Review of Proposed Minimum Efficiency Standards for “Consumer Boilers”

From MasterResource

By Mark Krebs

“DOE’s recent appliance efficiency ‘determinations’ are doing more harm than good for consumers and defy objectivity and transparency processes required by the Code of Federal Regulations (the Process Rule)….  Accordingly, this program should be dismantled as DOE has once again proven itself to be unworthy of objectively and transparently serving the best interests of American consumers.”

This post updates my September 19th analysis to examine just-filed comments in opposition to the U.S. Department of Energy’s hell-bent strategy of mandating less choice and higher costs for consumers in return for specious benefits.

Background

On August 13, 2023, DOE’s Office of Energy Efficiency and Renewable Energy (EERE) posted a Notice of Proposed Rulemaking for “consumer” boilers.  The comment period ended on October 13^th, 2023.  This NOPR, if finalized, would ban common gas-fired hot water boilers by requiring an AFUE (Annual Fuel Utilization Efficiency) of 95%.

According to Energy.gov, a high-efficiency heating system has an AFUE rating of 90% to 98.5%. Such premium efficiencies come at a premium cost, especially in the replacement market where most of these  dependable and long-lasting non-condensing boiler technologies are common.

My Comments

I have been documenting EERE’s misdeeds for more than a decade in scores of filings publicly available through regulation.gov. Additionally, I have disclosed scores of articles further documenting these misdeeds for the past decade that are publicly available through my archives at MasterResource. 

The reason for these inclusions is not for EERE; but for the benefit of elected and appointed lawmakers who may intervene in cleaning up the mess that the enabling legislation, the Energy Conservation and Policy Act (EPCA), created (unwittingly or otherwise) that increasingly harm ordinary consumers.

In addition to the added purchase expenses of high-end condensing furnaces, all such homes would require costly new boiler exhaust systems and cause potential problems for any non-condensing heating systems “stranded” on the existing non-condensing exhaust systems (i.e., typical gas-storage water heaters). 

Condensing technologies are also much more complicated, requiring additional maintenance and repair costs that can easily wipe out EERE’s claimed savings from reduced gas bills. Basically, high-end boilers are computer controlled. One failed motherboard component means a replacement. If such a failure occurs out-of-warranty, the fix is a new motherboard that can exceed the life-cycle savings estimated by EERE in this docket, savings of about $350 per year on average. Condensing boiler heat exchangers also don’t last nearly as long. 

Some manufacturers claim that condensing boiler heat exchanges will only last 10 years, as opposed to the 27+ years claimed by EERE.  Additionally, EERE’s meager $350 savings are highly inflated (by about 70%) due to  claimed Social Cost of Carbon (SCC) reductions and nebulous “health benefits,” both of which are highly contested by independent science.  At least arguably, EPCA never intended for these concocted benefits to be included, let alone given greater weight than reduced consumer utility costs.

Given these one-sided factors (and more discussed below), EERE claims a highly dubious 2.7-year simple payback.  It should also be noted that DOE has never based its “determinations” upon any semblance of actual installation histories.  Instead, EERE relies on a variety of biased analytical apparatchik that defy (by design) independent verification largely through biased forecasts with results averaged into oblivion.

Even more audacious is the fact that EERE is repeating the same manipulative Monte Carlo “random assignment” methodologies that DOE was recently admonished for using by the United States Court of Appeals for the District of Columbia Circuit where the Court remanded DOE’s final rule for commercial boilers.  By once again repeating this severe analytical cheat documented within the Court’s order, it further indicates DOE’s ongoing contempt for analytical objectivity and transparency that (at least arguably) shows contempt for the Court’s ruling.[1] The essence of this “random assignment” cheat is this:

 – that base case purchasing decisions are never influenced by the economics of potential investments in Standards-Compliant products regardless of the economic stakes involved– is indefensible.[2]

DOE’s recent appliance efficiency “determinations” are doing more harm than good for consumers and defy objectivity and transparency processes required by the Code of Federal Regulations at 10 CFR 430 Appendix A to Subpart C (a.k.a., the “Process Rule”).  But it’s a massive win for EERE’s radical “electrify everything” cult, their well-funded minions and the “administrative state” they collectively serve.

Accordingly, this program should be dismantled as DOE has once again proven itself to be unworthy of objectively and transparently serving the best interests of American consumers.

Comments filed in opposition to EERE’s NOPR for “consumer” boilers posted after October 13 deadline:

• Gas Analytic & Advocacy Services (GAAS):  ID EERE-2019-BT-STD-0036-0075
  These are my comments as summarized above.
• PHCC (Plumbing-Heating-Cooling Contractors—National Association) Consumer Boiler: ID EERE-2019-BT-STD-0036-0088
  As expected from a contractor trade association, PHCC provided an excellent real world rebuttal to DOE’s artificial lowballing of installation costs
• Burnham Holdings LLC (BHI):  ID EERE-2019-BT-STD-0036-0074
  BHI is the parent of several boiler manufacturers.  Their 179-pages of comments detailed how EERE is not following its own rules and did an exceptional job refuting EERE’s claimed boiler life expectancy of 26.9 years.  BHI also laid waste the EERE’s shipment assumptions along with many more that collectively over-estimated claimed economics (as usual).
• Joint States Attorneys General (AG):  ID EERE-2019-BT-STD-0036-0076. 21 State AG’s filed joint comments opposing EERE’s NOPR on the basis of ignoring numerous policies (such as Federalism) violation of EPCA, etc.
• HARDI (Heating, Air-conditioning & Refrigeration Distributors International) comments DOE Energy Conservation Standards for Consumer Boilers: ID EERE-2019-BT-STD-0036-0079
  HARDI’s comments oppose EERE’s NOPR on the basis of violating both EPCA and the Regulatory Flexibility Act (RFA).  HARDI’s comments also refute EERE’s claims for positive consumer benefits.
• Energy Marketers of America (EMA):  ID EERE-2019-BT-STD-0036-0087
  EMA is a federation of 48 state and regional trade associations representing family-owned and operated small business energy marketers throughout the United States.  EMA opposes EERE’s NOPR because it fails to meet the criteria set forth in EPCA for new and amended conservation standards, are not technically feasible and cannot be economically justified due to the economic burden it will place on manufacturers and consumers alike. Finally, the NOPR will not result in significant energy savings since older inefficient systems will likely remain in operation without any alternative equipment that most consumers can afford.
• EERE-2019-BT-STD-0036-0089
  Joint gas industry commenters include the American Gas Association (AGA) , the American Public Gas Association (APGA), the National Propane Gas Association (NPGA), and Spire, Inc.  Their comments are outlined and addressed as follows:
• The proposed standard violates the unavailability provisions of the Energy Policy and Conservation Act (“EPCA”).
• DOE’s analysis seriously mischaracterizes the boiler market and there are fundamental errors in how DOE analyzed installation costs.
• DOE’s use of random assignment systematically skews the results of the economic analyses that underpin the proposal.
• DOE’s analysis is based on an unreasonable assessment of the facts relevant to boiler installations.
• DOE’s proposal will negatively impact American manufacturing and jobs.

The above “random assignment” methodology is highlighted because it indicates that EERE is ignoring the admonishment they recently were dealt for their Final Rule for commercial boilers which, as I described earlier, was remanded by United States Court of Appeals for the District of Columbia Circuit.  I call that contempt. If this docket for “consumer” boilers is finalized, it stands a good chance that the court will also view it as contemptuous.

The joint gas industry comments also included a two-part (561 pages in total) attachment that provides an exhaustive history of related filings, many of which I wrote hile employed by Spire. This filing and its attachment indicate that the joint gas industry plans on appealing should this NOPR be finalized.

• AHRI (Air-Conditioning, Heating, and Refrigeration Institute ): ID EERE-2019-BT-STD-0036-0086AHRI’s 29 pages of comments covered a lot of ground. What I found most intriguing was the following discussion under the heading “DOE Should Account for Uncertainty Around its Estimates” at page 19.  Excerpts follow:

The calculations in the LCC contain at least 18 independent variables (Table 1), each of which DOE has estimated in some fashion. In its peer review report, the National Academies of Science, Engineering and Medicine specifically recommended that DOE account accurately for the uncertainty and variability and that “the uncertainty or variability the parameters represent should be compounded or propagated—properly accounting for any correlations— throughout the calculation.”²⁵ While DOE has attempted to understand and account for variability in some of these variables, it has not and does not account for the uncertainty around its estimates. AHRI questions whether DOE’s estimates are accurate.

AHRI then goes on to list such variables.  It’s a long list, taking up the next page and a half. The intriguing part for me personally is that EERE’s initial advisory panel, back in the mid ‘90’s, (that I was appointed to) made similar observations and recommendations.  Basically, we advised EERE to provide stakeholders the capability to independently perform “what-if” scenarios around such variables. What we got was EERE’s adoption of “Crystal Ball” which is high-end proprietary Monte Carlo software that EERE used to obscure, rather than illuminate, sensitivity analyses. This is the same software that EERE still uses for the aforementioned “random assignment” methodologies to falsely “determine” consumer benefits.

There were also several anonymous comments opposing this NOPR.  And of course, there were the usual suspects commenting in favor of this NOPR.  There were also a few comments that were difficult to say whether they were for or against the NOPR.  One of these was Rheem Manufacturing Company: ID EERE-2019-BT-STD-0036-0080.

Rheem comments elected to address EERE’s list of questions. One of these questions and Rheem’s reply indicates they support EERE’s ≥95% AFUE proposal and mission (“creep”) towards minimizing CO2 as follows:

14. DOE requests comments on its approach for developing efficiency trends beyond 2030. Rheem supports the ≥95% AFUE proposed by DOE for gas-fired hot water boilers. If finalized, the only significant increase in energy efficiency beyond 2030 would be with heat pump technology. Rheem understands that there are two main goals of the appliance standards program: 1) to reduce energy use and 2) to reduce greenhouse gas emissions, both in a responsible way that preserves consumer choice and product utility. Rheem recommends DOE evaluate hydrogen blends and full hydrogen boilers, which could reduce energy use while almost fully eliminating greenhouse gas emissions.,

I guess I overlooked the section under EPCA that EERE’s mission includes reducing greenhouse gas emissions. But I agree that EERE has unilaterally made it their mission.

Rheem (inadvertently?) provided a useful “heads up” that warrants discussion as follows:

Rheem notes that the Consumer Product Safety Commission (CPSC) is set to propose a rule¹¹ to establish a safety standard for residential gas-fired furnaces and boilers.

Footnote 11 provides the reference:

CPSC Carbon Monoxide Rulemaking Docket: https://www.regulations.gov/docket/CPSC-2019-0020

The following links are to CPSC meetings covering this matter:

• https://www.youtube.com/watch?v=PyWrgNOoomg&authuser=0
  • https://www.youtube.com/watch?v=woAZspbJ2Yc&authuser=0

Personally, I wasn’t aware of this situation within the CPSC, but it sounds to me like more of the SOS that started all the controversy over gas cooking and woke the sleeping giant that justly is the American consumer.  Unfortunately, the comment period is long ended and the CPSC is pondering its next move.

Conclusions

Overall, the number of commenters in opposition well exceeded those in favor. Regardless, I expect EERE will finalize this NOPR (with some minor adjustments perhaps) and then the 60-day window starts under the Administrative Procedures Act to challenge a Final Rule.  If litigated, I hope that my articles will help make the case that EERE deserves no legal deference and, instead, should be sunsetted, or at least their appliance efficiency standards program.

Since this article is an update, there are four more news items worthy of mention.  These are:

1. Supreme Court passes on red state challenge to Biden ‘social cost of carbon’ rule
   Most online news entities have a version of this.  The recurring theme is that the “red” states failed to adequately show harm. In other words, showing harm that is yet to come doesn’t count.  Although I have some ideas of my own, I ask MasterResource readers to list in the comments section below any historical examples of historic harm that may qualify.
2. AGA, APGA and NPGA File Legal Challenge to the DOE Final Rule for Commercial Water Heating
   On October 5^th, EERE issued a final rule requiring more stringent energy efficiency standards for commercial water heaters. It requires gas-fired storage water heaters to have a 95% thermal efficiency (condensing) and 96% thermal efficiency for gas-fired instantaneous water heaters. On October 13^th, AGA, APGA, and NPGA filed a petition with the US Court of Appeals for DC challenging the DOE CWH Final Rule. This is very good news as it indicates that gas industry trade associations are getting better organized and have a willingness to fight for both their customers’ free choice and their own interests for staying in business.  For a copy of the filing (USCA Case #23-1285 Document #2021854) click here.
3. Climate Documentary Debuts on NewsmaxA professional attempt (but not the first[3][4]) at opening the long overdue debate regarding the “climate crisis.”
4. National Propane Gas Association et. al. sue the State of New York over pending gas ban
   An official press release is located here: NY Lawsuit
   The legal filing is located here: NY Complaint

[1] DOE misuse of “random assignment,” and the vast implications thereof, is technically complicated to put it mildly.  The Joint gas industry comments (ID EERE-2019-BT-STD-0036-0089) provide a detailed explanation of this analytical cheat.  WARNING: Explaining the deeply complex devil-in-the-details of “random assignment” constitutes half of the 35 pages of the joint gas industry’s filing (starting at page 11 and ending at page 28).

[2] Ibid

[3] https://eelegal.org/policy-2/#ElectrificationReport

[4] https://blog.friendsofscience.org/2021/12/21/the-cost-of-net-zero-electrification-of-the-u-s-a/

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Mark Krebs, a mechanical engineer and energy policy consultant, has been involved with energy efficiency design and program evaluation for over thirty years. Mark has served as an expert witness in dozens of State energy efficiency proceedings, has been an advisor to DOE and has submitted scores of Federal energy-efficiency filings. His many MasterResource posts on natural gas vs. electricity and “Deep Decarbonization” federal policy can be found here.