[Federal Register Volume 72, Number 143 (Thursday, July 26, 2007)]
[Proposed Rules]
[Pages 41162-41210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-3640]
[[Page 41161]]
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Part IV
Department of Energy
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Office of Energy Efficiency and Renewable Energy
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10 CFR Part 431
Energy Conservation Program for Commercial and Industrial Equipment;
Proposed Rule
Federal Register / Vol. 72, No. 143 / Thursday, July 26, 2007 /
Proposed Rules
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 431
[Docket No. EE-2006-STD-0126]
RIN 1904-AB59
Energy Conservation Program for Commercial and Industrial
Equipment: Energy Conservation Standards for Commercial Ice-Cream
Freezers; for Self-Contained Commercial Refrigerators, Commercial
Freezers, and Commercial Refrigerator-Freezers without Doors; and for
Remote Condensing Commercial Refrigerators, Commercial Freezers, and
Commercial Refrigerator-Freezers
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Advance notice of proposed rulemaking and notice of public
meeting.
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SUMMARY: The Energy Policy and Conservation Act (EPCA) authorizes the
Department of Energy (DOE) to establish energy conservation standards
for various consumer products and commercial and industrial equipment,
including commercial ice-cream freezers; self-contained commercial
refrigerators, commercial freezers, and commercial refrigerator-
freezers without doors; and remote condensing commercial refrigerators,
commercial freezers, and commercial refrigerator-freezers, if DOE
determines that energy conservation standards would be technologically
feasible and economically justified, and would result in significant
energy savings. DOE publishes this Advance Notice of Proposed
Rulemaking (ANOPR) to consider establishing energy conservation
standards for the categories of commercial refrigeration equipment
mentioned above, and to announce a public meeting to receive comments
on a variety of issues.
DATES: DOE will hold a public meeting on August 23, 2007, from 9 a.m.
to 5 p.m. in Washington, DC. DOE must receive requests to speak at the
public meeting no later than 4 p.m., August 3, 2007. DOE must receive a
signed original and an electronic copy of statements to be given at the
public meeting no later than 4 p.m., August 9, 2007. DOE will accept
comments, data, and information regarding this ANOPR no later than
October 9, 2007. See section IV, ``Public Participation,'' of this
ANOPR for details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW.,
Washington, DC. Please note that foreign nationals visiting DOE
Headquarters are subject to advance security screening procedures,
requiring a 30-day advance notice. If you are a foreign national and
wish to participate in the public meeting, please inform DOE of this
fact as soon as possible by contacting Ms. Brenda Edwards-Jones at
(202) 586-2945 so that the necessary procedures can be completed.
You may submit comments identified by docket number EE-2006-STD-
0126 and/or Regulatory Information Number (RIN) 1904-AB59 using any of
the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: [email protected].
Include EE-2006-STD-0126 and/or RIN 1904-AB59 in the subject line of
your message.
Postal Mail: Ms. Brenda Edwards-Jones, U.S. Department of
Energy, Building Technologies Program, Mailstop EE-2J, 1000
Independence Avenue, SW., Washington, DC 20585-0121. Telephone: (202)
586-2945. Please submit one signed paper original.
Hand Delivery/Courier: Ms. Brenda Edwards-Jones, U.S.
Department of Energy, Building Technologies Program, Room 1J-018, 1000
Independence Avenue, SW., Washington, DC 20585-0121. Please submit one
signed original paper copy.
For detailed instructions on submitting comments and additional
information on the rulemaking process, see section IV, ``Public
Participation,'' of this document.
Docket: For access to the docket to read background documents or
comments received, go to the U.S. Department of Energy, Forrestal
Building, Room 1J-018 (Resource Room of the Building Technologies
Program), 1000 Independence Avenue, SW., Washington, DC, (202) 586-
2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal
holidays. Please call Ms. Brenda Edwards-Jones at the above telephone
number for additional information regarding visiting the Resource Room.
Please note: DOE's Freedom of Information Reading Room (Room 1E-190 at
the Forrestal Building) no longer houses rulemaking materials.
FOR FURTHER INFORMATION CONTACT: Mr. Charles Llenza, U.S. Department of
Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue,
SW., Washington, DC 20585-0121, (202) 586-2192. E-mail:
[email protected], or Ms. Francine Pinto, Esq., U.S. Department
of Energy, Office of General Counsel, GC-72, 1000 Independence Avenue,
SW., Washington, DC 20585, (202) 586-9507. E-mail:
[email protected].
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Purpose of the Advance Notice of Proposed Rulemaking
B. Summary of the Analysis
1. Engineering Analysis
2. Markups To Determine Equipment Price
3. Energy Use Characterization
4. Life-Cycle Cost and Payback Period Analyses
5. National Impact Analysis
C. Authority
D. Background
1. History of Standards Rulemaking for Commercial Refrigeration
Equipment
2. Rulemaking Process
3. Miscellaneous Rulemaking Issues
a. Federal Preemption
b. State Exemptions from Federal Preemption
c. Equipment Class Prioritization
4. Test Procedure
II. Commercial Refrigeration Equipment Analyses
A. Market and Technology Assessment
1. Definitions of Commercial Refrigeration Equipment Categories
a. Coverage of Equipment Excluded From American National
Standards Institute/Air-Conditioning and Refrigeration Institute
Standard 1200-2006
b. Coverage of Equipment Not Designed for Retail Use
c. Remote Condensing Commercial Refrigerators, Commercial
Freezers, and Commercial Refrigerator-Freezers
d. Secondary Coolant Applications
e. Self-Contained Commercial Refrigerators, Commercial Freezers,
and Commercial Refrigerator-Freezers Without Doors
f. Commercial Ice-Cream Freezers
2. Equipment Classes
3. Normalization Metric
4. Extension of Standards
5. Market Assessment
6. Technology Assessment
B. Screening Analysis
C. Engineering Analysis
1. Approach
2. Equipment Classes Analyzed
3. Analytical Models
a. Cost Model
b. Energy Consumption Model
4. Baseline Models
5. Cost-Efficiency Results
D. Markups To Determine Equipment Price
E. Energy Use Characterization
F. Rebuttable Presumption Payback Periods
G. Life-Cycle Cost and Payback Period Analyses
1. Approach
2. Life-Cycle Cost Analysis Inputs
3. Baseline Manufacturer Selling Price
4. Increase in Selling Price
5. Markups
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6. Installation Costs
7. Energy Consumption
8. Electricity Prices
9. Electricity Price Trends
10. Repair Costs
11. Maintenance Costs
12. Lifetime
13. Discount Rate
14. Payback Period
15. Life-Cycle Cost and Payback Period Results
H. Shipments Analysis
I. National Impact Analysis
1. Approach
2. Base Case and Standards Case Forecasted Efficiencies
3. National Impact Analysis Inputs
4. National Impact Analysis Results
J. Life-Cycle Cost Sub-Group Analysis
K. Manufacturer Impact Analysis
1. Sources of Information for the Manufacturer Impact Analysis
2. Industry Cash Flow Analysis
3. Manufacturer Sub-Group Analysis
4. Competitive Impacts Assessment
5. Cumulative Regulatory Burden
6. Preliminary Results for the Manufacturer Impact Analysis
L. Utility Impact Analysis
M. Employment Impact Analysis
N. Environmental Assessment
O. Regulatory Impact Analysis
III. Candidate Energy Conservation Standards Levels
IV. Public Participation
A. Attendance at Public Meeting
B. Procedure for Submitting Requests to Speak
C. Conduct of Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
1. Equipment Class Prioritization and Extending Analyses
2. Air-Curtain Angle
3. Door Angle
4. Equipment Classes for Equipment With Doors
5. Equipment Classes
6. Case Lighting Operating Hours
7. Operation and Maintenance Practices
8. Equipment Lifetime
9. Life-Cycle Cost Baseline Level
10. Characterizing the National Impact Analysis Base Case
11. Base Case and Standards Case Forecasts
12. Differential Impact of New Standards on Future Shipments by
Equipment Classes
13. Selection of Candidate Standard Levels for Post-Advance
Notice of Proposed Rulemaking Analysis
14. Approach to Characterizing Energy Conservation Standards
15. Standards for Commercial Refrigerator-Freezers
V. Regulatory Review and Procedural Requirements: Executive Order
12866
VI. Approval of the Office of the Secretary
I. Introduction
A. Purpose of the Advance Notice of Proposed Rulemaking
The purpose of this Advance Notice of Proposed Rulemaking (ANOPR)
is to provide interested persons with an opportunity to comment on:
1. The equipment classes that the Department of Energy (DOE) is
planning to analyze in this rulemaking;
2. The analytical framework, models, and tools (e.g., life-cycle
cost (LCC) and national energy savings (NES) spreadsheets) that DOE has
been using to perform analyses of the impacts of energy conservation
standards for commercial ice-cream freezers; self-contained commercial
refrigerators, commercial freezers, and commercial refrigerator-
freezers without doors; and remote condensing commercial refrigerators,
commercial freezers, and commercial refrigerator-freezers; \1\
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\1\ These types of equipment are referred to collectively
hereafter as ``commercial refrigeration equipment.''
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3. The results of the preliminary engineering analyses, the markups
analysis to determine equipment price, the energy use characterization,
the LCC and payback period (PBP) analyses, and the NES and national
impact analyses as presented in the ANOPR Technical Support Document
(TSD): Energy Efficiency Standards for Commercial and Industrial
Equipment: Commercial Ice-Cream Freezers; Self-Contained Commercial
Refrigerators, Freezers, and Refrigerator-Freezers without Doors; and
Remote Condensing Commercial Refrigerators, Freezers, and Refrigerator-
Freezers, and summarized in this ANOPR; and
4. The candidate energy conservation standard levels that DOE has
developed from these analyses.
B. Summary of the Analysis
The Energy Policy and Conservation Act, as amended, (EPCA)
authorizes DOE to establish minimum energy conservation standards for
various consumer products and commercial and industrial equipment,
including commercial refrigeration equipment, which are the subject of
this ANOPR. (42 U.S.C. 6291 et seq.) DOE conducted in-depth technical
analyses for this ANOPR in the following areas: engineering, markups to
determine equipment price, energy use characterization, LCC and PBP,
and NES and net present value (NPV). The ANOPR discusses the
methodologies and assumptions for each of these analyses. Table I.1
identifies the sections in this document that contain the results of
each of the analyses, and summarizes the methodologies, key inputs and
assumptions for the analyses. DOE consulted with interested parties and
stakeholders in developing these analyses, and invites further input
from interested parties and stakeholders on these topics. Obtaining
that input is a primary purpose of this ANOPR. Thus, the results of the
preliminary analyses presented in this ANOPR are subject to revision
following review and input from stakeholders and other interested
parties. The final rule will contain the results of the final analyses.
Table I.1.--In-Depth Technical Analyses Conducted for the Advance Notice of Proposed Rulemaking
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TSD section for
Analysis area Methodology Key inputs Key assumptions ANOPR section for results results
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Engineering (TSD Chapter 5)...... Efficiency level Component cost data Component Section II.C.5................ Chapter 5, section
approach and performance performance 5.10, and appendix
supplemented with values. improvements are B.
design option estimated using
analysis. ANSI/ARI Standard
1200-2006.
Markups to Determine Equipment Assessment of Distribution Markups for baseline Section II.D.................. Chapter 6, section
Price (TSD Chapter 6). company financial channels; market and more efficient 6.7.
reports to develop shares across the equipment are
markups to different channels; different.
transform State sales taxes;
manufacturer prices and shipments to
into customer different States.
prices.
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Energy Use Characterization (TSD Energy use estimates Component energy use Case lighting Section II.E.................. Chapter 7, section
Chapter 7). from the and refrigerant operates for 24 7.4.4, and
engineering load (from hours a day; and appendix D.
analysis, validated engineering supermarket is used
using whole- analysis); and as building
building annual condenser rack prototype.
simulation for performance data.
selected climates.
LCC and Payback Period (TSD Analysis of a Manufacturer selling Baseline efficiency Section II.G.15............... Chapter 8, section
Chapter 8). representative prices; markups level is Level 1; 8.4, and appendix
sample of (including sales average electricity G.
commercial taxes); prices are by
customers by installation price; customer-type and
building-type and energy consumption; State; Annual
location. electricity prices Energy Outlook
and future trends; (AEO) 2006 is used
maintenance costs; as reference case
repair costs; for future trends;
equipment lifetime; equipment lifetime
and discount rate. is 10 years; and
discount rate is
estimated by
weighted average
cost of capital by
customer type.
Shipments (TSD Chapter 9)........ Projection of linear Wholesaler markups Market shares by Section II.H.................. Chapter 9, section
footage of total from company equipment class are 9.4.
sales by equipment balance-sheet data constant;
class for new and and mechanical saturation by
replacement markets. markups from U.S. building type is
Census Bureau data; constant; and
current shipments shipments do not
data by equipment change in response
class; average to standards.
equipment lifetime;
construction
forecasts for food
sales buildings;
and shipments by
equipment size.
National Impact (TSD Chapter 10). Forecasts of Shipments; effective Annual shipments are Section II.I.4................ Chapter 10, section
commercial date of standard; from shipments 10.4, and appendix
refrigeration base case model; annual I.
equipment costs, efficiencies; weighted-average
annual energy shipment-weighted energy efficiency
consumption and market shares; and installed cost
operating costs to annual energy are a function of
the year 2042. consumption, total energy efficiency
installed cost and level; annual
repair & weighted-average
maintenance costs, repair and
all on a per linear maintenance costs
foot basis; are constant with
escalation of energy consumption
electricity prices; level; AEO2006 is
electricity site-to- used for
source conversion; electricity price
discount rate; and escalation;
present year. National Energy
Modeling System
(NEMS) is used for
site-to-source
conversion;
discount rates are
3 percent and 7
percent real; and
future costs are
discounted to
present year: 2007.
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1. Engineering Analysis
The engineering analysis establishes the relationship between the
cost and efficiency of commercial refrigeration equipment. This
relationship serves as the basis for cost and benefit calculations for
individual commercial consumers, manufacturers, and the Nation. The
engineering analysis identifies representative baseline equipment,
which is the starting point for analyzing technologies that provide
energy efficiency improvements. Baseline equipment here refers to a
model or models having features and technologies typically found in
equipment currently offered for sale. The baseline model in each
equipment class represents the characteristics of equipment in that
class. After identifying baseline models, DOE estimated manufacturer
selling prices (MSPs) through an analysis of
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manufacturer costs and manufacturer markups. Manufacturer markups are
the multipliers used to determine the MSPs based on manufacturing cost.
The engineering analysis uses 4 industry-supplied cost-efficiency
curves, which are based on an efficiency-level approach, and 15 cost-
efficiency curves derived from DOE analysis, which are based on a
design-options approach.2 3 DOE also discusses in the
engineering analysis the equipment classes analyzed, the methodology
used to extend the analysis to equipment classes that have low volumes
of shipments, an analysis of sensitivity to material prices, and the
use of alternative refrigerants.
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\2\ An efficiency-level approach establishes the relationship
between manufacturer cost and increased efficiency at predetermined
efficiency levels above the baseline. Under this approach,
manufacturers typically provide incremental manufacturer cost data
for incremental increases in efficiency.
\3\ A design-options approach uses individual or combinations of
design options to identify increases in efficiency. Under this
approach, estimates are based on manufacturer or component supplier
data, or through the use of engineering computer simulation models.
Individual design options, or combinations of design options, are
added to the baseline model in ascending order of cost-
effectiveness.
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2. Markups To Determine Equipment Price
DOE determines customer prices for commercial refrigeration
equipment from MSP and equipment price markups using industry balance
sheet data and U.S. Census Bureau data. To determine price markups, DOE
identifies distribution channels for equipment sales and determines the
existence and amounts of markups within each distribution channel. For
each distribution channel, DOE distinguishes between ``baseline
markups'' applied to the MSP for baseline equipment and ``incremental
markups'' applied to the incremental increase in MSP for higher
efficiency equipment. Overall baseline and overall incremental markups
are calculated separately based on the product of all baseline markups
at each step within a distribution channel or the product of all
incremental markups at each step within a distribution channel,
respectively. The combination of the overall baseline markup applied to
the baseline MSP and the incremental markups applied to the incremental
increase in MSP for higher efficiency equipment, including sales tax,
determines the final customer price.
3. Energy Use Characterization
The energy use characterization provides estimates of annual energy
consumption for commercial refrigeration equipment, which are used in
the subsequent LCC and PBP analyses and the national impact analysis
(NIA). DOE developed energy consumption estimates for the 15 classes of
equipment analyzed in the engineering analysis. DOE validated these
estimates with simulation modeling of energy consumption on an annual
basis for selected equipment classes and efficiency levels.
4. Life-Cycle Cost and Payback Period Analyses
The LCC and PBP analyses determine the economic impact of potential
standards on individual commercial consumers. The LCC is the total
consumer expense for a piece of equipment over the life of the
equipment. The LCC analysis compares the LCCs of equipment designed to
meet more stringent energy conservation standards with the LCC of the
equipment likely to be installed in the absence of standards. DOE
determines LCCs by considering: (1) Total installed cost to the
purchaser (which consists of MSP, sales taxes, distribution channel
markups, and installation cost), (2) the operating expenses of the
equipment (energy cost and maintenance and repair cost), (3) equipment
lifetime, and (4) a discount rate that reflects the real consumer cost
of capital and puts the LCC in present value terms. The PBP represents
the number of years needed to recover the increase in purchase price
(including installation cost) of more efficient equipment through
savings in the operating cost of the equipment. The PBP is the increase
in total installed cost due to increased efficiency divided by the
(undiscounted) decrease in annual operating cost from increased
efficiency.
5. National Impact Analysis
The NIA estimates the NES, and the NPV of total national customer
costs and savings, expected to result from new standards at specific
efficiency levels. DOE calculated the NES and NPV for each standard
level for commercial refrigeration equipment as the difference between
a base case forecast (without new standards) and the standards case
forecast (with new standards). For the NES, DOE determined national
annual energy consumption by multiplying the number of commercial
refrigeration equipment units in use (by vintage) by the average unit
energy consumption (also by vintage). DOE then computed cumulative
energy savings, which is the sum of each annual NES determined from the
year 2012 to 2042. The national NPV is the sum over time of the
discounted net savings each year, which consists of the difference
between total operating cost savings and the increase in total
installed costs. Critical inputs to the NIA include shipments
projections, rates at which users retire equipment (based on estimated
equipment lifetimes), and estimates of changes in shipments and
retirement rates in response to changes in equipment costs due to new
standards.
C. Authority
Title III of EPCA, 42 U.S.C. 6311-6317, as amended by the Energy
Policy Act of 2005 (EPACT 2005), Pub. L. 109-58, provides an energy
conservation program for certain commercial and industrial equipment.
Further, EPACT 2005 prescribes new or amended energy conservation
standards and test procedures, and directs DOE to undertake rulemakings
to promulgate such requirements. In particular, section 136(c) of EPACT
2005 directs DOE to prescribe energy conservation standards for
commercial refrigeration equipment. (42 U.S.C. 6313(c)(4)(A))
Before DOE prescribes any such standards, however, it must first
solicit comments on proposed standards. Moreover, DOE must design each
new standard for commercial refrigeration equipment to achieve the
maximum improvement in energy efficiency that is technologically
feasible and economically justified, and will result in significant
conservation of energy. (42 U.S.C. 6295(o)(2)(A), (o)(3)) To determine
whether a standard is economically justified, DOE must, after receiving
comments on the proposed standard, determine whether the benefits of
the standard exceed its burdens to the greatest extent practicable,
considering the following seven factors:
(1) The economic impact of the standard on manufacturers and
consumers of each of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products in the type (or class) compared with any
increase in the price, initial charges, or maintenance expenses for the
covered products which are likely to result from the imposition of the
standard;
(3) The total projected amount of energy savings likely to result
directly from the imposition of the standard;
(4) Any lessening of the utility or the performance of the covered
products likely to result from the imposition of the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to
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result from the imposition of the standard;
(6) The need for national energy conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6295(o)(2)(B)(i)).
Other statutory requirements are set forth in 42 U.S.C. 6295
(o)(1)-(2)(A), (2)(B)(ii)-(iii), and (3)-(4), and 42 U.S.C. 6316(e).
D. Background
1. History of Standards Rulemaking for Commercial Refrigeration
Equipment
Section 136(c) of EPACT 2005 amended section 342 of EPCA, in part,
by adding new subsection 342(c)(4)(A), (42 U.S.C. 6313(c)(4)(A)) which
directs the Secretary to issue, by rule, no later than January 1, 2009,
energy conservation standards for the following equipment, manufactured
on or after January 1, 2012: commercial ice-cream freezers; self-
contained commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers without doors; and remote condensing commercial
refrigerators, commercial freezers, and commercial refrigerator-
freezers. This equipment, which has never before been regulated at the
Federal level, is the subject of this rulemaking.
Section 136(a)(3) of EPACT 2005 amended section 340 of EPCA, in
part by adding the definitions for ``commercial refrigerator, freezer,
and refrigerator-freezer,'' ``holding temperature application,''
``pull-down temperature application,'' ``remote condensing unit,'' and
``self-contained condensing unit.'' \4\
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\4\ ``(9)(A) The term `commercial refrigerator, freezer, and
refrigerator-freezer' means refrigeration equipment that--
(i) Is not a consumer product (as defined in section 321 of EPCA
[42 U.S.C. 6291(1)]);
(ii) Is not designed and marketed exclusively for medical,
scientific, or research purposes;
(iii) Operates at a chilled, frozen, combination chilled and
frozen, or variable temperature;
(iv) Displays or stores merchandise and other perishable
materials horizontally, semivertically, or vertically;
(v) Has transparent or solid doors, sliding or hinged doors, a
combination of hinged, sliding, transparent, or solid doors, or no
doors;
(vi) Is designed for pull-down temperature applications or
holding temperature applications; and
(vii) Is connected to a self-contained condensing unit or to a
remote condensing unit.'' (42 U.S.C. 6311(9)(A)).
``(B) The term `holding temperature application' means a use of
commercial refrigeration equipment other than a pull-down
temperature application, except a blast chiller or freezer.'' (42
U.S.C. 6311(9)(B)).
``(D) The term `pull-down temperature application' means a
commercial refrigerator with doors that, when fully loaded with 12
ounce beverage cans at 90 degrees Fahrenheit (F), can cool those
beverages to an average stable temperature of 38 degrees F in 12
hours or less.'' (42 U.S.C. 6311(9)(D)).
``(E) The term `remote condensing unit' means a factory-made
assembly of refrigerating components designed to compress and
liquefy a specific refrigerant that is remotely located from the
refrigerated equipment and consists of 1 or more refrigerant
compressors, refrigerant condensers, condenser fans and motors, and
factory supplied accessories.'' (42 U.S.C. 6311(9)(E)).
``(F) The term `self-contained condensing unit' means a factory-
made assembly of refrigerating components designed to compress and
liquefy a specific refrigerant that is an integral part of the
refrigerated equipment and consists of 1 or more refrigerant
compressors, refrigerant condensers, condenser fans and motors, and
factory supplied accessories.'' (42 U.S.C. 6311(9)(F)).
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EPCA does not explicitly define the terms ``self-contained
commercial refrigerator, freezer, or refrigerator-freezer'' and
``remote condensing commercial refrigerator, freezer, or refrigerator-
freezer,'' which delineate two of the categories of equipment covered
by this rulemaking. DOE construes these two terms to mean ``commercial
refrigerator, freezer, or refrigerator-freezer that is connected to a
self-contained condensing unit'' and ``commercial refrigerator,
freezer, or refrigerator-freezer that is connected to a remote
condensing unit,'' respectively.
On April 25, 2006, DOE published in the Federal Register a notice
of public meeting and availability of the Rulemaking Framework for
Commercial Refrigeration Equipment Including Ice-Cream Freezers; Self-
Contained Commercial Refrigerators, Freezers, and Refrigerator-Freezers
without doors; and Remote Condensing Commercial Refrigerators,
Freezers, and Refrigerator-Freezers (Framework Document) that describes
the procedural and analytical approaches that DOE anticipates using to
evaluate energy conservation standards for commercial refrigeration
equipment. 71 FR 23876. This document is available at http://www.eere.energy.gov/buildings/appliance_standards/commercial/refrigeration_equipment.html. DOE held a Framework public meeting on
May 16, 2006, to discuss the procedural and analytical approaches for
use in the rulemaking, and to inform and facilitate stakeholders'
involvement in the rulemaking process. The analytical framework
presented at the public meeting described different analyses, such as
LCC and PBP, the proposed methods for conducting them, and the
relationships among the various analyses. The ANOPR TSD describes the
analytical framework in detail.
Statements received after publication of the Framework Document and
at the May 16, 2006, Framework public meeting helped identify issues
involved in this rulemaking and provided information that has
contributed to DOE's proposed resolution of these issues. Many of the
statements are quoted or summarized in this ANOPR. A parenthetical
reference at the end of a quotation or passage provides the location
index in the public record.
2. Rulemaking Process
Table I.2 sets forth a list of the analyses DOE has conducted and
intends to conduct in its evaluation of standards for commercial
refrigeration equipment. Until recently, DOE performed the manufacturer
impact analysis (MIA) in its entirety between the ANOPR and notice of
proposed rulemaking (NOPR) during energy conservation standards
rulemakings. As noted in the table, DOE has performed a preliminary MIA
for this ANOPR. DOE believes this change will improve the rulemaking
process.
Table I.2.--Commercial Refrigeration Equipment Analysis
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ANOPR NOPR Final Rule *
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Market and technology Revised Revised
assessment. ANOPR analyses. NOPR analyses.
Screening analysis..... Life-
cycle cost sub-
group analysis.
Engineering analysis...
Manufacturer
impact analysis.
Energy use Utility
characterization. impact analysis.
Markups to determine
equipment price. Employment impact
analysis.
Life-cycle cost and
payback period analyses. Environmental
assessment.
Shipments analysis.....
Regulatory impact
analysis.
National impact
analysis.
[[Page 41167]]
Preliminary
manufacturer impact analysis.
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* During the Final Rule phase, DOE considers the comments submitted by
the U.S. Department of Justice in the NOPR phase concerning the impact
of any lessening of competition that is likely to result from the
imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(v)).
The analyses in Table I.2 include the development of economic
models and analytical tools. If timely new data, models, or tools that
enhance the development of standards become available, DOE will
incorporate them into this rulemaking.
3. Miscellaneous Rulemaking Issues
a. Federal Preemption
During the Framework public meeting, the Air-Conditioning and
Refrigeration Institute (ARI) stated that it interpreted EPACT 2005 as
authorizing DOE to conduct a rulemaking for commercial refrigeration
equipment, and to exempt certain categories from the standards DOE
adopts. (Public Meeting Transcript, No. 3.4 at p. 80) \5\ The Appliance
Standards Awareness Project (ASAP) responded that setting a ``no-
standard'' standard that preempts the States is problematic. (Public
Meeting Transcript, No. 3.4 at pp. 81-82) However, ASAP agrees with
ARI's basic view that DOE should address opportunities for energy
savings, and should not necessarily have standards for every unit in
the marketplace, because the objective is to save energy in a cost-
effective way. Id. The American Council for an Energy-Efficient Economy
(ACEEE), in apparent agreement with ARI and ASAP, expressed doubt that
States would seek to set energy conservation standards for equipment
that are truly niche equipment. (Public Meeting Transcript, No. 3.4 at
p. 82) The Alliance to Save Energy, ACEEE, ASAP, Natural Resources
Defense Council (NRDC), Northeast Energy Efficiency Partnerships
(NEEP), and Northwest Power and Conservation Council (hereafter ``Joint
Comment'') strongly opposed any suggestion that States be preempted
from setting standards for equipment for which DOE does not itself set
standards. (Joint Comment, No. 9 at p. 3) \6\
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\5\ A notation in the form ``Public Meeting Transcript, No. 3.4
at p. 80'' identifies an oral comment that DOE received during the
May 16, 2006, Framework public meeting and which was recorded in the
public meeting transcript in the docket for this rulemaking (Docket
No. EE-2006-STD-0126), maintained in the Resource Room of the
Building Technologies Program This particular notation refers to a
comment (1) made during the public meeting, (2) recorded in document
number 3.4, which is the public meeting transcript that is filed in
the docket of this rulemaking, and (3) which appears on page 80 of
document number 3.4.
\6\ A notation in the form ``Joint Comment'', No. 9 at p. 3''
identifies a written comment that DOE has received and has included
in the docket of this rulemaking. This particular notation refers to
(1) A joint comment, (2) in document number 9 in the docket of this
rulemaking, and (3) appearing on page 3 of document number 9.
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DOE is evaluating all commercial refrigeration equipment--i.e., all
commercial ice-cream freezers, self-contained commercial refrigerators,
commercial freezers, and commercial refrigerator-freezers without
doors, and remote condensing commercial refrigerators, commercial
freezers, and commercial refrigerator-freezers--for the development of
standards. DOE will evaluate all relevant equipment classes during this
evaluation. This equipment has a large number of classes, however, and
DOE intends to prioritize the technical analyses based on shipment data
and only to conduct a full technical analysis on classes with the
highest numbers of shipments for this ANOPR. In accordance with 42
U.S.C. 6316(e)(1), DOE intends to adopt standards for all equipment for
which standards would satisfy the criteria in 42 U.S.C. 6295(o). DOE is
not aware of any basis for it to exclude from this rule any commercial
refrigeration equipment for which a standard would meet the statutory
criteria above. Furthermore, the extent to which States will be barred
from regulating the efficiency of any commercial refrigeration
equipment for which the final rule in this rulemaking omits standards,
will be governed by the relevant provisions of EPCA as to preemption,
42 U.S.C. 6297 and 6316(e)(3)-(4).
b. State Exemptions From Federal Preemption
Southern Company Services (Southern Company) and Edison Electric
Institute (EEI) believe that the standards for commercial refrigeration
equipment should be a ``50-state'' rule without exemptions from Federal
preemption. They claim that exemptions would complicate the regulation
of this equipment and increase costs to both manufacturers and
consumers. (Southern Company, No. 6 at p. 1 and EEI, No. 8 at p. 1)
DOE fully intends that any standards it adopts in this rulemaking
will apply uniformly in all of the States. In addition, any such
Federal standards would, on the date of publication of the final rule,
preempt any State standards that apply to the equipment covered by the
Federal standards. In the event any State or local standard is issued
before the date of publication of the final rule by the Secretary, that
State or local standard shall not be preempted until the Federal
standards take effect. (42 U.S.C. 6297 and 6316(e)(3)(A)) However, EPCA
allows the States to petition DOE for waivers of preemption with regard
to specific State standards, and DOE to grant such waiver applications
if the statutory criteria are met. (42 U.S.C. 6297(d)) DOE does not
have the authority to preclude States from seeking waivers or to decree
in advance that it will not grant them, either generally or for any
particular type of equipment.
c. Equipment Class Prioritization
ARI stated that it strongly recommends that DOE focus its
rulemaking efforts on the commercial refrigeration equipment classes
with the highest energy savings potential, and not spend its scarce
resources establishing standards for equipment with limited shipment
volume and/or energy consumption. (ARI, No. 7 at p. 1)
Because of the large number of equipment classes included in this
rulemaking, for the ANOPR phase of the rulemaking DOE has focused on
conducting a thorough examination of the equipment classes with the
greatest energy savings potential. To determine which equipment classes
have the greatest energy savings potential, DOE relied on industry-
supplied shipment data and addressed equipment classes with the highest
shipment values first. To address low-shipment equipment classes, DOE
could, for the NOPR phase of the rulemaking, either conduct a full
technical analysis of these equipment classes, or develop correlations
to extend analyses or standard levels. DOE explored the approach of
developing correlations by conducting a ``focused
[[Page 41168]]
matched-pair analysis.'' \7\ This methodology is described in further
detail in chapter 5 of the TSD. DOE specifically seeks feedback on its
approach to equipment-class prioritization and the approach to extend
the technical analysis from high-shipment equipment classes to low-
shipment equipment classes. This is identified as Issue 1 under
``Issues on Which DOE Seeks Comment'' in section IV.E of this ANOPR.
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\7\ The ``focused matched-pair analysis'' establishes a
correlation between rating temperature levels and energy consumption
by quantifying the differences in energy consumption for matched
pairs of equipment classes that are very similar in features and
dimensions, but have different operating temperatures.
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4. Test Procedure
A test procedure outlines the method by which manufacturers will
determine the efficiency of their commercial refrigeration equipment,
and thereby assess compliance with an energy conservation standard.
Section 136(f)(1)(B) of EPACT 2005 amended section 343 of EPCA (42
U.S.C. 6314) by adding new subsections 343(a)(6)(A)-(D) (42 U.S.C.
6314(a)(6)(A)-(D)), which direct the Secretary to develop test
procedures for commercial refrigeration equipment. On December 8, 2006,
DOE published a final rule (the December 2006 final rule) in which it
adopted American National Standards Institute (ANSI)/ARI Standard 1200-
2006, Performance Rating of Commercial Refrigerated Display
Merchandisers and Storage Cabinets, with one modification, as the DOE
test procedure for this equipment. 71 FR 71340, 71369-70.\8\ ANSI/ARI
Standard 1200-2006 contains rating temperature specifications of 38
[deg]F (2 [deg]F) for commercial refrigerators and
refrigerator compartments, 0 [deg]F (2 [deg]F) for
commercial freezers and freezer compartments, and -5 [deg]F (2 [deg]F) for commercial ice-cream freezers, and requires
performance tests to be conducted according to the American Society of
Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)
Standard 72-2005, Method of Testing Commercial Refrigerators and
Freezers, test method. The one modification DOE made in adopting ANSI/
ARI Standard 1200-2006 was to adopt in the final rule -15 [deg]F
(2 [deg]F) as the rating temperature for commercial ice-
cream freezers, instead of -5 [deg]F (2 [deg]F). 71 FR
71370. In addition, DOE adopted ANSI/Association of Home Appliance
Manufacturers (AHAM) Standard HRF-1-2004, Energy, Performance and
Capacity of Household Refrigerators, Refrigerator-Freezers and
Freezers, for determining compartment volumes for this equipment. 71 FR
71369-70.
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\8\ DOE incorporated by reference the ANSI/ARI Standard 1200-
2006 test procedure in section 431.64 of 10 CFR Part 431. 71 FR
71340 (December 8, 2006).
---------------------------------------------------------------------------
As mentioned above, on April 25, 2006, DOE published a Framework
Document that describes the procedural and analytical approaches to
evaluate energy conservation standards for commercial refrigeration
equipment and presented this analytical framework to stakeholders
during the Framework public meeting held on May 16, 2006. During the
Framework public meeting, the Food Products Association (FPA)
suggested, in lieu of climate-adjusted standards, climate conditions be
part of the test method. FPA stated that DOE should specify the range
of conditions that are expected for efficiency testing, and pointed out
that most grocery stores across the country operate in a 65 [deg]F to
70 [deg]F range. (Public Meeting Transcript, No. 3.4 at pp. 158-159)
ANSI/ARI Standard 1200-2006 requires that testing be in accordance with
ASHRAE Standard 72-2005, which requires ambient conditions during
testing of 75.2 [deg]F (1.8 [deg]F) for dry bulb
temperature and 64.4 [deg]F (1.8 [deg]F) for wet bulb
temperature. Although this is not the range recommended by FPA, it is
close to FPA's recommended range, these temperatures have been widely
used for testing commercial refrigeration equipment, and they provide
ambient test temperatures that are typical of the conditions in which
this equipment generally operates. Therefore, DOE's test procedure for
commercial refrigeration equipment does include ambient rating
conditions that represent normal operation conditions for commercial
refrigeration equipment.
During the Framework public meeting and Framework comment period,
DOE received comments on the inclusion of ``application temperatures''
for commercial refrigeration equipment, which are rating temperatures
other than the standard rating temperatures prescribed by DOE's test
procedures (38 [deg]F for commercial refrigerators, 0 [deg]F for
commercial freezers, and -15 [deg]F for commercial ice-cream freezers).
Hill Phoenix stated that manufacturers of commercial refrigeration
equipment occasionally produce a piece of equipment (usually at the
customer's request) that is designed to operate at a temperature
significantly different from one of the three standard temperatures.
(Public Meeting Transcript, No. 3.4 at pp. 74-76) ARI commented that
DOE should analyze the shipment data and determine whether it would be
worth regulating equipment that operates at application temperatures if
shipments for these units are very low. (Public Meeting Transcript, No.
3.4 at p. 79) ARI also asserted that allowing for an application
temperature category is essential because operating temperature plays a
key role in equipment energy consumption. (ARI, No. 7 at p. 4) The
Joint Comment pointed out that the application temperature category
should be reserved for equipment that cannot operate at 0 [deg]F or at
38 [deg]F, that DOE should not regulate equipment that has a small
shipments volume, and that appropriate Federal standards and rating
temperatures should be developed if shipments are large. (Joint
Comment, No. 9 at p. 3)
DOE analyzed the shipments data provided by ARI during the
Framework comment period. Excluding equipment for which EPACT 2005
amended EPCA to set standards (self-contained commercial refrigerators
and commercial freezers with doors), there were 170,949 units of remote
condensing commercial refrigerators and commercial freezers, self-
contained commercial refrigerators and commercial freezers without
doors, and commercial ice-cream freezers shipped in 2005. Shipments of
commercial refrigerator-freezers were not reported, but are considered
to be very small. Of the total shipments (both self-contained and
remote condensing), only 1.7 percent were equipment that operate at 45
[deg]F, 20 [deg]F, 10 [deg]F, or -30 [deg]F (application temperatures),
and 98.3 percent were equipment that operate at 38 [deg]F, 0 [deg]F, or
-15 [deg]F. By far, the application temperature with the largest number
of units shipped is the 45 [deg]F category (typically ``wine
chillers''), and these were predominately remote condensing equipment.
There were 1,834 units of remote condensing wine chillers shipped in
2005. Comparatively, in 2005 there were 85,001 units of remote
condensing refrigerators that operate at 38 [deg]F.
As stated above, DOE's test procedure for commercial refrigeration
equipment requires that all equipment, including equipment designed to
operate at application temperatures, be tested at one of the three
rating temperatures: 38 [deg]F for refrigerators, 0 [deg]F for
freezers, and -15 [deg]F for ice-cream freezers. Given the relatively
low shipment volumes of equipment that operates at application
temperatures, as well as DOE's understanding that some of this
equipment already can operate and be tested at one of the standard
rating temperatures and that manufacturers might be able to redesign
other equipment in relatively minor ways to have these capabilities,
DOE believes this requirement will not place an
[[Page 41169]]
unreasonable burden on manufacturers. In addition, if necessary,
manufacturers could seek waivers from the DOE test procedure, pursuant
to 10 CFR 431.401. For these reasons, DOE does not intend to develop
separate standards for equipment that operates at application
temperatures.
II. Commercial Refrigeration Equipment Analyses
This section addresses the analyses DOE has performed and intends
to perform for this rulemaking. A separate subsection addresses each
analysis, and contains a general introduction that describes the
analysis and a discussion of comments received from interested parties.
A. Market and Technology Assessment
When DOE begins a standards rulemaking, it develops information
that provides an overall picture of the market for the equipment
concerned, including the nature of the equipment, the industry
structure, and the market characteristics for the equipment. This
activity consists of both quantitative and qualitative efforts based
primarily on publicly available information. The subjects addressed in
the market and technology assessment for this rulemaking include
definitions, equipment classes, manufacturers and market shares,
shipments of covered equipment, regulatory and non-regulatory programs,
and technologies that could be used to improve the efficiency of
covered commercial refrigeration equipment. This information serves as
resource material for use throughout the rulemaking.
1. Definitions of Commercial Refrigeration Equipment Categories
Section 136(c) of EPACT 2005 amended section 342 of EPCA to include
new subsection (c)(4)(A), which mandates that DOE issue standards for
three categories of commercial refrigerators, commercial freezers, and
commercial refrigerator-freezers.\9\ Accordingly, pursuant to this
provision, the three categories of equipment addressed by this
rulemaking are: remote condensing commercial refrigerators, commercial
freezers and commercial refrigerator-freezers; self-contained
commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers without doors; and commercial ice-cream freezers.
These categories of equipment are referred to collectively as
``commercial refrigeration equipment.''
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\9\ ``Commercial refrigerators, commercial freezers, and
commercial refrigerator-freezers'' is a type of covered commercial
equipment. For purposes of discussion only in this proceeding, DOE
uses the term ``categories'' to designate groupings of ``commercial
refrigeration equipment.'' The categories of equipment are: self-
contained commercial refrigerators, commercial freezers, and
commercial refrigerator-freezers without doors; remote condensing
commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers; and commercial ice-cream freezers. DOE will
analyze specific equipment classes that fall within these general
categories and set appropriate standards.
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a. Coverage of Equipment Excluded From American National Standards
Institute/Air-Conditioning and Refrigeration Institute Standard 1200-
2006
During the Framework comment period, ARI stated that the ANSI/ARI
Standard 1200-2006 test procedure specifically excludes ice-cream
``dipping cabinets,'' but recommended that DOE include this equipment
under this rulemaking as commercial freezers. (ARI, No. 7 at p. 3) ARI
also appeared to suggest, however, that this and certain other
equipment excluded from ANSI/ARI Standard 1200-2006, such as floral
merchandisers, are excluded from coverage under EPCA because they are
not considered commercial display merchandisers or storage cabinets.
(ARI, No. 7 at p. 7)
EPCA directs DOE to set standards for commercial refrigeration
equipment (i.e., the three categories of equipment identified above).
Any equipment that meets the EPCA definition of a ``commercial
refrigerator, freezer, or refrigerator-freezer'' (see section I.D and
the preceding section) and falls under one of these three categories
will be covered by this rulemaking. In the December 2006 final rule,
DOE incorporated by reference certain sections of ANSI/ARI Standard
1200-2006 as the test procedure for commercial refrigeration equipment,
but did not reference section 2.2, which provides exclusions for
certain equipment such as ice-cream dipping cabinets and floral display
merchandisers. The equipment excluded in this section of ANSI/ARI
Standard 1200-2006 will only be excluded from this rulemaking if they
do not meet the EPACT 2005 definition of a ``commercial refrigerator,
freezer, or refrigerator-freezer.''
b. Coverage of Equipment Not Designed for Retail Use
During the Framework comment period, several stakeholders commented
on whether this rulemaking applies to equipment not designated for
retail use. FPA commented that DOE needs to distinguish between
``industrial'' and ``commercial.'' FPA believes that the EPCA
requirements for commercial refrigeration equipment were intended for
``point-of-sale'' equipment that is found in convenience stores and
supermarkets. FPA continued that, in the food industry,
``refrigeration'' includes the industrial equipment found in
manufacturing and processing facilities, not just the equipment in
retail stores. (Public Meeting Transcript, No. 3.4 at pp. 23-24)
Southern Company stated that the language ``storing or displaying or
dispensing'' in DOE's definition of ``ice-cream freezer'' is ambiguous
because it could include some industrial equipment the size of a
tractor-trailer compartment. Southern Company believes there needs to
be language to clarify that this rulemaking covers equipment used at
the retail level. (Public Meeting Transcript, No. 3.4 at pp. 35-36)
Southern Company and EEI both stated that a literal reading of DOE's
proposed equipment classes appears to include industrial refrigeration
equipment, which is not used for the display of merchandise for sale to
the consumer. Southern Company and EEI believe that the inclusion of
this equipment would unnecessarily complicate the analysis and the
development of test procedures. They also stated that this equipment is
not covered by EPCA and only commercial equipment is covered. They
suggest that DOE define which equipment is for commercial purposes and
which is for industrial purposes. Southern Company and EEI suggest that
DOE define commercial refrigeration equipment as ``refrigeration
equipment which would normally be used in a commercial business which
sells products to ultimate consumers.'' Further, the definition
``should not include equipment which is normally used only in
refrigerated warehouses or manufacturing facilities.'' (Southern
Company, No. 6 at pp. 1-2; EEI, No. 8 at p. 1)
DOE understands that industrial refrigeration equipment consists of
equipment used to process, manufacture, transport, or store chilled or
frozen food and other perishable items. Industrial refrigeration
equipment used to process or manufacture chilled or frozen food
primarily includes equipment used to flash-freeze or chill food on an
assembly line or in a batch manufacturing process. Industrial
refrigeration equipment used to transport chilled or frozen food or
other perishable items primarily includes refrigerated rail cars and
tractor-trailers. In industrial buildings, temporary storage of chilled
or frozen food is also necessary, as the manufactured product is often
held at
[[Page 41170]]
the manufacturing facility for processing or while awaiting transport.
Industrial refrigeration equipment used to store chilled or frozen food
is accomplished with refrigerated warehouses and/or refrigerated walk-
in rooms (``walk-ins'').
The term ``commercial refrigerator, freezer, and refrigerator-
freezer'' is defined as refrigeration equipment that, in part,
``displays or stores merchandise and other perishable materials'' (see
section I.D of this ANOPR). DOE interprets this language to mean that
equipment used in the processing, manufacture or transport of chilled
or frozen food is not considered commercial refrigeration equipment
because it is not used to ``display or store.'' However, equipment that
is used to store chilled or frozen food is considered covered
equipment. This language does not make mention of the intended
destination of the equipment, so DOE believes that walk-ins are covered
under the definition because they store chilled or frozen food,
regardless of whether the application is commercial or industrial.
However, it is unclear whether this rulemaking would be the appropriate
place to address walk-ins. The test procedures for self-contained
commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers with doors specified in EPCA section
343(a)(6)(A)(ii) specifically exclude walk-ins and therefore DOE
believes that the standards in EPCA sections 342(c)(2) and (3) do not
apply to walk-ins. Since the test procedures DOE adopted for equipment
covered under this rulemaking also specifically exclude walk-ins, DOE
believes that the standards being developed in this rulemaking under
EPCA section 342(c)(4)(A) also do not apply to walk-ins.\10\ DOE could,
however, address walk-ins under EPCA section 342(c)(4)(B), which states
that DOE may issue standard levels, by rule, for other categories of
commercial refrigerators, commercial freezers and commercial
refrigerator-freezers.
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\10\ Test procedures are found at 10 CFR 431.64.
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c. Remote Condensing Commercial Refrigerators, Commercial Freezers, and
Commercial Refrigerator-Freezers
Under EPCA, this equipment includes commercial refrigerators,
commercial freezers, and commercial refrigerator-freezers that have a
remote condensing unit, except for any remote condensing equipment that
would meet DOE's definition of ``ice-cream freezer'' as set forth at 10
CFR 431.62, 71 FR 71369.\11\ This equipment is typically used to store
and display merchandise for direct sale to the consumer, and referred
to as ``display cases,'' ``display cabinets,'' or ``merchandisers.''
The remote condensing unit has at least one compressor and a condenser
coil, and most remote condensing units consist of multiple compressors
(a compressor ``rack'') that serve multiple display cases.
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\11\ The EPCA provision that requires this rulemaking identifies
``ice-cream freezers'' separately from ``self-contained commercial
refrigerators, commercial freezers, and commercial refrigerator-
freezers without doors'' and ``remote condensing commercial
refrigerators, commercial freezers, and commercial refrigerator-
freezers.'' (42 U.S.C. 6313(c)(4)(A), added by EPACT 2005, section
136(c)) Since the Act neither specifies nor indicates that ``ice-
cream freezers'' are limited to equipment with a particular type of
condensing unit (i.e., remote or self-contained), equipment that has
a remote condensing unit and also meets DOE's definition of ``ice-
cream freezer'' would be considered an ``ice-cream freezer.''
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EPCA does not specifically define the term ``commercial
refrigerator-freezer,'' nor is DOE aware of an existing, written
definition for such equipment. Therefore, in its Framework Document,
DOE sought feedback on use of the definition of ``electric
refrigerator-freezer'' for consumer products (set forth in 10 CFR
430.2) as a basis for defining the term ``remote condensing commercial
refrigerator-freezer.'' (As discussed below, DOE also sought input on
using this definition as a basis for defining self-contained commercial
refrigerator-freezers.) The consumer product definition in 10 CFR 430.2
states that ``electric refrigerator-freezer means a cabinet which
consists of two or more compartments with at least one of the
compartments designed for the refrigerated storage of food at
temperatures above 32[deg]F. [sic] and with at least one of the
compartments designed for the freezing and storage of food at
temperatures below 8[deg]F. [sic] which may be adjusted by the user to
a temperature of 0[deg]F. [sic] or below. The source of refrigeration
requires single phase, alternating current [(AC)] electric energy input
only.'' During the Framework comment period, three stakeholders
commented on this definition. (ARI, No. 7 at p. 3; Public Meeting
Transcript, No. 3.4 at p. 45; and Public Meeting Transcript, No. 3.4 at
pp. 50-53) ARI and Zero Zone believe the definition is inappropriate
for commercial equipment. ARI proposed that a remote condensing
commercial refrigerator, freezer, or refrigerator-freezer be defined as
``a cabinet cooled by a remote refrigerating system for displaying and/
or storing chilled and/or frozen food to be maintained within
prescribed temperature limits. The cabinet is connected to one or more
power sources ranging from 120 to 240 volts AC.'' (ARI, No. 7 at p. 3)
During the Framework public meeting, ASAP indicated that DOE should
look at the detailed definition given in EPACT 2005 for refrigerator-
freezers. (Public Meeting Transcript, No. 3.4 at p. 53)
Based on the comments, DOE now believes that it need not adopt a
definition of ``remote condensing commercial refrigerator-freezer.''
The comments by Zero Zone indicate the difficulties of adapting the
residential product definition of refrigerator-freezer to the
commercial setting. ARI did not comment on the need for a definition of
commercial refrigerator-freezer discrete from definitions of
refrigerator and freezer, and its suggested definition of ``commercial
refrigerator, commercial freezer, and commercial refrigerator-freezer''
both duplicates and, in some ways, is inconsistent with the EPCA
definition of this term. For example, one inconsistency is that the ARI
definition states that the cabinet is connected to one or more power
sources ranging from 120 to 240 volts AC, whereas the EPCA definition
does not have any requirements for power sources. Further, ASAP did not
address the fact that the definition in EPACT 2005 does not distinguish
refrigerator-freezers from refrigerators and freezers. The comments by
ARI and ASAP, however, indicate that they believe DOE does not need to
adopt a separate definition for refrigerator-freezers.
DOE intends to rely here on the definition of ``commercial
refrigerator, freezer, and refrigerator-freezer'' in EPCA (42 U.S.C.
6311(9)(A), added by EPACT 2005, section 136(a)(3)), and on its
understanding of the well-accepted meaning of ``refrigerator-freezer.''
Thus, DOE construes the EPCA term ``remote condensing commercial
refrigerator-freezer'' (see 42 U.S.C. 6313(c)(4)(A), added by EPACT
2005, section 136(c)) to mean refrigeration equipment that operates at
both chilled and frozen temperatures and that is connected to a remote
condensing unit. This term refers to equipment with two or more
separate compartments, at least one of which is capable of maintaining
food or other perishable items at temperatures above freezing and at
least one of which maintains its contents frozen. By contrast,
refrigerators operate only at temperatures above freezing, and freezers
only at or below freezing temperatures.
In its Framework Document, DOE pointed out that EPCA defines a
``self-contained condensing unit,'' in part, as an assembly of
refrigerating components ``that is an integral part of the refrigerated
equipment * * * '' (42
[[Page 41171]]
U.S.C. 6311(9)(F), added by EPACT 2005, section 136(a)(3)) EPCA also
defines a ``remote condensing unit,'' in part, as an assembly of
refrigerating components ``that is remotely located from the
refrigerated equipment * * *.'' (42 U.S.C. 6311(9)(E), added by EPACT
2005, section 136(a)(3)) DOE also stated in the Framework Document that
this difference in the definitions may mean that, under EPCA, remote
condensing units are not a part of the refrigerated equipment and that
energy conservation standards for remote condensing commercial
refrigerators, commercial freezers, and commercial refrigerator-
freezers would apply only to the refrigerated equipment (i.e., storage
cabinets and display cases), but not to the remote condensing units.
DOE specifically requested stakeholder comments on this topic.
ARI asserted that it was responsible for the language in EPACT 2005
on this subject and the intent was to cover the display case and
storage cabinet only, not the remote condensing unit. (Public Meeting
Transcript, No. 3.4 at pp. 47-48, 49) ACEEE responded by stating that
it may be worth trying to cover the remote condensing unit so that the
whole system is regulated. (Public Meeting Transcript, No. 3.4 at p.
48) Zero Zone pointed out that regulating the remote condensing unit
would prove to be difficult because of the wide range of design
differences in compressors and condensing units, and recommended not
regulating them now. (Public Meeting Transcript, No. 3.4 at p. 48) ARI
stated that it agreed with DOE's interpretation of EPACT 2005 that the
rulemaking should be limited to the refrigerated display merchandisers
and storage cabinets only. Furthermore, ARI asserted that including the
remote condensing unit in this rulemaking would significantly
complicate the analysis and likely delay the completion date, and it
recommended that DOE reassess the situation in the future to determine
whether energy conservation standards should be established for remote
condensing equipment. (ARI, No. 7 at p. 3) Finally, the Joint Comment
stated that DOE should cover remote condensing units under this
rulemaking because it would provide more opportunity for energy savings
and for manufacturers to trade off performance between different parts
of the system. However, if DOE determines that including the entire
system in this rulemaking is impractical, then the balance of the
system should not be included under ``covered'' equipment for now, but
instead, DOE should consider such coverage in a subsequent revision to
the standard. (Joint Comment, No. 9 at p. 5).
Clearly, stakeholders differed on whether a remote condensing unit
is considered part of the equipment to which it is connected, and
whether such units are covered by the EPCA directive that DOE set
standards for remote condensing commercial refrigerators, commercial
freezers, and commercial refrigerator-freezers. (42 U.S.C.
6313(c)(4)(A), added by EPACT 2005, section 136(c)) ARI indicated that
it believes EPCA does not authorize application of standards to remote
condensing units, while ACEEE and the Joint Comment argued that remote
condensing units should be covered but not necessarily in this
rulemaking. However, DOE agrees with the stakeholders who stated that
including remote condensing units in the present rulemaking would
significantly complicate the rulemaking. There would be many
difficulties in establishing standards for the display cases and the
remote condensing units as a system. For example, display cases and
remote condensing units are typically purchased from different
manufacturers and installed at the site. Multiple display cases may be
connected to one or more remote condensing units through an extensive
network of refrigerant piping. Since each system is custom designed for
its location, each individual system will have unique aspects to its
design and operation (e.g., number of display cases, variation in
temperature control, use of heat recovery, etc.). Further, because the
intended configuration of the final system design is not known when the
components are manufactured, it would be difficult, if not impossible,
to set an energy conservation standard for the entire system at the
point of manufacture.
For these reasons, the energy conservation standards DOE intends to
develop in this rulemaking for remote condensing commercial
refrigeration equipment will apply to display cases only, not to the
remote condensing units. DOE will address at a later time whether and
to what extent it has the authority to regulate remote condensing units
and, if so, whether standards that address these units are warranted
and feasible.
d. Secondary Coolant Applications
In its Framework Document, DOE stated that it construed the
language in section 136(a)(3) of EPACT 2005, 42 U.S.C. 6311(9)(A)(vii),
the definition for ``commercial refrigerator, freezer, and
refrigerator-freezer,'' to mean that so-called ``secondary-coolant
applications'' are not covered under this rulemaking. DOE stated that
it believed this interpretation of EPACT 2005 was consistent with ANSI/
ARI Standard 1200-2006, which explicitly excludes secondary-coolant
applications.
During the Framework comment period, several stakeholders commented
on the coverage of equipment that uses secondary coolant systems.\12\
ACEEE stated that DOE should have a broad scope of coverage and should
in general cover as much as possible in the rulemaking. (Public Meeting
Transcript, No. 3.4 at p. 26) ARI stated that it agrees with the
interpretation DOE expressed in the Framework Document that secondary
coolant applications should not be covered under this rulemaking. ARI
explained that these systems represent a very small percentage of
currently installed commercial refrigeration systems in the United
States, and that there are no test procedures currently available for
measuring the energy consumption of such systems. ARI noted, however,
that DOE should revisit the secondary coolant issue in the next three
to four years. (ARI, No. 7 at p. 2) Hill Phoenix stated that based on
its experience, display cases that use secondary coolant make up less
than five percent of what it sells and that this statistic is probably
representative of the market in general. (Public Meeting Transcript,
No. 3.4 at p. 30) Further, Southern Company stated, and EEI agreed,
that it opposes the inclusion of secondary-coolant systems in this
rulemaking because of timing and complexity. Since ANSI/ARI Standard
1200-2006 excludes secondary-coolant applications, their inclusion
would complicate the development of a test procedure for commercial
refrigeration equipment. Also, Southern Company and EEI oppose the
inclusion of secondary coolant systems based on the small size of the
secondary coolant market. (Southern Company, No. 6 at p. 2 and EEI, No.
8 at p. 1) The Joint Comment stated that they do not object to DOE's
interpretation that secondary-coolant equipment is not covered under
this rulemaking, provided that this equipment in fact accounts for no
more than five percent of remote equipment sold, as asserted by Hill
Phoenix. (Joint Comment, No. 9 at p. 5)
---------------------------------------------------------------------------
\12\ Secondary coolant systems use a direct expansion
refrigeration cycle to cool a secondary single-phase fluid, which is
pumped to heat exchangers in remote condensing display cases and is
used to cool food or other perishable items.
---------------------------------------------------------------------------
Section 340(9)(A)(vii) of EPCA (42 U.S.C. 6311((9)(A)(vii), added
by EPACT 2005, section 136(a)(3)), states that the term ``commercial
refrigerator, freezer,
[[Page 41172]]
and refrigerator-freezer means equipment that ``is connected to a self-
contained condensing unit or to a remote condensing unit.'' (See
section I.D.1 of this ANOPR.) In the Framework Document, DOE stated
that it construes this language to mean that secondary coolant
applications are not covered under this rulemaking. As indicated in the
Framework Document, equipment using such applications are not directly
connected to a self-contained or remote condensing unit. DOE further
stated that it believed its interpretation to be consistent with ANSI/
ARI Standard 1200-2006. DOE has considered the comments it received,
but continues to believe that the language in section 340(9)(A)(vii) of
EPCA means that equipment using secondary coolant systems are not
covered under this rulemaking because they are not directly connected
to a self-contained or remote condensing unit and, therefore, do not
fit within the definition of ``commercial refrigerator, freezer, and
refrigerator-freezer'' in EPCA.
e. Self-Contained Commercial Refrigerators, Commercial Freezers, and
Commercial Refrigerator-Freezers Without Doors
Under EPCA, this equipment includes all types of commercial
refrigerators, commercial freezers, and commercial refrigerator-
freezers that have a self-contained condensing unit and have no doors,
except for self-contained equipment that meets DOE's definition of
``ice-cream freezer'' as set forth at 10 CFR 431.62. 71 FR 71369. As
with remote condensing equipment, self-contained equipment is typically
used to store and display merchandise for direct sale to the consumer,
and is commonly referred to as a ``refrigerated display case,''
``display cabinet,'' or ``merchandiser.'' Self-contained equipment is
defined as having an integral condensing unit (i.e., the condensing
unit is not remote from the refrigerated cabinet). (See 42 U.S.C.
6311(9)(F), added by EPACT 2005, section 136(a)(3)) The 2006 ASHRAE
Refrigeration Handbook (see chapter 47, p. 47.1) defines ``reach-in''
refrigerators or freezers as being upright and box shaped, and having
hinged or sliding doors. Given this definition, self-contained reach-in
commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers (i.e., self-contained units with doors) are not
covered in this rulemaking because the rulemaking only covers self-
contained equipment without doors.
In its Framework Document, as with the term ``remote condensing
commercial refrigerator-freezers,'' DOE sought feedback on use of the
definition of ``electric refrigerator-freezer'' for consumer products
(as set forth in 10 CFR 430.2) as a basis for defining the term ``self-
contained commercial refrigerator-freezer.'' The comments on this
subject were virtually identical to those received with respect to the
remote condensing equipment, which are discussed above in section
II.A.1.c, and DOE has reached the same conclusion here as it reached
with respect to that equipment. Specifically, DOE does not intend at
this point to adopt a definition for ``self-contained commercial
refrigerator-freezer without doors.'' Rather, DOE intends to rely on
EPCA's definition of ``commercial refrigerator, freezer, and
refrigerator-freezer,'' and on its understanding of the well-accepted
meaning of ``refrigerator-freezer.'' DOE construes the EPCA term
``self-contained commercial refrigerator-freezer without doors'' (see
42 U.S.C. 6313(c)(4)(A), added by EPACT 2005, section 136(c)) to mean
refrigeration equipment that operates at both chilled and frozen
temperatures, is connected to a self-contained condensing unit, and has
no doors. Such equipment has two or more separate compartments, at
least one of which is capable of maintaining food or other perishable
items at temperatures above freezing and at least one of which
maintains its contents frozen.
f. Commercial Ice-Cream Freezers
The EPCA provision that requires this rulemaking identifies ``ice-
cream freezers'' separately from ``self-contained commercial
refrigerators, freezers, and refrigerator-freezers without doors'' and
``remote condensing commercial refrigerators, freezers, and
refrigerator-freezers.'' (42 U.S.C. 6313(c)(4)(A), added by EPACT 2005,
section 136(c)) EPCA neither specifies nor indicates that ``ice-cream
freezers'' are limited to equipment with a particular door
configuration (e.g., with or without doors) or type of condensing unit
(i.e., remote or self-contained). Thus, pursuant to EPCA's definition
of ``commercial refrigerator, freezer, and refrigerator-freezer'' (42
U.S.C. 6311(9)(A), added by EPACT 2005, section 136(a)(3)), DOE
believes commercial ice-cream freezers include equipment with all door
types (i.e., solid doors, transparent doors, or no doors) and
configurations (e.g., vertical or horizontal), as well as equipment
with either integral or remote condensing units (i.e., self-contained
or remote condensing).
During the Framework comment period, several stakeholders commented
on the definition of commercial ice-cream freezer. ARI stated that the
majority of equipment intended for ice cream operates at -5 [deg]F or 0
[deg]F, with a minority that operates at -30 [deg]F, and stated that
DOE should focus on those ice-cream freezers with high shipment
volumes. (Public Meeting Transcript, No. 3.4 at pp. 32-33) Zero Zone
stated that there are many interpretations of what an ice-cream freezer
is. Zero Zone asserted that California and Canada define an ice-cream
freezer ``along the lines of a dipping cabinet.'' (Public Meeting
Transcript, No. 3.4 at p. 35) Zero Zone further commented that the
display-type freezers it sells for ice cream and frozen food are the
same, that these cases have adjustable temperatures, and that the user
sets the temperature of the equipment a little lower when it uses the
equipment for ice cream. Typically, the equipment has two ratings, one
for use of frozen food and for ice cream, because customers want to
know the energy use for each. Zero Zone also characterized as ``true
ice-cream cabinets'' those which have specific functions for the
processing and storage of ice cream, rather than its display, and
asserted that comparatively few of these are sold. (Public Meeting
Transcript, No. 3.4 at p. 38) Zero Zone asserted that the term ``ice-
cream freezer'' cannot be specifically defined because ice cream can be
stored or displayed in a number of cabinets that have different cabinet
styles and that may also be used to store other, non-ice-cream
equipment. In addition, it stated that not all ice cream is stored at
the same temperature. Zero Zone recommended that freezers be divided
into three categories: ice-cream dipping cabinets, 0 [deg]F to -15
[deg]F, and below -15 [deg]F. (Zero Zone, No. 5 at p. 1) Hill Phoenix
stated that its freezer cases also can operate at either 0 [deg]F or -5
[deg]F, but there is no distinction in the design of the case used for
ice cream and that used for frozen food, only in how the customer uses
it. Hill Phoenix added that because these two temperatures are so
close, there is a linear relationship between temperature and energy
usage. Hill Phoenix also stated there is a category of cases that
operate at -15 [deg]F to -30 [deg]F, called ``hardening'' cabinets,
which have a different design than typical freezer cases. (Public
Meeting Transcript, No. 3.4 at p. 41) Both Southern Company and EEI
stated that it is important that DOE develop definitions for commercial
freezer and ice-cream freezer that are all-inclusive, and do not leave
any loopholes for States to regulate. (Southern Company, No. 6 at p. 2;
EEI, No. 8 at p. 1) ARI stated that there is very little difference
[[Page 41173]]
between freezers designed to operate at 0 [deg]F and -5 [deg]F, both in
terms of features and in terms of energy consumption. ARI added that a
recent survey of its members revealed that a significant number of ice-
cream freezers operate at -15 [deg]F. It requested that freezers that
operate at -5 [deg]F be included in the freezer category. ARI intends
to amend ANSI/ARI Standard 1200-2006 to reflect an ice-cream freezer
temperature of -15 [deg]F. In addition, ARI proposed that specialty
freezers, such as hardening cabinets that operate far below the ice-
cream freezer temperature, be excluded from this rulemaking. (ARI, No.
7 at p. 2) The Joint Comment agreed with ARI that freezers that operate
at -5 [deg]F be tested at 0 [deg]F, and that testing at -5 [deg]F will
only be for information purposes, not for setting standards. (Joint
Comment, No. 9 at p. 3)
As part of the December 8, 2006 final rule, in which it adopted
test procedures for commercial refrigeration equipment, DOE adopted the
following definition for ``ice-cream freezer:'' ``a commercial freezer
that is designed to operate at or below -5 [deg]F (-21 [deg]C) and that
the manufacturer designs, markets, or intends for the storing,
displaying, or dispensing of ice cream.'' 71 FR 71369; 10 CFR 431.62.
In addition, this final rule prescribed the rating temperature at -15
[deg]F for ice-cream freezers. 71 FR 71370; 10 CFR 431.64.
Under this definition, unless equipment is designed, marketed, or
intended specifically for the storage, display or dispensing of ice
cream, it would not be considered an ``ice-cream freezer.'' Multi-
purpose commercial freezers, manufactured for storage and display, for
example, of frozen foods as well as ice cream would not meet this
definition, and DOE would not treat them as commercial ice-cream
freezers in this rulemaking. This is in accord with the comments listed
above, which indicated that DOE should not classify such freezers as
ice-cream freezers. On the other hand, any commercial freezer that is
specifically manufactured for storing, displaying or dispensing ice
cream, and that is designed so that in normal operation it can operate
at or below -5 [deg]F (-21 [deg]C), would meet the definition. This
includes equipment that some stakeholders referred to as true ice-cream
cabinets--freezers designed to operate considerably below -5 [deg]F and
that are sometimes referred to as ``hardening'' cabinets and are
specifically designed for ice cream storage, for example--as well as
those ice-cream dipping cabinets that are designed to operate at least
to some extent below -5 [deg]F. DOE intends to classify and address
these types of equipment as commercial ice-cream freezers in this
rulemaking.
2. Equipment Classes
In general, when evaluating and establishing energy conservation
standards, DOE divides covered equipment into equipment classes by the
type of energy used, capacity or other performance-related features
that affect efficiency, and factors such as the utility of the
equipment to users. (See 42 U.S.C. 6295(q).) Different energy
conservation standards may apply to different equipment classes.
Commercial refrigeration equipment can be divided into various
equipment classes categorized by physical characteristics that affect
the efficiency of the equipment. Most of these characteristics affect
the merchandise that the equipment can be used to display, and how that
merchandise can be accessed by the customer. Key physical
characteristics are the operating temperature, the presence or absence
of doors (i.e., closed cases or open cases), the type of doors used
(i.e., transparent or solid), the angle of the door or air curtain
(i.e., horizontal, semivertical, or vertical) and the type of
condensing unit (i.e., remote or self-contained). ARI agreed that
definitions for the terms horizontal, semivertical, and vertical be
based upon the angle of the air curtain. (ARI, No. 7 at p. 7)
DOE could not identify an existing industry definition of air-
curtain angle, but developed a preliminary definition for
consideration. DOE is considering defining air-curtain angle as the
angle between a vertical line and the line formed by the points at the
center of the discharge air grille and the center of the return air
grille, when viewed in cross-section. DOE specifically seeks feedback
on this definition of air-curtain angle. This is identified as Issue 2
under ``Issues on Which DOE Seeks Comment'' in section IV.E of this
ANOPR.
DOE proposed an organization of equipment classes in its Framework
Document based on the equipment classes for self-contained commercial
refrigerators, commercial freezers and commercial refrigerator-freezers
with doors described in section 136(c)(2) of EPACT 2005. Another
organization of equipment classes for commercial refrigeration
equipment was proposed by ARI during the Framework comment period, and
presented by DOE during the Framework public meeting. ARI organized
commercial refrigeration equipment by equipment family (where equipment
family is considered as broad groups of covered equipment that have
similar geometric characteristics), condensing unit type, and operating
temperature.\13\ (ARI, No. 7 at pp. 5-7) During the public meeting, DOE
noted that ARI's equipment families included a ``service over counter''
equipment family, which was absent from DOE's equipment class
organization. DOE understands that the service over counter equipment
family is unique in that access to merchandise on display is provided
only to sales personnel from the rear of the cabinet. ARI noted that
DOE did not categorize equipment with doors based on whether the doors
are solid or transparent, and ARI explained that this is a necessary
distinction. (ARI, No. 7 at p. 7) The Joint Comment stated that the
equipment families proposed by ARI are reasonable. (Joint Comment, No.
9 at p. 3)
---------------------------------------------------------------------------
\13\ For this rulemaking, equipment class designations consist
of a combination (in sequential order separated by periods) of an
(1) equipment family code (VOP=vertical open, SVO=semivertical open,
HZO=horizontal open, VCT=vertical transparent doors, VCS=vertical
solid doors, HCT=horizontal transparent doors, HCS=horizontal solid
doors, or SOC=service over counter), (2) an operating mode code
(RC=remote condensing or SC=self-contained), and (3) a rating
temperature code (M=medium temperature (38 [deg]F), L=low
temperature (0 [deg]F), or I=ice-cream temperature (-15 [deg]F)).
For example, ``VOP.RC.M'' refers to the ``vertical open, remote
condensing, medium temperature'' equipment class. See discussion
below and chapter 3 of the TSD, market and technology assessment,
for a more detailed explanation of the equipment class terminology.
---------------------------------------------------------------------------
DOE agrees with ARI that the characteristics of the service over
counter design affect efficiency, and is proposing an equipment class
organization that includes a service over counter equipment family. DOE
also agrees with ARI that the energy consumption of commercial
refrigeration equipment with doors is affected by whether the doors are
solid or transparent, and is proposing to include this distinction in
its equipment class organization.
In its Framework Document, DOE suggested that equipment without
doors be divided into equipment classes based on air-curtain angles of
0[deg] to 30[deg] (vertical), 30[deg] to 60[deg] (semivertical), and
60[deg] to 90[deg] (horizontal) from the vertical. During the Framework
public meeting, DOE asked for comments on these proposed ranges of air-
curtain angle. Hill Phoenix stated that the industry defines these as
0[deg] to 10[deg] for vertical, 10[deg] to 80[deg] for semivertical,
and 80[deg] to 90[deg] for horizontal. (Public Meeting Transcript, No.
3.4 at p. 86) The Joint Comment stated that the ranges for vertical and
semivertical should be closer to those used in DOE's proposal.
Specifically, the Joint Comment stated that because vertical equipment
will tend to be more efficient and thus likely
[[Page 41174]]
to have more stringent standards, if the equipment family delineations
allow manufacturers to substitute semivertical for vertical, they could
unintentionally shift the market to the less efficient standard.
Therefore, the Joint Comment stated that DOE should determine a divide
between vertical and semivertical that will not result in one type of
equipment being substituted for the other. (Joint Comment, No. 9 at pp.
3-4)
The cost-efficiency data DOE received from ARI for four covered
equipment classes were based on the industry definitions of 0[deg] to
10[deg] for vertical equipment, 10[deg] to 80[deg] for semivertical
equipment, and 80[deg] to 90[deg] for horizontal equipment, as measured
from the vertical. Therefore, DOE conducted its analyses for the ANOPR
based on these definitions of equipment families, but recognizes the
concern raised by the Joint Comment that these delineations may result
in one type of equipment being substituted for another. To investigate
the relationship of air-curtain angle to energy consumption for remote
condensing medium temperature open display cases (VOP.RC.M, SVO.RC.M,
and HZO.RC.M equipment classes), DOE collected market data, which is
documented in the market and technology assessment (see chapter 3 of
the TSD).14 15 These data show significant clusters of
equipment divided by air-curtain angles of 10[deg], 30[deg] and 65[deg]
from the vertical. The most significant cluster of equipment is in the
range of 0[deg] to 10[deg] from the vertical (this cluster corresponds
to the VOP.RC.M equipment class as currently defined), with less
significant clusters between 10[deg] and 30[deg], 30[deg] and 65[deg],
and 65[deg] and 90[deg] from the vertical. The large cluster of
equipment between 0[deg] to 10[deg] from the vertical has a high
frequency of units at 6[deg] to 9[deg] from the vertical. With the
delineation between vertical and semivertical equipment families at an
angle of 10[deg], if the SVO.RC.M equipment class had a less stringent
standard than the VOP.RC.M equipment class, DOE is concerned that
manufacturers may adjust their equipment designs slightly to take
advantage of the lower standard for SVO.RC.M equipment. A piece of
equipment could be redesigned with a small change in air-curtain angle
(e.g., from 9[deg] to 11[deg] from the vertical), that would not
significantly affect energy consumption or utility. This redesign would
move the equipment from the VOP.RC.M equipment class to the SVO.RC.M
equipment class, where it would not be subject to as stringent a
standard.
---------------------------------------------------------------------------
\14\ See Table II.1 through Table II.3, which set forth the
meaning of the equipment class lettering designations. Also, see
chapter 3 of the TSD for more details on the equipment class
lettering designations. For example, ``VOP.RC.M'' refers to the
``vertical open, remote condensing, medium temperature'' equipment
class.
\15\ The market data that DOE collected represents equipment
offerings of major commercial refrigeration equipment manufacturers
as of 2006. Each data point represents a particular model offered,
not a piece of equipment shipped, and is not intended to represent
shipments of equipment in the VOP.RC.M, SVO.RC.M, and HZO.RC.M
equipment classes. However, in the absence of detailed shipment
information broken down by energy use and air-curtain angle, DOE
believes this market data provides a reasonable estimate of the
distribution of equipment by energy use and air-curtain angle within
these equipment classes.
---------------------------------------------------------------------------
DOE understands that there is the potential for manufacturers to
redesign equipment to move from one equipment class to another
regardless of where the air-curtain angle delineation is made. However,
the concern raised above is heightened by the concentration of
equipment in the 0[deg] to 10[deg] from the vertical range, and the
potential for mass redesign of the majority of equipment currently
classified as VOP.RC.M in order to be classified as SVO.RC.M. According
to DOE's market data, there is a clear region of low density at an air-
curtain angle of 30[deg] from the vertical, and DOE believes that
drawing the delineation between the VOP and SVO equipment families here
could potentially result in less equipment migration from the VOP.RC.M
equipment class to the SVO.RC.M equipment class.
Additionally, DOE's market data provides little support for
delineating the SVO.RC.M and the HZO.RC.M equipment families at 80[deg]
from the vertical. A significant group of equipment with similar
characteristics (but clearly distinguished from the SVO.RC.M and
VOP.RC.M equipment classes) is present with air curtain angles of
65[deg] to 90[deg] from the vertical. This supports drawing the SVO.HZO
equipment family delineation at 60[deg] to 65[deg] from the vertical.
In light of this market data, DOE welcomes any additional data or
feedback regarding the proposed ranges of air-curtain angles or
shipments of equipment in the VOP.RC.M, SVO.RC.M and HZO.RC.M equipment
classes broken down by energy use and air-curtain angle.
DOE believes that the orientation of doors affects the energy
consumption of commercial refrigeration equipment with doors and that
this equipment can be broadly categorized by the angle of the door. DOE
did not receive stakeholder feedback on how to define the door angle
for equipment with doors, but is considering defining door angle as
``the angle between a vertical line and the line formed by the plane of
the door, when viewed in cross-section.'' DOE specifically seeks
feedback on this definition of door angle. This is identified as Issue
3 under ``Issues on Which DOE Seeks Comment'' in section IV.E of this
ANOPR.
During the Framework comment period, no objections were raised to
the proposal of equipment families of ``horizontal'' and ``vertical''
equipment with doors. In addition, Hill Phoenix commented that ARI
eliminated the ``semivertical with doors'' equipment family (doors with
an angle that deviated substantially from 0[deg] or 90[deg] with
respect to the vertical) because no manufacturers could identify any
shipments of semivertical equipment with doors. (Public Meeting
Transcript, No. 3.4 at p. 63) Therefore, for equipment with solid and
transparent doors, DOE is considering defining two equipment families
each, based on door angles of 0[deg] to 45[deg] (vertical) and 45[deg]
to 90[deg] (horizontal). DOE specifically seeks feedback on these
ranges of door angles for equipment with doors. This is identified as
Issue 4 under ``Issues on Which DOE Seeks Comment'' in section IV.E of
this ANOPR.
Based on the above information, DOE intends to use eight equipment
families, which are shown in Table II.1.
Table II.1.--Equipment Family Designations
------------------------------------------------------------------------
Equipment family Description
------------------------------------------------------------------------
Vertical Open (VOP).................. Equipment without doors and an
air-curtain angle greater than
or equal to 0[deg] and less than
10[deg] from the vertical.
Semivertical Open (SVO).............. Equipment without doors and an
air-curtain angle greater than
or equal to 10 and less than
80[deg] from the vertical.
Horizontal Open (HZO)................ Equipment without doors and an
air-curtain angle greater than
or equal to 80[deg] from the
vertical.
[[Page 41175]]
Vertical Closed Transparent (VCT).... Equipment with hinged or sliding
transparent doors and a door
angle less than 45[deg].
Horizontal Closed Transparent (HCT).. Equipment with hinged or sliding
transparent doors and a door
angle greater than or equal to
45[deg].
Vertical Closed Solid (VCS).......... Equipment with hinged or sliding
solid (opaque) doors and a door
angle less than 45[deg].
Horizontal Closed Solid (HCS)........ Equipment with hinged or sliding
solid (opaque) doors and a door
angle greater than or equal to
45[deg].
Service Over Counter (SOC)........... Equipment with sliding or hinged
doors intended for use by sales
personnel and fixed or hinged
glass for displaying
merchandise.
------------------------------------------------------------------------
Within each of these eight equipment families are equipment that
have one of the two condensing unit configurations shown in Table II.2.
Table II.2.--Condensing Unit Configuration Designations
------------------------------------------------------------------------
Condensing unit configuration Description
------------------------------------------------------------------------
Remote condensing (RC)............... Condensing unit is remotely
located from the refrigerated
equipment and consists of one or
more refrigerant compressors,
refrigerant condensers,
condenser fans and motors, and
factory-supplied accessories.
Self-contained (SC).................. Condensing unit is an integral
part of the refrigerated
equipment and consists of one or
more refrigerant compressors,
refrigerant condensers,
condenser fans and motors, and
factory-supplied accessories.
------------------------------------------------------------------------
Equipment classes would also be organized based on the three rating
temperatures shown in Table II.3.
Table II.3.--Rating Temperature Designations
------------------------------------------------------------------------
Rating temperature Description
------------------------------------------------------------------------
38 [deg]F (M)........................ Medium temperature
(refrigerators).
0 [deg]F (L)......................... Low temperature (freezers).
-15 [deg]F (I)....................... Ice-cream temperature (ice-cream
freezers).
------------------------------------------------------------------------
Based on stakeholder feedback, DOE is considering 38 of the 48
equipment classes shown in Table II.4.\16\ The equipment classes are
organized by equipment family, compressor operating mode, and rating
temperature. The right hand column in Table II.4, which has the heading
``Equipment Class Designation,'' identifies each of the 48 equipment
classes with a particular set of letters. The first three letters for
each class represent the equipment family for that class, the next two
letters represent the condensing unit configuration, and the last
letter represents the rating temperature. Table II.1 through Table II.3
set forth the meaning of the equipment class lettering designations.
(Also, see chapter 3 of the TSD for more details on the equipment class
lettering designations.)
---------------------------------------------------------------------------
\16\ Table II.4 identifies 48 classes of commercial
refrigeration equipment. Of the 48 classes, 10 classes are
identified by asterisks. EPCA has already established energy
conservation standards for these 10 classes. (42 U.S.C. 6313(c)(2)-
(3)) Therefore, these 10 classes are not covered under this
rulemaking.
Table II.4.--Commercial Refrigeration Equipment Classes
----------------------------------------------------------------------------------------------------------------
Rating
Equipment family Condensing unit temperature Equipment class designation
configuration ([deg]F)
----------------------------------------------------------------------------------------------------------------
Vertical Open......................... Remote................... 38 VOP.RC.M.
0 VOP.RC.L.
-15 VOP.RC.I
Self-Contained........... 38 VOP.SC.M.
0 VOP.SC.L.
-15 VOP.SC.I.
Semivertical Open..................... Remote................... 38 SVO.RC.M.
0 SVO.RC.L.
-15 SVO.RC.I.
Self-Contained........... 38 SVO.SC.M.
0 SVO.SC.L.
-15 SVO.SC.I.
Horizontal Open....................... Remote................... 38 HZO.RC.M.
[[Page 41176]]
0 HZO.RC.L.
-15 HZO.RC.I.
Self-Contained........... 38 HZO.SC.M.
0 HZO.SC.L.
-15 HZO.SC.I.
Vertical Closed Transparent........... Remote................... 38 VCT.RC.M.
0 VCT.RC.L.
-15 VCT.RC.I.
Self-Contained........... 38 VCT.SC.M.*
0 VCT.SC.L.*
-15 VCT.SC.I.
Horizontal Closed Transparent......... Remote................... 38 HCT.RC.M.
0 HCT.RC.L.
-15 HCT.RC.I.
Self-Contained........... 38 HCT.SC.M.*
0 HCT.SC.L.*
-15 HCT.SC.I.
Vertical Closed Solid................. Remote................... 38 VCS.RC.M.
0 VCS.RC.L.
-15 VCS.RC.I.
Self-Contained........... 38 VCS.SC.M.*
0 VCS.SC.L.*
-15 VCS.SC.I.
Horizontal Closed Solid............... Remote................... 38 HCS.RC.M.
0 HCS.RC.L.
-15 HCS.RC.I.
Self-Contained........... 38 HCS.SC.M.*
0 HCS.SC.L.*
-15 HCS.SC.I.
Service Over Counter.................. Remote.................. 38 SOC.RC.M.
0 SOC.RC.L.
-15 SOC.RC.I.
Self-Contained........... 38 SOC.SC.M.*
0 SOC.SC.L.*
-15 SOC.SC.I.
----------------------------------------------------------------------------------------------------------------
* These equipment classes have standards established by EPCA and are therefore not covered under this
rulemaking. (42 U.S.C. 6313(c)(2)-(3)).
EPCA contains standards for self-contained commercial
refrigerators, commercial freezers and commercial refrigerator-freezers
with doors (42 U.S.C. 6313(c)(2)-(3)); therefore this equipment is not
included in this rulemaking. Table II.5 identifies, by sets of letters,
10 potential equipment classes for this equipment. DOE has based the
designations of these possible equipment classes on the equipment class
designations presented in Table II.1 through Table II.3. Because these
equipment classes are not included in this rulemaking, they are
indicated with an asterisk in Table II.4.
Table II.5.--Potential Equipment Classes Not Included in This Rulemaking
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
VCT.SC.M........................ VCS.SC.M.......... HCT.SC.M.......... HCS.SC.M.......... SOC.SC.M.
VCT.SC.L........................ VCS.SC.L.......... HCT.SC.L.......... HCS.SC.L.......... SOC.SC.L.
----------------------------------------------------------------------------------------------------------------
During the Framework public meeting, Hill Phoenix asserted that
equipment with separate refrigerator and freezer compartments (i.e.,
refrigerator-freezers) is custom built and is a low shipment-volume
type of equipment. Hill Phoenix believes that spending time on these
equipment categories might unnecessarily slow the rulemaking. (Public
Meeting Transcript, No. 3.4 at p. 52) Based on this comment and DOE's
own analysis of the shipments data, DOE has not established equipment
classes for remote condensing commercial refrigerator-freezers or self-
contained commercial refrigerator-freezers without doors (also called
``dual temperature'' units). DOE addresses how it might set standards
for this equipment in sections III and IV.E.1.
In sum, Table II.6 presents the equipment classes covered under
this rulemaking organized by the three equipment categories, in
accordance with EPCA section 325(p)(1)(A). (42 U.S.C. 6295(p)(1)(A))
Pursuant to EPCA section 325(p)(1)(B), DOE specifically seeks feedback
on these equipment classes and invites interested persons to submit
written presentations of data, views, and arguments. (42 U.S.C.
6295(p)(1)(B)) This is identified as Issue 5 under ``Issues on Which
DOE Seeks Comment'' in section IV.E of this ANOPR.
[[Page 41177]]
Table II.6.--Commercial Refrigeration Equipment Classes by Category
----------------------------------------------------------------------------------------------------------------
Rating
Equipment category Condensing unit Equipment family temperature Equipment class
configuration ([deg]F) designation
----------------------------------------------------------------------------------------------------------------
Remote Condensing Commercial Remote............ Vertical Open..... 38 VOP.RC.M.
Refrigerators, Commercial Semivertical Open 0 VOP.RC.L.
Freezers, and Commercial .................. 38 SVO.RC.M.
Refrigerator-Freezers. Horizontal Open... 0 SVO.RC.L.
.................. 38 HZO.RC.M.
Vertical Closed 0 HZO.RC.L.
Transparent. 38 VCT.RC.M.
Horizontal Closed 0 VCT.RC.L.
Transparent. 38 HCT.RC.M.
Vertical Closed 0 HCT.RC.L.
Solid. 38 VCS.RC.M.
Horizontal Closed 0 VCS.RC.L.
Solid. 38 HCS.RC.M.
Service Over 0 HCS.RC.L.
Counter. 38 SOC.RC.M.
0 SOC.RC.L.
Self-Contained Commercial Self-Contained.... Vertical Open..... 38 VOP.SC.M.
Refrigerators, Commercial .................. 0 VOP.SC.L.
Freezers, and Commercial Semivertical Open. 38 SVO.SC.M.
Refrigerator-Freezers without .................. 0 SVO.SC.L.
Doors. Horizontal Open... 38 HZO.SC.M.
.................. 0 HZO.SC.L.
Commercial Ice-Cream Freezers.. Remote............ Vertical Open..... -15 VOP.RC.I.
Semivertical Open. -15 SVO.RC.I.
Horizontal Open... -15 HZO.RC.I.
Vertical Closed -15 VCT.RC.I.
Transparent.
Horizontal Closed -15 HCT.RC.I.
Transparent.
Vertical Closed -15 VCS.RC.I.
Solid.
Horizontal Closed -15 HCS.RC.I.
Solid.
Service Over -15 SOC.RC.I.
Counter.
Self-Contained.... Vertical Open..... -15 VOP.SC.I.
Semivertical Open. -15 SVO.SC.I.
Horizontal Open... -15 HZO.SC.I.
Vertical Closed -15 VCT.SC.I.
Transparent.
Horizontal Closed -15 HCT.SC.I.
Transparent.
Vertical Closed -15 VCS.SC.I.
Solid.
Horizontal Closed -15 HCS.SC.I.
Solid.
Service Over -15 SOC.SC.I.
Counter.
----------------------------------------------------------------------------------------------------------------
3. Normalization Metric
The standards being developed in this rulemaking must apply to
equipment of varying size and capacity within an equipment class, so
they must be normalized by some factor that is representative of the
varying energy use of the equipment. A ``normalization metric'' is a
measure of capacity or utility that allows comparison of energy use of
various sizes of equipment on a unit capacity basis. During the
Framework public meeting, DOE asked what normalization metric would be
most appropriate for the equipment in this rulemaking--total display
area (TDA), refrigerated volume, or length. ARI commented that in
remote condensing equipment, the trend has been to use TDA, not only in
the United States, but in Europe as well. ARI is trying to align itself
with standards like those from the International Standards Organization
(ISO) that use TDA, and wants DOE to be consistent with these ISO
standards. ARI's certification program will be based on TDA, and that
is how the data will be listed in its certification directory. (Public
Meeting Transcript, No. 3.4 at pp. 95-96) ARI also proposed that daily
energy consumption be calculated as a function of the refrigerated
volume for self-contained equipment with doors, and as a function of
TDA for self-contained equipment without doors, because these
respective normalization metrics are most representative of the energy
consumption of these two types of equipment. (ARI, No. 7 at p. 9) ARI
also stated that it will collect and analyze data for daily energy
consumption as a function of refrigerated volume and TDA for remote
condensing equipment in order to develop an appropriate recommendation
for that type of equipment. (ARI, No. 7 at p. 9) The Joint Comment
stated that they do not agree with DOE's proposal to use TDA as the
metric for cases without doors, because, they assert, such an approach
would favor ``shallow'' and ``tall'' equipment over ``deeper'' and
``shorter'' equipment of equivalent volume. The Joint Comment proposed
that DOE instead use volume, length, or potentially a combination of
TDA and volume. One compromise would be to use a multiple regression
equation that would consider both refrigerated volume and length or
refrigerated volume and TDA. (Joint Comment, No. 9 at p. 5, and Public
Meeting Transcript, No. 3.4 at pp. 94-95)
In this rulemaking, DOE intends to establish standards for remote
condensing commercial refrigerators, commercial freezers and commercial
refrigerator-freezers, as well as commercial ice-cream freezers, with
solid or transparent doors. Equipment with transparent doors is subject
to significant radiation loads (as much as 50 percent of the total
refrigeration load) as well as loads due to anti-sweat heaters that are
required to keep the door free of condensation. In addition,
transparent doors are inherently poorer
[[Page 41178]]
insulators than solid doors with an insulation value of roughly R-2
compared with R-16, respectively, for a typical freezer. For equipment
with transparent doors, TDA is a good indicator of the magnitude of the
radiation load, the anti-sweat load, and the conduction load through
the door. Additionally, TDA is representative of the ability of the
equipment to display merchandise, which is a measure of its utility or
usefulness to the owner. Thus, DOE believes that TDA is an appropriate
normalization metric for all remote condensing refrigerators and
freezers with transparent doors, as well as all commercial ice-cream
freezers with transparent doors. Remote condensing commercial
refrigerators, commercial freezers and commercial refrigerator-freezers
with solid doors and commercial ice-cream freezers with solid doors
(i.e., ``storage cabinets'') inherently have no TDA, since there is no
visible product and thus no glass or other transparent opening.
Therefore, DOE believes refrigerated volume is an appropriate
normalization metric for this equipment. This is consistent with the
fact that EPCA sets standards for self-contained units with solid doors
in the form of upper limits on daily energy consumption using
refrigerated volume as the normalization metric (42 U.S.C. 6313(c)(2),
added by EPACT 2005, section 136(c)). DOE also believes that length is
not an appropriate metric for equipment with solid or transparent doors
because it does not capture the physical relationship between heat
loads and equipment capacity as accurately as either TDA or volume.
DOE will also establish in this rulemaking standards for remote
condensing and self-contained commercial refrigerators, commercial
freezers and commercial refrigerator-freezers, and commercial ice-cream
freezers, without doors. The physical relationship between heat loads
and energy consumption is fundamentally different for this equipment
than for the equipment that has standards set by EPCA (i.e., self-
contained commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers with doors).\17\ Equipment without doors is
subject to large loads due to infiltration of warm moist air from the
area around the equipment. These loads are typically 25 percent to 85
percent of the total refrigeration load (depending on the air-curtain
angle and other factors), while the conduction loads experienced by
equipment without doors are typically less than 5 percent and are
rarely more than 25 percent. TDA is a much better indicator of
infiltration load than volume because the open area of the equipment is
directly related to the amount of infiltrated air. Current standards in
Europe (EUROVENT--CECOMAF), the United Kingdom (Enhanced Capital
Allowance Program), and Australia (Australian Greenhouse Office Minimum
Energy Performance Standards) use TDA as a normalization metric for
equipment without doors. Moreover, similar to equipment with
transparent doors, TDA is representative of the ability of equipment
without doors to display merchandise, which is a measure of its utility
or usefulness to the owner. Thus, DOE believes that TDA should be the
normalization metric for all remote condensing and self-contained
commercial refrigerators, commercial freezers and commercial
refrigerator-freezers without doors, and all commercial ice-cream
freezers without doors. DOE also believes that length is not an
appropriate metric for equipment without doors because it does not
capture the physical relationship between heat loads and equipment
capacity as accurately as TDA.
---------------------------------------------------------------------------
\17\ Standards for self-contained commerical refrigerators,
commercial freezers, and commercial refrigerator-freezers with doors
were added to 42 U.S.C. 6313(c)(2), by EPACT 2005, section 136(c).
---------------------------------------------------------------------------
4. Extension of Standards
During the Framework public meeting, DOE asked stakeholders if it
would be appropriate to extend the standards prescribed for self-
contained refrigeration equipment with doors in EPCA to similar remote
condensing equipment with doors and commercial ice-cream freezers with
doors covered in this rulemaking, and if so, what methodology would be
appropriate. ARI commented that it would not be appropriate to extend
the standards from self-contained equipment because that equipment is
normalized by volume, and the remote condensing equipment industry uses
TDA or some other metric. (Public Meeting Transcript, No. 3.4 at p. 89)
Hill Phoenix commented that as DOE has the opportunity to look at
energy data, it will see that for remote condensing cases, energy
consumption would be lower than for the self-contained cases. However,
Hill Phoenix did not explain how to make the comparison. (Public
Meeting Transcript No. 3.4 at p. 91) ARI also asserted that an
extension of the EPCA standards for self-contained commercial
refrigeration equipment with doors to remote condensing commercial
refrigeration equipment with doors is not appropriate. ARI explained
that the interior volume of self-contained equipment is calculated
using the ANSI/AHAM Standard HRF-1-2004, whereas the interior volume of
remote condensing equipment should be calculated according to ANSI/ARI
Standard 1200-2006. (ARI, No. 7 at p. 8)
Because of the differences in energy consumption, and calculation
of interior volume, DOE will not apply the standards prescribed by EPCA
for self-contained equipment with doors to remote condensing equipment
with doors. Instead, DOE will perform an analysis of the impacts of
potential standards and will adopt levels that meet the requirements of
EPCA section 325(o). (42 U.S.C. 6295(o)) As to commercial ice-cream
freezers with doors, in the market and technology assessment (see
chapter 3 of the TSD), DOE identified 16 commercial ice-cream freezer
equipment classes. During the engineering analysis (see chapter 5 of
the TSD), DOE developed cost-efficiency curves directly for 3 of the 16
commercial ice-cream freezer equipment classes (HCT.SC.I, VCT.SC.I, and
VCS.SC.I) because of their high shipment volumes. For these three
classes, this eliminated the issue of extending standards from self-
contained commercial freezers with doors. For the remaining 13
equipment classes, DOE is considering use of the cost-efficiency curves
(or standards) developed in this rulemaking for certain equipment
classes of remote condensing commercial freezers and self-contained
commercial freezers without doors, for equivalent equipment classes of
commercial ice-cream freezers. For a portion of these 13 low-shipment-
volume commercial ice-cream freezer equipment classes (as well as other
low-shipment-volume equipment classes) DOE is also considering use of
the EPACT 2005 standards for self-contained commercial freezers with
doors. The intent of this approach is to save time and resources by
eliminating direct analysis of equipment classes that have low shipment
volumes and lower overall potential energy savings. At this point in
the rulemaking, DOE only demonstrated this approach with two commercial
ice-cream freezer equipment classes, as well as one other commercial
refrigeration equipment class, (see chapter 5 of the TSD) and not the
full set of covered equipment classes. DOE specifically seeks feedback
on this approach to extending cost-efficiency curves (or standards)
from high-shipment-volume equipment classes to low-shipment-volume
equipment classes, and of extending EPCA standards to equipment classes
in this rulemaking. This is identified as
[[Page 41179]]
Issue 1 under ``Issues on Which DOE Seeks Comment'' in section IV.E of
this ANOPR.
5. Market Assessment
In the market assessment, DOE develops a qualitative and
quantitative characterization of the commercial refrigeration equipment
industry and market structure based on publicly available information
and data and information submitted by manufacturers and other
stakeholders.
DOE identified 34 manufacturers of commercial refrigeration
equipment. Four of these companies hold approximately 85 percent of the
domestic market share of refrigerated display cases. These four
manufacturers produce self-contained commercial refrigerators,
commercial freezers, and commercial refrigerator-freezers without doors
and commercial ice-cream freezers, although their primary business is
in remote condensing commercial refrigerators and commercial freezers
with and without doors. Like most industries, there exists a second
tier of smaller, but well-known manufacturers. These other
manufacturers make up the remaining 15 percent of U.S. market share.
See chapter 3 of the TSD for more information regarding manufacturers
of commercial refrigeration equipment.
DOE is considering the possibility that small businesses would be
particularly impacted by the promulgation of energy conservation
standards for commercial refrigeration equipment. The Small Business
Administration (SBA) defines small business manufacturing enterprises
for commercial refrigeration equipment as those having 750 employees or
fewer. SBA lists small business size standards for industries as they
are described in the North American Industry Classification System
(NAICS). The size standard for an industry is the largest that a for-
profit concern can be in that industry and still qualify as a small
business for Federal Government programs. These size standards are
generally expressed in terms of the average annual receipts or the
average employment of a firm. For commercial refrigeration equipment,
the size standard is matched to NAICS code 333415, Air-Conditioning and
Warm Air Heating Equipment and Commercial and Industrial Refrigeration
Equipment Manufacturing, and is 750 employees. DOE will study the
potential impacts on these small businesses in detail during the MIA,
which will be conducted as a part of the NOPR analysis. See chapter 3
of the TSD for more information regarding commercial refrigeration
equipment for small businesses.
ARI submitted annual shipment data by equipment class for its
member companies. (ARI, No. 7 Exhibit B at p. 1) DOE understands that
these data do not include the entire industry, since not all major
manufacturers are represented by ARI (most notably, True Manufacturing,
which DOE understands has a large market share of self-contained
commercial equipment with doors and commercial ice-cream freezers).
However, because these data cover the vast majority of the commercial
refrigeration equipment sold, and because no other detailed data were
available, the ARI shipment data became the basis of DOE's analysis.
The market and technology assessment (see chapter 3 of the TSD)
provides detailed shipment information from ARI for each category of
commercial refrigeration equipment by equipment class for 2005. The ARI
data included shipments for equipment that operates at an
``application'' temperature (e.g., wine chillers that operate at
45[deg]F and freezers that operate at -30[deg]F). However, DOE only
considered shipments of equipment at the three operating temperatures
considered in this rulemaking (38[deg]F, 0[deg]F, and -15[deg]F). The
shipments of equipment that operate at one of these three temperatures
constitute approximately 98 percent of the shipments reported by ARI.
See chapter 3 of the TSD for more information regarding commercial
refrigeration equipment shipments.
DOE reviewed available literature and consulted with experts on
commercial refrigeration equipment in order to establish typical
equipment lifetimes. The literature and individuals consulted estimated
a wide range of typical equipment lifetimes. Based on the literature
reviewed and discussions with industry experts and other stakeholders,
DOE concluded that a typical lifetime of 10 years is appropriate for
commercial refrigeration equipment. See chapter 3 of the TSD for more
information regarding equipment lifetimes.
DOE characterized commercial refrigeration equipment energy
consumption by conducting a survey of existing remote condensing
refrigeration equipment from major manufacturers and compiling a
performance database. The primary source of information for the
database was equipment data sheets that were publicly available on
manufacturers' websites. From these data sheets, equipment information
such as total refrigeration load, evaporator temperature, lighting
power draw, defrost power draw, and motor power draw allowed
determination of calculated daily energy consumption (CDEC) according
to the test procedure in ANSI/ARI Standard 1200-2006. See chapter 3 of
the TSD for more information regarding the performance data for
selected remote condensing equipment classes.
6. Technology Assessment
In the technology assessment, DOE identified technologies and
design options that could improve the efficiency of commercial
refrigeration equipment. This assessment provides the technical
background and structure on which DOE bases its screening and
engineering analyses. For commercial refrigeration equipment, DOE based
its list of technologically feasible design options on input from
manufacturers, industry experts, component suppliers, trade
publications, and technical papers. See chapter 3 of the TSD for
additional detail on the technology assessment and technologies
analyzed.
B. Screening Analysis
The purpose of the screening analysis is to evaluate the
technologies that improve the efficiency of equipment, to determine
which technologies to consider further and which options to screen out.
DOE consulted with industry, technical experts, and other interested
parties to develop a list of technologies for consideration. DOE then
applied the following four screening criteria to determine which
technologies are unsuitable for further consideration in the rulemaking
(10 CFR Part 430, Subpart C, Appendix A at 4(a)(4) and 5(b)):
1. Technological feasibility. Technologies incorporated in
commercial equipment or in working prototypes will be considered
technologically feasible.
2. Practicability to manufacture, install, and service. If mass
production of a technology in commercial equipment and reliable
installation and servicing of the technology could be achieved on the
scale necessary to serve the relevant market at the time of the
effective date of the standard, then that technology will be considered
practicable to manufacture, install and service.
3. Adverse impacts on equipment utility or equipment availability.
If a technology is determined to have significant adverse impact on the
utility of the equipment to significant subgroups of consumers, or
result in the unavailability of any covered equipment type with
performance characteristics (including reliability), features, sizes,
[[Page 41180]]
capacities, and volumes that are substantially the same as equipment
generally available in the United States at the time, it will not be
considered further.
4. Adverse impacts on health or safety. If it is determined that a
technology will have significant adverse impacts on health or safety,
it will not be considered further.
DOE eliminated five of the technologies considered in the market
and technology assessment. The specific technologies that were
eliminated are: (1) Air-curtain design, (2) thermoacoustic
refrigeration, (3) magnetic refrigeration, (4) electro-hydrodynamic
heat exchangers, and (5) copper rotor motors. Because all five of these
technologies are in the research stage, DOE believes that they would
not be practicable to manufacture, install and service on the scale
necessary to serve the relevant market at the time of the effective
date of the standard. In addition, because these technologies are in
the research stage, DOE cannot assess whether they will have any
adverse impacts on utility to significant subgroups of consumers,
result in the unavailability of any types of equipment, or present any
significant adverse impacts on health or safety. Therefore, DOE will
not consider these technologies as design options for improving the
energy efficiency of commercial refrigeration equipment.
For more details on how DOE developed the technology options and
the process for screening these options, refer to the market and
technology assessment (see chapter 3 of the TSD) and the screening
analysis (see chapter 4 of the TSD).
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the cost and efficiency of commercial
refrigeration equipment. For each equipment class, this relationship
estimates the baseline manufacturer cost, as well as the incremental
cost for equipment at efficiency levels above a baseline. In
determining the performance of higher efficiency equipment, DOE
considers technologies and design option combinations not eliminated in
the screening analysis. The output of the engineering analysis is a set
of cost-efficiency ``curves'' that are used in downstream analyses
(i.e., the LCC and PBP analyses and the NIA).
DOE typically structures its engineering analysis around one of
three methodologies. These are: (1) The design-option approach, which
calculates the incremental costs of adding specific design options to a
baseline model; (2) the efficiency-level approach, which calculates the
relative costs of achieving increases in energy efficiency levels; and
(3) the reverse-engineering or cost-assessment approach, which involves
a ``bottoms-up'' manufacturing cost assessment based on a detailed bill
of materials derived from commercial refrigeration equipment tear-
downs.
1. Approach
In this rulemaking, DOE is adopting an efficiency-level approach,
supplemented by a design-option approach. For the four equipment
classes with the highest shipment volumes, DOE used industry-supplied
cost-efficiency curves developed using an efficiency-level approach in
downstream analyses.\18\ These industry-supplied curves are qualified
using analytically derived curves developed by DOE using a design-
option approach. In addition, for the equipment classes where industry-
supplied curves were not available, DOE used the analytically derived
curves developed using a design-option approach in the downstream
analyses.
---------------------------------------------------------------------------
\18\ The four equipment classes with the highest shipment
volumes are: vertical closed transparent, remote condensing, low
temperature (VCT.RC.L); vertical open, remote condensing, medium
temperature (VOP.RC.M); semivertical open, remote condensing, medium
temperature (SVO.RC.M); and horizontal open, remote condensing, low
temperature (HZO.RC.L).
---------------------------------------------------------------------------
In the Framework Document, DOE requested feedback on the use of an
efficiency-level approach supported, as needed, by a design-option
approach to determine the cost-efficiency relationship for commercial
refrigeration equipment. ACEEE expressed concern about the use of an
efficiency-level approach because it effectively creates a ``black
box'' that does not allow for any independent analyses. ACEEE prefers
the design-option approach because of its transparency and the ability
to be independently verified. ACEEE noted that in the past, DOE has
taken both approaches simultaneously. By doing both, DOE can calibrate
one approach against another and have data that are publicly available
so all parties can comment. (Public Meeting Transcript, No. 3.4 at p.
110) ASAP stated that the design-option approach remains very important
because it validates the data and shows the benefits of different
technical options. (Public Meeting Transcript, No. 3.4 at p. 119) ARI
stated that it supports DOE's suggested approach for determining the
cost-efficiency relationship for commercial refrigeration equipment.
(ARI, No. 7 at p. 9) The Joint Comment stated that it supports the use
of an efficiency-level approach, provided that the estimates used are
sufficiently supported with design-option data for purposes of both
qualification and adding transparency to the ``black box'' of the
efficiency-level data. In particular, the Joint Comment pointed out
that this will require DOE to qualify multiple points for each
equipment class, carrying out further design-option analysis as
necessary to identify the most reasonable costs to use if the design-
options and efficiency-level data are not in alignment. (Joint Comment,
No. 9 at p. 1)
As previously described, DOE used an efficiency-level approach
supported by a design-option approach. DOE supplemented the industry-
supplied data with its own design-option analysis, which involved
consultation with outside experts, review of publicly available cost
and performance information, and modeling of equipment cost and energy
consumption. The supplemental design-option analysis provides
validation of the industry efficiency-level data, transparency of
assumptions and results, and the ability to perform independent
analyses for verification. In addition, the supplemental design-option
analysis allows analytically derived cost-efficiency curves to be
generated for equipment classes where no industry-supplied curves are
available. The methodology used to perform the design-option analysis
is described in detail in chapter 5 of the TSD.
2. Equipment Classes Analyzed
Because of the large number of equipment classes in this rulemaking
(see Table II.6), DOE did not directly analyze all equipment classes in
the engineering analysis for this ANOPR. Instead, DOE prioritized the
engineering analysis by examining only the equipment classes with
shipment volumes greater than 100 units per year. Table II.7 lists the
15 equipment classes that DOE directly analyzed in the engineering
analysis. This table includes the 14 equipment classes with greater
than 100 annual unit shipments, as well as the VOP.RC.L equipment
class.\19\ According to the 2005 ARI
[[Page 41181]]
shipments data, these 15 equipment classes represent 98 percent of the
shipments of covered commercial refrigeration equipment.
---------------------------------------------------------------------------
\19\ The VOP.RC.L equipment class was reported as having zero
shipments in the ARI shipment data, but was included in the analysis
based on a recommendation from a manufacturer during the preliminary
manufacturer impact analysis interviews. This manufacturer estimated
that shipments of the VOP.RC.L equipment class are actually around
2500 units per year. Regardless of the actual shipment volume, DOE
believes it is unlikely that this equipment class has zero annual
shipments, and likely has more than 100 annual shipments. DOE
believes this warrants inclusion of the VOP.RC.L equipment class in
the analysis.
Table II.7.--Equipment Classes Directly Analyzed in the Engineering
Analysis
------------------------------------------------------------------------
Equipment class Description
------------------------------------------------------------------------
VOP.RC.M...................... Vertical Refrigerator without Doors with
a Remote Condensing Unit, Medium
Temperature.
VOP.RC.L...................... Vertical Freezer without Doors with a
Remote Condensing Unit, Low
Temperature.
SVO.RC.M...................... Semi-Vertical Refrigerator without Doors
with a Remote Condensing Unit, Medium
Temperature.
HZO.RC.M...................... Horizontal Refrigerator without Doors
with a Remote Condensing Unit, Medium
Temperature.
HZO.RC.L...................... Horizontal Freezer without Doors with a
Remote Condensing Unit, Low
Temperature.
VCT.RC.M...................... Vertical Refrigerator with Transparent
Doors with a Remote Condensing Unit,
Medium Temperature.
VCT.RC.L...................... Vertical Freezer with Transparent Doors
with a Remote Condensing Unit, Low
Temperature.
SOC.RC.M...................... Service Over Counter Refrigerator with a
Remote Condensing Unit, Medium
Temperature.
VOP.SC.M...................... Vertical Refrigerator without Doors with
a Self-Contained Condensing Unit,
Medium Temperature.
SVO.SC.M...................... Semi-Vertical Refrigerator without Doors
with a Self-Contained Condensing Unit,
Medium Temperature.
HZO.SC.M...................... Horizontal Refrigerator without Doors
with a Self-Contained Condensing Unit,
Medium Temperature.
HZO.SC.L...................... Horizontal Freezer without Doors with a
Self-Contained Condensing Unit, Low
Temperature.
VCT.SC.I...................... Vertical Ice-Cream Freezer with
Transparent Doors with a Self-Contained
Condensing Unit, Ice-Cream Temperature.
VCS.SC.I...................... Vertical Ice-Cream Freezer with Solid
Doors with a Self-Contained Condensing
Unit, Ice-Cream Temperature.
HCT.SC.I...................... Horizontal Ice-Cream Freezer with
Transparent Doors with a Self-Contained
Condensing Unit, Ice-Cream Temperature.
------------------------------------------------------------------------
3. Analytical Models
In the design-option approach, DOE used models to develop estimates
of cost and energy consumption for each equipment class at each
efficiency level. A cost model was used to estimate the manufacturer
production cost (MPC) in dollars, and an energy consumption model was
used to estimate the daily energy consumption in kilowatt hours (kWh)
of covered commercial refrigeration equipment.
a. Cost Model
Development of the cost model involved the disassembly of a self-
contained refrigerator with transparent doors, an analysis of the
materials and manufacturing processes, and the development of a
parametric spreadsheet model flexible enough to cover all equipment
classes. The manufacturing cost model estimated MPC and reported it in
aggregated form to maintain confidentiality of sensitive cost data. DOE
obtained input from stakeholders on the MPC estimates and assumptions
to confirm accuracy. The cost model was used for 7 of the 15 examined
equipment classes and the results were extended to 6 of the remaining
examined equipment classes. The cost of the remaining two equipment
classes was estimated using available manufacturer list price (MLP)
information discounted to MPC. Details of the cost model are provided
in chapter 5 of the TSD.
A manufacturer markup is applied to the MPC estimates to arrive at
the MSP. This is the price of equipment sold at which the manufacturer
can recover both production and non-production costs, and earn a
profit. A market-share-weighted average industry markup was developed
by examining several major commercial refrigeration equipment
manufacturers' gross margin information from annual reports and
Securities and Exchange Commission (SEC) 10-K reports. The
manufacturers whose gross margin information was examined by DOE
represent approximately 80 percent of the commercial refrigeration
equipment market, and each of these companies is a subsidiary of a more
diversified parent company that manufactures equipment other than
commercial refrigeration equipment. Because the SEC 10-K reports do not
provide gross margin information at the subsidiary level, the estimated
markups represent the average markups that the parent company applies
over its entire range of offerings.
Markups were evaluated for the years 2000 to 2005, inclusively. The
manufacturer markup is calculated as 100/(100-average gross margin),
where gross margin is calculated as revenue-cost of goods sold (COGS).
To validate the SEC 10-K and annual report information, Internal
Revenue Service industry statistics were used as a check. DOE estimated
the average manufacturer markup within the industry as 1.39.
DOE received industry-supplied curves from ARI in the form of daily
energy consumption versus MLP, (both normalized by TDA). Since DOE's
analytically derived curves were developed in the form of CDEC versus
MSP (both normalized by TDA), it was necessary for DOE to estimate an
industry list price markup so that comparisons between the two sets of
curves could be made. The industry list price markup is a markup to the
production cost that provides the list price. To make comparisons
between the analytically derived cost-efficiency curves and the
industry-supplied cost-efficiency curves, DOE discounted the industry
data with the list price markup and normalized the analytically derived
curves by TDA.
DOE understands that manufacturers typically offer a discount off
the MLP, which depends on various factors such as the relationship with
the customer and the volume and type of equipment being purchased. For
the estimate of list price markup, DOE relied on information gathered
on self-contained commercial refrigeration equipment, since list price
information is readily available and typically published by self-
contained equipment manufacturers for this equipment. A review of the
data for self-contained equipment shows that the list price markup is
typically 2.0 (i.e., manufacturers will typically sell their equipment
for 50 percent off the published list price). DOE further verified the
estimate by obtaining list price quotes from several remote condensing
equipment manufacturers. During manufacturer interviews, some
commercial refrigeration equipment manufacturers agreed with the 2.0
markup estimate, while others stated the estimate was somewhat high.
Because the list price markup can vary significantly from manufacturer
to manufacturer and from customer to customer, DOE applied the same
estimated list price markup across each
[[Page 41182]]
equipment class to simplify the analysis.
b. Energy Consumption Model
The energy consumption model estimates the daily energy consumption
of commercial refrigeration equipment at various performance levels
using a design-options approach. The model is specific to the
categories of equipment covered under this rulemaking, but is
sufficiently generalized to model the energy consumption of all covered
equipment classes. For a given equipment class, the model estimates the
daily energy consumption for the baseline and the energy consumption of
several levels of performance above the baseline. The model is used to
calculate each performance level separately. For the baseline level, a
corresponding cost is calculated using the cost model, and for each
level above the baseline, the cost increases resulting from the
addition of various design options are used to recalculate the cost.
In the market and technology assessment (see chapter 3 of the TSD),
DOE defined an initial list of technologies that can reduce the energy
consumption of commercial refrigeration equipment. In the screening
analysis, DOE screened out technologies based on four screening
criteria: Technological feasibility, practicability to manufacture,
changes to product utility, and safety. The remaining list of
technologies becomes one of the inputs to the engineering analysis.
However, for reasons noted below, DOE did not incorporate all of these
technologies in the energy consumption model. Technologies that were
not used include: Remote lighting ballast location, evaporator fan
motor controllers, higher efficiency evaporator and condenser fan
blades, insulation increases or improvements, low pressure differential
evaporators, defrost cycle controls, and defrost mechanisms.
Relocation of fluorescent lamp ballasts outside the refrigerated
space can reduce energy consumption by lessening the refrigeration load
on the compressor. However, for the majority of commercial
refrigeration equipment currently manufactured, ballasts are already
located in electrical trays outside of the refrigerated space, in
either the base or top of the equipment. The notable exceptions are the
equipment classes in the VCT equipment family, where ballasts are most
often located on the interior of each door mullion. Most commercial
refrigeration equipment manufacturers purchase doors for VCT units that
are preassembled with the entire lighting system in place rather than
configured for separate ballasts. DOE believes that most commercial
refrigeration equipment manufacturers choose doors this way because it
would be labor intensive and time consuming to relocate these ballasts
at the factory, and because of the additional cost and labor of wiring
separate ballasts. In addition, the potential energy savings are small,
since modern electronic ballasts are very efficient and typically
contribute only a few watts each to the refrigeration load. Therefore,
DOE did not consider remote relocation of ballasts as a design option.
Evaporator fan motor controllers allow fan motors to run at
variable speed, to match changing conditions in the case. For
evaporator fan motor controllers, there is some opportunity for savings
as the buildup and removal of frost creates differing pressure drops
across the evaporator coil. Theoretically, less fan power is required
when the coil is free of frost. Additionally, the coil would operate at
a more stable temperature during the period of frost build-up. However,
the effectiveness of the air curtain in equipment without doors is very
sensitive to changes in airflow, so fan motor controllers could disrupt
the air curtain. The potential of disturbance to the air curtain, which
could lead to higher infiltration loads, does not warrant the use of
evaporator fan motor controllers in equipment without doors, even if
there were some reduction in fan energy use. In addition, DOE believes
that savings from evaporator fan motor controllers in all equipment
types would be small. Therefore, DOE did not consider evaporator fan
motor controllers as a design option.
Higher efficiency evaporator and condenser fan blades reduce motor
shaft power requirements by moving air more efficiently. Current
technology used in commercial refrigeration equipment is stamped sheet
metal or plastic axial fan blades. These fan blades are lightweight and
inexpensive. DOE was not able to identify any axial fan blade
technology that is significantly more efficient than what is currently
used, but did identify one alternative fan blade technology that could
potentially improve efficiency: Tangential fan blades. Tangential fan
blades can produce a wide, even airflow, and have the potential to
allow for increased saturated evaporator temperature (SET) through
improved air distribution across the evaporator coil, which would
reduce compressor power. However, tangential fan blades in small sizes
are themselves less efficient at moving air, and thus require greater
motor shaft power. Because of these competing effects, DOE did not
consider tangential fan blades as a design option.
Increases in or improvements to insulation thickness reduce the
heat load due to conduction and thus reduce compressor power. Increases
in the thickness of foam insulation are problematic because they must
either borrow volume from the refrigerated space or increase the
overall size of the equipment cabinet. Because the outer dimensions of
commercial refrigeration equipment are limited, it is often not
practical to increase the overall size of the cabinet (i.e., case
exterior dimensions are optimized for packing equipment into freight
and shipping containers). In addition, reducing the size of the
refrigerated space would reduce the utility of the equipment.
Therefore, increasing the thickness of foam insulation is not
practical. Furthermore, many display cases do not have significant
conduction loads, so insulation improvements do not offer large energy
savings. Improvements to insulation material include better
polyurethane foams and vacuum panels. In consultation with insulation
material manufacturers, DOE determined that there are no significant
differences in ``grades'' of insulation material, so most equipment
manufacturers are already using the best commercially available foam
materials in their equipment. Vacuum panels are an alternative form of
insulation; however, they may degrade in performance in time as small
leaks develop. In addition, vacuum panels cannot be penetrated by
fasteners, and do not provide the rigidity of ``foamed-in-place''
panels that polyurethane insulation creates. Therefore, DOE did not
consider insulation thickness increases or improvements as a design
option. DOE did, however, consider improvements to the efficiency
(e.g., thermal conductance) of doors in the design options analysis.
Higher efficiency doors reduce the overall heat gain to the case by
using better frame materials, more panes of glass and better (or more)
insulation in the doorframe.
Low pressure differential evaporators reduce energy consumption by
reducing the power of evaporator fan motors. However, in space-
constrained equipment such as commercial refrigeration equipment, this
reduction usually comes from a decrease in evaporator coil surface
area, which generally requires a lower SET to achieve the same
discharge air temperature and cooling potential. This, in turn, results
in a reduction in compressor efficiency. Because of these competing
effects, DOE did not consider
[[Page 41183]]
low pressure differential evaporators as a design option.
Defrost cycle control can reduce energy consumption by reducing the
frequency and duration of defrost periods. The majority of equipment
currently manufactured already uses partial defrost cycle control in
the form of cycle termination control. However, defrost cycle
initiation is still scheduled at regular intervals. Full defrost cycle
control would involve a method of detecting frost buildup and
initiating defrost. As described in the market and technology
assessment (see chapter 3 of the TSD), this could be accomplished
through an optical sensor or sensing the temperature differential
across the evaporator coil. However, both of these methods are
unreliable due to problems with fouling of the coil due to dust and
other surface contaminants. This becomes more of an issue as the
display case ages. Because of these issues, DOE did not consider
defrost cycle control as a design option.
Defrosting for medium temperature equipment is typically
accomplished with off-cycle defrost. Because off-cycle defrost uses no
energy (and decreases compressor on-time) there is no defrost design
option capable of reducing defrost energy in cases that use off-cycle
defrost. Some medium temperature equipment and all low temperature and
ice-cream temperature equipment use supplemental heat for defrost.
Commonly, electric resistance heating (electric defrost) is used in
this equipment. An alternative to electric defrost in equipment that
requires supplemental defrost heat is hot-gas defrost. Hot-gas defrost
is most often used in remote condensing equipment and involves the use
of the hot compressor discharge gas to warm the evaporator from the
refrigerant side. The test procedure for commercial refrigeration
equipment is not capable of quantifying the energy expenditure of the
compressor during a hot-gas defrost cycle. Therefore, DOE did not
consider it as a design option.
The design options DOE considered in the engineering analysis are:
Higher efficiency lighting and ballasts for the VOP, SVO,
HZO, and SOC equipment families (horizontal fixtures);
Higher efficiency lighting and ballasts for the VCT
equipment family (vertical fixtures);
Higher efficiency evaporator fan motors;
Increased evaporator surface area;
Improved doors for the VCT equipment family, low
temperature;
Improved doors for the VCT equipment family, medium
temperature;
Improved doors for the HCT equipment family, ice-cream
temperature;
Improved doors for the SOC equipment family, medium
temperature;
Higher efficiency condenser fan motors (for self-contained
equipment only);
Increased condenser surface area (for self-contained
equipment only); and
Higher efficiency compressors (for self-contained
equipment only).\20\
---------------------------------------------------------------------------
\20\ Improvements to the condensing unit are not considered for
remote condensing equipment, since the test procedure and standard
apply only to the cabinet and not the condensing unit.
---------------------------------------------------------------------------
In developing the energy consumption model, DOE made certain
assumptions including general assumptions about the analysis
methodology as well as specific numerical assumptions regarding load
components and design options. DOE based its energy consumption
estimates on new equipment tested in a controlled-environment chamber
subjected to ANSI/ARI Standard 1200-2006, which references the ANSI/
ASHRAE Standard 72-2005 test method.\21\ Manufacturers that are
certifying their equipment to comply with Federal standards will be
required to test new units with this test method, which specifies a
certain ambient temperature, humidity, light level, and other
requirements. One specification which DOE noted was absent from this
standard is the operating hours of the display case lighting in a 24-
hour period. DOE considered the operating hours to be 24 hours (i.e.,
that lights are on continuously). Other commercial refrigeration
equipment considerations are detailed in chapter 5 of the TSD.
---------------------------------------------------------------------------
\21\ Test procedures are found at 10 CFR 431.64.
---------------------------------------------------------------------------
The energy consumption model calculates CDEC as two major
components: compressor energy consumption and component energy
consumption (expressed as kilowatt hours per day (kWh/day)). Component
energy consumption is a sum of the direct electrical energy consumption
of fan motors, lighting, defrost and drain heaters, anti-sweat heaters,
and pan heaters. Compressor energy consumption is calculated from the
total refrigeration load (expressed as British thermal units per hour
(Btu/h)) and one of two compressor models: one version for remote
condensing equipment and one for self-contained equipment. The total
heat load is a sum of the component load and the non-electric load. The
component load is a sum of the heat emitted by evaporator fan motors,
lighting, defrost and drain heaters, and anti-sweat heaters inside and
adjacent to the refrigerated space (condenser fan motors and pan
heaters are outside of the refrigerated space and do not contribute to
the component heat load). The non-electric load is a sum of the heat
contributed by radiation through glass and openings, heat conducted
through walls and doors, and sensible and latent loads from warm, moist
air infiltration through openings. Details of component energy
consumption, compressor energy consumption, and load models are shown
in chapter 5 of the TSD.
4. Baseline Models
As mentioned above, the engineering analysis estimates the
incremental costs for equipment with efficiency levels above the
baseline in each equipment class. DOE was not able to identify a
voluntary or industry standard that provided a minimum baseline
efficiency requirement for commercial refrigeration equipment.
Therefore, it was necessary for DOE to establish baseline
specifications for each equipment class to define the energy
consumption and cost of the typical baseline equipment. These
specifications include dimensions, number of components, temperatures,
nominal power ratings, and other case features that affect energy
consumption, as well as a basic case cost (the cost of a piece of
equipment not including the major efficiency-related components such as
lights, fan motors, and evaporator coils).
DOE established baseline specifications for each of the equipment
classes modeled in the engineering analysis by reviewing available
manufacturer data, selecting several representative units from
available manufacturer data, and then aggregating the physical
characteristics of the selected units. This process created a
representative unit for each equipment class with average
characteristics for physical parameters (e.g., volume, TDA), and
minimum performance of energy-consuming components (e.g., fans,
lighting). The cost model was used to develop the basic case cost for
each equipment class. See appendix B of the TSD for these
specifications.
5. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of CDEC \22\ (in
[[Page 41184]]
kWh) versus MSP (in dollars), which form the basis for subsequent
analyses in the ANOPR. DOE created 15 cost-efficiency curves and
received 4 industry aggregated curves from ARI. The industry-supplied
curves are in the form of CDEC versus MLP, both normalized by TDA. To
compare the analytically derived curves to the industry-supplied
curves, DOE discounted the industry data with the list price markup and
normalized the analytically derived curves by TDA. For the four
equipment classes with the highest shipment volumes DOE used the
industry-supplied cost-efficiency curves in the downstream analyses.
For the equipment classes where industry-supplied curves were not
available, DOE used the analytically derived curves in the downstream
analyses. See chapter 5 for additional detail on the engineering
analysis and appendix B of the TSD for complete cost-efficiency
results.
---------------------------------------------------------------------------
\22\ The ANSI ARI Standard 1200-2006 test procedure uses CDEC as
the metric for remote condensing equipment and total daily energy
consumption (TDEC) as the metric for self-contained equipment. In
the engineering analysis, DOE used CDEC as the metric for both
equipment types, but will refer to each equipment type's specific
metric when developing standard equations.
---------------------------------------------------------------------------
D. Markups To Determine Equipment Price
This section explains how DOE developed the supply chain markups to
determine installed prices for commercial refrigeration equipment (see
chapter 6 of the TSD). DOE used the supply chain markups it developed
(along with sales taxes and installation costs) in conjunction with the
MSPs developed from the engineering analysis to arrive at the final
installed equipment prices for baseline and higher efficiency
equipment. As shown in Table II.8, DOE defined three distribution
channels for commercial refrigeration equipment to describe how the
equipment passes from the manufacturer to the customer. In the first
distribution channel, the manufacturer sells the equipment directly to
the customer through a national account. In the second and third
distribution channels, the manufacturer sells the commercial
refrigeration equipment to a wholesaler, who in turn may sell it
directly to the customer or sell it to a mechanical contractor who may
sell it and its installation to the customer. The wholesaler in this
case can be a refrigeration wholesaler focusing on commercial
refrigeration equipment, or a grocery warehouser (supply chain
distributor) who sells food and retail store equipment to the retailer.
Table II.8 also gives the estimated distribution channel shares (in
percentage of total sales) through each of the three distribution
channels.
Table II.8.--Distribution Channels and Shares for Commercial
Refrigeration Equipment
------------------------------------------------------------------------
Channel 1 Channel 2 Channel 3
------------------------------------------------------------------------
Manufacturer.................... Manufacturer, Manufacturer,
Wholesaler. Wholesaler,
Contractor.
Customer........................ Customer.......... Customer.
86 percent...................... 7 percent......... 7 percent.
------------------------------------------------------------------------
For each of the steps in the distribution channels presented above,
DOE estimated a baseline markup and an incremental markup. A baseline
markup is applied to the purchase of equipment with the baseline
efficiency. An incremental markup is applied to the incremental
increase in MSP for the purchase of higher efficiency equipment. The
overall baseline or overall incremental markup is then given by the
product of all the markups at each step in the distribution channel
plus sales tax. Overall baseline or overall incremental markups for the
entire commercial refrigeration equipment market can be determined
using the shipment weights through each distribution channel and the
corresponding overall baseline markup or the corresponding overall
incremental markup, respectively, for each distribution channel
including the applicable sales tax.
Markups for each step of the distribution channel were developed
based on available financial data. DOE based the wholesaler markups on
firm balance-sheet data from the Heating, Airconditioning &
Refrigeration Distributors International (HARDI), the trade association
representing wholesalers of refrigeration and heating, ventilating and
air-conditioning (HVAC) equipment. DOE used median financial statistics
reported by the controls and refrigeration industry segment of this
trade association in HARDI's 2005 Profit Planning Report. DOE based the
mechanical contractor markups on U.S. Census Bureau financial data for
the plumbing, heating, and air conditioning industry as a whole.
Average markups for sales through national accounts were estimated as
one-half that of the wholesaler to customer distribution channel.
Baseline markups for wholesalers and for contractors are calculated
as total revenue (equal to all expenses paid plus profit) divided by
the COGS. Expenses include direct costs for equipment, labor expenses,
occupancy expenses, and other operating expenses (e.g., insurance,
advertising). Some of these are presumed to be fixed costs (labor,
occupancy) that do not change with the distribution of higher
efficiency equipment. Other expenses are variable costs that may change
in response to changes in COGS. In developing incremental markup, DOE
considered the labor and occupancy costs to be fixed, and the other
operating costs and profit to scale with the MSP.
The overall markup is the product of all the markups plus sales tax
within a distribution channel. Both baseline and incremental overall
markups were calculated for each distribution channel. Sales taxes were
calculated based on State-by-State sales tax data reported by the Sales
Tax Clearinghouse. Both contractor costs and sales tax vary by State,
so the markup analysis develops distributions of markups within each
distribution channel as a function of State and business type (e.g.,
supermarket, convenience store, convenience store with gas station, or
superstore). Because the State-by-State distribution of commercial
refrigeration equipment units varies by business type (e.g.,
supermarkets may be more prevalent relative to convenience stores in
one part of the country than another), a national level distribution of
the markups is different for each business type.
Average overall markups in each distribution channel can be
calculated using estimates of the shipments of commercial refrigeration
equipment units by business type and by State. The ANOPR analysis used
estimates of relative total frozen and refrigerated food sales by State
and each business type as reported by the U.S. Census Bureau as a proxy
for relative shipments of commercial refrigeration equipment. Overall
baseline and incremental markups for sales to supermarkets
[[Page 41185]]
within each distribution channel are shown in Table II.9 and Table
II.10.
Table II.9.--Baseline Markups by Distribution Channel Including Sales Tax for Supermarkets
----------------------------------------------------------------------------------------------------------------
Mechanical
contractor National account
Wholesaler (includes (manufacturer- Overall
wholesaler) direct)
----------------------------------------------------------------------------------------------------------------
Distributor(s) Markup................... 1.436 2.182 1.218 1.301
Sales Tax............................... 1.068 1.068 1.068 1.068
Overall Markup.......................... 1.533 2.330 1.300 1.389
----------------------------------------------------------------------------------------------------------------
Table II.10.--Incremental Markups by Distribution Channel Including Sales Tax for Supermarkets
----------------------------------------------------------------------------------------------------------------
Mechanical
contractor National account
Wholesaler (includes (manufacturer- Overall
wholesaler) direct)
----------------------------------------------------------------------------------------------------------------
Distributor(s) Markup................... 1.107 1.362 1.054 1.079
Sales Tax............................... 1.068 1.068 1.068 1.068
Overall Markup.......................... 1.182 1.454 1.125 1.152
----------------------------------------------------------------------------------------------------------------
Additional detail on markups can be found in chapter 6 of the TSD.
E. Energy Use Characterization
The energy use characterization estimates the annual energy
consumption of commercial refrigeration equipment systems (including
remote condensing units). This estimate is used in the subsequent LCC
and PBP analyses (see chapter 8 of the TSD) and NIA (see chapter 10 of
the TSD). DOE estimated the energy consumption of the 15 equipment
classes analyzed in the engineering analysis (see chapter 5 of the TSD)
using the relevant test procedure. These energy consumption estimates
were then validated with annual simulation modeling of selected
equipment classes and efficiency levels.
ANSI/ARI Standard 1200-2006, which references ANSI/ASHRAE Standard
72-2005, is an industry-developed test procedure for measuring the
energy consumption of commercial refrigeration equipment. ANSI/ARI
Standard 1200-2006 provides a method for estimating the daily energy
consumption for a piece of commercial refrigeration equipment under
steady-state conditions. ANSI/ARI Standard 1200-2006 treats remote
condensing and self-contained commercial refrigeration equipment
differently. In the case of remote condensing equipment, the test
procedure measures the energy use of each component (e.g., fans and
lights) as well as the total refrigeration load of the equipment. The
total refrigeration load is used to calculate compressor energy
consumption based on a standardized relationship of evaporator
temperature and compressor energy efficiency ratio. In the case of
self-contained commercial equipment, the test procedure measures the
total energy use of the equipment as a whole, including both component
energy use and compressor energy use. The resulting daily energy
consumption estimate is either CDEC for remote condensing equipment or
TDEC for self-contained equipment. Both metrics represent the sum of
compressor energy consumption and the energy consumption of all other
energy consuming components in the equipment (i.e., evaporator fan
motors, lighting, anti-sweat heaters, defrost and drain heaters, and
condensate evaporator pan heaters).
Several options were considered to provide estimates of the energy
consumption of commercial refrigeration equipment. These options
include: using a whole building simulation which would analyze case,
compressor, and HVAC impacts; using an existing simulation program that
would analyze display case and compressor energy use on an annual
basis; and using estimates of energy consumption for various categories
of equipment as developed in the engineering analysis. For the ANOPR,
DOE used energy consumption estimates from the engineering analysis
directly in the LCC analysis. To validate these estimates, DOE
conducted a whole building energy use simulation for seven equipment
classes at selected design-option levels.
A whole building simulation was the option first considered by DOE
and was discussed during DOE?s Framework public meeting. During that
meeting Southern Company and ARI commented that a whole building
analysis is the desired approach (Public Meeting Transcript No. 3.4 at
p. 151). The Northwest Power Planning Council (NWPPC) and ASAP were
concerned about the additional difficulty and complexity of the
resulting analysis (Public Meeting Transcript No. 3.4 at p. 161 and
Public Meeting Transcript No. 3.4 at p. 155). The approach taken by DOE
was to use energy estimates developed from the engineering analysis but
to validate those estimates with whole building simulation of
supermarkets, which included simulation of the refrigeration system.
There were four reasons for adopting this approach.
1. The energy consumption ratings provided by ANSI/ARI Standard
1200-2006 do not distinguish between energy consumption by the
compressor (which may vary as a function of environmental conditions)
and energy consumption by other components in the case (e.g.,
lighting), which do not vary as a function of environmental conditions.
These two types of energy consumption are roughly similar in magnitude,
and it is difficult to assess where the energy savings are coming from
or what the impact on a building HVAC load might be.
2. The initial engineering analysis (see chapter 5 of the TSD) did
not suggest design options that would provide significant changes to
the building load relative to the commercial refrigeration system
energy consumption.
3. The net interaction between the refrigeration system and HVAC
energy consumption is a function of the variation in HVAC designs. HVAC
system designs for food sales buildings, like supermarkets, may
incorporate such features as separate dehumidification and refrigerant
condenser reheat systems, which make assessing overall HVAC impact
complicated. Also, detailed data on the relative prevalence
[[Page 41186]]
of different HVAC system designs incorporating these features is not
readily available.
4. The interaction between the refrigeration and overall HVAC
energy consumption is a function of the ratio of the total heat removed
from the space by the display cases relative to the other internal
loads (lighting, occupancy, and plug load) and external loads (building
envelope and ventilation driven) in the building. This ratio determines
the fraction of the year that the building is either in heating or
cooling mode. However, the balance of refrigeration-driven space loads
to the other space loads is impacted by the efficiency levels for all
commercial refrigeration equipment classes, complicating the analysis
of each equipment class individually. For the equipment classes with
the largest shipment, which make up the largest base of equipment in a
typical store and have the biggest overall impact on the space load
balance, the industry-supplied efficiency curves do not provide
information about changes in equipment design that could be used to
assess this change in refrigeration-driven space loads.
In its validation effort, DOE used a modified version of the DOE
developed DOE-2 whole-building energy analysis tool, DOE-2.2
refrigeration version (DOE-2.2R), to model whole-building energy use in
a typical supermarket in five U.S. climate locations (Baltimore,
Chicago, Houston, Los Angeles, and Memphis). Each of these locations
has a climate that typifies one of five distinct U.S. climate zones
developed by DOE for use in building energy codes development work.
These five climate zones taken together encompass approximately three-
fourths of the U.S. population. Annual energy use for seven equipment
classes was simulated at four representative efficiency levels. Data on
refrigeration loads from the engineering analysis supported the
development of the energy efficiency levels analyzed. These
refrigeration loads included those from internal features (e.g.,
lighting and fans inside the case), and externally driven loads from
radiation, convection/infiltration, and conduction through the case
wall. These loads and other direct energy-consuming features (e.g., fan
and lights) were mapped to corresponding inputs in DOE-2.2R for the
simulation analysis. Pull-down loads from shelving of food are not part
of the test procedure and were therefore not considered.
To examine the impacts of ambient relative humidity, refrigerant
piping heat loss, and climate location on energy consumption of
commercial refrigeration equipment, annual simulation data from the DOE
2.2R model was converted to average daily energy consumption and
average daily refrigeration load comparison with the engineering
analysis estimates. DOE also assessed the magnitude of interactions
between the refrigeration system and the building HVAC system.
The results of the whole-building simulation showed that climate
location has no influence on energy consumption of the refrigerated
case components for the remote condensing equipment classes examined.
For a given efficiency level, the energy consumption of case components
is the same for the simulation and the engineering analysis. In
addition, climate location was shown to have relatively little
influence on compressor energy consumption for equipment classes with
doors, where display case infiltration levels are relatively low.
Climate conditions do have a significant impact on compressor energy
consumption for open equipment. Compressor energy consumption is
determined by total refrigeration load and compressor efficiency, both
of which are affected by climate conditions for remote condensing
equipment.
In general, the average daily refrigeration load from the DOE 2.2R
simulations was smaller than that predicted by the engineering
analysis, due to differences between the building space conditions
throughout the year captured by the simulations and the space
conditions used for the steady-state rating of equipment used in the
engineering analysis. The actual energy consumption of the compressors
was, however, generally higher than that predicted by the engineering
analysis. The difference in energy consumption is due to the
aforementioned differences in refrigeration loads, the fact that the
simulation accounts for changes in condensing temperatures over the
year for each climate, and the additional superheat loads calculated by
the simulation software to bring the return refrigerant return vapor up
to the compressor suction temperature conditions, which is estimated to
be 65[deg]F (the ARI rating condition used to provide rated compressor
performance).
Analysis of the annual refrigeration system energy savings for each
of 3 efficiency levels above the baseline level were all within 14
percent of that predicted by the engineering analysis for 6 equipment
classes across all efficiency levels and climates examined. Net energy
savings averaged 8 percent higher for the highest efficiency level
examined. For the remote condensing VOP.RC.L equipment class the annual
energy savings deviated by as much as 21 percent. No shipments for this
equipment class were reported by ARI. Actual shipments, if any, are
expected to be small. This suggests that for the majority of commercial
refrigeration equipment, the energy savings predicted by the test
procedure agreed reasonably well with the annual simulation results,
although the impact of individual design options may differ.
Estimates of whole-building energy consumption and refrigeration
energy consumption were examined at selected efficiency levels and
climate locations to determine if the design options considered in the
engineering analysis would have a significant effect on building HVAC
energy use. The influence of refrigeration equipment efficiency changes
on HVAC system energy use varies depending on the design option. For
example, improved display case lighting efficiency would reduce the
energy consumption of the refrigeration system and potentially the air-
conditioning system, depending on lighting placement. Reduced
conduction and radiation loads in the refrigeration equipment would, by
contrast, increase the air-conditioning load and subsequent energy
consumption while decreasing the heating load. For all equipment
classes and efficiency levels examined, the annual whole-building
energy savings was within 10 percent of that calculated for the
refrigeration system alone. For the highest efficiency level examined,
savings were within 1.4 percent. The simulation results suggest that
the collective impact of the design options considered does not
significantly affect the HVAC energy consumption.
In the energy use characterization, DOE used whole-building
simulation to explore the relative energy savings of refrigeration
systems and whole-building energy use for supermarkets. While there
were some differences in the annual energy use predicted by the whole-
building simulation and that derived in the engineering analysis, DOE
concludes that these differences were generally small.
Both the engineering analysis and the whole-building simulation
presumed that display case lighting operated 24 hours per day. In many
applications, display case lighting may not be required 24 hours per
day. DOE conducted a sensitivity analysis to explore how variation in
display case lighting operating hours affected the energy savings. This
sensitivity analysis was done for all equipment classes using the
engineering analysis spreadsheet and the design options considered for
each equipment class. No such analysis could be done using the
[[Page 41187]]
industry-supplied efficiency curves as details on component energy
consumption were not provided with these curves. The sensitivity
analysis showed that energy savings were reduced as lighting operating
hours were reduced for all equipment classes that used display case
lighting. The magnitude of this effect depended upon the equipment
class. For a 20-hour lighting time assumption, the reduction in energy
savings was between 1 percent and 6 percent. For a 16-hour lighting
time assumption, the reduction in energy savings was between 2 percent
and 15 percent. DOE's analysis suggests that typical lighting operating
hours for most classes of commercial refrigeration equipment would fall
within the range of 16 to 24 hours per day, depending on store
operating hours, use of lighting during after-hours case stocking, and
typical lighting operation or controls used for unoccupied periods.
Display case lighting hours may also depend on the business type as
convenience stores have distinctly different operating hours than other
segments of the food retail industry.
Because of the sensitivity of the annual energy savings to display
case lighting hours and the lack of data on actual lighting use, DOE
specifically seeks feedback on the assumption of 24 hours for case
lighting operation. This is identified as Issue 6 under ``Issues on
Which DOE Seeks Comment'' in section IV.E of this ANOPR.
Also, DOE specifically seeks feedback on operation and maintenance
practices for commercial refrigeration equipment, which may be
prevalent in the field and may differ from standardized conditions,
such as those represented in a test procedure. Operation and
maintenance practices could potentially affect the energy consumption
savings experienced in the field as a result of increased energy
efficiency as compared to those savings estimated in the TSD's energy
consumption analysis under idealized testing conditions. These factors
include: compressor operation that is inefficient due to age or some
other condition associated with the compressor unit; location of a
commercial refrigeration unit adjacent to an outside door or in direct
sunlight; operation of a room-cooling fan nearby the commercial
refrigeration unit; a unit routinely stocked with products that are
significantly under or over the ambient room temperature; overstocking
of a unit; frequency and promptness of repair/maintenance of a unit;
operation of doors during periods of high volume use; frequency of
cooling coil cleaning; maintenance of sufficient space surrounding a
unit for proper air circulation or proper operation of air vents; and
wear/tear of, or damage to, door seals and hinges on a unit. Such
factors may or may not be associated with use of a unit in the field,
and thus their impacts would be difficult to analyze in a quantitative
manner. Nevertheless, these factors are among those commonly
highlighted in energy use reduction guidelines as important to
achieving the maximum energy efficiency for the given unit. Therefore,
DOE requests comment on the frequency that such factors come in to play
in energy use in the field, and whether and how DOE might account for
these factors in assessing the overall impacts of the candidate
standards levels for commercial refrigeration equipment. This is
identified as Issue 7 under ``Issues on Which DOE Seeks Comment'' in
section IV.E of this ANOPR.
In determining the reduction in energy consumption of commercial
refrigeration equipment due to increased efficiency, DOE did not take
into account a rebound effect. The rebound effect occurs when a piece
of equipment that is made more efficient is used more intensively, so
that the expected energy savings from the efficiency improvement do not
fully materialize. Because commercial refrigeration equipment is
operated 24 hours a day, 7 days a week to maintain adequate conditions
for the merchandise being retailed, a rebound effect resulting from
increased refrigeration energy consumption seemed unlikely. The
engineering estimates of energy use also used a 24-hour lighting
schedule; although a sensitivity analysis to a reduced lighting
schedule was performed. It is possible that under a reduced lighting
schedule, lower lighting power draw resulting from energy conservation
standards could lead to equipment operation strategies with increased
lighting operating hours; however, DOE has no data with which to
examine this impact for the commercial refrigeration equipment market
and has not taken it into account in the energy use characterization.
Additional detail on the energy use characterization can be found
in chapter 7 of the TSD.
F. Rebuttable Presumption Payback Periods
Section 345(e)(1)(A) of EPCA (42 U.S.C. 6316(e)(1)(A)) establishes
a rebuttable presumption for commercial refrigeration equipment. The
rebuttable presumption states that a standard is economically justified
if the Secretary finds that ``the additional cost to the consumer of
purchasing a product complying with an energy conservation standard
level will be less than three times the value of the energy * * *
savings during the first year that the consumer will receive as a
result of the standard, as calculated under the applicable test
procedure * * *.'' (42 U.S.C. 6295(o)(2)(B)(iii))
To evaluate the rebuttable presumption, DOE estimated the
additional cost of a more efficient, standard-compliant unit, and
compared this cost to the value of the energy saved during the first
year of operation of the equipment as determined by ANSI/ARI Standard
1200-2006. DOE interprets that the increased cost of purchasing a
standard-compliant unit includes the cost of installing the equipment
for use by the purchaser. DOE calculated the rebuttable presumption
PBP, or the ratio of the value of the increased installed price above
the baseline efficiency level to the first year's energy cost savings.
When this PBP is less than three years, the rebuttable presumption is
satisfied; when this PBP is equal to or more than three years, the
rebuttable presumption is not satisfied.
Rebuttable presumption PBPs were calculated based on a distribution
of installed costs and energy prices that included four types of
businesses and all 50 States. The rebuttable presumption PBPs differ
from the other PBPs calculated in the LCC analysis (see section II.G.14
of this ANOPR) in that they do not include maintenance or repair costs.
The baseline efficiency level for the rebuttable presumption
calculation is the baseline established in the engineering analysis.
From the range of efficiency levels for which cost data was determined
in the engineering analysis, DOE selected up to eight efficiency levels
in each equipment class, including the baseline efficiency level, for
the LCC and subsequent ANOPR analysis. The selection of these
efficiency levels is discussed in chapter 8 and appendix F of the TSD.
For each equipment class the rebuttable presumption PBP was calculated
for each efficiency level higher than the baseline.
Inputs to the PBP calculation are the first seven inputs shown in
Table II.12 found in section II.G.2 of this ANOPR.
Table II.11 shows the nationally averaged rebuttable presumption
paybacks calculated for all equipment classes and efficiency levels.
The highest efficiency level with a rebuttable presumption payback of
less than three years is also shown in Table II.11 for each equipment
class. For all equipment classes analyzed in the ANOPR analysis with
the exception of the SOC.RC.M
[[Page 41188]]
equipment class, the rebuttable presumption criteria were satisfied at
either the maximum efficiency level examined or the next lower
efficiency level examined. However, while DOE has examined the
rebuttable presumption PBPs, DOE has not determined economic
justification for any of the standard levels analyzed based on the
ANOPR rebuttable presumption analysis. The setting of candidate
standard levels (CSLs) by DOE will take into account the more detailed
analysis of the economic impacts of increased efficiency pursuant to
section 325(o)(2)(B)(i) of EPCA. (42 U.S.C. 6295(o)(2)(B)(i))
Table II.11.--Rebuttable Presumption Payback Periods by Efficiency Level and Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rebuttable presumption payback period (years)
Equipment type -------------------------------------------------------------------------------- Highest level with PBP <3 years
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M............................... NA 3.2 2.8 2.6 2.7 2.8 2.9 3.1 Level 7.
VOP.RC.L............................... NA 0.5 0.8 1.1 1.2 1.9 NA NA Level 6.
VOP.SC.M............................... NA 0.7 0.7 0.8 1.1 1.3 2.0 2.9 Level 8.
VCT.RC.M............................... NA 0.3 0.4 0.6 0.8 2.6 3.7 NA Level 6.
VCT.RC.L............................... NA 1.4 1.6 1.8 2.1 2.2 2.3 2.7 Level 8.
VCT.SC.I............................... NA 0.2 0.4 0.4 0.6 1.3 1.5 2.0 Level 8.
VCS.SC.I............................... NA 0.3 0.6 0.6 0.7 0.7 0.8 1.2 Level 8.
SVO.RC.M............................... NA 3.2 2.8 2.7 2.8 2.9 3.0 NA Level 6.
SVO.SC.M............................... NA 0.8 0.8 0.9 1.1 1.3 1.7 2.3 Level 8.
SOC.RC.M............................... NA 0.6 1.0 1.1 1.3 2.9 3.6 NA Level 6.
HZO.RC.M............................... NA 0.8 1.2 1.5 NA NA NA NA Level 4.
HZO.RC.L............................... NA 1.2 1.6 1.7 1.8 1.9 NA NA Level 6.
HZO.SC.M............................... NA 0.7 1.0 1.1 1.1 1.2 1.4 1.8 Level 8.
HZO.SC.L............................... NA 0.6 0.6 0.8 0.8 0.9 1.3 1.3 Level 8.
HCT.SC.I............................... NA 0.7 0.7 1.3 1.4 1.4 NA NA Level 6.
--------------------------------------------------------------------------------------------------------------------------------------------------------
G. Life-Cycle Cost and Payback Period Analyses
The LCC and PBP analyses determine the economic impact of potential
standards on consumers. The effects of standards on individual
commercial consumers include changes in operating expenses (usually
lower) and changes in total installed cost (usually higher). DOE
analyzed the net effect of these changes for commercial refrigeration
equipment, first, by calculating the changes in consumers' LCCs likely
to result from a CSL as compared to a base case (no new standards). The
LCC calculation considers total installed cost (includes MSP, sales
taxes, distribution channel markups, and installation cost), operating
expenses (energy, repair, and maintenance costs), equipment lifetime,
and discount rate. DOE performed the LCC analysis from the perspective
of the user of commercial refrigeration equipment.
DOE calculated the LCC for all customers as if each would purchase
a new commercial refrigeration equipment unit in the year the standard
takes effect. The effective date is the future date when a new standard
becomes operative. Section 136(c) of EPACT 2005 amends EPCA to add
section 342(c)(4), 42 U.S.C. 6313(c)(4), which directs the Secretary to
issue a final rule for commercial refrigeration equipment not later
than January 1, 2009, with the energy conservation standards levels
effective for equipment manufactured on or after January 1, 2012.
Further, the Secretary may issue, by rule, energy conservation
standards levels for other types of commercial refrigeration equipment,
with the standard levels effective for equipment three or more years
after a final rule is published. (42 U.S.C. 6313(c)(4)(B), added by
EPACT 2005, section 136(c)) Consistent with EPCA, DOE used these dates
in the ANOPR analyses. Further, DOE based the cost of the equipment on
projected costs in 2012. However, all dollar values are expressed in
2006 dollars. Annual energy prices are considered for the life of the
commercial refrigeration equipment.
DOE also analyzed the effect of changes in operating expenses and
installed costs by calculating the PBP of potential standards relative
to a base case. The PBP estimates the amount of time it would take the
commercial consumer to recover the incrementally higher purchase
expense of more energy efficient equipment through lower operating
costs. Similar to the LCC, the PBP is based on the total installed cost
and the operating expenses. However, unlike the LCC, only the first
year's operating expenses are considered in the calculation of the PBP.
Because the PBP does not account for changes in operating expense over
time or the time value of money, it is also referred to as a simple
PBP. For more details on the LCC and PBP analyses, refer to chapter 8
of the ANOPR TSD.
1. Approach
Recognizing that each commercial building that uses commercial
refrigeration equipment is unique, DOE analyzed variability and
uncertainty by performing the LCC and PBP calculations for two
prototype commercial buildings (stores) and four types of businesses
(two types of businesses for each prototype store). The first store
prototype is a ``large'' grocery store, which encompasses supermarkets
and wholesaler/retailer multi-line stores such as ``big-box'' stores,
``warehouse'' stores, and ``supercenters.'' The second prototype is a
``small'' store, which encompasses convenience stores and small
specialty stores such as meat markets, wine, beer, and liquor stores,
and convenience stores associated with gasoline stations. Within a
given prototype of store, various types of commercial refrigeration
equipment can serve the store's refrigeration needs.
Aside from energy, the most important factors influencing the LCC
and PBP analyses are related to the State to which each commercial
refrigeration equipment unit is shipped. These factors include energy
prices, installation cost, markup, and sales tax. The LCC analysis
presented here used the predicted energy consumption based on the
engineering analysis (see chapter 5 of the TSD) and reviewed in the
energy use characterization (see chapter 7 of the TSD). Energy
consumption of commercial refrigeration equipment calculated using this
approach is not sensitive to climatic conditions, so energy consumption
in the LCC analysis does not vary by geographical location.
[[Page 41189]]
At the national level, the analysis explicitly modeled both the
uncertainty and the variability in the model's inputs using probability
distributions based on the shipment of units to different States.
2. Life-Cycle Cost Analysis Inputs
For each efficiency level analyzed, the LCC analysis requires input
data for the total installed cost of the equipment, the operating cost,
and the discount rate. Table II.12 summarizes the inputs and key
assumptions used to calculate the economic impacts of various
efficiency levels. A more detailed discussion of the inputs follows.
Table II.12.--Summary of Inputs and Key Assumptions Used in the Life-
Cycle Cost Analysis
------------------------------------------------------------------------
Input Description
------------------------------------------------------------------------
Baseline Manufacturer Selling Price.. Price charged by manufacturer to
either a wholesaler or large
customer for baseline equipment.
Standard-Level Manufacturer Selling Incremental change in
Price Increases. manufacturer selling price for
equipment at each of the higher
efficiency standard levels.
Markups and Sales Tax................ Associated with converting the
manufacturer selling price to a
customer price (see chapter 6 of
TSD).
Installation Price................... Cost to the customer of
installing the equipment. This
includes labor, overhead, and
any miscellaneous materials and
parts. The total installed cost
equals the customer equipment
price plus the installation
price.
Equipment Energy Consumption......... Site energy use associated with
the use of commercial
refrigeration equipment, which
includes only the use of
electricity by the equipment
itself.
Electricity Prices................... Average commercial electricity
price ($/kWh) in each State and
for four classes of commercial
customers, as determined from
Energy Information
Administration (EIA) data for
2003 converted to 2006$.
Electricity Price Trends............. Used the AEO2006 reference case
to forecast future electricity
prices.
Maintenance Costs.................... Labor and material costs
associated with maintaining the
commercial refrigeration
equipment (e.g., cleaning heat
exchanger coils, checking
refrigerant charge levels, lamp
replacement).
Repair Costs......................... Labor and material costs
associated with repairing or
replacing components that have
failed.
Equipment Lifetime................... Age at which the commercial
refrigeration equipment is
retired from service (estimated
to be 10 years).
Discount Rate........................ Rate at which future costs are
discounted to establish their
present value to commercial
refrigeration equipment users.
Rebound Effect....................... A rebound effect was not taken
into account in the LCC
analysis.
------------------------------------------------------------------------
3. Baseline Manufacturer Selling Price
The baseline MSP is the price charged by manufacturers to either a
wholesaler/distributor or very large customer for equipment meeting
existing minimum efficiency (or baseline) standards. The MSP includes a
markup that converts the MPC to MSP. DOE obtained the baseline MSPs
through industry supplied efficiency-level data supplemented with a
design-option analysis. Refer to chapter 5 of the TSD for details. MSPs
were developed for equipment classes consisting of eight possible
equipment families, two possible condensing unit configurations (remote
condensing and self-contained) and three possible rating temperatures.
Not all covered equipment classes have significant actual shipments
(see chapter 3 of the TSD). The LCC and PBP analyses have been carried
out on a set of 15 equipment classes identified earlier.
DOE was not able to identify data on relative shipments for
equipment classes by efficiency level, nor were equivalent data found
by DOE in the literature or studies examined by DOE. For the equipment
for which DOE performed a design option analysis as the basis for the
engineering analysis, DOE designated the highest-energy-use equipment
as Level 1, and selected this as the baseline equipment.
4. Increase in Selling Price
The standard-level MSP increase is the change in MSP associated
with producing equipment at lower energy consumption levels associated
with higher standards. DOE developed MSP increases associated with
decreasing equipment energy consumption (or higher efficiency) levels
through a combination of energy consumption level and design-option
analyses. Refer to chapter 5 of the TSD for details. MSP increases as a
function of equipment energy consumption were developed for each of the
15 equipment classes. Although the engineering analysis produced up to
11 energy consumption levels, depending on equipment type, only up to 8
selected energy consumption levels were used in the LCC and PBP
analyses.
5. Markups
As discussed earlier, overall markups are based on one of three
distribution channels, as well as whether the equipment is being
purchased for the new construction or the replacement market. Based on
input received by DOE, approximately 7 percent of equipment purchased
by end-use customers is from wholesaler/distributors, 7 percent is from
mechanical contractors, and 86 percent is through national accounts.
DOE's understanding is that most equipment replacements are done
through store remodels (as opposed to equipment failure), and that the
distribution channels and installation process are similar for the new
and replacement markets. Available information suggests that the
fraction of equipment purchased through the distribution channels is
the same for new and replacement equipment.
6. Installation Costs
DOE derived installation costs for commercial refrigeration
equipment from data provided in RS Means Mechanical Cost Data.\23\ RS
Means provides estimates on the person-hours required to install
commercial refrigeration equipment and the labor rates associated with
the type of crew required to install the equipment. The installation
cost was calculated by multiplying the number of person-hours by the
corresponding labor rate. RS Means provides specific person-hour and
labor rate data for the installation of so-called ``mercantile
equipment'' (CSI Masterformat Number 11100), which includes commercial
refrigeration equipment. Labor rates vary significantly from region to
region of the
[[Page 41190]]
country and the RS Means data provide the necessary information to
capture this regional variability. RS Means provides cost indices that
reflect the labor rates for 295 cities in the United States. Several
cities in all 50 States and the District of Columbia are identified in
the RS Means data. These cost indices were incorporated into the
analysis to capture variation in installation cost, depending on the
location of the customer. To arrive at an average index for each State,
the city indices in each State were weighted by their population.
Population weights for the year 2000 from the U.S. Census Bureau were
used to calculate a weighted-average index for each State. Further,
since data was not available to indicate how installation costs vary
with the commercial refrigeration equipment type or its efficiency, DOE
considered the installation costs to be fixed, independent of the cost
or efficiency of the equipment. Even though the LCC spreadsheet allows
for alternative scenarios, DOE did not find a basis for changing its
basic premise for the ANOPR analysis.
---------------------------------------------------------------------------
\23\ R.S. Means Company, Inc. 2005. Mechanical Cost Data 28th
Annual Edition. Kingston, Massachusetts.
---------------------------------------------------------------------------
As described earlier, the total installed cost is the sum of the
equipment price and the installation cost. DOE derived the customer
equipment price for any given standard level by multiplying the
baseline MSP by the baseline markup and adding to it the product of the
incremental MSP and the incremental markup. Because MSPs, markups, and
the sales tax can all take on a variety of values depending on
location, the resulting total installed cost for a particular standard
level will not be a single-point value, but rather a distribution of
values.
7. Energy Consumption
The electricity consumed by the commercial refrigeration equipment
was based on the engineering analysis estimates as described previously
in section II.C.1 after the whole-building simulations validation
described in section II.E.
8. Electricity Prices
Electricity prices are necessary to convert the electric energy
savings into energy cost savings. DOE received several comments on the
development of electricity prices for its life cycle cost analysis. In
its Framework Document, DOE suggested the use of average commercial
electric prices. Comments received from Southern Company suggested that
due to high load factors, the price of electricity for commercial
refrigeration customers would be lower than the commercial average.
(Southern Company No. 3.4 at p. 170) Pacific Gas & Electric Company
(PG&E) commented it has a heavy ratcheting charge and is converting
customers to time-of-use metering. The very high coincident demand for
commercial refrigeration units could result in DOE underestimating the
cost of electricity. (PG&E No. 3.4 at p. 171) PG&E also questioned how
DOE would handle the time dependent valuation of energy. (PG&E No. 3.4
at p. 191) Southern Company responded that customers in its region were
not exposed to marginal rates because it has cost-based rates.
(Southern Company No. 3.4 at p. 193) Both groups supported the use of a
sensitivity analysis by DOE in this area. In another area of
discussion, ACEEE also commented that AEO electricity price forecasts
might require revision. (Public Meeting Transcript No. 3.4 at p. 174;
Joint Comment, No. 9 at p. 2) In the latter comment received, the Joint
Comment also suggested that DOE adopt the load profile and rate
schedule- (tariff-) based approach to electricity prices that DOE used
in the commercial unitary air conditioner rulemaking. (Joint comment,
No. 9 at p. 2)
DOE decided to use average electricity prices for four classes of
commercial refrigeration equipment customers on a State-by-State basis.
This approach will include the regional variations in energy prices and
provide for estimated electricity prices suitable for the target
market, yet reduce the analysis complexity. An effort to build tariff-
based costs would have significantly increased the complexity and time
needed for the analysis and it is not clear whether the results of the
analysis will be improved. The development and use of State-average
electricity prices by building type is described below and in more
detail in chapter 8 of the TSD.
9. Electricity Price Trends
Because of the wide variation in electricity consumption patterns,
wholesale costs, and retail rates across the country, it is important
to consider regional differences in electricity prices. DOE used
average effective commercial electricity prices at the State level from
the Energy Information Administration (EIA) publication, State Energy
Consumption, Price, and Expenditure Estimates. The latest available
prices from this source are for the calendar year 2003. These were
adjusted to represent 2006$ prices in two steps. First, national data
on the reported average commercial electricity prices from the EIA
website, Average Retail Price of Electricity to Ultimate Customers by
End-Use Sector, were used to adjust the 2003 prices to 2005 prices.
Next, because actual prices were not yet available for the entire year
of 2006, the forecasted ratio between 2006 and 2005 national commercial
retail electricity prices from AEO2006 was used to adjust the 2005
State-level prices to 2006$. Furthermore, DOE recognized that different
kinds of businesses typically use electricity in different amounts at
different times of the day, week, and year, and therefore face
different effective prices. To make this adjustment, DOE used the 2003
Commercial Building Energy Consumption Survey (CBECS) data set to
identify the average prices paid by the four kinds of businesses in
this analysis compared with the average prices paid by all commercial
customers. The ratios of prices paid by the four types of businesses to
the national average commercial prices seen in the 2003 CBECS were used
as multiplying factors to increase or decrease the average commercial
2006 price data previously developed as necessary for each of the four
kinds of businesses. Once the electricity prices for the four types of
businesses have been adjusted, the resulting prices are used in the
analysis. To obtain a weighted-average national electricity price, the
prices paid by each business in each State is weighted by the estimated
sales of frozen and refrigerated food products, which also serves as
the distribution of commercial refrigeration equipment units in each
state, to each prototype building. The State/business type weights are
the probabilities that a given commercial refrigeration equipment unit
shipped will be operated with a given electricity price. For evaluation
purposes, the prices and weights can be depicted as a cumulative
probability distribution. The effective electricity prices range from
approximately 5 cents per kWh to approximately 14 cents per kWh.
The electricity price trend provides the relative change in
electricity prices for future years out to the year 2030. Estimating
future electricity prices is difficult, especially considering that
there are efforts in many States throughout the country to restructure
the electricity supply industry. DOE applied the AEO2006 reference case
as the default scenario and extrapolated the trend in values from the
years 2020 to 2030 of the forecast to establish prices in the years
2030 to 2042. This method of extrapolation is in line with methods
currently being used by the EIA to forecast fuel prices for the Federal
Energy Management Program (FEMP). DOE provides a sensitivity analysis
of the life cycle costs saving and PBP results to future electricity
price
[[Page 41191]]
scenarios using both the AEO2006 high-growth and low-growth forecasts
in chapter 8 of the TSD.
10. Repair Costs
The equipment repair cost is the cost to the consumer for replacing
or repairing components in the commercial refrigeration equipment that
have failed. DOE based the annualized repair cost for baseline
efficiency equipment on the following expression:
RC = kx EQP/LIFE
Where:
RC = repair cost in dollars
k = fraction of equipment price (estimated to be 0.5)
EQP = baseline equipment price in dollars, and
LIFE = average lifetime of the equipment in years (estimated to be
10 years)
Because data were not available for how the repair costs vary with
equipment efficiency, DOE held repair costs constant as the default
scenario for the LCC and PBP analyses.
11. Maintenance Costs
DOE estimated the annualized maintenance costs for commercial
refrigeration equipment from data in RS Means Facilities Maintenance &
Repair Cost Data. RS Means provides estimates on the person-hours,
labor rates and materials required to maintain commercial refrigeration
equipment on a semi-annual basis. DOE used a single figure of $156/year
(2006$) for preventative maintenance for all classes of commercial
refrigeration equipment. Because data were not available for how the
maintenance costs vary with equipment efficiency, DOE held maintenance
costs constant even as equipment efficiency increased. Lamp replacement
and other lighting maintenance activities are required maintenance for
commercial refrigeration equipment, which DOE considered to be separate
from preventative maintenance, and were not itemized in the
preventative maintenance activities described by RS Means. Different
commercial refrigeration equipment classes have different numbers of
lamps (and ballasts) and many of the efficiency options considered in
DOE's engineering analysis involved changes to the lighting
configuration (lamp, ballast, or use of light emitting diode (LED)
lighting systems). Because the lighting configurations can vary by
energy consumption level, DOE estimated the relative maintenance costs
for lighting by each case type for which a design-option analysis was
performed. The methodology used was to estimate the frequency of
failure and replacement of individual lighting components, to estimate
the cost of replacement in the field, and to develop an annualized
maintenance cost based on the sum of the total lighting maintenance
costs (in 2006$) over the estimated life of the equipment divided by
the estimated life of the equipment.
Costs for fluorescent lamp and ballast replacements were based on
review of the original equipment manufacturer (OEM) costs used in the
engineering analysis, RS Means estimates and cost data from Grainger,
Inc., and previous studies. DOE estimated the costs of field
replacement using labor cost hours from RS Means Electrical Cost Data
for typical lamp or ballast replacement for other lighting fixtures,
using a 150 percent multiplier on OEM costs for lamps and ballasts
(provided in the engineering analysis spreadsheets) to reflect retail
pricing.
Fluorescent lamp and ballast technology is mature, so DOE made no
change in inflation-adjusted costs for these components. However,
because of rapid technological improvement, costs for LED lamps are
declining. DOE estimated that costs for replacing LED lighting fixtures
(believed to occur 6 years after the effective date of the standard)
are 140 percent of the OEM installed cost of LED lighting fixtures
today (in 2006$). These LED fixture replacement costs represent a 30
percent reduction to the current costs for in-the-field replacement.
DOE recognizes that both life and cost estimates for LED replacement
are speculative and believes it has taken a conservative approach to
estimating price reduction over time for this technology. Overhead and
profit factors from RS Means were not considered.
12. Lifetime
DOE defines lifetime as the age when a commercial refrigeration
equipment unit is retired from service. DOE based equipment lifetime on
discussions with industry experts and other stakeholders, and concluded
that a typical lifetime of 10 years is appropriate for commercial
refrigeration equipment. Commercial refrigeration equipment units are
typically replaced when stores are renovated--about every 10 years--
which is before the commercial refrigeration equipment units would have
physically worn out. Because of this, there is a used-equipment market
for commercial refrigeration equipment. DOE understands, however, that
the salvage value to the original purchaser is very low and thus this
has not been taken into account in the LCC. Chapter 3 of the TSD,
Market and Technology Assessment, contains a discussion of equipment
life data and the sources of such data.
DOE understands that the actual lifetime of a commercial
refrigeration equipment unit in the field might vary from the estimated
average 10-year lifetime, to some degree, by equipment class,
variations associated with components and manufacturing methods, as
well as store type where the unit is placed in service. Nevertheless,
the 10-year lifetime estimate is an important benchmark for testing to
a standard level of performance, making comparisons of different units
for purchasing decisions, and making a reasonable quantitative analysis
of the impacts that could result from different standard levels of
efficiency. Therefore, DOE specifically requests feedback on the
lifetime of commercial refrigeration equipment and whether, in fact,
this is a significant issue. Where the lifetime data indicate a
substantial variation from the assumed 10-year lifetime, DOE will
perform a sensitivity analysis of this variable in the LCC and NES
analyses and may adjust the best estimate of equipment lifetime as
well. In particular, DOE seeks comment on how long these units are
typically maintained in service, on average, either for all equipment
covered under this rulemaking or by equipment class and store type.
Also, DOE seeks comment on the existence of used-equipment markets for
commercial refrigeration equipment, and the importance of considering
such markets in its analysis. This is identified as Issue 8 under
``Issues on Which DOE Seeks Comment'' in section IV.E of this ANOPR.
13. Discount Rate
The discount rate is the rate at which future expenditures are
discounted to establish their present value. DOE received comments on
the development of discount rates at the Framework Public Meeting. FPA
suggested that DOE's analysis should consider discount rates for
convenience stores separately from other food stores, but considered
superstores in the same general market as the traditional grocery
store. (FPA No. 3.4 at p. 179) ARI suggested that DOE consider
developing discount rates explicitly for supercenters. (ARI No. 3.4 at
p. 179)
DOE derived the discount rates for the LCC analysis by estimating
the cost of capital for companies that purchase commercial
refrigeration equipment. The cost of capital is commonly used 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 their cost of capital is
[[Page 41192]]
the weighted average of the cost to the company of equity and debt
financing. DOE estimated the cost of equity financing by using the
Capital Asset Pricing Model (CAPM). The CAPM, among the most widely
used models to estimate the cost of equity financing, considers the
cost of equity to be proportional to the amount of systematic risk
associated with a company. The cost of equity financing tends to be
high when a company faces a large degree of systematic risk and it
tends to be low when the company faces a small degree of systematic
risk. To estimate the weighted average cost of capital (WACC)
(including the weighted average cost of debt and equity financing) of
commercial refrigeration equipment purchasers, DOE used a sample of
companies involved in groceries and multi-line retailing drawn from a
database of 7,319 U.S. companies on the Damodaran Online website. The
WACC approach taken for the determination of the discount rates takes
into account the current tax status of the individual firms on an
overall corporate basis. The marginal effects of increased costs and
thus depreciation due to higher cost equipment on the overall tax
status was not evaluated.
DOE used a sample of 23 companies to represent the purchasers of
commercial refrigeration equipment. For each company in the sample, DOE
derived the cost of debt, percent debt financing, and systematic
company risk from information provided at the Damodaran Online Web
site. It estimated the cost of debt financing from the long-term
government bond rate (4.39 percent) and the standard deviation of the
stock price. The cost of capital for small, independent grocers,
convenience store franchisees, gasoline station owner-operators, and
others with more limited access to capital is more difficult to
determine. Individual credit-worthiness varies considerably, and some
franchisees have access to the financial resources of the franchising
corporation. However, personal contacts with a sample of commercial
bankers yielded an estimate for the small operator weighted cost of
capital of about 200 to 300 basis points (2 percent to 3 percent) above
the rates for large grocery chains. A central value equal to the
weighted average of large grocery chains, plus 2.5 percent, was used
for small operators. Deducting expected inflation from the cost of
capital provides the estimates of the real discount rate by ownership
category. The average after-tax discount rate, weighted by the
percentage shares of total purchases of commercial refrigeration
equipment, is 4.76 percent for large grocery stores, 5.66 percent for
multi-line retailers, and 7.26 percent for convenience stores and
convenience stores associated with gasoline stations.
14. Payback Period
The PBP is the amount of time it takes the customer to recover the
incrementally higher purchase cost of more energy efficient equipment
as a result of lower operating costs. Numerically, the PBP is the ratio
of the increase in purchase cost (i.e., from a less efficient design to
a more efficient design) to the decrease in annual operating
expenditures. This type of calculation is known as a ``simple'' PBP,
because it does not take into account changes in operating cost over
time or the time value of money, that is, the calculation is done at an
effective discount rate of zero percent.
The equation for PBP is:
PBP = [Delta]IC / [Delta]OC
Where:
PBP = payback period in years,
[Delta]IC = difference in the total installed cost between the more
efficient standard level equipment (energy consumption levels 2, 3,
etc.) and the baseline (energy consumption level 1) equipment, and
[Delta]OC = difference in annual operating costs.
PBPs are expressed in years. PBPs greater than the life of the
equipment means that the increased total installed cost of the more
efficient equipment is not recovered in reduced operating costs for the
more efficient equipment.
The data inputs to PBP analysis are the total installed cost of the
equipment to the customer for each energy consumption level and the
annual (first year) operating costs for each energy consumption level.
The inputs to the total installed cost are the equipment price and the
installation cost. The inputs to the operating costs are the annual
energy cost, the annual repair cost, and the annual maintenance cost.
The PBP uses the same inputs as the LCC analysis, except that
electricity price trends and discount rates are not required. Since the
PBP is a ``simple'' (undiscounted) payback, the required electricity
cost is only for the year in which a new energy conservation standard
is to take effect--in this case, the year 2012. The electricity price
used in the PBP calculation of electricity cost was the price projected
for 2012, expressed in 2006$, but not discounted to 2006. Discount
rates are not used in the PBP calculation.
15. Life-Cycle Cost and Payback Period Results
This section presents the LCC and PBP results for the energy
consumption levels analyzed. Because the values of most inputs to the
LCC analysis are uncertain, DOE represents them as a distribution of
values rather than a single-point value. Thus, DOE derived the LCC
results also as a distribution of values.
DOE provides a summary of the change in LCC from the baseline by
percentile groupings of the distribution of results for each of the
equipment classes in chapter 8 and appendix G of the TSD. A sample for
one equipment class (VOP.RC.M) is shown in Table II.13. Table II.13
also shows the mean LCC savings and the percent of units with LCC
savings at each of the efficiency levels.
Table II.13.--Distribution of Life-Cycle Cost Savings From a Baseline Level (Level 1) by Efficiency Level for the Vertical Open, Remote Condensing,
Medium Temperature (VOP.RC.M) Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decrease in LCC from baseline (Level 1) shown by percentiles of the distribution of results Percent
(2006$) Mean of units
Efficiency level --------------------------------------------------------------------------------------------------- savings with LCC
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Level 2.......................... $145 $238 $301 $340 $361 $398 $425 $509 $711 $878 $1,285 $485 100
Level 3.......................... 317 471 569 634 665 730 775 911 1,238 1,512 2,169 871 100
Level 4.......................... 473 686 822 911 952 1,044 1,106 1,294 1,748 2,127 3,036 1,239 100
Level 5.......................... 717 1,048 1,260 1,399 1,464 1,606 1,703 1,995 2,701 3,290 4,704 1,910 100
Level 6.......................... 797 1,186 1,435 1,600 1,681 1,845 1,958 2,303 3,135 3,828 5,497 2,203 100
Level 7.......................... 842 1,288 1,576 1,769 1,863 2,047 2,177 2,574 3,533 4,330 6,255 2,459 100
Level 8.......................... 835 1,349 1,694 1,911 2,021 2,230 2,379 2,839 3,950 4,871 7,105 2,707 100
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 41193]]
As an example of how to interpret the information in Table II.13,
here is a review of the results for the VOP.RC.M equipment class. The
efficiency Level 4 in Table II.13 (row 3) shows that the change in LCC
(zero percentile column) is a minimum saving of $473. For 90 percent of
the cases studied (90th percentile), the change in LCC is a reduction
of $2,127 or less. The largest reduction in LCC is $3,036 (100th
percentile). The mean change in LCC is a net savings of $1,239. The
last column shows that 100 percent of the sample have LCC savings
(i.e., reductions in LCC greater than zero) when compared to the
baseline efficiency level.
Table II.14 provides the national average life cycle cost savings
calculated for each efficiency level when compared to the baseline
efficiency (Level 1) for all equipment classes. Review of Table II.14
shows that every efficiency level analyzed generated national average
life-cycle cost savings compared with the baseline efficiency level. It
should be pointed out that 100 percent of the units analyzed have
positive LCC savings.
Table II.14.--Average Life-Cycle Cost Savings From a Baseline Level (Level 1) by Efficiency Level and Equipment
Class
----------------------------------------------------------------------------------------------------------------
National average LCC savings (2006$)
Equipment class -------------------------------------------------------------------------------
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................ 0 485 871 1239 1910 2203 2459 2707
VOP.RC.L........................ 0 1209 2604 3512 3470 3443 NA NA
VOP.SC.M........................ 0 759 883 1006 1265 1328 1487 1482
VCT.RC.M........................ 0 1046 1309 1596 1750 2362 1925 NA
VCT.RC.L........................ 0 1179 1650 2105 2949 3333 3684 4272
VCT.SC.I........................ 0 1371 2581 3020 3285 5313 5613 5398
VCS.SC.I........................ 0 398 961 1383 1451 1559 1619 1609
SVO.RC.M........................ 0 227 500 758 1000 1223 1458 NA
SVO.SC.M........................ 0 552 588 644 824 841 1200 1186
SOC.RC.M........................ 0 835 1779 1718 1901 1868 1540 NA
HZO.RC.M........................ 0 208 435 490 NA NA NA NA
HZO.RC.L........................ 0 234 591 935 1267 1459 NA NA
HZO.SC.M........................ 0 66 286 354 381 445 466 543
HZO.SC.L........................ 0 68 555 1071 1136 1155 1448 1457
HCT.SC.I........................ 0 250 315 731 809 835 NA NA
----------------------------------------------------------------------------------------------------------------
DOE specifically seeks feedback on the validity of selecting Level
1 as the baseline in the LCC analysis. Since higher efficiency
equipment are known to be sold into the market, the LCC savings
estimates presented above represent overestimates with respect to the
life-cycle savings anticipated for base case efficiencies higher than
Level 1. DOE seeks input on whether a distribution of efficiencies
should be used for the LCC analysis baseline (instead of a single
efficiency level), and if so, what data could be used to populate this
distribution. This is identified as Issue 9 under ``Issues on Which DOE
Seeks Comment'' in section IV.E of this ANOPR.
Table II.15 summarizes the PBP results for each of the efficiency
levels for the VOP.RC.M equipment class. Results are summarized for PBP
by percentile groupings of the distribution of results. The chart also
shows the mean PBP for each efficiency level.
Table II.15.--Summary of Payback Period Results for the Vertical Open, Remote Condensing, Medium Temperature (VOP.RC.M) Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Payback period in years shown by percentiles of the distribution of results
Efficiency level --------------------------------------------------------------------------------------------------- Mean
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% PBP
--------------------------------------------------------------------------------------------------------------------------------------------------------
Level 2..................................... 1.4 2.1 2.3 2.8 3.1 3.3 3.5 3.6 3.8 4.1 4.7 3.2
Level 3..................................... 1.2 1.8 2.0 2.4 2.7 2.9 3.0 3.1 3.3 3.6 4.1 2.8
Level 4..................................... 1.1 1.8 1.9 2.3 2.5 2.7 2.9 3.0 3.2 3.4 3.9 2.6
Level 5..................................... 1.2 1.8 1.9 2.3 2.6 2.8 2.9 3.0 3.2 3.5 4.0 2.7
Level 6..................................... 1.2 1.8 2.0 2.4 2.7 2.9 3.0 3.1 3.3 3.6 4.1 2.8
Level 7..................................... 1.3 1.9 2.1 2.5 2.8 3.0 3.2 3.3 3.5 3.8 4.3 2.9
Level 8..................................... 1.4 2.1 2.2 2.7 3.0 3.2 3.4 3.5 3.8 4.0 4.6 3.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table II.16 provides the national average payback calculated for
each efficiency level when compared to the baseline efficiency level
(Level 1) for all equipment classes. Table II.16 also shows the
percentage of units reporting PBPs of less than three years. The
results of the analysis shows that purchases of higher efficiency
levels resulted in PBPs (with respect to purchase of baseline
efficiency units) of less than four years for any of the efficiency
levels considered for any equipment class.
[[Page 41194]]
Table II.16.--National Average Payback Periods by Efficiency Level and Equipment Class
----------------------------------------------------------------------------------------------------------------
Equipment class Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
National Average Payback Period (Years)
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................ NA 3.2 2.8 2.6 2.7 2.8 2.9 3.1
VOP.RC.L........................ NA 0.5 0.8 1.1 1.2 2.0 NA NA
VOP.SC.M........................ NA 0.7 0.7 0.8 1.1 1.4 2.0 3.1
VCT.RC.M........................ NA 0.3 0.4 0.7 0.9 2.7 3.9 NA
VCT.RC.L........................ NA 1.4 1.6 1.8 2.1 2.2 2.3 2.7
VCT.SC.I........................ NA 0.3 0.4 0.5 0.6 1.3 1.5 2.1
VCS.SC.I........................ NA 0.3 0.6 0.6 0.7 0.7 0.8 1.2
SVO.RC.M........................ NA 3.2 2.8 2.7 2.8 2.9 3.0 NA
SVO.SC.M........................ NA 0.8 0.8 0.9 1.1 1.3 1.8 2.4
SOC.RC.M........................ NA 0.6 1.0 1.2 1.4 3.1 3.9 NA
HZO.RC.M........................ NA 0.8 1.2 1.5 NA NA NA NA
HZO.RC.L........................ NA 1.2 1.6 1.7 1.8 1.9 NA NA
HZO.SC.M........................ NA 0.7 1.0 1.1 1.1 1.2 1.4 1.8
HZO.SC.L........................ NA 0.6 0.6 0.8 0.8 0.9 1.3 1.3
HCT.SC.I........................ NA 0.7 0.7 1.3 1.4 1.4 NA NA
----------------------------------------------------------------------------------------------------------------
Percent of Units With Payback Period of Less Than 3 Years
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................ 0 38 58 74 64 58 50 40
VOP.RC.L........................ 0 100 100 100 100 100 NA NA
VOP.SC.M........................ 0 100 100 100 100 100 98 41
VCT.RC.M........................ 0 100 100 100 100 60 24 NA
VCT.RC.L........................ 0 100 100 100 98 94 88 64
VCT.SC.I........................ 0 100 100 100 100 100 100 98
VCS.SC.I........................ 0 100 100 100 100 100 100 100
SVO.RC.M........................ 0 38 57 60 58 50 42 NA
SVO.SC.M........................ 0 100 100 100 100 100 100 87
SOC.RC.M........................ 0 100 100 100 100 40 25 NA
HZO.RC.M........................ 0 100 100 100 NA NA NA NA
HZO.RC.L........................ 0 100 100 100 100 100 NA NA
HZO.SC.M........................ 0 100 100 100 100 100 100 100
HZO.SC.L........................ 0 100 100 100 100 100 100 100
HCT.SC.I........................ 0 100 100 100 100 100 NA NA
----------------------------------------------------------------------------------------------------------------
DOE emphasizes that the PBPs shown in Table II.16 as well as the
rebuttable PBPs shown in Table II.11 take into account the cumulative
impact of all technologies used in a design option to reach a specific
energy efficiency level when compared to the baseline equipment.
Shorter PBP resulting from the most cost-effective technologies can
offset longer PBP from less cost-effective technologies to yield a low
overall PBP for the design option. For this reason, the choice of
baseline efficiency level affects the PBP for higher efficiency levels.
The LCC spreadsheet allows the user to select alternate baseline
efficiency levels for each equipment class and calculate the LCC
savings and PBP for all higher levels compared to the selected
baseline.
Table II.17 illustrates the impact of the selection of baseline
level on the VCT.RC.M equipment class for the supermarket business type
and using national average energy prices. Note that the values shown in
Table II.17 differ from the values shown in Table II.14 since the
values in Table II.17 do not represent a national average developed
through the weighting of all business types and fuel costs.
Nevertheless, they serve to illustrate the impact of the selected
baseline efficiency level on LCC savings and PBP. The LCC savings and
PBP are shown for four alternate baseline efficiency levels: Level 1,
Level 2, Level 3 and Level 4. As the baseline efficiency is moved from
Level 1 to Level 4, the life-cycle-cost savings are correspondingly
reduced for each of the higher efficiency levels. The efficiency level
with the maximum life-cycle-cost savings (level 6) is, however, the
same regardless of choice of baseline level. Selection of the baseline
level at level 6 would show no life-cycle-cost savings for higher
levels.
The calculated PBP also changes with selection of alternate
baseline efficiency levels. As the baseline efficiency is moved from
Level 1 to Level 4, the PBP for each of the higher efficiency levels,
relative to the selected baseline, increases, with the Level 7 PBP
moving from 3.9 years--using Level 1 as the baseline efficiency level--
to 6.2 years using Level 4 as the baseline efficiency level.
Table II.17.--Sensitivity of Average Life-Cycle Cost Savings and Payback Period to Selection of Baseline
Efficiency Level for the Vertical Transparent Door, Remote Condensing, Medium Temperature (VCT.RC.M) Equipment
Class
----------------------------------------------------------------------------------------------------------------
Baseline level Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
Average LCC Savings (2006$)
----------------------------------------------------------------------------------------------------------------
Level 1......................... 0 983 1232 1503 1646 2175 1709 NA
Level 2......................... NA 0 249 520 664 1193 726 NA
[[Page 41195]]
Level 3......................... NA NA 0 271 414 944 477 NA
Level 4......................... NA NA NA 0 144 673 206 NA
----------------------------------------------------------------------------------------------------------------
Average Payback Period (Years)
----------------------------------------------------------------------------------------------------------------
Level 1......................... NA 0.3 0.4 0.7 0.9 2.7 3.9 NA
Level 2......................... NA NA 0.8 1.2 1.5 3.7 5.2 NA
Level 3......................... NA NA NA 1.6 1.9 4.0 5.6 NA
Level 4......................... NA NA NA NA 2.4 4.5 6.2 NA
----------------------------------------------------------------------------------------------------------------
DOE provided a sensitivity analysis of the life-cycle-cost savings
as well as the PBP to the choice of baseline efficiency level in
Chapter 8 of the TSD. DOE presents these findings to facilitate
stakeholder review of the LCC and PBP analyses. DOE seeks information
and comments relevant to the assumptions, methodology, and results of
this analysis. See chapter 8 of the TSD for additional detail on the
LCC and PBP analyses.
H. Shipments Analysis
This section presents DOE's shipments analysis, which is an input
to the NIA (section II.I) and MIA (section II.K). DOE will undertake
the MIA after the ANOPR is published, and will report the results of
the MIA in the NOPR.
The results of the shipments analysis are driven primarily by
historical shipments data for the 15 equipment classes of commercial
refrigeration equipment under consideration. The model estimates that,
in each year, the existing stock of commercial refrigeration equipment
either ages by one year or is worn out and replaced. In addition, new
equipment can be shipped into new commercial floor space, and old
equipment can be removed through demolitions. DOE chose to analyze all
efficiency levels analyzed in the LCC in the NIA. Because DOE is
assessing impacts presuming each level analyzed represents a possible
standard level, DOE refers to the efficiency levels analyzed in the NIA
as ``candidate standard levels'' (CSLs). Shipments forecasts were
determined for all of the CSLs analyzed in the NIA and NPV analysis.
The shipments analysis is a description of commercial refrigeration
equipment stock flows as a function of year and age. While there are 15
equipment classes, the shipment analysis treats each category of
equipment independently and without coupling between them. DOE
formulated the equations used in the analysis as updates of the
distribution of stock in any given year, as a function of age, to the
following year using the following steps: (1) DOE first converted the
equipment units to linear feet of display space cooled by those units
by taking the national statistics on sales of equipment and calculating
equipment capacity per linear foot of retail grocery building display
space; (2) DOE used this calculation of existing stock, and the average
age of the equipment, as a basis for calculating replacement sales; (3)
DOE subtracted replacement sales from historical total sales statistics
to calculate new sales of commercial refrigeration equipment; (4) DOE
forecast new sales as a function of new construction of retail food
sales space; (5) DOE recorded sales of new and replacement equipment by
the year sold, and depreciated each annual vintage over the estimated
life of the equipment; and (6) DOE allocated sales in each year to the
15 equipment classes in proportion to their relative historical sales.
Table II.18 shows the results of the shipments analysis for the 15
commercial refrigeration equipment classes for the base case (baseline
efficiency level or Level 1). As equipment purchase price increases
with higher efficiency levels, a drop in shipments could be expected
relative to the base case. However, as annual energy consumption is
reduced, there is potentially a countering effect of increased
equipment sales due to more frequent installations and use of
commercial refrigeration equipment by retailers (a potential rebound
effect). Although there is a provision in the spreadsheet for a change
in projected shipments in response to efficiency level increases (or
energy consumption level decreases), DOE has no information with which
to calibrate such a relationship. Therefore, for the ANOPR analysis,
DOE presumed that the shipments do not change in response to the
changing CSLs.
Table II.18.--Forecasted Shipments for Commercial Refrigeration Equipment, 2012-2042, Level 1 (Base Case)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Thousands of linear feet shipped by year and equipment class
Equipment class --------------------------------------------------------------------------------------------
2012 2015 2020 2025 2030 2035 2040 2042 Cumulative
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M................................................... 423 446 490 538 591 649 714 742 17574
VOP.RC.L*.................................................. 0 0 0 0 0 0 0 0 0
VOP.SC.M................................................... 28 30 33 36 40 44 48 50 1182
VCT.RC.M................................................... 30 32 35 38 42 46 51 53 1255
VCT.RC.L................................................... 420 443 487 535 587 645 709 737 17456
VCT.SC.I................................................... 10 11 12 13 14 16 17 18 430
VCS.SC.I................................................... 3 3 3 3 4 4 4 5 107
SVO.RC.M................................................... 323 340 374 411 451 495 545 566 13405
SVO.SC.M................................................... 43 45 49 54 59 65 72 75 1769
SOC.RC.M................................................... 81 86 94 104 114 125 137 143 3379
[[Page 41196]]
HZO.RC.M................................................... 50 52 57 63 69 76 84 87 2060
HZO.RC.L................................................... 156 164 181 198 218 239 263 273 6476
HZO.SC.M................................................... 4 4 4 5 5 6 6 6 152
HZO.SC.L................................................... 8 8 9 10 11 12 13 13 315
HCT.SC.I................................................... 34 35 39 43 47 52 57 59 1397
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Estimated shipments of this equipment class were zero. The industry requested that this equipment class be included in the rulemaking.
Additional details on the shipments analysis can be found in
chapter 9 of the TSD.
I. National Impact Analysis
The NIA assesses future NES and the national economic impacts of
CSLs. The analysis measures economic impacts using the NPV metric
(i.e., future amounts discounted to the present) of total commercial
customer costs and savings expected to result from new standards at
specific efficiency levels. For a given CSL, DOE calculated the NPV, as
well as the NES, as the difference between a base case forecast and the
standards case. Additional details on the national impacts analysis for
commercial refrigeration equipment are found in chapter 10 of the TSD.
DOE determined national annual energy consumption as the product of
the annual energy consumption per commercial refrigeration equipment
unit and the number of commercial refrigeration equipment units of each
vintage. This approach accounts for differences in unit energy
consumption from year to year. Cumulative energy savings are the sum of
the annual NES determined over the period of analysis. DOE calculated
net economic savings each year as the difference between total
operating cost savings and increases in total installed costs.
Cumulative savings are the sum of the annual NPV.
1. Approach
Over time, in the standards case, more efficient equipment
gradually replaces less efficient equipment. This affects the
calculation of both the NES and NPV, both of which are a function of
the total number of units in use and their efficiencies, and thus are
dependent upon annual shipments and the lifetime of equipment. Both
calculations start by using the estimate of shipments and the quantity
of units in service, which are derived from the shipments model. With
regard to the estimation of NES, because more efficient commercial
refrigeration equipment units gradually replace less efficient ones,
the energy per unit of capacity used by the commercial refrigeration
equipment in service gradually decreases in the standards case relative
to the base case. To estimate the total energy savings for each
candidate efficiency level, DOE first calculated the national site
energy consumption (site energy is the energy directly consumed by the
units in operation) for commercial refrigeration equipment each year,
beginning with the expected effective date of the standards (2012).
This calculation was done for the base case forecast and the standards
case forecast. Second, DOE determined the annual site energy savings,
which is the difference between site energy consumption in the base
case and in the standards case. Third, DOE converted the annual site
energy savings into the annual amount of energy saved at the source of
electricity generation (the source energy). Finally, DOE summed the
annual source energy savings from 2012 to 2042 to calculate the total
NES for that period. DOE performed these calculations for each CSL.
2. Base Case and Standards Case Forecasted Efficiencies
A key component of DOE's estimates of NES and NPV are the energy
efficiencies for shipped equipment that it forecasts over time for the
base case (without new standards) and for each of the standards cases.
The forecasted efficiencies represent the distribution of energy
efficiency of the equipment under consideration that is shipped over
the forecast period (i.e., from the assumed effective date of a new
standard to 30 years after the standard becomes effective). Because key
inputs to the calculation of the NES and NPV are dependent on the
estimated efficiencies, they are of great importance to the analysis.
In the case of the NES, the per-unit annual energy consumption is a
direct function of efficiency. With regard to the NPV, two inputs, the
per-unit total installed cost and the per-unit annual operating cost,
both depend on efficiency. The per-unit total installed cost is a
direct function of efficiency while the per-unit annual operating cost,
because it is a direct function of the per-unit energy consumption, is
indirectly dependent on equipment efficiency.
The annual per-unit energy consumption is the site energy consumed
by a commercial refrigeration equipment unit per year. The annual
energy consumption is directly tied to the efficiency of the unit.
Thus, knowing the efficiency of a commercial refrigeration equipment
unit determines the corresponding annual energy consumption. DOE
determined annual forecasted market shares by efficiency level that, in
turn, enabled a determination of shipment-weighted annual energy
consumption values.
Because no data were available on market shares broken down by
efficiency level, DOE determined market shares by efficiency level for
commercial refrigeration equipment based on its own analysis. First,
DOE converted 2005 shipment information by equipment class into market
shares by equipment class, and then adapted a cost-based method similar
to that used in the NEMS to estimate market shares for each equipment
class by efficiency level. This cost-based method relied on cost data
developed in the engineering and life-cycle cost analyses as well as
economic purchase criteria data taken directly from NEMS. Then, from
those market shares and projections of shipments by equipment class,
DOE developed the future efficiency scenarios for a base case (i.e.,
without new standards) and for various standards cases (i.e., with new
standards). DOE did not have data to calibrate this approach to actual
market shipments by efficiency level. Therefore, DOE specifically seeks
feedback on this economic-based approach to estimating market shares.
This is identified as Issue 10 under ``Issues on Which DOE Seeks
Comment'' in section IV.E of this ANOPR.
DOE developed base case efficiency forecasts based on the estimated
market
[[Page 41197]]
shares by equipment class and efficiency level. Because there are no
historical data to indicate how equipment efficiencies or relative
equipment class preferences have changed over time, DOE predicted that
forecasted market shares would remain frozen at the 2012 efficiency
level until the end of the forecast period (30 years after the
effective date--the year 2042). Realizing that this prediction very
likely has the effect of causing the estimates of savings associated
with these efficiency standards to be overstated, DOE seeks comment on
this prediction and the potential significance of the over-estimate of
savings. In particular, DOE requests data that would enable it to
better characterize the likely increases in efficiency that would occur
over the 30-year modeling period in absence of this rule.
For its determination of standards case forecasted efficiencies,
DOE used a ``roll-up'' scenario to establish the market shares by
efficiency level for the year that standards become effective (i.e.,
2012). Information available to DOE suggests that equipment shipments
with efficiencies in the base case that did not meet the standard level
under consideration would ``roll-up'' to meet the new standard level.
Also, available information suggests that all equipment efficiencies in
the base case that were above the standard level under consideration
would not be affected.
DOE specifically seeks feedback on its basis for the forecasted
base case and standards case efficiencies and its prediction on how
standards impact efficiency distributions in the year that standards
take effect. This is identified as Issue 11 under ``Issues on Which DOE
Seeks Comment'' in section IV.E of this ANOPR. In addition, DOE
specifically seeks feedback on whether higher standard levels in
specific equipment classes are likely to cause commercial refrigeration
equipment customers to shift to using other, less-efficient equipment
classes for displaying merchandise. This is identified as Issue 12
under ``Issues on Which DOE Seeks Comment'' in section IV.E of this
ANOPR.
3. National Impact Analysis Inputs
The difference in shipments by equipment efficiency level between
the base and standards cases was the basis for determining the
reduction in per-unit annual energy consumption that could result from
new standards. The commercial refrigeration equipment stock in a given
year is the total linear footage of commercial refrigeration equipment
shipped from earlier years that survive in the given year. The NES
spreadsheet model keeps track of the total linear footage of commercial
refrigeration equipment units shipped each year. For purposes of the
ANOPR NES and NPV analyses, DOE estimated that approximately 10 percent
of the existing commercial refrigeration equipment units are retired
each year (based on a 10-year average lifetime) and that for units
shipped in 2042, any units still remaining at the end of 2052 are
replaced.
The site-to-source conversion factor is the multiplicative factor
used for converting site energy consumption, expressed in kWh, into
primary or source energy consumption, expressed in quads (quadrillion
Btu). DOE used annual site-to-source conversion factors based on U.S.
average values for the commercial sector, calculated from AEO2006,
Table A5. The average conversion factors vary over time, due to
projected changes in electricity generation sources (i.e., the power
plant types projected to provide electricity to the country).
To estimate NPV, DOE calculated the net impact each year as the
difference between total operating cost savings (including electricity,
repair, and maintenance cost savings) and increases in total installed
costs (which consists of MSP, sales taxes, distribution channel
markups, and installation cost). DOE calculated the NPV of each CSL
over the life of the equipment, using three steps. First, DOE
determined the difference between the equipment costs under the CSL
case and the base case, to get the net equipment cost increase
resulting from the CSL. Second, DOE determined the difference between
the base case operating costs and the CSL operating costs, to get the
net operating cost savings from the CSL. Third, DOE determined the
difference between the net operating cost savings and the net equipment
cost increase to get the net savings (or expense) for each year. DOE
then discounted the annual net savings (or expenses) for commercial
refrigeration equipment purchased on or after 2012 to the year 2007,
and summed the discounted values to provide the NPV of a CSL. An NPV
greater than zero shows net savings (i.e., the CSL would reduce overall
customer expenditures relative to the base case in present value
terms). An NPV that is less than zero indicates that the candidate
energy standard level would result in a net increase in customer
expenditures in present value terms.
Table II.19 summarizes the NES and NPV inputs to the NES
spreadsheet model. For each input a brief description of the data
source is given.
Table II.19.--National Energy Savings and Net Present Value Inputs
------------------------------------------------------------------------
Input data Description
------------------------------------------------------------------------
Shipments......................... Annual shipments from shipments
model (see chapter 9 Shipments
Analysis).
Effective Date of Standard........ 2012.
Base-Case Efficiencies............ Distribution of base-case shipments
by efficiency level.
Standards-Case Efficiencies....... Distribution of shipments by
efficiency level for each standards
case. Standards case annual market
shares by efficiency level remain
constant over time for the base-
case and each standards case.
Annual Energy Consumption per Annual weighted-average values are a
Linear Foot. function of energy consumption
level, which are established in the
Engineering Analysis (see chapter 5
of the TSD). Converted to a per
linear foot basis.
Total Installed Cost per Linear Annual weighted-average values are a
Foot. function of energy consumption
level (see chapter 8 of the TSD).
Converted to a per linear foot
basis.
Repair Cost per Linear Foot....... Annual weighted-average values are
constant with energy consumption
level (see chapter 8 of the TSD).
Converted to a per linear foot
basis.
Maintenance Cost per Linear Foot.. Annual weighted-average value equals
$156 (see chapter 8 of the TSD),
plus lighting maintenance cost.
Converted to a per linear foot
basis.
Escalation of Electricity Prices.. EIA AEO2006 forecasts (to 2030) and
extrapolation for beyond 2030 (see
chapter 8 of the TSD).
Electricity Site-to-Source Conversion varies yearly and is
Conversion. generated by DOE/EIA's NEMS*
program (a time series conversion
factor; includes electric
generation, transmission, and
distribution losses).
Discount Rate..................... 3 and 7 percent real.
Present Year...................... Future costs are discounted to year
2007.
[[Page 41198]]
Rebound Effect.................... A rebound effect (due to changes in
shipments resulting from standards)
was not considered in the National
Impact Analysis.
------------------------------------------------------------------------
* Chapter 13 (utility impact analysis) and chapter 14 (environmental
assessment) provide more detail on NEMS.
4. National Impact Analysis Results
Below are the NES results for each efficiency level considered for
the 15 equipment classes of commercial refrigeration equipment
analyzed. Results are cumulative to 2042 and are shown as primary
energy savings in quads. Inputs to the NES spreadsheet model are based
on weighted-average values, yielding results that are discrete point
values, rather than a distribution of values as in the LCC analysis.
Table II.20 shows the NES results for the CSLs analyzed for each
equipment class of commercial refrigeration equipment. DOE based all
the results on electricity price forecasts from the AEO2006 reference
case. The range of overall cumulative energy impacts for establishing
standards above the baseline level (Level 1) for all equipment classes
is from 0.12 quad for a standard at Level 2 to 1.73 quads with all
equipment at the highest efficiency level.
Table II.20.--Cumulative National Energy Savings for Commercial Refrigeration Equipment (2012-2042) (Quads)
----------------------------------------------------------------------------------------------------------------
National energy savings (quads*,**) by standard level
Equipment class ---------------------------------------------------------------------
Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
VOP.RC.M.................................. 0.04 0.07 0.13 0.26 0.33 0.41 0.52
VOP.RC.L[dagger].......................... 0.00 0.00 0.00 0.00 0.00 0.00 NA
VOP.SC.M.................................. 0.00 0.01 0.01 0.02 0.02 0.04 0.06
VCT.RC.M.................................. 0.00 0.00 0.01 0.01 0.03 0.03 NA
VCT.RC.L.................................. 0.04 0.08 0.13 0.27 0.36 0.45 0.66
VCT.SC.I.................................. 0.00 0.00 0.01 0.01 0.02 0.02 0.03
VCS.SC.I.................................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SVO.RC.M.................................. 0.01 0.03 0.06 0.10 0.14 0.20 NA
SVO.SC.M.................................. 0.00 0.01 0.01 0.01 0.02 0.04 0.05
SOC.RC.M.................................. 0.01 0.02 0.02 0.03 0.06 0.06 NA
HZO.RC.M.................................. 0.00 0.00 0.01 NA NA NA NA
HZO.RC.L.................................. 0.00 0.01 0.03 0.05 0.07 NA NA
HZO.SC.M.................................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
HZO.SC.L.................................. 0.00 0.00 0.00 0.00 0.00 0.01 0.01
HCT.SC.I.................................. 0.00 0.00 0.02 0.02 0.02 NA NA
----------------------------------------------------------------------------------------------------------------
* A value of NA means that no energy savings were calculated for this level of efficiency. For example, a
vertical open, remote condensing, low temperature unit (VOP.RC.L) had only six possible energy consumption
levels and, therefore, only six possible standards. Level 1 = Baseline, so there would be no savings at Level
1 and it has been omitted from the table.
** 0.00 indicates savings are less than 0.005 quadrillion Btu.
[dagger] The VOP.RC.L equipment class had no projected shipments. It was included in the analysis at the request
of the industry.
Below are the NPV results for the CSLs considered for the 15
equipment classes of commercial refrigeration equipment. Results are
cumulative and are shown as the discounted value of these savings in
dollar terms. The present value of increased total installed costs is
the total installed cost increase (i.e., the difference between the
standards case and base case), discounted to 2007, and summed over the
time period in which DOE evaluates the impact of standards (i.e., from
the effective date of standards, 2012, to the year 2052 when the last
commercial refrigeration equipment unit is retired).
Savings are decreases in operating costs (including electricity,
repair, and maintenance) associated with the higher energy efficiency
of commercial refrigeration equipment units purchased in the standards
case compared to the base case. Total operating cost savings are the
savings per unit multiplied by the number of units of each vintage
(i.e., the year of manufacture) surviving in a particular year.
Commercial refrigeration equipment consumes energy and must be
maintained over its entire lifetime. For units purchased in 2042, the
operating cost includes energy consumed and maintenance and repair
costs incurred until the last unit is retired from service in 2052.
Table II.21 shows the NPV results for the standard levels
considered for commercial refrigeration equipment based upon a seven
percent discount rate. DOE based all results on electricity price
forecasts from the AEO2006 reference case. Detailed results showing the
breakdown of the NPV into national equipment costs and national
operating costs are provided in appendix I of the TSD. At a seven
percent discount rate, the range of overall national NPV benefits
calculated for different CSL scenarios above the baseline was from $120
million to $1.4 billion. The present value of the installed cost
increase varied from a low of $70 million to a high of $1.82 billion.
The present value of the operating cost savings for higher standards
varied from a low of $210 million to a high of $3.14 billion.
[[Page 41199]]
Table II.21.--Cumulative Net Present Value Results Based on a Seven Percent Discount Rate (Billion 2006$)
----------------------------------------------------------------------------------------------------------------
Standard level (billion 2006$) * **
Equipment class ---------------------------------------------------------------------
Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
VOP.RC.M.................................. 0.03 0.07 0.12 0.25 0.31 0.36 0.40
VOP.RC.L[dagger].......................... 0.00 0.00 0.00 0.00 0.00 NA NA
VOP.SC.M.................................. 0.01 0.01 0.01 0.02 0.02 0.03 0.02
VCT.RC.M.................................. 0.00 0.01 0.01 0.01 0.02 0.00 NA
VCT.RC.L.................................. 0.06 0.10 0.16 0.30 0.37 0.44 0.55
VCT.SC.I.................................. 0.00 0.01 0.01 0.01 0.02 0.03 0.02
VCS.SC.I.................................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SVO.RC.M.................................. 0.01 0.03 0.06 0.09 0.13 0.17 NA
SVO.SC.M.................................. 0.01 0.01 0.01 0.02 0.02 0.04 0.04
SOC.RC.M.................................. 0.01 0.03 0.02 0.03 0.02 -0.01 NA
HZO.RC.M.................................. 0.00 0.01 0.01 NA NA NA NA
HZO.RC.L.................................. 0.00 0.02 0.04 0.06 0.08 NA NA
HZO.SC.M.................................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
HZO.SC.L.................................. 0.00 0.00 0.01 0.01 0.01 0.01 0.01
HCT.SC.I.................................. 0.00 0.01 0.02 0.03 0.03 NA NA
----------------------------------------------------------------------------------------------------------------
* A value of NA means that no energy savings were calculated for this level of efficiency. For example, a
vertical open, remote condensing, low temperature unit (VOP.RC.L) had only six possible energy consumption
levels and, therefore, only six possible standards. Level 1 = Baseline, so there would be no savings at Level
1 and it has been omitted from the table.
** 0.00 indicates savings are less than 0.005 quadrillion Btu.
[dagger] The VOP.RC.L equipment class had no projected shipments. It was included in the analysis at the request
of the industry.
Table II.22 provides the NPV results based on the three percent
discount rate and electricity price forecasts from the AEO2006
reference case. As with the NPV results based upon a seven percent
discount rate, detailed results showing the breakdown of the NPV into
national equipment costs and national operating costs based upon a
three percent discount rate are provided in appendix I of the TSD. At a
three percent discount rate, the range of overall NPV benefits
calculated for different CSL scenarios above the assumed baseline was
from $360 million to $4.03 billion. The present value of the installed
cost varied from a low of $150 million to a high of $3.57 billion. The
present value of the operating cost savings for higher standards varied
from a low of $510 million to a high of $7.51 billion.
Table II.22.--Cumulative Net Present Value Results Based on a Three Percent Discount Rate (Billion 2006$)
----------------------------------------------------------------------------------------------------------------
Standard level (billion 2006$) * **
Equipment class ---------------------------------------------------------------------
Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
VOP.RC.M.................................. 0.09 0.20 0.35 0.69 0.86 1.03 1.20
VOP.RC.L [dagger]......................... 0.00 0.00 0.00 0.00 0.00 NA NA
VOP.SC.M.................................. 0.02 0.02 0.03 0.06 0.06 0.08 0.08
VCT.RC.M.................................. 0.01 0.01 0.02 0.03 0.05 0.03 NA
VCT.RC.L.................................. 0.15 0.27 0.42 0.80 1.00 1.21 1.59
VCT.SC.I.................................. 0.01 0.01 0.02 0.02 0.07 0.07 0.07
VCS.SC.I.................................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SVO.RC.M.................................. 0.03 0.09 0.17 0.26 0.36 0.49 NA
SVO.SC.M.................................. 0.02 0.02 0.03 0.05 0.05 0.12 0.12
SOC.RC.M.................................. 0.02 0.07 0.06 0.08 0.07 0.03 NA
HZO.RC.M.................................. 0.00 0.02 0.02 NA NA NA NA
HZO.RC.L.................................. 0.01 0.05 0.10 0.17 0.21 NA NA
HZO.SC.M.................................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
HZO.SC.L.................................. 0.00 0.01 0.01 0.01 0.02 0.02 0.02
HCT.SC.I.................................. 0.01 0.01 0.06 0.07 0.08 NA NA
----------------------------------------------------------------------------------------------------------------
* A value of NA means that no energy savings were calculated for this level of efficiency. For example, a
vertical open, remote condensing, low temperature unit (VOP.RC.L) had only six possible energy consumption
levels and, therefore, only six possible standards. Level 1 = Baseline, so there would be no savings at Level
1 and it has been omitted from the table.
** 0.00 indicates savings are less than 0.005 quadrillion Btu.
[dagger] The VOP.RC.L equipment class had no projected shipments. It was included in the analysis at the request
of the industry.
J. Life-Cycle Cost Sub-Group Analysis
The LCC sub-group analysis evaluates impacts of standards on
identifiable groups of customers, such as customers of different
business types, which may be disproportionately affected by standards.
In the NOPR phase of this rulemaking, DOE will analyze the LCCs and
PBPs for customers that fall into those groups. The analysis will
determine whether any particular group of commercial consumers would be
adversely affected by any of the CSLs.
Also, DOE plans to examine variations in energy prices and energy
use that might affect the NPV of a standard to customer sub-
populations. To the extent possible, DOE will obtain estimates of the
variability of each input parameter and consider this variability
[[Page 41200]]
in the calculation of customer impacts. Variations in energy use for a
particular equipment type may depend on factors such as climate and
type of business.
DOE will determine the effect on customer sub-groups using the LCC
spreadsheet model. The spreadsheet model used for the LCC analysis can
be used with different data inputs. The standard LCC analysis includes
various customer types that use commercial refrigeration equipment. DOE
can analyze the LCC for any sub-group, such as a convenience store, by
using the LCC spreadsheet model and sampling only that sub-group.
Details of this model are explained in section II.G, which describes
the LCC and PBP analyses. DOE will be especially sensitive to purchase
price increases (``first-cost'' increases) to avoid negative impacts on
identifiable population groups such as small businesses (i.e., those
with low annual revenues), which may not be able to afford a
significant increase in the price of commercial refrigeration
equipment. For such customers that are sensitive to price increases,
increases in first costs of equipment can preclude the purchase of a
new model. As a result, some customers may retain equipment past its
useful life. This older equipment is generally less efficient to begin
with, and its efficiency may deteriorate further if it is retained
beyond its useful life. Large increases in first cost also can possibly
preclude the purchase and use of equipment altogether, resulting in a
potentially large loss of utility to the customer.
Although business income and annual revenues are not known for the
types of businesses analyzed in the LCC analysis, the floor space
occupied by a business may be an indicator of its annual income. If
this is generally true, then DOE will be able to perform sub-group
analyses on smaller businesses. As stated earlier, DOE can also use SBA
data for businesses with 750 or fewer employees as a proxy for
``smaller businesses.''
K. Manufacturer Impact Analysis
The purpose of the manufacturer impact analysis is to identify the
likely impacts of energy conservation standards on manufacturers. DOE
will conduct this analysis with input from manufacturers and other
interested parties and will apply this methodology to its evaluation of
standards. DOE will also consider financial impacts and a wide range of
quantitative and qualitative industry impacts that might occur
following the adoption of a standard. For example, a particular
standard level, if adopted by DOE, could require changes to commercial
refrigeration equipment manufacturing practices. DOE will identify and
understand these impacts through interviews with manufacturers and
other stakeholders during the NOPR stage of its analysis.
Recently, DOE announced changes to the format of the manufacturer
impact analysis through a report submitted to Congress on January 31,
2006 (as required by section 141 of EPACT 2005), entitled ``Energy
Conservation Standards Activities.'' Previously, DOE did not report any
manufacturer impact analysis results during the ANOPR phase; however,
under this new format, DOE has collected, evaluated, and reported
preliminary information and data in the ANOPR (see section II.K.6 of
this ANOPR). Such preliminary information includes the anticipated
conversion capital expenditures by efficiency level and the
corresponding anticipated impacts on jobs. DOE solicited this
information during the ANOPR engineering analysis manufacturer
interviews and reported the results in the preliminary manufacturer
impact analysis (see chapter 12 of the TSD).
DOE conducts the manufacturer impact analysis in three phases, and
further tailors the analytical framework based on stakeholder comments.
In Phase I, an industry profile is created to characterize the
industry, and a preliminary manufacturer impact analysis is conducted
to identify important issues that require consideration. Results of the
Phase I analysis are presented in the ANOPR TSD. In Phase II, an
industry cash flow model and an interview questionnaire are prepared to
guide subsequent discussions. In Phase III, manufacturers are
interviewed, and the impacts of standards are assessed both
quantitatively and qualitatively. Industry and sub-group cash flow and
net present value are assessed through use of the Government Regulatory
Impact Model (GRIM). Then impacts on competition, manufacturing
capacity, employment, and regulatory burden are assessed based on
manufacturer interview feedback and discussions. Results of the Phase
II and Phase III analyses are presented in the NOPR TSD. For more
detail on the manufacturer impact analysis, refer to chapter 12 of the
TSD.
1. Sources of Information for the Manufacturer Impact Analysis
Many of the analyses described above provide important information
applicable to the MIA. Such information includes manufacturing costs
and prices from the engineering analysis, retail price forecasts, and
shipments forecasts. DOE will supplement this information with company
financial data and other information gathered during interviews its
contractor conducts with manufacturers. This interview process plays a
key role in the manufacturer impact analysis because it allows
interested parties to privately express their views on important
issues. To preserve confidentiality, DOE aggregates these perspectives
across manufacturers, creating a combined opinion or estimate for DOE.
This process enables DOE to incorporate sensitive information from
manufacturers in the rulemaking process without specifying precisely
which manufacturer provided a certain set of data.
DOE conducts detailed interviews with manufacturers to gain insight
into the range of potential impacts of standards. During the
interviews, DOE typically solicits both quantitative and qualitative
information on the potential impacts of efficiency levels on sales,
direct employment, capital assets, and industrial competitiveness. DOE
prefers an interactive interview process, rather than a written
response to a questionnaire, because it helps clarify responses and
identify additional issues. Before the interviews, DOE will circulate a
draft document showing the estimates of the financial parameters based
on publicly available information. DOE will solicit comments and
suggestions on these estimates during the interviews.
DOE will ask interview participants to identify any confidential
information that they have provided, either orally or in writing. DOE
will consider all information collected, as appropriate, in its
decision-making process. However, DOE will not make confidential
information available in the public record. DOE also will ask
participants to identify all information that they wish to have
included in the public record, but that they do not want to have
associated with their interview. DOE will incorporate this information
into the public record, but will report it without attribution.
DOE will collate the completed interview questionnaires and prepare
a summary of the major issues. For more detail on the methodology used
in the manufacturer impact analysis, refer to chapter 12 of the TSD.
2. Industry Cash Flow Analysis
The industry cash flow analysis relies primarily on the GRIM. DOE
uses the GRIM to analyze the financial impacts of more stringent energy
conservation standards on the industry.
[[Page 41201]]
The GRIM analysis uses several factors to determine annual cash
flows from a new standard: Annual expected revenues; manufacturer costs
(including COGS, depreciation, research and development, selling,
general and administrative expenses); taxes; and conversion capital
expenditures. DOE compares the results against base case projections
that involve no new standards. The financial impact of new standards is
the difference between the two sets of discounted annual cash flows.
For more information on the industry cash flow analysis, refer to
chapter 12 of the TSD.
3. Manufacturer Sub-Group Analysis
Industry cost estimates are not adequate to assess differential
impacts among sub-groups of manufacturers. For example, small and niche
manufacturers, or manufacturers whose cost structure differs
significantly from the industry average, could experience a more
negative impact. Ideally, DOE would consider the impact on every firm
individually; however, it typically uses the results of the industry
characterization to group manufacturers exhibiting similar
characteristics.
During the interview process, DOE will discuss the potential sub-
groups and sub-group members it has identified for the analysis. DOE
will encourage the manufacturers to recommend sub-groups or
characteristics that are appropriate for the sub-group analysis. For
more detail on the manufacturer sub-group analysis, refer to chapter 12
of the TSD.
4. Competitive Impacts Assessment
DOE must also consider whether a new standard is likely to reduce
industry competition, and the Attorney General must determine the
impacts, if any, of any reduced competition. DOE will make a determined
effort to gather and report firm-specific financial information and
impacts. The competitive analysis will focus on assessing the impacts
on smaller manufacturers. DOE will base this assessment on
manufacturing cost data and on information collected from interviews
with manufacturers. The manufacturer interviews will focus on gathering
information to help assess asymmetrical cost increases to some
manufacturers, increased proportions of fixed costs that could increase
business risks, and potential barriers to market entry (e.g.,
proprietary technologies).
5. Cumulative Regulatory Burden
DOE recognizes and seeks to mitigate the overlapping effects on
manufacturers of new or revised DOE standards and other regulatory
actions affecting the same equipment. DOE will analyze and consider the
impact on manufacturers of multiple, equipment-specific regulatory
actions.
Based on its own research and discussions with manufacturers, DOE
identified several regulations relevant to commercial refrigeration
equipment, including: existing or new standards for commercial
refrigeration equipment, phaseout of hydrochlorofluorocarbons and foam
insulation blowing agents, standards for other equipment made by
commercial refrigeration equipment manufacturers, State energy
conservation standards, and international energy conservation
standards. DOE will study the potential impacts of these cumulative
burdens in greater detail during the MIA conducted during the NOPR
phase.
6. Preliminary Results for the Manufacturer Impact Analysis
DOE received views from manufacturers about what they perceived to
be the possible impact of potential new standards on their future
profitability. As stated by manufacturers, a new energy conservation
standard has the potential to impact financial performance in several
different ways. The capital investment needed to upgrade or redesign
equipment and equipment platforms before they have reached the end of
their useful life can require conversion costs that otherwise would not
be expended, resulting in stranded investments. In addition, more
stringent standards can result in higher per-unit costs that may deter
some customers from buying higher-margin units with more features,
thereby decreasing manufacturer profitability.
DOE estimates that a commercial refrigeration equipment production
line would have a life cycle of approximately 15 to 20 years in the
absence of standards. During that period, manufacturers would not make
major changes that altered the underlying platforms. Thus, a standard
that took effect and resulted in a major equipment platform redesign
before the end of the platform's life would strand a portion of the
earlier capital investments.
DOE asked manufacturers what level of conversion costs they
anticipated if energy conservation standards were to take effect. In
general, manufacturers expected only conversion costs associated with
redesigning of insulation foaming fixtures. One manufacturer estimated
this to be approximately $10 million in new fixtures, research, and
testing. Manufacturers indicated there would not be a significant
amount of stranded assets because of standards, but any stranded assets
that did exist would be primarily in the insulation foaming fixtures.
The manufacturers also indicated that standards would have little
effect on capacity and utilization.
The impact of new energy conservation standards on employment is an
important consideration in the rulemaking process. To assess how
domestic employment patterns might be affected by new energy
conservation standards for commercial refrigeration equipment, DOE
posed several questions related to this topic to manufacturers.
Over the past several years, some commercial refrigeration
equipment manufacturers have moved a portion of their production out of
the United States, primarily driven by concerns about profitability and
the opportunity for lower labor costs. Mexico is the most common
location for U.S. manufacturers to establish new production capacity,
since it offers low labor rates relative to the United States and
proximity to the U.S. market. Manufacturers indicated that they
anticipate new standards will accelerate the trend to manufacture
commercial refrigeration equipment outside of the United States.
Further, new standards may accelerate the rate at which commercial
refrigeration equipment production is moved to Mexico because if
manufacturers need to make large capital investments to produce
redesigned equipment platforms, they have strong financial incentives
to invest in a location with lower labor costs.
Manufacturers indicated that new standards could cause them to exit
one or more portions of the markets affected by the standards. Thus,
standards could affect the degree of industry consolidation, that is,
the degree to which a limited number of companies dominate a market. At
present, four companies account for a large majority of commercial
refrigeration equipment sales.
DOE asked manufacturers to what degree they expected industry
consolidation to occur in the absence of standards. In general,
manufacturers felt that there would be little industry consolidation in
the future. Historically, the commercial refrigeration equipment
industry has not seen extensive consolidation, although several
manufacturers have been bought and sold by parent companies in the
past.
For more preliminary results for the manufacturer impact analysis
such as other impacts on financial performance, impacts on utility and
performance, and
[[Page 41202]]
additional details on the impacts of cumulative regulatory burden,
refer to chapter 12 of the TSD.
L. Utility Impact Analysis
The utility impact analysis estimates the effects on the utility
industry of reduced energy consumption due to improved appliance
efficiency. The analysis compares modeling results for the base case
with results for each candidate standards case. It consists of
forecasted differences between the base and standards cases for
electricity generation, installed capacity, sales, and prices.
To estimate these effects of proposed commercial refrigeration
equipment standard levels on the electric utility industry, DOE intends
to use a variant of the EIA's NEMS.\24\ EIA uses NEMS to produce the
2007 Annual Energy Outlook (AEO). DOE will use a variant known as NEMS-
Building Technologies (BT) to provide key inputs to the analysis. NEMS-
BT produces a widely recognized reference case forecast for the United
States and is available in the public domain.
---------------------------------------------------------------------------
\24\ For more information on NEMS, please refer to the U.S.
Department of Energy, Energy Information Administration
documentation. A useful summary is National Energy Modeling System:
An Overview 2000, DOE/EIA-0581(2000), March 2000. DOE/EIA approves
use of the name NEMS to describe only an official version of the
model without any modification to code or data. Because this
analysis entails some minor code modifications and the model is run
under various policy scenarios that are variations on DOE/EIA
assumptions, in this analysis, DOE refers to it by the name NEMS-BT.
---------------------------------------------------------------------------
The use of NEMS-BT for the utility impact analysis offers several
advantages. As the official DOE energy forecasting model, it relies on
a set of assumptions that are transparent and have received wide
exposure and commentary. NEMS-BT allows an estimate of the interactions
between the various energy supply and demand sectors and the economy as
a whole. The utility impact analysis will determine the changes in
installed capacity and generation by fuel type produced by each CSL, as
well as changes in electricity sales to the commercial sector.
DOE conducts the utility analysis as a policy deviation from the
AEO2007, applying the same basic set of premises. For example, the
operating characteristics (e.g., energy conversion efficiency,
emissions rates) of future electricity generating plants are as
specified in the AEO2007 reference case, as are the prospects for
natural gas supply. DOE also will explore deviations from some of the
reference case premises, to represent alternative futures. Two
alternative scenarios use the high and low economic growth cases of
AEO2007. (The reference case corresponds to medium growth.) The high
economic growth case projects higher growth rates for population, labor
force, and labor productivity, resulting in lower predicted inflation
and interest rates relative to the reference case and higher overall
aggregate economic growth. The opposite is true for the low growth
case. Starting in 2012, the high growth case predicts growth in per
capita gross domestic product of 3.5 percent per year, compared with
3.0 percent per year in the reference case and 2.5 percent per year in
the low growth case. While supply-side growth determinants are varied
in these cases, AEO2007 uses the same reference case energy prices for
all three economic growth cases. Different economic growth scenarios
will affect the rate of growth of electricity demand.
The electric utility industry analysis will consist of NEMS-BT
forecasts for generation, installed capacity, sales, and prices. The
NEMS-BT provides reference case load shapes for several end uses,
including commercial refrigeration. The model uses predicted growth in
demand for each end use to build up a projection of the total electric
system load growth for each region, which it uses in turn to predict
the necessary additions to capacity. The NEMS-BT accounts for the
implementation of energy conservation standards by decrementing the
appropriate reference case load shape. DOE determines the size of the
decrement using data for the per-unit energy savings developed in the
LCC and PBP analyses (see chapter 8 of the TSD) and the forecast of
shipments developed for the NIA (see chapter 9 of the TSD).
The predicted reduction in capacity additions is sensitive to the
peak load impacts of the standard. DOE will investigate the need to
adjust the hourly load profiles that include this end use in NEMS-BT.
Since the AEO2007 version of NEMS-BT forecasts only to the year 2030,
DOE must extrapolate the results to 2042. DOE will use the approach
developed by EIA to forecast fuel prices for the FEMP. FEMP uses these
prices to estimate LCCs of Federal equipment procurements. For
petroleum products, EIA uses the average growth rate for the world oil
price over the years 2010 to 2025, in combination with the refinery and
distribution markups from the year 2025, to determine the regional
price forecasts. Similarly, EIA derives natural gas prices from an
average growth rate figure in combination with regional price margins
from the year 2025. Results of the analysis will include changes in
commercial electricity sales, and installed capacity and generation by
fuel type, for each trial standard level, in five-year, forecasted
increments extrapolated to the year 2040.
M. Employment Impact Analysis
DOE estimates the impacts of standards on employment for equipment
manufacturers, relevant service industries, energy suppliers, and the
economy in general. Both indirect and direct employment impacts are
covered. Direct employment impacts would result if standards led to a
change in the number of employees at manufacturing plants and related
supply and service firms. Direct impact estimates are covered in the
MIA.
Indirect employment impacts are impacts on the national economy
other than in the manufacturing sector being regulated. Indirect
impacts may result both from expenditures shifting among goods
(substitution effect) and changes in income which lead to a change in
overall expenditure levels (income effect). DOE defines indirect
employment impacts from standards as net jobs eliminated or created in
the general economy as a result of increased spending driven by the
increased equipment prices and reduced spending on energy.
DOE expects new standards to increase the total installed cost of
equipment (includes MSP, sales taxes, distribution channel markups, and
installation cost). DOE also expects the new standards to decrease
energy consumption, and thus expenditures on energy. Over time,
increased total installed cost is paid back through energy savings. The
savings in energy expenditures may be spent on new commercial
investment and other items.
Using an input/output model of the U.S. economy, this analysis
seeks to estimate the effects on different sectors and the net impact
on jobs. DOE will estimate national employment impacts for major
sectors of the U.S. economy in the NOPR, using public and commercially
available data sources and software. DOE will make all methods and
documentation available for review.
DOE developed Impact of Sector Energy Technologies (ImSET), a
spreadsheet model of the U.S. economy that focuses on 188 sectors most
relevant to industrial, commercial, and residential building energy
use.\25\ ImSET is a special-purpose version of
[[Page 41203]]
the U.S. Benchmark National Input-Output (I-O) model, which has been
designed to estimate the national employment and income effects of
energy saving technologies that are deployed by the DOE Office of
Energy Efficiency and Renewable Energy. In comparison with previous
versions of the model used in earlier rulemakings, the current version
allows for more complete and automated analysis of the essential
features of energy efficiency investments in buildings, industry,
transportation, and the electric power sectors.
---------------------------------------------------------------------------
\25\ Roop, J. M., M. J. Scott, and R. W. Schultz. 2005. ImSET:
Impact of Sector Energy Technologies. PNNL-15273. Pacific Northwest
National Laboratory, Richland, WA.
---------------------------------------------------------------------------
The ImSET software includes a personal computer-based I-O model
with structural coefficients to characterize economic flows among the
188 sectors. ImSET's national economic I-O structure is based on the
1997 Benchmark U.S. table (Lawson, et al. 2002),\26\ specially
aggregated to 188 sectors. The time scale of the model is 50 years.
---------------------------------------------------------------------------
\26\ Lawson, Ann M., Kurt S. Bersani, Mahnaz Fahim-Nader, and
Jiemin Guo. 2002. ``Benchmark Input-Output Accounts of the U.S.
Economy, 1997,'' Survey of Current Business, December, pp. 19-117.
---------------------------------------------------------------------------
The model is a static I-O model, which allows a great deal of
flexibility concerning the types of energy efficiency effects that can
be accommodated. For example, certain economic effects of energy
efficiency improvements require an assessment of inter-industry
purchases, which is handled in the model. Some energy efficiency
investments will not only reduce the costs of energy in the economy but
the costs of labor and other goods and services as well, which is
accommodated through a recalculation of the I-O structure in the model.
Output from the ImSET model can be used to estimate changes in
employment, industry output, and wage income in the overall U.S.
economy resulting from changes in expenditures in the various sectors
of the economy.
Although DOE intends to use ImSET for its analysis of employment
impacts, it welcomes input on other tools and factors it might
consider. For more information on the employment impacts analysis,
refer to chapter 14 of the TSD.
N. Environmental Assessment
DOE will assess the impacts of proposed commercial refrigeration
equipment standard levels on certain environmental indicators, using
NEMS-BT to provide key inputs to the analysis. The environmental
assessment produces results in a manner similar to those provided in
the AEO.
The intent of the environmental assessment is to provide estimates
of reduced powerplant emissions and to fulfill requirements to properly
quantify and consider the environmental effects of all new Federal
rules. The environmental assessment that will be produced by NEMS-BT
considers two pollutants (sulfur dioxide (SO2) and nitrogen
oxides (NOX)) and one other emission (carbon). The only form
of carbon the NEMS-BT model tracks is carbon dioxide (CO2).
Therefore, the only carbon discussed in this analysis is in the form of
CO2. For each of the CSLs, DOE will calculate total
undiscounted and discounted emissions using NEMS-BT and will use
external analysis as needed.
DOE will conduct the environmental assessment as an incremental
policy impact (i.e., a commercial refrigeration equipment standard) of
the AEO2007 forecast, applying the same basic set of assumptions used
in AEO2007. For example, the emissions characteristics of an
electricity generating plant will be exactly those used in AEO2007.
Also, forecasts conducted with NEMS-BT consider the supply-side and
demand-side effects on the electric utility industry. Thus, DOE's
analysis will account for any factors affecting the type of electricity
generation and, in turn, the type and amount of airborne emissions
generated by the utility industry. The NEMS-BT model tracks carbon
emissions with a specialized carbon emissions estimation subroutine,
producing reasonably accurate results due to the broad coverage of all
sectors and inclusion of interactive effects. Past experience with
carbon results from NEMS-BT suggests that emissions estimates are
somewhat lower than emissions based on simple average factors. One of
the reasons for this divergence is that NEMS-BT tends to predict that
conservation displaces generating capacity in future years. On the
whole, NEMS-BT provides carbon emissions results of reasonable
accuracy, at a level consistent with other Federal published results.
NEMS-BT also reports SO2 and NOX, which DOE
has reported in past analyses. The Clean Air Act Amendments of 1990 set
an SO2 emissions cap on all power generation. The attainment
of this target, however, is flexible among generators through the use
of emissions allowances and tradable permits. Although NEMS-BT includes
a module for SO2 allowance trading and delivers a forecast of
SO2 allowance prices, accurate simulation of SO2
trading implies that the effect of energy conservation standards on
physical emissions will be zero because emissions will always be at or
near the ceiling. This fact has caused considerable confusion in the
past. However, there may be an SO2 benefit from energy
conservation, in the form of a lower SO2 allowance price.
Since the impact of any one standard on the allowance price is likely
small and highly uncertain, DOE does not plan to monetize any potential
SO2 benefit.
NEMS also has an algorithm for estimating NOX emissions
from power generation. The impact of these emissions, however, will be
affected by the Clean Air Interstate Rule (CAIR), which the U.S.
Environmental Protection Agency issued on March 10, 2005.\27\ CAIR will
permanently cap emissions of NOX in 28 eastern States and
the District of Columbia. 70 FR 25162 (May 12, 2005). As with
SO2 emissions, a cap on NOX emissions means that
equipment energy conservation standards may have no physical effect on
these emissions. When NOX emissions are subject to emissions
caps, DOE's emissions reduction estimate corresponds to incremental
changes in the prices of emissions allowances in cap-and-trade
emissions markets rather than physical emissions reductions. Therefore,
while the emissions cap may mean that physical emissions reductions
will not result from standards, standards could produce an
environmental-related economic benefit in the form of lower prices for
emissions allowances. However, as with SO2 allowance prices,
DOE does not plan to monetize this benefit because the impact on the
NOX allowance price from any single energy conservation
standard is likely small and highly uncertain.
---------------------------------------------------------------------------
\27\ See http://www.epa.gov/cleanairinterstaterule/.
---------------------------------------------------------------------------
The results for the environmental assessment are similar to a
complete NEMS run as published in the AEO2007. These results include
power sector emissions for SO2, NOX, and carbon in five-year forecasted
increments extrapolated to 2042. The outcome of the analysis for each
CSL is reported as a deviation from the AEO2007 reference (base) case.
For more detail on the environmental assessment, refer to the
environmental assessment report of the TSD.
O. Regulatory Impact Analysis
DOE will prepare a draft regulatory impact analysis in compliance
with Executive Order 12866, ``Regulatory Planning and Review,'' which
will be subject to review by the Office of Management and Budget's
Office of Information and Regulatory Affairs (OIRA). 58 FR 51735
(September 30, 1993).
[[Page 41204]]
As part of the regulatory impact analysis (and as discussed in
section II.K of this ANOPR), DOE will identify and seek to mitigate the
overlapping effects on manufacturers of new or revised DOE standards
and other regulatory actions affecting the same equipment. Through
manufacturer interviews and literature searches, DOE will compile
information on burdens from existing and impending regulations
affecting commercial refrigeration equipment. DOE also seeks input from
stakeholders about regulations it should consider.
The regulatory impact analysis also will address the potential for
non-regulatory approaches to supplant or augment energy conservation
standards to improve the efficiency of commercial refrigeration
equipment. The following list includes non-regulatory means of
achieving energy savings that DOE can consider.
No new regulatory action
Consumer tax credits
Manufacturer tax credits
Performance standards
Rebates
Voluntary energy efficiency targets
Early replacement
Bulk government purchases
The TSD, in support of DOE's NOPR, will include an analysis of each
alternative, the methodology for which is discussed briefly below.
DOE will use the NES spreadsheet model (as discussed in sections
I.B.5 and II.I of this ANOPR) to calculate the NES and the NPV
corresponding to each alternative to the proposed standards. The
details of NES spreadsheet model are discussed in chapter 10 of the
TSD. To compare each alternative quantitatively to the proposed
conservation standards, it will be necessary to quantify the effect of
each alternative on the purchase and use of energy efficient commercial
equipment. Once each alternative is properly quantified, DOE will make
the appropriate revisions to the inputs in the NES spreadsheet model.
The following are key inputs that DOE may revise in the NES spreadsheet
model.
Energy prices and escalation factors
Implicit market discount rates for trading off purchase price
against operating expense when choosing equipment efficiency
Customer purchase price, operating cost, and income
elasticities
Customer price versus efficiency relationships
Equipment stock data (purchase of new equipment or turnover
rates for inventories)
The following are the key measures of the impact of each alternative.
Commercial energy use (EJ = 1018 joule) is the
cumulative energy use of the equipment from the effective date of the
new standard to the year 2035. DOE will report electricity consumption
as primary energy.
NES is the cumulative national energy use from the base
case projection less the alternative policy case projection.
NPV is the value of future operating cost savings from
commercial refrigeration equipment bought in the period from the
effective date of the new standard to the year 2035. DOE calculates the
NPV as the difference between the present value of equipment and
operating expenditures (including energy) in the base case, and the
present value of expenditures in each alternative policy case. DOE
discounts future operating and equipment expenditures to 2006 using a
seven percent real discount rate. It calculates operating expenses
(including energy) for the life of the equipment.
For more information on the regulatory impact analysis, refer to
the regulatory impact analysis report in the TSD.
III. Candidate Energy Conservation Standards Levels
DOE will specify CSLs in the ANOPR, but will not propose a
particular standard. DOE selected between four and eight energy
consumption levels for each commercial refrigeration equipment class
for use in the LCC and NIA. Based on the results of the ANOPR analysis,
DOE selects from the CSLs analyzed in the ANOPR a subset for a more
detailed analysis for the NOPR stage of the rulemaking. The range of
CSLs selected includes: the most energy efficient level or most energy
efficient combination of design options, the combination of design
options or efficiency level with the minimum LCC, and a combination of
design options or efficiency level with a PBP of not more than three
years. Additionally, CSLs that incorporate noteworthy technologies or
fill in large gaps between efficiency levels of other CSLs may be
selected.
DOE will include the most energy efficient level analyzed as a CSL.
The level with the maximum LCC savings was identified for each
equipment category. In some instances this was identical to the most
efficient level analyzed. In other cases it was the next most efficient
level analyzed. The calculated national average PBPs from the LCC
analysis suggested that many of the energy efficiency levels analyzed
provided a national average payback of less than three years when
compared with the baseline equipment. DOE opted to designate as a CSL
the maximum energy efficiency level that provided for a payback of less
than three years. These three selection criteria provided only one or
two CSLs selections per equipment class. Therefore, DOE selected two or
three lower energy consumption levels for each equipment class in order
to provide greater variation in CSLs for its future analysis. The
selection of these additional levels reflects DOE review of the
relative cost effectiveness of the levels when compared with the
baseline equipment and when compared with other efficiency levels. Four
CSLs were selected for each equipment class. Table III.1 shows the
selected CSLs based on the energy consumption for the specific
equipment analyzed in the engineering analysis. DOE specifically seeks
feedback on its selection of specific candidate standard levels for the
post ANOPR analysis phase. This is identified as Issue 13 under
``Issues on Which DOE Seeks Comment'' in section IV.E of this ANOPR.
DOE will refine its final selection of CSLs for further analysis
after receiving input from stakeholders on the ANOPR and after any
revision of the ANOPR analyses. At that point, the CSLs will be recast
as Trial Standard Levels (TSLs). DOE will analyze specific TSLs during
the post-ANOPR analysis and will report the results of that analysis in
the NOPR.
[[Page 41205]]
Table III.1.--Candidate Standard Levels and Factors Considered in their Selection for Future Analysis
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Candidate standard level selection considerations
------------------------------------------------------------------------------------------------------------------------
Equipment class Maximum Maximum Efficiency Highest Additional candidate standard level selected for
efficiency efficiency level with efficiency future analysis
level level with minimum LCC level with PBP
positive LCC <3 years
savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M....................... Level 8......... Level 8......... Level 8........ Level 7........ Level 6........ Level 4........
VOP.RC.L....................... Level 6......... Level 6......... Level 4........ Level 6........ Level 5........ Level 3........
VOP.SC.M....................... Level 8......... Level 8......... Level 7........ Level 7........ Level 5........ Level 3........
VCT.RC.M....................... Level 7......... Level 7......... Level 6........ Level 6........ Level 5........ Level 3........
VCT.RC.L....................... Level 8......... Level 8......... Level 8........ Level 8........ Level 7........ Level 5........ Level 3.
VCT.SC.I....................... Level 8......... Level 8......... Level 7........ Level 8........ Level 6........ Level 3........
VCS.SC.I....................... Level 8......... Level 8......... Level 7........ Level 8........ Level 6........ Level 5........
SVO.RC.M....................... Level 7......... Level 7......... Level 7........ Level 6........ Level 4........ Level 2........
SVO.SC.M....................... Level 8......... Level 8......... Level 7........ Level 8........ Level 5........ Level 3........
SOC.RC.M....................... Level 7......... Level 7......... Level 5........ Level 5........ Level 4........ Level 3........
HZO.RC.M....................... Level 4......... Level 4......... Level 4........ Level 4........ Level 3........ Level 2........
HZO.RC.L....................... Level 6......... Level 6......... Level 6........ Level 6........ Level 5........ Level 4........ Level 3.
HZO.SC.M....................... Level 8......... Level 8......... Level 8........ Level 8........ Level 7........ Level 6........ Level 4.
HZO.SC.L....................... Level 8......... Level 8......... Level 8........ Level 8........ Level 7........ Level 6........ Level 3.
HCT.SC.I....................... Level 6......... Level 6......... Level 6........ Level 6........ Level 5........ Level 4........ Level 3.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Because the equipment classes cover a variety of equipment sizes,
DOE has suggested defining the standard in terms of upper limits on
daily energy consumption (CDEC or TDEC as provided for remote
condensing and self-contained equipment, respectively) normalized by
TDA for remote condensing commercial equipment with transparent doors
or without doors, commercial ice-cream freezers with transparent doors,
and self-contained commercial equipment without doors. DOE has
suggested defining the standard levels in terms of maximum rated daily
energy consumption (CDEC or TDEC as provided for remote condensing and
self-contained equipment, respectively) normalized by refrigerated
volume (V, as measured by ANSI/AHAM Standard HRF-1-2004) for remote
condensing commercial refrigerators, commercial freezers, and
commercial refrigerators-freezers with solid doors and for commercial
ice-cream freezers with solid doors. The industry supplied cost-
efficiency curves are in the form of CDEC normalized by TDA (kWh/day/
ft\2\). In the engineering analysis, DOE normalized the CDEC for each
efficiency level by TDA or refrigerated volume. Table III.2 presents
the CSLs for the analyzed equipment classes in terms of these
normalized metrics.
Table III.2.--Candidate Standard Levels for Analyzed Equipment Classes Expressed in Terms of the Normalized Test Metrics
--------------------------------------------------------------------------------------------------------------------------------------------------------
Candidate standard level in order of efficiency Candidate standard levels for equipment analyzed
------------------------------------------------------- expressed in terms of the test metric
Equipment class Test metric -------------------------------------------------
Baseline CSL1 CSL2 CSL3 CSL4 Baseline CSL1 CSL2 CSL3 CSL4
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M..................... CDEC/TDA kWh/day/ Level 1 Level 4 Level 6 Level 7 Level 8 1.08 0.90 0.75 0.70 0.64
ft\2\.
VOP.RC.L..................... CDEC/TDA kWh/day/ Level 1 Level 3 Level 4 Level 5 Level 6 2.93 2.61 2.47 2.46 2.39
ft\2\.
VOP.SC.M..................... TDEC/TDA kWh/day/ Level 1 Level 3 Level 5 Level 7 Level 8 2.55 2.23 2.07 1.84 1.65
ft\2\.
VCT.RC.M..................... CDEC/TDA kWh/day/ Level 1 Level 3 Level 5 Level 6 Level 7 0.54 0.42 0.38 0.24 0.19
ft\2\.
VCT.RC.L..................... CDEC/TDA kWh/day/ Level 1 Level 3 Level 5 Level 7 Level 8 1.06 0.90 0.75 0.65 0.55
ft\2\.
VCT.SC.I..................... TDEC/TDA kWh/day/ Level 1 Level 3 Level 6 Level 7 Level 8 1.58 1.24 0.77 0.69 0.63
ft\2\.
VCS.SC.I..................... TDEC/V kWh/day/ Level 1 Level 5 Level 6 Level 7 Level 8 0.27 0.19 0.18 0.17 0.17
ft\3\.
SVO.RC.M..................... CDEC/TDA kWh/day/ Level 1 Level 2 Level 4 Level 6 Level 7 1.05 1.00 0.90 0.80 0.74
ft\2\.
SVO.SC.M..................... TDEC/TDA kWh/day/ Level 1 Level 3 Level 5 Level 7 Level 8 2.24 1.99 1.87 1.62 1.54
ft\2\.
SOC.RC.M..................... CDEC/TDA kWh/day/ Level 1 Level 3 Level 4 Level 5 Level 7 0.95 0.76 0.74 0.71 0.60
ft\2\.
HZO.RC.M..................... CDEC/TDA kWh/day/ Level 1 Level 1 Level 2 Level 3 Level 4 0.16 0.16 0.14 0.11 0.10
ft\2\.
HZO.RC.L..................... CDEC/TDA kWh/day/ Level 1 Level 3 Level 4 Level 5 Level 6 0.83 0.75 0.70 0.65 0.62
ft\2\.
HZO.SC.M..................... TDEC/TDA kWh/day/ Level 1 Level 4 Level 6 Level 7 Level 8 0.78 0.61 0.56 0.54 0.48
ft\2\.
HZO.SC.L..................... TDEC/TDA kWh/day/ Level 1 Level 3 Level 6 Level 7 Level 8 2.05 1.80 1.52 1.33 1.32
ft\2\.
HCT.SC.I..................... TDEC/TDA kWh/day/ Level 1 Level 3 Level 4 Level 5 Level 6 1.63 1.28 0.73 0.61 0.57
ft\2\.
--------------------------------------------------------------------------------------------------------------------------------------------------------
When an energy conservation standard is defined for an equipment
class, DOE must consider how to express the level in a manner suitable
for all equipment within that class. This is of particular concern when
the rating is in terms of energy consumption and there is variation of
energy consumption within a class due to variation in equipment size or
capacity. DOE believes that TDA captures the most significant driver
behind capacity-related energy consumption differences between like
equipment designs within an equipment class (see section II.A.2 of the
ANOPR). For this reason, DOE has suggested that the maximum energy
consumption standards for this equipment be expressed as:
MECSC = ASC x TDA (self-contained equipment)
MECRC = ARC x TDA (remote condensing equipment)
Where:
MECSC = maximum TDEC (kWh/day) from ANSI/ARI Standard
1200-2006,
[[Page 41206]]
MECRC = maximum CDEC (kWh/day) from ANSI/ARI Standard
1200-2006,
ARC = a minimum normalized energy consumption factor
(expressed in kWh/day/ft\2\ TDA),
ASC = a minimum normalized TDEC factor (expressed in kWh/
day/ft\2\ TDA), and
TDA = Total Display Area (ft\2\).
Commercial refrigerators, commercial freezers and commercial
refrigerator-freezers with a self-contained condensing unit designed
for holding temperature applications manufactured on or after January
1, 2010, will have energy conservation standards in terms of:
Maximum energy consumption M (kWh/yr) = B x V + K
Where:
B is expressed in terms of kWh/yr/ft\3\ of rated volume,
V is the adjusted volume (ft\3\) calculated for the equipment class,
and
K is an offset factor expressed in kWh/yr.
In similar fashion, DOE has suggested that the energy conservation
standards for remote condensing refrigerators, commercial freezers, and
commercial refrigerators-freezers with solid doors and for commercial
ice-cream freezers with solid doors, respectively, be expressed as:
MECRC= BRC x V + KRC (remote
condensing equipment)
MECSC= BSC x V + KSC (self-contained
equipment)
Where:
MECRC = maximum CDEC (kWh/day) from ANSI/ARI Standard
1200-2006,
MECSC = maximum TDEC (kWh/day) from ANSI/ARI Standard
1200-2006,
BRC = a minimum normalized energy consumption factor
(expressed in kWh/day/ft\3\ gross refrigerated volume) calculated
using the CDEC rating from the DOE adopted test procedure (ANSI/ARI
Standard 1200-2006),
BSC = a minimum normalized TDEC factor (expressed in kWh/
day/ft\3\ gross refrigerated volume) and calculated using the TDEC
rating from the DOE adopted test procedure (ANSI/ARI Standard 1200),
V = Gross Refrigerated Volume (ft\3\),
KRC = an offset factor in kWh/day for remote condensing
equipment, and
KSC = an offset factor in kWh/day for self-contained
equipment.
DOE is concerned that V may not completely capture the most
significant driver behind capacity- or size-related energy consumption
differences between equipment designs within these equipment classes.
In particular, for these equipment classes, the surface area for heat
gain may not vary linearly with volume. The VCS.SC.I equipment class
falls under this category.
DOE specifically seeks feedback on its approach for characterizing
energy conservation standards for commercial refrigeration equipment.
If the approach to characterizing standards for remote condensing
commercial refrigerators, commercials freezers, and commercial
refrigerators-freezers with solid doors and for commercial ice-cream
freezers with solid doors is acceptable, DOE seeks comments on how it
could develop appropriate offset factors (KSC and
KRC) for these classes of equipment. This is identified as
Issue 14 under ``Issues on Which DOE Seeks Comment'' in section IV.E of
this ANOPR.
Commercial refrigerator-freezers (also called dual temperature
units) are equipment that have two or more compartments that operate at
different temperatures. During the Framework public meeting, Hill
Phoenix stated that shipments of this equipment are very low. (Public
Meeting Transcript, No. 3.4 at p. 52) In the engineering analysis
(section II.C of this ANOPR), DOE only analyzed those equipment classes
with the highest shipment volumes, and therefore did not include an
analysis of commercial refrigerator-freezers. However, DOE explained in
the market and technology assessment (section II.A of this ANOPR) that
it intended to adapt the analytical results for commercial
refrigerators and commercial freezers to commercial refrigerator-
freezers.
DOE understands that remote condensing commercial refrigerator-
freezers (with and without doors) and self-contained commercial
refrigerator-freezers without doors may operate in one of two ways.
First, they may operate as separate chilled and frozen compartments
with evaporators fed by two sets of refrigerant lines or two
compressors. Second, they may operate as separate chilled and frozen
compartments fed by one set of low temperature refrigerant lines (with
evaporator pressure regulator (EPR) valves or similar devices used to
raise the evaporator pressure, and thus the temperature of one or more
compartments) or one compressor. Accordingly, for the purposes of
implementing standards, DOE is considering the following method for
implementing standards for commercial refrigerator-freezers.
For remote condensing commercial refrigerator-freezers
where two or more chilled and frozen compartments are cooled by
independent remote condensing units, each compartment should have its
total refrigeration load measured separately according to the ANSI/
ASHRAE Standard 72-2005 test procedure. Compressor energy consumption
(CEC) for each compartment shall be calculated using Table 1 in ANSI/
ARI Standard 1200-2006 using the evaporator temperature for that
compartment. The CDEC for the entire case shall be the sum of the CEC
for each compartment, fan energy consumption (FEC), lighting energy
consumption (LEC), anti-condensate energy consumption (AEC), defrost
energy consumption (DEC), and condensate evaporator pan energy
consumption (PEC) (as measured in ANSI/ARI Standard 1200-2006).
Determine the maximum limit on CDEC for each compartment, based on that
compartment's respective equipment class and TDA or volume. The maximum
limit on CDEC for the entire case is the sum of all the maximum limits
on CDEC of all compartments.
For remote condensing commercial refrigerator-freezers
where two or more chilled and frozen compartments are cooled by one
condensing unit (with EPR valves or similar devices used to raise the
evaporator pressure, and thus the temperature of one or more
compartments), the total case shall have its total refrigeration load
measured according to the ANSI/ASHRAE Standard 72-2005 test procedure.
CEC for the entire case shall be calculated using Table 1 in ANSI/ARI
Standard 1200-2006 using the lowest evaporator temperature of all
compartments. The CDEC for the entire case shall be the sum of the CEC,
FEC, LEC, AEC, DEC, and PEC. Determine the maximum limit on CDEC for
the compartment with the lowest integrated average temperature (IAT),
based on that compartment's respective equipment class and the total
TDA or volume of all compartments. This value is the maximum limit on
CDEC for the entire case.
For self-contained commercial refrigerator-freezers
without doors where two or more chilled and frozen compartments are
cooled by independent self-contained condensing units, the CDEC for the
entire case shall be measured according to the ANSI/ASHRAE Standard 72-
2005 test procedure. Determine the maximum limit on CDEC for each
compartment, based on that compartment's respective equipment class and
TDA. The maximum limit on CDEC for the entire case is the sum of all
the maximum limits on CDEC of all compartments.
For self-contained commercial refrigerator-freezers
without doors where two or more chilled and frozen compartments are
cooled by one condensing unit (with EPR valves or similar devices used
to raise the evaporator pressure, and thus the temperature of one or
more compartments), the daily energy consumption for the entire case
shall be measured according to the ANSI/
[[Page 41207]]
ASHRAE Standard 72-2005 test procedure. Determine the maximum limit on
CDEC for the compartment with the lowest IAT, based on that
compartment's respective equipment class and the total TDA of all
compartments. This value is the maximum limit on CDEC for the entire
case.
DOE specifically seeks feedback on its approach for setting
standards for remote condensing commercial refrigerator-freezers.
Additionally, DOE seeks feedback on how to implement standards for
self-contained commercial refrigerator-freezers without doors. These
are identified as Issue 15 under ``Issues on Which DOE Seeks Comment''
in section IV.E of this ANOPR.
IV. Public Participation
A. Attendance at Public Meeting
The time, date and location of the public meeting are set forth in
the DATES and ADDRESSES sections at the beginning of this document.
Anyone who wants to attend the public meeting must notify Ms. Brenda
Edwards-Jones at (202) 586-2945. As explained in the ADDRESSES section,
foreign nationals visiting DOE Headquarters are subject to advance
security screening procedures.
B. Procedure for Submitting Requests to Speak
Any person who has an interest in today's notice, or who is a
representative of a group or class of persons that has an interest in
these issues, may request an opportunity to make an oral presentation.
Please hand-deliver requests to speak to the address shown under the
heading ``Hand Delivery/Courier'' in the ADDRESSES section of this
ANOPR, between 9 a.m. and 4 p.m., Monday through Friday, except Federal
holidays. Also, requests may be sent by mail to the address shown under
the heading ``Postal Mail'' in the ADDRESSES section of this ANOPR, or
by e-mail to [email protected].
Persons requesting to speak should briefly describe the nature of
their interest in this rulemaking and provide a telephone number for
contact. DOE asks persons selected to be heard to submit a copy of
their statements at least two weeks before the public meeting, either
in person, by postal mail, or by e-mail as described in the preceding
paragraph. Please include an electronic copy of your statement on a
computer diskette or compact disk when delivery is by postal mail or in
person. Electronic copies must be in WordPerfect, Microsoft Word,
Portable Document Format (PDF), or text (American Standard Code for
Information Interchange (ASCII)) file format. At its discretion, DOE
may permit any person who cannot supply an advance copy of his or her
statement to participate, if that person has made alternative
arrangements with the Building Technologies Program. In such
situations, the request to give an oral presentation should ask for
alternative arrangements.
C. Conduct of Public Meeting
DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with 5 U.S.C. 553 and section 336 of
EPCA. (42 U.S.C. 6306) A court reporter will be present to record and
transcribe the proceedings. DOE reserves the right to schedule the
order of presentations and to establish the procedures governing the
conduct of the public meeting. After the public meeting, interested
parties may submit further comments about the proceedings, and any
other aspect of the rulemaking, until the end of the comment period.
The public meeting will be conducted in an informal, conference
style. DOE will present summaries of comments received before the
public meeting, allow time for presentations by participants, and
encourage all interested parties to share their views on issues
affecting this rulemaking. Each participant will be allowed to make a
prepared general statement (within time limits determined by DOE)
before discussion of a particular topic. DOE will permit other
participants to comment briefly on any general statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to the public meeting. The official conducting the
public meeting will accept additional comments or questions from those
attending, as time permits. The presiding official will announce any
further procedural rules or modification of the above procedures that
may be needed for proper conduct of the public meeting.
DOE will make the entire record of this proposed rulemaking,
including the transcript from the public meeting, available for
inspection at the U.S. Department of Energy, Forrestal Building, Room
1J-018 (Resource Room of the Building Technologies Program), 1000
Independence Avenue, SW., Washington, DC, (202) 586-2945, between 9
a.m. and 4 p.m., Monday through Friday, except Federal holidays. Any
person may purchase a copy of the transcript from the transcribing
reporter.
D. Submission of Comments
DOE will accept comments, data, and information regarding all
aspects of this ANOPR before or after the public meeting, but no later
than October 9, 2007. Please submit comments, data, and information
electronically to the following e-mail address:
[email protected]. Submit electronic
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format and
avoid the use of special characters or any form of encryption. Comments
in electronic format should be identified by the docket number EE-2006-
STD-0126 and/or RIN 1904-AB59, and whenever possible carry the
electronic signature of the author. Absent an electronic signature,
comments submitted electronically must be followed and authenticated by
submitting a signed original paper document. No telefacsimiles (faxes)
will be accepted.
Under 10 CFR Part 1004.11, any person submitting information that
he or she believes to be confidential and exempt by law from public
disclosure should submit two copies: One copy of the document including
all the information believed to be confidential, and one copy of the
document with the information believed to be confidential deleted. DOE
will make its own determination about the confidential status of the
information and treat it according to its determination.
Factors of interest to DOE when evaluating requests to treat
submitted information as confidential include: (1) A description of the
items; (2) whether and why such items are customarily treated as
confidential within the industry; (3) whether the information is
generally known by, or available from, other sources; (4) whether the
information has previously been made available to others without
obligation concerning its confidentiality; (5) an explanation of the
competitive injury to the submitting person which would result from
public disclosure; (6) when such information might lose its
confidential character due to the passage of time; and (7) why
disclosure of the information would be contrary to the public interest.
[[Page 41208]]
E. Issues on Which DOE Seeks Comment
DOE is interested in receiving comments on all aspects of this
ANOPR. DOE particularly invites comments or data to improve DOE's
analysis, including data or information that will respond to the
following questions or concerns that were addressed in this ANOPR:
1. Equipment Class Prioritization and Extending Analyses
Because of the large number of equipment classes included in this
rulemaking, DOE focused on conducting a thorough examination of the
equipment classes with the greatest energy-savings potential. To
address low-shipment equipment classes, DOE could either conduct a full
technical analysis of these equipment classes or develop correlations
to extend analyses or standard levels in the NOPR phase of the
rulemaking. DOE requests feedback on the approach to equipment type
prioritization and its approach to address low-shipment volume
equipment classes, and of extending EPCA standards to equipment classes
in this rulemaking. (See section I.D.3.c and II.A.2 of this ANOPR and
chapter 5 of the TSD for further details.)
2. Air-Curtain Angle
For equipment without doors, DOE believes that the orientation of
the air curtain affects the energy consumption (both remote condensing
and self-contained equipment) and that equipment without doors can be
broadly categorized by the angle of the air curtain that divides the
refrigerated compartment from the ambient space. DOE is considering
defining air-curtain angle as ``the angle between a vertical line and
the line formed by the points at the center of the discharge air grille
and the center of the return air grille, when viewed in cross-
section.'' DOE requests feedback on this definition of air-curtain
angle. (See section II.A.2 of this ANOPR for further details.)
3. Door Angle
For equipment with doors, DOE believes that the orientation of
doors affects the energy consumption and that equipment with doors can
be broadly categorized by the angle of the door. DOE is considering
defining door angle as ``the angle between a vertical line and the line
formed by the plane of the door, when viewed in cross-section.'' DOE
requests feedback on this on this definition of door angle. (See
section II.A.2 of this ANOPR for further details.)
4. Equipment Classes for Equipment With Doors
DOE is proposing to define two equipment families each for
equipment with solid and transparent doors, based on door angles of
0[deg] to 45[deg] (vertical) and 45[deg] to 90[deg] (horizontal). DOE
requests comments on these ranges of door angles in defining equipment
classes with doors. (See section II.A.2 of this ANOPR for further
details.)
5. Equipment Classes
In accordance with EPCA section 325(p)(1)(A), DOE identified the
equipment classes covered under this rulemaking in Table II.6. (42
U.S.C. 6295(p)(1)(A)) Pursuant to EPCA section 325(p)(1)(B), DOE
requests comments on these equipment classes and invites interested
persons to submit written presentations of data, views, and arguments.
(42 U.S.C. 6295(p)(1)(B)) (See section II.A.2 of this ANOPR for further
details.)
6. Case Lighting Operating Hours
DOE's analysis suggests that typical lighting operating hours for
most classes of commercial refrigeration equipment would fall in the
range of 16 to 24 hours per day, depending on store operating hours,
use of lighting during after-hours case stocking, and typical lighting
operation or controls used for unoccupied periods. Display case
lighting hours may also depend on business type as convenience stores
have distinctly different operating hours than other segments of the
food retail industry. DOE requests comments on whether the 24-hour
basis for case lighting operating hours is valid for DOE's continued
analysis, and if not, what changes should be made to better
characterize the case lighting operating hours? (See section II.E of
this ANOPR for further details.)
7. Operation and Maintenance Practices
DOE requests comments on operation and maintenance practices for
commercial refrigeration equipment that may be prevalent in the field
which may differ from standardized conditions, such as those
represented in a test procedure. These field conditions could
potentially affect the energy consumption savings experienced in the
field as a result of increased energy efficiency as compared to those
savings estimated in the TSD's energy consumption analysis under
idealized conditions. DOE requests comment on the frequency to which
such factors come in to play in energy use in the field, and whether
and how DOE could account for these factors in assessing the overall
impacts of the candidate standards levels for commercial refrigeration
equipment. (See section II.E of this ANOPR for further details.)
8. Equipment Lifetime
DOE requests comments on the lifetime of commercial refrigeration
equipment and whether, in fact, this is a significant issue and whether
DOE should perform a sensitivity analysis of this variable in the LCC
and NES analyses. In particular, DOE seeks comment on how long these
units are typically maintained in service by equipment class and store
type. Also, DOE seeks comment on the existence and importance of a
used-equipment market for commercial refrigeration equipment, and the
importance of considering such a market in its analysis. (See section
II.E of this ANOPR for further details.)
9. Life-Cycle Cost Baseline Level
DOE did not receive data from industry concerning the average
energy efficiency of commercial refrigeration equipment currently being
shipped, nor was data provided in further discussion with
manufacturers. An analysis of the literature suggests little data on
the energy characteristics of display cases in the general market is
available. Based on this, DOE used the Level 1 (minimum energy
efficiency level) established in the engineering analysis as the
baseline for the LCC analysis.
The selection of baseline level has two impacts in the LCC and PBP
analyses. It can affect the PBP calculated since payback is calculated
from the baseline level, and it can affect the maximum level showing
LCC savings. It can also affect the fraction of users on the market who
experience LCC savings at any level. The selection of the baseline
level does not generally affect the level identified as having the
maximum LCC savings. DOE requests feedback on whether the Level 1
baseline selected by DOE is valid for the LCC analysis, and if not,
what changes should be made to provide a more realistic baseline level.
Since higher efficiency equipment is known to be sold into the market,
DOE also seeks input on whether a distribution of efficiencies should
be used for the LCC analysis baseline, and if so, what data could be
used to populate this distribution. If more detailed data to develop a
distribution of efficiencies in the baseline cannot be provided, DOE
seeks input on how a sensitivity analysis to alternative baselines
could best be used to inform the LCC and NES analyses supporting the
rulemaking. (See section II.G.15 of this ANOPR for further details.)
[[Page 41209]]
10. Characterizing the National Impact Analysis Base Case
No data have been found on the market shares of various commercial
refrigeration equipment classes by energy consumption level. Therefore,
for the National Impact Analysis base case, DOE adapted a cost-based
method used in the NEMS to estimate market shares for each equipment
class by efficiency level. DOE did not have data to calibrate this
approach to actual market shipments. Does the economic-based approach
DOE used to establish base case shipments by efficiency level provide a
valid base case assumption for the NIA and future analyses? If not,
what should DOE do to improve the base case efficiency forecast? (See
section II.I.2 of this ANOPR for further details.)
11. Base Case and Standards Case Forecasts
Because key inputs to the calculation of the NES and NPV are
dependent on the estimated efficiencies under the base case (without
standards) and the standards case (with standards), forecasted
efficiencies are of great importance to the analysis. Information
available to DOE suggests that forecasted market shares would remain
frozen throughout the analysis period (i.e., 2012-2042). For its
determination of standards case forecasted efficiencies, DOE used a
``roll-up'' scenario to establish the market shares by efficiency level
for the year that standards become effective (i.e., 2012). Available
information suggests that equipment shipments with efficiencies in the
base case that did not meet the standard level under consideration
would ``roll-up'' to meet the new standard level. Also, available
information suggests that all equipment efficiencies in the base case
that were above the standard level under consideration would not be
affected. DOE requests feedback on its development of standards case
efficiency forecasts from the base case efficiency forecast and its
basis for how standards would impact efficiency distributions in the
year that standards are to take effect. (See section II.I.2 of this
ANOPR for further details.)
12. Differential Impact of New Standards on Future Shipments by
Equipment Classes
The shipment models used in the NES and NIA presume that the
relative market share of the different classes of commercial
refrigeration equipment remains constant over the time period analyzed.
While DOE is aware that market preferences for certain types of
products may change in the future, DOE has no data with which to
predict or characterize those changes. DOE is however particularly
concerned whether higher standards for certain classes of commercial
refrigeration equipment are likely to generate significant market
shifts to other equipment that may have higher energy consumption. By
developing standards for all classes of commercial refrigeration
equipment within the scope of this rulemaking using the same economic
criteria, DOE hopes to mitigate this concern. However, DOE specifically
requests stakeholder input on the potential for standards-driven market
shifts between equipment classes that could reduce national energy
savings as well as stakeholder input on how the standards setting
process can reduce or eliminate these shifts. (See section II.I.2 of
this ANOPR for further details.
13. Selection of Candidate Standard Levels for Post-Advance Notice of
Proposed Rulemaking Analysis
DOE is required to examine specific criteria for the selection of
CSLs for further analysis. Some of these criteria are economic based
and the resulting CSLs selected may be impacted by updates to the ANOPR
analysis after input from stakeholders. DOE has discretion in the
selection of additional standard levels it may choose to analyze. DOE
seeks input on the candidate standard levels selected for future
analysis shown in Table III.1 (See section III of this ANOPR for
further details.)
14. Approach to Characterizing Energy Conservation Standards
When an efficiency or energy consumption standard is defined for a
class of equipment, DOE must consider how to express the level in a
manner suitable for all equipment within that class. DOE seeks input on
its approach for characterizing energy conservation standards for
commercial refrigeration equipment as discussed in section III. If the
approach to characterizing standards for remote condensing commercial
refrigerators, commercial freezers, and commercial refrigerators-
freezers with solid doors and for commercial ice-cream freezers with
solid doors is acceptable, DOE seeks comments on how it could develop
appropriate offset factors (KSC and KRC) for
these classes of equipment. (See section III of this ANOPR for further
details.)
15. Standards for Commercial Refrigerator-Freezers
DOE is addressing standards for commercial refrigerator-freezers
(both remote condensing and self-contained). For equipment served by
independent condensing units, the maximum limit on CDEC for the entire
case is the sum of the maximum limits on CDEC of all compartments,
based on each compartment's respective equipment class and TDA or
volume. For equipment served by one condensing unit, the maximum limit
on CDEC for the entire case is the maximum limit on CDEC for the
compartment with the lowest IAT, based on the equipment class of that
compartment and the total TDA or volume of all compartments. DOE
requests feedback on this approach to implementing standards for
commercial refrigerator-freezers. (See section III of this ANOPR for
further details.)
V. Regulatory Review and Procedural Requirements: Executive Order 12866
DOE submitted this ANOPR for review to the Office of Management and
Budget, under Executive Order 12866, ``Regulatory Planning and
Review.'' 58 FR 51735 (October 4, 1993). If DOE later proposes energy
conservation standards for certain commercial refrigeration equipment,
and if the proposed rule constitutes a significant regulatory action,
DOE would prepare and submit to OMB for review the assessment of costs
and benefits required under section 6(a)(3) of the Executive Order. The
Executive Order requires agencies to identify the specific market
failure or other specific problem that it intends to address that
warrant new agency action, as well as assess the significance of that
problem, to enable assessment of whether any new regulation is
warranted. (Executive Order 12866, Sec. 1(b)(1)). Without a market
failure, a regulation cannot result in net benefits.
DOE's preliminary analysis suggests that accounting for the market
value of energy savings alone (i.e., excluding any possible
``externality'' benefits such as those noted below) would produce
enough benefits to yield net benefits across a wide array of equipment
and circumstances. These results, if correct, imply the existence of a
market failure in the commercial refrigeration equipment market. DOE
requests data on, and suggestions for testing the existence and extent
of, these potential market failures to complete an assessment in the
proposed rule of the significance of these failures and thus the net
benefits of regulation.
[[Page 41210]]
First, DOE believes that there is a lack of consumer information
and/or information processing capability about energy efficiency
opportunities in the commercial refrigeration equipment market. If this
is in fact the case, DOE would expect the energy efficiency for
commercial refrigeration equipment to be randomly distributed across
key variables such as energy prices and usage levels. DOE seeks data on
the efficiency levels of existing commercial refrigeration equipment in
use by store type (e.g., large grocery, multi-line retailer, small
grocery/convenience store) and electricity price (and/or geographic
region of the country). DOE plans to use these data to test the extent
to which purchasers of this equipment behave as if they are unaware of
the costs associated with their energy consumption. Also, DOE seeks
comment on knowledge of the Federal ENERGYSTAR program, and it's
penetration into the commercial refrigeration equipment consumer market
as a resource for knowledge of the availability and benefits of energy
efficient refrigeration units.
Second, for small businesses in particular, DOE believes there may
be ``split incentives'' for more energy efficient equipment. The
commercial space owner may not invest in efficient equipment because
the owner of the space does not pay the energy bill, and the retail
establishment owner (building tenant) does not want to invest so as not
to risk losing the capital investment at the end of the lease. If this
is in fact the case, DOE would expect that, other things equal,
establishments that own the equipment purchase higher efficiency
commercial refrigeration equipment on average than those who rent the
equipment through building lease arrangements. DOE seeks data on owner-
occupied buildings versus leased/non-owner occupied buildings for given
store types (e.g., large grocery) and their associated use of high-
efficiency units. With these data, DOE plans to assess the significance
of this market failure by comparing the energy efficiencies of the
units in place by building occupancy status.
Of course, there are likely to be certain ``external'' benefits
resulting from the improved efficiency of units that are not captured
by the users of such equipment. These include both environmental and
energy security-related externalities that are not already reflected in
energy prices such as reduced emissions of greenhouse gases and reduced
use of natural gas (and oil) for electricity generation. DOE invites
comments on the weight that should be given to these factors in DOE's
determination of the maximum efficiency level at which the total
benefits are likely to exceed the total burdens resulting from a DOE
standard.
In addition, various other analyses and procedures may apply to
such future rulemaking action, including those required by the National
Environmental Policy Act, Pub. L. 91-190, 42 U.S.C. 4321 et seq.; the
Unfunded Mandates Act of 1995, Pub. L. 104-4; the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq.; the Regulatory Flexibility Act, 5 U.S.C.
601 et seq.; and certain Executive Orders.
The draft of today's action and any other documents submitted to
OIRA for review are part of the rulemaking record and are available for
public review at the U.S. Department of Energy, Forrestal Building,
Room 1J-018, (Resource Room of the Building Technologies Program), 1000
Independence Avenue, SW., Washington, DC, (202) 586-2945, between 9
a.m. and 4 p.m., Monday through Friday, except Federal holidays.
VI. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of today's ANOPR.
Issued in Washington, DC, on July 19, 2007.
John Mizroch,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable
Energy.
[FR Doc. 07-3640 Filed 7-25-07; 8:45 am]
BILLING CODE 6450-01-P