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Rule2023-10849

Energy Conservation Program: Energy Conservation Standards for Consumer Pool Heaters

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Published

May 30, 2023

Effective

July 31, 2023

Issuing agencies

Energy Department

Abstract

The Energy Policy and Conservation Act, as amended ("EPCA"), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including consumer pool heaters. EPCA also requires the U.S. Department of Energy ("DOE" or "the Department") to periodically determine whether more- stringent, standards would be technologically feasible and economically justified, and would result in significant energy savings. In this final rule, DOE is adopting new and amended energy conservation standards for consumer pool heaters. It has determined that the new and amended energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified.

Full Text

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<title>Federal Register, Volume 88 Issue 103 (Tuesday, May 30, 2023)</title>
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[Federal Register Volume 88, Number 103 (Tuesday, May 30, 2023)]
[Rules and Regulations]
[Pages 34624-34705]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-10849]

[[Page 34623]]

Vol. 88

Tuesday,

No. 103

May 30, 2023

Part III

Department of Energy

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10 CFR Parts 429 and 430

Energy Conservation Program: Energy Conservation Standards for Consumer
Pool Heaters; Final Rule

Federal Register / Vol. 88 , No. 103 / Tuesday, May 30, 2023 / Rules
and Regulations

[[Page 34624]]

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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[EERE-2021-BT-STD-0020]
RIN 1904-AD49

Energy Conservation Program: Energy Conservation Standards for
Consumer Pool Heaters

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

ACTION: Final rule.

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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including consumer
pool heaters. EPCA also requires the U.S. Department of Energy (``DOE''
or ``the Department'') to periodically determine whether more-
stringent, standards would be technologically feasible and economically
justified, and would result in significant energy savings. In this
final rule, DOE is adopting new and amended energy conservation
standards for consumer pool heaters. It has determined that the new and
amended energy conservation standards for these products would result
in significant conservation of energy, and are technologically feasible
and economically justified.

DATES: The effective date of this rule is July 31, 2023. Compliance
with the new and amended standards established for consumer pool
heaters in this final rule is required on and after May 30, 2028.

ADDRESSES: The docket for this rulemaking, which includes Federal
Register notices, public meeting attendee lists and transcripts,
comments, and other supporting documents/materials, is available for
review at <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, not all documents listed in
the index may be publicly available, such as information that is exempt
from public disclosure.
The docket web page can be found at <a href="http://www.regulations.gov/docket/EERE-2021-BT-STD-0020">www.regulations.gov/docket/EERE-2021-BT-STD-0020</a>. The docket web page contains instructions on how
to access all documents, including public comments, in the docket.
For further information on how to review the docket, contact the
Appliance and Equipment Standards Program staff at (202) 287-1445 or by
email: <a href="/cdn-cgi/l/email-protection#074677776b6e6669646254736669636675637456726274736e6869744762622963686229606871">[email&#160;protected]</a>.

FOR FURTHER INFORMATION CONTACT:
Ms. Julia Hegarty, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(240) 597-6737. Email: <a href="/cdn-cgi/l/email-protection#0d4c7d7d61646c636e685e796c63696c7f697e5c78687e796462637e4d686823696268236a627b">[email&#160;protected]</a>.
Mr. Nolan Brickwood, U.S. Department of Energy, Office of the
General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (202) 586-4498. Email:
<a href="/cdn-cgi/l/email-protection#521c3d3e333c7c10203b3139253d3d36123a237c363d377c353d24">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Final Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Consumer Pool Heaters
III. General Discussion
A. General Comments
B. Scope of Coverage
C. Test Procedure
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared to Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
G. Other Topics
1. Test Procedure Updates
2. Enforcement Provisions
3. Certification Requirements
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Product Classes
2. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency
b. Higher Efficiency Levels
2. Cost Analysis
a. Manufacturer Production Costs
b. Manufacturer Selling Prices
3. Cost-Efficiency Results
D. Markups Analysis
E. Energy Use Analysis
1. Pool Heater Consumer Samples
2. Energy Use Estimation
a. Consumer Pool Heater Operating Hours
b. Heat Pump Pool Heater Energy Use
c. Modulating Equipment
d. Consumer Pool Heater Standby and Off Mode Energy Use
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
a. Rebound Effect
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
8. Energy Efficiency Distribution in the No-New-Standards Case
9. Payback Period Analysis
G. Shipments Analysis
H. National Impact Analysis
1. Product Efficiency Trends
2. National Energy Savings
3. Net Present Value Analysis
I. Consumer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model and Key Inputs
a. Manufacturer Production Costs
b. Shipments Projections
c. Product and Capital Conversion Costs
d. Stranded Assets
e. Manufacturer Markup Scenarios
3. Manufacturer Interviews
a. Manufacturer Product Costs, Manufacturer Selling Prices, and
Manufacturer Markups
b. Conversion Costs
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis

[[Page 34625]]

V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Consumer Pool
Heaters Standards
2. Annualized Benefits and Costs of the Adopted Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Description of Reasons Why Action Is Being Considered
2. Objectives of, and Legal Basis for, Rule
3. Description on Estimated Number of Small Entities Regulated
4. Description and Estimate of Compliance Requirements Including
Differences in Cost, if Any, for Different Groups of Small Entities
5. Duplication, Overlap, and Conflict With Other Rules and
Regulations
6. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Information Quality
M. Congressional Notification
VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

The Energy Policy and Conservation Act,\1\ as amended, Public Law
94-163, (42 U.S.C. 6291-6317, as codified) (``EPCA''), authorizes DOE
to regulate the energy efficiency of a number of consumer products and
certain industrial equipment. Title III, Part B of EPCA \2\ established
the Energy Conservation Program for Consumer Products Other Than
Automobiles. (42 U.S.C. 6291-6309) These products include consumer pool
heaters, the subject of this rulemaking.
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\1\ All references to EPCA in this document refer to the statute
as amended through the Energy Act of 2020, Public Law 116-260 (Dec.
27, 2020), which reflect the last statutory amendments that impact
Parts A and A-1 of EPCA.
\2\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
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Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in significant conservation of energy.
(42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6
years after issuance of any final rule establishing or amending a
standard, DOE must publish either a notice of determination that
standards for the product do not need to be amended, or a notice of
proposed rulemaking including new proposed energy conservation
standards (proceeding to a final rule, as appropriate). (42 U.S.C.
6295(m))
In accordance with these and other statutory provisions discussed
in this document, DOE is adopting amended energy conservation standards
for gas-fired pool heaters and new energy conservation standards for
electric pool heaters. The adopted new and amended standards are
expressed in terms of the integrated thermal efficiency
(``TE<INF>I</INF>'') metric, which replaces the thermal efficiency
(``TE'') metric for gas-fired pool heaters, and are shown in Table I.1.
The TE<INF>I</INF> standards are expressed as a function of the active
mode electrical input power (``PE'') in British thermal units per hour
(``Btu/h'') for electric pool heaters and the gas input rating
(``Q<INF>IN</INF>'') in Btu/h for gas-fired pool heaters. These
standards apply to all products listed in Table I.1 and manufactured
in, or imported into, the United States starting on May 30, 2028.
[GRAPHIC] [TIFF OMITTED] TR30MY23.009

A. Benefits and Costs to Consumers

Table I.2 summarizes DOE's evaluation of the economic impacts of
the adopted standards on consumers of consumer pool heaters, as
measured by the average life-cycle cost (``LCC'') savings and the
simple payback period (``PBP'').\3\ The average LCC savings are
positive for electric pool heaters and

[[Page 34626]]

gas-fired pool heaters, and the PBP is less than the average lifetime
of electric pool heaters and gas-fired pool heaters, which is estimated
to be 11.1 years (see section IV.F of this document).
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\3\ The average LCC savings refer to consumers that are affected
by a standard and are measured relative to the efficiency
distribution in the no-new-standards case, which depicts the market
in the compliance year in the absence of new or amended standards
(see section IV.F.8 of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.F.9 of this document).

Table I.2--Impacts of Adopted Energy Conservation Standards on Consumers
of Consumer Pool Heaters
------------------------------------------------------------------------
Average LCC Simple
Product class savings payback
(2021$) period (years)
------------------------------------------------------------------------
Electric Pool Heaters................... 1,130 0.5
Gas-fired Pool Heaters.................. 80 2.3
------------------------------------------------------------------------

DOE's analysis of the impacts of the adopted standards on consumers
is described in section IV.F of this document.

B. Impact on Manufacturers

The industry net present value (``INPV'') is the sum of the
discounted cash flows to the industry from the base year through the
end of the analysis period (2023-2057). Using a real discount rate of
7.4 percent,\4\ DOE estimates that the INPV for manufacturers of
consumer pool heaters in the case without new and amended standards is
$585.7 million in 2021 dollars. Under the adopted standards, DOE
estimates the change in INPV to range from -6.4 percent to 0.3 percent,
which is approximately -$37.3 million to $2.0 million. In order to
bring products into compliance with the new and amended standards, it
is estimated that industry will incur total conversion costs of $48.4
million.
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\4\ The discount rate was derived from industry financials from
publicly traded companies and then modified according to feedback
received during manufacturer interviews.
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DOE's analysis of the impacts of the adopted standards on
manufacturers is described in sections IV.J and V.B.2 of this document.

C. National Benefits and Costs 5
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\5\ All monetary values in this document are expressed in 2021
dollars.
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DOE's analyses indicate that the adopted energy conservation
standards for consumer pool heaters will save a significant amount of
energy. Relative to the case without new or amended standards, the
lifetime energy savings for consumer pool heaters purchased in the 30-
year period that begins in the anticipated year of compliance with the
new or amended standards (2028-2057), amount to 0.70 quadrillion
British thermal units (``Btu''), or quads.\6\ This represents a savings
of 2.9 percent relative to the energy use of these products in the case
without new or amended standards (referred to as the ``no-new-standards
case'').
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\6\ The quantity refers to full-fuel-cycle (``FFC'') energy
savings. FFC energy savings includes the energy consumed in
extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and, thus, presents a more complete
picture of the impacts of energy efficiency standards. For more
information on the FFC metric, see section IV.H.1 of this document.
---------------------------------------------------------------------------

The cumulative net present value (``NPV'') of total consumer
benefits of the standards for consumer pool heaters ranges from $1.18
billion (at a 7-percent discount rate) to $3.00 billion (at a 3-percent
discount rate). This NPV expresses the estimated total value of future
operating-cost savings minus the estimated increased product and
installation costs for consumer pool heaters purchased in 2028-2057.
In addition, the adopted standards for consumer pool heaters are
projected to yield significant environmental benefits. DOE estimates
that the standards will result in cumulative emission reductions (over
the same period as for energy savings) of 29 million metric tons
(``Mt'') \7\ of carbon dioxide (``CO<INF>2</INF>''), 6.0 thousand tons
of sulfur dioxide (``SO<INF>2</INF>''), 241 thousand tons of nitrogen
oxides (``NO<INF>X</INF>''), 284 thousand tons of methane
(``CH<INF>4</INF>''), 0.17 thousand tons of nitrous oxide
(``N<INF>2</INF>O''), and 0.04 tons of mercury (``Hg'').\8\ The
estimated cumulative reduction in CO<INF>2</INF> emissions through 2030
amounts to 0.57 Mt, which is equivalent to the emissions resulting from
the annual electricity use of more than 0.1 million homes.
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\7\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO<INF>2</INF> are presented in short tons.
\8\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 2022 (``AEO2022''). AEO2022 represents current Federal and
state legislation and final implementation of regulations as of the
time of its preparation. See section IV.K of this document for
further discussion of AEO2022 assumptions that affect air pollutant
emissions.
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DOE estimates the value of climate benefits from a reduction in
greenhouse gases (``GHG'') using four different estimates of the social
cost of CO<INF>2</INF> (``SC-CO<INF>2</INF>''), the social cost of
methane (``SC-CH<INF>4</INF>''), and the social cost of nitrous oxide
(``SC-N<INF>2</INF>O''). Together these represent the social cost of
GHG (``SC-GHG'').\9\ DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(``IWG'').\10\ The derivation of these values is discussed in section
IV.L of this document. For presentational purposes, the climate
benefits associated with the average SC-GHG at a 3-percent discount
rate are estimated to be $1.5 billion. DOE does not have a single
central SC-GHG point estimate and it emphasizes the importance and
value of considering the benefits calculated using all four sets of SC-
GHG estimates.
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\9\ To monetize the benefits of reducing GHG emissions this
analysis uses the interim estimates presented in the Technical
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February
2021 by the Interagency Working Group on the Social Cost of
Greenhouse Gases (IWG).
\10\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021 (``February 2021 SC-GHG TSD'').
<a href="http://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf">www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf</a>.
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DOE estimated the monetary health benefits of SO<INF>2</INF> and
NO<INF>X</INF> emissions reductions, using benefit per ton estimates
from the scientific literature, as discussed in section IV.L of this
document. DOE estimated the present value of the health benefits will
be $0.9 billion using a 7-percent discount rate, and $2.3 billion using
a 3-percent discount rate.\11\ DOE is currently only monetizing (for
SO<INF>2</INF> and NO<INF>X</INF>) PM<INF>2.5</INF> precursor health
benefits and (for NO<INF>X</INF>) ozone precursor health benefits but
will continue to assess the ability to monetize other effects such as
health benefits from reductions in direct PM<INF>2.5</INF> emissions.
---------------------------------------------------------------------------

\11\ DOE estimates the economic value of these emissions
reductions resulting from the adopted standards for the purpose of
complying with the requirements of Executive Order 12866.
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Table I.3 summarizes the economic benefits and costs expected to
result from the new and amended standards for consumer pool heaters.
There are

[[Page 34627]]

other important unquantified effects, including certain unquantified
climate benefits, unquantified public health benefits from the
reduction of toxic air pollutants and other emissions, unquantified
energy security benefits, and distributional effects, among others.

Table I.3--Summary of Monetized Benefits and Costs of Adopted Energy
Conservation Standards for Consumer Pool Heaters
------------------------------------------------------------------------
Billion 2021$
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 4.3
Climate Benefits *...................................... 1.5
Health Benefits **...................................... 2.3
Total Monetized Benefits [dagger]....................... 8.0
Consumer Incremental Product Costs [Dagger]............. 1.3
Net Monetized Benefits.................................. 6.7
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 1.8
Climate Benefits * (3% discount rate)................... 1.5
Health Benefits **...................................... 0.9
Total Monetized Benefits [dagger]....................... 4.2
Consumer Incremental Product Costs [Dagger]............. 0.7
Net Monetized Benefits.................................. 3.5
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
consumer pool heaters shipped in 2028-2057. These results include
benefits to consumers which accrue after 2057 from the products
shipped in 2028-2057.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5-percent, 3-percent, and 5-percent
discount rates; 95th percentile at a 3-percent discount rate) (see
section IV.L of this document). Together these represent the global SC-
GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
shown, but DOE does not have a single central SC-GHG point estimate.
To monetize the benefits of reducing GHG emissions this analysis uses
the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the
Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with a 3-percent discount
rate, but DOE does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as
installation costs.

The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The monetary values for the
total annualized net benefits are (1) the reduced consumer operating
costs, minus (2) the increase in product purchase prices and
installation costs, plus (3) the monetized value of climate and health
benefits of emission reductions, all annualized.\12\
---------------------------------------------------------------------------

\12\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2022, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2022. Using the present value, DOE then calculated the
fixed annual payment over a 30-year period, starting in the
compliance year, that yields the same present value.
---------------------------------------------------------------------------

The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered products and are measured for the lifetime of consumer pool
heaters shipped in 2028-2057. The benefits associated with reduced
emissions achieved as a result of the adopted standards are also
calculated based on the lifetime of consumer pool heaters shipped in
2028-2057. Total benefits for both the 3-percent and 7-percent cases
are presented using the average GHG social costs with 3-percent
discount rate. Estimates of SC-GHG values are presented for all four
discount rates in section IV.L.1 of this document.
Table I.4 presents the total estimated monetized benefits and costs
associated with the adopted standards, expressed in terms of annualized
values. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced NO<INF>X</INF> and SO<INF>2</INF>
emissions, and the 3-percent discount rate case for climate benefits
from reduced GHG emissions, the estimated cost of the standards adopted
in this rule is $74.1 per year in increased equipment costs, while the
estimated annual benefits are $208.0 million in reduced equipment
operating costs, $88.3 million in monetized climate benefits, and $97.7
million in monetized health benefits. In this case, the net monetized
benefit will amount to $319.8 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the standards is $75.3 million per year in increased
equipment costs, while the estimated annual benefits are $252.7 million
in reduced operating costs, $88.3 million in monetized climate
benefits, and $133.1 million in monetized health benefits. In this
case, the net monetized benefit will amount to $398.8 million per year.

[[Page 34628]]

Table I.4--Annualized Benefits and Costs of Adopted Standards for Consumer Pool Heaters
----------------------------------------------------------------------------------------------------------------
Million 2021$/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 252.7 238.5 270.0
Climate Benefits *.............................................. 88.3 85.3 91.2
Health Benefits **.............................................. 133.1 128.8 137.6
Total Monetized Benefits [dagger]............................... 474.1 452.6 498.7
Consumer Incremental Product Costs [Dagger]..................... 75.3 76.5 73.4
Net Monetized Benefits.......................................... 398.8 376.1 425.4
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 208.0 197.5 220.3
Climate Benefits * (3% discount rate)........................... 88.3 85.3 91.2
Health Benefits **.............................................. 97.7 94.8 100.7
Total Monetized Benefits [dagger]............................... 393.9 377.6 412.2
Consumer Incremental Product Costs [Dagger]..................... 74.1 74.6 73.2
Net Monetized Benefits.......................................... 319.8 303.0 339.1
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with products shipped in 2028-2057. These results
include benefits to consumers which accrue after 2057 from the products shipped in 2028-2057. The Primary, Low
Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the AEO2022 Reference
case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental
equipment costs reflect a constant price in the Primary Estimate, an increasing rate in the Low Net Benefits
Estimate, and a declining rate in the High Net Benefits Estimate. The methods used to derive projected price
trends are explained in sections IV.F.1 and IV.F.4 of this document. Note that the Benefits and Costs may not
sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3-percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance and value of considering the benefits calculated using all four
sets of SC-GHG estimates. To monetize the benefits of reducing GHG emissions this analysis uses the interim
estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February 2021 by the Interagency Working Group on
the Social Cost of Greenhouse Gases (IWG).
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with a
3-percent discount rate, but the Department does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as installation costs.

DOE's analysis of the national impacts of the adopted standards is
described in sections IV.H, IV.K, and IV.L of this document.

D. Conclusion

DOE concludes that the standards adopted in this final rule
represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified, and would result
in the significant conservation of energy. Specifically, with regards
to technological feasibility, products achieving these standard levels
are already commercially available for all product classes covered by
this proposal. As for economic justification, DOE's analysis shows that
the benefits of the standards exceed, to a great extent, the burdens of
the standards.
Using a 7-percent discount rate for consumer benefits and costs and
NO<INF>X</INF> and SO<INF>2</INF> reduction benefits, and a 3-percent
discount rate case for GHG social costs, the estimated cost of the
standards for consumer pool heaters is $74.1 million per year in
increased product costs, while the estimated annual benefits are $208.0
million in reduced product operating costs, $88.3 million in monetized
climate benefits, and $97.7 million in monetized health benefits. The
net monetized benefit amounts to $319.8 million per year.
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking.\13\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------

\13\ Procedures, Interpretations, and Policies for Consideration
in New or Revised Energy Conservation Standards and Test Procedures
for Consumer Products and Commercial/Industrial Equipment, 86 FR
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------

As previously mentioned, the standards are projected to result in
estimated national energy savings of 0.70 quads FFC, the equivalent of
the primary annual energy use of 7.5 million homes. In addition, they
are projected to reduce CO<INF>2</INF> emissions by 29 Mt. Based on
these findings, DOE has determined the energy savings from the standard
levels adopted in this final rule are ``significant'' within the
meaning of 42 U.S.C. 6295(o)(3)(B). A more detailed discussion of the
basis for these conclusions is contained in the remainder of this
document and the accompanying technical support document (``TSD'').

II. Introduction

The following section briefly discusses the statutory authority
underlying this final rule, as well as some of the relevant historical
background related to the establishment of standards for consumer pool
heaters.

A. Authority

EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of

[[Page 34629]]

EPCA established the Energy Conservation Program for Consumer Products
Other Than Automobiles. These products include consumer pool heaters,
the subject of this document. (42 U.S.C. 6292(a)(11)) EPCA prescribed
energy conservation standards for these products (42 U.S.C.
6295(e)(2)), and directs DOE to conduct two cycles of rulemakings to
determine whether to amend these standards. (42 U.S.C. 6295(e)(4)) EPCA
further provides that, not later than 6 years after the issuance of any
final rule establishing or amending a standard, DOE must publish either
a notice of determination that standards for the product do not need to
be amended, or a 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))
The energy conservation program under EPCA, consists essentially of
four parts: (1) testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of the EPCA specifically include
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293),
labeling provisions (42 U.S.C. 6294), energy conservation standards (42
U.S.C. 6295), and the authority to require information and reports from
manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal
preemption in limited instances for particular State laws or
regulations, in accordance with the procedures and other provisions set
forth under EPCA. (See 42 U.S.C. 6297(d))
Subject to certain criteria and conditions, DOE is required to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of each covered product. (42 U.S.C.
6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers of covered products
must use the prescribed DOE test procedure as the basis for certifying
to DOE that their products comply with the applicable energy
conservation standards adopted under EPCA and when making
representations to the public regarding the energy use or efficiency of
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use
these test procedures to determine whether the products comply with
standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test
procedure for consumer pool heaters appears at title 10 of the Code of
Federal Regulations (``CFR'') part 430, subpart B, appendix P
(``appendix P'').
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including consumer pool
heaters. Any new or amended standard for a covered product must be
designed to achieve the maximum improvement in energy efficiency that
the Secretary of Energy determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A) Furthermore, DOE may
not adopt any standard that would not result in the significant
conservation of energy. (42 U.S.C. 6295(o)(3)(B))
Moreover, DOE may not prescribe a standard (1) for certain
products, including consumer pool heaters, if no test procedure has
been established for the product, or (2) if DOE determines by rule that
the standard is not technologically feasible or economically justified.
(42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard
is economically justified, DOE must determine whether the benefits of
the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must
make this determination after receiving comments on the proposed
standard, and by considering, to the greatest extent practicable, the
following seven statutory factors:

(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated
average life of the covered products in the type (or class) compared
to any increase in the price, initial charges, or maintenance
expenses for the covered products that are likely to result from the
standard;
(3) The total projected amount of energy (or as applicable,
water) savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the
covered products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (``Secretary'')
considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing 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 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 products 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 such a feature and other factors DOE deems
appropriate. Id. Any rule prescribing such a standard must include an
explanation of the basis on which such higher or lower level was
established. (42 U.S.C. 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

[[Page 34630]]

standard, or, if that is not feasible, adopt a separate standard for
such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's
current test procedure for consumer pool heaters addresses standby mode
and off mode energy use by use of the integrated thermal efficiency
metric, as do the new and amended standards adopted in this final rule.

B. Background

1. Current Standards
The current energy conservation standard for gas-fired pool heaters
is set forth in DOE's regulations at 10 CFR 430.32(k) and is repeated
in Table II.1 of this document. The current energy conservation
standard for gas-fired pool heaters is in terms of thermal efficiency
(E<INF>t</INF>), which measures only active mode efficiency. Electric
pool heaters are a covered product under EPCA, but prior to this
rulemaking there was no Federal energy conservation standard for this
product class.

Table II.1--Federal Energy Conservation Standards for Consumer Pool
Heaters
------------------------------------------------------------------------
Minimum thermal
Product class efficiency
(percent)
------------------------------------------------------------------------
Gas-Fired Pool Heaters................................. 82
------------------------------------------------------------------------

2. History of Standards Rulemaking for Consumer Pool Heaters
On April 16, 2010, DOE published a final rule in which it concluded
the first round of rulemaking required under EPCA and established an
amended energy conservation standard for consumer pool heaters. 75 FR
20112 (``April 2010 Final Rule'').\14\ In relevant part, the April 2010
Final Rule amended the statutorily prescribed standards for gas-fired
pool heaters with a compliance date of April 16, 2013, on and after
which gas-fired pool heaters were required to achieve an E<INF>t</INF>
of 82 percent.
---------------------------------------------------------------------------

\14\ A correction notice was published on April 27, 2010,
correcting a reference to the compliance date for the energy
conservation standard. 75 FR 21981.
---------------------------------------------------------------------------

On December 17, 2012, DOE published a final rule in the Federal
Register that established a new efficiency metric, integrated thermal
efficiency (TE<INF>I</INF>), for gas-fired pool heaters. 77 FR 74559,
74565 (``December 2012 TP Final Rule''). The TE<INF>I</INF> metric
built on the existing E<INF>t</INF> metric for measuring active mode
energy efficiency, and accounts for the energy consumption during
standby mode and off mode operation. DOE stated in the December 2012 TP
Final Rule that for purposes of compliance with the energy conservation
standard, the test procedure amendments related to standby mode and off
mode (i.e., integrated thermal efficiency) are not required until the
compliance date of the next standards final rule, which addresses
standby and off mode. 77 FR 74559, 74559.
On January 6, 2015, DOE published a final rule pertaining to its
test procedures for direct heating equipment (``DHE'') and consumer
pool heaters. 80 FR 792 (``January 2015 TP Final Rule''). In that final
rule, DOE established test methods for measuring the integrated thermal
efficiency of electric resistance and electric heat pump pool heaters.
Id.
To evaluate whether to propose amendments to the energy
conservation standard for consumer pool heaters, DOE issued a request
for information (``RFI'') in the Federal Register on March 26, 2015. 80
FR 15922 (``March 2015 RFI''). Through the March 2015 RFI, DOE
requested data and information pertaining to its planned technical and
economic analyses for DHE and consumer pool heaters. Among other
topics, the March 2015 RFI sought data and information pertaining to
electric pool heaters. 80 FR 15922, 15924-15925. Although the March
2015 RFI and the previous energy conservation standards rulemaking
(concluding with the April 2010 Final Rule) included both DHE and
consumer pool heaters, DOE has elected to review its energy
conservation standards for each of these products separately.\15\
---------------------------------------------------------------------------

\15\ The rulemaking docket for DHE can be found at:
<a href="http://www.regulations.gov/#!docketDetail">www.regulations.gov/#!docketDetail</a>;D=EERE-2016-BT-STD-0007.
---------------------------------------------------------------------------

DOE subsequently published a notice of data availability (``NODA'')
in the Federal Register on October 26, 2015, which announced the
availability of its analyses for electric pool heaters. 80 FR 65169
(``October 2015 NODA''). The purpose of the October 2015 NODA was to
make publicly available the initial technical and economic analyses
conducted for electric pool heaters, and present initial results of
those analyses to seek further input from stakeholders. DOE did not
propose new or amended standards for consumer pool heaters at that
time. The initial TSD and accompanying analytical spreadsheets for the
October 2015 NODA provided the analyses DOE undertook to examine the
potential for establishing energy conservation standards for electric
pool heaters and provided preliminary discussions in response to
several issues raised by comments to the March 2015 RFI. The October
2015 NODA described the analytical methodology that DOE used, and each
analysis DOE had performed.
Most recently, on April 15, 2022, DOE published a NOPR (``April
2022 NOPR'') for consumer pool heaters, in which DOE proposed new
energy conservation standards for electric pool heaters and amended
energy conservation standards for gas-fired pool heaters. 87 FR 22640.
The new and amended standards proposed in the April 2022 NOPR were
defined in terms of the TE<INF>I</INF> metric, adopted in the December
2012 TP Final Rule (for gas-fired pool heaters) and January 2015 TP
Final Rule (for electric pool heaters). DOE received 11 comments in
response to the April 2022 NOPR from interested parties which are
listed in Table II.2.

Table II.2--Interested Parties Providing Written Comment in Response to the April 2022 NOPR
----------------------------------------------------------------------------------------------------------------
Comment No. in
Commenter(s) Abbreviation the docket Commenter type
----------------------------------------------------------------------------------------------------------------
Air-Conditioning, Heating, and AHRI and PHTA............. 20 Trade Association.
Refrigeration Institute; Pool & Hot Tub
Alliance.
American Gas Association; American Gas Associations.......... 15 Utility Association.
Public Gas Association.
Appliance Standards Awareness Project; Joint Advocates........... 13 Efficiency Organization.
American Council for an Energy-
Efficient Economy; Natural Resources
Defense Council; Northwest Energy
Efficiency Alliance; National Consumer
Law Center.
Aqua Cal AutoPilot, Inc................. AquaCal................... 11 Manufacturer.
Bradford White Corporation.............. BWC....................... 12 Manufacturer.
Fluidra................................. Fluidra................... 18 Manufacturer.

[[Page 34631]]

Hayward Holdings, Inc................... Hayward................... 17 Manufacturer.
New York State Energy Research and NYSERDA................... 10 State Agency.
Development Authority.
Pacific Gas and Electric Company; CA IOUs................... 16 Utility Association.
Southern California Edison; San Diego
Gas & Electric Company.
Rheem Manufacturing Company............. Rheem..................... 19 Manufacturer.
Union of Concerned Scientists; Center Environmental Advocates... 14 Efficiency Organization.
for Climate and Energy Solutions;
Montana Environmental Information
Center; Institute for Policy Integrity,
NYU School of Law; Sierra Club; Natural
Resources Defense Council.
----------------------------------------------------------------------------------------------------------------

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\16\
To the extent that interested parties have provided written comments
that are substantively consistent with any oral comments provided
during the May 4, 2022, public meeting, DOE cites the written comments
throughout this final rule. Any oral comments provided during the
webinar that are not substantively addressed by written comments are
summarized and cited separately throughout this final rule.
---------------------------------------------------------------------------

\16\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for consumer pool heaters. (Docket No.
EERE-2021-BT-STD-0020, which is maintained at <a href="http://www.regulations.gov">www.regulations.gov</a>).
The references are arranged as follows: (commenter name, comment
docket ID number, page of that document).
---------------------------------------------------------------------------

III. General Discussion

DOE developed this final rule after considering oral and written
comments, data, and information from interested parties that represent
a variety of interests. The following discussion addresses issues
raised by these commenters.

A. General Comments

This section summarizes general comments received from interested
parties regarding rulemaking timing and process.
The Gas Associations commented that DOE should adopt changes to its
rulemaking process as outlined in a report by National Academies of
Sciences, Engineering, and Medicine (``NASEM'') \17\ for both test
procedures and standards. (Gas Associations, No. 15 at p. 3) In
response, the Department notes that the rulemaking process for
standards of covered products and equipment are outlined at appendix A
to subpart C of 10 CFR part 430 (``appendix A''), and DOE periodically
examines and revises these provisions in separate rulemaking
proceedings.
---------------------------------------------------------------------------

\17\ Although not specified, DOE interprets this comment to
refer to the National Academies of Science, Engineering, and
Medicine 2021 report entitled ``Review of Methods Used by the U.S.
Department of Energy in Setting Appliance and Equipment Standards.''
Copies of the report are available at <a href="http://nap.nationalacademies.org/catalog/25992/review-of-methods-used-by-the-us-department-of-energy-in-setting-appliance-and-equipment-standards">nap.nationalacademies.org/catalog/25992/review-of-methods-used-by-the-us-department-of-energy-in-setting-appliance-and-equipment-standards</a> (last accessed on
October 15, 2022).
---------------------------------------------------------------------------

AHRI and PHTA suggested that the Department perform another round
of manufacturer interviews to determine if the data sources and
methodology used are still accurate to ensure DOE's analyses capture
products and conditions that best represent the current state of the
market. (AHRI and PHTA, No. 20 at p. 6) BWC urged DOE to utilize the
most recently available data when conducting its analysis for this
rulemaking, stating that many sources cited throughout the April 2022
NOPR are outdated and may provide an inaccurate picture of current
market impacts for manufacturers of consumer pool heaters. BWC
specifically noted that the Department cited information that was
gathered during manufacturer interviews conducted in 2015. BWC asserted
that several major events have transpired since that time, which have
had significant consequences for pool heater manufacturers (including
significant pricing increases for components and materials that are
utilized in manufacturing). Thus, BWC also recommended that DOE re-
interview product manufacturers and conduct additional research to
obtain updated costing information before issuing a final rule. (BWC,
No. 12 at pp. 1-2)
Throughout the rulemaking process, DOE seeks feedback and insight
from interested parties to improve the information used in the
analyses. During Phase III of the manufacturer impact analysis
(``MIA'') (see section IV.J of this document and chapter 12 of the
final rule TSD), DOE interviews manufacturers to gather information on
the effects of new and amended energy conservation standards on
revenues and finances, direct employment, capital assets, and industry
competitiveness. DOE also verifies findings from its other analyses
with manufacturers. The Phase III analysis for the April 2022 NOPR
occurred several years prior to this final rule, and given this unique
circumstance, the Department conducted additional interviews after the
publication of the April 2022 NOPR in order to collect the most recent
information, as stakeholders suggested. The analysis conducted for this
final rule takes into account the most recent feedback from
manufacturers and other interested parties.

B. Scope of Coverage

This final rule covers those consumer products that meet the
statutory and regulatory definition of ``pool heater,'' as codified at
10 CFR 430.2. (see also 42 U.S.C. 6291(25)) Consumer ``pool heaters''
are defined as an appliance designed for heating nonpotable water
contained at atmospheric pressure, including heating water in swimming
pools, spas, hot tubs and similar applications. 10 CFR 430.2. In this
rulemaking, DOE has addressed comments requesting the Department to
limit the scope of consumer pool heater regulations to products with
capacities that are below a certain limit in order to distinguish these
products from pool heaters that are commercial equipment. However, EPCA
places no capacity limit on the pool heaters it covers under its
definition of ``pool heater.'' (42 U.S.C. 6291(25)) Furthermore, EPCA
covers pool heaters as a ``consumer product,'' (42 U.S.C. 6291(2), 42
U.S.C. 6292(a)(11)) and defines ``consumer product,'' in part, as an
article that ``to any significant extent, is distributed in commerce
for personal use or consumption by individuals.'' (42 U.S.C. 6291(1))
Standards established for pool heaters as a consumer product under EPCA
therefore apply to any pool heater distributed to any significant
extent as a consumer product for personal use or consumption by
individuals, regardless of input capacity

[[Page 34632]]

and including consumer pool heater models that may also be installed in
commercial applications.
In the April 2022 NOPR, DOE initially concluded that further
delineation by adding an input capacity limit is not necessary. 87 FR
22640, 22653. DOE maintained its position initially stated in the April
2010 Final Rule that pool heaters marketed as commercial equipment
contain additional design modifications related to safety requirements
for installation in commercial buildings, including being designed to
meet a high volume flow and are matched with a pump from the point of
manufacture to accommodate the needs of commercial facilities, which
allows manufacturers to distinguish those units from pool heaters
distributed to any significant extent for residential use, regardless
of input capacity. Id.; (see also 75 FR 20112, 20127-20128). Moreover,
standards for gas-fired pool heaters regardless of size have been in
place since 1990, and to place a capacity limit on standards now would
result in backsliding for products over the capacity limit, which would
be contrary to the anti-backsliding provision in EPCA. (42 U.S.C.
6295(o)(1))
In response to the April 2022 NOPR, several commenters requested
that DOE further clarify the distinction between consumer pool heaters
and pool heaters which do not meet the definition of a consumer product
(i.e., ``commercial pool heaters''). Hayward requested that DOE utilize
a physical parameter to distinguish consumer pool heaters from
commercial pool heaters because the proposals in the April 2022 NOPR
may allow manufacturers to use marketing or branding in order to
exclude products from the scope of the rule. (Hayward, No. 17 at p. 3)
AHRI and PHTA suggested the following physical criteria could be used
to determine whether a pool heater is not a consumer pool heater: uses
a voltage above 277 volts, uses 3-phase current, is rated to Section IV
of the American Society of Mechanical Engineers (``ASME'') Boiler and
Pressure Vessel Code, is rated for 400,000 Btu/h or greater, and is
designed and marketed as commercial equipment. (AHRI and PHTA, No. 20
at p. 3)
Rheem supported the product classes DOE analyzed for this consumer
pool heater rulemaking and agreed with DOE's interpretation on coverage
of standards for consumer products. Specifically, Rheem indicated that
it differentiates consumer and commercial pool heaters through
marketing materials as well as unique design aspects such as: high-
volume flow, matching with a pump, ASME standards certification, and
voltage/phase. (Rheem, No. 19 at p. 3)
Comments from Hayward, Rheem, AHRI, and PHTA state that there are
certain physical characteristics of pool heaters which indicate they
are not distributed in commerce for personal use or consumption by
individuals. This is not inconsistent with DOE's position that consumer
pool heaters as products can presently be sufficiently distinguished
from ``commercial pool heaters.'' DOE notes, however, that EPCA places
no limitation on the physical characteristics for a pool heater to
qualify as a consumer product, (42 U.S.C. 6291(25)), and has concluded
that explicitly specifying design criteria to define consumer pool
heaters is unnecessary at this time.
When evaluating and establishing energy conservation standards, DOE
divides covered products into product classes by the type of energy
used or by capacity or other performance-related features that justify
differing standards. In determining whether a performance-related
feature justifies a different standard, DOE must consider such factors
as the utility of the feature to the consumer and other factors DOE
determines are appropriate. (42 U.S.C. 6295(q)(1))
As discussed in section IV.A.1 of this document, this final rule
considered consumer gas-fired pool heaters, oil-fired pool heaters,
electric pool heaters, and electric spa heaters. However, DOE is
establishing standards for only two product classes in this rulemaking:
gas-fired pool heaters and electric pool heaters. DOE may, in a future
rulemaking addressing energy conservation standards for consumer pool
heaters, analyze standards for oil-fired pool heaters and/or electric
spa heaters, or consider setting differential standards for new product
classes that may be considered.
NYSERDA supported DOE's effort to set standards for electric pool
heaters for the first time and concurred that the proposed standards
are cost effective and technologically feasible. (NYSERDA, No. 10 at p.
1) Hayward stated that electric resistance heaters should be included
in the scope of the rule to achieve the power usage and efficiency
goals for all pool heating systems. (Hayward, No. 17 at p. 2)
As discussed in section IV.C.1.a of this document, the baseline
efficiency level that DOE selected for electric pool heaters is based
on use of electric resistance elements. See section IV.A.1 of this
document for discussion of the product classes analyzed in this final
rule.

C. Test Procedure

EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
certify to DOE that their product complies with energy conservation
standards and to quantify the efficiency of their product. DOE's
current energy conservation standards for consumer pool heaters are
expressed in terms of E<INF>t</INF>. (See 10 CFR 430.32(k)(2).) DOE's
test procedure for consumer pool heaters is found at appendix P.
As discussed in section II.A of this document, EISA 2007 amended
EPCA to require DOE to amend its test procedures for covered consumer
products generally to include measurement of standby mode and off mode
energy consumption. (42 U.S.C. 6295(gg)(2)(A)) The current test
procedure established for fossil fuel-fired pool heaters determines an
integrated thermal efficiency metric (TE<INF>I</INF>), which accounts
for energy consumption during active mode operation (sections 2.1.1,
3.1.1, and 4.1.1 of appendix P) and standby mode (sections 2.2, 3.2,
and 4.2 of appendix P) and off mode operation (sections 2.3, 3.2, and
4.3 of appendix P), as required by EISA 2007. 77 FR 74559, 74572. See
also 77 FR 74559, 74564-74565. The DOE test procedure for electric
resistance and electric heat pump pool heaters determines the active
mode energy use for electric resistance (sections 2.1.2, 3.1.2, and
4.1.2 of appendix P) and electric heat pump pool heaters (sections
2.1.3, 3.1.3, and 4.1.3 of appendix P). Standby mode and off mode
energy use are also recorded using the same procedures used for fossil-
fuel fired pool heaters (sections 2.2, 3.2, and 4.2 and 2.3, 3.2, and
4.3 of appendix P, respectively). The active mode, standby mode, and
off mode energy use are then combined into the TE<INF>I</INF> metric
(section 5 of appendix P).
In this document, DOE is establishing new and amended energy
conservation standards for consumer pool heaters in terms of
TE<INF>I</INF> to align with the metric in the current test procedure.
To the extent DOE is also making amendments to the test procedure,
such amendments are limited to those necessary to accommodate the
proposed definitions and the proposed product classes. As discussed
further in sections III.G.1 and IV.A.1 of this document, DOE is
amending appendix P to add definitions for ``active electrical power,''
``input capacity,'' and ``output capacity;'' to add a calculation to

[[Page 34633]]

determine the output capacity for electric pool heaters; and to clarify
the calculation of input capacity for fossil fuel-fired pool heaters.
These amendments to appendix P would not impact test procedure conduct
nor the measurements taken, but rather the new provisions use existing
measurements to calculate the values necessary for comparing product
efficiency to the proposed standards.
In response to the April 2022 NOPR, DOE received comments from
stakeholders relating to the method of testing in the consumer pool
heater test procedure. Specifically, AHRI and PHTA suggested that the
Department use mass flow rate as an alternative calculation to using
the mass of water in the test procedure, as the use of a mass flow
meter would provide a significantly more accurate and repeatable data
collection that would also allow for automation of the test procedure.
AHRI and PHTA also encouraged DOE to update its references to the
latest edition of ANSI Z21.56.\18\ AHRI and PHTA noted that there are
measurable increases in efficiency due to part-load operation when
operating at colder ambient conditions that are not captured in the
current rating test. (AHRI and PHTA, No. 20 at pp. 3-4) Similarly,
Rheem suggested that DOE investigate part-load efficiency in the next
test procedure rulemaking. (Rheem, No. 19 at p. 4)
---------------------------------------------------------------------------

\18\ The most recent version of ANSI Z21.56 is ANSI Z21.56/CSA
4.7-2017, Gas-Fired Pool Heaters. Copies of the standard are
available for purchase at: <a href="http://webstore.ansi.org/Standards/CSA/ansiz21562017csa">webstore.ansi.org/Standards/CSA/ansiz21562017csa</a> (last accessed on October 15, 2022).
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DOE will consider these comments further in the next revision of
its consumer pool heater test procedure.

D. Technological Feasibility

1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the products or equipment that are the subject of the
rulemaking. As the first step in such an analysis, DOE develops a list
of technology options for consideration in consultation with
manufacturers, design engineers, and other interested parties. DOE then
determines which of those means for improving efficiency are
technologically feasible. DOE considers technologies incorporated in
commercially available products or in working prototypes to be
technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of appendix A
to 10 CFR part 430 subpart C (``appendix A'').
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; (3) adverse impacts on
health or safety and (4) unique-pathway proprietary technologies.
Section 7(b)(2)-(5) of appendix A. Section IV.B of this document
discusses the results of the screening analysis for consumer pool
heaters, particularly the designs DOE considered, those it screened
out, and those that are the basis for the standards adopted in this
rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the final rule TSD.
2. Maximum Technologically Feasible Levels
When DOE adopts a new or amended standard for a type or class of
covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for consumer
pool heaters, using the design parameters for the most efficient
products available on the market or in working prototypes. The max-tech
levels that DOE determined for this rulemaking are described in section
IV.C of this document and in chapter 5 of the final rule TSD.

E. Energy Savings

1. Determination of Savings
For each trial standard level (``TSL''), DOE projected energy
savings from application of the TSL to consumer pool heaters purchased
in the 30-year period that begins in the first full year of compliance
with the new and amended standards (2028-2057).\19\ The savings are
measured over the entire lifetime of products purchased in the 30-year
analysis period. DOE quantified the energy savings attributable to each
TSL as the difference in energy consumption between each standards case
and the no-new-standards case. The no-new-standards case represents a
projection of energy consumption that reflects how the market for a
product would likely evolve in the absence of new and amended energy
conservation standards.
---------------------------------------------------------------------------

\19\ DOE also presents a sensitivity analysis that considers
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

DOE used its national impact analysis (``NIA'') spreadsheet models
to estimate national energy savings (``NES'') from potential new and
amended standards for consumer pool heaters. The NIA spreadsheet model
(described in section IV.H of this document) calculates energy savings
in terms of site energy, which is the energy directly consumed by
products at the locations where they are used. For electricity, DOE
reports national energy savings in terms of primary energy savings,
which is the savings in the energy that is used to generate and
transmit the site electricity. For natural gas, the primary energy
savings are considered to be equal to the site energy savings. DOE also
calculates NES in terms of FFC energy savings. The FFC metric includes
the energy consumed in extracting, processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum fuels), and thus presents a
more complete picture of the impacts of energy conservation
standards.\20\ DOE's approach is based on the calculation of an FFC
multiplier for each of the energy types used by covered products or
equipment. For more information on FFC energy savings, see section
IV.H.2 of this document.
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\20\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
To adopt any new or amended standards for a covered product, DOE
must determine that such action would result in significant energy
savings. (42 U.S.C. 6295(o)(3)(B))
The significance of energy savings offered by a new or amended
energy conservation standard cannot be determined without knowledge of
the specific circumstances surrounding a given rulemaking. For example,
some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis, taking into
account the significance of cumulative FFC national energy savings, the
cumulative FFC emissions reductions, and the need to confront the
global climate crisis, among other factors.
The standard levels adopted in this final rule are projected to
result in

[[Page 34634]]

national energy savings of 0.70 quads, the equivalent of the
electricity use of 7.5 million homes in one year. Based on the amount
of FFC savings, the corresponding reduction in emissions, and the need
to confront the global climate crisis, DOE has determined the energy
savings from the standard levels adopted in this final rule are
``significant'' within the meaning of 42 U.S.C. 6295(o)(3)(B).

F. Economic Justification

1. Specific Criteria
As noted previously, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this final rule.
a. Economic Impact on Manufacturers and Consumers
EPCA requires DOE to consider the economic impact of the standard
on manufacturers and consumers of the product that would be subject to
the standard. (42 U.S.C. 6295(o)(2)(B)(i)(I). In determining the
impacts of potential amended standards on manufacturers, DOE conducts
an MIA, as discussed in section IV.J of this document. DOE first uses
an annual cash-flow approach to determine the quantitative impacts.
This step includes both a short-term assessment--based on the cost and
capital requirements during the period between when a regulation is
issued and when entities must comply with the regulation--and a long-
term assessment over a 30-year period. The industry-wide impacts
analyzed include (1) INPV, which values the industry on the basis of
expected future cash flows; (2) cash flows by year; (3) changes in
revenue and income; and (4) other measures of impact, as appropriate.
Second, DOE analyzes and reports the impacts on different types of
manufacturers, including impacts on small manufacturers. Third, DOE
considers the impact of standards on domestic manufacturer employment
and manufacturing capacity, as well as the potential for standards to
result in plant closures and loss of capital investment. Finally, DOE
takes into account cumulative impacts of various DOE regulations and
other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and PBP associated with new or amended standards. These
measures are discussed further in the following section. For consumers
in the aggregate, DOE also calculates the national net present value of
the consumer costs and benefits expected to result from particular
standards. DOE also evaluates the impacts of potential standards on
identifiable subgroups of consumers that may be affected
disproportionately by a standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating cost (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates appropriate for
consumers. To account for uncertainty and variability in specific
inputs, such as product lifetime and discount rate, DOE uses a
distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered products in the first full year of compliance with
new or amended standards. The LCC savings for the considered efficiency
levels are calculated relative to the case that reflects projected
market trends in the absence of new or amended standards. DOE's LCC and
PBP analysis is discussed in further detail in section IV.F of this
document.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section IV.H of this document, DOE uses the NIA
spreadsheet models to project national energy savings.
d. Lessening of Utility or Performance of Products
In establishing product classes, and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data
available to DOE, the standards adopted in this document will not
reduce the utility or performance of the products under consideration
in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General, that is
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It
also directs the Attorney General to determine the impact, if any, of
any lessening of competition likely to result from a standard and to
transmit such determination to the Secretary within 60 days of the
publication of a proposed rule, together with an analysis of the nature
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) To assist the
Department of Justice (``DOJ'') in making such a determination, DOE
transmitted copies of its proposed rule and the NOPR TSD to the
Attorney General for review, with a request that the DOJ provide its
determination on this issue. In its assessment letter responding to
DOE, DOJ concluded that the proposed energy conservation standards for
consumer pool heaters are unlikely to have a significant adverse impact
on competition. DOE is publishing the Attorney General's assessment at
the end of this final rule.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy
savings from the adopted standards are likely to provide improvements
to the security and reliability of the Nation's energy system.
Reductions in the demand for electricity also may result in reduced
costs for

[[Page 34635]]

maintaining the reliability of the Nation's electricity system. DOE
conducts a utility impact analysis to estimate how standards may affect
the Nation's needed power generation capacity, as discussed in section
IV.M of this document.
DOE maintains that environmental and public health benefits
associated with the more efficient use of energy are important to take
into account when considering the need for national energy
conservation. The adopted standards are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and GHGs associated with energy production and use. DOE
conducts an emissions analysis to estimate how potential standards may
affect these emissions, as discussed in section IV.K of this document;
the estimated emissions impacts are reported in section V.B.6 of this
document. DOE also estimates the economic value of emissions reductions
resulting from the considered TSLs, as discussed in section IV.L of
this document.
g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
previously, DOE could consider such information under ``other
factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first full year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effect potential amended
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the Nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section IV.F of this document.

G. Other Topics

1. Test Procedure Updates
This final rule establishes amended standards for gas-fired pool
heaters and new standards for electric pool heaters in terms of
TE<INF>I</INF>. These standards are functions of the input capacity
(``Q<INF>IN</INF>'') for gas-fired pool heaters and the active
electrical power (``PE'') for electric pool heaters. To provide clarity
on how values would be determined for certification, DOE is adopting
definitions for ``input capacity,'' ``active electrical power,'' and
``output capacity'' (``Q<INF>OUT</INF>'') and identifying which
measured variables in the test procedure represent these
characteristics.
Given the dependency of TE<INF>I</INF> on Q<INF>IN</INF> and PE, in
the April 2022 NOPR DOE proposed updates to the test procedure and
product-specific enforcement provisions to ensure clarity in
determination of these parameters. Specifically, DOE proposed to amend
appendix P to:
<bullet> Use values measured during the active mode test described
in Section 2.10.1 of ANSI.Z21.56-2006 (i.e., heating value times
correction factor times the quantity of fossil fuel used divided by the
length of the test) to determine the input capacity of a fossil fuel-
fired pool heater, as this calculation was not stated clearly within
appendix P;
<bullet> Clarify that active electrical power is represented by the
variable PE; and
<bullet> Provide a calculation for output capacity so that the
product class for an electric pool heater can be appropriately
determined.
87 FR 22640, 22651.
In response, Rheem suggested DOE add provisions to appendix P to
describe how to appropriately calculate input capacity for gas-fired
pool heaters at standard temperature and pressure conditions. (Rheem,
No. 19 at p. 2) AHRI and PHTA provided similar feedback, requesting
that DOE specify values for barometric pressure, as this value can vary
depending on numerous factors including test location and environmental
conditions. (AHRI and PHTA, No. 20 at p. 3)
Section 2.10.1 of ANSI Z21.56-2006, the industry test standard that
is incorporated by reference into appendix P for gas-fired pool
heaters, includes the use of a correction factor (``CF'') ``to correct
observed gas volume to the conditions of pressure and temperature at
which the heating value of the gas is specified [normally 30 inches
mercury column (101.6 kPa) and 60 [deg]F (15.5 [deg]C)]''. As such, the
standard temperature and pressure is already specified as 60 degrees
Fahrenheit (``[deg]F'') and 30 inches of mercury (``in. Hg'') for the
calculation of Q<INF>IN</INF>. If the laboratory barometric conditions
do not match the standard pressure, as AHRI and PHTA suggested, section
2.10.1 of ANSI Z21.56-2006 requires the gas measurement to be
mathematically corrected.
Rheem also requested that DOE clarify whether coefficient of
performance (``COP'') representations in manufacturer literature may
continue to be made at ambient conditions other than the ``High Air
Temperature--Mid Humidity'' condition in AHRI Standard 1160. (Rheem,
No. 19 at p. 10)
Section 3.1.3 of appendix P states that the test conditions for
electric heat pump pool heaters shall be at the ``High Air
Temperature--Mid Humidity (63% RH)'' level specified in section 6 of
AHRI 1160-2009, the industry test standard that is incorporated by
reference into appendix P for heat pump pool heaters. EPCA mandates
that no manufacturer, distributor, retailer, and or private labeler may
make any representation with respect to the energy use or efficiency of
a covered product to which a test procedure is applicable unless such
product has been tested in accordance with such test procedure and such
representation fairly discloses the results of such testing. (42 U.S.C.
6293(c)(1)(A)-(B)) Therefore, although manufacturers may make
representations of COP according to the test conditions in appendix P,
manufacturers may not make representations for heat pump pool heaters
at test conditions which are not included in appendix P.
Taking into consideration the feedback received on the necessary
updates to the test procedure to accommodate the transition to
TE<INF>I</INF>-based standards, DOE is amending appendix P as proposed
in the April 2022 NOPR to include new definitions and methods for
determining for input capacity, active electrical power, and output
capacity.
2. Enforcement Provisions
The Department codifies product-specific enforcement provisions at
10 CFR 429.134 to indicate how DOE would conduct certain aspects of
assessment or enforcement testing on covered products and equipment.

[[Page 34636]]

In the April 2022 NOPR, DOE proposed that the input capacity or
active electrical power (as applicable) for enforcement testing would
be measured pursuant to appendix P and compared against the rated value
certified by the manufacturer. If the measured input capacity or active
electrical power (as applicable) is within <plus-minus>2 percent of the
certified value, then DOE would use the certified value when
determining the applicable standard. The <plus-minus>2 percent
threshold was chosen because it is already used for commercial water
heating equipment (see 10 CFR 429.134(n)) and it represents a
reasonable range to account for manufacturing variations that may
affect the input capacity. DOE proposed that, during enforcement
testing for a gas-fired pool heater, if the measured input capacity is
not within <plus-minus>2 percent of the certified value, then DOE would
follow these steps to attempt to bring the fuel input rate to within
<plus-minus>2 percent of the certified value. First, DOE would attempt
to adjust the gas pressure in order to increase or decrease the input
capacity as necessary. If the input capacity is still not within <plus-
minus>2 percent of the certified value, DOE would then attempt to
modify the gas inlet orifice (i.e., drill) if the unit is equipped with
one. Finally, if these measures do not bring the input capacity to
within <plus-minus>2 percent of the certified value, DOE would use the
mean measured input capacity (either for a single unit sample or the
average for a multiple-unit sample) when determining the applicable
standard for the basic model. 87 FR 22640, 22651.
In the April 2022 NOPR, DOE proposed that, for an electric pool
heater, it would not take any steps to modify the unit to bring the
active electrical power of the unit within the <plus-minus>2 percent
threshold. Rather, if the active electrical power is not within <plus-
minus>2 percent of the certified value, DOE would use the measured
active electrical power (either for a single unit sample or the average
for a multiple unit sample) when determining the applicable standard
for the basic model. Id. at 87 FR 22652.
AHRI and PHTI commented that the Department's suggested <plus-
minus>2 percent threshold is appropriate for the certified value of
input capacity or active electrical power for gas-fired pool heaters
because adjustment of the valve should be allowed to achieve input
rate. However, AHRI and PHTA recommended that DOE should apply the
<plus-minus>5 percent threshold that is specified in section 6.3 \21\
of AHRI 1160 on the certified value of input capacity or active
electrical power for electric pool heaters, and requested that the
Department offer additional clarification for the proposed definition
of ``certified.'' (AHRI and PHTA, No. 20 at pp. 2-3) Hayward similarly
supported a <plus-minus>2 percent threshold for gas-fired pool heaters,
but believed that a <plus-minus> 5 percent threshold would be
appropriate for heat pump pool heaters due to variances in compressor
performance. (Hayward, No. 17 at p. 3) Rheem supported the DOE proposal
to add a <plus-minus>2 percent threshold to its enforcement provisions
at 10 CFR 429.134 regarding input capacity, which is required for gas-
fired pool heaters. For electric products, Rheem stated there are no
methods to easily adjust power, so while a threshold should be placed
on active electrical power in the enforcement provisions, due to the
inherent variability in active electrical power for electric pool
heaters this threshold should be <plus-minus>5 percent. (Rheem, No. 19
at p. 2)
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\21\ The commenters referenced section 6.2 of AHRI 1160, which
specifies application ratings. DOE interprets this comment as
intending to reference section 6.3 of AHRI 1160-2006, which
specifies tolerances on heating capacity and COP.
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DOE agrees with Rheem that electrical power cannot be readily
adjusted on a pool heater the way gas input is designed to be adjusted
for a field-installed unit, and thus, for electric pool heaters,
inherent product variability is not able to be compensated for with in-
field adjustments to energy input, as is possible for gas-fired pool
heaters. For this reason, DOE concludes that a higher threshold for
electrical power in the enforcement testing provisions for electrical
pool heaters as compared to the input capacity threshold for gas-fired
pool heaters is warranted. Section 6.3 of AHRI 1160-2006 states that
measured test results for heating capacity and COP shall not be less
than 95 percent of published ratings. Based on these considerations,
DOE agrees that the <plus-minus>5 percent threshold recommended by
stakeholders is appropriate for enforcement testing of electric pool
heaters. In this final rule, DOE is establishing product-specific
enforcement provisions for consumer pool heaters which allow a <plus-
minus>2 percent threshold for gas-fired pool heaters and a <plus-
minus>5 percent threshold for electric pool heaters.
Rheem also recommended changing the title to 10 CFR 429.134(s)(2)
to ``Verification of active electrical power for electric pool
heaters.'' (Rheem, No. 19 at p. 2) DOE understands this to be a
typographical correction to the title proposed in the April 2022 NOPR,
which read, ``Verification of active electrical power for pool
heaters.'' 87 FR 22640, 22716. Due to the additions of several product-
specific enforcement provisions since the April 2022 NOPR, the
enforcement provisions for pool heaters have been relocated to 10 CFR
429.134(dd). Because the title suggested by Rheem clarifies that the
provision applies only to electric pool heaters and not all pool
heaters, DOE is adopting the suggested title for 10 CFR 429.134(cc)(2).
3. Certification Requirements
In the April 2022 NOPR, DOE stated that if new and amended energy
conservation standards were adopted in this rulemaking, the Department
would review and revise the certification provisions accordingly to
establish certification provisions for electric pool heaters and to
allow for appropriate reporting of TE<INF>I</INF> values. DOE stated
that it would consider such amendments in a separate rulemaking. 87 FR
22640, 22651.
In response, Rheem generally recommended DOE update the
certification provisions at 10 CFR 429.24 to require certification of
integrated thermal efficiency and either input capacity or active
electrical power as necessary. (Rheem, No. 19 at p. 2) Rheem also
requested that DOE add certification provisions which allow for the
propane gas version of a basic model to be rated using the natural gas
version if the propane gas input rate is within 10 percent of the
natural gas input rate. (Rheem, No. 19 at p. 10)
DOE is considering these comments in a separate rulemaking
addressing certification requirements for consumer pool heaters and
other products and equipment. Interested parties may find this
rulemaking at Docket No. EERE-2023-BT-CE-0001. Compliance with the
energy conservation standards promulgated by this final rule must be
demonstrated on and after May 30, 2028.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this
final rule with regard to consumer pool heaters. Separate subsections
address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards considered in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential amended or new
energy conservation standards. The national impacts analysis uses a
second spreadsheet set that provides shipments projections and

[[Page 34637]]

calculates NES and NPV of total consumer costs and savings expected to
result from potential energy conservation standards. DOE uses the third
spreadsheet tool, the Government Regulatory Impact Model (``GRIM''), to
assess manufacturer impacts of potential standards. These three
spreadsheet tools are available on the DOE website for this rulemaking:
<a href="http://www.regulations.gov/docket/EERE-2021-BT-STD-0020">www.regulations.gov/docket/EERE-2021-BT-STD-0020</a>. Additionally, DOE
used output from the latest version of the Energy Information
Administration's (``EIA's'') Annual Energy Outlook (``AEO'') for the
emissions and utility impact analyses.

A. Market and Technology Assessment

DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this rulemaking include (1) a determination of the scope
of the rulemaking and product classes, (2) manufacturers and industry
structure, (3) existing efficiency programs, (4) shipments information,
(5) market and industry trends, and (6) technologies or design options
that could improve the energy efficiency of consumer pool heaters. The
key findings of DOE's market assessment are summarized in the following
sections. See chapter 3 of the final rule TSD for further discussion of
the market and technology assessment.
1. Product Classes
When evaluating and establishing energy conservation standards, DOE
may establish separate standards for a group of covered products (i.e.,
establish a separate product class) if DOE determines that separate
standards are justified based on the type of energy used, or if DOE
determines that a product's capacity or other performance-related
feature justifies a different standard. (42 U.S.C. 6295(q)) In making a
determination whether a performance-related feature justifies a
different standard, DOE must consider such factors as the utility of
the feature to the consumer and other factors DOE determines are
appropriate. (Id.)
Under EPCA, pool heaters are covered products. (42 U.S.C.
6292(a)(11)) EPCA defines ``pool heater'' as an appliance designed for
heating nonpotable water contained at atmospheric pressure, including
heating water in swimming pools, spas, hot tubs and similar
applications. (42 U.S.C. 6291(25)) This includes electric pool heaters,
gas-fired pool heaters, and oil-fired pool heaters. However, energy
conservation standards have been previously established only for gas-
fired pool heaters.\22\ In this final rule, DOE establishes definitions
for gas-fired pool heaters, electric pool heaters, electric spa
heaters, and oil-fired pool heaters; establishes new energy
conservation standards for electric pool heaters; and for gas-fired
pool heaters, translates the existing standard from the E<INF>t</INF>
metric to an equivalent level in terms of the TE<INF>I</INF> metric and
amends the energy conservation standards. DOE has not analyzed
potential standards for oil-fired pool heaters because they comprise a
very small market share and such standards would result in very little
energy savings. DOE also did not perform energy conservation standards
analysis for electric spa heaters, as DOE was unable to identify
technology options available to improve the efficiency of such
products. Accordingly, DOE is not establishing standards for these
products in this final rule.
---------------------------------------------------------------------------

\22\ EPCA prescribed a minimum thermal efficiency of pool
heaters and initially defined thermal efficiency of pool heaters
only in the context of test conditions for gas-fired pool heaters.
(See 42 U.S.C. 6295(e)(2) and 42 U.S.C. 6291(26))
---------------------------------------------------------------------------

As discussed in the April 2022 NOPR, some commenters responding to
the March 2015 RFI suggested DOE consider atmospherically vented gas-
fired pool heaters separately from fan-assisted gas-fired pool heaters
or to consider condensing and non-condensing products separately. 87 FR
22640, 22653. As previously noted by DOE, the standard for gas-fired
pool heaters proposed in the April 2022 NOPR, and adopted in this final
rule, can be achieved by atmospherically vented and/or non-condensing
gas-fired pool heaters.
In the March 2015 RFI, DOE sought comment on whether capacity or
other performance related features that may affect efficiency would
justify the establishment of consumer pool heater product classes that
would be subject to different energy conservation standards.
Specifically, DOE sought comment on whether heat pump technology was a
viable design for applications which typically utilize electric
resistance pool heaters. 80 FR 15922, 15925. As discussed in the April
2022 NOPR, some commenters recommended DOE create separate product
classes for electric resistance and electric heat pump pool heaters,
and others urged DOE to regulate both under one product class covering
all electric pool heaters. 87 FR 22640, 22654. In the April 2022 NOPR,
DOE noted that although heat pump pool heaters perform best when
operating within an environment with high air temperature and high air
humidity, they are nonetheless capable of operating effectively in
cooler climates during the swimming season. Additionally, rare cases in
which the ambient temperature is too low for the heat pump pool heater
to work effectively could be accommodated through the incorporation of
electric resistance backup elements. Therefore, DOE proposed to
maintain a single product class for electric pool heaters. Id.
In response to the April 2022 NOPR, the Joint Advocates stated
their support of a single product class for all electric pool heaters
because electric resistance heaters provide no unique utility. (Joint
Advocates, No. 13 at p. 1-2) The CA IOUs also agreed with DOE that
separate product classes for electric resistance and electric heat pump
pool heaters are not justified. (CA IOUs, No. 16 at p. 6) DOE received
no other comments in response to the April 2022 NOPR on this issue and,
for the reasons discussed, maintains a single product class for
electric pool heaters in this final rule.
In the April 2022 NOPR, DOE proposed definitions for electric pool
heaters (note that ``electric spa heater'' is defined later in this
section), gas-fired pool heaters, and oil-fired pool heaters. 87 FR
22640, 22656. The proposed definitions were as follows:
Electric pool heater means a pool heater other than an electric spa
heater that uses electricity as its primary energy source.
Gas-fired pool heater means a pool heater that uses gas as its
primary energy source.
Oil-fired pool heater means a pool heater that uses oil as its
primary energy source.
In response to the April 2022 NOPR, BWC agreed with DOE's proposal
to clarify regulations by adding a definition for ``gas-fired pool
heater'' at 10 CFR 430.2. (BWC, No. 12 at p. 2) AHRI and PHTA stated
their general agreement with DOE's proposed definitions, but urged the
Department to create separate definitions for electric heat pump and
electric resistance pool heaters, and provided a recommended definition
for electric heat pump pool heaters. (AHRI and PHTA, No. 20 at p. 4)
DOE acknowledges that there are differences in the components and
operation of electric resistance pool heaters and electric heat pump
pool heaters. However, because DOE is

[[Page 34638]]

maintaining one product class for all electric pool heaters, there is
no need to distinguish between these two types of electric pool
heaters. As such, DOE adopts the definitions above as proposed in the
April 2022 NOPR.
The definition of an electric pool heater adopted by this final
rule specifically excludes pool heaters meeting the definition of an
``electric spa heater''. In the April 2022 NOPR, DOE explained that
lower capacity \23\ electric heaters used to heat water in spas are a
covered product by virtue of being within EPCA's definition of pool
heater. 87 FR 22640, 22654-22656; (see 42 U.S.C. 6291(25).) In
addition, DOE noted in the April 2022 NOPR that electric spa heaters
are often incorporated into the construction of a self-contained spa or
hot tub, resulting in the heater performing its major function (heating
spa water) in an environment that would preclude the use of higher
efficiency technologies (heat pump) and manufacturers instead rely on
electric resistance heating elements. Therefore, DOE determined that
heat pump technology is not a viable option for electric spa heaters
designed for use within a self-contained portable electric spa because
a heat pump cannot be readily incorporated into the construction of a
spa or hot tub. However, DOE also determined that heat pump technology
is a viable option for heating a spa or hot tub if the heater is
separate from the construction of the hot tub or spa (i.e., non-self-
contained as defined in section 1 of ANSI/APSP/International Code
Council Standard 6-2013, ``American National Standard for Residential
Portable Spas and Swim Spas''). Therefore, in the April 2022 NOPR, DOE
proposed to define ``electric spa heater'' as follows:
---------------------------------------------------------------------------

\23\ In this case, ``lower-capacity'' means an input rating of
less than 11 kW. DOE identified 11 kW as being a typical output
capacity below which electric resistance heaters are integrated in
spas based on its assessment of the market performed for the October
2015 NODA. 80 FR 65169. This threshold was also suggested by a
commenter responding to the March 2015 RFI. 87 FR 22640, 22655.

Electric spa heater means a pool heater that (1) uses
electricity as its primary energy source; (2) has an output capacity
(as measured according to appendix P to subpart B of part 430) of 11
kW or less; and (3) is designed to be installed within a portable
---------------------------------------------------------------------------
electric spa.

87 FR 22640, 22656.
In the April 2022 NOPR, DOE also proposed a definition for
``portable electric spa,'' because at that time, DOE had not codified
such a definition.
Portable electric spa means a self-contained, factory-built spa or
hot tub in which all control, water heating and water circulating
equipment is an integral part of the product. Self-contained spas may
be permanently wired, or cord connected.
87 FR 22640, 22656.
Commenting in response to the April 2022 NOPR, the CA IOUs stated
their agreement with DOE's decision to exclude electric spa heaters
from this rulemaking due to differences in consumer utility, but
suggested DOE modify the definition for electric spa heater by
replacing the phrase ``to be installed'' with ``and marketed for use as
an electric pool heater.'' The CA IOUs explained that ``designed and
marketed'' means that the equipment is designed to fulfill the
indicated application and, when distributed in commerce, is marketed
for that application, with the designation on the packaging and any
publicly available documents, citing a definition from 10 CFR 431.462
(related to DOE's regulations for commercial pumps). (CA IOUs, No. 16
at pp. 5-6)
Rheem recommended aligning the definitions for portable electric
spas from the coverage determination for portable electric spas (Docket
No. EERE-2022-BT-DET-0006) and the NOPR prior to the publication of
either the final portable electric spa determination or consumer pool
heaters standards final rule. (Rheem, No. 19 at p. 3) AHRI and PHTA
sought clarification on whether swim spas are captured within the
definition of portable electric spas. (AHRI and PHTA, No. 20 at p. 4)
On September 2, 2022, DOE published a final determination
(``September 2022 Final Determination'') that established portable
electric spas as a covered consumer product and included the following
definition to be codified in 10 CFR 430.2:
Portable electric spa means 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.
87 FR 54123, 54129.
This newly established definition is substantively the same as the
one DOE proposed in the April 2022 NOPR and thus, DOE is not adopting
any amendments to that definition in this final rule.
In response to the comment from AHRI and PHTA, DOE notes that swim
spas are captured by the newly established definition for portable
electric spa to the extent that they meet the description included in
the definition. DOE also notes that portable electric spas are not
within the scope of this rulemaking and will not be subject to the
energy conservation standards adopted in this final rule. DOE
appreciates the suggested definitional change for electric spa heaters
from the CA IOUs but notes that the cited definition for commercial
pumps is not relevant to consumer products, including electric spa
heaters, a type of consumer pool heater. EPCA defines a consumer
product, in relevant part, as any article of a type which, to any
significant extent, is distributed in commerce for personal use or
consumption by individuals; without regard to whether such article of
such type is in fact distributed in commerce for personal use or
consumption by an individual. (42 U.S.C. 6291(1)) As such, the design
of an electric spa heater is sufficient to determine whether the
product is a covered consumer product; coverage does not hinge on how
the product is marketed. For this reason, DOE is not incorporating the
language suggested by the CA IOUs in the definition of ``electric spa
heater'' in this final rule.
Hayward suggested that DOE define pool heaters by technology (e.g.,
gas-fired, air vapor compression heating/cooling, ground-source vapor
compression heating/cooling, absorption heating/cooling, electric
resistance) because different technology types correspond to different
applications. (Hayward, No. 17 at pp. 3-4)
In response the suggestion from Hayward, DOE notes that EPCA
provides that product classes shall be defined if the Secretary
determines that covered products with the class 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 from that which
applies (or will apply) to other products within such type (or class).
(42 U.S.C. 6295(q)(1)) Accordingly, DOE is adopting separate
definitions and analyzed different energy conservation standards for
gas-fired and electric pool heaters, which consume different kinds of
energy. However, among the technologies listed by Hayward that consume
electricity, DOE was unable to identify, nor did Hayward suggest, a
correlation between technology type and capacity or other performance-
related feature that would constitute a ``feature'' under 42 U.S.C.
6295(q)(1). Therefore, DOE is declining to additionally define consumer
pool heater products by technology type.

[[Page 34639]]

In the April 2022 NOPR, DOE proposed a definition for output
capacity along with equations for its calculation for electric pool and
spa heaters to be incorporated in the consumer pool heaters test
procedure at appendix P. The proposed calculation for output capacity
for an electric pool or spa heater utilizes measurements already taken
for other calculations in appendix P and therefore DOE would not
consider the provision to result in any additional test procedure
burden. 87 FR 22640, 22656. DOE proposed to define output capacity for
electric pool and spa heaters as follows:

Output capacity for an electric pool or spa heater means the
maximum rate at which energy is transferred to the water.

DOE proposed separate equations for the calculation of output
capacity of an electric resistance pool heater and electric heat pump
pool heater. 87 FR 22640, 22656. For electric pool heaters that rely on
electric resistance heating elements, DOE proposed that the output
capacity be calculated as:

Q<INF>OUT,ER</INF> = k * W * (T<INF>mo</INF>-T<INF>mi</INF>) * (60/30)

where k is the specific heat of water, W is the mass of water collected
during the test, T<INF>mo</INF> is the average outlet water temperature
recorded during the primary test, T<INF>mi</INF> is the average inlet
water temperature record during the primary test, all as defined in
section 11.1 of ASHRAE 146, and (60/30) is the conversion factor to
convert the output capacity measured during the 30-minute test to
output capacity per hour.
DOE proposed that the output capacity of an electric pool heater
that uses heat pump technology be calculated as:

Q<INF>OUT,HP</INF> = k * W * (T<INF>ohp</INF>-T<INF>ihp</INF>) * (60/
t<INF>HP</INF>)

where k is the specific heat of water, W is the mass of water collected
during the test, T<INF>ohp</INF> is the average outlet water
temperature during the standard rating test, T<INF>ihp</INF> is the
average inlet water temperature during the standard rating test, all as
defined in section 11.2 of ASHRAE 146, and t<INF>HP</INF> is the
elapsed time of data recording during the thermal efficiency test on
electric heat pump pool heater, as defined in section 9.1 of ASHRAE
146, in minutes. 87 FR 22640, 22656.
DOE did not receive any comments pertaining to the definition and
calculations for output capacity proposed in the April 2022 NOPR and
therefore will adopt them, as proposed, in this final rule.
In the April 2022 NOPR, DOE tentatively determined that the
creation of a separate product class for heat pump pool heaters with
cooling capability was not necessary, and requested comment on its
assumption that electric pool heaters with cooling capabilities do not
suffer diminished efficiency performance in heating mode. 87 FR 22640,
22655-22656.
Responding to the April 2022 NOPR, Hayward commented that heat pump
pool heaters with heating and cooling need to have some efficiency
offset to accommodate additional system components that affect
efficiency in heating mode; the alternatives to heat pumps with cooling
include evaporative coolers, which consume both energy and water, and
are not currently regulated by DOE. (Hayward, No. 17 at p. 1) AHRI and
PHTA stated that the efficiency and performance for a heat pump with
cooling capabilities should be evaluated independently, as the pressure
drop from the reversing valve could have negative impacts on overall
performance compared to a similar model without cooling capabilities.
(AHRI and PHTA, No. 20 at p. 3) Hayward commented that heat pump pool
heaters that have both heating and cooling capabilities suffer
diminished efficiency performance in heating mode due to pressure drops
from the reversing valve and heat exchanger designs. Therefore, Hayward
argued that the standards for heat pumps with heating and cooling
should be lower than those for heating-only heat pumps. (Hayward, No.
17 at p. 3) Rheem stated that its heat pump pool heaters with cooling
capability experience minimal effect on efficiency performance when in
heating mode, but any difference is captured in performance ratings.
(Rheem, No. 19 at p. 3)
DOE's market assessment performed for this rulemaking included both
heating-only and heating- and cooling-capable consumer pool heaters. Of
the models DOE identified, differences in COP are negligible between
the heating- and cooling-capable pool heaters and the heating-only pool
heaters. As such, DOE maintains that the creation of a separate product
class for heat pump pool heaters with cooling capability is not
warranted and does not establish one in this final rule.
2. Technology Options
In the April 2022 NOPR, DOE identified nine technology options for
electric pool heaters and eight technology options for gas-fired pool
heaters that would be expected to improve the efficiency as measured by
DOE test procedure. 87 FR 22640, 22656-22657. Table IV.1 below lists
all technology options identified.

Table IV.1--Technology Options Identified for the April 2022 NOPR
----------------------------------------------------------------------------------------------------------------
Technology option Electric pool heater Gas-fired pool heater
----------------------------------------------------------------------------------------------------------------
Insulation improvements..................................... X X
Control improvements........................................ X X
Heat pump technology........................................ X ........................
Heat exchanger improvements................................. X X
Compressor improvements..................................... X ........................
Expansion valve improvements................................ X ........................
Fan improvements............................................ X ........................
Condensing heat exchanger................................... ........................ X
Electronic ignition systems................................. ........................ X
Switch mode power supply.................................... X X
Seasonal off switch......................................... X X
Condensing pulse combination................................ ........................ X
----------------------------------------------------------------------------------------------------------------

In the April 2022 NOPR, DOE discussed comments it received from
interested parties requesting the Department consider fan motor
improvements as a technology option to improve efficiency at multiple
load conditions. DOE noted that these improvements are unlikely to
yield improvements because heat pump pool heaters operate at full
capacity to satisfy the call for heat. Heat pump pool heaters on the
market use permanent split capacitor (``PSC'') motors and do not
currently utilize brushless permanent magnet (``BPM'') fan

[[Page 34640]]

motors.\24\ Therefore, DOE has not been able to test products in order
to determine the magnitude of efficiency improvement, if any, that
could be expected due to the incorporation of BPM motors. The
Department requested more information on this topic to determine
whether there would be an efficiency improvement from replacing PSC
motors with BPM motors. 87 FR 22640, 22660-22661.
---------------------------------------------------------------------------

\24\ The efficiency of PSC motors is highest at a single speed,
with significant diminishing operation efficiency at other speeds,
whereas BPM motors are capable of maintaining a high operating
efficiency at multiple speeds.
---------------------------------------------------------------------------

Responding to the April 2022 NOPR, Fluidra stated it generally
agreed with the technology options analyzed. (Fluidra, No. 18 at p. 2)
Hayward suggested consideration of modulating heaters, as they can
provide both improved efficiency and a better user experience, and
recommended further analysis on average energy or part load energy
consumption to provide credit for variable-capacity (modulating) pool
heaters. (Hayward, No. 17 at pp. 4-5) Hayward added that variable-
capacity heat pump pool heaters and gas-fired pool heaters, which would
allow for efficiency calculations at part loads, should be considered
for additional efficiency levels. Hayward also suggested that a
variable-capacity heat pump pool heater would constitute a new max-tech
electric pool heater efficiency level, and a variable-capacity gas-
fired pool heater would fall between 84-percent and 95-percent thermal
efficiency. (Hayward, No. 17 at p. 2) Conversely, AHRI and PHTA stated
that their testing shows variable-speed fans have minimal impact on
heat pump efficiency, and that the current efficiency metric does not
benefit from variable-capacity equipment. In addition, these commenters
noted that variable-capacity equipment will have higher standby mode
and off mode losses. (AHRI and PHTA, No. 20 at p. 4)
Rheem stated that fan motor efficiency improvements will affect
only the active mode testing in the current DOE test procedure. Rheem
noted that the current DOE test procedure does not address part-load
efficiency, which could be improved with fan motor efficiency (e.g.,
switching from a PSC to a BPM fan motor). (Rheem, No. 19 at p. 4)
Hayward claimed that while BPM fan motors may offer improved efficiency
at reduced speed, the energy consumed by the fan motor is small
compared to the energy consumed by the compressor motor. (Hayward, No.
17 at p. 4)
In order for a given technology to be considered a technology
option by DOE for the purposes of evaluating potential new or amended
energy conservation standards, the technology must be expected to
improve the efficiency or energy consumption as measured by DOE test
procedure. Appendix P does not capture part-load performance;
therefore, DOE is unable to determine the efficiency impacts of
modulating heaters or variable-capacity heat pumps for consumer pool
heaters. Thus, DOE did not evaluate either of these technologies as a
technology option for this final rule.
In response to the comment from Hayward, DOE acknowledges that the
energy consumed by the fan motor is generally smaller than that of the
compressor in an electric heat pump water heater. However, DOE agrees
with Rheem that improvements in fan motor efficiency will improve the
efficiency of a consumer pool heater as measured by appendix P and,
therefore, continued to consider fan motor improvements as part of the
general fan improvements technology option for this final rule. As
discussed in section III.C of this document, DOE may consider comments
related to part-load efficiency provisions in appendix P in its next
test procedure rulemaking for consumer pool heaters.
In summary, DOE retains the same list of technology options from
the April 2022 NOPR in this final rule. After considering all
identified potential technology options for improving the efficiency of
consumer pool heaters, DOE performed the screening analysis (see
section IV.B of this document and chapter 4 of the final rule TSD) on
these technologies to determine which were considered further in the
final rule analysis.

B. Screening Analysis

DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in commercially viable, existing
prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production of a technology in commercial products
and reliable installation and servicing of the technology could not be
achieved on the scale necessary to serve the relevant market at the
time of the projected compliance date of the standard, then that
technology will not be considered further.
(3) Impacts on product utility. If a technology is determined to
have a significant adverse impact on the utility of the product to
subgroups of consumers, or result in the unavailability of any covered
product type with performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as products generally available in the United States at the time,
it will not be considered further.
(4) Safety of technologies. If it is determined that a technology
would have significant adverse impacts on health or safety, it will not
be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving a
given efficiency level, it will not be considered further, due to the
potential for monopolistic concerns. Sections 6(b)(3) and 7(b) of
appendix A.
In sum, if DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the listed five criteria, it
will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed in
the following sections.
The subsequent sections describe DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
1. Screened-Out Technologies
In the April 2022 NOPR, DOE proposed eliminating condensing pulse
combustion from its analysis, having tentatively determined that this
technology option is not technologically feasible and not practicable
to manufacture, install, and service. DOE stated that, although
condensing pulse combustion technology shows promising results in
increasing efficiency, it has not yet penetrated the consumer pool
heater market, and similar efficiencies are achievable with other
technologies that have already been introduced on the market. 87 FR
22640, 22657. BWC agreed with screening out condensing pulse combustion
technology. (BWC, No. 12 at p. 2) For the reasons stated, DOE screened
out the condensing pulse combustion technology option in the final rule
analysis. Although condensing pulse combustion technology shows
promising results in increasing efficiency, it has not yet penetrated
the consumer pool heater market, and similar efficiencies are
achievable with

[[Page 34641]]

other technologies that have already been introduced on the market.
2. Remaining Technologies
Through a review of each technology, DOE concludes that all of the
other identified technologies listed in section IV.B.2 of this document
met all five screening criteria to be examined further as design
options in DOE's final rule analysis. In summary, DOE did not screen
out the following technology options shown in Table IV.2:

Table IV.2--Technology Options That Passed Screening Criteria
------------------------------------------------------------------------
Electric pool Gas-fired pool
Technology option heater heater
------------------------------------------------------------------------
Insulation improvements............... [check] [check]
Control improvements.................. [check] [check]
Heat pump technology.................. [check] ...............
Heat exchanger improvements........... [check] [check]
Expansion valve improvements.......... [check] ...............
Fan improvements...................... [check] ...............
Condensing heat exchanger............. ............... [check]
Electronic ignition systems........... ............... [check]
Switch mode power supply.............. [check] [check]
Seasonal off switch................... [check] [check]
------------------------------------------------------------------------

BWC agreed that the technology options identified by DOE in Table
IV.2 of the April 2022 NOPR (which are the same as those retained for
this final rule) are comprehensive and appropriate in assessing gas-
fired pool heaters, although many of the retained technologies are
unlikely to lead to significant overall energy efficiency improvements
for these consumer pool heaters. (BWC, No. 12 at p. 2)
DOE determined that these technology options are technologically
feasible because they are being used or have previously been used in
commercially-available products or working prototypes. DOE also found
that all of the remaining technology options meet the other screening
criteria (i.e., practicable to manufacture, install, and service and do
not result in adverse impacts on consumer utility, product
availability, health, or safety). For additional details, see chapter 4
of the final rule TSD. DOE notes that the technology options which
passed screening criteria do not in their entirety constitute the list
of technologies which were analyzed as representative of the major
design pathways to improving TE<INF>I</INF> values for consumer pool
heaters; those ``design options'' are described in further detail in
the engineering analysis (see section IV.C.1.b of this document).

C. Engineering Analysis

The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of consumer pool heaters.
There are two elements to consider in the engineering analysis; the
selection of efficiency levels to analyze (i.e., the ``efficiency
analysis'') and the determination of product cost at each efficiency
level (i.e., the ``cost analysis''). In determining the performance of
higher-efficiency products, DOE considers technologies and design
option combinations not eliminated by the screening analysis. For each
product class, DOE estimates the baseline cost, as well as the
incremental cost for the product at efficiency levels above the
baseline. The output of the engineering analysis is a set of cost-
efficiency ``curves'' that are used in downstream analyses (i.e., the
LCC and PBP analyses and the NIA).
1. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended
using the design option approach to interpolate to define ``gap fill''
levels (to bridge large gaps between other identified efficiency
levels) and/or to extrapolate to the ``max-tech'' level (particularly
in cases where the ``max-tech'' level exceeds the maximum efficiency
level currently available on the market).
In this final rule, DOE relied on the efficiency-level approach.
Efficiency levels for electric pool heaters were initially identified
in the October 2015 NODA based on a review of products on the market
and then revised in the April 2022 NOPR. DOE applied the same
analytical approach for the efficiency analysis of gas-fired pool
heaters in the April 2022 NOPR. 87 FR 22640, 22658.
As discussed in the April 2022 NOPR, the efficiency-level approach
enabled DOE to identify incremental improvements in efficiency
resulting from design options that consumer pool heater manufacturers
already incorporate in commercially available models. 87 FR 22640,
22658. However, as of this final rule, manufacturers have not yet begun
publishing ratings in terms of TE<INF>I</INF> because there are no
standards or certification requirements for electric pool heaters, and
requirements for gas-fired pool heaters are limited only to
E<INF>t</INF> representations. Due to this lack of certified or
otherwise publicly available TE<INF>I</INF> ratings, the Department's
efficiency analysis included a process to convert existing
E<INF>t</INF> ratings for gas-fired pool heaters and COP ratings for
heat pump pool heaters to representative TE<INF>I</INF> values based on
the calculation procedures found in section 5.1 of the appendix P test
procedure. Typical values for active mode, standby mode, and off mode
energy consumption were estimated based on test data and feedback from

[[Page 34642]]

manufacturers during confidential interviews. Id.
The TE<INF>I</INF> metric improves upon the E<INF>t</INF> metric by
taking into account standby mode and off mode energy consumption, as
discussed in section III.C of this document. The current standard for
gas-fired pool heaters requires an E<INF>t</INF> of 82 percent for
products of all capacities. Figure 3.2.24 of the April 2010 Final Rule
TSD (``Distribution of Pool Heater Models by Input Capacity and Thermal
Efficiency'') demonstrated that E<INF>t</INF> is not strongly dependent
upon capacity. However, the transition to a regulated TE<INF>I</INF>
metric has required additional consideration for how standby and off
mode energy consumption may affect ratings for products of different
capacities. From information collected throughout this rulemaking
process, DOE has determined that standby and off mode energy
consumption is not directly correlated to input capacity,
Q<INF>IN</INF>, for a gas-fired pool heater or active mode electrical
energy consumption, PE, for an electric pool heater. As a result,
consumer pool heaters with lower capacities cannot achieve the same
TE<INF>I</INF> levels as products with higher capacities because the
standby and off mode energy consumption is a more significant
contribution to the overall energy consumption of lower-capacity
products.
To account for this, in the April 2022 NOPR, DOE developed
efficiency levels in which the TE<INF>I</INF> requirement is a function
of the capacity of the unit. 87 FR 22640, 22659. In the engineering
analysis for the April 2022 NOPR, the Department used several
performance parameters measured in the appendix P test procedure as
inputs to determining TE<INF>I</INF> efficiency levels for consumer
pool heaters as a function of capacity. Id. at 87 FR 22658-22659.
In response to the April 2022 NOPR, Hayward argued that standards
for heat pump and gas-fired pool heaters should be strictly focused on
thermal efficiency and not include standby power. Hayward suggested
that standby mode power could be considered in a future revision when
these other requirements are more mature and understood. (Hayward, No.
17 at p. 2) Rheem stated the methodology used to estimate standby
energy use was appropriate. Rheem also supported the use of the
integrated thermal efficiency metric as it would allow manufacturers to
make tradeoffs between active mode, standby mode, and off mode energy
use regarding the overall efficiency and other features. (Rheem, No. 19
at p. 6) BWC agreed with the Department's estimates for standby mode
and off mode power consumption for gas-fired pool heaters, as well as
the assertion that this energy consumption accounts for a very small
amount of the total overall annual energy use for such products, and
will not increase with higher input products. (BWC, No. 12 at p. 3)
DOE notes first that EPCA requires that any final rule for new or
amended energy conservation standards promulgated after July 1, 2010,
must address standby mode and off mode energy use, (42 U.S.C.
6295(gg)(3)), in that 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)). The TE<INF>I</INF> metric,
which incorporates energy consumption in active mode, standby mode, and
off mode and upon which potential new and amended energy conservation
standards for consumer pool heaters were evaluated, has been
established in the appendix P test procedure since July 6, 2015, as
discussed in section III.C of this document, allowing ample time for
manufacturers to assess products per this metric.
For this final rule, DOE revisited market energy efficiency
distributions (see chapter 3 of the final rule TSD) and performed
another round of manufacturer interviews (see section IV.J.3 of this
document) to determine that the same efficiency levels from the April
2022 NOPR remain representative of the current consumer pool heater
market. The following subsections detail the baseline, intermediate,
and max-tech efficiency levels addressed in this final rule. Further
discussion can be found in chapter 5 of the final rule TSD.
a. Baseline Efficiency
For each product class, DOE generally selects a baseline model as a
reference point for each class, and measures changes resulting from
potential energy conservation standards against the baseline. The
baseline model in each product class represents the characteristics of
a product typical of that class (e.g., capacity, physical size).
Generally, a baseline model is one that just meets current energy
conservation standards, or, if no standards are in place, the baseline
is typically the most common or least efficient unit on the market.
DOE uses the baseline model for comparison in several analyses,
including the engineering analysis, LCC analysis, PBP analysis, and
NIA. To determine energy savings that will results from a new or
amended energy conservation standard, DOE compared energy use at each
of the higher energy efficiency levels to the energy consumption of the
baseline unit. Similarly, to determine the change sin price to the
consumer that will result from an amended energy conservation standard,
DOE compares the price of a baseline unit to the price of a unit at
each higher efficiency level.
For gas-fired pool heaters, DOE analyzed a baseline efficiency
level corresponding to a product which is minimally compliant with the
current standard (82-percent E<INF>t</INF>) and uses a standing pilot
light. As discussed in the April 2022 NOPR, standing pilot lights
operate when the product is not in use and contribute to fossil fuel
energy use in standby mode, thereby resulting in lower TE<INF>I</INF>
values than products with electronic ignition. 87 FR 22640, 22659.
Table IV.3 depicts the baseline efficiency level for gas-fired pool
heaters analyzed for the April 2022 NOPR (and, as discussed later, also
analyzed in this final rule).
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[GRAPHIC] [TIFF OMITTED] TR30MY23.004

For electric pool heaters, DOE analyzed a baseline efficiency level
corresponding to electric resistance heating, which was found to be the
least efficient electric pool heater design on the market. Table IV.4
depicts the baseline efficiency level for electric pool heaters
analyzed for the April 2022 NOPR and this final rule.
[GRAPHIC] [TIFF OMITTED] TR30MY23.005

BWC believed that the baseline efficiency levels established in the
April 2022 NOPR were appropriate based on the DOE test procedure for
these products. (BWC, No. 12 at p. 2)
DOE did not receive any other comments specifically on the baseline
efficiency levels proposed in the April 2022 NOPR. Comments relating to
energy use in standby mode and off mode power, which factor into the
baseline TE<INF>I</INF> equations, have been discussed previously in
section IV.C.1 of this document. For the reasons described, DOE
maintained these baseline efficiency levels for the final rule
analysis.
Additional details on the selection of baseline models and the
development of the baseline efficiency equations may be found in
chapter 5 of the final rule TSD.
b. Higher Efficiency Levels
As part of DOE's analysis, the maximum available efficiency level
is the highest efficiency unit currently available on the market. DOE
also defines a ``max-tech'' efficiency level to represent the maximum
possible efficiency for a given product. For consumer pool heaters, the
max-tech efficiency levels are achieved by gas-fired pool heaters that
utilize condensing technology and by electric pool heaters that utilize
heat pump technology.
As discussed in section IV.C.1 of this document, efficiency levels
for electric pool heaters were initially analyzed in the October 2015
NODA. DOE requested comment on these efficiency levels and reviewed
stakeholder feedback in the April 2022 NOPR. In response to that
feedback, DOE incorporated additional design options in the April 2022
NOPR to decrease the standby mode and off mode energy consumption at
the max-tech levels and to further improve TE<INF>I</INF> values:
transformer improvements, switch mode power supply, and a seasonal off
switch. 87 FR 22640, 22660.
Between the baseline efficiency level and the max-tech efficiency
level, DOE analyzed several intermediate higher efficiency levels for
gas-fired pool heaters and electric pool heaters in the April 2022
NOPR. 87 FR 22640, 22659-22660. These efficiency levels, and
corresponding major design options to achieve these efficiency levels,
are shown in Table IV.5 through Table IV.8. As discussed in this
section, the Department is using these efficiency levels and design
options for this final rule analysis.

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[GRAPHIC] [TIFF OMITTED] TR30MY23.006

Table IV.6--Design Options for Gas-Fired Pool Heaters
------------------------------------------------------------------------
Efficiency level Technology
------------------------------------------------------------------------
EL 0......................... Standing Pilot + Cu or CuNi Finned Tube +
Atmospheric.
EL 1......................... Electronic Ignition + Cu or CuNi Finned
Tube + Atmospheric.
EL 2......................... Electronic Ignition + Cu or CuNi Finned
Tube + Blower Driven Gas/Air Mix.
EL 3......................... Condensing + CuNi and Cu Finned Tube +
seasonal off switch + switch mode power
supply.
------------------------------------------------------------------------

[GRAPHIC] [TIFF OMITTED] TR30MY23.007

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[[Page 34645]]

Table IV.8--Design Options for Electric Pool Heaters
------------------------------------------------------------------------
Efficiency level Technology
------------------------------------------------------------------------
EL 0......................... Electric Resistance.
EL 1......................... Heat Pump, twisted Titanium tube coil in
concentric/counter flow PVC Pipe.
EL 2......................... EL 1 + increased evaporator surface area.
EL 3......................... EL 2 + increased evaporator surface area.
EL 4......................... EL 3 + increased evaporator surface area.
EL 5......................... EL4 + condenser coil length + seasonal
off switch + switch mode power supply.
------------------------------------------------------------------------

The April 2022 NOPR requested comment on the proposed efficiency
levels above the baseline and the typical technological changes
associated with each efficiency level. 87 FR 22640, 22663.
In response, the Joint Advocates encouraged DOE to consider
additional efficiency levels for both electric and gas-fired pool
heaters that include designs employing seasonal off switches and switch
mode power supplies. The Joint Advocates suggested that adding seasonal
off switches would increase energy savings with minimal cost, and cited
State regulations for heat pump pool heaters in California,
Connecticut, and Florida which already require an off switch mounted on
the pool heater that permits shutoff without adjusting the thermostat.
The Joint Advocates commented that the proposed standard levels should
be adjusted to include seasonal off switches and/or a switch mode power
supply and that the analysis include the reduced standby mode and off
mode energy consumption associated with the use of these technology
options. (Joint Advocates, No. 13 at pp. 2-3) Similarly, the CA IOUs
recommended that DOE consider incorporating the assumption that all
consumer pool heaters are equipped with a seasonal off switch and
updating the efficiency levels as appropriate. The CA IOUs indicated
that heat pump pool heaters certified in the California Energy
Commission's Modernized Appliance Efficiency Database System
(``MAEDbS'') all have an on/off switch as California's Appliance
Efficiency Regulations (Title 20) adopted this as a prescriptive design
requirement for all consumer pool heaters sold in the state. CA IOUs
suggested that the seasonal off switch would be a cost effective means
for many models to reach the EL 4 level without needing to redesign for
a higher COP. (CA IOUs, No. 16 at pp. 3-5)
AquaCal suggested that the proposed efficiency level for electric
pool heaters was more stringent, in terms of relative level of
technological advancement required, than that for gas-fired pool
heaters. AquaCal recommended DOE should consider proposing efficiency
levels that are more comparable, in terms of the relative level of
technological advancement required, for electric and gas-fired pool
heaters. (AquaCal, No. 11 at p. 1) However, as results have shown, the
benefits and burdens for higher efficiency levels of gas-fired pool
heaters are not equivalent to the benefits and burdens for higher
efficiency levels of electric pool heaters, and DOE accounts for this
when constructing TSLs.
Rheem generally supported the technology changes associated with
each efficiency level. However, Rheem stated that the off-mode energy
use may not actually be zero when there is a seasonal off switch, and
the commenter recommended DOE either amend appendix P to require that
any non-zero off mode energy use be measured or provide clarification
on whether seasonal off switches with non-zero off mode energy use meet
the definition of a seasonal off switch within appendix P. (Rheem, No.
19 at pp. 4-5)
Section 1.7 of appendix P defines ``off mode'' as the condition
during the pool non-heating season in which the consumer pool heater is
connected to the power source, and neither the main burner, nor the
electric resistance elements, nor the heat pump is activated, and the
seasonal off switch, if present, is in the ``off'' position. Section
1.8 defines ``seasonal off switch'' as a switch that results in
different energy consumption in off mode as compared to standby mode.
Thus, there is no requirement for a seasonal off switch to result in a
measured energy consumption of zero in off mode in order to meet the
definition in section 1.8 of appendix P. However, feedback from
manufacturers and DOE's own testing has led the Department to conclude
that 0 watts is a representative value for P<INF>W,OFF</INF> at max-
tech because some seasonal off switches, including those analyzed for
the max-tech level, are capable of reducing the electrical power
consumption to 0 watts when in off mode.
DOE reviewed the regulations and building codes in California,\25\
Connecticut,\26\ Texas,\27\ and Florida \28\ to consider the
requirements for seasonal off switches in these jurisdictions. From its
research, the Department recognizes that these States do not have the
same definition or usage for off switches as DOE provides in appendix
P; the States and DOE are not defining the same type of switch despite
similar terminology. Specifically, these States require the use of a
``readily accessible on-off switch'' which allows the unit to shut off
the heater operation without adjusting the thermostat setting. These
requirements do not specify that all power-consuming components of the
pool heater are off--only the heater operation. Therefore, it is
uncertain whether these State-required on-off switches would put the
pool heater in a state where it would consume 0 watts of power. As
noted, DOE defines ``seasonal off switch'' as a switch that results in
different energy consumption in off mode as compared to standby mode,
and this would typically cause the pool heater to consume 0 watts in
the off mode. Additionally, DOE notes that California's regulations
require such a switch only for heat pump pool heaters.
---------------------------------------------------------------------------

\25\ See California Code of Regulations at 20 CCR Sec.
1605.3(g)(2), found online at: <a href="http://govt.westlaw.com/calregs/Index?transitionType=Default&contextData=%28sc.Default%29">govt.westlaw.com/calregs/Index?transitionType=Default&contextData=%28sc.Default%29</a> (last
accessed on October 15, 2022).
\26\ In the current, 2022 version of Connecticut building code,
an emergency off switch is no longer required for pool heaters. Item
313.7, which used to address the emergency shutoff switch, has been
deleted. See 2022 Connecticut State Building code at <a href="http://portal.ct.gov/-/media/DAS/Office-of-State-Building-Inspector/2022-State-Codes/2022-CSBC-Final.pdf">portal.ct.gov/-/media/DAS/Office-of-State-Building-Inspector/2022-State-Codes/2022-CSBC-Final.pdf</a> (last accessed on October 15, 2022).
\27\ See Texas Administrative Code Sec. 265.197 at
texreg.sos.state.tx.us/public/
readtac$ext.TacPage?sl=T&app=9&p_dir=N&p_rloc=202557&p_tloc=&p_ploc=1
&pg=3&p_tac=&ti=25&pt=1&ch=265&rl=197 (last accessed on October 15,
2022).
\28\ See 2020 Florida Building Code, Energy Conservation at
C404.9.1, <a href="http://codes.iccsafe.org/content/FLEC2020P1/chapter-4-ce-commercial-energy-efficiency">codes.iccsafe.org/content/FLEC2020P1/chapter-4-ce-commercial-energy-efficiency</a> (last accessed on October 15, 2022).
---------------------------------------------------------------------------

AHRI and PHTA stated that a unit disconnect is required in these
installations, and this typically functions as the off switch. AHRI and
PHTA opposed using seasonal off switches at lower efficiency levels in
DOE's analysis. (AHRI and PHTA, No. 20 at p. 3)

[[Page 34646]]

As such, it is unclear whether manufacturers are responding to
State mandates for ``readily accessible on-off switches'' by
introducing seasonal off switches which meet DOE's definition in
appendix P.
DOE agrees that seasonal off switches and switch mode power
supplies can improve the TE<INF>I</INF> values of each efficiency
level. However, DOE notes that the engineering analysis identifies the
major design pathway manufacturers are expected to use to improve
efficiency From discussions with manufacturers, DOE understands that
improvements to heat exchangers and fans would likely be implemented
first to achieve efficiencies above the baseline, before equipping
consumer pool heaters with technologies to reduce standby mode and off
mode energy consumption, because active mode energy consumption is
significantly larger and would be prioritized when considering which
design option to implement to achieve a target standard level. For this
reason, DOE maintains its analysis from the April 2022 NOPR, which
attributes the incorporation of seasonal off switches, switch mode
power supply, and transformer improvements only at the max-tech
efficiency level, after manufacturers have exhausted options to improve
efficiency via heat exchanger upgrades.
Furthermore, the CA IOUs suggested increasing the max-tech
efficiency level for electric pool heaters, given the presence of such
products with AHRI-certified COP values that exceed the max-tech COP
level analyzed in the April 2022 NOPR. (CA IOUs, No. 16 at pp. 4-5) In
response to this, DOE notes that it evaluated the efficiencies of
electric pool heaters on the basis of the TE<INF>I</INF> metric, and
found that, based on expected values of standby and off mode power
consumption, the max-tech efficiency level assessed in the NOPR is
still representative of the maximum efficiency that has been
demonstrated across a full range of capacities.
The Department also received comments regarding the efficiency
levels chosen for analysis of gas-fired pool heaters. The Joint
Advocates urged DOE to evaluate an efficiency level for gas pool
heaters with an active mode thermal efficiency of 85 percent. The Joint
Advocates claimed that there exist non-condensing gas-fired products
from multiple manufacturers with 85-percent thermal efficiency at
capacities ranging from 150,000 to 750,000 Btu/h, which can be found in
DOE's Compliance Certification Database (``CCD'') and MAEDbS. (Joint
Advocates, No. 13 at p. 2) AHRI and PHTA, by contrast, claimed that the
current Efficiency Level 2 (``EL 2'') (corresponding to an active mode
E<INF>t</INF> of 84 percent) for gas-fired pool heaters has the
potential to condense, and that the Department should set the thermal
efficiency at 83 percent.
AHRI and PHTA, along with the Gas Associations, encouraged DOE to
adopt a standard based on a thermal efficiency of 83 percent to avoid
venting re-configurations due to this potential condensing operation
that could occur at the proposed standard that corresponds to 84-
percent thermal efficiency. (AHRI and PHTA, No. 20 at pp. 2 and 5; Gas
Associations, No. 15 at p. 2) Fluidra provided similar comments,
indicating that 84-percent thermal efficiency is too close to the
functional limit for non-condensing gas-fired pool heaters, and
suggesting that the standard should be set at a level which corresponds
to a thermal efficiency of 83 percent in order to ensure a margin of
efficiency is used to prevent new products from operating in condensing
mode when installed as a non-condensing product. They noted this
approach would minimize disruption to consumers and industry by
increasing the minimum thermal efficiency, while allowing adequate
transition time for gas-fired pool heaters to reach EL 3 in the future.
(Fluidra, No. 18 at pp. 1-2) At the NOPR public meeting, DOE also
received comments that 84 percent is the threshold of condensing
operation, and any thermal efficiency higher than 84 percent would
inevitably result in condensation. (Pentair, Public Meeting Transcript,
No. 9 at pp. 5-6)
In manufacturer interviews since the April 2022 NOPR, stakeholders
have elaborated that at an 84-percent E<INF>t</INF> rating, in certain
installation conditions condensate forms in venting as the flue gases
exiting the heat exchanger are close to the dew point. Thus, while such
a gas-fired pool heater would be considered ``non-condensing'' because
the condensation does not occur in the heat exchanger, installation
considerations would still include using the appropriate venting
materials to handle possible condensation. Additionally, stakeholders
indicated that, when a gas-fired pool heater is operating at an
efficiency that is close to the condensing threshold, variations in
ambient temperature and water inlet temperature can cause condensation
to actually occur in the heat exchanger. While these fluctuations would
improve the efficiency of the gas-fired pool heater as compared to its
rating, the result may be corrosive damage to the heat exchanger,
according to these manufacturers.
Given these considerations, DOE did not consider an efficiency
level of 85-percent E<INF>t</INF> for gas-fired pool heaters, which was
suggested by the Joint Advocates, because safety or installation
concerns about near-condensing operation (brought up by manufacturers
in response to the April 2022 NOPR) would potentially be exacerbated at
85-percent E<INF>t</INF>. Additionally, upon its review of the CCD, DOE
has found that only one model line from one manufacturer is available
at 85-percent E<INF>t</INF>, indicating that manufacturers do not
generally produce gas-fired pool heaters at that efficiency. This would
indicate that near-condensing operation concerns may hinder the
production of 85-percent E<INF>t</INF> pool heaters.
Although several parties indicated that near-condensing operation
is also an issue at 84-percent E<INF>t</INF>, DOE's market assessment
demonstrates that there are a large number of unique basic models of
gas-fired pool heaters from six manufacturers available at 84-percent
E<INF>t</INF>. This shows that a significant portion of the market uses
products at this efficiency level, and that the potential for
condensation to disrupt system performance has apparently been
adequately mitigated through appropriate product design and
installation instructions for these products to maintain market share
in the United States. For example, DOE observed that gas-fired pool
heaters at 84-percent E<INF>t</INF> can be equipped with blowers that
ensure positive vent pressure (for indoor installations) and may need
to be installed with adequate means to discharge potential condensate.
Most importantly, far more products exist at 84-percent E<INF>t</INF>
than do at 83-percent E<INF>t</INF> \29\--hence, it would appear that
the 84-percent E<INF>t</INF> efficiency level is feasible and generally
more desirable to consumers than 83-percent E<INF>t</INF> since the
market has already largely moved to 84-percent. For these reasons, DOE
maintains a TE<INF>I</INF> level based on 84-percent E<INF>t</INF> in
its efficiency analysis for gas-fired pool heaters.
---------------------------------------------------------------------------

\29\ As of October 2022, 51 unique basic models of gas-fired
pool heaters were certified to DOE at 84% E<INF>t</INF>, whereas
only 10 unique basic models were rated at 83% E<INF>t</INF>. See
chapter 3 of the TSD for further details on the market assessment.
---------------------------------------------------------------------------

Rheem and AHRI and PHTA stated that copper and cupronickel heat
exchangers are not suitable for condensing operation because they are
not resistant to the corrosion from condensate and thus should not be
considered for EL 3. (Rheem, No. 19 at pp. 4-5; AHRI and PHTA, No. 20
at p. 5) In response, DOE notes that it observed condensing
cupronickel-based pool heaters in its teardown analysis.

[[Page 34647]]

Therefore, DOE has determined that cupronickel is suitable for
condensing operation, and the manufacturer production cost (``MPC'')
for EL 3, as discussed in section IV.C.2.a of this document, reflects
the use of this material.
Fluidra also commented that gas-fired pool heaters at EL 0 and EL
1, which were based on a model with 82-percent E<INF>t</INF> with and
without a standing pilot light, respectively, have become less
prevalent in the marketplace and that these efficiency levels would
have minimal meaningful impact. (Fluidra, No. 18 at p. 2) However,
DOE's market assessment reveals that, contrary to Fluidra's comment,
82-percent E<INF>t</INF> (the active mode thermal efficiency at EL 0
and EL 1) is the most commonly found thermal efficiency on the market
for gas-fired pool heaters. Hence DOE analyzed gas-fired pool heaters
with 82-percent E<INF>t</INF> (with and without standing pilot lights)
for this final rule analysis.
Hayward suggested that DOE analyze additional efficiency levels for
both gas-fired pool heaters and electric pool heaters with variable-
capacity technologies (i.e., modulating burners or inverter drives).
Hayward stated that it believed that manufacturers will be deterred
from developing modulating consumer pool heaters because the standby
power consumption for inverter-driven heat pump pool heaters will be
higher than that for single-capacity heat pump pool heaters. Hayward
also indicated that standby power requirements could also deter
development of demand-response technologies. Hayward claimed that
variable-capacity heat pump pool heaters have significant efficiency
improvements over single-capacity products. (Hayward, No. 17 at p. 4)
However, as discussed in section IV.A.2 of this document, DOE has
determined that modulating burners and inverter-driven (i.e., variable-
speed fan) heat pump designs would not provide substantial improvements
to TE<INF>I</INF> as measured by the current appendix P test procedure,
because the test conditions require consumer pool heaters to operate at
full-load capacity. Thus, DOE did not analyze additional efficiency
levels for these technologies.
AquaCal claimed that the EL 4 level chosen by DOE for electric pool
heaters, while possible to achieve, only represents 10 percent of the
existing market because of the price increase for products at that
level of efficiency. (AquaCal, No. 11 at p. 1) EL 4 for electric pool
heaters corresponds to a COP of 6.0 or an E<INF>t</INF> of 600 percent.
This level was originally selected in the October 2015 NODA because
many heat pump pool heaters are rated at COPs of 6.0. An efficiency
level which approximately reflects the top 10 percent of the market is
a useful point to have in the analysis, because it represents a market-
available stringency which would result in significant energy savings.
In this final rule analysis, DOE has determined that several
manufacturers produce heat pump pool heaters which meet or exceed EL 4;
therefore, DOE is maintaining this efficiency level in its analysis of
electric pool heaters.
With respect to the description of technologies implemented at
higher efficiency levels for electric pool heaters, AHRI and PHTA
stated that the description for EL 1 is too specific for the heat
exchanger and does not account for a wide variety of heat exchanger
technologies on the market at this level. (AHRI and PHTA, No. 20 at p.
5)
In the initial October 2015 NODA engineering analysis, DOE
associated straight titanium tube coils in submerged water tanks as the
main heat exchanger type for achieving a TE<INF>I</INF> of 344 percent
at EL 1. In response to this analysis, AHRI suggested that the design
features assumed for EL 1 were mischaracterized, and DOE re-evaluated
this efficiency level in the April 2022 NOPR. In the April 2022 NOPR,
DOE had tentatively determined that electric pool heaters at EL 1 would
have more similar designs to electric pool heaters at EL 2, and, as a
result, DOE revised this efficiency level to reflect a twisted titanium
tube concentric/counterflow heat exchanger. The TE<INF>I</INF> rating
of this efficiency level was increased to 387 percent to correlate with
the improvement in heat exchanger type from submerged coils. 87 FR
22640, 22664. See chapter 5 of the April 2022 NOPR TSD for additional
information. As such, DOE is aware that products that perform at or
near EL 1 may use either submerged coil or twisted tube concentric/
counterflow heat exchangers. AHRI's previous comments, however, had
indicated that a submerged coil design misrepresented this efficiency
level.
DOE reiterates its assertion in the April 2022 NOPR that its
association of specific technology options with efficiency levels is
based on observed designs in commercially available products, and that
the Department does not assume a priori that certain heat exchanger
designs would result in specific efficiency levels. 87 FR 22640, 22664.
DOE discussed technology options in manufacturer interviews conducted
after the April 2022 NOPR and did not receive further feedback
indicating that a twisted tube concentric/counterflow heat exchanger
would not be representative of EL 1. Given that the majority of heat
pump pool heaters utilize this style of heat exchanger (based on DOE's
market review and teardowns of other efficiency levels), DOE is
maintaining this technology option for EL 1 in this final rule
analysis.
AHRI and PHTA stated that the descriptions for electric pool
heaters at EL 2 to EL 4 are too simple, and that other designs must be
implemented beyond increased evaporator surface area, such as increased
condenser surface area. AHRI and PHTA requested more information from
DOE regarding how the measured efficiency increases articulated in the
different ELs were derived via the increased evaporator surface area
and urged DOE to consider the impacts of reduced standby mode and off
mode energy consumption. AHRI and PHTA also encouraged DOE to
investigate the impact on efficiency levels due to the required change
in refrigerants. (AHRI and PHTA, No. 20 at p. 5)
To clarify, efficiency increases for heat pump pool heaters were
not numerically derived: DOE conducted teardown analyses on products
which were rated at these efficiency levels and observed that the
designs differed by evaporator surface area. This trend was verified
through teardowns of multiple samples spanning a range of efficiencies.
DOE did not observe condenser coil increases to contribute to
intermediate efficiency levels across all manufacturers' designs.
Specifically, several condenser coil lengths were observed for products
meeting similar efficiencies, and vice-versa: similar condenser coil
lengths were observed for products meeting different intermediate
efficiencies. This would indicate that manufacturers did not rely on
this design option to improve efficiency. The only case where DOE
observed significant increases in condenser length and coil diameter
was in the model representing the max-tech efficiency level. Thus, DOE
determined that condenser coil improvements are necessary to achieve EL
5.
In response to AHRI and PHTA's request for DOE to consider the
impact of standby mode and off mode energy consumption, DOE notes that
its estimated typical standby mode and off mode energy consumption
values for the engineering analysis do not mandate that manufacturers
must meet these values in order to comply with potential standards.
Because TE<INF>I</INF> is an integrated metric that combines active
mode, standby mode, and off mode energy consumption, manufacturers may

[[Page 34648]]

design products to meet potential standards by implementing
improvements to any combination of the three energy-consuming modes.
The technology options in this efficiency analysis assess the most
cost-effective design pathways to improvement efficiency based on
market evidence.
With respect to changes in refrigerant, products torn down by DOE
utilized R-410A refrigerant. While several low-GWP replacements for R-
410A, such as R-441A, R-290, and R-32, are currently being developed
and implemented in other refrigeration-based consumer products, that
refrigerant changeover is being driven in part by regulations such as
those in California. Consumer pool heaters are not subject to those
regulations at this time and thus the consumer pool heater market has
not yet experienced a similar shift to other refrigerants. Moreover,
commenters did not provide any specifics for replacement refrigerants
that DOE should consider during manufacturer interviews. As such, DOE
assumes that manufacturers will opt to continue to use R-410A
refrigerant as long as possible, and thereafter use drop-in
replacements using an alternative refrigerant wherever feasible to
limit product and capital conversion costs. Because these drop-in
replacements have not been taken up by the consumer pool heater market
at this time, it is uncertain what the MPC of an alternative
refrigerant system would be, nor whether there would be efficiency
impacts. Therefore, DOE maintained R-410A as the basis for heat pump
pool heater efficiency levels and MPCs in this final rule.
Further details of the efficiency analysis are found in chapter 5
of the final rule TSD.
2. Cost Analysis
The cost analysis portion of the engineering analysis is conducted
using one or a combination of cost approaches. The selection of cost
approach depends on a suite of factors, including the availability and
reliability of public information, characteristics of the regulated
product, the availability and timeliness of purchasing the product on
the market. The cost approaches are summarized as follows:
<bullet> Physical teardowns: Under this approach, DOE physically
dismantles a commercially available product, component-by-component, to
develop a detailed bill of materials for the product.
<bullet> Catalog teardowns: In lieu of physically deconstructing a
product, DOE identifies each component using parts diagrams (available
from manufacturer websites or appliance repair websites, for example)
to develop the bill of materials for the product.
<bullet> Price surveys: If neither a physical nor catalog teardown
is feasible (for example, for tightly integrated products such as
fluorescent lamps, which are infeasible to disassemble and for which
parts diagrams are unavailable) or cost-prohibitive and otherwise
impractical (e.g., large commercial boilers), DOE conducts price
surveys using publicly available pricing data published on major online
retailer websites and/or by soliciting prices from distributors and
other commercial channels.
At the start of the engineering analysis, DOE identified the energy
efficiency levels associated with consumer pool heaters on the market
using data gathered in the market assessment. DOE also identified
potential technologies and features that are typically incorporated
into products at the baseline level and at the various efficiency
levels analyzed above the baseline. Next, DOE selected products for a
physical teardown analysis having characteristics of typical products
on the market at the representative capacity and used these teardowns
to verify technology options implemented at each efficiency level. DOE
chose a representative size of 250,000 Btu/h input capacity for gas-
fired pool heaters and 110,000 Btu/h output capacity for electric pool
heaters. As explained in the April 2022 NOPR, DOE selected these
representative capacities based on the number of available models on
the market and by referencing a number of sources, including
information collected for the market and technology assessment, as well
as information obtained from product literature. DOE then sought
feedback on the representative capacities during confidential
manufacturer interviews. 87 FR 22640, 22664. DOE gathered information
from performing a physical teardown to create detailed bills of
materials (``BOMs''), which included all components and processes used
to manufacture the products. The resulting BOMs provide the basis for
the MPC estimates. MPCs are estimated spanning the full range of
efficiencies from the baseline to the maximum technology available. For
this rulemaking, DOE held interviews with manufacturers to gain insight
into the consumer pool heater industry and to request feedback on the
engineering analysis presented in the April 2022 NOPR. DOE used the
information gathered from these interviews, along with the data
obtained through teardown analysis and insights from public stakeholder
comments, to refine its MPC estimates.
a. Manufacturer Production Costs
To assemble BOMs and to calculate the manufacturing costs for the
different components in consumer pool heaters, DOE primarily relied
upon physical teardowns. Using the data gathered from the physical
teardowns, DOE characterized each component according to its weight,
dimensions, material, quantity, and the manufacturing processes used to
fabricate and assemble it. DOE also used catalog teardowns to
supplement physical teardown data. For the catalog teardowns DOE
examined published manufacturer catalogs and supplementary component
data to estimate the major physical differences (such as dimensions,
weight, design features) between a product that was physically
disassembled and a similar product that was not.
The teardown analysis allowed DOE to identify the technologies that
manufacturers typically incorporate into their products, along with the
efficiency levels associated with each technology or combination of
technologies. The BOMs from the teardown analysis were then used as
inputs to calculate the MPC for each product that was torn down. These
individual model MPCs take into account the cost of materials,
fabrication, labor, overhead, depreciation, and all other aspects that
make up a production facility.
Fluidra claimed that product pricing has gone up year over year
since the initial 2015 analysis, and component shortages over the last
few years have had a significant cost impact to both manufacturers and
consumers due to decrease of supply and increase of demand. Fluidra
stated that due to the smaller economy of scale for the consumer pool
heater market, price breaks for volume are not as large as other
heating, ventilation, and air-conditioning equipment. (Fluidra, No. 18
at p. 3)
DOE collected information on labor rates, tooling costs, raw
material prices, and other factors as inputs to the cost estimates. For
fabricated parts, the prices of raw metal materials \30\ (i.e., tube or
sheet metal) are estimated using the average of the most recent 5-year
period. The 5-year period for this final rule analysis captures metal
prices from 2017-2022, and, therefore, the updated resulting MPCs in
this final rule analysis reflect much of the material price increases
that manufacturers have experienced in recent years (smoothed over this
5-year period). For purchased

[[Page 34649]]

parts, DOE estimated the purchase price based on volume-variable price
quotations and detailed discussions with manufacturers and component
suppliers. The cost of transforming the intermediate materials into
finished parts was estimated based on current industry pricing at the
time of this final rule analysis.
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\30\ Prices are sourced from the American Metals Market,
available online at <a href="http://www.amm.com">www.amm.com</a> (last accessed on October 15, 2022).
---------------------------------------------------------------------------

The MPCs resulting from the teardowns were used to develop an
industry average MPC for each efficiency level of each product class
analyzed.
For gas-fired pool heaters, DOE's industry average MPCs reflect a
weighted average of costs for gas-fired pool heaters which use
different heat exchanger materials (e.g., copper versus cupronickel).
As discussed in the April 2022 NOPR, DOE surveyed the market and found
the percentage of models at each efficiency level that currently
utilize copper or cupronickel heat exchangers and assumed that, under
an amended standard, the percentage would remain unchanged. DOE
requested comment on this assumption. 87 FR 22640, 22664.
In response to the April 2022 NOPR, Hayward claimed that the
fraction of cupronickel heat exchangers in the market would likely be
reduced as a result of amended standards, but not to zero. (Hayward,
No. 17 at p. 4) AHRI and PHTA, stated that amended standards would
greatly reduce the number of products available on the market, and this
would in turn drive a large number of redesigns requiring cupronickel
heat exchangers. (AHRI and PHTA, No. 20 at p. 6)
Given the uncertainty in the outlook for copper versus cupronickel
heat exchangers in an amended standards case scenario, DOE maintained
its approach to assume that these fractions would remain the same as
they are currently.
b. Manufacturer Selling Prices
To account for manufacturers' non-production costs and profit
margin, DOE applies a multiplier (the manufacturer markup) to the MPC.
The resulting manufacturer selling price (``MSP'') is the price at
which the manufacturer distributes a unit into commerce. To meet new or
amended energy conservation standards, manufacturers typically redesign
their baseline products. These design changes typically increase MPCs
relative to those of previous baseline MPCs. Depending on the
competitive environment for these particular products, some or all of
the increased production costs may be passed from manufacturers to
retailers and eventually to customers in the form of higher purchase
prices. As production costs increase, manufacturers may also incur
additional overhead (e.g., warranty costs).
The manufacturer markup has an important bearing on profitability.
A high markup under a standards scenario suggests manufacturers can
readily pass along the increased variable costs and some of the capital
and product conversion costs (the one-time expenditures) to consumers.
A low markup suggests that manufacturers will have greater difficulty
recovering their investments, product conversion costs, and/or
incremental MPCs.
In the April 2022 NOPR analysis, DOE used a manufacturer markup of
1.33 for gas-fired pool heaters and a manufacturer markup of 1.28 for
electric pool heaters. DOE conducted interviews with manufacturers
after the publication of the April 2022 NOPR, during which several
manufacturers stated the estimated manufacturer markup for each product
class of consumer pool heaters used in the NOPR analysis were lower
than their manufacturer markup for those products. Based on these
additional inputs, DOE revised its markup calculations for this final
rule, increasing the gas-fired pool heater manufacturer markup from
1.33 used in the April 2022 NOPR analysis to 1.44 and increasing the
electric pool heater manufacturer markup from 1.28 used in the April
2022 NOPR analysis to 1.39.
See chapter 12 of the final rule TSD for more details about the
manufacturer markup calculation.
3. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of TE<INF>I</INF> (in
percent) versus MPC (in 2021 dollars), which form the basis for
subsequent analyses. DOE developed one curve for gas-fired pool heaters
and one curve for electric pool heaters, and these curves reflect the
MPCs developed for the representative capacities discussed in the
previous section. See chapter 5 of the final rule TSD for additional
detail on the engineering analysis.

Table IV.9--Manufacturer Production Cost for Gas-Fired Pool Heaters at Representative Input Capacity of 250,000
Btu/h
----------------------------------------------------------------------------------------------------------------
TEI (percent)
Efficiency level MPC (2021$) MSP (2021$)
----------------------------------------------------------------------------------------------------------------
EL 0............................................................ 61.1 $782 $1,186
EL 1............................................................ 81.3 788 1,195
EL 2............................................................ 83.3 969 1,444
EL 3............................................................ 94.8 1,349 2,016
----------------------------------------------------------------------------------------------------------------

Table IV.10--Manufacturer Production Cost for Electric Pool Heaters at Representative Output Capacity of 110,000
Btu/h
----------------------------------------------------------------------------------------------------------------
TEI (percent)
Efficiency level MPC (2021$) MSP (2021$)
----------------------------------------------------------------------------------------------------------------
EL 0............................................................ 99 $1,028 $1,441
EL 1............................................................ 387 1,248 1,845
EL 2............................................................ 483 1,305 1,924
EL 3............................................................ 534 1,355 1,993
EL 4............................................................ 551 1,427 2,094
EL 5............................................................ 595 1,523 2,228
----------------------------------------------------------------------------------------------------------------

[[Page 34650]]

D. Markups Analysis

The markups analysis develops appropriate markups (e.g., wholesaler
and distributors, pool contractors, pool retailers, pool builders) in
the distribution chain and sales taxes to convert the MSP estimates
derived in the engineering analysis to consumer prices, which are then
used in the LCC and PBP analysis and in the manufacturer impact
analysis. At each step in the distribution channel, companies mark up
the price of the product to cover business costs and profit margin.
For consumer pool heaters, the main parties in the distribution
chain are: (1) manufacturers; (2) wholesalers or distributors; (3) pool
contractors; (4) pool retailers; (5) buying groups; \31\ and (6) pool
builders. For each actor in the distribution chain except for
manufacturers, DOE developed baseline and incremental 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 operating profit
before and after new or amended standards.\32\
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\31\ Buying groups are intermediaries between the pool heater
manufacturers and contractors. A buying group is a coalition of
companies within a shared category who leverage their collective
purchasing power to negotiate price reductions from manufacturers.
\32\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, using the
same markup for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While such an outcome is
possible, DOE maintains that in markets that are reasonably
competitive it is unlikely that standards would lead to a
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------

For the NOPR, DOE characterized how pool products pass from the
manufacturer to residential and commercial consumers \33\ by gathering
data from several sources including 2020 Pkdata report,\34\ POOLCORP's
2020 Form 10-K,\35\ PRNewswire,\36\ PoolPro Magazine,\37\ Aqua
Magazine,\38\ and Pool and Spa News \39\ to determine the distribution
channels and fraction of shipments going through each distribution
channel. The distribution channels for replacement or new installation
of a consumer pool heater for existing swimming pool or spa are
characterized as follows: \40\
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\33\ DOE estimates that 6 percent of electric pool heaters and
13 percent of gas pool heaters will be shipped to commercial
applications in 2028. See section IV.E.1 for further discussion.
\34\ Pkdata, 2020 Residential and Commercial Swimming Pool, Hot
Tub, and Pool Heater Customized Report for LBNL, October 15, 2020,
available at: <a href="http://www.pkdata.com/datapointstrade.html#/">www.pkdata.com/datapointstrade.html#/</a> (last accessed
October 15, 2022).
\35\ POOLCORP, 2020 Form 10-K, available at:
<a href="http://dd7pmep5szm19.cloudfront.net/603/0000945841-1-000022.pdf">dd7pmep5szm19.cloudfront.net/603/0000945841-1-000022.pdf</a> (last
accessed October 15, 2022).
\36\ PRNewswire, United Aqua Group, one of the nation's largest
organizations dedicated to the professional pool construction,
service and retail industry, announces that POOLCORP[supreg] is no
longer the preferred distributor for its swimming pool products or
building materials, May 15, 2018, available at: <a href="http://www.prnewswire.com/news-releases/united-aqua-group-one-of-the-nations-largest-organizations-dedicated-to-the-professional-pool-construction-service-and-retail-industry-announces-that-poolcorp-is-no-longer-the-preferred-distributor-for-its-swimming-pool-produ-300648220.html">www.prnewswire.com/news-releases/united-aqua-group-one-of-the-nations-largest-organizations-dedicated-to-the-professional-pool-construction-service-and-retail-industry-announces-that-poolcorp-is-no-longer-the-preferred-distributor-for-its-swimming-pool-produ-300648220.html</a>
(last accessed October 15, 2022).
\37\ PoolPro, Channel Choices, PoolPro Magazine, March 5, 2018,
available at: <a href="http://poolpromag.com/channel-choices/">poolpromag.com/channel-choices/</a> (last accessed October
15, 2022).
\38\ Herman, E., Distributors: The Middleman's Role, Aqua
Magazine, December 2017, available at: <a href="http://aquamagazine.com/features/the-middleman-s-role.html">aquamagazine.com/features/the-middleman-s-role.html</a> (last accessed October 15, 2022).
\39\ Green, L., Forward Thinking: A Look at Distributor Sector
in Pool, Spa Industry Distributors adapt with the times, Pool and
Spa News, March 27, 2015, available at: <a href="http://www.poolspanews.com/business/retail-management/forward-thinking-a-look-at-distributor-sector-in-pool-spa-industry_o">www.poolspanews.com/business/retail-management/forward-thinking-a-look-at-distributor-sector-in-pool-spa-industry_o</a> (last accessed October 15, 2022).
\40\ Based on 2020 Pkdata, in residential pools and spas, DOE
assumed that the consumer pool heater goes through the wholesaler 45
percent of the time, 10 percent of the time wholesaler to retailer,
40 percent of the time directly through the pool retailer, and 5
percent of the time through the buying group.

Manufacturer [rarr] Wholesaler [rarr] Pool Contractor [rarr] Consumer
Manufacturer [rarr] Wholesaler [rarr] Pool Retailer [rarr] Consumer
Manufacturer [rarr] Pool Retailer [rarr] Consumer
Manufacturer [rarr] Buying Group [rarr] Pool Contractor [rarr] Consumer

The distribution channels for installation of consumer pool heaters
in a new swimming pool or spa are characterized as follows: \41\
---------------------------------------------------------------------------

\41\ Based on 2020 Pkdata, DOE estimated that about 40 percent
of consumer pool heater installations in new pools are distributed
through a wholesaler and about 60 percent are distributed through a
buying group.

Manufacturer [rarr] Wholesaler [rarr] Pool Builder [rarr] Consumer
Manufacturer [rarr] Buying Group [rarr] Pool Builder [rarr] Consumer

Lochinvar stated that the distribution channels for pool heaters
sold for commercial applications are similar to those used in
commercial packaged boiler and commercial water heater rulemakings.
(Lochinvar, No. 2 at p. 2) Lochinvar did not provide specific fractions
of shipments for each distribution channel. For the final rule
analysis, DOE estimated that half of consumer pool heaters installed in
commercial applications would use similar distribution channels to
commercial packaged boilers and commercial water heaters (Manufacturer
[rarr] Wholesaler [rarr] Mechanical Contractor [rarr] Consumer for
replacements and new owners; and Manufacturer [rarr] Wholesaler [rarr]
Mechanical Contractor [rarr] General Contractor [rarr] Consumer for new
swimming pool construction),\42\ while the remaining consumer pool
heaters would have the distribution channels described previously.
---------------------------------------------------------------------------

\42\ Based on 2020 Pkdata, which showed a much larger fraction
of pool heaters being sold through distributors (about 70 percent)
and directly to end users (about 20 percent) in commercial
applications compared to pool heaters in residential applications.
---------------------------------------------------------------------------

Rheem and BWC stated that the distribution channels appear
appropriate. Rheem also noted that the market share through each
distribution channel may change from manufacturer to manufacturer. BWC
noted that, however, in the residential distribution channel there are
circumstances where a product passes from a retailer to a contractor
before the consumer takes possession of the product and that, in the
commercial distribution channel, there are scenarios where a wholesaler
never takes ownership of the pool heater prior to it being installed.
(Rheem, No. 19 at p. 5; BWC, No. 12 at p. 3) Additionally, AHRI and
PHTA stated that the share of products moving through each channel is a
constantly moving target. (AHRI and PHTA, No. 20 at p. 6)
In response to Rheem's and AHRI and PHTA comment, DOE uses PKdata
to estimate the distribution channel market shares, which account for
variability of the market shares for each manufacturer. In response to
BWC comments, for this final rule DOE added a distribution channel to
account for the cases when the product passes from a retailer to a
contractor to customer, without involving a wholesaler. For commercial
pool heater applications, DOE already takes into account ``national
accounts'', where the wholesaler never takes ownership of the pool
heater prior to it being installed. For the final rule, DOE updated its
distribution channel market shares by using the latest PKdata
available.\43\ The latest data shows a growing market share for direct
dealers and online retailers.
---------------------------------------------------------------------------

\43\ Pkdata, 2022 Residential and Commercial Swimming Pool, Hot
Tub, and Pool Heater Customized Report for LBNL, October 15, 2020,
available at: <a href="http://www.pkdata.com/datapointstrade.html#/">www.pkdata.com/datapointstrade.html#/</a> (last accessed
October 15, 2022).
---------------------------------------------------------------------------

AHRI and PHTA noted that there would be a slight difference between
the distribution channels for gas fired pool

[[Page 34651]]

heaters and heat pump pool heaters, which is that heat pump heaters may
not need to go through a buying group as they can be sold directly from
manufacturer to a dealer. Given that AHRI and PHTA cannot provide data
to support this, they stated they would support the sources that DOE
utilized in the NOPR. (AHRI and PHTA, No. 20 at p. 6)
As stated previously, DOE uses the latest PKData data available to
estimate the distribution channel market shares which is not
disaggregated by gas-fired pool heaters and heat pump pool heaters. At
this time, DOE does not have data to account for slight differences
between the distribution channels for gas fired pool heaters and heat
pump pool heaters.
DOE developed baseline and incremental markups for each actor in
the distribution chain. Baseline markups are applied to the price of
products with baseline efficiency, while incremental markups are
applied to the difference in price between baseline and higher-
efficiency models (the incremental cost increase). The incremental
markup is typically less than the baseline markup and is designed to
maintain similar per-unit operating profit before and after new or
amended standards.\44\
---------------------------------------------------------------------------

\44\ Because the projected price of standards-compliant products
is typically higher than the price of baseline products, using the
same markup for the incremental cost and the baseline cost would
result in higher per-unit operating profit. While such an outcome is
possible, DOE maintains that in markets that are reasonably
competitive it is unlikely that standards would lead to a
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------

To estimate average baseline and incremental markups, DOE relied on
several sources, including: (1) form 10-K from U.S. Securities and
Exchange Commission (``SEC'') for Pool Corp (pool wholesaler) \45\ and
for the Leslie's, Home Depot, Lowe's, Wal-Mart, and Costco (for pool
retailers); (2) U.S. Census Bureau 2017 Annual Retail Trade Report for
miscellaneous store retailers (NAICS 453) (for pool retailers),\46\ (3)
U.S. Census Bureau 2017 Economic Census data \47\ on the residential
and commercial building construction industry (for pool builder, pool
contractor, and general and plumbing/mechanical contractors for
commercial applications); and (4) the Heating, Air Conditioning &
Refrigeration Distributors International (``HARDI'') 2013 Profit Report
\48\ (for wholesalers for commercial applications). DOE assumes that
the markups for buying group is half of the value of pool wholesaler
markups derived from Pool Corp's form 10-K. In addition, DOE used the
2005 Air Conditioning Contractors of America's (``ACCA'') Financial
Analysis on the Heating, Ventilation, Air-Conditioning, and
Refrigeration (``HVACR'') contracting industry \49\ to disaggregate the
mechanical contractor markups into replacement and new construction
markets for consumer pool heaters used in commercial applications.
---------------------------------------------------------------------------

\45\ U.S. Securities and Exchange Commission, SEC 10-K Reports
(2017-2021), available at <a href="http://www.sec.gov/">www.sec.gov/</a> (last accessed October 15,
2022). Leslie's data was only available from 2018-2021.
\46\ U.S. Census Bureau, 2017 Annual Retail Trade Report,
available at <a href="http://www.census.gov/programs-surveys/arts.html">www.census.gov/programs-surveys/arts.html</a> (last
accessed October 15, 2022). Note that the 2017 Annual Retail Trade
Report is the latest version of the report that includes detailed
operating expenses data.
\47\ U.S. Census Bureau, 2017 Economic Census Data. available at
<a href="http://www.census.gov/programs-surveys/economic-census.html">www.census.gov/programs-surveys/economic-census.html</a> (last accessed
October 15, 2022). Note that the 2017 Economic Census Data is the
latest version of this data.
\48\ Heating, Air Conditioning & Refrigeration Distributors
International (``HARDI''), 2013 HARDI Profit Report, available at
<a href="http://hardinet.org/">hardinet.org/</a> (last accessed October 15, 2022). Note that the 2013
HARDI Profit Report is the latest version of the report.
\49\ Air Conditioning Contractors of America (``ACCA''),
Financial Analysis for the HVACR Contracting Industry (2005),
available at <a href="http://www.acca.org/store#/storefront">www.acca.org/store#/storefront</a> (last accessed October
15, 2022). Note that the 2005 Financial Analysis for the HVACR
Contracting Industry is the latest version of the report and is only
used to disaggregate the mechanical contractor markups into
replacement and new construction markets.
---------------------------------------------------------------------------

In addition to the markups, DOE obtained state and local taxes from
data provided by the Sales Tax Clearinghouse.\50\ These data represent
weighted average taxes that include county and city rates. DOE derived
shipment-weighted average tax values for each r

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