November 1, 2010

Energy Conservation Program: Small Electric Motors

Proposed Rule
Summary

Score: 42 / 60

Additional details
Agency
Department of Energy
Regulatory Identification Number
1904-AB70
Agency Name
Department of Energy
Rule Publication Date
11/24/2009
Comment Closing Date
01/25/2010

RULE SUMMARY

The Energy Policy and Conservation Act authorizes the U.S. Department of Energy (DOE) to establish energy conservation standards for various consumer products and commercial and industrial equipment. Such equipment includes those small electric motors for which DOE determines that energy conservation standards would be technologically feasible and economically justified, and would result in significant energy savings. In this notice, DOE proposes energy conservation standards for certain small electric motors and is announcing a public meeting.

The entire Technical Support Document (TSD) is available at the Department of Energy's website.

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?
This regulation is easily findable by searching the RIN on regulations.gov. The RIA does not appear to be on regulations.gov but is in the Technical Support Document as Chapter 16 on the DOE website.
4/5
2. How verifiable are the data used in the analysis?
Data seemed well cited but required some effort to track down.
3/5
3. How verifiable are the models and assumptions used in the analysis?
Models were documented, accessible and interactive. Assumptions were spelled out.
5/5
4. Was the analysis comprehensible to an informed layperson?
With some effort and study, a well informed layperson should be able to figure out what was done. It is pretty easy to read.
4/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
4/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
Intended outcomes (dollars saved over the life cycle of the equipment, energy saved, lives saved) were clearly listed.
5/5
Does the analysis identify how these outcomes are to be measured?
Does not say explicitly how these outcomes would be measured ex post. They do have clear definitions of how dollars and energy saved can be measured on page 16-2 of the RIA.
4/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
Its not explicitly provided and depends on existing models used by DOE and EPA.
3/5
Does the analysis present credible empirical support for the theory?
The empirical support for the off the shelf models have strong empirical support.
4/5
Does the analysis adequately assess uncertainty about the outcomes?
The uncertainty of the outcomes is emphasized by the range of estimates, distributions and simulations, and sensitivity analysis that is often used.
4/5
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?
The market failure issue is discussed, but the analysis does not clearly explain why firms have little interest in purchasing motors that are economically efficient over their life cycle.
3/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
For the most part, the problem is assumed and comments are sought as to why there might not be a problem.
3/5
Does the analysis present credible empirical support for the theory?
The analysis presents credible empirical support for the environmental impacts but not for the cost saving impacts, which are the main benefits.
1/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The analysis adresses uncertianty for the environmental and energy impacts but not for the cost saving impacts, which is an important problem that DOE is trying to solve.
2/5
7. How well does the analysis assess the effectiveness of alternative approaches?
4/5
Does the analysis enumerate other alternatives to address the problem?
Seven or eight Trial Standard Levels (TSLs) representing different motor efficiency levels are examined.
5/5
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)?
In addition to the numerous TSLs that are examined, five non regulatory alternatives such as taxes, subsidies, rebates, and government bulk purchases are examined.
4/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
Net benefits and other outcomes are examined for all of the TSLs and key motor types.
5/5
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?
It is assumed that firms will not purchase more efficient and cost-saving motors even as energy prices rise over time.
3/5
8. How well does the analysis assess costs and benefits?
4/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
Incremental (to the baseline) costs are examined for different motor types and TSLs.
5/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
DOE does a good job of estimating all major expenditure categories. They have a thorough analysis and examine a wide range of expenditures from engineering costs to shipping costs
5/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The analysis identifies price impacts in sensitivity analyses using different assumptions about price elasticity of higher priced motors but assumes no impact in its "best" estimate.
4/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
The analysis estimates how many producers/consumers will switch to other types of engines once this regulation goes into effect, but the assumption that firms do not attempt to minimize the life cycle costs of electric motors is problematic.
3/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
A range of cost estimates and different assumptions are presented. They use a variety of discount rates to reflect uncertainty
4/5
Does the analysis identify the alternative that maximizes net benefits?
Yes, these points are carefully examined by motor category using Net Present Values (NPVs) for 3% and 7% over the period 2015 to 2065.
5/5
Does the analysis identify the cost-effectiveness of each alternative considered?
Cost-effectiveness can be calculated from the data used in the NPV analysis
4/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
DOE examines different types of manufactures (small vs. large, etc) and different types of customers and asses what costs they would face. The analysis also considers the effects up and down the production line -- since small motors are a product that are also used in other products. But demographic impacts are not analyzed.
3/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
See above. For the most part, the beneficiaries bear the costs.
3/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
The preamble says the economic analysis was used to choose the proposed options; the DOE certainly did a lot of analysis that supports the regulation.
4/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
The options that maximize net benefits for the various motors (NPV) were chosen.
5/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
Not explicitly. The outcome measures and goals can be easily tracked to determine future 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?
DOE did not say it would assess future performance or indicate any data that it would track after the rule was finalized. But the analysis in the RIA and preamble provides a template that could be used going forward.
2/5
 
Total 42 / 60