Northeast Gas Association

2014 Fall Operations Conference Saratoga Springs, NY

Overview and Status of Federal Appliance

Minimum Efficiency Regulations & Potential Impacts on Natural Gas Applications & LDC’s

Jim Ranfone Managing Director, Codes & Standards American Gas Association Washington, DC Oct. 2, 2014

AGA and the Fuel Switching Survey

1. About the American Gas Association.

2. What will be covered this evening.

3. Federal Appliance Minimum Efficiency Legislation & Regulations.

4. DOE’s role in issuing new federal regulations.

5. Products include residential furnaces, water heaters, etc.

6. Impact on energy use, product availability and consumers.

7. AGA fuel switching survey and why it is important.

8. Thanks for Your Help!

1

Three Times More Energy Reaches the Customer with Natural Gas

Electricity

Natural Gas

Delivered

To Customer

32

Conversion1

100 MMBtu Energy Source

95 34

93

Extraction,

Processing, &

Transportation Distribution

100 MMBTU

Energy Source

1.0 6.4 0 0

Total CO2e

7.4

92

0.4 0.1 5.4

Total CO2e

5.9

Not

Applicable

32% Efficient

92% Efficient

1 Includes all energy inputs, including renewable sources – based on actual fuel mix in 2007

2 Includes greenhouse gas impact from unburned methane

3 Energy consumed in space and water heating, clothes drying, and cooking.

NOTE: This full-fuel-cycle examines all impacts from the energy source through consumption

CO2 equivalent2 emissions from

typical household use3 (metric tons)

July 2014 version

CO2 equivalent2 emissions from

typical household use3 (metric tons)

Direct Use of Natural Gas Results in 20% Less CO2e

Electricity

Total CO2e

7.4 Million Metric Tons/Year

Natural Gas

Total CO2e

5.9 Million Metric Tons/Year

Annual CO2 equivalent* emissions from typical home heating, water heating, cooking, and clothes drying

energy uses during the full-fuel-cycle

1. Fuels used in electricity generation based on 2007 actual generation mix of fossil fuels, nuclear, and renewable energy

2. 1.1 million new homes were built in 2008

One Million Homes

NOTES:

* Includes greenhouse gas impact from unburned methane

July 2014 version

•Based on a 2,000 square foot home in an average climate, using national average energy prices. Analysis includes the following only: space heating, water

heating, cooking, and clothes drying. Home meets 2009 International Energy Conservation Code standards.

Full-Fuel-Cycle Impacts from Energy Consumption in a Typical Home

Total Annual Energy Cost: $1,499 Total Annual Energy Cost: $1,057

Electric Home Natural Gas Home

Full-Fuel-Cycle Energy Consumption: 131 MMBtu/yr Full-Fuel-Cycle Energy Consumption: 101 MMBtu/yr

7.4 metric tons CO2e* 5.9 metric tons CO2e*

Site Energy Consumption: 42 MMBtu/yr Site Energy Consumption: 88 MMBtu/yr

* Includes greenhouse gas impact from unburned methane

July 2014 version

Residential Energy Efficiency Ratings Water Heaters

Electric

Resistance

DOE NAECA Efficiency Rating 1:

Full-Fuel-Cycle Energy Consumption (MMBtu/yr):

Energy Cost2/yr :

CO2e* Emissions (metric tons/unit/yr):

Average Installed Cost4

Natural Gas DOE site-specific energy ratings are misleading.

While DOE rates an electric appliance with a more

efficient energy rating than a similar gas appliance,

in reality that electric appliance consumes more

source energy, pollutes more,

and costs the consumer more to operate.

Environmental Impact: 1.3 million tons of CO2e

A 10% market shift in shipments/sales would

reduce CO2e emissions by 1.3 million metric tons

per year.

.95 EF

49.7

$576

2.8

$662

.86 EF

26.5

$275

1.5

$967

1Energy factors (EF) based on a 40-50 gallon storage water heaters of equivalent first hour rating 2Energy Cost is based on 2014 DOE representative average unit costs for energy where electric rate is 12.40 cents/kWh; gas rate is $11.28/MMBtu

4 New installations, from: Preliminary Technical Support Document: Energy Efficiency Program for Consumer Products, January 5, 2009

EF=Energy Factor

* Includes greenhouse gas impact from unburned methane

July 2014 version

Residential Energy Efficiency Ratings Space Heating

Electric

Heat Pump

DOE NAECA Efficiency Rating:

Full-Fuel-Cycle Energy Consumption (MMBtu/yr):

Energy Cost1/year

CO2e* Emissions (metric tons/unit/yr):

Natural Gas

Furnace

DOE site-specific energy ratings are

misleading. While DOE rates an electric

appliance with a more efficient energy rating

than a similar gas appliance, in reality that

electric appliance consumes more source

energy, pollutes more, and costs the

consumer more to operate.

7.7 HSPF

96.5

$1,119

5.47

80 AFUE

68.3

$714

3.97

99 AFUE

155.8

$1,806

8.83

Electric

Resistance

Furnace

1Energy Cost is based on 2014 DOE representative average unit costs for energy where electric rate is 12.40 cents/kWh; gas rate is $11.28/MMBtu

HSPF=Heating Seasonal Performance Factor, AFUE=Annual Fuel Utilization Efficiency

* Includes greenhouse gas impact from unburned methane

July 2014 version

Comparison of Residential Space Heating Appliances

DOE/NAECA Efficiency 7.7 HSPF 9.0 HSPF 99 AFUE 80 AFUE 94 AFUE

Full-Fuel-Cycle Energy

Use per Year*

96 MMBtu 89 MMBtu 156 MMBtu 68 MMBtu 52 MMBtu

CO2e** Emissions/Yr* 5.5 Metric

Tons

5.0 Metric

Tons

8.8 Metric

Tons

4.0 Metric

Tons

2.6 Metric

Tons

Equipment Cost*** $2,720 $3,975 $2,800 $2,855 $3,895

Electric Heat Pump

Electric

Resistance

Furnace Natural Gas Furnace

• Excludes A/C operations

** Includes greenhouse gas impact from unburned methane

*** Package price includes cost for air conditioning equipment

July 2014 version

Residential Energy Efficiency Ratings Clothes Drying

Electric

DOE NAECA Efficiency Rating:

Full-Fuel-Cycle Energy Consumption (MMBtu/yr):

Energy Cost1/yr:

CO2e* Emissions (metric tons/unit/yr):

Natural Gas DOE site-specific energy ratings are misleading.

While DOE rates an electric appliance with a

more efficient energy rating than a similar gas

appliance, in reality that electric appliance

consumes more source energy, pollutes more,

and costs the consumer more to operate.

Environmental impact: 240,000 tons of CO2e

A 10% market shift on shipments/sales would

reduce CO2e emissions by 240,000 tons per year.

3.01 EF

7.3

$81

0.4

2.67 EF

3.0

$29.5

0.16

1Energy Cost is based on 2014 DOE representative average unit costs for energy where electric rate is 12.40 cents/kWh; gas rate is $11.28/MMBtu

EF = Energy Factor

* Includes greenhouse gas impact from unburned methane

July 2014 version

Residential Energy Efficiency Ratings Cooking Equipment

Electric

Energy Factor

Full-Fuel-Cycle Energy Consumption (MMBtu/yr):

Energy Cost1/yr:

CO2e* Emissions (metric tons/unit/yr):

Natural Gas DOE site-specific energy ratings are misleading.

While DOE rates an electric appliance with a

more efficient energy rating than a similar gas

appliance, in reality that electric appliance

consumes more source energy, pollutes more,

and costs the consumer more to operate.

Environmental Impact: 131,000 tons of CO2e

A 10% market shift on shipments/sales would

reduce CO2e emissions by 131,000 tons per year.

10.9 EF

5.7

$63

0.3

5.8 EF

3.8

$39

0.2

1Energy Cost is based on 2014 DOE representative average unit costs for energy where electric rate is 12.40 cents/kWh; gas rate is $11.28/MMBtu

* Includes greenhouse gas impact from unburned methane

July 2014 version

DOE Direct Final Furnace Rule

• Promulgated on October 25, 2011 after DOE Determined that No “Adverse” Comments Received

• Effective Date was of New Minimum Efficiency Levels May 1, 2013.

• The DFR:

– Set a Minimum Efficiency of 90% AFUE for Gas Furnaces in the 30 Northern U. S. States Where the Population-Weighed Heating Requirements >/= 5,000 Heating Degree Days (HHD) – A Regional Standard.

– Set a Minimum Efficiency Standard of 80% AFUE in the Remaining States.

– Other Impacts (e.g., standards for electric furnaces, etc.) Would Accrue But Are Not Discussed Here.

10

11

Implications for Non-Weatherized Residential Gas Furnaces

• A Ban of Gas Furnaces Currently Manufactured as Direct Replacements to Negative Pressure, Non-Condensing (Category I) Furnaces

• Ban Affects 30 Northern U. S. States Where the Population-Weighed Heating Requirements >/= 5,000 Heating Degree Days (HHD) – A Regional Standard.

• Where Existing Category I Furnaces are Replaced,

• Incentivizes

– Installation of Heat Pumps as the Heating System

– Installation of Electric Furnaces as the Heating System in All Air Handling Systems

– Replacement of Gas-Fired Storage Water Heaters with Electric Water Heaters.

• Replacement Incentives Controlled by Installation Costs and Venting System Modification Costs.

• In New Construction and Rehabs, Also Incentivizes Installation of These Other Systems.

12

DOE Sued Over DFR for Furnaces

• In December 2011, DOE sued by the American Public Gas Association (APGA) over the DOE Regional Furnace Standard

• APGA argued DOE didn’t follow proper procedures

• Regional Standard will cause “fuel switching” from natural gas to electric

• Based on the litigation, DOE issued statement that it would not “enforce” the furnace minimums that were to go into effect may 1, 2013

• This past April, DOE and APGA received court approval on an agreement that requires DOE to reissue a new analysis on furnaces standards and come out with a revised Notice of Proposed Rulemaking in an open and transparent manor.

• Industry currently awaiting a DOE NOPR. On Sept. 22, DOE made public available, its analysis available for public review.

• DOE needs consider the “unintended consequences” of the Regional standard

15

Residential Water Heater Minimum Requirements

• What are the current requirements?

• Who is responsible for issuing new requirements?

• Who is responsible for enforcing new requirements?

• How often are requirements evaluated?

• What are the new requirements and when do they go into effect?

16

Water heater (Effective Date April 16, 2015) Manufacturer can not make product less efficient

17

Gas Storage Water Heaters

Gas Instantaneous (Tankless)

Current Federal Minimum: .62

Revised Federal Minimum: .82

18

Water heater (Effective Date April 16, 2015) Manufacturer can not make product less efficient

Usage Guidelines

Electric Storage Water Heaters

The efficiency standards for electric table top water heaters and for electric

instantaneous (tankless) water heaters are not changed.

19

Water heater (Effective Date April 16, 2015) Manufacturer can not make product less efficient

Usage Guidelines

Oil Storage Water Heaters

20

Gas-Fired Pool Heaters (Effective Date April 16, 2013)

Manufacturer can not make product less efficient

Usage Guidelines

Current Federal Minimum: 78% Thermal Efficiency

Revised Federal Minimum: 82% Thermal Efficiency

21

Direct Heating Equipment Effective Date April 16, 2013

Manufacturer can not make product less efficient

Usage Guidelines

Highlighted - Gas Decorative Appliance Minimums successfully challenged in court

by the Hearth Products and Barbecue Association (HPBA)

DOE Timetable for Revising Water Heater Standards

22

• DOE to initiate Water Heater and other covered products

rulemaking process to determine if new minimum efficiency

requirements are “technically feasible and economically

justified” beginning end of 2012

• Framework Document - End of 2012 – early 2013

• Preliminary Technical Support Document (PTSD) - Mid 2013

• Notice of Proposed Rulemaking (NOPR) - Sept. 2014

• Final Rule - July 2015

• Effective Date – 2020

• DOE well behind schedule and currently no information on new

schedule available.

DOE Appliance Website

http://www1.eere.energy.gov/buildings/appliance_standards/about_standards.html

24

Framework Document

Preliminary Technical Support

Document (PTSD).

Notice of Proposed Rulemaking (NOPR)

Final Rule –

• Home

• About

• Laws & Regulations

• ENERGY STAR® Testing &

Verification

• EPACT 2005 Test Procedures

• Information Resources

• Notices & Rules

• Certification & Enforcement

• Schedule Setting

• Public Workshops & Hearings

• State Petitions

• Useful Links

• Guidance & FAQs

• Commercial Equipment

• Residential Products

Major U.S. Fuel Gas Codes

25

QUESTIONS?

Jim Ranfone Managing Director, Codes & Standards American Gas Association Washington, DC jranfone@aga.org

202.824.7310