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Consistent with the requirements under the Energy Policy and Conservation Act (EPCA), as amended, the U.S. Department of Energy (DOE) is examining whether to amend the current energy conservation standards for consumer water heaters found at 10 CFR 430.32(d). Once completed, this rulemaking will fulfill DOE’s statutory obligation to either propose amended standards for this product or determine that the standards do not need to be amended. In this rulemaking, 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 proposed standard levels are already commercially available for all product classes covered by the proposal. As for economic justification, DOE’s analysis shows that the benefits of the proposed standards exceed the burdens of the proposed standards.

Statement of Need:

The Energy Policy and Conservation Act requires minimum energy efficiency standards for certain appliances and commercial equipment, including consumer water heaters.  (42 U.S.C. 6292(a)(4))

Summary of the Legal Basis:

Title III of the Energy Policy and Conservation Act (EPCA), Pub. L. 94-163 (42 U.S.C. 6291-6309, as codified), established the Energy Conservation Program for Consumer Products Other Than Automobiles.  Pursuant to EPCA, any new or amended energy conservation standard that the U.S. Department of Energy (DOE) prescribes for certain products, such as consumer water heaters, shall be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified (42 U.S.C. 6295(o)(2)(A)) and to result in a significant conservation of energy (42 U.S.C. 6295(o)(3)(B)).  EPCA provides that not later the 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 notice of proposed rulemaking including new proposed energy conservation standards (proceeding to a final rule, as appropriate).  (42 U.S.C. 6295(m)(1))

Alternatives:

The statute requires DOE to conduct rulemakings to review standards and to revise standards to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified.  In making this determination, DOE conducts a thorough analysis of alternative standard levels, including the existing standard, based on the criteria specified in the statute.

Anticipated Costs and Benefits:

DOE finds that the benefits to the Nation of the proposed energy conservation standards for Consumer Water Heaters (such as energy savings, consumer average life-cycle cost savings, an increase in national net present value, and emissions reductions) outweigh the burdens (such as loss of industry net present value).  For consumer water heaters, DOE estimates that energy savings (in terms of uniform energy factor (UEF)) will be 27 quads over 30 years and that the cumulative net present value (NPV) of total consumer benefits of the proposed standards for consumer water heaters will be between $56 billion at a 7-percent discount rate and $161 billion at a 3-percent discount rate.

Risks:

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