Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines, 1027-1113 [2015-33074]
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Vol. 81
Friday,
No. 5
January 8, 2016
Part III
Department of Energy
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10 CFR Parts 429 and 431
Energy Conservation Program: Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines; Final Rule
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
DEPARTMENT OF ENERGY
10 CFR Parts 429 and 431
[Docket Number EERE–2013–BT–STD–
0022]
RIN 1904–AD00
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: Final rule.
AGENCY:
The Energy Policy and
Conservation Act of 1975 (EPCA), as
amended, prescribes energy
conservation standards for various
consumer products and certain
commercial and industrial equipment,
including refrigerated bottled or canned
beverage vending machines (beverage
vending machines or BVM). EPCA also
requires the U.S. Department of Energy
(DOE) to periodically determine
whether more-stringent standards
would be technologically feasible and
economically justified, and would save
a significant amount of energy. In this
final rule, DOE is amending the energy
conservation standards for Class A and
Class B beverage vending machines.
DOE is also amending the definition for
Class A equipment to more
unambiguously differentiate Class A
and Class B beverage vending machines.
In addition, DOE is amending the
definition of combination vending
machine, is defining two new classes of
combination vending machines,
Combination A and Combination B, and
is promulgating standards for those new
classes. Finally, DOE is adopting new
provisions that DOE will use to verify
the appropriate equipment class and
refrigerated volume during enforcement
testing.
DATES: The effective date of this rule is
March 8, 2016. Compliance with the
new and amended standards established
for beverage vending machines in this
final rule is required on and after
January 8, 2019. The incorporation by
reference of certain material listed in
this rule is approved by the Director of
the Federal Register as of March 8, 2016.
ADDRESSES: The docket, which includes
Federal Register notices, public meeting
attendee lists and transcripts,
comments, and other supporting
documents/materials, is available for
review at www.regulations.gov. All
documents in the docket are listed in
the www.regulations.gov index.
However, some documents listed in the
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SUMMARY:
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index, such as those containing
information that is exempt from public
disclosure, may not be publicly
available.
A link to the docket Web page can be
found at: www.regulations.gov/#!docket
Detail;D=EERE-2013-BT-STD-0022. The
www.regulations.gov Web page will
contain instructions on how to access
all documents, including public
comments, in the docket.
For further information on how to
review the docket, contact Ms. Brenda
Edwards at (202) 586–2945 or by email:
Brenda.Edwards@ee.doe.gov.
FOR FURTHER INFORMATION CONTACT: Mr.
John Cymbalsky, U.S. Department of
Energy, Office of Energy Efficiency and
Renewable Energy, Building
Technologies Office, EE–2J, 1000
Independence Avenue SW.,
Washington, DC 20585–0121.
Telephone: (202) 287–1692. Email:
refrigerated_beverage_vending_
machines@ee.doe.gov.
Ms. Sarah Butler, U.S. Department of
Energy, Office of the General Counsel,
GC–33, 1000 Independence Avenue
SW., Washington, DC, 20585–0121.
Telephone: (202) 586–1777. Email:
Sarah.Butler@hq.doe.gov.
SUPPLEMENTARY INFORMATION: This final
rule incorporates by reference into part
431 the following industry standard:
• ASTM E 1084–86 (Reapproved
2009), ‘‘Standard Test Method for Solar
Transmittance (Terrestrial) of Sheet
Materials Using Sunlight,’’ approved
April 1, 2009.
Copies of ASTM standards may be
obtained from ASTM International, 100
Barr Harbor Drive, P.O. Box C700, West
Conshohocken, PA 19428–2959, (877)
909–2786, or go to www.astm.org/.
See section IV.O for a further
discussion of this standard.
Table of Contents
I. Synopsis of the Final Rule
A. Benefits and Costs to Customers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for
Beverage Vending Machines
III. General Discussion
A. Equipment Classes and Scope of
Coverage
B. Test Procedure
C. Compliance Dates
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible
Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
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1. Specific Criteria
a. Economic Impact on Manufacturers and
Customers
b. Savings in Operating Costs Compared To
Increase in Price (LCC and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of
Equipment
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related
Comments
A. Market and Technology Assessment
1. Equipment Classes
a. Class A and Class B Beverage Vending
Machines
b. Combination Vending Machines
c. Definition of Transparent and Optional
Test Method for Determining Equipment
Classification
2. Machines Vending Perishable Goods
3. Market Characterization
4. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Baseline Equipment and Representative
Sizes
2. Refrigerants
a. Refrigerants Used in the Analysis
b. DOE Approach
c. Relative Energy Efficiency of
Refrigerants
3. Screened-In Technologies Not
Implemented as Design Options
4. Design Options Analyzed and Maximum
Technologically Feasible Efficiency
Level
a. Glass Packs
b. Evaporator Fan Motor Controls
c. Coils
d. Compressors
e. Insulation and Vacuum Insulated Panels
f. Lighting and Lighting Low Power Modes
g. Fan Motors
h. Performance of Design Option Packages
5. Manufacturer Production Costs
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period
Analysis
1. Customer Purchase Prices
2. Energy Prices
3. Maintenance, Repair, and Installation
Costs
4. Equipment Lifetime
5. Discount Rates
6. Equipment Efficiency in the No-NewStandards Case
7. Split Incentives
G. Shipments Analysis
1. Market Share by Equipment Class
2. Market Share by Refrigerant
3. High and Low Shipments Assumptions
H. National Impact Analysis
1. Equipment Efficiency Trends
2. National Energy Savings
a. Full-Fuel-Cycle Analysis
3. Net Present Value Analysis
I. Customer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
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a. Government Regulatory Impact Model
Key Inputs
b. Government Regulatory Impact Model
Scenarios
3. Discussion of Comments
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other
Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Development of Social Cost of Carbon
Values
c. Current Approach and Key Assumptions
2. Social Cost of Other Air Pollutants
M. Utility Impact Analysis
N. Employment Impact Analysis
O. Description of Materials Incorporated by
Reference
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy
Savings
1. Economic Impacts on Individual
Customers
a. Life-Cycle Cost and Payback Period
b. Customer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Impacts on Direct Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Customer Costs and
Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of
Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of National Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs
Considered for BVM Standards
2. Summary of Annualized Benefits and
Costs of the Adopted Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866
and 13563
B. Review Under the Regulatory Flexibility
Act
1. Description of Estimated Number of
Small Entities Regulated
2. Description and Estimate of Compliance
Requirements
3. Duplication, Overlap, and Conflict With
Other Rules and Regulations
4. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction
Act
D. Review Under the National
Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates
Reform Act of 1995
H. Review Under the Treasury and General
Government Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General
Government Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality
Bulletin for Peer Review
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M. Review Under Section 32 of the Federal
Energy Administration Act of 1974
N. Congressional Notification
VII. Approval of the Office of the Secretary
I. Synopsis of the Final Rule
Title III, Part A 1 of the Energy Policy
and Conservation Act of 1975 (EPCA or
the Act), Public Law 94–163 (42 U.S.C.
6291–6309, as codified), established the
Energy Conservation Program for
Consumer Products Other Than
Automobiles.2 These products include
refrigerated bottled or canned beverage
vending machines (beverage vending
machines or BVM), the subject of this
document. (42 U.S.C. 6295(v)) 3
Pursuant to EPCA, any new or
amended energy conservation standard
must be designed to achieve the
maximum improvement in energy
efficiency that DOE determines is
technologically feasible and
economically justified. (42 U.S.C.
6295(o)(2)(A)) Furthermore, the new or
amended standard must result in
significant conservation of energy. (42
U.S.C. 6295(o)(3)(B)) EPCA also
provides that not later than 6 years after
issuance of any final rule establishing or
amending a standard, DOE must publish
either a notice of determination that
standards for the equipment do not need
to be amended, or a notice of proposed
rulemaking including new proposed
energy conservation standards. (42
U.S.C. 6295(m)(1))
In accordance with these and other
statutory provisions discussed in this
document, DOE is adopting new and
amended energy conservation standards
for beverage vending machines. The
new and amended standards, which are
described in terms of the maximum
daily energy consumption (MDEC) as a
function of refrigerated volume, are
shown in Table I.1. Specifically, DOE is
1 For editorial reasons, upon codification in the
U.S. Code, Part B was redesignated Part A.
2 All references to EPCA in this document refer
to the statute as amended through the Energy
Efficiency Improvement Act of 2015, Public Law
114–11 (Apr. 30, 2015).
3 Because Congress included beverage vending
machines in Part A of Title III of EPCA, the
consumer product provisions of Part A (not the
industrial equipment provisions of Part A–1) apply
to beverage vending machines. DOE placed the
regulatory requirements specific to beverage
vending machines in Title 10 of the Code of Federal
Regulations (CFR), part 431, ‘‘Energy Efficiency
Program for Certain Commercial and Industrial
Equipment’’ as a matter of administrative
convenience based on their type and will refer to
beverage vending machines as ‘‘equipment’’
throughout this document because of their
placement in 10 CFR part 431. Despite the
placement of beverage vending machines in 10 CFR
part 431, the relevant provisions of Title A of EPCA
and 10 CFR part 430, which are applicable to all
product types specified in Title A of EPCA, are
applicable to beverage vending machines. See 74 FR
44914, 44917 (Aug. 31, 2009).
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amending the energy conservation
standards established by the 2009 BVM
final rule for Class A and Class B
beverage vending machines. In addition,
DOE is establishing two new equipment
classes at 10 CFR 431.292, Combination
A and Combination B, as well as new
energy conservation standards for those
equipment classes. The new and
amended standards adopted in this final
rule will apply to all equipment listed
in Table I.1 and manufactured in, or
imported into, the United States starting
on January 8, 2019.
TABLE I.1—ENERGY CONSERVATION
STANDARDS FOR BEVERAGE VENDING MACHINES
[Compliance Starting January 8, 2019]
Equipment class *
Class A ...............
Class B ...............
Combination A ...
Combination B ...
New and amended
energy conservation
standards **
Maximum Daily Energy
Consumption (MDEC)
(kWh/day †)
0.052
0.052
0.086
0.111
×
×
×
×
V
V
V
V
+
+
+
+
2.43 ‡
2.20 ‡
2.66 ‡
2.04 ‡
* See section IV.A.1 of this final rule for a
discussion of equipment classes.
** ‘‘V’’ is the representative value of refrigerated volume (ft3) of the BVM model, as
measured in accordance with the method for
determining refrigerated volume adopted in the
recently amended DOE BVM test procedure
and appropriate sampling plan requirements at
10 CFR 429.52(a)(3). 80 FR 45758 (July 31,
2015). See section III.B and V.A of this final
rule for more details.
† Kilowatt hours per day.
‡ Trial Standard Level (TSL) 3.
A. Benefits and Costs to Customers
Table I.2 and Table I.3 present DOE’s
evaluation of the economic impacts of
the new and amended energy
conservation standards on customers, or
purchasers, of beverage vending
machines, as measured by the average
life-cycle cost (LCC) savings and the
simple payback period (PBP).4 This
4 The average LCC savings are measured relative
to the efficiency distribution in the no-newstandards case, which depicts the market in the
compliance year (see section IV.F.6 of this final
rule). The simple PBP, which is designed to
compare specific efficiency levels, is measured
relative to the baseline model (see section IV.C.1 of
this final rule). DOE acknowledges that not all BVM
customers are also the entity that is responsible for
the energy costs of operating the beverage vending
machine in the field. However, there are many
different contracting mechanisms for leasing and
operating beverage vending machines, which are
influenced by many factors, including the capital
cost of the machine and the annual operating costs.
As such, DOE believes that a simple ‘‘customer’’
LCC-model accurately demonstrates the costeffectiveness of the potential energy efficiency
improvements resulting from any new or amended
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analysis is based upon beverage vending
machines that use either CO2 (R–744) or
propane (R–290). These refrigerants
were selected for analysis based on the
recent actions of the U.S. Environmental
Protection Agency’s (EPA) Significant
New Alternatives Policy (SNAP)
program,5 including the listing of
propane as acceptable in BVM
applications under Rule 19 (80 FR
19454, 19491 (April 10, 2015)) and the
change of status of R–134a to
unacceptable in BVM applications
beginning January 1, 2019 under Rule
20 (80 FR 42870, 42917–42920 (July 20,
2015)). The selection of these
refrigerants was also guided by visible
trends within the BVM marketplace and
feedback from interested parties during
public meetings, in written comments,
and during manufacturer interviews.
Where applicable, the average LCC
savings are positive for all equipment
classes and refrigerants, and the PBP is
less than the average lifetime of the
equipment, which is estimated to be
13.5 years.
TABLE I.2—IMPACTS OF NEW AND AMENDED ENERGY CONSERVATION STANDARDS ON CUSTOMERS OF BEVERAGE
VENDING MACHINES—CO2 REFRIGERANT
Life-cycle cost
savings
(2014$)
Equipment class
Class A ....................................................................................................................................................................
Class B ....................................................................................................................................................................
Combination A .........................................................................................................................................................
Combination B .........................................................................................................................................................
Payback
period
(years)
65
42
990
597
2.0
1.1
0.8
0.5
TABLE I.3—IMPACTS OF NEW AND AMENDED ENERGY CONSERVATION STANDARDS ON CUSTOMERS OF BEVERAGE
VENDING MACHINES—PROPANE REFRIGERANT
Life-cycle cost
savings
(2014$)
Equipment class
Class A ....................................................................................................................................................................
Class B ....................................................................................................................................................................
Combination A .........................................................................................................................................................
Combination B .........................................................................................................................................................
*0
361
772
610
Payback
period
(years)
1.1
0.5
0.7
0.3
* In this case, $0 savings is a result of all customers in the no-new-standards efficiency distribution already achieving the efficiency standard.
DOE’s analysis of the impacts of the
new and amended standards on
customers is described in section V of
this document.
B. Impact on Manufacturers
interviews with the manufacturers of
beverage vending machines, DOE does
not expect significant impacts on
manufacturing capacity or loss of
employment for the industry as a whole
to result from the standards for beverage
vending machines.
DOE’s analysis of the impacts of the
adopted standards on manufacturers is
described in section IV.J of this
document.
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The industry net present value (INPV)
is the sum of the discounted cash flows
to the industry from the base year
through the end of the analysis period
(2015 to 2048). Using a real discount
rate of 8.5 percent, DOE estimates that
the (INPV) for manufacturers of
beverage vending machines in the case
without amended standards is $94.8
million in 2014$. Under the adopted
standards, DOE expects that
manufacturers may lose up to 0.8
percent of this INPV, which is
approximately $0.7 million.6
Additionally, based on DOE’s
DOE’s analyses indicate that the
adopted energy conservation standards
for beverage vending machines would
save a significant amount of energy.
Relative to the case without amended
standards, the lifetime energy savings
for Class A, Class B, Combination A,
and Combination B beverage vending
standards, regardless of by whom the costs and
benefits are borne.
5 The EPA’s SNAP program, which is the U.S.
government regulatory program responsible for
maintaining the list of alternatives to ozonedepleting substances allowed for use within
specific applications in the United States, has taken
two rulemaking actions that concern refrigerants for
the U.S. refrigerated vending machine market. See
section IV.C.2 of this final rule for more details.
6 All monetary values in section I.B of this final
rule are expressed in 2014 dollars; discounted
values are discounted to 2014 unless explicitly
stated otherwise.
7 All monetary values in this section are
expressed in 2014 dollars and, where appropriate,
are discounted to 2015 unless explicitly stated
otherwise. Energy savings in this section refer to the
full-fuel-cycle (FFC) savings (see section IV.H for
discussion).
8 A quad is equal to 1015 British thermal units
(Btu). The quantity refers to FFC energy savings.
FFC energy savings includes the energy consumed
in extracting, processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum fuels), and,
thus, presents a more complete picture of the
impacts of energy efficiency standards. For more
information on the FFC metric, see section IV.H.1.
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C. National Benefits and Costs 7
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machines purchased in the 30-year
period that begins in the anticipated
year of compliance with the new and
amended standards (2019–2048) amount
to 0.122 quadrillion Btu (quads).8 This
represents a savings of 16 percent
relative to the energy use of this
equipment in the case without amended
standards (referred to as the ‘‘no-newstandards case’’).9
The cumulative net present value
(NPV) of total customer costs and
savings of the standards for beverage
vending machines range from $0.21
billion (at a 7-percent discount rate) to
$0.51 billion (at a 3-percent discount
rate).10 This NPV expresses the
estimated total value of future
operating-cost savings minus the
estimated increased equipment costs for
9 The no-new-standards case represents a mix of
efficiencies above the minimum efficiency level (EL
0). Please see section IV.F.6 for a more detail
description of associated assumptions.
10 These discount rates are used in accordance
with the Office of Management and Budget (OMB)
guidance to Federal agencies on the development of
regulatory analysis (OMB Circular A–4, September
17, 2003), and section E, ‘‘Identifying and
Measuring Benefits and Costs,’’ therein. Further
details are provided in section IV.H of this final
rule.
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beverage vending machines purchased
in 2019–2048.
In addition, the standards for beverage
vending machines are projected to yield
significant environmental benefits. DOE
estimates that the standards would
result in cumulative greenhouse gas
emission reductions (over the same
period as for energy savings) of 7
million metric tons (Mt) 11 of carbon
dioxide (CO2), 4 thousand tons of sulfur
dioxide (SO2), 13 thousand tons of
nitrogen oxides (NOX), 32 thousand tons
of methane (CH4), 0.09 thousand tons of
nitrous oxide (N2O), and 0.02 tons of
mercury (Hg).12 The cumulative
reduction in CO2 emissions through
2030 amounts to 1.16 Mt, which is
equivalent to the emissions resulting
from the annual electricity use of more
than 160,000 homes.
The value of the CO2 reductions is
calculated using a range of values per
metric ton of CO2 (otherwise known as
the Social Cost of Carbon, or SCC)
developed by a Federal interagency
process.13 The derivation of the SCC
values is discussed in section IV.L of
this final rule. Using discount rates
appropriate for each set of SCC values,
DOE estimates that the net present
monetary value of the CO2 emissions
1031
reduction (not including CO2 equivalent
emissions of other gases with global
warming potential) is between $49
million and $701 million, with a value
of $230 million using the central SCC
case represented by $40.0 per metric ton
in 2015. DOE also estimates that the net
present monetary value of the NOX
emissions reduction to be $16 million at
a 7-percent discount rate, and $42.0
million at a 3-percent discount rate.14
Table I.4 summarizes the national
economic benefits and costs expected to
result from the adopted standards for
beverage vending machines.
TABLE I.4—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF NEW AND AMENDED ENERGY CONSERVATION
STANDARDS FOR BEVERAGE VENDING MACHINES*
Present value
(million 2014$)
Category
Discount rate
(%)
Benefits
Customer Operating Cost Savings ........................................................................................................................
CO2 Reduction Monetized Value ($12.2/metric ton case) ** .................................................................................
CO2 Reduction Monetized Value ($40.0/metric ton case) ** .................................................................................
CO2 Reduction Monetized Value ($62.3/metric ton case) ** .................................................................................
CO2 Reduction Monetized Value ($117/metric ton case) ** ..................................................................................
NOX Reduction Monetized Value † .......................................................................................................................
Total Benefits ‡ ......................................................................................................................................................
225
542
49
230
366
701
16
42
471
814
7
3
5
3
2.5
3
7
3
7
3
Costs
Customer Incremental Installed Costs ..................................................................................................................
18
34
7
3
453
780
7
3
Net Benefits
Including CO2 and NOX† Reduction Monetized Value ‡ .......................................................................................
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* This table presents the costs and benefits associated with beverage vending machines shipped in 2019–2048. These results include benefits
to customers that accrue after the last year of analyzed shipments (2048) from the equipment purchased during the 30-year analysis period. The
costs account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in
preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The
fourth case represents the 95th percentile of the SCC distribution calculated using a 3-percent discount rate. The SCC time series used by DOE
incorporates an escalation factor. The value for NOX is the average of high and low values found in the literature.
† The $/ton values for NOX are described in section IV.L.
‡ Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with a 3-percent discount rate ($40.0/metric ton case).
11 A metric ton is equivalent to 1.1 short tons.
Results for NOX and Hg are presented in short tons.
12 DOE calculated emissions reductions relative
to the no-new-standards case, which reflects key
assumptions in the Annual Energy Outlook 2015
(AEO2015) Reference case, which generally
represents current legislation and environmental
regulations for which implementing regulations
were available as of October 31, 2014.
13 Technical Update of the Social Cost of Carbon
for Regulatory Impact Analysis Under Executive
Order 12866. Interagency Working Group on Social
Cost of Carbon, United States Government. May
2013; revised November 2013. Available at
www.whitehouse.gov/sites/default/files/omb/assets/
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inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf.
14 DOE estimated the monetized value of NO
X
emissions reductions using benefit per ton
estimates from the Regulatory Impact Analysis for
the Proposed Carbon Pollution Guidelines for
Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants,
published in June 2014 by EPA’s Office of Air
Quality Planning and Standards. (Available at
https://www3.epa.gov/ttnecas1/regdata/RIAs/
111dproposalRIAfinal0602.pdf.) See section IV.L.2
for further discussion. For the monetized NOX
benefits associated with PM2.5 in DOE’s primary
estimate, the benefit-per-ton values are based on an
estimate of premature mortality derived from the
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ACS study (Krewski et al. Extended Follow-Up and
Spatial Analysis of the American Cancer Society
Study Linking Particulate Air Pollution and
Mortality. 2009), which is the lower of the two EPA
central tendencies. DOE is using the lower value as
its primary estimate to be conservative when
making the policy decision concerning whether a
particular standard level is economically justified.
DOE also estimated monetized NOX benefits used
EPA’s higher benefit-per-ton estimates, and the
overall benefits are over two times larger (see Table
V.41). See chapter 14 of the TSD for further
description of EPA’s low and high values and the
study mentioned above. DOE is currently
investigating valuation of avoided Hg and SO2
emissions.
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The benefits and costs of the adopted
standards for beverage vending
machines sold in 2019–2048 can also be
expressed in terms of annualized values.
The monetary values for the total
annualized net benefits are the sum of
(1) the national economic value of the
benefits in reduced operating costs,
minus (2) the increases in equipment
purchase prices and installation costs,
plus (3) the value of the benefits of CO2
and NOX emission reductions, all
annualized.15
Although the value of operating cost
savings and CO2 emission reductions
are both important, two issues are
relevant. First, the national operating
cost savings are domestic U.S. customer
monetary savings that occur as a result
of market transactions, whereas the
value of CO2 reductions is based on a
global value. Second, the assessments of
operating cost savings and CO2 savings
are performed with different methods
that use different time frames for
analysis. The national operating cost
savings is measured for the lifetime of
beverage vending machines shipped in
2019–2048. Because CO2 emissions have
a very long residence time in the
atmosphere,16 the SCC values in future
years reflect future CO2-emissions
impacts that continue beyond 2100.
Estimates of annualized benefits and
costs of the adopted standards are
shown in Table I.5. The results under
the primary estimate are as follows.
Using a 7-percent discount rate for
benefits and costs other than CO2
reduction (for which DOE used a 3percent discount rate along with the
SCC series that has a value of $40.0 per
metric ton in 2015),17 the estimated cost
of the standards in this rule is $1.8
million per year in increased equipment
costs, while the estimated annual
benefits are $22.2 million in reduced
equipment operating costs, $12.8
million in CO2 reductions, and $1.6
million in reduced NOX emissions. In
this case, the net benefit amounts to $35
million per year. Using a 3-percent
discount rate for all benefits and costs
and the SCC series that has a value of
$40.0 per metric ton in 2015, the
estimated cost of the standards is $1.9
million per year in increased equipment
costs, while the estimated annual
benefits are $30.2 million per year in
reduced operating costs, $12.8 million
in CO2 reductions, and $2.3 million in
reduced NOX emissions. In this case, the
net benefit amounts to $43 million per
year.
DOE also calculated the low net
benefits and high net benefits estimates
by calculating the operating cost savings
and shipments at the AEO2015 Low
Economic Growth case and High
Economic Growth case scenarios,
respectively. The low and high benefits
for incremental installed costs were
derived using the low and high price
learning scenarios. In addition, the low
and high benefits estimates reflect low
and high shipments scenarios (see
section IV.G.3 of this final rule). The net
benefits and costs for low and high net
benefits estimates were calculated in the
same manner as the primary estimate by
using the corresponding values of
operating cost savings and incremental
installed costs.
TABLE I.5—ANNUALIZED BENEFITS AND COSTS OF NEW AND AMENDED STANDARDS FOR BEVERAGE VENDING MACHINES*
million 2014$/year
Discount rate
Low net benefits
estimate *
Primary estimate *
High net benefits
estimate *
Benefits
Customer Operating Cost Savings ....
CO2 Reduction Monetized Value
($12.2/metric ton case) **.
CO2 Reduction Monetized Value
($40.0/metric ton case) **.
CO2 Reduction Monetized Value
($62.3/metric ton case) **.
CO2 Reduction Monetized Value
($117/metric ton case) **.
NOX Reduction Monetized Value † ...
Total Benefits ‡ ..................................
7% .................................
3% .................................
5% .................................
22 ..................................
30 ..................................
4 ....................................
16 ..................................
21 ..................................
3 ....................................
27
36
4
3% .................................
13 ..................................
9 ....................................
14
2.5% ..............................
19 ..................................
14 ..................................
21
3% .................................
39 ..................................
29 ..................................
44
7%
3%
7%
7%
3%
3%
2 ....................................
2 ....................................
28 to 63 .........................
37 ..................................
36 to 69 .........................
45 ..................................
1 to 3 .............................
2 to 4 .............................
20 to 46 .........................
26 ..................................
25 to 51 .........................
32 ..................................
4
6
36 to 75
46
46 to 86
56
1.38 ...............................
1.42 ...............................
2.10
2.13
18 to 44 .........................
25 ..................................
34 to 73
44
.................................
.................................
range ......................
.................................
range ......................
.................................
Costs
Incremental Equipment Costs ...........
7% .................................
3% .................................
1.79 ...............................
1.89 ...............................
Net Benefits
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Total ‡ ................................................
7% range ......................
7% .................................
15 To convert the time-series of costs and benefits
into annualized values, DOE calculated a present
value in 2015, the year used for discounting the
NPV of total consumer costs and savings. For the
benefits, DOE calculated a present value associated
with each year’s shipments in the year in which the
shipments occur (e.g., 2020 or 2030), and then
discounted the present value from each year to
2015. The calculation uses discount rates of 3 and
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26 to 61 .........................
35 ..................................
7 percent for all costs and benefits except for the
value of CO2 reductions, for which DOE used casespecific discount rates, as shown in Table I.4. Using
the present value, DOE then calculated the fixed
annual payment over a 30-year period, starting in
the compliance year that yields the same present
value.
16 The atmospheric lifetime of CO is estimated of
2
the order of 30–95 years. Jacobson, MZ. Correction
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to ‘Control of fossil-fuel particulate black carbon
and organic matter, possibly the most effective
method of slowing global warming,’ J. Geophys.
Res. 2005. 110. pp. D14105.
17 DOE used a 3-percent discount rate because the
SCC values for the series used in the calculation
were derived using a 3-percent discount rate (see
section 0).
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1033
TABLE I.5—ANNUALIZED BENEFITS AND COSTS OF NEW AND AMENDED STANDARDS FOR BEVERAGE VENDING
MACHINES*—Continued
million 2014$/year
Discount rate
Primary estimate *
3% range ......................
3% .................................
Low net benefits
estimate *
34 to 70 .........................
43 ..................................
24 to 50 .........................
31 ..................................
High net benefits
estimate *
44 to 84
54
* This table presents the annualized costs and benefits associated with beverage vending machines shipped in 2019–2048. These results include benefits to customers that accrue after the last year of analyzed shipments (2048) from the equipment purchased in during the 30-year
analysis period. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which
may be incurred in preparation for the rule. The primary, low benefits, and high benefits estimates utilize projections of energy prices from the
AEO2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively as well as the default shipments scenario
along with the low and high shipments scenarios. In addition, incremental equipment costs reflect a medium decline rate for projected equipment
price trends in the primary estimate, a low decline rate for projected equipment price trends in the low benefits estimate, and a high decline rate
for projected equipment price trends in the high benefits estimate. The methods used to derive projected price trends are explained in appendix
8C of the technical support document (TSD).
** The CO2 values represent global monetized SCC values, in 2014$, in 2015 under several scenarios. The first three cases use the averages
of SCC distributions calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3-percent discount rate. The SCC time series incorporates an escalation factor.
† The $/ton values used for NOX are described in section IV.L.2. The Primary and Low Benefits Estimates used the values at the low end of
the ranges estimated by EPA, while the High Benefits Estimate uses the values at the high end of the ranges.
‡ Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to the average SCC with a 3-percent
discount rate ($40.0/metric ton case). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits
are calculated using the labeled discount rate, and those values are added to the full range of CO2 values.
DOE’s analysis of the national impacts
of the adopted standards is described in
section V.B.3 of this final rule.
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D. Conclusion
Based on the analyses culminating in
this final rule, DOE found the benefits
to the nation of the standards (energy
savings, customer LCC savings, positive
NPV of customer benefit, and emission
reductions) outweigh the burdens (loss
of INPV and LCC increases for some
users of these equipment). DOE has
concluded that the standards in this
final rule represent the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified, and would result
in significant conservation of energy.
DOE further notes that equipment
achieving these standard levels is
already commercially available for Class
A and Class B beverage vending
machines. While DOE does not have
certification data for combination
equipment to determine the existence or
extent of equipment meeting the
adopted standard levels, DOE believes
that the standard levels adopted for
combination equipment are reasonable
as they are based on technology options
that are widely available in the BVM
market today (see section III.D). DOE
acknowledges that equipment using the
SNAP-approved refrigerants (i.e., CO2
and propane) meeting the current or
adopted standard levels is not available
for all equipment classes, due to the
limited use of CO2 as a refrigerant to
date and the fact that propane has only
recently been approved for use in BVM
applications. 80 FR 19454, 19491 (April
10, 2015).
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However, DOE notes that Class B
beverage vending machines using CO2
are currently available. In addition,
Class A and Class B equipment that
meets the new and amended standard
levels is currently available, although
such equipment may not use
refrigerants that will be acceptable
under EPA SNAP at the time of
compliance with these new and
amended standards. While DOE
acknowledges that industry experience
with SNAP-compliant refrigerants is
limited, DOE believes that the existing
industry experience in improving the
efficiency of R–134a-based equipment is
applicable and transferable to
equipment using CO2 or propane as a
refrigerant. DOE has addressed the
technical feasibility and economic
implications of meeting the new and
amended standard levels utilizing CO2
and propane refrigerants in the analyses
presented in this final rule, and based
on these analyses, DOE has concluded
that the benefits of the new and
amended standards to the nation
(energy savings, positive NPV of
customer benefits, customer LCC
savings, and emission reductions)
outweigh the burdens (loss of INPV for
manufacturers).
DOE also considered more-stringent
energy efficiency levels as potential
standards. However, DOE concluded
that the potential burdens of the morestringent energy efficiency levels would
outweigh the projected benefits. Based
on consideration of the public
comments DOE received in response to
the 2015 BVM energy conservation
standards notice of proposed
rulemaking (2015 BVM ECS NOPR) and
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related information collected and
analyzed during the course of this
rulemaking effort, DOE is adopting
MDEC levels, in terms of kWh/day, that
are less-stringent than the new and
amended standards proposed in the
NOPR and represent the standard levels
resulting in the maximum economic
benefits for the nation.
II. Introduction
The following section briefly
discusses the statutory authority
underlying this final rule, as well as
some of the relevant historical
background related to the establishment
of amended and new standards for
beverage vending machines.
A. Authority
Title III, Part B of the Energy Policy
and Conservation Act of 1975 (EPCA or
the Act), Public Law 94–163 (codified as
42 U.S.C. 6291–6309) established the
Energy Conservation Program for
Consumer Products Other Than
Automobiles, a program covering most
major household appliances
(collectively referred to as ‘‘covered
products’’), which includes the beverage
vending machines that are the subject of
this rulemaking. (42 U.S.C. 6291(40)) As
part of this program, EPCA directed
DOE to prescribe energy conservation
standards for beverage vending
machines. (42 U.S.C. 6295(v)) In
addition, under 42 U.S.C. 6295(m), DOE
must periodically review its established
energy conservation standards for the
covered equipment. This final rule
fulfills these statutory requirements.
Pursuant to EPCA, DOE’s energy
conservation program for covered
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equipment consists essentially of four
parts: (1) Testing; (2) labeling; (3) the
establishment of Federal energy
conservation standards; and (4)
certification and enforcement
procedures. The Secretary or the Federal
Trade Commission, as appropriate, may
prescribe labeling requirements for
beverage vending machines. (42 U.S.C.
6294(a)(5)(A)) Subject to certain criteria
and conditions, DOE is required to
develop test procedures to measure the
energy efficiency, energy use, or
estimated annual operating cost of
covered equipment. (42 U.S.C. 6293)
Manufacturers of covered equipment
must use the prescribed DOE test
procedure as the basis for certifying to
DOE that their equipment complies with
the applicable energy conservation
standards adopted under EPCA and
when making representations to the
public regarding the energy use or
efficiency of that equipment. (42 U.S.C.
6293(c) and 6295(s)) Similarly, DOE
must use these test procedures to
determine whether the equipment
complies with standards adopted
pursuant to EPCA. (42 U.S.C. 6295(s))
DOE updated its test procedure for
beverage vending machines in a final
rule published July 31, 2015 (2015 BVM
test procedure final rule). 80 FR 45758.
In the 2015 BVM test procedure final
rule, DOE adopted several amendments
and clarifications to the DOE test
procedure in appendix A and appendix
B of subpart Q of 10 CFR part 431. As
specified in the 2015 BVM test
procedure final rule, manufacturers of
beverage vending machines are required
to use appendix B to demonstrate
compliance with any new and amended
energy conservation standards adopted
as a result of this rulemaking.
DOE must follow specific statutory
criteria for prescribing new or amended
standards for covered equipment,
including beverage vending machines.
Any new or amended standard for a
covered piece of equipment must be
designed to achieve the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified. (42 U.S.C.
6295(o)(2)(A) and (3)(B)) Furthermore,
DOE may not adopt any standard that
would not result in the significant
conservation of energy. (42 U.S.C.
6295(o)(3)) Moreover, DOE may not
prescribe a standard: (1) For certain
equipment, including beverage vending
machines, if no test procedure has been
established for the equipment, or (2) if
DOE determines by rule that the
standard is not technologically feasible
or economically justified. (42 U.S.C.
6295(o)(3)(A)–(B))
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In deciding whether a standard is
economically justified, DOE must
determine whether the benefits of the
standard exceed its burdens. (42 U.S.C.
6295(o)(2)(B)(i)) DOE must make this
determination after receiving comments
on the proposed standard, and by
considering, to the greatest extent
practicable, the following seven
statutory factors:
(1) The economic impact of the
standard on manufacturers and
consumers of the equipment subject to
the standard;
(2) The savings in operating costs
throughout the estimated average life of
the covered equipment in the type (or
class) compared to any increase in the
price, initial charges, or maintenance
expenses for the covered equipment that
are likely to result from the standard;
(3) The total projected amount of
energy (or as applicable, water) savings
likely to result directly from the
standard;
(4) Any lessening of the utility or the
performance of the covered equipment
likely to result from the standard;
(5) The impact of any lessening of
competition, as determined in writing
by the Attorney General, that is likely to
result from the standard;
(6) The need for national energy and
water conservation; and
(7) Other factors the Secretary of
Energy (Secretary) considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII))
Further, EPCA, as codified,
establishes a rebuttable presumption
that a standard is economically justified
if the Secretary finds that the additional
cost to the consumer of purchasing a
piece of equipment complying with an
energy conservation standard level will
be less than three times the value of the
energy (and, as applicable, water)
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))
EPCA, as codified, also contains what
is known as an ‘‘anti-backsliding’’
provision, which prevents the Secretary
from prescribing any amended standard
that either increases the maximum
allowable energy use or decreases the
minimum required energy efficiency of
a covered equipment type. (42 U.S.C.
6295(o)(1)) Also, the Secretary may not
prescribe an amended or new standard
if interested persons have established by
a preponderance of the evidence that
the standard is likely to result in the
unavailability in the United States in
any covered equipment type (or class) of
performance characteristics (including
reliability), features, sizes, capacities,
and volumes that are substantially the
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same as those generally available in the
United States. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies
requirements when promulgating an
energy conservation standard for
covered equipment that has two or more
subcategories. DOE must specify a
different standard level for a type or
class of equipment that has the same
function or intended use if DOE
determines that equipment within such
group: (A) Consume a different kind of
energy from that consumed by other
covered equipment within such type (or
class); or (B) have a capacity or other
performance-related feature which other
equipment within such type (or class)
do not have and such feature justifies a
higher or lower standard. (42 U.S.C.
6295(q)(1)) In determining whether a
performance-related feature justifies a
different standard for certain
equipment, DOE must consider such
factors as the utility to the consumer of
such a feature and other factors DOE
deems appropriate. Id. Any rule
prescribing such a standard must
include an explanation of the basis on
which such higher or lower level was
established. (42 U.S.C. 6295(q)(2)) In
this final rule, DOE is prescribing
energy conservation standards for
different classes of beverage vending
machines and DOE’s basis for
establishing such separate classes is
discussed in this final rule.
Federal energy conservation
requirements generally supersede State
laws or regulations concerning energy
conservation testing, labeling, and
standards. (42 U.S.C. 6297(a)–(c)) DOE
may, however, grant waivers of Federal
preemption for particular State laws or
regulations, in accordance with the
procedures and other provisions set
forth under 42 U.S.C. 6297(d)).
Finally, pursuant to EPCA any final
rule for new or amended energy
conservation standards promulgated
after July 1, 2010, must address standby
mode and off mode energy use. (42
U.S.C. 6295(gg)(3)) Specifically, when
DOE adopts a standard for any covered
equipment after that date, it must, if
justified by the criteria for adoption of
standards under EPCA (42 U.S.C.
6295(o)), incorporate standby mode and
off mode energy use into the standard,
or, if that is not feasible, adopt a
separate standard for such energy use
for that equipment. (42 U.S.C.
6295(gg)(3)(A)–(B))
DOE reviewed the operating modes
available for beverage vending machines
and determined that this equipment
does not have operating modes that
meet the definition of standby mode or
off mode, as established at 42 U.S.C.
6295(gg)(3). Specifically, beverage
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vending machines are typically always
providing at least one main function—
refrigeration. (42 U.S.C. 6295(gg)(1)(A))
DOE recognizes that in a unique
equipment design, the low power mode
includes disabling the refrigeration
system, while for other equipment the
low power mode controls only elevate
the thermostat set point. Because low
power modes still include some amount
of refrigeration for the vast majority of
equipment, DOE believes that such a
mode does not constitute a ‘‘standby
mode,’’ as defined by EPCA, for
beverage vending machines. Therefore,
DOE believes that beverage vending
machines do not operate under standby
and off mode conditions as defined in
EPCA, and that the energy use of a
beverage vending machine is captured
in any standard established for active
mode energy use. As such, the new and
amended energy conservation standards
adopted in this final rule do not
specifically address standby mode or off
mode energy consumption for the
equipment.
B. Background
1. Current Standards
In a final rule published on August
31, 2009 (henceforth referred to as the
1035
2009 BVM final rule), DOE prescribed
the current energy conservation
standards for beverage vending
machines. 74 FR 44914 (Aug. 31, 2009).
The 2009 BVM final rule established
energy conservation standards for Class
A and Class B beverage vending
machines, with a compliance date of
August 31, 2012, as shown in Table II.1.
DOE also established a class of
combination machines, but did not set
standards for combination machines,
instead reserving a place for possible
development of future standards for that
equipment.
TABLE II.1—ENERGY CONSERVATION STANDARDS FOR BEVERAGE VENDING MACHINES, PRESCRIBED BY THE 2009 BVM
FINAL RULE—COMPLIANCE DATE AUGUST 31, 2012
Class
Definition
A ...................................................
Class A means a refrigerated bottled or canned beverage vending
machine that is fully cooled, and is not a combination vending
machine.
Class B means any refrigerated bottled or canned beverage vending machine not considered to be Class A, and is not a combination vending machine.
Combination means a refrigerated bottled or canned beverage
vending machine that also has non-refrigerated volumes for the
purpose of vending other, non-‘‘sealed beverage’’ merchandise.
B ...................................................
Combination .................................
The 2009 BVM final rule document is
currently available at
www.regulations.gov/
#!documentDetail;D=EERE-2006-STD0125-0005.
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2. History of Standards Rulemaking for
Beverage Vending Machines
EPCA directed the Secretary to issue,
by rule, no later than August 8, 2009,
energy conservation standards for
beverage vending machines. (42 U.S.C.
6295 (v)) On August 31, 2009, DOE
issued a final rule establishing
performance standards for beverage
vending machines to complete the first
required rulemaking cycle. 74 FR 44914.
DOE conducted this energy
conservation standards rulemaking
pursuant to 42 U.S.C. 6295(m), which
requires that within 6 years of issuing
any final rule establishing or amending
a standard, DOE shall publish either a
notice of determination that amended
standards are not needed or a NOPR
proposing amended standards.
In initiating this rulemaking, DOE
prepared a framework document,
‘‘Energy Conservation Standards
Rulemaking Framework Document for
Refrigerated Beverage Vending
Machines’’ (framework document),
which describes the procedural and
analytical approaches DOE anticipates
using to evaluate energy conservation
standards for beverage vending
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Maximum daily energy consumption
machines. DOE published a notice that
announced both the availability of the
framework document and a public
meeting to discuss the proposed
analytical framework for the
rulemaking. That notice also invited
written comments from the public. 78
FR 33262 (June 4, 2013). That document
is available at www.regulations.gov/
#!docketDetail;D=EERE-2013-BT-STD0022.
DOE held the framework public
meeting on June 20, 2013, at which it (1)
presented the contents of the framework
document; (2) described the various
analyses DOE planned to conduct
during the rulemaking; (3) sought
comments from interested parties on
these subjects; and (4) in general, sought
to inform interested parties about, and
facilitate their involvement in, the
rulemaking. Major issues discussed at
the public meeting included: (1)
Equipment classes, (2) analytical
approaches and methods used in the
rulemaking; (3) impact of standards and
burden on manufacturers; (5)
technology options; (6) distribution
channels and shipments; (7) impacts of
outside regulations; and (8)
environmental issues. At the meeting
and during the comment period on the
framework document, DOE received
many comments that helped it identify
and resolve issues pertaining to
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0.055 × V + 2.56.
0.073 × V + 3.16.
[reserved].
beverage vending machines relevant to
this rulemaking.
DOE then gathered additional
information and performed preliminary
analyses to help review standards for
this equipment. DOE published a notice
to announce the availability of the
preliminary analysis TSD and a public
meeting to discuss the preliminary
analysis results. 79 FR 46379 (Aug. 8,
2014). In the preliminary analysis, DOE
discussed and requested comment on
the tools and methods DOE used in
performing its preliminary analysis, as
well as analyses results. DOE also
sought comments concerning other
relevant issues that could affect
potential amended standards for
beverage vending machines. Id.
The preliminary analysis provided an
overview of DOE’s technical and
economic analyses supporting new and
amended standards for beverage
vending machines, discussed the
comments DOE received in response to
the framework document, and
addressed issues raised by those
comments. The preliminary analysis
TSD also described the analytical
framework that DOE used (and
continues to use) in considering new
and amended standards for beverage
vending machines, including a
description of the methodology, the
analytical tools, and the relationships
between the various analyses that are
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part of this rulemaking. Additionally,
the preliminary analysis TSD presented
in detail each analysis that DOE had
performed for this equipment up to that
point, including descriptions of inputs,
data sources, methodologies, and
results. These analyses included (1) the
market and technology assessment, (2)
the screening analysis, (3) the
engineering analysis, (4) the energy use
analysis, (5) the markups analysis, (6)
the LCC analysis, (7) the PBP analysis,
(8) the shipments analysis, (9) the
national impact analysis (NIA), and (10)
a preliminary manufacturer impact
analysis (MIA).
The preliminary TSD that presents the
methodology and results of each of
these analyses is available at
www.regulations.gov/
#!docketDetail;D=EERE-2013-BT-STD0022. In this final rule, DOE is
presenting additional and revised
analysis in all of these areas.
The public meeting to review the
preliminary analysis took place on
September 16, 2014 (preliminary
analysis public meeting). At the
preliminary analysis public meeting,
DOE presented the methodologies and
results of the analyses prescribed in the
preliminary analysis TSD. Comments
received in response to the preliminary
analysis helped DOE identify and
resolve issues related to the preliminary
analyses and helped refine the analyses
for beverage vending machines.
DOE presented its updated analyses
and proposed new and amended
standard levels in the 2015 BVM ECS
NOPR, which DOE published on August
19, 2015. 80 FR 50462 (Aug. 19, 2015).
On September 29, 2015, DOE held a
public meeting to discuss the 2015 BVM
ECS NOPR and request comments on
DOE’s proposal (BVM ECS NOPR public
meeting). DOE received multiple
comments from interested parties and
considered these comments in the
preparation of the final rule. In response
to DOE’s 2015 BVM ECS NOPR, several
interested parties requested additional
time to prepare their written comments.
(AMS, No. 45 at p. 1; NAMA, No. 44 at
p. 1; Royal Vendors, No. 46 at p. 1; and
Coca-Cola, No. 49 at p. 1).18 To
accommodate this request, DOE issued
a notice to reopen the 2015 BVM ECS
18 DOE will identify comments received in
response to the 2015 BVM ECS NOPR and placed
in Docket No. EERE–2013–BT–STD–0022 by the
commenter, the number of document as listed in
the docket maintained at www.regulations.gov, and
the page number of that document where the
comment appears (for example: Coca-Cola, No. 52
at p. 2). If a comment was made verbally during the
BVM ECS NOPR public meeting, DOE will also
specifically identify those as being located in the
NOPR public meeting transcript (for example: CocaCola, Public Meeting Transcript, No. 48 at p. 184).
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NOPR comment period on October 23,
2015 until November 23, 2015. 80 FR
64370 (Oct. 23, 2015). Relevant
comments received during both
comment periods and the BVM ECS
NOPR public meeting, as well as DOE’s
responses, are provided throughout this
document.
III. General Discussion
DOE is amending standards for Class
A and Class B beverage vending
machines. DOE is also amending the
definition for Class A equipment to
more unambiguously differentiate Class
A and Class B beverage vending
machines. In addition, DOE is amending
the definition of combination vending
machine, creating two classes of
combination vending machine
equipment, and promulgating standards
for those classes. In the subsequent
sections, DOE discusses the scope of
coverage, test procedure, compliance
dates, technical feasibility, energy
savings, and economic justification of
the new and amended standards.
A. Equipment Classes and Scope of
Coverage
EPCA defines a beverage vending
machine as ‘‘a commercial refrigerator 19
that cools bottled or canned beverages
and dispenses the bottled or canned
beverages on payment.’’ (42 U.S.C.
6291(40))
When evaluating and establishing
energy conservation standards, DOE
divides covered equipment into
equipment classes by the type of energy
used or by capacity or other
performance-related features that
justifies a different standard. In making
a determination whether a performancerelated feature justify differing
standards, DOE must consider such
factors as the utility to the customer of
the feature and other factors DOE
determines are appropriate. (42 U.S.C.
6295(q))
19 EPCA defines commercial refrigerator, freezer,
and refrigerator-freezer as ‘‘refrigeration equipment
that—
(i) is not a consumer product (as defined in
section 6291 of this title);
(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).
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In the 2009 BVM final rule, DOE
determined that unique energy
conservation standards were warranted
for Class A and Class B beverage
vending machines and added the
following definitions to 10 CFR 431.292
to differentiate such equipment:
Class A means a beverage vending
machine that is fully cooled, and is not
a combination vending machine.
Class B means any beverage vending
machine not considered to be Class A,
and is not a combination vending
machine.
74 FR 44914, 44967 (Aug. 31, 2009).
DOE differentiated Class A and Class
B beverage vending machines based on
whether the refrigerated volume (V) of
equipment was fully cooled, as DOE
determined that this was the most
significant criteria affecting energy
consumption. Id. at 44924.
The 2009 BVM final rule also
established a definition for combination
vending machine at 10 CFR 431.292.
Combination vending machine means
a beverage vending machine that also
has non-refrigerated volumes for the
purpose of vending other, non-‘‘sealed
beverage’’ merchandise.
74 FR 44914, 44967 (Aug. 31, 2009).
DOE considered the definition of
beverage vending machine broad
enough to include any vending machine
that cools at least one bottled or canned
beverage and dispenses it upon
payment. DOE elected to establish
combination machines as a separate
equipment class because such machines
may be challenged by component
availability and such machines have a
distinct utility that limits their energy
efficiency improvement potential
compared to Class A and B beverage
vending machines. However, DOE did
not establish standards for combination
machines in the 2009 BVM final rule.
Id. at 44920.
While DOE’s existing definitions of
Class A and Class B equipment
distinguish equipment based on
whether or not the refrigerated volume
is ‘‘fully cooled,’’ DOE regulations have
never defined the term ‘‘fully cooled.’’
In the framework document, DOE
suggested a definition for ‘‘fully cooled’’
and further refined that definition in the
BVM test procedure NOPR DOE
published on Aug. 11, 2014 (2014 BVM
test procedure NOPR). 79 FR 46908,
46934. In response to comments
received on both the framework
document and 2014 BVM test procedure
NOPR, DOE proposed to modify the
definition of Class A to more
unambiguously differentiate Class A
and Class B equipment. In this final
rule, DOE is using the presence of a
transparent front on Class A beverage
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vending machines as a key
distinguishing characteristic between
Class A and Class B equipment and is
adopting this distinction as part of the
Class A equipment class definition.
In this final rule, DOE is also
amending the definition of combination
vending machine to better align with
industry definitions and provide more
clarity regarding the physical
characteristics of the ‘‘refrigerated’’ and
‘‘non-refrigerated’’ volumes, or
compartments. In addition, DOE is
creating two classes of combination
vending machines, Combination A and
Combination B, to differentiate
combination vending machines based
on criteria similar to those used to
distinguish Class A and Class B
beverage vending machines (i.e., the
presence of a transparent front). See
section IV.A.1 of this final rule for more
discussion on the equipment classes
addressed in this final rule.
B. Test Procedure
The estimates of energy use and
energy saving potential presented in the
final rule analysis are based on the
performance of beverage vending
machines when tested in accordance
with appendix B of the recently
amended DOE BVM test procedure
located at 10 CFR 431.294. (See sections
IV.B, IV.C, and IV.E of this final rule for
more discussion.) On July 31, 2015,
DOE published the 2015 BVM test
procedure final rule, which amended
DOE’s test procedure for beverage
vending machines. 80 FR 45758. In the
2015 BVM test procedure final rule,
DOE adopted several minor
amendments to clarify DOE’s test
procedure for beverage vending
machines and also adopted several
amendments related to the impact of
low power modes on the measured daily
energy consumption of BVM models. Id.
DOE also reorganized the DOE test
procedure into two new appendices,
appendix A and appendix B to subpart
Q to part 431 of Title 10 of the Code of
Federal Regulations, and adopted a
minor change to the certification and
reporting requirements for beverage
vending machines at 10 CFR
429.52(b)(2) and 10 CFR 431.296.
The DOE BVM test procedure, as
amended, incorporates by reference
American National Standards Institute
(ANSI)/American Society of Heating,
Refrigerating and Air-Conditioning
Engineers (ASHRAE) Standard 32.1–
2010 to describe the measurement
equipment, test conditions, and test
protocol applicable to testing beverage
vending machines. DOE’s test procedure
also specifies that the measurement of
‘‘refrigerated volume’’ of beverage
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vending machines must be in
accordance with the methodology
specified in Appendix C of ANSI/
ASHRAE Standard 32.1–2010.
In the 2015 BVM test procedure final
rule, DOE also adopted several new
clarifying amendments including:
(1) eliminating testing at the 90 °F
ambient test condition,
(2) clarifying the test procedure for
combination vending machines,
(3) clarifying the requirements for
loading BVM models under the DOE test
procedure,
(4) clarifying the specifications of the
standard product,
(5) clarifying the next-to-vend
beverage temperature test condition,
(6) specifying placement of
thermocouples during the DOE test
procedure,
(7) establishing testing provisions at
the lowest application product
temperature, and
(8) clarifying the treatment of certain
accessories when conducting the DOE
test procedure.
These test procedure amendments are
all reflected in DOE’s new appendix A,
which became effective August 31, 2015
and must be used, beginning January 27,
2016, by manufacturers for
representations and to demonstrate
compliance with the BVM energy
conservation standards adopted in the
2009 BVM final rule, for which
compliance was required as of August
31, 2012. 80 FR 45758 (July 31, 2015).
DOE also adopted amended language at
10 CFR 429.52(b) and 10 CFR 431.296
clarifying the certification and reporting
requirements for beverage vending
machines, which also became effective
August 31, 2015. Id. at 45787.
Appendix B includes all provisions in
appendix A, as well as, provisions for
testing low power modes. The test
procedure found in appendix B is to be
used in conjunction with the new and
amended standards established as a
result of this final rule. As such,
manufacturers are not required to use
appendix B until the compliance date of
the new and amended standards
established in this final rule. Id.
During the BVM ECS NOPR public
meeting and subsequent comment
period, several interested parties
commented about DOE’s updated BVM
test procedure and how equipment are
currently tested in the industry. ASAP
commented in the BVM ECS NOPR
public meeting that there may be
potential ambiguity in the BVM test
procedure DOE adopted in 2006 (71 FR
71340 (Dec. 8, 2006)) with regard to
lighting low power modes in that some
machines may have shown artificially
lower energy consumption under this
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test procedure due to lighting controls
automatically turning off the lights
when no one is in the test room. (ASAP,
Public Meeting Transcript, No. 48 at p.
67) Royal Vendors and SandenVendo
America (SVA) commented that the
current standard is achievable without
the use of low power modes and that
they test all of their equipment without
low power modes enabled, and do not
include payment systems in their
reported energy consumption. (Royal
Vendors, No. 54 at p. 4; SVA, No. 53 at
p. 2) The National Automatic
Merchandising Association (NAMA)
also commented that at least one
manufacturer has achieved the current
standard level without the use of energy
management systems, and that reported
energy consumption currently does not
include payment systems. NAMA
additionally urged DOE to allow energy
management systems to be enabled
during testing. (NAMA, No. 50 at p. 5)
In its written comments, NAMA
requested that DOE review the European
Vending Association’s Energy
Management Protocol Program and
stated that it may provide additional
guidance related to the testing of
beverage vending machines in Europe
that may be applicable to the United
States (NAMA, No. 50 at p. 14)
Automated Merchandising Systems
(AMS) commented that the revised test
procedure would adversely affect the
daily energy consumption (DEC) even
though performance has not changed.
(AMS, No. 57 at p. 2) Specifically, SVA
commented that including payment
systems in reported energy consumption
effectively lowers the allowable DEC by
0.2 kWh/day, which would account for
over 9 percent of allowable energy
consumption for Class A and 6 percent
for Class B. (SVA, No. 53 at p. 4) SVA
stated in written comments that the
inclusion of payment systems in the
reported energy consumption under the
new test procedure would make it
difficult to meet the current standard.
(SVA, No. 53 at p. 2) Similarly, CocaCola and Royal Vendors stated that
allowances for low power states are
offset by the inclusion of payment
systems in the reported energy
consumption under the new test
procedure. (Coca-Cola, No. 52 at p. 3;
Royal Vendors, No. 54 at p. 1)
DOE recognizes that the previous DOE
BVM test procedure adopted in DOE’s
2006 test procedure final rule (71 FR
71340 (Dec. 8, 2006)) may have allowed
for misinterpretation of some aspects of
DOE’s test procedure methodology.
However, the clarifications and
amendments recently adopted in
appendix A of the DOE BVM test
procedure seeks to unambiguously
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clarify how BVM equipment should be
configured and tested in accordance
with the DOE BVM test procedure. 80
FR 45758, 45760 (July 31, 2015).
Specifically, related to lighting controls,
appendix A requires that all lights be in
the ‘‘on’’ state for the full duration of the
test. However, appendix B, which is
required for demonstrating compliance
with the energy conservation standards
adopted in this final rule, allows
lighting and other accessories that are
controlled by an accessory low power
mode to be turned off (by the accessory
low power mode) for a period of 6
hours. DOE believes this accurately
represents the impact of accessory low
power modes on BVM DEC. Regarding
the energy consumption and
configuration of payment mechanisms
when testing beverage vending
machines, DOE clarified in the 2015
BVM test procedure final rule that
energy consumed by BVM payment
systems should be included in the
measured energy consumption of this
equipment under both appendix A and
appendix B.
In the analysis supporting this final
rule, DOE has analyzed equipment
under appendix B, which accounts for
the use of accessory and refrigeration
low power modes. DOE’s analysis also
assumes the energy consumption of
payment mechanisms are accounted for
in the DEC of BVM equipment. DOE
recognizes that some test procedure
amendments included in appendix B,
such as those addressing accessory and
lighting low power modes, may change
the measured energy consumption of
covered equipment. As such, as stated
in the 2015 BVM test procedure final
rule, use of appendix B is only
permitted to demonstrate compliance
with the new and amended standards
adopted in this final rule. 80 FR 45758,
45760–45761. DOE notes that, on the
effective date of this BVM ECS final
rule, manufacturers may elect to begin
using the appendix B test procedure
prior to the compliance date, provided
they use the results of such testing to
demonstrate compliance with the new
and amended standards adopted in this
final rule. Manufacturers may not use
the results of testing under appendix B
to demonstrate compliance with the
energy conservation standards adopted
in the 2009 BVM final rule.20
In response to NAMA’s comment
requesting that DOE allow for the use of
energy management systems during
testing, DOE notes that the revised DOE
20 See DOE’s test procedure guidance on this
topic at https://www1.eere.energy.gov/buildings/
appliance_standards/pdfs/tp_earlyuse_faq_2014-825.pdf.
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BVM test procedure now allows for the
use of lighting and refrigeration low
power states. In response to NAMA’s
suggestion that DOE consult the
European Vending Association’s Energy
Management Protocol Program, DOE
appreciates the suggestion from NAMA,
but notes that DOE has already clarified
the appropriate configuration and use of
energy management systems when
testing in accordance with the DOE
BVM test procedure in the recently
published 2015 BVM test procedure
final rule. 80 FR 45758. DOE also notes
that EPCA requires that the DOE BVM
test procedure for beverage vending
machines shall be based on ASHRAE
Standard 32.1–2004, entitled ‘‘Methods
of Testing for Rating Vending Machines
for Bottled, Canned or Other Sealed
Beverages.’’ 42 U.S.C. 6395(15)
C. Compliance Dates
Pursuant to 42 U.S.C. 6295(v)(3), the
new and amended standards in this
final rule will apply to equipment
manufactured beginning on January 8,
2019, 3 years after the publication date
of this final rule in the Federal Register.
In its analysis, DOE used a 30-year
analysis period of 2019–2048.
In written comments submitted in
response to the 2015 BVM ECS NOPR,
Coca-Cola, NAMA, Royal Vendors, and
the American Beverage Association
(ABA) requested that the compliance
date for DOE’s proposed standards be
delayed until 2022, 3 years after the
compliance date for the new EPA SNAP
Rules 19 and 20, which list as
acceptable the use of CO2, propane, and
isobutane refrigerants (80 FR 19454,
19491 (April 10, 2015)) and phase out
the use of R–134a refrigerant for BVM
applications (80 FR 42870, 42917–42920
(July 20, 2015)), respectively. (CocaCola, No. 52 at p. 1; NAMA, No. 50 at
p. 2; Royal Vendors, No. 54 at p. 2; ABA
No. 63 at p. 3) During the written
comment period following the
publication of the 2015 BVM ECS
NOPR, DOE also received 1,140
identical form letters (hereafter referred
to as the Form Letters) from interested
parties (the Form Letter Writers)
regarding several aspects of DOE’s
proposal. In the Form Letter,
commenters echoed the request for an
extension of the compliance date to
2022. (The Form Letter Writers, No. 64
and 65 at p. 1)
In response to the request for an
alternative compliance date for the new
and amended BVM standards
established as a result of this
rulemaking, DOE notes that it does not
have the discretion to deviate from the
compliance period for beverage vending
machines established under EPCA.
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Pursuant to 42 U.S.C. 6295(v), any
energy conservation standard prescribed
for beverage vending machines ‘‘shall
apply to [equipment] manufactured 3
years after the date of publication of a
final rule establishing the energy
conservation standard.’’ As such, DOE is
not authorized to accommodate the
request of commenters and maintains
that compliance of the new and
amended standards adopted in this final
rule is required beginning 3 years after
the publication date of this final rule in
the Federal Register, or on January 8,
2019.
D. Technological Feasibility
1. General
In each energy conservation standards
rulemaking, DOE conducts a screening
analysis based on information gathered
on all current technology options and
prototype designs that could improve
the efficiency of the equipment that are
the subject of the rulemaking. As the
first step in such an analysis, DOE
develops a list of technology options for
consideration in consultation with
manufacturers, design engineers, and
other interested parties. DOE then
determines which of those means for
improving efficiency are technologically
feasible. DOE considers technologies
incorporated in commercially available
equipment or in working prototypes to
be technologically feasible. 10 CFR part
430, subpart C, appendix A, section
4(a)(4)(i).
After DOE has determined that
particular technology options are
technologically feasible, it further
evaluates each technology option in
light of the following additional
screening criteria: (1) Practicability to
manufacture, install, and service; (2)
adverse impacts on equipment utility or
availability; and (3) adverse impacts on
health or safety. 10 CFR part 430,
subpart C, appendix A, section
4(a)(4)(ii)–(iv). Additionally, it is DOE
policy not to include in its analysis any
proprietary technology that is a unique
pathway to achieving a certain
efficiency level. Section IV.B of this
document discusses the results of the
screening analysis for beverage vending
machines, particularly the designs DOE
considered, those it screened out, and
those that are the basis for the standard
levels considered in this rulemaking.
For further details on the screening
analysis for this rulemaking, see chapter
4 of the final rule TSD.
In response to the proposed standard
levels in the 2015 BVM ECS NOPR, DOE
received several comments regarding
the technological feasibility of those
proposed standard levels. In written
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comments, the Appliance Standards
Awareness Project (ASAP), Alliance to
Save Energy (ASE), Natural Resources
Defense Council (NRDC), Northwest
Energy Efficiency Alliance (NEEA), and
the Northwest Power and Conservation
Council (NPCC) (herein referred to as
the Energy Efficiency Advocates Joint
Commenters, or EEA Joint Commenters)
submitted a joint comment ((herein
referred to as the EEA Joint Comment)
expressing support for DOE’s proposed
standards. (EEA Joint Commenters, No.
56 at p. 1) Conversely, in the BVM ECS
NOPR public meeting and in written
comments, NAMA, SVA, Coca-Cola,
Royal Vendors, AMS, Seaga
Manufacturing (Seaga), and the U.S.
Small Business Administration’s Office
of Advocacy (SBA Advocacy) all stated
that DOE’s proposed standards were too
aggressive, especially in light of EPA
SNAP regulations concurrent with
DOE’s rulemaking. (NAMA, No. 50 at p.
1; SVA, No. 53 at p. 10; Coca-Cola, No.
52 at p. 1; Royal Vendors, AMS, and
Seaga, Public Meeting Transcript, No.
48 at pp. 175, 177; SBA Advocacy, No.
61 at p. 3) ABA requested that DOE
coordinate with EPA to ensure the
proposed standards are technologically
and economically feasible relative to
ENERGY STAR equipment
specifications. (ABA, No. 63 at p. 3) The
European Vending Association stated
that adopting a standard more stringent
than ENERGY STAR was not justifiable
in Europe and it would not be feasible
for DOE to adopt more stringent
standards (EVA, No. 60 at p. 1) NAMA,
SVA, and SBA Advocacy stated that the
proposed standards are not
technologically feasible or economically
justified and will cause substantial
negative impacts on the industry if
enacted. (NAMA, No. 50 at p. 1; SVA,
No. 53 at p. 10; SBA Advocacy, No. 61
at p. 3) AMS, SVA, and Royal Vendors
stated in the BVM ECS NOPR public
meeting and in written comments that
compliance with DOE’s proposed
standards is unattainable, and Royal
Vendors added that compliance would
require cutting 1 kWh/day from its Class
A machines and 1.5 kWh/day from its
Class B machines. (AMS, SVA, and
Royal Vendors, Public Meeting
Transcript, No. 48 at p. 175; Royal
Vendors, No. 54 at p. 1)
In the BVM ECS NOPR public
meeting, Coca-Cola inquired about the
manufacturer of the CO2 unit that DOE
examined and found to meet the 2009
standard, and expressed doubt that an
existing CO2 machine would be able to
meet the proposed standard. (Coca-Cola,
Public Meeting Transcript, No. 48 at pp.
96–101) Similarly, SVA and SBA
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Advocacy expressed agreement that the
current standards could be met using
any refrigerant but disagreement that the
efficiency levels in the NOPR TSD could
be met. (SVA, No. 53 at p. 3; SBA
Advocacy, No. 61 at p. 3) SVA
additionally expressed disagreement
with DOE’s assumption that all baseline
Class A and Class B propane equipment
and Class A CO2 equipment would be
able to meet EL1 because it believes
many of DOE’s proposed design options
have already been implemented to meet
the 2009 standard. (SVA, No. 53 at p. 7)
AMS commented that it would not be
able to meet even the 2009 standard for
class A with CO2 refrigerant, and further
stated that it might be possible to meet
trial standard level (TSL) 1 for Class A
with substantial design changes. AMS
additionally commented that it may be
possible for it to meet TSL 2 for
Combination A equipment using CO2
and TSL 3 with propane with
substantial design changes. (AMS, No.
57 at p. 4) In written comments, the
Form Letter Writers stated DOE has not
provided proof that CO2 machines
meeting the proposed standards are
already available. (The Form Letter
Writers, No. 64 and 65 at p. 1) Further,
in the Form Letters, commenters stated
the combination vending machines have
not been tested to the proposed
standard. (The Form Letter Writers, No.
64 and 65 at p. 1)
In the BVM ECS NOPR public
meeting, SVA stated that the proposed
standards do not leave room for any
new or innovative features which
consume energy. (SVA, Public Meeting
Transcript, No. 48 at p. 174) In its
written comment, Coca-Cola stated that
the proposed standards would make it
difficult for suppliers to offer equipment
with display panels for equipment
interaction, video content, or
advertising, and would therefore reduce
utility of the equipment. (Coca-Cola, No.
52 at p. 4)
DOE appreciates the support for
DOE’s proposed standard levels from
the EEA Joint Commenters. Regarding
the concerns raised by Coca-Cola,
NAMA, Royal Vendors, AMS, Seaga,
and SBA Advocacy DOE has revised its
engineering and economic analyses
based on the specific feedback of
interested parties. DOE believes that its
analyses accurately reflect the
capabilities of existing current
equipment designs and component
design options. Specifically, DOE
compared its engineering outputs to
empirical DEC data gathered from the
units that DOE selected for testing and
teardowns, as well as to certified DEC
data included in the Compliance
Certification Management System
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1039
(CCMS) and ENERGY STAR®
directories in order to confirm the
validity and accuracy of its engineering
analysis inputs and results. Chapter 3 of
the final rule TSD contains plots of the
relevant ENERGY STAR and CCMS
certification data, while Chapter 5 of the
final rule TSD discusses DOE’s
methodology in selecting units for
testing and teardown.
DOE also revised certain assumptions
regarding the cost of more-efficient
components and the cost to maintain,
repair, and/or replace those moreefficient components to better reflect the
BVM market today and throughout the
analysis period. Component costs, as
well as maintenance, repair, and
replacement costs are discussed in
chapters 5 and 8 of the final rule TSD,
respectively. Based on these revised
analyses, DOE is adopting in this final
rule new and amended standards for
beverage vending machines that are less
stringent than the MDEC levels
proposed in the 2015 BVM ECS NOPR.
As discussed further in section V, the
MDEC levels adopted in this final rule
represent the standard levels for each
equipment class with the maximum net
benefits for the nation. DOE’s
engineering and economic analyses
presented in this final rule represent the
best available data on BVM performance
and costs and include substantial input
from interested parties received
throughout the course of the
rulemaking. As such, DOE believes the
MDEC standard levels adopted in this
final rule are technologically feasible
and economically justified. DOE also
analyzed these adopted standard levels
against the reported and tested DEC
values of currently available equipment
and notes that there are several models
of Class A and Class B equipment that
would meet the amended MDEC levels
under either appendix A or appendix B
(that is, with or without low power
modes employed). While DOE
acknowledges that not all of these
models use refrigerants that will be
required in 2019 when compliance with
the amended standards is required, DOE
notes that at least one BVM model using
CO2 as a refrigerant are listed in the
ENERGY STAR database that comply
with the amended MDEC standard for
Class B equipment adopted in this final
rule.
In response to ABA and EVA’s
comments suggesting that DOE
coordinate with ENERGY STAR and
highlighting the technological feasibility
of the ENERGY STAR standard levels,
DOE notes that DOE coordinates closely
with EPA’s ENERGY STAR program.
Regarding the technological feasibility
of the new and amended standards
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adopted in this final rule as compared
to ENERGY STAR levels, DOE is
obligated to adopt the standard levels
that represent the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified, subject to
specific criteria established by EPCA.
(42 U.S.C. 6295(o)(2) and (3)(B)) DOE
specifically analyzed the technological
feasibility and economic benefits of the
current ENERGY STAR levels for Class
A and Class B equipment (and
comparable levels for Combination
equipment) as TSL 1. DOE’s analysis
considers only those technology options
considered to be technologically
feasible, as discussed in section III.D.2
and IV.B. Therefore, by definition, all
ELs and TSLs analyzed by DOE
represent technologically feasible
energy consumption levels for beverage
vending machines. Based on DOE’s
analysis, as discussed further in section
V.B, DOE found TSL 3 to result in the
maximum economic benefits for the
nation. Therefore, while the current
ENERGY STAR are also technologically
feasible, TSL 3 represents the maximum
improvement in energy efficiency that is
technologically feasible and
economically justified, based on DOE’s
analysis.
In response to the Form Letter Writers
statement that DOE has not provided
proof that CO2 machines meeting the
proposed standards are already
available, DOE recognizes that there was
a statement in the 2015 BVM ECS NOPR
that may have been misinterpreted by
some to indicate that Class B equipment
using CO2 as a refrigerant was available
that met the standard level proposed in
the NOPR. Specifically, in both the 2015
BVM ECS NOPR public meeting and in
written comments, Coca-Cola stated that
it does not believe that there is a
beverage vending machine with a CO2
refrigeration system that is capable of
meeting the proposed standards, even
with credits for low power modes.
(Coca-Cola, No. 52 at p. 2; Coca-Cola,
Public Meeting Transcript, No. 48 at p.
184) In this final rule, DOE clarifies that
the sentence in the 2015 BVM ECS
NOPR was intended to read ‘‘Class B
equipment that utilizes CO2 as a
refrigerant and Class B equipment that
meets the proposed standard level is
currently available.’’ 80 FR 50462,
50467 (August 19, 2015). However,
regarding the standard adopted in this
final rule, DOE reiterates that at least
one BVM model using CO2 refrigerant is
listed in the ENERGY STAR data base
that meets the amended Class B
standard level, and it is possible that
additional units would meet the
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amended standard level when tested
until the new appendix B test procedure
adopted in the 2015 BVM test procedure
final rule. 80 FR 45758 (July 31, 2015).
BVM models of Class A and
combination equipment using CO2
refrigerant have not yet been developed,
so a similar comparison is not possible.
In response to commenters concerns
regarding combination equipment, DOE
notes that combination equipment
manufacturers are currently not
required to report their DEC or comply
with any energy conservation standards
and, as such, DOE does not have the
data that would be needed to perform a
similar comparative analysis of the
analytically-determined performance
levels from the engineering analysis
versus certification or testing data.
However, DOE notes that the design
options that DOE modeled in the
engineering analysis as included at the
adopted standard levels for
Combination A and Combination B
equipment are commonly available
technologies that are also included in
the packages of design options analyzed
at the amended standard levels for Class
A and B. That is, DOE believes that all
Combination A and Combination B
equipment should be able to meet the
new energy conservation standard levels
using the same technology options and
equipment designs that would be
employed by Class A and Class B
equipment in meeting the amended
standard levels adopted for the
equipment. This determination was
made based on an assessment of the
commonalities in design present
between the analogous classes, for
example the presence of a transparent
front and lighting in Class A and
Combination A machines, and the use of
a fully insulated cabinet and zone
cooling in Class B and Combination B
machines. A full discussion of DOE’s
analysis of the performance potential of
combination vending machines is
contained in Chapter 5 of the TSD.
In response to SVA and Coca-Cola’s
concerns regarding the ability of BVM
models that feature digital display
screens or other innovative, interactive
designs, DOE notes that compliance
with the new and amended standards is
assessed based on the tested DEC, as
measured in accordance with appendix
B of the recently updated DOE BVM test
procedure (80 FR 45758 (July 31, 2015)),
and appropriate sampling plans (10 CFR
429.52(a)). In both appendix A and
appendix B of the recently amended
DOE BVM test procedure, DOE adopted
specific provisions clarifying the
configuration of BVM models featuring
external customer display signs, lights,
or digital screens, among other
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accessories and components. 80 FR
45758, 45778–45780 (July 31, 2015).
Specifically, the DOE BVM test
procedure specifies that external
customer display signs, lights, or digital
screens should be de-energized or, if
they cannot be de-energized without
impacting the primary functionality of
the equipment, placed in the external
accessory standby mode (if available) or
the lowest energy consuming state (if no
external accessory standby mode is
available) that maintains such
functionality. 10 CFR 431.292. As the
incremental energy consumption of
display signs and digital screens
referred to by Coca-Cola and SVA
potentially are not included in the
measured DEC for such BVM models,
DOE does not believe that innovation of
manufacturers to include such features
and accessories will be affected by the
newly adopted test procedure or the
standard levels adopted in this final
rule. If any BVM manufacturers produce
a BVM model with any features or
accessories that cannot be
accommodated by the DOE BVM test
procedure or believe that application of
the DOE BVM test procedure would
produce results that are not adequately
representative of the energy
consumption of the equipment, the
manufacturer of that equipment may
submit a petition for a test procedure
waiver in accordance with the
provisions in 10 CFR 431.401.21
2. Maximum Technologically Feasible
Levels
When DOE proposes to adopt an
amended standard for a type or class of
covered equipment, it must determine
the maximum improvement in energy
efficiency or maximum reduction in
energy use that is technologically
feasible for such equipment. (42 U.S.C.
6295(p)(1)) Accordingly, in the
engineering analysis, DOE determined
the maximum technologically feasible
(‘‘max-tech’’) improvements in energy
efficiency for beverage vending
machines, using the design parameters
for the most efficient equipment
available on the market or in working
prototypes. The max-tech levels that
DOE determined for this rulemaking are
described in section III.D.2 of this final
rule and in chapter 5 of the final rule
TSD.
21 DOE issued a final rule amending its
regulations governing petitions for waiver and
interim waiver from DOE test procedures for
consumer products and commercial and industrial
equipment. 79 FR 26591 (May 9, 2014). This final
rule became effective on June 9, 2014.
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E. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy
savings from application of the TSL to
beverage vending machines purchased
in the 30-year period that begins in the
year of compliance with any new and
amended standards (2019–2048).22 The
savings are measured over the entire
lifetime of equipment purchased in the
30-year analysis period. DOE quantified
the energy savings attributable to each
TSL as the difference in energy
consumption between each standards
case and the no-new-standards case.
The no-new-standards case represents a
projection of energy consumption that
reflects how the market for the
equipment would likely evolve in the
absence of new and amended energy
conservation standards.
DOE used its NIA spreadsheet models
to estimate energy savings from new and
amended standards for beverage
vending machines. The NIA spreadsheet
model (described in section IV.H of this
document) calculates savings in site
energy, which is the energy directly
consumed by equipment at the locations
where they are used. Based on the site
energy, DOE calculates national energy
savings (NES) in terms of primary
energy savings at the site or at power
plants, and also in terms of full-fuelcycle (FFC) energy savings. The FFC
metric includes the energy consumed in
extracting, processing, and transporting
primary fuels (i.e., coal, natural gas,
petroleum fuels), and thus presents a
more complete picture of the impacts of
energy conservation standards.23 DOE’s
approach is based on the calculation of
an FFC multiplier for each of the energy
types used by covered equipment. For
more information on FFC energy
savings, see section IV.H.2 of this
document.
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2. Significance of Savings
To adopt standards for any covered
equipment, DOE must determine that
such action would result in
‘‘significant’’ energy savings. (42 U.S.C.
6295(o)(3)(B)) Although the term
‘‘significant’’ is not defined in the Act,
the U.S. Court of Appeals, for the
District of Columbia Circuit in Natural
Resources Defense Council v.
Herrington, 768 F.2d 1355, 1373 (D.C.
22 Each
TSL is composed of specific efficiency
levels for each equipment class. The TSL
considered for this final rule are described in
section V.A. DOE also presents a sensitivity
analysis that considers impacts for equipment
shipped in a 9-year period.
23 The FFC metric is discussed in DOE’s
statement of policy and notice of policy
amendment. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (Aug. 17, 2012).
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Cir. 1985), indicated that Congress
intended ‘‘significant’’ energy savings in
the context of EPCA to be savings that
were not ‘‘genuinely trivial.’’ The energy
savings for all the TSLs considered in
this rulemaking, including the adopted
standards, are nontrivial; therefore, DOE
considers them ‘‘significant’’ within the
meaning of section 325 of EPCA.
F. Economic Justification
1. Specific Criteria
As noted above, EPCA provides seven
factors to be evaluated in determining
whether a potential energy conservation
standard is economically justified. (42
U.S.C. 6295(o)(2)(B)(i)) The following
sections discuss how DOE has
addressed each of those seven factors in
this rulemaking.
a. Economic Impact on Manufacturers
and Customers
In determining the impacts of a
potential amended standard on
manufacturers, DOE conducts an MIA,
as discussed in section IV.J of this
document. DOE first uses an annual
cash-flow approach to determine the
quantitative impacts. This step includes
both a short-term assessment—based on
the cost and capital requirements during
the period between when a regulation is
issued and when entities must comply
with the regulation—and a long-term
assessment over a 30-year period. The
industry-wide impacts analyzed
include: (1) The INPV, which values the
industry on the basis of expected future
cash flows; (2) cash flows by year; (3)
changes in revenue and income; and (4)
other measures of impact, as
appropriate. Second, DOE analyzes and
reports the impacts on different types of
manufacturers, including impacts on
small manufacturers. Third, DOE
considers the impact of standards on
domestic manufacturer employment and
manufacturing capacity, as well as the
potential for standards to result in plant
closures and loss of capital investment.
Finally, DOE takes into account
cumulative impacts of various DOE
regulations and other regulatory
requirements on manufacturers.
For individual customers, measures of
economic impact include the changes in
LCC and PBP associated with new or
amended standards. These measures are
discussed further in the following
section. For customers in the aggregate,
DOE also calculates the national NPV of
the economic impacts applicable to a
particular rulemaking. DOE also
evaluates the LCC impacts of potential
standards on identifiable subgroups of
customers that may be affected
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1041
disproportionately by a national
standard.
b. Savings in Operating Costs Compared
To Increase in Price (LCC and PBP)
EPCA requires DOE to consider the
savings in operating costs throughout
the estimated average life of the covered
equipment in the type (or class)
compared to any increase in the price
of, or in the initial charges for, or
maintenance expenses of, the covered
equipment that are likely to result from
a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this
comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase
price of a piece of equipment and the
operating cost (including energy,
maintenance, and repair expenditures)
discounted over the lifetime of the
equipment. The LCC analysis requires a
variety of inputs, such as equipment
prices, equipment energy consumption,
energy prices, maintenance and repair
costs, equipment lifetime, and discount
rates appropriate for customers. To
account for uncertainty and variability
in specific inputs, such as equipment
lifetime and discount rate, DOE uses a
distribution of values, with probabilities
attached to each value.
The PBP is the estimated amount of
time (in years) it takes customers to
recover the increased purchase cost
(including installation) of a moreefficient piece of equipment through
lower operating costs. DOE calculates
the PBP by dividing the change in
purchase cost due to a more-stringent
standard by the change in annual
operating cost for the year that
standards are assumed to take effect.
For its LCC and PBP analysis, DOE
assumed that customers will purchase
the covered equipment in the first year
of compliance with amended standards.
The LCC savings for the considered
efficiency levels are calculated relative
to the case that reflects projected market
trends in the absence of amended
standards. DOE identifies the percentage
of customers estimated to experience an
LCC increase, as well as calculates the
average LCC savings associated with a
particular standard level. DOE’s LCC
and PBP analyses are discussed in
further detail in section IV.F of this
document.
c. Energy Savings
Although significant conservation of
energy is a separate statutory
requirement for adopting an energy
conservation standard, EPCA requires
DOE, in determining the economic
justification of a standard, to consider
the total projected energy savings that
are expected to result directly from the
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standard. (42 U.S.C. 6295(o)(2)(B)(i)(III))
As discussed in section IV.H of this
document, DOE uses the NIA
spreadsheet models to project NES.
d. Lessening of Utility or Performance of
Equipment
In establishing equipment classes, and
in evaluating design options and the
impact of potential standard levels, DOE
evaluates potential standards that would
not lessen the utility or performance of
the considered equipment. (42 U.S.C.
6295(o)(2)(B)(i)(IV)) DOE determined
based on the data available that the
standards adopted in this final rule will
not reduce the utility or performance of
the equipment under consideration in
this rulemaking.
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e. Impact of Any Lessening of
Competition
EPCA directs DOE to consider the
impact of any lessening of competition,
as determined in writing by the
Attorney General that is likely to result
from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(V)) It also directs the
Attorney General to determine the
impact, if any, of any lessening of
competition likely to result from a
standard and to transmit such
determination to the Secretary within 60
days of the publication of a proposed
rule, together with an analysis of the
nature and extent of the impact. (42
U.S.C. 6295(o)(2)(B)(ii)) DOE
transmitted a copy of its proposed rule
to the Attorney General with a request
that the Department of Justice (DOJ)
provide its determination on this issue.
DOE received no adverse comments
from DOJ regarding the proposed rule.
f. Need for National Energy
Conservation
DOE also considers the need for
national energy conservation in
determining whether a new or amended
standard is economically justified. (42
U.S.C. 6295(o)(2)(B)(i)(VI)) The energy
savings from the adopted standards are
likely to provide improvements to the
security and reliability of the nation’s
energy system. Reductions in the
demand for electricity also may result in
reduced costs for maintaining the
reliability of the nation’s electricity
system. DOE conducts a utility impact
analysis to estimate how standards may
affect the nation’s needed power
generation capacity, as discussed in
section IV.M of this document.
The adopted standards also are likely
to result in environmental benefits in
the form of reduced emissions of air
pollutants and greenhouse gases
associated with energy production and
use. DOE conducts an emissions
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analysis to estimate how potential
standards may affect these emissions, as
discussed in section IV.K of this final
rule; the emissions impacts are reported
in section V.B.6 of this document. DOE
also estimates the economic value of
emissions reductions resulting from the
considered TSLs, as discussed in
section IV.L of this document.
g. Other Factors
EPCA allows the Secretary of Energy,
in determining whether a standard is
economically justified, to consider any
other factors that the Secretary deems to
be relevant. (42 U.S.C.
6295(o)(2)(B)(i)(VII)) To the extent
interested parties submit any relevant
information regarding economic
justification that does not fit into the
other categories described above, DOE
could consider such information under
‘‘other factors.’’
2. Rebuttable Presumption
EPCA sets forth a rebuttable
presumption that an energy
conservation standard is economically
justified if the additional cost to the
customer of a piece of equipment that
meets the standard is less than three
times the value of the first year’s energy
savings resulting from the standard, as
calculated under the applicable DOE
test procedure. (42 U.S.C.
6295(o)(2)(B)(iii)) DOE’s LCC and PBP
analyses generate values used to
calculate the effect the new and
amended energy conservation standards
have on the PBP for customers. These
analyses include, but are not limited to,
the 3-year PBP contemplated under the
rebuttable-presumption test. In addition,
DOE routinely conducts an economic
analysis that considers the full range of
impacts to customers, manufacturers,
the Nation, and the environment, as
required under 42 U.S.C.
6295(o)(2)(B)(i). The results of this
analysis serve as the basis for DOE’s
evaluation of the economic justification
for a potential standard level (thereby
supporting or rebutting the results of
any preliminary determination of
economic justification). The rebuttable
presumption payback calculation is
discussed in section IV.F of this final
rule.
IV. Methodology and Discussion of
Related Comments
This section addresses the analyses
DOE has performed for this rulemaking
with regard to beverage vending
machines. Each component of DOE’s
analysis is discussed in the following
subsections, and DOE summarizes and
responds to associated comments
received in response to the NOPR.
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DOE used several analytical tools to
estimate the impact of the standards
considered in this document. The first
tool is a spreadsheet that calculates the
LCC savings and PBP of potential
amended or new energy conservation
standards. The NIA uses a second
spreadsheet set that provides shipments
forecasts and calculates NES and NPV of
total customer costs and savings
expected to result from potential energy
conservation standards. DOE uses the
third spreadsheet tool, the Government
Regulatory Impact Model (GRIM), to
assess manufacturer impacts of potential
standards. These three spreadsheet tools
are available on the DOE Web site for
this rulemaking: https://
www1.eere.energy.gov/buildings/
appliance_standards/rulemaking.aspx/
ruleid/73. Additionally, DOE used
output from the latest version of EIA’s
AEO, a widely known energy forecast
for the United States, for the emissions
and utility impact analyses.
A. Market and Technology Assessment
DOE develops information in the
market and technology assessment that
provides an overall picture of the
market for the equipment concerned,
including the purpose of the equipment,
the industry structure, manufacturers,
market characteristics, and technologies
used in the equipment. This activity
includes both quantitative and
qualitative assessments, based primarily
on publicly available information.
DOE reviewed relevant literature and
interviewed manufacturers to develop
an overall picture of the BVM market in
the United States. Industry publications,
trade journals, government agencies,
and trade organizations provided the
bulk of the information, including (1)
manufacturers and their market shares,
(2) shipments by equipment type, (3)
detailed equipment information, (4)
industry trends, and (5) existing
regulatory and non-regulatory
equipment efficiency improvement
initiatives. The key findings of DOE’s
market assessment are summarized
below. See chapter 3 of the final rule
TSD for further discussion of the market
and technology assessment.
1. Equipment Classes
In this final rule, DOE is amending
the energy conservation standards
established by the 2009 BVM final rule
for Class A and Class B beverage
vending machines. DOE believes that
Class A and Class B equipment classes
continue to provide distinct utility to
customers and have different energy
profiles and applicable design options,
as described below. As such, DOE has
determined that it is appropriate to
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separately analyze and regulate Class A
and Class B equipment. As noted
previously, DOE is amending the
definition for Class A equipment to
more clearly and unambiguously
describe the equipment characteristics
that distinguishing Class A from Class B
equipment. Specifically, DOE
distinguishes Class A equipment from
Class B equipment based on the
presence of a transparent front. DOE is
also amending the definition of
combination vending machine to better
align with industry definitions and
provide more clarity regarding the
physical characteristics of the
‘‘refrigerated’’ and ‘‘non-refrigerated’’
volumes, or compartments.24 In
addition, DOE is defining two new
equipment classes, Combination A and
Combination B, as well as establishing
new energy conservation standards for
those equipment classes. In the 2009
BVM final rule, DOE also established a
definition for combination vending
machines but elected not to set
standards for them at that time. 74 FR
44914, 44920 (Aug. 31, 2009). In
considering standards for combination
vending machines as part of this
rulemaking, DOE determined that the
presence of a transparent front is an
important differentiating feature for
combination equipment, similar to Class
1043
A and Class B beverage vending
machines.
Table IV.1 summarizes the new and
amended definitions for the four
equipment classes analyzed in this final
rule. The definitions, as well as the
general characteristics and
differentiating features, of the four
equipment classes adopted in this final
rule are described in the following
subsections of this document. In
addition, the following subsections
address any comments received from
interested parties on DOE’s proposed
definitions presented in the 2015 BVM
ECS NOPR and DOE’s response to those
comments.
TABLE IV.1—EQUIPMENT CLASSES FOR BEVERAGE VENDING MACHINES
Class
Definition
A ..............................................................
A refrigerated bottled or canned beverage vending machine that is not a combination vending machine and in which 25 percent or more of the surface area on the front side of the beverage vending machine is transparent.25
Any refrigerated bottled or canned beverage vending machine that is not considered to be Class A
and is not a combination vending machine.
A combination vending machine where 25 percent or more of the surface area on the front side of
the beverage vending machine is transparent.
A combination vending machine that is not considered to be Combination A.
B ..............................................................
Combination A .........................................
Combination B .........................................
Class A and Class B equipment are
currently differentiated based on the
cooling mechanism employed by the
equipment. The distinguishing criterion
between these two equipment classes is
whether the equipment is fully cooled.
10 CFR 431.292.
When the definitions of Class A and
Class B were established as part of the
2009 final rule, DOE did not define the
term ‘‘fully cooled.’’ In the framework
document, DOE suggested defining
‘‘fully cooled’’ to mean a beverage
vending machine within which each
item in the beverage vending machine is
brought to and stored at temperatures
that fall within ±2 °F of the average
beverage temperature, which is the
average of the temperatures of all the
items in the next-to-vend position for
each selection. 78 FR 33262 (June 4,
2013).
Throughout the course of this
rulemaking and the parallel DOE BVM
test procedure rulemaking, DOE has
discussed and received comments on
the most appropriate, clear, and
unambiguous definitions for Class A
and Class B beverage vending machines.
Specifically, in the 2014 DOE BVM test
procedure NOPR, DOE proposed to
define ‘‘fully cooled’’ as ‘‘a condition in
which the refrigeration system of a
beverage vending machine cools
product throughout the entire
refrigerated volume of a machine
instead of being directed at a fraction (or
zone) of the refrigerated volume as
measured by the average temperature of
the standard test packages in the
furthest from the next-to-vend positions
being no more than 10 °F above the
integrated average temperature of the
standard test packages.’’ 79 FR 46908,
46934 (Aug. 11, 2014). To accompany
DOE’s proposed definition of ‘‘fully
cooled,’’ the 2014 BVM test procedure
NOPR also proposed to adopt an
optional test method that could be used
to quantitatively differentiate between
Class A and Class B equipment. 79 FR
at 46917.
In response to the definition of ‘‘fully
cooled’’ proposed in the 2014 BVM test
procedure NOPR, several interested
parties recommended that DOE consider
an alternative differentiation between
equipment types to better capture
differences in energy consumption. In a
joint comment submitted on behalf of
the California investor-owned utilities
(Pacific Gas and Electric Company
(PG&E), Southern California Gas
Company (SCGC), San Diego Gas and
Electric (SDG&E), Southern California
Edison (SCE), and Arizona Public
Service (APS); hereafter referred to as
CA IOUs) commenters suggested that
the presence of a transparent or opaque
front and/or the arrangement of
products within the machine could be
potential differentiating criteria that are
more appropriate and consistent with
the differentiation between equipment
configurations applied in industry.
(Docket No. EERE–2013–BT–TP–0045,
CA IOUs, No. 0005 at p. 1) SVA also
supported this position. (Docket No.
EERE–2013–BT–TP–0045, SVA, Public
Meeting Transcript, No. 0004 at p. 52)
Many interested parties also commented
on the difficulty of establishing a
quantitative temperature threshold to
differentiate fully cooled equipment
from non-fully cooled equipment that
would be applicable across all BVM
models. (Docket No. EERE–2013–BT–
24 The definition of combination vending
machine established by DOE in the 2009 BVM final
rule referenced the presence of ‘‘non-refrigerated
volumes’’ to differentiate combination vending
machines from other styles of beverage vending
machines. In the amended definition for
combination vending machine, DOE is referring
instead to ‘‘compartments,’’ which DOE believes
captures the same intent as the term ‘‘volumes’’ in
the previous definition, but better indicates that the
‘‘volumes’’ are to be physically separate.
25 DOE notes that in the 2015 BVM ECS NOPR,
DOE proposed to the definition of Class A to
include the term ‘‘combination beverage vending
machine.’’ In this final rule, DOE is adopting a
definition of Class A that, instead, references the
term ‘‘combination vending machine,’’ as that is the
defined term for combination equipment at 10 CFR
431.292. DOE notes that this minor editorial change
does not affect the meaning or scope of the
definition, just ensure consistency between all of
the definition pertinent to the regulation of this
equipment.
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a. Class A and Class B Beverage Vending
Machines
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TP–0045, AMS, Public Meeting
Transcript, No. 0004 at p. 54; Docket
No. EERE–2013–BT–TP–0045, CocaCola, No. 0010 at p. 4; Docket No.
EERE–2013–BT–TP–0045, Coca-Cola,
No. 0010 at p. 4; Docket No. EERE–
2013–BT–TP–0045, SVA, No. 0008 at p.
2; Docket No. EERE–2013–BT–TP–0045,
NEEA, No. 0009 at p. 1)
In light of the extent and scope of the
comments received in response to the
amendments proposed in the 2014 BVM
test procedure NOPR regarding the
proposed definition of fully cooled,
alternative criteria for differentiating
Class A and Class B equipment, and the
optional fully cooled verification test
protocol, DOE wished to further
consider potential classification options
and criteria suggested by interested
parties, as well as provide interested
parties an additional opportunity to
provide feedback on any proposals to
amend the equipment class definitions.
As such, DOE responded to the
comments presented by interested
parties in response to the 2014 BVM test
procedure NOPR and proposed an
alternative approach to differentiate
Class A and Class B equipment in the
2015 BVM ECS NOPR. Specifically, in
the 2015 BVM ECS NOPR, DOE
proposed to amend the definition of
Class A beverage vending machines to
read as follows:
Class A means a refrigerated bottled
or canned beverage vending machine
that is not a combination vending
machine and in which 25 percent or
more of the surface area on the front
side of the beverage vending machine is
transparent.
DOE did not propose in the 2015
BVM ECS NOPR to substantively
modify the definition of Class B, since
Class B is defined as the mutually
exclusive converse of Class A. However,
DOE made a minor editorial change to
include the term ‘‘that’’ to improve
readability of the definition. 80 FR
50462, 50474–50475 (Aug. 19, 2015).
DOE also noted in the 2015 BVM ECS
NOPR that beverage vending machines
with horizontal product rows are
typically fully cooled and have a
transparent front, while beverage
vending machines with vertical product
stacks are typically zone cooled and are
fully opaque. DOE added that it is not
aware of any instances of BVM models
that are not fully cooled but which have
a transparent front and/or horizontal
product configuration or BVM models
that are fully cooled but which have and
opaque front and/or vertical stacks.
Thus, DOE believed that, based on
current equipment designs, using
criteria of (a) whether the equipment is
fully cooled, (b) whether the equipment
has a transparent front, or (c) whether
the product arrangement is horizontal or
vertical, would result in virtually
identical equipment categorization.
Finally, DOE also noted that, since
DOE’s engineering analysis considers
typical, representative equipment
designs for each equipment class (see
section IV.C), the cooling method, the
presence of a transparent or opaque
front,26 and product arrangement are
linked in DOE’s engineering analysis, as
shown in Table IV.2. Id.
TABLE IV.2—EQUIPMENT CLASSES DESIGN PARAMETERS FOR BEVERAGE VENDING MACHINES MODELED IN THE
ENGINEERING ANALYSIS
Class
Cooling method
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A .....................................................
B .....................................................
Combination A ...............................
Combination B ...............................
Fully cooled
Zone cooled
Fully cooled
Zone cooled
Vendible product
orientation
Transparent or opaque front
..................................
..................................
..................................
..................................
Transparent front ..........................
Opaque front .................................
Transparent front ..........................
Opaque front .................................
Horizontal product rows.
Vertical product stacks.
Horizontal product rows.
Vertical product stacks.
In response to DOE’s 2015 BVM ECS
NOPR, NAMA and Royal Vendors, in
their written comments, stated that the
presence of a transparent front does not
always correlate with fully-cooled
equipment, and that at least one
manufacturer has developed fullycooled vending machines with solid
fronts. (NAMA, No. 50 at p. 3; Royal
Vendors, No. 54 at p. 3) SVA expressed
disagreement with DOE’s proposed
definition of Class A equipment because
it stated that not all fully-cooled
beverage vending machines have a
transparent panel and that this may
discourage the production of Class B
equipment due to the more stringent
proposed standards for Class B. (SVA,
No. 53 at p. 1) AMS stated that the
presence of a transparent front does not
necessarily reflect the design intent or
energy consumption characteristics of
the machine (AMS, No. 57 at p. 2)
NAMA also expressed concern that
the transparency requirement excludes
the use of digital video display screens
in Class A equipment (NAMA, No. 50 at
p. 3) SVA agreed with NAMA and
expressed its belief that vending
machines with digital video display
screens should be considered as Class A
instead of Class B equipment (SVA,
Public Meeting Transcript, No. 48 at p.
19) Conversely, the CA IOUs expressed
their belief that equipment with
transparent and opaque video screen
fronts should be regulated as separate
equipment classes, with non-transparent
screens classified as Class B and
transparent screens classified as Class
A. (CA IOUs, No. 58 at p. 1)
In determining the best way to clarify
the differentiation of Class A and Class
B equipment, DOE considered all
comments submitted by interested
parties, as well as the manner in which
equipment is currently categorized by
DOE and industry. It is DOE’s continued
understanding that the cooling method
is significantly correlated with the
product configuration and presence of a
transparent front. Therefore,
differentiating Class A and Class B
equipment based on either the product’s
configuration or the transparency of the
front side of the BVM, rather than the
cooling method, would preserve the
same utility in each class of equipment.
The presence of a transparent front
provides a specific utility that allows a
customer to view and select from all of
the various next-to-vend product
selections, which are all maintained at
the appropriate vending temperature. In
this manner, the presence of a
transparent front is inherently related to
the cooling method of a beverage
vending machine (i.e., whether or not
the equipment is ‘‘fully cooled’’). DOE
acknowledges that there may be some
fully cooled beverage vending machines
that have an opaque front and, as such,
will be subject to the energy
conservation standard for Class B. For
example, in the 2015 BVM ECS NOPR,
26 In this notice, DOE uses the terms ‘‘solid front,’’
‘‘opaque front,’’ and ‘‘non-transparent’’ front
interchangeably to refer to equipment that does not
meet DOE’s definition of Class A or Combination
A. That is, equipment where greater than 75 percent
of the material used to construct the front of the
beverage vending machine does not meet the
definition of ‘‘transparent’’ adopted in this final
rule.
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DOE pointed to test data that
demonstrated some equipment with
opaque fronts and small refrigerated
volumes experience temperature
differentials of less than 2 °F between
the next-to-vend and furthest from nextto-vend beverage locations and are,
therefore, effectively ‘‘fully cooled.’’ 80
FR 50462, 50478 (Aug. 19, 2015).
However, DOE believes that the Class B
standards are more appropriate for such
equipment because the insulating
quality of the transparent versus nontransparent front has a larger impact on
energy consumption than the cooling
method.
DOE believes that the presence of a
transparent front provides the customer
with the specific utility of being able to
see all the available the product
selections and choose from the larger
number of merchandise options that are
provided by Class A equipment. In
addition, DOE notes that the presence of
a transparent material on the front side
of a beverage vending machine has a
larger impact on the energy
consumption of a given beverage
vending machine than the cooling
method or equipment product
arrangement. Thus, while DOE
continues to believe that the presence of
a transparent front, a ‘‘fully cooled’’
refrigerated volume, and horizontal
product placement are all representative
characteristics of most Class A
equipment, DOE believes that defining
equipment classes based on the feature
that is most related to the unique utility
and which has the largest impact on the
energy use of the equipment is the most
appropriate criterion to use to ensure
that the utility provided by Class A
equipment is maintained in the
marketplace.
While DOE acknowledges that there
may be some opaque front equipment
that is fully cooled, DOE believes that it
is more appropriate for such equipment
to be treated as Class B. Because an
opaque, insulated panel has
significantly different heat transfer
characteristics than a transparent glass
front, a BVM model that is insulated on
all six sides should use less energy than
a similar BVM model with a transparent
front. That is, DOE believes energy
consumption and the presence of a
transparent front are correlated.
DOE performed a sensitivity analysis
using the engineering analysis
spreadsheet to compare the impact of a
transparent front versus solid front on
DEC with the impact of a fully cooled
refrigerated volume versus a zone
cooled refrigerated volume on DEC.
Specifically, DOE compared the
analytically derived performance of two
specific sets of representative units
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differing only in one design
characteristic—either a transparent front
or a fully cooled interior. That is, DOE
modeled the following three BVM unit
configurations:
(1) A BVM unit with a fully cooled
refrigerated volume and a transparent
front
(2) a BVM unit with a fully cooled
refrigerated volume and a solid front
(3) a BVM unit with a zone cooled
refrigerated volume and a transparent
front.
DOE compared the modeled DEC of
number 1) and number 2) to determine
the impact of a transparent front and
compared number 1) and number 3) to
determine the impact of the cooling
method. The results of this analysis
indicated that the difference in energy
consumption between a BVM model
that has a transparent front as compared
to a model that does not is greater than
the difference in energy consumption
between a BVM model that is fully
cooled as compared to one that is not.
Based on this analysis, DOE has
determined that the presence of a
transparent front is closely correlated to
the utility associated with Class A
equipment and directly corresponds to
the energy consumption of the
equipment. Because the cooling method
and the presence of a glass or solid front
are correlated in practice for the vast
majority of equipment, DOE believes
that clarifying DOE’s equipment class
definitions using the presence of a
transparent front (an unambiguous
equipment characteristic based on
customer utility) will not result in
significant changes to the classification
of BVM models that are currently
available on the market.
Similarly, regarding the treatment of
digital screens, DOE agrees with CA
IOUs that the transparency of BVM
models equipped with digital screens
should be ascertained as it is for BVM
models with conventional glass or panel
materials. That is, transparency should
be determined for all the materials
between the refrigerated volume and the
ambient environment and only if the
aggregate performance of all those
materials yields a light transmittance of
greater than or equal to 45 percent
would that area be treated as
transparent.
DOE believes that this is the most
appropriate and reasonable treatment of
equipment with digital screens because
the energy consumption of BVM models
with opaque digital screens is more
similar to the energy consumption of
BVM models with opaque, insulated
fronts than to BVM models with
transparent fronts. That is, as noted by
SVA in the BVM ECS NOPR public
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meeting, the panel behind any external
customer display signs or digital screens
is typically insulated. (SVA, Public
Meeting Transcript, No. 48 at p. 24–25)
DOE notes that external customer digital
screens and customer display signs are
not required to be energized during the
testing of beverage vending machines, in
accordance with the newly adopted
BVM test procedure. 80 FR 45758,
45778–45780 (July 31, 2015).
Accordingly, the energy consumption
and heat transfer characteristics of a
BVM model with an external, opaque
digital screen is much more similar to
the energy consumption and heat
transfer characteristics of a BVM model
with an opaque, insulated front than a
BVM model with a transparent front.
Regarding equipment with
transparent digital screens, DOE
acknowledges the statement by CA IOUs
that equipment with transparent display
screens where all materials between the
refrigerated space and external ambient
environment meet the definition of
transparent will be treated as part of the
transparent surface area under DOE’s
definition. As such, equipment with
large transparent display screens (such
as, potentially, holograms projected
onto glass) that still enabled the BVM
user to see the refrigerated merchandise
inside the BVM refrigerated
compartment and constitute at least 25
percent of the front side of the beverage
vending machine would be categorized
as a Class A beverage vending machine.
However, DOE notes that it is not aware
of any such technology on the market
today.
Consequently, in this final rule, DOE
maintains that only BVM models where
at least 25 percent of the surface area on
the front side of the beverage vending
machine is transparent, and that is not
a combination vending machine, will be
considered to be Class A. Conversely, if
greater than 75 percent of the surface
area on the front side of the beverage
vending machine is not transparent, and
the beverage vending machine is not a
combination vending machine, then the
beverage vending machine will be
considered to be Class B. DOE notes that
the amended Class A definition only
considers transparent area on the front
side of beverage vending machine and
transparency must be determined for the
entire panel, as described in section
IV.A.1.c.
As interested parties did not suggest
any alternative definitions or
differentiating characteristics, DOE
believes that modifying the definitions
of Class A and Class B to rely on the
presence of a transparent front allows
for the most clear and unambiguous
differentiation of equipment classes.
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Further, DOE believes referencing the
presence of a transparent front to
identify Class A equipment generally
aligns with DOE’s and industry’s
interpretation of Class A machines to
date. DOE notes that the amended Class
A and Class B definitions are effective
on the effective date of this final rule.
b. Combination Vending Machines
In the 2009 BVM final rule, DOE
established a definition for combination
vending machines (74 FR 44914, 44920
(Aug. 31, 2009)). That definition
describes a combination vending
machine as a refrigerated bottled or
canned beverage machine that also has
non-refrigerated volumes for the
purpose of vending other, non-‘‘sealed
beverage’’ merchandise. 10 CFR
431.292. However, the 2009 BVM final
rule did not consider or differentiate
equipment within the combination
vending machine equipment category or
address any specific criteria that could
be used to differentiate ‘‘refrigerated’’
and ‘‘non-refrigerated.’’
In its recent test procedure
rulemaking, culminating in the 2015
BVM test procedure final rule, DOE
considered the applicability of the
combination vending machine
definition to equipment designs it has
encountered on the market, and
considered stakeholder comments on
the definition of ‘‘combination vending
machine.’’ 80 FR 45758, 45765–45767
(July 31, 2015). In the 2015 BVM test
procedure final rule, DOE clarified the
test procedure for combination vending
machines and noted that such
equipment must include compartments
that are physically separated, while
acknowledging that some combination
equipment designs may employ a
common product delivery chute
between the refrigerated and nonrefrigerated compartments for the
purposes of delivering vendible
merchandise to the customer. DOE also
gave notice that it would seek to further
clarify the definition of ‘‘combination
vending machine’’ in this BVM energy
conservation standard final rule. Id. at
45765–45767.
As such, in consideration of the input
from various commenters throughout
both the test procedure and energy
conservation standards rulemaking
processes, as well as of the range of
equipment designs that DOE has
observed for sale on the market, DOE
proposed in the 2015 BVM ECS NOPR
an amended definition of ‘‘combination
vending machine.’’ Specifically, DOE
proposed to amend the definition of
‘‘combination vending machine’’ to
more clearly and unambiguously
establish the distinction between
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‘‘refrigerated’’ and ‘‘non-refrigerated’’
compartments contained in a
combination vending machine based on
whether a compartment is designed to
be refrigerated, as demonstrated by the
presence of temperature controls. 80 FR
50462, 50478–50480 (Aug. 19, 2015).
DOE also proposed that, similar to
Class A and Class B equipment classes,
the transparency of the front side of the
vending machine can differentiate
certain styles of combination vending
machines that provide a unique utility
in the marketplace because their
specific design attributes allow the
equipment to be stocked with a wider
variety of product selections that can be
viewed directly through the
equipment’s transparent front. As such,
in the 2015 BVM ECS NOPR, DOE
proposed to define two new equipment
classes at 10 CFR 431.292, Combination
A and Combination B, and defined
those equipment classes as follows:
Combination A means a combination
vending machine where 25 percent or
more of the surface area on the front
side of the beverage vending machine is
transparent.
Combination B means a combination
vending machine that is not considered
to be Combination A.
Id.
In response to DOE’s proposed new
and amended definitions for
Combination A, Combination B, and
combination vending machine, several
interested parties raised questions about
DOE’s proposed definitions. In
particular, AMS stated that machines
intended to dispense both refrigerated
and unrefrigerated products have an
insulated tray between the refrigerated
and unrefrigerated compartments and
are defined as combination vending
machines by their company. (AMS,
Public Meeting Transcript, No. 48 at p.
18) AMS also stated that its combination
vending machines only have
temperature controls for the
compartment intended to be refrigerated
and therefore do not meet DOE’s
proposed definition for combination
vending machines. (AMS, No. 57 at p.
2) Steven Chesney of Seaga inquired if
a non-cooled refrigerated compartment
attached to a separate cabinet with a
refrigerated compartment would be
considered as a combination vending
machine. (Steven Chesney, Public
Meeting Transcript, No. 48 at p. 26)
EVA commented that DOE should use
‘‘simple and understandable’’
definitions and consider defining them
similar to the European definitions.
(EVA, No. 60 at p. 2)
In response to AMS’s comments
regarding their combination vending
machine designs, featuring an insulated
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shelf separating refrigerated and nonrefrigerated compartments and
temperature controls in the
compartment intended to be
refrigerated, DOE notes that this is in
fact consistent with its proposed
definition for combination vending
machines, provided the insulated shelf
is a ‘‘solid partition’’ and does not allow
for air transfer between the
compartments outside of the product
delivery chute. To clarify, DOE notes
that the combination vending machine
definition only requires temperature
controls in the compartment that is
designed to be refrigerated.
In response to Mr. Chesney’s inquiry
regarding whether two separate cabinets
attached to each other would constitute
a combination vending machine, DOE
clarifies that, consistent with all
equipment, compliance for each model
is based on how that model is
distributed in commerce. That is, if the
vending machine: (1) Is distributed in
commerce as a single piece of
equipment and (2) includes at least one
compartment that was designed to be
refrigerated (demonstrated by the
presence of temperature controls) and at
least one compartment that is not
designed to be refrigerated (and,
therefore, does not include temperature
controls) separated by a solid partition,
such equipment meets the definition of
combination vending machine and
would be classified as either
Combination A or Combination B for the
purposes of compliance with DOE’s
energy conservation standards. Such
equipment may share the same product
deliver chute or include separate
product delivery chutes.
In response to EVA’s suggestion that
DOE use simple and understandable
definitions, similar to those in the
European vending market, DOE
researched the definitions used in
Europe to describe beverage vending
machines and was not able to find
consistent definitions or terminology
that are publically available and such
definitions were note provided in EVA’s
comments. However, DOE continues to
believe that the definitions adopted in
this final rule represent the clearest and
most unambiguous approach to
differentiating equipment classes for the
U.S. market.
In response to DOE’s 2015 BVM ECS
NOPR, NAMA stated that DOE’s
proposed definition of combination
vending machines is inconsistent with
industry practice and the EPA’s
ENERGY STAR definition and requested
that DOE change this definition to be
consistent with industry practice.
NAMA specifically stated that very few
vending machines have a [fully-
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extending] solid partition, and that
instead many of them allow air to
comingle between the unrefrigerated
and refrigerated compartments. NAMA
additionally stated that the
unrefrigerated space pulls down to
nearly the same temperature as the
refrigerated volume over time in
machines it considers to be combination
vending machines. (NAMA, No. 50 at p.
1) In the Form Letters, commenters
stated the definition of combination
vending machines were not consistent
with terms used in industry. (The Form
Letter Writers, No. 64 and 65 at p. 1)
In response to comments from NAMA
and the Form Letter Writers that DOE’s
definition of combination vending
machine should be consistent with the
ENERGY STAR or other industry
definitions for such equipment, DOE
notes that the ENERGY STAR definition
of combination vending machines is
identical to the current DOE definition
for combination vending machine. DOE
is not aware of any other specific
industry definitions that are relevant for
this equipment, and notes that the
‘‘industry’’ terms mentioned by The
Form Letter Writers were not provided
in comments. As noted previously, DOE
believes the existing definition could be
made more clear and unambiguous to
improve the consistency of equipment
definition for regulatory purposes. In
addition, in response to NAMA’s
observation that typical combination
vending machines do not have a fully
extending solid partition, DOE notes
that the definition of combination
specifies that such equipment have two
compartments, separated by a solid
partition, but that such equipment may
also include a common product delivery
chute. DOE agrees with NAMA that, for
many designs of combination
equipment on the market today, the
common product delivery chute may
prevent the solid partition separating
the refrigerated and non-refrigerated
compartments from fully extending
from front to back and side to side. That
is, the solid partition need not thermally
isolate the refrigerated compartment(s)
from the non-refrigerated
compartment(s) provided any air
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exchange between compartments occurs
only unintentionally through the
common product delivery chute. If a
vending machine model were to feature
openings in the solid partition designed
to allow for air transfer between the
compartments, other than the product
delivery chute, such equipment would
not be considered a combination
vending machine as it would not
include any ‘‘non-refrigerated’’
compartments. That is, DOE interprets
the designed presence of openings in
the solid partition as a means of
‘‘intentional refrigeration’’ of that
compartment. Therefore, equipment that
is designed for air transfer between
compartments is treated as Class A or
Class B, depending on whether or not
the equipment featured a transparent
front (see sections IV.A.1.a and IV.A.1.c)
Based on the comments submitted by
interested parties, DOE is adopting, in
this final rule, the amended definition
for combination vending machine and
new definitions for Combination A and
Combination B, as proposed in the 2015
BVM ECS NOPR. As noted in the 2015
BVM test procedure final rule, DOE
believes that both appendix A and
appendix B of the amended DOE BVM
test procedure are applicable to
combination vending machines. 80 FR
45758 (July 31, 2015). Specifically,
appendix A of the DOE BVM test
procedure is applicable to combination
vending machines for the purposes of
making any representations regarding
the energy consumption of such
equipment beginning January 27, 2016.
Id. However, beginning on the
compliance date of this final rule,
manufacturers of combination vending
machines will be required to use
appendix B of the DOE BVM test
procedure for the purposes of
demonstrating compliance with any
such energy conservation standards and
when making representations regarding
the energy consumption of covered
equipment.
c. Definition of Transparent and
Optional Test Method for Determining
Equipment Classification
In the 2015 BVM ECS NOPR, DOE
proposed a quantitative criterion to
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clearly determine whether a BVM model
‘‘has a transparent front’’ based on the
percentage of transparent surface area
on the front side of the beverage
vending machine. Specifically, DOE
proposed the procedure by which DOE
would (1) determine the surface area of
beverage vending machines and (2)
determine whether such surface area is
transparent. However, DOE noted that
these procedures would not be required
for rating and certification of specific
BVM models. Under the proposal,
manufacturers would be able to certify
equipment as Class A, Class B,
Combination A, or Combination B based
on knowledge of the specific equipment
dimensions and characteristics.
However, DOE would use these
procedures in enforcement testing to
verify the appropriate equipment
classification for all cases. As such, DOE
also noted that where the appropriate
equipment classification is not
abundantly clear, manufacturers may
elect to perform the test to ensure they
are categorizing their equipment
properly. To clarify that such
procedures are only optional for
manufacturers, DOE proposed to add
such procedures to the product-specific
enforcement provisions at 10 CFR
429.134. 80 FR 50462, 50476–50480
(Aug. 19, 2015).
Specifically, to determine the surface
area, DOE proposed to specify that the
total surface area of the front side of the
beverage vending machine, from edge to
edge, be determined as the total length
multiplied by the total height of a
beverage vending machine. DOE also
proposed to specify that the transparent
surface area would consist of all areas
composed of transparent material on the
front side of a beverage vending
machine, and that the non-transparent
surface area would consist of all areas
composed of material that is not
transparent on the front side of a
beverage vending machine, where the
sum of the transparent and nontransparent surface areas should equal
the total surface area of the front side of
a beverage vending machine, as shown
in Figure IV.1. 80 FR 50462, 50476
(Aug. 19, 2015).
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In the 2014 BVM ECS NOPR, DOE
also noted that the same optional test
protocol to determine the transparency
of materials and the relative surface
areas of transparent and non-transparent
surfaces would be applicable to
combination vending machines except
that, the external surface areas
surrounding the non-refrigerated
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compartment(s) would not be
considered. That is, all the surfaces that
surround and enclose the compartment
designed to be refrigerated (as
demonstrated by the presence of
temperature controls), as well as any
surfaces that do not enclose any
product-containing compartments (e.g.,
surfaces surrounding any mechanical
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equipment or containing the product
selection and delivery apparatus) would
be considered in the calculation of
transparent and non-transparent surface
area for a beverage vending machine, as
shown in Figure IV.2. 80 FR at 50479
(Aug. 19, 2015).
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For both Class A and Combination A
beverage vending machines, in the 2015
BVM ECS NOPR, DOE also proposed a
specific definition and criteria to
determine whether a material is
transparent. Specifically, DOE proposed
to adopt the definition of transparent
that is applicable to commercial
refrigeration equipment,27 as adopted in
the 2014 commercial refrigeration
equipment test procedure final rule. 10
CFR 431.62; 79 FR 22277, 22286–22287,
and 22308 (April 21, 2014). Under this
definition, the term ‘‘transparent’’
would apply to any material with
greater than or equal to 45 percent light
transmittance, as determined in
accordance with the ASTM Standard E
1084–86 (Reapproved 2009), ‘‘Standard
Test Method for Solar Transmittance
(Terrestrial) of Sheet Materials Using
Sunlight,’’ at normal incidence and in
27 As a beverage vending machine is defined as
a type of commercial refrigerator, DOE believes that
it is consistent and appropriate to use the same
definition of transparent for both commercial
refrigeration equipment and beverage vending
machines.
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the intended direction of viewing. With
regard to beverage vending machines,
DOE also clarified that, when
determining material properties, that the
transparency of the BVM cabinet
materials should be determined with
consideration of all the materials used
to construct the wall segment(s), since
the utility of the transparent material is
only applicable if the viewer can clearly
see the refrigerated products contained
within the refrigerated volume of the
beverage vending machine. 80 FR
50462, 50477 (Aug. 19, 2015).
In response to DOE’s proposed
definition of transparent and optional
test method for determining the relative
transparent surface area, DOE received
several comments and suggestions from
interested parties. The CA IOUs
recommended that DOE more clearly
define the equipment classes being
regulated using the term, ‘‘transparent.’’
The CA IOUs also recommended that
DOE amend its definition of Class A
equipment to take into account possible
fluctuations in transparency of the front.
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1049
(CA IOUs, No. 58 at p. 1) Similarly, in
written comments, NAMA and Royal
Vendors stated that the 45 percent light
transmittance criterion for the
determination of transparency of the
glass front of a vending machine is
acceptable at this time, but may not be
so in the future if better low-emissivity
coatings are developed. (NAMA, No. 50
at p. 3; Royal Vendors, No. 54 at p. 3)
In written comments, Royal Vendors
stated also that the definition of Class A
would apply to a unit in which at least
25 percent of the front surface area is
transparent, but that the definition of
transparency would not always be met
by equipment Royal Vendors considers
to be ‘‘Class A.’’ (Royal Vendors, No. 54
at p. 3)
In response to the comments
submitted by the CA IOUs regarding the
treatment of certain equipment with
respect to the term ‘‘transparent,’’ DOE
clarifies that the definition of
transparent adopted in this final rule is
applicable to all classes of beverage
vending machines. In particular, the
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definition of transparent is pertinent to
differentiating Class A equipment from
Class B equipment and Combination A
equipment from Combination B
equipment. Similarly, DOE also uses the
term to determine equipment
classification for commercial
refrigeration equipment, the definition
of transparent adopted in this final rule
is pertinent only to beverage vending
machines.
In response to the comments by CA
IOUs, NAMA, and Royal Vendors
regarding the suitability of the 45
percent threshold for light
transmittance, DOE notes that it has
considered the current and potential
future characteristics of advanced, highperforming glass and acrylic products
featuring low-emissivity coatings, low
solar heat gain, or other features that
may impact the overall light
transmittance of the material. In the
commercial refrigeration equipment test
procedure NOPR, DOE had originally
proposed that a transparent material
was any material with greater than or
equal to 65 percent light transmittance,
consistent with the definition of total
display area in the Air-Conditioning,
Heating, and Refrigeration Institute
(AHRI) Standard 1200 (I–P)–2010 (AHRI
1200–2010), ‘‘Performance Rating of
Commercial Refrigerated Display
Merchandisers and Storage Cabinets.’’
78 FR 64295, 64301–64302 (Oct. 28,
2013). However, after conducting
market research regarding the visible
transmittance of typical materials used
in commercial refrigeration equipment
manufacturing, as well as new highperforming glass products that could be
used in such an application, DOE
adopted a threshold of 45 percent in the
2014 CRE test procedure final rule. 79
FR 22277, 22287 (April 21, 2014). In
support of this BVM ECS final rule, DOE
conducted additional research into the
glass and acrylic products typically
used by manufacturers to produce Class
A and Combination A beverage vending
machines, as well as any new, highperforming glass products that may have
been introduced since DOE’s review for
the 2014 CRE test procedure final rule.
Based on its review, DOE believes that
the threshold of 45 percent light
transmittance to determine transparency
is equally applicable to materials that
are typically used to manufacture both
commercial refrigeration equipment and
beverage vending machines. DOE will
continue to monitor the BVM and CRE
market for any new materials integrated
into equipment designs that meet DOE’s
intent of allow customers to view the
merchandise contained within the
refrigerated space but do not meet
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DOE’s definition of transparent and, if
necessary, revise the definition of
transparent accordingly.
Therefore, in this final rule, DOE is
adopting a definition of transparent
applicable to materials with greater than
or equal to 45 percent light
transmittance based testing in
accordance with ASTM Standard E
1084–86 (Reapproved 2009). DOE
reiterates that this test method is
optional and is not required for
equipment certification or testing by
manufacturers. Specifically,
manufacturers may continue to specify
the appropriate equipment class without
determining the light transmittance of
materials based on testing in accordance
with ASTM Standard E 1084–86
(Reapproved 2009) However, if the
transparency of a material is in
question, the determination of the light
transmittance of a transparent material
must be determined in accordance with
ASTM Standard E 1084–86 (Reapproved
2009) and DOE will use this test method
to determine equipment classification in
enforcement testing.
2. Machines Vending Perishable Goods
In response to DOE’s 2015 BVM ECS
NOPR, NAMA and Royal Vendors stated
that vending machines that vend
perishable goods should be regulated
under a separate equipment class
because they must maintain
temperatures that do not allow for a
refrigeration low power mode credit.
(NAMA, No. 50 at p. 5; Royal Vendors,
No. 54 at p. 4) Conversely, SVA
expressed agreement with DOE’s
position that vending machines that
vend perishable goods do not require a
separate equipment classification. (SVA,
No. 53 at p. 2)
DOE notes that there are beverage
vending machines that are capable of
vending certain perishable products that
may require more strict temperature
control than beverage vending machines
that only vend non-perishable products,
such as bottled or canned soda, juice, or
water. DOE notes such perishable
products may or may not be sealed
beverages but that, if a vending machine
is refrigerated and is capable of, or can
be configured to, vend sealed beverages
for at least one of the product selections,
then the vending machine meets DOE’s
definition of beverage vending machine
and must comply with DOE’s
regulations for this equipment.
Based on input from interested parties
provided throughout this rulemaking,
DOE believes that machines capable of
vending perishable goods are generally
not materially different from other
beverage vending machines, and that
the necessary levels of temperature
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maintenance needed to preserve
perishables are achieved through the
application of control settings rather
than through design changes. In
addition, such equipment can be tested
using DOE’s existing method of testing
and does not have significantly different
energy consumption profiles from other
beverage vending machines when tested
using DOE’s methodology. Therefore,
DOE does not believe separate
equipment classes and standard levels
are warranted for beverage vending
machines that are capable of vending
perishable goods, and DOE is not
implementing a separate class for such
equipment in this final rule. As such,
equipment that vends perishable
products along with at least one sealed
beverage must be tested in accordance
with the DOE test procedure and must
meet applicable energy conservation
standards. Vending machines that are
not capable of vending sealed beverages
or are not refrigerated do not meet
DOE’s definition of beverage vending
machine and, as such, are not subject to
standards, test procedures, and
certification and reporting requirements
for beverage vending machines.
DOE agrees with SVA that beverage
vending machines that may be
configured to, or capable of, vending
perishable goods do not require a
separate equipment class or separate
energy conservation standards.
Specifically, as noted in comments
provided by interested parties in
response to the framework document,
including Witterns, Crane, AMS, and
NAMA (see preliminary TSD chapter 2)
DOE understands that the same BVM
models may be configured to vend
perishable or non-perishable goods.
DOE also believes, based on market
research and input from interested
parties, that, if the BVM model is
configured to vend perishable goods, the
refrigeration low power mode that may
be installed on the machine as
distributed in commerce is simply
disabled or overridden for that
particular installation. DOE additionally
understands that installations where
beverage vending machines are
configured to vend perishable goods
represent a minority of installations, a
position supported in public comments
provided by Royal Vendors and NAMA
(see preliminary TSD chapter 2).
3. Market Characterization
As part of the market and technology
assessment, DOE identified and
characterized relevant trade
associations, manufacturers and their
market shares, and current regulatory
programs and non-regulatory initiatives
related to BVM energy use. Details
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related to this characterization are in
chapter 3 of the final rule TSD.
In response to the 2015 BVM ECS
NOPR, DOE received several comments
related to the role that the ENERGY
STAR program plays in the U.S. BVM
market. In the BVM ECS NOPR public
meeting and in written comments, EEA
Joint Commenters expressed the belief
that minimum efficiency standards and
the ENERGY STAR program are
complementary and that, by nature of
being mandatory, DOE’s energy
conservation standards program is able
to save more energy than ENERGY
STAR alone. (EEA Joint Commenters,
No. 56 at p. 4; EEA Joint Commenters,
Public Meeting Transcript, No. 48 at p.
118) The Form Letter Writers stated
standards would eliminate the current
ENERGY STAR specification as the
most efficient which would remove the
credibility of the ENERGY STAR
Industry. (The Form Letter Writers, No.
64 and 65 at p. 1) SVA expressed its
belief at the BVM ECS NOPR public
meeting that voluntary standards such
as ENERGY STAR are more effective in
driving the market towards more
efficient equipment than DOE’s
mandatory standards. (SVA, Public
Meeting Transcript, No. 48 at p. 117) In
written comments, Royal Vendors,
NAMA, and Coca-Cola stated that
ENERGY STAR certification is required
by a majority of equipment purchasers,
and that DOE’s proposed standards
would trigger a revision to ENERGY
STAR to further reduce allowable
energy consumption below the DOE
standard. These stakeholders added that
a revision to the ENERGY STAR
standard in response to DOE’s BVM ECS
rulemaking would make it more
difficult to meet their customers’
expectations for the ENERGY STAR
label. Coca Cola added that
manufacturers may devote more
resources to developing technologies
that can immediately meet newlyrevised ENERGY STAR standards,
instead of investing in the development
of technologies that may result in more
significant energy savings in the long
term. (Royal Vendors, No. 54 at p. 7;
NAMA, No. 50 at p. 14; Coca-Cola, No.
52 at p. 3).
DOE thanks the EEA Joint
Commenters and SVA for their
comments regarding the efficacy of
ENERGY STAR in driving the market
towards increased efficiency and agrees
with the EEA Joint Commenters’
assessment of ENERGY STAR and
DOE’s energy conservation standards as
being complementary and more
effective than voluntary standards
alone. In response to comments
regarding potential revision to ENERGY
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STAR standards as a result of today’s
rulemaking, DOE notes that ENERGY
STAR is a voluntary program that exists
to help customers identify energyefficient equipment on the market and
save on energy costs. Specifically, the
ENERGY STAR program includes only
those equipment that exceeds mandated
minimum standards that DOE is
required by statute to set and enforce.
Due to its nature as a voluntary
program, DOE does not consider the
impact of its energy conservation
standards on potential updates to
ENERGY STAR standards in its
analysis. DOE coordinates with EPA on
ENERGY STAR in order to reevaluate
the ENERGY STAR specifications when
DOE promulgates new or amended
standards.
DOE also received several comments
in response to the 2015 BVM ECS
NOPR’s request for updated estimates
for the market share of combination
vending machines. AMS commented
that it only manufactures Class A
machines and that its production
volume is split roughly evenly between
Class A and Combination A machines.
(AMS, No. 57 at p. 2) In its written
submission, NAMA stated that it did not
have data to estimate the market share
of combination vending machines
specifically, but it estimated that
beverage vending machines are
approximately 60 percent of the total
market for vending machines.
DOE thanks these stakeholders for
their submission of specific data and
has incorporated it into the analysis.
4. Technology Options
As part of the technology assessment,
DOE developed a list of technologies to
consider for improving the efficiency of
beverage vending machines. DOE
considers as design options all
technologies that meet the screening
criteria (see section I.B) and that
produce quantifiable results under the
DOE test procedure.
DOE typically uses information about
existing and past technology options
and prototype designs to help determine
which technologies manufacturers can
use to attain higher energy performance
levels. In consultation with interested
parties, DOE develops a list of
technologies for consideration in its
screening and engineering analyses.
Initially these technologies encompass
all those that DOE believes are
technologically feasible. Since many
options for improving equipment
efficiency are available in existing
equipment, equipment literature and
direct examination of BVM units
currently on the market provided much
of the information underlying this
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1051
analysis. While DOE notes that the
majority of currently available
equipment uses R–134a for its
refrigerant, and R–134a will no longer
be available for BVM applications at the
time compliance will be required with
any amended standards established as
part of this final rule (80 FR 42870,
42917–42920 (July 20, 2015)), DOE
believes that the majority of technology
options considered in DOE’s analysis
and presented in the following list are
applicable to all beverage vending
machines, regardless of the refrigerant
utilized. Specifically, DOE considered
the following technologies in this final
rule analyses:
• Higher efficiency lighting
• higher efficiency evaporator fan
motors
• higher efficiency evaporator fan
blades
• improved evaporator design
• evaporator fan motor controllers
• low-pressure-differential
evaporators
• insulation improvements (including
foam insulation thickness increase and
use of improved materials such as
vacuum insulated panels)
• improved glass pack (for Class A
and Combination A equipment)
• higher efficiency defrost
mechanism
• higher efficiency compressors
• variable speed compressors
• increased condenser performance
• higher efficiency condenser fan
motors
• higher efficiency condenser fan
blades
• microchannel heat exchangers
• higher efficiency expansion valves
• improved anti-sweat heaters
• lighting controls (including timers
and/or sensors)
• refrigeration low power modes.
Chapter 3 of the final rule TSD
includes the detailed description of all
technology options DOE identified for
consideration in this rulemaking.
B. Screening Analysis
The purpose of the screening analysis
is to evaluate the technologies identified
in the technology assessment to
determine which technologies to
consider further and which technologies
to screen out. DOE consulted with
industry, technical experts, and other
interested parties in developing a list of
energy-saving technologies for the
technology assessment, detailed in
chapter 3 of the final rule TSD. DOE
then applied the screening criteria to
determine which technologies were
unsuitable for further consideration in
this rulemaking. Chapter 4 of the final
rule TSD contains details about DOE’s
screening criteria.
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DOE uses the following four screening
criteria to determine which technology
options are suitable for further
consideration in an energy conservation
standards rulemaking:
(1) Technological feasibility. DOE
considers only those technologies
incorporated in commercial equipment
or in working prototypes to be
technologically feasible.
(2) Practicability to manufacture,
install, and service. If it is determined
that mass production and reliable
installation and servicing of a
technology in commercial equipment
could not be achieved on the scale
necessary to serve the relevant market at
the time of the projected compliance
date of the standard, then that
technology will not be considered
further.
(3) Impacts on equipment utility or
product availability. If it is determined
that a technology would have significant
adverse impact on the utility of the
product to significant subgroups of
customers or would 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 would have significant
adverse impacts on health or safety, it
will not be considered further.
10 CFR part 430, subpart C, appendix
A, 4(a)(4) and 5(b).
In sum, if DOE determines that a
technology, or a combination of
technologies, fails to meet one or more
of the above four criteria, it will be
excluded from further consideration in
the engineering analysis. The reasons
for eliminating any technology are
discussed below.
The subsequent sections address
DOE’s evaluation of each technology
option against the screening analysis
criteria and DOE’s determination of
technology options excluded (‘‘screened
out’’) based on the screening criteria.
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1. Screened-Out Technologies
These four screening criteria do not
include the propriety status of design
options. As noted previously, DOE will
only consider efficiency levels achieved
through the use of proprietary designs
in the engineering analysis if they are
not part of a unique path to achieve that
efficiency level. DOE does not believe
that any of the technologies identified in
the technology assessment are
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proprietary, and thus, did not eliminate
any technologies for that reason.
2. Remaining Technologies
Through a review of each technology,
DOE concludes that all of the other
identified technologies listed in this
section IV.B.2 met all four screening
criteria to be examined further as design
options in DOE’s final rule analysis. In
summary, DOE did not screen out the
following technology options:
• Higher efficiency lighting
• higher efficiency evaporator fan
motors
• higher efficiency evaporator fan
blades
• evaporator fan motor controllers
• improved evaporator design
• low-pressure differential
evaporators
• improvements to anti-sweat heaters
• improved or thicker insulation
• higher efficiency defrost
mechanisms
• higher efficiency compressors
• variable speed compressors
• microchannel heat exchangers
• improved condenser design
• higher efficiency condenser fan
motors
• higher efficiency condenser fan
blades
• improved glass pack design (for
Class A and Combination A machines)
• lighting controls
• refrigeration low power modes
DOE determined that these
technology options are technologically
feasible because they are being used or
have previously been used in
commercially available equipment or
working prototypes. DOE also finds that
all of the remaining technology options
meet the other screening criteria (i.e.,
practicable to manufacture, install, and
service and do not result in adverse
impacts on customer utility, equipment
availability, health, or safety). For
additional details, see chapter 4 of the
final rule TSD.
C. Engineering Analysis
The engineering analysis establishes
the relationship between an increase in
energy efficiency of the equipment and
the corresponding increase in
manufacturer selling price (MSP)
associated with that efficiency level.
This relationship serves as the basis for
cost-benefit calculations for individual
customers, manufacturers, and the
nation. DOE typically structures its
engineering analysis using one of three
approaches: (1) The design-option
approach, (2) the efficiency-level
approach, or (3) the cost-assessment
(reverse engineering) approach. The
next paragraphs provide overviews of
these three approaches.
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A design-option approach identifies
individual technology options (from the
market and technology assessment) that
can be used alone or in combination
with other technology options to
increase the energy efficiency of a given
BVM unit. Under this approach, cost
estimates of the baseline equipment and
more-efficient equipment that
incorporates design options are based
on manufacturer or component supplier
data or engineering computer
simulation models. Individual design
options, or combinations of design
options, are added to the baseline model
in descending order of costeffectiveness.
An efficiency-level approach
establishes the relationship between
manufacturer cost and increased
efficiency at predetermined efficiency
levels above the baseline. Under this
approach, DOE typically assesses
increases in manufacturer cost for
incremental increases in efficiency,
without identifying the technology or
design options that would be used to
achieve such increases.
A reverse-engineering, or costassessment, approach involves
disassembling representative units of
beverage vending machines, and
estimating the manufacturing costs
based on a ‘‘bottom-up’’ manufacturing
cost assessment; such assessments use
detailed data to estimate the costs for
parts and materials, labor, shipping/
packaging, and investment for models
that operate at particular efficiency
levels.
As discussed in the 2015 BVM ECS
NOPR, DOE employed the design-option
approach to develop the relationship
between energy use of a beverage
vending machine and MSP. The
decision to use this approach was made
due to several factors, including the lack
of numerous discrete levels of
equipment efficiency currently available
on the market and the prevalence of
energy-saving technologies applicable to
this equipment. More specifically, DOE
identified design options for analysis
and used a combination of industry
research and teardown-based cost
modeling to determine manufacturing
costs, then employed numerical
modeling to determine the energy
consumption of each combination of
design options employed in increasing
equipment efficiency. The resulting
range of equipment efficiency levels and
associated manufacturer production
costs (MPCs) were converted to MSPs
using information regarding typical
manufacturer markups and outbound
freight costs. Typical manufacturer
markups are presented in chapter 5 of
the final rule TSD.
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DOE revised the engineering analysis
presented in the 2015 BVM ECS NOPR
based on the feedback from
stakeholders, additional industry
research, and responses to recent
regulatory changes implemented by
EPA’s SNAP program. In particular,
DOE revised its assumptions for the
thermal modeling of combination
vending machines to account for some
cooling in the compartment that is not
designed to be refrigerated, incorporated
higher production costs associated with
specific requirements for beverage
vending machines using flammable
refrigerants (propane), and revised
which design options were included in
Class A and Class B baseline
configurations. In addition, DOE
adjusted the efficiency of CO2
compressors relative to R–134a
compressors, increased the amount of
LED lighting accounted for in place of
T8 lighting, decreased the impact
attributed to enhanced coils,
incorporated a single-pane glass pack
for Combination A vending machines at
baseline, removed the most-efficient
compressor design option from the 2015
BVM ECS NOPR, and updated its cost
estimates for several design options.
1. Baseline Equipment and
Representative Sizes
For each of the two classes of
equipment with current standards (Class
A and Class B), DOE developed baseline
configurations containing design
options consistent with units designed
to perform at a level that approximates
the existing 2009 BVM standard. DOE
based its representative size
assumptions for Class A and Class B
equipment on the representative sizes
assumed in the 2009 BVM rulemaking
and input from manufacturers during
the framework, preliminary analysis,
and NOPR phases of this rulemaking, as
well as data gathered from supplemental
sources. DOE believes that these
representative sizes continue to reflect
the design and features of current
baseline equipment for Class A and
Class B equipment.
For Combination A and Combination
B equipment, DOE set its baseline
efficiency level differently than for Class
A and Class B equipment, since there
are no current regulatory standards for
this equipment. Specifically, DOE
modeled the baseline level of efficiency
for the Combination A and Combination
B equipment as representing the leastefficient technology generally found in
the BVM market currently for each
design option analyzed. That is, the
baseline efficiency level for
Combination A and Combination B
equipment represented the least-
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efficient combination of technologies
available.
Representative sizes for Combination
A and Combination B were established
in the preliminary analysis based on
equipment available in the current
market, and have been maintained for
this final rule. Specific details of the
representative sizes chosen for analysis
and design options representing each of
the baseline equipment definitions for
Class A, Class B, Combination A, and
Combination B beverage vending
machines are described in more detail
in appendix 5A of the final rule TSD.
Based on input from manufacturers at
the BVM ECS NOPR public meeting as
well as feedback received in the
preliminary analysis phase of the
rulemaking, DOE adjusted the
assumptions it used in its analysis of
baseline level for Class A and Class B
beverage vending machines, for which
there are current standards. In this final
rule, DOE began its engineering analysis
by analyzing equipment designs that
had levels of energy consumption much
higher than allowed by the standard
level set in the 2009 final rule. DOE’s
analysis then implemented all
applicable design options (including
some which likely were implemented in
order to meet the 2009 final rule
standard levels) in order of ascending
payback period. Such an approach
results in equipment designs that better
reflect the current BVM market. To
determine the MPC for a beverage
vending machine that is minimallycompliant with the current BVM
standards each size, refrigerant, and
equipment class combination DOE
analyzed, DOE linearly interpolated
between the energy consumption levels
just above (more consumptive) and just
below (less consumptive) than the
standard. Additional design options
were then added as part of the design
option engineering analysis. This
methodology represents the approach
that a new entrant to the market, or an
existing manufacturer conducting a
redesign, would take to meet the new
standard analyzed in this rule, and
allows cost and price associated with
meeting the current standard with
appendix B of the amended test
procedure. See Table Table IV.4 for an
example of this methodology.
Most of the design options analyzed
in this final rule were observed by DOE
in some portion of the equipment
currently on the market. The presence of
these design options in equipment that
exceeds the current standard level
serves as validation of the energy
performance improvements over the
baseline level that are possible with
these design options. However, DOE
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1053
also realizes that no two manufacturers
may necessarily use the same design
option pathways to improve energy
performance. As such, DOE notes that
its engineering analyses represent just
one potential pathway to achieve the
efficiency levels modeled in
downstream analyses, the one that its
analysis shows to be the most costefficient.
After the NOPR stage, stakeholders
provided comments regarding DOE’s
analysis of baseline equipment. In
written comments, AMS commented
that the baseline level calculated for
Combination A beverage vending
machines is far more efficient than the
performance of actual machines in use
today. Specifically, AMS stated that
machines it manufactures, which would
meet DOE’s proposed definition of a
Combination A vending machine, were
tested, they would consume 8.09 kWh/
day as opposed to the 6.18 kW/day
baseline that DOE presented in the
NOPR TSD. (AMS, No. 57, at p. 10)
AMS specifically stated that converting
a Class A machine to a Combination A
machine only reduces energy by 25
percent even though the refrigerated
volume was reduced by 60 percent and
urged DOE to reconsider its
assumptions for baseline combination
vending machines. (AMS, No. 57 at p.
11)
DOE appreciates the submission of
specific data by stakeholders and used
this data to better inform its rulemaking
activities. In response to comments and
data submitted after the 2015 BVM ECS
NOPR, DOE has refined its engineering
model for Combination A vending
machines to better account for air
comingling between the compartment(s)
that are designed to be refrigerated and
the compartment(s) that are not
designed to be refrigerated, which
effectively increases the heat load
associated with the non-refrigerated
volumes and, correspondingly, energy
consumption. DOE notes that the results
of this updated analysis now more
closely align with AMS’s reported test
results.
2. Refrigerants
At the time of the final rule analysis,
hydrofluorocarbon (HFC) refrigerants,
and specifically R–134a, were used in
most beverage vending machines on the
market in the United States. In addition,
based on equipment certification reports
received by DOE, public statements
from major end users of beverage
vending machines such as Coca-Cola,28
28 One example of such a public statement is
available at www.coca-colacompany.com/
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and information DOE obtained through
confidential manufacturer interviews
(see section IV.J), DOE has come to
understand that CO2 refrigerant is used
in a small but growing portion of the
BVM market.
As discussed earlier, the refrigerants
that are available for use in the U.S.
BVM market are changing as a result of
two recent rulemaking actions by EPA
SNAP. First, EPA published proposed
Rule 19 (Docket No. EPA–HQ–OAR–
2014–0198) on July 9, 2014, that
proposed, among other things, to list
several hydrocarbons—isobutane and
propane—and the hydrocarbon blend
R–441A as acceptable alternatives under
SNAP in BVM applications, subject to
certain use conditions. 79 FR 38811. A
final rule adopting these proposals
became effective on May 11, 2015, and
was published in the Federal Register
on April 10, 2015. 80 FR 19454, 19491.
EPA’s second rulemaking under SNAP,
Proposed Rule 20 (Docket No. EPA–HQ–
OAR–2013–0748), was published on
August 6, 2014 and proposed to change
the status of certain refrigerants to
unacceptable for certain applications,
including R–134a for BVM application.
79 FR 46126. A final rule corresponding
to proposed Rule 20 was published in
the Federal Register on July 20, 2015.
80 FR 42870, 42917–42920 (July 20,
2015). This rule changes the status of R–
134a for new beverage vending
machines to unacceptable beginning on
January 1, 2019. Therefore, equipment
complying with the amended BVM
standards DOE is adopting in this final
rule will do so using the refrigerants
allowable under the newly amended
SNAP listings.
Due in large part to the EPA SNAP
rulemaking, DOE received a number of
stakeholder comments related to
refrigerants in this rulemaking. In
particular, commenters addressed
which refrigerants were likely to be
used in the future, DOE’s approach to
analyzing the different refrigerants, and
the relative energy efficiency of the
different refrigerants.
a. Refrigerants Used in the Analysis
DOE notes that while CO2 has been
approved for use in the United States in
refrigerated beverage vending
applications by EPA SNAP for several
years, other refrigerants such as
hydrocarbons, including propane, were
only recently listed as acceptable
alternatives for use in refrigerated
beverage vending applications in the
United States with EPA’s recent
innovation/coca-cola-installs-1-millionth-hfc-freecooler-globally-preventing-525mm-metrics-tons-ofco2.
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publication of final Rule 19. Although
DOE is not aware of any BVM models
that are currently commercially
available using propane as a refrigerant,
DOE accounted for the use of propane
as an alternative refrigerant, in addition
to CO2, as a potential refrigerant for
BVM application. This was based on use
of propane as a refrigerant in other
similar, self-contained commercial
refrigeration applications.
DOE did not receive any comments
disagreeing with the use of these two
refrigerants in the analysis. In response
to DOE’s 2015 BVM ECS NOPR request
for comment, SVA stated that it has no
plans to use isobutane as a refrigerant.
(SVA, No. 53 at p. 5) SVA stated that it
is in the early stages of research and
development (R&D) for propane
refrigerants and is concerned about EPA
and UL requirements that restrict BVM
placement, as well as significant
equipment and facilities costs
associated with flammable refrigerants.
AMS commented that beverage vending
machines with propane refrigeration
systems require spark-proof motors to
maintain safe operation in the event of
a refrigerant leak. AMS stated that these
motors are roughly three times the cost
of non-spark proof motors and that this
and other changes would add several
hundred dollars to the cost of each
machine. (SVA, No. 53 at p. 5; AMS, No.
57 at p. 8)
DOE thanks SVA and AMS for their
comments. DOE has reviewed the
relevant section of the UL 541 standard
regarding flammable refrigerants in
BVM applications and agrees with AMS
that additional related costs should be
accounted for in order to appropriately
reflect the cost of procuring motors in
compliance with the UL requirements.
Accordingly, DOE has revised its cost
model to account for the increased cost
of the motors required by this standard.
b. DOE Approach
In the engineering analysis for this
final rule, DOE first conducted an
analysis for each equipment class based
on equipment using R–134a refrigerant,
the refrigerant found in the majority of
equipment available today and therefore
providing the most specific and
comprehensive data available. DOE then
conducted analysis on each equipment
class using CO2 and propane
refrigerants, by adjusting the R–134a
analysis to account for the performance
differences attributable to the new
refrigerants. This methodology allowed
DOE to leverage the large existing base
of experience, data, and models for sale
utilizing R–134a while ensuring that its
engineering model and downstream
analyses properly addressed the
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refrigerant landscape applicable at the
time when compliance with new and
amended standards will be required.
In conducting its CO2 analysis, DOE
adjusted its engineering analysis to
account for an increase in energy use for
a beverage vending machine that uses
CO2 versus a similarly equipped unit
using R–134a. Specifically, in its final
rule analysis, DOE used a 10-percent
compressor power increase, based on a
separate analytical comparison of HFC
and CO2 compressors and feedback from
manufacturers, to account for the
inherent relative inefficiency of CO2.
This figure was reviewed with
manufacturers during interviews and
through requests for public comment on
the preliminary analysis. DOE also
analyzed components for CO2
refrigeration systems such as
compressors and refrigeration coils as
having higher costs than those for HFC
refrigeration systems. Additionally, as
CO2 models were currently available on
the market for purchase at the time of
this analysis, DOE was able to procure,
test, and tear down CO2 equipment to
use in corroborating its analysis.
For propane equipment, DOE used a
similar methodology to that applied for
CO2. The engineering analysis used
adjusted values for compressor
performance, incorporating a 15-percent
reduction in energy consumption as
compared to an R–134a compressor, as
well as adjustments to the cost of the
compressor, heat exchangers, and other
system components. These factors were
developed through a separate, focused
analysis targeting the inherent
differences in performance potential
between HFC and hydrocarbon
refrigerants. Additionally, as mentioned
above, DOE reviewed the requirements
in UL 541 Supplement SA, and
accordingly included an additional MPC
factor representative of changes that
may be needed to vend motors and
other electronic components in order to
comply with the UL requirements for all
units modeled with propane refrigerant.
For a detailed explanation of the
methodology used in adjusting the
analysis conducted on equipment using
R–134a refrigerant for analyzing CO2
and propane beverage vending
machines in this final rule, please see
chapter 5 of the final rule TSD.
In the BVM ECS NOPR public
meeting and in written comments, EEA
Joint Commenters and the CA IOUs
requested that DOE treat more efficient
refrigerants as a design option in its
engineering analysis rather than
conducting the analysis such that the
proposed standards could be met by
either CO2 or propane. The EEA Joint
Commenters expressed the belief that
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DOE’s refrigerant-neutral approach
overestimates cost and underestimates
potential energy savings as a result of
any update to the standard. (EEA Joint
Commenters, No. 56 at p. 2; CA IOUs,
No. 58 at p. 2; EAA Joint Commenters,
Public Meeting Transcript, No. 48 at pp.
8, 43)
DOE thanks the CA IOUs and EEA
Joint Commenters for their comments.
However, as noted by DOE in the BVM
ECS NOPR public meeting, DOE’s
analysis for beverage vending machines
has taken a refrigerant-neutral approach
to maintain diversity and customer
choice with regard to refrigerant in the
BVM market. For example, Coca-Cola
acknowledged in the BVM ECS NOPR
public meeting that its choice for the
North American business unit was CO2
as a refrigerant. (Coca-Cola, Public
Meeting Transcript, No. 48 at p. 48–50).
Coca-Cola’s statement is consistent with
DOE’s understanding that BVM
customers may select different
refrigerants for a variety of reasons and
DOE does not wish the standards
adopted as a result of this final rule to
limit the availability or viability of
certain SNAP-approved refrigerants in
the BVM market. Therefore, in this final
rule analysis, DOE has maintained a
refrigerant-neutral analysis approach
that ensures equitability across
refrigerant platforms and continued
availability of CO2 as a refrigerant
option for beverage vending machines.
That is, DOE has maintained an analysis
approach that independently analyzes
CO2- and propane-refrigerant equipment
so that the economic results can be
analyzed individually. Such an
approach results in selection of new and
amended standard levels that result in
the highest NPV for both refrigerants
and that does not disadvantage another
refrigerant.
c. Relative Energy Efficiency of
Refrigerants
NAMA and Royal Vendors
commented in their written submissions
that CO2 systems consume
approximately 15 percent more energy
than their R–134a counterparts and
cautioned that data may not be available
due to the lack of current use. (NAMA,
No. 50 at p. 5; Royal Vendors, No. 54 at
p. 4) SBA Advocacy agreed that CO2 is
about 15 percent less efficient than R–
134a and, therefore, claimed that it is
not a technologically feasible
alternative. (SBA Advocacy, No. 61 at p.
3) EVA also commented that CO2 is 15
percent less efficient than an R–134a
unit and the cost in Europe for ‘‘a
cooling unit operating on CO2 is double
that of an R–134a unit as a result of a
lack of availability of CO2 compressors.’’
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(EVA, No. 60 at p. 2) SVA commented
that its experience with CO2
refrigeration systems indicates
comparable efficiency performance to
R–134a systems if optimized solely for
steady-state conditions but stated that
these systems must be designed for pulldown requirements associated with
equipment reload at higher ambient
temperature and/or humidity
conditions, and that this causes CO2
systems tend to be about 5 percent less
energy efficient than R–134a. (SVA, No.
53 at p. 3) Additionally, AMS
commented that it had no direct
knowledge with CO2 but that its limited
testing with propane showed equal or
only slightly better efficiency than R–
134a. (AMS, No. 57 at p. 4)
DOE thanks these stakeholders for
their comments. It is DOE’s
understanding that the difference in
performance between equipment using
the different refrigerants is primarily a
result of the different compressor
efficiencies. DOE has incorporated these
differences into its analysis and notes
that its analytical results are in line with
comments provided and specifically
that the efficiency penalty associated
with CO2 refrigeration systems in the
analysis is bounded by the estimates
provided. Additional information about
these results is in the compressors
section of IV.C.4 and in chapter 5 of the
final rule TSD.
3. Screened-In Technologies Not
Implemented as Design Options
DOE removed several screened-in
technologies from consideration in the
engineering analysis due to lack of data,
lack of availability, competing effects, or
lack of measurable energy savings when
tested to the DOE test procedure. The
technologies included higher efficiency
fan blades for evaporator and condenser
fans, low-pressure differential
evaporators, improvements to anti-sweat
heaters, higher efficiency defrost
mechanisms, variable speed
compressors, and microchannel heat
exchangers. More information about
these technologies and the reasons they
were removed from consideration can
be found in chapter 5 of the final rule
TSD.
DOE received several comments
regarding one of the technologies it
removed from consideration in the
engineering analysis, variable speed
compressors. In response to DOE’s
request for comment on the use of
variable speed compressors in beverage
vending machines, AMS commented
that although it had used variable speed
compressors for energy savings in the
past, this technology was no longer
available for BVM applications due to
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the small market. (AMS, No. 57 at p. 3)
SVA commented that it is not aware of
any variable speed CO2 compressors.
(SVA, No. 53 at p. 5) In the BVM ECS
NOPR public meeting and written
comments, CA IOUs and the EEA Joint
Commenters stated their belief that the
three operating modes of beverage
vending machines (pull-down, steadystate, and low power mode) make them
good candidates for variable speed
compressors to reduce energy
consumption and inquired as to why
DOE chose to exclude them as design
options. (CA IOUs and EEA Joint
Commenters, Public Meeting Transcript,
No. 48 at p. 35) In its written comments,
the CA IOUs requested that DOE
consider variable speed compressors as
a design option. (CA IOUs, No. 58 at p.
2)
DOE thanks these stakeholders for
their comments and notes that
manufacturers are not precluded from
exploring variable speed compressors as
a means to meet the updated energy
conservation standards for beverage
vending machines. However,
manufacturer comments are consistent
with DOE’s conclusion in the 2015 BVM
ECS NOPR that there are currently no
variable speed compressors with
operating capacity ranges applicable to
beverage vending machines available on
the market that use refrigerants other
than R–134a, which will not be
available for use in vending machine
applications by the compliance date of
this rulemaking due to EPA’s SNAP
regulations. Because DOE is required to
set energy conservation standards that
are both technologically feasible and
economically justified, DOE did not
include variable speed compressors as a
design option in its analysis.
4. Design Options Analyzed and
Maximum Technologically Feasible
Efficiency Level
In response to the 2015 BVM ECS
NOPR, DOE received comments with
specific feedback regarding several of
the design options analyzed, including
glass packs, improved insulation and
vacuum insulated panels, higher
efficiency lighting, lighting low power
modes, fan motors, evaporator fan
controls, coils, and higher efficiency
compressors.
a. Glass Packs
In written comments, Coca-Cola
expressed its belief that enhanced glass
packs, specifically those using three
panes of glass, are not economically
justified for the energy savings
delivered. Coca-Cola further stated that
some of its current Class A equipment
with CO2 refrigeration systems use
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double pane, argon-filled, low E glass
and cannot accommodate triple pane
glass pack without a major redesign.
(Coca-Cola, No. 52 at p. 3) Similarly,
Royal Vendors commented that its Class
A machines currently use double-pane,
argon-filled, low-emissivity glass and
cannot accommodate triple-pane glass
packs without major redesigns, large
development costs, and substantial
machine cost increases. (Royal Vendors,
No. 54 at p. 2) SVA also commented that
enhanced glass packs are not
economically justified. (SVA, No. 53 at
p. 4)
DOE thanks Coca-Cola, Royal
Vendors, and SVA for their comments
and has increased the cost associated
with the enhanced glass pack design
option from that used during the NOPR,
in order to better represent the
economic ramifications of implementing
that design option. DOE notes that the
engineering analysis in this final rule
considers the enhanced glass pack
design option, which is a triple-paned
glass pack, as technologically feasible,
but that the economic analysis does not
deem it to be part of the least-cost
approach to meeting the new standard
levels at any analysis point.
Additionally, DOE accounted for the
cost of equipment redesign and
production equipment cost increases in
its manufacturer impact and customer
subgroup analyses (See sections IV.J and
IV.I, respectively).
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b. Evaporator Fan Motor Controls
Royal Vendors stated in written
comments that its machines already use
evaporator fan controls to meet the
current standards. (Royal Vendors, No.
54 at p. 2)
DOE thanks Royal Vendors for their
comment and agrees that most
equipment on the market today makes
use of evaporator fan motor controls.
Accordingly, in DOE’s engineering
analysis in this final rule, the evaporator
fan motor controls design option is
implemented in the baseline level for all
Class A and most Class B analysis
points. See section IV.C.1 for
information on how DOE established
baseline levels for Class A and Class B
equipment in this analysis.
c. Coils
In their written comments, SVA
questioned DOE’s assumption of 14
percent energy savings due to enhanced
evaporator coils, and stated their general
belief that predicted efficiency
improvements based on software
modeling are typically optimistic
compared to test results. SVA also
stated that for its Class A equipment, it
already uses enhanced evaporator coils
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to meet the current standard, and that
enhanced condenser coils reduce
equipment utility. (SVA, No. 53 at pp.
3–4)
DOE thanks SVA for their comments
and has revised the cost and energy
improvement associated with enhanced
coils in this final rule. DOE additionally
notes that in all of the final rule analysis
points, the resulting reduction in DEC
attributable to changes in the evaporator
coil is shown to be well less than 10
percent. In addition, DOE notes that
such ‘‘enhanced’’ evaporator and
condenser coil options are already
commonly implemented and
commercially-available design options.
d. Compressors
DOE received several comments
regarding different compressors.
Specifically, DOE received comments
regarding the higher efficiency
compressor design option and regarding
CO2 compressors. In the BVM ECS
NOPR public meeting, SVA expressed
doubt that a beverage vending machine
with the compressor that DOE
considered as baseline in its engineering
model would be able to meet the 2009
standard, and stated that DOE should
instead consider the Embraco
FFU130HAX compressor as the baseline
efficiency level. SVA additionally stated
that CO2 compressors capable of
reducing energy consumption to the
degree indicated in DOE’s 2015 BVM
ECS NOPR analysis do not exist on the
market. (SVA, Public Meeting
Transcript, No. 48 at pp. 63–72) In
written comments, Royal Vendors stated
that it is not aware of any compressors
with higher efficiency than the Embraco
FFU130HAX for R–134a or the Sanden
SRABB for CO2 and that therefore DOE
should not consider a more efficient
compressor as a design option to reduce
energy consumption. (Royal Vendors,
No. 54 at p. 1) In its written comments,
Coca-Cola similarly stated that the
assumed ability to move to higher
efficiency compressors does not exist.
(Coca-Cola, No. 52 at p. 3)
While, through testing and teardowns,
DOE has observed equipment on the
current market that meets the current
energy conservation standards that uses
compressors other than the Embraco
FFU130HAX, DOE agrees with
stakeholder comments in that it is not
currently aware of a compressor
available for use in beverage vending
machines in the United States that is
more efficient than the Embraco
FFU130HAX. Accordingly, DOE has
removed from the analysis the design
option that represented a higher
efficiency compressor. Additionally, the
engineering analysis now includes the
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‘‘Improved single speed reciprocating
compressor’’ design option (which
corresponds to the FFU130HAX,
adjusted according to the refrigerantspecific analysis) in all Class A baseline
equipment configurations.
Regarding CO2 compressors, in
written comments, AMS commented
that CO2 refrigerant has a significant
efficiency penalty, and that it is aware
of only one supplier that makes CO2
compressors in the capacity range
required for BVM applications. (AMS,
No. 57 at p. 8) Coca-Cola also stated in
its written comments that it is aware of
only one CO2 compressor supplier in
the U.S. for beverage vending machines.
(Coca-Cola, No. 52 at p. 2) Additionally,
in the BVM ECS NOPR public meeting,
Coca-Cola stated that it was aware of six
CO2 compressors, all early in the
technology curve, and suggested that
DOE take into account potential rapid
improvements in efficiency for CO2
compressors as a result of maturing
engineering and supply chains into
account in its analysis. (Public Meeting
Transcript, No. 48 at p. 51)
DOE thanks Coca-Cola and AMS for
their comments. DOE is aware that there
is currently a limited selection of CO2
compressors available to BVM
manufacturers in the United States.
Based on the feedback received, CO2
compressors were analyzed in the final
rule engineering analysis as using 10
percent more energy than an R–134a
compressor of similar design, as
opposed to the 6 percent value used in
the 2015 BVM ECS NOPR engineering.
e. Insulation and Vacuum Insulated
Panels
Royal Vendors commented that the
only design options considered by DOE
in this rulemaking that it has not
already implemented to meet existing
energy conservation standards are
increased insulation thickness and
vacuum insulated panels, and stated
that increased insulation thickness
would require large investments in
redesign and new foaming fixtures.
Royal Vendors additionally stated that it
does not know the viability of vacuum
insulated panels. (Royal Vendors, No.
54 at p. 2) Coca-Cola commented that
vacuum insulated panels are highly
costly to implement and that its supply
base has not worked to develop this
option. (Coca-Cola, No. 52 at p. 3) EEA
Joint Commenters stated that DOE’s
analysis may overestimate the cost and
underestimate the performance of
vacuum insulated panels due to
possibly outdated information. (EEA
Joint Commenters, No. 56 at p. 3) SVA
commented that they are already using
increased insulation thickness on their
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Class B equipment to meet the existing
standard. (SVA, No. 53 at p. 4).
DOE has accounted for redesign and
increased materials costs in its
manufacturer impact and engineering
analyses, respectively. (See sections IV.J
and chapter 12 of the TSD for
information on the manufacturer impact
analysis.) In response to Royals’
comment concerning the viability of
vacuum insulated panels in BVM
applications, DOE notes that proof of
concept for enhanced insulation to
increase energy efficiency has been
shown in related industries such as
commercial refrigerator manufacturing
and serves as a basis on which to assess
technological feasibility. Regarding
Coca-Cola’s comment, DOE has
quantified the costs to implement
vacuum insulated panels, which it
agrees to be sizably higher at this time
than those of traditional foam
insulation, and has incorporated those
costs into its engineering analysis. In
response to the comment by EEA Joint
Commenters regarding the cost and
performance of vacuum insulated
panels, DOE notes that it has continued
research into this technology in
concurrent rulemakings and that its
assessment for beverage vending
machines is based on the most up to
date information that it has obtained
through manufacturer interviews and
other sources.
f. Lighting and Lighting Low Power
Modes
Regarding lighting, CA IOUs in the
BVM ECS NOPR public meeting and
EEA Joint Commenters in their written
comment expressed the belief that DOE
should have accounted for a greater
variation in LED lighting system
efficiency rather than considering it as
a single efficiency tier. (CA IOUs and
the EEA Joint Commenters, Public
Meeting Transcript, No. 48 at p. 59; CA
IOUs, No. 58 at p. 4) In written
comments, Royal Vendors stated that it
is already using LED lighting in its Class
A machines to meet the current
standard. (Royal Vendors, No. 54 at p.
1)
DOE thanks the CA IOUs, EEA Joint
Commenters, and Royal Vendors for
their comments. DOE acknowledges that
there are a range of LED efficiencies
available on the market and notes that
several design options in the analysis
could be implemented to different
extents, including, for example, lighting
systems, thicker insulation, and various
types of controls (e.g., accessory and
refrigeration low power modes). In its
engineering model, DOE used
representative values for the energy
consumption of each design option,
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including lighting systems, for each
equipment class. DOE notes that
manufacturers are free to choose
whichever design path they wish in
order to meet current and future energy
conservation standards. DOE analyzes
and orders design options based on its
determination of the relative costeffectiveness of each design option. DOE
notes that its engineering analysis agrees
with Royal Vendors and accounts for
the use of LED lighting in order to meet
the baseline level at many Class A
analysis points.
Regarding lighting low power modes,
in the BVM ECS NOPR public meeting,
SVA expressed the belief that test
results currently included in
certification directories and showing
high levels of efficiency may have been
developed using lighting low power
modes. (SVA, Public Meeting
Transcript, No. 48 at p. 66) Also in the
public meeting, SVA expressed doubt
that the 6-hour allowance for lighting
low power states under the updated test
procedure could account for as steep a
drop in energy consumption as DOE’s
analysis shows. (SVA, Public Meeting
Transcript, No. 48 at p. 66) In its written
comments, SVA estimated that 20
percent energy savings over a baseline
model was possible if LED lighting
systems are used in conjunction with
lighting controls, and 10 percent energy
savings were possible if lighting
controls are used with T–8 lighting
systems. (SVA, No. 53 at p. 4) SVA also
stated that it only uses one LED bulb in
its Class A equipment while DOE
assumes two LED bulbs in its
engineering model. (SVA, No. 53 at p.
4)
DOE thanks SVA for its comments,
and especially appreciates the
submission of specific data on potential
energy savings as a result of increased
efficiency lighting. With regard to SVA’s
comment on the number of LED bulbs,
DOE notes that its engineering model is
based on equipment configurations
equipment found in teardowns, and that
it believes to be generally representative
of the beverage vending machine market
due to the presence of similar
configurations across multiple
manufacturers. DOE acknowledges that
individual models may not have the
same components. Additionally, DOE
revisited the specifications of models
available on the markets and, after
additional review of available data, in
its final rule analysis, DOE increased the
linear footage of LED fixtures used
within the case to replace T8 lighting in
Class B and Combination B analyses to
8 total feet of LED fixtures, and
maintained the values for Class A and
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1057
Combination A at 6 total feet of LED
fixtures.
g. Fan Motors
In the BVM ECS NOPR public
meeting, SVA commented that 9 watt
fan motors are unrealistic for BVM
applications and provided more detail
in its written comments, stating that it
uses 4 watt fan motors for its evaporator
and condenser fans. In written
comments, SVA also stated that its Class
B equipment already implements PSC
condenser fan motors and that ECM
condenser fan motors are not
economically justified. (SVA, Public
Meeting Transcript, No. 488 at p. 174;
SVA, No. 53 at p. 4) In written
comments, Royal Vendors stated that it
is already using ECM evaporator fan
motors and PSC condenser fan motors to
meet the current standards and added
that converting from PSC to ECM
condenser fan motors would not yield
significant energy savings for the added
cost. (Royal Vendors, No. 54 at p. 1)
In response to SVA’s comment
regarding fan power draw, DOE notes
that it used fan motor wattage values
that were shown to be typical of the
BVM market as evidenced by their
inclusion in numerous models
examined during DOE’s teardown
analysis. DOE thanks Royal Vendors for
its comment regarding the use of fan
motor design options and notes that it
has reviewed the energy consumption
model in its engineering analysis and
that Royal’s and SVA’s comments
generally align with DOE’s engineering
analysis with ECM evaporator fan
motors often being among the more costeffective design options and ECM
condenser fan motors being among the
least cost-effective.
h. Performance of Design Option
Packages
DOE also received several more
general comments regarding the design
options being used by manufacturers
and the maximum technologically
feasible level. In the BVM ECS NOPR
public meeting and in written
submission, SVA commented that it was
already implementing many of DOE’s
proposed design options to meet
existing ENERGY STAR levels and that
it would not be able to come close to
meeting DOE’s proposed standard
levels. SVA stated that many of the
design options DOE analyzed are not
technologically feasible or economically
justified and that the remaining design
options for Class A equipment are
automatic lighting controls and
refrigeration low power modes, which it
believes would yield approximately 5
percent energy savings. SVA listed the
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remaining design options for Class B
equipment as including automatic
lighting controls, enhanced evaporator
coils, LED lighting, and refrigeration
low power states. (SVA, No. 53 at pp.
3–4; Public Meeting Transcript, No. 48
at 173)
AMS commented in its written
submission that it has already
incorporated several design options to
meet the 2009 energy conservation
standards and that reducing daily
energy consumption by an additional 25
percent is not feasible with present
technologies and would require drastic
changes to overall cabinet sizes and
door design. (AMS, No. 57 at p. 9)
Similarly, Royal Vendors commented
that it has already employed most of the
design options considered by DOE in its
analysis to meet the 2009 standards and
therefore does not believe it can meet
the proposed standard using any
refrigerant. (Royal Vendors, No. 54 at p.
4) NAMA commented that most
manufacturers have already employed
most of the design options considered
by DOE and specifically stated that
some manufacturers already use ECM
evaporator fan motors, split capacitor
condenser fan motors, LED lighting, and
evaporator fan controls to meet the
current standard. (NAMA, No. 50 at p.
5) Coca-Cola commented that many
vending machines with CO2
refrigeration systems that it purchases
are already using LED lighting, ECM
evaporator fan motors, and PSC
condenser fan motors to meet ENERGY
STAR. Coca-Cola additionally stated
that while LEDs can save energy, ECM
condenser fan motors have minimal
impact on energy consumption. (CocaCola, No. 52 at p. 3)
SVA commented that many of the
design options considered by DOE are
not technologically feasible, are not
economically justified, or otherwise
have a negative impact on equipment
utility, citing the rebuttable
presumption that the cost to the
customer will be less than three times
the value of the energy savings during
the first year for energy conservation
standards to be economically justified
(Title 42 U.S.C. 6295(o)) and stated that
this should preclude DOE from
considering design options that do not
yield an energy cost savings of at least
one third of their incremental cost.
(SVA, No. 53 at p. 3) Additionally, in
the BVM ECS NOPR public meeting,
SVA expressed the belief that DOE
should have more fully disclosed the
data used in its analysis and that DOE’s
assumptions are generally off base with
regard to manufacturer capability. (SVA,
Public Meeting Transcript, No. 48 at p.
181)
In response to stakeholder comments,
DOE has revised its engineering model
to better represent which design options
are already being used to meet the
existing standard and therefore not be
considered as potential sources of
further incremental energy savings. In
response to SVA’s comment regarding
the economic justification of design
options, DOE notes that it includes in
the engineering analysis all technologies
that have survived the screening
analysis. At the engineering analysis
phase, DOE only screens out those
technologies that are not technologically
feasible; are not practical to
manufacture, install, and service; do not
impact equipment utility or equipment
availability; and do not adversely affect
health and safety (see section IV.B).
DOE considers the economic
implications of any screened-in design
options in its downstream analyses and
sets new and amended standard levels
based on any improvements in
efficiency that are economically
justified based on the new costs and
benefits accrued by the nation, as well
as the specific impacts on
manufacturers (see section IV.J) and
certain customer subgroups (see section
IV.I). In the LCC and PBP analyses, DOE
considers the time, in years, it takes for
the cumulative energy savings from
more efficient equipment to recover any
incremental increase in equipment cost
necessary to achieve those efficiency
improvements. DOE notes that the PBP
analysis is assessed based on the total
incremental equipment cost necessary
to achieve a given efficiency level and
the commensurate energy savings,
rather than determining the PBP of
individual design options. 42 U.S.C.
6295(o)(2)(B)(iii) DOE further discusses
the methodology for the PBP analysis in
section IV.F and presents the results of
such analyses in section V.B.1.a.
The design options included in this
final rule analysis are shown in Table
IV.4.
TABLE IV.3—DESIGN OPTIONS MODELED IN THE ENGINEERING ANALYSIS
Design option
Notes
Higher efficiency lighting ..........................................................................
Higher efficiency evaporator fan motors ..................................................
Evaporator fan controls.
Improved evaporator design.
Insulation increases or improvements ......................................................
Improved glass pack ................................................................................
Higher efficiency condenser fan motors ...................................................
Improved condenser design.
Higher efficiency compressors.
Lighting low power modes ........................................................................
Refrigeration low power modes ................................................................
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An example of the results of the
engineering analysis for a Class A BVM
model with CO2 refrigerant and a
e.g., LEDs.
e.g., Electronically commutated motors.
e.g., Thicker insulation, vacuum insulated panels.
Class A and Combination A only.
e.g., Electronically commutated motors.
e.g., Lighting timers.
e.g., Timer-based cabinet temperature rise.
medium refrigerated volume is provided
in Table IV.4 of this notice.
TABLE IV.4—EXAMPLE OF DESIGN OPTION ANALYSIS—CLASS A MEDIUM CO2 REFRIGERANT
DEC
(kWh/day)
MPC
($)
MSP
($)
8.598 ............
$1,736.52
$2,340.77
7.552 ............
1,740.50
2,345.63
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Design option added
High Energy Use; with SPM fan motors, no energy controls, T8 lighting, double-pane glass
pack, 1″ insulation, etc.
Evaporator Fan Controls.
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1059
TABLE IV.4—EXAMPLE OF DESIGN OPTION ANALYSIS—CLASS A MEDIUM CO2 REFRIGERANT—Continued
DEC
(kWh/day)
MPC
($)
MSP
($)
5.555
5.126
4.604
4.348
3.867
3.792
............
............
............
............
............
............
1,755.03
1,759.01
1,764.90
1,770.79
1,786.90
1,789.48
2,363.36
2,368.22
2,375.40
2,382.59
2,402.24
2,405.38
3.751
3.487
3.372
3.267
2.966
............
............
............
............
............
1,790.88
1,806.03
1,830.10
1,857.71
1,984.86
2,407.10
2,425.57
2,454.94
2,488.62
2,643.75
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5. Manufacturer Production Costs
In its engineering analysis, DOE
estimates costs for manufacturers to
produce equipment at the baseline
energy use level and at increasingly
higher levels of energy efficiency. In this
final rule, DOE based the manufacturer
production cost model upon data from
physical disassembly of units available
on the market, corroborated with
information from manufacturer
literature, discussions with industry
experts, input from manufacturer
interviews (see section IV.J of this final
rule), and other sources. The baseline
units modeled in the engineering
analysis only incorporated refrigerants
allowable under SNAP regulations at
the time of the effective date of any new
or amended standards, namely propane
and CO2. As such, the manufacturer
production costs at the baseline and
increasing levels of efficiency all reflect
the costs incurred in producing
equipment using acceptable refrigerants
under the final SNAP regulations issued
in 2015. The incremental cost associated
with producing a given BVM unit using
propane or CO2 refrigerant, as compared
to a similar BVM unit using R–134a
refrigerant is accounted for through the
use of these refrigerant-specific cost
curves. Chapter 5 of the final rule TSD
provides a detailed description of the
manufacturing cost analysis.
DOE received comments regarding the
selection of units for teardown and
regarding the MPCs that resulted from
the analysis. Specifically, in written
comments, NAMA expressed concern
that no combination vending machines
were directly torn down and tested and
requested that DOE perform such testing
before regulations are imposed on this
equipment class. (NAMA, No. 50 at p.
4) And, in its written comments, SVA
expressed agreement with DOE’s
assumed markups for Class A and Class
B equipment but added that it believes
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Design option added
Improved Single Speed Reciprocating Compressor.
Automatic Lighting Controls.
Permanent Split Capacitor Evaporator Fan Motor.
Permanent Split Capacitor Condenser Fan Motor.
LED Lighting.
Baseline—Interpolated—Exactly Meets Current Standards; Includes all Design Options Above
le.
Refrigeration Low Power State.
Enhanced Evaporator Coil.
Electronically-Commutated Evaporator Fan Motor.
1.125″ Thick Insulation.
Enhanced Glass Pack.
MPCs are underestimated. (SVA, No. 53
at p. 2)
In response to NAMA, DOE agrees
that additional teardowns might have
provided further information regarding
combination vending machines.
However, difficulty in procuring
combination vending equipment
ultimately made such teardowns
impracticable. Instead, DOE used data
gathered through teardowns of Class A
and Class B machines and extended
those data to the analysis of
combination machines, drawing on the
inherent physical and design
similarities between the analogous
equipment classes. In response to SVA,
DOE notes that its MPC estimates are
built up as the sum of individual
component and system cost estimates,
which have been subjected to numerous
rounds of stakeholder review in
previous stages of this rulemaking. DOE
has incorporated into its cost modeling
analysis all specific, actionable cost
information received at each stage of the
rulemaking. DOE additionally notes that
as mentioned elsewhere in this final
rule, it has updated its cost model for
propane units to account for motors and
other components that comply with
applicable UL standards, and that this
has had the net result of increasing MPC
values for those units.
D. Markups Analysis
DOE uses manufacturer-to-customer
markups to convert the MSP estimates
from the engineering analysis into
customer purchase prices, which are
subsequently used in the LCC and PBP
analysis to evaluate how the increased
cost of higher efficiency equipment
compares to the annual and lifetime
energy and operating cost savings
resulting from such efficiency
improvements. Accordingly, DOE
estimated markups for baseline and all
higher efficiency levels that are applied
to the MSPs from the engineering
analysis to obtain final customer
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purchase prices. The markups analysis
developed appropriate markups (e.g.,
manufacturer markups, retailer
markups, distributor markups,
contractor markups) in the distribution
chain and sales taxes to convert the
MPC estimates derived in the
engineering analysis to customer prices,
which were then used in the LCC and
PBP analysis and in the manufacturer
impact analysis. At each step in the
distribution channel, companies mark
up the price of the equipment to cover
business costs and profit margin.
In order to develop markups, DOE
identified distribution channels (i.e.,
how the equipment is distributed from
the manufacturer to the customer). Once
proper distribution channels for each of
the equipment classes were established,
DOE relied on economic data from the
U.S. Census Bureau and input from the
industry to determine to what extent
equipment prices increase as they pass
from the manufacturer to the customer
(see chapter 6 of the final rule TSD).
DOE identified three distribution
channels, as described below:
(1) Equipment Manufacturer →
Vending Machine Operator (e.g., bottler,
beverage distributor, large food
operator)
(2) Equipment Manufacturer →
Distributor → Vending Machine
Operator
(3) Equipment Manufacturer →
Distributor → Site Owner
Chapter 6 of the final rule TSD
provides details on DOE’s development
of markups for beverage vending
machines.
E. Energy Use Analysis
The purpose of the energy use
analysis is to establish an estimate of
annual energy consumption (AEC) of
beverage vending machines now and
over the 30-year analysis period and to
assess the energy-savings potential of
different equipment efficiencies. DOE
uses the resulting estimated AEC in the
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LCC and PBP analysis (section IV.F of
this final rule) to establish the customer
operating cost savings of efficiency
improvements considered. DOE also
uses the estimate of energy use at the
baseline and at higher levels of
efficiency to estimate NES in the NIA
(section IV.H of this final rule).
The energy use analysis assessed the
estimated AEC of a beverage vending
machine as installed in the field. DOE
recognizes that a variety of factors may
affect the actual energy use of a beverage
vending machine in the field, including
ambient conditions, use and stocking
profiles, and other factors. In the 2015
BVM ECS NOPR, to model the AEC of
each BVM unit, DOE separately
estimated the energy use of equipment
installed indoors and outdoors, to
account for the impact of ambient
temperature and relative humidity on
field-installed BVM energy use. 80 FR
5050462, 50486 (Aug. 19, 2015).
To determine the AEC of BVM units
installed indoors, DOE estimated that
the DEC modeled in the engineering
analysis and measured according to the
DOE test procedure is representative of
the average energy consumption for that
equipment every day of the year. DOE
believes this is a reasonable assumption,
as beverage vending machines installed
indoors are typically subject to
relatively constant temperature and
relative humidity conditions consistent
with the nominal DOE test conditions
(75 °F and 45 percent relative
humidity). DOE estimated that Class A
and Combination A beverage vending
machines and a majority of Class B and
Combination B beverage vending
machines will all be installed inside. Id.
However, DOE understands that some
Class B and Combination B beverage
vending machines are installed outdoors
and will be subject to potentially more
variable ambient temperature and
relative humidity conditions than BVM
units installed indoors. Therefore, in the
2015 BVM ECS NOPR, DOE modeled
the AEC of BVM units installed
outdoors based on a linear relationship
that was developed between the DEC
determined in accordance with the DOE
test procedure, as modeled in the
engineering analysis, and the AEC for
Class B and Combination B beverage
vending machines installed outdoors.
DOE developed this linear regression
based on analysis performed in support
of the 2009 BVM rulemaking, where
DOE modified its energy consumption
model developed in the engineering
analysis to reflect the equipment’s
thermal and compressor performance
characteristics and to simulate the
realistic performance of the machine
exposed to varying temperature and
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relative humidity conditions (chapter 7
of the 2009 BVM final rule TSD).
(Docket No. EERE–2006–STD–0125, No.
79) DOE then estimated the AEC of a
given Class B or Combination B
beverage vending machine installed
outside by multiplying the DEC value by
the linear equation determined from
based on the 2009 BVM rulemaking
analysis. Id.
Regarding DOE’s analysis of Class B
and Combination B beverage vending
machines installed outdoors, DOE’s
NOPR analysis did not consider the
incremental energy use of any electric
resistance heating elements energized to
prevent freezing in cold temperatures,
as DOE lacked sufficient data to do so
and such energy use is not directly
affected by improved efficiency levels
considered by DOE because the
technology options DOE considered in
the engineering analysis do not include
any design changes that would impact
the energy use of resistance heaters. As
such, DOE noted that accounting for the
energy use of cold weather heaters
would not significantly impact the
energy use analysis, LCC analysis, or
NIA results. Id.
In the 2015 BVM ECS NOPR, DOE
estimated, based on publicly available
data from college campuses,29 that 16
percent of Class B machines were
installed outdoors. DOE believes that
these data from college campuses are
reasonably representative of BVM
locations nationally due to the wide
variety of building types and outdoor
spaces on large college campuses, which
can be correlated with the likely BVM
locations expected. Id.
In addition, the engineering analysis
considered three specific sizes (small,
medium, and large) for Class A and
Class B equipment, and two specific
sizes (medium and large) for
Combination A and Combination B
equipment. However, DOE based its
energy use analysis on a ‘‘representative
size’’ beverage vending machine for
each equipment class, determined based
on a weighted average of the equipment
sizes modeled in the engineering
analysis. Id. at 50487.
In response to DOE’s energy use
analysis presented in the NOPR, Seaga
stated the belief that DOE should not
consider the number of Class A
machines installed outside to be
negligible, but did not provide any
additional data (Seaga, Public Meeting
Transcript, No. 48 at p. 84). NAMA also
noted the lack of college campuses from
29 Beverage vending machine Outdoor Location
and Elevated (90 °F) Outdoor Temperature
Analysis. Lawrence Berkeley National Laboratory.
June 2014. Available at https://eetd.lbl.gov/sites/all/
files/lbnl-6744e.pdf.
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the Northeast and Deep South in the
dataset that DOE used and
recommended that DOE expand its data
collection to include these two regions
of the country. (NAMA, No. 50 at p. 7)
Royal Vendors agreed with DOE that use
of cold weather heaters should not be
considered in the NIA. (Royal Vendors,
No. 54 at p. 5) Similarly, AMS
expressed agreement with DOE’s
analysis with regard to its methodology
in calculating annual energy
consumption. (AMS, No. 57 at p. 5)
DOE appreciates AMS and Royal
Vendor’s support of DOE’s energy use
assessment methodology and treatment
of cold weather heaters, respectively. In
response to Seaga and NAMA’s
concerns regarding the number and type
of beverage vending machines located
outdoors, DOE believes that the data
from six colleges and universities
around the country are sufficiently
representative of the general BVM
population because college campuses
typically have a mix of building types
that mirror some of the major markets
for beverage vending machines,
including retail, commercial lodging,
offices, public assembly, and outdoor
spaces (see chapter 7 in the final rule
TSD for a full discussion of the building
types represented in the sample from
college campuses). DOE appreciates the
comments from Seaga and NAMA but,
without data to improve DOE’s
estimates of outdoor BVM installations,
DOE was not able to identify any data
or information supporting such claims.
DOE acknowledges that these trends
could underestimate the outdoor
instances of outdoor Class A machines
and specific regional installation trends.
However, DOE continues to believe that,
on average, the majority of outdoor BVM
installations across the country are Class
B or Combination B units and that the
number of Class A outdoor installations
is small. In addition, DOE acknowledges
that the six-school sample may
underrepresent certain climatic regions
in the United States. However, DOE
does not have reason to believe that the
installation trends for BVM in those
regions would be significantly different
from those in the regions represented in
the data. Therefore, in this final rule,
DOE maintained the assumption that 16
percent of Class B beverage vending
machines are installed outside.
In the 2015 BVM ECS NOPR, DOE
also requested comments on any other
variables that it should account for in its
estimate of national energy use. In
response, DOE received several
comments regarding the effect of dirty
coils in field installations. Mr. Richard
Kenelly of CoilPod LLC commented that
dirty coils lead to reduced performance
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and higher energy use (CoilPod LLC,
No. 42 at p. 1) and added that energy
consumption may be reduced 45 to 50
percent after coils are cleaned (CoilPod
LLC, Public Meeting Transcript, No. 48
at p. 53). SVA added that increased
condenser efficiency is often achieved
by increasing fin density that can lead
to accelerated coil fouling, which
decreases energy consumption under
actual use conditions. (SVA, Public
Meeting Transcript, No. 54 at p. 54).
USelectIt (USI) agreed with SVA’s
statement that increased fin density is
used to increase condenser coil
efficiency and that because customers
don’t generally clean their coils, they
have implemented technology that runs
the condenser fan motors backwards in
an attempt to automatically clean the
coils. USI also agreed with SVA that
under real-world conditions, efficiency
would decrease substantially due to coil
degradation and that including higher
efficiency condenser coils may work
against DOE’s intended goal of energy
savings, as the higher fin density of
these coils makes them more difficult to
clean (USI, Public Meeting Transcript,
No. 54 at p. 5). In written comments,
Coca-Cola, Royal Vendors, and SVA
expressed concern that increasing coil
fin density will hinder performance in
the field due to increased fouling and
shorter equipment life. Royal Vendors
provided the specific example of higher
compressor strain due to higher static
pressure and increased coil restriction
in the case of increased fin density
(Coca-Cola, No. 52 at p. 3; Royal
Vendors, No. 54 at pp. 2, 6; SVA, No.
53 at p. 6).
DOE understands the importance of
proper maintenance, including cleaning
of the condenser coil, on the energy use
and lifetime of beverage vending
machines. DOE has accounted for
regular maintenance of BVM equipment
in the LCC model, which accounts for
an annual preventative maintenance
cost that includes coil cleaning,
cleaning the exterior of the machine and
machine components, and inspection of
the refrigeration system (see section IV.F
and chapter 8 of the TSD). DOE notes
that BVM manufacturers and
distributors encourage regular coil
cleaning in their operation manuals.30
In addition, some manufacturers and
distributors require adherence to the
operations manual in order to maintain
30 See e.g., Dixie Narco. Glassfront BevMax 3
Vender Technical Manual. Crane. https://
69.129.141.51:8080/RD/techbulletins.nsf/
e667893fe32caf4785256bcd0066752b/
67ec964a7ec11a7f85257346004b668b/$FILE/
Bev%20Max%203%20CC%20Man%20260.01.pdf
or Sma’s Club https://scene7.samsclub.com/is/
content/samsclub/633055_P1pdf.
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the warranty on the equipment,31 which
DOE believes may compel such regular
preventative maintenance. While DOE
acknowledges that some BVM operators
may not adhere to the recommended
maintenance schedule, manufacturers
do not have control over the actions of
BVM operators.
Furthermore, DOE does not have
authority to address such applicationbased usage as part of these equipment
standards, which are applied at the
point of manufacture when the coil is
clean. Therefore, DOE is electing not to
consider the impact of failure to clean
condenser coils or otherwise properly
maintain BVM equipment in the field in
the energy use analysis. DOE notes that
BVM operators may install and operate
their equipment in any number of
inadvisable ways that may have an
impact on energy use of the equipment.
However, in this analysis, DOE is
accounting for the anticipated energy
use of beverage vending machines in the
field as intended by manufacturers and
distributors. DOE believes that BVM
manufacturers, who are subject to these
standards, should not be held
responsible for any failure by BVM
operators to properly operate BVM
equipment in the field. DOE also notes
that, were DOE to account for the
impact of coil fouling in the energy use
analysis, it would likely affect all
equipment classes and ELs equivalently
and, thus, would not affect the LCC
analysis or NIA results because only
costs that vary with efficiency levels
(ELs) (incremental costs) lead to changes
in these results.
In addition, CA IOUs requested that
DOE provide state level energy savings
projections for its proposed standard
(CA IOUs, No. 58 at p. 6) In response to
this request, DOE notes that it is
obligated by EPCA to consider the
national benefits and costs, including
the total national energy savings, of any
new or amended standards to determine
whether such standards are
technologically feasible and
economically justified. EPCA does not
require DOE to consider such statespecific information in considering and
promulgating Federal standards. (42
U.S.C. 6295 (o)(2)) Furthermore, DOE
does not believe that such detailed
analysis would significantly improve
the analysis or affect the outcome of
such analysis. Therefore, DOE did not
perform a state-level analysis and has
based the standards analysis conducted
in this final rule on the national
31 See e.g., Drop’s Vending
www.dropsvending.com/Merchant2/
merchant.mvc?Screen=TERMPOL or Royal https://
royalvendors.com/wp-content/uploads/2014/05/
Domestic-Vender-Warranty.pdf.
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1061
aggregate impacts on customer,
manufacturers, and the nation in
performing the analyses required by 42
U.S.C. 6295(o)(2).
Chapter 7 of the final rule TSD
provides additional details on DOE’s
energy use analysis for beverage
vending machines.
F. Life-Cycle Cost and Payback Period
Analysis
New or amended energy conservation
standards usually decrease equipment
operating expenses and increase the
initial purchase price. DOE analyzes the
net effect of new or amended standards
on customers by evaluating the net LCC.
To evaluate the net LCC, DOE uses the
cost-efficiency relationship derived in
the engineering analysis and the energy
costs derived from the energy use
analysis. Inputs to the LCC calculation
include the installed cost of equipment
to the customer, operating expenses
(energy expenses, and maintenance and
repair costs), the lifetime of the unit,
and a discount rate.
Because the installed cost of
equipment typically increases while
operating costs typically decrease under
new standards, there is a time in the life
of equipment having higher-thanbaseline efficiency when the net
operating-cost benefit (in dollars) since
the time of purchase is equal to the
incremental first cost of purchasing the
equipment. The time required for
equipment to reach this costequivalence point is known as the PBP.
DOE uses Monte Carlo simulation and
probability distributions to incorporate
uncertainty and variability in the LCC
and PBP analysis. DOE used Microsoft
Excel combined with Crystal BallTM (a
commercially available program) to
develop an LCC and PBP spreadsheet
model that incorporates both Monte
Carlo simulation and probability
distributions. The LCC subgroup
analysis includes an assessment of
impacts on customer subgroups.
DOE determined several input values
for the LCC and PBP analysis including
(1) customer purchase prices; (2)
electricity prices; (3) maintenance,
service, and installation costs; (4)
equipment lifetimes; (5) discount rates;
(6) equipment efficiency in the no-newstandards case; and (7) split incentives.
The approach and data DOE used to
derive these input values are described
below.
1. Customer Purchase Prices
DOE multiplied the MSPs estimated
in the engineering analysis by the
supply-chain markups to calculate
customer purchase prices for the LCC
and PBP analysis. DOE determined, on
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average, 15 percent of this equipment
passes through a distributor or
wholesaler, and 85 percent of the
equipment is sold by a manufacturer
directly to the end user. In the LCC and
PBP analysis, approximately 15 percent
of the Monte Carlo iterations include a
distributor or wholesaler markup, while
85 percent of the iterations use a
markup factor of 1.0, indicative of no
additional markup on top of the MSPs
(besides sales tax).
DOE developed a projection of price
trends for beverage vending machines in
the 2015 BVM ECS NOPR, based on
historical price trends that projected the
MSP to decline by almost 2 percent
from the 2014 MSP estimates through
the 2019 assumed compliance date of
new or amended standards.
DOE re-examined the data available
and updated the price trend analysis for
this final rule analysis. DOE continued
to use the automatic merchandising
machines PPI and included historical
shipments data from the U.S. Census
Bureau’s current industrial reports to
examine the decline in inflationadjusted PPI as a function of cumulative
BVM shipments. Using these data for
the BVM price trends analysis and
DOE’s projections for future shipments
yields a price decline of roughly 10
percent over the period of 2014 through
2048. For the LCC model, between 2014
and 2019, the price decline is almost 2
percent. DOE used this revised price
trend in the final rule analysis, which
reflects analytical techniques more
consistent with the methodology DOE
has preferentially used for other
appliances. See appendix 8C of the TSD
for further details on the price learning
analysis.
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2. Energy Prices
DOE derived electricity prices from
state-level EIA energy price data for the
commercial and industrial sectors
(manufacturing facilities). DOE used
projections of these energy prices for
commercial and industrial customers to
estimate future energy prices in the LCC
and PBP analysis. EIA’s Annual Energy
Outlook 2015 (AEO2015) was used as
the source of projections for future
energy prices.
DOE developed estimates of
commercial and industrial electricity
prices for each state and the District of
Columbia. DOE derived these average
energy prices from data that are
published annually based on EIA Form
826. DOE then used EIA’s AEO2015
price projections to estimate state-level
commercial and industrial electricity
prices in future years. DOE assumed
that 60 percent of installations were in
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commercial locations and 40 percent
were in industrial locations.
In response to the 2015 BVM ECS
NOPR, Coca-Cola asked if electricity
prices from EIA used in the analysis are
based on a national average or if any
kind of weighting or regionality was
taken into account. Coca-Cola also
inquired whether DOE considered
marginal costs of electricity (Coca-Cola,
Public Meeting Transcript, No. 48 at p.
110). DOE notes that the LCC and PBP
analysis uses state-level electricity
prices in its Monte Carlo approach, and
as such inherently includes regional
variability in prices. DOE has
considered using marginal costs of
electricity but opted to use average
electricity prices by state in this final
rule analysis because compiling and
utilizing marginal rates for the
commercial sector across the nation is
extremely complex, and data is difficult
to obtain.
3. Maintenance, Repair, and Installation
Costs
DOE considered any expected
changes to maintenance, repair, and
installation costs for the beverage
vending machines covered in this
rulemaking. Typically, small
incremental changes in equipment
efficiency incur little or no changes in
repair and maintenance costs over
baseline equipment. The repair cost is
the cost to the customer for replacing or
repairing components in the BVM
equipment that have failed. The
maintenance cost is the cost to the
customer of maintaining equipment
operation. There is a greater probability
that equipment with efficiencies that are
significantly higher than the baseline
will incur increased repair and
maintenance costs, as such equipment is
more likely to incorporate technologies
that are not widely available or are
potentially less reliable than
conventional, baseline technologies.
DOE based repair costs for baseline
equipment on data in a Foster-Miller
Inc.32 report with adjustments to
account for LED lighting. Maintenance
costs include both preventative
maintenance and annualized cost of
refurbishment. DOE estimated that
beverage vending machines undergo
refurbishment every 4.5 years based on
two ENERGY STAR reports indicating
that beverage vending machines are
refurbished every 4 to 5 years. DOE used
RSMeans 33 data for preventative
maintenance costs and used data from
32 Foster-Miller, Inc. Vending Machine Service
Call Reduction Using the VendingMiser. February
18, 2002. Report BAY–01197. Waltham, MA.
33 RSMeans Facilities Maintenance & Repair
2010, 17th Annual Edition. 2009. Kingston, MA.
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the 2009 BVM final rule 34 for the
annualized cost of refurbishment.
In the 2009 BVM rulemaking, DOE
assumed that more-efficient beverage
vending machines would not incur
increased installation costs. Further,
DOE did not find evidence of a change
in repair or maintenance costs by
efficiency level with the exception of
repair cost decreases for efficiency
levels that used LED lighting.
In the 2015 BVM ECS NOPR, DOE
requested comment on the maintenance
and repair costs modeled in the LCC
analysis, especially additional data
regarding differences in maintenance or
repair costs that vary as a function of
refrigerant, equipment class, or
efficiency level. DOE received two
comments. Royal Vendors commented
that maintenance and repair costs will
be higher for units using new
refrigerants than they currently are for
R–134a units, and that more efficient
components are more expensive, thus
higher efficiency levels should have
higher maintenance costs. However,
Royal Vendors did not supply
supporting data. (Royal Vendors, No. 54
at p. 6) AMS commented that they had
observed no measurable differences in
cost or frequency of service calls for
higher efficiency Class A machines.
(AMS, No. 57 at pp. 5–6)
In response to these comments, in this
final rule analysis DOE included higher
maintenance costs for more efficient
machines which implemented such
design options as enhanced condenser
coils, improved compressors, and high
performance fans. Please see chapter 8
of the final rule TSD for more
information regarding maintenance and
repair costs.
4. Equipment Lifetime
DOE used information from various
literature sources and input from
manufacturers and other interested
parties to establish average equipment
lifetimes for use in the LCC and
subsequent analyses. The 2009 final rule
assumed that average BVM lifetime is 10
years. 74 FR 44914, 44927 (Aug. 31,
2009). For this final rule, a longer
average lifetime of 13.5 years is assumed
based on refurbishments occurring
twice during the life of the equipment
at an interval of 4.5 years. As discussed
in section IV.F.3, this estimate is based
34 U.S. Department of Energy–Office of Energy
Efficiency and Renewable Energy. Chapter 8 LifeCycle Cost And Payback Period Analyses, Beverage
Vending Machines Final Rule Technical Support
Document. 2009. Washington, DC. Available online
at www.regulations.gov under Docket No. EERE–
2006–STD–0125.
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on a 2010 ENERGY STAR webinar,35
which reported average lifetimes of 12
to 15 years, and data on the distribution
of equipment ages in the stock of
beverage vending machines in the
Pacific Northwest from the Northwest
Power and Conservation Council 2007
Regional Technical Forum 36 (RTF),
which observed the age of the units in
service to be approximately 8 years on
average.
Refurbishment costs are included in
the maintenance costs presented in
section IV.F.3 of this final rule, and a
discussion of how maintenance and
repair costs are derived is in chapter 8
of the final rule TSD. DOE believes a
lifetime of 13.5 years across efficiency
levels is a representative lifetime
assumption for beverage vending
machines. DOE used this assumption in
its analysis for this final rule.
At the NOPR stage, DOE requested
comment on the assumed lifetime of
beverage vending machines and if the
lifetime of beverage vending machines
is likely to be longer or shorter in the
future. In addition, DOE requested
comment on its assumption that a
beverage vending machine will typically
undergo two refurbishments during the
course of its life and if refurbishments
are likely to increase or decrease in the
future. DOE also requested comment on
the applicability of this assumption to
all equipment classes.
DOE received several additional
comments on equipment lifetime in
response to the NOPR analysis. AMS
generally agreed with DOE’s
methodology and results for equipment
lifetime (AMS, No.57 at p. 6), but AMS
also noted that new component types
with unproven reliability records may
either shorten or lengthen BVM
lifetimes. (AMS, No. 57 at p. 6) Royal
Vendors commented that the evaporator
fan and condenser fan will have shorter
life with increased fan density, thereby
decreasing performance and shortening
compressor lifetime. (Royal Vendors,
No. 54 at p. 6) NAMA commented that
the lifetime of machine could be longer
in the future because BVM owners will
retrofit instead of buy new machines.
(NAMA, No. 50 at p. 8)
35 EPA. Always Count Your Change, How
ENERGY STAR Refrigerated Vending Machines
Save Your Facility Money and Energy. 2010.
www.energystar.gov/ia/products/vending_
machines/Vending_Machine_Webinar_
Transcript.pdf.
36 Haeri, H., D. Bruchs, D. Korn, S. Shaw, J.
Schott. Characterization and Energy Efficiency
Opportunities in Vending Machines for the
Northwestern US Market. Prepared for Northwest
Power and Conservation Council Regional
Technical Forum by Quantec, LLC and The Cadmus
Group, Inc. Portland, OR. July 24, 2007.
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DOE appreciates these comments, and
maintained its average lifetime
assumption of approximately 13.5 years
for this final rule. However, DOE did
compensate for the effects of enhanced
evaporator and condenser fans in the
repair and maintenance costs
component of the LCC and PBP
analysis. In this analysis, while the
shorter life of these fans does not
shorten the overall life of the BVM
equipment, the costs to maintain more
efficient equipment is greater.
DOE notes that assumptions regarding
equipment lifetime and refurbishment
cycles also affect DOE’s shipments
model, which is discussed in section
IV.G of this final rule.
5. Discount Rates
DOE developed discount rates by
estimating the average cost of capital to
companies that purchase beverage
vending machines covered under this
rulemaking. DOE commonly uses the
cost of capital to estimate the present
value of cash flows to be derived from
a typical company project or
investment. Most companies use both
debt and equity capital to fund
investments, so the cost of capital is the
weighted-average cost to the firm of
equity and debt financing.
6. Equipment Efficiency in the No-NewStandards Case
To accurately analyze the incremental
costs and benefits of the adopted
standard levels, DOE’s analyses
consider the projected distribution of
equipment efficiencies in the no-newstandards case (the case without new
energy efficiency standards). That is,
DOE calculates the percentage of
customers who will be affected by a
standard at a particular efficiency level
(in the LCC and PBP analysis, discussed
in this section IV.F), as well as the
national benefits (in the NIA, discussed
in section IV.H) and impacts on
manufacturers (in the MIA, discussed in
section IV.J) recognizing that a range of
efficiencies currently exist in the
marketplace for beverage vending
machines and will continue to exist in
the no-new-standards case.
To estimate the efficiency
distributions for each equipment class,
DOE relied on all publicly available
energy use data. Specifically, the market
efficiency distribution was determined
separately for each equipment class and
for each refrigerant. For equipment for
which certification information was
available in the DOE certification 37 and
37 www.regulations.doe.gov/ccms.
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1063
ENERGY STAR databases,38 these data
were used to determine the efficiency
distribution of models within the
equipment class, which only included
Class B CO2 equipment. 80 FR 50462,
50492 (Aug. 19, 2015).
For Class A and Class B equipment
that is not represented in DOE’s
combined BVM models database (Class
A CO2 equipment and Class A and Class
B propane equipment), DOE assumed all
equipment would be ENERGY STARcompliant or use design options
consistent with ENERGY STAR
equipment in the no-new-standards
case. That is, DOE assumed that if a
manufacturer did not reengineer the
model to meet the ENERGY STAR level
independently, DOE assumed that it is
likely that a manufacturer would use the
same case and basic accessory set (i.e.,
non-refrigeration system components)
available on other similar ENERGY
STAR-listed models using R–134a,
changing only the compressor and other
sealed-system components, as opposed
to building or purchasing separate, less
efficient, components for any new
propane models. This analysis approach
resulted in selection of the first
efficiency level above the baseline, or
EL 1, for Class A and Class B propane
equipment and for Class A CO2 beverage
vending machines. Id.
For Combination A and Combination
B beverage vending machines, DOE
notes that very little data exists
regarding the efficiency distribution of
such equipment. However, because
most manufacturers of Combination A
and Combination B equipment also
produce Class A and/or Class B
equipment, DOE employed a
methodology to estimate the efficiency
distribution of existing Combination A
and Combination B equipment based on
the known efficiency of Class A and
Class B equipment. Therefore, based on
the same analytical methodology used
for Class A and Class B propane
equipment and Class A CO2 equipment,
DOE estimated the efficiency
distribution of Combination A and
Combination B equipment based on the
set of design options reflected in the
efficiency distribution for Class A and
Class B equipment that is currently
available on the market. However, DOE
notes that there are some BVM
manufacturers that produce only Class
A and/or Class B equipment and these
manufacturers typically produce the
most efficient units. Therefore, DOE
assumed that the design option set
corresponding to the ENERGY STAR
levels for Class A and Class B
38 www.energystar.gov/productfinder/product/
certified-vending-machines/results.
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equipment, which is the most common
design, represented the maximum
efficiency for combination equipment
and higher efficiency Class A and Class
B models did not have commensurate
combination equipment platforms.
Therefore, equivalent market share for
combination equipment and the
remaining shipments were equally
distributed between the ‘‘ENERGY
STAR equivalent’’ efficiency level and
the baseline efficiency level, or EL 0. Id.
To project this efficiency distribution
over the analysis time frame in the nonew-standards case, DOE assumed that
the efficiency distribution that currently
exists in the market will be maintained
over the analysis period (2019–2048).
Id.
In response to the 2015 BVM ECS
NOPR analysis, DOE received comments
from interested parties regarding DOE’s
efficiency distribution assumptions. In
particular, AMS commented that it sells
Combination A machines with and
without features found in their ENERGY
STAR Class A machines and that less
than 10 percent of its customers
purchase more efficient models because
the company does not see the energy
savings benefits themselves. (AMS, No.
57 at p. 7) NAMA also expressed
concern that DOE’s definition for
combination vending machines may
make the assumption that Combination
A and Combination B machines have
similar efficiency distributions to their
Class A and Class B counterparts false.
(NAMA, No. 50 at p. 9)
Regarding the efficiency distribution
of combination machines, as stated
above, DOE assumed that combination
vending machines enter the market at
efficiency levels similar to, but slightly
less than, the comparable Class A and
Class B efficiency distributions.
Consistent with AMS and NAMA’s
comments, DOE acknowledges that
Combination A and Combination B
equipment classes may be less efficient
than Class A and B equipment because
these classes have not previously been
subject to standards. Therefore, DOE
defined the baseline efficiency
distribution for Combination A and
Combination B equipment as
significantly less efficient than Class A
and Class B equipment. That is,
Combination A and Combination B
equipment is assumed to fall between
the baseline efficiency unit (the least
efficient combination unit that could be
produced) and the EL with comparable
design options to the ENERGY STAR EL
for Class A and Class B equipment. DOE
notes that this is significantly less
efficient than the baseline efficiency
distribution for Class A and Class B
equipment, as this equipment is not
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assumed to have shipments below
ENERGY STAR and in some cases has
shipments of BVM models with
efficiency levels far exceeding the
ENERGY STAR requirement.
DOE also notes that the values in the
ENEGY STAR and CCMS databases
represent values gathered under the
existing DOE test procedure, or
appendix A. Because this final rule
analysis is conducted based on testing
in accordance with appendix B, DOE
elected to translate the existing
equipment efficiency data to be
representative of testing under appendix
B. To do this, DOE calculated the
average energy savings, in kWh/day, for
accessory low power mode and
refrigeration low power mode for those
equipment classes represented in the
ENERGY STAR and CCMS databases,39
as these are the test procedure
provisions in appendix B that affect the
measured DEC of covered equipment.
The energy savings from accessory and
refrigeration low power mode will vary
based on the specific technologies and
components implemented in each
different BVM model. However, DOE
believes that the design options and
technologies modeled in the engineering
analysis are representative of typical
equipment available in the market;
therefore, the average energy savings for
the accessory and refrigeration low
power mode generated based on the
engineering analysis are similarly
representative of the average change in
daily energy consumption that BVM
models with low power modes would
observe when testing in accordance
with appendix B. That is, DOE’s
analysis calculates the average change
in measured DEC when testing under
appendix B, with low power modes
enabled, compared to appendix A, for
the typical BVM model.
To adjust the CCMS and ENERGY
STAR certified ratings, DOE assumed
that all ENERGY STAR-certified
equipment would have both accessory
low power mode and lighting low
power mode. DOE notes that ENERGY
STAR prescribes that either accessory or
refrigeration low power mode (or both)
be present in order for a model to
qualify for ENERGY STAR certification.
Therefore, all ENERGY STAR models
are offset by the average energy savings
resulting from the use of low power
modes when testing under appendix B
(0.21 kWh/day for Class B equipment).
DOE assumed that the models that were
39 While DOE performed this analysis for both
Class A and Class B equipment represented in the
CCMS and ENERGY STAR database, only Class B
CO2 units are relevant for DOE’s analysis, as all
Class A units in the ENERGY STAR and CCMS
databases use R–134a refrigerant.
PO 00000
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certified in CCMS but were not ENERGY
STAR-qualified did not have low power
modes and, thus, their energy
consumption was not adjusted.
Some commenters observed that some
certified ratings in the CCMS or
ENERGY STAR databases may be based
on testing of equipment without
accounting for the energy consumption
of money processing equipment and/or
without lighting fully energized for the
duration of the test, as is currently
required under appendix A (see section
III.B). DOE notes that the recently
published 2015 BVM test procedure
final rule adopted a new appendix A
that clarifies the treatment of certain
accessories, including lighting, under
the DOE test procedure. Specifically,
appendix A provides that, while energy
management systems that cannot be
adjusted by the machine operator may
be employed, all lighting is to be
illuminated to the maximum extent
throughout the test and the energy
consumption of payment mechanisms is
to be accounted for the DEC for each
BVM model. 80 FR 45758 (July 31,
2015). DOE also notes that appendix A
of the amended BVM test procedure
must currently be used to certify
equipment with existing energy
conservation standards. While DOE
acknowledges that some manufacturers
may have previously misinterpreted the
DOE test procedure and certified
equipment without lighting fully
illuminated and/or without money
processing equipment in place, DOE
notes that the analysis supporting the
standard levels adopted in this final rule
was done based on a modeled
engineering analysis, which was
validated based on testing DOE
conducted in accordance with the
amended BVM test procedure adopted
in the 2015 BVM test procedure final
rule. Based on the engineering analysis
and testing results, DOE maintains that
equipment can meet the current and
amended standard levels when testing
in accordance with the 2015 BVM test
procedure final rule test procedure
amendments. In addition, DOE notes
that the CCMS and ENERGY STAR
databases are only used to inform the
distribution of equipment efficiencies
currently available in the market. As
DOE does not have information on
whether and which specific models may
have been testing without lighting fully
illuminated and/or without money
processing devices in place, DOE
declines to modify the DEC values
found in the CCMS and ENERGY STAR
databases to account for these potential
misinterpretations. However, DOE did
conduct a sensitivity analysis to
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determine the impact of any artificially
reduced DEC values in the CCMS and
ENERGY STAR databases and found
that it did not have a significant impact
on the feasibility or cost-effectiveness of
the analyzed TSLs.
For equipment that are not
represented in DOE’s combined BVM
models database, the efficiency
distributions assumed in the final rule
are estimated based on the ENERGY
STAR and CCMS database, knowledge
of the market, test data, and comments
received from manufacturers.
Specifically, for Class A CO2 equipment
and Class A and Class B propane
equipment, these models were all
assumed to be designed based on a
similar ENERGY STAR-compliant R–
134a design platform for the given or
similar equipment class. This analysis
approach resulted in selection of the
baseline efficiency level for Class A CO2
equipment, EL1 for Class A propane
equipment, and primarily EL2 for Class
B propane equipment.40 Chapter 8 of
this final rule TSD provides more detail
about DOE’s approach to developing nonew-standards case efficiency
distributions.
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7. Split Incentives
DOE understands that in most cases
the purchasers of beverage vending
machines (a bottler or a vending
services company) do not pay the
energy costs for operation and thus will
not directly reap any energy cost savings
from more-efficient equipment.
However, DOE believes that BVM
owners will seek to pass on higher
equipment costs to the users who pay
the energy costs, if possible. DOE
understands that the BVM owner
typically has a financial arrangement
with the company or institution on
whose premises the beverage vending
machine is located, in which the latter
may pay a fee or receive a share of the
revenue from the beverage vending
machine. Thus, DOE expects that BVM
owners could modify the arrangement to
effectively pass on higher equipment
costs. Therefore, DOE’s LCC and PBP
analysis uses the perspective that the
company or institution on whose
premises the beverage vending machine
is located pays the higher equipment
cost and receives the energy cost
savings.
40 DOE assumed that 85 percent of the market
would enter at the ENERGY STAR level (EL2), with
the remaining 15 percent distributed between the
lower ELs (EL1 and EL0), to reflect the fact that
some manufacturers may elect to trade off the
increased efficiency of propane equipment with
other more efficient design options to reduce cost.
This assumption for Class B equipment also reflects
the larger spread in efficiency currently observed in
the market, as compared to Class A equipment.
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In response to the 2015 BVM ECS
NOPR, NAMA and AMS commented
that operators of vending machines
typically do not pay the energy costs
associated with the machine, which are
instead borne by the business or
institution where the machine is
installed. (NAMA, Public Meeting
Transcript, No. 48 at p. 108; AMS, No.
57 at p. 6) DOE is aware of this ‘‘split
incentive’’ issue and its impact on the
perceived cost-effectiveness of savings
in the marketplace. However, as noted
above, in this analysis DOE has assumed
BVM owners will seek to modify
existing financial arrangements and
contracts to pass on higher equipment
costs to the users who pay the energy
costs. Therefore, DOE’s LCC and PBP
analysis uses the perspective that the
company or institution on whose
premises the beverage vending machine
is located will be impacted by the
higher equipment cost and receives the
energy cost savings. In the MIA, DOE
also accounts for the ability of
manufacturers to pass on higher
equipment costs to customers (see
section IV.J).
G. Shipments Analysis
DOE uses forecasts of annual
equipment shipments to calculate the
national impacts of standards (NES and
NPV) and to calculate the future cash
flows of manufacturers.41 For beverage
vending machines, DOE developed
shipments forecasts based on an
analysis of key market drivers and
industry trends for this equipment. In
DOE’s shipments model, shipments of
equipment are driven by stock
replacements assuming that the overall
population of beverage vending
machines will slightly decrease over the
next several decades.
In the 2015 BVM ECS NOPR analysis,
DOE estimated historical shipments
between the years of 1998 and 2006
based on the 2009 BVM final rule
shipments model, increased by 18
percent to reflect the fact that the 2009
BVM final rule shipments model
addresses only Class A and Class B
equipment, not Combination A or
Combination B equipment. 74 FR 44914,
44928 (Aug. 31, 2009) DOE estimates
that combination machines represent 18
percent of total BVM shipments, as
discussed further in section IV.G.1. DOE
also referenced the ENERGY STAR
41 DOE uses all available data on manufacturer
model availability, shipments, or national sales to
develop estimates of the number of BVM units of
each equipment class sold in each year of the
analysis period. In general one would expect a close
correspondence between shipments and sales and
a reasonable correlation between model availability
and sales.
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1065
shipment data to estimate shipments of
new beverage vending machines
between the years of 2005 and 2012 to
corroborate DOE’s historical shipments
estimates during this period. These
historical shipment estimates were used
to build up a stock of BVM equipment
with a representative distribution of
ages, and DOE estimated a stock of 3.1
million BVM units in the United States
in 2006. 80 FR 50462, 50493 (Aug. 19,
2015).
Between 2006 and 2014, DOE
estimated that annual shipments
declined linearly from 118,000 in 2006
to 45,000 in 2014, consistent with
comments from manufacturers received
in during manufacturer interviews
conducted during the NOPR phase of
this rulemaking (see section IV.J of this
final rule). Based on these shipments,
the estimated stock in 2014 is
approximately 2.2 million units,
compared to a stock of approximately 3
million in 2006. In the 2015 BVM ECS
NOPR, DOE noted that if shipments
were maintained at 2014 levels of
around 45,000 units per year over the
30-year analysis period, this would
result in an 80-percent reduction in
overall stock of beverage vending
machines in the United States and
would reflect many current BVM
owners removing BVM units from the
marketplace permanently. Lacking any
data indicating or supporting a
significant reduction in availability or
deployment of beverage vending
machines, DOE assumed that shipments
would recover over time to maintain
reasonably constant stocks of beverage
vending machines into the future. Id.
In both the BVM ECS NOPR analysis
and this final rule analysis, DOE
modeled future shipments of new
beverage vending machines from 2014
through 2048 based on data from
Vending Times Census of the Industry
2014 42 that reported BVM stock trends
in the commercial and industrial
building sectors, as well as specific
commercial and industrial building
sectors where beverage vending
machines are commonly deployed. For
each commercial and industrial
building sector, DOE modeled an
average annual percentage reduction in
stock, as shown in Table IV.5, based on
an assumed percentage reduction in
BVM units for different commercial
building uses. The number of buildings
for each sector was also evaluated based
on data available from the 2012
Commercial Building Energy
42 Vending Times Census of the Industry 2014.
Available at www.vendingtimes.com.
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Consumption Survey (CBECS),43 and an
average increase in number of buildings
was calculated by comparing 2012
CBECS data to historical 2003 CBECS
data. The estimated stock in 2048 based
on this method was 1.8 million, a 20-
percent decrease from the 2.2 million
estimated in 2014. To estimate the
shipments of new beverage vending
machines based on these stock
projections, DOE assumed the minimum
growth rate necessary to result in a stock
of 1.8 million in 2048, which resulted
in a growth rate of 3.7 percent annually
throughout the analysis period. Id at
50494.
TABLE IV.5—AVERAGE ANNUAL PERCENT REDUCTION IN BVM STOCK AND GROWTH IN NUMBER OF BUILDINGS FOR EACH
INDUSTRIAL SECTOR AND THE INDUSTRY OVERALL
Average
annual %
reduction in
BVM stock
Commercial and industrial building sector *
Annual growth
in number
of buildings
(Est. from
CBECS data) *
(%)
Plants, Factories ......................................................................................................................................
Schools & Colleges and Universities ......................................................................................................
Public Locations .......................................................................................................................................
Government and Military .........................................................................................................................
Offices, Office Complexes .......................................................................................................................
Hospitals, Nursing Homes .......................................................................................................................
Other Locations .......................................................................................................................................
0.29
0.74
0.38
0.29
0.74
1.47
0.45
3.01
0.09
¥0.80
2.03
2.54
2.41
1.27
Total ..................................................................................................................................................
0.55
1.78
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* Note that the commercial and industrial building sectors assumed in this analysis correspond to those referenced in the 2013 Vending Times
Census of the Industry. DOE mapped the CBECS building types to these commercial and industrial building sectors and provides a description
of that mapping in chapter 9 of the final rule TSD.
At the 2015 BVM ECS NOPR stage,
DOE requested comment on the several
assumptions regarding historical
shipments between 1998 and 2014 and
also requested data from manufacturers
on historical shipments, by equipment
class, size, and efficiency level, for as
many years as possible, ideally
beginning in 1998 until the present.
In response, AMS offered that it
manufactures only Class A and
Combination A machines and that its
shipment volumes are split roughly 50–
50 between the two (AMS, No. 57 at p.
3). AMS also commented that DOE’s
shipments assumption contradict a 2014
ENERGY STAR publication which
reports 54,000 shipments for that year.
AMS noted that this does not include
combination machines, and claimed
that even the estimated 54,000 value is
likely underestimated. (AMS, No. 57 at
p. 7) SVA commented that historical
shipments between 1998 and 2014 had
a downward trend. (SVA, No. 53 at p.
8) Regarding existing BVM stock
assumptions, NAMA provided an
average estimate of 2.5 machines
installed per ‘‘customer location.’’
(NAMA, No. 50 at p. 11)
In response to these comments
submitted by interested parties, DOE
revised the historical shipments model
to reference the most current ENERGY
STAR market penetration reports,
including the 2014 report cited by AMS.
As AMS noted that the previous
estimate of 45,000 is likely too low, DOE
has updated the shipments in 2014 to be
consistent with the shipments of
ENERGY STAR-qualified units reported
by ENERGY STAR (54,000 units), but
scaled this number to reflect the
shipments of combination equipment
and non-ENERGY STAR-qualified Class
A and Class B equipment. Specifically,
DOE increased the 54,000 estimate by
18 percent to account for shipments of
combination equipment and by 11
percent to represent the shipments of
non-ENERGY-STAR-qualified units,44
resulting 71,443 units shipped in 2014.
DOE agrees with SVA’s comment
regarding the consistent downward
trend of shipments between 1198 and
2014 and notes that DOE’s shipments
model reflects this industry trend. DOE
believes the referenced ENERGY STAR
reports represent the best available data
to estimate historical BVM shipments.
At the NOPR stage DOE also
requested comment on its assumptions
regarding future shipments.
Specifically, DOE requested comment
on the stock of BVM units likely to be
available in the United States and in
particular commercial and industrial
building sectors over time. DOE also
requested comment on its assumptions
regarding the likely reduction in stock
in different commercial and industrial
building sectors in which beverage
vending machines are typically installed
and on any other factors that might
influence an overall reduction in BVM
stock.
In response to these requests, DOE
received several comments regarded
future shipments. In the BVM ECS
NOPR public meeting and in written
comments, NAMA expressed concern
regarding DOE’s assumed reduction in
shipments due to health initiatives and
stated that the industry is moving
towards healthier options. NAMA
additionally stated that the ability to
place whatever the operator wants in a
given machine would negate the need to
remove the machine itself due to a soda
ban. NAMA referenced an industry
census study by Technomic, Inc.
projecting growth in future revenues
and asked DOE to re-evaluate
assumptions regarding shipments.
(NAMA, No. 50 at p. 9; NAMA, Public
Meeting Transcript, No. 48 at p. 129)
Reinforcing that comment, the EEA Joint
Commenters argued that DOE may be
underestimating total number of
shipments over time because an
increase in healthy options that are
being offered in vending machines may
actually cause shipments to increase
over time, but did not provide
supporting data. (EEA Joint
Commenters, No. 56 at p. 4)
In written comments, NAMA
commented that it is not aware of any
situations that would result in further
reduction to BVM stock other than
micromarket expansion. However,
43 www.eia.gov/consumption/commercial/
reports/2012/preliminary/index.cfm.
44 DOE estimates that in 2014 89 percent of Class
A and B equipment were ENERGY STAR-qualified
based on the relative number of models available
in the CCMS and ENERGY STAR databases in 2014.
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NAMA expressed its belief that this
trend may not be as significant as once
thought, or as DOE suggested in the
2015 BVM ECS NOPR. NAMA cited a 15
percent growth in conversion from
beverage vending machines to
micromarkets and estimated there to be
10,000 micromarkets currently in
existence in the United States. NAMA
stated that it was unable to provide data
as to how the increased presence of
micromarkets would affect future
shipments. (NAMA, No. 50 at pp. 10–
11)
Conversely, SVA stated that new
technologies such as micromarkets are
resulting in the replacement of coin
operated vending machines with bottle
coolers. (SVA, Public Meeting
Transcript, No. 48 at p. 133) In written
comments, SVA expressed the belief
that the current downward trend in
beverage vending machine shipments in
the United States will continue for the
foreseeable future and recommended
that DOE work to improve its
understanding of equipment life, a
significant driver of projected shipment
calculations. (SVA, No. 53 at p. 9) SVA
stated that tightening equipment
budgets and increasing prices would
result in increased equipment life, and
if equipment life decreases, the stock of
beverage vending machines in the
United States would continue to
decrease. SVA cited a downward trend
in shipments between 1998 and 2014,
and expressed strong disagreement with
DOE’s assumption that this trend would
reverse. SVA additionally stated that
due to the limited time allowed to
submit comments, it was not able to
provide data on shipments by
equipment class. SVA stated its belief
that micromarkets will continue to
displace beverage vending machines
and have an increasingly negative
impact on shipments. (SVA, No. 53 at
pp. 7–8)
DOE notes that changes in the
availability of new refrigerants and
limitation of certain other refrigerants
for BVM applications may impact the
overall BVM market in the United States
and, specifically, the future shipments
of new beverage vending machines
through 2048. At the 2015 BVM ECS
NOPR stage, DOE requested comment
on the impact of the EPA SNAP rules on
future shipments of beverage vending
machines, by equipment class,
refrigerant, and efficiency level. With
respect to the impact of new refrigerants
on shipments, Royal Vendors, AMS, and
NAMA all commented that added
machine costs due to alternative
refrigerants as a result of EPA SNAP,
combined with the increased efficiency
required by DOE’s proposed standards,
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would decrease new machine purchases
in favor of refurbishments. (Royal
Vendors, No. 54 at p. 8; AMS, No. 57 at
p. 3; NAMA, No. 50 at p. 8) Conversely,
NEEA expressed the belief that EPA
SNAP compliance would lead to an
increase in new shipments, as
refurbishment may not be practical
when switching refrigerants. (NEEA,
Public Meeting Transcript, No. 48 at p.
135) Related to refurbishments, SVA
stated in the BVM ECS NOPR public
meeting that beverage vending machines
can be refurbished from R–134a to CO2
but not to propane due to different
safety concerns for flammable
refrigerants. (SVA, Public Meeting
Transcript, No. 48 at p. 136)
In response to comments received
from interested parties, DOE revised
certain aspects of the shipments model
in its final rule analysis. Primarily, DOE
revised the shipments model to more
explicitly account for refurbished
beverage vending machines and their
impact on overall shipments, as DOE
understands this is an important factor
driving current and future shipments of
beverage vending machines.
Specifically, DOE revised the BVM
shipments model to calculate the stock
of beverage vending machines that
survive from 1 year to the next
according to the following Eq. IV.1:
SurvivingStock = SaU(t,a) + Unew(t) ¥
Uretirements (t) + Urefurbishments (t)
[Eq.IV.1]
Where:
U(t,a) = total stock of age a in a given year
t,
Unew(t) = new shipments of BVM units in
year t (units with age a = 0),
Uretirements(t) = retirements of BVM units in
year t (units with various age a ≥ 13.4),
Urefurbishments(t) = refurbishments of BVM
units in year t (units with various age 30
≥ a ≥ 1),
a = age of stock in years, and
t = year.
DOE’s shipments model assumes as
increasing trend in refurbishing existing
equipment beginning in 2009 and
continuing through 2024, after which
refurbishments return to pre-2009
levels. DOE notes that the impact of this
increased refurbishment rate serves only
to delay shipments of new equipment,
rather than depress shipments
permanently.
In addition, DOE revised its
assumptions regarding the consistent
growth of shipments beginning in 2014,
in light of the impact of the new EPA
SNAP regulations on the BVM market.
While DOE does not have data to
suggest the impact of changes in
refrigerant availability on future
shipments, DOE acknowledges the
comments received from interested
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1067
parties expressing their concern and
belief that added machine costs due to
alternative refrigerants as a result of
EPA SNAP combined with the increased
efficiency required by DOE’s proposed
standards would decrease new machine
purchases in favor of refurbishments
after both regulations go into effect.
However, between 2014 and 2019, DOE
agrees with NEEA that EPA SNAP and
the pending compliance date of DOE’s
amended standards adopted herein may
actually act to increase shipments in the
near term, as BVM owners opt to replace
aging equipment in advance of the
required design changes that will occur
in 2019. DOE expects that some
customers may act in anticipation of the
likely increase in equipment prices that
may occur as a result of the design
changes necessary to comply with EPA
SNAP regulations and DOE’s new and
amended energy conservation
standards.
DOE also notes that many beverage
vending machines that were refurbished
beginning in 2009 to increase their life
will be 4.5 years older, the typical
average ‘‘refurbishment’’ cycle, and the
additional retirement of those older
refurbished machines may increase the
number of retirements beginning in
2014 and thus, may also increase
shipments from 2014 through 2024.
However, DOE also acknowledges that
BVM owners may also choose to
refurbish existing equipment prior to
the EPA SNAP compliance date and
assumes that a significant amount of
refurbishments will occur through 2024.
Notably, DOE’s shipments model
assumes that greater than 50 percent of
equipment that would otherwise reach
the end of its life and be retired will
instead be refurbished, delaying
purchases of new equipment, until after
2024. DOE believes this assumption
effectively captures the likely behavior
of customers who may choose to
refurbish existing R–134a equipment in
anticipation of new R–134a equipment
no longer being available following the
compliance date of the EPA SNAP
regulations.
In 2019, when EPA’s SNAP
regulations are anticipated to take effect,
DOE estimated that shipments will
decline dramatically to 2014 levels,
which represents the lowest annual
shipments in any year from 1998
through the end of the analysis period.
In the succeeding three years, consistent
with manufacturer expectations, DOE
believes that BVM shipments will
stagnate while manufacturers,
customers, and the market respond and
acclimate to the new EPA SNAP
regulations and their effect on
equipment availability and price. In
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2022, DOE anticipates that shipments
will increase, beginning to recover the
aging and depleted BVM stock. DOE
notes that, based on DOE’s assumptions
regarding the choice of customers to
refurbish or delay purchases of new
BVM equipment in response to the
increased cost of BVM units that are
compliant with EPA SNAP and DOE’s
new and amended standards, the BVM
shipments model estimates that the
BVM stock in 2022 will have decreased
46 percent compared to the existing
stock in 2014. DOE believes that, by this
time, customers and the marketplace
will have adapted to the new alternative
refrigerants and, thus, will begin to
return to typical purchasing and
refurbishment cycles. Therefore, to
replace retiring units, DOE’s final rule
shipments model assumes increases in
shipments through 2035, with the most
significant growth occurring between
2022 and 2028.
Beyond 2035, DOE estimates that
growth in shipments will slowly decline
as shipments return to a more
consistent, static-lifetime ‘‘replacement’’
scenario as older equipment
permanently leaves the market. DOE
estimates shipments will remain flat
from 2045 through the end of the
analysis period at around 135,000 units
per year, resulting in a final stock of 1.8
million in 2048, as projected by DOE
based on the Vending Times data. This
represents a 20-percent decrease from
2014 levels, primarily due to
replacement by bottle coolers and
micromarkets,45 which is consistent
with SVA’s comment that micromarkets
will continue to displace beverage
vending machines and have an
increasingly negative impact on
shipments.
DOE notes that it does not expect the
specific refrigerant used in a given
beverage vending machine to impact
demand for beverage vending machines
and overall equipment stocks over time.
As such, DOE maintains that the
historical Vending Times data and
stock-based analysis approach that DOE
employed to develop shipment
assumptions for this final rule are
appropriate and represent the best
available information about future
45 The term bottle cooler refers to a specific type
of self-contained commercial refrigerator with
transparent doors designed for pull-down
applications. Such equipment is specifically
defined as a ‘‘commercial refrigerator designed for
pull-down applications’’ at 10 CFR 431.62.
Micromarkets are small, self-service, convenience
store-like establishments and typically feature a
bottle cooler for selling bottled and canned
beverages, among other snacks, which are paid for
at a central payment kiosk. See www.vending.org/
images/pdfs/micro-market/Tech_W7_bulletin_
Micro_Market_v4.0.pdf.
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shipments of beverage vending
machines.
DOE believes it is reasonable to model
increasing shipments between 2022 and
2035 to recover BVM stock in the
United States, given the commitment by
major bottlers to alternative
refrigerants.46 DOE notes that major
bottlers represent approximately 90
percent of the BVM market 47 and, as
such, anticipates consistent or
increasing demand for alternative
refrigerant BVM units over time. DOE
notes that increasing shipments to
maintain reasonable stock 48 and
availability of BVM units in the
marketplace is also consistent with the
opinions of NAMA and the EEA Joint
Commenters regarding the availability
of healthy options in BVM merchandise
and, thus, continued relevance of
beverage vending machines in all
industry sectors, including schools,
office buildings, and other public
locations.
In response to the specific comments
received from NAMA and the EEA Joint
Commenters, DOE has reviewed its
assumptions regarding the rationale for
certain reductions in different market
segments. DOE agrees with commenters
that the types of vended products
available in beverage vending machines
are not limited to soda or other sugary
beverages and that sales of water, energy
drinks, and sports drinks have been
increasing over the past several years.49
However, DOE also acknowledges that
the increasing trend of micromarkets to
replace beverage vending machines in
some applications and notes that
Vending Times reports that installations
46 See e.g., R744, ‘‘Coca-Cola to approve 9 models
of CO2 vending machine—exclusive interview,’’
Available online www.r744.com/news/view/3466;
The Coca-Cola Company (2014), ‘‘2013/2014 Global
Reporting Initiative Report.’’ Available online
https://assets.coca-colacompany.com/1a/e5/208404
08404b9bc484ebc58d536c/2013-2014-coca-colasustainability-report-pdf.pdf; and PepsiCo (2015).
‘‘Performance with Purpose.’’ 2015 Atmosphere
Conference.
47 Northwest Power and Conservation Council
Regional Technical Forum. 2007. Characterization
of Energy Efficiency Opportunities in Vending
Machines for the Northwestern US Market.
Available at https://rtf.nwcouncil.org//meetings/
2007/08/
RTF%20Vending%20Characterization%20Study_
Revised%20Report_072407.pdf.
48 As noted in the 2015 BVM ECS NOPR, DOE
assumed an average 0.55-percent reduction in BVM
stock overtime, based on projected data from
Vending Times Census of the Industry 2014 and
CBECS building growth trends. DOE believes that
further reductions in BVM stock would represent a
dramatic shift in the availability of BVM units in
the United States and, thus, purchasing trends of
consumers who currently purchase a variety of
snacks and beverages from such vending machines.
See chapter 10 of the final rule TSD for more
information.
49 Vending Times Census of the Industry 2013
and 2014. Available at www.vendingtimes.com.
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of such micromarkets nearly doubled
between 2012 and 2013 and anticipates
similar growth between 2013 and
2014.50 As such, DOE believes that its
projected reductions in certain BVM
industry sectors to be reasonable, but
more likely driven by replacement by
mircomarkets than any health food
trends or soda bans. In addition, DOE
notes that these industry-segmentspecific declines are primarily
illustrative and serve only to support
the overall 0.55 percent annual
reduction in stock modeled for the
industry as a whole. DOE believes that
this overall trend in BVM stock
continues to be valid, as supported by
comments from manufacturers
anticipating continuing declines in
BVM stock and shipments.
For more information on DOE’s
shipments estimates, the shipments
analysis assumptions, and details on the
calculation methodology, refer to
chapter 9 of the final rule TSD.
1. Market Share by Equipment Class
Given a total volume of shipments,
DOE estimates the shipments of each
equipment class based on the estimated
market share of each equipment class. In
the 2015 BVM ECS NOPR, DOE
assumed the market share assigned to
each of the equipment classes shown in
Table IV.6.
TABLE IV.6—MARKET SHARE OF EACH
EQUIPMENT CLASS ASSUMED IN
NOPR ANALYSIS
Equipment class
Class A .................................
Class B .................................
Combination A ......................
Combination B ......................
NOPR market
share
(%)
54.3
27.7
9.3
8.7
In the NOPR analysis, DOE assumed
that the market share for each
equipment class was maintained over
the 30-year analysis period and did not
change as a function of standard level or
as a function of changes in refrigerant
availability resulting from the two
recent EPA SNAP rulemakings. 80 FR
19454, 19491 (April 10, 2015) and 80 FR
42870, 42917–42920 (July 20, 2015).
That is, in 2048, Class A, Class B,
Combination A, and Combination B
continued to represent 54.3, 27.7, 9.3,
and 8.7 percent of the market,
respectively. DOE made this assumption
because it does not have data or
information to suggest that the relative
shipments of different equipment
50 Vending Times Census of the Industry 2014.
Available at www.vendingtimes.com.
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classes will change over time and, if so,
in what direction and on what basis. 80
FR 50462, 50494–50495 (Aug. 19, 2015).
DOE did not receive any comments in
response to the NOPR on these market
distributions and, as such, is
maintaining the market share
distribution modeled in the NOPR in
the shipments model for this final rule.
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2. Market Share by Refrigerant
Once DOE has defined shipments by
equipment class, DOE also defined the
shipments within each equipment class
by refrigerant. In the 2015 BVM ECS
NOPR, DOE based its assumptions
regarding the relative shipments of each
refrigerant based on recent regulatory
actions under EPA’s SNAP program,
which listed propane and certain other
hydrocarbon refrigerants as acceptable
for BVM applications (80 FR 19454,
19491 (April 10, 2015)) and changed the
status of the industry-standard
refrigerant R–134a to unacceptable
beginning on January 1, 2019 (80 FR
42870, 42917–42920 (July 20, 2015)).
Specifically, in the NOPR, DOE
modeled a shipments scenario assuming
that all shipments of new BVM
equipment will use CO2 or propane as
a refrigerant beginning on January 1,
2019, the effective date of the status
change of R–134a as required by Final
Rule 20. 80 FR 50462, 50495 (Aug. 19,
2015).
Given the greater market experience
with CO2, DOE assumed that CO2 will
represent 60 percent of the market and
propane will represent 40 percent of the
market for all equipment classes
beginning in 2019 and continuing
through the end of the analysis period
(2048). Specifically, due to the listing of
CO2 as an acceptable refrigerant for
BVM applications several years ago by
EPA SNAP, as well as a commitment by
Coca-Cola (the largest equipment
purchaser) to move away from HFC
refrigerants in the near future, the
market has already seen evolution
towards the widespread use of CO2. Id.
However, DOE acknowledges that
propane-based BVM models have only
very recently become authorized under
SNAP and that there is much more
limited industry experience with this
refrigerant. DOE has based this final rule
analysis on the use of propane as an
alternative refrigerant, in addition to
CO2, and assumed that propane-based
BVM models will represent 40 percent
of shipments by 2019. As mentioned in
the engineering analysis, DOE believes
this assumption is reasonable based on
use of propane as a refrigerant in other,
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similar, self-contained commercial
refrigeration applications.51 Id.
In its written comments, SVA stated
that the relative market share of each
refrigerant by equipment class
depended heavily on the ability of
manufacturers to develop economically
sound equipment that meets UL
standards for flammable refrigerants.
(SVA, No. 53 at p. 9) In the BVM ECS
NOPR public meeting, Coca-Cola stated
that its refrigerant preference for the
North American market is CO2 and
noted that Japan (another large vending
market) is already using CO2. Also in
the public meeting, SVA expressed
commitment to CO2 but also stated it
was beginning to explore propane, and
Wittern stated that it was pursuing
propane over CO2 due to the higher
operating pressures of CO2 refrigeration
systems, which labor the compressors
and decrease efficiency. (Coca-Cola,
SVA, and Wittern, Public Meeting
Transcript, No. 48 at pp. 48–55)
In response to comments submitted
by interested parties, DOE reviewed its
assumptions regarding the relative
distribution of shipments of CO2 and
propane BVM equipment. DOE believes
that its 2015 BVM ECS NOPR
assumptions regarding the increased
market share of CO2 equipment relative
to propane equipment are consistent
with the statements made by
commenters regarding the existing use
and preference for CO2 equipment, as
well as the additional safety
certifications that will be necessary for
propane equipment. Specifically, DOE
accounted for the fact that beverage
vending machines with propane
refrigerant must meet all requirements
of Supplement SA to the 7th edition of
UL Standard 541, ‘‘Refrigerated Vending
Machines,’’ dated December 30, 201,
which specifically addresses flammable
refrigerants in vending machines, as
required by EPA SNAP’s Rule 19 final
rule. 80 FR 19454, 19460 (April 10,
2015). However, consistent with
Wittern’s observation regarding the
relative efficiency of propane as a
refrigerant compared to CO2, DOE
believes it is reasonable to assume that
propane will gain a significant market
share by 2019 as some manufacturers
elect to take advantage of propane’s
increased efficiency as a refrigerant in
BVM applications. In summary, DOE
appreciates comments from interested
parties and believes they are generally
consistent with DOE’s assumptions in
the NOPR. As such, DOE is maintaining
the distribution of shipments by
51 See e.g., Docket No. EPA–HQ–OAR–2014–
0198, The Environmental Investigation Agency, No.
0134.
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refrigerant modeled in the NOPR with
no modification.
DOE’s shipments analysis and
assumptions are discussed in more
detail in chapter 9 of the final rule TSD.
3. High and Low Shipments
Assumptions
DOE recognizes that there is
considerable uncertainty in forecasting
future shipments of beverage vending
machines. As such, in addition to the
primary shipments scenario presented
above, DOE estimated low and high
shipments scenarios as sensitivities on
the primary scenario. For the high and
low shipments scenarios, DOE assumed
the market share by equipment class
and refrigerant as in the default
shipments scenario, while the
magnitude of total shipments of new
beverage vending machines is varied
among the scenarios. DOE’s low
shipments scenario modeled lower
shipments from 2014 through 2019 than
DOE estimated in the NOPR to reflect
comments that the increased cost of
equipment (due to both EPA SNAP
requirements and DOE’s proposed
standards) would cause a decrease in
new machine purchases in favor of
refurbishments. In 2019, when EPA’s
SNAP regulations will take effect, DOE
estimated that shipments would return
to 2014 levels, before beginning to
recover in 2022 at the reduced growth
rate, reflecting the potential increased
refurbishment cycles and commensurate
increased lifetime for existing BVM
equipment. DOE also assumed that BVM
shipments recover only to
approximately 100,000 shipments per
year and result in a stock of 1.3 million
at the end of the analysis period, a 40percent reduction in units installed in
the United States. DOE notes that this
stock reduction is consistent with the
projected stock based on the Vending
Times data of a 2 percent annual
reduction over the analysis period,52
without adjusting for the growth in
buildings over the analysis period
calculated based on CBECS.
Conversely, the high shipments
scenario assumes the same overall
decline in stock assumed in the primary
shipment case; that is, a stock of 1.8
million BVM units in 2048. However,
the high shipments scenario assumes
that shipments recover more quickly
than in the primary shipments case. The
high shipments scenario assumes
shipments of new beverage vending
machines increase in advance of SNAP,
consistent with the default shipments
scenario, as BVM customers act
52 Vending Times Census of the Industry 2013
and 2014. Available at www.vendingtimes.com.
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preemptively to purchase remaining R–
134a equipment before it is no longer
allowed beginning in 2019. Then,
following 2019, the high shipments
scenario assumes that shipments
stagnate before growing rapidly again
beginning in 2022 to recover over the
next 5 years. DOE believes this scenario
represents the case where shipments of
BVM units increase over time based on
the increased offerings of healthy
options in beverage vending machines
and demand from bottlers for such
alternative refrigerant BVM units,
consistent with comments by NAMA
and Coca-Cola, respectively. These two
sensitivity scenarios are discussed in
more detail in chapter 9 of the final rule
TSD.
H. National Impact Analysis
The NIA assesses the NES and the
national NPV from a perspective of total
customer costs and savings that would
be expected to result from new or
amended standards at specific efficiency
levels (i.e., TSL) for each equipment
class of beverage vending machines.53
(‘‘Customer’’ in this context refers to
customers of the equipment being
regulated, in this case the purchaser of
the BVM) DOE calculated the NES and
NPV based on projections of annual
shipments, along with the annual
energy consumption and total installed
cost data from the energy use and LCC
analyses.54 For the present analysis,
DOE projected the energy savings,
operating cost savings, equipment costs,
and NPV of customer benefits for
equipment sold from 2019 through 2048
(the expected year in which the last
standards-compliant equipment is
shipped during the 30-year analysis).
DOE evaluates the impacts of new and
amended standards by comparing a nonew-standards case projections with the
standards case projections. The no-newstandards case characterizes energy use
and customer costs for each equipment
class in the absence of new or amended
energy conservation standards. For this
projection, DOE considered historical
trends in efficiency and various forces
that are likely to affect the mix of
efficiencies over time. DOE compared
the no-new-standards case with
projections characterizing the market for
each equipment class if DOE adopted
new or amended standards at specific
energy efficiency levels (i.e., the TSLs or
standards cases) for that class. For the
standards cases, DOE considers how a
given standard would likely affect the
market shares of equipment with
efficiencies less than the standard.
DOE used a spreadsheet model to
calculate the energy savings and the
national customer costs and savings
from each TSL. Interested parties can
review DOE’s analyses by changing
various input quantities within the
spreadsheet. The NIA spreadsheet
model uses average values as inputs
(rather than probability distributions of
key input parameters as used in the
LCC). To assess the effect of input
uncertainty on NES and NPV results,
DOE developed its spreadsheet model to
conduct sensitivity analyses by running
scenarios on specific input variables.
For the current analysis, the NIA used
projections of energy price trends from
the AEO2015 Reference case. In
addition, DOE analyzed scenarios that
used inputs from the AEO2015 Low
Economic Growth and High Economic
Growth cases. These cases have lower
and higher energy price trends,
respectively, compared to the reference
case. NIA results based on these cases
are presented in appendix 10E of the
final rule TSD.
A detailed description of the
procedure to calculate NES and NPV
and inputs for this analysis are provided
in chapter 10 of the final rule TSD.
Table IV.7 summarizes the inputs and
methods DOE used for the NIA analysis
for the final rule. Discussion of these
inputs and methods appears following
Table IV.7. See chapter 10 of the final
rule TSD for further details.
TABLE IV.7—SUMMARY OF INPUTS AND METHODS FOR THE NATIONAL IMPACT ANALYSIS
Inputs
Method
Shipments ....................................................................
Compliance Date of Standard .....................................
Efficiency Trends .........................................................
Annual shipments from shipments model.
2019.
No-new-standards case:
Standards cases:
Annual weighted-average values are a function of energy use at each TSL.
Annual weighted-average values are a function of cost at each TSL.
Incorporates projection of future equipment prices based on historical data.
Annual weighted-average values as a function of the annual energy consumption per unit
and energy prices.
Repair cost and maintenance costs provided from LCC analysis.
AEO2015 forecasts (to 2040) and extrapolation through 2078.
A time-series conversion factor based on AEO2015.
3% and 7%.
2015.
Projection of future price trends for BVM equipment.
Weibull distribution for equipment lifetime.
Annual Energy Consumption per Unit .........................
Total Cost per Unit ......................................................
Annual Energy Cost per Unit .......................................
Repair and Maintenance Cost per Unit .......................
Energy Prices ..............................................................
Energy Site-to-Primary and FFC Conversion ..............
Discount Rate ..............................................................
Present Year ................................................................
Price Learning ..............................................................
Lifetime ........................................................................
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1. Equipment Efficiency Trends
A key component of the NIA is the
trend in energy efficiency projected for
the no-new-standards case and each of
the standards cases. Section IV.F.6 of
this final rule describes how DOE
developed an energy efficiency
distribution for the no-new-standards
53 The NIA accounts for impacts in the 50 states
and U.S. territories.
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case (which yields a shipment-weighted
average efficiency) for each of the
considered equipment classes for the
first year of the forecast period.
DOE developed a distribution of
efficiencies in the no-new-standards
case for the compliance year of new
standards for each BVM equipment
class. Because no information was
available to suggest a different trend,
DOE assumed that the efficiency
distribution in the no-new-standards
case will remain the same in future
years. In each standards case, a ‘‘rollup’’ scenario approach was applied to
establish the efficiency distribution for
the compliance year. Under the ‘‘rollup’’ scenario, DOE assumed: (1)
54 For the NIA, DOE adjusts the installed cost data
from the LCC analysis to exclude sales tax, which
is a transfer.
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Equipment efficiencies in the no-newstandards case that do not meet the
standard level under consideration will
‘‘roll-up’’ to meet the new standard
level; and (2) equipment efficiencies
above the standard level under
consideration will not be affected. The
‘‘roll-up’’ was a more conservative
approach over the ‘‘market shift’’
approach. In a market shift approach it
is assumed that a given number of
customers will prefer to buy equipment
above the baseline. Therefore, in a
standards case scenario customers will
continue to purchase above the new
baseline by shifting to an efficiency
level that keeps their purchase the same
number of efficiency levels above the
new baseline until they no longer can
do so because the market becomes
compressed by the maximum available
efficiency level.
DOE also recognizes that recent
changes in refrigerant availability
resulting from the two recent EPA SNAP
rulemakings may have an impact on
forecasted efficiency distributions under
the no-new-standards case. 80 FR
19454, 19491 (April 10, 2015) and 80 FR
42870, 42917–42920 (July 20, 2015).
However, DOE did not account for such
potential impacts on efficiency
distributions in this final rule analysis,
as DOE does not have data or
information to suggest how efficiency
distributions of different equipment
classes or refrigerants will change over
time and, if so, in what direction and on
what basis as a result of potential
changes.
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2. National Energy Savings
The inputs for determining the NES
are (1) annual energy consumption per
unit, (2) shipments, (3) equipment stock,
(4) national energy consumption, and
(5) site-to-source conversion factors. As
discussed in the energy use analysis,
DOE calculated the national energy
consumption by multiplying the
number of units (stock) of each type of
equipment (by vintage or age) by the
unit energy consumption (also by
vintage). Vintage represents the age of
the equipment.
DOE calculated annual NES based on
the difference in national energy
consumption for the no-new-standards
case (without new efficiency standards)
and for each higher efficiency
standard.55 Cumulative energy savings
are the sum of the annual NES over the
period in which equipment shipped in
2019–2048 are in operation.
55 The no-new-standards case represents a mix of
efficiencies above the minimum efficiency level (EL
0). Please see section IV.F.6 for a more detail
description of associated assumptions.
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DOE uses a multiplicative factor
called ‘‘site-to-source conversion factor’’
to convert site energy consumption (at
the commercial building) into primary
or source energy consumption (the
energy input at the energy generation
station required to convert and deliver
the energy required at the site of
consumption). These site-to-source
conversion factors account for the
energy used at power plants to generate
electricity and for the losses in
transmission and distribution, as well as
for natural gas losses from pipeline
leakage and energy used for pumping.
For electricity, the conversion factors
vary over time due to projected changes
in generation sources (that is, the power
plant types projected to provide
electricity to the country). The factors
that DOE developed are marginal
values, which represent the response of
the system to an incremental decrease in
consumption associated with amended
energy conservation standards.
For this final rule, DOE used
conversion factors based on the U.S.
energy sector modeling using the
National Energy Modeling System
(NEMS) Building Technologies (NEMS–
BT) version that corresponds to
AEO2015 and which provides national
energy forecasts through 2040. Within
the results of NEMS–BT model runs
performed by DOE, a site-to-source ratio
for commercial refrigeration was
developed. The site-to-source ratio was
held constant beyond 2040 through the
end of the analysis period (30 years
from the compliance year plus the life
of equipment).
a. Full-Fuel-Cycle Analysis
DOE has historically presented NES
in terms of primary energy savings. On
August 18, 2011, DOE published a final
statement of policy in the Federal
Register announcing its intention to use
FFC measures of energy use and
greenhouse gas and other emissions in
the NIA and emissions analyses
included in future energy conservation
standards rulemakings. 76 FR 51281.
While DOE stated in that document that
it intended to use the Greenhouse Gases,
Regulated Emissions, and Energy Use in
Transportation (GREET) model to
conduct the analysis, it also said it
would review alternative methods,
including the use of NEMS. After
evaluating both models and the
approaches discussed in the August 18,
2011 document, DOE published an
amended statement of policy,
articulating its determination that
NEMS is a more appropriate tool for this
purpose. 77 FR 49701 (August 17, 2012).
The approach used for this final rule,
and the FFC multipliers that were
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applied, are described in appendix 10D
of the TSD. NES results are presented in
terms of both primary and FFC savings;
the savings by TSL are summarized in
terms of FFC savings in section I.C of
this final rule.
3. Net Present Value Analysis
The inputs for determining NPV are:
(1) Total annual equipment cost, (2)
total annual savings in operating costs,
(3) a discount factor to calculate the
present value of costs and savings, (4)
present value of costs, and (5) present
value of savings. DOE calculated the net
savings for each year as the difference
between the no-new-standards case and
each standards case in terms of total
savings in operating costs versus total
increases in equipment costs. DOE
calculated savings over the lifetime of
equipment shipped in the forecast
period. DOE calculated NPV as the
difference between the present value of
operating cost savings and the present
value of total equipment costs.
For the NPV analysis, DOE calculates
increases in total equipment costs as the
difference in total equipment cost
between the no-new-standards case and
standards case (i.e., once the standards
take effect). Because the more-efficient
equipment bought in the standards case
usually costs more than equipment
bought in the no-new-standards case,
cost increases appear as negative values
in calculating the NPV.
DOE expresses savings in operating
costs as decreases associated with the
lower energy consumption of equipment
bought in the standards case compared
to the no-new-standards case. Total
savings in operating costs are the
product of savings per unit and the
number of units of each vintage that
survive in a given year.
DOE multiplied monetary values in
future years by the discount factor to
determine the present value of costs and
savings. DOE estimates the NPV of
customer benefits using both a 3-percent
and a 7-percent real discount rate as the
average real rate of return on private
investment in the U.S. economy. DOE
used these discount rates in accordance
with guidance provided by the U.S.
Office of Management and Budget
(OMB) to Federal agencies on the
development of regulatory analysis.
(OMB Circular A–4 (Sept. 17, 2003),
section E, ‘‘Identifying and Measuring
Benefits and Costs’’) The 7-percent real
value is an estimate of the average
before-tax rate of return to private
capital in the U.S. economy. The 3percent real value represents the
‘‘societal rate of time preference,’’ which
is the rate at which society discounts
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future consumption flows to their
present.
this final rule and described in detail in
chapter 12 of the final rule TSD.
I. Customer Subgroup Analysis
In analyzing the impact of new or
amended standards on commercial
customers, DOE evaluated the impact on
identifiable groups (i.e., subgroups) of
customers, such as different types of
businesses that may be
disproportionately affected by a national
standard. The purpose of the subgroup
analysis is to determine the extent of
this disproportional impact. In
comparing potential impacts on the
different customer subgroups, DOE may
evaluate variations in regional
electricity prices, energy use profiles,
and purchase prices that might affect
the LCC of an energy conservation
standard to certain customer subgroups.
For this rulemaking, DOE identified
manufacturing and/or industrial
facilities that purchase their own
beverage vending machines as a relevant
subgroup. These facilities typically have
higher discount rates and lower
electricity prices than the general
population of BVM customers. These
two conditions make it likely that this
subgroup will have the lowest LCC
savings of any major customer
subgroup.
Two stakeholders commented on the
2015 BVM ECS NOPR subgroup
analysis. AMS commented that because
those who purchase the machines do
not usually pay for electricity, PBP
numbers for subgroup ‘‘do not really
exist’’ (i.e., energy savings are only
realized by site owners). (AMS, No. 57
at Page 6) NAMA suggested that
subgroups might include vending
machine operating companies because
‘‘most corporate and manufacturing
facilities provide vending machines to
their employees through vending
machine companies.’’ (NAMA, No. 50 at
p. 12)
In response to the comment from
AMS, DOE notes that the money saved
by more efficient equipment through
lower operating costs is accounted for in
the split incentives approach. DOE
believes that the subgroup to which
NAMA refers can be represented by the
manufacturing and/or industrial
facilities that purchase their own
beverage vending machines because
each group would likely have lower
electricity prices and higher discount
rates than the typical customer.
DOE determined the impact on this
BVM customer subgroup using the LCC
spreadsheet model. DOE conducted the
LCC and PBP analysis for customers
represented by the subgroup. The
results of DOE’s LCC subgroup analysis
are summarized in section V.B.1.b of
J. Manufacturer Impact Analysis
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1. Overview
DOE performed a MIA to determine
the financial impact of amended energy
conservation standards on
manufacturers of beverage vending
machines, and to estimate the potential
impact of such standards on
employment and manufacturing
capacity. The MIA has both quantitative
and qualitative aspects. The quantitative
part of the MIA primarily relies on the
Government Regulatory Impact Model
(GRIM), an industry cash-flow model
with inputs specific to this rulemaking.
The key GRIM inputs are data on the
industry cost structure, equipment
costs, shipments, and assumptions
about markups and conversion
expenditures. The key output is the
INPV. Different sets of assumptions (i.e.,
markup and shipments scenarios) will
produce different results. The
qualitative part of the MIA addresses
factors such as equipment
characteristics, impacts on particular
subgroups of firms, and important
market and equipment trends. The
complete MIA is outlined in chapter 12
of the final rule TSD.
DOE conducted the MIA for this
rulemaking in three phases. In Phase 1
of the MIA, DOE conducted structured,
detailed interviews with manufacturers
and prepared a profile of the BVM
industry. During manufacturer
interviews, DOE discussed engineering,
manufacturing, procurement, and
financial topics to identify concerns and
to inform and validate assumptions
used in the GRIM. See appendix 12A of
the TSD for a copy of the interview
guide.
DOE used information obtained
during these interviews to prepare a
profile of the BVM industry. Drawing on
financial analysis performed as part of
the 2009 energy conservation standard
for beverage vending machines, as well
as feedback obtained from
manufacturers, DOE derived financial
inputs for the GRIM (e.g., sales, general,
and administration (SG&A) expenses;
research and development (R&D)
expenses; and tax rates). DOE also used
public sources of information, including
company SEC 10–K filings,56 corporate
annual reports, the U.S. Census
Bureau’s Economic Census,57 and
56 U.S. Securities and Exchange Commission.
Annual 10–K Reports. Various Years. https://sec.gov.
57 U.S. Census Bureau, Annual Survey of
Manufacturers: General Statistics: Statistics for
Industry Groups and Industries. https://
factfinder2.census.gov/faces/nav/jsf/pages/
searchresults.xhtml?refresh=t.
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Hoover’s reports,58 to develop the
industry profile.
In Phase 2 of the MIA, DOE prepared
an industry cash-flow analysis to
quantify the potential impacts of an
amended energy conservation standard
on manufacturers of beverage vending
machines. In general, energy
conservation standards can affect
manufacturer cash flow in three distinct
ways: (1) Create a need for increased
investment; (2) raise production costs
per unit; and (3) alter revenue due to
higher per-unit prices and possible
changes in sales volumes. To quantify
these impacts, DOE used the GRIM to
perform a cash-flow analysis for the
BVM industry using financial values
derived during Phase 1.
In Phase 3 of the MIA, DOE evaluated
subgroups of manufacturers that may be
disproportionately impacted by
amended energy conservation standards
or that may not be represented
accurately by the average cost
assumptions used to develop the
industry cash-flow analysis. For
example, small manufacturers, niche
players, or manufacturers exhibiting a
cost structure that largely differs from
the industry average could be more
negatively affected. DOE identified one
subgroup for a separate impact analysis,
small businesses.
DOE identified eight companies that
sell BVM equipment in the United
States. For the small businesses
subgroup analysis, DOE applied the
small business size standards published
by the Small Business Administration
(SBA) to determine whether a company
is considered a small business. 65 FR
30836, 30848 (May 15, 2000), as
amended at 65 FR 53533, 53544 (Sept.
5, 2000) and codified at 13 CFR part
121. To be categorized as a small
business under North American
Industry Classification System (NAICS)
code 333318, ‘‘Other Commercial and
Service Industry Machinery
Manufacturing,’’ a BVM manufacturer
and its affiliates may employ a
maximum of 1,000 employees. The
1,000-employee threshold includes all
employees in a business’s parent
company and any other subsidiaries.
Based on this classification, of the eight
companies selling beverage vending
machines in the United States, DOE
identified five manufacturers that
qualify as small businesses, one of
which is a foreign manufacturer with
domestic-sited subsidiary that serves as
its marketing arm in the United States.
The BVM small manufacturer subgroup
is discussed in chapter 12 of the final
58 Hoovers Inc. Company Profiles. Various
Companies. www.hoovers.com.
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rule TSD and in section IV.J of this final
rule.
Additionally, in Phase 3 of the MIA,
DOE evaluated impacts of amended
energy conservation standards on
manufacturing capacity and direct
employment. DOE also evaluated
cumulative regulatory burdens affecting
the BVM industry.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the
changes in cash flow due to new
standards that result in a higher or
lower industry value. The GRIM
analysis uses a standard, annual cashflow analysis that incorporates
manufacturer costs, markups,
shipments, and industry financial
information as inputs. The GRIM
models changes in costs, distribution of
shipments, investments, and
manufacturer margins that could result
from an amended energy conservation
standard. The GRIM spreadsheet uses
the inputs to arrive at a series of annual
cash flows, beginning in 2015 (the
reference year of the analysis) and
continuing to 2048. DOE calculated
INPVs by summing the stream of annual
discounted cash flows during this
period. For BVM manufacturers, DOE
used a real discount rate of 8.5 percent,
which was derived from industry
financials and then modified according
to feedback received during
manufacturer interviews.
The GRIM calculates cash flows using
standard accounting principles and
compares changes in INPV between a
no-new-standards case and each
standards case. The difference in INPV
between the no-new-standards case and
a standards case represents the financial
impact of the amended energy
conservation standard on
manufacturers. As discussed previously,
DOE collected this information on the
critical GRIM inputs from a number of
sources, including publicly available
data and interviews with a number of
manufacturers. The GRIM results are
shown in section IV.J.2.b of this final
rule. Additional details about the GRIM,
the discount rate, and other financial
parameters can be found in chapter 12
of the final rule TSD.
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a. Government Regulatory Impact Model
Key Inputs
Manufacturer Production Costs
Manufacturing more efficient
equipment is typically more expensive
than manufacturing baseline equipment
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due to the use of more complex
components, which are typically more
costly than baseline components. The
changes in the MPCs of the analyzed
equipment can affect the revenues, gross
margins, and cash flow of the industry,
making these equipment cost data key
GRIM inputs for DOE’s analysis.
In the MIA, DOE used the MPCs for
each considered efficiency level
calculated in the engineering analysis,
as described in section IV.C of this final
rule and further detailed in chapter 5 of
the final rule TSD. In addition, DOE
used information from its teardown
analysis, described in chapter 5 of the
TSD, to disaggregate the MPCs into
material, labor, and overhead costs. To
calculate the MPCs for equipment above
the baseline, DOE added the
incremental material, labor, and
overhead costs from the engineering
cost-efficiency curves to the baseline
MPCs. These cost breakdowns and
equipment markups were validated and
revised with manufacturers during
manufacturer interviews. DOE notes
that, since all BVM equipment will be
required to be compliant with EPA’s
new Rule 20 regulations prohibiting the
use of R–134a after January 1, 2019 (80
FR 42870, 42917–42920 (July 20, 2015)),
the MPCs modeled in the GRIM
represent equipment that is compliant
with Rule 20 (i.e., uses only CO2 and
propane refrigerants), as well as any
existing energy conservation standards
for such equipment.
Shipments Forecasts
The GRIM estimates manufacturer
revenues based on total unit shipment
forecasts by equipment class and the
distribution of these values by efficiency
level. Changes in sales volumes and
efficiency mix over time can
significantly affect manufacturer
finances. For this analysis, the GRIM
uses the NIA’s annual shipment
forecasts derived from the shipments
analysis. See section IV.H of this final
rule and chapter 10 of the final rule TSD
for additional details.
Product and Capital Conversion Costs
Associated With Energy Conservation
Standards for Beverage Vending
Machines
An amended energy conservation
standard will cause manufacturers to
incur one-time conversion costs to bring
their production facilities and product
designs into compliance. DOE evaluated
the level of conversion-related
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expenditures that will be needed to
comply with each considered efficiency
level in each equipment class. For the
MIA, DOE classified these conversion
costs into two major groups: (1) Product
conversion costs and (2) capital
conversion costs. Product conversion
costs are one-time investments in
research, development, testing,
marketing, and other non-capitalized
costs necessary to make product designs
comply with the amended energy
conservation standard. Capital
conversion costs are one-time
investments in property, plant, and
equipment necessary to adapt or change
existing production facilities such that
new compliant equipment designs can
be fabricated and assembled.
Industry investments related to
compliance with EPA Rule 20 are
detailed in the next section (‘‘One-Time
Investments Associated with EPA SNAP
Rule 20’’) and are separate from the
conversion costs manufacturers are
estimated to incur to comply with
amended energy conservation
standards.
To evaluate the level of capital
conversion expenditures manufacturers
will likely incur to comply with
amended energy conservation
standards, DOE used manufacturer
interview feedback to determine an
average per-manufacturer capital
conversion cost for each design option
and equipment class. DOE scaled the
per-manufacturer capital conversion
costs to the industry level using a count
of manufacturers producing the given
equipment type (i.e., Class A, Class B,
Combination A, Combination B).
As detailed in section IV.G of this
final rule, shipments of BVM units with
HFC refrigerants are forecasted to fall to
zero by 2019 as a result of the EPA
SNAP Rule 20 compliance date of 2019.
Therefore, DOE estimates no conversion
costs associated with the remaining
shipments of BVM units with HFC
refrigerants that are forecasted to occur
during the conversion period (the 3
years leading up to the amended energy
conservation standard year of 2019).
Table IV.8 contains the permanufacturer capital conversion costs
associated with key design options for
each equipment class. DOE assumes that
all Combination A units share a
common cabinet and glass pack design
with a Class A unit, and will not carry
any additional capital conversion costs.
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TABLE IV.8—PER-MANUFACTURER CAPITAL CONVERSION COSTS FOR KEY DESIGN OPTIONS
[million 2014$]
Capital conversion costs
(million 2014$)
Design
option
Class A
Evaporator Fan Controls .....................................................................
1.125 Inch Thick Insulation ..................................................................
Enhanced Glass Pack .........................................................................
Vacuum Insulated Panels ....................................................................
Class B
* N/A
0.07
0.06
0.14
Combination A
0.04
0.09
* N/A
0.17
Combination B
0
0
0
0
0.04
0.09
* N/A
0.18
* N/A = Not Applicable.
DOE used a top-down approach that
relied on manufacturer feedback from
interviews to assess product conversion
costs for the BVM industry. Using the
DOE’s CCMS 59 and ENERGY STAR 60
databases, along with manufacturer Web
sites, DOE determined the number of
platforms that are currently available for
each equipment type (i.e., Class A, Class
B, Combination A, Combination B). DOE
used manufacturer feedback to
determine an average per platform
product conversion cost by design
option and equipment type. DOE then
used the platform counts to scale the
average per platform product conversion
to the industry level. DOE received
insufficient feedback from industry to
estimate representative product
conversion costs for Combination A and
Combination B equipment. As a result,
because of the inherent commonalities
of design and manufacture between
Class A and Combination A equipment
and between Class B and Combination
B equipment, DOE scaled Class A
product conversion costs to estimate
Combination A product conversion
costs and DOE scaled Class B product
conversion costs to scale Combination B
product conversion costs. This scaling
was based on the ratio of Combination
A to Class A platforms in the industry
and the ratio of Combination B to Class
B platforms, respectively.
Table IV.9 contains the per-platform
product conversion costs associated
with key design options for each
equipment class.
TABLE IV.9—PER-PLATFORM PRODUCT CONVERSION COSTS FOR KEY DESIGN OPTIONS
[million 2014$]
Product conversion costs
(million 2014$)
Design option
Class A
Evaporator Fan Controls .....................................................................
Enhanced Evaporator Coil ...................................................................
Enhanced Glass Pack .........................................................................
1.125 Inch Thick Insulation ..................................................................
Vacuum Insulated Panels ....................................................................
Class B
* N/A
0.02
0.06
0.02
0.06
Combination A
0.02
0.01
* N/A
0.02
0.06
0.004
* N/A
0.004
0.004
0.004
Combination B
0.02
0.01
* N/A
0.02
0.06
* N/A = Not Applicable.
As a result of EPA Rule 20, the
industry will be required to make an
upfront investment in order to transition
from the use of R–134a to CO2 or
propane. Although this industry
investment (detailed below) is not a
result of the amended DOE energy
conservation standards, DOE reflects the
impact of this investment in both the
no-new-standards and standards cases.
EPA Rule 20 did not provide an
estimate of the upfront investments
associated with a R–134a refrigerant
phase-out for BVM manufacturers.
Based on feedback in interviews, DOE
estimated an upfront cost to the
industry to comply with Rule 20 using
refrigerants CO2 and propane. DOE
estimated that each BVM manufacturer
will need to invest $750,000 to update
their equipment to comply with Rule 20
if they have no compliant equipment
today. DOE assumed this one-time
investment applied to all eight
manufacturers, resulting in an industry
cost of $6 million.61 DOE believes that
this estimate falls on the high end of the
range of potential costs because there
are manufacturers that already have
SNAP-compliant equipment on the
market today, and those manufacturers
will not need to make the same level of
investment ahead of the 2019 effective
date. For integration into the GRIM,
DOE assumed that this one-time cost
will occur in 2018 because the EPA’s
Rule 20 requires a phaseout of R–134a
by 2019. This cost is independent of
conversion costs that industry will need
to make as a result of amended energy
conservation standards (discussed in the
previous section). Unlike product and
capital conversion costs necessitated by
DOE energy conservation standards,
DOE includes this one-time Rule 20
investment in the GRIM in both the nonew-standards case and the standards
case. Accordingly, the costs related to
59 ‘‘CCMS.’’ CCMS. January 19, 2015. Accessed
January 19, 2015. www.regulations.doe.gov/
certification-data/.
60 ENERGY STAR Certified Vending Machines.
June 6, 2013. Accessed January 19, 2015.
www.energystar.gov/products/certified-products.
61 In the GRIM, the $6 million one-time SNAP
investment would affect the industry in the no-newstandards case as well as at each TSL.
DOE assumes that all energy
conservation standards-related
conversion costs occur between the year
of publication of the final rule and the
year by which manufacturers must
comply with the new standard. The
conversion cost figures used in the
GRIM can be found in section IV.J.2.a of
this final rule. For additional
information on the estimated product
and capital conversion costs, see
chapter 12 of the final rule TSD.
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based on manufacturer feedback on
costs associated with individual design
options, which are common to both CO2
and propane machines. These
Equipment class
Markup
individual design option costs were
Combination B ......................
1.36 scaled to reflect industry conversion
costs per design option and equipment
Because this manufacturer markup
type (ie., Class A, Class B, Combination
b. Government Regulatory Impact Model scenario assumes that manufacturers
A, Combination B) using the count of
Scenarios
will be able to maintain their gross
manufacturers currently producing
margin percentage markups as
Manufacturer Markup Scenarios
beverage vending machines of each
production costs increase in response to equipment type and the count of current
MSPs include direct manufacturing
an amended energy conservation
platforms of each equipment type.
production costs (i.e., labor, materials,
standard, it represents a high bound to
These industry conversion cost
and overhead estimated in DOE’s MPCs) industry profitability.
estimates were then allocated by
and all non-production costs (i.e.,
In the preservation of per-unit
refrigerant using assumptions developed
SG&A, R&D, and interest), along with
operating profits scenario, manufacturer in the Shipments Analysis related to the
profit. To calculate the MSPs in the
markups are calibrated such that the
distribution of refrigerants in the BVM
GRIM, DOE applied manufacturer
per-unit operating profit in the year after industry by 2019 (see section IV.G.2 for
markups to the MPCs estimated in the
the compliance date of the amended
a description of DOE’s methodology for
engineering analysis for each equipment energy conservation standard is the
forecasting future BVM shipments by
class and efficiency level. Modifying
same as in the no-new-standards case
refrigerant type). As DOE’s shipments
these manufacturer markups in the
for each equipment class. Under this
forecasts by refrigerant assume a
standards case yields different sets of
scenario, as the cost of production goes
significant market share for both CO2
impacts on manufacturers. For the MIA, up, manufacturers are generally
and propane equipment, DOE accounts
DOE modeled two standards case
required to reduce the markups on their for manufacturers’ decisions to produce
manufacturer markup scenarios to
minimally compliant equipment to
beverage vending machines using both
represent the uncertainty regarding the
maintain a cost-competitive offering.
CO2 and propane in its estimates of
potential impacts on prices and
The implicit assumption behind this
industry conversion costs.
profitability for manufacturers following scenario is that the industry can only
In response to the 2015 BVM ECS
the implementation of amended energy
maintain operating profits after
NOPR, AMS expressed concern relating
conservation standards: (1) A
compliance with the amended standard to the fact that EPA’s enforcement of
preservation of gross margin percentage is required. Therefore, gross margin (as
SNAP includes remanufactured
markup scenario and (2) a preservation
a percentage) is reduced between the
equipment, in addition to new
of per-unit operating profit markup
no-new-standards case and the
refrigerated beverage vending machines,
scenario. These scenarios lead to
standards case. This manufacturer
while DOE energy conservation
different manufacturer markup values
markup scenario represents a low bound standards apply only to new machines.
that, when applied to the inputted
to industry profitability under an
AMS believes this inconsistency will
MPCs, result in varying revenue and
amended energy conservation standard. contribute to the cumulative regulatory
cash flow impacts.
burdens faced by BVM manufacturers.
3. Discussion of Comments
(AMS, No.48 at p. 137) Additionally,
Under the preservation of gross
During the 2015 BVM ECS NOPR
NAMA stated that compliance with both
margin percentage scenario, DOE
public meeting and in public comments EPA SNAP rule 20 and proposed rule
applied a single uniform ‘‘gross margin
would be very costly to the industry.
percentage’’ markup across all efficiency submitted in response to the 2015 BVM
ECS NOPR, manufacturers, trade
(NAMA, No. 50 at p. 13) The Form
levels (for a given equipment class),
organizations, and SBA Advocacy
Letter Writers stated the standards were
which assumes that manufacturers will
provided several comments on the
not technologically feasible or
be able to maintain the same amount of
potential impact of amended energy
economically justified because of the
profit as a percentage of revenues at all
conservation standards on
burden on small businesses who also
efficiency levels within an equipment
have to meet new EPA mandates as well
class. As production costs increase with manufacturers. These comments are
as new DOE testing procedures (The
efficiency, this scenario implies that the outlined below. DOE notes that these
comments helped to update the analysis Form Letter Writers, No. 64 and 65 at p.
absolute dollar markup will increase as
reflected in this final rule.
1)
well. Based on publicly available
Relating to DOE’s 2015 BVM ECS
DOE recognizes that EPA regulations
financial information for manufacturers
that restrict the use of HFC refrigerants
of beverage vending machines as well as NOPR estimates of industry conversion
costs associated with compliance with
will lead to changes in production costs
comments from manufacturer
amended energy conservation
for BVM manufacturers, necessitate
interviews, DOE assumed the average
standards, Seaga commented that DOE
investments, and will, accordingly,
manufacturer markups to vary by
is underestimating industry conversion
contribute to the cumulative regulatory
equipment class as shown in Table
costs because different bottlers may
burdens incurred by manufacturers as a
IV.10.
want different refrigerants. (Seaga, No.
result of amended DOE energy
48 at p. 177)
conservation standards. DOE notes that
TABLE IV.10—BASELINE
As part of the manufacturer impact
although EPA SNAP Rule 20 lists
MANUFACTURER MARKUPS
analysis, DOE evaluated the level of
certain refrigerants as unacceptable in
energy conservation standards-related
refurbished machines as of July 20,
Equipment class
Markup
expenditures that will be needed to
2016, R–134a is not among the
unacceptable refrigerants. Therefore,
Class A .................................
1.22 comply with each considered efficiency
because manufacturers are currently
Class B .................................
1.17 level in each equipment class. DOE
Combination A ......................
1.36 notes that these conversion costs are
capable of producing beverage vending
complying with EPA Rule 20 have been
incorporated into the baseline to which
DOE analyzed these adopted standards.
As such, all the costs to industry that
occur in the standards case relate to the
impact of the adopted energy
conservations standards.
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machines with R–134a, DOE believes
that the cumulative regulatory burdens
associated with EPA’s enforcement of
SNAP on refurbished beverage vending
machines will be minimal, on both large
and small manufacturers. Moreover,
DOE’s statutory authority to prescribe
new and amended energy conservation
standards only applies to the point of
manufacture, and as such, DOE does not
have the authority to extend such
standards to refurbished equipment.
DOE accounted for the forthcoming
R–134a phase out by estimating
refrigerant-specific design pathways,
cost efficiency curves and the upfront
investments needed to adapt equipment,
production lines, and facilities to the
use of propane and CO2. DOE used a
value of $750,000 per manufacturer to
account for capital expenditures as well
as non-equipment costs such R&D,
testing, and marketing material changes
to bring BVM equipment using propane
or CO2 to market. DOE integrated this
cost into both the no-new-standards and
standards case estimates of INPV. See
section IV.J.2.a for further detail on onetime costs associated with SNAP Rule
20 compliance. Furthermore, DOE
includes the EPA’s SNAP Rule 20 in its
list of cumulative regulatory burdens in
section V.B.2.e of this final rule. DOE
also independently analyzed the impact
of the adopted new and amended
standards on small business in the
Regulatory Flexibility Analysis,
presented in section VI.B.
Also relating to cumulative regulatory
burdens, Royal Vendors commented
that the vending industry has
experienced numerous regulatory and
economic challenges in the past 5–10
years and that DOE’s proposed
standards would cause undue hardship
on the vending industry. (Royal
Vendors, No. 54 at p. 2)
In response to stakeholder feedback
relating to the 2015 BVM ECS NOPR,
DOE has updated its engineering
analysis and standard efficiency levels
for this final rule, resulting in less
burdensome standard levels for all
product classes of beverage vending
machines relative to the 2015 BVM ECS
NOPR proposal. DOE investigates
cumulative regulatory burden impacts
associated with this rulemaking in more
detail in section V.B.2.e of this notice,
and in chapter 12 of the final TSD.
Regarding the impacts of the standard
levels proposed in the 2015 BVM ECS
NOPR on small domestic BVM
manufacturers, Seaga noted that the
proposed standards would make it
difficult for small manufacturers to
remain in the industry. (Seaga, No. 48
at p. 177) Similarly, AMS commented
that the investments in engineering and
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development to meet DOE’s proposed
standard may require it to abandon the
vending machine market. (AMS, No. 57
at p. 10) Additionally, SBA Advocacy’s
conversations with small businesses on
their projected compliance costs
[associated with the standard levels
proposed in the 2015 BVM ECS NOPR]
yielded estimates exceeding $1,000,000
per small manufacturer. (SBA
Advocacy, No. 61 at p. 2) SBA
Advocacy stated further that, to ensure
that the cost implications of complying
with the SNAP rule are considered in
DOE’s analysis, it recommends that a
sensitivity analysis be done. (SBA
Advocacy, No. 61 at p. 3)
DOE recognizes that small
manufacturers may be
disproportionately impacted by energy
conservation standards relative to other
manufacturers in the industry. Again,
DOE notes that, in response to
stakeholder feedback relating to the
2015 BVM ECS NOPR, it has updated its
engineering analysis and standard
efficiency levels for this final rule,
resulting in less burdensome standard
levels for all equipment classes of
beverage vending machines relative to
the 2015 BVM ECS NOPR proposal.
DOE believes that the $1,000,000 per
small manufacturer compliance cost
estimate cited by SBA Advocacy is
inclusive of the both ECS-related
conversion costs and SNAP-related
upfront investments. DOE accounted for
the forthcoming R–134a phaseout
required by EPA SNAP by estimating
refrigerant-specific design pathways,
cost efficiency curves and the upfront
investments needed to adapt equipment,
production lines, and facilities to the
use of propane and CO2 (see section
IV.C.2 for information relating to
refrigerant-specific design pathways and
cost efficiency curves). DOE estimated
an upfront cost of $750,000 per
manufacturer to comply with Rule 20
using refrigerants propane and CO2
refrigerants (this cost is independent of
product and capital conversion costs
associated with DOE standards
compliance), and incorporated this cost
in the GRIM in both the no-newstandards case and the standards case.
This allowed DOE to isolate the
incremental impact of amended energy
conservation standards on BVM
manufacturers, while still accounting
for the impact of the 2019 R–134a
phaseout on the industry. See section
IV.J.2 for further details on DOE’s
modeling of ECS-related conversion
costs and SNAP-related upfront
investments. Additionally, DOE’s
analysis of the impacts of the final rule
standard levels on small manufacturers
is detailed in sections V.B.2 and VI.B.
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Finally, SBA commented that DOE set
the baseline for Combination A and
Combination B equipment classes as the
least efficient combination of
technologies analyzed in the
engineering analysis. As a result, SBA
Advocacy believes DOE could be
overstating benefits at higher TSLs
because the baseline represents
equipment that is less efficient than
actual equipment on the market and
may not represent a reasonable
combination of technologies. (SBA
Advocacy, No. 61 at p. 2)
Since there are currently no energyrelated regulatory standards for
Combination A and Combination B
beverage vending machines, the
baseline for these equipment classes is
defined as the level of efficiency
representing the least-efficient
technology currently found in the BVM
market for each design option analyzed.
Starting with the least efficient
technology results in an analysis where
manufacturers must incorporate more
design options and accrue greater
conversion costs to reach an amended
standard. This approach results in
estimates of manufacturer conversion
costs related to ECS compliance which
fall in the high end of the range of
potential costs.
DOE notes that, in written comments
in response to the 2015 BVM ECS
NOPR, AMS commented that the
baseline level calculated for
Combination A beverage vending
machines is far more efficient than the
performance of actual machines in use
today (see section IV.C.1 the full
discussion of this comment). In the final
rule analysis, DOE made additional
analytical adjustments to the
engineering analysis, and as such, the
baseline performance of the
combination equipment showed better
agreement with the figure suggested by
AMS.
K. Emissions Analysis
The emissions analysis consists of
two components. The first component
estimates the effect of potential energy
conservation standards on power sector
and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the
impacts of potential standards on
emissions of two additional greenhouse
gases, CH4 and N2O, as well as the
reductions to emissions of all species
due to ‘‘upstream’’ activities in the fuel
production chain. These upstream
activities comprise extraction,
processing, and transporting fuels to the
site of combustion. The associated
emissions are referred to as upstream
emissions.
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The analysis of power sector
emissions uses marginal emissions
factors that were derived from data in
AEO2015. The methodology is
described in chapters 13 and 15 of the
final rule TSD.
Combustion emissions of CH4 and
N2O are estimated using emissions
intensity factors published by the EPA,
GHG Emissions Factors Hub.62 The FFC
upstream emissions are estimated based
on the methodology described in
chapter 15 of the final rule TSD. The
upstream emissions include both
emissions from fuel combustion during
extraction, processing, and
transportation of fuel, and ‘‘fugitive’’
emissions (direct leakage to the
atmosphere) of CH4 and CO2.
The emissions intensity factors are
expressed in terms of physical units per
MWh or MMBtu of site energy savings.
Total emissions reductions are
estimated using the energy savings
calculated in the national impact
analysis.
For CH4 and N2O, DOE calculated
emissions reduction in tons and in
terms of units of carbon dioxide
equivalent (CO2eq). Gases are converted
to CO2eq by multiplying each ton of gas
by the gas’ global warming potential
(GWP) over a 100-year time horizon.
Based on the Fifth Assessment Report of
the Intergovernmental Panel on Climate
Change,63 DOE used GWP values of 28
for CH4 and 265 for N2O.
The AEO incorporates the projected
impacts of existing air quality
regulations on emissions. AEO2015
generally represents current legislation
and environmental regulations,
including recent government actions, for
which implementing regulations were
available as of October 31, 2014. DOE’s
estimation of impacts accounts for the
presence of the emissions control
programs discussed in the following
paragraphs.
SO2 emissions from affected electric
generating units (EGUs) are subject to
nationwide and regional emissions capand-trade programs. Title IV of the
Clean Air Act sets an annual emissions
cap on SO2 for affected EGUs in the 48
contiguous States and the District of
Columbia (D.C.). (42 U.S.C. 7651 et seq.)
SO2 emissions from 28 eastern States
and D.C. were also limited under the
62 Available at www.epa.gov/climateleadership/
inventory/ghg-emissions.html.
63 IPCC, 2013: Climate Change 2013: The Physical
Science Basis. Contribution of Working Group I to
the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change
[Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor,
S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex
and P.M. Midgley (eds.)]. Cambridge University
Press, Cambridge, United Kingdom and New York,
NY, USA. Chapter 8.
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Clean Air Interstate Rule (CAIR). 70 FR
25162 (May 12, 2005). CAIR created an
allowance-based trading program that
operates along with the Title IV
program. In 2008, CAIR was remanded
to EPA by the U.S. Court of Appeals for
the District of Columbia Circuit, but it
remained in effect.64 In 2011, EPA
issued a replacement for CAIR, the
Cross-State Air Pollution Rule (CSAPR).
76 FR 48208 (August 8, 2011). On
August 21, 2012, the D.C. Circuit issued
a decision to vacate CSAPR,65 and the
court ordered EPA to continue
administering CAIR. On April 29, 2014,
the U.S. Supreme Court reversed the
judgment of the D.C. Circuit and
remanded the case for further
proceedings consistent with the
Supreme Court’s opinion.66 On October
23, 2014, the D.C. Circuit lifted the stay
of CSAPR.67 Pursuant to this action,
CSAPR went into effect (and CAIR
ceased to be in effect) as of January 1,
2015.
EIA was not able to incorporate
CSAPR into AEO2015, so it assumes
implementation of CAIR. Although
DOE’s analysis used emissions factors
that assume that CAIR, not CSAPR, is
the regulation in force, the difference
between CAIR and CSAPR is not
relevant for the purpose of DOE’s
analysis of emissions impacts from
energy conservation standards.
The attainment of emissions caps is
typically flexible among EGUs and is
enforced through the use of emissions
allowances and tradable permits. Under
existing EPA regulations, any excess
SO2 emissions allowances resulting
from the lower electricity demand
caused by the adoption of an efficiency
standard could be used to permit
offsetting increases in SO2 emissions by
any regulated EGU. In past rulemakings,
DOE recognized that there was
uncertainty about the effects of
efficiency standards on SO2 emissions
covered by the existing cap-and-trade
system, but it concluded that negligible
reductions in power sector SO2
emissions will occur as a result of
standards.
64 See North Carolina v. EPA, 550 F.3d 1176 (D.C.
Cir. 2008); North Carolina v. EPA, 531 F.3d 896
(D.C. Cir. 2008).
65 See EME Homer City Generation, LP v. EPA,
696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81
U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702
(U.S. June 24, 2013) (No. 12–1182).
66 See EPA v. EME Homer City Generation, 134
S.Ct. 1584, 1610 (U.S. 2014). The Supreme Court
held in part that EPA’s methodology for quantifying
emissions that must be eliminated in certain States
due to their impacts in other downwind States was
based on a permissible, workable, and equitable
interpretation of the Clean Air Act provision that
provides statutory authority for CSAPR.
67 See Georgia v. EPA, Order (D.C. Cir. filed
October 23, 2014) (No. 11–1302).
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1077
Beginning in 2016, however, SO2
emissions will fall as a result of the
Mercury and Air Toxics Standards
(MATS) for power plants. 77 FR 9304
(Feb. 16, 2012). In the MATS rule, EPA
established a standard for hydrogen
chloride as a surrogate for acid gas
hazardous air pollutants (HAP), and also
established a standard for SO2 (a nonHAP acid gas) as an alternative
equivalent surrogate standard for acid
gas HAP. The same controls are used to
reduce HAP and non-HAP acid gas;
thus, SO2 emissions will be reduced as
a result of the control technologies
installed on coal-fired power plants to
comply with the MATS requirements
for acid gas. AEO2015 assumes that, in
order to continue operating, coal plants
must have either flue gas
desulfurization or dry sorbent injection
systems installed by 2016. Both
technologies, which are used to reduce
acid gas emissions, also reduce SO2
emissions. Under the MATS, emissions
will be far below the cap established by
CAIR, so it is unlikely that excess SO2
emissions allowances resulting from the
lower electricity demand would be
needed or used to permit offsetting
increases in SO2 emissions by any
regulated EGU.68 Therefore, DOE
believes that energy conservation
standards will generally reduce SO2
emissions in 2016 and beyond.
CAIR established a cap on NOX
emissions in 28 eastern States and the
District of Columbia.69 Energy
conservation standards are expected to
have little effect on NOX emissions in
those States covered by CAIR because
excess NOX emissions allowances
resulting from the lower electricity
demand could be used to permit
offsetting increases in NOX emissions
from other facilities. However,
standards would be expected to reduce
NOX emissions in the States not affected
by the caps, so DOE estimated NOX
68 DOE notes that the Supreme Court recently
remanded EPA’s 2012 rule regarding national
emission standards for hazardous air pollutants
from certain electric utility steam generating units.
See Michigan v. EPA (Case No. 14–46, 2015). DOE
has determined that the remand of the MATS rule
does not change the assumptions regarding the
impact of energy efficiency standards on SO2
emissions. Further, while the remand of the MATS
rule may have an impact on the overall amount of
mercury emitted by power plants, it does not
change the impact of the energy efficiency
standards on mercury emissions. DOE will continue
to monitor developments related to this case and
respond to them as appropriate.
69 CSAPR also applies to NO and it would
X
supersede the regulation of NOX under CAIR. As
stated previously, the current analysis assumes that
CAIR, not CSAPR, is the regulation in force. The
difference between CAIR and CSAPR with regard to
DOE’s analysis of NOX emissions is slight.
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emissions reductions from the standards
in this final rule for these States.
The MATS limit mercury emissions
from power plants, but they do not
include emissions caps and, as such,
DOE’s energy conservation standards
would likely reduce Hg emissions. DOE
estimated mercury emissions reduction
using emissions factors based on
AEO2015, which incorporates the
MATS.
In response to the 2015 BVM ECS
NOPR, CoilPod commented that DOE’s
estimate of emissions reduction is
overstated as it does not take into
account coil degradation that occurs in
real-world use. They additionally cited
a government report finding that bottlers
have no incentive to clean the coils on
their vending machines because the
establishments in which they are
installed pay the electricity costs.
(CoilPod, Public Meeting Transcript,
No. 48 at pp. 53–55)
DOE’s calculation of emissions
savings is based on the amount of
energy saved. Coil degradation has little
impact on emissions savings because it
is based on incremental savings. Both
baseline and more efficient equipment
will be impacted by coil fouling, and the
energy savings differential between the
no-new-standards case and the
standards case would largely remain the
same.
L. Monetizing Carbon Dioxide and Other
Emissions Impacts
As part of the development of this
rule, DOE considered the estimated
monetary benefits from the reduced
emissions of CO2 and NOX that are
expected to result from each of the TSLs
considered. In order to make this
calculation analogous to the calculation
of the NPV of customer benefit, DOE
considered the reduced emissions
expected to result over the lifetime of
equipment shipped in the forecast
period for each TSL. This section
summarizes the basis for the monetary
values used for of CO2 and NOX
emissions and presents the values
considered in this final rule.
For this final rule, DOE relied on a set
of values for the social cost of carbon
(SCC) that was developed by a Federal
interagency process. The basis for these
values is summarized in the next
section, and a more detailed description
of the methodologies used is provided
as an appendix to chapter 14 of the final
rule TSD.
1. Social Cost of Carbon
The SCC is an estimate of the
monetized damages associated with an
incremental increase in carbon
emissions in a given year. It is intended
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to include (but is not limited to)
climate-change-related changes in net
agricultural productivity, human health,
property damages from increased flood
risk, and the value of ecosystem
services. Estimates of the SCC are
provided in dollars per metric ton of
CO2. A domestic SCC value is meant to
reflect the value of damages in the
United States resulting from a unit
change in CO2 emissions, while a global
SCC value is meant to reflect the value
of damages worldwide.
Under section 1(b)(6) of Executive
Order 12866, ‘‘Regulatory Planning and
Review,’’ 58 FR 51735 (Oct. 4, 1993),
agencies must, to the extent permitted
by law, ‘‘assess both the costs and the
benefits of the intended regulation and,
recognizing that some costs and benefits
are difficult to quantify, propose or
adopt a regulation only upon a reasoned
determination that the benefits of the
intended regulation justify its costs.’’
The purpose of the SCC estimates
presented here is to allow agencies to
incorporate the monetized social
benefits of reducing CO2 emissions into
cost-benefit analyses of regulatory
actions. The estimates are presented
with an acknowledgement of the many
uncertainties involved and with a clear
understanding that they should be
updated over time to reflect increasing
knowledge of the science and
economics of climate impacts.
As part of the interagency process that
developed these SCC estimates,
technical experts from numerous
agencies met on a regular basis to
consider public comments, explore the
technical literature in relevant fields,
and discuss key model inputs and
assumptions. The main objective of this
process was to develop a range of SCC
values using a defensible set of input
assumptions grounded in the existing
scientific and economic literatures. In
this way, key uncertainties and model
differences transparently and
consistently inform the range of SCC
estimates used in the rulemaking
process.
a. Monetizing Carbon Dioxide Emissions
When attempting to assess the
incremental economic impacts of CO2
emissions, the analyst faces a number of
challenges. A report from the National
Research Council 70 points out that any
assessment will suffer from uncertainty,
speculation, and lack of information
about: (1) Future emissions of GHGs; (2)
the effects of past and future emissions
70 National Research Council. Hidden Costs of
Energy: Unpriced Consequences of Energy
Production and Use. 2009. National Academies
Press: Washington, DC.
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on the climate system; (3) the impact of
changes in climate on the physical and
biological environment; and (4) the
translation of these environmental
impacts into economic damages. As a
result, any effort to quantify and
monetize the harms associated with
climate change will raise questions of
science, economics, and ethics and
should be viewed as provisional.
Despite the limits of both
quantification and monetization, SCC
estimates can be useful in estimating the
social benefits of reducing CO2
emissions. The agency can estimate the
benefits from reduced (or costs from
increased) emissions in any future year
by multiplying the change in emissions
in that year by the SCC values
appropriate for that year. The NPV of
the benefits can then be calculated by
multiplying each of these future benefits
by an appropriate discount factor and
summing across all affected years.
It is important to emphasize that the
interagency process is committed to
updating these estimates as the science
and economic understanding of climate
change and its impacts on society
improves over time. In the meantime,
the interagency group will continue to
explore the issues raised by this analysis
and consider public comments as part of
the ongoing interagency process.
b. Development of Social Cost of Carbon
Values
In 2009, an interagency process was
initiated to offer a preliminary
assessment of how best to quantify the
benefits from reducing CO2 emissions.
To ensure consistency in how benefits
are evaluated across Federal agencies,
the Administration sought to develop a
transparent and defensible method,
specifically designed for the rulemaking
process, to quantify avoided climate
change damages from reduced CO2
emissions. The interagency group did
not undertake any original analysis.
Instead, it combined SCC estimates from
the existing literature to use as interim
values until a more comprehensive
analysis could be conducted. The
outcome of the preliminary assessment
by the interagency group was a set of
five interim values: global SCC
estimates for 2007 (in 2006$) of $55,
$33, $19, $10, and $5 per metric ton of
CO2. These interim values represented
the first sustained interagency effort
within the U.S. government to develop
an SCC for use in regulatory analysis.
The results of this preliminary effort
were presented in several proposed and
final rules.
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c. Current Approach and Key
Assumptions
After the release of the interim values,
the interagency group reconvened on a
regular basis to generate improved SCC
estimates. Specially, the group
considered public comments and
further explored the technical literature
in relevant fields. The interagency group
relied on three integrated assessment
models commonly used to estimate the
SCC: The FUND, DICE, and PAGE
models. These models are frequently
cited in the peer-reviewed literature and
were used in the last assessment of the
Intergovernmental Panel on Climate
Change (IPCC). Each model was given
equal weight in the SCC values that
were developed.
Each model takes a slightly different
approach to model how changes in
emissions result in changes in economic
damages. A key objective of the
interagency process was to enable a
consistent exploration of the three
models, while respecting the different
approaches to quantifying damages
taken by the key modelers in the field.
An extensive review of the literature
was conducted to select three sets of
input parameters for these models:
climate sensitivity, socio-economic and
emissions trajectories, and discount
rates. A probability distribution for
climate sensitivity was specified as an
input into all three models. In addition,
the interagency group used a range of
scenarios for the socio-economic
parameters and a range of values for the
discount rate. All other model features
were left unchanged, relying on the
model developers’ best estimates and
judgments.
In 2010, the interagency group
selected four sets of SCC values for use
in regulatory analyses. Three sets of
values are based on the average SCC
from the three integrated assessment
models, at discount rates of 2.5, 3, and
5 percent. The fourth set, which
represents the 95th percentile SCC
estimate across all three models at a 3percent discount rate, was included to
represent higher-than-expected impacts
from climate change further out in the
tails of the SCC distribution. The values
grow in real terms over time.
Additionally, the interagency group
determined that a range of values from
7 percent to 23 percent should be used
to adjust the global SCC to calculate
domestic effects,71 although preference
is given to consideration of the global
benefits of reducing CO2 emissions.
Table IV.11 presents the values in the
2010 interagency group report,72 which
is reproduced in appendix 14A of the
final rule TSD.
TABLE IV.11—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050
[2007$ per metric ton CO2]
Discount rate
5%
3%
2.5%
3%
Average
Average
Average
95th
percentile
Year
2010
2015
2020
2025
2030
2035
2040
2045
2050
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
The SCC values used for this
document were generated using the
most recent versions of the three
integrated assessment models that have
been published in the peer-reviewed
literature, as described in the 2013
update from the interagency working
4.7
5.7
6.8
8.2
9.7
11.2
12.7
14.2
15.7
group (revised July 2015).73 Table IV.12
shows the updated sets of SCC estimates
from the latest interagency update in 5year increments from 2010 to 2050. The
full set of annual SCC estimates between
2010 and 2050 is reported in appendix
14B of the final rule TSD. The central
21.4
23.8
26.3
29.6
32.8
36.0
39.2
42.1
44.9
35.1
38.4
41.7
45.9
50.0
54.2
58.4
61.7
65.0
64.9
72.8
80.7
90.4
100.0
109.7
119.3
127.8
136.2
value that emerges is the average SCC
across models at the 3-percent discount
rate. However, for purposes of capturing
the uncertainties involved in regulatory
impact analysis, the interagency group
emphasizes the importance of including
all four sets of SCC values.
TABLE IV.12—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE (REVISED JULY 2015), 2010–2050
[2007$ per metric ton CO2]
Discount rate
5%
3%
2.5%
3%
Average
Average
Average
95th
percentile
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Year
2010 .................................................................................................................
71 It is recognized that this calculation for
domestic values is approximate, provisional, and
highly speculative. There is no a priori reason why
domestic benefits should be a constant fraction of
net global damages over time.
72 Social Cost of Carbon for Regulatory Impact
Analysis Under Executive Order 12866. Interagency
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10
Working Group on Social Cost of Carbon, United
States Government (February 2010) (Available at:
www.whitehouse.gov/sites/default/files/omb/
inforeg/for-agencies/Social-Cost-of-Carbon-forRIA.pdf).
73 Technical Update of the Social Cost of Carbon
for Regulatory Impact Analysis Under Executive
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31
50
86
Order 12866. Interagency Working Group on Social
Cost of Carbon, United States Government (May
2013; revised July 2015) Available at
www.whitehouse.gov/sites/default/files/omb/
inforeg/scc-tsd-final-july-2015.pdf.
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TABLE IV.12—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE (REVISED JULY 2015), 2010–2050—Continued
[2007$ per metric ton CO2]
Discount rate
5%
3%
2.5%
3%
Average
Average
Average
95th
percentile
Year
2015
2020
2025
2030
2035
2040
2045
2050
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
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It is important to recognize that a
number of key uncertainties remain, and
that current SCC estimates should be
treated as provisional and revisable
because they will evolve with improved
scientific and economic understanding.
The interagency group also recognizes
that the existing models are imperfect
and incomplete. The National Research
Council report mentioned previously
points out that there is tension between
the goal of producing quantified
estimates of the economic damages from
an incremental ton of carbon and the
limits of existing efforts to model these
effects. There are a number of analytical
challenges that are being addressed by
the research community, including
research programs housed in many of
the Federal agencies participating in the
interagency process to estimate the SCC.
The interagency group intends to
periodically review and reconsider
those estimates to reflect increasing
knowledge of the science and
economics of climate impacts, as well as
improvements in modeling.74
In summary, in considering the
potential global benefits resulting from
reduced CO2 emissions, DOE used the
values from the 2013 interagency report
(revised July 2015), adjusted to 2014$
using the implicit price deflator for
gross domestic product (GDP) from the
Bureau of Economic Analysis. For each
of the four sets of SCC cases specified,
the values for emissions in 2015 were
$12.2, $40.0, $62.3, and $117 per metric
ton avoided (values expressed in
74 In November 2013, OMB announced a new
opportunity for public comment on the interagency
technical support document underlying the revised
SCC estimates. 78 FR 70586 (Nov. 26, 2013). In July
2015 OMB published a detailed summary and
formal response to the many comments that were
received. www.whitehouse.gov/blog/2015/07/02/
estimating-benefits-carbon-dioxide-emissionsreductions. It also stated its intention to seek
independent expert advice on opportunities to
improve the estimates, including many of the
approaches suggested by commenters.
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11
12
14
16
18
21
23
26
2014$). DOE derived values after 2050
using the relevant growth rates for the
2040–2050 period in the interagency
update.
DOE multiplied the CO2 emissions
reduction estimated for each year by the
SCC value for that year in each of the
four cases. To calculate a present value
of the stream of monetary values, DOE
discounted the values in each of the
four cases using the specific discount
rate that had been used to obtain the
SCC values in each case.
A number of stakeholders represented
by the U.S. Chamber of Commerce
stated that DOE should not use SCC
values to establish monetary figures for
emissions reductions until the SCC
undergoes a more rigorous notice,
review, and comment process. (The
Associations, No. 62 at p. 4)
In conducting the interagency process
that developed the SCC values,
technical experts from numerous
agencies met on a regular basis to
consider public comments, explore the
technical literature in relevant fields,
and discuss key model inputs and
assumptions. Key uncertainties and
model differences transparently and
consistently inform the range of SCC
estimates. These uncertainties and
model differences are discussed in the
interagency working group’s reports,
which are reproduced in appendix 14A
and 14B of the final rule TSD, as are the
major assumptions. The 2010 SCC
values have been used in a number of
Federal rulemakings upon which the
public had opportunity to comment. In
November 2013, OMB announced a new
opportunity for public comment on the
TSD underlying the revised SCC
estimates. See 78 FR 70586 (Nov. 26,
2013). OMB issued a revision to the
2013 SCC estimates in July of 2015. DOE
stands ready to work with OMB and the
other members of the interagency
working group on further review and
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36
42
46
50
55
60
64
69
56
62
68
73
78
84
89
95
105
123
138
152
168
183
197
212
revision of the SCC estimates as
appropriate.
2. Social Cost of Other Air Pollutants
As noted previously, DOE has
estimated how the considered energy
conservation standards would reduce
site NOX emissions nationwide and
decrease power sector NOX emissions in
those 22 States not affected by the CAIR.
DOE estimated the monetized value of
NOX emissions reductions using benefit
per ton estimates from the ‘‘Regulatory
Impact Analysis for the Proposed
Carbon Pollution Guidelines for Existing
Power Plants and Emission Standards
for Modified and Reconstructed Power
Plants,’’ published in June 2014 by
EPA’s Office of Air Quality Planning
and Standards.75 The report includes
high and low values for NOX (as PM2.5)
for 2020, 2025, and 2030 discounted at
3 percent and 7 percent,76 which are
presented in chapter 14 of the final rule
TSD. DOE assigned values for 2021–
2024 and 2026–2029 using, respectively,
the values for 2020 and 2025. DOE
assigned values after 2030 using the
value for 2030.
DOE multiplied the emissions
reduction (tons) in each year by the
associated $/ton values and then
discounted each series using discount
rates of 3 percent and 7 percent as
appropriate.
75 https://www3.epa.gov/ttnecas1/regdata/RIAs/
111dproposalRIAfinal0602.pdf. See Tables 4–7, 4–
8, and 4–9 in the report.
76 For the monetized NO benefits associated
X
with PM2.5, the related benefits (derived from
benefit-per-ton values) are primarily based on an
estimate of premature mortality derived from the
ACS study (Krewski et al., 2009), which is the lower
of the two EPA central tendencies. Using the lower
value is more conservative when making the policy
decision concerning whether a particular standard
level is economically justified. If the benefit-per-ton
estimates were based on the Six Cities study
(Lepuele et al., 2012), the values would be nearly
two-and-a-half times larger. (See chapter 14 of the
final rule TSD for further description of the studies
mentioned above.)
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DOE is evaluating appropriate
monetization of avoided SO2 and Hg
emissions in energy conservation
standards rulemakings. DOE has not
included monetization of those
emissions in the current analysis.
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M. Utility Impact Analysis
The utility impact analysis estimates
several effects on the electric power
industry that would result from the
adoption of new or amended energy
conservation standards. The utility
impact analysis estimates the changes in
installed electrical capacity and
generation that would result for each
TSL. The analysis is based on published
output from the NEMS associated with
AEO2015. NEMS produces the AEO
Reference case, as well as a number of
side cases that estimate the economywide impacts of changes to energy
supply and demand. DOE uses
published side cases to estimate the
marginal impacts of reduced energy
demand on the utility sector. These
marginal factors are estimated based on
the changes to electricity sector
generation, installed capacity, fuel
consumption and emissions in the AEO
Reference case and various side cases.
Details of the methodology are provided
in the appendices to chapters 13 and 15
of the final rule TSD.
The output of this analysis is a set of
time-dependent coefficients that capture
the change in electricity generation,
primary fuel consumption, installed
capacity and power sector emissions
due to a unit reduction in demand for
a given end use. These coefficients are
multiplied by the stream of electricity
savings calculated in the NIA to provide
estimates of selected utility impacts of
new or amended energy conservation
standards.
N. Employment Impact Analysis
DOE considers employment impacts
in the domestic economy as one factor
in selecting a standard. Employment
impacts from new or amended energy
conservation standards include both
direct and indirect impacts. Direct
employment impacts are changes in the
number of employees at the plants that
produce the covered equipment, along
with affiliated distribution and service
companies. The MIA addresses those
impacts.
Indirect employment impacts are
changes in national employment that
occur due to the shift in expenditures
and capital investment caused by the
purchase and operation of moreefficient appliances. Indirect
employment impacts from standards
consist of the net jobs created or
eliminated in the national economy,
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other than in the manufacturing sector
being regulated, caused by: (1) Reduced
spending by end users on energy; (2)
reduced spending on new energy supply
by the utility industry; (3) increased
customer spending on new equipment
to which the new standards apply; and
(4) the effects of those three factors
throughout the economy.
One method for assessing the possible
effects on the demand for labor of such
shifts in economic activity is to compare
sector employment statistics developed
by the Labor Department’s Bureau of
Labor Statistics (BLS).77 BLS regularly
publishes its estimates of the number of
jobs per million dollars of economic
activity in different sectors of the
economy, as well as the jobs created
elsewhere in the economy by this same
economic activity. Data from BLS
indicate that expenditures in the utility
sector generally create fewer jobs (both
directly and indirectly) than
expenditures in other sectors of the
economy.78 There are many reasons for
these differences, including wage
differences and the fact that the utility
sector is more capital-intensive and less
labor-intensive than other sectors.
Energy conservation standards have the
effect of reducing customer utility bills.
Because reduced customer expenditures
for energy likely lead to increased
expenditures in other sectors of the
economy, the general effect of efficiency
standards is to shift economic activity
from a less labor-intensive sector (i.e.,
the utility sector) to more laborintensive sectors (e.g., the retail and
service sectors). Thus, based on the BLS
data alone, DOE believes net national
employment may increase due to shifts
in economic activity resulting from
energy conservation standards.
DOE estimated indirect national
employment impacts for the standard
level adopted in this final rule using an
input/output model of the U.S. economy
called Impact of Sector Energy
Technologies version 4.0 (ImSET).79
ImSET is a special-purpose version of
the ‘‘U.S. Benchmark National InputOutput’’ (I–O) model, which was
designed to estimate the national
77 Data
on industry employment, hours, labor
compensation, value of production, and the implicit
price deflator for output for these industries are
available upon request by calling the Division of
Industry Productivity Studies (202–691–5618) or by
sending a request by email to dipsweb@bls.gov.
78 See Bureau of Economic Analysis, Regional
Multipliers: A User Handbook for the Regional
Input-Output Modeling System (RIMS II), U.S.
Department of Commerce (1992).
79 Livingston OV, SR Bender, MJ Scott, and RW
Schultz. ImSET 4.0: Impact of Sector Energy
Technologies Model Description and User’s Guide.
2015. Pacific Northwest National Laboratory,
Richland, WA. Report No. PNNL–24563.
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1081
employment and income effects of
energy-saving technologies. The ImSET
software includes a computer-based I–O
model having structural coefficients that
characterize economic flows among 187
sectors most relevant to industrial,
commercial, and residential building
energy use.
DOE notes that ImSET is not a general
equilibrium-forecasting model, and
understands the uncertainties involved
in projecting employment impacts,
especially changes in the later years of
the analysis. Because ImSET does not
incorporate price changes, the
employment effects predicted by ImSET
may over-estimate actual job impacts
over the long run for this rule.
Therefore, DOE generated results for
near-term timeframes (2020 and 2025),
where these uncertainties are reduced.
For more details on the employment
impact analysis, see chapter 16 of the
final rule TSD.
DOE reiterates that the indirect
employment impacts estimated with
ImSET for the entire economy differ
from the direct employment impacts in
the BVM manufacturing sector
estimated using the GRIM in the MIA,
as described at the beginning of this
section. The methodologies used and
the sectors analyzed in the ImSET and
GRIM models are different.
O. Description of Materials Incorporated
by Reference
In this final rule DOE is incorporating
by reference ASTM Standard E 1084–86
(Reapproved 2009), ‘‘Standard Test
Method for Solar Transmittance
(Terrestrial) of Sheet Materials Using
Sunlight,’’ to determine whether a
material is transparent when assessing
whether a beverage vending machine
has a transparent front and meets the
adopted Class A definition. Copies of
ASTM standards may be purchased
from ASTM International, 100 Barr
Harbor Drive, P.O. Box C700, West
Conshohocken, PA 19428, (877) 909–
2786, or at www.astm.org.
V. Analytical Results and Conclusions
The following section addresses the
results of DOE’s analyses with respect to
the considered energy conservation
standards for beverage vending
machines. It addresses the TSLs
examined by DOE, the projected
impacts of each of these levels if
adopted as energy conservation
standards for beverage vending
machines, and the standards levels that
DOE is adopting in this final rule.
Additional details regarding DOE’s
analyses are contained in the final rule
TSD supporting this notice.
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A. Trial Standard Levels
DOE analyzed 8 ELs for Class A
equipment, 12 ELs for Class B
equipment, 15 ELs for Combination A
equipment, and 13 ELs for Combination
B equipment in the LCC and NIA
analyses, where each EL represents a 5percent improvement in efficiency from
baseline efficiency (EL 0) to up to max
tech. Of the ELs analyzed for each class
DOE selected five TSLs based on the
following criteria:
(1) TSL 1 is equivalent to the current
ENERGY STAR criterion for all
equipment that is eligible for ENERGY
STAR qualification. This corresponded
to EL 2 for Class B equipment and EL
1 for Class A. Combination equipment is
currently not eligible for ENERGY STAR
qualification and, as such, DOE selected
TSL 1 as equivalent to EL 1, since EL
1 was the first EL analyzed above the
baseline (EL 0).
(2) TSL 2 was selected to be the EL
that is hypothetically representative of
the next version of ENERGY STAR. That
is, for the given equipment class, DOE
selected the EL comprising TSL 2 to be
5 or 10 percent better than TSL 1,
depending on the improvement
potential in different equipment classes.
That is, TSL 2 represents EL 2 for Class
A (5-percent improvement over TSL 1),
EL 4 for Class B (10-percent
improvement over TSL 1), and EL 3 for
Combination A and Combination B (10percent improvement over TSL 1).
(3) TSL 3 represents the EL with the
maximum NPV at a 7-percent discount
rate. This level also corresponds to the
maximum LCC savings for most
equipment classes. In addition, the EL
corresponding to a 3-year payback, zero
customers with net cost, and maximum
NPV at a 3-percent discount rate were
the same or within one EL from the
selected EL.
(4) TSL 4 was selected to be an
interim analysis point corresponding to
the EL halfway between TSL 3 and 5
(rounding up when between ELs).
(5) TSL 5 corresponds to the max tech
EL.
In response to DOE’s TSL selection
presented in the 2015 BVM ECS NOPR,
the CA IOUs commented in their
written submission that DOE should
consider an intermediate efficiency tier
between TSL 4 and TSL 5 for Class A
and Combination A and supported TSL
4 for Class B and Combination B
equipment. (CA IOUs, No. 58 at p. 5) In
response to CA IOUs suggestion, DOE
notes that DOE has revised the TSL
selection criteria for this final rule.
Specifically, because the final rule
analysis resulted in the maximum NVP
at a 7-percent discount rate occurring at
lower ELs for all equipment classes than
in the NOPR, DOE revised TSL 3 to
represent the TSL with maximum NPV
at a 7-percent discount rate instead of
TSL 4, as proposed in the 2015 BVM
ECS NOPR. Therefore, DOE has defined
TSL 4 as an interim analysis point
consisting of the EL halfway between
TSL 3 and TSL 5 for all equipment
classes. While, in the final rule analysis,
TSL 3 and TSL 4 consist of lower ELs
than DOE’s proposed TSL 4 presented
in the 2015 BVM ECS NOPR, DOE notes
that the TSL 4 analysis point now
reflects an interim analysis point
between the TSL with maximum NPV at
a 7-percent discount rate and max tech,
as requested by the commenters. DOE
also notes that, based on the revised
final rule analyses, ELs beyond TSL 3
for equipment Class A result in
increased LCC compared to baseline
equipment and a negative NPV.
Table V.1 shows the TSL levels DOE
selected for the equipment classes
analyzed. Note that DOE performed its
analyses for a ‘‘representative size’’
beverage vending machine and defined
refrigerant-neutral ELs such that the
selected ELs could be met by any
refrigerant. Similarly, the defined TSLs
share this approach and can be met by
either refrigerant.
TABLE V.1—TRIAL STANDARD LEVELS FOR A REPRESENTATIVE SIZE BVM MODEL EXPRESSED IN TERMS OF DAILY
ENERGY CONSUMPTION
[kWh/day]
Representative
volume
(ft3)
Equipment class
Class A ........................................
30.0
Class B ........................................
23.4
Combination A .............................
10.3
Combination B .............................
4.3
TSL
EL .....................
DEC ..................
EL .....................
DEC ..................
EL .....................
DEC ..................
EL .....................
DEC ..................
Base-line
0
4.21
0
4.87
0
7.89
0
4.58
TSL 1
TSL 2
1
4.00
2
4.38
1
7.49
1
4.35
2
3.79
4
3.90
3
6.70
3
3.89
TSL 3
*1
4.00
6
3.41
11
3.55
9
2.52
TSL 4
4
3.37
9
2.68
13
2.76
11
2.06
TSL 5
8
2.60
12
1.94
15
2.10
13
1.46
asabaliauskas on DSK5VPTVN1PROD with RULES
* DOE notes that the EL selected for TSL 3 for Class A equipment is EL 1, which is the same EL selected for TSL1 for Class A equipment.
In this final rule, DOE elected to
maintain the energy conservation
standard structure established in the
2009 BVM final rule, which establishes
the MDEC of covered BVM models in
terms of a linear equation of the
following form:
MDEC = A × V + B
Where:
A is expressed in terms of kWh/(day·ft3) of
measured refrigerated volume,
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V is the representative value of refrigerated
volume (ft3) calculated for the
equipment, and
B is an offset factor expressed in kWh/day.
Coefficients A and B are uniquely
derived for each equipment class based
on a linear equation passing between
the daily energy consumption values for
equipment of different refrigerated
volumes. For the A and B coefficients,
DOE used the unique energy
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Sfmt 4700
consumption values of the small,
medium, and large or medium and large
size BVM units for Class A and Class B
or Combination A and Combination B
beverage vending machines,
respectively. Table V.2 depicts the TSL
equations for each analyzed TSL and
equipment class. The methodology used
to establish the TSL equations and more
detailed results is described in more
detail in appendix 10B of the TSD.
E:\FR\FM\08JAR2.SGM
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1083
Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
TABLE V.2—TRIAL STANDARD LEVELS MAXIMUM DAILY ENERGY CONSUMPTION (kWh/day) EXPRESSED IN TERMS OF
EQUATIONS AND COEFFICIENTS FOR BVM EQUIPMENT
TSL
asabaliauskas on DSK5VPTVN1PROD with RULES
Baseline .......
1 ...................
2 ...................
3 ...................
4 ...................
5 ...................
Class A
0.055
0.052
0.050
0.052
0.044
0.034
×
×
×
×
×
×
V
V
V
V
V
V
+
+
+
+
+
+
2.56
2.43
2.30
2.43
2.05
1.58
Class B
....................
....................
....................
....................
....................
....................
In Table V.2, ‘‘V’’ is the representative
value of refrigerated volume (ft3) of the
BVM model, as measured in accordance
with the method for determining
refrigerated volume adopted in the
recently amended DOE test procedure
for beverage vending machines and
appropriate sampling plan
requirements. 80 FR 45758 (July 31,
2015). In the 2015 BVM ECS NOPR,
DOE proposed a calculation method to
be adopted at 10 CFR 429.52(a)(3) for
determining the representative value of
refrigerated volume for each BVM
model. 80 FR 50507–50508 (Aug. 19,
2015). In response to DOE’s proposal,
SVA expressed support for DOE’s
proposal to clarify the calculation of
refrigerated volume. (SVA, No. 53 at p.
10) DOE appreciates SVA’s support and,
in this final rule, is adopting provisions
to specify that the representative value
of refrigerated volume must be
determined as the mean of the measured
refrigerated volume of each tested unit.
Manufacturers must use this calculated
value for determining the appropriate
standard level for that model.
In addition, in the 2015 BVM ECS
NOPR, DOE proposed provisions to
assess whether the representative value
of refrigerated volume, as certified by
manufacturers, is valid. 80 FR 50507–
50508 (Aug. 19, 2015). DOE did not
receive any comments on this proposal
and, therefore, is adopting the proposal
for determining if the certified value of
refrigerated volume is valid as described
in the 2015 BVM ECS NOPR with no
modifications.
Under the adopted provisions, DOE
will compare the manufacturer’s
certified rating with results from the
unit or units in DOE’s tested sample. If
the results of the tested unit or units in
DOE’s sample are within 5 percent of
the representative value of refrigerated
volume certified by manufacturers, the
certified refrigerated volume value is
considered valid. Based on whether the
representative value of refrigerated
volume is valid, DOE will do one of the
following:
(1) If the representative value of
refrigerated volume, as certified by
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18:47 Jan 07, 2016
Jkt 238001
0.074
0.066
0.059
0.052
0.041
0.029
×
×
×
×
×
×
V
V
V
V
V
V
+
+
+
+
+
+
3.15
2.83
2.52
2.20
1.73
1.25
Combination A
....................
....................
....................
....................
....................
....................
0.192
0.182
0.163
0.086
0.067
0.051
×
×
×
×
×
×
V
V
V
V
V
V
+
+
+
+
+
+
5.91
5.62
5.03
2.66
2.07
1.58
manufacturers, is valid, DOE will use
the certified value to determine the
MDEC for that model; or
(2) If the representative value of
refrigerated volume is invalid, DOE will
use its results from the tested unit or
units as the basis for calculating the
MDEC for that BVM model.
Additionally, DOE notes that these
sampling and enforcement provisions
are effective March 8, 2016, as such,
applicable to both the existing
standards, as well as any new and
amended standards adopted as a result
of this final rule.
B. Economic Justification and Energy
Savings
1. Economic Impacts on Individual
Customers
DOE analyzed the economic impacts
on BVM customers by looking at the
effects that potential new and amended
standards at each TSL would have on
the LCC and PBP. DOE also examined
the impacts of potential standards on
customer subgroups. These analyses are
discussed in the following subsections.
a. Life-Cycle Cost and Payback Period
Customers affected by new standards
usually incur higher purchase prices
and lower operating costs. DOE
evaluates these impacts on individual
customers by calculating changes in
LCC and the PBP associated with the
TSLs. The results of the LCC analysis for
each TSL were obtained by comparing
the installed and operating costs of the
equipment in the no-new-standards case
scenario against the standards case
scenarios at each TSL. Inputs used for
calculating the LCC include total
installed costs (i.e., equipment price
plus installation costs), operating
expenses (i.e., annual energy savings,
energy prices, energy price trends,
repair costs, and maintenance costs),
equipment lifetime, and discount rates.
The LCC analysis is carried out using
Monte Carlo simulations. Consequently,
the results of the LCC analysis are
distributions covering a range of values,
as opposed to a single deterministic
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Combination B
....................
....................
....................
....................
....................
....................
0.202
0.192
0.172
0.111
0.091
0.064
×
×
×
×
×
×
V
V
V
V
V
V
+
+
+
+
+
+
3.71
3.52
3.15
2.04
1.67
1.18
value. DOE presents the mean or
median values, as appropriate,
calculated from the distributions of
results. The LCC analysis also provides
information on the percentage of
customers for whom an increase in the
minimum efficiency standard would
have a negative impact (net cost).
DOE also performed a PBP analysis as
part of the LCC analysis. The PBP is the
number of years it takes for a customer
to recover the increased costs of higher
efficiency equipment as a result of
operating cost savings. The PBP is an
economic benefit-cost measure that uses
benefits and costs without discounting.
Chapter 8 of the final rule TSD provides
detailed information on the LCC and
PBP analysis.
DOE used a ‘‘roll-up’’ scenario in this
rulemaking. Under the roll-up scenario,
DOE assumed that the market shares of
the efficiency levels (in the no-newstandards case) that do not meet the
standard level under consideration
would be ‘‘rolled up’’ into (meaning
‘‘added to’’) the market share of the
efficiency level at the standard level
under consideration, and the market
shares of efficiency levels that are above
the standard level under consideration
would remain unaffected. Customers in
the no-new-standards case scenario who
buy the equipment at or above the TSL
under consideration would be
unaffected if the standard were to be set
at that TSL. Customers in the no-newstandards case scenario who buy
equipment below the TSL under
consideration would be affected if the
standard were to be set at that TSL.
Among these affected customers, some
may benefit from lower LCCs of the
equipment and some may incur net cost
due to higher LCCs, depending on the
inputs to the LCC analysis, such as
electricity prices, discount rates, and
installed costs.
DOE’s LCC and PBP analysis provided
key outputs for each efficiency level
above the baseline. The results for all
equipment classes are displayed in
Table V.3 through Table V.18.
E:\FR\FM\08JAR2.SGM
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
TABLE V.3—AVERAGE LCC AND PBP RESULTS FOR CLASS A, CO2*
TSL
% of
baseline
energy use
EL
— ......................................................
1,3 ....................................................
2 .......................................................
— ......................................................
4 .......................................................
— ......................................................
— ......................................................
— ......................................................
5 .......................................................
0
1
2
3
4
5
6
7
8
100
95
90
85
80
75
70
65
62
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
2,817
2,832
2,867
2,951
3,071
3,232
3,467
3,701
3,853
Lifetime
operating
cost
487
480
505
530
557
549
542
534
529
Simple
payback
period **
(years)
LCC
4,991
4,910
5,157
5,405
5,674
5,593
5,512
5,431
5,379
7,807
7,742
8,025
8,356
8,744
8,825
8,979
9,132
9,232
Average
lifetime
(years)
..................
2.0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
TABLE V.4—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION
FOR CLASS A, CO2
Life-cycle cost savings
TSL
% of baseline
energy use
EL
— .....................................................................................................................
1,3 ....................................................................................................................
2 .......................................................................................................................
— .....................................................................................................................
4 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
5 .......................................................................................................................
% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
100
95
90
85
80
75
70
65
62
........................
0
100
100
100
100
100
100
100
........................
65
(217)
(549)
(937)
(1,018)
(1,171)
(1,325)
(1,424)
0
1
2
3
4
5
6
7
8
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
TABLE V.5—AVERAGE LCC AND PBP RESULTS FOR CLASS A, PROPANE *
TSL
EL
— ......................................................
1,3 ....................................................
2 .......................................................
— ......................................................
4 .......................................................
— ......................................................
— ......................................................
— ......................................................
5 .......................................................
asabaliauskas on DSK5VPTVN1PROD with RULES
% of
baseline
energy use
0
1
2
3
4
5
6
7
8
100
95
90
85
80
75
70
65
62
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
2,908
2,916
2,925
2,937
2,960
3,030
3,215
3,399
3,519
513
505
497
464
457
515
507
534
529
Lifetime
operating
cost
LCC
5,246
5,165
5,084
4,748
4,668
5,243
5,162
5,431
5,379
8,154
8,081
8,010
7,686
7,627
8,274
8,377
8,830
8,897
Simple
payback
period **
(years)
..................
1.1
1.2
0.6
0.9
N/A
N/A
N/A
N/A
Average
lifetime
(years)
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
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E:\FR\FM\08JAR2.SGM
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
TABLE V.6—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION
FOR CLASS A, PROPANE
Life-cycle cost savings
TSL
% of baseline
energy use
EL
— .....................................................................................................................
1,3 ....................................................................................................................
2 .......................................................................................................................
— .....................................................................................................................
4 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
5 .......................................................................................................................
% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
100
95
90
85
80
75
70
65
62
........................
0
0
0
0
94
96
100
100
........................
0
71
395
454
(193)
(296)
(749)
(817)
0
1
2
3
4
5
6
7
8
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
TABLE V.7—AVERAGE LCC AND PBP RESULTS FOR CLASS B, CO2*
TSL
% of
baseline
energy use
EL
— ......................................................
— ......................................................
1 .......................................................
— ......................................................
2 .......................................................
— ......................................................
3 .......................................................
— ......................................................
— ......................................................
4 .......................................................
— ......................................................
— ......................................................
5 .......................................................
0
1
2
3
4
5
6
7
8
9
10
11
12
100
95
90
85
80
75
70
65
60
55
50
45
40
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
2,320
2,324
2,328
2,332
2,336
2,340
2,348
2,362
2,388
2,449
2,665
2,973
3,298
Lifetime
operating
cost
522
513
505
496
507
498
497
488
456
532
523
514
505
Simple
payback
period **
(years)
LCC
5,354
5,261
5,169
5,076
5,181
5,089
5,073
4,981
4,644
5,408
5,315
5,222
5,127
7,674
7,585
7,496
7,408
7,517
7,429
7,422
7,343
7,033
7,857
7,980
8,195
8,425
Average
lifetime
(years)
..................
0.4
0.4
0.4
1.0
0.8
1.1
1.3
1.0
N/A
N/A
85.6
58.8
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
TABLE V.8—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION
FOR CLASS B, CO2
Life-cycle cost savings
asabaliauskas on DSK5VPTVN1PROD with RULES
TSL
% of baseline
energy use
EL
— .....................................................................................................................
— .....................................................................................................................
1 .......................................................................................................................
— .....................................................................................................................
2 .......................................................................................................................
— .....................................................................................................................
3 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
4 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
5 .......................................................................................................................
% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
100
95
90
85
80
75
70
65
60
55
50
45
40
........................
0
0
0
0
0
8
0
0
99
99
99
100
........................
0
0
0
0
38
42
109
375
(448)
(572)
(787)
(1,017)
0
1
2
3
4
5
6
7
8
9
10
11
12
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
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E:\FR\FM\08JAR2.SGM
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
TABLE V.9—AVERAGE LCC AND PBP RESULTS FOR CLASS B, PROPANE *
TSL
% of
baseline
energy use
EL
— ......................................................
— ......................................................
1 .......................................................
— ......................................................
2 .......................................................
— ......................................................
3 .......................................................
— ......................................................
— ......................................................
4 .......................................................
— ......................................................
— ......................................................
5 .......................................................
0
1
2
3
4
5
6
7
8
9
10
11
12
100
95
90
85
80
75
70
65
60
55
50
45
40
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
2,359
2,363
2,366
2,370
2,374
2,379
2,384
2,389
2,397
2,414
2,538
2,752
2,982
Lifetime
operating
cost
515
506
505
496
487
479
470
481
480
471
492
514
505
Simple
payback
period
(years)
LCC
5,283
5,191
5,169
5,076
4,984
4,891
4,798
4,904
4,888
4,796
5,000
5,222
5,127
7,642
7,553
7,535
7,446
7,358
7,270
7,182
7,293
7,285
7,210
7,538
7,974
8,109
Average
lifetime
(years)
..................
0.4
0.7
0.6
0.6
0.5
0.5
0.9
1.1
1.3
7.7
632.2
64.7
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to the baseline equipment.
TABLE V.10—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION
FOR CLASS B, PROPANE
Life-cycle cost savings
TSL
% of baseline
energy use
EL
— .....................................................................................................................
— .....................................................................................................................
1 .......................................................................................................................
— .....................................................................................................................
2 .......................................................................................................................
— .....................................................................................................................
3 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
4 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
5 .......................................................................................................................
% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
100
95
90
85
80
75
70
65
60
55
50
45
40
........................
0
3
0
0
0
0
1
3
1
59
91
93
........................
5
8
96
185
273
361
250
257
333
4
(432)
(566)
0
1
2
3
4
5
6
7
8
9
10
11
12
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
TABLE V.11—AVERAGE LCC AND PBP RESULTS FOR COMBINATION A, CO2*
asabaliauskas on DSK5VPTVN1PROD with RULES
TSL
EL
— ......................................................
1 .......................................................
— ......................................................
2 .......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
3 .......................................................
— ......................................................
4 .......................................................
— ......................................................
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baseline
energy use
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0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
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100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
Frm 00060
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
2,768
2,771
2,773
2,776
2,781
2,786
2,791
2,796
2,801
2,813
2,832
2,856
2,954
3,189
3,717
Fmt 4701
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561
550
539
528
517
506
495
484
504
493
466
455
480
545
534
Lifetime
operating
cost
LCC
5,771
5,654
5,537
5,420
5,303
5,186
5,069
4,952
5,148
5,031
4,753
4,636
4,885
5,527
5,410
E:\FR\FM\08JAR2.SGM
8,539
8,424
8,310
8,196
8,084
7,972
7,860
7,748
7,949
7,844
7,586
7,492
7,839
8,716
9,127
08JAR2
Simple
payback
period
(years)
..................
0.2
0.2
0.2
0.3
0.3
0.3
0.4
0.6
0.7
0.7
0.8
2.3
26.1
35.0
Average
lifetime
(years)
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
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TABLE V.11—AVERAGE LCC AND PBP RESULTS FOR COMBINATION A, CO2*—Continued
TSL
% of
baseline
energy use
EL
5 .......................................................
15
27
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
4,130
Lifetime
operating
cost
526
Simple
payback
period
(years)
LCC
5,331
9,462
Average
lifetime
(years)
39.4
13.5
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to the baseline equipment.
TABLE V.12—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION
FOR COMBINATION A, CO2
Life-cycle cost savings
TSL
% of baseline
energy use
EL
—
1 .......................................................................................................................
— .....................................................................................................................
2 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
3 .......................................................................................................................
— .....................................................................................................................
4 .......................................................................................................................
— .....................................................................................................................
5 .......................................................................................................................
% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
27
........................
0
0
0
0
0
0
0
0
0
0
0
2
76
86
93
........................
57
172
286
398
510
622
733
533
638
896
990
643
(234)
(645)
(980)
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
TABLE V.13—AVERAGE LCC AND PBP RESULTS FOR COMBINATION A, PROPANE *
asabaliauskas on DSK5VPTVN1PROD with RULES
TSL
% of
baseline
energy use
EL
— ......................................................
1 .......................................................
— ......................................................
2 .......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
3 .......................................................
— ......................................................
4 .......................................................
— ......................................................
5 .......................................................
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
27
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
2,914
2,915
2,916
2,917
2,919
2,923
2,928
2,932
2,937
2,943
2,952
2,967
2,988
3,066
3,433
3,765
561
550
539
528
517
506
495
484
473
484
482
480
444
469
534
526
Lifetime
operating
cost
LCC
5,771
5,654
5,537
5,420
5,303
5,186
5,069
4,952
4,835
4,939
4,914
4,889
4,519
4,768
5,410
5,331
8,685
8,569
8,453
8,337
8,222
8,109
7,997
7,884
7,772
7,882
7,866
7,855
7,508
7,834
8,844
9,097
Simple
payback
period
(years)
..................
0.1
0.1
0.1
0.1
0.2
0.2
0.2
0.3
0.4
0.5
0.7
0.6
1.7
19.2
24.7
Average
lifetime
(years)
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to the baseline equipment.
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TABLE V.14—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION
FOR COMBINATION A, PROPANE
Life-cycle cost savings
TSL
% of baseline
energy use
EL
— .....................................................................................................................
1 .......................................................................................................................
— .....................................................................................................................
2 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
3 .......................................................................................................................
— .....................................................................................................................
4 .......................................................................................................................
— .....................................................................................................................
5 .......................................................................................................................
% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
27
........................
0
0
0
0
0
0
0
0
0
0
0
0
1
74
82
........................
58
174
290
405
518
630
743
855
745
761
772
1,119
793
(217)
(470)
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
TABLE V.15—AVERAGE LCC AND PBP RESULTS FOR COMBINATION B, CO2*
TSL
% of
baseline
energy use
EL
— ......................................................
1 .......................................................
— ......................................................
2 .......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
3 .......................................................
— ......................................................
4 .......................................................
— ......................................................
5 .......................................................
0
1
2
3
4
5
6
7
8
9
10
11
12
13
100
95
90
85
80
75
70
65
60
55
50
45
40
32
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
2,418
2,419
2,420
2,422
2,423
2,425
2,429
2,434
2,441
2,454
2,467
2,491
2,538
3,250
Lifetime
operating
cost
511
502
494
485
477
468
460
451
452
444
464
464
526
512
Simple
payback
period **
(years)
LCC
5,239
5,149
5,058
4,968
4,878
4,787
4,697
4,607
4,608
4,517
4,717
4,718
5,336
5,188
7,657
7,568
7,479
7,390
7,301
7,212
7,126
7,040
7,049
6,971
7,184
7,209
7,874
8,438
Average
lifetime
(years)
..................
0.1
0.1
0.1
0.1
0.2
0.2
0.3
0.4
0.5
1.0
1.6
N/A
N/A
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
TABLE V.16—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION
FOR COMBINATION B, CO2
Life-cycle cost savings
asabaliauskas on DSK5VPTVN1PROD with RULES
TSL
— .....................................................................................................................
1 .......................................................................................................................
— .....................................................................................................................
2 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
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energy use
EL
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% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
100
95
90
85
80
75
70
65
60
........................
0
0
0
0
0
0
0
0
........................
30
89
179
268
356
443
528
519
0
1
2
3
4
5
6
7
8
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TABLE V.16—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION—
Continued
FOR COMBINATION B, CO2
Life-cycle cost savings
TSL
% of baseline
energy use
EL
3 .......................................................................................................................
— .....................................................................................................................
4 .......................................................................................................................
— .....................................................................................................................
5 .......................................................................................................................
% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
55
50
45
40
32
0
2
7
83
97
597
384
359
(306)
(870)
9
10
11
12
13
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
TABLE V.17—AVERAGE LCC AND PBP RESULTS FOR COMBINATION B, PROPANE *
TSL
% of
baseline
energy use
EL
— ......................................................
1 .......................................................
— ......................................................
2 .......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
— ......................................................
3 .......................................................
— ......................................................
4 .......................................................
— ......................................................
5 .......................................................
0
1
2
3
4
5
6
7
8
9
10
11
12
13
100
95
90
85
80
75
70
65
60
55
50
45
40
32
Average costs
(2014$)
Installed
cost
First year’s
operating
cost
2,538
2,539
2,540
2,541
2,542
2,543
2,544
2,547
2,552
2,561
2,571
2,585
2,613
2,933
Lifetime
operating
cost
511
502
494
485
477
468
460
451
443
444
435
455
456
512
Simple
payback
period **
(years)
LCC
5,239
5,149
5,058
4,968
4,878
4,787
4,697
4,607
4,516
4,517
4,427
4,626
4,628
5,188
7,777
7,688
7,598
7,509
7,420
7,330
7,241
7,153
7,068
7,078
6,998
7,212
7,240
8,121
Average
lifetime
(years)
..................
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.2
0.3
0.4
0.8
1.4
N/A
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
13.5
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
TABLE V.18—AVERAGE LCC SAVINGS RELATIVE TO THE NO-NEW-STANDARDS CASE EFFICIENCY DISTRIBUTION
FOR COMBINATION B, PROPANE
Life-cycle cost savings
asabaliauskas on DSK5VPTVN1PROD with RULES
TSL
% of baseline
energy use
EL
— .....................................................................................................................
1 .......................................................................................................................
— .....................................................................................................................
2 .......................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
— .....................................................................................................................
3 .......................................................................................................................
— .....................................................................................................................
4 .......................................................................................................................
— .....................................................................................................................
5 .......................................................................................................................
% of
customers that
experience a
net cost
Average
life-cycle cost
savings *
(2014$)
100
95
90
85
80
75
70
65
60
55
50
45
40
32
........................
0
0
0
0
0
0
0
0
0
0
1
3
86
........................
30
89
179
268
358
447
535
620
610
690
476
447
(433)
0
1
2
3
4
5
6
7
8
9
10
11
12
13
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
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b. Customer Subgroup Analysis
Using the LCC spreadsheet model,
DOE estimated the impacts of the TSLs
on manufacturing and/or industrial
facilities that purchase their own
beverage vending machines. This
subgroup typically has higher discount
rates and lower electricity prices
relative to the average customer. DOE
estimated the average LCC savings and
simple PBP for this subgroup as shown
in Table V.19 through Table V.26.
The results of the customer subgroup
analysis indicate that the
manufacturing/industrial subgroup fares
slightly worse than the average
customer, with that subgroup showing
lower LCC savings and longer payback
periods than a typical customer shows.
At TSL 3, all but one equipment class
have positive LCC savings for the
subgroup (Class A, Propane has LCC
savings of 0), although the savings are
not as great in magnitude as for all
customers. Chapter 11 of the final rule
TSD provides a more detailed
discussion on the customer subgroup
analysis and results.
TABLE V.19—COMPARISON OF IMPACTS FOR MANUFACTURING/INDUSTRIAL SUBGROUP RELATIVE TO ALL CUSTOMERS,
CLASS A, CO2
LCC savings *
(2014$)
Simple payback period **
(years)
TSL
Manufacturing
subgroup
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
All customers
47
(245)
47
(982)
(1,535)
Manufacturing
subgroup
65
(217)
65
(937)
(1,424)
All customers
2.6
N/A
2.6
N/A
N/A
2.0
N/A
2.0
N/A
N/A
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
TABLE V.20—COMPARISON OF IMPACTS FOR MANUFACTURING/INDUSTRIAL SUBGROUP RELATIVE TO ALL CUSTOMERS,
CLASS A, PROPANE
LCC savings *
(2014$)
Simple payback period **
(years)
TSL
Manufacturing
subgroup
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
All customers
0
53
0
391
(917)
Manufacturing
subgroup
0
71
0
454
(817)
All customers
1.3
1.4
1.3
1.0
N/A
1.1
1.2
1.1
0.9
N/A
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
TABLE V.21—COMPARISON OF IMPACTS FOR MANUFACTURING/INDUSTRIAL SUBGROUP RELATIVE TO ALL CUSTOMERS,
CLASS B, CO2
LCC savings *
(2014$)
Simple payback period **
(years)
TSL
Manufacturing
subgroup
asabaliauskas on DSK5VPTVN1PROD with RULES
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
0
0
22
(506)
(1,138)
All customers
Manufacturing
subgroup
0
0
42
(448)
(1,017)
0.5
2.0
2.0
N/A
N/A
All customers
0.4
1.0
1.1
N/A
58.8
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
TABLE V.22—COMPARISON OF IMPACTS FOR MANUFACTURING/INDUSTRIAL SUBGROUP RELATIVE TO ALL CUSTOMERS,
CLASS B, PROPANE
LCC savings *
(2014$)
Simple payback period **
(years)
TSL
Manufacturing
subgroup
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
All customers
3
138
272
188
(756)
Manufacturing
subgroup
8
185
361
333
(566)
All customers
1.1
0.7
0.7
2.0
N/A
0.7
0.6
0.5
1.3
64.7
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
TABLE V.23—COMPARISON OF IMPACTS FOR MANUFACTURING/INDUSTRIAL SUBGROUP RELATIVE TO ALL CUSTOMERS,
COMBINATION A, CO2
LCC savings *
(2014$)
Simple payback period **
(years)
TSL
Manufacturing
subgroup
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
All customers
44
220
716
(529)
(1,318)
Manufacturing
subgroup
57
286
990
(234)
(980)
All customers
0.3
0.3
1.1
N/A
874.3
0.2
0.2
0.8
26.1
39.4
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
TABLE V.24—COMPARISON OF IMPACTS FOR MANUFACTURING/INDUSTRIAL SUBGROUP RELATIVE TO ALL CUSTOMERS,
COMBINATION A, PROPANE
LCC savings *
(2014$)
Simple payback period **
(years)
TSL
Manufacturing
subgroup
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
All customers
45
224
505
476
(808)
Manufacturing
subgroup
58
290
772
793
(470)
All customers
0.1
0.1
0.9
2.4
546.6
0.1
0.1
0.7
1.7
24.7
* Parentheses indicate negative values.
TABLE V.25—COMPARISON OF IMPACTS FOR MANUFACTURING/INDUSTRIAL SUBGROUP RELATIVE TO ALL CUSTOMERS,
COMBINATION B, CO2
LCC savings *
(2014$)
Simple payback period **
(years)
TSL
asabaliauskas on DSK5VPTVN1PROD with RULES
Manufacturing
subgroup
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
23
138
436
168
(1,094)
All customers
Manufacturing
subgroup
30
179
597
359
(870)
0.2
0.2
0.7
2.7
N/A
All customers
0.1
0.1
0.5
1.6
N/A
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
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TABLE V.26—COMPARISON OF IMPACTS FOR MANUFACTURING/INDUSTRIAL SUBGROUP RELATIVE TO ALL CUSTOMERS,
COMBINATION B, PROPANE
LCC savings *
(2014$)
Simple payback period **
(years)
TSL
Manufacturing
subgroup
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
All customers
23
138
448
282
(658)
Manufacturing
subgroup
30
179
610
476
(433)
All customers
0.1
0.1
0.4
1.3
N/A
0.1
0.1
0.3
0.8
N/A
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
c. Rebuttable Presumption Payback
As discussed in section III.F.2 of this
final rule, EPCA provides a rebuttable
presumption that an energy
conservation standard is economically
justified if the additional cost to the
customer of the equipment that meets
the new or amended standard level is
less than three times the value of the
first-year energy savings resulting from
the standard. (42 U.S.C.
6295(o)(1)(B)(iii)) DOE’s LCC and PBP
analyses generate values that calculate
the PBP for customers of potential new
and amended energy conservation
standards. These analyses include, but
are not limited to, the 3-year PBP
contemplated under the rebuttable
presumption test. However, DOE
routinely conducts a full economic
analysis that considers the full range of
impacts, including those to the
customer, manufacturer, nation, and
environment, as required under 42
U.S.C. 6295(o)(2)(B)(i). The results of
this analysis serve as the basis for DOE
to definitively evaluate the economic
justification for a potential standard
level, thereby supporting or rebutting
the results of any preliminary
determination of economic justification.
Table V.27 shows the rebuttable
presumption payback periods for TSL 3,
for all equipment classes and both CO2
and propane refrigerants.
TABLE V.27—REBUTTABLE PRESUMPTION PAYBACK PERIODS AT TSL 3 FOR ALL REFRIGERANTS AND EQUIPMENT
CLASSES
Rebuttable presumption payback period
(years)
Refrigerant
Class A
CO2 ..........................................................................................
Propane ...................................................................................
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate
the impact of new and amended energy
conservation standards on
manufacturers of beverage vending
machines. The section below describes
the expected impacts on manufacturers
at each TSL. Chapter 12 of the final rule
TSD explains the analysis in further
detail.
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a. Industry Cash Flow Analysis Results
The following tables illustrate the
estimated financial impacts (represented
by changes in industry net present
value, or INPV) of energy conservation
standards on manufacturers of beverage
vending machines, as well as the
conversion costs that DOE expects
manufacturers would incur for all
equipment classes at each TSL.
As discussed in sections IV.J and
V.B.2.b of this final rule, DOE modeled
two different markup scenarios to
evaluate the range of cash flow impacts
on the BVM industry: (1) The
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Class B
2.0
1.1
0.5
0.5
preservation of gross margin percentage
markup scenario; and (2) the
preservation of per-unit operating profit
markup scenario.
To assess the less severe end of the
range of potential impacts, DOE
modeled a preservation of gross margin
percentage markup scenario, in which a
uniform ‘‘gross margin percentage’’
markup is applied across all potential
efficiency levels. In this scenario, DOE
assumed that a manufacturer’s absolute
dollar markup would increase as
production costs increase in the
standards case.
To assess the more severe end of the
range of potential impacts, DOE
modeled the preservation of per unit
operating profit markup scenario, which
reflects manufacturer concerns
surrounding their inability to maintain
margins as manufacturing production
costs increase to meet more stringent
efficiency levels. In this scenario, as
manufacturers make the necessary
investments required to convert their
facilities to produce new standards-
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Combination A
0.7
0.4
Combination B
0.5
0.3
compliant equipment and incur higher
costs of goods sold, their percentage
markup decreases. Operating profit does
not change in absolute dollars but
decreases as a percentage of revenue.
Each of the modeled scenarios results
in a unique set of cash flows and
corresponding industry values at each
TSL. In the following discussion, the
INPV results refer to the difference in
industry value between the no-newstandards case and each standards case
that result from the sum of discounted
cash flows from the reference year 2015
through 2048, the end of the analysis
period. To provide perspective on the
short-run cash flow impact, DOE
includes in the discussion of the results
a comparison of free cash flow between
the no-new-standards case and the
standards case at each TSL in the year
before amended standards would take
effect. This figure provides an
understanding of the magnitude of the
required conversion costs relative to the
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cash flow generated by the industry in
the no-new-standards case.
Table V.28 and Table V.29 present a
range of results reflecting both the
preservation of gross margin percentage
markup scenario and the preservation of
per-unit operating profit markup
scenario. As noted, the preservation of
per-unit operating profit scenario
accounts for the more severe impacts
presented. Estimated conversion costs
and free cash flow in the year prior to
the effective date of amended standards
do not vary with markup scenario.
TABLE V.28—MANUFACTURER IMPACT ANALYSIS UNDER THE PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP
SCENARIO FOR ANALYSIS PERIOD
[2015–2048]
No-newstandards
case
Units
INPV ......................
Change in INPV ....
Product Conversion Costs.
Capital Conversion
Costs.
Total Conversion
Costs.
Free Cash Flow ....
Trial standard level
1
2
3
4
5
2014$M .................
2014$M * ...............
% Change * ...........
2014$M .................
94.8
........................
........................
........................
94.4
(0.4)
(0.4)
0.58
94.7
(0.1)
(0.1)
0.58
95.2
0.4
0.4
0.58
98.8
4.0
4.2
1.19
112.6
17.9
18.9
3.27
2014$M .................
........................
0.30
0.30
0.30
1.14
4.29
2014$M .................
........................
0.88
0.88
0.88
2.33
7.56
2014$M .................
% Change * ...........
10.4
........................
10.1
(3.1)
10.1
(3.1)
10.1
(3.1)
9.5
(8.5)
7.4
(28.4)
* Parentheses indicate negative values.
TABLE V.29—MANUFACTURER IMPACT ANALYSIS UNDER THE PRESERVATION OF PER-UNIT OPERATING PROFIT MARKUP
SCENARIO FOR ANALYSIS PERIOD
[2015–2048]
No-newstandards
case
Units
INPV ......................
Change in INPV ....
Product Conversion Costs.
Capital Conversion
Costs.
Total Conversion
Costs.
Free Cash Flow ....
Trial standard level
1
2
3
4
5
2014$M .................
2014$M * ...............
% Change * ...........
2014$M .................
94.8
........................
........................
........................
94.1
(0.6)
(0.7)
0.6
94.0
(0.8)
(0.8)
0.6
94.0
(0.7)
(0.8)
0.6
91.5
(3.2)
(3.4)
1.2
79.3
(15.5)
(16.4)
3.3
2014$M .................
........................
0.3
0.3
0.3
1.1
4.3
2014$M .................
........................
0.9
0.9
0.9
2.3
7.6
2014$M .................
% Change * ...........
10.4
........................
10.1
(3.1)
10.1
(3.1)
10.1
(3.1)
9.5
(8.5)
7.4
(28.4)
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* Parentheses indicate negative values.
At TSL 1, DOE estimates the impact
on INPV for manufacturers of beverage
vending machine to range from ¥$0.6
million to ¥$0.4 million, or a change in
INPV of ¥0.7 percent and ¥0.4 percent
under the preservation of per-unit
operating profit markup scenario and
preservation of gross margin percentage
markup scenario, respectively. At this
TSL, industry free cash flow is
estimated to decrease by approximately
3.1 percent to $10.1 million, compared
to the no-new-standards case value of
$10.4 million in the year before the
compliance date (2018).
At TSL 1, the industry as a whole is
expected to incur $0.6 million in
product conversion costs and would be
expected to incur $0.3 in capital
conversion costs necessary to
manufacture redesigned platforms
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associated with amended energy
conservation standards compliance.
DOE’s engineering analysis indicates
that the most cost-effective design
options to reach TSL 1 are component
swaps and software modifications such
as automatic lighting controls, LED
lighting, a refrigeration low power state
mode, evaporator fan controls,
incorporation of a permanent split
capacitor evaporator fan motor, or
enhanced evaporator coils.
Manufacturer feedback indicated that
such component swaps do not incur
large product or capital conversion
costs.
At TSL 2, DOE estimates the impact
on INPV for manufacturers of beverage
vending machines to range from ¥$0.8
million to ¥$0.1 million, or a change in
INPV of ¥0.8 percent and ¥0.1 percent
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under the preservation of gross margin
percentage markup scenario and the
preservation of per-unit operating profit
markup scenario, respectively. At this
TSL, industry free cash flow is
estimated to decrease by approximately
3.1 percent to $10.1 million, compared
to the no-new-standards case value of
$10.4 million in the year before the
compliance date (2018).
At TSL 2, the industry as a whole is
expected to incur $0.6 million in
product conversion costs and $0.3 in
capital conversion costs to manufacturer
equipment requiring platform redesigns.
DOE’s engineering analysis indicates
that the most cost-effective design
options to reach TSL 2 are component
swaps and software modifications such
as incorporating an enhanced
evaporator coil, automatic lighting
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controls, LED lighting, improved single
speed reciprocating compressor, or a
low power state, incorporating a
permanent split capacitor condenser fan
motor, electronically-commutated
evaporator fan motor, enhanced
condenser coil, or evaporator fan
controls. Manufacturer feedback
indicated that such component swaps
do not incur large product or capital
conversion costs.
At TSL 3, DOE estimates the impact
on INPV for manufacturers of beverage
vending machines to range from ¥$0.7
million to $0.4 million, or a change in
INPV of ¥0.8 percent to 0.4 percent
under the preservation of gross margin
percentage markup scenario and the
preservation of per-unit operating profit
markup scenario, respectively. At this
TSL, industry free cash flow is
estimated to decrease by approximately
3.1 percent to $10.1 million, compared
to the no-new-standards case value of
$10.4 million in the year before the
compliance date (2018).
At TSL 3, the industry as a whole is
expected to spend $0.6 million in
product conversion costs, as well as
$0.3 million in capital conversion costs
to manufacture redesigned platforms. As
at TSLs 1 and 2, DOE’s engineering
analysis indicates that the most costeffective design options to reach TSL 3
are component swaps and software
modifications such as incorporating an
enhanced evaporator coil, automatic
lighting controls, LED lighting,
improved single speed reciprocating
compressor, or a low power state,
incorporating a permanent split
capacitor condenser fan motor,
electronically-commutated evaporator
fan motor, enhanced condenser coil, or
evaporator fan controls. Manufacturer
feedback indicated that such component
swaps do not incur large product or
capital conversion costs.
At TSL 4, DOE estimates the impact
on INPV for manufacturers of beverage
vending machines to range from ¥$3.2
million to $4.0 million, or a change in
INPV of ¥3.4 percent to 4.2 percent
under the preservation of gross margin
percentage markup scenario and the
preservation of per-unit operating profit
markup scenario, respectively. At this
TSL, industry free cash flow is
estimated to decrease by approximately
8.5 percent to $9.5 million, compared to
the no-new-standards case value of
$10.4 million in the year before the
compliance date (2018).
At TSL 4, the industry as a whole is
expected to spend $1.2 million in
product conversion costs, as well as
$1.1 million in capital conversion costs
for platform redesigns. At TSL 4,
depending on the equipment, some
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manufacturers will likely be required to
increase the thickness of their
equipment’s insulation, switch to an
electronically-commutated condenser
fan motor and incorporate vacuum
insulated panels (VIPs). Additionally,
many manufacturers of Combination A
machines will most likely be required to
integrate enhanced glass packs or
double pane glass in order to achieve
the required efficiency.
At TSL 5, DOE estimates the impact
on INPV for manufacturers of beverage
vending machines to range from ¥$15.5
million to $17.9 million, or a change in
INPV of ¥16.4 percent to 18.9 percent
under the preservation of gross margin
percentage markup scenario and the
preservation of per-unit operating profit
markup scenario, respectively. At this
TSL, industry free cash flow is
estimated to decrease by approximately
28.4 percent to $7.4 million, compared
to the no-new-standards case value of
$10.4 million in the year before the
compliance date (2018).
At TSL 5, the industry as a whole is
expected to spend $3.3 million in
product conversion costs associated
with the research and development and
testing and certification, as well as $4.3
million in one-time investments in
PP&E for platform redesigns. The
conversion cost burden for
manufacturers of all equipment
increases substantially at TSL 5. At this
level, manufacturers will likely be
required to integrate VIPs to achieve the
required efficiency. VIPs are an
unproven technology in the BVM
industry and would likely require
substantial effort and cost to
incorporate.
At TSL 5, there is approximately a
7-percent decrease in total industry
shipments in 2019 relative to the nonew-standards case. Under the
preservation of gross margin percentage
markup scenario, this decrease in
shipments and increased conversion
costs are outweighed by a relatively
larger increase in industry MPCs,
resulting in a positive change in INPV.
Under the preservation of per-unit
operating profit markup scenario, the
increase in MPCs at TSL 5 is
outweighed by the decrease in
shipments and the increase in industry
conversion costs. This results in a
decrease in INPV.
b. Impacts on Direct Employment
To quantitatively assess the potential
impacts of amended energy
conservation standards on direct
employment, DOE used the GRIM to
estimate the domestic labor
expenditures and number of direct
employees in the no-new-standards case
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and at each TSL from 2014 through
2048. DOE used data from the U.S.
Census Bureau’s 2013 Annual Survey of
Manufacturers,80 the results of the
engineering analysis, and interviews
with manufacturers to determine the
inputs necessary to calculate industrywide labor expenditures and domestic
direct employment levels. Labor
expenditures related to manufacturing
of beverage vending machines are a
function of labor intensity, sales
volume, and an assumption that wages
remain fixed in real terms over time.
The total labor expenditures in each
year are calculated by multiplying the
MPCs by the labor percentage of MPCs.
DOE estimates that 90 percent of BVM
units are produced domestically.
The total labor expenditures in the
GRIM were then converted to domestic
production employment levels by
dividing production labor expenditures
by the annual payment per production
worker (production worker hours times
the labor rate found in the U.S. Census
Bureau’s 2013 Annual Survey of
Manufacturers). The production worker
estimates in this section only cover
workers up to the line-supervisor level
who are directly involved in fabricating
and assembling a piece of equipment
within an original equipment
manufacturer (OEM) facility. Workers
performing services that are closely
associated with production operations,
such as materials handling tasks using
forklifts, are also included as production
labor. DOE’s estimates only account for
production workers who manufacture
the specific equipment covered by this
rulemaking.
Because production employment
expenditures are assumed to be a fixed
percentage of cost of goods sold and the
MPCs typically increase with more
efficient equipment, labor tracks the
increased prices in the GRIM. As
efficiency of beverage vending machines
increase, so does the complexity of the
equipment, generally requiring more
labor to produce. Based on industry
feedback, DOE believes that
manufacturers that use domestic
production currently will continue to
produce the same scope of covered
equipment in domestic production
facilities. DOE does not expect
production to shift to lower labor cost
countries. To estimate a lower bound to
employment, DOE assumed that
employment tracks closely with
industry shipments, and any percentage
decrease in shipments will result in a
80 U.S. Census Bureau. Annual Survey of
Manufacturers: General Statistics: Statistics for
Industry Groups and Industries (2013). Available at
www.census.gov/manufacturing/asm/.
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commensurate percentage decrease in
employment. A complete description of
the assumptions used to generate these
upper and lower bounds can be found
in chapter 12 of the final rule TSD.
Using the GRIM, DOE estimates that
in the absence of amended energy
conservation standards, there would be
653 domestic production workers in the
BVM industry. As noted previously,
DOE estimates that 90 percent of BVM
units sold in the United States are
manufactured domestically. Table V.30
shows the range of the impacts of
potential amended energy conservation
standards on U.S. production workers of
beverage vending machines.
TABLE V.30—POTENTIAL CHANGES IN THE TOTAL NUMBER OF BEVERAGE VENDING MACHINE PRODUCTION WORKERS IN
2019
No-newstandards
case *
Potential Changes in Domestic Production Workers
in 2019 **.
Trial standard level
1
2
3
4
.......................
0 to 2 ............
0 to 7 ............
0 to 6 ............
(5) to 46 ........
5
(49) to 233.
* No-new-standards case estimates 653 domestic production workers in the BVM industry in 2019.
** Parentheses indicate negative values.
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The upper end of the range estimates
the maximum increase in the number of
production workers in the BVM
industry after implementation of an
emended energy conservation standard.
It assumes that manufacturers would
continue to produce the same scope of
covered equipment within the United
States and would require some
additional labor to produce more
efficient equipment.
The lower end of the range represents
the maximum decrease in total number
of U.S. production workers that could
result from an amended energy
conservation standard. During
interviews, manufacturers noted that,
due to the high shipping costs
associated with beverage vending
machines, they would be hesitant to
move any major production operations
outside the United States. Therefore, the
lower bound of direct employment
impacts assumes domestic production
of beverage vending machines would
decrease by the same relative percentage
decrease in industry shipments as a
result of an amended energy
conservation standard.
This conclusion is independent of any
conclusions regarding indirect
employment impacts in the broader U.S.
economy, which are documented in
chapter 16 of the TSD.
c. Impacts on Manufacturing Capacity
In reference to the amended standard
levels proposed in the 2015 BVM ECS
NOPR, DOE received comments from
multiple small, domestic BVM
manufacturers stating that the proposed
standards could result in one or more
small manufacturers exiting the BVM
market altogether. As detailed in section
IV.J.3, DOE notes that, in response to
stakeholder feedback relating to the
2015 BVM ECS NOPR, it has updated its
engineering analysis and standard
efficiency levels for this final rule,
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resulting in less burdensome standard
levels for all equipment classes of
beverage vending machines relative to
the NOPR proposal. DOE believes that
manufactures will be able to maintain
production capacity levels sufficient to
meet market demand under the final
rule standard levels.
Additionally, manufacturers have
expressed concern regarding the
potential strain on technical resources
associated with having to comply with
both DOE amended energy conservation
standards and the EPA’s R–134a
phaseout for beverage vending machines
(see SNAP Final Rule 20 (80 FR 42870,
42917–42920 (July 20, 2015))) by 2019.
Few manufacturers have experience
with CO2 designs, and no beverage
vending machines in the domestic
market currently use propane. The
switch to CO2 and propane will require
all manufacturers to redesign the
majority of their equipment.
Manufacturers are concerned they do
not have the technical capacity to
redesign for new refrigerants and
amended energy conservation
standards. DOE accounted for the
forthcoming R–134a phaseout in its
analysis by estimating CO2- and
propane-specific cost-efficiency curves
and industry conversion costs related to
energy conservation standards
compliance, as well as a one-time
investment required for the industry to
switch all BVM production to CO2- and
propane. Cost-efficiency curves are
presented in chapter 5 of the final rule
TSD, and information regarding
conversion costs is contained in chapter
12.
d. Impacts on Subgroups of
Manufacturers
Small manufacturers, niche
equipment manufacturers, and
manufacturers exhibiting a cost
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structure substantially different from the
industry average could be affected
disproportionately. Using average cost
assumptions to develop an industry
cash-flow estimate is inadequate to
assess differential impacts among
manufacturer subgroups.
For BVM equipment, DOE identified
and evaluated the impact of amended
energy conservation standards on one
subgroup: Small manufacturers. The
SBA defines a ‘‘small business’’ as
having 1,000 employees or less for
NAICS 333318, ‘‘Other Commercial and
Service Industry Machinery
Manufacturing.’’ Based on this
definition, DOE identified five
manufacturers in the BVM equipment
industry that are small businesses.
For a discussion of the impacts on the
small manufacturer subgroup, see the
Regulatory Flexibility Analysis in
section VI.B of this final rule and
chapter 12 of the final rule TSD.
e. Cumulative Regulatory Burden
While any one regulation may not
impose a significant burden on
manufacturers, the combined effects of
several impending regulations may have
serious consequences for some
manufacturers, groups of manufacturers,
or an entire industry. Assessing the
impact of a single regulation may
overlook this cumulative regulatory
burden. Multiple regulations affecting
the same manufacturer can strain profits
and can lead companies to abandon
product lines or markets with lower
expected future returns than competing
equipment. For these reasons, DOE
conducts an analysis of cumulative
regulatory burden as part of its
rulemakings pertaining to appliance
efficiency.
For the cumulative regulatory burden
analysis, DOE considers other DOE
regulations that could affect BVM
manufacturers that will take effect
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approximately 3 years before or after the
2019 compliance date of amended
energy conservation standards. The
compliance years and expected industry
conversion costs of energy conservation
standards that may also impact BVM
manufacturers are indicated in Table
V.31.
TABLE V.31—COMPLIANCE DATES AND EXPECTED CONVERSION EXPENSES OF FEDERAL ENERGY CONSERVATION
STANDARDS AFFECTING BVM MANUFACTURERS
Regulation
Compliance date(s)
Commercial Refrigeration Equipment 79 FR 17725 (Mar. 28, 2014) .....
3/27/2017 .......................................
Manufacturers cited ENERGY STAR
standards for beverage vending
machines as a source of regulatory
burden. DOE notes that ENERGY STAR
is a voluntary program that is not
federally mandated. As such, DOE does
not consider the ENERGY STAR
program in its analysis of cumulative
regulatory burden.
In interviews and in public comments
made in response to the 2015 BVM ECS
NOPR, manufactures cited the EPA’s
SNAP Rule 20 phaseout of HFCs in
beverage vending machines by 2019 (80
FR 42870 (July 20, 2015)) as a major
source of additional burden
accompanying potential amended
efficiency standards. As detailed in
section IV.J, based on feedback in
interviews, DOE assumed that each
manufacturer would need to invest
$750,000 to update their equipment to
comply with Rule 20. DOE assumed this
one-time SNAP investment would apply
to all eight manufacturers in the year
leading up to the phaseout (i.e., 2018),
resulting in an additional burden to the
industry of $6 million. This one-time
cost occurs in both the no-newstandards case and in the standards
case.
3. National Impact Analysis
a. Significance of Energy Savings
DOE estimated the NES by calculating
the difference in annual energy
consumption for the no-new-standards
case scenario and standards case
scenario at each TSL for each equipment
class and summing up the annual
Expected expenses/impacts
$43.1 million.
energy savings for the beverage vending
machines purchased during the 30-year
2019 through 2048 analysis period.
Energy impacts include the 30-year
period, plus the life of equipment
purchased in the last year of the
analysis, or roughly 2019 through 2078.
The energy consumption calculated in
the NIA is FFC energy, which quantifies
savings beginning at the source of
energy production. DOE also reports
primary or source energy that takes into
account losses in the generation and
transmission of electricity. FFC and
primary energy are discussed in section
IV.H.2 of this final rule.
Table V.32 presents the source NES
for all equipment classes at each TSL
and the sum total of NES for each TSL.
TABLE V.32—CUMULATIVE NATIONAL PRIMARY ENERGY SAVINGS FOR EQUIPMENT PURCHASED IN 2019–2048
[Quads]
Standard level
Equipment class
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
Class A .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Class B .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination A .....................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination B .....................................................................
CO2 ...............................................................................
Propane ........................................................................
0.012
0.012
0.000
0.001
0.000
0.001
0.002
0.001
0.001
0.001
0.001
0.000
0.031
0.024
0.008
0.010
0.000
0.010
0.012
0.007
0.005
0.007
0.004
0.003
0.012
0.012
0.000
0.026
0.007
0.019
0.051
0.031
0.020
0.028
0.017
0.011
0.070
0.047
0.024
0.059
0.026
0.033
0.061
0.036
0.024
0.035
0.021
0.014
0.138
0.087
0.051
0.091
0.045
0.046
0.067
0.040
0.027
0.044
0.026
0.018
Total * .....................................................................
0.016
0.061
0.117
0.225
0.340
* Numbers may not add to totals, due to rounding.
asabaliauskas on DSK5VPTVN1PROD with RULES
Table V.33 presents FFC energy
savings at each TSL for each equipment
class. The NES increases from 0.017
quads at TSL 1 to 0.355 quads at TSL
5.
TABLE V.33—CUMULATIVE NATIONAL ENERGY SAVINGS INCLUDING FULL-FUEL-CYCLE FOR EQUIPMENT PURCHASED IN
2019–2048
[Quads]
Standard level
Equipment class
TSL 1
Class A .................................................................................
CO2 ...............................................................................
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0.012
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0.033
0.025
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0.012
0.012
08JAR2
TSL 4
0.073
0.049
TSL 5
0.144
0.091
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TABLE V.33—CUMULATIVE NATIONAL ENERGY SAVINGS INCLUDING FULL-FUEL-CYCLE FOR EQUIPMENT PURCHASED IN
2019–2048—Continued
[Quads]
Standard level
Equipment class
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
Propane ........................................................................
Class B .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination A .....................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination B .....................................................................
CO2 ...............................................................................
Propane ........................................................................
0.000
0.001
0.000
0.001
0.003
0.002
0.001
0.001
0.001
0.000
0.008
0.011
0.000
0.011
0.013
0.008
0.005
0.007
0.004
0.003
0.000
0.027
0.007
0.020
0.053
0.032
0.021
0.029
0.018
0.012
0.025
0.061
0.027
0.035
0.063
0.038
0.025
0.037
0.022
0.015
0.054
0.095
0.047
0.048
0.070
0.042
0.028
0.046
0.027
0.019
Total * .....................................................................
0.017
0.063
0.122
0.235
0.355
* Numbers may not add to totals, due to rounding.
OMB Circular A–4 81 requires
agencies to present analytical results,
including separate schedules of the
monetized benefits and costs that show
the type and timing of benefits and
costs. Circular A–4 also directs agencies
to consider the variability of key
elements underlying the estimates of
benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis
using 9 rather than 30 years of
equipment shipments. The choice of a
9-year period is a proxy for the timeline
in EPCA for the review of certain energy
conservation standards and potential
revision of and compliance with such
revised standards.82 DOE notes that the
review timeframe established in EPCA
generally does not overlap with the
equipment lifetime, equipment
manufacturing cycles or other factors
specific to beverage vending machines.
Thus, this information is presented for
informational purposes only and is not
indicative of any change in DOE’s
analytical methodology. The NES
results based on a 9-year analysis period
are presented in Table V.34. The
impacts are counted over the lifetime of
equipment purchased in 2019 through
2027.
TABLE V.34—NATIONAL FULL-FUEL-CYCLE ENERGY SAVINGS FOR 9 YEARS OF SHIPMENTS (2019–2027)
[Quads]
Standard level
Equipment class
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
Class A .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Class B .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination A .....................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination B .....................................................................
CO2 ...............................................................................
Propane ........................................................................
0.003
0.003
0.000
0.000
0.000
0.000
0.001
0.000
0.000
0.000
0.000
0.000
0.007
0.006
0.002
0.002
0.000
0.002
0.003
0.002
0.001
0.002
0.001
0.001
0.003
0.003
0.000
0.006
0.002
0.005
0.012
0.007
0.005
0.007
0.004
0.003
0.017
0.011
0.006
0.014
0.006
0.008
0.014
0.009
0.006
0.008
0.005
0.003
0.033
0.020
0.012
0.021
0.010
0.011
0.016
0.009
0.006
0.010
0.006
0.004
Total * .....................................................................
0.004
0.014
0.028
0.054
0.080
* Numbers may not add to totals, due to rounding.
asabaliauskas on DSK5VPTVN1PROD with RULES
b. Net Present Value of Customer Costs
and Benefits
DOE estimated the cumulative NPV to
the nation of the total savings for the
customers that would result from
81 U.S. Office of Management and Budget.
Circular A–4: Regulatory Analysis. September 17,
2003. Available at www.whitehouse.gov/omb/
circulars_a004_a-4/.
82 EPCA requires DOE to review its standards at
least once every 6 years, and requires, for certain
products, a 3-year period after any new standard is
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potential standards at each TSL. In
accordance with OMB guidelines on
regulatory analysis (OMB Circular A–4,
section E, September 17, 2003), DOE
calculated NPV using both a 7-percent
and a 3-percent real discount rate. The
7-percent rate is an estimate of the
average before-tax rate of return on
private capital in the U.S. economy, and
reflects the returns on real estate and
promulgated before compliance is required, except
that in no case may any new standards be required
within 6 years of the compliance date of the
previous standards. (42 U.S.C. 6295(m)) While
adding a 6-year review to the 3-year compliance
period adds up to 9 years, DOE notes that it may
undertake reviews at any time within the 6-year
period and that the 3-year compliance date may
yield to the 6-year backstop. A 9-year analysis
period may not be appropriate given the variability
that occurs in the timing of standards reviews and
the fact that for some consumer products, the
compliance period is 5 years rather than 3 years.
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small business capital, including
corporate capital. DOE used this
discount rate to approximate the
opportunity cost of capital in the private
sector, because recent OMB analysis has
found the average rate of return on
capital to be near this rate. In addition,
DOE used the 3-percent rate to capture
the potential effects of amended
standards on private consumption. This
rate represents the rate at which society
discounts future consumption flows to
their present value. It can be
approximated by the real rate of return
on long-term government debt (i.e.,
yield on Treasury notes minus annual
rate of change in the CPI), which has
averaged about 3 percent on a pre-tax
basis for the last 30 years.
Table V.35 and Table V.36 show the
customer NPV results for each of the
TSLs DOE considered for beverage
vending machines at both 7-percent and
3-percent discount rates. In each case,
the impacts cover the expected lifetime
of equipment purchased from 2019
through 2048. Detailed NPV results are
presented in chapter 10 of the final rule
TSD.
The NPV results at a 7-percent
discount rate for TSL 5 were negative
for all equipment classes. This is
consistent with the results of LCC
analysis results for TSL 5, which
showed significant increase in LCC and
significantly higher PBPs. Efficiency
levels for TSL 3 were chosen to
correspond to the highest NPV at a 7percent discount rate for all classes.
Consequently, the total NPV for
beverage vending machines was highest
for TSL 3, with a value of $0.207 billion
(2014$) at a 7-percent discount rate. TSL
1 showed the second highest total NPV,
with a value of $0.030 billion (2014$) at
a 7-percent discount rate. TSL 2, TSL 4
and TSL 5 have a total NPV lower than
TSL 1 or 3.
TABLE V.35—NET PRESENT VALUE AT A 7-PERCENT DISCOUNT RATE FOR EQUIPMENT PURCHASED IN 2019–2048
[billion 2014$]
Standard level *
Equipment class
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
Class A .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Class B .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination A .....................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination B .....................................................................
CO2 ...............................................................................
Propane ........................................................................
0.021
0.021
0.000
0.001
0.000
0.001
0.005
0.003
0.002
0.003
0.002
0.001
(0.058)
(0.074)
0.016
0.021
0.000
0.021
0.027
0.016
0.011
0.016
0.009
0.006
0.021
0.021
0.000
0.047
0.007
0.041
0.085
0.056
0.029
0.053
0.032
0.022
(0.213)
(0.314)
0.101
(0.041)
(0.078)
0.037
0.015
(0.015)
0.030
0.035
0.019
0.017
(0.645)
(0.464)
(0.181)
(0.235)
(0.169)
(0.065)
(0.075)
(0.056)
(0.019)
(0.063)
(0.047)
(0.016)
Total .......................................................................
0.030
0.006
0.207
(0.204)
(1.017)
* Values in parentheses are negative numbers.
TABLE V.36—NET PRESENT VALUE AT A 3-PERCENT DISCOUNT RATE FOR EQUIPMENT PURCHASED IN 2019–2048
[billion 2014$]
Standard level *
Equipment class
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
Class A .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Class B .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination A .....................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination B .....................................................................
CO2 ...............................................................................
Propane ........................................................................
0.054
0.054
0.000
0.002
0.000
0.002
0.013
0.008
0.005
0.006
0.004
0.003
(0.124)
(0.163)
0.039
0.050
0.000
0.050
0.065
0.039
0.026
0.038
0.023
0.015
0.054
0.054
0.000
0.116
0.018
0.098
0.208
0.137
0.071
0.129
0.077
0.052
(0.450)
(0.694)
0.244
(0.079)
(0.172)
0.093
0.056
(0.019)
0.075
0.089
0.048
0.041
(1.281)
(0.923)
(0.358)
(0.435)
(0.319)
(0.116)
(0.117)
(0.091)
(0.026)
(0.116)
(0.086)
(0.029)
Total .......................................................................
0.076
0.029
0.508
(0.0384)
(1.949)
asabaliauskas on DSK5VPTVN1PROD with RULES
* Values in parentheses are negative numbers.
The NPV results based on the
aforementioned 9-year analysis period
are presented in Table V.37 and Table
V.38. The impacts are counted over the
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lifetime of equipment purchased in
2019–2027. As mentioned previously in
section V.B.3.a of this final rule, this
information is presented for
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informational purposes only and is not
indicative of any change in DOE’s
analytical methodology or decision
criteria.
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TABLE V.37—NET PRESENT VALUE AT A 7-PERCENT DISCOUNT RATE FOR 9 YEARS OF SHIPMENTS (2019–2027)
[billion 2014$]
Standard level *
Equipment class
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
Class A .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Class B .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination A .....................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination B .....................................................................
CO2 ...............................................................................
Propane ........................................................................
0.009
0.009
0.000
0.000
0.000
0.000
0.002
0.001
0.001
0.001
0.001
0.000
(0.026)
(0.032)
0.006
0.008
0.000
0.008
0.011
0.007
0.004
0.006
0.004
0.003
0.009
0.009
0.000
0.019
0.003
0.016
0.034
0.022
0.011
0.021
0.013
0.009
(0.093)
(0.0135)
0.041
(0.020)
(0.034)
0.014
0.004
(0.008)
0.012
0.014
0.007
0.006
(0.279)
(0.200)
(0.079)
(0.104)
(0.074)
(0.030)
(0.035)
(0.025)
(0.009)
(0.029)
(0.021)
(0.008)
Total .......................................................................
0.012
(0.000)
0.083
(0.096)
(0.446)
* Values in parentheses are negative numbers
TABLE V.38—NET PRESENT VALUE AT A 3-PERCENT DISCOUNT RATE FOR 9 YEARS OF SHIPMENTS (2019–2027)
[billion 2014$]
Standard level *
Equipment class
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
Class A .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Class B .................................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination A .....................................................................
CO2 ...............................................................................
Propane ........................................................................
Combination B .....................................................................
CO2 ...............................................................................
Propane ........................................................................
0.015
0.015
0.000
0.001
0.000
0.001
0.004
0.002
0.002
0.002
0.001
0.001
(0.041)
(0.052)
0.011
0.014
0.000
0.014
0.019
0.011
0.008
0.011
0.007
0.004
0.015
0.015
0.000
0.033
0.005
0.028
0.059
0.039
0.020
0.037
0.022
0.015
(0.144)
(0.216)
0.072
(0.030)
(0.055)
0.025
0.011
(0.009)
0.021
0.024
0.013
0.011
(0.405)
(0.290)
(0.115)
(0.142)
(0.102)
(0.040)
(0.043)
(0.032)
(0.011)
(0.040)
(0.029)
(0.011)
Total .......................................................................
0.022
0.003
0.144
(0.138)
(0.630)
asabaliauskas on DSK5VPTVN1PROD with RULES
* Values in parentheses are negative numbers.
c. Indirect Impacts on Employment
DOE expects energy conservation
standards for beverage vending
machines to reduce energy costs for
equipment owners, with the resulting
net savings being redirected to other
forms of economic activity. Those shifts
in spending and economic activity
could affect the demand for labor. Thus,
indirect employment impacts may result
from expenditures shifting between
goods (the substitution effect) and
changes in income and overall
expenditure levels (the income effect)
that occur due to the imposition of new
and amended standards. These impacts
may affect a variety of businesses not
directly involved in the decision to
make, operate, or pay the utility bills for
beverage vending machines. As
described in section IV.N of this final
rule, DOE used an input/output model
of the U.S. economy to estimate indirect
employment impacts of the TSLs that
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DOE considered in this rulemaking (see
chapter 16 of the final rule TSD for more
details). DOE understands that there are
uncertainties involved in projecting
employment impacts, especially
changes in the later years of the
analysis. Therefore, DOE generated
results for near-term time frames (2020–
2025), where these uncertainties are
reduced.
The results suggest that these adopted
standards would be likely to have
negligible impact on the net demand for
labor in the economy. All TSLs increase
net demand for labor by fewer than 1000
jobs. The net change in jobs is so small
that it would be imperceptible in
national labor statistics and might be
offset by other, unanticipated effects on
employment. Chapter 16 of the final
rule TSD presents more detailed results
about anticipated indirect employment
impacts. As shown in Table V.39, DOE
estimates that net indirect employment
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impacts from a BVM amended standard
are small relative to the national
economy.
TABLE V.39—NET SHORT-TERM
CHANGE IN EMPLOYMENT
[Jobs]
Trial standard level
1
2
3
4
5
................................
................................
................................
................................
................................
* Values
numbers.
in
2020
2025
2
22
43
71
* (42)
parentheses
are
7
85
173
294
24
negative
4. Impact on Utility or Performance of
Equipment
In its analyses, DOE has considered
potential impacts of amended standards,
including the use of design options
considered in the engineering analysis,
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on the performance and utility of BVM
equipment. This includes the ability to
achieve and maintain the necessary
vending temperatures, the ability to
display and vend product upon receipt
of payment, and other factors core to the
utility of vending machine operation.
DOE has concluded that the new and
amended standards in this final rule
will not lessen the utility or
performance of beverage vending
machines.
5. Impact of Any Lessening of
Competition
As discussed in section III.F.1.e, the
Attorney General of the United States
(Attorney General) determines the
impact, if any, of any lessening of
competition likely to result from an
adopted standard and transmits such
determination in writing to the
Secretary within 60 days of the
publication of a proposed rule, together
with an analysis of the nature and
extent of the impact. (42 U.S.C.
6295(o)(2)(B)(i)(V) and (B)(ii)) To assist
the Attorney General in making such
determination, DOE provided the
Department of Justice (DOJ) with copies
of the 2015 BVM ECS NOPR and the
TSD for review. In its assessment letter
responding to DOE, DOJ concluded that
the proposed energy conservation
standards for beverage vending
machines are unlikely to have a
significant adverse impact on
competition. The Attorney General’s
assessment is published as an appendix
at the end of this final rule.
6. Need of the Nation To Conserve
Energy
Enhanced energy efficiency, where
economically justified, improves the
Nation’s energy security, strengthens the
economy, and reduces the
environmental impacts (costs) of energy
production. Reduced electricity demand
due to energy conservation standards is
also likely to reduce the cost of
maintaining the reliability of the
electricity system, particularly during
peak-load periods. As a measure of this
reduced demand, chapter 15 in the final
rule TSD presents the estimated
reduction in generating capacity,
relative to the no-new-standards case,
for the TSLs that DOE considered in this
rulemaking.
Energy conservation resulting from
new and amended standards for the
BVM equipment classes covered in this
final rule will also produce
environmental benefits in the form of
reduced emissions of air pollutants and
greenhouse gases associated with
electricity production. Table V.40
provides DOE’s estimate of cumulative
emissions reductions to result from the
TSLs considered in this rulemaking.
The table includes both power sector
emissions and upstream emissions. The
upstream emissions were calculated
using the multipliers discussed in
section IV.K of this final rule. DOE
reports annual CO2, NOX, and Hg
emissions reductions for each TSL in
chapter 13 of the final rule TSD.
TABLE V.40—CUMULATIVE EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR BEVERAGE VENDING MACHINES
TSL
1
2
3
4
5
Power Sector and Site Emissions
CO2 (million metric tons) ......................................................
NOX (thousand tons) ...........................................................
Hg (tons) ..............................................................................
N2O (thousand tons) ............................................................
CH4 (thousand tons) ............................................................
SO2 (thousand tons) ............................................................
0.97
1.06
0.00
0.01
0.08
0.59
3.61
3.97
0.01
0.04
0.31
2.18
6.98
7.66
0.02
0.09
0.60
4.22
13.39
14.70
0.03
0.16
1.16
8.09
20.23
22.22
0.05
0.25
1.75
12.22
0.20
2.90
0.00
0.00
16.01
0.04
0.39
5.60
0.00
0.00
30.92
0.07
0.75
10.74
0.00
0.01
59.34
0.14
1.13
16.24
0.00
0.01
89.70
0.21
3.81
6.86
0.01
0.05
16.32
2.22
7.37
13.26
0.02
0.09
31.52
4.29
14.14
25.44
0.03
0.17
60.50
8.23
21.36
38.45
0.05
0.26
91.45
12.43
Upstream Emissions
CO2 (million metric tons) ......................................................
NOX (thousand tons) ...........................................................
Hg (tons) ..............................................................................
N2O (thousand tons) ............................................................
CH4 (thousand tons) ............................................................
SO2 (thousand tons) ............................................................
0.05
0.78
0.00
0.00
4.30
0.01
Total Emissions
asabaliauskas on DSK5VPTVN1PROD with RULES
CO2 (million metric tons) ......................................................
NOX (thousand tons) ...........................................................
Hg (tons) ..............................................................................
N2O (thousand tons) ............................................................
CH4 (thousand tons) ............................................................
SO2 (thousand tons) ............................................................
As part of the analysis for this final
rule, DOE estimated monetary benefits
likely to result from the reduced
emissions of CO2 and NOX estimated for
each of the TSLs considered for
beverage vending machines. As
discussed in section IV.L of this final
rule, for CO2, DOE used values for the
SCC developed by an interagency
process. The interagency group selected
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1.02
1.84
0.00
0.01
4.38
0.60
four sets of SCC values for use in
regulatory analyses. Three sets are based
on the average SCC from three
integrated assessment models, at
discount rates of 2.5 percent, 3 percent,
and 5 percent. The fourth set, which
represents the 95th percentile SCC
estimate across all three models at a 3percent discount rate, is included to
represent higher-than-expected impacts
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from temperature change further out in
the tails of the SCC distribution. The
four SCC values for CO2 emissions
reductions in 2015, expressed in 2014$,
are $12.2 per metric ton, $40.0 per
metric ton, $62.3 per metric ton, and
$117 per metric ton for discount rates of
2.5 percent, 3 percent, 5 percent, and 3
percent respectively. The values for
later years are higher due to increasing
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
emissions-related costs as the
magnitude of projected climate change
increases.
Table V.41 presents the global value
of CO2 emissions reductions at each
TSL. DOE calculated domestic values as
a range from 7 percent to 23 percent of
the global values, and these results are
presented in chapter 14 of the final rule
TSD.
TABLE V.41—GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR BEVERAGE
VENDING MACHINES
SCC case *
(million 2014$)
TSL
5% discount rate,
average *
3% discount rate,
average *
2.5% discount
rate, average *
3% discount rate,
95th percentile *
Primary Energy Emissions
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
7
24
47
90
136
30
113
218
418
631
48
180
347
666
1,005
92
344
664
1,275
1,925
2
6
12
23
35
3
10
19
37
56
5
19
37
71
107
32
119
230
441
666
51
190
366
703
1,061
97
363
701
1,345
2,031
Upstream Emissions
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
0
1
3
5
7
Total Emissions
1
2
3
4
5
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
7
26
49
95
143
asabaliauskas on DSK5VPTVN1PROD with RULES
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117 per metric ton (2014$),
respectively.
DOE is aware that scientific and
economic knowledge about the
contribution of CO2 and other GHG
emissions to changes in the future
global climate and the potential
resulting damages to the world economy
continues to evolve rapidly. Thus, any
value placed in this rulemaking on
reducing CO2 emissions is subject to
change. DOE, together with other
Federal agencies, will continue to
review various methodologies for
estimating the monetary value of
reductions in CO2 and other GHG
emissions. This review considered the
comments on this subject that are part
of the public record for this and other
rulemakings, as well as other
methodological assumptions and issues.
However, consistent with DOE’s legal
obligations, and taking into account the
uncertainty involved with this
particular issue, DOE included in this
final rule the most recent values and
analyses resulting from the interagency
review process.
DOE also estimated a range for the
cumulative monetary value of the
economic benefits associated with NOX
emissions reductions anticipated to
result from amended standards for the
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BVM equipment that is the subject of
this final rule. The dollar-per-ton values
that DOE used are discussed in section
IV.L of this final rule. Table V.42
presents the present value of cumulative
NOX emissions reductions for each TSL
calculated using the average dollar-perton values and 7-percent and 3-percent
discount rates. This table presents
values that use the low dollar-per-ton
values, which reflect DOE’s primary
estimate. Results that reflect the range of
NOX dollar-per-ton values are presented
in Table V.44
TABLE V.42—PRESENT VALUE OF
NOX EMISSIONS REDUCTION FOR
POTENTIAL STANDARDS FOR BEVERAGE VENDING MACHINES *
TABLE V.42—PRESENT VALUE OF
NOX EMISSIONS REDUCTION FOR
POTENTIAL STANDARDS FOR BEVERAGE VENDING MACHINES *—Continued
(Million 2014$)
TSL
3% discount
rate
5 ........................
7% discount
rate
70
27
Upstream Emissions
1
2
3
4
5
........................
........................
........................
........................
........................
2
9
17
33
51
1
3
7
13
19
Total Emissions
(Million 2014$)
TSL
3% discount
rate
7% discount
rate
Power Sector Emissions
1
2
3
4
........................
........................
........................
........................
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3
13
24
47
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1
5
9
18
1
2
3
4
5
........................
........................
........................
........................
........................
6
22
42
80
121
2
8
16
31
46
* Results are based on the low benefit-perton values.
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
7. Other Factors
8. Summary of National Economic
Impacts
The Secretary of Energy, in
determining whether a standard is
economically justified, may consider
any other factors that the Secretary
deems to be relevant. (42 U.S.C.
6295(o)(2)(B)(i)(VII)) No other factors
were considered in this analysis.
The NPV of the monetized benefits
associated with emissions reductions
can be viewed as a complement to the
NPV of the customer savings calculated
for each TSL considered in this
rulemaking. Table V.43 presents the
NPV values that result from adding the
estimates of the potential economic
benefits resulting from reduced CO2 and
NOX emissions in each of four valuation
scenarios to the NPV of customer
savings calculated for each TSL
considered in this rulemaking, at both a
7-percent and 3-percent discount rate.
The CO2 values used in the columns of
each table correspond to the four sets of
SCC values discussed above.
TABLE V.43—NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS
FROM CO2 AND NOX EMISSIONS REDUCTIONS
≤Customer NPV at 3% discount rate added with (billion 2014$ *):
SCC case $12.2/
metric ton and 3%
low NOX value
TSL
1
2
3
4
5
SCC Case $40.0/
metric ton and 3%
low NOX value
SCC case $62.3/
metric ton and 3%
low NOX value
SCC case $117/
metric ton and 3%
low NOX value
0.088
0.077
0.599
(0.209)
(1.685)
0.114
0.170
0.780
0.137
(1.162)
0.132
0.241
0.916
0.398
(0.767)
0.179
0.414
1.251
1.041
0.203
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
Customer NPV at 7% discount rate added with (billion 2014$ *):
TSL
1
2
3
4
5
SCC case $12.2/
metric ton and 7%
low NOX value
SCC case $40.0/
metric ton and 7%
low NOX value
SCC case $62.3/
metric ton and 7%
low NOX value
SCC case $117/
metric ton and 7%
low NOX value
0.039
0.040
0.272
(0.078)
(0.827)
0.065
0.133
0.453
0.268
(0.305)
0.083
0.204
0.589
0.530
0.090
0.130
0.377
0.924
1.173
1.061
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
...............................................................................................
* Parentheses indicate negative values.
Note: The SCC case values represent the global SCC in 2015, in 2014$, for each case.
In considering the above results, two
issues are relevant. First, the national
operating cost savings are domestic U.S.
monetary savings that occur as a result
of market transactions, while the value
of CO2 reductions is based on a global
value. Second, the assessments of
operating cost savings and the SCC are
performed with different methods that
use different time frames for analysis.
The national operating cost savings is
measured for the lifetime of equipment
shipped in 2019 to 2048. Because CO2
emissions have a very long residence
time in the atmosphere,83 the SCC
values in future years reflect future
climate-related impacts that continue
beyond 2100.
asabaliauskas on DSK5VPTVN1PROD with RULES
C. Conclusion
When considering standards, the new
or amended energy conservation
standards that DOE adopts for any type
(or class) of covered equipment must be
83 The atmospheric lifetime of CO is estimated of
2
the order of 30–95 years. Jacobson, MZ. ‘‘Correction
to ‘Control of fossil-fuel particulate black carbon
and organic matter, possibly the most effective
method of slowing global warming.’ ’’ J. Geophys.
Res. 110. pp. D14105 (2005).
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Jkt 238001
designed to achieve the maximum
improvement in energy efficiency that
the Secretary determines is
technologically feasible and
economically justified. (42 U.S.C.
6295(o)(2)(A)) In determining whether a
standard is economically justified, the
Secretary must determine whether the
benefits of the standard exceed its
burdens by, to the greatest extent
practicable, considering the seven
statutory factors discussed previously.
(42 U.S.C. 6295(o)(2)(B)(i)). The new or
amended standard must also result in
significant conservation of energy. (42
U.S.C. 6295(o)(3)(B))
In this final rule, DOE considered the
impacts of the standards for beverage
vending machines at each TSL,
beginning with the maximum
technologically feasible level, to
determine whether that level was
economically justified. Where the maxtech level was not justified, DOE then
considered the next-most-efficient level
and undertook the same evaluation until
it reached the highest efficiency level
that is both technologically feasible and
economically justified and saves a
significant amount of energy.
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To aid the reader in understanding
the benefits and/or burdens of each TSL,
tables in this section summarize the
quantitative analytical results for each
TSL, based on the assumptions and
methodology discussed herein. The
efficiency levels contained in each TSL
are described in section V.A of this final
rule. In addition to the quantitative
results presented in the tables, DOE also
considers other burdens and benefits
that affect economic justification. These
include the impacts on identifiable
subgroups of customers who may be
disproportionately affected by a national
standard, impacts on employment,
technological feasibility, manufacturer
costs, and impacts on competition may
affect the economic results presented.
Section V.B.1.b of this final rule
presents the estimated impacts of each
TSL for these subgroups. DOE discusses
the impacts on direct employment in
BVM manufacturing in section V.B.2 of
this final rule, and discusses the
indirect employment impacts in section
V.B.3.c of this final rule.
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
1. Benefits and Burdens of TSLs
Considered for BVM Standards
Table V.44, Table V.45, and Table
V.46 summarize the quantitative
impacts estimated for each TSL for
beverage vending machines. The
national impacts are measured over the
lifetime of beverage vending machines
purchased in the 30-year period that
begins in the year of compliance with
amended standards (2019–2048). The
energy savings, emissions reductions,
and value of emissions reductions refer
to FFC results.
TABLE V.44—SUMMARY OF ANALYTICAL RESULTS FOR BEVERAGE VENDING MACHINES: NATIONAL IMPACTS
Category
TSL 1
National FFC Energy Savings (quads) ................................
NPV of Customer Benefits (2014$ billion):
3% Discount Rate .........................................................
7% Discount Rate .........................................................
Cumulative Emissions Reduction (Total FFC Emissions):
CO2 (MMt) .....................................................................
NOX (kt) ........................................................................
Hg (t) .............................................................................
N2O (kt) .........................................................................
N2O (kt CO2eq) .............................................................
CH4 (kt) .........................................................................
CH4 (kt CO2eq) .............................................................
SO2 (kt) .........................................................................
Value of Cumulative Emissions Reduction (Total FFC
Emissions):
CO2 (2014$ million) ** ...................................................
NOX—3% Discount Rate (2014$ million) .....................
NOX—7% Discount Rate (2014$ million) .....................
TSL 2
TSL 3
TSL 4
TSL 5
0.02
0.06
0.12
0.24
0.36
0.08
0.03
0.03
0.01
0.51
0.21
(0.38)
(0.20)
(1.95)
(1.02)
1.02
1.84
0.002
0.01
3.28
4.38
122.70
0.60
3.81
6.86
0.01
0.05
12.23
16.32
457.00
2.22
7.37
13.26
0.02
0.09
23.63
31.52
882.67
4.29
14.14
25.44
0.03
0.17
45.34
60.50
1,693.88
8.23
21.36
38.45
0.05
0.26
68.47
91.45
2,560.72
12.43
7 to 97
6 to 13
2 to 5
26 to 363
22 to 48
8 to 19
49 to 701
42 to 92
16 to 36
95 to 1,345
80 to 177
31 to 69
143 to 2,031
121 to 267
46 to 104
* MMT is million metric ton. kt is thousand tons. t is ton. CO2eq is the quantity of CO2 that would have the same global warming potential
(GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
TABLE V.45—NPV OF CUSTOMER BENEFITS BY EQUIPMENT CLASS
Trial standard level * (billion 2014$)
Discount rate
(%)
Equipment class
Class A .....................................................
1
2
3
4
5
3
7
3
7
3
7
3
7
Combination A .........................................
Combination B .........................................
Total—All Classes ....................................
(0.124)
(0.058)
0.050
0.021
0.065
0.027
0.038
0.016
0.054
0.021
0.116
0.047
0.208
0.085
0.129
0.053
(0.450)
(0.213)
(0.079)
(0.041
0.056
0.015
0.089
0.035
(1.281)
(0.645)
(0.435)
(0.235)
(0.117)
(0.075)
(0.116)
(0.063)
3
7
Class B .....................................................
0.054
0.021
0.002
0.001
0.013
0.005
0.006
0.003
0.076
0.030
0.029
0.006
0.508
0.207
(0.384)
(0.204)
(1.949)
(1.017)
* Parentheses indicate negative values.
TABLE V.46—SUMMARY OF ANALYTICAL RESULTS FOR BEVERAGE VENDING MACHINES: MANUFACTURER AND CUSTOMER
IMPACTS
asabaliauskas on DSK5VPTVN1PROD with RULES
TSL 1
Manufacturer Impacts:
Industry NPV relative to a case
without standards value of 94.8
(million 2014$) .............................
Industry NPV (% Change) ..............
Customer Mean LCC Savings* (2014$):
Class A CO2 ...................................
Class A Propane .............................
Class B CO2 ...................................
Class B Propane .............................
Combination A CO2 ........................
Combination A Propane .................
Combination B CO2 ........................
Combination B Propane .................
Customer Simple PBP** (years):
Class A CO2 ...................................
Class A Propane .............................
Class B CO2 ...................................
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TSL 2
TSL 3
TSL 4
TSL 5
94.1 to 94.4
¥0.7 to ¥0.4
94.0 to 94.7
¥0.8 to ¥0.1
94.0 to 95.2
¥0.8 to 0.4
91.5 to 98.8
¥3.4 to 4.2
79.3 to 112.6
¥16.4 to 18.9
65
0
0
8
57
58
30
30
(217)
71
0
185
286
290
179
179
65
0
42
361
990
772
597
610
(937)
454
(448)
333
(234)
793
359
476
(1,424)
(817)
(1,017)
(566)
(980)
(470)
(870)
(433)
2.0
1.1
0.4
N/A
1.2
1.0
2.0
1.1
1.1
N/A
0.9
N/A
N/A
N/A
58.8
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
TABLE V.46—SUMMARY OF ANALYTICAL RESULTS FOR BEVERAGE VENDING MACHINES: MANUFACTURER AND CUSTOMER
IMPACTS—Continued
TSL 1
Class B Propane .............................
Combination A CO2 ........................
Combination A Propane .................
Combination B CO2 ........................
Combination B Propane .................
Distribution of Customer LCC Impacts—
Net Cost (%):
Class A CO2 ...................................
Class A Propane .............................
Class B CO2 ...................................
Class B Propane .............................
Combination A CO2 ........................
Combination A Propane .................
Combination B CO2 ........................
Combination B Propane .................
TSL 2
TSL 3
TSL 4
TSL 5
0.7
0.2
0.1
0.1
0.1
0.6
0.2
0.1
0.1
0.1
0.5
0.8
0.7
0.5
0.3
1.3
26.1
1.7
1.6
0.8
64.7
39.4
24.7
N/A
N/A
0
0
0
3
0
0
0
0
100
0
0
0
0
0
0
0
0
0
8
0
0
0
0
0
100
0
99
1
76
1
7
1
100
100
100
93
93
82
97
86
asabaliauskas on DSK5VPTVN1PROD with RULES
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also
costs more to operate.
DOE also notes that the economic
literature provides a wide-ranging
discussion of how customers trade-off
upfront costs and energy savings in the
absence of government intervention.
Much of this literature attempts to
explain why customers appear to
undervalue energy efficiency
improvements. There is evidence that
customers undervalue future energy
savings as a result of (1) a lack of
information; (2) a lack of sufficient
salience of the long-term or aggregate
benefits; (3) a lack of sufficient savings
to warrant delaying or altering
purchases (e.g., an inefficient
ventilation fan in a new building or the
delayed replacement of a water pump);
(4) excessive focus on the short term, in
the form of inconsistent weighting of
future energy cost savings relative to
available returns on other investments;
(5) computational or other difficulties
associated with the evaluation of
relevant tradeoffs; and (6) a divergence
in incentives (e.g., renter versus
building owner, builder versus home
buyer). Other literature indicates that
with less than perfect foresight and a
high degree of uncertainty about the
future, customers may trade off these
types of investments at a higher-thanexpected rate between current
consumption and uncertain future
energy cost savings. This
undervaluation suggests that regulation
that promotes energy efficiency can
produce significant net private gains (as
well as producing social gains by, for
example, reducing pollution).
While DOE is not prepared at present
to provide a fuller quantifiable
framework for estimating the benefits
and costs of changes in customer
purchase decisions due to new and
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Jkt 238001
amended energy conservation
standards, DOE is committed to
developing a framework that can
support empirical quantitative tools for
improved assessment of the customer
welfare impacts of appliance standards.
DOE posted a paper that discusses the
issue of customer welfare impacts of
appliance energy efficiency standards,
and potential enhancements to the
methodology by which these impacts
are defined and estimated in the
regulatory process.84
As mentioned previously, in this final
rule, DOE considered the impacts of the
standards for beverage vending
machines at each TSL, beginning with
the maximum technologically feasible
level, to determine whether that level
was economically justified. Where the
max-tech level was not justified, DOE
then considered the next-most-efficient
level and undertook the same evaluation
until it reached the highest efficiency
level that is both technologically
feasible and economically justified and
saves a significant amount of energy.
Accordingly, DOE first considered
TSL 5, which corresponds to the maxtech level for all the equipment classes
and offers the potential for the highest
cumulative energy savings through the
analysis period from 2019 to 2048. The
estimated energy savings from TSL 5 are
0.36 quads of energy, an amount DOE
considers significant. TSL 5 has an
estimated NPV of customer benefit of
negative $1.017 billion using a 7-percent
84 Sanstad, A. Notes on the Economics of
Household Energy Consumption and Technology
Choice. 2010. Lawrence Berkeley National
Laboratory, Berkeley, CA. https://
www1.eere.energy.gov/buildings/appliance_
standards/pdfs/consumer_ee_theory.pdf.
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discount rate, and negative $1.949
billion using a 3-percent discount rate.
The cumulative emissions reductions
at TSL 5 are 21.4 million metric tons of
CO2, 12.4 thousand tons of SO2, 38.5
thousand tons of NOX, 0.05 tons of Hg,
91.5 thousand tons of CH4, and 0.3
thousand tons of N2O. The estimated
monetary value of the CO2 emissions
reductions at TSL 5 ranges from $143
million to $2,031 million.
At TSL 5, the average LCC savings
range from negative $1,424 to negative
$433, depending on equipment class.
The fraction of customers incurring a
net cost range from 82 percent for
Combination A machines with propane
refrigerant to 100 percent for all Class A
machines and Class B machines with
CO2 refrigerant. Accordingly,
approximately 90 percent of customers
purchasing Class B propane equipment,
Combination A CO2 equipment,
Combination B CO2, and Combination B
propane equipment would incur next
cost, or 93, 93, 97, and 86 percent of
customers, respectively.
At TSL 5, the projected change in
INPV ranges from a decrease of $15.5
million to an increase of $17.9 million.
If the lower bound of the range of
impacts is reached, TSL 5 could result
in a net loss of up to 16.4 percent in
INPV for manufacturers.
Based on these results, the Secretary
concludes that at TSL 5 for beverage
vending machines, the benefits of
energy savings, emission reductions,
and the estimated monetary value of the
CO2 emissions reductions would be
outweighed by the negative NPV,
negative LCC savings, and the negative
INPV on manufacturers. Consequently,
DOE has concluded that TSL 5 is not
economically justified.
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Federal Register / Vol. 81, No. 5 / Friday, January 8, 2016 / Rules and Regulations
Next DOE considered TSL 4, which
saves an estimated total of 0.24 quads of
energy, an amount DOE considers
significant. TSL 4 has an estimated NPV
of customer benefit of negative $0.20
billion using a 7-percent discount rate,
and negative $0.38 billion using a 3percent discount rate.
The cumulative emissions reductions
at TSL 4 are 14.1 million metric tons of
CO2, 8.2 thousand tons of SO2, 25.4
thousand tons of NOX, 0.03 tons of Hg,
60.5 thousand tons of CH4, and 0.2
thousand tons of N2O. The estimated
monetary value of the CO2 emissions
reductions at TSL 4 ranges from $95
million to $1,345 million.
At TSL 4, the average LCC savings
ranges from negative $937 to positive
$793, depending on equipment class.
The fraction of customers incurring a
net cost range from 0 percent, for Class
A propane equipment, to 100 percent,
for Class A CO2 equipment, depending
on equipment class. As shown in Table
V.46, a large percentage of Class B and
Combination A CO2 equipment incur a
net cost, and overall, a majority of
customers (53.8 percent) would
experience a net cost at TSL 4.
Regarding impacts on manufacturers,
at TSL 4, the projected change in INPV
ranges from a decrease of $3.2 million
to an increase of $4.0 million. At TSL
4, DOE recognizes the risk of negative
impacts if manufacturers’ expectations
concerning reduced profit margins are
realized. If the lower bound of the range
of impacts is reached, as DOE expects,
TSL 4 could result in a net loss of up
to 3.4 percent in INPV for
manufacturers.
Based on these results, the Secretary
concludes that at TSL 4 for beverage
vending machines, the benefits of
energy savings, emission reductions,
and the estimated monetary value of the
CO2 emissions reductions would be
outweighed by the negative NPV,
negative LCC savings, and the negative
INPV on manufacturers. Consequently,
DOE has concluded that TSL 4 is not
economically justified.
Next DOE considered TSL 3, which
saves an estimated total of 0.12 quads of
energy, an amount DOE considers
significant. TSL 3 has an estimated NPV
of customer benefit of $0.20 billion
using a 7-percent discount rate, and
$0.51 billion using a 3-percent discount
rate.
The cumulative emissions reductions
at TSL 3 are 7.4 million metric tons of
CO2, 4.3 thousand tons of SO2, 13.3
thousand tons of NOX, 0.02 tons of Hg,
31.5 thousand tons of CH4, and 0.09
thousand tons of N2O. The estimated
monetary value of the CO2 emissions
reductions at TSL 3 ranges from $49
million to $701 million.
At TSL 3, the average LCC savings
ranges from $0 to $990, depending on
equipment class. There are no
customers incurring a net cost for
almost all equipment classes, except for
Class B equipment with CO2 refrigerant
for which 8 percent of customers
experience a net cost.
At TSL 3, the projected change in
INPV ranges from a decrease of $0.7
million to an increase of $0.4 million. If
the lower bound of the range of impacts
is reached, as DOE expects, TSL 3 could
result in a net loss of up to 0.8 percent
in INPV for manufacturers.
After carefully considering the
analysis results and weighing the
benefits and burdens of TSL 3, DOE
believes that setting the standards for
beverage vending machines at TSL 3
represents the maximum improvement
in energy efficiency that is
technologically feasible and
economically justified. TSL 3 is
technologically feasible because the
technologies required to achieve these
levels already exist in the current
market and are available from multiple
manufacturers. TSL 3 is economically
justified because the benefits to the
nation in the form of energy savings,
customer NPV at both a 3-percent and
7-percent discount rate, and emissions
reductions outweigh the costs
associated with reduced INPV and
potential effects of reduced
manufacturing capacity.
Therefore, DOE is adopting new and
amended energy conservation standards
for beverage vending machines at TSL 3
as indicated in Table V.47.
85 To convert the time-series of costs and benefits
into annualized values, DOE calculated a present
value in 2015, the year used for discounting the
NPV of total consumer costs and savings. For the
benefits, DOE calculated a present value associated
with each year’s shipments in the year in which the
shipments occur (2020, 2030, etc.), and then
discounted the present value from each year to
2015. The calculation uses discount rates of 3 and
7 percent for all costs and benefits except for the
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TABLE V.47—ADOPTED ENERGY CONSERVATION STANDARDS FOR BEVERAGE VENDING MACHINES—Continued
Equipment class *
Combination B ........
Adopted energy
conservation
standards **
maximum
daily energy
consumption
(MDEC)
kWh/day †
0.111 × V + 2.04 ‡
* See section IV.A.1 of the final rule for a
discussion of equipment classes.
** ‘‘V’’ is the representative value of refrigerated volume (ft3) of the BVM model, as
measured in accordance with the method for
determining refrigerated volume adopted in the
recently amended DOE test procedure for
beverage vending machines and appropriate
sampling plan requirements. 80 FR 45758
(July 31, 2015). See section III.B and V.A for
more details.
† kilowatt hours per day.
‡ Trial Standard Level (TSL) 3.
2. Summary of Annualized Benefits and
Costs of the Adopted Standards
The benefits and costs of the adopted
standards can also be expressed in terms
of annualized values. The annualized
net benefit is the sum of: (1) The
annualized national economic value
(expressed in 2014$) of the benefits
from operating equipment that meet the
adopted standards (consisting primarily
of operating cost savings from using less
energy, minus increases in equipment
purchase costs, and (2) the annualized
monetary value of the benefits of CO2
and NOX emission reductions.85
Table V.48 shows the annualized
values for beverage vending machines
under TSL 3, expressed in 2014$. The
results under the primary estimate are
as follows. Using a 7-percent discount
rate for benefits and costs other than
CO2 reductions (for which DOE used a
3-percent discount rate along with the
average SCC series corresponding to a
TABLE V.47—ADOPTED ENERGY CON- value of $40.0 per metric ton in 2015
SERVATION STANDARDS FOR BEV- (2014$)), the estimated cost of the
ERAGE VENDING MACHINES
adopted standards for BVM equipment
is $1.8 million per year in increased
Adopted energy
equipment costs, while the estimated
conservation
benefits are $22.2 million per year in
standards **
reduced equipment operating costs,
maximum
Equipment class *
daily energy
$12.8 million per year in CO2
consumption
reductions, and $1.6 million per year in
(MDEC)
reduced NOX emissions. In this case, the
kWh/day †
net benefit amounts to $35 million per
year.
A .............................. 0.052 × V + 2.43 ‡
Using a 3-percent discount rate for all
B .............................. 0.052 × V + 2.20 ‡
benefits and costs and the average SCC
Combination A ........ 0.086 × V + 2.66 ‡
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value of CO2 reductions, for which DOE used casespecific discount rates. Using the present value,
DOE then calculated the fixed annual payment over
a 30-year period, starting in the compliance year
that yields the same present value.
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series corresponding to a value of $40.0
per metric ton in 2015 (in 2014$), the
estimated cost of the adopted standards
for beverage vending machines is $1.9
million per year in increased equipment
costs, while the estimated annual
benefits are $30.2 million in reduced
operating costs, $12.8 million in CO2
reductions, and $2.3 million in reduced
NOX emissions. In this case, the net
benefit amounts to $43 million per year.
TABLE V.48—ANNUALIZED BENEFITS AND COSTS OF ADOPTED STANDARDS (TSL 3) FOR BEVERAGE VENDING MACHINES
(Million 2014$/year)
Discount rate
Primary estimate *
Low net benefits
estimate *
High net benefits
estimate *
22 .......................
30 .......................
4 .........................
13 .......................
19 .......................
39 .......................
2 .........................
2 .........................
28 to 63 ..............
37 .......................
36 to 72 ..............
45 .......................
14 .......................
18 .......................
2 .........................
8 .........................
12 .......................
26 .......................
1 .........................
2 .........................
17 to 41 ..............
23 .......................
22 to 46 ..............
28 .......................
27
36
4
14
21
44
4
6
36 to 75
46
46 to 86
56
1.79 ....................
1.89 ....................
0.98 ....................
1.01 ....................
2.10
2.13
26
35
34
43
16
22
21
27
34 to 73
44
44 to 84
54
Benefits
Customer Operating Cost Savings ...............................................
CO2 Reduction Value ($12.2/metric ton) ** ..................................
CO2 Reduction Value ($40.0/metric ton) ** ..................................
CO2 Reduction Value ($62.3/metric ton) ** ..................................
CO2 Reduction Value ($117/metric ton) ** ...................................
NOX Reduction Value † ................................................................
Total Benefits ‡ .............................................................................
7% ......................
3% ......................
5% ......................
3% ......................
2.5% ...................
3% ......................
7% ......................
3% ......................
7% range ............
7% ......................
3% range ............
3% ......................
Costs
Customer Incremental Equipment Costs ......................................
7% ......................
3% ......................
Net Benefits
Total ‡ ............................................................................................
7%
7%
3%
3%
range ............
......................
range ............
......................
to 61 ..............
.......................
to 70 ..............
.......................
to 40 ..............
.......................
to 45 ..............
.......................
* This table presents the annualized costs and benefits associated with beverage vending machines shipped in 2019–2048. These results include benefits to customers that accrue after the last year of analyzed shipments (2048) from the equipment purchased in during the 30-year
analysis period. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which
may be incurred in preparation for the rule. The primary, low benefits, and high benefits estimates utilize projections of energy prices from the
AEO2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively as well as the default shipments scenario
along with the low and high shipments scenarios. In addition, incremental equipment costs reflect a medium decline rate for projected equipment
price trends in the primary estimate, a low decline rate for projected equipment price trends in the low benefits estimate, and a high decline rate
for projected equipment price trends in the high benefits estimate. The methods used to derive projected price trends are explained in appendix
8C of the technical support document.
** The CO2 values represent global monetized SCC values, in 2014$, in 2015 under several scenarios. The first three cases use the averages
of SCC distributions calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3-percent discount rate. The SCC time series incorporates an escalation factor.
† The $/ton values used for NOX are described in section IV.L.2. The Primary and Low Benefits Estimates used the values at the low end of
the ranges estimated by EPA, while the High Benefits Estimate uses the values at the high end of the ranges.
‡ Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to the average SCC with a 3-percent
discount rate ($40.0/metric ton case). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits
are calculated using the labeled discount rate, and those values are added to the full range of CO2 values.
VI. Procedural Issues and Regulatory
Review
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A. Review Under Executive Orders
12866 and 13563
Section 1(b)(1) of Executive Order
12866, ‘‘Regulatory Planning and
Review,’’ 58 FR 51735 (Oct. 4, 1993),
requires each agency to identify the
problem that it intends to address,
including, where applicable, the failures
of private markets or public institutions
that warrant new agency action, as well
as to assess the significance of that
problem. The problems that the adopted
standards for beverage vending
machines are intended to address are as
follows:
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(1) Insufficient information and the
high costs of gathering and analyzing
relevant information leads some
customers to miss opportunities to make
cost-effective investments in energy
efficiency.
(2) In some cases the benefits of more
efficient equipment are not realized due
to misaligned incentives between
purchasers and users. An example of
such a case is when the equipment
purchase decision is made by a building
contractor or building owner who does
not pay the energy costs.
(3) There are external benefits
resulting from improved energy
efficiency of equipment that is not
captured by the users of such
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equipment. These benefits include
externalities related to public health,
environmental protection and national
energy security that are not reflected in
energy prices, such as reduced
emissions of air pollutants and
greenhouse gases that impact human
health and global warming. DOE
attempts to qualify some of the external
benefits through use of social cost of
carbon values.
The Administrator of the Office of
Information and Regulatory Affairs
(OIRA) in the OMB has determined that
this regulatory action is not a significant
regulatory action under section (3)(f) of
Executive Order 12866. Section
6(a)(3)(A) of the Executive Order states
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that absent a material change in the
development of the planned regulatory
action, regulatory action not designated
as significant will not be subject to
review under section 6(a)(3) unless,
within 10 working days of receipt of
DOE’s list of planned regulatory actions,
the Administrator of OIRA notifies the
agency that OIRA has determined that a
planned regulation is a significant
regulatory action within the meaning of
the Executive order.
DOE has also reviewed this regulation
pursuant to Executive Order 13563,
issued on January 18, 2011. 76 FR 3281
(Jan. 21, 2011). EO 13563 is
supplemental to and explicitly reaffirms
the principles, structures, and
definitions governing regulatory review
established in Executive Order 12866.
To the extent permitted by law, agencies
are required by Executive Order 13563
to: (1) Propose or adopt a regulation
only upon a reasoned determination
that its benefits justify its costs
(recognizing that some benefits and
costs are difficult to quantify); (2) tailor
regulations to impose the least burden
on society, consistent with obtaining
regulatory objectives, taking into
account, among other things, and to the
extent practicable, the costs of
cumulative regulations; (3) select, in
choosing among alternative regulatory
approaches, those approaches that
maximize net benefits (including
potential economic, environmental,
public health and safety, and other
advantages; distributive impacts; and
equity); (4) to the extent feasible, specify
performance objectives, rather than
specifying the behavior or manner of
compliance that regulated entities must
adopt; and (5) identify and assess
available alternatives to direct
regulation, including providing
economic incentives to encourage the
desired behavior, such as user fees or
marketable permits, or providing
information upon which choices can be
made by the public.
DOE emphasizes as well that
Executive Order 13563 requires agencies
to use the best available techniques to
quantify anticipated present and future
benefits and costs as accurately as
possible. In its guidance, OIRA has
emphasized that such techniques may
include identifying changing future
compliance costs that might result from
technological innovation or anticipated
behavioral changes. For the reasons
stated in the preamble, DOE believes
that this final rule is consistent with
these principles, including the
requirement that, to the extent
permitted by law, benefits justify costs
and that net benefits are maximized.
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B. Review Under the Regulatory
Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires preparation
of a final regulatory flexibility analysis
(FRFA) for any final rule. As required by
Executive Order 13272, ‘‘Proper
Consideration of Small Entities in
Agency Rulemaking,’’ 67 FR 53461
(August 16, 2002), DOE published
procedures and policies on February 19,
2003, to ensure that the potential
impacts of its rules on small entities are
properly considered during the
rulemaking process. 68 FR 7990. DOE
has made its procedures and policies
available on the Office of the General
Counsel’s Web site (https://energy.gov/
gc/office-general-counsel). DOE has
prepared the following FRFRA for the
equipment that are the subject of this
rulemaking.
For manufacturers of BVM
equipment, the SBA has set a size
threshold, which defines those entities
classified as ‘‘small businesses’’ for the
purposes of the statute. DOE used the
SBA’s small business size standards to
determine whether any small entities
would be subject to the requirements of
the rule. See 13 CFR part 121. The size
standards are listed by North American
Industry Classification System (NAICS)
code and industry description and are
available at www.sba.gov/content/tablesmall-business-size-standards. BVM
equipment manufacturing is classified
under NAICS 333318, ‘‘Other
Commercial and Service Industry
Machinery Manufacturing.’’ The SBA
sets a threshold of 1,000 employees or
less for an entity to be considered as a
small business for this category.
1. Description of Estimated Number of
Small Entities Regulated
During its market survey, DOE used
available public information to identify
potential small manufacturers. DOE’s
research involved public databases (e.g.,
DOE’s Compliance Certification
Management System (CCMS),86 and
ENERGY STAR 87 databases), individual
company Web sites, and market
research tools (e.g., Hoovers reports 88)
to create a list of companies that
manufacture or sell equipment covered
by this rulemaking. DOE also asked
stakeholders and industry
representatives during manufacturer
interviews and at DOE public meetings
if they were aware of any other small
86 ‘‘CCMS.’’ CCMS. www.regulations.doe.gov/
certification-data/.
87 ENERGY STAR Certified Vending Machines.
June 6, 2013. www.energystar.gov/products/
certified-products.
88 Hoovers. www.hoovers.com/.
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1107
manufacturers. DOE reviewed publicly
available data and contacted select
companies on its list, as necessary, to
determine whether they met the SBA’s
definition of a small business
manufacturer of covered BVM
equipment. DOE screened out
companies that do not offer equipment
covered by this rulemaking, do not meet
the definition of a ‘‘small business,’’ or
are foreign-owned.
DOE identified eight companies
selling BVM equipment in the United
States. Four are small domestic
manufacturers and one is a small foreign
manufacturer with domestic-sited
subsidiary that serves as its marketing
arm in the United States. DOE contacted
all identified BVM manufacturers for
interviews. Ultimately, DOE
interviewed manufacturers representing
approximately 78 percent of BVM
equipment industry shipments and
approximately 50 percent of the small
business shipments.
2. Description and Estimate of
Compliance Requirements
The four small domestic BVM
manufacturers account for
approximately 15–20 percent of BVM
equipment shipments. The small
domestic manufacturers are Automated
Merchandising Systems, Multi-Max
Systems, Seaga, and Wittern.
In general, the small manufacturers
focus on the Combination A and
Combination B market segments.
Together, the four domestic and one
foreign small manufacturer account for
74 percent of Combination A and
Combination B sales. Based on the
shipments analysis, Combination A and
Combination B shipments account for
roughly 18 percent of the total BVM
market. The market share estimates are
based on aggregate information
compiled through manufacturer
interviews. The interview process is
described in section IV.J.1 of this notice
and chapter 12 of the TSD. The
interview guide used for interviews was
published as Appendix 12B of the
NOPR TSD. The shipments percentages
are from shipments analysis, which is
explained in section IV.G of this notice.
The remaining 82 percent of BVM
shipments are Class A and Class B units.
Based on data obtained during
manufacturer interviews, DOE estimated
that small business manufacturers
(including the one foreign small
manufacturer) account for
approximately 5 percent of the market
for each of the Class A and Class B
market segments. The remaining 95
percent of both Class A and Class B
market segments are held by the three
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large manufacturers: Crane, Royal
Vendors, and SVA.
DOE derived industry conversion
using a top-down approach described in
methodology section IV.J.2.a. Using
product platform counts by equipment
type (i.e., Class A, Class B, Combination
A, Combination B) and manufacturer,
DOE estimated the distribution of
industry conversion costs between small
manufacturers and large manufacturers.
Using its count of manufacturers, DOE
calculated capital conversion costs
(Table VI.1) and product conversion
costs (Table VI.2) for an average small
manufacturer versus an average large
manufacturer. To provide context on the
size of the conversion costs relative to
the size of the businesses, DOE presents
the conversion costs relative to annual
revenue and annual operating profit
under the final standard level, as shown
in VI.3. The current annual revenue and
annual operating profit estimates are
derived from the GRIM’s industry
revenue calculations and the market
share breakdowns of small versus large
manufacturers.
TABLE VI.1—COMPARISON OF TYPICAL SMALL AND LARGE MANUFACTURER’S CAPITAL CONVERSION COSTS *
Capital conversion
costs for typical
small
manufacturer
(2014$ millions)
Trial standard level
TSL
TSL
TSL
TSL
TSL
1
2
3
4
5
Capital conversion
costs for typical
large
manufacturer
(2014$ millions)
0.03
0.03
0.03
0.11
0.31
0.06
0.06
0.06
0.20
0.70
...........................................................................................................................................................
...........................................................................................................................................................
...........................................................................................................................................................
...........................................................................................................................................................
...........................................................................................................................................................
* Capital conversion costs are the capital investments made during the 3-year period between the publication of the final rule and the compliance year of the final standard.
TABLE VI.2—COMPARISON OF TYPICAL SMALL AND LARGE MANUFACTURER’S PRODUCT CONVERSION COSTS *
Product
conversion costs
for typical small
manufacturer
(2014$ millions)
Trial standard level
TSL
TSL
TSL
TSL
TSL
1
2
3
4
5
...........................................................................................................................................................
...........................................................................................................................................................
...........................................................................................................................................................
...........................................................................................................................................................
...........................................................................................................................................................
Product
conversion costs
for typical large
manufacturer
(2014$ millions)
0.06
0.06
0.06
0.12
0.23
0.09
0.09
0.09
0.19
0.54
* Product conversion costs are the R&D and other product development investments made during the 3-year period between the publication of
the final rule and the compliance year of the final standard.
TABLE VI.3—COMPARISON OF CONVERSION COSTS FOR AN AVERAGE SMALL AND AN AVERAGE LARGE MANUFACTURER
AT TSL 3
Capital
conversion
cost
(2014$
millions)
Small Manufacturer ..................................
Large Manufacturer ..................................
0.03
0.06
Product
conversion
cost
(2014$
millions)
Conversion
costs/annual
revenue
(%)
0.06
0.09
Conversion
costs/annual
operating profit
(%)
1.5
0.3
26.4
5.8
Conversion
costs/conversion period
revenue *
(%)
0.5
0.1
Conversion
costs/conversion period operating profit *
(%)
8.8
1.9
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* The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years.
At the established standard level,
DOE estimates total conversion costs
associated with new and amended
energy conservation standards for an
average small manufacturer to be
$87,000, which is approximately 1.5
percent of annual revenue and 26.4
percent of annual operating profit. This
suggests that an average small
manufacturer would need to reinvest
roughly 8.8 percent of its operating
profit per year over the conversion
period to comply with standards. In
addition, DOE found that 17 of 19 Class
A models in the combined CCMS and
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ENERGY STAR databases will be
compliant with standards as amended
in this final rule, with no modification
required under appendix A. This
includes units from AMS, Wittern, and
Seaga (all small manufacturers), in
addition to Royal, Crane, and
SandenVendo (all large manufacturers).
The total conversion costs associated
with new and amended energy
conservation standards for an average
large manufacturer is $150,000, which is
approximately 0.3 percent of annual
revenue and 5.8 percent of annual
operating profit. This suggests that an
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average large manufacturer would need
to reinvest roughly 1.9 percent of its
operating profit per year over the 3-year
conversion period.
Product conversion costs, which
include one-time investments such as
equipment redesigns and industry
certification, are a key driver of
conversion investments to comply with
the established level of standards.
Product conversion costs tend to be
fixed and do not scale with sales
volume. For each equipment platform,
small businesses must make redesign
investments that are similar to their
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large competitors. However, because
small manufacturers’ costs are spread
over a lower volume of units, it takes
longer for small manufacturers to
recover their investments. Similarly,
capital conversion costs are spread
across a lower volume of shipments for
small business manufacturers. DOE
notes that all small manufacturers
manufacturer both conventional (i.e.,
Class A and Class B equipment) as well
as combination equipment; there are no
small manufacturers that manufacturer
only combination equipment. DOE’s
product research suggests the
combination and conventional
equipment from the same manufacturer
often share design elements, such as
cabinet and glass pack designs.
Manufacturers that produce both
combination and conventional
equipment using shared design
elements would experience conversion
costs lower than those estimated since
a single redesign effort could be
leveraged across models in multiple
equipment classes.
DOE notes that, in response to
stakeholder feedback relating to the
2015 BVM ECS NOPR, it has updated its
engineering analysis and standard
efficiency levels for this final rule,
resulting in less burdensome standard
levels for small manufacturers of
beverage vending machines relative to
the 2015 BVM ECS NOPR proposal. In
the 2015 BVM ECS NOPR, DOE
estimated that the average small
manufacturer would incur costs of
$217,000 as a result of proposed
standards. For this final rule, DOE
estimates that the average small
manufacturer will incur costs of $87,000
as a result of final standards.
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3. Duplication, Overlap, and Conflict
With Other Rules and Regulations
DOE is not aware of any rules or
regulations that duplicate, overlap, or
conflict with today’s final rule.
4. Significant Alternatives to the Rule
DOE received two comments
concerning alternative programs. SVA
expressed the belief that voluntary
programs such as ENERGY STAR are
more effective in driving the market
towards more efficient equipment than
mandatory energy conservation
standards. (SVA, Public Meeting
Transcript, No. 48 at p. 117) ASAP
commented that while ENERGY STAR
has been effective in moving the market
towards more efficient equipment,
DOE’s final standards can achieve far
greater savings. (ASAP, Public Meeting
Transcript, No. 48 at p. 118) Neither
comment provided any supporting data.
In addition, SBA Advocacy stated its
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belief that DOE did not adequately
analyze the impact of any alternatives
presented in the RIA on small
manufacturers and questioned DOE’s
analysis of lower TSLs as alternatives to
the proposed standard if EPCA restricts
DOE from selecting such less
burdensome standards. (SBA Advocacy,
No. 61 at p. 4).
DOE thanks SVA and ASAP for their
comments regarding the efficacy of
ENERGY STAR in driving the market
towards increased efficiency and agrees
with the ASAP assessment of ENERGY
STAR and DOE’s energy conservation
standards as being complementary and
more effective than voluntary standards
alone. In particular, in response to
SVA’s comment regarding the efficacy
of voluntary programs like ENEGY
STAR in achieving energy savings, DOE
considered such alternatives in the
Regulatory Impact Analysis. However,
DOE notes that it is difficult to
confidently estimate the future impacts
of voluntary or market-based programs
because DOE does not control the
stringency of any such programs
compared to the current equipment
efficiency distributions. Further, unlike
the energy conservation standards
adopted in this final rule, compliance
with such programs or incentives is
voluntary, and it is therefore difficult to
estimate savings since it is unclear if
and how many manufacturers or
customers will choose to participate. In
addition, as noted by ASAP, the benefits
of any such voluntary programs would
likely be significantly less than DOE’s
amended energy conservation
standards, since it is unlikely that there
would be significant percent market
penetration or commensurately morestringent energy efficiency targets for
beverage vending machines.
In response to SBA Advocacy’s
comment regarding DOE’s analysis of
the impacts of regulatory alternatives on
small businesses, the discussion in the
previous section analyzes impacts on
small businesses that would result from
DOE’s final rule, TSL 3. In reviewing
alternatives to the final rule, DOE
examined energy conservation
standards set at lower efficiency levels.
As a result of these updates, DOE found
that TSL 1 and TSL 2 would not reduce
the impacts on small business
manufacturers (relative to TSL 3) and
both would come at the expense of a
reduction in energy savings and a
reduction in consumer NPV. TSL 1
achieves 86 percent lower energy
savings compared to the energy savings
at TSL 3. TSL 2 achieves 48 percent
lower energy savings compared to the
energy savings at TSL 3. The estimated
conversion costs for small business
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1109
manufacturers are estimated to be the
same at TSL 1 and TSL 2 as at TSL 3
($87,000).
Additionally, DOE considered
standards at higher efficiency levels,
corresponding to TSL 4 and TSL 5. TSL
4 achieves approximately 94 percent
higher savings than TSL 3, and TSL 5
achieves approximately 191 percent
higher savings than TSL 3. However,
DOE rejected this TSL due to the
negative NPV results.
Furthermore, the estimated
conversion costs for small business
manufacturers are significantly higher at
TSL 4 and TSL 5 than at TSL 3. To
comply with TSL 4, the average small
manufacturer must make $228,000 in
conversion cost investments, which is
$141,000 more than at TSL 3. To
comply with TSL 5, the average small
manufacturer must make $542,000 in
conversion cost investments, which is
$455,000 more than at TSL 3.
DOE believes that establishing
standards at TSL 3 balances the benefits
of the energy savings at TSL 3 with the
potential burdens placed on beverage
vending machine manufacturers,
including small business manufacturers.
Accordingly, DOE is declining to adopt
one of the other TSLs considered in the
analysis, or the other policy alternatives
detailed as part of the regulatory
impacts analysis included in chapter 17
of the final rule TSD.
Regarding SBA Advocacy’s comment
questioning DOE’s analysis of lower
TSLs are reasonable regulatory
alternatives, DOE is following SBA
Advocacy’s public guidance to Federal
agencies for how to comply with the
Regulatory Flexibility Analysis Act,
wherein SBA Advocacy states that
agencies ‘‘should consider a variety of
mechanisms to reach the regulatory
objective without regard to whether that
mechanism is statutorily permitted.’’ 89
DOE also notes that additional
compliance flexibilities may be
available through other means. EPCA
provides that a manufacturer whose
annual gross revenue from all of its
operations does not exceed $8 million
may apply for an exemption from all or
part of an energy conservation standard
for a period not longer than 24 months
after the effective date of a final rule
establishing the standard. Additionally,
Section 504 of the Department of Energy
Organization Act, 42 U.S.C. 7194,
provides authority for the Secretary to
adjust a rule issued under EPCA in
order to prevent ‘‘special hardship,
89 U.S. Small Business Administration Office of
Advocacy. A Guide for Government Agencies, How
to Comply with the Regulatory Flexibility Act. May
2012. https://www.sba.gov/sites/default/files/
rfaguide_0512_0.pdf.
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requirements for application of a CX.
See 10 CFR part 1021, App. B, B5.1(b);
1021.410(b) and App. B, B(1)–(5). The
final rule fits within this category of
actions because it is a rulemaking that
establishes energy conservation
standards for consumer products or
industrial equipment, and for which
none of the exceptions identified in CX
B5.1(b) apply. Therefore, DOE has made
a CX determination for this rulemaking,
and DOE does not need to prepare an
Environmental Assessment or
Environmental Impact Statement for
this rule. DOE’s CX determination for
this rule is available at https://
energy.gov/nepa/categorical-exclusioncx-determinations-cx.
C. Review Under the Paperwork
Reduction Act
Manufacturers of beverage vending
machines must certify to DOE that their
equipment comply with any applicable
energy conservation standards. In
certifying compliance, manufacturers
must test their equipment according to
the DOE test procedures for beverage
vending machines, including any
amendments adopted for those test
procedures. DOE has established
regulations for the certification and
recordkeeping requirements for all
covered consumer products and
commercial equipment, including
beverage vending machines. 76 FR
12422 (March 7, 2011); 80 FR 5099 (Jan.
30, 2015). The collection-of-information
requirement for the certification and
recordkeeping is subject to review and
approval by OMB under the Paperwork
Reduction Act (PRA). This requirement
has been approved by OMB under OMB
control number 1910–1400. Public
reporting burden for the certification is
estimated to average 30 hours per
response, including the time for
reviewing instructions, searching
existing data sources, gathering and
maintaining the data needed, and
completing and reviewing the collection
of information.
Notwithstanding any other provision
of the law, no person is required to
respond to, nor shall any person be
subject to a penalty for failure to comply
with, a collection of information subject
to the requirements of the PRA, unless
that collection of information displays a
currently valid OMB Control Number.
asabaliauskas on DSK5VPTVN1PROD with RULES
inequity, or unfair distribution of
burdens’’ that may be imposed on that
manufacturer as a result of such rule.
Manufacturers should refer to 10 CFR
part 430, subpart E, and part 1003 for
additional details.
DOE believes that establishing
standards at TSL 3 balances the benefits
of the energy savings at TSL 3 with the
potential burdens placed on refrigerated
beverage vending machine
manufacturers, including small business
manufacturers. Accordingly, DOE is
declining to adopt one of the other TSLs
considered in the analysis, or the other
policy alternatives detailed as part of
the regulatory impacts analysis included
in Chapter 17 of this NOPR TSD.
E. Review Under Executive Order 13132
Executive Order 13132, ‘‘Federalism.’’
64 FR 43255 (Aug. 10, 1999) imposes
certain requirements on Federal
agencies formulating and implementing
policies or regulations that preempt
State law or that have Federalism
implications. The Executive Order
requires agencies to examine the
constitutional and statutory authority
supporting any action that would limit
the policymaking discretion of the
States and to carefully assess the
necessity for such actions. The
Executive Order also requires agencies
to have an accountable process to
ensure meaningful and timely input by
State and local officials in the
development of regulatory policies that
have Federalism implications. On
March 14, 2000, DOE published a
statement of policy describing the
intergovernmental consultation process
it will follow in the development of
such regulations. 65 FR 13735. DOE has
examined this final rule and has
determined that it would not have a
substantial direct effect on the States, on
the relationship between the national
government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. EPCA governs and
prescribes Federal preemption of State
regulations as to energy conservation for
the equipment that is the subject of this
final rule. States can petition DOE for
exemption from such preemption to the
extent, and based on criteria, set forth in
EPCA. (42 U.S.C. 6297) Therefore, no
further action is required by Executive
Order 13132.
D. Review Under the National
Environmental Policy Act of 1969
Pursuant to the National
Environmental Policy Act (NEPA) of
1969, DOE has determined that the final
rule fits within the category of actions
included in Categorical Exclusion (CX)
B5.1 and otherwise meets the
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F. Review Under Executive Order 12988
With respect to the review of existing
regulations and the promulgation of
new regulations, section 3(a) of
Executive Order 12988, ‘‘Civil Justice
Reform,’’ imposes on Federal agencies
the general duty to adhere to the
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following requirements: (1) Eliminate
drafting errors and ambiguity; (2) write
regulations to minimize litigation; (3)
provide a clear legal standard for
affected conduct rather than a general
standard; and (4) promote simplification
and burden reduction. 61 FR 4729 (Feb.
7, 1996). Regarding the review required
by section 3(a), section 3(b) of Executive
Order 12988 specifically requires that
Executive agencies make every
reasonable effort to ensure that the
regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly
specifies any effect on existing Federal
law or regulation; (3) provides a clear
legal standard for affected conduct
while promoting simplification and
burden reduction; (4) specifies the
retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses
other important issues affecting clarity
and general draftsmanship under any
guidelines issued by the Attorney
General. Section 3(c) of Executive Order
12988 requires Executive agencies to
review regulations in light of applicable
standards in section 3(a) and section
3(b) to determine whether they are met
or it is unreasonable to meet one or
more of them. DOE has completed the
required review and determined that, to
the extent permitted by law, this final
rule meets the relevant standards of
Executive Order 12988.
G. Review Under the Unfunded
Mandates Reform Act of 1995
Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
each Federal agency to assess the effects
of Federal regulatory actions on State,
local, and Tribal governments and the
private sector. Public Law 104–4, sec.
201 (codified at 2 U.S.C. 1531). For a
regulatory action likely to result in a
rule that may cause the expenditure by
State, local, and Tribal governments, in
the aggregate, or by the private sector of
$100 million or more in any one year
(adjusted annually for inflation), section
202 of UMRA requires a Federal agency
to publish a written statement that
estimates the resulting costs, benefits,
and other effects on the national
economy. (2 U.S.C. 1532(a), (b)) The
UMRA also requires a Federal agency to
develop an effective process to permit
timely input by elected officers of State,
local, and Tribal governments on a
‘‘significant intergovernmental
mandate,’’ and requires an agency plan
for giving notice and opportunity for
timely input to potentially affected
small governments before establishing
any requirements that might
significantly or uniquely affect them. On
March 18, 1997, DOE published a
statement of policy on its process for
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intergovernmental consultation under
UMRA. 62 FR 12820. DOE’s policy
statement is also available at https://
energy.gov/sites/prod/files/gcprod/
documents/umra_97.pdf.
Section 202 of UMRA authorizes a
Federal agency to respond to the content
requirements of UMRA in any other
statement or analysis that accompanies
the final rule. (2 U.S.C. 1532(c)). The
content requirements of section 202(b)
of UMRA relevant to a private sector
mandate substantially overlap the
economic analysis requirements that
apply under section 325(o) of EPCA and
Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of
this document and the ‘‘Regulatory
Impact Analysis’’ section of the TSD for
this final rule respond to those
requirements.
Under section 205 of UMRA, the
Department is obligated to identify and
consider a reasonable number of
regulatory alternatives before
promulgating a rule for which a written
statement under section 202 is required.
(2 U.S.C. 1535(a)) DOE is required to
select from those alternatives the most
cost-effective and least burdensome
alternative that achieves the objectives
of the rule unless DOE publishes an
explanation for doing otherwise, or the
selection of such an alternative is
inconsistent with law. As required by 42
U.S.C. 6295(d), (f), and (o), 6313(e), and
6316(a), this final rule would establish
new and amended energy conservation
standards for beverage vending
machines that are designed to achieve
the maximum improvement in energy
efficiency that DOE has determined to
be both technologically feasible and
economically justified. A full discussion
of the alternatives considered by DOE is
presented in the ‘‘Regulatory Impact
Analysis’’ section of the TSD for this
final rule.
H. Review Under the Treasury and
General Government Appropriations
Act, 1999
Section 654 of the Treasury and
General Government Appropriations
Act, 1999 (Pub. L. 105–277) requires
Federal agencies to issue a Family
Policymaking Assessment for any rule
that may affect family well-being. This
final rule would not have any impact on
the autonomy or integrity of the family
as an institution. Accordingly, DOE has
concluded that it is not necessary to
prepare a Family Policymaking
Assessment.
I. Review Under Executive Order 12630
Pursuant to Executive Order 12630,
‘‘Governmental Actions and Interference
with Constitutionally Protected Property
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Rights,’’ 53 FR 8859 (March 18, 1988),
DOE has determined that this final rule
would not result in any takings that
might require compensation under the
Fifth Amendment to the U.S.
Constitution.
J. Review Under the Treasury and
General Government Appropriations
Act, 2001
Section 515 of the Treasury and
General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note)
provides for Federal agencies to review
most disseminations of information to
the public under information quality
guidelines established by each agency
pursuant to general guidelines issued by
OMB. OMB’s guidelines were published
at 67 FR 8452 (Feb. 22, 2002), and
DOE’s guidelines were published at 67
FR 62446 (Oct. 7, 2002). DOE has
reviewed this final rule under the OMB
and DOE guidelines and has concluded
that it is consistent with applicable
policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ‘‘Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use,’’ 66 FR 28355 (May
22, 2001), requires Federal agencies to
prepare and submit to OIRA at OMB, a
Statement of Energy Effects for any
significant energy action. A ‘‘significant
energy action’’ is defined as any action
by an agency that promulgates or is
expected to lead to promulgation of a
final rule, and that: (1) Is a significant
regulatory action under Executive Order
12866, or any successor order; and (2)
is likely to have a significant adverse
effect on the supply, distribution, or use
of energy, or (3) is designated by the
Administrator of OIRA as a significant
energy action. For any significant energy
action, the agency must give a detailed
statement of any adverse effects on
energy supply, distribution, or use
should the proposal be implemented,
and of reasonable alternatives to the
action and their expected benefits on
energy supply, distribution, and use.
DOE has concluded that this
regulatory action, which sets forth new
and amended energy conservation
standards for beverage vending
machines, is not a significant energy
action because the standards are not
likely to have a significant adverse effect
on the supply, distribution, or use of
energy, nor has it been designated as
such by the Administrator at OIRA.
Accordingly, DOE has not prepared a
Statement of Energy Effects on this final
rule.
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1111
L. Review Under the Information
Quality Bulletin for Peer Review
On December 16, 2004, OMB, in
consultation with the Office of Science
and Technology Policy (OSTP), issued
its Final Information Quality Bulletin
for Peer Review (the Bulletin). 70 FR
2664 (Jan. 14, 2005). The Bulletin
establishes that certain scientific
information shall be peer reviewed by
qualified specialists before it is
disseminated by the Federal
Government, including influential
scientific information related to agency
regulatory actions. The purpose of the
bulletin is to enhance the quality and
credibility of the Government’s
scientific information. Under the
Bulletin, the energy conservation
standards rulemaking analyses are
‘‘influential scientific information,’’
which the Bulletin defines as ‘‘scientific
information the agency reasonably can
determine will have, or does have, a
clear and substantial impact on
important public policies or private
sector decisions.’’ Id at FR 2667.
In response to OMB’s Bulletin, DOE
conducted formal in-progress peer
reviews of the energy conservation
standards development process and
analyses and has prepared a Peer
Review Report pertaining to the energy
conservation standards rulemaking
analyses. Generation of this report
involved a rigorous, formal, and
documented evaluation using objective
criteria and qualified and independent
reviewers to make a judgment as to the
technical/scientific/business merit, the
actual or anticipated results, and the
productivity and management
effectiveness of programs and/or
projects. The ‘‘Energy Conservation
Standards Rulemaking Peer Review
Report’’ dated February 2007 has been
disseminated and is available at the
following Web site: https://energy.gov/
eere/buildings/downloads/energyconservation-standards-rulemakingpeer-review-report.
M. Review Under Section 32 of the
Federal Energy Administration Act of
1974
Under section 301 of the Department
of Energy Organization Act (Pub. L. 95–
91; 42 U.S.C. 7101), DOE must comply
with section 32 of the Federal Energy
Administration Act of 1974, as amended
by the Federal Energy Administration
Authorization Act of 1977. (15 U.S.C.
788; FEAA) Section 32 essentially
provides in relevant part that, where a
proposed rule authorizes or requires use
of commercial standards, the notice of
proposed rulemaking must inform the
public of the use and background of
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such standards. In addition, section
32(c) requires DOE to consult with the
Attorney General and the Chairman of
the Federal Trade Commission (FTC)
concerning the impact of the
commercial or industry standards on
competition.
This final rule incorporates testing
methods contained in the following
standard: ASTM Standard E 1084–86,
‘‘Standard Test Method for Solar
Transmittance (Terrestrial) of Sheet
Materials Using Sunlight.’’ DOE has
evaluated this standard and is unable to
conclude whether it fully complies with
the requirements of section 32(b) of the
Federal Energy Administration Act (i.e.,
whether they were developed in a
manner that fully provides for public
participation, comment, and review).
DOE has consulted with both the
Attorney General and the Chairwoman
of the FTC about the impact on
competition of using the methods
contained in this standard and has
received no comments objecting to its
use.
PART 429—CERTIFICATION,
COMPLIANCE, AND ENFORCEMENT
FOR CONSUMER PRODUCTS AND
COMMERCIAL AND INDUSTRIAL
EQUIPMENT
1. The authority citation for part 429
continues to read as follows:
■
Authority: 42 U.S.C. 6291–6317.
2. Section 429.52 is amended by
adding paragraph (a)(3) to read as
follows:
■
§ 429.52 Refrigerated bottled or canned
beverage vending machines.
(a) * * *
(3) The representative value of
refrigerated volume of a basic model
reported in accordance with paragraph
(b)(2) of this section shall be the mean
of the refrigerated volumes measured for
each tested unit of the basic model and
determined in accordance with the test
procedure in § 431.296.
*
*
*
*
*
■ 3. Section 429.134 is amended by
adding paragraph (g) to read as follows:
N. Congressional Notification
§ 429.134 Product-specific enforcement
provisions.
As required by 5 U.S.C. 801, DOE will
report to Congress on the promulgation
of this rule prior to its effective date.
The report will state that it has been
determined that the rule is a ‘‘major
rule’’ as defined by 5 U.S.C. 804(2).
*
VII. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of this final rule.
List of Subjects
10 CFR Part 429
Confidential business information,
Energy conservation, Household
appliances, Imports, Reporting and
recordkeeping requirements.
10 CFR Part 431
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Administrative practice and
procedure, Confidential business
information, Energy conservation,
Incorporation by reference, Reporting
and recordkeeping requirements.
Issued in Washington, DC, on December
23, 2015.
David J. Friedman,
Principal Deputy Assistant Secretary, Energy
Efficiency and Renewable Energy.
For the reasons set forth in the
preamble, DOE amends parts 429 and
431 of chapter II of title 10 of the Code
of Federal Regulations, as set forth
below:
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*
*
*
*
(g) Refrigerated bottled or canned
beverage vending machines—(1)
Verification of refrigerated volume. The
refrigerated volume (V) of each tested
unit of the basic model will be
measured pursuant to the test
requirements of 10 CFR 431.296. The
results of the measurement(s) will be
compared to the representative value of
refrigerated volume certified by the
manufacturer. The certified refrigerated
volume will be considered valid only if
the measurement(s) (either the
measured refrigerated volume for a
single unit sample or the average of the
measured refrigerated volumes for a
multiple unit sample) is within five
percent of the certified refrigerated
volume.
(i) If the representative value of
refrigerated volume is found to be valid,
the certified refrigerated volume will be
used as the basis for calculation of
maximum daily energy consumption for
the basic model.
(ii) If the representative value of
refrigerated volume is found to be
invalid, the average measured
refrigerated volume determined from
the tested unit(s) will serve as the basis
for calculation of maximum daily
energy consumption for the tested basic
model.
(2) Verification of surface area,
transparent, and non-transparent areas.
The percent transparent surface area on
the front side of the basic model will be
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measured pursuant to these
requirements for the purposes of
determining whether a given basic
model meets the definition of Class A or
Combination A, as presented at 10 CFR
431.292. The transparent and nontransparent surface areas shall be
determined on the front side of the
beverage vending machine at the
outermost surfaces of the beverage
vending machine cabinet, from edge to
edge, excluding any legs or other
protrusions that extend beyond the
dimensions of the primary cabinet.
Determine the transparent and nontransparent areas on each side of a
beverage vending machine as described
in paragraphs (g)(2)(i) and (ii) of this
section. For combination vending
machines, disregard the surface area
surrounding any refrigerated
compartments that are not designed to
be refrigerated (as demonstrated by the
presence of temperature controls),
whether or not it is transparent.
Determine the percent transparent
surface area on the front side of the
beverage vending machine as a ratio of
the measured transparent area on that
side divided by the sum of the measured
transparent and non-transparent areas,
multiplying the result by 100.
(i) Determination of transparent area.
Determine the total surface area that is
transparent as the sum of all surface
areas on the front side of a beverage
vending machine that meet the
definition of transparent at 10 CFR
431.292. When determining whether or
not a particular wall segment is
transparent, transparency should be
determined for the aggregate
performance of all the materials
between the refrigerated volume and the
ambient environment; the composite
performance of all those materials in a
particular wall segment must meet the
definition of transparent for that area be
treated as transparent.
(ii) Determination of non-transparent
area. Determine the total surface area
that is not transparent as the sum of all
surface areas on the front side of a
beverage vending machine that are not
considered part of the transparent area,
as determined in accordance with
paragraph (g)(2)(i) of this section.
PART 431—ENERGY EFFICIENCY
PROGRAM FOR CERTAIN
COMMERCIAL AND INDUSTRIAL
EQUIPMENT
4. The authority citation for part 431
continues to read as follows:
■
Authority: 42 U.S.C. 6291–6317.
5. Section 431.292 is amended by:
a. Revising the definitions for ‘‘Class
A’’ and ‘‘Class B’’;
■
■
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b. Adding in alphabetical order
definitions for ‘‘Combination A’’ and
‘‘Combination B’’;
■ c. Revising the definition of
‘‘Combination vending machine’’; and
■ d. Adding in alphabetical order a
definition for ‘‘Transparent’’.
The revisions and additions read as
follows:
■
§ 431.292 Definitions concerning
refrigerated bottled or canned beverage
vending machines.
*
*
*
*
*
Class A means a refrigerated bottled
or canned beverage vending machine
that is not a combination vending
machine and in which 25 percent or
more of the surface area on the front
side of the beverage vending machine is
transparent.
Class B means a refrigerated bottled or
canned beverage vending machine that
is not considered to be Class A and is
not a combination vending machine.
Combination A means a combination
vending machine where 25 percent or
more of the surface area on the front
side of the beverage vending machine is
transparent.
Combination B means a combination
vending machine that is not considered
to be Combination A.
Combination vending machine means
a bottled or canned beverage vending
machine containing two or more
compartments separated by a solid
partition, that may or may not share a
product delivery chute, in which at least
one compartment is designed to be
refrigerated, as demonstrated by the
presence of temperature controls, and at
least one compartment is not.
*
*
*
*
*
Transparent means greater than or
equal to 45 percent light transmittance,
as determined in accordance with
ASTM E 1084–86 (Reapproved 2009),
(incorporated by reference, see
§ 431.293) at normal incidence and in
the intended direction of viewing.
*
*
*
*
*
■ 6. Section 431.293 is amended by
adding paragraph (c) to read as follows:
§ 431.293 Materials incorporated by
reference.
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*
*
*
*
*
(c) ASTM. ASTM International, 100
Barr Harbor Drive, P.O. Box C700, West
Conshohocken, PA 19428–2959, (877)
909–2786, or go to www.astm.org.
(1) ASTM E 1084–86 (Reapproved
2009), ‘‘Standard Test Method for Solar
Transmittance (Terrestrial) of Sheet
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Materials Using Sunlight,’’ approved
April 1, 2009, IBR approved for
§ 431.292.
(2) [Reserved]
■ 7. Section 431.296 is revised to read
as follows:
§ 431.296 Energy conservation standards
and their effective dates.
(a) Each refrigerated bottled or canned
beverage vending machine
manufactured on or after August 31,
2012 and before January 8, 2019, shall
have a daily energy consumption (in
kilowatt hours per day), when measured
in accordance with the DOE test
procedure at § 431.294, that does not
exceed the following:
Maximum daily energy
consumption
(kilowatt hours per day)
Equipment class
Class A ...............
Class B ...............
Combination
Vending Machines.
0.055 × V † + 2.56.
0.073 × V † + 3.16.
[RESERVED].
† ‘‘V’’ is the representative value of refrigerated volume (ft3) of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).
(b) Each refrigerated bottled or canned
beverage vending machine
manufactured on or after January 8,
2019, shall have a daily energy
consumption (in kilowatt hours per
day), when measured in accordance
with the DOE test procedure at
§ 431.294, that does not exceed the
following:
Maximum daily energy
consumption
(kilowatt hours per day)
Equipment class
Class A ...............
Class B ...............
Combination A ...
Combination B ...
0.052
0.052
0.086
0.111
×
×
×
×
V†
V†
V†
V†
+
+
+
+
2.43.
2.20.
2.66.
2.04.
† ‘‘V’’ is the representative value of refrigerated volume (ft3) of the BVM model, as calculated pursuant to 10 CFR 429.52(a)(3).
*
*
*
*
*
Note: The following letter will not appear
in the Code of Federal Regulations.
U.S. DEPARTMENT OF JUSTICE
Antitrust Division
William J. Baer
Assistant Attorney General
Main Justice Building
950 Pennsylvania Avenue NW.,
Washington, DC 20530–0001
(202) 514–2401 I (202) 616–2645 (Fax)
October 19, 2015
Anne Harkavy
PO 00000
Frm 00087
Fmt 4701
Sfmt 9990
1113
Deputy General Counsel for Litigation,
Regulation and Enforcement
1000 Independence Ave. SW.,
U.S. Department of Energy
Washington, DC 20585
Re: Energy Conservation Standards for
Refrigerated Beverage Vending
Machines; Doc. No. EERE–2013–
BT–STD–0022
Dear Deputy General Counsel Harkavy:
I am responding to your August 20,
2015, letter seeking the views of the
Attorney General about the potential
impact on competition of proposed
energy conservation standards for
refrigerated beverage vending machines.
Your request was submitted under
Section 325(o)(2)(B)(i)(V) of the Energy
Policy and Conservation Act, as
amended (ECPA), 42 U.S.C.
6295(o)(2)(B)(i)(V), which requires the
Attorney General to make a
determination of the impact of any
lessening of competition that is likely to
result from the imposition of proposed
energy conservation standards. The
Attorney General’s responsibility for
responding to requests from other
departments about the effect of a
program on competition has been
delegated to the Assistant Attorney
General for the Antitrust Division in 28
CFR § 0.40(g).
In conducting its analysis, the
Antitrust Division examines whether a
proposed standard may lessen
competition, for example, by
substantially limiting consumer choice
or increasing industry concentration. A
lessening of competition could result in
higher prices to manufacturers and
consumers.
We have reviewed the proposed
standards contained in the Notice of
Proposed Rulemaking (80 Fed. Reg.
50462, Aug. 19, 2015) (NOPR) and the
related Technical Support Documents.
We have also reviewed supplementary
information submitted to the Attorney
General by the Department of Energy, as
well as materials presented at the public
meeting held on the proposed standards
on September 29, 2015. Based on this
review, our conclusion is that the
proposed energy conservation standards
for refrigerated beverage vending
machines are unlikely to have a
significant adverse impact on
competition.
Sincerely,
William J. Baer
[FR Doc. 2015–33074 Filed 1–7–16; 8:45 am]
BILLING CODE 6450–01–P
E:\FR\FM\08JAR2.SGM
08JAR2
Agencies
[Federal Register Volume 81, Number 5 (Friday, January 8, 2016)]
[Rules and Regulations]
[Pages 1027-1113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33074]
[[Page 1027]]
Vol. 81
Friday,
No. 5
January 8, 2016
Part III
Department of Energy
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10 CFR Parts 429 and 431
Energy Conservation Program: Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines; Final Rule
Federal Register / Vol. 81 , No. 5 / Friday, January 8, 2016 / Rules
and Regulations
[[Page 1028]]
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DEPARTMENT OF ENERGY
10 CFR Parts 429 and 431
[Docket Number EERE-2013-BT-STD-0022]
RIN 1904-AD00
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: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as
amended, prescribes energy conservation standards for various consumer
products and certain commercial and industrial equipment, including
refrigerated bottled or canned beverage vending machines (beverage
vending machines or BVM). EPCA also requires the U.S. Department of
Energy (DOE) to periodically determine whether more-stringent standards
would be technologically feasible and economically justified, and would
save a significant amount of energy. In this final rule, DOE is
amending the energy conservation standards for Class A and Class B
beverage vending machines. DOE is also amending the definition for
Class A equipment to more unambiguously differentiate Class A and Class
B beverage vending machines. In addition, DOE is amending the
definition of combination vending machine, is defining two new classes
of combination vending machines, Combination A and Combination B, and
is promulgating standards for those new classes. Finally, DOE is
adopting new provisions that DOE will use to verify the appropriate
equipment class and refrigerated volume during enforcement testing.
DATES: The effective date of this rule is March 8, 2016. Compliance
with the new and amended standards established for beverage vending
machines in this final rule is required on and after January 8, 2019.
The incorporation by reference of certain material listed in this rule
is approved by the Director of the Federal Register as of March 8,
2016.
ADDRESSES: The docket, which includes Federal Register notices, public
meeting attendee lists and transcripts, comments, and other supporting
documents/materials, is available for review at www.regulations.gov.
All documents in the docket are listed in the www.regulations.gov
index. However, some documents listed in the index, such as those
containing information that is exempt from public disclosure, may not
be publicly available.
A link to the docket Web page can be found at: www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0022. The www.regulations.gov Web
page will contain instructions on how to access all documents,
including public comments, in the docket.
For further information on how to review the docket, contact Ms.
Brenda Edwards at (202) 586-2945 or by email:
Brenda.Edwards@ee.doe.gov.
FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Office, EE-2J, 1000 Independence Avenue SW., Washington,
DC 20585-0121. Telephone: (202) 287-1692. Email:
refrigerated_beverage_vending_machines@ee.doe.gov.
Ms. Sarah Butler, U.S. Department of Energy, Office of the General
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC, 20585-
0121. Telephone: (202) 586-1777. Email: Sarah.Butler@hq.doe.gov.
SUPPLEMENTARY INFORMATION: This final rule incorporates by reference
into part 431 the following industry standard:
ASTM E 1084-86 (Reapproved 2009), ``Standard Test Method
for Solar Transmittance (Terrestrial) of Sheet Materials Using
Sunlight,'' approved April 1, 2009.
Copies of ASTM standards may be obtained from ASTM International,
100 Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959,
(877) 909-2786, or go to www.astm.org/.
See section IV.O for a further discussion of this standard.
Table of Contents
I. Synopsis of the Final Rule
A. Benefits and Costs to Customers
B. Impact on Manufacturers
C. National Benefits and Costs
D. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Beverage Vending Machines
III. General Discussion
A. Equipment Classes and Scope of Coverage
B. Test Procedure
C. Compliance Dates
D. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
E. Energy Savings
1. Determination of Savings
2. Significance of Savings
F. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Customers
b. Savings in Operating Costs Compared To Increase in Price (LCC
and PBP)
c. Energy Savings
d. Lessening of Utility or Performance of Equipment
e. Impact of Any Lessening of Competition
f. Need for National Energy Conservation
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
A. Market and Technology Assessment
1. Equipment Classes
a. Class A and Class B Beverage Vending Machines
b. Combination Vending Machines
c. Definition of Transparent and Optional Test Method for
Determining Equipment Classification
2. Machines Vending Perishable Goods
3. Market Characterization
4. Technology Options
B. Screening Analysis
1. Screened-Out Technologies
2. Remaining Technologies
C. Engineering Analysis
1. Baseline Equipment and Representative Sizes
2. Refrigerants
a. Refrigerants Used in the Analysis
b. DOE Approach
c. Relative Energy Efficiency of Refrigerants
3. Screened-In Technologies Not Implemented as Design Options
4. Design Options Analyzed and Maximum Technologically Feasible
Efficiency Level
a. Glass Packs
b. Evaporator Fan Motor Controls
c. Coils
d. Compressors
e. Insulation and Vacuum Insulated Panels
f. Lighting and Lighting Low Power Modes
g. Fan Motors
h. Performance of Design Option Packages
5. Manufacturer Production Costs
D. Markups Analysis
E. Energy Use Analysis
F. Life-Cycle Cost and Payback Period Analysis
1. Customer Purchase Prices
2. Energy Prices
3. Maintenance, Repair, and Installation Costs
4. Equipment Lifetime
5. Discount Rates
6. Equipment Efficiency in the No-New-Standards Case
7. Split Incentives
G. Shipments Analysis
1. Market Share by Equipment Class
2. Market Share by Refrigerant
3. High and Low Shipments Assumptions
H. National Impact Analysis
1. Equipment Efficiency Trends
2. National Energy Savings
a. Full-Fuel-Cycle Analysis
3. Net Present Value Analysis
I. Customer Subgroup Analysis
J. Manufacturer Impact Analysis
1. Overview
2. Government Regulatory Impact Model
[[Page 1029]]
a. Government Regulatory Impact Model Key Inputs
b. Government Regulatory Impact Model Scenarios
3. Discussion of Comments
K. Emissions Analysis
L. Monetizing Carbon Dioxide and Other Emissions Impacts
1. Social Cost of Carbon
a. Monetizing Carbon Dioxide Emissions
b. Development of Social Cost of Carbon Values
c. Current Approach and Key Assumptions
2. Social Cost of Other Air Pollutants
M. Utility Impact Analysis
N. Employment Impact Analysis
O. Description of Materials Incorporated by Reference
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Customers
a. Life-Cycle Cost and Payback Period
b. Customer Subgroup Analysis
c. Rebuttable Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash Flow Analysis Results
b. Impacts on Direct Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
e. Cumulative Regulatory Burden
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value of Customer Costs and Benefits
c. Indirect Impacts on Employment
4. Impact on Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
8. Summary of National Economic Impacts
C. Conclusion
1. Benefits and Burdens of TSLs Considered for BVM Standards
2. Summary of Annualized Benefits and Costs of the Adopted
Standards
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Description of Estimated Number of Small Entities Regulated
2. Description and Estimate of Compliance Requirements
3. Duplication, Overlap, and Conflict With Other Rules and
Regulations
4. Significant Alternatives to the Rule
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Review Under Section 32 of the Federal Energy Administration
Act of 1974
N. Congressional Notification
VII. Approval of the Office of the Secretary
I. Synopsis of the Final Rule
Title III, Part A \1\ of the Energy Policy and Conservation Act of
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as
codified), established the Energy Conservation Program for Consumer
Products Other Than Automobiles.\2\ These products include refrigerated
bottled or canned beverage vending machines (beverage vending machines
or BVM), the subject of this document. (42 U.S.C. 6295(v)) \3\
---------------------------------------------------------------------------
\1\ For editorial reasons, upon codification in the U.S. Code,
Part B was redesignated Part A.
\2\ All references to EPCA in this document refer to the statute
as amended through the Energy Efficiency Improvement Act of 2015,
Public Law 114-11 (Apr. 30, 2015).
\3\ Because Congress included beverage vending machines in Part
A of Title III of EPCA, the consumer product provisions of Part A
(not the industrial equipment provisions of Part A-1) apply to
beverage vending machines. DOE placed the regulatory requirements
specific to beverage vending machines in Title 10 of the Code of
Federal Regulations (CFR), part 431, ``Energy Efficiency Program for
Certain Commercial and Industrial Equipment'' as a matter of
administrative convenience based on their type and will refer to
beverage vending machines as ``equipment'' throughout this document
because of their placement in 10 CFR part 431. Despite the placement
of beverage vending machines in 10 CFR part 431, the relevant
provisions of Title A of EPCA and 10 CFR part 430, which are
applicable to all product types specified in Title A of EPCA, are
applicable to beverage vending machines. See 74 FR 44914, 44917
(Aug. 31, 2009).
---------------------------------------------------------------------------
Pursuant to EPCA, any new or amended energy conservation standard
must be designed to achieve the maximum improvement in energy
efficiency that DOE determines is technologically feasible and
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new
or amended standard must result in significant conservation of energy.
(42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6
years after issuance of any final rule establishing or amending a
standard, DOE must publish either a notice of determination that
standards for the equipment do not need to be amended, or a notice of
proposed rulemaking including new proposed energy conservation
standards. (42 U.S.C. 6295(m)(1))
In accordance with these and other statutory provisions discussed
in this document, DOE is adopting new and amended energy conservation
standards for beverage vending machines. The new and amended standards,
which are described in terms of the maximum daily energy consumption
(MDEC) as a function of refrigerated volume, are shown in Table I.1.
Specifically, DOE is amending the energy conservation standards
established by the 2009 BVM final rule for Class A and Class B beverage
vending machines. In addition, DOE is establishing two new equipment
classes at 10 CFR 431.292, Combination A and Combination B, as well as
new energy conservation standards for those equipment classes. The new
and amended standards adopted in this final rule will apply to all
equipment listed in Table I.1 and manufactured in, or imported into,
the United States starting on January 8, 2019.
Table I.1--Energy Conservation Standards for Beverage Vending Machines
[Compliance Starting January 8, 2019]
------------------------------------------------------------------------
New and amended energy
conservation standards **
Equipment class * Maximum Daily Energy Consumption
(MDEC) (kWh/day [dagger])
------------------------------------------------------------------------
Class A.............................. 0.052 x V + 2.43 [Dagger]
Class B.............................. 0.052 x V + 2.20 [Dagger]
Combination A........................ 0.086 x V + 2.66 [Dagger]
Combination B........................ 0.111 x V + 2.04 [Dagger]
------------------------------------------------------------------------
* See section IV.A.1 of this final rule for a discussion of equipment
classes.
** ``V'' is the representative value of refrigerated volume (ft\3\) of
the BVM model, as measured in accordance with the method for
determining refrigerated volume adopted in the recently amended DOE
BVM test procedure and appropriate sampling plan requirements at 10
CFR 429.52(a)(3). 80 FR 45758 (July 31, 2015). See section III.B and
V.A of this final rule for more details.
[dagger] Kilowatt hours per day.
[Dagger] Trial Standard Level (TSL) 3.
A. Benefits and Costs to Customers
Table I.2 and Table I.3 present DOE's evaluation of the economic
impacts of the new and amended energy conservation standards on
customers, or purchasers, of beverage vending machines, as measured by
the average life-cycle cost (LCC) savings and the simple payback period
(PBP).\4\ This
[[Page 1030]]
analysis is based upon beverage vending machines that use either
CO2 (R-744) or propane (R-290). These refrigerants were
selected for analysis based on the recent actions of the U.S.
Environmental Protection Agency's (EPA) Significant New Alternatives
Policy (SNAP) program,\5\ including the listing of propane as
acceptable in BVM applications under Rule 19 (80 FR 19454, 19491 (April
10, 2015)) and the change of status of R-134a to unacceptable in BVM
applications beginning January 1, 2019 under Rule 20 (80 FR 42870,
42917-42920 (July 20, 2015)). The selection of these refrigerants was
also guided by visible trends within the BVM marketplace and feedback
from interested parties during public meetings, in written comments,
and during manufacturer interviews.
---------------------------------------------------------------------------
\4\ The average LCC savings are measured relative to the
efficiency distribution in the no-new-standards case, which depicts
the market in the compliance year (see section IV.F.6 of this final
rule). The simple PBP, which is designed to compare specific
efficiency levels, is measured relative to the baseline model (see
section IV.C.1 of this final rule). DOE acknowledges that not all
BVM customers are also the entity that is responsible for the energy
costs of operating the beverage vending machine in the field.
However, there are many different contracting mechanisms for leasing
and operating beverage vending machines, which are influenced by
many factors, including the capital cost of the machine and the
annual operating costs. As such, DOE believes that a simple
``customer'' LCC-model accurately demonstrates the cost-
effectiveness of the potential energy efficiency improvements
resulting from any new or amended standards, regardless of by whom
the costs and benefits are borne.
\5\ The EPA's SNAP program, which is the U.S. government
regulatory program responsible for maintaining the list of
alternatives to ozone-depleting substances allowed for use within
specific applications in the United States, has taken two rulemaking
actions that concern refrigerants for the U.S. refrigerated vending
machine market. See section IV.C.2 of this final rule for more
details.
---------------------------------------------------------------------------
Where applicable, the average LCC savings are positive for all
equipment classes and refrigerants, and the PBP is less than the
average lifetime of the equipment, which is estimated to be 13.5 years.
Table I.2--Impacts of New and Amended Energy Conservation Standards on
Customers of Beverage Vending Machines--CO2 Refrigerant
------------------------------------------------------------------------
Life-cycle
Equipment class cost savings Payback period
(2014$) (years)
------------------------------------------------------------------------
Class A................................. 65 2.0
Class B................................. 42 1.1
Combination A........................... 990 0.8
Combination B........................... 597 0.5
------------------------------------------------------------------------
Table I.3--Impacts of New and Amended Energy Conservation Standards on
Customers of Beverage Vending Machines--Propane Refrigerant
------------------------------------------------------------------------
Life-cycle
Equipment class cost savings Payback
(2014$) period (years)
------------------------------------------------------------------------
Class A................................. * 0 1.1
Class B................................. 361 0.5
Combination A........................... 772 0.7
Combination B........................... 610 0.3
------------------------------------------------------------------------
* In this case, $0 savings is a result of all customers in the no-new-
standards efficiency distribution already achieving the efficiency
standard.
DOE's analysis of the impacts of the new and amended standards on
customers is described in section V of this document.
B. Impact on Manufacturers
The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the
analysis period (2015 to 2048). Using a real discount rate of 8.5
percent, DOE estimates that the (INPV) for manufacturers of beverage
vending machines in the case without amended standards is $94.8 million
in 2014$. Under the adopted standards, DOE expects that manufacturers
may lose up to 0.8 percent of this INPV, which is approximately $0.7
million.\6\ Additionally, based on DOE's interviews with the
manufacturers of beverage vending machines, DOE does not expect
significant impacts on manufacturing capacity or loss of employment for
the industry as a whole to result from the standards for beverage
vending machines.
---------------------------------------------------------------------------
\6\ All monetary values in section I.B of this final rule are
expressed in 2014 dollars; discounted values are discounted to 2014
unless explicitly stated otherwise.
---------------------------------------------------------------------------
DOE's analysis of the impacts of the adopted standards on
manufacturers is described in section IV.J of this document.
C. National Benefits and Costs \7\
---------------------------------------------------------------------------
\7\ All monetary values in this section are expressed in 2014
dollars and, where appropriate, are discounted to 2015 unless
explicitly stated otherwise. Energy savings in this section refer to
the full-fuel-cycle (FFC) savings (see section IV.H for discussion).
---------------------------------------------------------------------------
DOE's analyses indicate that the adopted energy conservation
standards for beverage vending machines would save a significant amount
of energy. Relative to the case without amended standards, the lifetime
energy savings for Class A, Class B, Combination A, and Combination B
beverage vending machines purchased in the 30-year period that begins
in the anticipated year of compliance with the new and amended
standards (2019-2048) amount to 0.122 quadrillion Btu (quads).\8\ This
represents a savings of 16 percent relative to the energy use of this
equipment in the case without amended standards (referred to as the
``no-new-standards case'').\9\
---------------------------------------------------------------------------
\8\ A quad is equal to 10\15\ British thermal units (Btu). The
quantity refers to FFC energy savings. FFC energy savings includes
the energy consumed in extracting, processing, and transporting
primary fuels (i.e., coal, natural gas, petroleum fuels), and, thus,
presents a more complete picture of the impacts of energy efficiency
standards. For more information on the FFC metric, see section
IV.H.1.
\9\ The no-new-standards case represents a mix of efficiencies
above the minimum efficiency level (EL 0). Please see section IV.F.6
for a more detail description of associated assumptions.
---------------------------------------------------------------------------
The cumulative net present value (NPV) of total customer costs and
savings of the standards for beverage vending machines range from $0.21
billion (at a 7-percent discount rate) to $0.51 billion (at a 3-percent
discount rate).\10\ This NPV expresses the estimated total value of
future operating-cost savings minus the estimated increased equipment
costs for
[[Page 1031]]
beverage vending machines purchased in 2019-2048.
---------------------------------------------------------------------------
\10\ These discount rates are used in accordance with the Office
of Management and Budget (OMB) guidance to Federal agencies on the
development of regulatory analysis (OMB Circular A-4, September 17,
2003), and section E, ``Identifying and Measuring Benefits and
Costs,'' therein. Further details are provided in section IV.H of
this final rule.
---------------------------------------------------------------------------
In addition, the standards for beverage vending machines are
projected to yield significant environmental benefits. DOE estimates
that the standards would result in cumulative greenhouse gas emission
reductions (over the same period as for energy savings) of 7 million
metric tons (Mt) \11\ of carbon dioxide (CO2), 4 thousand
tons of sulfur dioxide (SO2), 13 thousand tons of nitrogen
oxides (NOX), 32 thousand tons of methane (CH4),
0.09 thousand tons of nitrous oxide (N2O), and 0.02 tons of
mercury (Hg).\12\ The cumulative reduction in CO2 emissions
through 2030 amounts to 1.16 Mt, which is equivalent to the emissions
resulting from the annual electricity use of more than 160,000 homes.
---------------------------------------------------------------------------
\11\ A metric ton is equivalent to 1.1 short tons. Results for
NOX and Hg are presented in short tons.
\12\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy
Outlook 2015 (AEO2015) Reference case, which generally represents
current legislation and environmental regulations for which
implementing regulations were available as of October 31, 2014.
---------------------------------------------------------------------------
The value of the CO2 reductions is calculated using a
range of values per metric ton of CO2 (otherwise known as
the Social Cost of Carbon, or SCC) developed by a Federal interagency
process.\13\ The derivation of the SCC values is discussed in section
IV.L of this final rule. Using discount rates appropriate for each set
of SCC values, DOE estimates that the net present monetary value of the
CO2 emissions reduction (not including CO2
equivalent emissions of other gases with global warming potential) is
between $49 million and $701 million, with a value of $230 million
using the central SCC case represented by $40.0 per metric ton in 2015.
DOE also estimates that the net present monetary value of the
NOX emissions reduction to be $16 million at a 7-percent
discount rate, and $42.0 million at a 3-percent discount rate.\14\
---------------------------------------------------------------------------
\13\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866. Interagency
Working Group on Social Cost of Carbon, United States Government.
May 2013; revised November 2013. Available at www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
\14\ DOE estimated the monetized value of NOX
emissions reductions using benefit per ton estimates from the
Regulatory Impact Analysis for the Proposed Carbon Pollution
Guidelines for Existing Power Plants and Emission Standards for
Modified and Reconstructed Power Plants, published in June 2014 by
EPA's Office of Air Quality Planning and Standards. (Available at
https://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 for further
discussion. For the monetized NOX benefits associated
with PM2.5 in DOE's primary estimate, the benefit-per-ton
values are based on an estimate of premature mortality derived from
the ACS study (Krewski et al. Extended Follow-Up and Spatial
Analysis of the American Cancer Society Study Linking Particulate
Air Pollution and Mortality. 2009), which is the lower of the two
EPA central tendencies. DOE is using the lower value as its primary
estimate to be conservative when making the policy decision
concerning whether a particular standard level is economically
justified. DOE also estimated monetized NOX benefits used
EPA's higher benefit-per-ton estimates, and the overall benefits are
over two times larger (see Table V.41). See chapter 14 of the TSD
for further description of EPA's low and high values and the study
mentioned above. DOE is currently investigating valuation of avoided
Hg and SO2 emissions.
---------------------------------------------------------------------------
Table I.4 summarizes the national economic benefits and costs
expected to result from the adopted standards for beverage vending
machines.
Table I.4--Summary of National Economic Benefits and Costs of New and
Amended Energy Conservation Standards for Beverage Vending Machines*
------------------------------------------------------------------------
Present value
Category (million Discount rate
2014$) (%)
------------------------------------------------------------------------
Benefits
------------------------------------------------------------------------
Customer Operating Cost Savings........ 225 7
542 3
CO2 Reduction Monetized Value ($12.2/ 49 5
metric ton case) **...................
CO2 Reduction Monetized Value ($40.0/ 230 3
metric ton case) **...................
CO2 Reduction Monetized Value ($62.3/ 366 2.5
metric ton case) **...................
CO2 Reduction Monetized Value ($117/ 701 3
metric ton case) **...................
NOX Reduction Monetized Value [dagger]. 16 7
42 3
Total Benefits [Dagger]................ 471 7
814 3
------------------------------------------------------------------------
Costs
------------------------------------------------------------------------
Customer Incremental Installed Costs... 18 7
34 3
------------------------------------------------------------------------
Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX[dagger] Reduction 453 7
Monetized Value [Dagger]..............
780 3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with beverage
vending machines shipped in 2019-2048. These results include benefits
to customers that accrue after the last year of analyzed shipments
(2048) from the equipment purchased during the 30-year analysis
period. The costs account for the incremental variable and fixed costs
incurred by manufacturers due to the standard, some of which may be
incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
2014$, in 2015 under several scenarios of the updated SCC values. The
first three cases use the averages of SCC distributions calculated
using 5-percent, 3-percent, and 2.5-percent discount rates,
respectively. The fourth case represents the 95th percentile of the
SCC distribution calculated using a 3-percent discount rate. The SCC
time series used by DOE incorporates an escalation factor. The value
for NOX is the average of high and low values found in the literature.
[dagger] The $/ton values for NOX are described in section IV.L.
[Dagger] Total benefits for both the 3-percent and 7-percent cases are
derived using the series corresponding to average SCC with a 3-percent
discount rate ($40.0/metric ton case).
[[Page 1032]]
The benefits and costs of the adopted standards for beverage
vending machines sold in 2019-2048 can also be expressed in terms of
annualized values. The monetary values for the total annualized net
benefits are the sum of (1) the national economic value of the benefits
in reduced operating costs, minus (2) the increases in equipment
purchase prices and installation costs, plus (3) the value of the
benefits of CO2 and NOX emission reductions, all
annualized.\15\
---------------------------------------------------------------------------
\15\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2015, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2015. The calculation uses discount rates of 3 and 7
percent for all costs and benefits except for the value of
CO2 reductions, for which DOE used case-specific discount
rates, as shown in Table I.4. Using the present value, DOE then
calculated the fixed annual payment over a 30-year period, starting
in the compliance year that yields the same present value.
---------------------------------------------------------------------------
Although the value of operating cost savings and CO2
emission reductions are both important, two issues are relevant. First,
the national operating cost savings are domestic U.S. customer monetary
savings that occur as a result of market transactions, whereas the
value of CO2 reductions is based on a global value. Second,
the assessments of operating cost savings and CO2 savings
are performed with different methods that use different time frames for
analysis. The national operating cost savings is measured for the
lifetime of beverage vending machines shipped in 2019-2048. Because
CO2 emissions have a very long residence time in the
atmosphere,\16\ the SCC values in future years reflect future
CO2-emissions impacts that continue beyond 2100.
---------------------------------------------------------------------------
\16\ The atmospheric lifetime of CO2 is estimated of
the order of 30-95 years. Jacobson, MZ. Correction to `Control of
fossil-fuel particulate black carbon and organic matter, possibly
the most effective method of slowing global warming,' J. Geophys.
Res. 2005. 110. pp. D14105.
---------------------------------------------------------------------------
Estimates of annualized benefits and costs of the adopted standards
are shown in Table I.5. The results under the primary estimate are as
follows. Using a 7-percent discount rate for benefits and costs other
than CO2 reduction (for which DOE used a 3-percent discount
rate along with the SCC series that has a value of $40.0 per metric ton
in 2015),\17\ the estimated cost of the standards in this rule is $1.8
million per year in increased equipment costs, while the estimated
annual benefits are $22.2 million in reduced equipment operating costs,
$12.8 million in CO2 reductions, and $1.6 million in reduced
NOX emissions. In this case, the net benefit amounts to $35
million per year. Using a 3-percent discount rate for all benefits and
costs and the SCC series that has a value of $40.0 per metric ton in
2015, the estimated cost of the standards is $1.9 million per year in
increased equipment costs, while the estimated annual benefits are
$30.2 million per year in reduced operating costs, $12.8 million in
CO2 reductions, and $2.3 million in reduced NOX
emissions. In this case, the net benefit amounts to $43 million per
year.
---------------------------------------------------------------------------
\17\ DOE used a 3-percent discount rate because the SCC values
for the series used in the calculation were derived using a 3-
percent discount rate (see section 0).
---------------------------------------------------------------------------
DOE also calculated the low net benefits and high net benefits
estimates by calculating the operating cost savings and shipments at
the AEO2015 Low Economic Growth case and High Economic Growth case
scenarios, respectively. The low and high benefits for incremental
installed costs were derived using the low and high price learning
scenarios. In addition, the low and high benefits estimates reflect low
and high shipments scenarios (see section IV.G.3 of this final rule).
The net benefits and costs for low and high net benefits estimates were
calculated in the same manner as the primary estimate by using the
corresponding values of operating cost savings and incremental
installed costs.
Table I.5--Annualized Benefits and Costs of New and Amended Standards for Beverage Vending Machines*
----------------------------------------------------------------------------------------------------------------
million 2014$/year
------------------------------------------------------------
Discount rate Low net benefits High net benefits
Primary estimate * estimate * estimate *
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Customer Operating Cost Savings 7%................ 22................ 16................ 27
3%................ 30................ 21................ 36
CO2 Reduction Monetized Value 5%................ 4................. 3................. 4
($12.2/metric ton case) **.
CO2 Reduction Monetized Value 3%................ 13................ 9................. 14
($40.0/metric ton case) **.
CO2 Reduction Monetized Value 2.5%.............. 19................ 14................ 21
($62.3/metric ton case) **.
CO2 Reduction Monetized Value 3%................ 39................ 29................ 44
($117/metric ton case) **.
NOX Reduction Monetized Value 7%................ 2................. 1 to 3............ 4
[dagger].
3%................ 2................. 2 to 4............ 6
Total Benefits [Dagger]........ 7% range.......... 28 to 63.......... 20 to 46.......... 36 to 75
7%................ 37................ 26................ 46
3% range.......... 36 to 69.......... 25 to 51.......... 46 to 86
3%................ 45................ 32................ 56
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Incremental Equipment Costs.... 7%................ 1.79.............. 1.38.............. 2.10
3%................ 1.89.............. 1.42.............. 2.13
----------------------------------------------------------------------------------------------------------------
Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [Dagger]................. 7% range.......... 26 to 61.......... 18 to 44.......... 34 to 73
7%................ 35................ 25................ 44
[[Page 1033]]
3% range.......... 34 to 70.......... 24 to 50.......... 44 to 84
3%................ 43................ 31................ 54
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with beverage vending machines shipped in
2019-2048. These results include benefits to customers that accrue after the last year of analyzed shipments
(2048) from the equipment purchased in during the 30-year analysis period. The results account for the
incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be
incurred in preparation for the rule. The primary, low benefits, and high benefits estimates utilize
projections of energy prices from the AEO2015 Reference case, Low Economic Growth case, and High Economic
Growth case, respectively as well as the default shipments scenario along with the low and high shipments
scenarios. In addition, incremental equipment costs reflect a medium decline rate for projected equipment
price trends in the primary estimate, a low decline rate for projected equipment price trends in the low
benefits estimate, and a high decline rate for projected equipment price trends in the high benefits estimate.
The methods used to derive projected price trends are explained in appendix 8C of the technical support
document (TSD).
** The CO2 values represent global monetized SCC values, in 2014$, in 2015 under several scenarios. The first
three cases use the averages of SCC distributions calculated using 5-percent, 3-percent, and 2.5-percent
discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution
calculated using a 3-percent discount rate. The SCC time series incorporates an escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L.2. The Primary and Low Benefits Estimates
used the values at the low end of the ranges estimated by EPA, while the High Benefits Estimate uses the
values at the high end of the ranges.
[Dagger] Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
the average SCC with a 3-percent discount rate ($40.0/metric ton case). In the rows labeled ``7% plus CO2
range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled
discount rate, and those values are added to the full range of CO2 values.
DOE's analysis of the national impacts of the adopted standards is
described in section V.B.3 of this final rule.
D. Conclusion
Based on the analyses culminating in this final rule, DOE found the
benefits to the nation of the standards (energy savings, customer LCC
savings, positive NPV of customer benefit, and emission reductions)
outweigh the burdens (loss of INPV and LCC increases for some users of
these equipment). DOE has concluded that the standards in this final
rule represent the maximum improvement in energy efficiency that is
technologically feasible and economically justified, and would result
in significant conservation of energy.
DOE further notes that equipment achieving these standard levels is
already commercially available for Class A and Class B beverage vending
machines. While DOE does not have certification data for combination
equipment to determine the existence or extent of equipment meeting the
adopted standard levels, DOE believes that the standard levels adopted
for combination equipment are reasonable as they are based on
technology options that are widely available in the BVM market today
(see section III.D). DOE acknowledges that equipment using the SNAP-
approved refrigerants (i.e., CO2 and propane) meeting the
current or adopted standard levels is not available for all equipment
classes, due to the limited use of CO2 as a refrigerant to
date and the fact that propane has only recently been approved for use
in BVM applications. 80 FR 19454, 19491 (April 10, 2015).
However, DOE notes that Class B beverage vending machines using
CO2 are currently available. In addition, Class A and Class
B equipment that meets the new and amended standard levels is currently
available, although such equipment may not use refrigerants that will
be acceptable under EPA SNAP at the time of compliance with these new
and amended standards. While DOE acknowledges that industry experience
with SNAP-compliant refrigerants is limited, DOE believes that the
existing industry experience in improving the efficiency of R-134a-
based equipment is applicable and transferable to equipment using
CO2 or propane as a refrigerant. DOE has addressed the
technical feasibility and economic implications of meeting the new and
amended standard levels utilizing CO2 and propane
refrigerants in the analyses presented in this final rule, and based on
these analyses, DOE has concluded that the benefits of the new and
amended standards to the nation (energy savings, positive NPV of
customer benefits, customer LCC savings, and emission reductions)
outweigh the burdens (loss of INPV for manufacturers).
DOE also considered more-stringent energy efficiency levels as
potential standards. However, DOE concluded that the potential burdens
of the more-stringent energy efficiency levels would outweigh the
projected benefits. Based on consideration of the public comments DOE
received in response to the 2015 BVM energy conservation standards
notice of proposed rulemaking (2015 BVM ECS NOPR) and related
information collected and analyzed during the course of this rulemaking
effort, DOE is adopting MDEC levels, in terms of kWh/day, that are
less-stringent than the new and amended standards proposed in the NOPR
and represent the standard levels resulting in the maximum economic
benefits for the nation.
II. Introduction
The following section briefly discusses the statutory authority
underlying this final rule, as well as some of the relevant historical
background related to the establishment of amended and new standards
for beverage vending machines.
A. Authority
Title III, Part B of the Energy Policy and Conservation Act of 1975
(EPCA or the Act), Public Law 94-163 (codified as 42 U.S.C. 6291-6309)
established the Energy Conservation Program for Consumer Products Other
Than Automobiles, a program covering most major household appliances
(collectively referred to as ``covered products''), which includes the
beverage vending machines that are the subject of this rulemaking. (42
U.S.C. 6291(40)) As part of this program, EPCA directed DOE to
prescribe energy conservation standards for beverage vending machines.
(42 U.S.C. 6295(v)) In addition, under 42 U.S.C. 6295(m), DOE must
periodically review its established energy conservation standards for
the covered equipment. This final rule fulfills these statutory
requirements.
Pursuant to EPCA, DOE's energy conservation program for covered
[[Page 1034]]
equipment consists essentially of four parts: (1) Testing; (2)
labeling; (3) the establishment of Federal energy conservation
standards; and (4) certification and enforcement procedures. The
Secretary or the Federal Trade Commission, as appropriate, may
prescribe labeling requirements for beverage vending machines. (42
U.S.C. 6294(a)(5)(A)) Subject to certain criteria and conditions, DOE
is required to develop test procedures to measure the energy
efficiency, energy use, or estimated annual operating cost of covered
equipment. (42 U.S.C. 6293) Manufacturers of covered equipment must use
the prescribed DOE test procedure as the basis for certifying to DOE
that their equipment complies with the applicable energy conservation
standards adopted under EPCA and when making representations to the
public regarding the energy use or efficiency of that equipment. (42
U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test
procedures to determine whether the equipment complies with standards
adopted pursuant to EPCA. (42 U.S.C. 6295(s))
DOE updated its test procedure for beverage vending machines in a
final rule published July 31, 2015 (2015 BVM test procedure final
rule). 80 FR 45758. In the 2015 BVM test procedure final rule, DOE
adopted several amendments and clarifications to the DOE test procedure
in appendix A and appendix B of subpart Q of 10 CFR part 431. As
specified in the 2015 BVM test procedure final rule, manufacturers of
beverage vending machines are required to use appendix B to demonstrate
compliance with any new and amended energy conservation standards
adopted as a result of this rulemaking.
DOE must follow specific statutory criteria for prescribing new or
amended standards for covered equipment, including beverage vending
machines. Any new or amended standard for a covered piece of equipment
must be designed to achieve the maximum improvement in energy
efficiency that is technologically feasible and economically justified.
(42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any
standard that would not result in the significant conservation of
energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a
standard: (1) For certain equipment, including beverage vending
machines, if no test procedure has been established for the equipment,
or (2) if DOE determines by rule that the standard is not
technologically feasible or economically justified. (42 U.S.C.
6295(o)(3)(A)-(B))
In deciding whether a standard is economically justified, DOE must
determine whether the benefits of the standard exceed its burdens. (42
U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after
receiving comments on the proposed standard, and by considering, to the
greatest extent practicable, the following seven statutory factors:
(1) The economic impact of the standard on manufacturers and
consumers of the equipment subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered equipment in the type (or class) compared to any
increase in the price, initial charges, or maintenance expenses for the
covered equipment that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water)
savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered
equipment likely to result from the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA, as codified, establishes a rebuttable presumption
that a standard is economically justified if the Secretary finds that
the additional cost to the consumer of purchasing a piece of equipment
complying with an energy conservation standard level will be less than
three times the value of the energy (and, as applicable, water) 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))
EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing
any amended standard that either increases the maximum allowable energy
use or decreases the minimum required energy efficiency of a covered
equipment type. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not
prescribe an amended or new standard if interested persons have
established by a preponderance of the evidence that the standard is
likely to result in the unavailability in the United States in any
covered equipment type (or class) of performance characteristics
(including reliability), features, sizes, capacities, and volumes that
are substantially the same as those generally available in the United
States. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an
energy conservation standard for covered equipment that has two or more
subcategories. DOE must specify a different standard level for a type
or class of equipment that has the same function or intended use if DOE
determines that equipment within such group: (A) Consume a different
kind of energy from that consumed by other covered equipment within
such type (or class); or (B) have a capacity or other performance-
related feature which other equipment within such type (or class) do
not have and such feature justifies a higher or lower standard. (42
U.S.C. 6295(q)(1)) In determining whether a performance-related feature
justifies a different standard for certain equipment, DOE must consider
such factors as the utility to the consumer of such a feature and other
factors DOE deems appropriate. Id. Any rule prescribing such a standard
must include an explanation of the basis on which such higher or lower
level was established. (42 U.S.C. 6295(q)(2)) In this final rule, DOE
is prescribing energy conservation standards for different classes of
beverage vending machines and DOE's basis for establishing such
separate classes is discussed in this final rule.
Federal energy conservation requirements generally supersede State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions set forth under 42
U.S.C. 6297(d)).
Finally, pursuant to EPCA any final rule for new or amended energy
conservation standards promulgated after July 1, 2010, must address
standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3))
Specifically, when DOE adopts a standard for any covered equipment
after that date, it must, if justified by the criteria for adoption of
standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and
off mode energy use into the standard, or, if that is not feasible,
adopt a separate standard for such energy use for that equipment. (42
U.S.C. 6295(gg)(3)(A)-(B))
DOE reviewed the operating modes available for beverage vending
machines and determined that this equipment does not have operating
modes that meet the definition of standby mode or off mode, as
established at 42 U.S.C. 6295(gg)(3). Specifically, beverage
[[Page 1035]]
vending machines are typically always providing at least one main
function--refrigeration. (42 U.S.C. 6295(gg)(1)(A)) DOE recognizes that
in a unique equipment design, the low power mode includes disabling the
refrigeration system, while for other equipment the low power mode
controls only elevate the thermostat set point. Because low power modes
still include some amount of refrigeration for the vast majority of
equipment, DOE believes that such a mode does not constitute a
``standby mode,'' as defined by EPCA, for beverage vending machines.
Therefore, DOE believes that beverage vending machines do not operate
under standby and off mode conditions as defined in EPCA, and that the
energy use of a beverage vending machine is captured in any standard
established for active mode energy use. As such, the new and amended
energy conservation standards adopted in this final rule do not
specifically address standby mode or off mode energy consumption for
the equipment.
B. Background
1. Current Standards
In a final rule published on August 31, 2009 (henceforth referred
to as the 2009 BVM final rule), DOE prescribed the current energy
conservation standards for beverage vending machines. 74 FR 44914 (Aug.
31, 2009). The 2009 BVM final rule established energy conservation
standards for Class A and Class B beverage vending machines, with a
compliance date of August 31, 2012, as shown in Table II.1. DOE also
established a class of combination machines, but did not set standards
for combination machines, instead reserving a place for possible
development of future standards for that equipment.
Table II.1--Energy Conservation Standards for Beverage Vending Machines,
Prescribed by the 2009 BVM Final Rule--Compliance Date August 31, 2012
------------------------------------------------------------------------
Maximum daily
Class Definition energy consumption
------------------------------------------------------------------------
A............................ Class A means a 0.055 x V + 2.56.
refrigerated
bottled or canned
beverage vending
machine that is
fully cooled, and
is not a
combination vending
machine.
B............................ Class B means any 0.073 x V + 3.16.
refrigerated
bottled or canned
beverage vending
machine not
considered to be
Class A, and is not
a combination
vending machine.
Combination.................. Combination means a [reserved].
refrigerated
bottled or canned
beverage vending
machine that also
has non-
refrigerated
volumes for the
purpose of vending
other, non-``sealed
beverage''
merchandise.
------------------------------------------------------------------------
The 2009 BVM final rule document is currently available at
www.regulations.gov/#!documentDetail;D=EERE-2006-STD-0125-0005.
2. History of Standards Rulemaking for Beverage Vending Machines
EPCA directed the Secretary to issue, by rule, no later than August
8, 2009, energy conservation standards for beverage vending machines.
(42 U.S.C. 6295 (v)) On August 31, 2009, DOE issued a final rule
establishing performance standards for beverage vending machines to
complete the first required rulemaking cycle. 74 FR 44914.
DOE conducted this energy conservation standards rulemaking
pursuant to 42 U.S.C. 6295(m), which requires that within 6 years of
issuing any final rule establishing or amending a standard, DOE shall
publish either a notice of determination that amended standards are not
needed or a NOPR proposing amended standards.
In initiating this rulemaking, DOE prepared a framework document,
``Energy Conservation Standards Rulemaking Framework Document for
Refrigerated Beverage Vending Machines'' (framework document), which
describes the procedural and analytical approaches DOE anticipates
using to evaluate energy conservation standards for beverage vending
machines. DOE published a notice that announced both the availability
of the framework document and a public meeting to discuss the proposed
analytical framework for the rulemaking. That notice also invited
written comments from the public. 78 FR 33262 (June 4, 2013). That
document is available at www.regulations.gov/#!docketDetail;D=EERE-
2013-BT-STD-0022.
DOE held the framework public meeting on June 20, 2013, at which it
(1) presented the contents of the framework document; (2) described the
various analyses DOE planned to conduct during the rulemaking; (3)
sought comments from interested parties on these subjects; and (4) in
general, sought to inform interested parties about, and facilitate
their involvement in, the rulemaking. Major issues discussed at the
public meeting included: (1) Equipment classes, (2) analytical
approaches and methods used in the rulemaking; (3) impact of standards
and burden on manufacturers; (5) technology options; (6) distribution
channels and shipments; (7) impacts of outside regulations; and (8)
environmental issues. At the meeting and during the comment period on
the framework document, DOE received many comments that helped it
identify and resolve issues pertaining to beverage vending machines
relevant to this rulemaking.
DOE then gathered additional information and performed preliminary
analyses to help review standards for this equipment. DOE published a
notice to announce the availability of the preliminary analysis TSD and
a public meeting to discuss the preliminary analysis results. 79 FR
46379 (Aug. 8, 2014). In the preliminary analysis, DOE discussed and
requested comment on the tools and methods DOE used in performing its
preliminary analysis, as well as analyses results. DOE also sought
comments concerning other relevant issues that could affect potential
amended standards for beverage vending machines. Id.
The preliminary analysis provided an overview of DOE's technical
and economic analyses supporting new and amended standards for beverage
vending machines, discussed the comments DOE received in response to
the framework document, and addressed issues raised by those comments.
The preliminary analysis TSD also described the analytical framework
that DOE used (and continues to use) in considering new and amended
standards for beverage vending machines, including a description of the
methodology, the analytical tools, and the relationships between the
various analyses that are
[[Page 1036]]
part of this rulemaking. Additionally, the preliminary analysis TSD
presented in detail each analysis that DOE had performed for this
equipment up to that point, including descriptions of inputs, data
sources, methodologies, and results. These analyses included (1) the
market and technology assessment, (2) the screening analysis, (3) the
engineering analysis, (4) the energy use analysis, (5) the markups
analysis, (6) the LCC analysis, (7) the PBP analysis, (8) the shipments
analysis, (9) the national impact analysis (NIA), and (10) a
preliminary manufacturer impact analysis (MIA).
The preliminary TSD that presents the methodology and results of
each of these analyses is available at www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0022. In this final rule, DOE is
presenting additional and revised analysis in all of these areas.
The public meeting to review the preliminary analysis took place on
September 16, 2014 (preliminary analysis public meeting). At the
preliminary analysis public meeting, DOE presented the methodologies
and results of the analyses prescribed in the preliminary analysis TSD.
Comments received in response to the preliminary analysis helped DOE
identify and resolve issues related to the preliminary analyses and
helped refine the analyses for beverage vending machines.
DOE presented its updated analyses and proposed new and amended
standard levels in the 2015 BVM ECS NOPR, which DOE published on August
19, 2015. 80 FR 50462 (Aug. 19, 2015). On September 29, 2015, DOE held
a public meeting to discuss the 2015 BVM ECS NOPR and request comments
on DOE's proposal (BVM ECS NOPR public meeting). DOE received multiple
comments from interested parties and considered these comments in the
preparation of the final rule. In response to DOE's 2015 BVM ECS NOPR,
several interested parties requested additional time to prepare their
written comments. (AMS, No. 45 at p. 1; NAMA, No. 44 at p. 1; Royal
Vendors, No. 46 at p. 1; and Coca-Cola, No. 49 at p. 1).\18\ To
accommodate this request, DOE issued a notice to reopen the 2015 BVM
ECS NOPR comment period on October 23, 2015 until November 23, 2015. 80
FR 64370 (Oct. 23, 2015). Relevant comments received during both
comment periods and the BVM ECS NOPR public meeting, as well as DOE's
responses, are provided throughout this document.
---------------------------------------------------------------------------
\18\ DOE will identify comments received in response to the 2015
BVM ECS NOPR and placed in Docket No. EERE-2013-BT-STD-0022 by the
commenter, the number of document as listed in the docket maintained
at www.regulations.gov, and the page number of that document where
the comment appears (for example: Coca-Cola, No. 52 at p. 2). If a
comment was made verbally during the BVM ECS NOPR public meeting,
DOE will also specifically identify those as being located in the
NOPR public meeting transcript (for example: Coca-Cola, Public
Meeting Transcript, No. 48 at p. 184).
---------------------------------------------------------------------------
III. General Discussion
DOE is amending standards for Class A and Class B beverage vending
machines. DOE is also amending the definition for Class A equipment to
more unambiguously differentiate Class A and Class B beverage vending
machines. In addition, DOE is amending the definition of combination
vending machine, creating two classes of combination vending machine
equipment, and promulgating standards for those classes. In the
subsequent sections, DOE discusses the scope of coverage, test
procedure, compliance dates, technical feasibility, energy savings, and
economic justification of the new and amended standards.
A. Equipment Classes and Scope of Coverage
EPCA defines a beverage vending machine as ``a commercial
refrigerator \19\ that cools bottled or canned beverages and dispenses
the bottled or canned beverages on payment.'' (42 U.S.C. 6291(40))
---------------------------------------------------------------------------
\19\ EPCA defines commercial refrigerator, freezer, and
refrigerator-freezer as ``refrigeration equipment that--
(i) is not a consumer product (as defined in section 6291 of
this title);
(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).
---------------------------------------------------------------------------
When evaluating and establishing energy conservation standards, DOE
divides covered equipment into equipment classes by the type of energy
used or by capacity or other performance-related features that
justifies a different standard. In making a determination whether a
performance-related feature justify differing standards, DOE must
consider such factors as the utility to the customer of the feature and
other factors DOE determines are appropriate. (42 U.S.C. 6295(q))
In the 2009 BVM final rule, DOE determined that unique energy
conservation standards were warranted for Class A and Class B beverage
vending machines and added the following definitions to 10 CFR 431.292
to differentiate such equipment:
Class A means a beverage vending machine that is fully cooled, and
is not a combination vending machine.
Class B means any beverage vending machine not considered to be
Class A, and is not a combination vending machine.
74 FR 44914, 44967 (Aug. 31, 2009).
DOE differentiated Class A and Class B beverage vending machines
based on whether the refrigerated volume (V) of equipment was fully
cooled, as DOE determined that this was the most significant criteria
affecting energy consumption. Id. at 44924.
The 2009 BVM final rule also established a definition for
combination vending machine at 10 CFR 431.292.
Combination vending machine means a beverage vending machine that
also has non-refrigerated volumes for the purpose of vending other,
non-``sealed beverage'' merchandise.
74 FR 44914, 44967 (Aug. 31, 2009).
DOE considered the definition of beverage vending machine broad
enough to include any vending machine that cools at least one bottled
or canned beverage and dispenses it upon payment. DOE elected to
establish combination machines as a separate equipment class because
such machines may be challenged by component availability and such
machines have a distinct utility that limits their energy efficiency
improvement potential compared to Class A and B beverage vending
machines. However, DOE did not establish standards for combination
machines in the 2009 BVM final rule. Id. at 44920.
While DOE's existing definitions of Class A and Class B equipment
distinguish equipment based on whether or not the refrigerated volume
is ``fully cooled,'' DOE regulations have never defined the term
``fully cooled.'' In the framework document, DOE suggested a definition
for ``fully cooled'' and further refined that definition in the BVM
test procedure NOPR DOE published on Aug. 11, 2014 (2014 BVM test
procedure NOPR). 79 FR 46908, 46934. In response to comments received
on both the framework document and 2014 BVM test procedure NOPR, DOE
proposed to modify the definition of Class A to more unambiguously
differentiate Class A and Class B equipment. In this final rule, DOE is
using the presence of a transparent front on Class A beverage
[[Page 1037]]
vending machines as a key distinguishing characteristic between Class A
and Class B equipment and is adopting this distinction as part of the
Class A equipment class definition.
In this final rule, DOE is also amending the definition of
combination vending machine to better align with industry definitions
and provide more clarity regarding the physical characteristics of the
``refrigerated'' and ``non-refrigerated'' volumes, or compartments. In
addition, DOE is creating two classes of combination vending machines,
Combination A and Combination B, to differentiate combination vending
machines based on criteria similar to those used to distinguish Class A
and Class B beverage vending machines (i.e., the presence of a
transparent front). See section IV.A.1 of this final rule for more
discussion on the equipment classes addressed in this final rule.
B. Test Procedure
The estimates of energy use and energy saving potential presented
in the final rule analysis are based on the performance of beverage
vending machines when tested in accordance with appendix B of the
recently amended DOE BVM test procedure located at 10 CFR 431.294. (See
sections IV.B, IV.C, and IV.E of this final rule for more discussion.)
On July 31, 2015, DOE published the 2015 BVM test procedure final rule,
which amended DOE's test procedure for beverage vending machines. 80 FR
45758. In the 2015 BVM test procedure final rule, DOE adopted several
minor amendments to clarify DOE's test procedure for beverage vending
machines and also adopted several amendments related to the impact of
low power modes on the measured daily energy consumption of BVM models.
Id. DOE also reorganized the DOE test procedure into two new
appendices, appendix A and appendix B to subpart Q to part 431 of Title
10 of the Code of Federal Regulations, and adopted a minor change to
the certification and reporting requirements for beverage vending
machines at 10 CFR 429.52(b)(2) and 10 CFR 431.296.
The DOE BVM test procedure, as amended, incorporates by reference
American National Standards Institute (ANSI)/American Society of
Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard
32.1-2010 to describe the measurement equipment, test conditions, and
test protocol applicable to testing beverage vending machines. DOE's
test procedure also specifies that the measurement of ``refrigerated
volume'' of beverage vending machines must be in accordance with the
methodology specified in Appendix C of ANSI/ASHRAE Standard 32.1-2010.
In the 2015 BVM test procedure final rule, DOE also adopted several
new clarifying amendments including:
(1) eliminating testing at the 90[emsp14][deg]F ambient test
condition,
(2) clarifying the test procedure for combination vending machines,
(3) clarifying the requirements for loading BVM models under the
DOE test procedure,
(4) clarifying the specifications of the standard product,
(5) clarifying the next-to-vend beverage temperature test
condition,
(6) specifying placement of thermocouples during the DOE test
procedure,
(7) establishing testing provisions at the lowest application
product temperature, and
(8) clarifying the treatment of certain accessories when conducting
the DOE test procedure.
These test procedure amendments are all reflected in DOE's new
appendix A, which became effective August 31, 2015 and must be used,
beginning January 27, 2016, by manufacturers for representations and to
demonstrate compliance with the BVM energy conservation standards
adopted in the 2009 BVM final rule, for which compliance was required
as of August 31, 2012. 80 FR 45758 (July 31, 2015). DOE also adopted
amended language at 10 CFR 429.52(b) and 10 CFR 431.296 clarifying the
certification and reporting requirements for beverage vending machines,
which also became effective August 31, 2015. Id. at 45787.
Appendix B includes all provisions in appendix A, as well as,
provisions for testing low power modes. The test procedure found in
appendix B is to be used in conjunction with the new and amended
standards established as a result of this final rule. As such,
manufacturers are not required to use appendix B until the compliance
date of the new and amended standards established in this final rule.
Id.
During the BVM ECS NOPR public meeting and subsequent comment
period, several interested parties commented about DOE's updated BVM
test procedure and how equipment are currently tested in the industry.
ASAP commented in the BVM ECS NOPR public meeting that there may be
potential ambiguity in the BVM test procedure DOE adopted in 2006 (71
FR 71340 (Dec. 8, 2006)) with regard to lighting low power modes in
that some machines may have shown artificially lower energy consumption
under this test procedure due to lighting controls automatically
turning off the lights when no one is in the test room. (ASAP, Public
Meeting Transcript, No. 48 at p. 67) Royal Vendors and SandenVendo
America (SVA) commented that the current standard is achievable without
the use of low power modes and that they test all of their equipment
without low power modes enabled, and do not include payment systems in
their reported energy consumption. (Royal Vendors, No. 54 at p. 4; SVA,
No. 53 at p. 2) The National Automatic Merchandising Association (NAMA)
also commented that at least one manufacturer has achieved the current
standard level without the use of energy management systems, and that
reported energy consumption currently does not include payment systems.
NAMA additionally urged DOE to allow energy management systems to be
enabled during testing. (NAMA, No. 50 at p. 5) In its written comments,
NAMA requested that DOE review the European Vending Association's
Energy Management Protocol Program and stated that it may provide
additional guidance related to the testing of beverage vending machines
in Europe that may be applicable to the United States (NAMA, No. 50 at
p. 14)
Automated Merchandising Systems (AMS) commented that the revised
test procedure would adversely affect the daily energy consumption
(DEC) even though performance has not changed. (AMS, No. 57 at p. 2)
Specifically, SVA commented that including payment systems in reported
energy consumption effectively lowers the allowable DEC by 0.2 kWh/day,
which would account for over 9 percent of allowable energy consumption
for Class A and 6 percent for Class B. (SVA, No. 53 at p. 4) SVA stated
in written comments that the inclusion of payment systems in the
reported energy consumption under the new test procedure would make it
difficult to meet the current standard. (SVA, No. 53 at p. 2)
Similarly, Coca-Cola and Royal Vendors stated that allowances for low
power states are offset by the inclusion of payment systems in the
reported energy consumption under the new test procedure. (Coca-Cola,
No. 52 at p. 3; Royal Vendors, No. 54 at p. 1)
DOE recognizes that the previous DOE BVM test procedure adopted in
DOE's 2006 test procedure final rule (71 FR 71340 (Dec. 8, 2006)) may
have allowed for misinterpretation of some aspects of DOE's test
procedure methodology. However, the clarifications and amendments
recently adopted in appendix A of the DOE BVM test procedure seeks to
unambiguously
[[Page 1038]]
clarify how BVM equipment should be configured and tested in accordance
with the DOE BVM test procedure. 80 FR 45758, 45760 (July 31, 2015).
Specifically, related to lighting controls, appendix A requires that
all lights be in the ``on'' state for the full duration of the test.
However, appendix B, which is required for demonstrating compliance
with the energy conservation standards adopted in this final rule,
allows lighting and other accessories that are controlled by an
accessory low power mode to be turned off (by the accessory low power
mode) for a period of 6 hours. DOE believes this accurately represents
the impact of accessory low power modes on BVM DEC. Regarding the
energy consumption and configuration of payment mechanisms when testing
beverage vending machines, DOE clarified in the 2015 BVM test procedure
final rule that energy consumed by BVM payment systems should be
included in the measured energy consumption of this equipment under
both appendix A and appendix B.
In the analysis supporting this final rule, DOE has analyzed
equipment under appendix B, which accounts for the use of accessory and
refrigeration low power modes. DOE's analysis also assumes the energy
consumption of payment mechanisms are accounted for in the DEC of BVM
equipment. DOE recognizes that some test procedure amendments included
in appendix B, such as those addressing accessory and lighting low
power modes, may change the measured energy consumption of covered
equipment. As such, as stated in the 2015 BVM test procedure final
rule, use of appendix B is only permitted to demonstrate compliance
with the new and amended standards adopted in this final rule. 80 FR
45758, 45760-45761. DOE notes that, on the effective date of this BVM
ECS final rule, manufacturers may elect to begin using the appendix B
test procedure prior to the compliance date, provided they use the
results of such testing to demonstrate compliance with the new and
amended standards adopted in this final rule. Manufacturers may not use
the results of testing under appendix B to demonstrate compliance with
the energy conservation standards adopted in the 2009 BVM final
rule.\20\
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\20\ See DOE's test procedure guidance on this topic at https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/tp_earlyuse_faq_2014-8-25.pdf.
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In response to NAMA's comment requesting that DOE allow for the use
of energy management systems during testing, DOE notes that the revised
DOE BVM test procedure now allows for the use of lighting and
refrigeration low power states. In response to NAMA's suggestion that
DOE consult the European Vending Association's Energy Management
Protocol Program, DOE appreciates the suggestion from NAMA, but notes
that DOE has already clarified the appropriate configuration and use of
energy management systems when testing in accordance with the DOE BVM
test procedure in the recently published 2015 BVM test procedure final
rule. 80 FR 45758. DOE also notes that EPCA requires that the DOE BVM
test procedure for beverage vending machines shall be based on ASHRAE
Standard 32.1-2004, entitled ``Methods of Testing for Rating Vending
Machines for Bottled, Canned or Other Sealed Beverages.'' 42 U.S.C.
6395(15)
C. Compliance Dates
Pursuant to 42 U.S.C. 6295(v)(3), the new and amended standards in
this final rule will apply to equipment manufactured beginning on
January 8, 2019, 3 years after the publication date of this final rule
in the Federal Register. In its analysis, DOE used a 30-year analysis
period of 2019-2048.
In written comments submitted in response to the 2015 BVM ECS NOPR,
Coca-Cola, NAMA, Royal Vendors, and the American Beverage Association
(ABA) requested that the compliance date for DOE's proposed standards
be delayed until 2022, 3 years after the compliance date for the new
EPA SNAP Rules 19 and 20, which list as acceptable the use of
CO2, propane, and isobutane refrigerants (80 FR 19454, 19491
(April 10, 2015)) and phase out the use of R-134a refrigerant for BVM
applications (80 FR 42870, 42917-42920 (July 20, 2015)), respectively.
(Coca-Cola, No. 52 at p. 1; NAMA, No. 50 at p. 2; Royal Vendors, No. 54
at p. 2; ABA No. 63 at p. 3) During the written comment period
following the publication of the 2015 BVM ECS NOPR, DOE also received
1,140 identical form letters (hereafter referred to as the Form
Letters) from interested parties (the Form Letter Writers) regarding
several aspects of DOE's proposal. In the Form Letter, commenters
echoed the request for an extension of the compliance date to 2022.
(The Form Letter Writers, No. 64 and 65 at p. 1)
In response to the request for an alternative compliance date for
the new and amended BVM standards established as a result of this
rulemaking, DOE notes that it does not have the discretion to deviate
from the compliance period for beverage vending machines established
under EPCA. Pursuant to 42 U.S.C. 6295(v), any energy conservation
standard prescribed for beverage vending machines ``shall apply to
[equipment] manufactured 3 years after the date of publication of a
final rule establishing the energy conservation standard.'' As such,
DOE is not authorized to accommodate the request of commenters and
maintains that compliance of the new and amended standards adopted in
this final rule is required beginning 3 years after the publication
date of this final rule in the Federal Register, or on January 8, 2019.
D. Technological Feasibility
1. General
In each energy conservation standards rulemaking, DOE conducts a
screening analysis based on information gathered on all current
technology options and prototype designs that could improve the
efficiency of the equipment that are the subject of the rulemaking. As
the first step in such an analysis, DOE develops a list of technology
options for consideration in consultation with manufacturers, design
engineers, and other interested parties. DOE then determines which of
those means for improving efficiency are technologically feasible. DOE
considers technologies incorporated in commercially available equipment
or in working prototypes to be technologically feasible. 10 CFR part
430, subpart C, appendix A, section 4(a)(4)(i).
After DOE has determined that particular technology options are
technologically feasible, it further evaluates each technology option
in light of the following additional screening criteria: (1)
Practicability to manufacture, install, and service; (2) adverse
impacts on equipment utility or availability; and (3) adverse impacts
on health or safety. 10 CFR part 430, subpart C, appendix A, section
4(a)(4)(ii)-(iv). Additionally, it is DOE policy not to include in its
analysis any proprietary technology that is a unique pathway to
achieving a certain efficiency level. Section IV.B of this document
discusses the results of the screening analysis for beverage vending
machines, particularly the designs DOE considered, those it screened
out, and those that are the basis for the standard levels considered in
this rulemaking. For further details on the screening analysis for this
rulemaking, see chapter 4 of the final rule TSD.
In response to the proposed standard levels in the 2015 BVM ECS
NOPR, DOE received several comments regarding the technological
feasibility of those proposed standard levels. In written
[[Page 1039]]
comments, the Appliance Standards Awareness Project (ASAP), Alliance to
Save Energy (ASE), Natural Resources Defense Council (NRDC), Northwest
Energy Efficiency Alliance (NEEA), and the Northwest Power and
Conservation Council (NPCC) (herein referred to as the Energy
Efficiency Advocates Joint Commenters, or EEA Joint Commenters)
submitted a joint comment ((herein referred to as the EEA Joint
Comment) expressing support for DOE's proposed standards. (EEA Joint
Commenters, No. 56 at p. 1) Conversely, in the BVM ECS NOPR public
meeting and in written comments, NAMA, SVA, Coca-Cola, Royal Vendors,
AMS, Seaga Manufacturing (Seaga), and the U.S. Small Business
Administration's Office of Advocacy (SBA Advocacy) all stated that
DOE's proposed standards were too aggressive, especially in light of
EPA SNAP regulations concurrent with DOE's rulemaking. (NAMA, No. 50 at
p. 1; SVA, No. 53 at p. 10; Coca-Cola, No. 52 at p. 1; Royal Vendors,
AMS, and Seaga, Public Meeting Transcript, No. 48 at pp. 175, 177; SBA
Advocacy, No. 61 at p. 3) ABA requested that DOE coordinate with EPA to
ensure the proposed standards are technologically and economically
feasible relative to ENERGY STAR equipment specifications. (ABA, No. 63
at p. 3) The European Vending Association stated that adopting a
standard more stringent than ENERGY STAR was not justifiable in Europe
and it would not be feasible for DOE to adopt more stringent standards
(EVA, No. 60 at p. 1) NAMA, SVA, and SBA Advocacy stated that the
proposed standards are not technologically feasible or economically
justified and will cause substantial negative impacts on the industry
if enacted. (NAMA, No. 50 at p. 1; SVA, No. 53 at p. 10; SBA Advocacy,
No. 61 at p. 3) AMS, SVA, and Royal Vendors stated in the BVM ECS NOPR
public meeting and in written comments that compliance with DOE's
proposed standards is unattainable, and Royal Vendors added that
compliance would require cutting 1 kWh/day from its Class A machines
and 1.5 kWh/day from its Class B machines. (AMS, SVA, and Royal
Vendors, Public Meeting Transcript, No. 48 at p. 175; Royal Vendors,
No. 54 at p. 1)
In the BVM ECS NOPR public meeting, Coca-Cola inquired about the
manufacturer of the CO2 unit that DOE examined and found to
meet the 2009 standard, and expressed doubt that an existing
CO2 machine would be able to meet the proposed standard.
(Coca-Cola, Public Meeting Transcript, No. 48 at pp. 96-101) Similarly,
SVA and SBA Advocacy expressed agreement that the current standards
could be met using any refrigerant but disagreement that the efficiency
levels in the NOPR TSD could be met. (SVA, No. 53 at p. 3; SBA
Advocacy, No. 61 at p. 3) SVA additionally expressed disagreement with
DOE's assumption that all baseline Class A and Class B propane
equipment and Class A CO2 equipment would be able to meet
EL1 because it believes many of DOE's proposed design options have
already been implemented to meet the 2009 standard. (SVA, No. 53 at p.
7) AMS commented that it would not be able to meet even the 2009
standard for class A with CO2 refrigerant, and further
stated that it might be possible to meet trial standard level (TSL) 1
for Class A with substantial design changes. AMS additionally commented
that it may be possible for it to meet TSL 2 for Combination A
equipment using CO2 and TSL 3 with propane with substantial
design changes. (AMS, No. 57 at p. 4) In written comments, the Form
Letter Writers stated DOE has not provided proof that CO2
machines meeting the proposed standards are already available. (The
Form Letter Writers, No. 64 and 65 at p. 1) Further, in the Form
Letters, commenters stated the combination vending machines have not
been tested to the proposed standard. (The Form Letter Writers, No. 64
and 65 at p. 1)
In the BVM ECS NOPR public meeting, SVA stated that the proposed
standards do not leave room for any new or innovative features which
consume energy. (SVA, Public Meeting Transcript, No. 48 at p. 174) In
its written comment, Coca-Cola stated that the proposed standards would
make it difficult for suppliers to offer equipment with display panels
for equipment interaction, video content, or advertising, and would
therefore reduce utility of the equipment. (Coca-Cola, No. 52 at p. 4)
DOE appreciates the support for DOE's proposed standard levels from
the EEA Joint Commenters. Regarding the concerns raised by Coca-Cola,
NAMA, Royal Vendors, AMS, Seaga, and SBA Advocacy DOE has revised its
engineering and economic analyses based on the specific feedback of
interested parties. DOE believes that its analyses accurately reflect
the capabilities of existing current equipment designs and component
design options. Specifically, DOE compared its engineering outputs to
empirical DEC data gathered from the units that DOE selected for
testing and teardowns, as well as to certified DEC data included in the
Compliance Certification Management System (CCMS) and ENERGY
STAR[supreg] directories in order to confirm the validity and accuracy
of its engineering analysis inputs and results. Chapter 3 of the final
rule TSD contains plots of the relevant ENERGY STAR and CCMS
certification data, while Chapter 5 of the final rule TSD discusses
DOE's methodology in selecting units for testing and teardown.
DOE also revised certain assumptions regarding the cost of more-
efficient components and the cost to maintain, repair, and/or replace
those more-efficient components to better reflect the BVM market today
and throughout the analysis period. Component costs, as well as
maintenance, repair, and replacement costs are discussed in chapters 5
and 8 of the final rule TSD, respectively. Based on these revised
analyses, DOE is adopting in this final rule new and amended standards
for beverage vending machines that are less stringent than the MDEC
levels proposed in the 2015 BVM ECS NOPR. As discussed further in
section V, the MDEC levels adopted in this final rule represent the
standard levels for each equipment class with the maximum net benefits
for the nation. DOE's engineering and economic analyses presented in
this final rule represent the best available data on BVM performance
and costs and include substantial input from interested parties
received throughout the course of the rulemaking. As such, DOE believes
the MDEC standard levels adopted in this final rule are technologically
feasible and economically justified. DOE also analyzed these adopted
standard levels against the reported and tested DEC values of currently
available equipment and notes that there are several models of Class A
and Class B equipment that would meet the amended MDEC levels under
either appendix A or appendix B (that is, with or without low power
modes employed). While DOE acknowledges that not all of these models
use refrigerants that will be required in 2019 when compliance with the
amended standards is required, DOE notes that at least one BVM model
using CO2 as a refrigerant are listed in the ENERGY STAR
database that comply with the amended MDEC standard for Class B
equipment adopted in this final rule.
In response to ABA and EVA's comments suggesting that DOE
coordinate with ENERGY STAR and highlighting the technological
feasibility of the ENERGY STAR standard levels, DOE notes that DOE
coordinates closely with EPA's ENERGY STAR program. Regarding the
technological feasibility of the new and amended standards
[[Page 1040]]
adopted in this final rule as compared to ENERGY STAR levels, DOE is
obligated to adopt the standard levels that represent the maximum
improvement in energy efficiency that is technologically feasible and
economically justified, subject to specific criteria established by
EPCA. (42 U.S.C. 6295(o)(2) and (3)(B)) DOE specifically analyzed the
technological feasibility and economic benefits of the current ENERGY
STAR levels for Class A and Class B equipment (and comparable levels
for Combination equipment) as TSL 1. DOE's analysis considers only
those technology options considered to be technologically feasible, as
discussed in section III.D.2 and IV.B. Therefore, by definition, all
ELs and TSLs analyzed by DOE represent technologically feasible energy
consumption levels for beverage vending machines. Based on DOE's
analysis, as discussed further in section V.B, DOE found TSL 3 to
result in the maximum economic benefits for the nation. Therefore,
while the current ENERGY STAR are also technologically feasible, TSL 3
represents the maximum improvement in energy efficiency that is
technologically feasible and economically justified, based on DOE's
analysis.
In response to the Form Letter Writers statement that DOE has not
provided proof that CO2 machines meeting the proposed
standards are already available, DOE recognizes that there was a
statement in the 2015 BVM ECS NOPR that may have been misinterpreted by
some to indicate that Class B equipment using CO2 as a
refrigerant was available that met the standard level proposed in the
NOPR. Specifically, in both the 2015 BVM ECS NOPR public meeting and in
written comments, Coca-Cola stated that it does not believe that there
is a beverage vending machine with a CO2 refrigeration
system that is capable of meeting the proposed standards, even with
credits for low power modes. (Coca-Cola, No. 52 at p. 2; Coca-Cola,
Public Meeting Transcript, No. 48 at p. 184) In this final rule, DOE
clarifies that the sentence in the 2015 BVM ECS NOPR was intended to
read ``Class B equipment that utilizes CO2 as a refrigerant
and Class B equipment that meets the proposed standard level is
currently available.'' 80 FR 50462, 50467 (August 19, 2015). However,
regarding the standard adopted in this final rule, DOE reiterates that
at least one BVM model using CO2 refrigerant is listed in
the ENERGY STAR data base that meets the amended Class B standard
level, and it is possible that additional units would meet the amended
standard level when tested until the new appendix B test procedure
adopted in the 2015 BVM test procedure final rule. 80 FR 45758 (July
31, 2015). BVM models of Class A and combination equipment using
CO2 refrigerant have not yet been developed, so a similar
comparison is not possible.
In response to commenters concerns regarding combination equipment,
DOE notes that combination equipment manufacturers are currently not
required to report their DEC or comply with any energy conservation
standards and, as such, DOE does not have the data that would be needed
to perform a similar comparative analysis of the analytically-
determined performance levels from the engineering analysis versus
certification or testing data. However, DOE notes that the design
options that DOE modeled in the engineering analysis as included at the
adopted standard levels for Combination A and Combination B equipment
are commonly available technologies that are also included in the
packages of design options analyzed at the amended standard levels for
Class A and B. That is, DOE believes that all Combination A and
Combination B equipment should be able to meet the new energy
conservation standard levels using the same technology options and
equipment designs that would be employed by Class A and Class B
equipment in meeting the amended standard levels adopted for the
equipment. This determination was made based on an assessment of the
commonalities in design present between the analogous classes, for
example the presence of a transparent front and lighting in Class A and
Combination A machines, and the use of a fully insulated cabinet and
zone cooling in Class B and Combination B machines. A full discussion
of DOE's analysis of the performance potential of combination vending
machines is contained in Chapter 5 of the TSD.
In response to SVA and Coca-Cola's concerns regarding the ability
of BVM models that feature digital display screens or other innovative,
interactive designs, DOE notes that compliance with the new and amended
standards is assessed based on the tested DEC, as measured in
accordance with appendix B of the recently updated DOE BVM test
procedure (80 FR 45758 (July 31, 2015)), and appropriate sampling plans
(10 CFR 429.52(a)). In both appendix A and appendix B of the recently
amended DOE BVM test procedure, DOE adopted specific provisions
clarifying the configuration of BVM models featuring external customer
display signs, lights, or digital screens, among other accessories and
components. 80 FR 45758, 45778-45780 (July 31, 2015). Specifically, the
DOE BVM test procedure specifies that external customer display signs,
lights, or digital screens should be de-energized or, if they cannot be
de-energized without impacting the primary functionality of the
equipment, placed in the external accessory standby mode (if available)
or the lowest energy consuming state (if no external accessory standby
mode is available) that maintains such functionality. 10 CFR 431.292.
As the incremental energy consumption of display signs and digital
screens referred to by Coca-Cola and SVA potentially are not included
in the measured DEC for such BVM models, DOE does not believe that
innovation of manufacturers to include such features and accessories
will be affected by the newly adopted test procedure or the standard
levels adopted in this final rule. If any BVM manufacturers produce a
BVM model with any features or accessories that cannot be accommodated
by the DOE BVM test procedure or believe that application of the DOE
BVM test procedure would produce results that are not adequately
representative of the energy consumption of the equipment, the
manufacturer of that equipment may submit a petition for a test
procedure waiver in accordance with the provisions in 10 CFR
431.401.\21\
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\21\ DOE issued a final rule amending its regulations governing
petitions for waiver and interim waiver from DOE test procedures for
consumer products and commercial and industrial equipment. 79 FR
26591 (May 9, 2014). This final rule became effective on June 9,
2014.
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2. Maximum Technologically Feasible Levels
When DOE proposes to adopt an amended standard for a type or class
of covered equipment, it must determine the maximum improvement in
energy efficiency or maximum reduction in energy use that is
technologically feasible for such equipment. (42 U.S.C. 6295(p)(1))
Accordingly, in the engineering analysis, DOE determined the maximum
technologically feasible (``max-tech'') improvements in energy
efficiency for beverage vending machines, using the design parameters
for the most efficient equipment available on the market or in working
prototypes. The max-tech levels that DOE determined for this rulemaking
are described in section III.D.2 of this final rule and in chapter 5 of
the final rule TSD.
[[Page 1041]]
E. Energy Savings
1. Determination of Savings
For each TSL, DOE projected energy savings from application of the
TSL to beverage vending machines purchased in the 30-year period that
begins in the year of compliance with any new and amended standards
(2019-2048).\22\ The savings are measured over the entire lifetime of
equipment purchased in the 30-year analysis period. DOE quantified the
energy savings attributable to each TSL as the difference in energy
consumption between each standards case and the no-new-standards case.
The no-new-standards case represents a projection of energy consumption
that reflects how the market for the equipment would likely evolve in
the absence of new and amended energy conservation standards.
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\22\ Each TSL is composed of specific efficiency levels for each
equipment class. The TSL considered for this final rule are
described in section V.A. DOE also presents a sensitivity analysis
that considers impacts for equipment shipped in a 9-year period.
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DOE used its NIA spreadsheet models to estimate energy savings from
new and amended standards for beverage vending machines. The NIA
spreadsheet model (described in section IV.H of this document)
calculates savings in site energy, which is the energy directly
consumed by equipment at the locations where they are used. Based on
the site energy, DOE calculates national energy savings (NES) in terms
of primary energy savings at the site or at power plants, and also in
terms of full-fuel-cycle (FFC) energy savings. The FFC metric includes
the energy consumed in extracting, processing, and transporting primary
fuels (i.e., coal, natural gas, petroleum fuels), and thus presents a
more complete picture of the impacts of energy conservation
standards.\23\ DOE's approach is based on the calculation of an FFC
multiplier for each of the energy types used by covered equipment. For
more information on FFC energy savings, see section IV.H.2 of this
document.
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\23\ The FFC metric is discussed in DOE's statement of policy
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as
amended at 77 FR 49701 (Aug. 17, 2012).
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2. Significance of Savings
To adopt standards for any covered equipment, DOE must determine
that such action would result in ``significant'' energy savings. (42
U.S.C. 6295(o)(3)(B)) Although the term ``significant'' is not defined
in the Act, the U.S. Court of Appeals, for the District of Columbia
Circuit in Natural Resources Defense Council v. Herrington, 768 F.2d
1355, 1373 (D.C. Cir. 1985), indicated that Congress intended
``significant'' energy savings in the context of EPCA to be savings
that were not ``genuinely trivial.'' The energy savings for all the
TSLs considered in this rulemaking, including the adopted standards,
are nontrivial; therefore, DOE considers them ``significant'' within
the meaning of section 325 of EPCA.
F. Economic Justification
1. Specific Criteria
As noted above, EPCA provides seven factors to be evaluated in
determining whether a potential energy conservation standard is
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The following
sections discuss how DOE has addressed each of those seven factors in
this rulemaking.
a. Economic Impact on Manufacturers and Customers
In determining the impacts of a potential amended standard on
manufacturers, DOE conducts an MIA, as discussed in section IV.J of
this document. DOE first uses an annual cash-flow approach to determine
the quantitative impacts. This step includes both a short-term
assessment--based on the cost and capital requirements during the
period between when a regulation is issued and when entities must
comply with the regulation--and a long-term assessment over a 30-year
period. The industry-wide impacts analyzed include: (1) The INPV, which
values the industry on the basis of expected future cash flows; (2)
cash flows by year; (3) changes in revenue and income; and (4) other
measures of impact, as appropriate. Second, DOE analyzes and reports
the impacts on different types of manufacturers, including impacts on
small manufacturers. Third, DOE considers the impact of standards on
domestic manufacturer employment and manufacturing capacity, as well as
the potential for standards to result in plant closures and loss of
capital investment. Finally, DOE takes into account cumulative impacts
of various DOE regulations and other regulatory requirements on
manufacturers.
For individual customers, measures of economic impact include the
changes in LCC and PBP associated with new or amended standards. These
measures are discussed further in the following section. For customers
in the aggregate, DOE also calculates the national NPV of the economic
impacts applicable to a particular rulemaking. DOE also evaluates the
LCC impacts of potential standards on identifiable subgroups of
customers that may be affected disproportionately by a national
standard.
b. Savings in Operating Costs Compared To Increase in Price (LCC and
PBP)
EPCA requires DOE to consider the savings in operating costs
throughout the estimated average life of the covered equipment in the
type (or class) compared to any increase in the price of, or in the
initial charges for, or maintenance expenses of, the covered equipment
that are likely to result from a standard. (42 U.S.C.
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP
analysis.
The LCC is the sum of the purchase price of a piece of equipment
and the operating cost (including energy, maintenance, and repair
expenditures) discounted over the lifetime of the equipment. The LCC
analysis requires a variety of inputs, such as equipment prices,
equipment energy consumption, energy prices, maintenance and repair
costs, equipment lifetime, and discount rates appropriate for
customers. To account for uncertainty and variability in specific
inputs, such as equipment lifetime and discount rate, DOE uses a
distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes
customers to recover the increased purchase cost (including
installation) of a more-efficient piece of equipment through lower
operating costs. DOE calculates the PBP by dividing the change in
purchase cost due to a more-stringent standard by the change in annual
operating cost for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumed that customers will
purchase the covered equipment in the first year of compliance with
amended standards. The LCC savings for the considered efficiency levels
are calculated relative to the case that reflects projected market
trends in the absence of amended standards. DOE identifies the
percentage of customers estimated to experience an LCC increase, as
well as calculates the average LCC savings associated with a particular
standard level. DOE's LCC and PBP analyses are discussed in further
detail in section IV.F of this document.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for adopting an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a standard, to
consider the total projected energy savings that are expected to result
directly from the
[[Page 1042]]
standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section
IV.H of this document, DOE uses the NIA spreadsheet models to project
NES.
d. Lessening of Utility or Performance of Equipment
In establishing equipment classes, and in evaluating design options
and the impact of potential standard levels, DOE evaluates potential
standards that would not lessen the utility or performance of the
considered equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) DOE determined
based on the data available that the standards adopted in this final
rule will not reduce the utility or performance of the equipment under
consideration in this rulemaking.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider the impact of any lessening of
competition, as determined in writing by the Attorney General that is
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It
also directs the Attorney General to determine the impact, if any, of
any lessening of competition likely to result from a standard and to
transmit such determination to the Secretary within 60 days of the
publication of a proposed rule, together with an analysis of the nature
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) DOE transmitted
a copy of its proposed rule to the Attorney General with a request that
the Department of Justice (DOJ) provide its determination on this
issue. DOE received no adverse comments from DOJ regarding the proposed
rule.
f. Need for National Energy Conservation
DOE also considers the need for national energy conservation in
determining whether a new or amended standard is economically
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the
adopted standards are likely to provide improvements to the security
and reliability of the nation's energy system. Reductions in the demand
for electricity also may result in reduced costs for maintaining the
reliability of the nation's electricity system. DOE conducts a utility
impact analysis to estimate how standards may affect the nation's
needed power generation capacity, as discussed in section IV.M of this
document.
The adopted standards also are likely to result in environmental
benefits in the form of reduced emissions of air pollutants and
greenhouse gases associated with energy production and use. DOE
conducts an emissions analysis to estimate how potential standards may
affect these emissions, as discussed in section IV.K of this final
rule; the emissions impacts are reported in section V.B.6 of this
document. DOE also estimates the economic value of emissions reductions
resulting from the considered TSLs, as discussed in section IV.L of
this document.
g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
To the extent interested parties submit any relevant information
regarding economic justification that does not fit into the other
categories described above, DOE could consider such information under
``other factors.''
2. Rebuttable Presumption
EPCA sets forth a rebuttable presumption that an energy
conservation standard is economically justified if the additional cost
to the customer of a piece of equipment that meets the standard is less
than three times the value of the first year's energy savings resulting
from the standard, as calculated under the applicable DOE test
procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE's LCC and PBP analyses
generate values used to calculate the effect the new and amended energy
conservation standards have on the PBP for customers. These analyses
include, but are not limited to, the 3-year PBP contemplated under the
rebuttable-presumption test. In addition, DOE routinely conducts an
economic analysis that considers the full range of impacts to
customers, manufacturers, the Nation, and the environment, as required
under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as
the basis for DOE's evaluation of the economic justification for a
potential standard level (thereby supporting or rebutting the results
of any preliminary determination of economic justification). The
rebuttable presumption payback calculation is discussed in section IV.F
of this final rule.
IV. Methodology and Discussion of Related Comments
This section addresses the analyses DOE has performed for this
rulemaking with regard to beverage vending machines. Each component of
DOE's analysis is discussed in the following subsections, and DOE
summarizes and responds to associated comments received in response to
the NOPR.
DOE used several analytical tools to estimate the impact of the
standards considered in this document. The first tool is a spreadsheet
that calculates the LCC savings and PBP of potential amended or new
energy conservation standards. The NIA uses a second spreadsheet set
that provides shipments forecasts and calculates NES and NPV of total
customer costs and savings expected to result from potential energy
conservation standards. DOE uses the third spreadsheet tool, the
Government Regulatory Impact Model (GRIM), to assess manufacturer
impacts of potential standards. These three spreadsheet tools are
available on the DOE Web site for this rulemaking: https://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/73. Additionally, DOE used output from the latest version of
EIA's AEO, a widely known energy forecast for the United States, for
the emissions and utility impact analyses.
A. Market and Technology Assessment
DOE develops information in the market and technology assessment
that provides an overall picture of the market for the equipment
concerned, including the purpose of the equipment, the industry
structure, manufacturers, market characteristics, and technologies used
in the equipment. This activity includes both quantitative and
qualitative assessments, based primarily on publicly available
information.
DOE reviewed relevant literature and interviewed manufacturers to
develop an overall picture of the BVM market in the United States.
Industry publications, trade journals, government agencies, and trade
organizations provided the bulk of the information, including (1)
manufacturers and their market shares, (2) shipments by equipment type,
(3) detailed equipment information, (4) industry trends, and (5)
existing regulatory and non-regulatory equipment efficiency improvement
initiatives. The key findings of DOE's market assessment are summarized
below. See chapter 3 of the final rule TSD for further discussion of
the market and technology assessment.
1. Equipment Classes
In this final rule, DOE is amending the energy conservation
standards established by the 2009 BVM final rule for Class A and Class
B beverage vending machines. DOE believes that Class A and Class B
equipment classes continue to provide distinct utility to customers and
have different energy profiles and applicable design options, as
described below. As such, DOE has determined that it is appropriate to
[[Page 1043]]
separately analyze and regulate Class A and Class B equipment. As noted
previously, DOE is amending the definition for Class A equipment to
more clearly and unambiguously describe the equipment characteristics
that distinguishing Class A from Class B equipment. Specifically, DOE
distinguishes Class A equipment from Class B equipment based on the
presence of a transparent front. DOE is also amending the definition of
combination vending machine to better align with industry definitions
and provide more clarity regarding the physical characteristics of the
``refrigerated'' and ``non-refrigerated'' volumes, or compartments.\24\
In addition, DOE is defining two new equipment classes, Combination A
and Combination B, as well as establishing new energy conservation
standards for those equipment classes. In the 2009 BVM final rule, DOE
also established a definition for combination vending machines but
elected not to set standards for them at that time. 74 FR 44914, 44920
(Aug. 31, 2009). In considering standards for combination vending
machines as part of this rulemaking, DOE determined that the presence
of a transparent front is an important differentiating feature for
combination equipment, similar to Class A and Class B beverage vending
machines.
---------------------------------------------------------------------------
\24\ The definition of combination vending machine established
by DOE in the 2009 BVM final rule referenced the presence of ``non-
refrigerated volumes'' to differentiate combination vending machines
from other styles of beverage vending machines. In the amended
definition for combination vending machine, DOE is referring instead
to ``compartments,'' which DOE believes captures the same intent as
the term ``volumes'' in the previous definition, but better
indicates that the ``volumes'' are to be physically separate.
---------------------------------------------------------------------------
Table IV.1 summarizes the new and amended definitions for the four
equipment classes analyzed in this final rule. The definitions, as well
as the general characteristics and differentiating features, of the
four equipment classes adopted in this final rule are described in the
following subsections of this document. In addition, the following
subsections address any comments received from interested parties on
DOE's proposed definitions presented in the 2015 BVM ECS NOPR and DOE's
response to those comments.
---------------------------------------------------------------------------
\25\ DOE notes that in the 2015 BVM ECS NOPR, DOE proposed to
the definition of Class A to include the term ``combination beverage
vending machine.'' In this final rule, DOE is adopting a definition
of Class A that, instead, references the term ``combination vending
machine,'' as that is the defined term for combination equipment at
10 CFR 431.292. DOE notes that this minor editorial change does not
affect the meaning or scope of the definition, just ensure
consistency between all of the definition pertinent to the
regulation of this equipment.
Table IV.1--Equipment Classes for Beverage Vending Machines
------------------------------------------------------------------------
Class Definition
------------------------------------------------------------------------
A.................................... A refrigerated bottled or canned
beverage vending machine that is
not a combination vending
machine and in which 25 percent
or more of the surface area on
the front side of the beverage
vending machine is
transparent.\25\
B.................................... Any refrigerated bottled or
canned beverage vending machine
that is not considered to be
Class A and is not a combination
vending machine.
Combination A........................ A combination vending machine
where 25 percent or more of the
surface area on the front side
of the beverage vending machine
is transparent.
Combination B........................ A combination vending machine
that is not considered to be
Combination A.
------------------------------------------------------------------------
a. Class A and Class B Beverage Vending Machines
Class A and Class B equipment are currently differentiated based on
the cooling mechanism employed by the equipment. The distinguishing
criterion between these two equipment classes is whether the equipment
is fully cooled. 10 CFR 431.292.
When the definitions of Class A and Class B were established as
part of the 2009 final rule, DOE did not define the term ``fully
cooled.'' In the framework document, DOE suggested defining ``fully
cooled'' to mean a beverage vending machine within which each item in
the beverage vending machine is brought to and stored at temperatures
that fall within 2 [deg]F of the average beverage
temperature, which is the average of the temperatures of all the items
in the next-to-vend position for each selection. 78 FR 33262 (June 4,
2013).
Throughout the course of this rulemaking and the parallel DOE BVM
test procedure rulemaking, DOE has discussed and received comments on
the most appropriate, clear, and unambiguous definitions for Class A
and Class B beverage vending machines. Specifically, in the 2014 DOE
BVM test procedure NOPR, DOE proposed to define ``fully cooled'' as ``a
condition in which the refrigeration system of a beverage vending
machine cools product throughout the entire refrigerated volume of a
machine instead of being directed at a fraction (or zone) of the
refrigerated volume as measured by the average temperature of the
standard test packages in the furthest from the next-to-vend positions
being no more than 10 [deg]F above the integrated average temperature
of the standard test packages.'' 79 FR 46908, 46934 (Aug. 11, 2014). To
accompany DOE's proposed definition of ``fully cooled,'' the 2014 BVM
test procedure NOPR also proposed to adopt an optional test method that
could be used to quantitatively differentiate between Class A and Class
B equipment. 79 FR at 46917.
In response to the definition of ``fully cooled'' proposed in the
2014 BVM test procedure NOPR, several interested parties recommended
that DOE consider an alternative differentiation between equipment
types to better capture differences in energy consumption. In a joint
comment submitted on behalf of the California investor-owned utilities
(Pacific Gas and Electric Company (PG&E), Southern California Gas
Company (SCGC), San Diego Gas and Electric (SDG&E), Southern California
Edison (SCE), and Arizona Public Service (APS); hereafter referred to
as CA IOUs) commenters suggested that the presence of a transparent or
opaque front and/or the arrangement of products within the machine
could be potential differentiating criteria that are more appropriate
and consistent with the differentiation between equipment
configurations applied in industry. (Docket No. EERE-2013-BT-TP-0045,
CA IOUs, No. 0005 at p. 1) SVA also supported this position. (Docket
No. EERE-2013-BT-TP-0045, SVA, Public Meeting Transcript, No. 0004 at
p. 52) Many interested parties also commented on the difficulty of
establishing a quantitative temperature threshold to differentiate
fully cooled equipment from non-fully cooled equipment that would be
applicable across all BVM models. (Docket No. EERE-2013-BT-
[[Page 1044]]
TP-0045, AMS, Public Meeting Transcript, No. 0004 at p. 54; Docket No.
EERE-2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4; Docket No. EERE-
2013-BT-TP-0045, Coca-Cola, No. 0010 at p. 4; Docket No. EERE-2013-BT-
TP-0045, SVA, No. 0008 at p. 2; Docket No. EERE-2013-BT-TP-0045, NEEA,
No. 0009 at p. 1)
In light of the extent and scope of the comments received in
response to the amendments proposed in the 2014 BVM test procedure NOPR
regarding the proposed definition of fully cooled, alternative criteria
for differentiating Class A and Class B equipment, and the optional
fully cooled verification test protocol, DOE wished to further consider
potential classification options and criteria suggested by interested
parties, as well as provide interested parties an additional
opportunity to provide feedback on any proposals to amend the equipment
class definitions. As such, DOE responded to the comments presented by
interested parties in response to the 2014 BVM test procedure NOPR and
proposed an alternative approach to differentiate Class A and Class B
equipment in the 2015 BVM ECS NOPR. Specifically, in the 2015 BVM ECS
NOPR, DOE proposed to amend the definition of Class A beverage vending
machines to read as follows:
Class A means a refrigerated bottled or canned beverage vending
machine that is not a combination vending machine and in which 25
percent or more of the surface area on the front side of the beverage
vending machine is transparent.
DOE did not propose in the 2015 BVM ECS NOPR to substantively
modify the definition of Class B, since Class B is defined as the
mutually exclusive converse of Class A. However, DOE made a minor
editorial change to include the term ``that'' to improve readability of
the definition. 80 FR 50462, 50474-50475 (Aug. 19, 2015).
DOE also noted in the 2015 BVM ECS NOPR that beverage vending
machines with horizontal product rows are typically fully cooled and
have a transparent front, while beverage vending machines with vertical
product stacks are typically zone cooled and are fully opaque. DOE
added that it is not aware of any instances of BVM models that are not
fully cooled but which have a transparent front and/or horizontal
product configuration or BVM models that are fully cooled but which
have and opaque front and/or vertical stacks. Thus, DOE believed that,
based on current equipment designs, using criteria of (a) whether the
equipment is fully cooled, (b) whether the equipment has a transparent
front, or (c) whether the product arrangement is horizontal or
vertical, would result in virtually identical equipment categorization.
Finally, DOE also noted that, since DOE's engineering analysis
considers typical, representative equipment designs for each equipment
class (see section IV.C), the cooling method, the presence of a
transparent or opaque front,\26\ and product arrangement are linked in
DOE's engineering analysis, as shown in Table IV.2. Id.
---------------------------------------------------------------------------
\26\ In this notice, DOE uses the terms ``solid front,''
``opaque front,'' and ``non-transparent'' front interchangeably to
refer to equipment that does not meet DOE's definition of Class A or
Combination A. That is, equipment where greater than 75 percent of
the material used to construct the front of the beverage vending
machine does not meet the definition of ``transparent'' adopted in
this final rule.
Table IV.2--Equipment Classes Design Parameters for Beverage Vending Machines Modeled in the Engineering
Analysis
----------------------------------------------------------------------------------------------------------------
Transparent or opaque Vendible product
Class Cooling method front orientation
----------------------------------------------------------------------------------------------------------------
A.................................... Fully cooled........... Transparent front...... Horizontal product
rows.
B.................................... Zone cooled............ Opaque front........... Vertical product
stacks.
Combination A........................ Fully cooled........... Transparent front...... Horizontal product
rows.
Combination B........................ Zone cooled............ Opaque front........... Vertical product
stacks.
----------------------------------------------------------------------------------------------------------------
In response to DOE's 2015 BVM ECS NOPR, NAMA and Royal Vendors, in
their written comments, stated that the presence of a transparent front
does not always correlate with fully-cooled equipment, and that at
least one manufacturer has developed fully-cooled vending machines with
solid fronts. (NAMA, No. 50 at p. 3; Royal Vendors, No. 54 at p. 3) SVA
expressed disagreement with DOE's proposed definition of Class A
equipment because it stated that not all fully-cooled beverage vending
machines have a transparent panel and that this may discourage the
production of Class B equipment due to the more stringent proposed
standards for Class B. (SVA, No. 53 at p. 1) AMS stated that the
presence of a transparent front does not necessarily reflect the design
intent or energy consumption characteristics of the machine (AMS, No.
57 at p. 2)
NAMA also expressed concern that the transparency requirement
excludes the use of digital video display screens in Class A equipment
(NAMA, No. 50 at p. 3) SVA agreed with NAMA and expressed its belief
that vending machines with digital video display screens should be
considered as Class A instead of Class B equipment (SVA, Public Meeting
Transcript, No. 48 at p. 19) Conversely, the CA IOUs expressed their
belief that equipment with transparent and opaque video screen fronts
should be regulated as separate equipment classes, with non-transparent
screens classified as Class B and transparent screens classified as
Class A. (CA IOUs, No. 58 at p. 1)
In determining the best way to clarify the differentiation of Class
A and Class B equipment, DOE considered all comments submitted by
interested parties, as well as the manner in which equipment is
currently categorized by DOE and industry. It is DOE's continued
understanding that the cooling method is significantly correlated with
the product configuration and presence of a transparent front.
Therefore, differentiating Class A and Class B equipment based on
either the product's configuration or the transparency of the front
side of the BVM, rather than the cooling method, would preserve the
same utility in each class of equipment. The presence of a transparent
front provides a specific utility that allows a customer to view and
select from all of the various next-to-vend product selections, which
are all maintained at the appropriate vending temperature. In this
manner, the presence of a transparent front is inherently related to
the cooling method of a beverage vending machine (i.e., whether or not
the equipment is ``fully cooled''). DOE acknowledges that there may be
some fully cooled beverage vending machines that have an opaque front
and, as such, will be subject to the energy conservation standard for
Class B. For example, in the 2015 BVM ECS NOPR,
[[Page 1045]]
DOE pointed to test data that demonstrated some equipment with opaque
fronts and small refrigerated volumes experience temperature
differentials of less than 2 [deg]F between the next-to-vend and
furthest from next-to-vend beverage locations and are, therefore,
effectively ``fully cooled.'' 80 FR 50462, 50478 (Aug. 19, 2015).
However, DOE believes that the Class B standards are more appropriate
for such equipment because the insulating quality of the transparent
versus non-transparent front has a larger impact on energy consumption
than the cooling method.
DOE believes that the presence of a transparent front provides the
customer with the specific utility of being able to see all the
available the product selections and choose from the larger number of
merchandise options that are provided by Class A equipment. In
addition, DOE notes that the presence of a transparent material on the
front side of a beverage vending machine has a larger impact on the
energy consumption of a given beverage vending machine than the cooling
method or equipment product arrangement. Thus, while DOE continues to
believe that the presence of a transparent front, a ``fully cooled''
refrigerated volume, and horizontal product placement are all
representative characteristics of most Class A equipment, DOE believes
that defining equipment classes based on the feature that is most
related to the unique utility and which has the largest impact on the
energy use of the equipment is the most appropriate criterion to use to
ensure that the utility provided by Class A equipment is maintained in
the marketplace.
While DOE acknowledges that there may be some opaque front
equipment that is fully cooled, DOE believes that it is more
appropriate for such equipment to be treated as Class B. Because an
opaque, insulated panel has significantly different heat transfer
characteristics than a transparent glass front, a BVM model that is
insulated on all six sides should use less energy than a similar BVM
model with a transparent front. That is, DOE believes energy
consumption and the presence of a transparent front are correlated.
DOE performed a sensitivity analysis using the engineering analysis
spreadsheet to compare the impact of a transparent front versus solid
front on DEC with the impact of a fully cooled refrigerated volume
versus a zone cooled refrigerated volume on DEC. Specifically, DOE
compared the analytically derived performance of two specific sets of
representative units differing only in one design characteristic--
either a transparent front or a fully cooled interior. That is, DOE
modeled the following three BVM unit configurations:
(1) A BVM unit with a fully cooled refrigerated volume and a
transparent front
(2) a BVM unit with a fully cooled refrigerated volume and a solid
front
(3) a BVM unit with a zone cooled refrigerated volume and a
transparent front.
DOE compared the modeled DEC of number 1) and number 2) to
determine the impact of a transparent front and compared number 1) and
number 3) to determine the impact of the cooling method. The results of
this analysis indicated that the difference in energy consumption
between a BVM model that has a transparent front as compared to a model
that does not is greater than the difference in energy consumption
between a BVM model that is fully cooled as compared to one that is
not. Based on this analysis, DOE has determined that the presence of a
transparent front is closely correlated to the utility associated with
Class A equipment and directly corresponds to the energy consumption of
the equipment. Because the cooling method and the presence of a glass
or solid front are correlated in practice for the vast majority of
equipment, DOE believes that clarifying DOE's equipment class
definitions using the presence of a transparent front (an unambiguous
equipment characteristic based on customer utility) will not result in
significant changes to the classification of BVM models that are
currently available on the market.
Similarly, regarding the treatment of digital screens, DOE agrees
with CA IOUs that the transparency of BVM models equipped with digital
screens should be ascertained as it is for BVM models with conventional
glass or panel materials. That is, transparency should be determined
for all the materials between the refrigerated volume and the ambient
environment and only if the aggregate performance of all those
materials yields a light transmittance of greater than or equal to 45
percent would that area be treated as transparent.
DOE believes that this is the most appropriate and reasonable
treatment of equipment with digital screens because the energy
consumption of BVM models with opaque digital screens is more similar
to the energy consumption of BVM models with opaque, insulated fronts
than to BVM models with transparent fronts. That is, as noted by SVA in
the BVM ECS NOPR public meeting, the panel behind any external customer
display signs or digital screens is typically insulated. (SVA, Public
Meeting Transcript, No. 48 at p. 24-25) DOE notes that external
customer digital screens and customer display signs are not required to
be energized during the testing of beverage vending machines, in
accordance with the newly adopted BVM test procedure. 80 FR 45758,
45778-45780 (July 31, 2015). Accordingly, the energy consumption and
heat transfer characteristics of a BVM model with an external, opaque
digital screen is much more similar to the energy consumption and heat
transfer characteristics of a BVM model with an opaque, insulated front
than a BVM model with a transparent front.
Regarding equipment with transparent digital screens, DOE
acknowledges the statement by CA IOUs that equipment with transparent
display screens where all materials between the refrigerated space and
external ambient environment meet the definition of transparent will be
treated as part of the transparent surface area under DOE's definition.
As such, equipment with large transparent display screens (such as,
potentially, holograms projected onto glass) that still enabled the BVM
user to see the refrigerated merchandise inside the BVM refrigerated
compartment and constitute at least 25 percent of the front side of the
beverage vending machine would be categorized as a Class A beverage
vending machine. However, DOE notes that it is not aware of any such
technology on the market today.
Consequently, in this final rule, DOE maintains that only BVM
models where at least 25 percent of the surface area on the front side
of the beverage vending machine is transparent, and that is not a
combination vending machine, will be considered to be Class A.
Conversely, if greater than 75 percent of the surface area on the front
side of the beverage vending machine is not transparent, and the
beverage vending machine is not a combination vending machine, then the
beverage vending machine will be considered to be Class B. DOE notes
that the amended Class A definition only considers transparent area on
the front side of beverage vending machine and transparency must be
determined for the entire panel, as described in section IV.A.1.c.
As interested parties did not suggest any alternative definitions
or differentiating characteristics, DOE believes that modifying the
definitions of Class A and Class B to rely on the presence of a
transparent front allows for the most clear and unambiguous
differentiation of equipment classes.
[[Page 1046]]
Further, DOE believes referencing the presence of a transparent front
to identify Class A equipment generally aligns with DOE's and
industry's interpretation of Class A machines to date. DOE notes that
the amended Class A and Class B definitions are effective on the
effective date of this final rule.
b. Combination Vending Machines
In the 2009 BVM final rule, DOE established a definition for
combination vending machines (74 FR 44914, 44920 (Aug. 31, 2009)). That
definition describes a combination vending machine as a refrigerated
bottled or canned beverage machine that also has non-refrigerated
volumes for the purpose of vending other, non-``sealed beverage''
merchandise. 10 CFR 431.292. However, the 2009 BVM final rule did not
consider or differentiate equipment within the combination vending
machine equipment category or address any specific criteria that could
be used to differentiate ``refrigerated'' and ``non-refrigerated.''
In its recent test procedure rulemaking, culminating in the 2015
BVM test procedure final rule, DOE considered the applicability of the
combination vending machine definition to equipment designs it has
encountered on the market, and considered stakeholder comments on the
definition of ``combination vending machine.'' 80 FR 45758, 45765-45767
(July 31, 2015). In the 2015 BVM test procedure final rule, DOE
clarified the test procedure for combination vending machines and noted
that such equipment must include compartments that are physically
separated, while acknowledging that some combination equipment designs
may employ a common product delivery chute between the refrigerated and
non-refrigerated compartments for the purposes of delivering vendible
merchandise to the customer. DOE also gave notice that it would seek to
further clarify the definition of ``combination vending machine'' in
this BVM energy conservation standard final rule. Id. at 45765-45767.
As such, in consideration of the input from various commenters
throughout both the test procedure and energy conservation standards
rulemaking processes, as well as of the range of equipment designs that
DOE has observed for sale on the market, DOE proposed in the 2015 BVM
ECS NOPR an amended definition of ``combination vending machine.''
Specifically, DOE proposed to amend the definition of ``combination
vending machine'' to more clearly and unambiguously establish the
distinction between ``refrigerated'' and ``non-refrigerated''
compartments contained in a combination vending machine based on
whether a compartment is designed to be refrigerated, as demonstrated
by the presence of temperature controls. 80 FR 50462, 50478-50480 (Aug.
19, 2015).
DOE also proposed that, similar to Class A and Class B equipment
classes, the transparency of the front side of the vending machine can
differentiate certain styles of combination vending machines that
provide a unique utility in the marketplace because their specific
design attributes allow the equipment to be stocked with a wider
variety of product selections that can be viewed directly through the
equipment's transparent front. As such, in the 2015 BVM ECS NOPR, DOE
proposed to define two new equipment classes at 10 CFR 431.292,
Combination A and Combination B, and defined those equipment classes as
follows:
Combination A means a combination vending machine where 25 percent
or more of the surface area on the front side of the beverage vending
machine is transparent.
Combination B means a combination vending machine that is not
considered to be Combination A.
Id.
In response to DOE's proposed new and amended definitions for
Combination A, Combination B, and combination vending machine, several
interested parties raised questions about DOE's proposed definitions.
In particular, AMS stated that machines intended to dispense both
refrigerated and unrefrigerated products have an insulated tray between
the refrigerated and unrefrigerated compartments and are defined as
combination vending machines by their company. (AMS, Public Meeting
Transcript, No. 48 at p. 18) AMS also stated that its combination
vending machines only have temperature controls for the compartment
intended to be refrigerated and therefore do not meet DOE's proposed
definition for combination vending machines. (AMS, No. 57 at p. 2)
Steven Chesney of Seaga inquired if a non-cooled refrigerated
compartment attached to a separate cabinet with a refrigerated
compartment would be considered as a combination vending machine.
(Steven Chesney, Public Meeting Transcript, No. 48 at p. 26) EVA
commented that DOE should use ``simple and understandable'' definitions
and consider defining them similar to the European definitions. (EVA,
No. 60 at p. 2)
In response to AMS's comments regarding their combination vending
machine designs, featuring an insulated shelf separating refrigerated
and non-refrigerated compartments and temperature controls in the
compartment intended to be refrigerated, DOE notes that this is in fact
consistent with its proposed definition for combination vending
machines, provided the insulated shelf is a ``solid partition'' and
does not allow for air transfer between the compartments outside of the
product delivery chute. To clarify, DOE notes that the combination
vending machine definition only requires temperature controls in the
compartment that is designed to be refrigerated.
In response to Mr. Chesney's inquiry regarding whether two separate
cabinets attached to each other would constitute a combination vending
machine, DOE clarifies that, consistent with all equipment, compliance
for each model is based on how that model is distributed in commerce.
That is, if the vending machine: (1) Is distributed in commerce as a
single piece of equipment and (2) includes at least one compartment
that was designed to be refrigerated (demonstrated by the presence of
temperature controls) and at least one compartment that is not designed
to be refrigerated (and, therefore, does not include temperature
controls) separated by a solid partition, such equipment meets the
definition of combination vending machine and would be classified as
either Combination A or Combination B for the purposes of compliance
with DOE's energy conservation standards. Such equipment may share the
same product deliver chute or include separate product delivery chutes.
In response to EVA's suggestion that DOE use simple and
understandable definitions, similar to those in the European vending
market, DOE researched the definitions used in Europe to describe
beverage vending machines and was not able to find consistent
definitions or terminology that are publically available and such
definitions were note provided in EVA's comments. However, DOE
continues to believe that the definitions adopted in this final rule
represent the clearest and most unambiguous approach to differentiating
equipment classes for the U.S. market.
In response to DOE's 2015 BVM ECS NOPR, NAMA stated that DOE's
proposed definition of combination vending machines is inconsistent
with industry practice and the EPA's ENERGY STAR definition and
requested that DOE change this definition to be consistent with
industry practice. NAMA specifically stated that very few vending
machines have a [fully-
[[Page 1047]]
extending] solid partition, and that instead many of them allow air to
comingle between the unrefrigerated and refrigerated compartments. NAMA
additionally stated that the unrefrigerated space pulls down to nearly
the same temperature as the refrigerated volume over time in machines
it considers to be combination vending machines. (NAMA, No. 50 at p. 1)
In the Form Letters, commenters stated the definition of combination
vending machines were not consistent with terms used in industry. (The
Form Letter Writers, No. 64 and 65 at p. 1)
In response to comments from NAMA and the Form Letter Writers that
DOE's definition of combination vending machine should be consistent
with the ENERGY STAR or other industry definitions for such equipment,
DOE notes that the ENERGY STAR definition of combination vending
machines is identical to the current DOE definition for combination
vending machine. DOE is not aware of any other specific industry
definitions that are relevant for this equipment, and notes that the
``industry'' terms mentioned by The Form Letter Writers were not
provided in comments. As noted previously, DOE believes the existing
definition could be made more clear and unambiguous to improve the
consistency of equipment definition for regulatory purposes. In
addition, in response to NAMA's observation that typical combination
vending machines do not have a fully extending solid partition, DOE
notes that the definition of combination specifies that such equipment
have two compartments, separated by a solid partition, but that such
equipment may also include a common product delivery chute. DOE agrees
with NAMA that, for many designs of combination equipment on the market
today, the common product delivery chute may prevent the solid
partition separating the refrigerated and non-refrigerated compartments
from fully extending from front to back and side to side. That is, the
solid partition need not thermally isolate the refrigerated
compartment(s) from the non-refrigerated compartment(s) provided any
air exchange between compartments occurs only unintentionally through
the common product delivery chute. If a vending machine model were to
feature openings in the solid partition designed to allow for air
transfer between the compartments, other than the product delivery
chute, such equipment would not be considered a combination vending
machine as it would not include any ``non-refrigerated'' compartments.
That is, DOE interprets the designed presence of openings in the solid
partition as a means of ``intentional refrigeration'' of that
compartment. Therefore, equipment that is designed for air transfer
between compartments is treated as Class A or Class B, depending on
whether or not the equipment featured a transparent front (see sections
IV.A.1.a and IV.A.1.c)
Based on the comments submitted by interested parties, DOE is
adopting, in this final rule, the amended definition for combination
vending machine and new definitions for Combination A and Combination
B, as proposed in the 2015 BVM ECS NOPR. As noted in the 2015 BVM test
procedure final rule, DOE believes that both appendix A and appendix B
of the amended DOE BVM test procedure are applicable to combination
vending machines. 80 FR 45758 (July 31, 2015). Specifically, appendix A
of the DOE BVM test procedure is applicable to combination vending
machines for the purposes of making any representations regarding the
energy consumption of such equipment beginning January 27, 2016. Id.
However, beginning on the compliance date of this final rule,
manufacturers of combination vending machines will be required to use
appendix B of the DOE BVM test procedure for the purposes of
demonstrating compliance with any such energy conservation standards
and when making representations regarding the energy consumption of
covered equipment.
c. Definition of Transparent and Optional Test Method for Determining
Equipment Classification
In the 2015 BVM ECS NOPR, DOE proposed a quantitative criterion to
clearly determine whether a BVM model ``has a transparent front'' based
on the percentage of transparent surface area on the front side of the
beverage vending machine. Specifically, DOE proposed the procedure by
which DOE would (1) determine the surface area of beverage vending
machines and (2) determine whether such surface area is transparent.
However, DOE noted that these procedures would not be required for
rating and certification of specific BVM models. Under the proposal,
manufacturers would be able to certify equipment as Class A, Class B,
Combination A, or Combination B based on knowledge of the specific
equipment dimensions and characteristics. However, DOE would use these
procedures in enforcement testing to verify the appropriate equipment
classification for all cases. As such, DOE also noted that where the
appropriate equipment classification is not abundantly clear,
manufacturers may elect to perform the test to ensure they are
categorizing their equipment properly. To clarify that such procedures
are only optional for manufacturers, DOE proposed to add such
procedures to the product-specific enforcement provisions at 10 CFR
429.134. 80 FR 50462, 50476-50480 (Aug. 19, 2015).
Specifically, to determine the surface area, DOE proposed to
specify that the total surface area of the front side of the beverage
vending machine, from edge to edge, be determined as the total length
multiplied by the total height of a beverage vending machine. DOE also
proposed to specify that the transparent surface area would consist of
all areas composed of transparent material on the front side of a
beverage vending machine, and that the non-transparent surface area
would consist of all areas composed of material that is not transparent
on the front side of a beverage vending machine, where the sum of the
transparent and non-transparent surface areas should equal the total
surface area of the front side of a beverage vending machine, as shown
in Figure IV.1. 80 FR 50462, 50476 (Aug. 19, 2015).
[[Page 1048]]
[GRAPHIC] [TIFF OMITTED] TR08JA16.000
In the 2014 BVM ECS NOPR, DOE also noted that the same optional
test protocol to determine the transparency of materials and the
relative surface areas of transparent and non-transparent surfaces
would be applicable to combination vending machines except that, the
external surface areas surrounding the non-refrigerated compartment(s)
would not be considered. That is, all the surfaces that surround and
enclose the compartment designed to be refrigerated (as demonstrated by
the presence of temperature controls), as well as any surfaces that do
not enclose any product-containing compartments (e.g., surfaces
surrounding any mechanical equipment or containing the product
selection and delivery apparatus) would be considered in the
calculation of transparent and non-transparent surface area for a
beverage vending machine, as shown in Figure IV.2. 80 FR at 50479 (Aug.
19, 2015).
[[Page 1049]]
[GRAPHIC] [TIFF OMITTED] TR08JA16.001
For both Class A and Combination A beverage vending machines, in
the 2015 BVM ECS NOPR, DOE also proposed a specific definition and
criteria to determine whether a material is transparent. Specifically,
DOE proposed to adopt the definition of transparent that is applicable
to commercial refrigeration equipment,\27\ as adopted in the 2014
commercial refrigeration equipment test procedure final rule. 10 CFR
431.62; 79 FR 22277, 22286-22287, and 22308 (April 21, 2014). Under
this definition, the term ``transparent'' would apply to any material
with greater than or equal to 45 percent light transmittance, as
determined in accordance with the ASTM Standard E 1084-86 (Reapproved
2009), ``Standard Test Method for Solar Transmittance (Terrestrial) of
Sheet Materials Using Sunlight,'' at normal incidence and in the
intended direction of viewing. With regard to beverage vending
machines, DOE also clarified that, when determining material
properties, that the transparency of the BVM cabinet materials should
be determined with consideration of all the materials used to construct
the wall segment(s), since the utility of the transparent material is
only applicable if the viewer can clearly see the refrigerated products
contained within the refrigerated volume of the beverage vending
machine. 80 FR 50462, 50477 (Aug. 19, 2015).
---------------------------------------------------------------------------
\27\ As a beverage vending machine is defined as a type of
commercial refrigerator, DOE believes that it is consistent and
appropriate to use the same definition of transparent for both
commercial refrigeration equipment and beverage vending machines.
---------------------------------------------------------------------------
In response to DOE's proposed definition of transparent and
optional test method for determining the relative transparent surface
area, DOE received several comments and suggestions from interested
parties. The CA IOUs recommended that DOE more clearly define the
equipment classes being regulated using the term, ``transparent.'' The
CA IOUs also recommended that DOE amend its definition of Class A
equipment to take into account possible fluctuations in transparency of
the front. (CA IOUs, No. 58 at p. 1) Similarly, in written comments,
NAMA and Royal Vendors stated that the 45 percent light transmittance
criterion for the determination of transparency of the glass front of a
vending machine is acceptable at this time, but may not be so in the
future if better low-emissivity coatings are developed. (NAMA, No. 50
at p. 3; Royal Vendors, No. 54 at p. 3) In written comments, Royal
Vendors stated also that the definition of Class A would apply to a
unit in which at least 25 percent of the front surface area is
transparent, but that the definition of transparency would not always
be met by equipment Royal Vendors considers to be ``Class A.'' (Royal
Vendors, No. 54 at p. 3)
In response to the comments submitted by the CA IOUs regarding the
treatment of certain equipment with respect to the term
``transparent,'' DOE clarifies that the definition of transparent
adopted in this final rule is applicable to all classes of beverage
vending machines. In particular, the
[[Page 1050]]
definition of transparent is pertinent to differentiating Class A
equipment from Class B equipment and Combination A equipment from
Combination B equipment. Similarly, DOE also uses the term to determine
equipment classification for commercial refrigeration equipment, the
definition of transparent adopted in this final rule is pertinent only
to beverage vending machines.
In response to the comments by CA IOUs, NAMA, and Royal Vendors
regarding the suitability of the 45 percent threshold for light
transmittance, DOE notes that it has considered the current and
potential future characteristics of advanced, high-performing glass and
acrylic products featuring low-emissivity coatings, low solar heat
gain, or other features that may impact the overall light transmittance
of the material. In the commercial refrigeration equipment test
procedure NOPR, DOE had originally proposed that a transparent material
was any material with greater than or equal to 65 percent light
transmittance, consistent with the definition of total display area in
the Air-Conditioning, Heating, and Refrigeration Institute (AHRI)
Standard 1200 (I-P)-2010 (AHRI 1200-2010), ``Performance Rating of
Commercial Refrigerated Display Merchandisers and Storage Cabinets.''
78 FR 64295, 64301-64302 (Oct. 28, 2013). However, after conducting
market research regarding the visible transmittance of typical
materials used in commercial refrigeration equipment manufacturing, as
well as new high-performing glass products that could be used in such
an application, DOE adopted a threshold of 45 percent in the 2014 CRE
test procedure final rule. 79 FR 22277, 22287 (April 21, 2014). In
support of this BVM ECS final rule, DOE conducted additional research
into the glass and acrylic products typically used by manufacturers to
produce Class A and Combination A beverage vending machines, as well as
any new, high-performing glass products that may have been introduced
since DOE's review for the 2014 CRE test procedure final rule. Based on
its review, DOE believes that the threshold of 45 percent light
transmittance to determine transparency is equally applicable to
materials that are typically used to manufacture both commercial
refrigeration equipment and beverage vending machines. DOE will
continue to monitor the BVM and CRE market for any new materials
integrated into equipment designs that meet DOE's intent of allow
customers to view the merchandise contained within the refrigerated
space but do not meet DOE's definition of transparent and, if
necessary, revise the definition of transparent accordingly.
Therefore, in this final rule, DOE is adopting a definition of
transparent applicable to materials with greater than or equal to 45
percent light transmittance based testing in accordance with ASTM
Standard E 1084-86 (Reapproved 2009). DOE reiterates that this test
method is optional and is not required for equipment certification or
testing by manufacturers. Specifically, manufacturers may continue to
specify the appropriate equipment class without determining the light
transmittance of materials based on testing in accordance with ASTM
Standard E 1084-86 (Reapproved 2009) However, if the transparency of a
material is in question, the determination of the light transmittance
of a transparent material must be determined in accordance with ASTM
Standard E 1084-86 (Reapproved 2009) and DOE will use this test method
to determine equipment classification in enforcement testing.
2. Machines Vending Perishable Goods
In response to DOE's 2015 BVM ECS NOPR, NAMA and Royal Vendors
stated that vending machines that vend perishable goods should be
regulated under a separate equipment class because they must maintain
temperatures that do not allow for a refrigeration low power mode
credit. (NAMA, No. 50 at p. 5; Royal Vendors, No. 54 at p. 4)
Conversely, SVA expressed agreement with DOE's position that vending
machines that vend perishable goods do not require a separate equipment
classification. (SVA, No. 53 at p. 2)
DOE notes that there are beverage vending machines that are capable
of vending certain perishable products that may require more strict
temperature control than beverage vending machines that only vend non-
perishable products, such as bottled or canned soda, juice, or water.
DOE notes such perishable products may or may not be sealed beverages
but that, if a vending machine is refrigerated and is capable of, or
can be configured to, vend sealed beverages for at least one of the
product selections, then the vending machine meets DOE's definition of
beverage vending machine and must comply with DOE's regulations for
this equipment.
Based on input from interested parties provided throughout this
rulemaking, DOE believes that machines capable of vending perishable
goods are generally not materially different from other beverage
vending machines, and that the necessary levels of temperature
maintenance needed to preserve perishables are achieved through the
application of control settings rather than through design changes. In
addition, such equipment can be tested using DOE's existing method of
testing and does not have significantly different energy consumption
profiles from other beverage vending machines when tested using DOE's
methodology. Therefore, DOE does not believe separate equipment classes
and standard levels are warranted for beverage vending machines that
are capable of vending perishable goods, and DOE is not implementing a
separate class for such equipment in this final rule. As such,
equipment that vends perishable products along with at least one sealed
beverage must be tested in accordance with the DOE test procedure and
must meet applicable energy conservation standards. Vending machines
that are not capable of vending sealed beverages or are not
refrigerated do not meet DOE's definition of beverage vending machine
and, as such, are not subject to standards, test procedures, and
certification and reporting requirements for beverage vending machines.
DOE agrees with SVA that beverage vending machines that may be
configured to, or capable of, vending perishable goods do not require a
separate equipment class or separate energy conservation standards.
Specifically, as noted in comments provided by interested parties in
response to the framework document, including Witterns, Crane, AMS, and
NAMA (see preliminary TSD chapter 2) DOE understands that the same BVM
models may be configured to vend perishable or non-perishable goods.
DOE also believes, based on market research and input from interested
parties, that, if the BVM model is configured to vend perishable goods,
the refrigeration low power mode that may be installed on the machine
as distributed in commerce is simply disabled or overridden for that
particular installation. DOE additionally understands that
installations where beverage vending machines are configured to vend
perishable goods represent a minority of installations, a position
supported in public comments provided by Royal Vendors and NAMA (see
preliminary TSD chapter 2).
3. Market Characterization
As part of the market and technology assessment, DOE identified and
characterized relevant trade associations, manufacturers and their
market shares, and current regulatory programs and non-regulatory
initiatives related to BVM energy use. Details
[[Page 1051]]
related to this characterization are in chapter 3 of the final rule
TSD.
In response to the 2015 BVM ECS NOPR, DOE received several comments
related to the role that the ENERGY STAR program plays in the U.S. BVM
market. In the BVM ECS NOPR public meeting and in written comments, EEA
Joint Commenters expressed the belief that minimum efficiency standards
and the ENERGY STAR program are complementary and that, by nature of
being mandatory, DOE's energy conservation standards program is able to
save more energy than ENERGY STAR alone. (EEA Joint Commenters, No. 56
at p. 4; EEA Joint Commenters, Public Meeting Transcript, No. 48 at p.
118) The Form Letter Writers stated standards would eliminate the
current ENERGY STAR specification as the most efficient which would
remove the credibility of the ENERGY STAR Industry. (The Form Letter
Writers, No. 64 and 65 at p. 1) SVA expressed its belief at the BVM ECS
NOPR public meeting that voluntary standards such as ENERGY STAR are
more effective in driving the market towards more efficient equipment
than DOE's mandatory standards. (SVA, Public Meeting Transcript, No. 48
at p. 117) In written comments, Royal Vendors, NAMA, and Coca-Cola
stated that ENERGY STAR certification is required by a majority of
equipment purchasers, and that DOE's proposed standards would trigger a
revision to ENERGY STAR to further reduce allowable energy consumption
below the DOE standard. These stakeholders added that a revision to the
ENERGY STAR standard in response to DOE's BVM ECS rulemaking would make
it more difficult to meet their customers' expectations for the ENERGY
STAR label. Coca Cola added that manufacturers may devote more
resources to developing technologies that can immediately meet newly-
revised ENERGY STAR standards, instead of investing in the development
of technologies that may result in more significant energy savings in
the long term. (Royal Vendors, No. 54 at p. 7; NAMA, No. 50 at p. 14;
Coca-Cola, No. 52 at p. 3).
DOE thanks the EEA Joint Commenters and SVA for their comments
regarding the efficacy of ENERGY STAR in driving the market towards
increased efficiency and agrees with the EEA Joint Commenters'
assessment of ENERGY STAR and DOE's energy conservation standards as
being complementary and more effective than voluntary standards alone.
In response to comments regarding potential revision to ENERGY STAR
standards as a result of today's rulemaking, DOE notes that ENERGY STAR
is a voluntary program that exists to help customers identify energy-
efficient equipment on the market and save on energy costs.
Specifically, the ENERGY STAR program includes only those equipment
that exceeds mandated minimum standards that DOE is required by statute
to set and enforce. Due to its nature as a voluntary program, DOE does
not consider the impact of its energy conservation standards on
potential updates to ENERGY STAR standards in its analysis. DOE
coordinates with EPA on ENERGY STAR in order to reevaluate the ENERGY
STAR specifications when DOE promulgates new or amended standards.
DOE also received several comments in response to the 2015 BVM ECS
NOPR's request for updated estimates for the market share of
combination vending machines. AMS commented that it only manufactures
Class A machines and that its production volume is split roughly evenly
between Class A and Combination A machines. (AMS, No. 57 at p. 2) In
its written submission, NAMA stated that it did not have data to
estimate the market share of combination vending machines specifically,
but it estimated that beverage vending machines are approximately 60
percent of the total market for vending machines.
DOE thanks these stakeholders for their submission of specific data
and has incorporated it into the analysis.
4. Technology Options
As part of the technology assessment, DOE developed a list of
technologies to consider for improving the efficiency of beverage
vending machines. DOE considers as design options all technologies that
meet the screening criteria (see section I.B) and that produce
quantifiable results under the DOE test procedure.
DOE typically uses information about existing and past technology
options and prototype designs to help determine which technologies
manufacturers can use to attain higher energy performance levels. In
consultation with interested parties, DOE develops a list of
technologies for consideration in its screening and engineering
analyses. Initially these technologies encompass all those that DOE
believes are technologically feasible. Since many options for improving
equipment efficiency are available in existing equipment, equipment
literature and direct examination of BVM units currently on the market
provided much of the information underlying this analysis. While DOE
notes that the majority of currently available equipment uses R-134a
for its refrigerant, and R-134a will no longer be available for BVM
applications at the time compliance will be required with any amended
standards established as part of this final rule (80 FR 42870, 42917-
42920 (July 20, 2015)), DOE believes that the majority of technology
options considered in DOE's analysis and presented in the following
list are applicable to all beverage vending machines, regardless of the
refrigerant utilized. Specifically, DOE considered the following
technologies in this final rule analyses:
Higher efficiency lighting
higher efficiency evaporator fan motors
higher efficiency evaporator fan blades
improved evaporator design
evaporator fan motor controllers
low-pressure-differential evaporators
insulation improvements (including foam insulation
thickness increase and use of improved materials such as vacuum
insulated panels)
improved glass pack (for Class A and Combination A
equipment)
higher efficiency defrost mechanism
higher efficiency compressors
variable speed compressors
increased condenser performance
higher efficiency condenser fan motors
higher efficiency condenser fan blades
microchannel heat exchangers
higher efficiency expansion valves
improved anti-sweat heaters
lighting controls (including timers and/or sensors)
refrigeration low power modes.
Chapter 3 of the final rule TSD includes the detailed description
of all technology options DOE identified for consideration in this
rulemaking.
B. Screening Analysis
The purpose of the screening analysis is to evaluate the
technologies identified in the technology assessment to determine which
technologies to consider further and which technologies to screen out.
DOE consulted with industry, technical experts, and other interested
parties in developing a list of energy-saving technologies for the
technology assessment, detailed in chapter 3 of the final rule TSD. DOE
then applied the screening criteria to determine which technologies
were unsuitable for further consideration in this rulemaking. Chapter 4
of the final rule TSD contains details about DOE's screening criteria.
[[Page 1052]]
DOE uses the following four screening criteria to determine which
technology options are suitable for further consideration in an energy
conservation standards rulemaking:
(1) Technological feasibility. DOE considers only those
technologies incorporated in commercial equipment or in working
prototypes to be technologically feasible.
(2) Practicability to manufacture, install, and service. If it is
determined that mass production and reliable installation and servicing
of a technology in commercial equipment could not be achieved on the
scale necessary to serve the relevant market at the time of the
projected compliance date of the standard, then that technology will
not be considered further.
(3) Impacts on equipment utility or product availability. If it is
determined that a technology would have significant adverse impact on
the utility of the product to significant subgroups of customers or
would 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 would have significant adverse impacts on health or safety,
it will not be considered further.
10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b).
In sum, if DOE determines that a technology, or a combination of
technologies, fails to meet one or more of the above four criteria, it
will be excluded from further consideration in the engineering
analysis. The reasons for eliminating any technology are discussed
below.
The subsequent sections address DOE's evaluation of each technology
option against the screening analysis criteria and DOE's determination
of technology options excluded (``screened out'') based on the
screening criteria.
1. Screened-Out Technologies
These four screening criteria do not include the propriety status
of design options. As noted previously, DOE will only consider
efficiency levels achieved through the use of proprietary designs in
the engineering analysis if they are not part of a unique path to
achieve that efficiency level. DOE does not believe that any of the
technologies identified in the technology assessment are proprietary,
and thus, did not eliminate any technologies for that reason.
2. Remaining Technologies
Through a review of each technology, DOE concludes that all of the
other identified technologies listed in this section IV.B.2 met all
four screening criteria to be examined further as design options in
DOE's final rule analysis. In summary, DOE did not screen out the
following technology options:
Higher efficiency lighting
higher efficiency evaporator fan motors
higher efficiency evaporator fan blades
evaporator fan motor controllers
improved evaporator design
low-pressure differential evaporators
improvements to anti-sweat heaters
improved or thicker insulation
higher efficiency defrost mechanisms
higher efficiency compressors
variable speed compressors
microchannel heat exchangers
improved condenser design
higher efficiency condenser fan motors
higher efficiency condenser fan blades
improved glass pack design (for Class A and Combination A
machines)
lighting controls
refrigeration low power modes
DOE determined that these technology options are technologically
feasible because they are being used or have previously been used in
commercially available equipment or working prototypes. DOE also finds
that all of the remaining technology options meet the other screening
criteria (i.e., practicable to manufacture, install, and service and do
not result in adverse impacts on customer utility, equipment
availability, health, or safety). For additional details, see chapter 4
of the final rule TSD.
C. Engineering Analysis
The engineering analysis establishes the relationship between an
increase in energy efficiency of the equipment and the corresponding
increase in manufacturer selling price (MSP) associated with that
efficiency level. This relationship serves as the basis for cost-
benefit calculations for individual customers, manufacturers, and the
nation. DOE typically structures its engineering analysis using one of
three approaches: (1) The design-option approach, (2) the efficiency-
level approach, or (3) the cost-assessment (reverse engineering)
approach. The next paragraphs provide overviews of these three
approaches.
A design-option approach identifies individual technology options
(from the market and technology assessment) that can be used alone or
in combination with other technology options to increase the energy
efficiency of a given BVM unit. Under this approach, cost estimates of
the baseline equipment and more-efficient equipment that incorporates
design options are based on manufacturer or component supplier data or
engineering computer simulation models. Individual design options, or
combinations of design options, are added to the baseline model in
descending order of cost-effectiveness.
An efficiency-level approach establishes the relationship between
manufacturer cost and increased efficiency at predetermined efficiency
levels above the baseline. Under this approach, DOE typically assesses
increases in manufacturer cost for incremental increases in efficiency,
without identifying the technology or design options that would be used
to achieve such increases.
A reverse-engineering, or cost-assessment, approach involves
disassembling representative units of beverage vending machines, and
estimating the manufacturing costs based on a ``bottom-up''
manufacturing cost assessment; such assessments use detailed data to
estimate the costs for parts and materials, labor, shipping/packaging,
and investment for models that operate at particular efficiency levels.
As discussed in the 2015 BVM ECS NOPR, DOE employed the design-
option approach to develop the relationship between energy use of a
beverage vending machine and MSP. The decision to use this approach was
made due to several factors, including the lack of numerous discrete
levels of equipment efficiency currently available on the market and
the prevalence of energy-saving technologies applicable to this
equipment. More specifically, DOE identified design options for
analysis and used a combination of industry research and teardown-based
cost modeling to determine manufacturing costs, then employed numerical
modeling to determine the energy consumption of each combination of
design options employed in increasing equipment efficiency. The
resulting range of equipment efficiency levels and associated
manufacturer production costs (MPCs) were converted to MSPs using
information regarding typical manufacturer markups and outbound freight
costs. Typical manufacturer markups are presented in chapter 5 of the
final rule TSD.
[[Page 1053]]
DOE revised the engineering analysis presented in the 2015 BVM ECS
NOPR based on the feedback from stakeholders, additional industry
research, and responses to recent regulatory changes implemented by
EPA's SNAP program. In particular, DOE revised its assumptions for the
thermal modeling of combination vending machines to account for some
cooling in the compartment that is not designed to be refrigerated,
incorporated higher production costs associated with specific
requirements for beverage vending machines using flammable refrigerants
(propane), and revised which design options were included in Class A
and Class B baseline configurations. In addition, DOE adjusted the
efficiency of CO2 compressors relative to R-134a
compressors, increased the amount of LED lighting accounted for in
place of T8 lighting, decreased the impact attributed to enhanced
coils, incorporated a single-pane glass pack for Combination A vending
machines at baseline, removed the most-efficient compressor design
option from the 2015 BVM ECS NOPR, and updated its cost estimates for
several design options.
1. Baseline Equipment and Representative Sizes
For each of the two classes of equipment with current standards
(Class A and Class B), DOE developed baseline configurations containing
design options consistent with units designed to perform at a level
that approximates the existing 2009 BVM standard. DOE based its
representative size assumptions for Class A and Class B equipment on
the representative sizes assumed in the 2009 BVM rulemaking and input
from manufacturers during the framework, preliminary analysis, and NOPR
phases of this rulemaking, as well as data gathered from supplemental
sources. DOE believes that these representative sizes continue to
reflect the design and features of current baseline equipment for Class
A and Class B equipment.
For Combination A and Combination B equipment, DOE set its baseline
efficiency level differently than for Class A and Class B equipment,
since there are no current regulatory standards for this equipment.
Specifically, DOE modeled the baseline level of efficiency for the
Combination A and Combination B equipment as representing the least-
efficient technology generally found in the BVM market currently for
each design option analyzed. That is, the baseline efficiency level for
Combination A and Combination B equipment represented the least-
efficient combination of technologies available.
Representative sizes for Combination A and Combination B were
established in the preliminary analysis based on equipment available in
the current market, and have been maintained for this final rule.
Specific details of the representative sizes chosen for analysis and
design options representing each of the baseline equipment definitions
for Class A, Class B, Combination A, and Combination B beverage vending
machines are described in more detail in appendix 5A of the final rule
TSD.
Based on input from manufacturers at the BVM ECS NOPR public
meeting as well as feedback received in the preliminary analysis phase
of the rulemaking, DOE adjusted the assumptions it used in its analysis
of baseline level for Class A and Class B beverage vending machines,
for which there are current standards. In this final rule, DOE began
its engineering analysis by analyzing equipment designs that had levels
of energy consumption much higher than allowed by the standard level
set in the 2009 final rule. DOE's analysis then implemented all
applicable design options (including some which likely were implemented
in order to meet the 2009 final rule standard levels) in order of
ascending payback period. Such an approach results in equipment designs
that better reflect the current BVM market. To determine the MPC for a
beverage vending machine that is minimally-compliant with the current
BVM standards each size, refrigerant, and equipment class combination
DOE analyzed, DOE linearly interpolated between the energy consumption
levels just above (more consumptive) and just below (less consumptive)
than the standard. Additional design options were then added as part of
the design option engineering analysis. This methodology represents the
approach that a new entrant to the market, or an existing manufacturer
conducting a redesign, would take to meet the new standard analyzed in
this rule, and allows cost and price associated with meeting the
current standard with appendix B of the amended test procedure. See
Table Table IV.4 for an example of this methodology.
Most of the design options analyzed in this final rule were
observed by DOE in some portion of the equipment currently on the
market. The presence of these design options in equipment that exceeds
the current standard level serves as validation of the energy
performance improvements over the baseline level that are possible with
these design options. However, DOE also realizes that no two
manufacturers may necessarily use the same design option pathways to
improve energy performance. As such, DOE notes that its engineering
analyses represent just one potential pathway to achieve the efficiency
levels modeled in downstream analyses, the one that its analysis shows
to be the most cost-efficient.
After the NOPR stage, stakeholders provided comments regarding
DOE's analysis of baseline equipment. In written comments, AMS
commented that the baseline level calculated for Combination A beverage
vending machines is far more efficient than the performance of actual
machines in use today. Specifically, AMS stated that machines it
manufactures, which would meet DOE's proposed definition of a
Combination A vending machine, were tested, they would consume 8.09
kWh/day as opposed to the 6.18 kW/day baseline that DOE presented in
the NOPR TSD. (AMS, No. 57, at p. 10) AMS specifically stated that
converting a Class A machine to a Combination A machine only reduces
energy by 25 percent even though the refrigerated volume was reduced by
60 percent and urged DOE to reconsider its assumptions for baseline
combination vending machines. (AMS, No. 57 at p. 11)
DOE appreciates the submission of specific data by stakeholders and
used this data to better inform its rulemaking activities. In response
to comments and data submitted after the 2015 BVM ECS NOPR, DOE has
refined its engineering model for Combination A vending machines to
better account for air comingling between the compartment(s) that are
designed to be refrigerated and the compartment(s) that are not
designed to be refrigerated, which effectively increases the heat load
associated with the non-refrigerated volumes and, correspondingly,
energy consumption. DOE notes that the results of this updated analysis
now more closely align with AMS's reported test results.
2. Refrigerants
At the time of the final rule analysis, hydrofluorocarbon (HFC)
refrigerants, and specifically R-134a, were used in most beverage
vending machines on the market in the United States. In addition, based
on equipment certification reports received by DOE, public statements
from major end users of beverage vending machines such as Coca-
Cola,\28\
[[Page 1054]]
and information DOE obtained through confidential manufacturer
interviews (see section IV.J), DOE has come to understand that
CO2 refrigerant is used in a small but growing portion of
the BVM market.
---------------------------------------------------------------------------
\28\ One example of such a public statement is available at
www.coca-colacompany.com/innovation/coca-cola-installs-1-millionth-hfc-free-cooler-globally-preventing-525mm-metrics-tons-of-co2.
---------------------------------------------------------------------------
As discussed earlier, the refrigerants that are available for use
in the U.S. BVM market are changing as a result of two recent
rulemaking actions by EPA SNAP. First, EPA published proposed Rule 19
(Docket No. EPA-HQ-OAR-2014-0198) on July 9, 2014, that proposed, among
other things, to list several hydrocarbons--isobutane and propane--and
the hydrocarbon blend R-441A as acceptable alternatives under SNAP in
BVM applications, subject to certain use conditions. 79 FR 38811. A
final rule adopting these proposals became effective on May 11, 2015,
and was published in the Federal Register on April 10, 2015. 80 FR
19454, 19491. EPA's second rulemaking under SNAP, Proposed Rule 20
(Docket No. EPA-HQ-OAR-2013-0748), was published on August 6, 2014 and
proposed to change the status of certain refrigerants to unacceptable
for certain applications, including R-134a for BVM application. 79 FR
46126. A final rule corresponding to proposed Rule 20 was published in
the Federal Register on July 20, 2015. 80 FR 42870, 42917-42920 (July
20, 2015). This rule changes the status of R-134a for new beverage
vending machines to unacceptable beginning on January 1, 2019.
Therefore, equipment complying with the amended BVM standards DOE is
adopting in this final rule will do so using the refrigerants allowable
under the newly amended SNAP listings.
Due in large part to the EPA SNAP rulemaking, DOE received a number
of stakeholder comments related to refrigerants in this rulemaking. In
particular, commenters addressed which refrigerants were likely to be
used in the future, DOE's approach to analyzing the different
refrigerants, and the relative energy efficiency of the different
refrigerants.
a. Refrigerants Used in the Analysis
DOE notes that while CO2 has been approved for use in
the United States in refrigerated beverage vending applications by EPA
SNAP for several years, other refrigerants such as hydrocarbons,
including propane, were only recently listed as acceptable alternatives
for use in refrigerated beverage vending applications in the United
States with EPA's recent publication of final Rule 19. Although DOE is
not aware of any BVM models that are currently commercially available
using propane as a refrigerant, DOE accounted for the use of propane as
an alternative refrigerant, in addition to CO2, as a
potential refrigerant for BVM application. This was based on use of
propane as a refrigerant in other similar, self-contained commercial
refrigeration applications.
DOE did not receive any comments disagreeing with the use of these
two refrigerants in the analysis. In response to DOE's 2015 BVM ECS
NOPR request for comment, SVA stated that it has no plans to use
isobutane as a refrigerant. (SVA, No. 53 at p. 5) SVA stated that it is
in the early stages of research and development (R&D) for propane
refrigerants and is concerned about EPA and UL requirements that
restrict BVM placement, as well as significant equipment and facilities
costs associated with flammable refrigerants. AMS commented that
beverage vending machines with propane refrigeration systems require
spark-proof motors to maintain safe operation in the event of a
refrigerant leak. AMS stated that these motors are roughly three times
the cost of non-spark proof motors and that this and other changes
would add several hundred dollars to the cost of each machine. (SVA,
No. 53 at p. 5; AMS, No. 57 at p. 8)
DOE thanks SVA and AMS for their comments. DOE has reviewed the
relevant section of the UL 541 standard regarding flammable
refrigerants in BVM applications and agrees with AMS that additional
related costs should be accounted for in order to appropriately reflect
the cost of procuring motors in compliance with the UL requirements.
Accordingly, DOE has revised its cost model to account for the
increased cost of the motors required by this standard.
b. DOE Approach
In the engineering analysis for this final rule, DOE first
conducted an analysis for each equipment class based on equipment using
R-134a refrigerant, the refrigerant found in the majority of equipment
available today and therefore providing the most specific and
comprehensive data available. DOE then conducted analysis on each
equipment class using CO2 and propane refrigerants, by
adjusting the R-134a analysis to account for the performance
differences attributable to the new refrigerants. This methodology
allowed DOE to leverage the large existing base of experience, data,
and models for sale utilizing R-134a while ensuring that its
engineering model and downstream analyses properly addressed the
refrigerant landscape applicable at the time when compliance with new
and amended standards will be required.
In conducting its CO2 analysis, DOE adjusted its
engineering analysis to account for an increase in energy use for a
beverage vending machine that uses CO2 versus a similarly
equipped unit using R-134a. Specifically, in its final rule analysis,
DOE used a 10-percent compressor power increase, based on a separate
analytical comparison of HFC and CO2 compressors and
feedback from manufacturers, to account for the inherent relative
inefficiency of CO2. This figure was reviewed with
manufacturers during interviews and through requests for public comment
on the preliminary analysis. DOE also analyzed components for
CO2 refrigeration systems such as compressors and
refrigeration coils as having higher costs than those for HFC
refrigeration systems. Additionally, as CO2 models were
currently available on the market for purchase at the time of this
analysis, DOE was able to procure, test, and tear down CO2
equipment to use in corroborating its analysis.
For propane equipment, DOE used a similar methodology to that
applied for CO2. The engineering analysis used adjusted
values for compressor performance, incorporating a 15-percent reduction
in energy consumption as compared to an R-134a compressor, as well as
adjustments to the cost of the compressor, heat exchangers, and other
system components. These factors were developed through a separate,
focused analysis targeting the inherent differences in performance
potential between HFC and hydrocarbon refrigerants. Additionally, as
mentioned above, DOE reviewed the requirements in UL 541 Supplement SA,
and accordingly included an additional MPC factor representative of
changes that may be needed to vend motors and other electronic
components in order to comply with the UL requirements for all units
modeled with propane refrigerant. For a detailed explanation of the
methodology used in adjusting the analysis conducted on equipment using
R-134a refrigerant for analyzing CO2 and propane beverage
vending machines in this final rule, please see chapter 5 of the final
rule TSD.
In the BVM ECS NOPR public meeting and in written comments, EEA
Joint Commenters and the CA IOUs requested that DOE treat more
efficient refrigerants as a design option in its engineering analysis
rather than conducting the analysis such that the proposed standards
could be met by either CO2 or propane. The EEA Joint
Commenters expressed the belief that
[[Page 1055]]
DOE's refrigerant-neutral approach overestimates cost and
underestimates potential energy savings as a result of any update to
the standard. (EEA Joint Commenters, No. 56 at p. 2; CA IOUs, No. 58 at
p. 2; EAA Joint Commenters, Public Meeting Transcript, No. 48 at pp. 8,
43)
DOE thanks the CA IOUs and EEA Joint Commenters for their comments.
However, as noted by DOE in the BVM ECS NOPR public meeting, DOE's
analysis for beverage vending machines has taken a refrigerant-neutral
approach to maintain diversity and customer choice with regard to
refrigerant in the BVM market. For example, Coca-Cola acknowledged in
the BVM ECS NOPR public meeting that its choice for the North American
business unit was CO2 as a refrigerant. (Coca-Cola, Public
Meeting Transcript, No. 48 at p. 48-50). Coca-Cola's statement is
consistent with DOE's understanding that BVM customers may select
different refrigerants for a variety of reasons and DOE does not wish
the standards adopted as a result of this final rule to limit the
availability or viability of certain SNAP-approved refrigerants in the
BVM market. Therefore, in this final rule analysis, DOE has maintained
a refrigerant-neutral analysis approach that ensures equitability
across refrigerant platforms and continued availability of
CO2 as a refrigerant option for beverage vending machines.
That is, DOE has maintained an analysis approach that independently
analyzes CO2- and propane-refrigerant equipment so that the
economic results can be analyzed individually. Such an approach results
in selection of new and amended standard levels that result in the
highest NPV for both refrigerants and that does not disadvantage
another refrigerant.
c. Relative Energy Efficiency of Refrigerants
NAMA and Royal Vendors commented in their written submissions that
CO2 systems consume approximately 15 percent more energy
than their R-134a counterparts and cautioned that data may not be
available due to the lack of current use. (NAMA, No. 50 at p. 5; Royal
Vendors, No. 54 at p. 4) SBA Advocacy agreed that CO2 is
about 15 percent less efficient than R-134a and, therefore, claimed
that it is not a technologically feasible alternative. (SBA Advocacy,
No. 61 at p. 3) EVA also commented that CO2 is 15 percent
less efficient than an R-134a unit and the cost in Europe for ``a
cooling unit operating on CO2 is double that of an R-134a
unit as a result of a lack of availability of CO2
compressors.'' (EVA, No. 60 at p. 2) SVA commented that its experience
with CO2 refrigeration systems indicates comparable
efficiency performance to R-134a systems if optimized solely for
steady-state conditions but stated that these systems must be designed
for pull-down requirements associated with equipment reload at higher
ambient temperature and/or humidity conditions, and that this causes
CO2 systems tend to be about 5 percent less energy efficient
than R-134a. (SVA, No. 53 at p. 3) Additionally, AMS commented that it
had no direct knowledge with CO2 but that its limited
testing with propane showed equal or only slightly better efficiency
than R-134a. (AMS, No. 57 at p. 4)
DOE thanks these stakeholders for their comments. It is DOE's
understanding that the difference in performance between equipment
using the different refrigerants is primarily a result of the different
compressor efficiencies. DOE has incorporated these differences into
its analysis and notes that its analytical results are in line with
comments provided and specifically that the efficiency penalty
associated with CO2 refrigeration systems in the analysis is
bounded by the estimates provided. Additional information about these
results is in the compressors section of IV.C.4 and in chapter 5 of the
final rule TSD.
3. Screened-In Technologies Not Implemented as Design Options
DOE removed several screened-in technologies from consideration in
the engineering analysis due to lack of data, lack of availability,
competing effects, or lack of measurable energy savings when tested to
the DOE test procedure. The technologies included higher efficiency fan
blades for evaporator and condenser fans, low-pressure differential
evaporators, improvements to anti-sweat heaters, higher efficiency
defrost mechanisms, variable speed compressors, and microchannel heat
exchangers. More information about these technologies and the reasons
they were removed from consideration can be found in chapter 5 of the
final rule TSD.
DOE received several comments regarding one of the technologies it
removed from consideration in the engineering analysis, variable speed
compressors. In response to DOE's request for comment on the use of
variable speed compressors in beverage vending machines, AMS commented
that although it had used variable speed compressors for energy savings
in the past, this technology was no longer available for BVM
applications due to the small market. (AMS, No. 57 at p. 3) SVA
commented that it is not aware of any variable speed CO2
compressors. (SVA, No. 53 at p. 5) In the BVM ECS NOPR public meeting
and written comments, CA IOUs and the EEA Joint Commenters stated their
belief that the three operating modes of beverage vending machines
(pull-down, steady-state, and low power mode) make them good candidates
for variable speed compressors to reduce energy consumption and
inquired as to why DOE chose to exclude them as design options. (CA
IOUs and EEA Joint Commenters, Public Meeting Transcript, No. 48 at p.
35) In its written comments, the CA IOUs requested that DOE consider
variable speed compressors as a design option. (CA IOUs, No. 58 at p.
2)
DOE thanks these stakeholders for their comments and notes that
manufacturers are not precluded from exploring variable speed
compressors as a means to meet the updated energy conservation
standards for beverage vending machines. However, manufacturer comments
are consistent with DOE's conclusion in the 2015 BVM ECS NOPR that
there are currently no variable speed compressors with operating
capacity ranges applicable to beverage vending machines available on
the market that use refrigerants other than R-134a, which will not be
available for use in vending machine applications by the compliance
date of this rulemaking due to EPA's SNAP regulations. Because DOE is
required to set energy conservation standards that are both
technologically feasible and economically justified, DOE did not
include variable speed compressors as a design option in its analysis.
4. Design Options Analyzed and Maximum Technologically Feasible
Efficiency Level
In response to the 2015 BVM ECS NOPR, DOE received comments with
specific feedback regarding several of the design options analyzed,
including glass packs, improved insulation and vacuum insulated panels,
higher efficiency lighting, lighting low power modes, fan motors,
evaporator fan controls, coils, and higher efficiency compressors.
a. Glass Packs
In written comments, Coca-Cola expressed its belief that enhanced
glass packs, specifically those using three panes of glass, are not
economically justified for the energy savings delivered. Coca-Cola
further stated that some of its current Class A equipment with
CO2 refrigeration systems use
[[Page 1056]]
double pane, argon-filled, low E glass and cannot accommodate triple
pane glass pack without a major redesign. (Coca-Cola, No. 52 at p. 3)
Similarly, Royal Vendors commented that its Class A machines currently
use double-pane, argon-filled, low-emissivity glass and cannot
accommodate triple-pane glass packs without major redesigns, large
development costs, and substantial machine cost increases. (Royal
Vendors, No. 54 at p. 2) SVA also commented that enhanced glass packs
are not economically justified. (SVA, No. 53 at p. 4)
DOE thanks Coca-Cola, Royal Vendors, and SVA for their comments and
has increased the cost associated with the enhanced glass pack design
option from that used during the NOPR, in order to better represent the
economic ramifications of implementing that design option. DOE notes
that the engineering analysis in this final rule considers the enhanced
glass pack design option, which is a triple-paned glass pack, as
technologically feasible, but that the economic analysis does not deem
it to be part of the least-cost approach to meeting the new standard
levels at any analysis point. Additionally, DOE accounted for the cost
of equipment redesign and production equipment cost increases in its
manufacturer impact and customer subgroup analyses (See sections IV.J
and IV.I, respectively).
b. Evaporator Fan Motor Controls
Royal Vendors stated in written comments that its machines already
use evaporator fan controls to meet the current standards. (Royal
Vendors, No. 54 at p. 2)
DOE thanks Royal Vendors for their comment and agrees that most
equipment on the market today makes use of evaporator fan motor
controls. Accordingly, in DOE's engineering analysis in this final
rule, the evaporator fan motor controls design option is implemented in
the baseline level for all Class A and most Class B analysis points.
See section IV.C.1 for information on how DOE established baseline
levels for Class A and Class B equipment in this analysis.
c. Coils
In their written comments, SVA questioned DOE's assumption of 14
percent energy savings due to enhanced evaporator coils, and stated
their general belief that predicted efficiency improvements based on
software modeling are typically optimistic compared to test results.
SVA also stated that for its Class A equipment, it already uses
enhanced evaporator coils to meet the current standard, and that
enhanced condenser coils reduce equipment utility. (SVA, No. 53 at pp.
3-4)
DOE thanks SVA for their comments and has revised the cost and
energy improvement associated with enhanced coils in this final rule.
DOE additionally notes that in all of the final rule analysis points,
the resulting reduction in DEC attributable to changes in the
evaporator coil is shown to be well less than 10 percent. In addition,
DOE notes that such ``enhanced'' evaporator and condenser coil options
are already commonly implemented and commercially-available design
options.
d. Compressors
DOE received several comments regarding different compressors.
Specifically, DOE received comments regarding the higher efficiency
compressor design option and regarding CO2 compressors. In
the BVM ECS NOPR public meeting, SVA expressed doubt that a beverage
vending machine with the compressor that DOE considered as baseline in
its engineering model would be able to meet the 2009 standard, and
stated that DOE should instead consider the Embraco FFU130HAX
compressor as the baseline efficiency level. SVA additionally stated
that CO2 compressors capable of reducing energy consumption
to the degree indicated in DOE's 2015 BVM ECS NOPR analysis do not
exist on the market. (SVA, Public Meeting Transcript, No. 48 at pp. 63-
72) In written comments, Royal Vendors stated that it is not aware of
any compressors with higher efficiency than the Embraco FFU130HAX for
R-134a or the Sanden SRABB for CO2 and that therefore DOE
should not consider a more efficient compressor as a design option to
reduce energy consumption. (Royal Vendors, No. 54 at p. 1) In its
written comments, Coca-Cola similarly stated that the assumed ability
to move to higher efficiency compressors does not exist. (Coca-Cola,
No. 52 at p. 3)
While, through testing and teardowns, DOE has observed equipment on
the current market that meets the current energy conservation standards
that uses compressors other than the Embraco FFU130HAX, DOE agrees with
stakeholder comments in that it is not currently aware of a compressor
available for use in beverage vending machines in the United States
that is more efficient than the Embraco FFU130HAX. Accordingly, DOE has
removed from the analysis the design option that represented a higher
efficiency compressor. Additionally, the engineering analysis now
includes the ``Improved single speed reciprocating compressor'' design
option (which corresponds to the FFU130HAX, adjusted according to the
refrigerant-specific analysis) in all Class A baseline equipment
configurations.
Regarding CO2 compressors, in written comments, AMS
commented that CO2 refrigerant has a significant efficiency
penalty, and that it is aware of only one supplier that makes
CO2 compressors in the capacity range required for BVM
applications. (AMS, No. 57 at p. 8) Coca-Cola also stated in its
written comments that it is aware of only one CO2 compressor
supplier in the U.S. for beverage vending machines. (Coca-Cola, No. 52
at p. 2) Additionally, in the BVM ECS NOPR public meeting, Coca-Cola
stated that it was aware of six CO2 compressors, all early
in the technology curve, and suggested that DOE take into account
potential rapid improvements in efficiency for CO2
compressors as a result of maturing engineering and supply chains into
account in its analysis. (Public Meeting Transcript, No. 48 at p. 51)
DOE thanks Coca-Cola and AMS for their comments. DOE is aware that
there is currently a limited selection of CO2 compressors
available to BVM manufacturers in the United States. Based on the
feedback received, CO2 compressors were analyzed in the
final rule engineering analysis as using 10 percent more energy than an
R-134a compressor of similar design, as opposed to the 6 percent value
used in the 2015 BVM ECS NOPR engineering.
e. Insulation and Vacuum Insulated Panels
Royal Vendors commented that the only design options considered by
DOE in this rulemaking that it has not already implemented to meet
existing energy conservation standards are increased insulation
thickness and vacuum insulated panels, and stated that increased
insulation thickness would require large investments in redesign and
new foaming fixtures. Royal Vendors additionally stated that it does
not know the viability of vacuum insulated panels. (Royal Vendors, No.
54 at p. 2) Coca-Cola commented that vacuum insulated panels are highly
costly to implement and that its supply base has not worked to develop
this option. (Coca-Cola, No. 52 at p. 3) EEA Joint Commenters stated
that DOE's analysis may overestimate the cost and underestimate the
performance of vacuum insulated panels due to possibly outdated
information. (EEA Joint Commenters, No. 56 at p. 3) SVA commented that
they are already using increased insulation thickness on their
[[Page 1057]]
Class B equipment to meet the existing standard. (SVA, No. 53 at p. 4).
DOE has accounted for redesign and increased materials costs in its
manufacturer impact and engineering analyses, respectively. (See
sections IV.J and chapter 12 of the TSD for information on the
manufacturer impact analysis.) In response to Royals' comment
concerning the viability of vacuum insulated panels in BVM
applications, DOE notes that proof of concept for enhanced insulation
to increase energy efficiency has been shown in related industries such
as commercial refrigerator manufacturing and serves as a basis on which
to assess technological feasibility. Regarding Coca-Cola's comment, DOE
has quantified the costs to implement vacuum insulated panels, which it
agrees to be sizably higher at this time than those of traditional foam
insulation, and has incorporated those costs into its engineering
analysis. In response to the comment by EEA Joint Commenters regarding
the cost and performance of vacuum insulated panels, DOE notes that it
has continued research into this technology in concurrent rulemakings
and that its assessment for beverage vending machines is based on the
most up to date information that it has obtained through manufacturer
interviews and other sources.
f. Lighting and Lighting Low Power Modes
Regarding lighting, CA IOUs in the BVM ECS NOPR public meeting and
EEA Joint Commenters in their written comment expressed the belief that
DOE should have accounted for a greater variation in LED lighting
system efficiency rather than considering it as a single efficiency
tier. (CA IOUs and the EEA Joint Commenters, Public Meeting Transcript,
No. 48 at p. 59; CA IOUs, No. 58 at p. 4) In written comments, Royal
Vendors stated that it is already using LED lighting in its Class A
machines to meet the current standard. (Royal Vendors, No. 54 at p. 1)
DOE thanks the CA IOUs, EEA Joint Commenters, and Royal Vendors for
their comments. DOE acknowledges that there are a range of LED
efficiencies available on the market and notes that several design
options in the analysis could be implemented to different extents,
including, for example, lighting systems, thicker insulation, and
various types of controls (e.g., accessory and refrigeration low power
modes). In its engineering model, DOE used representative values for
the energy consumption of each design option, including lighting
systems, for each equipment class. DOE notes that manufacturers are
free to choose whichever design path they wish in order to meet current
and future energy conservation standards. DOE analyzes and orders
design options based on its determination of the relative cost-
effectiveness of each design option. DOE notes that its engineering
analysis agrees with Royal Vendors and accounts for the use of LED
lighting in order to meet the baseline level at many Class A analysis
points.
Regarding lighting low power modes, in the BVM ECS NOPR public
meeting, SVA expressed the belief that test results currently included
in certification directories and showing high levels of efficiency may
have been developed using lighting low power modes. (SVA, Public
Meeting Transcript, No. 48 at p. 66) Also in the public meeting, SVA
expressed doubt that the 6-hour allowance for lighting low power states
under the updated test procedure could account for as steep a drop in
energy consumption as DOE's analysis shows. (SVA, Public Meeting
Transcript, No. 48 at p. 66) In its written comments, SVA estimated
that 20 percent energy savings over a baseline model was possible if
LED lighting systems are used in conjunction with lighting controls,
and 10 percent energy savings were possible if lighting controls are
used with T-8 lighting systems. (SVA, No. 53 at p. 4) SVA also stated
that it only uses one LED bulb in its Class A equipment while DOE
assumes two LED bulbs in its engineering model. (SVA, No. 53 at p. 4)
DOE thanks SVA for its comments, and especially appreciates the
submission of specific data on potential energy savings as a result of
increased efficiency lighting. With regard to SVA's comment on the
number of LED bulbs, DOE notes that its engineering model is based on
equipment configurations equipment found in teardowns, and that it
believes to be generally representative of the beverage vending machine
market due to the presence of similar configurations across multiple
manufacturers. DOE acknowledges that individual models may not have the
same components. Additionally, DOE revisited the specifications of
models available on the markets and, after additional review of
available data, in its final rule analysis, DOE increased the linear
footage of LED fixtures used within the case to replace T8 lighting in
Class B and Combination B analyses to 8 total feet of LED fixtures, and
maintained the values for Class A and Combination A at 6 total feet of
LED fixtures.
g. Fan Motors
In the BVM ECS NOPR public meeting, SVA commented that 9 watt fan
motors are unrealistic for BVM applications and provided more detail in
its written comments, stating that it uses 4 watt fan motors for its
evaporator and condenser fans. In written comments, SVA also stated
that its Class B equipment already implements PSC condenser fan motors
and that ECM condenser fan motors are not economically justified. (SVA,
Public Meeting Transcript, No. 488 at p. 174; SVA, No. 53 at p. 4) In
written comments, Royal Vendors stated that it is already using ECM
evaporator fan motors and PSC condenser fan motors to meet the current
standards and added that converting from PSC to ECM condenser fan
motors would not yield significant energy savings for the added cost.
(Royal Vendors, No. 54 at p. 1)
In response to SVA's comment regarding fan power draw, DOE notes
that it used fan motor wattage values that were shown to be typical of
the BVM market as evidenced by their inclusion in numerous models
examined during DOE's teardown analysis. DOE thanks Royal Vendors for
its comment regarding the use of fan motor design options and notes
that it has reviewed the energy consumption model in its engineering
analysis and that Royal's and SVA's comments generally align with DOE's
engineering analysis with ECM evaporator fan motors often being among
the more cost-effective design options and ECM condenser fan motors
being among the least cost-effective.
h. Performance of Design Option Packages
DOE also received several more general comments regarding the
design options being used by manufacturers and the maximum
technologically feasible level. In the BVM ECS NOPR public meeting and
in written submission, SVA commented that it was already implementing
many of DOE's proposed design options to meet existing ENERGY STAR
levels and that it would not be able to come close to meeting DOE's
proposed standard levels. SVA stated that many of the design options
DOE analyzed are not technologically feasible or economically justified
and that the remaining design options for Class A equipment are
automatic lighting controls and refrigeration low power modes, which it
believes would yield approximately 5 percent energy savings. SVA listed
the
[[Page 1058]]
remaining design options for Class B equipment as including automatic
lighting controls, enhanced evaporator coils, LED lighting, and
refrigeration low power states. (SVA, No. 53 at pp. 3-4; Public Meeting
Transcript, No. 48 at 173)
AMS commented in its written submission that it has already
incorporated several design options to meet the 2009 energy
conservation standards and that reducing daily energy consumption by an
additional 25 percent is not feasible with present technologies and
would require drastic changes to overall cabinet sizes and door design.
(AMS, No. 57 at p. 9) Similarly, Royal Vendors commented that it has
already employed most of the design options considered by DOE in its
analysis to meet the 2009 standards and therefore does not believe it
can meet the proposed standard using any refrigerant. (Royal Vendors,
No. 54 at p. 4) NAMA commented that most manufacturers have already
employed most of the design options considered by DOE and specifically
stated that some manufacturers already use ECM evaporator fan motors,
split capacitor condenser fan motors, LED lighting, and evaporator fan
controls to meet the current standard. (NAMA, No. 50 at p. 5) Coca-Cola
commented that many vending machines with CO2 refrigeration
systems that it purchases are already using LED lighting, ECM
evaporator fan motors, and PSC condenser fan motors to meet ENERGY
STAR. Coca-Cola additionally stated that while LEDs can save energy,
ECM condenser fan motors have minimal impact on energy consumption.
(Coca-Cola, No. 52 at p. 3)
SVA commented that many of the design options considered by DOE are
not technologically feasible, are not economically justified, or
otherwise have a negative impact on equipment utility, citing the
rebuttable presumption that the cost to the customer will be less than
three times the value of the energy savings during the first year for
energy conservation standards to be economically justified (Title 42
U.S.C. 6295(o)) and stated that this should preclude DOE from
considering design options that do not yield an energy cost savings of
at least one third of their incremental cost. (SVA, No. 53 at p. 3)
Additionally, in the BVM ECS NOPR public meeting, SVA expressed the
belief that DOE should have more fully disclosed the data used in its
analysis and that DOE's assumptions are generally off base with regard
to manufacturer capability. (SVA, Public Meeting Transcript, No. 48 at
p. 181)
In response to stakeholder comments, DOE has revised its
engineering model to better represent which design options are already
being used to meet the existing standard and therefore not be
considered as potential sources of further incremental energy savings.
In response to SVA's comment regarding the economic justification of
design options, DOE notes that it includes in the engineering analysis
all technologies that have survived the screening analysis. At the
engineering analysis phase, DOE only screens out those technologies
that are not technologically feasible; are not practical to
manufacture, install, and service; do not impact equipment utility or
equipment availability; and do not adversely affect health and safety
(see section IV.B). DOE considers the economic implications of any
screened-in design options in its downstream analyses and sets new and
amended standard levels based on any improvements in efficiency that
are economically justified based on the new costs and benefits accrued
by the nation, as well as the specific impacts on manufacturers (see
section IV.J) and certain customer subgroups (see section IV.I). In the
LCC and PBP analyses, DOE considers the time, in years, it takes for
the cumulative energy savings from more efficient equipment to recover
any incremental increase in equipment cost necessary to achieve those
efficiency improvements. DOE notes that the PBP analysis is assessed
based on the total incremental equipment cost necessary to achieve a
given efficiency level and the commensurate energy savings, rather than
determining the PBP of individual design options. 42 U.S.C.
6295(o)(2)(B)(iii) DOE further discusses the methodology for the PBP
analysis in section IV.F and presents the results of such analyses in
section V.B.1.a.
The design options included in this final rule analysis are shown
in Table IV.4.
Table IV.3--Design Options Modeled in the Engineering Analysis
------------------------------------------------------------------------
Design option Notes
------------------------------------------------------------------------
Higher efficiency lighting............. e.g., LEDs.
Higher efficiency evaporator fan motors e.g., Electronically commutated
motors.
Evaporator fan controls................
Improved evaporator design.............
Insulation increases or improvements... e.g., Thicker insulation,
vacuum insulated panels.
Improved glass pack.................... Class A and Combination A only.
Higher efficiency condenser fan motors. e.g., Electronically commutated
motors.
Improved condenser design..............
Higher efficiency compressors..........
Lighting low power modes............... e.g., Lighting timers.
Refrigeration low power modes.......... e.g., Timer-based cabinet
temperature rise.
------------------------------------------------------------------------
An example of the results of the engineering analysis for a Class A
BVM model with CO2 refrigerant and a medium refrigerated
volume is provided in Table IV.4 of this notice.
Table IV.4--Example of Design Option Analysis--Class A Medium CO2
Refrigerant
------------------------------------------------------------------------
Design option
DEC (kWh/day) MPC ($) MSP ($) added
------------------------------------------------------------------------
8.598............... $1,736.52 $2,340.77 High Energy Use;
with SPM fan
motors, no energy
controls, T8
lighting, double-
pane glass pack,
1'' insulation,
etc.
7.552............... 1,740.50 2,345.63 Evaporator Fan
Controls.
[[Page 1059]]
5.555............... 1,755.03 2,363.36 Improved Single
Speed
Reciprocating
Compressor.
5.126............... 1,759.01 2,368.22 Automatic Lighting
Controls.
4.604............... 1,764.90 2,375.40 Permanent Split
Capacitor
Evaporator Fan
Motor.
4.348............... 1,770.79 2,382.59 Permanent Split
Capacitor
Condenser Fan
Motor.
3.867............... 1,786.90 2,402.24 LED Lighting.
3.792............... 1,789.48 2,405.38 Baseline--Interpol
ated--Exactly
Meets Current
Standards;
Includes all
Design Options
Above le.
3.751............... 1,790.88 2,407.10 Refrigeration Low
Power State.
3.487............... 1,806.03 2,425.57 Enhanced
Evaporator Coil.
3.372............... 1,830.10 2,454.94 Electronically-
Commutated
Evaporator Fan
Motor.
3.267............... 1,857.71 2,488.62 1.125'' Thick
Insulation.
2.966............... 1,984.86 2,643.75 Enhanced Glass
Pack.
------------------------------------------------------------------------
5. Manufacturer Production Costs
In its engineering analysis, DOE estimates costs for manufacturers
to produce equipment at the baseline energy use level and at
increasingly higher levels of energy efficiency. In this final rule,
DOE based the manufacturer production cost model upon data from
physical disassembly of units available on the market, corroborated
with information from manufacturer literature, discussions with
industry experts, input from manufacturer interviews (see section IV.J
of this final rule), and other sources. The baseline units modeled in
the engineering analysis only incorporated refrigerants allowable under
SNAP regulations at the time of the effective date of any new or
amended standards, namely propane and CO2. As such, the
manufacturer production costs at the baseline and increasing levels of
efficiency all reflect the costs incurred in producing equipment using
acceptable refrigerants under the final SNAP regulations issued in
2015. The incremental cost associated with producing a given BVM unit
using propane or CO2 refrigerant, as compared to a similar
BVM unit using R-134a refrigerant is accounted for through the use of
these refrigerant-specific cost curves. Chapter 5 of the final rule TSD
provides a detailed description of the manufacturing cost analysis.
DOE received comments regarding the selection of units for teardown
and regarding the MPCs that resulted from the analysis. Specifically,
in written comments, NAMA expressed concern that no combination vending
machines were directly torn down and tested and requested that DOE
perform such testing before regulations are imposed on this equipment
class. (NAMA, No. 50 at p. 4) And, in its written comments, SVA
expressed agreement with DOE's assumed markups for Class A and Class B
equipment but added that it believes MPCs are underestimated. (SVA, No.
53 at p. 2)
In response to NAMA, DOE agrees that additional teardowns might
have provided further information regarding combination vending
machines. However, difficulty in procuring combination vending
equipment ultimately made such teardowns impracticable. Instead, DOE
used data gathered through teardowns of Class A and Class B machines
and extended those data to the analysis of combination machines,
drawing on the inherent physical and design similarities between the
analogous equipment classes. In response to SVA, DOE notes that its MPC
estimates are built up as the sum of individual component and system
cost estimates, which have been subjected to numerous rounds of
stakeholder review in previous stages of this rulemaking. DOE has
incorporated into its cost modeling analysis all specific, actionable
cost information received at each stage of the rulemaking. DOE
additionally notes that as mentioned elsewhere in this final rule, it
has updated its cost model for propane units to account for motors and
other components that comply with applicable UL standards, and that
this has had the net result of increasing MPC values for those units.
D. Markups Analysis
DOE uses manufacturer-to-customer markups to convert the MSP
estimates from the engineering analysis into customer purchase prices,
which are subsequently used in the LCC and PBP analysis to evaluate how
the increased cost of higher efficiency equipment compares to the
annual and lifetime energy and operating cost savings resulting from
such efficiency improvements. Accordingly, DOE estimated markups for
baseline and all higher efficiency levels that are applied to the MSPs
from the engineering analysis to obtain final customer purchase prices.
The markups analysis developed appropriate markups (e.g., manufacturer
markups, retailer markups, distributor markups, contractor markups) in
the distribution chain and sales taxes to convert the MPC estimates
derived in the engineering analysis to customer prices, which were then
used in the LCC and PBP analysis and in the manufacturer impact
analysis. At each step in the distribution channel, companies mark up
the price of the equipment to cover business costs and profit margin.
In order to develop markups, DOE identified distribution channels
(i.e., how the equipment is distributed from the manufacturer to the
customer). Once proper distribution channels for each of the equipment
classes were established, DOE relied on economic data from the U.S.
Census Bureau and input from the industry to determine to what extent
equipment prices increase as they pass from the manufacturer to the
customer (see chapter 6 of the final rule TSD).
DOE identified three distribution channels, as described below:
(1) Equipment Manufacturer [rarr] Vending Machine Operator (e.g.,
bottler, beverage distributor, large food operator)
(2) Equipment Manufacturer [rarr] Distributor [rarr] Vending
Machine Operator
(3) Equipment Manufacturer [rarr] Distributor [rarr] Site Owner
Chapter 6 of the final rule TSD provides details on DOE's
development of markups for beverage vending machines.
E. Energy Use Analysis
The purpose of the energy use analysis is to establish an estimate
of annual energy consumption (AEC) of beverage vending machines now and
over the 30-year analysis period and to assess the energy-savings
potential of different equipment efficiencies. DOE uses the resulting
estimated AEC in the
[[Page 1060]]
LCC and PBP analysis (section IV.F of this final rule) to establish the
customer operating cost savings of efficiency improvements considered.
DOE also uses the estimate of energy use at the baseline and at higher
levels of efficiency to estimate NES in the NIA (section IV.H of this
final rule).
The energy use analysis assessed the estimated AEC of a beverage
vending machine as installed in the field. DOE recognizes that a
variety of factors may affect the actual energy use of a beverage
vending machine in the field, including ambient conditions, use and
stocking profiles, and other factors. In the 2015 BVM ECS NOPR, to
model the AEC of each BVM unit, DOE separately estimated the energy use
of equipment installed indoors and outdoors, to account for the impact
of ambient temperature and relative humidity on field-installed BVM
energy use. 80 FR 5050462, 50486 (Aug. 19, 2015).
To determine the AEC of BVM units installed indoors, DOE estimated
that the DEC modeled in the engineering analysis and measured according
to the DOE test procedure is representative of the average energy
consumption for that equipment every day of the year. DOE believes this
is a reasonable assumption, as beverage vending machines installed
indoors are typically subject to relatively constant temperature and
relative humidity conditions consistent with the nominal DOE test
conditions (75 [deg]F and 45 percent relative humidity). DOE estimated
that Class A and Combination A beverage vending machines and a majority
of Class B and Combination B beverage vending machines will all be
installed inside. Id.
However, DOE understands that some Class B and Combination B
beverage vending machines are installed outdoors and will be subject to
potentially more variable ambient temperature and relative humidity
conditions than BVM units installed indoors. Therefore, in the 2015 BVM
ECS NOPR, DOE modeled the AEC of BVM units installed outdoors based on
a linear relationship that was developed between the DEC determined in
accordance with the DOE test procedure, as modeled in the engineering
analysis, and the AEC for Class B and Combination B beverage vending
machines installed outdoors. DOE developed this linear regression based
on analysis performed in support of the 2009 BVM rulemaking, where DOE
modified its energy consumption model developed in the engineering
analysis to reflect the equipment's thermal and compressor performance
characteristics and to simulate the realistic performance of the
machine exposed to varying temperature and relative humidity conditions
(chapter 7 of the 2009 BVM final rule TSD). (Docket No. EERE-2006-STD-
0125, No. 79) DOE then estimated the AEC of a given Class B or
Combination B beverage vending machine installed outside by multiplying
the DEC value by the linear equation determined from based on the 2009
BVM rulemaking analysis. Id.
Regarding DOE's analysis of Class B and Combination B beverage
vending machines installed outdoors, DOE's NOPR analysis did not
consider the incremental energy use of any electric resistance heating
elements energized to prevent freezing in cold temperatures, as DOE
lacked sufficient data to do so and such energy use is not directly
affected by improved efficiency levels considered by DOE because the
technology options DOE considered in the engineering analysis do not
include any design changes that would impact the energy use of
resistance heaters. As such, DOE noted that accounting for the energy
use of cold weather heaters would not significantly impact the energy
use analysis, LCC analysis, or NIA results. Id.
In the 2015 BVM ECS NOPR, DOE estimated, based on publicly
available data from college campuses,\29\ that 16 percent of Class B
machines were installed outdoors. DOE believes that these data from
college campuses are reasonably representative of BVM locations
nationally due to the wide variety of building types and outdoor spaces
on large college campuses, which can be correlated with the likely BVM
locations expected. Id.
---------------------------------------------------------------------------
\29\ Beverage vending machine Outdoor Location and Elevated
(90[emsp14][deg]F) Outdoor Temperature Analysis. Lawrence Berkeley
National Laboratory. June 2014. Available at https://eetd.lbl.gov/sites/all/files/lbnl-6744e.pdf.
---------------------------------------------------------------------------
In addition, the engineering analysis considered three specific
sizes (small, medium, and large) for Class A and Class B equipment, and
two specific sizes (medium and large) for Combination A and Combination
B equipment. However, DOE based its energy use analysis on a
``representative size'' beverage vending machine for each equipment
class, determined based on a weighted average of the equipment sizes
modeled in the engineering analysis. Id. at 50487.
In response to DOE's energy use analysis presented in the NOPR,
Seaga stated the belief that DOE should not consider the number of
Class A machines installed outside to be negligible, but did not
provide any additional data (Seaga, Public Meeting Transcript, No. 48
at p. 84). NAMA also noted the lack of college campuses from the
Northeast and Deep South in the dataset that DOE used and recommended
that DOE expand its data collection to include these two regions of the
country. (NAMA, No. 50 at p. 7) Royal Vendors agreed with DOE that use
of cold weather heaters should not be considered in the NIA. (Royal
Vendors, No. 54 at p. 5) Similarly, AMS expressed agreement with DOE's
analysis with regard to its methodology in calculating annual energy
consumption. (AMS, No. 57 at p. 5)
DOE appreciates AMS and Royal Vendor's support of DOE's energy use
assessment methodology and treatment of cold weather heaters,
respectively. In response to Seaga and NAMA's concerns regarding the
number and type of beverage vending machines located outdoors, DOE
believes that the data from six colleges and universities around the
country are sufficiently representative of the general BVM population
because college campuses typically have a mix of building types that
mirror some of the major markets for beverage vending machines,
including retail, commercial lodging, offices, public assembly, and
outdoor spaces (see chapter 7 in the final rule TSD for a full
discussion of the building types represented in the sample from college
campuses). DOE appreciates the comments from Seaga and NAMA but,
without data to improve DOE's estimates of outdoor BVM installations,
DOE was not able to identify any data or information supporting such
claims. DOE acknowledges that these trends could underestimate the
outdoor instances of outdoor Class A machines and specific regional
installation trends. However, DOE continues to believe that, on
average, the majority of outdoor BVM installations across the country
are Class B or Combination B units and that the number of Class A
outdoor installations is small. In addition, DOE acknowledges that the
six-school sample may underrepresent certain climatic regions in the
United States. However, DOE does not have reason to believe that the
installation trends for BVM in those regions would be significantly
different from those in the regions represented in the data. Therefore,
in this final rule, DOE maintained the assumption that 16 percent of
Class B beverage vending machines are installed outside.
In the 2015 BVM ECS NOPR, DOE also requested comments on any other
variables that it should account for in its estimate of national energy
use. In response, DOE received several comments regarding the effect of
dirty coils in field installations. Mr. Richard Kenelly of CoilPod LLC
commented that dirty coils lead to reduced performance
[[Page 1061]]
and higher energy use (CoilPod LLC, No. 42 at p. 1) and added that
energy consumption may be reduced 45 to 50 percent after coils are
cleaned (CoilPod LLC, Public Meeting Transcript, No. 48 at p. 53). SVA
added that increased condenser efficiency is often achieved by
increasing fin density that can lead to accelerated coil fouling, which
decreases energy consumption under actual use conditions. (SVA, Public
Meeting Transcript, No. 54 at p. 54). USelectIt (USI) agreed with SVA's
statement that increased fin density is used to increase condenser coil
efficiency and that because customers don't generally clean their
coils, they have implemented technology that runs the condenser fan
motors backwards in an attempt to automatically clean the coils. USI
also agreed with SVA that under real-world conditions, efficiency would
decrease substantially due to coil degradation and that including
higher efficiency condenser coils may work against DOE's intended goal
of energy savings, as the higher fin density of these coils makes them
more difficult to clean (USI, Public Meeting Transcript, No. 54 at p.
5). In written comments, Coca-Cola, Royal Vendors, and SVA expressed
concern that increasing coil fin density will hinder performance in the
field due to increased fouling and shorter equipment life. Royal
Vendors provided the specific example of higher compressor strain due
to higher static pressure and increased coil restriction in the case of
increased fin density (Coca-Cola, No. 52 at p. 3; Royal Vendors, No. 54
at pp. 2, 6; SVA, No. 53 at p. 6).
DOE understands the importance of proper maintenance, including
cleaning of the condenser coil, on the energy use and lifetime of
beverage vending machines. DOE has accounted for regular maintenance of
BVM equipment in the LCC model, which accounts for an annual
preventative maintenance cost that includes coil cleaning, cleaning the
exterior of the machine and machine components, and inspection of the
refrigeration system (see section IV.F and chapter 8 of the TSD). DOE
notes that BVM manufacturers and distributors encourage regular coil
cleaning in their operation manuals.\30\ In addition, some
manufacturers and distributors require adherence to the operations
manual in order to maintain the warranty on the equipment,\31\ which
DOE believes may compel such regular preventative maintenance. While
DOE acknowledges that some BVM operators may not adhere to the
recommended maintenance schedule, manufacturers do not have control
over the actions of BVM operators.
---------------------------------------------------------------------------
\30\ See e.g., Dixie Narco. Glassfront BevMax 3 Vender Technical
Manual. Crane. https://69.129.141.51:8080/RD/techbulletins.nsf/
e667893fe32caf4785256bcd0066752b/67ec964a7ec11a7f85257346004b668b/
$FILE/Bev%20Max%203%20CC%20Man%20260.01.pdf or Sma's Club https://scene7.samsclub.com/is/content/samsclub/633055_P1pdf.
\31\ See e.g., Drop's Vending www.dropsvending.com/Merchant2/merchant.mvc?Screen=TERMPOL or Royal https://royalvendors.com/wp-content/uploads/2014/05/Domestic-Vender-Warranty.pdf.
---------------------------------------------------------------------------
Furthermore, DOE does not have authority to address such
application-based usage as part of these equipment standards, which are
applied at the point of manufacture when the coil is clean. Therefore,
DOE is electing not to consider the impact of failure to clean
condenser coils or otherwise properly maintain BVM equipment in the
field in the energy use analysis. DOE notes that BVM operators may
install and operate their equipment in any number of inadvisable ways
that may have an impact on energy use of the equipment. However, in
this analysis, DOE is accounting for the anticipated energy use of
beverage vending machines in the field as intended by manufacturers and
distributors. DOE believes that BVM manufacturers, who are subject to
these standards, should not be held responsible for any failure by BVM
operators to properly operate BVM equipment in the field. DOE also
notes that, were DOE to account for the impact of coil fouling in the
energy use analysis, it would likely affect all equipment classes and
ELs equivalently and, thus, would not affect the LCC analysis or NIA
results because only costs that vary with efficiency levels (ELs)
(incremental costs) lead to changes in these results.
In addition, CA IOUs requested that DOE provide state level energy
savings projections for its proposed standard (CA IOUs, No. 58 at p. 6)
In response to this request, DOE notes that it is obligated by EPCA to
consider the national benefits and costs, including the total national
energy savings, of any new or amended standards to determine whether
such standards are technologically feasible and economically justified.
EPCA does not require DOE to consider such state-specific information
in considering and promulgating Federal standards. (42 U.S.C. 6295
(o)(2)) Furthermore, DOE does not believe that such detailed analysis
would significantly improve the analysis or affect the outcome of such
analysis. Therefore, DOE did not perform a state-level analysis and has
based the standards analysis conducted in this final rule on the
national aggregate impacts on customer, manufacturers, and the nation
in performing the analyses required by 42 U.S.C. 6295(o)(2).
Chapter 7 of the final rule TSD provides additional details on
DOE's energy use analysis for beverage vending machines.
F. Life-Cycle Cost and Payback Period Analysis
New or amended energy conservation standards usually decrease
equipment operating expenses and increase the initial purchase price.
DOE analyzes the net effect of new or amended standards on customers by
evaluating the net LCC. To evaluate the net LCC, DOE uses the cost-
efficiency relationship derived in the engineering analysis and the
energy costs derived from the energy use analysis. Inputs to the LCC
calculation include the installed cost of equipment to the customer,
operating expenses (energy expenses, and maintenance and repair costs),
the lifetime of the unit, and a discount rate.
Because the installed cost of equipment typically increases while
operating costs typically decrease under new standards, there is a time
in the life of equipment having higher-than-baseline efficiency when
the net operating-cost benefit (in dollars) since the time of purchase
is equal to the incremental first cost of purchasing the equipment. The
time required for equipment to reach this cost-equivalence point is
known as the PBP.
DOE uses Monte Carlo simulation and probability distributions to
incorporate uncertainty and variability in the LCC and PBP analysis.
DOE used Microsoft Excel combined with Crystal Ball\TM\ (a commercially
available program) to develop an LCC and PBP spreadsheet model that
incorporates both Monte Carlo simulation and probability distributions.
The LCC subgroup analysis includes an assessment of impacts on customer
subgroups.
DOE determined several input values for the LCC and PBP analysis
including (1) customer purchase prices; (2) electricity prices; (3)
maintenance, service, and installation costs; (4) equipment lifetimes;
(5) discount rates; (6) equipment efficiency in the no-new-standards
case; and (7) split incentives. The approach and data DOE used to
derive these input values are described below.
1. Customer Purchase Prices
DOE multiplied the MSPs estimated in the engineering analysis by
the supply-chain markups to calculate customer purchase prices for the
LCC and PBP analysis. DOE determined, on
[[Page 1062]]
average, 15 percent of this equipment passes through a distributor or
wholesaler, and 85 percent of the equipment is sold by a manufacturer
directly to the end user. In the LCC and PBP analysis, approximately 15
percent of the Monte Carlo iterations include a distributor or
wholesaler markup, while 85 percent of the iterations use a markup
factor of 1.0, indicative of no additional markup on top of the MSPs
(besides sales tax).
DOE developed a projection of price trends for beverage vending
machines in the 2015 BVM ECS NOPR, based on historical price trends
that projected the MSP to decline by almost 2 percent from the 2014 MSP
estimates through the 2019 assumed compliance date of new or amended
standards.
DOE re-examined the data available and updated the price trend
analysis for this final rule analysis. DOE continued to use the
automatic merchandising machines PPI and included historical shipments
data from the U.S. Census Bureau's current industrial reports to
examine the decline in inflation-adjusted PPI as a function of
cumulative BVM shipments. Using these data for the BVM price trends
analysis and DOE's projections for future shipments yields a price
decline of roughly 10 percent over the period of 2014 through 2048. For
the LCC model, between 2014 and 2019, the price decline is almost 2
percent. DOE used this revised price trend in the final rule analysis,
which reflects analytical techniques more consistent with the
methodology DOE has preferentially used for other appliances. See
appendix 8C of the TSD for further details on the price learning
analysis.
2. Energy Prices
DOE derived electricity prices from state-level EIA energy price
data for the commercial and industrial sectors (manufacturing
facilities). DOE used projections of these energy prices for commercial
and industrial customers to estimate future energy prices in the LCC
and PBP analysis. EIA's Annual Energy Outlook 2015 (AEO2015) was used
as the source of projections for future energy prices.
DOE developed estimates of commercial and industrial electricity
prices for each state and the District of Columbia. DOE derived these
average energy prices from data that are published annually based on
EIA Form 826. DOE then used EIA's AEO2015 price projections to estimate
state-level commercial and industrial electricity prices in future
years. DOE assumed that 60 percent of installations were in commercial
locations and 40 percent were in industrial locations.
In response to the 2015 BVM ECS NOPR, Coca-Cola asked if
electricity prices from EIA used in the analysis are based on a
national average or if any kind of weighting or regionality was taken
into account. Coca-Cola also inquired whether DOE considered marginal
costs of electricity (Coca-Cola, Public Meeting Transcript, No. 48 at
p. 110). DOE notes that the LCC and PBP analysis uses state-level
electricity prices in its Monte Carlo approach, and as such inherently
includes regional variability in prices. DOE has considered using
marginal costs of electricity but opted to use average electricity
prices by state in this final rule analysis because compiling and
utilizing marginal rates for the commercial sector across the nation is
extremely complex, and data is difficult to obtain.
3. Maintenance, Repair, and Installation Costs
DOE considered any expected changes to maintenance, repair, and
installation costs for the beverage vending machines covered in this
rulemaking. Typically, small incremental changes in equipment
efficiency incur little or no changes in repair and maintenance costs
over baseline equipment. The repair cost is the cost to the customer
for replacing or repairing components in the BVM equipment that have
failed. The maintenance cost is the cost to the customer of maintaining
equipment operation. There is a greater probability that equipment with
efficiencies that are significantly higher than the baseline will incur
increased repair and maintenance costs, as such equipment is more
likely to incorporate technologies that are not widely available or are
potentially less reliable than conventional, baseline technologies.
DOE based repair costs for baseline equipment on data in a Foster-
Miller Inc.\32\ report with adjustments to account for LED lighting.
Maintenance costs include both preventative maintenance and annualized
cost of refurbishment. DOE estimated that beverage vending machines
undergo refurbishment every 4.5 years based on two ENERGY STAR reports
indicating that beverage vending machines are refurbished every 4 to 5
years. DOE used RSMeans \33\ data for preventative maintenance costs
and used data from the 2009 BVM final rule \34\ for the annualized cost
of refurbishment.
---------------------------------------------------------------------------
\32\ Foster-Miller, Inc. Vending Machine Service Call Reduction
Using the VendingMiser. February 18, 2002. Report BAY-01197.
Waltham, MA.
\33\ RSMeans Facilities Maintenance & Repair 2010, 17th Annual
Edition. 2009. Kingston, MA.
\34\ U.S. Department of Energy-Office of Energy Efficiency and
Renewable Energy. Chapter 8 Life-Cycle Cost And Payback Period
Analyses, Beverage Vending Machines Final Rule Technical Support
Document. 2009. Washington, DC. Available online at
www.regulations.gov under Docket No. EERE-2006-STD-0125.
---------------------------------------------------------------------------
In the 2009 BVM rulemaking, DOE assumed that more-efficient
beverage vending machines would not incur increased installation costs.
Further, DOE did not find evidence of a change in repair or maintenance
costs by efficiency level with the exception of repair cost decreases
for efficiency levels that used LED lighting.
In the 2015 BVM ECS NOPR, DOE requested comment on the maintenance
and repair costs modeled in the LCC analysis, especially additional
data regarding differences in maintenance or repair costs that vary as
a function of refrigerant, equipment class, or efficiency level. DOE
received two comments. Royal Vendors commented that maintenance and
repair costs will be higher for units using new refrigerants than they
currently are for R-134a units, and that more efficient components are
more expensive, thus higher efficiency levels should have higher
maintenance costs. However, Royal Vendors did not supply supporting
data. (Royal Vendors, No. 54 at p. 6) AMS commented that they had
observed no measurable differences in cost or frequency of service
calls for higher efficiency Class A machines. (AMS, No. 57 at pp. 5-6)
In response to these comments, in this final rule analysis DOE
included higher maintenance costs for more efficient machines which
implemented such design options as enhanced condenser coils, improved
compressors, and high performance fans. Please see chapter 8 of the
final rule TSD for more information regarding maintenance and repair
costs.
4. Equipment Lifetime
DOE used information from various literature sources and input from
manufacturers and other interested parties to establish average
equipment lifetimes for use in the LCC and subsequent analyses. The
2009 final rule assumed that average BVM lifetime is 10 years. 74 FR
44914, 44927 (Aug. 31, 2009). For this final rule, a longer average
lifetime of 13.5 years is assumed based on refurbishments occurring
twice during the life of the equipment at an interval of 4.5 years. As
discussed in section IV.F.3, this estimate is based
[[Page 1063]]
on a 2010 ENERGY STAR webinar,\35\ which reported average lifetimes of
12 to 15 years, and data on the distribution of equipment ages in the
stock of beverage vending machines in the Pacific Northwest from the
Northwest Power and Conservation Council 2007 Regional Technical Forum
\36\ (RTF), which observed the age of the units in service to be
approximately 8 years on average.
---------------------------------------------------------------------------
\35\ EPA. Always Count Your Change, How ENERGY STAR Refrigerated
Vending Machines Save Your Facility Money and Energy. 2010.
www.energystar.gov/ia/products/vending_machines/Vending_Machine_Webinar_Transcript.pdf.
\36\ Haeri, H., D. Bruchs, D. Korn, S. Shaw, J. Schott.
Characterization and Energy Efficiency Opportunities in Vending
Machines for the Northwestern US Market. Prepared for Northwest
Power and Conservation Council Regional Technical Forum by Quantec,
LLC and The Cadmus Group, Inc. Portland, OR. July 24, 2007.
---------------------------------------------------------------------------
Refurbishment costs are included in the maintenance costs presented
in section IV.F.3 of this final rule, and a discussion of how
maintenance and repair costs are derived is in chapter 8 of the final
rule TSD. DOE believes a lifetime of 13.5 years across efficiency
levels is a representative lifetime assumption for beverage vending
machines. DOE used this assumption in its analysis for this final rule.
At the NOPR stage, DOE requested comment on the assumed lifetime of
beverage vending machines and if the lifetime of beverage vending
machines is likely to be longer or shorter in the future. In addition,
DOE requested comment on its assumption that a beverage vending machine
will typically undergo two refurbishments during the course of its life
and if refurbishments are likely to increase or decrease in the future.
DOE also requested comment on the applicability of this assumption to
all equipment classes.
DOE received several additional comments on equipment lifetime in
response to the NOPR analysis. AMS generally agreed with DOE's
methodology and results for equipment lifetime (AMS, No.57 at p. 6),
but AMS also noted that new component types with unproven reliability
records may either shorten or lengthen BVM lifetimes. (AMS, No. 57 at
p. 6) Royal Vendors commented that the evaporator fan and condenser fan
will have shorter life with increased fan density, thereby decreasing
performance and shortening compressor lifetime. (Royal Vendors, No. 54
at p. 6) NAMA commented that the lifetime of machine could be longer in
the future because BVM owners will retrofit instead of buy new
machines. (NAMA, No. 50 at p. 8)
DOE appreciates these comments, and maintained its average lifetime
assumption of approximately 13.5 years for this final rule. However,
DOE did compensate for the effects of enhanced evaporator and condenser
fans in the repair and maintenance costs component of the LCC and PBP
analysis. In this analysis, while the shorter life of these fans does
not shorten the overall life of the BVM equipment, the costs to
maintain more efficient equipment is greater.
DOE notes that assumptions regarding equipment lifetime and
refurbishment cycles also affect DOE's shipments model, which is
discussed in section IV.G of this final rule.
5. Discount Rates
DOE developed discount rates by estimating the average cost of
capital to companies that purchase beverage vending machines covered
under this rulemaking. DOE commonly uses the cost of capital to
estimate the present value of cash flows to be derived from a typical
company project or investment. Most companies use both debt and equity
capital to fund investments, so the cost of capital is the weighted-
average cost to the firm of equity and debt financing.
6. Equipment Efficiency in the No-New-Standards Case
To accurately analyze the incremental costs and benefits of the
adopted standard levels, DOE's analyses consider the projected
distribution of equipment efficiencies in the no-new-standards case
(the case without new energy efficiency standards). That is, DOE
calculates the percentage of customers who will be affected by a
standard at a particular efficiency level (in the LCC and PBP analysis,
discussed in this section IV.F), as well as the national benefits (in
the NIA, discussed in section IV.H) and impacts on manufacturers (in
the MIA, discussed in section IV.J) recognizing that a range of
efficiencies currently exist in the marketplace for beverage vending
machines and will continue to exist in the no-new-standards case.
To estimate the efficiency distributions for each equipment class,
DOE relied on all publicly available energy use data. Specifically, the
market efficiency distribution was determined separately for each
equipment class and for each refrigerant. For equipment for which
certification information was available in the DOE certification \37\
and ENERGY STAR databases,\38\ these data were used to determine the
efficiency distribution of models within the equipment class, which
only included Class B CO2 equipment. 80 FR 50462, 50492
(Aug. 19, 2015).
---------------------------------------------------------------------------
\37\ www.regulations.doe.gov/ccms.
\38\ www.energystar.gov/productfinder/product/certified-vending-machines/results.
---------------------------------------------------------------------------
For Class A and Class B equipment that is not represented in DOE's
combined BVM models database (Class A CO2 equipment and
Class A and Class B propane equipment), DOE assumed all equipment would
be ENERGY STAR-compliant or use design options consistent with ENERGY
STAR equipment in the no-new-standards case. That is, DOE assumed that
if a manufacturer did not reengineer the model to meet the ENERGY STAR
level independently, DOE assumed that it is likely that a manufacturer
would use the same case and basic accessory set (i.e., non-
refrigeration system components) available on other similar ENERGY
STAR-listed models using R-134a, changing only the compressor and other
sealed-system components, as opposed to building or purchasing
separate, less efficient, components for any new propane models. This
analysis approach resulted in selection of the first efficiency level
above the baseline, or EL 1, for Class A and Class B propane equipment
and for Class A CO2 beverage vending machines. Id.
For Combination A and Combination B beverage vending machines, DOE
notes that very little data exists regarding the efficiency
distribution of such equipment. However, because most manufacturers of
Combination A and Combination B equipment also produce Class A and/or
Class B equipment, DOE employed a methodology to estimate the
efficiency distribution of existing Combination A and Combination B
equipment based on the known efficiency of Class A and Class B
equipment. Therefore, based on the same analytical methodology used for
Class A and Class B propane equipment and Class A CO2
equipment, DOE estimated the efficiency distribution of Combination A
and Combination B equipment based on the set of design options
reflected in the efficiency distribution for Class A and Class B
equipment that is currently available on the market. However, DOE notes
that there are some BVM manufacturers that produce only Class A and/or
Class B equipment and these manufacturers typically produce the most
efficient units. Therefore, DOE assumed that the design option set
corresponding to the ENERGY STAR levels for Class A and Class B
[[Page 1064]]
equipment, which is the most common design, represented the maximum
efficiency for combination equipment and higher efficiency Class A and
Class B models did not have commensurate combination equipment
platforms. Therefore, equivalent market share for combination equipment
and the remaining shipments were equally distributed between the
``ENERGY STAR equivalent'' efficiency level and the baseline efficiency
level, or EL 0. Id.
To project this efficiency distribution over the analysis time
frame in the no-new-standards case, DOE assumed that the efficiency
distribution that currently exists in the market will be maintained
over the analysis period (2019-2048). Id.
In response to the 2015 BVM ECS NOPR analysis, DOE received
comments from interested parties regarding DOE's efficiency
distribution assumptions. In particular, AMS commented that it sells
Combination A machines with and without features found in their ENERGY
STAR Class A machines and that less than 10 percent of its customers
purchase more efficient models because the company does not see the
energy savings benefits themselves. (AMS, No. 57 at p. 7) NAMA also
expressed concern that DOE's definition for combination vending
machines may make the assumption that Combination A and Combination B
machines have similar efficiency distributions to their Class A and
Class B counterparts false. (NAMA, No. 50 at p. 9)
Regarding the efficiency distribution of combination machines, as
stated above, DOE assumed that combination vending machines enter the
market at efficiency levels similar to, but slightly less than, the
comparable Class A and Class B efficiency distributions. Consistent
with AMS and NAMA's comments, DOE acknowledges that Combination A and
Combination B equipment classes may be less efficient than Class A and
B equipment because these classes have not previously been subject to
standards. Therefore, DOE defined the baseline efficiency distribution
for Combination A and Combination B equipment as significantly less
efficient than Class A and Class B equipment. That is, Combination A
and Combination B equipment is assumed to fall between the baseline
efficiency unit (the least efficient combination unit that could be
produced) and the EL with comparable design options to the ENERGY STAR
EL for Class A and Class B equipment. DOE notes that this is
significantly less efficient than the baseline efficiency distribution
for Class A and Class B equipment, as this equipment is not assumed to
have shipments below ENERGY STAR and in some cases has shipments of BVM
models with efficiency levels far exceeding the ENERGY STAR
requirement.
DOE also notes that the values in the ENEGY STAR and CCMS databases
represent values gathered under the existing DOE test procedure, or
appendix A. Because this final rule analysis is conducted based on
testing in accordance with appendix B, DOE elected to translate the
existing equipment efficiency data to be representative of testing
under appendix B. To do this, DOE calculated the average energy
savings, in kWh/day, for accessory low power mode and refrigeration low
power mode for those equipment classes represented in the ENERGY STAR
and CCMS databases,\39\ as these are the test procedure provisions in
appendix B that affect the measured DEC of covered equipment. The
energy savings from accessory and refrigeration low power mode will
vary based on the specific technologies and components implemented in
each different BVM model. However, DOE believes that the design options
and technologies modeled in the engineering analysis are representative
of typical equipment available in the market; therefore, the average
energy savings for the accessory and refrigeration low power mode
generated based on the engineering analysis are similarly
representative of the average change in daily energy consumption that
BVM models with low power modes would observe when testing in
accordance with appendix B. That is, DOE's analysis calculates the
average change in measured DEC when testing under appendix B, with low
power modes enabled, compared to appendix A, for the typical BVM model.
---------------------------------------------------------------------------
\39\ While DOE performed this analysis for both Class A and
Class B equipment represented in the CCMS and ENERGY STAR database,
only Class B CO2 units are relevant for DOE's analysis,
as all Class A units in the ENERGY STAR and CCMS databases use R-
134a refrigerant.
---------------------------------------------------------------------------
To adjust the CCMS and ENERGY STAR certified ratings, DOE assumed
that all ENERGY STAR-certified equipment would have both accessory low
power mode and lighting low power mode. DOE notes that ENERGY STAR
prescribes that either accessory or refrigeration low power mode (or
both) be present in order for a model to qualify for ENERGY STAR
certification. Therefore, all ENERGY STAR models are offset by the
average energy savings resulting from the use of low power modes when
testing under appendix B (0.21 kWh/day for Class B equipment). DOE
assumed that the models that were certified in CCMS but were not ENERGY
STAR-qualified did not have low power modes and, thus, their energy
consumption was not adjusted.
Some commenters observed that some certified ratings in the CCMS or
ENERGY STAR databases may be based on testing of equipment without
accounting for the energy consumption of money processing equipment
and/or without lighting fully energized for the duration of the test,
as is currently required under appendix A (see section III.B). DOE
notes that the recently published 2015 BVM test procedure final rule
adopted a new appendix A that clarifies the treatment of certain
accessories, including lighting, under the DOE test procedure.
Specifically, appendix A provides that, while energy management systems
that cannot be adjusted by the machine operator may be employed, all
lighting is to be illuminated to the maximum extent throughout the test
and the energy consumption of payment mechanisms is to be accounted for
the DEC for each BVM model. 80 FR 45758 (July 31, 2015). DOE also notes
that appendix A of the amended BVM test procedure must currently be
used to certify equipment with existing energy conservation standards.
While DOE acknowledges that some manufacturers may have previously
misinterpreted the DOE test procedure and certified equipment without
lighting fully illuminated and/or without money processing equipment in
place, DOE notes that the analysis supporting the standard levels
adopted in this final rule was done based on a modeled engineering
analysis, which was validated based on testing DOE conducted in
accordance with the amended BVM test procedure adopted in the 2015 BVM
test procedure final rule. Based on the engineering analysis and
testing results, DOE maintains that equipment can meet the current and
amended standard levels when testing in accordance with the 2015 BVM
test procedure final rule test procedure amendments. In addition, DOE
notes that the CCMS and ENERGY STAR databases are only used to inform
the distribution of equipment efficiencies currently available in the
market. As DOE does not have information on whether and which specific
models may have been testing without lighting fully illuminated and/or
without money processing devices in place, DOE declines to modify the
DEC values found in the CCMS and ENERGY STAR databases to account for
these potential misinterpretations. However, DOE did conduct a
sensitivity analysis to
[[Page 1065]]
determine the impact of any artificially reduced DEC values in the CCMS
and ENERGY STAR databases and found that it did not have a significant
impact on the feasibility or cost-effectiveness of the analyzed TSLs.
For equipment that are not represented in DOE's combined BVM models
database, the efficiency distributions assumed in the final rule are
estimated based on the ENERGY STAR and CCMS database, knowledge of the
market, test data, and comments received from manufacturers.
Specifically, for Class A CO2 equipment and Class A and
Class B propane equipment, these models were all assumed to be designed
based on a similar ENERGY STAR-compliant R-134a design platform for the
given or similar equipment class. This analysis approach resulted in
selection of the baseline efficiency level for Class A CO2
equipment, EL1 for Class A propane equipment, and primarily EL2 for
Class B propane equipment.\40\ Chapter 8 of this final rule TSD
provides more detail about DOE's approach to developing no-new-
standards case efficiency distributions.
---------------------------------------------------------------------------
\40\ DOE assumed that 85 percent of the market would enter at
the ENERGY STAR level (EL2), with the remaining 15 percent
distributed between the lower ELs (EL1 and EL0), to reflect the fact
that some manufacturers may elect to trade off the increased
efficiency of propane equipment with other more efficient design
options to reduce cost. This assumption for Class B equipment also
reflects the larger spread in efficiency currently observed in the
market, as compared to Class A equipment.
---------------------------------------------------------------------------
7. Split Incentives
DOE understands that in most cases the purchasers of beverage
vending machines (a bottler or a vending services company) do not pay
the energy costs for operation and thus will not directly reap any
energy cost savings from more-efficient equipment. However, DOE
believes that BVM owners will seek to pass on higher equipment costs to
the users who pay the energy costs, if possible. DOE understands that
the BVM owner typically has a financial arrangement with the company or
institution on whose premises the beverage vending machine is located,
in which the latter may pay a fee or receive a share of the revenue
from the beverage vending machine. Thus, DOE expects that BVM owners
could modify the arrangement to effectively pass on higher equipment
costs. Therefore, DOE's LCC and PBP analysis uses the perspective that
the company or institution on whose premises the beverage vending
machine is located pays the higher equipment cost and receives the
energy cost savings.
In response to the 2015 BVM ECS NOPR, NAMA and AMS commented that
operators of vending machines typically do not pay the energy costs
associated with the machine, which are instead borne by the business or
institution where the machine is installed. (NAMA, Public Meeting
Transcript, No. 48 at p. 108; AMS, No. 57 at p. 6) DOE is aware of this
``split incentive'' issue and its impact on the perceived cost-
effectiveness of savings in the marketplace. However, as noted above,
in this analysis DOE has assumed BVM owners will seek to modify
existing financial arrangements and contracts to pass on higher
equipment costs to the users who pay the energy costs. Therefore, DOE's
LCC and PBP analysis uses the perspective that the company or
institution on whose premises the beverage vending machine is located
will be impacted by the higher equipment cost and receives the energy
cost savings. In the MIA, DOE also accounts for the ability of
manufacturers to pass on higher equipment costs to customers (see
section IV.J).
G. Shipments Analysis
DOE uses forecasts of annual equipment shipments to calculate the
national impacts of standards (NES and NPV) and to calculate the future
cash flows of manufacturers.\41\ For beverage vending machines, DOE
developed shipments forecasts based on an analysis of key market
drivers and industry trends for this equipment. In DOE's shipments
model, shipments of equipment are driven by stock replacements assuming
that the overall population of beverage vending machines will slightly
decrease over the next several decades.
---------------------------------------------------------------------------
\41\ DOE uses all available data on manufacturer model
availability, shipments, or national sales to develop estimates of
the number of BVM units of each equipment class sold in each year of
the analysis period. In general one would expect a close
correspondence between shipments and sales and a reasonable
correlation between model availability and sales.
---------------------------------------------------------------------------
In the 2015 BVM ECS NOPR analysis, DOE estimated historical
shipments between the years of 1998 and 2006 based on the 2009 BVM
final rule shipments model, increased by 18 percent to reflect the fact
that the 2009 BVM final rule shipments model addresses only Class A and
Class B equipment, not Combination A or Combination B equipment. 74 FR
44914, 44928 (Aug. 31, 2009) DOE estimates that combination machines
represent 18 percent of total BVM shipments, as discussed further in
section IV.G.1. DOE also referenced the ENERGY STAR shipment data to
estimate shipments of new beverage vending machines between the years
of 2005 and 2012 to corroborate DOE's historical shipments estimates
during this period. These historical shipment estimates were used to
build up a stock of BVM equipment with a representative distribution of
ages, and DOE estimated a stock of 3.1 million BVM units in the United
States in 2006. 80 FR 50462, 50493 (Aug. 19, 2015).
Between 2006 and 2014, DOE estimated that annual shipments declined
linearly from 118,000 in 2006 to 45,000 in 2014, consistent with
comments from manufacturers received in during manufacturer interviews
conducted during the NOPR phase of this rulemaking (see section IV.J of
this final rule). Based on these shipments, the estimated stock in 2014
is approximately 2.2 million units, compared to a stock of
approximately 3 million in 2006. In the 2015 BVM ECS NOPR, DOE noted
that if shipments were maintained at 2014 levels of around 45,000 units
per year over the 30-year analysis period, this would result in an 80-
percent reduction in overall stock of beverage vending machines in the
United States and would reflect many current BVM owners removing BVM
units from the marketplace permanently. Lacking any data indicating or
supporting a significant reduction in availability or deployment of
beverage vending machines, DOE assumed that shipments would recover
over time to maintain reasonably constant stocks of beverage vending
machines into the future. Id.
In both the BVM ECS NOPR analysis and this final rule analysis, DOE
modeled future shipments of new beverage vending machines from 2014
through 2048 based on data from Vending Times Census of the Industry
2014 \42\ that reported BVM stock trends in the commercial and
industrial building sectors, as well as specific commercial and
industrial building sectors where beverage vending machines are
commonly deployed. For each commercial and industrial building sector,
DOE modeled an average annual percentage reduction in stock, as shown
in Table IV.5, based on an assumed percentage reduction in BVM units
for different commercial building uses. The number of buildings for
each sector was also evaluated based on data available from the 2012
Commercial Building Energy
[[Page 1066]]
Consumption Survey (CBECS),\43\ and an average increase in number of
buildings was calculated by comparing 2012 CBECS data to historical
2003 CBECS data. The estimated stock in 2048 based on this method was
1.8 million, a 20-percent decrease from the 2.2 million estimated in
2014. To estimate the shipments of new beverage vending machines based
on these stock projections, DOE assumed the minimum growth rate
necessary to result in a stock of 1.8 million in 2048, which resulted
in a growth rate of 3.7 percent annually throughout the analysis
period. Id at 50494.
---------------------------------------------------------------------------
\42\ Vending Times Census of the Industry 2014. Available at
www.vendingtimes.com.
\43\ www.eia.gov/consumption/commercial/reports/2012/preliminary/index.cfm.
Table IV.5--Average Annual Percent Reduction in BVM Stock and Growth in
Number of Buildings for Each Industrial Sector and the Industry Overall
------------------------------------------------------------------------
Annual growth in
Average annual % number of
Commercial and industrial reduction in BVM buildings (Est.
building sector * stock from CBECS data)
* (%)
------------------------------------------------------------------------
Plants, Factories............... 0.29 3.01
Schools & Colleges and 0.74 0.09
Universities...................
Public Locations................ 0.38 -0.80
Government and Military......... 0.29 2.03
Offices, Office Complexes....... 0.74 2.54
Hospitals, Nursing Homes........ 1.47 2.41
Other Locations................. 0.45 1.27
---------------------------------------
Total....................... 0.55 1.78
------------------------------------------------------------------------
* Note that the commercial and industrial building sectors assumed in
this analysis correspond to those referenced in the 2013 Vending Times
Census of the Industry. DOE mapped the CBECS building types to these
commercial and industrial building sectors and provides a description
of that mapping in chapter 9 of the final rule TSD.
At the 2015 BVM ECS NOPR stage, DOE requested comment on the
several assumptions regarding historical shipments between 1998 and
2014 and also requested data from manufacturers on historical
shipments, by equipment class, size, and efficiency level, for as many
years as possible, ideally beginning in 1998 until the present.
In response, AMS offered that it manufactures only Class A and
Combination A machines and that its shipment volumes are split roughly
50-50 between the two (AMS, No. 57 at p. 3). AMS also commented that
DOE's shipments assumption contradict a 2014 ENERGY STAR publication
which reports 54,000 shipments for that year. AMS noted that this does
not include combination machines, and claimed that even the estimated
54,000 value is likely underestimated. (AMS, No. 57 at p. 7) SVA
commented that historical shipments between 1998 and 2014 had a
downward trend. (SVA, No. 53 at p. 8) Regarding existing BVM stock
assumptions, NAMA provided an average estimate of 2.5 machines
installed per ``customer location.'' (NAMA, No. 50 at p. 11)
In response to these comments submitted by interested parties, DOE
revised the historical shipments model to reference the most current
ENERGY STAR market penetration reports, including the 2014 report cited
by AMS. As AMS noted that the previous estimate of 45,000 is likely too
low, DOE has updated the shipments in 2014 to be consistent with the
shipments of ENERGY STAR-qualified units reported by ENERGY STAR
(54,000 units), but scaled this number to reflect the shipments of
combination equipment and non-ENERGY STAR-qualified Class A and Class B
equipment. Specifically, DOE increased the 54,000 estimate by 18
percent to account for shipments of combination equipment and by 11
percent to represent the shipments of non-ENERGY-STAR-qualified
units,\44\ resulting 71,443 units shipped in 2014. DOE agrees with
SVA's comment regarding the consistent downward trend of shipments
between 1198 and 2014 and notes that DOE's shipments model reflects
this industry trend. DOE believes the referenced ENERGY STAR reports
represent the best available data to estimate historical BVM shipments.
---------------------------------------------------------------------------
\44\ DOE estimates that in 2014 89 percent of Class A and B
equipment were ENERGY STAR-qualified based on the relative number of
models available in the CCMS and ENERGY STAR databases in 2014.
---------------------------------------------------------------------------
At the NOPR stage DOE also requested comment on its assumptions
regarding future shipments. Specifically, DOE requested comment on the
stock of BVM units likely to be available in the United States and in
particular commercial and industrial building sectors over time. DOE
also requested comment on its assumptions regarding the likely
reduction in stock in different commercial and industrial building
sectors in which beverage vending machines are typically installed and
on any other factors that might influence an overall reduction in BVM
stock.
In response to these requests, DOE received several comments
regarded future shipments. In the BVM ECS NOPR public meeting and in
written comments, NAMA expressed concern regarding DOE's assumed
reduction in shipments due to health initiatives and stated that the
industry is moving towards healthier options. NAMA additionally stated
that the ability to place whatever the operator wants in a given
machine would negate the need to remove the machine itself due to a
soda ban. NAMA referenced an industry census study by Technomic, Inc.
projecting growth in future revenues and asked DOE to re-evaluate
assumptions regarding shipments. (NAMA, No. 50 at p. 9; NAMA, Public
Meeting Transcript, No. 48 at p. 129) Reinforcing that comment, the EEA
Joint Commenters argued that DOE may be underestimating total number of
shipments over time because an increase in healthy options that are
being offered in vending machines may actually cause shipments to
increase over time, but did not provide supporting data. (EEA Joint
Commenters, No. 56 at p. 4)
In written comments, NAMA commented that it is not aware of any
situations that would result in further reduction to BVM stock other
than micromarket expansion. However,
[[Page 1067]]
NAMA expressed its belief that this trend may not be as significant as
once thought, or as DOE suggested in the 2015 BVM ECS NOPR. NAMA cited
a 15 percent growth in conversion from beverage vending machines to
micromarkets and estimated there to be 10,000 micromarkets currently in
existence in the United States. NAMA stated that it was unable to
provide data as to how the increased presence of micromarkets would
affect future shipments. (NAMA, No. 50 at pp. 10-11)
Conversely, SVA stated that new technologies such as micromarkets
are resulting in the replacement of coin operated vending machines with
bottle coolers. (SVA, Public Meeting Transcript, No. 48 at p. 133) In
written comments, SVA expressed the belief that the current downward
trend in beverage vending machine shipments in the United States will
continue for the foreseeable future and recommended that DOE work to
improve its understanding of equipment life, a significant driver of
projected shipment calculations. (SVA, No. 53 at p. 9) SVA stated that
tightening equipment budgets and increasing prices would result in
increased equipment life, and if equipment life decreases, the stock of
beverage vending machines in the United States would continue to
decrease. SVA cited a downward trend in shipments between 1998 and
2014, and expressed strong disagreement with DOE's assumption that this
trend would reverse. SVA additionally stated that due to the limited
time allowed to submit comments, it was not able to provide data on
shipments by equipment class. SVA stated its belief that micromarkets
will continue to displace beverage vending machines and have an
increasingly negative impact on shipments. (SVA, No. 53 at pp. 7-8)
DOE notes that changes in the availability of new refrigerants and
limitation of certain other refrigerants for BVM applications may
impact the overall BVM market in the United States and, specifically,
the future shipments of new beverage vending machines through 2048. At
the 2015 BVM ECS NOPR stage, DOE requested comment on the impact of the
EPA SNAP rules on future shipments of beverage vending machines, by
equipment class, refrigerant, and efficiency level. With respect to the
impact of new refrigerants on shipments, Royal Vendors, AMS, and NAMA
all commented that added machine costs due to alternative refrigerants
as a result of EPA SNAP, combined with the increased efficiency
required by DOE's proposed standards, would decrease new machine
purchases in favor of refurbishments. (Royal Vendors, No. 54 at p. 8;
AMS, No. 57 at p. 3; NAMA, No. 50 at p. 8) Conversely, NEEA expressed
the belief that EPA SNAP compliance would lead to an increase in new
shipments, as refurbishment may not be practical when switching
refrigerants. (NEEA, Public Meeting Transcript, No. 48 at p. 135)
Related to refurbishments, SVA stated in the BVM ECS NOPR public
meeting that beverage vending machines can be refurbished from R-134a
to CO2 but not to propane due to different safety concerns
for flammable refrigerants. (SVA, Public Meeting Transcript, No. 48 at
p. 136)
In response to comments received from interested parties, DOE
revised certain aspects of the shipments model in its final rule
analysis. Primarily, DOE revised the shipments model to more explicitly
account for refurbished beverage vending machines and their impact on
overall shipments, as DOE understands this is an important factor
driving current and future shipments of beverage vending machines.
Specifically, DOE revised the BVM shipments model to calculate the
stock of beverage vending machines that survive from 1 year to the next
according to the following Eq. IV.1:
SurvivingStock = [Sigma]aU(t,a) + Unew(t) - Uretirements (t) +
Urefurbishments (t) [Eq.IV.1]
Where:
U(t,a) = total stock of age a in a given year t,
Unew(t) = new shipments of BVM units in year t (units with age a =
0),
Uretirements(t) = retirements of BVM units in year t (units with
various age a >= 13.4),
Urefurbishments(t) = refurbishments of BVM units in year t (units
with various age 30 >= a >= 1),
a = age of stock in years, and
t = year.
DOE's shipments model assumes as increasing trend in refurbishing
existing equipment beginning in 2009 and continuing through 2024, after
which refurbishments return to pre-2009 levels. DOE notes that the
impact of this increased refurbishment rate serves only to delay
shipments of new equipment, rather than depress shipments permanently.
In addition, DOE revised its assumptions regarding the consistent
growth of shipments beginning in 2014, in light of the impact of the
new EPA SNAP regulations on the BVM market. While DOE does not have
data to suggest the impact of changes in refrigerant availability on
future shipments, DOE acknowledges the comments received from
interested parties expressing their concern and belief that added
machine costs due to alternative refrigerants as a result of EPA SNAP
combined with the increased efficiency required by DOE's proposed
standards would decrease new machine purchases in favor of
refurbishments after both regulations go into effect. However, between
2014 and 2019, DOE agrees with NEEA that EPA SNAP and the pending
compliance date of DOE's amended standards adopted herein may actually
act to increase shipments in the near term, as BVM owners opt to
replace aging equipment in advance of the required design changes that
will occur in 2019. DOE expects that some customers may act in
anticipation of the likely increase in equipment prices that may occur
as a result of the design changes necessary to comply with EPA SNAP
regulations and DOE's new and amended energy conservation standards.
DOE also notes that many beverage vending machines that were
refurbished beginning in 2009 to increase their life will be 4.5 years
older, the typical average ``refurbishment'' cycle, and the additional
retirement of those older refurbished machines may increase the number
of retirements beginning in 2014 and thus, may also increase shipments
from 2014 through 2024. However, DOE also acknowledges that BVM owners
may also choose to refurbish existing equipment prior to the EPA SNAP
compliance date and assumes that a significant amount of refurbishments
will occur through 2024. Notably, DOE's shipments model assumes that
greater than 50 percent of equipment that would otherwise reach the end
of its life and be retired will instead be refurbished, delaying
purchases of new equipment, until after 2024. DOE believes this
assumption effectively captures the likely behavior of customers who
may choose to refurbish existing R-134a equipment in anticipation of
new R-134a equipment no longer being available following the compliance
date of the EPA SNAP regulations.
In 2019, when EPA's SNAP regulations are anticipated to take
effect, DOE estimated that shipments will decline dramatically to 2014
levels, which represents the lowest annual shipments in any year from
1998 through the end of the analysis period. In the succeeding three
years, consistent with manufacturer expectations, DOE believes that BVM
shipments will stagnate while manufacturers, customers, and the market
respond and acclimate to the new EPA SNAP regulations and their effect
on equipment availability and price. In
[[Page 1068]]
2022, DOE anticipates that shipments will increase, beginning to
recover the aging and depleted BVM stock. DOE notes that, based on
DOE's assumptions regarding the choice of customers to refurbish or
delay purchases of new BVM equipment in response to the increased cost
of BVM units that are compliant with EPA SNAP and DOE's new and amended
standards, the BVM shipments model estimates that the BVM stock in 2022
will have decreased 46 percent compared to the existing stock in 2014.
DOE believes that, by this time, customers and the marketplace will
have adapted to the new alternative refrigerants and, thus, will begin
to return to typical purchasing and refurbishment cycles. Therefore, to
replace retiring units, DOE's final rule shipments model assumes
increases in shipments through 2035, with the most significant growth
occurring between 2022 and 2028.
Beyond 2035, DOE estimates that growth in shipments will slowly
decline as shipments return to a more consistent, static-lifetime
``replacement'' scenario as older equipment permanently leaves the
market. DOE estimates shipments will remain flat from 2045 through the
end of the analysis period at around 135,000 units per year, resulting
in a final stock of 1.8 million in 2048, as projected by DOE based on
the Vending Times data. This represents a 20-percent decrease from 2014
levels, primarily due to replacement by bottle coolers and
micromarkets,\45\ which is consistent with SVA's comment that
micromarkets will continue to displace beverage vending machines and
have an increasingly negative impact on shipments.
---------------------------------------------------------------------------
\45\ The term bottle cooler refers to a specific type of self-
contained commercial refrigerator with transparent doors designed
for pull-down applications. Such equipment is specifically defined
as a ``commercial refrigerator designed for pull-down applications''
at 10 CFR 431.62. Micromarkets are small, self-service, convenience
store-like establishments and typically feature a bottle cooler for
selling bottled and canned beverages, among other snacks, which are
paid for at a central payment kiosk. See www.vending.org/images/pdfs/micro-market/Tech_W7_bulletin_Micro_Market_v4.0.pdf.
---------------------------------------------------------------------------
DOE notes that it does not expect the specific refrigerant used in
a given beverage vending machine to impact demand for beverage vending
machines and overall equipment stocks over time. As such, DOE maintains
that the historical Vending Times data and stock-based analysis
approach that DOE employed to develop shipment assumptions for this
final rule are appropriate and represent the best available information
about future shipments of beverage vending machines.
DOE believes it is reasonable to model increasing shipments between
2022 and 2035 to recover BVM stock in the United States, given the
commitment by major bottlers to alternative refrigerants.\46\ DOE notes
that major bottlers represent approximately 90 percent of the BVM
market \47\ and, as such, anticipates consistent or increasing demand
for alternative refrigerant BVM units over time. DOE notes that
increasing shipments to maintain reasonable stock \48\ and availability
of BVM units in the marketplace is also consistent with the opinions of
NAMA and the EEA Joint Commenters regarding the availability of healthy
options in BVM merchandise and, thus, continued relevance of beverage
vending machines in all industry sectors, including schools, office
buildings, and other public locations.
---------------------------------------------------------------------------
\46\ See e.g., R744, ``Coca-Cola to approve 9 models of CO2
vending machine--exclusive interview,'' Available online
www.r744.com/news/view/3466; The Coca-Cola Company (2014), ``2013/
2014 Global Reporting Initiative Report.'' Available online https://assets.coca-colacompany.com/1a/e5/20840408404b9bc484ebc58d536c/2013-2014-coca-cola-sustainability-report-pdf.pdf; and PepsiCo (2015).
``Performance with Purpose.'' 2015 Atmosphere Conference.
\47\ Northwest Power and Conservation Council Regional Technical
Forum. 2007. Characterization of Energy Efficiency Opportunities in
Vending Machines for the Northwestern US Market. Available at https://rtf.nwcouncil.org//meetings/2007/08/RTF%20Vending%20Characterization%20Study_Revised%20Report_072407.pdf.
\48\ As noted in the 2015 BVM ECS NOPR, DOE assumed an average
0.55-percent reduction in BVM stock overtime, based on projected
data from Vending Times Census of the Industry 2014 and CBECS
building growth trends. DOE believes that further reductions in BVM
stock would represent a dramatic shift in the availability of BVM
units in the United States and, thus, purchasing trends of consumers
who currently purchase a variety of snacks and beverages from such
vending machines. See chapter 10 of the final rule TSD for more
information.
---------------------------------------------------------------------------
In response to the specific comments received from NAMA and the EEA
Joint Commenters, DOE has reviewed its assumptions regarding the
rationale for certain reductions in different market segments. DOE
agrees with commenters that the types of vended products available in
beverage vending machines are not limited to soda or other sugary
beverages and that sales of water, energy drinks, and sports drinks
have been increasing over the past several years.\49\ However, DOE also
acknowledges that the increasing trend of micromarkets to replace
beverage vending machines in some applications and notes that Vending
Times reports that installations of such micromarkets nearly doubled
between 2012 and 2013 and anticipates similar growth between 2013 and
2014.\50\ As such, DOE believes that its projected reductions in
certain BVM industry sectors to be reasonable, but more likely driven
by replacement by mircomarkets than any health food trends or soda
bans. In addition, DOE notes that these industry-segment-specific
declines are primarily illustrative and serve only to support the
overall 0.55 percent annual reduction in stock modeled for the industry
as a whole. DOE believes that this overall trend in BVM stock continues
to be valid, as supported by comments from manufacturers anticipating
continuing declines in BVM stock and shipments.
---------------------------------------------------------------------------
\49\ Vending Times Census of the Industry 2013 and 2014.
Available at www.vendingtimes.com.
\50\ Vending Times Census of the Industry 2014. Available at
www.vendingtimes.com.
---------------------------------------------------------------------------
For more information on DOE's shipments estimates, the shipments
analysis assumptions, and details on the calculation methodology, refer
to chapter 9 of the final rule TSD.
1. Market Share by Equipment Class
Given a total volume of shipments, DOE estimates the shipments of
each equipment class based on the estimated market share of each
equipment class. In the 2015 BVM ECS NOPR, DOE assumed the market share
assigned to each of the equipment classes shown in Table IV.6.
Table IV.6--Market Share of Each Equipment Class Assumed in NOPR
Analysis
------------------------------------------------------------------------
NOPR market
Equipment class share (%)
------------------------------------------------------------------------
Class A................................................. 54.3
Class B................................................. 27.7
Combination A........................................... 9.3
Combination B........................................... 8.7
------------------------------------------------------------------------
In the NOPR analysis, DOE assumed that the market share for each
equipment class was maintained over the 30-year analysis period and did
not change as a function of standard level or as a function of changes
in refrigerant availability resulting from the two recent EPA SNAP
rulemakings. 80 FR 19454, 19491 (April 10, 2015) and 80 FR 42870,
42917-42920 (July 20, 2015). That is, in 2048, Class A, Class B,
Combination A, and Combination B continued to represent 54.3, 27.7,
9.3, and 8.7 percent of the market, respectively. DOE made this
assumption because it does not have data or information to suggest that
the relative shipments of different equipment
[[Page 1069]]
classes will change over time and, if so, in what direction and on what
basis. 80 FR 50462, 50494-50495 (Aug. 19, 2015).
DOE did not receive any comments in response to the NOPR on these
market distributions and, as such, is maintaining the market share
distribution modeled in the NOPR in the shipments model for this final
rule.
2. Market Share by Refrigerant
Once DOE has defined shipments by equipment class, DOE also defined
the shipments within each equipment class by refrigerant. In the 2015
BVM ECS NOPR, DOE based its assumptions regarding the relative
shipments of each refrigerant based on recent regulatory actions under
EPA's SNAP program, which listed propane and certain other hydrocarbon
refrigerants as acceptable for BVM applications (80 FR 19454, 19491
(April 10, 2015)) and changed the status of the industry-standard
refrigerant R-134a to unacceptable beginning on January 1, 2019 (80 FR
42870, 42917-42920 (July 20, 2015)). Specifically, in the NOPR, DOE
modeled a shipments scenario assuming that all shipments of new BVM
equipment will use CO2 or propane as a refrigerant beginning
on January 1, 2019, the effective date of the status change of R-134a
as required by Final Rule 20. 80 FR 50462, 50495 (Aug. 19, 2015).
Given the greater market experience with CO2, DOE
assumed that CO2 will represent 60 percent of the market and
propane will represent 40 percent of the market for all equipment
classes beginning in 2019 and continuing through the end of the
analysis period (2048). Specifically, due to the listing of
CO2 as an acceptable refrigerant for BVM applications
several years ago by EPA SNAP, as well as a commitment by Coca-Cola
(the largest equipment purchaser) to move away from HFC refrigerants in
the near future, the market has already seen evolution towards the
widespread use of CO2. Id.
However, DOE acknowledges that propane-based BVM models have only
very recently become authorized under SNAP and that there is much more
limited industry experience with this refrigerant. DOE has based this
final rule analysis on the use of propane as an alternative
refrigerant, in addition to CO2, and assumed that propane-
based BVM models will represent 40 percent of shipments by 2019. As
mentioned in the engineering analysis, DOE believes this assumption is
reasonable based on use of propane as a refrigerant in other, similar,
self-contained commercial refrigeration applications.\51\ Id.
---------------------------------------------------------------------------
\51\ See e.g., Docket No. EPA-HQ-OAR-2014-0198, The
Environmental Investigation Agency, No. 0134.
---------------------------------------------------------------------------
In its written comments, SVA stated that the relative market share
of each refrigerant by equipment class depended heavily on the ability
of manufacturers to develop economically sound equipment that meets UL
standards for flammable refrigerants. (SVA, No. 53 at p. 9) In the BVM
ECS NOPR public meeting, Coca-Cola stated that its refrigerant
preference for the North American market is CO2 and noted
that Japan (another large vending market) is already using
CO2. Also in the public meeting, SVA expressed commitment to
CO2 but also stated it was beginning to explore propane, and
Wittern stated that it was pursuing propane over CO2 due to
the higher operating pressures of CO2 refrigeration systems,
which labor the compressors and decrease efficiency. (Coca-Cola, SVA,
and Wittern, Public Meeting Transcript, No. 48 at pp. 48-55)
In response to comments submitted by interested parties, DOE
reviewed its assumptions regarding the relative distribution of
shipments of CO2 and propane BVM equipment. DOE believes
that its 2015 BVM ECS NOPR assumptions regarding the increased market
share of CO2 equipment relative to propane equipment are
consistent with the statements made by commenters regarding the
existing use and preference for CO2 equipment, as well as
the additional safety certifications that will be necessary for propane
equipment. Specifically, DOE accounted for the fact that beverage
vending machines with propane refrigerant must meet all requirements of
Supplement SA to the 7th edition of UL Standard 541, ``Refrigerated
Vending Machines,'' dated December 30, 201, which specifically
addresses flammable refrigerants in vending machines, as required by
EPA SNAP's Rule 19 final rule. 80 FR 19454, 19460 (April 10, 2015).
However, consistent with Wittern's observation regarding the relative
efficiency of propane as a refrigerant compared to CO2, DOE
believes it is reasonable to assume that propane will gain a
significant market share by 2019 as some manufacturers elect to take
advantage of propane's increased efficiency as a refrigerant in BVM
applications. In summary, DOE appreciates comments from interested
parties and believes they are generally consistent with DOE's
assumptions in the NOPR. As such, DOE is maintaining the distribution
of shipments by refrigerant modeled in the NOPR with no modification.
DOE's shipments analysis and assumptions are discussed in more
detail in chapter 9 of the final rule TSD.
3. High and Low Shipments Assumptions
DOE recognizes that there is considerable uncertainty in
forecasting future shipments of beverage vending machines. As such, in
addition to the primary shipments scenario presented above, DOE
estimated low and high shipments scenarios as sensitivities on the
primary scenario. For the high and low shipments scenarios, DOE assumed
the market share by equipment class and refrigerant as in the default
shipments scenario, while the magnitude of total shipments of new
beverage vending machines is varied among the scenarios. DOE's low
shipments scenario modeled lower shipments from 2014 through 2019 than
DOE estimated in the NOPR to reflect comments that the increased cost
of equipment (due to both EPA SNAP requirements and DOE's proposed
standards) would cause a decrease in new machine purchases in favor of
refurbishments. In 2019, when EPA's SNAP regulations will take effect,
DOE estimated that shipments would return to 2014 levels, before
beginning to recover in 2022 at the reduced growth rate, reflecting the
potential increased refurbishment cycles and commensurate increased
lifetime for existing BVM equipment. DOE also assumed that BVM
shipments recover only to approximately 100,000 shipments per year and
result in a stock of 1.3 million at the end of the analysis period, a
40-percent reduction in units installed in the United States. DOE notes
that this stock reduction is consistent with the projected stock based
on the Vending Times data of a 2 percent annual reduction over the
analysis period,\52\ without adjusting for the growth in buildings over
the analysis period calculated based on CBECS.
---------------------------------------------------------------------------
\52\ Vending Times Census of the Industry 2013 and 2014.
Available at www.vendingtimes.com.
---------------------------------------------------------------------------
Conversely, the high shipments scenario assumes the same overall
decline in stock assumed in the primary shipment case; that is, a stock
of 1.8 million BVM units in 2048. However, the high shipments scenario
assumes that shipments recover more quickly than in the primary
shipments case. The high shipments scenario assumes shipments of new
beverage vending machines increase in advance of SNAP, consistent with
the default shipments scenario, as BVM customers act
[[Page 1070]]
preemptively to purchase remaining R-134a equipment before it is no
longer allowed beginning in 2019. Then, following 2019, the high
shipments scenario assumes that shipments stagnate before growing
rapidly again beginning in 2022 to recover over the next 5 years. DOE
believes this scenario represents the case where shipments of BVM units
increase over time based on the increased offerings of healthy options
in beverage vending machines and demand from bottlers for such
alternative refrigerant BVM units, consistent with comments by NAMA and
Coca-Cola, respectively. These two sensitivity scenarios are discussed
in more detail in chapter 9 of the final rule TSD.
H. National Impact Analysis
The NIA assesses the NES and the national NPV from a perspective of
total customer costs and savings that would be expected to result from
new or amended standards at specific efficiency levels (i.e., TSL) for
each equipment class of beverage vending machines.\53\ (``Customer'' in
this context refers to customers of the equipment being regulated, in
this case the purchaser of the BVM) DOE calculated the NES and NPV
based on projections of annual shipments, along with the annual energy
consumption and total installed cost data from the energy use and LCC
analyses.\54\ For the present analysis, DOE projected the energy
savings, operating cost savings, equipment costs, and NPV of customer
benefits for equipment sold from 2019 through 2048 (the expected year
in which the last standards-compliant equipment is shipped during the
30-year analysis).
---------------------------------------------------------------------------
\53\ The NIA accounts for impacts in the 50 states and U.S.
territories.
\54\ For the NIA, DOE adjusts the installed cost data from the
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------
DOE evaluates the impacts of new and amended standards by comparing
a no-new-standards case projections with the standards case
projections. The no-new-standards case characterizes energy use and
customer costs for each equipment class in the absence of new or
amended energy conservation standards. For this projection, DOE
considered historical trends in efficiency and various forces that are
likely to affect the mix of efficiencies over time. DOE compared the
no-new-standards case with projections characterizing the market for
each equipment class if DOE adopted new or amended standards at
specific energy efficiency levels (i.e., the TSLs or standards cases)
for that class. For the standards cases, DOE considers how a given
standard would likely affect the market shares of equipment with
efficiencies less than the standard.
DOE used a spreadsheet model to calculate the energy savings and
the national customer costs and savings from each TSL. Interested
parties can review DOE's analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses average values
as inputs (rather than probability distributions of key input
parameters as used in the LCC). To assess the effect of input
uncertainty on NES and NPV results, DOE developed its spreadsheet model
to conduct sensitivity analyses by running scenarios on specific input
variables.
For the current analysis, the NIA used projections of energy price
trends from the AEO2015 Reference case. In addition, DOE analyzed
scenarios that used inputs from the AEO2015 Low Economic Growth and
High Economic Growth cases. These cases have lower and higher energy
price trends, respectively, compared to the reference case. NIA results
based on these cases are presented in appendix 10E of the final rule
TSD.
A detailed description of the procedure to calculate NES and NPV
and inputs for this analysis are provided in chapter 10 of the final
rule TSD.
Table IV.7 summarizes the inputs and methods DOE used for the NIA
analysis for the final rule. Discussion of these inputs and methods
appears following Table IV.7. See chapter 10 of the final rule TSD for
further details.
Table IV.7--Summary of Inputs and Methods for the National Impact
Analysis
------------------------------------------------------------------------
Inputs Method
------------------------------------------------------------------------
Shipments............................ Annual shipments from shipments
model.
Compliance Date of Standard.......... 2019.
Efficiency Trends.................... No-new-standards case:
Standards cases:
Annual Energy Consumption per Unit... Annual weighted-average values
are a function of energy use at
each TSL.
Total Cost per Unit.................. Annual weighted-average values
are a function of cost at each
TSL.
Incorporates projection of future
equipment prices based on
historical data.
Annual Energy Cost per Unit.......... Annual weighted-average values as
a function of the annual energy
consumption per unit and energy
prices.
Repair and Maintenance Cost per Unit. Repair cost and maintenance costs
provided from LCC analysis.
Energy Prices........................ AEO2015 forecasts (to 2040) and
extrapolation through 2078.
Energy Site-to-Primary and FFC A time-series conversion factor
Conversion. based on AEO2015.
Discount Rate........................ 3% and 7%.
Present Year......................... 2015.
Price Learning....................... Projection of future price trends
for BVM equipment.
Lifetime............................. Weibull distribution for
equipment lifetime.
------------------------------------------------------------------------
1. Equipment Efficiency Trends
A key component of the NIA is the trend in energy efficiency
projected for the no-new-standards case and each of the standards
cases. Section IV.F.6 of this final rule describes how DOE developed an
energy efficiency distribution for the no-new-standards case (which
yields a shipment-weighted average efficiency) for each of the
considered equipment classes for the first year of the forecast period.
DOE developed a distribution of efficiencies in the no-new-
standards case for the compliance year of new standards for each BVM
equipment class. Because no information was available to suggest a
different trend, DOE assumed that the efficiency distribution in the
no-new-standards case will remain the same in future years. In each
standards case, a ``roll-up'' scenario approach was applied to
establish the efficiency distribution for the compliance year. Under
the ``roll-up'' scenario, DOE assumed: (1)
[[Page 1071]]
Equipment efficiencies in the no-new-standards case that do not meet
the standard level under consideration will ``roll-up'' to meet the new
standard level; and (2) equipment efficiencies above the standard level
under consideration will not be affected. The ``roll-up'' was a more
conservative approach over the ``market shift'' approach. In a market
shift approach it is assumed that a given number of customers will
prefer to buy equipment above the baseline. Therefore, in a standards
case scenario customers will continue to purchase above the new
baseline by shifting to an efficiency level that keeps their purchase
the same number of efficiency levels above the new baseline until they
no longer can do so because the market becomes compressed by the
maximum available efficiency level.
DOE also recognizes that recent changes in refrigerant availability
resulting from the two recent EPA SNAP rulemakings may have an impact
on forecasted efficiency distributions under the no-new-standards case.
80 FR 19454, 19491 (April 10, 2015) and 80 FR 42870, 42917-42920 (July
20, 2015). However, DOE did not account for such potential impacts on
efficiency distributions in this final rule analysis, as DOE does not
have data or information to suggest how efficiency distributions of
different equipment classes or refrigerants will change over time and,
if so, in what direction and on what basis as a result of potential
changes.
2. National Energy Savings
The inputs for determining the NES are (1) annual energy
consumption per unit, (2) shipments, (3) equipment stock, (4) national
energy consumption, and (5) site-to-source conversion factors. As
discussed in the energy use analysis, DOE calculated the national
energy consumption by multiplying the number of units (stock) of each
type of equipment (by vintage or age) by the unit energy consumption
(also by vintage). Vintage represents the age of the equipment.
DOE calculated annual NES based on the difference in national
energy consumption for the no-new-standards case (without new
efficiency standards) and for each higher efficiency standard.\55\
Cumulative energy savings are the sum of the annual NES over the period
in which equipment shipped in 2019-2048 are in operation.
---------------------------------------------------------------------------
\55\ The no-new-standards case represents a mix of efficiencies
above the minimum efficiency level (EL 0). Please see section IV.F.6
for a more detail description of associated assumptions.
---------------------------------------------------------------------------
DOE uses a multiplicative factor called ``site-to-source conversion
factor'' to convert site energy consumption (at the commercial
building) into primary or source energy consumption (the energy input
at the energy generation station required to convert and deliver the
energy required at the site of consumption). These site-to-source
conversion factors account for the energy used at power plants to
generate electricity and for the losses in transmission and
distribution, as well as for natural gas losses from pipeline leakage
and energy used for pumping. For electricity, the conversion factors
vary over time due to projected changes in generation sources (that is,
the power plant types projected to provide electricity to the country).
The factors that DOE developed are marginal values, which represent the
response of the system to an incremental decrease in consumption
associated with amended energy conservation standards.
For this final rule, DOE used conversion factors based on the U.S.
energy sector modeling using the National Energy Modeling System (NEMS)
Building Technologies (NEMS-BT) version that corresponds to AEO2015 and
which provides national energy forecasts through 2040. Within the
results of NEMS-BT model runs performed by DOE, a site-to-source ratio
for commercial refrigeration was developed. The site-to-source ratio
was held constant beyond 2040 through the end of the analysis period
(30 years from the compliance year plus the life of equipment).
a. Full-Fuel-Cycle Analysis
DOE has historically presented NES in terms of primary energy
savings. On August 18, 2011, DOE published a final statement of policy
in the Federal Register announcing its intention to use FFC measures of
energy use and greenhouse gas and other emissions in the NIA and
emissions analyses included in future energy conservation standards
rulemakings. 76 FR 51281. While DOE stated in that document that it
intended to use the Greenhouse Gases, Regulated Emissions, and Energy
Use in Transportation (GREET) model to conduct the analysis, it also
said it would review alternative methods, including the use of NEMS.
After evaluating both models and the approaches discussed in the August
18, 2011 document, DOE published an amended statement of policy,
articulating its determination that NEMS is a more appropriate tool for
this purpose. 77 FR 49701 (August 17, 2012).
The approach used for this final rule, and the FFC multipliers that
were applied, are described in appendix 10D of the TSD. NES results are
presented in terms of both primary and FFC savings; the savings by TSL
are summarized in terms of FFC savings in section I.C of this final
rule.
3. Net Present Value Analysis
The inputs for determining NPV are: (1) Total annual equipment
cost, (2) total annual savings in operating costs, (3) a discount
factor to calculate the present value of costs and savings, (4) present
value of costs, and (5) present value of savings. DOE calculated the
net savings for each year as the difference between the no-new-
standards case and each standards case in terms of total savings in
operating costs versus total increases in equipment costs. DOE
calculated savings over the lifetime of equipment shipped in the
forecast period. DOE calculated NPV as the difference between the
present value of operating cost savings and the present value of total
equipment costs.
For the NPV analysis, DOE calculates increases in total equipment
costs as the difference in total equipment cost between the no-new-
standards case and standards case (i.e., once the standards take
effect). Because the more-efficient equipment bought in the standards
case usually costs more than equipment bought in the no-new-standards
case, cost increases appear as negative values in calculating the NPV.
DOE expresses savings in operating costs as decreases associated
with the lower energy consumption of equipment bought in the standards
case compared to the no-new-standards case. Total savings in operating
costs are the product of savings per unit and the number of units of
each vintage that survive in a given year.
DOE multiplied monetary values in future years by the discount
factor to determine the present value of costs and savings. DOE
estimates the NPV of customer benefits using both a 3-percent and a 7-
percent real discount rate as the average real rate of return on
private investment in the U.S. economy. DOE used these discount rates
in accordance with guidance provided by the U.S. Office of Management
and Budget (OMB) to Federal agencies on the development of regulatory
analysis. (OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying
and Measuring Benefits and Costs'') The 7-percent real value is an
estimate of the average before-tax rate of return to private capital in
the U.S. economy. The 3-percent real value represents the ``societal
rate of time preference,'' which is the rate at which society discounts
[[Page 1072]]
future consumption flows to their present.
I. Customer Subgroup Analysis
In analyzing the impact of new or amended standards on commercial
customers, DOE evaluated the impact on identifiable groups (i.e.,
subgroups) of customers, such as different types of businesses that may
be disproportionately affected by a national standard. The purpose of
the subgroup analysis is to determine the extent of this
disproportional impact. In comparing potential impacts on the different
customer subgroups, DOE may evaluate variations in regional electricity
prices, energy use profiles, and purchase prices that might affect the
LCC of an energy conservation standard to certain customer subgroups.
For this rulemaking, DOE identified manufacturing and/or industrial
facilities that purchase their own beverage vending machines as a
relevant subgroup. These facilities typically have higher discount
rates and lower electricity prices than the general population of BVM
customers. These two conditions make it likely that this subgroup will
have the lowest LCC savings of any major customer subgroup.
Two stakeholders commented on the 2015 BVM ECS NOPR subgroup
analysis. AMS commented that because those who purchase the machines do
not usually pay for electricity, PBP numbers for subgroup ``do not
really exist'' (i.e., energy savings are only realized by site owners).
(AMS, No. 57 at Page 6) NAMA suggested that subgroups might include
vending machine operating companies because ``most corporate and
manufacturing facilities provide vending machines to their employees
through vending machine companies.'' (NAMA, No. 50 at p. 12)
In response to the comment from AMS, DOE notes that the money saved
by more efficient equipment through lower operating costs is accounted
for in the split incentives approach. DOE believes that the subgroup to
which NAMA refers can be represented by the manufacturing and/or
industrial facilities that purchase their own beverage vending machines
because each group would likely have lower electricity prices and
higher discount rates than the typical customer.
DOE determined the impact on this BVM customer subgroup using the
LCC spreadsheet model. DOE conducted the LCC and PBP analysis for
customers represented by the subgroup. The results of DOE's LCC
subgroup analysis are summarized in section V.B.1.b of this final rule
and described in detail in chapter 12 of the final rule TSD.
J. Manufacturer Impact Analysis
1. Overview
DOE performed a MIA to determine the financial impact of amended
energy conservation standards on manufacturers of beverage vending
machines, and to estimate the potential impact of such standards on
employment and manufacturing capacity. The MIA has both quantitative
and qualitative aspects. The quantitative part of the MIA primarily
relies on the Government Regulatory Impact Model (GRIM), an industry
cash-flow model with inputs specific to this rulemaking. The key GRIM
inputs are data on the industry cost structure, equipment costs,
shipments, and assumptions about markups and conversion expenditures.
The key output is the INPV. Different sets of assumptions (i.e., markup
and shipments scenarios) will produce different results. The
qualitative part of the MIA addresses factors such as equipment
characteristics, impacts on particular subgroups of firms, and
important market and equipment trends. The complete MIA is outlined in
chapter 12 of the final rule TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase
1 of the MIA, DOE conducted structured, detailed interviews with
manufacturers and prepared a profile of the BVM industry. During
manufacturer interviews, DOE discussed engineering, manufacturing,
procurement, and financial topics to identify concerns and to inform
and validate assumptions used in the GRIM. See appendix 12A of the TSD
for a copy of the interview guide.
DOE used information obtained during these interviews to prepare a
profile of the BVM industry. Drawing on financial analysis performed as
part of the 2009 energy conservation standard for beverage vending
machines, as well as feedback obtained from manufacturers, DOE derived
financial inputs for the GRIM (e.g., sales, general, and administration
(SG&A) expenses; research and development (R&D) expenses; and tax
rates). DOE also used public sources of information, including company
SEC 10-K filings,\56\ corporate annual reports, the U.S. Census
Bureau's Economic Census,\57\ and Hoover's reports,\58\ to develop the
industry profile.
---------------------------------------------------------------------------
\56\ U.S. Securities and Exchange Commission. Annual 10-K
Reports. Various Years. https://sec.gov.
\57\ U.S. Census Bureau, Annual Survey of Manufacturers: General
Statistics: Statistics for Industry Groups and Industries. https://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t.
\58\ Hoovers Inc. Company Profiles. Various Companies.
www.hoovers.com.
---------------------------------------------------------------------------
In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis
to quantify the potential impacts of an amended energy conservation
standard on manufacturers of beverage vending machines. In general,
energy conservation standards can affect manufacturer cash flow in
three distinct ways: (1) Create a need for increased investment; (2)
raise production costs per unit; and (3) alter revenue due to higher
per-unit prices and possible changes in sales volumes. To quantify
these impacts, DOE used the GRIM to perform a cash-flow analysis for
the BVM industry using financial values derived during Phase 1.
In Phase 3 of the MIA, DOE evaluated subgroups of manufacturers
that may be disproportionately impacted by amended energy conservation
standards or that may not be represented accurately by the average cost
assumptions used to develop the industry cash-flow analysis. For
example, small manufacturers, niche players, or manufacturers
exhibiting a cost structure that largely differs from the industry
average could be more negatively affected. DOE identified one subgroup
for a separate impact analysis, small businesses.
DOE identified eight companies that sell BVM equipment in the
United States. For the small businesses subgroup analysis, DOE applied
the small business size standards published by the Small Business
Administration (SBA) to determine whether a company is considered a
small business. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR
53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. To be
categorized as a small business under North American Industry
Classification System (NAICS) code 333318, ``Other Commercial and
Service Industry Machinery Manufacturing,'' a BVM manufacturer and its
affiliates may employ a maximum of 1,000 employees. The 1,000-employee
threshold includes all employees in a business's parent company and any
other subsidiaries. Based on this classification, of the eight
companies selling beverage vending machines in the United States, DOE
identified five manufacturers that qualify as small businesses, one of
which is a foreign manufacturer with domestic-sited subsidiary that
serves as its marketing arm in the United States. The BVM small
manufacturer subgroup is discussed in chapter 12 of the final
[[Page 1073]]
rule TSD and in section IV.J of this final rule.
Additionally, in Phase 3 of the MIA, DOE evaluated impacts of
amended energy conservation standards on manufacturing capacity and
direct employment. DOE also evaluated cumulative regulatory burdens
affecting the BVM industry.
2. Government Regulatory Impact Model
DOE uses the GRIM to quantify the changes in cash flow due to new
standards that result in a higher or lower industry value. The GRIM
analysis uses a standard, annual cash-flow analysis that incorporates
manufacturer costs, markups, shipments, and industry financial
information as inputs. The GRIM models changes in costs, distribution
of shipments, investments, and manufacturer margins that could result
from an amended energy conservation standard. The GRIM spreadsheet uses
the inputs to arrive at a series of annual cash flows, beginning in
2015 (the reference year of the analysis) and continuing to 2048. DOE
calculated INPVs by summing the stream of annual discounted cash flows
during this period. For BVM manufacturers, DOE used a real discount
rate of 8.5 percent, which was derived from industry financials and
then modified according to feedback received during manufacturer
interviews.
The GRIM calculates cash flows using standard accounting principles
and compares changes in INPV between a no-new-standards case and each
standards case. The difference in INPV between the no-new-standards
case and a standards case represents the financial impact of the
amended energy conservation standard on manufacturers. As discussed
previously, DOE collected this information on the critical GRIM inputs
from a number of sources, including publicly available data and
interviews with a number of manufacturers. The GRIM results are shown
in section IV.J.2.b of this final rule. Additional details about the
GRIM, the discount rate, and other financial parameters can be found in
chapter 12 of the final rule TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
Manufacturing more efficient equipment is typically more expensive
than manufacturing baseline equipment due to the use of more complex
components, which are typically more costly than baseline components.
The changes in the MPCs of the analyzed equipment can affect the
revenues, gross margins, and cash flow of the industry, making these
equipment cost data key GRIM inputs for DOE's analysis.
In the MIA, DOE used the MPCs for each considered efficiency level
calculated in the engineering analysis, as described in section IV.C of
this final rule and further detailed in chapter 5 of the final rule
TSD. In addition, DOE used information from its teardown analysis,
described in chapter 5 of the TSD, to disaggregate the MPCs into
material, labor, and overhead costs. To calculate the MPCs for
equipment above the baseline, DOE added the incremental material,
labor, and overhead costs from the engineering cost-efficiency curves
to the baseline MPCs. These cost breakdowns and equipment markups were
validated and revised with manufacturers during manufacturer
interviews. DOE notes that, since all BVM equipment will be required to
be compliant with EPA's new Rule 20 regulations prohibiting the use of
R-134a after January 1, 2019 (80 FR 42870, 42917-42920 (July 20,
2015)), the MPCs modeled in the GRIM represent equipment that is
compliant with Rule 20 (i.e., uses only CO2 and propane
refrigerants), as well as any existing energy conservation standards
for such equipment.
Shipments Forecasts
The GRIM estimates manufacturer revenues based on total unit
shipment forecasts by equipment class and the distribution of these
values by efficiency level. Changes in sales volumes and efficiency mix
over time can significantly affect manufacturer finances. For this
analysis, the GRIM uses the NIA's annual shipment forecasts derived
from the shipments analysis. See section IV.H of this final rule and
chapter 10 of the final rule TSD for additional details.
Product and Capital Conversion Costs Associated With Energy
Conservation Standards for Beverage Vending Machines
An amended energy conservation standard will cause manufacturers to
incur one-time conversion costs to bring their production facilities
and product designs into compliance. DOE evaluated the level of
conversion-related expenditures that will be needed to comply with each
considered efficiency level in each equipment class. For the MIA, DOE
classified these conversion costs into two major groups: (1) Product
conversion costs and (2) capital conversion costs. Product conversion
costs are one-time investments in research, development, testing,
marketing, and other non-capitalized costs necessary to make product
designs comply with the amended energy conservation standard. Capital
conversion costs are one-time investments in property, plant, and
equipment necessary to adapt or change existing production facilities
such that new compliant equipment designs can be fabricated and
assembled.
Industry investments related to compliance with EPA Rule 20 are
detailed in the next section (``One-Time Investments Associated with
EPA SNAP Rule 20'') and are separate from the conversion costs
manufacturers are estimated to incur to comply with amended energy
conservation standards.
To evaluate the level of capital conversion expenditures
manufacturers will likely incur to comply with amended energy
conservation standards, DOE used manufacturer interview feedback to
determine an average per-manufacturer capital conversion cost for each
design option and equipment class. DOE scaled the per-manufacturer
capital conversion costs to the industry level using a count of
manufacturers producing the given equipment type (i.e., Class A, Class
B, Combination A, Combination B).
As detailed in section IV.G of this final rule, shipments of BVM
units with HFC refrigerants are forecasted to fall to zero by 2019 as a
result of the EPA SNAP Rule 20 compliance date of 2019. Therefore, DOE
estimates no conversion costs associated with the remaining shipments
of BVM units with HFC refrigerants that are forecasted to occur during
the conversion period (the 3 years leading up to the amended energy
conservation standard year of 2019).
Table IV.8 contains the per-manufacturer capital conversion costs
associated with key design options for each equipment class. DOE
assumes that all Combination A units share a common cabinet and glass
pack design with a Class A unit, and will not carry any additional
capital conversion costs.
[[Page 1074]]
Table IV.8--Per-Manufacturer Capital Conversion Costs for Key Design Options
[million 2014$]
----------------------------------------------------------------------------------------------------------------
Capital conversion costs (million 2014$)
Design option ---------------------------------------------------------------------
Class A Class B Combination A Combination B
----------------------------------------------------------------------------------------------------------------
Evaporator Fan Controls................... * N/A 0.04 0 0.04
1.125 Inch Thick Insulation............... 0.07 0.09 0 0.09
Enhanced Glass Pack....................... 0.06 * N/A 0 * N/A
Vacuum Insulated Panels................... 0.14 0.17 0 0.18
----------------------------------------------------------------------------------------------------------------
* N/A = Not Applicable.
DOE used a top-down approach that relied on manufacturer feedback
from interviews to assess product conversion costs for the BVM
industry. Using the DOE's CCMS \59\ and ENERGY STAR \60\ databases,
along with manufacturer Web sites, DOE determined the number of
platforms that are currently available for each equipment type (i.e.,
Class A, Class B, Combination A, Combination B). DOE used manufacturer
feedback to determine an average per platform product conversion cost
by design option and equipment type. DOE then used the platform counts
to scale the average per platform product conversion to the industry
level. DOE received insufficient feedback from industry to estimate
representative product conversion costs for Combination A and
Combination B equipment. As a result, because of the inherent
commonalities of design and manufacture between Class A and Combination
A equipment and between Class B and Combination B equipment, DOE scaled
Class A product conversion costs to estimate Combination A product
conversion costs and DOE scaled Class B product conversion costs to
scale Combination B product conversion costs. This scaling was based on
the ratio of Combination A to Class A platforms in the industry and the
ratio of Combination B to Class B platforms, respectively.
---------------------------------------------------------------------------
\59\ ``CCMS.'' CCMS. January 19, 2015. Accessed January 19,
2015. www.regulations.doe.gov/certification-data/.
\60\ ENERGY STAR Certified Vending Machines. June 6, 2013.
Accessed January 19, 2015. www.energystar.gov/products/certified-products.
---------------------------------------------------------------------------
Table IV.9 contains the per-platform product conversion costs
associated with key design options for each equipment class.
Table IV.9--Per-Platform Product Conversion Costs for Key Design Options
[million 2014$]
----------------------------------------------------------------------------------------------------------------
Product conversion costs (million 2014$)
Design option ---------------------------------------------------------------------
Class A Class B Combination A Combination B
----------------------------------------------------------------------------------------------------------------
Evaporator Fan Controls................... * N/A 0.02 0.004 0.02
Enhanced Evaporator Coil.................. 0.02 0.01 * N/A 0.01
Enhanced Glass Pack....................... 0.06 * N/A 0.004 * N/A
1.125 Inch Thick Insulation............... 0.02 0.02 0.004 0.02
Vacuum Insulated Panels................... 0.06 0.06 0.004 0.06
----------------------------------------------------------------------------------------------------------------
* N/A = Not Applicable.
DOE assumes that all energy conservation standards-related
conversion costs occur between the year of publication of the final
rule and the year by which manufacturers must comply with the new
standard. The conversion cost figures used in the GRIM can be found in
section IV.J.2.a of this final rule. For additional information on the
estimated product and capital conversion costs, see chapter 12 of the
final rule TSD.
One-Time Investments Associated With EPA SNAP Rule 20
As a result of EPA Rule 20, the industry will be required to make
an upfront investment in order to transition from the use of R-134a to
CO2 or propane. Although this industry investment (detailed
below) is not a result of the amended DOE energy conservation
standards, DOE reflects the impact of this investment in both the no-
new-standards and standards cases.
EPA Rule 20 did not provide an estimate of the upfront investments
associated with a R-134a refrigerant phase-out for BVM manufacturers.
Based on feedback in interviews, DOE estimated an upfront cost to the
industry to comply with Rule 20 using refrigerants CO2 and
propane. DOE estimated that each BVM manufacturer will need to invest
$750,000 to update their equipment to comply with Rule 20 if they have
no compliant equipment today. DOE assumed this one-time investment
applied to all eight manufacturers, resulting in an industry cost of $6
million.\61\ DOE believes that this estimate falls on the high end of
the range of potential costs because there are manufacturers that
already have SNAP-compliant equipment on the market today, and those
manufacturers will not need to make the same level of investment ahead
of the 2019 effective date. For integration into the GRIM, DOE assumed
that this one-time cost will occur in 2018 because the EPA's Rule 20
requires a phaseout of R-134a by 2019. This cost is independent of
conversion costs that industry will need to make as a result of amended
energy conservation standards (discussed in the previous section).
Unlike product and capital conversion costs necessitated by DOE energy
conservation standards, DOE includes this one-time Rule 20 investment
in the GRIM in both the no-new-standards case and the standards case.
Accordingly, the costs related to
[[Page 1075]]
complying with EPA Rule 20 have been incorporated into the baseline to
which DOE analyzed these adopted standards. As such, all the costs to
industry that occur in the standards case relate to the impact of the
adopted energy conservations standards.
---------------------------------------------------------------------------
\61\ In the GRIM, the $6 million one-time SNAP investment would
affect the industry in the no-new-standards case as well as at each
TSL.
---------------------------------------------------------------------------
b. Government Regulatory Impact Model Scenarios
Manufacturer Markup Scenarios
MSPs include direct manufacturing production costs (i.e., labor,
materials, and overhead estimated in DOE's MPCs) and all non-production
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate
the MSPs in the GRIM, DOE applied manufacturer markups to the MPCs
estimated in the engineering analysis for each equipment class and
efficiency level. Modifying these manufacturer markups in the standards
case yields different sets of impacts on manufacturers. For the MIA,
DOE modeled two standards case manufacturer markup scenarios to
represent the uncertainty regarding the potential impacts on prices and
profitability for manufacturers following the implementation of amended
energy conservation standards: (1) A preservation of gross margin
percentage markup scenario and (2) a preservation of per-unit operating
profit markup scenario. These scenarios lead to different manufacturer
markup values that, when applied to the inputted MPCs, result in
varying revenue and cash flow impacts.
Under the preservation of gross margin percentage scenario, DOE
applied a single uniform ``gross margin percentage'' markup across all
efficiency levels (for a given equipment class), which assumes that
manufacturers will be able to maintain the same amount of profit as a
percentage of revenues at all efficiency levels within an equipment
class. As production costs increase with efficiency, this scenario
implies that the absolute dollar markup will increase as well. Based on
publicly available financial information for manufacturers of beverage
vending machines as well as comments from manufacturer interviews, DOE
assumed the average manufacturer markups to vary by equipment class as
shown in Table IV.10.
Table IV.10--Baseline Manufacturer Markups
------------------------------------------------------------------------
Equipment class Markup
------------------------------------------------------------------------
Class A................................................. 1.22
Class B................................................. 1.17
Combination A........................................... 1.36
Combination B........................................... 1.36
------------------------------------------------------------------------
Because this manufacturer markup scenario assumes that
manufacturers will be able to maintain their gross margin percentage
markups as production costs increase in response to an amended energy
conservation standard, it represents a high bound to industry
profitability.
In the preservation of per-unit operating profits scenario,
manufacturer markups are calibrated such that the per-unit operating
profit in the year after the compliance date of the amended energy
conservation standard is the same as in the no-new-standards case for
each equipment class. Under this scenario, as the cost of production
goes up, manufacturers are generally required to reduce the markups on
their minimally compliant equipment to maintain a cost-competitive
offering. The implicit assumption behind this scenario is that the
industry can only maintain operating profits after compliance with the
amended standard is required. Therefore, gross margin (as a percentage)
is reduced between the no-new-standards case and the standards case.
This manufacturer markup scenario represents a low bound to industry
profitability under an amended energy conservation standard.
3. Discussion of Comments
During the 2015 BVM ECS NOPR public meeting and in public comments
submitted in response to the 2015 BVM ECS NOPR, manufacturers, trade
organizations, and SBA Advocacy provided several comments on the
potential impact of amended energy conservation standards on
manufacturers. These comments are outlined below. DOE notes that these
comments helped to update the analysis reflected in this final rule.
Relating to DOE's 2015 BVM ECS NOPR estimates of industry
conversion costs associated with compliance with amended energy
conservation standards, Seaga commented that DOE is underestimating
industry conversion costs because different bottlers may want different
refrigerants. (Seaga, No. 48 at p. 177)
As part of the manufacturer impact analysis, DOE evaluated the
level of energy conservation standards-related expenditures that will
be needed to comply with each considered efficiency level in each
equipment class. DOE notes that these conversion costs are based on
manufacturer feedback on costs associated with individual design
options, which are common to both CO2 and propane machines.
These individual design option costs were scaled to reflect industry
conversion costs per design option and equipment type (ie., Class A,
Class B, Combination A, Combination B) using the count of manufacturers
currently producing beverage vending machines of each equipment type
and the count of current platforms of each equipment type. These
industry conversion cost estimates were then allocated by refrigerant
using assumptions developed in the Shipments Analysis related to the
distribution of refrigerants in the BVM industry by 2019 (see section
IV.G.2 for a description of DOE's methodology for forecasting future
BVM shipments by refrigerant type). As DOE's shipments forecasts by
refrigerant assume a significant market share for both CO2
and propane equipment, DOE accounts for manufacturers' decisions to
produce beverage vending machines using both CO2 and propane
in its estimates of industry conversion costs.
In response to the 2015 BVM ECS NOPR, AMS expressed concern
relating to the fact that EPA's enforcement of SNAP includes
remanufactured equipment, in addition to new refrigerated beverage
vending machines, while DOE energy conservation standards apply only to
new machines. AMS believes this inconsistency will contribute to the
cumulative regulatory burdens faced by BVM manufacturers. (AMS, No.48
at p. 137) Additionally, NAMA stated that compliance with both EPA SNAP
rule 20 and proposed rule would be very costly to the industry. (NAMA,
No. 50 at p. 13) The Form Letter Writers stated the standards were not
technologically feasible or economically justified because of the
burden on small businesses who also have to meet new EPA mandates as
well as new DOE testing procedures (The Form Letter Writers, No. 64 and
65 at p. 1)
DOE recognizes that EPA regulations that restrict the use of HFC
refrigerants will lead to changes in production costs for BVM
manufacturers, necessitate investments, and will, accordingly,
contribute to the cumulative regulatory burdens incurred by
manufacturers as a result of amended DOE energy conservation standards.
DOE notes that although EPA SNAP Rule 20 lists certain refrigerants as
unacceptable in refurbished machines as of July 20, 2016, R-134a is not
among the unacceptable refrigerants. Therefore, because manufacturers
are currently capable of producing beverage vending
[[Page 1076]]
machines with R-134a, DOE believes that the cumulative regulatory
burdens associated with EPA's enforcement of SNAP on refurbished
beverage vending machines will be minimal, on both large and small
manufacturers. Moreover, DOE's statutory authority to prescribe new and
amended energy conservation standards only applies to the point of
manufacture, and as such, DOE does not have the authority to extend
such standards to refurbished equipment.
DOE accounted for the forthcoming R-134a phase out by estimating
refrigerant-specific design pathways, cost efficiency curves and the
upfront investments needed to adapt equipment, production lines, and
facilities to the use of propane and CO2. DOE used a value
of $750,000 per manufacturer to account for capital expenditures as
well as non-equipment costs such R&D, testing, and marketing material
changes to bring BVM equipment using propane or CO2 to
market. DOE integrated this cost into both the no-new-standards and
standards case estimates of INPV. See section IV.J.2.a for further
detail on one-time costs associated with SNAP Rule 20 compliance.
Furthermore, DOE includes the EPA's SNAP Rule 20 in its list of
cumulative regulatory burdens in section V.B.2.e of this final rule.
DOE also independently analyzed the impact of the adopted new and
amended standards on small business in the Regulatory Flexibility
Analysis, presented in section VI.B.
Also relating to cumulative regulatory burdens, Royal Vendors
commented that the vending industry has experienced numerous regulatory
and economic challenges in the past 5-10 years and that DOE's proposed
standards would cause undue hardship on the vending industry. (Royal
Vendors, No. 54 at p. 2)
In response to stakeholder feedback relating to the 2015 BVM ECS
NOPR, DOE has updated its engineering analysis and standard efficiency
levels for this final rule, resulting in less burdensome standard
levels for all product classes of beverage vending machines relative to
the 2015 BVM ECS NOPR proposal. DOE investigates cumulative regulatory
burden impacts associated with this rulemaking in more detail in
section V.B.2.e of this notice, and in chapter 12 of the final TSD.
Regarding the impacts of the standard levels proposed in the 2015
BVM ECS NOPR on small domestic BVM manufacturers, Seaga noted that the
proposed standards would make it difficult for small manufacturers to
remain in the industry. (Seaga, No. 48 at p. 177) Similarly, AMS
commented that the investments in engineering and development to meet
DOE's proposed standard may require it to abandon the vending machine
market. (AMS, No. 57 at p. 10) Additionally, SBA Advocacy's
conversations with small businesses on their projected compliance costs
[associated with the standard levels proposed in the 2015 BVM ECS NOPR]
yielded estimates exceeding $1,000,000 per small manufacturer. (SBA
Advocacy, No. 61 at p. 2) SBA Advocacy stated further that, to ensure
that the cost implications of complying with the SNAP rule are
considered in DOE's analysis, it recommends that a sensitivity analysis
be done. (SBA Advocacy, No. 61 at p. 3)
DOE recognizes that small manufacturers may be disproportionately
impacted by energy conservation standards relative to other
manufacturers in the industry. Again, DOE notes that, in response to
stakeholder feedback relating to the 2015 BVM ECS NOPR, it has updated
its engineering analysis and standard efficiency levels for this final
rule, resulting in less burdensome standard levels for all equipment
classes of beverage vending machines relative to the 2015 BVM ECS NOPR
proposal.
DOE believes that the $1,000,000 per small manufacturer compliance
cost estimate cited by SBA Advocacy is inclusive of the both ECS-
related conversion costs and SNAP-related upfront investments. DOE
accounted for the forthcoming R-134a phaseout required by EPA SNAP by
estimating refrigerant-specific design pathways, cost efficiency curves
and the upfront investments needed to adapt equipment, production
lines, and facilities to the use of propane and CO2 (see
section IV.C.2 for information relating to refrigerant-specific design
pathways and cost efficiency curves). DOE estimated an upfront cost of
$750,000 per manufacturer to comply with Rule 20 using refrigerants
propane and CO2 refrigerants (this cost is independent of
product and capital conversion costs associated with DOE standards
compliance), and incorporated this cost in the GRIM in both the no-new-
standards case and the standards case. This allowed DOE to isolate the
incremental impact of amended energy conservation standards on BVM
manufacturers, while still accounting for the impact of the 2019 R-134a
phaseout on the industry. See section IV.J.2 for further details on
DOE's modeling of ECS-related conversion costs and SNAP-related upfront
investments. Additionally, DOE's analysis of the impacts of the final
rule standard levels on small manufacturers is detailed in sections
V.B.2 and VI.B.
Finally, SBA commented that DOE set the baseline for Combination A
and Combination B equipment classes as the least efficient combination
of technologies analyzed in the engineering analysis. As a result, SBA
Advocacy believes DOE could be overstating benefits at higher TSLs
because the baseline represents equipment that is less efficient than
actual equipment on the market and may not represent a reasonable
combination of technologies. (SBA Advocacy, No. 61 at p. 2)
Since there are currently no energy-related regulatory standards
for Combination A and Combination B beverage vending machines, the
baseline for these equipment classes is defined as the level of
efficiency representing the least-efficient technology currently found
in the BVM market for each design option analyzed. Starting with the
least efficient technology results in an analysis where manufacturers
must incorporate more design options and accrue greater conversion
costs to reach an amended standard. This approach results in estimates
of manufacturer conversion costs related to ECS compliance which fall
in the high end of the range of potential costs.
DOE notes that, in written comments in response to the 2015 BVM ECS
NOPR, AMS commented that the baseline level calculated for Combination
A beverage vending machines is far more efficient than the performance
of actual machines in use today (see section IV.C.1 the full discussion
of this comment). In the final rule analysis, DOE made additional
analytical adjustments to the engineering analysis, and as such, the
baseline performance of the combination equipment showed better
agreement with the figure suggested by AMS.
K. Emissions Analysis
The emissions analysis consists of two components. The first
component estimates the effect of potential energy conservation
standards on power sector and site (where applicable) combustion
emissions of CO2, NOX, SO2, and Hg.
The second component estimates the impacts of potential standards on
emissions of two additional greenhouse gases, CH4 and
N2O, as well as the reductions to emissions of all species
due to ``upstream'' activities in the fuel production chain. These
upstream activities comprise extraction, processing, and transporting
fuels to the site of combustion. The associated emissions are referred
to as upstream emissions.
[[Page 1077]]
The analysis of power sector emissions uses marginal emissions
factors that were derived from data in AEO2015. The methodology is
described in chapters 13 and 15 of the final rule TSD.
Combustion emissions of CH4 and N2O are
estimated using emissions intensity factors published by the EPA, GHG
Emissions Factors Hub.\62\ The FFC upstream emissions are estimated
based on the methodology described in chapter 15 of the final rule TSD.
The upstream emissions include both emissions from fuel combustion
during extraction, processing, and transportation of fuel, and
``fugitive'' emissions (direct leakage to the atmosphere) of
CH4 and CO2.
---------------------------------------------------------------------------
\62\ Available at www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------
The emissions intensity factors are expressed in terms of physical
units per MWh or MMBtu of site energy savings. Total emissions
reductions are estimated using the energy savings calculated in the
national impact analysis.
For CH4 and N2O, DOE calculated emissions
reduction in tons and in terms of units of carbon dioxide equivalent
(CO2eq). Gases are converted to CO2eq by
multiplying each ton of gas by the gas' global warming potential (GWP)
over a 100-year time horizon. Based on the Fifth Assessment Report of
the Intergovernmental Panel on Climate Change,\63\ DOE used GWP values
of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------
\63\ IPCC, 2013: Climate Change 2013: The Physical Science
Basis. Contribution of Working Group I to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Stocker,
T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A.
Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge
University Press, Cambridge, United Kingdom and New York, NY, USA.
Chapter 8.
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The AEO incorporates the projected impacts of existing air quality
regulations on emissions. AEO2015 generally represents current
legislation and environmental regulations, including recent government
actions, for which implementing regulations were available as of
October 31, 2014. DOE's estimation of impacts accounts for the presence
of the emissions control programs discussed in the following
paragraphs.
SO2 emissions from affected electric generating units
(EGUs) are subject to nationwide and regional emissions cap-and-trade
programs. Title IV of the Clean Air Act sets an annual emissions cap on
SO2 for affected EGUs in the 48 contiguous States and the
District of Columbia (D.C.). (42 U.S.C. 7651 et seq.) SO2
emissions from 28 eastern States and D.C. were also limited under the
Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR
created an allowance-based trading program that operates along with the
Title IV program. In 2008, CAIR was remanded to EPA by the U.S. Court
of Appeals for the District of Columbia Circuit, but it remained in
effect.\64\ In 2011, EPA issued a replacement for CAIR, the Cross-State
Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21,
2012, the D.C. Circuit issued a decision to vacate CSAPR,\65\ and the
court ordered EPA to continue administering CAIR. On April 29, 2014,
the U.S. Supreme Court reversed the judgment of the D.C. Circuit and
remanded the case for further proceedings consistent with the Supreme
Court's opinion.\66\ On October 23, 2014, the D.C. Circuit lifted the
stay of CSAPR.\67\ Pursuant to this action, CSAPR went into effect (and
CAIR ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------
\64\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008);
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
\65\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696,
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
\66\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610
(U.S. 2014). The Supreme Court held in part that EPA's methodology
for quantifying emissions that must be eliminated in certain States
due to their impacts in other downwind States was based on a
permissible, workable, and equitable interpretation of the Clean Air
Act provision that provides statutory authority for CSAPR.
\67\ See Georgia v. EPA, Order (D.C. Cir. filed October 23,
2014) (No. 11-1302).
---------------------------------------------------------------------------
EIA was not able to incorporate CSAPR into AEO2015, so it assumes
implementation of CAIR. Although DOE's analysis used emissions factors
that assume that CAIR, not CSAPR, is the regulation in force, the
difference between CAIR and CSAPR is not relevant for the purpose of
DOE's analysis of emissions impacts from energy conservation standards.
The attainment of emissions caps is typically flexible among EGUs
and is enforced through the use of emissions allowances and tradable
permits. Under existing EPA regulations, any excess SO2
emissions allowances resulting from the lower electricity demand caused
by the adoption of an efficiency standard could be used to permit
offsetting increases in SO2 emissions by any regulated EGU.
In past rulemakings, DOE recognized that there was uncertainty about
the effects of efficiency standards on SO2 emissions covered
by the existing cap-and-trade system, but it concluded that negligible
reductions in power sector SO2 emissions will occur as a
result of standards.
Beginning in 2016, however, SO2 emissions will fall as a
result of the Mercury and Air Toxics Standards (MATS) for power plants.
77 FR 9304 (Feb. 16, 2012). In the MATS rule, EPA established a
standard for hydrogen chloride as a surrogate for acid gas hazardous
air pollutants (HAP), and also established a standard for
SO2 (a non-HAP acid gas) as an alternative equivalent
surrogate standard for acid gas HAP. The same controls are used to
reduce HAP and non-HAP acid gas; thus, SO2 emissions will be
reduced as a result of the control technologies installed on coal-fired
power plants to comply with the MATS requirements for acid gas. AEO2015
assumes that, in order to continue operating, coal plants must have
either flue gas desulfurization or dry sorbent injection systems
installed by 2016. Both technologies, which are used to reduce acid gas
emissions, also reduce SO2 emissions. Under the MATS,
emissions will be far below the cap established by CAIR, so it is
unlikely that excess SO2 emissions allowances resulting from
the lower electricity demand would be needed or used to permit
offsetting increases in SO2 emissions by any regulated
EGU.\68\ Therefore, DOE believes that energy conservation standards
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------
\68\ DOE notes that the Supreme Court recently remanded EPA's
2012 rule regarding national emission standards for hazardous air
pollutants from certain electric utility steam generating units. See
Michigan v. EPA (Case No. 14-46, 2015). DOE has determined that the
remand of the MATS rule does not change the assumptions regarding
the impact of energy efficiency standards on SO2
emissions. Further, while the remand of the MATS rule may have an
impact on the overall amount of mercury emitted by power plants, it
does not change the impact of the energy efficiency standards on
mercury emissions. DOE will continue to monitor developments related
to this case and respond to them as appropriate.
---------------------------------------------------------------------------
CAIR established a cap on NOX emissions in 28 eastern
States and the District of Columbia.\69\ Energy conservation standards
are expected to have little effect on NOX emissions in those
States covered by CAIR because excess NOX emissions
allowances resulting from the lower electricity demand could be used to
permit offsetting increases in NOX emissions from other
facilities. However, standards would be expected to reduce
NOX emissions in the States not affected by the caps, so DOE
estimated NOX
[[Page 1078]]
emissions reductions from the standards in this final rule for these
States.
---------------------------------------------------------------------------
\69\ CSAPR also applies to NOX and it would supersede
the regulation of NOX under CAIR. As stated previously,
the current analysis assumes that CAIR, not CSAPR, is the regulation
in force. The difference between CAIR and CSAPR with regard to DOE's
analysis of NOX emissions is slight.
---------------------------------------------------------------------------
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and, as such, DOE's energy conservation
standards would likely reduce Hg emissions. DOE estimated mercury
emissions reduction using emissions factors based on AEO2015, which
incorporates the MATS.
In response to the 2015 BVM ECS NOPR, CoilPod commented that DOE's
estimate of emissions reduction is overstated as it does not take into
account coil degradation that occurs in real-world use. They
additionally cited a government report finding that bottlers have no
incentive to clean the coils on their vending machines because the
establishments in which they are installed pay the electricity costs.
(CoilPod, Public Meeting Transcript, No. 48 at pp. 53-55)
DOE's calculation of emissions savings is based on the amount of
energy saved. Coil degradation has little impact on emissions savings
because it is based on incremental savings. Both baseline and more
efficient equipment will be impacted by coil fouling, and the energy
savings differential between the no-new-standards case and the
standards case would largely remain the same.
L. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of this rule, DOE considered the
estimated monetary benefits from the reduced emissions of
CO2 and NOX that are expected to result from each
of the TSLs considered. In order to make this calculation analogous to
the calculation of the NPV of customer benefit, DOE considered the
reduced emissions expected to result over the lifetime of equipment
shipped in the forecast period for each TSL. This section summarizes
the basis for the monetary values used for of CO2 and
NOX emissions and presents the values considered in this
final rule.
For this final rule, DOE relied on a set of values for the social
cost of carbon (SCC) that was developed by a Federal interagency
process. The basis for these values is summarized in the next section,
and a more detailed description of the methodologies used is provided
as an appendix to chapter 14 of the final rule TSD.
1. Social Cost of Carbon
The SCC is an estimate of the monetized damages associated with an
incremental increase in carbon emissions in a given year. It is
intended to include (but is not limited to) climate-change-related
changes in net agricultural productivity, human health, property
damages from increased flood risk, and the value of ecosystem services.
Estimates of the SCC are provided in dollars per metric ton of
CO2. A domestic SCC value is meant to reflect the value of
damages in the United States resulting from a unit change in
CO2 emissions, while a global SCC value is meant to reflect
the value of damages worldwide.
Under section 1(b)(6) of Executive Order 12866, ``Regulatory
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to
the extent permitted by law, ``assess both the costs and the benefits
of the intended regulation and, recognizing that some costs and
benefits are difficult to quantify, propose or adopt a regulation only
upon a reasoned determination that the benefits of the intended
regulation justify its costs.'' The purpose of the SCC estimates
presented here is to allow agencies to incorporate the monetized social
benefits of reducing CO2 emissions into cost-benefit
analyses of regulatory actions. The estimates are presented with an
acknowledgement of the many uncertainties involved and with a clear
understanding that they should be updated over time to reflect
increasing knowledge of the science and economics of climate impacts.
As part of the interagency process that developed these SCC
estimates, technical experts from numerous agencies met on a regular
basis to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. The main
objective of this process was to develop a range of SCC values using a
defensible set of input assumptions grounded in the existing scientific
and economic literatures. In this way, key uncertainties and model
differences transparently and consistently inform the range of SCC
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
When attempting to assess the incremental economic impacts of
CO2 emissions, the analyst faces a number of challenges. A
report from the National Research Council \70\ points out that any
assessment will suffer from uncertainty, speculation, and lack of
information about: (1) Future emissions of GHGs; (2) the effects of
past and future emissions on the climate system; (3) the impact of
changes in climate on the physical and biological environment; and (4)
the translation of these environmental impacts into economic damages.
As a result, any effort to quantify and monetize the harms associated
with climate change will raise questions of science, economics, and
ethics and should be viewed as provisional.
---------------------------------------------------------------------------
\70\ National Research Council. Hidden Costs of Energy: Unpriced
Consequences of Energy Production and Use. 2009. National Academies
Press: Washington, DC.
---------------------------------------------------------------------------
Despite the limits of both quantification and monetization, SCC
estimates can be useful in estimating the social benefits of reducing
CO2 emissions. The agency can estimate the benefits from
reduced (or costs from increased) emissions in any future year by
multiplying the change in emissions in that year by the SCC values
appropriate for that year. The NPV of the benefits can then be
calculated by multiplying each of these future benefits by an
appropriate discount factor and summing across all affected years.
It is important to emphasize that the interagency process is
committed to updating these estimates as the science and economic
understanding of climate change and its impacts on society improves
over time. In the meantime, the interagency group will continue to
explore the issues raised by this analysis and consider public comments
as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
In 2009, an interagency process was initiated to offer a
preliminary assessment of how best to quantify the benefits from
reducing CO2 emissions. To ensure consistency in how
benefits are evaluated across Federal agencies, the Administration
sought to develop a transparent and defensible method, specifically
designed for the rulemaking process, to quantify avoided climate change
damages from reduced CO2 emissions. The interagency group
did not undertake any original analysis. Instead, it combined SCC
estimates from the existing literature to use as interim values until a
more comprehensive analysis could be conducted. The outcome of the
preliminary assessment by the interagency group was a set of five
interim values: global SCC estimates for 2007 (in 2006$) of $55, $33,
$19, $10, and $5 per metric ton of CO2. These interim values
represented the first sustained interagency effort within the U.S.
government to develop an SCC for use in regulatory analysis. The
results of this preliminary effort were presented in several proposed
and final rules.
[[Page 1079]]
c. Current Approach and Key Assumptions
After the release of the interim values, the interagency group
reconvened on a regular basis to generate improved SCC estimates.
Specially, the group considered public comments and further explored
the technical literature in relevant fields. The interagency group
relied on three integrated assessment models commonly used to estimate
the SCC: The FUND, DICE, and PAGE models. These models are frequently
cited in the peer-reviewed literature and were used in the last
assessment of the Intergovernmental Panel on Climate Change (IPCC).
Each model was given equal weight in the SCC values that were
developed.
Each model takes a slightly different approach to model how changes
in emissions result in changes in economic damages. A key objective of
the interagency process was to enable a consistent exploration of the
three models, while respecting the different approaches to quantifying
damages taken by the key modelers in the field. An extensive review of
the literature was conducted to select three sets of input parameters
for these models: climate sensitivity, socio-economic and emissions
trajectories, and discount rates. A probability distribution for
climate sensitivity was specified as an input into all three models. In
addition, the interagency group used a range of scenarios for the
socio-economic parameters and a range of values for the discount rate.
All other model features were left unchanged, relying on the model
developers' best estimates and judgments.
In 2010, the interagency group selected four sets of SCC values for
use in regulatory analyses. Three sets of values are based on the
average SCC from the three integrated assessment models, at discount
rates of 2.5, 3, and 5 percent. The fourth set, which represents the
95th percentile SCC estimate across all three models at a 3-percent
discount rate, was included to represent higher-than-expected impacts
from climate change further out in the tails of the SCC distribution.
The values grow in real terms over time. Additionally, the interagency
group determined that a range of values from 7 percent to 23 percent
should be used to adjust the global SCC to calculate domestic
effects,\71\ although preference is given to consideration of the
global benefits of reducing CO2 emissions. Table IV.11
presents the values in the 2010 interagency group report,\72\ which is
reproduced in appendix 14A of the final rule TSD.
---------------------------------------------------------------------------
\71\ It is recognized that this calculation for domestic values
is approximate, provisional, and highly speculative. There is no a
priori reason why domestic benefits should be a constant fraction of
net global damages over time.
\72\ Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866. Interagency Working Group on Social Cost of
Carbon, United States Government (February 2010) (Available at:
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).
Table IV.11--Annual SCC Values From 2010 Interagency Report, 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 4.7 21.4 35.1 64.9
2015............................................ 5.7 23.8 38.4 72.8
2020............................................ 6.8 26.3 41.7 80.7
2025............................................ 8.2 29.6 45.9 90.4
2030............................................ 9.7 32.8 50.0 100.0
2035............................................ 11.2 36.0 54.2 109.7
2040............................................ 12.7 39.2 58.4 119.3
2045............................................ 14.2 42.1 61.7 127.8
2050............................................ 15.7 44.9 65.0 136.2
----------------------------------------------------------------------------------------------------------------
The SCC values used for this document were generated using the most
recent versions of the three integrated assessment models that have
been published in the peer-reviewed literature, as described in the
2013 update from the interagency working group (revised July 2015).\73\
Table IV.12 shows the updated sets of SCC estimates from the latest
interagency update in 5-year increments from 2010 to 2050. The full set
of annual SCC estimates between 2010 and 2050 is reported in appendix
14B of the final rule TSD. The central value that emerges is the
average SCC across models at the 3-percent discount rate. However, for
purposes of capturing the uncertainties involved in regulatory impact
analysis, the interagency group emphasizes the importance of including
all four sets of SCC values.
---------------------------------------------------------------------------
\73\ Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866. Interagency
Working Group on Social Cost of Carbon, United States Government
(May 2013; revised July 2015) Available at www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
Table IV.12--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
[2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2010............................................ 10 31 50 86
[[Page 1080]]
2015............................................ 11 36 56 105
2020............................................ 12 42 62 123
2025............................................ 14 46 68 138
2030............................................ 16 50 73 152
2035............................................ 18 55 78 168
2040............................................ 21 60 84 183
2045............................................ 23 64 89 197
2050............................................ 26 69 95 212
----------------------------------------------------------------------------------------------------------------
It is important to recognize that a number of key uncertainties
remain, and that current SCC estimates should be treated as provisional
and revisable because they will evolve with improved scientific and
economic understanding. The interagency group also recognizes that the
existing models are imperfect and incomplete. The National Research
Council report mentioned previously points out that there is tension
between the goal of producing quantified estimates of the economic
damages from an incremental ton of carbon and the limits of existing
efforts to model these effects. There are a number of analytical
challenges that are being addressed by the research community,
including research programs housed in many of the Federal agencies
participating in the interagency process to estimate the SCC. The
interagency group intends to periodically review and reconsider those
estimates to reflect increasing knowledge of the science and economics
of climate impacts, as well as improvements in modeling.\74\
---------------------------------------------------------------------------
\74\ In November 2013, OMB announced a new opportunity for
public comment on the interagency technical support document
underlying the revised SCC estimates. 78 FR 70586 (Nov. 26, 2013).
In July 2015 OMB published a detailed summary and formal response to
the many comments that were received. www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. It
also stated its intention to seek independent expert advice on
opportunities to improve the estimates, including many of the
approaches suggested by commenters.
---------------------------------------------------------------------------
In summary, in considering the potential global benefits resulting
from reduced CO2 emissions, DOE used the values from the
2013 interagency report (revised July 2015), adjusted to 2014$ using
the implicit price deflator for gross domestic product (GDP) from the
Bureau of Economic Analysis. For each of the four sets of SCC cases
specified, the values for emissions in 2015 were $12.2, $40.0, $62.3,
and $117 per metric ton avoided (values expressed in 2014$). DOE
derived values after 2050 using the relevant growth rates for the 2040-
2050 period in the interagency update.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SCC value for that year in each of the four cases. To
calculate a present value of the stream of monetary values, DOE
discounted the values in each of the four cases using the specific
discount rate that had been used to obtain the SCC values in each case.
A number of stakeholders represented by the U.S. Chamber of
Commerce stated that DOE should not use SCC values to establish
monetary figures for emissions reductions until the SCC undergoes a
more rigorous notice, review, and comment process. (The Associations,
No. 62 at p. 4)
In conducting the interagency process that developed the SCC
values, technical experts from numerous agencies met on a regular basis
to consider public comments, explore the technical literature in
relevant fields, and discuss key model inputs and assumptions. Key
uncertainties and model differences transparently and consistently
inform the range of SCC estimates. These uncertainties and model
differences are discussed in the interagency working group's reports,
which are reproduced in appendix 14A and 14B of the final rule TSD, as
are the major assumptions. The 2010 SCC values have been used in a
number of Federal rulemakings upon which the public had opportunity to
comment. In November 2013, OMB announced a new opportunity for public
comment on the TSD underlying the revised SCC estimates. See 78 FR
70586 (Nov. 26, 2013). OMB issued a revision to the 2013 SCC estimates
in July of 2015. DOE stands ready to work with OMB and the other
members of the interagency working group on further review and revision
of the SCC estimates as appropriate.
2. Social Cost of Other Air Pollutants
As noted previously, DOE has estimated how the considered energy
conservation standards would reduce site NOX emissions
nationwide and decrease power sector NOX emissions in those
22 States not affected by the CAIR.
DOE estimated the monetized value of NOX emissions
reductions using benefit per ton estimates from the ``Regulatory Impact
Analysis for the Proposed Carbon Pollution Guidelines for Existing
Power Plants and Emission Standards for Modified and Reconstructed
Power Plants,'' published in June 2014 by EPA's Office of Air Quality
Planning and Standards.\75\ The report includes high and low values for
NOX (as PM2.5) for 2020, 2025, and 2030
discounted at 3 percent and 7 percent,\76\ which are presented in
chapter 14 of the final rule TSD. DOE assigned values for 2021-2024 and
2026-2029 using, respectively, the values for 2020 and 2025. DOE
assigned values after 2030 using the value for 2030.
---------------------------------------------------------------------------
\75\ https://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf. See Tables 4-7, 4-8, and 4-9 in the
report.
\76\ For the monetized NOX benefits associated with
PM2.5, the related benefits (derived from benefit-per-ton
values) are primarily based on an estimate of premature mortality
derived from the ACS study (Krewski et al., 2009), which is the
lower of the two EPA central tendencies. Using the lower value is
more conservative when making the policy decision concerning whether
a particular standard level is economically justified. If the
benefit-per-ton estimates were based on the Six Cities study
(Lepuele et al., 2012), the values would be nearly two-and-a-half
times larger. (See chapter 14 of the final rule TSD for further
description of the studies mentioned above.)
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DOE multiplied the emissions reduction (tons) in each year by the
associated $/ton values and then discounted each series using discount
rates of 3 percent and 7 percent as appropriate.
[[Page 1081]]
DOE is evaluating appropriate monetization of avoided
SO2 and Hg emissions in energy conservation standards
rulemakings. DOE has not included monetization of those emissions in
the current analysis.
M. Utility Impact Analysis
The utility impact analysis estimates several effects on the
electric power industry that would result from the adoption of new or
amended energy conservation standards. The utility impact analysis
estimates the changes in installed electrical capacity and generation
that would result for each TSL. The analysis is based on published
output from the NEMS associated with AEO2015. NEMS produces the AEO
Reference case, as well as a number of side cases that estimate the
economy-wide impacts of changes to energy supply and demand. DOE uses
published side cases to estimate the marginal impacts of reduced energy
demand on the utility sector. These marginal factors are estimated
based on the changes to electricity sector generation, installed
capacity, fuel consumption and emissions in the AEO Reference case and
various side cases. Details of the methodology are provided in the
appendices to chapters 13 and 15 of the final rule TSD.
The output of this analysis is a set of time-dependent coefficients
that capture the change in electricity generation, primary fuel
consumption, installed capacity and power sector emissions due to a
unit reduction in demand for a given end use. These coefficients are
multiplied by the stream of electricity savings calculated in the NIA
to provide estimates of selected utility impacts of new or amended
energy conservation standards.
N. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one
factor in selecting a standard. Employment impacts from new or amended
energy conservation standards include both direct and indirect impacts.
Direct employment impacts are changes in the number of employees at the
plants that produce the covered equipment, along with affiliated
distribution and service companies. The MIA addresses those impacts.
Indirect employment impacts are changes in national employment that
occur due to the shift in expenditures and capital investment caused by
the purchase and operation of more-efficient appliances. Indirect
employment impacts from standards consist of the net jobs created or
eliminated in the national economy, other than in the manufacturing
sector being regulated, caused by: (1) Reduced spending by end users on
energy; (2) reduced spending on new energy supply by the utility
industry; (3) increased customer spending on new equipment to which the
new standards apply; and (4) the effects of those three factors
throughout the economy.
One method for assessing the possible effects on the demand for
labor of such shifts in economic activity is to compare sector
employment statistics developed by the Labor Department's Bureau of
Labor Statistics (BLS).\77\ BLS regularly publishes its estimates of
the number of jobs per million dollars of economic activity in
different sectors of the economy, as well as the jobs created elsewhere
in the economy by this same economic activity. Data from BLS indicate
that expenditures in the utility sector generally create fewer jobs
(both directly and indirectly) than expenditures in other sectors of
the economy.\78\ There are many reasons for these differences,
including wage differences and the fact that the utility sector is more
capital-intensive and less labor-intensive than other sectors. Energy
conservation standards have the effect of reducing customer utility
bills. Because reduced customer expenditures for energy likely lead to
increased expenditures in other sectors of the economy, the general
effect of efficiency standards is to shift economic activity from a
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based
on the BLS data alone, DOE believes net national employment may
increase due to shifts in economic activity resulting from energy
conservation standards.
---------------------------------------------------------------------------
\77\ Data on industry employment, hours, labor compensation,
value of production, and the implicit price deflator for output for
these industries are available upon request by calling the Division
of Industry Productivity Studies (202-691-5618) or by sending a
request by email to dipsweb@bls.gov.
\78\ See Bureau of Economic Analysis, Regional Multipliers: A
User Handbook for the Regional Input-Output Modeling System (RIMS
II), U.S. Department of Commerce (1992).
---------------------------------------------------------------------------
DOE estimated indirect national employment impacts for the standard
level adopted in this final rule using an input/output model of the
U.S. economy called Impact of Sector Energy Technologies version 4.0
(ImSET).\79\ ImSET is a special-purpose version of the ``U.S. Benchmark
National Input-Output'' (I-O) model, which was designed to estimate the
national employment and income effects of energy-saving technologies.
The ImSET software includes a computer-based I-O model having
structural coefficients that characterize economic flows among 187
sectors most relevant to industrial, commercial, and residential
building energy use.
---------------------------------------------------------------------------
\79\ Livingston OV, SR Bender, MJ Scott, and RW Schultz. ImSET
4.0: Impact of Sector Energy Technologies Model Description and
User's Guide. 2015. Pacific Northwest National Laboratory, Richland,
WA. Report No. PNNL-24563.
---------------------------------------------------------------------------
DOE notes that ImSET is not a general equilibrium-forecasting
model, and understands the uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Because ImSET does not incorporate price changes, the
employment effects predicted by ImSET may over-estimate actual job
impacts over the long run for this rule. Therefore, DOE generated
results for near-term timeframes (2020 and 2025), where these
uncertainties are reduced. For more details on the employment impact
analysis, see chapter 16 of the final rule TSD.
DOE reiterates that the indirect employment impacts estimated with
ImSET for the entire economy differ from the direct employment impacts
in the BVM manufacturing sector estimated using the GRIM in the MIA, as
described at the beginning of this section. The methodologies used and
the sectors analyzed in the ImSET and GRIM models are different.
O. Description of Materials Incorporated by Reference
In this final rule DOE is incorporating by reference ASTM Standard
E 1084-86 (Reapproved 2009), ``Standard Test Method for Solar
Transmittance (Terrestrial) of Sheet Materials Using Sunlight,'' to
determine whether a material is transparent when assessing whether a
beverage vending machine has a transparent front and meets the adopted
Class A definition. Copies of ASTM standards may be purchased from ASTM
International, 100 Barr Harbor Drive, P.O. Box C700, West Conshohocken,
PA 19428, (877) 909-2786, or at www.astm.org.
V. Analytical Results and Conclusions
The following section addresses the results of DOE's analyses with
respect to the considered energy conservation standards for beverage
vending machines. It addresses the TSLs examined by DOE, the projected
impacts of each of these levels if adopted as energy conservation
standards for beverage vending machines, and the standards levels that
DOE is adopting in this final rule. Additional details regarding DOE's
analyses are contained in the final rule TSD supporting this notice.
[[Page 1082]]
A. Trial Standard Levels
DOE analyzed 8 ELs for Class A equipment, 12 ELs for Class B
equipment, 15 ELs for Combination A equipment, and 13 ELs for
Combination B equipment in the LCC and NIA analyses, where each EL
represents a 5-percent improvement in efficiency from baseline
efficiency (EL 0) to up to max tech. Of the ELs analyzed for each class
DOE selected five TSLs based on the following criteria:
(1) TSL 1 is equivalent to the current ENERGY STAR criterion for
all equipment that is eligible for ENERGY STAR qualification. This
corresponded to EL 2 for Class B equipment and EL 1 for Class A.
Combination equipment is currently not eligible for ENERGY STAR
qualification and, as such, DOE selected TSL 1 as equivalent to EL 1,
since EL 1 was the first EL analyzed above the baseline (EL 0).
(2) TSL 2 was selected to be the EL that is hypothetically
representative of the next version of ENERGY STAR. That is, for the
given equipment class, DOE selected the EL comprising TSL 2 to be 5 or
10 percent better than TSL 1, depending on the improvement potential in
different equipment classes. That is, TSL 2 represents EL 2 for Class A
(5-percent improvement over TSL 1), EL 4 for Class B (10-percent
improvement over TSL 1), and EL 3 for Combination A and Combination B
(10-percent improvement over TSL 1).
(3) TSL 3 represents the EL with the maximum NPV at a 7-percent
discount rate. This level also corresponds to the maximum LCC savings
for most equipment classes. In addition, the EL corresponding to a 3-
year payback, zero customers with net cost, and maximum NPV at a 3-
percent discount rate were the same or within one EL from the selected
EL.
(4) TSL 4 was selected to be an interim analysis point
corresponding to the EL halfway between TSL 3 and 5 (rounding up when
between ELs).
(5) TSL 5 corresponds to the max tech EL.
In response to DOE's TSL selection presented in the 2015 BVM ECS
NOPR, the CA IOUs commented in their written submission that DOE should
consider an intermediate efficiency tier between TSL 4 and TSL 5 for
Class A and Combination A and supported TSL 4 for Class B and
Combination B equipment. (CA IOUs, No. 58 at p. 5) In response to CA
IOUs suggestion, DOE notes that DOE has revised the TSL selection
criteria for this final rule. Specifically, because the final rule
analysis resulted in the maximum NVP at a 7-percent discount rate
occurring at lower ELs for all equipment classes than in the NOPR, DOE
revised TSL 3 to represent the TSL with maximum NPV at a 7-percent
discount rate instead of TSL 4, as proposed in the 2015 BVM ECS NOPR.
Therefore, DOE has defined TSL 4 as an interim analysis point
consisting of the EL halfway between TSL 3 and TSL 5 for all equipment
classes. While, in the final rule analysis, TSL 3 and TSL 4 consist of
lower ELs than DOE's proposed TSL 4 presented in the 2015 BVM ECS NOPR,
DOE notes that the TSL 4 analysis point now reflects an interim
analysis point between the TSL with maximum NPV at a 7-percent discount
rate and max tech, as requested by the commenters. DOE also notes that,
based on the revised final rule analyses, ELs beyond TSL 3 for
equipment Class A result in increased LCC compared to baseline
equipment and a negative NPV.
Table V.1 shows the TSL levels DOE selected for the equipment
classes analyzed. Note that DOE performed its analyses for a
``representative size'' beverage vending machine and defined
refrigerant-neutral ELs such that the selected ELs could be met by any
refrigerant. Similarly, the defined TSLs share this approach and can be
met by either refrigerant.
Table V.1--Trial Standard Levels for a Representative Size BVM Model Expressed in Terms of Daily Energy Consumption
[kWh/day]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Representative
Equipment class volume (ft\3\) TSL Base-line TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A................................. 30.0 EL......................... 0 1 2 * 1 4 8
DEC........................ 4.21 4.00 3.79 4.00 3.37 2.60
Class B................................. 23.4 EL......................... 0 2 4 6 9 12
DEC........................ 4.87 4.38 3.90 3.41 2.68 1.94
Combination A........................... 10.3 EL......................... 0 1 3 11 13 15
DEC........................ 7.89 7.49 6.70 3.55 2.76 2.10
Combination B........................... 4.3 EL......................... 0 1 3 9 11 13
DEC........................ 4.58 4.35 3.89 2.52 2.06 1.46
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE notes that the EL selected for TSL 3 for Class A equipment is EL 1, which is the same EL selected for TSL1 for Class A equipment.
In this final rule, DOE elected to maintain the energy conservation
standard structure established in the 2009 BVM final rule, which
establishes the MDEC of covered BVM models in terms of a linear
equation of the following form:
MDEC = A x V + B
Where:
A is expressed in terms of kWh/(day[middot]ft\3\) of measured
refrigerated volume,
V is the representative value of refrigerated volume (ft\3\)
calculated for the equipment, and
B is an offset factor expressed in kWh/day.
Coefficients A and B are uniquely derived for each equipment class
based on a linear equation passing between the daily energy consumption
values for equipment of different refrigerated volumes. For the A and B
coefficients, DOE used the unique energy consumption values of the
small, medium, and large or medium and large size BVM units for Class A
and Class B or Combination A and Combination B beverage vending
machines, respectively. Table V.2 depicts the TSL equations for each
analyzed TSL and equipment class. The methodology used to establish the
TSL equations and more detailed results is described in more detail in
appendix 10B of the TSD.
[[Page 1083]]
Table V.2--Trial Standard Levels Maximum Daily Energy Consumption (kWh/day) Expressed in Terms of Equations and
Coefficients for BVM Equipment
----------------------------------------------------------------------------------------------------------------
TSL Class A Class B Combination A Combination B
----------------------------------------------------------------------------------------------------------------
Baseline........................ 0.055 x V + 2.56.. 0.074 x V + 3.15.. 0.192 x V + 5.91.. 0.202 x V + 3.71
1............................... 0.052 x V + 2.43.. 0.066 x V + 2.83.. 0.182 x V + 5.62.. 0.192 x V + 3.52
2............................... 0.050 x V + 2.30.. 0.059 x V + 2.52.. 0.163 x V + 5.03.. 0.172 x V + 3.15
3............................... 0.052 x V + 2.43.. 0.052 x V + 2.20.. 0.086 x V + 2.66.. 0.111 x V + 2.04
4............................... 0.044 x V + 2.05.. 0.041 x V + 1.73.. 0.067 x V + 2.07.. 0.091 x V + 1.67
5............................... 0.034 x V + 1.58.. 0.029 x V + 1.25.. 0.051 x V + 1.58.. 0.064 x V + 1.18
----------------------------------------------------------------------------------------------------------------
In Table V.2, ``V'' is the representative value of refrigerated
volume (ft\3\) of the BVM model, as measured in accordance with the
method for determining refrigerated volume adopted in the recently
amended DOE test procedure for beverage vending machines and
appropriate sampling plan requirements. 80 FR 45758 (July 31, 2015). In
the 2015 BVM ECS NOPR, DOE proposed a calculation method to be adopted
at 10 CFR 429.52(a)(3) for determining the representative value of
refrigerated volume for each BVM model. 80 FR 50507-50508 (Aug. 19,
2015). In response to DOE's proposal, SVA expressed support for DOE's
proposal to clarify the calculation of refrigerated volume. (SVA, No.
53 at p. 10) DOE appreciates SVA's support and, in this final rule, is
adopting provisions to specify that the representative value of
refrigerated volume must be determined as the mean of the measured
refrigerated volume of each tested unit. Manufacturers must use this
calculated value for determining the appropriate standard level for
that model.
In addition, in the 2015 BVM ECS NOPR, DOE proposed provisions to
assess whether the representative value of refrigerated volume, as
certified by manufacturers, is valid. 80 FR 50507-50508 (Aug. 19,
2015). DOE did not receive any comments on this proposal and,
therefore, is adopting the proposal for determining if the certified
value of refrigerated volume is valid as described in the 2015 BVM ECS
NOPR with no modifications.
Under the adopted provisions, DOE will compare the manufacturer's
certified rating with results from the unit or units in DOE's tested
sample. If the results of the tested unit or units in DOE's sample are
within 5 percent of the representative value of refrigerated volume
certified by manufacturers, the certified refrigerated volume value is
considered valid. Based on whether the representative value of
refrigerated volume is valid, DOE will do one of the following:
(1) If the representative value of refrigerated volume, as
certified by manufacturers, is valid, DOE will use the certified value
to determine the MDEC for that model; or
(2) If the representative value of refrigerated volume is invalid,
DOE will use its results from the tested unit or units as the basis for
calculating the MDEC for that BVM model.
Additionally, DOE notes that these sampling and enforcement
provisions are effective March 8, 2016, as such, applicable to both the
existing standards, as well as any new and amended standards adopted as
a result of this final rule.
B. Economic Justification and Energy Savings
1. Economic Impacts on Individual Customers
DOE analyzed the economic impacts on BVM customers by looking at
the effects that potential new and amended standards at each TSL would
have on the LCC and PBP. DOE also examined the impacts of potential
standards on customer subgroups. These analyses are discussed in the
following subsections.
a. Life-Cycle Cost and Payback Period
Customers affected by new standards usually incur higher purchase
prices and lower operating costs. DOE evaluates these impacts on
individual customers by calculating changes in LCC and the PBP
associated with the TSLs. The results of the LCC analysis for each TSL
were obtained by comparing the installed and operating costs of the
equipment in the no-new-standards case scenario against the standards
case scenarios at each TSL. Inputs used for calculating the LCC include
total installed costs (i.e., equipment price plus installation costs),
operating expenses (i.e., annual energy savings, energy prices, energy
price trends, repair costs, and maintenance costs), equipment lifetime,
and discount rates.
The LCC analysis is carried out using Monte Carlo simulations.
Consequently, the results of the LCC analysis are distributions
covering a range of values, as opposed to a single deterministic value.
DOE presents the mean or median values, as appropriate, calculated from
the distributions of results. The LCC analysis also provides
information on the percentage of customers for whom an increase in the
minimum efficiency standard would have a negative impact (net cost).
DOE also performed a PBP analysis as part of the LCC analysis. The
PBP is the number of years it takes for a customer to recover the
increased costs of higher efficiency equipment as a result of operating
cost savings. The PBP is an economic benefit-cost measure that uses
benefits and costs without discounting. Chapter 8 of the final rule TSD
provides detailed information on the LCC and PBP analysis.
DOE used a ``roll-up'' scenario in this rulemaking. Under the roll-
up scenario, DOE assumed that the market shares of the efficiency
levels (in the no-new-standards case) that do not meet the standard
level under consideration would be ``rolled up'' into (meaning ``added
to'') the market share of the efficiency level at the standard level
under consideration, and the market shares of efficiency levels that
are above the standard level under consideration would remain
unaffected. Customers in the no-new-standards case scenario who buy the
equipment at or above the TSL under consideration would be unaffected
if the standard were to be set at that TSL. Customers in the no-new-
standards case scenario who buy equipment below the TSL under
consideration would be affected if the standard were to be set at that
TSL. Among these affected customers, some may benefit from lower LCCs
of the equipment and some may incur net cost due to higher LCCs,
depending on the inputs to the LCC analysis, such as electricity
prices, discount rates, and installed costs.
DOE's LCC and PBP analysis provided key outputs for each efficiency
level above the baseline. The results for all equipment classes are
displayed in Table V.3 through Table V.18.
[[Page 1084]]
Table V.3--Average LCC and PBP Results for Class A, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
------------------------------------------------ Simple
% of First payback Average
TSL EL baseline Installed year's Lifetime period ** lifetime
energy use cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--...................................................... 0 100 2,817 487 4,991 7,807 .......... 13.5
1,3..................................................... 1 95 2,832 480 4,910 7,742 2.0 13.5
2....................................................... 2 90 2,867 505 5,157 8,025 N/A 13.5
--...................................................... 3 85 2,951 530 5,405 8,356 N/A 13.5
4....................................................... 4 80 3,071 557 5,674 8,744 N/A 13.5
--...................................................... 5 75 3,232 549 5,593 8,825 N/A 13.5
--...................................................... 6 70 3,467 542 5,512 8,979 N/A 13.5
--...................................................... 7 65 3,701 534 5,431 9,132 N/A 13.5
5....................................................... 8 62 3,853 529 5,379 9,232 N/A 13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
more to operate.
Table V.4--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
for Class A, CO2
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of baseline % of Average life-
TSL EL energy use customers that cycle cost
experience a savings *
net cost (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. 0 100 .............. ..............
1,3............................................. 1 95 0 65
2............................................... 2 90 100 (217)
--.............................................. 3 85 100 (549)
4............................................... 4 80 100 (937)
--.............................................. 5 75 100 (1,018)
--.............................................. 6 70 100 (1,171)
--.............................................. 7 65 100 (1,325)
5............................................... 8 62 100 (1,424)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
Table V.5--Average LCC and PBP Results for Class A, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
------------------------------------------------ Simple
% of First payback Average
TSL EL baseline Installed year's Lifetime period ** lifetime
energy use cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--...................................................... 0 100 2,908 513 5,246 8,154 .......... 13.5
1,3..................................................... 1 95 2,916 505 5,165 8,081 1.1 13.5
2....................................................... 2 90 2,925 497 5,084 8,010 1.2 13.5
--...................................................... 3 85 2,937 464 4,748 7,686 0.6 13.5
4....................................................... 4 80 2,960 457 4,668 7,627 0.9 13.5
--...................................................... 5 75 3,030 515 5,243 8,274 N/A 13.5
--...................................................... 6 70 3,215 507 5,162 8,377 N/A 13.5
--...................................................... 7 65 3,399 534 5,431 8,830 N/A 13.5
5....................................................... 8 62 3,519 529 5,379 8,897 N/A 13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
more to operate.
[[Page 1085]]
Table V.6--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
for Class A, Propane
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of baseline % of Average life-
TSL EL energy use customers that cycle cost
experience a savings *
net cost (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. 0 100 .............. ..............
1,3............................................. 1 95 0 0
2............................................... 2 90 0 71
--.............................................. 3 85 0 395
4............................................... 4 80 0 454
--.............................................. 5 75 94 (193)
--.............................................. 6 70 96 (296)
--.............................................. 7 65 100 (749)
5............................................... 8 62 100 (817)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
Table V.7--Average LCC and PBP Results for Class B, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
------------------------------------------------ Simple
% of First payback Average
TSL EL baseline Installed year's Lifetime period ** lifetime
energy use cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--...................................................... 0 100 2,320 522 5,354 7,674 .......... 13.5
--...................................................... 1 95 2,324 513 5,261 7,585 0.4 13.5
1....................................................... 2 90 2,328 505 5,169 7,496 0.4 13.5
--...................................................... 3 85 2,332 496 5,076 7,408 0.4 13.5
2....................................................... 4 80 2,336 507 5,181 7,517 1.0 13.5
--...................................................... 5 75 2,340 498 5,089 7,429 0.8 13.5
3....................................................... 6 70 2,348 497 5,073 7,422 1.1 13.5
--...................................................... 7 65 2,362 488 4,981 7,343 1.3 13.5
--...................................................... 8 60 2,388 456 4,644 7,033 1.0 13.5
4....................................................... 9 55 2,449 532 5,408 7,857 N/A 13.5
--...................................................... 10 50 2,665 523 5,315 7,980 N/A 13.5
--...................................................... 11 45 2,973 514 5,222 8,195 85.6 13.5
5....................................................... 12 40 3,298 505 5,127 8,425 58.8 13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
more to operate.
Table V.8--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
for Class B, CO2
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of baseline % of Average life-
TSL EL energy use customers that cycle cost
experience a savings *
net cost (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. 0 100 .............. ..............
--.............................................. 1 95 0 0
1............................................... 2 90 0 0
--.............................................. 3 85 0 0
2............................................... 4 80 0 0
--.............................................. 5 75 0 38
3............................................... 6 70 8 42
--.............................................. 7 65 0 109
--.............................................. 8 60 0 375
4............................................... 9 55 99 (448)
--.............................................. 10 50 99 (572)
--.............................................. 11 45 99 (787)
5............................................... 12 40 100 (1,017)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
[[Page 1086]]
Table V.9--Average LCC and PBP Results for Class B, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
------------------------------------------------ Simple
% of First payback Average
TSL EL baseline Installed year's Lifetime period lifetime
energy use cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--...................................................... 0 100 2,359 515 5,283 7,642 .......... 13.5
--...................................................... 1 95 2,363 506 5,191 7,553 0.4 13.5
1....................................................... 2 90 2,366 505 5,169 7,535 0.7 13.5
--...................................................... 3 85 2,370 496 5,076 7,446 0.6 13.5
2....................................................... 4 80 2,374 487 4,984 7,358 0.6 13.5
--...................................................... 5 75 2,379 479 4,891 7,270 0.5 13.5
3....................................................... 6 70 2,384 470 4,798 7,182 0.5 13.5
--...................................................... 7 65 2,389 481 4,904 7,293 0.9 13.5
--...................................................... 8 60 2,397 480 4,888 7,285 1.1 13.5
4....................................................... 9 55 2,414 471 4,796 7,210 1.3 13.5
--...................................................... 10 50 2,538 492 5,000 7,538 7.7 13.5
--...................................................... 11 45 2,752 514 5,222 7,974 632.2 13.5
5....................................................... 12 40 2,982 505 5,127 8,109 64.7 13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
the baseline equipment.
Table V.10--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
for Class B, Propane
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of baseline % of Average life-
TSL EL energy use customers that cycle cost
experience a savings *
net cost (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. 0 100 .............. ..............
--.............................................. 1 95 0 5
1............................................... 2 90 3 8
--.............................................. 3 85 0 96
2............................................... 4 80 0 185
--.............................................. 5 75 0 273
3............................................... 6 70 0 361
--.............................................. 7 65 1 250
--.............................................. 8 60 3 257
4............................................... 9 55 1 333
--.............................................. 10 50 59 4
--.............................................. 11 45 91 (432)
5............................................... 12 40 93 (566)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
Table V.11--Average LCC and PBP Results for Combination A, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
------------------------------------------------ Simple
% of First payback Average
TSL EL baseline Installed year's Lifetime period lifetime
energy use cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--...................................................... 0 100 2,768 561 5,771 8,539 .......... 13.5
1....................................................... 1 95 2,771 550 5,654 8,424 0.2 13.5
--...................................................... 2 90 2,773 539 5,537 8,310 0.2 13.5
2....................................................... 3 85 2,776 528 5,420 8,196 0.2 13.5
--...................................................... 4 80 2,781 517 5,303 8,084 0.3 13.5
--...................................................... 5 75 2,786 506 5,186 7,972 0.3 13.5
--...................................................... 6 70 2,791 495 5,069 7,860 0.3 13.5
--...................................................... 7 65 2,796 484 4,952 7,748 0.4 13.5
--...................................................... 8 60 2,801 504 5,148 7,949 0.6 13.5
--...................................................... 9 55 2,813 493 5,031 7,844 0.7 13.5
--...................................................... 10 50 2,832 466 4,753 7,586 0.7 13.5
3....................................................... 11 45 2,856 455 4,636 7,492 0.8 13.5
--...................................................... 12 40 2,954 480 4,885 7,839 2.3 13.5
4....................................................... 13 35 3,189 545 5,527 8,716 26.1 13.5
--...................................................... 14 30 3,717 534 5,410 9,127 35.0 13.5
[[Page 1087]]
5....................................................... 15 27 4,130 526 5,331 9,462 39.4 13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
the baseline equipment.
Table V.12--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
for Combination A, CO2
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of baseline % of Average life-
TSL EL energy use customers that cycle cost
experience a savings *
net cost (2014$)
----------------------------------------------------------------------------------------------------------------
-- 0 100 .............. ..............
1............................................... 1 95 0 57
--.............................................. 2 90 0 172
2............................................... 3 85 0 286
--.............................................. 4 80 0 398
--.............................................. 5 75 0 510
--.............................................. 6 70 0 622
--.............................................. 7 65 0 733
--.............................................. 8 60 0 533
--.............................................. 9 55 0 638
--.............................................. 10 50 0 896
3............................................... 11 45 0 990
--.............................................. 12 40 2 643
4............................................... 13 35 76 (234)
--.............................................. 14 30 86 (645)
5............................................... 15 27 93 (980)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
Table V.13--Average LCC and PBP Results for Combination A, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
------------------------------------------------ Simple
% of First payback Average
TSL EL baseline Installed year's Lifetime period lifetime
energy use cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--...................................................... 0 100 2,914 561 5,771 8,685 .......... 13.5
1....................................................... 1 95 2,915 550 5,654 8,569 0.1 13.5
--...................................................... 2 90 2,916 539 5,537 8,453 0.1 13.5
2....................................................... 3 85 2,917 528 5,420 8,337 0.1 13.5
--...................................................... 4 80 2,919 517 5,303 8,222 0.1 13.5
--...................................................... 5 75 2,923 506 5,186 8,109 0.2 13.5
--...................................................... 6 70 2,928 495 5,069 7,997 0.2 13.5
--...................................................... 7 65 2,932 484 4,952 7,884 0.2 13.5
--...................................................... 8 60 2,937 473 4,835 7,772 0.3 13.5
--...................................................... 9 55 2,943 484 4,939 7,882 0.4 13.5
--...................................................... 10 50 2,952 482 4,914 7,866 0.5 13.5
3....................................................... 11 45 2,967 480 4,889 7,855 0.7 13.5
--...................................................... 12 40 2,988 444 4,519 7,508 0.6 13.5
4....................................................... 13 35 3,066 469 4,768 7,834 1.7 13.5
--...................................................... 14 30 3,433 534 5,410 8,844 19.2 13.5
5....................................................... 15 27 3,765 526 5,331 9,097 24.7 13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
the baseline equipment.
[[Page 1088]]
Table V.14--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
for Combination A, Propane
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of baseline % of Average life-
TSL EL energy use customers that cycle cost
experience a savings *
net cost (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. 0 100 .............. ..............
1............................................... 1 95 0 58
--.............................................. 2 90 0 174
2............................................... 3 85 0 290
--.............................................. 4 80 0 405
--.............................................. 5 75 0 518
--.............................................. 6 70 0 630
--.............................................. 7 65 0 743
--.............................................. 8 60 0 855
--.............................................. 9 55 0 745
--.............................................. 10 50 0 761
3............................................... 11 45 0 772
--.............................................. 12 40 0 1,119
4............................................... 13 35 1 793
--.............................................. 14 30 74 (217)
5............................................... 15 27 82 (470)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
Table V.15--Average LCC and PBP Results for Combination B, CO2*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
------------------------------------------------ Simple
% of First payback Average
TSL EL baseline Installed year's Lifetime period ** lifetime
energy use cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--...................................................... 0 100 2,418 511 5,239 7,657 .......... 13.5
1....................................................... 1 95 2,419 502 5,149 7,568 0.1 13.5
--...................................................... 2 90 2,420 494 5,058 7,479 0.1 13.5
2....................................................... 3 85 2,422 485 4,968 7,390 0.1 13.5
--...................................................... 4 80 2,423 477 4,878 7,301 0.1 13.5
--...................................................... 5 75 2,425 468 4,787 7,212 0.2 13.5
--...................................................... 6 70 2,429 460 4,697 7,126 0.2 13.5
--...................................................... 7 65 2,434 451 4,607 7,040 0.3 13.5
--...................................................... 8 60 2,441 452 4,608 7,049 0.4 13.5
3....................................................... 9 55 2,454 444 4,517 6,971 0.5 13.5
--...................................................... 10 50 2,467 464 4,717 7,184 1.0 13.5
4....................................................... 11 45 2,491 464 4,718 7,209 1.6 13.5
--...................................................... 12 40 2,538 526 5,336 7,874 N/A 13.5
5....................................................... 13 32 3,250 512 5,188 8,438 N/A 13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
more to operate.
Table V.16--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
for Combination B, CO2
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of baseline % of Average life-
TSL EL energy use customers that cycle cost
experience a savings *
net cost (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. 0 100 .............. ..............
1............................................... 1 95 0 30
--.............................................. 2 90 0 89
2............................................... 3 85 0 179
--.............................................. 4 80 0 268
--.............................................. 5 75 0 356
--.............................................. 6 70 0 443
--.............................................. 7 65 0 528
--.............................................. 8 60 0 519
[[Page 1089]]
3............................................... 9 55 0 597
--.............................................. 10 50 2 384
4............................................... 11 45 7 359
--.............................................. 12 40 83 (306)
5............................................... 13 32 97 (870)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
Table V.17--Average LCC and PBP Results for Combination B, Propane *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average costs (2014$)
------------------------------------------------ Simple
% of First payback Average
TSL EL baseline Installed year's Lifetime period ** lifetime
energy use cost operating operating LCC (years) (years)
cost cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--...................................................... 0 100 2,538 511 5,239 7,777 .......... 13.5
1....................................................... 1 95 2,539 502 5,149 7,688 0.1 13.5
--...................................................... 2 90 2,540 494 5,058 7,598 0.1 13.5
2....................................................... 3 85 2,541 485 4,968 7,509 0.1 13.5
--...................................................... 4 80 2,542 477 4,878 7,420 0.1 13.5
--...................................................... 5 75 2,543 468 4,787 7,330 0.1 13.5
--...................................................... 6 70 2,544 460 4,697 7,241 0.1 13.5
--...................................................... 7 65 2,547 451 4,607 7,153 0.1 13.5
--...................................................... 8 60 2,552 443 4,516 7,068 0.2 13.5
3....................................................... 9 55 2,561 444 4,517 7,078 0.3 13.5
--...................................................... 10 50 2,571 435 4,427 6,998 0.4 13.5
4....................................................... 11 45 2,585 455 4,626 7,212 0.8 13.5
--...................................................... 12 40 2,613 456 4,628 7,240 1.4 13.5
5....................................................... 13 32 2,933 512 5,188 8,121 N/A 13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results for each EL are calculated assuming that all customers use equipment at that efficiency level or higher. The PBP is measured relative to
the baseline equipment.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
more to operate.
Table V.18--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution
for Combination B, Propane
----------------------------------------------------------------------------------------------------------------
Life-cycle cost savings
-------------------------------
% of baseline % of Average life-
TSL EL energy use customers that cycle cost
experience a savings *
net cost (2014$)
----------------------------------------------------------------------------------------------------------------
--.............................................. 0 100 .............. ..............
1............................................... 1 95 0 30
--.............................................. 2 90 0 89
2............................................... 3 85 0 179
--.............................................. 4 80 0 268
--.............................................. 5 75 0 358
--.............................................. 6 70 0 447
--.............................................. 7 65 0 535
--.............................................. 8 60 0 620
3............................................... 9 55 0 610
--.............................................. 10 50 0 690
4............................................... 11 45 1 476
--.............................................. 12 40 3 447
5............................................... 13 32 86 (433)
----------------------------------------------------------------------------------------------------------------
* The calculation includes customers with zero LCC savings (no impact). Parentheses indicate negative values.
[[Page 1090]]
b. Customer Subgroup Analysis
Using the LCC spreadsheet model, DOE estimated the impacts of the
TSLs on manufacturing and/or industrial facilities that purchase their
own beverage vending machines. This subgroup typically has higher
discount rates and lower electricity prices relative to the average
customer. DOE estimated the average LCC savings and simple PBP for this
subgroup as shown in Table V.19 through Table V.26.
The results of the customer subgroup analysis indicate that the
manufacturing/industrial subgroup fares slightly worse than the average
customer, with that subgroup showing lower LCC savings and longer
payback periods than a typical customer shows. At TSL 3, all but one
equipment class have positive LCC savings for the subgroup (Class A,
Propane has LCC savings of 0), although the savings are not as great in
magnitude as for all customers. Chapter 11 of the final rule TSD
provides a more detailed discussion on the customer subgroup analysis
and results.
Table V.19--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Class A, CO2
----------------------------------------------------------------------------------------------------------------
LCC savings * (2014$) Simple payback period ** (years)
---------------------------------------------------------------------------
TSL Manufacturing Manufacturing
subgroup All customers subgroup All customers
----------------------------------------------------------------------------------------------------------------
1................................... 47 65 2.6 2.0
2................................... (245) (217) N/A N/A
3................................... 47 65 2.6 2.0
4................................... (982) (937) N/A N/A
5................................... (1,535) (1,424) N/A N/A
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
expensive to purchase, but also costs more to operate.
Table V.20--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Class A,
Propane
----------------------------------------------------------------------------------------------------------------
LCC savings * (2014$) Simple payback period ** (years)
---------------------------------------------------------------------------
TSL Manufacturing Manufacturing
subgroup All customers subgroup All customers
----------------------------------------------------------------------------------------------------------------
1................................... 0 0 1.3 1.1
2................................... 53 71 1.4 1.2
3................................... 0 0 1.3 1.1
4................................... 391 454 1.0 0.9
5................................... (917) (817) N/A N/A
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
expensive to purchase, but also costs more to operate.
Table V.21--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Class B, CO2
----------------------------------------------------------------------------------------------------------------
LCC savings * (2014$) Simple payback period ** (years)
---------------------------------------------------------------------------
TSL Manufacturing Manufacturing
subgroup All customers subgroup All customers
----------------------------------------------------------------------------------------------------------------
1................................... 0 0 0.5 0.4
2................................... 0 0 2.0 1.0
3................................... 22 42 2.0 1.1
4................................... (506) (448) N/A N/A
5................................... (1,138) (1,017) N/A 58.8
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
expensive to purchase, but also costs more to operate.
[[Page 1091]]
Table V.22--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Class B,
Propane
----------------------------------------------------------------------------------------------------------------
LCC savings * (2014$) Simple payback period ** (years)
---------------------------------------------------------------------------
TSL Manufacturing Manufacturing
subgroup All customers subgroup All customers
----------------------------------------------------------------------------------------------------------------
1................................... 3 8 1.1 0.7
2................................... 138 185 0.7 0.6
3................................... 272 361 0.7 0.5
4................................... 188 333 2.0 1.3
5................................... (756) (566) N/A 64.7
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
expensive to purchase, but also costs more to operate.
Table V.23--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Combination
A, CO2
----------------------------------------------------------------------------------------------------------------
LCC savings * (2014$) Simple payback period ** (years)
---------------------------------------------------------------------------
TSL Manufacturing Manufacturing
subgroup All customers subgroup All customers
----------------------------------------------------------------------------------------------------------------
1................................... 44 57 0.3 0.2
2................................... 220 286 0.3 0.2
3................................... 716 990 1.1 0.8
4................................... (529) (234) N/A 26.1
5................................... (1,318) (980) 874.3 39.4
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
expensive to purchase, but also costs more to operate.
Table V.24--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Combination
A, Propane
----------------------------------------------------------------------------------------------------------------
LCC savings * (2014$) Simple payback period ** (years)
---------------------------------------------------------------------------
TSL Manufacturing Manufacturing
subgroup All customers subgroup All customers
----------------------------------------------------------------------------------------------------------------
1................................... 45 58 0.1 0.1
2................................... 224 290 0.1 0.1
3................................... 505 772 0.9 0.7
4................................... 476 793 2.4 1.7
5................................... (808) (470) 546.6 24.7
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
Table V.25--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Combination
B, CO2
----------------------------------------------------------------------------------------------------------------
LCC savings * (2014$) Simple payback period ** (years)
---------------------------------------------------------------------------
TSL Manufacturing Manufacturing
subgroup All customers subgroup All customers
----------------------------------------------------------------------------------------------------------------
1................................... 23 30 0.2 0.1
2................................... 138 179 0.2 0.1
3................................... 436 597 0.7 0.5
4................................... 168 359 2.7 1.6
5................................... (1,094) (870) N/A N/A
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
expensive to purchase, but also costs more to operate.
[[Page 1092]]
Table V.26--Comparison of Impacts for Manufacturing/Industrial Subgroup Relative to All Customers, Combination
B, Propane
----------------------------------------------------------------------------------------------------------------
LCC savings * (2014$) Simple payback period ** (years)
---------------------------------------------------------------------------
TSL Manufacturing Manufacturing
subgroup All customers subgroup All customers
----------------------------------------------------------------------------------------------------------------
1................................... 23 30 0.1 0.1
2................................... 138 179 0.1 0.1
3................................... 448 610 0.4 0.3
4................................... 282 476 1.3 0.8
5................................... (658) (433) N/A N/A
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more
expensive to purchase, but also costs more to operate.
c. Rebuttable Presumption Payback
As discussed in section III.F.2 of this final rule, EPCA provides a
rebuttable presumption that an energy conservation standard is
economically justified if the additional cost to the customer of the
equipment that meets the new or amended standard level is less than
three times the value of the first-year energy savings resulting from
the standard. (42 U.S.C. 6295(o)(1)(B)(iii)) DOE's LCC and PBP analyses
generate values that calculate the PBP for customers of potential new
and amended energy conservation standards. These analyses include, but
are not limited to, the 3-year PBP contemplated under the rebuttable
presumption test. However, DOE routinely conducts a full economic
analysis that considers the full range of impacts, including those to
the customer, manufacturer, nation, and environment, as required under
42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the
basis for DOE to definitively evaluate the economic justification for a
potential standard level, thereby supporting or rebutting the results
of any preliminary determination of economic justification. Table V.27
shows the rebuttable presumption payback periods for TSL 3, for all
equipment classes and both CO2 and propane refrigerants.
Table V.27--Rebuttable Presumption Payback Periods at TSL 3 for All Refrigerants and Equipment Classes
----------------------------------------------------------------------------------------------------------------
Rebuttable presumption payback period (years)
Refrigerant ---------------------------------------------------------------------------
Class A Class B Combination A Combination B
----------------------------------------------------------------------------------------------------------------
CO2................................. 2.0 0.5 0.7 0.5
Propane............................. 1.1 0.5 0.4 0.3
----------------------------------------------------------------------------------------------------------------
2. Economic Impacts on Manufacturers
DOE performed an MIA to estimate the impact of new and amended
energy conservation standards on manufacturers of beverage vending
machines. The section below describes the expected impacts on
manufacturers at each TSL. Chapter 12 of the final rule TSD explains
the analysis in further detail.
a. Industry Cash Flow Analysis Results
The following tables illustrate the estimated financial impacts
(represented by changes in industry net present value, or INPV) of
energy conservation standards on manufacturers of beverage vending
machines, as well as the conversion costs that DOE expects
manufacturers would incur for all equipment classes at each TSL.
As discussed in sections IV.J and V.B.2.b of this final rule, DOE
modeled two different markup scenarios to evaluate the range of cash
flow impacts on the BVM industry: (1) The preservation of gross margin
percentage markup scenario; and (2) the preservation of per-unit
operating profit markup scenario.
To assess the less severe end of the range of potential impacts,
DOE modeled a preservation of gross margin percentage markup scenario,
in which a uniform ``gross margin percentage'' markup is applied across
all potential efficiency levels. In this scenario, DOE assumed that a
manufacturer's absolute dollar markup would increase as production
costs increase in the standards case.
To assess the more severe end of the range of potential impacts,
DOE modeled the preservation of per unit operating profit markup
scenario, which reflects manufacturer concerns surrounding their
inability to maintain margins as manufacturing production costs
increase to meet more stringent efficiency levels. In this scenario, as
manufacturers make the necessary investments required to convert their
facilities to produce new standards-compliant equipment and incur
higher costs of goods sold, their percentage markup decreases.
Operating profit does not change in absolute dollars but decreases as a
percentage of revenue.
Each of the modeled scenarios results in a unique set of cash flows
and corresponding industry values at each TSL. In the following
discussion, the INPV results refer to the difference in industry value
between the no-new-standards case and each standards case that result
from the sum of discounted cash flows from the reference year 2015
through 2048, the end of the analysis period. To provide perspective on
the short-run cash flow impact, DOE includes in the discussion of the
results a comparison of free cash flow between the no-new-standards
case and the standards case at each TSL in the year before amended
standards would take effect. This figure provides an understanding of
the magnitude of the required conversion costs relative to the
[[Page 1093]]
cash flow generated by the industry in the no-new-standards case.
Table V.28 and Table V.29 present a range of results reflecting
both the preservation of gross margin percentage markup scenario and
the preservation of per-unit operating profit markup scenario. As
noted, the preservation of per-unit operating profit scenario accounts
for the more severe impacts presented. Estimated conversion costs and
free cash flow in the year prior to the effective date of amended
standards do not vary with markup scenario.
Table V.28--Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario for Analysis Period
[2015-2048]
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new- Trial standard level
Units standards -------------------------------------------------------------------------------
case 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.............................. 2014$M.............. 94.8 94.4 94.7 95.2 98.8 112.6
Change in INPV.................... 2014$M *............ .............. (0.4) (0.1) 0.4 4.0 17.9
% Change *.......... .............. (0.4) (0.1) 0.4 4.2 18.9
Product Conversion Costs.......... 2014$M.............. .............. 0.58 0.58 0.58 1.19 3.27
Capital Conversion Costs.......... 2014$M.............. .............. 0.30 0.30 0.30 1.14 4.29
Total Conversion Costs............ 2014$M.............. .............. 0.88 0.88 0.88 2.33 7.56
Free Cash Flow.................... 2014$M.............. 10.4 10.1 10.1 10.1 9.5 7.4
% Change *.......... .............. (3.1) (3.1) (3.1) (8.5) (28.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
Table V.29--Manufacturer Impact Analysis Under the Preservation of Per-Unit Operating Profit Markup Scenario for Analysis Period
[2015-2048]
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-new- Trial standard level
Units standards -------------------------------------------------------------------------------
case 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.............................. 2014$M.............. 94.8 94.1 94.0 94.0 91.5 79.3
Change in INPV.................... 2014$M *............ .............. (0.6) (0.8) (0.7) (3.2) (15.5)
% Change *.......... .............. (0.7) (0.8) (0.8) (3.4) (16.4)
Product Conversion Costs.......... 2014$M.............. .............. 0.6 0.6 0.6 1.2 3.3
Capital Conversion Costs.......... 2014$M.............. .............. 0.3 0.3 0.3 1.1 4.3
Total Conversion Costs............ 2014$M.............. .............. 0.9 0.9 0.9 2.3 7.6
Free Cash Flow.................... 2014$M.............. 10.4 10.1 10.1 10.1 9.5 7.4
% Change *.......... .............. (3.1) (3.1) (3.1) (8.5) (28.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
At TSL 1, DOE estimates the impact on INPV for manufacturers of
beverage vending machine to range from -$0.6 million to -$0.4 million,
or a change in INPV of -0.7 percent and -0.4 percent under the
preservation of per-unit operating profit markup scenario and
preservation of gross margin percentage markup scenario, respectively.
At this TSL, industry free cash flow is estimated to decrease by
approximately 3.1 percent to $10.1 million, compared to the no-new-
standards case value of $10.4 million in the year before the compliance
date (2018).
At TSL 1, the industry as a whole is expected to incur $0.6 million
in product conversion costs and would be expected to incur $0.3 in
capital conversion costs necessary to manufacture redesigned platforms
associated with amended energy conservation standards compliance. DOE's
engineering analysis indicates that the most cost-effective design
options to reach TSL 1 are component swaps and software modifications
such as automatic lighting controls, LED lighting, a refrigeration low
power state mode, evaporator fan controls, incorporation of a permanent
split capacitor evaporator fan motor, or enhanced evaporator coils.
Manufacturer feedback indicated that such component swaps do not incur
large product or capital conversion costs.
At TSL 2, DOE estimates the impact on INPV for manufacturers of
beverage vending machines to range from -$0.8 million to -$0.1 million,
or a change in INPV of -0.8 percent and -0.1 percent under the
preservation of gross margin percentage markup scenario and the
preservation of per-unit operating profit markup scenario,
respectively. At this TSL, industry free cash flow is estimated to
decrease by approximately 3.1 percent to $10.1 million, compared to the
no-new-standards case value of $10.4 million in the year before the
compliance date (2018).
At TSL 2, the industry as a whole is expected to incur $0.6 million
in product conversion costs and $0.3 in capital conversion costs to
manufacturer equipment requiring platform redesigns. DOE's engineering
analysis indicates that the most cost-effective design options to reach
TSL 2 are component swaps and software modifications such as
incorporating an enhanced evaporator coil, automatic lighting
[[Page 1094]]
controls, LED lighting, improved single speed reciprocating compressor,
or a low power state, incorporating a permanent split capacitor
condenser fan motor, electronically-commutated evaporator fan motor,
enhanced condenser coil, or evaporator fan controls. Manufacturer
feedback indicated that such component swaps do not incur large product
or capital conversion costs.
At TSL 3, DOE estimates the impact on INPV for manufacturers of
beverage vending machines to range from -$0.7 million to $0.4 million,
or a change in INPV of -0.8 percent to 0.4 percent under the
preservation of gross margin percentage markup scenario and the
preservation of per-unit operating profit markup scenario,
respectively. At this TSL, industry free cash flow is estimated to
decrease by approximately 3.1 percent to $10.1 million, compared to the
no-new-standards case value of $10.4 million in the year before the
compliance date (2018).
At TSL 3, the industry as a whole is expected to spend $0.6 million
in product conversion costs, as well as $0.3 million in capital
conversion costs to manufacture redesigned platforms. As at TSLs 1 and
2, DOE's engineering analysis indicates that the most cost-effective
design options to reach TSL 3 are component swaps and software
modifications such as incorporating an enhanced evaporator coil,
automatic lighting controls, LED lighting, improved single speed
reciprocating compressor, or a low power state, incorporating a
permanent split capacitor condenser fan motor, electronically-
commutated evaporator fan motor, enhanced condenser coil, or evaporator
fan controls. Manufacturer feedback indicated that such component swaps
do not incur large product or capital conversion costs.
At TSL 4, DOE estimates the impact on INPV for manufacturers of
beverage vending machines to range from -$3.2 million to $4.0 million,
or a change in INPV of -3.4 percent to 4.2 percent under the
preservation of gross margin percentage markup scenario and the
preservation of per-unit operating profit markup scenario,
respectively. At this TSL, industry free cash flow is estimated to
decrease by approximately 8.5 percent to $9.5 million, compared to the
no-new-standards case value of $10.4 million in the year before the
compliance date (2018).
At TSL 4, the industry as a whole is expected to spend $1.2 million
in product conversion costs, as well as $1.1 million in capital
conversion costs for platform redesigns. At TSL 4, depending on the
equipment, some manufacturers will likely be required to increase the
thickness of their equipment's insulation, switch to an electronically-
commutated condenser fan motor and incorporate vacuum insulated panels
(VIPs). Additionally, many manufacturers of Combination A machines will
most likely be required to integrate enhanced glass packs or double
pane glass in order to achieve the required efficiency.
At TSL 5, DOE estimates the impact on INPV for manufacturers of
beverage vending machines to range from -$15.5 million to $17.9
million, or a change in INPV of -16.4 percent to 18.9 percent under the
preservation of gross margin percentage markup scenario and the
preservation of per-unit operating profit markup scenario,
respectively. At this TSL, industry free cash flow is estimated to
decrease by approximately 28.4 percent to $7.4 million, compared to the
no-new-standards case value of $10.4 million in the year before the
compliance date (2018).
At TSL 5, the industry as a whole is expected to spend $3.3 million
in product conversion costs associated with the research and
development and testing and certification, as well as $4.3 million in
one-time investments in PP&E for platform redesigns. The conversion
cost burden for manufacturers of all equipment increases substantially
at TSL 5. At this level, manufacturers will likely be required to
integrate VIPs to achieve the required efficiency. VIPs are an unproven
technology in the BVM industry and would likely require substantial
effort and cost to incorporate.
At TSL 5, there is approximately a 7-percent decrease in total
industry shipments in 2019 relative to the no-new-standards case. Under
the preservation of gross margin percentage markup scenario, this
decrease in shipments and increased conversion costs are outweighed by
a relatively larger increase in industry MPCs, resulting in a positive
change in INPV. Under the preservation of per-unit operating profit
markup scenario, the increase in MPCs at TSL 5 is outweighed by the
decrease in shipments and the increase in industry conversion costs.
This results in a decrease in INPV.
b. Impacts on Direct Employment
To quantitatively assess the potential impacts of amended energy
conservation standards on direct employment, DOE used the GRIM to
estimate the domestic labor expenditures and number of direct employees
in the no-new-standards case and at each TSL from 2014 through 2048.
DOE used data from the U.S. Census Bureau's 2013 Annual Survey of
Manufacturers,\80\ the results of the engineering analysis, and
interviews with manufacturers to determine the inputs necessary to
calculate industry-wide labor expenditures and domestic direct
employment levels. Labor expenditures related to manufacturing of
beverage vending machines are a function of labor intensity, sales
volume, and an assumption that wages remain fixed in real terms over
time. The total labor expenditures in each year are calculated by
multiplying the MPCs by the labor percentage of MPCs. DOE estimates
that 90 percent of BVM units are produced domestically.
---------------------------------------------------------------------------
\80\ U.S. Census Bureau. Annual Survey of Manufacturers: General
Statistics: Statistics for Industry Groups and Industries (2013).
Available at www.census.gov/manufacturing/asm/.
---------------------------------------------------------------------------
The total labor expenditures in the GRIM were then converted to
domestic production employment levels by dividing production labor
expenditures by the annual payment per production worker (production
worker hours times the labor rate found in the U.S. Census Bureau's
2013 Annual Survey of Manufacturers). The production worker estimates
in this section only cover workers up to the line-supervisor level who
are directly involved in fabricating and assembling a piece of
equipment within an original equipment manufacturer (OEM) facility.
Workers performing services that are closely associated with production
operations, such as materials handling tasks using forklifts, are also
included as production labor. DOE's estimates only account for
production workers who manufacture the specific equipment covered by
this rulemaking.
Because production employment expenditures are assumed to be a
fixed percentage of cost of goods sold and the MPCs typically increase
with more efficient equipment, labor tracks the increased prices in the
GRIM. As efficiency of beverage vending machines increase, so does the
complexity of the equipment, generally requiring more labor to produce.
Based on industry feedback, DOE believes that manufacturers that use
domestic production currently will continue to produce the same scope
of covered equipment in domestic production facilities. DOE does not
expect production to shift to lower labor cost countries. To estimate a
lower bound to employment, DOE assumed that employment tracks closely
with industry shipments, and any percentage decrease in shipments will
result in a
[[Page 1095]]
commensurate percentage decrease in employment. A complete description
of the assumptions used to generate these upper and lower bounds can be
found in chapter 12 of the final rule TSD.
Using the GRIM, DOE estimates that in the absence of amended energy
conservation standards, there would be 653 domestic production workers
in the BVM industry. As noted previously, DOE estimates that 90 percent
of BVM units sold in the United States are manufactured domestically.
Table V.30 shows the range of the impacts of potential amended energy
conservation standards on U.S. production workers of beverage vending
machines.
Table V.30--Potential Changes in the Total Number of Beverage Vending Machine Production Workers in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
No-new- standards ----------------------------------------------------------------------------------------------------
case * 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Potential Changes in Domestic .................. 0 to 2............ 0 to 7............ 0 to 6............ (5) to 46......... (49) to 233.
Production Workers in 2019 **.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* No-new-standards case estimates 653 domestic production workers in the BVM industry in 2019.
** Parentheses indicate negative values.
The upper end of the range estimates the maximum increase in the
number of production workers in the BVM industry after implementation
of an emended energy conservation standard. It assumes that
manufacturers would continue to produce the same scope of covered
equipment within the United States and would require some additional
labor to produce more efficient equipment.
The lower end of the range represents the maximum decrease in total
number of U.S. production workers that could result from an amended
energy conservation standard. During interviews, manufacturers noted
that, due to the high shipping costs associated with beverage vending
machines, they would be hesitant to move any major production
operations outside the United States. Therefore, the lower bound of
direct employment impacts assumes domestic production of beverage
vending machines would decrease by the same relative percentage
decrease in industry shipments as a result of an amended energy
conservation standard.
This conclusion is independent of any conclusions regarding
indirect employment impacts in the broader U.S. economy, which are
documented in chapter 16 of the TSD.
c. Impacts on Manufacturing Capacity
In reference to the amended standard levels proposed in the 2015
BVM ECS NOPR, DOE received comments from multiple small, domestic BVM
manufacturers stating that the proposed standards could result in one
or more small manufacturers exiting the BVM market altogether. As
detailed in section IV.J.3, DOE notes that, in response to stakeholder
feedback relating to the 2015 BVM ECS NOPR, it has updated its
engineering analysis and standard efficiency levels for this final
rule, resulting in less burdensome standard levels for all equipment
classes of beverage vending machines relative to the NOPR proposal. DOE
believes that manufactures will be able to maintain production capacity
levels sufficient to meet market demand under the final rule standard
levels.
Additionally, manufacturers have expressed concern regarding the
potential strain on technical resources associated with having to
comply with both DOE amended energy conservation standards and the
EPA's R-134a phaseout for beverage vending machines (see SNAP Final
Rule 20 (80 FR 42870, 42917-42920 (July 20, 2015))) by 2019. Few
manufacturers have experience with CO2 designs, and no
beverage vending machines in the domestic market currently use propane.
The switch to CO2 and propane will require all manufacturers
to redesign the majority of their equipment. Manufacturers are
concerned they do not have the technical capacity to redesign for new
refrigerants and amended energy conservation standards. DOE accounted
for the forthcoming R-134a phaseout in its analysis by estimating
CO2- and propane-specific cost-efficiency curves and
industry conversion costs related to energy conservation standards
compliance, as well as a one-time investment required for the industry
to switch all BVM production to CO2- and propane. Cost-
efficiency curves are presented in chapter 5 of the final rule TSD, and
information regarding conversion costs is contained in chapter 12.
d. Impacts on Subgroups of Manufacturers
Small manufacturers, niche equipment manufacturers, and
manufacturers exhibiting a cost structure substantially different from
the industry average could be affected disproportionately. Using
average cost assumptions to develop an industry cash-flow estimate is
inadequate to assess differential impacts among manufacturer subgroups.
For BVM equipment, DOE identified and evaluated the impact of
amended energy conservation standards on one subgroup: Small
manufacturers. The SBA defines a ``small business'' as having 1,000
employees or less for NAICS 333318, ``Other Commercial and Service
Industry Machinery Manufacturing.'' Based on this definition, DOE
identified five manufacturers in the BVM equipment industry that are
small businesses.
For a discussion of the impacts on the small manufacturer subgroup,
see the Regulatory Flexibility Analysis in section VI.B of this final
rule and chapter 12 of the final rule TSD.
e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on
manufacturers, the combined effects of several impending regulations
may have serious consequences for some manufacturers, groups of
manufacturers, or an entire industry. Assessing the impact of a single
regulation may overlook this cumulative regulatory burden. Multiple
regulations affecting the same manufacturer can strain profits and can
lead companies to abandon product lines or markets with lower expected
future returns than competing equipment. For these reasons, DOE
conducts an analysis of cumulative regulatory burden as part of its
rulemakings pertaining to appliance efficiency.
For the cumulative regulatory burden analysis, DOE considers other
DOE regulations that could affect BVM manufacturers that will take
effect
[[Page 1096]]
approximately 3 years before or after the 2019 compliance date of
amended energy conservation standards. The compliance years and
expected industry conversion costs of energy conservation standards
that may also impact BVM manufacturers are indicated in Table V.31.
Table V.31--Compliance Dates and Expected Conversion Expenses of Federal
Energy Conservation Standards Affecting BVM Manufacturers
------------------------------------------------------------------------
Expected expenses/
Regulation Compliance date(s) impacts
------------------------------------------------------------------------
Commercial Refrigeration 3/27/2017......... $43.1 million.
Equipment 79 FR 17725 (Mar. 28,
2014).
------------------------------------------------------------------------
Manufacturers cited ENERGY STAR standards for beverage vending
machines as a source of regulatory burden. DOE notes that ENERGY STAR
is a voluntary program that is not federally mandated. As such, DOE
does not consider the ENERGY STAR program in its analysis of cumulative
regulatory burden.
In interviews and in public comments made in response to the 2015
BVM ECS NOPR, manufactures cited the EPA's SNAP Rule 20 phaseout of
HFCs in beverage vending machines by 2019 (80 FR 42870 (July 20, 2015))
as a major source of additional burden accompanying potential amended
efficiency standards. As detailed in section IV.J, based on feedback in
interviews, DOE assumed that each manufacturer would need to invest
$750,000 to update their equipment to comply with Rule 20. DOE assumed
this one-time SNAP investment would apply to all eight manufacturers in
the year leading up to the phaseout (i.e., 2018), resulting in an
additional burden to the industry of $6 million. This one-time cost
occurs in both the no-new-standards case and in the standards case.
3. National Impact Analysis
a. Significance of Energy Savings
DOE estimated the NES by calculating the difference in annual
energy consumption for the no-new-standards case scenario and standards
case scenario at each TSL for each equipment class and summing up the
annual energy savings for the beverage vending machines purchased
during the 30-year 2019 through 2048 analysis period. Energy impacts
include the 30-year period, plus the life of equipment purchased in the
last year of the analysis, or roughly 2019 through 2078. The energy
consumption calculated in the NIA is FFC energy, which quantifies
savings beginning at the source of energy production. DOE also reports
primary or source energy that takes into account losses in the
generation and transmission of electricity. FFC and primary energy are
discussed in section IV.H.2 of this final rule.
Table V.32 presents the source NES for all equipment classes at
each TSL and the sum total of NES for each TSL.
Table V.32--Cumulative National Primary Energy Savings for Equipment Purchased in 2019-2048
[Quads]
----------------------------------------------------------------------------------------------------------------
Standard level
Equipment class -------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A......................... 0.012 0.031 0.012 0.070 0.138
CO2......................... 0.012 0.024 0.012 0.047 0.087
Propane..................... 0.000 0.008 0.000 0.024 0.051
Class B......................... 0.001 0.010 0.026 0.059 0.091
CO2......................... 0.000 0.000 0.007 0.026 0.045
Propane..................... 0.001 0.010 0.019 0.033 0.046
Combination A................... 0.002 0.012 0.051 0.061 0.067
CO2......................... 0.001 0.007 0.031 0.036 0.040
Propane..................... 0.001 0.005 0.020 0.024 0.027
Combination B................... 0.001 0.007 0.028 0.035 0.044
CO2......................... 0.001 0.004 0.017 0.021 0.026
Propane..................... 0.000 0.003 0.011 0.014 0.018
-------------------------------------------------------------------------------
Total *................. 0.016 0.061 0.117 0.225 0.340
----------------------------------------------------------------------------------------------------------------
* Numbers may not add to totals, due to rounding.
Table V.33 presents FFC energy savings at each TSL for each
equipment class. The NES increases from 0.017 quads at TSL 1 to 0.355
quads at TSL 5.
Table V.33--Cumulative National Energy Savings Including Full-Fuel-Cycle for Equipment Purchased in 2019-2048
[Quads]
----------------------------------------------------------------------------------------------------------------
Standard level
Equipment class -------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A......................... 0.012 0.033 0.012 0.073 0.144
CO2......................... 0.012 0.025 0.012 0.049 0.091
[[Page 1097]]
Propane..................... 0.000 0.008 0.000 0.025 0.054
Class B......................... 0.001 0.011 0.027 0.061 0.095
CO2......................... 0.000 0.000 0.007 0.027 0.047
Propane..................... 0.001 0.011 0.020 0.035 0.048
Combination A................... 0.003 0.013 0.053 0.063 0.070
CO2......................... 0.002 0.008 0.032 0.038 0.042
Propane..................... 0.001 0.005 0.021 0.025 0.028
Combination B................... 0.001 0.007 0.029 0.037 0.046
CO2......................... 0.001 0.004 0.018 0.022 0.027
Propane..................... 0.000 0.003 0.012 0.015 0.019
-------------------------------------------------------------------------------
Total *................. 0.017 0.063 0.122 0.235 0.355
----------------------------------------------------------------------------------------------------------------
* Numbers may not add to totals, due to rounding.
OMB Circular A-4 \81\ requires agencies to present analytical
results, including separate schedules of the monetized benefits and
costs that show the type and timing of benefits and costs. Circular A-4
also directs agencies to consider the variability of key elements
underlying the estimates of benefits and costs. For this rulemaking,
DOE undertook a sensitivity analysis using 9 rather than 30 years of
equipment shipments. The choice of a 9-year period is a proxy for the
timeline in EPCA for the review of certain energy conservation
standards and potential revision of and compliance with such revised
standards.\82\ DOE notes that the review timeframe established in EPCA
generally does not overlap with the equipment lifetime, equipment
manufacturing cycles or other factors specific to beverage vending
machines. Thus, this information is presented for informational
purposes only and is not indicative of any change in DOE's analytical
methodology. The NES results based on a 9-year analysis period are
presented in Table V.34. The impacts are counted over the lifetime of
equipment purchased in 2019 through 2027.
---------------------------------------------------------------------------
\81\ U.S. Office of Management and Budget. Circular A-4:
Regulatory Analysis. September 17, 2003. Available at
www.whitehouse.gov/omb/circulars_a004_a-4/.
\82\ EPCA requires DOE to review its standards at least once
every 6 years, and requires, for certain products, a 3-year period
after any new standard is promulgated before compliance is required,
except that in no case may any new standards be required within 6
years of the compliance date of the previous standards. (42 U.S.C.
6295(m)) While adding a 6-year review to the 3-year compliance
period adds up to 9 years, DOE notes that it may undertake reviews
at any time within the 6-year period and that the 3-year compliance
date may yield to the 6-year backstop. A 9-year analysis period may
not be appropriate given the variability that occurs in the timing
of standards reviews and the fact that for some consumer products,
the compliance period is 5 years rather than 3 years.
Table V.34--National Full-Fuel-Cycle Energy Savings for 9 Years of Shipments (2019-2027)
[Quads]
----------------------------------------------------------------------------------------------------------------
Standard level
Equipment class -------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A......................... 0.003 0.007 0.003 0.017 0.033
CO2......................... 0.003 0.006 0.003 0.011 0.020
Propane..................... 0.000 0.002 0.000 0.006 0.012
Class B......................... 0.000 0.002 0.006 0.014 0.021
CO2......................... 0.000 0.000 0.002 0.006 0.010
Propane..................... 0.000 0.002 0.005 0.008 0.011
Combination A................... 0.001 0.003 0.012 0.014 0.016
CO2......................... 0.000 0.002 0.007 0.009 0.009
Propane..................... 0.000 0.001 0.005 0.006 0.006
Combination B................... 0.000 0.002 0.007 0.008 0.010
CO2......................... 0.000 0.001 0.004 0.005 0.006
Propane..................... 0.000 0.001 0.003 0.003 0.004
-------------------------------------------------------------------------------
Total *................. 0.004 0.014 0.028 0.054 0.080
----------------------------------------------------------------------------------------------------------------
* Numbers may not add to totals, due to rounding.
b. Net Present Value of Customer Costs and Benefits
DOE estimated the cumulative NPV to the nation of the total savings
for the customers that would result from potential standards at each
TSL. In accordance with OMB guidelines on regulatory analysis (OMB
Circular A-4, section E, September 17, 2003), DOE calculated NPV using
both a 7-percent and a 3-percent real discount rate. The 7-percent rate
is an estimate of the average before-tax rate of return on private
capital in the U.S. economy, and reflects the returns on real estate
and
[[Page 1098]]
small business capital, including corporate capital. DOE used this
discount rate to approximate the opportunity cost of capital in the
private sector, because recent OMB analysis has found the average rate
of return on capital to be near this rate. In addition, DOE used the 3-
percent rate to capture the potential effects of amended standards on
private consumption. This rate represents the rate at which society
discounts future consumption flows to their present value. It can be
approximated by the real rate of return on long-term government debt
(i.e., yield on Treasury notes minus annual rate of change in the CPI),
which has averaged about 3 percent on a pre-tax basis for the last 30
years.
Table V.35 and Table V.36 show the customer NPV results for each of
the TSLs DOE considered for beverage vending machines at both 7-percent
and 3-percent discount rates. In each case, the impacts cover the
expected lifetime of equipment purchased from 2019 through 2048.
Detailed NPV results are presented in chapter 10 of the final rule TSD.
The NPV results at a 7-percent discount rate for TSL 5 were
negative for all equipment classes. This is consistent with the results
of LCC analysis results for TSL 5, which showed significant increase in
LCC and significantly higher PBPs. Efficiency levels for TSL 3 were
chosen to correspond to the highest NPV at a 7-percent discount rate
for all classes. Consequently, the total NPV for beverage vending
machines was highest for TSL 3, with a value of $0.207 billion (2014$)
at a 7-percent discount rate. TSL 1 showed the second highest total
NPV, with a value of $0.030 billion (2014$) at a 7-percent discount
rate. TSL 2, TSL 4 and TSL 5 have a total NPV lower than TSL 1 or 3.
Table V.35--Net Present Value at a 7-Percent Discount Rate for Equipment Purchased in 2019-2048
[billion 2014$]
----------------------------------------------------------------------------------------------------------------
Standard level *
Equipment class -------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A......................... 0.021 (0.058) 0.021 (0.213) (0.645)
CO2......................... 0.021 (0.074) 0.021 (0.314) (0.464)
Propane..................... 0.000 0.016 0.000 0.101 (0.181)
Class B......................... 0.001 0.021 0.047 (0.041) (0.235)
CO2......................... 0.000 0.000 0.007 (0.078) (0.169)
Propane..................... 0.001 0.021 0.041 0.037 (0.065)
Combination A................... 0.005 0.027 0.085 0.015 (0.075)
CO2......................... 0.003 0.016 0.056 (0.015) (0.056)
Propane..................... 0.002 0.011 0.029 0.030 (0.019)
Combination B................... 0.003 0.016 0.053 0.035 (0.063)
CO2......................... 0.002 0.009 0.032 0.019 (0.047)
Propane..................... 0.001 0.006 0.022 0.017 (0.016)
-------------------------------------------------------------------------------
Total................... 0.030 0.006 0.207 (0.204) (1.017)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative numbers.
Table V.36--Net Present Value at a 3-Percent Discount Rate for Equipment Purchased in 2019-2048
[billion 2014$]
----------------------------------------------------------------------------------------------------------------
Standard level *
Equipment class -------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A......................... 0.054 (0.124) 0.054 (0.450) (1.281)
CO2......................... 0.054 (0.163) 0.054 (0.694) (0.923)
Propane..................... 0.000 0.039 0.000 0.244 (0.358)
Class B......................... 0.002 0.050 0.116 (0.079) (0.435)
CO2......................... 0.000 0.000 0.018 (0.172) (0.319)
Propane..................... 0.002 0.050 0.098 0.093 (0.116)
Combination A................... 0.013 0.065 0.208 0.056 (0.117)
CO2......................... 0.008 0.039 0.137 (0.019) (0.091)
Propane..................... 0.005 0.026 0.071 0.075 (0.026)
Combination B................... 0.006 0.038 0.129 0.089 (0.116)
CO2......................... 0.004 0.023 0.077 0.048 (0.086)
Propane..................... 0.003 0.015 0.052 0.041 (0.029)
-------------------------------------------------------------------------------
Total................... 0.076 0.029 0.508 (0.0384) (1.949)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative numbers.
The NPV results based on the aforementioned 9-year analysis period
are presented in Table V.37 and Table V.38. The impacts are counted
over the lifetime of equipment purchased in 2019-2027. As mentioned
previously in section V.B.3.a of this final rule, this information is
presented for informational purposes only and is not indicative of any
change in DOE's analytical methodology or decision criteria.
[[Page 1099]]
Table V.37--Net Present Value at a 7-Percent Discount Rate for 9 Years of Shipments (2019-2027)
[billion 2014$]
----------------------------------------------------------------------------------------------------------------
Standard level *
Equipment class -------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A......................... 0.009 (0.026) 0.009 (0.093) (0.279)
CO2......................... 0.009 (0.032) 0.009 (0.0135) (0.200)
Propane..................... 0.000 0.006 0.000 0.041 (0.079)
Class B......................... 0.000 0.008 0.019 (0.020) (0.104)
CO2......................... 0.000 0.000 0.003 (0.034) (0.074)
Propane..................... 0.000 0.008 0.016 0.014 (0.030)
Combination A................... 0.002 0.011 0.034 0.004 (0.035)
CO2......................... 0.001 0.007 0.022 (0.008) (0.025)
Propane..................... 0.001 0.004 0.011 0.012 (0.009)
Combination B................... 0.001 0.006 0.021 0.014 (0.029)
CO2......................... 0.001 0.004 0.013 0.007 (0.021)
Propane..................... 0.000 0.003 0.009 0.006 (0.008)
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Total................... 0.012 (0.000) 0.083 (0.096) (0.446)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative numbers
Table V.38--Net Present Value at a 3-Percent Discount Rate for 9 Years of Shipments (2019-2027)
[billion 2014$]
----------------------------------------------------------------------------------------------------------------
Standard level *
Equipment class -------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Class A......................... 0.015 (0.041) 0.015 (0.144) (0.405)
CO2......................... 0.015 (0.052) 0.015 (0.216) (0.290)
Propane..................... 0.000 0.011 0.000 0.072 (0.115)
Class B......................... 0.001 0.014 0.033 (0.030) (0.142)
CO2......................... 0.000 0.000 0.005 (0.055) (0.102)
Propane..................... 0.001 0.014 0.028 0.025 (0.040)
Combination A................... 0.004 0.019 0.059 0.011 (0.043)
CO2......................... 0.002 0.011 0.039 (0.009) (0.032)
Propane..................... 0.002 0.008 0.020 0.021 (0.011)
Combination B................... 0.002 0.011 0.037 0.024 (0.040)
CO2......................... 0.001 0.007 0.022 0.013 (0.029)
Propane..................... 0.001 0.004 0.015 0.011 (0.011)
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Total................... 0.022 0.003 0.144 (0.138) (0.630)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative numbers.
c. Indirect Impacts on Employment
DOE expects energy conservation standards for beverage vending
machines to reduce energy costs for equipment owners, with the
resulting net savings being redirected to other forms of economic
activity. Those shifts in spending and economic activity could affect
the demand for labor. Thus, indirect employment impacts may result from
expenditures shifting between goods (the substitution effect) and
changes in income and overall expenditure levels (the income effect)
that occur due to the imposition of new and amended standards. These
impacts may affect a variety of businesses not directly involved in the
decision to make, operate, or pay the utility bills for beverage
vending machines. As described in section IV.N of this final rule, DOE
used an input/output model of the U.S. economy to estimate indirect
employment impacts of the TSLs that DOE considered in this rulemaking
(see chapter 16 of the final rule TSD for more details). DOE
understands that there are uncertainties involved in projecting
employment impacts, especially changes in the later years of the
analysis. Therefore, DOE generated results for near-term time frames
(2020-2025), where these uncertainties are reduced.
The results suggest that these adopted standards would be likely to
have negligible impact on the net demand for labor in the economy. All
TSLs increase net demand for labor by fewer than 1000 jobs. The net
change in jobs is so small that it would be imperceptible in national
labor statistics and might be offset by other, unanticipated effects on
employment. Chapter 16 of the final rule TSD presents more detailed
results about anticipated indirect employment impacts. As shown in
Table V.39, DOE estimates that net indirect employment impacts from a
BVM amended standard are small relative to the national economy.
Table V.39--Net Short-Term Change in Employment
[Jobs]
------------------------------------------------------------------------
Trial standard level 2020 2025
------------------------------------------------------------------------
1................................................. 2 7
2................................................. 22 85
3................................................. 43 173
4................................................. 71 294
5................................................. * (42) 24
------------------------------------------------------------------------
* Values in parentheses are negative numbers.
4. Impact on Utility or Performance of Equipment
In its analyses, DOE has considered potential impacts of amended
standards, including the use of design options considered in the
engineering analysis,
[[Page 1100]]
on the performance and utility of BVM equipment. This includes the
ability to achieve and maintain the necessary vending temperatures, the
ability to display and vend product upon receipt of payment, and other
factors core to the utility of vending machine operation. DOE has
concluded that the new and amended standards in this final rule will
not lessen the utility or performance of beverage vending machines.
5. Impact of Any Lessening of Competition
As discussed in section III.F.1.e, the Attorney General of the
United States (Attorney General) determines the impact, if any, of any
lessening of competition likely to result from an adopted standard and
transmits such determination in writing to the Secretary within 60 days
of the publication of a proposed rule, together with an analysis of the
nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and
(B)(ii)) To assist the Attorney General in making such determination,
DOE provided the Department of Justice (DOJ) with copies of the 2015
BVM ECS NOPR and the TSD for review. In its assessment letter
responding to DOE, DOJ concluded that the proposed energy conservation
standards for beverage vending machines are unlikely to have a
significant adverse impact on competition. The Attorney General's
assessment is published as an appendix at the end of this final rule.
6. Need of the Nation To Conserve Energy
Enhanced energy efficiency, where economically justified, improves
the Nation's energy security, strengthens the economy, and reduces the
environmental impacts (costs) of energy production. Reduced electricity
demand due to energy conservation standards is also likely to reduce
the cost of maintaining the reliability of the electricity system,
particularly during peak-load periods. As a measure of this reduced
demand, chapter 15 in the final rule TSD presents the estimated
reduction in generating capacity, relative to the no-new-standards
case, for the TSLs that DOE considered in this rulemaking.
Energy conservation resulting from new and amended standards for
the BVM equipment classes covered in this final rule will also produce
environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases associated with electricity production.
Table V.40 provides DOE's estimate of cumulative emissions reductions
to result from the TSLs considered in this rulemaking. The table
includes both power sector emissions and upstream emissions. The
upstream emissions were calculated using the multipliers discussed in
section IV.K of this final rule. DOE reports annual CO2,
NOX, and Hg emissions reductions for each TSL in chapter 13
of the final rule TSD.
Table V.40--Cumulative Emissions Reduction for Potential Standards for Beverage Vending Machines
----------------------------------------------------------------------------------------------------------------
TSL
-------------------------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Power Sector and Site Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 0.97 3.61 6.98 13.39 20.23
NOX (thousand tons)............. 1.06 3.97 7.66 14.70 22.22
Hg (tons)....................... 0.00 0.01 0.02 0.03 0.05
N2O (thousand tons)............. 0.01 0.04 0.09 0.16 0.25
CH4 (thousand tons)............. 0.08 0.31 0.60 1.16 1.75
SO2 (thousand tons)............. 0.59 2.18 4.22 8.09 12.22
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 0.05 0.20 0.39 0.75 1.13
NOX (thousand tons)............. 0.78 2.90 5.60 10.74 16.24
Hg (tons)....................... 0.00 0.00 0.00 0.00 0.00
N2O (thousand tons)............. 0.00 0.00 0.00 0.01 0.01
CH4 (thousand tons)............. 4.30 16.01 30.92 59.34 89.70
SO2 (thousand tons)............. 0.01 0.04 0.07 0.14 0.21
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....... 1.02 3.81 7.37 14.14 21.36
NOX (thousand tons)............. 1.84 6.86 13.26 25.44 38.45
Hg (tons)....................... 0.00 0.01 0.02 0.03 0.05
N2O (thousand tons)............. 0.01 0.05 0.09 0.17 0.26
CH4 (thousand tons)............. 4.38 16.32 31.52 60.50 91.45
SO2 (thousand tons)............. 0.60 2.22 4.29 8.23 12.43
----------------------------------------------------------------------------------------------------------------
As part of the analysis for this final rule, DOE estimated monetary
benefits likely to result from the reduced emissions of CO2
and NOX estimated for each of the TSLs considered for
beverage vending machines. As discussed in section IV.L of this final
rule, for CO2, DOE used values for the SCC developed by an
interagency process. The interagency group selected four sets of SCC
values for use in regulatory analyses. Three sets are based on the
average SCC from three integrated assessment models, at discount rates
of 2.5 percent, 3 percent, and 5 percent. The fourth set, which
represents the 95th percentile SCC estimate across all three models at
a 3-percent discount rate, is included to represent higher-than-
expected impacts from temperature change further out in the tails of
the SCC distribution. The four SCC values for CO2 emissions
reductions in 2015, expressed in 2014$, are $12.2 per metric ton, $40.0
per metric ton, $62.3 per metric ton, and $117 per metric ton for
discount rates of 2.5 percent, 3 percent, 5 percent, and 3 percent
respectively. The values for later years are higher due to increasing
[[Page 1101]]
emissions-related costs as the magnitude of projected climate change
increases.
Table V.41 presents the global value of CO2 emissions
reductions at each TSL. DOE calculated domestic values as a range from
7 percent to 23 percent of the global values, and these results are
presented in chapter 14 of the final rule TSD.
Table V.41--Global Present Value of CO2 Emissions Reduction for Potential Standards for Beverage Vending
Machines
----------------------------------------------------------------------------------------------------------------
SCC case * (million 2014$)
---------------------------------------------------------------------------
TSL 5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average * average * rate, average * 95th percentile *
----------------------------------------------------------------------------------------------------------------
Primary Energy Emissions
----------------------------------------------------------------------------------------------------------------
1................................... 7 30 48 92
2................................... 24 113 180 344
3................................... 47 218 347 664
4................................... 90 418 666 1,275
5................................... 136 631 1,005 1,925
----------------------------------------------------------------------------------------------------------------
Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1................................... 0 2 3 5
2................................... 1 6 10 19
3................................... 3 12 19 37
4................................... 5 23 37 71
5................................... 7 35 56 107
----------------------------------------------------------------------------------------------------------------
Total Emissions
----------------------------------------------------------------------------------------------------------------
1................................... 7 32 51 97
2................................... 26 119 190 363
3................................... 49 230 366 701
4................................... 95 441 703 1,345
5................................... 143 666 1,061 2,031
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
per metric ton (2014$), respectively.
DOE is aware that scientific and economic knowledge about the
contribution of CO2 and other GHG emissions to changes in
the future global climate and the potential resulting damages to the
world economy continues to evolve rapidly. Thus, any value placed in
this rulemaking on reducing CO2 emissions is subject to
change. DOE, together with other Federal agencies, will continue to
review various methodologies for estimating the monetary value of
reductions in CO2 and other GHG emissions. This review
considered the comments on this subject that are part of the public
record for this and other rulemakings, as well as other methodological
assumptions and issues. However, consistent with DOE's legal
obligations, and taking into account the uncertainty involved with this
particular issue, DOE included in this final rule the most recent
values and analyses resulting from the interagency review process.
DOE also estimated a range for the cumulative monetary value of the
economic benefits associated with NOX emissions reductions
anticipated to result from amended standards for the BVM equipment that
is the subject of this final rule. The dollar-per-ton values that DOE
used are discussed in section IV.L of this final rule. Table V.42
presents the present value of cumulative NOX emissions
reductions for each TSL calculated using the average dollar-per-ton
values and 7-percent and 3-percent discount rates. This table presents
values that use the low dollar-per-ton values, which reflect DOE's
primary estimate. Results that reflect the range of NOX
dollar-per-ton values are presented in Table V.44
Table V.42--Present Value of NOX Emissions Reduction for Potential
Standards for Beverage Vending Machines *
------------------------------------------------------------------------
(Million 2014$)
-------------------------
TSL 3% discount 7% discount
rate rate
------------------------------------------------------------------------
Power Sector Emissions
------------------------------------------------------------------------
1............................................. 3 1
2............................................. 13 5
3............................................. 24 9
4............................................. 47 18
5............................................. 70 27
------------------------------------------------------------------------
Upstream Emissions
------------------------------------------------------------------------
1............................................. 2 1
2............................................. 9 3
3............................................. 17 7
4............................................. 33 13
5............................................. 51 19
------------------------------------------------------------------------
Total Emissions
------------------------------------------------------------------------
1............................................. 6 2
2............................................. 22 8
3............................................. 42 16
4............................................. 80 31
5............................................. 121 46
------------------------------------------------------------------------
* Results are based on the low benefit-per-ton values.
[[Page 1102]]
7. Other Factors
The Secretary of Energy, in determining whether a standard is
economically justified, may consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No
other factors were considered in this analysis.
8. Summary of National Economic Impacts
The NPV of the monetized benefits associated with emissions
reductions can be viewed as a complement to the NPV of the customer
savings calculated for each TSL considered in this rulemaking. Table
V.43 presents the NPV values that result from adding the estimates of
the potential economic benefits resulting from reduced CO2
and NOX emissions in each of four valuation scenarios to the
NPV of customer savings calculated for each TSL considered in this
rulemaking, at both a 7-percent and 3-percent discount rate. The
CO2 values used in the columns of each table correspond to
the four sets of SCC values discussed above.
Table V.43--Net Present Value of Customer Savings Combined With Present Value of Monetized Benefits From CO2 and
NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
>Customer NPV at 3% discount rate added with (billion 2014$ *):
---------------------------------------------------------------------------
TSL SCC case $12.2/ SCC Case $40.0/ SCC case $62.3/ SCC case $117/
metric ton and 3% metric ton and 3% metric ton and 3% metric ton and 3%
low NOX value low NOX value low NOX value low NOX value
----------------------------------------------------------------------------------------------------------------
1................................... 0.088 0.114 0.132 0.179
2................................... 0.077 0.170 0.241 0.414
3................................... 0.599 0.780 0.916 1.251
4................................... (0.209) 0.137 0.398 1.041
5................................... (1.685) (1.162) (0.767) 0.203
----------------------------------------------------------------------------------------------------------------
Customer NPV at 7% discount rate added with (billion 2014$ *):
----------------------------------------------------------------------------------------------------------------
TSL SCC case $12.2/ SCC case $40.0/ SCC case $62.3/ SCC case $117/
metric ton and 7% metric ton and 7% metric ton and 7% metric ton and 7%
low NOX value low NOX value low NOX value low NOX value
----------------------------------------------------------------------------------------------------------------
1................................... 0.039 0.065 0.083 0.130
2................................... 0.040 0.133 0.204 0.377
3................................... 0.272 0.453 0.589 0.924
4................................... (0.078) 0.268 0.530 1.173
5................................... (0.827) (0.305) 0.090 1.061
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
Note: The SCC case values represent the global SCC in 2015, in 2014$, for each case.
In considering the above results, two issues are relevant. First,
the national operating cost savings are domestic U.S. monetary savings
that occur as a result of market transactions, while the value of
CO2 reductions is based on a global value. Second, the
assessments of operating cost savings and the SCC are performed with
different methods that use different time frames for analysis. The
national operating cost savings is measured for the lifetime of
equipment shipped in 2019 to 2048. Because CO2 emissions
have a very long residence time in the atmosphere,\83\ the SCC values
in future years reflect future climate-related impacts that continue
beyond 2100.
---------------------------------------------------------------------------
\83\ The atmospheric lifetime of CO2 is estimated of
the order of 30-95 years. Jacobson, MZ. ``Correction to `Control of
fossil-fuel particulate black carbon and organic matter, possibly
the most effective method of slowing global warming.' '' J. Geophys.
Res. 110. pp. D14105 (2005).
---------------------------------------------------------------------------
C. Conclusion
When considering standards, the new or amended energy conservation
standards that DOE adopts for any type (or class) of covered equipment
must be designed to achieve the maximum improvement in energy
efficiency that the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining
whether a standard is economically justified, the Secretary must
determine whether the benefits of the standard exceed its burdens by,
to the greatest extent practicable, considering the seven statutory
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)). The new or
amended standard must also result in significant conservation of
energy. (42 U.S.C. 6295(o)(3)(B))
In this final rule, DOE considered the impacts of the standards for
beverage vending machines at each TSL, beginning with the maximum
technologically feasible level, to determine whether that level was
economically justified. Where the max-tech level was not justified, DOE
then considered the next-most-efficient level and undertook the same
evaluation until it reached the highest efficiency level that is both
technologically feasible and economically justified and saves a
significant amount of energy.
To aid the reader in understanding the benefits and/or burdens of
each TSL, tables in this section summarize the quantitative analytical
results for each TSL, based on the assumptions and methodology
discussed herein. The efficiency levels contained in each TSL are
described in section V.A of this final rule. In addition to the
quantitative results presented in the tables, DOE also considers other
burdens and benefits that affect economic justification. These include
the impacts on identifiable subgroups of customers who may be
disproportionately affected by a national standard, impacts on
employment, technological feasibility, manufacturer costs, and impacts
on competition may affect the economic results presented. Section
V.B.1.b of this final rule presents the estimated impacts of each TSL
for these subgroups. DOE discusses the impacts on direct employment in
BVM manufacturing in section V.B.2 of this final rule, and discusses
the indirect employment impacts in section V.B.3.c of this final rule.
[[Page 1103]]
1. Benefits and Burdens of TSLs Considered for BVM Standards
Table V.44, Table V.45, and Table V.46 summarize the quantitative
impacts estimated for each TSL for beverage vending machines. The
national impacts are measured over the lifetime of beverage vending
machines purchased in the 30-year period that begins in the year of
compliance with amended standards (2019-2048). The energy savings,
emissions reductions, and value of emissions reductions refer to FFC
results.
Table V.44--Summary of Analytical Results for Beverage Vending Machines: National Impacts
----------------------------------------------------------------------------------------------------------------
Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
National FFC Energy Savings 0.02 0.06 0.12 0.24 0.36
(quads)........................
NPV of Customer Benefits (2014$
billion):
3% Discount Rate............ 0.08 0.03 0.51 (0.38) (1.95)
7% Discount Rate............ 0.03 0.01 0.21 (0.20) (1.02)
Cumulative Emissions Reduction
(Total FFC Emissions):
CO2 (MMt)................... 1.02 3.81 7.37 14.14 21.36
NOX (kt).................... 1.84 6.86 13.26 25.44 38.45
Hg (t)...................... 0.002 0.01 0.02 0.03 0.05
N2O (kt).................... 0.01 0.05 0.09 0.17 0.26
N2O (kt CO2eq).............. 3.28 12.23 23.63 45.34 68.47
CH4 (kt).................... 4.38 16.32 31.52 60.50 91.45
CH4 (kt CO2eq).............. 122.70 457.00 882.67 1,693.88 2,560.72
SO2 (kt).................... 0.60 2.22 4.29 8.23 12.43
Value of Cumulative Emissions
Reduction (Total FFC
Emissions):
CO2 (2014$ million) **...... 7 to 97 26 to 363 49 to 701 95 to 1,345 143 to 2,031
NOX--3% Discount Rate (2014$ 6 to 13 22 to 48 42 to 92 80 to 177 121 to 267
million)...................
NOX--7% Discount Rate (2014$ 2 to 5 8 to 19 16 to 36 31 to 69 46 to 104
million)...................
----------------------------------------------------------------------------------------------------------------
* MMT is million metric ton. kt is thousand tons. t is ton. CO2eq is the quantity of CO2 that would have the
same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2
emissions.
Table V.45--NPV of Customer Benefits by Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level * (billion 2014$)
Equipment class Discount rate -------------------------------------------------------------------------------
(%) 1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A................................................. 3 0.054 (0.124) 0.054 (0.450) (1.281)
7 0.021 (0.058) 0.021 (0.213) (0.645)
Class B................................................. 3 0.002 0.050 0.116 (0.079) (0.435)
7 0.001 0.021 0.047 (0.041 (0.235)
Combination A........................................... 3 0.013 0.065 0.208 0.056 (0.117)
7 0.005 0.027 0.085 0.015 (0.075)
Combination B........................................... 3 0.006 0.038 0.129 0.089 (0.116)
7 0.003 0.016 0.053 0.035 (0.063)
-----------------------------------------------------------------------------------------------
Total--All Classes...................................... 3 0.076 0.029 0.508 (0.384) (1.949)
7 0.030 0.006 0.207 (0.204) (1.017)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
Table V.46--Summary of Analytical Results for Beverage Vending Machines: Manufacturer and Customer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer Impacts:
Industry NPV relative to a case without standards 94.1 to 94.4 94.0 to 94.7 94.0 to 95.2 91.5 to 98.8 79.3 to 112.6
value of 94.8 (million 2014$).......................
Industry NPV (% Change).............................. -0.7 to -0.4 -0.8 to -0.1 -0.8 to 0.4 -3.4 to 4.2 -16.4 to 18.9
Customer Mean LCC Savings* (2014$):
Class A CO2.......................................... 65 (217) 65 (937) (1,424)
Class A Propane...................................... 0 71 0 454 (817)
Class B CO2.......................................... 0 0 42 (448) (1,017)
Class B Propane...................................... 8 185 361 333 (566)
Combination A CO2.................................... 57 286 990 (234) (980)
Combination A Propane................................ 58 290 772 793 (470)
Combination B CO2.................................... 30 179 597 359 (870)
Combination B Propane................................ 30 179 610 476 (433)
Customer Simple PBP** (years):
Class A CO2.......................................... 2.0 N/A 2.0 N/A N/A
Class A Propane...................................... 1.1 1.2 1.1 0.9 N/A
Class B CO2.......................................... 0.4 1.0 1.1 N/A 58.8
[[Page 1104]]
Class B Propane...................................... 0.7 0.6 0.5 1.3 64.7
Combination A CO2.................................... 0.2 0.2 0.8 26.1 39.4
Combination A Propane................................ 0.1 0.1 0.7 1.7 24.7
Combination B CO2.................................... 0.1 0.1 0.5 1.6 N/A
Combination B Propane................................ 0.1 0.1 0.3 0.8 N/A
Distribution of Customer LCC Impacts--Net Cost (%):
Class A CO2.......................................... 0 100 0 100 100
Class A Propane...................................... 0 0 0 0 100
Class B CO2.......................................... 0 0 8 99 100
Class B Propane...................................... 3 0 0 1 93
Combination A CO2.................................... 0 0 0 76 93
Combination A Propane................................ 0 0 0 1 82
Combination B CO2.................................... 0 0 0 7 97
Combination B Propane................................ 0 0 0 1 86
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
** Values of N/A indicate paybacks that are not possible, given that more efficient equipment is not only more expensive to purchase, but also costs
more to operate.
DOE also notes that the economic literature provides a wide-ranging
discussion of how customers trade-off upfront costs and energy savings
in the absence of government intervention. Much of this literature
attempts to explain why customers appear to undervalue energy
efficiency improvements. There is evidence that customers undervalue
future energy savings as a result of (1) a lack of information; (2) a
lack of sufficient salience of the long-term or aggregate benefits; (3)
a lack of sufficient savings to warrant delaying or altering purchases
(e.g., an inefficient ventilation fan in a new building or the delayed
replacement of a water pump); (4) excessive focus on the short term, in
the form of inconsistent weighting of future energy cost savings
relative to available returns on other investments; (5) computational
or other difficulties associated with the evaluation of relevant
tradeoffs; and (6) a divergence in incentives (e.g., renter versus
building owner, builder versus home buyer). Other literature indicates
that with less than perfect foresight and a high degree of uncertainty
about the future, customers may trade off these types of investments at
a higher-than-expected rate between current consumption and uncertain
future energy cost savings. This undervaluation suggests that
regulation that promotes energy efficiency can produce significant net
private gains (as well as producing social gains by, for example,
reducing pollution).
While DOE is not prepared at present to provide a fuller
quantifiable framework for estimating the benefits and costs of changes
in customer purchase decisions due to new and amended energy
conservation standards, DOE is committed to developing a framework that
can support empirical quantitative tools for improved assessment of the
customer welfare impacts of appliance standards. DOE posted a paper
that discusses the issue of customer welfare impacts of appliance
energy efficiency standards, and potential enhancements to the
methodology by which these impacts are defined and estimated in the
regulatory process.\84\
---------------------------------------------------------------------------
\84\ Sanstad, A. Notes on the Economics of Household Energy
Consumption and Technology Choice. 2010. Lawrence Berkeley National
Laboratory, Berkeley, CA. https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf.
---------------------------------------------------------------------------
As mentioned previously, in this final rule, DOE considered the
impacts of the standards for beverage vending machines at each TSL,
beginning with the maximum technologically feasible level, to determine
whether that level was economically justified. Where the max-tech level
was not justified, DOE then considered the next-most-efficient level
and undertook the same evaluation until it reached the highest
efficiency level that is both technologically feasible and economically
justified and saves a significant amount of energy.
Accordingly, DOE first considered TSL 5, which corresponds to the
max-tech level for all the equipment classes and offers the potential
for the highest cumulative energy savings through the analysis period
from 2019 to 2048. The estimated energy savings from TSL 5 are 0.36
quads of energy, an amount DOE considers significant. TSL 5 has an
estimated NPV of customer benefit of negative $1.017 billion using a 7-
percent discount rate, and negative $1.949 billion using a 3-percent
discount rate.
The cumulative emissions reductions at TSL 5 are 21.4 million
metric tons of CO2, 12.4 thousand tons of SO2,
38.5 thousand tons of NOX, 0.05 tons of Hg, 91.5 thousand
tons of CH4, and 0.3 thousand tons of N2O. The
estimated monetary value of the CO2 emissions reductions at
TSL 5 ranges from $143 million to $2,031 million.
At TSL 5, the average LCC savings range from negative $1,424 to
negative $433, depending on equipment class. The fraction of customers
incurring a net cost range from 82 percent for Combination A machines
with propane refrigerant to 100 percent for all Class A machines and
Class B machines with CO2 refrigerant. Accordingly,
approximately 90 percent of customers purchasing Class B propane
equipment, Combination A CO2 equipment, Combination B
CO2, and Combination B propane equipment would incur next
cost, or 93, 93, 97, and 86 percent of customers, respectively.
At TSL 5, the projected change in INPV ranges from a decrease of
$15.5 million to an increase of $17.9 million. If the lower bound of
the range of impacts is reached, TSL 5 could result in a net loss of up
to 16.4 percent in INPV for manufacturers.
Based on these results, the Secretary concludes that at TSL 5 for
beverage vending machines, the benefits of energy savings, emission
reductions, and the estimated monetary value of the CO2
emissions reductions would be outweighed by the negative NPV, negative
LCC savings, and the negative INPV on manufacturers. Consequently, DOE
has concluded that TSL 5 is not economically justified.
[[Page 1105]]
Next DOE considered TSL 4, which saves an estimated total of 0.24
quads of energy, an amount DOE considers significant. TSL 4 has an
estimated NPV of customer benefit of negative $0.20 billion using a 7-
percent discount rate, and negative $0.38 billion using a 3-percent
discount rate.
The cumulative emissions reductions at TSL 4 are 14.1 million
metric tons of CO2, 8.2 thousand tons of SO2,
25.4 thousand tons of NOX, 0.03 tons of Hg, 60.5 thousand
tons of CH4, and 0.2 thousand tons of N2O. The
estimated monetary value of the CO2 emissions reductions at
TSL 4 ranges from $95 million to $1,345 million.
At TSL 4, the average LCC savings ranges from negative $937 to
positive $793, depending on equipment class. The fraction of customers
incurring a net cost range from 0 percent, for Class A propane
equipment, to 100 percent, for Class A CO2 equipment,
depending on equipment class. As shown in Table V.46, a large
percentage of Class B and Combination A CO2 equipment incur
a net cost, and overall, a majority of customers (53.8 percent) would
experience a net cost at TSL 4.
Regarding impacts on manufacturers, at TSL 4, the projected change
in INPV ranges from a decrease of $3.2 million to an increase of $4.0
million. At TSL 4, DOE recognizes the risk of negative impacts if
manufacturers' expectations concerning reduced profit margins are
realized. If the lower bound of the range of impacts is reached, as DOE
expects, TSL 4 could result in a net loss of up to 3.4 percent in INPV
for manufacturers.
Based on these results, the Secretary concludes that at TSL 4 for
beverage vending machines, the benefits of energy savings, emission
reductions, and the estimated monetary value of the CO2
emissions reductions would be outweighed by the negative NPV, negative
LCC savings, and the negative INPV on manufacturers. Consequently, DOE
has concluded that TSL 4 is not economically justified.
Next DOE considered TSL 3, which saves an estimated total of 0.12
quads of energy, an amount DOE considers significant. TSL 3 has an
estimated NPV of customer benefit of $0.20 billion using a 7-percent
discount rate, and $0.51 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 3 are 7.4 million metric
tons of CO2, 4.3 thousand tons of SO2, 13.3
thousand tons of NOX, 0.02 tons of Hg, 31.5 thousand tons of
CH4, and 0.09 thousand tons of N2O. The estimated
monetary value of the CO2 emissions reductions at TSL 3
ranges from $49 million to $701 million.
At TSL 3, the average LCC savings ranges from $0 to $990, depending
on equipment class. There are no customers incurring a net cost for
almost all equipment classes, except for Class B equipment with
CO2 refrigerant for which 8 percent of customers experience
a net cost.
At TSL 3, the projected change in INPV ranges from a decrease of
$0.7 million to an increase of $0.4 million. If the lower bound of the
range of impacts is reached, as DOE expects, TSL 3 could result in a
net loss of up to 0.8 percent in INPV for manufacturers.
After carefully considering the analysis results and weighing the
benefits and burdens of TSL 3, DOE believes that setting the standards
for beverage vending machines at TSL 3 represents the maximum
improvement in energy efficiency that is technologically feasible and
economically justified. TSL 3 is technologically feasible because the
technologies required to achieve these levels already exist in the
current market and are available from multiple manufacturers. TSL 3 is
economically justified because the benefits to the nation in the form
of energy savings, customer NPV at both a 3-percent and 7-percent
discount rate, and emissions reductions outweigh the costs associated
with reduced INPV and potential effects of reduced manufacturing
capacity.
Therefore, DOE is adopting new and amended energy conservation
standards for beverage vending machines at TSL 3 as indicated in Table
V.47.
Table V.47--Adopted Energy Conservation Standards for Beverage Vending
Machines
------------------------------------------------------------------------
Adopted energy conservation
standards ** maximum daily energy
Equipment class * consumption (MDEC) kWh/day
[dagger]
------------------------------------------------------------------------
A.................................. 0.052 x V + 2.43 [Dagger]
B.................................. 0.052 x V + 2.20 [Dagger]
Combination A...................... 0.086 x V + 2.66 [Dagger]
Combination B...................... 0.111 x V + 2.04 [Dagger]
------------------------------------------------------------------------
* See section IV.A.1 of the final rule for a discussion of equipment
classes.
** ``V'' is the representative value of refrigerated volume (ft\3\) of
the BVM model, as measured in accordance with the method for
determining refrigerated volume adopted in the recently amended DOE
test procedure for beverage vending machines and appropriate sampling
plan requirements. 80 FR 45758 (July 31, 2015). See section III.B and
V.A for more details.
[dagger] kilowatt hours per day.
[Dagger] Trial Standard Level (TSL) 3.
2. Summary of Annualized Benefits and Costs of the Adopted Standards
The benefits and costs of the adopted standards can also be
expressed in terms of annualized values. The annualized net benefit is
the sum of: (1) The annualized national economic value (expressed in
2014$) of the benefits from operating equipment that meet the adopted
standards (consisting primarily of operating cost savings from using
less energy, minus increases in equipment purchase costs, and (2) the
annualized monetary value of the benefits of CO2 and
NOX emission reductions.\85\
---------------------------------------------------------------------------
\85\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2015, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(2020, 2030, etc.), and then discounted the present value from each
year to 2015. The calculation uses discount rates of 3 and 7 percent
for all costs and benefits except for the value of CO2 reductions,
for which DOE used case-specific discount rates. Using the present
value, DOE then calculated the fixed annual payment over a 30-year
period, starting in the compliance year that yields the same present
value.
---------------------------------------------------------------------------
Table V.48 shows the annualized values for beverage vending
machines under TSL 3, expressed in 2014$. The results under the primary
estimate are as follows. Using a 7-percent discount rate for benefits
and costs other than CO2 reductions (for which DOE used a 3-
percent discount rate along with the average SCC series corresponding
to a value of $40.0 per metric ton in 2015 (2014$)), the estimated cost
of the adopted standards for BVM equipment is $1.8 million per year in
increased equipment costs, while the estimated benefits are $22.2
million per year in reduced equipment operating costs, $12.8 million
per year in CO2 reductions, and $1.6 million per year in
reduced NOX emissions. In this case, the net benefit amounts
to $35 million per year.
Using a 3-percent discount rate for all benefits and costs and the
average SCC
[[Page 1106]]
series corresponding to a value of $40.0 per metric ton in 2015 (in
2014$), the estimated cost of the adopted standards for beverage
vending machines is $1.9 million per year in increased equipment costs,
while the estimated annual benefits are $30.2 million in reduced
operating costs, $12.8 million in CO2 reductions, and $2.3
million in reduced NOX emissions. In this case, the net
benefit amounts to $43 million per year.
Table V.48--Annualized Benefits and Costs of Adopted Standards (TSL 3) for Beverage Vending Machines
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Million 2014$/year)
--------------------------------------------------------------------------------------
Discount rate Low net benefits estimate High net benefits estimate
Primary estimate * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Operating Cost Savings.... 7%.......................... 22......................... 14......................... 27
3%.......................... 30......................... 18......................... 36
CO2 Reduction Value ($12.2/metric 5%.......................... 4.......................... 2.......................... 4
ton) **.
CO2 Reduction Value ($40.0/metric 3%.......................... 13......................... 8.......................... 14
ton) **.
CO2 Reduction Value ($62.3/metric 2.5%........................ 19......................... 12......................... 21
ton) **.
CO2 Reduction Value ($117/metric 3%.......................... 39......................... 26......................... 44
ton) **.
NOX Reduction Value [dagger]....... 7%.......................... 2.......................... 1.......................... 4
3%.......................... 2.......................... 2.......................... 6
Total Benefits [Dagger]............ 7% range.................... 28 to 63................... 17 to 41................... 36 to 75
7%.......................... 37......................... 23......................... 46
3% range.................... 36 to 72................... 22 to 46................... 46 to 86
3%.......................... 45......................... 28......................... 56
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Incremental Equipment 7%.......................... 1.79....................... 0.98....................... 2.10
Costs.
3%.......................... 1.89....................... 1.01....................... 2.13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [Dagger]..................... 7% range.................... 26 to 61................... 16 to 40................... 34 to 73
7%.......................... 35......................... 22......................... 44
3% range.................... 34 to 70................... 21 to 45................... 44 to 84
3%.......................... 43......................... 27......................... 54
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with beverage vending machines shipped in 2019-2048. These results include benefits
to customers that accrue after the last year of analyzed shipments (2048) from the equipment purchased in during the 30-year analysis period. The
results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in
preparation for the rule. The primary, low benefits, and high benefits estimates utilize projections of energy prices from the AEO2015 Reference case,
Low Economic Growth case, and High Economic Growth case, respectively as well as the default shipments scenario along with the low and high shipments
scenarios. In addition, incremental equipment costs reflect a medium decline rate for projected equipment price trends in the primary estimate, a low
decline rate for projected equipment price trends in the low benefits estimate, and a high decline rate for projected equipment price trends in the
high benefits estimate. The methods used to derive projected price trends are explained in appendix 8C of the technical support document.
** The CO2 values represent global monetized SCC values, in 2014$, in 2015 under several scenarios. The first three cases use the averages of SCC
distributions calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The fourth case represents the 95th percentile of
the SCC distribution calculated using a 3-percent discount rate. The SCC time series incorporates an escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L.2. The Primary and Low Benefits Estimates used the values at the low end of the
ranges estimated by EPA, while the High Benefits Estimate uses the values at the high end of the ranges.
[Dagger] Total benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to the average SCC with a 3-percent
discount rate ($40.0/metric ton case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are
calculated using the labeled discount rate, and those values are added to the full range of CO2 values.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify
the problem that it intends to address, including, where applicable,
the failures of private markets or public institutions that warrant new
agency action, as well as to assess the significance of that problem.
The problems that the adopted standards for beverage vending machines
are intended to address are as follows:
(1) Insufficient information and the high costs of gathering and
analyzing relevant information leads some customers to miss
opportunities to make cost-effective investments in energy efficiency.
(2) In some cases the benefits of more efficient equipment are not
realized due to misaligned incentives between purchasers and users. An
example of such a case is when the equipment purchase decision is made
by a building contractor or building owner who does not pay the energy
costs.
(3) There are external benefits resulting from improved energy
efficiency of equipment that is not captured by the users of such
equipment. These benefits include externalities related to public
health, environmental protection and national energy security that are
not reflected in energy prices, such as reduced emissions of air
pollutants and greenhouse gases that impact human health and global
warming. DOE attempts to qualify some of the external benefits through
use of social cost of carbon values.
The Administrator of the Office of Information and Regulatory
Affairs (OIRA) in the OMB has determined that this regulatory action is
not a significant regulatory action under section (3)(f) of Executive
Order 12866. Section 6(a)(3)(A) of the Executive Order states
[[Page 1107]]
that absent a material change in the development of the planned
regulatory action, regulatory action not designated as significant will
not be subject to review under section 6(a)(3) unless, within 10
working days of receipt of DOE's list of planned regulatory actions,
the Administrator of OIRA notifies the agency that OIRA has determined
that a planned regulation is a significant regulatory action within the
meaning of the Executive order.
DOE has also reviewed this regulation pursuant to Executive Order
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). EO 13563
is supplemental to and explicitly reaffirms the principles, structures,
and definitions governing regulatory review established in Executive
Order 12866. To the extent permitted by law, agencies are required by
Executive Order 13563 to: (1) Propose or adopt a regulation only upon a
reasoned determination that its benefits justify its costs (recognizing
that some benefits and costs are difficult to quantify); (2) tailor
regulations to impose the least burden on society, consistent with
obtaining regulatory objectives, taking into account, among other
things, and to the extent practicable, the costs of cumulative
regulations; (3) select, in choosing among alternative regulatory
approaches, those approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity); (4) to the extent
feasible, specify performance objectives, rather than specifying the
behavior or manner of compliance that regulated entities must adopt;
and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies
to use the best available techniques to quantify anticipated present
and future benefits and costs as accurately as possible. In its
guidance, OIRA has emphasized that such techniques may include
identifying changing future compliance costs that might result from
technological innovation or anticipated behavioral changes. For the
reasons stated in the preamble, DOE believes that this final rule is
consistent with these principles, including the requirement that, to
the extent permitted by law, benefits justify costs and that net
benefits are maximized.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of a final regulatory flexibility analysis (FRFA) for any
final rule. As required by Executive Order 13272, ``Proper
Consideration of Small Entities in Agency Rulemaking,'' 67 FR 53461
(August 16, 2002), DOE published procedures and policies on February
19, 2003, to ensure that the potential impacts of its rules on small
entities are properly considered during the rulemaking process. 68 FR
7990. DOE has made its procedures and policies available on the Office
of the General Counsel's Web site (https://energy.gov/gc/office-general-counsel). DOE has prepared the following FRFRA for the equipment that
are the subject of this rulemaking.
For manufacturers of BVM equipment, the SBA has set a size
threshold, which defines those entities classified as ``small
businesses'' for the purposes of the statute. DOE used the SBA's small
business size standards to determine whether any small entities would
be subject to the requirements of the rule. See 13 CFR part 121. The
size standards are listed by North American Industry Classification
System (NAICS) code and industry description and are available at
www.sba.gov/content/table-small-business-size-standards. BVM equipment
manufacturing is classified under NAICS 333318, ``Other Commercial and
Service Industry Machinery Manufacturing.'' The SBA sets a threshold of
1,000 employees or less for an entity to be considered as a small
business for this category.
1. Description of Estimated Number of Small Entities Regulated
During its market survey, DOE used available public information to
identify potential small manufacturers. DOE's research involved public
databases (e.g., DOE's Compliance Certification Management System
(CCMS),\86\ and ENERGY STAR \87\ databases), individual company Web
sites, and market research tools (e.g., Hoovers reports \88\) to create
a list of companies that manufacture or sell equipment covered by this
rulemaking. DOE also asked stakeholders and industry representatives
during manufacturer interviews and at DOE public meetings if they were
aware of any other small manufacturers. DOE reviewed publicly available
data and contacted select companies on its list, as necessary, to
determine whether they met the SBA's definition of a small business
manufacturer of covered BVM equipment. DOE screened out companies that
do not offer equipment covered by this rulemaking, do not meet the
definition of a ``small business,'' or are foreign-owned.
---------------------------------------------------------------------------
\86\ ``CCMS.'' CCMS. www.regulations.doe.gov/certification-data/
.
\87\ ENERGY STAR Certified Vending Machines. June 6, 2013.
www.energystar.gov/products/certified-products.
\88\ Hoovers. www.hoovers.com/.
---------------------------------------------------------------------------
DOE identified eight companies selling BVM equipment in the United
States. Four are small domestic manufacturers and one is a small
foreign manufacturer with domestic-sited subsidiary that serves as its
marketing arm in the United States. DOE contacted all identified BVM
manufacturers for interviews. Ultimately, DOE interviewed manufacturers
representing approximately 78 percent of BVM equipment industry
shipments and approximately 50 percent of the small business shipments.
2. Description and Estimate of Compliance Requirements
The four small domestic BVM manufacturers account for approximately
15-20 percent of BVM equipment shipments. The small domestic
manufacturers are Automated Merchandising Systems, Multi-Max Systems,
Seaga, and Wittern.
In general, the small manufacturers focus on the Combination A and
Combination B market segments. Together, the four domestic and one
foreign small manufacturer account for 74 percent of Combination A and
Combination B sales. Based on the shipments analysis, Combination A and
Combination B shipments account for roughly 18 percent of the total BVM
market. The market share estimates are based on aggregate information
compiled through manufacturer interviews. The interview process is
described in section IV.J.1 of this notice and chapter 12 of the TSD.
The interview guide used for interviews was published as Appendix 12B
of the NOPR TSD. The shipments percentages are from shipments analysis,
which is explained in section IV.G of this notice.
The remaining 82 percent of BVM shipments are Class A and Class B
units. Based on data obtained during manufacturer interviews, DOE
estimated that small business manufacturers (including the one foreign
small manufacturer) account for approximately 5 percent of the market
for each of the Class A and Class B market segments. The remaining 95
percent of both Class A and Class B market segments are held by the
three
[[Page 1108]]
large manufacturers: Crane, Royal Vendors, and SVA.
DOE derived industry conversion using a top-down approach described
in methodology section IV.J.2.a. Using product platform counts by
equipment type (i.e., Class A, Class B, Combination A, Combination B)
and manufacturer, DOE estimated the distribution of industry conversion
costs between small manufacturers and large manufacturers. Using its
count of manufacturers, DOE calculated capital conversion costs (Table
VI.1) and product conversion costs (Table VI.2) for an average small
manufacturer versus an average large manufacturer. To provide context
on the size of the conversion costs relative to the size of the
businesses, DOE presents the conversion costs relative to annual
revenue and annual operating profit under the final standard level, as
shown in VI.3. The current annual revenue and annual operating profit
estimates are derived from the GRIM's industry revenue calculations and
the market share breakdowns of small versus large manufacturers.
Table VI.1--Comparison of Typical Small and Large Manufacturer's Capital
Conversion Costs *
------------------------------------------------------------------------
Capital Capital
conversion costs conversion costs
Trial standard level for typical small for typical large
manufacturer manufacturer
(2014$ millions) (2014$ millions)
------------------------------------------------------------------------
TSL 1............................. 0.03 0.06
TSL 2............................. 0.03 0.06
TSL 3............................. 0.03 0.06
TSL 4............................. 0.11 0.20
TSL 5............................. 0.31 0.70
------------------------------------------------------------------------
* Capital conversion costs are the capital investments made during the 3-
year period between the publication of the final rule and the
compliance year of the final standard.
Table VI.2--Comparison of Typical Small and Large Manufacturer's Product
Conversion Costs *
------------------------------------------------------------------------
Product Product
conversion costs conversion costs
Trial standard level for typical small for typical large
manufacturer manufacturer
(2014$ millions) (2014$ millions)
------------------------------------------------------------------------
TSL 1............................. 0.06 0.09
TSL 2............................. 0.06 0.09
TSL 3............................. 0.06 0.09
TSL 4............................. 0.12 0.19
TSL 5............................. 0.23 0.54
------------------------------------------------------------------------
* Product conversion costs are the R&D and other product development
investments made during the 3-year period between the publication of
the final rule and the compliance year of the final standard.
Table VI.3--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Conversion
Capital Product Conversion Conversion costs/
conversion conversion Conversion costs/annual costs/ conversion
cost (2014$ cost (2014$ costs/annual operating conversion period
millions) millions) revenue (%) profit (%) period revenue operating
* (%) profit * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Manufacturer...................................... 0.03 0.06 1.5 26.4 0.5 8.8
Large Manufacturer...................................... 0.06 0.09 0.3 5.8 0.1 1.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the compliance year for this rulemaking, is 3 years.
At the established standard level, DOE estimates total conversion
costs associated with new and amended energy conservation standards for
an average small manufacturer to be $87,000, which is approximately 1.5
percent of annual revenue and 26.4 percent of annual operating profit.
This suggests that an average small manufacturer would need to reinvest
roughly 8.8 percent of its operating profit per year over the
conversion period to comply with standards. In addition, DOE found that
17 of 19 Class A models in the combined CCMS and ENERGY STAR databases
will be compliant with standards as amended in this final rule, with no
modification required under appendix A. This includes units from AMS,
Wittern, and Seaga (all small manufacturers), in addition to Royal,
Crane, and SandenVendo (all large manufacturers).
The total conversion costs associated with new and amended energy
conservation standards for an average large manufacturer is $150,000,
which is approximately 0.3 percent of annual revenue and 5.8 percent of
annual operating profit. This suggests that an average large
manufacturer would need to reinvest roughly 1.9 percent of its
operating profit per year over the 3-year conversion period.
Product conversion costs, which include one-time investments such
as equipment redesigns and industry certification, are a key driver of
conversion investments to comply with the established level of
standards. Product conversion costs tend to be fixed and do not scale
with sales volume. For each equipment platform, small businesses must
make redesign investments that are similar to their
[[Page 1109]]
large competitors. However, because small manufacturers' costs are
spread over a lower volume of units, it takes longer for small
manufacturers to recover their investments. Similarly, capital
conversion costs are spread across a lower volume of shipments for
small business manufacturers. DOE notes that all small manufacturers
manufacturer both conventional (i.e., Class A and Class B equipment) as
well as combination equipment; there are no small manufacturers that
manufacturer only combination equipment. DOE's product research
suggests the combination and conventional equipment from the same
manufacturer often share design elements, such as cabinet and glass
pack designs. Manufacturers that produce both combination and
conventional equipment using shared design elements would experience
conversion costs lower than those estimated since a single redesign
effort could be leveraged across models in multiple equipment classes.
DOE notes that, in response to stakeholder feedback relating to the
2015 BVM ECS NOPR, it has updated its engineering analysis and standard
efficiency levels for this final rule, resulting in less burdensome
standard levels for small manufacturers of beverage vending machines
relative to the 2015 BVM ECS NOPR proposal. In the 2015 BVM ECS NOPR,
DOE estimated that the average small manufacturer would incur costs of
$217,000 as a result of proposed standards. For this final rule, DOE
estimates that the average small manufacturer will incur costs of
$87,000 as a result of final standards.
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
DOE is not aware of any rules or regulations that duplicate,
overlap, or conflict with today's final rule.
4. Significant Alternatives to the Rule
DOE received two comments concerning alternative programs. SVA
expressed the belief that voluntary programs such as ENERGY STAR are
more effective in driving the market towards more efficient equipment
than mandatory energy conservation standards. (SVA, Public Meeting
Transcript, No. 48 at p. 117) ASAP commented that while ENERGY STAR has
been effective in moving the market towards more efficient equipment,
DOE's final standards can achieve far greater savings. (ASAP, Public
Meeting Transcript, No. 48 at p. 118) Neither comment provided any
supporting data. In addition, SBA Advocacy stated its belief that DOE
did not adequately analyze the impact of any alternatives presented in
the RIA on small manufacturers and questioned DOE's analysis of lower
TSLs as alternatives to the proposed standard if EPCA restricts DOE
from selecting such less burdensome standards. (SBA Advocacy, No. 61 at
p. 4).
DOE thanks SVA and ASAP for their comments regarding the efficacy
of ENERGY STAR in driving the market towards increased efficiency and
agrees with the ASAP assessment of ENERGY STAR and DOE's energy
conservation standards as being complementary and more effective than
voluntary standards alone. In particular, in response to SVA's comment
regarding the efficacy of voluntary programs like ENEGY STAR in
achieving energy savings, DOE considered such alternatives in the
Regulatory Impact Analysis. However, DOE notes that it is difficult to
confidently estimate the future impacts of voluntary or market-based
programs because DOE does not control the stringency of any such
programs compared to the current equipment efficiency distributions.
Further, unlike the energy conservation standards adopted in this final
rule, compliance with such programs or incentives is voluntary, and it
is therefore difficult to estimate savings since it is unclear if and
how many manufacturers or customers will choose to participate. In
addition, as noted by ASAP, the benefits of any such voluntary programs
would likely be significantly less than DOE's amended energy
conservation standards, since it is unlikely that there would be
significant percent market penetration or commensurately more-stringent
energy efficiency targets for beverage vending machines.
In response to SBA Advocacy's comment regarding DOE's analysis of
the impacts of regulatory alternatives on small businesses, the
discussion in the previous section analyzes impacts on small businesses
that would result from DOE's final rule, TSL 3. In reviewing
alternatives to the final rule, DOE examined energy conservation
standards set at lower efficiency levels. As a result of these updates,
DOE found that TSL 1 and TSL 2 would not reduce the impacts on small
business manufacturers (relative to TSL 3) and both would come at the
expense of a reduction in energy savings and a reduction in consumer
NPV. TSL 1 achieves 86 percent lower energy savings compared to the
energy savings at TSL 3. TSL 2 achieves 48 percent lower energy savings
compared to the energy savings at TSL 3. The estimated conversion costs
for small business manufacturers are estimated to be the same at TSL 1
and TSL 2 as at TSL 3 ($87,000).
Additionally, DOE considered standards at higher efficiency levels,
corresponding to TSL 4 and TSL 5. TSL 4 achieves approximately 94
percent higher savings than TSL 3, and TSL 5 achieves approximately 191
percent higher savings than TSL 3. However, DOE rejected this TSL due
to the negative NPV results.
Furthermore, the estimated conversion costs for small business
manufacturers are significantly higher at TSL 4 and TSL 5 than at TSL
3. To comply with TSL 4, the average small manufacturer must make
$228,000 in conversion cost investments, which is $141,000 more than at
TSL 3. To comply with TSL 5, the average small manufacturer must make
$542,000 in conversion cost investments, which is $455,000 more than at
TSL 3.
DOE believes that establishing standards at TSL 3 balances the
benefits of the energy savings at TSL 3 with the potential burdens
placed on beverage vending machine manufacturers, including small
business manufacturers. Accordingly, DOE is declining to adopt one of
the other TSLs considered in the analysis, or the other policy
alternatives detailed as part of the regulatory impacts analysis
included in chapter 17 of the final rule TSD.
Regarding SBA Advocacy's comment questioning DOE's analysis of
lower TSLs are reasonable regulatory alternatives, DOE is following SBA
Advocacy's public guidance to Federal agencies for how to comply with
the Regulatory Flexibility Analysis Act, wherein SBA Advocacy states
that agencies ``should consider a variety of mechanisms to reach the
regulatory objective without regard to whether that mechanism is
statutorily permitted.'' \89\
---------------------------------------------------------------------------
\89\ U.S. Small Business Administration Office of Advocacy. A
Guide for Government Agencies, How to Comply with the Regulatory
Flexibility Act. May 2012. https://www.sba.gov/sites/default/files/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------
DOE also notes that additional compliance flexibilities may be
available through other means. EPCA provides that a manufacturer whose
annual gross revenue from all of its operations does not exceed $8
million may apply for an exemption from all or part of an energy
conservation standard for a period not longer than 24 months after the
effective date of a final rule establishing the standard. Additionally,
Section 504 of the Department of Energy Organization Act, 42 U.S.C.
7194, provides authority for the Secretary to adjust a rule issued
under EPCA in order to prevent ``special hardship,
[[Page 1110]]
inequity, or unfair distribution of burdens'' that may be imposed on
that manufacturer as a result of such rule. Manufacturers should refer
to 10 CFR part 430, subpart E, and part 1003 for additional details.
DOE believes that establishing standards at TSL 3 balances the
benefits of the energy savings at TSL 3 with the potential burdens
placed on refrigerated beverage vending machine manufacturers,
including small business manufacturers. Accordingly, DOE is declining
to adopt one of the other TSLs considered in the analysis, or the other
policy alternatives detailed as part of the regulatory impacts analysis
included in Chapter 17 of this NOPR TSD.
C. Review Under the Paperwork Reduction Act
Manufacturers of beverage vending machines must certify to DOE that
their equipment comply with any applicable energy conservation
standards. In certifying compliance, manufacturers must test their
equipment according to the DOE test procedures for beverage vending
machines, including any amendments adopted for those test procedures.
DOE has established regulations for the certification and recordkeeping
requirements for all covered consumer products and commercial
equipment, including beverage vending machines. 76 FR 12422 (March 7,
2011); 80 FR 5099 (Jan. 30, 2015). The collection-of-information
requirement for the certification and recordkeeping is subject to
review and approval by OMB under the Paperwork Reduction Act (PRA).
This requirement has been approved by OMB under OMB control number
1910-1400. Public reporting burden for the certification is estimated
to average 30 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the PRA, unless that collection of information displays
a currently valid OMB Control Number.
D. Review Under the National Environmental Policy Act of 1969
Pursuant to the National Environmental Policy Act (NEPA) of 1969,
DOE has determined that the final rule fits within the category of
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets
the requirements for application of a CX. See 10 CFR part 1021, App. B,
B5.1(b); 1021.410(b) and App. B, B(1)-(5). The final rule fits within
this category of actions because it is a rulemaking that establishes
energy conservation standards for consumer products or industrial
equipment, and for which none of the exceptions identified in CX
B5.1(b) apply. Therefore, DOE has made a CX determination for this
rulemaking, and DOE does not need to prepare an Environmental
Assessment or Environmental Impact Statement for this rule. DOE's CX
determination for this rule is available at https://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 10, 1999)
imposes certain requirements on Federal agencies formulating and
implementing policies or regulations that preempt State law or that
have Federalism implications. The Executive Order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive Order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have Federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. DOE has examined this
final rule and has determined that it would not have a substantial
direct effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. EPCA governs
and prescribes Federal preemption of State regulations as to energy
conservation for the equipment that is the subject of this final rule.
States can petition DOE for exemption from such preemption to the
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297)
Therefore, no further action is required by Executive Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' imposes on Federal agencies the general duty
to adhere to the following requirements: (1) Eliminate drafting errors
and ambiguity; (2) write regulations to minimize litigation; (3)
provide a clear legal standard for affected conduct rather than a
general standard; and (4) promote simplification and burden reduction.
61 FR 4729 (Feb. 7, 1996). Regarding the review required by section
3(a), section 3(b) of Executive Order 12988 specifically requires that
Executive agencies make every reasonable effort to ensure that the
regulation: (1) Clearly specifies the preemptive effect, if any; (2)
clearly specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms; and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
Executive Order 12988 requires Executive agencies to review regulations
in light of applicable standards in section 3(a) and section 3(b) to
determine whether they are met or it is unreasonable to meet one or
more of them. DOE has completed the required review and determined
that, to the extent permitted by law, this final rule meets the
relevant standards of Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531).
For a regulatory action likely to result in a rule that may cause the
expenditure by State, local, and Tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year
(adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for
[[Page 1111]]
intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy
statement is also available at https://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the final rule. (2 U.S.C. 1532(c)). The content
requirements of section 202(b) of UMRA relevant to a private sector
mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The
SUPPLEMENTARY INFORMATION section of this document and the ``Regulatory
Impact Analysis'' section of the TSD for this final rule respond to
those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law. As required by 42 U.S.C. 6295(d),
(f), and (o), 6313(e), and 6316(a), this final rule would establish new
and amended energy conservation standards for beverage vending machines
that are designed to achieve the maximum improvement in energy
efficiency that DOE has determined to be both technologically feasible
and economically justified. A full discussion of the alternatives
considered by DOE is presented in the ``Regulatory Impact Analysis''
section of the TSD for this final rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This final rule would not have any impact on the autonomy or integrity
of the family as an institution. Accordingly, DOE has concluded that it
is not necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to Executive Order 12630, ``Governmental Actions and
Interference with Constitutionally Protected Property Rights,'' 53 FR
8859 (March 18, 1988), DOE has determined that this final rule would
not result in any takings that might require compensation under the
Fifth Amendment to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB
and DOE guidelines and has concluded that it is consistent with
applicable policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any significant energy
action. A ``significant energy action'' is defined as any action by an
agency that promulgates or is expected to lead to promulgation of a
final rule, and that: (1) Is a significant regulatory action under
Executive Order 12866, or any successor order; and (2) is likely to
have a significant adverse effect on the supply, distribution, or use
of energy, or (3) is designated by the Administrator of OIRA as a
significant energy action. For any significant energy action, the
agency must give a detailed statement of any adverse effects on energy
supply, distribution, or use should the proposal be implemented, and of
reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth new
and amended energy conservation standards for beverage vending
machines, is not a significant energy action because the standards are
not likely to have a significant adverse effect on the supply,
distribution, or use of energy, nor has it been designated as such by
the Administrator at OIRA. Accordingly, DOE has not prepared a
Statement of Energy Effects on this final rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' Id at FR 2667.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. Generation of this
report involved a rigorous, formal, and documented evaluation using
objective criteria and qualified and independent reviewers to make a
judgment as to the technical/scientific/business merit, the actual or
anticipated results, and the productivity and management effectiveness
of programs and/or projects. The ``Energy Conservation Standards
Rulemaking Peer Review Report'' dated February 2007 has been
disseminated and is available at the following Web site: https://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report.
M. Review Under Section 32 of the Federal Energy Administration Act of
1974
Under section 301 of the Department of Energy Organization Act
(Pub. L. 95-91; 42 U.S.C. 7101), DOE must comply with section 32 of the
Federal Energy Administration Act of 1974, as amended by the Federal
Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA)
Section 32 essentially provides in relevant part that, where a proposed
rule authorizes or requires use of commercial standards, the notice of
proposed rulemaking must inform the public of the use and background of
[[Page 1112]]
such standards. In addition, section 32(c) requires DOE to consult with
the Attorney General and the Chairman of the Federal Trade Commission
(FTC) concerning the impact of the commercial or industry standards on
competition.
This final rule incorporates testing methods contained in the
following standard: ASTM Standard E 1084-86, ``Standard Test Method for
Solar Transmittance (Terrestrial) of Sheet Materials Using Sunlight.''
DOE has evaluated this standard and is unable to conclude whether it
fully complies with the requirements of section 32(b) of the Federal
Energy Administration Act (i.e., whether they were developed in a
manner that fully provides for public participation, comment, and
review).
DOE has consulted with both the Attorney General and the Chairwoman
of the FTC about the impact on competition of using the methods
contained in this standard and has received no comments objecting to
its use.
N. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is a ``major rule'' as
defined by 5 U.S.C. 804(2).
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects
10 CFR Part 429
Confidential business information, Energy conservation, Household
appliances, Imports, Reporting and recordkeeping requirements.
10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Energy conservation, Incorporation by reference, Reporting
and recordkeeping requirements.
Issued in Washington, DC, on December 23, 2015.
David J. Friedman,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable
Energy.
For the reasons set forth in the preamble, DOE amends parts 429 and
431 of chapter II of title 10 of the Code of Federal Regulations, as
set forth below:
PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT
0
1. The authority citation for part 429 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
2. Section 429.52 is amended by adding paragraph (a)(3) to read as
follows:
Sec. 429.52 Refrigerated bottled or canned beverage vending machines.
(a) * * *
(3) The representative value of refrigerated volume of a basic
model reported in accordance with paragraph (b)(2) of this section
shall be the mean of the refrigerated volumes measured for each tested
unit of the basic model and determined in accordance with the test
procedure in Sec. 431.296.
* * * * *
0
3. Section 429.134 is amended by adding paragraph (g) to read as
follows:
Sec. 429.134 Product-specific enforcement provisions.
* * * * *
(g) Refrigerated bottled or canned beverage vending machines--(1)
Verification of refrigerated volume. The refrigerated volume (V) of
each tested unit of the basic model will be measured pursuant to the
test requirements of 10 CFR 431.296. The results of the measurement(s)
will be compared to the representative value of refrigerated volume
certified by the manufacturer. The certified refrigerated volume will
be considered valid only if the measurement(s) (either the measured
refrigerated volume for a single unit sample or the average of the
measured refrigerated volumes for a multiple unit sample) is within
five percent of the certified refrigerated volume.
(i) If the representative value of refrigerated volume is found to
be valid, the certified refrigerated volume will be used as the basis
for calculation of maximum daily energy consumption for the basic
model.
(ii) If the representative value of refrigerated volume is found to
be invalid, the average measured refrigerated volume determined from
the tested unit(s) will serve as the basis for calculation of maximum
daily energy consumption for the tested basic model.
(2) Verification of surface area, transparent, and non-transparent
areas. The percent transparent surface area on the front side of the
basic model will be measured pursuant to these requirements for the
purposes of determining whether a given basic model meets the
definition of Class A or Combination A, as presented at 10 CFR 431.292.
The transparent and non-transparent surface areas shall be determined
on the front side of the beverage vending machine at the outermost
surfaces of the beverage vending machine cabinet, from edge to edge,
excluding any legs or other protrusions that extend beyond the
dimensions of the primary cabinet. Determine the transparent and non-
transparent areas on each side of a beverage vending machine as
described in paragraphs (g)(2)(i) and (ii) of this section. For
combination vending machines, disregard the surface area surrounding
any refrigerated compartments that are not designed to be refrigerated
(as demonstrated by the presence of temperature controls), whether or
not it is transparent. Determine the percent transparent surface area
on the front side of the beverage vending machine as a ratio of the
measured transparent area on that side divided by the sum of the
measured transparent and non-transparent areas, multiplying the result
by 100.
(i) Determination of transparent area. Determine the total surface
area that is transparent as the sum of all surface areas on the front
side of a beverage vending machine that meet the definition of
transparent at 10 CFR 431.292. When determining whether or not a
particular wall segment is transparent, transparency should be
determined for the aggregate performance of all the materials between
the refrigerated volume and the ambient environment; the composite
performance of all those materials in a particular wall segment must
meet the definition of transparent for that area be treated as
transparent.
(ii) Determination of non-transparent area. Determine the total
surface area that is not transparent as the sum of all surface areas on
the front side of a beverage vending machine that are not considered
part of the transparent area, as determined in accordance with
paragraph (g)(2)(i) of this section.
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
4. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
5. Section 431.292 is amended by:
0
a. Revising the definitions for ``Class A'' and ``Class B'';
[[Page 1113]]
0
b. Adding in alphabetical order definitions for ``Combination A'' and
``Combination B'';
0
c. Revising the definition of ``Combination vending machine''; and
0
d. Adding in alphabetical order a definition for ``Transparent''.
The revisions and additions read as follows:
Sec. 431.292 Definitions concerning refrigerated bottled or canned
beverage vending machines.
* * * * *
Class A means a refrigerated bottled or canned beverage vending
machine that is not a combination vending machine and in which 25
percent or more of the surface area on the front side of the beverage
vending machine is transparent.
Class B means a refrigerated bottled or canned beverage vending
machine that is not considered to be Class A and is not a combination
vending machine.
Combination A means a combination vending machine where 25 percent
or more of the surface area on the front side of the beverage vending
machine is transparent.
Combination B means a combination vending machine that is not
considered to be Combination A.
Combination vending machine means a bottled or canned beverage
vending machine containing two or more compartments separated by a
solid partition, that may or may not share a product delivery chute, in
which at least one compartment is designed to be refrigerated, as
demonstrated by the presence of temperature controls, and at least one
compartment is not.
* * * * *
Transparent means greater than or equal to 45 percent light
transmittance, as determined in accordance with ASTM E 1084-86
(Reapproved 2009), (incorporated by reference, see Sec. 431.293) at
normal incidence and in the intended direction of viewing.
* * * * *
0
6. Section 431.293 is amended by adding paragraph (c) to read as
follows:
Sec. 431.293 Materials incorporated by reference.
* * * * *
(c) ASTM. ASTM International, 100 Barr Harbor Drive, P.O. Box C700,
West Conshohocken, PA 19428-2959, (877) 909-2786, or go to
www.astm.org.
(1) ASTM E 1084-86 (Reapproved 2009), ``Standard Test Method for
Solar Transmittance (Terrestrial) of Sheet Materials Using Sunlight,''
approved April 1, 2009, IBR approved for Sec. 431.292.
(2) [Reserved]
0
7. Section 431.296 is revised to read as follows:
Sec. 431.296 Energy conservation standards and their effective dates.
(a) Each refrigerated bottled or canned beverage vending machine
manufactured on or after August 31, 2012 and before January 8, 2019,
shall have a daily energy consumption (in kilowatt hours per day), when
measured in accordance with the DOE test procedure at Sec. 431.294,
that does not exceed the following:
------------------------------------------------------------------------
Maximum daily energy consumption
Equipment class (kilowatt hours per day)
------------------------------------------------------------------------
Class A.............................. 0.055 x V [dagger] + 2.56.
Class B.............................. 0.073 x V [dagger] + 3.16.
Combination Vending Machines......... [RESERVED].
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume
(ft\3\) of the BVM model, as calculated pursuant to 10 CFR
429.52(a)(3).
(b) Each refrigerated bottled or canned beverage vending machine
manufactured on or after January 8, 2019, shall have a daily energy
consumption (in kilowatt hours per day), when measured in accordance
with the DOE test procedure at Sec. 431.294, that does not exceed the
following:
------------------------------------------------------------------------
Maximum daily energy consumption
Equipment class (kilowatt hours per day)
------------------------------------------------------------------------
Class A.............................. 0.052 x V [dagger] + 2.43.
Class B.............................. 0.052 x V [dagger] + 2.20.
Combination A........................ 0.086 x V [dagger] + 2.66.
Combination B........................ 0.111 x V [dagger] + 2.04.
------------------------------------------------------------------------
[dagger] ``V'' is the representative value of refrigerated volume
(ft\3\) of the BVM model, as calculated pursuant to 10 CFR
429.52(a)(3).
* * * * *
Note: The following letter will not appear in the Code of
Federal Regulations.
U.S. DEPARTMENT OF JUSTICE
Antitrust Division
William J. Baer
Assistant Attorney General
Main Justice Building
950 Pennsylvania Avenue NW.,
Washington, DC 20530-0001
(202) 514-2401 I (202) 616-2645 (Fax)
October 19, 2015
Anne Harkavy
Deputy General Counsel for Litigation,
Regulation and Enforcement
1000 Independence Ave. SW.,
U.S. Department of Energy
Washington, DC 20585
Re: Energy Conservation Standards for Refrigerated Beverage Vending
Machines; Doc. No. EERE-2013-BT-STD-0022
Dear Deputy General Counsel Harkavy:
I am responding to your August 20, 2015, letter seeking the views
of the Attorney General about the potential impact on competition of
proposed energy conservation standards for refrigerated beverage
vending machines. Your request was submitted under Section
325(o)(2)(B)(i)(V) of the Energy Policy and Conservation Act, as
amended (ECPA), 42 U.S.C. 6295(o)(2)(B)(i)(V), which requires the
Attorney General to make a determination of the impact of any lessening
of competition that is likely to result from the imposition of proposed
energy conservation standards. The Attorney General's responsibility
for responding to requests from other departments about the effect of a
program on competition has been delegated to the Assistant Attorney
General for the Antitrust Division in 28 CFR Sec. 0.40(g).
In conducting its analysis, the Antitrust Division examines whether
a proposed standard may lessen competition, for example, by
substantially limiting consumer choice or increasing industry
concentration. A lessening of competition could result in higher prices
to manufacturers and consumers.
We have reviewed the proposed standards contained in the Notice of
Proposed Rulemaking (80 Fed. Reg. 50462, Aug. 19, 2015) (NOPR) and the
related Technical Support Documents. We have also reviewed
supplementary information submitted to the Attorney General by the
Department of Energy, as well as materials presented at the public
meeting held on the proposed standards on September 29, 2015. Based on
this review, our conclusion is that the proposed energy conservation
standards for refrigerated beverage vending machines are unlikely to
have a significant adverse impact on competition.
Sincerely,
William J. Baer
[FR Doc. 2015-33074 Filed 1-7-16; 8:45 am]
BILLING CODE 6450-01-P