Energy Conservation Program for Commercial and Industrial Equipment: Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump Energy Conservation Standards, 18858-18916 [E8-6907]
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Federal Register / Vol. 73, No. 67 / Monday, April 7, 2008 / Proposed Rules
DEPARTMENT OF ENERGY
Office of Energy Efficiency and
Renewable Energy
10 CFR Part 431
[Docket No. EERE–2007–BT–STD–0012]
RIN 1904–AB44
Energy Conservation Program for
Commercial and Industrial Equipment:
Packaged Terminal Air Conditioner
and Packaged Terminal Heat Pump
Energy Conservation Standards
Office of Energy Efficiency and
Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking
and public meeting.
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AGENCY:
SUMMARY: The Energy Policy and
Conservation Act (EPCA) prescribes
energy conservation standards for
various consumer products and
commercial and industrial equipment,
and requires the Department of Energy
(DOE) to administer an energy
conservation program for these
products. In this notice, DOE is
proposing amended energy conservation
standards for packaged terminal air
conditioners (PTACs) and packaged
terminal heat pumps (PTHPs) and is
announcing a public meeting.
DATES: DOE will hold a public meeting
on May 1, 2008, from 9 a.m. to 4 p.m.,
in Washington, DC. DOE must receive
requests to speak at the public meeting
before 4 p.m., April 21, 2008. DOE must
receive a signed original and an
electronic copy of statements to be given
at the public meeting before 4 p.m.,
April 21, 2008.
DOE will accept comments, data, and
information regarding the notice of
proposed rulemaking (NOPR) before and
after the public meeting, but no later
than June 6, 2008. See section VII,
‘‘Public Participation,’’ of this NOPR for
details.
ADDRESSES: The public meeting will be
held at the U.S. Department of Energy,
Forrestal Building, Room 1E–245, 1000
Independence Avenue, SW.,
Washington, DC. Please note that
foreign nationals visiting DOE
Headquarters are subject to advance
security screening procedures, requiring
a 30-day advance notice. If you are a
foreign national and wish to participate
in the public meeting, please inform
DOE as soon as possible by contacting
Ms. Brenda Edwards at (202) 586–2945
so that the necessary procedures can be
completed.
You may submit comments identified
by docket number EERE–2007–BT–
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STD–0012 and/or Regulation Identifier
Number (RIN) 1904–AB44 using any of
the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: ptac_hp@ee.doe.gov.
Include EERE–2007–BT–STD–0012 and/
or RIN 1904–AB44 in the subject line of
your message.
• Postal Mail: Ms. Brenda Edwards,
U.S. Department of Energy, Building
Technologies Program, Mailstop EE–2J,
1000 Independence Avenue, SW.,
Washington, DC 20585–0121.
Telephone: (202) 586–2945. Please
submit one signed paper original.
• Hand Delivery/Courier: Ms. Brenda
Edwards, U.S. Department of Energy,
Building Technologies Program, 950
L’Enfant Plaza, 6th Floor, Washington,
DC 20024. Please submit one signed
original paper copy.
Instructions: All submissions received
must include the agency name and
docket number or RIN for this
rulemaking. For detailed instructions on
submitting comments and additional
information on the rulemaking process,
see section VII, ‘‘Public Participation,’’
of this document.
Docket: For access to the docket to
read background documents or
comments received, visit the U.S.
Department of Energy, Forrestal
Building, Resource Room of the
Building Technologies Program, 950
L’Enfant Plaza, SW., 6th Floor,
Washington, DC 20024, (202) 586–2945,
between 9 a.m. and 4 p.m., Monday
through Friday, except Federal holidays.
Please call Ms. Brenda Edwards at the
above telephone number for additional
information regarding visiting the
Resource Room.
FOR FURTHER INFORMATION CONTACT: Wes
Anderson, Project Manager, Energy
Conservation Standards for Packaged
Terminal Air Conditioners and
Packaged Terminal Heat Pumps, U.S.
Department of Energy, Energy Efficiency
and Renewable Energy, Building
Technologies Program, EE–2J, 1000
Independence Avenue, SW.,
Washington, DC 20585–0121, (202) 586–
7335. E-mail:
Wes.Anderson@ee.doe.gov. Francine
Pinto, Esq., or Eric Stas, Esq., U.S.
Department of Energy, Office of General
Counsel, GC–72, 1000 Independence
Avenue, SW., Washington, DC 20585–
0121, (202) 586–9507. E-mail:
Francine.Pinto@hq.doe.gov or
Eric.Stas@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
I. Summary of the Proposed Rule
II. Introduction
A. Overview
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B. Authority
C. Background
1. Current Standards
2. History of Standards Rulemaking for
Packaged Terminal Air Conditioners and
Packaged Terminal Heat Pumps
III. General Discussion
A. Test Procedures
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible
Levels
C. Energy Savings
1. Determination of Savings
2. Significance of Savings
D. Economic Justification
1. Economic Impact on Manufacturers and
Commercial Customers
2. Life-Cycle Costs
3. Energy Savings
4. Lessening of Utility or Performance of
Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
IV. Methodology and Analyses
A. Market and Technology Assessment
1. Definitions of a PTAC and a PTHP
2. Equipment Classes
3. Market Assessment
a. Trade Association
b. Manufacturers
c. Shipments
4. Technology Assessment
B. Screening Analysis
C. Engineering Analysis
1. Approach
2. Equipment Classes Analyzed
3. Cost Model
4. Baseline Equipment
5. Alternative Refrigerant Analysis
a. R–22
b. R–410A
c. R–410A Compressor Availability
d. R–410A Manufacturing Production Cost
6. Cost-Efficiency Results
7. Mapping Energy Efficiency Ratio to
Coefficient of Performance
D. Markups to Determine Equipment Price
E. Energy Use Characterization
1. Building Type
2. Simulation Approach
F. Life-Cycle Cost and Payback Period
Analyses
1. Approach
2. Life-Cycle Cost Inputs
a. Equipment Prices
b. Installation Costs
c. Annual Energy Use
d. Electricity Prices
e. Maintenance Costs
f. Repair Costs
g. Equipment Lifetime
h. Discount Rate
3. Payback Period
G. National Impact Analysis—National
Energy Savings and Net Present Value
Analysis
1. Approach
2. Shipments Analysis
3. Base Case and Standards Case
Forecasted Distribution of Efficiencies
4. National Energy Savings and Net Present
Value
H. Life-Cycle Cost Sub-Group Analysis
I. Manufacturer Impact Analysis
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1. Overview
a. Phase 1, Industry Profile
b. Phase 2, Industry Cash Flow Analysis
c. Phase 3, Sub-Group Impact Analysis
2. Government Regulatory Impact Model
Analysis
3. Manufacturer Interviews
a. Issues
b. Government Regulatory Impact Model
Scenarios and Key Inputs
i. Base Case Shipments Forecast
ii. Standards Case Shipments Forecast
iii. R–410A Base Case and Amended
Energy Conservation Standards Markup
Scenarios
iv. Equipment and Capital Conversion
Costs
J. Employment Impact Analysis
K. Utility Impact Analysis
L. Environmental Analysis
M. Discussion of Other Issues
1. Effective Date of the Proposed Amended
Energy Conservation Standards
2. ASHRAE/IESNA Standard 90.1–1999
Labeling Requirement
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy
Savings
1. Economic Impacts on Commercial
Customers
a. Life-Cycle Cost and Payback Period
b. Life-Cycle Cost Sub-Group Analysis
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
i. Standard Size PTACs and PTHPs
ii. Non-Standard Size PTACs and PTHPs
b. Cumulative Regulatory Burden
c. Impacts on Employment
d. Impacts on Manufacturing Capacity
e. Impacts on Subgroups of Manufacturers
3. National Impact Analysis
a. Amount and Significance of Energy
Savings
b. Net Present Value
c. Impacts on Employment
4. Impact on Utility or Performance of
Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
C. Proposed Standard
1. Overview
2. Conclusion
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility
Act/Initial Regulatory Flexibility
Analysis
1. Reasons for the proposed rule
2. Objectives of, and legal basis for, the
proposed rule
3. Description and estimated number of
small entities regulated
4. Description and estimate of compliance
requirements
5. Duplication, overlap, and conflict with
other rules and regulations
6. Significant alternatives to the rule
C. Review Under the Paperwork Reduction
Act
D. Review Under the National
Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates
Reform Act of 1995
H. Review Under the Treasury and General
Government Appropriations Act of 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General
Government Appropriations Act of 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality
Bulletin for Peer Review
VII. Public Participation
A. Attendance at Public Meeting
B. Procedure for Submitting Requests to
Speak
C. Conduct of Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
The Energy Policy and Conservation
Act (EPCA), as amended, provides the
Department of Energy (DOE) the
authority to establish energy
18859
conservation standards for certain
commercial equipment covered by the
American Society of Heating,
Refrigerating, and Air-Conditioning
Engineers (ASHRAE) and the
Illuminating Engineering Society of
North America (IESNA) Standard 90.1,
including packaged terminal air
conditioners (PTACs) and packaged
terminal heat pumps (PTHPs), the
subject of this proceeding. (42 U.S.C.
6313(a)(6)(A)) Section 342(a)(6)(A)
provides that DOE may prescribe a
standard more stringent than the level
in ASHRAE/IESNA Standard 90.1, after
ASHRAE amends the energy
conservation standards found in
ASHRAE/IESNA Standard 90.1, if DOE
can demonstrate ‘‘by clear and
convincing evidence,’’ that such a more
stringent standard ‘‘would result in
significant additional conservation of
energy and is technologically feasible
and economically justified.’’ (42 U.S.C.
6313(a)(6)(A)(II) In accordance with
these criteria discussed in this notice,
DOE proposes to amend the energy
conservation standards for PTACs and
PTHPs by raising the efficiency levels
for this equipment to the levels shown
in Table I.1, above the efficiency levels
specified by ASHRAE/IESNA Standard
90.1–1999. The proposed standards
would apply to all covered PTACs and
PTHPs manufactured on or after the
date four years after publication of the
final rule in the Federal Register. (42
U.S.C. 6313(a)(6)(D)) The proposed
standards for PTACs and PTHPs
represent an improvement in energy
efficiency of 12 to 33 percent compared
to the efficiency levels specified by
ASHRAE/IESNA Standard 90.1–1999,
depending on the equipment class.
TABLE I.1.—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS
Equipment class
Proposed energy conservation standards*
Equipment
Category
Cooling capacity
PTAC ...............................
Standard Size** .............
<7,000 Btu/h ......................................
≥7,000 Btu/h and ≤15,000 Btu/h .......
>15,000 Btu/h ....................................
<7,000 Btu/h ......................................
≥7,000 Btu/h and ≤15,000 Btu/h .......
>15,000 Btu/h ....................................
<7,000 Btu/h ......................................
Non-Standard Size† .......
PTHP ...............................
Standard Size** .............
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≥7,000 Btu/h and ≤15,000 Btu/h .......
>15,000 Btu/h ....................................
Non-Standard Size† .......
<7,000 Btu/h ......................................
≥7,000 Btu/h and ≤15,000 Btu/h .......
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EER = 11.4
EER = 13.0¥(0.233 × Cap††)
EER = 9.5
EER = 10.2
EER = 11.7¥(0.213 × Cap††)
EER = 8.5
EER = 11.8
COP = 3.3
EER = 13.4¥(0.233 × Cap††)
COP = 3.7¥(0.053 × Cap††)
EER = 9.9
COP = 2.9
EER = 10.8
COP = 3.0
EER = 12.3¥(0.213 × Cap††)
COP = 3.1¥(0.026 × Cap††)
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Federal Register / Vol. 73, No. 67 / Monday, April 7, 2008 / Proposed Rules
TABLE I.1.—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS—Continued
Equipment class
Proposed energy conservation standards*
Equipment
Category
Cooling capacity
>15,000 Btu/h ....................................
EER = 9.1
COP = 2.8
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* For equipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all energy efficiency ratio (EER) values must be
rated at 95°F outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85°F entering water temperature
for water cooled equipment. All coefficient of performance (COP) values must be rated at 47°F outdoor dry-bulb temperature for air-cooled equipment, and at 70°F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
†† Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95°F outdoor dry-bulb temperature.
DOE’s analyses indicate that the
proposed energy conservation
standards, trial standard level (TSL) 4
for PTAC and PTHP equipment (See
section V.A for a discussion of the
TSLs), would save a significant amount
of energy—an estimated 0.019
quadrillion British thermal units (Btu),
or quads, of cumulative energy over 30
years (2012–2042). The economic
impacts on the nation (i.e., national net
present value) and the commercial
customer (i.e., the average life-cycle cost
(LCC) savings) are positive.
The national net present value (NPV)
of TSL 4 is $17 million using a 7 percent
discount rate and $61 million using a 3
percent discount rate, cumulative from
2012 to 2062 in 2006$. This is the
estimated total value of future savings
minus the estimated increased
equipment costs, discounted to 2008.
The benefits and costs of the standard
can also be expressed in terms of
annualized 2006$ values over the
forecast period 2012 through 2062.
Using a 7 percent discount rate for the
annualized cost analysis, the cost of the
standard is $3.4 million per year in
increased equipment and installation
costs while the annualized benefits are
$5.0 million per year in reduced
equipment operating costs. Using a 3
percent discount rate, the annualized
cost of the standard is $2.9 million per
year while the annualized benefits of
today’s standard are $5.6 million per
year. See section V.B.3 for additional
details.
Using a real corporate discount rate of
5 percent, DOE estimated the industry’s
NPV (INPV) for manufacturers of PTACs
and PTHPs to be $332 million in 2006$.
The impact of the proposed standards
on INPV of manufacturers of standard
size PTACs and PTHPs is estimated to
be between an 18 percent loss and a 2
percent loss (¥$56 million to ¥$5
million). The non-standard size PTAC
and PTHP industry is estimated to lose
between 44 percent and 34 percent of its
NPV (¥$12 million to ¥$9 million) as
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a result of the proposed standards.
Additionally, based on DOE’s
interviews with manufacturers of
PTACs and PTHPs, DOE expects
minimal plant closings or loss of
employment as a result of the proposed
standards.
DOE’s analyses indicate that the
proposed standard, TSL 4, has energy
savings and environmental benefits. All
of the energy saved is electricity, and
DOE expects the energy savings from
the proposed standards to eliminate the
need for approximately 81 megawatts
(MW) of generating capacity by 2042.
These results reflect DOE’s use of energy
price projections from the U.S. Energy
Information Administration (EIA)’s
Annual Energy Outlook 2007
(AEO2007).1 The proposed standard has
environmental benefits leading to
reductions in greenhouse gas emissions
(i.e., cumulative (undiscounted)
emission reductions) of 2.7 million tons
(Mt) of carbon dioxide (CO2) from 2012
to 2042. Additionally, the standard
would likely result in 0.16 thousand
tons (kt) of nitrogen oxides (NOX)
emissions reductions or generate a
similar amount of NOX emissions
allowance credits in areas where such
emissions are subject to emissions caps.
In view of its analyses, DOE believes
that the proposed standard, TSL 4,
represents the maximum improvement
in energy efficiency of PTAC and PTHP
equipment that is technologically
feasible and economically justified. DOE
found that the benefits to the Nation
(energy savings, customer average LCC
savings, national NPV increase, and
emission reductions) of the proposed
standards outweigh the burdens (loss of
INPV and LCC increases for some
customers). When DOE considered
higher energy efficiency levels as TSLs,
it found that the burdens (loss of
manufacturer NPV and LCC increase for
1 DOE intends to use EIA’s Annual Energy
Outlook 2008 (AEO2008) to generate the results for
the final rule. In addition, DOE will use 2007$ to
reflect all dollar values in the final rule.
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some customers) of the higher efficiency
levels outweighed the benefits (energy
savings, LCC savings for some
customers, national NPV increase, and
emission reductions) of those higher
levels.
DOE recognizes that manufacturers of
PTAC and PTHP equipment are also
facing a mandated refrigerant phase-out
on January 1, 2010. R–22, the only
refrigerant currently used by PTACs and
PTHPs, is an HCFC refrigerant and
subject to the phase-out requirement.
Phase-out of this refrigerant could have
a significant impact on the
manufacturing, performance, and cost of
PTAC and PTHP equipment. DOE
further discusses and estimated the
impacts of the refrigerant phase-out on
PTAC and PTHP equipment and on the
manufacturers of this equipment in
today’s notice.
II. Introduction
A. Overview
The proposed standard will save a
significant amount of energy and, as a
result of less energy being produced,
result in a cleaner environment. In the
30-year period after the amended
standard becomes effective, the nation
will save 0.019 quads of primary energy.
These energy savings also will result in
significantly reduced emissions of air
pollutants and greenhouse gases
associated with electricity production,
by avoiding the emission of 2.7 Mt of
CO2 and 0.16 kt of NOX. In addition,
once the standard is implemented in
2012, DOE expects to eliminate the need
for the construction of approximately 81
MW of new power plants by 2042. In
total, DOE estimates the net present
value to the Nation of this standard to
be $17 million from 2012 to 2062 in
2006$.
Finally, commercial customers will
see benefits from the proposed standard.
Although DOE expects the price of the
high efficiency PTAC and PTHP
equipment to be approximately 2
percent higher than the average price of
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this equipment today, the energy
efficiency gains will result in lower
energy costs. Based on this calculation,
DOE estimates that the mean payback
period for the high efficiency PTACs
will be approximately 11.2 years and
the mean payback period for the high
efficiency PTHPs will be approximately
4.4 years. When these savings are
summed over the lifetime of the high
efficiency equipment, customers of
PTACs will save $4, on average, and
customers of PTHPs will save $35, on
average, compared to their expenditures
on today’s baseline PTACs and PTHPs.
B. Authority
Part A–1 of Title III of EPCA
addresses the energy efficiency of
certain types of commercial and
industrial equipment.2 (42 U.S.C. 6311–
6317) It contains specific mandatory
energy conservation standards for
commercial PTACs and PTHPs. (42
U.S.C. 6313(a)(3)) The Energy Policy Act
of 1992 (EPACT), Public Law 102–486,
also amended EPCA with respect to
PTACs and PTHPs, providing
definitions in section 122(a), test
procedures in section 122(b), labeling
provisions in section 122(c), and the
authority to require information and
reports from manufacturers in section
122(e).3 DOE publishes today’s notice of
proposed rulemaking (NOPR) pursuant
to Part A–1. The PTAC and PTHP test
procedures appear at Title 10 Code of
Federal Regulations (CFR) section
431.96.
EPCA established Federal energy
conservation standards that generally
correspond to the levels in ASHRAE/
IESNA Standard 90.1, as in effect on
October 24, 1992 (ASHRAE/IESNA
Standard 90.1–1989), for each type of
covered equipment listed in section
342(a) of EPCA, including PTACs and
PTHPs. (42 U.S.C. 6313(a)) For each
type of equipment, EPCA directed that
if ASHRAE/IESNA Standard 90.1 is
amended, DOE must adopt an amended
standard at the new level in ASHRAE/
IESNA Standard 90.1, unless clear and
convincing evidence supports a
determination that adoption of a more
stringent level as a national standard
would produce significant additional
energy savings and be technologically
feasible and economically justified. (42
U.S.C. 6313(a)(6)(A)(ii)(II).
EPCA also provides that in deciding
whether such a more stringent standard
is economically justified, DOE must,
after receiving comments on the
proposed standard, determine whether
the benefits of the standard exceed its
burdens by considering, to the greatest
extent practicable, the following seven
factors:
(1) The economic impact of the
standard on manufacturers and
consumers of the products subject to the
standard;
(2) The savings in operating costs
throughout the estimated average life of
the product in the type (or class)
compared to any increase in the price
of, or in the initial charges for, or
maintenance expenses of the products
which are likely to result from the
imposition of the standard;
(3) The total projected amount of
energy savings likely to result directly
from the imposition of the standard;
(4) Any lessening of the utility or the
performance of the products likely to
result from the imposition of the
standard;
(5) The impact of any lessening of
competition, as determined in writing
by the Attorney General, that is likely to
result from the imposition of the
standard;
(6) The need for national energy
conservation; and
(7) Other factors the Secretary
considers relevant.
(42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)–(ii)).
Furthermore, EPCA contains what is
commonly known as an ‘‘antibacksliding’’ provision. (42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(1)) This
provision mandates that the Secretary
not prescribe any amended standard
that either increases the maximum
allowable energy use or decreases the
minimum required energy efficiency of
covered equipment. It is a fundamental
principle in EPCA’s statutory scheme
that DOE cannot amend standards
downward; that is, weaken standards,
from those that have been published as
a final rule. Natural Resources Defense
18861
Council v. Abraham, 355 F.3d 179 (2nd
Cir. 2004).
Additionally, the Secretary may not
prescribe an amended standard if
interested persons have established by a
preponderance of the evidence that the
amended standard is ‘‘likely to result in
the unavailability in the United States of
any product type (or class)’’ with
performance characteristics, features,
sizes, capacities, and volumes that are
substantially the same as those generally
available in the United States at the time
of the Secretary’s finding. (42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(4))
Federal energy efficiency
requirements for commercial equipment
generally supersede State laws or
regulations concerning energy
conservation testing, labeling, and
standards. (42 U.S.C. 6316(a) and (b))
DOE can, however, grant waivers of
preemption for particular State laws or
regulations, in accordance with the
procedures and other provisions of
section 327(d) of EPCA. (42 U.S.C.
6297(d) and 6316(b)(2)(D))
C. Background
1. Current Standards
The current energy conservation
standards in EPCA for PTACs and
PTHPs apply to all equipment
manufactured on or after January 1,
1994, (42 U.S.C. 6313(a)(3)) and
correspond to the minimum efficiency
levels in ASHRAE/IESNA Standard
90.1–1989. These levels consist of the
EER for the cooling mode and the COP
for the heating mode. The EER means
‘‘the ratio of the produced cooling effect
of an air conditioner or heat pump to its
net work input, expressed in Btu/watthour.’’ 10 CFR 431.92. The COP means
‘‘the ratio of produced cooling effect of
an air conditioner or heat pump (or its
produced heating effect, depending on
model operation) to its net work input,
when both the cooling (or heating) effect
and the net work input are expressed in
identical units of measurement.’’ 10
CFR 431.92. Table II.1 depicts the
Federal energy conservation standards
for PTACs and PTHPs found in 10 CFR
431.97.
TABLE II.1.—EXISTING FEDERAL ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS
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Equipment class
Existing federal energy
conservation standards*
Equipment
Cooling capacity
PTAC ....................................
< 7,000 Btu/h ...................................................................
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
2 This part was originally titled Part C., However,
it was redesignated Part A–1 after Part B of Title
III of EPCA was repealed by Public Law 109–58.
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EER = 8.88
EER = 10.0 ¥ (0.16 × Cap**)
3 These requirements are codified in Part C of
Title III of EPCA, now Part A–1, as amended, 42
U.S.C. 6311–6316, and Title 10 of the Code of
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Federal Regulations, Part 431 (10 CFR Part 431) at
10 CFR 431.92, 431.96, 431.97, and subparts U and
V.
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TABLE II.1.—EXISTING FEDERAL ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS—Continued
Equipment class
Existing federal energy
conservation standards*
Equipment
Cooling capacity
PTHP ....................................
> 15,000 Btu/h
< 7,000 Btu/h ...................................................................
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
EER = 7.6
EER = 8.88
COP = 2.7
EER = 10.0¥(0.16 × Cap**)
COP = 1.3 + (0.16 × EER)
EER = 7.6
COP = 2.5
* For equipment rated according to the Air-Conditioning and Refrigeration Institute (ARI) standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled
products. All COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature
for water-source heat pumps.
** Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature.
2. History of Standards Rulemaking for
Packaged Terminal Air Conditioners
and Packaged Terminal Heat Pumps
On October 29, 1999, ASHRAE’s
Board of Directors approved ASHRAE/
IESNA Standard 90.1–1999 (ASHRAE/
IESNA Standard 90.1–1999), which
addressed efficiency standard levels for
34 categories of commercial heating,
ventilating and air-conditioning (HVAC)
Standard 90.1–1999 used the equipment
classes defined by EPCA, which are
distinguished by equipment (i.e., air
conditioner or heat pump) and cooling
capacity, and further separated these
equipment classes by wall sleeve
dimensions as further discussed in
section IV.C.2. Table II.2 shows the
efficiency levels in ASHRAE/IESNA
Standard 90.1–1999 for PTACs and
PTHPs.
and water heating equipment covered
by EPCA, including PTACs and PTHPs.
In amending the ASHRAE/IESNA
Standard 90.1–1989 levels for PTACs
and PTHPs, ASHRAE acknowledged the
physical size constraints between the
varying sleeve sizes on the market.
Specifically, the wall sleeve dimensions
of the PTAC and PTHP affect the energy
efficiency of the equipment.
Consequently, ASHRAE/IESNA
TABLE II.2.—ASHRAE/IESNA STANDARD 90.1–1999 ENERGY EFFICIENCY LEVELS FOR PTACS AND PTHPS
Equipment class
ASHRAE/IESNA standard
90.1–1999 efficiency levels*
Equipment
Category
Cooling capacity
PTAC ...............................
Standard Size** .............
< 7,000 Btu/h .....................................
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
< 7,000 Btu/h
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
< 7,000 Btu/h .....................................
Non-Standard Size† .......
PTHP ...............................
Standard Size** .............
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
Non-Standard Size† .......
< 7,000 Btu/h .....................................
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
>15,000 Btu/h
EER = 11.0
EER = 12.5¥(0.213 × Cap††)
EER = 9.3
EER = 9.4
EER = 10.9¥(0.213 × Cap††)
EER = 7.7
EER = 10.8
COP = 3.0
EER = 12.3¥(0.213 × Cap††)
COP = 3.2¥(0.026 × Cap††)
EER = 9.1
COP = 2.8
EER = 9.3
COP = 2.7
EER = 10.8¥(0.213 × Cap††)
COP = 2.9¥(0.026 × Cap††)
EER = 7.6
COP = 2.5
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* For equipment rated according to ARI standards, all EER values must be rated at 95°F outdoor dry-bulb temperature for air-cooled products
and evaporatively-cooled products and at 85°F entering water temperature for water cooled products. All COP values must be rated at 47°F outdoor dry-bulb temperature for air-cooled products, and at 70°F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
ASHRAE/IESNA Standard 90.1–1999 also includes a factory labeling requirement for non-standard size PTAC and PTHP equipment as follows:
‘‘MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED IN NEW CONSTRUCTION PROJECTS.’’
†† Cap means cooling capacity in kBtu/h at 95°F outdoor dry-bulb temperature.
Following the publication of
ASHRAE/IESNA Standard 90.1–1999,
DOE performed a screening analysis that
covered 24 of the 34 categories of
equipment addressed in ASHRAE/
IESNA Standard 90.1–1999, to
determine if more stringent levels
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would result in significant additional
energy conservation of energy, be
technologically feasible and
economically justified. For each of these
types of equipment, the screening
analysis examined a range of efficiency
levels that included the levels specified
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in EPCA and ASHRAE/IESNA Standard
90.1–1999, as well as the maximum
technologically feasible efficiency
levels. The report ‘‘Screening Analysis
for EPACT-Covered Commercial
[Heating, Ventilating and AirConditioning] HVAC and Water-Heating
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Equipment’’ (commonly referred to as
the 2000 Screening Analysis) 4
summarizes this analysis, and estimates
the annual national energy consumption
and the potential for energy savings that
would result if the covered equipment
were to meet efficiency levels higher
than those specified in ASHRAE/IESNA
Standard 90.1–1999. The baselines for
the comparison were the corresponding
levels specified in ASHRAE/IESNA
Standard 90.1–1999 and EPCA.
On January 12, 2001, DOE published
a final rule for commercial HVAC and
water heating equipment, which
concluded that the 2000 Screening
Analysis indicated at least a reasonable
possibility of finding ‘‘clear and
convincing evidence’’ that more
stringent standards ‘‘would be
technologically feasible and
economically justified and would result
in significant additional conservation of
energy’’ for PTACs and PTHPs. 66 FR
3336, 3349. Under EPCA, these are the
criteria for DOE adoption of standards
more stringent than those in ASHRAE/
IESNA Standard 90.1. (42 U.S.C.
6313(a)(6)(A)(ii)(II))
In addition, on March 13, 2006, DOE
issued a Notice of Availability (NOA)
announcing the availability of a
technical support document (TSD) DOE
was using in re-assessing whether to
adopt, as uniform national standards,
energy conservation standards
contained in amendments to the
ASHRAE/IESNA Standard 90.1–1999
for certain types of commercial
equipment. 71 FR 12634. In the NOA,
DOE revised the energy savings analysis
from the 2000 Screening Analysis and
summarized the assumptions and
results in the NOA TSD. Id. DOE also
stated that, even though the revised
analysis reduced the potential energy
savings that might result from more
stringent standards than the efficiency
levels specified in ASHRAE/IESNA
Standard 90.1–1999 for PTACs and
PTHPs, DOE believed that there was a
possibility that clear and convincing
evidence exists that more stringent
standards are warranted. Therefore,
DOE stated in the NOA that it was
inclined to seek more stringent standard
levels than the efficiency levels in
ASHRAE/IESNA Standard 90.1–1999
for PTACs and PTHPs through a
separate rulemaking. 71 FR 12639.
Lastly, on March 7, 2007, DOE issued a
final rule reaffirming DOE’s inclination
in the March 2006 NOA and stating
4 U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy. ‘‘Energy
Conservation Program for Consumer Products:
Screening Analysis for EPACT-Covered Commercial
HVAC and Water-Heating Equipment Screening
Analysis.’’ April 2000.
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DOE’s decision to explore more
stringent efficiency levels than in
ASHRAE/IESNA Standard 90.1–1999
for PTACs and PTHPs through a
separate rulemaking. 72 FR 10038,
10044.
In January 2008, ASHRAE published
ASHRAE/IESNA Standard 90.1–2007,
which reaffirmed the definitions and
efficiency levels for PTACs and PTHPs
in ASHRAE/IESNA Standard 90.1–1999.
Since the definitions and efficiency
levels for PTACs and PTHPs are the
same in the two versions of ASHRAE/
IESNA Standard 90.1, DOE is only
referencing the ASHRAE/IESNA
Standard 90.1–1999 version throughout
today’s notice even though DOE
reviewed both versions.
III. General Discussion
A. Test Procedures
Section 343(a) of EPCA authorizes the
Secretary to amend the test procedures
for PTACs and PTHPs to the latest
version generally accepted by industry
or the rating procedures developed by
the Air-Conditioning and Refrigeration
Institute (ARI) 5, as referenced by
ASHRAE/IESNA Standard 90.1, unless
the Secretary determines by clear and
convincing evidence the latest version
of the industry test procedure does not
meet the requirements for test
procedures described in paragraphs (2)
and (3) of that section. (42 U.S.C.
6314(a)(4))
DOE published a final rule on October
21, 2004, that amends its test procedure
for PTACs and PTHPs to incorporate by
reference the most recent amendments
to the industry test procedure for PTACs
and PTHPs, ARI Standard 310/380–
2004. 69 FR 61962 (October 21, 2004).
DOE does not believe further
modifications to this test procedure are
necessary at this time because no further
amendments have been made to the
industry test procedure for PTACs and
PTHPs.
B. Technological Feasibility
1. General
DOE considers design options
technologically feasible if the industry
is already using them or if research has
progressed to development of a working
prototype. DOE defines technological
feasibility as: ‘‘Technologies
incorporated in commercially available
5 The Air-Conditioning and Refrigeration Institute
(ARI) and the Gas Appliance Manufacturers
Association (GAMA) announced on December 17,
2007, that their members voted to approve the
merger of the two trade associations to represent the
interests of cooling, heating, and commercial
refrigeration equipment manufacturers. The merged
association became AHRI on Jan. 1, 2008.
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18863
products or in working prototypes will
be considered technologically feasible.’’
10 CFR part 430, subpart C, appendix A,
section 4(a)(4)(i).
In each energy conservation standards
rulemaking, DOE conducts a screening
analysis based on information gathered
on all current technology options and
prototype designs that could improve
the efficiency of the equipment that is
the subject of the rulemaking. In
consultation with interested parties,
DOE develops a list of design options
for consideration in the rulemaking. All
technologically feasible design options
are candidates in this initial assessment.
DOE eliminates from consideration,
early in the process, any design option
that is not practicable to manufacture,
install, or service; that will have adverse
impacts on equipment utility or
availability; or for which there are
adverse impacts on health or safety. 10
CFR 430, subpart C, appendix A, section
4(a)(4). In addition, for the types of
equipment identified in section 342(a)
of EPCA, 42 U.S.C. 6313(a), which
includes PTACs and PTHPs, DOE
eliminates from consideration any
design option whose technological
feasibility is not supported by clear and
convincing evidence.
The design options DOE considered
as part of this rulemaking all have the
potential to improve EER or COP. DOE
considered any design option for PTACs
and PTHPs to be technologically
feasible if it is used in equipment the
PTAC and PTHP industry distributes in
commerce or is in a working prototype.
2. Maximum Technologically Feasible
Levels
In developing today’s proposed
standards, DOE has determined the
maximum improvement in energy
efficiency that is technologically
feasible (‘‘max tech’’) for PTACs and
PTHPs. EPCA requires that DOE adopt
amended energy conservation standards
for equipment covered by ASHRAE/
IESNA Standard 90.1 that achieves the
maximum improvement in energy
efficiency that is technologically
feasible and economically justified, or to
identify the ‘‘max tech’’ efficiency
levels. (42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(A)) Therefore, in reviewing
the amended ASHRAE/IESNA Standard
90.1 efficiency standards for PTACs and
PTHPs, DOE identified the ‘‘max tech’’
levels as part of the engineering analysis
(Chapter 5 of the TSD). At the present
time, those levels are the levels set forth
in TSL 7. For the representative cooling
capacities within a given equipment
class, PTACs and PTHPs utilizing R–22
with these efficiency levels already are
being offered for sale and there is no
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equipment at higher efficiency levels
that are currently available. Table III.1
lists the ‘‘max tech’’ levels that DOE
identified for this rulemaking.
TABLE III.1.—‘‘MAX TECH’’ EFFICIENCY LEVELS (≥7,000 BTU/H AND ≤15,000 BTU/H EQUIPMENT CLASSES)*
Cooling
capacity
(Btu/h)
Equipment type
Equipment class
PTAC ...................................................
Standard Size† .................................................................................................
‘‘Max tech’’
efficiency
level**
Non-standard Size†† ........................................................................................
PTHP ...................................................
9,000
12,000
11,000
12.0 EER
11.5 EER
11.2 EER
Standard Size† .................................................................................................
9,000
12.0 EER
3.5 COP
11.7 EER
3.3 COP
11.4 EER
2.9 COP
12,000
Non-standard Size†† ........................................................................................
11,000
* As discussed in section IV.C.2 of today’s notice, DOE is presenting the results for two cooling capacities of standard size PTACs and PTHPs,
9,000 Btu/h and 12,000 Btu/h, which fall within the equipment classes of PTACs and PTHPs with cooling capacities ≥7,000 Btu/h and ≤15,000
Btu/h.
** For equipment rated according to the DOE test procedure, all EER values would be rated at 95°F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85°F entering water temperature for water cooled products. All COP values must be rated at
47°F outdoor dry-bulb temperature for air-cooled products, and at 70°F entering water temperature for water-source heat pumps.
† Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
†† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
2. Significance of Savings
1. Determination of Savings
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C. Energy Savings
Section 342(a)(6)(A)(ii)(II) of EPCA
allows DOE to adopt a more stringent
standard for PTACs and PTHPs than the
amended level in ASHRAE/IESNA
Standard 90.1, if clear and convincing
evidence supports a determination that
the more stringent standard would
result in ‘‘significant’’ additional energy
savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II))
While EPCA does not define the term
‘‘significant,’’ a U.S. Court of Appeals,
in Natural Resources Defense Council v.
Herrington, 768 F.2d 1355, 1373 (D.C.
Cir. 1985), indicated that Congress
intended ‘‘significant’’ energy savings in
section 325 of EPCA to mean savings
that are not ‘‘genuinely trivial.’’ For all
the TSLs considered in this rulemaking,
DOE’s estimates of energy savings
provide clear and convincing evidence
that the additional energy savings to be
achieved from exceeding the
corresponding efficiency level[s] in
ASHRAE/IESNA Standard 90.1–1999
are nontrivial, and therefore DOE
considers them ‘‘significant’’ as required
by section 342 of EPCA. (42 U.S.C. 6313
(a)(6)(A)(ii)(II))
DOE used the national energy savings
(NES) Microsoft Excel spreadsheet to
estimate energy savings that could result
from amended energy conservation
standards for PTACs and PTHPs. The
spreadsheet forecasts energy savings
over the period of analysis for TSLs
relative to the base case. DOE quantified
the energy savings attributable to an
energy conservation standard as the
difference in energy consumption
between the trial standards case and the
base case. The base case represents the
forecast of energy consumption in the
absence of amended mandatory energy
conservation standards beyond the
levels in ASHRAE/IESNA Standard
90.1–1999. Section IV.G of this Notice
and Chapter 11 of the TSD describes the
NES spreadsheet model.
The NES spreadsheet model
calculates the energy savings in both
site energy (in kilowatt-hours (kWh)) or
source energy (in British thermal units
(Btu)). Site energy is the energy directly
consumed at building sites by PTACs
and PTHPs. DOE expresses national
energy savings in terms of source energy
savings (i.e., savings in energy used to
generate and transmit the energy
consumed at the site). Chapter 11 of the
TSD contains a table of factors used to
convert site energy consumption in kWh
to source energy consumption in Btu.
DOE derived these conversion factors,
which change over time, from EIA’s
AEO2007.
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D. Economic Justification
As noted earlier, EPCA provides
seven factors for DOE to evaluate in
determining whether an energy
conservation standard for PTAC and
PTHP is economically justified. (42
U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)–(ii)) The following
discussion explains how DOE has
addressed each factor in this
rulemaking.
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1. Economic Impact on Manufacturers
and Commercial Customers
DOE has established procedures,
interpretations, and policies to guide
DOE in considering new or amended
appliance energy conservation
standards. DOE investigates the impacts
of amended energy conservation
standards of PTACs and PTHPs on
manufacturers through the manufacturer
impact analysis (MIA) (see Chapter 13 of
the TSD). First, DOE uses an annual
cash flow approach in determining the
quantitative impacts of a new or
amended energy conservation standard
on manufacturers. This includes both a
short- and long-term assessment based
on the cost and capital requirements
during the period between the
announcement of a regulation and the
time when the regulation comes into
effect. Impacts analyzed include INPV,
cash flows by year, changes in revenue
and income, and other measures of
impact, as appropriate. Second, DOE
analyzes and reports the impacts on
different types of manufacturers, paying
particular attention to impacts on small
manufacturers. Third, DOE considers
the impact of standards on domestic
manufacturer employment,
manufacturing capacity, plant closures,
and loss of capital investment. Finally,
DOE takes into account cumulative
impacts of different DOE regulations on
manufacturers.
For customers, DOE measures the
economic impact as the change in
installed cost and life-cycle operating
costs, i.e., the LCC. Chapter 8 of the TSD
presents the LCC of the equipment at
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each efficiency level examined. LCC,
described below, is one of the seven
factors EPCA requires DOE to consider
in determining the economic
justification for a new or amended
standard. (42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(II))
2. Life-Cycle Costs
The LCC is the sum of the purchase
price, including the installation and
operating expense (including operating
energy consumption, maintenance, and
repair expenditures) discounted over
the lifetime of the equipment. To
determine the purchase price including
installation, DOE estimated the markups
that are added to the manufacturer
selling price (MSP) by distributors and
contractors, and estimated installation
costs from an analysis of PTAC and
PTHP installation cost estimates for
each of the equipment classes. DOE
determined that maintenance cost is not
dependent on PTAC and PTHP
efficiency and that repair cost increases
with MSP.
In estimating operating energy costs,
DOE used the average commercial
electricity price in each State, using EIA
data from 2006.6 DOE modified the 2006
average commercial electricity prices to
reflect the average electricity prices for
each of four types of businesses
examined in this analysis. The LCC
savings analysis compares the LCCs of
equipment designed to meet possible
proposed energy conservation standards
with the LCC of the equipment likely to
be installed in the absence of amended
energy conservation standards. The LCC
analysis also defines a range of energy
price forecasts for electricity used in the
economic analyses.
For each PTAC and PTHP equipment
class, DOE calculated both the LCC and
LCC savings at various efficiency levels.
The LCC analysis estimated the LCC for
representative equipment used in four
types of buildings, two of which were
hotels/motels and health care facilities
that are representative of the segment of
U.S. commercial building stock that
uses PTACs and PTHPs.
To account for uncertainty and
variability in specific inputs, such as
equipment lifetime and discount rate,
DOE used a distribution of values with
probabilities attached to each value. For
each of the four types of commercial
buildings, DOE sampled the value of
these inputs from the probability
distributions. As a result, the analysis
produced a range of LCCs. A distinct
advantage of this approach is that DOE
6 The EIA data for 2006 is the latest data set
published by EIA on commercial electricity prices
by State.
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can identify the percentage of customers
achieving LCC savings or attaining
certain payback values due to an
increased energy conservation standard,
in addition to identifying the average
LCC savings or average payback period
for that standard. DOE gives the LCC
savings as a distribution, with a mean
value and a range. DOE’s analysis
assumes that the customer purchases
the PTAC and PTHP in 2012. Chapter 8
of the TSD contains the details of the
LCC calculations.
3. Energy Savings
While significant additional energy
conservation is a separate statutory
requirement for imposing a more
stringent energy conservation standard
than the level in ASHRAE/IESNA
Standard 90.1, EPCA requires that DOE
consider the total projected energy
savings expected to result directly from
the standard when determining the
economic justification for a standard.
(42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(III)) DOE used the NES
spreadsheet results in its consideration
of total projected savings. Section V.B.3
discusses the savings figures.
4. Lessening of Utility or Performance of
Equipment
In establishing equipment classes, and
in evaluating design options and the
impact of proposed standards, DOE has
attempted to avoid proposing amended
standards for PTACs and PTHPs that
would lessen the utility or performance
of such equipment. (See 42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(IV))
The design options considered in the
engineering analysis of this rulemaking
do not involve changes in equipment
design or unusual installation
requirements that could reduce the
utility or performance of PTACs and
PTHPs. In addition, DOE is also
considering manufacturers’ concerns
that one-third of the non-standard size
market subject to the more stringent
standards under ASHRAE/IESNA
Standard 90.1–1999 would not be able
to meet the efficiency levels specified by
ASHRAE/IESNA Standard 90.1–1999
for standard size equipment due to the
physical size constraints of the wall
sleeve as further discussed in section
IV.A.2.
5. Impact of Any Lessening of
Competition
EPCA directs that DOE consider any
lessening of competition that is likely to
result from proposed standards. The
Attorney General considers the impact,
if any, of any lessening of competition
likely to result from imposition of a
proposed standard. (42 U.S.C. 6316(a);
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18865
42 U.S.C. 6295(o)(2)(B)(i)(V)) DOE has
transmitted a copy of this NOPR to the
Attorney General soliciting written
views on this issue.
6. Need of the Nation To Conserve
Energy
The non-monetary benefits of the
proposed standards are likely to be
reflected in improvements to the
security and reliability of the Nation’s
energy system-namely, reductions in the
overall demand for energy will result in
a reduction in the Nation’s reliance on
foreign sources of energy and increased
reliability of the Nation’s electricity
system. DOE conducts a utility impact
analysis to show the reduction in
installed generation capacity. The
proposed standards are also likely to
result in improvements to the
environment. In quantifying these
improvements, DOE has defined a range
of primary energy conversion factors
and associated emission reductions
based on the generation displaced by
energy conservation standards. DOE
reports the environmental effects from
each TSL in the environmental
assessment, Chapter 16 of the TSD. (42
U.S.C. 6313(a); 42 U.S.C.
6295(o)(2)(B)(i)(VI))
7. Other Factors
EPCA allows the Secretary of Energy,
in determining whether a proposed
standard is economically justified, to
consider any other factors that the
Secretary deems to be relevant. (42
U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(VII)) DOE considered
the impacts of setting different amended
energy conservation standards for
PTACs and PTHPs (i.e., the amended
standard level for a given PTAC cooling
capacity would be different from the
amended standard level for a give PTHP
with the same cooling capacity). DOE
also considered the effects of potential
equipment switching within the PTAC
and PTHP market (e.g., switching from
PTHPs to PTACs, which include a lessefficient heating system). In addition,
DOE also considered the uncertainty
associated with the market due to the
impending refrigerant phase-out in
2010, including equipment availability,
compressor availability, and the
available efficiencies of R–410A PTACs
and PTHPs. Lastly, DOE considered the
uniqueness of the non-standard size of
this equipment and any differential
impacts that might result on this
industry from amended energy
conservation standards. The nonstandard size market is further
discussed in section IV and the impacts
on the non-standard size industry from
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amended energy conservation standards
are estimated in section V.
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IV. Methodology and Analyses
This section addresses the analyses
DOE has performed for this rulemaking.
A separate sub-section addresses each
analysis. DOE used a spreadsheet to
calculate the LCC and payback periods
(PBPs) of potential amended energy
conservation standards. Another
spreadsheet was used to provide
shipments forecasts and then calculates
national energy savings and net present
value impacts of potential amended
energy conservation standards. DOE
also assessed manufacturer impacts,
largely through use of the Government
Regulatory Impact Model (GRIM).
DOE also estimated the impacts of
proposed PTAC and PTHP energy
conservation standards on electric
utilities and the environment using a
version of EIA’s National Energy
Modeling System (NEMS). The NEMS
model simulates the U.S. energy
economy and has been developed over
several years by the EIA primarily for
preparing the AEO. The NEMS produces
a widely known baseline forecast for the
United States through 2030 that is
available in the public domain. The
version of NEMS used for the proposed
energy conservation standards analysis
is called NEMS–BT , and is based on the
AEO2007 version with minor
modifications. The NEMS–BT offers a
sophisticated picture of the effect of
standards, since it can measure the
interactions between the various energy
supply and demand sectors and the
economy as a whole.
A. Market and Technology Assessment
When beginning an energy
conservation standards rulemaking,
DOE develops information that provides
an overall picture of the market for the
equipment concerned, including the
purpose of the equipment, the industry
structure, and market characteristics.
This activity includes both quantitative
and qualitative assessments based
primarily on publicly available
information. The subjects addressed in
the market and technology assessment
for this rulemaking (see Chapter 3 of the
TSD) include equipment classes,
manufacturers, quantities, and types of
equipment sold and offered for sale,
retail market trends, and regulatory and
non-regulatory programs.
1. Definitions of a PTAC and a PTHP
Section 340 of EPCA defines a
‘‘packaged terminal air conditioner’’ as
‘‘a wall sleeve and a separate unencased
combination of heating and cooling
assemblies specified by the builder and
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intended for mounting through the wall.
It includes a prime source of
refrigeration, separable outdoor louvers,
forced ventilation, and heating
availability by builder’s choice of hot
water, steam, or electricity.’’ (42 U.S.C.
6311(10)(A)) EPCA defines a ‘‘packaged
terminal heat pump’’ as ‘‘a packaged
terminal air conditioner that utilizes
reverse cycle refrigeration as its prime
heat source and should have
supplementary heat source available to
builders with the choice of hot water,
steam, or electric resistant heat.’’ (42
U.S.C. 6311(10)(B)) DOE codified these
definitions in 10 CFR 431.92 in a final
rule issued October 21, 2004. 69 FR
61970.
2. Equipment Classes
When evaluating and establishing
energy conservation standards, DOE
generally divides covered equipment
into equipment classes by the type of
energy used or by capacity or other
performance-related features that affect
efficiency. Different energy conservation
standards may apply to different
equipment classes. (42 U.S.C. 6316(a);
42 U.S.C. 6295(q))
PTACs and PTHPs can be divided
into various equipment classes
categorized by physical characteristics
that affect equipment efficiency. Key
characteristics affecting the energy
efficiency of the PTAC or PTHP are
whether the equipment has reverse
cycle heating (i.e., air conditioner or
heat pump), the cooling capacity, and
the physical dimensions of the unit.
The existing Federal energy
conservation standards for PTACs and
PTHPs correspond to the efficiency
levels in ASHRAE/IESNA Standard
90.1–1989, as shown in Tables 1 and 2
of 10 CFR Part 431.97, dividing PTACs
and PTHPs into six equipment classes.
These equipment classes are
differentiated by whether the equipment
has supplemental heating or reverse
cycle heating (i.e., air conditioner or
heat pump) and by cooling capacity in
Btu/h.
When installed, PTACs and PTHPs
are fitted into a wall sleeve. There is a
wide variety of wall sleeve sizes found
in different buildings. These wall
sleeves are market driven (i.e., the
applications or facilities where the
PTACs or PTHPs are installed is what
determines the ‘‘market standard’’ wall
sleeve dimension) and require
manufacturers to offer various PTACs
and PTHPs that can fit into various wall
sleeve dimensions. For new units, the
industry has standardized the wall
sleeve dimension for PTACs and PTHPs
in buildings over the past 20 years to be
16 inches high by 42 inches wide.
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Therefore, units that have a wall sleeve
dimension of 16 inches high by 42
inches wide are considered ‘‘standard
size’’ equipment and all other units are
considered ‘‘non-standard size’’
equipment. In contrast, the industry
does not have a common wall sleeve
dimension that is typical for all older
existing facilities. These facilities, such
as high-rise buildings found in large
cities, typically use non-standard size
equipment. In these installations,
altering the existing wall sleeve opening
to accommodate the more efficient,
standard size equipment could include
extensive structural changes to the
building, could be very costly, and is
therefore, rarely done.
When ASHRAE amended the
efficiency levels for PTACs and PTHPs
in 1999, it acknowledged the physical
size constraints among various sleeve
sizes on the market. Consequently,
ASHRAE/IESNA Standard 90.1–1999
used the equipment classes defined by
EPCA, which are distinguished by
whether the product has reverse cycle
heating (i.e., air conditioner or heat
pump) and cooling capacity in Btu/h,
and further separated these equipment
classes by wall sleeve dimensions.
ASHRAE/IESNA Standard 90.1–1999
refers to wall sleeve dimensions in two
categories: ‘‘New Construction’’ and
‘‘Replacement.’’ ASHRAE/IESNA
Standard 90.1–1999 does not describe
‘‘New Construction,’’ but Table 6.21D,
footnote b of ASHRAE/IESNA Standard
90.1–1999 states that ‘‘replacement’’
efficiencies apply only to units: (1)
‘‘Factory labeled as follows:
Manufactured for Replacement
Applications Only; Not to be Installed
in New Construction Projects’’; and (2)
‘‘with existing wall sleeves less than 16
inches high and less than 42 inches
wide.’’ DOE understands that the ‘‘New
Construction’’ category under ASHRAE/
IESNA Standard 90.1–1999 is residual,
and covers all other PTAC and PTHPs.
Hence, this category consists of
equipment with wall sleeve dimensions
greater than or equal to 16 inches high
and greater than or equal to 42 inches
wide, or lacking the requisite label. In
addition, when ASHRAE approved
ASHRAE/IESNA Standard 90.1–1999,
not only did it include delineations by
wall sleeve dimensions, but it also
associated these delineations with
specified efficiency levels. The
efficiency levels associated with nonstandard equipment, or ‘‘Replacement’’
equipment, are significantly less
stringent than those associated with
standard size equipment, or ‘‘New
Construction’’ equipment.
ARI recently submitted a continuous
maintenance proposal on PTAC and
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PTHP equipment to the ASHRAE/
IESNA Standard 90.1 committee, which
in part suggests alterations to the
delineations within ASHRAE/IESNA
Standard 90.1–1999 for standard and
non-standard size equipment.7 ARI
believes ASHRAE misclassified
approximately one-third of the nonstandard size market when it adopted
ASHRAE/IESNA Standard 90.1–1999.
ARI believes the one third of the nonstandard size market subject to the more
stringent standards under ASHRAE/
IESNA Standard 90.1–1999 are not
capable of meeting the efficiency levels
specified by ASHRAE/IESNA Standard
90.1–1999 for standard size equipment
due to the physical size constraints of
the wall sleeve. For example, a PTAC or
PTHP unit with wall sleeve dimensions
of 16.5 inches high and 27 inches wide
would be classified as standard size
equipment under ASHRAE’s
delineations and would be required to
meet the higher efficiency levels
specified by ASHRAE/IESNA Standard
90.1–1999. However, since this unit
does not have the industry standard
wall sleeve dimension of 16 inches high
by 42 inches wide, ARI believes these
units are solely non-standard units that
are used in very old buildings and
should therefore be considered as
replacement units. Due to the space
limitations typically associated with
non-standard size PTACs and PTHPs,
manufacturers have few options to
increase energy efficiency. As noted
above, many of the existing buildings
cannot be retrofitted to accommodate
larger wall sleeves associated with more
efficient standard-size units.
In response to this apparent
misclassification within ASHRAE/
IESNA Standard 90.1–1999, ARI
proposed a continuous maintenance
proposal to ASHRAE that includes a
new definition for non-standard size
PTACs and PTHPs in place of the
‘‘replacement’’ delineation in ASHRAE/
IESNA Standard 90.1–1999. The new
definition of non-standard size PTACs
and PTHPs reads: ‘‘equipment with
existing sleeves having an external wall
opening of less than 16 in. high or less
than 42 in. wide, and having a crosssectional area less than 670 in 2.’’
Effectively, this new definition of nonstandard equipment would allow
approximately five percent of the total
PTAC and PTHP market to qualify for
the less stringent, non-standard
efficiency levels.
DOE recognizes ARI’s concerns
regarding non-standard size equipment
and the possible misclassification under
the delineations established by
ASHRAE/IESNA Standard 90.1–1999.
When ASHRAE approved ASHRAE/
IESNA Standard 90.1–1999, not only
did it include delineations by wall
sleeve dimensions, but it also associated
these delineations with specified
efficiency levels. The efficiency levels
associated with non-standard
equipment, or ‘‘Replacement’’
equipment, are significantly less
stringent than those associated with
standard size equipment, or ‘‘New
Construction’’ equipment.
DOE reviewed the ARI shipment data
and found approximately 15 percent of
the total market (i.e., approximately
67,000 units shipped annually) are nonstandard size equipment. Under
ASHRAE/IESNA Standard 90.1–1999,
approximately 5 percent of the total
non-standard size equipment market
would be required to meet the more
stringent standards established for
standard size equipment. If DOE were to
adopt equipment classes consistent with
those delineations in ASHRAE/IESNA
Standard 90.1–1999, manufacturers
could be forced to cease production of
those equipment lines, which are
18867
potentially misclassified and could not
meet the more stringent standards.
Under the ARI continuous maintenance
proposal to ASHRAE, all of the nonstandard size equipment would be
subject to the less stringent standards.
Since ARI’s proposed definitions
would effectively reclassify some
equipment under ASHRAE/IESNA
90.1–1999’s delineations as nonstandard size equipment, DOE believes
ASHRAE must adopt ARI’s continuous
maintenance proposal before DOE can
officially use this definition as the basis
for DOE’s standard. (42 U.S.C.
6313(a)(6)(A)(ii)) DOE understands that
the ARI continuous maintenance
proposal on PTACs and PTHPs has been
approved by ASHRAE as Addendum t
to ASHRAE/IESNA Standard 90.1–2007
and will be the subject of public review.
If ASHRAE is able to adopt Addendum
t to ASHRAE/IESNA Standard 90.1–
2007 prior to September 2008, when
DOE must issue a final rule on this
rulemaking, DOE proposes to
incorporate that version of the ASHRAE
standard, including the modified
definition in its final rule.
At this time, DOE seeks stakeholder
comment on Addendum t to ASHRAE/
IESNA Standard 90.1–2007 (i.e., ARI’s
continuous maintenance proposal to
ASHRAE). Specifically, Addendum t to
ASHRAE/IESNA Standard 90.1–2007
incorporates the following revised
definition for non-standard size
equipment: ‘‘equipment with existing
sleeves having an external wall opening
of less than 16 in. high or less than 42
in. wide, and having a cross-sectional
area less than 670 in 2.’’ If ASHRAE
were to approve Addendum t to
ASHRAE/IESNA Standard 90.1–2007
prior to September 2008, DOE proposes
to adopt equipment classes in the final
rule for PTACs and PTHPs as shown in
Table IV.1.
TABLE IV.1.—EQUIPMENT CLASSES FOR PTACS AND PTHPS IF ASHRAE ADOPTS ADDENDUM T TO ASHRE/IESNA
STANDARD 90.1–2007
Equipment Class
Equipment
Category
Cooling capacity
PTAC .........................................
Standard Size* .................................................
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Non-Standard Size** ........................................
PTHP .........................................
Standard Size* .................................................
Non-Standard Size** ........................................
< 7,000 Btu/h
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
< 7,000 Btu/h
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
< 7,000 Btu/h
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
< 7,000 Btu/h
7 Air-Conditioning and Refrigeration Institute.
Continuous Maintenance Proposal on Package
Terminal Equipment. October 5, 2007.
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TABLE IV.1.—EQUIPMENT CLASSES FOR PTACS AND PTHPS IF ASHRAE ADOPTS ADDENDUM T TO ASHRE/IESNA
STANDARD 90.1–2007—Continued
Equipment Class
Equipment
Category
Cooling capacity
≥ 7,000 Btu/h and ≤ 15,000 Btu/h
> 15,000 Btu/h
* Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening of greater than or equal to 16
inches high or greater than or equal to 42 inches wide, and having a cross-sectional area greater than or equal to 670 inches squared.
** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16
inches high or less than 42 inches wide, and having a cross-sectional area less than 670 inches squared.
DOE would add the definitions of
standard size and non-standard size as
defined in the footnotes of Table IV.1
under 10 CFR 431.2. This is identified
as Issue 1 under ‘‘Issues to Which DOE
Seeks Comment’’ in section VII.E of
today’s proposed rule.
In the absence of final action by
ASHRAE on the addendum, DOE would
subdivide EPCA’s existing classes for
this equipment by wall sleeve
dimensions, consistent with ASHRAE/
IENSNA Standard 90.1–1999.
Specifically, DOE would adopt
equipment classes in the final rule for
PTACs and PTHPs as shown in Table
IV.2.
TABLE IV.2.—EQUIPMENT CLASSES FOR PTACS AND PTHPS IF ASHRAE DOES NOT ADOPT ADDENDUM T TO ASHRE/
IESNA STANDARD 90.1–2007
Equipment class
Equipment
Category
Cooling capacity
PTAC .........................................
Standard Size* .................................................
Non-Standard Size** ........................................
PTHP .........................................
Standard Size* .................................................
Non-Standard Size** ........................................
< 7,000 Btu/h
≥ 7,000 Btu/h and
> 15,000 Btu/h
< 7,000 Btu/h
≥ 7,000 Btu/h and
> 15,000 Btu/h
< 7,000 Btu/h
≥ 7,000 Btu/h and
> 15,000 Btu/h
< 7,000 Btu/h
≥ 7,000 Btu/h and
> 15,000 Btu/h
≤ 15,000 Btu/h
≤ 15,000 Btu/h
≤ 15,000 Btu/h
≤ 15,000 Btu/h
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* Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
** Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
DOE would add the definitions of
standard size and non-standard size as
defined in the footnotes of Table IV.2
under section 10 CFR 431.2.
For the purposes of today’s notice,
DOE has based the proposed standards
and the proposed definitions of nonstandard and standard size PTACs and
PTHPs as shown in the rule language of
today’s notice on the delineations in
ASHRAE/IESNA Standard 90.1–1999.
However as stated above, if ASHRAE
adopts Addendum t to ASHRAE/IESNA
Standard 90.1–2007 prior to September
2008, DOE proposes to incorporate the
modified definitions from the
Addendum in the final rule. (42 U.S.C.
6313(a)(6)(A)(ii)) If Addendum t is not
available for DOE to include in the final
rule, DOE’s ability to do so at a later
date will be constrained by the antibacksliding provision. (42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(1))
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3. Market Assessment
The subjects addressed in this market
assessment for this rulemaking include
trade associations, manufacturers, and
the quantities and types of equipment
sold and offered for sale. The
information DOE gathered serves as
resource material throughout the
rulemaking. Chapter 3 of the TSD
provides additional detail on the market
assessment.
a. Trade Association
The Air-Conditioning, Heating, and
Refrigeration Institute (AHRI), formerly
and throughout this notice referred to as
ARI, is the trade association
representing PTAC and PTHP
manufacturers. ARI and the Gas
Appliance Manufacturers Association
(GAMA) announced on December 17,
2007, that their members voted to
approve the merger of the two trade
associations to represent the interests of
cooling, heating, and commercial
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refrigeration equipment manufacturers.
The merged association became AHRI
on Jan. 1, 2008.
ARI develops and publishes technical
standards for residential and
commercial equipment using rating
criteria and procedures for measuring
and certifying equipment performance.
The DOE test procedure is an ARI
standard. ARI has developed a
certification program that the majority
of the manufacturers in the PTAC and
PTHP industry have used to certify their
equipment. Manufacturers certify their
own equipment by providing ARI with
test data. Through the ARI certification
program, ARI evaluates the test data and
determines if the equipment conforms
to ARI 310/380–2004.8 Once ARI has
determined that the equipment has met
all the requirements under ARI 310/
380–2004 standards and certification
8 DOE has incorporated by reference ARI
Standard 310/380–2004 as the DOE test procedure
at 10 CFR 431.97.
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program, it is added to a directory of
certified equipment. DOE used ARI’s
certification data, as summarized by the
2006 ARI directory of certified PTACs
and PTHPs, in the engineering analysis.
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b. Manufacturers
DOE identified five large
manufacturers of standard size PTAC
and PTHP that hold approximately 90
percent of the market in terms of
shipments. These five manufacturers
include: General Electric (GE) Company,
Carrier Corporation, Amana,9 Trane,10
and McQuay International. Three major
manufacturers including McQuay
International, RetroAire, and Fedders
Islandaire, Inc. share the non-standard
size PTAC and PTHP market. All of the
major manufacturers certify their
equipment with ARI and are included in
the ARI directory of certified products.
The standard size PTAC and PTHP
market differs from the non-standard
size PTAC and PTHP industry in that
many of the manufacturers are
domestically owned with manufacturing
facilities located outside of the United
States. Currently there is only one major
manufacturer of standard size PTAC and
PTHP equipment manufacturing
equipment in the United States. In
addition, there has been a recent trend
in the PTAC and PTHP standard size
market for foreign owned companies to
enter and sell equipment in the United
States.
Almost all of the manufacturers of
non-standard size PTACs and PTHPs are
domestically owned with manufacturing
facilities located inside of the United
States. The non-standard manufacturers
tend to specialize in equipment solely
for replacement applications. In
addition, non-standard size
manufacturers produce PTAC and PTHP
equipment on a made-to-order basis.
Unlike standard size manufacturers,
there has not been an influx of foreign
owned companies to sell non-standard
size PTAC and PTHP equipment in the
United States.
In addition, DOE takes into
consideration the impact of amended
energy conservation standards on small
businesses. At this time, DOE has
identified several small business in both
the standard size and non-standard size
PTAC and PTHP industry that fall under
the Small Business Administration
(SBA)’s definition as having 750
employees or fewer. DOE studies the
potential impacts on these small
businesses in detail during the MIA
9 Amana is a trademark of Maytag Corporation
and is used under license to Goodman Global, Inc.
10 Trane is a trademark and business of American
Standard companies.
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(section IV.I of today’s notice and
Chapter 13 of the TSD).
c. Shipments
DOE reviewed data collected by the
U.S. Census Bureau and ARI to evaluate
the annual PTAC and PTHP equipment
shipment trends and the value of these
shipments. The historical shipments
data shown in Tables IV.3 provide a
picture of the market for PTAC and
PTHP equipment. The historical
shipments for PTACs and PTHPs are
based on data provided by ARI for the
years 1997–2005.
18869
identified as potential means to improve
PTAC and PTHP performance:
• Scroll compressors
• Variable-speed compressors
• Higher efficiency compressors
• Complex control boards
• Higher efficiency fan motors
• Microchannel heat exchangers
• Increase heat exchanger area
• Material treatment of heat
exchanger
• Recircuiting heat exchanger coils
• Improved air flow and fan design
• Heat pipes
• Corrosion protection
B. Screening Analysis
TABLE IV.3.—2006 TOTAL PTAC AND
The purpose of the screening analysis
PTHP INDUSTRY ESTIMATED SHIP- is to evaluate the technologies that
MENT DATA FROM ARI (STANDARD improve equipment efficiency to
AND NON-STANDARD)
determine which technologies to
Total
(thousands
of units)
Year
2005
2004
2003
2002
2001
2000
1999
1998
1997
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
..........................................
484
446
399
389
388
402
453
471
434
Using currently available data, ARI
estimated that 85 percent of the
shipments for PTACs and PTHPs are
standard size units, while 15 percent are
non-standard size units. In addition,
ARI identified the two cooling
capacities for standard size PTACs and
PTHPs with the highest number of
shipments, which are 9,000 Btu/h and
12,000 Btu/h.
4. Technology Assessment
In the technology assessment, DOE
identified technologies and design
options that could improve the
efficiency of PTACs and PTHPs. This
assessment provides the technical
background and structure on which
DOE bases its screening and engineering
analyses. For PTACs and PTHPs, DOE
based its list of technologically feasible
design options on input from
manufacturers, industry experts,
component suppliers, trade
publications, and technical papers.
In surveying PTAC and PTHP
technology options, DOE considered a
wide assortment of equipment
literature, information derived from the
teardown analysis, information derived
from the stakeholder interviews, and the
previous DOE energy conservation
standards rulemaking for airconditioning rulemaking analyses. The
following technology options were
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consider further and which to screen
out. DOE consulted with a range of
parties, including industry, technical
experts, and others to develop a list of
technologies for consideration. DOE
then applied the following four
screening criteria to determine which
technologies are unsuitable for further
consideration in the rulemaking (10 CFR
Part 430, Subpart C, Appendix A at
4(a)(4) and 5(b)):
(1) Technological feasibility.
Technologies incorporated in
commercial equipment or in working
prototypes will be considered
technologically feasible.
(2) Practicability to manufacture,
install, and service. If mass production
of a technology in commercial
equipment and reliable installation and
servicing of the technology could be
achieved on the scale necessary to serve
the relevant market at the time of the
effective date of the standard, then that
technology will be considered
practicable to manufacture, install, and
service.
(3) Adverse impacts on equipment
utility or equipment availability. If a
technology is determined to have
significant adverse impact on the utility
of the equipment to significant
subgroups of customers, or result in the
unavailability of any covered equipment
type with performance characteristics
(including reliability), features, sizes,
capacities, and volumes that are
substantially the same as equipment
generally available in the United States
at the time, it will not be considered
further.
(4) Adverse impacts on health or
safety. If it is determined that a
technology will have significant adverse
impacts on health or safety, it will not
be considered further.
DOE eliminated three technologies
because they have no effect on, or do
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not increase EER or COP as measured by
the test procedure since the test
procedure measures steady-state energy
efficiency. However, these features (i.e.,
variable speed compressors, complex
control boards, and corrosion
protection) can reduce the energy
consumption of the PTAC or PTHP in
actual applications, since they affect the
cyclic operation of the equipment. They
do not affect the measure of efficiency
(i.e., EER and COP) since both are
steady-state measures, not cyclic
measures.
DOE also eliminated six of the
technologies it identified in the market
and technology assessment. The specific
technologies that were eliminated based
on the four screening criteria outlined
above are: (1) Scroll compressors, (2)
higher efficiency fan motors, (3)
microchannel heat exchangers, (4)
material treatment of heat exchangers,
(5) improved airflow and fan design,
and (6) heat pipes. DOE screened out
scroll compressors because they are not
currently practical to manufacturer in
the sizes necessary for use in PTACs
and PTHPs. DOE screened out higher
efficiency fan motors, improved airflow
and fan design because further gains in
PSC fan motor technology or changing
the type of fan design would affect the
size of the motor or fan. Because PTACs
and PTHPs are space-constrained
equipment, it is unlikely that
manufacturers would be able to redesign
the motor or fans that would be
practical to manufacture, install, and
service on a scale necessary to serve the
relevant market at the time of the
effective date of the standard. DOE
screened out microchannel heat
exchangers because they are still in the
research stage for PTAC and PTHP
equipment and would not be practicable
to manufacture, install, or service on a
scale necessary to serve the relevant
market at the time of the effective date
of the standard. DOE screened out
material treatment of heat exchangers
because it is currently patented and
only used by one PTAC and PTHP
manufacturer; thus, it would not be
practical to manufacture on broad scale
for the entire industry. Lastly, DOE
screened out heat pipes because they are
still in the research stage and their
energy savings potential has not been
fully established.
Based on equipment literature,
teardown analysis, and manufacturer
interviews, DOE has identified higher
efficiency compressors,11 increasing the
11 Currently, all PTAC and PTHP manufacturers
incorporate rotary compressors into their
equipment designs. DOE is referring to rotary
compressors throughout today’s notice unless
specifically noted.
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heat exchanger area, and recircuiting the
heat exchanger coils as the most
common ways by which manufacturers
improve the energy efficiency of their
PTACs and PTHPs as measured by the
test procedure and that are not excluded
by the four criteria in Appendix A to
Subpart B of 10 CFR Part 430 listed
above. See Chapter 3 of the TSD for
additional detail on the technology
assessment and technologies analyzed.
There are PTACs and PTHPs utilizing
R–22 in the market at various efficiency
levels incorporating the three design
options analyzed in today’s notice. DOE
believes this constitutes clear and
convincing evidence that all of the
efficiency levels discussed in today’s
notice is technologically feasible.
However, DOE recognizes the
uncertainty associated with the
conversion to R–410A refrigerant and
will take this into further consideration
when weighing the benefits and burdens
for each TSL. For more details on how
DOE developed the technology options
and the process for screening these
options, refer to the market and
technology assessment (see Chapter 3 of
the TSD) and the screening analysis (see
Chapter 4 of the TSD).
C. Engineering Analysis
The purpose of the engineering
analysis is to establish the relationship
between the cost and efficiency of
PTACs and PTHPs, to show the
manufacturing costs of achieving
increased efficiency. For each
equipment class, this analysis estimates
the baseline manufacturer cost, as well
as the incremental cost for equipment at
efficiency levels above the baseline. In
determining the performance and the
costs of more efficient equipment, DOE
considers technologies and design
option combinations not eliminated in
the screening analysis. The output of the
engineering analysis is a set of costefficiency relationships or costefficiency curves that are used in further
analyses (e.g., the LCC and PBP analyses
and the national impact analysis (NIA)).
DOE typically structures its
engineering analysis around one of three
methodologies: (1) The design-option
approach, which calculates the
incremental costs of adding specific
design options to a baseline model; (2)
the efficiency-level approach, which
calculates the relative costs of achieving
increases in energy efficiency levels,
without regard to the particular design
options used to achieve such increases;
and (3) the reverse-engineering or costassessment approach, which involves
‘‘bottom-up’’ manufacturing cost
assessments for achieving various levels
of increased efficiency, based on
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detailed data derived from equipment
tear-downs, as to costs for parts,
material, labor, shipping/packaging, and
investment for models that operate at
particular efficiency levels.
1. Approach
For PTACs and PTHPs, each energy
efficiency level is expressed as an EER,
which is a function of cooling capacity.
For each class analyzed, DOE used
representative cooling capacities
corresponding to the cooling capacities
with the highest equipment shipments
within a given equipment class. For the
purposes of conducting the analyses,
DOE believes that the results from the
representative cooling capacities can be
extrapolated to the entire range of
cooling capacities for each equipment
class. DOE’s approach for extending the
results to the omitted cooling capacities
is discussed further in section V.1 of
this NOPR. DOE seeks comment on this
approach to extend the engineering
analysis to cooling capacities for which
complete analysis was not performed.
This is identified as Issue 2 under
‘‘Issues to Which DOE Seeks Comment’’
in section VII.E of today’s proposed
rule.
For this analysis, DOE used a design
option approach, which involved
consultation with outside experts,
review of publicly available cost and
performance information, and modeling
of equipment cost. The design options
DOE considered in the Engineering
Analysis include higher efficiency
compressors, increasing the heat
exchanger area, and recircuiting the heat
exchanger coils. The design option
analysis provides transparency of
assumptions and results and the ability
to perform independent analyses for
verification. The methodology used to
perform design-option analysis and
derive the cost-efficiency relationship is
described in detail in Chapter 5 of the
TSD.
2. Equipment Classes Analyzed
For the engineering analysis, DOE
reviewed all twelve equipment classes
covered by this rulemaking. Since the
wall sleeve dimensions effect the energy
efficiency of the equipment, DOE
examined standard size and nonstandard size PTACs and PTHPs
separately. In addition, since the energy
efficiency equations for PTACs and
PTHPs established by EPCA and
ASHRAE/IESNA Standard 90.1–1999
are a function of the equipment’s
cooling capacity, DOE examined
specific cooling capacities for standard
size and non-standard size PTACs and
PTHPs, which are referred to as
representative cooling capacities. See
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Table 1 and Table 2 of 10 CFR Part
431.97 and ASHRAE/IESNA Standard
90.1–1999 for the energy efficiency
equations. DOE reviewed the shipments
data provided by ARI for the 2000
Screening Analysis and today’s
rulemaking,12 and found the majority of
shipments have a cooling capacity
within the 7,000 Btu/h to 15,000 Btu/h
range. See Chapter 3 of the TSD for
more details on the shipments data.
Consequently, DOE choose to examine
these four equipment classes further.
For standard size PTAC and PTHP
equipment classes, DOE identified two
representative cooling capacities. The
representative cooling capacities for
standard size PTACs and PTHPs are
9,000 Btu/h and 12,000 Btu/h. DOE
found these two representative cooling
capacities to have the highest number of
shipments based on data in the 2006
ARI Directory, the ACEEE database of
equipment, as well as the shipment
information provided to DOE found in
the 2000 Screening Analysis. For nonstandard size equipment, DOE could not
identify representative cooling
capacities or wall sleeve dimensions.
The non-standard size PTAC and PTHP
market also has a greater variety of
shipments based on the customers that
use them and specialized applications.
DOE used 11,000 Btu/h as the
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representative cooling capacity for nonstandard size equipment because it is
the middle of the cooling capacity
range. Therefore, for the engineering
analysis and subsequent analyses, DOE
analyzed non-standard size PTACs and
PTHPs with 11,000 Btu/h cooling
capacity. See Chapter 5 of the TSD for
additional details.
DOE developed the cost-efficiency
curves based on these representative
cooling capacities and wall sleeve-size
units. Table IV.4 exhibits the
representative cooling capacities within
each equipment class analyzed in the
engineering analysis.
TABLE IV.4.—REPRESENTATIVE COOLING CAPACITIES FOR THE ENGINEERING ANALYSIS
Representative
cooling capacity
(Btu/h)
Equipment type
Equipment class
PTAC .......................................................................................
Standard Size* ........................................................................
PTHP .......................................................................................
Non-Standard Size** ...............................................................
Standard Size* ........................................................................
Non-Standard Size** ...............................................................
9,000
12,000
11,000
9,000
12,000
11,000
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* Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
** Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
DOE’s selection of representative
cooling capacities for further
examination is based on shipment
information provided by ARI. For the
PTAC and PTHP equipment classes
with a cooling capacity greater than or
equal to 7,000 Btu/h and less than or
equal to 15,000 Btu/h, the energy
efficiency equation characterizes the
relationship between the EER of the
equipment and cooling capacity (i.e.,
EER is a function of the cooling capacity
of the equipment). Therefore, for these
equipment classes, DOE explicitly
analyzed the two cooling capacities
with the greatest number of shipments,
which allows DOE to investigate the
slope of the energy efficiency capacity
relationship. For all cooling capacities
less than 7,000 Btu/h and all cooling
capacities greater than 15,000 Btu/h, the
EER is calculated based on the energy
efficiency equation for 7,000 Btu/h or
15,000 Btu/h, respectively.
For PTACs and PTHPs, DOE is
proposing to equate the amended energy
conservation standards for equipment
with a cooling capacity less than 7,000
Btu/h with the amended energy
conservation standards for equipment
with a cooling capacity equal to 7,000
Btu/h. Similarly, for PTACs and PTHPs,
DOE is proposing to equate the
amended energy conservation standards
for equipment with a cooling capacity
greater than 15,000 Btu/h to the
amended energy conservation standards
for equipment with a cooling capacity
equal to 15,000 Btu/h. This is the same
method established in the Energy Policy
Act of 1992 as shown by the existing
Federal minimum energy conservation
standards and maintained by ASHRAE
Standard 90.1–1999 for calculating the
EER and COP of equipment with cooling
capacities less than 7,000 Btu/h and
greater than 15,000 Btu/h. More details
explaining how DOE developed the
proposed energy efficiency equations
based on the analysis results for the
representative cooling capacities are
found in section V.A of today’s notice.
3. Cost Model
DOE developed a manufacturing cost
model to estimate the manufacturing
production cost (MPC) of PTACs and
PTHPs. The manufacturing cost model
is a spreadsheet model, which details
the structured bill of materials to
estimate the MPCs of a PTAC or PTHP
based on all the manufacturing and
fabrication resources required to
manufacture the equipment. Developing
the cost model involved disassembling
various PTACs and PTHPs, analyzing
the materials and manufacturing
processes, and developing component
costing flexible enough to be applicable
to all equipment classes. In addition to
disassembling various PTACs and
PTHPs, manufacturers provided DOE
supplemental component data for
various PTAC and PTHP equipment.
The manufacturing cost model used the
component specifications supplied by
manufacturers, the teardown data,
component cost sources, and
engineering interviews to estimate the
MPCs. DOE reported the MPCs in
aggregated form to maintain
confidentiality of sensitive component
data. DOE obtained input from
stakeholders on the MPC estimates and
assumptions to confirm accuracy. DOE
used the cost model for all of the
representative cooling capacities within
the PTAC and PTHP equipment classes.
Chapter 5 of the TSD provides details
and assumptions of the cost model.
DOE applied a manufacturer markup
to the MPC estimates to arrive at the
MSP. This is the price at which the
12 ARI provided DOE shipments data from 2000
for the 2000 Screening Analysis and shipments data
from 2006 for today’s rulemaking.
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manufacturer can recover both
production and non-production costs 13
and earns a profit. DOE developed a
market-share-weighted average industry
markup by examining the major PTAC
and PTHP manufacturers’ gross margin
information from annual reports and
Securities and Exchange Commission
(SEC) 10–K reports. The manufacturers
DOE examined represent approximately
75 percent of the PTAC and PTHP
industry. Each of these companies is a
subsidiary of a more diversified parent
company that manufactures equipment
other than PTACs and PTHPs. Because
the SEC 10-K reports do not provide
gross margin information at the
subsidiary level, the estimated markups
represent the average markups that the
parent company applies over its entire
range of offerings.
DOE evaluated manufacturer markups
from 2002 to 2006, except for one
manufacturer, whose markup was
evaluated from 1998 to 2002 because
data from the latter years was not
publicly available. The manufacturer
markup is calculated as 100/(100 ¥
average gross margin), where gross
margin is calculated as revenue ¥ cost
of goods sold (COGS). DOE used
Internal Revenue Service industry
statistics to validate the SEC 10-K and
annual report information. DOE
estimated the average manufacturer
markup within the industry as 1.29. See
Chapter 5 of the TSD for additional
details.
4. Baseline Equipment
As mentioned above, the engineering
analysis estimates the incremental costs
for equipment with efficiency levels
above the baseline in each equipment
class. For the purpose of the engineering
analysis, DOE used the engineering
baseline EER as the starting point to
build the cost efficiency curves. DOE
usually uses the Federal minimum
energy conservation standards to
represent the baseline model’s energy
efficiency in the engineering analysis.
However, all of the PTAC and PTHP
equipment offered for sale, according to
the ARI directory, exceed the efficiency
levels specified by the existing Federal
minimum energy conservation
standards. Consequently, DOE
identified the lowest efficiency
equipment currently on the market and
is utilizing it as the engineering
baseline.
DOE established engineering baseline
specifications for each of the equipment
13 Full production costs include direct labor,
direct material, and direct overhead. Nonproduction costs include selling, general and
administrative, research and development, and
interest. See Chapter 5 of the TSD for more details.
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classes modeled in the engineering
analysis by reviewing available
manufacturer data, selecting several
representative units from available
manufacturer data, and then aggregating
the physical characteristics of the
selected units. These specifications
include wall sleeve dimensions, number
of components, and other equipment
features that affect energy consumption,
as well as a base cost (the cost of a piece
of equipment not including the major
efficiency-related components such as
compressors, fan motors, and heat
exchanger coils). By excluding the
equipment designs, which can be
attributable to specific manufacturers,
DOE created an engineering baseline
that is representative of each equipment
class with average characteristics,
including dimensions, components, and
other equipment features that are
necessary to calculate the MPC of each
unit within each equipment class. The
cost model was used to develop the
MPC for each equipment class.
Specifications of the baseline equipment
are provided in Chapter 5 of the TSD.
In estimating the economic impacts of
standards, DOE used the efficiency
levels in ASHRAE/IESNA Standard
90.1–1999 as the baseline efficiencies in
order to estimate the impacts of
standards more stringent than ASHRAE/
IESNA Standard 90.1–1999. ASHRAE/
IESNA Standard 90.1–1999 is the least
stringent energy efficiency level DOE
could adopt since EPCA directs that if
ASHRAE/IESNA Standard 90.1 is
amended, DOE must adopt an amended
standard at the new level in ASHRAE/
IESNA Standard 90.1 unless clear and
convincing evidence supports a
determination that adoption of a more
stringent level as a national standard
would produce significantly more
energy savings and be technologically
feasible and economically justified. (42
U.S.C. 6313(a)(6)(A)(ii)(II))
Consequently, the minimum energy
conservation standard levels DOE could
adopt in this rulemaking proceeding
would be the efficiency levels contained
in ASHRAE/IESNA Standard 90.1–1999.
Thus, DOE is evaluating in this
rulemaking whether efficiency levels
above those contained in ASHRAE/
IESNA Standard 90.1–1999 are
technologically feasible and
economically justified.14
5. Alternative Refrigerant Analysis
a. R–22
In 1987, the United Nations
Environment Programme (UNEP)
14 DOE’s estimates of potential energy savings
from an amended energy conservation standard are
further discussed in section V.3.
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adopted the Montreal Protocol on
Substances that Deplete the Ozone
Layer (Montreal Protocol), which
regulates the phase-out of ozonedepleting substances through a
collaborative and international effort. In
1988, the United States ratified the
Montreal Protocol and thus committed
to the phase-out.15
In 1990, the Clean Air Act was
amended to include Title VI,
‘‘Stratospheric Ozone Protection,’’ to
implement the Montreal Protocol. (42
U.S.C. 7671, et seq.) Title VI mandated
the phase-out by 2020 of
hydrochlorofluorocarbon (HCFC)
refrigerants for use in new airconditioning systems. (42 U.S.C. 7671d)
Title VI, however, also authorized the
Environmental Protection Agency (EPA)
to accelerate this date if certain criteria
were met, (42 U.S.C. 7671e) and EPA
subsequently adopted a rule on
December 10, 1993 to require the phaseout of HCFC refrigerants for use in new
equipment by 2010. 58 FR 65018. R–22,
the only refrigerant currently used by
PTACs and PTHPs, is an HCFC
refrigerant and subject to the phase-out
requirement. Phase-out of this
refrigerant could have a significant
impact on the manufacturing,
performance, and cost of PTAC and
PTHP equipment.
b. R–410A
As part of the engineering analysis,
DOE performed an alternative
refrigerant analysis to characterize the
performance implications on PTACs
and PTHPs. This analysis included
researching technical journal reports,
discussions with industry experts and
manufacturers, and developing an
analysis that used the methodology DOE
used in performing the engineering
analysis as to equipment using the R–22
refrigerant. ARI, in comment on the
March 13, 2006, Notice of Document
Availability (71 FR 12634) commented
that R–410A is the most likely
replacement refrigerant for R–22 in
standard and non-standard size PTACs
and PTHPs. (Docket No. EE–RM/STD–
03–100, EE–RM/STD–03–200, EE–RM/
STD–03–300, ARI, No. 26 at pp. 2–3) 16
15 The 1987 Montreal Protocol on Substances that
Deplete the Ozone Layer (as agreed in 1987). United
Nations Environment Programme. https://
ozone.unep.org/Ratification_status/
montreal_protocol.shtml.
16 ‘‘ARI, No. 26 at pp 2–3’’ refers (1) to a statement
that was submitted by the Air-Conditioning and
Refrigeration Institute and is recorded in the
Resource Room of the Building Technologies
Program in the docket under ‘‘Energy Efficiency
Program for Commercial and Industrial Equipment:
Efficiency Standards for Commercial Heating, AirConditioning and Water Heating Equipment,’’
Docket Number EE–RM–STD–03–100, EE–RM–
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Every manufacturer interview
confirmed that the industry is planning
to substitute R–410A for R–22 in PTACs
and PTHPs. Industry representatives
expressed a preference for R–410A due
to its performance similarities to R–22
and experience with other HVAC
equipment that use R–410A. Therefore,
DOE performed its alternative
refrigerant analysis based on the use of
R–410A. See Chapter 5 of the TSD for
additional details.
DOE identified the ‘‘max-tech’’
efficiency levels as described in section
III.B.2 of today’s proposed rule. These
‘‘max-tech’’ efficiency levels are based
on currently available R–22 PTACs and
PTHPs for a given representative cooling
capacity within a given equipment
class. In order to analyze the impact of
using R–410A in PTACs and PTHPs,
DOE considered the impact of using R–
410A on PTAC components, the
engineering analysis of past rulemakings
that addressed the refrigerant phase-out,
and markets in which a similar
transition has occurred.
First, DOE expects that the phase-out
of R–22 and the subsequent adoption of
R–410A refrigerants in PTACs and
PTHPs will require the redesign of the
sealed systems found inside the PTAC
and PTHP units. The sealed system
consists of the indoor and outdoor heat
exchangers, the compressor, refrigerant
flow-control devices, and any piping
that connects these components through
which refrigerant flows during unit
operation. Since R–22 refrigerants have
different operating characteristics than
R–410A, the sealed system in a PTAC or
PTHP unit using R–410A will have to be
redesigned to optimize the unit for
operation with R–410A. Specifically,
equipment using R–410A operates at
higher system pressure requiring
stronger sealed system walls and the use
of different oils (i.e., R–410 equipment
will use POE, while R–22 equipment
uses mineral). In addition, R–410A
compressors must also be designed with
thicker and stronger compressor shells
and components to withstand 50
percent to 60 percent more pressure
than R–22 compressors.17
The loss in compressor efficiency can
be overcome with optimized heat
exchanger design to a limited extent. As
discussed in the market and technology
assessment (Chapter 3 of the TSD),
different heat exchanger redesigns not
STD–03–200, and EE–RM–STD–03–300, as
comment number 26; and (2) a passage that appears
on pages 2 and 3 of that statement.
17 Emerson Climate Technologies. R410A
Questions. https://www.emersonclimate.com/
faq_copeland.htm#R410A (Last accessed August 2,
2007.) We will need to save the portion of this web
site that we rely upon for the administrative record.
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currently associated with compressors
could increase overall system
performance. According to
manufacturers, some redesigns, such as
adding coils, re-circuiting, and
increasing the frontal heat exchanger
surface area, are applicable to PTACs
and PTHPs regardless of the refrigerant
used. However, DOE does not have
sufficient information to predict with
precision the performance benefits of
heat exchanger redesigns. Initially, DOE
expects any such redesigns to result in
efficiency improvements insufficient to
offset the efficiency reductions resulting
from the switch from R–22 to R–410A.
Thus, DOE expects the overall system
efficiency of R–410A PTAC and PTHP
equipment will be lower than if that
equipment used R–22, as predicted by
manufacturer testing, ARI’s research,18
National Institute of Standards and
Technology studies,19 and as observed
in response to the transition from R–22
to R–410A in the residential air
conditioning market. Optimizing the
heat exchanger and HVAC circuits to
compensate could be costly, depending
on whether a heat exchanger
manufacturer needs to change the fin
tooling, expansion, and assembly
systems.
Therefore, in this rulemaking, DOE is
using an overall lower system
performance for PTAC and PTHP
equipment with R–410A. For standard
size PTACs and PTHPs with 9,000 Btu/
h cooling capacity, DOE calculated an
overall system performance degradation
consistent with ARI estimates of 6.3
percent.20 For standard size PTACs and
PTHPs with 12,000 Btu/h cooling
capacity, DOE calculated overall system
performance degradation consistent
with ARI estimates of 7.6 percent.21 For
non-standard size PTACs and PTHPs of
all cooling capacities, DOE calculated
overall system performance degradation
of 6.8 percent. See Chapter 5 of the TSD
for additional details.
DOE has no evidence that the
incremental efficiency gains from the
design options used in the R–22 case
would have a different effect on the
18 Air-Conditioning and Refrigeration Institute.
Response to ASHRAE 90.1 Continuous
Maintenance Proposal on Package Terminal
Equipment. May 18, 2006.
19 Payne, W., Domanski, P. A Comparison of an
R22 and an R410A Air Conditioner Operating at
High Ambient Temperatures. National Institute of
Standards and Technology Building Environment
Division: Thermal Machinery Group. https://
www.fire.nist.gov/bfrlpubs/build02/PDF/
b02186.pdf. (Last accessed August 2, 2007.)
20 Air-Conditioning and Refrigeration Institute.
Response to ASHRAE 90.1 Continuous
Maintenance Proposal on Package Terminal
Equipment. May 18, 2006.
21 Id.
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18873
system performance of R–410A
equipment. Therefore, DOE assumed the
design options for the R–22 analysis
previously discussed are applicable to
the alternative refrigerant analysis. DOE
also assumed that the corresponding
incremental EER improvement for each
design option in the R–22 analysis
would be the same in the alternative
refrigerant analysis. See Chapter 5 of the
TSD for additional details.
Similar issues existed within the
residential, central air conditioning
industry. Systems utilizing R–410A
have been available in the residential
air-conditioning market for several
years, and DOE believes the impact of
the refrigerant transition to R–410A for
PTACs and PTHPs and on the
manufacturers and purchasers of central
air conditioners and heat pumps will be
similar. The residential air-conditioning
market is a much larger market than the
PTAC and PTHP market, and thus offers
greater incentives for compressor
manufacturers to make the necessary
investments to produce more efficient
R–410A compressors. Initially, DOE
found that the R–410A compressors
available for use in residential, central
air conditioning equipment were less
efficient than their R–22 counterparts
they were replacing. However, DOE has
observed that residential, central air
conditioning manufacturers were able to
develop technologies and redesign their
equipment, so that the R–22 phase-out
has had little effect on system efficiency
when the equipment eventually came
onto the market.
At a minimum, DOE believes
manufacturers of PTAC and PTHP
equipment will be able to manufacture
equipment with R–410A at the
efficiency levels specified by ASHRAE/
IESNA Standard 90.1–1999. Since PTAC
and PTHP equipment utilizing R–22
exists at efficiency levels well above
ASHRAE/IESNA Standard 90.1–1999,
DOE believes the manufacturers will be
able to produce equipment utilizing R–
410A at least at the efficiency levels
specified by ASHRAE/IESNA Standard
90.1–1999, even after the estimated
performance degradations from the
engineering analysis are applied. DOE
has preliminarily concluded that the R–
410A compressors available for use in
PTAC and PTHP equipment could be
less efficient than their R–22
counterparts could at the time the takes
effect, based upon manufacturer
feedback during interviews and by
examining other air-conditioning
markets where similar refrigerant
transitions have taken place. However,
DOE is hopeful that over time
component manufacturers and PTAC
and PTHP manufacturers will be able to
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overcome the degradation in system
efficiency caused by the switch to R–
410A refrigerant. Therefore, DOE is
continuing to analyze, the higher, R–22based, energy efficiency levels
identified in section III.B.2 as the ‘‘maxtech’’ efficiency levels. DOE will give
particular attention to the PTAC and
PTHP efficiency levels that cannot be
met with current technologies and
practices with R–410A in weighing the
benefits and burdens of the various
TSLs. Based on information received in
public comments concerning this
NOPR, DOE may consider and adopt in
the final rule other potential standard
levels that take into account the impact
of R–410A.
c. R–410A Compressor Availability
The availability of R–410A
compressors in a wide range of
efficiencies is uncertain. Several
compressor manufacturers make R–22,
PTAC and PTHP compressors of
different capacities and efficiencies for
standard and non-standard equipment.
When the market transitions to R–410A,
these manufacturers may only offer one
line of compressors for PTACs and
PTHPs. In engineering interviews,
compressor manufacturers said they do
not know if R–410A compressors will
have equivalent performance to R–22
compressors by the 2010 date. They also
stated in interviews that they expect to
offer R–410A compressors at only one
efficiency level in the initial stages of
the phase-out, which could further
reduce compressor options for PTAC
and PTHP manufacturers.
d. R–410A Manufacturing Production
Cost
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To derive the baseline MPCs for the
R–410A PTACs and PTHPs, DOE made
additional cost determinations (e.g., R–
410 refrigerant pricing, R–410A
compressor pricing, etc.) and
incorporated them in the same cost
model used for the R–22 engineering
analysis. See Chapter 5 of the TSD for
additional details about component
prices using R–410A. DOE assumed a 25
percent increase in heat exchanger
tubing thickness to account for the
higher pressures of R–410A refrigerant
based on technical journals and
manufacturer interviews. DOE switched
the working refrigerant in the cost
model to R–410A and used the current
R–410A refrigerant price based upon
cost estimates from refrigerant suppliers
and engineering interviews with
manufacturers. During engineering
interviews, several manufacturers of
PTAC and PTHP equipment and several
component manufacturers stated that
compressor prices would increase
anywhere between 10 percent and 20
percent from current R–22 compressor
prices. To incorporate manufacturers’
comments, DOE assumed that
compressor costs would increase by 15
percent, which is consistent with the
feedback DOE received during the
engineering interviews. Using the above
assumptions, DOE recalculated baseline
equipment and design option MPCs to
establish the cost-efficiency relationship
for R–410A equipment.
The physical differences between
PTACs and PTHPs are mainly in the
reversing valve and other minor
components. The results from the
engineering and teardown analysis
showed that the sum of the MPCs for
reversing valves and other minor
components are constant across the
cost-efficiency relationship for the R–22
case. Therefore, DOE initially concluded
that the cost-efficiency relationship (i.e.,
cost-efficiency curves) of PTACs is the
same as the cost-efficiency relationship
of PTHPs, minus the MPCs for the
reversing valve and other minor
components at various cooling
capacities. In performing the alternative
refrigerant analysis, DOE found no
evidence that the cost-efficiency
relationships for PTACs and PTHPs
would be any different for equipment
using R–410A. Therefore, DOE assumed
that incremental cumulative MPCs for
PTACs and PTHPs of the same
equipment class would be the same as
in the R–22 case (i.e., that both PTACs
and PTHPs have the same incremental
cost-efficiency curves in the R–410A
case). To be consistent, DOE used the
same cost model as in the R–22 analysis
to estimate MPCs of equipment at
various efficiency levels in the R–410A
analysis. Chapter 5 of the TSD provides
additional details on the alternative
refrigerant analysis.
6. Cost-Efficiency Results
The results of the engineering analysis
are reported as a set of cost-efficiency
data (or ‘‘curves’’) in the form of MPC
(in dollars) versus EER, which form the
basis for other analyses in the NOPR.
DOE created cost-efficiency curves for
the six representative cooling capacities
within the four equipment classes of
PTACs and PTHPs, as discussed in
section IV.C.2, above. DOE used the R–
410A cost-efficiency curves for all
subsequent analyses in the NOPR. See
Chapter 5 of the TSD for additional
detail on the engineering analysis and
complete cost-efficiency results.
DOE also conducted a sensitivity
analysis on material prices to examine
the effect of spikes in metal prices that
the industry has experienced over the
past few years. The sensitivity analysis
used the annual average 2006 prices for
various metals used in the
manufacturing of PTACs and PTHPs.
Chapter 5 of the TSD shows the results
of the sensitivity analysis.
7. Mapping Energy Efficiency Ratio to
Coefficient of Performance
DOE used the analyses detailed in the
sections above to determine the
relationship between cost and cooling
efficiency (EER) for PTACs and PTHPs.
DOE also performed an analysis to
determine the heating efficiency (COP)
that corresponds to the cooling
efficiency (EER) analyzed. DOE
reviewed the 2006 ARI directory and the
PTHP units listed. There were 675 units
listed, which DOE separated into two
groups based on wall sleeve size
(standard size and non-standard size).
DOE then selected all of the standard
size 9,000 and 12,000 Btu/h cooling
capacity units, and all of the nonstandard units. Within each group, DOE
next eliminated repetitive and
discontinued units and then constructed
a listing of the units by EER and ranked
them by COP. DOE graphed each listing
(EER versus COP) and calculated the
minimum, maximum, and average
COPs. Table IV.5 shows the average EER
and COP pairings for PTHPs. DOE seeks
comment on the average EER and COP
pairings for PTHPs as shown in Table
IV.5, which DOE has identified as Issue
3 under ‘‘Issues to Which DOE Seeks
Comment’’ in section VII.E of this
NOPR. Additional details detailing how
DOE arrived at the average EER and
COP pairings for PTHPs is shown in
Chapter 5 of the TSD.
TABLE IV.5.—AVERAGE EER AND COP PAIRINGS FOR PTHPS
Equipment class
Efficiency level
Standard Size PTHP—9,000 Btu/h Cooling Capacity ................
Standard Size PTHP—12,000 Btu/h Cooling Capacity ..............
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COP = 3.1
EER = 10.2
COP = 3.0
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COP = 3.2
EER = 10.4
COP = 3.1
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EER = 11.3
COP = 3.3
EER = 10.6
COP = 3.1
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EER = 11.5
COP = 3.3
EER = 10.8
COP = 3.1
EER = 12
COP = 3.5
EER = 11.7
COP = 3.3
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Federal Register / Vol. 73, No. 67 / Monday, April 7, 2008 / Proposed Rules
TABLE IV.5.—AVERAGE EER AND COP PAIRINGS FOR PTHPS—Continued
Non-Standard Size PTHP—11,000 Btu/h Cooling Capacity .......
D. Markups To Determine Equipment
Price
DOE understands that the price of
PTAC or PTHP equipment depends on
the distribution channel the customer
uses to purchase the equipment. Typical
distribution channels include
manufacturers’ national accounts,
EER = 9.4
COP = 2.8
EER = 9.7
COP = 2.8
wholesalers, mechanical contractors,
and/or general contractors.
The customer price of this equipment
is not generally known. Therefore, DOE
developed supply chain markups in the
form of multipliers that represent
increases above MSP and include
distribution costs. DOE applied these
markups (or multipliers) to the MSPs it
developed from the engineering
EER = 10.0
COP = 2.9
EER = 10.7
COP = 2.9
EER = 11.4
COP = 2.9
analysis, and then added sales taxes and
installation costs, to arrive at the final
installed equipment prices for baseline
and higher efficiency equipment. See
Chapter 6 of the TSD for additional
details on markups. As shown in Table
IV.6, DOE identified four distribution
channels for PTACs and PTHPs to
describe how the equipment passes
from the manufacturer to the customer.
TABLE IV.6.—DISTRIBUTION CHANNELS FOR PTAC AND PTHP EQUIPMENT
Channel 1
Channel 2
Channel 3
Manufacturer (through national accounts).
Manufacturer ....................................
Manufacturer ....................................
Manufacturer.
Wholesaler .......................................
Wholesaler .......................................
Mechanical Contractor .....................
Customer ..........................................
Wholesaler.
General Contractor.
Customer.
Customer ...........................................
Customer ..........................................
Using Ducker Worldwide data,22 DOE
estimated percentages, for both the new
construction and replacement markets,
of the total sales in each market through
each of the four distribution channels,
as shown in Table IV.7. The entire
market of PTAC and PTHP equipment
consists of standard size equipment (85
percent of shipment volume) and nonstandard size equipment (15 percent of
shipment volume). Of the standard size
equipment, 80 percent are sold for the
replacement market and 20 percent are
for the new construction market. Nonstandard size equipment is only used in
the replacement market. This results in
Channel 4
approximately 17 percent of PTAC and
PTHP equipment that are purchased to
be installed in new construction, while
the remaining 83 percent is assumed to
replace existing PTAC and PTHP
equipment.
TABLE IV.7.—PERCENTAGE OF PTAC AND PTHP MARKET SHARES PASSING THROUGH EACH DISTRIBUTION CHANNEL
Channel 1
Channel 2
Channel 4
mstockstill on PROD1PC66 with PROPOSALS2
Replacement Market ........................................................................................................
New Construction Market ................................................................................................
15
30
For each of the steps in the
distribution channels presented above,
DOE estimated a baseline markup and
an incremental markup. DOE defined a
baseline markup as a multiplier that
converts the MSP of equipment with
baseline efficiency to the customer
purchase price for the equipment at the
same baseline efficiency level. An
incremental markup is defined as the
multiplier to convert the incremental
increase in MSP of higher efficiency
equipment to the customer purchase
price for the same equipment. Both
baseline and incremental markups are
only dependent on the particular
distribution channel and are
independent of the efficiency levels of
the PTACs and PTHPs.
DOE developed the markups for each
step of the distribution channels based
on available financial data. DOE based
the wholesaler and mechanical
contractor markups on the Heating,
Airconditioning & Refrigeration
Distributors International (HARDI) 2005
Profit Planning Report, Air Conditioning
Contractors of America (ACCA), and the
2002 U.S. Census Bureau financial data
for the plumbing, heating, and air
conditioning industry.23 DOE derived
the general contractor markups from
U.S. Census Bureau financial data for
the commercial and institutional
building construction sector. DOE
estimated average markup for sales
through national accounts to be one-half
of those for the wholesaler to customer
distribution channel. DOE determined
this markup for national accounts on an
assumption that the resulting national
account equipment price must fall
somewhere between the MSP (i.e., a
markup of 1.0) and the customer price
under a typical chain of distribution
(i.e., a markup of wholesaler,
mechanical contractor, or general
contractor).
The overall markup is the product of
all the markups (baseline or incremental
markups) for the different steps within
a distribution channel plus sales tax.
Sales taxes were calculated based on
State-by-State sales tax data reported by
the Sales Tax Clearinghouse. Because
both contractor costs and sales tax vary
by State, DOE developed distributions
of markups within each distribution
channel as a function of State and
22 Ducker Worldwide, 2001. 2000 U.S. Market for
Residential and Specialty Air Conditioning:
Packaged Terminal Air Conditioning. HVAC0002.
Final Report, March 2001. Ducker Industrial
Standards, 6905 Telegraph Road, Suite 300,
Bloomfield Hills, Michigan 48301.
23 The 2002 U.S. Census Bureau financial data for
the plumbing, heating, and air conditioning
industry is the latest version data set and was
issued in December 2004.
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0
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Federal Register / Vol. 73, No. 67 / Monday, April 7, 2008 / Proposed Rules
business type (e.g., large chain hotel/
motel, independent hotel, health care
facility, or office). Because the State-byState distribution of PTAC and PTHP
units varies by business type (e.g., large
chain hotels/motels may be more
prevalent relative to independent hotels
in one part of the country than in
another), the National level distribution
of the markups varies among business
types. Additional detail on markups can
be found in Chapter 6 of the TSD.
mstockstill on PROD1PC66 with PROPOSALS2
E. Energy Use Characterization
The building energy use
characterization analysis was used to
assess the energy savings potential of
PTAC and PTHP equipment at different
efficiency levels. This analysis
accomplishes this by estimating the
energy use of PTACs and PTHPs at
specified energy efficiency levels
through energy use simulations for key
commercial building types, across a
range of climate zones. The energy
simulations yielded hourly estimates of
the building energy consumption,
including lighting, plug, and airconditioning and heating equipment.
The annual energy consumption of
PTACs and PTHPs are used in
subsequent analyses including the LCC,
PBP, and NES.
In determining the reduction in
energy consumption of PTAC and PTHP
equipment due to increased efficiency,
DOE did not take into account a
rebound effect. The rebound effect
occurs when a piece of equipment,
when it is made more efficient, would
be used more intensively, so the
expected energy savings from the
efficiency improvement do not fully
materialize. Since the user of the
equipment, e.g., the customer in a hotel/
motel room, does not pay the utility bill,
the customer’s usage will be unaffected
by increasing the efficiency. Therefore,
DOE has no basis for concluding that a
rebound effect would occur and has not
taken the rebound effect into affect in
the energy use characterization. DOE
seeks comment on the rebound effect for
the PTAC and PTHP customer and
DOE’s assumption that the rebound
effect is not applicable to this industry.
DOE identified this as Issue 4 under
‘‘Issues on Which DOE Seeks Comment’’
in section VII.E of this NOPR. See
Chapter 7 of the TSD for additional
details.
1. Building Type
PTAC and PTHP units generally are
used in hotel/motel rooms, health care
facilities (e.g., assisted living homes,
nursing homes etc.), small offices, or
any application that requires individual
zone heating and cooling. According to
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the Ducker Worldwide analysis, PTAC
and PTHP units are primarily used in
hotels/motels with less than 125 rooms
and less than 3 stories, each. Therefore,
DOE selected this type of hotel/motel
building as the representative
commercial building in order to assess
the energy use of PTAC and PTHP units.
While DOE realizes that PTACs and
PTHPs are found in other building
types, DOE believes that, based on
engineering judgment and consultation
with industry experts, the cooling and
heating loads of an individual room
served by a single PTAC or PTHP unit
are independent of the building type in
which the room is situated.
2. Simulation Approach
DOE used a whole-building hourly
simulation tool, DOE–2.1E, to estimate
the energy use of PTACs and PTHPs in
the representative hotel/motel building
for various efficiency levels and
equipment classes at various climate
locations within the United States. The
DOE–2.1E program has a built-in PTAC/
PTHP module in its HVAC system
components. DOE used the EIA 2003
Commercial Building Energy
Consumption Survey (2003 CBECS) as
the primary source of data,
supplemented by other data sources, to
develop the representative building size
and other building characteristics for
this analysis (i.e., aspect ratio, building
construction type, envelope
characteristics, internal loads and
schedules, mechanical systems and
equipment etc.). DOE modeled hotel/
motel guest rooms facing in all
orientations by rotating a symmetrical
rectangular floor plan prototype
building 90 degrees to capture the
orientation-driven changes in annual
energy use of the PTAC and PTHP. The
Ducker Worldwide analysis and other
available data estimated that PTHPs
represent approximately 45 percent of
the total market for packaged terminal
equipment. Therefore, DOE estimated
the annual energy use per unit using a
PTHP as well as a PTAC in each climate
location. DOE assumed that generally
the building would use a PTAC or PTHP
unit. DOE calculated the weightedaverage annual energy use for each
PTAC and PTHP equipment class in
each State through the population
weighting of the representative climate
location(s) within the state. DOE further
aggregated the energy use at the State
level to national average energy use
using the 2000 Census population data,
published by the U. S. Census Bureau.
DOE estimated the annual energy use
for each equipment class at the baseline
efficiency level (i.e., the efficiency level
specified by ASHRAE/IESNA Standard
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90.1–1999) plus five higher efficiency
levels. As is to be expected, annual
energy use of PTAC and PTHP units
decreases as the efficiency level
increases from the baseline efficiency
level to the highest efficiency level
analyzed. Additional details on the
energy use characterization analysis can
be found in Chapter 7 of the TSD.
F. Life-Cycle Cost and Payback Period
Analyses
DOE conducted the LCC and PBP
analyses to estimate the economic
impacts of potential standards on
individual customers of PTACs and
PTHPs. DOE analyzed these impacts for
PTACs and PTHPs, first, by calculating
the change in customers’ LCCs likely to
result from higher efficiency levels as
compared with the baseline efficiency
levels. The LCC calculation considers
total installed cost (MSP, sales taxes,
distribution chain markups, and
installation cost), operating expenses
(energy, repair, and maintenance costs),
equipment lifetime, and discount rate.
DOE calculated the LCC for all
customers as if each would purchase a
new PTAC or PTHP unit in the year the
standard takes effect. A standard
becomes effective on the date on and
after which the equipment
manufactured must meet or exceed the
standard, which is September 30, 2012
for this rulemaking. To compute LCCs,
DOE discounted future operating costs
to the time of purchase and summed
them over the lifetime of the equipment.
Second, DOE analyzed the effect of
changes in installed costs and operating
expenses by calculating the PBP of
potential standards relative to baseline
efficiency levels. The PBP estimates the
amount of time it would take the
customer to recover, through lower
operating costs, the increment that
represents the increase in purchase
expense of more energy efficient
equipment. The PBP is that change in
purchase price divided by the change in
annual operating cost that results from
the standard. DOE expresses this period
in years. Similar to the LCC, the PBP is
based on the total installed cost and the
operating expenses. However, unlike the
LCC, only the first year’s operating
expenses are considered in the
calculation of the PBP. Because the PBP
does not account for changes in
operating expense over time or the time
value of money, it is also referred to as
a simple PBP.
DOE conducted the LCC and PBP
analyses using a spreadsheet model
developed in Microsoft Excel. When
combined with Crystal Ball (a
commercially available software
program), the LCC and PBP model
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generates a Monte Carlo simulation to
perform the analyses by incorporating
uncertainty and variability
considerations in certain of the key
parameters as discussed below. The
results of DOE’s LCC and PBP analyses
are summarized in section V.B.1.a
below and described in detail in TSD
Chapter 8.
1. Approach
Recognizing that each business that
uses PTAC and PTHP equipment is
unique, DOE analyzed variability and
uncertainty by performing the LCC and
PBP calculations for four types of
businesses, each of which tends to have
different costs of financing because of
the nature of the business. The first type
of business is a ‘‘large chain’’ hotel or
motel, which, DOE believes, has access
to a wide range of financing options and
thus a relative low financing costs. The
second type is an ‘‘independent’’ hotel
or motel, which is not affiliated with a
national chain, which has fewer
financing options and thus a relative
high financing costs. A third type of
business is called ‘‘health care’’ and
includes nursing homes, as well as
assisted living and long-term care
facilities, which, similar to the large
chain hotel, has a relative low financing
costs. The fourth type is called ‘‘office’’
and applies to small office buildings
that are occupied by offices of nonhospital medical professionals such as
physicians and dentists which, DOE
believes, has the fewest financing
options, and as a result, the highest
costs. DOE derived the financing costs
based on data from the Damodaran
Online site.24
The LCC analysis used the estimated
annual energy use for each PTAC or
PTHP unit as described in section IV.E,
energy use characterization. Energy use
of PTACs and PTHPs is sensitive to
climate, so it varies by State within the
United States. Aside from energy use,
other important factors influencing the
LCC and PBP analyses include energy
prices, installation costs, equipment
distribution markups, and sales tax. At
the National level, the LCC spreadsheets
explicitly modeled both the uncertainty
and the variability in the model’s
inputs, using probability distributions
based on the shipment of PTAC and
PTHP equipment to different States.
As mentioned above, DOE generated
LCC and PBP results as probability
18877
distributions using a simulation based
on Monte Carlo analysis methods, in
which certain key inputs to the analysis
consist of probability distributions
rather than single-point values.
Therefore, the outcomes of the Monte
Carlo analysis can also be expressed as
probability distributions. As a result, the
Monte Carlo analysis produces a range
of LCC and PBP results. A distinct
advantage of this type of approach is
that DOE can identify the percentage of
customers achieving LCC savings or
attaining certain PBP values due to an
increased efficiency level, in addition to
the average LCC savings or average PBP
for that efficiency level.
2. Life-Cycle Cost Inputs
For each efficiency level analyzed, the
LCC analysis requires input data for the
total installed cost of the equipment, its
operating cost, and the discount rate.
Table IV.8 summarizes the inputs and
key assumptions used to calculate the
customer economic impacts of all
energy efficiency levels analyzed in this
rulemaking. A more detailed discussion
of the inputs follows.
TABLE IV.8.—SUMMARY OF INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES
Inputs
Description
Affecting Installed Costs
Equipment Price .................................................
Installation Cost ..................................................
Derived by multiplying MSP (from the engineering analysis) by wholesaler markups and contractor markups plus sales tax (from markups analysis). Used the probability distribution for
the different markups to describe their variability.
Includes installation labor, installer overhead, and any miscellaneous materials and parts, derived from RS Means CostWorks 2007.
Affecting Operating Costs
Annual Energy Use .............................................
Electricity Price ...................................................
Maintenance Cost ...............................................
Repair Cost .........................................................
Derived from whole-building hourly energy use simulation for PTACs or PTHPs in a representative hotel/motel building in various climate locations (from energy use characterization analysis). Used annual electricity use per unit. Used the probability distribution to account for
which State a unit will be shipped to, which in turn affects the annual energy use.
Calculated average commercial electricity price in each State, as determined from EIA data for
2006. Used the AEO2007 forecasts to estimate the future electricity prices. Used the probability distribution for the electricity price.
Annual maintenance cost did not vary as a function of efficiency.
Estimated the annualized repair cost for baseline efficiency PTAC and PTHP equipment as
$15, based on costs of extended warranty contracts for PTACs and PTHPs and further discussed in Chapter 8 of the TSD. Assumed that repair costs would vary in direct proportion
with the MSP at higher efficiency levels because it generally costs more to replace components that are more efficient.
Affecting Present Value of Annual Operating Cost Savings
mstockstill on PROD1PC66 with PROPOSALS2
Equipment Lifetime .............................................
Discount Rate .....................................................
Date Standards Become Effective .....................
24 Damodaran Online. Leonard N. Stern School of
Business, New York University: https://
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Used the probability distribution of lifetimes, with mean lifetime for each of four equipment
classes assumed to be 10 years based on literature reviews and consultation with industry
experts.
Mean real discount rates ranging from 5.7 percent for owners of health care facilities to 8.2
percent for independent hotel/motel owners. Used the probability distribution for the discount
rate.
September 30, 2012 (four years after the publication of the final rule).
www.stern.nyu.edu/adamodar/New_Home_Page/
data.html. January 2006.
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TABLE IV.8.—SUMMARY OF INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES—Continued
Inputs
Description
Analyzed Efficiency Levels
Analyzed Efficiency Levels .................................
Baseline efficiency levels (ASHRAE/IESNA Standard 90.1–1999) and five higher efficiency levels for six equipment classes (DOE also considered levels that were combinations of efficiency levels for PTACs and PTHPs).
mstockstill on PROD1PC66 with PROPOSALS2
a. Equipment Prices
The price of a PTAC or PTHP reflects
the application of distribution channel
markups and the addition of sales tax to
the MSP. As described in section IV.C
above, DOE determined manufacturing
costs for a set of six cooling capacities
of equipment representing all
equipment classes. To derive the
manufacturing costs for other sizes of
PTACs and PTHPs, DOE scaled the costs
from these six cooling capacities. For
the LCC and PBP analyses and
subsequent analyses in today’s
rulemaking, DOE used the
manufacturing costs as developed in the
Engineering Analysis for PTAC and
PTHP equipment utilizing R–410A.
Each baseline MSP is the price
charged by manufacturers to either a
wholesaler/distributor or very large
customer for equipment meeting a
baseline efficiency. Each standard-level
MSP increase is the change in MSP
associated with producing equipment at
an efficiency level above the baseline.
DOE developed MSP, which increases
as a function of efficiency level for each
of the six representative capacities.
Refer to Chapter 5 of the TSD for details.
The markup is the percentage increase
in price as the PTAC and PTHP
equipment passes through the
distribution channel. As discussed
earlier, distribution chain markups are
based on one of four distribution
channels, as well as whether the
equipment is being purchased for the
new construction market or to replace
existing equipment. Probability
distributions were used for the different
distribution channel markups to
describe their variability. DOE
developed markups for both the
standard size and non-standard size
PTAC and PTHP equipment as
explained in section IV.D above.
labor rates associated with the type of
crew required to install the equipment.
Specifically, RS Means provides personhour and labor rate data for the
installation of ‘‘Unitary Air
Conditioning Equipment,’’ which
includes PTAC and PTHP equipment.
Labor rates vary significantly from
region to region of the country and the
RS Means data provide the necessary
information to capture this regional
variability. RS Means provides cost
indices that reflect the labor rates for
295 cities in the United States. Several
cities in all 50 States and the District of
Columbia are identified in the RS Means
data. DOE incorporated these cost
indices into the analysis to capture
variation in installation cost, depending
on the location of the customer. DOE
calculated the installation cost by
multiplying the number of person-hours
by the applicable labor rate. DOE
assumed the installation costs are fixed
for each equipment class and
independent of the efficiency of the
equipment.
b. Installation Costs
DOE derived installation costs for
PTACs and PTHPs from data provided
in RS Means CostWorks 2007 (RS
Means).25 RS Means provides estimates
on the person-hours required to install
PTAC and PTHP equipment and the
d. Electricity Prices
The applicable electricity prices are
needed to convert the electric energy
savings into energy cost savings.
Because of the wide variation in
electricity consumption patterns,
wholesale costs, and retail rates across
the country, it is important to consider
regional differences in electricity prices.
In order to simplify the NOPR analysis,
25 R.S. Means Company, Inc. 2007. RS Means
CostWorks 2007. Kingston, Massachusetts.
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c. Annual Energy Use
DOE estimated the electricity
consumed by the PTAC and PTHP
equipment based on the energy use
characterization as described previously
in section IV.E. DOE used a wholebuilding hourly simulation tool to
estimate the energy use in a
representative hotel/motel building for
different efficiency levels and
equipment classes at various climate
locations within the United States. DOE
aggregated the average annual energy
use per unit at the State level by
applying a population-weighting factor
for each examined climate location
within a State. Details of the annual
energy use calculations can be found in
TSD Chapter 7.
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DOE decided not to develop marginal
electricity prices from the tariff-based
electricity price model in this
rulemaking. Instead, DOE used average
effective commercial electricity prices at
the State level from EIA data for 2006.
This approach captured a wide range of
commercial electricity prices across the
Untied States. Furthermore, DOE
recognized that different kinds of
businesses typically use electricity in
different amounts at different times of
the day, week, and year, and therefore
face different effective prices. To make
this adjustment, DOE used EIA’s 2003
CBECS data set to identify the average
prices paid by the four kinds of
businesses in this analysis and
compared them with the average prices
paid by all commercial customers.26
The ratios of prices paid by the four
types of businesses to the national
average commercial prices seen in the
2003 CBECS were used as multipliers to
adjust the average commercial 2006
price data from EIA.
DOE weighted the prices paid by each
business in each State by the estimated
sales of PTACs and PTHPs to each
business type to obtain a weightedaverage national electricity price. The
State/business type weights reflect the
probabilities that a given PTAC or PTHP
unit shipped will be operated with a
given electricity price. To account for
this variability, DOE used a probability
distribution for not only which State the
equipment is shipped to, but also to
determine which business type would
purchase the equipment and therefore,
what electricity price they would pay.
The effective prices (2006$) range from
approximately 5.5 cents per kWh to
approximately 23.2 cents per kWh. The
development and use of State-average
electricity prices by business type are
described in more detail in Chapter 8 of
the TSD.
The electricity price trend provides
the relative change in electricity prices
for future years out to the year 2042.
Estimating future electricity prices is
difficult, especially considering that
there are efforts in many States
throughout the country to restructure
26 EIA’s 2003 CBECS is the most recent version
of the data set.
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the electricity supply industry. DOE
applied the AEO2007 reference case as
the default scenario and extrapolated
the trend in values from the years 2020
to 2030 of the forecast to establish prices
in the years 2030 to 2042. This method
of extrapolation is in line with methods
currently being used by the EIA to
forecast fuel prices for the Federal
Energy Management Program. DOE
provides a sensitivity analysis of the
LCC savings and PBP results to future
electricity price scenarios using both the
AEO2007 high-growth and low-growth
forecasts in Chapter 8 of the TSD.
mstockstill on PROD1PC66 with PROPOSALS2
e. Maintenance Costs
Maintenance costs are the costs to the
customer of maintaining equipment
operation. Maintenance costs include
services such as cleaning heatexchanger coils and changing air filters.
DOE was not able to identify publicly
available data on annual maintenance
costs per unit. DOE estimated annual
routine maintenance costs for PTAC and
PTHP equipment at $50 per year per
unit. Some manufacturers interviewed
for the manufacturer impact analysis
indicated verbally that this assumption
was reasonable. Because data were not
available to indicate how maintenance
costs vary with equipment efficiency,
DOE thus determined to use this
preventative maintenance costs that
remain constant as equipment efficiency
is increased.
f. Repair Costs
The repair cost is the cost to the
customer for replacing or repairing
components that have failed in the
PTAC and PTHP equipment. DOE
estimated the annualized repair cost for
baseline efficiency PTAC and PTHP
equipment as $15, based on costs of
extended warranty contracts PTACs and
PTHPs. DOE determined that repair
costs would increase in direct
proportion with increases in equipment
prices, because the price of PTAC and
PTHP equipment increases with its
efficiency and DOE recognizes that
complexity for repair will increase as
the efficiency of equipment increases.
DOE specifically seeks comment on
its estimation for the repair costs, as
well as the installation and maintenance
costs. In particular, DOE is interested in
how the installation, maintenance, and
repair costs may change with the use of
R–410A refrigerant in 2010 because
DOE’s estimates are based on data from
the field for equipment using R–22. See
Chapter 8 of the TSD for additional
information. DOE identified this as
Issue 5 under ‘‘Issues on Which DOE
Seeks Comment’’ in section VII.E of this
NOPR.
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g. Equipment Lifetime
DOE defines equipment lifetime as
the age when a PTAC or PTHP unit is
retired from service. DOE reviewed
available literature and consulted with
manufacturers in order to establish
typical equipment lifetimes. The
literature and experts consulted offered
a wide range of typical equipment
lifetimes. Individuals with previous
experience in manufacturing or
distribution of PTACs and PTHPs
suggested a typical lifetime of 5 to 15
years. Some experts suggested that the
lifetime could be even lower because of
the daily or continuous use of the
equipment and neglect of maintenance
such as cleaning the heat exchangers or
replacing the air filters. Previously, DOE
used a 15-year lifetime for PTACs and
PTHPs in the 2000 Screening Analysis
based on data from ASHRAE’s 1995
Handbook of HVAC Applications.
Stakeholders commented on the 2000
Screening Analysis and suggested DOE
use the 10-year lifetime assumption
rather than 15-year lifetime to more
accurately reflect the life and usage
characteristics of this equipment.27 66
FR 3336, 3349[0]. Therefore, based on
the information it gathered, DOE
concluded that a typical lifetime of 10
years is appropriate for PTAC and PTHP
equipment. Furthermore, DOE modeled
the lifetime of PTAC and PTHP
equipment as a Weibull statistical
distribution with an average lifetime of
10 years and a maximum lifetime of 20
years. Chapter 3 of the TSD contains a
discussion of equipment lifetime, and
TSD Chapter 8 discusses how
equipment life is modeled in the LCC
analysis.
h. Discount Rate
The discount rate is the rate at which
future expenditures are discounted to
establish their present value. DOE
estimated the discount rate by
estimating the cost of capital for
purchasers of PTAC and PTHP
equipment. Most purchasers use both
debt and equity capital to fund
investments. Therefore, for most
purchasers, the discount rate is the
weighted average cost of debt and equity
financing, or the weighted-average cost
of capital (WACC), less the expected
inflation.
To estimate the WACC of PTAC and
PTHP equipment purchasers, DOE used
a sample of companies including large
27 U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy. ‘‘Energy
Efficiency Program for Commercial and Industrial
Equipment: Efficiency Standards for Commercial
Heating, Air Conditioning and Water Heating
Equipment; Final Rule’’. January 2001.
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18879
hotel/motel chains and health care
chains drawn from a database of 7,319
U.S. companies given on the
Damodaran Online website. This
database includes most of the publicly
traded companies in the United States.
Based on this database, DOE calculated
the weighted average after-tax discount
rate for PTAC and PTHP purchases,
adjusted for inflation, as 5.71 percent for
large hotel chains and 5.65 percent for
health care (nursing homes and assisted
living facilities). The cost of capital for
independent hoteliers, and small office
companies with more limited access to
capital is more difficult to determine.
Individual credit-worthiness varies
considerably, and some franchisees
have access to the financial resources of
the franchising corporation. However,
personal contacts with a sample of
commercial bankers yielded an estimate
for the small operator weighted cost of
capital of about 200 to 300 basis points
(2 percent to 3 percent) higher than the
rates for larger hotel chains. Therefore,
DOE used a central value equal to the
weighted average of discount rate for
large hotel chains plus 2.5 percent for
independent hotel/motels and the same
adder was used to the discount rate for
large nursing home/assisted care
companies to derive an estimate for
small office buildings. As a result, DOE
calculated the weighted average aftertax discount rate for PTAC and PTHP
purchases, adjusted for inflation, as 8.21
percent for independent hotels and 8.15
percent for small offices (medical and
dental offices). The discount rate is
another key variable for which DOE
used a probability distribution in the
LCC and PBP analyses. TSD Chapter 8
contains the detailed calculations on the
discount rate.
3. Payback Period
DOE also determined the economic
impact of potential standards on
customers by calculating the PBP of the
TSLs relative to a baseline efficiency
level. The PBP measures the amount of
time it takes the commercial customer to
recover the assumed higher purchase
expense of more energy efficient
equipment through lower operating
costs. Similar to the LCC, the PBP is
based on the total installed cost and the
operating expenses and is calculated as
a range of payback periods, depending
on the probability distributions of the
two key inputs (i.e., the supply chain
markups and where the unit is likely to
be shipped to). However, unlike for the
LCC, in the calculation of the PBP, by
definition, DOE considered only the
first year’s operating expenses. Because
the PBP does not take into account
changes in operating expense over time
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or the time value of money, it is also
referred to as a simple payback period.
Additional details of the PBP can be
found in Chapter 8 of the TSD.
mstockstill on PROD1PC66 with PROPOSALS2
G. National Impact Analysis—National
Energy Savings and Net Present Value
Analysis
The national impacts analysis
evaluates the impact of a proposed
standard from a national perspective
rather than from the customer
perspective represented by the LCC.
This analysis assesses the NES, and the
NPV (future amounts discounted to the
present) of total commercial customer
costs and savings, which are expected to
result from amended standards at
specific efficiency levels. For each TSL,
DOE calculated the NPV, as well as the
NES, as the difference between a base
case forecast (without amended
standards) and the standards case (with
amended standards). The NES refers to
cumulative energy savings from 2012
through 2042. The NPV refers to
cumulative monetary savings. DOE
calculated net monetary savings in each
year relative to the base case as the
difference between total operating cost
savings and increases in total installed
cost. Cumulative savings are the sum of
the annual NPV over the specified
period. DOE accounted for operating
cost savings until 2062; that is, until all
the equipment installed through 2042 is
retired.
1. Approach
Over time, in the standards case,
equipment that is more efficient
gradually replaces less efficient
equipment. This affects the calculation
of both the NES and NPV, both of which
are a function of the total number of
units in use and their efficiencies, and
thus are dependent on annual
shipments and equipment lifetime,
including changes in shipments and
retirement rates in response to changes
in equipment costs due to standards.
Both calculations start by using the
estimate of shipments, and the quantity
of units in service, that are derived from
the shipments model.
With regard to estimating the NES,
because more efficient PTACs and
PTHPs gradually replace less efficient
ones, the energy per unit of capacity
used by the PTACs and PTHPs in
service gradually decreases in the
standards case relative to the base case.
DOE calculated the NES by subtracting
energy use under a standards scenario
from energy use in a base-case scenario.
Unit energy savings for each
equipment class are the same weightedaverage values as calculated in the LCC
and PBP spreadsheet. To estimate the
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total energy savings for each TSL, DOE
first calculated the national site energy
consumption (i.e., the energy directly
consumed by the units of equipment in
operation) for PTACs or PTHPs for each
year, beginning with the expected
effective date of the standards (2012),
for the base case forecast and the
standards case forecast. Second, DOE
determined the annual site energy
savings, consisting of the difference in
site energy consumption between the
base case and the standards case. Third,
DOE converted the annual site energy
savings into the annual amount of
energy saved at the source of electricity
generation (the source energy), using a
site-to-source conversion factor. Finally,
DOE summed the annual source energy
savings from 2012 to 2042 to calculate
the total NES for that period. DOE
performed these calculations for each
TSL considered in this rulemaking.
DOE considers whether a rebound
effect is applicable in its NES analysis.
A rebound effect occurs when an
increase in equipment efficiency leads
to an increased demand for its service.
EIA in its NEMS model assumes a
certain elasticity factor to account for an
increased demand for service due to the
increase in cooling (or heating)
efficiency. EIA refers to this as an
efficiency rebound.28 For the
commercial cooling equipment market,
there are two ways that a rebound effect
could occur:
1. An increased use of the cooling
equipment within the commercial
buildings they are installed in.
2. Additional instances of cooling a
commercial building where it was not
being cooled before.
The first instance does not occur for
the PTAC and PTHP equipment that are
typically used in guest rooms of hotel/
motel buildings, and patient rooms in
hospitals and health care clinics since
these buildings are already being
operated and conditioned 24 hours a
day and seven days a week.
Furthermore, the guest or the patient in
these rooms has no incentive to use the
equipment more or less, because they do
not pay the electricity bills.
Additionally, DOE feels that the
PTAC and PTHP equipment would not
significantly penetrate into previously
un-cooled building spaces. The existing
market for this equipment is specialized
to lodging type applications where the
equipment serves both a cooling and
heating need for a small room on the
perimeter of a building. Drawbacks for
installing these equipment in other
28 EIA, 2007. Assumptions to the Annual Energy
Outlook 2007. accessed at https://www.eia.doe.gov/
oiaf/aeo/assumption/
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spaces include noise, increased
installation costs, high use of electric
resistance heating, and their limitation
of being able to provide cooling to only
perimeter spaces. These considerations
make the packaged terminal equipment,
in general, not the first choice for
adding cooling to other non-conditioned
building spaces. Therefore, DOE did not
assume a rebound effect in the present
NOPR analysis.
To estimate NPV, DOE calculated the
net impact as the difference between
total operating cost savings (including
electricity, repair, and maintenance cost
savings) and increases in total installed
costs (which consists of MSP, sales
taxes, distribution chain markups, and
installation cost). DOE calculated the
NPV of each TSL over the life of the
equipment, using the following three
steps. First, DOE determined the
difference between the equipment costs
under the TSL case and the base case in
order to obtain the net equipment cost
increase resulting from the TSL. Second,
DOE determined the difference between
the base case operating costs and the
TSL operating costs, in order to obtain
the net operating cost savings from the
TSL. Third, DOE determined the
difference between the net operating
cost savings and the net equipment cost
increase in order to obtain the net
savings (or expense) for each year. DOE
then discounted the annual net savings
(or expenses) to the year 2008 for PTACs
and PTHPs bought on or after 2012 and
summed the discounted values to
provide the NPV of a TSL. An NPV
greater than zero shows net savings (i.e.,
the TSL would reduce customer
expenditures relative to the base case in
present value terms). An NPV that is
less than zero indicates that the TSL
would result in a net increase in
customer expenditures in present value
terms.
To make the analysis more accessible
and transparent to all stakeholders, DOE
used an MS Excel spreadsheet model to
calculate the energy savings and the
national economic costs and savings
from amended standards. In addition,
the TSD (chapter 10) and other
documentation on the website that DOE
provides during the rulemaking help
explain the models and how to use
them, and stakeholders can review
DOE’s analyses by changing various
input quantities within the spreadsheet.
Unlike the LCC analysis, the NES
spreadsheet does not use distributions
for inputs or outputs. DOE examined
sensitivities by applying different
scenarios. DOE used the NES
spreadsheet to perform calculations of
energy savings and NPV, using the
annual energy consumption and total
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installed cost data from the LCC
analysis. DOE forecasted the energy
savings, energy cost savings, equipment
costs, and NPV of benefits for each of
equipment classes from 2012 through
2042. The forecasts provided annual
and cumulative values for all four
output parameters as described above.
2. Shipments Analysis
An important element in the estimate
of the future impact of a standard is
equipment shipments. DOE developed
shipments projections under a base case
and each of the standards cases using a
shipments model. DOE used the
standards case shipments projection
and, in turn, the standards case
equipment stock to determine the NES.
The shipments portion of the
spreadsheet model forecasts PTAC and
PTHP shipments from 2012 to 2042. The
details of the shipment projections are
given in chapter 10 of the TSD.
DOE developed shipments forecasts
by accounting for: (1) The growth in the
building stock of hotel/motel, health
care and office buildings that are the
primary end users of PTACs and PTHPs;
(2) market segments; (3) equipment
retirements; and (4) equipment ages.
The shipments model assumes that, in
each year, each existing PTAC or PTHP
either ages by one year or breaks down,
and that equipment that breaks down is
replaced. In addition, new equipment
can be shipped into new commercial
building floor space, and old equipment
can be removed through demolitions.
Historical shipments are critical to the
development of the shipments model,
since DOE used the historical data to
calibrate the model. DOE’s primary
source of historical data for shipments
of PTACs and PTHPs was the shipment
data provided by ARI. ARI provided
DOE with shipments data for 10 years
(1997–2006), which allowed DOE to
allocate sales of equipment to the
different equipment classes. The
shipments data is summarized in
Chapter 3 of the TSD.
Although there is a provision in the
spreadsheet for a change in projected
shipments in response to efficiency
level increases, DOE has no information
with which to calibrate such a
relationship. Therefore, for the NOPR
analysis, DOE presumed that the
shipments do not change in response to
the changing TSLs.
Table IV.9 shows the forecasted
shipments for the different equipment
classes of PTACs and PTHPs for the
baseline efficiency level (ASHRAE/
IESNA Standard 90.1–1999) for selected
years from 2012 to 2042. As equipment
purchase price increases with
efficiency, generally a drop in
shipments would be expected. Although
there is a provision in the shipments
analysis spreadsheet for a change in
shipments as the efficiency increases
and the equipment becomes more
expensive, DOE has no basis for
concluding that such a change would
occur as the efficiency of PTACs and
PTHPs increases. Therefore, DOE
presumed that total shipments do not
change with TSL and that the effect of
the standards would be to shift the
percentage mix of shipments from lower
to higher efficiencies. Table IV.9 also
shows the cumulative shipments for
PTAC and PTHP equipment from 2012
to 2042.
TABLE IV.9.—SHIPMENTS FORECAST FOR BASE CASE PTAC AND PTHP EQUIPMENT
Thousands of units shipped by year and equipment class
2012
2015
2020
2025
2030
2035
2040
2042
Cumulative
shipments
(2012–
2042)
Standard Size PTACs ..............................................................
Standard Size PTHPs ..............................................................
Non-Standard Size PTACs ......................................................
Non-Standard Size PTHPs ......................................................
242
181
17
13
249
186
16
12
266
199
15
11
286
214
13
10
307
230
12
9
333
249
11
8
361
270
10
7
373
279
9
7
9,256
6,918
398
300
Total ..................................................................................
453
464
490
522
558
600
648
668
16,873
Equipment
DOE also uses the shipments
estimates developed above as an input
to the MIA, discussed in section IV.I.
Chapter 10 of the TSD provides
additional details on the shipments
forecasts.
mstockstill on PROD1PC66 with PROPOSALS2
3. Base Case and Standards Case
Forecasted Distribution of Efficiencies
The annual energy consumption of a
PTAC or PTHP unit is directly related
to the efficiency of the unit. Thus, DOE
forecasted shipment-weighted average
equipment efficiencies that, in turn,
enabled a determination of the
shipment-weighted annual energy
consumption values for the base case
and each TSL analyzed. DOE based
shipment-weighted average efficiency
trends for PTAC and PTHP equipment
on first converting the 2005 PTAC and
PTHP equipment shipments by
equipment class into market shares by
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equipment class. DOE then adapted a
cost-based method used in the NEMS to
estimate market shares for each
equipment class by TSL. Then, from
those market shares and projections of
shipments by equipment class, DOE
extrapolated future equipment
efficiency trends both for a base case
scenario and standards case scenarios.
The difference in equipment efficiency
between the base case and standards
cases was the basis for determining the
reduction in per-unit annual energy
consumption that could result from
amended standards. There is, however,
the refrigerant phase-out issue that also
affects the equipment efficiency. DOE
recognizes that the industry has been
able to meet the ASHRAE/IESNA
Standard 90.1–1999 efficiency levels
with R–22 as the primary refrigerant,
but is waiting to switch to R–410A as
the primary refrigerant starting in 2010.
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For the base case, DOE assumed that,
absent amended standards, forecasted
market shares would remain frozen at
the 2012 efficiency levels until the end
of the forecast period (30 years after the
effective date—the year 2042). DOE
realized that this prediction may have
the effect of causing DOE to
overestimate the savings associated with
the TSLs discussed in this notice since
historical data indicated PTACs and
PTHP equipment efficiencies or relative
equipment class preferences may
change voluntarily over time. Therefore,
DOE seeks comment on this assumption
and the potential significance of any
overestimate of savings. In particular,
DOE requests data that would enable it
to better characterize the likely
increases in efficiency that would occur
over the 30-year analysis period absent
adoption of either the standards
proposed, or the TSLs considered, in
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this rule. DOE identified this as Issue 6
under ‘‘Issues to Which DOE Seeks
Comment’’ in section VII.E of this
NOPR.
For each of the TSLs analyzed, DOE
used a ‘‘roll-up’’ scenario to establish
the market shares by efficiency level for
the year that standards become effective
(i.e., 2012). Information available to
DOE suggests that the efficiencies of
equipment in the base case that did not
meet the standard level under
consideration would ‘‘roll-up’’ to meet
the standard level. In addition, available
information suggests that all equipment
efficiencies in the base case that were
above the standard level under
consideration would not be affected.
DOE specifically seeks input on its
basis for the NES-forecasted base case
distribution of efficiencies and its
prediction on how amended energy
conservation standards impact the
distribution of efficiencies in the
standards case. DOE identified this as
Issue 7 under ‘‘Issues on Which DOE
Seeks Comment’’ in section VII.E of this
NOPR.
In addition, DOE specifically seeks
comment on whether DOE’s adoption of
higher amended energy conservation
standard levels would be likely to cause
the PTAC and PTHP customers to shift
to using other, less efficient type of
equipment. Acknowledging over 80
percent of PTAC and PTHP equipment
are sold for the replacement market,
DOE believes it is unlikely that PTAC
and PTHP equipment users would
switch to other type of equipment due
to the additional installation cost caused
by this potential switching. However,
DOE recognizes that potential
equipment switching from PTHPs to a
combination of PTACs and electric
resistance heating might occur if DOE
were to adopt a standard level for
PTHPs significantly higher than the
proposed standard level for PTACs.
DOE specifically seeks input on whether
disparity in the proposed standards for
PTACs and PTHPs is likely to cause the
PTHP customers to shift to PTACs with
electric resistance heating. DOE
identified this as Issue 8 under ‘‘Issues
on Which DOE Seeks Comment’’ in
section VII.E of this NOPR.
4. National Energy Savings and Net
Present Value
The PTAC and PTHP equipment stock
at any point in time is the total number
of PTACs and PTHPs purchased or
shipped from previous years that have
survived until that point. The NES
spreadsheet, through the use of the
shipments model, keeps track of the
total number of PTAC and PTHP units
shipped each year. For purposes of the
NES and NPV analyses, DOE assumes
that retirements follow a Weibull
distribution with a 10-year mean
lifetime. Retired units are not replaced
until 2042. For units shipped in 2042,
any units still remaining at the end of
2062 are retired.
The national annual energy
consumption is the product of the
annual unit energy consumption and
the number of PTAC and PTHP units of
each vintage. This approach accounts
for differences in unit energy
consumption from year to year. In
determining national annual energy
consumption, DOE initially calculated
the annual energy consumption at the
site (i.e., electricity in kWh consumed
by the PTAC and PTHP unit). DOE then
calculated primary energy consumption
from site energy consumption by
applying a marginal site-to-source
conversion factor to account for losses
associated with the generation,
transmission, and distribution of
electricity.
The site-to-source conversion factor is
a multiplier used for converting site
energy consumption, expressed in kWh,
into primary or source energy
consumption, expressed in quads
(quadrillion Btu). The site-to-source
conversion factor accounts for losses in
electricity generation, transmission, and
distribution. DOE obtained these
conversion factors using the NEMS
model. The conversion factors vary over
time, due to projected changes in
electricity generation sources (i.e., the
power plant types projected to provide
electricity to the country).
To discount future impacts, DOE
follows OMB guidance in the selection
of seven percent and three percent in
evaluating the impacts of regulations. In
selecting the discount rate
corresponding to a public investment,
OMB directs agencies to use ‘‘the real
Treasury borrowing rate on marketable
securities of comparable maturity to the
period of analysis.’’ Office of
Management and Budget (OMB)
Circular No. A–94, ‘‘Guidelines and
Discount Rates for Benefit-Cost Analysis
of Federal Programs,’’ dated October 29,
1992, section 8.c.1. The seven percent
rate is an estimate of the average beforetax rate of return on private capital in
the United States economy, and reflects
the returns to real estate and small
business capital as well as corporate
capital. DOE used this discount rate to
approximate the opportunity cost of
capital in the private sector, since recent
OMB analysis has found the average rate
of return on capital to be near this rate.
In addition, DOE used the 3 percent rate
to capture the potential effects of
standards on private customers’
consumption (e.g., through higher prices
for equipment and purchase of reduced
amounts of energy). This rate represents
the rate at which ‘‘society’’ discounts
future consumption flows to their
present value. This rate can be
approximated by the real rate of return
on long-term government debt (e.g.,
yield on Treasury notes minus annual
rate of change in the Consumer Price
Index), which has averaged about 3
percent on a pre-tax basis for the last 30
years. Table IV.10 summarizes the
inputs to the NES spreadsheet model
along with a brief description of the data
sources. The results of DOE’s NES and
NPV analysis are summarized in section
V.B.3 below and described in detail in
TSD Chapter 11.
TABLE IV.10.—SUMMARY OF NES AND NPV MODEL INPUTS
Description
Shipments ....................................................................
Effective Date of Standard ..........................................
Base Case Efficiencies ................................................
Standard Case Efficiencies .........................................
mstockstill on PROD1PC66 with PROPOSALS2
Inputs
Annual shipments from shipments model (see Chapter 10 of the TSD).
September 2012.
Distribution of base case shipments by efficiency level.
Distribution of shipments by efficiency level for each standards case. Standards case annual shipment-weighted market shares remain the same as in the base case and each
standard level for all efficiencies above the TSL. All other shipments are at the TSL efficiency.
Annual national weighted-average values are a function of efficiency level (Chapter 7 of
the TSD).
Annual weighted-average values are a function of efficiency level (Chapter 8 of the
TSD).
Annual Energy Use per Unit ........................................
Total Installed Cost per Unit ........................................
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TABLE IV.10.—SUMMARY OF NES AND NPV MODEL INPUTS—Continued
Inputs
Description
Repair Cost per Unit ....................................................
Annual weighted-average values increase with manufacturer’s cost level (Chapter 8 of
the TSD).
Annual weighted-average value equals $50 (Chapter 8 of the TSD).
2007 EIA AEO forecasts (to 2030) and extrapolation for beyond 2030 (Chapter 8 of the
TSD).
Conversion factor varies yearly and is generated by EIA’s NEMS* model. Includes the
impact of electric generation, transmission, and distribution losses.
3 percent and 7 percent real.
Future costs are discounted to year 2008.
Maintenance Cost per Unit ..........................................
Escalation of Electricity Prices ....................................
Electricity Site-to-Source Conversion Factor ...............
Discount Rate ..............................................................
Present Year ................................................................
* Chapter 14 on the utility impact analysis provides more detail on NEMS model.
H. Life-Cycle Cost Sub-Group Analysis
In analyzing the potential impact of
new or amended standards on
customers, DOE evaluates the impact on
identifiable groups (i.e., subgroups) of
customers, such as different types of
businesses, which may be
disproportionately affected by a national
standard level. For this rulemaking,
DOE identified small businesses as a
PTAC and PTHP customer subgroup
that could be disproportionately
affected, and examined the impact of
proposed standards on this group.
DOE determined the impact on this
PTAC and PTHP customer sub-group
using the LCC spreadsheet model. DOE
conducted the LCC and PBP analysis for
both PTAC and PTHP customers. The
standard LCC and PBP analysis
(described in section IV.F) includes
various types of businesses occupying
commercial buildings that use PTAC
and PTHP equipment. The LCC
spreadsheet model allows for the
identification of one or more subgroups
of businesses, which can then be
analyzed by sampling only each such
subgroup. The results of DOE’s LCC
subgroup analysis are summarized in
section V.B.1.c below and described in
detail in TSD Chapter 12.
mstockstill on PROD1PC66 with PROPOSALS2
I. Manufacturer Impact Analysis
1. Overview
DOE performed an MIA to estimate
the financial impact of higher energy
conservation standards on both
manufacturers of standard size PTACs
and PTHPs and manufacturers of nonstandard size PTACs and PTHPs, and to
calculate the impact of such standards
on employment and manufacturing
capacity. The MIA has both quantitative
and qualitative aspects. The quantitative
part of the MIA relies on the GRIM, an
industry-cash-flow model customized
for this rulemaking. The GRIM inputs
are information regarding the industry
cost structure, shipments, and revenues.
This includes information from many of
the analyses described above, such as
manufacturing costs and prices from the
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engineering analysis and shipments
forecasts. The key GRIM output is the
industry net present value. Different sets
of assumptions (scenarios) will produce
different results. The qualitative part of
the MIA addresses factors such as
equipment characteristics,
characteristics of particular firms, and
market and equipment trends, and
includes assessment of the impacts of
standards on sub-groups of
manufacturers. The complete MIA is
outlined in Chapter 13 of the TSD.
DOE conducted the MIA for PTACs
and PTHPs in three phases. Phase 1,
Industry Profile, consisted of preparing
an industry characterization, including
data on market share, sales volumes and
trends, pricing, employment, and
financial structure. Phase 2, Industry
Cash Flow, focused on the industry as
a whole. In this phase, DOE used the
GRIM to prepare an industry-cash-flow
analysis. Using publicly available
information developed in Phase 1, DOE
adapted the GRIM’s generic structure to
perform an analysis of PTAC and PTHP
energy conservation standards. In Phase
3, Subgroup Impact Analysis, DOE
conducted interviews with
manufacturers representing the majority
of domestic PTAC and PTHP sales. This
group included large and small
manufacturers of both standard and
non-standard size PTACs and PTHPs,
providing a representative cross-section
of the industry. During these interviews,
DOE discussed engineering,
manufacturing, procurement, and
financial topics specific to each
company and also obtained each
manufacturer’s view of the industry as
a whole. The interviews provided
valuable information DOE used to
evaluate the impacts of an amended
energy conservation standard on
manufacturers’ cash flows,
manufacturing capacities, and
employment levels.
a. Phase 1, Industry Profile
In Phase 1 of the MIA, DOE prepared
a profile of the PTAC and PTHP
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industry based on the market and
technology assessment prepared for this
rulemaking. Before initiating the
detailed impact studies, DOE collected
information on the present and past
structure and market characteristics of
the PTAC and PTHP industry. The
information DOE collected at that time
included market share, equipment
shipments, markups, and cost structure
for various manufacturers. The industry
profile includes further detail on
equipment characteristics, estimated
manufacturer market shares, the
financial situation of manufacturers,
trends in the number of firms, the
market, and equipment characteristics
of the PTAC and PTHP industry.
The industry profile included a top
down cost analysis of PTAC and PTHP
manufacturers that DOE used to derive
cost and preliminary financial inputs for
the GRIM (e.g., revenues; material,
labor, overhead, and depreciation
expenses; selling, general, and
administrative expenses (SG&A); and
research and development (R&D)
expenses). DOE also used public sources
of information to further calibrate its
initial characterization of the industry,
including SEC 10–K reports, Standard &
Poor’s (S&P) stock reports, and
corporate annual reports.
b. Phase 2, Industry Cash Flow Analysis
Phase 2 of the MIA focused on the
financial impacts of amended energy
conservation standards on the industry
as a whole. Higher energy conservation
standards can affect a manufacturer’s
cash flow in three distinct ways,
resulting in: (1) A need for increased
investment; (2) higher production costs
per unit; and (3) altered revenue by
virtue of higher per-unit prices and
changes in sales values. To quantify
these impacts in Phase 2 of the MIA,
DOE performed separate cash flow
analyses, using the GRIM, on the part of
the industry that manufactures standard
size PTACs and PTHPs and on the part
of the industry that manufactures nonstandard size equipment. In performing
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these analyses, DOE used the financial
values derived during Phase 1 and the
shipment scenarios used in the NES
analyses.
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c. Phase 3, Sub-Group Impact Analysis
Using average cost assumptions to
develop an industry-cash-flow estimate
is not adequate for assessing differential
impacts among subgroups of
manufacturers. For example, small
manufacturers, niche players, or
manufacturers exhibiting a cost
structure that largely differs from the
industry average could be more
negatively affected. DOE used the
results of the industry characterization
analysis (in Phase 1) to group
manufacturers that exhibit similar
characteristics.
DOE established two sub-groups for
the MIA corresponding to the two types
of PTAC and PTHP equipment and
manufacturers, i.e., manufacturers of
standard size equipment and
manufacturers of non-standard size
equipment. The standard size PTAC and
PTHP market is mostly domestically
owned with manufacturing facilities
located outside of the United States,
where as the non-standard size PTAC
and PTHP market is mostly
domestically owned with manufacturing
facilities located inside of the United
States. There has been a recent trend of
foreign owned, foreign operated
companies to enter the standard size
PTAC and PTHP market and sell
equipment within the United States.
Based on the identification of these
two sub-groups, DOE prepared two
different interview guides—one for
standard size PTAC and PTHP
manufacturers and one for non-standard
size PTAC and PTHP manufacturers.
These interview guides were used to
tailor the GRIM to address unique
financial characteristics of
manufacturers of each equipment size.
DOE interviewed companies from each
subgroup, including small and large
companies, subsidiaries and
independent firms, and public and
private corporations. The purpose of the
meetings was to develop an
understanding of how manufacturer
impacts vary with the TSLs. During the
course of the MIA, DOE interviewed
manufacturers representing the majority
of domestic PTAC and PTHP sales.
Many of these same companies also
participated in interviews for the
engineering analysis. However, the MIA
interviews broadened the discussion
from primarily technology-related issues
to include business related topics. One
objective was to obtain feedback from
industry on the assumptions used in the
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GRIM and to isolate key issues and
concerns.
DOE also evaluated the impact of the
energy conservation standards on the
manufacturing impacts of small
businesses. Small businesses, as defined
by the SBA for the PTAC and PTHP
manufacturing industry, are
manufacturing enterprises with 750 or
fewer employees. DOE shared the
interview guides with small
manufacturers and tailored specific
questions for small PTAC and PTHP
manufacturers. See Chapter 13 of the
TSD for details.
2. Government Regulatory Impact Model
Analysis
As mentioned above, DOE uses the
GRIM to quantify changes in cash flow
that result in a higher or lower industry
value. The GRIM analysis uses a
standard, annual-cash-flow analysis that
incorporates manufacturer prices,
manufacturing costs, shipments, and
industry financial information as inputs
and models changes in costs,
distribution of shipments, investments,
and associated margins that would
result from new or amended regulatory
conditions (in this case, standard
levels). The GRIM spreadsheet uses a
number of inputs to arrive at a series of
annual cash flows, beginning with the
base year of the analysis, 2007, and
continuing to 2042. DOE calculated
INPVs by summing the stream of annual
discounted cash flows during this
period.
DOE used the GRIM to calculate cash
flows using standard accounting
principles and to compare changes in
INPV between a base case and different
TSLs (the standards cases). Essentially,
the difference in INPV between the base
case and a standards case represents the
financial impact of the amended energy
conservation standards on
manufacturers. DOE collected this
information from a number of sources,
including publicly available data and
interviews with several manufacturers.
See Chapter 13 of the TSD for details.
3. Manufacturer Interviews
As part of the MIA, DOE discussed
potential impacts of amended energy
conservation standards with
manufacturers responsible for a majority
of PTAC and PTHP sales. The
manufacturers interviewed manufacture
90 percent of the standard size PTACs
and PTHPs and over 50 percent of the
non-standard size PTACs and PTHPs.29
These interviews were in addition to
29 DOE contacted other non-standard size
manufacturers as part of the MIA, but they did not
wish to participate in the MIA process.
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those DOE conducted as part of the
engineering analysis. The interviews
provided valuable information that DOE
used to evaluate the impacts of
amended energy conservation standards
on manufacturers’ cash flows,
manufacturing capacities, and
employment levels.
a. Issues
According to all manufacturers
interviewed, the biggest concern relating
to this rulemaking is the EPA mandated
phase-out of the HCFC refrigerants that
are used in current PTAC and PTHP
equipment. Every manufacturer
interviewed stated that it intends to
switch from the current R–22 refrigerant
to R–410A refrigerant in PTAC and
PTHP equipment, regardless of
equipment class. All manufacturers
interviewed expect to be affected by the
refrigerant phase-out for the following
reasons:
• Availability of R–410A refrigerant
compressors—All of the manufacturers
interviewed stated their concern that
only a small number of compressors
utilizing R–410A refrigerant are or will
be available before the R–22 refrigerant
must be replaced in 2010. Furthermore,
not all current cooling capacities
available in R–22 refrigerant
compressors are or will be available in
R–410A refrigerant versions. In
addition, not all voltages currently
offered by some manufacturers of PTAC
and PTHP equipment are or will be
available in an R–410A refrigerant
version. All manufacturers noted that
the small size of their industry gives
them little to no leverage to encourage
compressor manufacturers to develop
R–410A refrigerant compressors for
them.
• Compressor performance
degradation—According to all
manufacturers of PTAC and PTHP
equipment, R–410A refrigerant
compressors currently on the market
have at least a 0.8 to 1.0 EER compressor
performance degradation relative to the
R–22 refrigerant compressors that they
are intended to replace. The degradation
in compressor performance can be
attributed to several factors including a
reduction in displacement, increase in
complexity, necessity of increase in
strength of the compressor shell, and
use of non-mineral oils. As a result,
some manufacturers anticipate difficulty
initially meeting even the ASHRAE/
IESNA Standard 90.1–1999 efficiency
levels with R–410A-based units.
• Increase in manufacturing costs—
All manufacturers expect their PTAC
and PTHP equipment manufacturing
costs to increase as the sealed-system
portions of the equipment are upgraded
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to handle the higher system pressures
associated with R–410A refrigerant. In
addition to an increase in
manufacturing cost to accommodate
higher working pressures associated
with R–410A refrigerant and increased
refrigerant and compressor costs,
manufacturers are concerned about the
anticipated drop in compressor
efficiency, which would cause them to
incorporate some level of redesign into
their R–410A refrigerant equipment to
help offset this degradation and would
further increase manufacturing costs.
All manufacturers noted that costrecovery is very difficult in this industry
due to intense price competition.
Multiple United States-based
manufacturers noted the entry of
foreign-based competitors as a source
for the intense price competition.
• Combination of regulations—All
manufacturers anticipate that the
combination of the R–22 refrigerant
phase-out and possible amendment of
Federal energy conservation standards
will lead the industry to reduce the
scope of equipment offered. In addition,
several manufacturers anticipate as a
result of the three factors just discussed,
shifts in market share, consolidation
within the industry, and/or the
departure of marginal manufacturers
from the business.
Other manufacturing issues include
the delineation of non-standard size
equipment classes and the timing of the
regulations. First, manufacturers of nonstandard size PTACs and PTHPs
anticipate that, if the ASHRAE/IESNA
Standard 90.1–1999 equipment class
definition (i.e., equipment with wall
sleeve dimensions less than 16 inches
high and less than 42 inches wide) is
adopted by DOE, a significant portion of
the equipment they currently offer for
replacement purposes will be
misclassified as new construction. For
example, a PTAC or PTHP unit with one
of its wall sleeve dimensions less than
the 16 inches high and 42 inches wide
would be classified as standard size
equipment. Manufacturers stated that
these types of units are often sold on
demand as custom order to replace
existing equipment with the same wall
sleeve dimensions. The comments assert
that if DOE adopts the ASHRAE
definitions of standard and nonstandard units, it will force a small
volume of non-standard sleeve size
equipment to meet higher efficiency
levels, intended for standard size
equipment, which these units are
physically unable to meet because of
physical constraints due to the
equipment size. Further, some
manufacturers estimated that up to half
of their equipment lines could be
eliminated if DOE chooses to adopt
ASHRAE’s delineations of equipment
classes.30
Second, the EPA mandated R–22
refrigerant phase-out date (January 1,
2010) and the anticipated effective date
of the DOE amended energy
conservation standards rulemaking
(September 2012) are a concern for all
manufacturers. All manufacturers stated
that, because of the gap between these
dates, as well as the fact that DOE does
not expect to promulgate its rule until
September 30, 2008, each manufacturer
will have to make a separate
development effort to comply with each
of these regulations. Most manufacturers
stated that there could be some gains if
each is able to combine its efforts to
comply with the conversion to R–410A
refrigerant and amended minimum
energy conservation standards. Most
manufacturers were uncertain, however,
of the magnitude of the anticipated
benefit from any such combined effort.
analysis, the GRIM used both the NES
shipments forecasts and a modified
version referred to as the R–410A
shipments forecasts for both standard
size and non-standard size PTACs and
PTHPs from 2007 to 2042. Total
shipments forecasted by the NES for the
base case in 2012 are shown in Table
IV.11 and are further discussed in this
section of today’s notice. DOE allocated
to the closest representative cooling
capacity, in the appropriate equipment
class, any shipments forecasted by the
NES of equipment that was not within
one of the representative cooling
capacities. For example, the total PTAC
or PTHP shipments with a cooling
capacity less than 10,000 Btu/h for
standard size equipment are included
with the 9,000 Btu/h representative
cooling capacity.
TABLE IV.11.—TOTAL NESFORECASTED SHIPMENTS IN 2012
Total
industry
shipments*
Equipment class
(cooling capacities)
Standard Size PTACs (9,000
Btu/h) .....................................
Standard Size PTHPs (9,000
Btu/h) .....................................
Standard Size PTACs (12,000
Btu/h) .....................................
Standard Size PTHPs (12,000
Btu/h) .....................................
Non-Standard Size PTACs .......
Non-Standard Size PTHPs .......
97,900
76,500
144,100
104,400
17,100
12,900
* Estimates rounded to the nearest hundred.
DOE also estimated, in the shipments
analysis, the distribution of efficiencies
in the base case for PTACs and PTHPs.
(See Chapter 10 of the TSD.) Table IV.12
shows one example of the distribution
of efficiencies in the base case for
standard size PTACs with a cooling
capacity of 9,000 Btu/h plus those with
cooling capacities allocated to this
category. The distribution of efficiencies
in the base case for other equipment
classes shown in Chapter 10 of the TSD.
b. Government Regulatory Impact Model
Scenarios and Key Inputs
i. Base Case Shipments Forecast
The GRIM estimates manufacturer
revenues based on total-unit-shipment
forecasts and the distribution of these
values by EER. Changes in the efficiency
mix at each standard level are a key
driver of manufacturer finances. For this
TABLE IV.12.—NES DISTRIBUTION OF SHIPMENTS IN THE BASE CASE FOR STANDARD SIZE PTACS WITH COOLING
CAPACITIES LESS THAN 10,000 BTU/H
TSL
(EER)
Baseline
10.6
mstockstill on PROD1PC66 with PROPOSALS2
Distribution of Shipments (%) ..........................................
19.2
TSL 1, 2, 4
10.9
TSL 3
11.1
18.0
TSL 5
11.3
17.2
16.4
TSL 6
11.5
15.6
TSL 7
12.0
13.5
During the course of the MIA
interviews, DOE asked manufacturers to
comment on the NES shipment
forecasts. For all equipment classes,
manufacturers were in general
agreement with the NES total shipment
30 DOE understands that ARI has submitted a
continuous maintenance proposal to modify the
definitions of non-standard size PTACs and PTHPs,
which was subsequently approved by ASHRAE as
Addendum t to ASHRAE/IESNA Standard 90.1–
2007. As further discussed in section IV.A.2 above,
if ASHRAE is able to adopt Addendum t to
ASHRAE/IESNA Standard 90.1–2007 prior to
September 2008, when DOE must issue a final rule
on this rulemaking, DOE proposes to incorporate
the modified definition into its final rule.
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results. However, their views differed
on the impacts of the refrigerant phaseout on the distribution of efficiencies in
the base case.
Many manufacturers commented that
the NES shipments forecast did not
adequately account for the reduction in
efficiency resulting from the refrigerant
phase-out. Manufacturers believe there
will be a system performance
degradation as characterized in the
engineering analysis. In particular,
manufacturers commented that they
were planning to implement R–410A
refrigerant as a ‘‘drop-in’’ redesign to
meet the initial 2010 deadline. In a
drop-in redesign, manufacturers would
continue to use the current basic R–22
design for the PTAC or PTHP
equipment, and only replace
compressors, refrigerant and make other
minor adjustments.
degradation in system performance that
the engineering analysis estimates will
occur in 2010 (i.e., effective date for the
R–22 refrigerant phase-out).
DOE assumed that manufacturers
with equipment that would fall below
ASHRAE/IESNA Standard 90.1–1999
levels with a drop-in redesign would
nevertheless modify such equipment so
that it would achieve at least these
baseline efficiency levels. As an
example of the impact of the refrigerant
phase-out on the distribution of
efficiencies in the base case, Table IV.13
illustrates the change in the distribution
of efficiencies for standard size PTACs
with a cooling capacity of 9,000 Btu/h
from 2009 to 2010. DOE is seeking
comment about the distribution of
efficiencies in the R–410A base case for
each of the representative cooling
capacities.
DOE considered manufacturers’
concerns with the NES shipments
forecast and derived an alternative
shipments forecast (referred to as the
‘‘R–410A-shipments forecast’’). Several
manufacturers interviewed stated that
total shipments for both standard and
non-standard size equipment would not
be affected by the R–22 refrigerant
phase-out. Therefore, DOE assumed that
the total industry shipments forecasted
in the shipment analysis would not
change due to the refrigerant phase-out
(i.e., DOE assumed the total shipments
of equipment with R–410A refrigerant
would be equal to the total shipments of
equipment with R–22 refrigerant as
forecasted by the NES). Furthermore,
DOE assumed that, for both standard
and non-standard size PTACs and
PTHPs, the distributions by efficiencies
would shift in accordance with the
TABLE IV.13.—R–410A DISTRIBUTION OF EFFICIENCIES AS FORECASTED BY THE NES AND AS FORECASTED BY THE R–
410A-SHIPMENT FORECAST
TSL
(EER)
Baseline
10.6
NES Distribution of Shipments (%) .................................
R–410A-Shipments Forecast Distribution of Shipments
(%) ................................................................................
ii. Standards Case Shipments Forecast
For each standards case, DOE
assumed that shipments at efficiencies
below the projected minimum standard
levels were most likely to roll up to
those efficiency levels in response to an
increase in energy conservation
standards. This scenario assumes that
demand for high efficiency equipment is
a function of its price without regard to
the standard level. In addition, DOE
assumed that manufacturers would not
be able to manufacture equipment
higher than TSL 5 or TSL 6 depending
on equipment class for R–410A
equipment using today’s technology.
For TSLs above TSL 5 or TSL 6
depending on equipment class, DOE
assumed one hundred percent of the
products would be manufactured at the
efficiency levels specified by the TSL.
See Chapter 13 for additional details.
mstockstill on PROD1PC66 with PROPOSALS2
iii. R–410A Base Case and Amended
Energy Conservation Standards Markup
Scenarios
The PTAC and PTHP manufacturer
impact analysis is explicitly structured
to account for the cumulative burden of
sequential refrigerant and amended
energy conservation standards. This
section describes the markup scenarios
DOE used to calculate the base case
INPV after implementation of the R–22
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TSL 1, 2, 4
10.9
TSL 3
11.1
Frm 00030
TSL 6
11.5
TSL 7
12.0
19.2
18.0
17.2
16.4
15.6
13.5
70.9
15.6
0
13.5
0
0
refrigerant phase-out, and the standards
case INPV at each TSL.
DOE learned from interviews with
manufacturers that the majority of
manufacturers offer only one equipment
line. A single equipment line means that
there is no markup strategy used to
differentiate a lower efficiency piece of
equipment from a premium piece of
equipment. Through its analysis of the
PTAC and PTHP industry, DOE also
learned that prices of a PTAC and a
PTHP made by the same manufacturer
at the same cooling capacity do not
demand different pricing strategies.
Therefore, for the R–22 base case
industry cash flow analysis, DOE
assumed a flat markup for all equipment
regardless of whether it is a PTAC or
PTHP and regardless of cooling
capacity.
During interviews, many
manufacturers stated that they have not
been able to recover fully the increased
costs from increased metals prices.
Instead, manufacturers were only able to
recover a percentage of the full increase
in manufacturing production cost. Many
manufacturers believe a similar
situation would happen as a result of
both the R–22 refrigerant phase-out and
amended energy conservation
standards. Therefore, DOE made
different assumptions about how
manufacturers could recoup both
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R–410A refrigerant conversion costs and
the costs associated with amended
energy conservation standards, so that it
could examine the effects of different
cost recovery scenarios.
After discussions with manufacturers,
DOE analyzed two distinct R–410A base
case and amended energy conservation
standards markup scenarios: (1) The flat
markup scenario, and (2) the partial cost
recovery markup scenario. The flat
markup scenario can also be
characterized as the ‘‘preservation of
gross margin percentage’’ scenario.
Under this scenario, DOE applied,
across all TSLs, a single uniform ‘‘gross
margin percentage’’ markup that DOE
believes represents the current markup
for manufacturers in the PTAC and
PTHP industry. This flat markup
scenario implies that, as production
costs increase with efficiency, the
absolute dollar markup will also
increase. DOE calculated that the nonproduction cost markup, which consists
of SG&A expenses, R&D expenses,
interest, and profit, is 1.29. This markup
is consistent with the one DOE used in
the engineering analysis and GRIM
analysis for the base case. The implicit
assumption behind the ‘‘partial cost
recovery’’ scenario is that the industry
can pass-through only part of its
regulatory-driven increases in
production costs to consumers in the
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form of higher prices. DOE implemented
this markup scenario in the GRIM by
setting the non-production cost markups
at each TSL to yield an increase in MSP
equal to half the increase in production
cost. These markup scenarios
characterize the markup conditions
described by manufacturers, and reflect
the range of market responses
manufacturers expect as a result of the
R–22 phase-out and the amended energy
conservation standards. See Chapter 13
of the TSD for additional details of the
markup scenarios.
iv. Equipment and Capital Conversion
Costs
Energy conservation standards
typically cause manufacturers to incur
one-time conversion costs to bring their
production facilities and equipment
designs into compliance with the
amended standards. For the purpose of
the MIA, DOE classified these one-time
conversion costs into two major groups;
equipment conversion and capital
conversion costs. Equipment conversion
expenses are one-time investments in
research, development, testing, and
marketing, focused on making
equipment designs comply with the
new energy conservation standard.
Capital conversion expenditures are
one-time investments in property, plant,
and equipment to adapt or change
existing production facilities so that
new equipment designs can be
fabricated and assembled.
DOE assessed the R&D expenditures
manufacturers would be required to
make at each TSL. It obtained financial
information through manufacturer
interviews and compiled the results in
an aggregated form to mask any
proprietary or confidential information
from any one manufacturer. For both
standard size and non-standard size
PTACs and PTHPs at each TSL, DOE
considered a number of manufacturer
responses. DOE estimated the total
equipment conversion expenditures by
gathering the responses received during
the manufacturer interviews, then
weighted these data by market share for
each industry and, finally, extrapolated
each manufacturer’s R&D expenditures
for each product.
DOE also evaluated the level of
capital conversion costs manufacturers
would incur to comply with amended
energy conservation standards. It
prepared preliminary estimates of the
capital investments required using the
manufacturing cost model. DOE then
used the manufacturer interviews to
gather additional data on the level of
capital investment required at each TSL.
Manufacturers explained how different
TSLs impacted their ability to use
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existing plants, warehouses, tooling,
and equipment. From the interviews,
DOE was able to estimate what portion
of existing manufacturing assets needed
to be replaced and/or reconfigured, and
what additional manufacturing assets
were required to manufacture the higher
efficiency equipment. In most cases,
DOE projects that, as standard levels for
PTACs and PTHPs increase, the
proportion of existing assets that
manufacturers would have to replace
would also increase. Additional
information on the estimated equipment
conversion and capital conversion costs
is set forth in Chapter 13 of the TSD.
J. Employment Impact Analysis
Employment impact is one of the
factors that DOE considers in selecting
a standard. Employment impacts
include direct and indirect impacts.
Direct employment impacts are any
changes in the number of employees for
PTAC and PTHP manufacturers, their
suppliers, and related service firms.
Indirect impacts are those changes of
employment in the larger economy that
occur due to the shift in expenditures
and capital investment that is caused by
the purchase and operation of more
efficient PTAC and PTHP equipment.
The MIA in this rulemaking addresses
only the employment impacts on
manufacturers of PTACs and PTHPs,
i.e., the direct employment impacts (See
Chapter 13 of the TSD); this section
describes other, primarily indirect,
employment impacts.
Indirect employment impacts from
PTAC and PTHP standards consist of
the net jobs created or eliminated in the
national economy, other than in the
manufacturing sector being regulated, as
a consequence of (1) reduced spending
by end users on energy (electricity,
gas—including liquefied petroleum
gas—and oil); (2) reduced spending on
new energy supply by the utility
industry; (3) increased spending on the
purchase price of new PTACs and
PTHPs; and (4) the effects of those three
factors throughout the economy. DOE
expects the net monetary savings from
standards to be redirected to other forms
of economic activity. DOE also expects
these shifts in spending and economic
activity to affect the demand for labor.
In developing this proposed rule, DOE
estimated indirect national employment
impacts using an input/output model of
the United States economy, called
ImSET (Impact of Sector Energy
Technologies) developed by DOE’s
Building Technologies Program. ImSET
is a personal-computer-based,
economic-analysis model that
characterizes the interconnections
among 188 sectors of the economy as
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18887
national input/output structural
matrices, using data from the United
States Department of Commerce’s 1997
Benchmark United States table.31 The
ImSET model estimates changes in
employment, industry output, and wage
income in the overall United States
economy resulting from changes in
expenditures in the various sectors of
the economy. DOE estimated changes in
expenditures using the NES
spreadsheet. ImSET then estimated the
net national indirect employment
impacts of potential PTAC and PTHP
equipment efficiency standards on
employment by sector.
The ImSET input/output model
suggests the proposed PTAC and PTHP
efficiency standards could increase the
net demand for labor in the economy;
the gains would most likely be very
small relative to total national
employment. DOE therefore concludes
only that the proposed PTAC and PTHP
standards are likely to produce
employment benefits that are sufficient
to offset fully any adverse impacts on
employment in the PTAC and PTHP
industry. For more details on the
employment impact analysis, see
Chapter 15 of the TSD.
K. Utility Impact Analysis
The utility impact analysis estimates
the effects of reduced energy
consumption due to improved
equipment efficiency on the utility
industry. This utility analysis consists
of a comparison between forecast results
for a case comparable to the AEO2007
Reference Case and forecasts for policy
cases incorporating each of the PTAC
and PTHP TSLs.
DOE analyzed the effects of proposed
standards on electric utility industry
generation capacity and fuel
consumption using a variant of the
EIA’s NEMS. NEMS, which is available
in the public domain, is a large, multisectoral, partial-equilibrium model of
the United States energy sector. EIA
uses NEMS to produce its AEO, a
widely recognized baseline energy
forecast for the United States. DOE used
a variant known as NEMS–BT.
DOE conducted the utility analysis as
policy deviations from the AEO2007,
applying the same basic set of
assumptions. The utility analysis
reported the changes in installed
capacity and generation—by fuel type—
that result for each TSL, as well as
changes in end-use electricity sales.
Chapter 14 of the TSD provides details
31 Lawson, Ann M., Kurt S. Bersani, Mahnaz
Fahim-Nader, and Jiemin Guo. 2002. ‘‘Benchmark
Input-Output Accounts of the U.S. Economy, 1997,’’
Survey of Current Business, December, pp. 19–117.
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costs of complying with regulatory caps
on emissions.
L. Environmental Analysis
mstockstill on PROD1PC66 with PROPOSALS2
of the utility analysis methods and
results.
M. Discussion of Other Issues
DOE has prepared a draft
Environmental Assessment (EA)
pursuant to the National Environmental
Policy Act and the requirements under
42 U.S.C. 6295(o)(2) to determine the
environmental impacts of the proposed
standards. (42 U.S.C. 6316(a)) As part of
the environmental analysis, DOE
calculated the reduction in power plant
emissions of CO2, NOX and mercury
(Hg), using the NEMS–BT computer
model. The EA has been integrated into
Chapter 16 of the TSD. The analyses do
not include the estimated reduction in
power plant emissions of SO2 because,
as discussed below, any such reduction
resulting from an energy conservation
standard would not affect the overall
level of SO2 emissions in the United
States.
The NEMS–BT is run similarly to the
AEO2007 NEMS, except that PTAC and
PTHP energy usage is reduced by the
amount of energy (by fuel type) saved
due to the TSLs. DOE obtained the
inputs of national energy savings from
the NES spreadsheet model. For the
environmental analysis, the output is
the forecasted physical emissions. The
net benefit of the standard is the
difference between emissions estimated
by NEMS–BT and the AEO2007
Reference Case. The NEMS–BT tracks
CO2 emissions using a detailed module
that provides results with a broad
coverage of all sectors and inclusion of
interactive effects.
In the case of SO2, the Clean Air Act
Amendments of 1990 set an emissions
cap on all power generation. The
attainment of this target, however, is
flexible among generators and is
enforced by applying market forces,
using emissions allowances and
tradable permits. As a result, accurate
simulation of SO2 trading tends to imply
that the effect of energy conservation
standards on physical emissions will be
near zero because emissions will always
be at, or near, the ceiling. Thus, there is
virtually no real possible SO2
environmental benefit from electricity
savings as long as there is enforcement
of the emissions ceilings. However,
although there may not be an actual
reduction in SO2 emissions from
electricity savings, there still may be an
economic benefit from reduced demand
for SO2 emission allowances. Electricity
savings decrease the generation of SO2
emissions from power production, and
consequently can decrease the need to
purchase or generate SO2 emissions
allowance credits. This decreases the
1. Effective Date of the Proposed
Amended Energy Conservation
Standards
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Generally, covered equipment to
which a new or amended energy
conservation standard applies must
comply with the standard if they are
manufactured or imported on or after a
specified date. Section
342(a)(6)(A)(ii)(II) of EPCA directs DOE
to ‘‘establish an amended uniform
national standard for [PTACs and
PTHPs] at the minimum level for each
effective date specified in the amended
ASHRAE Standard 90.1 [–1999 for
PTACs and PTHPs], unless the Secretary
determines, by rule published in the
Federal Register and supported by clear
and convincing evidence, that adoption
of a uniform national standard more
stringent than such amended ASHRAE/
IESNA Standard 90.1 [–1999 for PTACs
and PTHPs] would result in significant
additional conservation of energy and is
technologically feasible and
economically justified.’’ (42 U.S.C.
6313(a)(6)(A)(ii)(II)) In today’s NOPR,
DOE is proposing to adopt a rule
prescribing energy conservation
standards higher than the efficiency
levels contained in ASHRAE/IESNA
Standard 90.1–1999. EPCA states that
any such standards ‘‘shall become
effective for products manufactured on
or after a date which is four years after
the date such rule is published in the
Federal Register.’’ (42 U.S.C.
6313(a)(6)(D)) DOE has applied this
four-year implementation period to
determine the effective date of any
energy conservation standard prescribed
by this rulemaking. Thus, since DOE
expects to issue a final rule in this
proceeding in September 2008 32, the
rule would apply to products
manufactured on or after September
2012, four years from the date of
publication of the final rule. Thus, DOE
calculated the LCCs and PBPs for all
customers as if each one purchased a
new PTAC or PTHP in 2012.
32 This rulemaking is subject to a Consent Decree
filed with the U.S. District Court for the Southern
District of New York to settle the consolidated cases
of State of New York, et al. v. Bodman, and Natural
Resources Defense Council, Inc., et al., (Civ. 7807
(JES) and Civ. 7808 (JES) (S.D.N.Y consolidated
December 6, 2005)), under which DOE is required
to publish a final rule for amended energy
conservation standards for PTACs and PTHPs by
September 30, 2008.
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2. ASHRAE/IESNA Standard 90.1–1999
Labeling Requirement
ASHRAE/IESNA Standard 90.1–1999
established separate categories for
PTACs and PTHPs based on standard
and non-standard size wall sleeve
dimensions. Further, it described
standard size units as being for new
construction and non-standard size
units as being for replacement purposes.
In addition, ASHRAE Standard 90.1–
1999 includes a labeling requirement in
order to differentiate between new
construction and replacement
equipment. Specifically, under
ASHRAE/IESNA Standard 90.1–1999, to
be considered a non-standard size unit
(i.e., replacement), PTACs and PTHPs
must have a sleeve size less than 16
inches high and less than 42 inches
wide, and be labeled as being for
replacement applications only. DOE
believes ASHRAE included a labeling
requirement for PTACs and PTHPs to
help deter less efficient, non-standard
size equipment from being used for new
construction.
Section 344 of EPCA provides the
Secretary with the authority to establish
labeling rules for certain commercial
equipment, including PTACs and
PTHPs. (42 U.S.C. 6315(e)) Section 344
of EPCA directs the Secretary to
consider labeling rules which: (1)
Indicate the energy efficiency of the
equipment on the permanent nameplate
attached to such equipment or on other
nearby permanent marking; (2)
prominently display the energy
efficiency of the equipment in new
equipment catalogs used by the
manufacturer to advertise the
equipment; and (3) include such other
markings as the Secretary determines
necessary solely to facilitate
enforcement of the standards
established for such equipment. (42
U.S.C. 6315(e)) In addition, section 344
of EPCA states that the Secretary shall
not promulgate labeling rules for any
class of industrial equipment, including
PTACs and PTHPs, unless DOE has
determined that:
• Labeling in accordance with this
section is technologically and
economically feasible with respect to
such class;
• Significant energy savings will
likely result from such labeling; and
• Labeling in accordance with this
section is likely to assist consumers in
making purchasing decisions.
(42 U.S.C. 6315(h)).
At this time, DOE is uncertain of the
types of energy use or efficiency
information commercial customers and
owners of PTACs and PTHPs would
find useful for making purchasing
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decisions. Before DOE can establish
labeling rules, it must first ascertain
whether the above-referenced criteria
are met. DOE will work with the Federal
Trade Commission and other
stakeholders to determine the types of
information and the forms (e.g., labels,
fact sheets, or directories) that would be
most useful for commercial customers
and owners of PTACs and PTHPs. DOE
preliminarily believes that a label on
PTAC and PTHP equipment indicating
the equipment class would be useful for
enforcement of both the energy
conservation standards as well as the
building codes and would assist States
and other stakeholders in determining
which application correlates to a given
PTAC or PTHP (based upon size). DOE
anticipates proposing labeling
requirements for PTAC and PTHP
equipment in a separate rulemaking.
DOE invites public comment on the
type of information and other
requirements or factors it should
consider in developing a proposed
labeling rule for PTACs and PTHPs.
V. Analytical Results
A. Trial Standard Levels
Table V.1 presents the baseline
efficiency level and the efficiency level
of each TSL analyzed for standard size
and non-standard size PTACs and
PTHPs subject to today’s proposed rule.
The baseline efficiency levels
correspond to the efficiency levels
specified by the energy efficiency
equations in ASHRAE/IESNA Standard
90.1–1999. TSLs 1, 3, 5, 6 represent
matched pairs of efficiency levels for the
three representative cooling capacities
of PTACs and PTHPs. The efficiency
levels for PTACs and PTHPs with the
same cooling capacity and wall sleeve
dimensions are equal. DOE maintained
the 0.7 EER decrement established by
ASHRAE/IESNA Standard 90.1–1999
between the standard size equipment
with cooling capacities of 9,000 Btu/h
and 12,000 Btu/h. TSL 7 is the
maximum technologically feasible
(‘‘max tech’’) level for each class of
equipment as discussed in section
III.B.2, above. TSLs 2 and 4 combine
different efficiency pairings between
PTACs and PTHPs. In other words, DOE
examined the impacts of amended
energy conservation standards when
PTACs and PTHPs are required to meet
different efficiency levels. For TSL 2,
DOE combined TSL 1 for PTACs and
TSL 3 for PTHPs. For TSL 4, DOE
combined TSL 1 for PTACs and TSL 5
for PTHPs. These two combination
levels serve to maximize LCC savings,
while recognizing the differences in
LCC results for PTACs and PTHPs.
TABLE V.1.—STANDARD SIZE AND NON-STANDARD SIZE PTACS AND PTHPS BASELINE EFFICIENCY LEVELS AND TSLS
Baseline
(ASHRAE/
IESNA Standard 90.1–
1999)
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
TSL 7
MaxTech
EER ....................................
10.6
10.9
10.9
11.1
10.9
11.3
11.5
12.0
EER ....................................
9.9
10.2
10.2
10.4
10.2
10.6
10.8
11.5
EER ....................................
8.6
9.4
9.4
9.7
9.4
10.0
10.7
11.2
EER ....................................
10.4
10.9
11.1
11.1
11.3
11.3
11.5
12.0
COP ....................................
EER ....................................
3.0
9.7
3.1
10.2
3.2
10.4
3.2
10.4
3.3
10.6
3.3
10.6
3.3
10.8
3.5
11.7
COP ....................................
EER ....................................
2.9
8.5
3.0
9.4
3.1
9.7
3.1
9.7
3.1
10.0
3.1
10.0
3.1
10.7
3.3
11.4
COP ....................................
2.6
2.8
2.8
2.8
2.9
2.9
2.9
2.9
Equipment class
(cooling capacity)
Efficiency metric
Standard Size PTAC 9,000
Btu/h.
Standard Size PTAC 12,000
Btu/h.
Non-Standard Size PTAC
11,000 Btu/h.
Standard Size PTHP 9,000
Btu/h.
Standard Size PTHP 12,000
Btu/h.
Non-Standard PTHP 11,000
Btu/h.
As stated in the engineering analysis
(see Chapter 5 of this TSD), current
Federal energy conservation standards
and the efficiency levels specified by
ASHRAE/IESNA Standard 90.1–1999
for PTACs and PTHPs are a function of
the equipment’s cooling capacity. Both
the Federal energy conservation
standards and the efficiency standards
in ASHRAE/IESNA Standard 90.1–1999
are based on equations to calculate the
efficiency levels for PTACs and PTHPs
with a cooling capacity greater than or
equal to 7,000 Btu/h and less than or
equal to 15,000 Btu/h for each
equipment class. To derive the
standards (i.e., efficiency level as a
function of cooling capacity), DOE
plotted the representative cooling
capacities and the corresponding
efficiency levels for each TSL. DOE then
calculated the equation of the line
passing through the EER values for
9,000 Btu/h and 12,000 Btu/h for
standard size PTACs and PTHPs. More
details describing how DOE determined
the energy efficiency equations for each
TSL are found in Chapter 9 of the TSD.
Table V.2 and Table V.3 identify the
energy efficiency equations for each TSL
for standard size PTACs and PTHPs.
mstockstill on PROD1PC66 with PROPOSALS2
TABLE V.2.—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR STANDARD
SIZE PTACS
Standard size** PTACs
Energy efficiency equation*
Baseline ASHRAE/IESNA Standard 90.1–1999 ...............................................................
TSL 1 .................................................................................................................................
TSL 2 .................................................................................................................................
TSL 3 .................................................................................................................................
TSL 4 .................................................................................................................................
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EER
EER
EER
EER
EER
=
=
=
=
=
12.5¥(0.213
13.0¥(0.233
13.0¥(0.233
13.2¥(0.233
13.0¥(0.233
E:\FR\FM\07APP2.SGM
×
×
×
×
×
07APP2
Cap†/1000)
Cap†/1000)
Cap†/1000)
Cap†/1000)
Cap†/1000)
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TABLE V.2.—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR STANDARD
SIZE PTACS—Continued
Standard size** PTACs
Energy efficiency equation*
TSL 5 .................................................................................................................................
TSL 6 .................................................................................................................................
TSL 7 .................................................................................................................................
EER = 13.4¥(0.233 × Cap†/1000)
EER = 13.6¥(0.233 × Cap†/1000)
EER = 13.5¥(0.167 × Cap†/1000)
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature.
TABLE V.3.—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR STANDARD
SIZE PTHPS
Standard size** PTHPs
Energy efficiency equation*
Baseline ASHRAE/IESNA Standard 90.1–1999 ...............................................................
TSL 1 .................................................................................................................................
TSL 2 .................................................................................................................................
TSL 3 .................................................................................................................................
TSL 4 .................................................................................................................................
TSL 5 .................................................................................................................................
TSL 6 .................................................................................................................................
TSL 7 .................................................................................................................................
EER = 12.3¥(0.213 × Cap†/1000)
COP = 3.2¥(0.026 × Cap†/1000)
EER = 13.0¥(0.233 × Cap†/1000)
COP = 3.6¥(0.046 × Cap†/1000)
EER = 13.2¥(0.233 × Cap†/1000)
COP = 3.6¥(0.044 × Cap†/1000)
EER = 13.2¥(0.233 × Cap†/1000)
COP = 3.6¥(0.044 × Cap†/1000)
EER = 13.4¥(0.233 × Cap†/1000)
COP = 3.7¥(0.053 × Cap†/1000)
EER = 13.4¥(0.233 × Cap†/1000)
COP = 3.7¥(0.053 × Cap†/1000)
EER = 13.6¥(0.233 × Cap†/1000)
COP = 3.8¥(0.053 × Cap†/1000)
EER = 12.9¥(0.100 × Cap†/1000)
COP = 4.1¥(0.074 × Cap†/1000)
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at
47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature.
For non-standard size PTACs and
PTHPs, DOE used the ASHRAE/IESNA
Standard 90.1–1999 equation slope and
the representative cooling capacity (i.e.,
11,000 Btu/h cooling capacity) to
determine the energy efficiency
equations corresponding to each TSL.
More details describing how DOE
determined the energy efficiency
equations for each TSL are found in
Chapter 9 of the TSD. Table V.4 and
Table V.5 identify the energy efficiency
equations for each TSL for non-standard
size PTAC and PTHP.
TABLE V.4—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR NON-STANDARD
SIZE PTACS
Non-standard size** PTACs
Energy efficiency equation*
mstockstill on PROD1PC66 with PROPOSALS2
Baseline ASHRAE/IESNA Standard 90.1–1999 ...............................................................
TSL 1 .................................................................................................................................
TSL 2 .................................................................................................................................
TSL 3 .................................................................................................................................
TSL 4 .................................................................................................................................
TSL 5 .................................................................................................................................
TSL 6 .................................................................................................................................
TSL 7 .................................................................................................................................
EER
EER
EER
EER
EER
EER
EER
EER
=
=
=
=
=
=
=
=
10.9
11.7
11.7
12.0
11.7
12.3
13.0
13.5
¥
¥
¥
¥
¥
¥
¥
¥
(0.213
(0.213
(0.213
(0.213
(0.213
(0.213
(0.213
(0.213
×
×
×
×
×
×
×
×
Cap†/1000)
Cap†/1000)
Cap†/1000)
Cap†/1000)
Cap†/1000)
Cap†/1000)
Cap†/1000)
Cap†/1000)
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products.
** Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature.
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TABLE V.5—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR NON-STANDARD
SIZE PTHPS
Non-standard size** PTHPs
Energy efficiency equation*
Baseline ASHRAE/IESNA Standard 90.1–1999 ...............................................................
TSL 1 .................................................................................................................................
TSL 2 .................................................................................................................................
TSL 3 .................................................................................................................................
TSL 4 .................................................................................................................................
TSL 5 .................................................................................................................................
TSL 6 .................................................................................................................................
TSL 7 .................................................................................................................................
EER = 10.8 ¥ (0.213 × Cap†/1000)
COP = 2.9 ¥ (0.026 × Cap†/1000)
EER = 11.7 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
EER = 12.0 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
EER = 12.0 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
EER = 12.3 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
EER = 12.3 ¥ (0.213 × Cap†/1000)
COP = 3.1 ¥ (0.026 × Cap†/1000)
EER = 13.0 ¥ (0.213 × Cap†/1000)
COP = 3.2 ¥ (0.026 × Cap†/1000)
EER = 13.7 ¥ (0.213 × Cap†/1000)
COP = 3.2 ¥ (0.026 × Cap†/1000)
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at
47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps.
** Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature.
For PTACs and PTHPs with cooling
capacity less than 7,000 Btu/h, DOE
determined the EERs using a cooling
capacity of 7,000 Btu/h in the
efficiency-capacity equations. For
PTACs and PTHPs with a cooling
capacity greater than 15,000 Btu/h
cooling capacity, DOE determined the
EERs using a cooling capacity of 15,000
Btu/h in the efficiency-capacity
equations. This is the same method
established in the Energy Policy Act of
1992 and provided in ASHRAE 90.1–
1999 for calculating the EER and COP of
equipment with cooling capacities
smaller than 7,000 Btu/h and larger than
15,000 Btu/h.
are reported in Tables V.6 through V.11
below. The first three outputs are the
proportion of PTAC and PTHP
purchases where the purchase of a
standard-compliant piece of equipment
would create a net LCC increase, no
impact, or a net LCC savings for the
customer. The fourth output is the
average net LCC savings from standardcompliant equipment. Finally, the fifth
output is the average PBP for the
customer investment in standardcompliant equipment.
B. Economic Justification and Energy
Savings
1. Economic Impacts on Commercial
Customers
a. Life-Cycle Cost and Payback Period
DOE’s LCC and PBP analyses
provided five outputs for each TSL that
TABLE V.6.—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTAC WITH A COOLING CAPACITY OF
9,000 BTU/H
Trial standard level
1
3
4
5
6
7
10.9
11
81
8
0
11.6
EER ..........................................................................................................................
PTAC with Net LCC Increase (%) ...........................................................................
PTAC with No Change in LCC (%) .........................................................................
PTAC with Net LCC Savings (%) ............................................................................
Mean LCC Savings* ($) ...........................................................................................
Mean PBP (years) ...................................................................................................
2
10.9
11
81
8
0
11.6
11.1
23
63
14
0
12.5
10.9
11
81
8
0
11.6
11.3
35
46
19
(2)
13.2
11.5
47
29
23
(4)
14.0
12
65
14
22
(13)
16.0
*Numbers in parentheses indicate negative LCC savings, i.e., an increase in LCC.
TABLE V.7.—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTHP WITH A COOLING CAPACITY OF
9,000 BTU/H
Trial standard level
mstockstill on PROD1PC66 with PROPOSALS2
1
EER ................................................................................................................................
PTHP with Net LCC Increase (%) .................................................................................
PTHP with No Change in LCC (%) ...............................................................................
PTHP with Net LCC Savings (%) ..................................................................................
Mean LCC Savings ($) ..................................................................................................
Mean Payback Period (years) .......................................................................................
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2
3
4
5
6
7
10.9
4
81
15
13
4.5
11.1
6
64
30
23
4.0
11.1
6
64
30
23
4.0
11.3
8
47
45
32
3.9
11.3
8
47
45
32
3.9
11.5
15
30
55
30
4.5
12
20
14
66
40
4.8
E:\FR\FM\07APP2.SGM
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TABLE V.8.—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTAC WITH A COOLING CAPACITY OF
12,000 BTU/H
Trial standard level
1
EER ...................................................................................................................
PTAC with Net LCC Increase (%) ....................................................................
PTAC with No Change in LCC (%) ..................................................................
PTAC with Net LCC Savings (%) .....................................................................
Mean LCC Savings* ($) ....................................................................................
Mean PBP (years) ............................................................................................
2
3
4
5
10.2
13
80
7
(1)
13.0
10.2
13
80
7
(1)
13.0
10.4
25
62
13
(3)
13.9
10.2
13
80
7
(1)
13.0
10.6
41
44
15
(7)
14.8
6
10.8
54
28
18
(11)
15.9
7
11.5
75
12
13
(36)
19.8
*Numbers in parentheses indicate negative savings, i.e., an increase in LCC.
TABLE V.9.—SUMMARY LCC AND PBP RESULTS FOR STANDARD SIZE PTHP WITH A COOLING CAPACITY OF
12,000 BTU/H
Trial standard level
1
2
3
4
5
6
7
10.2
5
80
15
15
4.9
10.4
7
62
31
26
4.4
10.4
7
62
31
26
4.4
10.6
15
45
40
22
5.3
10.6
15
45
40
22
5.3
10.8
27
28
45
18
6.1
11.7
45
12
43
8
7.5
EER ...................................................................................................................
PTHP with Net LCC Increase (%) ....................................................................
PTHP with No Change in LCC (%) ..................................................................
PTHP with Net LCC Savings (%) .....................................................................
Mean LCC Savings ($) .....................................................................................
Mean PBP (years) ............................................................................................
TABLE V.10.—SUMMARY LCC AND PBP RESULTS FOR NON-STANDARD SIZE PTACS WITH A COOLING CAPACITY OF
11,000 BTU/H
Trial standard level
1
2
3
4
5
6
7
9.4
3
80
17
27
4.2
9.4
3
80
17
27
4.2
9.7
9
62
30
31
4.9
9.4
3
80
16
27
4.2
10
16
44
40
33
5.7
10.7
33
27
40
26
7.8
11.2
48
12
40
12
9.6
EER ...................................................................................................................
PTAC with Net LCC Increase (%) ....................................................................
PTAC with No Change in LCC (%) ..................................................................
PTAC with Net LCC Savings (%) .....................................................................
Mean LCC Savings ($) .....................................................................................
Mean PBP (years) ............................................................................................
TABLE V.11.—SUMMARY LCC AND PBP RESULTS FOR NON-STANDARD SIZE PTHPS WITH A COOLING CAPACITY OF
11,000 BTU/H
Trial Standard level
1
2
3
4
5
6
7
9.4
0
81
19
61
2.0
9.7
2
62
36
66
2.6
9.7
2
62
36
66
2.6
10
3
45
53
81
2.8
10
3
45
53
80
2.8
10.7
14
27
59
74
4.2
11.4
29
12
59
53
5.8
mstockstill on PROD1PC66 with PROPOSALS2
EER ...................................................................................................................
PTHP with Net LCC Increase (%) ....................................................................
PTHP with No Change in LCC (%) ..................................................................
PTAC with Net LCC Savings (%) .....................................................................
Mean LCC Savings ($) .....................................................................................
Mean PBP (years) ............................................................................................
For PTACs and PTHPs with a cooling
capacity less than 7,000 Btu/h, DOE
established the proposed energy
conservation standards using a cooling
capacity of 7,000 Btu/h in the proposed
efficiency-capacity equation. DOE
believes the LCC and PBP impacts for
equipment in this category will be
similar to the impacts of the 9,000 Btu/
h units because the MSP and usage
characteristics are in a similar range.
Similarly, for PTACs and PTHPs with a
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cooling capacity greater than 15,000
Btu/h, DOE established the proposed
energy conservation standards using a
cooling capacity of 15,000 Btu/h in the
proposed efficiency-capacity equation.
Further, for PTACs and PTHPs with a
cooling capacity greater than 15,000
Btu/h, DOE believes the impacts will be
similar to units with a cooling capacity
of 12,000 Btu/h. More details explaining
how DOE developed the proposed
energy efficiency equations based on the
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analysis results for the representative
cooling capacities are provided in
Section V.A of today’s notice.
b. Life-Cycle Cost Sub-Group Analysis
Using the LCC spreadsheet model,
DOE determined the impact of the TSLs
on the following customer subgroup:
small businesses. Table V.12 shows the
mean LCC savings from proposed
energy conservation standards, and
Table V.13 shows the mean payback
E:\FR\FM\07APP2.SGM
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period (in years) for this subgroup. More
detailed discussion on the LCC
subgroup analysis and results can be
found in Chapter 12 of the TSD.
TABLE V.12.—MEAN LIFE-CYCLE COST SAVINGS FOR PTAC OR PTHP EQUIPMENT PURCHASED BY LCC SUB-GROUPS
(2006$)
TSL
1
Equipment class (cooling capacity)
Standard Size PTAC (9,000 Btu/h) ...................................................
Standard Size PTHP (9,000 Btu/h) ...................................................
Standard Size PTAC (12,000 Btu/h) .................................................
Standard Size PTHP (12,000 Btu/h) .................................................
Non-Standard Size PTAC ..................................................................
Non-Standard Size PTHP ..................................................................
TSL
2
($1)
10
(2)
11
22
53
TSL
3
($1)
19
(2)
20
22
56
TSL
4
($2)
19
(5)
20
25
56
TSL
5
($1)
26
(2)
16
22
69
TSL
6
($4)
26
(9)
16
26
69
TSL
7
($7)
23
(15)
11
16
60
($17)
30
(42)
(4)
1
37
*Numbers in parentheses indicate negative savings.
TABLE V.13.—MEAN PAYBACK PERIOD FOR PTAC OR PTHP EQUIPMENT PURCHASED BY LCC SUB-GROUPS (YEARS)
TSL
1
Equipment class (cooling capacity)
Standard Size PTAC (9,000 Btu/h) .................................................................
Standard Size PTHP (9,000 Btu/h) .................................................................
Standard Size PTAC (12,000 Btu/h) ...............................................................
Standard Size PTHP (12,000 Btu/h) ...............................................................
Non-Standard Size PTAC ................................................................................
Non-Standard Size PTHP ................................................................................
For PTACs and PTHPs with a cooling
capacity less than 7,000 Btu/h, DOE
believes that the LCC and PBP impacts
for equipment in this category will be
similar to the impacts of the 9,000 Btu/
h units because the MSP and usage
characteristics are in a similar range.
Similarly, for PTACs and PTHPs with a
cooling capacity greater than 15,000
TSL
2
11.5
4.5
12.9
4.9
4.2
2.0
TSL
3
11.5
4.0
12.9
4.4
4.2
2.6
TSL
4
12.4
4.0
13.8
4.4
4.9
2.6
TSL
5
11.5
3.9
12.9
5.2
4.2
2.8
13.2
3.9
14.7
5.2
5.7
2.8
TSL
6
13.9
4.5
15.7
6.1
7.8
4.2
TSL
7
15.9
4.8
19.7
7.5
9.5
5.8
Btu/h, DOE believes the impacts will be
similar to units with a cooling capacity
of 12,000 Btu/h. See chapter 5 of the
TSD for how we selected representative
capacities that were analyzed.
PTHP manufacturers. (See TSD, Chapter
13.)
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate
the impact of amended energy
conservation standards on PTAC and
Table V.14 and Table V.15 show the
MIA results for each TSL using both
markup scenarios described above for
standard size PTACs and PTHPs.33
a. Industry Cash Flow Analysis Results
i. Standard Size PTACs and PTHPs
TABLE V.14.—MANUFACTURER IMPACT ANALYSIS FOR STANDARD SIZE PTACS AND PTHPS UNDER THE FLAT MARKUP
SCENARIO
R–410A full cost recovery with amended energy standards full recovery of increased cost
INPV ..............................................
Change in INPV ............................
mstockstill on PROD1PC66 with PROPOSALS2
R–410A Equipment Conversion
Expenses *.
R–410A Capital Conversion Expenses *.
Amended Energy Conservation
Standards Equipment Conversion Expenses.
Amended Energy Conservation
Standards Capital Conversion
Expenses.
Total Investment Required **
Trial standard level
Base
case
1
2
3
4
5
6
7
(2006$ millions) .............................
(2006$ millions) .............................
(%) ................................................
(2006$ millions) .............................
305
..........
..........
14.0
305
(0)
¥0.1
............
303
(2)
¥0.8
............
306
1
0.2
..........
300
(5)
¥1.5
............
308
3
0.9
..........
304
(1)
¥0.2
............
314
9
3.1
..........
(2006$ millions) .............................
7.0
............
............
..........
............
..........
............
..........
(2006$ millions) .............................
..........
4.4
7.2
6.1
10.3
7.0
13.1
17.5
(2006$ millions) .............................
..........
3.4
5.6
4.7
7.9
5.4
10.1
13.5
(2006$ millions) .............................
..........
28.8
33.8
31.9
39.2
33.4
44.3
52.2
Units
* Equipment conversion expenses and capital conversion expenses for converting PTACs and PTHPs to R–410A are made in 2009 and accounted for in the base case.
** Total investment calculates both the equipment conversion expenses and the capital investments necessary for both converting PTACs and
PTHPs to R–410A and complying with amended energy conservation standards.
33 The MIA estimates the impacts on standard
size manufacturers of equipment in the entire range
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of cooling capacities (i.e., the MIA results in Tables
V.15 and V.16 take into consideration the impacts
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on manufacturers of equipment from all 6 standard
size equipment classes).
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TABLE V.15.—MANUFACTURER IMPACT ANALYSIS FOR STANDARD SIZE PTACS AND PTHPS UNDER THE PARTIAL COST
RECOVERY MARKUP SCENARIO
R–410A base case full cost recovery with amended energy standards partial cost recovery
Trial standard level
Base
case
1
2
3
4
5
6
7
(2006$ millions) .........................
(2006$ millions) .........................
(%) .............................................
(2006$ millions) .........................
305
..........
..........
14.0
268
(37)
¥12.1
............
257
(48)
¥15.7
............
250
(55)
¥18.1
............
249
(56)
¥18.3
............
236
(69)
¥22.7
............
210
(95)
¥31.2
............
139
(166)
¥54.5
............
(2006$ millions) .........................
7.0
............
............
............
............
............
............
............
(2006$ millions) .........................
..........
4.4
7.2
6.1
10.3
7.0
13.1
17.5
(2006$ millions) .........................
..........
3.4
5.6
4.7
7.9
5.4
10.1
13.5
(2006$ millions) .........................
..........
28.8
33.8
31.9
39.2
33.4
44.3
52.2
Units
INPV ...........................................
Change in INPV ..........................
R–410A Equipment Conversion
Expenses *.
R–410A Capital Conversion Expenses *.
Amended Energy Conservation
Standards Equipment Conversion Expenses.
Amended Energy Conservation
Standards Capital Conversion
Expenses.
Total Investment Required **
mstockstill on PROD1PC66 with PROPOSALS2
* Equipment conversion expenses and capital conversion expenses for converting PTACs and PTHPs to R–410A are made in 2009 and accounted for in the base case.
** Total investment calculates both the equipment conversion expenses and the capital investments necessary for both converting PTACs and
PTHPs to R–410A and complying with amended energy conservation standards.
For the results shown above, DOE
examined only the impacts of amended
energy conservation standards on the
INPV. The results shown assume that
manufacturers are able to recover all of
costs associated with the conversion to
R–410A refrigerant, which allows DOE
to examine the impacts of the refrigerant
phase-out separately in the cumulative
regulatory burden analysis. DOE also
estimated the impacts of amended
energy conservation standards when
manufacturers were only able to recover
part of the costs associated with the
conversion to R–410A and presented the
results in the TSD. See Chapter 13 of the
TSD for a complete summary of results
including the cumulative regulatory
burden analysis.
At TSL 1, the impact on INPV and
cash flow varies greatly depending on
the manufacturers and their ability to
pass on increases in MPCs to the
customer. DOE estimated the impacts in
INPV at TSL 1 to range from less than
¥$1 million up to ¥$37 million, or a
change in INPV of negative 0.1 percent
up to negative 12.1 percent. At this
level, the industry cash flow decreases
by approximately 25 percent, to $9
million, compared to the base case value
of $12 million in the year leading up to
the standards. Since more than 75
percent of PTAC and PTHP market is at
or above the efficiency levels specified
by TSL 1 using the R–22 refrigerant,
those manufacturers that do not fall
below the efficiency levels specified by
TSL 1 after the refrigerant phase-out
will not have to make additional
modifications to their product lines to
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conform to the amended energy
conservation standards. DOE expects
the lower end of the impacts to be
reached, which indicates that industry
revenues and costs are not significantly
negatively impacted as long as
manufacturers are able to recover fully
the increase in manufacturer production
cost from the customer.
At TSL 2, the impact on INPV and
cash flow would be similar to TSL 1 and
dependent on whether manufacturers
are able to recover fully the increases in
MPCs from the customer. DOE
estimated the impacts in INPV at TSL 2
to range from ¥$2 million up to ¥$48
million, or a change in INPV of ¥0.8
percent up to ¥15.7 percent. At this
level, the industry cash flow decreases
by approximately 33 percent, to $8
million, compared to the base case value
of $12 million in the year leading up to
the standards. Up to 75 percent of
PTACs and up to 50 percent of PTHPs
being sold are already at or above this
level using R–22 refrigerant. Similar to
TSL 1 for PTACs, manufacturers whose
equipment does not fall below the
efficiency levels specified by TSL 1 after
the refrigerant phase-out will not have
to make additional modifications to
their product lines to conform to TSL 2.
For PTHPs, the required higher level of
efficiency will cause some manufactures
to make additional modifications to
their product lines to conform to the
amended energy conservation
standards. These additional plant and
product modifications are estimated in
the capital and product conversion costs
shown in Tables V.14 and V. 15. Even
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though TSL 2 requires efficiency levels
that are different for PTACs and PTHPs,
there are small differences between the
EER values for a given capacity in sleeve
size, which will minimize the amount of
redesign manufacturers will have to
undertake to modify their product lines.
DOE expects the impacts of TSL 2 on
manufacturers of standard size PTACs
will be greater than TSL 1, but the
magnitude of impacts largely depends
on the ability of manufacturers to
recover fully the increase in MPC from
the customer and minimize the level of
redesign between the two efficiency
levels.
At TSL 3, the impact on INPV and
cash flow continues to vary depending
on the manufacturers and their ability to
pass on increases in MPCs to the
customer. DOE estimated the impacts in
INPV at TSL 3 to range from
approximately positive $1 million to
¥$55 million, or a change in INPV of
0.2 percent to ¥18.1 percent. At this
level, the industry cash flow decreases
by approximately 33 percent, to $8
million, compared to the base case value
of $12 million in the year leading up to
the standards. Currently the bulk of the
equipment being sold is already at or
above this level using R–22 refrigerant.
DOE does not expect industry revenues
and costs to be impacted significantly as
long as standard size PTAC and PTHP
manufacturers are able the increase in
manufacturer production cost from the
customer. The positive INPV value is
explained by increases in MSP due to
higher costs of R–410A equipment,
which DOE assumed under this scenario
E:\FR\FM\07APP2.SGM
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that manufacturers would be able to
recover fully the investments needed for
conversion to R–410A. See Chapter 13
of the TSD for additional details of each
markup scenario.
At TSL 4, DOE estimated the impacts
in INPV to range from approximately
¥$5 million to ¥$56 million, or a
change in INPV of ¥1.5 percent up to
¥18.3 percent. At this level, the
industry cash flow decreases by
approximately 50 percent, to $6 million,
compared to the base case value of $12
million in the year leading up to the
standards. At higher TSLs,
manufacturers have a harder time fully
passing on larger increases in MPCs to
the customer. At to TSL 4,
manufacturers are concerned about
whether they will be able to produce
PTHPs, by the effective date of the
standard, that use R–410A refrigerant.
Using the performance degradations
from the engineering analysis, TSL 4 for
PTHPs using R–410A would correspond
to the ‘‘max-tech’’ efficiency levels for
PTHPs unless higher efficiency
compressors enter the market prior to
the effective date of an amended energy
conservation standard. Based on
information submitted by industry,
manufacturers would be required to
redesign completely their PTHP
equipment lines. Since most
manufacturers only manufacture one
product line, and combine their R&D
efforts for PTACs and PTHPs into one
design, manufacturers would likely
choose to redesign their entire
equipment offering. Similar to TSL 1,
for PTACs, manufacturers that do not
fall below TSL 1 after the refrigerant
phase-out will not have to make
additional modifications to their PTAC
equipment lines to conform to TSL 4.
Due to the disparity between efficiency
levels of standard size PTACs and
PTHPs specified by TSL 4, DOE initially
believes that it is more likely that the
higher end of the range of impacts could
be reached (i.e., a drop of 18.3 percent
in INPV).
At TSL 5, DOE estimated the impacts
in INPV to range from approximately $3
million up to ¥$69 million, or a change
in INPV of approximately 1 percent up
to ¥22.7 percent. At this level, the
industry cash flow decreases by
approximately 33 percent, to $8 million,
compared to the base case value of $12
million in the year leading up to the
standards. As with TSL 4, standard size
PTAC and PTHP manufacturers
continue to have a hard time fully
passing on larger increases in MPCs to
the customer. At TSL 5, manufacturers
stated their concerns over the ability to
be able to produce both PTACs and
PTHPs by the effective date of the
standard utilizing R–410A refrigerant.
Using the performance degradations
from the engineering analysis, TSL 5
would correspond to the ‘‘max-tech’’
efficiency levels for both PTACs and
PTHPs using R–410A unless higher
efficiency compressors enter the market
prior to the effective date of an amended
energy conservation standard. Based on
information submitted by industry, the
majority of manufacturers would require
a complete redesign of their equipment.
Thus, DOE believes it is likely that the
higher range of the impacts could be
reached.
At TSL 6, DOE estimated the impacts
in INPV to range from ¥$1 million up
to ¥$95 million, or a change in INPV
of approximately ¥0.2 percent up to
¥31.2 percent. At this level, the
industry cash flow decreases by
approximately 66 percent, to $4 million,
compared to the base case value of $12
million in the year leading up to the
standards. At higher TSLs,
manufacturers have a harder time fully
passing on larger increases in MPCs to
the customer, and therefore
manufacturers expect the higher end of
the range of impacts to be reached (i.e.,
a drop of 31.2 percent in INPV). TSL 6
requires the production of standard size
PTACs and PTHPs using R–410A that
are not currently available on the market
today assuming the system performance
degradations estimated in the
engineering analysis. If manufacturers
do not have the ability to integrate a
high efficiency R–410A compressor into
the PTACs and PTHPs, the impacts
could be greater than characterized by
DOE’s MIA analysis.
At TSL 7 (max tech), DOE estimated
the impacts in INPV to range from $9
million up to ¥$166 million, or a
change in INPV of approximately 3
percent up to ¥54.5 percent. At this
level, the industry cash flow decreases
by approximately 92 percent, to $1
million, compared to the base case value
of $12 million in the year leading up to
the standards. At higher TSLs,
manufacturers have a harder time fully
passing on larger increases in MPCs to
the customer, and therefore
manufacturers expect the higher end of
the range of impacts to be reached (i.e.,
a drop of 31.2 percent in INPV).
Currently, there is only one model being
manufactured at these efficiency levels,
which uses R–22 refrigerant. Most
manufacturers did not provide DOE
with projected equipment conversion
costs or capital conversion costs at this
level, since they could not conceive of
what designs using R–410A might
achieve this efficiency level. The
industry would experience an increase
in net present value if it were able to
fully pass through to customers the
increase in production costs associated
with meeting new amended energy
conservation standards. However, there
is a risk of very large negative impacts
if manufacturers’ expectations are
realized about reducing profit margins.
During the interviews, manufacturers
expressed disbelief at the possibility of
manufacturing an entire equipment line
at the max-tech levels using R–410A
refrigerant.
ii. Non-Standard Size PTACs and
PTHPs
Table V.16 and Table V.17 shows the
MIA results for each TSL using both
markup scenarios described above for
non-standard size PTACs and PTHPs.34
TABLE V.16.—MANUFACTURER IMPACT ANALYSIS FOR NON-STANDARD SIZE PTACS AND PTHPS UNDER FULL COST
RECOVERY MARKUP SCENARIO
R–410A full cost recovery with amended energy standards full recovery of increased cost
Base
case
mstockstill on PROD1PC66 with PROPOSALS2
Units
INPV ...............................
Change in INPV .............
(2006$ millions) .............
(2006$ millions) .............
(%) .................................
34 The MIA estimates the impacts on nonstandard size manufacturers of equipment in the
entire range of cooling capacities (i.e., the MIA
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Jkt 214001
28
..........
..........
Trial standard level
1
25
(2)
¥7.7
2
22
(5)
¥18.5
3
23
(4)
¥15.7
results in Tables V.15 and V.16 take into
consideration the impacts on manufacturers of
PO 00000
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Sfmt 4702
4
5
18
(9)
¥34.2
21
(7)
¥24.6
6
18
(9)
¥32.9
7
16
(11)
¥40.6
equipment from all 6 non-standard size equipment
classes).
E:\FR\FM\07APP2.SGM
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TABLE V.16.—MANUFACTURER IMPACT ANALYSIS FOR NON-STANDARD SIZE PTACS AND PTHPS UNDER FULL COST
RECOVERY MARKUP SCENARIO—Continued
R–410A full cost recovery with amended energy standards full recovery of increased cost
Trial standard level
Base
case
Units
1
2
3
4
5
6
7
R–410A Equipment Conversion Expenses *.
R–410A Capital Conversion Expenses *.
Amended Energy Conservation Standards
Equipment Conversion
Expenses.
Amended Energy Conservation Standards
Capital Conversion Expenses.
(2006$ millions) .............
0.6
............
................
................
................
................
................
................
(2006$ millions) .............
7.0
............
................
................
................
................
................
................
(2006$ millions) .............
..........
2.5
6.3
5.6
10.6
8.8
11.9
15.0
(2006$ millions) .............
..........
1.3
2.2
1.9
3.5
2.6
3.2
3.9
Total Investment Required **.
(2006$ millions) .............
..........
11.4
16.1
15.1
21.7
18.9
22.7
26.5
* Equipment conversion expenses and capital conversion expenses for converting PTACs and PTHPs to R–410A are made in 2009 and accounted for in the base case.
** Total investment calculates both the equipment conversion expenses and the capital investments necessary for both converting PTACs and
PTHPs to R–410A and complying with amended energy conservation standards.
TABLE V.17.—MANUFACTURER IMPACT ANALYSIS FOR NON-STANDARD SIZE PTACS AND PTHPS UNDER THE PARTIAL
COST RECOVERY MARKUP SCENARIO
R–410A Base case full cost recovery with amended energy standards partial cost recovery
INPV .............................
Change in INPV ............
R–410A Equipment
Conversion Expenses *.
R–410A Capital Conversion Expenses *.
Amended Energy Conservation Standards
Equipment Conversion Expenses.
Amended Energy Conservation Standards
Capital Conversion
Expenses.
Total Investment
Required **.
Trial standard level
Base
case
1
2
3
4
5
6
7
(2006$ millions) ...........
(2006$ millions) ...........
(%) ...............................
(2006$ millions) ...........
28
..........
..........
0.6
23
(4)
¥14.8
................
20
(7)
¥26.9
................
20
(7)
¥25.7
................
15
(12)
¥43.9
................
17
(10)
¥37.5
................
13
(15)
¥53.4
................
7
(21)
¥74.7
................
(2006$ millions) ...........
7.0
................
................
................
................
................
................
................
(2006$ millions) ...........
..........
2.5
6.3
5.6
10.6
8.8
11.9
15.0
(2006$ millions) ...........
..........
1.3
2.2
1.9
3.5
2.6
3.2
3.9
(2006$ millions) ...........
..........
11.4
16.1
15.1
21.7
18.9
22.7
26.5
Units
mstockstill on PROD1PC66 with PROPOSALS2
* Equipment conversion expenses and capital conversion expenses for converting PTACs and PTHPs to R–410A are made in 2009 and accounted for in the base case.
** Total investment calculates both the equipment conversion expenses and the capital investments necessary for both converting PTACs and
PTHPs to R–410A and complying with amended energy conservation standards.
For the results shown above, DOE
examined only the impacts of amended
energy conservation standards on the
INPV. The results shown assume that
manufacturers are able to recover all of
costs associated with the conversion to
R–410A refrigerant, which allows DOE
to examine the impacts of the refrigerant
phase-out separately in the cumulative
regulatory burden analysis. See Chapter
13 of the TSD for a complete summary
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of results including the cumulative
regulatory burden analysis.
At TSL 1, DOE estimated the impacts
in INPV to range from less than ¥$2
million up to ¥$4 million, or a change
in INPV of ¥7.7 percent up to ¥14.8
percent. At this level, the industry cash
flow decreases by approximately 50
percent, $1 million, compared to the
base case value of $2 million in the year
leading up to the standards. Since more
PO 00000
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than half of the equipment being sold is
already at or above this level using R–
22 refrigerant, those manufacturers that
do not fall below TSL 1 using R–410A
refrigerant will not have to make
additional modifications to their
product lines to conform to the
amended energy conservation
standards. At TSL 1, the results of the
analysis show the least impact on
manufacturers.
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At TSL 2, DOE estimated the impacts
in INPV to range from ¥$5 million up
to ¥$7 million, or a change in INPV of
¥18.5 percent up to ¥26.9 percent. At
this level, the industry cash flow
decreases by approximately 150 percent,
¥$1 million, compared to the base case
value of $2 million in the year leading
up to the standards. At this level, the
majority of the industry is impacted. At
higher TSLs, manufacturers have a
harder time fully passing on larger
increases in MPCs to the customer, thus
manufacturers expect the higher end of
the range of impacts to be reached (i.e.,
a drop of 26.9 percent in INPV).
At TSL 3, DOE estimated the impacts
in INPV to range from ¥$4 million up
to ¥$7 million, or a change in INPV of
¥15.7 percent up to ¥25.7 percent. At
this level, the industry cash flow
decreases by approximately 150 percent,
¥$1 million, compared to the base case
value of $2 million in the year leading
up to the standards. At higher TSLs,
manufacturers continue to have a hard
time fully passing on larger increases in
MPCs to the customer, thus
manufacturers expect the higher end of
the range of impacts to be reached (i.e.,
a drop of 25.7 percent in INPV).
Manufacturers stated that the level of redesign required to manufacture all the
equipment lines and cooling capacity
ranges would be so extensive that they
would consider not investing the time,
research, or development efforts
necessary to make equipment utilizing
R–410A at TSL 3.
At TSL 4, DOE estimated the impacts
in INPV to range from ¥$9 million up
to ¥$12 million, or a change in INPV
of ¥34.2 percent up to ¥43.9 percent.
At this level, the industry cash flow
decreases by approximately 250 percent,
¥$3 million, compared to the base case
value of $2 million in the year leading
up to the standards. At TSL 4,
manufacturers stated their concerns
over the ability to be able to produce
PTHPs by the effective date of the
standard utilizing R–410A refrigerant.
Using the performance degradations
from the engineering analysis, TSL 4 for
PTHPs would correspond to the ‘‘maxtech’’ efficiency levels for PTHPs unless
higher efficiency compressors enter the
market prior to the effective date of an
amended energy conservation standard.
Based on information submitted by
industry, manufacturers would be
required to redesign completely their
PTHP equipment lines.
At TSL 5, DOE estimated the impacts
in INPV to range from ¥$7 million up
to ¥$10 million, or a change in INPV
of ¥24.6 percent up to ¥37.5 percent.
At this level, the industry cash flow
decreases by approximately 200 percent,
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¥$2 million, compared to the base case
value of $2 million in the year leading
up to the standards. Using the
performance degradations from the
engineering analysis, TSL 5 for PTACs
and PTHPs would correspond to the
‘‘max-tech’’ efficiency levels for PTHPs
unless higher efficiency compressors
enter the market prior to the effective
date of an amended energy conservation
standard.
At TSL 6, DOE estimated the impacts
in INPV to range from ¥$9 million up
to ¥$15 million, or a change in INPV
of ¥32.9 percent up to ¥53.4 percent.
At this level, the industry cash flow
decreases by approximately 300 percent,
¥$4 million, compared to the base case
value of $2 million in the year leading
up to the standards.
At TSL 5 and 6, manufacturers stated
their concerns over the ability to be able
to produce this equipment by the
effective date of the standard utilizing
R–410A. Based on information
submitted by industry, manufacturers
would require a complete redesign of
their non-standard PTAC and PTHP
platforms. Many manufacturers stated
they would be unwilling to redesign
completely non-standard size
equipment because of the small size of
the market and the declining sales.
Manufacturers also commented nonstandard size PTACs and PTHPs are
manufactured to order based on unique
building designs for replacement
applications. Therefore, manufacturers
did not see the advantage to completely
redesigning non-standard size PTACs
and PTHPs in small and declining
market.
At TSL 7, DOE estimated the impacts
in INPV to range from ¥$11 million up
to ¥$21 million, or a change in INPV
of ¥40.6 percent up to ¥74.7 percent.
At this level, the industry cash flow
decreases by approximately 350 percent,
¥$5 million, compared to the base case
value of $2 million in the year leading
up to the standards. During their MIA
interviews, all manufacturers stated that
this level is simply not achievable with
current technologies after the refrigerant
phase-out. In addition, some
manufacturers would not provide
equipment conversion cost or capital
conversion costs at this level, since they
could not conceive what designs might
reach this efficiency level.
Lastly, non-standard size
manufacturers stated great concern over
the amplification of impacts if
ASHRAE/IESNA Standard 90.1–1999
definitions are adopted by DOE and
their equipment lines are reduced.
Several manufacturers believe the
ASHRAE/IESNA Standard 90.1–1999
definitions would cause up to 50
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18897
percent of their equipment lines to be
misclassified. Consequently, this
equipment would be required to meet
the higher energy conservation
standards for standard size equipment,
which manufacturers do not believe is
attainable with non-standard size
equipment. If manufacturers’
expectations were reached with a
declining equipment offering, the INPV
and cash flow impacts of the declining
industry as estimated by the MIA would
be further negatively affected.
b. Cumulative Regulatory Burden
While any one regulation may not
impose a significant burden on
manufacturers, the combined effects of
several impending regulations may have
serious consequences for some
manufacturers, groups of manufacturers,
or an entire industry. Assessing the
impact of a single regulation may
overlook this cumulative regulatory
burden.
As previously mentioned, all PTAC
and PTHP manufacturers believe that
the refrigerant phase-out will be the
biggest external burden on
manufacturers. DOE took all comments
and concerns into consideration and
examined different impacts the
refrigerant phase-out would have on
standard and non-standard size PTAC
and PTHP industries. DOE first
examined the possible impacts on INPV
from converting current production of
R–22 equipment into R–410A
equipment. DOE then examined the
possible impacts of amended energy
conservation standards on the R–410A
base case. In other words, DOE
examined the cumulative impacts of
both R–410A conversion and
compliance with the proposed energy
conservation standards (see Chapter 13
of the TSD). Table V.18 and Table V.19
show the changes in INPV because of
conversion to R–410A in 2012 on the
base case (i.e., the shipments forecast in
the absence of amended mandatory
energy conservation standards beyond
the levels in ASHRAE/IESNA Standard
90.1–1999). For the results presented in
the two tables below, DOE assumed
manufacturers would be able to cover
fully any increase in manufacturing
costs associated with the conversion to
R–410A in 2010. DOE also estimated the
impacts on the base case from the R–
410A conversion if manufacturers were
not able to recover fully the increases in
MPCs and displayed the results in
Chapter 13 of the TSD. In general, if
manufacturers were not able to recover
fully the increases in MPC because of
the R–410A conversion, the impacts on
the base case would be amplified.
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TABLE V.18.—CHANGES IN INDUSTRY NET PRESENT VALUE FOR STANDARD SIZE PTACS AND PTHPS FROM R–410A
CONVERSION
Energy conservation standards
flat markup
Change in INPV
from base case
TSL
INPV
$MM
$MM
Base Case (R–22 only) .......................................................................................................................................
Base Case (R–22 with R–410A Conversion) ......................................................................................................
298
305
%
Change
................
7
................
2.3%
TABLE V.19.—CHANGES IN INDUSTRY NET PRESENT VALUE FOR NON-STANDARD SIZE PTACS AND PTHPS FROM R–
410A CONVERSION
Energy conservation standards
flat markup
Change in INPV
from base case
TSL
INPV
$MM
$MM
Base Case (R–22 only) .......................................................................................................................................
Base Case (R–22 with R–410A Conversion) ......................................................................................................
c. Impacts on Employment
DOE estimated industry-wide labor
expenditures based on the engineering
analysis. Coil fabrication; tube cutting
and soldering; electronic connection
assembly; package assembly; testing and
packing of the completed PTAC or
PTHP represent the bulk of the labor.
DOE estimated the amount of labor
needed to perform these functions, and
incorporated these estimates into the
GRIM, which projects labor
expenditures annually. Under the
GRIM, total labor expenditures are a
function of the labor intensity in
manufacturing equipment, the sales
volume, and the unit cost of labor (i.e.,
the wage rate), which remains fixed in
32
28
%
Change
................
(4)
................
¥12.5%
real terms over time. Table V.20 and
Table V.21 provide DOE’s estimate of
the changes in labor measured as the
change in labor expenditures for
standard and non-standard size PTACs
and PTHPs in 2012, the date DOE
expects the amended energy
conservation standard to become
effective, compared to the base case.
TABLE V.20.—PROJECTED CHANGE IN LABOR EXPENDITURES, STANDARD SIZE PTACS AND PTHPS (2012)
Trial standard levels
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
+1.9% .......................................................................................................................
+2.4%
+3.0%
+2.9%
+4.3%
+5.7%
TSL 7
+11.5%
TABLE V.21.—PROJECTED CHANGE IN LABOR EXPENDITURES, NON-STANDARD SIZE PTACS AND PTHPS (2012)
Trial standard levels
TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
TSL 7
+1.8% ...........................................................................................................................
mstockstill on PROD1PC66 with PROPOSALS2
TSL 1
+2.2%
+2.7%
+2.6%
+3.7%
+7.3%
+11.6%
Based on these results, DOE expects
no significant discernable direct
employment impacts among standard
and non-standard size PTAC and PTHP
manufacturers for TSL1 through TSL 7.
This conclusion is independent of any
conclusions regarding employment
impacts in the broader United States
economy, which are documented in
Chapter 15 of the TSD. This conclusion
also ignores the possible relocation of
domestic employment to lower-laborcost countries. Manufacturers stated
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their concerns, throughout the
interviews, about increasing offshore
competition entering the market over
the past five years.
d. Impacts on Manufacturing Capacity
According to the majority of standard
and non-standard size PTAC and PTHP
manufacturers, amended energy
conservation standards will not
significantly affect the manufacturer’s
production capacity. Any necessary
redesign of PTACs and PTHPs will not
PO 00000
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change the fundamental assembly of the
equipment. However, manufacturers
anticipate some minimal changes to the
assembly line due to the conversion to
R–410A refrigerant. Because of the
properties of R–410A refrigerant, the
assembly line will need to give special
attention to creating vacuums within
each unit’s chambers, and additional
assembly will be needed if the number
of fan motors increases. DOE believes
manufacturers will be able to maintain
production capacity levels and continue
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to meet market demand under amended
energy conservation standards.
e. Impacts on Subgroups of
Manufacturers
As discussed above, using average
cost assumptions to develop an industry
cash flow estimate is not adequate for
assessing differential impacts among
subgroups of manufacturers. Small
manufacturers, niche players, or
manufacturers exhibiting a cost
structure that differs largely from the
industry average could be affected
differently. DOE used the results of the
industry characterization to group
manufacturers exhibiting similar
characteristics.
DOE evaluated the impact of amended
energy conservation standards on small
businesses, as defined by the SBA for
the PTAC and PTHP manufacturing
industry as manufacturing enterprises
with 750 or fewer employees. DOE
shared the interview guides with small
PTAC and PTHP manufacturers and
tailored specific questions for these
manufacturers. During DOE’s interviews
with small manufacturers, they
provided information, which suggested
that the impacts of standards on them
would not differ from impacts on larger
companies within the industry. (See
TSD, Chapter 13.)
3. National Impact Analysis
a. Amount and Significance of Energy
Savings
Table V.22 shows the forecasted
national energy savings for all the
equipment classes of PTACs and PTHPs
at each of the TSLs. DOE estimated the
national energy savings using the
AEO2007 energy price forecast. The
table also shows the magnitude of the
energy savings if the savings are
discounted at rates of 7 percent and 3
percent. Each TSL considered in this
rulemaking would result in significant
energy savings, and the amount of
savings increases with higher energy
conservation standards. (See TSD,
Chapter 11.)
TABLE V.22.—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR PTACS AND PTHPS (ENERGY SAVINGS FOR
UNITS SOLD FROM 2012 TO 2042)
Primary national energy savings (quads)
(sum of all equipment classes)
Trial standard level
Undiscounted
1
2
3
4
5
6
7
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
DOE reports both undiscounted and
discounted values of energy savings.
There is evidence that each TSL that is
more stringent than the corresponding
level in ASHRAE/IESNA Standard 90.1–
1999 results in additional energy
savings, ranging from 0.008 quads to
0.086 quads for TSLs 1 through 7. For
example, the estimated energy savings
for TSL 4 is equivalent to the electricity
used annually by approximately 4,000
motels.35
b. Net Present Value
mstockstill on PROD1PC66 with PROPOSALS2
The NPV analysis is a measure of the
cumulative benefit or cost of standards
to the Nation. Tables V.23 and V.24
provide an overview of the NPV results.
TABLE V.23.—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR
PTACS
NPV* (billion 2006$)
Trial standard level
1
2
3
4
5
6
7
................
................
................
................
................
................
................
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$0.000
0.000
(0.001)
0.000
(0.006)
(0.014)
(0.066)
3% discount
rate
$0.005
0.005
0.007
0.005
0.005
(0.000)
(0.071)
* Numbers in parentheses indicate negative
NPV, i.e., a net cost.
TABLE V.24.—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR
PTHPS
Trial
standard
level
35 Energy Information Agency. https://
www.eia.doe.gov/emeu/cbecs/cbecs2003/
detailed_tables_2003/2003set1/2003pdf/b1.pdf.
June 2006.
7% discount
rate
1
2
3
4
5
6
................
................
................
................
................
................
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NPV* (billion 2006$)
7% discount
rate
$0.006
0.014
0.014
0.016
0.016
0.010
Fmt 4701
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0.008
0.014
0.017
0.019
0.027
0.038
0.086
3% Discounted
7% Discounted
0.005
0.008
0.009
0.010
0.014
0.021
0.046
0.002
0.004
0.004
0.005
0.007
0.010
0.023
TABLE V.24.—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR
PTHPS—Continued
Trial
standard
level
7 ................
NPV* (billion 2006$)
7% discount
rate
(0.001)
3% discount
rate
0.074
* Numbers in parentheses indicate negative
NPV, i.e., a net cost.
Use of a 3 percent discount rate
increases the present value of future
equipment-purchase costs and operating
cost savings. Because annual operating
cost savings in later years grow at a
faster rate than annual equipment
purchase costs, use of a 3 percent
discount rate increases the NPV at most
TSLs. (See TSD, Chapter 11.)
c. Impacts on Employment
DOE develops estimates of the
indirect employment impacts of
proposed standards in the economy in
general. As discussed above, DOE
$0.021
0.043 expects energy conservation standards
0.043 for PTACs and PTHPs to reduce energy
0.056 bills for commercial customers, and the
0.056 resulting net savings to be redirected to
0.052 other forms of economic activity. DOE
3% discount
rate
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also realizes that these shifts in
spending and economic activity could
affect the demand for labor. To estimate
these effects, DOE used an input/output
model of the U.S. economy using BLS
data (as described in section IV.J). (See
TSD, Chapter 15.)
This input/output model suggests the
proposed PTAC and PTHP energy
conservation standards are likely to
increase the net demand for labor in the
economy. Neither the BLS data nor the
input/output model used by DOE
includes the quality or wage level of the
jobs. As shown in Table V.25, DOE
estimates that net indirect employment
impacts from a proposed PTAC and
PTHP standards are likely to be very
small. The net increase in jobs is so
small that it would be imperceptible in
national labor statistics and might be
offset by other, unanticipated effects on
employment.
prior to September 2008, DOE proposes
to incorporate the modified definition in
the final rule to help alleviate
manufacturers concerns about reduced
product availability.
5. Impact of Any Lessening of
Competition
EPCA directs DOE to consider any
lessening of competition that is likely to
result from standards. It directs the
Attorney General to determine in
writing the impact, if any, of any
lessening of competition likely to result
from a proposed standard. (42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(V))
To assist the Attorney General in
making such a determination, DOE has
provided the Department of Justice
(DOJ) with copies of this notice and the
TSD for review. DOE found that
numerous foreign manufacturers have
entered the standard size PTAC and
PTHP market over the past several
TABLE V.25.—NET NATIONAL CHANGE years. DOE believes this will continue to
happen in this market regardless of the
IN INDIRECT EMPLOYMENT, JOBS IN
proposed standard level chosen.
2042
6. Need of the Nation To Conserve
Energy
Trial
standard
Increasing the energy efficiency of
level
PTACs and PTHPs promotes the
PTACs
PTHPs
Nation’s energy security by reducing
1 ................
11
20 overall demand for energy, and thus
2 ................
11
40 reducing the Nation’s reliance on
3 ................
24
40 foreign sources of energy. Reduced
4 ................
11
62 demand also may improve the reliability
5 ................
44
62
of the Nation’s electricity system,
6 ................
69
82
7 ................
147
195 particularly during peak-load periods.
As a measure of this reduced demand,
DOE expects the proposed standards to
4. Impact on Utility or Performance of
eliminate the need for the construction
Equipment
of new power plants with
In performing the engineering
approximately 81 megawatts (MW)
analysis, DOE considered design
electricity generation capacity in 2042.
options that would not lessen the utility
Enhanced energy efficiency also
or performance of the individual classes produces environmental benefits. The
of equipment. (42 U.S.C. 6316(a); 42
expected energy savings from higher
U.S.C. 6295(o)(2)(B)(i)(IV)) As presented [PTAC and PTHP] standards will reduce
in section III.D.4, of this notice, DOE
the emissions of air pollutants and
concluded that none of the efficiency
greenhouse gases associated with fossil
levels proposed for standard size and
fuel use as well as other energy-related
non-standard size equipment in this
environmental impacts. Table V.26
notice will reduce the utility or
shows cumulative CO2, NOX, and Hg
performance of PTACs and PTHPs
emissions reductions for all the [PTAC
except the small fraction of the market
and PTHP] equipment classes over the
that is potentially misclassified under
forecast period. The cumulative CO2,
ASHRAE/IESNA Standard 90.1–1999.
NOX and Hg emission reductions range
PTAC and PTHP manufacturers
up to 6.13 Mt, 0.53 kt, and ¥0.04 t,
currently offer equipment that meet or
respectively, for PTACs and 6.94 Mt,
exceed the proposed standard levels. As 0.40 kt, and ¥0.03 t, respectively, for
detailed in section IV.A.2 above, DOE
PTHPs. In Chapter 16 of the TSD, DOE
recognizes ARI’s concerns regarding
reports annual changes in CO2, NOX and
non-standard size equipment and the
Hg emissions attributable to each TSL.
possible misclassification under the
As discussed in section IV.L, DOE does
definitions established by ASHRAE/
not report SO2 emissions reduction from
IESNA Standard 90.1–1999. If ASHRAE power plants because such reduction
is able to adopt Addendum t to
from an energy conservation standard
ASHRAE/IESNA Standard 90.1–2007
would not affect the overall level of SO2
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Net national change in jobs
(number of jobs)
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emissions in the United States due to
the caps on power plant emissions of
SO2.
The impact of these NOX emissions
will be affected by the Clean Air
Interstate Rule (CAIR) issued by the U.S.
Environmental Protection Agency on
March 10, 2005.36 70 FR 25162 (May 12,
2005). CAIR will permanently cap
emissions of NOX in 28 eastern States
and the District of Columbia. As with
SO2 emissions, a cap on NOX emissions
means that equipment energy
conservation standards are not likely to
have a physical effect on NOX emissions
in States covered by the CAIR caps.
Therefore, while the emissions cap may
mean that physical emissions
reductions in those States will not result
from standards, standards could
produce an environmental-related
economic benefit in the form of lower
prices for emissions allowance credits.
However, as with SO2 allowance prices,
DOE does not plan to monetize this
benefit for those States because the
impact on the NOX allowance price
from any single energy conservation
standard is likely to be small and highly
uncertain. DOE seeks comment on how
it might value NOX emissions for the 22
States not covered under CAIR.
With regard to mercury emissions,
DOE is able to report an estimate of the
physical quantity changes in mercury
emissions associated with an energy
conservation standard. Based on the
NEMS–BT modeling, Hg emissions
generally decline out to 2020 or 2025.
However, there is a slight Hg increase by
2030, depending on the TSL level and
the equipment type. These changes in
Hg emissions, as shown in Table V.26,
are extremely small, i.e., none of the
changes come close to approaching a 1
percent change in annual emissions.
The NEMS–BT model accounts for a
wide variety of factors. One possible
reason for the Hg emissions increase
could be due to emissions banking. The
NEMS–BT model assumed that power
plant operators would be permitted to
bank emission allowances from years in
which they release fewer emissions than
the maximum permitted. Power plant
operators may then release more
emissions than permitted by their
allowances in a later year.
The NEMS–BT model assumed that
these emissions would be subject to
EPA’s Clean Air Mercury Rule 37
(CAMR), which would permanently cap
emissions of mercury for new and
existing coal-fired plants in all States by
2010. Similar to SO2 and NOX, DOE
assumed that under such system, energy
36 See
37 70
E:\FR\FM\07APP2.SGM
https://www.epa.gov/cleanairinterstaterule/.
FR 28606 (May 18, 2005).
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conservation standards would result in
no physical effect on these emissions,
but would be expected to result in an
environmental-related economic benefit
in the form of a lower price for
emissions allowance credits. DOE’s plan
for addressing analysis does not include
monetizing the benefits of reduced
mercury emissions, because DOE
considered that valuation of such
impact from any single energy
conservation standard would likely be
small and highly uncertain.
On February 8, 2008, the U.S. Court
of Appeals for the District of Columbia
Circuit (D.C. Circuit) issued its decision
in State of New Jersey, et al. v.
Environmental Protection Agency,38 in
which the Court, among other actions,
vacated the CAMR referenced above.
Accordingly, DOE is considering
whether changes are needed to its plan
for addressing the issue of mercury
emissions in light of the D.C. Circuit’s
decision. DOE invites public comment
on addressing mercury emissions in this
rulemaking.
TABLE V.26.—SUMMARY OF EMISSIONS REDUCTIONS FOR [PTAC AND PTHP] (CUMULATIVE REDUCTIONS FOR EQUIPMENT
SOLD FROM 2012 TO 2042)
Trial standard levels
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
TSL 7
Emissions reductions for PTACs*
CO2 (Mt) ...............................................................................
NOX (kt) ...............................................................................
Hg (t) ....................................................................................
0.50
0.04
0.00
0.50
0.04
0.00
1.06
0.09
-0.01
0.50
0.04
0.00
1.83
0.16
-0.01
2.95
0.26
-0.02
6.13
0.53
-0.04
1.49
0.08
-0.01
2.19
0.12
-0.01
2.19
0.12
-0.01
3.00
0.13
-0.02
6.94
0.40
-0.03
Emissions reductions for PTHPs*
CO2 (Mt) ...............................................................................
NOX (kt) ...............................................................................
Hg (t) ....................................................................................
0.73
0.04
0.00
1.49
0.08
-0.01
* Negative values indicate emission increases.
DOE is considering taking into
account a monetary benefit of CO2
emission reductions associated with this
rulemaking. During the preparation of
its most recent review of the state of
climate science, the Intergovernmental
Panel on Climate Change (IPCC)
identified various estimates of the
present value of reducing carbondioxide emissions by one ton over the
life that these emissions would remain
in the atmosphere. The estimates
reviewed by the IPCC spanned a range
of values. In the absence of a consensus
on any single estimate of the monetary
value of CO2 emissions, DOE used the
estimates identified by the study cited
in Summary for Policymakers prepared
by Working Group II of the IPCC’s
Fourth Assessment Report to estimate
the potential monetary value of the CO2
reductions likely to result from the
standards under consideration in this
rulemaking.
To put the potential monetary benefits
from reduced CO2 emissions into a form
that is likely to be most useful to
decision makers and stakeholders, DOE
used the same methods used to
calculate the net present value of
consumer costs savings: The estimated
year-by-year reductions in CO2
emissions were converted into monetary
values ranging from the $0 and $14 per
ton. These estimates were based on an
assumption of no benefit to an average
benefit value reported by the IPCC.39
The resulting annual values were then
discounted over the life of the affected
appliances to the present using both 3
percent and 7 percent discount rates.
The resulting estimates of the potential
range of net present value benefits
associated with the reduction of CO2
emissions are reflected in Table V.27.
TABLE V.27.—PRELIMINARY ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS UNDER CONSIDERED PTACS
AND PTHP TRIAL STANDARD LEVELS
Estimated CO2 (Mt)
emission reductions
PTAC TSL
mstockstill on PROD1PC66 with PROPOSALS2
1
2
3
4
5
6
7
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
38 No. 05–1097, 2008 WL 341338, at *1 (D.C. Cir.
Feb. 8, 2008).
39 According to the IPCC, the mean social cost of
carbon (SCC) reported in studies published in peerreviewed journals was U.S. $43 per ton of carbon.
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This translates into about $12 per ton of carbon
dioxide. The literature review (Tol 2005) from
which this mean was derived did not report the
year in which these dollars are denominated.
However, since the underlying studies spanned
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0.50
0.50
1.06
0.50
1.83
2.95
6.13
Value of estimated CO2
emission reductions
based on IPCC range
(million $)
0
0
0
0
0
0
0
to
to
to
to
to
to
to
7.00
7.00
14.84
7.00
25.62
41.3
85.82
several years on either side of 2000, the estimate is
often treated as year 2000 dollars. Updating that
estimate to 2007 dollars yields a SCC of $14 per ton
of carbon dioxide.
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TABLE V.27.—PRELIMINARY ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS UNDER CONSIDERED PTACS
AND PTHP TRIAL STANDARD LEVELS—CONTINUED
Estimated CO2 (Mt)
emission reductions
PTHP TSL
1
2
3
4
5
6
7
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
..............................................................................................................................................
DOE relied on the average of the IPCC
reported estimate as an upper bound on
the benefits resulting from reducing
each metric ton of U.S. CO2 emissions.
It is important to note that the estimate
of the upper bound value represents the
value of worldwide impacts from
potential climate impacts caused by CO2
emissions, and are not confined to
impacts likely to occur within the U.S.
In contrast, most of the other estimates
of costs and benefits of increasing the
efficiency of PTACs and PTHPs in this
proposal include only the economic
values of impacts that would be
experienced in the U.S. For example, in
determining impacts on manufacturers,
DOE generally does not consider
impacts that occur solely outside of the
U.S. Consequently, as DOE considers a
monetary value for CO2 emission
reductions, the value might be restricted
to a representation of those cost/benefits
likely to be experienced in the United
States. Currently, there are no estimated
values for the U.S. benefits likely to
result from CO2 emission reductions.
However, DOE expects that, if such
values were developed, DOE would use
those U.S. benefit values, and not world
benefit values, in its analysis. DOE
further expects that, if such values were
developed, they would be lower than
comparable global values. DOE invites
public comment on the above
discussion of CO2.
0.73
1.49
1.49
2.19
2.19
3.00
6.94
7. Other Factors
The Secretary of Energy, in
determining whether a standard is
economically justified, may consider
any other factors that he/she deems to
be relevant. (42 U.S.C. 6316 (a); 42
U.S.C. 6295(o)(2)(B)(i)(VI)) The
Secretary has decided to consider the
impacts of setting different amended
energy conservation standards for
PTACs and PTHPs (i.e., setting an
amended standard level for a given
PTAC cooling capacity, which would be
significantly different from the amended
standard level for a PTHP with the same
cooling capacity). In addition, DOE also
considered the uncertainties associated
with the impending refrigerant phaseout in 2010, including equipment
availability, compressor availability,
and the available efficiencies of R–410A
PTACs and PTHPs.
C. Proposed Standard
1. Overview
EPCA, at 42 U.S.C.
6313(a)(6)(A)(ii)(II), specifies that, for
any commercial and industrial
equipment addressed in section
342(a)(6)(A)(i) of EPCA, 42 U.S.C.
6313(a), DOE may prescribe an energy
conservation standard more stringent
than the level for such equipment in
ASHRAE/IESNA Standard 90.1, as
amended, only if ‘‘clear and convincing
Value of estimated CO2
emission reductions
based on IPCC range
(million $)
0
0
0
0
0
0
0
to
to
to
to
to
to
to
10.22
26.64
26.64
30.66
30.66
42.00
97.16
evidence’’ shows that a more stringent
standard ‘‘would result in significant
additional conservation of energy and is
technologically feasible and
economically justified.’’ (42 U.S.C.
6313(a)(6)(A)(ii)(II)).
In selecting the proposed energy
conservation standards for PTACs and
PTHPs for consideration in today’s
notice of proposed rulemaking, DOE
started by examining the maximum
technologically feasible levels, and
determined whether those levels were
economically justified. Upon finding the
maximum technologically feasible
levels not to be justified, DOE analyzed
the next lower TSL to determine
whether that level was economically
justified. DOE repeated this procedure
until it identified a TSL that was
economically justified.
To aid the reader as DOE discusses
the benefits and/or burdens of each TSL,
Table V.28 presents a summary of
quantitative analysis results for each
TSL based on the assumptions and
methodology discussed above. This
table presents the results or, in some
cases, a range of results, for each TSL,
and will aid the reader in the discussion
of costs and benefits of each TSL. The
range of values reported in this table for
industry impacts represents the results
for the different markup scenarios that
DOE used to estimate manufacturer
impacts.
TABLE V.28.—SUMMARY OF RESULTS BASED UPON THE AEO2007 ENERGY PRICE FORECAST *
mstockstill on PROD1PC66 with PROPOSALS2
TSL 1
Primary energy saved (quads) ..............................
7% Discount rate ...................................................
3% Discount rate ...................................................
Generation capacity reduction (GW) ** ..................
NPV (2006$ billion):
7% Discount rate ............................................
3% Discount rate ............................................
Industry impacts:
Industry NPV (2006$ million) ..........................
Industry NPV (% Change) ..............................
Cumulative emissions impacts†:
CO2 (Mt) ..........................................................
NOX (kt) ..........................................................
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TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
TSL 7
0.008
0.002
0.005
0.042
0.014
0.004
0.008
0.062
0.017
0.004
0.009
0.081
0.019
0.005
0.010
0.081
0.027
0.007
0.014
0.141
0.038
0.010
0.021
0.209
0.086
0.023
0.046
0.461
$0.007
$0.026
$0.014
$0.049
$0.013
$0.050
$0.017
$0.061
$0.010
$0.061
($0.004)
$0.052
($0.067)
$0.003
(2)–(41)
(1)–(12)
(8)–(55)
(2)–(17)
(4)–(62)
(1)–(19)
(14)–(68)
(4)–(20)
(4)–(80)
(1)–(24)
(10)–(110)
(3)–(33)
(2)–(187)
(1)–(56)
1.24
0.08
1.99
0.12
2.55
0.17
2.69
0.16
4.02
0.28
5.95
0.39
13.07
0.93
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TABLE V.28.—SUMMARY OF RESULTS BASED UPON THE AEO2007 ENERGY PRICE FORECAST *—Continued
TSL 1
Hg (t) ...............................................................
Mean LCC savings * (2006$):
Standard Size PTAC, 9,000 Btu/h ..................
Standard Size PTHP, 9,000 Btu/h ..................
Standard Size PTAC, 12,000 Btu/h ................
Standard Size PTHP, 12,000 Btu/h ................
Non-Standard Size PTAC ...............................
Non-Standard Size PTHP ...............................
Mean PBP (years):
Standard Size PTAC, 9,000 Btu/h ..................
Standard Size PTHP, 9,000 Btu/h ..................
Standard Size PTAC, 12,000 Btu/h ................
Standard Size PTHP, 12,000 Btu/h ................
Non-Standard Size PTAC ...............................
Non-Standard Size PTHP ...............................
LCC Results:
Standard Size PTAC, 9,000 Btu/h
Net Cost (%) ............................................
No Impact (%) .........................................
Net Benefit (%) ........................................
Standard Size PTHP, 9,000 Btu/h
Net Cost (%) ............................................
No Impact (%) .........................................
Net Benefit (%) ........................................
Standard Size PTAC, 12,000 Btu/h
Net Cost (%) ............................................
No Impact (%) .........................................
Net Benefit (%) ........................................
Standard Size PTHP, 12,000 Btu/h
Net Cost (%) ............................................
No Impact (%) .........................................
Net Benefit (%) ........................................
Non-Standard Size PTAC
Net Cost (%) ............................................
No Impact (%) .........................................
Net Benefit (%) ........................................
Non-Standard Size PTHP
Net Cost (%) ............................................
No Impact (%) .........................................
Net Benefit (%) ........................................
TSL 2
TSL 3
TSL 4
TSL 5
TSL 6
TSL 7
0.00
¥0.01
¥0.02
¥0.01
¥0.02
¥0.04
¥0.07
0
13
(1)
14
27
61
0
23
(1)
26
27
66
(0)
23
(3)
26
31
66
0
32
(1)
22
27
81
(2)
32
(6)
22
33
81
(4)
30
(11)
18
26
74
(13)
40
(36)
8
12
53
11.6
4.5
13.0
4.9
4.2
2.0
11.6
4.0
13.0
4.4
4.2
2.6
12.5
4.0
13.9
4.4
4.9
2.6
11.6
3.9
13.0
5.3
4.2
2.8
13.2
3.9
14.8
5.3
5.7
2.8
14.0
4.5
15.9
6.1
7.8
4.2
16.0
4.8
19.8
7.5
9.6
5.8
11.7
80.8
7.5
11.7
80.8
7.5
23.5
62.8
13.8
11.7
80.8
7.5
35.4
45.5
19.1
47.5
29.1
23.4
64.8
13.5
21.6
4.0
81.2
14.9
6.2
63.7
30.1
6.2
63.7
30.1
8.0
46.7
45.3
8.0
46.7
45.3
14.7
30.2
55.2
19.7
14.4
65.9
12.9
80.1
7.0
12.9
80.1
7.0
25.7
61.6
12.7
12.9
80.1
7.0
40.8
44.1
15.1
54.3
27.6
18.1
74.7
12.1
13.2
4.9
80.2
14.8
7.2
62.1
30.7
7.2
62.1
30.7
15.0
44.6
40.5
15.0
44.6
40.5
26.7
27.9
45.4
44.8
12.1
43.0
3.4
80.2
16.4
3.4
80.2
16.4
8.8
61.6
29.6
3.4
80.2
16.4
16.3
43.8
39.9
32.9
26.9
40.2
48.1
12.5
39.4
0.2
80.9
18.9
1.9
62.4
35.7
1.9
62.4
35.7
2.8
44.6
52.7
2.8
44.6
52.7
13.8
27.4
58.8
28.9
12.4
58.7
mstockstill on PROD1PC66 with PROPOSALS2
* Parentheses indicate negative (¥) values. For LCCs, a negative value means an increase in LCC by the amount indicated.
** Change in installed generation capacity by the year 2042 based on AEO2007 Reference Case.
† CO emissions impacts include physical reductions at power plants. NO emissions impacts include physical reductions at power plants as
2
X
well as production of emissions allowance credits where NOX emissions are subject to emissions caps. SO2 emissions impacts include physical
reductions at households only.
In addition to the quantitative results,
DOE also considered other factors that
might affect economic justification. DOE
took into consideration the EPA
mandated refrigerant phase-out and its
effect on PTAC and PTHP equipment
efficiency, which concern both standard
size and non-standard size PTACs and
PTHPs. In addition, DOE considered the
uniqueness of the PTAC and PTHP
industry, that is, manufacturers of nonstandard size equipment. In particular,
DOE considered the declining
shipments of this equipment, the small
size segment of the industry (both
relative to the rest of the PTAC and
PTHP industry and in absolute terms),
and the differential impacts of potential
amended energy conservation standards
on non-standard size manufacturers
when compared to standard size
manufacturers.
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2. Conclusion
First, DOE considered TSL 7, the maxtech level. TSL 7 would likely save
0.086 quads of energy through 2042, an
amount DOE considers significant.
Discounted at seven percent, the
projected energy savings through 2042
would be 0.023 quads. For the Nation as
a whole, DOE projects that TSL 7 would
result in a net decrease of $67 million
in NPV, using a discount rate of seven
percent. The emissions reductions at
TSL 7 are 13.07 Mt of CO2 and 0.93 kt
of NOX. Total generating capacity in
2042 is estimated to decrease compared
to the reference case by 0.461 gigawatts
(GW) under TSL 7.
At TSL 7, DOE projects that the
average PTAC customer will experience
an increase in LCC for all standard size
equipment classes. Purchasers of PTACs
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are projected to lose on average $21
(2006$) over the life of the product and
purchasers of PTHPs would save on
average $26 (2006$). DOE estimates LCC
increases for 70 percent of customers in
the Nation that purchase a standard size
PTAC, and for 34 percent of customers
in the Nation that purchase a standard
size PTHP. DOE also estimates LCC
increases for 48 percent of customers in
the Nation that purchase a non-standard
size PTAC, and for 29 percent of
customers in the Nation that purchase a
non-standard size PTHP. The mean
payback period of each standard size
PTAC equipment classes at TSL 7 is
projected to be substantially longer than
the mean lifetime of the equipment.
The projected change in industry
value (INPV) ranges from a decrease of
$2 million to a decrease of $187 million.
For PTACs and PTHPs, the impacts are
E:\FR\FM\07APP2.SGM
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driven primarily by the assumptions
regarding the ability to pass on larger
increases in MPCs to the customer.
Currently, there is only one product line
being manufactured at TSL 7 efficiency
levels, and it uses R–22 refrigerant, as
discussed in section III.B.2 above. DOE
believes that PTAC and PTHP
manufacturers will eventually be able to
design and produce R–410A equipment
at TSL 7, based on manufacturers’
response to the residential central air
conditioners refrigerant phase-out and
amended energy conservation
standards. However, DOE has not
initially been able to identify
technologies and design approaches for
R–410A units to meet these higher
levels in the absence of a high efficiency
compressor. At TSL 7, DOE recognizes
the risk of very large negative impacts
if manufacturers’ expectations about
reduced profit margins are realized. In
particular, if the high end of the range
of impacts is reached as DOE expects,
TSL 7 could result in a net loss of 56
percent in INPV to the PTAC and PTHP
industry.
After carefully considering the
analysis and weighing the benefits and
burdens of TSL 7, the Secretary has
reached the following initial conclusion:
At TSL 7, even if manufacturers
overcome the barriers to produce R–410
equipment by the effective date of an
amended energy conservation standard,
the benefits of energy savings and
emissions reductions would be
outweighed by the potential multimillion dollar negative net economic
cost to the Nation, the economic burden
on consumers, and the large capital
conversion costs that could result in a
reduction in INPV for manufacturers.
Next, DOE considered TSL 6. Primary
energy savings is estimated at 0.038
quads of energy through 2042, which
DOE considers significant. Discounted
at seven percent, the energy savings
through 2042 would be 0.010 quads. For
the Nation as a whole, DOE projects that
TSL 6 would result in a net decrease of
$4 million in NPV, using a discount rate
of seven percent. The emissions
reductions are projected to be 5.95 Mt
of CO2 and 0.39 kt of NOX. Total
generating capacity in 2042 under TSL
6 is estimated to decrease by 0.209 GW.
At TSL 6, DOE found the impacts of
amended energy conservation standards
on customers of PTACs would likely
differ significantly from their impacts
on PTHP customers. While only 22
percent of customers of standard size
PTHPs would likely have an LCC
increase at TSL 6, a majority of
customers of standard size PTACs (52
percent) would have LCC increase at
this TSL. A customer for a standard size
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PTAC, on average, would experience an
increase in LCC of $8, while the
customer for a standard size PTHP, on
average, would experience a decrease in
LCC of $23. In addition, the customer
for a non-standard size PTAC, on
average, would experience a decrease in
LCC of $26, while the customer for a
non-standard size PTHP, on average,
would experience a decrease in LCC of
$74. At TSL 6, DOE projects that the
average PTAC customer for a standard
size PTAC will experience an increase
in LCC in each equipment class. In
addition, the mean payback period of
each standard size PTAC equipment
class at TSL 6 is projected to be
substantially longer than the mean
lifetime.
At TSL 6, the projected change in
INPV ranges between a loss of $10
million and a loss of $110 million. For
manufacturers of non-standard size
equipment alone, DOE estimated a
decrease in the collective value of the
industry to range from 33 percent to 53
percent. The magnitude of projected
impacts is still largely determined,
however, by the manufacturers’ ability
to pass on larger increases in MPC to the
customer. Thus, the potential INPV
decrease of $110 million assumes DOE’s
projections of partial cost recovery as
described in Chapter 13 of the TSD. In
addition, at TSL 6 the impending
refrigerant phase-out could have a
significant impact on manufacturers.
Currently, both standard size and nonstandard size PTACs and PTHPs using
R–22 refrigerant are available on the
market at TSL 6 efficiency levels. But,
if the performance degradations that
DOE estimated in the engineering
analysis for R–410A equipment prove to
be valid, manufacturers might be unable
to produce R–410A equipment at these
levels unless high efficiency R–410A
compressors become available. The
absence of such compressors would
likely mean that the negative financial
impacts of TSL 6 would be greater than
characterized by DOE’s MIA analysis.
Even though the ability of
manufacturers to produce equipment
utilizing R–410A is greater at TSL 6
than at TSL 7, DOE anticipates that it
would still be difficult for
manufacturers to produce standard size
and non-standard size PTACs and
PTHPs at TSL 6 in the full range of
capacities available today due to the
physical size constraints imposed by the
wall sleeve dimensions.
While DOE recognizes the increased
economic benefits to the nation that
could result from TSL 6, DOE concludes
that the benefits of a Federal standard at
TSL 6 would still be outweighed by the
economic burden that would be placed
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Sfmt 4702
upon PTAC customers. In addition, DOE
believes at TSL 6, the benefits of energy
savings and emissions impacts would be
outweighed by the large impacts on
manufacturers’ INPV. Finally, DOE is
concerned that manufacturers may be
unable to offer the full capacity range of
equipment utilizing R–410A by the
effective date of the amended energy
conservation standards.
Next, DOE considered TSL 5. DOE
projects that TSL 5 would save 0.027
quads of energy through 2042, an
amount DOE considers significant.
Discounted at seven percent, the
projected energy savings through 2042
would be 0.007 quads. For the Nation as
a whole, DOE projects TSL 5 to result
in net savings in NPV of $10 million,
using a discount rate of seven percent,
and $61 million, using a discount rate
of three percent. The estimated
emissions reductions are 4.02 Mt of CO2
and 0.28 kt of NOX. Total generating
capacity in 2042 under TSL 5 would
likely decrease by 0.141 GW.
At TSL 5, DOE projects that the
average customer for standard size
PTAC will experience an increase in
LCC in each equipment classes.
Purchasers of PTACs are projected to
lose on average $5 (2006$) over the life
of the product and purchasers of PTHPs
would save on average $26 (2006$).
DOE estimates LCC savings for 39
percent of customers of standard size
PTACs, and for 12 percent of customers
of standard size PTHPs. LCC increases
are estimated for 16 percent of
customers of non-standard size PTACs,
and for 3 percent of customers of nonstandard size PTHPs. The mean payback
period for each standard size PTAC
equipment class at TSL 6 is projected to
be substantially longer than the mean
lifetime of the equipment.
The projected change in INPV ranges
between a loss of $4 million and a loss
of $80 million. For manufacturers of
non-standard size equipment alone,
DOE projects their collective industry
value would decrease by 25 percent to
38 percent. Just as with TSL 6 and 7, the
projected impacts continue to be driven
primarily by the manufacturers’ ability
to pass on increases in MPCs to the
customer. The loss of $80 million
assumes DOE’s projections of partial
cost recovery as described in Chapter 13
of the TSD. TSL 5 requires the
production of standard size and nonstandard size PTACs and PTHPs using
R–410A that would have efficiencies
equivalent to the ‘‘max tech’’ efficiency
levels with R–410A applying the
degradations estimated in the
engineering analysis in the absence of a
high efficiency compressor.
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After carefully considering the
analysis and weighing the benefits and
burdens, the Secretary has concluded
that, at TSL 5, the benefits of energy
savings and emissions reductions would
be outweighed by the potential multimillion dollar net economic cost to the
Nation, the economic burden on PTAC
consumers as compared with PTHP
customers, and the large capital
conversion costs that could result in a
reduction in INPV for manufacturers.
Next, DOE considered TSL 4. For TSL
4, DOE combined TSL 1 for PTACs and
TSL 5 for PTHPs. This combination of
efficiency levels serves to maximize
LCC savings, while recognizing the
differences in LCC results for PTACs
and PTHPs. DOE projects that TSL 4
would save 0.019 quads of energy
through 2042, an amount DOE considers
significant. Discounted at seven percent,
the projected energy savings through
2042 would be 0.005 quads. For the
Nation as a whole, DOE projects that
TSL 4 would result in net savings in
NPV of $17 million, using a discount
rate of seven percent, and $61 million,
using a discount rate of three percent.
The estimated emissions reductions are
2.69 Mt of CO2 and 0.16 kt of NOX. Total
generating capacity in 2042 under TSL
4 would likely increase by 0.081 GW.
At TSL 4, DOE projects that the
average PTAC or PTHP customer would
experience LCC savings. Purchasers of
standard size PTACs, on average, have
LCC increase of $1 (2006$) over the life
of the product and purchasers of PTHPs
would save on average $26 (2006$).
DOE estimates LCC savings for 12
percent of customers in the Nation that
purchase a standard size PTAC, and for
12 percent of customers in the Nation
that purchase a standard size PTHP.
DOE estimates LCC increases for 3
percent of customers in the Nation that
purchase a non-standard size PTAC, and
for 3 percent of customers in the Nation
that purchase a non-standard size PTHP.
For both standard size and non-standard
size PTACs and PTHPs, the remainder
of customers would experience either a
decrease or no change in LCC. DOE also
projects that the mean payback period of
each standard size PTAC equipment
class at TSL 4 would be substantially
longer than the mean lifetime of the
equipment.
The projected change in INPV ranges
between a loss of $14 million and a loss
of $68 million. For manufacturers of
non-standard size equipment alone,
DOE projects their collective industry
value would decrease by 34 percent to
44 percent. Just as with TSL 5, 6, and
7, the projected impacts continue to be
18905
driven primarily by the manufacturers’
ability to pass on increases in MPCs to
the customer. The loss of $68 million
assumes DOE’s projections of partial
cost recovery as described in Chapter 13
of the TSD. TSL 4 requires the
production of standard size and nonstandard size PTACs at TSL 1 efficiency
levels and PTHPs at TSL 5 efficiency
levels. Thus, TSL 4 requires the
production of standard size and nonstandard size PTHPs using R–410A that
would have efficiencies equivalent to
the ‘‘max tech’’ efficiency levels with R–
410A applying the degradations
estimated in the engineering analysis in
the absence of a high efficiency
compressor.
After considering the analysis and
weighing the benefits and the burdens,
DOE tentatively concludes that the
benefits of a TSL 4 standard outweigh
the burdens. In particular, the Secretary
concludes that TSL 4 saves a significant
amount of energy and is technologically
feasible and economically justified.
Therefore, DOE today proposes to adopt
the energy conservation standards for
PTACs and PTHPs at TSL 4. Table V.29
demonstrates the proposed energy
conservation standards for all
equipment classes of PTACs and PTHPs,
including all cooling capacities.
TABLE V.29.—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS
Equipment class
Proposed energy conservation standards*
Equipment
Category
Cooling capacity
PTAC .....................
Standard Size** .....................................
< 7,000 Btu/h ........................................
≥7,000 Btu/h and ≤15,000 Btu/h ..........
>15,000 Btu/h .......................................
<7,000 Btu/h .........................................
≥ 7,000 Btu/h and ≤ 15,000 Btu/h ........
> 15,000 Btu/h ......................................
< 7,000 Btu/h ........................................
≥ 7,000 Btu/h and ≤ 15,000 Btu/h ........
Non-Standard Size† ..............................
PTHP .....................
Standard Size** .....................................
> 15,000 Btu/h ......................................
< 7,000 Btu/h ........................................
≥ 7,000 Btu/h and ≤ 15,000 Btu/h ........
Non-Standard Size†
> 15,000 Btu/h ......................................
EER = 11.4
EER = 13.0 ¥ (0.233 × Cap††)
EER = 9.5
EER = 10.2
EER = 11.7¥(0.213 × Cap††)
EER = 8.5
EER = 11.8, COP = 3.3
EER = 13.4¥(0.233 × Cap††)
COP = 3.7¥(0.053 × Cap††)
EER = 9.9, COP = 2.9
EER = 10.8, COP = 3.0
EER = 12.3¥(0.213 × Cap††)
COP = 3.1¥(0.026 × Cap††)
EER = 9.1, COP = 2.8
* For
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equipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all energy efficiency ratio (EER) values must be
rated at 95° F outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85° F entering water temperature for water cooled equipment. All coefficient of performance (COP) values must be rated at 47° F outdoor dry-bulb temperature for air-cooled
equipment, and at 70° F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
†† Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95° F outdoor dry-bulb temperature.
As noted, TSL 4 would require PTHPs
to meet the same efficiency levels as
specified in TSL 5. DOE believes that
these efficiency levels are equivalent to
the expected ‘‘max tech’’ efficiency
levels for equipment utilizing R–410A
applying the degradations estimated in
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the engineering analysis. Therefore,
DOE strongly encourages stakeholders
to scrutinize closely the analyses and
other information presented with this
notice, and to comment on the viability
of this standard level. In addition, since
TSL 4 requires different efficiency levels
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for PTACs and PTHPs, DOE solicits
comment on potential equipment
switching as discussed in section IV.G.3
of today’s notice. In particular, DOE is
interested in receiving comment on
whether: (1) Evidence shows that
equipment switching is likely and
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would likely negate the energy savings
from setting a standard at different
efficiency levels for PTHPs and PTACs;
and (2) such evidence warrants DOE
adoption of some other TSL level or the
ASHRAE/IESNA Standard 90.1–1999
efficiency levels rather than TSL 4 for
the final rule.
Aside from the considerations
discussed above, DOE is also concerned
about the unique nature of the nonstandard size segment of the PTAC and
PTHP industry. At TSL 4, non-standard
size manufacturers are expected to lose
from $9 million to $12 million in INPV,
which is a reduction in 34 percent to 44
percent. Many manufacturers stated
they would be unwilling to redesign
completely non-standard size
equipment because of the small size of
the market and the declining sales. In
supporting this assertion, manufacturers
also pointed out that non-standard size
PTACs and PTHPs are manufactured to
order based on unique building designs
for replacement applications. In
addition, manufacturers expressed great
concern that negative impacts would be
amplified if DOE were to adopt the
ASHRAE/IESNA Standard 90.1–1999
equipment class delineations, and their
equipment lines were reduced. Several
manufacturers believe the ASHRAE/
IESNA Standard 90.1–1999 delineations
would cause up to 50 percent of their
equipment lines to be misclassified, and
be subject to standard levels they could
not meet with resulting decline in
equipment offerings. If these concerns
were realized, the negative INPV and
cash flow impacts on the declining
industry would be even greater than
estimated by the MIA. DOE is
particularly interested in receiving
comments on the differential impacts on
non-standard size manufacturers and on
whether DOE should adopt lower
minimum efficiency levels (e.g., TSL 1,
TSL 2, or TSL 3) for non-standard size
PTAC and PTHP equipment in the final
rule.
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VI. Procedural Issues and Regulatory
Review
A. Review Under Executive Order 12866
Today’s regulatory action has been
determined to be a significant regulatory
action under Executive Order 12866,
‘‘Regulatory Planning and Review.’’ 58
FR 51735 (October 4, 1993).
Accordingly, this action was subject to
review under the Executive Order by the
Office of Information and Regulatory
Affairs at the Office of Management and
Budget (OMB).
The Executive Order requires that
each agency identify in writing the
specific market failure or other specific
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problem that it intends to address that
warrant new agency action, as well as
assess the significance of that problem,
to enable assessment of whether any
new regulation is warranted. Executive
Order 12866, § 1(b)(1).
DOE’s preliminary analysis suggests
that much of the hospitality industry
segment using PTAC and PTHP
equipment tends to be small hotels or
motels. DOE believes that these small
hotels and motels tend to be
individually owned and operated, and
lack corporate direction in terms of
energy policy. The transaction costs for
these smaller owners or operators to
research, purchase, and install optimum
efficiency equipment are too high to
make such action commonplace. DOE
believes that there is a lack of
information and/or information
processing capability about energy
efficiency opportunities in the PTAC
and PTHP market available to hotel or
motel owners. Unlike residential
heating and air conditioning products,
PTACs and PTHPs are not included in
energy labeling programs such as the
Federal Trade Commission’s energy
labeling program. Furthermore, the
energy use of PTACs and PTHPs is
dependent on climate and the
equipment usage and, as such, is not
readily available for the owners or
operators to make a decision on whether
improving the energy efficiency of
PTAC and PTHP equipment is costeffective. DOE seeks data on the
efficiency levels of existing PTAC and
PTHP equipment in use by building
type (e.g., hotel, motel, small office
building, nursing home facility, etc.),
electricity price (and/or geographic
region of the country) and installation
type (i.e., new construction or
replacement).
DOE recognizes that PTACs and
PTHPs are not purchased in the same
manner as regulated appliances that are
sold in retail stores, e.g., room air
conditioners. When purchased by the
end user, PTACs and PTHPs are more
likely purchased through contractors
and builders that perform the
installation. The Air-Conditioning and
Refrigeration Institute (ARI) Directory of
Certified Product Performance includes
PTACs and PTHPs and provides the
energy efficiency and capacity
information on PTACs and PTHPs
produced by participating
manufacturers. DOE seeks comment on
the experience with this directory and
the extent to which the information it
provides leads to more informed
choices, specifically given how such
equipment are purchased.
To the extent, there is potentially a
substantial information problem, one
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could expect the energy efficiency for
PTACs and PTHPs to be more or less
randomly distributed across key
variables such as energy prices and
usage levels. However, since data are
not available on how such equipment is
purchased, DOE seeks detailed data on
the distribution of energy efficiency
levels for both new construction and
replacement markets. DOE plans to use
these data to test the extent to which
purchasers of this equipment behave as
if they are unaware of the costs
associated with their energy
consumption. In the case of the PTHP
equipment with multiple heating
systems (reverse cycle and electric
resistance), estimating the energy
consumption from component level
changes is even more complex. DOE
found energy efficiency and energy cost
savings are not the primary drivers of
the hotel and motel business. Instead,
hotel and motel operators work on a
fixed budget and are primarily
concerned with providing clean and
comfortable rooms to the customers to
ensure customer satisfaction. If
consumer satisfaction decreases, hotel
or motel owners may incur increased
transaction costs, thus preventing access
to capital to finance energy efficiency
investment.
A related issue is the problem of
asymmetric information (one party to a
transaction has more and better
information than the other) and/or high
transactions costs (costs of gathering
information and effecting exchanges of
goods and services) among the PTAC
and PTHP equipment customers. In the
case of PTACs and PTHPs, in many
cases, the party responsible for the
equipment purchase may not be the one
who pays the cost to operate it. For
example, PTAC and PTHP equipment
are also used in nursing homes and
medical office buildings where the
builder or complex owner often makes
decisions about PTACs and PTHPs
without input from tenants nor do they
offer options to tenants to upgrade them.
Furthermore, DOE believes the tenant
typically pays the utility bills. If there
were no transactions costs, it would be
in the builder or complex owners’
interest to install equipment the tenants
would choose on their own. For
example, a tenant who knowingly faces
higher utility bills from low-efficiency
equipment would expect to pay less in
rent, thereby shifting the higher utility
cost back to the complex owner.
However, this information is not
costless, and it may not be in the
interest of the tenant to take the time to
develop it, or, in the case of the complex
owner who installs less efficient
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equipment, to convey that information
to the tenant.
To the extent that asymmetric
information and/or high transaction
costs are problems, one would expect to
find certain outcomes with respect to
PTAC and PTHP efficiency. For
example, other things being equal, one
would not expect to see higher rents for
office complexes with high efficiency
equipment. Alternatively, one would
expect higher energy efficiency in rental
units where the rent includes utilities
compared to those where the tenant
pays the utility bills separately. DOE
seeks data that might enable it to
conduct tests of market failure.
In addition, this rulemaking is likely
to yield certain ‘‘external’’ benefits
resulting from improved energy
efficiency of PTACs and PTHPs that are
not captured by the users of such
equipment. These include both
environmental and energy security
related externalities that are not
reflected in energy prices, such as
reduced emissions of greenhouse gases.
With regard to environmental
externalities, the emissions reductions
in today’s proposed rule are projected to
be 2.7 Mt of CO2 and 0.16 kt of NOX.
DOE invites comments on the weight
that should be placed on these factors in
DOE’s determination of the maximum
energy efficiency level at which the total
benefits are likely to exceed the total
burdens resulting from an amended
DOE standard.
DOE conducted a regulatory impact
analysis (RIA) and, under the Executive
Order, was subject to review by the
Office of Information and Regulatory
Affairs (OIRA) in the OMB. DOE
presented to OIRA for review the draft
proposed rule and other documents
prepared for this rulemaking, including
the RIA, and has included these
documents in the rulemaking record.
They are available for public review in
the Resource Room of the Building
Technologies Program, 950 L’Enfant
Plaza, SW., 6th Floor, Washington, DC
20024, (202) 586–9127, between 9 a.m.
and 4 p.m., Monday through Friday,
except Federal holidays.
The RIA is contained in the TSD
prepared as a separate report for the
rulemaking. The RIA consists of: (1) A
statement of the problem addressed by
this regulation, and the mandate for
government action; (2) a description and
analysis of the feasible policy
alternatives to this regulation; (3) a
quantitative comparison of the impacts
of the alternatives; and (4) the national
economic impacts of the proposed
standard.
The RIA calculates the effects of
feasible policy alternatives to PTAC and
PTHP amended energy conservation
standards, and provides a quantitative
comparison of the impacts of the
alternatives. DOE evaluated each
alternative in terms of its ability to
achieve significant energy savings at
reasonable costs, and compared it to the
effectiveness of the proposed rule. DOE
analyzed these alternatives using a
series of regulatory scenarios as input to
the NES Shipments Model for PTACs
and PTHPs, which it modified to allow
inputs for these measures.
DOE identified the following major
policy alternatives for achieving
increased PTAC and PTHP energy
efficiency:
• No new regulatory action;
• Commercial customer rebates;
• Commercial customer tax credits;
• Voluntary energy-efficiency
targets—ENERGY STAR;
TABLE VI.1.—NON-REGULATORY ALTERNATIVES TO STANDARDS
Energy
savings*
(quads)
Policy alternatives
No New Regulatory Action ......................................................................................................................
Commercial Customer Rebates ..............................................................................................................
Commercial Customer Tax Credits .........................................................................................................
Voluntary Energy-Efficiency Targets—ENERGY STAR ..........................................................................
Today’s Standards at TSL 4 ....................................................................................................................
0.000
0.006
0.010
0.017
0.019
Net present value**
(billion 2006$)
7% Discount rate
0.000
0.003
0.007
0.013
0.016
3% Discount rate
0.000
0.017
0.032
0.057
0.061
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* Energy savings are in source quads.
** Net present value is the value in the present of a time series of costs and savings. DOE determined the net present value from 2012 to
2062 in billions of 2006$.
The net present value amounts shown
in Table VI.1 refer to the NPV for
commercial customers. The costs to the
government of each policy (such as
rebates or tax credits) are not included
in the costs for the NPV since, on
balance, customers are both paying for
(through taxes) and receiving the
benefits of the payments. The following
paragraphs discuss each of the policy
alternatives listed in Table VI.1. (See
TSD, Regulatory Impact Analysis.)
No new regulatory action. The case in
which no regulatory action is taken with
regard to PTACs and PTHPs constitutes
the ‘‘base case’’ (or ‘‘No Action’’)
scenario. In this case, between the years
2012 and 2042, PTACs and PTHPs are
expected to use 2.63 quads of primary
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energy. By definition, no new regulatory
action yields zero (0) energy savings and
a net present value of zero dollars.
Financial Incentives Policies. DOE
considered several scenarios in which
the Federal government would provide
some form of financial incentive. It
studied two types of incentives: tax
credits and rebates. Tax credits could be
granted to customers who purchase high
efficiency PTAC and PTHP equipment.
Alternatively, the government could
issue tax credits to manufacturers or
customers to offset costs associated with
producing or purchasing high-efficiency
equipment. For this analysis, only a
customer tax credit, patterned after
provision in the EPACT of 2005, was
considered. The second incentive
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program involved a rebate program that
was nominally patterned after existing
rebate programs currently offered by
several utilities.
Commercial Customer Rebates. DOE
modeled the impact of the customer
rebate policy by determining the
increased customer participation rate
due to the rebates (i.e., the percent
increase in customers purchasing highefficiency equipment). It then applied
the resulting increase in market share of
efficient units to the NES spreadsheet
model to estimate the resulting NES and
NPV with respect to the base case.
After reviewing several utility rebate
programs currently in place (see Chapter
3 of the TSD), DOE decided to pattern
a potential national rebate program after
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a program now undertaken by Xcel
Energy. Xcel Energy is a large utility
that provides service to eight Western
and Midwestern states. A small public
utility in Minnesota, Shakopee Public
Utilities, offers a similar rebate program.
Under these programs, commercial
and industrial businesses buying PTACs
can receive a base payment of $7.50 per
ton for units rated at 9.20 EER and $1.25
per ton for every incremental increase of
0.1 EER above base requirements. When
compared against the incremental retail
costs of higher efficiency PTACs shown
in Chapter 8 of the TSD, the rebates
generally range between 17 and 23
percent of the incremental cost beyond
TSL 1. Because the baseline (ASHRAE/
IESNA Standard 90.1–1999) efficiency
standards are above 9.2 EER for all
equipment, it is more difficult to assess
an appropriate level of the rebate for
equipment just above the baseline
(specifically, at TSL 1) used in this
NOPR. For purposes of this analysis, it
was assumed that the same incremental
fraction of the cost between the baseline
unit and TSL 1 would be rebated as for
higher incremental efficiency levels. A
base payment for any unit exceeding a
minimum efficiency was also assumed
to be paid to commercial or industrial
customers applying for the rebate. The
specific provisions of the rebate
assumed for PTAC equipment were:
(a) $10.00 per ton for units rated
above the ASHRAE/IESNA Standard
90.1–1999 efficiency levels.
(b) A rebate paying 25 percent of the
incremental price difference between
the baseline efficiency level and the
particular TSL.
For PTHP equipment, the rebate
programs offered by Xcel Energy and
Shakopee Public Utilities double the
payment for incremental efficiency
above the baseline (from $1.25 to $2.50
per ton per 0.1 increments in the EER).
Following that pattern, the provisions
assumed for the PTHP equipment were:
(a) $10.00 per ton for units rated
above the ASHRAE/IESNA Standard
90.1–1999 efficiency levels.
(b) A rebate paying 50 percent of the
incremental price difference between
the baseline efficiency level and the
particular TSL.
As an example comparison, the rebate
application form for Xcel Energy shows
the calculation for 9,000 Btu/h PTAC
with an EER of 11.0. This unit would
receive a rebate of $39.37 under Xcel
Energy’s program. Under the provisions
of the National rebate program
constructed for this analysis, a 9,000
Btu/h PTHP unit at TSL 2 (EER = 11.1)
would receive a rebate of $38.97.
Using the method described in
Chapter 10 of the TSD to estimate
market shares, a new distribution of
sales by efficiency level (corresponding
to the various TSLs) was computed. The
rebates elicit greater purchases of higher
efficiency equipment that lower the
overall average annual energy
consumption per unit. The changes in
shipment-weighted annual energy
consumption are shown in Table VI.2.
TABLE VI.2.—SHIPMENT-WEIGHTED AVERAGE ANNUAL ENERGY CONSUMPTION PER UNIT FOR CUSTOMER REBATE
PROGRAM
Representative
cooling capacity
(Btu/h)
Equipment classes
Standard Size PTAC .......................................................................................
Standard Size PTHP .......................................................................................
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Non-Standard Size PTAC ................................................................................
Non-Standard Size PTHP ................................................................................
The rebate program lowers the retail
cost to the customer, but must be
financed by tax revenues. From a
societal point of view, the installed cost
at any efficiency level does not change
with the rebate policy; it simply
transfers part of the cost from the
customer to tax payers as a whole. Thus,
for calculation of total cost of
equipment, the revised estimates of
sales by efficiency level are multiplied
by the pre-rebate costs (i.e., identical to
those in the base case).
Commercial Customer Tax Credits.
DOE assumed a (commercial or
industrial) customer tax credit that is
patterned after the tax credits that were
created in EPACT 2005. EPACT 2005
provided tax credits to customers who
purchase and install specific products
such as energy efficient windows,
insulation, doors, roofs, and heating and
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Customer
rebate
1,012
1,277
1,984
2,379
1,556
2,505
1,007
1,271
1,974
2,366
1,549
2,499
9,000
12,000
9,000
12,000
11,000
11,000
cooling equipment. For many of these
products, the tax credit is equal to the
10 percent of the retail cost, limited to
specific dollar levels. For example, to
receive the tax credit for energy efficient
windows, the windows need to meet the
requirements of the 2000 IECC and
updated versions of the IECC published
since 2000.
The 10 percent customer tax credits
were assumed to apply to all PTAC
equipment above the baseline efficiency
(ASHRAE/IESNA Standard 90.1–1999).
The credits were assumed to apply only
to the retail cost of the equipment and
not to any additional costs related to
installation.
The 10 percent cost tax credit leads to
increased shares of sales of equipment
with efficiencies above the baseline. In
Chapter 11, a market allocation
algorithm is used to estimate market
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1999 (base case)
kWh/yr
Percent
change
¥0.46
¥0.49
¥0.49
¥0.54
¥0.42
¥0.23
shares of current sales of PTAC and
PTHP equipment. This same algorithm
was used to estimate the impact of the
tax credit upon the shares of equipment
by efficiency (as before, the discrete
efficiency levels correspond to the
TSLs).
As for the rebate policy, the method
described in Chapter 11 of the TSD was
used to estimate the change in market
shares that may result from a 10 percent
tax credit. A new distribution of sales by
efficiency level (corresponding to the
various TSLs) was computed. The tax
credits elicit greater purchases of higher
efficiency equipment that lower the
overall average annual energy
consumption per unit. The changes in
shipment-weighted annual energy
consumption are shown in Table VI.3.
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TABLE VI.3.—SHIPMENT-WEIGHTED AVERAGE ANNUAL ENERGY CONSUMPTION PER UNIT FOR CUSTOMER TAX CREDIT
PROGRAM
Representative
cooling capacity
(Btu/h)
Equipment classes
Standard Size PTAC .......................................................................................
Customer
tax credit
(10%)
1,012
1,277
1,984
2,379
1,556
2,505
1,005
1,269
1,971
2,364
1,544
2,487
9,000
12,000
9,000
12,000
11,000
11,000
Standard Size PTHP .......................................................................................
Non-Standard Size PTAC ................................................................................
Non-Standard Size PTHP ................................................................................
DOE assumed that a policy for
national voluntary energy efficiency
targets would be administered through
the Federal government’s ENERGY
STAR voluntary program conducted by
the Environmental Protection Agency
(EPA) and DOE. EPA and DOE qualify
energy efficient products as those that
exceed Federal minimum standards by
a specified amount, or if no Federal
standard exists, exhibit selected energy
saving features. Generally, the ENERGY
STAR program works to recognize the
top quartile of the products on the
market, meaning that approximately 25
percent of products on the market meet
or exceed the ENERGY STAR levels.
Although an ENERGY STAR program
for PTACs and PTHPs does not exist,
DOE is in the process of developing
such a program. The program is
designed to encourage manufacturers to
ASHRAE/IESNA
standard 90.1–
1999 (base case)
kWh/yr
manufacture and promote compliant
(labeled) equipment and for customers
to purchase labeled equipment. As yet,
no specific criteria have been
established as to the specific efficiency
levels that would qualify PTAC or PTHP
equipment to receive an ENERGY STAR
label. Most types of appliances and
equipment in the ENERGY STAR
program must be 10 percent or more
efficient than the prevailing National
efficiency standard. For the purpose of
modeling PTACs and PTHPs, DOE has
assumed that TSL 3 is a reasonable
estimate of where an ENERGY STAR
qualifying efficiency level may be
established.
The promotional activities of the
ENERGY STAR program are directed
toward increasing the sales of qualifying
equipment over time. For purposes of
this analysis, DOE assumed that the
Percent
change
¥0.68
¥0.65
¥0.64
¥0.63
¥0.78
¥0.73
market shares of ENERGY STAR
equipment would increase by a
minimum of 20 percent as compared to
the base case. The revised market shares
of sales by efficiency translate into
percentage increases (above the base
case) in the average EER for future
shipments.
Because this is a voluntary program,
without specific financial incentives,
some method must be developed to
generate the market distribution of
equipment with various efficiencies that
would result from an ENERGY STAR
program. As for the financial incentive
programs, the market shares algorithm
described in Chapter 11 of the TSD was
employed. For each equipment class,
the overall increase in the salesweighted efficiency achieved in this
manner is shown in Table VI.4.
TABLE VI.4.—SHIPMENT-WEIGHTED AVERAGE ANNUAL ENERGY CONSUMPTION PER UNIT FOR A FUTURE ENERGY STAR
PROGRAM
Equipment
Representative
cooling capacity
ASHRAE/IESNA
standard 90.1–
1999 (base case)
kWh/yr
ENERGY
STAR level
Standard Size PTAC ..........................................................................................
9,000 Btu/h .......
12,000 Btu/h .....
9,000 Btu/h .......
12,000 Btu/h .....
11,000 Btu/h .....
11,000 Btu/h .....
1,012
1,277
1,984
2,379
1,556
2,505
1,006
1,271
1,958
2,353
1,532
2,463
Standard Size PTHP ..........................................................................................
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Non-Standard Size PTAC ...................................................................................
Non-Standard Size PTHP ...................................................................................
Early Replacement Incentives. Early
replacement refers to the replacement of
PTAC/PTHP equipment before the end
of their useful lives. The purpose of this
policy is to retrofit or replace old,
inefficient equipment with high
efficiency units. DOE studied the
feasibility of a Federal program to
promote early replacement of
appliances and equipment under
EPACT 1992. In this study, DOE
identified Federal policy options for
early replacement that include a direct
national program, replacement of
Federally-owned equipment, promotion
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through equipment manufacturers,
customer incentives, incentives to
utilities, market behavior research, and
building regulations.
While cost effective opportunities to
install units that are more efficient exist
on a limited basis, DOE determined that
a Federal early replacement program is
not economically justified because the
market for PTAC and PTHP equipment
is relatively small and narrow.
Moreover, the savings are not likely to
be significantly higher than those
achieved by a voluntary program such
as ENERGY STAR program. A
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Percent
change
¥0.64%
¥0.50%
¥1.32%
¥1.09%
¥1.52%
¥1.68%
temporary surge in PTAC and PTHP
sales in the early 2000s further reduces
the potential for an effective early
replacement program.
Bulk Government Purchases. In this
policy alternative, bulk government
purchases refers to Federal, State, and
local governments being encouraged to
purchase equipment meeting the energy
conservation standards. The motivations
for this policy are that (1) aggregating
public sector demand could provide a
market signal to manufacturers and
vendors that some of their largest
customers seek suppliers with
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equipment that meet an efficiency target
at good prices, and (2) this could induce
‘‘market pull’’ impacts through the
effects of manufacturers and vendors
achieving economies of scale for high
efficiency equipment. As with the early
retirement policy, bulk government
purchases may provide cost effective
opportunities to install more efficient
equipment on a limited basis, however
it was concluded that a widespread bulk
purchase program was not economically
justified. This is because the segment/
share of the market that would be
affected by a bulk government purchase
program is a small portion of an already
relatively small market, as most of the
shipments/sales are to nongovernmental customers.
Energy Conservation Standards (TSL
4). DOE proposes to adopt the energy
conservation levels listed in section V.C.
As indicated in the paragraphs above,
none of the alternatives DOE examined
would save as much energy as the
proposed standards. In addition, several
of the alternatives would require new
enabling legislation, such as customer
tax credits, since authority to carry out
those alternatives does not presently
exist.
B. Review Under the Regulatory
Flexibility Act/Initial Regulatory
Flexibility Analysis
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires preparation
of an initial regulatory flexibility
analysis for any rule that by law must
be proposed for public comment, unless
the agency certifies that the rule, if
promulgated, will not have a significant
economic impact on a substantial
number of small entities. As required by
Executive Order 13272, ‘‘Proper
Consideration of Small Entities in
Agency Rulemaking,’’ 67 FR 53461
(August 16, 2002), DOE published
procedures and policies on February 19,
2003, to ensure that the potential
impacts of its rules on small entities are
properly considered during the
rulemaking process. 68 FR 7990. DOE
has made its procedures and policies
available on the Office of General
Counsel’s Web site: https://
www.gc.doe.gov.
Small businesses, as defined by the
Small Business Administration (SBA)
for the PTAC and PTHP manufacturing
industry, are manufacturing enterprises
with 750 employees or fewer. DOE used
the small business size standards
published on January 31, 1996, as
amended, by the SBA to determine
whether any small entities would be
required to comply with the rule. 61 FR
3286 and codified at 13 CFR part 121.
The size standards are listed by North
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American Industry Classification
System (NAICS) code and industry
description. PTAC and PTHP
manufacturing is classified under
NAICS 333415.
The PTAC and PTHP industry is
characterized by both domestic and
international manufacturers. Standard
size PTACs and PTHPs are primarily
manufactured abroad with the exception
of one domestic PTAC and PTHP
manufacturer. Non-standard size PTACs
and PTHPs are primarily manufactured
domestically by a handful of
manufacturers. Consolidation within the
PTAC and PTHP industry has reduced
the number of parent companies that
manufacture similar equipment under
different affiliates and labels. Prior to
issuing this notice of proposed
rulemaking, DOE interviewed two small
businesses affected by the rulemaking.
DOE also obtained information about
small business impacts while
interviewing manufacturers that exceed
the small business size threshold of 750
employees.
DOE reviewed ARI’s Applied
Directory of Certified Product
Performance (2006) and created a list of
every manufacturer that had certified
equipment ratings in the directory. DOE
also asked stakeholders and ARI
representatives within the PTAC and
PTHP industry if they were aware of any
other small manufacturers. DOE then
looked at publicly available data and
contacted manufacturers, where needed,
to determine if they meet the SBA’s
definition of a small manufacturing
facility and have their manufacturing
facilities located within the United
States. Based on this analysis, DOE
estimates that there are two small
manufacturers of PTACs and PTHPs. Of
these two manufacturers, one of them
operates manufacturing facilities within
the United States. The one domestic
manufacturer solely produces nonstandard equipment. DOE, then,
contacted both small manufacturers. It
subsequently conducted two on-site
interviews with small manufacturers,
one standard size manufacturer and one
non-standard size manufacturer, to
determine if there are differential
impacts on these companies that may
result from amended energy
conservation standards.
DOE found that, in general, small
manufacturers have the same concerns
as large manufacturers regarding
amended energy conservation
standards. DOE summarized the key
issues for standard size and nonstandard size manufacturers in section
IV.I.3 of today’s notice. Both
manufacturers echoed the same
concerns regarding amended energy
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conservation standards as the larger
manufacturers. In addition, the small
manufacturer of non-standard size
equipment particularly stated its
concern for the equipment class
misclassification within ASHRAE/
IESNA Standard 90.1–1999, which is
detailed in sections IV.A.2 and V.C of
today’s notice. DOE found no significant
differences in the R&D emphasis or
marketing strategies between small
business manufacturers and large
manufacturers. Therefore, for the classes
comprised primarily of small
businesses, DOE believes the GRIM
analysis, which models each equipment
class separately, is representative of the
small businesses affected by standards.
The qualitative and quantitative GRIM
results are summarized in section V.B.2
of today’s notice.
DOE reviewed the standard levels
considered in today’s notice of proposed
rulemaking under the provisions of the
Regulatory Flexibility Act and the
procedures and policies published on
February 19, 2003. Based on the
foregoing, DOE determined that it
cannot certify that these proposed
energy conservation standard levels, if
promulgated, would have no significant
economic impact on a substantial
number of small entities. DOE made this
determination because of the potential
impacts that the proposed energy
conservation standard levels under
consideration for standard size and nonstandard size PTACs and PTHPs would
have on the manufacturers, including
the small businesses, which
manufacture them. Consequently, DOE
has prepared an initial regulatory
flexibility analysis (IRFA) for this
rulemaking. The IRFA describes
potential impacts on small businesses
associated with standard size and nonstandard size PTAC and PTHP design
and manufacturing.
The potential impacts on standard
size and non-standard size PTAC and
PTHP manufacturers are discussed in
the following sections. DOE has
transmitted a copy of this IRFA to the
Chief Counsel for Advocacy of the Small
Business Administration for review.
1. Reasons for the Proposed Rule
Part A–1 of Title III of EPCA
addresses the energy efficiency of
certain types of commercial and
industrial equipment. (42 U.S.C. 6311–
6317) It contains specific mandatory
energy conservation standards for
commercial PTACs and PTHPs. (42
U.S.C. 6313(a)(3)) EPACT 1992, Public
Law 102–486, also amended EPCA with
respect to PTACs and PTHPs, providing
definitions in section 122(a), test
procedures in section 122(b), labeling
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provisions in section 122(c), and the
authority to require information and
reports from manufacturers in section
122(e).40 DOE publishes today’s NOPR
pursuant to Part A–1. The PTAC and
PTHP test procedures appear at Title 10
CFR section 431.96.
EPCA established Federal energy
conservation standards that generally
correspond to the levels in ASHRAE/
IESNA Standard 90.1, as in effect on
October 24, 1992 (ASHRAE/IESNA
Standard 90.1–1989), for each type of
covered equipment listed in section
342(a) of EPCA, including PTACs and
PTHPs. (42 U.S.C. 6313(a)) For each
type of equipment, EPCA directed that
if ASHRAE/IESNA Standard 90.1 is
amended, DOE must adopt an amended
standard at the new level in ASHRAE/
IESNA Standard 90.1, unless clear and
convincing evidence supports a
determination that adoption of a more
stringent level as a national standard
would produce significant additional
energy savings and be technologically
feasible and economically justified. (42
U.S.C. 6313(a)(6)(A)(ii)(II)) In
accordance with these statutory criteria,
DOE is proposing in today’s notice to
amend the energy conservation
standards for PTACs and PTHPs by
raising the efficiency levels for this
equipment above the efficiency levels
specified by ASHRAE/IESNA Standard
90.1–1999.
2. Objectives of, and Legal Basis For, the
Proposed Rule
For each type of equipment, EPCA
directed that if ASHRAE/IESNA
Standard 90.1 is amended, DOE must
adopt an amended standard at the new
level in ASHRAE/IESNA Standard 90.1,
unless clear and convincing evidence
supports a determination that adoption
of a more stringent level as a national
standard would produce significant
additional energy savings and be
technologically feasible and
economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)(II)) To determine
whether economic justification exists,
DOE reviews comments received and
conducts analysis to determine whether
the economic benefits of the proposed
standard exceed the burdens to the
greatest extent practicable, taking into
consideration seven factors set forth in
42 U.S.C. 6295(o)(2)(B) (see Section II.B
of this preamble). (42 U.S.C. 6316(a))
Further information concerning the
background of this rulemaking is
provided in Chapter 1 of the TSD.
40 These requirements are codified in Part A–1 of
Title III of EPCA, as amended, 42 U.S.C. 6311–6316,
and Title 10 of the Code of Federal Regulations, Part
431 (10 CFR Part 431) at 10 CFR 431.92, 431.96,
431.97, and subparts U and V.
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3. Description and Estimated Number of
Small Entities Regulated
By researching the standard size and
non-standard size PTAC and PTHP
market, developing a database of
manufacturers, and conducting
interviews with manufacturers (both
large and small), DOE was able to
estimate the number of small entities
that would be regulated under a
proposed energy conservation standard.
DOE estimates that, of the 4 domestic
manufacturers it has identified as
making residential PTACs and PTHPs,
one is known to be a small business. See
Chapter 12 of the TSD for further
discussion about the methodology used
in DOE’s manufacturer impact analysis
and its analysis of small-business
impacts.
4. Description and Estimate of
Compliance Requirements
Potential impacts on manufacturers,
including small businesses, come from
impacts associated with standard size
and non-standard size design and
manufacturing. The margins and/or
market share of manufacturers,
including small businesses, in the
standard size and non-standard size
PTAC and PTHP industry could be
negatively impacted in the long term by
the standard levels under consideration
in this notice of proposed rulemaking,
specifically TSL 4. At TSL 4, as opposed
to lower TSLs, small manufacturers
would have less flexibility in choosing
a design path. However, as discussed
under subsection 6 (Significant
alternatives to the rule) below, DOE
expects that the differential impact on
small, standard and non-standard size
PTAC and PTHP manufacturers (versus
large businesses) would be smaller in
moving from TSL 1 to TSL 2 than it
would be in moving from TSL 3 to TSL
4. The rationale for DOE’s expectation is
best discussed in a comparative context
and is therefore elaborated upon in
subsection 6 (Significant alternatives to
the rule). As discussed in the
introduction to this IRFA, DOE expects
that the differential impact associated
with PTAC and PTHP design and
manufacturing on small, non-standard
size and standard size businesses would
be negligible.
5. Duplication, Overlap, and Conflict
With Other Rules and Regulations
DOE is not aware of any rules or
regulations that duplicate, overlap, or
conflict with the rule being considered
today.
6. Significant Alternatives to the Rule
The primary alternatives to the
proposed rule considered by DOE are
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18911
the other TSLs besides the one being
considered today, TSL 4. These
alternative TSLs and their associated
impacts on small business are discussed
in the subsequent paragraphs. In
addition to the other TSLs considered,
the TSD associated with this proposed
rule includes a report referred to in
section VI.A in the preamble as the
regulatory impact analysis (RIA—
discussed earlier in this report and in
detail in the TSD). This report discusses
the following policy alternatives: (1) No
new regulatory action, (2) financial
incentives policies, (3) voluntary energy
efficiency targets—ENERGY STAR, (4)
early replacement incentives, and (5)
bulk government purchases. The energy
savings and beneficial economic
impacts of these regulatory alternatives
are one to two orders of magnitude
smaller than those expected from the
standard levels under consideration.
The entire non-standard size PTAC
and PTHP industry has such low
shipments that no designs are produced
at high volume. There is little
repeatability of designs, so small
businesses can competitively produce
many non-standard size PTAC and
PTHP designs. The PTAC and PTHP
industry as a whole primarily has
experience producing equipment with
efficiencies that would comply with the
ASHRAE/IESNA Standard 90.1–1999
baseline. In addition, the standard-size
PTAC and PTHP industry produces a
significant number of units that would
comply with efficiency levels above the
baseline using R–22 refrigerant. All
manufacturers, including small
businesses, would have to develop
designs to enable compliance to higher
TSLs, with the expected Environmental
Protection Agency mandated alternative
refrigerant requirement to take affect in
2010. Development costs would be more
burdensome to small businesses.
Product redesign costs tend to be fixed
and do not scale with sales volume.
Thus, small businesses would be at a
relative disadvantage at higher TSLs
because research and development
efforts would be on the same scale as
those for larger companies, but these
expenses would be recouped over
smaller sales volumes.
At TSL 4, manufacturers stated their
concerns over the ability to be able to
produce PTHPs by the future effective
date of the standard using R–410A
refrigerant. Using the performance
degradations from the engineering
analysis, TSL 4 for PTHPs would
correspond to the ‘‘max-tech’’ efficiency
levels for PTHPs unless higher
efficiency compressors enter the market
prior to the effective date of an amended
energy conservation standard. At TSL 4
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and above, DOE estimates that the
majority of manufacturers would be
negatively impacted, especially nonstandard size manufacturers. Based on
information submitted by industry,
manufacturers would require a complete
redesign of their non-standard PTAC
and PTHP platforms’ higher TSLs. They
did not see the advantage to completely
redesigning non-standard size PTACs
and PTHPs in small and declining
market and would not be willing to
redesign completely non-standard size
equipment because of the small size of
the market and the declining sales.
Manufacturers also commented nonstandard size PTACs and PTHPs are
manufactured to order based on unique
building designs for replacement
applications. This concern was echoed
by all manufacturers, not just small
business manufacturers.
The primary difference between TSL
3 and TSL 4 from the manufacturers’
viewpoint is that at TSL 3 both PTACs
and PTHPs have to conform to the same,
higher efficiency levels at a given
capacity. TSL 4 would require
manufacturers to design PTHPs at
higher efficiency levels than that of
PTACs at the same cooling capacity.
The differences in efficiencies between
PTACs and PTHPs could negatively
affect the margins or decrease the
market share of small businesses
because manufacturers would
potentially need to design separate
platforms of PTACs and PTHPs. Each
platform would require significant
capital for research and development
that small business may not readily
have as their large competitors.
Chapter 12 of the TSD contains more
information about the impact of this
rulemaking on manufacturers. DOE
interviewed two small businesses
affected by this rulemaking (see also
section IV.F.1 above). DOE also obtained
information about small business
impacts while interviewing
manufacturers that exceed the small
business size threshold of 750
employees.
C. Review Under the Paperwork
Reduction Act
This rulemaking will impose no new
information or record keeping
requirements. Accordingly, Office of
Management and Budget clearance is
not required under the Paperwork
Reduction Act. (44 U.S.C. 3501 et seq.)
D. Review Under the National
Environmental Policy Act
DOE has prepared a draft
environmental assessment (EA) of the
impacts of the proposed rule, pursuant
to the National Environmental Policy
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Act of 1969 (42 U.S.C. 4321 et seq.), the
regulations of the Council on
Environmental Quality (40 CFR parts
1500–1508), and DOE’s regulations for
compliance with the National
Environmental Policy Act (10 CFR part
1021). The EA has been incorporated
into the TSD; the environmental impact
analyses are contained primarily in
Chapter 16 for that document. Before
issuing the final rule for PTACs and
PTHPs, DOE will consider public
comments and, as appropriate, issue the
final EA. Based on the EA, DOE will
determine whether to issue a finding of
no significant impact or prepare an
environmental impact statement for this
rulemaking.
E. Review Under Executive Order 13132
Executive Order 13132, ‘‘Federalism,’’
64 FR 43255 (August 4, 1999) imposes
certain requirements on agencies
formulating and implementing policies
or regulations that preempt State law or
that have federalism implications. The
Executive Order requires agencies to
examine the constitutional and statutory
authority supporting any action that
would limit the policymaking discretion
of the States and to assess carefully the
necessity for such actions. The
Executive Order also requires agencies
to have an accountable process to
ensure meaningful and timely input by
State and local officials in the
development of regulatory policies that
have federalism implications. On March
14, 2000, DOE published a statement of
policy describing the intergovernmental
consultation process it will follow in the
development of such regulations. 65 FR
13735. DOE has examined today’s
proposed rule and has determined that
it does not have a substantial direct
effect on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various levels of government. EPCA
governs and prescribes Federal
preemption of State regulations as to
energy conservation for the equipment
that is the subject of today’s proposed
rule. States can petition DOE for
exemption from such preemption to the
extent, and based on criteria, set forth in
EPCA. (42 U.S.C. 6297(d) and
6316(b)(2)(D)) No further action is
required by Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing
regulations and the promulgation of
new regulations, section 3(a) of
Executive Order 12988, ‘‘Civil Justice
Reform,’’ 61 FR 4729 (February 7, 1996)
imposes on Federal agencies the general
duty to adhere to the following
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requirements: (1) Eliminate drafting
errors and ambiguity; (2) write
regulations to minimize litigation; and
(3) provide a clear legal standard for
affected conduct rather than a general
standard and promote simplification
and burden reduction. Section 3(b) of
Executive Order 12988 specifically
requires that Executive agencies make
every reasonable effort to ensure that the
regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly
specifies any effect on existing Federal
law or regulation; (3) provides a clear
legal standard for affected conduct
while promoting simplification and
burden reduction; (4) specifies the
retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses
other important issues affecting clarity
and general draftsmanship under any
guidelines issued by the Attorney
General. Section 3(c) of Executive Order
12988 requires Executive agencies to
review regulations in light of applicable
standards in section 3(a) and section
3(b) to determine whether they are met
or it is unreasonable to meet one or
more of them. DOE has completed the
required review and determined that, to
the extent permitted by law, this
proposed rule meets the relevant
standards of Executive Order 12988.
G. Review Under the Unfunded
Mandates Reform Act of 1995
Title II of the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104–4)
(UMRA) requires each Federal agency to
assess the effects of Federal regulatory
actions on State, local, and Tribal
governments and the private sector. For
a proposed regulatory action likely to
result in a rule that may cause the
expenditure by State, local, and Tribal
governments, in the aggregate, or by the
private sector of $100 million or more
in any one year (adjusted annually for
inflation), section 202 of UMRA requires
a Federal agency to publish a written
statement that estimates the resulting
costs, benefits, and other effects on the
national economy. (2 U.S.C. 1532(a),(b))
The UMRA also requires a Federal
agency to develop an effective process
to permit timely input by elected
officers of State, local, and Tribal
governments on a proposed ‘‘significant
intergovernmental mandate,’’ and
requires an agency plan for giving notice
and opportunity for timely input to
potentially affected small governments
before establishing any requirements
that might significantly or uniquely
affect small governments. On March 18,
1997, DOE published a statement of
policy on its process for
intergovernmental consultation under
UMRA (62 FR 12820) (also available at
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https://www.gc.doe.gov). The proposed
rule published today contains neither an
intergovernmental mandate nor a
mandate that may result in expenditure
of $100 million or more in any year, so
these requirements do not apply.
H. Review Under the Treasury and
General Government Appropriations
Act, 1999
Section 654 of the Treasury and
General Government Appropriations
Act, 1999 (Pub. L. 105–277) requires
Federal agencies to issue a Family
Policymaking Assessment for any rule
that may affect family well-being. This
rule would not have any impact on the
autonomy or integrity of the family as
an institution. Accordingly, DOE has
concluded that it is not necessary to
prepare a Family Policymaking
Assessment.
I. Review Under Executive Order 12630
DOE has determined, under Executive
Order 12630, ‘‘Governmental Actions
and Interference with Constitutionally
Protected Property Rights,’’ 53 FR 8859
(March 18, 1988), that this regulation
would not result in any taking that
would require compensation under the
Fifth Amendment to the United States
Constitution.
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J. Review Under the Treasury and
General Government Appropriations
Act, 2001
The Treasury and General
Government Appropriations Act, 2001
(44 U.S.C. 3516 note) provides for
agencies to review most disseminations
of information to the public under
guidelines established by each agency
pursuant to general guidelines issued by
OMB. OMB’s guidelines were published
at 67 FR 8452 (February 22, 2002), and
DOE’s guidelines were published at 67
FR 62446 (October 7, 2002). DOE has
reviewed today’s notice under the OMB
and DOE guidelines and has concluded
that it is consistent with applicable
policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ‘‘Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use,’’ 66 FR 28355 (May
22, 2001) requires Federal agencies to
prepare and submit to the Office of
Information and Regulatory Affairs
(OIRA) at OMB, a Statement of Energy
Effects for any proposed significant
energy action. A ‘‘significant energy
action’’ is defined as any action by an
agency that promulgated or is expected
to lead to promulgation of a final rule,
and that: (1) Is a significant regulatory
action under Executive Order 12866, or
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any successor order; and (2) is likely to
have a significant adverse effect on the
supply, distribution, or use of energy, or
(3) is designated by the Administrator of
OIRA as a significant energy action. For
any proposed significant energy action,
the agency must give a detailed
statement of any adverse effects on
energy supply, distribution, or use
should the proposal be implemented,
and of reasonable alternatives to the
action and their expected benefits on
energy supply, distribution, and use.
Today’s regulatory action would not
have a significant adverse effect on the
supply, distribution, or use of energy
and, therefore, is not a significant
energy action. Accordingly, DOE has not
prepared a Statement of Energy Effects.
L. Review Under the Information
Quality Bulletin for Peer Review
On December 16, 2004, OMB, in
consultation with the Office of Science
and Technology (OSTP), issued its
‘‘Final Information Quality Bulletin for
Peer Review’’ (Bulletin). 70 FR 2664
(January 14, 2005). The Bulletin
establishes that certain scientific
information shall be peer reviewed by
qualified specialists before it is
disseminated by the Federal
government, including influential
scientific information related to agency
regulatory actions. The purpose of the
bulletin is to enhance the quality and
credibility of the Government’s
scientific information. Under the
Bulletin, the energy conservation
standards rulemakings analyses are
‘‘influential scientific information.’’ The
Bulletin defines ‘‘influential scientific
information’’ as ‘‘scientific information
the agency reasonably can determine
will have, or does have, a clear and
substantial impact on important public
policies or private sector decisions.’’ 70
FR 2667 (January 14, 2005).
In response to OMB’s Bulletin, DOE
conducted formal in-progress peer
reviews of the energy conservation
standards development process and
analyses and has prepared a Peer
Review Report pertaining to the energy
conservation standards rulemaking
analyses. The ‘‘Energy Conservation
Standards Rulemaking Peer Review
Report’’ dated February 2007 has been
disseminated and is available at the
following Web site: https://
www.eere.energy.gov/buildings/
appliance_standards/peer_review.html.
DOE on June 28–29, 2005.
VII. Public Participation
A. Attendance at Public Meeting
The time and date of the public
meeting are listed in the DATES section
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18913
at the beginning of this notice of
proposed rulemaking. The public
meeting will be held at the U.S.
Department of Energy, Forrestal
Building, Room 1E–245, 1000
Independence Avenue, SW.,
Washington, DC, 20585–0121. To attend
the public meeting, please notify Ms.
Brenda Edwards at (202) 586–2945.
Foreign nationals visiting DOE
Headquarters are subject to advance
security screening procedures, requiring
a 30-day advance notice. Any foreign
national wishing to participate in the
meeting should advise DOE of this fact
as soon as possible by contacting Ms.
Brenda Edwards to initiate the
necessary procedures.
B. Procedure for Submitting Requests To
Speak
Any person who has an interest in
today’s notice, or who is a
representative of a group or class of
persons that has an interest in these
issues, may request an opportunity to
make an oral presentation. Such persons
may hand-deliver requests to speak,
along with a computer diskette or CD in
WordPerfect, Microsoft Word, PDF, or
text (ASCII) file format to the address
shown in the ADDRESSES section at the
beginning of this notice of proposed
rulemaking between the hours of 9 a.m.
and 4 p.m., Monday through Friday,
except Federal holidays. Requests may
also be sent by mail or e-mail to:
Brenda.Edwards@ee.doe.gov.
Persons requesting to speak should
briefly describe the nature of their
interest in this rulemaking and provide
a telephone number for contact. DOE
requests persons selected to be heard to
submit an advance copy of their
statements by 4 p.m., April 21, 2008. At
its discretion, DOE may permit any
person who cannot supply an advance
copy of their statement to participate, if
that person has made advance
alternative arrangements with the
Building Technologies Program. The
request to give an oral presentation
should ask for such alternative
arrangements.
C. Conduct of Public Meeting
DOE will designate a DOE official to
preside at the public meeting and may
use a professional facilitator to aid
discussion. The meeting will not be a
judicial or evidentiary-type public
hearing, but DOE will conduct it in
accordance with 5 U.S.C. 553 and
section 336 of EPCA, 42 U.S.C. 6306. A
court reporter will be present to record
the proceedings and prepare a
transcript. DOE reserves the right to
schedule the order of presentations and
to establish the procedures governing
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the conduct of the public meeting. After
the public meeting, interested parties
may submit further comments on the
proceedings as well as on any aspect of
the rulemaking until the end of the
comment period.
The public meeting will be conducted
in an informal, conference style. DOE
will present summaries of comments
received before the public meeting,
allow time for presentations by
participants, and encourage all
interested parties to share their views on
issues affecting this rulemaking. Each
participant will be allowed to make a
prepared general statement (within time
limits determined by DOE), before the
discussion of specific topics. DOE will
permit other participants to comment
briefly on any general statements.
At the end of all prepared statements
on a topic, DOE will permit participants
to clarify their statements briefly and
comment on statements made by others.
Participants should be prepared to
answer questions by DOE and by other
participants concerning these issues.
DOE representatives may also ask
questions of participants concerning
other matters relevant to this
rulemaking. The official conducting the
public meeting will accept additional
comments or questions from those
attending, as time permits. The
presiding official will announce any
further procedural rules or modification
of the above procedures that may be
needed for the proper conduct of the
public meeting.
DOE will make the entire record of
this proposed rulemaking, including the
transcript from the public meeting,
available for inspection at the U.S.
Department of Energy, Forrestal
Building, Resource Room of the
Building Technologies Program, 950
L’Enfant Plaza, SW., 6th Floor,
Washington, DC 20024, (202) 586–9127,
between 9 a.m. and 4 p.m., Monday
through Friday, except Federal holidays.
Any person may buy a copy of the
transcript from the transcribing reporter.
D. Submission of Comments
DOE will accept comments, data, and
information regarding the proposed rule
before or after the public meeting, but
no later than the date provided at the
beginning of this notice of proposed
rulemaking. Please submit comments,
data, and information electronically.
Send them to the following e-mail
address: ptac_hp@ee.doe.gov. Submit
electronic comments in WordPerfect,
Microsoft Word, PDF, or text (ASCII) file
format and avoid the use of special
characters or any form of encryption.
Comments in electronic format should
be identified by the docket number EE–
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RM/STD–2007–BT–STD–0012 and/or
RIN 1904–AB44, and wherever possible
carry the electronic signature of the
author. Absent an electronic signature,
comments submitted electronically
must be followed and authenticated by
submitting the signed original paper
document. No telefacsimiles (faxes) will
be accepted.
According to 10 CFR 1004.11, any
person submitting information that he
or she believes to be confidential and
exempt by law from public disclosure
should submit two copies: one copy of
the document including all the
information believed to be confidential,
and one copy of the document with the
information believed to be confidential
deleted. DOE will make its own
determination about the confidential
status of the information and treat it
according to its determination.
Factors of interest to DOE when
evaluating requests to treat submitted
information as confidential include: (1)
A description of the items; (2) whether
and why such items are customarily
treated as confidential within the
industry; (3) whether the information is
generally known by or available from
other sources; (4) whether the
information has previously been made
available to others without obligation
concerning its confidentiality; (5) an
explanation of the competitive injury to
the submitting person which would
result from public disclosure; (6) when
such information might lose its
confidential character due to the
passage of time; and (7) why disclosure
of the information would be contrary to
the public interest.
E. Issues on Which DOE Seeks Comment
DOE is particularly interested in
receiving comments and views of
interested parties concerning the
following issues:
1. Addendum t to ASHRAE/IESNA
Standard 90.1–2007 (i.e., ARI’s
continuous maintenance proposal on
PTACs and PTHPs), which proposes
changes to the non-standard
delineations in ASHRAE/IESNA
Standard 90.1–1999. As explained in
section IV.C.2, of this preamble, DOE
proposes to incorporate the modified
definitions in Addendum t in the final
rule if ASHRAE adopts Addendum t
prior to September 2008.
2. The approach to extrapolate the
engineering analysis to cooling
capacities for which complete analysis
was not performed.
3. The EER and COP pairings for
PTHPs based on current ARI product
directory information.
4. The rebound effect for the PTAC
and PTHP industry.
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5. Estimation for the installation,
maintenance, and repair costs. In
particular, DOE is interested in how the
installation, maintenance, and repair
costs may change with the
implementation of R–410A refrigerant
in 2010 because DOE’s estimates are
based on R–22 data from the field.
6. The prediction and the potential
significance of the overestimate in
energy savings due to the assumption
that forecasted market shares of PTACs
and PTHPs at each efficiency level
considered in the NOPR would remain
frozen beginning in 2012 until the end
of the forecast period (30 years after the
effective date—the year 2042). In
particular, DOE requests data that
would enable it to better characterize
the likely increases in efficiency that
would occur over the 30-year analysis
period in the absence of this rule (i.e.,
the distribution of efficiency levels in
absence of standards is assumed to be
constant).
7. The NES-forecasted base case
distribution of efficiencies after the
refrigerant phaseout and its prediction
on how amended energy conservation
standards impact the distribution of
efficiencies in the standards case.
8. Whether amended energy
conservation standards will result in
PTAC and PTHP customers shifting to
other, less efficient equipment types.
9. The NES shipments forecasts of
total shipments for standard size and
non-standard size equipment. In
addition, the distribution of standard
size equipment being placed into new
construction buildings versus replacing
existing units.
10. The proposed standard level, TSL
4, for standard size PTACs and PTHPs
and non-standard size PTACs and
PTHPs.
11. Whether DOE should consider
either a higher or a lower TSL,
including the ASHRAE/IESNA Standard
90.1–1999 baseline efficiency levels, in
the final rule due to the magnitude of
the impacts and the cumulative
regulatory burdens of the R–22
phaseout.
12. The proposal to adopt TSL 4
which requires different efficiency
levels for PTACs and PTHPs, DOE is
interested in receiving comment on
potential equipment switching as
discussed in section IV.G.3 of today’s
notice (i.e., will TSL 4 cause PTHP
customers to shift to less efficient
PTACs).
13. The unique impacts on the nonstandard size equipment and
manufacturers. In particular, the
consideration of a lower TSL for nonstandard size PTACs and PTHPs due to
the unique market and potentially
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substantial impacts. For example, at
TSL 4, non-standard size manufacturers
are expected to lose from $9 million to
$12 million in INPV, which is a
reduction in 34 percent to 44 percent. In
addition, whether the ASHRAE/IESNA
Standard 90.1–1999 delineations for
standard and non-standard size units
would result in equipment lines being
misclassified and unavailable.
14. The above-discussed approach for
labeling of PTACs and PTHPs.
Specifically, DOE invites comments on
the types of energy use information and
format consumers would find useful on
a PTAC or PTHP label.
VIII. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of this proposed rule.
List of Subjects in 10 CFR Part 431
Administrative practice and
procedure, Energy conservation,
Household appliances.
PART 431—ENERGY EFFICIENCY
PROGRAM FOR CERTAIN
COMMERCIAL AND INDUSTRIAL
EQUIPMENT
inches high, or greater than or equal to
42 inches wide.
*
*
*
*
*
3. Section 431.97 of Subpart F is
amended by revising paragraph (a),
including Tables 1 and 2, and by adding
a new paragraph (c) to read as follows:
1. The authority citation for part 431
continues to read as follows:
§ 431.97 Energy efficiency standards and
their effective dates.
Federal Regulations, part 431 is
proposed to be amended to read as set
forth below.
Authority: 42 U.S.C. 6291–6317.
2. Section 431.92 of Subpart F is
amended by adding in alphabetical
order new definitions for ‘‘Non-standard
size’’ and ‘‘Standard size,’’ to read as
follows:
§ 431.92 Definitions concerning
commercial air conditioners and heat
pumps.
*
Issued in Washington, DC, on March 28,
2008.
Alexander A. Karsner,
Assistant Secretary, Energy Efficiency and
Renewable Energy.
For the reasons set forth in the
preamble, chapter II of title 10, Code of
*
*
*
*
Non-standard size means a packaged
terminal air conditioner or packaged
terminal heat pump with wall sleeve
dimensions less than 16 inches high and
less than 42 inches wide.
*
*
*
*
*
Standard size means a packaged
terminal air conditioner or packaged
terminal heat pump with a wall sleeve
dimension greater than or equal to 16
(a) All small or large commercial
package air-conditioning and heating
equipment manufactured on or after
January 1, 1994 (except for large
commercial package air-conditioning
and heating equipment, for which the
effective date is January 1, 1995), and
before January 1, 2010 in the case of the
air-cooled equipment covered by the
standards in paragraph (b), must meet
the applicable minimum energy
efficiency standard level(s) set forth in
Tables 1 and 2 of this section. Each
packaged terminal air conditioner or
packaged terminal heat pump
manufactured on or after January 1,
1994, and before September 30, 2012,
must meet the applicable minimum
energy efficiency standard level(s) set
forth in Tables 1 and 2 of this section.
TABLE 1 TO § 431.97.—MINIMUM COOLING EFFICIENCY LEVELS
Efficiency level1
Product
Category
Sub-category
Products manufactured until October
29, 2003
Air Cooled, 3 Phase
<65,000 Btu/h ...........
Split System ..............
Single Package .........
SEER = 10.0 .............
SEER = 9.7 ...............
SEER = 10.0.
SEER = 9.7.
Air Cooled .................
≥65,000 Btu/h and
<135,000 Btu/h.
<17,000 Btu/h ...........
All ..............................
EER = 8.9 .................
EER = 8.9.
AC .............................
HP .............................
AC .............................
HP .............................
AC .............................
HP .............................
All ..............................
EER
EER
EER
EER
EER
EER
EER
EER
EER
EER
EER
EER
EER
EER
≥135,000 Btu/h and
<240,000 Btu/h.
All ..............................
EER = 9.6 .................
EER = 9.6.3
<7,000 Btu/h .............
All ..............................
EER = 8.88 ...............
EER = 8.88.
≥7,000 Btu/h and
≤15,000 Btu/h
...................................
>15,000 Btu/h ...........
Small Commercial
Packaged Air Conditioning and Heating
Equipment.
Cooling capacity
...................................
EER = 10.0¥(0.16 ×
capacity [in kBtu/h
at 95°F outdoor
dry-bulb temperature]).
EER = 7.6 .................
EER = 10.0¥(0.16 ×
capacity [in kBtu/h
at 95°F outdoor
dry-bulb temperature]).
EER = 7.6
Water Cooled Evaporatively Cooled,
and Water-Source.
Large Commercial
Packaged Air Conditioning and Heating
Equipment.
mstockstill on PROD1PC66 with PROPOSALS2
Packaged Terminal Air
Conditioners and
Heat Pumps.
Air Cooled .................
Water-Cooled and
Evaporatively
Cooled.
All ..............................
≥17,000 Btu/h and
<65,000 Btu/h.
≥65,000 Btu/h and
<135,000 Btu/h.
≥135,000 Btu/h and
<240,000 Btu/h.
=
=
=
=
=
=
=
9.3 .................
9.3 .................
9.3 .................
9.3 .................
10.5 ...............
10.5 ...............
8.5 .................
Products manufactured on and after
October 29, 2003
=
=
=
=
=
=
=
12.1.
11.2.
12.1.
12.0.
11.5.2
12.0.
8.5.
equipment rated according to the ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products and evaporatively-cooled products and at 85 °F entering water temperature for water-cooled products. For water-source heat pumps rated
according to the ISO standard, EER must be rated at 30 °C (86 °F) entering water temperature.
2 Deduct 0.2 from the required EER for units with heating sections other than electric resistance heat.
3 Effective 10/29/2004, the minimum value became EER = 11.0.
1 For
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TABLE 2 TO § 431.97.—MINIMUM HEATING EFFICIENCY LEVELS
Efficiency level 1
Product
Category
Products manufactured until October
29, 2003
Air Cooled, 3 Phase
<65,000 Btu/h ...........
Split System ..............
Single Package .........
HSPF = 6.8 ...............
HSPF = 6.6 ...............
HSPF = 6.8.
HSPF = 6.6.
<135,000 Btu/h .........
COP = 4.2.
≥65,000 Btu/h and
≤135,000 Btu/h.
≥135,000 Btu/h and
<0,000 Btu/h.
Split System and Single Package.
All ..............................
COP = 3.8 .................
Air Cooled .................
Large Commercial
Packaged Air Conditioning and Heating
Equipment.
Packaged Terminal
Heat Pumps.
Sub-category
Water-Source ............
Small Commercial
Packaged Air Conditioning and Heating
Equipment.
Cooling capacity
COP = 3.0 .................
COP = 3.0.
Split System and Single Package.
COP = 2.9 .................
COP = 2.9.
All ..............................
COP = 1.3+(0.16 ×
the applicable minimum cooling EER
prescribed in Table
1—Minimum Cooling Efficiency Levels).
COP = 1.3+(0.16 ×
the applicable minimum cooling EER
prescribed in Table
1—Minimum Cooling Efficiency Levels).
Air Cooled .................
All ..............................
All ..............................
Products manufactured on and after
October 29, 2003
1 For units tested by ARI standards, all COP values must be rated at 47° F outdoor dry-bulb temperature for air-cooled products, and at 70° F
entering water temperature for water-source heat pumps. For heat pumps tested by the ISO Standard 13256–1, the COP values must be obtained at the rating point with 20° C (68° F) entering water temperature.
*
*
*
*
*
(c) Each packaged terminal air
conditioner or packaged terminal heat
pump manufactured on or after
September 30, 2012, shall have an
Energy Efficiency Ratio and Coefficient
of Performance no less than:
Efficiency level *
Equipment
Category
Cooling capacity
Packaged Terminal Air
Conditioner.
Standard Size .............
<7,000 Btu/h ....................................................
≥7,000 Btu/h and ≤15,000 Btu/h
>15,000 Btu/h
<7,000 Btu/h ....................................................
≥7,000 Btu/h and ≤15,000 Btu/h
>15,000 Btu/h
<7,000 Btu/h ....................................................
Non-Standard Size .....
Packaged Terminal
Heat Pump.
Standard Size .............
≥7,000 Btu/h and ≤15,000 Btu/h
>15,000 Btu/h
Non-Standard Size .....
<7,000 Btu/h ....................................................
≥7,000 Btu/h and ≤15,000 Btu/h
>15,000 Btu/h
EER = 11.4
EER = 13.0—(0.233 × Cap **)
EER = 9.5
EER = 10.2
EER = 11.7—(0.213 × Cap **)
EER = 8.5
EER = 11.8
COP = 3.3
EER = 13.4—(0.233 × Cap **)
COP = 3.7—(0.053 × Cap **)
EER = 9.9
COP = 2.9
EER = 10.8
COP = 3.0
EER = 12.3—(0.213 × Cap **)
COP = 3.1—(0.026 × Cap **)
EER = 9.1
COP = 2.8
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95° F outdoor dry-bulb temperature for air-cooled
products and evaporatively-cooled products and at 85° F entering water temperature for water cooled products. All COP values must be rated at
47° F outdoor dry-bulb temperature for air-cooled products, and at 70° F entering water temperature for water-source heat pumps.
** Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95° F outdoor dry-bulb temperature.
[FR Doc. E8–6907 Filed 4–4–08; 8:45 am]
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]]>Agencies
[Federal Register Volume 73, Number 67 (Monday, April 7, 2008)]
[Proposed Rules]
[Pages 18858-18916]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-6907]
[[Page 18857]]
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Part II
Department of Energy
-----------------------------------------------------------------------
Office of Energy Efficiency and Renewable Energy
-----------------------------------------------------------------------
10 CFR Part 431
Energy Conservation Program for Commercial and Industrial Equipment:
Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump
Energy Conservation Standards; Proposed Rule
Federal Register / Vol. 73, No. 67 / Monday, April 7, 2008 / Proposed
Rules
[[Page 18858]]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 431
[Docket No. EERE-2007-BT-STD-0012]
RIN 1904-AB44
Energy Conservation Program for Commercial and Industrial
Equipment: Packaged Terminal Air Conditioner and Packaged Terminal Heat
Pump Energy Conservation Standards
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of proposed rulemaking and public meeting.
-----------------------------------------------------------------------
SUMMARY: The Energy Policy and Conservation Act (EPCA) prescribes
energy conservation standards for various consumer products and
commercial and industrial equipment, and requires the Department of
Energy (DOE) to administer an energy conservation program for these
products. In this notice, DOE is proposing amended energy conservation
standards for packaged terminal air conditioners (PTACs) and packaged
terminal heat pumps (PTHPs) and is announcing a public meeting.
DATES: DOE will hold a public meeting on May 1, 2008, from 9 a.m. to 4
p.m., in Washington, DC. DOE must receive requests to speak at the
public meeting before 4 p.m., April 21, 2008. DOE must receive a signed
original and an electronic copy of statements to be given at the public
meeting before 4 p.m., April 21, 2008.
DOE will accept comments, data, and information regarding the
notice of proposed rulemaking (NOPR) before and after the public
meeting, but no later than June 6, 2008. See section VII, ``Public
Participation,'' of this NOPR for details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW.,
Washington, DC. Please note that foreign nationals visiting DOE
Headquarters are subject to advance security screening procedures,
requiring a 30-day advance notice. If you are a foreign national and
wish to participate in the public meeting, please inform DOE as soon as
possible by contacting Ms. Brenda Edwards at (202) 586-2945 so that the
necessary procedures can be completed.
You may submit comments identified by docket number EERE-2007-BT-
STD-0012 and/or Regulation Identifier Number (RIN) 1904-AB44 using any
of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: ptac_hp@ee.doe.gov. Include EERE-2007-BT-STD-0012
and/or RIN 1904-AB44 in the subject line of your message.
Postal Mail: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Program, Mailstop EE-2J, 1000
Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202)
586-2945. Please submit one signed paper original.
Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department
of Energy, Building Technologies Program, 950 L'Enfant Plaza, 6th
Floor, Washington, DC 20024. Please submit one signed original paper
copy.
Instructions: All submissions received must include the agency name
and docket number or RIN for this rulemaking. For detailed instructions
on submitting comments and additional information on the rulemaking
process, see section VII, ``Public Participation,'' of this document.
Docket: For access to the docket to read background documents or
comments received, visit the U.S. Department of Energy, Forrestal
Building, Resource Room of the Building Technologies Program, 950
L'Enfant Plaza, SW., 6th Floor, Washington, DC 20024, (202) 586-2945,
between 9 a.m. and 4 p.m., Monday through Friday, except Federal
holidays. Please call Ms. Brenda Edwards at the above telephone number
for additional information regarding visiting the Resource Room.
FOR FURTHER INFORMATION CONTACT: Wes Anderson, Project Manager, Energy
Conservation Standards for Packaged Terminal Air Conditioners and
Packaged Terminal Heat Pumps, U.S. Department of Energy, Energy
Efficiency and Renewable Energy, Building Technologies Program, EE-2J,
1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-
7335. E-mail: Wes.Anderson@ee.doe.gov. Francine Pinto, Esq., or Eric
Stas, Esq., U.S. Department of Energy, Office of General Counsel, GC-
72, 1000 Independence Avenue, SW., Washington, DC 20585-0121, (202)
586-9507. E-mail: Francine.Pinto@hq.doe.gov or Eric.Stas@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
I. Summary of the Proposed Rule
II. Introduction
A. Overview
B. Authority
C. Background
1. Current Standards
2. History of Standards Rulemaking for Packaged Terminal Air
Conditioners and Packaged Terminal Heat Pumps
III. General Discussion
A. Test Procedures
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
1. Determination of Savings
2. Significance of Savings
D. Economic Justification
1. Economic Impact on Manufacturers and Commercial Customers
2. Life-Cycle Costs
3. Energy Savings
4. Lessening of Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
IV. Methodology and Analyses
A. Market and Technology Assessment
1. Definitions of a PTAC and a PTHP
2. Equipment Classes
3. Market Assessment
a. Trade Association
b. Manufacturers
c. Shipments
4. Technology Assessment
B. Screening Analysis
C. Engineering Analysis
1. Approach
2. Equipment Classes Analyzed
3. Cost Model
4. Baseline Equipment
5. Alternative Refrigerant Analysis
a. R-22
b. R-410A
c. R-410A Compressor Availability
d. R-410A Manufacturing Production Cost
6. Cost-Efficiency Results
7. Mapping Energy Efficiency Ratio to Coefficient of Performance
D. Markups to Determine Equipment Price
E. Energy Use Characterization
1. Building Type
2. Simulation Approach
F. Life-Cycle Cost and Payback Period Analyses
1. Approach
2. Life-Cycle Cost Inputs
a. Equipment Prices
b. Installation Costs
c. Annual Energy Use
d. Electricity Prices
e. Maintenance Costs
f. Repair Costs
g. Equipment Lifetime
h. Discount Rate
3. Payback Period
G. National Impact Analysis--National Energy Savings and Net
Present Value Analysis
1. Approach
2. Shipments Analysis
3. Base Case and Standards Case Forecasted Distribution of
Efficiencies
4. National Energy Savings and Net Present Value
H. Life-Cycle Cost Sub-Group Analysis
I. Manufacturer Impact Analysis
[[Page 18859]]
1. Overview
a. Phase 1, Industry Profile
b. Phase 2, Industry Cash Flow Analysis
c. Phase 3, Sub-Group Impact Analysis
2. Government Regulatory Impact Model Analysis
3. Manufacturer Interviews
a. Issues
b. Government Regulatory Impact Model Scenarios and Key Inputs
i. Base Case Shipments Forecast
ii. Standards Case Shipments Forecast
iii. R-410A Base Case and Amended Energy Conservation Standards
Markup Scenarios
iv. Equipment and Capital Conversion Costs
J. Employment Impact Analysis
K. Utility Impact Analysis
L. Environmental Analysis
M. Discussion of Other Issues
1. Effective Date of the Proposed Amended Energy Conservation
Standards
2. ASHRAE/IESNA Standard 90.1-1999 Labeling Requirement
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Commercial Customers
a. Life-Cycle Cost and Payback Period
b. Life-Cycle Cost Sub-Group Analysis
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
i. Standard Size PTACs and PTHPs
ii. Non-Standard Size PTACs and PTHPs
b. Cumulative Regulatory Burden
c. Impacts on Employment
d. Impacts on Manufacturing Capacity
e. Impacts on Subgroups of Manufacturers
3. National Impact Analysis
a. Amount and Significance of Energy Savings
b. Net Present Value
c. Impacts on Employment
4. Impact on Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
C. Proposed Standard
1. Overview
2. Conclusion
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act/Initial
Regulatory Flexibility Analysis
1. Reasons for the proposed rule
2. Objectives of, and legal basis for, the proposed rule
3. Description and estimated number of small entities regulated
4. Description and estimate of compliance requirements
5. Duplication, overlap, and conflict with other rules and
regulations
6. Significant alternatives to the rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act of 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act of 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
A. Attendance at Public Meeting
B. Procedure for Submitting Requests to Speak
C. Conduct of Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
The Energy Policy and Conservation Act (EPCA), as amended, provides
the Department of Energy (DOE) the authority to establish energy
conservation standards for certain commercial equipment covered by the
American Society of Heating, Refrigerating, and Air-Conditioning
Engineers (ASHRAE) and the Illuminating Engineering Society of North
America (IESNA) Standard 90.1, including packaged terminal air
conditioners (PTACs) and packaged terminal heat pumps (PTHPs), the
subject of this proceeding. (42 U.S.C. 6313(a)(6)(A)) Section
342(a)(6)(A) provides that DOE may prescribe a standard more stringent
than the level in ASHRAE/IESNA Standard 90.1, after ASHRAE amends the
energy conservation standards found in ASHRAE/IESNA Standard 90.1, if
DOE can demonstrate ``by clear and convincing evidence,'' that such a
more stringent standard ``would result in significant additional
conservation of energy and is technologically feasible and economically
justified.'' (42 U.S.C. 6313(a)(6)(A)(II) In accordance with these
criteria discussed in this notice, DOE proposes to amend the energy
conservation standards for PTACs and PTHPs by raising the efficiency
levels for this equipment to the levels shown in Table I.1, above the
efficiency levels specified by ASHRAE/IESNA Standard 90.1-1999. The
proposed standards would apply to all covered PTACs and PTHPs
manufactured on or after the date four years after publication of the
final rule in the Federal Register. (42 U.S.C. 6313(a)(6)(D)) The
proposed standards for PTACs and PTHPs represent an improvement in
energy efficiency of 12 to 33 percent compared to the efficiency levels
specified by ASHRAE/IESNA Standard 90.1-1999, depending on the
equipment class.
Table I.1.--Proposed Energy Conservation Standards for PTACs and PTHPs
----------------------------------------------------------------------------------------------------------------
Equipment class
------------------------------------------------------------------------------------ Proposed energy
Equipment Category Cooling capacity conservation standards*
----------------------------------------------------------------------------------------------------------------
PTAC............................... Standard Size**....... <7,000 Btu/h.......... EER = 11.4
>=7,000 Btu/h and EER = 13.0-(0.233 x
<=15,000 Btu/h. Cap[dagger][dagger])
>15,000 Btu/h......... EER = 9.5
Non-Standard <7,000 Btu/h.......... EER = 10.2
Size[dagger].
>=7,000 Btu/h and EER = 11.7-(0.213 x
<=15,000 Btu/h. Cap[dagger][dagger])
>15,000 Btu/h......... EER = 8.5
PTHP............................... Standard Size**....... <7,000 Btu/h.......... EER = 11.8
COP = 3.3
>=7,000 Btu/h and EER = 13.4-(0.233 x
<=15,000 Btu/h. Cap[dagger][dagger])
COP = 3.7-(0.053 x
Cap[dagger][dagger])
>15,000 Btu/h......... EER = 9.9
COP = 2.9
Non-Standard <7,000 Btu/h.......... EER = 10.8
Size[dagger]. COP = 3.0
>=7,000 Btu/h and EER = 12.3-(0.213 x
<=15,000 Btu/h. Cap[dagger][dagger])
COP = 3.1-(0.026 x
Cap[dagger][dagger])
[[Page 18860]]
>15,000 Btu/h......... EER = 9.1
COP = 2.8
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure (ARI Standard 310/380-2004), all energy efficiency
ratio (EER) values must be rated at 95[deg]F outdoor dry-bulb temperature for air-cooled equipment and
evaporatively-cooled equipment and at 85[deg]F entering water temperature for water cooled equipment. All
coefficient of performance (COP) values must be rated at 47[deg]F outdoor dry-bulb temperature for air-cooled
equipment, and at 70[deg]F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches
high, or greater than or equal to 42 inches wide.
[dagger] Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high
and less than 42 inches wide.
[dagger][dagger] Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95[deg]F
outdoor dry-bulb temperature.
DOE's analyses indicate that the proposed energy conservation
standards, trial standard level (TSL) 4 for PTAC and PTHP equipment
(See section V.A for a discussion of the TSLs), would save a
significant amount of energy--an estimated 0.019 quadrillion British
thermal units (Btu), or quads, of cumulative energy over 30 years
(2012-2042). The economic impacts on the nation (i.e., national net
present value) and the commercial customer (i.e., the average life-
cycle cost (LCC) savings) are positive.
The national net present value (NPV) of TSL 4 is $17 million using
a 7 percent discount rate and $61 million using a 3 percent discount
rate, cumulative from 2012 to 2062 in 2006$. This is the estimated
total value of future savings minus the estimated increased equipment
costs, discounted to 2008. The benefits and costs of the standard can
also be expressed in terms of annualized 2006$ values over the forecast
period 2012 through 2062. Using a 7 percent discount rate for the
annualized cost analysis, the cost of the standard is $3.4 million per
year in increased equipment and installation costs while the annualized
benefits are $5.0 million per year in reduced equipment operating
costs. Using a 3 percent discount rate, the annualized cost of the
standard is $2.9 million per year while the annualized benefits of
today's standard are $5.6 million per year. See section V.B.3 for
additional details.
Using a real corporate discount rate of 5 percent, DOE estimated
the industry's NPV (INPV) for manufacturers of PTACs and PTHPs to be
$332 million in 2006$. The impact of the proposed standards on INPV of
manufacturers of standard size PTACs and PTHPs is estimated to be
between an 18 percent loss and a 2 percent loss (-$56 million to -$5
million). The non-standard size PTAC and PTHP industry is estimated to
lose between 44 percent and 34 percent of its NPV (-$12 million to -$9
million) as a result of the proposed standards. Additionally, based on
DOE's interviews with manufacturers of PTACs and PTHPs, DOE expects
minimal plant closings or loss of employment as a result of the
proposed standards.
DOE's analyses indicate that the proposed standard, TSL 4, has
energy savings and environmental benefits. All of the energy saved is
electricity, and DOE expects the energy savings from the proposed
standards to eliminate the need for approximately 81 megawatts (MW) of
generating capacity by 2042. These results reflect DOE's use of energy
price projections from the U.S. Energy Information Administration
(EIA)'s Annual Energy Outlook 2007 (AEO2007).\1\ The proposed standard
has environmental benefits leading to reductions in greenhouse gas
emissions (i.e., cumulative (undiscounted) emission reductions) of 2.7
million tons (Mt) of carbon dioxide (CO2) from 2012 to 2042.
Additionally, the standard would likely result in 0.16 thousand tons
(kt) of nitrogen oxides (NOX) emissions reductions or generate a
similar amount of NOX emissions allowance credits in areas where such
emissions are subject to emissions caps.
---------------------------------------------------------------------------
\1\ DOE intends to use EIA's Annual Energy Outlook 2008
(AEO2008) to generate the results for the final rule. In addition,
DOE will use 2007$ to reflect all dollar values in the final rule.
---------------------------------------------------------------------------
In view of its analyses, DOE believes that the proposed standard,
TSL 4, represents the maximum improvement in energy efficiency of PTAC
and PTHP equipment that is technologically feasible and economically
justified. DOE found that the benefits to the Nation (energy savings,
customer average LCC savings, national NPV increase, and emission
reductions) of the proposed standards outweigh the burdens (loss of
INPV and LCC increases for some customers). When DOE considered higher
energy efficiency levels as TSLs, it found that the burdens (loss of
manufacturer NPV and LCC increase for some customers) of the higher
efficiency levels outweighed the benefits (energy savings, LCC savings
for some customers, national NPV increase, and emission reductions) of
those higher levels.
DOE recognizes that manufacturers of PTAC and PTHP equipment are
also facing a mandated refrigerant phase-out on January 1, 2010. R-22,
the only refrigerant currently used by PTACs and PTHPs, is an HCFC
refrigerant and subject to the phase-out requirement. Phase-out of this
refrigerant could have a significant impact on the manufacturing,
performance, and cost of PTAC and PTHP equipment. DOE further discusses
and estimated the impacts of the refrigerant phase-out on PTAC and PTHP
equipment and on the manufacturers of this equipment in today's notice.
II. Introduction
A. Overview
The proposed standard will save a significant amount of energy and,
as a result of less energy being produced, result in a cleaner
environment. In the 30-year period after the amended standard becomes
effective, the nation will save 0.019 quads of primary energy. These
energy savings also will result in significantly reduced emissions of
air pollutants and greenhouse gases associated with electricity
production, by avoiding the emission of 2.7 Mt of CO2 and
0.16 kt of NOX. In addition, once the standard is
implemented in 2012, DOE expects to eliminate the need for the
construction of approximately 81 MW of new power plants by 2042. In
total, DOE estimates the net present value to the Nation of this
standard to be $17 million from 2012 to 2062 in 2006$.
Finally, commercial customers will see benefits from the proposed
standard. Although DOE expects the price of the high efficiency PTAC
and PTHP equipment to be approximately 2 percent higher than the
average price of
[[Page 18861]]
this equipment today, the energy efficiency gains will result in lower
energy costs. Based on this calculation, DOE estimates that the mean
payback period for the high efficiency PTACs will be approximately 11.2
years and the mean payback period for the high efficiency PTHPs will be
approximately 4.4 years. When these savings are summed over the
lifetime of the high efficiency equipment, customers of PTACs will save
$4, on average, and customers of PTHPs will save $35, on average,
compared to their expenditures on today's baseline PTACs and PTHPs.
B. Authority
Part A-1 of Title III of EPCA addresses the energy efficiency of
certain types of commercial and industrial equipment.\2\ (42 U.S.C.
6311-6317) It contains specific mandatory energy conservation standards
for commercial PTACs and PTHPs. (42 U.S.C. 6313(a)(3)) The Energy
Policy Act of 1992 (EPACT), Public Law 102-486, also amended EPCA with
respect to PTACs and PTHPs, providing definitions in section 122(a),
test procedures in section 122(b), labeling provisions in section
122(c), and the authority to require information and reports from
manufacturers in section 122(e).\3\ DOE publishes today's notice of
proposed rulemaking (NOPR) pursuant to Part A-1. The PTAC and PTHP test
procedures appear at Title 10 Code of Federal Regulations (CFR) section
431.96.
---------------------------------------------------------------------------
\2\ This part was originally titled Part C., However, it was
redesignated Part A-1 after Part B of Title III of EPCA was repealed
by Public Law 109-58.
\3\ These requirements are codified in Part C of Title III of
EPCA, now Part A-1, as amended, 42 U.S.C. 6311-6316, and Title 10 of
the Code of Federal Regulations, Part 431 (10 CFR Part 431) at 10
CFR 431.92, 431.96, 431.97, and subparts U and V.
---------------------------------------------------------------------------
EPCA established Federal energy conservation standards that
generally correspond to the levels in ASHRAE/IESNA Standard 90.1, as in
effect on October 24, 1992 (ASHRAE/IESNA Standard 90.1-1989), for each
type of covered equipment listed in section 342(a) of EPCA, including
PTACs and PTHPs. (42 U.S.C. 6313(a)) For each type of equipment, EPCA
directed that if ASHRAE/IESNA Standard 90.1 is amended, DOE must adopt
an amended standard at the new level in ASHRAE/IESNA Standard 90.1,
unless clear and convincing evidence supports a determination that
adoption of a more stringent level as a national standard would produce
significant additional energy savings and be technologically feasible
and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II).
EPCA also provides that in deciding whether such a more stringent
standard is economically justified, DOE must, after receiving comments
on the proposed standard, determine whether the benefits of the
standard exceed its burdens by considering, to the greatest extent
practicable, the following seven factors:
(1) The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the product in the type (or class) compared to any increase in
the price of, or in the initial charges for, or maintenance expenses of
the products which are likely to result from the imposition of the
standard;
(3) The total projected amount of energy savings likely to result
directly from the imposition of the standard;
(4) Any lessening of the utility or the performance of the products
likely to result from the imposition of the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
imposition of the standard;
(6) The need for national energy conservation; and
(7) Other factors the Secretary considers relevant.
(42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)-(ii)).
Furthermore, EPCA contains what is commonly known as an ``anti-
backsliding'' provision. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(1)) This
provision mandates that the Secretary not prescribe any amended
standard that either increases the maximum allowable energy use or
decreases the minimum required energy efficiency of covered equipment.
It is a fundamental principle in EPCA's statutory scheme that DOE
cannot amend standards downward; that is, weaken standards, from those
that have been published as a final rule. Natural Resources Defense
Council v. Abraham, 355 F.3d 179 (2nd Cir. 2004).
Additionally, the Secretary may not prescribe an amended standard
if interested persons have established by a preponderance of the
evidence that the amended standard is ``likely to result in the
unavailability in the United States of any product type (or class)''
with performance characteristics, features, sizes, capacities, and
volumes that are substantially the same as those generally available in
the United States at the time of the Secretary's finding. (42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(4))
Federal energy efficiency requirements for commercial equipment
generally supersede State laws or regulations concerning energy
conservation testing, labeling, and standards. (42 U.S.C. 6316(a) and
(b)) DOE can, however, grant waivers of preemption for particular State
laws or regulations, in accordance with the procedures and other
provisions of section 327(d) of EPCA. (42 U.S.C. 6297(d) and
6316(b)(2)(D))
C. Background
1. Current Standards
The current energy conservation standards in EPCA for PTACs and
PTHPs apply to all equipment manufactured on or after January 1, 1994,
(42 U.S.C. 6313(a)(3)) and correspond to the minimum efficiency levels
in ASHRAE/IESNA Standard 90.1-1989. These levels consist of the EER for
the cooling mode and the COP for the heating mode. The EER means ``the
ratio of the produced cooling effect of an air conditioner or heat pump
to its net work input, expressed in Btu/watt-hour.'' 10 CFR 431.92. The
COP means ``the ratio of produced cooling effect of an air conditioner
or heat pump (or its produced heating effect, depending on model
operation) to its net work input, when both the cooling (or heating)
effect and the net work input are expressed in identical units of
measurement.'' 10 CFR 431.92. Table II.1 depicts the Federal energy
conservation standards for PTACs and PTHPs found in 10 CFR 431.97.
Table II.1.--Existing Federal Energy Conservation Standards for PTACs
and PTHPs
------------------------------------------------------------------------
Equipment class Existing federal
--------------------------------------------------- energy conservation
Equipment Cooling capacity standards*
------------------------------------------------------------------------
PTAC........................ < 7,000 Btu/h....... EER = 8.88
>= 7,000 Btu/h and EER = 10.0 - (0.16 x
<= 15,000 Btu/h Cap**)
[[Page 18862]]
> 15,000 Btu/h EER = 7.6
PTHP........................ < 7,000 Btu/h....... EER = 8.88
COP = 2.7
>= 7,000 Btu/h and EER = 10.0-(0.16 x
<= 15,000 Btu/h Cap**)
COP = 1.3 + (0.16 x
EER)
> 15,000 Btu/h EER = 7.6
COP = 2.5
------------------------------------------------------------------------
* For equipment rated according to the Air-Conditioning and
Refrigeration Institute (ARI) standards, all EER values must be rated
at 95 [deg]F outdoor dry-bulb temperature for air-cooled products and
evaporatively-cooled products and at 85 [deg]F entering water
temperature for water cooled products. All COP values must be rated at
47 [deg]F outdoor dry-bulb temperature for air-cooled products, and at
70 [deg]F entering water temperature for water-source heat pumps.
** Cap means cooling capacity in kBtu/h at 95 [deg]F outdoor dry-bulb
temperature.
2. History of Standards Rulemaking for Packaged Terminal Air
Conditioners and Packaged Terminal Heat Pumps
On October 29, 1999, ASHRAE's Board of Directors approved ASHRAE/
IESNA Standard 90.1-1999 (ASHRAE/IESNA Standard 90.1-1999), which
addressed efficiency standard levels for 34 categories of commercial
heating, ventilating and air-conditioning (HVAC) and water heating
equipment covered by EPCA, including PTACs and PTHPs. In amending the
ASHRAE/IESNA Standard 90.1-1989 levels for PTACs and PTHPs, ASHRAE
acknowledged the physical size constraints between the varying sleeve
sizes on the market. Specifically, the wall sleeve dimensions of the
PTAC and PTHP affect the energy efficiency of the equipment.
Consequently, ASHRAE/IESNA Standard 90.1-1999 used the equipment
classes defined by EPCA, which are distinguished by equipment (i.e.,
air conditioner or heat pump) and cooling capacity, and further
separated these equipment classes by wall sleeve dimensions as further
discussed in section IV.C.2. Table II.2 shows the efficiency levels in
ASHRAE/IESNA Standard 90.1-1999 for PTACs and PTHPs.
Table II.2.--ASHRAE/IESNA Standard 90.1-1999 Energy Efficiency Levels for PTACs and PTHPs
----------------------------------------------------------------------------------------------------------------
Equipment class ASHRAE/IESNA standard 90.1-
------------------------------------------------------------------------------------ 1999 efficiency levels*
Equipment Category Cooling capacity
----------------------------------------------------------------------------------------------------------------
PTAC............................... Standard Size**....... < 7,000 Btu/h......... EER = 11.0
>= 7,000 Btu/h and <= EER = 12.5-(0.213 x
15,000 Btu/h Cap[dagger][dagger])
> 15,000 Btu/h EER = 9.3
Non-Standard < 7,000 Btu/h EER = 9.4
Size[dagger].
>= 7,000 Btu/h and <= EER = 10.9-(0.213 x
15,000 Btu/h Cap[dagger][dagger])
> 15,000 Btu/h EER = 7.7
PTHP............................... Standard Size**....... < 7,000 Btu/h......... EER = 10.8
COP = 3.0
>= 7,000 Btu/h and <= EER = 12.3-(0.213 x
15,000 Btu/h Cap[dagger][dagger])
COP = 3.2-(0.026 x
Cap[dagger][dagger])
> 15,000 Btu/h EER = 9.1
COP = 2.8
Non-Standard < 7,000 Btu/h......... EER = 9.3
Size[dagger]. COP = 2.7
>= 7,000 Btu/h and <= EER = 10.8-(0.213 x
15,000 Btu/h Cap[dagger][dagger])
COP = 2.9-(0.026 x
Cap[dagger][dagger])
>15,000 Btu/h EER = 7.6
COP = 2.5
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to ARI standards, all EER values must be rated at 95[deg]F outdoor dry-bulb
temperature for air-cooled products and evaporatively-cooled products and at 85[deg]F entering water
temperature for water cooled products. All COP values must be rated at 47[deg]F outdoor dry-bulb temperature
for air-cooled products, and at 70[deg]F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches
high, or greater than or equal to 42 inches wide.
[dagger] Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high
and less than 42 inches wide. ASHRAE/IESNA Standard 90.1-1999 also includes a factory labeling requirement for
non-standard size PTAC and PTHP equipment as follows: ``MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO
BE INSTALLED IN NEW CONSTRUCTION PROJECTS.''
[dagger][dagger] Cap means cooling capacity in kBtu/h at 95[deg]F outdoor dry-bulb temperature.
Following the publication of ASHRAE/IESNA Standard 90.1-1999, DOE
performed a screening analysis that covered 24 of the 34 categories of
equipment addressed in ASHRAE/IESNA Standard 90.1-1999, to determine if
more stringent levels would result in significant additional energy
conservation of energy, be technologically feasible and economically
justified. For each of these types of equipment, the screening analysis
examined a range of efficiency levels that included the levels
specified in EPCA and ASHRAE/IESNA Standard 90.1-1999, as well as the
maximum technologically feasible efficiency levels. The report
``Screening Analysis for EPACT-Covered Commercial [Heating, Ventilating
and Air-Conditioning] HVAC and Water-Heating
[[Page 18863]]
Equipment'' (commonly referred to as the 2000 Screening Analysis) \4\
summarizes this analysis, and estimates the annual national energy
consumption and the potential for energy savings that would result if
the covered equipment were to meet efficiency levels higher than those
specified in ASHRAE/IESNA Standard 90.1-1999. The baselines for the
comparison were the corresponding levels specified in ASHRAE/IESNA
Standard 90.1-1999 and EPCA.
---------------------------------------------------------------------------
\4\ U.S. Department of Energy, Office of Energy Efficiency and
Renewable Energy. ``Energy Conservation Program for Consumer
Products: Screening Analysis for EPACT-Covered Commercial HVAC and
Water-Heating Equipment Screening Analysis.'' April 2000.
---------------------------------------------------------------------------
On January 12, 2001, DOE published a final rule for commercial HVAC
and water heating equipment, which concluded that the 2000 Screening
Analysis indicated at least a reasonable possibility of finding ``clear
and convincing evidence'' that more stringent standards ``would be
technologically feasible and economically justified and would result in
significant additional conservation of energy'' for PTACs and PTHPs. 66
FR 3336, 3349. Under EPCA, these are the criteria for DOE adoption of
standards more stringent than those in ASHRAE/IESNA Standard 90.1. (42
U.S.C. 6313(a)(6)(A)(ii)(II))
In addition, on March 13, 2006, DOE issued a Notice of Availability
(NOA) announcing the availability of a technical support document (TSD)
DOE was using in re-assessing whether to adopt, as uniform national
standards, energy conservation standards contained in amendments to the
ASHRAE/IESNA Standard 90.1-1999 for certain types of commercial
equipment. 71 FR 12634. In the NOA, DOE revised the energy savings
analysis from the 2000 Screening Analysis and summarized the
assumptions and results in the NOA TSD. Id. DOE also stated that, even
though the revised analysis reduced the potential energy savings that
might result from more stringent standards than the efficiency levels
specified in ASHRAE/IESNA Standard 90.1-1999 for PTACs and PTHPs, DOE
believed that there was a possibility that clear and convincing
evidence exists that more stringent standards are warranted. Therefore,
DOE stated in the NOA that it was inclined to seek more stringent
standard levels than the efficiency levels in ASHRAE/IESNA Standard
90.1-1999 for PTACs and PTHPs through a separate rulemaking. 71 FR
12639. Lastly, on March 7, 2007, DOE issued a final rule reaffirming
DOE's inclination in the March 2006 NOA and stating DOE's decision to
explore more stringent efficiency levels than in ASHRAE/IESNA Standard
90.1-1999 for PTACs and PTHPs through a separate rulemaking. 72 FR
10038, 10044.
In January 2008, ASHRAE published ASHRAE/IESNA Standard 90.1-2007,
which reaffirmed the definitions and efficiency levels for PTACs and
PTHPs in ASHRAE/IESNA Standard 90.1-1999. Since the definitions and
efficiency levels for PTACs and PTHPs are the same in the two versions
of ASHRAE/IESNA Standard 90.1, DOE is only referencing the ASHRAE/IESNA
Standard 90.1-1999 version throughout today's notice even though DOE
reviewed both versions.
III. General Discussion
A. Test Procedures
Section 343(a) of EPCA authorizes the Secretary to amend the test
procedures for PTACs and PTHPs to the latest version generally accepted
by industry or the rating procedures developed by the Air-Conditioning
and Refrigeration Institute (ARI) \5\, as referenced by ASHRAE/IESNA
Standard 90.1, unless the Secretary determines by clear and convincing
evidence the latest version of the industry test procedure does not
meet the requirements for test procedures described in paragraphs (2)
and (3) of that section. (42 U.S.C. 6314(a)(4))
---------------------------------------------------------------------------
\5\ The Air-Conditioning and Refrigeration Institute (ARI) and
the Gas Appliance Manufacturers Association (GAMA) announced on
December 17, 2007, that their members voted to approve the merger of
the two trade associations to represent the interests of cooling,
heating, and commercial refrigeration equipment manufacturers. The
merged association became AHRI on Jan. 1, 2008.
---------------------------------------------------------------------------
DOE published a final rule on October 21, 2004, that amends its
test procedure for PTACs and PTHPs to incorporate by reference the most
recent amendments to the industry test procedure for PTACs and PTHPs,
ARI Standard 310/380-2004. 69 FR 61962 (October 21, 2004). DOE does not
believe further modifications to this test procedure are necessary at
this time because no further amendments have been made to the industry
test procedure for PTACs and PTHPs.
B. Technological Feasibility
1. General
DOE considers design options technologically feasible if the
industry is already using them or if research has progressed to
development of a working prototype. DOE defines technological
feasibility as: ``Technologies incorporated in commercially available
products or in working prototypes will be considered technologically
feasible.'' 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the equipment that is the subject of the rulemaking. In
consultation with interested parties, DOE develops a list of design
options for consideration in the rulemaking. All technologically
feasible design options are candidates in this initial assessment. DOE
eliminates from consideration, early in the process, any design option
that is not practicable to manufacture, install, or service; that will
have adverse impacts on equipment utility or availability; or for which
there are adverse impacts on health or safety. 10 CFR 430, subpart C,
appendix A, section 4(a)(4). In addition, for the types of equipment
identified in section 342(a) of EPCA, 42 U.S.C. 6313(a), which includes
PTACs and PTHPs, DOE eliminates from consideration any design option
whose technological feasibility is not supported by clear and
convincing evidence.
The design options DOE considered as part of this rulemaking all
have the potential to improve EER or COP. DOE considered any design
option for PTACs and PTHPs to be technologically feasible if it is used
in equipment the PTAC and PTHP industry distributes in commerce or is
in a working prototype.
2. Maximum Technologically Feasible Levels
In developing today's proposed standards, DOE has determined the
maximum improvement in energy efficiency that is technologically
feasible (``max tech'') for PTACs and PTHPs. EPCA requires that DOE
adopt amended energy conservation standards for equipment covered by
ASHRAE/IESNA Standard 90.1 that achieves the maximum improvement in
energy efficiency that is technologically feasible and economically
justified, or to identify the ``max tech'' efficiency levels. (42
U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A)) Therefore, in reviewing the
amended ASHRAE/IESNA Standard 90.1 efficiency standards for PTACs and
PTHPs, DOE identified the ``max tech'' levels as part of the
engineering analysis (Chapter 5 of the TSD). At the present time, those
levels are the levels set forth in TSL 7. For the representative
cooling capacities within a given equipment class, PTACs and PTHPs
utilizing R-22 with these efficiency levels already are being offered
for sale and there is no
[[Page 18864]]
equipment at higher efficiency levels that are currently available.
Table III.1 lists the ``max tech'' levels that DOE identified for this
rulemaking.
Table III.1.--``Max Tech'' Efficiency Levels (>=7,000 Btu/h and <=15,000 Btu/h Equipment Classes)\*\
----------------------------------------------------------------------------------------------------------------
Cooling
Equipment type Equipment class capacity ``Max tech'' efficiency
(Btu/h) level\**\
----------------------------------------------------------------------------------------------------------------
PTAC..................................... Standard Size[dagger]....... 9,000 12.0 EER
12,000 11.5 EER
Non-standard 11,000 11.2 EER
Size[dagger][dagger].
----------------------------------------------------------------------------------------------------------------
PTHP..................................... Standard Size[dagger]....... 9,000 12.0 EER
3.5 COP
12,000 11.7 EER
3.3 COP
Non-standard 11,000 11.4 EER
Size[dagger][dagger]. 2.9 COP
----------------------------------------------------------------------------------------------------------------
\*\ As discussed in section IV.C.2 of today's notice, DOE is presenting the results for two cooling capacities
of standard size PTACs and PTHPs, 9,000 Btu/h and 12,000 Btu/h, which fall within the equipment classes of
PTACs and PTHPs with cooling capacities >=7,000 Btu/h and <=15,000 Btu/h.
\**\ For equipment rated according to the DOE test procedure, all EER values would be rated at 95[deg]F outdoor
dry-bulb temperature for air-cooled products and evaporatively-cooled products and at 85[deg]F entering water
temperature for water cooled products. All COP values must be rated at 47[deg]F outdoor dry-bulb temperature
for air-cooled products, and at 70[deg]F entering water temperature for water-source heat pumps.
[dagger] Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16
inches high, or greater than or equal to 42 inches wide.
[dagger][dagger] Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16
inches high and less than 42 inches wide.
C. Energy Savings
1. Determination of Savings
DOE used the national energy savings (NES) Microsoft Excel
spreadsheet to estimate energy savings that could result from amended
energy conservation standards for PTACs and PTHPs. The spreadsheet
forecasts energy savings over the period of analysis for TSLs relative
to the base case. DOE quantified the energy savings attributable to an
energy conservation standard as the difference in energy consumption
between the trial standards case and the base case. The base case
represents the forecast of energy consumption in the absence of amended
mandatory energy conservation standards beyond the levels in ASHRAE/
IESNA Standard 90.1-1999. Section IV.G of this Notice and Chapter 11 of
the TSD describes the NES spreadsheet model.
The NES spreadsheet model calculates the energy savings in both
site energy (in kilowatt-hours (kWh)) or source energy (in British
thermal units (Btu)). Site energy is the energy directly consumed at
building sites by PTACs and PTHPs. DOE expresses national energy
savings in terms of source energy savings (i.e., savings in energy used
to generate and transmit the energy consumed at the site). Chapter 11
of the TSD contains a table of factors used to convert site energy
consumption in kWh to source energy consumption in Btu. DOE derived
these conversion factors, which change over time, from EIA's AEO2007.
2. Significance of Savings
Section 342(a)(6)(A)(ii)(II) of EPCA allows DOE to adopt a more
stringent standard for PTACs and PTHPs than the amended level in
ASHRAE/IESNA Standard 90.1, if clear and convincing evidence supports a
determination that the more stringent standard would result in
``significant'' additional energy savings. (42 U.S.C.
6313(a)(6)(A)(ii)(II)) While EPCA does not define the term
``significant,'' a U.S. Court of Appeals, in Natural Resources Defense
Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated
that Congress intended ``significant'' energy savings in section 325 of
EPCA to mean savings that are not ``genuinely trivial.'' For all the
TSLs considered in this rulemaking, DOE's estimates of energy savings
provide clear and convincing evidence that the additional energy
savings to be achieved from exceeding the corresponding efficiency
level[s] in ASHRAE/IESNA Standard 90.1-1999 are nontrivial, and
therefore DOE considers them ``significant'' as required by section 342
of EPCA. (42 U.S.C. 6313 (a)(6)(A)(ii)(II))
D. Economic Justification
As noted earlier, EPCA provides seven factors for DOE to evaluate
in determining whether an energy conservation standard for PTAC and
PTHP is economically justified. (42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)-(ii)) The following discussion explains how DOE has
addressed each factor in this rulemaking.
1. Economic Impact on Manufacturers and Commercial Customers
DOE has established procedures, interpretations, and policies to
guide DOE in considering new or amended appliance energy conservation
standards. DOE investigates the impacts of amended energy conservation
standards of PTACs and PTHPs on manufacturers through the manufacturer
impact analysis (MIA) (see Chapter 13 of the TSD). First, DOE uses an
annual cash flow approach in determining the quantitative impacts of a
new or amended energy conservation standard on manufacturers. This
includes both a short- and long-term assessment based on the cost and
capital requirements during the period between the announcement of a
regulation and the time when the regulation comes into effect. Impacts
analyzed include INPV, cash flows by year, changes in revenue and
income, and other measures of impact, as appropriate. Second, DOE
analyzes and reports the impacts on different types of manufacturers,
paying particular attention to impacts on small manufacturers. Third,
DOE considers the impact of standards on domestic manufacturer
employment, manufacturing capacity, plant closures, and loss of capital
investment. Finally, DOE takes into account cumulative impacts of
different DOE regulations on manufacturers.
For customers, DOE measures the economic impact as the change in
installed cost and life-cycle operating costs, i.e., the LCC. Chapter 8
of the TSD presents the LCC of the equipment at
[[Page 18865]]
each efficiency level examined. LCC, described below, is one of the
seven factors EPCA requires DOE to consider in determining the economic
justification for a new or amended standard. (42 U.S.C. 6316(a); 42
U.S.C. 6295(o)(2)(B)(i)(II))
2. Life-Cycle Costs
The LCC is the sum of the purchase price, including the
installation and operating expense (including operating energy
consumption, maintenance, and repair expenditures) discounted over the
lifetime of the equipment. To determine the purchase price including
installation, DOE estimated the markups that are added to the
manufacturer selling price (MSP) by distributors and contractors, and
estimated installation costs from an analysis of PTAC and PTHP
installation cost estimates for each of the equipment classes. DOE
determined that maintenance cost is not dependent on PTAC and PTHP
efficiency and that repair cost increases with MSP.
In estimating operating energy costs, DOE used the average
commercial electricity price in each State, using EIA data from
2006.\6\ DOE modified the 2006 average commercial electricity prices to
reflect the average electricity prices for each of four types of
businesses examined in this analysis. The LCC savings analysis compares
the LCCs of equipment designed to meet possible proposed energy
conservation standards with the LCC of the equipment likely to be
installed in the absence of amended energy conservation standards. The
LCC analysis also defines a range of energy price forecasts for
electricity used in the economic analyses.
---------------------------------------------------------------------------
\6\ The EIA data for 2006 is the latest data set published by
EIA on commercial electricity prices by State.
---------------------------------------------------------------------------
For each PTAC and PTHP equipment class, DOE calculated both the LCC
and LCC savings at various efficiency levels. The LCC analysis
estimated the LCC for representative equipment used in four types of
buildings, two of which were hotels/motels and health care facilities
that are representative of the segment of U.S. commercial building
stock that uses PTACs and PTHPs.
To account for uncertainty and variability in specific inputs, such
as equipment lifetime and discount rate, DOE used a distribution of
values with probabilities attached to each value. For each of the four
types of commercial buildings, DOE sampled the value of these inputs
from the probability distributions. As a result, the analysis produced
a range of LCCs. A distinct advantage of this approach is that DOE can
identify the percentage of customers achieving LCC savings or attaining
certain payback values due to an increased energy conservation
standard, in addition to identifying the average LCC savings or average
payback period for that standard. DOE gives the LCC savings as a
distribution, with a mean value and a range. DOE's analysis assumes
that the customer purchases the PTAC and PTHP in 2012. Chapter 8 of the
TSD contains the details of the LCC calculations.
3. Energy Savings
While significant additional energy conservation is a separate
statutory requirement for imposing a more stringent energy conservation
standard than the level in ASHRAE/IESNA Standard 90.1, EPCA requires
that DOE consider the total projected energy savings expected to result
directly from the standard when determining the economic justification
for a standard. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(III))
DOE used the NES spreadsheet results in its consideration of total
projected savings. Section V.B.3 discusses the savings figures.
4. Lessening of Utility or Performance of Equipment
In establishing equipment classes, and in evaluating design options
and the impact of proposed standards, DOE has attempted to avoid
proposing amended standards for PTACs and PTHPs that would lessen the
utility or performance of such equipment. (See 42 U.S.C. 6316(a); 42
U.S.C. 6295(o)(2)(B)(i)(IV)) The design options considered in the
engineering analysis of this rulemaking do not involve changes in
equipment design or unusual installation requirements that could reduce
the utility or performance of PTACs and PTHPs. In addition, DOE is also
considering manufacturers' concerns that one-third of the non-standard
size market subject to the more stringent standards under ASHRAE/IESNA
Standard 90.1-1999 would not be able to meet the efficiency levels
specified by ASHRAE/IESNA Standard 90.1-1999 for standard size
equipment due to the physical size constraints of the wall sleeve as
further discussed in section IV.A.2.
5. Impact of Any Lessening of Competition
EPCA directs that DOE consider any lessening of competition that is
likely to result from proposed standards. The Attorney General
considers the impact, if any, of any lessening of competition likely to
result from imposition of a proposed standard. (42 U.S.C. 6316(a); 42
U.S.C. 6295(o)(2)(B)(i)(V)) DOE has transmitted a copy of this NOPR to
the Attorney General soliciting written views on this issue.
6. Need of the Nation To Conserve Energy
The non-monetary benefits of the proposed standards are likely to
be reflected in improvements to the security and reliability of the
Nation's energy system-namely, reductions in the overall demand for
energy will result in a reduction in the Nation's reliance on foreign
sources of energy and increased reliability of the Nation's electricity
system. DOE conducts a utility impact analysis to show the reduction in
installed generation capacity. The proposed standards are also likely
to result in improvements to the environment. In quantifying these
improvements, DOE has defined a range of primary energy conversion
factors and associated emission reductions based on the generation
displaced by energy conservation standards. DOE reports the
environmental effects from each TSL in the environmental assessment,
Chapter 16 of the TSD. (42 U.S.C. 6313(a); 42 U.S.C.
6295(o)(2)(B)(i)(VI))
7. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
proposed standard is economically justified, to consider any other
factors that the Secretary deems to be relevant. (42 U.S.C. 6316(a); 42
U.S.C. 6295(o)(2)(B)(i)(VII)) DOE considered the impacts of setting
different amended energy conservation standards for PTACs and PTHPs
(i.e., the amended standard level for a given PTAC cooling capacity
would be different from the amended standard level for a give PTHP with
the same cooling capacity). DOE also considered the effects of
potential equipment switching within the PTAC and PTHP market (e.g.,
switching from PTHPs to PTACs, which include a less-efficient heating
system). In addition, DOE also considered the uncertainty associated
with the market due to the impending refrigerant phase-out in 2010,
including equipment availability, compressor availability, and the
available efficiencies of R-410A PTACs and PTHPs. Lastly, DOE
considered the uniqueness of the non-standard size of this equipment
and any differential impacts that might result on this industry from
amended energy conservation standards. The non-standard size market is
further discussed in section IV and the impacts on the non-standard
size industry from
[[Page 18866]]
amended energy conservation standards are estimated in section V.
IV. Methodology and Analyses
This section addresses the analyses DOE has performed for this
rulemaking. A separate sub-section addresses each analysis. DOE used a
spreadsheet to calculate the LCC and payback periods (PBPs) of
potential amended energy conservation standards. Another spreadsheet
was used to provide shipments forecasts and then calculates national
energy savings and net present value impacts of potential amended
energy conservation standards. DOE also assessed manufacturer impacts,
largely through use of the Government Regulatory Impact Model (GRIM).
DOE also estimated the impacts of proposed PTAC and PTHP energy
conservation standards on electric utilities and the environment using
a version of EIA's National Energy Modeling System (NEMS). The NEMS
model simulates the U.S. energy economy and has been developed over
several years by the EIA primarily for preparing the AEO. The NEMS
produces a widely known baseline forecast for the United States through
2030 that is available in the public domain. The version of NEMS used
for the proposed energy conservation standards analysis is called NEMS-
BT , and is based on the AEO2007 version with minor modifications. The
NEMS-BT offers a sophisticated picture of the effect of standards,
since it can measure the interactions between the various energy supply
and demand sectors and the economy as a whole.
A. Market and Technology Assessment
When beginning an energy conservation standards rulemaking, DOE
develops information that provides an overall picture of the market for
the equipment concerned, including the purpose of the equipment, the
industry structure, and market characteristics. This activity includes
both quantitative and qualitative assessments based primarily on
publicly available information. The subjects addressed in the market
and technology assessment for this rulemaking (see Chapter 3 of the
TSD) include equipment classes, manufacturers, quantities, and types of
equipment sold and offered for sale, retail market trends, and
regulatory and non-regulatory programs.
1. Definitions of a PTAC and a PTHP
Section 340 of EPCA defines a ``packaged terminal air conditioner''
as ``a wall sleeve and a separate unencased combination of heating and
cooling assemblies specified by the builder and intended for mounting
through the wall. It includes a prime source of refrigeration,
separable outdoor louvers, forced ventilation, and heating availability
by builder's choice of hot water, steam, or electricity.'' (42 U.S.C.
6311(10)(A)) EPCA defines a ``packaged terminal heat pump'' as ``a
packaged terminal air conditioner that utilizes reverse cycle
refrigeration as its prime heat source and should have supplementary
heat source available to builders with the choice of hot water, steam,
or electric resistant heat.'' (42 U.S.C. 6311(10)(B)) DOE codified
these definitions in 10 CFR 431.92 in a final rule issued October 21,
2004. 69 FR 61970.
2. Equipment Classes
When evaluating and establishing energy conservation standards, DOE
generally divides covered equipment into equipment classes by the type
of energy used or by capacity or other performance-related features
that affect efficiency. Different energy conservation standards may
apply to different equipment classes. (42 U.S.C. 6316(a); 42 U.S.C.
6295(q))
PTACs and PTHPs can be divided into various equipment classes
categorized by physical characteristics that affect equipment
efficiency. Key characteristics affecting the energy efficiency of the
PTAC or PTHP are whether the equipment has reverse cycle heating (i.e.,
air conditioner or heat pump), the cooling capacity, and the physical
dimensions of the unit.
The existing Federal energy conservation standards for PTACs and
PTHPs correspond to the efficiency levels in ASHRAE/IESNA Standard
90.1-1989, as shown in Tables 1 and 2 of 10 CFR Part 431.97, dividing
PTACs and PTHPs into six equipment classes. These equipment classes are
differentiated by whether the equipment has supplemental heating or
reverse cycle heating (i.e., air conditioner or heat pump) and by
cooling capacity in Btu/h.
When installed, PTACs and PTHPs are fitted into a wall sleeve.
There is a wide variety of wall sleeve sizes found in different
buildings. These wall sleeves are market driven (i.e., the applications
or facilities where the PTACs or PTHPs are installed is what determines
the ``market standard'' wall sleeve dimension) and require
manufacturers to offer various PTACs and PTHPs that can fit into
various wall sleeve dimensions. For new units, the industry has
standardized the wall sleeve dimension for PTACs and PTHPs in buildings
over the past 20 years to be 16 inches high by 42 inches wide.
Therefore, units that have a wall sleeve dimension of 16 inches high by
42 inches wide are considered ``standard size'' equipment and all other
units are considered ``non-standard size'' equipment. In contrast, the
industry does not have a common wall sleeve dimension that is typical
for all older existing facilities. These facilities, such as high-rise
buildings found in large cities, typically use non-standard size
equipment. In these installations, altering the existing wall sleeve
opening to accommodate the more efficient, standard size equipment
could include extensive structural changes to the building, could be
very costly, and is therefore, rarely done.
When ASHRAE amended the efficiency levels for PTACs and PTHPs in
1999, it acknowledged the physical size constraints among various
sleeve sizes on the market. Consequently, ASHRAE/IESNA Standard 90.1-
1999 used the equipment classes defined
