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Rule2023-12958

Energy Conservation Program: Energy Conservation Standards for Microwave Ovens

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Published

June 20, 2023

Effective

August 21, 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 microwave ovens. EPCA also requires the U.S. Department of Energy ("DOE") to periodically determine whether more stringent standards would be technologically feasible and economically justified, and whether they would result in significant energy savings. In this final rule, DOE is adopting amended energy conservation standards for microwave ovens. It has determined that the 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 117 (Tuesday, June 20, 2023)</title>
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[Federal Register Volume 88, Number 117 (Tuesday, June 20, 2023)]
[Rules and Regulations]
[Pages 39912-39960]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-12958]

[[Page 39911]]

Vol. 88

Tuesday,

No. 117

June 20, 2023

Part II

Department of Energy

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10 CFR Part 430

Energy Conservation Program: Energy Conservation Standards for
Microwave Ovens; Final Rule

Federal Register / Vol. 88, No. 117 / Tuesday, June 20, 2023 / Rules
and Regulations

[[Page 39912]]

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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2017-BT-STD-0023]
RIN 1904-AE00

Energy Conservation Program: Energy Conservation Standards for
Microwave Ovens

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 microwave
ovens. EPCA also requires the U.S. Department of Energy (``DOE'') to
periodically determine whether more stringent standards would be
technologically feasible and economically justified, and whether they
would result in significant energy savings. In this final rule, DOE is
adopting amended energy conservation standards for microwave ovens. It
has determined that the 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 August 21, 2023. Compliance
with the amended standards established for microwave ovens in this
final rule is required on and after June 22, 2026.

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-2017-BT-STD-0023">www.regulations.gov/docket/EERE-2017-BT-STD-0023</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#d392a3a3bfbab2bdb0b680a7b2bdb7b2a1b7a082a6b6a0a7babcbda093b6b6fdb7bcb6fdb4bca5">[email&#160;protected]</a>.

FOR FURTHER INFORMATION CONTACT: Dr. Carl Shapiro, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-2J, 1000 Independence Avenue SW, Washington, DC
20585-0121. Telephone: (202) 287-5649. Email:
<a href="/cdn-cgi/l/email-protection#430233332f2a222d20261037222d272231273012362630372a2c2d300326266d272c266d242c35">[email&#160;protected]</a>.
Ms. Celia Sher, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC, 20585-
0121. Telephone: (202) 287-6122. Email: <a href="/cdn-cgi/l/email-protection#f5b690999c94dba69d9087b59d84db919a90db929a83">[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 Microwave Ovens
III. General Discussion
A. Scope of Coverage
B. Test Procedure
C. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
D. Energy Savings
1. Determination of Savings
2. Significance of Savings
E. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared To Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
1. Market and Technology Assessment
2. Product Classes
3. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency/Energy Use
b. Higher Efficiency Levels
2. Cost Analysis
3. Cost-Efficiency Results
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
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. Markup Scenarios
3. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Microwave Ovens
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
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969

[[Page 39913]]

E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Information Quality
M. Congressional Notification
VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

The Energy Policy and Conservation Act, Public Law 94-163, as
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency
of a number of consumer products and certain industrial equipment. (42
U.S.C. 6291-6317) Title III, Part B of EPCA \2\ established the Energy
Conservation Program for Consumer Products Other Than Automobiles. (42
U.S.C. 6291-6309) These products include microwave ovens, 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 microwave ovens. The adopted standards, which are expressed in
watts (``W''), are shown in Table I.1. These standards apply to all
products listed in Table I.1 and manufactured in, or imported into, the
United States starting on June 22, 2026.

Table I.1--Energy Conservation Standards for Microwave Ovens (Compliance
Starting June 22, 2026)
------------------------------------------------------------------------
Maximum allowable average
Product class standby power, (watts)
------------------------------------------------------------------------
PC 1: Microwave-Only Ovens and 0.6 W
Countertop Convection Microwave Ovens.
PC 2: Built-In and Over-the-Range 1.0 W
Convection Microwave Ovens.
------------------------------------------------------------------------

A. Benefits and Costs to Consumers

Table I.2 summarizes DOE's evaluation of the economic impacts of
the adopted standards on consumers of microwave ovens, as measured by
the average life-cycle cost (``LCC'') savings and the simple payback
period (``PBP'').\3\ The average LCC savings are positive for all
product classes, and the PBP is less than the average lifetime of
microwave ovens, which is estimated to be 10.78 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.9] of this document). The simple PBP, which is
designed to compare specific efficiency levels, is measured relative
to the baseline product (see section IV.C of this document).

Table I.2--Impacts of Adopted Energy Conservation Standards on Consumers
of Microwave Ovens
------------------------------------------------------------------------
Average LCC Simple
Product class savings payback
(2021$) period (years)
------------------------------------------------------------------------
PC 1: Microwave-Only Ovens and 0.99 1.3
Countertop Convection Microwave Ovens..
PC 2: Built-In and Over-the-Range 0.83 0.8
Convection Microwave Ovens.............
------------------------------------------------------------------------

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 (2023-2055). Using a real discount rate of
8.5 percent, DOE estimates that the INPV for manufacturers of microwave
ovens in the case without amended standards is $1,426 million in 2021
dollars. Under the adopted standards, DOE estimates the change in INPV
to range from -$37.2 million, which represents a change of -2.6
percent, to no change in INPV. In order to bring products into
compliance with amended standards, it is estimated that industry will
incur total conversion costs of $46.1 million.
DOE's analysis of the impacts of the adopted standards on
manufacturers is described in sections IV.J and V.B.2 of this document.

C. National Benefits and Costs 4
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\4\ All monetary values in this document are expressed in 2021
dollars. and, where appropriate, are discounted to 2023 unless
explicitly stated otherwise.
---------------------------------------------------------------------------

DOE's analyses indicate that the adopted energy conservation
standards for microwave ovens would save a significant amount of
energy. Relative to the case without amended standards, the lifetime
energy savings for microwave ovens purchased in the 30-year period that
begins in the anticipated year of compliance with the amended standards
(2026-2055), amount to 0.06 quadrillion British thermal units
(``Btu''), or quads.\5\ This represents a savings of 19 percent
relative to the energy use of these products in the case without
amended standards (referred to as the ``no-new-standards case'').
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\5\ The quantity refers to full-fuel-cycle (FFC) energy savings.
FFC energy savings includes the energy consumed in extracting,
processing, and transporting primary fuels (i.e., coal, natural gas,
petroleum fuels), and, thus, presents a more complete picture of the
impacts of energy efficiency standards. For more information on the
FFC metric, see section IV.H.1 of this document.

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[[Page 39914]]

The cumulative net present value (``NPV'') of total consumer
benefits of the standards for microwave ovens ranges from $0.16 (at a
7-percent discount rate) to $0.35 (at a 3-percent discount rate). This
NPV expresses the estimated total value of future operating-cost
savings minus the estimated increased product costs for microwave ovens
purchased in 2026-2055.
In addition, the adopted standards for microwave ovens 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 1.87 million metric tons
(``Mt'') \6\ of carbon dioxide (``CO<INF>2</INF>''), 0.85 thousand tons
of sulfur dioxide (``SO<INF>2</INF>''), 2.88 thousand tons of nitrogen
oxides (``NO<INF>X</INF>''), 12.64 thousand tons of methane
(``CH<INF>4</INF>''), 0.02 thousand tons of nitrous oxide
(``N<INF>2</INF>O''), and 0.005 tons of mercury (``Hg'').\7\ The
estimated cumulative reduction in CO<INF>2</INF> emissions through 2030
amounts to 0.10 Mt, which is equivalent to the emissions resulting from
the annual electricity use of more than 19 thousand homes.
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\6\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO<INF>2</INF> are presented in short tons.
\7\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy
Outlook 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 effect air pollutant
emissions.
---------------------------------------------------------------------------

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). DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).\8\ The derivation of these values is discussed in section IV.L
of this document. For presentational purposes, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
estimated to be $0.10 billion. DOE does not have a single central SC-
GHG point estimate and DOE emphasizes the importance and value of
considering the benefits calculated using all four sets of SC-GHG
estimates.\9\
---------------------------------------------------------------------------

\8\ 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>.
\9\ On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the Federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is
no longer in effect, pending resolution of the Federal government's
appeal of that injunction or a further court order. Among other
things, the preliminary injunction enjoined the defendants in that
case from ``adopting, employing, treating as binding, or relying
upon'' the interim estimates of the social cost of greenhouse
gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize
the benefits of reducing greenhouse gas emissions. As reflected in
this rule, DOE has reverted to its approach prior to the injunction
and presents monetized benefits where appropriate and permissible
under law.
---------------------------------------------------------------------------

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 would
be $0.07 billion using a 7-percent discount rate, and $0.17 billion
using a 3-percent discount rate.\10\ 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.
---------------------------------------------------------------------------

\10\ DOE estimates the economic value of these emissions
reductions resulting from the considered TSLs for the purpose of
complying with the requirements of Executive Order 12866.
---------------------------------------------------------------------------

Table I.3 summarizes the monetized benefits and costs expected to
result from the amended standards for microwave ovens. There are other
important unquantified effects, including certain unquantified climate
benefits, unquantified public health benefits from the reduction of
toxic air pollutants and other emissions, unquantified energy security
benefits, and distributional effects, among others.

Table I.3--Summary of Monetized Benefits and Costs of Adopted Energy
Conservation Standards for Microwave Ovens
------------------------------------------------------------------------
Billion $2021
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 0.43
Climate Benefits *...................................... 0.10
Health Benefits **...................................... 0.17
---------------
Total Benefits [dagger]............................. 0.70
Consumer Incremental Product Costs [Dagger]............. 0.08
---------------
Net Benefits........................................ 0.62
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 0.21
Climate Benefits * (3% discount rate)................... 0.10
Health Benefits **...................................... 0.07
---------------
Total Benefits[dagger].............................. 0.38
Consumer Incremental Product Costs [Dagger]............. 0.05
---------------
Net Benefits........................................ 0.34
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
microwave ovens shipped in 2026-2055. These results include benefits
to consumers which accrue after 2055 from the products shipped in 2026-
2055.

[[Page 39915]]

* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5-percent, 3-percent, and 5-percent
discount rates; 95th percentile at 3-percent discount rate) (see
section IV.L of this document). Together these represent the global SC-
GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
shown, but DOE does not have a single central SC-GHG point estimate.
On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087)
granted the Federal government's emergency motion for stay pending
appeal of the February 11, 2022, preliminary injunction issued in
Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of
the Fifth Circuit's order, the preliminary injunction is no longer in
effect, pending resolution of the Federal government's appeal of that
injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. As reflected in this rule, DOE has
reverted to its approach prior to the injunction and presents
monetized benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects, such as health benefits, from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate.
[Dagger] Costs include incremental equipment costs as well as
installation costs.

The benefits and costs of the proposed standards can also be
expressed in terms of annualized values. The monetary values for the
total annualized net benefits are (1) the reduced consumer operating
costs, minus (2) the increase in product purchase prices and
installation costs, plus (3) the value of climate and health benefits
of emission reductions, all annualized.\11\
---------------------------------------------------------------------------

\11\ 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 microwave ovens
shipped in 2026-2055. The benefits associated with reduced emissions
achieved as a result of the adopted standards are also calculated based
on the lifetime of microwave ovens shipped in 2026-2055. Total benefits
for both the 3-percent and 7-percent cases are presented using the
average GHG social costs with 3-percent discount rate. Estimates of SC-
GHG values are presented for all four discount rates in section V.B.8
of this document.
Table I.4 presents the total estimated monetized benefits and costs
associated with the standards adopted in this rule, 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 $4.3 million per year in increased equipment costs,
while the estimated annual benefits are $19.5 million in reduced
equipment operating costs, $5.2 million in climate benefits, and $6.9
million in health benefits. In this case, the net benefit would amount
to $27.3 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated cost of the amended standards is $4.3 million per year in
increased equipment costs, while the estimated annual benefits are
$23.5 million in reduced operating costs, $5.2 million in climate
benefits, and $9.2 million in health benefits. In this case, the net
benefit would amount to $33.5 million per year.

Table I.4--Annualized Benefits and Costs of Adopted Standards for Microwave Ovens
----------------------------------------------------------------------------------------------------------------
Million 2021 $/year
-----------------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 23.5 22.2 25.0
Climate Benefits *.............................................. 5.2 5.1 5.4
Health Benefits **.............................................. 9.2 9.0 9.4
-----------------------------------------------
Total Benefits [dagger]..................................... 37.9 36.3 39.8
Consumer Incremental Product Costs [Dagger]..................... 4.3 4.3 4.2
-----------------------------------------------
Net Benefits................................................ 33.5 31.9 35.6
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings................................. 19.5 18.6 20.5
Climate Benefits * (3% discount rate)........................... 5.2 5.1 5.4
Health Benefits **.............................................. 6.9 6.7 7.1
-----------------------------------------------
Total Benefits [dagger]..................................... 31.6 30.4 32.9
Consumer Incremental Product Costs [Dagger]..................... 4.3 4.3 4.2
-----------------------------------------------

[[Page 39916]]

Net Benefits................................................ 27.3 26.1 28.7
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with microwave ovens shipped in 2026-2055. These
results include benefits to consumers which accrue after 2055 from the products shipped in 2026-2055. 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 medium decline rate in the Primary Estimate, a low decline rate in the
Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to
derive projected price trends are explained in sections IV.F.1 and IV.H.1 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 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. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the Federal
government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
preliminary injunction is no longer in effect, pending resolution of the Federal government's appeal of that
injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. As
reflected in this rule, DOE has reverted to its approach prior to the injunction and presents monetized
benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate.
[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 microwave ovens is $4.3 million per year in increased
product costs, while the estimated annual benefits are $19.5 million in
reduced product operating costs, $5.2 million in climate benefits, and
$6.9 million in health benefits. The net benefit amounts to $27.3
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.\12\ 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.
---------------------------------------------------------------------------

\12\ 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 0.06 quads in FFC energy use and
emissions, the equivalent of the primary annual energy use of 1.6
million homes. In addition, the standards are projected to reduce
CO<INF>2</INF> emissions by 1.87 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 final rule 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 microwave
ovens.

A. Authority

EPCA authorizes DOE to regulate the energy efficiency of a number
of consumer products and certain industrial equipment. Title III, Part
B of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles. These products include microwave
ovens, the subject of this document. (42 U.S.C. 6292(a)(10)) EPCA
prescribed energy conservation standards for these products, and
directs DOE to conduct future rulemakings to determine whether to amend
these standards. (42 U.S.C. 6295(h)(2)(A)-(B)) EPCA further provides
that, not later than 6 years after the issuance of any final rule
establishing or amending a standard, DOE must publish either a notice
of determination that standards for the product do not need to be
amended, or a NOPR including new proposed energy conservation standards
(proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1))
The energy conservation program under EPCA consists essentially of
four parts: (1) testing, (2) labeling, (3) the establishment of Federal
energy conservation standards, and (4) certification and enforcement
procedures. Relevant provisions of EPCA specifically include
definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293),
labeling provisions (42 U.S.C. 6294), energy conservation

[[Page 39917]]

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
procedures for microwave ovens appear at title 10 of the Code of
Federal Regulations (``CFR'') Sec. 430.23(i) and 10 CFR part 430,
subpart B, appendix I (``appendix I'').
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including microwave ovens. Any
new or amended standard for a covered product must be designed to
achieve the maximum improvement in energy efficiency that the Secretary
of Energy determines is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B))
Furthermore, DOE may not adopt any standard that would not result in
the significant conservation of energy. (42 U.S.C. 6295(o)(3))
Moreover, DOE may not prescribe a standard (1) for certain products,
including microwave ovens, 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, as codified, 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 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))

B. Background

1. Current Standards
In a final rule published on June 17, 2013 (``June 2013 Final
Rule''), DOE prescribed the current energy conservation standards for
microwave ovens manufactured on and after June 17, 2016. 78 FR 36316.
These standards are set forth in DOE's regulations at 10 CFR
430.32(j)(3) and are repeated in Table II.1.

[[Page 39918]]

Table II.1--Federal Energy Conservation Standards for Microwave Ovens
------------------------------------------------------------------------
Maximum allowable average
Product class standby power
------------------------------------------------------------------------
Microwave-Only Ovens and Countertop 1.0 W.
Convection Microwave Ovens.
Built-In and Over-the-Range Convection 2.2 W.
Microwave Ovens.
------------------------------------------------------------------------

2. History of Standards Rulemaking for Microwave Ovens
EPCA prescribed an energy conservation standard for kitchen ranges
and ovens, and directed DOE to conduct two cycles of rulemakings to
determine whether to amend standards for these products. (42 U.S.C.
6295(h)(2)(A)-(B)) DOE completed the first of these rulemaking cycles
by publishing a final rule on September 8, 1998, that codified the
prescriptive design standard for gas cooking products established in
EPCA, but found that no standards were justified for electric cooking
products, including microwave ovens, at that time. 63 FR 48038, 48053-
48054. DOE completed the second rulemaking cycle and published a final
rule on April 8, 2009, in which it determined, among other things, that
standards for microwave oven active mode energy use were not
economically justified. 74 FR 16040.
DOE published the June 2013 Final Rule, adopting energy
conservation standards for microwave ovens. 78 FR 36316. In the June
2013 Final Rule, DOE maintained its prior determination that active
mode standards are not warranted for microwave ovens and prescribed
energy conservation standards that address the standby and off mode
energy use of microwave ovens. 78 FR 36316, 36317.
In support of the present review of the microwave oven energy
conservation standards, DOE published an early assessment request for
information on August 13, 2019, which identified various issues on
which DOE sought comment to inform its determination of whether the
standards need to be amended. 84 FR 39980.
DOE subsequently published a notice of proposed determination
(``NOPD'') on August 12, 2021, in which DOE initially determined that
current standards for microwave ovens do not need to be amended. 86 FR
44298. (``August 2021 NOPD'') In the August 2021 NOPD, DOE tentatively
determined that there are technology options that would improve the
efficiency of microwave ovens. 86 FR 44298, 44310. Based on the
analysis conducted for the August 2021 NOPD, DOE estimated that amended
standards for microwave oven standby power at the maximum
technologically feasible (``max-tech'') level would result in 0.1 quads
of energy saved over a 30-year period (representing an estimated 8
percent reduction in site energy use of microwave ovens). 86 FR 44298,
44310.
In evaluating the significance of the estimated energy savings for
the August 2021 NOPD, DOE applied a two-part numeric threshold test
that was then applicable under section 6(b) of appendix A to 10 CFR
part 430 subpart C (Jan. 1, 2021 edition). Specifically, the threshold
required that an energy conservation standard result in a 0.30 quads
reduction in site energy use over a 30-year analysis period or a 10-
percent reduction in site energy use over that same period. See 85 FR
8626, 8670 (Feb. 14, 2020). In the August 2021 NOPD, DOE stated that
the estimated site energy savings at the max-tech level was under the
0.3-quads/10-percent threshold and tentatively determined that amended
energy conservation standards for microwave oven standby power would
not result in significant conservation of energy. 86 FR 44298, 44310.
DOE also noted that the two-part numeric threshold was under
reconsideration. 86 FR 44298, 44302.
On December 13, 2021, DOE published in the Federal Register a final
rule that amended appendix A to 10 CFR part 430 subpart C (``appendix
A''). 86 FR 70892 (``December 2021 Final Rule''). The December 20201
Final Rule, in part, removed the numeric threshold in section 6(b) of
appendix A for determining when the significant energy savings
criterion is met, reverting to DOE's prior practice of making such
determinations on a case-by-case basis. 86 FR 70892.
After the publication of the NOPD, DOE conducted investigative
testing and manufacturer discussions, and updated the engineering
analysis to be used in a subsequently published supplemental notice of
proposed rulemaking (``SNOPR'') on August 24, 2022. 87 FR 52282.
(``August 2022 SNOPR'') In the August 2022 SNOPR, DOE revised the
efficiency levels, manufacturer selling price (``MSP'')-efficiency
relationships, and LCC and PBP analyses to evaluate the economic
impacts of potential energy conservation standards for microwave ovens
on individual consumers. The amended energy conservation standards for
microwave ovens proposed in the August 2022 SNOPR are shown in Table
II.2. DOE requested comment on these proposed standards and associated
analyses and results.

Table II.2--August 2022 SNOPR Proposed Energy Conservation Standards for
Microwave Ovens
------------------------------------------------------------------------
Maximum allowable average
Product class standby power (watts)
------------------------------------------------------------------------
PC 1: Microwave-Only Ovens and 0.6 W.
Countertop Convection Microwave Ovens.
PC 2: Built-In and Over-the-Range 1.0 W.
Convection Microwave Ovens.
------------------------------------------------------------------------

DOE held a public meeting on October 11, 2022, to solicit feedback
from stakeholders concerning the August 2022 SNOPR, and received 5
comments in response to the August 2022 SNOPR from the interested
parties listed in Table II.3.

Table II.3--August 2022 SNOPR Written Comments
----------------------------------------------------------------------------------------------------------------
Comment number
Commenter(s) Abbreviation in the docket Commenter type
----------------------------------------------------------------------------------------------------------------
Appliance Standards Awareness Project, The Joint Commenters...... 31 Efficiency Organizations.
American Council for an Energy-
Efficient Economy, Consumer Federation
of America, National Consumer Law
Center, Natural Resources Defense
Council, Northwest Energy Efficiency
Alliance.
Association of Home Appliance AHAM...................... 28 Trade Association.
Manufacturers.
Center for Climate and Energy Solutions, C2ES...................... 29 Efficiency Organizations.
Institute for Policy Integrity at New
York University School of Law, Natural
Resources Defense Council, Sierra Club,
Union of Concerned Scientists,
Institute for Policy Integrity.

[[Page 39919]]

Whirlpool Corporation................... Whirlpool................. 30 Manufacturer.
----------------------------------------------------------------------------------------------------------------

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\13\
To the extent that interested parties have provided written comments
that are substantively consistent with any oral comments provided
during the October 11, 2022 webinar, 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.
---------------------------------------------------------------------------

\13\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for microwave ovens. (Docket No. EERE-
2017-BT-STD-0023, 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. Scope of Coverage

This final rule covers those consumer products that meet the
definition of ``microwave oven'' as codified at 10 CFR 430.2, which
defines ``microwave oven'' as a category of cooking products which is a
household cooking appliance consisting of a compartment designed to
cook or heat food by means of microwave energy, including microwave
ovens with or without thermal elements designed for surface browning of
food and convection microwave ovens. This includes any microwave
oven(s) component of a combined cooking product. Any product meeting
the definition of microwave oven is included in DOE's scope of
coverage.
For this final rule, DOE considered the two product classes of
microwave ovens prescribed in the current energy conservation
standards: (1) Microwave-Only Ovens and Countertop Convection Microwave
Ovens, and (2) Built-In and Over-the-Range Convection Microwave Ovens.
For these two classes of microwave ovens, DOE's current test
procedure measures the energy consumption in standby mode and off mode
only. Consequently, DOE's current energy conservation standards for
microwave ovens are also expressed in terms of standby mode and off
mode power. There are currently no active mode energy conservation
standards; nor is there a prescribed test procedure for measuring the
active mode energy use or efficiency (e.g., cooking efficiency) of
microwave ovens.
The Joint Commenters commented that adopting a standard for active
mode energy consumption could achieve ``significantly greater'' savings
than proposed standby power standards, and that DOE should develop a
test procedure and standards for active mode power consumption. (Joint
Commenters, No. 31 at p. 2) DOE previously rejected developing an
active mode test procedure in the microwave oven test procedure final
rule published on March 30, 2022, (``March 2022 TP Final Rule'') due to
undue burden on manufacturers and the lack of an available test
procedure that accounts for the efficiency improvements of inverter
microwave ovens. 87 FR 18261. As there is no test procedure for
measuring the active mode efficiency of a microwave oven, and since
development of such a test procedure is out of the scope of this
document, DOE is not currently proposing to adopt an active mode energy
usage standard.
See section IV.2 of this document for discussion of the product
classes analyzed in this final rule.

B. 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 will
finalize a test procedure establishing methodologies used to evaluate
proposed energy conservation standards prior to publication of a NOPR
proposing new or amended energy conservation standards. Section 8(d)(1)
of appendix A. As discussed, DOE amended the test procedure for
microwave ovens, set forth in appendix I, in the March 2022 TP Final
Rule. DOE's current energy conservation standards for microwave ovens
are expressed in terms of watts of standby power. (See 10 CFR
430.23(j)(3).)

C. 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.
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
practicability to manufacture, install, and service; (2) adverse
impacts on product utility or availability; (3) adverse impacts on
health or safety and (4) unique-pathway proprietary technologies.
Sections 6(b)(3)(ii) through (v) and sections 7(b)(2) through (5) of
appendix A. Section IV.B of this document discusses the results of the
screening analysis for microwave ovens, particularly the designs DOE
considered, those it screened out, and those that are the basis for the
standards considered in this rulemaking. For further details on the
screening analysis for this rulemaking, see chapter 4 of the final rule
TSD.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy

[[Page 39920]]

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 microwave
ovens, 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.

D. Energy Savings

1. Determination of Savings
For each trial standard level (``TSL''), DOE projected energy
savings from application of the TSL to microwave ovens purchased in the
30-year period that begins in the year of compliance with the amended
standards (2026-2055).\14\ 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 amended energy
conservation standards.
---------------------------------------------------------------------------

\14\ Each TSL is composed of specific efficiency levels for each
product class. The TSLs considered for this rule are described in
section V.A of this document. 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 amended
standards for microwave ovens. 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.\15\
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.
---------------------------------------------------------------------------

\15\ 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. In evaluating the
significance of energy savings, DOE considers differences in primary
energy and FFC effects for different covered products and equipment
when determining whether energy savings are significant. Primary energy
and FFC effects include the energy consumed in electricity production
(depending on load shape), in distribution and transmission, and in
extracting, processing, and transporting primary fuels (i.e., coal,
natural gas, petroleum fuels), and thus present a more complete picture
of the impacts of energy conservation standards.
Accordingly, DOE evaluates the significance of energy savings on a
case-by-case basis. As stated, the standard levels adopted in this
final rule are projected to result in national FFC energy savings of
0.06 quads, the equivalent of the electricity use of 1.6 million homes
in one year. 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).

E. 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 rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of potential amended standards on
manufacturers, DOE conducts a Manufacturer Impact Analysis (``MIA''),
as discussed in section IV.J of this document. DOE 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 payback period (``PBP'') associated with new or
amended standards. These measures are discussed further in the
following section. For consumers in the aggregate, DOE also calculates
the national net present value of the consumer costs and benefits
expected to result from particular standards. DOE also evaluates the
impacts of potential standards on identifiable subgroups of consumers
that may be affected disproportionately by a standard.
b. Savings in Operating Costs Compared To Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its

[[Page 39921]]

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 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.E 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 would 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 proposed standard
and to transmit such determination to the Secretary within 60 days of
the publication of a proposed rule, together with an analysis of the
nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) To
assist the Department of Justice (``DOJ'') in making such a
determination, DOE transmitted copies of the August 2022 SNOPR and the
SNOPR 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 microwave ovens 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 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 greenhouse gases (``GHGs'') associated with energy
production and use. DOE conducts an emissions analysis to estimate how
potential standards may affect these emissions, as discussed in section
IV.K of this document; the estimated emissions impacts are reported in
section V.B.6 of this document. DOE also estimates the economic value
of emissions reductions resulting from the considered TSLs, as
discussed in section IV.L of this document.
g. Other Factors
In determining whether an energy conservation standard is
economically justified, DOE may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To
the extent DOE identifies any relevant information regarding economic
justification that does not fit into the other categories described
previously, DOE could consider such information under ``other
factors.''
2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the consumer of a
product that meets the standard is less than three times the value of
the first year's energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE's LCC and PBP
analyses generate values used to calculate the effects that proposed
energy conservation standards would have on the payback period for
consumers. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable-presumption test. In
addition, DOE routinely conducts an economic analysis that considers
the full range of impacts to consumers, manufacturers, the Nation, and
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The
results of this analysis serve as the basis for DOE's evaluation of the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification). The rebuttable presumption payback calculation
is discussed in section IV.F of this document.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this
rulemaking with regard to microwave ovens. 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

[[Page 39922]]

standards. The national impacts analysis uses a second spreadsheet set
that provides shipments projections and calculates national energy
savings and net present value of total consumer costs and savings
expected to result from potential energy conservation standards. DOE
uses the third spreadsheet tool, the Government Regulatory Impact Model
(``GRIM''), to assess manufacturer impacts of potential standards.
These three spreadsheet tools are available on the DOE website for this
rulemaking: <a href="http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/48">www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/48</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.
1. 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 microwave ovens. 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.
AHAM commented that it disagrees with DOE addressing European
efficiency programs as a part of its analysis for the August 2022
SNOPR. AHAM stated that DOE is improperly making direct comparisons to
the European market and should not look to Europe or any other
jurisdiction for guidance without first understanding the differences
between products in those markets and those in the United States.
(AHAM, No. 28 at p. 10) In response to AHAM's comment, DOE notes that
its analysis of foreign regulatory programs is only to reduce
additional manufacturer burden in complying with conflicting standards.
DOE did not find any conflicting foreign regulatory programs, nor did
it develop trial standards levels based on any foreign regulations. In
the case of this rulemaking, foreign regulations had no bearing on
DOE's analysis.
2. 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.)
Any product meeting the definition of a microwave oven, as codified
in 10 CFR 430.2, is included in DOE's scope of coverage. ``Microwave
oven'' is defined as a category of cooking products which is a
household cooking appliance consisting of a compartment designed to
cook or heat food by means of microwave energy, including microwave
ovens with or without thermal elements designed for surface browning of
food and convection microwave ovens. This includes any microwave
oven(s) component of a combined cooking product.
For this proposal, DOE considered the two product classes of
microwave ovens prescribed in the current energy conservation
standards: (1) Microwave-Only Ovens and Countertop Convection Microwave
Ovens, and (2) Built-In and Over-the-Range Convection Microwave Ovens.
For these two classes of microwave ovens, DOE's current test
procedure measures the energy consumption in standby mode and off mode
only. Consequently, DOE's current energy conservation standards for
microwave ovens are also expressed in terms of standby mode and off
mode power. There are currently no active mode energy conservation
standards nor a prescribed test procedure for measuring the active mode
energy use or efficiency (e.g., cooking efficiency) of microwave ovens.
In response to the August 2022 SNOPR, AHAM and Whirlpool requested
that DOE consider changing microwave oven product classes to align with
the three general chassis designs: countertop, built-in, and over-the-
range. AHAM commented that the feature sets, design requirements,
consumer use patterns, and standby powers are more correlated to
chassis type than the presence of convection functionality. (AHAM, No.
28 at p. 12) AHAM further stated that, on a shipment-weighted average
basis, countertop models consume 0.6 W of standby power, followed by
over-the-range models, and built-in models consuming 0.81 W and 1.65 W
of standby power, respectively. (AHAM, No. 28 at p. 13) Whirlpool added
that task lights, exhaust fans, and environmental sensors are some of
the unique features of many over-the-range microwave ovens. (Whirlpool,
No. 30 at p. 6).
In the June 2013 Final Rule, DOE discussed its rationale for
establishing the current product class structure. In that rulemaking,
DOE acknowledged that over-the-range microwave ovens contain additional
relays for components that are not found in countertop units, such as
exhaust or cooling fans and cooktop lighting. However, these components
were not found in DOE's analysis to require larger power supplies that
would affect standby power consumption, and thus would not warrant a
separate product class for over-the-range microwave-only ovens from
countertop microwave ovens. 78 FR 36328. For this rulemaking, DOE's
teardown and analyses of the Compliance Certification Database (``CCD
\16\'') showed that microwave ovens have a wide variety of features
independent of chassis type. DOE found various sensors, display types,
and connectivity features in over-the-range, built-in and countertop
microwave ovens. As such, DOE determines that performance-related
features are fully reflected by the current product class structure.
Additionally, AHAM claims via its shipment-weighted average standby
power consumption data that the only meaningful differentiation for
product classes is installation configuration. AHAM however did not
provide shipments data with sufficient granularity to contradict DOE's
previous data and conclusions (i.e., to justify eliminating product
class differentiation on the basis of convection features and instead
defining product classes solely by installation configuration). As a
result, DOE is unable to rely on AHAM's data to revise the product
classes. Further, DOE is not aware of, nor did AHAM provide, any data
demonstrating that consumer utility varies by chassis type and has
impacts on energy use that would justify establishing separate product
classes. As a result, DOE is

[[Page 39923]]

opting to maintain its current product class structure.
---------------------------------------------------------------------------

\16\ Available at <a href="http://www.regulations.doe.gov/certification-data">www.regulations.doe.gov/certification-data</a>.
---------------------------------------------------------------------------

3. Technology Options
In the preliminary market analysis and technology assessment for
the August 2022 SNOPR, DOE identified four technology options initially
determined to improve the efficiency of microwave ovens, as measured by
the DOE test procedure:

Table IV.1--Microwave Oven Technology Options
------------------------------------------------------------------------
Mode Technology option
------------------------------------------------------------------------
Standby................................ Lower-power display
technologies.
Standby................................ Cooking sensors with no standby
power requirement.
Standby................................ More efficient power supply and
control board options.
Standby................................ Automatic power-down of most
power-consuming components,
including the clock display.
------------------------------------------------------------------------

In support of the analysis for its August 2022 SNOPR, DOE purchased
and tested 33 microwave ovens representing the two proposed product
classes, and the results confirmed that microwave oven models currently
on the market can achieve standby power consumption values in-between
the very low levels enabled by automatic power-down microwave ovens and
the proposed levels (i.e., 0.6 W for Product Class 1 and 1.0 W for
Product Class 2). 87 FR 52283. Further, DOE's testing suggested that
microwave ovens are frequently rated conservatively, such that their
certified standby power level is higher than actual values obtained
when tested in accordance with appendix I. Therefore, DOE was unable to
accurately assess the relationship between specific standby power
levels and utilized technology options based on data from the CCD.
Instead, DOE used the measured standby power levels of microwave oven
models in its test sample as a proxy to determine the representative
distribution of standby power levels among microwave ovens on the
market, as shown in Table IV.2. Details of the methodology and results
from DOE's investigative testing are included in chapter 3 and chapter
5 of the SNOPR TSD as well as the final rule TSD.\17\
---------------------------------------------------------------------------

\17\ The final rule TSD as well as the SNOPR TSD are available
on the docket, <a href="http://www.regulations.gov/document/EERE-2017-BT-STD-0023-0022">www.regulations.gov/document/EERE-2017-BT-STD-0023-0022</a>.

Table IV.2--Estimated Market Distribution of Microwave Ovens
------------------------------------------------------------------------
Market share
Standby power (W) (%)
------------------------------------------------------------------------
Microwave-Only Ovens and Countertop Convection Microwave Ovens
------------------------------------------------------------------------
1....................................................... 15
0.8..................................................... 45
0.6..................................................... 29
0.4..................................................... 11
------------------------------------------------------------------------
Built-in and Over-the-Range Convection Microwave Ovens
------------------------------------------------------------------------
2.2..................................................... 0
1.5..................................................... 36
1....................................................... 59
0.5..................................................... 5
------------------------------------------------------------------------

AHAM commented that it disagreed with DOE's use of tested values
rather than CCD reported values in the August 2022 SNOPR, a practice it
says undermines the practice of conservatively reporting standby power
to allow some ``buffer'' to ensure consumers are getting what they are
promised. (AHAM, No. 28 at p. 9) AHAM further commented that
conservative rating ensures compliance with applicable standards by
providing a safety factor to account for unavoidable variation in the
manufacturing process. DOE notes that its tested values were often much
lower than the reported values in the CCD, with differences as great as
1.43 W (approximately 65 percent) for Product Class 2 microwave ovens
and 0.6192 W (approximately 61 percent) for Product Class 1 microwave
ovens. DOE determines these current ratings to be significantly more
conservative than is necessary, considering electronics manufacturing
processes are sufficiently advanced. Furthermore, DOE did not see any
variation in standby power greater than 0.1 W in the duplicate test
units.
AHAM additionally commented that the products that use
significantly less power than rated undermine the need for new
standards, as there is little to gain. (AHAM, No. 28 at p. 9)
DOE reiterates that its analysis uses an efficiency distribution
based on tested values that shows the existing market to be more
efficient compared to that based on overly conservative rated values.
As discussed further in section V.C.1 of this document, DOE's analysis
demonstrates that despite the use of a more efficient distribution in
its analysis as a starting point, the benefits of the standard exceed,
to a great extent, the burdens at TSL 2 and an amended standard set at
this level for microwave ovens would be economically justified.
Additionally, AHAM's comment underscores the importance of testing
units rather than relying solely on data from the CCD.
As part of the analysis for the August 2022 SNOPR, DOE subsequently
tore down all 33 microwave ovens, but was unable to isolate a unique
set of technology options associated with each standby power level. As
such, DOE concluded that models demonstrating lower standby power
consumption than the current energy conservation standards are not
implementing specific technology options; rather, they are
incorporating a comprehensive, system-level control board redesign that
prioritizes standby power performance from the ground up. Examples of
possible redesign strategies include (1) the replacement of
microcontrollers with modern ones that demonstrate significantly lower
quiescent current consumption and (2) firmware that emphasizes the
shutting down of any subassemblies that are not in use while idle. DOE
estimated that while these improvements would not contribute to the
incremental manufacturer production cost (``MPC'') of a control board,
the redesign would result in significant conversion costs for
manufacturers as they attempt to bring their microwave oven models into
compliance with any proposed standards. See section IV.J.2.a of this
document.
In the August 2022 SNOPR, DOE requested feedback on its tentative
conclusion that reducing the standby power consumption of a microwave
oven would require a whole-board redesign, and that manufacturers would
incur a one-time conversion cost without any additional MPC. AHAM and
Whirlpool agreed with DOE's assessment that standby power reduction is
a system-level redesign challenge, and that standby power often cannot
be reduced with simple component changes. (AHAM, No. 28 at p. 5;
Whirlpool, No. 30 at p. 6) AHAM and Whirlpool disagreed with DOE's
conclusion that redesign would not impact overall MPC of a given
product. Whirlpool commented that the new classes of microprocessors,
display backlight circuits, display deep sleep technologies, and power
switches may be necessary to reach higher efficiencies, and that this
will add to the MPC for more efficient microwave ovens. (Whirlpool, No.
30 at p. 7) AHAM commented that changes to the control board may
require manufacturers to evaluate and replace or remove components
affected by the control board (e.g., displays, sensors,

[[Page 39924]]

and clock) to reach amended standard levels. (AHAM, No. 28 at p. 5)
In response to AHAM and Whirlpool's comments, DOE notes that the
analysis of the 33 microwave ovens noted above included product
teardowns and establishing costed bill of materials. DOE examined the
datasheets for components used in each design but was unable to
establish a strong relationship between the use of better components
and a microwave oven's overall standby performance. DOE found that
while standby performance could be improved by opting for a better
component, such as in the case of microcontrollers with deep sleep
states, the cost differentials were often zero or negative. In all
situations, DOE found that overall circuit design rather than component
selection itself had a greater impact on standby performance cost. In
the absence of additional cost data showing a clear MPC-efficiency
relationship, DOE maintains its conclusion that any system-level
redesign would not contribute to an incremental MPC increase.

B. Screening Analysis

DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in working prototypes will not
be considered further.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial products could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
(3) Impacts on product utility or product availability. If it is
determined that a technology would have a significant adverse impact on
the utility of the product for significant subgroups of consumers or
would result in the unavailability of any covered product type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as products
generally available in the United States at the time, it will not be
considered further.
(4) Adverse impacts on health or safety. 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 design option
utilizes proprietary technology that represents a unique pathway to
achieving a given efficiency level, that technology will not be
considered further due to the potential for monopolistic concerns.
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 include 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
DOE considers whether a technology option will adversely impact
consumer utility and product availability. To that end, DOE has
previously stated it is uncertain the extent to which consumers value
the function of a continuous display clock, but that loss of such
function may result in significant loss of consumer utility. 78 FR
36316, 36362. Consistent with this prior concern, DOE has screened out
``automatic power-down'' as a technology option due to its impact on
consumer utility in this final rule.
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
meet 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:
(1) Lower-power display technologies;
(2) Cooking sensors with no standby power requirement; and
(3) More efficient power supply and control board options.
DOE determines that these technology options are technologically
feasible because they are being used or have previously been used in
commercially-available products or working prototypes. DOE also finds
that all of the remaining technology options meet the other screening
criteria (i.e., practicable to manufacture, install, and service and do
not result in adverse impacts on consumer utility, product
availability, health, or safety). For additional details, see chapter 4
of the final rule TSD.
AHAM and Whirlpool asserted that DOE's revised standards will cause
an unacceptable loss of product functionality, and that future features
will not be able to be added to microwave ovens due to feature power
draw and DOE's practice of undermining conservative ratings. (AHAM, No.
28 at pp. 3-4, 8; Whirlpool, No. 30 at p. 5) AHAM provided a
confidential list of various features that it states would be
impossible to implement at DOE's updated standards. (AHAM, No. 28 at p.
4) AHAM additionally commented that manufacturers will also be unable
to incorporate indoor air quality (``IAQ'') sensors, which may be
required by future state building codes and could be impossible to
implement due to EPCA's backsliding provision. (Id. at pp. 3, 13) AHAM
and Whirlpool commented that other sensors may also need to be removed
as well, driving consumers to use less efficient methods of cooking,
and Whirlpool added that it was not aware of any humidity sensors that
do not impact standby power. (AHAM, No. 28 at p. 4; Whirlpool, No. 30
at pp. 4, 7) Finally, AHAM stated that updated microwave oven standby
power standards could lead to a loss of connectivity features in
microwave ovens. (AHAM, No 28 at p. 3)
The Joint Commenters commented that they were able to find many
Product Class 1 \18\ units from various manufacturers with reported
powers below 0.6 W that incorporated sensor technologies. (Joint
Commenters, No. 31 at p. 3)
---------------------------------------------------------------------------

\18\ Product Class 1 comprises microwave-only ovens and
countertop convection microwave ovens.
---------------------------------------------------------------------------

In response to these comments, DOE concludes that IAQ monitoring
sensors (smoke and carbon monoxide(``CO'')) are technologically mature
enough to be implemented without any significant impact to microwave
oven standby power budgets due to the prevalence and maturity of low-
power smoke and carbon monoxide detectors required by most state
building codes.\19\ DOE researched additional sensors that might be
applicable for use in microwave ovens, and found low-power options for
IAQ, such as the Bosch BME688, with an average current consumption of
0.1 milliamps (``mA'') at 3.6 volts (``V'') in low power mode, and the
Renesas ZMOD4410 with an average power consumption of 0.16 milliwatts
in ultra-low power mode. Similarly, DOE found

[[Page 39925]]

flame detection sensors, such as the Kemet QFS series, with an average
current draw of 3.5 microamps (``[micro]A'') at 3.6 V and PM sensors,
such as the Sensirion SPS30, with an idle current draw of 330 [micro]A
and a sleep current draw of 50 [micro]A.
---------------------------------------------------------------------------

\19\ DOE found that the First Alert BRK PRC710 and Kidde P3010CU
combination smoke and CO detectors include sealed batteries meant to
last 10 years.
---------------------------------------------------------------------------

Regarding AHAM's comment that updated standards impact connectivity
features, DOE notes that section 2.1.1 of appendix I instructs that if
a microwave oven can communicate through a network (e.g.,
Bluetooth[supreg] or internet connection), the network function is
disabled for the duration of standby mode and off mode testing, if it
is possible to disable it by means provided in the manufacturer's user
manual. Furthermore, DOE's testing did not find any correlation between
presence of connected features and standby power consumption.
Similarly, DOE did not find any standby power impact from humidity
sensors in the microwave ovens tested and torn down. An additional
review of available humidity sensors showed multiple models without a
listed electrical warm-up time, as well as sensors with power
requirements less than 0.005 W (e.g. review of datasheets for humidity
sensors from component manufacturers such as Reneas, Amphenol, and
Texas Instrument shows typical supply currents in the range of 1 to 200
[micro]A).
With regards to loss of features and functionality, DOE notes that
many of the features discussed confidentially by AHAM were already
present in the microwave ovens torn down by DOE and therefore were
captured by DOE in its analysis. DOE also determines that those
features discussed by AHAM that were not seen in DOE's teardown
analysis would not impact standby power, as the microwave oven would
not be in standby mode while those features are activated. Instead, the
features would be disconnected, turned off, or put into a quiescent
state \20\ in order to place the microwave oven in standby mode for
testing. As such, DOE determines that amending standards would neither
impact the types of sensors that can be used in microwave oven designs
nor adversely impact consumer utility.
---------------------------------------------------------------------------

\20\ In electronics design, Quiescent state or Quiescent mode is
defined as a state of inactivity or dormancy, with attributes of
very low current draw.
---------------------------------------------------------------------------

C. Engineering Analysis

The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of microwave ovens. 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
microwave ovens, 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/equipment at efficiency levels above the baseline. The
output of the engineering analysis is a set of cost-efficiency
``curves'' that are used in downstream analyses (i.e., the LCC and PBP
analyses and the NIA).
1. Efficiency Analysis
DOE typically uses one of two approaches to develop energy
efficiency levels for the engineering analysis: (1) relying on observed
efficiency levels in the market (i.e., the efficiency-level approach),
or (2) determining the incremental efficiency improvements associated
with incorporating specific design options to a baseline model (i.e.,
the design-option approach). Using the efficiency-level approach, the
efficiency levels established for the analysis are determined based on
the market distribution of existing products (in other words, based on
the range of efficiencies and efficiency level ``clusters'' that
already exist on the market). Using the design option approach, the
efficiency levels established for the analysis are determined through
detailed engineering calculations and/or computer simulations of the
efficiency improvements from implementing specific design options that
have been identified in the technology assessment. DOE may also rely on
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended
using the design option approach to ``gap fill'' levels (to bridge
large gaps between other identified efficiency levels) and/or to
extrapolate to the ``max-tech'' level (particularly in cases where the
``max-tech'' level exceeds the maximum efficiency level currently
available on the market).
In this rulemaking, DOE applied the efficiency-level approach. As
discussed, DOE was unable to use the design-option approach because it
did not identify specific design options associated with each standby
power level.
a. Baseline Efficiency/Energy Use
For each product class, DOE generally selects a baseline model as a
reference point against which to measure changes resulting from energy
conservation standards. 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.
For microwave-only ovens and countertop convection microwave ovens
(``Product Class 1''), the baseline standby power level is equal to the
current standard of 1.0 W. For the built-in and over-the-range
convection microwave ovens product class (``Product Class 2''), the
baseline standby power consumption used for the analysis is equal to
the current standard of 2.2 W. This maximum allowable average standby
power consumption for Product Class 2 is higher than that allowed for
Product Class 1 microwave ovens because, in the June 2013 Final Rule,
DOE concluded that built-in and over-the-range convection microwave
ovens require a larger power supply to support additional features,
such as an exhaust fan, additional relays, and additional lights, and
that the larger power supply contributes to a higher standby power
consumption. 78 FR 36316, 36328. Nonetheless, DOE expects that certain
available design options for reducing standby power consumption for
Product Class 2 microwave ovens would be similar to those for Product
Class 1 microwave ovens.
b. Higher Efficiency Levels
Using the efficiency-level approach, the higher 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). As noted in section IV.A.2 of this document, DOE's testing
suggests that microwave ovens are frequently rated conservatively, such
that their certified standby power level is higher than actual values
obtained when tested in accordance with appendix I. DOE therefore used
the measured standby power levels of microwave oven models in its test
sample as a proxy to determine the representative distribution of
standby power levels among microwave ovens currently on the market, as
shown in Table IV.2.
According to this efficiency distribution, 85 percent of Product
Class 1 microwave ovens achieve a standby power consumption lower than
the

[[Page 39926]]

current standard of 1.0 W, with 45 percent of the market estimated to
be achieving 0.8 W, 29 percent achieving 0.6 W, and 11 percent
achieving 0.4 W, all without the use of automatic power-down. For
Product Class 1, therefore, DOE analyzed three efficiency levels
(``ELs'') above the baseline, which correspond to these three standby
power levels, as shown in Table IV.3.
The test results also showed that all of the Product Class 2 test
units achieved a standby power consumption in the range of 0.5 W to 1.5
W, lower than the current standard of 2.2 W. As such, DOE analyzed
higher efficiency levels for this product class at standby power values
evenly distributed within that range: EL 1 at 1.5 W, EL 2 at 1.0 W, and
EL 3 (max-tech) at 0.5 W. DOE estimates that there are currently no
built-in and over-the-range convection microwave ovens in the market at
the baseline standby power consumption of 2.2 W.
In summary, DOE analyzed the following efficiency levels for this
rule:

Table IV.3--Analyzed Efficiency Levels for Microwave-Only Ovens and
Countertop Convection Microwave Ovens
------------------------------------------------------------------------
Standby power
Efficiency level (W)
------------------------------------------------------------------------
Baseline................................................ 1.00
1....................................................... 0.8
2....................................................... 0.6
3 (Max-Tech)............................................ 0.4
------------------------------------------------------------------------

Table IV.4--Analyzed Efficiency Levels for Built-In and Over-the-Range
Convection Microwave Ovens
------------------------------------------------------------------------
Standby power
Efficiency level (W)
------------------------------------------------------------------------
Baseline................................................ 2.2
1....................................................... 1.5
2....................................................... 1.0
3 (Max-Tech)............................................ 0.5
------------------------------------------------------------------------

The Joint Commenters requested that DOE analyze an additional
efficiency level above max-tech, citing a number of microwave ovens in
the CCD with reported standby powers of less than 0.3 W. The Joint
Commenters further stated that many of these microwave ovens do not
utilize the screened-out automatic power-down technology option, making
this a viable efficiency level for manufacturers.
With regard to the Joint Commenters request, DOE's review of the
market has shown that the majority of the microwave ovens at or below
0.3 W utilize other screened-out technology options (no clock, no
display, and automatic power-down) to achieve a low standby power, and
that an EL above max-tech would require designing microwave ovens with
a significant impact to consumer utility. Also, as discussed further in
section V.C of this document, DOE has determined that there is
uncertainty as to whether or not a standard at max-tech would stifle
innovation and risk impacting customer utility. Accordingly, DOE has
elected not to analyze an efficiency level above the max-tech discussed
in the August 2022 SNOPR.
AHAM and Whirlpool commented that electromagnetic interference
(``EMI'') filtration boards draw a significant amount of power that
DOE's analysis did not take into account. (AHAM, No. 28 at p. 6;
Whirlpool, No. 30, at pp. 2-3) Furthermore, AHAM stated that EMI
filters that draw less power than those currently in use may not be as
effective at filtering out conducted electromagnetic fields (``EMF'').
Whirlpool stated that effective filter designs can account for up to
0.3 W of standby power in a microwave oven. (Whirlpool, No. 30 at p. 4)
AHAM commented that a survey of the current market found filter board
power contributions of 0.17 W for countertop microwave ovens, 0.22 W
for over-the-range microwave ovens, and 0.08 W for built-in microwave
ovens (AHAM, No. 28 at p. 6).
As detailed in chapter 5 of the final rule TSD, DOE conducted a
number of additional standby power tests on a sample of nine microwave
ovens from both product classes after removing their input power
filtration boards. Tested units included inverter microwave ovens,
which tend to have more expensive and complex filtration boards, and
units with different sensors and WiFi functionality.
DOE found that the sampled power filtration boards, on average,
account for only 0.012 W of power during standby testing, calculated as
the difference between the standby power with the filter installed and
the standby power without the filter installed. This average measured
value of 0.012 W is approximately 25 times less than Whirlpool's
estimate (0.3 W) and about 10 times less than the shipment-weighted
average of AHAM's reported values (0.173 W) using shipment weights
provided by Whirlpool in its comments. (Whirlpool, No. 30 at p. 6) DOE
conducted a single-tailed T-test to determine whether AHAM's reported
mean differs in a statistically significant way from the measured mean.
The resulting p-value rejected the null hypothesis (i.e., the
difference is indeed statistically significant and not due to sampling
artifices). Whirlpool commented that DOE's tested models may not
utilize the highest levels of filtering. (Whirlpool, No. 30 at p. 4)
Since neither AHAM nor Whirlpool provided any further information
identifying brands and models used to arrive at these values, DOE
cannot verify the comments that EMI filtration boards take up a
significant amount of a microwave's standby power budget, nor that
DOE's tests were not representative of the market.
DOE performed additional teardown analysis of power filter boards
from tested microwave ovens. All boards were passive filtration boards
that utilize (1) a selection of capacitors and a common mode choke for
mains power filtration; (2) a safety capacitor bleed resistor used to
discharge capacitors that might otherwise shock a user when unplugging
the unit from the wall; and (3) In some cases, a metal oxide varistor
likely for voltage transient suppression. The primary standby power
draw of this circuit is the always-connected bleeder resistor, which
can be further eliminated with minimal impact to EMI filtration quality
by using any number of automatic safety capacitor discharge circuits.
However, this approach to reducing standby power with an automatic
safety capacitor discharge circuit would only be relevant and
meaningful if the power consumption of EMI filters with regular bleed
resistors were significant. As discussed previously, DOE's testing
showed power consumption of EMI filters to be a fraction of what AHAM
and Whirlpool commented. The use of automatic capacitor discharge
circuits would therefore not be meaningful and/or necessary.
Additionally, AHAM commented that microwave ovens account for 40.51
percent of consumer-reported nuisance trips when connected to a mains
line with an arc-fault circuit interrupter (``AFCI'') circuit breaker.
(AHAM, No. 28 at p. 8) AHAM stated that manufacturers traditionally
outfit microwave ovens with EMI filters designed to only meet emissions
limits established by the Federal Communications Commission (``FCC'')
in 47 CFR part 15 and 47 CFR part 18 (referred to as ``Part 15'' and
``Part 18''), and that actual limits for avoiding accidental
``nuisance'' tripping are much more stringent and require EMI filters
that consume more power. (AHAM, No. 28 at pp. 6-8) With increasing use
of AFCIs in homes, Whirlpool commented that DOE must account for the
additional power draw

[[Page 39927]]

of AFCI-compliant EMI filters when amending standards or risk losing
other features that provide consumer utility. (Whirlpool, No. 30 at p.
4)
DOE researched guidance for appliance manufacturers on ensuring
compatibility with AFCI outlets. As part of its efforts to promote the
use of AFCIs, the National Electrical Manufacturer's Association
(``NEMA'') has published guidelines \21\ for appliance manufacturers
that wish to design appliances that are compatible with AFCI outlets.
These guidelines were developed by the Molded Case Circuit Breaker
Product Group of the Low Voltage Distribution Equipment Section of
NEMA. At the time of publication, this group included ABB Control,
Inc.; Eaton Corporation; General Electric; Siemens Industry, Inc.; and
Schneider Electric USA, all manufacturers of AFCIs. Although it is
unclear how many of these members participated in the development of
NEMA's guidance, DOE has not found contradicting guidance from any AFCI
manufacturers.
---------------------------------------------------------------------------

\21\ National Electrical Manufacturer's Association.
Recommendations on AFCI/Home Electrical Product Compatibility. 2011.
Rosslyn, VA.
---------------------------------------------------------------------------

NEMA's white paper describes the emission limits recommendations
for appliance manufacturers. Specifically, NEMA recommends that
manufacturers meet Part 15 requirements for Class B devices, even if
appliances are not subject to these regulations. DOE notes that the
Part 15 requirements for conducted emissions of Class B devices are the
same as the Part 18 requirements for consumer devices other than
induction cooking ranges and ultrasonic equipment. Thus, if
manufacturers are designing microwave ovens to meet Part 18
requirements as AHAM states, they are following the leading industry
guidance for avoiding AFCI nuisance tripping.
Although AHAM commented that AFCIs are being improperly tripped by
normal microwave use, DOE recognizes that there are many potential
sources of arcing in a microwave oven that may be difficult for
consumers to recognize, potentially leading to an over-reporting of
nuisance tripping. Unwanted arcing can occur during cooking if there
are materials that reflect microwaves; the microwave is improperly
loaded (ran empty or nearly empty); or there is a stalled stirrer blade
or non-rotating antenna, which may not be visible to the consumer,
resulting in reflected microwaves. In all three of these cases, the
AFCI is performing its function correctly by detecting arcs and
preventing further power draw, though consumers may not be aware that
these arcs are occurring. Microwave ovens also rely on a number of
relays to control various functionality. Relays, if not properly
implemented, can also be prone to producing excessive arcing that may
trip AFCIs. Thus, AFCIs can correctly trip from detected arcs that may
be invisible to consumers.
In sum, DOE does not find that future EMI filter board designs
would substantively alter the standby power levels that microwave ovens
can achieve and concludes, therefore, that EMI filtration board power
draw will not prohibit future innovation in microwave ovens. Further,
DOE determined that microwave ovens are already meeting the leading
guidance for avoiding nuisance tripping and will continue to do so as
long as manufacturers design according to mandatory FCC standards.
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, and the availability and timeliness of purchasing the
microwave oven 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.
For microwave ovens, DOE attempted to estimate the MPC of attaining
each efficiency level using the physical teardowns approach described
previously. As stated in section IV.A.2 of this document, DOE tore down
all 33 microwave ovens in its test sample but was unable to isolate a
unique set of technology options associated with each standby power
level. As such, DOE concludes that models demonstrating lower standby
power consumption than the current energy conservation standards are
not implementing specific technology options, but rather incorporate a
comprehensive system-level control board design that prioritizes
standby power performance from the ground up. Examples of possible
design strategies include the replacement of microcontrollers and
switch mode controllers with modern ones that demonstrate significantly
lower quiescent current consumption at no additional cost compared to
those found in inefficient systems and firmware that emphasizes the
shutting down of all subassemblies that are not in use while idle. DOE
estimates that, while these improvements would not contribute to an
increase in the MPC of a control board (i.e., incremental MPC of $0),
the redesign would result in conversion costs for manufacturers as they
bring their microwave oven models into compliance with any proposed
standards. See section IV.J.2.a of this document. To account for
manufacturers' non-production costs and profit margin, DOE applies a
multiplier (the manufacturer markup) to the MPC. The resulting MSP is
the price at which the manufacturer distributes a unit into commerce.
DOE developed an average manufacturer markup by examining the annual
Securities and Exchange Commission (``SEC'') 10-K reports filed by
publicly-traded manufacturers primarily engaged in household cooking
appliance manufacturing and whose combined product range includes
microwave ovens.
3. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of MPC (in dollars) versus
standby power consumption (in W). For the reasons discussed in sections
IV.A.2 and IV.C.2 of this document, DOE estimated an incremental MPC of
$0 at all higher efficiency levels, compared to the baseline MPC, for
both of the product classes, as shown in Table IV.5 and Table IV.6 of
this document. See chapter 5 of the final rule TSD for additional
detail on the engineering analysis.

[[Page 39928]]

Table IV.5--Analyzed Efficiency Levels and Incremental Manufacturer
Production Costs for Microwave-Only Ovens and Countertop Convection
Microwave Ovens
------------------------------------------------------------------------
Standby power Incremental
Efficiency level (W) MPC (2021$)
------------------------------------------------------------------------
Baseline................................ 1.00 ..............
1....................................... 0.8 0.0
2....................................... 0.6 0.0
3....................................... 0.4 0.0
------------------------------------------------------------------------

Table IV.6--Analyzed Efficiency Levels and Incremental Manufacturer
Production Costs for Built-In and Over-the-Range Convection Microwave
Ovens
------------------------------------------------------------------------
Standby power Incremental
Efficiency level (W) MPC (2021$)
------------------------------------------------------------------------
Baseline................................ 2.20 ..............
1....................................... 1.5 $0.0
2....................................... 1.00 $0.0
3....................................... 0.5 $0.0
------------------------------------------------------------------------

D. Markups Analysis

The markups analysis develops appropriate markups (e.g., retailer
markups, distributor markups, contractor markups) in the distribution
chain and sales taxes to convert the MSP estimates derived in the
engineering analysis to consumer prices, which are then used in the LCC
and PBP analysis. At each step in the distribution channel, companies
mark up the price of the product to cover business costs and profit
margin.
For microwave ovens, DOE further developed baseline and incremental
markups for each link in the distribution chain (after the product
leaves the manufacturer). 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.\22\
---------------------------------------------------------------------------

\22\ 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.
---------------------------------------------------------------------------

DOE relied on economic data from the U.S. Census Bureau to estimate
average baseline and incremental markups. Specifically, DOE used the
2017 Annual Retail Trade Survey for the ``electronics and appliance
stores'' sector to develop retailer markups.\23\
---------------------------------------------------------------------------

\23\ US Census Bureau, Annual Retail Trade Survey. 2017.
<a href="http://www.census.gov/programs-surveys/arts.html">www.census.gov/programs-surveys/arts.html</a>.
---------------------------------------------------------------------------

Chapter 6 of the final rule TSD provides details on DOE's
development of markups for microwave ovens.

E. Energy Use Analysis

The purpose of the energy use analysis is to determine the annual
energy consumption of microwave ovens at different efficiencies in
representative U.S. single-family homes, multi-family residences, and
mobile homes, and to assess the energy savings potential of increased
microwave ovens efficiency. The energy use analysis estimates the range
of energy use of microwave ovens in the field (i.e., as they are
actually used by consumers). The energy use analysis provides the basis
for other analyses DOE performed, particularly assessments of the
energy savings and the savings in consumer operating costs that could
result from adoption of amended or new standards.
For this final rule, DOE used the same methodology as that
described in section IV.D of the August 2022 SNOPR. In the June 2013
Final Rule, DOE determined the average hours of operation for microwave
ovens to be 44.9 hours per year.24 25 To calibrate the
average annual operating hours, DOE primarily used data from the EIA's
2020 Residential Energy Consumption Survey (``RECS'').\26\ RECS 2020
provides information on the frequency of microwave oven usage per week
for each household. DOE calculated the RECS microwave oven usage factor
for each household in the sample by dividing the weighted-average usage
based on the entire RECS samples. DOE then multiplied the usage factor
by the annual operating hours (i.e., 44.9 hours) for each household in
the RECS. DOE subtracted field microwave ovens operating hours from the
total number of hours in a year and multiplied that difference by the
standby mode power usage at each efficiency level to determine annual
standby mode and off mode energy consumption.
---------------------------------------------------------------------------

\24\ Uniform Test Method for Measuring the Energy Consumption of
Cooking Products. 10 CFR part 430, subpart B, appendix I,
<a href="http://www.law.cornell.edu/cfr/text/10/appendix-I_to_subpart_B_of_part_430">www.law.cornell.edu/cfr/text/10/appendix-I_to_subpart_B_of_part_430</a>.
\25\ Williams, et al. 2012. Surveys of Microwave Ovens in U.S.
Homes. LBNL-5947E <a href="http://www.osti.gov/biblio/1172657">www.osti.gov/biblio/1172657</a>.
\26\ U.S. Department of Energy-Energy Information
Administration, Residential Energy Consumption Survey, 2020 Public
Use Microdata Files, 2015. Washington, DC. Available online at:
<a href="http://www.eia.doe.gov/emeu/recs/recspubuse20/pubuse20.html">www.eia.doe.gov/emeu/recs/recspubuse20/pubuse20.html</a>.
---------------------------------------------------------------------------

Chapter 7 of the final rule TSD provides details on DOE's energy
use analysis for microwave ovens.

F. Life-Cycle Cost and Payback Period Analysis

DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of potential energy conservation standards for
microwave ovens. The effect of new or amended energy conservation
standards on individual consumers usually involves a reduction in
operating cost and an increase in purchase cost. DOE used the following
two metrics to measure consumer impacts:
<bullet> The LCC is the total consumer expense of an appliance or
product over the life of that product, consisting of

[[Page 39929]]

total installed cost (manufacturer selling price, distribution chain
markups, sales tax, and installation costs) plus operating costs
(expenses for energy use, maintenance, and repair). To compute the
operating costs, DOE discounts future operating costs to the time of
purchase and sums them over the lifetime of the product.
<bullet> The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
at higher efficiency levels by the change in annual operating cost for
the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC
relative to the LCC in the no-new-standards case, which reflects the
estimated efficiency distribution of microwave ovens in the absence of
new or amended energy conservation standards. In contrast, the PBP for
a given efficiency level is measured relative to the baseline product.
For each considered efficiency level in each product class, DOE
calculated the LCC and PBP for a nationally representative set of
housing units. As stated previously, DOE developed household samples
from the RECS 2020. For each sample household, DOE determined the
energy consumption for the microwave ovens and the appropriate energy
price. By developing a representative sample of households, the
analysis captured the variability in energy consumption and energy
prices associated with the use of microwave ovens.
Inputs to the calculation of total installed cost include the cost
of the product--which includes MPCs, manufacturer markups, retailer and
distributor markups, and sales taxes--and installation costs. Inputs to
the calculation of operating expenses include annual energy
consumption, energy prices and price projections, repair and
maintenance costs, product lifetimes, and discount rates. DOE created
distributions of values for product lifetime, discount rates, and sales
taxes, with probabilities attached to each value, to account for their
uncertainty and variability.
The computer model DOE uses to calculate the LCC relies on a Monte
Carlo simulation to incorporate uncertainty and variability into the
analysis. The Monte Carlo simulations randomly sample input values from
the probability distributions and microwave ovens user samples. For
this rulemaking, the Monte Carlo approach is implemented in MS Excel
together with the Crystal BallTM add-on.\27\ The model
calculated the LCC for products at each efficiency level for 10,000
housing units per simulation run. The analytical results include a
distribution of 10,000 data points showing the range of LCC savings for
a given efficiency level relative to the no-new-standards case
efficiency distribution. In performing an iteration of the Monte Carlo
simulation for a given consumer, product efficiency is chosen based on
its probability. If the chosen product efficiency is greater than or
equal to the efficiency of the standard level under consideration, the
LCC calculation reveals that a consumer is not impacted by the standard
level. By accounting for consumers who already purchase more-efficient
products, DOE avoids overstating the potential benefits from increasing
product efficiency. DOE calculated the LCC and PBP for consumers of
microwave ovens as if each were to purchase a new product in the first
year of required compliance with new or amended standards. Amended
standards apply to microwave ovens manufactured 3 years after the date
on which any new or amended standard is published. (42 U.S.C.
6295(g)(10)(B)) Therefore, DOE used 2026 as the first year of
compliance with any amended standards for microwave ovens.
---------------------------------------------------------------------------

\27\ Crystal BallTM is a commercially-available
software tool to facilitate the creation of these types of models by
generating probability distributions and summarizing results within
Excel, available at <a href="http://www.oracle.com/technetwork/middleware/crystalball/overview/index.html">www.oracle.com/technetwork/middleware/crystalball/overview/index.html</a> (last accessed December 13, 2022).
---------------------------------------------------------------------------

Table IV.5 summarizes the approach and data DOE used to derive
inputs to the LCC and PBP calculations. The subsections that follow
provide further discussion. Details of the spreadsheet model, and of
all the inputs to the LCC and PBP analyses, are contained in chapter 8
of the final rule TSD and its appendices.

Table IV.5--Summary of Inputs and Methods for the LCC and PBP Analysis *
------------------------------------------------------------------------
Inputs Source/method
------------------------------------------------------------------------
Product Cost........................... Derived by multiplying MPCs by
manufacturer and retailer
markups and sales tax, as
appropriate. Used historical
data to derive a price scaling
index to project product
costs.
Installation Costs..................... Assumed no change with
efficiency level.
Annual Energy Use...................... The total annual energy use
multiplied by the hours per
year. Average number of hours
based on field data.
Variability: Based on the RECS
2020.
Energy Prices.......................... Electricity: Based on EEI 2021.
Variability: Regional energy
prices determined for nine
regions.
Energy Price Trends.................... Based on AEO2022 price
projections.
Repair and Maintenance Costs........... Assumed no change with
efficiency level.
Product Lifetime....................... Average: 10.78 years.
Discount Rates......................... Approach involves identifying
all possible debt or asset
classes that might be used to
purchase the considered
appliances, or might be
affected indirectly. Primary
data source was the Federal
Reserve Board's Survey of
Consumer Finances.
Compliance Date........................ 2026.
------------------------------------------------------------------------
* Not used for PBP calculation. References for the data sources
mentioned in this table are provided in the sections following the
table or in chapter 8 of the final rule TSD.

1. Product Cost
To calculate consumer product costs, DOE multiplied the MPCs
developed in the engineering analysis by the markups described
previously (along with sales taxes). DOE used different markups for
baseline products and higher-efficiency products, because DOE applies
an incremental markup to the increase in MSP associated with higher-
efficiency products.
Economic literature and historical data suggest that the real costs
of many products may trend downward over time according to ``learning''
or ``experience'' curves. An experience curve analysis implicitly
includes factors such as efficiencies in labor, capital investment,
automation, materials prices, distribution, and economies of scale at
an industry-wide level. To derive the learning rate parameter for
microwave ovens, DOE obtained historical Producer Price Index (``PPI'')
data for microwave ovens from the Bureau of Labor Statistics (``BLS'').
A PPI for ``Household Cooking Appliance Manufacturing: Electric
(Including Microwave) Household Ranges, Ovens, Surface Cooking Units,

[[Page 39930]]

and Equipment'' was available for the time period between 1972 and
2020.\28\ Inflation-adjusted price indices were calculated by dividing
the PPI series by the gross domestic product index from the Bureau of
Economic Analysis for the same years. Using data from 1972-2020, the
estimated learning rate (defined as the fractional reduction in price
expected from each doubling of cumulative production) is 10.7 percent.
---------------------------------------------------------------------------

\28\ U.S. Bureau of Labor Statistics, PPI Industry Data, Major
household appliance manufacturers, Product series ID: PCU
33522033522011. Data series available at: <a href="http://www.bls.gov/ppi/">www.bls.gov/ppi/</a>.
---------------------------------------------------------------------------

2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous
materials and parts needed to install the product. DOE used data from
2022 to estimate the baseline installation cost for microwave ovens.
DOE found no evidence that installation costs would be impacted with
increased efficiency levels.
3. Annual Energy Consumption
For each sampled household, DOE determined the energy consumption
for a microwave oven at different efficiency levels using the approach
described previously in section IV.E of this document.
4. Energy Prices
Because marginal electricity price more accurately captures the
incremental savings associated with a change in energy use from higher
efficiency, it provides a better representation of incremental change
in consumer costs than average electricity prices. Therefore, DOE
applied average electricity prices for the energy use of the product
purchased in the no-new-standards case, and marginal electricity prices
for the incremental change in energy use associated with the other
efficiency levels considered.
DOE derived electricity prices in 2022 using data from Edison
Electric Institute (``EEI'') Typical Bills and Average Rates
reports.\29\ Based upon comprehensive, industry-wide surveys, this
semi-annual report presents typical monthly electric bills and average
kilowatt-hour costs to the customer as charged by investor-owned
utilities. For the residential sector, DOE calculated electricity
prices using the methodology described in Coughlin and Beraki
(2018).\30\ For the commercial sector, DOE calculated electricity
prices using the methodology described in Coughlin and Beraki
(2019).\31\
---------------------------------------------------------------------------

\29\ Edison Electric Institute. Typical Bills and Average Rates
Report. 2020. Winter 2020, Summer 2020: Washington, DC
\30\ Coughlin, K. and B. Beraki.2018. Residential Electricity
Prices: A Review of Data Sources and Estimation Methods. Lawrence
Berkeley National Lab. Berkeley, CA. Report No. LBNL-2001169.
<a href="http://ees.lbl.gov/publications/residential-electricity-prices-review">ees.lbl.gov/publications/residential-electricity-prices-review</a>.
\31\ Coughlin, K. and B. Beraki. 2019. Non-residential
Electricity Prices: A Review of Data Sources and Estimation Methods.
Lawrence Berkeley National Lab. Berkeley, CA. Report No. LBNL-
2001203. <a href="http://ees.lbl.gov/publications/non-residential-electricity-prices">ees.lbl.gov/publications/non-residential-electricity-prices</a>.
---------------------------------------------------------------------------

DOE's methodology allows electricity prices to vary by sector,
region, and season. In the analysis, variability in electricity prices
is chosen to be consistent with the way the consumer economic and
energy use characteristics are defined in the LCC analysis. For
microwave ovens, DOE derived electricity prices in 2022 using data from
EEI. DOE used the EEI data to define a marginal price as the ratio of
the change in the bill to the change in energy consumption. See chapter
8 of the final rule TSD for details.
To estimate energy prices in future years, DOE multiplied the 2020
energy prices by the projection of annual average price changes for
each of the nine census divisions from the Reference case in AEO2022,
which has an end year of 2050.\32\ To estimate price trends after 2050,
the 2046-2050 average was used for all subsequent years.
---------------------------------------------------------------------------

\32\ U.S. Department of Energy--Energy Information
Administration. Annual Energy Outlook 2018 with Projections to 2050.
Washington, DC. Available at <a href="http://www.eia.gov/forecasts/aeo/">www.eia.gov/forecasts/aeo/</a> (last
accessed December 13, 2022).
---------------------------------------------------------------------------

5. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing product
components that have failed in an appliance; maintenance costs are
associated with maintaining the operation of the product. Typically,
small incremental increases in product efficiency entail no, or only
minor, changes in repair and maintenance costs compared to baseline
efficiency products. In this final rule analysis, DOE included no
changes in maintenance or repair costs for microwave ovens that exceed
baseline efficiency.
6. Product Lifetime
For microwave ovens, DOE developed a distribution of lifetimes from
which specific values are assigned to the appliances in the samples.
DOE conducted an analysis of actual lifetime in the field using a
combination of historical shipments data, the stock of the considered
appliances in the American Housing Survey, and responses in RECS on the
age of the appliances in the homes. The data allowed DOE to estimate a
survival function, which provides an average appliance lifetime. This
analysis yielded a lifetime probability distribution with an average
lifetime for microwave ovens of approximately 10.78 years. See chapter
8 of the final rule TSD for further details.
7. Discount Rates
In the calculation of LCC, DOE applies discount rates appropriate
to households to estimate the present value of future operating cost
savings. DOE estimated a distribution of discount rates for microwave
ovens based on the opportunity cost of consumer funds.
DOE applies weighted average discount rates calculated from
consumer debt and asset data, rather than marginal or implicit discount
rates.\33\ The LCC analysis estimates net present value over the
lifetime of the product, so the appropriate discount rate will reflect
the general opportunity cost of household funds, taking this time scale
into account. Given the long time horizon modeled in the LCC, the
application of a marginal interest rate associated with an initial
source of funds is inaccurate. Regardless of the method of purchase,
consumers are expected to continue to rebalance their debt and asset
holdings over the LCC analysis period, based on the restrictions
consumers face in their debt payment requirements and the relative size
of the interest rates available on debts and assets. DOE estimates the
aggregate impact of this rebalancing using the historical distribution
of debts and assets.
---------------------------------------------------------------------------

\33\ The implicit discount rate is inferred from a consumer
purchase decision between two otherwise identical goods with
different first cost and operating cost. It is the interest rate
that equates the increment of first cost to the difference in net
present value of lifetime operating cost, incorporating the
influence of several factors: transaction costs; risk premiums and
response to uncertainty; time preferences; and interest rates at
which a consumer is able to borrow or lend. The implicit discount
rate is not appropriate for the LCC analysis because it reflects a
range of factors that influence consumer purchase decisions, rather
than the opportunity cost of the funds that are used in purchases.
---------------------------------------------------------------------------

To establish residential discount rates for the LCC analysis, DOE
identified all relevant household debt or asset classes in order to
approximate a consumer's opportunity cost of funds related to appliance
energy cost savings. It estimated the average percentage shares of the
various types of debt and equity by household income group using data
from the Federal Reserve Board's triennial Survey of Consumer

[[Page 39931]]

Finances \34\ (``SCF'') starting in 1995 and ending in 2019. Using the
SCF and other sources, DOE developed a distribution of rates for each
type of debt and asset by income group to represent the rates that may
apply in the year in which amended standards would take effect. DOE
assigned each sample household a specific discount rate drawn from one
of the distributions. The average rate across all types of household
debt and equity and income groups, weighted by the shares of each type,
is 4.3 percent. See chapter 8 of the final rule TSD for further details
on the development of consumer discount rates.
---------------------------------------------------------------------------

\34\ U.S. Board of Governors of the Federal Reserve System.
Survey of Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010,
2013, 2016, and 2019. Available at <a href="http://www.Federalreserve.gov/econresdata/scf/scfindex.htm">www.Federalreserve.gov/econresdata/scf/scfindex.htm</a> (last accessed December 13, 2022).
---------------------------------------------------------------------------

8. Energy Efficiency Distribution in the No-New-Standards Case
To accurately estimate the share of consumers that would be
affected by a potential energy conservation standard at a particular
efficiency level, DOE's LCC analysis considered the projected
distribution (market shares) of product efficiencies under the no-new-
standards case (i.e., the case without amended or new energy
conservation standards).
To estimate the energy efficiency distribution of microwave ovens
for 2026, DOE used data from the engineering analysis. The estimated
market shares for the no-new-standards case for microwave ovens are
shown in Table IV.6. See chapter 8 of the final rule TSD for further
information on the derivation of the efficiency distributions.

Table IV.6--No-New-Standards Case Efficiency Distribution for Microwave Ovens in 2026
----------------------------------------------------------------------------------------------------------------
Product class 1: microwave- Product class 2: built-in and
only and countertop convection over-the- range convection
microwave ovens microwave ovens
TSL ---------------------------------------------------------------
Standby power Market share Standby power Market share
(W) (%) (W) (%)
----------------------------------------------------------------------------------------------------------------
Baseline........................................ 1.00 15 2.20 0
1............................................... 0.8 45 1.5 36
2............................................... 0.6 29 1.0 59
3............................................... 0.4 11 0.5 5
----------------------------------------------------------------------------------------------------------------

In response to the August 2023 SNOPR, AHAM stated that the CCD is
not an accurate determination of efficiency distributions. (AHAM, No.
28 at p. 10) DOE agrees that shipment-weighted efficiency distributions
would be preferable to shares based on model counts, but such data were
not available for microwave ovens, and there is no firm basis to make
an adjustment to the model count market shares. DOE's approach may well
overstate the market share of higher-efficiency products in the absence
of new standards, but this would mean that the energy and economic
benefits estimated by DOE for new standards are minimum amounts. The
justification for the adopted standards would be even stronger if DOE
were able to use actual shipment data for the model counts.
The LCC Monte Carlo simulations draw from the efficiency
distributions and randomly assign an efficiency to the microwave oven
purchased by each sample household in the no-new-standards case. The
resulting percent shares within the sample match the market shares in
the efficiency distributions.
9. Payback Period Analysis
The payback period is the amount of time (expressed in years) it
takes the consumer to recover the additional installed cost of more-
efficient products, compared to baseline products, through energy cost
savings. Payback periods that exceed the life of the product mean that
the increased total installed cost is not recovered in reduced
operating expenses.
The inputs to the PBP calculation for each efficiency level are the
change in total installed cost of the product and the change in the
first-year annual operating expenditures relative to the baseline. DOE
refers to this as a ``simple PBP'' because it does not consider changes
over time in operating cost savings. The PBP calculation uses the same
inputs as the LCC analysis when deriving first-year operating costs.
As noted previously, EPCA establishes a rebuttable presumption that
a standard is economically justified if the Secretary finds that the
additional cost to the consumer of purchasing a product complying with
an energy conservation standard level will be less than three times the
value of the first year's energy savings resulting from the standard,
as calculated under the applicable test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE
determined the value of the first year's energy savings by calculating
the energy savings in accordance with the applicable DOE test
procedure, and multiplying those savings by the average energy price
projection for the year in which compliance with the amended standards
would be required.

G. Shipments Analysis

DOE uses projections of annual product shipments to calculate the
national impacts of potential amended or new energy conservation
standards on energy use, NPV, and future manufacturer cash flows.\35\
The shipments model takes an accounting approach, tracking market
shares of each product class and the vintage of units in the stock.
Stock accounting uses product shipments as inputs to estimate the age
distribution of in-service product stocks for all years. The age
distribution of in-service product stocks is a key input to
calculations of both the NES and NPV, because operating costs for any
year depend on the age distribution of the stock.
---------------------------------------------------------------------------

\35\ DOE uses data on manufacturer shipments as a proxy for
national sales, as aggregate data on sales are lacking. In general,
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------

Total shipments for microwave ovens are developed by considering
the demand from replacements for units in stock that fail and the
demand from new installations in newly constructed homes. DOE
calculated shipments due to replacements using the retirement function
developed for the LCC analysis and historical data from AHAM. DOE
calculated shipments due to new installations using estimates from the
microwave oven saturation rate in new homes in RECS 2020 and
projections of new housing starts from AEO2022. See

[[Page 39932]]

chapter 9 of the final rule TSD for details.
For this final rule analysis, DOE used data from a market research
report and estimated the market share for built-in and over-the-range
convection microwave ovens at 4 percent.\36\
---------------------------------------------------------------------------

\36\ Euromonitor International. 2021. Air treatment products in
the U.S. December.
---------------------------------------------------------------------------

DOE considers the impacts on shipments from changes in product
purchase price and operating cost associated with higher energy
efficiency levels using a price elasticity and an efficiency
elasticity. DOE employs a 0.2-percent efficiency elasticity rate and a
price elasticity of -0.45 in its shipments model.\37\ The market impact
is defined as the difference between the product of price elasticity of
demand and the change in price due to a standard level, and the product
of the efficiency elasticity and the change in operating costs due to a
standard level.
---------------------------------------------------------------------------

\37\ Fujita, K. (2015) Estimating Price Elasticity using Market-
Level Appliance Data. Lawrence Berkeley National Laboratory, LBNL-
188289.
---------------------------------------------------------------------------

H. National Impact Analysis

The NIA assesses the NES and the NPV from a national perspective of
total consumer costs and savings that would be expected to result from
new or amended standards at specific efficiency levels.\38\
(``Consumer'' in this context refers to consumers of the product being
regulated.) DOE calculates the NES and NPV for the potential standard
levels considered based on projections of annual product shipments,
along with the annual energy consumption and total installed cost data
from the energy use and LCC analyses. For the present analysis, DOE
projected the energy savings, operating cost savings, product costs,
and NPV of consumer benefits over the lifetime of microwave ovens sold
from 2026 through 2055.
---------------------------------------------------------------------------

\38\ The NIA accounts for impacts in the 50 states.
---------------------------------------------------------------------------

DOE evaluates the impacts of new or amended standards by comparing
a case without such standards with standards-case projections. The no-
new-standards case characterizes energy use and consumer costs for each
product class in the absence of new or amended energy conservation
standards. For this projection, DOE considers historical trends in
efficiency and various forces that are likely to affect the mix of
efficiencies over time. DOE compares the no-new-standards case with
projections characterizing the market for each product class if DOE
adopted new or amended standards at specific energy efficiency levels
(i.e., the TSLs or standards cases) for that class. For the standards
cases, DOE considers how a given standard would likely affect the
market shares of products with efficiencies greater than the standard.
DOE uses a spreadsheet model to calculate the energy savings and
the national consumer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values
(as opposed to probability distributions) as inputs.
Table IV.7 summarizes the inputs and methods DOE used for the NIA
analysis for the final rule. Discussion of these inputs and methods
follows the table. See chapter 10 of the final rule TSD for further
details.

Table IV.7--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments.................... Annual shipments from shipments model.
Compliance Date of Standard.. 2026.
Efficiency Trends............ Standards cases: ``Roll up'' equipment to
meet potential efficiency level.
Annual Energy Consumption per Annual weighted-average values are a
Unit. function of energy use at each TSL.
Total Installed Cost per Unit Annual weighted-average values are a
function of cost at each TSL.
Annual Energy Cost per Unit.. Annual weighted-average values as a
function of the annual energy
consumption per unit and energy prices.
Repair and Maintenance Cost Annual values do not change with
per Unit. efficiency level.
Energy Price Trends.......... AEO2022 projections (to 2050) and
extrapolation thereafter.
Energy Site-to-Primary and A time-series conversion factor based on
FFC Conversion. AEO2022.
Discount Rate................ Three and seven percent.
Present Year................. 2023.
------------------------------------------------------------------------

1. Product Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.F.8 of this document describes how DOE developed an
energy efficiency distribution for the no-new-standards case (which
yields a shipment-weighted average efficiency) for each of the
considered product classes for the year of anticipated compliance with
an amended or new standard. To project the trend in efficiency absent
amended standards for microwave ovens over the entire shipments
projection period, DOE used the shipments-weighted standby power
(``SWSP'') as a starting point. DOE assumed that the shipment-weighted
efficiency would not increase annually for the microwave oven product
classes. The approach is further described in chapter 10 of the final
rule TSD.
For the standards cases, DOE used a ``roll-up'' scenario to
establish the shipment-weighted efficiency for the year that standards
are assumed to become effective (2026). In this scenario, the market
shares of products in the no-new-standards case that do not meet the
standard under consideration would ``roll up'' to meet the new standard
level, and the market share of products above the standard would remain
unchanged.
2. National Energy Savings
The national energy savings analysis involves a comparison of
national energy consumption of the considered products between each TSL
and the case with no new or amended energy conservation standards. DOE
calculated the national energy consumption by multiplying the number of
units (stock) of each product (by vintage or age) by the unit energy
consumption (also by vintage). DOE calculated annual NES based on the
difference in national energy consumption for the no-new-standards case
and for each higher efficiency standard case. DOE estimated energy
consumption and savings based on site energy and converted the
electricity consumption and savings to primary energy (i.e., the energy
consumed by power plants to generate site electricity) using annual
conversion factors derived from AEO2022.

[[Page 39933]]

Cumulative energy savings are the sum of the NES for each year over the
timeframe of the analysis.
Use of higher-efficiency products is sometimes associated with a
direct rebound effect, which refers to an increase in utilization of
the product due to the increase in efficiency. DOE did not find any
data on the rebound effect specific to microwave ovens; therefore, no
rebound was applied.
In 2011, in response to the recommendations of a committee on
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy
Efficiency Standards'' appointed by the National Academy of Sciences,
DOE announced its intention to use FFC measures of energy use and
greenhouse gas and other emissions in the national impact analyses and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the
approaches discussed in the August 18, 2011 notice, DOE published a
statement of amended policy in which DOE explained its determination
that EIA's National Energy Modeling System (``NEMS'') is the most
appropriate tool for its FFC analysis and its intention to use NEMS for
that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain,
multi-sector, partial equilibrium model of the U.S. energy sector \39\
that EIA uses to prepare its Annual Energy Outlook. The FFC factors
incorporate losses in production and delivery in the case of natural
gas (including fugitive emissions) and additional energy used to
produce and deliver the various fuels used by power plants. The
approach used for deriving FFC measures of energy use and emissions is
described in appendix 10B of the final rule TSD.
---------------------------------------------------------------------------

\39\ For more information on NEMS, refer to The National Energy
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009.
Available at <a href="http://www.eia.gov/forecasts/aeo/index.cfm">www.eia.gov/forecasts/aeo/index.cfm</a> (last accessed
December 13, 2022).
---------------------------------------------------------------------------

3. Net Present Value Analysis
The inputs for determining the NPV of the total costs and benefits
experienced by consumers are (1) total annual installed cost, (2) total
annual operating costs (energy costs and repair and maintenance costs),
and (3) a discount factor to calculate the present value of costs and
savings. DOE calculates net savings each year as the difference between
the no-new-standards case and each standards case in terms of total
savings in operating costs versus total increases in installed costs.
DOE calculates operating cost savings over the lifetime of each product
shipped during the projection period.
As discussed in section IV.F.1 of this document, DOE developed
microwave oven price trends based on historical PPI data. DOE applied
the same trends to project prices for each product class at each
considered efficiency level. By 2055, which is the end date of the
projection period, the average microwave oven price is projected to
drop 11 percent relative to 2021. DOE's projection of product prices is
described in appendix 10C of the final rule TSD.
To evaluate the effect of uncertainty regarding the price trend
estimates, DOE investigated the impact of different product price
projections on the consumer NPV for the considered TSLs for microwave
ovens. In addition to the default price trend, DOE considered two
product price sensitivity cases: (1) a high price decline case based on
``electric household cooking products'' PPI series from 1993 to 2021
and (2) a low price decline case based on the same PPI series from 1972
to 1992. The derivation of these price trends and the results of these
sensitivity cases are described in appendix 10C of the final rule TSD.
The energy cost savings are calculated using the estimated energy
savings in each year and the projected price of the appropriate form of
energy. To estimate energy prices in future years, DOE multiplied the
average regional energy prices by the projection of annual national-
average residential energy price changes in the Reference case from
AEO2022, which has an end year of 2050. To estimate price trends after
2050, the 2046-2050 average was used for all years. As part of the NIA,
DOE also analyzed scenarios that used inputs from variants of the
AEO2022 Reference case that have lower and higher economic growth.
Those cases have lower and higher energy price trends compared to the
Reference case. NIA results based on these cases are presented in
appendix 10C of the final rule TSD.
In considering the consumer welfare gained due to the direct
rebound effect, DOE accounted for change in consumer surplus attributed
to additional cooling from the purchase of a more efficient unit.
Overall consumer welfare is generally understood to be enhanced from
rebound. The net consumer impact of the rebound effect is included in
the calculation of operating cost savings in the consumer NPV results.
See appendix 10F of the final rule TSD for details on DOE's treatment
of the monetary valuation of the rebound effect.
In calculating the NPV, DOE multiplies the net savings in future
years by a discount factor to determine their present value. For this
final rule, DOE estimated the NPV of consumer benefits using both a 3-
percent and a 7-percent real discount rate. DOE uses these discount
rates in accordance with guidance provided by the Office of Management
and Budget (``OMB'') to Federal agencies on the development of
regulatory analysis.\40\ The discount rates for the determination of
NPV are in contrast to the discount rates used in the LCC analysis,
which are designed to reflect a consumer's perspective. The 7-percent
real value is an estimate of the average before-tax rate of return to
private capital in the U.S. economy. The 3-percent real value
represents the ``social rate of time preference,'' which is the rate at
which society discounts future consumption flows to their present
value.
---------------------------------------------------------------------------

\40\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at
<a href="http://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/">obamawhitehouse.archives.gov/omb/circulars_a004_a-4/</a> (last accessed
December 13, 2022).
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

In analyzing the potential impact of new or amended energy
conservation standards on consumers, DOE evaluates the impact on
identifiable subgroups of consumers that may be disproportionately
affected by a new or amended national standard. The purpose of a
subgroup analysis is to determine the extent of any such
disproportional impacts. DOE evaluates impacts on particular subgroups
of consumers by analyzing the LCC impacts and PBP for those particular
consumers from alternative standard levels. For this final rule, DOE
analyzed the impacts of the considered standard levels on two
subgroups: (1) low-income households and (2) senior-only households.
The analysis used subsets of the RECS 2020 sample composed of
households that meet the criteria for the considered subgroups. DOE
used the LCC and PBP spreadsheet model to estimate the impacts of the
considered efficiency levels on these subgroups. Chapter 11 of the
final rule TSD describes the consumer subgroup analysis.

J. Manufacturer Impact Analysis

1. Overview
DOE performed an MIA to estimate the financial impacts of amended
energy conservation standards on manufacturers of microwave ovens and
to estimate the potential impacts of such standards on employment and
manufacturing capacity. The MIA has both quantitative and qualitative
aspects and includes analyses of projected

[[Page 39934]]

industry cash flows, the INPV, investments in research and development
(``R&D'') and manufacturing capital, and domestic manufacturing
employment. Additionally, the MIA seeks to determine how amended energy
conservation standards might affect manufacturing employment, capacity,
and competition, as well as how standards contribute to overall
regulatory burden. Finally, the MIA serves to identify any
disproportionate impacts on manufacturer subgroups, including small
business manufacturers.
The quantitative part of the MIA primarily relies on the Government
Regulatory Impact Model (``GRIM''), an industry cash flow model with
inputs specific to this rulemaking. The key GRIM inputs include data on
the industry cost structure, unit production costs, product shipments,
manufacturer markups, and investments in R&D and manufacturing capital
required to produce compliant products. The key GRIM outputs are the
INPV, which is the sum of industry annual cash flows over the analysis
period, discounted using the industry-weighted average cost of capital,
and the impact to domestic manufacturing employment. The model uses
standard accounting principles to estimate the impacts of more-
stringent energy conservation standards on a given industry by
comparing changes in INPV and domestic manufacturing employment between
a no-new-standards case and the various standards cases (TSLs). To
capture the uncertainty relating to manufacturer pricing strategies
following amended standards, the GRIM estimates a range of possible
impacts under different markup scenarios.
The qualitative part of the MIA addresses manufacturer
characteristics and market trends. Specifically, the MIA considers such
factors as a potential standard's impact on manufacturing capacity,
competition within the industry, the cumulative impact of other DOE and
non-DOE regulations, and impacts on manufacturer subgroups. The
complete MIA is outlined in chapter 12 of the final rule TSD.
DOE prepared a profile of the microwave oven manufacturing industry
based on the market and technology assessment, current information from
DOE's CCD, and information from the June 2013 Final Rule. (78 FR 36316)
This included a top-down analysis of microwave oven manufacturers that
DOE used to derive preliminary financial inputs for the GRIM (e.g.,
revenues; materials, labor, overhead, and depreciation expenses; SG&A
expenses; and R&D expenses).
Additionally, DOE prepared a framework industry cash-flow analysis
to quantify the potential impacts of amended energy conservation
standards. The GRIM uses several factors to determine a series of
annual cash flows starting with the announcement of the standard and
extending over a 30-year period following the compliance date of the
standard. These factors include annual expected revenues, costs of
sales, SG&A and R&D expenses, taxes, and capital expenditures. In
general, energy conservation standards can affect manufacturer cash
flow in three distinct ways: (1) creating a need for increased
investment, (2) raising production costs per unit, and (3) altering
revenue due to higher per-unit prices and changes in sales volumes.
DOE also evaluated subgroups of manufacturers that may be
disproportionately impacted by amended standards or that may not be
accurately represented by the average cost assumptions used to develop
the industry cash flow analysis. Such manufacturer subgroups may
include small business manufacturers, low-volume manufacturers, niche
players, and/or manufacturers exhibiting a cost structure that largely
differs from the industry average. DOE identified one subgroup for a
separate impact analysis: small business manufacturers. The small
business subgroup is discussed in section VI.B of this document,
``Review under the Regulatory Flexibility Act'' and in chapter 12 of
the final rule TSD.
2. Government Regulatory Impact Model and Key Inputs
DOE uses the GRIM to quantify the changes in cash flow due to
amended standards that result in a higher or lower industry value. The
GRIM uses a standard, annual discounted cash-flow analysis that
incorporates manufacturer costs, markups, shipments, and industry
financial information as inputs. The GRIM models changes in costs,
distribution of shipments, investments, and manufacturer margins that
could result from amended energy conservation standards. The GRIM
spreadsheet uses the inputs to arrive at a series of annual cash flows,
beginning in 2023 (the base year of the analysis) and continuing to
2055. DOE calculated INPVs by summing the stream of annual discounted
cash flows during this period. For manufacturers of microwave ovens,
DOE used a real discount rate of 8.5 percent, which was the same real
discount rate used in the June 2013 Final Rule and that was verified
during manufacturer interviews for that rulemakings analysis.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between the no-new-standards case and each
standards case. The difference in INPV between the no-new-standards
case and a standards case represents the financial impact of the
amended energy conservation standards on manufacturers. As discussed
previously, DOE developed critical GRIM inputs using a number of
sources, including publicly available data, results of the engineering
analysis, and information used in the June 2013 Final Rule. The GRIM
results are presented in section V.B.2 of this document. Additional
details about the GRIM, the discount rate, and other financial
parameters can be found in chapter 12 of the final rule TSD.
a. Manufacturer Production Costs
Manufacturing more efficient products is typically more expensive
than manufacturing baseline products due to the use of more complex
components, which are typically more costly than baseline components.
The changes in the MPCs of covered products can affect the revenues,
gross margins, and cash flow of the industry. As previously stated in
the engineering analysis in section IV.C.3 of this document, DOE
estimated an incremental MPC of $0 at all efficiency levels, compared
to the baseline MPC. DOE did not make any changes to the MPCs from the
August 2022 SNOPR.
b. Shipments Projections
The GRIM estimates manufacturer revenues based on total unit
shipment projections and the distribution of those shipments by
efficiency level. Changes in sales volumes and efficiency mix over time
can significantly affect manufacturer finances. For this analysis, the
GRIM uses the NIA's annual shipment projections derived from the
shipments analysis from 2023 (the base year) to 2055 (the end year of
the analysis period). See chapter 9 of the final rule TSD for
additional details. DOE slightly updated the shipments analysis from
the August 2022 SNOPR.
c. Product and Capital Conversion Costs
Amended energy conservation standards could cause manufacturers to
incur conversion costs to bring their production facilities and product
designs into compliance. DOE evaluated the level of conversion-related
expenditures that would be needed to comply with each considered
efficiency level in each product class. For the MIA, DOE classified
these conversion costs into two major groups: (1) product

[[Page 39935]]

conversion costs and (2) capital conversion costs. Product conversion
costs are investments in research, development, testing, marketing, and
other non-capitalized costs necessary to make product designs comply
with amended energy conservation standards. Capital conversion costs
are investments in property, plant, and equipment necessary to adapt or
change existing production facilities such that new compliant product
designs can be fabricated and assembled.
DOE used a bottom-up cost estimate to arrive at a total industry
conversion cost at each efficiency level for both product classes.
First, DOE estimated the investments manufacturers are likely to incur
in redesigning a single microwave oven control board to be able to meet
the analyzed energy conservation standards. These per-board conversion
costs were based on manufacturer interviews and include both per-board
capital conversion costs (e.g., investments in machinery and tooling)
as well as product conversion costs (e.g., investments in R&D and
testing). Based on manufacturer feedback, DOE assigned a smaller level
of investment necessary to achieve lower efficiency levels and a larger
level of investment to achieve higher efficiency levels.
Next, based on engineering teardowns and market research, DOE
estimated the total number of unique control boards used across all
covered microwave ovens. DOE used the percentage of unique microwave
oven models for each product class that were certified in DOE's
publicly available CCD to estimate the number of unique control boards
for each product class. Then DOE used the efficiency distribution from
the shipments analysis to estimate the number, for each product class,
of unique control boards specific to each efficiency level. Once DOE
estimated the number of unique control boards, DOE used the per-board
redesign costs specific to achieve each analyzed efficiency level in
order to arrive at the total industry conversion costs.
DOE did not make any changes to the capital and product conversion
costs estimates used in the August 2022 SNOPR. In general, DOE assumes
all conversion-related investments occur between the year of
publication of the final rule and the year by which manufacturers must
comply with the amended standards. The conversion cost figures used in
the GRIM can be found in section V.B.2 of this document. See chapter 12
of the final rule TSD for additional information on the estimated
capital and product conversion costs.
d. Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials, and overhead estimated in DOE's MPCs) and all non-production
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate
the MSPs in the GRIM, DOE applied non-production cost markups to the
MPCs estimated in the engineering analysis for each product class and
efficiency level. Modifying these markups in the standards case yields
different sets of impacts on manufacturers. As in the August 2022
SNOPR, DOE used a manufacturer markup of 1.298 for both product classes
in the no-new-standards case. (87 FR 52282, 52296)
For the MIA, DOE modeled two standards-case markup scenarios to
represent uncertainty regarding the potential impacts on prices and
profitability for manufacturers following the implementation of amended
energy conservation standards: (1) a conversion cost recovery scenario;
and (2) a constant price scenario. These scenarios lead to different
manufacturer markup values at each TSL that, when applied to the MPCs,
result in varying revenue and cash flow impacts.
Under the conversion cost recovery scenario, DOE modeled a scenario
in which manufacturers increase their manufacturer markups in response
to amended energy conservation standards. Because DOE's engineering
analysis assumed there were no increases in the MPCs at higher
efficiency levels compared to the baseline MPCs, and that microwave
oven manufacturers would incur conversion costs to redesign non-
compliant models, DOE modeled a manufacturer markup scenario in which
microwave oven manufacturers attempt to recover these investments
through an increase in their manufacturer markup. Therefore, in the
standards cases, the manufacturer markup of models that would need to
be re-designed is a value larger than the 1.298 manufacturer markup
used in the no-new-standards case. DOE calibrated these manufacturer
markups for each product class at each efficiency level to cause
manufacturer INPV in the standards cases to be equal to the INPV in the
no-new-standards case. Because manufacturer markups used in this
scenario are calculated using the shipments analysis as inputs and the
shipments analysis was updated from the August 2022 SNOPR to this final
rule analysis, the calibrated manufacturer markups used in the
conversion cost recovery scenario for this final rule analysis are
slightly different than those values that were calculated in the August
2022 SNOPR. However, the methodology used to calculate these
manufacturer markup values are the same as those used in the August
2022 SNOPR.
The conversion cost recovery scenario represents the upper-bound of
manufacturer profitability, as microwave oven manufacturers are no
worse off, as measured by INPV, with energy conservation standards than
in the no-new-standards case (i.e., if DOE did not amend energy
conservation standards).
Under the constant price scenario, DOE applied the same
manufacturer markup, 1.298, for all efficiency levels in the no-new-
standards case and the standards cases. Because DOE's engineering
analysis assumed there were no increases in the MPCs at higher
efficiency levels and that microwave oven manufacturers would incur
conversion costs to redesign non-compliant models, microwave oven
manufacturers do not earn any additional revenue in the standards cases
than in the no-new-standards case, despite incurring conversion costs
to redesign non-compliant microwave oven models. The constant price
scenario represents the lower-bound of manufacturer profitability, as
microwave oven manufacturers incur conversion costs but do not receive
any additional revenue from these redesign efforts. The manufacturer
markups in the constant price scenario are the same as those used in
the August 2022 SNOPR.
A comparison of industry financial impacts under the two markup
scenarios is presented in section V.B.2.a of this document.
3. Discussion of MIA Comments
AHAM commented on the August 2022 SNOPR that DOE correctly decided
to incorporate conversion costs into the LCC analysis as part of the
August 2022 SNOPR. However, AHAM stated that DOE should amortize these
conversion costs over a 6-year period instead of amortizing these
conversion costs over a 30-year period, which is what was done in the
August 2022 SNOPR. (AHAM, No. 28 at p. 11)
In the SNOPR analysis, DOE used the GRIM to calculate a higher
manufacturer markup in the standards cases that results in an
equivalent manufacturer INPV in the standards cases compared to the no-
new-standards case. The conversion cost recovery scenario is the
manufacturer markup scenario incorporated into all downstream analyses,
including the LCC analysis, in the standards cases. In this scenario,
manufacturers make investments, both

[[Page 39936]]

in machinery and tooling (capital conversion costs) and in redesign and
testing (product conversion costs), prior to the compliance date of
energy conservation standards. After compliance with energy
conservation standards manufacturers increase their manufacturer
markup, thereby increasing revenue and free cash flow for the remainder
of the 30-year analysis period. Amortizing these conversion costs over
a 6-year period would create a scenario where manufacturer INPV
increases in all analyzed TSLs in the standards cases compared to the
no-new-standards case. DOE maintains that amortizing these conversion
costs over the 30-year analysis period reflects an accurate upper-bound
to industry profitability in the standards cases as manufacturers do
not lose INPV in the conversion cost recovery scenario in the standards
cases compared to the no-new-standards case.

K. Emissions Analysis

The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO<INF>2</INF>, NO<INF>X</INF>, SO<INF>2</INF>, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH<INF>4</INF> and
N<INF>2</INF>O, as well as the reductions in emissions of other gases
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion.
The analysis of electric power sector emissions of CO<INF>2</INF>,
NO<INF>X</INF>, SO<INF>2</INF>, and Hg uses emissions intended to
represent the marginal impacts of the change in electricity consumption
associated with amended or new standards. The methodology is based on
results published for the AEO, including a set of side cases that
implement a variety of efficiency-related policies. The methodology is
described in appendix 13A in the final rule TSD. The analysis presented
in this final rule uses projections from AEO2022. Power sector
emissions of CH<INF>4</INF> and N<INF>2</INF>O from fuel combustion are
estimated using Emission Factors for Greenhouse Gas Inventories
published by the Environmental Protection Agency (EPA).\41\
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\41\ Available at <a href="http://www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf">www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf</a> (last accessed December 13,
2022).
---------------------------------------------------------------------------

FFC upstream emissions, which include emissions from fuel
combustion during extraction, processing, and transportation of fuels,
and ``fugitive'' emissions (direct leakage to the atmosphere) of
CH<INF>4</INF> and CO<INF>2</INF>, are estimated based on the
methodology described in chapter 15 of the final rule TSD.
The emissions intensity factors are expressed in terms of physical
units per MWh or MMBtu of site energy savings. For power sector
emissions, specific emissions intensity factors are calculated by
sector and end use. Total emissions reductions are estimated using the
energy savings calculated in the national impact analysis.
1. Air Quality Regulations Incorporated in DOE's Analysis
DOE's no-new-standards case for the electric power sector reflects
the AEO, which incorporates the projected impacts of existing air
quality regulations on emissions. AEO2022 generally represents current
legislation and environmental regulations, including recent government
actions, that were in place at the time of preparation of AEO2022,
including the emissions control programs discussed in the following
paragraphs.\42\
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\42\ For further information, see the Assumptions to AEO2022
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook. Available at <a href="http://www.eia.gov/outlooks/aeo/assumptions/">www.eia.gov/outlooks/aeo/assumptions/</a> (last accessed December 13, 2022).
---------------------------------------------------------------------------

SO<INF>2</INF> emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO<INF>2</INF> for affected EGUs in the 48 contiguous States and
the District of Columbia (``DC''). (42 U.S.C. 7651 et seq.)
SO<INF>2</INF> emissions from numerous States in the eastern half of
the United States are also limited under the Cross-State Air Pollution
Rule (``CSAPR''). 76 FR 48208 (Aug. 8, 2011). CSAPR requires these
States to reduce certain emissions, including annual SO<INF>2</INF>
emissions, and went into effect as of January 1, 2015 and has been
subsequently updated.\43\ AEO2022 incorporates implementation of CSAPR,
including the Revised CSAPR Update issued in April 2021. 86 FR 23054.
Compliance with CSAPR is flexible among EGUs and is enforced through
the use of tradable emissions allowances. Under existing EPA
regulations, for States subject to SO<INF>2</INF> emissions limits
under CSAPR, any excess SO<INF>2</INF> emissions allowances resulting
from the lower electricity demand caused by the adoption of an
efficiency standard could be used to permit offsetting increases in
SO<INF>2</INF> emissions by another regulated EGU.
---------------------------------------------------------------------------

\43\ CSAPR requires States to address annual emissions of
SO<INF>2</INF> and NO<INF>X</INF>, precursors to the formation of
fine particulate matter (``PM<INF>2.5</INF>'') pollution, in order
to address the interstate transport of pollution with respect to the
1997 and 2006 PM<INF>2.5</INF> National Ambient Air Quality
Standards (``NAAQS''). CSAPR also requires certain States to address
the ozone season (May-September) emissions of NO<INF>X</INF>, a
precursor to the formation of ozone pollution, in order to address
the interstate transport of ozone pollution with respect to the 1997
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a
supplemental rule that included an additional five States in the
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011)
(Supplemental Rule). In 2021, EPA issued the Revised CSAPR Update
for the 2008 Ozone NAAQs (Revised CSAPR Update) promulgating EGU
NO<INF>X</INF> ozone season emission budgets for 12 states. 86 FR
23054, 23059 (Apr. 30, 2021).
---------------------------------------------------------------------------

Beginning in 2016, SO<INF>2</INF> emissions began to fall as a
result of the Mercury and Air Toxics Standards (``MATS'') for power
plants. 77 FR 9304 (Feb. 16, 2012). In the MATS final rule, EPA
established a standard for hydrogen chloride as a surrogate for acid
gas hazardous air pollutants (``HAP''), and also established a standard
for SO<INF>2</INF> (a non-HAP acid gas) as an alternative equivalent
surrogate standard for acid gas HAP. The same controls are used to
reduce HAP and non-HAP acid gas; thus, SO<INF>2</INF> emissions are
being reduced as a result of the control technologies installed on
coal-fired power plants to comply with the MATS requirements for acid
gas. Because of the emissions reductions under the MATS, it is unlikely
that excess SO<INF>2</INF> emissions allowances resulting from the
lower electricity demand would be needed or used to permit offsetting
increases in SO<INF>2</INF> emissions by another regulated EGU.
Therefore, energy conservation standards that decrease electricity
generation will generally reduce SO<INF>2</INF> emissions. DOE
estimated SO<INF>2</INF> emissions reduction using emissions factors
based on AEO2022.
CSAPR also established limits on NO<INF>X</INF> emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NO<INF>X</INF>
emissions in those States covered by CSAPR emissions limits if excess
NO<INF>X</INF> emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NO<INF>X</INF> emissions from other EGUs. In such cases, NO<INF>X</INF>
emissions would remain near the limit even if electricity generation
goes down. A different case could possibly result, depending on the
configuration of the power sector in the different regions and the need
for allowances, such that NO<INF>X</INF> emissions might not remain at
the limit in the case of lower electricity demand. In this case, energy
conservation standards might

[[Page 39937]]

reduce NO<INF>X</INF> emissions in covered States. Despite this
possibility, DOE has chosen to be conservative in its analysis and has
maintained the assumption that standards will not reduce NO<INF>X</INF>
emissions in States covered by CSAPR. Standards would be expected to
reduce NO<INF>X</INF> emissions in the States not covered by CSAPR. DOE
used AEO2022 data to derive NO<INF>X</INF> emissions factors for the
group of States not covered by CSAPR.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would be expected to slightly reduce Hg emissions. DOE
estimated mercury emissions reduction using emissions factors based on
AEO2022, which incorporates the MATS.

L. Monetizing Emissions Impacts

As part of the development of this final rule, for the purpose of
complying with the requirements of Executive Order 12866, DOE
considered the estimated monetary benefits from the reduced emissions
of CO<INF>2,</INF> CH<INF>4</INF>, N<INF>2</INF>O, NO<INF>X,</INF> and
SO<INF>2</INF> that are expected to result from each of the TSLs
considered. In order to make this calculation analogous to the
calculation of the NPV of consumer benefit, DOE considered the reduced
emissions expected to result over the lifetime of products shipped in
the projection period for each TSL. This section summarizes the basis
for the values used for monetizing the emissions benefits and presents
the values considered in this final rule.
On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the Federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of
the Fifth Circuit's order, the preliminary injunction is no longer in
effect, pending resolution of the Federal government's appeal of that
injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. As reflected in this rule, DOE has
reverted to its approach prior to the injunction and presents monetized
benefits where appropriate and permissible under law. DOE requests
comment on how to address the climate benefits and other non-monetized
effects of the proposal.
AHAM commented that DOE should not use the social cost of carbon
and other monetization of emissions reductions benefits in its analysis
of the factors EPCA requires DOE to balance to determine the
appropriate standard. AHAM commented that while it may be acceptable
for DOE to continue its current practice of examining the social cost
of carbon and monetization of other emissions reductions benefits as
informational so long as the underlying interagency analysis is
transparent and vigorous, the monetization analysis should not impact
the TSLs DOE selects as a new or amended standard. (AHAM, No. 28 at p.
13)
As stated in section III.F.1.f of this document, DOE maintains that
environmental and public health benefits associated with the more
efficient use of energy, including those connected to global climate
change, are important to take into account when considering the need
for national energy conservation, which is one of the factors that EPCA
requires DOE to evaluate in determining whether a potential energy
conservation standard is economically justified. See 42 U.S.C.
6295(o)(2)(B)(i)(VI). In addition, Executive Order 13563, which was re-
affirmed on January 21, 2021, stated that each agency must, among other
things: ``select, in choosing among alternative regulatory approaches,
those approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity).'' For these reasons, DOE
includes monetized emissions reductions in its evaluation of potential
standard levels. As previously stated, however, DOE would reach the
same conclusion presented in this final rulemaking in the absence of
the social cost of greenhouse gases.
1. Monetization of Greenhouse Gas Emissions
DOE estimates the monetized benefits of the reductions in emissions
of CO<INF>2</INF>, CH<INF>4</INF>, and N<INF>2</INF>O by using a
measure of the social cost of each pollutant (e.g., SC-CO<INF>2</INF>).
These estimates represent the monetary value of the net harm to society
associated with a marginal increase in emissions of these pollutants in
a given year, or the benefit of avoiding that increase. These estimates
are intended to include (but are not limited to) climate-change-related
changes in net agricultural productivity, human health, property
damages from increased flood risk, disruption of energy systems, risk
of conflict, environmental migration, and the value of ecosystem
services.
DOE exercises its own judgment in presenting monetized climate
benefits as recommended by applicable Executive orders, and DOE would
reach the same conclusion presented in this final rulemaking in the
absence of the social cost of greenhouse gases. That is, the social
costs of greenhouse gases, whether measured using the February 2021
interim estimates presented by the Interagency Working Group on the
Social Cost of Greenhouse Gases (IWG) or by another means, did not
affect the rule ultimately proposed by DOE.
DOE estimated the global social benefits of CO<INF>2</INF>,
CH<INF>4</INF>, and N<INF>2</INF>O reductions (i.e., SC-GHGs) using the
estimates presented in the Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990, published in February 2021 by the IWG. The SC-GHGs is the
monetary value of the net harm to society associated with a marginal
increase in emissions in a given year, or the benefit of avoiding that
increase. In principle, SC-GHGs includes the value of all climate

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