Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines, 34094-34138 [E8-13345]
Download as PDF
<![CDATA[
34094
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
DEPARTMENT OF ENERGY
Office of Energy Efficiency and
Renewable Energy
10 CFR Part 431
[Docket No. EERE–2006–STD–0125]
RIN 1904–AB58
Energy Conservation Program: Energy
Conservation Standards for
Refrigerated Bottled or Canned
Beverage Vending Machines
Office of Energy Efficiency and
Renewable Energy, Department of
Energy.
ACTION: Advance notice of proposed
rulemaking and notice of public
meeting.
jlentini on PROD1PC65 with PROPOSALS3
AGENCY:
SUMMARY: The Energy Policy and
Conservation Act (EPCA) directs the
Department of Energy (DOE) to establish
energy conservation standards for
various consumer products and
commercial and industrial equipment,
including refrigerated bottled or canned
beverage vending machines (beverage
vending machines), for which DOE
determines that energy conservation
standards would be technologically
feasible and economically justified, and
would result in significant energy
savings. DOE is publishing this Advance
Notice of Proposed Rulemaking
(ANOPR) to: (1) Announce that it is
considering establishment of energy
conservation standards for beverage
vending machines; and (2) announce a
public meeting to receive comments on
a variety of related issues.
DATES: DOE will hold a public meeting
on Thursday, June 26, 2008, from 9 a.m.
to 5 p.m. in Washington, DC. DOE must
receive requests to speak at the public
meeting no later than 4 p.m., Thursday,
June 19, 2008. DOE must receive a
signed original and an electronic copy
of statements to be given at the public
meeting no later than 4 p.m., Thursday,
June 19, 2008.
DOE will accept comments, data, and
information regarding this ANOPR
before or after the public meeting, but
no later than July 16, 2008. See Section
IV, ‘‘Public Participation,’’ of this
ANOPR 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 20585. (Please note that
foreign nationals visiting DOE
Headquarters are subject to advance
security screening procedures. If you are
a foreign national and wish to
participate in the public meeting, please
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
inform DOE as soon as possible by
contacting Ms. Brenda Edwards at (202)
586–2945 so that the necessary
procedures can be completed.)
Any comments submitted must
identify the ANOPR for Beverage
Vending Machines, and provide the
docket number EERE–2006–STD–0125
and/or Regulatory Information Number
(RIN) 1904–AB58. Comments may be
submitted using any of the following
methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: beveragevending.
rulemaking@ee.doe.gov. Include docket
number EERE–2006–STD–0125 and/or
RIN number 1904–AB58 in the subject
line of the 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. Please
submit one signed paper original.
• Hand Delivery/Courier: Ms. Brenda
Edwards, U.S. Department of Energy,
Building Technologies Program, 950
L’Enfant Plaza, SW., Suite 600,
Washington, DC 20024. Telephone:
(202) 586–2945. Please submit one
signed paper original.
For detailed instructions on
submitting comments and additional
information on the rulemaking process,
see Section IV, ‘‘Public Participation,’’
of this document.
Docket: For access to the docket to
read background documents or
comments received, go to the U.S.
Department of Energy, Resource Room
of the Building Technologies Program,
950 L’Enfant Plaza, SW., Suite 600,
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: Mr.
Charles Llenza, U.S. Department of
Energy, Office of Energy Efficiency and
Renewable Energy, Building
Technologies Program, EE–2J, 1000
Independence Avenue, SW.,
Washington, DC 20585–0121.
Telephone: (202) 586–2192. E-mail:
Charles.Llenza@ee.doe.gov.
Mr. Eric Stas or Ms. Francine Pinto,
U.S. Department of Energy, Office of the
General Counsel, GC–72, 1000
Independence Avenue, SW.,
Washington, DC 20585–0121.
Telephone: (202) 586–9507. E-mail:
Eric.Stas@hq.doe.gov or
Francine.Pinto@hq.doe.gov.
PO 00000
Frm 00002
Fmt 4701
Sfmt 4702
For information on how to submit or
review public comments and on how to
participate in the public meeting,
contact Ms. Brenda Edwards, U.S.
Department of Energy, Office of Energy
Efficiency and Renewable Energy,
Building Technologies Program, EE–2J,
1000 Independence Avenue, SW.,
Washington, DC 20585–0121.
Telephone: (202) 586–2945. E-mail:
Brenda.Edwards@ee.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Purpose of the Advance Notice of
Proposed Rulemaking
B. Overview of the Analyses Performed
1. Engineering Analysis
2. Markups To Determine Equipment Price
3. Energy Use Characterization
4. Life-Cycle Cost and Payback Period
Analyses
5. National Impact Analysis
C. Authority
D. Background
1. History of Standards Rulemaking for
Beverage Vending Machines
2. Rulemaking Process
3. Miscellaneous Rulemaking Issues
a. Consensus Agreement
b. Type of Standard
c. Split Incentive Issue
4. Test Procedure
5. Rating Conditions
II. Energy Conservation Standards Analyses
for Beverage Vending Machines
A. Market and Technology Assessment
1. Definition of ‘‘Beverage Vending
Machine’’
2. Equipment Classes
3. Selection of Baseline Equipment—Use of
the ENERGY STAR Criteria
4. Normalization Metric
5. Scope and Coverage of Equipment
a. Combination Machines
b. Refurbished Equipment
6. Market Assessment
7. Technology Assessment
B. Screening Analysis
1. Technology Options Screened Out
2. Technology Options Considered Further
in Analysis
C. Engineering Analysis
1. Approach
2. Equipment Classes Analyzed
3. Analytical Models
a. Cost Model
b. Energy Consumption Model
4. Baseline Models
5. Alternative Refrigerants
6. Cost-Efficiency Results
D. Markups To Determine Equipment Price
E. Energy Use Characterization
1. Selection of Efficiency Levels for Further
Analysis
2. Annual Energy Consumption Results
F. Rebuttable Presumption Payback Periods
G. Life-Cycle Cost and Payback Period
Analyses
1. Approach
2. Life-Cycle Cost Analysis Inputs
a. Baseline Manufacturer Selling Price
b. Increase in Selling Price
c. Markups
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
d. Installation Costs
e. Energy Consumption
f. Electricity Prices
g. Electricity Price Trends
h. Repair Costs
i. Maintenance Costs
j. Lifetime
k. Discount Rate
l. Rebound Effect
m. Effective Date
3. Split Incentive Issue
4. Payback Period
5. Life-Cycle Cost and Payback Period
Results
H. Shipments Analysis
I. National Impact Analysis
1. Approach
2. Base-Case and Standards-Case
Forecasted Efficiencies
3. National Impact Analysis Inputs
4. National Impact Analysis Results
J. Life-Cycle Cost Sub-Group Analysis
K. Manufacturer Impact Analysis
1. Sources of Information for the
Manufacturer Impact Analysis
2. Industry Cash Flow Analysis
3. Manufacturer Sub-Group Analysis
4. Competitive Impacts Assessment
5. Cumulative Regulatory Burden
6. Preliminary Results for the Manufacturer
Impact Analysis
L. Utility Impact Analysis
M. Employment Impact Analysis
N. Environmental Assessment
O. Regulatory Impact Analysis
III. Candidate Energy Conservation Standards
Levels
IV. 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
1. Equipment Classes
2. Compressor and Lighting Operating
Hours
3. Refurbishment Cycles
4. Life-Cycle Cost Baseline Level
5. Base-Case and Standards-Case Forecasts
6. Differential Impact of New Standards on
Future Shipments by Equipment Classes
7. Selection of Candidate Standard Levels
for Notice of Proposed Rulemaking
Analysis
8. Approach to Characterizing Energy
Conservation Standards
V. Regulatory Review and Procedural
Requirements
VI. Approval of the Office of the Secretary
jlentini on PROD1PC65 with PROPOSALS3
I. Introduction
A. Purpose of the Advance Notice of
Proposed Rulemaking
Through this Advance Notice of
Proposed Rulemaking, the U.S.
Department of Energy is initiating
rulemaking to consider establishing
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
energy conservation standards for
beverage vending machines. The
purpose of this ANOPR is to provide
interested persons with an opportunity
to comment on:
1. The equipment classes that DOE
plans to analyze in this rulemaking;
2. The analytical framework,
methodology, inputs, models, and tools
(e.g., life-cycle cost (LCC) and national
energy savings (NES) spreadsheets) that
DOE has been using to perform analyses
of the impacts of energy conservation
standards for refrigerated bottled or
canned beverage vending machines
(collectively referred to in this ANOPR
as ‘‘beverage vending machines’’);
3. The analyses conducted for the
ANOPR, including the preliminary
results of the engineering analysis, the
markups analysis to determine
equipment price, the energy use
characterization, the LCC and payback
period (PBP) analyses, the NES and
national impact analyses, and
preliminary manufacturer impact
analysis. These analyses are
summarized in the ANOPR Technical
Support Document (TSD), Energy
Efficiency Standards for Commercial
and Industrial Equipment: Refrigerated
Beverage Vending Machines 1,
published in tandem with this ANOPR;
and
4. The candidate standard levels
(CSLs) that DOE has developed for the
ANOPR from these analyses.
Interested persons are welcome to
comment on any relevant issue related
to this ANOPR. However, throughout
this Federal Register notice, DOE
identifies areas and issues on which it
specifically invites public comment.
These critical issues are summarized in
Section IV.E of this notice.
B. Overview of the Analyses Performed
As noted above, EPCA, as amended,
authorizes DOE to consider establishing
or amending energy conservation
standards for various consumer
products and commercial and industrial
equipment, including the beverage
vending machines that are the subject of
this ANOPR. (42 U.S.C. 6291 et seq.)
DOE conducted in-depth technical
analyses for this ANOPR in the
following areas: (1) Engineering; (2)
1 To view the technical support document for this
rulemaking, visit DOE’s Web site at: https://
www.eere.energy.gov/buildings/
appliance_standards/commercial/
beverage_machines.html.
PO 00000
Frm 00003
Fmt 4701
Sfmt 4702
34095
markups to determine equipment price;
(3) energy use characterization; (4) LCC
and PBP; and (5) NES and net present
value (NPV). The ANOPR discusses the
methodologies, assumptions, and
preliminary results for each analysis.
For each type of analysis, Table I.1
identifies the sections in this document
that contain the results of the analyses,
and summarizes their methodologies,
key inputs, and assumptions. In
addition, DOE conducted several other
analyses that either support the five
analyses discussed above or are
preliminary analyses that will be
expanded during the notice of proposed
rulemaking (NOPR) stage of this
rulemaking. These analyses include the
market and technology assessment, a
screening analysis which contributes to
the engineering analysis, and the
shipments analysis which contributes to
the national impacts analysis. In
addition to these analyses, DOE has
begun preliminary work on the lifecycle cost subgroup analysis,
manufacturer impact analysis, utility
impact analysis, employment impact
analysis, environmental impact
analysis, and the regulatory impact
analysis for the ANOPR. These analyses
will be expanded upon during the
NOPR stage of this rulemaking.
DOE consulted with stakeholders as
part of its process in developing all of
these analyses for the ANOPR and
invites further public input on these
topics which it will incorporate, as
appropriate, into any revised analyses.
While obtaining such input is the
primary purpose at this ANOPR stage of
the rulemaking, this notice also contains
a synopsis of the preliminary analytical
results. (The TSD contains a complete
set of results.) The purpose of
publishing these preliminary results in
this notice is to: (1) Facilitate public
comment on DOE’s analytical
methodology; (2) illustrate the level of
detail interested persons (stakeholders 2)
will find in the TSD; and (3) invite
stakeholders to comment on the
structure and the presentation of those
results. The preliminary analytical
results presented in the ANOPR are
subject to revision following review and
input from stakeholders.
2 The terms ‘‘stakeholders’’ and ‘‘interested
persons’’ are used interchangeably throughout this
ANOPR to refer to any member of the public
seeking to provide input on this rulemaking.
E:\FR\FM\16JNP3.SGM
16JNP3
34096
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
TABLE I.1.—IN-DEPTH TECHNICAL ANALYSES CONDUCTED FOR THE ANOPR
Analysis area
Key inputs
Methodology
Key assumptions
ANOPR section for
results
TSD section for
results
Component performance improvements
are estimated using
ANSI/ASHRAE
Standard 32.1–
2004.
Markups for baseline
and more-efficient
equipment are different.
Section II.C.6 ..............
Chapter 5, section
5.10, and Appendix
B.
Section II.D .................
Chapter 6, section
6.7.
Vending machines
certified for indoor/
outdoor use are assumed to be split
25% outdoors and
75% indoors.
Baseline efficiency is
Level 1. Average
electricity prices
are listed by customer type and
State. The Annual
Energy Outlook
2007 (AEO2007) 3
is used as the reference case for future trends. Equipment lifetime is 14
years. Discount
rate is estimated
using the weighted
average cost of
capital by customer
type.
Market shares by
equipment class
are constant. Market saturation by
business type is
constant. Shipments do not
change in response
to standards.
Section II.E .................
Chapter 7, section
7.4.4, and Appendix D.
Section II.G.5 .............
Chapter 8, section
8.4, and Appendix
G.
Section II.H .................
Chapter 9, section
9.4.
Engineering ................
Design option analysis.
Component cost data
and performance
values.
Markups to Determine
Equipment Price.
Assessment of company financial reports to develop
markups that transform manufacturer
prices into customer prices.
Energy use estimates
from the energy
performance model
based on the engineering analysis
spreadsheet.
Analysis of a representative sample
of commercial customers by business
type and location.
Distribution channels,
market shares
across the different
channels, State
sales taxes, and
shipments to different States.
Annual energy consumption based on
hourly weather
data for 237 U.S.
locations.
Projection of total
sales by business
type, State and by
equipment class.
Wholesaler markups
from company balance-sheet data,
current shipments
data by equipment
class, and average
equipment lifetime.
Energy Use Characterization.
LCC and Payback Period.
jlentini on PROD1PC65 with PROPOSALS3
Shipments ..................
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
Manufacturer selling
prices, markups
(including sales
taxes), installation
price, energy consumption, electricity
prices and future
trends, maintenance costs, repair
costs, equipment
lifetime, and discount rate.
PO 00000
Frm 00004
Fmt 4701
Sfmt 4702
E:\FR\FM\16JNP3.SGM
16JNP3
34097
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
TABLE I.1.—IN-DEPTH TECHNICAL ANALYSES CONDUCTED FOR THE ANOPR—Continued
Analysis area
Methodology
Key inputs
Key assumptions
ANOPR section for
results
TSD section for
results
National Impact ..........
Forecasts of equipment costs, annual
energy consumption, and operating
costs to 2042.
Shipments; effective
date of standard;
base-case efficiencies; shipmentweighted market
shares; annual energy consumption,
total installed cost,
and repair and
maintenance costs
(all on a per-unit
basis); escalation
of electricity prices;
electricity site-tosource conversion;
discount rate; and
present year.
Annual shipments are
from the shipments
model. The annual
weighted-average
energy efficiency,
installed cost, and
annual-weighted
average repair
costs are a function
of the energy efficiency level. Annual weighted-average maintenance
costs are constant
with the energy
consumption level.
AEO2007 is used
for electricity price
escalation, and the
National Energy
Modeling System
(NEMS) is used for
site-to-source conversion. Discount
rates are 3% and
7% real. Future
costs are discounted to 2007.
Section II.I.4 ...............
Chapter 10, section
10.4, and Appendix
I.
3 DOE will conduct the NOPR analysis using the latest available version of the AEO. Updated analytical spreadsheets using AEO2008 will be
made available on DOE’s Web site by late Spring/early Summer 2008: https://www.eere.energy. gov/buildings/appliance_standards/commercial/
beverage_machines.html.
jlentini on PROD1PC65 with PROPOSALS3
1. Engineering Analysis
DOE uses the engineering analysis,
along with the equipment price
determination, to establish the
relationship between the costs (i.e., enduser/customer prices) and efficiencies of
equipment which DOE evaluates for
standards, including beverage vending
machines. This relationship serves as
the basis for cost and benefit
calculations for individual commercial
customers, manufacturers, and the
Nation. The engineering analysis
identifies representative baseline
equipment, which is the starting point
for analyzing technologies expected to
provide energy efficiency
improvements. ‘‘Baseline equipment’’
here refers to model(s) having features
and technologies typically found in
equipment currently offered for sale.
The baseline model in each equipment
class represents the characteristics of
equipment in that class; for equipment
which is already subject to an energy
efficiency standard, the baseline unit is
typically one which just meets the
current regulatory requirement. After
identifying baseline models, DOE
estimates manufacturer selling prices
(MSPs) through an analysis of
manufacturer costs and manufacturer
markups. Manufacturer markups are the
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
multipliers used to determine MSPs
based on manufacturing cost.
The engineering analysis uses costefficiency curves based on a designoptions approach 4 derived from DOE
analysis. In the engineering analysis,
DOE also discusses the equipment
classes analyzed, sensitivity to material
prices, and the use of alternative
refrigerants. For additional detail on the
engineering analysis, see Section II.C.1.
2. Markups to Determine Equipment
Price
DOE determines customer prices for
beverage vending machines from MSP 5
and equipment price markups using
industry balance sheet and U.S. Census
Bureau data. To determine price
markups, DOE identifies distribution
4 A design-options approach uses individual or
combinations of design options to identify increases
in efficiency. Under this approach, estimates are
based on manufacturer or component supplier data,
or through the use of engineering computer
simulation models. Individual design options, or
combinations of design options, are added to the
baseline model in ascending order of costeffectiveness.
5 Manufacturer selling prices are derived from the
manufacturer production costs by applying the
manufacturer markup. The MSP is the selling price
of the equipment directly from the manufacturing
facility. If this equipment is then routed through a
wholesaler and/or a distributor, additional markups
are applied before reaching the customer.
PO 00000
Frm 00005
Fmt 4701
Sfmt 4702
channels for equipment sales and
determines the existence and amount of
markups within each distribution
channel. For each distribution channel,
DOE distinguishes between ‘‘baseline
markups’’ applied to the MSP for
baseline equipment and ‘‘incremental
markups’’ applied to the incremental
increase in MSP for more-efficient
equipment. Overall baseline and overall
incremental markups are calculated
separately based on the product of all
baseline and incremental markups at
each step in a distribution channel.
Together, the overall baseline markup
applied to the baseline equipment MSP
and the incremental markups applied to
the incremental increase in MSP for
more-efficient equipment, including
sales tax, determine the final customer
price. For additional detail on the
markups used to determine equipment
price, see Section II.D.
3. Energy Use Characterization
The energy use characterization
provides estimates of annual energy
consumption for beverage vending
machines. DOE uses these estimates in
the subsequent LCC and PBP analyses
and the national impact analysis (NIA).
DOE developed daily energy
consumption estimates for the different
equipment classes analyzed in the
E:\FR\FM\16JNP3.SGM
16JNP3
34098
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
engineering analysis.6 DOE then
validated these estimates with
simulation modeling of energy
consumption on an annual basis for all
the equipment classes and efficiency
levels. The simulation modeling took
into account the percentage of vending
machines that would be placed indoors
and outdoors and therefore, exposed to
varying ambient temperatures. For
additional detail on the energy use
characterization, see Section II.E.
jlentini on PROD1PC65 with PROPOSALS3
4. Life-Cycle Cost and Payback Period
Analyses
The LCC and PBP analyses determine
the economic impact of potential
standards on individual commercial
customers. The LCC is the total
customer expense for a piece of
equipment over the life of the
equipment (i.e., purchase price plus
maintenance and operating costs). The
LCC analysis compares the life-cycle
costs of equipment designed to meet
new or amended energy conservation
standards with the life-cycle cost of the
equipment likely to be installed in the
absence of such standards. DOE
determines these costs by considering:
(1) Total installed cost to the purchaser
(including MSP, sales taxes, distribution
channel markups, and installation cost);
(2) the operating expenses of the
equipment (energy cost and
maintenance and repair cost); (3)
equipment lifetime; and (4) a discount
rate that reflects the real cost of capital
and puts the LCC in present value
terms. For additional detail on the LCC
analysis, see Section II.G.1.
The PBP represents the number of
years needed to recover the increase in
purchase price (including installation
cost) of more-efficient equipment
through savings in the operating cost.
The PBP is the increase in total installed
cost due to increased efficiency divided
by the (undiscounted) decrease in
annual operating cost from increased
efficiency. For additional detail on the
PBP analysis, see Section II.G.1.
5. National Impact Analysis
The NIA estimates the NES, as well as
the NPV, of total national customer
costs and savings expected to result
from new standards at specific
efficiency levels. Stated another way,
DOE calculated the NES and NPV for
each standard level for beverage
vending machines as the difference
between a base-case forecast (i.e.,
without new standards) and the
6 The daily energy consumption estimates were
calculated in the engineering analysis based on
procedures and conditions specified in ANSI/
ASHRAE Standard 32.1–2004, Methods of Testing
for Bottled, Canned, and Other Sealed Beverages.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
standards-case forecast (i.e., with new
standards). For each year of the analysis,
the beverage vending machine stock is
composed of units of different types
shipped in previous years (or vintages)
which remain available for sale at
present. Each vintage has a
characteristic distribution of efficiency
levels. DOE first determined the average
energy consumption of each vintage in
the stock accounting for all efficiency
levels in that vintage. The national
annual energy consumption is then the
product of the annual average energy
consumption per beverage vending
machine at a given vintage and the
number of beverage vending machines
of that vintage in the stock for the
particular year. This approach accounts
for differences in unit energy
consumption from year to year. Annual
energy savings are calculated for each
standard level by subtracting national
energy consumption for that standard
level from that calculated for the
baseline. Cumulative energy savings are
the sum of the annual NES determined
from 2012 to 2042.
In a similar fashion, DOE tracks the
first costs for all equipment installed at
each efficiency level for each vintage. It
also tracks the annual operating cost
(sum of the energy, maintenance, and
repair costs) by vintage for all
equipment remaining in the stock for
each year of the analysis. DOE then
calculates the net economic savings
each year as the difference between total
operating cost savings and increases in
the total installed costs. The NPV is the
annual net cost savings calculated for
each year, discounted to the year 2012,
and expressed in 2007$. Cumulative
NPV savings reported are the sum of the
annual NPV savings over the analysis
period (2012–2042).7 Critical inputs to
the NIA include shipment projections,
rates at which users retire equipment
(based on estimated equipment
lifetimes), and estimates of changes in
shipments and retirement rates in
response to changes in equipment costs
due to new standards. For additional
detail on the NIA, see Section II.I.1.
C. Authority
Title III of EPCA sets forth a variety
of provisions concerning energy
efficiency. Part A 8 of Title III provides
7 DOE uses 31 years as the time period of analysis
for its NES calculations in many of its rulemakings,
in order to enable interested persons to understand
the relative magnitude of energy savings potentials
of the various equipment at the standard levels
being considered.
8 This part was originally titled Part B; however,
it was redesignated Part A, after Part B of Title III
was repealed by Pub. L. 109–58. Similarly, Part C,
Certain Industrial Equipment, was redesignated
Part A–1.
PO 00000
Frm 00006
Fmt 4701
Sfmt 4702
for the ‘‘Energy Conservation Program
for Consumer Products Other Than
Automobiles.’’ (42 U.S.C. 6291–6309)
The amendments to EPCA contained
in the Energy Policy Act of 2005
(EPACT 2005), Pub. L. 109–58, include
new or amended energy conservation
standards and test procedures for some
of these products, and direct DOE to
undertake rulemakings to promulgate
such requirements. In particular, section
135(c)(4) of EPACT 2005 amends EPCA
to direct DOE to prescribe energy
conservation standards for beverage
vending machines. (42 U.S.C. 6295(v))
Because of its placement in Part A of
Title III of EPCA, the rulemaking for
beverage vending machine energy
conservation standards is bound by the
requirements of 42 U.S.C. 6295.
However, since beverage vending
machines are commercial equipment
and consistent with DOE’s previous
action to incorporate the EPACT 2005
requirements for commercial equipment
into Title 10 of the Code of Federal
Regulations (CFR), Part 431 (‘‘Energy
Efficiency Program for Certain
Commercial and Industrial
Equipment’’), DOE intends to place the
new requirements for beverage vending
machines in 10 CFR part 431. The
location of the provisions within the
CFR does not affect either their
substance or applicable procedure, so
DOE is placing them in the appropriate
CFR part based on their nature or type.9
Before DOE prescribes any such
standards, however, it must first solicit
comments on proposed standards.
Moreover, DOE must design each new
standard for beverage vending machines
to achieve the maximum improvement
in energy efficiency that is
technologically feasible and
economically justified, and will result
in significant conservation of energy.
(42 U.S.C. 6295(o)(2)(A), (o)(3), (v)) To
determine whether a standard is
economically justified, DOE must, after
receiving comments on the proposed
standard, determine whether the
benefits of the standard exceed its
burdens to the greatest extent
practicable, considering the following
seven factors:
(1) The economic impact of the
standard on manufacturers and
consumers of products subject to the
standard;
(2) The savings in operating costs
throughout the estimated average life of
the covered product in the type (or
class) compared with any increase in
the price, initial charges, or
9 Because of their placement into 10 CFR 431,
beverage vending machines will be referred to as
‘‘equipment’’ throughout this notice.
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
maintenance expenses for the covered
product likely to result from imposition
of the standard;
(3) The total projected amount of
energy savings likely to result directly
from imposition of the standard;
(4) Any lessening of the utility or
performance of the covered products
likely to result from 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 imposition of the standard;
(6) The need for national energy
conservation; and
(7) Other factors the Secretary of
Energy (the Secretary) considers
relevant.
(42 U.S.C. 6295(o)(2)(B)(i))
D. Background
1. History of Standards Rulemaking for
Beverage Vending Machines
As noted above, section 135(c)(4) of
EPACT 2005 amended section 325 of
EPCA in part by adding new subsections
325(v)(2), (3), and (4). (42 U.S.C.
6295(v)(1), (2) and (3)).10 These
provisions direct the Secretary to
prescribe, by rule, energy conservation
standards for beverage vending
machines no later than August 8, 2009,
and state that any such standards shall
apply to beverage vending machines
manufactured three years after the date
of publication of the final rule that
establishes those standards. The energy
use of this equipment has never before
been regulated at the Federal level.
Section 135(a)(3) of EPACT 2005
amended section 321 of EPCA in part by
adding new subsection 321(40) (42
U.S.C. 6291(40)), which establishes the
definitions for ‘‘refrigerated bottled or
canned beverage vending machine’’ as
‘‘a commercial refrigerator that cools
bottled or canned beverages and
dispenses the bottled or canned
beverages on payment.’’ In addition,
section 136(a)(3) of EPACT 2005
amended section 340 of EPCA in part by
adding a definition for ‘‘commercial
refrigerator, freezer, and refrigeratorfreezer.’’ 11
On June 28, 2006, DOE published in
the Federal Register a notice
announcing a public meeting and the
availability of a Framework Document
titled, Rulemaking Framework for
Refrigerated Bottled or Canned Beverage
Vending Machines,12 that describes the
procedural and analytical approaches
that DOE anticipates using to evaluate
energy conservation standards for
beverage vending machines. 71 FR
36715. DOE invited written comments
on this analytical framework.
DOE held a Framework public
meeting on July 11, 2006, whose
purpose was to discuss the procedural
and analytical approaches for use in the
rulemaking, and to inform and facilitate
stakeholder involvement in the
rulemaking process. The analytical
framework presented at the public
meeting described different analyses,
such as LCC and PBP, the planned
methods for conducting them, and the
relationships among the various
analyses.13 Manufacturers, trade
associations, environmental advocates,
and other interested parties attended the
public meeting.
Comments received after publication
of the Framework Document and at the
July 11 public meeting helped identify
and elaborated upon issues involved in
this rulemaking and provided
information that has contributed to
DOE’s efforts to resolve these issues.
Many of the statements provided by
stakeholders are quoted or summarized
in this ANOPR. A parenthetical
reference at the end of a quotation or
passage provides the location of such
item in the public record (i.e., the
docket for this rulemaking). The ANOPR
TSD describes the analytical framework
in detail.
During the course of this rulemaking,
Congress passed the Energy
34099
Independence Security Act of 2007
(EISA 2007), which the President signed
on December 19, 2007 (Pub. L. 110–
140). Of relevance to the beverage
vending machine rulemaking, section
310(3) of EISA 2007 amended section
325 of EPCA in part by adding
subsection 325(gg) (42 U.S.C. 6295(gg)).
This subsection requires any new or
amended energy conservation standard
adopted after July 1, 2010 to incorporate
‘‘standby mode and off mode energy
use.’’ (42 U.S.C. 6295(gg)(3)(A)) Since
any standard associated with this
rulemaking is required by August 2009,
the energy use calculations will not
include ‘‘standby mode and off mode
energy use.’’ To include standby mode
and off mode energy use requirements
for this rulemaking would take a
considerable degree of analytical effort
and would likely require changes to the
test procedure. Given the statutory
deadline, DOE has decided to address
this requirement when the standards for
beverage vending machines are
reviewed in August 2015 to consider the
need for possible amendment in
accordance with 42 U.S.C. 6295(m).
2. Rulemaking Process
Table I.2 sets forth a list of the
analyses DOE has conducted and
intends to conduct in its evaluation of
potential energy conservation standards
for beverage vending machines.
Historically, DOE performed the
manufacturer impact analysis (MIA) in
its entirety between the ANOPR and
NOPR stages of energy conservation
standards rulemakings. However, more
recently, DOE has refined its process
and has begun to publish a preliminary
MIA in the ANOPR for public comment.
DOE believes this change will improve
the rulemaking process. Accordingly, as
noted in the table below, DOE has
performed a preliminary MIA for this
ANOPR.
TABLE I.2.—BEVERAGE VENDING MACHINE ANALYSIS
NOPR
• Market and technology assessment ..............
• Screening analysis .........................................
jlentini on PROD1PC65 with PROPOSALS3
ANOPR
• Revised ANOPR analyses ............................
• Life-cycle cost sub-group analysis ...............
• Revised NOPR analyses
10 It is noted that the relevant statutory provisions
were renumbered pursuant to section 316 of the
Energy Independence and Security Act of 2007,
Pub. L. 110–140.
11 This definition reads as follows:
‘‘(9)(A) The term ‘commercial refrigerator, freezer,
and refrigerator-freezer’ means refrigeration
equipment that—
(i) is not a consumer product (as defined in
section 321 [of EPCA; 42 U.S.C. 6291(1)]);
(ii) is not designed and marketed exclusively for
medical, scientific, or research purposes;
(iii) operates at a chilled, frozen, combination
chilled and frozen, or variable temperature;
(iv) displays or stores merchandise and other
perishable materials horizontally, semivertically, or
vertically;
(v) has transparent or solid doors, sliding or
hinged doors, a combination of hinged, sliding,
transparent, or solid doors, or no doors;
(vi) is designed for pull-down temperature
applications or holding temperature applications;
and
(vii) is connected to a self-contained condensing
unit or to a remote condensing unit.’’
(42 U.S.C. 6311(9)(A))
12 The Framework Document is available at:
https://www.eere.energy.gov/buildings/
appliance_standards/commercial/
beverage_machines.html.
13 PDF copies of the slides and other materials
associated with the public meeting are available at:
https://www.eere.energy.gov/buildings/
appliance_standards/commercial/
beverage_machines.html.
VerDate Aug<31>2005
18:11 Jun 13, 2008
Jkt 214001
PO 00000
Frm 00007
Fmt 4701
Sfmt 4702
Final Rule*
E:\FR\FM\16JNP3.SGM
16JNP3
34100
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
TABLE I.2.—BEVERAGE VENDING MACHINE ANALYSIS—Continued
ANOPR
•
•
•
•
•
•
•
NOPR
Engineering analysis ......................................
Energy use characterization ..........................
Markups to determine equipment price .........
Life-cycle cost and payback period analyses
Shipments analysis ........................................
National impact analysis ................................
Preliminary manufacturer impact analysis .....
•
•
•
•
•
Final Rule*
Manufacturer impact analysis .......................
Utility impact analysis ...................................
Employment impact analysis ........................
Environmental assessment ...........................
Regulatory impact analysis ...........................
* During the final rule phase, DOE considers the comments submitted by the U.S. Department of Justice in the NOPR phase concerning the
impact of any lessening of competition likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(v))
The analyses listed in Table I.2 also
include the development of related
economic models and analytical tools,
as necessary. If timely new data,
models, or tools that enhance the
development of standards become
available, DOE will incorporate them
into this rulemaking.
3. Miscellaneous Rulemaking Issues
a. Consensus Agreement
jlentini on PROD1PC65 with PROPOSALS3
In response to the Framework
Document, USA Technologies stated
that there appears to be considerable
consensus regarding potential energy
conservation standards for beverage
vending machines and that DOE could
provide a valuable and meaningful
service by coordinating the efforts of
industry, manufacturers, beverage
vending machine owners, and utilities
by fostering an agreement on standards.
USA Technologies stated that this
approach could help the industry
achieve significant energy savings in a
very short time, instead of waiting until
2012. (USA Tech, No. 9 at p. 1) 14
Edison Electric Institute (EEI) suggested
that, given DOE’s workload on Federal
standards over the next several years,
DOE should try to arrange a negotiated
rulemaking of interested parties to help
streamline the process. EEI noted that
such a process was very successful with
the fluorescent lamp ballast
rulemaking.15 (EEI, No. 12 at p. 1)
14 A notation in the form ‘‘USA Tech, No. 9 at p.
1’’ identifies a written comment that DOE received
and included in the docket for this rulemaking
(Docket No. EERE–2006-STD–0125), maintained in
the Resource Room of the Building Technologies
Program. Specifically, this footnote refers to a
comment made USA Technologies, and recorded on
page 1 of document number 9. Likewise, a notation
in the form ‘‘Public Meeting Transcript, No. 8 at p.
150’’ identifies an oral comment that DOE received
during the July 11, 2006, Framework public meeting
and which was recorded in the public meeting
transcript in the docket for this rulemaking.
Likewise, a notation in the form ‘‘Joint Comment,’’
No. 13 at p. 3’’ identifies a written comment that
DOE has received and has included in the docket
of this rulemaking.
15 DOE notes that in the florescent lamp ballasts
rulemaking, a consensus process was used. 65 FR
56740, 56744 (Sept. 19, 2000).
VerDate Aug<31>2005
18:11 Jun 13, 2008
Jkt 214001
DOE supports efforts by interested
parties to work together to develop and
present to DOE recommendations on
equipment categories and standard
levels. Such recommendations are
welcome throughout the standards
development process, especially
following issuance of the ANOPR. Any
consensus recommendation must satisfy
the statutory criteria provided by EPCA
in determining whether an energy
conservation standard is technologically
feasible and economically justified, and
will result in significant conservation of
energy. (42 U.S.C. 6295(o)(2)(A), (o)(3),
(v)) Any consensus recommendation
should also include information that
DOE can use to assess the seven
statutory factors that determine whether
the benefits of the standard exceed its
burdens to the greatest extent
practicable. (42 U.S.C. 6925(o)(2)(B)(i))
b. Type of Standard
Crane Merchandising Systems asked
whether the technology options listed
would become mandatory as part of the
rulemaking. (Public Meeting Transcript,
No. 8 at p. 150) USA Technologies
stated that, in terms of technology
options for compliance with energy
conservation standards, the more
opportunity manufacturers have to be
creative, the better, particularly since
this is a very creative industry. It stated
that restricting manufacturers to
particular design options would not be
in the manufacturers’—or the buyers’—
best interest. (Public Meeting
Transcript, No. 8 at p. 173) Dixie-Narco
likewise stated that the choice of
technologies used to achieve standards
should be left to the discretion of the
manufacturer. (Public Meeting
Transcript, No. 14 at p. 3) Dixie-Narco
further suggested that the DOE standard
should not recommend any particular
design packages or endorse any specific
third-party technologies developed for
use in vending machines that original
equipment manufacturers have not
endorsed as being compatible with their
equipment. It stated that these
technologies may work against other
PO 00000
Frm 00008
Fmt 4701
Sfmt 4702
energy-saving components such as
variable-capacity compressors. (Public
Meeting Transcript, No. 14 at p. 3) In
contrast, the Naval Facilities
Engineering Service Center (NFESC)
recommended that DOE should pursue
cost-effective standards for beverage
vending machines, which would
include both overall efficiency
standards, as well as prescriptive
standards that address more focused
topics such as a low-power-mode
requirement for low-use periods and
lighting efficiency within the unit.
(NFESC, No. 15 at p. 2)
In response, DOE notes that EPCA
provides that an ‘‘energy conservation
standard’’ must be either (A) ‘‘a * * *
level of energy efficiency’’ or ‘‘a * * *
quantity of energy use,’’ or (B), for
certain specified equipment, ‘‘a design
requirement.’’ (42 U.S.C. 6291(6)) Thus,
an ‘‘energy conservation standard’’
cannot consist of both a design
requirement and a level of efficiency or
energy use.16 Moreover, item (A) above
indicates that, under EPCA, a single
energy conservation standard cannot
have measures of both energy efficiency
and energy use. Furthermore, EPCA
specifically requires DOE to base its test
procedure for this equipment on
American National Standards Institute
(ANSI)/American Society of Heating,
Refrigerating and Air-Conditioning
Engineers (ASHRAE) Standard 32.1–
2004, Methods of Testing for Rating
Vending Machines for Bottled, Canned
or Other Sealed Beverages. (42 U.S.C.
6293(b)(15)) The test methods in ANSI/
ASHRAE Standard 32.1–2004 consist of
means to measure energy consumption,
not energy efficiency.
For these reasons, DOE does not
intend to develop efficiency standards
or design requirements for this
equipment. Instead, DOE intends to
develop standards such that each
beverage vending machine would be
subject to a maximum level of energy
16 Beverage vending machines are not one of the
specified equipment for which EPCA allows a
standard to consist of a design requirement. (42
U.S.C. 6291(6)(B), 6292(a)).
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
use, and manufacturers could meet
these standards with their own choice of
design methods.
c. Split Incentive Issue
DOE mentioned the ‘‘split incentive
issue’’ (explained below) at the
Framework public meeting when
discussing distribution channels for
beverage vending machines sold to the
bottler or a vending machine operator.
The bottler or the vending machine
operator installs these machines at
different sites through location
contracts, maintains and stocks the
machines, and retains a certain
percentage of the coin-box revenue. The
site owner, in this case, allows the
machine to be placed on-site, receives a
percentage of the coin-box revenue and/
or other remuneration, and most
relevant to this rulemaking, pays the
electricity bill and enjoys any electricity
cost savings associated with moreefficient machines. The equipment
purchaser (bottler or vending machine
operator) does not pay the electricity
bill and, therefore, does not receive any
cost savings. In principle, the business
site owner would be willing to accept a
lower percentage of revenue for a
machine that uses less electricity.
However, where it is costly to
renegotiate contracts, the incentive to
purchase more-efficient machines may
be lessened or eliminated. Nonetheless,
there may be a growing market for
energy-efficient beverage vending
machines because environmentallyconscious beverage companies and
bottlers are pushing to install energyefficient machines on-site, and certain
site owners are demanding that energyefficient machines be installed to reduce
their electricity costs.
At the Framework public meeting,
Coca-Cola indicated that the vending
machine operator may or may not pay
some or all of the energy costs,
depending on its contract with the site
owner. (Public Meeting Transcript, No.
8 at p. 190) Meanwhile, EEI asserted
that information about distribution
channels and beverage vending machine
contracts would be important for the
LCC analysis. EEI claimed that unless
there is a provision in the contract for
energy costs, there will be a split
incentive for machine owners and site
owners. (EEI, No. 12 at p. 5)
DOE agrees with EEI that there may be
a split incentive in the beverage vending
machine market; however, it disagrees
with EEI’s contention that the split
incentive is relevant to the LCC
analysis. DOE recognizes that when a
standard results in overall operating
cost savings that are greater than
increases in the installed cost for the
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
equipment, there will be a life-cycle cost
benefit from the standard, a key piece of
regulatory information independent of
who receives such benefit. How the
benefits and burdens are shared
between the equipment purchaser and
the site owner is a function of the nature
of the contract, and this allocation may
in fact change as the expenses of either
party change as a result of subsequent
events, such as changes in electricity
prices or standards requiring moreefficient machines. DOE has limited
data on existing beverage vending
machine contracts, but knows that these
can vary widely. DOE has no data on
how these contracts may change as the
relative expenses of either party shift. In
summary, for the purposes of the LCC
analysis and as is required by EPCA,
DOE is evaluating the benefits and
burdens of the standards from the
standpoint of a ‘‘customer’’ who is
assumed to bear the burden of
purchasing the equipment and the
benefits of any energy savings, which in
this case, is the equipment purchaser.
(42 U.S.C. 6295(o)(2)(B)(i)) DOE requests
further comment and information on
this issue.
4. Test Procedure
A test procedure outlines the method
by which manufacturers will determine
the energy consumption of their
beverage vending machines, and thereby
assess the results used to certify
compliance with an energy conservation
standard.
Section 135(b) of EPACT 2005
amended section 323 of EPCA in part by
adding new subsections 323(b)(15) (42
U.S.C. 6293(b)(15)) and 323(f) (42 U.S.C.
6293(f)). Respectively, these subsections
provide that the test procedure for
refrigerated bottled or canned beverage
vending machines shall be based on
ANSI/ASHRAE Standard 32.1–2004,
and that the Secretary had until August
8, 2007 to prescribe that new test
procedure.
On December 8, 2006, DOE published
a final rule in the Federal Register that
incorporated by reference ANSI/
ASHRAE Standard 32.1–2004, with two
modifications, as the DOE test
procedure for this equipment. 71 FR
71340, 71375; 10 CFR 431.294. The first
modification DOE made was to specify
that in Section 6.2, ‘‘Voltage and
Frequency,’’ equipment with dual
nameplate voltages must be tested at the
lower of the two voltages only. 71 FR
71340, 71355 (Dec. 8, 2006). The second
modification was to specify that (1) any
measurement of ‘‘vendible capacity’’ of
refrigerated bottled or canned beverage
vending machines must be in
accordance with the second paragraph
PO 00000
Frm 00009
Fmt 4701
Sfmt 4702
34101
of Section 5, ‘‘Vending Machine
Capacity,’’ of ANSI/ASHRAE Standard
32.1–2004, and (2) any measurement of
‘‘refrigerated volume’’ of refrigerated
bottled or canned beverage vending
machines must be in accordance with
the methodology specified in Section
5.2, ‘‘Total Refrigerated Volume,’’
(excluding subsections 5.2.2.2 through
5.2.2.4) of the ANSI/Association of
Home Appliance Manufacturers
(AHAM) HRF–1–2004, Energy,
Performance and Capacity of Household
Refrigerators, Refrigerator-Freezers and
Freezers. Id.
5. Rating Conditions
In the Framework Document, DOE
requested feedback on what rating
conditions it should use for setting
standards and determining compliance
with them. DOE’s test procedure
included two rating conditions (i.e., 75
degrees Fahrenheit (°F)/45 percent
relative humidity (RH) and 90°F/65
percent RH). EEI stated that the 75°F/45
percent RH ambient conditions
specified in the ANSI/ASHRAE
Standard 32.1–2004 should provide
adequate daily energy-usage information
for most machines located solely
indoors. EEI added that for certain
indoor conditions (i.e., machines
located in rooms with limited
ventilation), the 90°F/65 percent RH test
conditions may be better. (EEI, No. 12 at
p. 2)
Dixie-Narco stated that for the
majority of indoor equipment, the rating
75°F/45 percent RH temperature is
accurate and reflects actual conditions.
(Public Meeting Transcript, No. 8 at p.
95) Dixie-Narco stated that the 90°F/65
percent RH rating condition is highly
overstated, arguing that no location in
the United States is at 90°F/65 percent
RH condition 24 hours a day, 365 days
a year. Royal Vendors and UVA
Technologies agreed with Dixie-Narco,
stating that the actual energy use of
outdoor machines is likely to be
overstated, in most cases, when
determined under those conditions.
(Public Meeting Transcript, No. 8 at pp.
96–97)
Pacific Gas and Electric (PG&E)
indicated, however, that DOE need not
distinguish between indoor and outdoor
temperature conditions in setting rating
conditions because machines located
indoors sometimes operate in warmer
conditions, similar to the ambient
conditions that the machine might
operate in if it was located outdoors.
(Public Meeting Transcript, No. 8 at p.
94) Coca-Cola stated energy
consumption depends not only on
ambient temperature, but also on
ambient humidity and the heat load
E:\FR\FM\16JNP3.SGM
16JNP3
jlentini on PROD1PC65 with PROPOSALS3
34102
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
(heat output by components) within the
machine. (Coca-Cola, No. 8 at p. 220)
EEI noted that one EEI member
company suggested that if DOE could
determine a way to require outdoorrated machines to be used exclusively
outdoors and indoor-rated machines to
be used exclusively indoors, there could
be considerable energy savings. (EEI,
No. 12 at p. 2)
During the Framework public
meeting, EEI stated that if glass-front
machines are placed outside, DOE might
need to consider a different test
procedure to account for the difference
in radiation heat loads between glassfront and closed-front machines. EEI
also suggested separate tests for winter
and summer conditions for machines
used outdoors. (Public Meeting
Transcript, No. 8 at p. 66) In addition,
EEI argued that energy usage of beverage
vending machines varies dramatically
based on ambient conditions. It
suggested that DOE should adopt a test
procedure for outdoor machines that
would account for high ambient
temperatures and/or solar loads, which
would improve the efficiency of the
equipment throughout the year, but
especially on peak summer days. (EEI,
No. 12 at p. 3) EEI added that if DOE
decides to establish standards in terms
of total daily energy consumption, then
extreme outdoor temperature conditions
must be accounted for. (EEI, No. 12 at
p. 5)
In response to these comments, DOE
understands the concerns about the
variability in energy consumption
resulting from different ambient
conditions. However, outdoor-only
beverage machines are currently
nonexistent. Currently, all machines
placed outdoors are designed for both
indoor and outdoor use and are not
designed exclusively for outdoor use
only. If, as suggested by several
manufacturers, a 90 °F/65 percent RH
rating condition for a machine used
outdoors would result in overstatement
of its energy use due to changing daily
and seasonal ambient conditions, that
rating condition applied to the same
machine used indoors would then be
expected to result in an even greater
overstatement of energy use. For
example, the average annual
temperature in Miami, FL (one of the
southernmost and warmest cities in the
United States) is approximately 75 °F.17
Therefore, throughout the United States,
almost all average annual outdoor
temperatures are close to or below 75 °F.
DOE chooses to evaluate an average
temperature because it believes that the
increase in the energy consumption of a
machine operating in temperatures
above the average is offset by the
decrease in energy consumption of a
machine operating in temperatures
below the average. In addition, beverage
vending machines have closed
refrigeration systems. The relative
humidity that a beverage vending
machine operates in has a much less
significant impact than ambient
temperature on the energy consumption
of a beverage vending machine. After
careful consideration of public
comments on this issue, DOE plans to
use a 75 °F/45 percent RH rating
condition for all refrigerated beverage
vending machines covered by this
rulemaking. DOE will include this
rating condition requirement as part of
any energy conservation standards
developed in this rulemaking.
17 Typical Meterorological Year 2 (TMY2) Data
(from the 1961–1990 National Solar Radiation Data
Base). Available at: https://rredc.nrel.gov/solar/
old_data/nsrdb/tmy2/.
18 Available on DOE’s Web site at https://
www.eere.energy.gov/buildings/
appliance_standards/commercial/
beverage_machines.html.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
II. Energy Conservation Standards
Analyses for Beverage Vending
Machines
This section addresses the analyses
DOE has performed and intends to
perform for this rulemaking. A separate
subsection addresses each analysis and
the underlying assumptions applied to
that analysis. Specifically, DOE will
perform a set of analyses, including: (1)
A market and technology assessment;
(2) a screening analysis; (3) an
engineering analysis; (4) an analysis to
determine equipment price; (5) an
energy use characterization; (6) an LCC
and PBP analysis; (7) a shipments
analysis; (8) a national impact analysis;
and (9) a manufacturer impact analysis.
Additional analyses consider the impact
of a potential rule on utilities, LCC subgroups, employment, and the
environment. A full description of how
these analyses are performed is
contained in the TSD.18 However, this
section of the ANOPR provides an
overview of these analyses, while
focusing on how these analyses are
being tailored to this rulemaking and on
their underlying assumptions. It also
discusses comments received from
interested parties since DOE published
the beverage vending machines
Framework Document.
A. Market and Technology Assessment
When DOE begins a standards
rulemaking, it develops market
assessment information that provides an
overall picture of the market for the
PO 00000
Frm 00010
Fmt 4701
Sfmt 4702
equipment concerned, including the
nature of the equipment, the industry
structure, and market characteristics for
the equipment. The technology
assessment identifies available, energysaving technologies, which will be
considered in the screening analysis.
These activities consist of both
quantitative and qualitative efforts
based primarily on publicly available
information. The subjects addressed in
the market and technology assessment
for this rulemaking include
manufacturer characteristics and market
shares, existing regulatory and nonregulatory efficiency improvement
initiatives, equipment classes, and
trends in equipment markets and
characteristics. This information serves
as resource material for use throughout
the rulemaking.
1. Definition of ‘‘Beverage Vending
Machine’’
As mentioned above, EPCA defines
the term ‘‘refrigerated bottled or canned
beverage vending machine’’ as ‘‘a
commercial refrigerator that cools
bottled or canned beverages and
dispenses the bottled or canned
beverages on payment.’’ (42 U.S.C.
6291(40)) Thus, whether equipment is a
beverage vending machine covered
under EPCA depends on whether it
cools and dispenses ‘‘bottled beverages’’
and/or ‘‘canned beverages,’’ and, in the
Framework Document, DOE requested
feedback on the meaning of these terms.
The following summarizes public
comments on this issue.
PepsiCo stated that there are many
types of packaging for beverages that
cannot be categorized as a can or bottle.
(Public Meeting Transcript, No. 8 at p.
36) Dixie-Narco questioned how DOE’s
packaging definition will take into
account evolving package types over
time. (Public Meeting Transcript, No. 8
at p. 37) PepsiCo elaborated, asking how
DOE will treat other types of packaging
(e.g., pouch-type packaging and
packaging that is a combination of
plastic and paperboard). (Public
Meeting Transcript, No. 8 at pp. 40–41)
The National Automated Merchandising
Association (NAMA) then asked
whether DOE will include aseptic
packaging as a bottle or can.19 (Public
Meeting Transcript, No. 8 at p. 41)
Dixie-Narco suggested that DOE
should use the term ‘‘beverage
containers’’ to describe the items
refrigerated beverage vending machines
dispense. (Public Meeting Transcript,
No. 8 at p. 46) EEI stated that DOE
19 An aseptic package is a package that is
intended to prevent spoilage and is used for longterm storage of its contents.
E:\FR\FM\16JNP3.SGM
16JNP3
jlentini on PROD1PC65 with PROPOSALS3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
should expand the list of vended items
to more than just bottles and cans.
(Public Meeting Transcript, No. 8 at p.
42) It suggested that DOE should add
‘‘other beverage container’’ to the list of
vended items that delineate what
constitutes a beverage vending machine,
and that DOE should define that term,
so as to include other combinations
(e.g., plastic and paperboard, metal and
plastic, metal and glass) or other
materials that may contain a beverage
that will be housed in a refrigerated
beverage vending machine. EEI noted
that another option would be to add the
phrase ‘‘packaged beverage-refrigerated’’
to the list of vended products that
define what equipment is a beverage
vending machine. (EEI, No. 12 at p. 3)
The Alliance to Save Energy, the
American Council for an Energy
Efficient Economy (ACEEE), the
Appliance Standards Awareness Project
(ASAP), the Natural Resources Defense
Council (NRDC), the Northeast Energy
Efficiency Partnerships (NEEP), and the
Northwest Power and Conservation
Council, in comments they jointly filed
(hereafter ‘‘Joint Comment’’), stated that
the definitions suggested by DOE for the
terms ‘‘bottle’’ and ‘‘can’’ seem
workable, except that the term ‘‘can’’
should be broadened to include plastic.
The Joint Comment also noted the
distinction between what is a ‘‘can’’ and
what is a ‘‘bottle’’ is not important, as
long as all types of containers are
included. (Joint Comment, No. 13 at p.
3) Dixie-Narco agreed with this
comment. The Joint Comment suggested
using the ASHRAE standard package
(i.e., a 12-ounce, 355-milliliter can) as a
thermal load in the test procedure.
(Dixie-Narco, No. 14 at p. 1)
After carefully reviewing these
comments, DOE has tentatively decided
to consider broader definitions for the
terms ‘‘bottled’’ and ‘‘canned’’ as they
apply to beverage vending machines.
DOE believes a bottle or can in this
context refers to ‘‘a sealed container for
beverages,’’ so a bottled or canned
beverage is ‘‘a beverage in a sealed
container.’’ Such definition would avoid
unnecessary complications regarding
the material composition of the
container. Furthermore, a single,
encompassing definition will eliminate
the need to determine whether a
particular container is a bottle or a can.
DOE seeks comment on this broader
definition, both as to the definition itself
and whether it is consistent with the
intent of the Act.
Combination vending machines are
vending machines that dispense cooled
beverages as well as other beverages and
food items. These types of vending
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
machines are discussed in Section 5.a
below.
2. Equipment Classes
In general, when evaluating and
establishing energy conservation
standards, DOE divides covered
equipment into equipment classes by
the type of energy used, capacity, or
other performance-related features that
affect efficiency and factors such as the
utility of such feature(s) to users. (42
U.S.C. 6295(q)) DOE routinely
establishes different energy
conservation standards for different
equipment classes based on these
criteria.
A number of characteristics of
beverage vending machines have the
potential to affect their energy use and
efficiency, and accordingly, to be the
basis for separate equipment classes for
these machines. In the Framework
Document, DOE suggested and sought
feedback on two issues that could affect
equipment class designations: (1)
Indoor-only and indoor/outdoor
machines; and (2) glass-front and solidfront machines.
With regard to glass-front and solidfront machines, ACEEE stated it may be
better to distinguish equipment classes
as ‘‘zone-cooled’’ and ‘‘fully-cooled’’
rather than ‘‘solid-front’’ and ‘‘glassfront’’, respectively. It asserted that the
latter two demarcations overlap to some
extent, and some important distinctions
make zone-cooled and fully-cooled
better classifications. (Public Meeting
Transcript, No. 8 at p. 85) NAMA stated
that during vending machine efficiency
meetings with the Canadian Standards
Association (CSA), the CSA’s standards
committee recommended ‘‘zone-cooled’’
and ‘‘fully-cooled’’ as the two classes of
refrigerated beverage vending machines.
(Public Meeting Transcript, No. 8 at p.
58) Dixie-Narco and Coca-Cola agreed
that using these designations to define
equipment classes has merit. (Public
Meeting Transcript, No. 8 at pp. 63–64)
As stated earlier, DOE categorizes
equipment classes based on different
performance-related or utility-related
factors that affect efficiency. PG&E
stated that the efficiency of a machine
depends on whether it is zone-cooled or
fully-cooled. (Public Meeting
Transcript, No. 8 at p. 62) Dixie-Narco
stated that, all other things being equal,
zone-cooled machines use less energy
than fully-cooled machines because
their refrigeration system is smaller.
(Public Meeting Transcript, No. 8 at p.
103) PepsiCo expressed a similar
opinion, adding that it would like to see
standards based on energy use, rather
than trying to define what the design of
PO 00000
Frm 00011
Fmt 4701
Sfmt 4702
34103
the machine should be. (Public Meeting
Transcript, No. 8 at p. 103)
Based on public comments, DOE
agrees that ‘‘zone-cooled’’ and ‘‘fullycooled’’ are more appropriate
descriptors for beverage vending
machines that are solid-front and glassfront, respectively, and intends to use
this terminology in this rulemaking.
In addition to whether a beverage
vending machine is zone-cooled or
fully-cooled, the ambient conditions
that a machine operates in can also
affect its energy efficiency. EEI and
NFESC stated that there should be
separate equipment classes for indooronly and indoor/outdoor machines.
(Public Meeting Transcript, No. 8 at p.
50 and NFESC, No. 15 at p. 4) DixieNarco commented that a classification is
needed for the outdoor machines simply
because of the large number of machines
that Coca-Cola and PepsiCo own; some
smaller operators may primarily have
indoor locations, but no one should be
excluded. (Public Meeting Transcript,
No. 8 at p. 94) Coca-Cola stated that a
distinction between indoor-only and
indoor/outdoor machines has to do with
weatherization and how they tolerate
environmental effects. Specifically,
Coca-Cola stated that indoor/outdoor
machines are more weatherproof and
designed to be less influenced by
environmental effects, such as high
humidity and direct contact with
moisture. (Public Meeting Transcript,
No. 8 at p. 55) Dixie-Narco commented
that the primary differences between
indoor-only and indoor/outdoor
machines are vandalism-prevention
features. (Public Meeting Transcript, No.
8 at p. 53)
Southern California Edison’s
Refrigeration and Thermal Test Center
(RTTC) asked whether it would be
appropriate to have a category for
outdoor-only machines since there
probably will be glass-front outdoor
machines in the future. RTTC stated that
the larger refrigeration system needed
for an outdoor machine would not be
the proper size for indoor conditions.
(Public Meeting Transcript, No. 8 at p.
89) In contrast, Dixie-Narco stated that
outdoor machines today can be used
indoors and outdoors, but that
classification is acceptable because the
machine can be tested to the worst-case
environment. According to Dixie-Narco,
indoor-only machines are tested to the
75 °F/45 percent RH condition, so when
an outdoor machine is tested indoors,
lower energy use is measured because of
the lower rating conditions. Dixie-Narco
did not see any need to have additional
specifications. (Public Meeting
Transcript, No. 8 at p. 89) ACEEE
summarized the discussion at the
E:\FR\FM\16JNP3.SGM
16JNP3
jlentini on PROD1PC65 with PROPOSALS3
34104
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
Framework public meeting, stating it
heard there should be an outdoor
category with subcategories for zonecooled and fully-cooled machines, and
an indoor category without any
subcategories. (Public Meeting
Transcript, No. 8 at p. 94) ACEEE
suggested three equipment classes based
on the discussion at the Framework
public meeting: (1) A zone-cooled
machine tested at 90 °F; (2) a fullycooled machine tested at 75 °F; and (3)
a fully-cooled machine tested at 90 °F.
(Public Meeting Transcript, No. 8 at p.
68).
Dixie-Narco stated that variable-speed
compressors are increasingly being used
in vending machines, and they adapt to
the load indoors and outdoors.
Moreover, Dixie-Narco argued that these
compressors are no less efficient
indoors, even if they are sized to operate
outdoors. Dixie-Narco stated that in
order to be able to meet ENERGY STAR
Tier 2 levels and above, manufacturers
will have to use variable speed
compressor technology. (Public Meeting
Transcript, No. 8 at p. 91) Dixie-Narco
recommended consolidating into one
rating condition so that both indoor and
outdoor vending machines are tested at
a standard of 75 °F/45 percent RH.
(Dixie-Narco, No. 14 at p. 2).
Based on the public comments above
and anecdotal information that few
glass-front or fully-cooled machines
(certified for indoor use only) are
actually installed outdoors (because of
safety and vandalism reasons) and very
few other machines are certified for
indoor use only, DOE now intends to
designate the following two equipment
classes of beverage vending machines
for this rulemaking:
(a) Class A Machine (fully-cooled
machines).
(b) Class B Machine (any beverage
vending machine not considered to be
Class A)
DOE recognizes that fully-cooled
beverage vending machines virtually
always have glass fronts, and DOE has
designated these machines as ‘‘Class A.’’
DOE has designated as ‘‘Class B’’ any
other beverage vending machine that
cannot be considered Class A. DOE
intends to use these two equipment
classes rather than four as suggested in
the Framework Document. DOE does
not find it necessary to establish
separate equipment classes for indoor
machines and outdoor machines,
because of the similarities between
average indoor and outdoor operating
conditions. Thus, DOE intends to use
two equipment classes (Class A and
Class B), as described in further detail
below.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
The ‘‘Class A’’ beverage vending
machine equipment class is comprised
of machines that cool the entire internal
volume. Class A machines generally use
‘‘shelf-style’’ vending mechanisms and
tend to utilize a transparent (glass or
transparent polymer) front,. Because the
next-to-be-vended product is visible to
the consumer and any product can be
selected by the consumer off of the
shelf, all bottled or canned beverage
containers are necessarily enclosed
within the refrigerated volume.
The ‘‘Class B’’ beverage vending
machine equipment class is generally
composed of machines that have an
opaque front (which provides better
insulation from ambient conditions) and
utilize a ‘‘stack-style’’ vending
mechanism. These machines are usually
installed either indoors or outdoors. The
energy consumption of the outdoor
machines varies with the varying
ambient conditions. However, as stated
earlier, the average energy consumption
of these machines is very similar to that
of machines installed indoors.
Typically, though, unlike the Class A
machines, only a fraction (or a zone) of
the volumes of the Class B machines
(usually the bottom third of the
machine) is cooled. Hence, they are also
sometimes referred to as ‘‘zone-cooled’’
machines.
3. Selection of Baseline Equipment—
Use of the ENERGY STAR Criteria
Once DOE establishes equipment
classes, it selects a baseline model as a
reference point for each class, and
measures changes resulting from energy
conservation standards against the
baseline. The baseline model in each
equipment class represents the
characteristics of equipment typical of
that class (e.g., vendible capacity,
physical size). Generally, a baseline
model is one that just meets current
energy conservation standards, or, if no
standards are in place, the baseline is
typically the most common or least
efficient unit on the market. At present,
there are no existing energy
conservation standards for beverage
vending machines covered under this
rulemaking.
However, the U.S. Environmental
Protection Agency (EPA) has developed
voluntary energy performance criteria
for beverage vending machines as part
of the ENERGY STAR labeling program.
ENERGY STAR has a two-tiered
specification for refrigerated beverage
machines. Tier 1 has been in effect for
new machines since April 1, 2004, and
for refurbished machines since April 31,
2006. The Tier 2 criteria went into effect
on July 1, 2007 for all new machines.
PO 00000
Frm 00012
Fmt 4701
Sfmt 4702
Originally, the top 25 percent of
beverage vending machines qualified for
ENERGY STAR Tier 1. Now, however,
some manufacturers are producing even
more-efficient machines that qualify for
Tier 2, and a majority of the machines
being manufactured meet or exceed Tier
1 levels. However, there are some
models currently in the market that are
less efficient than the Tier 1 levels. In
the Framework Document, DOE
suggested setting the ENERGY STAR
Tier 1 specification as the baseline
efficiency level for all classes of
beverage vending machines covered
under this rulemaking. (More details
regarding the specifications can be
found in Chapter 3 of the TSD.)
ACEEE asserted that the ENERGY
STAR Tier 1 specification can probably
be considered the baseline for solidfront machines, but that for glass-front
machines, the baseline may have to be
slightly lower. (Public Meeting
Transcript, No. 8 at p. 114) In contrast,
Dixie-Narco stated that Tier 1 level
would be a good baseline for glass-front
machines. Dixie-Narco further
commented that all of the glass-front
machines that both of its competitors
sell are ENERGY STAR qualified, and
that it would be comfortable meeting
those levels for its glass-front machines
as well. (Public Meeting Transcript, No.
8 at p. 116) EEI and Royal Vendors
agreed that Tier 1 would be an
appropriate baseline level. (Public
Meeting Transcript, No. 8 at p. 118;
Royal, No. 11 at p. 3)
The Joint Comment agreed that
models meeting the ENERGY STAR Tier
1 specification should be used as the
baseline because more than 90 percent
of indoor/outdoor beverage vending
machines meet this specification, and a
large and growing volume of indooronly machines meet this specification as
well. The Joint Comment added that in
the next two years, it is expected that
nearly all indoor-only machines will
meet this specification, because of the
trend for beverage companies to only
want to purchase ENERGY STARqualified equipment. (Joint Comment,
No. 13 at p. 3) Moreover, PepsiCo stated
that it requires the manufacturers with
which it contracts to build new
machines to meet the California Energy
Commission standard, which is the
same as the ENERGY STAR Tier 1
requirement. (Public Meeting
Transcript, No. 8 at p. 265) Coca-Cola
stated that it has mandated that all
Coca-Cola vending machines are to use
half as much energy by 2010 as in 2000,
adding that this reduction would
certainly meet ENERGY STAR Tier 1
qualifications.
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
USA Technologies noted that there
are three primary manufacturers in the
industry and that each makes three
primary models. According to USA
Technologies, these nine models
probably represent more than 90 percent
of the beverage vending machines
purchased each year. Thus, USA
Technologies commented that by
considering the energy consumption of
these models and the number of units
purchased over the last five years, the
baseline model would be clear. (Public
Meeting Transcript, No. 8 at p. 115)
Based on stakeholder feedback and
current market trends, DOE expects that
in the absence of new standards, most,
if not all, new machines will meet the
ENERGY STAR Tier 1 level by 2012.
Therefore, DOE is using ENERGY STAR
Tier 1 as the baseline efficiency level
since it roughly represents the leastefficient equipment likely to be sold in
2012.
4. Normalization Metric
For both residential and commercial
refrigerators, EPCA and DOE
implementing regulations set standards
for each of several classes. These
classes, for the most part, are not
defined by size, but are instead based
upon their design configurations and
whether rated for indoor or outdoor use;
therefore, these classes include
equipment of varying sizes. Because a
refrigerator’s energy use is a function of
its size, the standard for each class
incorporated a formula which, in effect,
prescribes a maximum amount of energy
use that varies by size of equipment
within that class. (10 CFR 430.32(a) and
10 CFR 431.66) A key factor in each
such formula is a ‘‘normalization
metric,’’ which represents equipment
size (e.g., refrigerated volume) and
allows the maximum allowed energy
use to vary by the size of the equipment.
DOE is using the same approach in
developing standards in this beverage
vending machine rulemaking.
In the Framework Document,
however, DOE set forth the currently
used industry metric of vendible
capacity (i.e., number of cans) of a
beverage vending machine as well as the
refrigerated volume metric as is being
used in commercial refrigerators. During
the Framework public meeting, DOE
asked for comment on which of these
normalization metrics would be most
appropriate for the beverage vending
machines in this rulemaking.
In response, Coca-Cola stated that for
the current test metric (i.e., vendible
capacity), the DOE test procedure does
not reflect the current state of the
beverage vending machine industry.
(Public Meeting Transcript, No. 8 at p.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
69) Dixie-Narco, Crane Merchandising
Systems, Coca-Cola, and PepsiCo all
agreed that refrigerated volume would
provide the best normalization metric
for beverage vending machines. (Public
Meeting Transcript, No. 8 at pp. 86–125)
Dixie-Narco then asked whether
industry consensus standards (e.g.,
AHAM standards) exist for measuring
refrigerated volume in refrigerators that
could be adapted for use in assessing
beverage vending machines. (Public
Meeting Transcript, No. 8 at p. 87) At
the meeting, DOE responded that the
test procedures in ANSI/AHAM HRF–1–
2004, may be relevant and is currently
in use for residential refrigerators.
Dixie-Narco stated that a method to
measure refrigerated volume must be
determined. Dixie-Narco stated that the
industry must examine residential and
commercial refrigeration equipment and
try to develop an agreed-upon method
of measuring the refrigerated volume of
vending machines. Dixie-Narco stated
that once this is done, it will have
energy-consumption data it can provide
to DOE for analysis. (Public Meeting
Transcript, No. 8 at p. 134) Royal
Vendors stated that California just
published new energy standards,20 and
that California will require
manufacturers to measure and report the
refrigerated volume of all vending
machines according to the AHAM 1974
volume calculation (i.e., ANSI/AHAM
HRF–1–1979). Therefore, Royal Vendors
stated that manufacturers will be
measuring refrigerated volumes for their
machines, and it will be public
information. (Public Meeting Transcript,
No. 8 at p. 135)
Based on the public comments and
the recently published California
standards which use refrigerated
volume for all vending machines, DOE
decided to use refrigerated volume as
the normalization metric for measuring
daily energy consumption for all
equipment classes of beverage vending
machines. DOE will collect industry
data to develop a translation from
vendible capacity to refrigerated
volume.
5. Scope and Coverage of Equipment
a. Combination Machines
At the Framework public meeting,
stakeholders raised a number of
questions regarding what types of
beverage vending machines would be
covered in the present rulemaking.
Whirlpool asked whether this
rulemaking will cover beverage vending
machines that have separate sections for
refrigerated and non-refrigerated
20 California Energy Commission, Title 20, 2007
Appliance Efficiency Regulations.
PO 00000
Frm 00013
Fmt 4701
Sfmt 4702
34105
beverages. (Public Meeting Transcript,
No. 8 at p. 45) Dixie-Narco and Crane
Merchandising Systems also expressed
concern about zone-cooled machines
that contain different products in
different sections held at different
temperatures. These stakeholders
suggested that this may cause confusion
and may raise questions about the
definition of ‘‘zone cooled.’’ (Public
Meeting Transcript, No. 8 at p. 104)
EEI stated that the types and
quantities of products sold in
refrigerated vending machines are
changing and will have an impact on
energy use, which may result in
confusion about what this rulemaking
covers. EEI suggested that, based on
stakeholder feedback, this rulemaking
should cover all machines that have at
least 50–75 percent of their capacity
dedicated to refrigerated, packaged
beverages. (EEI, No. 12 at p. 2) EEI also
suggested that DOE consider a
definition for a ‘‘refrigerated product
machine’’ to cover machines that sell
food along with beverages. EEI noted
that if more machines sell both food and
beverages, and DOE does not cover this
equipment in this rulemaking, there
could be a loophole for manufacturers to
produce machines that do not meet the
standard if there is at least one food (or
other non-beverage) item for sale in the
equipment. (EEI, No. 12 at p. 3) PG&E
asked if DOE could benefit from the
California designations of multi-package
equipment and non-multi-package
equipment 21 when considering what
beverage vending machines will be
included in this rulemaking. (Public
Meeting Transcript, No. 8 at p. 62)
EPCA does not explicitly address
‘‘combination machines’’ (i.e., vending
machines that dispense cooled
beverages as well as other beverages and
food items). As discussed above, EPCA
directs DOE to set standards for vending
machines that cool bottled or canned
beverages and dispense them upon
payment. (42 U.S.C. 6291(40) and
6295(v)) DOE believes that the language
used to define beverage vending
machines is broad enough to include
any vending machine, as long as some
portion of that machine cools bottled or
canned beverages and dispenses them
upon payment. For this rulemaking,
DOE interprets these provisions to cover
any vending machine that can dispense
at least one type of refrigerated bottled
or canned beverage, regardless of the
21 The California Energy Commission defines a
‘‘refrigerated multi-package beverage vending
machine’’ as a refrigerated beverage vending
machine that is able to display and dispense at least
20 discrete types of beverages. (California Energy
Commission, Title 20, 2007 Appliance Efficiency
Regulations).
E:\FR\FM\16JNP3.SGM
16JNP3
34106
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
other types of vended products (some of
which may not be refrigerated).
b. Refurbished Equipment
jlentini on PROD1PC65 with PROPOSALS3
At the Framework public meeting,
PepsiCo also asked whether the new
standards would apply to refurbished
and remanufactured equipment. (Public
Meeting Transcript, No. 8 at p. 230)
USA Technologies indicated that, to
establish meaningful regulations, DOE
must consider the existing machines
that are remanufactured or refurbished,
as well as new machines. (Public
Meeting Transcript, No. 8 at p. 22)
In response to the possibility that
DOE could use ENERGY STAR criteria
when defining energy standards for
beverage vending machines,
stakeholders commented on how this
would affect their equipment that is
currently on the market. Dixie-Narco
stated they make some vending
machines that do not meet ENERGY
STAR criteria, but these machines could
be modified to achieve them. (Public
Meeting Transcript, No. 8 at p. 131)
Royal Vendors volunteered that it also
has a model series that does not meet
ENERGY STAR criteria because of the
loading configuration of the machines,
but the series has very low sales. (Public
Meeting Transcript, No. 8 at p. 131)
PepsiCo stated that a very small
percentage of its machines built before
2004 meet ENERGY STAR Tier 1
criteria, but that it would be very
expensive to upgrade these machines.
(Public Meeting Transcript, No. 8 at p.
245)
DOE has carefully considered its
authority to establish energy
conservation standards for rebuilt and
refurbished beverage vending machines
in light of these comments, and as
discussed below, has tentatively
concluded that its authority does not
extend to rebuilt and refurbished
equipment. The relevant statutory
provisions are discussed below, as well
as the agency’s rationale in reaching this
conclusion.
Section 332 of EPCA provides that it
shall be unlawful for any manufacturer
or private labeler to distribute in
commerce any new covered equipment
which is not in conformity with an
applicable energy conservation
standard. (42 U.S.C. 6302(a)(5) and
6316(a)–(b) (emphasis added)) 22
22 DOE
only regulates equipment that is either
specifically enumerated as ‘‘covered products’’ or is
equipment for which DOE has been granted
authority to regulate in another statutory provision.
Section 325 of EPCA (42 U.S.C. 6295) grants DOE
authority to regulate beverage vending machines,
without including the specific language designating
them as ‘‘covered products.’’ The failure to include
the words ‘‘covered product’’ in Section 325 of
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
Congress made section 332 applicable to
beverage vending machines because an
applicable energy conservations
standard is prescribed for that
equipment under section 325(v) of
EPCA. (42 U.S.C. 6295(v)) Section
332(b) defines ‘‘new covered product’’
to mean ‘‘a covered product the title of
which has not passed to a purchaser
who buys such a product for purposes
other than (1) reselling such product, or
(2) leasing such product for a period in
excess of one year.’’ (42 U.S.C. 6302(b))
That is, a new covered product is one
for which the title has not passed to a
customer.23
DOE believes that the definition of
‘‘new covered product’’ in section 332 is
ambiguous on the question of whether
a rebuilt or refurbished beverage
vending machine is subject to DOE’s
authority to set energy conservation
standards. On this point, DOE notes that
section 332 does not expressly provide
that ‘‘new covered product’’ means new
equipment the title of which is
transferred by the original manufacturer
to an original owner. Conversely, the
definition of ‘‘new covered product’’
does not expressly exclude substantially
remanufactured equipment that is
subsequently resold (i.e., equipment
sold or disposed of by the original
owner that is rebuilt or refurbished by
an entity which resells it to another
person). In order to resolve this
ambiguity regarding DOE’s authority to
regulate rebuilt and refurbished
beverage vending machines, DOE
considered both congressional intent
and the nature of the existing beverage
vending machine market.
There is no legislative history that
reflects Congress’s intent. However,
DOE views the way Congress chose to
define ‘‘new covered product’’ in EPCA
as the strongest indicator that the term
was not intended to apply to rebuilt or
refurbished equipment. Specifically, it
is unlikely that Congress would have
made transfer of ‘‘title’’ the test of
whether equipment was ‘‘new’’ if it
intended to cover rebuilt or refurbished
equipment. The most reasonable
interpretation of the statutory definition
is that Congress intended that this
provision apply to newly manufactured
equipment the title of which has not
passed for the first time to a purchaser
EPCA or to include beverage vending machines in
Section 322 of EPCA, which lists the covered
products in Part A, does not mean that beverage
vending machines will not be treated as ‘‘covered
products’’ for purposes of DOE exercising its
regulatory authority.
23 In the context of this discussion, the term
‘‘customer’’ is used to identify equipment’s end
user; e.g., ‘‘customer’’ does not include a party that
takes title of equipment solely for the purpose of
resale or for leasing equipment for less than a year.
PO 00000
Frm 00014
Fmt 4701
Sfmt 4702
of the equipment. Such interpretation
provides certainty and clarity for the
regulated entities subject to these
statutory provisions.
In addition, if DOE were to interpret
‘‘new covered product’’ as applying to
other than newly manufactured
equipment, EPCA’s testing and labeling
provisions would be much harder to
implement and enforce. Identifying
‘‘manufacturers’’ under such an
interpretation likely would be
difficult,24 and it also likely would be
difficult for DOE to distinguish between
rebuilt equipment that is not covered
and equipment that has been so
extensively rebuilt as to be considered
‘‘new,’’ and therefore, subject to these
provisions.
DOE understands the concern of some
stakeholders that there is a possibility
that the energy conservation standards
for beverage vending machines could be
circumvented if remanufactured
machines are not deemed to be ‘‘new
covered products.’’ DOE understands
that the rebuilt and refurbished beverage
vending machine market is comprised
of either: (1) Equipment sold by the
original manufacturer or private labeler,
which after purchase by a commercial
customer, is then modified and resold
by another party; or (2) equipment that,
following purchase by a commercial
customer, is modified and retained by
that customer. However, for the abovestated reasons, DOE has concluded that
rebuilt and refurbished beverage
vending machines are not ‘‘new covered
products’’ under EPCA, and therefore,
are not subject to DOE’s energy
conservation standards or test
procedures.25 With respect to the first
scenario, upon transfer of the title of the
beverage vending machine to the
commercial customer, the beverage
vending machine is no longer new
covered equipment, and therefore, it is
not subject to DOE regulations even if it
is subsequently resold. Similarly, with
respect to beverage vending machines
that are refurbished or rebuilt for or by
the commercial customer (i.e., they are
not resold), DOE lacks authority over
those beverage vending machines
because they are neither ‘‘new’’ covered
equipment nor distributed in commerce.
Furthermore, if refurbished or rebuilt
beverage vending machines that are sold
24 For example, a business that rebuilds or
remanufactures equipment, instead of reselling it
and transferring title, could operate as a repair
facility for consumers who already own the used
equipment. The business would simply rebuild the
equipment for a fee and return it to the owner; there
would be no transfer of title.
25 DOE notes that de minimis use of used or
recycled parts would not make a ‘‘new product’’
into a used product.
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
to another party were covered but not
those that are refurbished or rebuilt for
the commercial customer, DOE believes
this would likely create an inequity that
Congress would not have intended since
a purpose of EPCA was to establish a
single national standard, not multiple
standards for the same equipment.
Throughout the history of the energy
conservation standards program, DOE
has not regulated used consumer
products or commercial equipment that
has been refurbished, rebuilt, or
undergone major repairs, since EPCA
only covers new covered equipment
distributed in commerce. For all of these
reasons, DOE concludes that rebuilt or
refurbished beverage vending machines
are not new covered equipment under
EPCA and, therefore, are not subject to
DOE’s energy conservation standards or
test procedures.
jlentini on PROD1PC65 with PROPOSALS3
6. Market Assessment
In the market assessment, DOE
develops a qualitative and quantitative
characterization of the beverage vending
machine industry and market structure
based on publicly-available information
and information submitted by
manufacturers and other stakeholders.
Three major beverage vending
machines manufacturers hold the vast
majority (about 75 percent) of the
domestic market share:
• Crane Merchandising/Dixie-Narco,
Inc.26
• Royal Vendors, Inc.
• Sanden-Vendo America
Several other manufacturers also
produce beverage vending machines for
the domestic market, including:
• Automatic Merchandising Systems
(AMS)
• Distributed Vending Company
• Jofemar USA
• Seaga Manufacturing, Inc.
• The Wittern Group
PepsiCo and Coca-Cola are, by far, the
largest customers of beverage vending
machines. They do not manufacture
beverage vending machines. Instead,
they contract with manufacturers that
produce equipment with specific design
characteristics.
DOE is considering the possibility
that small businesses would be
particularly affected by the
promulgation of energy conservation
standards for beverage vending
machines. The Small Business
Administration (SBA) lists small
business size standards for this industry
as they are described in the North
American Industry Classification
26 Crane Merchandising purchased Dixie-Narco,
Inc. on October 23, 2006, after the Framework
public meeting was held.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
System (NAICS) code 333311,
Automated Vending Machine
Manufacturing. The size standard for an
industry sets the largest average annual
receipts or average number of
employees that a for-profit concern can
have and still qualify as a small
business for Federal Government
programs. SBA defines small business
manufacturing enterprises for beverage
vending machines as having 500
employees or fewer. DOE identified six
small business manufacturers in the
beverage vending machine industry.
DOE will study the potential impacts on
these small businesses in detail during
the manufacturer impact analysis,
which will be conducted as part of the
NOPR analysis. See Chapter 3 of the
TSD for more information regarding
small business manufacturers of
beverage vending machines.
DOE recognizes that smaller
manufacturers, niche manufacturers,
and manufacturers exhibiting a cost
structure that differs substantially from
the industry average may be
differentially affected by the imposition
of standards. NAMA stated that it could
provide a list of manufacturers along
with associated contact information that
could be useful for DOE’s research.
(Public Meeting Transcript, No. 8 at p.
76) DOE is using NAMA’s information
on manufacturers and contacts to define
subgroups of smaller manufacturers.
DOE will use this information to
analyze how standards enacted by this
rulemaking affect smaller
manufacturers.
In the Framework Document, DOE
requested suggestions for obtaining
historical energy usage and equipment
shipping information. NAMA stated that
shipment data are now privately held
and are not reported to NAMA or the
Census Bureau. NAMA noted that DOE
will have to request historical shipment
information directly from
manufacturers. (Public Meeting
Transcript, No. 8 at p. 75) Dixie-Narco
stated that it would provide historical
shipment information if asked, but
requested the data remain confidential.
Dixie-Narco added that obtaining
energy-usage information back to 1990
would be difficult, if not impossible,
because such information was not
recorded by manufacturers at that time.
(Public Meeting Transcript, No. 8 at p.
76)
PepsiCo and Coca-Cola recommended
that DOE request historical shipment
and energy-usage data from EPA and
State organizations. (Public Meeting
Transcript, No. 8 at pp. 78–82) PepsiCo
urged all manufacturers to provide
NAMA with all available historical
shipment and energy-usage data for
PO 00000
Frm 00015
Fmt 4701
Sfmt 4702
34107
aggregation. (Public Meeting Transcript,
No. 8 at p. 79)
NAMA stated that it collected some
aggregated historical shipment and
energy-usage data for the ENERGY
STAR program. (Public Meeting
Transcript, No. 8 at p. 83) EPA stated
that it is creating a summary report for
the 2005 shipment information from
NAMA and will at least include the
shipments of ENERGY STAR-qualified
models and an estimate of market
penetration. EPA also suggested that,
depending on how high market
penetration is, shipment of ENERGY
STAR-qualified models could serve as a
proxy for determining the makeup of the
overall market, although the data would
not be manufacturer-specific. (Public
Meeting Transcript, No. 8 at p. 83)
Dixie-Narco stated that EPA has the
company’s shipment data for 2005, but
it did not collect data before 2005.
(Dixie-Narco, No. 14 at p. 2) ACEEE
summarized that there seem to be two
paths for collection and aggregation of
historical shipment and energy-usage
data: (1) By NAMA, or (2) by a DOE
contractor. (Public Meeting Transcript,
No. 8 at p. 82)
Dixie-Narco stated at the Framework
public meeting that it will try to provide
data on its forthcoming models, keeping
in mind that ENERGY STAR Tier 2 will
take effect in July 2007. Dixie-Narco
added that it estimates 80 percent of
installed machines will exceed ENERGY
STAR Tier 1 levels by 2012. (Public
Meeting Transcript, No. 8 at p. 246)
Royal Vendors stated that it will
cooperate with NAMA to develop
equipment shipment data on an
industry basis. Royal Vendors noted,
however, that trends may be difficult to
decipher. (Royal, No. 11 at p. 2)
EEI stated that according to public
meeting participants, ‘‘stack-style’’
machines were 90 percent of the market
and glass-front machines were 10
percent of the market in 2001. However,
stack-style and glass-front machines
were each 50 percent of the market in
2006. EEI noted that if market shares
continue changing in this direction,
baseline energy-usage and energyefficiency upgrade possibilities could be
affected. (EEI, No. 12 at p. 3)
In summary, it is evident that NAMA
does not have the historical shipment
and energy-usage data necessary to
determine efficiency trends in the
industry. Therefore, DOE will contact
ENERGY STAR program staff and State
organizations and use their websites and
various industry reports to obtain
historical shipment and energy-usage
data.
E:\FR\FM\16JNP3.SGM
16JNP3
jlentini on PROD1PC65 with PROPOSALS3
34108
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
7. Technology Assessment
In the technology assessment, DOE
identifies technologies and design
options that could improve the
efficiency of beverage vending
machines. This assessment provides the
technical background and structure on
which DOE bases its screening and
engineering analyses. For beverage
vending machines, DOE based its list of
technologically-feasible design options
on input from manufacturers, industry
experts, component suppliers, trade
publications, and technical papers. See
Chapter 3 of the TSD for additional
detail on the technology assessment and
technologies analyzed. However, the
following discussion provides an
overview of the salient aspects of the
technology assessment, including issues
on which DOE seeks public comment.
In the Framework Document, DOE
identified and sought feedback on the
applicable technologies and designs
which have the potential to improve the
energy efficiency of the identified
equipment classes. A detailed
discussion of these technologies and
design options is given in Chapter 3 of
the TSD. In response, Dixie-Narco
asserted that certain technology options
on DOE’s list are not compatible with
each other. (Public Meeting Transcript,
No. 8 at p. 155) Furthermore, EEI
commented that several of the
technologies may already be
incorporated into the baseline units
being manufactured and installed in the
United States. (EEI, No. 12 at p. 4)
Several stakeholders addressed other
means for reducing the energy use of
beverage vending machines, offering
both general and specific suggestions.
Specifically, Royal Vendors stated that
the important systems and components
which may impact the energy efficiency
of a beverage vending machine are the
sealed cooling unit, evaporator/
circulating fan, lighting, insulation, and
door-sealing systems. It noted that
ENERGY STAR Tier 1 qualified
machines include an effective
combination of these systems with a
focus on lighting, compressor efficiency,
and efficient evaporator/circulating fan
motor impellers. To improve the energy
efficiency of beverage vending
machines, Royal Vendors suggested
adding T8 lamps with electronic
ballasts, low-ballast-factor ballasts,
electronically-commutated fan motors
with engineered impeller and venturi
rings, and capillary tube systems with
liquid-suction heat exchangers. Royal
Vendors also stated that anti-sweat
heaters are no longer in use and can be
removed from the list of technologies
considered. (Royal, No. 11 at p. 3)
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
On this issue, Coca-Cola stated that
the manufacturers which supply the
company with beverage vending
machines have already discontinued use
of capillary tube expansion devices
(which consume more energy) and are
starting to instead use more-efficient
thermostatic and electronic expansion
valves. Coca-Cola stated that some
manufacturers are researching other
technologies such as Stirling
refrigeration, which uses temperature
differential to provide electrical power.
(Public Meeting Transcript, No. 8 at p.
92) EEI and ACEEE agreed that ballasts
using dimming technology should be
considered a technology option as a
means of decreasing the energy
consumption associated with beverage
vending machine lighting. (Public
Meeting Transcript, No. 8 at p. 92; Joint
Comment, No. 13 at p. 3) EEI added that
DOE may want to investigate other
lighting technologies such as T5
fluorescent lamps and dimmable light
emitting diode (LED) systems. (EEI, No.
12 at p. 4) PG&E expressed a similar
opinion that there are many
opportunities to save energy in lighting
beverage vending machines. PG&E also
suggested considering additional fan
motor technologies. (Public Meeting
Transcript, No. 8 at p. 172) USA
Technologies stated that the technology
options list should also include energymanagement systems, which restrict the
energy use of equipment in a room
when it is not occupied. (Public Meeting
Transcript, No. 8 at p. 149).
DOE is addressing all the technology
options suggested and welcomes further
public comment on this issue. See the
screening analysis portion of this
ANOPR and Chapter 3 of the TSD for
more details on these technology
options.
B. Screening Analysis
The purpose of the screening analysis
is to evaluate the technology options
identified as having the potential to
improve the efficiency of equipment, in
order to determine which technologies
to consider further and which to screen
out. DOE consulted with industry,
technical experts, and other interested
parties 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:
(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
PO 00000
Frm 00016
Fmt 4701
Sfmt 4702
and reliable installation and servicing of
a technology in commercial equipment
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 consumers, 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.
10 CFR Part 430, Subpart C, Appendix
A at 4(a)(4) and 5(b).
1. Technology Options Screened Out
In the market and technology
assessment (Chapter 3 of the TSD), DOE
developed an initial list of technologies
expected to have the potential to reduce
the energy consumption of beverage
vending machines. In the screening
analysis, DOE screened out technologies
based on four criteria discussed above
(i.e., technological feasibility,
practicability to manufacture, changes
to equipment utility, and safety). The
list of remaining technologies becomes
one of the key inputs to the engineering
analysis (discussed subsequently). For
reasons explained below, DOE screened
out a number of technologies (which
were not input into the energy
consumption model), including higherefficiency evaporator and condenser fan
blades, low-pressure differential
evaporators, and defrost mechanisms.
Higher-efficiency evaporator and
condenser fan blades reduce motor shaft
power requirements by moving air more
efficiently. Current beverage vending
machine designs use stamped sheet
metal or plastic axial fan blades. These
fan blades are lightweight and
inexpensive. DOE was not able to
identify any axial fan blade technology
that is significantly more efficient than
that which is currently in use, but it did
identify and consider one alternative fan
blade technology that could potentially
improve efficiency—tangential fan
blades. Tangential fan blades can
produce a wide, even airflow, and have
the potential to allow for increased
E:\FR\FM\16JNP3.SGM
16JNP3
jlentini on PROD1PC65 with PROPOSALS3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
saturated evaporator temperature (SET)
through improved air distribution across
the evaporator coil, which would reduce
compressor power. However, tangential
fan blades are less efficient at moving
air, and, thus, require greater motor
shaft power. Because of these competing
effects, the use of tangential fan blades
would not be expected to improve
energy efficiency, so DOE did not
consider tangential fan blades as a
design option.
Low-pressure differential evaporators
reduce energy consumption by reducing
the power level required of evaporator
fan motors. However, in spaceconstrained equipment such as beverage
vending machines, this reduction
usually comes from a decrease in
evaporator coil surface area, which
generally requires a lower SET to
achieve the same discharge air
temperature and cooling potential. This,
in turn, results in a reduction in
compressor efficiency. Because of these
competing effects, the use of lowpressure differential evaporators would
not be expected to improve energy
efficiency, so DOE did not consider lowpressure differential evaporators as a
design option.
Defrosting for beverage vending
machines is typically accomplished
with off-cycle defrost (which uses no
energy and decreases compressor ontime), although DOE understands that
this function also may be accomplished
with electric resistance heating. Because
the vast majority of machines already
use off-cycle defrost (a typical feature in
baseline equipment), DOE has
determined that there is currently no
defrost design option capable of more
effectively reducing defrost energy
consumption for equipment that uses
off-cycle defrost. For these reasons, DOE
did not consider off-cycle defrost as a
design option for achieving further
improvements in energy efficiency.
DOE eliminated four other
technologies considered in the market
and technology assessment—
thermoacoustic refrigeration, magnetic
refrigeration, electro-hydrodynamic heat
exchangers, and copper rotor motors—
because all four are currently in the
research stage, and DOE believes that
they would not be practicable to
manufacture, install, and service on the
scale necessary to serve the relevant
market at the time of the effective date
of the standard (i.e., 2012). Because
these technologies are in the research
stage, DOE also cannot assess whether
they would have any adverse impacts
on utility to significant subgroups of
consumers, would result in the
unavailability of any types of
equipment, or would present any
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
significant adverse impacts on health or
safety. Therefore, DOE will not consider
these technologies as design options for
improving the energy efficiency of
beverage vending machines.
2. Technology Options Considered
Further in Analysis
After screening out technologies in
accordance with the provisions set forth
in 10 CFR Part 430, Subpart C,
Appendix A, (4)(a)(4) and (5)(b), DOE is
considering the following nine
technologies, or ‘‘design options,’’ as
viable means of improving energy
efficiency of the beverage vending
machines covered under this ANOPR.
The market and technology assessment
(TSD Chapter 3) provides a detailed
description of these design options.
These design options will be considered
by DOE in the engineering analysis:
• More-efficient lighting and ballasts.
• More-efficient evaporator fan
motors.
• Evaporator fan motor controllers.
• Improved evaporator design.
• Insulation increases or
improvements.
• Improved glass pack (for Class A
machines).
• Higher efficiency condenser fan
motors.
• Improved condenser design.
• More-efficient compressors.
In the Framework Document, DOE
stated that to the greatest extent
possible, it would base its engineering
analysis on commercially-available
equipment which incorporates one or
more of the design options listed above.
In this way, DOE is better able to apply
these features in a manner consistent
with real world applications. DOE
stated that it would consider a
proprietary design in the subsequent
analyses only if it is not a unique path
to a given efficiency level.
Several stakeholders provided
comments on the issue of proprietary
technologies in the context of the
beverage vending machine rulemaking.
NFESC responded that DOE should
consider whether efficiency levels
attainable only through proprietary
technologies can be made part of the
efficiency standard if that technology
were to be made available through
licensing agreements at a reasonable
cost. (NFESC, No. 15 at p. 6) USA
Technologies stated that its products are
patented, but available to anyone in the
industry anywhere in the world. (Public
Meeting Transcript, No. 8 at p. 182)
USA Technologies also noted that it has
a proprietary patented design that will
take many of the ENERGY STAR Tier 1
machines to Tier 2 levels and make
some Tier 2 machines even more
PO 00000
Frm 00017
Fmt 4701
Sfmt 4702
34109
efficient. USA Technologies added that
there is technology in the market today
capable of driving energy costs down at
a very reasonable cost to the
manufacturer. USA Technologies urged
DOE not to exclude these proprietary
technologies from the analysis, although
it also acknowledged that the market
should remain competitive. (Public
Meeting Transcript, No. 8 at p. 176).
PepsiCo agreed with DOE’s approach,
claiming that certain proprietary
technologies should be excluded.
PepsiCo cited the example of how CocaCola has patented several energy
management technologies that are not
available to PepsiCo. (Public Meeting
Transcript, No. 8 at p. 181) Dixie-Narco
stated that proprietary designs that
include add-on or non-permanent
energy management devices not
installed by the manufacturer must be
excluded from consideration in this
rulemaking, since the manufacturer is
ultimately responsible for all
technologies incorporated in beverage
vending machines. (Dixie-Narco, No. 14
at p. 4)
As noted previously, DOE will
consider all proprietary designs unless
they are the only way to reach a given
efficiency level, in which case they will
be rejected from further analysis. With
regard to proprietary add-on energy
management devices, DOE has not
considered these devices as design
options because they are external to the
vending machine and/or are not
installed by the manufacturer. DOE is
sensitive to stakeholder concerns
regarding proprietary designs and will
make provisions to maintain the
confidentiality of any proprietary data
stakeholders submit. This information
will provide input to the competitive
impact assessment and other economic
analyses.
For more details on how DOE
developed the technology options and
the process for screening these options
and the design options that DOE is
considering, see the market and
technology assessment (Chapter 3 of the
TSD) and the screening analysis
(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
beverage vending machines. For each
equipment class, this relationship
estimates the baseline manufacturer
cost, as well as the incremental cost for
equipment at efficiency levels above the
baseline. In determining the
performance of higher-efficiency
equipment, DOE considers technologies
and design option combinations not
E:\FR\FM\16JNP3.SGM
16JNP3
34110
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
eliminated by the screening analysis.
The output of the engineering analysis
is a set of cost-efficiency ‘‘curves’’ that
are used in downstream analyses (i.e.,
the LCC and PBP analyses and the 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;
and (3) the reverse-engineering or costassessment approach, which involves a
‘‘bottoms-up’’ manufacturing cost
assessment based on a detailed bill of
materials derived from beverage
vending machine tear-downs.
1. Approach
In this rulemaking, DOE is adopting a
design-option approach, which
calculates the incremental costs of
adding specific design options to a
baseline model. For each equipment
class, DOE analyzed three machines of
different sizes to assess how energy use
varies with size. A small, a medium,
and a large machine were chosen for
Class A and Class B beverage vending
machines, based on current market
offerings. See Chapter 3 of the TSD for
a detailed description of the Class A and
Class B equipment classes and Chapter
5 of the TSD for additional detail on the
different machines analyzed.
In the Framework Document, DOE
requested feedback on possible use of an
efficiency-level approach supported, as
needed, by a design-option approach to
determine the cost-efficiency
relationship for beverage vending
machines. DOE stated that it plans to
create an industry-wide analysis based
primarily on data from stakeholders.
The data are intended to represent the
average incremental production cost to
improve a baseline model to a specified
efficiency level. This methodology
constitutes an efficiency-level approach
to the engineering analysis because it
establishes the relationship between
manufacturer cost and increased
efficiency at predetermined efficiency
levels above the baseline. Under this
approach, manufacturers typically
provide incremental manufacturer cost
data for incremental increases in
efficiency. Although DOE specifically
requested this information from the
industry, no such information was
provided.
Since an efficiency-level approach
was not possible for beverage vending
machines, DOE instead decided to use
cost estimates of specific design options.
This methodology constitutes a design-
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
options approach because it uses
individual or combinations of design
options to identify increases in
efficiency. Under this approach,
estimates are based on manufacturer or
component supplier data or derived
from engineering computer simulation
models. Individual design options or
combinations of design options are
added to the baseline model in
ascending order of cost. This approach
also involves consultation with outside
experts and/or further review of
publicly available cost and performance
information.
The Joint Comment stated that using
manufacturer-supplied efficiency levels
that have been checked against design
options derived by DOE was acceptable
if DOE verified a sufficient number of
efficiency improvements with design
option data to provide confidence in
DOE’s overall estimates. The Joint
Comment added that for a robust
approach, DOE must compare multiple
points per equipment class and do
additional analysis if the design option
and efficiency level data are not in
alignment. (Joint Comment, No. 13 at p.
1) The Joint Comment stated that DOE
should explore methods of making the
detailed manufacturer cost data publicly
available, although it recognized that
this task would be difficult given DOE’s
need to strike a balance between
manufacturers’ requirements for
confidentiality and the public’s need for
transparency in government decision
making. In making this request, the Joint
Comment explained that manufacturer
cost estimates are a ‘‘black box’’ for
other stakeholders, and making the data
submitted by manufacturers publicly
available could greatly improve the
transparency of the process. (Joint
Comment, No. 13 at p. 2)
As explained above, an efficiencylevel approach was not possible, so DOE
relied solely on a design-option
approach in the engineering analysis.
Given that there were no manufacturerprovided cost-efficiency curves, DOE
was not able to compare the two
approaches as suggested by the Joint
Comment. However, the design-option
approach allows advocates,
manufacturers, and other stakeholders
the opportunity to review DOE’s
methodology and assumptions,
including cost estimates, as this
information is made publicly available
through the ANOPR TSD and
engineering spreadsheet. Through
consultation with outside experts,
review of publicly-available cost and
performance information, and modeling
of equipment cost and energy
consumption, DOE believes it has
conducted a robust engineering
PO 00000
Frm 00018
Fmt 4701
Sfmt 4702
analysis. Chapter 5 of the TSD describes
the methodology used to perform the
design-option analysis in detail.
2. Equipment Classes Analyzed
Beverage vending machines can be
divided into different equipment classes
categorized by physical characteristics
that affect equipment efficiency. Most of
these characteristics affect the
merchandise that the equipment cools
and vends, and how the customer
accesses that merchandise. Key physical
characteristics are the door type (e.g.,
glass-front or solid-front) and the
machine’s vendible capacity (or
refrigerated volume). As described in
Section II.A.2, DOE analyzed two
equipment classes: Class A (fully-cooled
machines) and Class B (all other
machines). Furthermore, as discussed
above, beverage vending machine
energy use varies with volume, so DOE
analyzed three different machine sizes
for each equipment class to assess how
energy use varies with size.
3. Analytical Models
In the design-option approach, DOE
used models to develop cost and energy
consumption estimates for each
equipment class at each efficiency level.
DOE used a cost model to estimate the
manufacturer production cost (MPC) in
dollars, and an energy consumption
model to estimate the daily energy
consumption in kilowatt hours (kWh) of
covered beverage vending machines.
Each of these models is discussed in
further detail below.
a. Cost Model
DOE used a cost model to estimate the
core case cost (i.e., the MPC of the
structure, walls, doors, shelving and
fascia of the case, but does not include
the cost of any energy-using
components) of beverage vending
machines. This model was adapted from
a cost model developed for DOE’s
rulemaking on commercial refrigeration
equipment.27 The approach for
commercial refrigeration equipment
involved disassembling a self-contained
refrigerator, analyzing the materials and
manufacturing processes for each
component, and developing a
parametric spreadsheet to model the
cost to fabricate (or purchase) each
component and the cost of assembly.
Because of the similarities in
manufacturing processes between selfcontained commercial refrigeration
equipment and vending machines, DOE
27 See https://www.eere.energy.gov/buildings/
appliance_standards/commercial/
refrigeration_equipment.html for further detail on
and validation of the commercial refrigeration
equipment cost model.
E:\FR\FM\16JNP3.SGM
16JNP3
jlentini on PROD1PC65 with PROPOSALS3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
was able to adapt the commercial
refrigeration equipment cost model for
beverage vending machines by
maintaining many of the assumptions
about materials and manufacturing
processes but modifying the dimensions
and types of components to be specific
to beverage vending machines. To
confirm the accuracy of the cost model,
DOE obtained input from stakeholders
on beverage vending machine
production cost estimates and on other
assumptions used in the model. DOE
believes this approach is acceptable,
given the similarities in materials and
manufacturing processes between
commercial refrigeration equipment and
beverage vending machines. Chapter 5
of the TSD provides details of the cost
model.
In the Framework Document, DOE
sought feedback from manufacturers on
incremental manufacturing costs and
components in terms of design options
to improve energy efficiency. The Joint
Comment stated that the cost estimates
should assume mass production, since
efficiency standards could make today’s
expensive niche products tomorrow’s
lower-cost commodity products. (Joint
Comment, No. 13 at p. 2)
The Joint Comment stated that DOE
should account for market forces in
computing typical costs using
manufacturer cost estimates. Based on
past experience, the Joint Comment
explained that the various cost estimates
that DOE will collect from
manufacturers can vary significantly
from manufacturer to manufacturer.
Also, manufacturers with below-average
costs will determine market prices,
because higher-priced manufacturers
will need to reduce costs to remain
competitive. Therefore, the Joint
Comment recommended that DOE
should use the simple average of the
market-share-weighted average cost
estimate and the lowest cost estimate.
(Joint Comment, No. 13 at p. 2)
EEI mentioned that the increasing cost
of commodities such as steel, copper,
aluminum, and plastic may affect this
rulemaking. EEI stated that commodity
prices for plastics, for example, have
risen dramatically in the past few years
because of the increase in oil prices.
However, EEI also noted that high prices
may dictate redesigns to avoid using
those materials. (Public Meeting
Transcript, No. 8 at p. 181 and EEI, No.
12 at p. 5) PG&E stated that just as the
prices of raw materials have gone up, so
have the prices of primary energy.
(Public Meeting Transcript, No. 8 at p.
183)
In response to these comments, DOE
conducted a sensitivity analysis on
material prices similar to the analysis
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
presented in the commercial
refrigeration equipment rulemaking.
DOE determined the cost of raw
materials by using prices for copper,
steel, and aluminum from the American
Metals Market.28 Prices for rifled and
unrifled copper tubing were obtained
directly from a tubing manufacturer.
Because metal prices have fluctuated
drastically over the last few years, DOE
used metal prices that reflect a five-year
average of the Bureau of Labor Statistics
Producer Price Indices (PPIs) 29 from
2002 to 2006 with an adjustment to
2006$. DOE used the PPIs for copper
rolling, drawing, and extruding, and
steel mill products, and DOE made the
adjustments to 2006$ using the gross
domestic product implicit price
deflator. Because it is not clear if these
material price trends will continue, DOE
conducted a sensitivity analysis to
illustrate the effect of raw material price
variability on the cost of beverage
vending machines. See Chapter 5 of the
TSD for more details on this sensitivity
analysis.
DOE applied a manufacturer markup
to the MPC estimates to arrive at the
MSP. MSP is the price of equipment
sold at which the manufacturer can
recover both production and nonproduction costs and earn a profit. DOE
developed a market-share-weighted
average industry markup by examining
gross margin information from the
annual reports of several major beverage
vending machine manufacturers and
Securities and Exchange Commission
(SEC) 10–K reports.30 The
manufacturers whose gross margin
information DOE examined represent
approximately 70 percent of the
beverage vending machine market, and
each of these companies is a subsidiary
of a more diversified parent company
that manufactures equipment other than
beverage vending machines. 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.
Markups were evaluated for 2001 to
2006. The manufacturer markup is
calculated as 100/(100 ¥ average gross
margin), where average gross margin is
calculated as revenue ¥ cost of goods
sold (COGS). To validate the
information, DOE reviewed its
assumptions with beverage vending
machine manufacturers. During
28 American Metals Market, https://
www.amm.com/.
29 U.S. Department of Labor, Bureau of Labor
Statistics, Producer Price Indices, https://
www.bls.gov/ppi/.
30 Available at: https://www.sec.gov/edgar.shtml.
PO 00000
Frm 00019
Fmt 4701
Sfmt 4702
34111
interviews (see Chapter 12 of the TSD),
beverage vending machine
manufacturers stated that many
manufacturers generate revenue and
profit by providing other goods and
services, and their margins for beverage
vending machines are lower than their
company-wide margin. Taking this
information into consideration, DOE is
using an industry-wide manufacturer
markup of 1.03 in the engineering
analysis.
b. Energy Consumption Model
The energy consumption model
estimates the daily energy consumption
of beverage vending machines at various
performance levels using a designoption approach. The model is specific
to the equipment covered under this
rulemaking, but is sufficiently
generalized to model the energy
consumption of all covered equipment
classes. For a given equipment class, the
model estimates the daily energy
consumption for the baseline and the
energy consumption of several
performance levels above the baseline.
The model is used to calculate each
performance level separately. For the
baseline level, a corresponding cost is
calculated using the cost model. For
each level above the baseline, the cost
increases resulting from the addition of
various design options are used to
recalculate the cost.
In developing the energy
consumption model, DOE made certain
assumptions, including general
assumptions about the analytical
methodology and specific assumptions
regarding load components and design
options. DOE based its energy
consumption estimates on new
equipment tested in a controlledenvironment chamber under the
procedures and conditions specified in
ANSI/ASHRAE Standard 32.1–2004,
Methods of Testing for Bottled, Canned,
and Other Sealed Beverages.31
Manufacturers of beverage vending
machines must certify that their
equipment complies with Federal
standards using this test method, which
specifies a certain ambient temperature,
humidity, and other requirements. One
relevant specification that DOE noted is
absent from this standard is the
operating hours of the display case
lighting during a 24-hour period. Thus,
DOE is considering the operating time to
be 24 hours (i.e., that lights are on
throughout the 24-hour period) when
conducting the analyses for this
rulemaking. Chapter 5 of the TSD
31 These test procedures are incorporated by
reference at 10 CFR 431.294.
E:\FR\FM\16JNP3.SGM
16JNP3
34112
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
details these and other beverage vending
machine considerations.
The energy consumption model
calculates daily energy consumption
(DEC) as being comprised of two major
components: (1) Compressor energy
consumption; and (2) component energy
consumption (expressed as kWh/day).
‘‘Component energy consumption’’ is a
sum of the direct electrical energy
consumption of fan motors, lighting,
vend mechanisms, control systems, and
coin and bill validators. ‘‘Compressor
energy consumption’’ is calculated from
the total refrigeration load (expressed as
British thermal units per hour (Btu/h))
and a compressor model based on the
10-coefficient compressor model in
American Refrigeration Institute (ARI)
Standard 540–2004, Performance Rating
of Positive Displacement Refrigerant
Compressors and Compressor Units.
The total refrigeration load is a sum of
the component heat load and the nonelectric load. The component heat load
is a sum of the heat emitted by
evaporator fan motors and lighting
inside the refrigerated space.
(Condenser fan motors are outside the
refrigerated space and do not contribute
to the component heat load.) The nonelectric load is a sum of the heat
contributed by radiation through glass
doors (in Class A machines); heat
conducted through walls and doors; and
sensible and latent loads from warm,
moist air infiltration through vend doors
and cracks. Chapter 5 of the TSD
provides details on component energy
consumption, compressor energy
consumption, and heat load models.
4. Baseline Models
As mentioned above, the engineering
analysis estimates the incremental costs
for equipment with efficiency levels
above a baseline model in each
equipment class. As an initial matter,
DOE defined baseline specifications for
each equipment class. These
specifications include dimensions,
numbers of components, operating
temperatures, nominal power ratings,
and other necessary features to calculate
the energy consumption of each
equipment class. The baseline
specifications define the energy
consumption and cost of the typical
equipment (i.e., units of typical
efficiency) on the market today, namely
beverage vending machines meeting
ENERGY STAR Tier 1.
DOE established baseline
specifications for each of the equipment
classes modeled in the engineering
analysis by reviewing available
manufacturer data, selecting several
representative units based upon that
data, and then aggregating the physical
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
characteristics of the selected units. As
noted above, DOE chose the baseline
specifications such that the baseline
machines met ENERGY STAR’s Tier 1
criteria (see TSD Chapter 3 for further
details on the criteria). This process
created a representative unit for each
equipment class with average
characteristics for physical parameters
(e.g., volume, wall area), and typical
performance for energy-consuming
components (e.g., fans, lighting). See
Chapter 5 of the TSD for these
specifications.
5. Alternative Refrigerants
Generally, DOE must consider in its
engineering analysis the effects of
regulatory changes outside DOE’s
statutory energy conservation standards
rulemaking process that can affect
manufacturers of the covered
equipment. Some of these changes
could also affect the energy efficiency or
energy consumption of the equipment.
In the Framework Document, DOE
sought stakeholder input as to whether
there are any regulatory issues that it
should consider in its analysis of
beverage vending machines. DOE
identified the phaseout of
hydrochlorofluorocarbons (HCFCs) 32 as
an example of an external regulatory
issue the beverage vending machine
industry must address that could affect
the engineering analysis. HCFCs contain
chlorine, a chemical known to deplete
stratospheric ozone. Due to this
phaseout, the beverage vending machine
industry must transition to non-ozonedepleting refrigerants, such as
hydrofluorocarbons (HFCs),
hydrocarbons (HCs), and other natural
refrigerants (e.g., carbon dioxide (CO2)).
As a result, the beverage vending
machine industry generally has been
transitioning away from the HCFC-based
refrigerants in its equipment. For the
beverage vending machines covered in
this rulemaking, DOE understands that
much of the industry has already been
using HFC-based refrigerants,
specifically R–134a. Therefore, to
address the imminent phaseout of
HCFCs, DOE considered the effects of
HFC-based refrigerants from the outset
of its analyses. Some stakeholders
stated, however, that DOE should
consider examining other types of
refrigerants such as HCs and CO2.
Coca-Cola commented that it has
made a corporate commitment to move
32 EPA is phasing out the production and
importation of certain HCFC refrigerants (i.e.,
HCFC–142b and HCFC–22) in new equipment in
the U.S. by January 1, 2010. Further, EPA is phasing
out the production and importation of all HCFC
refrigerants in new equipment in the U.S. by
January 1, 2015. 42 U.S.C. 7671(d).
PO 00000
Frm 00020
Fmt 4701
Sfmt 4702
beyond HCFC and HFC refrigerants to
vending machines that use HCs and CO2
(i.e., R–744). Coca-Cola expressed
concern that current CO2 systems are
not as efficient as systems using HCFC
refrigerants, thereby making compliance
with any new energy conservation
standard more difficult for such
machines, if their unique characteristics
are not taken into account. (Public
Meeting Transcript, No. 8 at p. 146)
EEI stated that the HFC [sic] phaseout
begins in 2010 and that the final rule for
this rulemaking will be in 2009, with
standards becoming effective in 2012.
EEI commented that, because of this
timing, if Coca-Cola could provide input
to DOE on new refrigeration
technologies, DOE would not have to
perform its own analysis on alternative
refrigerants. (Public Meeting Transcript,
No. 8 at p. 170) (DOE notes, however,
that the phaseout occurring in 2010 is
for HCFC-based refrigerants and that no
U.S. phaseout of HFC-based refrigerants
is currently scheduled.) EEI also stated
that it appears that new refrigerants will
be in use in beverage vending machines
by 2010. According to EEI, certain new
technology options should be
compatible with the refrigerant of
choice starting in 2010, when HCFCbased refrigerants are phased out in the
United States. EEI added that due to the
global nature of this equipment and the
ban on HFC-based refrigerants in some
countries, manufacturers are
considering CO2 in all beverage vending
machines, and such action could affect
design options and baseline energy
usage. (EEI, No. 12 at p. 4)
In response to the comments by Coca
Cola and EEI, DOE conducted a
qualitative examination of the use of HC
refrigerants and CO2 in the beverage
vending machine industry. Based on
conversations with beverage vending
machine manufacturers and industry
experts, DOE understands that HC
refrigerants (e.g., butane and propane)
are extremely flammable, and are
classified as A3 refrigerants (low
toxicity, high flammability) in the
United States. Because of this
classification, there are significant
difficulties in selling and certifying
equipment in the United States that use
hydrocarbon refrigerants, and there are
currently no manufacturers in the
beverage vending machine industry who
do so. DOE recognizes that other
countries (e.g., Germany) have begun to
adopt the use of HC refrigerants. But in
the United States, these barriers and the
perception of high safety risk has
prevented their wide-spread use. DOE
believes that the use of these refrigerants
in beverage vending machines is not
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
likely and, therefore, did not conduct an
analysis using HC refrigerants.
Although CO2 does not have the
volatility issues of HC refrigerants, CO2
can have lower cycle efficiencies than
HFC-based refrigerants such as R–134a.
DOE also understands that necessary
components, such as compressors, do
not yet exist in the market in sizes
appropriate for beverage vending
machines. Thus, DOE was not able to
conduct an analysis on CO2-based
refrigeration systems.
Therefore, due to volatility and
availability issues associated with HC
refrigerants and CO2, HFC-based
refrigerants are the only alternative
refrigerant option DOE plans to consider
in this rulemaking. DOE requests
additional stakeholder input or data on
this issue.
6. Cost-Efficiency Results
The results of the engineering analysis
are reported as cost-efficiency data (or
‘‘curves’’) in the form of daily energy
consumption (DEC) (in kWh) versus
MSP (in dollars), which form the basis
for subsequent analyses in the ANOPR.
DOE developed six curves representing
the two equipment classes and three
different size machines in each
equipment class. The methodology for
developing the curves started with
determining the energy consumption for
baseline equipment and MPCs for this
equipment. Above the baseline, DOE
implemented design options using the
ratio of cost to savings, and
implemented only one design option at
each level. Design options were
implemented until all available
technologies were employed (i.e., at a
max-tech level). See TSD Chapter 5 for
additional detail on the engineering
analysis and TSD Appendix B for
complete cost-efficiency results.
D. Markups To Determine Equipment
Price
This section explains how DOE
developed the distribution channel
(supply chain) markups to determine
installed prices for beverage vending
machines (see Chapter 6 of the TSD).
DOE used the supply chain markups it
developed (including sales taxes and
installation costs), along with the MSPs
developed from the engineering
analysis, to arrive at the final installed
equipment prices for baseline and
higher-efficiency equipment. Whereas
the manufacturer markup DOE used in
the engineering analysis was applied to
the MPC to arrive at the MSP, these
supply chain markups (baseline and
incremental markups described below)
were applied to the MSPs to arrive at
the final installed equipment prices. At
the Framework public meeting, the
NPCC stated that among universities,
school districts, and other public
agencies, direct purchases of beverage
vending machines by these sectors
might be a fairly significant fraction of
total machine purchases, and it added
that the weighting between the different
sectors should be the same as for energy
prices. (Public Meeting Transcript, No.
8 at p. 227)
DOE subsequently reviewed different
sources of data, including industry
34113
reports, and concluded there are three
main channels of distribution for
beverage vending machines. Businesses
and other entities that directly purchase
the equipment typically obtain their
machines through an equipment
wholesaler/distributor and not directly
from the manufacturer. Such direct
ownership of vending machines by site
owners, however, constitutes only about
five percent of the total market. Instead,
most institutions and manufacturing
facilities have machines installed onsite through a ‘‘location contract’’ from
a vending machine operator or bottler/
distributor that owns and stocks the
machines.
As Table II.1 demonstrates, DOE
identified three distribution channels
for beverage vending machines which
describe how the equipment passes
from the manufacturer to the customer.
In the first distribution channel, the
manufacturer sells the equipment
directly to the beverage bottler/
distributor, who installs and operates
the machine at a given site. In the
second and third distribution channels,
the manufacturer sells the beverage
vending machine to the equipment
wholesaler/distributor, who in turn may
sell it to a vending machine operator
(who installs and operates the machine
at a given site) or to a site owner (who
stocks and operates the machine). Table
II.1 also provides the estimated
distribution channel shares (in
percentage of total sales) through each
of the three distribution channels.
TABLE II.1.—DISTRIBUTION CHANNELS AND SHARES FOR BEVERAGE VENDING MACHINES
Channel 2
Channel 3
Manufacturer
↓
Beverage Bottler/Distributor
Manufacturer
↓
Equipment Wholesaler/Distributor
↓
Vending Machine Operator
Manufacturer
↓
Equipment Wholesaler/Distributor
↓
Site Owner
68%
jlentini on PROD1PC65 with PROPOSALS3
Channel 1
27%
5%
in the distribution channel. Overall,
weighted average baseline or
incremental markups for the entire
beverage vending machine market can
be determined using the shipment
weights through each distribution
channel and the corresponding overall
baseline markup or the corresponding
overall incremental markup,
respectively, for each distribution
channel, and any applicable sales tax.
DOE developed markups for each step
of a given distribution channel based on
available financial data. Specifically,
DOE based the equipment wholesaler/
distributor markups on U.S. Census
Bureau data 33 for Other Commercial
Equipment Merchant Wholesalers
(NAICS 423440). This sector includes
those establishments primarily engaged
in distributing and wholesaling
For each step in the distribution
channels presented above, DOE
estimated a baseline markup and an
incremental markup, which are
additional amounts added when
equipment is sold and installed. A
baseline markup is applied for the
purchase of baseline equipment. An
incremental markup is applied to the
incremental increase in MSP for the
purchase of higher-efficiency
equipment. The overall baseline or
overall incremental markup is the
product of all the markups at each step
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
PO 00000
Frm 00021
Fmt 4701
Sfmt 4702
33 U.S. Census Bureau. 2002. 2002 Economic
Census Release Date: 12/3/2004. Sector 42:
Wholesale Trade: Industry Series: Product Lines by
Kind of Business for the United States: 2002 at
https://factfinder.census.gov/servlet/
IBQTable?_bm=y&-MFG=10971:42&ds_name=EC0242I3&-_lang=en (Accessed on April
16, 2007).
E:\FR\FM\16JNP3.SGM
16JNP3
34114
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
refrigerated beverage vending machines
and other equipment to restaurants and
hotels (NAICS 4234401) and stores
(NAICS 4234402). The U.S. Census
Bureau data for this sector include
revenue and expense data in total
dollars, rather than in typical values for
an average or representative business.
Because of this, DOE assumed the total
dollar values that the U.S. Census
Bureau reported, once converted to an
individual entity basis, represents
revenues and expenses for an average or
typical wholesaler/distributor business.
DOE calculated baseline markups for
wholesalers as total revenue (equal to all
expenses paid plus profit) divided by
the cost of goods sold (COGS). Expenses
include direct costs for equipment, labor
expenses, occupancy expenses, and
other operating expenses (e.g.,
insurance, advertising). DOE presumed
some expenses (i.e., labor and
occupancy) to be fixed and not subject
to change with the increases in the
efficiency of the equipment being sold.
Other expenses are variable costs that
may change in response to changes in
the COGS. In developing incremental
markups, DOE again considered the
labor and occupancy costs to be fixed,
and the other operating costs and profit
to be proportional to the MSP.
The overall markup for a distribution
channel is the product of all the
markups plus sales tax within that
channel. DOE calculated both baseline
and incremental overall markups for
each distribution channel. DOE
calculated sales taxes based on State-byState sales tax data reported by the Sales
Tax Clearinghouse.34 Sales tax varies by
State, so the markup analysis develops
distributions of markups within each
distribution channel as a function of
State.
For the third distribution channel, the
site owner of a beverage vending
machine usually consists of a business
type (e.g., manufacturing facility, office
buildings, health care buildings, and
retail). Because the State-by-State
distribution of beverage vending
machines may vary by business type
(e.g., manufacturing facilities may be
more prevalent relative to retail stores in
one part of the country than another), a
national level distribution of the
markups may be different for each
business type.
Average overall markups in each
distribution channel can be calculated
using estimates of the shipments of
beverage vending machines by
distribution of State population.
However, markups are not uniform
among wholesalers. DOE used the Excel
spreadsheet-based Crystal Ball program,
which employs Monte Carlo analysis, to
reflect this uncertainty in the LCC
analysis. DOE applied the same baseline
and incremental markups to all sales of
beverage vending machines passing
through equipment wholesaler/
distributors, whether to the vending
machine operator (channel 2) or to the
site owner (channel 3). Table II.2 and
Table II.3 show overall baseline and
incremental markups for sales within
each distribution channel. Chapter 6 of
the TSD provides additional detail on
markups.
TABLE II.2.—OVERALL AVERAGE BASELINE MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX
Manufacturer direct
Markup .......................................................................................................................
Sales Tax ...................................................................................................................
Overall Markup ..........................................................................................................
Wholesaler/distributor
1.000
1.068
1.068
Overall weighted
average
1.46
1.068
1.559
1.147
1.068
1.226
TABLE II.3.—OVERALL AVERAGE INCREMENTAL MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX
Manufacturer
direct
Markup .......................................................................................................................
Sales Tax ...................................................................................................................
Overall Markup ..........................................................................................................
1.000
1.068
1.068
1.20
1.068
1.282
Overall weighted
average
1.064
1.068
1.137
The energy use characterization
analysis estimates the annual energy
consumption of individual beverage
vending machines (both baseline and
higher-efficiency units) installed
indoors or outdoors around the country.
DOE uses this estimate, which
represents typical energy consumption
in the field, as an input in the
subsequent LCC and PBP analyses
(Chapter 8 of the TSD) and NIA (Chapter
10 of the TSD). DOE estimated the
energy use for machines in the two
equipment classes (Class A and Class B
vending machines) 35 analyzed in the
engineering analysis based on the DOE
test procedure 36 (Chapter 5 of the TSD).
Beverage vending machines are
typically installed in manufacturing
facilities and commercial buildings and
are considered part of the ‘‘plug
loads’’ 37 of the building. They also
contribute to the heat gain to the
building on a 24-hour basis. At the
Framework public meeting, DOE asked
whether it should quantify the effect of
more-efficient beverage vending
machines (presumably contributing less
heat to the building) on building space
conditioning loads and, if so, what
would be the most effective way of
doing this. EEI responded that there
might be some impact on building space
conditioning loads for about five
percent of the installations, based upon
their location and concentration. (Public
Meeting Transcript, No. 8 at p. 208) In
general, EEI remarked that in many
situations (e.g., a single machine in a
facility or one machine per occupied
floor) these impacts are likely to be
minimal; however, EEI stated that there
could be an appreciable impact on space
conditioning loads in indoor areas
where multiple machines are
concentrated. On this topic, the Joint
34 The Sales Tax Clearinghouse. Available at:
https://thestc.com/STRates.stm (Accessed on June
25, 2007).
35 Class A and Class B vending machines are as
described in Section II.A.2 of the ANOPR.
36 DOE incorporated by reference, ANSI/ASHRAE
Standard 32.1–2004, with two modifications, as the
DOE test procedure for the beverage vending
machines. 71 FR 71340, 71375 (Dec. 8, 2006); 10
CFR 431.294. ‘‘Plug loads’’ are those appliances and
equipment that are plugged into the power outlets
in a building.
37 ‘‘Plug loads’’ are those appliances and
equipment that are plugged into the power outlets
in a building.
E. Energy Use Characterization
jlentini on PROD1PC65 with PROPOSALS3
Wholesaler/
distributor
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
PO 00000
Frm 00022
Fmt 4701
Sfmt 4702
E:\FR\FM\16JNP3.SGM
16JNP3
34115
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
Comment recommended that DOE
perform a limited set of sensitivity
analyses to determine whether a
reasonable estimate of the impacts is
feasible and whether such impacts
would be significant, given variations in
climate, space conditioning system type,
and other building loads. (ACEEE, No.
13 at p. 4) Dixie-Narco asserted that the
impact would be minimal and that DOE
should not attempt to quantify this
effect. (Dixie-Narco, No. 14 at p. 5)
NFESC recommended that DOE account
for the additional electricity attributable
to the added heat load on airconditioning systems in determining
what efficiency standard will be costeffective. (NFESC, No. 15 at p. 5)
Based on these comments, DOE
conducted a brief sensitivity analysis of
the impact of a beverage vending
machine’s energy consumption and its
magnitude compared to other plug loads
in a commercial building, where more
than two-thirds of the beverage vending
machines are installed. Using the
Energy Information Administration
(EIA)’s Commercial Building Energy
Consumption Survey (CBECS) data,38
DOE examined 16 commercial building
types (i.e., principal building activity
(PBA) categories) in which beverage
vending machines are typically
installed. Annual energy consumption
of these machines was calculated, based
on 8 kWh of daily electricity
consumption and 365 days of operation,
which equated to three percent of the
total electricity consumption for lighting
in a typical commercial building. Based
on these findings which suggest that the
impact is minimal, DOE has decided to
conduct no further analyses regarding
the impact of more-efficient beverage
vending machines on building spaceconditioning loads.
Another question related to the energy
use of beverage vending machines is the
‘‘heating mode’’ for machines installed
outdoors in cold climates. At the
Framework public meeting, Royal
Vendors stated that a very small number
of machines have a heater kit, although
these kits do not run much of the time,
even in very cold climates such as
Alaska (Public Meeting Transcript, No.
8 at p. 211). Therefore, DOE decided
that it will not consider the ‘‘heating
mode’’ to be a significant factor in its
energy use analysis.
As discussed above, DOE analyzed
two equipment classes of beverage
vending machines, Class A and Class B.
Although Class A machines may be
certified for indoor/outdoor use, there
are few Class A machines installed
outdoors because of concerns about
vandalism. Therefore, DOE assumed
Class A machines to be installed indoors
only and subject to the constant indoor
air temperature and relative humidity
conditions of 75 °F/45 percent RH,
matching one of the test conditions in
the DOE test procedure. Further, based
on market data as to the installation of
Class B machines and discussions with
several beverage vending machine
distributors, DOE assumed that 25
percent of these machines are placed
outdoors and that the remaining 75
percent of these machines are installed
indoors. DOE seeks stakeholder input
on this approach, which is identified as
Issue 1 under ‘‘Issues on Which DOE
Seeks Comment’’ in Section IV.E of this
ANOPR.
Furthermore, for both Class A and
Class B machines, DOE analyzed the
three typical sizes (vendible capacities)
defined in the engineering analysis
(Chapter 5 of the TSD). Each machine
has a different refrigerated volume as
measured by ANSI/AHAM HRF–1–2004
and shown in Table II.4.
TABLE II.4.—CONFIGURATIONS OF THE BEVERAGE VENDING MACHINES ANALYZED
Class A machine
Configuration
Small
(A–S–IN)*
Vendible Capacity (number of cans) .......
Refrigerated Volume (ft3) .........................
Medium
(A–M–IN)
270
19
Class B machine
Large
(A–L–IN)
350
31
Small
(B–S–IO)
410
35
450
19
Medium
(B–M–IO)
650
24
Large
(B–L–IO)
800
31
* This nomenclature denotes a combination of equipment class, size, and assumed application. For example, A–S–IN denotes a Class A small
machine used indoors only, whereas B–S–IO denotes a Class B small machine that can be installed either indoors or outdoors.
DOE estimated the annual energy
consumption for Class A vending
machines as the product of the average
daily energy consumption from the DOE
test procedure indoor test condition of
75 ° F/45 percent RH, and 365 days per
year. For Class A machines, the annual
energy consumption did not vary by
State.
Eann = 25% x Eann, outdoor + 75% x Eann, indoor
DOE calculated the energy consumed
by Class B vending machines using the
following relationship:
Eq. II.1
For the 25 percent of the Class B
machines located outdoors, DOE
developed a spreadsheet-based energy
performance model that uses Typical
Meteorological Year (TMY2) climate
data.39 DOE created temperature and
relative humidity bins with
temperatures ranging from 130 °F to
¥40 °F in 5 °F increments, and percent
relative humidity values ranging from
100 percent RH to 0 percent RH in 5
percent RH increments. The model
calculates the annual energy
consumption of a vending machine at
any of the chosen engineering efficiency
levels (derived from the engineering
38 EIA 2003. EIA (Energy Information
Administration), 2003, 2003 CBECS Detailed
Tables. https://www.eia.doe.gov/emeu/cbecs/
cbecs2003/detailed_tables_2003/
detailed_tables_2003.html. Accessed June 14, 2007.
39 TMY2 data expresses the annual average
weather data for 237 cities in the United States.
TMY2 National Renewable Energy Laboratory.
Typical Meterological Years Derived from the 1961–
1990 National Solar Radiation Database (1995).
Available at: https://rrede.nredl.gov/solar/old_data/
nsrdb/1961-1990.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
PO 00000
Frm 00023
Fmt 4701
Sfmt 4702
E:\FR\FM\16JNP3.SGM
16JNP3
EP16JN08.007</MATH>
jlentini on PROD1PC65 with PROPOSALS3
Where:
Eann = Annual average energy consumption,
Eann,outdoor = Annual average energy
consumption for an outdoor machine,
and
Eann,indoor = Annual average energy
consumption for an indoor machine.
34116
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
States. DOE mapped each TMY2 station
to a certain State, based on its location.
Within each State, DOE assigned a
relative weight to each TMY2 station,
based on the total population of
identifiable population centers (cities,
towns, other) that can be shown to be
most climatically similar to that TMY2
location. The annual energy
consumption data for the TMY locations
were then weighted to obtain annual
energy consumption data for each State.
As described below, DOE developed
the annual energy consumption for each
equipment class and at each efficiency
level for each State in the United States
as inputs for the LCC and PBP analyses.
analysis) for a variety of temperatures
and relative humidity values. The
model calculates the annual energy use
for each TMY2 city by stepping through
the binned weather data, calculating the
daily average energy consumption for
the beverage vending machine from the
energy performance model for each bin,
dividing by 24 to convert to average
hourly energy consumption, and
multiplying by the number of hours in
the bin. The sum of the hourly energy
consumption for all bins provides the
annual energy consumption.
DOE estimated annual energy
consumed by the remaining 75 percent
of the Class B machines located indoors
as the product of the daily energy
consumption calculated at the DOE test
procedure indoor test condition of 75
°F/45 percent RH, and 365 days per
year.
DOE calculated the average annual
energy use for each Class B machine for
all 237 TMY2 stations in the United
1. Selection of Efficiency Levels for
Further Analysis
The engineering analysis considered
an efficiency level corresponding to the
present market efficiency level (below
the Tier 1 efficiency level) which DOE
designated as Level 0. DOE then
developed up to thirteen efficiency
levels for some equipment classes to
obtain a range of cost-efficiency
relationships in the engineering
analysis. For each equipment class, DOE
then down-selected only nine efficiency
levels to consider in the energy use
characterization and subsequent
economic analyses. The efficiency levels
range from a baseline efficiency level to
the max-tech level. As part of that range,
DOE selected ENERGY STAR levels
(Tier 1 and Tier 2) and intermediate
levels that would yield a smooth LCC
curve. Table II.5 shows the mapping of
the efficiency levels that DOE will use
in the further economic analyses of the
efficiency levels from the engineering
analysis. These nine efficiency levels,
chosen for the subsequent economic
analyses, the corresponding annual
energy consumption figures, and
manufacturer selling prices for beverage
vending machines determined in the
engineering analysis are all inputs to
DOE’s LCC analysis.
TABLE II.5.—MAPPING OF THE EFFICIENCY LEVELS FOR SUBSEQUENT ECONOMIC ANALYSES TO THE ENGINEERING
EFFICIENCY LEVELS
Engineering efficiency levels for class B machines
(all sizes)
Efficiency levels for LCC and PBP
analyses
Engineering efficiency levels for class A machines (all sizes)
Level 0 ...............................................................
Level 1 (ENERGY STAR Tier 1) or Baseline
Level.
Level 2 ...............................................................
Level 3 (ENERGY STAR Tier 2) .......................
Level 4 ...............................................................
Level 5 ...............................................................
Level 6 ...............................................................
Level 7 ...............................................................
Level 8 (Max Tech) ............................................
Level 0 ..............................................................
Level 1 ..............................................................
Level 0.
Level 1.
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
Level
2. Annual Energy Consumption Results
Class B machines, DOE added
aggregated State-by-State results by
using data from each of the 237 TMY2
weather stations to the annual energy
consumption of the remaining 75
percent of Class B machines located
indoors, in order to determine the total
energy consumption of all Class B
As explained above, DOE assumes
that all Class A machines and 75
percent of Class B machines are
installed indoors and that 25 percent of
Class B machines are located outdoors.
To calculate a weighted energy use of
3 ..............................................................
4 ..............................................................
7 ..............................................................
8 ..............................................................
9 ..............................................................
11 ............................................................
13 ............................................................
3.
4.
6.
7.
9.
10.
11.
machines. DOE further aggregated
energy consumption at the State level to
arrive at the national average energy
consumption, using the 2000 Census
population data.40 Table II.6 presents
the national average annual energy
consumption figures for the three
different sizes of Class B machines.
TABLE II.6.—NATIONAL AVERAGE ANNUAL ENERGY CONSUMPTION FOR CLASS B MACHINES, BY EFFICIENCY LEVELS
(KWH)
jlentini on PROD1PC65 with PROPOSALS3
Level 0
(market
baseline)
Large (B–L–IO) ..........................
Medium (B–M–IO) .....................
Small (B–S–IO) .........................
4,033
3,899
3,699
40 The U.S. Census Bureau, 2000 Census, https://
factfinder.census.gov/servlet/GCTTable?_bm=y&-
VerDate Aug<31>2005
17:20 Jun 13, 2008
Level 1
(ENERGY
STAR
Tier 1)
Jkt 214001
Level 2
2,244
2,108
1,934
1,901
1,763
1,589
Level 3
(ENERGY
STAR
Tier 2)
Level 4
1,740
1,623
1,461
1,598
1,488
1,376
geo_id=01000US&box_head_nbr=GCT-PHI&context=gct&-ds_name=DEC_2000_SFI_U&-
PO 00000
Frm 00024
Fmt 4701
Sfmt 4702
Level 5
Level 6
1,533
1,426
1,214
1,348
1,250
1,149
Level 7
1,336
1,240
1,140
Level 8
(Max
Tech)
1,315
1,221
1,125
tree_id=4001&-format=US-9. (Accessed on March
25, 2007.)
E:\FR\FM\16JNP3.SGM
16JNP3
34117
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
Table II.7 shows annual energy
consumption for each size of Class A
machine. National average energy
consumption figures are identical to
State energy consumption figures. These
national average annual energy
consumption figures are used in the
subsequent LCC, PBP, NES and
rebuttable presumption payback period
analyses.
TABLE II.7.—ANNUAL ENERGY CONSUMPTION FOR CLASS A MACHINES, ALL SIZES AND ALL LOCATIONS, BY EFFICIENCY
LEVELS (KWH)
Energy use (all locations, kWh)
Size
Large (A–L–IN) ..........................
Medium (A–M–IN) .....................
Small (A–S–IN) ..........................
Level 0
(market
baseline)
3,173
3,005
2,796
DOE’s energy use characterization
assumes both that there are no controls
limiting display lighting or compressor
operation in a beverage vending
machine to certain hours of the day and
that the display lighting or compressor
operation would not be affected by
occupancy patterns in the building.
However, using occupancy sensors and
other controllers might reduce a
vending machine’s energy requirements
during long periods of non-use, such as
overnight and weekends. This
occupancy controller option is often
used when de-lamping a vending
machine is not advisable (i.e., when a
vending machine does not have a
captive audience or when de-lamping
results in reduced vending sales
revenues). Controllers can either be
added on or enabled in certain beverage
vending machines. DOE requests
comments on the need to incorporate
such controls in its energy use
characterization analysis and, if so, how
to do so in the NOPR analysis. See Issue
2 under ‘‘Issues on Which DOE Seeks
Comment’’ in Section IV.E of this
ANOPR. Chapter 7 of the TSD provides
additional details on the energy use
characterization.
jlentini on PROD1PC65 with PROPOSALS3
Level 1
(ENERGY
STAR Tier
1)
F. Rebuttable Presumption Payback
Periods
A more energy-efficient device will
usually cost more to purchase than a
device of standard energy efficiency.
However, the more-efficient device will
usually cost less to operate due to
reductions in operating costs (i.e., lower
energy bills). The payback period (PBP)
is the time (usually expressed in years)
it takes to recover the additional
installed cost of the more-efficient
device through energy cost savings. In
considering standard setting for
Level 2
2,452
2,321
2,117
Level 3
(ENERGY
STAR Tier
2)
2,229
2,102
1,902
2,045
1,933
1,737
Level 4
1,882
1,775
1,585
beverage vending machines, sections
325(o)(2)(B)(iii) and (v)(3) of EPCA (42
U.S.C. 6295(o)(2)(B)(iii) and (v)(3))
establish a rebuttable presumption that
a standard is economically justified if
the Secretary finds that ‘‘the additional
cost to the consumer of purchasing a
product complying with an energy
conservation standard level will be less
than three times the value of the energy
* * * savings during the first year that
the consumer will receive as a result of
the standard, as calculated under the
applicable test procedure * * *.’’ (42
U.S.C. 6295(o)(2)(B)(iii)) This rebuttable
presumption test is an alternative path
to establishing economic justification as
compared to consideration of the seven
factors set forth in 42 U.S.C.
6295(o)(2)(B)(i)(I)–(VII).
To evaluate the rebuttable
presumption, DOE estimated the
additional cost of a more-efficient,
standard-compliant unit, and compared
this cost to the value of the energy saved
during the first year of operating the
equipment. DOE assumed that the
increased cost of purchasing a standardcompliant unit includes the cost of
installing the equipment for use by the
purchaser. DOE calculated the
rebuttable presumption PBP, or the ratio
of the value of the increased installed
price above the baseline efficiency level
to the first year’s energy cost savings.
When this PBP is less than three years,
the rebuttable presumption is satisfied;
when this PBP is equal to or more than
three years, the rebuttable presumption
is not satisfied.
DOE calculated rebuttable
presumption PBPs based on a
distribution of installed costs and
energy prices that included seven types
of businesses and all 50 States. Unlike
Level 5
Level 6
1,790
1,692
1,518
17:20 Jun 13, 2008
Jkt 214001
PO 00000
Frm 00025
Fmt 4701
Sfmt 4702
1,654
1,576
1,417
Level 8
(Max
Tech)
1,586
1,510
1,356
the other PBPs calculated in the LCC
analysis (see Section II.G.4 of this
ANOPR), the rebuttable presumption
PBPs do not include maintenance or
repair costs.41 As with the LCC analysis
(see Section II.G.2), the baseline
efficiency level for the rebuttable
presumption calculation is Level 1.
From the range of efficiency levels for
which cost data was determined in the
engineering analysis, DOE selected nine
efficiency levels in each equipment
class, including the baseline efficiency
level, for the LCC and subsequent
ANOPR analyses. Chapter 7 of the TSD
discusses the selection of these
efficiency levels. For each equipment
class, DOE calculated the rebuttable
presumption PBP at each efficiency
level higher than the baseline. Inputs to
the PBP calculation are the first seven
inputs shown in Table II.9 in Section
II.G.2 of this ANOPR.
Table II.8 shows the nationallyaveraged rebuttable presumption
payback periods calculated for all
equipment classes and efficiency levels.
Table II.8 also shows the highest
efficiency level with a rebuttable
presumption payback of less than 3
years for each equipment class.
As is the case in other DOE energy
conservation standards rulemakings,
while DOE has examined the rebuttable
presumption PBPs, it has not
determined economic justification for
any of the standard levels analyzed
based on the ANOPR rebuttable
presumption analysis. Instead, when
setting candidate standard levels (CSLs),
DOE will consider the more detailed
analysis of the economic impacts of
increased efficiency according to section
325(o)(2)(B)(i) of EPCA. (42 U.S.C.
6295(o)(2)(B)(i))
41 Energy cost savings are the only costs
addressed with respect to rebuttable presumption
payback periods. 42 U.S.C. 6295(o)(2)(B)(iii).
VerDate Aug<31>2005
1,773
1,675
1,502
Level 7
E:\FR\FM\16JNP3.SGM
16JNP3
34118
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
TABLE II.8.—REBUTTABLE PRESUMPTION PAYBACK PERIODS BY EFFICIENCY LEVEL AND EQUIPMENT CLASS
Rebuttable presumption payback period (years)
Equipment type
Level 1
Level 2
Level 3
Level 4
Level 5
Level 6
Level 7
Level 8
NA
NA
NA
NA
NA
NA
0.7
0.7
0.7
1.1
1.1
1.2
1.1
1.1
1.3
1.4
1.5
1.4
1.5
1.6
1.8
1.6
1.7
1.7
3.6
3.8
3.6
2.1
2.3
2.2
3.9
4.1
4.8
2.3
2.5
2.4
4.1
4.4
5.1
6.3
6.1
6.1
122.9
112.3
5.1
145.4
347.9
75.4
jlentini on PROD1PC65 with PROPOSALS3
B–L–IO ...................................................
B–M–IO ..................................................
B–S–IO ..................................................
A–L–IN ...................................................
A–M–IN ..................................................
A–S–IN ..................................................
G. Life-Cycle Cost and Payback Period
Analyses
The LCC and PBP analyses determine
the economic impact of potential
standards on customers. The effects of
standards on individual commercial
customers include changes in operating
expenses (usually lower) and changes in
total installed cost (usually higher). DOE
analyzed the net effect of these changes
for beverage vending machines by
calculating the changes in customers’
LCCs likely to result from a CSL
compared to a base case (no new
standards). The LCC calculation
considers total installed cost (includes
MSP, sales taxes, distribution channel
markups, and installation cost),
operating expenses (i.e., energy, repair,
and maintenance costs), equipment
lifetime, and discount rate. DOE
performed the LCC analysis from the
perspective of the purchaser of a
beverage vending machine.
DOE calculated the LCC for all
customers as if each would purchase a
new beverage vending machine in the
year the standard takes effect. The
standard takes effect on the future date
when it begins to apply to newlymanufactured equipment. Section
135(c)(4) of EPACT 2005 amended
EPCA to add new subsections 325(v)(2),
(3) and (4) (42 U.S.C. 6295(v)(1), (2) and
(3)), which directs the Secretary to issue
a final rule for refrigerated bottled or
canned beverage vending machines no
later than August 8, 2009, with the
energy conservation standard levels in
the rule applying to all equipment
manufactured on or after August 8,
2012. Consistent with EPCA, DOE used
these dates in the ANOPR analyses.
DOE based the cost of the equipment
on projected costs in 2012, although all
dollar values are expressed in 2007$.
DOE projected that the cost for
equipment in 2012 when expressed in
real terms (2007$) would be identical to
the cost determined in the engineering
analysis. DOE also considered annual
energy prices for the life of the beverage
vending machine, based on EIA’s
Annual Energy Outlook 2007
(AEO2007).
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
DOE also analyzed the effect of
changes in operating expenses and
installed costs by calculating the PBP of
potential standards relative to a base
case. The PBP estimates the amount of
time it would take the commercial
customer to recover the anticipated,
incrementally higher purchase expense
of more energy-efficient equipment
through lower operating costs. Similar
to the LCC analysis, the PBP is based on
the total installed cost and the operating
expenses. However, unlike the LCC, the
PBP only considers the first year’s
operating expenses. Because the PBP
does not account for changes in
operating expense over time or the time
value of money, this calculation is also
referred to as a simple PBP. Usually, the
benefits of a regulation exceed the costs
of that regulation if the service life of
the covered equipment is substantially
longer than the PBP.
The following discussion provides an
overview of the approach and inputs for
the LCC and PBP analyses performed by
DOE, as well as a summary of the
preliminary results generated for the
beverage vending machines under
consideration in this rulemaking.
However, for a more detailed discussion
on the LCC and PBP analyses, see
Chapter 8 of the ANOPR TSD.
1. Approach
The LCC analysis estimates the
impact on commercial customers of
potential energy conservation standards
for beverage vending machines by
calculating the net cost of those
machines under two scenarios: (1) A
‘‘base case’’ of no new standard; and (2)
a ‘‘standards case’’ under which
beverage vending machines must
comply with a new energy efficiency
standard. Recognizing that each type of
commercial customer who uses a
beverage vending machine is unique,
DOE analyzed variability and
uncertainty by performing the LCC and
PBP calculations for seven types of
businesses. Six of these typically
purchase and install beverage vending
machines in their buildings. The
seventh business type, which is the
PO 00000
Frm 00026
Fmt 4701
Sfmt 4702
Highest level
with PBP
<3 years
Level
Level
Level
Level
Level
Level
4.
4.
4.
6.
6.
6.
most common purchaser of the
equipment, is a local bottler or vending
machine operator that typically has the
machine installed in one of the other six
business types, provides vending
services, and splits the coin box receipts
through a contractual arrangement with
the site owner.
Of the six business types analyzed,
four have a Principal Building Activity
(PBA) category assigned to them in the
CBECS data. These four business types
analyzed are: (1) Office/healthcare
(including a large number of firms
engaged in financial and other services,
medical and dental offices, and nursing
homes); (2) retail (including all types of
retail stores and food and beverage
service facilities); (3) schools (including
colleges and universities and large
groups of housing facilities owned by
State governments, such as prisons); and
(4) ‘‘other’’ (including warehouses,
hotels/motels, and assembly buildings).
The two remaining business types
analyzed are manufacturing facilities
and military bases that are typically
large utility customers and pay
industrial rates for their electricity
consumption.
Aside from energy, the most
important factors influencing the LCC
and PBP analyses are related to where
the beverage vending machine is
installed. These factors include energy
prices, installation cost, markup, and
sales tax. The LCC analysis used the
annual energy consumption determined
in the energy use characterization
analysis (Chapter 7 of the TSD). Energy
consumption calculated using this
approach is sensitive to climatic
conditions, especially for the vending
machines located outdoors. Therefore,
energy consumption in the LCC analysis
varies by geographical location. At the
national level, the LCC analysis
explicitly modeled both the uncertainty
and the variability in the model’s inputs
using probability distributions. These
are based on the shipment of units to
different States, as determined by
population weights.
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
2. Life-Cycle Cost Analysis Inputs
For each efficiency level analyzed, the
LCC analysis requires input data for the
total installed cost of the equipment, the
operating expense, and the discount
rate. Table II.9 summarizes the inputs
and key assumptions used to calculate
the economic impacts to commercial
34119
customers of various efficiency levels
for each beverage vending machine. A
more detailed discussion of the inputs
follows.
TABLE II.9.—SUMMARY OF INPUTS AND KEY ASSUMPTIONS USED IN THE LIFE-CYCLE COST ANALYSIS
Input
Description
Baseline Efficiency Level ....................................
Energy savings and energy cost savings are compared to a pre-selected baseline efficiency
level (in this case Level 1).
Certain number of higher efficiency levels are pre-selected up to the max-tech level for LCC
and PBP analyses.
Price charged by manufacturer to either a wholesaler or large customer for baseline equipment.
Incremental change in manufacturer selling price for equipment at each of the higher efficiency levels.
Associated with converting the manufacturer selling price to a customer price (see Chapter 6
of TSD).
Cost to the customer of installing the equipment. This includes labor, overhead, and any miscellaneous materials and parts. The total installed cost equals the customer equipment price
plus the installation price.
Site energy use associated with the use of beverage vending machines, which includes only
the use of electricity by the equipment itself.
Average commercial electricity price ($/kWh) in each State and for seven classes of commercial and industrial customers, as determined from EIA data for 2003 converted to 2007$.
Used the AEO2007 reference case to forecast future electricity prices.
Labor and material costs associated with maintaining the beverage vending machines (e.g.,
cleaning heat exchanger coils, checking refrigerant charge levels, lamp replacement).
Labor and material costs associated with repairing or replacing components that have failed.
Age at which the beverage vending machine is retired from service (estimated to be 14
years).
Rate at which future costs are discounted to establish their present value to beverage vending
machine purchasers.
A rebound effect was not taken into account in the LCC analysis.
Analysis period is the time span over which DOE calculated the LCC (i.e., 2012–2042).
Higher Efficiency Levels ......................................
Baseline Manufacturer Selling Price ...................
Standard-Level Manufacturer Selling Price Increases.
Markups and Sales Tax ......................................
Installation Price ..................................................
Equipment Energy Consumption ........................
Electricity Prices ..................................................
Electricity Price Trends .......................................
Maintenance Costs ..............................................
Repair Costs ........................................................
Equipment Lifetime ..............................................
Discount Rate ......................................................
Rebound Effect ...................................................
Analysis Period ...................................................
jlentini on PROD1PC65 with PROPOSALS3
a. Baseline Manufacturer Selling Price
The ‘‘baseline MSP’’ is the price
manufacturers charge to either a
wholesaler/distributor or very large
customer for beverage vending machine
equipment meeting baseline efficiency
levels. The MSP includes a markup that
converts the MPC to MSP. DOE
developed the baseline MSPs using a
cost model (detailed in Chapter 5 of the
TSD). MSPs were developed for two
equipment classes and three typical
sizes within each equipment class.
DOE was not able to identify relative
shipments data for equipment classes by
efficiency level. For the equipment on
which DOE performed a design-option
analysis as the basis for the engineering
analysis, DOE designated Level 1 as the
baseline efficiency level. Level 1 also
coincided with the ENERGY STAR Tier
1 level, which is assumed to represent
the least efficient equipment likely to be
sold in 2012.
b. Increase in Selling Price
The standard-level MSP increase is
the change in MSP associated with
producing beverage vending machine
equipment at higher efficiency levels (or
with lower energy consumption). MSP
increases are associated with decreasing
equipment energy consumption (or
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
higher efficiency) levels through a
combination of energy consumption
level and design-option analyses. See
Chapter 5 of the TSD for details. DOE
developed these MSP increases for the
two equipment classes.
c. Markups
As discussed earlier, overall markups
are based on one of three distribution
channels for beverage vending
machines. Site owners purchase
approximately five percent of
equipment from wholesaler/distributors;
vending machine operators purchase 27
percent of equipment from wholesaler/
distributors; and beverage bottler/
distributors purchase 68 percent of
equipment directly from manufacturers,
based on input received by DOE.
d. Installation Costs
DOE derived installation costs for
beverage vending machines from U.S.
Bureau of Labor Statistics (BLS) data.42
BLS provides median wage rates for
installation, maintenance, and repair
occupations that reflect the labor rates
for each State. These data allow DOE to
compute State labor cost indices relative
42 Bureau of Labor Statistics, Occupational
Employment and Wage Estimates (May 2006).
Available at: https://www.bls.gov/oes_dl.htm.
PO 00000
Frm 00027
Fmt 4701
Sfmt 4702
to the national average for these
occupations. DOE incorporated these
cost indices into the analysis to capture
variations in installation cost by
location. DOE calculated the installation
cost by multiplying the number of
person-hours by the corresponding labor
rate as reported by Foster-Miller Inc.43
Foster-Miller data were more specific to
the beverage vending machine industry
and service calls, and were used
whenever possible. DOE decided that
the installation costs (including
overhead and profit) represent the total
installation costs for baseline
equipment. Further, since data were not
available to indicate how installation
costs vary by the beverage vending
machine class or efficiency, DOE
considered installation costs to be fixed
and independent of the cost or
efficiency of the equipment. Although
the LCC spreadsheet allows for
alternative scenarios, DOE did not find
a compelling reason to change its basic
premise for the ANOPR analysis.
As described earlier, the total
installed cost is the sum of the
equipment purchase price and the
installation cost. DOE derived the
43 Foster-Miller, Inc., Vending Machine Service
Call Redution Using the Vending Miser (2002).
E:\FR\FM\16JNP3.SGM
16JNP3
34120
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
customer equipment purchase price for
any given efficiency level by
multiplying the baseline MSP by the
baseline markup and adding to it the
product of the incremental MSP and the
incremental markup. Because MSPs,
markups, and the sales tax can take on
a variety of values depending on
location, the resulting total installed
cost for a particular efficiency level will
not be a single-point value, but a
distribution of values. DOE used a
Monte-Carlo analysis, which is a
stochastic approach, to determine this
distribution of values.
jlentini on PROD1PC65 with PROPOSALS3
e. Energy Consumption
DOE based its estimate of the annual
electricity consumption of beverage
vending machines on the energy use
characterization described in Section
II.E of this ANOPR.
f. Electricity Prices
Electricity prices are necessary to
convert electric energy savings into
energy cost savings. In its Framework
Document, DOE suggested using average
commercial and/or industrial electricity
prices depending on the purchaser of
the beverage vending machine to
develop its life-cycle cost analysis.
Based on comments made at the
Framework public meeting, DOE
estimated that about 30 percent of
installed beverage vending machines are
located at manufacturing facilities with
industrial electricity prices.
On this topic, EEI recommended that
DOE should use industrial as well as
commercial electricity prices in the
analysis. (EEI, No. 12 at p. 6) In its
analyses, DOE will use average
electricity prices for the following types
of locations: (1) Industrial buildings; (2)
Federal military buildings; and (3) large
office, small office, education, and
mercantile buildings. These average
electricity prices will be determined on
a State-by-State basis in order to include
regional variations in energy prices,
while reducing the overall complexity
of the analysis. DOE will use a MonteCarlo stochastic analysis (using Crystal
Ball) to capture the variation of energy
prices across the different building
types and geographic regions. 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. DOE
used average commercial electricity
prices at the State level from the EIA
publication, State Energy Consumption,
Price, and Expenditure Estimates. The
latest available prices from this source
are for 2006. Because actual prices were
available for all of 2006, DOE used the
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
forecasted ratio between 2007 and 2006
national commercial retail electricity
prices from AEO2007 to adjust the 2006
State-level prices to 2007$.
DOE decided to use average electricity
prices paid by seven different classes of
beverage vending machine customers on
a State-by-State basis. DOE also adjusted
for different effective prices, since
different kinds of businesses typically
use electricity in different amounts at
different times of the day, week, and
year. To make this adjustment, DOE
used the 2003 CBECS data set to
identify the average prices four of the
seven business types paid compared
with the average prices all commercial
customers paid. Two of the seven
business types were manufacturing
facilities and military/Federal facilities,
which DOE assumed pay industrial
electricity prices. DOE used the ratios of
prices paid by the four types of
businesses to the national average
commercial prices seen in the 2003
CBECS as multiplying factors to
increase or decrease the average
commercial 2006 price data previously
developed. Once the electricity prices
for the four types of businesses were
adjusted, those prices were used in the
LCC analysis.
To obtain a weighted-average national
electricity price, the prices paid by each
business in each State is weighted by
the estimated sales of beverage vending
machines to each business type. The
State/business type weights are the
probabilities that a given beverage
vending machine unit shipped will be
operated with a given electricity price.
For evaluation purposes, the prices and
weights can be depicted as a cumulative
probability distribution. The effective
electricity prices range from
approximately 4 cents per kWh to
approximately 16 cents per kWh. This
approach will include regional
variations in energy prices and provide
for estimated electricity prices suitable
for the target market, yet reduce the
overall complexity of the analysis. The
development and use of State-average
electricity prices by business type is
described in more detail in Chapter 8 of
the TSD.
g. Electricity Price Trends
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
the electricity supply industry. DOE
applied the AEO2007 reference case as
the default scenario and extrapolated
the trend in values from 2020 to 2030
PO 00000
Frm 00028
Fmt 4701
Sfmt 4702
of the forecast to establish prices in
2030 to 2042. This method of
extrapolation is in line with methods
that EIA uses to forecast fuel prices for
the Federal Energy Management
Program (FEMP). DOE provides a
sensitivity analysis of the life-cycle
costs 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. DOE
is committed to using the latest
available EIA forecast of energy prices
in this rulemaking. For the NOPR
analysis, DOE expects to use AEO2008.
Since the Final Rule is expected to be
published by August 2009, DOE expects
to use AEO2009 in the Final Rule
analysis. Prior to issuance of the NOPR,
updates of the ANOPR analytical
spreadsheets using AEO2008 will be
made available on the Web: https://
www.eere.energy.gov/buildings/
appliance_standards/commercial/
beverage_machines.html.
h. Repair Costs
The equipment repair cost is the cost
to the customer of replacing or repairing
failed components in the beverage
vending machine. DOE based the
annualized repair cost for baseline
efficiency equipment on the following
equation:
RC = k × EQP/LIFE
Where:
RC = repair cost in dollars,
k = fraction of equipment price (estimated to
be 0.5),
EQP = baseline equipment price in dollars,
and
LIFE = average lifetime of the equipment in
years (estimated to be 14 years).
Because data were unavailable on
how repair costs vary with equipment
efficiency, DOE held repair costs
constant as the default scenario for the
LCC and PBP analyses.
i. Maintenance Costs
DOE estimated the annualized
maintenance costs for beverage vending
machines from data provided by FosterMiller, Inc. (2002). The report by FosterMiller provides estimates on the personhours, labor rates, and materials
required for routine preventive
maintenance of beverage vending
machines. DOE adjusted the total
annual maintenance cost and used a
single figure of $31.37/year (2007$) for
preventive maintenance for all beverage
vending machine classes. In addition to
routine maintenance, industry contacts
stated that most beverage vending
machines are fully refurbished every
three to five years at an average cost of
approximately $930. DOE calculated the
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
annual cost of refurbishment by
assuming two refurbishments (one in
year 4 and another in year 8) and then
annualizing the present value of the cost
using the discount rate that applied to
the business type assumed to own the
beverage vending machine. DOE added
the two maintenance components
together to produce an overall annual
maintenance cost of $165.44 (2007$).
Because data are not available for how
maintenance costs vary with equipment
efficiency, DOE held maintenance costs
constant even as equipment efficiency
increased. DOE seeks feedback on the
frequency of refurbishment cycles, its
assumptions regarding constant
maintenance costs, and how changes to
the machines might affect energy use in
the field. Section IV.E of this ANOPR
discusses this subject, identified as
Issue 3 under ‘‘Issues on Which DOE
Seeks Comment.’’
jlentini on PROD1PC65 with PROPOSALS3
j. Lifetime
DOE defines ‘‘lifetime’’ as the age
when a beverage vending machine is
retired from service. Based upon
discussions with industry experts and
other stakeholders, DOE concluded that
a typical equipment lifetime of 14 years
is appropriate for beverage vending
machines. As described earlier, beverage
vending machines are refurbished every
three to five years, and they are usually
completely replaced after two rounds of
refurbishment (by which time they are
typically obsolete or physically worn
out). Chapter 3 of the TSD, market and
technology assessment, contains a
discussion of equipment life data and
the sources of such data.
k. Discount Rate
The ‘‘discount rate’’ is the rate at
which future expenditures are
discounted to establish their present
value. DOE received comments on the
development of discount rates for this
rulemaking at the Framework public
meeting. Specifically, EEI stated that in
terms of average cost of capital and
discount rates, DOE should account for
the rise in U.S. interest rates over the
past few years. EEI also stated that DOE
should determine how many vending
machine owners are small businesses,
which may have higher costs of capital
and, therefore, higher discount rates.
(EEI, No. 12 at p. 7) The following
explains DOE’s approach to discount
rates for this rulemaking in light of these
comments.
DOE derived discount rates for the
LCC analysis by estimating the cost of
capital for companies that purchase
beverage vending machines. The cost of
capital is commonly used to estimate
the present value of cash flows to be
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
derived from a typical company project
or investment. For most companies, the
cost of capital is the weighted average
of the cost to the company of equity and
debt financing. DOE estimated the cost
of equity financing with the Capital
Asset Pricing Model (CAPM), among the
most widely used models to estimate
such costs. CAPM considers the cost of
equity to be proportional to the amount
of systematic risk for a company. The
cost of equity financing tends to be high
when a company faces a large degree of
systematic risk and low when the
company faces a small degree of
systematic risk.
To estimate the weighted average cost
of capital (WACC; defined as the
weighted average cost of debt and equity
financing) of purchasers, DOE used a
sample of companies involved in the six
ownership categories, according to their
type of activity. DOE sought financial
information for all of the firms in the
full sample involved in the seven types
of business drawn from a database of
7,687 U.S. companies on the Damodaran
Online Web site.44 This resulted in a
sample of about 6,661 firms. In cases
where one or more of the variables
needed to estimate the discount rate was
missing or could not be obtained, DOE
discarded the firm from the analysis.
Overall, it discarded about 36 percent of
the firms in the full database for this
reason, resulting in a final count of
4,240 firms. The WACC approach for
determining discount rates accounts for
the current tax status of individual firms
on an overall corporate basis. DOE did
not evaluate the marginal effects of
increased costs, and thus depreciation
due to more expensive equipment, on
the overall tax status.
DOE used the final sample of 4,240
companies to represent beverage
vending machines purchasers. For each
company in the sample, DOE derived
the cost of debt, percent debt financing,
and systematic company risk from
information on the Damodaran Online
Web site. Damodaran estimated the cost
of debt financing from the long-term
government bond rate (4.39 percent) and
the standard deviation of the stock
price. DOE then determined the
weighted average values for the cost of
debt, range of values, and standard
deviation of WACC for each category of
the sample companies. Deducting
expected inflation from the cost of
capital provided estimates of real
discount rate by ownership category.
44 Damodaran Online, Leonard N. Stern School of
Business, New York University. Available at:
https://www.stern.nyu.edu/∼adamodar/
New_Home_Page/data.html. (Accessed May 23,
2007.)
PO 00000
Frm 00029
Fmt 4701
Sfmt 4702
34121
The above methodology yielded the
following average after-tax discount
rates, weighted by the percentage shares
of total purchases of beverage vending
machines: (1) 5.08 percent for bottlers
and distributors; (2) 6.04 percent for
manufacturing facilities; (3) 5.07 percent
for office and health care businesses; (4)
5.98 percent for retail stores; (5) 2.20
percent for schools and colleges; (6) 2.89
percent for military bases; and (7) 4.98
percent for all other types of
businesses.45
l. Rebound Effect
A ‘‘rebound effect’’ occurs when a
piece of equipment that is made more
efficient is used more intensively, so
that the expected energy savings from
the efficiency improvement do not fully
materialize. Because beverage vending
machines operate on a 24-hour basis to
maintain adequate conditions for the
merchandise being retailed, a rebound
effect resulting from increased
refrigeration energy consumption
seemed unlikely. Thus, there is no
rebound effect to be accounted for in the
LCC analysis.
m. Effective Date
For purposes of this discussion, the
‘‘effective date’’ is the future date when
a new standard becomes operative (i.e.,
the date by and after which beverage
vending machine manufacturers must
manufacture equipment that complies
with the standard). DOE publication of
a final rule in this standards rulemaking
is required by August 8, 2009. Pursuant
to section 42 U.S.C. 6295(v)(3), as
amended by EPACT 2005, the effective
date of any new energy conservation
standard for beverage vending machines
must be three years after the final rule
is published. DOE calculated LCC for
commercial customers, based upon an
assumption that each would purchase
the new equipment in the year the
standard takes effect.
3. Split Incentive Issue
DOE mentioned the ‘‘split incentive
issue’’ in the Framework public meeting
when discussing distribution channels
for beverage vending machines sold
directly to the bottler or a vending
machine operator. The bottler or the
vending machine operator installs these
machines at different business sites
through a ‘‘location contract,’’ maintains
and stocks the machine, and receives a
certain percentage of the coin-box
revenue. The business site owner, in
45 These discount rates are what private
companies pay as beverage vending machine
purchasers. Government agencies use three-percent
and seven-percent discount rates for economic
calculations.
E:\FR\FM\16JNP3.SGM
16JNP3
34122
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
this case, allows the machine to be
placed on-site, receives a percentage of
the coin-box revenue and/or other
remuneration, and most relevant to this
rulemaking, pays the electricity bill. In
principle, the business site owner
would be willing to accept a lower
percentage of revenue for a machine that
uses less electricity. However, where it
is costly to renegotiate contracts, the
incentive to purchase more-efficient
machines may be lessened or
eliminated. Nonetheless, there may be a
growing market for energy-efficient
beverage vending machines since
environmentally-conscious beverage
companies and bottlers are pushing to
install energy-efficient machines on-site,
and certain business site owners are
demanding that energy-efficient
machines be installed to reduce
electricity costs.
At the Framework public meeting,
Coca-Cola stated that it has ‘‘full-service
vending’’ (a split-incentive) that allows
a Coca-Cola bottler to buy the vending
machine and give it to an operator. The
operator may or may not pay some or all
of the energy costs, depending on its
contract with the customer. (Public
Meeting Transcript, No. 8 at p. 190)
Meanwhile, EEI stated that information
about distribution channels and
machine contracts would be important
for the LCC analysis. EEI explained that
unless there is a provision in the
contract for energy costs, there will be
a split incentive for site owners. (EEI,
No. 12 at p. 5).
In response, DOE agrees that split
incentive is a critical issue to consider
in the LCC analysis. DOE will assume
that operating cost savings due to energy
cost savings are transferred to the
owner/operator of the beverage vending
machine through the coin-box revenue
contract. This assumption not only
addresses the split incentive issue but
also will result in the highest energy
savings for the minimum LCC and the
lowest total LCC. DOE will also conduct
limited sensitivity analyses of alternate
scenarios to explore how the LCC
savings might change as the site owner
retains some fraction (e.g., 50 percent) of
the operating cost savings.
4. Payback Period
The PBP is the amount of time it takes
the customer to recover the
incrementally higher purchase cost of
more energy-efficient equipment as a
result of lower operating costs (i.e.,
through energy cost savings). Payback
analysis is a technique used to obtain a
rough indication of whether an
investment is worthwhile. Numerically,
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
the PBP is the ratio of the increase in
purchase cost (i.e., from a less-efficient
design to a more-efficient design) to the
decrease in annual operating
expenditures. This type of calculation is
known as a ‘‘simple PBP,’’ because it
does not take into account other changes
in operating expenses over time or the
time value of money.
The equation for PBP is:
PBP =DIC/DOC
Where:
PBP = payback period in years,
DIC = difference in the total installed cost
between the more-efficient standard
level equipment (energy consumption
levels 2, 3, etc.) and the baseline (energy
consumption level 1) equipment, and
DOC = difference in annual operating costs.
PBPs are expressed in years. If the
PBP is greater than the life of the
equipment, then the increased total
installed cost of the more-efficient
equipment would not be recovered in
reduced operating costs. The PBP thus
calculated differs from the rebuttable
presumption payback calculation
discussed in Section II.F in that it
includes repair and maintenance costs,
which are part of the annual operating
costs.
The data inputs to PBP analysis are
the total installed cost of the equipment
to the customer for each energy
consumption level and the annual (first
year) operating costs for each energy
consumption level. The inputs to the
total installed cost are the equipment
price and the installation cost. The
inputs to the operating costs are the
annual energy cost, the annual repair
cost, and the annual maintenance cost.
The PBP uses the same inputs as the
LCC analysis, except that electricity
price trends and discount rates are not
required. Since the PBP is a simple
(undiscounted) payback, the required
electricity cost is only for the year in
which a new energy conservation
standard is to take effect—in this case,
2012. The electricity price used in the
PBP calculation of electricity cost was
the price projected for 2012, expressed
in 2007$, but not discounted to 2007.
Discount rates are not used in the PBP
calculation.
PBP is one of the economic indicators
that DOE uses when assessing economic
impact to a customer. As expressed
above, PBP does not take into account
the time value of money explicitly (e.g.,
through a discount factor), the life of the
efficiency measure, or changing fuel
costs over time. In addition, because
PBP takes into account the cumulative
energy and first-cost impact of a set of
PO 00000
Frm 00030
Fmt 4701
Sfmt 4702
efficiency measures, it can be sensitive
to the baseline level assumed. In
addition, what is deemed an acceptable
payback period can vary. By contrast,
when examining LCC savings by
efficiency levels, there is generally a
maximum LCC savings point (minimum
LCC efficiency level) indicative of
maximum economic benefit to the
customer. The selection of the baseline
efficiency level does not effect the
identification of the minimum LCC
efficiency level, although a baseline
efficiency is used when calculating net
LCC savings or costs. DOE considers
both LCC and PBP as related to the
seven factors discussed in Section I.C to
determine whether a standard is
economically justified and whether the
benefits of an energy conservation
standard will exceed its burdens to the
greatest extent practicable. However,
because LCC uses a range of discount
rates (that depend on customers’ cost of
financing), takes into account changing
energy prices, and does not require
selection of a baseline efficiency level,
it is given greater weight in DOE
decision-making.
5. Life-Cycle Cost and Payback Period
Results
This section presents the LCC and
PBP results for the energy consumption
levels analyzed for this ANOPR. While
both types of indicators of costeffectiveness will be considered by
DOE, greater weight is usually given to
the LCC savings results because they
account for customer discount rates and
changing energy prices. Because the
values of most inputs to the LCC
analysis are uncertain, DOE represents
them as a distribution of values rather
than a single-point value. Thus, DOE
derived the LCC results also as a
distribution of values. For example, the
difference in LCC for the different
efficiency levels from the baseline
efficiency level (Level 1 in this case) can
be provided by percentiles of
distribution of values as shown in Table
II.10.
Chapter 8 and Appendix F of the TSD
provide a summary of the change in
LCC from the baseline efficiency level
(Level 1 in this case) by percentile
groupings of the distribution of results
for each equipment class. Table II.10
provides an example of such LCC
changes for a portion of one equipment
class (B–L–IO). Table II.10 also shows
the mean LCC savings and the percent
of units with LCC savings at each
efficiency level.
E:\FR\FM\16JNP3.SGM
16JNP3
34123
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
TABLE II.10.—DISTRIBUTION OF LIFE-CYCLE COST SAVINGS FROM A BASELINE LEVEL (LEVEL 1) BY EFFICIENCY LEVEL
FOR THE CLASS B LARGE INDOOR/OUTDOOR (B–L–IO) EQUIPMENT CLASS
Decrease in LCC from baseline (level 1) shown by percentiles of the distribution of results (2007$)
Efficiency
level
Level
Level
Level
Level
Level
Level
Level
2
3
4
5
6
7
8
.....
.....
.....
.....
.....
.....
.....
0%
10%
20%
$32
31
17
¥83
¥123
¥136
¥1,304
$123
158
174
65
59
45
¥1,115
30%
$149
198
224
121
129
117
¥1,045
40%
50%
60%
70%
80%
90%
$175
236
272
167
187
175
¥989
$200
271
318
218
252
240
¥935
$223
306
362
265
311
300
¥892
$251
347
415
325
386
377
¥833
$279
389
468
375
451
441
¥766
$314
440
535
448
542
533
¥672
$374
529
649
568
692
686
¥524
The following example explains how
to interpret the information in Table
II.10. The row concerning Efficiency
Level 4 in Table II.10 (row 3) shows that
the minimum change in LCC for this
Efficiency Level for B–L–IO equipment
is a savings of $17 (zero percentile
column). In other words, all beverage
vending machines of this type would
have an LCC savings at Efficiency Level
4. For 90 percent of the cases studied
(90th percentile), the change in LCC is
a reduction of $649 or less. The largest
reduction in LCC is $1,215 (100th
percentile). The mean change in LCC is
a net savings of $392. The last column
shows that 100 percent of the sample
machines have LCC savings (i.e.,
reductions in LCC greater than zero)
when compared to the baseline
efficiency level.
Mean
savings
$239
329
392
298
352
341
849
100%
Percent
of units
with
LCC
savings
100
100
100
97
97
95
1
$693
978
1,215
1,189
1,494
1,501
339
Table II.11 provides the national
average life-cycle cost savings
calculated for each efficiency level
when compared to the baseline
efficiency (Level 1) for all three machine
sizes in each of the two equipment
classes. Review of Table II.11 shows that
most of the efficiency levels analyzed
generated national average life-cycle
cost savings compared with the baseline
efficiency level.
TABLE II.11.—AVERAGE LIFE-CYCLE COST SAVINGS FROM A BASELINE EFFICIENCY LEVEL (LEVEL 1) BY EFFICIENCY
LEVEL AND EQUIPMENT CLASS
National average LCC savings (2007$)
Equipment class
Level 1
B–L–IO .............
B–M–IO ............
B–S–IO .............
A–L–IN ..............
A–M–IN .............
A–S–IN .............
Level 2
0
0
0
0
0
0
Level 3
239
240
238
148
144
139
DOE seeks feedback on the validity of
selecting Level 1 (which is the same
level as ENERGY STAR Tier 1) as the
baseline for the LCC analysis. Since
more-efficient equipment is available in
the market, DOE seeks input on whether
a distribution of efficiencies should be
Level 4
329
313
296
259
242
238
Level 5
392
370
318
348
326
316
Level 6
298
272
290
373
343
326
used for the LCC analysis baseline
instead of a single efficiency level, and
if so, what data could be used to
populate this distribution. Section IV.E
of this ANOPR discusses this subject,
identified as Issue 4 under ‘‘Issues on
Which DOE Seeks Comment.’’
Level 7
352
320
253
369
338
319
Level 8
341
307
238
194
187
171
¥849
¥779
¥683
¥774
¥722
¥574
Table II.12 provides summary PBP
results for each efficiency level for B–L–
IO equipment as an example. Results are
summarized for PBP by percentile
groupings of the distribution of results.
The chart also shows the mean PBP for
each efficiency level.
TABLE II.12.—SUMMARY OF PAYBACK PERIOD RESULTS FOR CLASS B, LARGE INDOOR/OUTDOOR (B–L–IO) EQUIPMENT
Payback period in years shown by percentiles of the distribution of results
Efficiency level
jlentini on PROD1PC65 with PROPOSALS3
0%
Level
Level
Level
Level
Level
Level
Level
2
3
4
5
6
7
8
..............
..............
..............
..............
..............
..............
..............
0.3
0.4
0.5
1.1
1.1
1.2
6.6
10%
20%
0.4
0.7
0.9
2.0
2.2
2.3
18.2
0.5
0.7
1.0
2.3
2.5
2.6
26.0
Table II.13 provides the national
average payback calculated for each
efficiency level when compared to the
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
30%
0.6
0.9
1.2
2.7
2.9
3.1
37.2
40%
0.6
1.0
1.3
3.0
3.3
3.4
55.5
50%
0.7
1.0
1.4
3.3
3.6
3.8
85.5
60%
0.7
1.1
1.5
3.6
3.9
4.1
100.0
baseline efficiency level (Level 1) for all
three machine sizes of the two
equipment classes. Table II.13 also
PO 00000
Frm 00031
Fmt 4701
Sfmt 4702
70%
0.8
1.2
1.7
4.1
4.4
4.7
100.0
80%
0.9
1.4
1.9
4.7
5.1
5.4
100.0
90%
1.1
1.6
2.3
5.6
6.2
6.5
146.6
100%
1.6
2.4
3.5
9.7
10.9
11.8
4,808.0
Mean
PBP
0.7
1.1
1.5
3.6
3.9
4.1
122.9
shows the percentage of units that
would have PBPs of less than three
years (i.e., the rebuttable presumption
E:\FR\FM\16JNP3.SGM
16JNP3
34124
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
PBP for economic justification under 42
U.S.C. 6295(o)(2)(B)(iii)). The results of
the analysis show that purchases of
more-efficient machines would result in
PBPs (when compared to the purchase
of baseline efficiency units) of about six
years or less (often substantially less) for
all but the most efficient machines
analyzed for both equipment classes.
TABLE II.13.—NATIONAL AVERAGE PAYBACK PERIODS BY EFFICIENCY LEVEL AND EQUIPMENT CLASS
National average payback period (years)
Equipment Class
Level 1
B–L–IO .............
B–M–IO ............
B–S–IO .............
A–L–IN ..............
A–M–IN .............
A–S–IN .............
Level 2
NA
NA
NA
NA
NA
NA
Level 3
0.7
0.7
0.7
1.1
1.1
1.2
Level 4
1.1
1.1
1.3
1.4
1.5
1.4
Level 5
1.5
1.6
1.8
1.6
1.7
1.7
Level 6
3.6
3.8
3.6
2.1
2.3
2.2
Level 7
Level 8
3.9
4.1
4.8
2.3
2.5
2.4
4.1
4.4
5.1
6.3
6.1
6.1
122.9
112.3
198.0
145.4
347.9
75.4
35
25
21
81
77
77
25
23
19
3
5
5
0
0
0
0
0
0
Percent of Units With Payback Period of Less Than Three Years
B–L–IO .............
B–M–IO ............
B–S–IO .............
A–L–IN ..............
A–M–IN .............
A–S–IN .............
NA
NA
NA
NA
NA
NA
100
100
100
100
100
100
The PBPs shown in Table II.13 and
the rebuttable PBPs shown in Table II.8
account for the cumulative impact of all
technologies used in a design option to
reach a specific energy efficiency level
when compared to the baseline
equipment. Every design option is made
up of a mix of technologies, some of
which may have relatively short PBPs
and others that may have relatively
longer PBPs, if considered separately.
For this reason, the choice of baseline
efficiency level affects the PBP for moreefficient machines. The LCC
spreadsheet allows the user to select
alternate baseline efficiency levels for
each equipment class and to calculate
the LCC savings and PBP for all higher
levels compared to the selected
baseline. See Chapter 8 and Appendix F
of the TSD for additional details on the
LCC and PBP analyses.
H. Shipments Analysis
jlentini on PROD1PC65 with PROPOSALS3
This section presents DOE’s
shipments analysis, which is an input to
the NIA (Section II.I) and MIA (Section
II.K). DOE will undertake revisions to
the NIA and conduct the final MIA after
the ANOPR is published, and then
report the results of both in the NOPR.
The results of the shipments analysis
are driven primarily by historical
shipments data for the two equipment
classes of beverage vending machines
under consideration. The model
100
100
100
99
99
99
99
99
93
99
97
99
39
37
39
87
83
85
estimates that, in each year, equipment
in the existing stock of beverage vending
machines either ages by one year or is
worn out and replaced. In addition, new
equipment can be shipped into new
commercial building floor space, and
old equipment can be removed through
demolitions. DOE chose to analyze all
efficiency levels analyzed in the LCC in
the NIA. Because DOE is assessing
impacts and presuming each level
analyzed represents a possible standard
level, DOE refers to the efficiency levels
analyzed in the NIA as candidate
standard levels (CSLs). DOE determined
shipments forecasts for all of the CSLs
analyzed in the NIA and NPV analysis.
According to an analysis of the
beverage vending machine market,46
there were about 3.67 million beverage
vending machines in the United States
in 2005. Industry estimates that about 5
percent of these units are Class A
machines intended for indoor use only,
while 95 percent are Class B machines
intended for either indoor or outdoor
use. Annual shipments have decreased
from about 338,000 in 2000 to less than
100,000 in 2006. DOE estimates that
total 2006 shipments were about 67,000
units. The industry estimates that about
10 percent of units shipped were Class
A units, while 90 percent of units
shipped are Class B machines intended
for either indoor or outdoor use.
(NAMA, No. 17 at p. 3).
DOE was not able to locate any market
data concerning shipments by machine
size (i.e., vendible capacity); therefore,
the shipments analysis focused on the
three sizes (small, medium, and large)
believed to be typical and which were
analyzed in the preceding LCC and PBP
analyses. DOE assumed that each size is
about one-third of the market for Class
A units and translated the three sizes to
the corresponding vendible capacity.
Under this approach, the large-size
Class A machine would correspond to
having a vendible capacity of 410 12ounce cans, the medium-size Class A
machine would have a capacity of 350
cans, and the small-size Class A
machine would have a capacity of 270
cans. Similarly, DOE assumed that each
size is about one-third of the market for
Class B units. Under this approach, the
large-size Class B machine would have
a vendible capacity of 800 cans, the
medium-size Class B machine would
have a capacity of 650 cans, and the
small-size Class B machine would have
a capacity of 450 cans.
Because several different types of
businesses own beverage vending
machines and use them in a variety of
locations, machines are divided into
several market segments. Table II.14
gives the business locations and the
approximate size of the market segments
from 2002 to 2005.
46 Automatic Merchandiser, State of the Vending
Industry Report (August 2006). Available at:
www.AMonline.com.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
PO 00000
Frm 00032
Fmt 4701
Sfmt 4702
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
34125
TABLE II.14.—MARKET SEGMENTS FOR THE BEVERAGE VENDING MACHINES (2002–2005)
Percent of
machines
Business location
Percent of
machines
Ownership
Manufacturing ...............................................................
Offices ..........................................................................
Retail ............................................................................
Schools/Colleges ..........................................................
Health Care ..................................................................
Hotels/Motels ................................................................
30.4
23.1
13.6
13.0
6.1
3.0
75.0
25.0
7.6
7.3
4.1
3.8
2.6
2.3
Bottlers and Vendors ...................................................
Business-Owned ..........................................................
Manufacturing ..............................................................
Offices and Health Care ..............................................
Retail, Restaurants, Bars, and Clubs ..........................
Schools, Colleges, and Public Facilities (including
correctional).
Military Bases ...............................................................
Other (including hotels/motels) ....................................
Restaurants/Bars/ Clubs ..............................................
Correctional Facilities ...................................................
Military Bases ...............................................................
Other .............................................................................
1.9
4.0
Subtotal, Business Owned ....................................
......................................................................................
25.0
........................
Total ......................................................................
100.0
Total ......................................................................
100.0
0.5
1.8
Source: State of the Vending Industry (2006).
Table II.15 shows the forecasted
shipments of the three typical sizes of
beverage vending machines for Class A
and Class B units for selected years, and
cumulatively, between 2012 and 2042.
As equipment purchase price increases
with higher efficiency levels, a drop in
shipments could occur relative to the
base case. On the other hand, as annual
energy consumption is reduced,
equipment sales could increase due to
more frequent installations and use of
beverage vending machines by retailers.
DOE has no information by which to
calibrate either such relationship.
Therefore, although the spreadsheet
allows for changes in projected
shipments in response to efficiency
level increases or energy consumption
level decreases, for the ANOPR analysis,
DOE presumed that the shipments
would not change in response to the
changing CSLs. Table II.15 also shows
the cumulative shipments for the 31-
year period between 2012 and 2042 for
all beverage vending machines. Because
there has been a decrease in shipments
from 2000 to 2006 and as more and
more units are retired, there has to be
an increase in future shipments to
replenish the existing stock of
equipment. Chapter 9 of the TSD
provides additional details on the
shipments analysis.
TABLE II.15.—FORECASTED SHIPMENTS FOR BEVERAGE VENDING MACHINES (BASELINE EFFICIENCY, LEVEL 1)
Year (thousands of units shipped)
Equipment class
2012
A–L–IN .................................
A–M–IN ................................
A–S–IN .................................
B–L–IO .................................
B–M–IO ................................
B–S–IO .................................
2015
7.7
7.7
7.7
77.6
77.6
77.6
7.6
7.6
7.6
77.0
77.0
77.0
jlentini on PROD1PC65 with PROPOSALS3
I. National Impact Analysis
The NIA assesses cumulative national
energy savings (NES) and the
cumulative national economic impacts
of candidate standard levels. The
analysis measures economic impacts
using the NPV metric (i.e., future
amounts discounted to the present) of
total commercial customer costs and
savings expected to result from new
standards at specific efficiency levels.
For a given CSL, DOE calculated the
NPV, as well as the NES, as the
difference between a base-case forecast
and the standards-case forecasts.
Chapter 10 of the TSD provides
additional details on the national
impacts analysis for beverage vending
machines.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
2020
2025
7.9
7.9
7.9
79.8
79.8
79.8
8.3
8.3
8.3
84.2
84.2
84.2
2030
8.8
8.8
8.8
88.8
88.8
88.8
For each year of the analysis, the
beverage vending machine stock is
composed of units shipped in previous
years (or vintages). Each vintage has a
characteristic distribution of efficiency
levels. DOE first determined the average
energy consumption of each vintage in
the stock accounting for all efficiency
levels in that vintage. The national
annual energy consumption is then the
product of the annual average energy
consumption per beverage vending
machine at a given vintage and the
number of beverage vending machines
of that vintage in the stock for the
particular year. This approach accounts
for differences in unit energy
consumption from year to year. Annual
energy savings are calculated for each
standard level by subtracting national
PO 00000
Frm 00033
Fmt 4701
Sfmt 4702
2035
9.2
9.2
9.2
93.4
93.4
93.4
2040
9.7
9.7
9.7
98.4
98.4
98.4
2042
9.9
9.9
9.9
100.5
100.5
100.5
Cumulative
shipments
(2012–2042)
265.9
265.9
265.9
2,688.3
2,688.3
2,688.3
energy consumption for that standard
level from that calculated for the
baseline. Cumulative energy savings are
the sum of the annual NES over the
period of analysis.
In a similar fashion, DOE tracks the
first costs for all equipment installed at
each efficiency level for each vintage. It
also tracks the annual operating cost
(sum of the energy, maintenance, and
repair costs) by vintage for all
equipment remaining in the stock for
each year of the analysis. DOE then
calculates the net economic savings
each year as the difference between total
operating cost savings and increases in
the total installed costs (which consist
of manufacturer selling price, sales tax,
and installation cost). The NPV is the
annual net cost savings calculated for
E:\FR\FM\16JNP3.SGM
16JNP3
34126
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
each year, discounted to the year 2012,
and expressed in 2007$. Cumulative
NPV savings reported are the sum of the
annual NPV over the analysis period.
jlentini on PROD1PC65 with PROPOSALS3
1. Approach
Over time, in the standards case,
more-efficient equipment 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 depend on
annual shipments and the lifetime of
equipment. Both calculations start by
using the estimate of shipments and the
quantity of units in service, which are
derived from the shipments model. As
more-efficient beverage vending
machines gradually replace lessefficient ones, the energy per unit of
capacity that beverage vending
machines in service use gradually
decreases in the standards case relative
to the base case, leading to an estimate
of NES.
To estimate the total energy savings
for each candidate efficiency level, DOE
first calculated the national site energy
consumption 47 for beverage vending
machines each year, beginning with the
expected effective date of the standards
(i.e., 2012). DOE did this calculation for
both the base-case forecast and the
standards-case forecast. Second, DOE
determined the annual site energy
savings, which is the difference between
site energy consumption in the base
case and in 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). Then,
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
CSL.
2. Base-Case and Standards-Case
Forecasted Efficiencies
A key component of DOE’s estimates
of NES and NPV are the energy
efficiencies for shipped equipment that
it forecasts over time for the base case
(without new standards) and for each of
the standards cases. The forecasted
efficiencies represent the distribution of
energy efficiency of the equipment
under consideration that is shipped over
the forecast period (i.e., from the
assumed effective date of a new
standard to 30 years after the standard
becomes effective). Because key inputs
to the calculation of the NES and NPV
depend on the estimated efficiencies,
47 ‘‘Site energy’’ is the energy directly consumed
by the units in operation.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
they are of great importance to the
analysis. In the case of the NES, the perunit annual energy consumption is a
direct function of efficiency. Regarding
the NPV, the per-unit total installed cost
and the per-unit annual operating cost
both depend on efficiency. The per-unit
total installed cost is a direct function
of efficiency. Increased efficiency
results in reduced energy consumption
which results in reduced energy costs.
However, the maintenance cost portion
of the operating cost may go up and
hence, the per-unit annual operating
cost is an indirect function of the
equipment efficiency.
The annual per-unit energy
consumption is the average energy
consumed by a beverage vending
machine in a year as determined in the
energy use characterization (see Chapter
7 of the TSD). The annual energy
consumption is directly tied to the
efficiency of the unit. DOE determined
annual forecasted market shares by
efficiency level that, in turn, enabled a
determination of shipment-weighted
annual national average energy
consumption values. At the Framework
public meeting, several manufacturers
and ACEEE offered their estimates of
shipments of new beverage vending
machines that would meet ENERGY
STAR levels by 2012. ACEEE also stated
that virtually 100 percent of all beverage
vending machines will meet Tier 1
levels, and it further expects that 100
percent of the indoor-outdoor zonecooled (Class B) machines would meet
Tier 2 levels. (ACEEE, No. 13 at p. 4)
Dixie-Narco estimated that 100 percent
of new equipment would meet Tier 1,
and about 75 percent would meet Tier
2 levels in 2012. (Dixie-Narco, No. 14 at
p. 7). Based on these comments, DOE
assumed for purposes of its analyses
that 100 percent of beverage vending
machine shipments will meet ENERGY
STAR Tier 1 level and that about 55
percent of shipments will meet Tier 2
level by 2012.
Because no data were available on
market shares broken down by
efficiency level, DOE developed
estimates. First, DOE converted 2005
shipment information by equipment
class into market shares by equipment
class, and then adapted a cost-based
method similar to that used in the
NEMS to estimate market shares for
each equipment class by efficiency
level. This cost-based method relied on
cost data developed in the engineering
and life-cycle cost analyses, as well as
economic purchase criteria data taken
directly from NEMS. From those market
shares and shipment projections, DOE
developed the future efficiency
scenarios for a base case (i.e., without
PO 00000
Frm 00034
Fmt 4701
Sfmt 4702
new standards) and for various
standards cases (i.e., with new
standards).
DOE developed base-case efficiency
forecasts based on the estimated market
shares by equipment class and
efficiency level. Because there are no
historical data to indicate how
equipment efficiencies or relative
equipment class preferences have
changed over time, DOE assumed that
forecasted market shares would remain
frozen at the 2012 efficiency level until
the end of the forecast period (30 years
after the effective date or 2042).
Realizing that this prediction likely
overstates the estimates of savings
associated with these efficiency
standards, DOE seeks comment on this
assumption and the potential
significance of the overestimate. In
particular, DOE requests data that
would help characterize the likely
increases in efficiency that would occur
over the 30-year modeling period in
absence of a standard.
For its estimate of standards-case
forecasted efficiencies, 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 equipment shipments
with efficiencies in the base case that
did not meet the standard level under
consideration would roll up to meet the
new standard level. Also, DOE assumed
that all equipment efficiencies in the
base case that were above the standard
level under consideration likely would
not be affected.
DOE seeks feedback on how it
predicts base-case and standards-case
efficiencies, and how standards affect
efficiency distributions. Section IV.E of
this ANOPR discusses this subject,
identified as Issue 5 under ‘‘Issues on
Which DOE Seeks Comment.’’ DOE also
seeks feedback on whether higher
standard levels in specific equipment
classes are likely to cause beverage
vending machine customers to shift to
less-efficient equipment classes. Section
IV.E of this ANOPR discusses this
subject, identified as Issue 6 under
‘‘Issues on Which DOE Seeks
Comment.’’
3. National Impact Analysis Inputs
DOE used the difference in shipments
by equipment efficiency level between
the base case and standards cases to
determine the reduction in per-unit
annual energy consumption that could
result from new standards. The beverage
vending machine stock in a given year
is the total number of beverage vending
machines shipped from earlier years
that survive in the given year. The NES
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
spreadsheet model tracks the total
number of beverage vending machines
shipped each year. For purposes of the
ANOPR NES and NPV analyses, DOE
assumed that retirements follow a
Weibull form of statistical distribution
with a 14-year average lifetime for
beverage vending machines.
Retirements for any given vintage build
to about eight percent per year by year
7, then tail off gradually to less than one
percent per year by year 20. Retired
units are replaced until 2042. For units
shipped in 2042, any units still
remaining at the end of 2062 are
replaced.
The site-to-source conversion factor is
the multiplicative factor used for
converting site energy consumption
(expressed in kWh) into primary or
source energy consumption (expressed
in quads (quadrillion Btu)). DOE used
annual site-to-source conversion factors
based on U.S. average values for the
commercial sector, calculated from
AEO2007, Table A5. The average
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 estimate NPV, DOE calculated the
net impact each year as the difference
between total operating cost savings
(including electricity, repair, and
maintenance cost savings) and increases
in total installed costs (consisting of
MSP, sales taxes, distribution channel
markups, and installation cost). DOE
calculated the NPV of each CSL over the
life of the equipment using three steps.
First, DOE calculated the difference
between the equipment costs under
each CSL and the base case to determine
the net equipment cost increase
resulting from each CSL. Second, DOE
calculated the difference between the
base-case operating costs and the
34127
operating costs at each CSL to determine
the net operating cost savings from each
CSL. Third, DOE calculated the
difference between the net operating
cost savings and the net equipment cost
increase to determine the net savings (or
expense) for each year. DOE then
discounted the annual net savings (or
expenses) for beverage vending
machines purchased on or after 2012 to
2007$, and summed the discounted
values to arrive at the NPV of a CSL. An
NPV greater than zero shows net savings
(i.e., the CSL would reduce overall
customer expenditures relative to the
base case in present-value terms). An
NPV less than zero indicates that the
CSL would result in a net increase in
customer expenditures in present-value
terms. Table II.16 summarizes the NES
and NPV inputs to the NES spreadsheet
model, and briefly describes the data
source for each input.
TABLE II.16.—NATIONAL ENERGY SAVINGS AND NET PRESENT VALUE INPUTS
Input data
Description
Shipments ...........................................................
Effective Date of Standard .................................
Base-Case Efficiencies .......................................
Standards-Case Efficiencies ...............................
Annual shipments from shipments model (see Chapter 9 of the TSD, Shipments Analysis).
2012.
Distribution of base-case shipments by efficiency level.
Distribution of shipments by efficiency level for each standards case. Standards-case annual
market shares by efficiency level remain constant over time for the base case and each
standards case.
Annual weighted-average values are a function of energy consumption level per unit, which
are established in the Energy Use Characterization (Chapter 7 of the TSD).
Annual weighted-average values are a function of energy consumption level (see Chapter 8 of
the TSD).
Annual weighted-average values increase with manufacturer’s cost level (see Chapter 8 of the
TSD).
Annual weighted-average value equals $165.44 (see Chapter 8 of the TSD).
EIA AEO2007 forecasts (to 2030) and extrapolation beyond 2030 (see Chapter 8 of the TSD).
Conversion varies yearly and is generated by DOE/EIA’s NEMS * model (a time-series conversion factor that includes electric generation, transmission, and distribution losses).
3% and 7% real.
Future costs are discounted to 2008.
As explained in the LCC inputs section, DOE does not anticipate unit energy consumption rebounding above the levels used in the LCC analysis and passed to the NIA analysis. Further, the shipments model develops shipment projections in order to meet historical market
saturation levels. The shipment model does not further adjust shipments as a function of
unit energy consumption levels, because DOE has no information by which to calibrate such
a relationship.
Annual Energy Consumption per Unit ................
Total Installed Cost per Unit ...............................
Repair Cost per Unit ...........................................
Maintenance Cost per Unit .................................
Escalation of Electricity Prices ...........................
Electricity Site-to-Source Conversion .................
Discount Rate .....................................................
Present Year .......................................................
Rebound Effect ...................................................
* Chapter 13 (utility impact analysis) and Chapter 14 (environmental assessment) provide more detail on NEMS.
4. National Impact Analysis Results
jlentini on PROD1PC65 with PROPOSALS3
Table II.17 presents the cumulative
NES results for the CSLs analyzed for
three sizes of each equipment class of
beverage vending machines. Results are
cumulative to 2042 and are shown as
primary energy savings in quads. Inputs
to the NES spreadsheet model are based
on weighted-average values, yielding
results that are discrete point values,
rather than a distribution of values as in
the LCC analysis. DOE based all the
results on electricity price forecasts
from the AEO2007 reference case. The
range of overall cumulative energy
impacts for standards above the baseline
efficiency level (Level 1) is from 0.006
quad (Class A machines) and 0.048 quad
(Class B machines) for a standard
established at Level 2, to 0.036 quad
(Class A machines) and 0.351 quad
(Class B machines) at the max tech
efficiency level (Level 8).
TABLE II.17.—CUMULATIVE NATIONAL ENERGY SAVINGS FOR BEVERAGE VENDING MACHINES (2012–2042) (QUADS)
National energy savings (Quads) by candidate standard level
Equipment class
Level 2
Class A .............
VerDate Aug<31>2005
Level 3
0.006
17:20 Jun 13, 2008
Jkt 214001
Level 4
0.011
PO 00000
Level 5
0.018
Frm 00035
Fmt 4701
0.023
Sfmt 4702
Level 6
Level 7
0.023
E:\FR\FM\16JNP3.SGM
16JNP3
0.031
Level 8
0.036
34128
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
TABLE II.17.—CUMULATIVE NATIONAL ENERGY SAVINGS FOR BEVERAGE VENDING MACHINES (2012–2042) (QUADS)—
Continued
National energy savings (Quads) by candidate standard level
Equipment class
Level 2
Class B .............
Level 3
0.048
Level 4
0.106
Level 5
0.181
0.222
Under the NPV analysis, savings
represent decreases in operating costs
(including electricity, repair, and
maintenance) associated with the higher
energy efficiency of beverage vending
machines purchased in the standards
case compared to the base case. Total
operating cost savings are the savings
per unit multiplied by the number of
units of each vintage (i.e., the year of
manufacture) surviving in a particular
year. The beverage vending machine
consumes energy and must be
maintained over its entire lifetime. For
units purchased in 2042, the operating
cost includes energy consumed and
maintenance and repair costs incurred
Below are the NPV results for the
CSLs DOE considered for the three sizes
of each of the two equipment classes of
beverage vending machines. Results are
cumulative and shown as the
discounted value at seven percent of
these savings in present dollar terms.
The present value of increased total
installed costs is the total installed cost
increase (i.e., the difference between the
standards case and base case),
discounted to 2007, and summed over
the time period in which DOE evaluates
the impact of standards (i.e., from the
effective date of standards, 2012 to 2062
when the last beverage vending machine
is retired).
Level 6
Level 7
0.234
0.300
Level 8
0.351
until the last unit retires from service in
2062.
Table II.18 shows the NPV results for
the CSLs for beverage vending machines
based on a seven-percent discount rate.
DOE based all results on electricity
price forecasts from the AEO2007
reference case. Appendix H of the TSD
provides detailed results showing the
breakdown of the NPV into national
equipment costs and national operating
costs. At a seven-percent discount rate,
the maximum national NPV benefits
calculated for different CSL scenarios
above the baseline was about $30
million for Class A machines and about
$280 million for Class B machines.
TABLE II.18.—CUMULATIVE NET PRESENT VALUE RESULTS BASED ON A SEVEN-PERCENT DISCOUNT RATE (BILLION
2007$) *
Standard level
Equipment class
Level 2
Class A .............
Class B .............
Level 3
0.009
0.079
Level 4
0.018
0.171
Level 5
0.028
0.269
0.030
0.280
Level 6
Level 7
0.027
0.264
(0.009)
(0.081)
Level 8
(0.221)
(1.916)
* Values in parentheses indicate negative NPV.
Table II.19 provides the NPV results
based on the three-percent discount rate
and electricity price forecasts from the
AEO2007 reference case. Appendix H of
the TSD provides detailed results
showing the breakdown of the NPV into
national equipment costs and national
operating costs based on a three-percent
discount rate. At this rate, the maximum
overall NPV benefits calculated for
different CSL scenarios above the
assumed baseline was $80 million for
Class A machines and $764 million for
Class B machines.
TABLE II.19.—CUMULATIVE NET PRESENT VALUE RESULTS BASED ON A THREE-PERCENT DISCOUNT RATE (BILLION
2007$) *
Standard level
Equipment class
Level 2
Class A .............
Class B .............
Level 3
0.021
0.204
Level 4
0.046
0.443
Level 5
0.072
0.709
0.080
0.764
Level 6
Level 7
0.079
0.741
0.010
0.085
Level 8
(0.419)
(3.654)
jlentini on PROD1PC65 with PROPOSALS3
* Values in parentheses indicate negative NPV.
As discussed previously in Section
II.E, roughly 25 percent of the Class B
machines are used outdoors, and DOE
assumes that all Class A machines are
used indoors. To be thorough, DOE
developed analytical tools with the
capability of separately analyzing Class
B machines certified for indoor use only
and Class A machines certified for
indoor/outdoor use. However, DOE was
not able to locate any sales data for
these two equipment markets, so sales
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
are assumed to be zero and DOE did not
report LCC or NIA results separately for
these equipment markets.
J. Life-Cycle Cost Sub-Group Analysis
The LCC sub-group analysis evaluates
impacts of standards on identifiable
groups of customers, such as customers
of different business types that may be
disproportionately affected by a national
energy conservation standards level. In
the NOPR phase of this rulemaking,
PO 00000
Frm 00036
Fmt 4701
Sfmt 4702
DOE will analyze the LCCs and PBPs for
these customers, and determine whether
they would be adversely affected by any
of the CSLs.
Also, DOE plans to examine
variations in energy prices and energy
use that might affect the NPV of a
standard to customer sub-populations.
To the extent possible, DOE will obtain
estimates of the variability of each input
parameter and consider this variability
in the calculation of customer impacts.
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
Variations in energy use for a particular
equipment class may depend on factors
such as climate and type of business.
DOE will determine the effect on
customer sub-groups using the LCC
spreadsheet model. The standard LCC
analysis includes various customer
types that use beverage vending
machines. DOE can analyze the LCC for
any sub-group, such as a particular type
of school or institution, by using the
spreadsheet model and sampling only
that sub-group. Section II.G explains the
details of this model. DOE will be
especially sensitive to purchase price
increases (‘‘first-cost’’ increases) to
avoid negative impacts on identifiable
population groups such as small
businesses (i.e., those with low annual
revenues) that may not be able to afford
a significant increase in the price of
beverage vending machines. Some of
these customers may retain equipment
past its useful life. This older equipment
is generally less efficient, and its
efficiency may deteriorate further if it is
retained beyond its useful life. Large
increases in first cost also could
preclude the purchase and use of
equipment altogether, resulting in a
potentially large loss of utility to the
customer.
Although DOE does not know
business income and annual revenues
for the types of businesses analyzed in
the LCC analysis, the floor space
occupied by a business may be an
indicator of annual income. If this
proves true, DOE can perform sub-group
analyses on smaller businesses. DOE
can also use SBA data for businesses
with 500 or fewer employees as a proxy
for ‘‘smaller businesses.’’
K. Manufacturer Impact Analysis
The purpose of the manufacturer
impact analysis is to identify the likely
impacts of energy conservation
standards on manufacturers. DOE has
begun and will continue to conduct this
analysis with input from manufacturers
and other interested parties and apply
this methodology to its evaluation of
standards. DOE will also consider
financial impacts and a wide range of
quantitative and qualitative industry
impacts that might occur following the
adoption of a standard. For example, a
particular standard level adopted by
DOE could require changes to beverage
vending machine manufacturing
practices. DOE will identify and
understand these impacts through
interviews with manufacturers and
other stakeholders during the NOPR
stage of its analysis.
DOE announced changes to its
process for the manufacturer impact
analysis through a report submitted to
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
34129
Congress on January 31, 2006 (as
required by section 141 of EPACT 2005),
entitled ‘‘Energy Conservation
Standards Activities.’’ Previously, DOE
did not report any manufacturer impact
analysis results during the ANOPR
phase; however, under this new process,
DOE has collected, evaluated, and
reported preliminary information and
data in the ANOPR (see Section II.K.6 of
this ANOPR). Such preliminary
information includes the anticipated
conversion capital expenditures by
efficiency level and the corresponding
anticipated impacts on jobs. DOE
solicited this information during the
ANOPR engineering analysis
manufacturer interviews and reported
the results in the preliminary
manufacturer impact analysis (see
Chapter 12 of the TSD).
DOE conducts the manufacturer
impact analysis in three phases, and
then tailors the analytical framework
based on public comments. In Phase I,
DOE creates an industry profile to
characterize the industry and conducts
a preliminary manufacturer impact
analysis to identify important issues
that require consideration. The ANOPR
TSD presents results of the Phase I
analysis. In Phase II, DOE prepares an
industry cash flow model and an
interview questionnaire to guide
subsequent discussions. In Phase III,
DOE interviews manufacturers and
assesses the impacts of standards both
quantitatively and qualitatively. DOE
uses the Government Regulatory Impact
Model (GRIM) to assess industry and
sub-group cash flow and net present
value, and then assesses impacts on
competition, manufacturing capacity,
employment, and regulatory burden
based on manufacturer interviews. The
NOPR TSD presents results of the Phase
II and Phase III analyses. For more detail
on the manufacturer impact analysis,
see Chapter 12 of the TSD.
opinion or estimate for DOE. This
process enables DOE to incorporate
sensitive information from
manufacturers in the rulemaking
process without specifying which
manufacturer provided a certain set of
data.
DOE conducts detailed interviews
with manufacturers to gain insight into
the range of potential impacts of
standards. During the interviews, DOE
typically solicits both quantitative and
qualitative information on the potential
impacts of efficiency levels on sales,
direct employment, capital assets, and
industrial competitiveness. DOE prefers
interactive interviews, rather than
written responses to a questionnaire,
because DOE can clarify responses and
identify additional issues. Before the
interviews, DOE circulates a draft
document showing the estimates of the
financial parameters based on publiclyavailable information. DOE solicits
comments and suggestions on these
estimates during the interviews.
DOE asks interview participants to
identify any confidential information
that they have provided, either orally or
in writing. DOE considers all
information collected, as appropriate, in
its decision-making process. However,
DOE does not make confidential
information available in the public
record. DOE also asks participants to
identify all information that they wish
to have included in the public record,
but do not want to have associated with
their interview. DOE incorporates this
information into the public record, but
reports it without attribution.
DOE collates the completed interview
questionnaires and prepares a summary
of the major issues. For more detail on
the methodology used in the
manufacturer impact analysis, see
Chapter 12 of the TSD.
1. Sources of Information for the
Manufacturer Impact Analysis
Many of the analyses described above
provide input data for the MIA. Such
information includes manufacturing
costs and prices from the engineering
analysis, retail price forecasts, and
shipments forecasts. DOE will
supplement this information with
company financial data and other
information gathered during
manufacturer interviews. This interview
process plays a key role in the
manufacturer impact analysis because it
allows interested parties to privately
express their views on important issues.
To preserve confidentiality, DOE
aggregates these perspectives across
manufacturers, creating a combined
The industry cash flow analysis relies
primarily on the GRIM. DOE uses the
GRIM to analyze the financial impacts
of more stringent energy conservation
standards on the industry. The GRIM
analysis uses several factors to
determine annual cash flows from a new
standard: (1) Annual expected revenues;
(2) manufacturer costs (including COGS,
depreciation, research and
development, selling, and general and
administrative expenses); (3) taxes; and
(4) conversion capital expenditures.
DOE compares the GRIM results against
base-case projections that involve no
new standards. The financial impact of
new standards is the difference between
the two sets of discounted annual cash
flows. For more information on the
PO 00000
Frm 00037
Fmt 4701
Sfmt 4702
2. Industry Cash Flow Analysis
E:\FR\FM\16JNP3.SGM
16JNP3
34130
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
industry cash flow analysis, see Chapter
12 of the TSD.
3. Manufacturer Sub-Group Analysis
Industry-wide cost estimates are not
adequate to assess differential impacts
among sub-groups of manufacturers. For
example, small and niche
manufacturers, or manufacturers whose
cost structure differs significantly from
the industry average, could experience a
more negative impact. Ideally, DOE
would consider the impact on every
firm individually; however, it typically
uses the results of the industry
characterization to group manufacturers
exhibiting similar characteristics.
During the interviews, DOE will
discuss the potential sub-groups and
sub-group members it has identified for
the analysis. DOE will encourage
manufacturers to recommend subgroups or characteristics that are
appropriate for the sub-group analysis.
For more detail on the manufacturer
sub-group analysis, see Chapter 12 of
the TSD.
4. Competitive Impacts Assessment
DOE must also consider whether a
new standard is likely to reduce
industry competition, and the Attorney
General must determine the impacts, if
any, of any reduced competition. DOE
makes a determined effort to gather and
report firm-specific financial
information and impacts. The
competitive analysis includes an
assessment of the impacts on smaller
manufacturers. DOE bases this
assessment on manufacturing cost data
and on information collected from
interviews with manufacturers. The
manufacturer interviews focus on
gathering information to help assess
asymmetrical cost increases to some
manufacturers, increased proportions of
fixed costs that could increase business
risks, and potential barriers to market
entry (e.g., proprietary technologies).
jlentini on PROD1PC65 with PROPOSALS3
5. Cumulative Regulatory Burden
DOE recognizes and seeks to mitigate
the overlapping effects on
manufacturers of new or revised DOE
standards and other regulatory actions
affecting the same equipment. DOE will
analyze and consider the impact on
manufacturers of multiple, equipmentspecific regulatory actions.
In the Framework Document, DOE
asked what regulations or pending
regulations it should consider in the
analysis of cumulative regulatory
burden. DOE stated it will study the
potential impacts of these cumulative
burdens in greater detail during the MIA
conducted during the NOPR phase.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
During the Framework comment
period, several stakeholders commented
on cumulative regulatory burden on
beverage vending machine
manufacturers. PepsiCo stated that the
beverage vending machine rulemaking
should not establish standards that
interfere with other Federal
requirements, such as those related to
greenhouse gases and global warming.
(Public Meeting Transcript, No. 8 at p.
147) Dixie-Narco stated that other
regulatory burdens are Restriction of
Hazardous Substance rules, California
Energy Commission regulations, Natural
Resources Canada regulations, and new
State and municipality regulations.
(Public Meeting Transcript, No. 8 at p.
256) Royal Vendors stated that
coordination with the California Energy
Commission’s and Canadian Standards
Association’s regulations would reduce
the burden on the industry. (Public
Meeting Transcript, No. 8 at p. 273)
USA Technologies stated that the
current technology puts U.S.
manufacturers at a disadvantage in
relation to other nations as we look
toward 2012. In addition, USA
Technologies commented that DOE
should be aware that the phaseout of
refrigerants currently used in beverage
vending machines will require a
complete overhaul of current
parameters, which will make DOE’s
current work obsolete. (USA
Technologies, No. 9 at p. 1) EEI stated
that, regarding cumulative regulatory
burden, DOE should consider current,
new, and upcoming regulations in
Canada, Europe, and Mexico (along with
any U.S. State regulations) that may
affect the refrigerated vending machine
industry. (EEI, No. 12 at p. 7) DixieNarco stated that other burdens include
requirements set by specific customers
(e.g., Coca-Cola company and PepsiCo)
relating to performance, marketing, and
merchandising of the equipment; DixieNarco also suggested that DOE should
consider sanitary standards published
by NAMA and the National Sanitation
Foundation applicable to vending
equipment. (Dixie-Narco, No. 14 at p. 4)
In response, DOE identified several
regulations relevant to beverage vending
machines through its own research and
discussions with manufacturers,
including existing or new standards for
beverage vending machines, phaseout of
HCFCs and foam insulation blowing
agents, standards for other equipment
made by beverage vending machine
manufacturers, State energy
conservation standards, and
international energy conservation
standards. See Chapter 12 of the TSD for
more detail. DOE understands that
PO 00000
Frm 00038
Fmt 4701
Sfmt 4702
complying with such regulations
requires corporations to invest in both
human and capital resources. In
addition, the emphasis on cumulative
regulatory burden in the comments
submitted during the Framework
comment period further highlights the
importance of such regulations to
stakeholders. DOE will consider the
substantial impact of other regulatory
programs, both domestic and
international, on beverage vending
machine manufacturers. As mentioned
above, DOE will study the potential
impacts of these cumulative burdens in
greater detail in the MIA conducted
during the NOPR phase. DOE invites
additional comment and data from
stakeholders and manufacturers on
regulations applicable to beverage
vending machine manufacturers that
contribute to their regulatory burden.
6. Preliminary Results for the
Manufacturer Impact Analysis
DOE received views from
manufacturers through preliminary
interviews about what they perceive to
be the possible impact of new standards
on profitability. They stated that a new
energy conservation standard has the
potential to affect financial performance
in several ways. The capital investment
needed to upgrade or redesign
equipment and equipment platforms
before they have reached the end of
their useful life can require conversion
costs that otherwise would not be
expended, resulting in stranded
investments. In addition, more stringent
standards can result in higher per-unit
costs that may deter some customers
from buying higher-margin units with
more features, thereby decreasing
manufacturer profitability.
DOE estimates that a beverage
vending machine production line would
have a life cycle of approximately 5 to
10 years in the absence of standards.
During that period, manufacturers
would not make major equipment
changes that alter the underlying
platforms. Thus, a standard that took
effect and resulted in a major platform
redesign before the end of the platform’s
life would strand a portion of the earlier
capital investments.
DOE asked manufacturers what level
of conversion costs they anticipated if
efficiency standards were to take effect.
In general, manufacturers expected only
conversion costs associated with
redesigning insulation foaming fixtures.
Manufacturers stated that no capital
investments would be needed to go from
ENERGY STAR Tier 1 to Tier 2. One
manufacturer estimated the retooling
capital investments needed to comply
with efficiency levels beyond Tier 2 to
E:\FR\FM\16JNP3.SGM
16JNP3
jlentini on PROD1PC65 with PROPOSALS3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
be several million dollars. One
manufacturer indicated that it would
experience stranded assets if standards
were too stringent and production
facilities needed to be moved out of the
country.
The impact of new energy
conservation standards on employment
is another important consideration in
the rulemaking process. To assess how
domestic employment patterns might be
affected by new energy conservation
standards for beverage vending
machines, DOE posed several questions
to manufacturers on that topic.
In response, some beverage vending
machine manufacturers stated that they
have considered moving their
production out of the United States,
primarily because of concerns about
profitability and the opportunity for
lower labor costs if future standards are
too stringent. If manufacturers need to
make large capital investments to
produce redesigned platforms, they
have strong financial incentives to
invest in a location with lower labor
costs. Mexico is the most common
location for U.S. manufacturers to
establish new production capacity since
it offers low labor rates (relative to the
United States) and proximity to the U.S.
market.
DOE asked manufacturers to what
degree they expect industry
consolidation to occur in the absence of
standards. Manufacturers stated that
they expect no industry consolidation in
the future. Three companies now
account for a large majority of beverage
vending machine sales. Historically, the
beverage vending machine industry has
not seen extensive consolidation,
although there has been a lot of
consolidation in recent years of the
industry’s customers, such as bottling
companies.
Manufacturers also discussed how
standards would affect their ability to
compete. Some stated that new
standards would not disproportionately
advance or harm their competitive
positions. Others stated that if a
company had more available access to
capital, that company might meet the
standard at a lower cost or in a shorter
timeframe, and such company would
thus have a better competitive position
and possibly gain market share. For
more preliminary results of the
manufacturer impact analysis, such as
impacts on financial performance,
equipment utility and performance, and
cumulative regulatory burden, see
Chapter 12 of the TSD.
L. Utility Impact Analysis
For the NOPR, the utility impact
analysis will estimate the effects on the
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
utility industry of reduced energy
consumption due to improved
equipment efficiency resulting from any
energy conservation standard for
beverage vending machines. The
analysis compares modeling results for
the base case with results for each
candidate standard’s case. It consists of
forecasted differences between the base
case and standards case for electricity
generation, installed capacity, sales, and
prices.
To estimate the effects of potential
beverage vending machine standard
levels on the electric utility industry,
DOE intends to use a variant of the
EIA’s NEMS.48 NEMS, which is
available in the public domain, is a
large, multi-sectoral, partial equilibrium
model of the U.S. energy sector. EIA
uses NEMS to produce the AEO2007,
which is a widely recognized baseline
energy forecast for the U.S. DOE will
use a variant of NEMS known as NEMSBuilding Technologies (BT) to provide
key inputs to the utility impact analysis.
Again, NEMS–BT produces a widely
recognized reference case forecast for
the United States and is available in the
public domain.
The use of NEMS–BT for the utility
impact analysis offers several
advantages. As the official DOE energy
forecasting model, it relies on a set of
assumptions that are transparent and
have received wide exposure and
commentary. NEMS–BT allows an
estimate of the interactions between the
various energy supply and demand
sectors and the economy as a whole.
The utility impact analysis will
determine the changes for electric
utilities in installed capacity and
generation by fuel type produced by
each CSL, as well as changes in
electricity sales to the commercial
sector. At the Framework public
meeting, DOE asked whether there are
tools besides NEMS–BT that the
Department should consider using for
conducting its utility impact analysis.
EEI suggested that DOE consider the
industrial building demand module in
NEMS for this analysis, because
beverage vending machines are installed
in manufacturing and military/Federal
48 For more information on NEMS, please see the
U.S. Department of Energy, Energy Information
Administration (EIA) documentation. A useful
summary is National Energy Modeling System: An
Overview 2003, Report number: DOE/EIA–0581
(March 2003) (available at: https://tonto.eia.gov/
FTPROOT/forecasting/05812003.pdf). DOE/EIA
approves use of the name ‘‘NEMS’’ to describe only
an official version of the model without any
modification to code or data. Because the present
analysis entails some minor code modifications and
the model is run under various policy scenarios that
are variations on DOE/EIA assumptions, DOE refers
to it by the name ‘‘NEMS–BT’’ in this analysis.
PO 00000
Frm 00039
Fmt 4701
Sfmt 4702
34131
facilities that typically pay industrial
rates on their utility bills. (EEI, No. 12
at p. 7) DOE will investigate using this
module in addition to the commercial
building demand module during the
NOPR phase of this rulemaking.
DOE plans to conduct the utility
analysis as a policy deviation from the
AEO2007, applying the same basic set of
premises. For example, the operating
characteristics (e.g., energy conversion
efficiency, emissions rates) of future
electricity generating plants are the
same in the AEO2007 reference case, as
are the prospects for natural gas supply.
DOE also will explore deviations from
some of the reference case premises to
represent alternative future outcomes.
Two alternative scenarios use the highand low-economic-growth cases of
AEO2007. (The reference case
corresponds to medium growth.) The
high-economic-growth case projects
higher growth rates for population, labor
force, and labor productivity, resulting
in lower predicted inflation and interest
rates relative to the reference case and
higher overall aggregate economic
growth. The opposite is true for the lowgrowth case. Starting in 2012, the highgrowth case predicts growth in per
capita gross domestic product of 3.5
percent per year, compared with 3.0
percent per year in the reference case
and 2.5 percent per year in the lowgrowth case. While supply-side growth
determinants vary in these cases,
AEO2007 uses the same reference case
energy prices for all three economic
growth cases so that the impact of
differences in the three scenarios are
comparable. Different economic growth
scenarios will affect the rate of growth
of electricity demand in different ways.
The electric utility industry analysis
will consist of NEMS–BT forecasts for
generation, installed capacity, sales, and
prices. The model uses predicted
growth in demand for each end use to
create a projection of the total electric
system load growth for each of fifteen
electricity market module supply
regions, and then to predict the
necessary additions to capacity. For
electrical end uses, the NEMS–BT
accounts for the implementation of
energy conservation standards by
decrementing the appropriate reference
case load shape. DOE determines the
size of the decrement using data on the
per-unit energy savings developed in
the LCC and PBP analyses (Chapter 8 of
the TSD) and the forecast of shipments
developed for the NIA (see Chapter 9 of
the TSD).
The predicted reduction in capacity
additions is sensitive to the standard’s
peak load impacts. DOE will investigate
the need to adjust the hourly load
E:\FR\FM\16JNP3.SGM
16JNP3
34132
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
profiles that include this end use in
NEMS–BT. Since the AEO2007 version
of NEMS–BT forecasts only to 2030,
DOE must extrapolate the results to
2042. It is not feasible to extend the
forecast period of NEMS–BT for the
purpose of this analysis, nor does EIA
have an approved method for
extrapolation of many outputs beyond
2030. Therefore, DOE will use the
approach developed by EIA to forecast
fuel prices for the FEMP. FEMP uses
these prices to estimate LCCs of Federal
equipment procurements. For petroleum
products, EIA uses the average growth
rate for the world oil price from 2010 to
2025, in combination with refinery and
distribution markups from 2025, to
determine regional price forecasts.
Similarly, EIA derives natural gas prices
from an average growth rate figure in
combination with regional price
margins from 2025. Results of the
analysis will include changes in
commercial electricity sales, and
installed capacity and generation by fuel
type, for each CSL in five-year,
forecasted increments extrapolated to
2042. For more information on the
utility impact analysis, refer to Chapter
13 of the TSD.
M. Employment Impact Analysis
At the NOPR stage, DOE estimates the
impacts of standards on employment for
equipment manufacturers, relevant
service industries, energy suppliers, and
the economy in general. The following
discussion explains the methodology
DOE plans to use in conducting the
employment impact analysis for this
rulemaking. Both indirect and direct
employment impacts are analyzed.
Direct employment impacts would
result if standards led to a change in the
number of employees at manufacturing
plants and related supply and service
firms.
Indirect employment impacts are
impacts on the national economy other
than the manufacturing sector being
regulated. Indirect impacts may result
both from expenditures shifting among
goods (substitution effect) and changes
in income that lead to a change in
overall expenditure levels (income
effect). DOE defines indirect
employment impacts from standards as
net jobs eliminated or created in the
general economy as a result of increased
spending driven by the increased
equipment prices and reduced spending
on energy.
Using an input/output model of the
U.S. economy, this analysis seeks to
estimate the effects on different sectors
and the net impact on jobs. DOE will
estimate national employment impacts
for major sectors of the U.S. economy in
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
the NOPR, using public and
commercially-available data sources and
software. DOE will make all methods
and documentation pertaining to the
employment impact analysis available
for review in the TSD published in
conjunction with the NOPR.
DOE developed Impact of Sector
Energy Technologies (ImSET), a
spreadsheet model of the U.S. economy
that focuses on 188 sectors most
relevant to industrial, commercial, and
residential building energy use.49
ImSET is a special-purpose version of
the U.S. Benchmark National InputOutput (I–O) model, which was
designed to estimate the national
employment and income effects of
energy-saving technologies that are
considered by the DOE Office of Energy
Efficiency and Renewable Energy. The
current version of the model allows for
more complete and automated analysis
of the essential features of energyefficiency investments in buildings,
industry, transportation, and the electric
power sectors compared to previous
versions used in earlier rulemakings.
The ImSET software includes a
personal computer-based I–O model
with structural coefficients to
characterize economic flows among the
188 sectors. ImSET’s national economic
I–O structure is based on the 1997
Benchmark U.S. table (Lawson, et al.
2002),50 specially aggregated to 188
sectors. The time scale of the model is
50 years, with annual increments.
The model is a static I–O model,
which allows a great deal of flexibility
concerning the types of energyefficiency effects that it can
accommodate. For example, certain
economic effects of energy efficiency
improvements require an assessment of
inter-industry purchases, which is
handled in the model. Some energyefficiency investments will not only
reduce the costs of energy in the
economy but the costs of labor and other
goods and services as well, which is
accommodated through a recalculation
of the I–O structure in the model.
Output from the ImSET model can be
used to estimate changes in
employment, industry output, and wage
income in the overall U.S. economy
resulting from changes in expenditures
in the various sectors of the economy.
Although DOE intends to use ImSET
for its analysis of employment impacts,
49 Roop, J. M., M. J. Scott, and R. W. Schultz,
‘‘ImSET: Impact of Sector Energy Technologies,’’
PNNL-15273 (Pacific Northwest National
Laboratory, Richland, WA) (2005).
50 Lawson, Ann M., Kurt S. Bersani, Mahnaz
Fahim-Nader, and Jiemin Guo, ‘‘Benchmark InputOutput Accounts of the U.S. Economy, 1997,’’
Survey of Current Business (Dec. 2002), pp. 19–117.
PO 00000
Frm 00040
Fmt 4701
Sfmt 4702
it welcomes input on other tools and
factors it might consider. For more
information on the employment impacts
analysis, see Chapter 14 of the TSD.
N. Environmental Assessment
For the NOPR, DOE will assess the
impacts of energy conservation
standards for beverage vending machine
standard levels on certain
environmental indicators, using NEMS–
BT to provide key inputs to the analysis.
The environmental assessment produces
results in a manner similar to those
provided in AEO2007. DOE anticipates
that the primary environmental effects
will be reduced power plant emissions
resulting from reduced electricity
consumption.
The intent of the environmental
assessment is to provide estimates of
reduced power plant emissions and to
fulfill requirements to properly quantify
and consider the environmental effects
of all new Federal rules. The
environmental assessment that will be
produced by NEMS–BT considers
potential environmental impacts from
three pollutants (sulfur dioxide (SO2),
nitrogen oxides (NOX), and mercury
(Hg)) and from CO2 emissions. For each
of the trial standard levels, DOE will
calculate total undiscounted and
discounted power plant emissions using
NEMS-BT and will use further external
analysis as needed.
DOE will conduct each portion of the
environmental assessment performed
for this rulemaking as an incremental
policy impact (i.e., an energy
conservation standard for beverage
vending machines) of the AEO2007
forecast, applying the same basic set of
assumptions used in AEO2007. For
example, the emissions characteristics
of an electricity generating plant will be
exactly those used in AEO2007. Also,
forecasts conducted with NEMS–BT
consider the supply-side and demandside effects on the electric utility
industry. Thus, DOE’s analysis will
account for any factors affecting the type
of electricity generation and, in turn, the
type and amount of airborne emissions
the utility industry generates.
The NEMS–BT model tracks carbon
emissions with a specialized carbon
emissions estimation subroutine,
producing reasonably accurate results
due to the broad coverage of all sectors
and inclusion of interactive effects. Past
experience with carbon results from
NEMS–BT suggests that emissions
estimates are somewhat lower than
emissions based on simple average
factors. One reason for this divergence
is that NEMS–BT tends to predict that
conservation measures will slow
generating capacity growth in future
E:\FR\FM\16JNP3.SGM
16JNP3
jlentini on PROD1PC65 with PROPOSALS3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
years, and new generating capacity is
expected to be more efficient than
existing capacity. On the whole, NEMS–
BT provides carbon emissions results of
reasonable accuracy, at a level
consistent with other Federal published
results. In addition to providing
estimates of quantitative impacts of
beverage vending machine standards on
CO2 emissions, DOE will consider the
use of monetary values to represent the
potential value of such emissions
reductions. DOE invites comment on
how to estimate such monetary value of
such effects or on any widely accepted
values which might be used in DOE’s
analyses.
NEMS–BT also reports on SO2 and
NOX, which DOE has reported in past
analyses. The Clean Air Act
Amendments of 1990 51 set an SO2
emissions cap on all large power plants.
However, attainment of this target is
flexible among generators through the
use of emissions allowances and
tradable permits. Although NEMS–BT
includes a module for SO2 allowance
trading and delivers a forecast of SO2
allowance prices, accurate simulation of
SO2 trading implies that the effect of
energy conservation standards on
physical emissions will be zero because
emissions will always be at or near the
ceiling. However, there may be an SO2
economic benefit from energy
conservation in the form of a lower SO2
allowance price. Since the impact of any
one standard on the allowance price is
likely to be small and highly uncertain,
DOE does not plan to monetize any
potential SO2 benefit.
NEMS–BT also has an algorithm for
estimating NOX emissions from power
generation. The impact of these
emissions, however, will be affected by
the Clean Air Interstate Rule (CAIR)
issued by the U.S. Environmental
Protection Agency on March 10, 2005.52
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
51 The Clean Air Act Amendments of 1990 were
signed into law as Pub. L. 101–549 on November
15, 1990. The amendment can be viewed at https://
www.epa.gov/air/caa/.
52 See https://www.epa.gov/cleanairinterstaterule/.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
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,
NEMS–BT has an algorithm for
estimating these emissions from power
generation, and, as it has done in the
past, DOE is able to report an estimate
of the physical quantity of mercury
emissions reductions associated with an
energy conservation standard. DOE
assumed that these emissions would be
subject to EPA’s Clean Air Mercury
Rule 53 (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 conservation standards
would result in no physical effect on
these emissions, but may result in a
small and highly uncertain
environmental-related economic benefit
in the form of a lower price for
emissions allowance credits.
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,54 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. DOE invites public comment
on addressing mercury emissions in this
rulemaking.
With regard to particulates, these
emissions are a special case because
they arise not only from direct
emissions, but also from complex
atmospheric chemical reactions that
result from NOX and SO2 emissions.
DOE does not intend to analyze or
report on the particulate emissions from
power stations because of the highly
complex and uncertain relationship
between particulate emissions and
particulate concentrations that impact
air quality.
In sum, the methodology for the
environmental assessment is similar to
the methodology (i.e., based on NEMS)
used to estimate the environmental
impacts published in the AEO2007.
These results include power sector
emissions for SO2, NOX, mercury and
53 70
FR 28606 (May 18, 2005).
05–1097, 2008 WL 341338, at *1 (D.C. Cir.
Feb. 8, 2008).
54 No.
PO 00000
Frm 00041
Fmt 4701
Sfmt 4702
34133
CO2 in five-year forecasted increments
extrapolated to 2042. The outcome of
the NOPR analysis for each trial
standard level is reported as a deviation
from the AEO2007 reference (base) case.
For more detail on the environmental
assessment, see the environmental
assessment report of the TSD.
O. Regulatory Impact Analysis
DOE will prepare a draft regulatory
impact analysis in compliance with
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ signed on
September 30, 1993, which will be
subject to review by the Office of
Management and Budget’s Office of
Information and Regulatory Affairs
(OIRA). 58 FR 51735 (Oct. 4, 1993).
As part of the regulatory impact
analysis (and as discussed in Section
II.K of this ANOPR), DOE will identify
and seek to mitigate the overlapping
effects on manufacturers of new or
revised DOE standards and other
regulatory actions affecting the same
equipment. Through manufacturer
interviews and literature searches, DOE
will compile information on burdens
from existing and impending
regulations affecting the beverage
vending machines covered under this
rulemaking. DOE also seeks input from
stakeholders about regulations whose
impacts it should consider.
The regulatory impact analysis also
will address the potential for nonregulatory approaches to supplant or
augment energy conservation standards
to improve the efficiency of beverage
vending machines. The following list
includes non-regulatory means of
achieving energy savings that DOE may
consider:
• No new regulatory action
• Consumer tax credits
• Manufacturer tax credits
• Performance standards
• Rebates
• Voluntary energy efficiency targets
• Early replacement
• Bulk government purchases
In support of DOE’s NOPR, the TSD
will include a complete quantitative
analysis of each alternative to the
proposed conservation standard. The
methodology for this analysis is
discussed briefly below.
DOE will use the NES spreadsheet
model (discussed in Sections I.B.5 and
II.I of this ANOPR) to calculate the NES
and the NPV corresponding to each
alternative to the proposed standards.
See Chapter 10 of the TSD for details on
the NES spreadsheet model. To compare
each alternative quantitatively to the
proposed conservation standards, the
model will need to quantify the effect of
each alternative on the purchase and
E:\FR\FM\16JNP3.SGM
16JNP3
34134
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
use of energy-efficient commercial
equipment. Once each alternative is
properly quantified, DOE will make the
appropriate revisions to the inputs in
the NES spreadsheet model. The
following are key inputs that DOE may
revise in the NES spreadsheet model:
• Energy prices and escalation
factors;
• Implicit market discount rates for
trading off purchase price against
operating expense when choosing
equipment efficiency;
• Customer purchase price, operating
cost, and income elasticities;
• Customer price versus efficiency
relationships; and
• Equipment stock data (purchase of
new equipment or turnover rates for
inventories).
The following are the key measures of
the impact of each alternative:
• Commercial energy use (EJ = 1018
joule) is the cumulative energy use of
the equipment from the effective date of
the new standard (i.e., 2012) to 2042.
DOE will report electricity consumption
as primary energy.
• NES is the cumulative national
energy use from the base-case projection
less the alternative standards-case
projection.
• NPV is the value of future operating
cost savings from beverage vending
machines bought between the effective
date of the new standard and 2042. DOE
calculates the NPV as the difference
between the present value of equipment
and operating expenditures (including
energy) in the base case, and the present
value of expenditures in each
alternative policy case. DOE discounts
future operating and equipment
expenditures to 2007 using a sevenpercent real discount rate. DOE
calculates operating expenses (including
energy) for the life of the equipment.
For more information on the
regulatory impact analysis, see the
regulatory impact analysis report in the
TSD.
III. Candidate Energy Conservation
Standards Levels
In terms of process, DOE specifies
CSLs in the ANOPR, but it does not
propose a particular standard at this
stage of the rulemaking. DOE selected
up to nine energy consumption levels
for each class of beverage vending
machine for use in the LCC and NIA.
Based on the results of the ANOPR
analysis, DOE selects a subset from the
CSLs analyzed in the ANOPR for more
detailed analysis during the NOPR stage
of the rulemaking. The range of CSLs
selected includes the most energyefficient level or most energy-efficient
combination of design options, the
combination of design options or
efficiency level with the minimum LCC,
and a combination of design options or
efficiency level with a PBP of no more
than three years. DOE may also select
CSLs that incorporate noteworthy
technologies or fill in large gaps
between efficiency levels of other CSLs.
As noted above, DOE has included the
most energy-efficient level analyzed as a
CSL, and DOE has identified the level
with the maximum LCC savings for each
equipment class. The calculated
national average PBPs from the LCC
analysis suggested that many of the
energy efficiency levels analyzed
provided a national average payback of
less than three years when compared
with the baseline equipment. DOE chose
to designate the maximum energy
efficiency level that provided a payback
of less than three years as a CSL. These
three selection criteria provided two or
three CSL selections per equipment
class. Therefore, DOE selected two other
lower efficiency levels for each
equipment class to provide greater
variation in CSLs for future analysis.
The selection of these additional levels
reflects DOE review of the relative cost
effectiveness of the levels when
compared with the baseline equipment
and other efficiency levels.
DOE selected four CSLs for each
equipment class. Table III.1 shows the
selected CSLs based on the energy
consumption of the specific equipment
analyzed in the engineering analysis.
DOE seeks feedback on its selection of
these specific candidate standard levels
for the post-ANOPR analysis phase.
Section IV.E of this ANOPR discusses
this subject, identified as Issue 7 under
‘‘Issues on Which DOE Seeks
Comment.’’
DOE will refine its final selection of
CSLs for further analysis after receiving
input from stakeholders on the ANOPR
and after any revision of the ANOPR
analyses. The CSLs will then be recast
as Trial Standard Levels (TSLs). DOE
will analyze specific TSLs during the
post-ANOPR analysis and report the
results in the NOPR.
TABLE III.1.—CANDIDATE STANDARD LEVELS AND FACTORS CONSIDERED IN THEIR SELECTION FOR FUTURE ANALYSIS
Candidate standard level selection considerations
Equipment class
Maximum
efficiency
level
Maximum
efficiency
level with
positive LCC
savings
Efficiency
level with
minimum
LCC
Highest
efficiency
level with
PBP
<3 years
Class A ...................................................................
Class B ...................................................................
Level 8 ........
Level 8 ........
Level 7 ........
Level 7 ........
Level 5 ........
Level 4 ........
Level 6 ........
Level 4 ........
jlentini on PROD1PC65 with PROPOSALS3
Because the equipment classes cover
a variety of equipment sizes, DOE has
suggested defining the standard in terms
of upper limits on daily energy
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
consumption normalized by refrigerated
volume (‘‘V,’’ as measured by ANSI/
AHAM HRF–1–2004). Table III.2
presents the CSLs for the analyzed
PO 00000
Frm 00042
Fmt 4701
Sfmt 4702
Additional candidate standard level selected for
future analysis
Level 4 ........
Level 5 ........
Level 3.
Level 3.
equipment classes in terms of these
normalized metrics.
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
34135
TABLE III.2.—CANDIDATE STANDARD LEVELS FOR ANALYZED EQUIPMENT CLASSES EXPRESSED IN TERMS OF THE
NORMALIZED TEST METRICS
Candidate standard level in order of efficiency expressed in terms of the test metric
Equipment
class
Test metric
Class A .........
Daily Energy Consumption/
Refrigerated Volume
kWh/day/ft 3.
Daily Energy Consumption/
Refrigerated Volume
kWh/day/ft 3.
Class B .........
Baseline
CSL1
CSL2
CSL3
1.08 (Level 1) .....
0.90 (Level 4) .....
0.75 (Level 6) .....
0.70 (Level 7) .....
0.64 (Level 8).
2.93 (Level 1) .....
2.61 (Level 3) .....
2.47 (Level 4) .....
2.46 (Level 5) .....
2.39 (Level 6).
When an energy conservation
standard is defined for an equipment
class, DOE must consider how to
express the level in a manner suitable
for all equipment within that class. This
is of particular concern when the rating
is in terms of energy consumption and
energy consumption varies within a
class due to variations in equipment
size or capacity.
DOE plans to define energy
conservation standards for refrigerated
beverage vending machines in terms of:
Maximum energy consumption M (kWh/day)
=B×V+K
Where:
B is expressed in terms of kWh/day/ft3 of
measured volume,
V is the measured volume (ft3) calculated for
the equipment class, and
K is an offset factor expressed in kWh/day.
DOE seeks feedback on this approach
for characterizing energy conservation
standards for refrigerated beverage
vending machines. If this approach is
acceptable, DOE seeks comments on
how it could develop the appropriate
offset factor, K, for the two classes of
equipment. Section IV.E of this ANOPR
discusses this subject, identified as
Issue 8 under ‘‘Issues on Which DOE
Seeks Comment.’’
IV. Public Participation
jlentini on PROD1PC65 with PROPOSALS3
A. Attendance at Public Meeting
The time, date, and location of the
public meeting are set forth in the DATES
and ADDRESSES sections at the beginning
of this document. Anyone who wishes
to attend the public meeting must notify
Ms. Brenda Edwards at (202) 586–2945.
As explained in the ADDRESSES section,
foreign nationals visiting DOE
Headquarters are subject to advance
security screening procedures.
B. Procedure for Submitting Requests to
Speak
Any person who has an interest in
today’s notice, or who represents a
group or class of persons with an
interest in these issues, may request an
opportunity to make an oral
presentation at the public meeting.
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
Please hand deliver requests to speak to
the address shown under the heading
‘‘Hand Delivery/Courier’’ in the
ADDRESSES section of this ANOPR
between 9 a.m. and 4 p.m., Monday
through Friday, except Federal holidays.
Requests may also be sent by mail to the
address shown under the heading
‘‘Postal Mail’’ in the ADDRESSES section
of this ANOPR, or by 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
asks persons scheduled to make an oral
presentation at the public meeting to
submit a copy of their statements at
least two weeks before the public
meeting, either in person, by postal
mail, or by e-mail. Please include an
electronic copy of your statement on a
computer diskette or compact disk
when delivery is by postal mail or in
person. Electronic copies must be in
WordPerfect, Microsoft Word, Portable
Document Format (PDF), or text
(American Standard Code for
Information Interchange (ASCII)) file
format. At its discretion, DOE may
permit any person who cannot supply
an advance copy of his or her statement
to make an oral presentation, if that
person has made alternative
arrangements with the Building
Technologies Program. In such
situations, the request to give an oral
presentation should ask for alternative
arrangements.
C. Conduct of Public Meeting
DOE will designate a DOE official to
preside at the public meeting and may
also 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
and transcribe the proceedings. DOE
reserves the right to schedule the order
of presentations and to establish the
procedures governing the conduct of the
PO 00000
Frm 00043
Fmt 4701
Sfmt 4702
CSL4
public meeting. After the public
meeting, interested parties may submit
further comments about the
proceedings, and any other 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
discussion of a particular topic. 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 the public
meeting. 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 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, Resource Room
of the Building Technologies Program,
950 L’Enfant Plaza, Suite 600, SW,
Washington, DC, 20024, (202) 586–2945,
between 9:00 a.m. and 4:00 p.m.,
Monday through Friday, except Federal
holidays. Any person may purchase a
copy of the transcript from the
transcribing reporter.
E:\FR\FM\16JNP3.SGM
16JNP3
34136
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
D. Submission of Comments
DOE will accept comments, data, and
information regarding all aspects of this
ANOPR before or after the public
meeting, but no later than July 16, 2008.
Please submit comments, data, and
information by e-mail to: bever
agevending.rulemaking@ee.doe.gov.
Please submit electronic comments in
WordPerfect, Microsoft Word, PDF, or
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 EERE–2006–STD–0125
and/or RIN 1904–AB58, and whenever
possible carry the electronic signature of
the author. Absent an electronic
signature, comments submitted
electronically must be followed and
authenticated by a signed original paper
document. No telefacsimiles (faxes) will
be accepted.
Under 10 CFR Part 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 shall include all the
information believed to be confidential,
and the other copy of the document
shall have 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 that DOE considers 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 that 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 interested in receiving
comments on all aspects of this ANOPR.
DOE particularly invites comments or
data to improve DOE’s analysis,
including data or information that will
respond to the following questions or
concerns addressed in this ANOPR.
1. Equipment Classes
In accordance with EPCA section
325(p)(1)(A), DOE identified the
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
equipment classes covered under this
rulemaking. (42 U.S.C. 6295(p)(1)(A)) In
making that determination, DOE
decided to focus the present ANOPR
analyses on two equipment classes of
beverage vending machines based upon
their two predominant applications,
namely, Class A machines that are
installed indoors and Class B machines
that are installed both indoors and
outdoors. Pursuant to EPCA section
325(p)(1)(B), DOE requests comments on
the validity of this approach and invites
interested persons to submit written
presentations of data, views, and
arguments. (42 U.S.C. 6295(p)(1)(B))
(See Section II.A.2 of this ANOPR for
further details.)
2. Compressor and Lighting Operating
Hours
DOE’s energy use characterization
presumes that there are no controls that
limit display lighting or compressor
operation in a beverage vending
machine to certain hours of the day or
would be affected by occupancy
patterns in the building. It is known,
however, that such controllers exist and
can either be added on or enabled in
certain beverage vending machines.
DOE requests comments on the need to
incorporate such controls in its energy
analysis and how it might do so in the
NOPR analysis. (See Section II.E of this
ANOPR for further details.)
3. Refurbishment Cycles
DOE requests comments on
refurbishment cycles for beverage
vending machines that may be prevalent
in the field and may differ from
standardized practices or the two cycles
during the equipment lifetime assumed
by DOE. These refurbishment cycles
could affect actual energy consumption
savings as a result of increased energy
efficiency as compared to those savings
estimated in the energy use
characterization analysis and as
reported in the TSD. DOE requests
comments on: (1) The frequency of
refurbishment cycles; (2) how
refurbishing the vending machines
might affect energy use in the field; and
(3) whether and how DOE could
account for these changes in assessing
the overall impacts of the candidate
standards levels on beverage vending
machines. (See Section IV.E.3 of this
ANOPR for further details.)
4. Life-Cycle Cost Baseline Level
DOE did not receive data from the
industry or in the manufacturer
interviews concerning the average
energy efficiency of beverage vending
machines currently being shipped. An
analysis of the literature suggests that
PO 00000
Frm 00044
Fmt 4701
Sfmt 4702
little data on the energy characteristics
of beverage vending machines in the
general market are available. Therefore,
DOE used the Level 1 established in the
engineering analysis as the baseline
efficiency for the LCC analysis.
Selection of the baseline efficiency
level impacts the LCC and PBP analyses.
It affects PBP, since payback is
calculated from the baseline efficiency
level, and affects the maximum
efficiency level showing LCC savings,
and the magnitude of LCC savings. It
can also affect the number of users who
experience LCC savings at any level.
The selection of the baseline level does
not generally affect the efficiency level
with maximum LCC savings. DOE
requests feedback on whether the Level
1 baseline DOE selected is valid for the
LCC analysis, and if not, what changes
DOE should make to provide a more
realistic baseline. Since higher
efficiency equipment is sold in the
market, DOE also seeks input on
whether it should use a distribution of
efficiencies for the LCC analysis
baseline, and if so, what data could be
used to populate this distribution. If
more detailed data to develop a
distribution of efficiencies in the
baseline cannot be provided, DOE seeks
input on how a sensitivity analysis to
alternative baselines could best be used
to inform the LCC and NES analyses
supporting the rulemaking. (See Section
II.G.5 of this ANOPR for further details.)
5. Base-Case and Standards-Case
Forecasts
Because key inputs to the calculation
of the NES and NPV depend on the
estimated efficiencies under the base
case (without standards) and the
standards case (with standards),
forecasted efficiencies are of great
importance to the analysis. Information
available to DOE suggests that
forecasted market shares would remain
frozen throughout the analysis period
(i.e., 2012–2042). For its determination
of standards-case forecasted efficiencies,
DOE used a roll-up scenario to establish
market shares by efficiency level for the
year that standards become effective
(i.e., 2012). Available information
suggests that equipment shipments with
efficiencies in the base case that did not
meet the standard level under
consideration would roll up to meet the
new standard level. Available
information also suggests that no
equipment efficiencies in the base case
that were above the standard level
under consideration would be affected.
DOE requests feedback on its
development of standards-case
efficiency forecasts from the base-case
efficiency forecast, and on how it
E:\FR\FM\16JNP3.SGM
16JNP3
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
determined that standards would affect
efficiency distributions in the year that
standards are to take effect. (See Section
II.I.2 of this ANOPR for further details.)
6. Differential Impact of New Standards
on Future Shipments by Equipment
Classes
The shipment model used in the NES
and NIA presumes that the relative
market share of the different classes of
beverage vending machines remains
constant over the time period analyzed.
While DOE is aware that market
preferences for certain types of
equipment may change in the future,
DOE has no data with which to predict
or characterize those changes. DOE is
particularly concerned whether higher
standards for one class of beverage
vending machines are likely to generate
significant market shifts to other
equipment that may have higher energy
consumption (or lower efficiency). By
developing standards for both classes of
beverage vending machines within the
scope of this rulemaking using the same
economic criteria, DOE hopes to
mitigate this concern. However, DOE
requests stakeholder input on the
potential for standards-driven market
shifts between equipment classes that
could reduce national energy savings,
and on how the standards-setting
process can reduce or eliminate these
shifts. (See Section II.I.2 of this ANOPR
for further details.)
jlentini on PROD1PC65 with PROPOSALS3
7. Selection of Candidate Standard
Levels for Notice of Proposed
Rulemaking Analysis
DOE is required to examine specific
criteria for the selection of CSLs. Some
of these criteria are economically based
and the resulting CSLs selected may be
affected by updates to the ANOPR
analysis after input from stakeholders.
DOE has discretion over the selection of
additional standard levels it chooses to
analyze. DOE seeks input on the
candidate standard levels selected for
future analysis shown in Table III.1 (See
Section III of this ANOPR for further
details.)
8. Approach to Characterizing Energy
Conservation Standards
When an efficiency or energy
conservation standard is defined for a
class of equipment, DOE must consider
how to express the level in a manner
suitable for all equipment within that
class. DOE seeks input on its approach
for characterizing energy conservation
standards for beverage vending
machines as discussed in Section III. If
the approach is acceptable, DOE seeks
comments on how it could develop
appropriate offset factors (K) for the two
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
classes of equipment. (See Section III of
this ANOPR for further details.)
V. Regulatory Review and Procedural
Requirements
DOE submitted this ANOPR for
review to the Office of Management and
Budget (OMB), under Executive Order
12866, ‘‘Regulatory Planning and
Review,’’ 58 FR 51735 (October 4, 1993).
If DOE later proposes energy
conservation standards for certain
beverage vending machines, and if the
proposed rule constitutes a significant
regulatory action, DOE would prepare
and submit to OMB for review the
assessment of costs and benefits
required under section 6(a)(3) of the
Executive Order. The Executive Order
requires that each agency identify in
writing the market failure or other
specific 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 presumes that a perfectly
functioning market would result in
efficiency levels that maximize benefits
to all affected persons. Consequently,
without a market failure or other
specific problem, a regulation would not
be expected to result in net benefits to
customers and the Nation. However,
DOE also notes that whether it
establishes standards for this equipment
is determined by the statutory criteria
expressed in EPCA. Even in the absence
of a market failure or other specific
problem, DOE nevertheless may be
required to establish standards under
existing law.
DOE’s preliminary analysis suggests
that beverage vending machines are
predominantly owned either by site
owners (i.e., the owner of the
establishment where the vending
machine is installed), or by bottlers or
vending machine operators (i.e., the
operator that installs, stocks, and
services the equipment and retains a
percentage of the coin-box-revenue).
DOE believes that these owners and
operators lack corporate direction in
terms of energy policy. The transaction
costs for these 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 beverage
vending machine market available to
site owners. Unlike residential heating
and air conditioning equipment,
beverage vending machines are not
included in energy labeling programs
PO 00000
Frm 00045
Fmt 4701
Sfmt 4702
34137
such as the Federal Trade Commission’s
energy labeling program. Furthermore,
the energy use of beverage vending
machines is dependent on how often the
machines are used and, as such, the
relevant information is not readily
available for the owners or operators to
make a decision on whether improving
the energy efficiency of beverage
vending machines is cost-effective. To
better understand this market, DOE
seeks data on the efficiency levels of
existing beverage vending machines in
use by owner (i.e., site owner or
machine operator), electricity price,
equipment class (Class A or Class B
machines) and installation type (i.e.,
indoors or outdoors).
DOE recognizes that beverage vending
machines 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, beverage vending machines
are more likely purchased directly from
individual manufacturers through
equipment catalogs or specification
sheets. NAMA, unlike other industry
trade associations, does not publish a
directory of covered equipment. DOE
seeks comment on the availability of
energy efficiency information and the
extent to which the information leads to
informed choices, specifically given
how such equipment is purchased.
To the extent there is potentially a
substantial information problem, one
could expect the energy efficiency for
beverage vending machines 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 the new site owner and
equipment operator 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. DOE requests data on,
and suggestions for the existence and
extent of potential market failures to
complete an assessment of the
significance of these failures and, thus,
the net benefits of regulation.
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). In the case of
beverage vending machines, in most
cases, the party responsible for the
equipment purchase may not be the one
who pays the cost to operate it. For
example, in the case where the bottler
E:\FR\FM\16JNP3.SGM
16JNP3
34138
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 / Proposed Rules
jlentini on PROD1PC65 with PROPOSALS3
or beverage vending machine operator
owns the equipment and the site owner
pays the utilities, the vending machine
operator may make the purchasing
decision about the beverage vending
machine without input from the site
owner and may not offer options to the
site owner to upgrade them.
In addition, this rulemaking is likely
to yield certain ‘‘external’’ benefits
resulting from improved energy
efficiency of beverage vending machines
that are not captured by the users of
such equipment. These include both
environmental and energy securityrelated externalities that are not
reflected in energy prices, such as
reduced emissions of greenhouse gases
and reduced use of natural gas and oil
for electricity generation. DOE invites
VerDate Aug<31>2005
17:20 Jun 13, 2008
Jkt 214001
comments on the weight that should be
given to these factors in DOE’s
determination of the maximum energy
efficiency level at which the total
benefits are likely to exceed the total
costs resulting from a DOE standard.
In addition, various other analyses
and procedures may apply to such
future rulemaking action, including
those required by the National
Environmental Policy Act (Pub. L. 91–
190, 42 U.S.C. 4321 et seq.); the
Unfunded Mandates Reform Act of 1995
(Pub. L. 104–4); the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.);
the Regulatory Flexibility Act (5 U.S.C.
601 et seq.); and certain Executive
Orders.
The draft of today’s action and any
other documents submitted to OMB for
PO 00000
Frm 00046
Fmt 4701
Sfmt 4702
review are part of the rulemaking record
and are available for public review at
the U.S. Department of Energy, Resource
Room of the Building Technologies
Program, 950 L’Enfant Plaza, Suite 600,
SW., Washington, DC 20024, (202) 586–
2945, between 9:00 a.m. and 4:00 p.m.,
Monday through Friday, except Federal
holidays.
VI. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of today’s ANOPR.
Issued in Washington, DC, on June 9, 2008.
Alexander A. Karsner,
Assistant Secretary, Energy Efficiency and
Renewable Energy.
[FR Doc. E8–13345 Filed 6–13–08; 8:45 am]
BILLING CODE 6450–01–P
E:\FR\FM\16JNP3.SGM
16JNP3
]]>Agencies
[Federal Register Volume 73, Number 116 (Monday, June 16, 2008)]
[Proposed Rules]
[Pages 34094-34138]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-13345]
[[Page 34093]]
-----------------------------------------------------------------------
Part III
Department of Energy
-----------------------------------------------------------------------
Office of Energy Efficiency and Renewable Energy
-----------------------------------------------------------------------
10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines; Proposed Rule
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 /
Proposed Rules
[[Page 34094]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 431
[Docket No. EERE-2006-STD-0125]
RIN 1904-AB58
Energy Conservation Program: Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Advance notice of proposed rulemaking and notice of public
meeting.
-----------------------------------------------------------------------
SUMMARY: The Energy Policy and Conservation Act (EPCA) directs the
Department of Energy (DOE) to establish energy conservation standards
for various consumer products and commercial and industrial equipment,
including refrigerated bottled or canned beverage vending machines
(beverage vending machines), for which DOE determines that energy
conservation standards would be technologically feasible and
economically justified, and would result in significant energy savings.
DOE is publishing this Advance Notice of Proposed Rulemaking (ANOPR)
to: (1) Announce that it is considering establishment of energy
conservation standards for beverage vending machines; and (2) announce
a public meeting to receive comments on a variety of related issues.
DATES: DOE will hold a public meeting on Thursday, June 26, 2008, from
9 a.m. to 5 p.m. in Washington, DC. DOE must receive requests to speak
at the public meeting no later than 4 p.m., Thursday, June 19, 2008.
DOE must receive a signed original and an electronic copy of statements
to be given at the public meeting no later than 4 p.m., Thursday, June
19, 2008.
DOE will accept comments, data, and information regarding this
ANOPR before or after the public meeting, but no later than July 16,
2008. See Section IV, ``Public Participation,'' of this ANOPR 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 20585. (Please note that foreign nationals visiting DOE
Headquarters are subject to advance security screening procedures. 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.)
Any comments submitted must identify the ANOPR for Beverage Vending
Machines, and provide the docket number EERE-2006-STD-0125 and/or
Regulatory Information Number (RIN) 1904-AB58. Comments may be
submitted using any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: beveragevending.rulemaking@ee.doe.gov. Include
docket number EERE-2006-STD-0125 and/or RIN number 1904-AB58 in the
subject line of the 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. Please submit one
signed paper original.
Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department
of Energy, Building Technologies Program, 950 L'Enfant Plaza, SW.,
Suite 600, Washington, DC 20024. Telephone: (202) 586-2945. Please
submit one signed paper original.
For detailed instructions on submitting comments and additional
information on the rulemaking process, see Section IV, ``Public
Participation,'' of this document.
Docket: For access to the docket to read background documents or
comments received, go to the U.S. Department of Energy, Resource Room
of the Building Technologies Program, 950 L'Enfant Plaza, SW., Suite
600, 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: Mr. Charles Llenza, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington,
DC 20585-0121. Telephone: (202) 586-2192. E-mail:
Charles.Llenza@ee.doe.gov.
Mr. Eric Stas or Ms. Francine Pinto, U.S. Department of Energy,
Office of the General Counsel, GC-72, 1000 Independence Avenue, SW.,
Washington, DC 20585-0121. Telephone: (202) 586-9507. E-mail:
Eric.Stas@hq.doe.gov or Francine.Pinto@hq.doe.gov.
For information on how to submit or review public comments and on
how to participate in the public meeting, contact Ms. Brenda Edwards,
U.S. Department of Energy, Office of Energy Efficiency and Renewable
Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue,
SW., Washington, DC 20585-0121. Telephone: (202) 586-2945. E-mail:
Brenda.Edwards@ee.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Purpose of the Advance Notice of Proposed Rulemaking
B. Overview of the Analyses Performed
1. Engineering Analysis
2. Markups To Determine Equipment Price
3. Energy Use Characterization
4. Life-Cycle Cost and Payback Period Analyses
5. National Impact Analysis
C. Authority
D. Background
1. History of Standards Rulemaking for Beverage Vending Machines
2. Rulemaking Process
3. Miscellaneous Rulemaking Issues
a. Consensus Agreement
b. Type of Standard
c. Split Incentive Issue
4. Test Procedure
5. Rating Conditions
II. Energy Conservation Standards Analyses for Beverage Vending
Machines
A. Market and Technology Assessment
1. Definition of ``Beverage Vending Machine''
2. Equipment Classes
3. Selection of Baseline Equipment--Use of the ENERGY STAR
Criteria
4. Normalization Metric
5. Scope and Coverage of Equipment
a. Combination Machines
b. Refurbished Equipment
6. Market Assessment
7. Technology Assessment
B. Screening Analysis
1. Technology Options Screened Out
2. Technology Options Considered Further in Analysis
C. Engineering Analysis
1. Approach
2. Equipment Classes Analyzed
3. Analytical Models
a. Cost Model
b. Energy Consumption Model
4. Baseline Models
5. Alternative Refrigerants
6. Cost-Efficiency Results
D. Markups To Determine Equipment Price
E. Energy Use Characterization
1. Selection of Efficiency Levels for Further Analysis
2. Annual Energy Consumption Results
F. Rebuttable Presumption Payback Periods
G. Life-Cycle Cost and Payback Period Analyses
1. Approach
2. Life-Cycle Cost Analysis Inputs
a. Baseline Manufacturer Selling Price
b. Increase in Selling Price
c. Markups
[[Page 34095]]
d. Installation Costs
e. Energy Consumption
f. Electricity Prices
g. Electricity Price Trends
h. Repair Costs
i. Maintenance Costs
j. Lifetime
k. Discount Rate
l. Rebound Effect
m. Effective Date
3. Split Incentive Issue
4. Payback Period
5. Life-Cycle Cost and Payback Period Results
H. Shipments Analysis
I. National Impact Analysis
1. Approach
2. Base-Case and Standards-Case Forecasted Efficiencies
3. National Impact Analysis Inputs
4. National Impact Analysis Results
J. Life-Cycle Cost Sub-Group Analysis
K. Manufacturer Impact Analysis
1. Sources of Information for the Manufacturer Impact Analysis
2. Industry Cash Flow Analysis
3. Manufacturer Sub-Group Analysis
4. Competitive Impacts Assessment
5. Cumulative Regulatory Burden
6. Preliminary Results for the Manufacturer Impact Analysis
L. Utility Impact Analysis
M. Employment Impact Analysis
N. Environmental Assessment
O. Regulatory Impact Analysis
III. Candidate Energy Conservation Standards Levels
IV. 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
1. Equipment Classes
2. Compressor and Lighting Operating Hours
3. Refurbishment Cycles
4. Life-Cycle Cost Baseline Level
5. Base-Case and Standards-Case Forecasts
6. Differential Impact of New Standards on Future Shipments by
Equipment Classes
7. Selection of Candidate Standard Levels for Notice of Proposed
Rulemaking Analysis
8. Approach to Characterizing Energy Conservation Standards
V. Regulatory Review and Procedural Requirements
VI. Approval of the Office of the Secretary
I. Introduction
A. Purpose of the Advance Notice of Proposed Rulemaking
Through this Advance Notice of Proposed Rulemaking, the U.S.
Department of Energy is initiating rulemaking to consider establishing
energy conservation standards for beverage vending machines. The
purpose of this ANOPR is to provide interested persons with an
opportunity to comment on:
1. The equipment classes that DOE plans to analyze in this
rulemaking;
2. The analytical framework, methodology, inputs, models, and tools
(e.g., life-cycle cost (LCC) and national energy savings (NES)
spreadsheets) that DOE has been using to perform analyses of the
impacts of energy conservation standards for refrigerated bottled or
canned beverage vending machines (collectively referred to in this
ANOPR as ``beverage vending machines'');
3. The analyses conducted for the ANOPR, including the preliminary
results of the engineering analysis, the markups analysis to determine
equipment price, the energy use characterization, the LCC and payback
period (PBP) analyses, the NES and national impact analyses, and
preliminary manufacturer impact analysis. These analyses are summarized
in the ANOPR Technical Support Document (TSD), Energy Efficiency
Standards for Commercial and Industrial Equipment: Refrigerated
Beverage Vending Machines \1\, published in tandem with this ANOPR; and
---------------------------------------------------------------------------
\1\ To view the technical support document for this rulemaking,
visit DOE's Web site at: https://www.eere.energy.gov/buildings/
appliance_standards/commercial/beverage_machines.html.
---------------------------------------------------------------------------
4. The candidate standard levels (CSLs) that DOE has developed for
the ANOPR from these analyses.
Interested persons are welcome to comment on any relevant issue
related to this ANOPR. However, throughout this Federal Register
notice, DOE identifies areas and issues on which it specifically
invites public comment. These critical issues are summarized in Section
IV.E of this notice.
B. Overview of the Analyses Performed
As noted above, EPCA, as amended, authorizes DOE to consider
establishing or amending energy conservation standards for various
consumer products and commercial and industrial equipment, including
the beverage vending machines that are the subject of this ANOPR. (42
U.S.C. 6291 et seq.) DOE conducted in-depth technical analyses for this
ANOPR in the following areas: (1) Engineering; (2) markups to determine
equipment price; (3) energy use characterization; (4) LCC and PBP; and
(5) NES and net present value (NPV). The ANOPR discusses the
methodologies, assumptions, and preliminary results for each analysis.
For each type of analysis, Table I.1 identifies the sections in
this document that contain the results of the analyses, and summarizes
their methodologies, key inputs, and assumptions. In addition, DOE
conducted several other analyses that either support the five analyses
discussed above or are preliminary analyses that will be expanded
during the notice of proposed rulemaking (NOPR) stage of this
rulemaking. These analyses include the market and technology
assessment, a screening analysis which contributes to the engineering
analysis, and the shipments analysis which contributes to the national
impacts analysis. In addition to these analyses, DOE has begun
preliminary work on the life-cycle cost subgroup analysis, manufacturer
impact analysis, utility impact analysis, employment impact analysis,
environmental impact analysis, and the regulatory impact analysis for
the ANOPR. These analyses will be expanded upon during the NOPR stage
of this rulemaking.
DOE consulted with stakeholders as part of its process in
developing all of these analyses for the ANOPR and invites further
public input on these topics which it will incorporate, as appropriate,
into any revised analyses. While obtaining such input is the primary
purpose at this ANOPR stage of the rulemaking, this notice also
contains a synopsis of the preliminary analytical results. (The TSD
contains a complete set of results.) The purpose of publishing these
preliminary results in this notice is to: (1) Facilitate public comment
on DOE's analytical methodology; (2) illustrate the level of detail
interested persons (stakeholders \2\) will find in the TSD; and (3)
invite stakeholders to comment on the structure and the presentation of
those results. The preliminary analytical results presented in the
ANOPR are subject to revision following review and input from
stakeholders.
---------------------------------------------------------------------------
\2\ The terms ``stakeholders'' and ``interested persons'' are
used interchangeably throughout this ANOPR to refer to any member of
the public seeking to provide input on this rulemaking.
[[Page 34096]]
Table I.1.--In-Depth Technical Analyses Conducted for the ANOPR
--------------------------------------------------------------------------------------------------------------------------------------------------------
ANOPR section for TSD section for
Analysis area Methodology Key inputs Key assumptions results results
--------------------------------------------------------------------------------------------------------------------------------------------------------
Engineering........................ Design option analysis Component cost data Component performance Section II.C.6....... Chapter 5, section
and performance improvements are 5.10, and Appendix
values. estimated using ANSI/ B.
ASHRAE Standard 32.1-
2004.
Markups to Determine Equipment Assessment of company Distribution channels, Markups for baseline Section II.D......... Chapter 6, section
Price. financial reports to market shares across and more-efficient 6.7.
develop markups that the different equipment are
transform channels, State sales different.
manufacturer prices taxes, and shipments
into customer prices. to different States.
Energy Use Characterization........ Energy use estimates Annual energy Vending machines Section II.E......... Chapter 7, section
from the energy consumption based on certified for indoor/ 7.4.4, and Appendix
performance model hourly weather data outdoor use are D.
based on the for 237 U.S. assumed to be split
engineering analysis locations. 25% outdoors and 75%
spreadsheet. indoors.
LCC and Payback Period............. Analysis of a Manufacturer selling Baseline efficiency Section II.G.5....... Chapter 8, section
representative sample prices, markups is Level 1. Average 8.4, and Appendix G.
of commercial (including sales electricity prices
customers by business taxes), installation are listed by
type and location. price, energy customer type and
consumption, State. The Annual
electricity prices Energy Outlook 2007
and future trends, (AEO2007) 3 is used
maintenance costs, as the reference
repair costs, case for future
equipment lifetime, trends. Equipment
and discount rate. lifetime is 14
years. Discount rate
is estimated using
the weighted average
cost of capital by
customer type.
Shipments.......................... Projection of total Wholesaler markups Market shares by Section II.H......... Chapter 9, section
sales by business from company balance- equipment class are 9.4.
type, State and by sheet data, current constant. Market
equipment class. shipments data by saturation by
equipment class, and business type is
average equipment constant. Shipments
lifetime. do not change in
response to
standards.
[[Page 34097]]
National Impact.................... Forecasts of equipment Shipments; effective Annual shipments are Section II.I.4....... Chapter 10, section
costs, annual energy date of standard; from the shipments 10.4, and Appendix
consumption, and base-case model. The annual I.
operating costs to efficiencies; weighted-average
2042. shipment-weighted energy efficiency,
market shares; annual installed cost, and
energy consumption, annual-weighted
total installed cost, average repair costs
and repair and are a function of
maintenance costs the energy
(all on a per-unit efficiency level.
basis); escalation of Annual weighted-
electricity prices; average maintenance
electricity site-to- costs are constant
source conversion; with the energy
discount rate; and consumption level.
present year. AEO2007 is used for
electricity price
escalation, and the
National Energy
Modeling System
(NEMS) is used for
site-to-source
conversion. Discount
rates are 3% and 7%
real. Future costs
are discounted to
2007.
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 DOE will conduct the NOPR analysis using the latest available version of the AEO. Updated analytical spreadsheets using AEO2008 will be made available
on DOE's Web site by late Spring/early Summer 2008: https://www.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.html.
1. Engineering Analysis
DOE uses the engineering analysis, along with the equipment price
determination, to establish the relationship between the costs (i.e.,
end-user/customer prices) and efficiencies of equipment which DOE
evaluates for standards, including beverage vending machines. This
relationship serves as the basis for cost and benefit calculations for
individual commercial customers, manufacturers, and the Nation. The
engineering analysis identifies representative baseline equipment,
which is the starting point for analyzing technologies expected to
provide energy efficiency improvements. ``Baseline equipment'' here
refers to model(s) having features and technologies typically found in
equipment currently offered for sale. The baseline model in each
equipment class represents the characteristics of equipment in that
class; for equipment which is already subject to an energy efficiency
standard, the baseline unit is typically one which just meets the
current regulatory requirement. After identifying baseline models, DOE
estimates manufacturer selling prices (MSPs) through an analysis of
manufacturer costs and manufacturer markups. Manufacturer markups are
the multipliers used to determine MSPs based on manufacturing cost.
The engineering analysis uses cost-efficiency curves based on a
design-options approach \4\ derived from DOE analysis. In the
engineering analysis, DOE also discusses the equipment classes
analyzed, sensitivity to material prices, and the use of alternative
refrigerants. For additional detail on the engineering analysis, see
Section II.C.1.
---------------------------------------------------------------------------
\4\ A design-options approach uses individual or combinations of
design options to identify increases in efficiency. Under this
approach, estimates are based on manufacturer or component supplier
data, or through the use of engineering computer simulation models.
Individual design options, or combinations of design options, are
added to the baseline model in ascending order of cost-
effectiveness.
---------------------------------------------------------------------------
2. Markups to Determine Equipment Price
DOE determines customer prices for beverage vending machines from
MSP \5\ and equipment price markups using industry balance sheet and
U.S. Census Bureau data. To determine price markups, DOE identifies
distribution channels for equipment sales and determines the existence
and amount of markups within each distribution channel. For each
distribution channel, DOE distinguishes between ``baseline markups''
applied to the MSP for baseline equipment and ``incremental markups''
applied to the incremental increase in MSP for more-efficient
equipment. Overall baseline and overall incremental markups are
calculated separately based on the product of all baseline and
incremental markups at each step in a distribution channel. Together,
the overall baseline markup applied to the baseline equipment MSP and
the incremental markups applied to the incremental increase in MSP for
more-efficient equipment, including sales tax, determine the final
customer price. For additional detail on the markups used to determine
equipment price, see Section II.D.
---------------------------------------------------------------------------
\5\ Manufacturer selling prices are derived from the
manufacturer production costs by applying the manufacturer markup.
The MSP is the selling price of the equipment directly from the
manufacturing facility. If this equipment is then routed through a
wholesaler and/or a distributor, additional markups are applied
before reaching the customer.
---------------------------------------------------------------------------
3. Energy Use Characterization
The energy use characterization provides estimates of annual energy
consumption for beverage vending machines. DOE uses these estimates in
the subsequent LCC and PBP analyses and the national impact analysis
(NIA). DOE developed daily energy consumption estimates for the
different equipment classes analyzed in the
[[Page 34098]]
engineering analysis.\6\ DOE then validated these estimates with
simulation modeling of energy consumption on an annual basis for all
the equipment classes and efficiency levels. The simulation modeling
took into account the percentage of vending machines that would be
placed indoors and outdoors and therefore, exposed to varying ambient
temperatures. For additional detail on the energy use characterization,
see Section II.E.
---------------------------------------------------------------------------
\6\ The daily energy consumption estimates were calculated in
the engineering analysis based on procedures and conditions
specified in ANSI/ASHRAE Standard 32.1-2004, Methods of Testing for
Bottled, Canned, and Other Sealed Beverages.
---------------------------------------------------------------------------
4. Life-Cycle Cost and Payback Period Analyses
The LCC and PBP analyses determine the economic impact of potential
standards on individual commercial customers. The LCC is the total
customer expense for a piece of equipment over the life of the
equipment (i.e., purchase price plus maintenance and operating costs).
The LCC analysis compares the life-cycle costs of equipment designed to
meet new or amended energy conservation standards with the life-cycle
cost of the equipment likely to be installed in the absence of such
standards. DOE determines these costs by considering: (1) Total
installed cost to the purchaser (including MSP, sales taxes,
distribution channel markups, and installation cost); (2) the operating
expenses of the equipment (energy cost and maintenance and repair
cost); (3) equipment lifetime; and (4) a discount rate that reflects
the real cost of capital and puts the LCC in present value terms. For
additional detail on the LCC analysis, see Section II.G.1.
The PBP represents the number of years needed to recover the
increase in purchase price (including installation cost) of more-
efficient equipment through savings in the operating cost. The PBP is
the increase in total installed cost due to increased efficiency
divided by the (undiscounted) decrease in annual operating cost from
increased efficiency. For additional detail on the PBP analysis, see
Section II.G.1.
5. National Impact Analysis
The NIA estimates the NES, as well as the NPV, of total national
customer costs and savings expected to result from new standards at
specific efficiency levels. Stated another way, DOE calculated the NES
and NPV for each standard level for beverage vending machines as the
difference between a base-case forecast (i.e., without new standards)
and the standards-case forecast (i.e., with new standards). For each
year of the analysis, the beverage vending machine stock is composed of
units of different types shipped in previous years (or vintages) which
remain available for sale at present. Each vintage has a characteristic
distribution of efficiency levels. DOE first determined the average
energy consumption of each vintage in the stock accounting for all
efficiency levels in that vintage. The national annual energy
consumption is then the product of the annual average energy
consumption per beverage vending machine at a given vintage and the
number of beverage vending machines of that vintage in the stock for
the particular year. This approach accounts for differences in unit
energy consumption from year to year. Annual energy savings are
calculated for each standard level by subtracting national energy
consumption for that standard level from that calculated for the
baseline. Cumulative energy savings are the sum of the annual NES
determined from 2012 to 2042.
In a similar fashion, DOE tracks the first costs for all equipment
installed at each efficiency level for each vintage. It also tracks the
annual operating cost (sum of the energy, maintenance, and repair
costs) by vintage for all equipment remaining in the stock for each
year of the analysis. DOE then calculates the net economic savings each
year as the difference between total operating cost savings and
increases in the total installed costs. The NPV is the annual net cost
savings calculated for each year, discounted to the year 2012, and
expressed in 2007$. Cumulative NPV savings reported are the sum of the
annual NPV savings over the analysis period (2012-2042).\7\ Critical
inputs to the NIA include shipment projections, rates at which users
retire equipment (based on estimated equipment lifetimes), and
estimates of changes in shipments and retirement rates in response to
changes in equipment costs due to new standards. For additional detail
on the NIA, see Section II.I.1.
---------------------------------------------------------------------------
\7\ DOE uses 31 years as the time period of analysis for its NES
calculations in many of its rulemakings, in order to enable
interested persons to understand the relative magnitude of energy
savings potentials of the various equipment at the standard levels
being considered.
---------------------------------------------------------------------------
C. Authority
Title III of EPCA sets forth a variety of provisions concerning
energy efficiency. Part A \8\ of Title III provides for the ``Energy
Conservation Program for Consumer Products Other Than Automobiles.''
(42 U.S.C. 6291-6309)
---------------------------------------------------------------------------
\8\ This part was originally titled Part B; however, it was
redesignated Part A, after Part B of Title III was repealed by Pub.
L. 109-58. Similarly, Part C, Certain Industrial Equipment, was
redesignated Part A-1.
---------------------------------------------------------------------------
The amendments to EPCA contained in the Energy Policy Act of 2005
(EPACT 2005), Pub. L. 109-58, include new or amended energy
conservation standards and test procedures for some of these products,
and direct DOE to undertake rulemakings to promulgate such
requirements. In particular, section 135(c)(4) of EPACT 2005 amends
EPCA to direct DOE to prescribe energy conservation standards for
beverage vending machines. (42 U.S.C. 6295(v))
Because of its placement in Part A of Title III of EPCA, the
rulemaking for beverage vending machine energy conservation standards
is bound by the requirements of 42 U.S.C. 6295. However, since beverage
vending machines are commercial equipment and consistent with DOE's
previous action to incorporate the EPACT 2005 requirements for
commercial equipment into Title 10 of the Code of Federal Regulations
(CFR), Part 431 (``Energy Efficiency Program for Certain Commercial and
Industrial Equipment''), DOE intends to place the new requirements for
beverage vending machines in 10 CFR part 431. The location of the
provisions within the CFR does not affect either their substance or
applicable procedure, so DOE is placing them in the appropriate CFR
part based on their nature or type.\9\
---------------------------------------------------------------------------
\9\ Because of their placement into 10 CFR 431, beverage vending
machines will be referred to as ``equipment'' throughout this
notice.
---------------------------------------------------------------------------
Before DOE prescribes any such standards, however, it must first
solicit comments on proposed standards. Moreover, DOE must design each
new standard for beverage vending machines to achieve the maximum
improvement in energy efficiency that is technologically feasible and
economically justified, and will result in significant conservation of
energy. (42 U.S.C. 6295(o)(2)(A), (o)(3), (v)) To determine whether a
standard is economically justified, DOE must, after receiving comments
on the proposed standard, determine whether the benefits of the
standard exceed its burdens to the greatest extent practicable,
considering the following seven factors:
(1) The economic impact of the standard on manufacturers and
consumers of products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered product in the type (or class) compared with any
increase in the price, initial charges, or
[[Page 34099]]
maintenance expenses for the covered product likely to result from
imposition of the standard;
(3) The total projected amount of energy savings likely to result
directly from imposition of the standard;
(4) Any lessening of the utility or performance of the covered
products likely to result from 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
imposition of the standard;
(6) The need for national energy conservation; and
(7) Other factors the Secretary of Energy (the Secretary) considers
relevant.
(42 U.S.C. 6295(o)(2)(B)(i))
D. Background
1. History of Standards Rulemaking for Beverage Vending Machines
As noted above, section 135(c)(4) of EPACT 2005 amended section 325
of EPCA in part by adding new subsections 325(v)(2), (3), and (4). (42
U.S.C. 6295(v)(1), (2) and (3)).\10\ These provisions direct the
Secretary to prescribe, by rule, energy conservation standards for
beverage vending machines no later than August 8, 2009, and state that
any such standards shall apply to beverage vending machines
manufactured three years after the date of publication of the final
rule that establishes those standards. The energy use of this equipment
has never before been regulated at the Federal level.
---------------------------------------------------------------------------
\10\ It is noted that the relevant statutory provisions were
renumbered pursuant to section 316 of the Energy Independence and
Security Act of 2007, Pub. L. 110-140.
---------------------------------------------------------------------------
Section 135(a)(3) of EPACT 2005 amended section 321 of EPCA in part
by adding new subsection 321(40) (42 U.S.C. 6291(40)), which
establishes the definitions for ``refrigerated bottled or canned
beverage vending machine'' as ``a commercial refrigerator that cools
bottled or canned beverages and dispenses the bottled or canned
beverages on payment.'' In addition, section 136(a)(3) of EPACT 2005
amended section 340 of EPCA in part by adding a definition for
``commercial refrigerator, freezer, and refrigerator-freezer.'' \11\
---------------------------------------------------------------------------
\11\ This definition reads as follows:
``(9)(A) The term `commercial refrigerator, freezer, and
refrigerator-freezer' means refrigeration equipment that--
(i) is not a consumer product (as defined in section 321 [of
EPCA; 42 U.S.C. 6291(1)]);
(ii) is not designed and marketed exclusively for medical,
scientific, or research purposes;
(iii) operates at a chilled, frozen, combination chilled and
frozen, or variable temperature;
(iv) displays or stores merchandise and other perishable
materials horizontally, semivertically, or vertically;
(v) has transparent or solid doors, sliding or hinged doors, a
combination of hinged, sliding, transparent, or solid doors, or no
doors;
(vi) is designed for pull-down temperature applications or
holding temperature applications; and
(vii) is connected to a self-contained condensing unit or to a
remote condensing unit.''
(42 U.S.C. 6311(9)(A))
---------------------------------------------------------------------------
On June 28, 2006, DOE published in the Federal Register a notice
announcing a public meeting and the availability of a Framework
Document titled, Rulemaking Framework for Refrigerated Bottled or
Canned Beverage Vending Machines,\12\ that describes the procedural and
analytical approaches that DOE anticipates using to evaluate energy
conservation standards for beverage vending machines. 71 FR 36715. DOE
invited written comments on this analytical framework.
---------------------------------------------------------------------------
\12\ The Framework Document is available at: https://
www.eere.energy.gov/buildings/appliance_standards/commercial/
beverage_machines.html.
---------------------------------------------------------------------------
DOE held a Framework public meeting on July 11, 2006, whose purpose
was to discuss the procedural and analytical approaches for use in the
rulemaking, and to inform and facilitate stakeholder involvement in the
rulemaking process. The analytical framework presented at the public
meeting described different analyses, such as LCC and PBP, the planned
methods for conducting them, and the relationships among the various
analyses.\13\ Manufacturers, trade associations, environmental
advocates, and other interested parties attended the public meeting.
---------------------------------------------------------------------------
\13\ PDF copies of the slides and other materials associated
with the public meeting are available at: https://
www.eere.energy.gov/buildings/appliance_standards/commercial/
beverage_machines.html.
---------------------------------------------------------------------------
Comments received after publication of the Framework Document and
at the July 11 public meeting helped identify and elaborated upon
issues involved in this rulemaking and provided information that has
contributed to DOE's efforts to resolve these issues. Many of the
statements provided by stakeholders are quoted or summarized in this
ANOPR. A parenthetical reference at the end of a quotation or passage
provides the location of such item in the public record (i.e., the
docket for this rulemaking). The ANOPR TSD describes the analytical
framework in detail.
During the course of this rulemaking, Congress passed the Energy
Independence Security Act of 2007 (EISA 2007), which the President
signed on December 19, 2007 (Pub. L. 110-140). Of relevance to the
beverage vending machine rulemaking, section 310(3) of EISA 2007
amended section 325 of EPCA in part by adding subsection 325(gg) (42
U.S.C. 6295(gg)). This subsection requires any new or amended energy
conservation standard adopted after July 1, 2010 to incorporate
``standby mode and off mode energy use.'' (42 U.S.C. 6295(gg)(3)(A))
Since any standard associated with this rulemaking is required by
August 2009, the energy use calculations will not include ``standby
mode and off mode energy use.'' To include standby mode and off mode
energy use requirements for this rulemaking would take a considerable
degree of analytical effort and would likely require changes to the
test procedure. Given the statutory deadline, DOE has decided to
address this requirement when the standards for beverage vending
machines are reviewed in August 2015 to consider the need for possible
amendment in accordance with 42 U.S.C. 6295(m).
2. Rulemaking Process
Table I.2 sets forth a list of the analyses DOE has conducted and
intends to conduct in its evaluation of potential energy conservation
standards for beverage vending machines. Historically, DOE performed
the manufacturer impact analysis (MIA) in its entirety between the
ANOPR and NOPR stages of energy conservation standards rulemakings.
However, more recently, DOE has refined its process and has begun to
publish a preliminary MIA in the ANOPR for public comment. DOE believes
this change will improve the rulemaking process. Accordingly, as noted
in the table below, DOE has performed a preliminary MIA for this ANOPR.
Table I.2.--Beverage Vending Machine Analysis
------------------------------------------------------------------------
ANOPR NOPR Final Rule*
------------------------------------------------------------------------
Market and technology Revised Revised
assessment. ANOPR analyses. NOPR analyses
Screening analysis..... Life-
cycle cost sub-
group analysis.
[[Page 34100]]
Engineering analysis...
Manufacturer
impact analysis.
Energy use Utility
characterization. impact analysis.
Markups to determine
equipment price. Employment impact
analysis.
Life-cycle cost and
payback period analyses. Environmental
assessment.
Shipments analysis.....
Regulatory impact
analysis.
National impact
analysis.
Preliminary
manufacturer impact analysis.
------------------------------------------------------------------------
* During the final rule phase, DOE considers the comments submitted by
the U.S. Department of Justice in the NOPR phase concerning the impact
of any lessening of competition likely to result from the imposition
of the standard. (42 U.S.C. 6295(o)(2)(B)(v))
The analyses listed in Table I.2 also include the development of
related economic models and analytical tools, as necessary. If timely
new data, models, or tools that enhance the development of standards
become available, DOE will incorporate them into this rulemaking.
3. Miscellaneous Rulemaking Issues
a. Consensus Agreement
In response to the Framework Document, USA Technologies stated that
there appears to be considerable consensus regarding potential energy
conservation standards for beverage vending machines and that DOE could
provide a valuable and meaningful service by coordinating the efforts
of industry, manufacturers, beverage vending machine owners, and
utilities by fostering an agreement on standards. USA Technologies
stated that this approach could help the industry achieve significant
energy savings in a very short time, instead of waiting until 2012.
(USA Tech, No. 9 at p. 1) \14\ Edison Electric Institute (EEI)
suggested that, given DOE's workload on Federal standards over the next
several years, DOE should try to arrange a negotiated rulemaking of
interested parties to help streamline the process. EEI noted that such
a process was very successful with the fluorescent lamp ballast
rulemaking.\15\ (EEI, No. 12 at p. 1)
DOE supports efforts by interested parties to work together to
develop and present to DOE recommendations on equipment categories and
standard levels. Such recommendations are welcome throughout the
standards development process, especially following issuance of the
ANOPR. Any consensus recommendation must satisfy the statutory criteria
provided by EPCA in determining whether an energy conservation standard
is technologically feasible and economically justified, and will result
in significant conservation of energy. (42 U.S.C. 6295(o)(2)(A),
(o)(3), (v)) Any consensus recommendation should also include
information that DOE can use to assess the seven statutory factors that
determine whether the benefits of the standard exceed its burdens to
the greatest extent practicable. (42 U.S.C. 6925(o)(2)(B)(i))
---------------------------------------------------------------------------
\14\ A notation in the form ``USA Tech, No. 9 at p. 1''
identifies a written comment that DOE received and included in the
docket for this rulemaking (Docket No. EERE-2006-STD-0125),
maintained in the Resource Room of the Building Technologies
Program. Specifically, this footnote refers to a comment made USA
Technologies, and recorded on page 1 of document number 9. Likewise,
a notation in the form ``Public Meeting Transcript, No. 8 at p.
150'' identifies an oral comment that DOE received during the July
11, 2006, Framework public meeting and which was recorded in the
public meeting transcript in the docket for this rulemaking.
Likewise, a notation in the form ``Joint Comment,'' No. 13 at p. 3''
identifies a written comment that DOE has received and has included
in the docket of this rulemaking.
\15\ DOE notes that in the florescent lamp ballasts rulemaking,
a consensus process was used. 65 FR 56740, 56744 (Sept. 19, 2000).
---------------------------------------------------------------------------
b. Type of Standard
Crane Merchandising Systems asked whether the technology options
listed would become mandatory as part of the rulemaking. (Public
Meeting Transcript, No. 8 at p. 150) USA Technologies stated that, in
terms of technology options for compliance with energy conservation
standards, the more opportunity manufacturers have to be creative, the
better, particularly since this is a very creative industry. It stated
that restricting manufacturers to particular design options would not
be in the manufacturers'--or the buyers'--best interest. (Public
Meeting Transcript, No. 8 at p. 173) Dixie-Narco likewise stated that
the choice of technologies used to achieve standards should be left to
the discretion of the manufacturer. (Public Meeting Transcript, No. 14
at p. 3) Dixie-Narco further suggested that the DOE standard should not
recommend any particular design packages or endorse any specific third-
party technologies developed for use in vending machines that original
equipment manufacturers have not endorsed as being compatible with
their equipment. It stated that these technologies may work against
other energy-saving components such as variable-capacity compressors.
(Public Meeting Transcript, No. 14 at p. 3) In contrast, the Naval
Facilities Engineering Service Center (NFESC) recommended that DOE
should pursue cost-effective standards for beverage vending machines,
which would include both overall efficiency standards, as well as
prescriptive standards that address more focused topics such as a low-
power-mode requirement for low-use periods and lighting efficiency
within the unit. (NFESC, No. 15 at p. 2)
In response, DOE notes that EPCA provides that an ``energy
conservation standard'' must be either (A) ``a * * * level of energy
efficiency'' or ``a * * * quantity of energy use,'' or (B), for certain
specified equipment, ``a design requirement.'' (42 U.S.C. 6291(6))
Thus, an ``energy conservation standard'' cannot consist of both a
design requirement and a level of efficiency or energy use.\16\
Moreover, item (A) above indicates that, under EPCA, a single energy
conservation standard cannot have measures of both energy efficiency
and energy use. Furthermore, EPCA specifically requires DOE to base its
test procedure for this equipment on American National Standards
Institute (ANSI)/American Society of Heating, Refrigerating and Air-
Conditioning Engineers (ASHRAE) Standard 32.1-2004, Methods of Testing
for Rating Vending Machines for Bottled, Canned or Other Sealed
Beverages. (42 U.S.C. 6293(b)(15)) The test methods in ANSI/ASHRAE
Standard 32.1-2004 consist of means to measure energy consumption, not
energy efficiency.
---------------------------------------------------------------------------
\16\ Beverage vending machines are not one of the specified
equipment for which EPCA allows a standard to consist of a design
requirement. (42 U.S.C. 6291(6)(B), 6292(a)).
---------------------------------------------------------------------------
For these reasons, DOE does not intend to develop efficiency
standards or design requirements for this equipment. Instead, DOE
intends to develop standards such that each beverage vending machine
would be subject to a maximum level of energy
[[Page 34101]]
use, and manufacturers could meet these standards with their own choice
of design methods.
c. Split Incentive Issue
DOE mentioned the ``split incentive issue'' (explained below) at
the Framework public meeting when discussing distribution channels for
beverage vending machines sold to the bottler or a vending machine
operator. The bottler or the vending machine operator installs these
machines at different sites through location contracts, maintains and
stocks the machines, and retains a certain percentage of the coin-box
revenue. The site owner, in this case, allows the machine to be placed
on-site, receives a percentage of the coin-box revenue and/or other
remuneration, and most relevant to this rulemaking, pays the
electricity bill and enjoys any electricity cost savings associated
with more-efficient machines. The equipment purchaser (bottler or
vending machine operator) does not pay the electricity bill and,
therefore, does not receive any cost savings. In principle, the
business site owner would be willing to accept a lower percentage of
revenue for a machine that uses less electricity. However, where it is
costly to renegotiate contracts, the incentive to purchase more-
efficient machines may be lessened or eliminated. Nonetheless, there
may be a growing market for energy-efficient beverage vending machines
because environmentally-conscious beverage companies and bottlers are
pushing to install energy-efficient machines on-site, and certain site
owners are demanding that energy-efficient machines be installed to
reduce their electricity costs.
At the Framework public meeting, Coca-Cola indicated that the
vending machine operator may or may not pay some or all of the energy
costs, depending on its contract with the site owner. (Public Meeting
Transcript, No. 8 at p. 190) Meanwhile, EEI asserted that information
about distribution channels and beverage vending machine contracts
would be important for the LCC analysis. EEI claimed that unless there
is a provision in the contract for energy costs, there will be a split
incentive for machine owners and site owners. (EEI, No. 12 at p. 5)
DOE agrees with EEI that there may be a split incentive in the
beverage vending machine market; however, it disagrees with EEI's
contention that the split incentive is relevant to the LCC analysis.
DOE recognizes that when a standard results in overall operating cost
savings that are greater than increases in the installed cost for the
equipment, there will be a life-cycle cost benefit from the standard, a
key piece of regulatory information independent of who receives such
benefit. How the benefits and burdens are shared between the equipment
purchaser and the site owner is a function of the nature of the
contract, and this allocation may in fact change as the expenses of
either party change as a result of subsequent events, such as changes
in electricity prices or standards requiring more-efficient machines.
DOE has limited data on existing beverage vending machine contracts,
but knows that these can vary widely. DOE has no data on how these
contracts may change as the relative expenses of either party shift. In
summary, for the purposes of the LCC analysis and as is required by
EPCA, DOE is evaluating the benefits and burdens of the standards from
the standpoint of a ``customer'' who is assumed to bear the burden of
purchasing the equipment and the benefits of any energy savings, which
in this case, is the equipment purchaser. (42 U.S.C. 6295(o)(2)(B)(i))
DOE requests further comment and information on this issue.
4. Test Procedure
A test procedure outlines the method by which manufacturers will
determine the energy consumption of their beverage vending machines,
and thereby assess the results used to certify compliance with an
energy conservation standard.
Section 135(b) of EPACT 2005 amended section 323 of EPCA in part by
adding new subsections 323(b)(15) (42 U.S.C. 6293(b)(15)) and 323(f)
(42 U.S.C. 6293(f)). Respectively, these subsections provide that the
test procedure for refrigerated bottled or canned beverage vending
machines shall be based on ANSI/ASHRAE Standard 32.1-2004, and that the
Secretary had until August 8, 2007 to prescribe that new test
procedure.
On December 8, 2006, DOE published a final rule in the Federal
Register that incorporated by reference ANSI/ASHRAE Standard 32.1-2004,
with two modifications, as the DOE test procedure for this equipment.
71 FR 71340, 71375; 10 CFR 431.294. The first modification DOE made was
to specify that in Section 6.2, ``Voltage and Frequency,'' equipment
with dual nameplate voltages must be tested at the lower of the two
voltages only. 71 FR 71340, 71355 (Dec. 8, 2006). The second
modification was to specify that (1) any measurement of ``vendible
capacity'' of refrigerated bottled or canned beverage vending machines
must be in accordance with the second paragraph of Section 5, ``Vending
Machine Capacity,'' of ANSI/ASHRAE Standard 32.1-2004, and (2) any
measurement of ``refrigerated volume'' of refrigerated bottled or
canned beverage vending machines must be in accordance with the
methodology specified in Section 5.2, ``Total Refrigerated Volume,''
(excluding subsections 5.2.2.2 through 5.2.2.4) of the ANSI/Association
of Home Appliance Manufacturers (AHAM) HRF-1-2004, Energy, Performance
and Capacity of Household Refrigerators, Refrigerator-Freezers and
Freezers. Id.
5. Rating Conditions
In the Framework Document, DOE requested feedback on what rating
conditions it should use for setting standards and determining
compliance with them. DOE's test procedure included two rating
conditions (i.e., 75 degrees Fahrenheit ([deg]F)/45 percent relative
humidity (RH) and 90[deg]F/65 percent RH). EEI stated that the
75[deg]F/45 percent RH ambient conditions specified in the ANSI/ASHRAE
Standard 32.1-2004 should provide adequate daily energy-usage
information for most machines located solely indoors. EEI added that
for certain indoor conditions (i.e., machines located in rooms with
limited ventilation), the 90[deg]F/65 percent RH test conditions may be
better. (EEI, No. 12 at p. 2)
Dixie-Narco stated that for the majority of indoor equipment, the
rating 75[deg]F/45 percent RH temperature is accurate and reflects
actual conditions. (Public Meeting Transcript, No. 8 at p. 95) Dixie-
Narco stated that the 90[deg]F/65 percent RH rating condition is highly
overstated, arguing that no location in the United States is at
90[deg]F/65 percent RH condition 24 hours a day, 365 days a year. Royal
Vendors and UVA Technologies agreed with Dixie-Narco, stating that the
actual energy use of outdoor machines is likely to be overstated, in
most cases, when determined under those conditions. (Public Meeting
Transcript, No. 8 at pp. 96-97)
Pacific Gas and Electric (PG&E) indicated, however, that DOE need
not distinguish between indoor and outdoor temperature conditions in
setting rating conditions because machines located indoors sometimes
operate in warmer conditions, similar to the ambient conditions that
the machine might operate in if it was located outdoors. (Public
Meeting Transcript, No. 8 at p. 94) Coca-Cola stated energy consumption
depends not only on ambient temperature, but also on ambient humidity
and the heat load
[[Page 34102]]
(heat output by components) within the machine. (Coca-Cola, No. 8 at p.
220) EEI noted that one EEI member company suggested that if DOE could
determine a way to require outdoor-rated machines to be used
exclusively outdoors and indoor-rated machines to be used exclusively
indoors, there could be considerable energy savings. (EEI, No. 12 at p.
2)
During the Framework public meeting, EEI stated that if glass-front
machines are placed outside, DOE might need to consider a different
test procedure to account for the difference in radiation heat loads
between glass-front and closed-front machines. EEI also suggested
separate tests for winter and summer conditions for machines used
outdoors. (Public Meeting Transcript, No. 8 at p. 66) In addition, EEI
argued that energy usage of beverage vending machines varies
dramatically based on ambient conditions. It suggested that DOE should
adopt a test procedure for outdoor machines that would account for high
ambient temperatures and/or solar loads, which would improve the
efficiency of the equipment throughout the year, but especially on peak
summer days. (EEI, No. 12 at p. 3) EEI added that if DOE decides to
establish standards in terms of total daily energy consumption, then
extreme outdoor temperature conditions must be accounted for. (EEI, No.
12 at p. 5)
In response to these comments, DOE understands the concerns about
the variability in energy consumption resulting from different ambient
conditions. However, outdoor-only beverage machines are currently
nonexistent. Currently, all machines placed outdoors are designed for
both indoor and outdoor use and are not designed exclusively for
outdoor use only. If, as suggested by several manufacturers, a 90
[deg]F/65 percent RH rating condition for a machine used outdoors would
result in overstatement of its energy use due to changing daily and
seasonal ambient conditions, that rating condition applied to the same
machine used indoors would then be expected to result in an even
greater overstatement of energy use. For example, the average annual
temperature in Miami, FL (one of the southernmost and warmest cities in
the United States) is approximately 75 [deg]F.\17\ Therefore,
throughout the United States, almost all average annual outdoor
temperatures are close to or below 75 [deg]F. DOE chooses to evaluate
an average temperature because it believes that the increase in the
energy consumption of a machine operating in temperatures above the
average is offset by the decrease in energy consumption of a machine
operating in temperatures below the average. In addition, beverage
vending machines have closed refrigeration systems. The relative
humidity that a beverage vending machine operates in has a much less
significant impact than ambient temperature on the energy consumption
of a beverage vending machine. After careful consideration of public
comments on this issue, DOE plans to use a 75 [deg]F/45 percent RH
rating condition for all refrigerated beverage vending machines covered
by this rulemaking. DOE will include this rating condition requirement
as part of any energy conservation standards developed in this
rulemaking.
---------------------------------------------------------------------------
\17\ Typical Meterorological Year 2 (TMY2) Data (from the 1961-
1990 National Solar Radiation Data Base). Available at: https://
rredc.nrel.gov/solar/old_data/nsrdb/tmy2/.
---------------------------------------------------------------------------
II. Energy Conservation Standards Analyses for Beverage Vending
Machines
This section addresses the analyses DOE has performed and intends
to perform for this rulemaking. A separate subsection addresses each
analysis and the underlying assumptions applied to that analysis.
Specifically, DOE will perform a set of analyses, including: (1) A
market and technology assessment; (2) a screening analysis; (3) an
engineering analysis; (4) an analysis to determine equipment price; (5)
an energy use characterization; (6) an LCC and PBP analysis; (7) a
shipments analysis; (8) a national impact analysis; and (9) a
manufacturer impact analysis. Additional analyses consider the impact
of a potential rule on utilities, LCC sub-groups, employment, and the
environment. A full description of how these analyses are performed is
contained in the TSD.\18\ However, this section of the ANOPR provides
an overview of these analyses, while focusing on how these analyses are
being tailored to this rulemaking and on their underlying assumptions.
It also discusses comments received from interested parties since DOE
published the beverage vending machines Framework Document.
---------------------------------------------------------------------------
\18\ Available on DOE's Web site at https://www.eere.energy.gov/
buildings/appliance_standards/commercial/beverage_machines.html.
---------------------------------------------------------------------------
A. Market and Technology Assessment
When DOE begins a standards rulemaking, it develops market
assessment information that provides an overall picture of the market
for the equipment concerned, including the nature of the equipment, the
industry structure, and market characteristics for the equipment. The
technology assessment identifies available, energy-saving technologies,
which will be considered in the screening analysis. These activities
consist of both quantit
