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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations the following two metrics to measure consumer impacts:
The LCC is the total consumer expense of equipment over the life of that equipment, consisting of total installed cost MSP, distribution chain markups, sales tax, and installation costs plus operating costs expenses for energy use, maintenance, and repair.
To compute the operating costs, DOE
discounts future operating costs to the time of purchase and sums them over the lifetime of the equipment.
The simple PBP is the estimated amount of time in years it takes consumers to recover the increased purchase cost including installation of more-efficient equipment through lower operating costs. DOE calculates the simple PBP by dividing the change in purchase cost at higher efficiency levels by the change in annual operating cost for the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE
measures the change in LCC relative to the LCC in the no-new-standards case, which reflects the estimated efficiency distribution of SEMs in the absence of new or amended energy conservation standards. In contrast, the simple PBP
for a given efficiency level is measured relative to the baseline equipment. The analysis focuses on the four representative units identified in Table IV7.
For each considered efficiency level in each equipment class, DOE
calculated the LCC and PBP for a nationally representative set of
consumers. As stated previously, DOE
developed a sample based on distributions of consumers across sectors and applications, as well as across efficiency levels. For each sample consumer, DOE determined the unit energy consumption and appropriate energy price. By developing a representative sample of consumers, the analysis captured the variability in energy consumption and energy prices associated with the use of SEMs.
Inputs to the calculation of total installed cost include the cost of the equipmentwhich includes MSPs, retailer markups, and sales taxesand installation costs. Inputs to the calculation of operating expenses include annual energy consumption, energy prices and price projections, repair and maintenance costs, equipment lifetimes, and discount rates.
DOE created distributions of values for equipment lifetime, discount rates, and sales taxes, with probabilities attached to each value, to account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP relies on a Monte Carlo simulation to incorporate uncertainty and variability into the analysis. The Monte Carlo simulations randomly sample input values from the probability distributions and consumer samples. The model calculated the LCC
and PBP for equipment at each efficiency level for 10,000 consumers per representative unit per simulation run. The analytical results include a distribution of 10,000 data points
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showing the range of LCC savings for a given efficiency level relative to the nonew-standards case efficiency distribution. In performing an iteration of the Monte Carlo simulation for a given consumer, equipment efficiency is chosen based on its probability. If the chosen equipment efficiency is greater than or equal to the efficiency of the standard level under consideration, the LCC and PBP calculation reveals that a consumer is not impacted by the standard level. By accounting for consumers who already purchase moreefficient equipment, DOE avoids overstating the potential benefits from increasing equipment efficiency.
DOE calculated the LCC and PBP for all consumers as if each were to purchase a new motor in the expected year of compliance with amended standards. For purposes of its analysis, DOE estimated that any amended standards would apply to SEMs manufactured 5 years after the date on which the amended standard is published. DOE estimated publication of a final rule in the first half of 2023.
Therefore, for purposes of its analysis, DOE used 2028 as the first full year of compliance.
Table IV9 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. DOE
updated relevant data sources to the most recent information available in preparation of this final determination.
The subsections that follow provide further discussion.

TABLE IV9SUMMARY OF INPUTS AND METHODS FOR THE LCC AND PBP ANALYSIS
Inputs
Source/method
Equipment Cost
Installation Costs
Annual Energy Use

Derived by multiplying MSPs by distribution channel markups and sales tax, as appropriate.
Assumed no change with efficiency level other than shipping costs.
Motor input power multiplied by annual operating hours per year. Variability: Based on plant surveys and previous DOE study.
Electricity: Used average and marginal prices methodology from Coughlin and Beraki and updated data from Edison Electric Institute Typical Bill and Average Rates Reports Winter 2019, Summer 2019.
Based on AEO 2020 price projections.
Assumed no change with efficiency level.
Estimated using information from March 2010 Final Rule and from DOEs Advanced Manufacturing Office.
Residential: Approach involves identifying all possible debt or asset classes that might be used to purchase the considered appliances, or might be affected indirectly. Primary data source was the Federal Reserve Boards Survey of Consumer Finances.
Commercial: Calculated as the weighted average cost of capital for entities purchasing small electric motors. Primary data source was Damodaran Online.
2028.

Energy Prices
Energy Price Trends
Repair and Maintenance Costs
Equipment Lifetime
Discount Rates

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Compliance Date

References for the data sources mentioned in this table are provided in the sections following the table.

1. Equipment Cost To calculate consumer equipment costs, DOE multiplied the MSPs developed in the engineering analysis by the distribution channel markups
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described in section IV.D along with sales taxes. DOE used different markups for baseline motors and higherefficiency motors, because DOE applies an incremental markup to the increase
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in MSP associated with higherefficiency equipment. Further, in this final determination, DOE assumed the prices of SEMs would remain constant over time no decrease in price.

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