August 14, 2012

Energy Conservation Program: Energy Conservation Standards for Battery Chargers and External Power Supplies

Proposed Rule
Summary

Score: 29 / 60

Additional details
Agency
Department of Energy
Regulatory Identification Number
1904-AB57
Rule Publication Date
03/27/2012
Comment Closing Date
05/29/2012
Dollar Year
2010 millions
Time Horizon (Years)
2013 for 30 yrs Battery Charges in parenthesis (primary case)

RULE SUMMARY

The Department of Energy sets forth amended energy conservation standards for Class A external power supplies (EPSs), consistent with the requirements of the DOE established in the Energy Policy and
Conservation Act (EPCA), which prescribes energy conservation standards for various consumer products and commercial and industrial equipment, including battery chargers and EPSs. The EPCA also requires the DOE to determine whether more stringent, amended standards for these products are technologically feasible, economically justified, and would save a significant amount of energy. The DOE determined such amended standards are justified and said standards are set forth in this rule proposal.

The Department of Energy sets forth amended energy conservation standards for Class A external power supplies (EPSs), consistent with the requirements of the DOE established in the Energy Policy andConservation Act (EPCA), which prescribes energy conservation standards for various consumer products and commercial and industrial equipment, including battery chargers and EPSs. The EPCA also requires the DOE to determine whether more stringent, amended standards for these products are technologically feasible, economically justified, and would save a significant amount of energy. The DOE determined such amended standards are justified and said standards are set forth in this rule proposal.

 

COMMENTARY

Given the analysis provided in the NPRM, it is unclear as to whether the standards provide the highest net benefits solution to the issue given that no analysis of the other six alternatives is provided. The regulatory proposal is based heavily on energy savings, which are often seen separately from general costs and benefits. While the analytical analysis of the proposed standards is fully described, the descriptions were repetitive and in many cases confusing. Much of the NPRM and TSD would be impenetrable by non-experts.

MONETIZED COSTS & BENEFITS (AS REPORTED BY AGENCY)

Dollar Year
2010 millions
 
Time Horizon (Years)
2013 for 30 yrs Battery Charges in parenthesis (primary case)
 
Discount Rates
3%
7%
Expected Costs (Annualized)
247.3 (107.9)
251.9 (110)
Expected Benefits (Annualized)
403.9 (561.3)
380.7 (523.1)
Expected Costs (Total)
Not Reported by Agency
Not Reported by Agency
Expected Benefits (Total)
Not Reported by Agency
Not Reported by Agency
Net Benefits (Annualized)
156.6 (453.4)
128.7 (413.1)
Net Benefits (Total)
Not Reported by Agency
Not Reported by Agency

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
The docket can be found on regulations.gov via RIN and keyword searches. Searches on the Department of Energy webpage using the RIN and the regulation title produced communication memos concerning the regulation and technical support documents but not the regulation itself. After some digging on the webpage, links to the U.S. Government Printing Office can be found where further searches lead to the proposed rule. An incomplete TSD (with the referenced Chapter 17 missing) is easily accessible in the posted docket. However, the full TSD was hidden under a "public meeting" link.
2/5
2. How verifiable are the data used in the analysis?
Engineering data is documented by consulting studies and teardown of units. The engineering data is difficult to verify. Very little of the data appears to be available to interested parties.
2/5
3. How verifiable are the models and assumptions used in the analysis?
Assumptions appear to be clearly stated throughout the analysis. In some cases, citation is provided to support the assumptions; however, in some cases no citation is provided.
3/5
4. Was the analysis comprehensible to an informed layperson?
Acronyms are used throughout; however, all were defined at least once, and in some cases multiple times. Further, technical jargon is commonplace. The organization and sheer length of the document leads to a less penetrable (for the layperson) rule than otherwise possible. The more complex engineering approach to the model also makes for a more difficult to comprehend analysis.
3/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
3/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The more stringent standards are intended to reduce energy usage, which will improve environmental (air) quality and energy reliability, particularly during peak usage periods. It is questionable as to whether the savings would be noticeable by the average household.
4/5
Does the analysis identify how these outcomes are to be measured?
The analysis provides some estimates of the suggested pollution reduction (including CO2 and NOX) and assigns monetary values to such reductions. The value of fewer energy interruptions is not computed. The identified energy cost savings and energy savings double count the same impact.
3/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
The basic idea is that the DOE has identified ways to save energy, and, if adopted, people will save energy. More specifically, more efficient external power suppliers and battery chargers will require less energy. Given that a sizable share of users are for commercial purposes during peak time, the strains on the energy network will be reduced most during that period. However, it is not clear as to why consumers of energy are not willing to demand such energy savings measures, if the measures are as effective in reducing costs as is claimed in the rule.
2/5
Does the analysis present credible empirical support for the theory?
The analysis does reference some scientific studies from other federal agencies. Original empirical support for the energy reduction claims is provided as part of the energy analysis (unit testing).
3/5
Does the analysis adequately assess uncertainty about the outcomes?
The analysis does address the uncertainty in the calculation of the value of CO2 pollution reductions. Otherwise, the outcomes are presented as point estimates.
2/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
2/5
Does the analysis identify a market failure or other systemic problem?
Very brief mention is made to market failure in Section VI of the proposed rule; prior to this point, little motivation is provided other than to comply with the EPCA. Passing statements with no support or justification are provided, suggesting consumers lack information or the capacity to process information about energy efficiency. The same is true of the claim of asymmetric information and high transaction costs in accumulating more information on energy efficiency in the home appliance market. Finally, the external costs associated with pollution and lower energy reliability—a topic discussed in more detail in the rule—is offered.
4/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The energy reliability and air pollution arguments are classic externality cases, which are explained relatively well in the rule. The asymmetric information and high transaction costs to additional information arguments are also standard arguments; however, it is not detailed how or where these problems stem in this particular case. As such, it is not entirely clear why consumers/manufacturers are not interested in the cost savings.
3/5
Does the analysis present credible empirical support for the theory?
That information problems exist is stated as truth. That reductions in energy and therefore air pollution is beneficial to society is supported with some calculation of the monetary value (and net benefit) of CO2 and NOX reductions associated with the proposed standards.
1/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The analysis does not address any uncertainty (or the extent) in regard to the information problems. Some consideration is given to the value of CO2 emissions reductions, but this is primarily due to lack of agreement in the field concerning how to value such reductions. In general, the analysis seems to rush to conclusions based on markups, simulation data, and interview data without consideration of uncertainty.
1/5
7. How well does the analysis assess the effectiveness of alternative approaches?
4/5
Does the analysis enumerate other alternatives to address the problem?
Supposedly, eight total options were considered: 1) no new regulatory action, 2) consumer tax credits, 3) manufacturer tax credits, 4) performance standards, 5) rebates, 6) voluntary energy efficiency targets, 7) early replacement, and 8) bulk government purchases.
4/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
A number of alternatives are considered: regulation, incentives-based, voluntary, etc.
4/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
The analysis of the alternatives can be found in Chapter 17 of the TSD. The analysis is lacking in detail. For example, it is not entirely clear as to what assumptions are being made to arrive at the estimates. However, estimates of the market share meeting efficiency targets and energy saved are provided for each alternative. In addition, some narrow alternatives within the performance standards is provided in the NPRM but with little information concerning these minor alternatives.
3/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
The baseline is described quite well. First, it is made clear that many EPSs and battery chargers already exceed the proposed standard and that they will continue to do so. Energy efficiency in the United States is expected to continue to improve as manufacturers adapt to EU standards leading up to 2013. No further improvements are anticipated beyond 2013 without the regulation.
3/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
No analysis of the alternatives is provided despite claims that the DOE has quantified the costs and benefits. However, the costs of different standards are detailed, but the narrowness of these standards options provides little variation in the analysis.
2/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
All reasonable expected costs imposed on the producers as a result of the new standards appear to be addressed, as the DOE consulted with numerous manufacturers and received substantial feedback concerning the expected costs. Enforcement costs are explained to hold steady as the same resources can be used as is currently in place.
4/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
Without computing or using elasticities, no estimates of price changes can be quantified. It is stated that the MSP is likely to rise for the equipment manufacturer. However, the extent to which that cost is passed on to the final consumer is indeterminate depending on the elasticity.
2/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
The possibility of increased or decreased (due to scale operations) costs of components is considered. However, given the possible changes in behavior that can reasonably extend from this policy, this consideration is extremely limited.
1/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
Sensitivity analysis is performed to allow for different probability distributions for the Monte Carlo, to allow for different energy prices. Annualized costs, benefits, and net benefits are presented as point estimates with a "Low Net Benefits Estimate" and a "High Net Benefits Estimate" in addition to the "Primary Estimate."
4/5
Does the analysis identify the alternative that maximizes net benefits?
Net benefits of the alternative choices are not provided.
0/5
Does the analysis identify the cost-effectiveness of each alternative considered?
No analysis of alternative options is provided. Again, consideration of a narrow set of alternative performance standards is examined, but this variation is very limited in scope.
1/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
The analysis adequately identified those who will bear costs associated with the new standards; however, the incidence of these costs is not sufficiently addressed. For example, without a discussion of elasticities, it is not determined as to how much of the additional manufacturing costs will be passed on to consumers of the batteries.
3/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
The value of reduced emissions is a benefit to society as a whole. Reduced energy costs benefit all energy consumers—households and businesses alike, although by different amounts due to different application uses and consumption habits and, in some cases, energy prices. For example, peak energy users are shown to benefit the most from the regulation as these consumers pay the highest price for energy and therefore stand to save the most for increased energy efficiency. Again, the manufacturer impact analysis appears to be preliminary and lacks some detail.
3/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
While the analysis is supportive of the alternative chosen (regulatory standards), it is not entirely clear that the assumptions concerning the analysis of the other alternatives were not made in an effort to reach that conclusion. The vagueness of the analysis in chapter 17 of the TSD suggests the possibility that the analysis were conducted with a predetermined outcome in mind.
3/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
It appears that further consideration is given to maximizing energy saving with incomplete consideration to financial costs.
3/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
No measures are discussed for future tracking of the rule's goals. By implication, they could be held to measuring energy savings.
1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
No indication of future assessment is given, although retrospective analysis of energy savings is always available.
1/5
 
Total 29 / 60