[Federal Register Volume 88, Number 119 (Thursday, June 22, 2023)]
[Proposed Rules]
[Pages 40932-41013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12957]
[[Page 40931]]
Vol. 88
Thursday,
No. 119
June 22, 2023
Part II
Department of Energy
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10 CFR Part 430
Energy Conservation Program: Energy Conservation Standards for Ceiling
Fans; Proposed Rule
Federal Register / Vol. 88 , No. 119 / Thursday, June 22, 2023 /
Proposed Rules
[[Page 40932]]
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DEPARTMENT OF ENERGY
10 CFR Part 430
[EERE-2021-BT-STD-0011]
RIN 1904-AE99
Energy Conservation Program: Energy Conservation Standards for
Ceiling Fans
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking and announcement of public
meeting.
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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including ceiling
fans. EPCA also requires the U.S. Department of Energy (``DOE'') to
periodically determine whether more-stringent, standards would be
technologically feasible and economically justified, and would result
in significant energy savings. In this notice of proposed rulemaking
(``NOPR''), DOE proposes new and amended energy conservation standards
for ceiling fans, and also announces a public meeting to receive
comment on these proposed standards and associated analyses and
results.
DATES: Comments: DOE will accept comments, data, and information
regarding this NOPR no later than August 21, 2023.
Meeting: DOE will hold a public meeting via webinar on Thursday,
July 27, 2023 from 1:00 p.m. to 4:00 p.m. See section IV, ``Public
Participation,'' for webinar registration information, participant
instructions and information about the capabilities available to
webinar participants.'' Comments regarding the likely competitive
impact of the proposed standard should be sent to the Department of
Justice contact listed in the ADDRESSES section on or before August 21,
2023.
ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at www.regulations.gov under docket
number EERE-2021-BT-STD-0011. Follow the instructions for submitting
comments. Alternatively, interested persons may submit comments,
identified by docket number EERE-2021-BT-STD-0011, by any of the
following methods:
Email: [email protected]. Include the docket number
EERE-2021-BT-STD-0011 in the subject line of the message.
Postal Mail: Appliance and Equipment Standards Program, U.S.
Department of Energy, Building Technologies Office, Mailstop EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 287-1445. If possible, please submit all items on a compact disc
(``CD''), in which case it is not necessary to include printed copies.
Hand Delivery/Courier: Appliance and Equipment Standards Program,
U.S. Department of Energy, Building Technologies Office, 1000
Independence Ave. SW, Washington, DC 20585. Telephone: (202) 287-1445.
If possible, please submit all items on a CD, in which case it is not
necessary to include printed copies.
No telefacsimiles (``faxes'') will be accepted. For detailed
instructions on submitting comments and additional information on this
process, see section VII of this document.
Docket: The docket for this activity, which includes Federal
Register notices, comments, and other supporting documents/materials,
is available for review at www.regulations.gov. All documents in the
docket are listed in the www.regulations.gov index. However, not all
documents listed in the index may be publicly available, such as
information that is exempt from public disclosure.
The docket web page can be found at www.regulations.gov/docket/EERE-2021-BT-STD-0011. The docket web page contains instructions on how
to access all documents, including public comments, in the docket. See
section VII of this document for information on how to submit comments
through www.regulations.gov.
EPCA requires the Attorney General to provide DOE a written
determination of whether the proposed standard is likely to lessen
competition. The U.S. Department of Justice Antitrust Division invites
input from market participants and other interested persons with views
on the likely competitive impact of the proposed standard. Interested
persons may contact the Division at [email protected] on or
before the date specified in the DATES section. Please indicate in the
``Subject'' line of your email the title and Docket Number of this
proposed rulemaking.
FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Dommu, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (202) 506-9870. Email:
[email protected].
Mr. Nolan Brickwood, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (202) 586-4498. Email:
[email protected].
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting,
contact the Appliance and Equipment Standards Program staff at (202)
287-1445 or by email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Proposed Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Ceiling Fans
C. Deviation From Appendix A
III. General Discussion
A. General Comments
B. Product Classes and Scope of Coverage
C. Test Procedure
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Product Classes
a. Very Small Diameter Ceiling Fans
b. High-Speed Belt-Driven Ceiling Fans
c. High- and Low-Airflow Large-Diameter Ceiling Fans
d. Very-Close Mount Hugger Ceiling Fans
2. Test Procedure and Certification
3. Technology Options
a. Standard and Hugger Ceiling Fans
b. Large-Diameter Ceiling Fans
c. High-Speed Belt-Driven Ceiling Fans
d. Summary of Technology Options
B. Screening Analysis
1. Screened-Out Technologies
a. Standard and Hugger Ceiling Fans
[[Page 40933]]
b. Large-Diameter Ceiling Fans
2. Remaining Technologies
C. Engineering Analysis
1. Representative Units
2. Efficiency Analysis
a. Baseline Efficiency
b. Higher Efficiency Levels
c. Large-Diameter Ceiling Fan Standby Power
3. Cost Analysis
a. Hugger and Standard Ceiling Fans
b. Large-Diameter Ceiling Fans
c. High-Speed Belt-Driven Ceiling Fans
d. Manufacturer Mark-Up
4. Cost-Efficiency Results
D. Markups Analysis
E. Energy Use Analysis
1. Inputs for Standard and Hugger Ceiling Fans
a. Sample of Purchasers
b. Operating Hours
c. Power Consumption at Each Speed and Standby
2. Inputs for Large-Diameter and High-Speed Belt-Driven Ceiling
Fans
a. Sample of Purchasers
b. Operating Hours
c. Power Consumption at Each Speed and Standby
3. Impact on Air-Conditioning or Heating Equipment Use
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
a. Residential
b. Commercial and Industrial
8. Energy Efficiency Distributions in the No-New-Standards Case
and Each Standard Case
9. Payback Period Analysis
G. Shipments Analysis
H. National Impact Analysis
1. National Energy Savings
2. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Product and Capital Conversion Costs
d. Markup Scenarios
3. Manufacturer Interviews
4. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Ceiling Fan
Standards
2. Annualized Benefits and Costs of the Proposed Standards
D. Reporting, Certification, and Sampling Plan
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Description of Reasons Why Action Is Being Considered
2. Objectives of, and Legal Basis for, Rule
3. Description on Estimated Number of Small Entities Regulated
4. Description and Estimate of Compliance Requirements Including
Differences in Cost, if Any, for Different Groups of Small Entities
5. Duplication, Overlap, and Conflict With Other Rules and
Regulations
6. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Information Quality
VII. Public Participation
A. Participation in the Webinar
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of the Webinar
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Synopsis of the Proposed Rule
The Energy Policy and Conservation Act, Public Law 94-163, as
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency
of a number of consumer products and certain industrial equipment. (42
U.S.C. 6291-6317) Title III, Part B of EPCA \2\ established the Energy
Conservation Program for Consumer Products Other Than Automobiles. (42
U.S.C. 6291-6309) These products include ceiling fans, the subject of
this proposed rulemaking.
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\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
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Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in a significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later
than 6 years after issuance of any final rule establishing or amending
a standard, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a notice of
proposed rulemaking (``NOPR'') including new proposed energy
conservation standards (proceeding to a final rule, as appropriate).
(42 U.S.C. 6295(m))
In accordance with these and other statutory provisions discussed
in this document, DOE proposes amended energy conservation standards
for ceiling fans. The proposed standards, which are expressed in cubic
feet per minute per watt (``CFM/W'') for standard and hugger ceiling
fans and ceiling fan energy index (``CFEI'') for large-diameter ceiling
fans (``LDCFs'') and high-speed belt-driven (``HSBD'') ceiling fans,
are shown in Table I.1. These proposed standards, if adopted, would
apply to all ceiling fans listed in Table I.1 manufactured in, or
imported into, the United States starting on the date 3 years after the
publication of the final rule for this proposed rulemaking.
[[Page 40934]]
Table I.1--Proposed Energy Conservation Standards for Ceiling Fans
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Equipment class CFM/W
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Standard Ceiling Fans *........... D <=53 in.: 0.69 D + 53.25.
D >53 in.: 1.31 D + 52.08.
Hugger Ceiling Fans *............. D <=53 in.: 0.56 D + 48.75.
D >53 in.: 1.37 D + 38.5.
------------------------------------------------------------------------
CFEI
-------------------------------------
Large-Diameter Ceiling Fans....... 1.22 at high speed.
1.31 at 40 percent speed or the
nearest speed that is not less than
40 percent speed.
High-Speed Belt-Driven Ceiling 1.89 at high speed.
Fans.
------------------------------------------------------------------------
* D is the representative value of blade span as determined in
accordance with the DOE test procedure at appendix U to subpart B of
10 CFR part 430 and applicable sampling plans.
A. Benefits and Costs to Consumers
Table I.2 presents DOE's evaluation of the economic impacts of the
proposed standards on consumers of ceiling fans, as measured by the
average life-cycle cost (``LCC'') savings and the simple payback period
(``PBP'').\3\ The average LCC savings are positive for all product
classes, and the PBP is less than the average lifetime of ceiling fans,
which is estimated to be 14.6 years (see section IV.F.6 of this
document).
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\3\ The average LCC savings refer to consumers that are affected
by a standard and are measured relative to the efficiency
distribution in the no-new-standards case, which depicts the market
in the compliance year in the absence of new or amended standards
(see section IV.F.8 of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.C of this document).
Table I.2--Impacts of Proposed Energy Conservation Standards on
Consumers of Ceiling Fans
[TSL 3]
------------------------------------------------------------------------
Average LCC Simple payback
Ceiling fan class savings period
($2022) (years)
------------------------------------------------------------------------
Standard................................ 16.69 4.1
Hugger.................................. 5.14 6.6
HSBD.................................... 663.92 2.1
Large-Diameter.......................... 68.20 5.8
------------------------------------------------------------------------
DOE's analysis of the impacts of the proposed standards on
consumers is described in section IV.F of this document.
B. Impact on Manufacturers
The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the base year through the
end of the analysis period (2023-2057). Using a real discount rate of
7.4 percent, DOE estimates that the INPV for manufacturers of ceiling
fans in the case without new and amended standards is $2,329 million in
2022$. Under the proposed standards, the change in INPV is estimated to
range from -4.4 percent to -1.8 percent, which is approximately -$101
million to -$43 million. In order to bring products into compliance
with new and amended standards, it is estimated that the industry would
incur total conversion costs of $107.2 million.
DOE's analysis of the impacts of the proposed standards on
manufacturers is described in section IV.J of this document. The
analytic results of the manufacturer impact analysis (``MIA'') are
presented in section V.B.2 of this document.
C. National Benefits and Costs 4
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\4\ All monetary values in this document are expressed in 2022
dollars.
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DOE's analyses indicate that the proposed energy conservation
standards for ceiling fans would save a significant amount of energy.
Relative to the case without new and amended standards, the lifetime
energy savings for ceiling fans purchased in the 30-year period that
begins in the anticipated first full year of compliance with the new
and amended standards (2028-2057) amount to 0.92 quadrillion British
thermal units (``Btu''), or quads,\5\ of full-fuel-cycle energy
savings. This represents a savings of 9 percent relative to the energy
use of these products in the case without new and amended standards
(referred to as the ``no-new-standards case'').
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\5\ The quantity refers to full-fuel-cycle (``FFC'') energy
savings. FFC energy savings includes the energy consumed in
extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and, thus, presents a more complete
picture of the impacts of energy efficiency standards. For more
information on the FFC metric, see section IV.H.1 of this document.
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The cumulative net present value (``NPV'') of total consumer
benefits of the proposed standards for ceiling fans ranges from 1.84
billion USD (at a 7-percent discount rate) to 4.96 billion USD (at a 3-
percent discount rate). This NPV expresses the estimated total value of
future operating-cost savings minus the estimated increased product
costs for ceiling fans purchased in 2028-2057.
In addition, the proposed standards for ceiling fans are projected
to yield significant environmental benefits. DOE estimates that the
proposed standards would result in cumulative emission reductions (over
the same period as for energy savings) of 18.3 million metric tons
(``Mt'') \6\ of carbon dioxide (``CO2''), 4.5 thousand tons
of sulfur dioxide (``SO2''), 31.3 thousand tons of nitrogen
oxides (``NOX''), 141 thousand tons of methane
(``CH4''), 0.15 thousand tons of nitrous oxide
(``N2O''), and 0.03 tons of mercury (``Hg'').\7\
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\6\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\7\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy
Outlook 2023 (``AEO 2023''). AEO 2023 represents current Federal and
state legislation and final implementation of regulations as of the
time of its preparation. See section IV.K of this document for
further discussion of AEO 2023 assumptions that effect air pollutant
emissions.
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DOE estimates the value of climate benefits from a reduction in
greenhouse gases (GHG) using four different estimates of the social
cost of CO2 (``SC-CO2''), the social cost of
methane (``SC-CH4''), and the social cost of nitrous oxide
(``SC-N2O''). Together these represent the social cost of
GHG (SC-GHG). DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).\8\ The
[[Page 40935]]
derivation of these values is discussed in section IV.L of this
document. For presentational purposes, the climate benefits associated
with the average SC-GHG at a 3-percent discount rate are estimated to
be $0.95 billion. DOE does not have a single central SC-GHG point
estimate and it emphasizes the importance and value of considering the
benefits calculated using all four sets of SC-GHG estimates.
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\8\ To monetize the benefits of reducing GHG emissions this
analysis uses the interim estimates presented in the Technical
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February
2021 by the IWG. (``February 2021 SC-GHG TSD''). www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
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DOE estimated the monetary health benefits of SO2 and
NOX emissions reductions using benefit per ton estimates
from the scientific literature, as discussed in section IV.L of this
document. DOE estimated the present value of the health benefits would
be $0.6 billion using a 7-percent discount rate, and $1.7 billion using
a 3-percent discount rate.\9\ DOE is currently only monetizing (for
SO2 and NOX) PM2.5 precursor health
benefits and (for NOX) ozone precursor health benefits, but
will continue to assess the ability to monetize other effects such as
health benefits from reductions in direct PM2.5 emissions.
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\9\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
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Table I.3 summarizes the monetized benefits and costs expected to
result from the proposed standards for ceiling fans. There are other
important unquantified effects, including certain unquantified climate
benefits, unquantified public health benefits from the reduction of
toxic air pollutants and other emissions, unquantified energy security
benefits, and distributional effects, among others.
Table I.3--Summary of Monetized Benefits and Costs of Proposed Energy
Conservation Standards for Ceiling Fans
[TSL 3]
------------------------------------------------------------------------
Billion 2022$
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 6.43
Climate Benefits *...................................... 0.95
Health Benefits **...................................... 1.70
---------------
Total Benefits [dagger]............................... 9.08
Consumer Incremental Product Costs...................... 1.47
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Net Benefits.......................................... 7.61
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 2.66
Climate Benefits * (3% discount rate)................... 0.95
Health Benefits **...................................... 0.64
---------------
Total Benefits [dagger]............................... 4.25
Consumer Incremental Product Costs...................... 0.82
---------------
Net Benefits.......................................... 3.43
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with ceiling
fans shipped in 2028-2057. These results include benefits to consumers
which accrue after 2028 from the products shipped in 2028-2057.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate) (see
section IV.L of this document). Together these represent the global SC-
GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3 percent discount rate are
shown; however, DOE emphasizes the importance and value of considering
the benefits calculated using all four sets of SC-GHG estimates. To
monetize the benefits of reducing GHG emissions, this analysis uses
the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate.
The benefits and costs of the proposed standards can also be
expressed in terms of annualized values. The monetary values for the
total annualized net benefits are (1) the reduced consumer operating
costs, minus (2) the increase in product purchase prices and
installation costs, plus (3) the monetized value of climate and health
benefits of emission reductions, all annualized.\10\
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\10\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2023, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur, and
then discounted the present value from each year to 2023. Using the
present value, DOE then calculated the fixed annual payment over a
30-year period, starting in the compliance year, that yields the
same present value.
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The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered products and are measured for the lifetime of ceiling fans
shipped in 2028-2057. The benefits associated with reduced emissions
achieved as a result of the proposed standards are also calculated
based on the lifetime of ceiling fans shipped in 2028-2057. Total
benefits for both the 3-percent and 7-percent cases are presented using
the average GHG social costs with 3-percent discount rate. Estimates of
SC-GHG values are presented for all four discount rates in section
IV.L.1 of this document.
Table I.4 presents the total estimated monetized benefits and costs
associated with the proposed standard, expressed in terms of annualized
values. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NOX and SO2
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated monetized cost of the
standards proposed in this rule is $86.6 million per year in increased
equipment costs, while the estimated annual benefits are $281.1 million
in reduced equipment operating costs, $54.7 million in monetized
climate benefits, and $67.5 million in monetized health benefits. In
this case the net monetized benefit would amount to $316.7 million per
year.
Using a 3-percent discount rate for all benefits and costs, the
estimated monetized cost of the proposed standards is $84.6 million per
year in increased equipment costs, while the estimated annual benefits
are $369.3 million in reduced operating costs, $54.7 million in
monetized climate benefits, and $97.5 million in monetized health
benefits. In this case, the net monetized benefit would amount to
$436.9 million per year.
[[Page 40936]]
Table I.4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Ceiling Fans
[TSL 3]
----------------------------------------------------------------------------------------------------------------
Million 2022$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 369.3 343.9 387.6
Climate Benefits *.............................................. 54.7 52.4 55.5
Health Benefits **.............................................. 97.5 93.6 98.9
-----------------------------------------------
Total Monetized Benefits [dagger]............................... 521.4 489.9 542.1
Consumer Incremental Product Costs.............................. 84.6 85.8 81.3
-----------------------------------------------
Net Benefits.................................................... 436.9 404.1 460.7
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 281.1 263.2 294.3
Climate Benefits * (3% discount rate)........................... 54.7 52.4 55.5
Health Benefits **.............................................. 67.5 65.1 68.5
-----------------------------------------------
Total Monetized Benefits [dagger]............................... 403.3 380.7 418.3
Consumer Incremental Product Costs.............................. 86.6 87.7 83.6
-----------------------------------------------
Net Monetized Benefits.......................................... 316.7 293.0 334.7
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with ceiling fans shipped in 2028-2057. These
results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057. The
Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the AEO
2023 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. The methods used
to derive projected price trends are explained in sections IV.F.1 and IV.H.2 of this document. Note that the
Benefits and Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
notice). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at
a 3 percent discount rate are shown; however, DOE emphasizes the importance and value of considering the
benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG
emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost
of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021
by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate.
DOE's analysis of the national impacts of the proposed standards is
described in sections IV.H, IV.K and IV.L of this document.
D. Conclusion
DOE has tentatively concluded that the proposed standards represent
the maximum improvement in energy efficiency that is technologically
feasible and economically justified, and would result in the
significant conservation of energy. Specifically, with regards to
technological feasibility products achieving these standard levels are
already commercially available for all product classes covered by this
proposal. As for economic justification, DOE's analysis shows that the
benefits of the proposed standard exceed, to a great extent, the
burdens of the proposed standards.
Using a 7-percent discount rate for consumer benefits and costs and
NOX and SO2 reduction benefits, and a 3-percent
discount rate case for GHG social costs, the estimated monetized cost
of the proposed standards for ceiling fans is $86.6 million per year in
increased ceiling fan costs, while the estimated annual monetized
benefits are $281.1 million in reduced ceiling fan operating costs,
$54.7 million in monetized climate benefits and $67.5 million in
monetized health benefits. The net monetized benefit amounts to $316.7
million per year.
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\11\ For
example, some covered products and equipment have substantial energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------
\11\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------
As previously mentioned, the standards are projected to result in
estimated national energy savings of 0.92 quad FFC for ceiling fans
shipped between 2028 and 2057, the equivalent of the primary annual
energy use of almost 10 million homes. In addition, they are projected
to reduce CO2 emissions by 18.3 million metric tons for
ceiling fans shipped from 2028 to 2057.\12\ Based on these findings,
DOE has initially determined the energy savings from the proposed
standard levels are ``significant'' within the meaning of 42 U.S.C.
6295(o)(3)(B). A more detailed discussion of the basis for these
tentative conclusions is contained in the remainder of this document
and the accompanying technical support document.
---------------------------------------------------------------------------
\12\ These results include benefits to consumers which accrue
after 2057 from the products shipped in 2028-2057.
---------------------------------------------------------------------------
DOE also considered more-stringent energy efficiency levels as
potential
[[Page 40937]]
standards, and is still considering them in this rulemaking. However,
DOE has tentatively concluded that the potential burdens of the more-
stringent energy efficiency levels would outweigh the projected
benefits.
Based on consideration of the public comments DOE receives in
response to this document and related information collected and
analyzed during the course of this rulemaking effort, DOE may adopt
energy efficiency levels presented in this document that are either
higher or lower than the proposed standards, or some combination of
level(s) that incorporate the proposed standards in part.
II. Introduction
The following section briefly discusses the statutory authority
underlying this proposed rule, as well as some of the relevant
historical background related to the establishment of standards for
ceiling fans.
A. Authority
EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles. These products include ceiling fans,
the subject of this document. (42 U.S.C. 6292(a)(20)) This NOPR covers
those consumer products that meet the definition of ``ceiling fans''
codified at 10 CFR 430.2 as nonportable devices suspended from a
ceiling for circulating air via the rotation of fan blades. EPCA, as
amended, prescribed energy conservation standards for these products
and authorized DOE to consider energy efficiency or energy use
standards for the electricity used by ceiling fan to circulate air in a
room.\13\ (42 U.S.C. 6295(ff)(6))
---------------------------------------------------------------------------
\13\ While ceiling fans are often sold with light kits, this
notice only considers the electricity used by ceiling fans to
circulate air in a room. DOE evaluates energy efficiency standards
associated with ceiling fan light kits in a separate rulemaking
(Docket No. EERE-2019-BT-STD-0040).
---------------------------------------------------------------------------
EPCA further provides that, not later than 6 years after the
issuance of any final rule establishing or amending a standard, DOE
must publish either a notice of determination that standards for the
product do not need to be amended, or a NOPR including new proposed
energy conservation standards (proceeding to a final rule, as
appropriate). (42 U.S.C. 6295(m)(1))
The energy conservation program under EPCA consists essentially of
four parts: (1) testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of EPCA specifically include
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293),
labeling provisions (42 U.S.C. 6294), energy conservation standards (42
U.S.C. 6295), and the authority to require information and reports from
manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal
preemption for particular State laws or regulations, in accordance with
the procedures and other provisions set forth under EPCA. (See 42
U.S.C. 6297(d))
Subject to certain criteria and conditions, DOE is required to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of each covered product. (42 U.S.C.
6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers of covered products
must use the prescribed DOE test procedure as the basis for certifying
to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly,
DOE must use these test procedures to determine whether the products
comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The
DOE test procedures for ceiling fans appear at title 10 of the Code of
Federal Regulations (``CFR'') part 430, subpart B, appendix U.
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including ceiling fans. Any new
or amended standard for a covered product must be designed to achieve
the maximum improvement in energy efficiency that the Secretary of
Energy determines is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B))
Furthermore, DOE may not adopt any standard that would not result in
the significant conservation of energy. (42 U.S.C. 6295(o)(3))
Moreover, DOE may not prescribe a standard: (1) for certain
products, including ceiling fans, if no test procedure has been
established for the product, or (2) if DOE determines by rule that the
standard is not technologically feasible or economically justified. (42
U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is
economically justified, DOE must determine whether the benefits of the
standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make
this determination after receiving comments on the proposed standard,
and by considering, to the greatest extent practicable, the following
seven statutory factors:
(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water)
savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (``Secretary'') considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA establishes a rebuttable presumption that a standard
is economically justified if the Secretary finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended
or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those
[[Page 40938]]
generally available in the United States. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for a covered product that has two or more
subcategories. DOE must specify a different standard level for a type
or class of product that has the same function or intended use, if DOE
determines that products within such group: (A) consume a different
kind of energy from that consumed by other covered products within such
type (or class); or (B) have a capacity or other performance-related
feature which other products within such type (or class) do not have
and such feature justifies a higher or lower standard. (42 U.S.C.
6295(q)(1)) In determining whether a performance-related feature
justifies a different standard for a group of products, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE deems appropriate. Id. Any rule prescribing such a
standard must include an explanation of the basis on which such higher
or lower level was established. (42 U.S.C. 6295(q)(2))
Finally, pursuant to the amendments contained in the Energy
Independence and Security Act of 2007 (``EISA 2007''), Pub. L. 110-140,
any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, is required to address standby mode and
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE
adopts a standard for a covered product after that date, it must, if
justified by the criteria for adoption of standards under EPCA (42
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into
a single standard, or, if that is not feasible, adopt a separate
standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A)-(B)) DOE's current test procedures for ceiling fans does
address measuring standby mode and off mode energy use. In this
rulemaking, for small-diameter ceiling fans \14\ DOE intends to
incorporate such energy use into any amended energy conservation
standards that it may adopt. For LDCFs \15\ and HSBD ceiling fans, DOE
has determined that incorporating this energy use into a single
standard and establishing a separate standard is not justified under 42
U.S.C. 6295(o).
---------------------------------------------------------------------------
\14\ A small-diameter ceiling fan is a ceiling fan that is less
than or equal to seven feet in diameter. 10 CFR part 430 subpart B
appendix U section 1.18.
\15\ A large-diameter ceiling fan is a ceiling fan that is
greater than seven feet in diameter. 10 CFR part 430 subpart B
appendix U section 1.12.
---------------------------------------------------------------------------
B. Background
1. Current Standards
In a final rule published on October 18, 2005, DOE codified the
design standards prescribed by EPCA for ceiling fans. 70 FR 60407,
60413. These standards are set forth in DOE's regulations at 10 CFR
430.32(s)(1) and require all ceiling fans manufactured on or after
January 1, 2007, to have: (1) fan speed controls separate from any
lighting controls; (2) adjustable speed controls (either more than one
speed or variable speed); and (3) the capability for reverse action
(other than fans sold for industrial or outdoor application or where
safety would be an issue). (42 U.S.C. 6295(ff)(1)(A))
In a final rule published on January 19, 2017, (``January 2017 ECS
Final Rule''), DOE prescribed the current energy conservation standards
for ceiling fans manufactured in, or imported into, the United States
on and after January 21, 2020. 82 FR 6826, 6827.
On December 27, 2020, the Energy Act of 2020 (Pub. L. 116-260) was
signed into law. The Energy Act of 2020 amended performance standards
for LDCFs. (42 U.S.C. 6295(ff)(6)(C)(i), as codified) Pursuant to the
Energy Act of 2020, LDCFs are subject to standards in terms of the CFEI
metric, with one standard based on operation of the fan at high speed
and a second standard based on operation of the fan at 40 percent speed
or the nearest speed that is not less than 40 percent speed. (42 U.S.C.
6295(ff)(6)(C)(i), as codified)
On May 27, 2021, DOE published a final rule to amend the current
regulations for LDCFs (``May 2021 Technical Amendment''). 86 FR 28469.
The May 2021 Technical Amendment was published to codify provisions
enacted by Congress through the Energy Act of 2020. Specifically,
section 1008 of the Energy Act of 2020 amended section 325(ff)(6) of
EPCA to specify that LDCFs manufactured on or after January 21, 2020,
are not required to meet minimum ceiling fan efficiency requirements in
terms of the ratio of the total airflow to the total power consumption,
as established in the January 2017 ECS Final Rule, and instead are
required to meet specified minimum efficiency requirements based on the
CFEI metric. 86 FR 28469, 28469-28470. On November 28, 2022, DOE also
published a final rule to implement the full scope of standards for
LDCFs as set forth in the Energy Act of 2020. 86 FR 72863.
The current standards are set forth in DOE's regulations at 10 CFR
430.32(s) and are summarized in Table II.1.
Table II.1--Current Federal Energy Conservation Standards for Ceiling
Fans
------------------------------------------------------------------------
Product class as defined in appendix U [of Minimum efficiency (CFM/W)
10 CFR 430.32(s)] \1\
------------------------------------------------------------------------
Very small diameter (VSD)................. D <=12 in.: 21.
D >12 in.: 3.16D-17.04.
Standard.................................. 0.65D + 38.03.
Hugger.................................... 0.29D + 34.46.
High-speed small diameter (HSSD).......... 4.16D + 0.02.
------------------------------------------------------------------------
Minimum Efficiency (CFEI)
-----------------------------
Large-diameter ceiling fans (LDCFs)....... 1.00 at high speed.
1.31 at 40 percent speed or
the nearest speed that is
not less than 40 percent
speed.
------------------------------------------------------------------------
\1\ D is the ceiling fan's blade span, in inches, as determined in
Appendix U of [10 CFR 430.32(s)].
2. History of Standards Rulemaking for Ceiling Fans
On May 7, 2021, DOE published a notice that it was initiating an
early assessment review to determine whether any new or amended
standards would satisfy the relevant requirements of EPCA for a new or
amended energy conservation standard for ceiling fans and a request for
information (``RFI''). 86 FR 24538 (``May 2021 RFI'').
On February 10, 2022, DOE published a notice of public webinar and
availability of preliminary technical support document (``TSD''). 87 FR
7758 (``February 2022 Preliminary Analysis''). The purpose of the
February 2022 Preliminary Analysis was to make publicly available the
initial technical and economic analyses conducted for ceiling fans and
present initial results of those analyses. DOE held the public webinar
on March 16, 2022, to present its preliminary analysis and to seek
comments from interested parties.
DOE received comments in response to the February 2022 Preliminary
Analysis from the interested parties listed in Table II.2.
[[Page 40939]]
Table II.2--February 2022 Preliminary Analysis Written Comments
----------------------------------------------------------------------------------------------------------------
Comment number
Commenter(s) Abbreviation in the docket Commenter type
----------------------------------------------------------------------------------------------------------------
American Lighting Association........... ALA....................... 26 Trade Association.
Air Movement and Control Association.... AMCA...................... 23 Trade Association.
Pacific Gas and Electric Company, CA IOUs................... 22 Utilities.
Southern California Edison, San Diego
Gas & Electric Company.
Appliance Standards Awareness Project, Efficiency Advocates...... 25 Efficiency Organizations.
American Council for an Energy-
Efficient Economy, Natural Resources
Defense Council, New York State Energy
Research and Development Authority.
Lutron Electronics Co................... Lutron.................... 24 Controller Manufacturer.
Northwest Energy Efficiency Alliance.... NEEA...................... 27 Efficiency Organization.
----------------------------------------------------------------------------------------------------------------
A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\16\
To the extent that interested parties have provided written comments
that are substantively consistent with any oral comments provided
during the March 2022 public meeting, DOE cites the written comments
throughout this document. Any oral comments provided during the webinar
that are not substantively addressed by written comments are summarized
and cited separately throughout this document.
---------------------------------------------------------------------------
\16\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for ceiling fans. (Docket No. EERE-
2021-BT-STD-0011, which is maintained at www.regulations.gov). The
references are arranged as follows: (commenter name, comment docket
ID number, page of that document).
---------------------------------------------------------------------------
C. Deviation From Appendix A
In accordance with section 3(a) of 10 CFR part 430, subpart C,
appendix A (``appendix A''), DOE notes that it is deviating from the
provision in appendix A regarding the NOPR stage for an energy
conservation standard rulemaking. Section 6(f)(2) of appendix A
specifies that the length of the public comment period for a NOPR will
vary depending upon the circumstances of the particular rulemaking, but
will not be less than 75 calendar days. DOE is opting to deviate from
this step by providing a 60-day comment period. As previously
discussed, DOE requested comment on its analytical approach in section
ES.3 of the February 2022 Preliminary Analysis TSD and provided
stakeholders with a 60-day comment period. Given that this NOPR relies
largely on the same analytical approach taken in the February 2022
Preliminary Analysis, DOE believes a 60-day comment period is
appropriate and will provide interested parties with a meaningful
opportunity to comment on the proposed rule.
III. General Discussion
DOE developed this proposal after considering oral and written
comments, data, and information from interested parties that represent
a variety of interests. The following discussion addresses issues
raised by these commenters.
A. General Comments
This section summarizes general comments received from interested
parties regarding rulemaking timing and process.
NEEA commented generally that they support DOE's continued
development of energy conservation standards and use of transparent and
comparable efficiency metrics to encourage market adoption of efficient
products. (NEEA, No. 27 at p. 1)
B. Product Classes and Scope of Coverage
When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used or by capacity or other performance-related features that justify
differing standards. In determining whether a performance-related
feature justifies a different standard, DOE must consider such factors
as the utility of the feature to the consumer and other factors DOE
determines are appropriate. (42 U.S.C. 6295(q)) This NOPR covers those
consumer products that meet the definition of ``ceiling fans,'' as
codified at 10 CFR 430.2. See section IV.A.1 of this document for
discussion of the scope of coverage and product classes analyzed in
this NOPR.
C. Test Procedure
EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
certify to DOE that their product complies with energy conservation
standards and to quantify the efficiency of their product. DOE's
current energy conservation standards for ceiling fans are expressed in
terms of CFM/W and CFEI. (See 10 CFR 430.32(s)(2).)
D. Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the products or equipment that are the subject of the
rulemaking. As the first step in such an analysis, DOE develops a list
of technology options for consideration in consultation with
manufacturers, design engineers, and other interested parties. DOE then
determines which of those means for improving efficiency are
technologically feasible. DOE considers technologies incorporated in
commercially-available products or in working prototypes to be
technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of appendix A
to 10 CFR part 430 subpart C (``Process Rule'').
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; (3) adverse impacts on
health or safety, and (4) unique-pathway proprietary technologies.
Sections 6(b)(3)(ii)-(v) and 7(b)(2)-(5) of the Process Rule. Section
IV.B of this document discusses the results of the screening analysis
for ceiling fans,
[[Page 40940]]
particularly the designs DOE considered, those it screened out, and
those that are the basis for the standards considered in this proposed
rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the NOPR technical support document
(``TSD'').
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for ceiling
fans, using the design parameters for the most efficient products
available on the market or in working prototypes. The max-tech levels
that DOE determined for this rulemaking are described in section IV.C
of this proposed rule and in chapter 5 of the NOPR TSD.
E. Energy Savings
1. Determination of Savings
For each trial standard level (``TSL''), DOE projected energy
savings from application of the TSL to ceiling fans purchased in the
30-year period that begins in the first full year of compliance with
the proposed standards (2028-2057).\17\ The savings are measured over
the entire lifetime of ceiling fans purchased in the previous 30-year
period. DOE quantified the energy savings attributable to each TSL as
the difference in energy consumption between each standards case and
the no-new-standards case. The no-new-standards case represents a
projection of energy consumption that reflects how the market for a
product would likely evolve in the absence of amended energy
conservation standards.
---------------------------------------------------------------------------
\17\ Each TSL is composed of specific efficiency levels for each
product class. The TSLs considered for this NOPR are described in
section V.A of this document. DOE conducted a sensitivity analysis
that considers impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------
DOE used its national impact analysis (``NIA'') python programming
language model to estimate national energy savings (``NES'') from
potential amended or new standards for ceiling fans. The NIA python
programming language model (described in section IV.H of this document)
calculates energy savings in terms of site energy, which is the energy
directly consumed by products at the locations where they are used. For
electricity, DOE reports national energy savings in terms of primary
energy savings, which is the savings in the energy that is used to
generate and transmit the site electricity. DOE also calculates NES in
terms of FFC energy savings. The FFC metric includes the energy
consumed in extracting, processing, and transporting primary fuels
(i.e., coal, natural gas, petroleum fuels), and thus presents a more
complete picture of the impacts of energy conservation standards.\18\
DOE's approach is based on the calculation of an FFC multiplier for
each of the energy types used by covered products or equipment. For
more information on FFC energy savings, see section IV.H.1 of this
document.
---------------------------------------------------------------------------
\18\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------
2. Significance of Savings
To adopt any new or amended standards for a covered product, DOE
must determine that such action would result in significant energy
savings. (42 U.S.C. 6295(o)(3)(B))
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\19\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis, taking into
account the significance of cumulative FFC national energy savings, the
cumulative FFC emissions reductions, and the need to confront the
global climate crisis, among other factors. DOE has initially
determined the energy savings from the proposed standard levels are
``significant'' within the meaning of 42 U.S.C. 6295(o)(3)(B).
---------------------------------------------------------------------------
\19\ The numeric threshold for determining the significance of
energy savings established in a final rule published on February 14,
2020 (85 FR 8626, 8670), was subsequently eliminated in a final rule
published on December 13, 2021 (86 FR 70892).
---------------------------------------------------------------------------
F. Economic Justification
1. Specific Criteria
As noted previously, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this proposed rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on
manufacturers, DOE conducts an MIA, as discussed in section IV.J of
this document. DOE first uses an annual cash-flow approach to determine
the quantitative impacts. This step includes both a short-term
assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed include (1) INPV, which
values the industry on the basis of expected future cash flows, (2)
cash flows by year, (3) changes in revenue and income, and (4) other
measures of impact, as appropriate. Second, DOE analyzes and reports
the impacts on different types of manufacturers, including impacts on
small manufacturers. Third, DOE considers the impact of standards on
domestic manufacturer employment and manufacturing capacity, as well as
the potential for standards to result in plant closures and loss of
capital investment. Finally, DOE takes into account cumulative impacts
of various DOE regulations and other regulatory requirements on
manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and PBP associated with new or amended standards. These
measures are discussed further in the following section. For consumers
in the aggregate, DOE also calculates the national net present value of
the consumer costs and benefits expected to result from particular
standards. DOE also evaluates the impacts of potential standards on
identifiable subgroups of consumers that may be affected
disproportionately by a standard.
b. Savings in Operating Costs Compared To Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its
[[Page 40941]]
installation) and the operating expense (including energy, maintenance,
and repair expenditures) discounted over the lifetime of the product.
The LCC analysis requires a variety of inputs, such as product prices,
product energy consumption, energy prices, maintenance and repair
costs, product lifetime, and discount rates appropriate for consumers.
To account for uncertainty and variability in specific inputs, such as
product lifetime and discount rate, DOE uses a distribution of values,
with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered products in the first full year of compliance with
new or amended standards. The LCC savings for the considered efficiency
levels are calculated relative to the case that reflects projected
market trends in the absence of new or amended standards. DOE's LCC and
PBP analysis is discussed in further detail in section IV.F of this
document.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section III.D of this document, DOE uses the NIA python
programming language model to project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards proposed in this document would not
reduce the utility or performance of the products under consideration
in this proposed rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a proposed standard. (42 U.S.C.
6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine
the impact, if any, of any lessening of competition likely to result
from a proposed standard and to transmit such determination to the
Secretary within 60 days of the publication of a proposed rule,
together with an analysis of the nature and extent of the impact. (42
U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of this proposed
rule to the Attorney General with a request that the Department of
Justice (``DOJ'') provide its determination on this issue. DOE will
publish and respond to the Attorney General's determination in the
final rule. DOE invites comment from the public regarding the
competitive impacts that are likely to result from this proposed rule.
In addition, stakeholders may also provide comments separately to DOJ
regarding these potential impacts. See the ADDRESSES section for
information to send comments to DOJ.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy
savings from the proposed standards are likely to provide improvements
to the security and reliability of the Nation's energy system.
Reductions in the demand for electricity also may result in reduced
costs for maintaining the reliability of the Nation's electricity
system. DOE conducts a utility impact analysis to estimate how
standards may affect the Nation's needed power generation capacity, as
discussed in section IV.M of this document.
DOE maintains that environmental and public health benefits
associated with the more efficient use of energy are important to take
into account when considering the need for national energy
conservation. The proposed standards are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases (``GHGs'') associated with energy
production and use. DOE conducts an emissions analysis to estimate how
potential standards may affect these emissions, as discussed in section
IV.K of this document; the estimated emissions impacts are reported in
section V.B.6 of this document. DOE also estimates the economic value
of emissions reductions resulting from the considered TSLs, as
discussed in section IV.L of this document.
g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
previously, DOE could consider such information under ``other
factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effects that proposed
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the Nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section V.B.1.c of this proposed rule.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to ceiling fans. Separate subsections address
each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards proposed in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential
[[Page 40942]]
amended or new energy conservation standards. The national impacts
analysis uses a second spreadsheet set that provides shipments
projections and calculates national energy savings and net present
value of total consumer costs and savings expected to result from
potential energy conservation standards. DOE uses the third spreadsheet
tool, the Government Regulatory Impact Model (``GRIM''), to assess
manufacturer impacts of potential standards. These three spreadsheet
tools are available on the DOE website for this rulemaking:
www.regulations.gov/docket/EERE-2021-BT-STD-0011. Additionally, DOE
used output from the latest version of the Energy Information
Administration's (``EIA's'') Annual Energy Outlook (``AEO''), a widely
known energy projection for the United States, for the emissions and
utility impact analyses.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this rulemaking include (1) a determination of the scope
of the rulemaking and product classes, (2) manufacturers and industry
structure, (3) existing efficiency programs, (4) shipments information,
(5) market and industry trends; and (6) technologies or design options
that could improve the energy efficiency of ceiling fans. The key
findings of DOE's market assessment are summarized in the following
sections. See chapter 3 of the NOPR TSD for further discussion of the
market and technology assessment.
1. Product Classes
When evaluating and establishing energy conservation standards, DOE
may establish separate standards for a group of covered products (i.e.,
establish a separate product class) if DOE determines that separate
standards are justified based on the type of energy used, or if DOE
determines that a product's capacity or other performance-related
feature justifies a different standard. (42 U.S.C. 6295(q)) In making a
determination whether a performance-related feature justifies a
different standard, DOE must consider such factors as the utility of
the feature to the consumer and other factors DOE determines are
appropriate. (Id.)
DOE currently defines separate energy conservation standards for
the following ceiling fan product classes: hugger, standard, very small
diameter (``VSD''), high-speed small diameter (``HSSD''), and LDCF. 10
CFR 430.32(s)(2).
In section 2.2 of the February 2022 Preliminary Analysis TSD, DOE
requested comment on VSD ceiling fans, HSBD ceiling fans, high- and
low-airflow LDCFs, and very-close mount hugger ceiling fans. These
comments are discussed in detail as follows:
a. Very Small Diameter Ceiling Fans
A VSD ceiling fan is defined as a small-diameter ceiling fan less
than or equal to 18 inches. Appendix U to subpart B of part 430
(``appendix U''). On August 16, 2022, DOE published a test procedure
final rule for ceiling fans (``August 2022 TP Final Rule''). 87 FR
50396. The August 2022 TP Final Rule amended the definition of ceiling
fan to clarify that a ceiling fan must provide circulating air, and
clarified that ``a ceiling fan that has a ratio of fan blade span (in
inches) to maximum rotation rate (in revolutions per minute) greater
than 0.06 provides circulating air.'' Id. at 87 FR 50402.
DOE included VSD fans in the February 2022 Preliminary Analysis,
but in section 2.2.1 of the preliminary analysis TSD stated that all
VSD fans DOE was aware of had a diameter-to-maximum operating speed
ratio of less than or equal to 0.06 inches to revolutions per minute
(``in/RPM''). Therefore, with the amended definition of ``circulating
air'', DOE expected that there would no longer be any ceiling fans on
the market that would meet the definition of a VSD ceiling fan. In the
February 2022 Preliminary Analysis, DOE requested comment on its
observation that all VSD ceiling fans would have a diameter-to-maximum
operating speed ratio of less than or equal to 0.06 in/RPM.
In response, ALA supported delineating air circulating fan heads
from ceiling fans using the 0.06 ratio, and provided data that shows a
distinct difference in the ratio for air circulating fan heads and
ceiling fans. (ALA, No. 26 at p. 7) The Efficiency Advocates encouraged
DOE to cover VSD ceiling fans in the fans and blowers rulemaking.
(Efficiency Advocates, No. 25 at p. 3)
DOE notes that comments related to scope and definitions for fans
and blowers are available at Docket No. EERE-2021-BT-TP-0021. DOE did
not receive any comments identifying VSD fans that exceed the 0.06
ratio. Further, DOE notes that the maximum diameter for a VSD fan is 18
inches. Based on the 0.06 ratio, a VSD fan would have to operate at a
maximum of 300 rpm to meet the definition of circulating air and
therefore meet the definition of a ceiling fan. Most fans with blade
spans 18 inches or less on the market advertise blade speeds greater
than 1,000 rpm.
In theory, a ceiling fan could exist that meets the definition of
both circulating air and VSD ceiling fan. In that case, the DOE test
procedure at appendix U to subpart B of part 430 would be applicable,
and the current energy conservation standards for VSD ceiling fans at
10 CFR 430.32(s)(2) would apply. However, DOE does not expect fans to
enter the market that meet the definition of both ceiling fan and VSD
ceiling fan because a fan with a blade span of 18 inches or less
spinning at fewer than 300 rpm would provide limiting cooling utility
for consumers. As such, for this NOPR, DOE has assumed that VSD ceiling
fan shipments are zero, and has not evaluated amended energy
conservation standards for VSD ceiling fans.
DOE requests comment on its assumption that there are zero products
on the market that meet the definition of both ceiling fan and VSD
ceiling fan, and its decision not to evaluate amended energy
conservation standards for VSD ceiling fans on that basis.
b. High-Speed Belt-Driven Ceiling Fans
Belt-driven ceiling fans are defined as ``a ceiling fan with a
series of one or more fan heads, each driven by a belt connected to one
or more motors that are located outside of the fan head.'' Appendix U
to subpart B of part 430. On July 25, 2016, DOE published a test
procedure final rule (``July 2016 TP Final Rule''), in which it stated
it would not propose standards for belt-driven ceiling fans due to the
limited number of basic models and lack of available data. 81 FR 48619,
48622. In the January 2017 ECS Final Rule, DOE noted that belt-driven
ceiling fans were generally highly customizable, and that customers can
decide on the number of fan heads, distance from the motor to the fan
head, and type of belt. (See chapter 3 of the January 2017 ECS Final
Rule TSD). While DOE did establish a definition and product class,
belt-driven ceiling fans were exempt from the test procedure, and
energy conservation standards were therefore not established. 81 FR
48619, 48622, 48624.
In response to the May 2021 RFI, BAF \20\ and AMCA commented that a
new type of belt-driven ceiling fan that
[[Page 40943]]
uses a larger motor and higher tip speeds has recently entered the
market. (BAF, No. 14 at p. 2; AMCA, No. 9 at p. 4) BAF and AMCA
recommended that DOE create a high-speed product class and a low-speed
product class for these belt-driven ceiling fans. Id. BAF and AMCA
additionally suggested that the HSBD ceiling fans be subject to testing
according to the American National Standards Institute (``ANSI'')/AMCA
Standard 230-15 ``Laboratory Methods of Testing Air Circulating Fans
for Rating and Certification'' (``AMCA 230-15''). Id. BAF also
recommended that HSBD ceiling fans be subject to energy conservation
standards, but that low-speed belt-driven ceiling fans should be
exempted. (BAF, No. 14 at p. 2) The CA IOUs identified one of these
HSBD ceiling fans (drum-type circulating ceiling fan) and asked DOE to
clarify whether industrial belt-driven fans are covered as ceiling fans
or as fans and blowers. (CA IOUs, No. 12 at p. 4-5)
---------------------------------------------------------------------------
\20\ This notice uses BAF to refer to comments from Big Ass
Fans, a manufacturer of ceiling fans.
---------------------------------------------------------------------------
In its August 2022 TP Final Rule, DOE defined HSBD ceiling fan,
stated that these fans shall be tested according to AMCA 230-15, and
stated that HSBD ceiling fans will use the CFEI metric. 87 FR 50396.
DOE did not establish separate definitions for small- and large-
diameter HSBD fans, but rather included all HSBD ceiling fans into one
definition. Id. at 87 FR 50404. DOE notes that belt-driven ceiling fans
that do not meet the definition of HSBD remain exempt from the DOE test
procedure. See appendix U.
DOE notes that a ceiling fan must be ``distributed in commerce with
components that enable it to be suspended from a ceiling.'' 87 FR
50396, 50402. Belt-driven fans are often distributed in commerce
without components that enable the fan to be suspended from a ceiling.
For example, some belt-driven fans are sold connected to wheels or to a
pedestal base. In this case, such a fan would not meet the definition
of a ceiling fan because it has not been manufactured to be suspended
from the ceiling, and therefore would not be subject to the HSBD test
procedure or any potential energy conservation standards even though a
consumer could independently purchase their own straps or chains and
elect to hang this fan from the ceiling.
HSBD fans in contrast, are distributed in commerce with specific
straps, chains, or other similar components that are designed and
tested by the manufacturer to safely support the weight of the ceiling
fan in an overhead configuration. Further, they circulate air, since
they meet the 0.06 blade span to maximum rpm ratio.
Many belt-driven fans are housed (meaning the fan blades are
contained within a cylindrical enclosure, often with solid metal sides
and a cage on the front and back); however, the presence of a housing
is not relevant in determining whether a product meets the definition
of ceiling fan. While a housing is generally included to better direct
air, a housing could be added to a ceiling fan, including those that
are clearly intended to circulate air. As such, DOE emphasizes that the
definition of a ceiling fan requires that fan to be ``suspended from a
ceiling'' and to ``circulate air'', rather than the presence or absence
of a fan housing.
In this NOPR, DOE has evaluated potential energy conservation
standards for HSBD ceiling fans.
c. High- and Low-Airflow Large-Diameter Ceiling Fans
BAF and AMCA previously commented that two product classes,
separated based on airflow, may be justified for LDCFs to reflect
unique characteristics for products intended for commercial versus
industrial applications. (BAF, No. 14 at p. 2; AMCA, No. 9 at p. 7). In
response to these comments, DOE considered whether to establish
separate high-airflow and low-airflow product classes for LDCFs in
section 2.4.1.1 of its February 2022 Preliminary Analysis TSD.
In response, the CA IOUs, AMCA, and NEEA all commented that DOE
should not divide the LDCF product class into separate high- and low-
airflow classes because doing so would not provide any benefit or be
warranted by differences in features or technology. (AMCA, No. 23 at
pp. 2-4; NEEA, No. 27 at p. 2; CA IOUs, No. 22 at pp. 2-4) The CA IOUs
provided results from a study they conducted that analyzed the
performance data of 90 AMCA-certified LDCFs. (CA IOUs, No. 22 at pp. 2-
4) The results showed that 66 percent of fans were included in the low-
airflow class and that many were near the airflow cutoff between the
two classes that DOE defined in the February 2022 Preliminary Analysis.
Id. They noted that slight changes in fan speed could therefore cause a
fan to move from one class into another. Id. The CA IOUs suggested that
the similarity in the airflow data therefore indicated that it is
unnecessary to separate low- and higher-airflow fans, and that if
different energy conservation standards were used for the two classes
it could result in market distortion. Id. Additionally, the results
also showed that commercial LDCFs generally had a higher CFEI than
industrial LDCFs, which the CA IOUs attributed to commercial LDCFs
often using more efficient motors. They stated that these results also
indicate that airflow is not a driver of efficiency for LDCFs. Id.
To establish a separate product class, DOE must determine that a
product has a capacity or other performance-related feature which other
covered products do not have, and that such feature justifies a
different standard through the feature's utility to the consumer and
other factors. (42 U.S.C. 6295(q)) DOE reviewed the data provided by
the CA IOUs and manufacturer literature and found that while some fans
are marketed for lower airflow and commercial applications, and that
others are marketed for higher-airflow, DOE agrees with commenters that
there is not a clear performance-related distinction between the two.
Therefore, DOE did not evaluate low- and high-airflow LDCFs as separate
product classes in this analysis.
d. Very-Close Mount Hugger Ceiling Fans
Hugger ceiling fans offer consumer utility since they have less
distance between the ceiling fan blades and the ceiling. This allows
them to be installed in applications with lower ceilings, where a
standard ceiling fan with a down rod could be a safety issue or would
not be desirable to consumers.
In section 2.4.1.1 of the February 2022 Preliminary Analysis TSD,
DOE discussed that moving a hugger fan further from the ceiling could
increase airflow without an associated increase in power consumption,
although this would be at the expense of consumer preferences for a
very-close mounted fan. DOE requested comment on whether consumers
consider all hugger ceiling fans equal, or if there is additional
consumer utility associated with hugger fans that are closer to the
ceiling.
ALA commented that there is no additional utility associated with
hugger fans that are closer to the ceiling and encouraged DOE to
maintain only one product class for hugger ceiling fans as doing so
would avoid the need for additional testing. (ALA, No. 26 at p. 9) DOE
did not receive any comment suggesting that very-close mount hugger
fans warranted a separate equipment class.
In this NOPR, DOE did not further evaluate a separate product class
for ceiling fans that are closer to the ceiling. However, DOE did
modify its engineering analysis for hugger ceiling fans to reflect that
moving a hugger fan further from the ceiling (although still less than
or equal to 10 inches from the
[[Page 40944]]
ceiling) represents a possible path toward meeting higher efficiency
standards. This is discussed in greater detail in section IV.C of this
document.
2. Test Procedure and Certification
DOE's test procedure for measuring the energy efficiency of ceiling
fans is available at appendix U and requirements for certification in
DOE's compliance certification database (``CCD'') specific to ceiling
fans are provided at 10 CFR 429.32. In section 2.3 of the February 2022
Preliminary Analysis TSD, DOE stated that proposed rules had been
issued to amend both the ceiling fan test procedure and ceiling fan
certification requirements. Since the February 2022 Preliminary
Analysis, the August 2022 TP Final Rule (87 FR 50396) and a
certification Final Rule (``July 2022 Certification Final Rule'') (87
FR 43952) have published, and updates were included in their respective
sections of the CFR.
In response to the February 2022 Preliminary Analysis, stakeholders
commented on test procedure and certification issues. These comments
are summarized and addressed as follows.
Regarding the test procedure for LDCFs, NEEA commented that they
generally support use of the CFEI metric for LDCFs. (NEEA, No. 27 at
pp. 1-2) AMCA recommended that DOE define a minimum testable
configuration for LDCFs that specifies which components and accessories
should and should not be included for testing. (AMCA, No. 23 at p. 9)
Additionally, AMCA recommended that, for a minimum LDCF testable
configuration, the fan should be tested as a complete fan with a
single-fan controller and that any optional features that do not relate
to air movement should not be energized during testing. (AMCA, No. 23
at p. 9)
Regarding AMCA's suggestion to test ceiling fans without including
additional accessories and in a minimum testable configuration, DOE
notes that appendix U requires that additional accessories not related
to ceiling fan airflow be turned off during testing and that testing
shall be completed with the default or minimally functional controller.
Specifically, section 3.3.1 of appendix U lists specifications for
testing with additional accessories for standard and hugger fans and
section 3.5.1 of appendix U lists specifications for testing with
additional accessories for LDCFs and HSBD fans.
AMCA also commented that additional parameters, like blade span,
CFEI100, CFEI40, airflow at high speed, and airflow at 40 percent
speed, should be included in the reporting requirements for the CCD so
that the data can be used in the next rulemaking to adjust CFEI ratings
and standby power requirements. AMCA added that standby power should
also be reported for compliance filing. AMCA further stated that adding
these reporting requirements would not create an additional burden on
manufacturers because the additional data being reported would come
directly from the test report that is already produced for DOE
compliance testing. (AMCA, No. 23 at pp. 3, 7)
Regarding compliance with existing energy conservation standards,
AMCA commented that, based on an internet market survey they conducted,
they believe many LDCFs on the market are not currently registered in
DOE's CCD. AMCA estimated that less than half of the LDCF models
available for sale in the United States were certified to DOE and that
only 7 of the 23 LDCF manufacturers/importers they identified had
registered products in the CCD. (AMCA, No. 23 at pp. 7, 14-15)
Additionally, AMCA commented that some of the published performance
data for fan models identified in their internet market survey may be
physically impossible. (AMCA, No. 23 at pp. 14-15; Ivanovich, Public
Meeting Transcript, No. 21 at p. 10)
AMCA expressed concern that increased standards would have a
disproportionate impact on manufacturers that are certifying their fans
and working to meet the energy conservation standards, and they
encouraged DOE to enforce its standards across the ceiling fan
industry. (AMCA, No. 23 at pp. 14-15; Ivanovich, Public Meeting
Transcript, No. 21 at p. 10)
AMCA estimated that the performance of many products identified
through their internet market survey but not registered in the CCD may
be below the current energy conservation standards. Id. AMCA further
stated that these unregistered products could muddy DOE's analysis by
suggesting that the current energy conservation standards are being
easily met. (AMCA, No. 23 at pp. 1-2,7) AMCA commented that current
energy conservation standards were met through investment by
manufacturers, and enacting higher efficiency standards today would
penalize manufacturers that have invested to comply with current energy
conservation standards while rewarding bad actors who never invested.
(AMCA, No. 23 at p. 1,2)
Regarding ceiling fan certification requirements, DOE notes that
the July 2022 Certification Final Rule amended 10 CFR 429.32 to require
additional data submission at the time of certification for LDCFS,
including blade span, CFEI40, and CFEI100, amongst other data. 87 FR
43952, 43964-66. Further, DOE notes that 10 CFR 429.12(a) specifies
that ``[e]ach manufacturer, before distributing in commerce any basic
model of a covered product or covered equipment subject to an
applicable energy conservation standard set forth in parts 430 or 431,
and annually thereafter on or before the dates provided in paragraph
(d) of this section, shall submit a certification report to DOE
certifying that each basic model meets the applicable energy
conservation standard(s).'' 10 CFR 429.12(a). DOE's current energy
conservation standards are listed at 10 CFR 430.32(s)(2) and are
relevant to all ceiling fans manufactured on or after January 21, 2020.
Consistent with 10 CFR parts 429 and 430, manufacturers are required to
submit a certification report to DOE that their basic models meet the
relevant energy conservation standards at10 CFR 430.32(s)(2) along with
the additional information as required in 10 CFR 429.32.
Regarding the sampling requirements when testing LDCFs, AMCA stated
that the data they provided to DOE were based on single-sample tests,
rather than the two-sample tests required by 10 CFR 429.32. AMCA also
commented that the current Federal energy conservation standards are
based on single-sample test data as well. AMCA provided calculations
showing the impact of using the confidence limits in 10 CFR 429.32 to
determine the represented CFEI values from two samples.
AMCA further commented that after the Energy Act of 2020 was
published, which prescribed the current energy conservation standards
at CFEI100 and CFEI40, a technical errata to AMCA 230-15 was published
on May 15, 2021 to account for air density differences between test
labs. (AMCA, No. 23 at pp. 12-13) AMCA commented that because DOE has
incorporated the technical errata to AMCA 230-15 into DOE's test
procedure, (see appendix U and 87 FR 50396, 50405), the manufacturer
data on which DOE's analysis is based overestimates performance by an
average of 3 percent.
AMCA estimated that correcting for the test lab air density, as
required in the AMCA 230 technical errata, and two-sample requirements
in 10 CFR 429.32 increase CFEI 100 and CFEI 40 by an average of 12
percent and 17 percent, respectively. (AMCA, No. 23 at pp. 2-3) AMCA
encouraged DOE to both account for the impact of the technical errata
and ensure that its analysis is based on two-sample data. (AMCA, No. 23
at pp. 13-14) Given the impact of the
[[Page 40945]]
technical errata and the requirement to use two-sample test data, AMCA
commented that the current energy conservation standards are stricter
than congress intended and therefore AMCA recommended that DOE maintain
the current CFEI requirements of CFEI100 = 1.00 and CFEI40 = 1.31 in
this proposed rulemaking. (AMCA, No. 23 at p. 3)
DOE disagrees with AMCA's comment that the statistical requirements
in 10 CFR 429.32 result in a more stringent standard when conducting a
two-sample test. 10 CFR 429.32(a)(2)(i) states that reported airflow
should use the lower of ``the mean of the sample'' or ``the lower 90
percent confidence limit (LCL) of the true mean divided by 0.9.''
Similarly, 10 CFR 429.32(a)(2)(ii) states that reported power
consumption should use the higher of ``the mean of the sample'' or
``the upper 95 percent confidence limit (UCL) of the true mean divided
by 1.1.'' In the example data AMCA included in their comments (AMCA No.
23 at p. 14), the values listed as ``Represented Value'' are the 90
percent lower confidence limit (``LCL'') of the true mean of the
airflow and the 95 percent upper confidence limit (``UCL'') of the true
mean of the power consumption. These values do not include the
``divided by 0.9'' in 10 CFR 429.32(a)(2)(i)(B) and the ``divided by
1.1'' in 10 CFR 429.32(a)(2)(ii)(B). If the statistical calculations
were applied as written in 10 CFR 429.32(a)(2), the mean of the sample
is lower than the 90 percent LCL of the true mean divided by 0.9 and
therefore the mean of the sample should be used to represent the
airflow. Similarly, the mean of the power consumption is greater than
the mean of the 95 percent UCL of the true mean divided by 1.1 and
therefore the mean of the sample should be used to represent power
consumption.
DOE notes that the only time the mean of the two-sample test is not
used is when there is a large deviation between the measured results of
the two tests. Even in a scenario where the two-sample test requirement
results in large deviation, manufacturers have the option to conduct
additional tests to increase the confidence of the sample mean.
Therefore, DOE has not modified its analysis to reflect any difference
between reported single-sample results and two-sample results in this
NOPR.
Regarding using the AMCA 230-15 technical errata, DOE agrees that
if manufacturer data did not correct for air density, it may overstate
a CFEI values for a given LDCF. DOE notes that current energy
conservation standards must be met using appendix U, which includes the
AMCA 230-15 technical errata. However, DOE has modified its analysis of
higher efficiency levels in this NOPR to reflect the possibility that
some manufacturer data on which DOE's analysis is based may not include
air density corrections. This modification is discussed in more detail
in section IV.C.2.b of this document.
3. Technology Options
In the preliminary market analysis and technology assessment, DOE
identified several technology options that would be expected to improve
the efficiency of ceiling fans, as measured by the DOE test procedure.
As previously discussed, standard and hugger ceiling fan efficiency is
based on a weighted average CFM/W metric, whereas LDCF and HSBD ceiling
fan efficiency is evaluated using CFEI. Standard and hugger ceiling
fans are also typically installed in residential applications whereas
LDCF and HSBD ceiling fans are typically installed in commercial and/or
industrial applications. The differences in metric, market, and utility
mean that the technology options for improving the efficiency as
measured by the DOE test procedure are unique for each product class.
In section 2.4.3 of the February 2022 Preliminary Analysis TSD, DOE
identified technologies for improving the efficiency of each ceiling
fan product class. The following sections discuss the technology
options identified in the February 2022 Preliminary Analysis,
stakeholder comment, and DOE's technology options included in this NOPR
analysis.
a. Standard and Hugger Ceiling Fans
Generally, at both low and high speeds an increase in standard and
hugger ceiling fan efficiency can be achieved by increasing airflow and
decreasing power consumption. In section 2.4.3 of the February 2022
Preliminary Analysis TSD, DOE identified three primary categories for
increasing standard and hugger fan efficiency: (1) more efficient
motors, including larger direct-drive single-phase induction motors and
brushless direct current (``BLDC'') motors; (2) more efficient ceiling
fan blades using common blade materials, twisted blades, and beveled
blades; and (3) advanced ceiling fan controls, including occupancy
sensors, wind sensors, and temperature sensors.
As discussed previously, moving a hugger fan further from the
ceiling is one way of increasing the CFM/W for these fans because it
increases airflow without reducing power consumption. Hugger ceiling
fans with fan blades very close to the ceiling can create a vacuum
between the fan blades and the ceiling that prevents air from returning
to the input side of the fan (i.e., the air choking effect). However,
certain consumers may prefer closely mount ceiling fans, despite the
reduced airflow, because they do not protrude as far into the ceiling.
DOE requested data regarding the impact that the distance between the
ceiling fan blades and the ceiling had on airflow.
In response, ALA conducted testing in which they measured high
speed CFM for multiple fan models while increasing the distance between
the fan blades and the ceiling. (ALA, No. 26 at pp. 9-11) ALA's said
that their test data showed that for most models the benefit of having
a fan closer to the ceiling than 10 inches decreases significantly for
each additional inch closer to the ceiling, and that hugger fan airflow
approximately doubled when the distance between the fan blades and the
ceiling increased from 6 inches to 10 inches. Id.
DOE interprets the ``benefit of having a fan closer to the ceiling
than 10 inches decreases significantly'' stated in ALA's comment to
mean that the airflow of a hugger fan decreases below 10 inches. DOE
does not interpret this text to mean that there is no reason for
consumers to want a fan that is mounted closer than 10 inches from the
ceiling. DOE has previously determined that ceiling fans mounted closer
to ceiling (i.e., hugger fans) warrant a separate energy conservation
standard. 86 FR 6826, 6841. The fact that fans exist on market that are
fewer than 10-inches from the ceiling indicate that there are some
consumer preferences for these fans, even if the airflow is somewhat
reduced. Specifically, the ability for that fan to be installed in
areas with low ceilings where additional clearance between the ceiling
fan and the floor are desired.
In this NOPR, DOE included increasing the distance from the ceiling
as a possible technology option for hugger ceiling fans but has
retained flexibility in its maximum technology options for fans to be
fewer than 10 inches from the ceiling.
b. Large-Diameter Ceiling Fans
An increase in LDCF efficiency is associated with a reduction in
power consumption while maintaining airflow. In section 2.4.3 of the
February 2022 Preliminary Analysis TSD, DOE identified three primary
technology options: (1) more efficient motors, including three-phase
geared induction motors, three-phase geared premium induction motors,
and permanent magnet direct-drive motors; (2) more
[[Page 40946]]
efficient ceiling fan blades, including twisted blades and blade
attachments; and (3) advanced ceiling fan controls, including occupancy
sensors, wind sensors, and temperature sensors.
AMCA commented that changing from a lower-efficiency geared motor
to an IE3 \21\ motor would improve the efficiency of a LDCF. (AMCA, No.
23 at p. 2) However, AMCA stated that all its members that manufacture
gear-driven ceiling fan already use IE3 motors. Id.
---------------------------------------------------------------------------
\21\ ``IE3'' is the International Electrotechnical Commission
(``IEC'') designation for premium efficiency motors. IE3, National
Electrical Manufacturers Association (``NEMA'') premium, and EISA
2007 standards for electric motors are often considered equivalent
efficiency requirements, although the actual values differ depending
on pole, horsepower and enclosure.
---------------------------------------------------------------------------
AMCA is correct that IE3 motors, or similarly efficient motors (for
those below 1 horsepower (``HP'') where IE3 levels do not exist) are
typical in the industry. Therefore, DOE is no longer considering three-
phase geared induction motors that are not premium efficiency as a
technology option in this NOPR. DOE did not receive any other comments
regarding other technology options and therefore has retained them in
this analysis.
In addition to the technology options identified in the February
2022 Preliminary Analysis, DOE has identified LDCF optimization as an
additional technology option evaluated in this NOPR for improving the
efficiency of LDCFs.
Section 1008 of the Energy Act of 2020, as codified in appendix U,
specifies that LDCF CFEI be calculated using AMCA 208-18 \22\ with
modifications. Broadly, the CFEI metric is the evaluation of the real-
world performance of a given fan relative to the performance of a
theoretical reference fan. In determining the power required for a
reference fan, the CFEI calculation assumes the power input that would
be required to produce the tested airflow, given the ceiling fan blade
span. AMCA 208-18 assumes four efficiency metrics for the reference
fan: (1) airfoil efficiency; (2) transmission efficiency; (3) motor
efficiency; and (4) controller efficiency.
---------------------------------------------------------------------------
\22\ ANSI/AMCA Standard 208-18 (``AMCA 208-18''), Calculation of
the Fan Energy Index, ANSI approved January 24, 2018.
---------------------------------------------------------------------------
The reference fan calculation in AMCA 208-18 assumes that airfoil
blades are 42 percent efficient and that controllers are 100 percent
efficient. Further, the reference fan calculation assumes the
transmission efficiency is consistent with a perfectly sized V-belt
drive. DOE notes that LDCF manufacturers typically use a two-stage
helical gearbox rather than a V-belt drive; however, in interviews,
manufacturers stated that the reference fan V-belt drive efficiency is
a reasonable approximation of a two-stage helical gearbox. The
reference fan calculation also assumes the motor efficiency is
consistent with a perfectly sized (relative to the required input
power) IE3 motor. DOE notes that IE3 motor specifications exist at
distinct motor sizes and not as a smooth curve across all possible
motor horsepower sizes. Therefore, the motor efficiency formula in AMCA
208-18 is only an approximation. Further, motors are typically sold at
distinct horsepower sizes, and therefore the motor size used will not
exactly align with the assumed reference fan horsepower and the
efficiency may vary.
To meet higher CFEI, some manufacturers may increase fan motor
efficiency, others may increase airfoil efficiency, and others may
increase transmission efficiency. Further, these various efficiencies
can compound with one another. A higher airfoil efficiency means that a
smaller gearbox and a smaller motor, with less energy loss, can be used
since more power input to the fan blades is converted to airflow.
For example, a 24-foot LDCF with a high-speed airflow of 230,000
CFM has a reference fan power consumption of 1,683 W. A fan with the
same efficiency characteristics of the reference fan would have a
CFEI100 equal to 1.00 and use 1,683 W at 100 percent speed. If a
manufacturer were to improve the airfoil efficiency by one percent
(from the reference value of 42 percent to 43 percent), that fan would
consume 1,647 W, corresponding to a CFEI equal to 1.022.
LDCFs are commonly offered as a fan ``family'' with one brand name
spanning a variety of blade spans. Typically, a single fan family will
be offered in 8-, 10-, 12-, 14-, 16-, 18-, 20-, and 24-foot diameters.
To reduce the number of custom parts, it is common for manufacturers to
use the same motor/transmission part across several LDCF blade spans.
While this practice reduces the burden on manufacturers, it means that
the motor size and blade angle is better optimized for certain blade
spans and less well optimized for others. This practice also results in
a range of CFEI values on the market even within a single fan family,
despite the fact that the motor size, transmission, and airflow may be
similar. Therefore, in addition to the technology options evaluated in
the February 2022 Preliminary Analysis, DOE included LDCF optimization
as a technology option in this NOPR for improving the efficiency of
LDCFs.
c. High-Speed Belt-Driven Ceiling Fans
Similar to LDCF efficiency, HSBD ceiling fan efficiency is achieved
by reducing power consumption while maintaining airflow. In the
February 2022 Preliminary Analysis, DOE stated that it did not have
sufficient data to analyze a baseline efficiency level or evaluate
higher efficiency levels for HSBD ceiling fans. DOE requested comment
on technology options for improving HSBD ceiling fan efficiency. DOE
received no comments regarding specific technology options for
improving the efficiency of HSBD ceiling fans.
Given the similarities between large, housed, air-circulating fan
heads and HSBD ceiling fans, DOE expects that technologies which
improve air-circulating fan head efficiency would also improve HSBD
ceiling fan efficiency. As such, the technology options evaluated for
HSBD ceiling fans in this NOPR align with the technology options
analyzed in the Fans and Blowers Notice of Data Availability regarding
air circulating fans published October 13, 2022 (``Air Circulating Fans
NODA''). The technology options analyzed in the Air Circulating Fans
NODA included: split-phase motors, permanent split-capacitor (``PSC'')
motors, high-efficiency PSC motors, electronically commutated motors
(``ECMs''), and aerodynamic redesign. 87 FR 62038, 62042.
d. Summary of Technology Options
For this NOPR, DOE has tentatively selected the technology options
listed in Table IV.1 for its NOPR analysis.
[[Page 40947]]
Table IV.1--Technology Options and Descriptions
------------------------------------------------------------------------
Technology option Description
------------------------------------------------------------------------
Small-diameter ceiling fans:
Larger direct-drive Direct-drive, single-phase, PSC motors
motors. with an external rotor are the most
common type of motor used in ceiling
fans. These motors typically have a
flat, pancake-style construction. Larger
direct-drive motors have increased mass
and/or use steel with better energy
efficiency characteristics for the
stator and rotor stack. These motors
also typically have improved lamination
design which increases the cross section
and/or length of the copper wiring
inside the motor.
BLDC motors.............. BLDC motors are electronically
commutated, synchronous motors with
permanent magnets embedded in or on
their rotors. BLDC motors are driven by
a converter plus inverter combination
control system, which converts the AC
power supplied by a building into DC
power and controls the power flow into
the motor to create continuously
switching currents in the motor phases.
BLDC motors can be much more efficient
than induction motors.
Blade materials.......... Use of alternative materials could enable
more complex and efficient blade shapes
(plywood vs. MDF vs. injection-molded
resin, for example). Further, some
ceiling fans use a natural material that
is somewhat porous (i.e., allows air to
pass through the blades without
contributing to airflow). Replacing this
natural material with more common
materials can increase ceiling fan
efficiency.
Occupancy, wind, and Occupancy sensors use technologies that
temperature sensors and detect the presence of people through
ceiling fan controls. movement or body heat. Wind sensors
measure airflow speed and can be used in
conjunction with a ceiling fan to
determine whether the fan is providing
the ideal amount of airflow in a room.
Temperature sensors measure the
temperature of a room. Ceiling fans can
be paired with these sensors and a
control system to automatically adjust
and optimize their power consumption.
Control systems can be mounted into the
wall to allow consumers to conveniently
turn ceiling fans off or slow their
speed as they leave a room or building,
reducing unnecessary power consumption.
Distance from the ceiling Ceiling fans mounted such that their
(hugger ceiling fans blades are closer to the ceiling are
only). unable to produce as much airflow as if
their blades were further from the
ceiling. Therefore, hugger ceiling fans
mounted close to the ceiling have a
reduced energy efficiency potential
compared to those with a greater
distance between the ceiling and the
blades. Increasing this distance
improves airflow and efficiency.
Large-diameter ceiling fans:
Permanent magnet direct- Permanent magnet motors are able to offer
drive motors. high-torque even at low-speeds and as
such are able to be used without a gear-
box. The rotor spins in a synchronous
manner (i.e., the motor rotates at the
same speed as the revolving magnetic
field), which is why these motors are
sometimes referred to as ``permanent
magnet synchronous motors.'' Permanent
magnet motors can be significantly more
efficient than induction motors. Several
types of permanent magnet direct-drive
motors are currently used in the large-
diameter ceiling fans industry,
including BLDC, permanent magnet AC, and
transverse flux.
Fan Optimization......... LDCFs are typically not optimized for
every blade span for which they are
offered. To minimize parts,
manufacturers often use the same motor/
transmission assembly across numerous
blade spans, rather than having an
optimized design for each blade span.
Optimizing the fan for each blade span
represents an opportunity to increase
efficiency.
Airfoil blades........... Airfoil blades increase ceiling fan
efficiency by reducing drag and
therefore reducing power consumption.
Airfoil blades use curved surfaces to
improve aerodynamics. The thickness is
not uniform, and the top and bottom
surfaces do not follow the same path
from leading edge to trailing edge.
Beveled blades........... Beveled fan 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, which reduce drag and increase
airflow efficiency.
Curved blades............ Curved blades increase ceiling fan
efficiency by reducing drag and
therefore reducing power consumption.
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.
HSBD ceiling fans: .........................................
Improved Motor Efficiency The efficiency of an HSBD fan can be
increased by improving the efficiency of
the HSBD motor. Several different motor
technologies exist, ranging from split-
phase motors, PSC motors, higher-
efficiency PSC motors, and ECMs.
Improved aerodynamic The efficiency of a fan can be increased
design. by improving the aerodynamic design of
its components. This includes optimizing
the blade shape to reduce drag and
optimizing the housing or guard design
to increase airflow.
------------------------------------------------------------------------
B. Screening Analysis
DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in commercially viable, existing
prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production of a technology in commercial products
and reliable installation and servicing of the technology could not be
achieved on the scale necessary to serve the relevant market at the
time of the projected compliance date of the standard, then that
technology will not be considered further.
(3) Impacts on product utility. If a technology is determined to
have a significant adverse impact on the utility of the product to
subgroups of consumers, or result in the unavailability of any covered
product type with performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as products generally available in the United States at the time,
it will not be considered further.
(4) Safety of technologies. If it is determined that a technology
would have significant adverse impacts on health or safety, it will not
be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving a
given efficiency level, it will not be considered further, due to the
potential for monopolistic concerns.
10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections 6(c)(3)
and 7(b).
[[Page 40948]]
In summary, if DOE determines that a technology, or a combination
of technologies, fails to meet one or more of the listed five criteria,
it will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed in
the following sections.
The subsequent sections include comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
1. Screened-Out Technologies
a. Standard and Hugger Ceiling Fans
In section 2.5 of the February 2022 Preliminary Analysis TSD, DOE
screened out the following technology option for small-diameter ceiling
fans: three-phase induction motors, blade shape, blade attachments,
occupancy sensors, wind sensors, temperature sensors, and brushed DC
motors. ALA commented that they agreed with the technologies DOE
screened out in the February 2022 Preliminary Analysis. (ALA, No. 26 at
p. 6)
In this NOPR, DOE has continued to screen these technology options.
Each of these technology options is discussed further in Section 4 of
the TSD.
In response to the May 2021 RFI, numerous stakeholders commented
that the DOE CFM/W metric for small-diameter ceiling fans penalizes
smart technologies that use standby power but does not credit any
reduction in active mode power consumption that results from
implementing advanced controls and smart technology. (AMCA, No. 9 at p.
9, 13; ALA No. 8 at p. 2) ALA and Center for the Built Environment
(``CBE'') recommended DOE credit products with smart technologies to
account for active mode energy reduction and system wide energy
reductions. (ALA, No. 8 at p. 2; CBE, No. 7 at pp. 2-4)) In section
2.4.3.3 of the February 2022 Preliminary Analysis TSD, DOE acknowledged
that smart technologies have the potential to reduce ceiling fan CFM/W,
on account of using additional power while in standby operation which
is accounted for in an operating hour-based weighted average power
consumption used in the denominator of the CFM/W metric, despite the
fact that smart technologies may reduce operating hours. In response to
stakeholder's suggestion that DOE's test procedure ``credit'' potential
operating hour reductions in the CFM/W metric to better convey to
consumers on the fan's label which products use less power, DOE noted
that smart technologies are currently incorporated into high-efficiency
products that easily exceed energy conservation standards, and
therefore a smart technology credit was not needed.
Regarding ceiling fan smart technology's ability to reduce building
wide energy usage, DOE noted in section 2.4.3.3 of the February 2022
Preliminary Analysis TSD that, while studies show there are potential
system-wide energy savings associated with incorporation of automated
controls, these studies reported connectivity challenges that led to
DOE questioning whether any potential savings of automated controls
would be fully realized by consumers. Therefore, DOE did not account
for any potential operating hour savings in the February 2022
Preliminary Analysis.
In response, Lutron stated that, while smart technologies are
typically used for high-efficiency fans, they can also be integrated
into lower-efficiency fans to save energy. (Lutron, No. 24 at pp. 3-4)
Lutron added that DOE's decision not to include operating hour savings
associated with smart technologies is based on a single field study of
a single fan model and that the issues described in this field study
are uncommon with smart technologies. (Lutron, No. 24 at p. 3)
DOE agrees that smart technologies can be incorporated into lower-
efficiency ceiling fans. In Table IV.2, DOE has provided example
numbers to demonstrate why a credit is not needed for theoretical
operating hour savings associated with smart technology.
Table IV.2--Example Smart Tech Power Consumption
----------------------------------------------------------------------------------------------------------------
Fan 1 AC Fan 2 AC Fan 3 BLDC Fan 4 BLDC
motor-- no motor--with motor--no motor--with
smart tech smart tech smart tech smart tech
----------------------------------------------------------------------------------------------------------------
Airflow High (CFM).............................. 4,500 4,500 4,500 4,500
Airflow Low (CFM)............................... 1,200 1,200 1,200 1,200
Power High (W).................................. 58.7 55.0 28.3 27.0
Power Low (W)................................... 12.0 11.0 3.9 3.5
Standby Power (W)............................... 0.0 1.4 0.7 1.4
CFM/W........................................... 80 77 157 149
----------------------------------------------------------------------------------------------------------------
In the CFM/W efficiency metric, the denominator is a weighted
average of high-speed power consumption, low-speed power consumption
and standby power consumption. In high-efficiency fans, such as fans
with BLDC motors, standby power energy consumption can make up a much
larger percentage of the denominator, because high-speed and low-speed
power are relatively low. Therefore, more efficient active mode fans
run the risk of appearing on consumer labels to be less efficient by
having lower CFM/W. In Table IV.2, Fan 3 has a higher certified CFM/W
than Fan 4, despite the fact that Fan 4 uses less power in active mode.
However, as stated both fans are very efficient and there is little
difference in power consumption. Therefore, there is no need to
``credit'' potential operating hour savings of Fan 4 such that it
appears equally or more efficient than Fan 3.
Regarding lower-efficiency ceiling fans, and specifically fans with
AC motors, DOE notes that high-speed and low-speed power consumption is
considerably more than fans with BLDC motors and therefore the standby
power usage contributes less to the denominator of the CFM/W metric and
the difference in certified CFM/W values is going to be relatively
small between fans with smart tech and fans without smart tech. In
Table IV.2, Fan 1 has a higher certified CFM/W than Fan 2, despite the
fact that Fan 2 uses less power in active mode. Because standby power
is a small component of total power consumption, there is only a 3 CFM/
W difference between Fan 1 and Fan 2 and there is little risk to
consumers in purchasing Fan 1, thinking it is more efficient than Fan
2. Therefore, there is no need to ``credit'' potential operating hour
savings of Fan
[[Page 40949]]
2 such that it appears equally or more efficient than Fan 1.
DOE therefore maintains its position that a CFM/W ``credit'' is not
needed for ceiling fans incorporating sensors or other smart
technologies for the purpose of communicating to consumers which
products are more efficient.
Regarding potential building-wide energy savings, DOE notes that
regardless of whether smart technologies/automated controls are
included in minimally compliant products or high-efficiency products,
the operating hours impact would be the same. DOE does not expect that
amended efficiency standards would impact the prevalence of smart
technologies in ceiling fans and has therefore screened out smart
technologies in this NOPR.
b. Large-Diameter Ceiling Fans
DOE screened out and did not receive comment on the following
technology options for LDCFs in the February 2022 Preliminary Analysis:
alternative blade materials; twisted blades; blade attachments;
occupancy, wind, and temperature sensors; and brushed DC motors. DOE
therefore continues to screen out these technology options in this
NOPR. These technology options are discussed further in Chapter 4 of
the TSD.
2. Remaining Technologies
Regarding DOE's decision to screen-in BLDC motors in the February
2022 Preliminary Analysis, several stakeholders suggested BLDC motors
may not satisfy DOE's screening criteria. ALA commented that a standard
level that eliminates ceiling fans with AC motors is not in the public
interest and recommended non-mandatory measures, such as consumer
education programs, a properly designed and promoted ENERGY STAR
specification, utility rebates or other manufacturer incentives
combined with a less stringent standard level can yield substantial
energy savings by accommodating consumer design and utility
preferences. (ALA, No. 26 at pp. 1-2) ALA added that when the ENERGY
STAR program moved to a level that could be met only by BLDC motor
ceiling fans, the result was a 70-percent reduction in ceiling fan
ENERGY STAR units sold, and HSSD fans were almost eliminated when DOE's
efficiency standard moved to requiring a DC motor. (ALA, No. 26 at p.
2) ALA commented that BLDC motor ceiling fans have a delayed start-up
where they may change rotational direction (from clockwise to
counterclockwise) which can be confusing and annoying to consumers.
(ALA, No. 26 at p. 5)
ALA further commented that DC motor manufacturing relies on ferrite
magnet materials and rare earth magnet materials sourced from China.
They added that a standard that requires BLDC motors would further U.S.
ceiling fan manufacturer reliance on Chinese imports. (ALA, No. 26 at
p. 14) In section 2.6.3.3 of the February 2022 Preliminary Analysis
TSD, DOE noted small-diameter ceiling fan manufacturers already rely on
China for the vast majority of their production and it does not expect
that a transition to BLDC motors would change this reliance. ALA
provided no comment suggesting that BLDC motor ceiling fans are
manufactured in a different location than AC motor ceiling fans.
Regarding ALA's comments that the ENERGY STAR level requiring BLDC
motors resulted in a significant reduction in shipments, DOE notes that
ENERGY STAR is a voluntary standard and ENERGY STAR products are
typically offered at a price premium. BLDC motor ceiling fans sold
today are not sold as the lowest price point products but as premium
products with marketing for their sleek designs, additional speed
controls, and quiet operation. In the case of amended efficiency
standards, consumers choose between purchasing a ceiling fan and not
purchasing a ceiling fan, not between purchasing an ENERGY STAR
certified fan and a non-ENERGY STAR certified fan. Products that do not
meet amended efficiency standards would no longer be an option for
consumers to choose. In this analysis, DOE has accounted for purchase
price elasticity between efficiency levels requiring BLDC motors and
the no-new standards case (as discussed in section IV.G of this
document), but DOE does not expect a 70-percent reduction in shipments
or a similar dynamic as stakeholders suggested.
In section 2.4.3.3 of the February 2022 Preliminary Analysis TSD,
DOE acknowledged that the control mechanism is different for AC motor
ceiling fans and BLDC motor ceiling fans but did not determine that
these differences represented a significant loss in consumer utility.
DOE noted that while some AC motor ceiling fans are controlled with a
remote control, the vast majority are controlled with electromechanical
controllers, e.g., a pull chain or a wired wall-control. BLDC motors,
by contrast, require an electronic controller to operate with either a
remote control or an electronic receiver.
In response, Lutron commented that setting an energy efficiency
level where AC powered fans are removed from the market would not be in
the public interest. (Lutron, No. 24 at p. 2) Lutron stated that the
near-universal compatibility of wall-mounted fan speed controls with AC
motors has allowed consumers to purchase fan speed controls for
reliability, aesthetics, potential energy savings, and integration
features. (Lutron, No. 24 at p. 2) Lutron commented that high-tech,
integrated lighting and fan control systems do not control only ceiling
fans, but can save significant energy in a home, and that a ceiling fan
efficiency standard that requires BLDC motors would result in the
elimination of this energy savings potential and consumer utility.
(Lutron, No. 24 at pp. 2, 3) Lutron provided an example of an ``All
Off'' button on an integrated control system that turns off all lights
and fans in a home as a consumer is exiting the home and stated that
without this feature, it's more likely for fans and lights to be left
on for an extended period while nobody is home. Id.
Lutron and ALA commented that the adoption of an efficiency
standard that requires BLDC motors would remove ceiling fans
controllable by wall-mounted fan speed controls from the market, since
quiet fan speed controls and variable speed controls cannot be
integrated with BLDC motors. (Lutron, No. 24 at p. 2; ALA, No. 26 at p.
7) Lutron commented that they do not believe that DOE has the authority
to set an efficiency standard that essentially requires BLDC motors
since such a standard could remove wall-mounted control features from
the market. (Lutron, No. 24 at p. 2) Lutron cited three specific
examples where consumer utility is lost if consumers cannot use wired-
wall mounted speed controls: (1) wall-mounted controls that incorporate
both light and fan speed controls in the same device; (2) fan speed
controls that coordinate with other switches and dimmers; and (3)
conveniently located wall-mounted controls that interrupt power to the
ceiling fan and its light kit. (Lutron, No. 24 at p. 2)
DOE agrees that existing wired wall controllers would not be
compatible with BLDC motors, and that BLDC motors instead rely on
wireless controls. However, DOE disagrees that this incompatibility
results in the loss of consumer utility. DOE disagrees that wall
mounted controls that incorporate both light and fan speed controls
would no longer be available if BLDC motors were required for ceiling
fans. Many BLDC fans on the market today are sold with wall controllers
that provide both
[[Page 40950]]
light and fan speed controls. Although wall controls for BLDC motors
are more similar to a remote control, the interface with consumers
offers the same functionality as a wired wall control.
In terms of style and design coordination with other switches and
dimmers in the house, DOE notes that the external design for BLDC motor
ceiling fan wall-controls are in many cases similar or identical to AC
motor ceiling fan wall-control designs. DOE agrees that consumers may
have to purchase a different brand wall-control from their light-
switch; however, the style could still match other switches.
Regarding Lutron's comment that conveniently located wall-mounted
controls that interrupt power to the ceiling fan and its light kit
would not exist with BLDC motors, DOE reiterates that these controls do
exist. BLDC control switches interrupt power to the fan in the same way
that any other switch would. While this feature is not universal for
BLDC wall controls, it is available for consumers who want this
feature.
DOE acknowledges that BLDC wall controls are incompatible with
existing AC motor wall controls. However, the consumer features
provided by BLDC motors are identical to the features provided by AC
motor wall controls--namely, a convenient, wall mounted system for
controlling ceiling fan speed and lights. Therefore, DOE has evaluated
BLDC motors as a design option for standard and hugger ceiling fans in
this NOPR. DOE accounts for differences in BLDC motor production costs
and manufacturer impacts in the downstream analyses.
Through a review of each technology, DOE tentatively concludes that
all of the other identified technologies listed in section IV.A.3 of
this document met all five screening criteria to be examined further as
design options in DOE's NOPR analysis.
DOE has initially determined that these technology options are
technologically feasible because they are being used or have previously
been used in commercially available products or working prototypes. DOE
also finds that all of the remaining technology options meet the other
screening criteria (i.e., practicable to manufacture, install, and
service and do not result in adverse impacts on consumer utility,
product availability, health, or safety, unique-pathway proprietary
technologies). For additional details, see chapter 4 of the NOPR TSD.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of ceiling fans. There are
two elements to consider in the engineering analysis: the selection of
efficiency levels to analyze (i.e., the ``efficiency analysis''); and
the determination of product cost at each efficiency level (i.e., the
``cost analysis''). In determining the performance of higher-efficiency
products, DOE considers technologies and design option combinations not
eliminated by the screening analysis. For each product class, DOE
estimates the baseline cost, as well as the incremental cost for the
product at efficiency levels above the baseline. The output of the
engineering analysis is a set of cost-efficiency ``curves'' that are
used in downstream analyses (i.e., the LCC and PBP analyses and the
NIA).
1. Representative Units
Ceiling fans are sold with a range of diameters or blade spans.
Rather than model every possible set of characteristics a ceiling fan
could have, DOE models certain representative units as the basis of its
analysis. In section 2.6.1 of the February 2022 Preliminary Analysis
TSD, DOE modeled three representative units for standard ceiling fans,
a 44-inch standard fan, a 52-inch standard fan, and a 60-inch standard
fan. For hugger ceiling fans, DOE modeled two representative units, a
44-inch ceiling fan and a 52-inch ceiling fan. These representative
units were consistent with the blade spans used in the January 2017 ECS
Final Rule, 82 FR 6826, 6852, and in section 2.6.1 of the February 2022
Preliminary Analysis TSD DOE stated that the units were still
representative of the current market. In section 2.6.1 of the February
2022 Preliminary Analysis TSD, DOE requested comment and data regarding
this assumption. In response, ALA commented that the blade spans used
in the preliminary analysis are representative. (ALA No. 26 at p. 9).
DOE did not receive any comment recommending alternative representative
units be used. Therefore, DOE has included in this analysis the
standard and hugger representative units and blades spans from the
February 2022 Preliminary Analysis.
In section 2.6.4 of the February 2022 Preliminary Analysis TSD, DOE
observed that the incremental costs to achieve higher efficiencies was
lower for larger blade spans. In order to better evaluate the larger
blade spans in the hugger ceiling fan product class, DOE has included
an additional 60-inch hugger ceiling fan representative unit in this
analysis in addition to the representative units and blade spans
analyzed in the February 2022 Preliminary Analysis.
For LDCFs, DOE modeled three representative blades spans in the
February 2022 Preliminary Analysis, an 8-foot fan, a 12-foot fan, and a
20-foot fan. In section 2.6.1 of the February 2022 Preliminary Analysis
TSD, DOE evaluated a high-airflow product and a low-airflow product at
each blade span. DOE requested comment on its consideration of a high-
and low-airflow product class and representative units. DOE also
requested data addressing why a 20-foot ceiling fan cost-efficiency
curve would not be representative of a 24-foot ceiling fan cost
efficiency curve.
As discussed in section IV.A.1.c of this document, DOE concluded
that evaluation of a high-airflow and low-airflow product classes was
not necessary. Manufacturers may market some LDCFs for the commercial
market and other LDCFs for the industrial market; however there is
overlap between these applications and one fan can typically be
substituted for another. In accordance with this determination, DOE has
removed the high- and low-airflow distinction in its representative
units and has modeled one LDCF fan at each blade span, with the power
usage modified to reflect typical values for the whole market.
Regarding differences between a 20-foot and 24-foot ceiling fan,
AMCA commented that within a given product line, the general
construction of the two products is similar but there may be cost
differences due to longer blades, a larger shipping container, and a
longer recommended extension-tube to provide additional clearance from
the ceiling to avoid restriction of intake air. (AMCA, No. 23 at p. 5)
DOE notes that all of the difference identified by AMCA are associated
with minor cost-differences between a 20-foot and 24-foot fan, not with
differences in the incremental costs associated with meeting amended
efficiency standards. While a 24-foot ceiling fan may be slightly more
expensive overall, the technologies (i.e., permanent magnet direct
drive motors, fan optimization, etc.) and incremental costs associated
with improving the efficiency of a 24-foot ceiling fan are going to be
similar to a 20-foot ceiling fan. Therefore, DOE has tentatively
determined that a 20-foot fan is sufficient to represent the cost-
efficiency relationship of 24-foot fans.
AMCA requested that DOE consider a ``very low power'' LDCF product
class, stating data from their survey of LDCF manufacturers shows that
lower-power LDCFs have high enough CFEI ratings and low enough standby
powers to warrant a separate product class from
[[Page 40951]]
high-volume LDCFs. (AMCA, No. 23 at pp. 2, 4) AMCA stated that these
lower-power LDCFs have lower maximum airflows, smaller motors, and
simpler controls than typical high-volume LDCFs. AMCA added that the
constants used in the CFEI metric were derived using high-volume low-
speed (``HVLS'') fans, so a different metric may be more appropriate
for ``very low power'' LDCFs. Id.
Regarding AMCA's comment that a different metric or different CFEI
constants may be needed for ``low-power'' LDCFs, DOE notes that the
CFEI metric and constants were prescribed at 42 U.S.C. 6295(ff)(6)(C)
for ``large-diameter ceiling fans'' without regard to the power usage
of those fans.
In DOE's review of the market, the number of ``low-power'' LDCFs
has increased since the January 2017 ECS final rule. These units are
often produced by manufacturers that predominately manufacture small-
diameter ceiling fans. In many cases, these ``low-power'' LDCFs
leverage an existing small-diameter ceiling fan design, but with a
diameter greater than 7 feet, and are therefore subject to LDCF
regulations. These ``low-power'' LDCFs tend to have much smaller
motors, blade spans between 7 and 10 feet, and are significantly less
expensive both to manufacture and to sell. Since these fans require
high torque to spin such large blades, they only use BLDC motors.
Although DOE is not considering a different product class for ``low-
power'' LDCFs in this analysis, DOE has evaluated an additional
representative unit for ``low-power'' LDCFs because of the unique power
consumption and selling price of these products. DOE notes that low-
power LDCFs are subject to the same test procedure and energy
conservation standards as all other LDCFs; however, the MIA analysis
considers the industry cash flow for these units to be in line with the
modeled costs for these units and not in line with the more expensive
manufacturer selling prices (``MSPs'') for all other LDCFs.
For HSBD ceiling fans, DOE stated in section 2.6.2.4 of the
February 2022 Preliminary Analysis TSD that it did not have sufficient
data to evaluate higher efficiency standards and therefore did not
model a representative HSBD unit. As discussed in section IV.A.1.b of
this document, DOE recently revised the definition of ceiling fan such
that a fan is only considered a ceiling fan if it has a blade span to
rpm ratio greater than 0.06. DOE notes that a belt-driven, housed air-
circulating fan shares many of the same performance characteristic with
HSBD fans. In general, most housed air circulating fans have smaller
diameters and higher maximum rpms than ceiling fans, however as the
diameter increases, the rpm of the fans tend to decrease such that
beyond a certain diameter, certain housed air circulating fans exceed
the 0.06 ratio. In that case, the primary distinction between an air
circulating fan and an HSBD fan is the presence of components that
enable an HSBD fan to be mounted from the ceiling. Therefore, DOE has
only considered the largest representative unit from the Air
Circulating Fans NODA for the HSBD analysis. Specifically, DOE selected
a 50-inch HSBD ceiling fan as a representative HSBD fan for its NOPR
analysis.
DOE requests comment and data on the distribution of HSBD blade
spans.
DOE requests comment and data regarding whether a 50-inch fan is
representative of an HSBD ceiling fan.
2. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended
using the design option approach to ``gap fill'' levels (to bridge
large gaps between other identified efficiency levels) and/or to
extrapolate to the max-tech level (particularly in cases where the max-
tech level exceeds the maximum efficiency level currently available on
the market).
In this analysis, DOE relied on a combination of these two
approaches to estimate the energy use and cost of meeting a given
efficiency level. As previously discussed, the efficiency of a ceiling
fan can be influenced by both the airflow and the power usage of the
models and the decision to attempt to meet amended standards via
increasing airflow versus decreasing power consumption will vary by
manufacturer and basic model.
a. Baseline Efficiency
For each product/equipment class, DOE generally selects a baseline
model as a reference point for each class, and measures changes
resulting from potential energy conservation standards against the
baseline. The baseline model in each product/equipment class represents
the characteristics of a product/equipment typical of that class (e.g.,
capacity, physical size). Generally, a baseline model is one that just
meets current energy conservation standards, or, if no standards are in
place, the baseline is typically the most common or least efficient
unit on the market.
Standard and Hugger Ceiling Fans
In the February 2022 Preliminary Analysis, DOE evaluated a baseline
unit as one that just meets the current energy conservation standards
for hugger and standard ceiling fans. DOE did not receive any comments
in opposition to this approach and therefore has followed the same
approach for assigning a baseline unit in this analysis.
DOE determined baseline energy consumption in the February 2022
Preliminary Analysis by dividing typical airflows for standard and
hugger ceiling fans by the baseline CFM/W. DOE evaluated higher
efficiency levels by assuming that manufacturers would maintain the
airflow of their products and meet efficiency standards by decreasing
power usage.
In response to the February 2022 Preliminary Analysis, ALA provided
data comparing ALA member EnergyGuide labels of baseline fans to
EnergyGuide labels of max-tech fans and stated that DOE is
overestimating the consumer savings between baseline and max-tech.
(ALA, No. 26 at p. 14).
In manufacturer interviews, manufacturers commented that to meet
higher efficiency levels for a given fan model without using a BLDC
motor, they would evaluate ways to both increase airflow and decrease
power consumption. Further, manufacturers pointed out that some of
their baseline fans are minimally efficient on account of having lower
airflow, not necessarily higher power consumption.
For this NOPR, DOE reevaluated its assumption that manufacturers
would maintain airflow when designing models with a higher CFM/W value
[[Page 40952]]
while still using AC motors. Specifically, DOE leveraged the California
Energy Commission Database (``CEC database''), which includes certified
CFM/W values, high-speed airflow, high-speed power measurements, low-
speed airflow, and low-speed power measurements, to identify change in
power consumption and change in airflow associated with higher
certified CFM/W values.
From the CEC Database, DOE observed that ceiling fans on the market
with higher CFM/W include a combination of higher airflow and lower
power consumption. In other words, baseline ceiling fans tend to have
relatively high power consumption and relatively low airflows, instead
of relatively high power consumptions and typical airflows.
For this NOPR analysis, DOE has maintained the baseline standard
and hugger ceiling fan as one that just meets current energy
conservation standards. However, DOE has modified the energy use
analysis to better align with market data which that suggests that
baseline market minimum ceiling fans have lower airflow in addition to
higher power consumption. This approach is described in greater detail
in Chapter 5 of the TSD.
DOE requests comment on the difference in airflow and power
consumption between fans at baseline efficiency and higher efficiency
levels while still using an AC motor.
Large-Diameter Ceiling Fans
In section 2.6.2.2 of the February 2022 Preliminary Analysis TSD,
DOE assigned a baseline efficiency for LDCFs as a fan that is minimally
compliant with current efficiency levels. DOE initially estimated a
baseline airflow for low- and high-airflow LDCFs. DOE then relied on
the minimally compliant CFEI100 and CFEI40 values to estimate the
baseline power consumption at maximum speed and 40-percent speed. DOE
used a cubic relationship to estimate the energy use at all other
operating speeds.
As noted in section IV.C.1 of this document, DOE is not evaluating
a separate high- and low-airflow LDCF in this NOPR. Therefore, DOE has
revised its baseline airflow to reflect a value representative of all
LDCFs, i.e. between the February 2022 Preliminary Analysis high- and
low-airflow models so that the LDCF baseline representative unit is
reflective of all LDCF fans.
For this NOPR analysis, DOE conducted additional manufacturer
interviews where it received additional data on LDCFs. As noted in
section IV.A.3.b of this document, manufacturers typically offer a
``family'' of LDCFs at multiple blade spans and do not optimize their
motor/transmission assembly across every blade span. Manufacturers
instead rely on using reasonably efficient motor/transmission designs
and airfoil designs to exceed energy conservation standards while
minimizing component inventory. As such, the least efficient products
on the market typically exceed the CFEI100 standard of 1.00 by a
considerable margin because manufacturers are not trying to just barely
meet energy conservation standards. Rather, they are trying to exceed
them by a sufficient amount so they can meet standards without having
to optimize every single model.
DOE observed a significant discrepancy in public CFEI40 values
depending on whether manufacturers marketed 40-percent speed power
consumption at high voltage (3-phase, 380-480 V) instead of lower
voltage (3-phase, 200-277 V). DOE notes that this discrepancy in power
consumption based on input voltage is much greater at low-speeds, while
measured power is nearly equal at 100-percent speed. See Chapter 5 of
the TSD for data demonstrating how test voltage impacts power
consumption.
Most LDCF basic models are rated to operate with both high and low
voltage. Operating voltage is not a consumer choice, because the
driving factor for operating voltage is whatever voltage a consumer has
at the fan's installation location. In the August 2022 TP Final Rule,
DOE clarified the test voltage required for certification after
receiving stakeholder feedback that the previous wording was unclear.
87 FR 50396, 50408. Further, technologies that improve high-speed
efficiency, such as airfoil design or better transmission efficiency
(i.e., permanent magnet direct-drive motors), are also likely to
improve the efficiency at CFEI40.
Since the least efficient fans on the market exceed the minimum
energy conservation standards, in this NOPR, DOE has revised its
baseline LDCF models to reflect the average CFEI100 and CFEI40 that
meet current standards but do not meet EL1 (i.e., the fans that would
have to be redesigned in the presence of an amended standard). DOE used
these average CFEI100 and CFEI40 values to calculate the baseline power
given the representative airflow. DOE used a cubic relationship to
estimate power consumption at all other operating speeds.
High-Speed Belt-Driven Ceiling Fans
In section 2.6.2.4 of the February 2022 Preliminary Analysis TSD,
DOE included preliminary market research on HSBD ceiling fans and noted
that it would evaluate whether energy conservations standards would be
technologically feasible and economically justified for these products.
DOE requested comment on the sales and distribution of efficiencies of
HSBDs currently on the market.
The CA IOUs recommended that DOE include HSBD ceiling fans in the
HSSD product class and large-diameter belt-driven ceiling fans in the
LDCF class, because belt-driven ceiling fans do not provide additional
utility in any consumer use case that would warrant a separate class.
(CA IOUs, No. 22 at p. 4) The Efficiency Advocates encouraged DOE to
evaluate potential standards for belt-driven ceiling fans. (Efficiency
Advocates, No. 25 at p. 3)
DOE did not receive any data regarding the current efficiency
distribution for HSBD ceiling fans. Given the overlap between large
air-circulating fan heads and HSBD ceiling fans, DOE relied on data for
large air-circulating fan heads to estimate the performance of HSBD
ceiling fans for its NOPR analysis. Specifically, DOE relied on
efficiency levels similar to those evaluated in the Air Circulating
Fans NODA (Docket No. EERE-2022-BT-STD-0002-0011).
DOE notes that, while the Air Circulating Fans NODA models multiple
air-circulating fans head diameters, HSBD ceiling fans need to have a
blade span/RPM ratio greater than 0.06 in order to meet the ceiling fan
definition. In general, smaller air circulating fans have relatively
high rpms and those rpms decrease as the blade span get larger.
Therefore, only the large air circulating fans with a blade span/RPM
ratio greater than 0.06, if sold in a ceiling mounted configuration,
would meet the definition of an HSBD ceiling fan. As such, DOE has
relied on only the 50-inch representative unit evaluated in the Air
Circulating Fans NODA for its analysis in this NOPR, since these fans
are most likely to ``circulate air''. DOE notes that the Air
Circulating Fans NODA presents efficiency in both CFM/W and fan energy
index (``FEI''). 87 FR 62038, 62043. To convert CFM/W and FEI to CFEI,
DOE relied on the Bioenvironmental and Structural System Laboratory
\23\ (``BESS Labs'')
[[Page 40953]]
database to identify the average airflow of a 50-inch fan. DOE
evaluated a baseline energy consumption for HSBD ceiling fans by
calculating high-speed power consumption from the CFM/W ratio at the
EL0 evaluated in the Air Circulating Fans NODA assuming average
airflow. From the airflow and power consumption, DOE calculated the
baseline CFEI value.
---------------------------------------------------------------------------
\23\ BESS Labs is a research, product-testing and educational
laboratory. BESS Labs provides engineering data to air in the
selection and design of agricultural buildings and assists equipment
manufactures in developing better products. Test reports for
circulating fans are publicly available at bess.illinois.edu/current.asp. (Last accessed November 22, 2022)
---------------------------------------------------------------------------
DOE requests data as to the average airflow of HSBD ceiling fans
and the range of airflows available.
b. Higher Efficiency Levels
As part of DOE's analysis, the maximum available efficiency level
is the highest efficiency unit currently available on the market. DOE
also defines a ``max-tech'' efficiency level to represent the maximum
possible efficiency for a given product.
Standard and Hugger Ceiling Fans
In section 2.6.2.1 of the February 2022 Preliminary Analysis, DOE
relied on market data to estimate typical airflows for ceiling fans at
both low and high speeds. DOE evaluated higher efficiency levels by
assuming that manufacturers would maintain the airflow of their
products and meet efficiency standards by decreasing power usage.
Specifically, DOE modeled two efficiency levels that assumed continued
use of AC motors, corresponding to a 10-percent and 20-percent
reduction in power consumption. DOE also evaluated two efficiency
levels that assumed a transition to BLDC motors, one that aligned with
ENERGY STAR levels and assumed a BLDC motor with inefficient fan blades
and a second efficiency level that corresponded to BLDC motors with
common blade materials.
DOE noted that one concern with assuming manufacturers would
maintain their airflow was that many manufacturers could increase fan
efficiency by moving hugger ceiling fans further from the ceiling,
results in increased airflow with no change in power consumption.
In response, ALA provided test data from eight ceiling fans
demonstrating that moving a ceiling fan from a very close mount, for
example 6 inches between the fan blades and the ceiling to 10 inches,
can double the CFM. (ALA, No. 26 at pp. 9-11)
For this NOPR analysis, DOE modified its energy use assumptions to
incorporate the fact that AC motor ceiling fans meet higher ELs by both
increasing airflow and decreasing power consumption. For standard
ceiling fans, DOE maintained the CFM/W levels of EL0, EL1, and EL2 from
the February 2022 Preliminary Analysis. However, instead of associating
an increase in efficiency with maintaining airflow and reducing power
consumption, DOE used a regression analysis to estimate the typical
airflow and typical power usage associated with a given CFM/W for AC
motor ceiling fans. Specifically, DOE modeled two different means of
achieving higher efficiency levels, one being via maintaining airflow
and reducing power consumption through more efficient motors and a
second approach via maintain power consumption and increasing airflow
through aerodynamic design and optimization. DOE then aggregated the
two approaches to align with the regression analysis. This analysis is
discussed in Chapter 5 of the TSD and better reflects the variety of
methods manufacturers can use to meet a given energy conservation
standard, including both decreasing power consumption and increasing
airflow.
For hugger ceiling fans, the ability to improve CFM/W without
necessarily decreasing power is more pronounced since manufacturers
have an additional option to move hugger ceiling fans further from the
ceiling. As ALA's test data demonstrate, each additional inch of
distance between a ceiling fan blades and the ceiling increases
airflow, until around 10 inches, where the airflow begins to level off.
To better reflect that a hugger ceiling fan is a similar product to a
standard ceiling fan, in this NOPR, DOE modified its EL1 and EL2 hugger
levels to better reflect the characteristics of a standard ceiling fan
moved closer to the ceiling. Specifically, DOE evaluated what the CFM/W
would be of an EL1 and EL2 standard ceiling fan if it (1) were moved
from 11 inches of space between the fan blades and the ceiling to 8
inches of space between the fan blades and the ceiling and (2) high-
speed airflow was reduced in accordance with the typical reduction in
airflow associated with moving a fan closer to the ceiling. DOE then
calculated the efficiency of that model to determine the EL1 and EL2
CFM/W for hugger ceiling fans.
To acknowledge that hugger ceiling fan and standard ceiling fan
models are not the same, DOE relied on CEC trendline data for hugger
ceiling fans to estimate the airflow and power consumption of typical
hugger ceiling fans on the market that meet a given efficiency level.
The full analysis demonstrating how the hugger ceiling fan efficiency
levels and energy consumption were calculated is discussed in Chapter 5
of the TSD.
DOE notes that, for both hugger ceiling fans and standard ceiling
fans, baseline ceiling fans in the February 2022 Preliminary Analysis
generally used more power than baseline fans in this NOPR analysis.
These revised values better reflect the multitude of choices
manufacturers have for meeting a higher efficiency level and are not
overly optimistic in assuming all CFM/W gains would be associated only
with decreasing energy consumption.
As noted in section 2.6.2.1 of the February 2022 Preliminary
Analysis TSD, DOE assumed two ELs associated with a transition to BLDC
motors. EL3 corresponded to the current ENERGY STAR levels and was
associated with BLDC motors with inefficient blades. EL4 corresponded
to BLDC motors with common blade materials. In the February 2022
preliminary analysis, the energy use at EL3 and EL4 was equivalent;
however, the inefficient blades were assumed to have less airflow,
resulting in a lower CFM/W.
While the February 2022 Preliminary Analysis generally assumed that
ENERGY STAR levels require BLDC motors, further investigation
demonstrated that many ceiling fans were capable of meeting ENERGY STAR
levels without transitioning to BLDC motors. Specifically, moving a
hugger ceiling fan further from the ceiling, while still being less
than 10 inches from the ceiling, could enable a manufacturer to meet
hugger ENERGY STAR levels without reducing power consumption.
To include an efficiency level associated with BLDC motors that is
unlikely to be met with certain AC fan models, DOE combined the two
BLDC efficiency levels from the February 2022 Preliminary Analysis into
one efficiency level in this NOPR analysis. The NOPR BLDC level is
higher than the ENERGY STAR level in the February 2022 Preliminary
Analysis, but lower than the max-tech level in the February 2022
Preliminary Analysis and is based on the minimum CFM/W values that
cannot be obtained with AC motors. Like the February 2022 Preliminary
Analysis, all blade designs and common blade materials currently on the
market for fans with BLDC motors will exceed the NOPR BLDC efficiency
level, many by a considerable margin. But the BLDC levels provide
sufficient flexibility for all blade designs and blade materials and
will permit hugger ceiling fans to have sufficient flexibility in terms
of distance between the fan blades and the ceiling.
In response to DOE's acknowledgment that many BLDC ceiling fans
will exceed the CFM/W of even the max-tech efficiency levels, the
Efficiency Advocates encouraged DOE to evaluate higher max-tech
efficiency levels,
[[Page 40954]]
consistent with the most efficient ceiling fans on the market.
(Efficiency Advocates, No. 25 at pp. 2-3) They stated that ceiling fans
currently available on the market more than double DOE's max-tech
efficiency level in the February 2022 Preliminary analysis, noting that
these models generally combine higher efficiency motors and more
aerodynamic blades. Id. Regarding the specific model the Efficiency
Advocates identified, DOE notes that linked manufacturer literature
cited by the Efficiency Advocates and the ENERGY STAR data cited by the
Efficiency Advocates report two different CFM/W values. Based on the
manufacturer literature for the basic model, the cited input power at
high-speed appears to actually be a weighted average value and not a
high-speed value.
DOE's review of the ceiling fan market indicates that for ceiling
fans using BLDC motors, the power usage is relatively constant, with
the key factor distinguishing between CFM/W being the amount of airflow
from a given fan at both low and high speed. In most settings, provided
the maximum airflow is sufficient to meet a consumer's needs, there is
not additional utility to providing more airflow beyond what a consumer
would want. Ceiling fan manufacturer balance fan aesthetics and airflow
in designing ceiling fans. DOE has not evaluated higher efficiency
levels with BLDC motors since those levels would limit minimum distance
that ceiling fan blades could be from the ceiling for hugger ceiling
fans (as described in section IV.A.3.a of this document), consumer
features (such as additional sensors, connectivity, or receivers) which
may decrease CFM/W by consuming additional power in standby mode (as
described in IV.B.1.a of this document), blade shape (which DOE has
screened out as a technology option due to the negative impacts on
consumer utility, as described in Chapter 4 of the TSD), and minimum
and maximum airflows (as described in Chapter 5 of the TSD). DOE has
provided examples of BLDC motor power usage and CFM/W ratings in
Chapter 5 of the TSD which demonstrate that BLDC power consumption is
approximately constant across all certified CFM/W values.
In addition to the technology-based efficiency levels described
previously, DOE observed that the BLDC technology option shows a
natural inclination for certain blade spans. Specifically, DOE observed
that for standard and hugger fans below 52'', fewer than 20 percent of
basic models included BLDC motors and an even smaller market share used
BLDC motors. However, for ceiling fans with blade spans greater than or
equal to 52'', there was a large increase in the share of basic models
using BLDC motors such at 60'', over 50 percent of basic models use
BLDC motors and at the largest blades spans, virtually all ceiling fans
use BLDC motors (See Chapter 5 of the NOPR TSD). This is because beyond
52'', manufacturers are typically designing and marketing products to
higher income consumers where the aesthetic appeals, smaller motor
sizes, and additional features associated with BLDC motors along with
the higher torque of BLDC motors creates a favorable market for BLDC
motors. As such, DOE has considered a step-function efficiency level
wherein ceiling fans that are less than or equal to 53'' in span use a
more efficient AC motor and ceiling fans that are greater than 53'' use
a BLDC motors.
Table IV.3--Standard and Hugger Ceiling Fan Efficiency Levels
------------------------------------------------------------------------
Efficiency level Description
------------------------------------------------------------------------
EL0....................................... Baseline.
EL1....................................... More Efficient AC Motor.
EL2....................................... More Efficient AC Motor.
EL3....................................... Market Based Step-Function.
<=53'' = More Efficient AC
Motors.
>53'' = BLDC Motors.
EL4....................................... BLDC Motor.
------------------------------------------------------------------------
Large-Diameter Ceiling Fans
As discussed previously, the CFEI metric takes into consideration
the performance of a given fan relative to the performance of a
reference fan. The reference fan assumes a certain airfoil,
transmission, motor, and controller efficiency. To meet a higher CFEI
value, some manufacturers may increase fan motor efficiency, while
others may increase their airfoil efficiency or transmission
efficiency. Further, these efficiencies are not necessarily independent
and can impact one another. For example, higher airfoil efficiency may
mean that a smaller motor can be used since more of the power input to
the fan blades is converted to airflow.
In the February 2022 Preliminary Analysis, DOE noted that it relied
on a combination of public data sources and aggregated confidential
data sources to evaluate the distribution of efficiencies available on
the market. DOE considered two efficiency levels in the February 2022
Preliminary Analysis: EL1, corresponding to a level that could still be
met with gear-driven IE3 motors, and EL2, corresponding to permanent
magnet direct-drive motors.
AMCA commented that ELs 1 and 2 in the February 2022 Preliminary
Analysis are too strict and that the results of a survey of its members
that manufacture LDCFs indicated that about 50 percent of LDCF products
would fail EL1 and 60 percent would fail EL2. They expressed concern
that implementing these ELs could damage the market. As a result, AMCA
requested that DOE reconsider its requirements for ELs 1 and 2. (AMCA,
No. 23 at p. 2) AMCA stated that, while EL1 in the February 2022
Preliminary Analysis was intended to represent a change from lower-
efficiency gearmotors to IE3 gearmotors, all AMCA members with gear-
driven ceiling fans already use IE3 motors. (AMCA, No. 23 at p. 2) In
relation to this, AMCA commented that the way the ELs were considered
in the February 2022 Preliminary Analysis TSD was erroneous. They
commented that the TSD wrongly assumed a CFEI100 value of 1.00 would be
met using an IE1 motor, but AMCA 208 specifies that a CFEI100 of 1.00
is based on an IE3 motor. AMCA's survey of its member companies and
their products indicated that no gear-driven HVLS ceiling fans use IE1
motors. AMCA stated that DOE's estimation that changing from an IE1
motor to an IE3 motor could reduce power consumption by 25 percent was
highly unlikely and not representative of the typical power savings
that could be achieved when switching from an IE1 motor to an IE3
motor. (AMCA, No. 23 at pp. 15-19) AMCA also commented that its survey
of its members that manufacture LDCFs indicated that 20 percent of
direct-drive LDCF models would fail EL1, even though EL1 is intended to
represent gear-driven fans with IE3 motors and EL2 is intended to
represent direct-drive fans. AMCA added that the apparent assumption in
the February 2022 Preliminary Analysis that switching from a gear-
driven to direct-driven setup improves efficiency is not always
correct. (AMCA, No. 23 at p. 2)
AMCA is correct that utilizing an IE1 motor as the assumed baseline
motor is a poor characterization of baseline LDCF efficiency. While it
is true that AMCA 208 assumes an IE3 motor in the reference fan and
that most manufacturers use an IE3 motor, the AMCA 208 calculations
also assume a perfectly-sized motor relative to the airfoil efficiency
and transmission efficiency of the reference fan. As noted in section
IV.C.2.a and demonstrated in data plots provided both in CA IOUs' (CA
IOU, No. 22 at p. 4) and AMCA's (AMCA, No. 9 at p. 16) public
[[Page 40955]]
comments, the least efficient LDCFs on the market tend to exceed the
energy conservation standards by a considerable margin. In this NOPR,
DOE has modified its baseline energy use analysis to reflect that with
an IE3 motor at baseline, manufacturers consistently exceed a CFEI100
of 1.00 and CFEI40 of 1.31.
DOE notes that manufacturer data show that EL1 represents an
efficiency level that is achievable with an IE3 motor. While AMCA's
comment states that 64.4 percent of gear-driven ceiling fans would fail
the February 2022 Preliminary Analysis EL1 level, that similarly means
35.6 percent of IE3 motors are capable of meeting EL1 levels.
Manufacturers did not identify unique characteristics about the gear-
driven ceiling fans that exceed EL1 levels from those that do not, and
AMCA comments suggest that both are using motors of similar
efficiencies.
As stated previously, many LDCFs are offered in a variety of blade
spans, often ranging from 8 feet to 24 feet, where the motor size used
for a given fan model is identical across several of the blade spans.
In interviews, manufacturers stated that LDCFs are typically not
optimized across every single blade span offered for sale to minimize
the number of parts. Rather, one motor and gearbox assembly will span
several blade spans. This ability to optimize ceiling fans for a given
blade span explains why some gear-driven ceiling fans can meet EL1
levels while others cannot. Since a third of gear-driven ceiling fans
in AMCA's database are capable of meeting EL1 levels, DOE has retained
its EL1 level in this NOPR but has recharacterized it as corresponding
to an IE3 motor with LDCF optimized for the given blade span. DOE has
modified its cost analysis to reflect that, while optimization of a fan
does not inherently have additional cost, there are production cost
impacts associated with having every blade span optimized, rather than
using the same motor-gearbox combination across a range of blade spans.
Regarding AMCA's comment that transitioning from a gear-driven fan
to a direct-drive fan does not inherently increase efficiency, this is
partially correct. While it is not impossible for a gear-driven ceiling
fan model to have a higher CFEI100 than a direct-drive fan, when all
other things are held equal, a direct-drive fan is not going to have
transmission losses. With no transmission losses, the highest CFEI
models on the market tend to be direct-drive models.
Like gear-driven ceiling fans, direct-drive ceiling fans have a
range of CFEI100 values depending on how well they are optimized for a
given application. AMCA commented that 54.1 percent of the direct-drive
fans in their database meet EL2 levels. Further, AMCA commented that
the average CFEI100 value for 20-foot and 24-foot ceiling fans is 1.44
and 1.41, respectively, both of which exceed EL2 levels. (AMCA, No. 23
at p. 5)
DOE notes that the percentage of models that would have to be
modified to meet a higher efficiency level is generally not indicative
of whether or not that efficiency level is economically justified.
Rather, economic justification is determined by analyzing the costs of
an amended standard relative to the cost savings of the more efficient
product. Further, the EL2 efficiency level is clearly technologically
feasible since 40 percent of models are already meeting DOE's max-tech
efficiency level.
Regarding the number of models that would have failed at the EL1
and EL2 levels evaluated in the February 2022 Preliminary Analysis, DOE
notes that stakeholders did not specify if the failure was on account
of not meeting CFEI100 values, not meeting CFEI40 values, or not
meeting some theoretical standby power limitation. As discussed
previously, DOE observed considerable difference in CFEI40 values
depending on the voltage manufacturers used to test their LDCFs. While
the test voltage has not changed, the August 2022 TP Final Rule
clarified the test voltage in response to stakeholder feedback that the
previous language was unclear. As such, some of the data stakeholders
are referencing as failing a given efficiency level may be based on
testing at the higher voltage configurations. Given that higher CFEI100
values tend to correlate with higher CFEI40 values, DOE only evaluated
higher CFEI100 efficiency levels and did not evaluate higher efficiency
standards at the CFEI40 value. DOE expects that the vast majority of
LDCFs exceed the current CFEI40 standards and those instances cited as
being close to the standard may have been tested at higher voltages.
This interpretation was supported by AMCA, who commented that the
average CFEI40 value for 20-foot and 24-foot fans was 2.19 and 2.31,
respectively, easily exceeding the current CFEI40 standards.
In DOE's energy use analysis for this NOPR, DOE relied on market
data to estimate the average CFEI40 values of fans at a given
efficiency level, rather than assuming LDCFs were minimally compliant
at the CFEI40 value.
AMCA commented that increasing the energy conservation standard
requirements for CFEI would have unintended and negative impacts on
both the ceiling fan industry and consumers. (AMCA, No. 23 at p. 1)
AMCA commented that a correction made to the input power calculation in
the AMCA 230-15 technical errata in 2021 would slightly increase the
calculated input power and therefore decrease the calculated CFEI. They
stated that, because this correction was made after the current energy
conservation standards were set, the current standard is more strict
than intended and that this should be considered when new energy
conservation standards are set. AMCA provided results from a study of
over 300 ceiling fan test reports showing that CFEI could decrease by
about 3 percent as a result of the correction. (AMCA, No. 23 at pp. 12-
13)
DOE notes that its test procedure includes the technical errata and
therefore manufacturers need to meet the current energy conservation
standards, namely, CFEI100 equal to 1.00 and CFEI40 equal to 1.31.
Given that some of the published data on which DOE's analysis is
derived may have been conducted in testing environments with differing
air densities, in this NOPR DOE has chosen to evaluate a more
conservative EL1 and EL2 by reducing the CFEI100 EL1 and EL2 levels by
0.03 relative to the February 2022 Preliminary Analysis values.
High-Speed Belt-Driven Ceiling Fans
As discussed previously, DOE relied on the October 2022 Fans and
Blowers NODA to evaluate efficiency levels for HSBD fans. Because the
CFEI metric is relative to a reference fan performance that accounts
for differences in airflow, DOE assumed the representative HSBD airflow
would remain constant at higher efficiency levels and calculated the
power consumption at each EL, maintaining the CFM/W values used in the
October 2022 Fans and Blowers NODA. DOE then calculated the CFEI value
based on the airflow and power consumption. See chapter 5 of the TSD
for additional details on this methodology.
c. Large-Diameter Ceiling Fan Standby Power
In the May 2021 RFI, DOE discussed that the CFEI metric does not
capture standby or off mode energy use and that DOE may need to develop
a separate standby mode metric for LDCFs. 86 FR 24538, 24544. In
section 2.6.2.3 of the February 2022 Preliminary Analysis TSD, DOE
noted that it had not identified a way to incorporate standby power
into the CFEI metric. Further,
[[Page 40956]]
DOE did not identify technology options that would reduce LDCF standby
power aside from removing energy saving controls and features. DOE did
not evaluate higher standby power efficiency levels in the February
2022 Preliminary Analysis because it had not identified technology
options for reducing standby power without impacting product utility
through removal of controller features.
In the February 2022 Preliminary Analysis, DOE used an average
standby power of 7 W, consistent with the January 2017 ECS Final Rule.
DOE stated that it was considering establishing a standby power limit
at 13 W, the maximum standby power observed in the market. DOE also
stated that it was considering a credit-based approach where fans that
are more efficient in active mode would be permitted to utilize more
standby power in standby operation.
In section 2.6.2.3 of the February 2022 Preliminary Analysis TSD,
DOE requested comment on technologies available to reduce standby power
without reducing consumer utility, the maximum standby power on the
market, potential future technologies that could increase standby
power, and any possible active mode-based credit for standby power
consumption.
Regarding specific technologies that increase or decrease standby
power, AMCA stated that the standby power consumed by a ceiling fan can
be affected by a wall controller powered from the variable frequency
drive (``VFD'') or separate wall plugin; a display used on the wall
controller; a display used on the VFD; cooling fans on the VFD;
communications devices; sensors; and an electronic filter. (AMCA, No.
23 at p. 5) AMCA added that increased drive efficiency paired with
larger heat sink to eliminate drive cooling fans, redesign/replacement
of the VFD to have cooling fans turn off under low loads, simplified
wall controllers with no display, elimination of communication devices,
and elimination of sensors could all reduce LDCF standby power. (AMCA,
No. 23 at p. 6) AMCA commented that sensors, wireless devices, network
communications, multi-fan/multiproduct controllers, grid-connected
demand-management controls, air disinfection, and lighting are
potential technologies that could be implemented into LDCFs in the
future which would further increase standby power. (AMCA, No. 23 at p.
8)
Regarding the current maximum standby power on the market, AMCA
provided data from their survey of member LDCF manufacturers showing
that the highest standby power consumption in its survey was 19 W for a
direct-drive fan and 12 W for a gear-driven fan. The average standby
power consumption was 9.8 W for a direct-drive fan and 6.8 W for a
gear-driven fan. (AMCA, No. 23 at p. 6) AMCA added that their analysis
of the LDCF models manufactured by member companies yielded an average
standby power of 8.8 W, rather than the 7 W that was previously
determined from a smaller dataset. Therefore, AMCA recommended that DOE
adjust the average standby power value to 8.8 W for LDCFs. (AMCA, No.
23 at p. 11) Additionally, AMCA stated that the results of the LDCF
model analysis indicated that standby power accounts for 1.1 percent to
2.5 percent of the total power consumed by LDCFs and commented that
enforcing strict standby power limits would place an unnecessary burden
on manufacturers. (AMCA, No. 23 at p. 11)
AMCA stated that about half the models currently on the market
would fail to meet a standard based only on an average standby power
limit. (AMCA, No. 23 at p. 7) For the 13 W standby power limit cited in
the February 2022 Preliminary Analysis, AMCA estimated that 18.1
percent of models would fail. (AMCA, No. 23 at p. 11) AMCA recommended
that DOE propose a less aggressive standby power requirement than what
was proposed in the February 2022 Preliminary Analysis, and revise its
analysis to produce new average and maximum standby power data
assumptions based on AMCA's LDCF manufacturer survey results.
AMCA supported DOE's suggestion for implementing a credit-based
system for regulating standby power, where LDCFs that achieve higher
active mode efficiencies are allowed more standby power. AMCA added
that this active-mode approach would allow manufacturers more
flexibility in LDCF design. (AMCA, No. 23 at p. 9) However, AMCA also
stated that the requirements proposed by DOE in the February 2022
Preliminary Analysis for this credit-based standby power approach were
too strict. AMCA supported this comment by providing data from their
survey of LDCF member companies that showed failure rates of 50.6
percent at EL1 and 60.5 percent at EL2, assuming a 7 W average was
used. Failure rates were 48 percent at EL1 and 59 percent at EL2 when a
standby power limit of 13 W was used. (AMCA, No. 23 at pp. 3, 9-10)
AMCA also recommended that DOE define the standby power allowance based
on the CFEI rating of a fan by starting at a standby power allowance of
15 W for a CFEI of 1.00 and increasing the standby power allowance by
1.0 W for every 0.02 increase in CFEI. (AMCA, No. 23 at pp. 10-11)
ALA commented that DOE should not set a separate standby power
standard for small-diameter fans. (ALA, No. 26 at p. 12)
42 U.S.C. 6295(gg)(2) requires DOE to incorporate standby power
into its existing test procedures, if technically feasible. Section 3.6
of appendix U specifies the current test procedure for measuring the
standby power consumption of LDCF. In the August 2022 TP Final Rule,
DOE clarified that testing shall be conducted with either the default
controller or, if multiple controllers are offered, the minimally
functional controller and that standby power consumption is not
required for the purpose of representations or certification until
compliance is required with an energy conservation standard. 87 FR
50396, 50408. To the extent voluntary representations are made in
writing or advertisements, appendix U is required, regardless of
whether compliance with an energy conservation standard is applied. See
42 U.S.C. 6293(c).
Section 42 U.S.C. 6295(gg)(3) requires DOE to incorporate standby
power into a single amended or new standard, if feasible. If not
feasible, DOE is required to prescribe a separate standard for standby
mode and off mode energy consumption, if justified under 42 U.S.C.
6295(o).
Regarding ALA's comment on standby power for small-diameter ceiling
fans, DOE notes that the existing CFM/W metric incorporates standby
power and therefore a separate evaluation of a standby power standard
for small-diameter ceiling fans is not needed.
One significant challenge in evaluating potential energy savings
associated with standby power for LDCF fans is that while appendix U
clarifies testing with the default controller or minimally functional
controller, there is no industry standardized default controller.
Depending on the intended application, a fan at default may include
other devices, such as a larger controller display or network
connectivity. Some of these sensors and devices may reduce energy
consumption overall. AMCA identified additional controller technologies
associated with connectivity with the greater grid and HVAC system that
would be appealing energy saving options in the future, but may not be
sold with the default controller today. Further, the only technologies
identified by AMCA for reducing standby power that do not explicitly
change consumer utility
[[Page 40957]]
include elimination or reduction of cooling fans in the VFD. While
these technologies could in theory be an option to reduce standby power
consumption, the easier path for manufacturers to meet a standby power
standard is by offering the product with fewer sensors and
communication devices. Therefore, imposing a standby standard could
increase overall energy consumption by causing manufacturers to forego
these devices with higher energy-saving capacity.
DOE notes that many of the drive specific technologies identified
by AMCA as potentially reducing standby power would also increase or
decrease controller losses in active mode. As noted, controller
efficiency is incorporated into the CFEI metric but assumed to be 100
percent for the reference fan. As manufacturers begin adding controller
losses, including drive cooling fans, the measured active mode
efficiency would decrease. Therefore, there is an existing incentive
for manufacturers to reduce drive losses, absent a separate standby
power standard.
Regarding AMCA's comment about a standby power efficiency standard
that credits active-mode performance being a possible logical approach,
DOE notes that standby power for LDCFs corresponds with the complexity
of the default controller and not with active mode performance. In
other words, increasing the CFEI of a given fan model would not be
correlated with higher standby power. As such, all the existing
concerns with reduced default controller features would apply with an
active mode, credit-based system.
DOE notes that the most cost-effective means for manufacturers to
reduce their standby power would be for manufacturers to remove
display, network connectivity, and sensors from their default
controller. Removing any or all these features would reduce standby
power consumption and lower controller costs. Therefore, there would be
no incremental costs associated with reducing standby power.
Simple controllers without displays, network connectivity, or
sensors exist today. Because there are additional manufacturing costs
associated with more advanced controllers, simple controllers are
typically the default controllers for fans targeting the lowest price
point. LDCFs targeting higher price points tend to offer controllers
with additional features to help justify their higher selling price.
LDCF manufacturers then offer several upgradable controllers with
increasing functionality, and consumers select the controller that has
their desired functionality.
As noted, Appendix U specifies testing standby power with the
default controller or minimally functional controller. Under a maximum
standby-power energy conservation standard, the most cost-effective way
for manufacturers to meet such standards would be to offer a new
minimally functional controller with fewer additional features. A
standby-power energy conservation standard would not impact the standby
power consumption of any of the upgradable controllers that consumers
are purchasing, only the minimally functional controller. Energy
savings for a standby power energy conservation standard would only be
achievable if consumers opted for a controller with less functionality.
As noted, consumers currently have the option to purchase fans with
controllers that offer less functionality, and typically at lower costs
than fans with more advanced controls. As far as DOE is aware,
information on consumer behavior regarding LDCF controllers is not
available, but DOE understands that consumers are already making the
decision to purchase LDCFs and controllers with additional
functionality, despite these products adding costs.
Therefore, DOE expects that any new standard for standby power for
LDCFs would result in manufacturers offering new minimally functional
controllers with reduced utility. These new controllers would likely
not result in energy savings, however, since consumers would continue
to select controllers with greater functionality when they purchase a
LDCF, as they do in the current market.
As such, in accordance with DOE's requirements at 42 U.S.C.
6295(gg)(3), DOE has tentatively determined not to analyze a separate
standard for standby mode and off mode energy consumption, since such a
standard would not lead to energy savings.
DOE requests comment and data regarding its tentative determination
that energy conservation standards for LDCF standby power would be met
by removing consumer features from the default controller, and that
this would likely not result in energy savings.
DOE requests comment and data on the primary factors that govern
LDCF controller purchasing decisions.
Regarding AMCA's suggestion to increase the average standby power
in DOE's modeling from 7 W to 8.8 W, DOE notes that the data provided
by AMCA show a range of standby power consumption where the maximum
standby power is considerably higher (19 W) than the median standby
power (7.1 W) or the mean standby power (8.8 W). Given that DOE
recently clarified in its August 2022 TP Final Rule that standby power
is to be measured with the default controller, DOE expects that a
subset of manufacturers may have provided data using a more advanced
controller, resulting in a maximum standby power that is considerably
greater than the median--potentially skewing the average. Because the
median standby power in AMCA's data (7.1 W) aligns closely with the 7 W
DOE has used in the February 2022 Preliminary Analysis, DOE has
maintained a standby power of 7 W in its energy use analysis. DOE notes
that standby power consumption is held constant across efficiency
levels and therefore only influences the overall energy use and not the
incremental energy use.
3. Cost Analysis
The cost analysis portion of the engineering analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
product, the availability and timeliness of purchasing the product on
the market. The cost approaches are summarized as follows:
[ssquf] Physical teardowns: Under this approach, DOE physically
dismantles a commercially available product, component-by-component, to
develop a detailed bill of materials for the product.
[ssquf] Catalog teardowns: In lieu of physically deconstructing a
product, DOE identifies each component using parts diagrams (available
from manufacturer websites or appliance repair websites, for example)
to develop the bill of materials for the product.
[ssquf] Price surveys: If neither a physical nor catalog teardown
is feasible (for example, for tightly integrated products such as
fluorescent lamps, which are infeasible to disassemble and for which
parts diagrams are unavailable) or cost-prohibitive and otherwise
impractical (e.g., large commercial boilers), DOE conducts price
surveys using publicly available pricing data published on major online
retailer websites and/or by soliciting prices from distributors and
other commercial channels.
In the present case, DOE conducted the analysis using a combination
of physical and catalog teardowns to build a ``bottom up''
manufacturing cost assessment. DOE discusses the specific cost
assessment for each product class below. The resulting bill of
materials
[[Page 40958]]
provides the basis for the manufacturer production cost (``MPC'')
estimates.
a. Hugger and Standard Ceiling Fans
In section 2.6.3 of the February 2022 Preliminary Analysis TSD, DOE
relied on physical and catalog teardowns to estimate costs for all
components of baseline 44-inch standard and hugger ceiling fans.
Specifically, DOE used manufacturer literature to estimate the motor
size of minimally compliant ceiling fans. Based on the typical motor
size of minimally compliant fans identified, DOE estimated the motor
housing cost and the ceiling fan mounting assembly costs. DOE assumed
that hugger and standard ceiling fans of equivalent blade span use
similar motors and that the primary difference in cost is the addition
of a down-rod in standard ceiling fans.
DOE then applied a variety of markups to the factory production
cost to get a manufacturer production cost. These markups included
factory overhead costs, a factory markup, tariffs, and shipping
costs.\24\
---------------------------------------------------------------------------
\24\ Factory costs, factory markups, and tariffs were derived
from manufacturer interviews. Shipping costs were derived from
shipping container costs and ceiling fan box sizes. These markups
are detailed in Chapter 5 of the TSD.
---------------------------------------------------------------------------
In response to the February 2022 Preliminary Analysis, the
Efficiency Advocates supported DOE's approach for estimating ceiling
fan manufacturing costs because it only reflected the cost associated
with features increasing energy efficiency, rather than including the
cost of other premium features, and noted they were not aware of
information indicating DOE had underestimated the increase to costs
from EL0 to EL4. (Efficiency Advocates, No. 25 at pp. 1-2)
Conversely, ALA commented that DOE overestimated the cost of EL0
standard and hugger ceiling fans and underestimated the cost of EL4
fans. ALA provided retail price data to show a larger price difference
in the current market. (ALA, No. 26 at p. 12) ALA also shared
aggregated incremental MPC estimates from a survey of nine ALA members,
and stated that the price differentials were considerably more than
those used in the February 2022 Preliminary Analysis TSD. ALA
recommended that DOE incorporate these estimates into future analysis.
(ALA, No. 26 at pp. 13-14)
Regarding ALA's comment on DOE underestimating the price of
baseline ceiling fans, DOE notes that the example fans provided by ALA
demonstrate that there are many ways to increase or decrease the cost
of a ceiling fan that are unrelated to efficiency (e.g., simpler or
more complex motor housing designs, lower cost blade materials, smaller
box-sizes, higher-volume products with lower margins, etc.). For
ceiling fans with AC motors in the ALA dataset, the lowest cost ceiling
fans are under $30 while other AC motor ceiling fans are over $130.
In interviews, DOE explored what was unique about ceiling fans in
the $30 to $50 range. Manufacturers cited use of simple designs to
reduce tooling costs, use of less expensive materials, small box sizes
for reduced shipping costs, and retailer emphasis on low-price points,
resulting in reduced markups and squeezing margins wherever possible.
During interviews, manufacturers did not identify specific
characteristics for these very low-cost ceiling fans that would change
the incremental costs associated with meeting higher efficiency
standards. Similarly, DOE did not identify any characteristics that
would lead these very low-cost ceiling fans to have a higher
incremental cost. Therefore, DOE expects that the increase in first
cost for both a $30 AC motor ceiling fan and a $130 AC motor ceiling
fan would be similar if transitioning to a more efficient motor.
Regarding the specific models ALA provided as examples of DOE
overestimating the price of max-tech ceiling fans, DOE notes that there
are certain characteristics of the BLDC fan prices that may not be
representative of the incremental costs in the presence of amended
efficiency standards. DOE notes that BLDC motors are not required to
meet energy conservations standards today. Therefore, the ceiling fans
with BLDC motors on the market today are typically targeting consumers
for whom minimum price is not the dominant purchasing factor. Most
ceiling fans with BLDC motors today include sleek designs, quiet
operation, and a greater number of speed controls as key selling
points. Consistent with manufacturers targeting a more affluent
demographic, current basic models with BLDC motors are more likely to
include more sophisticated designs, enhanced controls, and other
features that would allow for marketing to a higher price-point.
In DOE's review of the market, DOE observed numerous BLDC ceiling
fans marketed for retail at considerably lower costs than the BLDC
motor fans included in ALA's cited data. Additionally, in reviewing
similar products, DOE observed numerous residential pedestal fans on
the market that use BLDC motors and are offered at less than $100.
For this NOPR analysis, DOE has updated its cost model to reflect
updated material prices (e.g., blade material costs, motor housing
costs, motor costs, etc.). In evaluating higher efficiency levels that
still use AC motors, DOE modified its cost-analysis to reflect the
reality that higher efficiency levels would be met via a combination of
motor efficiency improvements and aerodynamic redesigns and
optimization. Similar to the efficiency analysis, DOE modeled two
different means of achieving higher efficiency levels, one being via
maintaining airflow and reducing power consumption through more
efficient motors and a second approach via maintain power consumption
and increasing airflow through aerodynamic design and optimization. In
modeling costs associated with using a more efficient motor, DOE
assumed that the motor housing cost and ceiling fan mounting assembly
costs would increase with a larger motor and scaled costs based on the
increase in motor weight. DOE assumed aerodynamic changes would not
increase manufacturer production costs, although they would still
require redesign costs similar that would be accounted for in the
manufacturer impact analysis. DOE then aggregated the two approaches by
assuming a similar weighting between the two approaches in the cost
model as was used in the efficiency analysis. DOE has described this
approach in detail in Chapter 5 of the TSD.
For max-tech efficiency levels, DOE supplemented its February 2022
Preliminary Analysis estimates for the incremental factory costs to
transition to BLDC motors with additional data from manufacturer
interviews.
Shipping Costs
DOE assumes that all small-diameter ceiling fans are manufactured
in Asia and must be shipped to the U.S. for sale. While shipping costs
vary by fan, DOE has traditionally applied a representative per-fan
shipping cost to all representative units in its calculation of
manufacturer production costs. In section 2.6.3.3 of the February 2022
Preliminary Analysis TSD, DOE noted that its shipping cost estimate was
derived from manufacturer interviews and was abnormally high at the
time because of supply chain related challenges.
ALA commented that DOE assumed a constant shipping cost of $7.77,
while ALA members pay $15.85 per unit from China on average, where most
residential fans are manufactured, and
[[Page 40959]]
do not expect lower shipping costs in the future. (ALA, No. 26 at p.
14)
DOE acknowledges that shipping costs have been highly variable over
the last 5 years. Prior to May 2020, the cost to send a 40-foot
shipping container from China to the U.S. was typically less than
$5,000. However, from May 2020 through mid-2022 there were
unprecedented high shipping prices where in some cases the cost to send
a 40-foot shipping container from China to the U.S. was exceeded
$15,000. In recent months, these costs have decreased and as of October
2022 are near their historical norm.
To better reflect future changes in shipping prices, and to account
for that the relationship between shipping cost and fan size, DOE
changed its shipping estimates from a flat cost to a variable cost
based on the cost of shipping a 40-foot container from China to the
U.S. While the cost of shipping an individual fan model will vary based
on that fan's specific design, DOE used manufacturer literature to
develop a relationship between ceiling fan blade span and shipping
container cube size. DOE then estimated the number of ceiling fan
models that could fit in each 40-foot shipping container and divided
that number by the cost to ship a 40-foot container from China to the
U.S. This methodology is described in more detail in Chapter 5 of the
TSD. The per fan shipping costs used in this analysis were $2.84 for
44-inch ceiling fans, $3.63 for a 52-inch ceiling fan, and $4.42 for a
60-inch ceiling fan.
DOE acknowledges that certain models may be able to fit more or
fewer ceiling fans into a shipping container. This may result in
certain models having higher or lower costs than estimated. However,
DOE notes that the manufacturer literature DOE relied on to develop the
relationship between cube size and blade span included ceiling fans
across a range of efficiencies and did not show any trend between
ceiling fan cube size and product efficiency, including for fans with
BLDC motors. Therefore, shipping costs influence overall MPCs and do
not influence the incremental costs associated with higher efficiency
standards.
Motor Markup
Ceiling fan manufacturers, in determining their manufacturer
production costs, typically apply a markup to account for estimated
post-market costs associated with a product, including warranty
coverage, product returns, and general customer support. DOE has
grouped these costs together into a markup percentage known as a
``motor markup''. While manufacturers typically do not vary their motor
markup for each individual product, they will use a different markup
for products or technologies that may have greater post-market costs
than average. For example, manufacturers use a different motor markup
for AC products and BLDC products on account of differing post-market
costs for consumers. Because of these different markups, DOE relied on
interview feedback to derive a different motor markup for AC motor fans
and BLDC fans.
Where exactly in the value chain these costs are accounted for
depends on a manufacturer's specific production chain. Some
manufacturers may apply a certain percentage to the total production
cost depending on the motor technology. Other manufacturers may apply
the markup directly to the motor. In the February 2022 Preliminary
Analysis, DOE stated that it was applying an 8 percent motor markup for
BLDC motor fans and a 1.2 percent motor markup for AC motor fans. DOE
explained that manufacturers apply a greater markup to BLDC fans
because greater post-market support is needed to accommodate the
greater complexity of BLDC control electronics.
DOE applied this markup to the motor and controller costs when
determining the factory production costs and noted that this was
consistent with the average manufacturer estimates derived during
manufacturer interviews conducted as part of both the January 2017 ECS
Final Rule and the February 2022 Preliminary Analysis.
In response, the CA IOUs asked DOE to reduce the warranty rate for
BLDC ceiling fans to be similar to the warranty rate for AC-powered
ceiling fans, citing the required three-year warranty rate for ENERGY
STAR-certified ceiling fans as evidence that manufacturers are
confident in their products. (CA IOUs, No. 22 at p. 1) The CA IOUs
added that improper installations and power surges often void the
manufacturer warranty for a product, so neither one of these two cases
can be used as justification for an increased warranty rate for BLDC
products. (CA IOUs, No. 22 at p. 2) The Efficiency Advocates encouraged
DOE to reevaluate the 8 percent warranty factor applied to DC motors
and cited the 2014 furnace fan rulemaking as evidence of little
difference in failure rate between AC and DC motors. (Efficiency
Advocates, No. 25 at p. 2; Dunklin, Public Meeting Transcript, No. 21
at p. 66) They noted that the magnitude of the difference was not
warranted and raised that an inappropriately high warranty rate may
artificially inflate the manufacturer costs of using DC motors. Id.
In contrast, ALA and Westinghouse agreed with the motor markups DOE
used in the February 2022 Preliminary Analysis for BLDC and AC motor
ceiling fans. (ALA, No. 26 at p. 6; Gatto, Public Meeting Transcript,
No. 21 at p. 66) ALA expanded that these costs are consistent with the
average manufacturer cost associated with the warranty repair/
replacement expenses based on actual ceiling fan manufacturer expenses
incurred ``after the sale''. (ALA, No. 26 at p. 6)
While the CA IOUs and the Efficiency Advocates may be correct that
a typical BLDC motor ceiling fan may not be several times more likely
to fail during the fan's warranty period, the motor markup does not
include only failures but instead is a general term encompassing all
post-market costs. During manufacturer interviews conducted in support
of this NOPR analysis, manufacturers uniformly agreed that they apply a
greater warranty rate for BLDC motor ceiling fans than they did for AC
motor ceiling fans. Manufacturers cited greater return rates due to
more complex installations, occasional defective electronics that were
covered by warranties, and greater customer support required for BLDC
ceiling fans.
In section 2.6.3.2 of the February 2022 Preliminary Analysis TSD,
DOE discussed that some manufacturers were including the BLDC motor
electronic controller outside of the motor housing (i.e., in the
ceiling fan canopy as opposed to within the motor housing), making it
more accessible to consumers and therefore easier to replace without
needing to replace the entire fan. However, DOE noted that this
practice was not yet widespread. In interviews, DOE explored whether
the practice of moving an electronic controller to the canopy was a
reasonable method of reducing the motor markup. In response,
manufacturers cited that while moving the BLDC motor electronics to the
canopy allows easier replacement of failed motor electronics, it
requires consumers to do more complicated wiring and run more wires
through the downrod, which requires increased consumer support and
replacement rates.
Based on both public comments and confidential manufacturer
interviews, an 8-percent motor markup for BLDC motor fans and a 1.2-
percent motor markup for AC motor fans is consistent with the current
markup rates applied to fans on the market today. Therefore, DOE has
maintained these markup rates in this NOPR analysis.
[[Page 40960]]
Wall Controls
As discussed in section IV.B.2.a.i of this document, existing wired
AC motor wall controls \25\ are incompatible with BLDC motors. In the
February 2022 Preliminary Analysis, DOE did not account for additional
costs associated with replacement of existing wired AC wall controls.
---------------------------------------------------------------------------
\25\ Wired wall controls are installed in similar locations to
light switches and are connected to the ceiling fan power input.
Wired wall controls include capacitors that allow for controlling a
ceiling fan speed from the wall rather than via pull-chain speed
controls.
---------------------------------------------------------------------------
ALA commented that 50 percent of existing ceiling fans are
controlled by a wall dimmer or a wall speed control switch, and such
controls are incompatible with BLDC motor ceiling fans and would need
to be replaced. (ALA, No. 26 at pp. 3-4) Lutron stated that replacing
AC motor-powered ceiling fans with fans powered by a BLDC motor would
have a negative impact on consumers that currently have a fan speed
control system installed. Lutron estimated the current installed base
of fan speed controls to be about 25 million units. (Lutron, No. 24 at
p. 3)
ALA commented that because BLDC wall controls are radio frequency
(``RF'')-based and proprietary to the ceiling fan manufacturer,
switching from one BLDC motor-based ceiling fan to another will also
require switching the wall control, possibly even if the prior wall
control is from the same manufacturer. (ALA, No. 26 at p. 4) ALA
further commented that because BLDC motor ceiling fan controls are
proprietary, consumers will be limited to the few solutions offered by
the particular manufacturer. (ALA, No. 26 at p. 4) Consumers may be
left with a mix of control solutions throughout their home that do not
function together or look uniform. Id. Further, ALA added that since
BLDC controls are proprietary,\26\ consumers who wish to replace a
broken or lost remote control may not be able to find a compatible
remote or wall control solution and thus may be forced to purchase a
new ceiling fan. (ALA, No. 26 at pp. 4-5) Hinkley commented that a
standard requiring DC motors would result in significant costs to
manufacturers to maintain DC motor controls and firmware after those
products have been discontinued so that the controls and firmware could
be used for replacement purposes. (Kachala, Public Meeting Transcript,
No. 21 at p. 77)
---------------------------------------------------------------------------
\26\ BLDC motors require electronic controllers to control
operating speed. Manufacturers typically develop controllers
specific to their fan models and replacements must include the
correct product for that fan model.
---------------------------------------------------------------------------
Hunter and ALA commented that because AC wall controls are
incompatible with BLDC wall controls DOE should incorporate the costs
of existing AC wall controls that need to be replaced into its
analysis. (Bacon, Public Meeting Transcript, No. 21 at p. 85; ALA, No.
26 at p. 4) ALA stated that the average BLDC motor wall controller
costs $14.22, which at surveyed markups results in a $35.72 retail cost
to consumers, before considering costs for consumers who utilize an
electrician. (ALA, No. 26 at p. 14)
ALA commented that ceiling fans with DC motors are typically more
difficult to install than ceiling fans with AC motors. ALA recommended
that DOE also include the cost of hiring an electrician in the
installation cost of BLDC fan wall controls for consumers not
knowledgeable or comfortable with changing their own wall controls and
the environmental costs associated with the disposal of millions of
obsolete wall control systems and their required RF control
replacements. (ALA, No. 26 at p. 4)
Conversely, the CA IOUs recommended that DOE exclude the cost of
proprietary wall switches for BLDC ceiling fans because many BLDC
ceiling fans are sold with a wall-mounted remote instead and can also
be installed with a pull chain. (CA IOUs, No. 22 at p. 2)
DOE notes that while AC motor wall controls are generally
universally compatible with pull-chain AC motor ceiling fans, there are
several scenarios where a manufacturer would have to replace a wired
wall-controller absent a BLDC motor purchase. Wired wall controls
cannot be used with remote controls and therefore any consumer
replacing a wired pull-chain ceiling fan with a remote-controlled
ceiling fan would have to replace the wired wall control. Wired wall
controls also require a separate power line for individual light
controls and fan speed controls. If a consumer is controlling a ceiling
fan without a light kit via a wired wall control and replaces that
ceiling fan with a ceiling fan with a light kit, that consumer would
likely need to replace their wired wall controller. Lastly, consumers
have natural turn-over of their wall controls, absent any standards. In
interviews, manufacturers estimated a typical lifetime for wall
controls ranging from 10 to 20 years. This is in line with the average
lifetime of ceiling fans, indicating that many wall controls are likely
replaced at the time of ceiling fan replacement, regardless of what
replacement fan is purchased.
As noted by the CA IOUs, BLDC ceiling fans are sold with a
controller. DOE considers the cost of this controller in its MPCs. As
such, consumers who purchase a BLDC motor ceiling fan do not need to go
out and purchase a separate wall controller or worry about
compatibility between models, since the controller is sold with the
fan.
If a consumer has an existing wired wall control and purchases a
BLDC motor ceiling fan, they will have to purchase a different switch
as a replacement for their existing wired wall control. If a consumer
wanted to maintain the functionality of a wall control, they would
likely purchase a BLDC motor ceiling fan with a wall control. If the
consumer does not care to maintain the wall control, they likely would
replace their wired wall control with a simple on/off toggle switch.
Simple on/off toggle switches commonly retail for less than one dollar.
Given the low cost of simple on/off toggle switches, the multiple
scenarios where a consumer would replace a wired wall switch absent any
amended efficiency standard, and the fact BLDC motor ceiling fans are
sold with controllers, DOE has not included additional costs for wall
control replacements in its NOPR analysis.
Regarding stakeholder comments that DOE should include the costs of
more complicated installation, DOE notes that BLDC motor ceiling fans
are commonly sold with the controller in the motor housing. This is
done to simplify consumer installation. As such, the number of wires to
connect are generally identical between AC and DC motor ceiling fans
and therefore DOE has not included differing installation costs. DOE
notes that some BLDC motor ceiling fans include the controller in the
ceiling fan canopy. This approach makes it easier for a consumer to
replace the motor, but is more challenging to install. DOE notes that
its BLDC motor markup includes the additional markup associated with
more difficult installations, accounted for as higher consumer support
costs.
Lastly, DOE notes that existing manufacturer literature markets
wired wall controls as ``universal.'' Further, remote control ceiling
fans, both AC motor and BLDC motor, do not typically market a lack of
compatibility with existing wired wall controls as something that needs
to be considered or overcome by consumers. This suggests that this
issue has not been a concern for consumers. For the reasons stated
previously, DOE has not incorporated additional wall-control
[[Page 40961]]
replacement costs, aside from the general MPC costs for a BLDC
controller required for all BLDC motor ceiling fans, in this NOPR.
b. Large-Diameter Ceiling Fans
Like small-diameter ceiling fans, DOE relied on physical and
catalog teardowns to build a ``bottom up'' manufacturing cost
assessment for large-diameter ceiling fans in the February 2022
Preliminary Analysis. DOE modeled the change in costs associated with
going to a higher EL as a transition from a three-phase geared
induction motor to a premium three-phase geared induction motor. DOE
also modeled different motor sizes depending on whether the
representative unit was a low-airflow LDCF or a high-airflow LDCF.
In accordance with stakeholder feedback to not establish separate
product classes for low-airflow and high-airflow LDCFs, DOE has modeled
only one cost for each blade span LDCF unit. Consistent with this
approach, DOE has modified its motor sizing to be reflective of a 0.5
HP motor for 8-foot fans, 1 HP motor for 12-foot fans, and 2 HP motor
for 20-foot fans.
As noted, all AMCA members typically use ``premium'' efficiency
motors across all gear-driven products. Nevertheless, the gear-driven
products on the market span a range of CFEI100 values, some of which
exceed DOE's EL1 value, even when the motor size and motor efficiency
are approximately constant. As noted, manufacturers expressed in
interviews an ability to optimize fans for a given diameter. This is
observable in the manufacture literature, where the CFEI of a given
model with identical blade shapes and motor size will vary across blade
spans. Manufacturers stated that in order to reduce the number of
parts, the motor gearbox size and angle of blade connection will be
held constant across numerous blade spans, even though optimizing for
every specific blade span may lead to higher efficiency. DOE has
revised its cost associated with a transition from EL0 to EL1 to be
reflective of maintaining motor size and motor efficiency but adding
additional optimization of the fan.
Optimization of an LDCF does not inherently have additional costs
to the consumer. There are additional costs to manufacturers to
develop, redesign, and reoptimize fans, and DOE models these costs in
its manufacturer impact analysis. But functionally all the material
parts are the same. DOE teardown models take into account purchase
volume discounts that a manufacturer will receive. In a scenario where
manufacturers must purchase specific motor-gearbox combinations
optimized for every blade span, these volume discounts are less.
Accordingly, DOE modeled the incremental production cost increases
associated with a transition from EL0 to EL1 as corresponding to a one-
third reduction in motor-gearbox purchase volume quantity. This cost
analysis reflects the fact that while gear-driven motors can achieve
EL1 levels, they will require additional redesign and re-optimization,
which will increase the manufacturer production costs of those models.
For DOE's max-tech efficiency level, DOE assumed a transition to a
permanent-magnet direct-drive motor of the same size as the gear-driven
motor.
c. High-Speed Belt-Driven Ceiling Fans
Like the efficiency analysis for HSBD ceiling fans, DOE did not
have specific data on the incremental costs associated with improving
the efficiency of HSBD fans. Therefore, DOE used the October 2022 Fans
and Blower NODA for 50-inch fans to estimate the incremental costs
associated with higher efficiency levels.
d. Manufacturer Markup
To account for manufacturers' non-production costs and profit
margin, DOE applies a multiplier (the manufacturer markup) to the MPC.
The resulting manufacturer selling price (``MSP'') is the price at
which the manufacturer distributes a unit into commerce. DOE developed
an average manufacturer markup during the January 2017 Final Rule by
examining the annual Securities and Exchange Commission (SEC) 10-K
reports filed by publicly-traded manufacturers primarily engaged in
ceiling fan manufacturing. DOE then adjusted these manufacturer markups
based on feedback manufacturers provided during manufacturer
interviews. 82 FR 6826, 6845. The manufacturer markups used in this
NOPR analysis are discussed in more detail in section IV.J.2.d of this
document and in chapter 12 of this NOPR TSD.
4. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of energy efficiency (in
terms of CFM/W or CFEI) versus MPC (in dollars). DOE developed curves
for each representative unit. The methodology for developing the curves
started with determining the energy consumption for baseline equipment
and MPCs for this equipment. Above the baseline, DOE implemented design
options using the ratio of cost to savings. Design options were
implemented until all available technologies were employed (i.e., at a
max-tech level). See TSD Chapter 5 for additional detail on the
engineering analysis.
D. Markups Analysis
The markups analysis develops appropriate markups (e.g., retailer
markups, distributor markups, contractor markups) in the distribution
chain and sales taxes to convert the MSP estimates derived in the
engineering analysis to consumer prices, which are then used in the LCC
and PBP analysis and in the manufacturer impact analysis. At each step
in the distribution channel, companies mark up the price of the product
to cover business costs and profit margin.
For standard and hugger ceiling fans, consistent with the February
2022 Preliminary Analysis, DOE characterized four distribution channels
to describe how such fans pass from manufacturers to consumers, as
follows:
Manufacturer [rarr] Home Improvement Center [rarr] Consumer
Manufacturer/Home Improvement Center (in-store label) [rarr]
Consumer
Manufacturer [rarr] Wholesaler [rarr] Contractor [rarr]
Consumer
Manufacturer [rarr] Showroom [rarr] Consumer
For HSBD and LDCFs, DOE considered the following distribution
channels:
Manufacturer [rarr] Dealer [rarr] Customer
Manufacturer [rarr] In-house Dealer [rarr] Customer
DOE assumed that the markup for in-house dealers and conventional
dealers is the same; Therefore, the overall markup for these two
channels is also the same.
DOE developed baseline and incremental markups for each actor in
the distribution chain. Baseline markups are applied to the price of
products with baseline efficiency, while incremental markups are
applied to the difference in price between baseline and higher-
efficiency models (the incremental cost increase). The incremental
markup is typically less than the baseline markup and is designed to
maintain similar per-unit operating profit before and after new or
amended standards.\27\
---------------------------------------------------------------------------
\27\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, using the
same markup for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While such an outcome is
possible, DOE maintains that in markets that are reasonably
competitive it is unlikely that standards would lead to a
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------
[[Page 40962]]
ALA disagreed with DOE's incremental markups methodology and
assumption that current margins would drop, and argued that according
to ALA survey results BLDC motor ceiling fans (EL 4) have nearly
identical markups as baseline (EL 0) ceiling fans with no indication
this practice of maintaining fan markups across underlying technologies
would change in the future. ALA added that DOE's justification of the
incremental markup methodology in appendix 6A of the TSD, which
compares ceiling fans to LCD TVs, is incorrect because the underlying
electronics for TVs are shared with a myriad of technologies and
products. (ALA, No. 26 at p. 3)
DOE's incremental markup approach assumes that an increase in
profitability, which is implied by keeping a fixed markup when the
product price goes up, is unlikely to be viable over time in reasonably
competitive markets. DOE recognizes that home centers are likely to
seek to maintain the same markup on appliances in response to changes
in manufacturer sales prices after an amendment to energy conservation
standards for ceiling fans. However, DOE believes that retail pricing
is likely to adjust over time as retailers are forced to readjust their
markups to reach a medium-term equilibrium in which per-unit profit is
relatively unchanged before and after standards are implemented. To
showcase the hypothesized conditions of efficiency standard
implementation using real-world data, DOE would ideally analyze a
household durable that has experienced a consistent rise in price, such
as one that may occur as a result of standards. However, DOE was not
able to obtain such data for household durable goods. In appendix 6A,
the LCD TV data was not meant to be an equivalent case to ceiling fans;
rather it illustrated a scenario when the cost of goods sold
experienced a significant change (in this case, LCD TV costs were
decreasing), the retailer's gross margin did not remain fixed. In other
examples where DOE was able to acquire time series data demonstrating
upward price trends, even though the industries are not directly
related to ceiling fans, the observed percent retail gross margins have
decreased during the same time.
DOE requests comment and data on the gross margin trends for
household durables relevant to ceiling fans that experienced an
increase in the cost of goods sold.
DOE acknowledges that home-center markup practices in response to
amended standards are complex and varying with business conditions.
However, DOE's analysis necessarily only considers changes in appliance
offerings that occur in response to amended standards. Given the medium
to high level of market competition among industry groups involved in
appliance retail industry, DOE continues to maintain that its
assumption that standards do not facilitate a sustainable increase in
profitability is reasonable.\28\ See appendix 6A for more details.
---------------------------------------------------------------------------
\28\ IBISWorld. US Industry Reports. (Last accessed November 22,
2022.) https://www.ibisworld.com.
---------------------------------------------------------------------------
DOE relied on 10-K reports from the U.S. Securities and Exchange
Commission (SEC) and economic data from the U.S. Census Bureau to
estimate average baseline and incremental markups. Specifically, DOE
used 10-K reports for major home improvement centers and the 2017
Annual Retail Trade Survey for the ``building material and supplies
dealers'' sector to develop home improvement center markups,\29\ the
2017 Annual Wholesale Trade Survey for the ``household appliances, and
electrical and electronic goods merchant wholesalers'' sector to
estimate wholesaler markups,\30\ 2021 RSMeans Electrical Cost Data to
derive contractor markups,\31\ and 10-K reports for key industrial
supplier to develop dealer markups.
---------------------------------------------------------------------------
\29\ U.S. Census Bureau, Annual Retail Trade Survey. 2017. (Last
accessed November 22, 2022.) www.census.gov/programs-surveys/arts.html.
\30\ U.S. Census Bureau, Annual Wholesale Trade Survey. 2017.
(Last accessed November 22, 2022.) www.census.gov/awts.
\31\ RSMeans data. (Last accessed November 22, 2022.) https://www.rsmeans.com/.
---------------------------------------------------------------------------
ALA provided an aggregated Home Center markup of independent label
fans from a survey of nine ALA members. ALA pointed out that these
markups are higher than those used for DOE in the preliminary analysis,
and suggested that DOE adopt these higher home center markups in
subsequent analysis. (ALA, No. 26 at p. 14)
DOE appreciates the data submitted by ALA. DOE's home improvement
center markup methodology relies on publicly available data from the
U.S. SEC's 10-K reports and the U.S. Census Bureau, which is a
preferred approach as the results can be replicated and the data
sources are updated on a regular basis. Moreover, the baseline markup
value derived from the government data is in the similar range of the
value provided by ALA, indicating that the 10-K report and U.S. Census
are reliable sources for estimating the industry-wide markup value.
For more details on the distribution channels and the markups used
by DOE, see chapter 6 of this NOPR TSD.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of ceiling fans at different efficiencies in
representative U.S. single-family homes, multi-family residences, and
commercial buildings, and to assess the energy savings potential of
increased ceiling fan efficiency. The energy use analysis estimates the
range of energy use of ceiling fans in the field (i.e., as they are
actually used by consumers). The energy use analysis provides the basis
for other analyses DOE performs, particularly assessments of the energy
savings and the savings in consumer operating costs that could result
from adoption of amended or new standards.
ALA commented that DOE is overestimating the consumer savings
between EL 0 and EL 4 fans in all but one category, based on a survey
of ALA members. (ALA, No. 26, at p. 14)
DOE's energy use analysis for standard and hugger ceiling fans
considers daily operating hours, the fraction of time spent in each
mode, power consumption at each mode from the engineering analysis, and
an assumed consumption of 0.7 W while not in active mode for AC ceiling
fans with a remote and all BLDC ceiling fans. While DOE appreciates
ALA's efforts in conducting this survey, the information presented by
ALA does not provide the assumptions used in calculating the average
consumer savings between the baseline (EL 0) and max-tech (EL 4)
ceiling fans (other than the assumed average electricity price of
$0.12/kWh). Moreover, while there is no indication that the subset of
ALA members who opted to complete the survey are representative of the
broader standard and hugger ceiling fan markets, DOE has revised its
efficiency analysis in this NOPR to better reflect the power
consumption of baseline (EL 0) ceiling fans. This revision should
better align the EnergyGuide label's implied savings with those of
DOE's analysis in this NOPR.
1. Inputs for Standard and Hugger Ceiling Fans
a. Sample of Purchasers
As in the February 2022 Preliminary Analysis, DOE has included only
residential applications in the energy use analysis of standard and
hugger ceiling fans. DOE used the Energy Information Administration
(EIA) 2020 Residential Energy Consumption Survey
[[Page 40963]]
(RECS) \32\ to choose a random sample of households in which new
ceiling fans could be installed. RECS is a national sample survey of
housing units that collects statistical information on the consumption
of, and expenditures for, energy in housing units, along with data on
energy-related characteristics of the housing units and occupants. RECS
collected data on nearly 18,500 housing units, and was constructed by
EIA to be a national representation of the household population in the
United States. In creating the sample of RECS households, DOE used the
subset of RECS records that met the criterion that the household had at
least one ceiling fan. DOE chose a sample of 10,000 households from
RECS to estimate annual energy use for standard and hugger ceiling
fans. Because RECS provides no means of determining the type of ceiling
fan in a given household, DOE used the same sample for the standard and
hugger product classes.
---------------------------------------------------------------------------
\32\ U.S. Department of Energy-Energy Information
Administration. 2020 Residential Energy Consumption Survey (RECS).
2020. (Last accessed November 11, 2022.) https://www.eia.gov/consumption/residential/data/2020/.
---------------------------------------------------------------------------
b. Operating Hours
Consistent with the February 2022 Preliminary Analysis, DOE used
data from an LBNL study \33\ that surveyed ceiling fan owners to
estimate the total daily operating hours for each sampled RECS
household. In that study, the authors asked a nationally representative
sample of more than 2,500 ceiling fan users to report their ceiling fan
operating hours for high, medium, and low speeds, as well as frequency
of use throughout the year and hours of operation during the most-used
month of the year and a month of relatively little ceiling fan use. The
LBNL study reported a distribution of operating hours, with an average
of 6.45 hours of operation per day. The operating hours for each sample
household were drawn from the distribution of operating hours reported
in the LBNL study, and further apportioned into operating hours at
different fan speeds. As in the February 2022 Preliminary Analysis, DOE
estimated that standard and hugger ceiling fans are operated 33 percent
of the time in active mode on high speed, 38 percent on medium speed,
and 29 percent on low speed. For each household sampled from RECS 2020,
the fraction of time that the fan spends at each of low and medium
speed was drawn from a uniform distribution over the interval between
zero and twice the average fraction of time for that speed. Because the
sum of fractions of time spent at each speed must equal one, the
fraction of time spent at high speed is simply given by the remaining
fraction. DOE then used these fractions to apportion the total hours of
use into hours of use at high, medium, and low speeds. This method of
sampling the amount of time for each operating mode is consistent with
that of the February 2022 Preliminary Analysis as well as the January
2017 ECS Final Rule. AMCA commented that AMCA does not have data that
contradicts DOE's assumptions for the breakdown of operating hours.
(AMCA, No. 23 at p. 11)
---------------------------------------------------------------------------
\33\ Kantner, C.L.S., S.J. Young, S.M. Donovan, and K. Garbesi.
Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.--Results of a
Survey on Amazon Mechanical Turk. 2013. Lawrence Berkeley National
Laboratory: Berkeley, CA. Report No. LBNL-6332E. (Last accessed
November 11, 2022.) http://www.escholarship.org/uc/item/3r67c1f9.
---------------------------------------------------------------------------
c. Power Consumption at Each Speed and Standby
DOE determined the power consumption at high, medium, and low speed
for each representative fan size in the engineering analysis (see
section IV.C of this document). These values are shown in chapter 5 of
the NOPR TSD. DOE estimated that all ceiling fans with BLDC motors
expend standby power, and that 15 percent of non-baseline standard and
hugger ceiling fans with AC motors come with a remote, and therefore
consume power while in standby mode. DOE further estimated 0.7 watts as
the power consumption value for standby for all representative fans
belonging to the standard and hugger product classes, based on testing
conducted in association with developing the engineering analysis.
2. Inputs for Large-Diameter and High-Speed Belt-Driven Ceiling Fans
a. Sample of Purchasers
As in the February 2022 Preliminary Analysis, DOE has included only
commercial and industrial applications in the energy use analysis of
large-diameter and HSBD ceiling fans. Although some large-diameter and
HSBD fans are used in residential applications, they represent a very
small portion of the total market for large-diameter and HSBD ceiling
fans. Similar to standard and hugger ceiling fans, DOE developed a
sample of 10,000 fans to represent the range of large-diameter and HSBD
ceiling fan energy use using RECS 2020. DOE did not use the 2018
Commercial Buildings Energy Consumption Survey (CBECS) because CBECS
does not identify buildings with ceiling fans. By using RECS 2020 to
construct the large-diameter and HSBD ceiling fan samples, DOE
implicitly assumed that the geographic distribution of commercial and
industrial ceiling fans is equivalent to that of residential ceiling
fans.
b. Operating Hours
DOE drew 10,000 samples from a uniform distribution between 6 hours
per day and 18 hours per day when calculating the energy use of large-
diameter ceiling fans. Without data indicating that the operating hours
of HSBD ceiling fans differ from those of large-diameter ceiling fans,
DOE used the same uniform distribution to draw operating hours for HSBD
ceiling fans.
DOE assumed that all large-diameter ceiling fans spend an equal
amount of time operating at 20 percent speed, 40 percent speed, 60
percent speed, 80 percent speed, and 100 percent speed. This assumption
for large-diameter ceiling fans aligns with the February 2022
Preliminary Analysis. Due to insufficient data to estimate the time
spent at each speed for HSBD ceiling fans, DOE assumed HSBD ceiling
fans operate at high speed for all time spent in active mode. This
assumption aligns with the one made in the January 2017 Final Rule for
HSSD ceiling fans. AMCA commented that it does not have data that
contradicts DOE's assumptions for the breakdown of operating hours.
(AMCA, No. 23 at p. 11)
DOE requests comment and data as to whether the assumed operating
hours and operating speeds are appropriate for HSBD ceiling fans.
c. Power Consumption at Each Speed and Standby
DOE determined the power consumption for a given representative
large-diameter ceiling fan by the weighted average of power consumption
at the five speeds discussed previously, where each speed was weighted
by an equal fraction of time spent at that speed. The power consumption
for HSBD ceiling fans was assumed to be the power consumption at high
speed. DOE also considered all large-diameter and HSBD ceiling fans to
have 7 W standby power, and that all hours not spent in active mode
were in standby mode.
3. Impact on Air-Conditioning or Heating Equipment Use
As in the February 2022 Preliminary Analysis, DOE did not account
for any interaction between ceiling fans and air-conditioning or
heating equipment. In DOE's assessment, it appears unlikely that
consumers would substantially increase air-conditioning use or forego
purchasing a ceiling fan in lieu of an air-conditioning unit due to a
modest
[[Page 40964]]
increase in the initial cost of a ceiling fan as a result of an amended
energy conservation standard. DOE agrees that ceiling fans have the
hypothetical potential to be an inexpensive and effective replacement
for air-conditioning use; however, the interaction between ceiling fan
use and air-conditioning use is unlikely to be different in the case of
amended standards than it would be in the no-new-standards case. The
shipments analysis projects a modest change of shipments for standard
and hugger fans of less than two percent in the compliance year under
the proposed standard level, and it is unclear what would motivate
consumers to change their air-conditioner's set point or otherwise
change their air-conditioning behavior if they own a ceiling fan
regardless of whether there is a new or amended standard. Therefore,
the interaction between ceiling fan use and air-conditioning use would
be unlikely to be different in the case of amended standards than it
would be in the no-new-standards case.
DOE requests comment and data on the impact on air-conditioning or
heating equipment use from the adoption of more stringent efficiency
standards on ceiling fans.
Chapter 7 of the NOPR TSD provides details on DOE's energy use
analysis for ceiling fans.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
ceiling fans. The effect of new or amended energy conservation
standards on individual consumers usually involves a reduction in
operating cost and an increase in purchase cost. DOE used the following
two metrics to measure consumer impacts:
[ballot] The LCC is the total consumer expense of an appliance or
product over the life of that product, consisting of total installed
cost (manufacturer selling price, distribution chain markups, sales
tax, and installation costs) plus operating costs (expenses for energy
use, maintenance, and repair). To compute the operating costs, DOE
discounts future operating costs to the time of purchase and sums them
over the lifetime of the product.
[ballot] The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
at higher efficiency levels by the change in annual operating cost for
the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of ceiling fans in the absence of new
or amended energy conservation standards. In contrast, the PBP for a
given efficiency level is measured relative to the baseline product.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of
housing units and commercial and industrial buildings. As stated
previously, DOE developed household samples from the 2020 RECS for
standard and hugger ceiling fans, and assumed the geographic
distribution of large-diameter and HSBD ceiling fans used in commercial
and industrial applications is equivalent to that of residential
ceiling fans. For each sampled consumer, DOE determined the energy
consumption for the ceiling fan and the appropriate energy price. By
developing a representative sample of consumers, the analysis captured
the variability in energy consumption and energy prices associated with
the use of ceiling fans.
Inputs to the calculation of total installed cost include MPCs,
manufacturer markups, retailer and distributor markups, and sales
taxes. Consistent with the approach used in January 2017 ECS Final Rule
(section IV.F.1 of this document)--which was supported at the time by
Westinghouse, ALA, and BAS--DOE assumed that installation costs do not
vary by efficiency level and therefore were not considered in the
analysis. Inputs to the calculation of operating expenses include
annual energy consumption, energy prices and price projections, product
lifetimes, and discount rates. DOE created distributions of values for
product lifetime, discount rates, and sales taxes, with probabilities
attached to each value, to account for their uncertainty and
variability. Repair and maintenance costs were assumed not to vary by
efficiency level, and therefore were not considered in the analysis.
The computer model DOE uses to calculate the LCC relies on a Monte
Carlo simulation to incorporate uncertainty and variability into the
analysis. The Monte Carlo simulations randomly sample input values from
the probability distributions and ceiling fan user samples. For this
rulemaking, the Monte Carlo approach is implemented in the Python
programming language. The model calculated the LCC for products at each
efficiency level for 10,000 consumers per simulation run. The
analytical results include a distribution of 10,000 data points showing
the range of LCC savings for a given efficiency level relative to the
no-new-standards case efficiency distribution. In performing an
iteration of the Monte Carlo simulation for a given consumer, product
efficiency is chosen based on its probability. If the chosen product
efficiency is greater than or equal to the efficiency of the standard
level under consideration, the LCC calculation reveals that a consumer
is not impacted by the standard level. By accounting for consumers who
already purchase more-efficient products, DOE avoids overstating the
potential benefits from increasing product efficiency.
DOE calculated the LCC and PBP for consumers of ceiling fans as if
each were to purchase a new product in the first full year of
compliance with new or amended standards. For the purpose of its
analysis, DOE assumed new and amended standards would apply to ceiling
fans manufactured 3 years after the date on which any new or amended
standard is published. At this time, DOE estimates publication of a
final rule in the second half of 2024. Therefore, for purposes of its
analysis, DOE used 2028 as the first full year of compliance with any
new or amended standards for ceiling fans.
Table IV.2 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet model, and of
all the inputs to the LCC and PBP analyses, are contained in chapter 8
of the NOPR TSD and its appendices.
[[Page 40965]]
Table IV.4--Summary of Inputs for the LCC and PBP Analysis *
------------------------------------------------------------------------
Average or typical
Inputs value Characterization
------------------------------------------------------------------------
Total Installed Cost Inputs
------------------------------------------------------------------------
Product Price................. Varies by Single-point
distribution value.
channel, efficiency
level, and product
class.
Sales Tax..................... 7.3%................. Varies by region.
------------------------------------------------------------------------
Operating Cost Inputs
------------------------------------------------------------------------
Power Rating.................. Varies by efficiency Single-point
level and product value.
class.
Operating Hours............... Standard and hugger Distribution (see
ceiling fans: 6.45 chapter 7 of
hrs/day (average). this TSD for
Large-diameter and details).
HSBD ceiling fans:
12.0 hrs/day
(average)..
Electricity Prices............ Residential: 0.15 $/ Vary by region
kWh (avg), 0.14 $/ for each sector.
kWh (mgl).
Commercial: 0.11 $/
kWh (avg), 0.11 $/
kWh (mgl)..
Industrial: 0.09 $/
kWh (avg), 0.08 $/
kWh (mgl)..
Electricity Price Trends...... AEO 2023 reference Vary by region
case. for each sector.
Product Lifetime.............. Mean: 14.6 years..... Weibull
Median: 14.0 years... distribution.
Discount Rate................. Residential sector: Residential: Vary
4.3%. by household
Commercial sector: income.
6.7%.. Commercial/
Industrial sector: Industrial:
7.2%.. Distribution.
First Full Year of Compliance. 2028................. Single-point
value.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
in the sections following the table or in chapter 8 of the NOPR TSD.
The Efficiency Advocates commented that the reported average LCC
savings obscure the fact that a consumer's LCC savings are always
greatest at the highest evaluated EL. (Efficiency Advocates, No. 25 at
p. 3)
The LCC savings values DOE reports take into consideration the
efficiency level of the ceiling fan each consumer would purchase in the
absence of a new efficiency standard. This approach acknowledges that
setting an efficiency standard at a given efficiency level may not
impact all consumers. In the example analysis provided by the
Efficiency Advocates, the reported LCC savings were compared to the
difference in average LCC between each efficiency level and the
baseline (EL 0) ceiling fan. This comparison is problematic because the
results DOE reports in the LCC table (not the LCC savings table) assume
the entire sample of 10,000 consumers purchase ceiling fans at each of
the ELs. As a result, comparing the difference in average LCCs from the
LCC table inherently assumes that every consumer would purchase a
ceiling fan at EL 0 in the absence of a standard, which does not agree
with DOE's market research. For details on the market efficiency
distribution, see section IV.F.8 of this document.
1. Product Cost
To calculate consumer product costs, DOE multiplied the MPCs
developed in the engineering analysis by the markups described
previously (along with sales taxes). DOE used different markups for
baseline products and higher-efficiency products, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency products.
DOE used a price trend to account for changes in the incremental
BLDC motor price that are expected to occur between the time for which
DOE has data for BLDC motor prices (2021) and the first full year of
compliance (2028). For details on the price trend analysis, see section
IV.G of this document. In order to account for the possibility that
prices will not decrease, DOE performed a sensitivity analysis in which
the price of fans with BLDC motors does not decrease. DOE applied sales
tax, which varies by geographic location, to the total product cost.
DOE collected sales tax data from the Sales Tax Clearinghouse \34\ and
used population projections from the Census Bureau \35\ to develop
population-weighted-average sales tax values for each state in the
assumed first full year of compliance (2028).
---------------------------------------------------------------------------
\34\ Sales Tax Clearinghouse Inc. State Sales Tax Rates Along
with Combined Average City and County Rates. June 6, 2022. (Last
accessed November 22, 2022.) http://thestc.com/STrates.stm.
\35\ U.S. Department of Commerce--Bureau of the Census. Table
A1: Interim Projections of the Total Population for the United
States and States: April 1, 2000 to July 1, 2030. Population
Division, Interim State Population Projections. 2005. (Last accessed
November 22, 2022.) https://wonder.cdc.gov/wonder/help/populations/population-projections/SummaryTabA1.xls.
---------------------------------------------------------------------------
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. As in the February
2022 Preliminary Analysis, DOE assumed that installation costs do not
vary by efficiency level. Therefore, DOE did not include installation
costs in its analysis.
ALA and Lutron commented that if DOE were to adopt an efficiency
standard requiring the use of brushless DC motors, wall-mounted fan-
speed controls would become obsolete and/or require expensive
retrofitting. This is because DC motors employ proprietary controls
that are internal to the motor assembly and do not receive control
signals through electrical wiring, but through a proprietary wireless
remote. (ALA, No. 26, at pp. 1-2, 7; Lutron, No. 24 at p. 2) ALA
further commented that even if switching between DC ceiling fans from
the same manufacturer, the older existing DC wall control may no longer
work because it has outdated technology. Consequently, consumers may
also be forced to purchase a new ceiling fan if they lose or break
their remote. (ALA, No. 26, at pp. 4-5)
ALA conducted a survey of nine ALA members, which resulted in an
estimate of $14.22 manufacturing cost for an average DC wall
controller, or a $35.72 retail cost to consumers, including markups but
barring installation cost. (ALA, No. 26, at p. 14) ALA added that
because of the installation difficulty, consumers may utilize an
electrician to install a DC motor ceiling fan. ALA recommends that DOE
determine the percentage of consumers who utilize electricians to
install wall controls, and factor this into their installation costs.
(ALA, No. 26, at p. 6)
In contrast, the CA IOUs commented that DOE should not include the
cost of wall controls for DC ceiling fans because many DC ceiling fans
are offered with a
[[Page 40966]]
wall-mounted remote-control. (CA IOUs, No. 22 at p. 2)
DOE appreciates the insights of ALA, Lutron, and the CA IOUs
regarding ceiling fan wall controls. As the CA IOUs mentioned, DOE
finds that new DC motor ceiling fans typically come with remote
controls and an option to wall-mount them. Thus, DOE is not considering
the cost of DC wall controls themselves, nor the cost of retrofitting
existing AC fan wall controls in its analysis. The remote controls
packaged with DC-motor ceiling fans provide the same utility to
consumers that have an existing wall control. Additionally, DOE does
not have data quantifying how often consumers replace a ceiling fan due
to a broken or lost remote, or what percentage of consumers hire
electricians to install their fans. DOE continues to invite comments
and data from stakeholders on this issue.
ALA added that the impact analysis doesn't attempt to assign value
to the environmental costs associated with the disposal of millions of
obsolete wall control systems and their required radio frequency (RF)
control replacements. (ALA, No. 26, at p. 4) ALA is correct that DOE's
preliminary analysis did not assign value to environmental costs
associated with the mass disposal of obsolete wall control systems.
Because DC-motor ceiling fans are typically sold with remote controls
that provide the same utility as a consumer's existing ceiling fan wall
control, DOE does not believe that a mass disposal of obsolete wall
control systems would occur should a standard be set that requires DC-
motor ceiling fans. Moreover, DOE believes that any existing wall
controls that are disposed of would be treated as standard electronic
waste, because such controls do not contain hazardous materials. In
this NOPR, DOE has therefore continued to not evaluate environmental
costs associated with disposal of obsolete wall control systems.
DOE requests comment and data on its assumption that installation
costs do not vary by efficiency level for a given product class.
3. Annual Energy Consumption
For each sampled consumer, DOE determined the energy consumption
for a ceiling fan at different efficiency levels using the approach
described previously in section IV.E of this document.
4. Energy Prices
Because marginal electricity price more accurately captures the
incremental savings associated with a change in energy use from higher
efficiency, it provides a better representation of incremental change
in consumer costs than average electricity prices. Therefore, DOE
applied average electricity prices for the energy use of the product
purchased in the no-new-standards case, and marginal electricity prices
for the incremental change in energy use associated with the other
efficiency levels considered.
DOE derived electricity prices in 2022 using data from EEI Typical
Bills and Average Rates reports.\36\ Based upon comprehensive,
industry-wide surveys, this semi-annual report presents typical monthly
electric bills and average kilowatt-hour costs to the customer as
charged by investor-owned utilities. For the residential sector, DOE
calculated electricity prices using the methodology described in
Coughlin and Beraki (2018).\37\ For the commercial and industrial
sectors, DOE calculated electricity prices using the methodology
described in Coughlin and Beraki (2019).\38\
---------------------------------------------------------------------------
\36\ Edison Electric Institute. Typical Bills and Average Rates
Report 2022. 2022. Winter 2022, Summer 2022: Washington, DC.
\37\ Coughlin, K. and B. Beraki. 2018. Residential Electricity
Prices: A Review of Data Sources and Estimation Methods. Lawrence
Berkeley National Lab. Berkeley, CA. Report No. LBNL-2001169. (Last
accessed November 22, 2022.) https://ees.lbl.gov/publications/residential-electricity-prices-review
\38\ Coughlin, K. and B. Beraki. 2019. Non-residential
Electricity Prices: A Review of Data Sources and Estimation Methods.
Lawrence Berkeley National Lab. Berkeley, CA. Report No. LBNL-
2001203. https://ees.lbl.gov/publications/non-residential-electricity-prices (last accessed November 22, 2022).
---------------------------------------------------------------------------
DOE's methodology allows electricity prices to vary by sector,
region and season. In the analysis, variability in electricity prices
is chosen to be consistent with the way the consumer economic and
energy use characteristics are defined in the LCC analysis.
To estimate energy prices in future years, DOE multiplied the 2022
energy prices by the projection of annual average price changes for
each of the nine census divisions from the Reference case in AEO2023,
which has an end year of 2050.\39\ To estimate price trends after 2050,
a simple average of the 2046-2050 values was used for 2051 and all
subsequent years.
---------------------------------------------------------------------------
\39\ EIA. Annual Energy Outlook 2023 with Projections to 2050.
Washington, DC. Available at www.eia.gov/forecasts/aeo/ (last
accessed May 15, 2023).
---------------------------------------------------------------------------
See chapter 8 of the NOPR TSD for details.
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. Typically,
small incremental increases in product efficiency entail no, or only
minor, changes in repair and maintenance costs compared to baseline
efficiency products. As in the February 2022 Preliminary Analysis, DOE
assumed that repair and maintenance costs do not vary by efficiency
level. Therefore, DOE did not estimate repair or maintenance costs in
this NOPR analysis.
6. Product Lifetime
DOE estimated ceiling fan lifetimes by fitting a survival
probability function to data of historical shipments and the 2012 age
distributions of installed stock. Data on the age distribution for the
installed residential ceiling fan stock in 2012 was available from the
LBNL study.\40\ By combining data from the LBNL study with historic
data on residential ceiling fan shipments, DOE estimated the percentage
of appliances of a given age that are still in operation. Shipment data
were only available for standard and hugger ceiling fans. DOE also
added a constraint that the shipments history multiplied by the
survival function sum to the estimate of installed stock from 2020
RECS. This is the same approach taken in the February 2022 Preliminary
Analysis, but with updated data sources.
---------------------------------------------------------------------------
\40\ Kantner, C.L.S., S.J. Young, S.M. Donovan, and K. Garbesi.
Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.--Results of a
Survey on Amazon Mechanical Turk. 2013. Lawrence Berkeley National
Laboratory: Berkeley, CA. Report No. LBNL-6332E. (Last accessed
November 11, 2022.) http://www.escholarship.org/uc/item/3r67c1f9.
---------------------------------------------------------------------------
This survival function, which DOE assumed has the form of a
cumulative Weibull distribution,\41\ provides a mean of 14.6 years and
a median of 14.0 years for ceiling fan lifetime. This represents an
increase in the average ceiling fan lifetime of approximately 5.8
percent relative to the February 2022 Preliminary Analysis, which is a
result of the updated data sources. Shipments data were available only
for residential ceiling fans, so DOE assumed the survival probability
function of large-diameter and HSBD ceiling fans is the same as that
for standard and hugger ceiling fans.
---------------------------------------------------------------------------
\41\ Weibull distributions are commonly used to model appliance
lifetimes.
---------------------------------------------------------------------------
DOE requests comment and data on its lifetime methodology and
estimated survival probability distribution for ceiling fans. DOE also
requests comment and data as to whether HSBD ceiling fans have a
different lifetime than other ceiling fans.
ALA commented that DC motor-based ceiling fans include an
electronic
[[Page 40967]]
controller that is estimated to last 5-9 years depending on the
electronics design and the quality of power in a particular consumer's
home. (ALA, No. 26, at p. 5) ALA further commented that DC fan motor
controller failures due to electronic overstress (``EOS'') are as
common as in computers and other consumer electronics. Moreover,
protection against EOS is not possible over the duration of the average
ceiling fan life used in the February 2022 Preliminary Analysis. (ALA,
No. 26, at p. 7)
DOE appreciates ALA's insights into the expected lifetime of BLDC
motor-based ceiling fan controls and the issue of EOS. However, DOE is
unaware of representative data to corroborate different service
lifetimes for BLDC ceiling fans and AC ceiling fans. Information from
manufacturer interviews suggests that the service lifetime of AC and
BLDC motors is similar, but the electronics required for BLDC motors
may be a failure point. However, manufacturer feedback also indicates
that the quality of DC electronics has improved over time and the BLDC
motor electronics have therefore become more reliable. Moreover, due to
the relative recent adoption of ceiling fans with BLDC motors in the
U.S. market, there is insufficient data to properly characterize a
different service lifetime for BLDC motors relative to AC motors. DOE
notes that some sources, such as lumens.com, even indicate that BLDC
motors effectively improve the ceiling fan's service life due to the
BLDC motor generating less heat than an equivalent AC motor.\42\ For
this NOPR, DOE has continued to assume that ceiling fan lifetime does
not depend on the motor type.
---------------------------------------------------------------------------
\42\ Lumens.com offers over 40,000 products (including ceiling
fans) from over 350 brands. www.lumens.com/how-tos-and-advice/why-choose-dc-fans.html (Last accessed November 22, 2022.)
---------------------------------------------------------------------------
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to residential and commercial consumers to estimate the present value
of future operating cost savings. The subsections below provide
information on the derivation of the discount rates by sector. See
chapter 8 of the NOPR TSD for further details on the development of
discount rates.
a. Residential
DOE estimated a distribution of residential discount rates for
standard and hugger ceiling fans based on the opportunity cost of
consumer funds. DOE applies weighted average discount rates calculated
from consumer debt and asset data, rather than marginal or implicit
discount rates.\43\ The LCC analysis estimates net present value over
the lifetime of the product, so the appropriate discount rate will
reflect the general opportunity cost of household funds, taking this
time scale into account. Given the long time horizon modeled in the LCC
analysis, the application of a marginal interest rate associated with
an initial source of funds is inaccurate. Regardless of the method of
purchase, consumers are expected to continue to rebalance their debt
and asset holdings over the LCC analysis period, based on the
restrictions consumers face in their debt payment requirements and the
relative size of the interest rates available on debts and assets. DOE
estimates the aggregate impact of this rebalancing using the historical
distribution of debts and assets.
---------------------------------------------------------------------------
\43\ The implicit discount rate is inferred from a consumer
purchase decision between two otherwise identical goods with
different first cost and operating cost. It is the interest rate
that equates the increment of first cost to the difference in net
present value of lifetime operating cost, incorporating the
influence of several factors: transaction costs; risk premiums and
response to uncertainty; time preferences; interest rates at which a
consumer is able to borrow or lend. The implicit discount rate is
not appropriate for the LCC analysis because it reflects a range of
factors that influence consumer purchase decisions, rather than the
opportunity cost of the funds that are used in purchases.
---------------------------------------------------------------------------
To establish residential discount rates for the LCC analysis, DOE
identified all relevant household debt or asset classes in order to
approximate a consumer's opportunity cost of funds related to appliance
energy cost savings. It estimated the average percentage shares of the
various types of debt and equity by household income group using data
from the Federal Reserve Board's triennial Survey of Consumer Finances
\44\ (``SCF'') starting in 1995 and ending in 2019. Using the SCF and
other sources, DOE developed a distribution of rates for each type of
debt and asset by income group to represent the rates that may apply in
the year in which new or amended standards would take effect. DOE
assigned each sample household a specific discount rate drawn from one
of the distributions. The average rate across all types of household
debt and equity and income groups, weighted by the shares of each type,
is 4.3 percent.
---------------------------------------------------------------------------
\44\ U.S. Board of Governors of the Federal Reserve System.
Survey of Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010,
2013, 2016, and 2019. (Last accessed November 22, 2022.) https://www.federalreserve.gov/econres/scfindex.htm.
---------------------------------------------------------------------------
b. Commercial and Industrial
For commercial and industrial consumers, DOE used the cost of
capital to estimate the present value of cash flows to be derived from
a typical company project or investment. Most companies use both debt
and equity capital to fund investments, so the cost of capital is the
weighted-average cost to the firm of equity and debt financing. This
corporate finance approach is referred to as the weighted-average cost
of capital. DOE used currently available economic data in developing
commercial discount rates, with Damodaran Online being the primary data
source.\45\ The average discount rates for the commercial and
industrial sectors are 6.7 percent and 7.2 percent, respectively.
---------------------------------------------------------------------------
\45\ Damodaran, A. Data Page: Historical Returns on Stocks,
Bonds and Bills-United States. 2021. (Last accessed November 22,
2022.) https://pages.stern.nyu.edu/~adamodar/.
---------------------------------------------------------------------------
8. Energy Efficiency Distributions in the No-New-Standards Case and
Each Standard Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
TSL, DOE's LCC analysis considered the projected distribution (market
shares) of product efficiencies under the no-new-standards case (i.e.,
the case without amended or new energy conservation standards) and each
of the standard cases (i.e., the cases where a standard would be set at
each TSL) in the assumed first full year of compliance (2028).
The estimated market shares for the no-new-standards case and each
standards case for ceiling fans in the assumed first full year of
compliance (2028) are determined by the shipments analysis and are
shown in Table IV.3 through Table IV.6. A description of each of the
TSLs is located in section V.A. of this document. For further
information on the derivation of the market efficiency distributions,
see section IV.G of this document and chapter 8 of the NOPR TSD.
[[Page 40968]]
Table IV.5--Standard Ceiling Fan Market Efficiency Distribution by Trial Standard Level and Blade Span in 2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level EL 0 (%) EL 1 (%) EL 2 (%) EL 3 (%) EL 4 (%) Total * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
44-inch Blade Span
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-New-Standards........................................ 46.4 30.7 21.7 1.3 100.0
TSL 1................................................... 0.0 57.2 40.4 2.4 100.0
TSL 2................................................... 0.0 0.0 94.5 5.5 100.0
TSL 3................................................... 0.0 0.0 94.5 5.5 100.0
TSL 4................................................... 0.0 0.0 0.0 100.0 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
52-inch Blade Span
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-New-Standards........................................ 24.4 49.1 22.4 4.1 100.0
TSL 1................................................... 0.0 65.0 29.6 5.4 100.0
TSL 2................................................... 0.0 0.0 84.6 15.4 100.0
TSL 3................................................... 0.0 0.0 84.6 15.4 100.0
TSL 4................................................... 0.0 0.0 0.0 100.0 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
60-inch Blade Span
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-New-Standards........................................ 16.2 32.4 17.9 33.5 100.0
TSL 1................................................... 0.0 38.7 21.3 40.0 100.0
TSL 2................................................... 0.0 0.0 34.8 65.2 100.0
TSL 3................................................... 0.0 0.0 0.0 100.0 100.0
TSL 4................................................... 0.0 0.0 0.0 100.0 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The total may not sum to 100% due to rounding.
Table IV.6--Hugger Ceiling Fan Market Efficiency Distribution by Trial Standard Level and Blade Span in 2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level EL 0 (%) EL 1 (%) EL 2 (%) EL 3 (%) EL 4 (%) Total * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
44-inch Blade Span
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-New-Standards........................................ 29.1 30.4 38.0 2.4 100.0
TSL 1................................................... 0.0 42.9 53.6 3.4 100.0
TSL 2................................................... 0.0 0.0 94.0 6.0 100.0
TSL 3................................................... 0.0 0.0 94.0 6.0 100.0
TSL 4................................................... 0.0 0.0 0.0 100.0 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
52-inch Blade Span
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-New-Standards........................................ 34.4 23.6 35.7 6.2 100.0
TSL 1................................................... 0.0 36.1 54.4 9.5 100.0
TSL 2................................................... 0.0 0.0 85.1 14.9 100.0
TSL 3................................................... 0.0 0.0 85.1 14.9 100.0
TSL 4................................................... 0.0 0.0 0.0 100.0 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
60-inch Blade Span
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-New-Standards........................................ 16.1 13.8 55.2 15.0 100.0
TSL 1................................................... 0.0 16.4 65.7 17.8 100.0
TSL 2................................................... 0.0 0.0 78.6 21.4 100.0
TSL 3................................................... 0.0 0.0 0.0 100.0 100.0
TSL 4................................................... 0.0 0.0 0.0 100.0 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The total may not sum to 100% due to rounding.
Table IV.7--Large-Diameter Ceiling Fan Market Efficiency Distribution by Trial Standard Level and Blade Span in
2028
----------------------------------------------------------------------------------------------------------------
Trial standard level EL 0 (%) EL 1 (%) EL 2 (%) Total * (%)
----------------------------------------------------------------------------------------------------------------
8-foot Blade Span
----------------------------------------------------------------------------------------------------------------
No-New-Standards................................ 10.4 15.3 74.3 100.0
TSL 1........................................... 0.0 25.7 74.3 100.0
TSL 2........................................... 0.0 25.7 74.3 100.0
TSL 3........................................... 0.0 25.7 74.3 100.0
[[Page 40969]]
TSL 4........................................... 0.0 0.0 100.0 100.0
----------------------------------------------------------------------------------------------------------------
12-foot Blade Span
----------------------------------------------------------------------------------------------------------------
No-New-Standards................................ 24.6 45.4 30.0 100.0
TSL 1........................................... 0.0 70.0 30.0 100.0
TSL 2........................................... 0.0 70.0 30.0 100.0
TSL 3........................................... 0.0 70.0 30.0 100.0
TSL 4........................................... 0.0 0.0 100.0 100.0
----------------------------------------------------------------------------------------------------------------
20-foot Blade Span
----------------------------------------------------------------------------------------------------------------
No-New-Standards................................ 14.5 63.5 22.0 100.0
TSL 1........................................... 0.0 78.0 22.0 100.0
TSL 2........................................... 0.0 78.0 22.0 100.0
TSL 3........................................... 0.0 78.0 22.0 100.0
TSL 4........................................... 0.0 0.0 100.0 100.0
----------------------------------------------------------------------------------------------------------------
* The total may not sum to 100% due to rounding.
Table IV.8--High-Speed Belt-Driven Ceiling Fan Market Efficiency Distribution by Trial Standard Level and Blade Span in 2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level EL 0 (%) EL 1 (%) EL 2 (%) EL 3 (%) EL 4 (%) Total * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
50-inch Blade Span
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-New-Standards........................................ 24.0 10.3 6.9 58.7 0.0 100.0
TSL 1................................................... 0.0 0.0 41.3 58.7 0.0 100.0
TSL 2................................................... 0.0 0.0 41.3 58.7 0.0 100.0
TSL 3................................................... 0.0 0.0 0.0 100.0 0.0 100.0
TSL 4................................................... 0.0 0.0 0.0 0.0 100.0 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The total may not sum to 100% due to rounding.
9. Payback Period Analysis
The payback period is the amount of time (expressed in years) it
takes the consumer to recover the additional installed cost of more-
efficient products, compared to baseline products, through energy cost
savings. Payback periods that exceed the life of the product mean that
the increased total installed cost is not recovered in reduced
operating expenses.
The inputs to the PBP calculation for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. DOE
refers to this as a ``simple PBP'' because it does not consider changes
over time in operating cost savings. The PBP calculation uses the same
inputs as the LCC analysis when deriving first-year operating costs.
As noted previously, EPCA establishes a rebuttable presumption that
a standard is economically justified if the Secretary finds that the
additional cost to the consumer of purchasing a product complying with
an energy conservation standard level will be less than three times the
value of the first year's energy savings resulting from the standard,
as calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings by the average energy price
projection for the assumed first full year in which compliance with the
new or amended standards would be required.
G. Shipments Analysis
DOE uses projections of annual ceiling fan shipments to calculate
the national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\46\
The shipments model uses an accounting approach, where estimates of
stock, demand, and retirements are modeled together to estimate future
values. In the shipments analysis for ceiling fans, DOE considered
three market segments contributing to demand: (1) demand for
replacements, (2) demand for installations into existing buildings, and
(3) demand for installations in new construction. DOE also accounted
for retirement demand lost to demolitions that remove housing stock.
DOE used estimates of historical shipments incorporated into the
analysis for the January 2017 ECS Final Rule, as well as ENERGY STAR
Unit Shipment Reports,\47\ to create an initial vintage distribution.
---------------------------------------------------------------------------
\46\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general,
one would expect a close correspondence between shipments and sales.
\47\ U.S. Department of Energy and U.S. Environmental Protection
Agency. Unit Shipment and Sales Data Archives. (Last accessed
November 22, 2022.) https://www.energystar.gov/partner_resources/products_partner_resources/brand_owner_resources/unit_shipment_data/archives.
---------------------------------------------------------------------------
To compute demand for replacements, DOE used the lifetime estimated
during the LCC analysis, which estimates a median lifetime of 14.0
years for ceiling fans. In each analysis year of the model, DOE
calculated retirements across the vintage distribution and totaled in
order to find
[[Page 40970]]
all retirement demand. DOE used projections of housing starts coupled
with ceiling fan saturation data to estimate demand for installations
into new construction. To estimate demand for installation into
existing buildings, DOE first estimated ceiling fan saturation in
existing building stock and new construction separately. DOE assumed
that in each analysis year, if existing housing stock had not yet met
the new construction saturation rate for ceiling fans, a small portion
of all stock without ceiling fans would install them. DOE assumed that
the average number of ceiling fans installed for those homes was the
same as that for new construction.
To account for retirement demand lost to building demolitions, DOE
first computed projected demolitions as the difference in annual
housing stock changes and new construction estimates. DOE then assumed
that the fraction of demolished homes with ceiling fans and the number
of ceiling fans per demolished home were constant and for each year
computed the number of retired ceiling fans that would not be replaced
due to demolitions.
Once demand has been computed, it has to be allotted among
representative units for each product class, at each available
efficiency level. In order to allot demand for standard and hugger
fans, DOE implemented a discrete consumer choice model that calculates
market share for each representative ceiling fan option as a function
of its price relative to that of similar ceiling fans. Qualitatively,
higher-priced ceiling fan options will receive less market share. The
sensitivity to price was estimated by examining online survey data on
ceiling fan consumers from TraQline.\48\ DOE computed and implemented
adjustment factors to calibrate the consumer choice model to current
market shares, so that the consumer choice model aligns with present
efficiency distribution estimates, which were derived based on
manufacturer interviews.
---------------------------------------------------------------------------
\48\ TraQline is a market research company that specializes in
tracking consumer purchasing behavior across a wide range of
products using quarterly online surveys. www.traqline.com.
---------------------------------------------------------------------------
For this NOPR, DOE did not model how the market share of standard
and hugger fans would change should the standards for these fans be set
at different levels (e.g., a max-tech standard for all standard fans,
and EL 2 for some or all hugger fans).
DOE seeks comment on the potential market response to a disparity
in standards for standard and hugger product classes, including but not
limited to the potential for product switching. Specifically, DOE seeks
comment and data as to how the market would respond to a standard
requiring BLDC motors for standard ceiling fans but not for hugger
ceiling fans.
DOE assumed that the price of fans with BLDC motors would decrease
over time to that of the most expensive representative unit with an AC
motor, which results in the BLDC motor market share increasing over
time. DOE estimated a 6.5 percent price decline rate associated with
the electronics used to control brushless DC motor fans based on an
analysis of the Producer Price Index (PPI) of semiconductor
components.\49\ This rate is applied only to the incremental cost
between a brushless DC motor fans and their most expensive AC motor
alternative, rather than the cost of the whole fan.
---------------------------------------------------------------------------
\49\ PPI industry code PCU334413334413.
---------------------------------------------------------------------------
ALA commented that ``the majority bill of materials cost of
componentry passives and magnetics [in fans with BLDC motors] are
common to all power devices and do not follow equivalent productivity
curves'' for electronics that rely heavily on integrated circuitry.
(ALA, No. 26, at p. 7) DOE acknowledges uncertainty in the projection
of prices for ceiling fans with BLDC motors, as well as uncertainty in
the long-term effects of supply chain disruption on microchip and
semiconductor components in all fans. In order to establish a range of
economic outcomes, DOE performed an analysis for a scenario in which
retail prices of all fans remain fixed over time, which are presented
in chapters 9 and 10 of the NOPR TSD. In regard to the present
application of price learning for ceiling fans with BLDC motors, DOE
points out that this projection methodology is consistent with that
done for the January 2017 ECS Final Rule (see section IV.G.4 of this
document). In DOE's analysis, price learning is applied to the
incremental cost difference between the efficiency levels with the most
expensive AC motor (EL2) and the EL with the BLDC motor (EL3 for 60''
fans or EL4 across the board for standard and hugger fans). The primary
driver in the increased costs for incorporating the BLDC motor
technology is the electronic controller that is used with DC motors, to
which a semiconductor PPI is used when applying the price learning.
Based on this approach, the incremental cost delta becomes smaller
between the most expensive AC motor and the BLDC motor technologies
over time. DOE's analysis assumes, however, that price learning is
insufficient to drive the cost of BLDC motors below the cost of the
most expensive AC motor.
DOE requests comment on the long-term implications of supply chain
disruption on the microchip and semiconductor cost components of
affected ceiling fans.
DOE requests comment on its price learning assumption and
methodology, including but not limited to data supporting existing or
alternative price trends for fans with BLDC motors.
For large-diameter and HSBD fans, DOE allots demand using a
constant efficiency distribution of shipments over time for the no-
standards case. To estimate the efficiency distribution for these fans
at each standard level, DOE followed a `roll-up' approach. In this
approach, at each standards case, ceiling fans that do not meet the
standard are `rolled-up' to the minimum qualifying EL at the standard
level. The market share of fans above the standard level is left
unchanged. As with standard and hugger fans, DOE assumed that the price
of large-diameter and HSBD fans with brushless DC motors would decrease
over time, though this does not affect the projected market shares.
ALA commented that it is not appropriate to model ceiling fans as
price inelastic (ALA, No. 26 at p. 2). Manufacturers have commented
that consumers may switch to cheaper fan options if ceiling fan price
increases as a result of the proposed standards. Examples include
choosing to purchase a box fan instead of a ceiling fan or choosing to
forgo the purchase all together. DOE agrees that a standard requiring
the purchase of higher priced fans may result in a reduction of fan
shipments. For this reason, in this NOPR analysis DOE implemented price
elasticity into its modeling of standard and hugger fan shipments,
which is intended to capture the effect of changes to shipments as a
result of increases in the price of ceiling fans. Estimates of the
price elasticity used in this proposed rule are informed by a study of
sensitivity of price with respect to purchases of home appliances. The
elasticity value decreases over time (from -0.5 to -0.17 over 20 years,
then constant thereafter), reflecting a gradual return to historical
consumer purchasing frequencies. This results in a 10% decrease in
shipments at the max-tech efficiency levels for standard and hugger at
the assumed compliance year (2028), which is reduced over time as the
elasticity effect moderates. ALA further commented that the
implementation of an ENERGY STAR standard that could only be met by
BLDC motor fans resulted in a dramatic
[[Page 40971]]
reduction in the sale of fans with the ENERGY STAR label. DOE agrees
with this assessment of available data, but not with the implied
conclusion that a similar standard on ceiling fans would result in the
same drop in total ceiling fan shipments. DOE assumes that the market
share of fans capable of meeting the prior ENERGY STAR standard
remained mostly unchanged after the new standard came into effect, and
that the dramatic reduction in ENERGY STAR shipments is primarily the
result of removing the ENERGY STAR label from the majority of
previously qualifying market share. DOE did not find indication in the
ENERGY STAR unit shipment reports that a higher ENERGY STAR standard
impacted total ceiling fan sales as a whole, which would be the concern
for modeling market price elasticity. Additionally, ALA commented that
projected sales decreases are ``based on its expectation of only a
modest price increase due to the technology change required to deliver
[DC] fans''. DOE agrees that a larger price differential would result
in a larger projected drop in total shipments in standards cases. For a
discussion of how prices are derived for this analysis, see Chapter 5
of the NOPR TSD.
Chapter 9 of this TSD provides additional details regarding the
shipments analysis.
DOE requests comment on its shipment projection methodology and
assumptions, including the demand function and associated elasticities
for ceiling fans used in the analysis.
H. National Impact Analysis
The NIA assesses the aggregate national impacts of potential energy
conservation standards by estimating the NES and NPV at each proposed
standard level. DOE determined the NPV and NES for each product class
at each potential standard level. To compute NES and NPV, the NIA
requires estimates of shipments and stock from the shipments analysis,
as well as average annual energy consumption, purchase prices, and
electricity prices from the LCC analysis. DOE combines ceiling fan
stock at each proposed standard level with average annual energy use
and electricity prices to derive both national energy consumption and
national operating costs of ceiling fans. The analysis uses shipments
at each proposed standard level and average purchase prices to derive
total installed costs. While NES is computed by taking the difference
between standards- and no-new-standards case consumption, NPV is
calculated by taking the difference between national operating cost
savings and installed cost increases. DOE calculates NES and NPV for
ceiling fans shipped in the period 2028-2057.
Because DOE assumed that new standards would decrease the volume of
shipments and stock, the standards-case stock and shipments were used
to calculate energy and cost savings. In doing so, DOE more
conservatively measures savings by excluding the anticipated reduction
in total ceiling fan stock as a contributing factor in savings.
DOE accounts for the direct rebound effect in the NIA. Direct
rebound is the concept that as appliances become more efficient,
consumers use more of their service because their operating cost is
reduced. In the case of ceiling fans, the rebound could be manifested
in increased hours of use or in increased airflow. DOE has not found
data to support a rebound effect for ceiling fans, and has assumed no
rebound in this NOPR analysis.
DOE requests comment on the presence and size of a direct rebound
effect for ceiling fans.
ALA commented that they are ``concerned that there will be a
rebound related to central air conditioning and heating in home energy
consumption as a direct result of the substantially reduced
affordability of air movement through a residential fan,'' and that
consumers may opt to purchase less efficient tabletop and window box
fans in the presence of a BLDC fan standard. (ALA, No. 26, at p. 12)
DOE describes these effects as indirect rebound, and does not attempt
to model the shipments and energy use of products outside the scope of
a rulemaking that have not been analyzed. Furthermore, as discussed in
section IV.E.3 of this document, DOE estimates that the interaction
between ceiling fan use and air-conditioning use is unlikely to be
different in the case of amended standards than it would be in the no-
new-standards case.
DOE uses a model coded in the python programming language to
calculate the energy savings and the national consumer costs and
savings from each TSL. DOE exports the results of these analyses to an
excel workbook, which can be found on the docket. Interested parties
can review DOE's analyses by changing various input quantities within
the spreadsheet.
Table IV.7 summarizes the inputs and methods DOE used for the NIA
analysis for the NOPR. Discussion of these inputs and methods follows
the table. See chapter 10 of the NOPR TSD for further details.
Table IV.9--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments......................... Annual shipments from shipments
model.
Compliance Date of Standard....... 2028.
Efficiency Trends................. No-new-standards case: Calibrated
consumer choice for standard and
hugger fans, fixed for all others.
Standards cases: Calibrated consumer
choice for standard and hugger
fans, rollup for all others.
Annual Energy Consumption per Unit Average annual per-unit energy use
of ceiling fans at each EL.
Total Installed Cost per Unit..... Average per-unit purchase price of
ceiling fans at each EL.
Incorporates projection of future
product prices based on historical
data.
Energy Price Trends............... AEO 2023 projections (to 2050) and
extrapolation thereafter.
Energy Site-to-Primary and FFC A time-series conversion factor
Conversion. based on AEO 2023.
Discount Rate..................... 3 percent and 7 percent.
Present Year...................... 2023.
------------------------------------------------------------------------
1. National Energy Savings
The national energy savings analysis involves a comparison of
national energy consumption of the considered products between each
potential standards case (``TSL'') and the case with no new or amended
energy conservation standards. DOE calculated the national energy
consumption by multiplying the number of units (stock) of each EL of
each product (by vintage or age) by the unit energy consumption.
[[Page 40972]]
DOE calculated annual NES based on the difference in national energy
consumption for the no-new standards case and for each higher
efficiency standard case. DOE estimated energy consumption and savings
based on site energy and converted the electricity consumption and
savings to primary energy (i.e., the energy consumed by power plants to
generate site electricity) using annual conversion factors derived from
AEO 2023. Cumulative energy savings are the sum of the NES for each
year over the timeframe of the analysis.
In the NIA, DOE did not account for the possible change in energy
use for those purchasers that would not purchase a ceiling fan, or
delay their purchase of a ceiling fan, due to the higher purchase cost
under the proposed standards. Consistent with an economic analysis that
is responsive to E.O. 12866, DOE seeks comments and publicly-available
data to improve its estimation of how the proposed standards may affect
purchasers that would no longer own or delay purchase of a ceiling fan.
DOE is committed to developing a framework that can support empirical
quantitative tools for improved assessment of the consumer welfare
impacts of appliance standards, including ceiling fans.
In 2011, in response to the recommendations of a committee on
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards'' appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in which DOE explained its determination
that EIA's National Energy Modeling System (``NEMS'') is the most
appropriate tool for its FFC analysis and its intention to use NEMS for
that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain,
multi-sector, partial equilibrium model of the U.S. energy sector \50\
that EIA uses to prepare its Annual Energy Outlook. The FFC factors
incorporate losses in production and delivery in the case of natural
gas (including fugitive emissions) and additional energy used to
produce and deliver the various fuels used by power plants. The
approach used for deriving FFC measures of energy use and emissions is
described in appendix 10B of the NOPR TSD.
---------------------------------------------------------------------------
\50\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009.
Available at https://www.eia.gov/outlooks/aeo/ (last accessed
November 22, 2022).
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2. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are (1) total annual installed cost, (2) total
annual operating costs (energy costs and repair and maintenance costs),
and (3) a discount factor to calculate the present value of costs and
savings. DOE calculates net savings each year as the difference between
the no-new-standards case and each standards case in terms of total
savings in operating costs versus total increases in installed costs.
DOE calculates operating cost savings over the lifetime of each product
shipped during the projection period.
As discussed in section IV.G of this document, DOE developed
ceiling fan price trends based on related historical PPI data for fan
components. DOE applied the price trend to the incremental cost of BLDC
fans over the most expensive AC alternative. By 2028, which is the
modeled compliance year, the average incremental BLDC fan price is
projected to drop 37 percent relative to 2021 incremental prices.
To evaluate the effect of uncertainty regarding the price trend
estimates, DOE considered an additional ceiling fan price sensitivity
scenario, wherein the price of all ceiling fan options remain constant
during the analysis period. See Chapter 10 of the NOPR TSD for a
summary of these scenario results.
The energy cost savings are calculated using the estimated energy
savings in each year and the projected price of the appropriate form of
energy. To estimate energy prices in future years, DOE multiplied the
average regional energy prices by the projection of annual national-
average sector-specific energy price changes in the Reference case from
AEO 2023, which has an end year of 2050. To estimate price trends after
2050, the 2050 value was used for all years. As part of the NIA, DOE
also analyzed scenarios that used energy price trend inputs from
variants of the AEO 2023 Reference case that have lower and higher
economic growth. Those cases have lower and higher energy price trends
compared to the Reference case. NIA results based on these cases are
presented in appendix 10C of the NOPR TSD.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
NOPR, DOE estimated the NPV of consumer benefits using both a 3-percent
and a 7-percent real discount rate. DOE uses these discount rates in
accordance with guidance provided by the Office of Management and
Budget (``OMB'') to Federal agencies on the development of regulatory
analysis.\51\ The discount rates for the determination of NPV are in
contrast to the discount rates used in the LCC analysis, which are
designed to reflect a consumer's perspective. The 7-percent real value
is an estimate of the average before-tax rate of return to private
capital in the U.S. economy. The 3-percent real value represents the
``social rate of time preference,'' which is the rate at which society
discounts future consumption flows to their present value.
---------------------------------------------------------------------------
\51\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at
georgewbush-whitehouse.archives.gov/omb/memoranda/m03-21.html (last
accessed November 22, 2022).
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I. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended energy
conservation standards on consumers, DOE evaluates the impact on
identifiable subgroups of consumers that may be disproportionately
affected by a new or amended national standard. The purpose of a
subgroup analysis is to determine the extent of any such
disproportional impacts. DOE evaluates impacts on particular subgroups
of consumers by analyzing the LCC impacts and PBP for those particular
consumers from alternative standard levels. For this NOPR, DOE analyzed
the impacts of the considered standard levels on two subgroups: (1)
low-income households (for standard and hugger ceiling fans) and (2)
small businesses (for LDCFs and HSBD ceiling fans).
For low-income households, the consumer sample consisted of a
subset of the RECS 2020 sample composed only of low-income households.
DOE assumed these households had equivalent usage patterns and energy
prices as the general population. Moreover, because discount rates are
based on income group (see section IV.F.7 of this document), low-income
households have higher discount rates, on average, than the general
population. DOE separately analyzed different groups in the low-income
household sample using data from RECS on home ownership status and on
who pays the electricity bill. Low-income homeowners are analyzed
equivalently to how they are analyzed in the standard LCC analysis.
Low-income renters who do not pay their electricity bill are assumed to
not be impacted by any new or amended standards. In this
[[Page 40973]]
case, the landlord purchases the appliance and pays its operating
costs, so is effectively the consumer and the renter is not impacted.
Low-income renters who do pay their electricity bill are assumed to
incur no first cost. DOE made this assumption to acknowledge that for a
large appliance such as ceiling fans, renters are unlikely to be
purchasers. Instead, the landlord would bear the cost, and some or none
of the cost could get passed on to the renter. While some of the
incremental cost of a standards-compliant ceiling fan could get passed
on in rent, this would happen over time and would be far less than the
energy savings received by renters who pay the energy bill.
Also, the results of this analysis on consumers is uncertain as DOE
does not account for potential differences in the marginal cost of
energy for low-income households relative to the general population.
For example, there may be differences in energy prices faced by these
households due to reduced marginal electricity tariffs offered to lower
income household through programs that specifically reduce the energy
expenses borne by these households.
DOE welcomes comment on how it may account for energy prices faced
by low income households.
For small businesses, DOE applied discount rates specific to small
businesses to the same consumer sample that was used in the standard
LCC analysis. DOE used the LCC and PBP model to estimate the impacts of
the considered efficiency levels on these subgroups. Chapter 11 in the
NOPR TSD describes the consumer subgroup analysis.
DOE requests comment and data on the overall methodology used for
the consumer subgroup analysis.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of new and
amended energy conservation standards on manufacturers of ceiling fans
and to estimate the potential impacts of such standards on employment
and manufacturing capacity. The MIA has both quantitative and
qualitative aspects and includes analyses of projected industry cash
flows, the INPV, investments in research and development (``R&D'') and
manufacturing capital, and domestic manufacturing employment.
Additionally, the MIA seeks to determine how new and amended energy
conservation standards might affect manufacturing employment, capacity,
and competition, as well as how standards contribute to overall
regulatory burden. Finally, the MIA serves to identify any
disproportionate impacts on manufacturer subgroups, including small
business manufacturers.
The quantitative part of the MIA primarily relies on the Government
Regulatory Impact Model (``GRIM''), an industry cash flow model with
inputs specific to this rulemaking. The key GRIM inputs include data on
the industry cost structure, unit production costs, product shipments,
manufacturer markups, and investments in R&D and manufacturing capital
required to produce compliant products. The key GRIM outputs are the
INPV, which is the sum of industry annual cash flows over the analysis
period, discounted using the industry-weighted average cost of capital,
and the impact to domestic manufacturing employment. The model uses
standard accounting principles to estimate the impacts of more-
stringent energy conservation standards on a given industry by
comparing changes in INPV and domestic manufacturing employment between
a no-new-standards case and the various standards cases (``TSLs''). To
capture the uncertainty relating to manufacturer pricing strategies
following new and amended standards, the GRIM estimates a range of
possible impacts under different markup scenarios.
The qualitative part of the MIA addresses manufacturer
characteristics and market trends. Specifically, the MIA considers such
factors as a potential standard's impact on manufacturing capacity,
competition within the industry, the cumulative impact of other DOE and
non-DOE regulations, and impacts on manufacturer subgroups. The
complete MIA is outlined in chapter 12 of the NOPR TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared a profile of the ceiling fan manufacturing
industry based on the market and technology assessment, preliminary
manufacturer interviews, and publicly available information. This
included a top-down analysis of ceiling fan manufacturers that DOE used
to derive preliminary financial inputs for the GRIM (e.g., revenues;
materials, labor, overhead, and depreciation expenses; selling,
general, and administrative expenses (``SG&A''); and R&D expenses). DOE
also used public sources of information to further calibrate its
initial characterization of the ceiling fan manufacturing industry,
including company filings of form 10-K from the SEC, corporate annual
reports, the U.S. Census Bureau's Economic Census,\52\ and reports from
D&B Hoovers.\53\
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\52\ www.census.gov/programs-surveys/asm/data/tables.html.
\53\ app.avention.com.
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In Phase 2 of the MIA, DOE prepared a framework industry cash-flow
analysis to quantify the potential impacts of new and amended energy
conservation standards. The GRIM uses several factors to determine a
series of annual cash flows starting with the announcement of the
standard and extending over a 30-year period following the compliance
date of the standard. These factors include annual expected revenues,
costs of sales, SG&A and R&D expenses, taxes, and capital expenditures.
In general, energy conservation standards can affect manufacturer cash
flows in three distinct ways: (1) creating a need for increased
investment, (2) raising production costs per unit, and (3) altering
revenue due to higher per-unit prices and changes in sales volumes.
In addition, during Phase 2, DOE developed interview guides to
distribute to manufacturers of ceiling fans in order to develop other
key GRIM inputs, including product and capital conversion costs, and to
gather additional information on the anticipated effects of energy
conservation standards on revenues, direct employment, capital assets,
industry competitiveness, and subgroup impacts.
In Phase 3 of the MIA, DOE conducted structured, detailed
interviews with representative manufacturers. During these interviews,
DOE discussed engineering, manufacturing, procurement, and financial
topics to validate assumptions used in the GRIM and to identify key
issues or concerns. See section IV.J.3 of this document for a
description of the key issues raised by manufacturers during the
interviews. As part of Phase 3, DOE also evaluated subgroups of
manufacturers that may be disproportionately impacted by new and
amended standards or that may not be accurately represented by the
average cost assumptions used to develop the industry cash flow
analysis. Such manufacturer subgroups may include small business
manufacturers, low-volume manufacturers (``LVMs''), niche players, and/
or manufacturers exhibiting a cost structure that largely differs from
the industry average. DOE identified four manufacturer subgroups for a
separate impact analysis: small business manufacturers; standard and
hugger ceiling fan manufacturers; large-diameter ceiling fan
manufacturers; and
[[Page 40974]]
high-speed belt-driven ceiling fan manufacturers. The small business
subgroup is discussed in section VI.B, ``Review under the Regulatory
Flexibility Act'' and in chapter 12 of the NOPR TSD. Impacts to the
standard and hugger ceiling fan manufacturers; large-diameter ceiling
fan manufacturers; and high-speed belt-driven ceiling fan manufacturers
are discussed in sectionV.B.2.a of this document.
2. Government Regulatory Impact Model and Key Inputs
DOE uses the GRIM to quantify the changes in cash flow due to new
and amended standards that result in a higher or lower industry value.
The GRIM uses a standard, annual discounted cash-flow analysis that
incorporates manufacturer costs, markups, shipments, and industry
financial information as inputs. The GRIM models changes in costs,
distribution of shipments, investments, and manufacturer margins that
could result from new and amended energy conservation standards. The
GRIM spreadsheet uses the inputs to arrive at a series of annual cash
flows, beginning in 2023 (the base year of the analysis) and continuing
to 2057. DOE calculated INPVs by summing the stream of annual
discounted cash flows during this period. For manufacturers of ceiling
fans, DOE used a real discount rate of 7.4 percent, which was derived
from industry financials and then modified according to feedback
received during manufacturer interviews.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between the no-new-standards case and each
standards case. The difference in INPV between the no-new-standards
case and a standards case represents the financial impact of the new
and amended energy conservation standard on manufacturers. As discussed
previously, DOE developed critical GRIM inputs using a number of
sources, including publicly available data, results of the engineering
analysis, and information gathered from industry stakeholders during
the course of manufacturer interviews. The GRIM results are presented
in section V.B.2 of this document. Additional details about the GRIM,
the discount rate, and other financial parameters can be found in
chapter 12 of the NOPR TSD.
a. Manufacturer Production Costs
Manufacturing more efficient equipment is typically more expensive
than manufacturing baseline equipment due to the use of more complex
components, which are typically more costly than baseline components.
The changes in the MPCs of covered products can affect the revenues,
gross margins, and cash flow of the industry.
DOE relied on manufacturer teardown estimates for various
efficiency levels to estimate the costs associated with baseline
equipment and the incremental costs to achieve higher efficiency
levels. For a complete description of the MPCs, see chapter 5 of the
NOPR TSD.
b. Shipments Projections
The GRIM estimates manufacturer revenues based on total unit
shipment projections and the distribution of those shipments by
efficiency level. Changes in sales volumes and efficiency mix over time
can significantly affect manufacturer finances. For this analysis, the
GRIM uses the NIA's annual shipment projections derived from the
shipments analysis from 2023 (the base year) to 2057 (the end year of
the analysis period). See chapter 9 of the NOPR TSD for additional
details.
c. Product and Capital Conversion Costs
New and amended energy conservation standards could cause
manufacturers to incur conversion costs to bring their production
facilities and product designs into compliance. DOE evaluated the level
of conversion-related expenditures that would be needed to comply with
each considered efficiency level in each product class. For the MIA,
DOE classified these conversion costs into two major groups: (1)
product conversion costs; and (2) capital conversion costs. Product
conversion costs are investments in research, development, testing,
marketing, and other non-capitalized costs necessary to make product
designs comply with new and amended energy conservation standards.
Capital conversion costs are investments in property, plant, and
equipment necessary to adapt or change existing production facilities
such that new compliant product designs can be fabricated and
assembled.
DOE used data gathered from manufacturer interviews as well as
information derived from the product teardown analysis and engineering
models to estimate conversion costs ceiling fan manufacturers would
incur for each product class at each efficiency level. Because each of
these product class groups use similar technology options at each
efficiency level, DOE used three unique but similar methodologies to
estimate the conversion costs for all standard and hugger ceiling fan
product classes, for all LDCF product classes, and for the HSBD ceiling
fan product class.
Using data from DOE's publicly available Compliance Certification
Database \54\ (``CCD''), DOE estimated there are approximately 2,272
unique standard ceiling fan models and approximately 1,049 unique
hugger ceiling fan models currently on the market. DOE used information
gathered during manufacturer interviews to estimate the average per
model capital and product conversion costs for a standard or hugger
ceiling fan model.
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\54\ https://www.regulations.doe.gov/certification-data/CCMS-4-Ceiling_Fans.html#q=Product_Group_s%3A%22Ceiling%20Fans%22. (Last
accessed on November 4, 2022.)
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For standard and hugger ceiling fan manufacturers, DOE estimated
the per model capital conversion costs based on feedback received
during manufacturer interviews. DOE estimated it would cost standard
and hugger ceiling fan manufacturers approximately $30,000 in tooling
costs for each non-compliant ceiling fan model that would need to be
redesigned due to energy conservation standards.
Standard and hugger ceiling fan manufacturers would also incur two
types of product conversion costs: redesign costs (in the form of
engineering time) and re-testing costs (typically conducted at a third-
party test lab). DOE estimates it would take approximately two months
of engineering time (per model) to redesign a standard or hugger
ceiling fan model, if that redesign continued to use an AC motor, and
approximately four months of engineering time (per model) if that
redesign needed to use a BLDC motor. DOE assumed standard and hugger
ceiling fan models would use a more efficient AC motor to meet
standards set at EL 1 and EL 2 (and EL 3 for standard and hugger
ceiling fan models under 53 inches), while DOE assumed standard and
hugger ceiling fan models would use a BLDC motor to meet standards set
at EL 3 for ceiling fans over 53 inches and for all standard and hugger
ceiling fan models at EL 4. Using data from the Bureau of Labor
Statistics (BLS), DOE estimated the hourly cost to a ceiling fan
manufacturer for an engineer to conduct this ceiling fan redesign
effort. First, DOE estimated the hourly wage of a ceiling fan engineer.
DOE estimated the hourly wage for an engineer is $46.64.\55\ DOE then
estimated that wage account for approximately 70.5 percent of total
employer compensation.\56\ Therefore,
[[Page 40975]]
DOE estimates that it would cost an employer approximately $66.16 per
hour for an engineer to conduct a ceiling fan redesign.\57\ Using the
hourly wage rates DOE estimated that standard and hugger ceiling fan
manufacturers would incur approximately $21,171 per model \58\ to
redesign a standard or hugger ceiling fan model to meet efficiency
levels that would like use an AC motor to meet the energy conservation
standards (i.e., for all standard and hugger ceiling fan models at EL 1
and EL 2; or at EL 3 for standard and hugger ceiling fan models that
are under 53 inches only) and would incur approximately $42,342 per
model \59\ to redesign a standard or hugger ceiling fan model to meet
efficiency levels that would like use an BLDC motor to meet the energy
conservation standards (i.e., at EL 3 for standard and hugger ceiling
fan models that are over 53 inches only and for all standard and hugger
ceiling fan models at EL 4).
---------------------------------------------------------------------------
\55\ BLS, Occupational Employment and Wages, May 2021. 17-2141
Mechanical Engineers, mean hourly wage ($46.64). www.bls.gov/oes/current/oes172141.htm. (Last accessed on November 10, 2022.)
\56\ BLS, Employer Costs for Employee Compensation, June 2022.
Wages and Salaries for Private Industry Workers is 70.5 percent of
compensation. https://www.bls.gov/news.release/archives/ecec_09202022.pdf. (Last accessed on November 10, 2022.)
\57\ $46.64 / 0.705 = $66.16 (rounded to the nearest cent).
\58\ $66.16 (hourly wage rate) x 8 (hours in a workday) x 20
(workdays in a month) x 2 (months of engineering time) = $21,171.
\59\ $66.16 (hourly wage rate) x 8 (hours in a workday) x 20
(workdays in a month) x 4 (months of engineering time) = $42,342.
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In addition to the engineering resources, DOE estimated that it
would cost standard and hugger ceiling fan manufacturers approximately
$5,500 to test a standard or hugger ceiling fan model at a third-party
test lab using DOE's ceiling fan test procedure (to demonstrate
compliance with any energy conservation standard) and to meet a UL
certification. All models that would be redesigned would incur this per
model testing cost.
For large-diameter ceiling fans, DOE estimated conversion costs
based on product families. Most large-diameter ceiling fan
manufacturers design a family of large-diameter ceiling fans that range
in size from 8 feet to 24 feet. Typically, redesigns for product
families like this can be applied to all sizes. Using information
gathered from known large-diameter ceiling fan manufacturers' websites
and DOE's CCD, DOE identified 85 large-diameter ceiling fan families
that are sold in the United States.
To estimate capital conversion costs for LDCF manufacturers, DOE
estimated that it would cost a LDCF manufacturer approximately $500,000
per product family in tooling equipment, production equipment, and
prototype designs to convert a LDCF to meet standards set at EL 1. EL 1
would likely require LDCF manufacturers to optimize the airfoil blades
and to optimize a gear-driven motor to each size of LDCF. DOE estimated
that it would cost LDCF manufacturers an additional $500,000 per
product family in production equipment (for a total of $1,000,000 in
capital conversion costs per product family) to add a direct-drive
motor to all sizes of LDCFs to meet the standards set at EL 2.
To estimated product conversion costs for LDCF manufacturers, DOE
estimated that it would cost LCDF manufacturers approximately $150,000
in marketing costs, $50,000 in safety testing costs, and $10,000 in UL
testing costs per product family to make any changes to a LDCF product
family (i.e., these same per product family costs would be incurred at
EL 1 and EL 2 for all product families that would be redesigned). In
addition to these marketing and testing costs, DOE estimated that LDCF
manufacturers would incur approximately $250,000 to redesign a product
family of LDCF models at EL 1 and approximately $550,000 to redesign a
product family of LDCF models at EL 2.
In general, DOE assumes all conversion-related investments occur
between the year of publication of the final rule and the year by which
manufacturers must comply with the new and amended standards. The
conversion cost estimates used in the GRIM can be found in Table IV.10
and in section V.B.2.a of this document. For additional information on
the estimated capital and product conversion costs, see chapter 12 of
the NOPR TSD.
Table IV.10--Summary of Ceiling Fan Conversion Costs by Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency level
Units Product class ---------------------------------------------------------------
EL 1 EL 2 EL 3 EL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Product Conversion Costs............. 2022$ millions.......... Standard............... 16.8 17.1 30.1 76.5
Hugger................. 9.5 17.3 17.9 46.2
LDCF................... 6.4 25.3 .............. ..............
HSBD................... 0.2 0.2 0.3 1.7
Capital Conversion Costs............. 2022$ millions.......... Standard............... 18.9 19.3 25.5 47.9
Hugger................. 10.7 19.5 19.7 29.0
LDCF................... 7.0 18.0 .............. ..............
HSBD................... 0.2 0.2 0.2 0.9
Total Conversion Costs *............. 2022$ millions.......... Standard............... 35.8 36.4 55.7 124.4
Hugger................. 20.2 36.8 37.6 75.2
LDCF................... 13.4 43.3 .............. ..............
HSBD................... 0.3 0.3 0.5 2.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers may not sum exactly due to rounding.
d. Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials, and overhead estimated in DOE's MPCs) and all non-production
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate
the MSPs in the GRIM, DOE applied non-production cost markups to the
MPCs estimated in the engineering analysis for each product class and
efficiency level. Modifying these markups in the standards case yields
different sets of impacts on manufacturers. For the MIA, DOE modeled
two standards-case markup scenarios to represent uncertainty regarding
the potential impacts on prices and profitability for manufacturers
following the implementation of new and amended energy conservation
standards: (1) a preservation of gross margin scenario; and (2) a
preservation of operating profit scenario. These scenarios lead to
different markup values that, when
[[Page 40976]]
applied to the MPCs, result in varying revenue and cash flow impacts.
DOE developed an average manufacturer markup for ceiling fans
during the January 2017 Final Rule by examining the annual SEC 10-K
reports filed by publicly traded manufacturers primarily engaged in
ceiling fan manufacturing. The January 2017 Final Rule used an industry
average manufacturer markup of 1.37 for all ceiling fans.\60\ DOE
conducted manufacturer interviews prior to the publication of this
NOPR. During these manufacturer interviews, DOE asked ceiling fan
manufacturers if this was an appropriate manufacturer markup to use as
an average value for all ceiling fans covered by this rulemaking.
During manufacturers interviews manufacturers of LDCF and HSBD ceiling
fans stated that their manufacturer markups are higher than 1.37. Based
on manufacturer feedback from manufacturer interviews, DOE increased
the manufacturer markup for LDCFs and HSBD ceiling fans to 1.70.
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\60\ 82 FR 6826, 6870.
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ALA commented on the February 2022 Preliminary Analysis that the
average manufacturer markup amongst a survey of nine ALA members was
greater than the 1.37 manufacturer markup used in the February 2022
Preliminary Analysis. (ALA, No. 26 at p. 14) DOE received a variety of
feedback on the use of 1.37 to represent an industry average
manufacturer markup. While some standard and hugger ceiling fan
manufacturers stated that this manufacturer markup was too low, other
standard and hugger ceiling fan manufacturers stated in interviews that
this was an appropriate industry average manufacturer markup for
standard and hugger ceiling fans. DOE notes that while some ALA members
might have a higher manufacturer markup than 1.37, DOE also notes that
there are some high-volume low-cost standard and hugger ceiling fan
manufacturers that have a manufacturer markup lower than 1.37. DOE
still estimates the shipment weighted industry average manufacturer
markup to be 1.37 for standard and hugger ceiling fan manufacturers.
For this NOPR analysis, DOE used a manufacturer markup of 1.37 for
all standard and hugger ceiling fans and a manufacturer markup of 1.70
for all LDCFs and HSBD ceiling fans.\61\
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\61\ This corresponds to a gross margin of approximately 27
percent for standard and hugger ceiling fans and a gross margin of
approximately 41 percent for LDCFs.
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Under the preservation of gross margin scenario, DOE applied a
single uniform gross margin percentage across all efficiency levels,
which assumes that manufacturers would be able to maintain the same
amount of profit as a percentage of revenues at all efficiency levels
within a product class. As MPCs increase with efficiency, this scenario
implies that the absolute dollar value will increase as well.
Therefore, DOE assumes that this scenario represents the upper bound to
industry profitability under energy conservation standards.
Under the preservation of operating profit scenario, DOE modeled a
situation in which manufacturers are not able to increase operating
profit in proportion to increases in MPCs. Under this scenario, as the
MPCs increase, manufacturers will reduce their manufacturer margin to
maintain a cost competitive offering in the market. Therefore, gross
margin (as a percentage) shrinks in the standards cases. This
manufacturer markup scenario represents the lower bound to industry
profitability under new and amended energy conservation standards.
A comparison of industry financial impacts under the two markup
scenarios is presented in section V.B.2.a of this document. A full
discussion of the manufacturer markups and the markup scenarios used in
this NOPR analysis is discussed in chapter 12 of this NOPR TSD.
3. Manufacturer Interviews
DOE interviewed a variety of ceiling fan manufacturers. In these
interviews, DOE asked manufacturers to describe their major concerns
regarding this proposed rulemaking. The following section highlights
manufacturer concerns that helped inform the projected potential
impacts of amended energy conservation standards on the ceiling fan
industry. Manufacturer interviews are conducted under non-disclosure
agreements (``NDAs''), so DOE does not document these discussions in
the same way that it does public comments in the comment summaries and
DOE's responses throughout the rest of this document.
Price Sensitivity of Standard and Hugger Ceiling Fan Customers
Standard and hugger ceiling fan manufacturers stated that their
customers are sensitive to increases in the price of standard and
hugger ceiling fans. These manufacturers stated that an increase in the
purchase price of standard and hugger ceiling fans would result in a
reduction in the volume of standard and hugger ceiling fans sold. DOE's
shipment analysis included price elasticity for standard and hugger
ceiling fans, with the max-tech analyzed ELs resulting in an
approximately 10 percent reduction in standard and hugger ceiling fans
shipments at the compliance year. The MIA also accounts for the
potential loss in revenue due to the decline in shipments.
Conversion Costs for Standard and Hugger Ceiling Fans
Standard and hugger ceiling fan manufacturers stated that if they
must use BLDC motors in all of their standard and hugger ceiling fan
models to meet energy conservation standards, enormous investments
would have to be made by these standard and hugger ceiling fan
manufacturers. Manufacturers stated that most of their current product
offerings do not use a BLDC motor and they would be required to convert
up to 90 percent of their current models to incorporate a BLDC motor to
meet the max-tech ELs for the standard and hugger ceiling fan product
classes. Manufacturers stated there would be tooling costs for each
ceiling fan model that is redesigned, additional re-testing costs, and
engineering resources needed to be able to complete this redesign
effort. DOE accounts for these investments (i.e., conversion costs)
that standard and hugger ceiling fan manufacturers would have to make
at each analyzed EL as part of the MIA. The methodology for these
conversion cost estimates is described in section IV.J.2.c of this
document. The estimated conversion cost estimates are included in
chapter 12 of this NOPR TSD.
Safety of Large-Diameter Ceiling Fan
Several LDCF manufacturers stated that safety is their number one
concern when designing an LDCF model. Many LDCF manufacturers include
multiple safety features in their LDCF models and put a significant
number of resources (engineering time and safety testing) to make their
LDCF models as safe as possible. LDCF manufacturers stated that any DOE
energy conservation standard that would require LDCF manufacturers to
redesign their LDCF models, would cause manufacturers to incur
significant additional engineering time and testing to make sure any of
their remodeled LDCFs continue to have these safety features. Some LDCF
manufacturers stated that while energy efficiency is important, it
should not interfere with the overall safety of an LDCF.
4. Discussion of MIA Comments
ALA commented that energy conservation standards requiring BLDC
motors for standard and hugger ceiling fans would cause manufacturers
to
[[Page 40977]]
focus their efforts on converting their product lines to BLDC motor
ceiling fans, rather than focusing on innovation or aesthetic updates.
As a result of less aesthetically pleasing ceiling fans, many consumers
will keep their older, more inefficient ceiling fans instead of
purchasing modern, more efficient ceiling fans. Moreover, consumers
will have fewer innovative ceiling fan options available to them. (ALA,
No. 26 at p. 6) Hunter also commented that DOE regulations may impact
turnover and innovation of products. (Catania, Public Meeting
Transcript, No. 21 at p. 97, 98) ALA added that the current price
points for ceiling fans with AC motors substantially contribute to the
positive cash flow for the industry, and that a regulatory-driven
increase in ceiling fan prices will harm ALA's small- to medium-sized
members. (ALA, No. 26 at p. 6)
As part of the shipments analysis DOE modeled a reduction in the
number of shipments for standard and hugger ceiling fans in the
standards cases (with higher ELs resulting in a great reduction in the
quantity of standard and hugger ceiling fans). Additionally, these
potentially lower shipment volumes are included (as inputs) in the GRIM
used in the MIA to calculate manufacturer cash flows. Lastly, the MIA
estimates the cost on ceiling fan manufacturers to redesign any non-
compliant ceiling fan models that would have to be redesigned due to
energy conservation standards.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions to emissions of other gases
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion.
The analysis of electric power sector emissions of CO2,
NOX, SO2, and Hg uses emissions factors intended
to represent the marginal impacts of the change in electricity
consumption associated with amended or new standards. The methodology
is based on results published for the AEO, including a set of side
cases that implement a variety of efficiency-related policies. The
methodology is described in appendix 13A in the NOPR TSD. The analysis
presented in this notice uses projections from AEO2023. Power sector
emissions of CH4 and N2O from fuel combustion are
estimated using Emission Factors for Greenhouse Gas Inventories
published by the Environmental Protection Agency (EPA).\62\
---------------------------------------------------------------------------
\62\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed July 12,
2021).
---------------------------------------------------------------------------
FFC upstream emissions, which include emissions from fuel
combustion during extraction, processing, and transportation of fuels,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2, are estimated based on the
methodology described in chapter 15 of the NOPR TSD.
The emissions intensity factors are expressed in terms of physical
units per MWh or MMBtu of site energy savings. For power sector
emissions, specific emissions intensity factors are calculated by
sector and end use. Total emissions reductions are estimated using the
energy savings calculated in the national impact analysis.
1. Air Quality Regulations Incorporated in DOE's Analysis
DOE's no-new-standards case for the electric power sector reflects
the AEO, which incorporates the projected impacts of existing air
quality regulations on emissions. AEO2023 generally represents current
legislation and environmental regulations, including recent government
actions, that were in place at the time of preparation of AEO2023,
including the emissions control programs discussed in the following
paragraphs.\63\
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\63\ For further information, see the Assumptions to AEO2023
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed May 10, 2023).
---------------------------------------------------------------------------
SO2 emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO2 for affected EGUs in the 48 contiguous States and
the District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2
emissions from numerous States in the eastern half of the United States
are also limited under the Cross-State Air Pollution Rule (``CSAPR'').
76 FR 48208 (Aug. 8, 2011). CSAPR requires these States to reduce
certain emissions, including annual SO2 emissions, and went
into effect as of January 1, 2015.\64\ AEO2023 incorporates
implementation of CSAPR, including the update to the CSAPR ozone season
program emission budgets and target dates issued in 2016. 81 FR 74504
(Oct. 26, 2016). Compliance with CSAPR is flexible among EGUs and is
enforced through the use of tradable emissions allowances. Under
existing EPA regulations, any excess SO2 emissions
allowances resulting from the lower electricity demand caused by the
adoption of an efficiency standard could be used to permit offsetting
increases in SO2 emissions by another regulated EGU.
---------------------------------------------------------------------------
\64\ CSAPR requires states to address annual emissions of
SO2 and NOX, precursors to the formation of
fine particulate matter (PM2.5) pollution, in order to
address the interstate transport of pollution with respect to the
1997 and 2006 PM2.5 National Ambient Air Quality
Standards (``NAAQS''). CSAPR also requires certain states to address
the ozone season (May-September) emissions of NOX, a
precursor to the formation of ozone pollution, in order to address
the interstate transport of ozone pollution with respect to the 1997
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a
supplemental rule that included an additional five states in the
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011)
(Supplemental Rule).
---------------------------------------------------------------------------
However, beginning in 2016, SO2 emissions began to fall
as a result of the Mercury and Air Toxics Standards (``MATS'') for
power plants. 77 FR 9304 (Feb. 16, 2012). The final rule establishes
power plant emission standards for mercury, acid gases, and non-mercury
metallic toxic pollutants. In order to continue operating, coal power
plants must have either flue gas desulfurization or dry sorbent
injection systems installed. Both technologies, which are used to
reduce acid gas emissions, also reduce SO2 emissions.
Because of the emissions reductions under the MATS, it is unlikely that
excess SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by another regulated EGU.
Therefore, energy conservation standards that decrease electricity
generation would generally reduce SO2 emissions. DOE
estimated SO2 emissions reduction using emissions factors
based on AEO2023.
CSAPR also established limits on NOX emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NOX
emissions in those States covered by CSAPR emissions limits if excess
NOX emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NOX emissions from other EGUs. In such case, NOX
emissions would remain near the limit even if electricity generation
goes down. A different case could possibly result, depending on the
[[Page 40978]]
configuration of the power sector in the different regions and the need
for allowances, such that NOX emissions might not remain at
the limit in the case of lower electricity demand. In this case, energy
conservation standards might reduce NOX emissions in covered
States. Despite this possibility, DOE has chosen to be conservative in
its analysis and has maintained the assumption that standards will not
reduce NOX emissions in States covered by CSAPR. Energy
conservation standards would be expected to reduce NOX
emissions in the States not covered by CSAPR. DOE used AEO2023 data to
derive NOX emissions factors for the group of States not
covered by CSAPR.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would be expected to slightly reduce Hg emissions. DOE
estimated mercury emissions reduction using emissions factors based on
AEO2023, which incorporates the MATS.
L. Monetizing Emissions Impacts
As part of the development of this proposed rule, for the purpose
of complying with the requirements of Executive Order 12866, DOE
considered the estimated monetary benefits from the reduced emissions
of CO2, CH4, N2O, NOX, and
SO2 that are expected to result from each of the TSLs
considered. In order to make this calculation analogous to the
calculation of the NPV of consumer benefit, DOE considered the reduced
emissions expected to result over the lifetime of products shipped in
the projection period for each TSL. This section summarizes the basis
for the values used for monetizing the emissions benefits and presents
the values considered in this NOPR.
To monetize the benefits of reducing GHG emissions, this analysis
uses the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
1. Monetization of Greenhouse Gas Emissions
DOE estimates the monetized benefits of the reductions in emissions
of CO2, CH4, and N2O by using a
measure of the SC of each pollutant (e.g., SC-CO2). These
estimates represent the monetary value of the net harm to society
associated with a marginal increase in emissions of these pollutants in
a given year, or the benefit of avoiding that increase. These estimates
are intended to include (but are not limited to) climate-change-related
changes in net agricultural productivity, human health, property
damages from increased flood risk, disruption of energy systems, risk
of conflict, environmental migration, and the value of ecosystem
services.
DOE exercises its own judgment in presenting monetized climate
benefits as recommended by applicable Executive orders, and DOE would
reach the same conclusion presented in this proposed rulemaking in the
absence of the social cost of greenhouse gases. That is, the social
costs of greenhouse gases, whether measured using the February 2021
interim estimates presented by the Interagency Working Group on the
Social Cost of Greenhouse Gases or by another means, did not affect the
rule ultimately proposed by DOE.
DOE estimated the global social benefits of CO2,
CH4, and N2O reductions using SC-GHG values that
were based on the interim values presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
Estimates under Executive Order 13990, published in February 2021 by
the IWG. The SC-GHGs is the monetary value of the net harm to society
associated with a marginal increase in emissions in a given year, or
the benefit of avoiding that increase. In principle, SC-GHGs includes
the value of all climate change impacts, including (but not limited to)
changes in net agricultural productivity, human health effects,
property damage from increased flood risk and natural disasters,
disruption of energy systems, risk of conflict, environmental
migration, and the value of ecosystem services. The SC-GHGs therefore,
reflects the societal value of reducing emissions of the gas in
question by one metric ton. The SC-GHGs is the theoretically
appropriate value to use in conducting benefit-cost analyses of
policies that affect CO2, N2O and CH4 emissions.
As a member of the IWG involved in the development of the February 2021
SC-GHG TSD, DOE agrees that the interim SC-GHG estimates represent the
most appropriate estimate of the SC-GHG until revised estimates have
been developed reflecting the latest, peer-reviewed science.
The SC-GHGs estimates presented here were developed over many
years, using transparent process, peer-reviewed methodologies, the best
science available at the time of that process, and with input from the
public. Specifically, in 2009, the IWG, which included the DOE and
other executive branch agencies and offices, was established to ensure
that agencies were using the best available science and to promote
consistency in the social cost of carbon (SC-CO2) values
used across agencies. The IWG published SC-CO2 estimates in
2010 that were developed from an ensemble of three widely cited
integrated assessment models (IAMs) that estimate global climate
damages using highly aggregated representations of climate processes
and the global economy combined into a single modeling framework. The
three IAMs were run using a common set of input assumptions in each
model for future population, economic, and CO2 emissions
growth, as well as equilibrium climate sensitivity--a measure of the
globally averaged temperature response to increased atmospheric
CO2 concentrations. These estimates were updated in 2013
based on new versions of each IAM. In August 2016 the IWG published
estimates of the social cost of methane (SC-CH4) and nitrous
oxide (SC-N2O) using methodologies that are consistent with
the methodology underlying the SC-CO2 estimates. The
modeling approach that extends the IWG SC-CO2 methodology to
non-CO2 GHGs has undergone multiple stages of peer review.
The SC-CH4 and SC-N2O estimates were developed by
Marten et al.\65\ and underwent a standard double-blind peer review
process prior to journal publication. In 2015, as part of the response
to public comments received to a 2013 solicitation for comments on the
SC-CO2 estimates, the IWG announced a National Academies of
Sciences, Engineering, and Medicine review of the SC-CO2
estimates to offer advice on how to approach future updates to ensure
that the estimates continue to reflect the best available science and
methodologies. In January 2017, the National Academies released their
final report, Valuing Climate Damages: Updating Estimation of the
Social Cost of Carbon Dioxide, and recommended specific criteria for
future updates to the SC-CO2 estimates, a modeling framework
to satisfy the specified criteria, and both near-term updates and
longer-term research needs pertaining to various components of the
estimation process (National Academies, 2017).\66\ Shortly thereafter,
in March 2017, President Trump issued Executive Order 13783, which
[[Page 40979]]
disbanded the IWG, withdrew the previous TSDs, and directed agencies to
ensure SC-CO2 estimates used in regulatory analyses are
consistent with the guidance contained in OMB's Circular A-4,
``including with respect to the consideration of domestic versus
international impacts and the consideration of appropriate discount
rates'' (E.O. 13783, Section 5(c)). Benefit-cost analyses following
E.O. 13783 used SC-GHG estimates that attempted to focus on the U.S.-
specific share of climate change damages as estimated by the models and
were calculated using two discount rates recommended by Circular A-4, 3
percent and 7 percent. All other methodological decisions and model
versions used in SC-GHG calculations remained the same as those used by
the IWG in 2010 and 2013, respectively.
---------------------------------------------------------------------------
\65\ Marten, A.L., E.A. Kopits, C.W. Griffiths, S.C. Newbold,
and A. Wolverton. Incremental CH4 and N2O
mitigation benefits consistent with the U.S. Government's SC-
CO2 estimates. Climate Policy. 2015. 15(2): pp. 272-298.
\66\ National Academies of Sciences, Engineering, and Medicine.
Valuing Climate Damages: Updating Estimation of the Social Cost of
Carbon Dioxide. 2017. The National Academies Press: Washington, DC.
---------------------------------------------------------------------------
On January 20, 2021, President Biden issued Executive Order 13990,
which re-established the IWG and directed it to ensure that the U.S.
Government's estimates of the social cost of carbon and other
greenhouse gases reflect the best available science and the
recommendations of the National Academies (2017). The IWG was tasked
with first reviewing the SC-GHG estimates currently used in Federal
analyses and publishing interim estimates within 30 days of the E.O.
that reflect the full impact of GHG emissions, including by taking
global damages into account. The interim SC-GHG estimates published in
February 2021 are used here to estimate the climate benefits for this
proposed rulemaking. The E.O. instructs the IWG to undertake a fuller
update of the SC-GHG estimates by January 2022 that takes into
consideration the advice of the National Academies (2017) and other
recent scientific literature. The February 2021 SC-GHG TSD provides a
complete discussion of the IWG's initial review conducted under E.O.
13990. In particular, the IWG found that the SC-GHG estimates used
under E.O. 13783 fail to reflect the full impact of GHG emissions in
multiple ways.
First, the IWG found that the SC-GHG estimates used under E.O.
13783 fail to fully capture many climate impacts that affect the
welfare of U.S. citizens and residents, and those impacts are better
reflected by global measures of the SC-GHG. Examples of omitted effects
from the E.O. 13783 estimates include direct effects on U.S. citizens,
assets, and investments located abroad, supply chains, U.S. military
assets and interests abroad, and tourism, and spillover pathways such
as economic and political destabilization and global migration that can
lead to adverse impacts on U.S. national security, public health, and
humanitarian concerns. In addition, assessing the benefits of U.S. GHG
mitigation activities requires consideration of how those actions may
affect mitigation activities by other countries, as those international
mitigation actions will provide a benefit to U.S. citizens and
residents by mitigating climate impacts that affect U.S. citizens and
residents. A wide range of scientific and economic experts have
emphasized the issue of reciprocity as support for considering global
damages of GHG emissions. If the United States does not consider
impacts on other countries, it is difficult to convince other countries
to consider the impacts of their emissions on the United States. The
only way to achieve an efficient allocation of resources for emissions
reduction on a global basis--and so benefit the U.S. and its citizens--
is for all countries to base their policies on global estimates of
damages. As a member of the IWG involved in the development of the
February 2021 SC-GHG TSD, DOE agrees with this assessment and,
therefore, in this proposed rule DOE centers attention on a global
measure of SC-GHG. This approach is the same as that taken in DOE
regulatory analyses from 2012 through 2016. A robust estimate of
climate damages that accrue only to U.S. citizens and residents does
not currently exist in the literature. As explained in the February
2021 TSD, existing estimates are both incomplete and an underestimate
of total damages that accrue to the citizens and residents of the U.S.
because they do not fully capture the regional interactions and
spillovers discussed previously, nor do they include all of the
important physical, ecological, and economic impacts of climate change
recognized in the climate change literature. As noted in the February
2021 SC-GHG TSD, the IWG will continue to review developments in the
literature, including more robust methodologies for estimating a U.S.-
specific SC-GHG value, and explore ways to better inform the public of
the full range of carbon impacts. As a member of the IWG, DOE will
continue to follow developments in the literature pertaining to this
issue.
Second, the IWG found that the use of the social rate of return on
capital (7 percent under current OMB Circular A-4 guidance) to discount
the future benefits of reducing GHG emissions inappropriately
underestimates the impacts of climate change for the purposes of
estimating the SC-GHG. Consistent with the findings of the National
Academies (2017) and the economic literature, the IWG continued to
conclude that the consumption rate of interest is the theoretically
appropriate discount rate in an intergenerational context,\67\ and
recommended that discount rate uncertainty and relevant aspects of
intergenerational ethical considerations be accounted for in selecting
future discount rates.
---------------------------------------------------------------------------
\67\ Interagency Working Group on Social Cost of Carbon. Social
Cost of Carbon for Regulatory Impact Analysis under Executive Order
12866. 2010. United States Government. (Last accessed April 15,
2022.) www.epa.gov/sites/default/files/2016-12/documents/scc_tsd_2010.pdf; Interagency Working Group on Social Cost of
Carbon. Technical Update of the Social Cost of Carbon for Regulatory
Impact Analysis Under Executive Order 12866. 2013. (Last accessed
April 15, 2022.) www.federalregister.gov/documents/2013/11/26/2013-28242/technical-support-document-technical-update-of-the-social-cost-of-carbon-for-regulatory-impact; Interagency Working Group on
Social Cost of Greenhouse Gases, United States Government. Technical
Support Document: Technical Update on the Social Cost of Carbon for
Regulatory Impact Analysis-Under Executive Order 12866. August 2016.
(Last accessed January 18, 2022.) www.epa.gov/sites/default/files/2016-12/documents/sc_co2_tsd_august_2016.pdf; Interagency Working
Group on Social Cost of Greenhouse Gases, United States Government.
Addendum to Technical Support Document on Social Cost of Carbon for
Regulatory Impact Analysis under Executive Order 12866: Application
of the Methodology to Estimate the Social Cost of Methane and the
Social Cost of Nitrous Oxide. August 2016. (Last accessed January
18, 2022.) https://www.epa.gov/sites/default/files/2016-12/documents/addendum_to_sc-ghg_tsd_august_2016.pdf.
---------------------------------------------------------------------------
Furthermore, the damage estimates developed for use in the SC-GHG
are estimated in consumption-equivalent terms, and so an application of
OMB Circular A-4's guidance for regulatory analysis would then use the
consumption discount rate to calculate the SC-GHG. DOE agrees with this
assessment and will continue to follow developments in the literature
pertaining to this issue. DOE also notes that while OMB Circular A-4,
as published in 2003, recommends using 3-percent and 7-percent discount
rates as ``default'' values, Circular A-4 also reminds agencies that
``different regulations may call for different emphases in the
analysis, depending on the nature and complexity of the regulatory
issues and the sensitivity of the benefit and cost estimates to the key
assumptions.'' On discounting, Circular A-4 recognizes that ``special
ethical considerations arise when comparing benefits and costs across
generations,'' and Circular A-4 acknowledges that analyses may
appropriately ``discount future costs and consumption benefits . . . at
a lower rate than for intragenerational analysis.'' In the 2015
Response to Comments on the Social Cost of Carbon for Regulatory Impact
Analysis, OMB, DOE, and the other IWG members recognized that
``Circular A-4
[[Page 40980]]
is a living document'' and ``the use of 7 percent is not considered
appropriate for intergenerational discounting. There is wide support
for this view in the academic literature, and it is recognized in
Circular A-4 itself.'' Thus, DOE concludes that a 7-percent discount
rate is not appropriate to apply to value the social cost of greenhouse
gases in the analysis presented in this analysis.
To calculate the present and annualized values of climate benefits,
DOE uses the same discount rate as the rate used to discount the value
of damages from future GHG emissions, for internal consistency. That
approach to discounting follows the same approach that the February
2021 TSD recommends ``to ensure internal consistency--i.e., future
damages from climate change using the SC-GHG at 2.5 percent should be
discounted to the base year of the analysis using the same 2.5 percent
rate.'' DOE has also consulted the National Academies' 2017
recommendations on how SC-GHG estimates can ``be combined in RIAs with
other cost and benefits estimates that may use different discount
rates.'' The National Academies reviewed several options, including
``presenting all discount rate combinations of other costs and benefits
with [SC-GHG] estimates.''
As a member of the IWG involved in the development of the February
2021 SC-GHG TSD, DOE agrees with the above assessment and will continue
to follow developments in the literature pertaining to this issue.
While the IWG works to assess how best to incorporate the latest, peer-
reviewed science to develop an updated set of SC-GHG estimates, it set
the interim estimates to be the most recent estimates developed by the
IWG prior to the group being disbanded in 2017. The estimates rely on
the same models and harmonized inputs and are calculated using a range
of discount rates. As explained in the February 2021 SC-GHG TSD, the
IWG has recommended that agencies revert to the same set of four values
drawn from the SC-GHG distributions based on three discount rates as
were used in regulatory analyses between 2010 and 2016 and were subject
to public comment. For each discount rate, the IWG combined the
distributions across models and socioeconomic emissions scenarios
(applying equal weight to each) and then selected a set of four values
recommended for use in benefit-cost analyses: an average value
resulting from the model runs for each of three discount rates (2.5
percent, 3 percent, and 5 percent), plus a fourth value, selected as
the 95th percentile of estimates based on a 3-percent discount rate.
The fourth value was included to provide information on potentially
higher-than-expected economic impacts from climate change. As explained
in the February 2021 SC-GHG TSD, and DOE agrees, this update reflects
the immediate need to have an operational SC-GHG for use in regulatory
benefit-cost analyses and other applications that was developed using a
transparent process, peer-reviewed methodologies, and the science
available at the time of that process. Those estimates were subject to
public comment in the context of dozens of proposed rulemakings as well
as in a dedicated public comment period in 2013.
There are a number of limitations and uncertainties associated with
the SC-GHG estimates. First, the current scientific and economic
understanding of discounting approaches suggests discount rates
appropriate for intergenerational analysis in the context of climate
change are likely to be less than 3 percent, near 2 percent or
lower.\68\ Second, the IAMs used to produce these interim estimates do
not include all of the important physical, ecological, and economic
impacts of climate change recognized in the climate change literature
and the science underlying their ``damage functions''--i.e., the core
parts of the IAMs that map global mean temperature changes and other
physical impacts of climate change into economic (both market and
nonmarket) damages--lags behind the most recent research. For example,
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the integrated assessment models, their
incomplete treatment of adaptation and technological change, the
incomplete way in which inter-regional and intersectoral linkages are
modeled, uncertainty in the extrapolation of damages to high
temperatures, and inadequate representation of the relationship between
the discount rate and uncertainty in economic growth over long time
horizons. Likewise, the socioeconomic and emissions scenarios used as
inputs to the models do not reflect new information from the last
decade of scenario generation or the full range of projections. The
modeling limitations do not all work in the same direction in terms of
their influence on the SC-CO2 estimates. However, as
discussed in the February 2021 TSD, the IWG has recommended that, taken
together, the limitations suggest that the interim SC-GHG estimates
used in this proposed rule likely underestimate the damages from GHG
emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------
\68\ Interagency Working Group on Social Cost of Greenhouse
Gases (IWG). 2021. Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990. February. United States Government. Available at:
www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/. (Last accessed January 20, 2023).
---------------------------------------------------------------------------
DOE's derivations of the SC-CO2, SC-N2O, and
SC-CH4 values used for this NOPR are discussed in the
following sections, and the results of DOE's analyses estimating the
benefits of the reductions in emissions of these GHGs are presented in
section V.B.6 of this document.
a. Social Cost of Carbon
The SC-CO2 values used for this NOPR were based on the
values presented for the IWG's February 2021 TSD. Table IV.11 shows the
updated sets of SC-CO2 estimates from the IWG's TSD in 5-
year increments from 2020 to 2050. The full set of annual values that
DOE used is presented in Appendix 14-A of the NOPR TSD. For purposes of
capturing the uncertainties involved in regulatory impact analysis, DOE
has determined it is appropriate to include all four sets of SC-
CO2 values, as recommended by the IWG.\69\
---------------------------------------------------------------------------
\69\ For example, the February 2021 TSD discusses how the
understanding of discounting approaches suggests that discount rates
appropriate for intergenerational analysis in the context of climate
change may be lower than 3 percent.
[[Page 40981]]
Table IV.11--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
[2020$ Per metric ton CO2)
----------------------------------------------------------------------------------------------------------------
Discount rate and statistic
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2020............................................ 14 51 76 152
2025............................................ 17 56 83 169
2030............................................ 19 62 89 187
2035............................................ 22 67 96 206
2040............................................ 25 73 103 225
2045............................................ 28 79 110 242
2050............................................ 32 85 116 260
----------------------------------------------------------------------------------------------------------------
Because the IWG's last year was 2050,, DOE used SC-CO2
estimates published by EPA, for 2051 to 2070, adjusted to 2020$.\70\
These estimates are based on methods, assumptions, and parameters
identical to those used to develop the 2020-2050 estimates published by
the IWG (which were based on EPA modeling). DOE expects additional
climate benefits to accrue for any longer-life ceiling fans after 2070,
but a lack of available SC-CO2 estimates for emissions years
beyond 2070 prevents DOE from monetizing these potential benefits in
this analysis.
---------------------------------------------------------------------------
\70\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC, December 2021. Available at https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf (last accessed January 13, 2023).
---------------------------------------------------------------------------
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. DOE adjusted the values to 2022$ using the implicit price
deflator for gross domestic product (``GDP'') from the Bureau of
Economic Analysis. To calculate a present value of the stream of
monetary values, DOE discounted the values in each of the four cases
using the specific discount rate that had been used to obtain the SC-
CO2 values in each case.
b. Social Cost of Methane and Nitrous Oxide
The SC-CH4 and SC-N2O values used for this
NOPR were based on the values developed for the February 2021 TSD.
Table IV.12 shows the updated sets of SC-CH4 and SC-
N2O estimates from the latest interagency update in 5-year
increments from 2020 to 2050. The full set of annual values used is
presented in Appendix 14-A of the NOPR TSD. To capture the
uncertainties involved in regulatory impact analysis, DOE has
determined it is appropriate to include all four sets of SC-
CH4 and SC-N2O values, as recommended by the IWG.
DOE derived values after 2050 using the approach described above for
the SC-CO2.
Table IV.12--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
[2020$ Per metric ton]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SC-CH4 SC-N2O
-------------------------------------------------------------------------------------------------------------------------------
Discount rate and statistic Discount rate and statistic
-------------------------------------------------------------------------------------------------------------------------------
Year 5% 3% 2.5% 3% 5% 3% 2.5% 3%
-------------------------------------------------------------------------------------------------------------------------------
95th 95th
Average Average Average percentile Average Average Average percentile
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020............................................................ 670 1500 2000 3900 5800 18000 27000 48000
2025............................................................ 800 1700 2200 4500 6800 21000 30000 54000
2030............................................................ 940 2000 2500 5200 7800 23000 33000 60000
2035............................................................ 1100 2200 2800 6000 9000 25000 36000 67000
2040............................................................ 1300 2500 3100 6700 10000 28000 39000 74000
2045............................................................ 1500 2800 3500 7500 12000 30000 42000 81000
2050............................................................ 1700 3100 3800 8200 13000 33000 45000 88000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DOE multiplied the CH4 and N2O emissions
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. DOE
adjusted the values to 2022$ using the implicit price deflator for
gross domestic product (``GDP'') from the Bureau of Economic Analysis.
To calculate a present value of the stream of monetary values, DOE
discounted the values in each of the cases using the specific discount
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case.
2. Monetization of Other Emissions Impacts
For the NOPR, DOE estimated the monetized value of NOX
and SO2 emissions reductions from electricity generation
using the latest benefit per ton estimates for that sector from the
EPA's Benefits Mapping and Analysis Program.\71\ DOE used EPA's values
for PM2.5-related benefits associated with NOX
and SO2 and for ozone-related benefits associated with
NOX for 2025, 2030, and 2040, calculated with discount rates
of 3 percent and 7 percent. DOE used linear interpolation to define
values for the years not given in the 2025 to 2040 period; for years
beyond 2040 the values are held constant. DOE combined the EPA benefit
per ton estimates with regional information on electricity consumption
and emissions to define weighted-average national values for
NOX and
[[Page 40982]]
SO2 as a function of sector (see appendix 14B of the NOPR
TSD).
---------------------------------------------------------------------------
\71\ Estimating the Benefit per Ton of Reducing PM2.5 Precursors
from 21 Sectors. www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
---------------------------------------------------------------------------
DOE also estimated the monetized value of NOX and
SO2 emissions reductions from site use of natural gas in
ceiling fans using benefit-per-ton estimates from the EPA's Benefits
Mapping and Analysis Program. Although none of the sectors covered by
EPA refers specifically to residential and commercial buildings, the
sector called ``area sources'' would be a reasonable proxy for
residential and commercial buildings.\72\ The EPA document provides
high and low estimates for 2025 and 2030 at 3- and 7-percent discount
rates.\73\ DOE used the same linear interpolation and extrapolation as
it did with the values for electricity generation.
---------------------------------------------------------------------------
\72\ ``Area sources'' represents all emission sources for which
states do not have exact (point) locations in their emissions
inventories. Because exact locations would tend to be associated
with larger sources, ``area sources'' would be fairly representative
of small, dispersed sources like homes and businesses.
\73\ ``Area sources'' are a category in the 2018 document from
EPA, but are not used in the 2021 document cited above. See:
www.epa.gov/sites/default/files/2018-02/documents/sourceapportionmentbpttsd_2018.pdf. (Last accessed January 20,
2023).
---------------------------------------------------------------------------
DOE multiplied the site emissions reduction (in tons) in each year
by the associated $/ton values, and then discounted each series using
discount rates of 3 percent and 7 percent as appropriate.
M. Utility Impact Analysis
The utility impact analysis estimates the changes in installed
electrical capacity and generation projected to result for each
considered TSL. The analysis is based on published output from the NEMS
associated with AEO2023. NEMS produces the AEO Reference case, as well
as a number of side cases that estimate the economy-wide impacts of
changes to energy supply and demand. For the current analysis, impacts
are quantified by comparing the levels of electricity sector
generation, installed capacity, fuel consumption and emissions in the
AEO2023 Reference case and various side cases. Details of the
methodology are provided in the appendices to chapters 13 and 15 of the
NOPR TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of potential new or
amended energy conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a proposed standard. Employment impacts from new or
amended energy conservation standards include both direct and indirect
impacts. Direct employment impacts are any changes in the number of
employees of manufacturers of the products subject to standards, their
suppliers, and related service firms. The MIA addresses those impacts.
Indirect employment impacts are changes in national employment that
occur due to the shift in expenditures and capital investment caused by
the purchase and operation of more-efficient appliances. Indirect
employment impacts from standards consist of the net jobs created or
eliminated in the national economy, other than in the manufacturing
sector being regulated, caused by (1) reduced spending by consumers on
energy, (2) reduced spending on new energy supply by the utility
industry, (3) increased consumer spending on the products to which the
new standards apply and other goods and services, and (4) the effects
of those three factors throughout the economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (``BLS''). BLS regularly publishes its estimates of
the number of jobs per million dollars of economic activity in
different sectors of the economy, as well as the jobs created elsewhere
in the economy by this same economic activity. Data from BLS indicate
that expenditures in the utility sector generally create fewer jobs
(both directly and indirectly) than expenditures in other sectors of
the economy.\74\ There are many reasons for these differences,
including wage differences and the fact that the utility sector is more
capital-intensive and less labor-intensive than other sectors. Energy
conservation standards have the effect of reducing consumer utility
bills. Because reduced consumer expenditures for energy likely lead to
increased expenditures in other sectors of the economy, the general
effect of efficiency standards is to shift economic activity from a
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, the BLS
data suggest that net national employment may increase due to shifts in
economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------
\74\ See U.S. Department of Commerce-Bureau of Economic
Analysis. Regional Multipliers: A User Handbook for the Regional
Input-Output Modeling System (RIMS II). 1997. U.S. Government
Printing Office: Washington, DC. Available at https://apps.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf (last accessed January 20,
2023).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this NOPR using an input/output model of the U.S.
economy called Impact of Sector Energy Technologies version 4
(``ImSET'').\75\ ImSET is a special-purpose version of the ``U.S.
Benchmark National Input-Output'' (``I-O'') model, which was designed
to estimate the national employment and income effects of energy-saving
technologies. The ImSET software includes a computer-based I-O model
having structural coefficients that characterize economic flows among
187 sectors most relevant to industrial, commercial, and residential
building energy use.
---------------------------------------------------------------------------
\75\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W.
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model
Description and User Guide. 2015. Pacific Northwest National
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------
DOE notes that ImSET is not a general equilibrium forecasting
model, and that the uncertainties involved in projecting employment
impacts, especially changes in the later years of the analysis. Because
ImSET does not incorporate price changes, the employment effects
predicted by ImSET may over-estimate actual job impacts over the long
run for this rule. Therefore, DOE used ImSET only to generate results
for near-term timeframes (2028-2032), where these uncertainties are
reduced. For more details on the employment impact analysis, see
chapter 16 of the NOPR TSD.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for
ceiling fans. It addresses the TSLs examined by DOE, the projected
impacts of each of these levels if adopted as energy conservation
standards for ceiling fans, and the standards levels that DOE is
proposing to adopt in this NOPR. Additional details regarding DOE's
analyses are contained in the NOPR TSD supporting this document.
A. Trial Standard Levels
In general, DOE typically evaluates potential new or amended
standards for products and equipment by grouping individual efficiency
levels for each
[[Page 40983]]
class into TSLs. Use of TSLs allows DOE to identify and consider
manufacturer cost interactions between the product classes, to the
extent that there are such interactions, and price elasticity of
consumer purchasing decisions that may change when different standard
levels are set.
In the analysis conducted for this NOPR, DOE analyzed the benefits
and burdens of four TSLs for ceiling fans. DOE developed TSLs that
combine efficiency levels for each analyzed product class. DOE presents
the results for the TSLs in this document, while the results for all
efficiency levels that DOE analyzed are in the NOPR TSD.
Table V.1 presents the TSLs and the corresponding efficiency levels
that DOE has identified for potential amended energy conservation
standards for ceiling fans. TSL 4 represents the maximum
technologically feasible (``max-tech'') energy efficiency for all
product classes. TSL 3 corresponds to the highest efficiency level that
can be met for standard and hugger ceiling fans without low-income
purchasers experiencing a large increase in first cost, the highest
efficiency level with positive LCC for LDCFs, and the highest
efficiency level using the most efficient motor for HSBD fans without
needing aerodynamic redesign for fan blades. TSL 2 corresponds to the
highest efficiency level met with AC motors for standard and hugger
ceiling fans, positive LCC for LDCFs, and using the most efficient PSC
motors for HSBD ceiling fans. TSL 1 corresponds to using larger AC
motors for standard and hugger ceiling fans, positive LCC for LDCFs,
and using the most efficient PSC motor for HSBD ceiling fans.\76\
---------------------------------------------------------------------------
\76\ DOE did not consider a TSL with HSBD set to EL1 because the
LCC savings are negative at that EL.
Table V.1--Trial Standard Levels for Ceiling Fans
----------------------------------------------------------------------------------------------------------------
TSL Standard Hugger LDCF HSBD
----------------------------------------------------------------------------------------------------------------
TSL 1........................................... EL 1 EL 1 EL 1 EL 2
TSL 2........................................... EL 2 EL 2 EL 1 EL 2
TSL 3........................................... EL 3 EL 3 EL 1 EL 3
TSL 4........................................... EL 4 EL 4 EL 2 EL 4
----------------------------------------------------------------------------------------------------------------
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on ceiling fan consumers by
looking at the effects that potential amended standards at each TSL
would have on the LCC and PBP. DOE also examined the impacts of
potential standards on selected consumer subgroups. These analyses are
discussed in the following sections.
a. Life-Cycle Cost and Payback Period
In general, higher-efficiency products affect consumers in two
ways: (1) purchase price increases and (2) annual operating costs
decrease. Inputs used for calculating the LCC and PBP include total
installed costs (i.e., product price plus installation costs), and
operating costs (i.e., annual energy use, energy prices, energy price
trends, repair costs, and maintenance costs). The LCC calculation also
uses product lifetime and a discount rate. Chapter 8 of the NOPR TSD
provides detailed information on the LCC and PBP analyses.
Table V.2 through Table--V.9 show the LCC and PBP results for the
TSLs considered for each product class. In the first of each pair of
tables, the simple payback is measured relative to the baseline
product. In the second table, impacts are measured relative to the
efficiency distribution in the no-new-standards case in the compliance
year (see section IV.F.8 of this document). Because some consumers
purchase products with higher efficiency in the no-new-standards case,
the average savings are less than the difference between the average
LCC of the baseline product and the average LCC at each TSL. The
savings refer only to consumers who are affected by a standard at a
given TSL. Those who already purchase a product with efficiency at or
above a given TSL are not affected. Consumers for whom the LCC
increases at a given TSL experience a net cost. DOE does not include
consumers who no longer purchase ceiling fans (i.e., are ``priced out''
of the market) or delay their purchase in the percent of consumers that
experience a net cost. As discussed in section IV.H.1, DOE seeks
comment on this issue. However, DOE notes that low-income consumers who
may no longer purchase ceiling fans are considered in the justification
for the proposed TSL. See discussion in section V.C.1 for details.
Table V.2--Average LCC and PBP Results for Standard Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2022$)
---------------------------------------------------------------- Simple payback Average
Efficiency level First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ $121.61 $13.80 $161.90 $283.51 .............. 14.6
1....................................................... 124.55 13.30 156.05 280.60 5.9 14.6
2....................................................... 129.33 12.69 148.89 278.22 7.0 14.6
3....................................................... 131.39 11.39 133.54 264.94 4.1 14.5
4....................................................... 148.03 7.75 90.89 238.92 4.4 14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
[[Page 40984]]
Table V.3--Average LCC Savings Relative to the No-New-Standards Case for Standard Ceiling Fans
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
Efficiency Percent of
TSL level Average LCC consumers that
savings * experience net
(2022$) cost
----------------------------------------------------------------------------------------------------------------
1............................................................... 1 $5.57 17
2............................................................... 2 11.25 38
3............................................................... 3 16.69 36
4............................................................... 4 39.84 34
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.4--Average LCC and PBP Results for Hugger Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2022$)
---------------------------------------------------------------- Simple payback Average
Efficiency level First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ $108.73 $11.87 $140.02 $248.76 .............. 14.6
1....................................................... 111.06 11.55 136.24 247.31 7.3 14.6
2....................................................... 112.26 11.40 134.44 246.70 7.5 14.6
3....................................................... 112.55 11.29 133.09 245.63 6.6 14.6
4....................................................... 136.47 7.04 82.84 219.31 5.7 14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.5--Average LCC Savings Relative to the No-New-Standards Case for Hugger Ceiling Fans
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
Efficiency Percent of
TSL level Average LCC consumers that
savings * experience net
(2022$) cost
----------------------------------------------------------------------------------------------------------------
1............................................................... 1 $2.10 28
2............................................................... 2 3.80 33
3............................................................... 3 5.14 33
4............................................................... 4 28.48 42
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.6--Average LCC and PBP Results for High-Speed Belt-Driven Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2022$)
---------------------------------------------------------------- Simple payback Average
Efficiency level First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ $559.52 $586.27 $5,397.92 $5,957.44 .............. 14.5
1....................................................... 692.32 579.64 5,336.84 6,029.16 20.0 14.5
2....................................................... 739.41 514.24 4,734.83 5,474.24 2.5 14.5
3....................................................... 769.49 484.86 4,464.36 5,233.85 2.1 14.5
4....................................................... 769.49 312.36 2,876.45 3,645.94 0.8 14.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
[[Page 40985]]
Table V.7--Average LCC Savings Relative to the No-New-Standards Case for High-Speed Belt-Driven Ceiling Fans
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
Efficiency Percent of
TSL level Average LCC consumers that
savings * experience net
(2022$) cost
----------------------------------------------------------------------------------------------------------------
1-2............................................................. 2 $508.29 0
3............................................................... 3 663.92 0
4............................................................... 4 1,854.94 0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.
Table V.8--Average LCC and PBP Results for Large-Diameter Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2022$)
---------------------------------------------------------------- Simple payback Average
Efficiency level First year's Lifetime (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................ $5,473.03 $170.58 $1,583.08 $7,056.11 .............. 14.6
1....................................................... 5,578.62 152.31 1,413.51 6,992.13 5.8 14.6
2....................................................... 5,905.17 133.83 1,241.58 7,146.75 11.8 14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
baseline product.
Table V.9--Average LCC Savings Relative to the No-New-Standards Case for Large-Diameter Ceiling Fans
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
Efficiency Percent of
TSL level Average LCC consumers that
savings * experience net
(2022$) cost
----------------------------------------------------------------------------------------------------------------
1-3............................................................. 1 $68.20 4
4............................................................... 2 (183.40) 43
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers. Parentheses indicate negative savings.
DOE also performed a sensitivity analysis to account for the
possibility that fans with BLDC motors will not decrease in price (see
appendix 8D of the NOPR TSD). In this analysis, average LCC savings of
affected consumers are smaller but remain positive for all equipment
classes at the proposed TSL (TSL 3).
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, DOE estimated the impact of the
considered TSLs on two subgroups: (1) low-income households (for
standard and hugger ceiling fans) and (2) small businesses (LDCFs and
HSBD ceiling fans). Table V.10 compares the average LCC savings and PBP
at each efficiency level for the consumer subgroups with similar
metrics for the entire consumer sample for ceiling fans. In most cases,
the average LCC savings and PBP for low-income households at the
considered efficiency levels are improved (i.e., higher LCC savings and
equal or lesser payback periods) from the average for all households.
Chapter 11 of the NOPR TSD presents the complete LCC and PBP results
for the subgroups.
Table V.10--Comparison of LCC Savings and PBP for Consumer Subgroups and All Consumers
----------------------------------------------------------------------------------------------------------------
Average LCC savings * (2022$) Simple payback (years)
---------------------------------------------------------------------------
TSL Low-income Low-income
households All households households All households
----------------------------------------------------------------------------------------------------------------
Standard Ceiling Fans
----------------------------------------------------------------------------------------------------------------
1................................... $7.92 $5.57 3.1 5.9
2................................... 15.05 11.25 3.6 7.0
3................................... 21.81 16.69 2.1 4.1
4................................... 52.89 39.84 2.3 4.4
----------------------------------------------------------------------------------------------------------------
[[Page 40986]]
Hugger Ceiling Fans
----------------------------------------------------------------------------------------------------------------
1................................... 3.59 2.10 3.7 7.3
2................................... 6.05 3.80 3.8 7.5
3................................... 8.21 5.14 3.1 6.6
4................................... 42.44 28.48 2.9 5.7
----------------------------------------------------------------------------------------------------------------
Small businesses All businesses Small businesses All businesses
----------------------------------------------------------------------------------------------------------------
Large-Diameter Ceiling Fans
----------------------------------------------------------------------------------------------------------------
1-3................................. 44.47 68.20 5.8 5.8
4................................... (213.59) (183.40) 11.8 11.8
----------------------------------------------------------------------------------------------------------------
HSBD Ceiling Fans
----------------------------------------------------------------------------------------------------------------
1-2................................. 419.41 508.29 20.0 20.0
3................................... 552.80 663.92 2.5 2.5
4................................... 1,593.49 1,854.94 2.1 2.1
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers. Parentheses indicate negative savings.
c. Rebuttable Presumption Payback
As discussed in section IV.F.9 of this document, EPCA establishes a
rebuttable presumption that an energy conservation standard is
economically justified if the increased purchase cost for a product
that meets the standard is less than three times the value of the
first-year energy savings resulting from the standard. In calculating a
rebuttable presumption payback period for each of the considered TSLs,
DOE used discrete values, and, as required by EPCA, based the energy
use calculation on the DOE test procedure for ceiling fans. In
contrast, the PBPs presented in section V.B.1.a of this document, were
calculated using distributions that reflect the range of energy use in
the field.
Table V.5 presents the rebuttable-presumption payback periods for
the considered TSLs for ceiling fans. While DOE examined the
rebuttable-presumption criterion, it considered whether the standard
levels considered for the NOPR are economically justified through a
more detailed analysis of the economic impacts of those levels,
pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full range
of impacts to the consumer, manufacturer, Nation, and environment. The
results of that analysis serve as the basis for DOE to definitively
evaluate the economic justification for a potential standard level,
thereby supporting or rebutting the results of any preliminary
determination of economic justification.
Table V.11--Rebuttable Presumption Payback Periods
----------------------------------------------------------------------------------------------------------------
Rebuttable payback period (years)
---------------------------------------------------------------
Efficiency level Large-
Standard Hugger HSBD diameter
----------------------------------------------------------------------------------------------------------------
1............................................... 4.9 5.9 21.1 5.8
2............................................... 5.8 6.0 2.6 12.0
3............................................... 3.6 4.6 2.2 ..............
4............................................... .............. .............. 0.8 ..............
----------------------------------------------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of new and amended
energy conservation standards on manufacturers of ceiling fans. The
following section describes the expected impacts on manufacturers at
each considered TSL. Chapter 12 of the NOPR TSD explains the analysis
in further detail.
a. Industry Cash Flow Analysis Results
In this section, DOE provides GRIM results from the analysis, which
examines changes in the industry that would result from the analyzed
standards. The following tables summarize the estimated financial
impacts (represented by changes in INPV) of potential new and amended
energy conservation standards on manufacturers of ceiling fans, as well
as the conversion costs that DOE estimates manufacturers of ceiling
fans would incur at each TSL. To evaluate the range of cash-flow
impacts on the ceiling fan industry, DOE modeled two scenarios using
different assumptions that correspond to the range of anticipated
market responses to new and amended energy conservation standards: (1)
the preservation of gross margin scenario and (2) the preservation of
operating profit scenario.
In the preservation of gross margin scenario, ceiling fan
manufacturers are able to maintain their margins (as a percentage),
even as the MPCs of ceiling fans increase due to energy conservation
standards. The same uniform margin of 27 percent is applied across
standard and hugger ceiling fans, while the same
[[Page 40987]]
uniform margin of 41 percent is applied across all LDCF and HSBD
ceiling fans for all efficiency levels in the preservation of gross
margin scenario.\77\ In the preservation of operating profit scenario,
in the standards cases manufacturers are not able to maintain their
original margins of 27 percent for standard and hugger ceiling fans and
41 percent for LDCF and HSBD ceiling fans. Instead, manufacturers are
only able to maintain the same operating profit (in absolute dollars)
in the standards cases as in the no-new-standards case, despite higher
MPCs.
---------------------------------------------------------------------------
\77\ The gross margin percentage of 27 percent (for standard and
hugger ceiling fans) is based on a manufacturer markup of 1.37 and
the gross margin percentage of 41 percent (for LDCF and HSBD ceiling
fans) is based on a manufacturer markup of 1.70.
---------------------------------------------------------------------------
Each of the modeled scenarios results in a unique set of cash-flows
and corresponding industry values at each TSL for ceiling fan
manufacturers. In the following discussion, the INPV results refer to
the difference in industry value between the no-new-standards case and
each standards case resulting from the sum of discounted cash-flows
from 2023 through 2057. To provide perspective on the short-run cash-
flow impact, DOE includes in the discussion of results a comparison of
free cash flow between the no-new-standards case and the standards case
at each TSL in the year before new and amended standards are required.
DOE presents the range in INPV for all ceiling fan manufacturers in
Table V.12andTable V.13. However, most ceiling fan manufacturers only
manufacture one of the three categories of standard or hugger ceiling
fans, LDCFs, or HSBD ceiling fans. DOE lists the impacts on those
groups of ceiling fan manufacturers. DOE presents the range in INPV for
standard and hugger ceiling fan manufacturers in Table V.14 and Table
V.15; the range in INPV for LDCF manufacturers in Table V.16 and Table
V.17; the range in INPV for HSBD ceiling fan manufacturers in Table
V.18 and Table V.19.
Table V.12--Manufacturer Impact Analysis for All Ceiling Fans--Preservation of Gross Margin Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2022$ millions............. 2,329 2,293 2,298 2,286 2,278
Change in INPV........................... 2022$ millions............. ................ (35.8) (30.8) (42.6) (50.8)
%.......................... ................ (1.5) (1.3) (1.8) (2.2)
Product Conversion Costs................. 2022$ millions............. ................ 32.9 41.0 54.8 149.6
Capital Conversion Costs................. 2022$ millions............. ................ 36.8 45.9 52.4 95.8
Total Conversion Costs................... 2022$ millions............. ................ 69.7 87.0 107.2 245.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative value. Not all numbers sum exactly due to rounding.
Table V.13--Manufacturer Impact Analysis for All Ceiling Fans--Preservation of Operating Profit Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2022$ millions............. 2,329 2,272 2,244 2,227 2,003
Change in INPV........................... 2022$ millions............. ................ (56.9) (84.8) (101.3) (325.7)
%.......................... ................ (2.4) (3.6) (4.4) (14.0)
Product Conversion Costs................. 2022$ millions............. ................ 32.9 41.0 54.8 149.6
Capital Conversion Costs................. 2022$ millions............. ................ 36.8 45.9 52.4 95.8
Total Conversion Costs................... 2022$ millions............. ................ 69.7 87.0 107.2 245.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative value. Not all numbers sum exactly due to rounding.
Standard and Hugger Ceiling Fan Manufacturers
Table V.14--Manufacturer Impact Analysis for Standard and Hugger Ceiling Fans--Preservation of Gross Margin Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2022$ millions............. 1,517 1,487 1,492 1,481 1,477
Change in INPV........................... 2022$ millions............. ................ (29.2) (24.1) (35.8) (39.2)
%.......................... ................ (1.9) (1.6) (2.4) (2.6)
Product Conversion Costs................. 2022$ millions............. ................ 26.3 34.4 48.0 122.7
Capital Conversion Costs................. 2022$ millions............. ................ 29.6 38.7 45.2 76.9
Total Conversion Costs................... 2022$ millions............. ................ 55.9 73.2 93.2 199.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative value. Not all numbers sum exactly due to rounding.
[[Page 40988]]
Table V.15--Manufacturer Impact Analysis for Standard and Hugger Ceiling Fans--Preservation of Operating Profit Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2022$ millions............. 1,517 1,470 1,442 1,425 1,242
Change in INPV........................... 2022$ millions............. ................ (47.0) (74.9) (91.4) (274.1)
%.......................... ................ (3.1) (4.9) (6.0) (18.1)
Product Conversion Costs................. 2022$ millions............. ................ 26.3 34.4 48.0 122.7
Capital Conversion Costs................. 2022$ millions............. ................ 29.6 38.7 45.2 76.9
Total Conversion Costs................... 2022$ millions............. ................ 55.9 73.2 93.2 199.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative value. Not all numbers sum exactly due to rounding.
At TSL 4, for standard and hugger ceiling fan manufacturers, DOE
estimates impacts on INPV will range from -$274.1 million to -$39.2
million, which represents a change of -18.1 percent to -2.6 percent,
respectively. At TSL 4, industry free cash-flow decreases to $19.8
million, which represents a decrease of approximately 79.5 percent,
compared to the no-new-standards case value of $96.3 million in 2027,
the year before the modeled compliance date.
TSL 4 would set energy conservation standards at max-tech (EL 4)
for all standard and hugger ceiling fans. DOE estimates that
approximately 10 percent of the standard ceiling fan shipments and 5
percent of the hugger ceiling fan shipments would already meet the
efficiency levels required at TSL 4 in 2028 in the no-new-standards
case. Therefore, DOE estimates that manufacturers would have to
redesign models representing approximately 90 percent of standard
ceiling fan shipments and 95 percent of hugger ceiling fan shipments by
the estimated compliance date.
At TSL 4, DOE expects standard and hugger ceiling fan manufacturers
to incur approximately $122.7 million in product conversion costs to
redesign all non-compliant standard and hugger ceiling fan models.
Additionally, standard and hugger ceiling fan manufacturers would incur
approximately $76.9 million in capital conversion costs to purchase new
tooling and equipment necessary to produce compliant standard and
hugger ceiling fan models to meet these energy conservation standards.
At TSL 4, the shipment-weighted average MPC for standard and hugger
ceiling fans significantly increases by 24.9 percent relative to the
no-new-standards case shipment-weighted average MPC in 2028. In the
preservation of gross margin scenario, manufacturers fully pass on this
cost increase. The increase in shipment weighted average MPC is
outweighed by the $199.6 million in conversion costs, causing a
negative change in INPV at TSL 4 under the preservation of gross margin
scenario.
Under the preservation of operating profit scenario, manufacturers
earn the same per-unit operating profit as would be earned in the no-
new-standards case, but manufacturers do not earn additional profit
from their investments or higher MPCs. In this scenario, the 24.9
percent shipment weighted average MPC increase results in a reduction
in the manufacturer margin after the analyzed compliance year. This
reduction in the manufacturer margin and the $199.6 million in
conversion costs incurred by manufacturers cause a moderately negative
change in INPV at TSL 4 under the preservation of operating profit
scenario.
At TSL 3, for standard and hugger ceiling fan manufacturers, DOE
estimates impacts on INPV will range from -$91.4 million to -$35.8
million, which represents a change of -6.0 percent to -2.4 percent,
respectively. At TSL 3, industry free cash-flow decreases to $59.6
million, which represents a decrease of approximately 38.2 percent,
compared to the no-new-standards case value of $96.3 million in 2027,
the year before the modeled compliance date.
TSL 3 would set energy conservation standards at EL 3 for all
standard and hugger ceiling fans. DOE estimates that approximately 28
percent of the standard ceiling fan shipments and 41 percent of the
hugger ceiling fan shipments would already meet or exceed the
efficiency levels required at TSL 3 in 2028, in the no-new-standards
case. Therefore, DOE estimates that manufacturers would have to
redesign models representing approximately 72 percent of standard
ceiling fan shipments and 59 percent of hugger ceiling fan shipments by
the estimated compliance date.
At TSL 3, DOE expects standard and hugger ceiling fan manufacturers
to incur approximately $48.0 million in product conversion costs to
redesign all non-compliant standard and hugger ceiling fan models.
Additionally, standard and hugger ceiling fan manufacturers would incur
approximately $45.2 million in capital conversion costs to purchase new
tooling and equipment necessary to produce compliant standard and
hugger ceiling fan models to meet these energy conservation standards.
At TSL 3, the shipment-weighted average MPC for standard and hugger
ceiling fans moderately increases by 5.1 percent relative to the no-
new-standards case shipment-weighted average MPC in 2028. In the
preservation of gross margin scenario, manufacturers fully pass on this
cost increase. The increase in shipment weighted average MPC is
outweighed by the $93.2 million in conversion costs, causing a slightly
negative change in INPV at TSL 3 under the preservation of gross margin
scenario.
In the preservation of operating profit scenario, the 5.1 percent
shipment weighted average MPC increase results in a reduction in the
manufacturer margin after the analyzed compliance year. This reduction
in the manufacturer margin and the $93.2 million in conversion costs
incurred by manufacturers cause a slightly negative change in INPV at
TSL 3 under the preservation of operating profit scenario.
At TSL 2, for standard and hugger ceiling fan manufacturers, DOE
estimates impacts on INPV will range from -$74.9 million to -$24.1
million, which represents a change of -4.9 percent to -1.6 percent,
respectively. At TSL 2, industry free cash-flow decreases to $67.1
million, which represents a decrease of approximately 30.3 percent,
compared to the no-new-standards case value of $96.3 million in 2027,
the year before the modeled compliance date.
TSL 2 would set energy conservation standards at EL 2 for all
standard and hugger ceiling fans. DOE estimates that
[[Page 40989]]
approximately 32 percent of the standard ceiling fan shipments and 42
percent of the hugger ceiling fan shipments would already meet or
exceed the efficiency levels required at TSL 2 in 2028, in the no-new-
standards case. Therefore, DOE estimates that manufacturers would have
to redesign models representing approximately 68 percent of standard
ceiling fan shipments and 58 percent of hugger ceiling fan shipments by
the estimated compliance date.
At TSL 2, DOE expects standard and hugger ceiling fan manufacturers
to incur approximately $34.4 million in product conversion costs to
redesign all non-compliant standard and hugger ceiling fan models.
Additionally, standard and hugger ceiling fan manufacturers would incur
approximately $38.7 million in capital conversion costs to purchase new
tooling and equipment necessary to produce compliant standard and
hugger ceiling fan models to meet these energy conservation standards.
At TSL 2, the shipment-weighted average MPC for standard and hugger
ceiling fans moderately increases by 4.6 percent relative to the no-
new-standards case shipment-weighted average MPC in 2028. In the
preservation of gross margin scenario, manufacturers fully pass on this
cost increase. The increase in shipment weighted average MPC is
outweighed by the $73.2 million in conversion costs, causing a slightly
negative change in INPV at TSL 2 under the preservation of gross margin
scenario.
In the preservation of operating profit scenario, the 4.6 percent
shipment weighted average MPC increase results in a reduction in the
manufacturer margin after the analyzed compliance year. This reduction
in the manufacturer margin and the $73.2 million in conversion costs
incurred by manufacturers cause a slightly negative change in INPV at
TSL 2 under the preservation of operating profit scenario.
At TSL 1, for standard and hugger ceiling fan manufacturers, DOE
estimates impacts on INPV will range from -$47.0 million to -$29.2
million, which represents a change of -3.1 percent to -1.9 percent,
respectively. At TSL 1, industry free cash-flow decreases to $74.0
million, which represents a decrease of approximately 23.2 percent,
compared to the no-new-standards case value of $96.3 million in 2027,
the year before the modeled compliance date.
TSL 1 would set energy conservation standards at EL 1 for all
standard and hugger ceiling fans. DOE estimates that approximately 75
percent of the standard ceiling fan shipments and 68 percent of the
hugger ceiling fan shipments would already meet or exceed the
efficiency levels required at TSL 1 in 2028, in the no-new-standards
case. Therefore, DOE estimates that manufacturers would have to
redesign models representing approximately 25 percent of standard
ceiling fan shipments and 32 percent of hugger ceiling fan shipments by
the estimated compliance date.
At TSL 1, DOE expects standard and hugger ceiling fan manufacturers
to incur approximately $26.3 million in product conversion costs to
redesign all non-compliant standard and hugger ceiling fan models.
Additionally, standard and hugger ceiling fan manufacturers would incur
approximately $29.6 million in capital conversion costs to purchase new
tooling and equipment necessary to produce compliant standard and
hugger ceiling fan models to meet these energy conservation standards.
At TSL 1, the shipment-weighted average MPC for standard and hugger
ceiling fans slightly increases by 1.6 percent relative to the no-new-
standards case shipment-weighted average MPC in 2028. In the
preservation of gross margin scenario, manufacturers fully pass on this
cost increase. The increase in shipment weighted average MPC is
outweighed by the $55.9 million in conversion costs, causing a slightly
negative change in INPV at TSL 1 under the preservation of gross margin
scenario.
In the preservation of operating profit scenario, the 1.6 percent
shipment weighted average MPC increase results in a reduction in the
manufacturer margin after the analyzed compliance year. This reduction
in the manufacturer margin and the $55.9 million in conversion costs
incurred by manufacturers cause a slightly negative change in INPV at
TSL 1 under the preservation of operating profit scenario.
Large-Diameter Ceiling Fan Manufacturers
Table V.16--Manufacturer Impact Analysis for Large-Diameter Ceiling Fans--Preservation of Gross Margin Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2022$ millions............. 810 803 803 803 800
Change in INPV........................... 2022$ millions............. ................ (6.6) (6.6) (6.6) (10.1)
%.......................... ................ (0.8) (0.8) (0.8) (1.2)
Product Conversion Costs................. 2022$ millions............. ................ 6.4 6.4 6.4 25.3
Capital Conversion Costs................. 2022$ millions............. ................ 7.0 7.0 7.0 18.0
Total Conversion Costs................... 2022$ millions............. ................ 13.4 13.4 13.4 43.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative value. Not all numbers sum exactly due to rounding.
Table V.17--Manufacturer Impact Analysis for Large-Diameter Ceiling Fans--Preservation of Operating Profit Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2022$ millions............. 810 800 800 800 760
Change in INPV........................... 2022$ millions............. ................ (9.6) (9.6) (9.6) (49.8)
%.......................... ................ (1.2) (1.2) (1.2) (6.2)
Product Conversion Costs................. 2022$ millions............. ................ 6.4 6.4 6.4 25.3
[[Page 40990]]
Capital Conversion Costs................. 2022$ millions............. ................ 7.0 7.0 7.0 18.0
Total Conversion Costs................... 2022$ millions............. ................ 13.4 13.4 13.4 43.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative value. Not all numbers sum exactly due to rounding.
At TSL 4, for LDCF manufacturers, DOE estimates impacts on INPV
will range from -$49.8 million to -$10.1 million, which represents a
change of -6.2 percent to -1.2 percent, respectively. At TSL 4,
industry free cash-flow decreases to $15.9 million, which represents a
decrease of approximately 51.3 percent, compared to the no-new-
standards case value of $32.6 million in 2027, the year before the
modeled compliance date.
TSL 4 would set energy conservation standards at max-tech (EL 2)
for all LDCFs. DOE estimates that approximately 48 percent of all LDCF
shipments would already meet the efficiency levels required at TSL 4 in
2028, in the no-new-standards case. Therefore, DOE estimates that
manufacturers would have to redesign models representing approximately
52 percent of LDCF shipments by the estimated compliance date.
At TSL 4, DOE expects LDCF manufacturers to incur approximately
$25.3 million in product conversion costs to redesign all non-compliant
LDCF models. Additionally, LDCF manufacturers would incur approximately
$18.0 million in capital conversion costs to purchase new tooling and
equipment necessary to produce compliant LDCF models to meet the energy
conservation standard.
At TSL 4, the shipment-weighted average MPC for LDCF moderately
increases by 6.3 percent relative to the no-new-standards case
shipment-weighted average MPC in 2028. In the preservation of gross
margin scenario, manufacturers fully pass on this cost increase. The
increase in shipment weighted average MPC is outweighed by the $43.3
million in conversion costs, causing a negative change in INPV at TSL 4
under the preservation of gross margin scenario.
Under the preservation of operating profit scenario, manufacturers
earn the same per-unit operating profit as would be earned in the no-
new-standards case, but manufacturers do not earn additional profit
from their investments or higher MPCs. In this scenario, the 6.3
percent shipment weighted average MPC increase results in a reduction
in the manufacturer margin after the analyzed compliance year. This
reduction in the manufacturer margin and the $43.3 million in
conversion costs incurred by manufacturers cause a moderately negative
change in INPV at TSL 4 under the preservation of operating profit
scenario.
At TSL 3, TSL 2, and TSL 1, for LDCF manufacturers, DOE estimates
impacts on INPV will range from -$9.6 million to -$6.6 million, which
represents a change of -1.2 percent to -0.8 percent, respectively. At
these TSLs, industry free cash-flow decreases to $27.3 million, which
represents a decrease of approximately 16.4 percent, compared to the
no-new-standards case value of $32.6 million in 2027, the year before
the modeled compliance date.
TSL 3, TSL 2, and TSL 1 would set energy conservation standards at
EL 1 for all LDCFs. DOE estimates that approximately 86 percent of the
LDCF shipments would already meet or exceed the efficiency levels
required at these TSLs in 2028, in the no-new-standards case.
Therefore, DOE estimates that manufacturers would have to redesign
models representing approximately 14 percent of LDCF shipments by the
estimated compliance date.
At TSL 3, TSL 2, and TSL 1, DOE expects LDCF manufacturers to incur
approximately $6.4 million in product conversion costs to redesign all
non-compliant LDCF models. Additionally, LDCF manufacturers would incur
approximately $7.0 million in capital conversion costs to purchase new
tooling and equipment necessary to produce compliant LDCF models to
meet the energy conservation standard.
At TSL 3, TSL 2, and TSL 1, the shipment-weighted average MPC for
LDCFs slightly increases by 0.4 percent relative to the no-new-
standards case shipment-weighted average MPC in 2028. In the
preservation of gross margin scenario, manufacturers fully pass on this
slight cost increase. The increase in shipment weighted average MPC is
outweighed by the $13.4 million in conversion costs, causing a slightly
negative change in INPV at these TSLs under the preservation of gross
margin scenario.
In the preservation of operating profit scenario, the 0.4 percent
shipment weighted average MPC increase results in a reduction in the
manufacturer margin after the analyzed compliance year. This reduction
in the manufacturer margin and the $13.4 million in conversion costs
incurred by manufacturers cause a slightly negative change in INPV at
these TSLs under the preservation of operating profit scenario.
High-Speed Belt-Driven Ceiling Fan Manufacturers
Table V.18--Manufacturer Impact Analysis for High-Speed Belt-Driven Ceiling Fans--Preservation of Gross Margin Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2022$ millions............. 2.6 2.6 2.6 2.5 0.9
Change in INPV........................... 2022$ millions............. ................ (0.1) (0.1) (0.2) (1.8)
%.......................... ................ (2.1) (2.1) (6.3) (66.7)
Product Conversion Costs................. 2022$ millions............. ................ 0.2 0.2 0.3 1.7
Capital Conversion Costs................. 2022$ millions............. ................ 0.2 0.2 0.2 0.9
[[Page 40991]]
Total Conversion Costs................... 2022$ millions............. ................ 0.3 0.3 0.5 2.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative value. Not all numbers sum exactly due to rounding.
Table V.19--Manufacturer Impact Analysis for High-Speed Belt-Driven Ceiling Fans--Preservation of Operating Profit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level *
Units No-new- ---------------------------------------------------------------
standards case 1 2 3 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..................................... 2022$ millions............. 2.6 2.4 2.4 2.2 0.6
Change in INPV........................... 2022$ millions............. ................ (0.3) (0.3) (0.4) (2.0)
%.......................... ................ (9.6) (9.6) (15.3) (75.7)
Product Conversion Costs................. 2022$ millions............. ................ 0.2 0.2 0.3 1.7
Capital Conversion Costs................. 2022$ millions............. ................ 0.2 0.2 0.2 0.9
Total Conversion Costs................... 2022$ millions............. ................ 0.3 0.3 0.5 2.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a negative value. Not all numbers sum exactly due to rounding.
At TSL 4, for HSBD ceiling fan manufacturers, DOE estimates impacts
on INPV will range from -$2.0 million to -$1.8 million, which
represents a change of -75.7 percent to -66.7 percent, respectively. At
TSL 4, industry free cash-flow decreases to -$1.0 million, which
represents a decrease of approximately 1015 percent, compared to the
no-new-standards case value of $0.1 million in 2027, the year before
the modeled compliance date. The negative cash flow implies that HSBD
ceiling fan manufacturers would likely need to borrow money during the
year(s) leading up to the energy conservation standard compliance date
as they incur costly aerodynamic redesigns to all of their HSBD ceiling
fan models.
TSL 4 would set energy conservation standards at max-tech (EL 4)
for all HSBD ceiling fans. DOE estimates that there will be no HSBD
ceiling fan shipments that would already meet the efficiency levels
required at TSL 4 in 2028, in the no-new-standards case. Therefore, DOE
estimates that manufacturers would have to redesign all HSBD ceiling
fan models by the estimated compliance date.
At TSL 4, DOE expects HSBD ceiling fan manufacturers to incur
approximately $1.7 million in product conversion costs to redesign all
HSBD ceiling fan models. At this TSL, HSBD ceiling manufacturers would
have to conduct a full aerodynamic redesign to all of their HSBD
ceiling fan models. Additionally, HSBD ceiling fan manufacturers would
incur approximately $0.9 million in capital conversion costs to
purchase new tooling and equipment associated with these
aerodynamically redesigned blades to produce compliant HSBD ceiling fan
models to meet the energy conservation standard.
At TSL 4, the shipment-weighted average MPC for HSBD ceiling fans
moderately increases by 10.9 percent relative to the no-new-standards
case shipment-weighted average MPC in 2028. In the preservation of
gross margin scenario, manufacturers fully pass on this cost increase.
The increase in shipment weighted average MPC is significantly
outweighed by the $2.6 million in conversion costs, causing a
significantly negative change in INPV at TSL 4 under the preservation
of gross margin scenario.
Under the preservation of operating profit scenario, manufacturers
earn the same per-unit operating profit as would be earned in the no-
new-standards case, but manufacturers do not earn additional profit
from their investments or higher MPCs. In this scenario, the 10.9
percent shipment weighted average MPC increase results in a reduction
in the manufacturer margin after the analyzed compliance year. This
reduction in the manufacturer margin and the $2.6 million in conversion
costs incurred by manufacturers cause a significantly negative change
in INPV at TSL 4 under the preservation of operating profit scenario.
At TSL 3, for HSBD ceiling fan manufacturers, DOE estimates impacts
on INPV will range from -$0.4 million to -$0.2 million, which
represents a change of -15.3 percent to -6.3 percent, respectively. At
TSL 3, industry free cash-flow decreases to -$0.1 million, which
represents a decrease of approximately 189.4 percent, compared to the
no-new-standards case value of $0.1 million in 2027, the year before
the modeled compliance date. The negative cash flow implies that HSBD
ceiling fan manufacturers would likely need to borrow money during the
year(s) leading up to the energy conservation standards compliance date
as they incur costly redesigns to a majority of their HSBD ceiling fan
models.
TSL 3 would set energy conservation standards at EL 3 for all HSBD
ceiling fans. DOE estimates that approximately 59 percent of the HSBD
ceiling fan shipments would already meet or exceed the efficiency
levels required at TSL 3 in 2028, in the no-new-standards case.
Therefore, DOE estimates that manufacturers would have to redesign
models representing approximately 41 percent of HSBD ceiling fan
shipments by the estimated compliance date.
At TSL 3, DOE expects HSBD ceiling fan manufacturers to incur
approximately $0.3 million in product conversion costs to redesign all
non-compliant HSBD ceiling fan models. Additionally, HSBD ceiling fan
manufacturers would incur approximately $0.2 million in capital
conversion costs to purchase new tooling and equipment necessary to
produce compliant HSBD ceiling fan models to meet the energy
conservation standards.
At TSL 3, the shipment-weighted average MPC for HSBD ceiling fans
moderately increases by 10.9 percent relative to the no-new-standards
case shipment-weighted average MPC in 2028. In the preservation of
gross margin scenario, manufacturers fully
[[Page 40992]]
pass on this cost increase. The increase in shipment weighted average
MPC is outweighed by the $0.5 million in conversion costs, causing a
moderately negative change in INPV at TSL 3 under the preservation of
gross margin scenario.
In the preservation of operating profit scenario, the 10.9 percent
shipment weighted average MPC increase results in a reduction in the
manufacturer margin after the analyzed compliance year. This reduction
in the manufacturer margin and the $0.5 million in conversion costs
incurred by manufacturers cause a moderately negative change in INPV at
TSL 3 under the preservation of operating profit scenario.
At TSL 2 and TSL 1, for HSBD ceiling fan manufacturers, DOE
estimates impacts on INPV will range from -$0.3 million to -$0.05
million, which represents a change of -9.6 percent to -2.1 percent,
respectively. At TSL 2 and TSL 1, industry free cash-flow decreases to
-$0.03 million, which represents a decrease of approximately 123.0
percent, compared to the no-new-standards case value of $0.1 million in
2027, the year before the modeled compliance date. The negative cash
flow implies that HSBD ceiling fan manufacturers would likely need to
borrow money during the year(s) leading up to the energy conservation
standards compliance date as they incur costly redesigns to a majority
of their HSBD ceiling fan models.
TSL 2 and TSL 1 would set energy conservation standards at EL 2 for
all HSBD ceiling fans. DOE estimates that approximately 66 percent of
the HSBD ceiling fan shipments would already meet or exceed the
efficiency levels required at TSL 2 and TSL 1 in 2028, in the no-new-
standards case. Therefore, DOE estimates that manufacturers would have
to redesign models representing approximately 34 percent of HSBD
ceiling fan shipments by the estimated compliance date.
At TSL 2 and TSL 1, DOE expects HSBD ceiling fan manufacturers to
incur approximately $0.2 million in product conversion costs to
redesign all non-compliant HSBD ceiling fan models. Additionally, HSBD
ceiling fan manufacturers would incur approximately $0.2 million in
capital conversion costs to purchase new tooling and equipment
necessary to produce compliant HSBD ceiling fan models to meet the
energy conservation standards.
At TSL 2 and TSL 1, the shipment-weighted average MPC for HSBD
ceiling fans moderately increases by 8.7 percent relative to the no-
new-standards case shipment-weighted average MPC in 2028. In the
preservation of gross margin scenario, manufacturers fully pass on this
cost increase. The increase in shipment weighted average MPC is
outweighed by the $0.3 million in conversion costs, causing a slightly
negative change in INPV at TSL 2 and TSL 1 under the preservation of
gross margin scenario.
In the preservation of operating profit scenario, the 8.7 percent
shipment weighted average MPC increase results in a reduction in the
manufacturer margin after the analyzed compliance year. This reduction
in the manufacturer margin and the $0.3 million in conversion costs
incurred by manufacturers cause a moderately negative change in INPV at
TSL 2 and TSL 1 under the preservation of operating profit scenario.
b. Direct Impacts on Employment
To quantitatively assess the potential impacts of new and amended
energy conservation standards on direct employment in the ceiling fan
industry, DOE used the GRIM to estimate the domestic labor expenditures
and the number of direct employees in the no-new-standards case and in
each of the standards cases during the analysis period.
Production employees are those who are directly involved in
fabricating and assembling products within a manufacturer facility.
Workers performing services that are closely associated with production
operations, such as materials handling tasks using forklifts, are
included as production labor, as well as line supervisors.
There is very limited domestic production employment for standard
and hugger ceiling fans. Almost all the production for standard and
hugger ceiling fans takes place in Asia. Domestic production employment
for standard and hugger ceiling fans is mostly limited to assembling
products imported into the U.S. DOE estimated that domestic employment
would not be impacted by any of the analyzed TSLs for standard and
hugger ceiling fans, as the assembling of a max-tech standard and
hugger ceiling fan is similar to the assembling of a baseline AC motor
standard and hugger ceiling fan.
For LDCF, DOE used the GRIM to calculate the number of production
employees from labor expenditures. DOE used statistical data from the
U.S. Census Bureau's 2021 Annual Survey of Manufacturers \78\ (``ASM'')
and the results of the engineering analysis to calculate industry-wide
labor expenditures. Labor expenditures related to product manufacturing
depend on the labor intensity of the product, the sales volume, and an
assumption that wages remain fixed in real terms over time. The total
labor expenditures in the GRIM were then converted to domestic
production employment levels by dividing production labor expenditures
by the annual payment per production worker.
---------------------------------------------------------------------------
\78\ www.census.gov/programs-surveys/asm/data/tables.html. Last
accessed on November 10, 2022.
---------------------------------------------------------------------------
Non-production employees account for those workers that are not
directly engaged in the manufacturing of the covered products. This
could include sales, human resources, engineering, and management. DOE
estimated non-production employment levels by multiplying the number of
ceiling fan workers by a scaling factor. The scaling factor is
calculated by taking the ratio of the total number of employees, and
the total production workers associated with the industry NAICS code
333413 (industrial and commercial fan and blower and air purification
equipment manufacturing) which covers LDCF manufacturing. Using data
from manufacturer interviews, DOE estimated that all LDCFs that are
sold in the U.S. are manufactured domestically.
Using the estimated labor content from the GRIM combined with data
from the 2021 ASM, DOE estimates that there would be approximately 55
domestic production workers, and 24 domestic non-production workers
involved in LDCF manufacturing in 2028 in the absence of new and
amended energy conservation standards. shows the range of the impacts
of energy conservation standards on U.S. production of LDCFs.
[[Page 40993]]
Table V.20--Domestic Employment for Large-Diameter Ceiling Fans in 2028
----------------------------------------------------------------------------------------------------------------
Trial standard level
No-new- -------------------------------
standards case 1-3 4
----------------------------------------------------------------------------------------------------------------
Domestic Production Workers in 2028........................... 55 55 58
Domestic Non-Production Workers in 2028....................... 24 24 26
Total Direct Employment in 2028............................... 79 79 84
Potential Change in Total Direct Employment in 2028........... ................ 0 5-(28)
----------------------------------------------------------------------------------------------------------------
At the upper range of the potential change in total direct
employment for LDCFs and HSBD ceiling fans, DOE estimated that there
could be an increase in the number of domestic employees involved in
the production and non-production of LDCFs. For this upper bound
scenario, the additional labor expenditures associated with
manufacturing max-tech (EL 2) direct-drive LDCFs.\79\ At the lower
range of the potential change in total direct employment for LDCFs, DOE
estimated that employment levels would remain constant for TSL 1-3. At
TSL 4, DOE conservatively estimated that half of all domestic
production employment could be relocated abroad. Almost all LDCF are
manufactured in the U.S. and it would be unlikely that any energy
conservation standards set for LDCF would cause domestic production to
move abroad, due to the larger shipping costs and longer shipping time
to customers.
---------------------------------------------------------------------------
\79\ Based on the labor content from the engineering analysis,
the labor expenditures is constant for baseline and EL 1 (both ELs
use a geared AC motor), while the labor content increases at max-
tech (EL 2) which uses a direct-drive DC motor.
---------------------------------------------------------------------------
For HSBD ceiling fans, DOE estimated that the majority of HSBD
ceiling fans are manufactured in the U.S., However, due to the
extremely low annual shipments DOE did not use the GRIM to estimate the
total domestic employment levels for HSBD ceiling fans. Most HSBD
ceiling fan manufacturers manufacture a variety of different type of
fans and/or blower, some that would be covered in this proposed
rulemaking as an LDCF and some fans and/or blowers that would not be
covered by this proposed rulemaking. DOE does not estimate that there
are any full-time domestic employees dedicated to exclusively producing
HSBD ceiling fans that are covered in this proposed rulemaking.
Instead, it is more likely that several domestic employees produce HSBD
ceiling fans covered by this rulemaking in addition to producing other
non-covered fans and/or blowers that are not covered by this proposed
rulemaking.
DOE requests comment on the estimated potential domestic employment
impacts on ceiling fan manufacturers presented in this NOPR.
Specifically, DOE requests comment on the assumption that almost all
standard and hugger ceiling fans are manufactured abroad and any energy
conservation standards would not have a significant impact on domestic
employment for standard and hugger ceiling fan manufacturers; on the
domestic employment impacts shown in for LDCF manufacturers; and on the
assumption that while most HSBD ceiling fans are manufactured
domestically, due to the extremely low annual shipment volumes, any
energy conservation standards would not have a significant impact on
domestic employment.
c. Impacts on Manufacturing Capacity
Manufacturers stated that any standards that would cause
manufacturers to use BLDC motors for all standard and hugger ceiling
fans would be very difficult to meet in a three-year timeframe.\80\
Standard and hugger ceiling fans models with BLDC motors represent
fewer than 10 percent of models offered by a standard and hugger
ceiling fan manufacturer. Therefore, most standard and hugger ceiling
fan manufacturers stated that converting more than 90 percent of their
standard and hugger ceiling fan models would be difficult to do in a
three-year compliance period.
---------------------------------------------------------------------------
\80\ Based on the time between the publication of a potential
final rule amended standards and the compliance date of those
amended standards.
---------------------------------------------------------------------------
At TSL 3 for standard and hugger ceiling fans, DOE estimates that
only standard and hugger ceiling fans that are 53 inches or larger
would use BLDC motors to meet the energy conservation standard. Based
on the shipment analysis, standard and hugger ceiling fans that are 53
inches or larger represent approximately 11 percent of the standard and
hugger ceiling fan market. Given the lower volume of shipments and
smaller number of models of standard and hugger ceiling fans that are
53 inches or larger, DOE has initially determined that there would be a
sufficient volume of BLDC motors available for standard and hugger
ceiling fans that are greater than 53 inches or larger.
Additionally, some, but not all, LDCF manufacturers stated that any
standards that would cause manufacturers to use a permanent magnet
direct-drive motor for LDCFs could be difficult to meet due to the
potential unavailability of these direct-drive motors. These LDCF
manufacturers stated that the permanent magnet direct-drive motors
could become a DOE regulated product under the ongoing DOE energy
conservation standards rulemaking for Electric Motors.\81\ These LDCF
manufacturers stated that regulations on these permanent magnet direct-
drive motors may limit their availability in the LDCF marketplace.
---------------------------------------------------------------------------
\81\ www.regulations.gov/docket/EERE-2021-BT-STD-0011.
---------------------------------------------------------------------------
All other ELs analyzed require making incremental improvements to
existing designs or using more efficient AC motors and should not
present manufacturing capacity constraints given the 3-year compliance
period proposed in this NOPR.
DOE requests comment on the potential manufacturing capacity
constraints placed on ceiling fan manufacturers (including any
potential supply chain issues) at any of the TSLs presented in this
NOPR.
d. Impacts on Subgroups of Manufacturers
As discussed in section IV.J.1 of this document, using average cost
assumptions to develop an industry cash-flow estimate may not be
adequate for assessing differential impacts among manufacturer
subgroups. Small manufacturers, niche manufacturers, and manufacturers
exhibiting a cost structure substantially different from the industry
average could be affected disproportionately. DOE used the results of
the industry characterization to group manufacturers exhibiting similar
characteristics. Consequently, DOE considered four manufacturer
subgroups in the MIA: standard and hugger ceiling fan manufacturers;
LDCF manufacturers; HSBD ceiling fan
[[Page 40994]]
manufacturers; and small business manufacturers as subgroups for
separate impact analyses. DOE discussed the potential impacts on
standard and hugger ceiling fan manufacturers; LDCF manufacturers; and
HSBD ceiling fan manufacturers separately in section V.B.2.a of this
document.
For the small business subgroup analysis, DOE applied the small
business size standards published by the Small Business Administration
(``SBA'') to determine whether a company is considered a small
business. The size standards are codified at 13 CFR part 121. Standard
and hugger ceiling fan manufacturers are categorized under NAICS code
335210, ``small electrical appliance manufacturing.'' LDCF and HSBD
ceiling fan manufacturers are categorized under NAICS code 333413,
``industrial and commercial fan and blower and air purification
equipment manufacturing.'' To qualify as a small business standard and
hugger ceiling fan manufacturer, as categorized under NAICS code
335210, a business and its affiliates may employ a maximum of 1,500
employees. To qualify as a small business LDCF and HSBD ceiling fan
manufacturers, as categorized under NAICS code 333413, a business and
its affiliates may employ a maximum of 500 employees. These employee
thresholds include all employees in a business's parent company and any
other subsidiaries. For a discussion of the impacts on the small
business manufacturer subgroup, see the Regulatory Flexibility Analysis
in section VI.B of this document.
e. Cumulative Regulatory Burden
One aspect of assessing manufacturer burden involves looking at the
cumulative impact of multiple DOE standards and the product-specific
regulatory actions of other Federal agencies that affect the
manufacturers of a covered product or equipment. While any one
regulation may not impose a significant burden on manufacturers, the
combined effects of several existing or impending regulations may have
serious consequences for some manufacturers, groups of manufacturers,
or an entire industry. Assessing the impact of a single regulation may
overlook this cumulative regulatory burden. In addition to energy
conservation standards, other regulations can significantly affect
manufacturers' financial operations. Multiple regulations affecting the
same manufacturer can strain profits and lead companies to abandon
product lines or markets with lower expected future returns than
competing products. For these reasons, DOE conducts an analysis of
cumulative regulatory burden as part of its rulemakings pertaining to
appliance efficiency.
DOE evaluates product-specific regulations that will take effect
approximately 3 years before or after the estimated 2028 compliance
date of any new and amended energy conservation standards for ceiling
fans. This information is presented in Table V.21.
Table V.21--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting Ceiling Fan Manufacturers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Industry Industry
Number of manufacturers Approx. conversion conversion
Federal energy conservation standard manufacturers * affected by standards year costs costs/ product
this rule ** (millions) revenue ***
--------------------------------------------------------------------------------------------------------------------------------------------------------
General Service Lamps [dagger] 88 FR 1638 (Jan. 11, 2023)....... 100+ 5 2028 $407 (2022$) 4.5%
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This column presents the total number of manufacturers identified in the energy conservation standard rule contributing to cumulative regulatory
burden.
** This column presents the number of manufacturers producing ceiling fans that are also listed as manufacturers in the listed energy conservation
standard contributing to cumulative regulatory burden.
*** This column presents industry conversion costs as a percentage of product revenue during the conversion period. Industry conversion costs are the
upfront investments manufacturers must make to sell compliant products/equipment. The revenue used for this calculation is the revenue from just the
covered product/equipment associated with each row. The conversion period is the time frame over which conversion costs are made and lasts from the
publication year of the final rule to the compliance year of the energy conservation standard. The conversion period typically ranges from 3 to 5
years, depending on the rulemaking.
[dagger] Indicates a NOPR publications. Values may change on publication of a Final Rule.
In addition to the rulemaking listed in Table V.21, DOE has ongoing
rulemakings for other products or equipment that ceiling fan
manufacturers produce, including ceiling fan light kits \82\ and fans
and blowers.\83\ If DOE proposes or finalizes any energy conservation
standards for these products or equipment prior to finalizing energy
conservation standards for ceiling fans, DOE will include the energy
conservation standards for these other products or equipment as part of
the cumulative regulatory burden for the ceiling fan final rule.
---------------------------------------------------------------------------
\82\ www.regulations.gov/docket/EERE-2019-BT-STD-0040.
\83\ www.regulations.gov/docket/EERE-2022-BT-STD-0002.
---------------------------------------------------------------------------
3. National Impact Analysis
This section presents DOE's estimates of the national energy
savings and the NPV of consumer benefits that would result from each of
the TSLs considered as potential new or amended standards.
a. Significance of Energy Savings
To estimate the energy savings attributable to potential new or
amended standards for ceiling fans, DOE compared their energy
consumption under the no-new-standards case to their anticipated energy
consumption under each TSL. The savings are measured over the entire
lifetime of products purchased in the 30-year period that begins in the
first full year of anticipated compliance with new or amended standards
(2028-2057). Table V.6 presents DOE's projections of the national
energy savings for each TSL considered for ceiling fans. The savings
were calculated using the approach described in section IV.H of this
document.
[[Page 40995]]
Table V.23--Cumulative National Energy Savings for Ceiling Fans; 30 Years of Shipments (2028-2057), in
Quadrillion Btu
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Source National Energy Savings:
HSBD........................................ 0.00 0.00 0.01 0.04
Hugger...................................... 0.10 0.22 0.25 1.83
Large Diameter.............................. 0.02 0.02 0.02 0.11
Standard.................................... 0.11 0.46 0.61 1.64
---------------------------------------------------------------
Total................................... 0.24 0.71 0.89 3.63
----------------------------------------------------------------------------------------------------------------
Full-Fuel-Cycle National Energy Savings:
HSBD........................................ 0.00 0.00 0.01 0.04
Hugger...................................... 0.11 0.22 0.26 1.88
Large Diameter.............................. 0.02 0.02 0.02 0.12
Standard.................................... 0.11 0.48 0.63 1.69
---------------------------------------------------------------
Total................................... 0.25 0.73 0.92 3.72
----------------------------------------------------------------------------------------------------------------
OMB Circular A-4 \84\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this proposed
rulemaking, DOE undertook a sensitivity analysis using 9 years, rather
than 30 years, of product shipments. The choice of a 9-year period is a
proxy for the timeline in EPCA for the review of certain energy
conservation standards and potential revision of and compliance with
such revised standards.\85\ The review timeframe established in EPCA is
generally not synchronized with the product lifetime, product
manufacturing cycles, or other factors specific to ceiling fans. Thus,
such results are presented for informational purposes only and are not
indicative of any change in DOE's analytical methodology. The NES
sensitivity analysis results based on a 9-year analytical period are
presented in Table V.7. The impacts are counted over the lifetime of
ceiling fans purchased in 2028-2036.
---------------------------------------------------------------------------
\84\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003.
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed
January 17, 2023).
\85\ EPCA requires DOE to review its standards at least once
every 6 years, and requires, for certain products, a 3-year period
after any new standard is promulgated before compliance is required,
except that in no case may any new standards be required within 6
years of the compliance date of the previous standards. While adding
a 6-year review to the 3-year compliance period adds up to 9 years,
DOE notes that it may undertake reviews at any time within the 6
year period and that the 3-year compliance date may yield to the 6-
year backstop. A 9-year analysis period may not be appropriate given
the variability that occurs in the timing of standards reviews and
the fact that for some products, the compliance period is 5 years
rather than 3 years.
Table V.24--Cumulative National Energy Savings for Ceiling Fans; 9 Years of Shipments (2028-2036), in
Quadrillion Btu
----------------------------------------------------------------------------------------------------------------
Trial standard level
Equipment class ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Source National Energy Savings:
HSBD........................................ 0.00 0.00 0.00 0.01
Hugger...................................... 0.03 0.06 0.07 0.49
Large Diameter.............................. 0.00 0.00 0.00 0.02
Standard.................................... 0.03 0.12 0.17 0.45
---------------------------------------------------------------
Total................................... 0.06 0.19 0.24 0.97
----------------------------------------------------------------------------------------------------------------
Full-Fuel-Cycle National Energy Savings:
HSBD........................................ 0.00 0.00 0.00 0.01
Hugger...................................... 0.03 0.06 0.07 0.51
Large Diameter.............................. 0.00 0.00 0.00 0.02
Standard.................................... 0.03 0.13 0.17 0.46
---------------------------------------------------------------
Total................................... 0.06 0.19 0.24 0.99
----------------------------------------------------------------------------------------------------------------
[[Page 40996]]
b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV of the total costs and savings for
consumers that would result from the TSLs considered for ceiling fans.
In accordance with OMB's guidelines on regulatory analysis,\86\ DOE
calculated NPV using both a 7-percent and a 3-percent real discount
rate. Table V.8 shows the consumer NPV results with impacts counted
over the lifetime of products purchased in 2028-2057.
---------------------------------------------------------------------------
\86\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/ (last accessed
January 20, 2023).
Table V.25--Cumulative Net Present Value of Consumer Benefits for Ceiling Fans; 30 Years of Shipments (2028-
2057), Billion $2022
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate Equipment class ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
3%............................ HSBD............ 0.01 0.01 0.02 0.13
Hugger.......... 0.49 1.09 1.33 10.73
Large Diameter.. 0.05 0.05 0.05 0.16
Standard........ 0.57 2.53 3.55 9.96
---------------------------------------------------------------
Total.......... 1.12 3.68 4.96 20.99
----------------------------------------------------------------------------------------------------------------
7%............................ HSBD............ 0.00 0.00 0.01 0.05
Hugger.......... 0.16 0.38 0.47 3.93
Large Diameter.. 0.02 0.02 0.02 0.02
Standard........ 0.21 0.93 1.34 3.77
---------------------------------------------------------------
Total.......... 0.39 1.32 1.84 7.77
----------------------------------------------------------------------------------------------------------------
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V.9. The impacts are counted over the
lifetime of products purchased in 2028-2036. As mentioned previously,
such results are presented for informational purposes only and are not
indicative of any change in DOE's analytical methodology or decision
criteria.
Table V.26--Cumulative Net Present Value of Consumer Benefits for Ceiling Fans; 9 Years of Shipments (2028-
2036), Billion $2022
----------------------------------------------------------------------------------------------------------------
Trial standard level
Discount rate Equipment class ---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
3%............................ HSBD............ 0.00 0.00 0.01 0.04
Hugger.......... 0.16 0.34 0.42 3.33
Large Diameter.. 0.01 0.01 0.01 -0.00
Standard........ 0.20 0.85 1.22 3.27
---------------------------------------------------------------
Total.......... 0.37 1.21 1.66 6.63
----------------------------------------------------------------------------------------------------------------
7%............................ HSBD............ 0.00 0.00 0.00 0.02
Hugger.......... 0.07 0.15 0.20 1.61
Large Diameter.. 0.01 0.01 0.01 -0.02
Standard........ 0.10 0.42 0.62 1.65
---------------------------------------------------------------
Total.......... 0.17 0.58 0.83 3.26
----------------------------------------------------------------------------------------------------------------
The previous results reflect the use of a default trend to estimate
the change in price for ceiling fans over the analysis period (see
section IV.G of this document). DOE also conducted a sensitivity
analysis that considered a scenario in which the price of BLDC fans
does not change over the analysis period. The results of this
alternative case are presented in appendix 10C of the NOPR TSD.
c. Indirect Impacts on Employment
It is estimated that that amended energy conservation standards for
ceiling fans would reduce energy expenditures for consumers of those
products, with the resulting net savings being redirected to other
forms of economic activity. These expected shifts in spending and
economic activity could affect the demand for labor. As described in
section IV.N of this document, DOE used an input/output model of the
U.S. economy to estimate indirect employment impacts of the TSLs that
DOE considered. There are uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Therefore, DOE generated results for near-term timeframes
(2028-2032), where these uncertainties are reduced.
The results suggest that the proposed standards would be likely to
have a negligible impact on the net demand for labor in the economy.
The net change in jobs is so small that it would be imperceptible in
national labor statistics
[[Page 40997]]
and might be offset by other, unanticipated effects on employment.
Chapter 16 of the NOPR TSD presents detailed results regarding
anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
As discussed in section IV.C.2 of this document, DOE has
tentatively concluded that the standards proposed in this NOPR would
not lessen the utility or performance of the ceiling fans under
consideration in this rulemaking. Manufacturers of these products
currently offer units that meet or exceed the proposed standards.
5. Impact of Any Lessening of Competition
DOE considered any lessening of competition that would be likely to
result from new or amended standards. As discussed in section III.F.1.e
of this document, the Attorney General determines the impact, if any,
of any lessening of competition likely to result from a proposed
standard, and transmits such determination in writing to the Secretary,
together with an analysis of the nature and extent of such impact. To
assist the Attorney General in making this determination, DOE has
provided DOJ with copies of this NOPR and the accompanying TSD for
review. DOE will consider DOJ's comments on the proposed rule in
determining whether to proceed to a final rule. DOE will publish and
respond to DOJ's comments in that document. DOE invites comment from
the public regarding the competitive impacts that are likely to result
from this proposed rule. In addition, stakeholders may also provide
comments separately to DOJ regarding these potential impacts. See the
ADDRESSES section for information to send comments to DOJ.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand due to energy conservation standards is also likely to reduce
the cost of maintaining the reliability of the electricity system,
particularly during peak-load periods. Chapter 15 in the NOPR TSD
presents the estimated impacts on electricity generating capacity,
relative to the no-new-standards case, for the TSLs that DOE considered
in this proposed rulemaking.
Energy conservation resulting from potential energy conservation
standards for ceiling fans is expected to yield environmental benefits
in the form of reduced emissions of certain air pollutants and
greenhouse gases. Table V.10 provides DOE's estimate of cumulative
emissions reductions expected to result from the TSLs considered in
this rulemaking. The emissions were calculated using the multipliers
discussed in section IV.K of this document. DOE reports annual
emissions reductions for each TSL in chapter 13 of the NOPR TSD.
Table V.27--Cumulative Emissions Reduction for Ceiling Fans Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
Trial standard level
---------------------------------------------------------------
1 2 3 4
----------------------------------------------------------------------------------------------------------------
Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 4.46 13.27 16.75 67.95
CH4 (thousand tons)............................. 0.28 0.82 1.04 4.21
N2O (thousand tons)............................. 0.04 0.11 0.14 0.57
NOX (thousand tons)............................. 1.95 5.80 7.32 29.71
SO2 (thousand tons)............................. 1.18 3.50 4.42 17.94
Hg (tons)....................................... 0.01 0.02 0.03 0.12
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 0.41 1.22 1.54 6.26
CH4 (thousand tons)............................. 37.72 111.08 140.11 568.94
N2O (thousand tons)............................. 0.00 0.01 0.01 0.03
NOX (thousand tons)............................. 6.47 19.04 24.02 97.55
SO2 (thousand tons)............................. 0.02 0.07 0.09 0.37
Hg (tons)....................................... 0.00 0.00 0.00 0.00
----------------------------------------------------------------------------------------------------------------
Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 4.88 14.49 18.29 74.20
CH4 (thousand tons)............................. 37.99 111.90 141.15 573.15
N2O (thousand tons)............................. 0.04 0.12 0.15 0.60
NOX (thousand tons)............................. 8.41 24.84 31.35 127.26
SO2 (thousand tons)............................. 1.20 3.57 4.51 18.31
Hg (tons)....................................... 0.01 0.02 0.03 0.12
----------------------------------------------------------------------------------------------------------------
As part of the analysis for this rulemaking, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
that DOE estimated for each of the considered TSLs for ceiling fans.
Section IV.L of this document discusses the SC-CO2 values
that DOE used. Table V.11 presents the value of CO2
emissions reduction at each TSL for each of the SC-CO2
cases. The time-series of annual values is presented for the proposed
TSL in chapter 14 of the NOPR TSD.
[[Page 40998]]
Table V.28--Present Value of CO2 Emissions Reduction for Ceiling Fans Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
SC-CO2 case
---------------------------------------------------------------
Discount rate and statistics
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
(million 2022$)
---------------------------------------------------------------
1............................................... 46.2 202.0 317.6 612.7
2............................................... 137.8 601.3 945.0 1,823.9
3............................................... 174.4 760.3 1,194.7 2,306.5
4............................................... 707.0 3,083.4 4,844.8 9,353.6
----------------------------------------------------------------------------------------------------------------
As discussed in section IV.L.2, DOE estimated the climate benefits
likely to result from the reduced emissions of methane and
N2O that DOE estimated for each of the considered TSLs for
ceiling fans. Table V.12 presents the value of the CH4
emissions reduction at each TSL, and Table V.13 presents the value of
the N2O emissions reduction at each TSL. The time-series of
annual values is presented for the proposed TSL in chapter 14 of the
NOPR TSD.
Table V.29--Present Value of Methane Emissions Reduction for Ceiling Fans Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
SC-CH4 case
---------------------------------------------------------------
Discount rate and statistics
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
(million 2022$)
---------------------------------------------------------------
1............................................... 16.6 50.8 71.3 134.3
2............................................... 49.1 149.9 210.3 396.3
3............................................... 62.1 189.3 265.5 500.5
4............................................... 251.9 768.5 1,077.7 2,031.9
----------------------------------------------------------------------------------------------------------------
Table V.30--Present Value of Nitrous Oxide Emissions Reduction for Ceiling Fans Shipped in 2028-2057
----------------------------------------------------------------------------------------------------------------
SC-N2O Case
---------------------------------------------------------------
Discount rate and statistics
---------------------------------------------------------------
TSL 5% 3% 2.5% 3%
---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
(million 2022$)
---------------------------------------------------------------
1............................................... 0.1 0.6 0.9 1.6
2............................................... 0.4 1.8 2.7 4.7
3............................................... 0.5 2.2 3.4 5.9
4............................................... 2.2 9.0 14.0 24.0
----------------------------------------------------------------------------------------------------------------
DOE is well aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
global and U.S. economy continues to evolve rapidly. DOE, together with
other Federal agencies, will continue to review methodologies for
estimating the monetary value of reductions in CO2 and other
GHG emissions. This ongoing review will consider the comments on this
subject that are part of the public record for this and other
rulemakings, as well as other methodological assumptions and issues.
DOE notes that the proposed standards would be economically justified
even without inclusion of monetized benefits of reduced GHG emissions.
DOE also estimated the monetary value of the health benefits
associated with NOX and SO2 emissions reductions
anticipated to result from the considered TSLs for ceiling fans. The
dollar-per-ton values that DOE used are discussed in section IV.L of
this document. Table V.14 presents the present value for NOX
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates, and Table V.15 presents similar results for
SO2 emissions reductions. The results in these tables
reflect application of EPA's low dollar-per-ton values, which DOE used
to be conservative. The time-series of annual values is presented for
the proposed TSL in chapter 14 of the NOPR TSD.
[[Page 40999]]
Table V.31--Present Value of NOX Emissions Reduction for Ceiling Fans
Shipped in 2028-2057
------------------------------------------------------------------------
3% Discount 7% Discount
TSL rate rate
------------------------------------------------------------------------
(million 2022$)
-------------------------------
1....................................... 377.0 140.6
2....................................... 1,116.6 418.2
3....................................... 1,412.1 530.3
4....................................... 5,731.3 2,151.1
------------------------------------------------------------------------
Table V.32--Present Value of SO2 Emissions Reduction for Ceiling Fans
Shipped in 2028-2057
------------------------------------------------------------------------
3% Discount 7% Discount
TSL rate rate
------------------------------------------------------------------------
(million 2022$)
-------------------------------
1....................................... 75.8 28.8
2....................................... 225.7 86.0
3....................................... 285.6 109.2
4....................................... 1,158.6 442.4
------------------------------------------------------------------------
Not all the public health and environmental benefits from the
reduction of greenhouse gases, NOx, and SO2 are captured in
the values above, and additional unquantified benefits from the
reductions of those pollutants as well as from the reduction of Hg,
direct PM, and other co-pollutants may be significant. DOE has not
included monetary benefits of the reduction of Hg emissions because the
amount of reduction is very small.
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No
other factors were considered in this analysis.
8. Summary of Economic Impacts
Table V.16 presents the NPV values that result from adding the
estimates of the potential economic benefits resulting from reduced GHG
and NOX and SO2 emissions to the NPV of consumer
benefits calculated for each TSL considered in this rulemaking. The
consumer benefits are domestic U.S. monetary savings that occur as a
result of purchasing the covered ceiling fans, and are measured for the
lifetime of products shipped in 2028-2057. The climate benefits
associated with reduced GHG emissions resulting from the adopted
standards are global benefits, and are also calculated based on the
lifetime of ceiling fans shipped in 2028-2057.
Table V.33--Consumer NPV Combined With Present Value of Climate Benefits and Health Benefits
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Using 3% discount rate for Consumer NPV and Health Benefits (billion 2022$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case.......................... 1.6 5.2 6.9 28.8
3% Average SC-GHG case.......................... 1.8 5.8 7.6 31.7
2.5% Average SC-GHG case........................ 2.0 6.2 8.1 33.8
3% 95th percentile SC-GHG case.................. 2.3 7.3 9.5 39.3
----------------------------------------------------------------------------------------------------------------
Using 7% discount rate for Consumer NPV and Health Benefits (billion 2022$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case.......................... 0.6 2.0 2.7 11.3
3% Average SC-GHG case.......................... 0.8 2.6 3.4 14.2
2.5% Average SC-GHG case........................ 0.9 3.0 3.9 16.3
3% 95th percentile SC-GHG case.................. 1.3 4.1 5.3 21.8
----------------------------------------------------------------------------------------------------------------
C. Conclusion
When considering new or amended energy conservation standards, the
standards that DOE adopts for any type (or class) of covered product
must be designed to achieve the maximum improvement in energy
efficiency that the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining
whether a standard is economically justified, the Secretary must
determine whether the benefits of the standard exceed its burdens by,
to the greatest extent practicable, considering the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or
amended standard must also result in significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B))
For this NOPR, DOE considered the impacts of new and amended
standards for ceiling fans at each TSL, beginning with the maximum
technologically feasible level, to determine whether that level was
economically justified. Where the max-tech level was not justified, DOE
then considered the next most efficient level and undertook the same
evaluation until it reached the highest efficiency level that is both
technologically feasible and economically justified and saves a
significant amount of energy.
To aid the reader as DOE discusses the benefits and/or burdens of
each TSL, tables in this section present a summary of the results of
DOE's quantitative analysis for each TSL. In addition to the
quantitative results presented in the tables, DOE also considers other
burdens and benefits that affect economic justification. These include
the impacts on identifiable subgroups of consumers who may be
disproportionately affected by a national standard and impacts on
employment.
DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy
savings in the absence of government intervention. Much of this
literature attempts to explain why consumers appear to undervalue
energy efficiency improvements. There is evidence that consumers
undervalue future energy savings as a result of (1) a lack of
information, (2) a lack of sufficient salience of the long-term or
aggregate benefits, (3) a lack of sufficient savings to warrant
delaying or altering purchases, (4) excessive focus on the short term,
in the form of inconsistent weighting of future energy cost savings
relative to available returns on other investments, (5) computational
or other difficulties associated with the evaluation of relevant
tradeoffs, and (6)
[[Page 41000]]
a divergence in incentives (for example, between renters and owners, or
builders and purchasers). Having less than perfect foresight and a high
degree of uncertainty about the future, consumers may trade off these
types of investments at a higher than expected rate between current
consumption and uncertain future energy cost savings.
In DOE's current regulatory analysis, potential changes in the
benefits and costs of a regulation due to changes in consumer purchase
decisions are included in two ways. First, if consumers forego the
purchase of a product in the standards case, this decreases sales for
product manufacturers, and the impact on manufacturers attributed to
lost revenue is included in the MIA. Second, DOE accounts for energy
savings attributable only to products actually used by consumers in the
standards case; if a standard decreases the number of products
purchased by consumers, this decreases the potential energy savings
from an energy conservation standard. DOE provides estimates of
shipments and changes in the volume of product purchases in chapter 9
of the NOPR TSD. However, DOE's current analysis does not explicitly
control for heterogeneity in consumer preferences, preferences across
subcategories of products or specific features, or consumer price
sensitivity variation according to household income.\87\
---------------------------------------------------------------------------
\87\ P.C. Reiss and M.W. White. Household Electricity Demand,
Revisited. Review of Economic Studies. 2005. 72(3): pp. 853-883.
doi: 10.1111/0034-6527.00354.
---------------------------------------------------------------------------
While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in consumer purchase decisions due to an energy conservation standard,
DOE is committed to developing a framework that can support empirical
quantitative tools for improved assessment of the consumer welfare
impacts of appliance standards. DOE has posted a paper that discusses
the issue of consumer welfare impacts of appliance energy conservation
standards, and potential enhancements to the methodology by which these
impacts are defined and estimated in the regulatory process.\88\
---------------------------------------------------------------------------
\88\ Sanstad, A.H. Notes on the Economics of Household Energy
Consumption and Technology Choice. 2010. Lawrence Berkeley National
Laboratory. www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf (last accessed January 27, 2023).
---------------------------------------------------------------------------
DOE welcomes comments on how to more fully assess the potential
impact of energy conservation standards on consumer choice and how to
quantify this impact in its regulatory analysis in future rulemakings.
1. Benefits and Burdens of TSLs Considered for Ceiling Fan Standards
Table V.34 and Table V.35 summarize the quantitative impacts
estimated for each TSL for ceiling fans. The national impacts are
measured over the lifetime of ceiling fans purchased in the 30-year
period that begins in the anticipated year of compliance with new and
amended standards (2028-2057). The energy savings, emissions
reductions, and value of emissions reductions refer to full-fuel-cycle
results. The efficiency levels contained in each TSL are described in
section V.A of this document.
Table V.34--Summary of Analytical Results for Ceiling Fan TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4
----------------------------------------------------------------------------------------------------------------
Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads........................................... 0.25 0.73 0.92 3.72
----------------------------------------------------------------------------------------------------------------
Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................... 4.88 14.49 18.29 74.20
CH4 (thousand tons)............................. 37.99 111.90 141.15 573.15
N2O (thousand tons)............................. 0.04 0.12 0.15 0.60
NOX (thousand tons)............................. 8.41 24.84 31.35 127.26
SO2 (thousand tons)............................. 1.20 3.57 4.51 18.31
Hg (tons)....................................... 0.01 0.02 0.03 0.12
----------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (3% discount rate, billion 2022$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................. 1.66 5.08 6.43 26.01
Climate Benefits *.............................. 0.25 0.75 0.95 3.86
Health Benefits **.............................. 0.45 1.34 1.70 6.89
Total Benefits [dagger]......................... 2.37 7.17 9.08 36.76
----------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs.............. 0.54 1.39 1.47 5.02
----------------------------------------------------------------------------------------------------------------
Consumer Net Benefits....................... 1.12 3.68 4.96 20.99
Total Net Benefits...................... 1.82 5.78 7.61 31.74
----------------------------------------------------------------------------------------------------------------
Present Value of Benefits and Costs (7% discount rate, billion 2022$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................. 0.68 2.09 2.66 10.76
Climate Benefits *.............................. 0.25 0.75 0.95 3.86
Health Benefits **.............................. 0.17 0.50 0.64 2.59
Total Benefits [dagger]..................... 1.11 3.35 4.25 17.21
----------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs.............. 0.29 0.77 0.82 2.99
----------------------------------------------------------------------------------------------------------------
Consumer Net Benefits....................... 0.39 1.32 1.84 7.77
Total Net Benefits...................... 0.81 2.58 3.43 14.22
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with ceiling fans shipped in 2028-2057. These
results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057.
[[Page 41001]]
* Climate benefits are calculated using four different estimates of the SC-CO2, SC-CH4 and SC-N2O. Together,
these represent the global SC-GHG. For presentational purposes of this table, the climate benefits associated
with the average SC-GHG at a 3 percent discount rate are shown; however, DOE emphasizes the importance and
value of considering the benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits
of reducing GHG emissions, this analysis uses the interim estimates presented in the Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990
published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate.
Table V.35--Summary of Analytical Results for Ceiling Fans TSLs: Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL * TSL2 * TSL3 * TSL4 *
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2022$) (No-new- 2,272-2,293 2,244-2,298 2,227-2,286 2,003-2,278
standards case INPV = 2,329).......
Industry NPV (% change)............. (2.4)-(1.5) (3.6)-(1.3) (4.4)-(1.8) (14.0)-(2.2)
----------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings (2022$)
----------------------------------------------------------------------------------------------------------------
Standard............................ $5.57 $11.25 $16.69 $39.84
Hugger.............................. 2.10 3.80 5.14 28.48
Large-Diameter...................... 68.20 68.20 68.20 (183.40)
High-Speed Belt-Driven.............. 508.29 508.29 663.92 1,854.94
----------------------------------------------------------------------------------------------------------------
Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Standard............................ 5.9 7.0 4.1 4.4
Hugger.............................. 7.3 7.5 6.6 5.7
Large-Diameter...................... 5.8 5.8 5.8 11.8
High-Speed Belt-Driven.............. 20.0 2.5 2.1 0.8
----------------------------------------------------------------------------------------------------------------
Percent of Consumers that Experience a Net Cost
----------------------------------------------------------------------------------------------------------------
Standard............................ 17% 38% 36% 34%
Hugger.............................. 28% 33% 33% 42%
Large-Diameter...................... 4% 4% 4% 43%
High-Speed Belt-Driven.............. 0% 0% 0% 0%
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Weighted by shares of each product class in total projected shipments in 2022.
DOE first considered TSL 4, which represents the max-tech
efficiency levels for all product classes. TSL 4 would require BLDC
motors for all sizes of small diameter ceiling fans, including those
sold in both the hugger and standard configuration. For large diameter
ceiling fans, the highest level would include permanent magnet direct
drive technology or BLDC motors depending on size, while the high-speed
belt driven fans would likely include more efficient ECMs and
aerodynamic redesign of the fan blades. TSL 4 would save an estimated
3.7 quads of energy, an amount DOE considers significant. Under TSL 4,
the NPV of consumer benefit would be $7.8 billion using a discount rate
of 7 percent, and $21.0 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 74 Mt of
CO2, 18 thousand tons of SO2, 127 thousand tons
of NOX, 0.12 tons of Hg, 573 thousand tons of
CH4, and 0.6 thousand tons of N2O. The estimated
monetary value of the climate benefits from reduced GHG emissions
(associated with the average SC-GHG at a 3-percent discount rate) at
TSL 4 is $3.9 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 4 is $2.6 billion using a 7-percent discount rate and $6.9 billion
using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 4 is $14.2
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 4 is $31.7 billion.
At TSL 4, affected purchasers of standard ceiling fans experience
an average LCC savings of $39.84, and those of hugger ceiling fans
experience an average LCC savings of $28.48. Average LCC savings for
HSBD ceiling fans are $1,855, whereas LDCF purchasers experience a loss
of $183.4 (i.e., negative LCC savings). The savings for small diameter
ceiling fans are primarily driven by the incorporation of BLDC motors,
which is a significantly more-efficient motor technology than what is
commonly used today. The simple payback period is 4.4 years for
standard ceiling fans, 5.7 years for hugger ceiling fans, 0.8 years for
HSBD ceiling fans, and 11.8 years for LDCFs. The fraction of consumers
experiencing a net LCC increase is 34 percent for standard ceiling
fans, 42 percent for hugger ceiling fans, 0 percent for HSBD ceiling
fans, and 43 percent for LDCFs. The fraction of consumers experiencing
net costs are attributable mostly to the varied usage associated with
ceiling fans.
For small diameter ceiling fans, BLDC motor designs are used in
only 7 percent of the market currently. Amongst those shipments with
BLDC motors, they are heavily weighted toward ceiling fans greater than
53 inches. For example, BLDC motors are available in over 50 percent of
basic models among 60 inch
[[Page 41002]]
diameter ceiling fans, compared to less than 10 percent of basic models
among 44 inch and 52 inch diameter ceiling fans.
Currently, ceiling fans with smaller diameters (such as 44 inches
in the standard and hugger configurations) can be purchased for as low
as $30 to $50 at major big box stores and online retailers. Consumers
purchasing these lower-cost products are likely the consumers who are
most sensitive to increases in first cost. At TSL 4, the first cost for
these products could increase by approximately 50 to 100 percent as a
result of adopting TSL 4. DOE is concerned that, in some cases, the
customer may forgo or defer the purchase of a new ceiling fan in the
small diameter standard and hugger configuration due to the increase in
first cost that would be required to achieve the efficiency levels
associated with TSL 4. Further, while low-income consumers of standard
and hugger fans experience an overall positive LCC savings of $52.89
and $42.44 respectively, an estimated 21 percent and 27 percent of
standard and hugger fan low-income consumers, respectively, experience
a net LCC increase. Further, these low-income consumer savings are
partially driven by renters who do not purchase the ceiling fan but pay
for the electricity consumed by the ceiling fan. If the increase in
first cost results in a landlord forgoing the purchase of a ceiling
fan, the renters would need to rely on alternative means for comfort
conditioning or purchase the ceiling fan themselves. While DOE's
research has not found a strong correlation between HVAC (i.e.,
cooling) usage and ceiling fan usage (i.e., that air-conditioner usage
replaces ceiling fan usage, or vice-versa),\89\ DOE has acknowledged
and applied a price elasticity. However, DOE does not have data to
support or refute whether a customer that defers purchasing a ceiling
fan due to the increase in first cost would, consequently, increase the
use of their HVAC system, room air conditioner, portable air
conditioner, or switch to cheaper (and typically less efficient \90\)
fan options, such as a box fan.
---------------------------------------------------------------------------
\89\ Kantner, C.L.S., S.J. Young, S.M. Donovan, and K. Garbesi.
Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.--Results of a
Survey on Amazon Mechanical Turk. 2013. Lawrence Berkeley National
Laboratory: Berkeley, CA. Report No. LBNL-6332E. (Last accessed
April 12, 2023.) http://www.escholarship.org/uc/item/3r67c1f9.
\90\ Alternative fan options are generally not subject to
efficiency regulations and frequently rely on smaller diameters fans
with higher rpms to produce airflow, leading to increased power
usage relative to typical ceiling fans.
---------------------------------------------------------------------------
DOE seeks comment on whether a certain percentage of consumers of
small diameter ceiling fans, especially with diameters less than or
equal to 53 inches in both the standard and hugger configurations,
would defer or forgo purchasing ceiling fans with BLDC motors that
achieve TSL 4 efficiency.
DOE also seeks comment on any evidence of consumers substituting
one cooling method--e.g., increased HVAC use--for another, e.g., a
forgone ceiling fan.
At TSL 4, the projected change in INPV for all ceiling fan
manufacturers ranges from a decrease of $325.7 million to a decrease of
$50.8 million, which corresponds to decreases of 14.0 percent and 2.2
percent, respectively. DOE estimates that industry must invest $245.5
million to comply with standards set at TSL 4 and that these
investments are primarily driven by the number of ceiling fan models
that will need to be redesigned at this TSL.
For standard and hugger ceiling fan manufacturers, the projected
change in INPV at TSL 4 ranges from a decrease of $274.1 million to a
decrease of $39.2 million, which corresponds to decreases of 18.1
percent and 2.6 percent, respectively. DOE estimates that standard and
hugger ceiling fan manufacturers must invest $199.6 million to comply
with standards set at TSL 4, which is driven by manufacturers needing
to redesign models representing approximately 93 percent of standard
and hugger ceiling fan shipments to incorporate a BLDC motor.
Manufacturers currently have engineering designs and tooling
equipment for approximately 2,500 standard and hugger ceiling fan
models that use AC motors. At TSL 4, all engineering designs and
tooling equipment associated with the production of standard and hugger
ceiling fans using an AC motor will likely need to be redesigned or
redeveloped to incorporate a BLDC motor. Manufacturers will likely need
to develop new motor housings for standard and hugger ceiling fan
models that use BLDC motors, as well as develop new tooling equipment
that is unique to each BLDC motor ceiling fan model. Lastly,
manufacturers will need to increase engineering resources to optimize
and test the BLDC motor and controls for each newly redesigned standard
and hugger ceiling fan model that uses a BLDC motor. These investments,
both in engineering resources and in new production equipment, will
likely strain manufacturers' limited resources during the three-year
compliance period, given the number of standard and hugger ceiling fan
models that need to be redesigned during this time period. DOE
estimates that in the no-new-standards case, models representing
approximately 7 percent of standard and hugger ceiling fan shipments
would meet the efficiency levels analyzed at TSL 4. Standard and hugger
ceiling fan manufacturers may have to change their component sourcing
to ensure sufficient supply of BLDC motors or invest significant
capital to manufacture BLDC motors in-house.
DOE seeks comment from stakeholders about whether BLDC motors and
BLDC motor controllers are available in the sizes necessary to support
the full range of hugger and standard ceiling fans as well as
manufacturers' ability to ramp up their sourcing or production of such
motors and controllers in the timeframe needed to comply with TSL 4
efficiencies for standard and hugger ceiling fans.
For LDCF manufacturers, the projected change in INPV at TSL 4
ranges from a decrease of $49.8 million to a decrease of $10.1 million,
which corresponds to decreases of 6.2 percent and 1.2 percent,
respectively. DOE estimates that LDCF manufacturers must invest $43.3
million to comply with standards set at TSL 4. DOE estimates that
approximately 48 percent of LDCF shipments would meet the efficiency
levels analyzed at TSL 4.
For HSBD ceiling fan manufacturers, the projected change in INPV at
TSL 4 ranges from a decrease of $2.0 million to a decrease of $1.8
million, which corresponds to decreases of 75.7 percent and 66.7
percent, respectively. DOE estimates that HSBD ceiling fan
manufacturers must invest $2.6 million to comply with standards set at
TSL 4. DOE estimates that no HSBD ceiling fan shipments would meet the
efficiency levels analyzed at TSL 4.
The Secretary tentatively concludes that at TSL 4 for ceiling fans,
the benefits of energy savings, positive NPV of consumer benefits,
emission reductions, and the estimated monetary value of the emissions
reductions would be outweighed by the manufacturing impacts, including
the large reduction in INPV for HSBD ceiling fans and the lack of
manufacturers currently offering products meeting the efficiency levels
required by this TSL for HSBD ceiling fans; the negative LCC benefits
for LDCFs with a proposed standard at TSL 4; and the possibility for
significant impacts on low-income consumers. As to the final point, the
Secretary is concerned that certain (primarily low-income) consumers
may decide to forgo purchasing ceiling fans as a result of the
[[Page 41003]]
increase in first costs. DOE has previously received feedback from
manufacturers that consumers may switch to cheaper (and typically less
efficient) fan options, such as box fans, or increase use of HVAC
systems in the event of significant increases in first costs for
ceiling fans because it is a price sensitive market and ceiling fans
are not considered a necessity by many consumers.\91\ Further, as
discussed previously, DOE estimates that, because of price sensitivity,
an estimated 10 percent of consumers may exit the market for ceiling
fans as a result of the price increases likely at TSL 4.\92\ If DOE
were to consider the welfare loss from these consumers exiting the
market, the costs of a standard set at TSL 4 would be higher still. DOE
notes that due to the sensitivity on first cost, a decision not to
purchase a ceiling fan is more likely to affect low-income consumers
and would impact the low-income economic analysis results presented in
this proposed rule for TSL 4. Hence, to ensure accessibility to all
consumers, including those with low incomes, the Secretary has
tentatively concluded that TSL 4 is not economically justified.
---------------------------------------------------------------------------
\91\ (ALA, No. 26 at p. 2)
\92\ For all other considered TSLs, the fraction of consumers
who may exit the market is at most 2 percent based on the demand
elasticities used in this NOPR. This is reflective of a smaller
increase in average fan purchase price (less than 5 percent) than at
TSL 4 (about 20 percent).
---------------------------------------------------------------------------
DOE requests comment and data on whether and to what extent an
increase in first costs would disproportionately impact low-income
consumers.
DOE then considered TSL 3, which represents EL 3 for standard and
hugger ceiling fans, EL 3 for HSBD ceiling fans, and EL 1 for LDCFs.
TSL 3 would require the use of more-efficient AC motors for standard
and hugger ceiling fans less than or equal to 53 inches and BLDC motors
for all other standard and hugger ceiling fans, optimized designs for
each blade span for LDCFs, and ECMs for HSBD ceiling fans. TSL 3 would
save an estimated 0.9 quads of energy, an amount DOE considers
significant. Under TSL 3, the NPV of consumer benefit would be $1.8
billion using a discount rate of 7 percent, and $5.0 billion using a
discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 (for ceiling fans
shipped between 2028 and 2057) are 18 Mt of CO2, 5 thousand
tons of SO2, 31 thousand tons of NOX, 0.03 tons
of Hg, 141 thousand tons of CH4, and 0.15 thousand tons of
N2O. The estimated monetary value of the climate benefits
from reduced GHG emissions (associated with the average SC-GHG at a 3-
percent discount rate) at TSL 3 is $0.95 billion. The estimated
monetary value of the health benefits from reduced SO2 and
NOX emissions at TSL 3 is $0.6 billion using a 7-percent
discount rate and $1.7 billion using a 3-percent discount rate.
Using a 7-percent discount rate for consumer benefits and costs,
health benefits from reduced SO2 and NOX
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated total NPV at TSL 3 is $3.4
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 3 is $7.6 billion. The estimated total
NPV is provided for additional information, but DOE uses the NPV of
consumer benefits when determining whether a proposed standard level is
economically justified.
At TSL 3, affected purchasers of standard ceiling fans experience
an average LCC savings of $16.7, and those of hugger ceiling fans have
$5.14 LCC savings. Average LCC savings for HSBD and LDCF ceiling fans
are $664 and $68.2, respectively. The simple payback period is 4.1
years for standard ceiling fans, 6.6 years for hugger ceiling fans, 2.1
years for HSBD ceiling fans, and 5.8 years for LDCFs. The fraction of
consumers experiencing a net LCC cost is 36 percent for standard
ceiling fans, 33 percent for hugger ceiling fans, 0 percent for HSBD
ceiling fans, and a 4 percent for LDCFs. In addition, at TSL 3,
purchasers of standard and hugger fans spend on average an additional
$9.8 and $3.8, respectively, in total installed cost compared to their
corresponding baseline (EL 0).
Low-income consumers of standard and hugger fans experience
positive LCC savings $21.8 and $8.2, respectively with a 19 percent and
18 percent of standard and hugger fan low-income consumers experiencing
a net LCC cost. Further, unlike at TSL 4, DOE expects that low first-
cost ceiling fans will remain on the market because compliance with TSL
3 will not require manufacturers to install BLDC motors in the small
standard and hugger models that low-income consumers principally rely
on. Accordingly, DOE expects that TSL 3 will not result in consumers
who are particularly sensitive to purchase price when deciding whether
or not to purchase a ceiling fan forgoing the purchase of a ceiling fan
altogether.
At TSL 3, the projected change in INPV for all ceiling fan
manufacturers ranges from a decrease of $101.3 million to a decrease of
$42.6 million, which corresponds to decreases of 4.4 percent and 1.8
percent, respectively. DOE estimates that industry must invest $107.2
million to comply with standards set at TSL 3.
For standard and hugger ceiling fan manufacturers the projected
change in INPV at TSL 3 ranges from a decrease of $91.4 million to a
decrease of $35.8 million, which corresponds to decreases of 6.0
percent and 2.4 percent, respectively. DOE estimates that standard and
hugger ceiling fan manufacturers must invest $93.2 million to comply
with standards set at TSL 3. DOE estimates that in the no-new-standards
case, models representing approximately 35 percent of standard and
hugger ceiling fan shipments would meet or exceed the efficiency levels
analyzed at TSL 3. Manufacturers will most likely not use a BLDC motor
to meet the efficiency levels required at TSL 3 for standard and hugger
ceiling fan models less than or equal to 53 inches. Therefore, any
standard or hugger ceiling fan models that will be required to be
redesigned will not need to accommodate a BLDC motor. While
manufacturers will most likely need to use a BLDC motor to meet the
efficiency levels required at TSL 3 for standard and hugger ceiling fan
models greater than 53 inches, there are significantly fewer standard
and hugger ceiling fan models and shipments greater than 53 inches
compared to less than or equal to 53 inches.
For LDCF manufacturers the projected change in INPV at TSL 3 ranges
from a decrease of $9.6 million to a decrease of $6.6 million, which
corresponds to decreases of 1.2 percent and 0.8 percent, respectively.
DOE estimates that LDCF manufacturers must invest $13.4 million to
comply with standards set at TSL 3. DOE estimates that approximately 86
percent of LDCF shipments would meet or exceed the efficiency levels
analyzed at TSL 3.
For HSBD ceiling fan manufacturers the projected change in INPV at
TSL 3 ranges from a decrease of $0.4 million to a decrease of $0.2
million, which corresponds to decreases of 15.3 percent and 6.3
percent, respectively. DOE estimates that HSBD ceiling fan
manufacturers must invest $0.5 million to comply with standards set at
TSL 3. DOE estimates that approximately 59 percent of HSBD ceiling fan
shipments would meet or exceed the efficiency levels analyzed at TSL 3.
After considering the analysis and weighing the benefits and
burdens, the Secretary has tentatively concluded that at a standard set
at TSL 3 for ceiling fans would be economically justified. At this TSL,
the average LCC savings for all product classes is positive. An
estimated 36 percent of standard ceiling fans, 33 percent for hugger
ceiling fans,
[[Page 41004]]
0 percent for HSBD ceiling fans, and 4 percent for LDCFs experience a
net cost. The FFC national energy savings are significant and the NPV
of consumer benefits is positive using both a 3-percent and 7-percent
discount rate. Notably, the benefits to consumers vastly outweigh the
cost to manufacturers. Further, the increase in total installed cost is
considerably less than TSL 4, and weighted toward larger blade-spans
that are more likely to be purchased for features other than only first
cost (and thus less likely to burden low-income consumers) and where
BLDC motors already make up a significant percentage of basic model
designs. TSL3 retains a low-cost entry price point for all standard and
hugger ceiling fans less than 53 inches. This ensures that lower-income
consumers for whom initial purchase price is the driving factor in
purchasing a ceiling fan retain a low-cost option. The projected 2
percent reduction in shipments at TSL 3 (about 0.44 million units), as
a result of the increased first costs relative to the no-new-standards
case in the compliance year, is considerably less than the projected
impact at TSL 4. At TSL 3, the NPV of consumer benefits, even measured
at the more conservative discount rate of 7 percent is over 15 times
higher than the maximum estimated manufacturers' loss in INPV. The
standard levels at TSL 3 are economically justified even without
weighing the estimated monetary value of emissions reductions. When
those emissions reductions are included--representing $0.95 billion in
climate benefits (associated with the average SC-GHG at a 3-percent
discount rate), and $ 1.7 billion (using a 3-percent discount rate) or
$ 0.6 billion (using a 7-percent discount rate) in health benefits--the
rationale becomes stronger still.
TSL 3 includes efficiency levels that require the use of similar
technologies for standard and hugger ceiling fans. DOE market research
indicates that the current markets offer similar, if not identical
designs, for models that differ only in the way they are mounted to the
ceiling. For example, DOE has observed that standard ceiling fan models
are often sold as a down rod in combination with an otherwise identical
hugger ceiling fan model, the combination of which make it a standard
ceiling fan. While DOE did not explicitly analyze a TSL that would
require TSL 4 efficiency levels for standard ceiling fans and TSL 3
efficiency levels for hugger fans, DOE is strongly considering this
alternative combination for the final rule. In that case, DOE would
expect the market to begin expanding for BLDC motor technology to
support all size ranges of standard ceiling fans, while allowing hugger
fans to continue to utilize AC motor technology. This could allow for a
more gradual transition and would maintain a low-cost option on the
market for hugger ceiling fans, which predominantly service households
with lower or standard-size ceiling heights.\93\ DOE believes this
would help alleviate some of the first cost concerns associated with
TSL 4. Even though this hybrid TSL 3 and TSL 4 policy scenario could
provide additional benefits, DOE is concerned that manufacturers may
respond to the TSL 4 standard ceiling fan efficiency requirements,
which essentially require BLDC motor technology, by changing the way
they offer ceiling fans for sale. In particular, DOE wonders whether
manufacturers would shift to a strategy where they simply offer down
rods on hugger ceiling fans that allow for the conversion to standard
ceiling fan when installed. This strategy has the potential to
significantly decrease the shipments of standard ceiling fans (and the
potential benefits from a more efficient proposed standard at TSL 4
efficiency levels for standard fans) by shifting the market to
predominantly hugger fans and employing installation alterations to
standard ceiling fans for the price sensitive part of the market. In
such a scenario, the savings associated with this TSL option may never
be realized. Down rods are already sold as separate products from most
standard and hugger manufacturers to accommodate a variety of ceiling
heights. While the current market mostly focuses on large down rods for
higher ceiling applications, DOE is concerned that such a market would
develop for two to four inch down rods that are common in most standard
ceiling fans because the infrastructure for selling down rods directly
to consumers already exists today. Therefore, consumers may elect to
purchase a hugger fan and a separate two-to-four inch down rod, thereby
avoiding purchasing a ceiling fan with a BLDC motor.
---------------------------------------------------------------------------
\93\ Hugger ceiling fans are installed closer to the ceiling and
as such allow for additional head-space below the ceiling fan
relative to standards ceiling fans. This makes hugger ceiling fans
more likely to be installed in lower ceiling heights than standard
ceiling fans.
---------------------------------------------------------------------------
DOE seeks comment on this alternative proposed standard level as
well as the unintended market consequences and the changes industry
would make to the way they bring products to market as a result of
standards that require the use of different motor technologies for
standard and hugger ceiling fans with small diameters.
As stated, DOE conducts the walk-down analysis to determine the TSL
that represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified as required under
EPCA. The walk-down is not a comparative analysis, as a comparative
analysis would result in the maximization of net benefits instead of
energy savings that are technologically feasible and economically
justified, which would be contrary to the statute. 86 FR 70892, 70908.
Although DOE has not conducted a comparative analysis to select the
proposed energy conservation standards, DOE notes that for standard and
hugger ceiling fans, TSL 3 preserves the low-cost AC motor segment of
the ceiling fan market, which permits low-cost consumers to experience
minimal increases in first cost, whereas TSL 4 results in a greater
increase in first cost for these low-income consumers. TSL 3 also
offers higher LCC and lower reduction in INPV than TSL 4 for LDCFs and
a considerably lower reduction in INPV for HSBD ceiling fans.
Although DOE considered proposed new and amended standard levels
for ceiling fans by grouping the efficiency levels for each product
class into TSLs, DOE evaluates all analyzed efficiency levels in its
analysis. For standard and hugger ceiling fans, TSL 3 (i.e., the
proposed TSL) includes the maximum level of energy savings while
preserving lower-cost products on the market for low-income consumers.
As previously discussed, setting standards at max-tech for standard and
hugger ceiling fans would significantly increase the price of the
lowest cost products on the market, reducing shipments (and purchases)
by 10 percent, which would disproportionately impact low-income
consumers who are most affected by price increases. For LDCFs, TSL 3
represents the highest efficiency level with positive LCC and setting
standards above this level would result in negative LCC for consumers.
For HSBD ceiling fans, TSL 3 represents the highest efficiency level
for which products are currently offered and setting standards at max-
tech for these products could result in significant reduction in INPV.
Therefore, DOE has concluded that max-tech is not justified.
[[Page 41005]]
Table V.36--Proposed Amended Energy Conservation Standards for Ceiling
Fans
------------------------------------------------------------------------
Equipment class CFM/W
------------------------------------------------------------------------
Standard Ceiling Fans *................ D <=53 in.: 0.69 D + 53.25.
D >53 in.: 1.31 D + 52.08.
Hugger Ceiling Fans *.................. D <=53 in.: 0.56 D + 48.75.
D >53 in.: 1.37 D + 38.5.
------------------------------------------------------------------------
CFEI
--------------------------------
Large-Diameter Ceiling Fans............ 1.22 at high speed.
1.31 at 40 percent speed or the
nearest speed that is not less
than 40 percent speed.
High-Speed Belt-Driven Ceiling Fans.... 1.89 at high speed.
------------------------------------------------------------------------
* D is the representative value of blade span as determined in
accordance with the DOE test procedure at appendix U to subpart B of
10 CFR part 430 and applicable sampling plans.
2. Annualized Benefits and Costs of the Proposed Standards
The benefits and costs of the proposed standards can also be
expressed in terms of annualized values. The annualized net benefit is
(1) the annualized national economic value (expressed in 2022$) of the
benefits from operating products that meet the proposed standards
(consisting primarily of operating cost savings from using less energy,
minus increases in product purchase costs, and (2) the annualized
monetary value of the climate and health benefits from emission
reductions.
Table V.20 shows the annualized values for ceiling fans under TSL
3, expressed in 2022$. The results under the primary estimate are as
follows.
Using a 7-percent discount rate for consumer benefits and costs and
NOx and SO2 reduction benefits, and a 3-percent discount
rate case for GHG social costs, the estimated cost of the proposed
standards for ceiling fans is $86.6 million per year in increased
equipment costs, while the estimated annual benefits are $281.1 million
from reduced equipment operating costs, $54.7 million from GHG
reductions, and $67.5 million from reduced NOX and
SO2 emissions. In this case, the net benefit amounts to
$316.74 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the proposed standards for ceiling fans is $84.6
million per year in increased equipment costs, while the estimated
annual benefits are $369.3 million in reduced operating costs, $54.7
million from GHG reductions, and $97.5 million from reduced
NOX and SO2 emissions. In this case, the net
benefit amounts to $436.9 million per year.
Table V.37--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Ceiling Fans (TSL 3)
----------------------------------------------------------------------------------------------------------------
Million 2022$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% Discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 369.3 343.9 387.6
Climate Benefits *.............................................. 54.7 52.4 55.5
Health Benefits **.............................................. 97.5 93.6 98.9
----------------------------------------------------------------------------------------------------------------
Total Benefits [dagger]..................................... 521.4 489.9 542.1
Consumer Incremental Product Costs.............................. 84.6 85.8 81.3
----------------------------------------------------------------------------------------------------------------
Net Benefits.................................................... 436.9 404.1 460.7
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 281.1 263.2 294.3
Climate Benefits * (3% discount rate)........................... 54.7 52.4 55.5
Health Benefits **.............................................. 67.5 65.1 68.5
----------------------------------------------------------------------------------------------------------------
Total Benefits [dagger]..................................... 403.3 380.7 418.3
Consumer Incremental Product Costs.............................. 86.6 87.7 83.6
----------------------------------------------------------------------------------------------------------------
Net Benefits................................................ 316.7 293.0 334.7
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with ceiling fans shipped in 2028-2057. These
results include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057. The
Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the AEO
2023 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. The methods used
to derive projected price trends are explained in sections IV.F.1 and IV.H.2 of this document. Note that the
Benefits and Costs may not sum to the Net Benefits due to rounding.
[[Page 41006]]
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown; however, DOE emphasizes the importance and value of considering the
benefits calculated using all four sets of SC-GHG estimates. To monetize the benefits of reducing GHG
emissions, this analysis uses the interim estimates presented in the Technical Support Document: Social Cost
of Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021
by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate.
D. Reporting, Certification, and Sampling Plan
Manufacturers, including importers, must use product-specific
certification templates to certify compliance to DOE. For ceiling fans,
the certification template reflects the general certification
requirements specified at 10 CFR 429.12 and the product-specific
requirements specified at 10 CFR 429.32. As discussed in the previous
paragraphs, DOE is not proposing to amend the product-specific
certification requirements for these products.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving
Regulation and Regulatory Review, 76 FR 3821 (Jan. 21, 2011) and E.O.
14094, ``Modernizing Regulatory Review,'' 88 FR 21879 (Apr. 11, 2023),
requires agencies, to the extent permitted by law, to (1) propose or
adopt a regulation only upon a reasoned determination that its benefits
justify its costs (recognizing that some benefits and costs are
difficult to quantify); (2) tailor regulations to impose the least
burden on society, consistent with obtaining regulatory objectives,
taking into account, among other things, and to the extent practicable,
the costs of cumulative regulations; (3) select, in choosing among
alternative regulatory approaches, those approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity);
(4) to the extent feasible, specify performance objectives, rather than
specifying the behavior or manner of compliance that regulated entities
must adopt; and (5) identify and assess available alternatives to
direct regulation, including providing economic incentives to encourage
the desired behavior, such as user fees or marketable permits, or
providing information upon which choices can be made by the public. DOE
emphasizes as well that E.O. 13563 requires agencies to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible. In its guidance, the
Office of Information and Regulatory Affairs (``OIRA'') in the Office
of Management and Budget (``OMB'') has emphasized that such techniques
may include identifying changing future compliance costs that might
result from technological innovation or anticipated behavioral changes.
For the reasons stated in the preamble, this proposed regulatory action
is consistent with these principles.
Section 6(a) of E.O. 12866 also requires agencies to submit
``significant regulatory actions'' to OIRA for review. OIRA has
determined that this proposed regulatory action constitutes a
``significant regulatory action'' within the scope of section 3(f)(1)
of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O.
12866, DOE has provided to OIRA an assessment, including the underlying
analysis, of benefits and costs anticipated from the proposed
regulatory action, together with, to the extent feasible, a
quantification of those costs; and an assessment, including the
underlying analysis, of costs and benefits of potentially effective and
reasonably feasible alternatives to the planned regulation, and an
explanation why the planned regulatory action is preferable to the
identified potential alternatives. These assessments are summarized in
this preamble and further detail can be found in the technical support
document for this proposed rulemaking.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
for any rule that by law must be proposed for public comment, unless
the agency certifies that the rule, if promulgated, will not have a
significant economic impact on a substantial number of small entities.
As required by E.O. 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General
Counsel's website (energy.gov/gc/office-general-counsel). DOE has
prepared the following IRFA for the products that are the subject of
this proposed rulemaking.
For manufacturers of ceiling fans, the SBA has set a size
threshold, which defines those entities classified as ``small
businesses'' for the purposes of the statute. DOE used the SBA's small
business size standards to determine whether any small entities would
be subject to the requirements of the rule. (See 13 CFR part 121.) The
size standards are listed by North American Industry Classification
System (``NAICS'') code and industry description and are available at
www.sba.gov/document/support-table-size-standards. Manufacturing of
standard and hugger ceiling fans is classified under NAICS 335210,
``Small Electrical Appliance Manufacturing.'' The SBA sets a threshold
of 1,500 employees or fewer for an entity to be considered as a small
business for this category. Manufacturing of LDCFs and HSBD ceiling
fans is classified under NAICS 333413, ``Industrial and Commercial Fan
and Blower and Air Purification Equipment Manufacturing.'' The SBA sets
a threshold of 500 employees or fewer for an entity to be considered as
a small business for this category.
1. Description of Reasons Why Action Is Being Considered
EPCA requires that, not later than 6 years after the issuance of
any final rule establishing or amending a standard, DOE must publish
either a notice of determination that standards for the product do not
need to be amended, or a NOPR including new proposed energy
conservation standards (proceeding to a final rule, as appropriate).
(42 U.S.C. 6295(m)(1)).
2. Objectives of, and Legal Basis for, Rule
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including ceiling fans. Any new
or amended standard for a covered product must be designed to achieve
the maximum improvement in energy
[[Page 41007]]
efficiency that the Secretary of Energy determines is technologically
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42
U.S.C. 6295(o)(3)(B))
3. Description on Estimated Number of Small Entities Regulated
DOE conducted a more focused inquiry of the companies that could be
small businesses which manufacture ceiling fans covered by this
proposed rulemaking. DOE referenced DOE's publicly available CCD to
generate a list of brands associated with covered products, identified
the businesses selling each brand using publicly available online
information, and referenced D&B Hoovers \94\ reports to determine
whether they might meet the criteria of a small business. DOE screened
out companies that do not offer products covered by this rulemaking, do
not meet the definition of a ``small business,'' or are foreign owned
and operated.
---------------------------------------------------------------------------
\94\ app.avention.com/login.
---------------------------------------------------------------------------
For ceiling fans, DOE identified 91 companies that manufacture
ceiling fans covered by this rulemaking. 61 of these companies are
large businesses--with more than 500 total employees if they
manufacture LDCF and HSBD or with more than 1,500 total employees if
they manufacture standard and hugger ceiling fans--or are foreign-owned
and operated. DOE determined that there were 16 domestic businesses
with less than 1,500 total employees that sell standard and hugger
ceiling fans covered by this rulemaking, 10 domestic businesses with
less than 500 total employees that sell LDCFs covered by this
rulemaking, and four domestic businesses with less than 500 total
employees that sell HSBD ceiling fans covered by this rulemaking.
Of the 16 domestic businesses that have fewer than 1,500 total
employees and manufacture standard and hugger ceiling fans covered by
this rulemaking, none of these companies own or maintain domestic
production facilities. All 16 of these companies either manufacture
their standard and hugger ceiling fans in Asia or out-source their
standard and hugger ceiling fans to an original equipment manufacturer
(``OEM'') located in Asia. Of the 10 domestic businesses with less than
500 total employees that manufacture LDCFs covered by this rulemaking,
nine have domestic production facilities. All four domestic businesses
with less than 500 total employees that manufacture HSBD ceiling fans
covered by this rulemaking have domestic production facilities.
Therefore, DOE did not identify any domestic standard and hugger
ceiling fan manufacturers that meet SBA's definition of a small
business. DOE identified nine LDCF manufacturers and four HSBD ceiling
fan manufacturers that meet SBA's definition of a small business.
DOE requests comment on the number of small businesses identified
that meet SBA's definition of a small business and manufacture ceiling
fans covered by this proposed rulemaking.
4. Description and Estimate of Compliance Requirements Including
Differences in Cost, if Any, for Different Groups of Small Entities
DOE cross-referenced its manufacturer list and brand-to-
manufacturer mapping as well as the CCD to create an estimate of the
number of models or product families associated with each small entity.
DOE further estimated the number of models or product families that
would need to be redesigned for each manufacturer, based on the
standards proposed in this document. Using the cost estimates
previously discussed in section IV.J.2.c of this document, DOE provides
estimates of costs for each small business in the following tables for
LDCFs and HSBD ceiling fans respectively.
Table VI.1--Small business Impacts--Large Diameter Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total conversion
Estimated cost as a
Estimated annual Total product product Estimated total percentage of
Small business revenue (2022$) families families to be conversion cost compliance-
redesigned (2022$) period revenue *
(percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Business 1.............................................. $610,000 10 5 $4,800,000 263.3
Small Business 2.............................................. 795,000 1 1 960,000 40.3
Small Business 3.............................................. 1,480,000 1 1 960,000 21.6
Small Business 4.............................................. 19,000,000 5 3 2,880,000 5.1
Small Business 5.............................................. 21,880,000 2 1 960,000 1.5
Small Business 6.............................................. 401,000 1 0 ................. .................
Small Business 7.............................................. 244,000 1 0 ................. .................
Small Business 8.............................................. 63,400 2 0 ................. .................
Small Business 9.............................................. 56,000 1 0 ................. .................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Compliance period revenue is equal to the ``Estimated Annual Revenue'' times 3 to account for the 3-year compliance period. Values may not be exact
due to rounding.
Table VI.2--Small Business Impacts--High-Speed-Belt-Driven Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total conversion
cost as a
Estimated annual Estimated Estimated total percentage of
Small business revenue (2022$) Total models models to be conversion cost compliance-
redesigned (2022$) period revenue *
(percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Business 1............................................... $930,000 5 3 $233,500 8.4
Small Business 2............................................... 12,460,000 5 4 311,400 0.8
Small Business 3............................................... 5,050,000 1 0 ................. .................
[[Page 41008]]
Small Business 4............................................... 1,440,000 1 0 ................. .................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Compliance period revenue is equal to the ``Estimated Annual Revenue'' times 3 to account for the 3-year compliance period. Values may not be exact
due to rounding.
Manufacturers are expected to spread out redesign and retooling
costs across the three-year compliance window and, additionally, are
expected to prioritize models based on sales volume. Some businesses,
particularly those with high conversion costs relative to their annual
revenue, may opt to remove models from their product offerings in order
to reduce overall conversion costs. Manufacturers may need to seek
outside funding to support redesign efforts if internal free cash flows
are insufficient. Manufacturers are able to sell non-compliant products
produced or imported prior to the compliance date. Additional
information about product conversion costs and small business impacts
are included in chapter 12 of the NOPR TSD.
DOE requests comment on the estimated and other costs which small
manufacturers of ceiling fans may incur if this proposed rulemaking is
finalized.
DOE additionally requests comment on whether small businesses would
opt to remove models from the market rather than redesign, the basis
for which models would be redesigned, and the extent to which this
would be the case.
5. Duplication, Overlap, and Conflict With Other Rules and Regulations
DOE is not aware of any other rules or regulations that duplicate,
overlap, or conflict with the rule being considered today.
6. Significant Alternatives to the Rule
The discussion in the previous section analyzes impacts on small
businesses that would result from DOE's proposed rule, represented by
TSL 3. In reviewing alternatives to the proposed rule, DOE examined
energy conservation standards set at lower efficiency levels. While TSL
1 and TSL 2 would reduce the impacts on small business manufacturers,
it would come at the expense of a large reduction in energy savings.
TSL 1 achieves 73 percent lower energy savings compared to the energy
savings at TSL 3. TSL 2 achieves 26 percent lower energy savings
compared to the energy savings at TSL 3.
Based on the presented discussion, establishing standards at TSL 3
balances the benefits of the energy savings at TSL 3 with the potential
burdens placed on ceiling fan manufacturers, including small business
manufacturers. Accordingly, DOE does not propose one of the other TSLs
considered in the analysis, or the other policy alternatives examined
as part of the regulatory impact analysis and included in chapter 17 of
the NOPR TSD.
Additional compliance flexibilities may be available through other
means. EPCA provides that a manufacturer whose annual gross revenue
from all of its operations does not exceed $8 million may apply for an
exemption from all or part of an energy conservation standard for a
period not longer than 24 months after the effective date of a final
rule establishing the standard. (42 U.S.C. 6295(t)) This exemption, if
granted, would effectively extend the compliance window up to five
years from the publication of a final rule. Additionally, manufacturers
subject to DOE's energy efficiency standards may apply to DOE's Office
of Hearings and Appeals for exception relief under certain
circumstances. Manufacturers should refer to 10 CFR part 430, subpart
E, and 10 CFR part 1003 for additional details.
C. Review Under the Paperwork Reduction Act
Manufacturers of ceiling fans must certify to DOE that their
products comply with any applicable energy conservation standards. In
certifying compliance, manufacturers must test their products according
to the DOE test procedures for ceiling fans, including any amendments
adopted for those test procedures. DOE has established regulations for
the certification and recordkeeping requirements for all covered
consumer products and commercial equipment, including ceiling fans.
(See generally 10 CFR part 429). The collection-of-information
requirement for the certification and recordkeeping is subject to
review and approval by OMB under the Paperwork Reduction Act (``PRA'').
This requirement has been approved by OMB under OMB control number
1910-1400. Public reporting burden for the certification is estimated
to average 35 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
DOE is analyzing this proposed regulation in accordance with the
National Environmental Policy Act of 1969 (``NEPA'') and DOE's NEPA
implementing regulations (10 CFR part 1021). DOE's regulations include
a categorical exclusion for rulemakings that establish energy
conservation standards for consumer products or industrial equipment.
10 CFR part 1021, subpart D, appendix B5.1. DOE anticipates that this
rulemaking qualifies for categorical exclusion B5.1 because it is a
rulemaking that establishes energy conservation standards for consumer
products or industrial equipment, none of the exceptions identified in
categorical exclusion B5.1(b) apply, no extraordinary circumstances
exist that require further environmental analysis, and it otherwise
meets the requirements for application of a categorical exclusion. See
10 CFR 1021.410. DOE will complete its NEPA review before issuing the
final rule.
E. Review Under Executive Order 13132
E.O. 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), imposes
certain requirements on Federal agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. The Executive order requires agencies to
[[Page 41009]]
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. DOE has examined this
proposed rule and has tentatively determined that it would not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government. EPCA
governs and prescribes Federal preemption of State regulations as to
energy conservation for the products that are the subject of this
proposed rule. States can petition DOE for exemption from such
preemption to the extent, and based on criteria, set forth in EPCA. (42
U.S.C. 6297) Therefore, no further action is required by Executive
Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil
Justice Reform,'' imposes on Federal agencies the general duty to
adhere to the following requirements: (1) eliminate drafting errors and
ambiguity, (2) write regulations to minimize litigation, (3) provide a
clear legal standard for affected conduct rather than a general
standard, and (4) promote simplification and burden reduction. 61 FR
4729 (Feb. 7, 1996). Regarding the review required by section 3(a),
section 3(b) of E.O. 12988 specifically requires that executive
agencies make every reasonable effort to ensure that the regulation:
(1) clearly specifies the preemptive effect, if any, (2) clearly
specifies any effect on existing Federal law or regulation, (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction, (4) specifies the retroactive
effect, if any, (5) adequately defines key terms, and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
Executive Order 12988 requires executive agencies to review regulations
in light of applicable standards in section 3(a) and section 3(b) to
determine whether they are met or it is unreasonable to meet one or
more of them. DOE has completed the required review and determined
that, to the extent permitted by law, this proposed rule meets the
relevant standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, section 201 (codified at 2 U.S.C.
1531). For a proposed regulatory action likely to result in a rule that
may cause the expenditure by State, local, and Tribal governments, in
the aggregate, or by the private sector of $100 million or more in any
one year (adjusted annually for inflation), section 202 of UMRA
requires a Federal agency to publish a written statement that estimates
the resulting costs, benefits, and other effects on the national
economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal
agency to develop an effective process to permit timely input by
elected officers of State, local, and Tribal governments on a proposed
``significant intergovernmental mandate,'' and requires an agency plan
for giving notice and opportunity for timely input to potentially
affected small governments before establishing any requirements that
might significantly or uniquely affect them. On March 18, 1997, DOE
published a statement of policy on its process for intergovernmental
consultation under UMRA. 62 FR 12820. DOE's policy statement is also
available at energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
Although this proposed rule does not contain a Federal
intergovernmental mandate, it may require expenditures of $100 million
or more in any one year by the private sector. Such expenditures may
include: (1) investment in research and development and in capital
expenditures by ceiling fans manufacturers in the years between the
final rule and the compliance date for the new standards and (2)
incremental additional expenditures by consumers to purchase higher-
efficiency ceiling fans, starting at the compliance date for the
applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the proposed rule. (2 U.S.C. 1532(c)) The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of this NOPR and the TSD for this
proposed rule respond to those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the proposed rule unless DOE publishes
an explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C. 6295(m),
this proposed rule would establish new and amended energy conservation
standards for ceiling fans that are designed to achieve the maximum
improvement in energy efficiency that DOE has determined to be both
technologically feasible and economically justified, as required by 42
U.S.C. 6295(o)(2)(A) and 6295(o)(3)(B). A full discussion of the
alternatives considered by DOE is presented in chapter 17 of the TSD
for this proposed rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (Mar. 15,
1988), DOE has determined that this proposed rule would not result in
any takings that might require compensation under the Fifth Amendment
to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review
most
[[Page 41010]]
disseminations of information to the public under information quality
guidelines established by each agency pursuant to general guidelines
issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22,
2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7,
2002). Pursuant to OMB Memorandum M-19-15, Improving Implementation of
the Information Quality Act (April 24, 2019), DOE published updated
guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE
has reviewed this NOPR under the OMB and DOE guidelines and has
concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
E.O. 13211, ``Actions Concerning Regulations That Significantly
Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 (May 22,
2001), requires Federal agencies to prepare and submit to OIRA at OMB,
a Statement of Energy Effects for any proposed significant energy
action. A ``significant energy action'' is defined as any action by an
agency that promulgates or is expected to lead to promulgation of a
final rule, and that (1) is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any proposed significant energy action,
the agency must give a detailed statement of any adverse effects on
energy supply, distribution, or use should the proposal be implemented,
and of reasonable alternatives to the action and their expected
benefits on energy supply, distribution, and use.
DOE has tentatively concluded that this regulatory action, which
proposes new and amended energy conservation standards for ceiling
fans, is not a significant energy action because the proposed standards
are not likely to have a significant adverse effect on the supply,
distribution, or use of energy, nor has it been designated as such by
the Administrator at OIRA. Accordingly, DOE has not prepared a
Statement of Energy Effects on this proposed rule.
L. Information Quality
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (``OSTP''), issued its Final Information
Quality Bulletin for Peer Review (``the Bulletin''). 70 FR 2664 (Jan.
14, 2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' 70 FR 2664, 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process and the analyses
that are typically used and has prepared a report describing that peer
review.\95\ Generation of this report involved a rigorous, formal, and
documented evaluation using objective criteria and qualified and
independent reviewers to make a judgment as to the technical/
scientific/business merit, the actual or anticipated results, and the
productivity and management effectiveness of programs and/or projects.
Because available data, models, and technological understanding have
changed since 2007, DOE has engaged with the National Academy of
Sciences to review DOE's analytical methodologies to ascertain whether
modifications are needed to improve the Department's analyses. DOE is
in the process of evaluating the resulting report.\96\
---------------------------------------------------------------------------
\95\ The 2007 ``Energy Conservation Standards Rulemaking Peer
Review Report'' is available at the following website: energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0 (last accessed February 7, 2023).
\96\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
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VII. Public Participation
A. Participation in the Webinar
The time and date of the webinar meeting are listed in the DATES
section at the beginning of this document. Webinar registration
information, participant instructions, and information about the
capabilities available to webinar participants will be published on
DOE's website: www.energy.gov/eere/buildings/public-meetings-and-comment-deadlines. Participants are responsible for ensuring their
systems are compatible with the webinar software.
B. Procedure for Submitting Prepared General Statements for
Distribution
Any person who has an interest in the topics addressed in this
proposed rule, or who is representative of a group or class of persons
that has an interest in these issues, may request an opportunity to
make an oral presentation at the webinar. Such persons may submit to
[email protected]. Persons who wish to speak
should include with their request a computer file in WordPerfect,
Microsoft Word, PDF, or text (ASCII) file format that briefly describes
the nature of their interest in this proposed rulemaking and the topics
they wish to discuss. Such persons should also provide a daytime
telephone number where they can be reached.
C. Conduct of the Webinar
DOE will designate a DOE official to preside at the webinar/public
meeting and may also use a professional facilitator to aid discussion.
The meeting will not be a judicial or evidentiary-type public hearing,
but DOE will conduct it in accordance with section 336 of EPCA (42
U.S.C. 6306). A court reporter will be present to record the
proceedings and prepare a transcript. DOE reserves the right to
schedule the order of presentations and to establish the procedures
governing the conduct of the webinar. There shall not be discussion of
proprietary information, costs or prices, market share, or other
commercial matters regulated by U.S. anti-trust laws. After the webinar
and until the end of the comment period, interested parties may submit
further comments on the proceedings and any aspect of the proposed
rulemaking.
The webinar will be conducted in an informal, conference style. DOE
will a general overview of the topics addressed in this proposed
rulemaking, allow time for prepared general statements by participants,
and encourage all interested parties to share their views on issues
affecting this rulemaking. Each participant will be allowed to make a
general statement (within time limits determined by DOE), before the
discussion of specific topics. DOE will permit, as time permits, other
participants to comment briefly on any general statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly. Participants should
be prepared to answer questions by DOE and by other
[[Page 41011]]
participants concerning these issues. DOE representatives may also ask
questions of participants concerning other matters relevant to this
rulemaking. The official conducting the webinar/public meeting will
accept additional comments or questions from those attending, as time
permits. The presiding official will announce any further procedural
rules or modification of the above procedures that may be needed for
the proper conduct of the webinar.
A transcript of the webinar will be included in the docket, which
can be viewed as described in the Docket section at the beginning of
this proposed rule. In addition, any person may buy a copy of the
transcript from the transcribing reporter.
D. Submission of Comments
DOE will accept comments, data, and information regarding this
proposed rule before or after the public meeting, but no later than the
date provided in the DATES section at the beginning of this proposed
rule. Interested parties may submit comments, data, and other
information using any of the methods described in the ADDRESSES section
at the beginning of this document.
Submitting comments via www.regulations.gov. The
www.regulations.gov web page will require you to provide your name and
contact information. Your contact information will be viewable to DOE
Building Technologies staff only. Your contact information will not be
publicly viewable except for your first and last names, organization
name (if any), and submitter representative name (if any). If your
comment is not processed properly because of technical difficulties,
DOE will use this information to contact you. If DOE cannot read your
comment due to technical difficulties and cannot contact you for
clarification, DOE may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to www.regulations.gov information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (``CBI'')). Comments submitted
through www.regulations.gov cannot be claimed as CBI. Comments received
through the website will waive any CBI claims for the information
submitted. For information on submitting CBI, see the Confidential
Business Information section.
DOE processes submissions made through www.regulations.gov before
posting. Normally, comments will be posted within a few days of being
submitted. However, if large volumes of comments are being processed
simultaneously, your comment may not be viewable for up to several
weeks. Please keep the comment tracking number that www.regulations.gov
provides after you have successfully uploaded your comment.
Submitting comments via email, hand delivery/courier, or postal
mail. Comments and documents submitted via email, hand delivery/
courier, or postal mail also will be posted to www.regulations.gov. If
you do not want your personal contact information to be publicly
viewable, do not include it in your comment or any accompanying
documents. Instead, provide your contact information in a cover letter.
Include your first and last names, email address, telephone number, and
optional mailing address. The cover letter will not be publicly
viewable as long as it does not include any comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. If you submit via postal mail
or hand delivery/courier, please provide all items on a CD, if
feasible, in which case it is not necessary to submit printed copies.
No telefacsimiles (``faxes'') will be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email two well-marked copies: one copy of the document marked
``confidential'' including all the information believed to be
confidential, and one copy of the document marked ``non-confidential''
with the information believed to be confidential deleted. DOE will make
its own determination about the confidential status of the information
and treat it according to its determination.
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except information deemed to be
exempt from public disclosure).
E. Issues on Which DOE Seeks Comment
Although DOE welcomes comments on any aspect of this proposal, DOE
is particularly interested in receiving comments and views of
interested parties concerning the following issues:
(1) DOE requests comment on its assumption that there are zero
products on the market that meet the definition of both ceiling fan and
VSD ceiling fan, and its decision not to evaluate amended energy
conservation standards for VSD ceiling fans on that basis.
(2) DOE requests comment and data on the distribution of HSBD blade
spans.
(3) DOE requests comment and data regarding whether a 50-inch fan
is representative of an HSBD ceiling fan.
(4) DOE requests comment on the difference in airflow and power
consumption between fans at baseline efficiency and higher efficiency
levels while still using an AC motor.
(5) DOE requests data as to the average airflow of HSBD ceiling
fans and the range of airflows available.
(6) DOE requests comment and data regarding its tentative
determination that energy conservation standards for LDCF standby power
would be met by removing consumer features from the default controller,
and that this would likely not result in energy savings.
(7) DOE requests comment and data on the primary factors that
govern LDCF controller purchasing decisions.
(8) DOE requests comment and data on the gross margin trends for
household durables relevant to ceiling fans that experienced an
increase in the cost of goods sold.
(9) DOE requests comment and data as to whether the assumed
operating hours
[[Page 41012]]
and operating speeds are appropriate for HSBD ceiling fans.
(10) DOE requests comment and data on the impact on air-
conditioning or heating equipment use from the adoption of more
stringent efficiency standards on ceiling fans.
(11) DOE requests comment and data on its assumption that
installation costs do not vary by efficiency level for a given product
class.
(12) DOE requests comment and data on its lifetime methodology and
estimated survival probability distribution for ceiling fans. DOE also
requests comment and data as to whether HSBD ceiling fans have a
different lifetime than other ceiling fans.
(13) DOE seeks comment on the potential market response to a
disparity in standards for standard and hugger product classes,
including but not limited to the potential for product switching.
Specifically, DOE seeks comment and data as to how the market would
respond to a standard requiring BLDC motors for standard ceiling fans
but not for hugger ceiling fans.
(14) DOE requests comment on the long-term implications of supply
chain disruption on the microchip and semiconductor cost components of
affected ceiling fans.
(15) DOE requests comment on its price learning assumption and
methodology, including but not limited to data supporting existing or
alternative price trends for fans with BLDC motors.
(16) DOE requests comment on its shipment projection methodology
and assumptions, including the demand function and associated
elasticities for ceiling fans used in the analysis.
(17) DOE requests comment on the presence and size of a direct
rebound effect for ceiling fans.
(18) DOE welcomes comment on how it may account for energy prices
faced by low income households.
(19) DOE requests comment and data on the overall methodology used
for the consumer subgroup analysis.
(20) DOE requests comment on the estimated potential domestic
employment impacts on ceiling fan manufacturers presented in this NOPR.
Specifically, DOE requests comment on the assumption that almost all
standard and hugger ceiling fans are manufactured abroad and any energy
conservation standards would not have a significant impact on domestic
employment for standard and hugger ceiling fan manufacturers; on the
domestic employment impacts shown in for LDCF manufacturers; and on the
assumption that while most HSBD ceiling fans are manufactured
domestically, due to the extremely low annual shipment volumes, any
energy conservation standards would not have a significant impact on
domestic employment.
(21) DOE requests comment on the potential manufacturing capacity
constraints placed on ceiling fan manufacturers (including any
potential supply chain issues) at any of the TSLs presented in this
NOPR.
(22) DOE welcomes comments on how to more fully assess the
potential impact of energy conservation standards on consumer choice
and how to quantify this impact in its regulatory analysis in future
rulemakings.
(23) DOE seeks comment on whether a certain percentage of consumers
of small diameter ceiling fans, especially with diameters less than or
equal to 53 inches in both the standard and hugger configurations,
would defer or forgo purchasing ceiling fans with BLDC motors that
achieve TSL 4 efficiency.
(24) DOE also seeks comment on any evidence of consumers
substituting one cooling method--e.g., increased HVAC use--for another,
e.g., a forgone ceiling fan.
(25) DOE seeks comment from stakeholders about whether BLDC motors
and BLDC motor controllers are available in the sizes necessary to
support the full range of hugger and standard ceiling fans as well as
manufacturers' ability to ramp up their sourcing or production of such
motors and controllers in the timeframe needed to comply with TSL 4
efficiencies for standard and hugger ceiling fans.
(26) DOE requests comment and data on whether and to what extent an
increase in first costs would disproportionately impact low-income
consumers.
(27) DOE seeks comment on this alternative proposed standard level
as well as the unintended market consequences and the changes industry
would make to the way they bring products to market as a result of
standards that require the use of different motor technologies for
standard and hugger ceiling fans with small diameters.
(28) DOE requests comment on the number of small businesses
identified that manufacture ceiling fans covered by this proposed
rulemaking.
(29) DOE requests comment on the estimated and potentially un-
estimated costs which small manufacturers of ceiling fans may incur if
this proposed rulemaking is finalized.
(30) DOE request comment on whether small businesses would opt to
remove models from the market rather than redesign, the basis for which
models would be redesigned, and the extent to which this would be the
case.
(31) DOE requests comments on impacts to domestic small businesses.
(32) DOE additionally requests comments on TSL 4, including the
benefits and costs borne by low-income consumers.
(33) Additionally, DOE welcomes comments on other issues relevant
to the conduct of this rulemaking that may not specifically be
identified in this document.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this notice of
proposed rulemaking and announcement of public meeting.
List of Subjects in 10 CFR Part 430
Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Intergovernmental relations, Small businesses.
Signing Authority
This document of the Department of Energy was signed on June 9,
2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for
Energy Efficiency and Renewable Energy, pursuant to delegated authority
from the Secretary of Energy. That document with the original signature
and date is maintained by DOE. For administrative purposes only, and in
compliance with requirements of the Office of the Federal Register, the
undersigned DOE Federal Register Liaison Officer has been authorized to
sign and submit the document in electronic format for publication, as
an official document of the Department of Energy. This administrative
process in no way alters the legal effect of this document upon
publication in the Federal Register.
Signed in Washington, DC, on June 13, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons set forth in the preamble, DOE proposes to amend
part 430 of chapter II, subchapter D, of title 10 of the Code of
Federal Regulations, as set forth below:
PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS
0
1. The authority citation for part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
[[Page 41013]]
0
2. Amend Sec. 430.32 by revising paragraph (s)(2) to read as follows:
Sec. 430.32 Energy and water conservation standards and their
compliance dates.
* * * * *
(s) * * *
(2)(i) Ceiling fans manufactured on or after January 21, 2020 and
before [Date 3 years after date of publication of the final rule in the
Federal Register] shall meet the requirements shown in the table:
------------------------------------------------------------------------
Product class as defined in Appendix U Minimum efficiency (CFM/W) *
------------------------------------------------------------------------
Very small-diameter (VSD)................. D <=12 in.: 21
D >12 in.: 3.16 D -17.04
Standard.................................. 0.65 D + 38.03
Hugger.................................... 0.29 D + 34.46
High-speed small-diameter (HSSD).......... 4.16 D + 0.02
------------------------------------------------------------------------
* D is the ceiling fan's blade span, in inches, as determined in
appendix U of this part.
(ii) Ceiling fans manufactured on or after [Date 3 years after date
of publication of the final rule in the Federal Register] shall meet
the requirements shown in the table:
------------------------------------------------------------------------
Product class as defined in Appendix U Minimum efficiency (CFM/W)*
------------------------------------------------------------------------
Very small-diameter (VSD)................. D <=12 in.: 21
D >12 in.: 3.16 D -17.04
Standard.................................. D <=53 in.: 0.69 D +53.25
D >53 in.: 1.31 D +52.08
Hugger.................................... D <=53 in.: 0.56 D +48.75
D >53 in.: 1.37 D +38.5
High-speed small-diameter (HSSD).......... 4.16 D + 0.02
------------------------------------------------------------------------
* D is the ceiling fan's blade span, in inches, as determined in
appendix U of this part.
(iii) Large-diameter ceiling fans, as defined in appendix U to
subpart B of this part, manufactured on or after January 21, 2020 and
before [Date 3 years after date of publication of the final rule in the
Federal Register], shall have a CFEI greater than or equal to--
(A) 1.00 at high speed; and
(B) 1.31 at 40 percent speed or the nearest speed that is not less
than 40 percent speed.
(iv) Large-diameter ceiling fans, as defined in appendix U to
subpart B of this part, manufactured on or after [Date 3 years after
date of publication of the final rule in the Federal Register], shall
have a CFEI greater than or equal to--
(A) 1.22 at high speed; and
(B) 1.31 at 40 percent speed or the nearest speed that is not less
than 40 percent speed.
(v) High-speed belt-driven ceiling fans, as defined in appendix U
to subpart B of this part, manufactured on or after [Date 3 years after
date of publication of the final rule in the Federal Register], shall
have a CFEI greater than or equal to--
(A) 1.89 at high speed.
(vi) The provisions in paragraph (s)(2)(i) through (v) of this
section apply to ceiling fans except:
(A) Ceiling fans where the plane of rotation of a ceiling fan's
blades is not less than or equal to 45 degrees from horizontal, or
cannot be adjusted based on the manufacturer's specifications to be
less than or equal to 45 degrees from horizontal;
(B) Centrifugal ceiling fans, as defined in appendix U of this
part;
(C) Belt-driven ceiling fans other than high-speed belt-driven
ceiling fans, as defined in appendix U of this part;
(D) Oscillating ceiling fans, as defined in appendix U of this
part; and
(E) Highly-decorative ceiling fans, as defined in appendix U of
this part.
* * * * *
[FR Doc. 2023-12957 Filed 6-21-23; 8:45 am]
BILLING CODE 6450-01-P