[Federal Register Volume 89, Number 98 (Monday, May 20, 2024)]
[Rules and Regulations]
[Pages 44464-44537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07873]
[[Page 44463]]
Vol. 89
Monday,
No. 98
May 20, 2024
Part V
Department of Energy
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10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for
Circulator Pumps; Final Rule
Federal Register / Vol. 89 , No. 98 / Monday, May 20, 2024 / Rules
and Regulations
[[Page 44464]]
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DEPARTMENT OF ENERGY
10 CFR Part 431
[EERE-2016-BT-STD-0004]
RIN 1904-AD61
Energy Conservation Program: Energy Conservation Standards for
Circulator Pumps
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Final rule.
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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including circulator
pumps. 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 final rule, DOE is adopting new
energy conservation standards for circulator pumps. It has determined
that the energy conservation standards for this equipment would result
in significant conservation of energy, and are technologically feasible
and economically justified.
DATES: The effective date of this rule is August 5, 2024. Compliance
with the standards established for circulator pumps in this final rule
is required on and after May 22, 2028.
ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at www.regulations.gov. All documents in the docket are listed
in the www.regulations.gov index. However, not all documents listed in
the index may be publicly available, such as information that is exempt
from public disclosure.
The docket web page can be found at www.regulations.gov/docket/EERE-2016-BT-STD-0004. The docket web page contains instructions on how
to access all documents, including public comments, in the docket.
For further information on how to review the docket, contact the
Appliance and Equipment Standards Program staff at (202) 287-1445 or by
email: [email protected].
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) 586-9870. Email: [email protected].
Mr. Uchechukwu ``Emeka'' Eze, U.S. Department of Energy, Office of
the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (240) 961-8879. Email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Synopsis of the Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
III. General Discussion
A. November 2016 CPWG Recommendations
1. Energy Conservation Standard Level
2. Labeling Requirements
3. Certification Reports
B. General Comments
C. Equipment Classes and Scope of Coverage
1. CPWG Recommendations
a. Scope
b. Definitions
c. Equipment Classes
d. Small Vertical In-Line Pumps
D. Test Procedure
1. Control Mode
E. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
F. Energy Savings
1. Determination of Savings
2. Significance of Savings
G. 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 Equipment
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
H. Compliance Date
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Scope of Coverage and Equipment Classes
a. Scope
b. Equipment Classes
2. Technology Options
a. Hydraulic Design
b. More Efficient Motors
c. Speed Reduction
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Representative Equipment
a. Circulator Pump Varieties
2. Efficiency Analysis
a. Baseline Efficiency
b. Higher Efficiency Levels
c. EL Analysis
3. Cost Analysis
4. Cost-Efficiency Results
5. Manufacturer Markup and Manufacturer Selling Price
D. Markups Analysis
E. Energy Use Analysis
1. Circulator Pump Applications
2. Consumer Samples
3. Operating Hours
4. Load Profiles
F. Life-Cycle Cost and Payback Period Analysis
1. Equipment Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Equipment Lifetime
7. Discount Rates
a. Residential
b. Commercial
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
G. Shipments Analysis
1. No-New-Standards Case Shipments Projections
2. Standards-Case Shipment Projections
H. National Impact Analysis
1. Equipment Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Product and Capital Conversion Costs
d. Manufacturer Markup Scenarios
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
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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 Equipment
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 Circulator Pump
Standards
2. Annualized Benefits and Costs of the Adopted Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866, 13563, and 14094
B. Review Under the Regulatory Flexibility Act
1. Need for, and Objectives of, Rule
2. Significant Issues Raised by Public Comments in Response to
the IRFA
3. Description and Estimated Number of Small Entities Affected
4. Description of Reporting, Recordkeeping, and Other Compliance
Requirements
5. Significant Alternatives Considered and Steps Taken To
Minimize Significant Economic Impacts on Small Entities
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Information Quality
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Synopsis of the Final 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 C of the Energy Policy and
Conservation Act, as amended (EPCA), established the Energy
Conservation Program for Certain Industrial Equipment. (42 U.S.C. 6311-
6317) Such equipment includes pumps. Circulator pumps, which are the
subject of this rulemaking, are a category of pumps.
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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.
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Pursuant to EPCA, any new 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. 6316(a); 42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
standard must result in significant conservation of energy. (42 U.S.C.
6295(o)(3)(B)) EPCA also provides that not later than 6 years after
issuance of any final rule establishing or amending a standard, DOE
must publish either a notice of determination that standards for the
equipment do not need to be amended, or a notice of proposed rulemaking
including new proposed energy conservation standards (proceeding to a
final rule, as appropriate). (42 U.S.C. 6295(m))
In accordance with these and other statutory provisions discussed
in this document, DOE analyzed the benefits and burdens of four trial
standard levels (``TSLs'') for circulator pumps. The TSLs and their
associated benefits and burdens are discussed in detail in sections V.A
through V.C of this document. As discussed in section V.C of this
document, DOE has determined that TSL 2 represents the maximum
improvement in energy efficiency that is technologically feasible and
economically justified. The adopted standards, which are expressed in
in terms of a maximum circulator energy index (``CEI''), are shown in
Table I.1. These standards apply to all equipment listed in Table I.1
and manufactured in, or imported into, the United States starting on
May 22, 2028.
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As stated in section III.D.1 of this document, the established
standards apply to circulator pumps when operated using the least
consumptive control variety with which they are equipped.
CEI is defined as shown in equation (1), and consistent \2\ with
section 41.5.3.2 of HI 41.5-2022, ``Hydraulic Institute Program
Guideline for Circulator Pump Energy Rating Program.'' \3\ 87 FR 57264.
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\2\ HI 41.5-2022 uses the term CERREF for the
analogous concept. In the September 2022 TP Final Rule, DOE
discussed this decision to instead use CERSTD in the
context of Federal energy conservation standards.
\3\ HI 41.5-2022 provides additional instructions for testing
circulator pumps to determine an Energy Rating value for different
circulator pump control varieties.
[GRAPHIC] [TIFF OMITTED] TR20MY24.001
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Where:
CEI = the circulator energy index (dimensionless);
CER = circulator energy rating (hp); and
CERSTD = for a circulator pump that is minimally
compliant with DOE's energy conservation standards with the same
hydraulic horsepower as the tested pump.
The value of CER varies according to the circulator pump control
variety of the tested pump, but in all cases is a function of measured
pump input power when operated under certain conditions, as described
in the
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September 2022 TP Final Rule. 87 FR 57264.
Relatedly, CERSTD represents CER for a circulator pump
that is minimally compliant with DOE's energy conservation standards
with the same hydraulic horsepower as the tested pump, as determined in
accordance with the specifications at paragraph (i) of 10 CFR 431.465.
87 FR 57264.
A. Benefits and Costs to Consumers
Table I.2 summarizes DOE's evaluation of the economic impacts of
the adopted standards on consumers of circulator pumps, as measured by
the average life-cycle cost (``LCC'') savings and the simple payback
period (``PBP'').\4\ The average LCC savings are positive for all
equipment classes, and the PBP is less than the average lifetime of
circulator pumps, which is estimated to be 10.5 years (see section
IV.F.6 of this document).
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\4\ 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 standards (see section
IV.F.9 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).
[GRAPHIC] [TIFF OMITTED] TR20MY24.002
DOE's analysis of the impacts of the adopted standards on consumers
is described in section IV.F of this document.
B. Impact on Manufacturers
The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the base year through the
end of the analysis period (2024-2057). Using a real discount rate of
9.6 percent, DOE estimates that the INPV for manufacturers of
circulator pumps in the case without new standards is $347.1 million in
2022$. Under the adopted standards, DOE estimates the change in INPV to
range from -19.9 percent to 3.2 percent, which is approximately -$69.2
million to $11.1 million. In order to bring equipment into compliance
with new standards, it is estimated that industry will incur total
conversion costs of $81.2 million.
DOE's analysis of the impacts of the adopted standards on
manufacturers is described in sections IV.J and V.B.2 of this document.
C. National Benefits and Costs \5\
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\5\ All monetary values in this document are expressed in 2022
dollars. and, where appropriate, are discounted to 2024 unless
explicitly stated otherwise.
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DOE's analyses indicate that the adopted energy conservation
standards for circulator pumps would save a significant amount of
energy. Relative to the case without new standards, the lifetime energy
savings for circulator pumps purchased in the 30-year period that
begins in the anticipated year of compliance with the new standards
(2028-2057), amount to 0.55 quadrillion British thermal units
(``Btu''), or quads.\6\ This represents a savings of 32.6 percent
relative to the energy use of these equipment in the case without new
standards (referred to as the ``no-new-standards case'').
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\6\ The quantity refers to full-fuel-cycle (FFC) energy savings.
FFC energy savings includes the energy consumed in extracting,
processing, and transporting primary fuels (i.e., coal, natural gas,
petroleum fuels), and, thus, presents a more complete picture of the
impacts of energy efficiency standards. For more information on the
FFC metric, see section IV.H.2 of this document.
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The cumulative net present value (``NPV'') of total consumer
benefits of the standards for circulator pumps ranges from 0.95 billion
in 2022$ (at a 7-percent discount rate) to 2.34 billion in 2022$ (at a
3-percent discount rate). This NPV expresses the estimated total value
of future operating-cost savings minus the estimated increased
equipment and installation costs for circulator pumps purchased in
2028-2057.
In addition, the adopted standards for circulator pumps are
projected to yield significant environmental benefits. DOE estimates
that the standards will result in cumulative emission reductions (over
the same period as for energy savings) of 10.04 million metric tons
(``Mt'') \7\ of carbon dioxide (``CO2''), 2.95 thousand tons
of sulfur dioxide (``SO2''), 18.65 thousand tons of nitrogen
oxides (``NOX''), 83.84 thousand tons of methane
(``CH4''), 0.10 thousand tons of nitrous oxide
(``N2O''), and 0.02 tons of mercury (``Hg'').\8\
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\7\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO2 are presented in short tons.
\8\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2023 (``AEO2023''). AEO2023 reflects, to the extent
possible, laws and regulations adopted through mid-November 2022,
including the Inflation Reduction Act. See section IV.K of this
document for further discussion of AEO2023 assumptions that affect
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 (in terms of benefit
per ton of GHG avoided) developed by an Interagency Working Group on
the Social Cost of Greenhouse Gases (``IWG'').\9\ The derivation of
these values is discussed in section IV.L of this document. For
presentational purposes, the climate benefits associated with the
average SC-GHG at a 3-percent discount rate are estimated to be $0.59
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. DOE notes, however,
that the adopted standards would be economically justified even without
inclusion of monetized benefits of reduced GHG emissions.
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\9\ 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 Environmental
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Protection Agency,\10\ as discussed in section IV.L of this document.
DOE estimated the present value of the health benefits would be $0.51
billion using a 7-percent discount rate, and $1.16 billion using a 3-
percent discount rate.\11\ DOE is currently only monetizing health
benefits from changes in ambient fine particulate matter
(PM2.5) concentrations from two precursors (SO2
and NOX), and from changes in ambient ozone from one
precursor (for NOX), 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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\10\ U.S. EPA. Estimating the Benefit per Ton of Reducing
Directly Emitted PM2.5, PM2.5 Precursors and
Ozone Precursors from 21 Sectors. Available at www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
\11\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
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Table I.3 summarizes the monetized benefits and costs expected to
result from the new standards for circulator pumps. 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.
BILLING CODE 6450-01-P
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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 equipment purchase prices and
installation costs, plus (3) the value of climate and health benefits
of emission reductions, all annualized.\12\
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\12\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2024, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2024. 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 equipment and are measured for the lifetime of circulator pumps
shipped in 2028-2057. The benefits associated with reduced emissions
achieved as a result of the adopted standards are also calculated based
on the lifetime of circulator pumps 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
V.B.6 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,\13\ the estimated cost of the standards
adopted in this rule is $113.9 million per year in increased equipment
costs, while the estimated annual benefits are $207.5 million in
reduced equipment operating costs, $32.7 million in climate benefits,
and $50.7 million in health benefits. In this case, the net benefit
would amount to $177.0 million per year.
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\13\ As discussed in section IV.L.1 of this document, DOE agrees
with the IWG that using consumption-based discount rates (e.g., 3
percent) is appropriate when discounting the value of climate
impacts. Combining climate effects discounted at an appropriate
consumption-based discount rate with other costs and benefits
discounted at a capital-based rate (i.e., 7 percent) is reasonable
because of the different nature of the types of benefits being
measured.
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Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $109.4 million per year in increased
equipment costs, while the estimated annual benefits are $239.7 million
in reduced operating costs, $32.7 million in climate benefits, and
$64.7 million in health benefits. In this case, the net benefit would
amount to $227.7 million per year.
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[GRAPHIC] [TIFF OMITTED] TR20MY24.006
BILLING CODE 6450-01-C
DOE's analysis of the national impacts of the adopted standards is
described in sections IV.H, IV.K and IV.L of this document.
D. Conclusion
DOE concludes that the standards adopted in this final rule
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, equipment achieving these standard levels
is already commercially available for all equipment in the single
product class covered by this final rule. As for economic
justification, DOE's analysis shows that the benefits of the standards
exceed, to a great extent, the burdens of the 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 cost of the
standards for circulator pumps is $113.9 million per year in increased
equipment costs, while the estimated annual benefits are $207.5 million
in reduced equipment operating costs, $32.7 million in climate
benefits, and $50.7 million in health benefits. The net benefit amounts
to $177.0 million per year. DOE notes that the net benefits are
substantial even in the absence of the climate benefits \14\ and DOE
would adopt the same standards in the absence of such benefits.
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\14\ The information on climate benefits is provided in
compliance with Executive Order 12866.
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The significance of energy savings offered by a new energy
conservation standard cannot be determined without knowledge of the
specific circumstances surrounding a given rulemaking.\15\ For example,
some covered equipment have most of their energy consumption occur
during periods of peak energy demand. The impacts of these equipment on
the energy infrastructure can be more pronounced than equipment with
relatively constant demand. Accordingly, DOE evaluates the significance
of energy savings on a case-by-case basis.
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\15\ 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).
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As previously mentioned, the standards are projected to result in
estimated national energy savings of 0.55 quad FFC, the equivalent of
the primary annual energy use of 5.9 million homes. In addition, they
are projected to reduce CO2 emissions by 10.04 Mt. Based on
these findings, DOE has determined the energy savings from the standard
levels adopted in this final rule are ``significant'' within the
meaning of 42 U.S.C. 6295(o)(3)(B). A more detailed discussion of the
basis for these conclusions is contained in the remainder of this
document and the accompanying TSD.
II. Introduction
The following section briefly discusses the statutory authority
underlying this final rule, as well as some of the relevant historical
background related to the establishment of standards for circulator
pumps.
A. Authority
EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
C of EPCA, added by Public Law 95-619, Title IV, section 441(a),
established the Energy Conservation Program for Certain Industrial
Equipment, which sets forth a variety of provisions designed to improve
energy efficiency. This equipment includes pumps, the subject of this
rulemaking. (42 U.S.C. 6311(1)(A))
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
equipment 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. 6316(a); 42
U.S.C. 6295(m)(1))
The energy conservation program under EPCA consists essentially of
four
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parts: (1) testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of EPCA include definitions (42 U.S.C.
6311), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C.
6315), energy conservation standards (42 U.S.C. 6313), and the
authority to require information and reports from manufacturers (42
U.S.C. 6316).
Federal energy efficiency requirements for covered equipment
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6316(a) and 42 U.S.C. 6316(b); 42 U.S.C. 6297) DOE may, however,
grant waivers of Federal preemption in limited instances for particular
State laws or regulations, in accordance with the procedures and other
provisions set forth under EPCA. (See 42 U.S.C. 6316(a) (applying the
preemption waiver provisions of 42 U.S.C. 6297))
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 all covered equipment. (42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of covered
equipment must use the Federal test procedures as the basis for: (1)
certifying to DOE that their equipment complies with the applicable
energy conservation standards adopted pursuant to EPCA (42 U.S.C.
6316(a); 42 U.S.C. 6295(s)), and (2) making representations about the
efficiency of that equipment (42 U.S.C. 6314(d)). Similarly, DOE must
use these test procedures to determine whether the equipment complies
with relevant standards promulgated under EPCA. (42 U.S.C. 6316(a); 42
U.S.C. 6295(s)) The DOE test procedures for circulator pumps appear at
title 10 of the Code of Federal Regulations (``CFR'') part 431, subpart
Y, appendix D.
DOE must follow specific statutory criteria for prescribing new
standards for covered equipment, including circulator pumps. Any new
standard for covered equipment 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. 6316(a); 42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may not adopt
any standard that would not result in the significant conservation of
energy. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(3))
Moreover, DOE may not prescribe a standard (1) for certain
equipment, including circulator pumps, if no test procedure has been
established for the equipment, or (2) if DOE determines by rule that
the standard is not technologically feasible or economically justified.
(42 U.S.C. 6316(a); 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. Id. 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 equipment subject to the standard;
(2) The savings in operating costs throughout the estimated
average life of the covered equipment in the type (or class)
compared to any increase in the price, initial charges, or
maintenance expenses for the covered equipment 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 equipment 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. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing equipment 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. 6316(a); 42 U.S.C.
6295(o)(2)(B)(iii))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any new standard that either increases the maximum allowable energy use
or decreases the minimum required energy efficiency of covered
equipment. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(1)) Also, the
Secretary may not prescribe a 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 equipment type (or class) of performance characteristics
(including reliability), features, sizes, capacities, and volumes that
are substantially the same as those generally available in the United
States. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for covered equipment that has two or more
subcategories. DOE must specify a different standard level for a type
or class of equipment that has the same function or intended use if DOE
determines that equipment within such group (A) consumes a different
kind of energy from that consumed by other covered equipment within
such type (or class); or (B) has a capacity or other performance-
related feature which other equipment within such type (or class) does
not have and such feature justifies a higher or lower standard. (42
U.S.C. 6316(a); 42 U.S.C. 6295(q)(1)) In determining whether a
performance-related feature justifies a different standard for a group
of equipment, DOE must consider such factors as the utility to the
consumer of such a feature and other factors DOE deems appropriate. Id.
Any rule prescribing such a standard must include an explanation of the
basis on which such higher or lower level was established. (42 U.S.C.
6316(a); 42 U.S.C. 6295(q)(2))
B. Background
As stated, EPCA includes ``pumps'' among the industrial equipment
listed as ``covered equipment'' for the purpose of Part A-1, although
EPCA does not define the term ``pump.'' (42 U.S.C. 6311(1)(A)) In a
final rule published January 25, 2016, DOE established a definition for
``pump,'' definitions associated with pumps, and test procedures for
certain pumps. 81 FR 4086, 4090 (``January 2016 TP Final Rule'').
``Pump'' is defined as ``equipment designed to move liquids (which may
include entrained gases, free solids, and totally dissolved solids) by
physical or mechanical action and includes a bare pump and, if included
by the manufacturer at the time of sale, mechanical equipment, driver,
and controls.'' 10 CFR 431.462. Circulator pumps fall within this
definition. The specific pump categories subject to the test procedures
described in the January 2016 TP Final Rule are referred to as
``general pumps'' in this document. Circulator pumps were not included
as general pumps.
In general, and relative to pumps at-large, circulator pumps tend
to be toward the smaller end of the range of both power and hydraulic
head. Circulated fluid would not require a net elevation gain, and thus
the required
[[Page 44473]]
head is that associated with the resistance of the hydraulic circuit. A
circulator pump, by definition, is a pump that is either a wet rotor
circulator pump; a dry rotor, two-piece circulator pump; or a dry
rotor, three-piece circulator pump. A circulator pump may be
distributed in commerce with or without a volute.
The January 2016 TP Final Rule implemented the recommendations of
the Commercial and Industrial Pump Working Group (``CIPWG''),
established through the Appliance Standards Rulemaking Federal Advisory
Committee (``ASRAC'') to negotiate standards and a test procedure for
general pumps. (Docket No. EERE-2013-BT-NOC-0039) The CIPWG and ASRAC
approved a term sheet containing recommendations to DOE that included
initiation of a separate rulemaking for circulator pumps. (Docket No.
EERE-2013-BT-NOC-0039, No. 92, Recommendation #5A at p. 2)
On February 3, 2016, DOE issued a notice of intent to establish a
working group to negotiate a NOPR for energy conservation standards for
circulator pumps, to negotiate, if possible, Federal standards and a
test procedure for circulator pumps, and to announce the first public
meeting. 81 FR 5658. The members of the Circulator Pump Working Group
(``CPWG''), which was established under the ASRAC, were selected to
ensure a broad and balanced array of interested parties and expertise,
including representatives from efficiency advocacy organizations and
manufacturers. Additionally, one member from ASRAC and one DOE
representative were part of the CPWG. Table II.1 lists the 15 members
of the CPWG and their affiliations.
[GRAPHIC] [TIFF OMITTED] TR20MY24.007
The CPWG commenced negotiations at an open meeting on March 29,
2016, and held six additional meetings to discuss scope, metric, and
the test procedure. The CPWG concluded its negotiations for test
procedure topics on September 7, 2016, with a consensus vote to approve
a term sheet containing recommendations to DOE on scope, definitions,
metric, and the basis of the test procedure (``September 2016 CPWG
Recommendations''). The September 2016 CPWG Recommendations are
available in the CPWG docket. (Docket No. EERE-2016-BT-STD-0004, No.
58)
The CPWG continued to meet to address potential energy conservation
standards for circulator pumps. Those meetings were held November 3-4,
2016, and November 29-30, 2016, with approval of a second term sheet
(``November 2016 CPWG Recommendations'') containing CPWG
recommendations related to energy conservation standards, applicable
test procedure, labeling, and certification requirements for circulator
pumps (Docket No. EERE-2016-BT-STD-0004, No. 98). Whereas the September
2016 CPWG Recommendations are discussed in the September 2022 TP Final
Rule, the November 2016 CPWG Recommendations are summarized in section
III.A of this document. In a meeting held December 22, 2016, ASRAC
voted unanimously to approve the September 2016 and November 2016 CPWG
Recommendations. (Docket No. EERE-2013-BT-NOC-0005, No. 91 at p. 2)
\16\
---------------------------------------------------------------------------
\16\ All references in this document to the approved
recommendations included in 2016 Term Sheets are noted with the
recommendation number and a citation to the appropriate document in
the CPWG docket (e.g., Docket No. EERE-2016-BT-STD-0004, No. X,
Recommendation #Y at p. Z). References to discussions or suggestions
of the CPWG not found in the 2016 Term Sheets include a citation to
meeting transcripts and the commenter, if applicable (e.g., Docket
No. EERE-2016-BT-STD-0004, [Organization], No. X at p. Y).
---------------------------------------------------------------------------
In a letter dated June 9, 2017, the Hydraulic Institute (``HI'')
expressed its support for the process that DOE initiated regarding
circulator pumps and encouraged the publishing of a NOPR and a final
rule by the end of 2017. (Docket No. EERE-2016-BT-STD-0004, HI, No. 103
at p. 1) DOE took no actions regarding circulator pumps between 2017
and 2020. In response to an early assessment review request for
information (``RFI'') published September 28, 2020, regarding the
existing test procedures for general pumps (85 FR 60734, ``September
2020 Early Assessment RFI''), HI commented that it continues to support
the recommendations from the CPWG. (Docket No. EERE-2020-BT-TP-0032,
HI, No. 6 at p. 1) The Northwest Energy Efficiency Alliance (``NEEA'')
also referenced the September 2016 CPWG Recommendations and recommended
that DOE adopt test procedures for circulator pumps in the pumps
rulemaking or a separate rulemaking. (Docket No. EERE-2020-BT-TP-0032,
NEEA, No. 8 at p. 8)
On May 7, 2021, DOE published a request for information related to
test procedures and energy conservation standards for circulator pumps
and received comments from the interested parties. 86 FR 24516 (``May
2021 RFI'').
DOE published a NOPR for the test procedure on December 20, 2021,
presenting DOE's proposals to establish
[[Page 44474]]
a circulator pump test procedure (``December 2021 TP NOPR''). 86 FR
72096. DOE held a public meeting related to this NOPR on February 2,
2022. DOE published a final rule for the test procedure on September
19, 2022 (``September 2022 TP Final Rule''). The test procedure final
rule established definitions, testing methods and a performance metric,
requirements regarding sampling and representations of energy
consumption and certain other metrics, and enforcement provisions for
circulator pumps.
DOE published an energy conservation standard NOPR on December 6,
2022. 87 FR 74850 (``December 2022 NOPR''). DOE held a public meeting
related to the December 2022 NOPR on January 19, 2023 (``NOPR public
meeting'').
DOE received comments in response to the December 2022 NOPR from
the interested parties listed in Table II.2.
[GRAPHIC] [TIFF OMITTED] TR20MY24.008
A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\17\
To the extent that interested parties have provided written comments
that are substantively consistent with any oral comments provided
during the NOPR public meeting, DOE cites the written comments
throughout this final rule. Any oral comments provided during the NOPR
public meeting that are not substantively addressed by written comments
are summarized and cited separately throughout this final rule.
---------------------------------------------------------------------------
\17\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for circulator pumps. (Docket No.
EERE-2016-BT-STD-0004, which is maintained at www.regulations.gov).
The references are arranged as follows: (commenter name, comment
docket ID number, page of that document).
---------------------------------------------------------------------------
III. General Discussion
DOE developed this final rule 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. November 2016 CPWG Recommendations
As discussed in section II.B of this document, the CPWG approved
two term sheets which represented the group's consensus
recommendations. The second term sheet, referred to in this final rule
as the ``November 2016 CPWG Recommendations'' contained the CPWG's
recommendations related to energy conservation standards, applicable
test procedure, labeling, and certification requirements for circulator
pumps. (Docket No. EERE-2016-BT-STD-0004, No. 98) The standards
established in this final rule closely mirror the November 2016 CPWG
Recommendations, which are summarized in this section.
In response to the December 2022 NOPR, the CA IOUs provided
comments that supported DOE's alignment of the proposed regulations and
the CPWG's consensus November term sheet. (CA IOUs, No. 133 at pp. 1-2)
HI stated they support the recommendations agreed upon by the CPWG.
(HI, No. 135 at p.
[[Page 44475]]
1) HI acknowledged DOE has incorporated the appropriate sections for
the testing and rating of circulator pumps. Id.
1. Energy Conservation Standard Level
The November 2016 CPWG Recommendations recommended that each
circulator pump be required to meet an applicable minimum efficiency
standard. Specifically, the recommendation was that each pump must have
a CEI \18\ of less than or equal to 1.00. Among the numbered efficiency
levels (``ELs'') considered by the CPWG as potential standard levels,
the agreed level was EL 2, i.e., a CEI less than or equal to 1.00
(``Recommendation #1'').
---------------------------------------------------------------------------
\18\ The November 2016 CPWG Recommendations predated
establishment of the current metric, called ``CEI,'' and instead
used the analogous term ``PEICIRC''. In the December 2021
TP NOPR, DOE proposed to adopt the ``CEI'' nomenclature instead
based, in part, on comments received, to remain consistent with
terminology used in HI 41.5 and to avoid potential confusion. After
receiving favorable comments on its proposal, DOE adopted the CEI
nomenclature in the September 2022 TP Final Rule.
---------------------------------------------------------------------------
In response to the December 2022 NOPR, NEEA/NWPCC supported the
proposed rulemaking, specifically the proposed adoption of TSL 2.
(NEEA/NWPCC, No. 134 at pp. 3-4) In the December 2022 NOPR DOE defined
EL 2 and TSL 2 at the same standard level, which is consistent with
this final rule, as discussed in section V.B.2 of this document. 87 FR
74850, 74895. NYSERDA supported the proposed adoption of TSL 2 as well,
due to the number of multifamily buildings in New York City being
higher than the national average. (NYSERDA, No. 130 at p. 4) NYSERDA
commented that circulator pumps likely operate more in any given year
in places such as New York City and they may see more energy savings
than the NOPR proposed. Id. The CA IOUs also supported DOE's
development of energy conservation standards based on the consensus
recommendations and supported adoption of the proposed TSL 2
recommendation. (CA IOUs, No. 133 at p. 1)
DOE did not receive any comments that did not support the CPWG-
recommended standard level for circulator pumps in response to the
December 2022 NOPR. Accordingly, and as described in section V.C.1 of
this document, DOE, in this final rule, is adopting energy conservation
standards for circulator pumps at TSL 2.
CEI was defined in the September 2022 TP Final Rule consistent with
the November 2016 CPWG Recommendations as shown in equation (2), and
consistent with section 41.5.3.2 of HI 41.5-2022. 87 FR 57264.
[GRAPHIC] [TIFF OMITTED] TR20MY24.009
Where:
CER = circulator energy rating (hp); and
CERSTD = circulator energy rating for a minimally
compliant circulator pump serving the same hydraulic load as the
tested pump.
The value of CER varies according to the circulator pump control
variety of the tested pump, but in all cases is a function of measured
pump input power when operated under certain conditions, as described
in the September 2022 TP Final Rule.
Relatedly, CERSTD represents CER for a hypothetical
circulator pump, as a function of hydraulic power, that is minimally
compliant with DOE's energy conservation standards, as determined in
accordance with the specifications at paragraph (i) of Sec. 431.465.
87 FR 57264. Conceptually, it is a curve that provides a value of pump
input power for any hydraulic output power. Energy conservation
standards could equivalently have been formulated to direct that a
circulator pump must carry a CER less than the value of
CERSTD at its particular hydraulic output power. Defining
CEI as a ratio of CER and CERSTD serves to normalize the
energy conservation standard, allowing it to assume a fixed numerical
value regardless of hydraulic output power, which has the advantage of
simplicity and better comparability among different pump models.
The November 2016 CPWG Recommendations contained a proposed method
for calculating CERSTD.\19\ The equation represents a
summation of weighted input powers at each part load test point. The
part load test points are set at 25%, 50%, 75%, and 100% of the flow at
best efficiency point (``BEP''). Each test point is weighted based on
the controls used for testing. This equation is shown in equation (3):
---------------------------------------------------------------------------
\19\ The November 2016 CPWG Recommendations predated
establishment of the current term ``CERSTD'' and instead
used the analogous term ``PERCIRC,STD''. In the December
2021 TP NOPR, DOE proposed to adopt the ``CERSTD''
nomenclature instead of ``PERCIRC,STD'' because DOE
believed that CERSTD was more reflective of Federal
energy conservation standards. After receiving no opposition on its
proposal, DOE adopted the CERSTD nomenclature in the
September 2022 TP Final Rule.
[GRAPHIC] [TIFF OMITTED] TR20MY24.010
---------------------------------------------------------------------------
Where:
[omega]i = weight at each test point i, specified in
Recommendation #2B;
Pi\in,STD\ = reference power input to the circulator pump
driver at test point i, calculated using the equations and method
specified in Recommendation #2C; and
i = test point(s), defined as 25%, 50%, 75%, and 100% of the flow at
BEP.
Recommendation #2B of the November 2016 CPWG Recommendations
specified a weighting factor of 25% for each respective test point i.
(``Recommendation #2B'').
The November 2016 CPWG Recommendations also included
(``Recommendation #2C'') a
[[Page 44476]]
recommended reference input power, Pi\in,STD\, as described
in equation (4).
[GRAPHIC] [TIFF OMITTED] TR20MY24.011
Where:
Pu,i = tested hydraulic power output of the pump being
rated at test point i, in hp;
[eta]WTW,100 = reference BEP circulator pump
efficiency at the recommended standard level (%), calculated using
the equations and values specified in Recommendation #2D;
[alpha]i = part-load efficiency factor at each test point
i, specified in Recommendation #2E; and
i = test point(s), defined as 25%, 50%, 75%, and 100% of the flow at
BEP.
The November 2016 CPWG Recommendations also included a reference
efficiency at BEP at the CPWG-recommended standard level,
[eta]WTW,100 (``Recommendation #2D''), which varies
by circulator pump hydraulic output power.
Specifically, for circulator pumps with BEP hydraulic output power
Pu,100 <1 hp, the reference efficiency at BEP
([eta]WTW,100) should be determined using equation
(5):
[GRAPHIC] [TIFF OMITTED] TR20MY24.012
Where:
[eta]WTW,100 = reference BEP pump efficiency at
the recommended standard level (%); and
Pu,100 = tested hydraulic power output of the
pump being rated at BEP (hp).
For the CPWG-recommended standard level, the constants A, B, and C
used in equation 5 would have the values listed in Table III.1.
[GRAPHIC] [TIFF OMITTED] TR20MY24.013
For circulator pumps with BEP hydraulic output power
Pu,100 >=1 hp, the reference efficiency at BEP
([eta]WTW,100) would have a constant value of 67.79.
Additionally, the November 2016 CPWG Recommendations included a
part-load efficiency factor ([alpha]i, as appears in
equation (4)), which varies according to test point (``Recommendation
#2E). Specifically, [alpha]i would have the values listed in
Table III.2.
---------------------------------------------------------------------------
\20\ The November 2016 CPWG Recommendations did not explicitly
include a value for the part-load efficiency factor,
[alpha]i, in Recommendation #2E. Nonetheless,
Recommendation #2C makes clear that a value for [alpha]i
is required to calculate reference input power, which calls for a
value at test point i=100%. DOE infers the omission of
[alpha]100 from Recommendation #2E to reflect
that i=100% corresponds to full-load, and thus implies no part-load-
driven reduction in efficiency and, by extension, a load coefficient
of unity. DOE is making this assumption that
[alpha]100 = 1 explicit by including it in this
table, which is otherwise identical to that of Recommendation #2E.
[GRAPHIC] [TIFF OMITTED] TR20MY24.014
This CPWG-recommended equation structure is used to characterize
the standard level established in this final rule, with certain
inconsequential changes to variable names.
2. Labeling Requirements
Under EPCA, DOE has certain authority to establish labeling
requirements for covered equipment. (42 U.S.C. 6315) The November 2016
CPWG Recommendations contained one recommendation regarding labeling
requirements, which was to include both model number and CEI \21\ on
the circulator nameplate. (Docket No. EERE-2016-BT-STD-0004, No. 98,
Recommendation #3 at p. 4)
---------------------------------------------------------------------------
\21\ The CPWG recommended that ``PEI'' be included in a
potential labeling requirement which, as described previously, is
analogous to CEI.
---------------------------------------------------------------------------
[[Page 44477]]
In response to the December 2022 NOPR, HI recommended that DOE
establish label requirements for circulator pumps in this rulemaking
that only include the basic model number and CEI, as agreed to by the
CPWG. (HI, No. 135 at p. 6) DOE did not receive any other comments
regarding the establishment of labeling requirements for circulator
pumps.
DOE is considering establishing labeling requirements for
circulator pumps in a separate rulemaking and is carefully evaluating
the potential benefits of establishing labeling requirements as
explained by HI. Accordingly, in this final rule, DOE is not
establishing specific labeling requirements for circulator pumps, but
DOE may consider such requirements for circulator pumps, including
those recommended by the CPWG, in a separate rulemaking.
3. Certification Reports
Under EPCA, DOE has the authority to require information and
reports from manufacturers with respect to the energy efficiency or
energy use. (42 U.S.C. 6316; 42 U.S.C. 6296).
The November 2016 CPWG Recommendations contained one recommendation
regarding certification reporting requirements. Specifically, the CPWG
recommended that the following information should be included in both
certification reports and the public Compliance Certification
Management System (``CCMS'') database:
Manufacturer name
Model number
CEI \22\
---------------------------------------------------------------------------
\22\ CEI had not been established at the time of the November
2016 CPWG Recommendations, which instead referred to this value as
``PEICIRC''.
---------------------------------------------------------------------------
Flow (in gallons per minute) and head (in feet) at BEP
Tested control setting
Input power at measured data points
(Docket No. EERE-2016-BT-STD-0004, No. 98, Recommendation #4 at p. 4)
The aforementioned CPWG recommendation also included that certain
additional information be permitted but not mandatorily included in
both certification reports and the public CCMS database. (Docket No.
EERE-2016-BT-STD-0004, No. 98 Recommendation #4 at p. 4) These
additional options are: true root mean square (``RMS'') current, true
RMS voltage, real power, and resultant power factor at measured data
points. Id.
In response to the December 2022 NOPR proposal to require a pump
operating in the least consumptive control mode when meeting compliance
with energy conservation standards for circulator pumps, the CA IOUs
noted that the most consumptive performance of circulator products
indicates the product's combined motor and hydraulic efficiency without
controls, providing helpful information to consumers and the regulatory
process. (CA IOUs, No. 133 at p. 2) They encouraged DOE to support
voluntary reporting of this performance data to inform future
rulemakings. Id.
DOE is not establishing certification or reporting, voluntary or
mandatory, requirements for circulator pumps in this final rule.
Instead, DOE may consider proposals to address amendments to the
certification requirements and reporting for circulator pumps under a
separate rulemaking regarding appliance and equipment certification.
Further information on this voluntary reporting of performance in
various control modes is discussed in section III.D.1 of this document.
B. General Comments
DOE received a single general comment from an interested party
regarding rulemaking timing and process. Specifically, ASAP et al.
commented in response to the December 2022 NOPR that they supported
DOE's proposed rulemaking for circulator pumps. (ASAP et al., No. 131
at p. 1)
C. Equipment Classes and Scope of Coverage
When evaluating and establishing energy conservation standards, DOE
divides covered equipment into equipment 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. 6316(a); 42 U.S.C. 6295(q))
This final rule covers equipment that meets the definition of
``circulator pumps,'' as codified at 10 CFR 431.462, which is
consistent with the September 2016 CPWG Recommendations. DOE identified
no basis to change the scope of energy conservation standards for
circulator pumps relative to the scope of test procedures adopted in
the September 2022 Final Rule. Accordingly, in this final rule, DOE is
aligning the scope of energy conservation standards for circulator
pumps with that of the circulator pumps test procedure. 87 FR 57264.
Specifically, this final rule is applying energy conservation standards
to all circulator pumps that are also clean water pumps, including on-
demand circulator pumps and circulators-less-volute, and excluding
submersible pumps and header pumps. Comments related to scope are
discussed and considered in the test procedure final rule.
Both of these proposals--scope and equipment classes--match the
recommendations of the CPWG, which are summarized in this section. They
are discussed further in section IV.A.1 of this document.
1. CPWG Recommendations
a. Scope
The September 2016 CPWG Recommendations addressed the scope of a
circulator pumps rulemaking. Specifically, the CPWG recommended that
the scope of a circulator pumps test procedure and energy conservation
standards cover clean water pumps (as defined at 10 CFR 431.462)
distributed in commerce with or without a volute and that are one of
the following categories: wet rotor circulator pumps, dry-rotor close-
coupled circulator pumps, and dry-rotor mechanically coupled circulator
pumps. The CPWG also recommended that the scope exclude submersible
pumps and header pumps. 86 FR 24516, 24520. (Docket No. EERE-2016-BT-
STD-0004, No. 58, Recommendations #1A, 2A, and 2B at pp. 1-2) As
previously stated, the scope of this rule aligns with the scope
recommended by the CPWG, consistent with the September 2022 TP Final
Rule.
b. Definitions
The CPWG also recommended several definitions relevant to scope.
DOE notes that, generally, definitions recommended by the CPWG rely on
terms previously defined in the January 2016 TP final rule, including
``close-coupled pump,'' ``mechanically-coupled pump,'' ``dry rotor
pump,'' ``single axis flow pump,'' and ``rotodynamic pump.'' 81 FR
4086, 4146-4147; 10 CFR 431.462.
In the September 2022 TP Final Rule, DOE did not propose a new
definition for submersible circulator pumps, instead signaling
applicability of an established term, ``submersible pump,'' which was
defined in the 2017 test procedure final rule for dedicated-purpose
pool pumps. 82 FR 36858, 36922 (Aug. 7, 2017):
``Submersible pump'' means a pump that is designed to be operated
with the motor and bare pump fully submerged in the pumped liquid. 10
CFR 431.462.
In the September 2022 TP Final Rule, DOE established a number of
definitions related to circulator pumps. 87 FR
[[Page 44478]]
57264. Specifically, DOE defined ``circulator pump,'' ``wet rotor
circulator pump,'' ``dry rotor, two-piece circulator pump,'' ``dry
rotor, three-piece circulator pump,'' ``horizontal motor,'' ``header
pump,'' and ``circulator-less-volute.'' Id.
``Circulator pump'' was defined to include both wet- and dry-rotor
designs and to include circulators-less-volute, which are distributed
in commerce without a volute and for which a paired volute is also
distributed in commerce. Header pumps, by contrast, are those without
volutes and for which no paired volute is available in commerce. Id.
DOE is maintaining these definitions from the September 2022 TP
Final Rule in the standards for circulator pumps.
c. Equipment Classes
The CPWG recommended that all circulator pumps be analyzed in a
single equipment class. (Docket No. EERE-2016-BT-STD-0004, No. 98,
Recommendation #1 at p. 1) DOE's proposal aligns with the
recommendation of the CPWG. Equipment classes are discussed further in
section IV.A.1.b of this document.
d. Small Vertical In-Line Pumps
The CPWG recommended that DOE analyze and establish energy
conservation standards for small vertical in-line pumps (``SVILs'')
with a compliance date equivalent to the previous energy conservation
standards final rule (81 FR 4367, Jan. 26, 2016) for general (not
circulator) pumps. (Docket No. EERE-2016-BT-STD-0004, No. 58,
Recommendation #1B at pp. 1-2) The CPWG recommended the standards for
SVILs be similar in required performance to those of general pumps.
(Docket No. EERE-2016-BT-STD-0004, No. 58, Recommendation #1B at p. 2)
In addition to energy conservation standards for SVILs, the CPWG
recommended SVILs be evaluated using the same test metric as general
pumps. Id.
Consistent with the CPWG recommendation, DOE extended the
commercial and industrial pump test procedures to SVILs in a separate
final rule published March 24, 2023. 88 FR 17934 (``March 2023 Final
Rule''). That test procedure allows evaluation of energy conservation
standards for SVILs as part of a commercial and industrial pumps
rulemaking process.
In the December 2022 NOPR, DOE tentatively determined to maintain
its approach to address energy conservation standards for circulator
pumps only in this rulemaking, separately from SVILs. 87 FR 74850,
74862. DOE did not receive adequate data or information to suggest that
DOE should address standards for SVILs along with the circulator pumps
within the scope of the December 2022 NOPR. Id. Accordingly, DOE did
not propose to include SVILs within the scope of the energy
conservation standards considered in the December 2022 NOPR. Id.
Relatedly, the September 2022 TP Final Rule did not adopt test
procedures for SVILs. 87 FR 57264.
In the December 2022 NOPR, DOE requested comment on its approach to
exclude SVILs from the scope of the NOPR, and whether DOE should
consider standards for any SVILs as part of this rulemaking. 87 FR
74850, 74862.
HI and NEEA/NWPCC agreed with DOE's decision to exclude SVIL pumps
from the circulators scope. (NEEA/NWPCC, No. 134 at pp. 4-5; HI, No.
135 at p. 4) HI also commented that according to ASRAC negotiations,
SVILs should instead be addressed under the commercial and industrial
pumps rulemaking. (HI, No. 135 at p. 4)
Due to stakeholders providing comment supporting SVILs to be
evaluated in the commercial and pumps rulemaking in both this
rulemaking and the commercial and industrial pumps rulemaking, DOE has
determined to maintain its approach to address energy conservation
standards for circulator pumps only in this rulemaking, separately from
SVILs. Accordingly, DOE is not including SVILs within the scope of the
energy conservation standards considered in this final rule.
D. Test Procedure
EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314(a))
Manufacturers of covered equipment must use these test procedures to
certify to DOE that their equipment complies with energy conservation
standards and to quantify the efficiency of their equipment. DOE's
current energy conservation standards for circulator pumps are
expressed in terms of CEI. CEI represents the weighted average electric
input power to the driver over a specified load profile, normalized
with respect to a circulator pump serving the same hydraulic load that
has a specified minimum performance level. \23\ (See 10 CFR
431.464(c).)
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\23\ The performance of a comparable pump that has a specified
minimum performance level is referred to as the circulator energy
rating (``CERstd'').
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1. Control Mode
Circulator pumps may be equipped with speed controls that govern
their response to settings or signals. DOE's test procedure contains
definitions and test methods applicable to pressure controls,
temperature controls, manual speed controls, external input signal
controls, and no controls (i.e., full speed operation only).\24\
Section B.1 of appendix D to subpart Y of 10 CFR part 431 specifies
that circulator pumps without one of the identified control varieties
(i.e., pressure control, temperature control, manual speed control or
external input signal control) are tested at full speed.
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\24\ In this document, circulator pumps with ``no controls'' are
also inclusive of other potential control varieties that are not one
of the specifically identified control varieties.
---------------------------------------------------------------------------
Some circulator pumps operate in only a single control mode,
whereas others are capable of operating in any of several control
modes. As discussed in the September 2022 TP Final Rule, circulator
pump energy consumption typically varies by control mode, for
circulator pumps equipped with more than one control mode. 87 FR 57264,
57273-57275. In the September 2022 TP Final Rule, DOE summarized and
responded to a variety of stakeholder comments which discussed
advantages and disadvantages of various potential requirements
regarding the control variety activated during testing. Id. Ultimately,
DOE determined not to restrict active control variety during testing.
Id. To not limit application of a particular control mode, the test
procedure for circulator pumps states ``if a given circulator pump
model is distributed in commerce with multiple control varieties
available, the manufacturer may select a control variety (or varieties)
among those available with which to test the circulator pump, including
the test method for circulator pumps at full speed or circulator pumps
without external input signal, manual, pressure, or temperature
controls).'' Section 2.2 of appendix D to subpart Y of 10 CFR part 431.
In the September 2022 TP Final Rule, DOE stated that although the
test procedure does not restrict active control variety during testing,
whether compliance with any standards would be based on a specific
control mode (or no controls) would be addressed in an energy
conservation standard rulemaking. 87 FR 57264, 57275. It further
explains that a future energy conservation standard rulemaking could
determine whether certain information related to the control mode used
for testing would be required as part of certification. Id.
In the December 2022 NOPR, DOE proposed to require compliance with
[[Page 44479]]
energy conservation standards for circulator pumps while operated in
the least consumptive control mode in which it is capable of operating.
87 FR 74850, 74862. Because many circulator pumps equipped with control
modes designed to reduce energy consumption relate to full-speed
operating also include the ability to operate at constant speed, to
require testing using a circulator pump's most consumptive control mode
may reduce the ability of rated CEI to characterize the degree of
energy savings possible across circulator pump models. 87 FR 74850,
74862-74863. Circulator pump basic models equipped with a variety of
control modes would receive the same rating as an otherwise identical
basic model which could operate only at full speed, even though in
practice the former may consume considerably less energy in many
applications. 87 FR 74850, 74863.
In the December 2022 NOPR, DOE requested comment regarding
circulator pump control variety for the purposes of demonstrating
compliance with energy conservation standards. 87 FR 74850, 74863.
HI, ASAP et al., and the CA IOUs all supported using the least
consumptive operating mode as the CEI rating metric. (HI, No. 135 at p.
4; ASAP et al., No. 131 at p. 2; CA IOUs, No. 133 at p. 2) The CA IOUs
also noted that variable-speed control demonstrated potential savings
relative to maximum-speed-only circulator pumps. (CA IOUs, No. 133 at
p. 2) Therefore, the CA IOUs recommended DOE support voluntary
reporting of performance data of variable-speed control as well as
account for variable-speed control savings in future circulator pump
test methods and conservation standards. Id.
Further, ASAP et al. encouraged DOE to require additional reporting
of ratings with the most consumptive method. (ASAP et al., No. 131 at
p. 2) ASAP et al. commented that specifying CEI ratings based only on
the least consumptive model may not accurately reflect the energy usage
of fixed-speed-mode circulator pumps. Id.
DOE agrees that performance data obtained from a circulator pump
operated in one mode may not reflect performance when operated in a
different mode, including the fixed-speed mode cited by ASAP. While DOE
is not adopting certification requirements, mandatory or voluntary, in
this final rule, as stated in section III.A.3 of this document, it may
do so as part of a separate rulemaking.
NEEA/NWPCC recommended DOE require circulator pumps to be tested
and to demonstrate compliance with energy conservation standards in the
most consumptive control mode because: (1) they ``are concerned that
manufacturers will meet the standard through an optional speed control
setting rather than hydraulic redesign or addition of an efficient
motor, meaning that the circulator will often function in a control
setting that delivers performance below what is required by the
standard. In some cases, such as three speed circulator pumps, the
speed controls are intended to serve different sizes of systems, and
the least-consumptive mode will not be representative of larger
systems.'' (2) ``Least-consumptive testing will increase testing
burden, as manufacturers will have to test multiple settings to first
determine which setting is the least-consumptive. Conversely, DOE has
asserted (and we agree) that the most-consumptive control is the full
speed setting, meaning there is no additional testing required to
determine the most-consumptive setting.'' (3) ``Non-guaranteed
performance will discourage utility programs, as they will not be able
to determine the current practice baseline because many circulators
will operate below the actual standard.'' (4) ``The market will be
confused about the performance of circulators in the field, because
least-consumptive control does not equate to the most representative
control. While we agree with DOE's assertion in this NOPR that testing
in the least-consumptive control mode will better communicate the range
of controls available to the market and their relative energy
consumption, consumers may be confused as to why the expected energy
performance fails to materialize.'' (5) ``Manufacturers already support
testing in most-consumptive control setting as they test and submit
ratings to the Hydraulic Institute (HI) circulator Energy Rating (ER)
database.'' (6) '' Least-consumptive testing impedes future rulemakings
that could strengthen the standard. Least-consumptive testing will
allow for a range of performance, with some circulators operating in
modes that perform worse than the DOE standard. Tightening that
standard in the future may simply widen the gap of tested versus actual
performance. Conversely, most-consumptive testing would establish a
clear minimum performance standard that DOE can build upon in future
rulemakings.'' (NEEA/NWPCC, No. 134 at pp. 2-3) NEEA/NWPCC also
explained that the most-consumptive testing ensures that any tightening
of the standard will remove equipment with low performance, but least-
consumptive testing may not if their lowest consumptive method is in
standards and the rest are not. Id. NEEA/NWPCC stated that the revised
standard would only achieve the energy conservation goals if using most
consumptive testing, and NEEA/NWPCC recommend that DOE revisit this
issue in future circulator pump rulemakings. Id.
Regarding NEEA/NWPCC's first point that manufacturers may comply
with a standard based on the least consumptive operating mode by
incorporating controls, DOE recognizes the possibility but not that it
would necessarily be detrimental. Speed reduction is a legitimate means
of reducing circulator pump energy consumption, far outstripping the
savings potential of other technology options for certain applications.
Even in nominally fixed-speed applications, which call for no flow
variability, speed adjustment can be used to match the circulator pump
output to load imposed by the actual hydraulic circuit at hand. The
potential for manufacturers of noncompliant circulator pumps adding
manual speed controls as a way to reduce CEI to reach compliance is not
expected to be significant. Analysis of submitted manufacturer model
data indicates that adding manual speed controls reduces a circulator
pump's CER metric by an average of 6.5%. DOE's analysis of the market
shows that less than 2% of circulator pumps that would not be compliant
with the standard levels adopted in this final rule are single-speed
models that could attain compliance by introducing manual speed
controls. Further, because there would likely be significant conversion
cost associated with modifying circulator pump models, manufacturers
may be hesitant to develop them unless confident of strong demand that
would enable recovery of those costs. Further, the products themselves
would cost more to manufacture due to multispeed motors' costing more
to purchase or construct than single-speed motors, which would reduce
their appeal to first-cost-motivated consumers. Finally, while NEEA/
NWPCC identifies a potential case in which manual speed controls reduce
the energy savings achievable by an energy conservation standard, so
too can manual speed controls be used to save energy in applications
that do not require the circulator pumps' full output. In view of the
relatively small fraction of the market that could feasibly function as
NEEA/NWPCC describes, the additional equipment costs and conversion
costs associated with multi-speed products relative to single-speed,
and the potential for manual-speed control to
[[Page 44480]]
help as well as hinder the objective of energy savings, the potential
of manual speed control to undermine the anticipated energy savings of
this final rule appears minimal.
Regarding NEEA/NWPCC's second point that least consumptive testing
may increase testing burden, industry standard HI 41.5-2022, section
41.5.3.4 ``Determination of CER'' directs that circulator pumps already
be rated at both the most and least consumptive control methods.
Accordingly, DOE finds incremental testing burden to be minimized to
the extent that computing both methods is already widespread industry
practice.
Regarding NEEA/NWPCC's third point that non-guaranteed performance
may discourage utility programs, DOE does not have information to
evaluate the size of potential energy savings arising from utility
programs concerning circulator pumps relative to the magnitude of the
energy savings estimated to be associated with the energy conservation
standards adopted in this final rule. Further, a least-consumptive-
based compliance requirement does not necessarily obscure differences
in full-load performance, as more-efficient motors will tend to perform
better at both full and reduced speeds.
Regarding NEEA/NWPCC's fourth point that the market may be confused
about the performance of circulators in the field, DOE observes that
the ``field'' would include an array of applications, some of which
would realize greater or lesser savings than a single CEI value in
isolation could convey. One factor which may tend to make the former
less likely than the latter is cost--because variable-speed circulator
pumps tend to cost more, purchasers may be more likely to have
developed enough understanding of the product to justify paying a
premium.
It is possible that a circulator pump purchaser may wind up with
less savings than anticipated if purchasing a variable-speed circulator
pump for an application that truly requires single-speed operation.
However, even in an application with truly constant demand, variable-
speed circulator pumps may still offer energy savings relative to a
single-speed circulator pump. Such savings could arise from the fact
that, while circulator pump applications exist over a continuous
spectrum of hydraulic power requirements, circulator pump models are
offered only at certain, discrete hydraulic power levels. Thus, even
purchasers who accurately estimate their demand would likely end up
with some amount of unnecessary hydraulic power. A variable-speed
circulator pump may save energy by operating closer to the necessary
hydraulic power level, even if that level does not vary over time.
DOE cannot be certain of how electric utilities might design future
incentive programs for circulator pumps but does not see that they
would necessarily dismiss the potential of variable-speed circulator
pumps to save energy, even while purchase of a variable-speed
circulator pump does not guarantee that every individual installation
would realize savings relative to a hypothetical alternative of a
single-speed circulator pump with less full-speed power consumption.
One potential mitigating factor, in the case of a utility unwilling to
consider an incentive program that could not guarantee savings at every
circulator pump installation using the CEI metric alone, is that full-
speed pump performance data may be published for those pumps and
subsequently used as basis for incentive qualification provided that
such data was generated consistently with the test procedure for
circulator pumps. (See 10 CFR 431.464(c).)
Regarding NEEA/NWPCC's fifth point that manufacturers already
support testing in the most-consumptive setting, as evidenced by their
testing and submission of corresponding ratings to HI's circulator
Energy Rating database, those manufacturers also submit ratings
corresponding to the least consumptive setting. As stated, this is a
voluntary directive of industry standard HI 41.5-2022, Sec. 41.5.3.4
``Determination of CER''.
Regarding NEEA/NWPCC's sixth point that least consumptive testing
may impede future rulemakings that could otherwise have strengthened
standards, DOE observes that more-stringent standards in a hypothetical
future rulemaking would not be prohibited, or even materially impeded,
by this final rule's adoption of requirements to base compliance on the
least-consumptive operating mode. Improved motors and hydraulic
assemblies, which are the sources of improved performance in the fixed-
speed evaluation scenario supported by NEEA/NWPCC's arguments, would
still carry potential to improve under any choice of required operating
mode for compliance.
Several commenters argue that testing in the least consumptive
control mode may provide a less representative CEI value in certain
situations, but do not openly consider that the same must be true of a
requirement to test in the most consumptive control mode. Testing and
certifying performance using the most consumptive mode would also
generate results that are not accurate in all individual situations.
Because there are multiple control modes on some circulator pumps,
testing at one load profile could not represent every potential
circulator pump application. For the purpose of estimating energy
savings that would be realized by consumers at various potential
standard levels, DOE does not assume a pump would consume energy in
direct proportion to its CEI value, but instead relies on energy use
assumption as discussed in section IV.E of this document.
The energy conservation standards evaluated in this final rule are
based on wire-to-water efficiency, which is influenced by both
hydraulic efficiency and motor efficiency. Because circulator pump
efficiency is measured on a wire-to-water basis, it is difficult to
entirely disentangle performance differences due to motor efficiency
from those due to hydraulic efficiency. In redesigning a pump model to
meet the standard established in this final rule, manufacturers would
likely consider both hydraulic efficiency and motor efficiency. Speed
reduction is a legitimate means of reducing energy consumption and
likely offers greater potential energy savings than hydraulic
optimization would alone due to pump affinity laws, which are described
in section IV.A.2.c of this document. If compliance with energy
conservation standards were based on the most consumptive control mode,
circulator pumps with energy-saving controls would be unlikely to
receive benefit to their CEI score, as essentially all circulator pumps
would be evaluated at full speed.
In view of the foregoing discussion and the support of HI, ASAP et
al., and the CA IOUs, DOE is adopting the requirement that circulator
pumps comply with energy conservation standards while operated in their
least consumptive mode.
As stated in section III.A.3 of this document, certification
requirements, including those related to active control variety, are
not being proposed in this final rule, but may be addressed in a
potential future rulemaking.
E. 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 equipment that is the subject of the rulemaking. As
the first step in such an analysis, DOE develops a list of technology
options for
[[Page 44481]]
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 equipment or in
working prototypes to be technologically feasible. 10 CFR 431.4;
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 equipment utility or availability; (3) adverse impacts on
health or safety and (4) unique-pathway proprietary technologies. 10
CFR 431.4; sections 7(b)(2)-(5). Section IV.B of this document
discusses the results of the screening analysis for circulator pumps,
particularly the designs DOE considered, those it screened out, and
those that are the basis for the standards considered in this
rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the final rule technical support document
(``TSD'').
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt a new standard for a type or class of
covered equipment, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such equipment. (42 U.S.C. 6316(a); 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 circulator pumps, using the design parameters for the
most efficient equipment available on the market or in working
prototypes. The max-tech levels that DOE determined for this rulemaking
are described in section IV.C.2 of this final rule and in chapter 5 of
the final rule TSD.
F. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from application of the
TSL to circulator pumps purchased in the 30-year period that begins in
the year of compliance with the new standards (2028-2057).\25\ The
savings are measured over the entire lifetime of equipment purchased in
the 30-year analysis period. DOE quantified the energy savings
attributable to each TSL as the difference in energy consumption
between each standards case and the no-new-standards case. The no-new-
standards case represents a projection of energy consumption that
reflects how the market for equipment would likely evolve in the
absence of new energy conservation standards.
---------------------------------------------------------------------------
\25\ DOE also presents a sensitivity analysis that considers
impacts for equipment shipped in a 9-year period.
---------------------------------------------------------------------------
DOE used its national impact analysis (``NIA'') spreadsheet models
to estimate national energy savings (``NES'') from potential new
standards for circulator pumps. The NIA spreadsheet model (described in
section IV.H of this document) calculates energy savings in terms of
site energy, which is the energy directly consumed by equipment at the
locations where it is 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 full-fuel-cycle
(``FFC'') energy savings. The FFC metric includes the energy consumed
in extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and thus presents a more complete
picture of the impacts of energy conservation standards.\26\ DOE's
approach is based on the calculation of an FFC multiplier for each of
the energy types used by covered equipment. For more information on FFC
energy savings, see section IV.H.2 of this document.
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\26\ 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 standards for covered equipment, 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 energy
conservation standard cannot be determined without knowledge of the
specific circumstances surrounding a given rulemaking.\27\ For example,
some covered equipment has most of its energy consumption occur during
periods of peak energy demand. The impact of this equipment on the
energy infrastructure can be more pronounced than equipment with
relatively constant demand. Accordingly, DOE evaluates the significance
of energy savings on a case-by-case basis, considering 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.
---------------------------------------------------------------------------
\27\ 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).
---------------------------------------------------------------------------
As stated, the standard levels adopted in this final rule are
projected to result in national energy savings of 0.55 quad, the
equivalent of the primary annual energy use of 5.9 million homes. Based
on the amount of FFC savings, the corresponding reduction in emissions,
and the need to confront the global climate crisis, DOE has determined
the energy savings from the standard levels adopted in this final rule
are ``significant'' within the meaning of 42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(3)(B). Even without considering the need to confront the global
climate crisis, DOE has determined the energy savings from the standard
levels adopted in this rule are ``significant'' under EPCA.
G. 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. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(I)-(VII)) The following sections discuss how DOE has
addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of potential new standards 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
[[Page 44482]]
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 considers 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 payback period (``PBP'') associated with new
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 equipment 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 equipment
that are likely to result from a standard. (42 U.S.C. 6316(a); 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 equipment (including
its installation) and the operating cost (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the equipment. The LCC analysis requires a variety of inputs, such as
equipment prices, equipment energy consumption, energy prices,
maintenance and repair costs, equipment lifetime, and discount rates
appropriate for consumers. To account for uncertainty and variability
in specific inputs, such as equipment 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 more-efficient equipment 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 equipment in the first year of compliance with new
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 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. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(III)) As discussed in section IV.H of this document,
DOE uses the NIA spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Equipment
In establishing equipment 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 equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards adopted in this document would not
reduce the utility or performance of the equipment under consideration
in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a standard. (42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine
the impact, if any, of any lessening of competition likely to result
from a standard and to transmit such determination to the Secretary
within 60 days of the publication of a proposed rule, together with an
analysis of the nature and extent of the impact. (42 U.S.C. 6316(a); 42
U.S.C. 6295(o)(2)(B)(ii)) To assist the Department of Justice (``DOJ'')
in making such a determination, DOE transmitted copies of its proposed
rule and the NOPR TSD to the Attorney General for review, with a
request that the DOJ provide its determination on this issue. In its
assessment letter responding to DOE, DOJ concluded that the proposed
energy conservation standards for circulator pumps are unlikely to have
a significant adverse impact on competition. DOE is publishing the
Attorney General's assessment at the end of this final rule.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new standard is economically
justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(VI)) The
energy savings from the adopted standards are likely to provide
improvements to the security and reliability of the Nation's energy
system. Reductions in the demand for electricity also may result in
reduced costs for maintaining the reliability of the Nation's
electricity system. DOE conducts a utility impact analysis to estimate
how standards may affect the Nation's needed power generation capacity,
as discussed in section IV.M of this document.
DOE has determined 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 adopted 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. 6316(a); 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
EPCA creates a rebuttable presumption that an energy conservation
standard is economically justified if the additional cost to the
equipment 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. (42 U.S.C. 6316(a);
42 U.S.C.
[[Page 44483]]
6295(o)(2)(B)(iii)) DOE's LCC and PBP analyses generate values used to
calculate the effect potential new 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. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)) The results of
this analysis serve as the basis for DOE's evaluation of the economic
justification for a potential standard level (thereby supporting or
rebutting the results of any preliminary determination of economic
justification). The rebuttable presumption payback calculation is
discussed in section IV.F of this final rule.
H. Compliance Date
EPCA does not prescribe a compliance lead time for energy
conservation standards for pumps, i.e., the number of years between the
date of publication of a final energy conservation standard
(``effective date'') and the date on which manufacturers must comply
with the new standard. The November 2016 CPWG Recommendations specified
a compliance date of four years following publication of the final
rule.
In response to the May 2021 RFI, DOE received two comments
regarding the compliance date. Grundfos recommended a 2-year compliance
date and NEEA recommended a 3-year compliance date. (Docket No. EERE-
2016-BT-STD-0004, Grundfos, No. 113, at p. 1; Docket No. EERE-2016-BT-
STD-0004, NEEA, No. 115, at p. 3) Neither Grundfos nor NEEA provided
additional comments regarding the compliance date in response to the
December 2022 NOPR.
In the December 2022 NOPR, DOE proposed a 2-year compliance date
for energy conservation standards due to the industry being more mature
than when the CPWG made its recommendation. 87 FR 74850, 74865. DOE
requested comment on its proposal. Id. DOE also noted that, due to
projected market trends, a change in the rulemaking's compliance date
may lead to a small but non-negligible change in consumer and
manufacturer benefits or impacts. Id.
In response to the December 2022 NOPR, HI and Xylem recommended DOE
adopt a 4-year compliance lead time for manufacturers to meet the
proposed standard. (HI, No. 135 at p. 1; Xylem, No. 136 at p. 1) HI and
Xylem stated that the proposed 2-year compliance lead time conflicts
with the 4-year time negotiated by the CPWG and that the existing
equipment on the market meeting EL 2 does not cover the breadth of
utility required by the market. Id. Xylem explained that implementing a
2-year compliance timeline for pumps would delay, rather than
accelerate, manufacturer compliance. (Xylem, No. 136 at p. 1) Xylem
recommended that DOE make recourse to the European Union's method of
implementing regulations to decrease circulator pump energy consumption
by providing manufacturers the necessary time to comply with the
regulations. (Xylem, No. 136 at p. 2)
HI and Xylem commented that, as stated in the December 2022 NOPR,
66 percent of circulator pumps on the market need to be redesigned to
meet the proposed standard, and manufacturers will benefit from a 4-
year compliance lead time to engineer, develop, and test equipment to
meet the standard. (HI, No. 135 at p. 2; Xylem, No. 136 at p. 2) HI and
Xylem commented that, due to supply chain issues, it is not uncommon
for an 18-month lead time for manufacturers to obtain materials to
leave just 6 months for all engineering, development, and third-party
agency testing; meaning this timeline is not feasible for
manufacturers. (HI, No. 135 at pp. 2-3; Xylem, No. 136 at p. 3). HI and
Xylem also stated that much of the development, sourcing, testing, and
equipment line implementation is linear, with each step dependent on
prior steps being completed. Id. HI and Xylem commented that much
equipment will require an EL 3 effort to be compliant and meet market
competitiveness requirements, which will extend the timeline of
equipment development and testing well beyond 2 years. Id. In addition,
HI added that manufacturers are required to obtain safety and drinking
water approvals via third party agency testing for all new/redesigned
equipment. (HI, No. 135 at p. 3)
HI and Xylem further commented that manufacturers, including Xylem
itself, anticipate struggling to meet capacity, for instance regarding
lead times for electronically commutated motors (``ECMs''), production
test equipment, and other assets that will delay the compliance lead
time. (HI, No. 135 at p. 3; Xylem, No. 136 at p. 3) HI noted that ECM
component suppliers have been unable to meet demand and will continue
to fall behind as the circulator market transitions to ECMs. (HI, No.
135 at p. 4) Xylem commented that manufacturers will see similar lead
time issues when developing new production lines as seen with materials
in the supply chain. (Xylem, No. 136 at pp. 3-4) Xylem stated it will
take 12-18 months to source and implement production lines, which will
delay the compliance lead time. Id. Xylem commented that manufacturers'
inability to meet the aggressive compliance timeline will result in a
gap of pumps available in the market and potentially lead to
overinflated pricing, substitution of older and less efficient
equipment, and costly conversions to alternative systems. Id.
In the NOPR public meeting, Taco commented that the proposed
implementation period is extremely short and requires a lot of changes.
(Taco, Inc., Public Meeting Transcript, No. 129 at pp. 65-66) Taco
stated it is nearly impossible to get anything electronic in a two-year
period to go through this testing. Id. Taco further commented that
everything would need to be redesigned with no way to get the parts in
house to make that happen. Id. Taco stated that, at the time of the
public meeting, it was receiving two-year quotes to get in new
electronic products. Id.
HI and Xylem commented that a 2-year lead time will pose an
additional financial burden on manufacturers due to conversion-cost
impacts with a quick turnaround. (HI, No. 135 at p. 4; Xylem, No. 136
at p. 4) Xylem commented that even large companies may not be able to
justify achieving the extremely short investment-to-launch period
proposed by DOE. (Xylem, No. 136 at p. 4) Xylem believes manufacturers
will redesign to be competitive, which likely means redesigning past
the minimal compliance CEI of 1.0, which will include additional costs
and time needed. Id. Xylem agreed that basic model counts would
decrease with a transition to ECMs due to the greater range of
applications served. Id. However, Xylem recommended DOE consider the
additional incremental cost to transition these models to EL 3 levels.
Id. Xylem commented that capital investment is likely to increase when
going from EL 2 to EL 4 and that DOE has underestimated the capital
investment and time commitment needed to reach EL 3 and EL 4. Id. HI
and Xylem recommended that DOE follow up with manufacturers to qualify
the lead times to acquire and commission manufacturing assets. (HI, No.
135 at p. 4; Xylem, No. 136 at pp. 3-4).
Further, HI and Xylem disagreed with DOE's assertion that
manufacturers
[[Page 44484]]
affected by this rulemaking are not affected by other rulemakings and
recommended that DOE consider the cumulative burden of rulemakings
currently in progress, such as those regarding commercial and
industrial pumps and electric motors. (HI, No. 135 at p. 4; Xylem, No.
136 at p. 5) HI also recommended DOE consider that the ECM technology
used in CP2- and CP3-style circulator pumps is under consideration in
the electric motor rulemakings. (HI, No. 135 at p. 6) HI commented that
the timing and outcome of the electric motor rulemakings would impact
circulator manufacturers' ability to redesign CP2 and CP3 equipment
within the 2-year compliance lead time. Id.
Wyer commented that the manufacturing industry has seen an increase
in the number of ECM circulator pumps in recent years and this increase
has proven problematic. (Tom Wyer, No. 128 at pp. 1-2) Wyer commented
that the pump manufacturers listed by the CPWG do not currently have
the ability to produce ECM pumps in sufficient quantities to satisfy a
growing market. Id. Wyer commented that several manufacturers are
substituting permanent split capacitor ``''PSC'') motor pumps for ECMs
to make up for the insufficient availability of ECM pumps, which is due
to: (1) international supply chain shortages; (2) plant capacity in the
facilities that manufacturer ECM circulators, all of which are located
in Europe; and (3) the rapid adoption of hydronic heat pumps in Europe
caused by the war in Ukraine, natural gas supply constraints, and
rising prices. Id. Wyer commented that U.S. manufacturing
infrastructure cannot support the level of production needed to satisfy
the hydronics market with ECM circulators. (Tom Wyer, No. 128 at p. 2)
Wyer stated that ECM pumps with the performance curves necessary for
the geothermal HVAC industry are only manufactured in Europe, while the
majority of PSC pumps currently used in the geothermal HVAC industry
are made in the United States. Id. Wyer commented that U.S.-based
manufacturers are more likely to shut down domestic facilities and
continue importing ECM circulators rather than invest to upgrade their
plants to produce ECM pumps. Id. Wyer recommended that DOE consider the
impact of the proposed rulemaking on domestic manufacturer employment
and the potential of plant closures. Id. Wyer commented that 3 years is
not enough time for pump manufacturers to upgrade their capacity to
supply the entire hydronics market in the U.S. and recommended that DOE
delay the implementation of the standard until the domestic supply of
ECM pumps is sufficient to meet current and future demand. Id. Wyer
recommended that if DOE continues with the proposed rulemaking, the
compliance time should be increased to a minimum of 6 years. Id.
In response, DOE notes that, as stated by manufacturers, the
redesign process for circulator pumps contains multiple, sequential
steps dependent on completion of the preceding step. Third-party water
testing, which is necessary after the redesign process but before the
circulator pumps go to market, adds further time constraints to pump
manufacturers. These reasons make a 2-year compliance date hard for
manufacturers to reach EL 2 levels, but some manufacturers will use the
redesigning process as an opportunity for further energy savings. HI
and Xylem also noted that they feel the cumulative regulatory burden
from other rulemakings, including commercial industrial pumps and small
electric motors, put further strain on manufacturers who expect a 2-
year compliance date for circulator pumps to add significant financial
burden. Cumulative regulatory burden from other rulemakings is
discussed in section V.B.2.e of this document.
As discussed previously, in the December 2022 NOPR DOE did not
follow the CPWG's recommendation of a 4-year compliance date, instead
proposing a 2-year compliance date due to the market maturing since the
2016 CPWG meetings. However, as discussed by stakeholders, the natural
growth of ECMs in the market has been slow, with only around 1 percent
of the market switching to ECMs annually, leaving the majority of the
market in need of redesign to reach EL 2. As such, DOE agrees that a
longer compliance period than proposed in the DOE 2022 NOPR is
warranted. However, although the natural market share growth of ECMs
has been slow, the market is closer to EL 2 on average now than when
the CPWG initially recommended a 4-year compliance date, which has led
DOE to conclude that no additional time past the 4-year recommendation,
such as a 6-year compliance date, is necessary. Accordingly, in this
final rule, DOE is adopting a 4-year compliance date for energy
conservation standards.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to circulator pumps. Separate subsections
address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards considered in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential 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-2016-BT-STD-0004. Additionally, DOE used output from the latest version of
the Energy Information Administration's (``EIA's'') Annual Energy
Outlook (``AEO'') 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 equipment
concerned, including the purpose of the equipment, the industry
structure, manufacturers, market characteristics, and technologies used
in the equipment. 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 equipment 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 circulator pumps. The key
findings of DOE's market assessment are summarized in the following
sections. See chapter 3 of the final rule TSD for further discussion of
the market and technology assessment.
In response to the December 2022 NOPR, HI requested that DOE
provide its market assessment of basic model information as a
supplemental publication, including the estimated number of models left
for conversion and the percentage they make up of the market. (HI, No.
126 at p. 1) HI requested that DOE allow manufacturers time to review
the market assessment data and provide comments. Id.
DOE responded to this comment by publishing a supplementary
document
[[Page 44485]]
with the estimated number of models at or above EL 2 and the number of
models below EL 2 on January 31, 2023. (Docket No. EERE-2016-BT-STD-
0004-0127) This information is reflected in Table IV.14 in section
IV.J.2.c of this document.
1. Scope of Coverage and Equipment Classes
a. Scope
As stated in the December 2022 NOPR, DOE proposed to align the
scope of these proposed energy conservation standards with that of the
circulator pumps test procedure. 87 FR 74850, 74865; 87 FR 57264. In
that document, DOE finalized the scope of the circulator pumps test
procedure such that it applies to circulator pumps that are clean water
pumps, including circulators-less-volute and on-demand circulator
pumps, and excluding header pumps and submersible pumps. 87 FR 74850,
74865-74866. That scope is consistent with the recommendations of the
CPWG. (Docket No. EERE-2016-BT-STD-0004, No. 58)
In the December 2022 NOPR, DOE proposed to apply energy
conservation standards to all circulator pumps included in the CWPG
recommendations, which excluded submersible pumps and header pumps. 87
FR 74850, 74866. (Docket No. EERE-2016-BT-STD-0004, No. 58) The
September 2022 TP Final Rule also excluded submersible pumps and header
pumps. 87 FR 57264, 57272. Any future evaluation of energy conservation
standards would require a corresponding test procedure.
In the December 2022 NOPR, DOE requested comment regarding the
proposed scope of energy conservation standards for circulator pumps.
87 FR 74850, 74866.
HI agreed with DOE's proposal to apply standards to all circulator
pumps included in the CWPG recommendations, which excluded submersible
pumps and header pumps. (HI, No. 135 at p. 4)
Equipment Diagrams
In general, DOE establishes written definitions to designate which
equipment falls within the scope of a test procedure or energy
conservation standard. In the specific case of circulator pumps,
certain scope-related definitions were adopted by the September 2022 TP
Final Rule and codified at 10 CFR 431.462.
DOE adopted the definitions that distinguish various circulator
pumps nearly unchanged from those recommended by the CPWG at meeting 2.
(Docket No. EERE-2016-BT-STD-0004-0021, p. 22) 10 CFR 431.462. CPWG
membership included five manufacturers of circulator pumps; a trade
association representing the U.S. hydraulic industry; a trade
association representing plumbing, heating, and cooling contractors;
and other manufacturers of equipment that either use or are used by
circulator pumps as components.
In the December 2022 NOPR, DOE stated that given the strong
representation of entities with deep experience in circulator pump
design and for whom definitional ambiguity could be burdensome, it is
reasonable to expect the CPWG-proposed definitions were viewed as
sufficiently clear at the time of their recommendation. 87 FR 74850,
74866.
Additionally, in the December 2022 NOPR, DOE explained that the
development of diagrams to support the definitions could create
confusion if interpretations of such diagrams differ from those of the
corresponding written definitions. For this reason, and in the absence
of any evidence of ambiguity in the definitions, DOE did not propose to
establish equipment diagrams in the December 2022 NOPR, but requested
comments on the definitions and whether any clarification was needed.
87 FR 74850, 74866.
HI agreed that the proposed definitions are sufficiently clear and
consistent with the diagrams provided in ANSI/HI 14.1-14.2. (HI, No.
135 at p. 4)
Accordingly, DOE is not establishing equipment diagrams in this
final rule.
b. Equipment Classes
When evaluating and establishing energy conservation standards, DOE
may divide covered equipment into equipment classes by the type of
energy used, or by capacity or other performance-related features that
justify a different standard. (42 U.S.C. 6316(a); 42 U.S.C. 6295(q)) In
making a determination whether capacity or another 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
deems appropriate. Id.
For circulator pumps, there are no current energy conservation
standards and, thus, no preexisting equipment classes. However, the
November 2016 Term Sheets contained a recommendation related to
establishing equipment classes for circulator pumps. Specifically,
``Recommendation #1'' of the November 2016 CPWG Recommendations
suggests grouping all circulator pumps into a single equipment class,
though with numerical energy conservation standard values that vary as
a function of hydraulic output power. (Docket No. EERE-2016-BT-STD-
0004, No. 98, Recommendation #1 at p.1)
As stated in section III.C.1 of this document, circulator pumps may
be offered in wet- or dry-rotor configurations, and if dry-rotor, in
either close-coupled or mechanically coupled construction. Minor
differences may exist across configurations. For example, during
interviews with manufacturers, DOE learned that wet-rotor pumps tended
to be quieter, whereas dry-rotor pumps may be easier to service. In
general, however, each respective pump variety serves similar
applications. Similarly, data provided to DOE as part of the
confidential submission process indicates that each variety may reach
similar efficiency levels when operated with similar motor technology.
Accordingly, no apparent basis exists to warrant establishing separate
equipment classes by circulator pump configuration.
One additional salient design attribute of circulator pumps is
housing material. Generally, circulator pumps are built using a cast
iron, bronze, or stainless-steel housing. Bronze and stainless steel
(sometimes discussed collectively with the descriptor ``nonferrous'')
carry greater corrosion resistance and are thus suitable for use in
applications in which they will be exposed to corrosive elements.
Typically, corrosion resistance is most important in ``open loop''
applications in which new water is constantly being replaced.
By contrast, cast iron (sometimes described as ``ferrous'' to
distinguish from the ``nonferrous'' descriptor applied to bronze and
stainless steel) pump housing is less resistant to corrosion than
bronze or stainless steel, and as a result is generally limited to
``closed loop'' applications in which the same water remains in the
hydraulic circuit, in which it will eventually become deionized and
less able to corrode metallic elements of circulator pumps. Cast iron
is generally less expensive to manufacture than bronze or stainless
steel and, as a result, bronze or stainless-steel circulator pumps are
less commonly selected by consumers for applications that do not
strictly require them.
As discussed in the December 2022 NOPR, although a difference in
utility exists across circulator pump housing materials, no such
difference exists in ability to reach higher efficiencies. 87 FR 74850,
74866. All housing materials can reach all efficiency levels analyzed
in this final rule. Id. Accordingly, no
[[Page 44486]]
apparent basis exists to warrant establishing separate equipment
classes by circulator pump housing material. Id.
In the December 2022 NOPR, DOE requested comment regarding the
proposal to analyze all circulator pumps within a single equipment
class. 87 FR 74850, 74866.
In response, ASAP et al. and HI supported DOE's proposal of a
single equipment class and standard for all circulator pumps, as it is
consistent with the CPWG recommendations. (ASAP et al., No. 131 at pp.
1-2; HI, No. 135 at p. 4)
Based on the foregoing analysis and the support of stakeholders,
DOE is establishing circulator pumps in a single equipment class.
Strauch commented that while DOE regularly considers the cumulative
regulatory burden on manufacturers, DOE does not address an equivalent
burden on consumers, for whom regulatory processes result in diminished
equipment choices. (Mark Strauch, No. 123 at p. 2)
As discussed by Strauch, DOE evaluated cumulative regulatory burden
on manufacturers in this rulemaking. See section V.B.2.e of this
document. In response to Strauch's comment regarding diminishing
equipment choices, DOE notes that some circulator pump models with
induction motors also come equipped with automatic continuous variable
speed controls and therefore not all induction motors will be removed
from the market. Further, DOE analyzes burden on consumers in section
IV.I of this document.
On-Demand Circulator Pumps
On-demand circulator pumps respond to actions of the user rather
than other factors such as pressure, temperature, or time. In the
September 2022 TP Final Rule, DOE adopted the following definition for
on-demand circulator pumps, which is consistent with that recommended
by the CPWG (Docket No. EERE-2016-BT-STD-0004, No. 98, Recommendation 4
at p. 5):
On-demand circulator pump means a circulator pump that is
distributed in commerce with an integral control that:
Initiates water circulation based on receiving a signal
from the action of a user [of a fixture or appliance] or sensing the
presence of a user of a fixture and cannot initiate water circulation
based on other inputs, such as water temperature or a pre-set schedule.
Automatically terminates water circulation once hot water
has reached the pump or desired fixture.
Does not allow the pump to operate when the temperature in
the pipe exceeds 104 [deg]F or for more than 5 minutes continuously.
10 CFR 431.462.
The TP final rule (87 FR 57264) responded to a number of comments
received in response to the December 2021 TP NOPR, which were discussed
therein. Several commenters encouraged DOE to develop an adjustment to
the CEI metric that accounted for the potential of on-demand circulator
pumps to save energy in certain contexts. (EERE-2016-BT-TP-0033, No. 10
at p. 5; EERE-2016-BT-TP-0033, No. 11 at pp. 4-5). Other commenters did
not support an adjusted CEI metric for on-demand circulator pumps in
the test procedure final rule, but recommended evaluation of such in a
potential future rulemaking. (Docket No. EERE-2016-BT-TP-0033, No. 9 at
p. 3; EERE-2016-BT-TP-0033, No. 7 at p. 1).
DOE ultimately did not adopt any modification to the CEI metric for
on-demand circulator pumps in the final rule but stated that it would
consider the appropriate scope and equipment categories for standards
for on-demand circulator pumps in a separate energy conservation
rulemaking.
As stated in section III.C of this document, DOE is aligning the
scope of energy conservation standards for circulator pumps
consistently with that of the test procedure for circulator pumps,
which includes on-demand circulator pumps. 87 FR 57264.
As discussed in the December 2022 NOPR, in developing the equipment
class structure, DOE is directed to consider, among other factors,
performance-related features that justify a different standard and the
utility of such features to the consumer. 87 FR 74850, 74867. (42
U.S.C. 6316(a); 42 U.S.C. 6295(q)) In the specific case of on-demand
circulator pumps, the primary distinguishing feature (i.e., ability to
react to user action or presence) is not obviously performance related
in that it does not impede the ability of on-demand circulator pumps to
reach the same performance levels as any other circulator pumps. Id.
On that basis, DOE proposed not to establish a separate equipment
class for on-demand circulator pumps in the December 2022 NOPR. Id.
In the December 2022 NOPR, DOE requested comment on its proposal
not to establish a separate equipment class for on-demand circulator
pumps. 87 FR 74850, 74867.
In response to the December 2022 NOPR, HI and NEEA/NWPCC stated
their support of DOE's proposal to refrain from creating a separate
equipment class for on-demand circulators. (HI, No. 135 at p. 4; NEEA/
NWPCC, No. 134 at p. 4) NEEA/NWPCC also recommended that, due to the
associated energy savings, DOE adopt a CEI credit for on-demand
circulator pumps, recognizing that the necessary data collection may
delay implementing such a credit until the next circulator pumps
rulemaking. (NEEA/NWPCC, No. 134 at p. 4)
On-demand circulator pumps have access to the same technology
options as circulator pumps at-large. Thus, it is not clear that on-
demand function relates to efficiency, as measured by the test
procedure for circulator pumps. (See 10 CFR 431.464(c)) In certain
applications, on-demand circulator pumps may conceivably save energy if
used to replace an equivalent non-on-demand circulator pump through
reduced aggregate operating duration rather the improved energy
efficiency during operation. DOE expects the energy efficiency during
operation to be the same. DOE does not have data to determine the
extent to which on-demand circulator pumps are replacing more
traditional circulator pumps. However, such energy savings during the
life of the operation would be highly variable based on used and would
not materialize if the on-demand circulator pump were installed where
none had existed previously (i.e., a newly added on-demand circulator
pump). DOE already accounts for operating duration of on-demand
circulator pumps in the energy use analysis, which is described in
section IV.E of this final rule. In summary, on-demand circulator pumps
neither obviously provide additional utility to consumers relative to
non-on-demand circulator pumps nor face any impediment to achieving the
same performance levels as circulator pumps at-large. Accordingly, DOE
is not able to conclude that on-demand function would meet the
statutory requirements for establishment of a separate equipment class
(42 U.S.C. 6316(a); 42 U.S.C. 6295(q)).
Based on the foregoing analysis and consistent with commenters, DOE
is not establishing a separate equipment class for on-demand
circulators. If DOE receives data regarding a potential CEI credit for
on-demand circulator pumps, DOE may consider a CEI credit at that time.
2. Technology Options
In the preliminary market analysis and technology assessment, DOE
identified 3 technology options that would be expected to improve the
efficiency of circulator pumps, as measured by the DOE test procedure:
Improved hydraulic design;
More efficient motors; and
[[Page 44487]]
Increased number of motor speeds.
Chapter 3 of the final rule TSD details each of these technology
options. Section IV.C.2.c of this document provides examples of which
technology options may be used to reach various efficiency levels.
a. Hydraulic Design
The performance characteristics of a pump, such as flow, head, and
efficiency, are influenced by the pump's hydraulic design. For the
purposes of DOE's analysis, ``hydraulic design'' is a broad term used
to describe the system design of the wetted components of a pump.
Although hydraulic design focuses on the specific hydraulic
characteristics of the impeller and the volute/casing, it also includes
design choices related to bearings, seals, and other ancillary
components.
Impeller and volute/casing geometries, clearances, and associated
components can be redesigned to a higher efficiency (at the same flow
and head) using a combination of techniques including historical best
practices and modern computer-aided design (CAD) and analysis methods.
The wide availability of modern CAD packages and techniques now enables
pump designers to reach designs with improved vane shapes, flow paths,
and cutwater designs more quickly, all of which work to improve the
efficiency of the pump as a whole.
b. More Efficient Motors
Different constructions of motors have different achievable
efficiencies. Two general motor constructions are present in the
circulator pump market: induction motors and ECMs. Induction motors
include both single-phase and three-phase configurations. Single-phase
induction motors may be further differentiated and include split-phase,
capacitor-start induction-run (``CSIR''), capacitor-start capacitor-run
(``CSCR''), and PSC motors. In manufacturer interviews, DOE, using
confidentially submitted manufacturer data, found that induction motor
circulator pumps account for the majority of the circulator pump
market.
The efficiency of an induction motor can be increased by
redesigning the motor to reduce slip losses between the rotor and
stator components, as well as reducing mechanical losses at seals and
bearings. ECMs are generally more efficient than induction motors
because their construction minimizes slip losses between the rotor and
stator components. Unlike induction motors, however, ECMs require an
electronic drive to function. This electronic drive consumes
electricity, and variations in drive losses and mechanical designs lead
to a range of ECM efficiencies.
The energy conservation standard in this rule is based upon wire-
to-water efficiency, which is defined as the hydraulic output power of
a circulator pump divided by its line input power and is expressed as a
percentage. The achievable wire-to-water efficiency of circulator pumps
is influenced by both hydraulic efficiency and motor efficiency. As
part of the engineering analysis (section IV.C of this document), DOE
assessed the range of attainable wire-to-water efficiencies for
circulator pumps with induction motors and those with ECMs over a range
of hydraulic power outputs. Because circulator pump efficiency is
measured on a wire-to-water basis, it is difficult to fully separate
differences due to motor efficiency from those due to hydraulic
efficiency. In redesigning a pump model to meet the standard
established in this final rule, manufacturers could consider both
hydraulic efficiency and motor efficiency.
Higher motor capacities are generally required for higher hydraulic
power outputs, and as motor capacity increases, the attainable
efficiency of the motor at full load also increases. Higher horsepower
motors also operate close to their peak efficiency for a wider range of
loading conditions.\28\
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\28\ U.S. DOE Building Technologies Office. Energy Savings
Potential and Opportunities for High-Efficiency Electric Motors in
Residential and Commercial Equipment. December 2013. Prepared for
the DOE by Navigant Consulting. pp. 4. Available at energy.gov/sites/prod/files/2014/02/f8/Motor%20Energy%20Savings%20Potential%20Report%202013-12-4.pdf DFR.
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Circulator pump manufacturers either manufacture motors in-house or
purchase complete or partial motors from motor manufacturers and/or
distributors. Manufacturers may select an entirely different motor or
redesign an existing motor in order to improve a pump's motor
efficiency.
c. Speed Reduction
Circulator pumps with variable speed capability can reduce their
energy consumption by reducing pump speed to match load requirements.
As discussed in the September 2022 TP Final Rule, the CER metric is a
weighted average of input powers at each test point relative to BEP
flow. The circulator pump test procedure allows CER values for multi-
and variable-speed circulator pumps to be calculated as the weighted
average of input powers at full speed BEP flow, and reduced speed at
flow points less than BEP; CER for single-speed circulator pumps is
calculated based only on input power at full speed. 10 CFR
431.464(c)(2). Due to pump affinity laws, variable-speed circulator
pumps will achieve reduced power consumption at flow points less than
BEP by reducing their rotational speed to more closely match required
system head. As such, the CER metric grants benefits on circulator
pumps capable of variable speed operation.
Specifically, pump affinity laws describe the relationship of pump
operating speed, flow rate, head, and hydraulic power. According to the
affinity laws, flow varies proportionally with the pump's rotational
speed, as described in equation (6). The affinity laws also establish
that pump total head is proportional to speed squared, as described in
equation (7), and pump hydraulic power is proportional to speed cubed,
as described in equation (8)
[GRAPHIC] [TIFF OMITTED] TR20MY24.015
[[Page 44488]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.016
[GRAPHIC] [TIFF OMITTED] TR20MY24.017
Where:
Q1 and Q2 = volumetric flow rate at two
operating points;
H1 and H2 = pump total head at two operating
points;
N1 and N2 = pump rotational speed at two
operating points; and
P1 and P2 = pump hydraulic power at two
operating points.
This means that a pump operating at half speed will provide one
half of the pump's full-speed flow and one eighth of the pump's full-
speed power.\29\ However, pump affinity laws do not account for changes
in hydraulic and motor efficiency that may occur as a pump's rotational
speed is reduced. Typically, hydraulic efficiency and motor efficiency
will be reduced at lower operating speeds. Consequently, at reduced
speeds, power consumption is not reduced as drastically as hydraulic
output power. Even so, the efficiency losses at low-speed operation are
typically outweighed by the exponential reduction in hydraulic output
power at low-speed operation; this results in a lower input power at
low-speed operation at flow points lower than BEP.
---------------------------------------------------------------------------
\29\ A discussion of reduced-speed pump dynamics is available at
www.regulations.gov/document?D=EERE-2015-BT-STD-0008-0099.
---------------------------------------------------------------------------
Circulator pump speed controls may be discrete or continuous, as
well as manual or automatic. Circulator pumps with discrete speed
controls vary the circulator pump's rotational speed in a stepwise
manner. Discrete controls are found mostly on circulator pumps with
induction motors and have several speed settings that can be used to
allow contractors greater installation flexibility with a single
circulator pump model. For these circulator pumps, the speed is set
manually with a dial or buttons by the installer or user, and they
operate at a constant speed once the installation is complete.
Circulator pumps equipped with automatic speed controls can adjust
the circulator pump's rotational speed based on a signal from
differential pressure or temperature sensors, or an external input
signal from a boiler. The variable frequency drives required for ECMs
make them fairly amenable to the addition of variable speed control
logic; currently, the vast majority of circulator pumps with automatic
continuously variable speed controls also have ECMs. However, some
circulator pump models with induction motors also come equipped with
automatic continuous variable speed controls. While automatic controls
can reduce energy consumption by allowing circulator pump speed to
dynamically respond to changes in system conditions, these controls can
also reduce energy consumption by reducing speed to a single, constant
value that is optimized based on system head at the required flow
point. Automatic controls can be broadly categorized into two groups:
pressure-based controls, and temperature-based controls.
Pressure-based controls vary the circulator pump speed based on
changes in the system pressure. These pressure changes are typically
induced by a thermostatically controlled zone valve that monitors the
space temperature in different zones and calls for heat (i.e., opens
the valve) when the space/zone temperature is below the set-point,
similar to a thermostat. In this type of control, a pressure sensor
internal to the circulator pump determines the amount of pressure in
the system and adjusts the circulator pump speed to achieve the desired
system pressure.
Temperature-based controls monitor the supply and return
temperature to the circulator pump and modulate the circulator pump's
speed to maintain a fixed temperature drop across the system.
Circulator pumps with temperature-based controls are able to serve the
heat loads of a conditioned space at a lower speed, and therefore lower
input power, than the differential pressure control because it can
account for the differential temperature between the space and supplied
hot water, delivering a constant BTU/hr load to the space when less
heat is needed even in a given zone or zones.
In the December 2022 NOPR, DOE concluded that the technology
options identified were sufficient to conduct the engineering analysis,
which is discussed in section IV.C of this document.
B. Screening Analysis
DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial equipment 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
equipment 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 equipment utility. If a technology is determined
to have a significant adverse impact on the utility of the equipment
to subgroups of consumers, or result in the unavailability of any
covered equipment type with performance characteristics (including
reliability), features, sizes, capacities, and volumes that are
substantially the same as equipment 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 I6(c)(3) and 7(b).
In sum, 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
[[Page 44489]]
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
In the December 2022 NOPR DOE received comment from stakeholders
regarding the potential of screening out ECMs. HI responded to the May
2021 RFI by commenting that ECMs and controls could potentially become
a problem due to scarcity of necessary component materials, reliance on
foreign sources, and the degree of automation and specialized tooling
involved in the manufacture of ECMs. (Docket No. EERE-2016-BT-STD-0004,
HI, No. 112, at p. 7) DOE interpreted HI's comment to be discussing a
hypothetical future scenario, and not to be stating that ECMs are
unavailable at this time. 87 FR 74850, 74870. Accordingly in the
December 2022 NOPR, DOE retained ECMs as a design option for the
analysis. Id.
In the December 2022 NOPR DOE requested comment regarding the
current and anticipated forward availability of ECMs and components
necessary for their manufacture. 87 FR 74850, 74870.
HI responded stating the suppliers of ECM components, such as
chips, electronic components, and rare earth metals, have not been able
to meet demand and that some manufacturers have been seeing lead times
of 18 months. (HI, No. 135 at p. 4)
Subsequent private interview of a well-known circulator pump
manufacturer concluded that, although certain components had realized
shortages following the COVID-19 pandemic, the market appeared to be
equilibrating and there was no reason to expect the shortage would
persist.
DOE has found ECMs available in a range of sizes needed to support
the circulator pumps market and commercially and readily available
today. Further, the U.S. government is investing in domestic
manufacturing of semiconductor microchips in programs such as the CHIPS
and Science Act. Semiconductors are an integral part of ECMs and are
often the limiting factor in the motor's production. CHIPS for America
is a program that offers $52 billion of financial incentives for
domestic manufacturing and development of semiconductors and was signed
into law on August 9, 2022. Therefore, domestic microchip production
may be expected to grow.
DOE did not receive any comments requesting that ECMs be screened
out in this analysis. Therefore, DOE is retaining ECMs as a design
option for the analysis.
2. Remaining Technologies
Through a review of each technology, DOE tentatively concludes that
all of the other identified technologies listed in section IV.A.2 of
this document met all five screening criteria to be examined further as
design options in DOE's final rule analysis. In summary, DOE did not
screen out the following technology options:
Improved hydraulic design;
Improved motor efficiency; or
Increased number of motor speeds.
DOE determined that these technology options are technologically
feasible because they are being used or have previously been used in
commercially available equipment 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, equipment
availability, health, or safety). For additional details, see chapter 4
of the final rule TSD.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of circulator pumps. 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 equipment cost at each efficiency level (i.e., the
``cost analysis''). In determining the performance of higher-efficiency
equipment, DOE considers technologies and design option combinations
not eliminated by the screening analysis. For each equipment class, DOE
estimates the baseline cost, as well as the incremental cost for the
equipment 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 Equipment
To assess MPC-efficiency relationships for all circulator pumps
available on the market, DOE selected a set of representative units to
analyze. These representative units exemplify capacities and hydraulic
characteristics typical of circulator pumps currently found on the
market. In general, to determine representative capacities and
hydraulic characteristics, DOE analyzed the distribution of all
available models and/or shipments and discussed its findings with the
CPWG. The analysis focused on single speed induction motors as they
represent the bulk of the baseline of the market.
To start the selection process, nominal horsepower targets based on
CPWG feedback of 1/40, 1/25, 1/12, 1/6, and 1 hp were selected for
representative units (Docket No. EERE-2016-BT-STD-0004-0061, p. 9). At
each horsepower target, pump curves were constructed from manufacturer
data. Near identical pump curves were consolidated into single curves
and curves that represent circulator pumps with low shipments were
filtered out to remove the impact of low-selling pumps. These high-
sales consolidated pump curves were then grouped with similar curves to
form clusters of similar circulator pumps. A representative curve was
then constructed from this cluster of pumps by using the mean flow and
head at each test point. Eight of these curves were constructed to form
the eight representative units used in further analyses.
a. Circulator Pump Varieties
Circulator pumps varieties are used to classify different pumps in
industry. Wet rotor circulator pumps are commonly referred to as CP1;
dry-rotor, two-piece circulator pumps are commonly referred to as CP2;
and dry-rotor, three-piece circulator pumps are commonly referred to as
CP3. The distinction of circulator varieties does not have a large
impact on performance with all circulator pump varieties being capable
of achieving any particular performance curve. Due to the performance
similarities, the groups of pump curves used to generate representative
units contain a mix of all three circulator varieties. Although DOE
analyzed CP1, CP2, and CP3 circulator varieties as a single equipment
class, representative units were selected such that all circulator
varieties were captured in the analysis.
The parameters of each of the representative units used in this
analysis are provided in Table IV.1.
[[Page 44490]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.018
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 equipment (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 equipment on the market) may be
extended using the design option approach to interpolate to define
``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 rulemaking, DOE applied an efficiency-level approach due to
the availability of robust data characterizing both performance and
selling price at a variety of efficiency levels.
a. Baseline Efficiency
For each 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 equipment class represents the characteristics
of 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 a common, low-efficiency unit on the market.
For all representative units, DOE modeled a baseline circulator
pump as one with a PSC motor.
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 type of equipment.
For all representative units, DOE modeled a max-tech circulator
pump as one with an ECM and operated on a differential temperature-
based control scheme.
c. EL Analysis
DOE examined the influence of different parameters on wire-to-water
efficiency including hydraulic power. Hydraulic power has a significant
impact on wire-to-water efficiency as seen in the different
representative units. To find the correlation, the relationship of
power and wire-to-water efficiency were evaluated for both single speed
induction and single speed ECMs. Multiple relationships were tested
with a logarithmic relationship being the most accurate. This
logarithmic relationship can be used to set efficiency levels inclusive
of all representative units across the ranges of horsepower.
To calculate wire-to-water efficiency at part-load conditions,
wire-to-water efficiency at full-load conditions is multiplied by a
part-load coefficient, represented by alpha ([alpha]). As instructed by
the CPWG, a mean fit was developed for each part-load test point across
representative units to find a single value to use for alpha for each
test point. This methodology was conducted independently for single-
speed induction, single-speed ECM, and variable-speed ECM to find
unique alphas at each point for each motor type. The unique alpha
values are provided in Table IV.2.
[[Page 44491]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.019
DOE set EL 0 as the baseline configuration of circulator pumps
representing the minimum efficiency available on the market. DOE used
the logarithmic function developed when finding the relationship
between hydraulic power and wire-to-water efficiency to find the lower
second percentile of single speed induction circulator pumps to set as
EL 0. DOE finds single speed circulator pumps with induction motors
have the lowest wire-to-water efficiency and are being set as EL 0, as
agreed on at CPWG meeting 8. (Docket No. EERE-2016-BT-STD-0004-0061, p.
15)
DOE set EL 1 to correspond approximately to single-speed induction
motors with improved wire-to-water efficiency. EL 1 is an intermediate
efficiency level between the baseline EL 0 and more efficient ECMs
defined in higher efficiency levels. EL 1 was defined as the halfway
between the most efficient single-speed induction motors and the
baseline used as EL 0.
EL 2 is set to correspond approximately to single-speed ECMs. The
values for these circulator pumps are found using the same base
logarithmic function that was used when finding the relationship
between hydraulic power and wire-to-water efficiency. EL 2 corresponds
to a CEI of 1.00, which is the level recommended by the CPWG in the
November 2016 CPWG Recommendations.
EL 3 is set to correspond approximately to variable-speed ECMs with
automatic proportional pressure control. The effect of a 50-percent
proportional pressure control is applied using equation (9) for each
part-load test point. The wire-to-water efficiency at each test point
is found using the alpha values for variable speed ECM values for
Alpha.
[GRAPHIC] [TIFF OMITTED] TR20MY24.020
Where:
Hi = total system head at each load point i (ft);
Qi = flow rate at each load point i (gpm);
Q100 = flow rate at 100 percent of BEP flow at
maximum speed (gpm); and
H100 = total pump head at 100 percent of BEP flow
at maximum speed (ft).
EL 4 is the max-tech efficiency level, which represents the
circulator pumps with the maximum possible efficiency. EL 4 is set as
variable speed ECMs with automatic differential temperature control.
The effects of the controls are calculated using equation (10). Similar
to EL 3, the wire-to-water efficiencies are found using the alpha
values for variable speed ECMs.
[GRAPHIC] [TIFF OMITTED] TR20MY24.021
For pumps that do not fit exactly into a representative unit, DOE
developed a continuous function for wire-to-water efficiency at BEP.
The technique extends the representative units for each EL to compute
wire-to-water efficiency at BEP for all circulator pumps by using a
logarithmic function based on hydraulic power represented in equation
(11) and fit to each pump's specific performance data. A logarithmic
curve form was selected based on apparent fit over a wide power range
to manufacturer-submitted pump performance data. Variable d can be
solved by using equation (12) and the variables for a and b are
presented in Table IV.3 which contains different values for each
efficiency level. See TSD Chapter 5 for additional detail on the
engineering analysis.
[[Page 44492]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.022
[GRAPHIC] [TIFF OMITTED] TR20MY24.023
Where:
[eta]WTW = wire-to-water efficiency
Phydro = hydraulic power (hp);
[GRAPHIC] [TIFF OMITTED] TR20MY24.024
Table IV.4 contains a summary of the motor type and control scheme
associated with each EL.
[GRAPHIC] [TIFF OMITTED] TR20MY24.025
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
equipment, the availability and timeliness of purchasing the equipment
on the market. The cost approaches are summarized as follows:
[ballot] Physical teardowns: Under this approach, DOE physically
dismantles commercially available equipment, component-by-component, to
develop a detailed bill of materials for the equipment.
[ballot] Catalog teardowns: In lieu of physically deconstructing
equipment, 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 equipment.
[ballot] Price surveys: If neither a physical nor catalog teardown
is feasible (for example, for tightly integrated equipment 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 teardowns and price surveys. The resulting bill of
materials provides the basis for the manufacturer production cost
(``MPC'') estimates.
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 by examining the annual Securities and
Exchange Commission (``SEC'') 10-K reports filed by publicly traded
manufacturers primarily engaged in machinery and equipment-industrial
pumps, except hydraulic fluid power pumps, not seasonally adjusted
manufacturing, and whose combined equipment range includes circulator
pumps.
[[Page 44493]]
4. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of wire-to-water efficiency
versus MPC (in dollars). DOE developed 15 curves representing the 15
representative units in the analysis. 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 and
implemented only one design option at each level. Design options were
implemented until all available technologies were employed (i.e., at a
max-tech level).
Table IV.5, Table IV.6, Table IV.7, and Table IV.8 contain cost-
efficiency results of the engineering analysis. MPCs are presented for
circulator pumps with both ferrous and nonferrous housing material.
Housing material does not significantly affect the energy consumption
of circulator pumps but does alter production cost. Housing material is
discussed further in section IV.A.1.b of this document. See TSD Chapter
5 for additional detail on the engineering analysis.
BILLING CODE 6450-01-P
[GRAPHIC] [TIFF OMITTED] TR20MY24.026
[[Page 44494]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.027
[GRAPHIC] [TIFF OMITTED] TR20MY24.028
[[Page 44495]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.029
BILLING CODE 6450-01-C
5. Manufacturer Markup and Manufacturer Selling Price
To account for manufacturers' non-production costs and profit
margin, DOE applies a non-production cost multiplier (the manufacturer
markup) to the full MPC. The resulting MSP is the price at which the
manufacturer can recover production and non-production costs. To
calculate the manufacturer markups, DOE used data from 10-K reports
\30\ submitted to the U.S. Securities and Exchange Commission (``SEC'')
by the publicly owned circulator pump manufacturers. DOE then averaged
the financial figures spanning the years 2018 to 2022 to calculate the
initial estimate of markups for circulator pumps for this rulemaking.
During the 2022 manufacturer interviews, DOE discussed the manufacturer
markup with manufacturers and used the feedback to modify the
manufacturer markup calculated through review of SEC 10-K reports.
---------------------------------------------------------------------------
\30\ U.S. Securities and Exchange Commission, Annual 10-K
Reports (Various Years) available at sec.gov (Last accessed Sept.
19, 2023).
---------------------------------------------------------------------------
To calculate the MSP for circulator pump equipment, DOE multiplied
the calculated MPC at each efficiency level by the manufacturer markup.
See chapter 12 of the final rule TSD for more details about the
manufacturer markup calculation and the MSP calculations.
D. Markups Analysis
The markups analysis develops appropriate markups (e.g., retailer
markups, wholesaler 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
equipment to cover business costs and profit.
For circulator pumps, the main parties in the distribution channel
are (1) sales representatives (reps); (2) wholesalers; (3) contractors;
and (4) original equipment manufacturers (OEMs). For each actor in the
distribution channel, DOE developed baseline and incremental markups.
Baseline markups are applied to the price of equipment 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 standards.\31\
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\31\ Because the projected price of standards-compliant
equipment is typically higher than the price of baseline equipment,
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 in the short run, 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.
---------------------------------------------------------------------------
DOE identified distribution channels for circulator pumps and
estimated their respective shares of shipments by sector (residential
and commercial) based on feedback from manufacturers and the CPWG
(Docket No. EERE-2016-BT-STD-0004, No. 49 at p. 51), as shown in Table
IV.9.
[[Page 44496]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.030
The sales representative in the distribution chain serves the role
of a wholesale distributor, as they do not take commission from the
sale, but buy the equipment and take title to it. The OEM channels
represent sales of circulator pumps, which are included in other
equipment, such as hot water boilers.
In the December 2022 NOPR, DOE requested comment on whether the
distribution channels described above and the percentage of equipment
sold through the different channels are appropriate and sufficient to
describe the distribution markets for circulator pumps. 87 FR 74850,
74875. Specifically, DOE requested comment and data on online sales of
circulator pumps and the appropriate channel to characterize them. Id.
HI commented that it generally agreed with the distribution
channels presented in Table IV.9 and noted that online sales would be
split between line 2 (Sales Rep [rarr] Distributor [rarr] Contractor
[rarr] End User) and line 4 (Sales Rep [rarr] Distributor [rarr] End
User) (HI, No. 135 at p. 5)
DOE acknowledges that the online sales of circulator pumps may have
increased in the past few years. However, there is currently no
sufficient data supporting a notable price difference between online
sales and conventional sales, namely channel 2 and channel 4. Hence,
DOE assumed that circulator pumps sold through online channels have the
same prices as those through conventional channels and that online
sales have been included in the shares of channel 2 and channel 4.
To estimate average baseline and incremental markups, DOE relied on
several sources, including: (1) U.S. Census Bureau 2017 Annual
Wholesale Trade Survey \32\ (for sales representatives and circulator
wholesalers), (2) U.S. Census Bureau 2017 Economic Census data \33\ on
the residential and commercial building construction industry (for
contractors), and (3) the Heating, Air Conditioning & Refrigeration
Distributors International (``HARDI'') 2013 Profit Report \34\ (for
equipment wholesalers). In addition to markups of distribution channel
costs, DOE applied state and local sales tax provided by the Sales Tax
Clearinghouse to derive the final consumer purchase prices for
circulator pumps.\35\
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\32\ U.S. Census Bureau, 2017 Annual Wholesale Trade Survey
(Available at: www.census.gov/data/tables/2017/econ/awts/) (Last
accessed February 07, 2023).
\33\ U.S. Census Bureau, 2017 Economic Census Data. available at
www.census.gov/programs-surveys/economic-census.html (last accessed
February 07, 2023).
\34\ Heating, Air Conditioning & Refrigeration Distributors
International (``HARDI''), 2013 HARDI Profit Report, available at
hardinet.org/ (last accessed February 07, 2023). Note that the 2013
HARDI Profit Report is the latest version of the report.
\35\ Sales Tax Clearinghouse Inc., State Sales Tax Rates Along
with Combined Average City and County Rates, 2023 (Available at:
thestc.com/STrates.stm) (Last accessed September. 11, 2023).
---------------------------------------------------------------------------
Chapter 6 of the final rule TSD provides details on DOE's
development of markups for circulator pumps.
E. Energy Use Analysis
The purpose of the energy use analysis is to determine the annual
energy consumption of circulator pumps 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 circulator pump efficiency. The energy use analysis estimates
the range of energy use of circulator pumps in the field (i.e., as they
are actually used by consumers). The energy use analysis provides the
basis for other analyses DOE performed, particularly assessments of the
energy savings and the savings in consumer operating costs that could
result from adoption of new standards.
Following the same approach as in the December 2022 NOPR, to
calculate the annual energy use (``AEU'') for circulator pumps, DOE
multiplied the annual operating hours by the line input power (derived
in the engineering analysis) at each operating point. The following
sections describe how DOE estimated circulator pump energy use in the
field for different applications, geographical areas, and use cases.
1. Circulator Pump Applications
DOE identified two primary applications for circulator pumps:
hydronic heating, and hot water recirculation. Hydronic heating systems
are typically characterized by the use of water to move heating from
sources such as hot water boilers to different rooms through pipes and
radiating surfaces. Hot water recirculation systems serve the purpose
of moving hot water from sources such as water heaters, through pipes,
to water fixture outlets. For each of these applications, DOE developed
estimates of operating hours and load profiles to characterize
circulator pump energy use in the field.
Circulator pumps used in hydronic heating applications typically
have cast iron housings, while those used in hot water recirculation
applications have housings made of stainless steel or bronze. DOE
collected sales data for circulator pumps, including their housing
materials, through manufacturer interviews, and was able to estimate
the market share of each application by horsepower and efficiency
level. To estimate market shares by sector and horsepower rating, DOE
relied primarily on industry expert input.
In the May 2021 RFI, DOE requested feedback on whether the
breakdowns of circulator pumps by sector and application have changed
since the CPWG proceedings. HI commented that there have not been any
market changes to warrant a different estimate. (HI, No. 112 at p. 9)
During the 2022 manufacturer interviews, DOE collected recent data and
updated the estimated market shares by application. According to these
data, DOE estimated the market share of circulator pumps used in
hydronic heating and hot water recirculation applications at 66.6, and
33.4 percent, respectively.
[[Page 44497]]
2. Consumer Samples
To estimate the energy use of circulator pumps in field operating
conditions, DOE developed consumer samples that are representative of
installation and operating characteristics of how such equipment is
used in the field, as well as distributions of annual energy use by
application and market segment.
To develop a sample of circulator pump consumers, DOE used the
Energy Information Administration's (EIA) 2018 Commercial Buildings
Energy Consumption Survey (CBECS) \36\ and the 2015 residential energy
consumption survey (RECS) \37\. For the commercial sector, DOE selected
commercial buildings from CBECS and apartment buildings with five or
more units from RECS. For the residential sector, DOE selected single
family attached or detached buildings from RECS. As discussed in
chapter 7 of the final rule TSD, the majority of consumers (73.7%) of
circulator pumps are in the residential sector, and the rest (26.3%)
are in the commercial sector. The following paragraphs describe how DOE
developed the consumer samples by application.
---------------------------------------------------------------------------
\36\ U.S. Department of Energy-Energy Information
Administration. 2012 Commercial Buildings Energy Consumption Survey
(CBECS). 2018. (Last accessed September 29, 2023.) www.eia.gov/consumption/commercial/data/2012/.
\37\ U.S. Department of Energy: Energy Information
Administration. 2015 Residential Energy Consumption Survey (RECS).
2015. (Last accessed September 29, 2023.) www.eia.gov/consumption/residential/data/2015/.
---------------------------------------------------------------------------
For hydronic heating, because there is no data in RECS and CBECS
specifically on the use of circulator pumps, DOE used data on hot water
boilers to develop its consumer sample. DOE adjusted the selection
weight associated with the representative RECS and CBECS buildings
containing boilers to effectively exclude steam boilers, which are not
used with circulator pumps. To estimate the distribution of circulator
pumps by geographical region, DOE also used information on each
building's heated area by boilers to correlate it to circulator
horsepower rating.
For hot water recirculation, there is limited information in RECS
and CBECS. In the residential sector, DOE selected consumers based on
building square footage and assumed that buildings greater than 3,000
square feet have a hot water recirculation system, according to
feedback from the CPWG.\38\ (Docket No. EERE-2016-BT-STD-0004, No. 67
at pp. 171,172) DOE also assumed that only small (<\1/12\ hp)
circulator pumps are installed in residential buildings, according to
feedback from the CPWG. (Docket No. EERE-2016-BT-STD-0004, No. 67 at
pp. 157-163) For the commercial sector, DOE first selected buildings in
CBECS with water heaters. Further, DOE assigned a circulator pump size
category based on the number of floors in each building. The commercial
segment of the RECS sample was defined as multi-family buildings with
more than four units. Similar to the hydronic heating application, to
determine a distribution by region by representative unit, DOE assigned
circulator pump sizes (i.e., horsepower ratings) to building types
based on the number of floors in each building.
---------------------------------------------------------------------------
\38\ As discussed during the CPWG, a hot water recirculation
pump is more likely to be available in a building where the distance
from a water heater to outlets (e.g., bathrooms) is such that the
benefits of a HWR system are more pronounced. (Docket No. EERE-2016-
BT-STD-0004, No. 46 at pp. 180-181,184)
---------------------------------------------------------------------------
For details on the consumer sample methodology, see chapter 7 of
the final rule TSD.
3. Operating Hours
DOE developed annual operating hour estimates by sector
(commercial, residential) and application (hydronic heating, hot water
recirculation).
a. Hydronic Heating
For hydronic heating applications in the residential sector,
operating hours per year were estimated based on two sources: 2015
confidential residential field metering data from Vermont, and a 2012-
2013 residential metering study in Ithaca, NY.\39\ DOE used the data
from these metering data to establish a relationship between heating
degree days (HDDs) \40\ and circulator pump operating hours. DOE
correlated monthly operating hours with corresponding HDDs to annual
operating hours. DOE then used the geographic distribution of
consumers, derived from the consumer sample based on RECS and CBECS in
correlation to the presence of hot water boilers, as described in
section IV.E.2, to estimate weighted-average HDDs for each region. For
the residential sector, this scaling factor was 0.33 HPY/HDD. For the
commercial sector, the CPWG recommended a scaling factor of 0.45 HPY/
HDD. (Docket No. EERE-2016-BT-STD-0004, No. 100 at pp. 122-123). The
weighted average operating hours per year for the hydronic heating
application were estimated at approximately 1,970 and 2,200 for the
residential and commercial sector, respectively.
---------------------------------------------------------------------------
\39\ Arena, L. and O. Faakye. Optimizing Hydronic System
Performance in Residential Applications. 2013. U.S. Department of
Energy Building Technologies Office. Last accessed July 21, 2022.
www.nrel.gov/docs/fy14osti/60200.pdf.
\40\ Heating Degree Day (HDD) is a measure of how cold a
location was over a period of time, relative to a base temperature.
In RECS and CBECS, the base temperature used is 65 [deg]F and the
period of time is one year. The heating degree-days for a single day
is the difference between the base temperature and the day's average
outside temperature if the daily average is less than the base, and
zero if the daily average outside temperature is greater than or
equal to the base temperature. The heating degree-days for a longer
period of time are the sum of the daily heating degree-days for days
in that period.
---------------------------------------------------------------------------
b. Hot Water Recirculation
For circulator pumps used in hot water recirculation applications,
DOE developed operating hour and consumer fractions estimates based on
their associated control types, according to feedback from the CPWG
(Docket No. EERE-2016-BT-STD-0004, No. 60 at p. 74; Docket No. EERE-
2016-BT-STD-0004, No. 67 at pp. 194-195; Docket No. EERE-2016-BT-STD-
0004, No. 68 at p. 184), as shown in Table IV.10.
[[Page 44498]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.031
With regard to Table IV.10, Strauch commented that DOE
overestimates operating hours for circulator pumps in the residential
sector and cited personal experience with using a circulator pump with
an integrated timer. (Strauch, No. 123 at p. 1) In response, while DOE
acknowledges that the estimates in Table IV.10 are averages and do not
cover all use cases, it also notes that these estimates were discussed
in the CPWG and supported by stakeholders following the May 2021 RFI.
(NEEA, No. 115 at pp. 5-6); (Grundfos, No. 113 at p. 9); (HI, No. 112
at p. 9)
NYSERDA commented that DOE's assumed average operating hours across
technology options are nationally representative but may be higher when
high-rise multi-family buildings due to longer pipes with increased
heat loss, as well as larger household sizes and water usage. (NYSERDA,
No.130 at p. 4)
DOE agrees with NYSERDA that multi-family buildings may consume
more water and experience more heat loss than other types of buildings.
However, DOE is not aware of data relating circulator pump hours of
operation to building type. DOE also notes that its analysis does
consider purchasers with the characteristics related to high-rise
multi-family buildings. For example, half of the purchasers in the hot
water recirculation application are estimated to use their circulator
pump 24 hours per day. Further, DOE considers a wide range of piping
configurations in its calculation of load profiles as described in the
section IV.E.4, including systems curves related to longer pipes.
4. Load Profiles
To estimate the power consumption of each representative unit at
each efficiency level, DOE used the following methodology: For each
representative unit, DOE defined a range of typical system curves
representing different piping and fluid configurations and bounded the
representative unit's pump curve derived in the engineering analysis
within those system curves. The upper and lower boundaries of this
range of system curves correspond to a maximum (Qmax) and minimum
(Qmin) value of volumetric flow. The value of Qmax is capped to 150% of
BEP flow at most, while the value of the value of Qmin is capped to at
least 25% of BEP flow.
For single speed circulator pumps (ELs 0-2) in single zone
applications, DOE randomly selects a single operating point
(Q0) within the boundaries of a uniform distribution defined
by the system curves such that Q0 is between Qmin and Qmax.
The AEU is then calculated by multiplying the power consumption at the
volumetric flow Q0, as derived in the engineering analysis,
by the annual operating hours. DOE notes that while a random operating
point is assigned to each purchaser of an analyzed representative unit,
as discussed in the previous paragraph, the boundaries Qmin and Qmax
are selected such that they correspond to appropriate operating ranges
specifically for each of those representative units.
For variable-speed circulator pumps (ELs 3-4) in single-zone
applications, similarly, DOE randomly selects a single operating point
(Q0) within the boundaries of the system curves, such that
Q0 is between Qmin and Qmax. After the operating point is
selected, the procedure to determine the AEU varies depending on the
value of Q0: If the selected operating point (Q0)
has a flow that is equal or higher than QBEP, the method is
the same as the one for single speed circulator pumps in single zones.
For operating points where Q0 0.
For circulator pumps in multi-zone applications DOE modeled their
operation by assuming that representative multi-zone systems have three
zones, resulting in two additional operating points (Q- and
Q+), which are equidistant from a randomly selected
operating point, Q0, and are within the allowable operating
flow (between Qmin and Qmax), as defined by the representative unit's
characteristic system curves. (Docket #0004, No. 61 at p. 88)
In the December 2022 NOPR, DOE noted that its energy use analysis
assumes that all purchasers of variable-speed equipment with controls
(ELs 3 and 4) are installed in systems that benefit from such control
capabilities. However, this assumption may differ from the reality of
installations in the field, where a fraction of purchasers may not
benefit from such control capabilities due to system characteristics or
improper installation. In such cases, the energy use of EL 3 and EL 4
equipment would be at similar levels to EL 2 equipment. The CA IOUs
commented that they agree with DOE's
[[Page 44499]]
assertion that a portion of purchasers do not benefit from controls in
the field, in which case energy savings of variable speed controls
compared to EL 2 may not be fully realized. However, they noted that
occurrences of ineffective installed controls should decrease over time
as integrated controls and automatic-operating-point adjustments become
simpler to set-up and more widely adopted (CA IOUs, No. 133 at p. 3)
ASAP requested that DOE determine the fraction of circulator pump
installations in the field that are indeed capable of benefiting from
speed control. (ASAP, No. 131 at p. 2)
In response to these comments, DOE conducted further research but
found no data on the fraction of circulator pump installations in the
field that are indeed capable of benefiting from speed controls. In
turn, DOE conducted a sensitivity analysis to estimate the impact in
the LCC analysis of varying the fraction of purchasers that benefit
from controls in the field. Results showed that the fraction of
purchasers experiencing a net cost at EL 3 and EL 4 would linearly
increase from 42.7% to 60.7% and 45.9% to 74.8%, respectively, when the
fraction of purchasers who do benefit from controls in the field varies
from 100% to 0%. The remaining ELs (EL0 and EL1) do not include
controls and were not affected. See chapter 8 of the final rule TSD and
appendix 8D for more details on this sensitivity analysis.
Chapter 7 of the final rule TSD provides details on DOE's energy
use analysis.
F. Life-Cycle Cost and Payback Period Analysis
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual purchasers of potential energy conservation standards for
circulator pumps. The effect of new energy conservation standards on
individual purchasers 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 equipment over
the life of that equipment, 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 equipment.
[ballot] The PBP is the estimated amount of time (in years) it
takes purchasers to recover the increased purchase cost (including
installation) of a more-efficient equipment 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 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 circulator pumps in the absence of
new energy conservation standards. In contrast, the PBP for a given
efficiency level is measured relative to the baseline equipment.
For each considered efficiency level in each equipment class, DOE
calculated the LCC and PBP for a nationally representative set of
commercial and residential purchasers. As stated previously, DOE
developed purchaser samples from the 2015 RECS and the 2018 CBECS, for
the residential and commercial sectors, respectively. For each sampled
purchaser, DOE determined the energy consumption for the circulator
pumps and the appropriate energy price. By developing a representative
sample of purchasers, the analysis captured the variability in energy
consumption and energy prices associated with the use of circulator
pumps.
Inputs to the calculation of total installed cost include the cost
of the equipment--which includes MPCs, manufacturer markups, retailer
and distributor markups, and sales taxes--and installation costs.
Inputs to the calculation of operating expenses include annual energy
consumption, energy prices and price projections, repair and
maintenance costs, equipment lifetimes, and discount rates. DOE created
distributions of values for equipment lifetime, discount rates, and
sales taxes, with probabilities attached to each value, to account for
their uncertainty and variability.
The computer model DOE uses to calculate the LCC 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 circulator pumps user samples. The
model calculated the LCC and PBP for a sample of 75,000 purchasers per
simulation run. The analytical results include a distribution of 75,000
data points showing the range of LCC savings. In performing an
iteration of the Monte Carlo simulation for a given consumer, equipment
efficiency is chosen based on its probability. By accounting for
purchasers who already purchase more-efficient equipment, DOE avoids
overstating the potential benefits from increasing efficiency.
DOE calculated the LCC and PBP for purchasers of circulator pumps
as if each were to purchase a new equipment in the first year of
required compliance with new standards. As discussed in section III.G,
new standards would apply to circulator pumps manufactured 4 years
after the date on which any new or amended standard is published. DOE
is publishing this final rule in 2024. Therefore, for purposes of its
analysis, DOE used 2028 as the first year of compliance with standards
for circulator pumps.
Table IV.11 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 model, and of all the inputs
to the LCC and PBP analyses, are contained in chapter 8 of the final
rule TSD and its appendices.
[[Page 44500]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.032
1. Equipment Cost
To calculate consumer equipment 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 equipment and higher-efficiency equipment because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency equipment. Due to lack of historical price data and
uncertainty on the factors that may affect future circulator pump
prices, such as price declines on certain equipment components, DOE
assumed a constant price over the analysis period. However, DOE
developed a sensitivity analysis accounting for future price declines
of electronic components in circulator pumps with ECMs. See chapter 8
of the final rule TSD and appendix 8D for more details on this
sensitivity analysis.
2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts associated with installing a circulator pump in the
place of use. DOE derived installation costs for circulator pumps based
on data from RSMeans and input from the CPWG.\41\ (Docket #0004, No. 67
at p. 266)
---------------------------------------------------------------------------
\41\ RSMeans. 2021 RSMeans Plumbing Cost Data. Rockland, MA.
http://www.rsmeans.com.
---------------------------------------------------------------------------
DOE assumed that circulator pumps without variable speed controls
(ELs 0-2) require a labor time of 3 hours and an additional 30 minutes
for circulators with electronic controls (ELs 3 and 4). (Docket #0004,
No. 67 at p. 266) RSMeans provides estimates on the labor hours and
labor costs required to install equipment. In the NOPR, DOE derived the
installation cost for circulator pumps as the product of labor hours
and time required to install a circulator pump. Installation costs vary
by geographic location and efficiency level. During the 2022
manufacturer interviews, manufacturers agreed with DOE's approach to
estimate installation costs.
In the December 2022 NOPR, the CA IOUs acknowledged DOE's
installation cost assumptions regarding additional set-up time for
circulator pumps with controls due to commissioning challenges.
However, they noted that, in a future rulemaking evaluation cycle, DOE
should not consider incremental set-up time for circulator pumps at EL
3 and EL 4 that have automatic-operating-point selection functionality.
(CA IOUs, No.133 at p. 2-3) In response to the CA IOUs comment, DOE
states that is not aware of data quantifying the fraction of circulator
pumps purchasers that have automatic-operating-point selection
functionality. Therefore, DOE maintained its installation cost
assumptions, which are based on what was agreed by the CWPG, as
previously described.
3. Annual Energy Consumption
For each sampled purchaser, DOE determined the AEU for a circulator
pump at different efficiency levels using the approach described
previously in section IV.E.3 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. DOE generally
applies average electricity prices for the energy use of the equipment
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. In this final rule, DOE only used
marginal electricity prices due to the calculated annual electricity
cost for some regions and efficiency levels being negative when using
average electricity prices for the energy use of the equipment
purchased in the no-new-standards case. Negative costs can occur in
instances where the marginal electricity cost for the region and the
energy savings relative to the baseline for the given efficiency level
are large enough that the incremental cost savings exceed the baseline
cost.
DOE derived electricity prices in 2022 using data from EEI Typical
Bills and Average Rates reports. 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
[[Page 44501]]
electricity prices using the methodology described in Coughlin and
Beraki (2018).\42\ For the commercial sector, DOE calculated
electricity prices using the methodology described in Coughlin and
Beraki (2019).
---------------------------------------------------------------------------
\42\ 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.
ees.lbl.gov/publications/residential-electricity-prices-review.
---------------------------------------------------------------------------
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
regional energy prices by the projection of annual change in national-
average residential or commercial energy price from AEO2023, which has
an end year of 2050.\43\ For each purchaser sampled, DOE applied the
projection for the geographic location in which the consumer was
located. To estimate price trends after 2050, DOE assumed that the
regional prices would remain at the 2050 value.
---------------------------------------------------------------------------
\43\ EIA. Annual Energy Outlook 2023. Available at www.eia.gov/outlooks/aeo/ (last accessed September, 21, 2023).
---------------------------------------------------------------------------
DOE used the electricity price trends associated with the AEO
Reference case, which is a business-as-usual estimate, given known
market, demographic, and technological trends. DOE also included AEO
High Economic Growth and AEO Low Economic Growth scenarios in the
analysis. The high- and low-growth cases show the projected effects of
alternative economic growth assumptions on energy prices.
For a detailed discussion of the development of electricity prices,
see chapter 8 of the final rule TSD.
5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing equipment
components that have failed in an equipment; maintenance costs are
associated with maintaining the operation of the equipment. Typically,
small incremental increases in equipment efficiency entail no, or only
minor, changes in repair and maintenance costs compared to baseline
efficiency equipment.
As in the December 2022 NOPR, DOE assumed that only certain types
of CP3 circulators require annual maintenance through oil lubrication.
Based on CPWG feedback, DOE assumed that 50 percent of commercial
purchasers have a maintenance cost of $10 per year and 25 percent of
residential purchasers have a maintenance cost of $20 per year, which
result in an overall $5 annual maintenance cost for CP3 circulators in
each of the two applications. (Docket #0004, No. 47 at pp. 324-327)
Repair costs consist of both labor and replacement part costs. DOE
assumed that repair costs for CP1 circulators are negligible because
purchasers tend to discard such equipment when they fail. For CP2 and
CP3 circulator pumps, DOE assumed that 50 percent of purchasers will
incur repairs once in the equipment lifetime, that repair cost does not
vary with efficiency level, and that cost is spread over the
equipment's lifetime. Rather than assuming a specific repair year, the
cost of a single repair is divided over the lifetime of the equipment
and added to its annual operating expenses. According to CPWG feedback
and manufacturer interview input, typical repairs for CP2 and CP3
include seal replacements and coupler plus motor mount replacements,
respectively. DOE assumed consistent labor time with installation
costs, which is 3 hours for seal replacement and 1.5 hours for coupler
and motor mount replacement. Additionally, DOE assumes there is no
variation in repair costs between a baseline efficiency circulator and
a higher efficiency circulator. During the 2022 manufacturer
interviews, manufacturers agreed with DOE's approach to estimate
maintenance and repair costs. DOE maintained its assumptions in this
final rule.
6. Equipment Lifetime
Equipment lifetime is the age when a unit of circulator equipment
is retired from service. DOE estimated lifetimes and developed lifetime
distributions for circulator pumps primarily based on manufacturer
interviews conducted in 2016 and CPWG feedback. (Docket #0004, No. 41
at p. 74) The data collected by manufacturers allowed DOE to develop a
survival function, which provides a distribution of lifetimes ranging
from a minimum of 3 years based on warranty covered period, to a
maximum of 50 years for CP1, CP2, or CP3 respectively. Based on
manufacturer interviews, DOE assumed circulator pump lifetimes do not
vary across efficiency levels. (Docket #0004, No. 41 at p. 74) Table
IV.12 shows the average and maximum lifetimes by circulator variety.
[GRAPHIC] [TIFF OMITTED] TR20MY24.033
During the 2022 manufacturer interviews, DOE solicited additional
feedback from manufacturers on the lifetime assumptions presented in
Table IV.12, and the general consensus was that there have not been
significant technological changes to warrant a different estimate on
the circulator pump lifetimes.
Mark Strauch commented that equipment lifetime should vary by
efficiency level because more controls equate to less reliability and
AC motors and ECMs fail at different rates. (Mark Strauch, No.123 at p.
1) DOE did not modify its lifetime assumptions because its assumptions
rely on feedback from manufacturer interviews and CPWG feedback.
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to residential and commercial purchasers to estimate the present value
of future operating cost savings. The subsections below provide
information on the derivation of the discount rates by sector.
a. Residential
DOE applies weighted average discount rates calculated from
consumer debt and asset data, rather than marginal
[[Page 44502]]
or implicit discount rates.\44\ The LCC analysis estimates net present
value over the lifetime of the equipment, so the appropriate discount
rate will reflect the general opportunity cost of household funds,
taking this time scale into account. Given the long time-horizon
modeled in the LCC, the application of a marginal interest rate
associated with an initial source of funds is inaccurate. Regardless of
the method of purchase, purchasers are expected to continue to
rebalance their debt and asset holdings over the LCC analysis period,
based on the restrictions purchasers 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.
---------------------------------------------------------------------------
\44\ 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 equipment
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
\45\ (``SCF'') in 1995, 1998, 2001, 2004, 2007, 2010, 2013, 2016, and
2019. 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 August 1, 2023.) http://www.federalreserve.gov/econresdata/scf/scfindex.htm. 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 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 3.9 percent. See chapter 8 of
the final rule TSD for further details on the development of consumer
discount rates.
---------------------------------------------------------------------------
\45\ 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 May 1, 2023.)
www.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------
b. Commercial
For commercial purchasers, 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.\46\ The average discount rate across the commercial building
types is 6.9 percent.
---------------------------------------------------------------------------
\46\ Damodaran, A. Data Page: Costs of Capital by Industry
Sector. 2021. (Last accessed August 1, 2023.) http://
pages.stern.nyu.edu/~adamodar/.
---------------------------------------------------------------------------
See chapter 8 of the final rule TSD for further details on the
development of discount rates.
8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of purchasers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the projected
distribution (market shares) of equipment efficiencies under the no-
new-standards case (i.e., the case without new energy conservation
standards).
To estimate the energy efficiency distribution of circulator pumps
at the assumed compliance year (2028), DOE first analyzed detailed
confidential manufacturer shipments data from 2015, broken down by
efficiency level, circulator variety, and nominal horsepower. During
the 2016 manufacturer interviews, DOE also collected aggregated
historical circulator pump efficiency data from 2013 to 2015. Based on
these data, DOE developed an efficiency trend between the year for
which DOE had detailed data (2015) and the expected first year of
compliance.\47\ According to CPWG feedback, DOE applied an efficiency
trend from baseline (EL 0) circulator pumps to circulator pumps with
ECMs (ELs 2-4). (Docket #0004, No. 78 at p. 6).
---------------------------------------------------------------------------
\47\ To develop the efficiency trend, DOE also utilized an
estimated introduction year of 1994 for circulator pumps with ECMs.
(Docket #0004, No. 78 at p. 6).
---------------------------------------------------------------------------
In the May 2021 RFI, DOE requested information on whether any
changes in the circulator pump market since 2015 have affected the
market efficiency distribution of circulator pumps. NEEA discussed
their energy efficiency program for circulators since mid 2020 and the
circulator sales data collected from circulator manufacturer
representatives covering the entire Northwest at the start of 2020.
NEEA stated that more than two-thirds of circulator pumps sold by
participants in the Northwest are not equipped with ECM. NEEA stated
that fewer than one-fifth of circulator pumps are equipped with speed
control technology. (NEEA, No. 115 at pp. 2-3, 6) HI stated that small
incremental growth is occurring for ECMs, but first cost is a barrier.
(HI, No. 112 at p. 9-10) Grundfos suggested market changes have
affected distribution of circulators since 2015 and DOE should use
manufacturer and market interviews to update their dataset. (Grundfos,
No. 113 at p. 9)
During the 2022 manufacturer interviews, DOE collected additional
aggregated historical circulator pump efficiency data (ranging from
2016 to 2021). Based on these data, DOE retained the methodology
described earlier, but updated the efficiency trend, which was used to
project the no-standards-case efficiency distribution at the assumed
compliance year (2028) and beyond. See chapter 8 of the final rule TSD
for further information on the derivation of the efficiency
distributions.
Following the December 2022 NOPR, in which DOE requested further
comment on its approach and inputs to develop the no-new standards case
efficiency distribution, HI commented that it agrees with DOE's
approach and noted that markets are moving towards more controlled
equipment. (HI, No. 135 at p. 5). DOE maintained the same methodology
as in the December 2022 NOPR to develop the no-standards-case
efficiency distribution in this final rule.
a. Assignment of Circulator Pump Efficiency to Sampled Consumers
While DOE expects economic factors to play a role when consumers,
commercial building owners, or builders decide on what type of
circulator pump to install, assignment of circulator pump efficiency
for a given installation based solely on economic measures such as
life-cycle cost or simple payback period would not fully and accurately
reflect most real-world installations. There are a number of market
failures discussed in the economics literature that illustrate how
purchasing decisions with respect to
[[Page 44503]]
energy efficiency are unlikely to be perfectly correlated with energy
use, as described subsequently. DOE maintains that the method of
assignment, which is in part random, is a reasonable approach. It
simulates behavior in the circulator pump market, where market failures
result in purchasing decisions not being perfectly aligned with
economic interests. DOE further emphasizes that its approach does not
assume that all purchasers of circulator pumps make economically
irrational decisions (i.e., the lack of a correlation is not the same
as a negative correlation). As part of the random assignment, some
homes or buildings with large heating loads will be assigned higher-
efficiency circulator pumps, and some homes or buildings with
particularly low heating loads will be assigned baseline circulator
pumps, which aligns with the available data. By using this approach,
DOE acknowledges the uncertainty inherent in the data and does not
assume certain market conditions that are unsupported by the available
evidence.
The following discussion provides more detail about the various
market failures that affect circulator pump purchases. First, consumers
are motivated by more than simple financial trade-offs. There are
consumers who are willing to pay a premium for more energy-efficient
products because they are environmentally conscious.\48\ Additionally,
there are systematic market failures that are likely to contribute
further complexity to how equipment is chosen by consumers. For
example, in new construction, builders influence the type of circulator
pumps used in many buildings but do not pay operating costs. Also,
contractors install a large share of circulator pumps in replacement
situations, and they can exert a high degree of influence over the type
of circulator pump purchased. Furthermore, emergency replacements of
essential equipment such as a circulator pump in the heating season are
strongly biased toward like-for-like replacement (i.e., replacing the
non-functioning equipment with a similar or identical product). Time is
a constraining factor during emergency replacements, and consumers may
not consider the full range of available options on the market, despite
their availability. The consideration of alternative equipment options
is far more likely for planned replacements and installations in new
construction.
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\48\ Ward, D.O., Clark, C.D., Jensen, K.L., Yen, S.T., &
Russell, C.S. (2011): ``Factors influencing willingness-to pay for
the ENERGY STAR[supreg] label,'' Energy Policy, 39 (3), 1450-1458
(Available at: www.sciencedirect.com/science/article/abs/pii/S0301421510009171) (Last accessed March 14, 2024).
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There are market failures relevant to circulator pumps installed in
commercial applications as well. It is often assumed that because
commercial and industrial customers are businesses that have trained or
experienced individuals making decisions regarding investments in cost-
saving measures, some of the commonly observed market failures present
in the general population of residential customers should not be as
prevalent in a commercial setting. However, there are many
characteristics of organizational structure and historic circumstance
in commercial settings that can lead to underinvestment in energy
efficiency.
First, a recognized problem in commercial settings is the split
incentive problem, where the building owner (or building developer)
selects the equipment, and the tenant (or subsequent building owner)
pays for energy costs.49 50 There are other similarly
misaligned incentives embedded in the organizational structure within a
given firm or business that can impact the choice of a circulator pump.
For example, if one department or individual within an organization is
responsible for capital expenditures (and therefore equipment
selection) while a separate department or individual is responsible for
paying the energy bills, a market failure similar to the split-
incentive problem can result.\51\ Additionally, managers may have other
responsibilities and often have other incentives besides operating cost
minimization, such as satisfying shareholder expectations, which can
sometimes be focused on short-term returns.\52\ Decision-making related
to commercial buildings is highly complex and involves gathering
information from and for a variety of different market actors. It is
common to see conflicting goals across various actors within the same
organization, as well as information asymmetries between market actors
in the energy efficiency context in commercial building
construction.\53\
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\49\ Vernon, D., and Meier, A. (2012). ``Identification and
quantification of principal-agent problems affecting energy
efficiency investments and use decisions in the trucking industry,''
Energy Policy, 49, 266-273.
\50\ Blum, H. and Sathaye, J. (2010). ``Quantitative Analysis of
the Principal-Agent Problem in Commercial Buildings in the U.S.:
Focus on Central Space Heating and Cooling,'' Lawrence Berkeley
National Laboratory, LBNL-3557E (Available at: escholarship.org/uc/item/6p1525mg) (Last accessed March 14, 2024).
\51\ Prindle, B., Sathaye, J., Murtishaw, S., Crossley, D.,
Watt, G., Hughes, J., and de Visser, E. (2007). ``Quantifying the
effects of market failures in the end-use of energy,'' Final Draft
Report Prepared for International Energy Agency (Available from
International Energy Agency, Head of Publications Service, 9 rue de
la Federation, 75739 Paris, Cedex 15 France).
\52\ Bushee, B.J. (1998). ``The influence of institutional
investors on myopic R&D investment behavior,'' Accounting Review,
305-333. DeCanio, S.J. (1993). ``Barriers Within Firms to Energy
Efficient Investments,'' Energy Policy, 21(9), 906-914 (explaining
the connection between short-termism and underinvestment in energy
efficiency).
\53\ International Energy Agency (IEA). (2007). Mind the Gap:
Quantifying Principal-Agent Problems in Energy Efficiency. OECD Pub.
(Available at www.iea.org/reports/mind-the-gap) (Last accessed March
14, 2024).
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The arguments for the existence of market failures in the
commercial and industrial sectors are corroborated by empirical
evidence. One study in particular showed evidence of substantial gains
in energy efficiency that could have been achieved without negative
repercussions on profitability, but the investments had not been
undertaken by firms.\54\ The study found that multiple organizational
and institutional factors caused firms to require shorter payback
periods and higher returns than the cost of capital for alternative
investments of similar risk. Another study demonstrated similar results
with firms requiring very short payback periods of 1-2 years in order
to adopt energy-saving projects, implying hurdle rates of 50 to 100
percent, despite the potential economic benefits.\55\
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\54\ DeCanio, S.J. (1998). ``The Efficiency Paradox:
Bureaucratic and Organizational Barriers to Profitable Energy-Saving
Investments,'' Energy Policy, 26(5), 441-454.
\55\ Andersen, S.T., and Newell, R.G. (2004). ``Information
programs for technology adoption: the case of energy-efficiency
audits,'' Resource and Energy Economics, 26, 27-50.
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The existence of market failures in the residential and commercial
sectors is well supported by the economics literature and by a number
of case studies. If DOE developed an efficiency distribution that
assigned circulator pump efficiency in the no-new-standards case solely
according to energy use or economic considerations such as life-cycle
cost or payback period, the resulting distribution of efficiencies
within the building sample would not reflect any of the market failures
or behavioral factors above. Thus, DOE concludes such a distribution
would not be representative of the circulator pump market.
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 equipment, compared to baseline equipment, through energy
cost savings. Payback periods that exceed the life of
[[Page 44504]]
the equipment 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 equipment 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 an equipment complying
with an energy conservation standard level will be less than three
times the value of the first year's energy savings resulting from the
standard, as calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings by the average energy price
projection for the year in which compliance with the new standards
would be required.
G. Shipments Analysis
DOE uses projections of annual equipment shipments to calculate the
national impacts of potential new energy conservation standards on
energy use, NPV, and future manufacturer cash flows.\56\ The shipments
model takes an accounting approach, tracking market shares of each
equipment class and the vintage of units in the stock. Stock accounting
uses equipment shipments as inputs to estimate the age distribution of
in-service equipment stocks for all years. The age distribution of in-
service equipment stocks is a key input to calculations of both the NES
and NPV, because operating costs for any year depend on the age
distribution of the stock.
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\56\ 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.
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In the accounting approach, shipments are the result either of
demand for the replacement of existing equipment, or of demand for
equipment from new commercial and residential construction.
Replacements in any projection year are based on (a) shipments in prior
years, and (b) the lifetime of previously shipped equipment. Demand for
new equipment is based on the rate of increase in commercial floor
space (in the commercial sector), and residential housing (in the
residential sector). In each year of shipments projections, retiring
equipment is removed from a record of existing stock, and new shipments
are added. DOE accounts for demand lost to demolitions (i.e. loss of
circulator pumps that will not be replaced) by assuming that a small
fraction of stock is retired without being replaced in each year, based
on a derived demolition rate for each sector.
DOE collected confidential historical shipments data for the period
2013-2021 from manufacturer interviews held in 2016 (during the CPWG)
and 2022. Shipments data provided by manufacturers were broken down by
circulator variety, nominal horsepower rating, and efficiency. Table
IV.13 presents historical circulator pumps shipments. Note that due to
confidentiality concerns, DOE is only able to present aggregated
circulator pump shipments.
[GRAPHIC] [TIFF OMITTED] TR20MY24.034
1. No-New-Standards Case Shipments Projections
The no-new-standards case shipments projections are an estimate of
how much of each equipment type would be shipped in the absence of any
new standard. DOE projected shipments in the no-new-standards case by
circulator pump variety (CP1, CP2, and CP3) as well as sector
(residential and commercial) and application (hydronic heating and hot
water recirculation).
In the no-new-standards case, DOE assumes that demand for new
installations would be met by CP1 circulator pumps alone. New demand is
based on AEO 2023 projections of commercial floorspace and new
construction (for demand to the commercial sector), and projections of
residential housing stock and starts (for demand to the residential
sector).
HI commented that DOE should consider the impact of legislation and
increased demand of heat pumps and their impact on circulator pump
shipments. (HI, No.135 at p. 5) While DOE is not able to explicitly
estimate the effect of recent legislation incentivizing heat pump
adoption, DOE assumes that over time, a decreasing amount of demand for
equipment in the hydronic heating application is met by circulator
pumps. For each year in the shipments projection period (2022-2057),
DOE estimates a 6 percent year-over-year reduction of new demand
penetration for circulator pumps in the hydronic heating application.
This estimate is based on a trendline fit from available Census data on
new heating systems.\57\ See Chapter 9 of the final rule TSD for more
details on this analysis.
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\57\ Type of Heating System Used in New Single-Family Houses
Completed. Available at www.census.gov/construction/chars/xls/heatsystem_cust.xls (Last accessed August 20, 2023).
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DOE assumed that demand for replacements would be met by circulator
pumps of the same variety (e.g., CP2 only replaced by CP2) in each
[[Page 44505]]
sector and application, according to manufacturer feedback.\58\ After
calculating retirements of existing pumps based on those previously
shipped and equipment lifetimes, DOE assumes that some of this quantity
will not be replaced due to demolition. DOE estimates the demolition
rate of existing equipment stock by using the AEO 2023 projections of
new commercial floorspace and floorspace growth in the commercial
sector, and new housing starts and housing stock in the residential
sector.
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\58\ According to manufacturer feedback, circulator pumps are
typically replaced by the same model if available when they fail.
Contractors and technicians are more likely to replace a like-for-
like circulator pump in order to match installation configurations
and that the replacement pump meets the performance criteria of the
replaced one.
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2. Standards-Case Shipment Projections
The standards-case shipments projections account for the effects of
potential standards on shipments. DOE assumed a ``roll-up'' scenario to
estimate standards-case shipments, wherein the no-new-standards-case
shipments that would be below the minimum qualifying efficiency level
prescribed by a standard beginning in the assumed compliance year
(2028) are ``rolled up'' (i.e., added to) to the minimum qualifying
equipment efficiency level at that standard level.
HI did not provide any further suggestions beyond the approach
proposed by DOE. (HI, No.135 at p. 5). See chapter 9 of the final rule
TSD for details on the shipments analysis.
H. National Impact Analysis
The NIA assesses the national energy savings (``NES'') and the NPV
from a national perspective of total consumer costs and savings that
would be expected to result from new standards at specific efficiency
levels.\59\ (``Consumer'' in this context refers to purchasers of the
equipment being regulated.) DOE calculates the NES and NPV for the
potential standard levels considered based on projections of annual
equipment shipments, along with the annual energy consumption and total
installed cost data from the energy use and LCC analyses. For the
present analysis, DOE projected the energy savings, operating cost
savings, equipment costs, and NPV of consumer benefits over the
lifetime of circulator pumps sold from 2028 through 2057.
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\59\ The NIA accounts for impacts in the 50 states and U.S.
territories.
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DOE evaluates the impacts of new standards by comparing a case
without such standards with standards-case projections. The no-new-
standards case characterizes energy use and consumer costs for each
equipment class in the absence of new energy conservation standards.
For this projection, DOE considers historical trends in efficiency and
various forces that are likely to affect the mix of efficiencies over
time. DOE compares the no-new-standards case with projections
characterizing the market for each equipment class if DOE adopted new
standards at specific energy efficiency levels (i.e., the TSLs or
standards cases) for that class. For the standards cases, DOE considers
how a given standard would likely affect the market shares of equipment
with efficiencies greater than the standard.
DOE provides a spreadsheet model to calculate the energy savings
and the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV.14 summarizes the inputs and methods DOE used for the NIA
analysis for the final rule. Discussion of these inputs and methods
follows the table. See chapter 10 of the final rule TSD for further
details.
[GRAPHIC] [TIFF OMITTED] TR20MY24.035
1. Equipment Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.F.8 of this document describes how DOE developed an
energy efficiency distribution for the no-new-standards case (which
yields a shipment-weighted average efficiency) for each of the
considered equipment classes for the year of anticipated compliance
with an new standard. To project the trend in efficiency absent new
standards for circulator pumps over the entire shipments projection
period, DOE followed the approach discussed in section IV.F.8 of this
document. The approach is further described in chapter 8 of the final
rule TSD.
For the standards cases, DOE used a ``roll-up'' scenario to
establish the shipment-weighted efficiency for the year that standards
are assumed to
[[Page 44506]]
become effective (2028). In this scenario, the market shares of
equipment in the no-new-standards case that do not meet the standard
under consideration would ``roll up'' to meet the new standard level,
and the market share of equipment above the standard would remain
unchanged.
The CA IOUs commented that they expect accelerated adoption of
circulator pumps with variable speed controls following a standard at
TSL 2 and strongly encouraged DOE to collaborate with stakeholders
monitoring these trends to better inform the LCC and NIA analyses and
associated savings from EL 3 and EL 4 circulator pumps. (CA IOUs,
No.133 at p. 4) In response, DOE notes that based on manufacturer-
provided data, DOE estimates an efficiency trend from baseline (EL 0)
or EL 1 circulator pumps to ELs 2 through 4 in the absence of standards
(see section F.8 of this document and chapter 8 of the final rule TSD
for details). In the standards case, while it is possible that a higher
percentage of purchasers and applications may shift to circulator pumps
with variable speed control (i.e., ELs 3 and 4), DOE does not have the
data (e.g., historical price and efficiency data) to estimate that
trend, therefore, consistent with the NOPR analysis, it assumes a roll-
up scenario in this final rule.
2. National Energy Savings
The national energy savings analysis involves a comparison of
national energy consumption of the considered equipment between each
potential standards case (``TSL'') and the case with no new energy
conservation standards. DOE calculated the national energy consumption
by multiplying the number of units (stock) of each equipment (by
vintage or age) by the unit energy consumption (also by vintage). DOE
calculated annual NES based on the difference in national energy
consumption for the no-new-standards case and for each higher
efficiency standard case. DOE estimated energy consumption and savings
based on site energy and converted the electricity consumption and
savings to primary energy (i.e., the energy consumed by power plants to
generate site electricity) using annual conversion factors derived from
AEO2023. Cumulative energy savings are the sum of the NES for each year
over the timeframe of the analysis.
Use of higher-efficiency equipment is sometimes associated with a
direct rebound effect, which refers to an increase in utilization of
the equipment due to the increase in efficiency. DOE did not find any
data on the rebound effect specific to circulator pumps \60\ and
requested comment on its assumption of 0 rebound effect in the NOPR
issued in 2021. DOE requested a comment specifically for circulator
pumps, including the magnitude of any rebound effect and data sources
specific to circulator pumps. In response, HI commented that it agrees
with DOE's assumed negligible rebound effect. (HI, No.135 at p. 5)
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\60\ DOE acknowledges that studies have found a rebound effect
in residential heating situations. However, none of these studies
address circulator pumps in particular. DOE does not expect that
consumers would increase utilization of their heating system due to
increased efficiency of a small component of the system.
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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 \61\
that EIA uses to prepare its Annual Energy Outlook. The FFC factors
incorporate losses in production and delivery in the case of natural
gas (including fugitive emissions) and additional energy used to
produce and deliver the various fuels used by power plants. The
approach used for deriving FFC measures of energy use and emissions is
described in appendix 10B of the final rule TSD.
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\61\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009.
Available at www.eia.gov/forecasts/aeo/index.cfm (last accessed
October 5, 2023).
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3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by purchasers 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 equipment shipped during the projection period.
Due to lack of historical price data and uncertainty on the factors
that may affect future circulator pump prices, DOE assumed a constant
price (in $2022) when estimating circulator pump prices in future
years. However, as discussed in section IV.F.1 of this document, DOE
developed a sensitivity analysis to account for the effect of potential
future price declines of electronic components in circulator pumps with
ECMs. See appendix 10C of the final rule TSD for the results of this
sensitivity analysis.
The operating cost savings are energy cost savings and costs
associated with repair and maintenance, which are calculated using the
estimated operating cost savings in each year and the projected price
of the appropriate form of energy. 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 residential energy
price changes in the Reference case from AEO2023, which has an end year
of 2050. To estimate price trends after 2050, the 2050 price was used
for all years. As part of the NIA, DOE also analyzed scenarios that
used inputs from variants of the AEO2023 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 appendix10C of the final rule TSD.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
final rule, DOE estimated the NPV of consumer benefits using both a 3-
percent and a 7-percent real discount rate. DOE uses these discount
rates in accordance with guidance provided by the Office of Management
and Budget (``OMB'') to Federal agencies on the development of
regulatory analysis.\62\ The discount rates for the determination of
NPV are in contrast to the discount rates used in the
[[Page 44507]]
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.
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\62\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at
https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf.
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I. Consumer Subgroup Analysis
In analyzing the potential impact of new energy conservation
standards on purchasers, DOE evaluates the impact on identifiable
subgroups of purchasers that may be disproportionately affected by a
new 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 purchasers by analyzing the LCC
impacts and PBP for those particular purchasers from alternative
standard levels. For this final rule, due to the high fraction of
consumers utilizing circulator pumps in the residential sector, DOE
analyzed the impacts of the considered standard levels on one subgroup:
i.e., senior-only households. The analysis used subsets of the RECS
2015 sample composed of households that meet the criteria for the
considered subgroups. DOE used the LCC and PBP spreadsheet model to
estimate the impacts of the considered efficiency levels on these
subgroups. Chapter 11 in the final rule TSD describes the consumer
subgroup analysis.
In the December 2022 NOPR, NYSERDA commented that DOE should
consider including high-rise multifamily buildings in the subgroup
analysis for subsequent rulemakings because they are likely to
experience higher operating hours, especially for the HWR application.
(NYSERDA, No.130 at p. 4)
DOE notes the primary purpose of a subgroup analysis is to
investigate whether a subsection of purchasers would be negatively
impacted by standards. If high-rise multifamily buildings are expected
to experience higher operating hours than the general purchaser
population, then they will incur larger and more positive benefits from
standards, rendering a subgroup analysis of these purchasers
unnecessary.
J. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate the financial impacts of new
energy conservation standards on manufacturers of circulator pumps 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 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, equipment
shipments, manufacturer markups, and investments in R&D and
manufacturing capital required to produce compliant equipment. 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 on domestic manufacturing
employment. The model uses standard accounting principles to estimate
the impacts of more-stringent energy conservation standards on a given
industry by comparing changes in INPV and domestic manufacturing
employment between a no-new-standards case and the various standards
cases (i.e., TSLs). To capture the uncertainty relating to manufacturer
pricing strategies following new standards, the GRIM estimates a range
of possible impacts under different manufacturer 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 final rule TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE prepared a profile of the circulator pump
manufacturing industry based on the market and technology assessment,
preliminary manufacturer interviews, and publicly available
information. This included a top-down analysis of circulator pump
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 circulator pump
manufacturing industry, including company filings of form 10-K from the
SEC,\63\ corporate annual reports, the U.S. Census Bureau's ``Economic
Census,'' \64\ and reports from D&B Hoovers.\65\
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\63\ www.sec.gov/edgar.
\64\ www.census.gov/programs-surveys/asm/data/tables.html.
\65\ 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 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
standards. These factors include annual expected revenues, costs of
sales, SG&A and R&D expenses, taxes, and capital expenditures. In
general, energy conservation standards can affect manufacturer cash
flow in three distinct ways: (1) creating a need for increased
investment, (2) raising production costs per unit, and (3) altering
revenue due to higher per-unit prices and changes in sales volumes.
In addition, during Phase 2, DOE developed interview guides to
distribute to manufacturers of circulator pumps 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. As part of Phase 3, DOE also evaluated subgroups of
manufacturers that may be disproportionately impacted by new standards
or that may not be accurately represented by the average cost
assumptions used to develop the
[[Page 44508]]
industry cash-flow analysis. Such manufacturer subgroups may include
small business manufacturers, low-volume manufacturers, niche players,
and/or manufacturers exhibiting a cost structure that largely differs
from the industry average. DOE identified one subgroup for a separate
impact analysis: small business manufacturers. The small business
subgroup is discussed in section VI.B, ``Review under the Regulatory
Flexibility Act'' and in chapter 12 of the final rule TSD.
2. Government Regulatory Impact Model and Key Inputs
DOE uses the GRIM to quantify the changes in cash flow due to new
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 model changes in costs, distribution of
shipments, investments, and manufacturer margins that could result from
new energy conservation standards. The GRIM spreadsheet uses the inputs
to arrive at a series of annual cash flows, beginning in 2024 (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 circulator pumps, DOE used a real discount rate of
9.6 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 new energy
conservation standards on manufacturers. As discussed previously, DOE
developed critical GRIM inputs using a number of sources, including
publicly available data, results of the engineering analysis,
information gathered from industry stakeholders during the course of
manufacturer interviews, and subsequent Working Group meetings. 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 final rule 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 equipment can affect the revenues,
gross margins, and cash flow of the industry. MPCs were derived in the
engineering analysis using methods discussed in section IV.C.3 of this
document.
For a complete description of the MPCs, see chapter 5 of the final
rule 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 2024 (the base year) to 2057 (the end year of
the analysis period). See chapter 9 of the final rule TSD for
additional details.
c. Product and Capital Conversion Costs
New energy conservation standards could cause manufacturers to
incur conversion costs to bring their production facilities and
equipment designs into compliance. DOE evaluated the level of
conversion-related expenditures that would be needed to comply with
each considered efficiency level in each equipment 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 equipment
designs comply with new 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 equipment designs can be fabricated and assembled.
To evaluate the level of product conversion costs manufacturers
would likely incur to comply with new energy conservation standards,
DOE estimated the number of basic models that manufacturers would have
to re-design to move their equipment lines to each incremental
efficiency level. DOE developed the product conversion costs by
estimating the amount of labor per basic model manufacturers would need
for research and development to raise the efficiency of models to each
incremental efficiency level. DOE anticipates that manufacturer basic
model counts would decrease with use of ECMs due to the greater range
of applications served by one ECM as opposed to an induction motor. DOE
also assumed manufacturers would incur testing costs to establish
certified ratings using DOE's test procedure for circulator pumps and
applying DOE's statistical sampling plans to assess compliance.
For circulator pumps, DOE estimated that the re-design effort
varies by efficiency level. At EL 1, DOE anticipates a minor redesign
effort as manufacturers increase their breadth of offerings to meet
standards at this level. DOE estimated a redesign effort of 18 months
of engineering labor and 9 months of technician labor per model at this
level. At EL 2, DOE anticipates manufacturers to integrate ECMs into
their circulator pumps. This requires a significant amount of re-design
as manufacturers transition from legacy AC induction motors to ECMs.
DOE estimated a redesign effort of 35 months of engineering labor and
18 months of technician labor per model. At EL 3 and EL 4, DOE
anticipates manufacturers to incur additional control board redesign
costs as manufacturers add controls (e.g., proportional pressure
controls). DOE estimated a redesign effort of 54 months of engineering
labor and 35 months of technician labor per model at EL 3. DOE
estimated a redesign effort of 54 months of engineering labor and 54
months of technician labor per model at EL 4.
To evaluate the level of capital conversion costs manufacturers
would likely incur to comply with new energy conservation standards,
DOE used information derived from the engineering analysis, shipments
analysis, and manufacturer interviews. DOE used the information to
estimate the additional investments in property, plant, and equipment
that are necessary to meet energy conservation standards. In the
engineering analysis evaluation of higher efficiency equipment from
leading manufacturers of circulator pumps, DOE found a range of designs
and manufacturing approaches. DOE attempted to account for both the
range of manufacturing pathways and the current efficiency distribution
of shipments in the modeling of industry capital conversion costs.
For all circulator pump varieties, DOE estimates that capital
conversion costs are driven by the cost for industry to expand
production capacity at efficiency levels requiring use of an ECM (i.e.,
EL 2, EL 3, and EL 4). DOE anticipates capital investments to be
similar among EL 2 through EL 4 as circulator pump controls are likely
to be used to increase a circulator pump
[[Page 44509]]
beyond EL 2, and pump controls do not require additional capital
investments. At all ELs, DOE anticipates manufacturers will incur costs
to expand production capacity of more efficient equipment.
For CP1 type circulator pumps, DOE anticipates manufacturers would
choose to assemble ECMs in-house. As such, the capital conversion cost
estimates for CP1-type circulator pumps include, but were not limited
to, capital investments in welding and bobbin tooling, magnetizers,
winders, lamination dies, testing equipment, and additional
manufacturing floor-space requirements.
For CP2 and CP3 type circulator pumps, DOE anticipates
manufacturers would purchase ECMs as opposed to assembling in-house. As
such, DOE estimated that the design changes to produce circulator pumps
with ECMs would be driven by purchased parts (i.e., ECMs). The capital
conversion costs for these variety of circulator pumps are based on
additional manufacturing floor space requirements to expand
manufacturing capacity of ECMs.
During the NOPR public meeting, Taco requested that DOE provide an
estimate on the number of models that are assumed to be redesigned for
each EL. (Taco, Inc., Public Meeting Transcript, No. 129 at pp. 69-70)
Table IV.15 displays the number of circulator pump models that would be
redesigned and introduced into the market at each efficiency level.
[GRAPHIC] [TIFF OMITTED] TR20MY24.036
HI and Xylem commented on the December 2022 NOPR that the
investments DOE estimated in the December 2022 NOPR required to comply
with standards set at TSL 2, TSL 3, and TSL 4, would be substantial
investments given the size of and total free cash flow available to
most circulator pump manufacturers. (HI, No. 135 at pp. 3-5; Xylem, No.
136 at p. 4) HI and Xylem continued by stating that requiring
manufacturers to make these investments in a 2-year compliance period
and the current market's supply chain issues increases the conversion
cost impacts on the manufacturers. (Id.) Additionally, HI and Xylem
commented that considering lead times for materials and components, it
is not possible to invest the amount required to comply with TSL 2
efficiently within the 2-year compliance period.\66\ (Id.) HI and Xylem
recommended that DOE have a 4-year compliance period, which was the
compliance period agreed to by the CPWG. (Id.) As discussed in section
III.H of this document, DOE is establishing a 4-year compliance date
for energy conservation standards for circulator pumps. DOE interprets
HI's comment regarding conversion cost impact to manufacturers' will be
mitigated if a 4-year compliance date is adopted.
---------------------------------------------------------------------------
\66\ In the December 2022 NOPR (Table IV.13) DOE estimated that
manufacturers will have to invest $54.7 million in product
conversion costs and an additional $22.3 million in capital
conversion cost ($77.0 million total). 87 FR 74850, 74886.
---------------------------------------------------------------------------
HI and Xylem also commented that it would be difficult for
companies to introduce a circulator pump into the market that has a CEI
right at 1.0 and have it be competitive in the market. (HI, No. 135 at
pp. 3-5; Xylem, No. 136 at p. 4) Therefore, HI and Xylem state that the
DOE NOPR analysis of TSL 2, which only looks at the costs associated
with making circulator pumps that are minimally compliant with TSL 2
(i.e., comply with standards set at TSL 2 but would not meet efficiency
levels associated with TSL 3) is not accurate. (Id.) HI and Xylem
stated that the market realities are that new circulators need to be
designed to successfully compete in the market as well, which will
require an investment much closer to the impacts (cost & time) which
DOE has associated with TSL 3. (Id.) As described in section IV.G.2 of
this document, the shipments analysis models a ``roll-up'' scenario to
estimate standards-case shipments. In this scenario, the shipments in
the no-new-standards-case that would be below the minimum qualifying
efficiency level prescribed by standards are ``rolled up'' (i.e., added
to) to the minimum qualifying equipment efficiency level at that
standard level. DOE disagrees that there would not be a market for
minimally qualifying circulator pumps at any of the analyzed TSLs. As
displayed in Table IV.4 through Table IV.7, MPCs increase at higher
efficiency levels, which results in more expensive end-user prices at
higher efficiency levels. DOE estimates that approximately 70 percent
of circulator pump shipments currently sold into the U.S. market are at
baseline or EL 1 (which are the least expensive circulator pumps on the
market). HI additionally stated that while small incremental growth is
occurring for ECMs (circulator pumps with ECMs typically are at EL 2,
EL 3, or EL 4) first cost is a barrier for customers. (HI, No. 112 at
pp. 9-10) DOE agrees that the initial purchase price prevents some
customers from purchasing more efficient and expensive circulator
pumps. Therefore, DOE modeled a shipment scenario that has customers
continuing to purchase the minimally complaint circulator pumps (which
would also be the least expensive circulator pumps) after compliance
with each analyzed energy conservation standard.
HI and Xylem also commented that capital investment will increase
going from EL 2 to EL 4. (Id.) HI commented that EL 3 and EL 4
circulator pumps are more complex equipment that will require
additional investment in programing and testing infrastructure, and
additional manufacturing tooling for EL 4 beyond what is required at EL
3 to simulate the external input signals during manufacturing testing.
(Id.) DOE agrees that EL 3 and EL 4 will require additional programing
and testing and has included those additional costs in the product
conversion costs shown in Table IV.16 as these programing and testing
costs are non-capitalized costs and should be included in product
conversion costs and not capital conversion costs.\67\ Therefore, DOE
has included these additional investments required to comply with EL 3
and EL 4.
---------------------------------------------------------------------------
\67\ At EL 2 DOE estimates the product conversion costs will be
$56.4 million. This will increase to $91.5 million at EL 3 and
increase to $105.1 million at EL 4.
---------------------------------------------------------------------------
In general, DOE assumes all conversion-related investments occur
between the date of publication of this final rule and the year by
which manufacturers must comply with the new standards. The conversion
cost figures used in the GRIM can be found in Table IV.16 and in
section V.B.2.a of this document. For additional information on the
estimated capital
[[Page 44510]]
and product conversion costs, see chapter 12 of the final rule TSD.
[GRAPHIC] [TIFF OMITTED] TR20MY24.037
d. Manufacturer Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials, and overhead estimated in DOE's MPCs) and all non-production
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate
the MSPs in the GRIM, DOE applied non-production cost markups to the
MPCs estimated in the engineering analysis for each equipment 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 manufacturer markup scenarios to represent
uncertainty regarding the potential impacts on prices and profitability
for manufacturers following the implementation of new energy
conservation standards: (1) a preservation of gross margin scenario and
(2) a preservation of operating profit scenario. These scenarios lead
to different manufacturer markup values that, when applied to the MPCs,
result in varying revenue and cash flow impacts.
Under the preservation of gross margin 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 an equipment class. As MPCs increase with efficiency,
this scenario implies that the absolute dollar markup will increase.
This is the manufacturer markup scenario that is used in all consumer
analyses (e.g., LCC, NIA, etc.).
To estimate the average manufacturer markup used in the
preservation of gross margin scenario, DOE analyzed publicly available
financial information for manufacturers of circulator pumps. DOE then
requested feedback on its initial manufacturer markup estimates during
manufacturer interviews. Based on manufacturer interviews, DOE revised
the initial manufacturer markups that were used in December 2022 NOPR.
DOE did not receive any comments on the manufacturer markups presented
in the December 2022 NOPR. Therefore, DOE continues to use the same
manufacturer markups in this final rule analysis that were used in the
December 2022 NOPR. Table IV.17 presents the manufacturers markups used
in this final rule analysis for the no-new-standards case and the
preservation of gross margin scenario standards cases. These markups
capture all non-production costs, including SG&A expenses, R&D
expenses, interest expenses, and profit.
[GRAPHIC] [TIFF OMITTED] TR20MY24.038
Under the preservation of operating profit scenario, DOE modeled a
situation in which manufacturers are not able to increase per-unit
operating profit in proportion to increases in MPCs. In this scenario,
manufacturer markups are set so that operating profit one year after
the compliance date of energy conservation standards is the same as in
the no-new-standards case on a per-unit basis. In other words,
manufacturers are not able to garner additional operating profit from
the higher MPCs and the investments that are required to comply with
the energy conservation standards. However, manufacturers are able to
maintain the same per-unit operating profit in the standards case that
was earned in the no-new-standards case. Therefore, operating margin in
percentage terms is reduced between the no-new-standards case and
standards case.
A comparison of industry financial impacts under the two
manufacturer markup scenarios is presented in section V.B.2.a of this
document.
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 in 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 intended to
represent the marginal impacts of the change in electricity consumption
associated with 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 final rule 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).\68\
---------------------------------------------------------------------------
\68\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed September 29,
2023).
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[[Page 44511]]
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 final rule 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 reflects, to the extent
possible, laws and regulations adopted through mid-November 2022,
including the emissions control programs discussed in the following
paragraphs the emissions control programs discussed in the following
paragraphs, and the Inflation Reduction Act.\69\
---------------------------------------------------------------------------
\69\ 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 September 29, 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.\70\ The AEO
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, for states subject to SO2
emissions limits under CSAPR, 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.
---------------------------------------------------------------------------
\70\ 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), and EPA issued the CSAPR Update for the 2008
ozone NAAQS. 81 FR 74504 (Oct. 26, 2016).
---------------------------------------------------------------------------
However, beginning in 2016, SO2 emissions began to fall
as a result of the Mercury and Air Toxics Standards (``MATS'') for
power plants.\71\ 77 FR 9304 (Feb. 16, 2012). The final rule
establishes power plant emission standards for mercury, acid gases, and
non-mercury metallic toxic pollutants. 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 will generally reduce
SO2 emissions. DOE estimated SO2 emissions
reduction using emissions factors based on AEO2023.
---------------------------------------------------------------------------
\71\ 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.
---------------------------------------------------------------------------
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. Depending on the configuration of the power sector in the
different regions and the need for allowances, however, NOX
emissions might not remain at the limit in the case of lower
electricity demand. That would mean that 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. 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 final 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 equipment 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 final rule.
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
[[Page 44512]]
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 (``February 2021 SC-GHG TSD''). The SC-GHG 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, the SC-GHG 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-GHG therefore, reflects the societal value of reducing emissions
of the gas in question by one metric ton. The SC-GHG 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 agreed that the
interim SC-GHG estimates represent the most appropriate estimate of the
SC-GHG until revised estimates are developed reflecting the latest,
peer-reviewed science. See 87 FR 78382, 78406-78408 for discussion of
the development and details of the IWG SC-GHG estimates.
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.\72\ 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 SC-GHG TSD, the IWG has recommended
that, taken together, the limitations suggest that the interim SC-GHG
estimates used in this final rule likely underestimate the damages from
GHG emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------
\72\ Interagency Working Group on Social Cost of Greenhouse
Gases. 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/.
---------------------------------------------------------------------------
Earthjustice et al. commented that DOE appropriately applies the
social cost estimates developed by the IWG to its analysis of climate
benefits. They stated that these values are widely agreed to
underestimate the full social costs of greenhouse gas emissions, but
for now they remain appropriate to use as conservative estimates.
(Earthjustice et al., No. 132-1 at p. 1)
DOE agrees that the interim SC-GHG values applied for this final
rule are conservative estimates. In the February 2021 SC-GHG TSD, the
IWG stated that the models used to produce the interim estimates do not
include all of the important physical, ecological, and economic impacts
of climate change recognized in the climate change literature. For
these same impacts, the science underlying their ``damage functions''
lags behind the most recent research. In the judgment of the IWG, these
and other limitations suggest that the range of four interim SC-GHG
estimates presented in the TSD likely underestimate societal damages
from GHG emissions. The IWG is in the process of assessing how best to
incorporate the latest peer-reviewed science and the recommendations of
the National Academies to develop an updated set of SC-GHG estimates,
and DOE remains engaged in that process.
Earthjustice et al. suggested that DOE should state that criticisms
of the social cost of greenhouse gases are moot in this rulemaking
because the proposed rule is justified without them. (Earthjustice et
al., No. 132-1 at p.2) DOE agrees that the proposed rule is
economically justified without including climate benefits associated
with reduced GHG emissions.
Earthjustice et al. commented that DOE should consider applying
sensitivity analysis using EPA's draft climate-damage estimates
released in November 2022, as EPA's work faithfully implements the
roadmap laid out in 2017 by the National Academies of Sciences and
applies recent advances in the science and economics on the costs of
climate change. (Earthjustice et al., No. 132-1 at pp. 2-3)
DOE is aware that in December 2023, EPA issued a new set of SC-GHG
estimates in connection with a final rulemaking under the Clean Air
Act.\73\ As DOE had used the IWG interim values in proposing this rule
and is currently reviewing the updated 2023 SC-GHG values, for this
final rule, DOE used these updated 2023 SC-GHG values to conduct a
sensitivity analysis of the value of GHG emissions reductions. DOE
notes that because EPA's estimates are considerably higher than the
IWG's interim SC-GHG values applied for this final rule, an analysis
that uses the EPA's estimates results in significantly greater climate-
related benefits. However, such results would not affect DOE's decision
in this final rule. As stated elsewhere in this document, DOE would
reach the same conclusion regarding the economic justification of the
standards presented in this final rule without considering the IWG's
interim SC-GHG values, which DOE agrees are conservative estimates. For
the same reason, if DOE were to use EPA's higher SC-GHG estimates, they
would not change DOE's conclusion that the standards are economically
justified.
---------------------------------------------------------------------------
\73\ See www.epa.gov/environmental-economics/scghg.
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DOE's derivations of the SC-CO2, SC-N2O, and
SC-CH4 values used for this final rule 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.
[[Page 44513]]
a. Social Cost of Carbon
The SC-CO2 values used for this final rule were based on
the values developed for the February 2021 SC-GHG TSD, which are shown
in Table IV.18 in five-year increments from 2020 to 2050. The set of
annual values that DOE used, which was adapted from estimates published
by EPA,\74\ is presented in Appendix 14A of the final rule TSD. These
estimates are based on methods, assumptions, and parameters identical
to the estimates published by the IWG (which were based on EPA
modeling), and include values for 2051 to 2070. DOE expects additional
climate benefits to accrue for equipment still operating 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.
---------------------------------------------------------------------------
\74\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC, December 2021. Available at nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1013ORN.pdf (last accessed October 2, 2023).
[GRAPHIC] [TIFF OMITTED] TR20MY24.039
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
final rule were based on the values developed for the February 2021 SC-
GHG TSD. Table IV.19 shows the updated sets of SC-CH4 and
SC-N2O estimates from the latest interagency update in 5-
year increments from 2020 to 2050. The full set of annual values used
is presented in appendix 14A of the final rule 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.
[GRAPHIC] [TIFF OMITTED] TR20MY24.040
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.
c. Sensitivity Analysis Using Updated SC-GHG Estimates
In December 2023, EPA issued an updated set of SC-GHG estimates
(2023
[[Page 44514]]
SC-GHG) in connection with a final rulemaking under the Clean Air
Act.\75\ These estimates incorporate recent research and address
recommendations of the National Academies (2017) and comments from a
2023 external peer review of the accompanying technical report. For
this rulemaking, DOE used these updated 2023 SC-GHG values to conduct a
sensitivity analysis of the value of GHG emissions reductions
associated with alternative standards for circulator pumps. This
sensitivity analysis provides an expanded range of potential climate
benefits associated with amended standards. The final year of EPA's new
2023 SC-GHG estimates is 2080; therefore, DOE did not monetize the
climate benefits of GHG emissions reductions occurring after 2080.
---------------------------------------------------------------------------
\75\ See www.epa.gov/environmental-economics/scghg.
---------------------------------------------------------------------------
The overall climate benefits are greater when using the higher,
updated 2023 SC-GHG estimates, compared to the climate benefits using
the older IWG SC-GHG estimates. The results of the sensitivity analysis
are presented in appendix 14C of the final rule TSD.
2. Monetization of Other Emissions Impacts
For the final rule, DOE estimated the monetized value of
NOX and SO2 emissions reductions from electricity
generation using benefit-per-ton estimates for that sector from the
EPA's Benefits Mapping and Analysis Program.\76\ 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 and 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
regional benefit-per-ton estimates with regional information on
electricity consumption and emissions from AEO2023 to define weighted-
average national values for NOX and SO2 (see
appendix 14B of the final rule TSD).
---------------------------------------------------------------------------
\76\ U.S. Environmental Protection Agency. Estimating the
Benefit per Ton of Reducing Directly-Emitted PM2.5,
PM2.5 Precursors and Ozone Precursors from 21 Sectors.
www.epa.gov/benmap/estimating-benefit-ton-reducing-directly-emitted-pm25-pm25-precursors-and-ozone-precursors.
---------------------------------------------------------------------------
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
final rule TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of potential new
energy conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a standard. Employment impacts from new energy
conservation standards include both direct and indirect impacts. Direct
employment impacts are any changes in the number of employees of
manufacturers of the equipment 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 equipment. 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 purchasers on energy, (2)
reduced spending on new energy supply by the utility industry, (3)
increased consumer spending on the equipment 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.\77\ 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.
---------------------------------------------------------------------------
\77\ 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 apps.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf (last accessed October 02, 2023).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
levels considered in this final rule using an input/output model of the
U.S. economy called Impact of Sector Energy Technologies version 4
(``ImSET'').\78\ 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.
---------------------------------------------------------------------------
\78\ 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's 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
[[Page 44515]]
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 final rule TSD.
V. Analytical Results and Conclusions
The following section addresses the results from DOE's analyses
with respect to the considered energy conservation standards for
circulator pumps. It addresses the TSLs examined by DOE, the projected
impacts of each of these levels if adopted as energy conservation
standards for circulator pumps, and the standards level that DOE is
adopting in this final rule. Additional details regarding DOE's
analyses are contained in the final rule TSD supporting this document.
A. Trial Standard Levels
In general, DOE typically evaluates potential new standards for
equipment by grouping individual efficiency levels for each class into
TSLs. Use of TSLs allows DOE to identify and consider manufacturer cost
interactions between the equipment classes, to the extent that there
are such interactions, and price elasticity of consumer purchasing
decisions that may change when different standard levels are set.
In the analysis conducted for this final rule, DOE analyzed the
benefits and burdens of four TSLs for circulator pumps. As discussed
previously, because there is only one equipment class for circulator
pumps, DOE developed TSLs that align with their corresponding ELs
(i.e., TSL 1 corresponds to EL 1, etc.). DOE presents the results for
the TSLs in this document, while the results for all efficiency levels
that DOE analyzed are in the final rule TSD.
Table V.1 presents the TSLs and the corresponding efficiency levels
that DOE has identified for potential new energy conservation standards
for circulator pumps. TSL 4 represents the maximum technologically
feasible (``max-tech'') energy efficiency.
[GRAPHIC] [TIFF OMITTED] TR20MY24.041
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
DOE analyzed the economic impacts on circulator pump consumers by
looking at the effects that potential new 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 equipment affects 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., equipment 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 equipment lifetime and a discount rate. Chapter 8 of the final
rule TSD provides detailed information on the LCC and PBP analyses.
Table V.2 and Table V.3 show the LCC and PBP results for the TSLs
considered for each equipment class. In the first of each pair of
tables, the simple payback is measured relative to the baseline
equipment. In the second table, the impacts are measured relative to
the efficiency distribution in the in the no-new-standards case in the
compliance year (see section IV.F.8 of this document). Because some
consumers purchase equipment with higher efficiency in the no-new-
standards case, the average savings are less than the difference
between the average LCC of the baseline equipment 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 an equipment 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.
[GRAPHIC] [TIFF OMITTED] TR20MY24.042
[[Page 44516]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.043
b. Consumer Subgroup Analysis
In the consumer subgroup analysis, due to the high fraction of
circulator pumps used in the residential sector, DOE estimated the
impact of the considered TSLs on senior-only households. The analysis
used subsets of the RECS 2015 sample composed of households that meet
the criteria for seniors to generate a new sample of 75,000 senior
consumers. Table V.4 compares the average LCC savings and PBP at each
efficiency level for the consumer subgroups with similar metrics for
the entire consumer sample for circulator pumps. In most cases, the
average LCC savings and PBP for senior-only households at the
considered efficiency levels are not substantially different from the
average for all households. Chapter 11 of the final rule TSD presents
the complete LCC and PBP results for the considered subgroup.
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c. Rebuttable Presumption Payback
As discussed in section II.A of this document, EPCA establishes a
rebuttable presumption that an energy conservation standard is
economically justified if the increased purchase cost for an equipment
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 procedures for circulator pumps. In
contrast, the PBPs presented in section
[[Page 44517]]
V.B.1.a 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 circulator pumps. While DOE examined the
rebuttable-presumption criterion, it considered whether the standard
levels considered for this rule 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.\79\
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\79\ As shown in Table V.5, the rebuttable payback period for
the recommended standard level (3.0 years) comes very close to
satisfying the rebuttable presumption.
[GRAPHIC] [TIFF OMITTED] TR20MY24.045
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of new energy
conservation standards on manufacturers of circulator pumps. The next
section describes the expected impacts on manufacturers at each
considered TSL. Chapter 12 of the final rule 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 new energy
conservation standards. The following tables summarize the estimated
financial impacts (represented by changes in INPV) of potential new
energy conservation standards on manufacturers of circulator pumps, as
well as the conversion costs that DOE estimates manufacturers of
circulator pumps would incur at each TSL.
As discussed in section IV.J.2.d of this document, DOE modeled two
manufacturer markup scenarios to evaluate a range of cash flow impacts
on the circulator pump industry: (1) the preservation of gross margin
scenario and (2) the preservation of operating profit scenario. DOE
considered the preservation of gross margin scenario by applying a
``gross margin percentage'' for each equipment class across all
efficiency levels. As MPCs increase with efficiency, this scenario
implies that the absolute dollar markup will increase. Because this
scenario assumes that a manufacturer's absolute dollar markup would
increase as MPCs increase in the standards cases, it represents the
upper-bound to industry profitability under new energy conservation
standards.
The preservation of operating profit scenario reflects
manufacturers' concerns about their inability to maintain margins as
MPCs increase to meet higher efficiency levels. In this scenario, while
manufacturers make the necessary investments required to convert their
facilities to produce compliant equipment, operating profit remains the
same in absolute dollars, but decreases as a percentage of revenue.
Each of the modeled manufacturer markup scenarios results in a
unique set of cash-flows and corresponding industry values at each TSL.
In the following discussion, the INPV results refer to the difference
in industry value between the no-new-standards case and each standards
case resulting from the sum of discounted cash-flows from 2024 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 energy conservation standards are required.
DOE presents the range in INPV for circulator pump manufacturers in
Table V.6 and Table V.7. DOE presents the impacts to industry cash
flows and the conversion costs in Table V.8.
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[[Page 44518]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.047
[GRAPHIC] [TIFF OMITTED] TR20MY24.048
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At TSL 4, DOE estimates the change in INPV will range from -$118.1
million to $32.4 million, which represents a change in INPV of -34.0
percent to 9.3 percent, respectively. At TSL 4, industry free cash flow
decreases to -$20.8 million, which represents a decrease of
approximately 173.3 percent, compared to the no-new-standards case
value of $28.4 million in 2027, the year before the compliance year.
TSL 4 sets the efficiency level at EL 4, max-tech, for all
circulator pump varieties. DOE estimates that approximately 2 percent
of all circulator pump shipments will meet the ELs required at TSL 4 in
the no-new-standards case in 2028, the compliance year.
At TSL 4, DOE estimates manufacturers would incur $105.1 million in
product conversion costs and $24.7 million in capital conversion costs
to bring their equipment portfolios into compliance with standards set
at TSL 4. At TSL 4, product conversion costs are the key driver of the
decrease in free cash flow. These upfront investments result in a
significantly lower free cash flow in the year before the compliance
date.
At TSL 4, the shipment weighted-average MPC significantly increases
by approximately 65.3 percent relative to the no-new-standards case
MPC. In the preservation of gross margin scenario, this increase in MPC
causes an increase in manufacturer free cash flow, while the $129.9
million in conversion costs estimated at TSL 4 cause a decrease in
manufacturer free cash flow. Ultimately, these factors result in a
moderately positive change in INPV at TSL 4 under the preservation of
gross margin scenario.
Under the preservation of operating profit scenario, the
significant increase in the shipment weighted-average MPC results in a
lower average manufacturer markup. This lower average manufacturer
markup and the $129.9 million in conversion costs result in a
significantly negative change in INPV at TSL 4 under the preservation
of operating profit scenario.
At TSL 3, DOE estimates the change in INPV will range from -$100.1
million to $15.2 million, which represents a change in INPV of -28.8
percent to 4.4 percent, respectively. At TSL 3, industry free cash flow
decreases to -$14.6 million, which represents a decrease of
approximately 151.6 percent, compared to the no-new-standards case
value of $28.4 million in 2027, the year before the compliance year.
TSL 3 sets the efficiency level at EL 3 for all circulator pump
varieties. DOE estimates that approximately 20 percent of all
circulator pump shipments will meet or exceed the ELs required at TSL 3
in the no-new-standards case in 2028, the compliance year.
At TSL 3, DOE estimates manufacturers would incur $91.5 million in
product conversion costs and $24.7 million in capital conversion costs
to bring their equipment portfolios into compliance with standards set
at TSL 3. At TSL 3, product conversion costs continue to be a key
driver of the decrease in free cash flow. These upfront investments
result in a significantly lower free cash flow in the year before the
compliance date.
At TSL 3, the shipment weighted-average MPC significantly increases
by approximately 51.0 percent relative to the no-new-standards case
MPC. In the preservation of gross margin scenario, this increase in MPC
causes an increase in manufacturer free cash flow, while the $116.2
million in conversion costs estimated at TSL 3 cause a decrease in
manufacturer free cash flow. Ultimately, these factors result in a
slightly positive change in INPV at TSL 3 under the preservation of
gross margin scenario.
Under the preservation of operating profit scenario, the
significant increase in the shipment weighted-average MPC results in a
lower average manufacturer markup. This lower average manufacturer
markup and the $116.2 million in conversion costs result in a
significantly negative change in INPV at TSL 3 under the preservation
of operating profit scenario.
[[Page 44519]]
At TSL 2, DOE estimates the change in INPV will range from -$69.2
million to $11.1 million, which represents a change in INPV of -19.9
percent to 3.2 percent, respectively. At TSL 2, industry free cash flow
decreases to -$2.1 million, which represents a decrease of
approximately 107.3 percent, compared to the no-new-standards case
value of $28.4 million in 2027, the year before the compliance year.
TSL 2 sets the efficiency level at EL 2 for all circulator pump
varieties. DOE estimates that approximately 37 percent of all
circulator pump shipments will meet or exceed the ELs required at TSL 2
in the no-new-standards case in 2028, the compliance year.
At TSL 2, DOE estimates manufacturers would incur $56.4 million in
product conversion costs and $24.7 million in capital conversion costs
to bring their equipment portfolios into compliance with standards set
at TSL 2. At TSL 2, product conversion costs continue to be a key
driver of the decrease in free cash flow. These upfront investments
result in a lower free cash flow in the year before the compliance
date.
At TSL 2, the shipment weighted-average MPC moderately increases by
approximately 36.5 percent relative to the no-new-standards case MPC.
In the preservation of gross margin scenario, this increase in MPC
causes an increase in manufacturer free cash flow, while the $81.2
million in conversion costs estimated at TSL 2 cause a decrease in
manufacturer free cash flow. Ultimately, these factors result in a
slightly positive change in INPV at TSL 2 under the preservation of
gross margin scenario.
Under the preservation of operating profit scenario, the moderate
increase in the shipment weighted-average MPC results in a lower
average manufacturer markup. This lower average manufacturer markup and
the $81.2 million in conversion costs result in a moderately negative
change in INPV at TSL 2 under the preservation of operating profit
scenario.
At TSL 1, DOE estimates the change in INPV will be -$3.4 million,
which represents a change in INPV of -1.0 percent. At TSL 1, industry
free cash flow decreases to $26.5 million, which represents a decrease
of approximately 6.6 percent, compared to the no-new-standards case
value of $28.4 million in 2027, the year before the compliance year.
TSL 1 sets the efficiency level at EL 1 for all circulator pump
varieties. DOE estimates that approximately 69 percent of all
circulator pump shipments will meet or exceed the ELs required at TSL 1
in the no-new-standards case in 2028, the compliance year.
At TSL 1, DOE does not expect the increases in efficiency
requirements at this TSL to require any capital investments. DOE
anticipates that manufacturers would have to make slight investments in
R&D to re-design some of their equipment offering to meet standards set
at TSL 1. Overall, DOE estimates that manufacturers would incur $5.5
million in product conversion costs to bring their equipment portfolios
into compliance with standards set to TSL 1. At TSL 1, all
manufacturers have basic models that meet or exceed these efficiency
levels.
At TSL 1, the shipment-weighted average MPC for all circulator
pumps does not increase relative to the no-new-standards case shipment-
weighted average MPC in 2028. Since the shipment-weighted average MPC
does not increase at all at TSL 1 compared to the no-new-standards
case, manufacturers are not able to recover any additional revenue at
TSL 1, despite the conversion costs that they incur at TSL 1.
Therefore, the $5.5 million in conversion costs incurred by
manufacturers causes a slightly negative change in INPV at TSL 1 in
both manufacturer markup scenarios.
b. Direct Impacts on Employment
To quantitatively assess the potential impacts of new energy
conservation standards on direct employment in the circulator pump
industry, DOE used the GRIM to estimate the domestic labor expenditures
and number of direct employees in the no-new-standards case and in each
of the standards cases during the analysis period. This analysis
includes both production and non-production employees employed by
circulator pump manufacturers. DOE used statistical data from the U.S.
Census Bureau's 2021 Annual Survey of Manufacturers \80\ (``ASM''), the
results of the engineering analysis, and interviews with manufacturers
to determine the inputs necessary to calculate industry-wide labor
expenditures and domestic employment levels. Labor expenditures related
to manufacturing of the equipment are a function of the labor intensity
of the equipment, the sales volume, and an assumption that wages remain
fixed in real terms over time.
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\80\ U.S. Census Bureau, 2018-2021 Annual Survey of
Manufacturers: Statistics for Industry Groups and Industries (2021).
Available at www.census.gov/data/tables/time-series/econ/asm/2018-2021-asm.html.
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The total labor expenditures in the GRIM are converted to domestic
production worker employment levels by dividing production labor
expenditures by the average fully burdened wage per production worker.
DOE calculated the fully burdened wage by multiplying the industry
production worker hourly blended wage (provided by the ASM) by the
fully burdened wage ratio. The fully burdened wage ratio factors in
paid leave, supplemental pay, insurance, retirement and savings, and
legally required benefits. DOE determined the fully burdened ratio from
the Bureau of Labor Statistics' employee compensation data.\81\ The
estimates of production workers in this section cover workers,
including line supervisors who are directly involved in fabricating and
assembling the equipment within the manufacturing facility. Workers
performing services that are closely associated with production
operations, such as materials handling tasks using forklifts, are also
included as production labor.
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\81\ U.S. Bureau of Labor Statistics. Employer Costs for
Employee Compensation (June 2023). Available at www.bls.gov/news.release/archives/ecec_09122023.pdf.
---------------------------------------------------------------------------
Non-production worker employment levels were determined by
multiplying the industry ratio of production worker employment to non-
production employment against the estimated production worker
employment previously explained. Estimates of non-production workers in
this section cover above-the-line supervisors, sales, sales delivery,
installation, office functions, legal, and technical employees.
The total direct-employment impacts calculated in the GRIM are the
sum of the changes in the number of domestic production and non-
production workers resulting from energy conservation standards for
circulator pumps, as compared to the no-new-standards case. Typically,
more efficient equipment is more complex and labor intensive to
produce. Per-unit labor requirements and production time requirements
trend higher with more stringent energy conservation standards.
DOE estimates that approximately 65 percent of circulator pumps
sold in the United States are manufactured domestically. In the absence
of energy conservation standards, DOE estimates that there would be 173
domestic production workers in the circulator pump industry in 2028,
the compliance year.
DOE's analysis estimates that the circulator pump industry will
domestically employ 284 production and non-production workers in the
circulator pump industry in 2028 in the absence of energy conservation
standards. Table V.9 presents the range
[[Page 44520]]
of potential impacts of energy conservation standards on U.S.
production workers of circulator pumps.
[GRAPHIC] [TIFF OMITTED] TR20MY24.049
At the upper end of the range, all examined TSLs show an increase
(or no change) in the number of domestic workers for circulator pumps.
The upper end of the range represents a scenario where manufacturers
increase production and non-production hiring due to the increase in
labor associated with more efficient circulator pumps and the
additional engineers needed to redesign more efficient circulator
pumps. However, this assumes that in addition to hiring more production
and no-production employees, all existing domestic production and non-
production employees would remain in the United States and not shift to
other countries that currently produce circulator pumps that are sold
in the United States.
At the lower end of the range, all examined TSLs show a decrease
(or no change) in the number of domestic workers for circulator pumps.
Based on information gathered during manufacturer interviews, DOE
understands circulator pumps with ECMs are primarily manufactured
outside the United States. However, manufacturers stated that they
would likely expand their ECM production capacities in the United
States if standards were established at efficiency levels that would
likely require ECMs (i.e., TSL 2 or higher). The lower end of the range
represents a scenario where some manufacturers with existing production
facilities abroad move their circulator pump production for ELs that
will likely require an ECM to those production facilities abroad.
Therefore, DOE modeled a low-end employment range that assumes half of
existing domestic production would be relocated to foreign countries
due to the energy conservation standard at TSL 2 or higher.
HI stated that domestic employment is specific to each
manufacturer. To obtain this information DOE is encouraged to procure
these estimates under NDA with each manufacturer. (HI, No. 135 at p. 6)
DOE conducted manufacturer interviews with a variety of circulator pump
manufacturers prior to the December 2022 NOPR. DOE continues to use the
information gathered during those manufacturer interviews in this final
rule.
Wyer commented that U.S. manufacturing infrastructure cannot
support the level of production needed to satisfy the hydronics market
with ECM circulators. (Wyer, No. 128 at p. 2) Wyer stated that ECM
pumps with the performance curves necessary for the geothermal HVAC
industry are only manufactured in Europe, while the majority of PSC
pumps currently being used in the geothermal HVAC industry are made in
the United States. (Id.) Wyer commented that U.S.-based manufacturers
are more likely to shut down domestic facilities and continue importing
ECM circulators rather than invest to upgrade their plants to produce
ECM pumps. (Id.) Wyer recommended that DOE consider the impact of the
proposed rulemaking on domestic manufacturer employment and the
potential of plant closures. (Id.) Table V.9 displays the range of
potential impacts to domestic manufacturing. Specifically, the lower
end of the range represents a scenario where some manufacturers move
their circulator pump production for ELs that will likely require an
ECM to production facilities located abroad.
Due to variations in manufacturing labor practices, actual direct
employment could vary depending on manufacturers' preference for high
capital or high labor practices in response to standards. DOE notes
that the employment impacts discussed here are independent of the
indirect employment impacts to the broader U.S. economy, which are
documented in chapter 15 of the accompanying TSD.
c. Impacts on Manufacturing Capacity
During manufacturer interviews, industry feedback indicated that
manufacturers' current production capacity was strained due to upstream
supply chain constraints. Additionally, manufacturers expressed that
additional production lines would be required during the conversion
period if standards were set at a level requiring ECMs. However, many
manufacturers noted that their portfolios have expanded in recent years
to accommodate more circulator pumps using ECMs. Furthermore,
manufacturers indicated that a circulator pump utilizing an ECM could
support a wider range of applications compared to a circulator pump
utilizing an induction motor.
As part of the December 2022 NOPR, DOE requested comment on a
potential 2-year compliance period. HI and Xylem commented that
manufacturers will benefit from a 4-year compliance period to allow
time to engineer, develop, and test equipment to meet the standards.
Additionally, there could be manufacturing capacity concerns if DOE
required compliance within 2 years of
[[Page 44521]]
publication of a final rule. (HI, No. 135 at pp. 2-3; Xylem, No. 136 at
pp. 3-4) This topic is also discussed in more detail in section III.H
of this document. Given that DOE is requiring compliance with energy
conservation standards 4 years after publication of this final rule,
DOE does not anticipate any manufacturing capacity concerns.
d. Impacts on Subgroups of Manufacturers
As discussed in section IV.J 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 identified small business
manufacturers as a subgroup for a separate impact analysis.
For the small business subgroup analysis, DOE applied the small
business size standards published by the Small Business Administration
(``SBA'') to determine whether a company is considered a small
business. The size standards are codified at 13 CFR part 201. To be
categorized as a small business under the North American Industry
Classification System (``NAICS'') code 333914, ``Measuring, Dispensing,
and Other Pumping Equipment Manufacturing,'' a circulator pump
manufacturer and its affiliates may employ a maximum of 750 employees.
The 750-employee threshold includes all employees in a business's
parent company and any other subsidiaries. Based on this
classification, DOE identified three small businesses that manufacture
circulator pumps in the United States. DOE estimates one of the small
businesses does not manufacture any circulator pump models that would
meet the adopted standards. The other two small businesses both offer
circulator pumps that would meet the adopted standards. The first small
business is estimated to redesign 32 basic models at a cost of
approximately $50.1 million, which corresponds to approximately 7.9
percent of that small business's annual revenue over the 4-year
compliance period. The second small business is estimated to redesign 3
basic models at a cost of approximately $3.7 million, which corresponds
to approximately 11.6 percent of that small business's annual revenue
over the 4-year compliance period. The third small business is
estimated to redesign 1 basic model at a cost of approximately $1.5
million, which corresponds to approximately 18.3 percent of that small
business's annual revenue over the 4-year compliance period.
The small business subgroup analysis is discussed in more detail in
chapter 12 of the final rule TSD and 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 regulatory actions
of other Federal agencies and States that affect the manufacturers of
covered 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.
Multiple regulations affecting the same manufacturer can strain profits
and lead companies to abandon equipment lines or markets with lower
expected future returns than competing equipment. For these reasons,
DOE conducts an analysis of cumulative regulatory burden as part of its
rulemakings pertaining to equipment efficiency.
DOE evaluates equipment-specific regulations that will take effect
approximately 3 years before or after the 2028 compliance date of any
energy conservation standards for circulator pumps.\82\ DOE is aware
that circulator pump manufacturers produce other equipment or products
including dedicated-purpose pool pumps \83\ and commercial and
industrial pumps.\84\ None of these products or equipment have proposed
or adopted energy conservation standards that require compliance within
3 years of the adopted energy conservation standards for circulator
pumps in this final rule.
---------------------------------------------------------------------------
\82\ Section 13(g)(2) of appendix A to 10 CFR part 430 subpart C
(``Process Rule'').
\83\ www.regulations.gov/docket/EERE-2022-BT-STD-0001.
\84\ www.regulations.gov/docket/EERE-2021-BT-STD-0018.
---------------------------------------------------------------------------
HI and Xylem stated that the commercial and industrial pumps
rulemaking is ongoing and the impact of the commercial and industrial
pumps rulemaking will certainly require extensive resources from the
same manufacturers being affected by the circulator pumps rulemaking
during the same time horizon. (HI, No. 135 at p. 4; Xylem, No. 136 at
p. 5) The commercial and industrial pumps rulemaking is an ongoing
rulemaking that has not published a proposed rulemaking (i.e., NOPR) or
a final rule. DOE is unable to estimate the potential impact of
rulemakings that do not have proposed or adopted energy conservation
standards. However, DOE will consider the cumulative effect of this
circulator pumps rulemaking as part of the commercial and industrial
pumps rulemaking if DOE proposes or establishes standards for
commercial and industrial pumps in a future rulemaking.
Lastly, HI and Xylem commented that the electric motors rulemaking
\85\ will have a significant impact on the availability (style and
volume), and breadth of ECMs to support conversion, especially the CP2
and CP3 style circulator pumps. (Id.) DOE was unable to find any
circulator pump manufacturer that also manufactures electric motors
covered by that rulemaking. Additionally, the ECMs that are used in the
circulator pumps to meet the efficiency levels at EL 2 and above, are
not covered by that electric motors rulemaking.
---------------------------------------------------------------------------
\85\ 88 FR 36066 (Jun. 1, 2023).
---------------------------------------------------------------------------
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 standards.
a. Significance of Energy Savings
To estimate the energy savings attributable to potential new
standards for circulator pumps, 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
equipment purchased in the 30-year period that begins in the year of
anticipated compliance with new standards (2028-2057). Table V.10
presents DOE's projections of the national energy savings for each TSL
considered for circulator pumps. The savings were calculated using the
approach described in section IV.H.2 of this document.
[[Page 44522]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.050
OMB Circular A-4 \86\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using 9 years, rather than 30
years, of equipment 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.\87\ The review timeframe established in EPCA is generally
not synchronized with the equipment lifetime, equipment manufacturing
cycles, or other factors specific to circulator pumps. 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.11. The impacts are counted over the lifetime of
circulator pumps purchased in 2028-2036.
---------------------------------------------------------------------------
\86\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf.
\87\ EPCA requires DOE to review its standards at least once
every 6 years, and requires, for certain equipment, a 3-year period
after any new standard is promulgated before compliance is required,
except that in no case may any new standards be required within 6
years of the compliance date of the previous standards. (42 U.S.C.
6295(m)) 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 equipment, the
compliance period is 5 years rather than 3 years.
[GRAPHIC] [TIFF OMITTED] TR20MY24.051
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 circulator
pumps. In accordance with OMB's guidelines on regulatory analysis,\88\
DOE calculated NPV using both a 7-percent and a 3-percent real discount
rate. Table V.12 shows the consumer NPV results with impacts counted
over the lifetime of equipment purchased in 2028-2057.
---------------------------------------------------------------------------
\88\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf.
[GRAPHIC] [TIFF OMITTED] TR20MY24.052
The NPV results based on the aforementioned 9-year analytical
period are presented in Table V.13. The impacts are counted over the
lifetime of equipment 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.
[[Page 44523]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.053
c. Indirect Impacts on Employment
DOE estimates that new energy conservation standards for circulator
pumps will reduce energy expenditures for consumers of those equipment,
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 adopted standards are likely to have a
negligible impact on the net demand for labor in the economy. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 16 of the final rule TSD presents detailed results
regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Equipment
As discussed in section III.G.1.d of this document, DOE has
concluded that the standards adopted in this final rule will not lessen
the utility or performance of the circulator pumps under consideration
in this rulemaking. Manufacturers of these equipment currently offer
units that meet or exceed the adopted standards.
5. Impact of Any Lessening of Competition
DOE considered any lessening of competition that would be likely to
result from new standards. As discussed in section III.G.1.e of this
document, EPCA directs the Attorney General of the United States
(``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 in writing to the Secretary within 60
days of the publication of a proposed rule, together with an analysis
of the nature and extent of the impact. To assist the Attorney General
in making this determination, DOE provided the Department of Justice
(``DOJ'') with copies of the NOPR and the TSD for review. In its
assessment letter responding to DOE, DOJ concluded that the proposed
energy conservation standards for circulator pumps are unlikely to have
a significant adverse impact on competition. DOE is publishing the
Attorney General's assessment at the end of this final rule.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand due to energy conservation standards is also likely to reduce
the cost of maintaining the reliability of the electricity system,
particularly during peak-load periods. Chapter 15 in the final rule TSD
presents the estimated impacts on electricity, for the TSLs that DOE
considered in this rulemaking.
Energy conservation resulting from potential energy conservation
standards for circulator pumps is expected to yield environmental
benefits in the form of reduced emissions of certain air pollutants and
greenhouse gases. Table V.14 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 final rule TSD.
[[Page 44524]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.054
As part of the analysis for this rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
that DOE estimated for each of the considered TSLs for circulator
pumps. Section IV.L of this document discusses the estimated SC-
CO2 values that DOE used. Table V.15 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 selected TSL in chapter 14 of the final rule TSD.
[GRAPHIC] [TIFF OMITTED] TR20MY24.055
As discussed in section IV.L.2 of this document, 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 circulator pumps. Table V.16 presents the value of the
CH4 emissions reduction at each TSL, and Table V.17 presents
the value of the N2O emissions reduction at each TSL. The
time-series of annual values is presented for the selected TSL in
chapter 14 of the final rule TSD.
[[Page 44525]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.056
[GRAPHIC] [TIFF OMITTED] TR20MY24.057
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, however, that the adopted standards would be economically
justified even without inclusion of monetized benefits of reduced GHG
emissions.
DOE also estimated the monetary value of the economic benefits
associated with NOX and SO2 emissions reductions
anticipated to result from the considered TSLs for circulator pumps.
The dollar-per-ton values that DOE used are discussed in section IV.L
of this document. Table V.18 presents the present value for
NOX emissions reduction for each TSL calculated using 7-
percent and 3-percent discount rates, and Table V.19 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 selected TSL in chapter 14 of the final rule TSD.
[GRAPHIC] [TIFF OMITTED] TR20MY24.058
[[Page 44526]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.059
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
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.20 presents the NPV values that result from adding the
estimates of the 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 equipment and are measured for the
lifetime of equipment 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 circulator pumps shipped in 2028-2057.
[GRAPHIC] [TIFF OMITTED] TR20MY24.060
C. Conclusion
When considering new energy conservation standards, the standards
that DOE adopts for any type (or class) of covered equipment 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. 6316(a); 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. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)) The new standard must also result in significant
conservation of energy. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(3)(B))
For this final rule, DOE considered the impacts of new standards
for circulator pumps 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.
1. Benefits and Burdens of TSLs Considered for Circulator Pump
Standards
Table V.21 and Table V.22 summarize the quantitative impacts
estimated for each TSL for circulator pumps. The national impacts are
measured over the lifetime of circulator pumps purchased
[[Page 44527]]
in the 30-year period that begins in the anticipated year of compliance
with new standards (2028-2057). The energy savings, emissions
reductions, and value of emissions reductions refer to full-fuel-cycle
results. DOE is presenting monetized benefits of GHG emissions
reductions in accordance with the applicable Executive orders and DOE
would reach the same conclusion presented in this notice in the absence
of the social cost of greenhouse gases, including the Interim Estimates
presented by the Interagency Working Group. The efficiency levels
contained in each TSL are described in section V.A of this document.
BILLING CODE 6450-01-P
[GRAPHIC] [TIFF OMITTED] TR20MY24.061
[[Page 44528]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.062
BILLING CODE 6450-01-C
DOE first considered TSL 4, which represents the max-tech
efficiency levels. TSL 4 would save an estimated 1.19 quads of energy,
an amount DOE considers significant. Under TSL 4, the NPV of consumer
benefit would be $1.17 billion using a discount rate of 7 percent, and
$3.57 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 21.73 Mt of
CO2, 40.4 thousand tons of SO2, 6.29 thousand
tons of NOX, 0.04 tons of Hg, 182.7 thousand tons of
CH4, and 0.20 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 $1.25 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 4 is $1.07 billion using a 7-percent discount rate and $2.47
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 $3.5
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 4 is $7.29 billion.
At TSL 4, the average LCC impact is a savings of $112.4. The simple
payback period is 4.6 years. The fraction of purchasers experiencing a
net LCC cost is 45.9 percent.
At TSL 4, the projected change in INPV ranges from a decrease of
$118.1 million to an increase of $32.4 million, which corresponds to a
decrease of 34.0 percent and an increase of 9.3 percent, respectively.
DOE estimates that industry must invest $129.9 million to comply with
standards set at TSL 4. This investment is primarily driven by
converting all existing equipment to include differential-temperature
based controls and the associated product conversion costs that would
be needed to support such a transition. DOE estimates that
approximately 2 percent of circulator pump shipments would meet the
efficiency levels analyzed at TSL 4 in the no-new-standards case.
The Secretary concludes that at TSL 4 for circulator pump, 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 economic burden on many
consumers, and the impacts on manufacturers, including the large
conversion costs, profit margin impacts that could result in a large
reduction in INPV, and the lack of manufacturers currently offering
products meeting the efficiency levels required at this TSL, including
small businesses. Almost a majority of circulator pump customers (45.9
percent) would experience a net cost and manufacturers would have to
significantly ramp up production of more efficient models since only 2
percent of shipments currently meet the efficiency levels at TSL 4.
Consequently, the Secretary has concluded that TSL 4 is not
economically justified.
DOE then considered TSL 3, which represents EL 3 for all circulator
pumps, and would require automatic proportional pressure controls to be
added to the circulator pump. TSL 3 would save an estimated 1.02 quads
of energy, an amount DOE considers significant. Under TSL 3, the NPV of
consumer benefit would be $1.11 billion using a discount rate of 7
percent, and $3.25 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 18.56 Mt of
CO2, 5.39 thousand tons of SO2, 34.5 thousand
tons of NOX, 0.04 tons of Hg, 155.86 thousand tons of
CH4, and 0.18 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 $1.07 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 3 is $0.92 billion using a 7-percent discount rate and $2.11
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 $3.10
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 3 is $6.44 billion.
At TSL 3, the average LCC impact is a savings of $117.4. The simple
payback period is 4.5 years. The fraction of consumers experiencing a
net LCC cost is 42.7 percent.
At TSL 3, the projected change in INPV ranges from a decrease of
$100.1 million to an increase of $15.2 million, which corresponds to a
decrease of 28.8 percent and an increase of 4.4 percent, respectively.
DOE estimates that industry must invest $116.2 million to comply with
standards set at TSL 3. DOE estimates that approximately 20 percent of
circulator pump shipments will meet or exceed the efficiency levels
analyzed at TSL 3 in the no-new-standards case.
DOE also notes that the estimated energy and economic savings from
TSL 3 are highly dependent on the end-use systems in which the
circulator pumps
[[Page 44529]]
are installed (e.g., hydronic heating or water heating applications).
Circulator pumps are typically added to systems when installed in the
field and can be replaced separately than the end-use appliance in
which they are paired. Depending on the type of controls that the end-
use appliance contains, the circulator pumps may not see the field
savings benefits from the technologies incorporated in TSL 3 because
the end-use system cannot accommodate full variable-speed operation. In
particular, some systems will not achieve any additional savings from
differential pressure controls as compared to a single speed ECM with
no controls (i.e., TSL 2). As discussed earlier in this document, to
evaluate the effect of a varying fraction of circulator pumps
benefitting from controls, DOE conducted a sensitivity in the LCC
analysis. The results of this sensitivity analysis showed that the
fraction of purchasers experiencing a net cost at EL 3 and EL 4 would
linearly increase from 42.7% to 60.7% and 45.9% to 74.8%, respectively,
when the fraction of purchasers who do benefit from controls in the
field varies from 100% to 0%. While the analysis includes the best
available assumptions on the distribution of system curves and single-
zone versus multi-zone applications, variation in those assumptions
could have a large impact on savings potential and resulting economics
providing uncertainty in the savings associated with TSL 3.
The Secretary concludes that at TSL 3 for circulator pump, 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 economic burden on many
consumers, and the impacts on manufacturers, including the large
conversion costs, profit margin impacts that could result in a large
reduction in INPV, and the lack of manufacturers currently offering
products meeting the efficiency levels required at this TSL, including
small businesses. Almost a majority of circulator pump customers (42.7
percent) would experience a net cost and manufacturers would have to
significantly ramp up production of more efficient models since only 2
percent of shipments currently meet TSL 3 efficiency levels. In
addition, the Secretary is also concerned about the uncertainty
regarding the potential energy savings as compared to the field savings
due to the lack of end-use appliances being able to respond to
differential pressure controls from the circulator pump. Consequently,
the Secretary has concluded that TSL 3 is not economically justified.
DOE then considered TSL 2, which represents efficiency level 2 for
circulator pumps. TSL 2 would save an estimated 0.55 quads of energy,
an amount DOE considers significant. Under TSL 2, the NPV of consumer
benefit would be $0.95 billion using a discount rate of 7 percent, and
$2.34 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 2 are 10.04 Mt of
CO2, 2.95 thousand tons of SO2, 18.65 thousand
tons of NOX, 0.02 tons of Hg, 83.84 thousand tons of
CH4, and 0.10 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 2 is $0.59 billion. The estimated monetary value of the health
benefits from reduced SO2 and NOX emissions at
TSL 2 is $0.51 billion using a 7-percent discount rate and $1.16
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 2 is $2.05
billion. Using a 3-percent discount rate for all benefits and costs,
the estimated total NPV at TSL 2 is $4.09 billion.
At TSL 2, the average LCC impact is a savings of $110.9. The simple
payback period is 3.3 years. The fraction of consumers experiencing a
net LCC cost is 28.0 percent.
At TSL 2, the projected change in INPV ranges from a decrease of
$69.2 million to an increase of $11.1 million, which corresponds to a
decrease of 19.9 percent and to an increase of 3.2 percent,
respectively. DOE estimates that industry must invest $81.2 million to
comply with standards set at TSL 2. DOE estimates that approximately 37
percent of circulator pump shipments would meet the efficiency levels
analyzed at TSL 2. At TSL 2, most manufacturers have current circulator
pump offerings at this level.
Standards set at TSL 2 essentially guarantees energy savings in all
applications currently served by an induction motor, as the savings
accrue from motor efficiency alone rather than from a particular
control strategy that must be properly matched to the system in the
field. In comparison, TSL 3 and 4 include an ECM as in TSL 2, but TSL 3
and 4 also include the associated variable speed controls that must be
properly matched in the field. TSL 2 also allows and encourages uptake
of circulators with controls, as manufacturers may choose to prioritize
variable speed ECM as opposed to single speed ECM. This could increase
the potential savings from TSL 2 from those captured in the analysis,
while providing consumers and manufacturers with flexibility to select
the motor and/or control strategy most appropriate to their given
application.
After considering the analysis and weighing the benefits and
burdens, the Secretary has concluded that a standard set at TSL 2 for
circulator pumps would be economically justified. At this TSL, the
average LCC savings are positive. An estimated 28.0 percent \89\ of
circulator pump consumers experience a net cost. The FFC national
energy savings are significant and the NPV of consumer benefits is
positive using both a 3-percent and 7-percent discount rate. Notably,
the benefits to consumers vastly outweigh the cost to manufacturers. At
TSL 2, the NPV of consumer benefits, even measured at the more
conservative discount rate of 7 percent is over 13 times higher than
the maximum estimated manufacturers' loss in INPV. The standard levels
at TSL 2 are economically justified even without weighing the estimated
monetary value of emissions reductions. When those emissions reductions
are included--representing $0.59 billion in climate benefits
(associated with the average SC-GHG at a 3-percent discount rate), and
$1.16 billion (using a 3-percent discount rate) or $0.51 billion (using
a 7-percent discount rate) in health benefits--the rationale becomes
stronger still.
---------------------------------------------------------------------------
\89\ While there are various factors that may lead to certain
consumers experiencing a net cost (e.g., high discount rates, lower
equipment lifetimes, or a combination thereof), typically consumers
who use their equipment for lower operating hours compared to the
rest of the sample are generally less likely to recoup the purchase
price of the equipment through operating cost savings.
---------------------------------------------------------------------------
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 new
energy conservation standards, DOE notes that despite the average
consumer LCC savings being
[[Page 44530]]
similar between TSL 2 ($110.9), TSL 3 ($117.4) and TSL 4 ($112.4), TSL
2 has a much lower fraction of consumers who experience a net cost
(28.0%) than TSL 3 (42.7%) and TSL 4 (45.9%). In terms of industry
investment to comply with each standard level, TSL 2 ($81.2 million)
has considerably lower impact than TSL 3 ($116.2 million) and TSL 4
($129.9 million).
Therefore, based on the previous considerations, DOE adopts the
energy conservation standards for circulator pumps at TSL 2. The new
energy conservation standards for circulator pumps, which are expressed
as CEI, are shown in Table V.23.
[GRAPHIC] [TIFF OMITTED] TR20MY24.063
2. Annualized Benefits and Costs of the Adopted Standards
The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The annualized net benefit is
(1) the annualized national economic value (expressed in 2022$) of the
benefits from operating equipment that meet the adopted standards
(consisting primarily of operating cost savings from using less
energy), minus increases in equipment purchase costs, and (2) the
annualized monetary value of the climate and health benefits.
Table V.24 shows the annualized values for circulator pumps under
TSL 2, 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 reductions, and the 3-percent
discount rate case for GHG social costs, the estimated cost of the
adopted standards for circulator pumps is $113.9 million per year in
increased equipment installed costs, while the estimated annual
benefits are $207.5 million from reduced equipment operating costs,
$32.7 million in GHG reductions (climate benefits), and $50.7 million
in health benefits from reduced NOX and SO2
emissions. In this case, the net benefit amounts to $177 million per
year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the adopted standards for circulator pumps is $109.4
million per year in increased equipment costs, while the estimated
annual benefits are $239.7 million in reduced operating costs, $32.7
million from GHG reductions, and $64.7 million from reduced
NOX and SO2 emissions. In this case, the net
benefit amounts to $227.7 million per year.
BILLING CODE 6450-01-P
[[Page 44531]]
[GRAPHIC] [TIFF OMITTED] TR20MY24.064
BILLING CODE 6450-01-C
[[Page 44532]]
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
amended by E.O. 14094, ``Modernizing Regulatory Review,'' 88 FR 21879
(April 11, 2023), requires agencies, to the extent permitted by law, to
(1) propose or adopt a regulation only upon a reasoned determination
that its benefits justify its costs (recognizing that some benefits and
costs are difficult to quantify); (2) tailor regulations to impose the
least burden on society, consistent with obtaining regulatory
objectives, taking into account, among other things, and to the extent
practicable, the costs of cumulative regulations; (3) select, in
choosing among alternative regulatory approaches, those approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity); (4) to the extent feasible, specify performance
objectives, rather than specifying the behavior or manner of compliance
that regulated entities must adopt; and (5) identify and assess
available alternatives to direct regulation, including providing
economic incentives to encourage the desired behavior, such as user
fees or marketable permits, or providing information upon which choices
can be made by the public. DOE emphasizes as well that E.O. 13563
requires agencies to use the best available techniques to quantify
anticipated present and future benefits and costs as accurately as
possible. In its guidance, the Office of Information and Regulatory
Affairs (``OIRA'') in the Office of Management and Budget (``OMB'') has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in the preamble,
this final 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 final regulatory action constitutes a
``significant regulatory action'' within the scope of section 3(f)(1)
of E.O. 12866., as amended by E.O. 14094. 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 final regulatory action, together with, to the
extent feasible, a quantification of those costs; and an assessment,
including the underlying analysis, of costs and benefits of potentially
effective and reasonably feasible alternatives to the planned
regulation, and an explanation why the planned regulatory action is
preferable to the identified potential alternatives. These assessments
are summarized in this preamble and further detail can be found in the
technical support document for this rulemaking.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
and a final regulatory flexibility analysis (``FRFA'') for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by E.O. 13272, ``Proper Consideration of Small Entities in Agency
Rulemaking,'' 67 FR 53461 (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
FRFA for the equipment that is the subject of this rulemaking.
For manufacturers of circulator pumps, 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 NAICS code and industry description and
are available at www.sba.gov/document/support-table-size-standards.
Manufacturing of circulator pumps is classified under NAICS 333914,
``Measuring, Dispensing, and Other Pumping Equipment Manufacturing.''
The SBA sets a threshold of 750 employees or fewer for an entity to be
considered as a small business for this category.
1. Need for, and Objectives of, Rule
The January 2016 TP Final Rule and the January 2016 ECS Final Rule
implemented the recommendations of the CIPWG established through the
ASRAC to negotiate standards and a test procedure for general pumps.
(Docket No. EERE-2013-BT-NOC-0039) The CIPWG approved a term sheet
containing recommendations to DOE on appropriate standard levels for
general pumps, as well as recommendations addressing issues related to
the metric and test procedure for general pumps (``CIPWG
recommendations''). (Docket No. EERE-2013-BT-NOC-0039, No. 92)
Subsequently, ASRAC approved the CIPWG recommendations. The CIPWG
recommendations included initiation of a separate rulemaking for
circulator pumps. (Docket No. EERE-2013-BT-NOC-0039, No. 92,
Recommendation #5A at p. 2)
On February 3, 2016, DOE issued a notice of intent to establish the
Circulator Pumps Working Group to negotiate a NOPR for energy
conservation standards for circulator pumps; to negotiate, if possible,
Federal standards and a test procedure for circulator pumps; and to
announce the first public meeting. 81 FR 5658. The CPWG met to address
potential energy conservation standards for circulator pumps. Those
meetings began on November 3-4, 2016, and concluded on November 30,
2016, with approval of a term sheet (``November 2016 CPWG
Recommendations'') containing CPWG recommendations related to energy
conservation standards, applicable test procedure, and labeling and
certification requirements for circulator pumps. (Docket No. EERE-2016-
BT-STD-0004, No. 98) As such, DOE has undertaken this rulemaking to
consider establishing energy conservation standards for circulator
pumps.
2. Significant Issues Raised by Public Comments in Response to the IRFA
HI commented that while they do not have any specific small
business data to provide, the 2-year compliance lead time will be very
difficult for small businesses to comply with, which may cause these
small businesses to exit the market. As discussed in section III.H of
this document, DOE is establishing a 4-year compliance date for energy
conservation standards for circulator pumps. DOE interprets HI's
comment regarding the impacts to small businesses will be mitigated if
a 4-year compliance date is adopted.
3. Description and Estimated Number of Small Entities Affected
As previously described, DOE used SBA's definition of a small
business to identify any circulator pump small business manufacturers.
DOE used
[[Page 44533]]
publicly available information to identify small businesses that
manufacture circulator pumps covered in this rulemaking. DOE identified
ten companies that are manufacturers of circulator pumps covered by
this rulemaking. DOE screened out companies that do not meet the
definition of a ``small business,'' are foreign-owned and operated, or
do not manufacture circulator pumps in the United States. DOE
identified three small businesses that manufacture circulator pumps in
the United States using subscription-based business information tools
to determine the number of employees and revenue of these small
businesses.
4. Description of Reporting, Recordkeeping, and Other Compliance
Requirements
This final rule establishes energy conservation standards for
circulator pumps. To determine the impact on the small business
manufacturers, DOE estimated the product conversion costs and capital
conversion costs that all circulator pump manufacturers would incur.
DOE additionally estimated the product and capital conversion costs
that the three identified small business manufacturers would incur.
Product conversion costs are investments in research, development,
testing, marketing, and other non-capitalized costs necessary to make
equipment designs comply with energy conservation standards. Capital
conversion costs are one-time investments in plant, property, and
equipment made in response to standards.
DOE estimates there is one small business that does not have any
circulator pump models that would meet the adopted standards. The other
two businesses both offer circulator pumps that would meet the adopted
standards. DOE applied the conversion cost methodology described in
section IV.J.2.c of this document to arrive at its estimate of product
and capital conversion costs for the small business manufacturers. DOE
assumes that all circulator pump manufacturers, including small
business manufacturers, would spread conversion costs over the four-
year compliance timeframe, as manufacturers are required to comply with
standards four years after the publication of this final rule. Using
publicly available data, DOE estimated the average annual revenue for
each of the three small businesses, displayed in Table VI.1.
[GRAPHIC] [TIFF OMITTED] TR20MY24.066
Additionally, these manufacturers could choose to discontinue their
least efficient models and ramp up production of existing, compliant
models rather than redesign each of their non-compliant models.
Therefore, DOE's estimated conversion costs could overestimate the
actual conversion costs that these small businesses would incur.
5. Significant Alternatives Considered and Steps Taken To Minimize
Significant Economic Impacts on Small Entities
The discussion in the previous section analyzes impacts on small
businesses that would result from the adopted standards, represented by
TSL 2. In reviewing alternatives to the adopted standards, DOE examined
energy conservation standards set at lower efficiency levels. While TSL
1 would reduce the impacts on small business manufacturers, it would
come at the expense of a reduction in energy savings. TSL 1 achieves 80
percent lower energy savings and achieves 51 percent lower consumer net
benefits compared to the energy savings and consumer net benefits at
TSL 2.
Establishing standards at TSL 2 is the maximum improvement in
energy efficiency that is technologically feasible and that DOE has
determined in this final rule to be economically justified as
requirement by EPCA, including considering the potential burdens placed
on circulator pump manufacturers, including small business
manufacturers. Accordingly, DOE is not adopting one of the other TSLs
considered in the analysis, or the other policy alternatives examined
as part of the regulatory impact analysis and included in chapter 17 of
the final rule TSD.
Additional compliance flexibilities may be available through other
means. 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 circulator pumps must certify to DOE that their
equipment complies with any applicable energy conservation standards.
In certifying compliance, manufacturers must test their equipment
according to the DOE test procedures for circulator pumps, including
any amendments adopted for those test procedures. DOE has established
regulations for the certification and recordkeeping requirements for
all covered consumer equipment and commercial equipment, including
circulator pumps. (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.
Certification data will be required for circulator pumps; however,
DOE is not adopting certification or reporting requirements for
circulator pumps in this final rule. Instead, DOE may consider
proposals to establish certification requirements and reporting for
circulator pumps under a separate rulemaking regarding appliance and
equipment certification. DOE will address changes to OMB Control
[[Page 44534]]
Number 1910-1400 at that time, as necessary.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act of 1969
(``NEPA''), DOE has analyzed this proposed action rule in accordance
with NEPA and DOE's NEPA implementing regulations (10 CFR part 1021).
DOE has determined that this rule qualifies for categorical exclusion
under 10 CFR part 1021, subpart D, appendix B5.1 because it is a
rulemaking that establishes energy conservation standards for consumer
equipment or industrial equipment, none of the exceptions identified in
B5.1(b) apply, no extraordinary circumstances exist that require
further environmental analysis, and it meets the requirements for
application of a categorical exclusion. (See 10 CFR 1021.410.)
Therefore, DOE has determined that promulgation of this rule is not a
major Federal action significantly affecting the quality of the human
environment within the meaning of NEPA, and does not require an
environmental assessment or an environmental impact statement.
E. Review Under Executive Order 13132
E.O. 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), imposes
certain requirements on Federal agencies formulating and implementing
policies or regulations that preempt State law or that have federalism
implications. The Executive order requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. The Executive order also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have federalism implications. On March 14, 2000, DOE
published a statement of policy describing the intergovernmental
consultation process it will follow in the development of such
regulations. 65 FR 13735. DOE has examined this rule and has determined
that it would not have a substantial direct effect on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. EPCA governs and prescribes Federal preemption of State
regulations as to energy conservation for the equipment that are the
subject of this final rule. States can petition DOE for exemption from
such preemption to the extent, and based on criteria, set forth in
EPCA. See 42 U.S.C. 6316(a) and (b); 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 E.O. 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. DOE has completed the
required review and determined that, to the extent permitted by law,
this final rule meets the relevant standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a regulatory action likely to result in a rule that may cause the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE has concluded that this final rule 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 circulator pumps 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 circulator pumps, starting at the compliance date for
the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the final rule. (2 I.C. 1532(c)) The content requirements
of section 202(b) of UMRA relevant to a private sector mandate
substantially overlap the economic analysis requirements that apply
under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of this document and the TSD for this
final rule respond to those requirements.
Under section 205 of UMRA, DOE is obligated to identify and
consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C. 6295(m),
this final rule establishes new energy conservation standards for
circulator pumps that are designed to achieve the
[[Page 44535]]
maximum improvement in energy efficiency that DOE has determined to be
both technologically feasible and economically justified, as required
by 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 final rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This rule would not have any impact on the autonomy or integrity of the
family as an institution. Accordingly, DOE has concluded that it is not
necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (March
18, 1988), DOE has determined that this rule would not result in any
takings that might require compensation under the Fifth Amendment to
the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). 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 final rule under the OMB and DOE guidelines and has
concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
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 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 significant energy action, the
agency must give a detailed statement of any adverse effects on energy
supply, distribution, or use should the proposal be implemented, and of
reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth new
energy conservation standards for circulator pumps, is not a
significant energy action because the standards are not likely to have
a significant adverse effect on the supply, distribution, or use of
energy, nor has it been designated as such by the Administrator at
OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects
on this final rule.
L. 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 prepared a report describing that peer
review.\90\ 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 DOE's analyses. DOE is in the
process of evaluating the resulting report.\91\
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\90\ 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 September 19, 2023).
\91\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
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M. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. Pursuant to
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of
1996 (also known as the Congressional Review Act), the Office of
Information and Regulatory Affairs has determined that this rule meets
the criteria set forth in 5 U.S.C. 804(2).
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects in 10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Energy conservation, Incorporation by reference, Reporting
and recordkeeping requirements.
Signing Authority
This document of the Department of Energy was signed on April 9,
2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for
Energy Efficiency and Renewable Energy, pursuant to delegated authority
from the Secretary of Energy. That document with the original signature
and date is maintained by DOE. For administrative purposes only, and in
compliance with requirements of the Office of the Federal Register, the
undersigned DOE Federal Register Liaison Officer has been authorized to
sign and submit the document in electronic format for
[[Page 44536]]
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 April 10, 2024.
Treena V. Garrett,
Federal Register Liaison Officer,U.S. Department of Energy.
For the reasons set forth in the preamble, DOE amends part 431 of
chapter II, subchapter D, of title 10 of the Code of Federal
Regulations as set forth below:
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
1. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
0
2. Amend Sec. 431.465 by revising the section heading and adding
paragraph (i) to read as follows:
Sec. 431.465 Circulator pumps energy conservation standards and their
compliance dates.
* * * * *
(i) Each circulator pump that is manufactured starting on May 22,
2028 and that meets the criteria in paragraphs (i)(1) through (i)(2) of
this section must have a circulator energy index (``CEI'') rating (as
determined in accordance with the test procedure in Sec.
431.464(c)(2)) of not more than 1.00 using the instructions in
paragraph (i)(3) of this section and with a control mode as specified
in paragraph (i)(4) of this section:
(1) Is a clean water pump as defined in Sec. 431.462.
(2) Is not a submersible pump or a header pump, each as defined in
Sec. 431.462.
(3) The relationships in this paragraph (i)(3) are necessary to
calculate maximum CEI.
(i) Calculate CEI according to the following equation:
Equation 1 to Paragraph (i)(3)(i)
[GRAPHIC] [TIFF OMITTED] TR20MY24.067
Where:
CEI = the circulator energy index (dimensionless);
CER = the circulator energy rating (hp), determined in accordance
with section 6 of appendix D to subpart Y of part 431; and
CERSTD = the CER for a circulator pump that is minimally
compliant with DOE's energy conservation standards with the same
hydraulic horsepower as the rated pump (hp), determined in
accordance with paragraph (i)(3)(ii) of this section.
(ii) Calculate CERSTD according to the following
equation:
Equation 2 to Paragraph (i)(3)(ii)
[GRAPHIC] [TIFF OMITTED] TR20MY24.068
Where:
CERSTD = the CER for a circulator pump that is minimally
compliant with DOE's energy conservation standards with the same
hydraulic horsepower as the rated pump (hp);
i = the index variable of the summation notation used to express
CERSTD (dimensionless) as described in the table 3 to
paragraph (i)(3)(ii), in which i is expressed as a percentage of
circulator pump flow at best efficiency point, determined in
accordance with the test procedure in Sec. 431.464(c)(2);
[omega]i = the weighting factor (dimensionless) at each
corresponding test point, i, as described in table 3 to paragraph
(i)(3)(ii); and Piin,STD = the reference power
input to the circulator pump driver (hp) at test point i, calculated
using the equations and method specified in paragraph (i)(3)(iii) of
this section.
Table 3 to Paragraph (i)(3)(ii)
------------------------------------------------------------------------
Corresponding
I (%) [omega]i
------------------------------------------------------------------------
25..................................................... .25
50..................................................... .25
75..................................................... .25
100.................................................... .25
------------------------------------------------------------------------
(iii) Calculate Piin,STD according to the
following equation:
Equation 3 to Paragraph (i)(3)(iii)
[GRAPHIC] [TIFF OMITTED] TR20MY24.069
Where:
Piin,STD = the reference power input to the
circulator pump driver at test point i (hp);
Pu,i = circulator pump basic model rated hydraulic
horsepower (hp) determined in accordance with 10 CFR
429.59(a)(2)(i);
[alpha]i = part-load efficiency factor (dimensionless) at
each test point i as described in table 4 to paragraph (i)(3)(iii);
and
[eta]WTW,100 = reference circulator pump wire-to-
water efficiency at best efficiency point (%) at the applicable
energy conservation standard level, as described in table 5 to
paragraph (i)(3)(iii) as a function of circulator pump basic model
rated hydraulic horsepower at 100% BEP flow,
Pu,100.
[[Page 44537]]
Table 4 to Paragraph (i)(3)(iii)
------------------------------------------------------------------------
Corresponding
I (%) [alpha]i
------------------------------------------------------------------------
25..................................................... 0.4843
50..................................................... 0.7736
75..................................................... 0.9417
100.................................................... 1
------------------------------------------------------------------------
Table 5 to Paragraph (i)(3)(iii)
------------------------------------------------------------------------
Pu,100 [eta]WTW,100
------------------------------------------------------------------------
<1.............................. 10*ln(Pu,100 + 0.001141) +
67.78.
>=1............................. 67.79%.
------------------------------------------------------------------------
(4) A circulator pump subject to energy conservation standards as
described in this paragraph (i) must achieve the maximum CEI as
described in paragraph (i)(3)(i) of this section and in accordance with
the test procedure in Sec. 431.464(c)(2) in the least consumptive
control mode in which it is capable of operating.
Note: The following letter will not appear in the Code of
Federal Regulations.
U.S. DEPARTMENT OF JUSTICE
Antitrust Division
RFK Main Justice Building
950 Pennsylvania Avenue NW
Washington, DC 20530-0001
January 26, 2024
Ami Grace-Tardy
Assistant General Counsel
for Litigation, Regulation and Energy Efficiency
U.S. Department of Energy
Washington, DC 20585
Re: Energy Conservation Standards for Circulator Pumps
DOE Docket No. EERE-2016-BT-STD-0004
Dear Assistant General Counsel Grace-Tardy:
I am responding to your November 28, 2023, letter seeking the views
of the Attorney General about the potential impact on competition of
energy conservation standards for circulator pumps.
Your request was submitted under Section 325(o)(2)(B)(i)(V) of the
Energy Policy and Conservation Act, as amended (ECPA), 42 U.S.C.
6295(o)(2)(B)(i)(V), which requires the Attorney General to make a
determination of the impact of any lessening of competition that is
likely to result from the imposition of proposed energy conservation
standards. The Attorney General's responsibility for responding to
requests from other departments about the effect of a program on
competition has been delegated to the Assistant Attorney General for
the Antitrust Division in 28 CFRSec. 0.40(g). The Assistant Attorney
General for the Antitrust Division has authorized me, as the Policy
Director for the Antitrust Division, to provide the Antitrust
Division's views regarding the potential impact on competition of
proposed energy conservation standards on his behalf.
In conducting its analysis, the Antitrust Division examines whether
a potential amended standard may lessen competition, for example, by
substantially limiting consumer choice, by placing certain
manufacturers at an unjustified competitive disadvantage, or by
inducing avoidable inefficiencies in production or distribution of
particular products. A lessening of competition could result in higher
prices to manufacturers and consumers.
We have reviewed the proposed standards contained in the Notice of
proposed rulemaking and request for comment (87 FR 74850, December 6,
2022) and the related Technical Support Document. We have also reviewed
public comments and information discussed at the Working Group Meetings
held in November 29-30, 2016.
Based on this review, our conclusion is that the proposed energy
conservation standards for circulator pumps are unlikely to have a
significant impact on competition.
Sincerely,
David G.B. Lawrence,
Policy Director
[FR Doc. 2024-07873 Filed 5-17-24; 8:45 am]
BILLING CODE 6450-01-P