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Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards (2021)

Chapter:ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS

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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
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ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS

This annex provides greater detail of the committee’s analysis of the LCC analysis associated with the residential dishwasher’s rulemaking. The information in this annex, contained in two tables, comprises a review of the LCC as described in the Technical Support Document (DOE, 2014). Table 4A.1 summarizes DOE’s approach to estimating each input to the installation cost (IC) estimation for dishwashers and the committee’s recommendation to improve this estimation process by accounting for uncertainty and variability. Table 4A.2 summarizes DOE’s approach for each of the input variables for the operating costs (OC) of dishwashers and also includes recommendations.

REFERENCE

DOE (U.S. Department of Energy). 2014. Technical Support Document: Energy Efficiency Program for Consumer Products and Commercial and Industrial Equipment: Residential Dishwashers. Washington, DC. December. https://www.regulations.gov/document/EERE-2014-BT-STD-0021-0005.

Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

TABLE 4A.1 Review of DOE Approach to Estimate the Value of Installed Costs (ICs) for Residential Dishwashers

Variable Description/Relevance DOE Approach Committee Comments
Units and Estimate Method Data Sources
Baseline Manufacturer Cost in the analysis year This is the cost to manufacture the baseline dishwasher as estimated during the year DOE conducts the analysis 2013$

Standard: 203.72
Compact: 187.68
Association of Home Appliance Manufacturers This is a key input into DOE’s analysis. The committee finds that a single-value estimate, with the precision of cents of a dollar, conveys a false sense of certainty around a value that is, in fact, highly uncertain. DOE could provide a range instead of point estimates by propagating the uncertainty on the costs of different materials and labor. Nevertheless, because DOE’s interest is in comparing the baseline with the alternative ELs to find LCC Savings, this value ends up being irrelevant (what really matters is the incremental cost of the ELs).
Factor to account for Manufacturer cost declines due to learning, between the analysis year (2013) and the compliance year (2019) Multiply the Manufacturers cost of year 2013 by this factor to obtain the forecast of manufacturer cost for 2019 in 2015$ Unitless

0.905
DOE derives cost declining annual rates (due to experience or learning) from historical PPI data for other miscellaneous households’ appliances for years 1988-2013 and shipments data by fitting a power-law function BLS Producer Price Index (PPI) data. GDP Chained Price Index. Data on annual shipments of dishwashers for 1972-2012
  • The cost declines of baseline costs are irrelevant for the LCC Savings calculation (because they appear on both sides of the equation and cancel out). For other calculations, where they are useful, DOE should account for the uncertainty around this value.
  • DOE’s analysis of cost assumes decreases due to experience (i.e., reductions in costs related to shipments) estimates a 95% confidence interval for the experience rate (defined as the percent reduction in price when cumulative production doubles) as 25.7±1.5%. To account for uncertainty, DOE can sample from this range in the Monte Carlo simulation. While it is not clear from Chapter 8 or Appendix 8C if DOE (2014) already treats this value probabilistically, it seems possible given that the Excel file presents a value slightly different from 0.905 (i.e., 0.926).
Baseline Manufacturer Cost in the compliance year This is the cost to manufacture the baseline product during the compliance year (i.e., 2019 for dishwashers) 2015$

Standard: 148.31
Compact: 168.33
DOE multiplies the Baseline Manufacturer Costs in the Analysis year by the Factor representing cost reductions due to learning (prior row in this table) 0.905 x Baseline Manufacturer cost in the compliance year See recommendations in prior row.
Manufacturer cost increases from ELs Add to baseline cost to find the total manufacturer cost of each EL 2013$

Standard;
EL1:9.52
EL2:36.53
EL3:74.72
EL4:74.72
From engineering analysis and cost models that involve physically disassembling commercially available products, reviewing publicly available cost Given that different products already in the market or that will be developed can achieve the same efficiency level through the adoption of different designs and components, it is clear that the manufacturer cost increases will differ among products within the same EL category. The committee recommends adopting one of two possible approaches:
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee Comments
Units and Estimate Method Data Sources

Compact; EL1:8.01
EL2:21.50

and performance information, and modeling equipment cost
  • Calling this parameter “Average Manufacturer Cost increase,” and, rather than providing a point estimate, providing a range or
  • Changing the name of this parameter to “Maximum manufacturer cost increase” and adopting the maximum value from the range of possibilities uncovered in the engineering analysis.
Manufacturer Markup for Baseline product Multiply this factor by the Manufacturer Production Cost (MPC) to obtain the final manufacturer price Unitless

1.24
Weighted average of manufacturers’ markup reported in the data source Securities and Exchange Commission SEC 10-K reports from 2004-2009 for manufacturers of major household appliances whose product offerings include dishwashers
  • Supplement the SEC’s information with expert’s interviews to understand if the estimates of the manufacturer’s average markup for all products is representative of the markup for dishwashers.
  • Estimate the weighted average of the manufacturer’s markup for all of the years for which there are SEC 10-K reports and calculate the minimum, the maximum and the average for those years. Adjust the relevant statistics based on expert’s judgments. Then assume markup is a random variable that follows a triangular probability distribution function and use this characterization to estimate the Installed Costs for each household in the RECS sample.
  • For transparency, provide all of the data necessary to allow readers of the TSD to replicate DOE’s analysis and obtain the same estimates. The committee could not calculate a range for this variable because DOE did not provide a list of the manufacturers that they included in the original analysis.
  • Consider reporting to 3 or 4 decimal places for this factor, given that sales prices are reported with the precision of dollars and cents.
Retailer Markup for Baseline Multiply this factor by the Cost of Goods Sold (CGS) to obtain the final sale price of the baseline product to consumers Unitless

1.36
Use the reported Sales and Gross Margin for Electronics and Appliance stores in year 2007 in the Formula: Baseline Markup = (CGS+GM)/GM or =Sales/GM 2011 Annual Retail Trade Survey (ARTS)a
  • Estimate the markup for Electronics and Appliance stores for all of the years reported in the most recent ARTS surveys (i.e., 1993-2011).
  • Characterize the Markup for baseline as a random variable following a triangular distribution with parameters estimated from the ARTS survey. (The committee finds this variable is within the range (1.321,1.405) and the parameters of the triangular distribution will be: Minimum=1.321, Maximum=1.405, Average=1.363.b.
  • Also, use historical data to identify any past trends in retail markups that can shed light on the projection of future values. Because DOE is estimating future markup it is important to assess whether historical data supports the hypothesis of increasing or declining trends.
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee Comments
Units and Estimate Method Data Sources
  • Supplement the SEC’s information and adjust the triangular parameters with info from experts’ interviews about whether the estimates of the manufacturer’s average markup for all products is representative of the markup for dishwashers.
  • Consider reporting 3 decimals for this factor. The third and fourth decimal impact the final calculation because sales prices are reported with a precision of cents, and the Costs of the Goods Sold may exceed $1,000.
Incremental Retailer Markup Multiply this factor by the incremental cost of an EL (relative to the baseline product’s cost), to obtain the retailer price Unitless

1.11
Breakdown Operating Expenses of Electronics and Appliance stores into two categories: invariant and variant + profits. Then apply the formula: IncrementalMarkup=(CG S+VariantCosts+Profits)/ CGS 2007 Annual Retail Trade Survey Detailed Operating Expenses (ARTS).c The ARTS collects detailed data on Operating Expenses on years ending in 2 and 7
  • Use the coefficient of variation (CV) reported for each of the Operating Expenses of Electronics and Appliance Stores in the data source. The CV of Operating Expenses for Electronic Appliance Stores varies between 1% (for Purchased advertising and promotional services) and 20.8% (for Expensed Equipment). Calculate Standard Deviation of each Operating Expense and use it to estimate a range of plausible incremental markup values.
  • Using this approach, the committee finds that the Incremental markup can be characterized as a random variable likely to take a value in the range (1.103, 1.118). It can be characterized, for example, as following a triangular distribution with the parameters: Minimum=1.103, Maximum=1.118, Average=1.11. The lower and upper bounds of this range are estimated by applying the specific Standard Deviation to each of the Variant Operating Expenses, and assuming sales, profits, and Invariant Expenses stay as average.
  • Consider reporting 3 decimals for this factor. The third and fourth decimal have an impact in the final calculation because sales prices are reported with a precision of cents.
  • Use historical data to identify any past trends in retail markups that can shed light on the projection of future values.
Sales Taxes Add to the retailer price to obtain the final purchasing cost to consumers %

Varies by state or groups of states
Find the specific rate according to the state where the household is located
Average Sales Taxes (Population Weighted National Average) This value is presented in the TSD but not used for the LCC %

7.11
DOE takes the Average Sales Tax Rate for 9 Census Divisions plus the four largest states in year Sales Tax Clearinghouse http://thestc.com/STrates.stm
  • Account for interstate variability. Take the population-weighted average sales tax in a state (city tax + county tax + state tax) for each of the 50 states to calculate a
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee Comments
Units and Estimate Method Data Sources
2014 and weights them by population in 2013 to obtain an average for the whole country
  • range of Sales Taxes for the country. Estimate minimum and maximum tax rates or quartiles or both.
  • Using data of State and Local Sales Tax Rates as of January 1, 2014d—for 50 states and DC.- and estimates of the population for the same year,e the committee finds that the population-weighted average of state and local sales tax rates is 7.24%. The minimum is 0% (in four states with 2.3% of the population), and the maximum is 9.45%.
  • The committee used a different data source than the one provided in the TSD because the committee does not have access to the 2014 data on combined city, county and states tax rates from the Sales Tax Clearinghouse (and the data provided for free in the Website is for an unspecified year and different from the data presented by DOE).
  • Clarify when an average national sales tax used.
  • Use public data sources for both tax rates and population estimates to ensure replicability.
  • Estimate the range of sales tax rates for the country.
  • Estimate population-weighted average using data for all of the states.
Installation cost Add to the consumer product price to obtain total Installed Costs (IC) 2013$
2015$

149.5
157.93
DOE equates labor costs to installation costs. DOE obtains Labor costs with overhead and profits by subtracting material costs from total costs RS Means. Residential Cost Data 2013f Because DOE is estimating LCC Savings and assuming installation costs are the same for all products, this value is irrelevant, because it cancels out in the calculation of savings. When DOE estimates LCC savings from a newly purchased baseline product, it should account for the variation of labor costs by state, rather than assuming a single value for the entire country. In the Monte Carlo simulation, DOE can use the information on the state (or group of states) where the RECS household is located to retrieve the corresponding installation costs.

NOTE: ARTS = annual retail trade survey; BLS = Bureau of Labor Statistics; CGS = cost of goods sold; EL = efficiency level; GDP = gross domestic product; GM = gross margin; LCC = life-cycle cost; RECS = Residential Energy Consumption Survey.

a https://www.census.gov/data/tables/2011/econ/arts/annual-report.html.

b The minimum markup value was observed in 2011, the average value was observed in 2007, the maximum value was observed in 1993 (the first year for which there is data in this ARTS report), while values very close to the average were observed in 1995, 2007 and 2009.

c https://www.census.gov/data/tables/2007/econ/arts/detailed-operating-expenses.html.

d https://taxfoundation.org/state-and-local-sales-tax-rates-2014/ Table 1. State and Local Sales Tax Rates as of January 1, 2014.

e https://www.census.gov/data/datasets/2014/demo/saipe/2014-state-and-county.html.

f See p. 672 of Gordian. 2013. “RS Means. Residential Cost Data 2013: 32nd Annual Edition.” Kingston, MA: Gordian.

Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×

TABLE 4A.2 Review of DOE Approach to Estimating the Value of Operating Costs (OCs) for Dishwashers

Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
Number of cycles per year Number of times that a dishwasher completes an operational cycle in a year Cycles/year

Varies by household and Monte Carlo run
A random draw from a distribution depending on the answer provided by the household in RECS:
  1. Less than once per week: Triangular, 1 to 52
  2. Once per week: Uniform, 26,78.
  3. 2 to 3 times per week: Uniform, 78 to 182
  4. 4 to 6 times per week: Uniform, 182 to 338
  5. At least once per day: Triangular, 300/500/548
RECS
  • Were this question in the RECS to be amended to give respondents the opportunity to provide the number of times in a week, month or year that a dishwasher is used in their household, DOE could avoid having to resort to guesses and random variable generation to reproduce the number needed.

So far as probability distributions continue to be used, the committee recommends:

  1. Utilizing all of the parameters (e.g., what is the “most likely” value parameter assumed for the triangular distribution representing the responses “less than once per week”? only the minimum and maximum are specified)
  2. Justifying the choice of distribution (e.g., why a Uniform instead of a Triangular?)
  3. Justifying the choice of parameters (e.g., why does DOE assume that a household that responds “once per week” has a 50% chance of using it less than once per week, as implied by the Uniform (26,78)?)

*The title of Table 7.4.1. “RECS dishwasher Usage data” is misleading. This title is appropriate to describe the content in columns 1-3 but gives the wrong impression that the probability distributions of column 4 are also part of data collected or directly inferred from RECS. Also, it is unclear if the probability distributions presented in column four already account for the adjustment of the total average of cycles per year, form 171 (as obtained from the 2009 RECS) to 215 (as obtained from Little [2001]).

Average number of cycles per year This number is used to translate the estimate of annual energy consumption of an EL into per cycle energy consumption and to adjust the RECS data to obtain an average of Cycles/year

215
DOE bases this estimate on a survey of 26,000 households conducted by Arthur D. Little in 2001 Arthur D. Little (2001). Review of Survey Data to Support Revisions to DOE’s Dishwasher Test Procedure. December 12, 2001. Prepared for the U.S. Department of Energy by Arthur D. Little, Cambridge, MA.
  • This number would not play any role in the calculation of energy consumption per cycle if the engineering analysis presented this value.
  • DOE should present the per-cycle energy consumption both for operating the dishwasher and for heating the water as a result of the engineering analysis and make explicit the assumption about cycles/year in the presentation of EL curves.
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
cycles per year deemed to be more accurate
  • In the TSD, DOE (2014) explains that the 2009 RECS indicates that out of the 12,100 households surveyed, 7,382 had dishwashers and used them 171 cycles/year on average. DOE prefers to use the 215 cycles/year estimated because the Little (2001) survey has data from more households (three times more) and is more comprehensive. In the committee’s judgment, disregarding the data from the RECS—which is 8 years newer than Little (2001)—isn’t entirely justifiable. The average of 171 obtained by DOE from RECS data may be artificially low because DOE assumes a probability distribution that implies that households responding that they use the dishwasher once a week, have a 50% chance of using it less than once a week. By adjusting this distribution DOE can obtain a higher average of cycles/year and may not need to take the 215 Little (2001) number as a reference.
  • The Little (2001) reference does not appear to be available to the public and could not be found by the committee.
  • DOE should base the analysis on publicly available sources whenever possible and if needed adjust assumptions.
Duration of the average dishwashing cycle This value is necessary to estimate the number of Standby hours per year Hours

1
The caption of Tables 7.2.3 and 7.2.4 imply DOE assumes the average dishwashing cycle for all Standard Dishwashers and Compact dishwashers is 1 hour Section 5.5.2.3 of the Engineering Analysis states that DOE expects manufacturers of EL2 to increase the duration of the cycle to compensate for decreased water use and maintain washing performance with improved efficiency. Given that DOE expects ELs 3 and 4 to improve upon the design options of EL2, it is quite likely that in practice, cycle duration will be different from 1 hour, depending on the dishwasher options and the consumer preferences. While the duration of a cycle has a direct impact on the estimation of standby energy consumption, it has a small impact on the operating costs of the dishwasher. Nevertheless, a more rigorous estimation of this number in the engineering analysis would benefit from an improvement in the presentation of the engineering analysis, which would characterize different cycles available at the different ELs and for each cycle, specify its duration, energy and water consumption.
Standby Power Use Necessary to estimate Standby Energy Use Watts Tables 7.2.1. and 7.2.2 present estimates of the Standby Power for the baseline and EL of standard
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
Standard:
Baseline: 0
EL1-EL4: 0.5
Compact:
Baseline 2.3
EL1: 1.7
EL2: 0.5
and of compact dishwashers without providing any reference. Presumably standby power consumption is measured in some existing models and assumed to stay unchanged for others but for transparency DOE should state the conditions of the test and the assumptions about Standby Power estimates. In particular, it would be useful to explain the great discrepancy in standby power use between the Standard and the Compact product classes.
Standby hours per year This value is necessary to estimate the Annual Standby Energy Use Hours/yr

8551
DOE estimates the number of Standby hours by assuming there are 8766 hours in 1 year, and assuming the dishwashers are run for 215 cycles per year, each taking an average of 1 hour to be complete. Therefore the number of standby hours is 8766-215=8551. DOE should characterize the Standby hours per year based on the characterization of the cycles for each EL. By assuming that all cycles last 1 hour, DOE may be overestimating the standby energy consumption from EL1, EL2, EL3, and EL4. According to the estimates presented, Standby energy represents less than 3% of the annual energy consumed by the Standard dishwashers and between 3% and 8% of the compact models.
Annual Standby Energy Use This value is subtracted from Annual Energy Use to obtain Per-cycle Energy Use kWh/yr

Standard
Baseline 0
EL1-EL4: 4.3kWh/yr

Compact
Baseline 19.7
EL1 14.5
EL2 4.3
Annual Energy Use dedicated to Dishwashing Only. (I.e., total energy consumption minus standby energy consumption) This is the energy consumed by the dishwasher to operate (i.e., heat water, operate the motors and dry the dishes) kWh/yr

Standard
Baseline: 307

EL1: 290.7
EL2: 275.7
EL3: 229.7
EL4: 175.7


Compact:
Baseline: 204.3
Subtract the estimate of Standby Annual Energy consumption from the Estimate of Annual Energy Use (kWh/yr) This intermediate quantity is not reported explicitly in the TSD but can be calculated from Tables 7.3.1 and 7.3.2
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
EL1: 188.5
EL2: 136.7
Per-cycle energy use for each EL Average energy used by a dishwasher per cycle of operation. Calculated for each EL. kWh/cycle
Standard;
Baseline 307/215

EL1: 290.7

EL2:275.7

EL3:229.7

EL4:175.7


Compact:
Baseline: 19.7
EL1: 14.5
EL2: 4.3
Divide Annual Energy Use Dedicated to Dishwashing Only by the Number of Cycles in a Year

Standard;
Baseline 307/215

EL1: 290.7/215

EL2:275.7/215

EL3:229.7/215

EL4:175.7/215


Compact:
Baseline: 204.3/215
EL1: 188.5/215
EL2: 136.7/215
  • Section 5.5.3 in the Engineering Analysis Chapter of the TSD presents DOE developed cost-efficiency curves for standard and compact residential dishwashers based on teardowns and cost modeling. The cost efficiency curves relate the Estimated Annual Energy Use of each EL to the Incremental Manufacturing Cost ($). Unfortunately, the section does not explain the process followed to estimate Annual Energy Use. There is no mention of the assumed number of cycles/year or the energy used during standby. Later, in section 7, DOE takes this estimate of Annual Energy Use and divides by an estimate of 215 cycles/year to obtain the energy used per cycle.
  • DOE’s cost-efficiency curves should relate Incremental Manufacturing cost and Energy use per cycle (instead of Annual Energy Use). In chapter 5, the TSD reports estimates of the energy use per cycle and standby energy for the baseline dishwasher and for each EL.
  • DOE should describe in detail all of the assumptions and/or test conditions that affect the estimate of energy use per-cycle. For example, what is the average inlet water temperature? what is the operating water temperature for each ESL? Also, any other information that can be derived from engineering analysis should be reported in Chapter 5. For example, how much energy is used to heat water and how much to power the motors and dry the dishes? Assumptions on the number of cycles per year should be presented and discussed in Chapter 7 of the TSD.
Per-cycle Water Heating Energy Consumption This estimate is necessary to calculate the operating costs of a dishwasher taking into account different sources of energy for water heating (e.g. electricity, gas, oil) kWh/cycle

Standard:
Baseline 0.82
EL1 0.7
EL2 0.58
EL3 0.51
EL4 0.37

Compact:
Assume the use of an electric water heater with 100% efficiency and multiply the per-cycle water consumption by an assumed temperature rise of 70F (21C) and a specific heat of 0.0024 kWh/gal-F (4.186 joule/gram-C) Per-cycle water use (gallons/cycle) from the engineering analysis.
  • The engineering analysis presents an estimate of Annual Water Consumption and Per-cycle Water Consumption but does not discuss related results and assumptions that are necessary for the LCC.
  • DOE should present any tests results and/or assumptions used in Chapter 5, related to (1) water temperature rise, (2) assumed efficiency of the water heater.
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
Baseline 0.58
EL1 0.51
EL2 0.33
  • The values reported in the sixth column of Tables 7.2.3 and 7.2.4 (per-cycle energy use for water heating) are a bit lower than the values the committee obtained by multiplying the water use per cycle (i.e., 3rd column in the tables) by 70 F and by 0.0024kWh-gal-F. (For the Baseline and ELs 1-3 of the Standard Dishwasher the committee finds 0.84, 0.71, 0.59, 0.52 versus the reported values of 0.82, 0.7, 0.58, 0.51.) For the Compact Dishwasher the committee finds 0.59, 0.52, 0.34 vs the reported values of 0.58, 0.51, 0.33
Per-cycle energy use for machine and drying (motor energy for pumping water and electrical heating element for dish drying) This value is reported for the baseline and each EL in tables 7.2.3 and 7.2.4 but does not play any role in the LCC calculations kWh/cycle

Compact;
BL: 0.36
EL1 0.37
EL2 0.31
Subtract the Per-cycle Water-heating Energy Consumption from the per-cycle Energy Consumption This value is not used in any LCC or PBP calculation
Annual Water Use Intermediate calculation Gal/yr

Standard;
BL:1075
EL1:914
EL2:753
EL3:667
EL4:477

Compact;
BL: 753
EL1: 667
EL2: 430
Multiply per-cycle Water Consumption by Number of Cycles in a year Per-cycle Water Consumption from Engineering Analysis and Number of cycles from Little (2001)
Annual Energy Consumption for water heating when Electric, Gas or Oil heaters are used Necessary to estimate the cost of water heating for the baseline and ELs as a function of prices of electricity, gas and oil. The energy consumption for water heating reported by DOE is 44%-57% of the total energy consumed by kWh/yr for electric water heaters

MMBtu/yr for gas and oil water heaters.

Standard
Electric
The caption of Tables 7.3.1 and 7.3.2 indicates that the calculation assumes water heater efficiencies of 98% electric, 80% for gas and 78% for oil.
  • The efficiency of water heaters and water-temperature rise requirements varies significantly across geographical regions and seasons. This variability will greatly affect the estimates of the energy efficiency of water heating models.
  • DOE should account for geographical and seasonal variability in water heater efficiency and temperature rise requirements by collecting data and developing technical models. Then
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
dishwashing operation for the standard models and 5%-56% for the compact models BL: 177, EL1: 150, EL2:124, EL3:110, EL4:79.
Gas:
BL:0.74, EL1:0.63, EL2:0.52, EL3: 0.46, EL:4 0.33.
Oil;
BL:0.76,
EL1:0.64,
EL2:0.53,
EL3:0.47,
EL4:0.34
  • develop estimates of energy consumption for water heating that are specific to each state, month and fuel type.
  • The calculation of Per-cycle Water-heating Energy consumption assumes electric water heaters efficiency of 100% and this calculation assumes 98%.
  • DOE’s engineering analysis should provide details on assumptions and test results. If there are not any tests results on water heating energy consumption then DOE needs to back up its assumptions on water heater efficiencies with references from the literature or water heater standards.
  • The committee could not replicate the numbers of the third column in Table 7.3.1 and Table 7.3.2. When multiplying annual water use by 70F and 0.0024kWh/gal-F the committee obtains values of Annual Energy Consumption for water use that are ~3kWh higher than those reported. If the committee took into account the 98% efficiency of electric water heaters, then it would obtain values even higher than those reported.
Electricity prices in the analysis year Annual average residential electricity price in 2012 2013$/kWh

A different value for each of the 27 RECS regions
Estimate annual average residential electricity prices for each of 27 RECS regions by weighting the annual residential electricity price for a utility by the number of households served in a region EIA Form 861 which contains, for every utility serving final consumers, annual electricity sales, revenues from electricity sales, number of customers in each sector. DOE should use the monthly average electricity prices to residential customers by state calculated by EIAa. Multiply monthly electricity prices in each state by monthly electricity consumption in each state to obtain state-specific, monthly electricity costs.
Natural Gas Prices in the analysis year Annual average of natural gas residential prices in 2012 2013$/MMBtu A different value for each of the 27 RECS regions Estimate annual average of prices by state and then estimate the average price in the RECS region weighting each state in the region by its number of households EIA publication, Natural gas Navigator which presents monthly averages of volumes of natural gas deliveries and prices by state. Residential natural gas prices are likely to be higher than industrial and commercial prices. By using an average of the price for the three sectors, DOE is likely underestimating natural gas costs to residential customers.
DOE should adjust the monthly average of natural gas prices by state for all sectors based on the relative difference between national residential, commercial and industrial monthly prices reported by EIA in its natural gas monthly publicationb
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
LPG prices in the analysis year Annual average of LPG prices for residential customers in 2012 2013$/MMBtu A different value for each of the 27 RECS regions Estimate average price in the RECS region by weighting each state in the region by its number of households EIA’s 2012 State Energy Consumption Price and Expenditures Estimates (SEDS). DOE should use monthly residential prices of propane by state provided by EIAc to estimate monthly energy costs for households with LPG water heaters. Then use monthly prices by state/region to estimate monthly energy costs.
Oil prices in the year of analysis Annual average residential oil prices in 2012 2013$/MMBtu A different value for each of the 27 RECS regions Estimate average price in the RECS region by weighting each state in the region by its number of households EIA’s 2012 State Energy Consumption Price and Expenditures Estimates (SEDS). DOE should use monthly residential prices of heating oil by state provided by EIAd to estimate monthly energy costs for households with LPG water heaters. Then use monthly prices by state/region to estimate monthly energy costs.
Water prices Annual average of water prices in 2012 2013$/thousand gallons

A different value for each of the four census regions (Northeast, Midwest, South and West)
Due to small sample size of utilities in the survey, DOE estimates water volumetric prices for the four U.S. Census Regions. It first finds a volume weighted average price by state and then finds a regions price by weighting states averages by the state’s population Water and Wastewater Rate Survey conducted by Raftelis Financial Consultants and the American Water Works Association with data from 290 water utilities and 214 wastewater utilities on fixed and volumetric charges. There is numerosity and heterogeneity of the municipal water supply industry, and the surveys may suffer from response bias. Nonetheless, there are not better sources for data than those used by DOE.
Future changes in electricity, natural gas, LPG and oil prices Necessary to project electricity prices for the compliance year (2019) and 20 years beyond (i.e., through 2040) Unitless

For each fuel, one value for each year between 2012 and 2019 and another value for all years between 2030 and 2040
DOE calculates annual changes in prices forecast by the AEO 2014 reference case for the period 2012-2040. Then for all of the years between 2030 and 2040 it assigns the average annual change for the period Annual Energy Outlook 2014 reference case. DOE should account for uncertainty on future energy prices by considering the AEO projections under the low economic growth and high economic growth cases. DOE can assume that each of the AEO cases has equal likelihood and can sample accordingly in its Monte Carlo simulation. DOE can also look retrospectively at AEO projections, estimate their error and apply that error to current projections to obtain an upper and lower bound estimate.
Future changes in water (and waste water) prices Necessary to project water prices for the compliance year (2019) and 20 years beyond (i.e., through 2040) Unitless

One value of annual price change for all of the projection years
DOE estimated the linear growth in water prices from 1970 through 2012 and extrapolated the trend to forecast prices through 2048 National U.S. city average water price index from 1970 through 2012. U.S. city data are only sources available.
Repair and maintenance cost Lack of data force DOE to assume that there are no incremental costs in repair or maintenance from changes in product efficiency
  • DOE states that although products with higher efficiency may have a higher probability of failure due to the increased complexity and number of parts there is not enough data to include this consideration.
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
  • DOE should extend the engineering analysis to project the impact of standards on the lifetime of appliances and the cost of maintenance and repairs. It also recommends that DOE collects data on the lifetime of equipment and uses it to inform this variable.
  • DOE should infer the duration of key product components from RECS data for each appliance type and vintage and given household usage whenever possible.
  • An increase in the costs of repair and maintenance of a product is likely to play a bigger role in the LCC than other variables that DOE estimates in more detail, such as the modest increase in manufacturer costs due to the cost of labor.
Product lifetime Necessary to estimate operating costs for the entire lifetime of the product Years

Weibul distribution with shape parameter 16.25, and location parameter 2.18 estimated in Crystal Ball by using the inputs: average=15.4 years, minimum=5 years and maximum=50 years
DOE adjusts RECS data to reflect use outside of primary residence based on AHS data and also takes into account shipments data from the Appliance magazine and trade associations

DOE takes as maximum the 99th percentile
  • RECS data on the age of the appliance (age response is in the form of bins comprising several years).
  • U.S. Census’s American Housing Survey (AHS) of second and vacant homes.
  • Data from Appliance magazine and trade associations on known history of appliance shipments.
  • DOE assumes the same lifetime for products of different energy efficiency levels. This assumption may be unrealistic in light of the fact that as stated by DOE, the increased complexity and number of parts of more efficient products, increases the cumulative probability of failure. Hence, the committee’s recommendations presented in the row above, for obtaining data on the impacts of energy efficiency on repair and maintenance costs and product lifetime, also apply here.
  • The committee did not find a detailed explanation on the approach followed by DOE to combine information from the three data sources described in Section 8.2.3 of the TSD.
  • DOE should provide a detailed explanation of the method followed to combine information from different data sources.
  • Appendix 8.D.3 suggests that DOE estimates the shape and scale of the Weibul distribution from its estimates of the minimum, median, and maximum lifetime of a dishwasher. The committee believes this approach does not take advantage of the information on the standard deviation of lifetime of dishwashers that can be estimated from the RECS sample and its adjustments.
  • DOE should estimate the parameters of the Weibul distribution using the method of moments
Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
Variable Description/Relevance DOE Approach Committee’s Comments
Units and Estimate Method Data Sources
  • (or Maximum likelihood) to all of the (adjusted) observations of the lifetime of dishwashers in the sample. Also, note that the two-parameter Weibul with the parameters specified implies there is a 7% chance that the dishwasher fails before 5 years. If 5 years is believed to be the true minimum of the distribution then consider using a 3-parameter Weibul.
Discount rates Necessary to find the present value of Operating Costs of the dishwasher %

One probability distribution (30 bins) for each of 6 Income groups. Income groups: 1: 1-20 percentile, 2: 21-40 percentile, 3: 41-60 percentile, 4: 61-80 percentile, 5: 81-90 percentile, and 6: 90-99 percentile)
  • DOE estimates this discount rate as an opportunity cost of funds that consumers will spend paying for the operating and maintenance costs of the appliance.
  • DOE estimates a distribution of discount rates for each of 6 income brackets by taking into account the average shares of different debts and equity for each group during 1994-2010, the probability distribution of interest rates for different types of debt, and historical data on returns from equity investments
  • Federal Reserve Board’s Survey of Consumer Finances (SCF) containing data on shares of debt and equity for each of the six income classes (years 1995, 1998, 001, 2004, and 2010) as well as data on interest rates on mortgages, home equity loans, credit cards, installment loans, other residence loans and lines of credit.
  • Cost of Savings Index Data on interest rates of savings accounts and money market accounts.
  • Federal Reserve Board time-series data on annual interest rates for

certificate of deposit, saving bonds. and AAA corporate bonds.

Rate of return on stocks from Standard and Poor’s S&P 500.

The committee finds DOE’s approach reasonable.

NOTES: BL = baseline level; EL = efficiency level; kWh = kilowatt-hour; LCC = life-cycle cost; LPG = liquefied petroleum gas; mmBtu = million British thermal units; PBP = payback period; RECS = Residential Energy Consumption Survey; SCF = standard cubic feet. See A.D. Little, 2001, Review of Survey Data to Support Revisions to DOE’s Dishwasher Test Procedure, Prepared for the U.S. Department of Energy, Cambridge, MA, December 12.

a For example, monthly prices for April 2020 are reported in Table 5.6.A in Electric Power Monthly, “Average Price of Electricity to Ultimate Customers by End-Use Sector,” https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a.

b See, for example, Table 3 in “Selected national average natural gas prices, 2015‐2020” in the Natural Gas monthly, June 2020, https://www.eia.gov/naturalgas/monthly/pdf/table_03.pdf.

c For example Weekly Propane Prices (October-March) for residential customers is provided at https://www.eia.gov/dnav/pet/pet_pri_wfr_a_EPLLPA_PRS_dpgal_w.htm.

d For example Weekly Heating Oil Prices (October-March) for residential customers is provided at https://www.eia.gov/dnav/pet/pet_pri_wfr_a_EPD2F_PRS_dpgal_w.htm.

Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
×
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Suggested Citation:"ANNEX 4A: DETAILED COMMENTS ON THE LIFE-CYCLE COST ANALYSIS FOR RESIDENTIAL DISHWASHERS." National Academies of Sciences, Engineering, and Medicine. 2021. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards. Washington, DC: The National Academies Press. doi: 10.17226/25992.
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The U.S. Department of Energy (DOE) issues standards regulations for energy conservation pursuant to the Energy Policy and Conservation Act of 1975, as amended, and other authorities. These standards regulations apply to certain consumer products and commercial and industrial equipment. These can include air conditioning and heating systems, washing machines, and commercial refrigeration, among numerous other examples. DOE issues standards regulations by rulemaking and includes quantitative maximum water and energy use or minimum energy conservation standards. There are currently standards regulations for more than 70 product classes (i.e., a specific type of consumer product or commercial or industrial equipment). This report reviews the assumptions, models, and methodologies that DOE uses in setting the quantitative portion of the standards regulations following the Office of Management and Budget's guidance on the use of scientific information. Review of Methods Used by the U.S. Department of Energy in Setting Appliance and Equipment Standards makes findings and recommendations on how DOE can improve its analyses and align its regulatory analyses with best practices for cost-benefit analysis.

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