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Proposed Rule2022-24290

Energy Conservation Program: Energy Conservation Standards for Portable Electric Spas

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Published

November 17, 2022

Issuing agencies

Energy Department

Abstract

In this notice of data availability ("NODA"), the U.S. Department of Energy ("DOE") is publishing data and certain preliminary analytical results related to DOE's evaluation of potential energy conservation standards for portable electric spas ("PESs"). DOE requests comments, data, and information regarding the data and analysis.

Full Text

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<title>Federal Register, Volume 87 Issue 221 (Thursday, November 17, 2022)</title>
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[Federal Register Volume 87, Number 221 (Thursday, November 17, 2022)]
[Proposed Rules]
[Pages 69082-69116]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-24290]

[[Page 69081]]

Vol. 87

Thursday,

No. 221

November 17, 2022

Part II

Department of Energy

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10 CFR Part 430

Energy Conservation Program: Energy Conservation Standards for Portable
Electric Spas; Proposed Rule

Federal Register / Vol. 87, No. 221 / Thursday, November 17, 2022 /
Proposed Rules

[[Page 69082]]

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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2022-BT-STD-0025]
RIN 1904-AF36

Energy Conservation Program: Energy Conservation Standards for
Portable Electric Spas

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

ACTION: Notification of data availability and request for comment.

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SUMMARY: In this notice of data availability (``NODA''), the U.S.
Department of Energy (``DOE'') is publishing data and certain
preliminary analytical results related to DOE's evaluation of potential
energy conservation standards for portable electric spas (``PESs'').
DOE requests comments, data, and information regarding the data and
analysis.

DATES: Written comments and information will be accepted on or before,
January 17, 2023.

ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a>, under docket
number EERE-2022-BT-STD-0025. Follow the instructions for submitting
comments. Alternatively, interested persons may submit comments,
identified by docket number EERE-2022-BT-STD-0025, by any of the
following methods:
Email: <a href="/cdn-cgi/l/email-protection#0959667b7d686b656c4c656c6a5a79687a3b393b3b5a5d4d39393b3c496c6c276d666c276e667f">[email&#160;protected]</a>. Include the docket
number EERE-2022-BT-STD-0025 in the subject line of the message.
Postal Mail: Appliance and Equipment Standards Program, U.S.
Department of Energy, Building Technologies Office, Mailstop EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 287-1445. If possible, please submit all items on a compact disc
(``CD''), in which case it is not necessary to include printed copies.
Hand Delivery/Courier: Appliance and Equipment Standards Program,
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445.
If possible, please submit all items on a CD, in which case it is not
necessary to include printed copies.
No telefacsimiles (``faxes'') will be accepted. For detailed
instructions on submitting comments and additional information on this
process, see section IV of this document.
To inform interested parties and to facilitate this rulemaking
process, DOE has prepared preliminary analytical data, which is
available on the rulemaking docket at: <a href="http://www.regulations.gov/docket/EERE-2022-BT-STD-0025">www.regulations.gov/docket/EERE-2022-BT-STD-0025</a>.
Docket: The docket for this activity, which includes Federal
Register notices, comments, public meeting transcripts, and other
supporting documents/materials, is available for review at
<a href="http://www.regulations.gov">www.regulations.gov</a>. All documents in the docket are listed in the
<a href="http://www.regulations.gov">www.regulations.gov</a> index. However, some documents listed in the index,
such as those containing information that is exempt from public
disclosure, may not be publicly available.
The docket web page can be found at <a href="http://www.regulations.gov/docket/EERE-2022-BT-STD-0025">www.regulations.gov/docket/EERE-2022-BT-STD-0025</a>. The docket web page contains instructions on how
to access all documents, including public comments in the docket. See
section IV.A of this document for information on how to submit comments
through <a href="http://www.regulations.gov">www.regulations.gov</a>.

FOR FURTHER INFORMATION CONTACT:
Mr. Jeremy Dommu, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-2J,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(202) 586-9870. Email <a href="/cdn-cgi/l/email-protection#68291818040109060b0d3b1c09060c091a0c1b391d0d1b1c0107061b280d0d460c070d460f071e">[email&#160;protected]</a>.
Ms. Kristin Koernig, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (202) 586-3593. Email:
<a href="/cdn-cgi/l/email-protection#59122b302a2d30377732363c2b37303e193128773d363c773e362f">[email&#160;protected]</a>.
For further information on how to submit a comment, review other
public comments and the docket, contact the Appliance and Equipment
Standards Program staff at (202) 287-1445 or by email:
<a href="/cdn-cgi/l/email-protection#3e7f4e4e52575f505d5b6d4a5f505a5f4c5a4d6f4b5b4d4a5751504d7e5b5b105a515b10595148">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
A. Authority
B. Rulemaking Process
C. Deviation From Appendix A
II. Background
A. Current Process
III. Summary of the Analyses Performed by DOE
A. Market and Technology Assessment
1. Product Description
2. Potential Product Classes
a. Inflatable Spas
b. Exercise Spas
c. Standard Spas
d. Combination Spas
3. Manufacturers and Industry Structure
4. Other Regulatory Programs
5. Technology Options for Improving Efficiency
a. Insulation
b. Cover
c. Sealing
d. Radiant Barrier
e. Insulated Ground Cover
f. Dedicated Circulation Pump
g. Heat Pump
B. Screening Analysis
C. Engineering Analysis
1. Efficiency Analysis
2. Cost Analysis
3. Engineering Results
D. Markups Analysis
1. Distribution Channels
2. Markups
3. Sales Taxes
4. Summary of Markups
E. Energy Use Analysis
1. Consumer Sample
2. Typical Annual Operating Hours (npy)
3. Ambient Temperature (Tamb)
4. Operating Water Temperature (Top)
5. Annual Energy Use Results
F. Life-Cycle Cost and Payback Period Analyses
1. Inputs to the Life-Cycle Cost Model
a. Inputs to Total Installed Cost
b. Inputs to Operating Costs
2. Product Lifetime
a. Hard-Sided Spas
b. Inflatable Spas
3. Rebound Effect
4. Energy Efficiency Distribution in the No-New-Standards Case
5. Discount Rates
6. Payback Period Analysis
7. Consumer Results
G. Shipments Analysis
1. Approach To Shipments and Stock Models
2. Initial Stock Estimates
a. Hard-Sided Spas Stock
b. Inflatable Spas Stock
3. Product Saturations
4. Determining Annual Spa Shipments
a. Initial Shipments
b. New Spa Shipments
c. Spa Replacements
d. Demolitions
e. Product Lifetimes
f. Future Portable Electric Spa Shipments
g. Calculating Shipments and Stock
5. Impacts of Increased Product Costs on Shipments
6. Results for 30-Years of Shipment (2029-2058)
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
a. Site-to-Power-Plant Energy Conversion Factors
b. Full-Fuel Cycle Multipliers
3. Net Present Value Analysis
4. Candidate Standard Levels
5. Results for 30-Years of Shipments (2029-2058)
IV. Public Participation
A. Submission of Comments
B. Issues on Which DOE Seeks Comment

[[Page 69083]]

V. Approval of the Office of the Secretary

I. Introduction

A. Authority

The Energy Policy and Conservation Act, as amended (``EPCA''),\1\
authorizes DOE to regulate the energy efficiency of a number of
consumer products and certain industrial equipment. (42 U.S.C. 6291-
6317) Title III, Part B \2\ of EPCA established the Energy Conservation
Program for Consumer Products Other Than Automobiles, which, in
addition to identifying particular consumer products and commercial
equipment as covered under the statute, permits the Secretary of Energy
to classify additional types of consumer products as covered products.
(42 U.S.C. 6292(a)(20)) In a notice of final determination of coverage
(``NOFD'') published in the Federal Register on September 2, 2022
(``September 2022 NOFD''), DOE classified PESs as a covered product
pursuant to 42 U.S.C. 6292(b)(1) after determining that classifying
PESs as a covered product is necessary or appropriate to carry out the
purposes of EPCA and that average annual household energy use for PESs
is likely to exceed 100 kilowatt-hours per year. 87 FR 54123.
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\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
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The relevant purposes of EPCA include:
(1) To conserve energy supplies through energy conservation
programs, and, where necessary, the regulation of certain energy uses;
and
(2) To provide for improved energy efficiency of motor vehicles,
major appliances, and certain other consumer products. (42 U.S.C.
6201(4) and (5))
First, DOE determined that the coverage of PESs is both necessary
and appropriate to carry out the purposes of EPCA on the basis of
market data, the existence of technology options for improving energy
efficiency of PESs, and supporting argument of commenters in response
to the notice of proposed determination of coverage. 87 FR 54123,
54125-54126.
DOE then determined that estimated household energy use was likely
to exceed 100 kWh/year based on market data and certification data
reported to the California Energy Commission's (``CEC'') Modernized
Appliance Efficiency Database System (``MAEDbS'').\3\ In the September
2022 NOFD, DOE had estimated average energy consumption of 1,699 kWh
per year per household, which matched estimates submitted by commenters
in response to the notice of proposed determination of coverage. Id. at
87 FR 54126-54127.
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\3\ CEC Modernized Appliance Efficiency Database System.
Available at <a href="http://cacertappliances.energy.ca.gov">cacertappliances.energy.ca.gov</a>. (last accessed October
26, 2022).
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Having determined that classifying PESs as a covered product was
necessary or appropriate to carry out the purposes of EPCA and that
average annual household energy use for PESs was likely to exceed 100
kilowatt-hours per year, DOE classified PESs as a covered product. Id.
at 87 FR 54127.
Additionally, in the September 2022 NOFD, DOE established a
definition of the term ``portable electric spa,'' which was ``a
factory-built electric spa or hot tub, supplied with equipment for
heating and circulating water at the time of sale or sold separately
for subsequent attachment.'' Id. at 87 FR 54125; see also 10 CFR 430.2.
As PESs are now a covered product, EPCA allows DOE to prescribe an
energy conservation standard for any type (or class) of covered
products of a type specified in 42 U.S.C. 6292(a)(20) if the
requirements of 42 U.S.C. 6295(o) and (p) are met and the Secretary
determines that--
(A) the average per household energy use within the United States
by products of such type (or class) exceeded 150 kilowatt-hours (or its
Btu equivalent) for any 12-month period ending before such
determination;
(B) the aggregate household energy use within the United States by
products of such type (or class) exceeded 4,200,000,000 kilowatt-hours
(or its Btu equivalent) for any such 12-month period;
(C) substantial improvement in the energy efficiency of products of
such type (or class) is technologically feasible; and
(D) the application of a labeling rule under 42 U.S.C. 6294 to such
type (or class) is not likely to be sufficient to induce manufacturers
to produce, and consumers and other persons to purchase, covered
products of such type (or class) which achieve the maximum energy
efficiency which is technologically feasible and economically
justified. (42 U.S.C. 6295(l)(1))
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 notification of determination that standards for
the product do not need to be amended, or a notice of proposed
rulemaking (``NOPR'') including new proposed energy conservation
standards (proceeding to a final rule, as appropriate). (42 U.S.C.
6295(m)(1)) Not later than three years after issuance of a final
determination not to amend standards, DOE must publish either a notice
of determination that standards for the product do not need to be
amended, or a NOPR including new proposed energy conservation standards
(proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B))
Under EPCA, any new or amended energy conservation standard must be
designed to achieve the maximum improvement in energy efficiency that
DOE determines is technologically feasible and economically justified.
(42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must
result in a significant conservation of energy. (42 U.S.C.
6295(o)(3)(B))
DOE is publishing this NODA to collect data and information to
inform its decision to establish energy conservation standards for PESs
consistent with its obligations under EPCA.

B. Rulemaking Process

DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including PESs. As noted, EPCA
requires that any new or amended energy conservation standard
prescribed by the Secretary of Energy (``Secretary'') be designed to
achieve the maximum improvement in energy efficiency (or water
efficiency for certain products specified by EPCA) that is
technologically feasible and economically justified. (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.
6295(o)(3))
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\4\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products or equipment with relatively constant demand. In evaluating
the significance of energy savings, DOE considers differences in
primary energy and full-fuel cycle

[[Page 69084]]

(``FFC'') effects for different covered products and equipment when
determining whether energy savings are significant. Primary energy and
FFC effects include the energy consumed in electricity production
(depending on load shape), in distribution and transmission, and in
extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and thus present a more complete picture
of the impacts of energy conservation standards. Accordingly, DOE
evaluates the significance of energy savings on a case-by-case basis,
taking into account the significance of cumulative FFC national energy
savings, the cumulative FFC emissions reductions, and the need to
confront the global climate crisis, among other factors.
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\4\ 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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To determine whether a standard is economically justified, EPCA
requires that DOE determine whether the benefits of the standard exceed
its burdens by considering, to the greatest extent practicable, the
following seven factors:
1. The economic impact of the standard on the manufacturers and
consumers of the products subject to the standard;
2. The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered products that are likely to result from the standard;
3. The total projected amount of energy (or as applicable, water)
savings likely to result directly from the standard;
4. Any lessening of the utility or the performance of the products
likely to result from the standard;
5. The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
6. The need for national energy and water conservation; and
7. Other factors the Secretary considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
DOE fulfills these and other applicable requirements by conducting
a series of analyses throughout the rulemaking process. Table I.1 shows
the individual analyses that are performed to satisfy each of the
requirements within EPCA.
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\5\ On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is
no longer in effect, pending resolution of the federal government's
appeal of that injunction or a further court order. Among other
things, the preliminary injunction enjoined the defendants in that
case from ``adopting, employing, treating as binding, or relying
upon'' the interim estimates of the social cost of greenhouse
gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize
the benefits of reducing greenhouse gas emissions. In the absence of
further intervening court orders, DOE will revert to its approach
prior to the injunction and present monetized benefits where
appropriate and permissible by law.

Table I.1--EPCA Requirements and Corresponding DOE Analysis
------------------------------------------------------------------------
EPCA requirement Corresponding DOE analysis
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Significant Energy Savings............. <bullet> Shipments Analysis.
<bullet> National Impact
Analysis.
<bullet> Energy Analysis.
Technological Feasibility.............. <bullet> Market and Technology
Assessment.
<bullet> Screening Analysis.
<bullet> Engineering Analysis.
Economic Justification:
Economic impact on manufacturers <bullet> Manufacturer Impact
and consumers. Analysis.
<bullet> Life-Cycle Cost and
Payback Period Analysis.
<bullet> Life-Cycle Cost
Subgroup Analysis.
<bullet> Shipments Analysis.
Lifetime operating cost savings <bullet> Markups for Product
compared to increased cost for the Price Analysis.
product. <bullet> Energy Analysis.
<bullet> Life-Cycle Cost and
Payback Period Analysis.
Total projected energy savings..... <bullet> Shipments Analysis.
<bullet> National Impact
Analysis.
Impact on utility or performance... <bullet> Screening Analysis.
<bullet> Engineering Analysis.
Impact of any lessening of <bullet> Manufacturer Impact
competition. Analysis.
Need for national energy and water <bullet> Shipments Analysis.
conservation. <bullet> National Impact
Analysis.
Other factors the Secretary <bullet> Employment Impact
considers relevant. Analysis.
<bullet> Utility Impact
Analysis.
<bullet> Emissions Analysis.
<bullet> Monetization of
Emission Reductions
Benefits.\5\
<bullet> Regulatory Impact
Analysis.
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Further, EPCA establishes a rebuttable presumption that a standard
is economically justified if the Secretary finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended
or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those

[[Page 69085]]

generally available in the United States. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for a covered product that has two or more
subcategories. DOE must specify a different standard level for a type
or class of product that has the same function or intended use, if DOE
determines that products within such group: (A) consume a different
kind of energy from that consumed by other covered products within such
type (or class); or (B) have a capacity or other performance-related
feature which other products within such type (or class) do not have
and such feature justifies a higher or lower standard. (42 U.S.C.
6295(q)(1)) In determining whether a performance-related feature
justifies a different standard for a group of products, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE deems appropriate. (Id.) Any rule prescribing such a
standard must include an explanation of the basis on which such higher
or lower level was established. (42 U.S.C. 6295(q)(2))
Finally, pursuant to the amendments contained in the Energy
Independence and Security Act of 2007 (``EISA 2007''), Public Law 110-
140, any final rule for new or amended energy conservation standards
promulgated after July 1, 2010, is required to address standby mode and
off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE
adopts a standard for a covered product after that date, it must, if
justified by the criteria for adoption of standards under EPCA (42
U.S.C. 6295(o)), incorporate standby mode and off mode energy use into
a single standard, or, if that is not feasible, adopt a separate
standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A)-(B))
Before proposing a standard, DOE typically seeks public input on
the analytical framework, models, and tools that DOE intends to use to
evaluate standards for the product at issue and the results of
preliminary analyses DOE performed for the product. See section IV.B of
this document for a list of analysis and data on which DOE seeks
comment.
DOE is examining whether to establish energy conservation standards
for PESs pursuant to its obligations under EPCA. This notification
announces the availability of preliminary analytical results and data.

C. Deviation From Appendix A

In accordance with section 3(a) of 10 CFR part 430, subpart C,
appendix A (``appendix A''), DOE notes that it is deviating from the
provision in appendix A regarding the pre-NOPR stage for an energy
conservation standard rulemaking. Section 6(d)(2) of appendix A
specifies that the length of the public comment period for a pre-NOPR
will vary depending upon the circumstances of the particular
rulemaking, but will not be less than 75 calendar days. For this NODA,
DOE is providing a 60-day comment period, which DOE deems appropriate
given the publication of three antecedent notices relating to PESs, two
of which, themselves, offered opportunity for comment related to PESs
and all of which would be understood by interested parties as a signal
that DOE would be evaluating potential energy conservation standards.
Those three antecedent notices were the proposed determination of
portable electric spas as a covered consumer product (87 FR 8745 (Feb.
16, 2022)), the final determination of portable electric spas as a
covered consumer product (87 FR 54123 (Sept. 2, 2022)), and the
proposed rulemaking for the test procedure for portable electric spas
(87 FR 63356 (Oct. 18, 2022)), respectively. Further, a 60-day comment
period will allow DOE to review comments received in response to this
NODA and use them to inform the analysis of the product considered in
evaluating potential energy conservation standards.

II. Background

A. Current Process

DOE has not previously conducted an energy conservation standards
rulemaking for PESs. As described in section I.A of this NODA, DOE
previously determined that PESs met the criteria for classification as
a covered product pursuant to EPCA and classified PESs as a covered
product. 87 FR 54123.
Following this determination of coverage, DOE published a NOPR
proposing a test procedure for PESs in the Federal Register on October
18, 2022. 87 FR 63356. In that NOPR, DOE proposed to incorporate by
reference an industry test method published by the Pool and Hot Tub
Alliance (``PHTA'') \6\ in partnership with the International Code
Council (``ICC'') and approved by the American National Standards
Institute (``ANSI''), ANSI/APSP/ICC-14 2019, ``American National
Standard for Portable Electric Spa Energy Efficiency'' (``APSP-14
2019'') with certain exceptions and additions. 87 FR 63356, 63361-
63369. The proposed test method produces a measure of the energy
consumption of PESs (i.e., the normalized average standby power) that
represents the average power consumed by the spa, normalized to a
standard temperature difference between the ambient air and the water
in the spa, while the cover is on and the product is operating in its
default operation mode. Id. at 87 FR 63361.
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\6\ The PHTA is a result of a 2019 merger between the
Association of Pool and Spa Professionals (``APSP'') and the
National Swimming Pool Foundation (``NSPF''). The reference to APSP
has been retained in the ANSI designation of ANSI/APSP/ICC-14 2019.
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Comments received to date as part of the coverage determination
rulemaking have helped DOE identify and resolve issues related to the
NODA.

III. Summary of the Analyses Performed by DOE

For the product covered in this NODA, DOE conducted in-depth
technical analyses in the following areas: (1) engineering; (2) markups
to determine product price; (3) energy use; (4) life cycle cost
(``LCC'') and payback period (``PBP''); and (5) national impacts. The
preliminary analytical results that present the methodology and results
of each of these analyses that are not included in the body of this
notice are available at: <a href="http://www.regulations.gov/docket/EERE-2022-BT-STD-0025">www.regulations.gov/docket/EERE-2022-BT-STD-0025</a>. Specifically, DOE is making available the following data and
analysis:
(1) Approved and Archived Portable Electric Spas exported from the
CEC's Meads. Data as of August 8, 2022.
(2) DOE's testing results for a simple inflatable portable electric
spa. Testing followed methods specified in APSP-14 2019 and attempted
to isolate the effects of various test conditions and design options.
(3) Reference table for DOE's proposed efficiency levels for non-
inflatable and inflatable portable electric spas, including particular
changes in specifications and the estimated effects on energy
consumption and costs thereof.
DOE also conducted, and has included in this NODA, several other
analyses that either support the major analyses or are preliminary
analyses that will be expanded if DOE determines that a NOPR is
warranted to propose new energy conservation standards. These analyses
include: (1) the market and technology assessment; (2) the screening
analysis, which contributes to the engineering analysis; and (3) the
shipments analysis, which contributes to the LCC and PBP analysis and
the national impact analysis (``NIA''). In addition to these analyses,
DOE has begun preliminary work on the

[[Page 69086]]

manufacturer impact analysis and has identified the methods to be used
for the consumer subgroup analysis, the emissions analysis, the
employment impact analysis, the regulatory impact analysis, and the
utility impact analysis. DOE will expand on these analyses in the NOPR
should one be issued.

A. Market and Technology Assessment

DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including general characteristics of the products, the
industry structure, manufacturers, market characteristics, and
technologies used in the products. This activity includes both
quantitative and qualitative assessments, based primarily on publicly
available information. The subjects addressed in the market and
technology assessment include: (1) a determination of the scope of the
rulemaking and product classes; (2) manufacturers and industry
structure; (3) existing efficiency programs; (4) shipments information;
(5) market and industry trends; and (6) technologies or design options
that could improve the energy efficiency of the product.
1. Product Description
DOE referred to PES product literature and to its communications
with spa manufacturers to inform its understanding of the technology
and the different types of products within the industry. Relevant
product literature includes APSP-14 2019, the current industry test
procedure and energy conservation standards, materials related to state
rulemakings, academic papers, and marketing materials.\7\ In
particular, DOE also made significant use of the following sources: the
final staff report for CEC's 2018 Appliance Efficiency Rulemaking for
Spas, ``Analysis of Efficiency Standards and Marking for Spas;'' \8\
the Codes and Standards Enhancement (``CASE'') Initiative submission
from California investor-owned utilities in support of CEC's 2012
rulemaking for spas, ``Analysis of Standards Proposal for Portable
Electric Spas;'' \9\ a 2018 graduate thesis from California State
University, Sacramento, ``Improving Energy Efficiency of Portable
Electric Spas by Improving Its Thermal Conductivity Properties;'' \10\
and a 2012 graduate thesis from California Polytechnic State
University, San Luis Obispo, ``Measurement and Analysis of the Standby
Power of Twenty-Seven Portable Electric Spas.'' \11\ PES manufacturers
were contacted via the PHTA.
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\7\ APSP-14 2019 is available at: <a href="http://webstore.ansi.org/standards/apsp/ansiapspicc142019">webstore.ansi.org/standards/apsp/ansiapspicc142019</a>.
\8\ California Energy Commission. ``Final Staff Report--Analysis
of Efficiency Standards and Marking for Spas.'' February 2, 2018.
\9\ Codes and Standards Enhancement (CASE) Initiative.
``Analysis of Standards Proposal for Portable Electric Spas.'' May
15, 2014.
\10\ Ramos, Nestor. ``Improving Energy Efficiency of Portable
Electric Spas by Improving Its Thermal Conductivity Properties.''
Spring, 2018.
\11\ Hamill, Andrew. ``Measurement and Analysis of the Standby
Power of Twenty-Seven Portable Electric Spas.'' September, 2012.
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APSP-14 2019 defines a spa as ``a product intended for the
immersion of persons in temperature-controlled water circulated in a
closed system'' and a portable electric spa as ``a factory-built
electric spa or hot tub, supplied with equipment for heating and
circulating water at the time of sale or sold separately for subsequent
attachment.'' DOE adopted this definition of ``portable electric spa''
without modification in the September 2022 NOFD. 87 FR 54123, 54125.
Integral heating and circulation equipment are features that
distinguish PESs from similar products in inflatable or above-ground
pools and therapy bathtubs or permanent residential spas, respectively.
Beyond these characteristic features, PESs often also include chemical
systems for water sanitation as well as features such as additional
lighting, audio systems, and internet connectivity for more precise and
accessible spa monitoring.
DOE requests comment on the previous description of the target
technology and the scope of this product, including whether any
modifications or additions are necessary to characterize this product.
2. Potential Product Classes
DOE must specify a different standard level for a type or class of
product that has the same function or intended use if DOE determines
that products within such group: consume a different kind of energy
from that consumed by other covered products within such type (or
class); or have a capacity or other performance-related feature which
other products within such type (or class) do not have and such feature
justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In
determining whether a performance-related feature justifies a different
standard for a group of products, DOE must consider such factors as the
utility to the consumer of the feature and other factors DOE deems
appropriate. (Id.) Any rule prescribing such a standard must include an
explanation of the basis on which such higher or lower level was
established. (42 U.S.C. 6295(q)(2))
DOE observed several distinguishable categories of products in the
PES market that provide consumers with unique utility that could
necessitate a different standard level for energy consumption.
a. Inflatable Spas
Inflatable spas are characterized by collapsible and storable
bodies. They are usually made of a flexible polyvinyl chloride
(``PVC'') plastic tub, which is filled with air during use and which
connects to a control unit external to the tub but still integral to
the product as distributed in commerce. Inflatable spas are often used
seasonally and, during seasons when inflatable spas are not in use,
they are often deflated and put in storage. Correspondence with
inflatable spa manufacturers indicated that inflatable spas provide
unique utility as a result of their low price relative to other
portable electric spas and their ability to be collapsed and moved more
easily than other spas. Inflatable spas often have maximum water
temperatures settings greater than 100 [deg]F, and the PVC construction
that allows them to be less expensive and collapsible also decrease
their ability to retain heat. This characteristic generally makes the
power demand of inflatable spas higher than that of other portable
electric spas. As a result, DOE tentatively concludes that inflatable
spas are not able to be subject to the same energy consumption limits
as other spas.
b. Exercise Spas
Exercise spas are characterized by their large size and ability to
generate a water flow strong enough to allow for physical activity such
as swimming in place. Exercise spas are usually composed of a
rectangular rigid synthetic plastic cabinet topped with a rigid vacuum-
formed acrylic shell. The cavity between the cabinet and acrylic shell
houses components such as pumps and heaters and also allows for dense
insulating materials to help the spa retain heat. Exercise spas provide
unique utility in their capacity to facilitate physical activity inside
the spa for a person as large as the 99th Percentile Man as specified
in ANSI/APSP/ICC-16.\12\ Exercise spas may have maximum water
temperatures settings above or below 100 [deg]F. According to
manufacturers, consumers tend to set the water temperature of exercise
spas to less than 100 [deg]F when using exercise

[[Page 69087]]

spas for physical activity. And exercise spas' capacity to house dense
insulation makes them able to retain heat and reduce energy consumption
more than inflatable spas.
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\12\ ANSI/APSP/ICC-16 is available at <a href="https://webstore.ansi.org/standards/apsp/ansiapspicc162017PA2021">https://webstore.ansi.org/standards/apsp/ansiapspicc162017PA2021</a>.
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c. Standard Spas
Standard spas are neither collapsible nor designed for use in
recreational physical activities. Like exercise spas, they are
typically composed of rigid plastic cabinets affixed to an acrylic
shell. However, they may also be constructed of other rigid materials.
DOE is aware of some standard spas whose exteriors are made entirely of
rotationally molded plastic. Standard spas are not designed to generate
a water flow strong enough to allow for swimming in place and are
usually not large enough to allow for a person to swim in place.
Standard spas offer unique utility in comparison to inflatable spas in
that they typically have more and higher performance jet pumps, as well
as the capacity for more additional features such as lights, water
features, or stereo systems. Standard spas usually have maximum water
temperature settings of above 100 [deg]F. Like exercise spas, the rigid
and relatively large space between the perimeter of the spa and the spa
shell allows for dense insulation, which makes standard spas able to
reduce energy consumption more than inflatable spas.
d. Combination Spas
Combination spas are single contiguous spas consisting of distinct
exercise spa and standard spa sections, each of which has an
independent control for the setting of water temperature. Combination
spas provide unique utility in their capacity to provide distinct
reservoirs intended for physical activity and also therapy and leisure.
Like standard and exercise spas, combination spas are able to house
dense insulation, increasing their ability to retain heat and to lower
their energy consumption.
DOE's descriptions of these potential product classes were largely
informed by the current industry standard, APSP-14 2019. In this NODA,
standard spas, exercise spas, and combination spas are sometimes
collectively referred to as ``non-inflatable'' spas or ``hard-sided''
spas. And in this NODA, inflatable spas are often treated separately
because their construction is associated with limited technology
options and higher energy consumption. Exercise spas, standard spas,
and combination spas, however, are often treated similarly as non-
inflatable spas.
DOE requests comment on whether the distinction between categories
of PESs, as described in section III.A.2 of this NODA, is significant
enough to warrant the establishment of different product classes for
each type.
3. Manufactures and Industry Structure
The PES market is largely split between inflatable spas, standard
spas, and exercise and combination spas, with each type catering to
different consumer segments that do not significantly overlap.
Similarly, there is no significant overlap between the manufacturers of
inflatable spas and non-inflatable spas, although one manufacturer will
often make all of the standard, exercise, and combination spas. The
inflatable spa market is concentrated in a small number of
manufacturers characterized by large production volumes, vertical
integration, and manufacturing plants located outside of the United
States. The market for non-inflatable spas, however, is more fragmented
among manufacturers who purchase most spa components and whose
manufacturing plants are located in North America. Manufacturers of
both inflatable and non-inflatable spas often produce models under
multiple brands. In particular, manufacturers of non-inflatable spas
may also offer different brands, and even product lines within a brand,
at multiple price points. Features that tend to correlate to the price
point of a spa include the number and strength of therapy jets, the
quality of cabinet materials, and the presence of additional features,
such as lighting or stereo systems.
DOE requests comment on the above description of the PES
manufacturers and the PES industry structure and whether any other
details are necessary for characterizing the industry or for
determining whether energy conservation standards for PESs might be
justified.
4. Other Regulatory Programs
As part of its analysis, DOE surveyed existing regulatory programs
concerning the energy consumption of PESs. These regulatory programs
include both programs that enforce mandatory limits in their respective
jurisdictions and voluntary programs. The first such mandatory program
was CEC's mandatory Title 20 regulations concerning PESs, which were
adopted in 2004. Over the next decade, four other states adopted
mandatory standards, in some cases following CEC's regulations and, in
other cases, creating their own, such as Arizona's Title 44 adopted in
2009. In 2014, PHTA created the first iteration of a voluntary industry
standard in APSP-14 2014, which measures and sets limits for the energy
required to maintain the set temperature and circulate water while the
spa is not in use, known as ``standby power.''
The most recent development in test procedures and energy
conservation standards for PESs was the publication of APSP-14 2019 in
2019. This revised version of the APSP-14 (i.e., APSP-14 2019) was
created in collaboration with CEC and was promptly adopted as
California's new standard. The 2019 version revised some test methods
and lowered the maximum allowable standby power for exercise and
combination spas from those in APSP-14 2014. APSP-14 2019 also included
standby power limits for inflatable spas for the first time. As of July
2022, nine states have adopted APSP-14 2019, three states have adopted
the previous version APSP-14 2014, and Arizona and Connecticut follow
Arizona's 2009 Title 44 provisions and California's 2006 Title 20
provisions, respectively.
DOE is also aware of standards in the European Union and Canada.
The European Union standard, CSN EN 17125, covers a wider range of
products and concerns safety requirements and test methods for energy
consumption.\13\ CSN EN 17125 specifies labeling requirements for
energy consumption but does not specify a maximum limit for the energy
consumption of PESs. A Canadian national standard, Energy Performance
of Hot Tubs and Spas, reaffirmed in 2021, (``CSA C374:11''), provides
both a test method and energy performance requirements for PESs.\14\
CSA C374:11 cites CEC's Title 20, and its test procedure and energy
conservation standards are similar to those in APSP-14 2019.
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\13\ CSN EN 17125 is available at: <a href="https://www.en-standard.eu/csn-en-17125-domestic-spas-whirlpool-spas-hot-tubs-safety-requirements-and-test-methods/">https://www.en-standard.eu/csn-en-17125-domestic-spas-whirlpool-spas-hot-tubs-safety-requirements-and-test-methods/</a>.
\14\ CSA C374:11 (R2021) is available at: <a href="https://www.csagroup.org/store/product/2703317/">https://www.csagroup.org/store/product/2703317/</a>.
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DOE requests information on any voluntary or mandatory test
procedure and energy conservation standards for PESs that are not
mentioned in section III.A.4 of this NODA.
5. Technology Options for Improving Efficiency
DOE reviewed product literature and conducted manufacturer
interviews to survey the technologies that could lower the normalized
average standby power of a PES and are currently available for use in
the portable electric spa market. To identify the most relevant
technology

[[Page 69088]]

options, DOE researched the components of PESs that consume energy and
the design characteristics that affect energy consumption. DOE's
research and data submitted by manufacturers suggest that the most
substantial energy uses of a portable electric spa in standby mode are
the energy use associated with maintaining the water temperature and
circulating the water. As a result, DOE's analysis considered
technology options that focus on these two systems. Because their
designs are quite different, inflatable spas and non-inflatable spas
have different instances of applicable technology options, although the
engineering motivations behind the types of technology options are
similar. DOE's research did not identify reasons that technology
options would differ between standard spas, exercise, and combination
spas. Accordingly, the same technology options are considered for each
spa variety.
DOE seeks comment generally on the descriptions of relevant energy-
saving technology options as described in section III.A.5 of this
document, including whether any options require revised or additional
details to characterize each option's effects on a PES's energy
consumption.
a. Insulation
To minimize heat losses, PESs require insulating materials between
the hot spa water and cool ambient air. This NODA uses the unmodified
term ``insulation'' to refer to the insulation in the walls and floor
of the spa, as opposed to any insulating materials in the cover. In
non-inflatable spas, this material is often a polyurethane spray foam,
which is applied to the bottom of the spa shell. Foam can also be
applied in sheets inside the perimeter of the spa cabinet. Foam
insulation can be any selected thickness, with the maximum amount of
foam known as ``full-foam'' insulation, which entirely fills the space
between the spa shell and the cabinet. Even in full-foam applications,
however, foam or other insulating materials cannot totally encapsulate
a spa's pumps or heating element. The most typical foam used has a
density of 0.5 pounds per cubic foot. Both thicker and denser
insulation increase, up to a point, the total R-value of the
insulation, which then reduces the energy consumption of spas. However,
the marginal effectiveness of thicker or denser insulation in the walls
and floor, as measured in R-value, decreases progressively. Although in
practice foam may be added in arbitrary increments, the efficiency
analysis in section III.C.1 considers two specific levels of additional
insulation. The first corresponds to R-6 added in the spa's wall
sections to prevent heat loss from the water outward to the ambient air
and to R-3.5 added in the floor section to prevent heat loss from the
water downward to the ground. The second corresponds to R-6 added in
the wall sections. The efficiency analysis also considers a design
option in which two inches of 0.5 pound per cubic foot of foam is
replaced with 2 pound per cubic foot of foam.
Inflatable spas are typically only insulated by air pockets, their
PVC material, and flexible foam integrated into their covers and,
especially, into attachable ``jackets.'' To maintain its collapsible
and storable characteristics, however, many other methods of adding
foam or other insulating materials to non-inflatable spas are not
applicable. In response to mandatory energy consumption limits in some
jurisdictions, some inflatable spa manufacturers developed a
``jacket,'' which has foam integrated into it and surrounds the
inflated spa. During correspondence with DOE, inflatable manufacturers
reported that such a jacket or a similar design is necessary for
reducing the energy consumption below maximum levels as specified by
the most recent industry and CEC standards.
DOE seeks comment regarding use of additional or improved
insulation as a technology option for PESs and, in particular, what
would limit adding further insulation to a PES.
b. Cover
Heat loss, which drives PES energy consumption, can also occur
through the top face of a spa, in addition to through the walls and
floor. Covers prevent this heat loss by acting as an insulator against
conductive heat transfer and also as a convection and vapor barrier to
maintain high humidity levels above the water surface, thus preventing
evaporative cooling. In non-inflatable spas, spa covers are typically
made of rigid polystyrene foam panels wrapped in moisture barriers and
protective vinyl sheaths. Most covers on non-inflatable spas have a
central hinge, which allows consumers to remove and otherwise handle
them more easily. The hinge is typically created by joining two pieces
of rigid foam with a patch of vinyl. To allow for easy folding, there
is typically a space of one to two inches between the two sections.
This design is known as a ``dual-hinged'' design because either half
may be lifted first. Like insulation in the body of non-inflatable
spas, the main method for increasing the thermal resistance of a cover
is to increase its thickness or density. Also, like insulation in the
body of an inflatable spa, the marginal effectiveness of additional
cover thickness or density decreases as the thickness or density
increase. Product literature and online retail data suggest that the
ranges of cover thicknesses and densities available are two inches to
six inches and one pound per cubic foot to two pounds per cubic foot,
respectively.
Inflatable spa covers consist of thin flexible foam material that
is about one-half inch thick and surrounded by a flexible PVC tarp. In
lieu of additional foam that would reduce the cover's ability to
collapse or to be stored, some inflatable spa manufacturers distribute
spas with inflatable inserts, which end users may place in a pouch on
the bottom of the cover. These inserts reduce the heat loss through the
top face of the spa by adding additional insulating pockets of air
between the water and ambient air and by improving the seal of the
cover.
DOE seeks comment regarding use of improved covers as a technology
option for PESs and, in particular, what would limit further energy
performance increases of PES covers.
c. Sealing
A particularly important aspect of the performance of a spa cover
is that it largely depends on the extent to which the cover is able to
create an airtight seal between the area above the spa's water and the
area surrounding the spa. Inadequate seals allow air to exchange
between each area, resulting in heat losses through evaporation and
convection. Areas through which air typically escapes are around the
edge of the cover, where the cover meets the flange created by the top
of the spa shell, and the central double-hinging area of the cover, if
the cover does have a hinge. A common method of addressing the seal
around the edge of the cover is by ensuring both the spa flange and the
bottom of the cover are as flat as possible. To address air leaks
through a hinge in the cover, manufacturers might insert a separate
piece of foam to fill the gap between each half of the cover created by
the hinge. This ``hinge seal'' is also composed of rigid foam sheathed
in a protective material, such as vinyl, and is connected to the
stretch of material connecting each section of the spa cover. The hinge
seal is not connected to each section, however, allowing for easy
folding. Manufacturers might also opt for a ``single-hinged'' folding
design, in which there is no space gap between vertical edges of each
spa cover sections. Instead, the edges of each

[[Page 69089]]

section of the cover are angled, with one overlapping the other. This
design eliminates the gap between sections. With this design, only the
section of the cover resting on top of the other at the hinge can be
lifted first. Covers can typically be buckled into position, but
manufacturers and product literature suggest that, when fastened, these
buckles do not to a large extent affect the seal but are mostly
intended for safety. Correspondence with manufacturers has also
suggested that the cover cannot be perfectly sealed. Because pressure
will build as a result of thermal expansion and contraction of interior
air and water, as well as from the potential addition of air through
jets, some amount of air will be forced to escape through even very
fortified spa covers.
Manufacturers have indicated to DOE that similar sealing strategies
addressing air from leaking out of the spa cabinet could also reduce a
spa's normalized average standby power. However, DOE did not identify
evidence of air leakage through spa regions other than the cover.
Accordingly, no technology options or technologies were analyzed that
explicitly address the sealing of other areas than the cover of the
spa.
DOE seeks comment regarding use of improved sealing as a technology
option for PESs, regarding whether air leakage is significant at PES
locations other than the cover, and regarding what would limit further
sealing improvements energy performance increases of PES covers.
d. Radiant Barrier
The insulation and sealing methods described previously reduce
conductive and convective heat losses, respectively. Energy can also
leave the spa through radiative heat transfer. This type of heat
transfer can be reduced by the application of a radiant barrier that
reflects radiation back toward the center of the spa. Commonly
available radiant barriers are composite ``thermal blankets'' made of a
thin insulating material, such as bubble wrap, with reflective foil on
both of its sides. DOE is aware of several manufacturers who use such a
material or similar ones as a method of reducing their spas' heat
losses. Correspondence with manufacturers and DOE's own research
indicates that radiant barriers require an air gap between them and the
radiating heat source to be effective. Like insulation, the marginal
effectiveness of radiant barriers decreases as the spa reduces its heat
losses via other methods.
DOE seeks comment on the description of radiant barriers and data
on the relative effects of radiant barriers when paired with different
amounts of insulation and different thicknesses of adjacent air gaps.
e. Insulated Ground Cover
To reduce heat conducted from the bottom of a spa to the ground, it
is possible to install spas on top of a layer of insulating material.
While non-inflatable spas are not typically distributed with such
layers, an example of this application is in the current industry test
procedure, APSP-14 2019, which allows for spas to be placed on top of
two inches of polyisocyanurate sheathed with at least half an inch of
plywood during testing. Inflatable spas, however, are often distributed
with thin foam mats meant to be placed underneath the spas. These mats
are typically to protect them from debris which might puncture the
spas' PVC material. DOE has also observed similar, thicker ground
covers available for purchase, which are marketed on the basis of their
insulating capacities in addition to protective capacities. These
thicker ground covers reduce the conductive heat transfer through the
bottom of the spa to the ground. Based on their expected effectiveness
and availability on the market, DOE considered insulated ground covers
as a viable technology option for inflatable PESs.
For this NODA, DOE did not explicitly model the addition of an
insulated ground cover as a technology option for non-inflatable PESs
because it remains unclear how DOE's proposed test procedure for PESs
may affect manufacturers' installation instructions (e.g., to use an
insulated ground cover) and consequently typical PES installation
configurations. Additionally, existing performance data for PESs does
not typically disclose presence of an insulated ground cover. Due to
this uncertainty and the fact that such an addition into DOE's model
would change the effects of other design options, DOE employed the more
conservative approach of not modeling insulated ground covers as a
technology option for non-inflatable PESs in this NODA. However, DOE
may do so in the future as indicated by comment or data. In contrast to
the approach taken for non-inflatable PESs, DOE did include insulated
ground covers as a technology option for inflatable spas because of the
abundance of currently available products marketed as insulating ground
covers for that spa type.
DOE requests comment regarding whether insulated ground covers
warrant inclusion in the set of technology options for non-inflatable
PESs, including whether non-inflatable PESs are typically installed on
top of insulated ground covers and whether that installation would be
likely to change in view of the proposed DOE test procedure (see 87 FR
63356).
f. Dedicated Circulation Pump
Most non-inflatable spas use two-speed jet pumps for powering
therapy jets and for water circulation. These jet pumps operate at high
speed when powering therapy jets and low speed when used only for
circulation purposes. The overall efficiency of a pump depends on
several factors, including the hydraulic efficiency of the impeller and
casing, the geometry of the plumbing system, and the electrical
efficiency of the pump's motor. However, it is possible to simplify the
comparison of the efficiencies of two differently sized pumps operating
at the same motor speed. In general, when a pump operates at a motor
speed significantly lower than its maximum motor speed on a given
plumbing system, it will be less efficient than a smaller pump
operating at its maximum motor speed on that same plumbing system.
Consequently, a pump configuration more efficient than a single two-
speed pump is two single-speed pumps, including a higher horsepower
pump sized for operating therapy jets and a lower horsepower pump sized
for filtration purposes. DOE is aware that pump inefficiencies may
manifest as waste heat, which, if absorbed by the spa water, would
reduce the load on the heating element and ultimately may mitigate the
effects of a relatively inefficient pump and pump motor. The extent to
which this waste heat is captured is still being investigated. Although
in practice two-speed pumps and dedicated circulation pumps vary in
power consumption, and the amount of waste heat will depend on how a
given pump motor dissipates heat and on a spa's insulation, the
efficiency analysis in section III.C.1 considers just two estimated
values for water circulation: one associated with using the low-speed
setting of a two-speed pump, and one associated with using a one-speed
dedicated circulation pump. DOE did not evaluate dedicated circulation
pumps as a technology option for inflatable spas because inflatable
spas typically use a one-speed dedicated circulation pump and a
separate air blower for massage jets.
DOE seeks comment and data on the degree to which two-speed pump
inefficiencies manifest as waste heat and to which that waste heat is
absorbed by the spa's water.

[[Page 69090]]

g. Heat Pump
DOE is aware of the existence of heat pumps marketed for use with
PESs. Heat pumps would require less power as a heat source than the
electric resistance heaters typically used in the PES industry. DOE is
aware of at least one manufacturer of heat pump models marketed for use
with spas explicitly.\15\ However, heat pumps designed for use with
portable electric spas appear otherwise absent in the market. DOE is
unaware of portable electric spas that are equipped with heat pumps by
their manufacturers.
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\15\ Arctic Heat Pumps. Arctic Titanium Heat Pump for Swimming
Pools and Spas--015ZA/B. Available at <a href="http://www.arcticheatpumps.com/arctic-titanium-heat-pump-for-swimming-pools-and-spas-heats-chills-11-700-btu-dc-inverter.html">www.arcticheatpumps.com/arctic-titanium-heat-pump-for-swimming-pools-and-spas-heats-chills-11-700-btu-dc-inverter.html</a>. (last accessed August 5, 2022) The
2022-08-05 material from this website is available in docket 2022-
BT-STD-0025 at <a href="http://www.regulations.gov">www.regulations.gov</a>.
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For the one spa-compatible heat pumps supplier that DOE identified,
models list coefficients of performance \16\ that range from 3.16 to
6.2, though at lower output temperatures than those typical of PESs. In
general, heat pump performance declines as a function of increase of
the thermal gradient across which they operate. However, DOE did not
obtain data to extrapolate those values to higher temperatures. In
general, heat pump performance declines as a function of increase of
the thermal gradient across which they operate. Additionally, DOE did
not obtain data regarding how heat pumps would affect installation cost
if non-integral units required separate mounting, plumbing, and
electrical connection.
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\16\ Coefficient of performance (``COP'') is a figure
characterizing the relative performance of heat pumps. It represents
the ratio of heat transferred to the input energy required to
transfer it. A higher COP indicates less energy consumed to per unit
of heat delivered.
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Accordingly, for this NODA, heat pumps were not included in the set
of design options modeled in the engineering analysis due to lack of
sufficient data and limited availability. If warranted, DOE may model
the addition of a heat pump as a technology option in future analysis.
DOE requests comment regarding whether heat pumps would be likely
to reduce energy consumption in PESs and, if so, quantified estimates
of the effects of heat pump integration on both energy consumption and
manufacturer production cost.
DOE requests comment regarding the availability of heat pumps
compatible with PESs.

B. Screening Analysis

DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
Technological feasibility. Technologies that are not incorporated
in commercial products or in working prototypes will not be considered
further.
Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial products could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
Impacts on product utility or product availability. If it is
determined that a technology would have a significant adverse impact on
the utility of the product for significant subgroups of consumers or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, that technology
will not be considered further.
Adverse impacts on health or safety. If it is determined that a
technology would have significant adverse impacts on health or safety,
that technology will not be considered further.
Unique-pathway proprietary technologies. If a design option
utilizes proprietary technology that represents a unique pathway to
achieving a given efficiency level, that technology will not be
considered further due to the potential for monopolistic concerns.
10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
If DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the listed five criteria, it
will be excluded from further consideration in the engineering
analysis.
In the case of PESs, DOE has tentatively determined that no
technology options identified in section III.A.5 met the criteria for
screening. Accordingly, all technology options identified in section
III.A.5 were considered during the engineering analysis, with the
exception of heat pumps and insulated ground covers (for non-inflatable
spas only), which are not explicitly analyzed as design options for
reasons discussed in section III.A.5 of this NODA.

C. Engineering Analysis

The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of PESs. 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 PESs cost at each efficiency level (i.e., the
``cost analysis''). In determining the performance of higher-efficiency
PESs, DOE considered technologies and design option combinations not
eliminated by the screening analysis. For each product class of PES,
DOE estimated the manufacturer production cost (``MPC'') for the
baseline as well as higher efficiency levels. 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).
DOE converts the MPC to the manufacturer selling price (``MSP'') by
applying a manufacturer markup. The MSP is the price the manufacturer
charges its first customer, when selling into the PES distribution
channels. The manufacturer markup accounts for manufacturer non-
production costs and profit margin. DOE developed the manufacturer
markup by examining publicly available financial information for
manufacturers of the covered product.
1. Efficiency Analysis
DOE selected efficiency levels to analyze by identifying baseline
units for non-inflatable and inflatable spas, evaluating the effects of
efficiency design options on those units, and extrapolating the results
to spas of other sizes. The baseline unit is intended to be
representative of the most consumptive spas available in the market.
For non-inflatable spas, DOE identified ``Spa J'' from the 2012 study
``Measurement and Analysis of the Standby Power of Twenty-Seven
Portable Electric Spas'' as the baseline unit.\17\ For inflatable spas,
DOE acquired a sample unit and measured its performance without the
additional features that make it compliant with CEC energy conservation
standards (and, by extension, with APSP-14 2019). The results of those
tests were considered to be representative of the most consumptive
inflatable spas on the market.
---------------------------------------------------------------------------

\17\ Hamill, Andrew. ``Measurement and Analysis of the Standby
Power of Twenty-Seven Portable Electric Spas.'' September, 2012.
---------------------------------------------------------------------------

DOE seeks comment on its selection of the baseline unit, including
whether any other units on the market would

[[Page 69091]]

better represent the most consumptive spas available for purchase.
The non-inflatable spa baseline unit was identified on the basis of
its fill volume and normalized average standby power. However, no
information was available regarding its features and, in particular,
its insulation characteristics. To predict the effects of technologies
and design option combinations on the non-inflatable baseline unit, it
was necessary to estimate insulation levels of the model's spa cabinet.
To do this estimate, a simplified model of the energy consumption of
PESs was created, which accepts spa specifications, including fill
volume, linear dimensions, and insulation type, and predicts the
normalized average standby losses of a spa. Predictions were made for a
subset of spas in MAEDbS on which DOE collected additional data through
brochures and other marketing materials, and predictions were then
compared to values reported in MAEDbS. By establishing a relationship
between the amount of insulation and normalized average standby power,
it was possible to estimate the amount of insulation in the non-
inflatable baseline unit, Spa J. Additionally, Spa J was reported to be
tested with a cover better than other covers observed to be available
on the market. Using the energy consumption model, the normalized
average standby power was approximated for Spa J if it had been fitted
with a cover of a lower R-value. The energy consumption model is
described in more detail below.
DOE's research and correspondence with manufacturers indicate that
the drivers of PESs' energy consumption in standby mode are: (1) heat
losses, and (2) the energy demands of filtration. In addition to the
energy consumption of the filtration system, there are small power
demands, such as that of a spa's controls unit, that are also modeled
as constant with size. In DOE's analysis, the energy consumption of the
filtration system and other wattage inputs, which are constant with
size and do not contribute to water heating, are collectively referred
to as ``non-heat losses.'' In the energy consumption model, these non-
heat losses were modeled as constant with size and were discretized
into two potential values for non-inflatable spas--a larger value for
spas that use the low-speed setting of high-hp pumps for filtration,
and a smaller value for spas that use a better-sized dedicated
circulation pump for filtration purposes. Only one value for non-heat
losses was estimated for inflatable spas, which typically already use
dedicated circulation pumps for filtration and separate air blowers for
massage jets. The estimated values for non-heat losses are summarized
in the table below. The ``High HP 2-Speed Pump'' column represents the
non-heat losses associated with a high horsepower two-speed pump for
non-inflatable spas and the single speed pump typical for inflatable
spas, while the ``Dedicated Circulation Pump'' column represents non-
heat losses associated with dedicated circulation pump upgrades.

Table III.1--Estimated Non-Heat Losses of PESs
------------------------------------------------------------------------
Non-heat losses
----------------------------------------
Spa type High HP 2-speed Dedicated
pump circulation pump
------------------------------------------------------------------------
Standard Spa................... 40 Watts........... 20 Watts.
Exercise Spa................... 40 Watts........... 20 Watts.
Combination Spa................ 40 Watts........... 20 Watts.
Inflatable Spa................. n/a................ 27.25 Watts.
------------------------------------------------------------------------

DOE requests comment on the range of filtration system power
demands in PESs as described in Table III.1. DOE also requests comment
on any correlation between power demand and whether a spa uses a high
horsepower two-speed pump or a lower horsepower dedicated circulation
pump.
To calculate a spa's heat loss in standby mode, DOE assumed that a
spa's normalized average standby power loss is approximately equal to
the instantaneous heat loss of a spa held at thermal equilibrium, with
spa water temperature and ambient air temperature held at the values
respectively specified by DOE's proposed test procedure. It is
noteworthy that doing so ignores temperature fluctuations
characteristic of PESs' heating cycles.
DOE accounted for heat losses due to one-dimensional conductive
heat transfer through the walls, floor, and cover of the spa, as well
as heat losses due to convection at the outer wall and due to
radiation. Spas were modelled as thermal circuits consisting of walls,
floor, and cover in parallel with each other. The total thermal
resistance of the walls and floor of the spa depends in part on their
respective thicknesses and, consequently, the shape of the spa shell.
Therefore, a simplified shell configuration consisting of basic upright
seats on every side (i.e., no lounge seats) was considered. As a result
of this assumption, walls were divided into lower-insulation top wall
and higher-insulation bottom wall sections, and the floor was divided
into lower-insulation center and higher-insulation perimeter sections.
In particular, the following simplifications were made regarding the
distance from the spa shell to the spa cabinet:

Table III.2--Measurements of Simplified Model of Non-Inflatable Spa
Shell
------------------------------------------------------------------------
Maximum insulation
Section of spa Description thickness
------------------------------------------------------------------------
Top of Wall........... The horizontal distance 6 inches.
from the spa cabinet to
the seat backs..
Bottom of Wall........ The horizontal distance 18 inches.
from the spa cabinet to
the wall of the foot
well..
Center of floor....... The vertical distance 3 inches.
from the base of the
spa to the bottom of
the foot well..
Perimeter of floor.... The vertical distance 15 inches.
from the base of the
spa to the bottom of
the seat..
------------------------------------------------------------------------

[[Page 69092]]

In addition to conductive heat transfer, heat losses due to
radiation and convection were estimated. Losses due to radiation were
approximated using the average percent difference between the average
standby losses of spa models units with and without reflective layers
in their insulation. DOE identified those unit pairs and their
differences in standby energy consumption using MAEDbS. DOE also
conducted independent testing on one inflatable spa and one non-
inflatable spa, measuring the energy consumption before and after each
was retrofitted with a reflective radiant barrier. To estimate the
effects of air convection on the outside surfaces of the spa, DOE
selected a convective heat transfer coefficient characteristic of
airflow at the rate specified in DOE's proposed test procedure and
applied it in series with the spa walls, floor, and cover. Although air
leaks are known to affect the heat losses of a spa, DOE did not obtain
data sufficient to characterize the magnitude of their effect.
Accordingly, DOE's energy model does not estimate the effect of air
leaks explicitly. Instead, losses due to air leaks are treated as
included in the losses through bridge sections, as described as
follows.
DOE requests comment on its assumption of a standard shell shape as
described in Table III.2, especially whether it is representative and
whether DOE should consider certain shapes that result in maximum or
minimum amounts of insulation.
DOE requests data and comment on the effectiveness of radiant
barriers in reducing the normalized average standby power of PESs and
on what factors make radiant barriers more or less effective.
DOE requests data and comment on the extent to which spas lose heat
through air convection out of unsealed regions of the spa and on the
factors that affect heat losses due to sealing.
DOE requests comment on the best way to quantify varying degrees of
cover seal, including perimeter seal against the spa flange and hinge
seal through the center of the cover.
The PES energy consumption model system described previously
overlooks several complicating factors. Specifically, the typical spa's
cabinet holds plumbing, heating equipment, and other components that
not only displace insulation, but also bring hot water closer to the
outside of the spa and even generate their own waste heat, which
escapes the spa or enters the water at unknown proportions. At the same
time, the foam itself is subject to voids and other variations. Rather
than attempting to find an analytical solution that considers factors
such as the number of jets and amount of piping, the physical size of
internal components, or the distance of each from the outside of the
spa, DOE used a simplified model that considers the heat loss through
these ``thermal bridges'' as the amount of heat loss that could not be
predicted by the one-dimensional model described above. DOE used this
assumption to reformulate the thermal circuit of a spa as consisting of
one-part thermal bridge section and one-part insulated section, which
is subdivided into walls, floor, and cover, as described previously.
Bridge sections were modeled as smaller but responsible for a
disproportionate amount of heat flux. Specifically, the proportion of
areas were estimated to be 90 percent insulated area to 10 percent
bridge area. As a result, it was possible to calculate an average R-
value for bridge sections in a spa. Using the average R-value for
bridge sections and the modeled area ratios of insulated area to bridge
area, the energy consumption model calculated total energy use with a
median 0.9 percent error and an average of -4.38 percent error.
DOE requests comment on the method of analyzing thermal bridges as
a single section of low R-value on the spa. Additionally, DOE requests
information about techniques and models which are used in industry to
predict spa performance.
DOE requests comment and data on the discrepancy between heat loss
through the wall where the components are housed and through other
walls.
DOE requests comment on any strategies for considering the effects
of hot water traveling through plumbing on a spa's heat loss.
The R-value of a typical spa's bridge section was important to
infer insulation thickness of Spa J, the chosen baseline unit for non-
inflatable spas. Although Spa J's ``equivalent insulation thickness''
was calculated using the measured heat loss rate, this value cannot be
used to represent the spa's insulation thickness because it does not
consider bridge sections of relatively low thermal resistance.
Consequently, it would underestimate the amount of insulation in Spa J
and overestimate both the space available for additional insulation and
ultimately the amount by which it would be possible to lower heat
losses. Using the average R-value for bridge sections, DOE found what
may be a more representative insulation equivalent resistance, which is
then able to be decomposed into individual walls, cover, and floor
equivalent resistances.
With estimated insulation characteristics for its baseline non-
inflatable spa, it was possible to calculate the expected effects of
additional insulation on the baseline spa's normalized average standby
power consumption. DOE used these calculations to evaluate additional
insulation in the walls of the spa, the floor, and the cover. These
calculations, along with data from DOE's testing a non-inflatable spa
and from the 2012 Hamill study, were used to establish proposed
efficiency levels for non-inflatable spas. DOE selected efficiency
levels in the order of increasing dollar to implement per expected watt
savings using costs described below in the cost analysis.
DOE was also able to conduct its own testing on an inflatable spa
baseline unit. Because DOE's energy consumption model relies to a large
extent on R-values, and as DOE found less data on the R-value of
inflatable spa materials, the effects of most inflatable design options
were related to test data rather than calculations. For design options
utilizing additional insulation and for which DOE did not have test
data, a model similar to the one described previously was used. And
efficiency levels for inflatable spas were chosen in the order of
increasing dollar to implement per expected watt savings, similar to
non-inflatable spas.
After the normalized standby power consumption was calculated for
the baseline non-inflatable and inflatable spas, the standby power of
spas with other volumes was extrapolated using a scaling relationship.
DOE used the relationship defined in APSP-14 2019 standards levels,
which vary energy consumption proportionally to the volume of the spa
raised to the two-thirds power. Several manufacturers recounted during
correspondence with DOE that a constant term was added to the scaling
relationship to account for energy demands unrelated to size during the
most recent revision of APSP-14 2019. Consequently, DOE chose to again
break total standby power losses into heat losses and non-heat losses,
and to scale only heat losses proportionally to volume raised to the
two-thirds power, while holding non-heat losses constant at different
fill volumes.
DOE requests comment describing its appropriation of the scaling
relationship defined in APSP-14 2019 and whether there are any other
traits with which DOE might vary energy consumption.
The efficiency analysis above was informed by data acquired by
testing to the current industry standard test procedure, APSP-14 2019.
However, DOE has proposed a test procedure for PESs, which made it
necessary to

[[Page 69093]]

convert initial results into those which might be expected if spas were
to be tested under that proposed test procedure. In particular, this
conversion accounted for a higher temperature gradient between spa
water and ambient air temperatures during testing, and for the removal
of the foam and plywood foundation allowed by APSP-14 2019.\18\ To
account for the change in temperature gradient, original values were
multiplied by a re-normalization factor of 1.243, the ratio of the
proposed temperature difference of 46 [deg]F to the industry standard
of 37 [deg]F. DOE removed R-13 of insulation from the floor section of
the spa in its model to account for the loss of two inches of
polyisocyanurate foam underneath the spa. While the converted values
will be used for downstream analyses, DOE is also releasing the values
before conversion so that manufacturers may consider them in the
context of existing data.
---------------------------------------------------------------------------

\18\ Appendix A of APSP-14 states the following: The floor may
be insulated with 2in. (51mm) thick R-13 polyisocyanurate with
radiant barrier on both sides.
---------------------------------------------------------------------------

DOE requests comment on whether there are other factors DOE should
consider in converting normalized average standby power values to
reflect the proposed test procedure.
2. Cost Analysis
DOE gathered data through manufacturer interviews, sample unit
teardowns, and publicly available retail data to estimate the costs of
both whole baseline units and of incremental design options. When
necessary, profit margins for inflatables and non-inflatable spa
manufacturers, as well as certain distributors, were estimated to
convert MPC to MSP to final sale price.
DOE requests comment and data on typical markups from MPC to MSP
and from MSP to final sale price.
Once the costs of baseline units and individual design options were
estimated, DOE investigated a scaling function that could relate the
price of a spa to its fill volume. As a first approximation, DOE
estimated that the cost of a spa would be directly proportional to its
fill-volume to the two-thirds power. DOE analyzed a small sample of
retail data and found that, for units otherwise equal in qualities and
features, such a relationship appears to slightly overestimate the cost
of smaller spas and underestimate the cost of larger spas.
DOE requests comment and data characterizing the relationship
between MPC and the size of a PES and whether there are better methods
for approximating the effects of size changes on MPC than the one
described previously.
DOE requests comment and data characterizing to what degree sales
margins vary with spa size.
3. Engineering Results
The initial results of the efficiency analysis contained the
estimated energy consumption of PESs at each efficiency level, as would
be measured according to the current industry test procedure, APSP-14.
These initial results are not used in the energy use analysis or other
downstream analyses because they do not reflect DOE's proposed test
procedure. However, as manufacturers are most likely to have data as
measured with the current industry standard test procedure, the initial
results of the efficiency analysis are summarized in the tables which
follow. In the sets of efficiency levels for both non-inflatable and
inflatable spas, Efficiency Level 1 is equivalent to the maximum
consumption limit set by APSP-14 2019.

Table III.3--Energy Consumption for Non-Inflatable Spas Using Industry TP
----------------------------------------------------------------------------------------------------------------
Energy consumption using industry TP Energy consumption of a 334-
Efficiency level (watts) gal unit (watts)
----------------------------------------------------------------------------------------------------------------
0 (Baseline)................................ 40 + 6.88 * Vol 2/3................. 371
1........................................... 40 + 3.75 * Vol 2/3................. 220
2........................................... 40 + 2.92 * Vol 2/3................. 180
3........................................... 40 + 2.74 * Vol 2/3................. 172
4........................................... 40 + 2.74 * Vol 2/3................. 152
5........................................... 40 + 2.63 * Vol 2/3................. 146
6........................................... 40 + 2.38 * Vol 2/3................. 135
7........................................... 40 + 1.88 * Vol 2/3................. 111
8 (Max-Tech)................................ 40 + 1.80 * Vol 2/3................. 107
----------------------------------------------------------------------------------------------------------------

Table III.4--Energy Consumption for Inflatable Spas Using Industry TP
----------------------------------------------------------------------------------------------------------------
Energy consumption using industry TP Estimated energy consumption
Efficiency level (watts) of a 200-gal unit (watts)
----------------------------------------------------------------------------------------------------------------
0 (Baseline)................................ 9.20 * Vol 2/3...................... 315
1........................................... 7.00 * Vol 2/3...................... 239
2........................................... 4.78 * Vol 2/3...................... 164
3(Max-Tech)................................. 4.73 * Vol 2/3...................... 162
----------------------------------------------------------------------------------------------------------------

DOE requests comment on the efficiency levels described in tables
Table III.3 and Table III.4, including whether any do not align with
expected effects design options associated with them, as described in
Table III.7 and Table III.8.
As discussed previously in this document, on October 18, 2022, DOE
proposed a test procedure for measuring the energy consumption of PESs.
87 FR 63356. DOE's proposed test procedure aligns with the current
industry test procedure in many regards, including in its use of
normalized average standby power as a metric for the energy consumption
of PESs. However, DOE's proposed test procedure includes changes to the
specified ambient air temperature and to the amount of insulation
allowed under the spa during

[[Page 69094]]

testing. These changes can be expected to increase the measured
normalized average standby power of all PESs. Section III.C.1 discusses
DOE's method of converting standby power values measured under the
industry test procedure to the values expected if the standby power
values for the same spas were measured under DOE's proposed test
procedure. The converted and final results are summarized in the tables
below. These values are used in the analyses described in later
sections of this document.
The tables below also summarize the expected percent change in
energy consumption on each efficiency level as a result of DOE's
proposed test procedure. The increased temperature gradient is not
expected to affect any efficiency levels differently. However, the
effect of removing additional insulation from underneath the spa will
depend on the amount of foam present in the base section of the spa and
on the presence of other design options. As a result, the percent
change is not constant across efficiency levels. The change in
normalized average standby power at a given efficiency level due to
DOE's proposed test procedure is expected to remain constant for spas
of all volumes at that efficiency level.

Table III.5--Energy Consumption for Non-Inflatable Spa Using Proposed TP
----------------------------------------------------------------------------------------------------------------
Energy
Energy consumption using consumption of a % Increase from
Efficiency level proposed TP (watts) 334-gal unit industry TP (%)
(watts)
----------------------------------------------------------------------------------------------------------------
0....................................... 40 + 9.55 * Vol 2/3............. 500 35
1....................................... 40 + 5.37 * Vol 2/3............. 299 36
2....................................... 40 + 4.34 * Vol 2/3............. 249 38
3....................................... 40 + 4.12 * Vol 2/3............. 238 38
4....................................... 40 + 4.02 * Vol 2/3............. 213 40
5....................................... 40 + 3.88 * Vol 2/3............. 207 42
6....................................... 40 + 3.04 * Vol 2/3............. 167 24
7....................................... 40 + 2.73 * Vol 2/3............. 152 37
8....................................... 40 + 2.63 * Vol 2/3............. 147 37
----------------------------------------------------------------------------------------------------------------

Table III.6--Energy Consumption for Inflatable Spa Using Proposed TP
----------------------------------------------------------------------------------------------------------------
Energy
Energy consumption using consumption of a % Increase from
Efficiency level proposed TP (watts) 200-gal unit industry TP (%)
(watts)
----------------------------------------------------------------------------------------------------------------
0....................................... 14.39 * Vol 2/3................. 492 56
1....................................... 12.03 * Vol 2/3................. 411 72
2....................................... 7.50 * Vol 2/3.................. 257 57
3....................................... 7.44 * Vol 2/3.................. 254 57
----------------------------------------------------------------------------------------------------------------

DOE requests comment on the expected effects of DOE's proposed test
procedure, as described in Table III.5 and Table III.6, including on
whether its effects on normalized average standby power would be
greater than or less than DOE's estimates.
Efficiency levels for PESs were established by estimating the
effects of adding each design option to a representative unit at the
previous efficiency level. The design option, which presented the
lowest cost in dollars per watt expected to be saved, was selected as
characteristic of the next efficiency level. Although potential
standards at different efficiency levels will not prescribe specific
design options, this approach resulted in the possibility of
characterizing each efficiency level by the addition of a specific
design option. DOE's estimates of the cost to manufacture each design
option, as well as the baseline spa, are described in section III.C.2
of this NODA. The characteristic design options and their estimated
costs on 334-gallon non-inflatable spas and a 200-gallon inflatable spa
are summarized in the tables III.7 and III.8.

Table III.7--Characteristic Design Options for Non-Inflatable Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Characteristic design option Total MPC for Marginal MPC for
Efficiency level added from previous EL 334-gal unit 334-gal unit
----------------------------------------------------------------------------------------------------------------
0....................................... The baseline spa, Spa J, was $3,120 $0
estimated to have R-10 worth of
insulation in the walls and
floor and an R-14 cover.
1....................................... Additional R-6 in the wall 3,186 66
sections and R-3.5 in the floor
section.
2....................................... Additional R-6 in the wall 3,252 66
sections.
3....................................... Additional inch of cover 3,280 28
thickness (equivalent to an
additional R-4).
4....................................... Switch from two-speed pump to 3,405 125
dedicated jet and circulation
pumps.
5....................................... Additional inch of cover 3,433 28
thickness (equivalent to an
additional R-4).
6....................................... Replace two inches of 0.5lb foam 3,607 174
with 2lb foam insulation.
7....................................... Add radiant barrier around 3,697 90
perimeter of spa.
8....................................... Increase cover density from 1lb 3,767 70
foam to 2lb foam.
----------------------------------------------------------------------------------------------------------------

[[Page 69095]]

Table III.8--Characteristic Design Options for Inflatable Spa Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Characteristic design option Total MPC on 200- Marginal MPC on
Efficiency level added from previous EL gal unit 200-gal unit
----------------------------------------------------------------------------------------------------------------
0....................................... None............................ $122 $0
1....................................... Flexible foam jacket and 165 43
inflatable cover insert.
2....................................... Additional reflective blanket 297 132
around spa.
3....................................... \1/2\ inch thick foam ground 329 32
cover.
----------------------------------------------------------------------------------------------------------------

DOE requests comment and data regarding the design options and
associated estimated costs described in tables Table III.7 and Table
III.8 of this NODA.
Section III.C.2 also discusses the conversion of MPC to MSP using
manufacturer markups, and the scaling relationship used to extrapolate
from the price of the baseline unit to units of other sizes. In
particular, the price of a spa was modeled as growing proportionally to
the fill volume to the two thirds power. The manufacturer markups used
and the ultimate MSP scaling relationships are described in Tables
III.9 and III.10.

Table III.9--Manufacturer Markups by Manufacturer Type
------------------------------------------------------------------------
Estimated
Manufacturer types manufacturer
markup
------------------------------------------------------------------------
Inflatable Spa Manufacturer.......................... 1.17
Non-Inflatable Spa Manufacturer...................... 1.43
------------------------------------------------------------------------

Table III.10--Portable Electric Spa MSP by Volume
------------------------------------------------------------------------
MSP for
Efficiency level MSP for non-inflatable inflatable spas
spas ($) ($)
------------------------------------------------------------------------
0............................. 92.69 * Vol 2/3....... 4.07 * Vol 2/3
1............................. 94.64 * Vol 2/3....... 5.50 * Vol 2/3
2............................. 98.54 * Vol 2/3....... 9.92 * Vol 2/3
3............................. 103.27 * Vol 2/3...... 10.98 * Vol 2/3
4............................. 111.72 * Vol 2/3...... n/a
5............................. 120.99 * Vol 2/3...... n/a
6............................. 136.22 * Vol 2/3...... n/a
7............................. 154.10 * Vol 2/3...... n/a
8............................. 174.05 * Vol 2/3...... n/a
------------------------------------------------------------------------

Those estimates describe a relationship between the marginal cost
and the marginal efficiency of a PES as the PES is made progressively
more efficient. The relationship is the basis of analyses described in
sections D, E, F, G, and H of this NODA.

D. Markups Analysis

The markups analysis develops appropriate markups (e.g., retailer
markups, distributor markups, contractor markups) in the distribution
chain and sales taxes to convert the MSP estimates derived in the
engineering analysis to consumer prices, which are then used in the LCC
and PBP analyses and in the manufacturer impact analysis. At each step
in the distribution channel, companies mark up the price of the product
to cover business costs and profit margin.
1. Distribution Channels
For this NODA, DOE has identified separate distribution channels
into groups for hard-sided (standard, exercise, and combination) and
inflatable spas. DOE based the market shares on confidential
manufacturer interviews conducted under non-disclosure agreements. For
PESs, the main parties in the distribution chains are shown in Table
III.11.

Table III.11--Distribution Channels
----------------------------------------------------------------------------------------------------------------
Market share (%)
-------------------------------
Index Distribution channel agents Hard-sided Inflatable
spas spas
----------------------------------------------------------------------------------------------------------------
1..................................... Manufacturer [rarr] Wholesaler [rarr] 5 ..............
Spa Product Contractor [rarr] Consumer.
2..................................... Manufacturer [rarr] Spa Product Retailer 60 ..............
[rarr] Consumer.
3..................................... Manufacturer [rarr] Big Box Retailer 20 50
[rarr] Consumer.
4..................................... Manufacturer [rarr] Big Box Internet 10 50
Retailer [rarr] Consumer.
5..................................... Manufacturer [rarr] Consumer (direct 5 ..............
sale).
----------------------------------------------------------------------------------------------------------------

2. Markups
Baseline markups are applied to the price of products with baseline
efficiency, while incremental markups are applied to the difference in
price between baseline and higher-efficiency models (the incremental
cost increase). The incremental markup is typically less than the
baseline markup and is designed to maintain similar per-unit

[[Page 69096]]

operating profit before and after new or amended standards.\19\
---------------------------------------------------------------------------

\19\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, using the
same markup for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While such an outcome is
possible, DOE maintains that it is unlikely that standards would
lead to a sustainable increase in profitability in the long run in
markets that are reasonable competitive.
---------------------------------------------------------------------------

For this NODA, DOE did not develop PES-specific baseline and
incremental markups for each actor in the distribution chain. Instead,
based on supply chain similarities, DOE used the markups analysis
developed for its Pool Heater energy conservation standard as a
proxy.\20\ If DOE decides to pursue minimum efficiency standards for
PESs, DOE will examine the PES supply chain in detail.
---------------------------------------------------------------------------

\20\ Please see chapter 6 of the Technical Support Document:
Energy Efficiency Program for Consumer Products and Commercial and
Industrial Equipment: Consumer Pool Heaters. DOE. 2022. Available at
<a href="https://www.regulations.gov/document/EERE-2021-BT-STD-0020-0005">https://www.regulations.gov/document/EERE-2021-BT-STD-0020-0005</a>.
---------------------------------------------------------------------------

DOE applied the following baseline and incremental markups for each
step of the distribution channels listed in Table III.11, which are
shown in Table III.12.

Table III.12--Agent Specific Markups
------------------------------------------------------------------------
Baseline Incremental
Agent markup markup
------------------------------------------------------------------------
Wholesaler.............................. 1.41 1.15
Spa Product Retailer.................... 1.76 1.22
Big Box Retailer........................ 1.31 1.07
Big Box Internet Retailer............... 1.31 1.07
Consumer (direct sale).................. 1.70 1.22
Spa Product Contractor.................. 1.40 1.21
------------------------------------------------------------------------

DOE requests information on the existence of any distribution
channels other than the distribution channels listed in Table III.11 of
this document. Further, DOE requests comment on whether the same
distribution channels are applicable to installations of new and
replacement PESs.
DOE requests information on the fraction of shipments that are
distributed through the channels shown in Table III.11 of this
document.
3. Sales Taxes
The sales tax represents state and local sales taxes that are
applied to the consumer product price. The sales tax is a
multiplicative factor that increases the consumer product price.
DOE derived state and local taxes from data provided by the Sales
Tax Clearinghouse.\21\ DOE derived population-weighted average tax
values for each Census Region, as shown in Table III.13.\22\
---------------------------------------------------------------------------

\21\ Sales Tax Clearinghouse Inc. State Sales Tax Rates Along
with Combined Average City and County Rates. July 2021. Available at
<a href="https://thestc.com/STrates.stm">https://thestc.com/STrates.stm</a> (Last accessed July 1, 2021.)
\22\ See: <a href="https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf">https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf</a>.

Table III.13--Average Sales Tax Rates by Census Region
------------------------------------------------------------------------
Sales tax rate
Census region Description (%)
------------------------------------------------------------------------
1.............................. Northeast.............. 6.90
2.............................. Midwest................ 7.10
3.............................. South.................. 7.36
4.............................. West................... 7.53
---------------
Population-weighted average ....................... 7.28
------------------------------------------------------------------------

4. Summary of Markups
Table III.14 summarizes the markups at each stage in the
distribution channel and provides the average sales tax to arrive at
overall markups for the potential product classes considered in this
analysis.

Table III.14--Summary of Markups
------------------------------------------------------------------------
Baseline Incremental
Equipment class markup markups
------------------------------------------------------------------------
Standard................................ 1.75 1.27
Exercise................................ 1.75 1.27
Combination............................. 1.75 1.27
Inflatable.............................. 1.41 1.15
------------------------------------------------------------------------

E. Energy Use Analysis

The purpose of the energy use analysis is to determine the annual
energy consumption of PESs during stand-by operation at different
efficiencies in representative U.S. single-family homes and to assess
the energy savings potential of increased PES efficiency. The energy
use analysis estimated the range of energy use of PESs in the field
(i.e., as they are actually used by consumers). The energy use analysis
provided the basis for other analyses DOE performed,

[[Page 69097]]

particularly assessments of the energy savings and the savings in
consumer operating costs that could result from adoption of new
standards.
The energy use analysis uses the energy use models developed in the
engineering analysis. The engineering analysis calculated the rate of
heat loss from the spa as a function of the difference between the spa
operating temperature and the ambient temperature. For this analysis,
DOE developed distributions of binned hourly ambient temperature data
using the dry-bulb temperature from the Typical Meteorological Year 3
(``TMY3'') \23\ weather data as a function of climate zone, as
described in section III.E.3 of this document. The annual energy use
(``AEU'') in kilowatt hours per year (kWh/yr) for each climate zone, z,
for all spas, other than combination spas, is expressed as:
---------------------------------------------------------------------------

\23\ The TMY data sets hold hourly values of solar radiation and
meteorological elements for a 1-year period. Their intended use is
for computer simulations of solar energy conversion systems and
building systems to facilitate performance comparisons of different
system types, configurations, and locations in the United States and
its territories. Because the values represent typical rather than
extreme conditions, they are not suited for designing systems to
meet the worst-case conditions occurring at a location.
[GRAPHIC] [TIFF OMITTED] TP17NO22.000

---------------------------------------------------------------------------
Where:

AEUz = the annual energy use, in kWh, of the spa installed in
climate zone z; if there are any hours where Tamb exceeds Top, AEU
is set equal to zero,
j = a bin index representing the ambient temperature at which the
spa is operating,
wz,j = the probability of the monthly ambient temperature for
climate zone z,
Sys<INF>non-heat</INF> = the energy use of non-heat producing
systems, i.e., water pumps, controls, etc., which does not scale
with spa water volume,
z = climate zone,
Sysheat = a coefficient representing heating system energy use,
which scales with spa water volume,
Vol = the spa's water volume,
Top = the spa's operating temperature (87 for exercise spas, and the
exercise portion of combination spas, 102 for all other products)
([deg]F),
TopTP = the spa's operating temperature as defined in the test
procedure (102 [deg]F),
Tamb j = the ambient temperature ([deg]F),
TambTP = the national average ambient temperature, as defined in the
test procedure (56 [deg]F), and
npyz = number of months of operation per year for PESs installed in
climate zone z.

DOE seeks comment on its energy use model. Specifically, DOE seeks
comment on the energy use model for combination spas, where the Sysnon-
heat variable is normalized with volume of water portioned to the
standard spa pool.
1. Consumer Sample
DOE conducts its analysis in support of a potential new minimum
energy conservation standard at the national level. This means that DOE
must distribute consumers of PES products throughout the nation to
capture variability of key inputs of PES operation. Specifically, for
the annual energy use estimate, DOE had concern regarding distributing
the population of PES installations across different regions to capture
variability in outdoor (ambient) temperatures, which impact PES stand-
by energy consumption. This distribution of installations is referred
to as the ``Consumer Sample.''
For this NODA, DOE used the statistical household data available in
the Energy Information Administration. Residential Energy Consumption
Survey: 2015 (``RECS'').\24\ \25\ DOE used the data from RECS of
households with a hot tub (RECBATH=1, FUELTUB=5, and TYPEHUQ=[2, 3]) to
define the national spatial sample of PES installations over analysis
regions defined by the intersection of census regions r and climate
zones z. The climate zones are those defined in the RECS microdata. The
percent distribution of consumers over census region/climate zone is
provided in Table III.15.
---------------------------------------------------------------------------

\24\ U.S. Department of Energy--Energy Information
Administration. Residential Energy Consumption Survey: 2015 RECS
Survey Data. 2015. Available at <a href="https://www.eia.gov/consumption/residential/data/2015/">https://www.eia.gov/consumption/residential/data/2015/</a>. (Last accessed August 5, 2021.)
\25\ At the time of drafting, the Residential Energy Consumption
Survey has released a new version based on 2020 inputs as a
preliminary analysis. If DOE elects to pursue new minimum efficiency
standards for PESs, DOE will update the consumer sample to the 2020
version of RECS.

[[Page 69098]]

Table III.15--Region and Climate Zone Probabilities of Hot Tub Installations
--------------------------------------------------------------------------------------------------------------------------------------------------------
Climate zone (z)
-----------------------------------------------------------------------------------------------
Census region (r ) Hot-dry/ mixed-
Cold/very cold dry Hot-humid Marine Mixed-humid Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 18.0 0.0 0.0 0.0 2.1 20.1
2....................................................... 16.5 0.0 0.0 0.0 6.4 22.9
3....................................................... 1.1 0.0 9.8 0.0 14.5 25.4
4....................................................... 8.8 9.0 0.7 13.1 0.0 31.6
-----------------------------------------------------------------------------------------------
Total............................................... 44.5 9.0 10.5 13.1 22.9 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Typical Annual Operating Hours (npy)
A key input to the energy use analysis is the number of annual
operating hours of the product. Available data indicated that PESs
operate in stand-by mode for the majority of hours that they are on.
During the process of updating PES standards for California in 2018,
CEC reported a duty cycle between 5,040 hours per year for inflatable
spas (which are intended for seasonal use) and 8,760 hours per year for
standard, exercise, and combination spas.\26\ DOE notes that these
estimates may be typical for California, but are not represented in the
existing data in RECS.
---------------------------------------------------------------------------

\26\ Final Staff Report, Analysis of Efficiency Standards and
Marking for Spas, 2018 Appliance Efficiency Rulemaking for Spas
Docket Number 18-AAER-02 TN 222413. See: pg. 35, Available at
<a href="https://efiling.energy.ca.gov/GetDocument.aspx?tn=222413&DocumentContentId=31256">https://efiling.energy.ca.gov/GetDocument.aspx?tn=222413&DocumentContentId=31256</a>.
---------------------------------------------------------------------------

The RECS data include a field (MONTUB) quantifying the number of
months per year that the hot tub is considered in use. For this
analysis, DOE considered the term ``in use'' to mean plugged-in and
running. RECS does not specify which months the spa is in use, only the
quantity of months. Therefore, for this NODA, DOE interpreted these
data as that the spas in RECS will be operating during the warmest
months of the year, as shown in Table III.16. For inflatable PES, DOE
made the modeling assumption that they would be in operation up to a
maximum of warmest 6 months of the year.

Table III.16--Mapping of RECS Months of Operation to Calendar Months
--------------------------------------------------------------------------------------------------------------------------------------------------------
Months of operation (npy)
-----------------------------------------------------------------------------------------------------------
1 2 3 4 5 6 7 8 9 10 11 12
--------------------------------------------------------------------------------------------------------------------------------------------------------
Jan......................................... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... 1
Feb......................................... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... 1 1
Mar......................................... ....... ....... ....... ....... ....... ....... ....... ....... 1 1 1 1
Apr......................................... ....... ....... ....... ....... ....... ....... 1 1 1 1 1 1
May......................................... ....... ....... ....... ....... 1 1 1 1 1 1 1 1
Jun......................................... ....... ....... 1 1 1 1 1 1 1 1 1 1
Jul......................................... 1 1 1 1 1 1 1 1 1 1 1 1
Aug......................................... ....... 1 1 1 1 1 1 1 1 1 1 1
Sep......................................... ....... ....... ....... 1 1 1 1 1 1 1 1 1
Oct......................................... ....... ....... ....... ....... ....... 1 1 1 1 1 1 1
Nov......................................... ....... ....... ....... ....... ....... ....... ....... 1 1 1 1 1
Dec......................................... ....... ....... ....... ....... ....... ....... ....... ....... ....... 1 1 1
Hours/year.................................. 744 1,488 2,208 2,928 3,672 4,416 5,136 5,856 6,600 7,344 8,016 8,760
--------------------------------------------------------------------------------------------------------------------------------------------------------

DOE used RECS data to estimate the probability that a spa would be
in use npy months per year as a function of climate zone. Given the
sparsity of RECS data and to estimate the probabilities, DOE first
binned the recorded value of MONTUB into 4 bins: 1 to 3 months per
year, 4 to 6 months per year, 7 to 9 months per year, and 10 to 12
months per year. Then DOE calculated the percent of RECS households
falling in each bin for each climate zone. Finally, DOE used the
modelling assumption that the 3 values in each bin are equally
probable. The resulting distribution of the expected number of months
per year (npy) are shown in Table III.17. Once the number of months of
operation is known, the hours of operation are calculated as if the spa
is in operation over the full month.

Table III.17--Assignment of Climate Zone (z) by Months of Operation (npy) for Hard-Sided Spas
----------------------------------------------------------------------------------------------------------------
Hot-dry/ mixed-
Months per year (npy) Cold/very cold dry Hot-humid Marine Mixed-humid
----------------------------------------------------------------------------------------------------------------
1............................... 0.07 0.06 0.09 0.06 0.04
2............................... 0.07 0.06 0.09 0.06 0.04
3............................... 0.07 0.06 0.09 0.06 0.04
4............................... 0.07 0.06 0.09 0.06 0.04
5............................... 0.06 0.06 0.05 0.05 0.06
6............................... 0.06 0.06 0.05 0.05 0.06
7............................... 0.06 0.06 0.05 0.05 0.06
8............................... 0.06 0.06 0.05 0.05 0.06
9............................... 0.12 0.13 0.11 0.14 0.15

[[Page 69099]]

10.............................. 0.12 0.13 0.11 0.14 0.15
11.............................. 0.12 0.13 0.11 0.14 0.15
12.............................. 0.12 0.13 0.11 0.14 0.15
----------------------------------------------------------------------------------------------------------------

Table III.18--Assignment of Climate Zone (z) by Months of Operation (npy) for Inflatable Spas
----------------------------------------------------------------------------------------------------------------
Hot-dry/ mixed-
Months per year (npy) Cold/very cold dry Hot-humid Marine Mixed-humid
----------------------------------------------------------------------------------------------------------------
1............................... 0.17 0.16 0.19 0.17 0.13
2............................... 0.17 0.16 0.19 0.17 0.13
3............................... 0.17 0.16 0.19 0.17 0.13
4............................... 0.17 0.16 0.19 0.17 0.13
5............................... 0.16 0.18 0.12 0.15 0.23
6............................... 0.16 0.18 0.12 0.15 0.23
----------------------------------------------------------------------------------------------------------------

DOE requests comment on its approach to estimating annual operating
hours. Additionally, DOE requests comment on its modeling assumption
that PES would be operated during the warmest months of the year.
3. Ambient Temperature (Tamb)
For the purposes of the NODA, DOE has made the modeling assumption
that all PESs are installed outdoors and their energy use will be a
function of the ambient temperature of the PESs' location. Losses to
the external environment depend both on how many months per year the
spa operates, and the distribution of ambient temperatures for those
months in the given climate zone. To establish representative hourly
temperatures for each of the PESs' installations as a function of
climate zone (z), DOE calculated the probability distribution of
temperatures, binned into 5 [deg]F segments, denoted j, based on TMY3
data. For this NODA, DOE averaged over one TMY3 weather station for
each state within a climate zone to determine a single hourly
temperature series for each zone, z. For each value of npy, DOE binned
the temperature time series for the appropriate months to create a
distribution. The distribution was normalized by the total number of
hours for that selection of months. The result is a distribution
w(z,j,npy), which defines the percent of hours allocated to each bin j
for climate zone z, with npy months of operation.\27\
---------------------------------------------------------------------------

\27\ For the treatment of TMY3 data and mapping weather stations
to regions, climate zones and states please see Appendix 7C or the
Technical Support Document: Energy Efficiency Program for Consumer
Products and Commercial and Industrial Equipment: Consumer Furnaces.
U.S. Department of Energy. 2022. Available at <a href="https://www.regulations.gov/document/EERE-2014-BT-STD-0031-0320">https://www.regulations.gov/document/EERE-2014-BT-STD-0031-0320</a>.
---------------------------------------------------------------------------

An example of the probability distribution of ambient temperatures
for PESs operating for 1 and 7 months a year installed in census region
2 (Midwest), which covers climate zones: cold/very cold and mixed-
humid, are shown in Table III.19.

Table III.19--Example Ambient Temperature Probabilities for Census Region 2 (Midwest), Where PESs Are Operated
for 1 and 7 Months per Year
----------------------------------------------------------------------------------------------------------------
Probability (w)
Temperature bin -------------------------------------
Months of operation npy [deg]F (j ) Cold/very cold
(z) Mixed-humid (z)
----------------------------------------------------------------------------------------------------------------
1...................................................... 62.5 0.095 .................
1...................................................... 67.5 0.223 0.067
1...................................................... 72.5 0.219 0.266
1...................................................... 77.5 0.249 0.215
1...................................................... 82.5 0.172 0.196
1...................................................... 87.5 0.042 0.179
1...................................................... 92.5 ................. 0.077
--------------------------------------------------------
Total.............................................. ................. 1.000 1.00
7...................................................... 32.5 0.003 .................
7...................................................... 37.5 0.033 0.001
7...................................................... 42.5 0.052 0.022
7...................................................... 47.5 0.084 0.049
7...................................................... 52.5 0.102 0.071
7...................................................... 57.5 0.117 0.123
7...................................................... 62.5 0.155 0.135
7...................................................... 67.5 0.165 0.156
7...................................................... 72.5 0.134 0.168
7...................................................... 77.5 0.102 0.116
7...................................................... 82.5 0.046 0.099
7...................................................... 87.5 0.008 0.048
7...................................................... 92.5 ................. 0.012
--------------------------------------------------------

[[Page 69100]]

Total.............................................. ................. 1.000 1.00
----------------------------------------------------------------------------------------------------------------

Representative values of the distribution are provided in Table
III.19 for one month of operation and for seven months of operation per
year. In general, the smaller the npy, the more usage is concentrated
in warmer months.
DOE requests comment on its approach to determining regional
ambient temperatures.
4. Operating Water Temperature (Top)
An input to the energy use analysis is the typical stand-by mode
operating temperature of the spa. DOE understands that the typical
operating temperature for any given spa would be determined by the
personal preference of the consumer. Further, DOE understands that all
potential product classes of PESs can be operated over a range of
temperatures, with a recommended safe operating maximum temperature of
104 [deg]F.\28\ DOE recognizes that this maximum temperature would not
apply to exercise spas not capable of maintaining a minimum water
temperature of 100 [deg]F. DOE was unable to find a credible source to
create a lower bound, minimum stand-by operating temperature. In a
guidance document to dutyholders of spas, the Health and Safety
Executive determined a typical operating range of 30-40 [deg]C (86-104
[deg]F).\29\
---------------------------------------------------------------------------

\28\ U.S. Consumer Product Safety Commission, CPSC Warns of Hot
Tub Temperatures, December 31, 1979. Available at <a href="http://www.cpsc.gov/Newsroom/News-Releases/1980/CPSC-Warns-Of-Hot-Tub-Temperatures">www.cpsc.gov/Newsroom/News-Releases/1980/CPSC-Warns-Of-Hot-Tub-Temperatures</a> (Last
accessed: January 14, 2022.)
\29\ The Control of Legionella and Other Infectious Agents in
Spa-Pool Systems, Health and Safety Executive, 2017. Available at
<a href="http://www.hse.gov">www.hse.gov</a>.uk/pubns/priced/hsg282.pdf.
---------------------------------------------------------------------------

For any future potential energy conservation standards for PESs,
DOE tentatively concludes that the typical stand-by mode operating
temperatures aligns with the minimum operating temperatures stated in
APSP-14 2019, and that these temperatures are representative of the
average. These values are shown in Table III.20.

Table III.20--Typical Operating Water Temperature ([deg]F) by Spa
Potential Product Class Defined in
APSP-14 2019
------------------------------------------------------------------------
Temp. [deg]F Product class Requirement Reference
------------------------------------------------------------------------
102 <plus- exercise spas or capable of 5.6.1.1
minus>2. the exercise maintaining a
portion of a minimum water
combination spa. temperature of 100
[deg]F.
87 <plus- exercise spas or is not capable of 5.6.1.2
minus>2. the exercise maintaining a
portion of a minimum water
combination spa. temperature of 100
[deg]F.
102 <plus- standard spas, the ................... 5.6.1.3
minus>2. standard spa
portion of a
combination spa,
or inflatable spas.
------------------------------------------------------------------------

For spas capable of maintaining a minimum water temperature of 100
[deg]F, DOE assumed for modelling a single point temperature of 102
[deg]F. For spas not capable of maintaining a minimum water temperature
of 100 [deg]F, DOE assumed for modelling a single point temperature of
87 [deg]F. DOE split the fraction of exercise, and the exercise portion
of combination spas, where 30 percent of installations would operate at
87 [deg]F and the remaining 70 percent of installations would operate
at 102 [deg]F. DOE made the modeling assumption that the spa would be
maintained at this temperature for the operating hours that the spa is
in stand-by mode. However, in the field, DOE expects that spas will be
operated over a range of temperatures to meet the comfort of the
consumer.
DOE requests data or comment on the typical operating temperature
for exercise spas not capable of maintaining a minimum temperature of
100 [deg]F. And DOE requests data or comment on the distribution of
typical operating temperature for exercise spas not capable of
maintaining a minimum temperature of 100 [deg]F.
DOE requests data or comment on the distribution of typical
operating temperature for spas capable of maintaining a minimum
temperature of 100 [deg]F. And DOE requests data or comment on the
distribution of typical operating temperature for exercise spas capable
of maintaining a minimum temperature of 100 [deg]F.
5. Annual Energy Use Results

Table III.21--Average Annual Energy Use by Potential Product Class (kWh/Year)
----------------------------------------------------------------------------------------------------------------
Spa type
Efficiency level ---------------------------------------------------------------
Combination Exercise Inflatable Standard
----------------------------------------------------------------------------------------------------------------
0............................................... 8,978 6,869 988 2,570
1............................................... 5,118 3,937 816 1,542
2............................................... 4,182 3,219 511 1,283
3............................................... 3,978 3,063 507 1,228
4............................................... 3,783 2,902 N/A 1,101
5............................................... 3,654 2,803 N/A 1,066
6............................................... 2,894 2,223 N/A 860

[[Page 69101]]

7............................................... 2,605 2,002 N/A 781
8............................................... 2,512 1,931 N/A 756
----------------------------------------------------------------------------------------------------------------

F. Life-Cycle Cost and Payback Period Analyses

DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers defined in the consumer sample (see section
III.E.1) of potential energy conservation standards for PESs. The
effect of potential energy conservation standards on individual
consumers usually involves a reduction in operating cost and an
increase in purchase cost. In this NODA, DOE used the following two
metrics to measure consumer impacts:
<bullet> The LCC is the total consumer expense of an appliance or
product over the life of that product, consisting of total installed
cost (manufacturer selling price, distribution chain markups, sales
tax, and installation costs) plus operating costs (expenses for energy
use, maintenance, and repair). To compute the operating costs, DOE
discounts future operating costs to the time of purchase and sums them
over the lifetime of the product.
<bullet> The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
at higher efficiency levels by the change in annual operating cost for
the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of PESs in the absence of new or
amended energy conservation standards. In contrast, the PBP for a given
efficiency level is measured relative to the baseline product.
For each considered efficiency level in each potential product
class, DOE calculated the LCC and PBP for a nationally representative
set of housing units. As stated previously, DOE developed household
samples from the 2015 RECS. For each sample household, DOE determined
the energy consumption for the PESs and the appropriate electricity
price. By developing a representative sample of households, the
analysis captured the variability in energy consumption and energy
prices associated with the use of PESs.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MPCs, manufacturer markups, retailer and
distributor markups, and sales taxes--and installation costs. Inputs to
the calculation of operating expenses include annual energy
consumption, energy prices and price projections, repair and
maintenance costs, product lifetimes, and discount rates. DOE created
distributions of values for product lifetime, discount rates, and sales
taxes, with probabilities attached to each value to account for their
uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP relies on
a Monte Carlo simulation to incorporate uncertainty and variability
into the analysis. The Monte Carlo simulations randomly sample input
values from the probability distributions and PES's user samples. For
this NODA the Monte Carlo approach was implemented in a computer
simulation. The model calculated the LCC and PBP for products at each
efficiency level for 10,000 housing units per simulation run. The
analytical results include a distribution of 10,000 data points showing
the range of LCC savings for a given efficiency level relative to the
no-new-standards case efficiency distribution. In performing an
iteration of the Monte Carlo simulation for a given consumer, product
efficiency is chosen based on its probability. If the chosen product
efficiency is greater than or equal to the efficiency of the standard
level under consideration, the LCC and PBP calculation reveals that a
consumer is not impacted by the standard level. By accounting for
consumers who already purchase more-efficient products, DOE avoids
overstating the potential benefits from increasing product efficiency.
DOE calculated the LCC and PBP for all consumers of PESs as if each
were to purchase a new product in the expected year of required
compliance with new standards. Any new standards would apply to PESs
manufactured 5 years after the date on which any new standard is
published. (42 U.S.C. 6295(l)(2)) For purposes of its analysis, DOE
used 2029 as the first year of compliance with any new standards for
PESs.
Table III.22 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion on the approach and data.
---------------------------------------------------------------------------

\30\ Coughlin, K., Beraki, B. Residential Electricity Prices A
Review of Data Sources and Estimation Methods. Energy Analysis and
Environmental Impacts Division Lawrence Berkeley National Laboratory
Energy Efficiency Standards Group. 2018. Available at <a href="https://eta-publications.lbl.gov/sites/default/files/lbnl-2001169.pdf">https://eta-publications.lbl.gov/sites/default/files/lbnl-2001169.pdf</a>.

Table III.22--Summary of Inputs and Methods for the LCC and PBP Analysis
*
------------------------------------------------------------------------
Inputs Source/method
------------------------------------------------------------------------
Product Cost...................... Derived by multiplying MPCs by
manufacturer and retailer markups
and sales tax, as appropriate.
Installation Costs................ Assumed no change with efficiency
level and not considered in the
NODA.
Annual Energy Use................. The total annual energy use
multiplied by the hours per year.
Average number of hours based on
RECS 2015.
Variability: Based on the Census
region, and Climate Zone.
Energy Prices..................... Electricity: Determined as per LBNL-
2001169.\30\
Energy Price Trends............... Based on AEO2022 price projections.
Repair and Maintenance Costs...... Assumed not to change with
efficiency level.
Product Lifetime.................. Average: 10.5 years for hard-sided
spas, 3.0 for inflatable spas.

[[Page 69102]]

Discount Rates.................... Approach involves identifying all
possible debt or asset classes that
might be used to purchase the
considered appliances or might be
affected indirectly. Primary data
source was the Federal Reserve
Board's Survey of Consumer
Finances.
Compliance Date................... 2029.
------------------------------------------------------------------------

1. Inputs to the Life-Cycle Cost Model
The LCC is the total consumer expense during the life of an
appliance, including purchase expense and operating costs (including
energy expenditures). DOE discounts future operating costs to the time
of purchase and sums them over the lifetime of the product. DOE defines
LCC by the following equation:
[GRAPHIC] [TIFF OMITTED] TP17NO22.001

Where:

LCC = life-cycle cost in dollars,
TIC = total installed cost in dollars,
[sum] = sum over product lifetime, from year 1 to year N,
N = lifetime of appliance in years,
OC<INF>t</INF> = operating cost in dollars in year t,
r = discount rate, and
t = year for which operating cost is being determined.

DOE expresses dollar values in 2021$ for the LCC.
a. Inputs to Total Installed Cost
Product Costs
To calculate consumer product costs, DOE multiplied the MSPs
developed in the engineering analysis by the markups described
previously (along with sales taxes). DOE used different markups for
baseline products and higher-efficiency products because DOE applies an
incremental markup to the increase in MSP associated with higher-
efficiency products.
Future Product Costs
Examination of historical price data for certain appliances and
equipment that have had energy conservation standards indicates that
the assumption of constant real prices and costs may overestimate long-
term trends in appliance and equipment prices in many cases. Economic
literature and historical data suggest that the real costs of these
products may, in fact, trend downward over time according to
``learning'' or ``experience'' curves. Desroches et al. (2013)
summarizes the data and literature currently available that is relevant
to price projections for selected appliances and equipment.\31\ The
extensive literature on the ``learning'' or ``experience'' curve
phenomenon is typically based on observations in the manufacturing
sector.\32\ In the experience curve method, the real cost of production
is related to the cumulative production or ``experience'' with a
manufactured product. This experience is usually measured in terms of
cumulative production. Thus, as experience (production) accumulates,
the cost of producing the next unit decreases.
---------------------------------------------------------------------------

\31\ Desroches, Louis-Benoit, et al., ``Incorporating Experience
Curves in Appliance Standards Analysis'', Energy Policy 52 (2013):
402-416.
\32\ In addition to Desroches (2013), see Weiss, M., Junginger,
H.M., Patel, M.K., Blok, K., (2010a). A Review of Experience Curve
Analyses for Energy Demand Technologies. Technological Forecasting &
Social Change. 77:411-428.
---------------------------------------------------------------------------

If DOE proceeds with new efficiency standards for PESs, DOE may
derive the learning rate parameter for all PESs from the historical
Producer Price Index (``PPI'') data for ``326191--Plastics Plumbing
Fixture Manufacturing'' for the time period between 1993 and 2021 from
the Bureau of Labor Statistics (``BLS'').33 34 If DOE
determines that new efficiency standards for PESs are warranted, DOE
will inflation-adjust the price indices calculation by dividing the PPI
series by the implicit Gross Domestic Product price deflator for the
same years.
---------------------------------------------------------------------------

\33\ This U.S. industry consists of establishments primarily
engaged in manufacturing plastics or fiberglass plumbing fixtures.
Examples of products made by these establishments are plastics or
fiberglass bathtubs, hot tubs, portable toilets, and shower stalls.
See <a href="http://www.naics.com/naics-code-description/?code=326191">www.naics.com/naics-code-description/?code=326191</a>
\34\ Product series ID: NDU3261913261911, see more information
at <a href="http://www.bls.gov/ppi">www.bls.gov/ppi</a>.
---------------------------------------------------------------------------

DOE requests comment on its proposed methodology to project future
equipment prices.
DOE requests information or data related to the past trends in
production costs of PESs. Additionally, DOE requests data or
information related to the cost of PES production over time.
Installation Costs
As noted, inputs to the calculation of total install cost include
the installation costs. Installation cost includes labor, overhead, and
any miscellaneous materials and parts needed to install the product. As
part of its Title 20 regulatory activities for PESs, CEC examined
potentially available technologies that can be employed to improve the
efficiency of PESs. CEC's report includes several technology options
but states that improved insulation (in terms of improved insulation
coverage, type, and quantity) within the tub walls and of the tub cover
offer the greatest opportunity for improved efficiency. The report also
mentions further attainable efficiency improvements through, but not
limited to, improved spa cover design and improved pump and motor
system design within in the spa itself.\35\ DOE tentatively finds that
none of these technologies would impact the quantity of labor,
overhead, or materials needed to install a PES if DOE were to adopt new
energy efficiency standards. Based on these findings, DOE tentatively
concludes that installation costs should not be included in any future
life-cycle cost analysis.
---------------------------------------------------------------------------

\35\ Final Staff Report, Analysis of Efficiency Standards and
Marking for Spas, 2018 Appliance Efficiency Rulemaking for Spas
Docket Number 18-AAER-02 TN 222413. Available at
<a href="http://efiling.energy.ca.gov/GetDocument.aspx?tn=222413&DocumentContentId=31256">efiling.energy.ca.gov/GetDocument.aspx?tn=222413&DocumentContentId=31256</a>.
---------------------------------------------------------------------------

DOE requests comment on its decision to exclude installation costs
from any future efficiency standard calculation.
DOE requests data and details on the installation costs of PESs,
and whether those costs vary by product type or any other factor
affecting their efficiency.
b. Inputs to Operating Costs
Annual Energy Consumption
For each sampled household, DOE determined the energy consumption
for a PES at different efficiency levels using the approach described
previously in section III.E of this document.
Electricity Prices
Using data from EEI Typical Bills and Average Rates reports, DOE
derived annual electricity prices in 2021 for all the census regions in
RECS.36 37 DOE calculated electricity prices using the

[[Page 69103]]

methodology described in Coughlin and Beraki (2018), where for each
purchase sampled, DOE assigned the average and marginal electricity
price for the census region in which the PES is located.\38\ Because
marginal electricity price captures more accurately the incremental
costs or savings associated with a change in energy use relative to the
consumer's bill in the reference case, it may provide a better
representation of incremental change in consumer costs than average
electricity prices. Therefore, DOE used average electricity prices to
characterize the baseline energy level and marginal electricity prices
to characterize the incremental change in energy costs associated with
the other energy levels considered. The regional average and marginal
electricity prices are shown in Table III.23.
---------------------------------------------------------------------------

\36\ Edison Electric Institute, Typical Bills and Average Rates
Report, Winter 2021, 2021.
\37\ Edison Electric Institute, Typical Bills and Average Rates
Report, Summer 2021, 2021.
\38\ Coughlin, K., Beraki, B. Residential Electricity Prices A
Review of Data Sources and Estimation Methods. Energy Analysis and
Environmental Impacts Division Lawrence Berkeley National Laboratory
Energy Efficiency Standards Group. 2018. Available at <a href="https://eta-publications.lbl.gov/sites/default/files/lbnl-2001169.pdf">https://eta-publications.lbl.gov/sites/default/files/lbnl-2001169.pdf</a>.

Table III.23--Regional Average and Marginal Electricity Prices
[$/kWh, 2021$]
----------------------------------------------------------------------------------------------------------------
Census region Geographic area Average $/kWh Marginal $/kWh
----------------------------------------------------------------------------------------------------------------
1............................................. Northeast....................... 0.1834 0.1687
2............................................. Midwest......................... 0.1380 0.1240
3............................................. South........................... 0.1164 0.0994
4............................................. West............................ 0.1959 0.2145
----------------------------------------------------------------------------------------------------------------

Future Electricity Price Trends
To arrive at prices in future years, DOE will multiply the 2021
electricity prices by the forecast of annual average price changes for
each census division from the most recent Energy Information
Administration's Annual Energy Outlook (``AEO'').\39\ To estimate price
trends after 2050, DOE maintained prices constant at 2050 levels.
---------------------------------------------------------------------------

\39\ See <a href="http://www.eia.gov/outlooks/aeo">www.eia.gov/outlooks/aeo</a>.
---------------------------------------------------------------------------

DOE requests comment on its use of AEO to project electricity
prices into the future.
Maintenance and Repair Costs
As noted, inputs to the calculation of operating expenses include
repair and maintenance costs, among other factors. For this NODA, DOE
made the modeling assumption that maintenance costs would not change
with increased product stand-by efficiency. DOE understands that PES
maintenance broadly falls into two categories: (1) maintaining water
quality, and (2) the care and upkeep of the PES itself. DOE does not
foresee a difference in costs to consumers in maintaining water quality
under a new potential efficiency standard to stand-by power. Further,
DOE understands the maintenance to the PES itself to be cleaning
activities (i.e., cleaning of the filters, spa interior, spa exterior,
and cover).\40\ Based on these understandings, DOE does not consider
that these cleaning activities would cost the consumer more under a new
potential energy conservation standard.
---------------------------------------------------------------------------

\40\ See <a href="https://staging-na01-jacuzzi.demandware.net/on/demandware.static/-/Library-Sites-jacuzzi-shared-content/default/v44de813235d8b46eb8c84da693ec1bed8e8ec186/pdf-documents/Jacuzzi_Swim_Spa_Collection_Owners_Manual_English.pdf">https://staging-na01-jacuzzi.demandware.net/on/demandware.static/-/Library-Sites-jacuzzi-shared-content/default/v44de813235d8b46eb8c84da693ec1bed8e8ec186/pdf-documents/Jacuzzi_Swim_Spa_Collection_Owners_Manual_English.pdf</a>.
---------------------------------------------------------------------------

However, DOE notes that the costs to repair more efficient PES
mechanical systems and insulation may be greater in the case of a
potential new energy conservation standard.
DOE requests feedback and specific data on whether maintenance
costs differ in comparison to the baseline maintenance costs for any of
the specific efficiency improving technology options applicable to
PESs.
DOE requests comment on the typical repairs to PESs and how they
may differ in the case of a potential new energy conservation standard.
2. Product Lifetime
The product lifetime is the age at which a product is retired from
service. Rather than use a single average value for the lifetime of
PESs, DOE developed lifetime distributions to characterize the age, in
years, when hard- and inflatable PESs will be retired from service. To
model PES lifetimes, DOE assumed that the probability function for the
annual survival of PESs would take the form of a Weibull distribution.
A Weibull distribution is a probability distribution commonly used to
measure failure rates.41 42
---------------------------------------------------------------------------

\41\ For reference on the Weibull distribution, see sections
1.3.6.6.8 and 8.4.1.3 of the NIST/SEMATECH e-Handbook of Statistical
Methods. Available at <a href="http://www.itl.nist.gov/div898/handbook/">www.itl.nist.gov/div898/handbook/</a>.
\42\ For an example methodology of how DOE approaches its
survival calculation, see section 8.3.4 of chapter 8 of the
Technical Support Document: Energy Efficiency Program For Consumer
Products and Commercial and Industrial Equipment: Consumer Furnaces.
DOE. 2022. Available at <a href="https://www.regulations.gov/document/EERE-2014-BT-STD-0031-0320">https://www.regulations.gov/document/EERE-2014-BT-STD-0031-0320</a>.
---------------------------------------------------------------------------

a. Hard-Sided Spas
DOE examined historical hard-sided spa installation data from PK
Data, Inc. (``PK Data'') for the years from 2015 through 2020 and fit a
Weibull distribution to these data with minimum and maximum lifetimes
of 1 year and 30 years, respectively. This Weibull distribution yielded
an average lifetime of 9.3 years.
b. Inflatable Spas
DOE did not have equivalent data from which to estimate lifetimes
for inflatable spas. As a result, DOE used the average lifetime on the
design life from the CEC CASE report on PESs.\43\ To estimate the
lifetime of inflatable spas, DOE fit a Weibull function based on the
modeling assumptions of an average and maximum lifetimes of 3.0 and 5.0
years, respectively.
---------------------------------------------------------------------------

\43\ California Energy Commission. ``Final Staff Report--
Analysis of Efficiency Standards and Marking for Spas.'' February 2,
2018.

[[Page 69104]]

Table III.24--Lifetime Parameters
----------------------------------------------------------------------------------------------------------------
Value Weibull parameters
-------------------------------------------------------------------------------
Minimum Average Maximum
(years) (years) (years) Alpha (scale) Beta (shape)
----------------------------------------------------------------------------------------------------------------
Hard-Sided Spas................. 1 9.3 30 9.91 1.85
Inflatable Spas................. 1 3.0 5 3.20 7.00
----------------------------------------------------------------------------------------------------------------

DOE requests comment on its lifetime analysis.
3. Rebound Effect
DOE considered the possibility that some consumers may use a
higher-efficiency PES more than a baseline one, thereby negating some
or all the energy savings from the more-efficient product. Such a
change in consumer behavior when operating costs decline is known as a
(direct) rebound effect. Because the heating and pumping systems
operation in ``stand-by mode'' also function when the PES is operated
in ``active mode,'' an increase in PES usage due to a rebound effect
would not impact any potential energy savings in a new standards case.
For this reason, DOE tentatively finds that the rebound effect should
not apply to PES stand-by power.
DOE requests comment on its reasoning to not apply a rebound effect
to PES stand-by power energy use.
4. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considers the projected
distribution (market shares) of product efficiencies under the no-new-
standards case (i.e., the case without amended or new energy
conservation standards).
To establish the fraction of PES purchases that exceed baseline
equipment in terms of energy efficiency in the absence of potential new
standards, DOE examined information provided by PHTA and U.S. Census
data.
The information provided by the PHTA shows the adoption of state
level minimum efficiency requirements for PESs. These state level
programs are related to different editions of APSP-14 2019, and this
variation in state-level adoption creates a fractured regulatory
environment where different states have different minimum energy
efficiency requirements.
For this NODA, DOE has made the simplified modeling assumption that
all spas sold in states with an existing standard would adhere to APSP-
14 2019 and will be considered above the baseline in 2029. Further, DOE
notes that the RECS 2015 data does not have state-level information
from which to derive the relative spa owning probability for each
state, and, for the purposes of estimating the efficiency distribution
in the no-new standards case, DOE used state populations published in
the 2021 Census.\44\ DOE acknowledges that this modeling assumption may
overrepresent the state of national efficiency adoption to the
detriment of national energy savings as states with less stringent
standards are modeled with greater minimum efficiency levels. However,
this potential overrepresentation may be balanced by those consumers in
non-regulated states purchasing more efficient products. These
populations are shown in Table III.25 and are held constant over time.
---------------------------------------------------------------------------

\44\ Annual Estimates of the Resident Population for the United
States, Regions, States, District of Columbia, and Puerto Rico:
April 1, 2020 to July 1, 2021 (NST-EST2021-POP). U.S. Census Bureau,
Population Division. December 2021.
---------------------------------------------------------------------------

Using the projected distribution of efficiencies for PESs, DOE
randomly assigned a product efficiency to each household drawn from the
consumer sample. If a consumer is assigned a product efficiency that is
greater than or equal to the efficiency under consideration, the
consumer would not be affected by a standard at that efficiency level.

Table III.25--PESs Minimum Efficiency Standards by State
------------------------------------------------------------------------
State Standard Population
------------------------------------------------------------------------
Arizona........................... AZ Title 44......... 7,276,316
California........................ APSP 14-2019........ 39,237,836
Connecticut....................... CA Title 20 (2006).. 3,605,597
District of Columbia.............. APSP 14-2019........ 670,050
Massachusetts..................... APSP 14-2019........ 6,984,723
New Jersey........................ APSP 14-2019........ 9,267,130
Oregon............................ APSP 14-2019........ 4,246,155
Pennsylvania...................... APSP 14-2019........ 12,964,056
Rhode Island...................... APSP 14-2019........ 1,095,610
Colorado.......................... APSP 14-2014........ 5,812,069
Maryland.......................... APSP 14-2019........ 6,165,129
Nevada............................ APSP 14-2019........ 3,143,991
Vermont........................... APSP 14-2014........ 645,570
Washington........................ APSP 14-2014........ 7,738,692
------------------------------------------------------------------------
Total Population Covered by Standards................... 108,852,924
U.S. Population......................................... 331,893,745
Fraction above Baseline................................. 32.8%
Fraction at Baseline.................................... 67.2%
------------------------------------------------------------------------

[[Page 69105]]

Table III.26--Distribution of Efficiencies in the No-New Standards Case (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency level
Type ---------------------------------------------------------------------------------------------------------------------
0 1 2 3 4 5 6 7 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Spas.......................... 67.2 32.8 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to households to estimate the present value of future operating cost
savings in the year of compliance. DOE estimated a distribution of
discount rates for PESs based on the opportunity cost of consumer
funds.
DOE applies weighted average discount rates calculated from
consumer debt and asset data, rather than marginal or implicit discount
rates.\45\ The LCC analysis estimates net present value over the
lifetime of the product. As a result, the appropriate discount rate
will reflect the general opportunity cost of household funds, taking
this time scale into account. Given the long-time horizon modeled in
the LCC analysis, the application of a marginal interest rate
associated with an initial source of funds is inaccurate. Regardless of
the method of purchase, consumers are expected to continue to rebalance
their debt and asset holdings over the LCC analysis period, based on
the restrictions consumers face in their debt payment requirements and
the relative size of the interest rates available on debts and assets.
DOE estimates the aggregate impact of this rebalancing using the
historical distribution of debts and assets.
---------------------------------------------------------------------------

\45\ 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; and 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 to approximate
a consumer's opportunity cost of funds related to appliance energy cost
savings. Then DOE estimated the average percentage shares of the
various types of debt and equity by household income group using data
from the Federal Reserve Board's Survey of Consumer Finances (``SCF'')
for 1995, 1998, 2001, 2004, 2007, 2010, 2013, 2016, and 2019.\46\ 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 energy conservation 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 were then mapped
to RECS income bins for the fraction of homes with portable electric
spas.\47\
---------------------------------------------------------------------------

\46\ Note that two older versions of the SCF are also available
(1989 and 1992); these surveys are not used in this analysis because
they do not provide all of the necessary types of data (e.g., credit
card interest rates, etc.). DOE has tentatively determined that the
time span covered by the eight surveys included is sufficiently
representative of recent debt and equity shares and interest rates.
\47\ A detailed discussion of DOE discount rate methodology for
residential consumers can be found in the Technical Support
Document: Energy Efficiency Program for Consumer Products and
Commercial and Industrial Equipment: Consumer Furnaces. DOE, 2022,
in chapters 8, and appendix 8H. Available at <a href="https://www.regulations.gov/document/EERE-2014-BT-STD-0031-0320">https://www.regulations.gov/document/EERE-2014-BT-STD-0031-0320</a>.

Table III.27--Mapping of SCF Income Groups to RECS 2015 Income Bin
--------------------------------------------------------------------------------------------------------------------------------------------------------
RECS income bins 1 2 3 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 100.0%
2....................................................... 2.9% 86.6% 10.6%
3....................................................... 100.0%
4....................................................... 15.4% 84.6%
5....................................................... 100.0%
6....................................................... 13.4% 86.6%
7....................................................... 88.4% 11.6%
8....................................................... 100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table III.28--Average Real Effective Discount Rates
------------------------------------------------------------------------
SCF income group Discount rate (%)
------------------------------------------------------------------------
1...................................... 4.76
2...................................... 4.99
3...................................... 4.54
4...................................... 3.84
5...................................... 3.47
6...................................... 3.23
Overall Average........................ 4.29
------------------------------------------------------------------------
Source: Board of Governors of the Federal Reserve System, Survey of
Consumer Finances (1995-2019).

[[Page 69106]]

6. Payback Period Analysis
The PBP is the amount of time it takes the consumer to recover the
additional installed cost of more-efficient products, compared to
baseline products, through energy cost savings. PBP are expressed in
years. PBP that exceed the life of the product mean that the increased
total installed cost is not recovered in reduced operating expenses.
The equation for PBP is:
[GRAPHIC] [TIFF OMITTED] TP17NO22.002

Where:

PBP = payback period in years,
[Delta]IC = difference in the total installed cost between the more
efficient product (efficiency levels 1, 2, 3, etc.) and the baseline
product, and
[Delta]OC = difference in first-year annual operating costs between
the more efficient product and the baseline product.

The data inputs to PBP are the total installed cost of the product
to the consumer for each efficiency level and the annual (first year)
operating costs for each efficiency level. As for the LCC, the inputs
to the total installed cost are the product price and installation
cost. The inputs to the operating costs are the annual energy and
annual maintenance costs. The PBP uses the same inputs as does the LCC
analysis, except that electricity price trends are not required.
Because the PBP is a simple payback, the required electricity cost is
only for the year in which a potential new energy conservation standard
would take effect--in this case, 2029.
7. Consumer Results

Table III.29--Standard Spas: Average LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$) Simple
---------------------------------------------------------------- payback Average
Efficiency level First year's Lifetime period lifetime
Installed cost operating cost operating cost LCC (years) (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0....................................................... 8,507 352 2,648 11,644 .............. 8.8
1....................................................... 8,594 246 1,849 10,937 0.8 8.8
2....................................................... 8,852 207 1,555 10,918 2.4 8.8
3....................................................... 9,165 198 1,491 11,188 4.5 8.8
4....................................................... 9,725 179 1,345 11,638 7.8 8.8
5....................................................... 10,338 174 1,305 12,251 11.9 8.8
6....................................................... 11,347 142 1,068 13,088 16.5 8.8
7....................................................... 12,530 130 978 14,258 23.9 8.8
8....................................................... 13,851 126 949 15,636 34.6 8.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table III.30--Standard Spas: Average LCC Savings Relative to the No-New-
Standards Case Efficiency Distribution
------------------------------------------------------------------------
Average
savings--
Efficiency level % Consumers impacted
with net cost consumers
(2021$)
------------------------------------------------------------------------
1....................................... 6.4 1,056
2....................................... 35.2 726
3....................................... 51.2 456
4....................................... 65.9 6
5....................................... 77.0 -607
6....................................... 84.6 -1,444
7....................................... 91.4 -2,614
8....................................... 96.1 -3,992
------------------------------------------------------------------------

Table III.31--Exercise Spas: Average LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$)
---------------------------------------------------------------- Simple payback Average
Efficiency level First year's Lifetime period (years) lifetime
Installed cost operating cost operating cost LCC (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0....................................................... 26,791 930 6,937 35,077 .............. 8.8
1....................................................... 27,063 631 4,715 33,144 0.9 8.8
2....................................................... 27,876 521 3,892 33,187 2.7 8.8
3....................................................... 28,862 497 3,715 34,060 5.1 8.8
4....................................................... 30,624 472 3,530 35,751 9.4 8.8
5....................................................... 32,556 457 3,417 37,696 14.6 8.8
6....................................................... 35,731 368 2,756 40,415 20.2 8.8
7....................................................... 39,459 335 2,504 44,132 29.7 8.8
8....................................................... 43,618 324 2,423 48,479 44.0 8.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 69107]]

Table III.32--Exercise Spas: Average LCC Savings Relative to the No-New-
Standards Case Efficiency Distribution
------------------------------------------------------------------------
Average
savings--
Efficiency level % Consumers impacted
with net cost consumers
(2021$)
------------------------------------------------------------------------
1....................................... 7.9 2,889
2....................................... 39.5 1,889
3....................................... 55.8 1,017
4....................................... 72.1 -674
5....................................... 82.1 -2,619
6....................................... 88.5 -5,338
7....................................... 94.2 -9,055
8....................................... 97.5 -13,403
------------------------------------------------------------------------

Table III.33--Combination Spas: Average LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$) Simple
---------------------------------------------------------------- payback Average
Efficiency level First year's Lifetime period lifetime
Installed cost operating cost operating cost LCC (years) (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0....................................................... 34,175 1,218 9,093 44,965 .............. 8.8
1....................................................... 34,523 823 6,143 42,387 0.9 8.8
2....................................................... 35,560 678 5,064 42,412 2.7 8.8
3....................................................... 36,818 647 4,831 43,519 4.9 8.8
4....................................................... 39,065 617 4,609 45,690 9.1 8.8
5....................................................... 41,531 597 4,460 48,167 14.1 8.8
6....................................................... 45,581 481 3,592 51,611 19.5 8.8
7....................................................... 50,336 437 3,262 56,345 28.6 8.8
8....................................................... 55,642 422 3,155 61,888 42.2 8.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table III.34--Combination Spas: Average LCC Savings Relative to the No-
New-Standards Case Efficiency Distribution
------------------------------------------------------------------------
Average
savings--
Efficiency level % Consumers impacted
with net cost consumers
(2021$)
------------------------------------------------------------------------
1....................................... 7.5 3,835
2....................................... 38.4 2,553
3....................................... 54.2 1,446
4....................................... 70.6 -724
5....................................... 81.0 -3,201
6....................................... 88.2 -6,646
7....................................... 94.1 -11,379
8....................................... 97.4 -16,923
------------------------------------------------------------------------

Table III.35--Inflatable Spas: Average LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2021$) Simple
---------------------------------------------------------------- payback Average
Efficiency level First year's Lifetime period lifetime
Installed cost operating cost operating cost LCC (years) (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0....................................................... 244 147 424 780 .............. 3.0
1....................................................... 287 130 375 778 2.8 3.0
2....................................................... 549 83 238 924 5.5 3.0
3....................................................... 858 82 237 1,256 13.0 3.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 69108]]

Table III.36--Inflatable Spas: Average LCC Savings Relative to the No-
New-Standards Case Efficiency Distribution: Combination Spas
------------------------------------------------------------------------
Average
savings--
Efficiency level % Consumers impacted
with net cost consumers
(2021$)
------------------------------------------------------------------------
1....................................... 38.7 3
2....................................... 84.6 -143
3....................................... 99.6 -475
------------------------------------------------------------------------

G. Shipments Analysis

DOE uses projections of annual product shipments to calculate the
national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\48\
The shipments model takes an accounting approach in tracking market
shares of each potential product class and the vintage of units in the
stock. Stock accounting uses product shipments as inputs to estimate
the age distribution of in-service product stocks for all years. The
age distribution of in-service product stocks is a key input to
calculations of both the NES and NPV because operating costs for any
year depend on the age distribution of the stock.
---------------------------------------------------------------------------

\48\ 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.
---------------------------------------------------------------------------

1. Approach to Shipments and Stock Models
DOE developed a national stock model to estimate annual shipments
of products under potential energy efficiency standards. The model
considers market segments as distinct inputs to projected shipments.
DOE considered new home installations and replacements in existing
households as the primary market segments for PESs.
DOE's shipments model takes a stock accounting approach, tracking
the vintage of units in the existing stock and expected housing stock
trends. The stock accounting uses product shipments, a retirement
function, and initial in-service product stock as inputs to develop an
estimate of the age distribution of in-service product stock for all
years. The age distribution of in-service product stock is a key input
to calculations of both the NES and NPV because the operating costs for
any year depend on the age distribution of the stock. The dependence of
operating cost on the product age distribution occurs under a
standards-case scenario that produces increasing efficiency over time,
whereby older, less efficient units may have higher operating costs,
while younger, more-efficient units have lower operating costs.
2. Initial Stock Estimates
a. Hard-Sided Spas Stock
DOE used industry data from PK Data to estimate the initial stock
for hard-sided spas.\49\ The PK Data were compiled from manufacturer
data and other sources, including dealers, retailers, and consumers,
and provide an estimated installation base for these spas. However,
these data did not specify the fraction of installations that are
standard, exercise, or combination spas. For this NODA, DOE has made
the modeling assumptions that the fraction of the market for standard,
exercise, and combination spas will follow the model count in
MAEDbS.\50\ The stock breakdown based on the data received by DOE from
PK Data and the weights from MAEDbS are shown in Table III.37.
---------------------------------------------------------------------------

\49\ P.K. Data Inc. 2022 Hot Tube Market Data: Custom
Compilation for Lawrence Berkeley National Laboratory (through
2021). 2022. Alpharetta, GA. (Last accessed April 12, 2022.)
Available at <a href="https://www.pkdata.com/reports-store.html#/">https://www.pkdata.com/reports-store.html#/</a>.
\50\ California Energy Commission's Modernized Appliance
Efficiency Database System. Available at <a href="https://cacertappliances.energy.ca.gov/Login.aspx">https://cacertappliances.energy.ca.gov/Login.aspx</a>.

Table III.37--PK Data and DOE Stock Estimates of Hard-Sided Spas
[Units, 2020]
----------------------------------------------------------------------------------------------------------------
All spas PK
data Standard Exercise Combination
----------------------------------------------------------------------------------------------------------------
Fraction (%).................................... 100 85 12 3
Units (2020).................................... 5,454,117 4,635,999 654,494 163,624
----------------------------------------------------------------------------------------------------------------

DOE requests comment on its stock ratios for hard-sided spas.
Additionally, DOE seeks input on the market shares of standard,
exercise, and combination spas.
b. Inflatable Spas Stock
Inflatable spas (inflatable spas) are a relatively new product to
the spa industry. As such, DOE was unable to find comprehensive,
publicly available information to indicate either their shipments or
existing stock. The CEC's ``2018 Appliance Efficiency Rulemaking for
Spas, Final Staff Report'' projected California's stock of inflatable
spas in 2020 to be 20,101 units. When this value is scaled by
population, it produces a national stock estimate of 170,025 units, or
approximately 3 percent of the stock of hard-sided Spas. For this NODA,
DOE has made the modeling assumption that stock of inflatable spas in
2020 was 170,025 units.

[[Page 69109]]

Table III.38--Estimated Total PES Stocks, and Market Weight, 2020
(Units)
------------------------------------------------------------------------
Potential
Potential product class product class Units
weight, M
------------------------------------------------------------------------
Standard................................ 82.5 4,635,999
Exercise................................ 11.7 654,494
Combination............................. 2.9 163,624
Inflatable.............................. 2.9 170,025
------------------------------------------------------------------------

DOE seeks comment on its 2020 stock estimates for all spa types.
3. Product Saturations
PES stocks are distributed nationally according to the number of
single-family houses by census region, r, and climate zone, z, derived
from RECS. These regional distributions are considered static over the
analysis period. PES saturations are expressed as:
[GRAPHIC] [TIFF OMITTED] TP17NO22.003

Where:

Stockt = the total PES stock in 2022, i.e., 5,624,142 units,
i = an index indicating the location (r, z) of the spa,
S = the saturation (count) of spas per single-family household, and
H = total single-family households.
4. Determining Annual Spa Shipments
a. Initial Shipments
Initial shipments for each potential product class of PESs are
derived from the stock estimates in section III.G.2, as:
[GRAPHIC] [TIFF OMITTED] TP17NO22.004

Where:

Ships = total PES shipments for each product class,
M = PES market weight (see Table III.38), and
Lavg = the average potential product class's lifetime.
b. New Spa Shipments

[…truncated; see source link]

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