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Proposed Rule2023-16476

Energy Conservation Program: Energy Conservation Standards for Consumer Boilers

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Published

August 14, 2023

Issuing agencies

Energy Department

Abstract

The Energy Policy and Conservation Act, as amended (EPCA), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including consumer boilers. EPCA also requires the U.S. Department of Energy (DOE or the Department) to periodically determine whether more-stringent standards would be technologically feasible and economically justified and would result in significant energy savings. In this notice of proposed rulemaking (NOPR), DOE proposes amended energy conservation standards for consumer boilers, and also announces a public meeting to receive comment on these proposed standards and associated analyses and results.

Full Text

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<title>Federal Register, Volume 88 Issue 155 (Monday, August 14, 2023)</title>
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[Federal Register Volume 88, Number 155 (Monday, August 14, 2023)]
[Proposed Rules]
[Pages 55128-55217]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-16476]

[[Page 55127]]

Vol. 88

Monday,

No. 155

August 14, 2023

Part II

Department of Energy

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10 CFR Part 430

Energy Conservation Program: Energy Conservation Standards for Consumer
Boilers; Proposed Rule

Federal Register / Vol. 88 , No. 155 / Monday, August 14, 2023 /
Proposed Rules

[[Page 55128]]

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DEPARTMENT OF ENERGY

10 CFR Part 430

[EERE-2019-BT-STD-0036]
RIN 1904-AE82

Energy Conservation Program: Energy Conservation Standards for
Consumer Boilers

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

ACTION: Notice of proposed rulemaking and announcement of public
meeting.

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SUMMARY: The Energy Policy and Conservation Act, as amended (EPCA),
prescribes energy conservation standards for various consumer products
and certain commercial and industrial equipment, including consumer
boilers. EPCA also requires the U.S. Department of Energy (DOE or the
Department) to periodically determine whether more-stringent standards
would be technologically feasible and economically justified and would
result in significant energy savings. In this notice of proposed
rulemaking (NOPR), DOE proposes amended energy conservation standards
for consumer boilers, and also announces a public meeting to receive
comment on these proposed standards and associated analyses and
results.

DATES:
Comments: DOE will accept comments, data, and information regarding
this NOPR no later than October 13, 2023.
Meeting: DOE will hold a public meeting via webinar on Tuesday,
September 12, 2023 from 1:00 p.m. to 4:00 p.m. See section VII,
``Public Participation,'' for webinar registration information,
participant instructions and information about the capabilities
available to webinar participants.
Comments regarding the likely competitive impact of the proposed
standard should be sent to the Department of Justice contact listed in
the ADDRESSES section on or before September 13, 2023.

ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at <a href="http://www.regulations.gov">www.regulations.gov</a> under docket
number EERE-2019-BT-STD-0036. Follow the instructions for submitting
comments. Alternatively, interested persons may submit comments,
identified by docket number EERE-2019-BT-STD-0036 and/or RIN 1904-AE82,
by any of the following methods:
Email: <a href="/cdn-cgi/l/email-protection#7f3c10110c0a121a0d3d1016131a0d0c4d4f4e462c2b3b4f4f4c493f1a1a511b101a51181009">[email&#160;protected]</a>. Include the docket
number EERE-2019-BT-STD-0036 and/or RIN 1904-AE82 in the subject line
of the message.
Postal Mail: Appliance and Equipment Standards Program, U.S.
Department of Energy, Building Technologies Office, Mailstop EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. If possible,
please submit all items on a compact disc (CD), in which case it is not
necessary to include printed copies.
Hand Delivery/Courier: Appliance and Equipment Standards Program,
U.S. Department of Energy, Building Technologies Office, 950 L'Enfant
Plaza SW, 6th Floor, Washington, DC 20024. Telephone: (202) 287-1445.
If possible, please submit all items on a CD, in which case it is not
necessary to include printed copies.
No telefacsimiles (faxes) will be accepted. For detailed
instructions on submitting comments and additional information on this
process, see section VII (Public Participation) of this document.
Docket: The docket for this activity, which includes Federal
Register notices, comments, and other supporting documents/materials,
is available for review at <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-2019-BT-STD-0036">www.regulations.gov/docket/EERE-2019-BT-STD-0036</a>. The docket web page contains instructions on how
to access all documents, including public comments, in the docket. See
section VII (Public Participation) of this document for information on
how to submit comments through <a href="http://www.regulations.gov">www.regulations.gov</a>.
EPCA requires the Attorney General to provide DOE a written
determination of whether the proposed standard is likely to lessen
competition. The U.S. Department of Justice Antitrust Division invites
input from market participants and other interested persons with views
on the likely competitive impact of the proposed standard for consumer
boilers. Interested persons may contact the Division at
<a href="/cdn-cgi/l/email-protection#1e7b707b6c7967306d6a7f707a7f6c7a6d5e6b6d7a717430797168">[email&#160;protected]</a> on or before the date specified in the DATES
section. Please indicate in the ``Subject'' line of your email the
title and Docket Number of this proposed rulemaking.

FOR FURTHER INFORMATION CONTACT:
Ms. Julia Hegarty, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Office, EE-5B,
1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone:
(240) 597-6737. Email: <a href="/cdn-cgi/l/email-protection#7f3e0f0f13161e111c1a2c0b1e111b1e0d1b0c2e0a1a0c0b1610110c3f1a1a511b101a51181009">[email&#160;protected]</a>.
Mr. Eric Stas, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121.
Telephone: (202) 586-5827. Email: <a href="/cdn-cgi/l/email-protection#d396a1bab0fd80a7b2a093bba2fdb7bcb6fdb4bca5">[email&#160;protected]</a>.
For further information on how to submit a comment, review other
public comments and the docket, or participate in the public meeting
webinar, contact the Appliance and Equipment Standards Program staff at
(202) 287-1445 or by email: <a href="/cdn-cgi/l/email-protection#69281919050008070a0c3a1d08070d081b0d1a381c0c1a1d0006071a290c0c470d060c470e061f">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Proposed Rule
A. Benefits and Costs to Consumers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Consumer Boilers
C. Deviation From Appendix A
III. General Discussion
A. General Comments
B. Scope of Coverage
C. Test Procedure
D. Boilers Not Requiring Electricity
E. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
F. Energy Savings
1. Determination of Savings
2. Significance of Savings
G. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Savings in Operating Costs Compared To Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Products
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Product Classes
a. Fossil Fuel-Fired Hot Water Boilers
b. Hydronic Heat Pump Boilers
2. Market Assessment
3. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies

[[Page 55129]]

C. Engineering Analysis
1. Efficiency Analysis
a. Baseline Efficiency
b. Higher Efficiency Levels
2. Cost Analysis
3. Manufacturer Markup and Shipping Costs
4. Cost-Efficiency Results
D. Markups Analysis
E. Energy Use Analysis
1. Building Sample
2. Space Heating Energy Use
a. Heating Load Calculation
b. Impact of Return Water Temperature on Efficiency
c. Impact of Jacket Losses on Energy Use
d. Impact of Excess Air Adjustments
3. Water Heating Use
F. Life-Cycle Cost and Payback Period Analysis
1. Product Cost
2. Installation Cost
3. Annual Energy Consumption
4. Energy Prices
5. Maintenance and Repair Costs
6. Product Lifetime
7. Discount Rates
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. Manufacturer Markup Scenarios
3. Manufacturer Interviews
a. The Replacement Market
4. Discussion of MIA Comments
K. Emissions Analysis
1. Air Quality Regulations Incorporated in DOE's Analysis
L. Monetizing Emissions Impacts
1. Monetization of Greenhouse Gas Emissions
a. Social Cost of Carbon
b. Social Cost of Methane and Nitrous Oxide
2. Monetization of Other Emissions Impacts
M. Utility Impact Analysis
N. Employment Impact Analysis
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Direct Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Consumer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Products
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for Consumer Boiler
Standards
2. Annualized Benefits and Costs of the Proposed Standards
D. Reporting, Certification, and Sampling Plan
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act of 1995
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
A. Participation in the Public Meeting Webinar
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of the Webinar
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

The Energy Policy and Conservation Act, as amended (EPCA),\1\
Public Law 94-163 (codified at 42 U.S.C. 6291-6317), authorizes DOE to
regulate the energy efficiency of a number of consumer products and
certain industrial equipment. (42 U.S.C. 6291-6317) Title III, Part B
\2\ of EPCA established the Energy Conservation Program for Consumer
Products Other Than Automobiles. (42 U.S.C. 6291-6309) These products
include consumer boilers, the subject of this rulemaking. (42 U.S.C.
6292(a)(5)) \3\
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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.
\3\ DOE notes that consumer boilers are defined as a subcategory
of covered consumer furnaces (see 42 U.S.C. 6291(23)).
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Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in a significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later
than six 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)(1))
In accordance with these and other statutory provisions discussed
in this document, DOE analyzed the benefits and burdens of four trial
standard levels (TSLs) for consumer boilers. The TSLs and their
associated benefits and burdens are discussed in detail in sections
V.A-C of this document. As discussed in section V.C of this document,
DOE has tentatively determined that TSL 3 represents the maximum
improvement in energy efficiency that is technologically feasible and
economically justified. The proposed standards at TSL 3, which are
expressed in minimum annual fuel utilization efficiency (AFUE), standby
mode power consumption (P<INF>W,SB</INF>) and off mode power
consumption (P<INF>W,OFF</INF>), are shown in Table I.1. These proposed
standards, if adopted, would apply to all consumer boilers listed in
Table I.1 manufactured in, or imported into, the United States starting
on the date five years after the date of publication of the final rule
for this rulemaking. Specifically, DOE is proposing more-stringent AFUE
standards for gas-fired and oil-fired boilers while maintaining the
current standards for electric steam and hot water boilers.
Additionally, DOE is proposing to maintain the design requirements and
exceptions to the minimum AFUE requirements established by statute and
currently codified at 10 CFR 430.32(e)(2). (See 42 U.S.C.
6295(f)(3)(A)-(C))

[[Page 55130]]

Table I.1--Proposed Energy Conservation Standards for Consumer Boilers
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PW,SB (W) * PW,OFF (W)
Product class AFUE (%) * * Design requirements *
----------------------------------------------------------------------------------------------------------------
Gas-fired Hot Water..................... 95 9 9 Constant-burning pilot not
permitted. Automatic means for
adjusting water temperature
required (except for boilers
equipped with tankless
domestic water heating coils).
Gas-Fired Steam......................... 82 8 8 Constant-burning pilot not
permitted.
Oil-fired Hot Water..................... 88 11 11 Automatic means for adjusting
temperature required (except
for boilers equipped with
tankless domestic water
heating coils).
Oil-fired Steam......................... 86 11 11 None.
Electric Hot Water...................... None 8 8 Automatic means for adjusting
temperature required (except
for boilers equipped with
tankless domestic water
heating coils).
Electric Steam.......................... None 8 8 None.
----------------------------------------------------------------------------------------------------------------
* A boiler that is manufactured to operate without any need for electricity or any electric connection, electric
gauges, electric pumps, electric wires, or electric devices is not required to meet the AFUE, PW,SB, PW,OFF,
or design requirements, but must meet the requirements of 10 CFR 430.32(e)(2)(i) which include a minimum AFUE
of 75 percent for gas-fired steam boilers and a minimum AFUE of 80 percent for all other boilers.

A. Benefits and Costs to Consumers

Table I.2 presents DOE's evaluation of the economic impacts of the
proposed standards on consumers of consumer boilers, as measured by the
average life-cycle cost (LCC) savings and the simple payback period
(PBP).\4\ The average LCC savings are positive for all product classes,
and the PBP is less than the average lifetime of consumer boilers,
which is estimated to be 26.9 years for gas-fired hot water boilers,
23.7 years for gas-fired steam boilers, 25.6 years for oil-fired hot
water boilers, and 19.6 years for oil-fired steam boilers (see section
IV.F.6 of this document for further details).
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\4\ The average LCC savings refer to consumers that are affected
by a standard and are measured relative to the distribution of
purchased boilers, and their associated energy efficiency, in the
no-new-standards case, which depicts the market in the compliance
year in the absence of new or amended standards (see section IV.F.8
of this document). The simple PBP, which is designed to compare
specific efficiency levels, is measured relative to the baseline
product (see section IV.C of this document).

Table I.2--Impacts of Proposed Energy Conservation Standards on
Consumers of Consumer Boilers
------------------------------------------------------------------------
Average LCC
Product class savings Simple payback
(2022$) period (years)
------------------------------------------------------------------------
Gas-fired Hot Water..................... 768 2.7
Gas-fired Steam......................... .............. ..............
Oil-fired Hot Water..................... 666 3.3
Oil-fired Steam......................... 310 5.5
------------------------------------------------------------------------

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

B. Impact on Manufacturers 5
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\5\ All monetary values in this document are expressed in 2022
dollars.
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The industry net present value (INPV) is the sum of the discounted
cash flows starting from the publication year (2023) of the NOPR and
continuing through the 30-year period following the expected compliance
date of the standards (2023-2059). Using a real discount rate of 9.7
percent, DOE estimates that the INPV for manufacturers of consumer
boilers in the case without amended standards is $532.0 million. Under
the proposed standards, the change in INPV is estimated to range from -
11.7 percent to -7.7 percent, which is approximately -$62.2 million to
-$40.7 million. In order to bring products into compliance with amended
standards, it is estimated that the industry would incur total
conversion costs of $98.0 million.
DOE's analysis of the impacts of the proposed standards on
manufacturers is described in section IV.J of this document. The
analytic results of the manufacturer impact analysis (MIA) are
presented in section V.B.2 of this document.

C. National Benefits and Costs

DOE's analyses indicate that the proposed energy conservation
standards for consumer boilers would save a significant amount of
energy. Relative to the case without amended standards, the lifetime
energy savings for consumer boilers purchased in the 30-year period
that begins in the anticipated year of compliance with the amended
standards (2030-2059) amount to 0.7 quadrillion British thermal units
(Btu), or quads.\6\ This represents a savings of 2.3 percent relative
to the energy use of these products in the case without amended
standards (referred to as the ``no-new-standards case'' or as the
baseline).
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\6\ The quantity refers to full-fuel-cycle (FFC) energy savings.
FFC energy savings includes the energy consumed in extracting,
processing, and transporting primary fuels (i.e., coal, natural gas,
petroleum fuels), and, thus, presents a more complete picture of the
impacts of energy efficiency standards. For more information on the
FFC metric, see section IV.H.1 of this document.
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The cumulative net present value (NPV) of total consumer benefits
of the proposed standards for consumer boilers ranges from $0.72
billion (at a 7-percent discount rate) to $2.27 billion (at a 3-percent
discount rate). This NPV expresses the estimated total value of future
operating-cost savings minus the estimated increased product and
installation costs for consumer boilers purchased in 2030-2059 relative
to the baseline.
In addition, the proposed standards for consumer boilers are
projected to yield significant environmental benefits. DOE estimates
that the proposed standards would result in cumulative emission
reductions (over the same period as for energy savings) of 39 million
metric tons (Mt) \7\ of carbon dioxide (CO<INF>2</INF>), 438 thousand
tons of

[[Page 55131]]

methane (CH<INF>4</INF>), 0.17 thousand tons of nitrous oxide
(N<INF>2</INF>O), 105 thousand tons of nitrogen oxides
(NO<INF>X</INF>), and 2.7 thousand tons of sulfur dioxide
(SO<INF>2</INF>), and an increase of 0.001 tons of mercury (Hg) due to
slightly higher electricity consumption.\8\
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\7\ A metric ton is equivalent to 1.1 short tons. Results for
emissions other than CO<INF>2</INF> are presented in short tons.
\8\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy
Outlook 2023 (AEO 2023). AEO 2023 represents current Federal and
State legislation and final implementation of regulations as of the
time of its preparation. See section IV.K of this document for
further discussion of AEO2023 assumptions that effect air pollutant
emissions.
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DOE estimates the value of climate benefits from a reduction in
greenhouse gases (GHG) using four different estimates of the social
cost of 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).\9\ The
derivation of these values is discussed in section IV.L of this
document. For presentational purposes, the climate benefits associated
with the average SC-GHG at a 3-percent discount rate over the period of
analysis are estimated to be $2.0 billion. DOE does not have a single
central SC-GHG point estimate, and it emphasizes the importance and
value of considering the benefits calculated using all four sets of SC-
GHG estimates.
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\9\ To monetize the benefits of reducing GHG emissions this
analysis uses the interim estimates presented in the Technical
Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide
Interim Estimates Under Executive Order 13990 published in February
2021 by the IWG. (``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>.
---------------------------------------------------------------------------

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 $1.1 billion using a 7-percent discount rate, and $3.3 billion using
a 3-percent discount rate.\10\ DOE is currently only monetizing (for
SO<INF>2</INF> and NO<INF>X</INF>) health benefits from changes in fine
particulate matter (PM<INF>2.5</INF>) precursors (SO<INF>2</INF> and
NO<INF>X</INF>) and for changes in an ozone precursor (NO<INF>X</INF>),
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 trial standard levels
(TSLs) for the purpose of complying with the requirements of
Executive Order 12866.
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Table I.3 summarizes the monetized benefits and costs expected to
result from the proposed standards for consumer boilers. 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--Present Value of Monetized Benefits and Costs of Proposed
Energy Conservation Standards for Consumer Boilers
[TSL 3]
------------------------------------------------------------------------
Billion 2022$
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 3.1
Climate Benefits *...................................... 2.0
Health Benefits **...................................... 3.3
Total Monetized Benefits [dagger]....................... 8.5
Consumer Incremental Product Costs [Dagger]............. 0.8
Net Monetized Benefits.................................. 7.6
Change in Producer Cashflow (INPV [Dagger][Dagger])..... (0.06)-(0.04)
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 1.1
Climate Benefits * (3% discount rate)................... 2.0
Health Benefits **...................................... 1.1
Total Monetized Benefits [dagger]....................... 4.3
Consumer Incremental Product Costs [Dagger]............. 0.4
Net Monetized Benefits.................................. 3.9
Change in Producer Cashflow (INPV [Dagger][Dagger])..... (0.06)-(0.04)
------------------------------------------------------------------------
Note: This table presents present value (in 2022$) of the costs and
benefits associated with consumer boilers shipped in 2030-2059. These
results include benefits which accrue after 2059 from the products
shipped in 2030-2059.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5-percent, 3-percent, and 5-percent
discount rates; 95th percentile at 3-percent discount rate) (see
section IV.L of this document). Together these represent the global SC-
GHG. For presentational purposes of this table, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
shown; however, DOE emphasizes the importance and value of considering
the benefits calculated using all four sets of SC-GHG estimates. To
monetize the benefits of reducing GHG emissions, this analysis uses
the interim estimates presented in the Technical Support Document:
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates
Under Executive Order 13990 published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate, but DOE does not have a single central SC-GHG point estimate.
DOE emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as
installation costs.

[[Page 55132]]

[Dagger][Dagger] Operating Cost Savings are calculated based on the life
cycle costs analysis and national impact analysis as discussed in
detail below. See sections IV.F and IV.H of this document. DOE's NIA
includes all impacts (both costs and benefits) along the distribution
chain beginning with the increased costs to the manufacturer to
manufacture the product and ending with the increase in price
experienced by the consumer. DOE also separately conducts a detailed
analysis on the impacts on manufacturers (the MIA). See section IV.J
of this document. In the detailed MIA, DOE models manufacturers'
pricing decisions based on assumptions regarding investments,
conversion costs, cashflow, and margins. The MIA produces a range of
impacts, which is the rule's expected impact on the INPV. The change
in INPV is the present value of all changes in industry cash flow,
including changes in production costs, capital expenditures, and
manufacturer profit margins. Change in INPV is calculated using the
industry weighted average cost of capital value of 9.7 percent that is
estimated in the manufacturer impact analysis (see chapter 12 of the
NOPR TSD for a complete description of the industry weighted average
cost of capital). For consumer boilers, those values are -$62 million
and -$41 million. DOE accounts for that range of likely impacts in
analyzing whether a TSL is economically justified. See section V.C of
this document. DOE is presenting the range of impacts to the INPV
under two markup scenarios: the Preservation of Gross Margin scenario,
which is the manufacturer markup scenario used in the calculation of
Consumer Operating Cost Savings in this table, and the Preservation of
Operating Profit Markup scenario, where DOE assumed manufacturers
would not be able to increase per-unit operating profit in proportion
to increases in manufacturer production costs. DOE includes the range
of estimated INPV in the above table, drawing on the MIA explained
further in section IV.J, to provide additional context for assessing
the estimated impacts of this proposal to society, including potential
changes in production and consumption, which is consistent with OMB's
Circular A-4 and E.O. 12866. If DOE were to include the INPV into the
net benefit calculation for this proposed rule, the net benefits would
range from $7.54 billion to $7.56 billion at 3-percent discount rate
and would range from $3.84 billion to $3.86 billion at 7-percent
discount rate. DOE seeks comment on this approach.

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

\11\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2023, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2030), and then discounted the present value from each year
to 2023. Using the present value, DOE then calculated the fixed
annual payment over a 30-year period, starting in the compliance
year, that yields the same present value.
---------------------------------------------------------------------------

The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered products and are measured for the lifetime of consumer boilers
shipped in 2030-2059. The benefits associated with reduced emissions
achieved as a result of the proposed standards are also calculated
based on the lifetime of consumer boilers shipped in 2030-2059. Total
benefits for both the 3-percent and 7-percent cases are presented using
the average GHG social costs with 3-percent discount rate. Estimates of
SC-GHG values are presented for all four discount rates in section
IV.L.1 of this document.
Table I.4 presents the total estimated monetized benefits and costs
associated with the proposed standard, expressed in terms of annualized
values. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and
health benefits from reduced 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 monetized cost of the
standards proposed in this rule is $52 million per year in increased
equipment costs, while the estimated annual benefits are $139 million
in reduced equipment operating costs, $124 million in monetized climate
benefits, and $137 million in monetized health benefits. In this case,
the net monetized benefit would amount to $348 million per year.
Using a 3-percent discount rate for all benefits and costs, the
estimated monetized cost of the proposed standards is $50 million per
year in increased equipment costs, while the estimated annual monetized
benefits are $188 million in reduced operating costs, $124 million in
monetized climate benefits, and $204 million in in monetized air
pollutant health benefits. In this case, the net benefit would amount
to $466 million per year.

Table I.4--Annualized Monetized Benefits and Costs of Proposed Energy
Conservation Standards for Consumer Boilers
[TSL 3]
------------------------------------------------------------------------
Million 2022$/year
--------------------------------------
Low-net- High-net-
Primary benefits benefits
estimate estimate estimate
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.. 188 175 233
Climate Benefits *............... 124 121 144
Health Benefits **............... 204 200 237
Total Monetized Benefits [dagger] 516 496 613
Consumer Incremental Product 50 58 38
Costs [Dagger]..................
Net Monetized Benefits........... 466 438 575
Change in Producer Cashflow (INPV (6)-(4) (6)-(4) (6)-(4)
[Dagger][Dagger])...............
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.. 139 129 169
Climate Benefits * (3% discount 124 121 144
rate)...........................
Health Benefits **............... 137 135 158
Total Monetized Benefits [dagger] 400 385 470
Consumer Incremental Product 52 59 41
Costs [Dagger]..................
Net Monetized Benefits........... 348 326 430

[[Page 55133]]

Change in Producer Cashflow (INPV (6)-(4) (6)-(4) (6)-(4)
[Dagger][Dagger])...............
------------------------------------------------------------------------
Note: This table presents the present value (in 2022$) of the costs and
benefits associated with consumer boilers shipped in 2030-2059. These
results include benefits which accrue after 2059 from the products
shipped in 2030-2059. The Primary, Low-Net-Benefits, and High-Net-
Benefits Estimates utilize projections of energy prices from the AEO
2023 Reference case, Low-Economic-Growth case, and High-Economic-
Growth case, respectively. In addition, incremental equipment costs
reflect a constant trend in the Primary Estimate, an increasing rate
in the Low-Net-Benefits Estimate, and a decreasing 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.3 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; however, DOE
emphasizes the importance and value of considering the benefits
calculated using all four sets of SC-GHG estimates. To monetize the
benefits of reducing GHG emissions, this analysis uses the interim
estimates presented in the Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates Under Executive
Order 13990 published in February 2021 by the IWG.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.L of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are
presented using the average SC-GHG with 3-percent discount rate, but
the Department does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as
installation costs.
[Dagger][Dagger] Operating Cost Savings are calculated based on the life
cycle costs analysis and national impact analysis as discussed in
detail below. See sections IV.F and IV.H of this document. DOE's NIA
includes all impacts (both costs and benefits) along the distribution
chain beginning with the increased costs to the manufacturer to
manufacture the product and ending with the increase in price
experienced by the consumer. DOE also separately conducts a detailed
analysis on the impacts on manufacturers (the MIA). See section IV.J
of this document. In the detailed MIA, DOE models manufacturers'
pricing decisions based on assumptions regarding investments,
conversion costs, cashflow, and margins. The MIA produces a range of
impacts, which is the rule's expected impact on the INPV. The change
in INPV is the present value of all changes in industry cash flow,
including changes in production costs, capital expenditures, and
manufacturer profit margins. The annualized change in INPV is
calculated using the industry weighted average cost of capital value
of 9.7 percent that is estimated in the manufacturer impact analysis
(see chapter 12 of the NOPR TSD for a complete description of the
industry weighted average cost of capital). For consumer boilers,
those values are -$6 million and -$4 million. DOE accounts for that
range of likely impacts in analyzing whether a TSL is economically
justified. See section V.C of this document. DOE is presenting the
range of impacts to the INPV under two markup scenarios: the
Preservation of Gross Margin scenario, which is the manufacturer
markup scenario used in the calculation of Consumer Operating Cost
Savings in this table, and the Preservation of Operating Profit Markup
scenario, where DOE assumed manufacturers would not be able to
increase per-unit operating profit in proportion to increases in
manufacturer production costs. DOE includes the range of estimated
annualized change in INPV in the above table, drawing on the MIA
explained further in section IV.J of this document, to provide
additional context for assessing the estimated impacts of this
proposal to society, including potential changes in production and
consumption, which is consistent with OMB's Circular A-4 and E.O.
12866. If DOE were to include the INPV into the annualized net benefit
calculation for this proposed rule, the annualized net benefits would
range from $460 million to $462 million at 3-percent discount rate and
would range from $342 million to $344 million at 7-percent discount
rate. DOE seeks comment on this approach.

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

D. Conclusion

DOE has tentatively concluded that the proposed standards represent
the maximum improvement in energy efficiency that is technologically
feasible and economically justified, and would result in the
significant conservation of energy. Specifically, with regards to
technological feasibility, products achieving these standard levels are
already commercially available for all product classes covered by this
proposal. As for economic justification, DOE's analysis shows that the
benefits of the proposed standard exceed, to a great extent, the
burdens of the proposed standards.
Using a 7-percent discount rate for consumer benefits and costs and
NO<INF>X</INF> and SO<INF>2</INF> reduction benefits, and a 3-percent
discount rate case for GHG social costs, the estimated monetized cost
of the proposed standards for consumer boilers is $52 million per year
from increased consumer boiler costs, while the estimated annual
monetized benefits are $139 million in reduced consumer boiler
operating costs, $124 million in monetized climate benefits, and $137
million in monetized air pollutant health benefits. The net monetized
benefit amounts to $348 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 substantial energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------

\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 proposed standards are projected to
result in estimated national energy savings of 0.7 quads full-fuel-
cycle (FFC), the equivalent of the primary annual energy use of 6.5
million homes, and NPV of total consumer benefits from $0.72 billion
(at a 7-percent discount rate) to $2.27 billion (at a 3-percent
discount rate) over the 30-year analysis period beginning with the
expected compliance year (2030-2059). In addition, they are projected
to reduce CO<INF>2</INF> emissions by 44 Mt. Based on these findings,
DOE has initially determined the energy savings from the proposed
standard levels are ``significant'' within the meaning of 42 U.S.C.
6295(o)(3)(B). A more detailed discussion of the basis for these
tentative conclusions is contained in the remainder of this

[[Page 55134]]

document and the accompanying technical support document (TSD).\13\
---------------------------------------------------------------------------

\13\ The TSD is available in the docket for this rulemaking at:
<a href="http://www.regulations.gov/docket/EERE-2019-BT-STD-0036">www.regulations.gov/docket/EERE-2019-BT-STD-0036</a>.
---------------------------------------------------------------------------

DOE also considered more-stringent energy efficiency levels as
potential standards, and is still considering them in this rulemaking.
However, DOE has tentatively concluded that the potential burdens of
the more-stringent energy efficiency levels would outweigh the
projected benefits.
Based on consideration of the public comments DOE receives in
response to this document and related information collected and
analyzed during the course of this rulemaking effort, DOE may adopt
energy efficiency levels presented in this document that are either
higher or lower than the proposed standards, or some combination of
level(s) that incorporate the proposed standards in part.

II. Introduction

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

A. Authority

EPCA, Public Law 94-163 (codified at 42 U.S.C. 6291-6317)
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. (42 U.S.C. 6291-6309) These products
include consumer boilers, the subject of this document. (42 U.S.C.
6292(a)(5))
EPCA prescribed energy conservation standards for these products
(42 U.S.C. 6295(f)(3)), and the statute directed DOE to conduct future
rulemakings to determine whether to amend these standards. (42 U.S.C.
6295(f)(4)(C)) EPCA further provides that, not later than six 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))
Under EPCA, the energy conservation program consists essentially of
four parts: (1) testing, (2) labeling, (3) Federal energy conservation
standards, and (4) certification and enforcement procedures. Relevant
provisions of EPCA specifically include definitions (42 U.S.C. 6291),
test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294),
energy conservation standards (42 U.S.C. 6295), and the authority to
require information and reports from manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products
established under EPCA generally supersede State laws and regulations
concerning energy conservation testing, labeling, and standards. (42
U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal
preemption in limited circumstances 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 6295(r)) Manufacturers of covered products must use
the prescribed DOE test procedure as the basis for certifying to DOE
that their products comply with the applicable energy conservation
standards adopted under EPCA and when making representations to the
public regarding the energy use or efficiency of those products. (42
U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly, DOE must use these
test procedures to determine whether the products comply with standards
adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedures
for consumer boilers appear at title 10 of the Code of Federal
Regulations (CFR) part 430, subpart B, appendix EE.\14\
---------------------------------------------------------------------------

\14\ On March 13, 2023, DOE published a final rule in the
Federal Register amending the test procedure for consumer boilers
and moving this test procedure to a new appendix EE effective on
April 12, 2023. 88 FR 15510.
---------------------------------------------------------------------------

DOE must follow specific statutory criteria for prescribing new or
amended standards for covered products, including consumer boilers.
EPCA requires that any new or amended energy conservation 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 (o)(3)(B)) 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 consumer boilers, 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 manufacturer 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 of, initial charges for, or maintenance
expenses for the covered products that are likely to result from the
standard;
(3) The total projected amount of energy (or as applicable,
water) savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the
covered products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers
relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA establishes a rebuttable presumption that a standard
is economically justified if the Secretary finds that the additional
cost to the consumer of purchasing a product complying with an energy
conservation standard level will be less than three times the value of
the energy savings during the first year that the consumer will receive
as a result of the standard, as calculated under the applicable test
procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA also contains what is known as an ``anti-backsliding''
provision, which prevents the Secretary from prescribing any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of a covered product.
(42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended
or new standard if interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States in any covered product type (or
class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States. (42 U.S.C.
6295(o)(4))

[[Page 55135]]

Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for a covered product that has two or more
subcategories. DOE must specify a different standard level for a type
or class of product that has the same function or intended use, if DOE
determines that products within such group: (A) consume a different
kind of energy from that consumed by other covered products within such
type (or class); or (B) have a capacity or other performance-related
feature which other products within such type (or class) do not have
and such feature justifies a higher or lower standard. (42 U.S.C.
6295(q)(1)) In determining whether a performance-related feature
justifies a different standard for a group of products, DOE must
consider such factors as the utility to the consumer of the feature and
other factors DOE deems appropriate. Id. Any rule prescribing such a
standard must include an explanation of the basis on which such higher
or lower level was established. (42 U.S.C. 6295(q)(2))
Finally, pursuant to the amendments contained in the Energy
Independence and Security Act of 2007 (EISA 2007), Pub. L. 110-140, any
final rule for new or amended energy conservation standards promulgated
after July 1, 2010, is required to address standby mode and off mode
energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a
standard for a covered product after that date, it must, if justified
by the criteria for adoption of standards under EPCA (42 U.S.C.
6295(o)), incorporate standby mode and off mode energy use into a
single standard, or, if that is not feasible, adopt a separate standard
for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B))
DOE's current test procedures for consumer boilers address standby mode
and off mode energy use in separate metrics (P<INF>W,SB</INF> and
P<INF>W,OFF</INF>, respectively). In this proposed rulemaking, DOE
intends to consider these metrics in addition to the active mode
metric, AFUE.

B. Background

1. Current Standards
In a final rule published in the Federal Register on January 15,
2016 (January 2016 Final Rule), DOE prescribed the current energy
conservation standards for consumer boilers manufactured on and after
January 15, 2021. 81 FR 2320, 2416-2417. These standards are set forth
in DOE's regulations at 10 CFR 430.32(e)(2)(iii) and are repeated in
Table II.1.

Table II.1--Federal Energy Conservation Standards for Consumer Boilers *
----------------------------------------------------------------------------------------------------------------
AFUE PW,SB PW,OFF
Product class (percent) (watts) (watts) Design requirements
** [dagger] [dagger]
----------------------------------------------------------------------------------------------------------------
Gas-fired Hot Water..................... 84 9 9 Constant-burning pilot not
permitted. Automatic means for
adjusting water temperature
required (except for boilers
equipped with tankless
domestic water heating coils).
Gas-fired Steam......................... 82 8 8 Constant-burning pilot not
permitted.
Oil-fired Hot Water..................... 86 11 11 Automatic means for adjusting
temperature required (except
for boilers equipped with
tankless domestic water
heating coils).
Oil-fired Steam......................... 85 11 11 None.
Electric Hot Water...................... None 8 8 Automatic means for adjusting
temperature required (except
for boilers equipped with
tankless domestic water
heating coils).
Electric Steam.......................... None 8 8 None.
----------------------------------------------------------------------------------------------------------------
* A boiler that is manufactured to operate without any need for electricity or any electric connection, electric
gauges, electric pumps, electric wires, or electric devices is not required to meet the AFUE or design
requirements. Instead, such boilers must meet a minimum AFUE of 80 percent (for all classes except gas-fired
steam), and 75 percent for gas-fired steam.
** AFUE stands for Annual Fuel Utilization Efficiency, as determined in 10 CFR 430.23(n)(2).
[dagger] PW,SB and PW,OFF stand for standby mode power consumption and off mode power consumption, respectively.

2. History of Standards Rulemaking for Consumer Boilers
DOE initiated this rulemaking pursuant to its six-year-lookback
authority under 42 U.S.C. 6295(m)(1). On March 25, 2021, DOE published
in the Federal Register a request for information (RFI) that initiated
an early assessment review to determine whether any new or amended
standards would satisfy the relevant requirements of EPCA for a new or
amended energy conservation standard for consumer boilers (March 2021
RFI). 86 FR 15804. Specifically, through the March 2021 RFI, DOE sought
data and information that could enable the agency to determine whether
DOE should propose a ``no new standard'' determination because a more-
stringent standard: (1) would not result in a significant savings of
energy; (2) is not technologically feasible; (3) is not economically
justified; or (4) any combination of foregoing. Id. Additionally, DOE
granted a 30-day comment extension for the March 2021 RFI (for a total
of a 60-day comment period) in a notice published in the Federal
Register on April 9, 2021. 86 FR 18478, 18479.
Subsequently, on May 4, 2022, DOE published in the Federal Register
a preliminary analysis and TSD for purposes of evaluating the need for
amended energy conservation standards for consumer boilers (May 2022
Preliminary Analysis). 87 FR 26304. The May 2022 Preliminary Analysis
and TSD discussed the analytical framework, models, and tools used to
evaluate potential standards, and the results of the preliminary
analyses performed. Id. DOE held a public meeting webinar on June 16,
2022, to receive comments on its May 2022 Preliminary Analysis for
consumer boilers.
DOE received comments in response to the May 2022 Preliminary
Analysis from the interested parties listed in Table II.2.

[[Page 55136]]

Table II.2--May 2022 Preliminary Analysis Written Comments *
----------------------------------------------------------------------------------------------------------------
Comment No. in
Commenter(s) Abbreviation the docket Commenter type
----------------------------------------------------------------------------------------------------------------
American Gas Association, American AGA, APGA, and NPGA....... 38 Utility Trade
Public Gas Association, National Associations.
Propane Gas Association.
Air-Conditioning, Heating, and AHRI...................... 40, 42 Manufacturer Trade
Refrigeration Institute. Association.
Bradford White Corporation.............. BWC....................... 39 Manufacturer.
Crown Boiler Company.................... Crown..................... 30 Manufacturer.
Appliance Standards Awareness Project, Joint Advocates........... 35 Efficiency Advocacy
American Council for an Energy- Organizations.
Efficient Economy, Consumer Federation
of America, National Consumer Law
Center, Natural Resources Defense
Council.
Northwest Energy Efficiency Alliance.... NEEA...................... 36 Efficiency Advocacy
Organization.
New York State Energy Research and NYSERDA................... 33 State Agency.
Development Authority.
PB Heat, LLC............................ PB Heat................... 34 Manufacturer.
Rheem Manufacturing Company............. Rheem..................... 37 Manufacturer.
U.S. Boiler Company, Inc................ U.S. Boiler............... 31 Manufacturer.
Weil-McLain Technologies................ WMT....................... 32 Manufacturer.
----------------------------------------------------------------------------------------------------------------
* DOE received one additional comment to this docket that was not accessible and is not discussed further.

A parenthetical reference at the end of a comment quotation or
paraphrase provides the location of the item in the public record.\15\
To the extent that interested parties have provided written comments
that are substantively consistent with any oral comments provided
during the June 16, 2022 Preliminary Analysis public meeting webinar,
DOE cites the written comments throughout this document.
---------------------------------------------------------------------------

\15\ The parenthetical reference provides a reference for
information located in the docket of DOE's rulemaking to develop
energy conservation standards for consumer boilers. (Docket No.
EERE-2019-BT-STD-0036, 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).
---------------------------------------------------------------------------

C. Deviation From Appendix A

In accordance with section 3(a) of 10 CFR part 430, subpart C,
appendix A (appendix A), DOE notes that it deviated from the provision
at section 6(a)(2) in appendix A regarding the pre-NOPR stages for an
energy conservation standards rulemaking (specifically, the publication
of a framework document). As initially discussed in the May 2022
Preliminary Analysis, DOE opted to deviate from this step by publishing
a preliminary analysis without a framework document. A framework
document is intended to introduce and summarize the various analyses
DOE conducts during the rulemaking process and requests initial
feedback from interested parties. As noted in the May 2022 Preliminary
Analysis, prior to that document, DOE published an RFI in the Federal
Register in which DOE identified and sought comment on the analyses
conducted in support of the most recent energy conservation standards
rulemakings for boilers. 87 FR 26304, 26307 (May 4, 2022).
In accordance with section 3(a) of appendix A, DOE notes that it is
deviating from the provision in appendix A specifying that there will
not be less than 75 days for public comment on the NOPR (section
6(f)(2) of appendix A). The public comment period on this NOPR will be
60 days. DOE is opting to deviate from this step because the May 2022
Preliminary Analysis already allowed stakeholders an opportunity to
comment on the analytical methods and subsequent preliminary results.
Additionally, DOE extended the comment period for the March 2021 RFI by
30 days for a total of a 60-day comment period. 86 FR 18478, 18479
(April 9, 2021). This NOPR relies on the same overall approach, but has
updated the analyses to incorporate stakeholder feedback in response to
the preliminary results. Consequently, DOE has concluded that that a
comment period of 60 days is appropriate and will provide interested
parties a meaningful opportunity to comment on the proposed rule.
DOE notes that it is not deviating from the provisions in section
8(d)(1) of appendix A, which state that a test procedure final rule
should be published at least 180 days prior to the close of a comment
period of a NOPR proposing amended standards for the products within
the scope of the test procedure final rule. Specifically, section
8(d)(1) pertains to test procedure amendments that impact measured
energy use or efficiency. Most recently, DOE published a test procedure
final rule in the Federal Register on March 13, 2023. 88 FR 15510. In
this final rule, DOE concluded that the updates to the test procedure
have minimal impact on AFUE ratings and that manufacturers will be able
to rely on data generated under the previous version of that test
procedure. Thus, an analysis of potential amended energy conservation
standards for consumer boilers can be carried out using current
performance data, so the 180-day requirement does not apply.

III. General Discussion

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

A. General Comments

This section summarizes general comments received from interested
parties regarding rulemaking timing and process.
AGA, APGA, and NPGA requested that DOE host a workshop to walk
through the Department's analytical approach for stakeholders and the
public in general, because these commenters suggested that the TSDs and
associated spreadsheets are complex and appear not to be consistent
across product categories. (AGA, APGA, NPGA, No. 38 at p. 4)
In response, DOE notes that the Department posts its TSDs and
spreadsheet analyses to the rulemaking docket found at <a href="http://regulations.gov">regulations.gov</a>
in order to provide transparency into the methodology used to arrive at
the results presented in this NOPR. As stated in the DATES section of
this proposed rule, DOE will host a public meeting via webinar which
will include an overview of DOE's methodology and provide an
opportunity for stakeholders to provide additional comments or pose
questions on this topic.

[[Page 55137]]

Crown and U.S. Boiler stated that a 60-day comment period was
insufficient to review the May 2022 Preliminary Analysis, given that
several calculations and underlying assumptions have changed since the
previous rulemaking. (Crown, No. 30 at p. 2; U.S. Boiler, No. 31 at p.
1)
As explained in the May 2022 Preliminary Analysis, DOE opted to
provide a 60-day comment period because the Department had already
requested comment in the March 2021 RFI on its energy conservation
standards analyses. DOE incorporated then most recent data inputs but
largely relied on many of the same analytical assumptions and
approaches used in the previous rulemaking, such that the agency
determined that a 60-day comment period in conjunction with the prior
comment period for the March 2021 RFI provided sufficient time for
interested parties to review the preliminary analysis and develop
comments. 87 FR 26304, 26307 (May 4, 2022). Further, DOE notes that it
is providing an additional 60-day comment period for this NOPR, which
again relies on the same analytical structure as the May 2022
Preliminary Analysis.

B. Scope of Coverage

Consumer boilers are appliances that transfer heat using combustion
gases or electricity to water to provide hot water or steam for space
heating.
Consumer boilers are defined in EPCA as a type of furnace.
Specifically, the term ``furnace'' is defined as a product which
utilizes only single-phase electric current, or single-phase electric
current or direct current in conjunction with natural gas, propane, or
home heating oil, and which--
Is designed to be the principal heating source for the living space
of a residence;
Is not contained within the same cabinet with a central air
conditioner whose rated cooling capacity is above 65,000 Btu per hour
(Btu/h);
Is an electric central furnace, electric boiler, forced-air central
furnace, gravity central furnace, or low pressure steam or hot water
boiler; and
Has a heat input rate of less than 300,000 Btu/h for electric
boilers and low pressure steam or hot water boilers and less than
225,000 Btu/h for forced-air central furnaces, gravity central furnace,
and electric central furnaces. (42 U.S.C. 6291(23))
DOE has codified definitions for the terms ``electric boiler'' and
``low pressure steam or hot water boiler'' in its regulations as
follows:
Electric boiler means an electrically powered furnace designed to
supply low pressure steam or hot water for space heating application. A
low pressure steam boiler operates at or below 15 pounds per square
inch gauge (psig) steam pressure; a hot water boiler operates at or
below 160 psig water pressure and 250 degrees Fahrenheit ([deg]F) water
temperature.
Low pressure steam or hot water boiler means an electric, gas, or
oil-burning furnace designed to supply low pressure steam or hot water
for space heating application. A low pressure steam boiler operates at
or below 15 psig steam pressure; a hot water boiler operates at or
below 160 psig water pressure and 250 [deg]F water temperature.
10 CFR 430.2.
In the May 2022 Preliminary Analysis, DOE requested comment on
hydronic heat pumps as technology options for consumer boilers. (See
the Executive Summary of the preliminary analysis TSD). In response,
the Department received multiple comments regarding the classification
of hydronic heat pump boilers. Hydronic heat pumps, commonly air-to-
water heat pumps, are systems that use the refrigeration cycle to heat
or chill water for domestic hot water or space conditioning use.
Crown and U.S. Boiler stated that heat pumps should not be
classified as boilers due to their inability to generate water
temperatures high enough to satisfy the design heating load of the vast
majority of the residential hot water heating systems in the United
States. (Crown, No. 30 at p. 3; U.S. Boiler, No. 31 at p. 3) BWC also
disagreed with DOE's interpretation in the May 2022 Preliminary
Analysis that air-to-water and water-to-water heat pumps (heat pump
products) should be considered as consumer boilers, stating that heat
pump products have pronounced differences that separate them from
boilers. BWC also claimed that DOE has listed the two products
separately on their website, as well as in DOE's Compliance
Certification Management System (CCMS) database. (BWC, No. 39 at p. 1)
AHRI similarly commented that heat pumps should not be included under
the current regulatory definitions for boilers and boiler product
classes, as the products cannot reach the same water temperature as
conventional boilers and cannot provide sufficient heating year-round
without assistance. AHRI recommended DOE update the current definition
of a ``boiler'' to include the ability to provide the required heat on
the coldest day of the year. AHRI further recommended that given the
difference in the form, fit, and function of heat pumps and
conventional boilers, DOE should establish a separate definition and
product class for these heat pump products. (AHRI, No. 40 at p. 3)
In contrast, Rheem, NYSERDA, the Joint Advocates, and NEEA all
suggested that heat pump boilers are capable of meeting home heating
design loads and should be considered as consumer boilers. (Rheem, No.
37 at p. 3; NYSERDA, No. 33 at p. 2; Joint Advocates, No. 35 at pp. 1-
2; NEEA, No. 36 at pp. 1-2) Rheem also stated that while heat pumps may
not reach the same maximum temperatures as conventional products, heat
pumps can provide adequate space heating in many applications. (Rheem,
No. 37 at p. 2)
In the March 2023 TP Final Rule, which was the most recent
rulemaking amending the consumer boiler test procedure, DOE addressed
similar comments suggesting hydronic air-to-water heat pump boilers and
water-to-water heat pump boilers should be excluded from the ``boiler''
definitions because they cannot provide the same maximum water
temperature as non-heat pump hydronic systems. Specifically, in the
March 2023 TP Final Rule, DOE noted that neither the EPCA definition
nor DOE's definitions at 10 CFR 430.2 for consumer boilers provide a
minimum water temperature requirement and, thus, do not exclude
hydronic heat pump boilers from being considered as consumer boilers.
DOE also noted in the March 2023 TP Final Rule that hydronic heat pump
boilers are marketed as providing the principal heating source for a
residence. 88 FR 15510, 15515-15516 (March 13, 2023).
In response to the comments received on the May 2022 Preliminary
Analysis, DOE again reviewed the market for hydronic heat pumps. Based
on its review of the hydronic heat pumps currently on the market, DOE
agrees with Rheem, NYSERDA, the Joint Advocates, and NEEA that hydronic
heat pumps can provide enough space heating to serve home design loads
in many applications. These products utilize only single-phase electric
current or direct current in conjunction with natural gas, propane, or
home heating oil, can be designed to be the principal heating source
for the living space of a residence, are not contained within the same
cabinet with a central air conditioner whose rated cooling capacity is
above 65,000 Btu/h, meet the definition of an ``electric boiler,'' and
have a heat input rate of less than 300,000 Btu/h (i.e., the
requirement for electric boilers). As such, hydronic heat pumps which
are designed to be the principal heating source of the living

[[Page 55138]]

space of a residence meet the criteria of ``furnace'' as defined in
EPCA at 42 U.S.C. 6291(23). Further, the Department notes that these
products also meet DOE's codified regulatory definition for ``low
pressure steam or hot water boiler.'' Therefore, DOE considers hydronic
heat pumps to be within the scope of coverage for consumer boilers.
However, as discussed in section III.C of this document, there is no
currently-applicable test procedure for hydronic heat pump consumer
boilers, and as a result, DOE has not considered these products further
in this NOPR.
In this NOPR, DOE has considered products which meet the
definitions for ``electric boiler'' and ``low pressure steam or hot
water boiler'' to be consumer boilers within the scope of this
rulemaking, with the exception of hydronic heat pump boilers, for which
there is currently no applicable test procedure to determine compliance
with standards.
See section IV.A.1 of this document for discussion of the product
classes analyzed in this NOPR.

C. Test Procedure

EPCA sets forth generally applicable criteria and procedures for
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293)
Manufacturers of covered products must use these test procedures to
quantify the efficiency of their product, to certify to DOE that their
product complies with energy conservation standards, and when making
efficiency-related representations to the public. (42 U.S.C. 6293(c)
and 42 U.S.C. 6295(s)) EPCA states that the AFUE is the efficiency
descriptor for furnaces and boilers (See 42 U.S.C. 6291(20) and (22));
however, as discussed in section II.A of this document, DOE is required
to also account for standby mode and off mode energy consumption.
Accordingly, for the current consumer boiler energy conservation
standards, AFUE is the active mode efficiency metric, while
P<INF>W,SB</INF> and P<INF>W,OFF</INF> are the metrics for standby mode
and off mode electrical energy consumption, respectively (see 10 CFR
430.32(e)(2)(iii)). All three of these metrics are measured by the DOE
test procedure for consumer boilers.
On March 13, 2023, DOE published a final rule in the Federal
Register amending the test procedure for consumer boilers (March 2023
TP Final Rule). 88 FR 15510. The amended test procedure became
effective on April 12, 2023.
Prior to April 12, 2023, the DOE test procedure for determining the
AFUE, P<INF>W,SB</INF>, and P<INF>W,OFF</INF> of consumer boilers was
located at appendix N to subpart B of 10 CFR part 430 (appendix N) and
referenced American Society of Heating, Refrigerating and Air-
Conditioning Engineers (ASHRAE) Standard 103-1993, ``Method of Testing
for Annual Fuel Utilization Efficiency of Residential Central Furnaces
and Boilers'' \16\ and International Electrotechnical Commission (IEC)
62301 (Edition 2.0), ``Household electrical appliances--Measurement of
standby power.'' AFUE is an annualized fuel efficiency metric that
fully accounts for fuel consumption in active, standby, and off modes
but does not include auxiliary electrical energy consumption.
P<INF>W,SB</INF> and P<INF>W,OFF</INF> are measures of the standby mode
and off mode power consumption, respectively, in watts.
---------------------------------------------------------------------------

\16\ American Society for Testing and Materials (ASTM) Standard
D2159-09 (Reapproved 2013), ``Standard test methods and procedures
for Smoke Density in Flue Gases From Burning Distillate Fuels,''
(ASTM D2156-09 (R2013)) is also referenced by the appendix EE test
procedure for setting up oil-fired burners.
---------------------------------------------------------------------------

In the March 2023 TP final rule, DOE updated appendix N to remove
the provisions applicable only to consumer boilers and to rename the
appendix ``Uniform Test Method for Measuring the Energy Consumption of
Furnaces.'' Correspondingly, the final rule established a new test
procedure specific to consumer boilers in a new appendix EE to subpart
B of 10 CFR part 430 (appendix EE). On and after September 11, 2023,
manufacturers will be required to use the amended test procedure
(though manufacturers may opt to do so early (i.e., any time after
April 12, 2023)), per the March 2023 TP Final Rule, to determine
ratings for consumer boilers. The amended test procedure located at
appendix EE consists of all provisions that were previously included in
appendix N relevant to consumer boilers, with the following
modifications:
Incorporating by reference the current revision to the applicable
industry standard, American National Standards Institute (ANSI)/ASHRAE
Standard 103-2017, ``Methods of Testing for Annual Fuel Utilization
Efficiency of Residential Central Furnaces and Boilers;''
Incorporating by reference the current revision of American Society
for Testing and Materials (ASTM) Standard D2156-09 (Reapproved 2018),
``Standard Test Method for Smoke Density in Flue Gases from Burning
Distillate Fuels;''
Incorporating by reference ANSI/ASHRAE Standard 41.6-2014,
``Standard Method for Humidity Measurement;''
Updating the definitions to reflect the changes in ANSI/ASHRAE 103-
2017 as compared to ANSI/ASHRAE 103-1993;
Removing the definition of ``outdoor furnace or boiler'' from 10
CFR 430.2;
Making certain corrections to improve the accuracy, repeatability,
and reproducibility of calculations within the test procedure.
88 FR 15510, 15512-15513 (March 13, 2023).
DOE determined that the amendments in the March 2023 TP Final Rule
would minimally impact the measured efficiency of certain consumer
boilers, and retesting and re-rating would not be required. 88 FR
15510, 15514 (March 13, 2023). Therefore, DOE expects that the energy
efficiency and energy consumption ratings currently achieved are still
representative of ratings that would be achieved under the revised test
method. As a result, DOE evaluated potential amended energy
conservation standards for consumer boilers using current market data.
As discussed in section III.B of this document, DOE has become
aware of hydronic air-to-water and water-to-water heat pumps, which DOE
has determined meet the definitional criteria to be classified as
consumer boilers. However, the AFUE metric described in ASHRAE 103-2017
(which is incorporated by reference into appendix EE) calculates the
efficiency of an electric boiler as 100 percent minus jacket loss,\17\
which provides a representative measure of efficiency for electric
boilers using electric resistance technology, for which an efficiency
value of 100 percent (the ratio of heat output to energy input) is the
maximum upper limit that technically could be achieved. DOE concluded
that the AFUE metric would not provide a representative or meaningful
measure of efficiency for a boiler with a heat pump supplying the heat
input, because heat pump efficiency (in terms of heat output to energy
input) typically exceeds 100 percent, and the AFUE metric does not
allow for ratings greater than 100 percent for electric boilers. 88 FR
15510, 15515 (March 13, 2023). Similarly, the ASHRAE 103-2017 test
procedure assumes a maximum value of 100 percent for gas-fired and oil-
fired boilers when calculating the steady-state efficiency and heating
seasonal efficiency, such that the methodology would not result in
representative AFUE

[[Page 55139]]

values for gas-fired or oil-fired absorption heat pump boilers.
---------------------------------------------------------------------------

\17\ The term ``jacket loss'' is used by industry to mean the
transfer of heat from the outer surface (i.e., jacket) of a boiler
to the ambient air surrounding the boiler.
---------------------------------------------------------------------------

Rheem, NYSERDA, the Joint Advocates, and NEEA all urged DOE to
develop a test procedure for heat pump consumer boilers. (Rheem, No. 37
at p. 3; NYSERDA, No. 33 at p. 2; Joint Advocates, No. 35 at p. 2;
NEEA, No. 36 at p. 2)
DOE will consider heat pump boilers when re-evaluating the test
procedure for consumer boilers in a future rulemaking. As noted in
section III.B of this document, due to the lack of a Federal test
procedure at this time which adequately addresses AFUE for heat pump
boilers, DOE has initially determined not to analyze heat pump boilers
in this standards rulemaking. However, the standby mode and off mode
power consumption test procedures in appendix EE remain applicable to
heat pump boilers; hence, these metrics are required for heat pump
boilers. Similarly, the statutory design requirements at 10 CFR
430.32(e)(2)(iii)(A) apply to these products.

D. Boilers Not Requiring Electricity

On July 28, 2008, DOE published a final rule technical amendment in
the Federal Register to codify the requirements that would be
applicable to consumer boilers as established in the Energy
Independence and Security Act of 2007. 73 FR 43611. That final rule
codified, as per the statute, that a boiler that is manufactured to
operate without any need for electricity or any electric connection,
electric gauges, electric pumps, electric wires, or electric devices
shall not be required to meet the current minimum AFUE standards or
design requirements for consumer boilers. Id. at 73 FR 43613.
As a result of this statutory exception, the regulations require
that boilers manufactured to operate without any need for electricity
or any electric connection, electric gauges, electric pumps, electric
wires, or electric devices must still meet the minimum AFUE
requirements in 10 CFR 430.32(e)(2)(i)--namely, a minimum AFUE of 80
percent (for all classes except gas-fired steam boilers), and 75
percent for gas-fired steam boilers.
In subsequent final rules, including the January 2016 final rule,
DOE maintained this exception for boilers not requiring electricity as
required by EPCA; however, the codified language had a technical error
wherein the exception inadvertently only applied to boilers
manufactured on or after September 1, 2012, and before January 15, 2021
(see 10 CFR 430.32(e)(2)(v), which only references 10 CFR
430.32(e)(2)(ii)). The provisions at 10 CFR 430.32(e)(2)(v) apply also
to boilers manufactured on or after January 15, 2021 (which must meet
the requirements at 10 CFR 430.32(e)(2)(iii)).
In this NOPR, DOE proposes to make technical amendments to the
standards for consumer boilers to clarify that the aforementioned
exceptions continue to apply.

E. Technological Feasibility

1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the 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)-(v) and 7(b)(2)-(5) of appendix A. Section IV.B of
this document discusses the results of the screening analysis for
consumer boilers, particularly the designs DOE considered, those it
screened out, and those that are the basis for the potential standards
considered in this rulemaking. For further details on the screening
analysis for this rulemaking, see chapter 4 of the NOPR TSD.
2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered product, it must determine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined the maximum technologically
feasible (``max-tech'') improvements in energy efficiency for consumer
boilers, 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.1.b of this document and in chapter 5 of the NOPR TSD.

F. Energy Savings

1. Determination of Savings
For each TSL, DOE projected energy savings from application of the
TSL to consumer boilers purchased in the 30-year period that begins in
the year of compliance with the proposed standards (2030-2059).\18\ The
savings are measured over the entire lifetime of consumer boilers
purchased in the previous 30-year period. DOE quantified the energy
savings attributable to each TSL as the difference in energy
consumption between each standards case and the no-new-standards case.
The no-new-standards case represents a projection of energy consumption
that reflects how the market for a product would likely evolve in the
absence of new or amended energy conservation standards.
---------------------------------------------------------------------------

\18\ Each TSL is composed of specific efficiency levels for each
product class. The TSLs considered for this NOPR are described in
section V.A of this document. DOE conducted a sensitivity analysis
that considers impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

DOE used its national impact analysis (NIA) spreadsheet model to
estimate national energy savings (NES) from potential amended or new
standards for consumer boilers. 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.\19\
DOE's approach is based on the calculation of an FFC multiplier for
each of the energy

[[Page 55140]]

types used by covered products or equipment. For more information on
FFC energy savings, see section IV.H.2 of this document.
---------------------------------------------------------------------------

\19\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51281 (August 18, 2011), as
amended at 77 FR 49701 (August 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.\20\ For
example, some covered products and equipment have most of their energy
consumption occur during periods of peak energy demand. The impacts of
these products on the energy infrastructure can be more pronounced than
products with relatively constant demand. Accordingly, DOE evaluates
the significance of energy savings on a case-by-case basis, taking into
account the significance of cumulative FFC national energy savings, the
cumulative FFC emissions reductions, and the need to confront the
global climate crisis, among other factors. DOE has initially
determined the energy savings from the proposed standard levels are
``significant'' within the meaning of 42 U.S.C. 6295(o)(3)(B).
---------------------------------------------------------------------------

\20\ The numeric threshold for determining the significance of
energy savings, established in a final rule published in the Federal
Register on February 14, 2020 (85 FR 8626, 8670), was subsequently
eliminated in a final rule published in the Federal Register on
December 13, 2021 (86 FR 70892, 70906), which went into effect on
January 12, 2022.
---------------------------------------------------------------------------

G. Economic Justification

1. Specific Criteria
As noted previously, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The
following sections discuss how DOE has addressed each of those seven
factors in this proposed rulemaking.
a. Economic Impact on Manufacturers and Consumers
In determining the impacts of a potential amended standard on
manufacturers, DOE conducts an MIA, as discussed in section IV.J of
this document. DOE first uses an annual cash-flow approach to determine
the quantitative impacts. This step includes both a short-term
assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed include: (1) INPV, which
values the industry on the basis of expected future cash flows, (2)
cash flows by year, (3) changes in revenue and income, and (4) other
measures of impact, as appropriate. Second, DOE analyzes and reports
the impacts on different types of manufacturers, including impacts on
small manufacturers. Third, DOE considers the impact of standards on
domestic manufacturer employment and manufacturing capacity, as well as
the potential for standards to result in plant closures and loss of
capital investment. Finally, DOE takes into account cumulative impacts
of various DOE regulations and other regulatory requirements on
manufacturers.
For individual consumers, measures of economic impact include the
changes in LCC and PBP associated with new or amended standards. These
measures are discussed further in the following section. For consumers
in the aggregate, DOE also calculates the national net present value of
the consumer costs and benefits expected to result from particular
standards. DOE also evaluates the impacts of potential standards on
identifiable subgroups of consumers that may be affected
disproportionately by a standard.
b. Savings in Operating Costs Compared To Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered product in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered product
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a product (including
its installation) and the operating expense (including energy,
maintenance, and repair expenditures) discounted over the lifetime of
the product. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance
and repair costs, product lifetime, and discount rates appropriate for
consumers. To account for uncertainty and variability in specific
inputs, such as product lifetime and discount rate, DOE uses a
distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes
consumers to recover the increased purchase cost (including
installation) of a more-efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost
due to a more-stringent standard by the change in annual operating cost
for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will
purchase the covered products in the first year of compliance with new
or amended standards. The LCC savings for the considered efficiency
levels are calculated relative to the case that reflects projected
market trends in the absence of new or amended standards. DOE's LCC and
PBP analysis is discussed in further detail in section IV.F of this
document.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
discussed in section III.F.1 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 proposed 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 proposed standard. (42 U.S.C.
6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine
the impact, if any, of any lessening of competition likely to result
from a proposed standard and to transmit such determination to the
Secretary within 60 days of the publication of a proposed rule,
together with an analysis of the nature and extent of the impact. (42
U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of this proposed
rule to

[[Page 55141]]

the Attorney General with a request that the Department of Justice
(DOJ) provide its determination on this issue. DOE will publish and
respond to the Attorney General's determination in the final rule. DOE
invites comment from the public regarding the competitive impacts that
are likely to result from this proposed rule. In addition, stakeholders
may also provide comments separately to DOJ regarding these potential
impacts. See the ADDRESSES section for information to send comments to
DOJ.
f. Need for National Energy Conservation
DOE also considers the need for national energy and water
conservation in determining whether a new or amended standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy
savings from the proposed standards are likely to provide improvements
to the security and reliability of the Nation's energy system.
Reductions in the demand for electricity also may result in reduced
costs for maintaining the reliability of the Nation's electricity
system. DOE conducts a utility impact analysis to estimate how
standards may affect the Nation's needed power generation capacity, as
discussed in section IV.M of this document.
DOE maintains that environmental and public health benefits
associated with the more efficient use of energy are important to take
into account when considering the need for national energy
conservation. The proposed standards are likely to result in
environmental benefits in the form of reduced emissions of air
pollutants and 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.9 and results reported in section V.B.1.c
of this document.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this
rulemaking with regard to consumer boilers. Separate subsections
address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the
standards proposed in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential amended or new
energy conservation standards. The national impacts analysis uses a
second spreadsheet set that provides shipments projections and
calculates national energy savings and net present value of total
consumer costs and savings expected to result from potential energy
conservation standards. DOE uses the third spreadsheet tool, the
Government Regulatory Impact Model (GRIM), to assess manufacturer
impacts of potential standards. These three spreadsheet tools are
available on the DOE website for this proposed rulemaking:
<a href="http://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=45&action=viewcurrent">www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=45&action=viewcurrent</a>. Additionally, DOE used
output from the latest version of the Energy Information
Administration's (EIA's) Annual Energy Outlook (AEO), a widely known
energy projection for the United States, for the emissions and utility
impact analyses.

A. Market and Technology Assessment

DOE develops information in the market and technology assessment
that provides an overall picture of the market for the products
concerned, including the purpose of the products, the industry
structure, manufacturers, market characteristics, and technologies used
in the products. This activity includes both quantitative and
qualitative assessments, based primarily on publicly-available
information. The subjects addressed in the market and technology
assessment for this proposed rulemaking include: (1) a determination of
the scope of the rulemaking and product classes, (2) manufacturers and
industry structure, (3) existing efficiency programs, (4) shipments
information, (5) market and industry trends; and (6) technologies or
design options that could improve the energy efficiency of consumer
boilers. The key findings of DOE's market assessment are summarized in
the following sections. See chapter 3 of the NOPR TSD for further
discussion of the market and technology assessment.
1. Product Classes
When evaluating and establishing energy conservation standards, DOE
may establish separate standards for a group of covered products (i.e.,
establish a separate product class) if DOE determines that separate
standards are justified based on the type of energy used, or if DOE
determines that a product's capacity or other performance-related
feature justifies a different standard. (42 U.S.C. 6295(q)) In making a
determination whether a performance-related feature justifies a
different standard, DOE must consider such factors as the utility of
the feature to the consumer and other factors DOE determines are
appropriate. (Id.)
The current product classes are divided by the type of energy used
(i.e., gas, oil, or electricity) and by the heat transfer medium (i.e.,
steam or hot water) as shown in Table IV.1. (See 10 CFR 430.32(e)(2))
The current product classes were originally established by EISA 2007
and are codified at 10 CFR 430.32(e)(2)(iii)(A).

[[Page 55142]]

Table IV.1--Consumer Boiler Product Classes
------------------------------------------------------------------------
Fuel type Heat transfer medium
------------------------------------------------------------------------
Gas....................................... Steam.
Hot Water.
Oil....................................... Steam.
Hot Water.
Electric.................................. Steam.
Hot Water.
------------------------------------------------------------------------

In the May 2022 Preliminary Analysis, DOE maintained these product
classes, and the Department solicited feedback on whether any
additional product classes would be necessary for consumer boilers,
including a potential consideration for hydronic heat pump boilers.
(See the Executive Summary of the preliminary analysis TSD). Multiple
stakeholders provided feedback on potential additional product classes
for fossil fuel-fired hot water boilers and hydronic heat pump boilers,
as discussed in the subsections that follow.
a. Fossil Fuel-Fired Hot Water Boilers \21\
---------------------------------------------------------------------------

\21\ As discussed in chapter 3 of the NOPR TSD, due to the high
temperature of steam, condensing operation is not utilized in steam
boilers, and all steam boilers on the market are non-condensing.
Therefore, the discussion in this section is only applicable to hot
water boilers.
---------------------------------------------------------------------------

On December 29, 2021, DOE published in the Federal Register a final
interpretive rule for consumer furnaces, commercial water heaters, and
similarly situated products or equipment (the December 2021
Interpretive Rule), which explained DOE's return to its historic
position that, among other things, non-condensing technology and
associated venting of the flue gases is not a performance-related
``feature'' that provides a distinct consumer utility under EPCA.\22\
86 FR 73947.
---------------------------------------------------------------------------

\22\ For more information, see <a href="http://www.regulations.gov/docket/EERE-2018-BT-STD-0018">www.regulations.gov/docket/EERE-2018-BT-STD-0018</a> (Last accessed Jan. 3, 2023).
---------------------------------------------------------------------------

In the May 2022 Preliminary Analysis, DOE addressed several
comments on the March 2021 RFI from stakeholders requesting that the
Department consider non-condensing technology and associated venting to
be a performance-related feature, (see chapter 2 of the preliminary
TSD), and DOE maintained its position that non-condensing technology
does not constitute a performance-related ``feature,'' consistent with
the December 2021 Interpretive Rule. 87 FR 26304, 26308 (May 4, 2022).
In response to the May 2022 Preliminary Analysis, commenters provided
follow-up feedback with more information regarding how condensing
versus non-condensing technology would affect the applicable venting
categories.
As discussed in chapter 3 of the NOPR TSD, manufacturers generally
provide specific venting instructions based on the characteristics of
the heating appliance. The National Fire Protection Association (NFPA)
and ANSI maintain NFPA 54/ANSI Z223.1, ``National Fuel Gas Code,''
which assigns four venting categories to gas-fired appliances. Category
I venting is for nonpositive vent static pressures \23\ and limited
flue gas condensate \24\ production in the vent; Category II venting is
for nonpositive vent static pressures and excessive condensate
production in the vent; Category III venting is for positive vent
static pressures and limited condensate production in the vent, and
Category IV venting is for positive vent static pressures and excessive
condensate production in the vent. Non-condensing boilers can use
Category I venting, which is compatible with natural draft vent systems
that use chimney venting, but condensing boilers require category IV
venting, which is not compatible with natural draft vent systems.
(Category II venting is not common for consumer boilers, and Category
III venting can be used for non-condensing boilers but is also not
compatible with natural draft vent systems.)
---------------------------------------------------------------------------

\23\ Static pressure is the pressure created by a fluid at rest
relative to the measurement instrument. Here non-positive static
pressure refers to the flue gases having a pressure lower than
atmospheric pressure so no assistance is needed for the flue gases
to escape through the vent system.
\24\ Condensate refers to the moisture that condenses inside
venting systems when the flue gas is cooled to below the dew point
and liquid begins to condense on the walls of the vent system.
---------------------------------------------------------------------------

Crown and U.S. Boiler stated that the ability to vent residential
boilers using Category I venting is a feature that must be preserved
due to boilers being a primarily replacement market in older urban
areas with limited exterior wall space suitable for a vent terminal,
and they recommended that there should be a product class for Category
I boilers. Crown stated that the elimination of Category I venting
would result in the need for extensive renovations to some existing
structures if the chimney can no longer be used, the potential for
boilers to be used long after they are a safe option, the potential use
of less safe heating equipment such as electric space heaters, or the
possibility of poor venting reconfigurations that could lead to safety
issues. Crown and U.S. Boiler stated that these ramifications cannot be
addressed in the standards cost-benefit analysis. Crown and U.S. Boiler
pointed to the preliminary TSD, which discussed that both the United
Kingdom and European Union have exceptions to their condensing boiler
standards that allow for installation of non-condensing boilers in
difficult installation circumstances. (Crown, No. 30 at pp. 2-3; U.S.
Boiler, No. 31 at p. 2)
WMT stated that it believes that EPCA (42 U.S.C. 6295(o)(4))
prohibits the elimination of non-condensing hot water boilers, and non-
condensing operation constitutes a product feature per EPCA that
warrants a separate product class under 42 U.S.C. 6295(q)(1), as stated
by DOE in the January 2021 Interpretative Rule (86 FR 4776). (WMT, No.
32 at pp. 1-2) WMT suggested that non-condensing boilers in Category I
venting should be a separate product class in order to recognize that
these products operate at 180 [deg]F return water temperatures, vent
through Category I venting, and may be installed in insufficiently-
insulated homes. WMT asserted that these homes also do not have the
ability to increase heat emitter surface area, and, thus, the various
efficiency levels analyzed in the preliminary analysis could not be
achieved by this hypothetical new product class. (WMT, No. 32 at p. 7)
PB Heat advocated for a separate product class for non-condensing
boilers, claiming that this action would secure cost-effective products
for consumers, in terms of product lifespan and maintenance, as well as
maintaining the consumer boiler replacement market. (PB Heat, No. 34 at
p. 2)
In contrast, NYSERDA stated that condensing and non-condensing
boilers should remain in the same product class because condensing
operation is not a performance-related feature. NYSERDA indicated that
challenging installations represent a small proportion of the market.
NYSERDA provided data showing that almost 40 percent of all furnaces
and boilers in New York achieve a condensing level of performance,\25\
and commented that DOE's estimate that fewer than 5 percent of
installations could be labeled as challenging is well-supported and
reflective of the significant gain of market share that condensing
products have achieved over the last twenty years. (NYSERDA, No. 33 at
p. 3)
---------------------------------------------------------------------------

\25\ NYSERDA provided information from its 2019 Residential
Building Stock Assessment, found online at <a href="http://www.nyserda.ny.gov/About/Publications/Building-Stock-and-Potential-Studies/Residential-Building-Stock-Assessment">www.nyserda.ny.gov/About/Publications/Building-Stock-and-Potential-Studies/Residential-Building-Stock-Assessment</a> (Last accessed Jan. 3, 2023).
---------------------------------------------------------------------------

The Joint Advocates likewise supported DOE's decision to evaluate
condensing and non-condensing boilers within a single product class (as

[[Page 55143]]

discussed in chapter 2 of the preliminary TSD). The Joint Advocates
stated that condensing technology provides the same utility, uses the
same fuel source, and does not constitute a ``performance related
feature'' that would warrant a separate product class from non-
condensing technology. (Joint Advocates, No. 35 at p. 1) NEEA also
supported DOE's decision to evaluate condensing and non-condensing
boilers within a single product class, as both products utilize the
same primary fuel source, neither provides unique consumer utility, and
keeping them in the same class prevents non-condensing boiler
manufacturers from obtaining a competitive, regulatory advantage over
condensing boiler manufacturers (i.e., by having less-stringent
requirements). (NEEA, No. 36 at p. 1)
With respect to commenters' statements that non-condensing
technology and associated venting is a ``feature'' that DOE's standards
cannot make unavailable, DOE concluded in the December 2021 final
interpretive rule that incorporation of non-condensing technology and
associated venting is not a performance-related ``feature'' for the
purpose of the EPCA prohibition at 42 U.S.C. 6295(o)(4). 86 FR 73955
73947, 73955 (Dec. 29. 2021). In support of that conclusion, DOE
explained that given EPCA's focus on an appliance's major function(s),
it is reasonable to assume that the consumer would be aware of
performance-related features and would recognize such features as
providing additional benefit in the appliance's performance of such
major function. Id. For example, some boilers have Wi-Fi connectivity
features that allow the consumer to remotely monitor and control their
boiler.\26\ In contrast to these features, an aspect of the appliance
that does not provide any additional benefit to the consumer during
operation would not be a performance-related feature that Congress
would expect DOE to preserve at the expense of energy savings. With
respect to boilers, some examples are heat exchanger designs or
materials, burner designs, and ignition system designs. While all of
these components are necessary parts of a boiler, they are not
performance-related features that provide other additional benefit to
the consumer during operation. Non-condensing technology and associated
venting falls squarely into this category. Further, energy conservation
standards work by removing the less-efficient technologies and designs
from the market. For example, DOE set standards for furnace fans in
2014 that effectively eliminated permanent split capacitor motors from
several product classes in favor of brushless permanent magnet motors,
which are more efficient. 79 FR 38130. As a second example, the amended
standards for residential clothes washers established by the May 31,
2012, rule effectively eliminated the use of electromechanical-style
user interface controls from the market, in favor of fully electronic
user interface controls--which enable more efficient energy and water
performance. 77 FR 32307. As a third example, DOE published a final
rule on June 17, 2013, adopting energy conservation standards for
microwave oven standby mode and off mode. These standards effectively
eliminated the use of linear power supplies from microwave oven control
boards, in favor of switch-mode power supplies, which exhibit
significantly lower standby mode and off mode power consumption. 78 FR
36316. It would completely frustrate the energy-savings purposes of
EPCA if DOE were to adopt an overly-broad reading of ``features'' that
preserves less-efficient technologies without determining that boilers
using those less-efficient technologies offer consumers an additional
benefit during normal operation that other boilers do not offer.
---------------------------------------------------------------------------

\26\ For example, see: <a href="https://www.viessmann-us.com/content/dam/public-brands/us/flyers/Vitodens_200_W_B2HE_06_2021.pdf/_jcr_content/renditions/original./Vitodens_200_W_B2HE_06_2021.pdf">https://www.viessmann-us.com/content/dam/public-brands/us/flyers/Vitodens_200_W_B2HE_06_2021.pdf/_jcr_content/renditions/original./Vitodens_200_W_B2HE_06_2021.pdf</a>
and <a href="https://ntiboilers.com/wp-content/uploads/2020/09/FTVN_Series-Handout_2020_Web.pdf">https://ntiboilers.com/wp-content/uploads/2020/09/FTVN_Series-Handout_2020_Web.pdf</a>.
---------------------------------------------------------------------------

For these reasons, DOE disagrees with commenters that eliminating
non-condensing boiler technology and associated venting from the market
would violate EPCA's ``unavailability'' provision as that technology
does not provide unique utility to consumers that is not substantially
the same as that provided by condensing boilers. Moreover, such a
finding would preserve a less efficient technology with no unique
consumer utility at the expense of a significant savings of energy and
consumer benefit. Accordingly, for the purpose of the analysis
conducted for this rulemaking, DOE did not analyze separate equipment
classes for non-condensing and condensing boilers in this final rule.
In addition, while DOE agrees with NYSERDA that the number of
challenging installations represent a decreasing proportion of the
market because newer constructions can be designed around Category IV
venting considerations, DOE also agrees with manufacturers that those
few consumers with challenging installations could incur significant
costs. But DOE does not agree with the assertion by Crown and U.S.
Boiler that non-condensing technology and associated venting must be
preserved because the costs of these challenging installations cannot
be accounted for in DOE's economic analysis. First, as stated
previously, non-condensing technology and associated venting is not a
performance-related feature because, among other things, it does not
provide additional benefit in the appliance's performance of its major
function. Using existing venting can reduce installation costs, but
that does not provide the consumer with any additional benefits during
operation of the boiler. Further, EPCA specifically directs DOE to
consider installation and operating costs as part of the Department's
determination of economic justification. (See 42 U.S.C.
6295(o)(2)(B)(i)(II)) As a result, there is a clear distinction in EPCA
between the purposes of the product class provision in 42 U.S.C.
6295(q)--preserve performance-related features in the market--and the
economic justification requirement in 42 U.S.C. 6295(o)(2)(B)--
determine whether the benefits, e.g., reduced fuel costs for an
appliance, of a proposed standard exceed the burdens, e.g., increased
installation cost. And, DOE has accounted for the costs of altering or
replacing an existing venting system with a venting system that will
accommodate a condensing furnace as part of the installation costs in
the LCC analysis (see section IV.F.2 of this document and chapter 8 of
the NOPR TSD).
With respect to Crown and U.S. Boiler's concerns regarding safety
issues caused by condensing boilers, DOE is not aware of, nor have the
commenters provided, any data showing that non-condensing boilers are a
safer option than condensing boilers. DOE notes that condensing boilers
are currently widely available on the market and have been available
for decades, and in certain locations have experienced widespread
adoption (even having achieved greater market share than non-condensing
boilers in some areas). Given the track record of condensing boilers
being installed and operated safely, DOE finds that installers are
capable of safely installing and venting condensing boilers, even in
circumstances that would require the venting system to be upgraded.
Additionally, in response to WMT, DOE expects that condensing
boilers and non-condensing boilers alike would be capable of operating
with return water temperatures of 180 [deg]F. Thus, the return water
temperature provided by the product would not be reason to
differentiate product classes. DOE understands that condensing boilers,
when operating at these temperatures,

[[Page 55144]]

would have minimal condensation occurring in the heat exchanger, which
does result in non-condensing efficiency. This effect is accounted for
in the energy use analysis (see section IV.E of this document).
b. Hydronic Heat Pump Boilers
In the May 2022 Preliminary Analysis, DOE specifically sought
information regarding whether there are any performance-related
features of heat pump boilers which would justify a separate product
class. DOE also requested information on the expected market for such
products (see the Executive Summary of the preliminary analysis TSD).
Rheem suggested that DOE should include heat pump boilers in the
existing product class structure, but if that cannot be accomplished, a
separate product class may be warranted, with changes to the regulatory
definition for consumer boilers. (Rheem, No. 37 at p. 2)
Crown and U.S. Boiler stated that heat pump boilers are unable to
generate water temperatures high enough to satisfy the design heating
load of the vast majority of the residential hot water heating systems
in the United States, and, therefore, if heat pump boilers are
considered to be consumer boilers, they should be placed in their own
products class. (Crown, No. 30 at p. 3; U.S. Boiler, No. 31 at p. 3)
BWC commented that heat pump boilers are not able to provide the same
utility as conventional consumer boilers, especially during extreme
environmental conditions, and, therefore, should be placed in a
separate class than conventional consumer boilers. (BWC, No. 39 at p.
1)
As discussed in section III.C of this document, the DOE test
procedure for consumer boilers would not currently provide test results
that are representative of the energy use or energy efficiency of an
air-to-water or water-to-water heat pump boiler, and without an
appropriate test procedure for these products at this time, DOE did not
analyze heat pump boilers in this NOPR.
2. Market Assessment
In the market assessment, DOE obtains information on the present
and past industry structure and market characteristics in order to
inform multiple other analyses. In preparing the May 2022 Preliminary
Analysis, DOE reviewed available public literature to develop an
understanding of the consumer boiler industry in the United States,
including assessing manufacturer market share and characteristics,
existing regulatory and non-regulatory initiatives for improving
product efficiency, and trends in product characteristics and retail
markets. The Department used data sources such as its own Compliance
Certification Database (CCD),\27\ supplemented by information in
California Energy Commission's Modernized Appliance Efficiency Database
System (MAEDbS),\28\ AHRI's Directory of Certified Product
Performance,\29\ and the U.S. Environmental Protection Agency's ENERGY
STAR product finder.\30\ DOE specifically sought comment in the May
2022 Preliminary Analysis on whether manufacturer model counts from
publicly-available databases accurately reflect manufacturer market
shares on a model-weighted or sales-weighted basis in order to inform
the LCC analysis by providing insights into the typical consumer or
installation scenarios (see the Executive Summary of the consumer
boilers preliminary TSD).
---------------------------------------------------------------------------

\27\ DOE's CCD can be found online at: <a href="http://www.regulations.doe.gov/certification-data/#q=Product_Group_s%3A*">www.regulations.doe.gov/certification-data/#q=Product_Group_s%3A*</a> (Last accessed Jan. 3,
2023).
\28\ MAEDbS can be found online at:
<a href="http://cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx">cacertappliances.energy.ca.gov/Pages/ApplianceSearch.aspx</a> (Last
accessed Jan. 3, 2023).
\29\ AHRI's Directory of Certified Product Performance can be
found online at: <a href="http://www.ahridirectory.org/Search/SearchHome">www.ahridirectory.org/Search/SearchHome</a>?ReturnUrl=%2f (Last accessed March 1, 2023).
\30\ EPA's ENERGY STAR product finder can be found online at:
<a href="http://www.energystar.gov/products/products_list">www.energystar.gov/products/products_list</a> (Last accessed Jan. 3,
2023).
---------------------------------------------------------------------------

WMT stated that certification databases do not indicate shipments
and, thus, reflect the distribution of neither input capacities nor
efficiencies. (WMT, No. 32 at pp. 7-8) WMT commented that the boilers
market is increasingly transitioning towards higher efficiencies, and
this is occurring in specific areas and regions where higher-efficiency
consumer boilers have the most financial benefit and the application
allows for it. The commenter stated that areas with lower adoption
rates are based less on need for financial benefit than the inability
to adapt the building to lower water circulation temperatures required
for high-efficiency products; in other words, regions where local
building codes or policies result in increased installation costs or
even prohibit condensing appliance installations have the least
transition towards higher efficiencies. WMT commented that this would
disproportionally affect certain consumer subgroups. (WMT, No. 32 at p.
11)
Similarly, Rheem did not recommend using model counts from
publicly-available databases to reflect market shares. (Rheem, No. 37
at p. 2)
AHRI also disagreed with the Department's use of manufacturer model
counts from publicly-available databases to reflect manufacturer market
shares on a model-weighted or sales-weighted basis, claiming that these
databases do not accurately represent market share and misrepresent the
market. (AHRI, No. 40 at p. 3) In a follow-up submission, AHRI provided
information to DOE containing a market share analysis for gas-fired hot
water boilers. AHRI stated that its contractor survey, completed in
July 2022, was conducted in conjunction with the Air Conditioning
Contractors of America (ACCA) and the Plumbing, Heating, and Cooling
Contractors Association (PHCC), and that it gathered feedback from over
140 experienced contractors. (AHRI, No. 42 at p. 1)
DOE notes that the data provided by AHRI contained insights into
manufacturer shipments, installation types, consumer boiler lifetimes,
and other parameters which DOE has incorporated, as applicable, into
its market assessment and considered for the downstream analyses (e.g.,
LCC and PBP, shipments).
3. Technology Options
In the preliminary market analysis and technology assessment, DOE
identified 13 technology options that would be expected to improve the
efficiency (in terms of the three regulated metrics: AFUE,
P<INF>W,SB</INF>, and P<INF>W,OFF</INF>) of consumer boilers, as
measured by the DOE test procedure:
Technology options to improve AFUE: heat exchanger improvements,
modulating operation, vent dampers, direct vent, pulse combustion,
premix burners, burner derating, low-pressure air-atomized oil burners,
delayed-action oil pump solenoid valves, and electronic ignition.
Technology option to improve PW,SB and PW,OFF: control relays for
models with brushless permanent magnet (BPM) motors, transformer
improvements, and switching mode power supplies.
Additionally, based on an extensive review of publicly available
literature, DOE listed technologies that could potentially improve the
overall efficiency of consumer boilers but would not result in
improvements to AFUE, P<INF>W,SB</INF>, or P<INF>W,OFF</INF>. These
were, namely: micro combined heat and power systems, improved motor
efficiency, positive shut-off valves for oil burner nozzles, renewable
natural

[[Page 55145]]

gas,\31\ and heat pump technology. See chapter 3 of the preliminary TSD
for details. After developing the preliminary list of technology
options, DOE requested feedback on this list. The Department also
sought information regarding the adoption of low-loss transformers and
switching mode power supplies in consumer boilers to meet the existing
P<INF>W,SB</INF> and P<INF>W,OFF</INF> standards.
---------------------------------------------------------------------------

\31\ Renewable natural gas is methane (natural gas) that is
produced via the breakdown of biological material, then treated to
remove contaminants.
---------------------------------------------------------------------------

BWC disagreed with some of the design characteristics which were
presented in Table 3.3.2 of the preliminary TSD, stating that non-
condensing copper heat exchangers can be either Category I or II
venting, not just Category II venting. BWC also stated that condensing
operation can begin in venting at around the 85-percent AFUE level, as
opposed to the 88-percent AFUE threshold described in the preliminary
TSD. BWC recommended that DOE perform a more up-to-date teardown
analysis to address these discrepancies. (BWC, No. 39 at p. 2) In
response, DOE believes that BWC may have misinterpreted the information
provided in this table. Table 3.3.2 of the preliminary TSD simply
provides brief descriptions of the terms that are used to characterize
consumer boiler designs, and these terms are grouped together in
accordance with the corresponding design parameter. DOE stated in Table
3.3.2 that copper heat exchangers are used in some non-condensing
models, not that these heat exchangers are limited to Category II
venting.
Rheem stated that renewable natural gas likely has little effect on
efficiency compared to traditional natural gas, and, therefore, the
commenter recommended that this technology option should be removed
from the analysis. (Rheem, No. 37 at p. 2) DOE agrees that renewable
natural gas would not result in improvements to AFUE, P<INF>W,SB</INF>,
or P<INF>W,OFF</INF>, and, thus, this fuel has not been considered as a
technology option in this NOPR.
AHRI stated that it does not have data on any current technologies
that can be used to reach a more-stringent standard, but further stated
that consumer boilers are typically installed within the thermal
envelope of the building and any energy lost from the consumer boiler
results in useful heat provided to the building. (AHRI, No. 40 at pp.
3-4) In response, DOE notes that a consumer boiler's primary purpose is
to deliver heat to the hot water or steam in the home heating loop. DOE
understands the comment from AHRI to mean that any technologies which
limit the loss of heat from the consumer boiler to its immediate
surroundings (i.e., heat that does not go into the hot water or steam)
should not be considered as improving the efficiency of the consumer
boiler because the heat is ultimately delivered to the building even if
it is not through the hot water or steam. The previous appendix N test
procedure and the new appendix EE test procedure both account for this
by assigning a value of 0 to the jacket loss factor (a value which
quantifies heat lost directly to the consumer boiler's surroundings
through its jacket) if the boiler is non-weatherized, as it is assumed
to be located within the conditioned space of the building.\32\ At the
time of this analysis, DOE did not identify any commercially available
weatherized consumer boilers. The technology options identified as
improving AFUE are consistent with this understanding.
---------------------------------------------------------------------------

\32\ In defining the AFUE metric, EPCA states that this
descriptor is based on the assumption that all weatherized warm air
furnaces or boilers are located out-of-doors, and boilers which are
not weatherized are located within the heated space. (42 U.S.C.
6291(20)(A)-(C)) The jacket loss is, therefore, assigned a value of
0 for any boilers that are non-weatherized.
---------------------------------------------------------------------------

DOE requests information on the market share of weatherized
consumer boilers and the typical jacket losses of such products.
BWC strongly discouraged DOE from evaluating more-stringent standby
mode and off mode power consumption (P<INF>W,SB</INF> and
P<INF>W,OFF</INF>) standards. BWC commented that, based on its own
testing, it has not seen a significant decrease in energy used in
standby mode through the use of larger, low-loss transformers. BWC also
stated that DOE's methodology of examining a few discrete components
and their energy consumption instead of the overall power consumption
of the consumer boiler was of concern to BWC because it fails to
account for the power consumed by a consumer boiler's entire electrical
system (including all ancillary components), and it recommended not to
pursue more-stringent power consumption standards. (BWC, No. 39 at p.
2)
In response, DOE has considered this information about the
implementation of low-loss transformers and has tentatively determined
that it remains uncertain whether this technology option can be used to
further reduce standby mode and off mode energy consumption. In the
January 2016 Final Rule, DOE had determined that low-loss transformers
and switching mode power supplies would be necessary to achieve the
P<INF>W,SB</INF> and P<INF>W,OFF</INF> standards that were promulgated
in that rule (which were set at the maximum technologically feasible
levels at the time). 81 FR 2320, 2407-2408 (Jan. 15, 2016). As
discussed in chapter 5 of the NOPR TSD, transformer improvements (i.e.,
low loss transformers) and switching mode power supplies would have
uncertain potential to further improve standby mode and off mode power
consumption because these were considered to be the maximum
technologically feasible designs in the January 2016 Final Rule which
established the current standards. Thus, low-loss transformers and
switching mode power supplies were not considered as potential design
options for consumer boilers in this NOPR. In this NOPR, DOE
tentatively determined that control relays are the only viable
technology option remaining which can lead to discernible improvements
to P<INF>W,SB</INF> and P<INF>W,OFF</INF>. However, as discussed in
section IV.B of this document, control relays were screened out from
further consideration, leaving no design options currently identified
to improve these metrics. As a result, this NOPR did not further assess
potential amended P<INF>W,SB</INF> and P<INF>W,OFF</INF> standards, and
only amended AFUE standards are proposed. See chapters 3 and 4 of the
NOPR TSD for further details of the technology assessment leading to
this tentative conclusion not to further analyze amended standby mode
and off mode energy consumption standards at this time.
DOE received multiple comments in response to the May 2022
Preliminary Analysis regarding heat pumps as technology options for
consumer boilers. NYSERDA, the Joint Advocates, and NEEA recommended
that heat pumps be considered as technology options once a test
procedure for these products is established, suggesting that heat pump
boilers would define the maximum technologically feasible efficiency
for consumer boilers. (NYSERDA, No. 33 at p. 2; Joint Advocates, No. 35
at pp. 1-2; NEEA, No. 36 at pp. 1-2)
Additionally, NYSERDA stated that New York's ambitious climate
objectives will require retrofitting the heating systems of existing
homes to reduce GHGs, and given the prevalence of hydronic systems in
the New York market, providing consumers choices for low-emission
hydronic heating solutions will be important. (NYSERDA, No. 33 at p. 2)
The Joint Advocates commented that hydronic heating is used in 8
percent of homes overall in the United States, including 28 percent of
homes in the Northeastern region, and heat pump boilers will assist
that proportion's rise to higher efficiencies as State policies

[[Page 55146]]

shift forward. The Joint Advocates stated that gas absorption heat
pumps can replace standard gas space heating appliances in cold
climates, operating at much higher theoretical AFUE values. (Joint
Advocates, No. 35 at pp. 1-2)
NEEA recommended that DOE should evaluate electric and gas heat
pump technology, as well as dual-fuel heat pump boilers and gas
absorption heat pump boilers, for consumer boilers as potential ``max-
tech'' efficiency levels. NEEA stated that these products provide the
same product utility as conventional consumer boilers and that these
products are commercially available. (NEEA, No. 36 at pp. 1-2)
WMT, on the other hand, stated that it is not aware of viable heat
pump boilers in the market which can operate consistently and reliably
at circulating water temperatures sufficient for heating needs across
the Nation. (WMT, No. 32 at p. 8) AHRI commented that it did not have
data regarding current technologies that can be used to meet more-
stringent standards or the adoption of electric heat pump or gas heat
pump technology in the consumer boiler market. (AHRI, No. 40 at pp. 3-
4)
As discussed in section IV.A.1.b of this document, DOE has
tentatively determined that heat pump technology would not yield
improvements in AFUE per the new appendix EE test procedure, and that
further development of the test procedure would be necessary in order
to address these novel products. Therefore, DOE has not included heat
pump technologies in its list of technology options for this NOPR. The
Department appreciates the feedback and information provided by
stakeholders on this topic and will continue to evaluate heat pump
boilers in a future rulemaking.

B. Screening Analysis

DOE uses the following five screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:

(1) Technological feasibility. Technologies that are not
incorporated in commercial products or in commercially viable,
existing prototypes will not be considered further.
(2) Practicability to manufacture, install, and service. If it
is determined that mass production of a technology in commercial
products and reliable installation and servicing of the technology
could not be achieved on the scale necessary to serve the relevant
market at the time of the projected compliance date of the standard,
then that technology will not be considered further.
(3) Impacts on product utility. If a technology is determined to
have a significant adverse impact on the utility of the product to
subgroups of consumers, or results in the unavailability of any
covered product type with performance characteristics (including
reliability), features, sizes, capacities, and volumes that are
substantially the same as products generally available in the United
States at the time, it will not be considered further.
(4) Safety of technologies. If it is determined that a
technology would have significant adverse impacts on health or
safety, it will not be considered further.
(5) Unique-pathway proprietary technologies. If a technology has
proprietary protection and represents a unique pathway to achieving
a given efficiency level, it will not be considered further, due to
the potential for monopolistic concerns.

10 CFR part 430, subpart C, appendix A, sections 6(b)(3) and 7(b).
In summary, if DOE determines that a technology, or a combination
of technologies, fails to meet one or more of the listed five criteria,
it will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed in
the following sections.
The subsequent discussion includes comments from interested parties
pertinent to the screening criteria, DOE's evaluation of each
technology option against the screening analysis criteria, and whether
DOE determined that a technology option should be excluded (``screened
out'') based on the screening criteria.
In response to the May 2022 Preliminary Analysis, several
commenters raised concerns regarding the consideration of an 85-percent
AFUE efficiency level for gas-fired hot water boilers, stating that
this particular efficiency could have issues with installation and
repair, reliability, and safety. These commenters assert that this
issue should have bearing on DOE's consideration of technology options
for this rulemaking.
AGA, APGA, and NPGA stated that if DOE were to propose 85-percent
AFUE as a standard, it would be too close to condensing operation to be
safely implemented with existing Category I venting systems, and that
forcing the consumer to upgrade to condensing technology would place
undue burden and expense on the consumer. AGA, APGA, and NPGA stated
that manufacturers would not produce consumer boilers that are prone to
failure, instead opting to make condensing boilers, thereby limiting
the choice of and increasing the burden on the consumer. (AGA, APGA and
NPGA, No. 38 at p. 3) Rheem similarly expressed concern that the 85-
percent efficiency level is too close to condensing operation to be
used safely without reliability issues and costly upgrades. (Rheem, No.
37 at p. 4)
Reiterating its comments from the previous standards rulemaking,
Crown provided data from the U.S. Consumer Product Safety Commission
(CPSC) on failure modes that led or contributed to carbon monoxide
incidents associated with modern furnaces and boilers between the years
2002-2009 and concluded that, as the AFUE increases, the likelihood
that one of these failure modes would cause a carbon monoxide incident
also increases. Crown stated that this is due the flue gases being less
buoyant at higher efficiencies, and, thus, being less able to overcome
the effects of depressurization, partial blockage, back-drafting, or an
improperly designed vent system; additionally, cooler flue gases are
more likely to cause damage to the vent system if something else also
goes wrong (e.g., Crown provided the example of trace halogen
aspiration into the consumer boiler). (Crown, No. 30 at pp. 3-5) U.S.
Boiler provided the same comments as Crown. (U.S. Boiler, No. 31 at pp.
3-5)
Crown stated that setting a standard for gas-fired hot water
boilers at 85-percent AFUE would completely ignore the safety and
reliability concerns that can result from the installation of a
consumer boiler operating at this efficiency level into a Category I
chimney. Crown provided graphical data charting flue gas CO<INF>2</INF>
concentration and net flue gas temperature that suggested that the
steady-state efficiency at which a consumer boiler could operate while
maintaining a Category I designation would be between 82.7-84.1-percent
AFUE. Crown made the observation that, since AFUE will never exceed
steady-state efficiency, the current standard at 84-percent AFUE, for
all practical purposes, is already at this limit. Crown argued that
while there are consumer boilers on the market at 85-percent AFUE, not
all of them are certified to ANSI Z21.13, ``Gas-Fired Low Pressure
Steam And Hot Water Boilers,'' and are, therefore, not officially
Category I venting. Crown also stated that these 85-percent AFUE
consumer boilers have modifications such as power gas burners and
operate in conditions different than laboratory conditions where AFUE
was determined, creating uncertainty on whether they would be safe in
all field conditions. Crown commented that while there are explicit
instructions on how to install consumer boilers, manufacturers have
little control on whether these instructions are followed, and an AFUE
minimum of 85 percent introduces more of a safety risk to the consumer;
therefore, a standard at this level would force all manufacturers to

[[Page 55147]]

either prescribe vent requirements more stringent than those currently
in the National Fuel Gas Code and/or give up any remaining extra safety
margin they have built into their products for suboptimal vent systems,
all for an incremental energy savings benefit likely amounting to a
rounding error. (Crown, No. 30 at pp. 3-5) U.S. Boiler provided the
same comments. (U.S. Boiler, No. 31 at pp. 3-5)
In response, DOE understands that Crown, U.S. Boiler, APA, APGA,
and NPGA are concerned about the safety of installing gas-fired hot
water boilers with incremental heat exchanger improvements (leading to
an AFUE of 85 percent) within current Category I venting systems.
However, as a technology option, an increase in heat exchanger
effectiveness alone does not pose a safety risk for consumers or
service technicians. To this point, in the January 2016 Final Rule, the
Department recognized that certain efficiency levels could pose health
or safety concerns under certain conditions if they are not installed
properly in accordance with manufacturer specifications. However, these
concerns can be resolved with proper product installations and venting
system design; this is evidenced by the significant shipments of
products that are currently commercially available at these efficiency
levels, as well as the lack of restrictions on the installation
location of these units in installation manuals. In addition, DOE noted
that products achieving these efficiency levels have been on the market
since at least 2002, which demonstrates their reliability, safety, and
consumer acceptance. In some circumstances, if the potential for
condensate is high, different vent materials (such as a high grade
stainless steel vent) may be required to withstand the condensate. High
efficiency condensing boilers typically use PVC/CPVC venting since the
exhaust gases are cool enough. Given the significant product
availability and the amount of time products at these efficiency levels
have been available on the market, DOE continues to believe that
products at these efficiency levels are safe and reliable when
installed correctly. 81 FR 2320, 2344-2345 (Jan. 15, 2016).
Further, DOE examined the most recent report from the CPSC
regarding carbon monoxide incidents related to the use of consumer
products, which presented data from 2018 (CPSC 2018 Report).\33\ This
report discusses that information collected on the carbon monoxide
incidents often describes conditions of compromised vent systems, flue
passageways, and chimneys for furnaces, boilers, and other heating
systems. CPSC 2018 Report at p. 9. Specifically, the CPSC 2018 Report
states that ``[a]ccording to the information available, some products
had vents that became detached or were installed/maintained improperly.
Vents were also sometimes blocked by soot caused by inefficient
combustion, which, in turn, may have been caused by several factors,
such as leaky or clogged burners, an over-firing condition, or
inadequate combustion air. Other furnace-related conditions included
compromised heat exchangers or filter doors/covers that were removed or
not sealed. Some products were old and apparently not well maintained.
Other incidents mentioned a backdraft condition, large amounts of
debris in the chimney, and the use of a product that was later
prohibited by the utility company and designated not to be turned on
until repaired.'' Id. Based on this information, DOE has tentatively
determined that it is the potential for older or improperly maintained
venting and burner systems to be inadequate which may pose a safety
risk, and not the higher-efficiency consumer boiler itself. In other
words, high efficiency boilers available on the market today are just
as safe as baseline boilers when they are installed and maintained
properly. If either high-efficiency or low-efficiency boilers are not
installed and maintained properly, then some potential for safety
concerns may exist as outlined by the CPSC report. But DOE has not
found, nor have commenters presented, evidence that more stringent
standards for boilers would result in a reduction of boiler safety. In
the LCC analysis, DOE accounts for the costs associated with correctly
installing boilers (including modifications to vent system when
appropriate), as well as preventative maintenance and any necessary
repairs over the lifetime of a product. As a result, DOE has not
screened out heat exchanger improvements as a technology option from
this NOPR analysis.
---------------------------------------------------------------------------

\33\ M.V. Hnatov, ``Non-Fire Carbon Monoxide Deaths Associated
with the Use of Consumer Products; 2018 Annual Estimates,'' U.S.
Consumer Product Safety Commission, September 2021. Available online
at <a href="http://www.cpsc.gov/s3fs-public/Non-Fire-Carbon-Monoxide-Deaths-Associated-with-the-Use-of-Consumer-Products-2018-Annual-Estimates.pdf?VersionId=IN1CTo8Njoxta0CmddOUl2t.tmQ.iEEb">www.cpsc.gov/s3fs-public/Non-Fire-Carbon-Monoxide-Deaths-Associated-with-the-Use-of-Consumer-Products-2018-Annual-Estimates.pdf?VersionId=IN1CTo8Njoxta0CmddOUl2t.tmQ.iEEb</a> (Last
accessed Jan. 3, 2023).
---------------------------------------------------------------------------

PB Heat stated that the current minimum efficiency levels are close
to the condensing range, and increasing them any further will reduce
applications where Category I consumer boilers can be installed and,
therefore, reduce consumer utility and access to affordable heating.
(PB Heating, No. 34 at p. 1)
As stated in section IV.A.1.a of this document, in this rulemaking,
DOE is not considering venting configurations to constitute a consumer
or product utility, consistent with the conclusions of the December
2021 Interpretive Rule. DOE acknowledges that certain types of homes
may require substantial investment to upgrade the venting if
transitioning from a Category I vent system to a Category IV vent
system, and the Department aims to accurately capture these costs to
the consumer in the LCC and PBP analyses. Additionally, DOE has
considered a low-income consumer subgroup in order to assess the LCC
impacts on access to affordable heating in particular. The details of
these analyses are discussed in sections IV.F and IV.I of this
document, respectively.
1. Screened-Out Technologies
Rheem suggested that hydrogen technology (including hydrogen and
hydrogen blends) should be screened out from the technology options in
this rulemaking due to technological feasibility. (Rheem, No. 37 at p.
3)
In response, DOE notes that in commenting on the March 2021 RFI,
Rheem had recommended that the Department consider new fuel sources,
including hydrogen-blended gas and renewable natural gas, while stating
that industry groups are currently evaluating the safe and efficient
use of hydrogen-blended fuels (with up to 15-percent hydrogen) in gas-
fired appliances. (Rheem, No. 10 at p. 5) Consequently, DOE included
hydrogen-ready boilers \34\ in the technology assessment of the May
2022 Preliminary Analysis (see chapter 3 of the preliminary TSD). DOE
evaluated hydrogen-ready boilers and differences in burner systems that
would be able to accommodate a transition to hydrogen blend gas and has
tentatively determined that hydrogen-ready burner designs do not appear
to contribute to gains in AFUE. As a result of these findings, DOE did
not consider hydrogen-ready burners in this NOPR as a technology option
to improve consumer boiler AFUE, and, thus, this technology was not
even included in the NOPR screening analysis. In addition, DOE notes
that hydrogen-ready boilers do not appear to be commercially-available
technologies in the United States, and have not yet been

[[Page 55148]]

demonstrated to be commercially-viable and mass-produced, as per
screening criteria number 2; therefore, even if hydrogen-ready burners
were to provide an efficiency benefit to consumer boilers, this
technology would have likely been screened out during this proposed
rulemaking on the basis of practicability to manufacture, install, and
service.
---------------------------------------------------------------------------

\34\ ``Hydrogen-ready'' boilers are appliances that have the
ability to burn both natural gas and hydrogen (i.e., either a blend
of the two fuels or a complete switch between fuels).
---------------------------------------------------------------------------

DOE requests further information on the potential future adoption
of hydrogen-ready consumer boilers in the United States and any data
demonstrating potential impacts of these burner systems on AFUE.
After consideration of each technology option analyzed in the
technology assessment, DOE has screened out the following technologies
in this NOPR analysis: condensing operation in oil-fired hot water
boilers, pulse combustion, burner derating, low-pressure air-atomized
oil burners, and control relays for models with BPM motors. DOE
screened these technologies out in the May 2022 Preliminary Analysis
for the reasons explained in that document (see chapter 4 of the
preliminary analysis TSD), but the Department did not receive any
additional feedback from stakeholders on these determinations. Table
IV.2 presents the criteria that were the basis for screening out each
of these technologies from further consideration in the NOPR analysis.
Further details can be found in chapter 4 of the NOPR TSD.

Table IV.2--Screened-Out Technologies for Consumer Boilers
--------------------------------------------------------------------------------------------------------------------------------------------------------
EPCA criterion (X = basis for screening out)
-------------------------------------------------------------------------------------
Practicability Adverse Adverse
Technology option Technological to manufacture, impacts on impacts on Unique- pathway
feasibility install, and utility or health and proprietary
service availability safety technologies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Condensing operation in oil-fired hot water boilers............... ............... X ............... ............... ...............
Pulse combustion.................................................. ............... ................ ............... X ...............
Burner derating................................................... ............... ................ X ............... ...............
Low-pressure air-atomized oil burners............................. ............... X ............... ............... ...............
Control relays for BPM motors..................................... ............... ................ X ............... ...............
--------------------------------------------------------------------------------------------------------------------------------------------------------

DOE requests comment on the tentative determination that condensing
operation in oil-fired hot water boilers, pulse combustion, burner
derating, low-pressure air-atomized oil burners, and control relays for
models with BPM motors should be screened out from further analysis.
2. Remaining Technologies
Through a review of each technology, DOE tentatively concludes that
all of the other identified technologies met all five screening
criteria to be examined further as design options to improve AFUE in
DOE's NOPR analysis. In summary, DOE did not screen out the following
technology options presented in Table IV.3.

Table IV.3--Retained Technologies for Consumer Boilers
------------------------------------------------------------------------
Technology
-------------------------------------------------------------------------
Type Design Option
------------------------------------------------------------------------
Fans/Venting...................... Inducer fans.*
Vent dampers.
Direct venting/power venting.
Heat Exchanger Improvements....... Condensing heat exchanger (for gas
hot water boilers only)
Improved geometry and increased heat
exchanger surface area.
Baffles.
Burner............................ Modulating operation/modulating
Aquastats.
Premix burners.
Delayed-action oil pump solenoid
valves.
Ignition.......................... Electronic ignition (for oil-fired
boilers)
------------------------------------------------------------------------
* In chapter 3 of the May 2022 Preliminary Analysis TSD, inducer fans
were described as mechanical draft systems and grouped with heat
exchanger improvements, as use of induced draft can allow for use of
more restrictive heat exchanger designs that improve heat transfer.

DOE has initially determined that these technology options are
technologically feasible because they are being used or have previously
been used in commercially-available products or working prototypes. DOE
also finds that all of the remaining technology options to improve AFUE
meet the other screening criteria (i.e., practicable to manufacture,
install, and service and do not result in adverse impacts on consumer
utility, product availability, health, or safety, unique-pathway
proprietary technologies).
By screening out control relays for models with BPM motors, DOE has
tentatively determined that there remain no other technology options
which could viably improve standby mode and off mode power consumption.
As a result of this screening analysis, DOE has tentatively determined
that it is not technologically feasible at this time to increase the
stringency of the standby mode and off mode power consumption standards
for consumer boilers.
For additional details, see chapter 4 of the NOPR TSD.

C. Engineering Analysis

The purpose of the engineering analysis is to establish the
relationship between the efficiency and cost of consumer boilers. There
are two elements to consider in the engineering analysis: the selection
of efficiency levels to analyze (i.e., the ``efficiency analysis'') and
the determination of product cost at each efficiency level (i.e., the
``cost analysis''). In determining the performance of higher-efficiency
products, DOE considers technologies

[[Page 55149]]

and design option combinations not eliminated by the screening
analysis. For each product class, DOE estimates the baseline cost, as
well as the incremental cost for the product at efficiency levels above
the baseline. The output of the engineering analysis is a set of cost-
efficiency ``curves'' that are used in downstream analyses (i.e., the
LCC and PBP analyses and the NIA).
As discussed in the previous section of this document, DOE has
tentatively determined that it is not technologically feasible at this
time to increase the stringency of the standby mode and off mode power
consumption standards for consumer boilers because all of the potential
technology options have either uncertain impact on P<INF>W,SB</INF> and
P<INF>W,OFF</INF> or have been removed from further consideration in
the screening analysis. Thus, the engineering analysis of this NOPR
assesses improvements in AFUE only.
AHRI supported the Department's preliminary decision not to analyze
a more-stringent standard for standby and off mode power consumption,
stating that there is limited benefit to setting a more-stringent
standard. (AHRI, No. 40 at p. 4) Rheem also supported DOE's tentative
determination not to analyze more-stringent standby mode and off mode
standards. Rheem requested clarification as to whether DOE can
simultaneously increase the minimum AFUE if that results in an increase
in electrical energy consumption and a corresponding increase in
standby mode and off mode energy use, even if the combined change
results in a net decrease in energy use. (Rheem, No. 37 at pp. 3-4)
In response to the question from Rheem, EPCA states that the
Secretary may not prescribe any amended standard which increases the
maximum allowable energy use or decreases the minimum required energy
efficiency of a covered product (which includes consumer boilers). (42
U.S.C. 6295(o)(1)) This statutory ``anti-backsliding'' provision would
prohibit DOE from increasing the standby mode and off mode energy
consumption standards.
The comment from Rheem appears to suggest that standards should
consider a combined metric of both active mode, standby mode, and off
mode energy consumption. EPCA requires integration of standby mode and
off mode energy consumption ``into the overall energy efficiency,
energy consumption, or other energy descriptor for each covered
product, with one exception being if such an integrated test procedure
is technically infeasible for a particular covered product, in which
case the Secretary shall prescribe a separate standby mode and off mode
energy use test procedure for the covered product, if technically
feasible. (42 U.S.C. 6295(gg)(2)(A)) In a final rule published in the
Federal Register on October 20, 2010, DOE determined that an integrated
metric is not technically feasible because the measurement of standby
mode and off mode energy consumption is much smaller than the active
mode fuel consumption reflected in AFUE, making the standby mode and
off mode energy consumption infeasible to regulate as part of a
combined metric. 75 FR 64621, 64622-64627.
From its own test data and manufacturer interviews, DOE has
tentatively determined that increases to the AFUE of a boiler would not
result in increases to the standby mode and off mode power consumption
in such a way that it would be impossible to comply with the existing
standby mode and off mode power consumption standards.
Additionally, as discussed in section III.C of this document, DOE's
test method for consumer boilers assigns a value of 100-percent AFUE to
any electric boiler which is non-weatherized (see section 11.1 of
ASHRAE 103-2017, which is incorporated by reference into appendix EE).
DOE has not identified any electric boilers that are weatherized or
intended for installation outdoors, and has tentatively determined that
electric boilers would typically be non-weatherized and installed
indoors. As such, the AFUE for these products would already be at the
maximum possible value per the test procedure. Thus, DOE did not
further analyze electric hot water or electric steam boilers in the
engineering analysis, and AFUE-based standards for these product
classes are not proposed in this NOPR.
The following subsections outline the methodology used when
conducting the efficiency analysis and cost analysis.
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 proposed rulemaking, DOE has relied on the efficiency-level
approach. This approach ensures that the efficiency levels considered
in the engineering analysis are attainable using technologies which are
commercially available and viable for consumer boilers, and DOE
considered this approach reasonable because all of the technology
options to improve AFUE that passed the screening analysis have been
observed in commercially-available products. Additionally, as discussed
later, since the consumer boiler industry is relatively mature, it
exhibits a design option pathway to improved AFUE efficiency
demonstrated by models on the market. As such, DOE was able to conduct
teardown analyses on consumer boilers which meet each efficiency level,
and ascertain a list of representative design options which
manufacturers are most likely to employ in order to achieve these
efficiencies. The selection of these efficiency levels from market data
is discussed in the following sections.
a. Baseline Efficiency
For each product class, DOE generally selects a baseline model as a
reference point for each class, and measures changes resulting from
potential energy conservation standards against the baseline. The
baseline model in each product class represents the characteristics of
a product typical of that class (e.g., capacity, physical size).
Generally, a baseline model is one that just meets current energy
conservation standards, or, if no standards are in place, the baseline
is typically the most common or least efficient unit on the market. For
consumer boilers, there currently exist minimum AFUE standards for gas-
fired and oil-fired products at 10 CFR 430.32(e)(2)(iii)(A), which were
used to define the baseline efficiency levels for these product
classes. Additionally, baseline models

[[Page 55150]]

must meet the design requirements at 10 CFR 430.32(e)(2)(iii)(A) and
the standby mode and off mode power consumption standards at 10 CFR
430.32(e)(2)(iii)(B).
b. Higher Efficiency Levels
As part of DOE's analysis, the maximum available efficiency level
is the highest efficiency unit currently available on the market. DOE
also defines a ``max-tech'' efficiency level to represent the maximum
possible efficiency for a given product. For this analysis, because the
consumer boiler industry is relatively mature and there is a clear
design option pathway to improved AFUE efficiency demonstrated by
models on the market, DOE has tentatively determined that the maximum
available efficiency level is representative of the max-tech efficiency
level for gas-fired and oil-fired boilers, and that any additional
design options that could theoretically be used to further improve
efficiency have been screened out. The max-tech efficiency levels
analyzed in the May 2022 Preliminary Analysis are provided in Table
IV.4.

Table IV.4--Max-Tech AFUE Efficiency Levels for Consumer Boilers
------------------------------------------------------------------------
AFUE
Product class (%)
------------------------------------------------------------------------
Gas-fired hot water............................................. 96
Gas-fired steam................................................. 83
Oil-fired hot water............................................. 88
Oil-fired steam................................................. 86
------------------------------------------------------------------------

In the May 2022 Preliminary Analysis, DOE also considered the range
of input capacities of models certified at these efficiencies to ensure
that the max-tech efficiencies analyzed would not inadvertently
correspond to a lessening of product availability to meet the full
range of household heating needs (see chapter 5 of the preliminary
analysis TSD). These assessments were made based on the database of
consumer boilers constructed as part of the market assessment,
discussed in section IV.A.2 of this document.
In response to the May 2022 Preliminary Analysis, AHRI noted that
NFPA-31, ``Standard for the Installation of Oil[hyphen]Burning
Equipment'' (NFPA-31),\35\ provides guidance for the relining of
chimneys based on steady-state efficiency, and within these guidelines
are restrictions on higher-efficiency oil boilers that AHRI stated may
have an impact on consumers. AHRI commented that, according to NFPA-31,
a 6-inch diameter by 35-foot long metal chimney liner can be used for
an 86-percent ``steady-state efficiency'' boiler having an input
between 119,000 and 280,000 Btu/h, but this input range becomes 140,000
to 210,000 Btu/h if the ``steady-state efficiency'' is 88-percent. As a
result, AHRI recommended that DOE should treat 86.0-percent AFUE as
max-tech for oil-fired hot water boilers. (AHRI, No. 40 at p. 4)
---------------------------------------------------------------------------

\35\ NFPA-31 Appendix E states that metal chimney liners may be
needed to reduce transient low draft during startup, as well as
protect masonry from acidic condensate damage. The required size of
the liner is specified based on the steady state efficiency of the
boiler, which is shown in NFPA-31 Appendix E tables E.5.4(a) and
E.5.4(b).
---------------------------------------------------------------------------

In response, DOE reviewed the 2020 edition of NFPA-31 \36\ and
notes that Tables E.5.4(a) through E.5.4(e) of that standard present
the chimney metal liner specifications that are appropriate for various
firing rates (in terms of gallons of oil per hour), and DOE understands
that AHRI has converted these values of oil firing rates into Btu/h
input rates. AHRI's comment indicates that, for a 6-inch diameter by
35-foot long chimney liner, a steady-state efficiency \37\ greater than
86-percent could result in a smaller range of input capacities
allowable. Upon further inspection of Table E.5.4(a) of NFPA-31, DOE
notes that AHRI's calculation is based on a lateral run of 10 feet.
Adjusting to a shorter horizontal vent run of 4 feet,\38\ for example,
would allow households to meet their heating needs using a boiler with
a higher efficiency. Table E.5.4(a) of NFPA-31 indicates that a firing
rate of 1.75 gallons per hour (approximately 245,000 Btu/h) is
acceptable at the high end of firing rates for steady-state
efficiencies of 88 percent, which DOE estimates would correspond to
AFUEs of 87-88 percent. This would suggest that the narrowing of the
acceptable input capacity range is not significant enough to mean that
a large fraction of homes would not be able to find a replacement
boiler to meet their heating needs if the standard were set at 88-
percent AFUE.
---------------------------------------------------------------------------

\36\ Found online at <a href="http://link.nfpa.org/free-access/publications/31/2020">link.nfpa.org/free-access/publications/31/2020</a> (Last accessed Jan. 3, 2023).
\37\ Section E.8.3 of NFPA-31 suggests that the steady-state
efficiency of a hydronic boiler can be estimated by adding 1
percentage point to the rated AFUE of the boiler.
\38\ As discussed in appendix 8D of the NOPR TSD, most oil-fired
boilers do not have a horizontal vent option, so the horizontal run
would be limited for vertical venting.
---------------------------------------------------------------------------

Therefore, upon re-evaluating the input capacity ranges available
for the maximum available AFUEs on the market, DOE has initially
concluded that the max-tech levels from the May 2022 Preliminary
Analysis are still applicable, and these levels were analyzed as max-
tech in this NOPR.
Between the baseline efficiency level and max-tech efficiency
level, DOE analyzed several other intermediate higher efficiency
levels. In the May 2022 Preliminary Analysis, DOE sought comment on
whether the AFUE efficiency levels identified at the preliminary stage
were appropriate for each product class (see the Executive Summary of
the preliminary TSD).
As discussed in section IV.B of this document, DOE received
multiple comments regarding the 85-percent AFUE efficiency level which
was analyzed for gas-fired hot water boilers in the May 2022
Preliminary Analysis. For the reasons explained in that section, the
Department has tentatively determined that the concerns raised by
stakeholders reflect potential downsides to these products regarding
the installation, maintenance, and repair costs--and not a risk
directly associated with incrementally more-efficient heat exchanger
technologies. Hence, DOE has retained the 85-percent AFUE efficiency
level in this NOPR analysis after observing that a substantial number
of models on the market are certified at this level. This observation
is further corroborated by AHRI's 2021 shipment data for consumer
boilers, which indicate that boilers rated between 85.0-percent and
85.9-percent AFUE are the second-highest frequency of non-condensing
model shipments, behind only baseline models (see AHRI, No. 42 at p.
2).
Crown provided a detailed analysis of how venting category
requirements correlate to the flue gas temperature and percent of
CO<INF>2</INF> in the flue gas, and described the approximate
relationship between these parameters and the steady-state combustion
efficiency of a consumer boiler. Reiterating comments provided in the
previous rulemaking, Crown stated that there is a limit to the steady-
state efficiency that is achievable while maintaining Category I
venting status. (Crown, No. 30 at pp. 3-5) U.S. Boiler provided the
same comments as Crown. (U.S. Boiler, No. 31 at pp. 3-5) DOE agrees
with the assessment provided by Crown and U.S. Boiler and notes that,
in the engineering analysis, design options to improve efficiency
include technologies which would move the consumer boiler out of
Category I venting status.
In response to the May 2022 Preliminary Analysis, Rheem suggested
consideration of an additional efficiency level for gas-fired hot water
boilers at 90-percent AFUE to capture a segment of the market certified
by ENERGY STAR (at the minimum level under that program) with existing
products on the market. (Rheem, No. 37 at p. 4)

[[Page 55151]]

In response, DOE notes that EPA's ENERGY STAR Product Specification
for Boilers, Version 3.0 (effective October 1, 2014) (ENERGY STAR
Product Specification V3.0) requires a minimum performance of 90-
percent AFUE for gas-fired boilers and 87-percent AFUE for oil-fired
boilers.\39\ While the 87-percent AFUE efficiency level was already
considered for oil-fired hot water boilers, the May 2022 Preliminary
Analysis did not assess a 90-percent AFUE efficiency level for gas-
fired hot water boilers. Therefore, in this NOPR analysis, DOE has
added an efficiency level corresponding to the ENERGY STAR Product
Specification V3.0 for gas-fired hot water boilers. Additional teardown
analyses were conducted to assess the design options representative of
this efficiency level, and further details are described in chapter 5
of the NOPR TSD.
---------------------------------------------------------------------------

\39\ ENERGY STAR Product Specification for Boilers, Version 3.0
can be found online at <a href="http://www.energystar.gov/sites/default/files/specs/Boilers%20Program%20Requirements%20Version%203%200.pdf">www.energystar.gov/sites/default/files/specs/Boilers%20Program%20Requirements%20Version%203%200.pdf</a> (Last
accessed Jan. 3, 2023).
---------------------------------------------------------------------------

The efficiency levels analyzed in this NOPR are shown subsequently
in Table IV.5 through Table IV.8.
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 product
on the market. The cost approaches are summarized as follows:
<bullet> Physical teardowns: Under this approach, DOE physically
dismantles a commercially-available product, component-by-component, to
develop a detailed bill of materials (BOM) 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.
In the present case, DOE conducted the analysis using physical and
catalog teardowns to generate BOMs for models meeting the efficiency
levels selected in the efficiency analysis. While the BOM generated for
each model describe the product's construction in detail (i.e.,
including each fabrication and assembly operation, types of parts that
are purchased versus built in-house, types of equipment needed to
manufacture the product, and manufacturing process parameters), any
additional higher-cost features that were included in the consumer
boiler design but do not have any impact on AFUE were not factored into
the engineering analysis. Wherever possible, DOE compared models from
similar product lines at different efficiencies in order to clearly
identify the design option pathway to higher efficiency levels. Through
these teardown analyses, DOE has found that the pathway for improving
AFUE is relatively homogeneous across all boiler product classes and
efficiency levels--consisting mainly of heat exchanger improvements.
The BOM provides the basis for the manufacturer production cost
(MPC) estimates. DOE sought comment on the MPC estimates presented in
the May 2022 Preliminary Analysis (see the Executive Summary of the
preliminary TSD).
Crown and U.S. Boiler commented that manufacturing, installation,
and operating costs used for DOE's preliminary analysis are likely
obsolete due to recent sharp increases in prices (reflecting inflation
and supply chain issues). Crown stated that if DOE were to raise the
standards for gas-fired hot water boilers to a condensing efficiency
level, it would result in significant increases in MPCs for gas steam
and oil-fired cast-iron boilers even if the standards for those product
classes remain unchanged due to the large, fixed costs for cast-iron
foundries. Crown indicated that if standards for gas-fired hot water
boilers were raised to a condensing efficiency level, the fixed costs
of the foundries could no longer be shared between gas-fired hot water
boilers and noncondensing gas steam and/or oil-fired boilers due to
their significant differences in design. Such a scenario could render
some foundries no longer financially viable. (Crown, No. 30 at pp. 5-6;
U.S. Boiler, No. 31 at pp. 5-6) Similarly, WMT indicated that sectional
cast-iron heat exchangers are nearly identical across product classes,
so the potential elimination of non-condensing cast-iron gas-fired hot
water boilers would significantly change the cost structure for other
product classes. (WMT, No. 32 at p. 2)
In response, DOE's cost analysis accounts for the recent increases
in material and part prices caused by inflation and supply chain
challenges; specifically, prices from September 2022 were used for
purchased parts and non-metals, and a five-year average up to September
2022 was used to account for raw metal prices (this average being a
method to account for rapid fluctuations which typically average out in
the future). For this NOPR and with regards to the potential changes in
manufacturing cost due to cast-iron foundry impacts, DOE did not
directly account for the pricing interaction across product classes
described by Crown and U.S. Boiler for cast-iron boilers in the
industry MPC estimates. DOE notes that many consumer boiler original
equipment manufacturers (OEMs) have already transitioned to using
foundries owned by companies unrelated to the particular consumer
boiler OEM (i.e., ``third-party foundries'') for their consumer boiler
castings. Of the 10 consumer boiler OEMs that offer gas-fired steam,
oil-fired hot water, or oil-fired steam cast-iron boilers, research
indicates that only two OEMs currently own domestic foundries (i.e.,
vertically integrated OEMs) that supply consumer boiler castings for
the U.S. market. This would suggest that current component price
estimates already reflect a transition in foundry operation. Although
DOE did not directly account for the pricing interaction across product
classes in the engineering analysis, DOE estimates the potential fixed
foundry overhead and depreciation costs associated with producing gas-
fired hot water boiler heat exchangers that may need to be reallocated
to gas-fired steam, oil-fired hot water, and oil-fired steam production
costs under a condensing standard and analyzes the potential impacts of
a condensing standard on OEMs that operate their own foundries in
section V.B.2.d of this document, ``Impacts on Subgroups of
Manufacturers.''
DOE requests comment on whether an increase in MPCs for gas-fired
steam, oil-fired hot water, and oil-fired steam boilers would result
from an amended standard requiring condensing technology for gas-fired
hot water boilers and, if so, how much of an increase would occur. DOE
also requests comment on whether the potential increase in cast-iron
boiler MPCs would only be applicable to consumer boiler manufacturers
that operate their own foundries.

[[Page 55152]]

BWC requested that DOE re-evaluate the assumptions in Table 5.6.4
of the preliminary TSD (``Factory Parameter Assumptions''), which it
argued appeared to be grossly overstated given the overall size of the
boiler industry. (BWC, No. 39 at p. 3)
In addition to seeking public comment on the MPC estimates from the
May 2022 Preliminary Analysis, DOE consultants discussed the results of
the preliminary cost analysis with manufacturers in confidential
interviews in order to solicit direct feedback on the MPCs. DOE
incorporated a substantial amount of the qualitative and quantitative
feedback obtained from manufacturers to refine the assumptions used in
the cost modeling for this NOPR, as suggested by BWC. These updates are
detailed in chapter 5 of the NOPR TSD, and include revisions to the
factory parameter assumptions.
3. Manufacturer Markup and Shipping Costs
To account for manufacturers' non-production costs and profit
margin, DOE applies a multiplier (the manufacturer markup) to the MPC.
The resulting manufacturer selling price (MSP) is the price at which
the manufacturer distributes a unit into commerce. DOE developed an
average manufacturer markup by examining the annual Securities and
Exchange Commission (SEC) 10-K reports \40\ filed by publicly-traded
manufacturers primarily engaged in heating, ventilation, and air
conditioning (HVAC) manufacturing and whose combined product range
includes consumer boilers. See chapter 12 of the NOPR TSD or section
IV.J.2.d of this document for additional detail on the manufacturer
markup.
---------------------------------------------------------------------------

\40\ U.S. Securities and Exchange Commission, Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system. Available at
<a href="http://www.sec.gov/edgar/search/">www.sec.gov/edgar/search/</a> (Last accessed Jan. 3, 2023).
---------------------------------------------------------------------------

Shipping costs account for the additional non-production cost for
manufacturers to distribute their products to the first buyer in the
distribution chain. In the May 2022 Preliminary Analysis, DOE estimated
shipping costs based on how many units can fit in a typical trailer,
considering the extra space necessary for shipping and loading
inefficiencies for mixed truckload configurations with other equipment.
In general, DOE found that shipping costs would not vary appreciably by
efficiency level, except for gas-fired hot water boilers. For this
product class, models with condensing heat exchangers would have more
lightweight and compact designs, allowing for more products to
potentially be loaded onto a trailer such that the shipping cost would
decrease for condensing efficiency levels (see chapter 5 of the
preliminary analysis TSD).
WMT commented that shipping costs have increased dramatically (in
some cases nearly doubling or tripling the costs of shipping from pre-
pandemic levels), and this would affect costs for components to ship to
consumer boiler manufacturers, as well as the costs for consumer
boilers to be shipped to customers. WMT stated that such shipping cost
impacts should be included in DOE's analysis. (WMT, No. 32 at p. 9)
In response, DOE notes that the MPC estimates discussed in section
IV.C.2 of this document account for the costs for components to ship to
consumer boiler manufacturers. In general, through its review of
publicly-available component cost data and confidential interviews with
consumer boiler manufacturers, the Department has observed an increase
in purchased component prices, which is reflected in the increase in
MPCs in this NOPR analysis compared to the May 2022 Preliminary
Analysis.
For outgoing shipping costs, DOE monitors trailer prices on a
regular basis to ensure that these costs reflect the most recent
freight shipping rates to transport products. DOE did observe a
substantial increase in prices immediately following the COVID-19
pandemic and subsequent supply chain crisis,\41\ and these increases
were reflected in the shipping cost estimates in the May 2022
Preliminary Analysis. Many of the shipping costs estimated in this NOPR
are comparable to the preliminary estimates in the May 2022 Preliminary
Analysis; however, DOE did revise its approach for this NOPR. Instead
of using a coast-to-coast distance estimate, which was used in the May
2022 Preliminary Analysis, DOE relied on a Midwest-to-coast distance
estimate after careful review of the geographic locations of consumer
boiler manufacturing sites. Therefore, although DOE included the most
up-to-date trailer prices, this change in the shipping distance
estimate caused the shipping costs for most product classes to be lower
in this NOPR compared to the May 2022 Preliminary Analysis.
---------------------------------------------------------------------------

\41\ U.S. Bureau of Labor Statistics Producer Price Index (PPI)
commodity data for transportation services indicate a sharp rise in
long-distance motor carrying prices since 2020. See online at
<a href="http://data.bls.gov/timeseries/wpu301202&output_view=pct_12mths">data.bls.gov/timeseries/wpu301202&output_view=pct_12mths</a> (Last
accessed Jan. 3, 2023).
---------------------------------------------------------------------------

Crown and U.S. Boiler commented that condensing boilers are often
imported fully assembled from Europe or Asia, and when they are not,
the ``heat engine'' (heat exchanger and burner system) almost always
is, with final assembly occurring in the United States. Crown indicated
that the longer supply chain for condensing boilers would negate any
savings in shipping costs due to the reduced size and weight of
condensing boilers. (Crown, No. 30 at p. 6; U.S. Boiler, No. 31 at p.
6)
In response, DOE once again notes that as mentioned, inbound
freight costs are included in the MPCs as a portion of the cost for
purchased parts. In this analysis, based on further manufacturer
feedback during interviews, DOE estimated MPCs associated with final
assembly occurring in the United States. While developing the MPCs for
consumer boilers in this NOPR, DOE incorporated recent manufacturer
feedback to arrive at the most recent estimates for heat exchangers and
burners purchased from overseas. Based on the results of the
engineering analysis, DOE agrees with Crown and U.S. Boiler that the
MPC plus shipping costs for condensing boilers will in total be higher
than the MPC plus shipping costs for non-condensing boilers.
4. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of AFUE versus MPC and MSP
(in 2022 dollars). DOE developed four curves representing the four
consumer boiler product classes which are being analyzed in this NOPR.
Manufacturing costs can vary with the input rating of the consumer
boiler, and for each product class, one representative input capacity
was chosen as the basis for analysis to represent the entire class:
100,000 Btu/h for gas-fired boilers and 140,000 Btu/h for oil-fired
boilers. This allowed DOE to develop one curve to represent the cost of
implementing engineering design changes for each product class. The
methodology for developing the curves started with determining the MPCs
for baseline products. Above the baseline, DOE determined the design
options which would comprise the most cost-effective pathway to higher
efficiency levels using teardown data at each level. See chapter 5 of
the NOPR TSD for additional detail on the engineering analysis. The
resulting cost-efficiency curves are shown in Table IV.5, through Table
IV.8.
DOE requests comment on the cost-efficiency results in this
engineering analysis. DOE also seeks input on the design options that
would be implemented to achieve the selected efficiency levels.

[[Page 55153]]

Table IV.5--Cost-Efficiency Curve for Gas-Fired Hot Water Boilers
----------------------------------------------------------------------------------------------------------------
Shipping
Efficiency level AFUE Design options MPC MSP cost
(%) (2022$) (2022$) (2022$)
----------------------------------------------------------------------------------------------------------------
EL 0 (baseline)....................... 84 Non-condensing heat exchanger; 581.22 819.52 30.32
Natural or induced draft.
EL 1.................................. 85 EL0 + Increased heat exchanger 645.20 909.73 30.32
surface area; Natural or
induced draft.
EL 2 (ENERGY STAR V3.0)............... 90 Cast-aluminum or stainless- 991.66 1,398.24 18.53
steel condensing heat
exchanger; Premix modulating
burner.
EL 3.................................. 95 Stainless-steel condensing 1,020.12 1,438.37 18.53
heat exc

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