[Federal Register Volume 73, Number 116 (Monday, June 16, 2008)]
[Proposed Rules]
[Pages 34094-34138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-13345]
[[Page 34093]]
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Part III
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: Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines; Proposed Rule
Federal Register / Vol. 73, No. 116 / Monday, June 16, 2008 /
Proposed Rules
[[Page 34094]]
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DEPARTMENT OF ENERGY
Office of Energy Efficiency and Renewable Energy
10 CFR Part 431
[Docket No. EERE-2006-STD-0125]
RIN 1904-AB58
Energy Conservation Program: Energy Conservation Standards for
Refrigerated Bottled or Canned Beverage Vending Machines
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Advance notice of proposed rulemaking and notice of public
meeting.
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SUMMARY: The Energy Policy and Conservation Act (EPCA) directs the
Department of Energy (DOE) to establish energy conservation standards
for various consumer products and commercial and industrial equipment,
including refrigerated bottled or canned beverage vending machines
(beverage vending machines), for which DOE determines that energy
conservation standards would be technologically feasible and
economically justified, and would result in significant energy savings.
DOE is publishing this Advance Notice of Proposed Rulemaking (ANOPR)
to: (1) Announce that it is considering establishment of energy
conservation standards for beverage vending machines; and (2) announce
a public meeting to receive comments on a variety of related issues.
DATES: DOE will hold a public meeting on Thursday, June 26, 2008, from
9 a.m. to 5 p.m. in Washington, DC. DOE must receive requests to speak
at the public meeting no later than 4 p.m., Thursday, June 19, 2008.
DOE must receive a signed original and an electronic copy of statements
to be given at the public meeting no later than 4 p.m., Thursday, June
19, 2008.
DOE will accept comments, data, and information regarding this
ANOPR before or after the public meeting, but no later than July 16,
2008. See Section IV, ``Public Participation,'' of this ANOPR for
details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW.,
Washington, DC 20585. (Please note that foreign nationals visiting DOE
Headquarters are subject to advance security screening procedures. If
you are a foreign national and wish to participate in the public
meeting, please inform DOE as soon as possible by contacting Ms. Brenda
Edwards at (202) 586-2945 so that the necessary procedures can be
completed.)
Any comments submitted must identify the ANOPR for Beverage Vending
Machines, and provide the docket number EERE-2006-STD-0125 and/or
Regulatory Information Number (RIN) 1904-AB58. Comments may be
submitted using any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: [email protected]. Include
docket number EERE-2006-STD-0125 and/or RIN number 1904-AB58 in the
subject line of the message.
Postal Mail: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Program, Mailstop EE-2J, 1000
Independence Avenue, SW., Washington, DC 20585-0121. Please submit one
signed paper original.
Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department
of Energy, Building Technologies Program, 950 L'Enfant Plaza, SW.,
Suite 600, Washington, DC 20024. Telephone: (202) 586-2945. Please
submit one signed paper original.
For detailed instructions on submitting comments and additional
information on the rulemaking process, see Section IV, ``Public
Participation,'' of this document.
Docket: For access to the docket to read background documents or
comments received, go to the U.S. Department of Energy, Resource Room
of the Building Technologies Program, 950 L'Enfant Plaza, SW., Suite
600, Washington, DC, 20024, (202) 586-2945, between 9 a.m. and 4 p.m.,
Monday through Friday, except Federal holidays. Please call Ms. Brenda
Edwards at the above telephone number for additional information
regarding visiting the Resource Room.
FOR FURTHER INFORMATION CONTACT: Mr. Charles Llenza, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington,
DC 20585-0121. Telephone: (202) 586-2192. E-mail:
[email protected].
Mr. Eric Stas or Ms. Francine Pinto, U.S. Department of Energy,
Office of the General Counsel, GC-72, 1000 Independence Avenue, SW.,
Washington, DC 20585-0121. Telephone: (202) 586-9507. E-mail:
[email protected] or [email protected].
For information on how to submit or review public comments and on
how to participate in the public meeting, contact Ms. Brenda Edwards,
U.S. Department of Energy, Office of Energy Efficiency and Renewable
Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue,
SW., Washington, DC 20585-0121. Telephone: (202) 586-2945. E-mail:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Purpose of the Advance Notice of Proposed Rulemaking
B. Overview of the Analyses Performed
1. Engineering Analysis
2. Markups To Determine Equipment Price
3. Energy Use Characterization
4. Life-Cycle Cost and Payback Period Analyses
5. National Impact Analysis
C. Authority
D. Background
1. History of Standards Rulemaking for Beverage Vending Machines
2. Rulemaking Process
3. Miscellaneous Rulemaking Issues
a. Consensus Agreement
b. Type of Standard
c. Split Incentive Issue
4. Test Procedure
5. Rating Conditions
II. Energy Conservation Standards Analyses for Beverage Vending
Machines
A. Market and Technology Assessment
1. Definition of ``Beverage Vending Machine''
2. Equipment Classes
3. Selection of Baseline Equipment--Use of the ENERGY STAR
Criteria
4. Normalization Metric
5. Scope and Coverage of Equipment
a. Combination Machines
b. Refurbished Equipment
6. Market Assessment
7. Technology Assessment
B. Screening Analysis
1. Technology Options Screened Out
2. Technology Options Considered Further in Analysis
C. Engineering Analysis
1. Approach
2. Equipment Classes Analyzed
3. Analytical Models
a. Cost Model
b. Energy Consumption Model
4. Baseline Models
5. Alternative Refrigerants
6. Cost-Efficiency Results
D. Markups To Determine Equipment Price
E. Energy Use Characterization
1. Selection of Efficiency Levels for Further Analysis
2. Annual Energy Consumption Results
F. Rebuttable Presumption Payback Periods
G. Life-Cycle Cost and Payback Period Analyses
1. Approach
2. Life-Cycle Cost Analysis Inputs
a. Baseline Manufacturer Selling Price
b. Increase in Selling Price
c. Markups
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d. Installation Costs
e. Energy Consumption
f. Electricity Prices
g. Electricity Price Trends
h. Repair Costs
i. Maintenance Costs
j. Lifetime
k. Discount Rate
l. Rebound Effect
m. Effective Date
3. Split Incentive Issue
4. Payback Period
5. Life-Cycle Cost and Payback Period Results
H. Shipments Analysis
I. National Impact Analysis
1. Approach
2. Base-Case and Standards-Case Forecasted Efficiencies
3. National Impact Analysis Inputs
4. National Impact Analysis Results
J. Life-Cycle Cost Sub-Group Analysis
K. Manufacturer Impact Analysis
1. Sources of Information for the Manufacturer Impact Analysis
2. Industry Cash Flow Analysis
3. Manufacturer Sub-Group Analysis
4. Competitive Impacts Assessment
5. Cumulative Regulatory Burden
6. Preliminary Results for the Manufacturer Impact Analysis
L. Utility Impact Analysis
M. Employment Impact Analysis
N. Environmental Assessment
O. Regulatory Impact Analysis
III. Candidate Energy Conservation Standards Levels
IV. Public Participation
A. Attendance at Public Meeting
B. Procedure for Submitting Requests to Speak
C. Conduct of Public Meeting
D. Submission of Comments
E. Issues on Which DOE Seeks Comment
1. Equipment Classes
2. Compressor and Lighting Operating Hours
3. Refurbishment Cycles
4. Life-Cycle Cost Baseline Level
5. Base-Case and Standards-Case Forecasts
6. Differential Impact of New Standards on Future Shipments by
Equipment Classes
7. Selection of Candidate Standard Levels for Notice of Proposed
Rulemaking Analysis
8. Approach to Characterizing Energy Conservation Standards
V. Regulatory Review and Procedural Requirements
VI. Approval of the Office of the Secretary
I. Introduction
A. Purpose of the Advance Notice of Proposed Rulemaking
Through this Advance Notice of Proposed Rulemaking, the U.S.
Department of Energy is initiating rulemaking to consider establishing
energy conservation standards for beverage vending machines. The
purpose of this ANOPR is to provide interested persons with an
opportunity to comment on:
1. The equipment classes that DOE plans to analyze in this
rulemaking;
2. The analytical framework, methodology, inputs, models, and tools
(e.g., life-cycle cost (LCC) and national energy savings (NES)
spreadsheets) that DOE has been using to perform analyses of the
impacts of energy conservation standards for refrigerated bottled or
canned beverage vending machines (collectively referred to in this
ANOPR as ``beverage vending machines'');
3. The analyses conducted for the ANOPR, including the preliminary
results of the engineering analysis, the markups analysis to determine
equipment price, the energy use characterization, the LCC and payback
period (PBP) analyses, the NES and national impact analyses, and
preliminary manufacturer impact analysis. These analyses are summarized
in the ANOPR Technical Support Document (TSD), Energy Efficiency
Standards for Commercial and Industrial Equipment: Refrigerated
Beverage Vending Machines \1\, published in tandem with this ANOPR; and
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\1\ To view the technical support document for this rulemaking,
visit DOE's Web site at: http://www.eere.energy.gov/buildings/
appliance_standards/commercial/beverage_machines.html.
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4. The candidate standard levels (CSLs) that DOE has developed for
the ANOPR from these analyses.
Interested persons are welcome to comment on any relevant issue
related to this ANOPR. However, throughout this Federal Register
notice, DOE identifies areas and issues on which it specifically
invites public comment. These critical issues are summarized in Section
IV.E of this notice.
B. Overview of the Analyses Performed
As noted above, EPCA, as amended, authorizes DOE to consider
establishing or amending energy conservation standards for various
consumer products and commercial and industrial equipment, including
the beverage vending machines that are the subject of this ANOPR. (42
U.S.C. 6291 et seq.) DOE conducted in-depth technical analyses for this
ANOPR in the following areas: (1) Engineering; (2) markups to determine
equipment price; (3) energy use characterization; (4) LCC and PBP; and
(5) NES and net present value (NPV). The ANOPR discusses the
methodologies, assumptions, and preliminary results for each analysis.
For each type of analysis, Table I.1 identifies the sections in
this document that contain the results of the analyses, and summarizes
their methodologies, key inputs, and assumptions. In addition, DOE
conducted several other analyses that either support the five analyses
discussed above or are preliminary analyses that will be expanded
during the notice of proposed rulemaking (NOPR) stage of this
rulemaking. These analyses include the market and technology
assessment, a screening analysis which contributes to the engineering
analysis, and the shipments analysis which contributes to the national
impacts analysis. In addition to these analyses, DOE has begun
preliminary work on the life-cycle cost subgroup analysis, manufacturer
impact analysis, utility impact analysis, employment impact analysis,
environmental impact analysis, and the regulatory impact analysis for
the ANOPR. These analyses will be expanded upon during the NOPR stage
of this rulemaking.
DOE consulted with stakeholders as part of its process in
developing all of these analyses for the ANOPR and invites further
public input on these topics which it will incorporate, as appropriate,
into any revised analyses. While obtaining such input is the primary
purpose at this ANOPR stage of the rulemaking, this notice also
contains a synopsis of the preliminary analytical results. (The TSD
contains a complete set of results.) The purpose of publishing these
preliminary results in this notice is to: (1) Facilitate public comment
on DOE's analytical methodology; (2) illustrate the level of detail
interested persons (stakeholders \2\) will find in the TSD; and (3)
invite stakeholders to comment on the structure and the presentation of
those results. The preliminary analytical results presented in the
ANOPR are subject to revision following review and input from
stakeholders.
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\2\ The terms ``stakeholders'' and ``interested persons'' are
used interchangeably throughout this ANOPR to refer to any member of
the public seeking to provide input on this rulemaking.
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Table I.1.--In-Depth Technical Analyses Conducted for the ANOPR
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ANOPR section for TSD section for
Analysis area Methodology Key inputs Key assumptions results results
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Engineering........................ Design option analysis Component cost data Component performance Section II.C.6....... Chapter 5, section
and performance improvements are 5.10, and Appendix
values. estimated using ANSI/ B.
ASHRAE Standard 32.1-
2004.
Markups to Determine Equipment Assessment of company Distribution channels, Markups for baseline Section II.D......... Chapter 6, section
Price. financial reports to market shares across and more-efficient 6.7.
develop markups that the different equipment are
transform channels, State sales different.
manufacturer prices taxes, and shipments
into customer prices. to different States.
Energy Use Characterization........ Energy use estimates Annual energy Vending machines Section II.E......... Chapter 7, section
from the energy consumption based on certified for indoor/ 7.4.4, and Appendix
performance model hourly weather data outdoor use are D.
based on the for 237 U.S. assumed to be split
engineering analysis locations. 25% outdoors and 75%
spreadsheet. indoors.
LCC and Payback Period............. Analysis of a Manufacturer selling Baseline efficiency Section II.G.5....... Chapter 8, section
representative sample prices, markups is Level 1. Average 8.4, and Appendix G.
of commercial (including sales electricity prices
customers by business taxes), installation are listed by
type and location. price, energy customer type and
consumption, State. The Annual
electricity prices Energy Outlook 2007
and future trends, (AEO2007) 3 is used
maintenance costs, as the reference
repair costs, case for future
equipment lifetime, trends. Equipment
and discount rate. lifetime is 14
years. Discount rate
is estimated using
the weighted average
cost of capital by
customer type.
Shipments.......................... Projection of total Wholesaler markups Market shares by Section II.H......... Chapter 9, section
sales by business from company balance- equipment class are 9.4.
type, State and by sheet data, current constant. Market
equipment class. shipments data by saturation by
equipment class, and business type is
average equipment constant. Shipments
lifetime. do not change in
response to
standards.
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National Impact.................... Forecasts of equipment Shipments; effective Annual shipments are Section II.I.4....... Chapter 10, section
costs, annual energy date of standard; from the shipments 10.4, and Appendix
consumption, and base-case model. The annual I.
operating costs to efficiencies; weighted-average
2042. shipment-weighted energy efficiency,
market shares; annual installed cost, and
energy consumption, annual-weighted
total installed cost, average repair costs
and repair and are a function of
maintenance costs the energy
(all on a per-unit efficiency level.
basis); escalation of Annual weighted-
electricity prices; average maintenance
electricity site-to- costs are constant
source conversion; with the energy
discount rate; and consumption level.
present year. AEO2007 is used for
electricity price
escalation, and the
National Energy
Modeling System
(NEMS) is used for
site-to-source
conversion. Discount
rates are 3% and 7%
real. Future costs
are discounted to
2007.
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3 DOE will conduct the NOPR analysis using the latest available version of the AEO. Updated analytical spreadsheets using AEO2008 will be made available
on DOE's Web site by late Spring/early Summer 2008: http://www.eere.energy. gov/buildings/appliance_standards/commercial/beverage_machines.html.
1. Engineering Analysis
DOE uses the engineering analysis, along with the equipment price
determination, to establish the relationship between the costs (i.e.,
end-user/customer prices) and efficiencies of equipment which DOE
evaluates for standards, including beverage vending machines. This
relationship serves as the basis for cost and benefit calculations for
individual commercial customers, manufacturers, and the Nation. The
engineering analysis identifies representative baseline equipment,
which is the starting point for analyzing technologies expected to
provide energy efficiency improvements. ``Baseline equipment'' here
refers to model(s) having features and technologies typically found in
equipment currently offered for sale. The baseline model in each
equipment class represents the characteristics of equipment in that
class; for equipment which is already subject to an energy efficiency
standard, the baseline unit is typically one which just meets the
current regulatory requirement. After identifying baseline models, DOE
estimates manufacturer selling prices (MSPs) through an analysis of
manufacturer costs and manufacturer markups. Manufacturer markups are
the multipliers used to determine MSPs based on manufacturing cost.
The engineering analysis uses cost-efficiency curves based on a
design-options approach \4\ derived from DOE analysis. In the
engineering analysis, DOE also discusses the equipment classes
analyzed, sensitivity to material prices, and the use of alternative
refrigerants. For additional detail on the engineering analysis, see
Section II.C.1.
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\4\ A design-options approach uses individual or combinations of
design options to identify increases in efficiency. Under this
approach, estimates are based on manufacturer or component supplier
data, or through the use of engineering computer simulation models.
Individual design options, or combinations of design options, are
added to the baseline model in ascending order of cost-
effectiveness.
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2. Markups to Determine Equipment Price
DOE determines customer prices for beverage vending machines from
MSP \5\ and equipment price markups using industry balance sheet and
U.S. Census Bureau data. To determine price markups, DOE identifies
distribution channels for equipment sales and determines the existence
and amount of markups within each distribution channel. For each
distribution channel, DOE distinguishes between ``baseline markups''
applied to the MSP for baseline equipment and ``incremental markups''
applied to the incremental increase in MSP for more-efficient
equipment. Overall baseline and overall incremental markups are
calculated separately based on the product of all baseline and
incremental markups at each step in a distribution channel. Together,
the overall baseline markup applied to the baseline equipment MSP and
the incremental markups applied to the incremental increase in MSP for
more-efficient equipment, including sales tax, determine the final
customer price. For additional detail on the markups used to determine
equipment price, see Section II.D.
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\5\ Manufacturer selling prices are derived from the
manufacturer production costs by applying the manufacturer markup.
The MSP is the selling price of the equipment directly from the
manufacturing facility. If this equipment is then routed through a
wholesaler and/or a distributor, additional markups are applied
before reaching the customer.
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3. Energy Use Characterization
The energy use characterization provides estimates of annual energy
consumption for beverage vending machines. DOE uses these estimates in
the subsequent LCC and PBP analyses and the national impact analysis
(NIA). DOE developed daily energy consumption estimates for the
different equipment classes analyzed in the
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engineering analysis.\6\ DOE then validated these estimates with
simulation modeling of energy consumption on an annual basis for all
the equipment classes and efficiency levels. The simulation modeling
took into account the percentage of vending machines that would be
placed indoors and outdoors and therefore, exposed to varying ambient
temperatures. For additional detail on the energy use characterization,
see Section II.E.
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\6\ The daily energy consumption estimates were calculated in
the engineering analysis based on procedures and conditions
specified in ANSI/ASHRAE Standard 32.1-2004, Methods of Testing for
Bottled, Canned, and Other Sealed Beverages.
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4. Life-Cycle Cost and Payback Period Analyses
The LCC and PBP analyses determine the economic impact of potential
standards on individual commercial customers. The LCC is the total
customer expense for a piece of equipment over the life of the
equipment (i.e., purchase price plus maintenance and operating costs).
The LCC analysis compares the life-cycle costs of equipment designed to
meet new or amended energy conservation standards with the life-cycle
cost of the equipment likely to be installed in the absence of such
standards. DOE determines these costs by considering: (1) Total
installed cost to the purchaser (including MSP, sales taxes,
distribution channel markups, and installation cost); (2) the operating
expenses of the equipment (energy cost and maintenance and repair
cost); (3) equipment lifetime; and (4) a discount rate that reflects
the real cost of capital and puts the LCC in present value terms. For
additional detail on the LCC analysis, see Section II.G.1.
The PBP represents the number of years needed to recover the
increase in purchase price (including installation cost) of more-
efficient equipment through savings in the operating cost. The PBP is
the increase in total installed cost due to increased efficiency
divided by the (undiscounted) decrease in annual operating cost from
increased efficiency. For additional detail on the PBP analysis, see
Section II.G.1.
5. National Impact Analysis
The NIA estimates the NES, as well as the NPV, of total national
customer costs and savings expected to result from new standards at
specific efficiency levels. Stated another way, DOE calculated the NES
and NPV for each standard level for beverage vending machines as the
difference between a base-case forecast (i.e., without new standards)
and the standards-case forecast (i.e., with new standards). For each
year of the analysis, the beverage vending machine stock is composed of
units of different types shipped in previous years (or vintages) which
remain available for sale at present. Each vintage has a characteristic
distribution of efficiency levels. DOE first determined the average
energy consumption of each vintage in the stock accounting for all
efficiency levels in that vintage. The national annual energy
consumption is then the product of the annual average energy
consumption per beverage vending machine at a given vintage and the
number of beverage vending machines of that vintage in the stock for
the particular year. This approach accounts for differences in unit
energy consumption from year to year. Annual energy savings are
calculated for each standard level by subtracting national energy
consumption for that standard level from that calculated for the
baseline. Cumulative energy savings are the sum of the annual NES
determined from 2012 to 2042.
In a similar fashion, DOE tracks the first costs for all equipment
installed at each efficiency level for each vintage. It also tracks the
annual operating cost (sum of the energy, maintenance, and repair
costs) by vintage for all equipment remaining in the stock for each
year of the analysis. DOE then calculates the net economic savings each
year as the difference between total operating cost savings and
increases in the total installed costs. The NPV is the annual net cost
savings calculated for each year, discounted to the year 2012, and
expressed in 2007$. Cumulative NPV savings reported are the sum of the
annual NPV savings over the analysis period (2012-2042).\7\ Critical
inputs to the NIA include shipment projections, rates at which users
retire equipment (based on estimated equipment lifetimes), and
estimates of changes in shipments and retirement rates in response to
changes in equipment costs due to new standards. For additional detail
on the NIA, see Section II.I.1.
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\7\ DOE uses 31 years as the time period of analysis for its NES
calculations in many of its rulemakings, in order to enable
interested persons to understand the relative magnitude of energy
savings potentials of the various equipment at the standard levels
being considered.
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C. Authority
Title III of EPCA sets forth a variety of provisions concerning
energy efficiency. Part A \8\ of Title III provides for the ``Energy
Conservation Program for Consumer Products Other Than Automobiles.''
(42 U.S.C. 6291-6309)
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\8\ This part was originally titled Part B; however, it was
redesignated Part A, after Part B of Title III was repealed by Pub.
L. 109-58. Similarly, Part C, Certain Industrial Equipment, was
redesignated Part A-1.
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The amendments to EPCA contained in the Energy Policy Act of 2005
(EPACT 2005), Pub. L. 109-58, include new or amended energy
conservation standards and test procedures for some of these products,
and direct DOE to undertake rulemakings to promulgate such
requirements. In particular, section 135(c)(4) of EPACT 2005 amends
EPCA to direct DOE to prescribe energy conservation standards for
beverage vending machines. (42 U.S.C. 6295(v))
Because of its placement in Part A of Title III of EPCA, the
rulemaking for beverage vending machine energy conservation standards
is bound by the requirements of 42 U.S.C. 6295. However, since beverage
vending machines are commercial equipment and consistent with DOE's
previous action to incorporate the EPACT 2005 requirements for
commercial equipment into Title 10 of the Code of Federal Regulations
(CFR), Part 431 (``Energy Efficiency Program for Certain Commercial and
Industrial Equipment''), DOE intends to place the new requirements for
beverage vending machines in 10 CFR part 431. The location of the
provisions within the CFR does not affect either their substance or
applicable procedure, so DOE is placing them in the appropriate CFR
part based on their nature or type.\9\
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\9\ Because of their placement into 10 CFR 431, beverage vending
machines will be referred to as ``equipment'' throughout this
notice.
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Before DOE prescribes any such standards, however, it must first
solicit comments on proposed standards. Moreover, DOE must design each
new standard for beverage vending machines to achieve the maximum
improvement in energy efficiency that is technologically feasible and
economically justified, and will result in significant conservation of
energy. (42 U.S.C. 6295(o)(2)(A), (o)(3), (v)) To determine whether a
standard is economically justified, DOE must, after receiving comments
on the proposed standard, determine whether the benefits of the
standard exceed its burdens to the greatest extent practicable,
considering the following seven factors:
(1) The economic impact of the standard on manufacturers and
consumers of products subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered product in the type (or class) compared with any
increase in the price, initial charges, or
[[Page 34099]]
maintenance expenses for the covered product likely to result from
imposition of the standard;
(3) The total projected amount of energy savings likely to result
directly from imposition of the standard;
(4) Any lessening of the utility or performance of the covered
products likely to result from imposition of the standard;
(5) The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from
imposition of the standard;
(6) The need for national energy conservation; and
(7) Other factors the Secretary of Energy (the Secretary) considers
relevant.
(42 U.S.C. 6295(o)(2)(B)(i))
D. Background
1. History of Standards Rulemaking for Beverage Vending Machines
As noted above, section 135(c)(4) of EPACT 2005 amended section 325
of EPCA in part by adding new subsections 325(v)(2), (3), and (4). (42
U.S.C. 6295(v)(1), (2) and (3)).\10\ These provisions direct the
Secretary to prescribe, by rule, energy conservation standards for
beverage vending machines no later than August 8, 2009, and state that
any such standards shall apply to beverage vending machines
manufactured three years after the date of publication of the final
rule that establishes those standards. The energy use of this equipment
has never before been regulated at the Federal level.
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\10\ It is noted that the relevant statutory provisions were
renumbered pursuant to section 316 of the Energy Independence and
Security Act of 2007, Pub. L. 110-140.
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Section 135(a)(3) of EPACT 2005 amended section 321 of EPCA in part
by adding new subsection 321(40) (42 U.S.C. 6291(40)), which
establishes the definitions for ``refrigerated bottled or canned
beverage vending machine'' as ``a commercial refrigerator that cools
bottled or canned beverages and dispenses the bottled or canned
beverages on payment.'' In addition, section 136(a)(3) of EPACT 2005
amended section 340 of EPCA in part by adding a definition for
``commercial refrigerator, freezer, and refrigerator-freezer.'' \11\
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\11\ This definition reads as follows:
``(9)(A) The term `commercial refrigerator, freezer, and
refrigerator-freezer' means refrigeration equipment that--
(i) is not a consumer product (as defined in section 321 [of
EPCA; 42 U.S.C. 6291(1)]);
(ii) is not designed and marketed exclusively for medical,
scientific, or research purposes;
(iii) operates at a chilled, frozen, combination chilled and
frozen, or variable temperature;
(iv) displays or stores merchandise and other perishable
materials horizontally, semivertically, or vertically;
(v) has transparent or solid doors, sliding or hinged doors, a
combination of hinged, sliding, transparent, or solid doors, or no
doors;
(vi) is designed for pull-down temperature applications or
holding temperature applications; and
(vii) is connected to a self-contained condensing unit or to a
remote condensing unit.''
(42 U.S.C. 6311(9)(A))
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On June 28, 2006, DOE published in the Federal Register a notice
announcing a public meeting and the availability of a Framework
Document titled, Rulemaking Framework for Refrigerated Bottled or
Canned Beverage Vending Machines,\12\ that describes the procedural and
analytical approaches that DOE anticipates using to evaluate energy
conservation standards for beverage vending machines. 71 FR 36715. DOE
invited written comments on this analytical framework.
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\12\ The Framework Document is available at: http://www.eere.energy.gov/buildings/appliance_standards/commercial/
beverage_machines.html.
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DOE held a Framework public meeting on July 11, 2006, whose purpose
was to discuss the procedural and analytical approaches for use in the
rulemaking, and to inform and facilitate stakeholder involvement in the
rulemaking process. The analytical framework presented at the public
meeting described different analyses, such as LCC and PBP, the planned
methods for conducting them, and the relationships among the various
analyses.\13\ Manufacturers, trade associations, environmental
advocates, and other interested parties attended the public meeting.
---------------------------------------------------------------------------
\13\ PDF copies of the slides and other materials associated
with the public meeting are available at: http://www.eere.energy.gov/buildings/appliance_standards/commercial/
beverage_machines.html.
---------------------------------------------------------------------------
Comments received after publication of the Framework Document and
at the July 11 public meeting helped identify and elaborated upon
issues involved in this rulemaking and provided information that has
contributed to DOE's efforts to resolve these issues. Many of the
statements provided by stakeholders are quoted or summarized in this
ANOPR. A parenthetical reference at the end of a quotation or passage
provides the location of such item in the public record (i.e., the
docket for this rulemaking). The ANOPR TSD describes the analytical
framework in detail.
During the course of this rulemaking, Congress passed the Energy
Independence Security Act of 2007 (EISA 2007), which the President
signed on December 19, 2007 (Pub. L. 110-140). Of relevance to the
beverage vending machine rulemaking, section 310(3) of EISA 2007
amended section 325 of EPCA in part by adding subsection 325(gg) (42
U.S.C. 6295(gg)). This subsection requires any new or amended energy
conservation standard adopted after July 1, 2010 to incorporate
``standby mode and off mode energy use.'' (42 U.S.C. 6295(gg)(3)(A))
Since any standard associated with this rulemaking is required by
August 2009, the energy use calculations will not include ``standby
mode and off mode energy use.'' To include standby mode and off mode
energy use requirements for this rulemaking would take a considerable
degree of analytical effort and would likely require changes to the
test procedure. Given the statutory deadline, DOE has decided to
address this requirement when the standards for beverage vending
machines are reviewed in August 2015 to consider the need for possible
amendment in accordance with 42 U.S.C. 6295(m).
2. Rulemaking Process
Table I.2 sets forth a list of the analyses DOE has conducted and
intends to conduct in its evaluation of potential energy conservation
standards for beverage vending machines. Historically, DOE performed
the manufacturer impact analysis (MIA) in its entirety between the
ANOPR and NOPR stages of energy conservation standards rulemakings.
However, more recently, DOE has refined its process and has begun to
publish a preliminary MIA in the ANOPR for public comment. DOE believes
this change will improve the rulemaking process. Accordingly, as noted
in the table below, DOE has performed a preliminary MIA for this ANOPR.
Table I.2.--Beverage Vending Machine Analysis
------------------------------------------------------------------------
ANOPR NOPR Final Rule*
------------------------------------------------------------------------
Market and technology Revised Revised
assessment. ANOPR analyses. NOPR analyses
Screening analysis..... Life-
cycle cost sub-
group analysis.
[[Page 34100]]
Engineering analysis...
Manufacturer
impact analysis.
Energy use Utility
characterization. impact analysis.
Markups to determine
equipment price. Employment impact
analysis.
Life-cycle cost and
payback period analyses. Environmental
assessment.
Shipments analysis.....
Regulatory impact
analysis.
National impact
analysis.
Preliminary
manufacturer impact analysis.
------------------------------------------------------------------------
* During the final rule phase, DOE considers the comments submitted by
the U.S. Department of Justice in the NOPR phase concerning the impact
of any lessening of competition likely to result from the imposition
of the standard. (42 U.S.C. 6295(o)(2)(B)(v))
The analyses listed in Table I.2 also include the development of
related economic models and analytical tools, as necessary. If timely
new data, models, or tools that enhance the development of standards
become available, DOE will incorporate them into this rulemaking.
3. Miscellaneous Rulemaking Issues
a. Consensus Agreement
In response to the Framework Document, USA Technologies stated that
there appears to be considerable consensus regarding potential energy
conservation standards for beverage vending machines and that DOE could
provide a valuable and meaningful service by coordinating the efforts
of industry, manufacturers, beverage vending machine owners, and
utilities by fostering an agreement on standards. USA Technologies
stated that this approach could help the industry achieve significant
energy savings in a very short time, instead of waiting until 2012.
(USA Tech, No. 9 at p. 1) \14\ Edison Electric Institute (EEI)
suggested that, given DOE's workload on Federal standards over the next
several years, DOE should try to arrange a negotiated rulemaking of
interested parties to help streamline the process. EEI noted that such
a process was very successful with the fluorescent lamp ballast
rulemaking.\15\ (EEI, No. 12 at p. 1)
DOE supports efforts by interested parties to work together to
develop and present to DOE recommendations on equipment categories and
standard levels. Such recommendations are welcome throughout the
standards development process, especially following issuance of the
ANOPR. Any consensus recommendation must satisfy the statutory criteria
provided by EPCA in determining whether an energy conservation standard
is technologically feasible and economically justified, and will result
in significant conservation of energy. (42 U.S.C. 6295(o)(2)(A),
(o)(3), (v)) Any consensus recommendation should also include
information that DOE can use to assess the seven statutory factors that
determine whether the benefits of the standard exceed its burdens to
the greatest extent practicable. (42 U.S.C. 6925(o)(2)(B)(i))
---------------------------------------------------------------------------
\14\ A notation in the form ``USA Tech, No. 9 at p. 1''
identifies a written comment that DOE received and included in the
docket for this rulemaking (Docket No. EERE-2006-STD-0125),
maintained in the Resource Room of the Building Technologies
Program. Specifically, this footnote refers to a comment made USA
Technologies, and recorded on page 1 of document number 9. Likewise,
a notation in the form ``Public Meeting Transcript, No. 8 at p.
150'' identifies an oral comment that DOE received during the July
11, 2006, Framework public meeting and which was recorded in the
public meeting transcript in the docket for this rulemaking.
Likewise, a notation in the form ``Joint Comment,'' No. 13 at p. 3''
identifies a written comment that DOE has received and has included
in the docket of this rulemaking.
\15\ DOE notes that in the florescent lamp ballasts rulemaking,
a consensus process was used. 65 FR 56740, 56744 (Sept. 19, 2000).
---------------------------------------------------------------------------
b. Type of Standard
Crane Merchandising Systems asked whether the technology options
listed would become mandatory as part of the rulemaking. (Public
Meeting Transcript, No. 8 at p. 150) USA Technologies stated that, in
terms of technology options for compliance with energy conservation
standards, the more opportunity manufacturers have to be creative, the
better, particularly since this is a very creative industry. It stated
that restricting manufacturers to particular design options would not
be in the manufacturers'--or the buyers'--best interest. (Public
Meeting Transcript, No. 8 at p. 173) Dixie-Narco likewise stated that
the choice of technologies used to achieve standards should be left to
the discretion of the manufacturer. (Public Meeting Transcript, No. 14
at p. 3) Dixie-Narco further suggested that the DOE standard should not
recommend any particular design packages or endorse any specific third-
party technologies developed for use in vending machines that original
equipment manufacturers have not endorsed as being compatible with
their equipment. It stated that these technologies may work against
other energy-saving components such as variable-capacity compressors.
(Public Meeting Transcript, No. 14 at p. 3) In contrast, the Naval
Facilities Engineering Service Center (NFESC) recommended that DOE
should pursue cost-effective standards for beverage vending machines,
which would include both overall efficiency standards, as well as
prescriptive standards that address more focused topics such as a low-
power-mode requirement for low-use periods and lighting efficiency
within the unit. (NFESC, No. 15 at p. 2)
In response, DOE notes that EPCA provides that an ``energy
conservation standard'' must be either (A) ``a * * * level of energy
efficiency'' or ``a * * * quantity of energy use,'' or (B), for certain
specified equipment, ``a design requirement.'' (42 U.S.C. 6291(6))
Thus, an ``energy conservation standard'' cannot consist of both a
design requirement and a level of efficiency or energy use.\16\
Moreover, item (A) above indicates that, under EPCA, a single energy
conservation standard cannot have measures of both energy efficiency
and energy use. Furthermore, EPCA specifically requires DOE to base its
test procedure for this equipment on American National Standards
Institute (ANSI)/American Society of Heating, Refrigerating and Air-
Conditioning Engineers (ASHRAE) Standard 32.1-2004, Methods of Testing
for Rating Vending Machines for Bottled, Canned or Other Sealed
Beverages. (42 U.S.C. 6293(b)(15)) The test methods in ANSI/ASHRAE
Standard 32.1-2004 consist of means to measure energy consumption, not
energy efficiency.
---------------------------------------------------------------------------
\16\ Beverage vending machines are not one of the specified
equipment for which EPCA allows a standard to consist of a design
requirement. (42 U.S.C. 6291(6)(B), 6292(a)).
---------------------------------------------------------------------------
For these reasons, DOE does not intend to develop efficiency
standards or design requirements for this equipment. Instead, DOE
intends to develop standards such that each beverage vending machine
would be subject to a maximum level of energy
[[Page 34101]]
use, and manufacturers could meet these standards with their own choice
of design methods.
c. Split Incentive Issue
DOE mentioned the ``split incentive issue'' (explained below) at
the Framework public meeting when discussing distribution channels for
beverage vending machines sold to the bottler or a vending machine
operator. The bottler or the vending machine operator installs these
machines at different sites through location contracts, maintains and
stocks the machines, and retains a certain percentage of the coin-box
revenue. The site owner, in this case, allows the machine to be placed
on-site, receives a percentage of the coin-box revenue and/or other
remuneration, and most relevant to this rulemaking, pays the
electricity bill and enjoys any electricity cost savings associated
with more-efficient machines. The equipment purchaser (bottler or
vending machine operator) does not pay the electricity bill and,
therefore, does not receive any cost savings. In principle, the
business site owner would be willing to accept a lower percentage of
revenue for a machine that uses less electricity. However, where it is
costly to renegotiate contracts, the incentive to purchase more-
efficient machines may be lessened or eliminated. Nonetheless, there
may be a growing market for energy-efficient beverage vending machines
because environmentally-conscious beverage companies and bottlers are
pushing to install energy-efficient machines on-site, and certain site
owners are demanding that energy-efficient machines be installed to
reduce their electricity costs.
At the Framework public meeting, Coca-Cola indicated that the
vending machine operator may or may not pay some or all of the energy
costs, depending on its contract with the site owner. (Public Meeting
Transcript, No. 8 at p. 190) Meanwhile, EEI asserted that information
about distribution channels and beverage vending machine contracts
would be important for the LCC analysis. EEI claimed that unless there
is a provision in the contract for energy costs, there will be a split
incentive for machine owners and site owners. (EEI, No. 12 at p. 5)
DOE agrees with EEI that there may be a split incentive in the
beverage vending machine market; however, it disagrees with EEI's
contention that the split incentive is relevant to the LCC analysis.
DOE recognizes that when a standard results in overall operating cost
savings that are greater than increases in the installed cost for the
equipment, there will be a life-cycle cost benefit from the standard, a
key piece of regulatory information independent of who receives such
benefit. How the benefits and burdens are shared between the equipment
purchaser and the site owner is a function of the nature of the
contract, and this allocation may in fact change as the expenses of
either party change as a result of subsequent events, such as changes
in electricity prices or standards requiring more-efficient machines.
DOE has limited data on existing beverage vending machine contracts,
but knows that these can vary widely. DOE has no data on how these
contracts may change as the relative expenses of either party shift. In
summary, for the purposes of the LCC analysis and as is required by
EPCA, DOE is evaluating the benefits and burdens of the standards from
the standpoint of a ``customer'' who is assumed to bear the burden of
purchasing the equipment and the benefits of any energy savings, which
in this case, is the equipment purchaser. (42 U.S.C. 6295(o)(2)(B)(i))
DOE requests further comment and information on this issue.
4. Test Procedure
A test procedure outlines the method by which manufacturers will
determine the energy consumption of their beverage vending machines,
and thereby assess the results used to certify compliance with an
energy conservation standard.
Section 135(b) of EPACT 2005 amended section 323 of EPCA in part by
adding new subsections 323(b)(15) (42 U.S.C. 6293(b)(15)) and 323(f)
(42 U.S.C. 6293(f)). Respectively, these subsections provide that the
test procedure for refrigerated bottled or canned beverage vending
machines shall be based on ANSI/ASHRAE Standard 32.1-2004, and that the
Secretary had until August 8, 2007 to prescribe that new test
procedure.
On December 8, 2006, DOE published a final rule in the Federal
Register that incorporated by reference ANSI/ASHRAE Standard 32.1-2004,
with two modifications, as the DOE test procedure for this equipment.
71 FR 71340, 71375; 10 CFR 431.294. The first modification DOE made was
to specify that in Section 6.2, ``Voltage and Frequency,'' equipment
with dual nameplate voltages must be tested at the lower of the two
voltages only. 71 FR 71340, 71355 (Dec. 8, 2006). The second
modification was to specify that (1) any measurement of ``vendible
capacity'' of refrigerated bottled or canned beverage vending machines
must be in accordance with the second paragraph of Section 5, ``Vending
Machine Capacity,'' of ANSI/ASHRAE Standard 32.1-2004, and (2) any
measurement of ``refrigerated volume'' of refrigerated bottled or
canned beverage vending machines must be in accordance with the
methodology specified in Section 5.2, ``Total Refrigerated Volume,''
(excluding subsections 5.2.2.2 through 5.2.2.4) of the ANSI/Association
of Home Appliance Manufacturers (AHAM) HRF-1-2004, Energy, Performance
and Capacity of Household Refrigerators, Refrigerator-Freezers and
Freezers. Id.
5. Rating Conditions
In the Framework Document, DOE requested feedback on what rating
conditions it should use for setting standards and determining
compliance with them. DOE's test procedure included two rating
conditions (i.e., 75 degrees Fahrenheit ([deg]F)/45 percent relative
humidity (RH) and 90[deg]F/65 percent RH). EEI stated that the
75[deg]F/45 percent RH ambient conditions specified in the ANSI/ASHRAE
Standard 32.1-2004 should provide adequate daily energy-usage
information for most machines located solely indoors. EEI added that
for certain indoor conditions (i.e., machines located in rooms with
limited ventilation), the 90[deg]F/65 percent RH test conditions may be
better. (EEI, No. 12 at p. 2)
Dixie-Narco stated that for the majority of indoor equipment, the
rating 75[deg]F/45 percent RH temperature is accurate and reflects
actual conditions. (Public Meeting Transcript, No. 8 at p. 95) Dixie-
Narco stated that the 90[deg]F/65 percent RH rating condition is highly
overstated, arguing that no location in the United States is at
90[deg]F/65 percent RH condition 24 hours a day, 365 days a year. Royal
Vendors and UVA Technologies agreed with Dixie-Narco, stating that the
actual energy use of outdoor machines is likely to be overstated, in
most cases, when determined under those conditions. (Public Meeting
Transcript, No. 8 at pp. 96-97)
Pacific Gas and Electric (PG&E) indicated, however, that DOE need
not distinguish between indoor and outdoor temperature conditions in
setting rating conditions because machines located indoors sometimes
operate in warmer conditions, similar to the ambient conditions that
the machine might operate in if it was located outdoors. (Public
Meeting Transcript, No. 8 at p. 94) Coca-Cola stated energy consumption
depends not only on ambient temperature, but also on ambient humidity
and the heat load
[[Page 34102]]
(heat output by components) within the machine. (Coca-Cola, No. 8 at p.
220) EEI noted that one EEI member company suggested that if DOE could
determine a way to require outdoor-rated machines to be used
exclusively outdoors and indoor-rated machines to be used exclusively
indoors, there could be considerable energy savings. (EEI, No. 12 at p.
2)
During the Framework public meeting, EEI stated that if glass-front
machines are placed outside, DOE might need to consider a different
test procedure to account for the difference in radiation heat loads
between glass-front and closed-front machines. EEI also suggested
separate tests for winter and summer conditions for machines used
outdoors. (Public Meeting Transcript, No. 8 at p. 66) In addition, EEI
argued that energy usage of beverage vending machines varies
dramatically based on ambient conditions. It suggested that DOE should
adopt a test procedure for outdoor machines that would account for high
ambient temperatures and/or solar loads, which would improve the
efficiency of the equipment throughout the year, but especially on peak
summer days. (EEI, No. 12 at p. 3) EEI added that if DOE decides to
establish standards in terms of total daily energy consumption, then
extreme outdoor temperature conditions must be accounted for. (EEI, No.
12 at p. 5)
In response to these comments, DOE understands the concerns about
the variability in energy consumption resulting from different ambient
conditions. However, outdoor-only beverage machines are currently
nonexistent. Currently, all machines placed outdoors are designed for
both indoor and outdoor use and are not designed exclusively for
outdoor use only. If, as suggested by several manufacturers, a 90
[deg]F/65 percent RH rating condition for a machine used outdoors would
result in overstatement of its energy use due to changing daily and
seasonal ambient conditions, that rating condition applied to the same
machine used indoors would then be expected to result in an even
greater overstatement of energy use. For example, the average annual
temperature in Miami, FL (one of the southernmost and warmest cities in
the United States) is approximately 75 [deg]F.\17\ Therefore,
throughout the United States, almost all average annual outdoor
temperatures are close to or below 75 [deg]F. DOE chooses to evaluate
an average temperature because it believes that the increase in the
energy consumption of a machine operating in temperatures above the
average is offset by the decrease in energy consumption of a machine
operating in temperatures below the average. In addition, beverage
vending machines have closed refrigeration systems. The relative
humidity that a beverage vending machine operates in has a much less
significant impact than ambient temperature on the energy consumption
of a beverage vending machine. After careful consideration of public
comments on this issue, DOE plans to use a 75 [deg]F/45 percent RH
rating condition for all refrigerated beverage vending machines covered
by this rulemaking. DOE will include this rating condition requirement
as part of any energy conservation standards developed in this
rulemaking.
---------------------------------------------------------------------------
\17\ Typical Meterorological Year 2 (TMY2) Data (from the 1961-
1990 National Solar Radiation Data Base). Available at: http://rredc.nrel.gov/solar/old_data/nsrdb/tmy2/.
---------------------------------------------------------------------------
II. Energy Conservation Standards Analyses for Beverage Vending
Machines
This section addresses the analyses DOE has performed and intends
to perform for this rulemaking. A separate subsection addresses each
analysis and the underlying assumptions applied to that analysis.
Specifically, DOE will perform a set of analyses, including: (1) A
market and technology assessment; (2) a screening analysis; (3) an
engineering analysis; (4) an analysis to determine equipment price; (5)
an energy use characterization; (6) an LCC and PBP analysis; (7) a
shipments analysis; (8) a national impact analysis; and (9) a
manufacturer impact analysis. Additional analyses consider the impact
of a potential rule on utilities, LCC sub-groups, employment, and the
environment. A full description of how these analyses are performed is
contained in the TSD.\18\ However, this section of the ANOPR provides
an overview of these analyses, while focusing on how these analyses are
being tailored to this rulemaking and on their underlying assumptions.
It also discusses comments received from interested parties since DOE
published the beverage vending machines Framework Document.
---------------------------------------------------------------------------
\18\ Available on DOE's Web site at http://www.eere.energy.gov/
buildings/appliance_standards/commercial/beverage_machines.html.
---------------------------------------------------------------------------
A. Market and Technology Assessment
When DOE begins a standards rulemaking, it develops market
assessment information that provides an overall picture of the market
for the equipment concerned, including the nature of the equipment, the
industry structure, and market characteristics for the equipment. The
technology assessment identifies available, energy-saving technologies,
which will be considered in the screening analysis. These activities
consist of both quantitative and qualitative efforts based primarily on
publicly available information. The subjects addressed in the market
and technology assessment for this rulemaking include manufacturer
characteristics and market shares, existing regulatory and non-
regulatory efficiency improvement initiatives, equipment classes, and
trends in equipment markets and characteristics. This information
serves as resource material for use throughout the rulemaking.
1. Definition of ``Beverage Vending Machine''
As mentioned above, EPCA defines the term ``refrigerated bottled or
canned beverage vending machine'' as ``a commercial refrigerator that
cools bottled or canned beverages and dispenses the bottled or canned
beverages on payment.'' (42 U.S.C. 6291(40)) Thus, whether equipment is
a beverage vending machine covered under EPCA depends on whether it
cools and dispenses ``bottled beverages'' and/or ``canned beverages,''
and, in the Framework Document, DOE requested feedback on the meaning
of these terms. The following summarizes public comments on this issue.
PepsiCo stated that there are many types of packaging for beverages
that cannot be categorized as a can or bottle. (Public Meeting
Transcript, No. 8 at p. 36) Dixie-Narco questioned how DOE's packaging
definition will take into account evolving package types over time.
(Public Meeting Transcript, No. 8 at p. 37) PepsiCo elaborated, asking
how DOE will treat other types of packaging (e.g., pouch-type packaging
and packaging that is a combination of plastic and paperboard). (Public
Meeting Transcript, No. 8 at pp. 40-41) The National Automated
Merchandising Association (NAMA) then asked whether DOE will include
aseptic packaging as a bottle or can.\19\ (Public Meeting Transcript,
No. 8 at p. 41)
---------------------------------------------------------------------------
\19\ An aseptic package is a package that is intended to prevent
spoilage and is used for long-term storage of its contents.
---------------------------------------------------------------------------
Dixie-Narco suggested that DOE should use the term ``beverage
containers'' to describe the items refrigerated beverage vending
machines dispense. (Public Meeting Transcript, No. 8 at p. 46) EEI
stated that DOE
[[Page 34103]]
should expand the list of vended items to more than just bottles and
cans. (Public Meeting Transcript, No. 8 at p. 42) It suggested that DOE
should add ``other beverage container'' to the list of vended items
that delineate what constitutes a beverage vending machine, and that
DOE should define that term, so as to include other combinations (e.g.,
plastic and paperboard, metal and plastic, metal and glass) or other
materials that may contain a beverage that will be housed in a
refrigerated beverage vending machine. EEI noted that another option
would be to add the phrase ``packaged beverage-refrigerated'' to the
list of vended products that define what equipment is a beverage
vending machine. (EEI, No. 12 at p. 3)
The Alliance to Save Energy, the American Council for an Energy
Efficient Economy (ACEEE), the Appliance Standards Awareness Project
(ASAP), the Natural Resources Defense Council (NRDC), the Northeast
Energy Efficiency Partnerships (NEEP), and the Northwest Power and
Conservation Council, in comments they jointly filed (hereafter ``Joint
Comment''), stated that the definitions suggested by DOE for the terms
``bottle'' and ``can'' seem workable, except that the term ``can''
should be broadened to include plastic. The Joint Comment also noted
the distinction between what is a ``can'' and what is a ``bottle'' is
not important, as long as all types of containers are included. (Joint
Comment, No. 13 at p. 3) Dixie-Narco agreed with this comment. The
Joint Comment suggested using the ASHRAE standard package (i.e., a 12-
ounce, 355-milliliter can) as a thermal load in the test procedure.
(Dixie-Narco, No. 14 at p. 1)
After carefully reviewing these comments, DOE has tentatively
decided to consider broader definitions for the terms ``bottled'' and
``canned'' as they apply to beverage vending machines. DOE believes a
bottle or can in this context refers to ``a sealed container for
beverages,'' so a bottled or canned beverage is ``a beverage in a
sealed container.'' Such definition would avoid unnecessary
complications regarding the material composition of the container.
Furthermore, a single, encompassing definition will eliminate the need
to determine whether a particular container is a bottle or a can. DOE
seeks comment on this broader definition, both as to the definition
itself and whether it is consistent with the intent of the Act.
Combination vending machines are vending machines that dispense
cooled beverages as well as other beverages and food items. These types
of vending machines are discussed in Section 5.a below.
2. Equipment Classes
In general, when evaluating and establishing energy conservation
standards, DOE divides covered equipment into equipment classes by the
type of energy used, capacity, or other performance-related features
that affect efficiency and factors such as the utility of such
feature(s) to users. (42 U.S.C. 6295(q)) DOE routinely establishes
different energy conservation standards for different equipment classes
based on these criteria.
A number of characteristics of beverage vending machines have the
potential to affect their energy use and efficiency, and accordingly,
to be the basis for separate equipment classes for these machines. In
the Framework Document, DOE suggested and sought feedback on two issues
that could affect equipment class designations: (1) Indoor-only and
indoor/outdoor machines; and (2) glass-front and solid-front machines.
With regard to glass-front and solid-front machines, ACEEE stated
it may be better to distinguish equipment classes as ``zone-cooled''
and ``fully-cooled'' rather than ``solid-front'' and ``glass-front'',
respectively. It asserted that the latter two demarcations overlap to
some extent, and some important distinctions make zone-cooled and
fully-cooled better classifications. (Public Meeting Transcript, No. 8
at p. 85) NAMA stated that during vending machine efficiency meetings
with the Canadian Standards Association (CSA), the CSA's standards
committee recommended ``zone-cooled'' and ``fully-cooled'' as the two
classes of refrigerated beverage vending machines. (Public Meeting
Transcript, No. 8 at p. 58) Dixie-Narco and Coca-Cola agreed that using
these designations to define equipment classes has merit. (Public
Meeting Transcript, No. 8 at pp. 63-64)
As stated earlier, DOE categorizes equipment classes based on
different performance-related or utility-related factors that affect
efficiency. PG&E stated that the efficiency of a machine depends on
whether it is zone-cooled or fully-cooled. (Public Meeting Transcript,
No. 8 at p. 62) Dixie-Narco stated that, all other things being equal,
zone-cooled machines use less energy than fully-cooled machines because
their refrigeration system is smaller. (Public Meeting Transcript, No.
8 at p. 103) PepsiCo expressed a similar opinion, adding that it would
like to see standards based on energy use, rather than trying to define
what the design of the machine should be. (Public Meeting Transcript,
No. 8 at p. 103)
Based on public comments, DOE agrees that ``zone-cooled'' and
``fully-cooled'' are more appropriate descriptors for beverage vending
machines that are solid-front and glass-front, respectively, and
intends to use this terminology in this rulemaking.
In addition to whether a beverage vending machine is zone-cooled or
fully-cooled, the ambient conditions that a machine operates in can
also affect its energy efficiency. EEI and NFESC stated that there
should be separate equipment classes for indoor-only and indoor/outdoor
machines. (Public Meeting Transcript, No. 8 at p. 50 and NFESC, No. 15
at p. 4) Dixie-Narco commented that a classification is needed for the
outdoor machines simply because of the large number of machines that
Coca-Cola and PepsiCo own; some smaller operators may primarily have
indoor locations, but no one should be excluded. (Public Meeting
Transcript, No. 8 at p. 94) Coca-Cola stated that a distinction between
indoor-only and indoor/outdoor machines has to do with weatherization
and how they tolerate environmental effects. Specifically, Coca-Cola
stated that indoor/outdoor machines are more weatherproof and designed
to be less influenced by environmental effects, such as high humidity
and direct contact with moisture. (Public Meeting Transcript, No. 8 at
p. 55) Dixie-Narco commented that the primary differences between
indoor-only and indoor/outdoor machines are vandalism-prevention
features. (Public Meeting Transcript, No. 8 at p. 53)
Southern California Edison's Refrigeration and Thermal Test Center
(RTTC) asked whether it would be appropriate to have a category for
outdoor-only machines since there probably will be glass-front outdoor
machines in the future. RTTC stated that the larger refrigeration
system needed for an outdoor machine would not be the proper size for
indoor conditions. (Public Meeting Transcript, No. 8 at p. 89) In
contrast, Dixie-Narco stated that outdoor machines today can be used
indoors and outdoors, but that classification is acceptable because the
machine can be tested to the worst-case environment. According to
Dixie-Narco, indoor-only machines are tested to the 75 [deg]F/45
percent RH condition, so when an outdoor machine is tested indoors,
lower energy use is measured because of the lower rating conditions.
Dixie-Narco did not see any need to have additional specifications.
(Public Meeting Transcript, No. 8 at p. 89) ACEEE summarized the
discussion at the
[[Page 34104]]
Framework public meeting, stating it heard there should be an outdoor
category with subcategories for zone-cooled and fully-cooled machines,
and an indoor category without any subcategories. (Public Meeting
Transcript, No. 8 at p. 94) ACEEE suggested three equipment classes
based on the discussion at the Framework public meeting: (1) A zone-
cooled machine tested at 90 [deg]F; (2) a fully-cooled machine tested
at 75 [deg]F; and (3) a fully-cooled machine tested at 90 [deg]F.
(Public Meeting Transcript, No. 8 at p. 68).
Dixie-Narco stated that variable-speed compressors are increasingly
being used in vending machines, and they adapt to the load indoors and
outdoors. Moreover, Dixie-Narco argued that these compressors are no
less efficient indoors, even if they are sized to operate outdoors.
Dixie-Narco stated that in order to be able to meet ENERGY STAR Tier 2
levels and above, manufacturers will have to use variable speed
compressor technology. (Public Meeting Transcript, No. 8 at p. 91)
Dixie-Narco recommended consolidating into one rating condition so that
both indoor and outdoor vending machines are tested at a standard of 75
[deg]F/45 percent RH. (Dixie-Narco, No. 14 at p. 2).
Based on the public comments above and anecdotal information that
few glass-front or fully-cooled machines (certified for indoor use
only) are actually installed outdoors (because of safety and vandalism
reasons) and very few other machines are certified for indoor use only,
DOE now intends to designate the following two equipment classes of
beverage vending machines for this rulemaking:
(a) Class A Machine (fully-cooled machines).
(b) Class B Machine (any beverage vending machine not considered to
be Class A)
DOE recognizes that fully-cooled beverage vending machines
virtually always have glass fronts, and DOE has designated these
machines as ``Class A.'' DOE has designated as ``Class B'' any other
beverage vending machine that cannot be considered Class A. DOE intends
to use these two equipment classes rather than four as suggested in the
Framework Document. DOE does not find it necessary to establish
separate equipment classes for indoor machines and outdoor machines,
because of the similarities between average indoor and outdoor
operating conditions. Thus, DOE intends to use two equipment classes
(Class A and Class B), as described in further detail below.
The ``Class A'' beverage vending machine equipment class is
comprised of machines that cool the entire internal volume. Class A
machines generally use ``shelf-style'' vending mechanisms and tend to
utilize a transparent (glass or transparent polymer) front,. Because
the next-to-be-vended product is visible to the consumer and any
product can be selected by the consumer off of the shelf, all bottled
or canned beverage containers are necessarily enclosed within the
refrigerated volume.
The ``Class B'' beverage vending machine equipment class is
generally composed of machines that have an opaque front (which
provides better insulation from ambient conditions) and utilize a
``stack-style'' vending mechanism. These machines are usually installed
either indoors or outdoors. The energy consumption of the outdoor
machines varies with the varying ambient conditions. However, as stated
earlier, the average energy consumption of these machines is very
similar to that of machines installed indoors. Typically, though,
unlike the Class A machines, only a fraction (or a zone) of the volumes
of the Class B machines (usually the bottom third of the machine) is
cooled. Hence, they are also sometimes referred to as ``zone-cooled''
machines.
3. Selection of Baseline Equipment--Use of the ENERGY STAR Criteria
Once DOE establishes equipment classes, it selects a baseline model
as a reference point for each class, and measures changes resulting
from energy conservation standards against the baseline. The baseline
model in each equipment class represents the characteristics of
equipment typical of that class (e.g., vendible capacity, physical
size). Generally, a baseline model is one that just meets current
energy conservation standards, or, if no standards are in place, the
baseline is typically the most common or least efficient unit on the
market. At present, there are no existing energy conservation standards
for beverage vending machines covered under this rulemaking.
However, the U.S. Environmental Protection Agency (EPA) has
developed voluntary energy performance criteria for beverage vending
machines as part of the ENERGY STAR labeling program. ENERGY STAR has a
two-tiered specification for refrigerated beverage machines. Tier 1 has
been in effect for new machines since April 1, 2004, and for
refurbished machines since April 31, 2006. The Tier 2 criteria went
into effect on July 1, 2007 for all new machines.
Originally, the top 25 percent of beverage vending machines
qualified for ENERGY STAR Tier 1. Now, however, some manufacturers are
producing even more-efficient machines that qualify for Tier 2, and a
majority of the machines being manufactured meet or exceed Tier 1
levels. However, there are some models currently in the market that are
less efficient than the Tier 1 levels. In the Framework Document, DOE
suggested setting the ENERGY STAR Tier 1 specification as the baseline
efficiency level for all classes of beverage vending machines covered
under this rulemaking. (More details regarding the specifications can
be found in Chapter 3 of the TSD.)
ACEEE asserted that the ENERGY STAR Tier 1 specification can
probably be considered the baseline for solid-front machines, but that
for glass-front machines, the baseline may have to be slightly lower.
(Public Meeting Transcript, No. 8 at p. 114) In contrast, Dixie-Narco
stated that Tier 1 level would be a good baseline for glass-front
machines. Dixie-Narco further commented that all of the glass-front
machines that both of its competitors sell are ENERGY STAR qualified,
and that it would be comfortable meeting those levels for its glass-
front machines as well. (Public Meeting Transcript, No. 8 at p. 116)
EEI and Royal Vendors agreed that Tier 1 would be an appropriate
baseline level. (Public Meeting Transcript, No. 8 at p. 118; Royal, No.
11 at p. 3)
The Joint Comment agreed that models meeting the ENERGY STAR Tier 1
specification should be used as the baseline because more than 90
percent of indoor/outdoor beverage vending machines meet this
specification, and a large and growing volume of indoor-only machines
meet this specification as well. The Joint Comment added that in the
next two years, it is expected that nearly all indoor-only machines
will meet this specification, because of the trend for beverage
companies to only want to purchase ENERGY STAR-qualified equipment.
(Joint Comment, No. 13 at p. 3) Moreover, PepsiCo stated that it
requires the manufacturers with which it contracts to build new
machines to meet the California Energy Commission standard, which is
the same as the ENERGY STAR Tier 1 requirement. (Public Meeting
Transcript, No. 8 at p. 265) Coca-Cola stated that it has mandated that
all Coca-Cola vending machines are to use half as much energy by 2010
as in 2000, adding that this reduction would certainly meet ENERGY STAR
Tier 1 qualifications.
[[Page 34105]]
USA Technologies noted that there are three primary manufacturers
in the industry and that each makes three primary models. According to
USA Technologies, these nine models probably represent more than 90
percent of the beverage vending machines purchased each year. Thus, USA
Technologies commented that by considering the energy consumption of
these models and the number of units purchased over the last five
years, the baseline model would be clear. (Public Meeting Transcript,
No. 8 at p. 115)
Based on stakeholder feedback and current market trends, DOE
expects that in the absence of new standards, most, if not all, new
machines will meet the ENERGY STAR Tier 1 level by 2012. Therefore, DOE
is using ENERGY STAR Tier 1 as the baseline efficiency level since it
roughly represents the least-efficient equipment likely to be sold in
2012.
4. Normalization Metric
For both residential and commercial refrigerators, EPCA and DOE
implementing regulations set standards for each of several classes.
These classes, for the most part, are not defined by size, but are
instead based upon their design configurations and whether rated for
indoor or outdoor use; therefore, these classes include equipment of
varying sizes. Because a refrigerator's energy use is a function of its
size, the standard for each class incorporated a formula which, in
effect, prescribes a maximum amount of energy use that varies by size
of equipment within that class. (10 CFR 430.32(a) and 10 CFR 431.66) A
key factor in each such formula is a ``normalization metric,'' which
represents equipment size (e.g., refrigerated volume) and allows the
maximum allowed energy use to vary by the size of the equipment. DOE is
using the same approach in developing standards in this beverage
vending machine rulemaking.
In the Framework Document, however, DOE set forth the currently
used industry metric of vendible capacity (i.e., number of cans) of a
beverage vending machine as well as the refrigerated volume metric as
is being used in commercial refrigerators. During the Framework public
meeting, DOE asked for comment on which of these normalization metrics
would be most appropriate for the beverage vending machines in this
rulemaking.
In response, Coca-Cola stated that for the current test metric
(i.e., vendible capacity), the DOE test procedure does not reflect the
current state of the beverage vending machine industry. (Public Meeting
Transcript, No. 8 at p. 69) Dixie-Narco, Crane Merchandising Systems,
Coca-Cola, and PepsiCo all agreed that refrigerated volume would
provide the best normalization metric for beverage vending machines.
(Public Meeting Transcript, No. 8 at pp. 86-125) Dixie-Narco then asked
whether industry consensus standards (e.g., AHAM standards) exist for
measuring refrigerated volume in refrigerators that could be adapted
for use in assessing beverage vending machines. (Public Meeting
Transcript, No. 8 at p. 87) At the meeting, DOE responded that the test
procedures in ANSI/AHAM HRF-1-2004, may be relevant and is currently in
use for residential refrigerators.
Dixie-Narco stated that a method to measure refrigerated volume
must be determined. Dixie-Narco stated that the industry must examine
residential and commercial refrigeration equipment and try to develop
an agreed-upon method of measuring the refrigerated volume of vending
machines. Dixie-Narco stated that once this is done, it will have
energy-consumption data it can provide to DOE for analysis. (Public
Meeting Transcript, No. 8 at p. 134) Royal Vendors stated that
California just published new energy standards,\20\ and that California
will require manufacturers to measure and report the refrigerated
volume of all vending machines according to the AHAM 1974 volume
calculation (i.e., ANSI/AHAM HRF-1-1979). Therefore, Royal Vendors
stated that manufacturers will be measuring refrigerated volumes for
their machines, and it will be public information. (Public Meeting
Transcript, No. 8 at p. 135)
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\20\ California Energy Commission, Title 20, 2007 Appliance
Efficiency Regulations.
---------------------------------------------------------------------------
Based on the public comments and the recently published California
standards which use refrigerated volume for all vending machines, DOE
decided to use refrigerated volume as the normalization metric for
measuring daily energy consumption for all equipment classes of
beverage vending machines. DOE will collect industry data to develop a
translation from vendible capacity to refrigerated volume.
5. Scope and Coverage of Equipment
a. Combination Machines
At the Framework public meeting, stakeholders raised a number of
questions regarding what types of beverage vending machines would be
covered in the present rulemaking. Whirlpool asked whether this
rulemaking will cover beverage vending machines that have separate
sections for refrigerated and non-refrigerated beverages. (Public
Meeting Transcript, No. 8 at p. 45) Dixie-Narco and Crane Merchandising
Systems also expressed concern about zone-cooled machines that contain
different products in different sections held at different
temperatures. These stakeholders suggested that this may cause
confusion and may raise questions about the definition of ``zone
cooled.'' (Public Meeting Transcript, No. 8 at p. 104)
EEI stated that the types and quantities of products sold in
refrigerated vending machines are changing and will have an impact on
energy use, which may result in confusion about what this rulemaking
covers. EEI suggested that, based on stakeholder feedback, this
rulemaking should cover all machines that have at least 50-75 percent
of their capacity dedicated to refrigerated, packaged beverages. (EEI,
No. 12 at p. 2) EEI also suggested that DOE consider a definition for a
``refrigerated product machine'' to cover machines that sell food along
with beverages. EEI noted that if more machines sell both food and
beverages, and DOE does not cover this equipment in this rulemaking,
there could be a loophole for manufacturers to produce machines that do
not meet the standard if there is at least one food (or other non-
beverage) item for sale in the equipment. (EEI, No. 12 at p. 3) PG&E
asked if DOE could benefit from the California designations of multi-
package equipment and non-multi-package equipment \21\ when considering
what beverage vending machines will be included in this rulemaking.
(Public Meeting Transcript, No. 8 at p. 62)
---------------------------------------------------------------------------
\21\ The California Energy Commission defines a ``refrigerated
multi-package beverage vending machine'' as a refrigerated beverage
vending machine that is able to display and dispense at least 20
discrete types of beverages. (California Energy Commission, Title
20, 2007 Appliance Efficiency Regulations).
---------------------------------------------------------------------------
EPCA does not explicitly address ``combination machines'' (i.e.,
vending machines that dispense cooled beverages as well as other
beverages and food items). As discussed above, EPCA directs DOE to set
standards for vending machines that cool bottled or canned beverages
and dispense them upon payment. (42 U.S.C. 6291(40) and 6295(v)) DOE
believes that the language used to define beverage vending machines is
broad enough to include any vending machine, as long as some portion of
that machine cools bottled or canned beverages and dispenses them upon
payment. For this rulemaking, DOE interprets these provisions to cover
any vending machine that can dispense at least one type of refrigerated
bottled or canned beverage, regardless of the
[[Page 34106]]
other types of vended products (some of which may not be refrigerated).
b. Refurbished Equipment
At the Framework public meeting, PepsiCo also asked whether the new
standards would apply to refurbished and remanufactured equipment.
(Public Meeting Transcript, No. 8 at p. 230) USA Technologies indicated
that, to establish meaningful regulations, DOE must consider the
existing machines that are remanufactured or refurbished, as well as
new machines. (Public Meeting Transcript, No. 8 at p. 22)
In response to the possibility that DOE could use ENERGY STAR
criteria when defining energy standards for beverage vending machines,
stakeholders commented on how this would affect their equipment that is
currently on the market. Dixie-Narco stated they make some vending
machines that do not meet ENERGY STAR criteria, but these machines
could be modified to achieve them. (Public Meeting Transcript, No. 8 at
p. 131) Royal Vendors volunteered that it also has a model series that
does not meet ENERGY STAR criteria because of the loading configuration
of the machines, but the series has very low sales. (Public Meeting
Transcript, No. 8 at p. 131) PepsiCo stated that a very small
percentage of its machines built before 2004 meet ENERGY STAR Tier 1
criteria, but that it would be very expensive to upgrade these
machines. (Public Meeting Transcript, No. 8 at p. 245)
DOE has carefully considered its authority to establish energy
conservation standards for rebuilt and refurbished beverage vending
machines in light of these comments, and as discussed below, has
tentatively concluded that its authority does not extend to rebuilt and
refurbished equipment. The relevant statutory provisions are discussed
below, as well as the agency's rationale in reaching this conclusion.
Section 332 of EPCA provides that it shall be unlawful for any
manufacturer or private labeler to distribute in commerce any new
covered equipment which is not in conformity with an applicable energy
conservation standard. (42 U.S.C. 6302(a)(5) and 6316(a)-(b) (emphasis
added)) \22\ Congress made section 332 applicable to beverage vending
machines because an applicable energy conservations standard is
prescribed for that equipment under section 325(v) of EPCA. (42 U.S.C.
6295(v)) Section 332(b) defines ``new covered product'' to mean ``a
covered product the title of which has not passed to a purchaser who
buys such a product for purposes other than (1) reselling such product,
or (2) leasing such product for a period in excess of one year.'' (42
U.S.C. 6302(b)) That is, a new covered product is one for which the
title has not passed to a customer.\23\
---------------------------------------------------------------------------
\22\ DOE only regulates equipment that is either specifically
enumerated as ``covered products'' or is equipment for which DOE has
been granted authority to regulate in another statutory provision.
Section 325 of EPCA (42 U.S.C. 6295) grants DOE authority to
regulate beverage vending machines, without including the specific
language designating them as ``covered products.'' The failure to
include the words ``covered product'' in Section 325 of EPCA or to
include beverage vending machines in Section 322 of EPCA, which
lists the covered products in Part A, does not mean that beverage
vending machines will not be treated as ``covered products'' for
purposes of DOE exercising its regulatory authority.
\23\ In the context of this discussion, the term ``customer'' is
used to identify equipment's end user; e.g., ``customer'' does not
include a party that takes title of equipment solely for the purpose
of resale or for leasing equipment for less than a year.
---------------------------------------------------------------------------
DOE believes that the definition of ``new covered product'' in
section 332 is ambiguous on the question of whether a rebuilt or
refurbished beverage vending machine is subject to DOE's authority to
set energy conservation standards. On this point, DOE notes that
section 332 does not expressly provide that ``new covered product''
means new equipment the title of which is transferred by the original
manufacturer to an original owner. Conversely, the definition of ``new
covered product'' does not expressly exclude substantially
remanufactured equipment that is subsequently resold (i.e., equipment
sold or disposed of by the original owner that is rebuilt or
refurbished by an entity which resells it to another person). In order
to resolve this ambiguity regarding DOE's authority to regulate rebuilt
and refurbished beverage vending machines, DOE considered both
congressional intent and the nature of the existing beverage vending
machine market.
There is no legislative history that reflects Congress's intent.
However, DOE views the way Congress chose to define ``new covered
product'' in EPCA as the strongest indicator that the term was not
intended to apply to rebuilt or refurbished equipment. Specifically, it
is unlikely that Congress would have made transfer of ``title'' the
test of whether equipment was ``new'' if it intended to cover rebuilt
or refurbished equipment. The most reasonable interpretation of the
statutory definition is that Congress intended that this provision
apply to newly manufactured equipment the title of which has not passed
for the first time to a purchaser of the equipment. Such interpretation
provides certainty and clarity for the regulated entities subject to
these statutory provisions.
In addition, if DOE were to interpret ``new covered product'' as
applying to other than newly manufactured equipment, EPCA's testing and
labeling provisions would be much harder to implement and enforce.
Identifying ``manufacturers'' under such an interpretation likely would
be difficult,\24\ and it also likely would be difficult for DOE to
distinguish between rebuilt equipment that is not covered and equipment
that has been so extensively rebuilt as to be considered ``new,'' and
therefore, subject to these provisions.
---------------------------------------------------------------------------
\24\ For example, a business that rebuilds or remanufactures
equipment, instead of reselling it and transferring title, could
operate as a repair facility for consumers who already own the used
equipment. The business would simply rebuild the equipment for a fee
and return it to the owner; there would be no transfer of title.
---------------------------------------------------------------------------
DOE understands the concern of some stakeholders that there is a
possibility that the energy conservation standards for beverage vending
machines could be circumvented if remanufactured machines are not
deemed to be ``new covered products.'' DOE understands that the rebuilt
and refurbished beverage vending machine market is comprised of either:
(1) Equipment sold by the original manufacturer or private labeler,
which after purchase by a commercial customer, is then modified and
resold by another party; or (2) equipment that, following purchase by a
commercial customer, is modified and retained by that customer.
However, for the above-stated reasons, DOE has concluded that rebuilt
and refurbished beverage vending machines are not ``new covered
products'' under EPCA, and therefore, are not subject to DOE's energy
conservation standards or test procedures.\25\ With respect to the
first scenario, upon transfer of the title of the beverage vending
machine to the commercial customer, the beverage vending machine is no
longer new covered equipment, and therefore, it is not subject to DOE
regulations even if it is subsequently resold. Similarly, with respect
to beverage vending machines that are refurbished or rebuilt for or by
the commercial customer (i.e., they are not resold), DOE lacks
authority over those beverage vending machines because they are neither
``new'' covered equipment nor distributed in commerce. Furthermore, if
refurbished or rebuilt beverage vending machines that are sold
[[Page 34107]]
to another party were covered but not those that are refurbished or
rebuilt for the commercial customer, DOE believes this would likely
create an inequity that Congress would not have intended since a
purpose of EPCA was to establish a single national standard, not
multiple standards for the same equipment.
---------------------------------------------------------------------------
\25\ DOE notes that de minimis use of used or recycled parts
would not make a ``new product'' into a used product.
---------------------------------------------------------------------------
Throughout the history of the energy conservation standards
program, DOE has not regulated used consumer products or commercial
equipment that has been refurbished, rebuilt, or undergone major
repairs, since EPCA only covers new covered equipment distributed in
commerce. For all of these reasons, DOE concludes that rebuilt or
refurbished beverage vending machines are not new covered equipment
under EPCA and, therefore, are not subject to DOE's energy conservation
standards or test procedures.
6. Market Assessment
In the market assessment, DOE develops a qualitative and
quantitative characterization of the beverage vending machine industry
and market structure based on publicly-available information and
information submitted by manufacturers and other stakeholders.
Three major beverage vending machines manufacturers hold the vast
majority (about 75 percent) of the domestic market share:
Crane Merchandising/Dixie-Narco, Inc.\26\
---------------------------------------------------------------------------
\26\ Crane Merchandising purchased Dixie-Narco, Inc. on October
23, 2006, after the Framework public meeting was held.
---------------------------------------------------------------------------
Royal Vendors, Inc.
Sanden-Vendo America
Several other manufacturers also produce beverage vending machines
for the domestic market, including:
Automatic Merchandising Systems (AMS)
Distributed Vending Company
Jofemar USA
Seaga Manufacturing, Inc.
The Wittern Group
PepsiCo and Coca-Cola are, by far, the largest customers of
beverage vending machines. They do not manufacture beverage vending
machines. Instead, they contract with manufacturers that produce
equipment with specific design characteristics.
DOE is considering the possibility that small businesses would be
particularly affected by the promulgation of energy conservation
standards for beverage vending machines. The Small Business
Administration (SBA) lists small business size standards for this
industry as they are described in the North American Industry
Classification System (NAICS) code 333311, Automated Vending Machine
Manufacturing. The size standard for an industry sets the largest
average annual receipts or average number of employees that a for-
profit concern can have and still qualify as a small business for
Federal Government programs. SBA defines small business manufacturing
enterprises for beverage vending machines as having 500 employees or
fewer. DOE identified six small business manufacturers in the beverage
vending machine industry. DOE will study the potential impacts on these
small businesses in detail during the manufacturer impact analysis,
which will be conducted as part of the NOPR analysis. See Chapter 3 of
the TSD for more information regarding small business manufacturers of
beverage vending machines.
DOE recognizes that smaller manufacturers, niche manufacturers, and
manufacturers exhibiting a cost structure that differs substantially
from the industry average may be differentially affected by the
imposition of standards. NAMA stated that it could provide a list of
manufacturers along with associated contact information that could be
useful for DOE's research. (Public Meeting Transcript, No. 8 at p. 76)
DOE is using NAMA's information on manufacturers and contacts to define
subgroups of smaller manufacturers. DOE will use this information to
analyze how standards enacted by this rulemaking affect smaller
manufacturers.
In the Framework Document, DOE requested suggestions for obtaining
historical energy usage and equipment shipping information. NAMA stated
that shipment data are now privately held and are not reported to NAMA
or the Census Bureau. NAMA noted that DOE will have to request
historical shipment information directly from manufacturers. (Public
Meeting Transcript, No. 8 at p. 75) Dixie-Narco stated that it would
provide historical shipment information if asked, but requested the
data remain confidential. Dixie-Narco added that obtaining energy-usage
information back to 1990 would be difficult, if not impossible, because
such information was not recorded by manufacturers at that time.
(Public Meeting Transcript, No. 8 at p. 76)
PepsiCo and Coca-Cola recommended that DOE request historical
shipment and energy-usage data from EPA and State organizations.
(Public Meeting Transcript, No. 8 at pp. 78-82) PepsiCo urged all
manufacturers to provide NAMA with all available historical shipment
and energy-usage data for aggregation. (Public Meeting Transcript, No.
8 at p. 79)
NAMA stated that it collected some aggregated historical shipment
and energy-usage data for the ENERGY STAR program. (Public Meeting
Transcript, No. 8 at p. 83) EPA stated that it is creating a summary
report for the 2005 shipment information from NAMA and will at least
include the shipments of ENERGY STAR-qualified models and an estimate
of market penetration. EPA also suggested that, depending on how high
market penetration is, shipment of ENERGY STAR-qualified models could
serve as a proxy for determining the makeup of the overall market,
although the data would not be manufacturer-specific. (Public Meeting
Transcript, No. 8 at p. 83) Dixie-Narco stated that EPA has the
company's shipment data for 2005, but it did not collect data before
2005. (Dixie-Narco, No. 14 at p. 2) ACEEE summarized that there seem to
be two paths for collection and aggregation of historical shipment and
energy-usage data: (1) By NAMA, or (2) by a DOE contractor. (Public
Meeting Transcript, No. 8 at p. 82)
Dixie-Narco stated at the Framework public meeting that it will try
to provide data on its forthcoming models, keeping in mind that ENERGY
STAR Tier 2 will take effect in July 2007. Dixie-Narco added that it
estimates 80 percent of installed machines will exceed ENERGY STAR Tier
1 levels by 2012. (Public Meeting Transcript, No. 8 at p. 246) Royal
Vendors stated that it will cooperate with NAMA to develop equipment
shipment data on an industry basis. Royal Vendors noted, however, that
trends may be difficult to decipher. (Royal, No. 11 at p. 2)
EEI stated that according to public meeting participants, ``stack-
style'' machines were 90 percent of the market and glass-front machines
were 10 percent of the market in 2001. However, stack-style and glass-
front machines were each 50 percent of the market in 2006. EEI noted
that if market shares continue changing in this direction, baseline
energy-usage and energy-efficiency upgrade possibilities could be
affected. (EEI, No. 12 at p. 3)
In summary, it is evident that NAMA does not have the historical
shipment and energy-usage data necessary to determine efficiency trends
in the industry. Therefore, DOE will contact ENERGY STAR program staff
and State organizations and use their websites and various industry
reports to obtain historical shipment and energy-usage data.
[[Page 34108]]
7. Technology Assessment
In the technology assessment, DOE identifies technologies and
design options that could improve the efficiency of beverage vending
machines. This assessment provides the technical background and
structure on which DOE bases its screening and engineering analyses.
For beverage vending machines, DOE based its list of technologically-
feasible design options on input from manufacturers, industry experts,
component suppliers, trade publications, and technical papers. See
Chapter 3 of the TSD for additional detail on the technology assessment
and technologies analyzed. However, the following discussion provides
an overview of the salient aspects of the technology assessment,
including issues on which DOE seeks public comment.
In the Framework Document, DOE identified and sought feedback on
the applicable technologies and designs which have the potential to
improve the energy efficiency of the identified equipment classes. A
detailed discussion of these technologies and design options is given
in Chapter 3 of the TSD. In response, Dixie-Narco asserted that certain
technology options on DOE's list are not compatible with each other.
(Public Meeting Transcript, No. 8 at p. 155) Furthermore, EEI commented
that several of the technologies may already be incorporated into the
baseline units being manufactured and installed in the United States.
(EEI, No. 12 at p. 4)
Several stakeholders addressed other means for reducing the energy
use of beverage vending machines, offering both general and specific
suggestions. Specifically, Royal Vendors stated that the important
systems and components which may impact the energy efficiency of a
beverage vending machine are the sealed cooling unit, evaporator/
circulating fan, lighting, insulation, and door-sealing systems. It
noted that ENERGY STAR Tier 1 qualified machines include an effective
combination of these systems with a focus on lighting, compressor
efficiency, and efficient evaporator/circulating fan motor impellers.
To improve the energy efficiency of beverage vending machines, Royal
Vendors suggested adding T8 lamps with electronic ballasts, low-
ballast-factor ballasts, electronically-commutated fan motors with
engineered impeller and venturi rings, and capillary tube systems with
liquid-suction heat exchangers. Royal Vendors also stated that anti-
sweat heaters are no longer in use and can be removed from the list of
technologies considered. (Royal, No. 11 at p. 3)
On this issue, Coca-Cola stated that the manufacturers which supply
the company with beverage vending machines have already discontinued
use of capillary tube expansion devices (which consume more energy) and
are starting to instead use more-efficient thermostatic and electronic
expansion valves. Coca-Cola stated that some manufacturers are
researching other technologies such as Stirling refrigeration, which
uses temperature differential to provide electrical power. (Public
Meeting Transcript, No. 8 at p. 92) EEI and ACEEE agreed that ballasts
using dimming technology should be considered a technology option as a
means of decreasing the energy consumption associated with beverage
vending machine lighting. (Public Meeting Transcript, No. 8 at p. 92;
Joint Comment, No. 13 at p. 3) EEI added that DOE may want to
investigate other lighting technologies such as T5 fluorescent lamps
and dimmable light emitting diode (LED) systems. (EEI, No. 12 at p. 4)
PG&E expressed a similar opinion that there are many opportunities to
save energy in lighting beverage vending machines. PG&E also suggested
considering additional fan motor technologies. (Public Meeting
Transcript, No. 8 at p. 172) USA Technologies stated that the
technology options list should also include energy-management systems,
which restrict the energy use of equipment in a room when it is not
occupied. (Public Meeting Transcript, No. 8 at p. 149).
DOE is addressing all the technology options suggested and welcomes
further public comment on this issue. See the screening analysis
portion of this ANOPR and Chapter 3 of the TSD for more details on
these technology options.
B. Screening Analysis
The purpose of the screening analysis is to evaluate the technology
options identified as having the potential to improve the efficiency of
equipment, in order to determine which technologies to consider further
and which to screen out. DOE consulted with industry, technical
experts, and other interested parties to develop a list of technologies
for consideration. DOE then applied the following four screening
criteria to determine which technologies are unsuitable for further
consideration in the rulemaking:
(1) Technological Feasibility. Technologies incorporated in
commercial equipment or in working prototypes will be considered
technologically feasible.
(2) Practicability to Manufacture, Install, and Service. If mass
production and reliable installation and servicing of a technology in
commercial equipment could be achieved on the scale necessary to serve
the relevant market at the time of the effective date of the standard,
then that technology will be considered practicable to manufacture,
install, and service.
(3) Adverse Impacts on Equipment Utility or Equipment Availability.
If a technology is determined to have significant adverse impact on the
utility of the equipment to significant subgroups of consumers, or
result in the unavailability of any covered equipment type with
performance characteristics (including reliability), features, sizes,
capacities, and volumes that are substantially the same as equipment
generally available in the United States at the time, it will not be
considered further.
(4) Adverse Impacts on Health or Safety. If it is determined that a
technology will have significant adverse impacts on health or safety,
it will not be considered further.
10 CFR Part 430, Subpart C, Appendix A at 4(a)(4) and 5(b).
1. Technology Options Screened Out
In the market and technology assessment (Chapter 3 of the TSD), DOE
developed an initial list of technologies expected to have the
potential to reduce the energy consumption of beverage vending
machines. In the screening analysis, DOE screened out technologies
based on four criteria discussed above (i.e., technological
feasibility, practicability to manufacture, changes to equipment
utility, and safety). The list of remaining technologies becomes one of
the key inputs to the engineering analysis (discussed subsequently).
For reasons explained below, DOE screened out a number of technologies
(which were not input into the energy consumption model), including
higher-efficiency evaporator and condenser fan blades, low-pressure
differential evaporators, and defrost mechanisms.
Higher-efficiency evaporator and condenser fan blades reduce motor
shaft power requirements by moving air more efficiently. Current
beverage vending machine designs use stamped sheet metal or plastic
axial fan blades. These fan blades are lightweight and inexpensive. DOE
was not able to identify any axial fan blade technology that is
significantly more efficient than that which is currently in use, but
it did identify and consider one alternative fan blade technology that
could potentially improve efficiency--tangential fan blades. Tangential
fan blades can produce a wide, even airflow, and have the potential to
allow for increased
[[Page 34109]]
saturated evaporator temperature (SET) through improved air
distribution across the evaporator coil, which would reduce compressor
power. However, tangential fan blades are less efficient at moving air,
and, thus, require greater motor shaft power. Because of these
competing effects, the use of tangential fan blades would not be
expected to improve energy efficiency, so DOE did not consider
tangential fan blades as a design option.
Low-pressure differential evaporators reduce energy consumption by
reducing the power level required of evaporator fan motors. However, in
space-constrained equipment such as beverage vending machines, this
reduction usually comes from a decrease in evaporator coil surface
area, which generally requires a lower SET to achieve the same
discharge air temperature and cooling potential. This, in turn, results
in a reduction in compressor efficiency. Because of these competing
effects, the use of low-pressure differential evaporators would not be
expected to improve energy efficiency, so DOE did not consider low-
pressure differential evaporators as a design option.
Defrosting for beverage vending machines is typically accomplished
with off-cycle defrost (which uses no energy and decreases compressor
on-time), although DOE understands that this function also may be
accomplished with electric resistance heating. Because the vast
majority of machines already use off-cycle defrost (a typical feature
in baseline equipment), DOE has determined that there is currently no
defrost design option capable of more effectively reducing defrost
energy consumption for equipment that uses off-cycle defrost. For these
reasons, DOE did not consider off-cycle defrost as a design option for
achieving further improvements in energy efficiency.
DOE eliminated four other technologies considered in the market and
technology assessment--thermoacoustic refrigeration, magnetic
refrigeration, electro-hydrodynamic heat exchangers, and copper rotor
motors--because all four are currently in the research stage, and DOE
believes that they would not be practicable to manufacture, install,
and service on the scale necessary to serve the relevant market at the
time of the effective date of the standard (i.e., 2012). Because these
technologies are in the research stage, DOE also cannot assess whether
they would have any adverse impacts on utility to significant subgroups
of consumers, would result in the unavailability of any types of
equipment, or would present any significant adverse impacts on health
or safety. Therefore, DOE will not consider these technologies as
design options for improving the energy efficiency of beverage vending
machines.
2. Technology Options Considered Further in Analysis
After screening out technologies in accordance with the provisions
set forth in 10 CFR Part 430, Subpart C, Appendix A, (4)(a)(4) and
(5)(b), DOE is considering the following nine technologies, or ``design
options,'' as viable means of improving energy efficiency of the
beverage vending machines covered under this ANOPR. The market and
technology assessment (TSD Chapter 3) provides a detailed description
of these design options. These design options will be considered by DOE
in the engineering analysis:
More-efficient lighting and ballasts.
More-efficient evaporator fan motors.
Evaporator fan motor controllers.
Improved evaporator design.
Insulation increases or improvements.
Improved glass pack (for Class A machines).
Higher efficiency condenser fan motors.
Improved condenser design.
More-efficient compressors.
In the Framework Document, DOE stated that to the greatest extent
possible, it would base its engineering analysis on commercially-
available equipment which incorporates one or more of the design
options listed above. In this way, DOE is better able to apply these
features in a manner consistent with real world applications. DOE
stated that it would consider a proprietary design in the subsequent
analyses only if it is not a unique path to a given efficiency level.
Several stakeholders provided comments on the issue of proprietary
technologies in the context of the beverage vending machine rulemaking.
NFESC responded that DOE should consider whether efficiency levels
attainable only through proprietary technologies can be made part of
the efficiency standard if that technology were to be made available
through licensing agreements at a reasonable cost. (NFESC, No. 15 at p.
6) USA Technologies stated that its products are patented, but
available to anyone in the industry anywhere in the world. (Public
Meeting Transcript, No. 8 at p. 182) USA Technologies also noted that
it has a proprietary patented design that will take many of the ENERGY
STAR Tier 1 machines to Tier 2 levels and make some Tier 2 machines
even more efficient. USA Technologies added that there is technology in
the market today capable of driving energy costs down at a very
reasonable cost to the manufacturer. USA Technologies urged DOE not to
exclude these proprietary technologies from the analysis, although it
also acknowledged that the market should remain competitive. (Public
Meeting Transcript, No. 8 at p. 176).
PepsiCo agreed with DOE's approach, claiming that certain
proprietary technologies should be excluded. PepsiCo cited the example
of how Coca-Cola has patented several energy management technologies
that are not available to PepsiCo. (Public Meeting Transcript, No. 8 at
p. 181) Dixie-Narco stated that proprietary designs that include add-on
or non-permanent energy management devices not installed by the
manufacturer must be excluded from consideration in this rulemaking,
since the manufacturer is ultimately responsible for all technologies
incorporated in beverage vending machines. (Dixie-Narco, No. 14 at p.
4)
As noted previously, DOE will consider all proprietary designs
unless they are the only way to reach a given efficiency level, in
which case they will be rejected from further analysis. With regard to
proprietary add-on energy management devices, DOE has not considered
these devices as design options because they are external to the
vending machine and/or are not installed by the manufacturer. DOE is
sensitive to stakeholder concerns regarding proprietary designs and
will make provisions to maintain the confidentiality of any proprietary
data stakeholders submit. This information will provide input to the
competitive impact assessment and other economic analyses.
For more details on how DOE developed the technology options and
the process for screening these options and the design options that DOE
is considering, see the market and technology assessment (Chapter 3 of
the TSD) and the screening analysis (Chapter 4 of the TSD).
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the cost and efficiency of beverage vending
machines. For each equipment class, this relationship estimates the
baseline manufacturer cost, as well as the incremental cost for
equipment at efficiency levels above the baseline. In determining the
performance of higher-efficiency equipment, DOE considers technologies
and design option combinations not
[[Page 34110]]
eliminated by the screening analysis. The output of the engineering
analysis is a set of cost-efficiency ``curves'' that are used in
downstream analyses (i.e., the LCC and PBP analyses and the NIA).
DOE typically structures its engineering analysis around one of
three methodologies: (1) The design-option approach, which calculates
the incremental costs of adding specific design options to a baseline
model; (2) the efficiency-level approach, which calculates the relative
costs of achieving increases in energy efficiency levels; and (3) the
reverse-engineering or cost-assessment approach, which involves a
``bottoms-up'' manufacturing cost assessment based on a detailed bill
of materials derived from beverage vending machine tear-downs.
1. Approach
In this rulemaking, DOE is adopting a design-option approach, which
calculates the incremental costs of adding specific design options to a
baseline model. For each equipment class, DOE analyzed three machines
of different sizes to assess how energy use varies with size. A small,
a medium, and a large machine were chosen for Class A and Class B
beverage vending machines, based on current market offerings. See
Chapter 3 of the TSD for a detailed description of the Class A and
Class B equipment classes and Chapter 5 of the TSD for additional
detail on the different machines analyzed.
In the Framework Document, DOE requested feedback on possible use
of an efficiency-level approach supported, as needed, by a design-
option approach to determine the cost-efficiency relationship for
beverage vending machines. DOE stated that it plans to create an
industry-wide analysis based primarily on data from stakeholders. The
data are intended to represent the average incremental production cost
to improve a baseline model to a specified efficiency level. This
methodology constitutes an efficiency-level approach to the engineering
analysis because it establishes the relationship between manufacturer
cost and increased efficiency at predetermined efficiency levels above
the baseline. Under this approach, manufacturers typically provide
incremental manufacturer cost data for incremental increases in
efficiency. Although DOE specifically requested this information from
the industry, no such information was provided.
Since an efficiency-level approach was not possible for beverage
vending machines, DOE instead decided to use cost estimates of specific
design options. This methodology constitutes a design-options approach
because it uses individual or combinations of design options to
identify increases in efficiency. Under this approach, estimates are
based on manufacturer or component supplier data or derived from
engineering computer simulation models. Individual design options or
combinations of design options are added to the baseline model in
ascending order of cost. This approach also involves consultation with
outside experts and/or further review of publicly available cost and
performance information.
The Joint Comment stated that using manufacturer-supplied
efficiency levels that have been checked against design options derived
by DOE was acceptable if DOE verified a sufficient number of efficiency
improvements with design option data to provide confidence in DOE's
overall estimates. The Joint Comment added that for a robust approach,
DOE must compare multiple points per equipment class and do additional
analysis if the design option and efficiency level data are not in
alignment. (Joint Comment, No. 13 at p. 1) The Joint Comment stated
that DOE should explore methods of making the detailed manufacturer
cost data publicly available, although it recognized that this task
would be difficult given DOE's need to strike a balance between
manufacturers' requirements for confidentiality and the public's need
for transparency in government decision making. In making this request,
the Joint Comment explained that manufacturer cost estimates are a
``black box'' for other stakeholders, and making the data submitted by
manufacturers publicly available could greatly improve the transparency
of the process. (Joint Comment, No. 13 at p. 2)
As explained above, an efficiency-level approach was not possible,
so DOE relied solely on a design-option approach in the engineering
analysis. Given that there were no manufacturer-provided cost-
efficiency curves, DOE was not able to compare the two approaches as
suggested by the Joint Comment. However, the design-option approach
allows advocates, manufacturers, and other stakeholders the opportunity
to review DOE's methodology and assumptions, including cost estimates,
as this information is made publicly available through the ANOPR TSD
and engineering spreadsheet. Through consultation with outside experts,
review of publicly-available cost and performance information, and
modeling of equipment cost and energy consumption, DOE believes it has
conducted a robust engineering analysis. Chapter 5 of the TSD describes
the methodology used to perform the design-option analysis in detail.
2. Equipment Classes Analyzed
Beverage vending machines can be divided into different equipment
classes categorized by physical characteristics that affect equipment
efficiency. Most of these characteristics affect the merchandise that
the equipment cools and vends, and how the customer accesses that
merchandise. Key physical characteristics are the door type (e.g.,
glass-front or solid-front) and the machine's vendible capacity (or
refrigerated volume). As described in Section II.A.2, DOE analyzed two
equipment classes: Class A (fully-cooled machines) and Class B (all
other machines). Furthermore, as discussed above, beverage vending
machine energy use varies with volume, so DOE analyzed three different
machine sizes for each equipment class to assess how energy use varies
with size.
3. Analytical Models
In the design-option approach, DOE used models to develop cost and
energy consumption estimates for each equipment class at each
efficiency level. DOE used a cost model to estimate the manufacturer
production cost (MPC) in dollars, and an energy consumption model to
estimate the daily energy consumption in kilowatt hours (kWh) of
covered beverage vending machines. Each of these models is discussed in
further detail below.
a. Cost Model
DOE used a cost model to estimate the core case cost (i.e., the MPC
of the structure, walls, doors, shelving and fascia of the case, but
does not include the cost of any energy-using components) of beverage
vending machines. This model was adapted from a cost model developed
for DOE's rulemaking on commercial refrigeration equipment.\27\ The
approach for commercial refrigeration equipment involved disassembling
a self-contained refrigerator, analyzing the materials and
manufacturing processes for each component, and developing a parametric
spreadsheet to model the cost to fabricate (or purchase) each component
and the cost of assembly. Because of the similarities in manufacturing
processes between self-contained commercial refrigeration equipment and
vending machines, DOE
[[Page 34111]]
was able to adapt the commercial refrigeration equipment cost model for
beverage vending machines by maintaining many of the assumptions about
materials and manufacturing processes but modifying the dimensions and
types of components to be specific to beverage vending machines. To
confirm the accuracy of the cost model, DOE obtained input from
stakeholders on beverage vending machine production cost estimates and
on other assumptions used in the model. DOE believes this approach is
acceptable, given the similarities in materials and manufacturing
processes between commercial refrigeration equipment and beverage
vending machines. Chapter 5 of the TSD provides details of the cost
model.
---------------------------------------------------------------------------
\27\ See http://www.eere.energy.gov/buildings/appliance_
standards/commercial/refrigeration_equipment.html for further
detail on and validation of the commercial refrigeration equipment
cost model.
---------------------------------------------------------------------------
In the Framework Document, DOE sought feedback from manufacturers
on incremental manufacturing costs and components in terms of design
options to improve energy efficiency. The Joint Comment stated that the
cost estimates should assume mass production, since efficiency
standards could make today's expensive niche products tomorrow's lower-
cost commodity products. (Joint Comment, No. 13 at p. 2)
The Joint Comment stated that DOE should account for market forces
in computing typical costs using manufacturer cost estimates. Based on
past experience, the Joint Comment explained that the various cost
estimates that DOE will collect from manufacturers can vary
significantly from manufacturer to manufacturer. Also, manufacturers
with below-average costs will determine market prices, because higher-
priced manufacturers will need to reduce costs to remain competitive.
Therefore, the Joint Comment recommended that DOE should use the simple
average of the market-share-weighted average cost estimate and the
lowest cost estimate. (Joint Comment, No. 13 at p. 2)
EEI mentioned that the increasing cost of commodities such as
steel, copper, aluminum, and plastic may affect this rulemaking. EEI
stated that commodity prices for plastics, for example, have risen
dramatically in the past few years because of the increase in oil
prices. However, EEI also noted that high prices may dictate redesigns
to avoid using those materials. (Public Meeting Transcript, No. 8 at p.
181 and EEI, No. 12 at p. 5) PG&E stated that just as the prices of raw
materials have gone up, so have the prices of primary energy. (Public
Meeting Transcript, No. 8 at p. 183)
In response to these comments, DOE conducted a sensitivity analysis
on material prices similar to the analysis presented in the commercial
refrigeration equipment rulemaking. DOE determined the cost of raw
materials by using prices for copper, steel, and aluminum from the
American Metals Market.\28\ Prices for rifled and unrifled copper
tubing were obtained directly from a tubing manufacturer. Because metal
prices have fluctuated drastically over the last few years, DOE used
metal prices that reflect a five-year average of the Bureau of Labor
Statistics Producer Price Indices (PPIs) \29\ from 2002 to 2006 with an
adjustment to 2006$. DOE used the PPIs for copper rolling, drawing, and
extruding, and steel mill products, and DOE made the adjustments to
2006$ using the gross domestic product implicit price deflator. Because
it is not clear if these material price trends will continue, DOE
conducted a sensitivity analysis to illustrate the effect of raw
material price variability on the cost of beverage vending machines.
See Chapter 5 of the TSD for more details on this sensitivity analysis.
---------------------------------------------------------------------------
\28\ American Metals Market, http://www.amm.com/.
\29\ U.S. Department of Labor, Bureau of Labor Statistics,
Producer Price Indices, http://www.bls.gov/ppi/.
---------------------------------------------------------------------------
DOE applied a manufacturer markup to the MPC estimates to arrive at
the MSP. MSP is the price of equipment sold at which the manufacturer
can recover both production and non-production costs and earn a profit.
DOE developed a market-share-weighted average industry markup by
examining gross margin information from the annual reports of several
major beverage vending machine manufacturers and Securities and
Exchange Commission (SEC) 10-K reports.\30\ The manufacturers whose
gross margin information DOE examined represent approximately 70
percent of the beverage vending machine market, and each of these
companies is a subsidiary of a more diversified parent company that
manufactures equipment other than beverage vending machines. Because
the SEC 10-K reports do not provide gross margin information at the
subsidiary level, the estimated markups represent the average markups
that the parent company applies over its entire range of offerings.
---------------------------------------------------------------------------
\30\ Available at: http://www.sec.gov/edgar.shtml.
---------------------------------------------------------------------------
Markups were evaluated for 2001 to 2006. The manufacturer markup is
calculated as 100/(100 - average gross margin), where average gross
margin is calculated as revenue - cost of goods sold (COGS). To
validate the information, DOE reviewed its assumptions with beverage
vending machine manufacturers. During interviews (see Chapter 12 of the
TSD), beverage vending machine manufacturers stated that many
manufacturers generate revenue and profit by providing other goods and
services, and their margins for beverage vending machines are lower
than their company-wide margin. Taking this information into
consideration, DOE is using an industry-wide manufacturer markup of
1.03 in the engineering analysis.
b. Energy Consumption Model
The energy consumption model estimates the daily energy consumption
of beverage vending machines at various performance levels using a
design-option approach. The model is specific to the equipment covered
under this rulemaking, but is sufficiently generalized to model the
energy consumption of all covered equipment classes. For a given
equipment class, the model estimates the daily energy consumption for
the baseline and the energy consumption of several performance levels
above the baseline. The model is used to calculate each performance
level separately. For the baseline level, a corresponding cost is
calculated using the cost model. For each level above the baseline, the
cost increases resulting from the addition of various design options
are used to recalculate the cost.
In developing the energy consumption model, DOE made certain
assumptions, including general assumptions about the analytical
methodology and specific assumptions regarding load components and
design options. DOE based its energy consumption estimates on new
equipment tested in a controlled-environment chamber under the
procedures and conditions specified in ANSI/ASHRAE Standard 32.1-2004,
Methods of Testing for Bottled, Canned, and Other Sealed Beverages.\31\
Manufacturers of beverage vending machines must certify that their
equipment complies with Federal standards using this test method, which
specifies a certain ambient temperature, humidity, and other
requirements. One relevant specification that DOE noted is absent from
this standard is the operating hours of the display case lighting
during a 24-hour period. Thus, DOE is considering the operating time to
be 24 hours (i.e., that lights are on throughout the 24-hour period)
when conducting the analyses for this rulemaking. Chapter 5 of the TSD
[[Page 34112]]
details these and other beverage vending machine considerations.
---------------------------------------------------------------------------
\31\ These test procedures are incorporated by reference at 10
CFR 431.294.
---------------------------------------------------------------------------
The energy consumption model calculates daily energy consumption
(DEC) as being comprised of two major components: (1) Compressor energy
consumption; and (2) component energy consumption (expressed as kWh/
day). ``Component energy consumption'' is a sum of the direct
electrical energy consumption of fan motors, lighting, vend mechanisms,
control systems, and coin and bill validators. ``Compressor energy
consumption'' is calculated from the total refrigeration load
(expressed as British thermal units per hour (Btu/h)) and a compressor
model based on the 10-coefficient compressor model in American
Refrigeration Institute (ARI) Standard 540-2004, Performance Rating of
Positive Displacement Refrigerant Compressors and Compressor Units. The
total refrigeration load is a sum of the component heat load and the
non-electric load. The component heat load is a sum of the heat emitted
by evaporator fan motors and lighting inside the refrigerated space.
(Condenser fan motors are outside the refrigerated space and do not
contribute to the component heat load.) The non-electric load is a sum
of the heat contributed by radiation through glass doors (in Class A
machines); heat conducted through walls and doors; and sensible and
latent loads from warm, moist air infiltration through vend doors and
cracks. Chapter 5 of the TSD provides details on component energy
consumption, compressor energy consumption, and heat load models.
4. Baseline Models
As mentioned above, the engineering analysis estimates the
incremental costs for equipment with efficiency levels above a baseline
model in each equipment class. As an initial matter, DOE defined
baseline specifications for each equipment class. These specifications
include dimensions, numbers of components, operating temperatures,
nominal power ratings, and other necessary features to calculate the
energy consumption of each equipment class. The baseline specifications
define the energy consumption and cost of the typical equipment (i.e.,
units of typical efficiency) on the market today, namely beverage
vending machines meeting ENERGY STAR Tier 1.
DOE established baseline specifications for each of the equipment
classes modeled in the engineering analysis by reviewing available
manufacturer data, selecting several representative units based upon
that data, and then aggregating the physical characteristics of the
selected units. As noted above, DOE chose the baseline specifications
such that the baseline machines met ENERGY STAR's Tier 1 criteria (see
TSD Chapter 3 for further details on the criteria). This process
created a representative unit for each equipment class with average
characteristics for physical parameters (e.g., volume, wall area), and
typical performance for energy-consuming components (e.g., fans,
lighting). See Chapter 5 of the TSD for these specifications.
5. Alternative Refrigerants
Generally, DOE must consider in its engineering analysis the
effects of regulatory changes outside DOE's statutory energy
conservation standards rulemaking process that can affect manufacturers
of the covered equipment. Some of these changes could also affect the
energy efficiency or energy consumption of the equipment.
In the Framework Document, DOE sought stakeholder input as to
whether there are any regulatory issues that it should consider in its
analysis of beverage vending machines. DOE identified the phaseout of
hydrochlorofluorocarbons (HCFCs) \32\ as an example of an external
regulatory issue the beverage vending machine industry must address
that could affect the engineering analysis. HCFCs contain chlorine, a
chemical known to deplete stratospheric ozone. Due to this phaseout,
the beverage vending machine industry must transition to non-ozone-
depleting refrigerants, such as hydrofluorocarbons (HFCs), hydrocarbons
(HCs), and other natural refrigerants (e.g., carbon dioxide
(CO2)). As a result, the beverage vending machine industry
generally has been transitioning away from the HCFC-based refrigerants
in its equipment. For the beverage vending machines covered in this
rulemaking, DOE understands that much of the industry has already been
using HFC-based refrigerants, specifically R-134a. Therefore, to
address the imminent phaseout of HCFCs, DOE considered the effects of
HFC-based refrigerants from the outset of its analyses. Some
stakeholders stated, however, that DOE should consider examining other
types of refrigerants such as HCs and CO2.
---------------------------------------------------------------------------
\32\ EPA is phasing out the production and importation of
certain HCFC refrigerants (i.e., HCFC-142b and HCFC-22) in new
equipment in the U.S. by January 1, 2010. Further, EPA is phasing
out the production and importation of all HCFC refrigerants in new
equipment in the U.S. by January 1, 2015. 42 U.S.C. 7671(d).
---------------------------------------------------------------------------
Coca-Cola commented that it has made a corporate commitment to move
beyond HCFC and HFC refrigerants to vending machines that use HCs and
CO2 (i.e., R-744). Coca-Cola expressed concern that current
CO2 systems are not as efficient as systems using HCFC
refrigerants, thereby making compliance with any new energy
conservation standard more difficult for such machines, if their unique
characteristics are not taken into account. (Public Meeting Transcript,
No. 8 at p. 146)
EEI stated that the HFC [sic] phaseout begins in 2010 and that the
final rule for this rulemaking will be in 2009, with standards becoming
effective in 2012. EEI commented that, because of this timing, if Coca-
Cola could provide input to DOE on new refrigeration technologies, DOE
would not have to perform its own analysis on alternative refrigerants.
(Public Meeting Transcript, No. 8 at p. 170) (DOE notes, however, that
the phaseout occurring in 2010 is for HCFC-based refrigerants and that
no U.S. phaseout of HFC-based refrigerants is currently scheduled.) EEI
also stated that it appears that new refrigerants will be in use in
beverage vending machines by 2010. According to EEI, certain new
technology options should be compatible with the refrigerant of choice
starting in 2010, when HCFC-based refrigerants are phased out in the
United States. EEI added that due to the global nature of this
equipment and the ban on HFC-based refrigerants in some countries,
manufacturers are considering CO2 in all beverage vending
machines, and such action could affect design options and baseline
energy usage. (EEI, No. 12 at p. 4)
In response to the comments by Coca Cola and EEI, DOE conducted a
qualitative examination of the use of HC refrigerants and
CO2 in the beverage vending machine industry. Based on
conversations with beverage vending machine manufacturers and industry
experts, DOE understands that HC refrigerants (e.g., butane and
propane) are extremely flammable, and are classified as A3 refrigerants
(low toxicity, high flammability) in the United States. Because of this
classification, there are significant difficulties in selling and
certifying equipment in the United States that use hydrocarbon
refrigerants, and there are currently no manufacturers in the beverage
vending machine industry who do so. DOE recognizes that other countries
(e.g., Germany) have begun to adopt the use of HC refrigerants. But in
the United States, these barriers and the perception of high safety
risk has prevented their wide-spread use. DOE believes that the use of
these refrigerants in beverage vending machines is not
[[Page 34113]]
likely and, therefore, did not conduct an analysis using HC
refrigerants.
Although CO2 does not have the volatility issues of HC
refrigerants, CO2 can have lower cycle efficiencies than
HFC-based refrigerants such as R-134a. DOE also understands that
necessary components, such as compressors, do not yet exist in the
market in sizes appropriate for beverage vending machines. Thus, DOE
was not able to conduct an analysis on CO2-based
refrigeration systems.
Therefore, due to volatility and availability issues associated
with HC refrigerants and CO2, HFC-based refrigerants are the
only alternative refrigerant option DOE plans to consider in this
rulemaking. DOE requests additional stakeholder input or data on this
issue.
6. Cost-Efficiency Results
The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of daily energy consumption
(DEC) (in kWh) versus MSP (in dollars), which form the basis for
subsequent analyses in the ANOPR. DOE developed six curves representing
the two equipment classes and three different size machines in each
equipment class. The methodology for developing the curves started with
determining the energy consumption for baseline equipment and MPCs for
this equipment. Above the baseline, DOE implemented design options
using the ratio of cost to savings, and implemented only one design
option at each level. Design options were implemented until all
available technologies were employed (i.e., at a max-tech level). See
TSD Chapter 5 for additional detail on the engineering analysis and TSD
Appendix B for complete cost-efficiency results.
D. Markups To Determine Equipment Price
This section explains how DOE developed the distribution channel
(supply chain) markups to determine installed prices for beverage
vending machines (see Chapter 6 of the TSD). DOE used the supply chain
markups it developed (including sales taxes and installation costs),
along with the MSPs developed from the engineering analysis, to arrive
at the final installed equipment prices for baseline and higher-
efficiency equipment. Whereas the manufacturer markup DOE used in the
engineering analysis was applied to the MPC to arrive at the MSP, these
supply chain markups (baseline and incremental markups described below)
were applied to the MSPs to arrive at the final installed equipment
prices. At the Framework public meeting, the NPCC stated that among
universities, school districts, and other public agencies, direct
purchases of beverage vending machines by these sectors might be a
fairly significant fraction of total machine purchases, and it added
that the weighting between the different sectors should be the same as
for energy prices. (Public Meeting Transcript, No. 8 at p. 227)
DOE subsequently reviewed different sources of data, including
industry reports, and concluded there are three main channels of
distribution for beverage vending machines. Businesses and other
entities that directly purchase the equipment typically obtain their
machines through an equipment wholesaler/distributor and not directly
from the manufacturer. Such direct ownership of vending machines by
site owners, however, constitutes only about five percent of the total
market. Instead, most institutions and manufacturing facilities have
machines installed on-site through a ``location contract'' from a
vending machine operator or bottler/distributor that owns and stocks
the machines.
As Table II.1 demonstrates, DOE identified three distribution
channels for beverage vending machines which describe how the equipment
passes from the manufacturer to the customer. In the first distribution
channel, the manufacturer sells the equipment directly to the beverage
bottler/distributor, who installs and operates the machine at a given
site. In the second and third distribution channels, the manufacturer
sells the beverage vending machine to the equipment wholesaler/
distributor, who in turn may sell it to a vending machine operator (who
installs and operates the machine at a given site) or to a site owner
(who stocks and operates the machine). Table II.1 also provides the
estimated distribution channel shares (in percentage of total sales)
through each of the three distribution channels.
Table II.1.--Distribution Channels and Shares for Beverage Vending Machines
----------------------------------------------------------------------------------------------------------------
Channel 1 Channel 2 Channel 3
----------------------------------------------------------------------------------------------------------------
Manufacturer Manufacturer Manufacturer
[darr] [darr] [darr]
Beverage Bottler/Distributor Equipment Wholesaler/Distributor Equipment Wholesaler/Distributor
[darr] [darr]
Vending Machine Operator Site Owner
----------------------------------------------------------------------------------------------------------------
68% 27% 5%
----------------------------------------------------------------------------------------------------------------
For each step in the distribution channels presented above, DOE
estimated a baseline markup and an incremental markup, which are
additional amounts added when equipment is sold and installed. A
baseline markup is applied for the purchase of baseline equipment. An
incremental markup is applied to the incremental increase in MSP for
the purchase of higher-efficiency equipment. The overall baseline or
overall incremental markup is the product of all the markups at each
step in the distribution channel. Overall, weighted average baseline or
incremental markups for the entire beverage vending machine market can
be determined using the shipment weights through each distribution
channel and the corresponding overall baseline markup or the
corresponding overall incremental markup, respectively, for each
distribution channel, and any applicable sales tax.
DOE developed markups for each step of a given distribution channel
based on available financial data. Specifically, DOE based the
equipment wholesaler/distributor markups on U.S. Census Bureau data
\33\ for Other Commercial Equipment Merchant Wholesalers (NAICS
423440). This sector includes those establishments primarily engaged in
distributing and wholesaling
[[Page 34114]]
refrigerated beverage vending machines and other equipment to
restaurants and hotels (NAICS 4234401) and stores (NAICS 4234402). The
U.S. Census Bureau data for this sector include revenue and expense
data in total dollars, rather than in typical values for an average or
representative business. Because of this, DOE assumed the total dollar
values that the U.S. Census Bureau reported, once converted to an
individual entity basis, represents revenues and expenses for an
average or typical wholesaler/distributor business.
---------------------------------------------------------------------------
\33\ U.S. Census Bureau. 2002. 2002 Economic Census Release
Date: 12/3/2004. Sector 42: Wholesale Trade: Industry Series:
Product Lines by Kind of Business for the United States: 2002 at
http://factfinder.census.gov/servlet/IBQTable?_bm=y&-MFG=10971:42&-ds_name=EC0242I3&-_lang=en (Accessed on April 16, 2007).
---------------------------------------------------------------------------
DOE calculated baseline markups for wholesalers as total revenue
(equal to all expenses paid plus profit) divided by the cost of goods
sold (COGS). Expenses include direct costs for equipment, labor
expenses, occupancy expenses, and other operating expenses (e.g.,
insurance, advertising). DOE presumed some expenses (i.e., labor and
occupancy) to be fixed and not subject to change with the increases in
the efficiency of the equipment being sold. Other expenses are variable
costs that may change in response to changes in the COGS. In developing
incremental markups, DOE again considered the labor and occupancy costs
to be fixed, and the other operating costs and profit to be
proportional to the MSP.
The overall markup for a distribution channel is the product of all
the markups plus sales tax within that channel. DOE calculated both
baseline and incremental overall markups for each distribution channel.
DOE calculated sales taxes based on State-by-State sales tax data
reported by the Sales Tax Clearinghouse.\34\ Sales tax varies by State,
so the markup analysis develops distributions of markups within each
distribution channel as a function of State.
---------------------------------------------------------------------------
\34\ The Sales Tax Clearinghouse. Available at: https://thestc.com/STRates.stm (Accessed on June 25, 2007).
---------------------------------------------------------------------------
For the third distribution channel, the site owner of a beverage
vending machine usually consists of a business type (e.g.,
manufacturing facility, office buildings, health care buildings, and
retail). Because the State-by-State distribution of beverage vending
machines may vary by business type (e.g., manufacturing facilities may
be more prevalent relative to retail stores in one part of the country
than another), a national level distribution of the markups may be
different for each business type.
Average overall markups in each distribution channel can be
calculated using estimates of the shipments of beverage vending
machines by distribution of State population. However, markups are not
uniform among wholesalers. DOE used the Excel spreadsheet-based Crystal
Ball program, which employs Monte Carlo analysis, to reflect this
uncertainty in the LCC analysis. DOE applied the same baseline and
incremental markups to all sales of beverage vending machines passing
through equipment wholesaler/distributors, whether to the vending
machine operator (channel 2) or to the site owner (channel 3). Table
II.2 and Table II.3 show overall baseline and incremental markups for
sales within each distribution channel. Chapter 6 of the TSD provides
additional detail on markups.
Table II.2.--Overall Average Baseline Markups by Distribution Channel Including Sales Tax
----------------------------------------------------------------------------------------------------------------
Manufacturer Wholesaler/ Overall weighted
direct distributor average
----------------------------------------------------------------------------------------------------------------
Markup................................................. 1.000 1.46 1.147
Sales Tax.............................................. 1.068 1.068 1.068
Overall Markup......................................... 1.068 1.559 1.226
----------------------------------------------------------------------------------------------------------------
Table II.3.--Overall Average Incremental Markups by Distribution Channel Including Sales Tax
----------------------------------------------------------------------------------------------------------------
Manufacturer Wholesaler/ Overall weighted
direct distributor average
----------------------------------------------------------------------------------------------------------------
Markup................................................. 1.000 1.20 1.064
Sales Tax.............................................. 1.068 1.068 1.068
Overall Markup......................................... 1.068 1.282 1.137
----------------------------------------------------------------------------------------------------------------
E. Energy Use Characterization
The energy use characterization analysis estimates the annual
energy consumption of individual beverage vending machines (both
baseline and higher-efficiency units) installed indoors or outdoors
around the country. DOE uses this estimate, which represents typical
energy consumption in the field, as an input in the subsequent LCC and
PBP analyses (Chapter 8 of the TSD) and NIA (Chapter 10 of the TSD).
DOE estimated the energy use for machines in the two equipment classes
(Class A and Class B vending machines) \35\ analyzed in the engineering
analysis based on the DOE test procedure \36\ (Chapter 5 of the TSD).
---------------------------------------------------------------------------
\35\ Class A and Class B vending machines are as described in
Section II.A.2 of the ANOPR.
\36\ DOE incorporated by reference, ANSI/ASHRAE Standard 32.1-
2004, with two modifications, as the DOE test procedure for the
beverage vending machines. 71 FR 71340, 71375 (Dec. 8, 2006); 10 CFR
431.294. ``Plug loads'' are those appliances and equipment that are
plugged into the power outlets in a building.
---------------------------------------------------------------------------
Beverage vending machines are typically installed in manufacturing
facilities and commercial buildings and are considered part of the
``plug loads'' \37\ of the building. They also contribute to the heat
gain to the building on a 24-hour basis. At the Framework public
meeting, DOE asked whether it should quantify the effect of more-
efficient beverage vending machines (presumably contributing less heat
to the building) on building space conditioning loads and, if so, what
would be the most effective way of doing this. EEI responded that there
might be some impact on building space conditioning loads for about
five percent of the installations, based upon their location and
concentration. (Public Meeting Transcript, No. 8 at p. 208) In general,
EEI remarked that in many situations (e.g., a single machine in a
facility or one machine per occupied floor) these impacts are likely to
be minimal; however, EEI stated that there could be an appreciable
impact on space conditioning loads in indoor areas where multiple
machines are concentrated. On this topic, the Joint
[[Page 34115]]
Comment recommended that DOE perform a limited set of sensitivity
analyses to determine whether a reasonable estimate of the impacts is
feasible and whether such impacts would be significant, given
variations in climate, space conditioning system type, and other
building loads. (ACEEE, No. 13 at p. 4) Dixie-Narco asserted that the
impact would be minimal and that DOE should not attempt to quantify
this effect. (Dixie-Narco, No. 14 at p. 5) NFESC recommended that DOE
account for the additional electricity attributable to the added heat
load on air-conditioning systems in determining what efficiency
standard will be cost-effective. (NFESC, No. 15 at p. 5)
---------------------------------------------------------------------------
\37\ ``Plug loads'' are those appliances and equipment that are
plugged into the power outlets in a building.
---------------------------------------------------------------------------
Based on these comments, DOE conducted a brief sensitivity analysis
of the impact of a beverage vending machine's energy consumption and
its magnitude compared to other plug loads in a commercial building,
where more than two-thirds of the beverage vending machines are
installed. Using the Energy Information Administration (EIA)'s
Commercial Building Energy Consumption Survey (CBECS) data,\38\ DOE
examined 16 commercial building types (i.e., principal building
activity (PBA) categories) in which beverage vending machines are
typically installed. Annual energy consumption of these machines was
calculated, based on 8 kWh of daily electricity consumption and 365
days of operation, which equated to three percent of the total
electricity consumption for lighting in a typical commercial building.
Based on these findings which suggest that the impact is minimal, DOE
has decided to conduct no further analyses regarding the impact of
more-efficient beverage vending machines on building space-conditioning
loads.
Another question related to the energy use of beverage vending
machines is the ``heating mode'' for machines installed outdoors in
cold climates. At the Framework public meeting, Royal Vendors stated
that a very small number of machines have a heater kit, although these
kits do not run much of the time, even in very cold climates such as
Alaska (Public Meeting Transcript, No. 8 at p. 211). Therefore, DOE
decided that it will not consider the ``heating mode'' to be a
significant factor in its energy use analysis.
---------------------------------------------------------------------------
\38\ EIA 2003. EIA (Energy Information Administration), 2003,
2003 CBECS Detailed Tables. http://www.eia.doe.gov/emeu/cbecs/cbecs2003/detailed_tables_2003/detailed_tables_2003.html.
Accessed June 14, 2007.
---------------------------------------------------------------------------
As discussed above, DOE analyzed two equipment classes of beverage
vending machines, Class A and Class B. Although Class A machines may be
certified for indoor/outdoor use, there are few Class A machines
installed outdoors because of concerns about vandalism. Therefore, DOE
assumed Class A machines to be installed indoors only and subject to
the constant indoor air temperature and relative humidity conditions of
75 [deg]F/45 percent RH, matching one of the test conditions in the DOE
test procedure. Further, based on market data as to the installation of
Class B machines and discussions with several beverage vending machine
distributors, DOE assumed that 25 percent of these machines are placed
outdoors and that the remaining 75 percent of these machines are
installed indoors. DOE seeks stakeholder input on this approach, which
is identified as Issue 1 under ``Issues on Which DOE Seeks Comment'' in
Section IV.E of this ANOPR.
Furthermore, for both Class A and Class B machines, DOE analyzed
the three typical sizes (vendible capacities) defined in the
engineering analysis (Chapter 5 of the TSD). Each machine has a
different refrigerated volume as measured by ANSI/AHAM HRF-1-2004 and
shown in Table II.4.
Table II.4.--Configurations of the Beverage Vending Machines Analyzed
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A machine Class B machine
-----------------------------------------------------------------------------------------------
Configuration Small (A-S- Medium (A-M- Medium (B-M-
IN)* IN) Large (A-L-IN) Small (B-S-IO) IO) Large (B-L-IO)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vendible Capacity (number of cans)...................... 270 350 410 450 650 800
Refrigerated Volume (ft\3\)............................. 19 31 35 19 24 31
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This nomenclature denotes a combination of equipment class, size, and assumed application. For example, A-S-IN denotes a Class A small machine used
indoors only, whereas B-S-IO denotes a Class B small machine that can be installed either indoors or outdoors.
DOE estimated the annual energy consumption for Class A vending
machines as the product of the average daily energy consumption from
the DOE test procedure indoor test condition of 75 [deg] F/45 percent
RH, and 365 days per year. For Class A machines, the annual energy
consumption did not vary by State.
DOE calculated the energy consumed by Class B vending machines
using the following relationship:
[GRAPHIC] [TIFF OMITTED] TP16JN08.007
Where:
Eann = Annual average energy consumption,
Eann,outdoor = Annual average energy consumption for an outdoor
machine, and
Eann,indoor = Annual average energy consumption for an
indoor machine.
For the 25 percent of the Class B machines located outdoors, DOE
developed a spreadsheet-based energy performance model that uses
Typical Meteorological Year (TMY2) climate data.\39\ DOE created
temperature and relative humidity bins with temperatures ranging from
130 [deg]F to -40 [deg]F in 5 [deg]F increments, and percent relative
humidity values ranging from 100 percent RH to 0 percent RH in 5
percent RH increments. The model calculates the annual energy
consumption of a vending machine at any of the chosen engineering
efficiency levels (derived from the engineering
[[Page 34116]]
analysis) for a variety of temperatures and relative humidity values.
The model calculates the annual energy use for each TMY2 city by
stepping through the binned weather data, calculating the daily average
energy consumption for the beverage vending machine from the energy
performance model for each bin, dividing by 24 to convert to average
hourly energy consumption, and multiplying by the number of hours in
the bin. The sum of the hourly energy consumption for all bins provides
the annual energy consumption.
---------------------------------------------------------------------------
\39\ TMY2 data expresses the annual average weather data for 237
cities in the United States. TMY2 National Renewable Energy
Laboratory. Typical Meterological Years Derived from the 1961-1990
National Solar Radiation Database (1995). Available at: http://rrede.nredl.gov/solar/old_data/nsrdb/1961-1990.
---------------------------------------------------------------------------
DOE estimated annual energy consumed by the remaining 75 percent of
the Class B machines located indoors as the product of the daily energy
consumption calculated at the DOE test procedure indoor test condition
of 75 [deg]F/45 percent RH, and 365 days per year.
DOE calculated the average annual energy use for each Class B
machine for all 237 TMY2 stations in the United States. DOE mapped each
TMY2 station to a certain State, based on its location. Within each
State, DOE assigned a relative weight to each TMY2 station, based on
the total population of identifiable population centers (cities, towns,
other) that can be shown to be most climatically similar to that TMY2
location. The annual energy consumption data for the TMY locations were
then weighted to obtain annual energy consumption data for each State.
As described below, DOE developed the annual energy consumption for
each equipment class and at each efficiency level for each State in the
United States as inputs for the LCC and PBP analyses.
1. Selection of Efficiency Levels for Further Analysis
The engineering analysis considered an efficiency level
corresponding to the present market efficiency level (below the Tier 1
efficiency level) which DOE designated as Level 0. DOE then developed
up to thirteen efficiency levels for some equipment classes to obtain a
range of cost-efficiency relationships in the engineering analysis. For
each equipment class, DOE then down-selected only nine efficiency
levels to consider in the energy use characterization and subsequent
economic analyses. The efficiency levels range from a baseline
efficiency level to the max-tech level. As part of that range, DOE
selected ENERGY STAR levels (Tier 1 and Tier 2) and intermediate levels
that would yield a smooth LCC curve. Table II.5 shows the mapping of
the efficiency levels that DOE will use in the further economic
analyses of the efficiency levels from the engineering analysis. These
nine efficiency levels, chosen for the subsequent economic analyses,
the corresponding annual energy consumption figures, and manufacturer
selling prices for beverage vending machines determined in the
engineering analysis are all inputs to DOE's LCC analysis.
Table II.5.--Mapping of the Efficiency Levels for Subsequent Economic
Analyses to the Engineering Efficiency Levels
------------------------------------------------------------------------
Engineering Engineering
efficiency levels efficiency levels
Efficiency levels for LCC and for class A for class B
PBP analyses machines (all machines (all
sizes) sizes)
------------------------------------------------------------------------
Level 0......................... Level 0........... Level 0.
Level 1 (ENERGY STAR Tier 1) or Level 1........... Level 1.
Baseline Level.
Level 2......................... Level 3........... Level 3.
Level 3 (ENERGY STAR Tier 2).... Level 4........... Level 4.
Level 4......................... Level 7........... Level 6.
Level 5......................... Level 8........... Level 7.
Level 6......................... Level 9........... Level 9.
Level 7......................... Level 11.......... Level 10.
Level 8 (Max Tech).............. Level 13.......... Level 11.
------------------------------------------------------------------------
2. Annual Energy Consumption Results
As explained above, DOE assumes that all Class A machines and 75
percent of Class B machines are installed indoors and that 25 percent
of Class B machines are located outdoors. To calculate a weighted
energy use of Class B machines, DOE added aggregated State-by-State
results by using data from each of the 237 TMY2 weather stations to the
annual energy consumption of the remaining 75 percent of Class B
machines located indoors, in order to determine the total energy
consumption of all Class B machines. DOE further aggregated energy
consumption at the State level to arrive at the national average energy
consumption, using the 2000 Census population data.\40\ Table II.6
presents the national average annual energy consumption figures for the
three different sizes of Class B machines.
---------------------------------------------------------------------------
\40\ The U.S. Census Bureau, 2000 Census, http://factfinder.census.gov/servlet/GCTTable?_bm=y&-geo_id=01000US&box_head_nbr=GCT-PHI&-context=gct&-ds_name=DEC_2000_SFI_U&-tree_id=4001&-format=US-9. (Accessed on March 25, 2007.)
Table II.6.--National Average Annual Energy Consumption for Class B Machines, by Efficiency Levels (kWh)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Level 1 Level 3
Level 0 (ENERGY (ENERGY Level 8
(market STAR Tier Level 2 STAR Tier Level 4 Level 5 Level 6 Level 7 (Max Tech)
baseline) 1) 2)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Large (B-L-IO).............................. 4,033 2,244 1,901 1,740 1,598 1,533 1,348 1,336 1,315
Medium (B-M-IO)............................. 3,899 2,108 1,763 1,623 1,488 1,426 1,250 1,240 1,221
Small (B-S-IO).............................. 3,699 1,934 1,589 1,461 1,376 1,214 1,149 1,140 1,125
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 34117]]
Table II.7 shows annual energy consumption for each size of Class A
machine. National average energy consumption figures are identical to
State energy consumption figures. These national average annual energy
consumption figures are used in the subsequent LCC, PBP, NES and
rebuttable presumption payback period analyses.
Table II.7.--Annual Energy Consumption for Class A Machines, All Sizes and All Locations, by Efficiency Levels (kWh)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Energy use (all locations, kWh)
-----------------------------------------------------------------------------------------------------------
Level 1 Level 3
Size Level 0 (ENERGY (ENERGY Level 8
(market STAR Tier Level 2 STAR Tier Level 4 Level 5 Level 6 Level 7 (Max Tech)
baseline) 1) 2)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Large (A-L-IN).............................. 3,173 2,452 2,229 2,045 1,882 1,790 1,773 1,654 1,586
Medium (A-M-IN)............................. 3,005 2,321 2,102 1,933 1,775 1,692 1,675 1,576 1,510
Small (A-S-IN).............................. 2,796 2,117 1,902 1,737 1,585 1,518 1,502 1,417 1,356
--------------------------------------------------------------------------------------------------------------------------------------------------------
DOE's energy use characterization assumes both that there are no
controls limiting display lighting or compressor operation in a
beverage vending machine to certain hours of the day and that the
display lighting or compressor operation would not be affected by
occupancy patterns in the building. However, using occupancy sensors
and other controllers might reduce a vending machine's energy
requirements during long periods of non-use, such as overnight and
weekends. This occupancy controller option is often used when de-
lamping a vending machine is not advisable (i.e., when a vending
machine does not have a captive audience or when de-lamping results in
reduced vending sales revenues). Controllers can either be added on or
enabled in certain beverage vending machines. DOE requests comments on
the need to incorporate such controls in its energy use
characterization analysis and, if so, how to do so in the NOPR
analysis. See Issue 2 under ``Issues on Which DOE Seeks Comment'' in
Section IV.E of this ANOPR. Chapter 7 of the TSD provides additional
details on the energy use characterization.
F. Rebuttable Presumption Payback Periods
A more energy-efficient device will usually cost more to purchase
than a device of standard energy efficiency. However, the more-
efficient device will usually cost less to operate due to reductions in
operating costs (i.e., lower energy bills). The payback period (PBP) is
the time (usually expressed in years) it takes to recover the
additional installed cost of the more-efficient device through energy
cost savings. In considering standard setting for beverage vending
machines, sections 325(o)(2)(B)(iii) and (v)(3) of EPCA (42 U.S.C.
6295(o)(2)(B)(iii) and (v)(3)) establish a rebuttable presumption that
a standard is economically justified if the Secretary finds that ``the
additional cost to the consumer of purchasing a product complying with
an energy conservation standard level will be less than three times the
value of the energy * * * savings during the first year that the
consumer will receive as a result of the standard, as calculated under
the applicable test procedure * * *.'' (42 U.S.C. 6295(o)(2)(B)(iii))
This rebuttable presumption test is an alternative path to establishing
economic justification as compared to consideration of the seven
factors set forth in 42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII).
To evaluate the rebuttable presumption, DOE estimated the
additional cost of a more-efficient, standard-compliant unit, and
compared this cost to the value of the energy saved during the first
year of operating the equipment. DOE assumed that the increased cost of
purchasing a 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.
DOE calculated rebuttable presumption PBPs based on a distribution
of installed costs and energy prices that included seven types of
businesses and all 50 States. Unlike the other PBPs calculated in the
LCC analysis (see Section II.G.4 of this ANOPR), the rebuttable
presumption PBPs do not include maintenance or repair costs.\41\ As
with the LCC analysis (see Section II.G.2), the baseline efficiency
level for the rebuttable presumption calculation is Level 1. From the
range of efficiency levels for which cost data was determined in the
engineering analysis, DOE selected nine efficiency levels in each
equipment class, including the baseline efficiency level, for the LCC
and subsequent ANOPR analyses. Chapter 7 of the TSD discusses the
selection of these efficiency levels. For each equipment class, DOE
calculated the rebuttable presumption PBP at each efficiency level
higher than the baseline. Inputs to the PBP calculation are the first
seven inputs shown in Table II.9 in Section II.G.2 of this ANOPR.
---------------------------------------------------------------------------
\41\ Energy cost savings are the only costs addressed with
respect to rebuttable presumption payback periods. 42 U.S.C.
6295(o)(2)(B)(iii).
---------------------------------------------------------------------------
Table II.8 shows the nationally-averaged rebuttable presumption
payback periods calculated for all equipment classes and efficiency
levels. Table II.8 also shows the highest efficiency level with a
rebuttable presumption payback of less than 3 years for each equipment
class.
As is the case in other DOE energy conservation standards
rulemakings, while DOE has examined the rebuttable presumption PBPs, it
has not determined economic justification for any of the standard
levels analyzed based on the ANOPR rebuttable presumption analysis.
Instead, when setting candidate standard levels (CSLs), DOE will
consider the more detailed analysis of the economic impacts of
increased efficiency according to section 325(o)(2)(B)(i) of EPCA. (42
U.S.C. 6295(o)(2)(B)(i))
[[Page 34118]]
Table II.8.--Rebuttable Presumption Payback Periods by Efficiency Level and Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rebuttable presumption payback period (years)
Equipment type -------------------------------------------------------------------------------- Highest level with PBP <3
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 years
--------------------------------------------------------------------------------------------------------------------------------------------------------
B-L-IO................................... NA 0.7 1.1 1.5 3.6 3.9 4.1 122.9 Level 4.
B-M-IO................................... NA 0.7 1.1 1.6 3.8 4.1 4.4 112.3 Level 4.
B-S-IO................................... NA 0.7 1.3 1.8 3.6 4.8 5.1 5.1 Level 4.
A-L-IN................................... NA 1.1 1.4 1.6 2.1 2.3 6.3 145.4 Level 6.
A-M-IN................................... NA 1.1 1.5 1.7 2.3 2.5 6.1 347.9 Level 6.
A-S-IN................................... NA 1.2 1.4 1.7 2.2 2.4 6.1 75.4 Level 6.
--------------------------------------------------------------------------------------------------------------------------------------------------------
G. Life-Cycle Cost and Payback Period Analyses
The LCC and PBP analyses determine the economic impact of potential
standards on customers. The effects of standards on individual
commercial customers include changes in operating expenses (usually
lower) and changes in total installed cost (usually higher). DOE
analyzed the net effect of these changes for beverage vending machines
by calculating the changes in customers' LCCs likely to result from a
CSL compared to a base case (no new standards). The LCC calculation
considers total installed cost (includes MSP, sales taxes, distribution
channel markups, and installation cost), operating expenses (i.e.,
energy, repair, and maintenance costs), equipment lifetime, and
discount rate. DOE performed the LCC analysis from the perspective of
the purchaser of a beverage vending machine.
DOE calculated the LCC for all customers as if each would purchase
a new beverage vending machine in the year the standard takes effect.
The standard takes effect on the future date when it begins to apply to
newly-manufactured equipment. Section 135(c)(4) of EPACT 2005 amended
EPCA to add new subsections 325(v)(2), (3) and (4) (42 U.S.C.
6295(v)(1), (2) and (3)), which directs the Secretary to issue a final
rule for refrigerated bottled or canned beverage vending machines no
later than August 8, 2009, with the energy conservation standard levels
in the rule applying to all equipment manufactured on or after August
8, 2012. Consistent with EPCA, DOE used these dates in the ANOPR
analyses.
DOE based the cost of the equipment on projected costs in 2012,
although all dollar values are expressed in 2007$. DOE projected that
the cost for equipment in 2012 when expressed in real terms (2007$)
would be identical to the cost determined in the engineering analysis.
DOE also considered annual energy prices for the life of the beverage
vending machine, based on EIA's Annual Energy Outlook 2007 (AEO2007).
DOE also analyzed the effect of changes in operating expenses and
installed costs by calculating the PBP of potential standards relative
to a base case. The PBP estimates the amount of time it would take the
commercial customer to recover the anticipated, incrementally higher
purchase expense of more energy-efficient equipment through lower
operating costs. Similar to the LCC analysis, the PBP is based on the
total installed cost and the operating expenses. However, unlike the
LCC, the PBP only considers the first year's operating expenses.
Because the PBP does not account for changes in operating expense over
time or the time value of money, this calculation is also referred to
as a simple PBP. Usually, the benefits of a regulation exceed the costs
of that regulation if the service life of the covered equipment is
substantially longer than the PBP.
The following discussion provides an overview of the approach and
inputs for the LCC and PBP analyses performed by DOE, as well as a
summary of the preliminary results generated for the beverage vending
machines under consideration in this rulemaking. However, for a more
detailed discussion on the LCC and PBP analyses, see Chapter 8 of the
ANOPR TSD.
1. Approach
The LCC analysis estimates the impact on commercial customers of
potential energy conservation standards for beverage vending machines
by calculating the net cost of those machines under two scenarios: (1)
A ``base case'' of no new standard; and (2) a ``standards case'' under
which beverage vending machines must comply with a new energy
efficiency standard. Recognizing that each type of commercial customer
who uses a beverage vending machine is unique, DOE analyzed variability
and uncertainty by performing the LCC and PBP calculations for seven
types of businesses. Six of these typically purchase and install
beverage vending machines in their buildings. The seventh business
type, which is the most common purchaser of the equipment, is a local
bottler or vending machine operator that typically has the machine
installed in one of the other six business types, provides vending
services, and splits the coin box receipts through a contractual
arrangement with the site owner.
Of the six business types analyzed, four have a Principal Building
Activity (PBA) category assigned to them in the CBECS data. These four
business types analyzed are: (1) Office/healthcare (including a large
number of firms engaged in financial and other services, medical and
dental offices, and nursing homes); (2) retail (including all types of
retail stores and food and beverage service facilities); (3) schools
(including colleges and universities and large groups of housing
facilities owned by State governments, such as prisons); and (4)
``other'' (including warehouses, hotels/motels, and assembly
buildings). The two remaining business types analyzed are manufacturing
facilities and military bases that are typically large utility
customers and pay industrial rates for their electricity consumption.
Aside from energy, the most important factors influencing the LCC
and PBP analyses are related to where the beverage vending machine is
installed. These factors include energy prices, installation cost,
markup, and sales tax. The LCC analysis used the annual energy
consumption determined in the energy use characterization analysis
(Chapter 7 of the TSD). Energy consumption calculated using this
approach is sensitive to climatic conditions, especially for the
vending machines located outdoors. Therefore, energy consumption in the
LCC analysis varies by geographical location. At the national level,
the LCC analysis explicitly modeled both the uncertainty and the
variability in the model's inputs using probability distributions.
These are based on the shipment of units to different States, as
determined by population weights.
[[Page 34119]]
2. Life-Cycle Cost Analysis Inputs
For each efficiency level analyzed, the LCC analysis requires input
data for the total installed cost of the equipment, the operating
expense, and the discount rate. Table II.9 summarizes the inputs and
key assumptions used to calculate the economic impacts to commercial
customers of various efficiency levels for each beverage vending
machine. A more detailed discussion of the inputs follows.
Table II.9.--Summary of Inputs and Key Assumptions Used in the Life-
Cycle Cost Analysis
------------------------------------------------------------------------
Input Description
------------------------------------------------------------------------
Baseline Efficiency Level......... Energy savings and energy cost
savings are compared to a pre-
selected baseline efficiency level
(in this case Level 1).
Higher Efficiency Levels.......... Certain number of higher efficiency
levels are pre-selected up to the
max-tech level for LCC and PBP
analyses.
Baseline Manufacturer Selling Price charged by manufacturer to
Price. either a wholesaler or large
customer for baseline equipment.
Standard-Level Manufacturer Incremental change in manufacturer
Selling Price Increases. selling price for equipment at each
of the higher efficiency 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 beverage vending machines,
which includes only the use of
electricity by the equipment
itself.
Electricity Prices................ Average commercial electricity price
($/kWh) in each State and for seven
classes of commercial and
industrial customers, as determined
from EIA data for 2003 converted to
2007$.
Electricity Price Trends.......... Used the AEO2007 reference case to
forecast future electricity prices.
Maintenance Costs................. Labor and material costs associated
with maintaining the beverage
vending machines (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 beverage vending
machine is retired from service
(estimated to be 14 years).
Discount Rate..................... Rate at which future costs are
discounted to establish their
present value to beverage vending
machine purchasers.
Rebound Effect.................... A rebound effect was not taken into
account in the LCC analysis.
Analysis Period................... Analysis period is the time span
over which DOE calculated the LCC
(i.e., 2012-2042).
------------------------------------------------------------------------
a. Baseline Manufacturer Selling Price
The ``baseline MSP'' is the price manufacturers charge to either a
wholesaler/distributor or very large customer for beverage vending
machine equipment meeting baseline efficiency levels. The MSP includes
a markup that converts the MPC to MSP. DOE developed the baseline MSPs
using a cost model (detailed in Chapter 5 of the TSD). MSPs were
developed for two equipment classes and three typical sizes within each
equipment class.
DOE was not able to identify relative shipments data for equipment
classes by efficiency level. For the equipment on which DOE performed a
design-option analysis as the basis for the engineering analysis, DOE
designated Level 1 as the baseline efficiency level. Level 1 also
coincided with the ENERGY STAR Tier 1 level, which is assumed to
represent the least efficient equipment likely to be sold in 2012.
b. Increase in Selling Price
The standard-level MSP increase is the change in MSP associated
with producing beverage vending machine equipment at higher efficiency
levels (or with lower energy consumption). MSP increases are associated
with decreasing equipment energy consumption (or higher efficiency)
levels through a combination of energy consumption level and design-
option analyses. See Chapter 5 of the TSD for details. DOE developed
these MSP increases for the two equipment classes.
c. Markups
As discussed earlier, overall markups are based on one of three
distribution channels for beverage vending machines. Site owners
purchase approximately five percent of equipment from wholesaler/
distributors; vending machine operators purchase 27 percent of
equipment from wholesaler/distributors; and beverage bottler/
distributors purchase 68 percent of equipment directly from
manufacturers, based on input received by DOE.
d. Installation Costs
DOE derived installation costs for beverage vending machines from
U.S. Bureau of Labor Statistics (BLS) data.\42\ BLS provides median
wage rates for installation, maintenance, and repair occupations that
reflect the labor rates for each State. These data allow DOE to compute
State labor cost indices relative to the national average for these
occupations. DOE incorporated these cost indices into the analysis to
capture variations in installation cost by location. DOE calculated the
installation cost by multiplying the number of person-hours by the
corresponding labor rate as reported by Foster-Miller Inc.\43\ Foster-
Miller data were more specific to the beverage vending machine industry
and service calls, and were used whenever possible. DOE decided that
the installation costs (including overhead and profit) represent the
total installation costs for baseline equipment. Further, since data
were not available to indicate how installation costs vary by the
beverage vending machine class or efficiency, DOE considered
installation costs to be fixed and independent of the cost or
efficiency of the equipment. Although the LCC spreadsheet allows for
alternative scenarios, DOE did not find a compelling reason to change
its basic premise for the ANOPR analysis.
---------------------------------------------------------------------------
\42\ Bureau of Labor Statistics, Occupational Employment and
Wage Estimates (May 2006). Available at: http://www.bls.gov/oes_dl.htm.
\43\ Foster-Miller, Inc., Vending Machine Service Call Redution
Using the Vending Miser (2002).
---------------------------------------------------------------------------
As described earlier, the total installed cost is the sum of the
equipment purchase price and the installation cost. DOE derived the
[[Page 34120]]
customer equipment purchase price for any given efficiency level by
multiplying the baseline MSP by the baseline markup and adding to it
the product of the incremental MSP and the incremental markup. Because
MSPs, markups, and the sales tax can take on a variety of values
depending on location, the resulting total installed cost for a
particular efficiency level will not be a single-point value, but a
distribution of values. DOE used a Monte-Carlo analysis, which is a
stochastic approach, to determine this distribution of values.
e. Energy Consumption
DOE based its estimate of the annual electricity consumption of
beverage vending machines on the energy use characterization described
in Section II.E of this ANOPR.
f. Electricity Prices
Electricity prices are necessary to convert electric energy savings
into energy cost savings. In its Framework Document, DOE suggested
using average commercial and/or industrial electricity prices depending
on the purchaser of the beverage vending machine to develop its life-
cycle cost analysis. Based on comments made at the Framework public
meeting, DOE estimated that about 30 percent of installed beverage
vending machines are located at manufacturing facilities with
industrial electricity prices.
On this topic, EEI recommended that DOE should use industrial as
well as commercial electricity prices in the analysis. (EEI, No. 12 at
p. 6) In its analyses, DOE will use average electricity prices for the
following types of locations: (1) Industrial buildings; (2) Federal
military buildings; and (3) large office, small office, education, and
mercantile buildings. These average electricity prices will be
determined on a State-by-State basis in order to include regional
variations in energy prices, while reducing the overall complexity of
the analysis. DOE will use a Monte-Carlo stochastic analysis (using
Crystal Ball) to capture the variation of energy prices across the
different building types and geographic regions. Because of the wide
variation in electricity consumption patterns, wholesale costs, and
retail rates across the country, it is important to consider regional
differences in electricity prices. DOE used average commercial
electricity prices at the State level from the EIA publication, State
Energy Consumption, Price, and Expenditure Estimates. The latest
available prices from this source are for 2006. Because actual prices
were available for all of 2006, DOE used the forecasted ratio between
2007 and 2006 national commercial retail electricity prices from
AEO2007 to adjust the 2006 State-level prices to 2007$.
DOE decided to use average electricity prices paid by seven
different classes of beverage vending machine customers on a State-by-
State basis. DOE also adjusted for different effective prices, since
different kinds of businesses typically use electricity in different
amounts at different times of the day, week, and year. To make this
adjustment, DOE used the 2003 CBECS data set to identify the average
prices four of the seven business types paid compared with the average
prices all commercial customers paid. Two of the seven business types
were manufacturing facilities and military/Federal facilities, which
DOE assumed pay industrial electricity prices. DOE used the ratios of
prices paid by the four types of businesses to the national average
commercial prices seen in the 2003 CBECS as multiplying factors to
increase or decrease the average commercial 2006 price data previously
developed. Once the electricity prices for the four types of businesses
were adjusted, those prices were used in the LCC analysis.
To obtain a weighted-average national electricity price, the prices
paid by each business in each State is weighted by the estimated sales
of beverage vending machines to each business type. The State/business
type weights are the probabilities that a given beverage vending
machine unit shipped will be operated with a given electricity price.
For evaluation purposes, the prices and weights can be depicted as a
cumulative probability distribution. The effective electricity prices
range from approximately 4 cents per kWh to approximately 16 cents per
kWh. This approach will include regional variations in energy prices
and provide for estimated electricity prices suitable for the target
market, yet reduce the overall complexity of the analysis. The
development and use of State-average electricity prices by business
type is described in more detail in Chapter 8 of the TSD.
g. Electricity Price Trends
The electricity price trend provides the relative change in
electricity prices for future years out to the year 2042. Estimating
future electricity prices is difficult, especially considering that
there are efforts in many States throughout the country to restructure
the electricity supply industry. DOE applied the AEO2007 reference case
as the default scenario and extrapolated the trend in values from 2020
to 2030 of the forecast to establish prices in 2030 to 2042. This
method of extrapolation is in line with methods that EIA uses to
forecast fuel prices for the Federal Energy Management Program (FEMP).
DOE provides a sensitivity analysis of the life-cycle costs savings and
PBP results to future electricity price scenarios using both the
AEO2007 high-growth and low-growth forecasts in Chapter 8 of the TSD.
DOE is committed to using the latest available EIA forecast of energy
prices in this rulemaking. For the NOPR analysis, DOE expects to use
AEO2008. Since the Final Rule is expected to be published by August
2009, DOE expects to use AEO2009 in the Final Rule analysis. Prior to
issuance of the NOPR, updates of the ANOPR analytical spreadsheets
using AEO2008 will be made available on the Web: http://www.eere.energy.gov/buildings/appliance_standards/commercial/
beverage_machines.html.
h. Repair Costs
The equipment repair cost is the cost to the customer of replacing
or repairing failed components in the beverage vending machine. DOE
based the annualized repair cost for baseline efficiency equipment on
the following equation:
RC = k x EQP/LIFE
Where:
RC = repair cost in dollars,
k = fraction of equipment price (estimated to be 0.5),
EQP = baseline equipment price in dollars, and
LIFE = average lifetime of the equipment in years (estimated to be
14 years).
Because data were unavailable on how repair costs vary with
equipment efficiency, DOE held repair costs constant as the default
scenario for the LCC and PBP analyses.
i. Maintenance Costs
DOE estimated the annualized maintenance costs for beverage vending
machines from data provided by Foster-Miller, Inc. (2002). The report
by Foster-Miller provides estimates on the person-hours, labor rates,
and materials required for routine preventive maintenance of beverage
vending machines. DOE adjusted the total annual maintenance cost and
used a single figure of $31.37/year (2007$) for preventive maintenance
for all beverage vending machine classes. In addition to routine
maintenance, industry contacts stated that most beverage vending
machines are fully refurbished every three to five years at an average
cost of approximately $930. DOE calculated the
[[Page 34121]]
annual cost of refurbishment by assuming two refurbishments (one in
year 4 and another in year 8) and then annualizing the present value of
the cost using the discount rate that applied to the business type
assumed to own the beverage vending machine. DOE added the two
maintenance components together to produce an overall annual
maintenance cost of $165.44 (2007$). Because data are not available for
how maintenance costs vary with equipment efficiency, DOE held
maintenance costs constant even as equipment efficiency increased. DOE
seeks feedback on the frequency of refurbishment cycles, its
assumptions regarding constant maintenance costs, and how changes to
the machines might affect energy use in the field. Section IV.E of this
ANOPR discusses this subject, identified as Issue 3 under ``Issues on
Which DOE Seeks Comment.''
j. Lifetime
DOE defines ``lifetime'' as the age when a beverage vending machine
is retired from service. Based upon discussions with industry experts
and other stakeholders, DOE concluded that a typical equipment lifetime
of 14 years is appropriate for beverage vending machines. As described
earlier, beverage vending machines are refurbished every three to five
years, and they are usually completely replaced after two rounds of
refurbishment (by which time they are typically obsolete or physically
worn out). Chapter 3 of the TSD, market and technology assessment,
contains a discussion of equipment life data and the sources of such
data.
k. Discount Rate
The ``discount rate'' is the rate at which future expenditures are
discounted to establish their present value. DOE received comments on
the development of discount rates for this rulemaking at the Framework
public meeting. Specifically, EEI stated that in terms of average cost
of capital and discount rates, DOE should account for the rise in U.S.
interest rates over the past few years. EEI also stated that DOE should
determine how many vending machine owners are small businesses, which
may have higher costs of capital and, therefore, higher discount rates.
(EEI, No. 12 at p. 7) The following explains DOE's approach to discount
rates for this rulemaking in light of these comments.
DOE derived discount rates for the LCC analysis by estimating the
cost of capital for companies that purchase beverage vending machines.
The cost of capital is commonly used to estimate the present value of
cash flows to be derived from a typical company project or investment.
For most companies, the cost of capital is the weighted average of the
cost to the company of equity and debt financing. DOE estimated the
cost of equity financing with the Capital Asset Pricing Model (CAPM),
among the most widely used models to estimate such costs. CAPM
considers the cost of equity to be proportional to the amount of
systematic risk for a company. The cost of equity financing tends to be
high when a company faces a large degree of systematic risk and low
when the company faces a small degree of systematic risk.
To estimate the weighted average cost of capital (WACC; defined as
the weighted average cost of debt and equity financing) of purchasers,
DOE used a sample of companies involved in the six ownership
categories, according to their type of activity. DOE sought financial
information for all of the firms in the full sample involved in the
seven types of business drawn from a database of 7,687 U.S. companies
on the Damodaran Online Web site.\44\ This resulted in a sample of
about 6,661 firms. In cases where one or more of the variables needed
to estimate the discount rate was missing or could not be obtained, DOE
discarded the firm from the analysis. Overall, it discarded about 36
percent of the firms in the full database for this reason, resulting in
a final count of 4,240 firms. The WACC approach for determining
discount rates accounts for the current tax status of individual firms
on an overall corporate basis. DOE did not evaluate the marginal
effects of increased costs, and thus depreciation due to more expensive
equipment, on the overall tax status.
---------------------------------------------------------------------------
\44\ Damodaran Online, Leonard N. Stern School of Business, New
York University. Available at: http://www.stern.nyu.edu/~adamodar/
New--Home--Page/data.html. (Accessed May 23, 2007.)
---------------------------------------------------------------------------
DOE used the final sample of 4,240 companies to represent beverage
vending machines purchasers. For each company in the sample, DOE
derived the cost of debt, percent debt financing, and systematic
company risk from information on the Damodaran Online Web site.
Damodaran estimated the cost of debt financing from the long-term
government bond rate (4.39 percent) and the standard deviation of the
stock price. DOE then determined the weighted average values for the
cost of debt, range of values, and standard deviation of WACC for each
category of the sample companies. Deducting expected inflation from the
cost of capital provided estimates of real discount rate by ownership
category.
The above methodology yielded the following average after-tax
discount rates, weighted by the percentage shares of total purchases of
beverage vending machines: (1) 5.08 percent for bottlers and
distributors; (2) 6.04 percent for manufacturing facilities; (3) 5.07
percent for office and health care businesses; (4) 5.98 percent for
retail stores; (5) 2.20 percent for schools and colleges; (6) 2.89
percent for military bases; and (7) 4.98 percent for all other types of
businesses.\45\
---------------------------------------------------------------------------
\45\ These discount rates are what private companies pay as
beverage vending machine purchasers. Government agencies use three-
percent and seven-percent discount rates for economic calculations.
---------------------------------------------------------------------------
l. Rebound Effect
A ``rebound effect'' occurs when a piece of equipment that is made
more efficient is used more intensively, so that the expected energy
savings from the efficiency improvement do not fully materialize.
Because beverage vending machines operate on a 24-hour basis to
maintain adequate conditions for the merchandise being retailed, a
rebound effect resulting from increased refrigeration energy
consumption seemed unlikely. Thus, there is no rebound effect to be
accounted for in the LCC analysis.
m. Effective Date
For purposes of this discussion, the ``effective date'' is the
future date when a new standard becomes operative (i.e., the date by
and after which beverage vending machine manufacturers must manufacture
equipment that complies with the standard). DOE publication of a final
rule in this standards rulemaking is required by August 8, 2009.
Pursuant to section 42 U.S.C. 6295(v)(3), as amended by EPACT 2005, the
effective date of any new energy conservation standard for beverage
vending machines must be three years after the final rule is published.
DOE calculated LCC for commercial customers, based upon an assumption
that each would purchase the new equipment in the year the standard
takes effect.
3. Split Incentive Issue
DOE mentioned the ``split incentive issue'' in the Framework public
meeting when discussing distribution channels for beverage vending
machines sold directly to the bottler or a vending machine operator.
The bottler or the vending machine operator installs these machines at
different business sites through a ``location contract,'' maintains and
stocks the machine, and receives a certain percentage of the coin-box
revenue. The business site owner, in
[[Page 34122]]
this case, allows the machine to be placed on-site, receives a
percentage of the coin-box revenue and/or other remuneration, and most
relevant to this rulemaking, pays the electricity bill. In principle,
the business site owner would be willing to accept a lower percentage
of revenue for a machine that uses less electricity. However, where it
is costly to renegotiate contracts, the incentive to purchase more-
efficient machines may be lessened or eliminated. Nonetheless, there
may be a growing market for energy-efficient beverage vending machines
since environmentally-conscious beverage companies and bottlers are
pushing to install energy-efficient machines on-site, and certain
business site owners are demanding that energy-efficient machines be
installed to reduce electricity costs.
At the Framework public meeting, Coca-Cola stated that it has
``full-service vending'' (a split-incentive) that allows a Coca-Cola
bottler to buy the vending machine and give it to an operator. The
operator may or may not pay some or all of the energy costs, depending
on its contract with the customer. (Public Meeting Transcript, No. 8 at
p. 190) Meanwhile, EEI stated that information about distribution
channels and machine contracts would be important for the LCC analysis.
EEI explained that unless there is a provision in the contract for
energy costs, there will be a split incentive for site owners. (EEI,
No. 12 at p. 5).
In response, DOE agrees that split incentive is a critical issue to
consider in the LCC analysis. DOE will assume that operating cost
savings due to energy cost savings are transferred to the owner/
operator of the beverage vending machine through the coin-box revenue
contract. This assumption not only addresses the split incentive issue
but also will result in the highest energy savings for the minimum LCC
and the lowest total LCC. DOE will also conduct limited sensitivity
analyses of alternate scenarios to explore how the LCC savings might
change as the site owner retains some fraction (e.g., 50 percent) of
the operating cost savings.
4. Payback Period
The PBP is the amount of time it takes the customer to recover the
incrementally higher purchase cost of more energy-efficient equipment
as a result of lower operating costs (i.e., through energy cost
savings). Payback analysis is a technique used to obtain a rough
indication of whether an investment is worthwhile. Numerically, the PBP
is the ratio of the increase in purchase cost (i.e., from a less-
efficient design to a more-efficient design) to the decrease in annual
operating expenditures. This type of calculation is known as a ``simple
PBP,'' because it does not take into account other changes in operating
expenses over time or the time value of money.
The equation for PBP is:
PBP =[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. If the PBP is greater than the life of
the equipment, then the increased total installed cost of the more-
efficient equipment would not be recovered in reduced operating costs.
The PBP thus calculated differs from the rebuttable presumption payback
calculation discussed in Section II.F in that it includes repair and
maintenance costs, which are part of the annual operating costs.
The data inputs to PBP analysis are the total installed cost of the
equipment to the customer for each energy consumption level and the
annual (first year) operating costs for each energy consumption level.
The inputs to the total installed cost are the equipment price and the
installation cost. The inputs to the operating costs are the annual
energy cost, the annual repair cost, and the annual maintenance cost.
The PBP uses the same inputs as the LCC analysis, except that
electricity price trends and discount rates are not required. Since the
PBP is a simple (undiscounted) payback, the required electricity cost
is only for the year in which a new energy conservation standard is to
take effect--in this case, 2012. The electricity price used in the PBP
calculation of electricity cost was the price projected for 2012,
expressed in 2007$, but not discounted to 2007. Discount rates are not
used in the PBP calculation.
PBP is one of the economic indicators that DOE uses when assessing
economic impact to a customer. As expressed above, PBP does not take
into account the time value of money explicitly (e.g., through a
discount factor), the life of the efficiency measure, or changing fuel
costs over time. In addition, because PBP takes into account the
cumulative energy and first-cost impact of a set of efficiency
measures, it can be sensitive to the baseline level assumed. In
addition, what is deemed an acceptable payback period can vary. By
contrast, when examining LCC savings by efficiency levels, there is
generally a maximum LCC savings point (minimum LCC efficiency level)
indicative of maximum economic benefit to the customer. The selection
of the baseline efficiency level does not effect the identification of
the minimum LCC efficiency level, although a baseline efficiency is
used when calculating net LCC savings or costs. DOE considers both LCC
and PBP as related to the seven factors discussed in Section I.C to
determine whether a standard is economically justified and whether the
benefits of an energy conservation standard will exceed its burdens to
the greatest extent practicable. However, because LCC uses a range of
discount rates (that depend on customers' cost of financing), takes
into account changing energy prices, and does not require selection of
a baseline efficiency level, it is given greater weight in DOE
decision-making.
5. Life-Cycle Cost and Payback Period Results
This section presents the LCC and PBP results for the energy
consumption levels analyzed for this ANOPR. While both types of
indicators of cost-effectiveness will be considered by DOE, greater
weight is usually given to the LCC savings results because they account
for customer discount rates and changing energy prices. Because the
values of most inputs to the LCC analysis are uncertain, DOE represents
them as a distribution of values rather than a single-point value.
Thus, DOE derived the LCC results also as a distribution of values. For
example, the difference in LCC for the different efficiency levels from
the baseline efficiency level (Level 1 in this case) can be provided by
percentiles of distribution of values as shown in Table II.10.
Chapter 8 and Appendix F of the TSD provide a summary of the change
in LCC from the baseline efficiency level (Level 1 in this case) by
percentile groupings of the distribution of results for each equipment
class. Table II.10 provides an example of such LCC changes for a
portion of one equipment class (B-L-IO). Table II.10 also shows the
mean LCC savings and the percent of units with LCC savings at each
efficiency level.
[[Page 34123]]
Table II.10.--Distribution of Life-Cycle Cost Savings From a Baseline Level (Level 1) by Efficiency Level for the Class B Large Indoor/Outdoor (B-L-IO)
Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Decrease in LCC from baseline (level 1) shown by percentiles of the distribution of results Percent
(2007$) of
--------------------------------------------------------------------------------------------------- Mean units
Efficiency level savings with
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% LCC
savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Level 2............................ $32 $123 $149 $175 $200 $223 $251 $279 $314 $374 $693 $239 100
Level 3............................ 31 158 198 236 271 306 347 389 440 529 978 329 100
Level 4............................ 17 174 224 272 318 362 415 468 535 649 1,215 392 100
Level 5............................ -83 65 121 167 218 265 325 375 448 568 1,189 298 97
Level 6............................ -123 59 129 187 252 311 386 451 542 692 1,494 352 97
Level 7............................ -136 45 117 175 240 300 377 441 533 686 1,501 341 95
Level 8............................ -1,304 -1,115 -1,045 -989 -935 -892 -833 -766 -672 -524 339 849 1
--------------------------------------------------------------------------------------------------------------------------------------------------------
The following example explains how to interpret the information in
Table II.10. The row concerning Efficiency Level 4 in Table II.10 (row
3) shows that the minimum change in LCC for this Efficiency Level for
B-L-IO equipment is a savings of $17 (zero percentile column). In other
words, all beverage vending machines of this type would have an LCC
savings at Efficiency Level 4. For 90 percent of the cases studied
(90th percentile), the change in LCC is a reduction of $649 or less.
The largest reduction in LCC is $1,215 (100th percentile). The mean
change in LCC is a net savings of $392. The last column shows that 100
percent of the sample machines have LCC savings (i.e., reductions in
LCC greater than zero) when compared to the baseline efficiency level.
Table II.11 provides the national average life-cycle cost savings
calculated for each efficiency level when compared to the baseline
efficiency (Level 1) for all three machine sizes in each of the two
equipment classes. Review of Table II.11 shows that most of the
efficiency levels analyzed generated national average life-cycle cost
savings compared with the baseline efficiency level.
Table II.11.--Average Life-Cycle Cost Savings From a Baseline Efficiency Level (Level 1) by Efficiency Level and
Equipment Class
----------------------------------------------------------------------------------------------------------------
National average LCC savings (2007$)
Equipment class -----------------------------------------------------------------------
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
B-L-IO.................................. 0 239 329 392 298 352 341 -849
B-M-IO.................................. 0 240 313 370 272 320 307 -779
B-S-IO.................................. 0 238 296 318 290 253 238 -683
A-L-IN.................................. 0 148 259 348 373 369 194 -774
A-M-IN.................................. 0 144 242 326 343 338 187 -722
A-S-IN.................................. 0 139 238 316 326 319 171 -574
----------------------------------------------------------------------------------------------------------------
DOE seeks feedback on the validity of selecting Level 1 (which is
the same level as ENERGY STAR Tier 1) as the baseline for the LCC
analysis. Since more-efficient equipment is available in the market,
DOE seeks input on whether a distribution of efficiencies should be
used for the LCC analysis baseline instead of a single efficiency
level, and if so, what data could be used to populate this
distribution. Section IV.E of this ANOPR discusses this subject,
identified as Issue 4 under ``Issues on Which DOE Seeks Comment.''
Table II.12 provides summary PBP results for each efficiency level
for B-L-IO equipment as an example. Results are summarized for PBP by
percentile groupings of the distribution of results. The chart also
shows the mean PBP for each efficiency level.
Table II.12.--Summary of Payback Period Results for Class B, Large Indoor/Outdoor (B-L-IO) Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Payback period in years shown by percentiles of the distribution of results
Efficiency level --------------------------------------------------------------------------------------------------- Mean
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% PBP
--------------------------------------------------------------------------------------------------------------------------------------------------------
Level 2..................................... 0.3 0.4 0.5 0.6 0.6 0.7 0.7 0.8 0.9 1.1 1.6 0.7
Level 3..................................... 0.4 0.7 0.7 0.9 1.0 1.0 1.1 1.2 1.4 1.6 2.4 1.1
Level 4..................................... 0.5 0.9 1.0 1.2 1.3 1.4 1.5 1.7 1.9 2.3 3.5 1.5
Level 5..................................... 1.1 2.0 2.3 2.7 3.0 3.3 3.6 4.1 4.7 5.6 9.7 3.6
Level 6..................................... 1.1 2.2 2.5 2.9 3.3 3.6 3.9 4.4 5.1 6.2 10.9 3.9
Level 7..................................... 1.2 2.3 2.6 3.1 3.4 3.8 4.1 4.7 5.4 6.5 11.8 4.1
Level 8..................................... 6.6 18.2 26.0 37.2 55.5 85.5 100.0 100.0 100.0 146.6 4,808.0 122.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table II.13 provides the national average payback calculated for
each efficiency level when compared to the baseline efficiency level
(Level 1) for all three machine sizes of the two equipment classes.
Table II.13 also shows the percentage of units that would have PBPs of
less than three years (i.e., the rebuttable presumption
[[Page 34124]]
PBP for economic justification under 42 U.S.C. 6295(o)(2)(B)(iii)). The
results of the analysis show that purchases of more-efficient machines
would result in PBPs (when compared to the purchase of baseline
efficiency units) of about six years or less (often substantially less)
for all but the most efficient machines analyzed for both equipment
classes.
Table II.13.--National Average Payback Periods by Efficiency Level and Equipment class
----------------------------------------------------------------------------------------------------------------
National average payback period (years)
Equipment Class -----------------------------------------------------------------------
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
B-L-IO.................................. NA 0.7 1.1 1.5 3.6 3.9 4.1 122.9
B-M-IO.................................. NA 0.7 1.1 1.6 3.8 4.1 4.4 112.3
B-S-IO.................................. NA 0.7 1.3 1.8 3.6 4.8 5.1 198.0
A-L-IN.................................. NA 1.1 1.4 1.6 2.1 2.3 6.3 145.4
A-M-IN.................................. NA 1.1 1.5 1.7 2.3 2.5 6.1 347.9
A-S-IN.................................. NA 1.2 1.4 1.7 2.2 2.4 6.1 75.4
----------------------------------------------------------------------------------------------------------------
Percent of Units With Payback Period of Less Than Three Years
----------------------------------------------------------------------------------------------------------------
B-L-IO.................................. NA 100 100 99 39 35 25 0
B-M-IO.................................. NA 100 100 99 37 25 23 0
B-S-IO.................................. NA 100 100 93 39 21 19 0
A-L-IN.................................. NA 100 99 99 87 81 3 0
A-M-IN.................................. NA 100 99 97 83 77 5 0
A-S-IN.................................. NA 100 99 99 85 77 5 0
----------------------------------------------------------------------------------------------------------------
The PBPs shown in Table II.13 and the rebuttable PBPs shown in
Table II.8 account for the cumulative impact of all technologies used
in a design option to reach a specific energy efficiency level when
compared to the baseline equipment. Every design option is made up of a
mix of technologies, some of which may have relatively short PBPs and
others that may have relatively longer PBPs, if considered separately.
For this reason, the choice of baseline efficiency level affects the
PBP for more-efficient machines. The LCC spreadsheet allows the user to
select alternate baseline efficiency levels for each equipment class
and to calculate the LCC savings and PBP for all higher levels compared
to the selected baseline. See Chapter 8 and Appendix F of the TSD for
additional details on the LCC and PBP analyses.
H. Shipments Analysis
This section presents DOE's shipments analysis, which is an input
to the NIA (Section II.I) and MIA (Section II.K). DOE will undertake
revisions to the NIA and conduct the final MIA after the ANOPR is
published, and then report the results of both in the NOPR.
The results of the shipments analysis are driven primarily by
historical shipments data for the two equipment classes of beverage
vending machines under consideration. The model estimates that, in each
year, equipment in the existing stock of beverage vending machines
either ages by one year or is worn out and replaced. In addition, new
equipment can be shipped into new commercial building floor space, and
old equipment can be removed through demolitions. DOE chose to analyze
all efficiency levels analyzed in the LCC in the NIA. Because DOE is
assessing impacts and presuming each level analyzed represents a
possible standard level, DOE refers to the efficiency levels analyzed
in the NIA as candidate standard levels (CSLs). DOE determined
shipments forecasts for all of the CSLs analyzed in the NIA and NPV
analysis.
According to an analysis of the beverage vending machine
market,\46\ there were about 3.67 million beverage vending machines in
the United States in 2005. Industry estimates that about 5 percent of
these units are Class A machines intended for indoor use only, while 95
percent are Class B machines intended for either indoor or outdoor use.
Annual shipments have decreased from about 338,000 in 2000 to less than
100,000 in 2006. DOE estimates that total 2006 shipments were about
67,000 units. The industry estimates that about 10 percent of units
shipped were Class A units, while 90 percent of units shipped are Class
B machines intended for either indoor or outdoor use. (NAMA, No. 17 at
p. 3).
---------------------------------------------------------------------------
\46\ Automatic Merchandiser, State of the Vending Industry
Report (August 2006). Available at: www.AMonline.com.
---------------------------------------------------------------------------
DOE was not able to locate any market data concerning shipments by
machine size (i.e., vendible capacity); therefore, the shipments
analysis focused on the three sizes (small, medium, and large) believed
to be typical and which were analyzed in the preceding LCC and PBP
analyses. DOE assumed that each size is about one-third of the market
for Class A units and translated the three sizes to the corresponding
vendible capacity. Under this approach, the large-size Class A machine
would correspond to having a vendible capacity of 410 12-ounce cans,
the medium-size Class A machine would have a capacity of 350 cans, and
the small-size Class A machine would have a capacity of 270 cans.
Similarly, DOE assumed that each size is about one-third of the market
for Class B units. Under this approach, the large-size Class B machine
would have a vendible capacity of 800 cans, the medium-size Class B
machine would have a capacity of 650 cans, and the small-size Class B
machine would have a capacity of 450 cans.
Because several different types of businesses own beverage vending
machines and use them in a variety of locations, machines are divided
into several market segments. Table II.14 gives the business locations
and the approximate size of the market segments from 2002 to 2005.
[[Page 34125]]
Table II.14.--Market Segments for the Beverage Vending Machines (2002-2005)
----------------------------------------------------------------------------------------------------------------
Percent of Percent of
Business location machines Ownership machines
----------------------------------------------------------------------------------------------------------------
Manufacturing................................ 30.4 Bottlers and Vendors............ 75.0
Offices...................................... 23.1 Business-Owned.................. 25.0
Retail....................................... 13.6 Manufacturing................... 7.6
Schools/Colleges............................. 13.0 Offices and Health Care......... 7.3
Health Care.................................. 6.1 Retail, Restaurants, Bars, and 4.1
Clubs.
Hotels/Motels................................ 3.0 Schools, Colleges, and Public 3.8
Facilities (including
correctional).
Restaurants/Bars/ Clubs...................... 2.6 Military Bases.................. 0.5
Correctional Facilities...................... 2.3 Other (including hotels/motels). 1.8
---------------
Military Bases............................... 1.9 Subtotal, Business Owned..... 25.0
Other........................................ 4.0 ................................ ..............
----------------- ---------------
Total.................................... 100.0 Total........................ 100.0
----------------------------------------------------------------------------------------------------------------
Source: State of the Vending Industry (2006).
Table II.15 shows the forecasted shipments of the three typical
sizes of beverage vending machines for Class A and Class B units for
selected years, and cumulatively, between 2012 and 2042. As equipment
purchase price increases with higher efficiency levels, a drop in
shipments could occur relative to the base case. On the other hand, as
annual energy consumption is reduced, equipment sales could increase
due to more frequent installations and use of beverage vending machines
by retailers. DOE has no information by which to calibrate either such
relationship. Therefore, although the spreadsheet allows for changes in
projected shipments in response to efficiency level increases or energy
consumption level decreases, for the ANOPR analysis, DOE presumed that
the shipments would not change in response to the changing CSLs. Table
II.15 also shows the cumulative shipments for the 31-year period
between 2012 and 2042 for all beverage vending machines. Because there
has been a decrease in shipments from 2000 to 2006 and as more and more
units are retired, there has to be an increase in future shipments to
replenish the existing stock of equipment. Chapter 9 of the TSD
provides additional details on the shipments analysis.
Table II.15.--Forecasted Shipments for Beverage Vending Machines (Baseline Efficiency, Level 1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year (thousands of units shipped)
-------------------------------------------------------------------------------------------------------
Equipment class Cumulative
2012 2015 2020 2025 2030 2035 2040 2042 shipments
(2012-2042)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A-L-IN.......................................... 7.7 7.6 7.9 8.3 8.8 9.2 9.7 9.9 265.9
A-M-IN.......................................... 7.7 7.6 7.9 8.3 8.8 9.2 9.7 9.9 265.9
A-S-IN.......................................... 7.7 7.6 7.9 8.3 8.8 9.2 9.7 9.9 265.9
B-L-IO.......................................... 77.6 77.0 79.8 84.2 88.8 93.4 98.4 100.5 2,688.3
B-M-IO.......................................... 77.6 77.0 79.8 84.2 88.8 93.4 98.4 100.5 2,688.3
B-S-IO.......................................... 77.6 77.0 79.8 84.2 88.8 93.4 98.4 100.5 2,688.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
I. National Impact Analysis
The NIA assesses cumulative national energy savings (NES) and the
cumulative national economic impacts of candidate standard levels. The
analysis measures economic impacts using the NPV metric (i.e., future
amounts discounted to the present) of total commercial customer costs
and savings expected to result from new standards at specific
efficiency levels. For a given CSL, DOE calculated the NPV, as well as
the NES, as the difference between a base-case forecast and the
standards-case forecasts. Chapter 10 of the TSD provides additional
details on the national impacts analysis for beverage vending machines.
For each year of the analysis, the beverage vending machine stock
is composed of units shipped in previous years (or vintages). Each
vintage has a characteristic distribution of efficiency levels. DOE
first determined the average energy consumption of each vintage in the
stock accounting for all efficiency levels in that vintage. The
national annual energy consumption is then the product of the annual
average energy consumption per beverage vending machine at a given
vintage and the number of beverage vending machines of that vintage in
the stock for the particular year. This approach accounts for
differences in unit energy consumption from year to year. Annual energy
savings are calculated for each standard level by subtracting national
energy consumption for that standard level from that calculated for the
baseline. Cumulative energy savings are the sum of the annual NES over
the period of analysis.
In a similar fashion, DOE tracks the first costs for all equipment
installed at each efficiency level for each vintage. It also tracks the
annual operating cost (sum of the energy, maintenance, and repair
costs) by vintage for all equipment remaining in the stock for each
year of the analysis. DOE then calculates the net economic savings each
year as the difference between total operating cost savings and
increases in the total installed costs (which consist of manufacturer
selling price, sales tax, and installation cost). The NPV is the annual
net cost savings calculated for
[[Page 34126]]
each year, discounted to the year 2012, and expressed in 2007$.
Cumulative NPV savings reported are the sum of the annual NPV over the
analysis period.
1. Approach
Over time, in the standards case, more-efficient equipment
gradually replaces less-efficient equipment. This affects the
calculation of both the NES and NPV, both of which are a function of
the total number of units in use and their efficiencies and thus depend
on annual shipments and the lifetime of equipment. Both calculations
start by using the estimate of shipments and the quantity of units in
service, which are derived from the shipments model. As more-efficient
beverage vending machines gradually replace less-efficient ones, the
energy per unit of capacity that beverage vending machines in service
use gradually decreases in the standards case relative to the base
case, leading to an estimate of NES.
To estimate the total energy savings for each candidate efficiency
level, DOE first calculated the national site energy consumption \47\
for beverage vending machines each year, beginning with the expected
effective date of the standards (i.e., 2012). DOE did this calculation
for both the base-case forecast and the standards-case forecast.
Second, DOE determined the annual site energy savings, which is the
difference between site energy consumption in the base case and in the
standards case. Third, DOE converted the annual site energy savings
into the annual amount of energy saved at the source of electricity
generation (the source energy). Then, DOE summed the annual source
energy savings from 2012 to 2042 to calculate the total NES for that
period. DOE performed these calculations for each CSL.
---------------------------------------------------------------------------
\47\ ``Site energy'' is the energy directly consumed by the
units in operation.
---------------------------------------------------------------------------
2. Base-Case and Standards-Case Forecasted Efficiencies
A key component of DOE's estimates of NES and NPV are the energy
efficiencies for shipped equipment that it forecasts over time for the
base case (without new standards) and for each of the standards cases.
The forecasted efficiencies represent the distribution of energy
efficiency of the equipment under consideration that is shipped over
the forecast period (i.e., from the assumed effective date of a new
standard to 30 years after the standard becomes effective). Because key
inputs to the calculation of the NES and NPV depend on the estimated
efficiencies, 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. Regarding the NPV, the per-unit total installed cost and
the per-unit annual operating cost both depend on efficiency. The per-
unit total installed cost is a direct function of efficiency. Increased
efficiency results in reduced energy consumption which results in
reduced energy costs. However, the maintenance cost portion of the
operating cost may go up and hence, the per-unit annual operating cost
is an indirect function of the equipment efficiency.
The annual per-unit energy consumption is the average energy
consumed by a beverage vending machine in a year as determined in the
energy use characterization (see Chapter 7 of the TSD). The annual
energy consumption is directly tied to the efficiency of the unit. DOE
determined annual forecasted market shares by efficiency level that, in
turn, enabled a determination of shipment-weighted annual national
average energy consumption values. At the Framework public meeting,
several manufacturers and ACEEE offered their estimates of shipments of
new beverage vending machines that would meet ENERGY STAR levels by
2012. ACEEE also stated that virtually 100 percent of all beverage
vending machines will meet Tier 1 levels, and it further expects that
100 percent of the indoor-outdoor zone-cooled (Class B) machines would
meet Tier 2 levels. (ACEEE, No. 13 at p. 4) Dixie-Narco estimated that
100 percent of new equipment would meet Tier 1, and about 75 percent
would meet Tier 2 levels in 2012. (Dixie-Narco, No. 14 at p. 7). Based
on these comments, DOE assumed for purposes of its analyses that 100
percent of beverage vending machine shipments will meet ENERGY STAR
Tier 1 level and that about 55 percent of shipments will meet Tier 2
level by 2012.
Because no data were available on market shares broken down by
efficiency level, DOE developed estimates. First, DOE converted 2005
shipment information by equipment class into market shares by equipment
class, and then adapted a cost-based method similar to that used in the
NEMS to estimate market shares for each equipment class by efficiency
level. This cost-based method relied on cost data developed in the
engineering and life-cycle cost analyses, as well as economic purchase
criteria data taken directly from NEMS. From those market shares and
shipment projections, DOE developed the future efficiency scenarios for
a base case (i.e., without new standards) and for various standards
cases (i.e., with new standards).
DOE developed base-case efficiency forecasts based on the estimated
market shares by equipment class and efficiency level. Because there
are no historical data to indicate how equipment efficiencies or
relative equipment class preferences have changed over time, DOE
assumed that forecasted market shares would remain frozen at the 2012
efficiency level until the end of the forecast period (30 years after
the effective date or 2042). Realizing that this prediction likely
overstates the estimates of savings associated with these efficiency
standards, DOE seeks comment on this assumption and the potential
significance of the overestimate. In particular, DOE requests data that
would help characterize the likely increases in efficiency that would
occur over the 30-year modeling period in absence of a standard.
For its estimate of standards-case forecasted efficiencies, DOE
used a ``roll-up'' scenario to establish the market shares by
efficiency level for the year that standards become effective (i.e.,
2012). Information available to DOE suggests that equipment shipments
with efficiencies in the base case that did not meet the standard level
under consideration would roll up to meet the new standard level. Also,
DOE assumed that all equipment efficiencies in the base case that were
above the standard level under consideration likely would not be
affected.
DOE seeks feedback on how it predicts base-case and standards-case
efficiencies, and how standards affect efficiency distributions.
Section IV.E of this ANOPR discusses this subject, identified as Issue
5 under ``Issues on Which DOE Seeks Comment.'' DOE also seeks feedback
on whether higher standard levels in specific equipment classes are
likely to cause beverage vending machine customers to shift to less-
efficient equipment classes. Section IV.E of this ANOPR discusses this
subject, identified as Issue 6 under ``Issues on Which DOE Seeks
Comment.''
3. National Impact Analysis Inputs
DOE used the difference in shipments by equipment efficiency level
between the base case and standards cases to determine the reduction in
per-unit annual energy consumption that could result from new
standards. The beverage vending machine stock in a given year is the
total number of beverage vending machines shipped from earlier years
that survive in the given year. The NES
[[Page 34127]]
spreadsheet model tracks the total number of beverage vending machines
shipped each year. For purposes of the ANOPR NES and NPV analyses, DOE
assumed that retirements follow a Weibull form of statistical
distribution with a 14-year average lifetime for beverage vending
machines. Retirements for any given vintage build to about eight
percent per year by year 7, then tail off gradually to less than one
percent per year by year 20. Retired units are replaced until 2042. For
units shipped in 2042, any units still remaining at the end of 2062 are
replaced.
The site-to-source conversion factor is the multiplicative factor
used for converting site energy consumption (expressed in kWh) into
primary or source energy consumption (expressed in quads (quadrillion
Btu)). DOE used annual site-to-source conversion factors based on U.S.
average values for the commercial sector, calculated from AEO2007,
Table A5. The average conversion factors vary over time, due to
projected changes in electricity generation sources (i.e., the power
plant types projected to provide electricity to the country).
To estimate NPV, DOE calculated the net impact each year as the
difference between total operating cost savings (including electricity,
repair, and maintenance cost savings) and increases in total installed
costs (consisting of MSP, sales taxes, distribution channel markups,
and installation cost). DOE calculated the NPV of each CSL over the
life of the equipment using three steps. First, DOE calculated the
difference between the equipment costs under each CSL and the base case
to determine the net equipment cost increase resulting from each CSL.
Second, DOE calculated the difference between the base-case operating
costs and the operating costs at each CSL to determine the net
operating cost savings from each CSL. Third, DOE calculated the
difference between the net operating cost savings and the net equipment
cost increase to determine the net savings (or expense) for each year.
DOE then discounted the annual net savings (or expenses) for beverage
vending machines purchased on or after 2012 to 2007$, and summed the
discounted values to arrive at the NPV of a CSL. An NPV greater than
zero shows net savings (i.e., the CSL would reduce overall customer
expenditures relative to the base case in present-value terms). An NPV
less than zero indicates that the CSL would result in a net increase in
customer expenditures in present-value terms. Table II.16 summarizes
the NES and NPV inputs to the NES spreadsheet model, and briefly
describes the data source for each input.
Table II.16.--National Energy Savings and Net Present Value Inputs
------------------------------------------------------------------------
Input data Description
------------------------------------------------------------------------
Shipments.................... Annual shipments from shipments model
(see Chapter 9 of the TSD, 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
Unit. function of energy consumption level per
unit, which are established in the
Energy Use Characterization (Chapter 7
of the TSD).
Total Installed Cost per Unit Annual weighted-average values are a
function of energy consumption level
(see Chapter 8 of the TSD).
Repair Cost per Unit......... Annual weighted-average values increase
with manufacturer's cost level (see
Chapter 8 of the TSD).
Maintenance Cost per Unit.... Annual weighted-average value equals
$165.44 (see Chapter 8 of the TSD).
Escalation of Electricity EIA AEO2007 forecasts (to 2030) and
Prices. extrapolation beyond 2030 (see Chapter 8
of the TSD).
Electricity Site-to-Source Conversion varies yearly and is generated
Conversion. by DOE/EIA's NEMS * model (a time-series
conversion factor that includes electric
generation, transmission, and
distribution losses).
Discount Rate................ 3% and 7% real.
Present Year................. Future costs are discounted to 2008.
Rebound Effect............... As explained in the LCC inputs section,
DOE does not anticipate unit energy
consumption rebounding above the levels
used in the LCC analysis and passed to
the NIA analysis. Further, the shipments
model develops shipment projections in
order to meet historical market
saturation levels. The shipment model
does not further adjust shipments as a
function of unit energy consumption
levels, because DOE has no information
by which to calibrate such a
relationship.
------------------------------------------------------------------------
* Chapter 13 (utility impact analysis) and Chapter 14 (environmental
assessment) provide more detail on NEMS.
4. National Impact Analysis Results
Table II.17 presents the cumulative NES results for the CSLs
analyzed for three sizes of each equipment class of beverage vending
machines. Results are cumulative to 2042 and are shown as primary
energy savings in quads. Inputs to the NES spreadsheet model are based
on weighted-average values, yielding results that are discrete point
values, rather than a distribution of values as in the LCC analysis.
DOE based all the results on electricity price forecasts from the
AEO2007 reference case. The range of overall cumulative energy impacts
for standards above the baseline efficiency level (Level 1) is from
0.006 quad (Class A machines) and 0.048 quad (Class B machines) for a
standard established at Level 2, to 0.036 quad (Class A machines) and
0.351 quad (Class B machines) at the max tech efficiency level (Level
8).
Table II.17.--Cumulative National Energy Savings for Beverage Vending Machines (2012-2042) (Quads)
----------------------------------------------------------------------------------------------------------------
National energy savings (Quads) by candidate standard level
Equipment class --------------------------------------------------------------
Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
Class A.......................................... 0.006 0.011 0.018 0.023 0.023 0.031 0.036
[[Page 34128]]
Class B.......................................... 0.048 0.106 0.181 0.222 0.234 0.300 0.351
----------------------------------------------------------------------------------------------------------------
Below are the NPV results for the CSLs DOE considered for the three
sizes of each of the two equipment classes of beverage vending
machines. Results are cumulative and shown as the discounted value at
seven percent of these savings in present dollar terms. The present
value of increased total installed costs is the total installed cost
increase (i.e., the difference between the standards case and base
case), discounted to 2007, and summed over the time period in which DOE
evaluates the impact of standards (i.e., from the effective date of
standards, 2012 to 2062 when the last beverage vending machine is
retired).
Under the NPV analysis, savings represent decreases in operating
costs (including electricity, repair, and maintenance) associated with
the higher energy efficiency of beverage vending machines purchased in
the standards case compared to the base case. Total operating cost
savings are the savings per unit multiplied by the number of units of
each vintage (i.e., the year of manufacture) surviving in a particular
year. The beverage vending machine consumes energy and must be
maintained over its entire lifetime. For units purchased in 2042, the
operating cost includes energy consumed and maintenance and repair
costs incurred until the last unit retires from service in 2062.
Table II.18 shows the NPV results for the CSLs for beverage vending
machines based on a seven-percent discount rate. DOE based all results
on electricity price forecasts from the AEO2007 reference case.
Appendix H of the TSD provides detailed results showing the breakdown
of the NPV into national equipment costs and national operating costs.
At a seven-percent discount rate, the maximum national NPV benefits
calculated for different CSL scenarios above the baseline was about $30
million for Class A machines and about $280 million for Class B
machines.
Table II.18.--Cumulative Net Present Value Results Based on a Seven-Percent Discount Rate (Billion 2007$) *
----------------------------------------------------------------------------------------------------------------
Standard level
Equipment class --------------------------------------------------------------
Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
Class A.......................................... 0.009 0.018 0.028 0.030 0.027 (0.009) (0.221)
Class B.......................................... 0.079 0.171 0.269 0.280 0.264 (0.081) (1.916)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses indicate negative NPV.
Table II.19 provides the NPV results based on the three-percent
discount rate and electricity price forecasts from the AEO2007
reference case. Appendix H of the TSD provides detailed results showing
the breakdown of the NPV into national equipment costs and national
operating costs based on a three-percent discount rate. At this rate,
the maximum overall NPV benefits calculated for different CSL scenarios
above the assumed baseline was $80 million for Class A machines and
$764 million for Class B machines.
Table II.19.--Cumulative Net Present Value Results Based on a Three-Percent Discount Rate (Billion 2007$) *
----------------------------------------------------------------------------------------------------------------
Standard level
Equipment class --------------------------------------------------------------
Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8
----------------------------------------------------------------------------------------------------------------
Class A.......................................... 0.021 0.046 0.072 0.080 0.079 0.010 (0.419)
Class B.......................................... 0.204 0.443 0.709 0.764 0.741 0.085 (3.654)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses indicate negative NPV.
As discussed previously in Section II.E, roughly 25 percent of the
Class B machines are used outdoors, and DOE assumes that all Class A
machines are used indoors. To be thorough, DOE developed analytical
tools with the capability of separately analyzing Class B machines
certified for indoor use only and Class A machines certified for
indoor/outdoor use. However, DOE was not able to locate any sales data
for these two equipment markets, so sales are assumed to be zero and
DOE did not report LCC or NIA results separately for these equipment
markets.
J. Life-Cycle Cost Sub-Group Analysis
The LCC sub-group analysis evaluates impacts of standards on
identifiable groups of customers, such as customers of different
business types that may be disproportionately affected by a national
energy conservation standards level. In the NOPR phase of this
rulemaking, DOE will analyze the LCCs and PBPs for these customers, and
determine whether they would be adversely affected by any of the CSLs.
Also, DOE plans to examine variations in energy prices and energy
use that might affect the NPV of a standard to customer sub-
populations. To the extent possible, DOE will obtain estimates of the
variability of each input parameter and consider this variability in
the calculation of customer impacts.
[[Page 34129]]
Variations in energy use for a particular equipment class may depend on
factors such as climate and type of business.
DOE will determine the effect on customer sub-groups using the LCC
spreadsheet model. The standard LCC analysis includes various customer
types that use beverage vending machines. DOE can analyze the LCC for
any sub-group, such as a particular type of school or institution, by
using the spreadsheet model and sampling only that sub-group. Section
II.G explains the details of this model. DOE will be especially
sensitive to purchase price increases (``first-cost'' increases) to
avoid negative impacts on identifiable population groups such as small
businesses (i.e., those with low annual revenues) that may not be able
to afford a significant increase in the price of beverage vending
machines. Some of these customers may retain equipment past its useful
life. This older equipment is generally less efficient, and its
efficiency may deteriorate further if it is retained beyond its useful
life. Large increases in first cost also could preclude the purchase
and use of equipment altogether, resulting in a potentially large loss
of utility to the customer.
Although DOE does not know business income and annual revenues for
the types of businesses analyzed in the LCC analysis, the floor space
occupied by a business may be an indicator of annual income. If this
proves true, DOE can perform sub-group analyses on smaller businesses.
DOE can also use SBA data for businesses with 500 or fewer employees as
a proxy for ``smaller businesses.''
K. Manufacturer Impact Analysis
The purpose of the manufacturer impact analysis is to identify the
likely impacts of energy conservation standards on manufacturers. DOE
has begun and will continue to conduct this analysis with input from
manufacturers and other interested parties and apply this methodology
to its evaluation of standards. DOE will also consider financial
impacts and a wide range of quantitative and qualitative industry
impacts that might occur following the adoption of a standard. For
example, a particular standard level adopted by DOE could require
changes to beverage vending machine manufacturing practices. DOE will
identify and understand these impacts through interviews with
manufacturers and other stakeholders during the NOPR stage of its
analysis.
DOE announced changes to its process for the manufacturer impact
analysis through a report submitted to Congress on January 31, 2006 (as
required by section 141 of EPACT 2005), entitled ``Energy Conservation
Standards Activities.'' Previously, DOE did not report any manufacturer
impact analysis results during the ANOPR phase; however, under this new
process, DOE has collected, evaluated, and reported preliminary
information and data in the ANOPR (see Section II.K.6 of this ANOPR).
Such preliminary information includes the anticipated conversion
capital expenditures by efficiency level and the corresponding
anticipated impacts on jobs. DOE solicited this information during the
ANOPR engineering analysis manufacturer interviews and reported the
results in the preliminary manufacturer impact analysis (see Chapter 12
of the TSD).
DOE conducts the manufacturer impact analysis in three phases, and
then tailors the analytical framework based on public comments. In
Phase I, DOE creates an industry profile to characterize the industry
and conducts a preliminary manufacturer impact analysis to identify
important issues that require consideration. The ANOPR TSD presents
results of the Phase I analysis. In Phase II, DOE prepares an industry
cash flow model and an interview questionnaire to guide subsequent
discussions. In Phase III, DOE interviews manufacturers and assesses
the impacts of standards both quantitatively and qualitatively. DOE
uses the Government Regulatory Impact Model (GRIM) to assess industry
and sub-group cash flow and net present value, and then assesses
impacts on competition, manufacturing capacity, employment, and
regulatory burden based on manufacturer interviews. The NOPR TSD
presents results of the Phase II and Phase III analyses. For more
detail on the manufacturer impact analysis, see Chapter 12 of the TSD.
1. Sources of Information for the Manufacturer Impact Analysis
Many of the analyses described above provide input data for the
MIA. Such information includes manufacturing costs and prices from the
engineering analysis, retail price forecasts, and shipments forecasts.
DOE will supplement this information with company financial data and
other information gathered during manufacturer interviews. This
interview process plays a key role in the manufacturer impact analysis
because it allows interested parties to privately express their views
on important issues. To preserve confidentiality, DOE aggregates these
perspectives across manufacturers, creating a combined opinion or
estimate for DOE. This process enables DOE to incorporate sensitive
information from manufacturers in the rulemaking process without
specifying which manufacturer provided a certain set of data.
DOE conducts detailed interviews with manufacturers to gain insight
into the range of potential impacts of standards. During the
interviews, DOE typically solicits both quantitative and qualitative
information on the potential impacts of efficiency levels on sales,
direct employment, capital assets, and industrial competitiveness. DOE
prefers interactive interviews, rather than written responses to a
questionnaire, because DOE can clarify responses and identify
additional issues. Before the interviews, DOE circulates a draft
document showing the estimates of the financial parameters based on
publicly-available information. DOE solicits comments and suggestions
on these estimates during the interviews.
DOE asks interview participants to identify any confidential
information that they have provided, either orally or in writing. DOE
considers all information collected, as appropriate, in its decision-
making process. However, DOE does not make confidential information
available in the public record. DOE also asks participants to identify
all information that they wish to have included in the public record,
but do not want to have associated with their interview. DOE
incorporates this information into the public record, but reports it
without attribution.
DOE collates the completed interview questionnaires and prepares a
summary of the major issues. For more detail on the methodology used in
the manufacturer impact analysis, see Chapter 12 of the TSD.
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. The GRIM analysis uses several
factors to determine annual cash flows from a new standard: (1) Annual
expected revenues; (2) manufacturer costs (including COGS,
depreciation, research and development, selling, and general and
administrative expenses); (3) taxes; and (4) conversion capital
expenditures. DOE compares the GRIM results against base-case
projections that involve no new standards. The financial impact of new
standards is the difference between the two sets of discounted annual
cash flows. For more information on the
[[Page 34130]]
industry cash flow analysis, see Chapter 12 of the TSD.
3. Manufacturer Sub-Group Analysis
Industry-wide cost estimates are not adequate to assess
differential impacts among sub-groups of manufacturers. For example,
small and niche manufacturers, or manufacturers whose cost structure
differs significantly from the industry average, could experience a
more negative impact. Ideally, DOE would consider the impact on every
firm individually; however, it typically uses the results of the
industry characterization to group manufacturers exhibiting similar
characteristics.
During the interviews, DOE will discuss the potential sub-groups
and sub-group members it has identified for the analysis. DOE will
encourage manufacturers to recommend sub-groups or characteristics that
are appropriate for the sub-group analysis. For more detail on the
manufacturer sub-group analysis, see Chapter 12 of the TSD.
4. Competitive Impacts Assessment
DOE must also consider whether a new standard is likely to reduce
industry competition, and the Attorney General must determine the
impacts, if any, of any reduced competition. DOE makes a determined
effort to gather and report firm-specific financial information and
impacts. The competitive analysis includes an assessment of the impacts
on smaller manufacturers. DOE bases this assessment on manufacturing
cost data and on information collected from interviews with
manufacturers. The manufacturer interviews focus on gathering
information to help assess asymmetrical cost increases to some
manufacturers, increased proportions of fixed costs that could increase
business risks, and potential barriers to market entry (e.g.,
proprietary technologies).
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.
In the Framework Document, DOE asked what regulations or pending
regulations it should consider in the analysis of cumulative regulatory
burden. DOE stated it will study the potential impacts of these
cumulative burdens in greater detail during the MIA conducted during
the NOPR phase.
During the Framework comment period, several stakeholders commented
on cumulative regulatory burden on beverage vending machine
manufacturers. PepsiCo stated that the beverage vending machine
rulemaking should not establish standards that interfere with other
Federal requirements, such as those related to greenhouse gases and
global warming. (Public Meeting Transcript, No. 8 at p. 147) Dixie-
Narco stated that other regulatory burdens are Restriction of Hazardous
Substance rules, California Energy Commission regulations, Natural
Resources Canada regulations, and new State and municipality
regulations. (Public Meeting Transcript, No. 8 at p. 256) Royal Vendors
stated that coordination with the California Energy Commission's and
Canadian Standards Association's regulations would reduce the burden on
the industry. (Public Meeting Transcript, No. 8 at p. 273) USA
Technologies stated that the current technology puts U.S. manufacturers
at a disadvantage in relation to other nations as we look toward 2012.
In addition, USA Technologies commented that DOE should be aware that
the phaseout of refrigerants currently used in beverage vending
machines will require a complete overhaul of current parameters, which
will make DOE's current work obsolete. (USA Technologies, No. 9 at p.
1) EEI stated that, regarding cumulative regulatory burden, DOE should
consider current, new, and upcoming regulations in Canada, Europe, and
Mexico (along with any U.S. State regulations) that may affect the
refrigerated vending machine industry. (EEI, No. 12 at p. 7) Dixie-
Narco stated that other burdens include requirements set by specific
customers (e.g., Coca-Cola company and PepsiCo) relating to
performance, marketing, and merchandising of the equipment; Dixie-Narco
also suggested that DOE should consider sanitary standards published by
NAMA and the National Sanitation Foundation applicable to vending
equipment. (Dixie-Narco, No. 14 at p. 4)
In response, DOE identified several regulations relevant to
beverage vending machines through its own research and discussions with
manufacturers, including existing or new standards for beverage vending
machines, phaseout of HCFCs and foam insulation blowing agents,
standards for other equipment made by beverage vending machine
manufacturers, State energy conservation standards, and international
energy conservation standards. See Chapter 12 of the TSD for more
detail. DOE understands that complying with such regulations requires
corporations to invest in both human and capital resources. In
addition, the emphasis on cumulative regulatory burden in the comments
submitted during the Framework comment period further highlights the
importance of such regulations to stakeholders. DOE will consider the
substantial impact of other regulatory programs, both domestic and
international, on beverage vending machine manufacturers. As mentioned
above, DOE will study the potential impacts of these cumulative burdens
in greater detail in the MIA conducted during the NOPR phase. DOE
invites additional comment and data from stakeholders and manufacturers
on regulations applicable to beverage vending machine manufacturers
that contribute to their regulatory burden.
6. Preliminary Results for the Manufacturer Impact Analysis
DOE received views from manufacturers through preliminary
interviews about what they perceive to be the possible impact of new
standards on profitability. They stated that a new energy conservation
standard has the potential to affect financial performance in several
ways. The capital investment needed to upgrade or redesign equipment
and equipment platforms before they have reached the end of their
useful life can require conversion costs that otherwise would not be
expended, resulting in stranded investments. In addition, more
stringent standards can result in higher per-unit costs that may deter
some customers from buying higher-margin units with more features,
thereby decreasing manufacturer profitability.
DOE estimates that a beverage vending machine production line would
have a life cycle of approximately 5 to 10 years in the absence of
standards. During that period, manufacturers would not make major
equipment changes that alter the underlying platforms. Thus, a standard
that took effect and resulted in a major platform redesign before the
end of the platform's life would strand a portion of the earlier
capital investments.
DOE asked manufacturers what level of conversion costs they
anticipated if efficiency standards were to take effect. In general,
manufacturers expected only conversion costs associated with
redesigning insulation foaming fixtures. Manufacturers stated that no
capital investments would be needed to go from ENERGY STAR Tier 1 to
Tier 2. One manufacturer estimated the retooling capital investments
needed to comply with efficiency levels beyond Tier 2 to
[[Page 34131]]
be several million dollars. One manufacturer indicated that it would
experience stranded assets if standards were too stringent and
production facilities needed to be moved out of the country.
The impact of new energy conservation standards on employment is
another important consideration in the rulemaking process. To assess
how domestic employment patterns might be affected by new energy
conservation standards for beverage vending machines, DOE posed several
questions to manufacturers on that topic.
In response, some beverage vending machine manufacturers stated
that they have considered moving their production out of the United
States, primarily because of concerns about profitability and the
opportunity for lower labor costs if future standards are too
stringent. If manufacturers need to make large capital investments to
produce redesigned platforms, they have strong financial incentives to
invest in a location with lower labor costs. Mexico is the most common
location for U.S. manufacturers to establish new production capacity
since it offers low labor rates (relative to the United States) and
proximity to the U.S. market.
DOE asked manufacturers to what degree they expect industry
consolidation to occur in the absence of standards. Manufacturers
stated that they expect no industry consolidation in the future. Three
companies now account for a large majority of beverage vending machine
sales. Historically, the beverage vending machine industry has not seen
extensive consolidation, although there has been a lot of consolidation
in recent years of the industry's customers, such as bottling
companies.
Manufacturers also discussed how standards would affect their
ability to compete. Some stated that new standards would not
disproportionately advance or harm their competitive positions. Others
stated that if a company had more available access to capital, that
company might meet the standard at a lower cost or in a shorter
timeframe, and such company would thus have a better competitive
position and possibly gain market share. For more preliminary results
of the manufacturer impact analysis, such as impacts on financial
performance, equipment utility and performance, and cumulative
regulatory burden, see Chapter 12 of the TSD.
L. Utility Impact Analysis
For the NOPR, the utility impact analysis will estimate the effects
on the utility industry of reduced energy consumption due to improved
equipment efficiency resulting from any energy conservation standard
for beverage vending machines. The analysis compares modeling results
for the base case with results for each candidate standard's case. It
consists of forecasted differences between the base case and standards
case for electricity generation, installed capacity, sales, and prices.
To estimate the effects of potential beverage vending machine
standard levels on the electric utility industry, DOE intends to use a
variant of the EIA's NEMS.\48\ NEMS, which is available in the public
domain, is a large, multi-sectoral, partial equilibrium model of the
U.S. energy sector. EIA uses NEMS to produce the AEO2007, which is a
widely recognized baseline energy forecast for the U.S. DOE will use a
variant of NEMS known as NEMS-Building Technologies (BT) to provide key
inputs to the utility impact analysis. Again, NEMS-BT produces a widely
recognized reference case forecast for the United States and is
available in the public domain.
---------------------------------------------------------------------------
\48\ For more information on NEMS, please see the U.S.
Department of Energy, Energy Information Administration (EIA)
documentation. A useful summary is National Energy Modeling System:
An Overview 2003, Report number: DOE/EIA-0581 (March 2003)
(available at: http://tonto.eia.gov/FTPROOT/forecasting/05812003.pdf). DOE/EIA approves use of the name ``NEMS'' to describe
only an official version of the model without any modification to
code or data. Because the present analysis entails some minor code
modifications and the model is run under various policy scenarios
that are variations on DOE/EIA assumptions, DOE refers to it by the
name ``NEMS-BT'' in this analysis.
---------------------------------------------------------------------------
The use of NEMS-BT for the utility impact analysis offers several
advantages. As the official DOE energy forecasting model, it relies on
a set of assumptions that are transparent and have received wide
exposure and commentary. NEMS-BT allows an estimate of the interactions
between the various energy supply and demand sectors and the economy as
a whole. The utility impact analysis will determine the changes for
electric utilities in installed capacity and generation by fuel type
produced by each CSL, as well as changes in electricity sales to the
commercial sector. At the Framework public meeting, DOE asked whether
there are tools besides NEMS-BT that the Department should consider
using for conducting its utility impact analysis. EEI suggested that
DOE consider the industrial building demand module in NEMS for this
analysis, because beverage vending machines are installed in
manufacturing and military/Federal facilities that typically pay
industrial rates on their utility bills. (EEI, No. 12 at p. 7) DOE will
investigate using this module in addition to the commercial building
demand module during the NOPR phase of this rulemaking.
DOE plans to conduct the utility analysis as a policy deviation
from the AEO2007, applying the same basic set of premises. For example,
the operating characteristics (e.g., energy conversion efficiency,
emissions rates) of future electricity generating plants are the same
in the AEO2007 reference case, as are the prospects for natural gas
supply.
DOE also will explore deviations from some of the reference case
premises to represent alternative future outcomes. Two alternative
scenarios use the 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 vary in these cases,
AEO2007 uses the same reference case energy prices for all three
economic growth cases so that the impact of differences in the three
scenarios are comparable. Different economic growth scenarios will
affect the rate of growth of electricity demand in different ways.
The electric utility industry analysis will consist of NEMS-BT
forecasts for generation, installed capacity, sales, and prices. The
model uses predicted growth in demand for each end use to create a
projection of the total electric system load growth for each of fifteen
electricity market module supply regions, and then to predict the
necessary additions to capacity. For electrical end uses, the NEMS-BT
accounts for the implementation of energy conservation standards by
decrementing the appropriate reference case load shape. DOE determines
the size of the decrement using data on the per-unit energy savings
developed in the LCC and PBP analyses (Chapter 8 of the TSD) and the
forecast of shipments developed for the NIA (see Chapter 9 of the TSD).
The predicted reduction in capacity additions is sensitive to the
standard's peak load impacts. DOE will investigate the need to adjust
the hourly load
[[Page 34132]]
profiles that include this end use in NEMS-BT. Since the AEO2007
version of NEMS-BT forecasts only to 2030, DOE must extrapolate the
results to 2042. It is not feasible to extend the forecast period of
NEMS-BT for the purpose of this analysis, nor does EIA have an approved
method for extrapolation of many outputs beyond 2030. Therefore, DOE
will use the approach developed by EIA to forecast fuel prices for the
FEMP. FEMP uses these prices to estimate LCCs of Federal equipment
procurements. For petroleum products, EIA uses the average growth rate
for the world oil price from 2010 to 2025, in combination with refinery
and distribution markups from 2025, to determine regional price
forecasts. Similarly, EIA derives natural gas prices from an average
growth rate figure in combination with regional price margins from
2025. Results of the analysis will include changes in commercial
electricity sales, and installed capacity and generation by fuel type,
for each CSL in five-year, forecasted increments extrapolated to 2042.
For more information on the utility impact analysis, refer to Chapter
13 of the TSD.
M. Employment Impact Analysis
At the NOPR stage, DOE estimates the impacts of standards on
employment for equipment manufacturers, relevant service industries,
energy suppliers, and the economy in general. The following discussion
explains the methodology DOE plans to use in conducting the employment
impact analysis for this rulemaking. Both indirect and direct
employment impacts are analyzed. Direct employment impacts would result
if standards led to a change in the number of employees at
manufacturing plants and related supply and service firms.
Indirect employment impacts are impacts on the national economy
other than the manufacturing sector being regulated. Indirect impacts
may result both from expenditures shifting among goods (substitution
effect) and changes in income that lead to a change in overall
expenditure levels (income effect). DOE defines indirect employment
impacts from standards as net jobs eliminated or created in the general
economy as a result of increased spending driven by the increased
equipment prices and reduced spending on energy.
Using an input/output model of the U.S. economy, this analysis
seeks to estimate the effects on different sectors and the net impact
on jobs. DOE will estimate national employment impacts for major
sectors of the U.S. economy in the NOPR, using public and commercially-
available data sources and software. DOE will make all methods and
documentation pertaining to the employment impact analysis available
for review in the TSD published in conjunction with the NOPR.
DOE developed Impact of Sector Energy Technologies (ImSET), a
spreadsheet model of the U.S. economy that focuses on 188 sectors most
relevant to industrial, commercial, and residential building energy
use.\49\ ImSET is a special-purpose version of the U.S. Benchmark
National Input-Output (I-O) model, which was designed to estimate the
national employment and income effects of energy-saving technologies
that are considered by the DOE Office of Energy Efficiency and
Renewable Energy. The current version of the model allows for more
complete and automated analysis of the essential features of energy-
efficiency investments in buildings, industry, transportation, and the
electric power sectors compared to previous versions used in earlier
rulemakings.
---------------------------------------------------------------------------
\49\ Roop, J. M., M. J. Scott, and R. W. Schultz, ``ImSET:
Impact of Sector Energy Technologies,'' PNNL-15273 (Pacific
Northwest National Laboratory, Richland, WA) (2005).
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The ImSET software includes a personal computer-based I-O model
with structural coefficients to characterize economic flows among the
188 sectors. ImSET's national economic I-O structure is based on the
1997 Benchmark U.S. table (Lawson, et al. 2002),\50\ specially
aggregated to 188 sectors. The time scale of the model is 50 years,
with annual increments.
---------------------------------------------------------------------------
\50\ Lawson, Ann M., Kurt S. Bersani, Mahnaz Fahim-Nader, and
Jiemin Guo, ``Benchmark Input-Output Accounts of the U.S. Economy,
1997,'' Survey of Current Business (Dec. 2002), 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 it
can accommodate. For example, certain economic effects of energy
efficiency improvements require an assessment of inter-industry
purchases, which is handled in the model. Some 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, see
Chapter 14 of the TSD.
N. Environmental Assessment
For the NOPR, DOE will assess the impacts of energy conservation
standards for beverage vending machine standard levels on certain
environmental indicators, using NEMS-BT to provide key inputs to the
analysis. The environmental assessment produces results in a manner
similar to those provided in AEO2007. DOE anticipates that the primary
environmental effects will be reduced power plant emissions resulting
from reduced electricity consumption.
The intent of the environmental assessment is to provide estimates
of reduced power plant emissions and to fulfill requirements to
properly quantify and consider the environmental effects of all new
Federal rules. The environmental assessment that will be produced by
NEMS-BT considers potential environmental impacts from three pollutants
(sulfur dioxide (SO2), nitrogen oxides (NOX), and
mercury (Hg)) and from CO2 emissions. For each of the trial
standard levels, DOE will calculate total undiscounted and discounted
power plant emissions using NEMS-BT and will use further external
analysis as needed.
DOE will conduct each portion of the environmental assessment
performed for this rulemaking as an incremental policy impact (i.e., an
energy conservation standard for beverage vending machines) of the
AEO2007 forecast, applying the same basic set of assumptions used in
AEO2007. For example, the emissions characteristics of an electricity
generating plant will be exactly those used in AEO2007. Also, forecasts
conducted with NEMS-BT consider the supply-side and 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 the utility industry
generates.
The NEMS-BT model tracks carbon emissions with a specialized carbon
emissions estimation subroutine, producing reasonably accurate results
due to the broad coverage of all sectors and inclusion of interactive
effects. Past experience with carbon results from NEMS-BT suggests that
emissions estimates are somewhat lower than emissions based on simple
average factors. One reason for this divergence is that NEMS-BT tends
to predict that conservation measures will slow generating capacity
growth in future
[[Page 34133]]
years, and new generating capacity is expected to be more efficient
than existing capacity. On the whole, NEMS-BT provides carbon emissions
results of reasonable accuracy, at a level consistent with other
Federal published results. In addition to providing estimates of
quantitative impacts of beverage vending machine standards on
CO2 emissions, DOE will consider the use of monetary values
to represent the potential value of such emissions reductions. DOE
invites comment on how to estimate such monetary value of such effects
or on any widely accepted values which might be used in DOE's analyses.
NEMS-BT also reports on SO2 and NOX, which
DOE has reported in past analyses. The Clean Air Act Amendments of 1990
\51\ set an SO2 emissions cap on all large power plants.
However, attainment of this target is flexible among generators through
the use of emissions allowances and tradable permits. Although NEMS-BT
includes a module for SO2 allowance trading and delivers a
forecast of SO2 allowance prices, accurate simulation of
SO2 trading implies that the effect of energy conservation
standards on physical emissions will be zero because emissions will
always be at or near the ceiling. However, there may be an
SO2 economic benefit from energy conservation in the form of
a lower SO2 allowance price. Since the impact of any one
standard on the allowance price is likely to be small and highly
uncertain, DOE does not plan to monetize any potential SO2
benefit.
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\51\ The Clean Air Act Amendments of 1990 were signed into law
as Pub. L. 101-549 on November 15, 1990. The amendment can be viewed
at http://www.epa.gov/air/caa/.
---------------------------------------------------------------------------
NEMS-BT also has an algorithm for estimating NOX
emissions from power generation. The impact of these emissions,
however, will be affected by the Clean Air Interstate Rule (CAIR)
issued by the U.S. Environmental Protection Agency on March 10,
2005.\52\ 70 FR 25162 (May 12, 2005). CAIR will permanently cap
emissions of NOX in 28 eastern States and the District of
Columbia. As with SO2 emissions, a cap on NOX
emissions means that equipment energy conservation standards are not
likely to have a physical effect on NOX emissions in States
covered by the CAIR caps. Therefore, while the emissions cap may mean
that physical emissions reductions in those States will not result from
standards, standards could produce an environmental-related economic
benefit in the form of lower prices for emissions allowance credits.
However, as with SO2 allowance prices, DOE does not plan to
monetize this benefit for those States because the impact on the
NOX allowance price from any single energy conservation
standard is likely to be small and highly uncertain. DOE seeks comment
on how it might value NOX emissions for the 22 States not
covered under CAIR.
---------------------------------------------------------------------------
\52\ See http://www.epa.gov/cleanairinterstaterule/.
---------------------------------------------------------------------------
With regard to mercury emissions, NEMS-BT has an algorithm for
estimating these emissions from power generation, and, as it has done
in the past, DOE is able to report an estimate of the physical quantity
of mercury emissions reductions associated with an energy conservation
standard. DOE assumed that these emissions would be subject to EPA's
Clean Air Mercury Rule \53\ (CAMR), which would permanently cap
emissions of mercury for new and existing coal-fired plants in all
States by 2010. Similar to SO2 and NOX, DOE
assumed that under such system, energy conservation standards would
result in no physical effect on these emissions, but may result in a
small and highly uncertain environmental-related economic benefit in
the form of a lower price for emissions allowance credits.
---------------------------------------------------------------------------
\53\ 70 FR 28606 (May 18, 2005).
---------------------------------------------------------------------------
On February 8, 2008, the U.S. Court of Appeals for the District of
Columbia Circuit (D.C. Circuit) issued its decision in State of New
Jersey, et al. v. Environmental Protection Agency,\54\ in which the
Court, among other actions, vacated the CAMR referenced above.
Accordingly, DOE is considering whether changes are needed to its plan
for addressing the issue of mercury emissions. DOE invites public
comment on addressing mercury emissions in this rulemaking.
---------------------------------------------------------------------------
\54\ No. 05-1097, 2008 WL 341338, at *1 (D.C. Cir. Feb. 8,
2008).
---------------------------------------------------------------------------
With regard to particulates, these emissions are a special case
because they arise not only from direct emissions, but also from
complex atmospheric chemical reactions that result from NOX
and SO2 emissions. DOE does not intend to analyze or report
on the particulate emissions from power stations because of the highly
complex and uncertain relationship between particulate emissions and
particulate concentrations that impact air quality.
In sum, the methodology for the environmental assessment is similar
to the methodology (i.e., based on NEMS) used to estimate the
environmental impacts published in the AEO2007. These results include
power sector emissions for SO2, NOX, mercury and
CO2 in five-year forecasted increments extrapolated to 2042.
The outcome of the NOPR analysis for each trial standard level is
reported as a deviation from the AEO2007 reference (base) case. For
more detail on the environmental assessment, see the environmental
assessment report of the TSD.
O. Regulatory Impact Analysis
DOE will prepare a draft regulatory impact analysis in compliance
with Executive Order 12866, ``Regulatory Planning and Review,'' signed
on September 30, 1993, which will be subject to review by the Office of
Management and Budget's Office of Information and Regulatory Affairs
(OIRA). 58 FR 51735 (Oct. 4, 1993).
As part of the regulatory impact analysis (and as discussed in
Section II.K of this ANOPR), DOE will identify and seek to mitigate the
overlapping effects on manufacturers of new or revised DOE standards
and other regulatory actions affecting the same equipment. Through
manufacturer interviews and literature searches, DOE will compile
information on burdens from existing and impending regulations
affecting the beverage vending machines covered under this rulemaking.
DOE also seeks input from stakeholders about regulations whose impacts
it should consider.
The regulatory impact analysis also will address the potential for
non-regulatory approaches to supplant or augment energy conservation
standards to improve the efficiency of beverage vending machines. The
following list includes non-regulatory means of achieving energy
savings that DOE may consider:
No new regulatory action
Consumer tax credits
Manufacturer tax credits
Performance standards
Rebates
Voluntary energy efficiency targets
Early replacement
Bulk government purchases
In support of DOE's NOPR, the TSD will include a complete
quantitative analysis of each alternative to the proposed conservation
standard. The methodology for this analysis is discussed briefly below.
DOE will use the NES spreadsheet model (discussed in Sections I.B.5
and II.I of this ANOPR) to calculate the NES and the NPV corresponding
to each alternative to the proposed standards. See Chapter 10 of the
TSD for details on the NES spreadsheet model. To compare each
alternative quantitatively to the proposed conservation standards, the
model will need to quantify the effect of each alternative on the
purchase and
[[Page 34134]]
use of energy-efficient commercial equipment. Once each alternative is
properly quantified, DOE will make the appropriate revisions to the
inputs in the NES spreadsheet model. The following are key inputs that
DOE may revise in the NES spreadsheet model:
Energy prices and escalation factors;
Implicit market discount rates for trading off purchase
price against operating expense when choosing equipment efficiency;
Customer purchase price, operating cost, and income
elasticities;
Customer price versus efficiency relationships; and
Equipment stock data (purchase of new equipment or
turnover rates for inventories).
The following are the key measures of the impact of each
alternative:
Commercial energy use (EJ = 1018 joule) is the
cumulative energy use of the equipment from the effective date of the
new standard (i.e., 2012) to 2042. DOE will report electricity
consumption as primary energy.
NES is the cumulative national energy use from the base-
case projection less the alternative standards-case projection.
NPV is the value of future operating cost savings from
beverage vending machines bought between the effective date of the new
standard and 2042. DOE calculates the NPV as the difference between the
present value of equipment and operating expenditures (including
energy) in the base case, and the present value of expenditures in each
alternative policy case. DOE discounts future operating and equipment
expenditures to 2007 using a seven-percent real discount rate. DOE
calculates operating expenses (including energy) for the life of the
equipment.
For more information on the regulatory impact analysis, see the
regulatory impact analysis report in the TSD.
III. Candidate Energy Conservation Standards Levels
In terms of process, DOE specifies CSLs in the ANOPR, but it does
not propose a particular standard at this stage of the rulemaking. DOE
selected up to nine energy consumption levels for each class of
beverage vending machine for use in the LCC and NIA. Based on the
results of the ANOPR analysis, DOE selects a subset from the CSLs
analyzed in the ANOPR for more detailed analysis during the NOPR stage
of the rulemaking. The range of CSLs selected includes the most 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 no more than three years. DOE may also select CSLs that incorporate
noteworthy technologies or fill in large gaps between efficiency levels
of other CSLs.
As noted above, DOE has included the most energy-efficient level
analyzed as a CSL, and DOE has identified the level with the maximum
LCC savings for each equipment class. The calculated national average
PBPs from the LCC analysis suggested that many of the energy efficiency
levels analyzed provided a national average payback of less than three
years when compared with the baseline equipment. DOE chose to designate
the maximum energy efficiency level that provided a payback of less
than three years as a CSL. These three selection criteria provided two
or three CSL selections per equipment class. Therefore, DOE selected
two other lower efficiency levels for each equipment class to provide
greater variation in CSLs for future analysis. The selection of these
additional levels reflects DOE review of the relative cost
effectiveness of the levels when compared with the baseline equipment
and other efficiency levels.
DOE selected four CSLs for each equipment class. Table III.1 shows
the selected CSLs based on the energy consumption of the specific
equipment analyzed in the engineering analysis. DOE seeks feedback on
its selection of these specific candidate standard levels for the post-
ANOPR analysis phase. Section IV.E of this ANOPR discusses this
subject, identified as Issue 7 under ``Issues on Which DOE Seeks
Comment.''
DOE will refine its final selection of CSLs for further analysis
after receiving input from stakeholders on the ANOPR and after any
revision of the ANOPR analyses. The CSLs will then be recast as Trial
Standard Levels (TSLs). DOE will analyze specific TSLs during the post-
ANOPR analysis and report the results in the NOPR.
Table III.1.--Candidate Standard Levels and Factors Considered in Their Selection for Future Analysis
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Candidate standard level selection considerations
------------------------------------------------------------------------------------------------------------------------
Equipment class Maximum efficiency Maximum efficiency Efficiency level Highest efficiency Additional candidate standard level
level level with with minimum LCC level with PBP <3 selected for future analysis
positive LCC years
savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class A........................ Level 8............ Level 7........... Level 5........... Level 6........... Level 4........... Level 3.
Class B........................ Level 8............ Level 7........... Level 4........... Level 4........... Level 5........... 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 normalized by refrigerated volume (``V,'' as
measured by ANSI/AHAM HRF-1-2004). Table III.2 presents the CSLs for
the analyzed equipment classes in terms of these normalized metrics.
[[Page 34135]]
Table III.2.--Candidate Standard Levels for Analyzed Equipment Classes Expressed in Terms of the Normalized Test Metrics
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Candidate standard level in order of efficiency expressed in terms of the test metric
Equipment class Test metric ----------------------------------------------------------------------------------------------------------------------------------------
Baseline CSL1 CSL2 CSL3 CSL4
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Class A.......................... Daily Energy 1.08 (Level 1)............ 0.90 (Level 4)............ 0.75 (Level 6)........... 0.70 (Level 7)........... 0.64 (Level 8).
Consumption/
Refrigerated Volume
kWh/day/ft 3.
Class B.......................... Daily Energy 2.93 (Level 1)............ 2.61 (Level 3)............ 2.47 (Level 4)........... 2.46 (Level 5)........... 2.39 (Level 6).
Consumption/
Refrigerated Volume
kWh/day/ft 3.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
When an energy conservation standard is defined for an equipment
class, DOE must consider how to express the level in a manner suitable
for all equipment within that class. This is of particular concern when
the rating is in terms of energy consumption and energy consumption
varies within a class due to variations in equipment size or capacity.
DOE plans to define energy conservation standards for refrigerated
beverage vending machines in terms of:
Maximum energy consumption M (kWh/day) = B x V + K
Where:
B is expressed in terms of kWh/day/ft\3\ of measured volume,
V is the measured volume (ft\3\) calculated for the equipment class,
and
K is an offset factor expressed in kWh/day.
DOE seeks feedback on this approach for characterizing energy
conservation standards for refrigerated beverage vending machines. If
this approach is acceptable, DOE seeks comments on how it could develop
the appropriate offset factor, K, for the two classes of equipment.
Section IV.E of this ANOPR discusses this subject, identified as Issue
8 under ``Issues on Which DOE Seeks Comment.''
IV. Public Participation
A. Attendance at Public Meeting
The time, date, and location of the public meeting are set forth in
the DATES and ADDRESSES sections at the beginning of this document.
Anyone who wishes to attend the public meeting must notify Ms. Brenda
Edwards at (202) 586-2945. As explained in the ADDRESSES section,
foreign nationals visiting DOE Headquarters are subject to advance
security screening procedures.
B. Procedure for Submitting Requests to Speak
Any person who has an interest in today's notice, or who represents
a group or class of persons with an interest in these issues, may
request an opportunity to make an oral presentation at the public
meeting. Please hand deliver requests to speak to the address shown
under the heading ``Hand Delivery/Courier'' in the ADDRESSES section of
this ANOPR between 9 a.m. and 4 p.m., Monday through Friday, except
Federal holidays. Requests may also be sent by mail to the address
shown under the heading ``Postal Mail'' in the ADDRESSES section of
this ANOPR, or by e-mail to [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 scheduled to make an oral presentation at the
public meeting to submit a copy of their statements at least two weeks
before the public meeting, either in person, by postal mail, or by e-
mail. Please include an electronic copy of your statement on a computer
diskette or compact disk when delivery is by postal mail or in person.
Electronic copies must be in WordPerfect, Microsoft Word, Portable
Document Format (PDF), or text (American Standard Code for Information
Interchange (ASCII)) file format. At its discretion, DOE may permit any
person who cannot supply an advance copy of his or her statement to
make an oral presentation, if that person has made alternative
arrangements with the Building Technologies Program. In such
situations, the request to give an oral presentation should ask for
alternative arrangements.
C. Conduct of Public Meeting
DOE will designate a DOE official to preside at the public meeting
and may also use a professional facilitator to aid discussion. The
meeting will not be a judicial or evidentiary-type public hearing, but
DOE will conduct it in accordance with 5 U.S.C. 553 and section 336 of
EPCA. (42 U.S.C. 6306) A court reporter will be present to record and
transcribe the proceedings. DOE reserves the right to schedule the
order of presentations and to establish the procedures governing the
conduct of the public meeting. After the public meeting, interested
parties may submit further comments about the proceedings, and any
other aspect of the rulemaking, until the end of the comment period.
The public meeting will be conducted in an informal conference
style. DOE will present summaries of comments received before the
public meeting, allow time for presentations by participants, and
encourage all interested parties to share their views on issues
affecting this rulemaking. Each participant will be allowed to make a
prepared general statement (within time limits determined by DOE)
before discussion of a particular topic. DOE will permit other
participants to comment briefly on any general statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly and comment on
statements made by others. Participants should be prepared to answer
questions by DOE and by other participants concerning these issues. DOE
representatives may also ask questions of participants concerning other
matters relevant to the public meeting. The official conducting the
public meeting will accept additional comments or questions from those
attending, as time permits. The presiding official will announce any
further procedural rules or modification of the above procedures that
may be needed for proper conduct of the public meeting.
DOE will make the entire record of this proposed rulemaking,
including the transcript from the public meeting, available for
inspection at the U.S. Department of Energy, Resource Room of the
Building Technologies Program, 950 L'Enfant Plaza, Suite 600, SW,
Washington, DC, 20024, (202) 586-2945, between 9:00 a.m. and 4:00 p.m.,
Monday through Friday, except Federal holidays. Any person may purchase
a copy of the transcript from the transcribing reporter.
[[Page 34136]]
D. Submission of Comments
DOE will accept comments, data, and information regarding all
aspects of this ANOPR before or after the public meeting, but no later
than July 16, 2008. Please submit comments, data, and information by e-
mail to: [email protected]. Please submit
electronic comments in WordPerfect, Microsoft Word, PDF, or ASCII file
format and avoid the use of special characters or any form of
encryption. Comments in electronic format should be identified by the
Docket Number EERE-2006-STD-0125 and/or RIN 1904-AB58, and whenever
possible carry the electronic signature of the author. Absent an
electronic signature, comments submitted electronically must be
followed and authenticated by a signed original paper document. No
telefacsimiles (faxes) will be accepted.
Under 10 CFR Part 1004.11, any person submitting information that
he or she believes to be confidential and exempt by law from public
disclosure should submit two copies. One copy of the document shall
include all the information believed to be confidential, and the other
copy of the document shall have the information believed to be
confidential deleted. DOE will make its own determination about the
confidential status of the information and treat it according to its
determination.
Factors that DOE considers when evaluating requests to treat
submitted information as confidential include: (1) A description of the
items; (2) whether and why such items are customarily treated as
confidential within the industry; (3) whether the information is
generally known by, or available from, other sources; (4) whether the
information has previously been made available to others without
obligation concerning its confidentiality; (5) an explanation of the
competitive injury to the submitting person that would result from
public disclosure; (6) when such information might lose its
confidential character due to the passage of time; and (7) why
disclosure of the information would be contrary to the public interest.
E. Issues on Which DOE Seeks Comment
DOE is interested in receiving comments on all aspects of this
ANOPR. DOE particularly invites comments or data to improve DOE's
analysis, including data or information that will respond to the
following questions or concerns addressed in this ANOPR.
1. Equipment Classes
In accordance with EPCA section 325(p)(1)(A), DOE identified the
equipment classes covered under this rulemaking. (42 U.S.C.
6295(p)(1)(A)) In making that determination, DOE decided to focus the
present ANOPR analyses on two equipment classes of beverage vending
machines based upon their two predominant applications, namely, Class A
machines that are installed indoors and Class B machines that are
installed both indoors and outdoors. Pursuant to EPCA section
325(p)(1)(B), DOE requests comments on the validity of this approach
and invites interested persons to submit written presentations of data,
views, and arguments. (42 U.S.C. 6295(p)(1)(B)) (See Section II.A.2 of
this ANOPR for further details.)
2. Compressor and Lighting Operating Hours
DOE's energy use characterization presumes that there are no
controls that limit display lighting or compressor operation in a
beverage vending machine to certain hours of the day or would be
affected by occupancy patterns in the building. It is known, however,
that such controllers exist and can either be added on or enabled in
certain beverage vending machines. DOE requests comments on the need to
incorporate such controls in its energy analysis and how it might do so
in the NOPR analysis. (See Section II.E of this ANOPR for further
details.)
3. Refurbishment Cycles
DOE requests comments on refurbishment cycles for beverage vending
machines that may be prevalent in the field and may differ from
standardized practices or the two cycles during the equipment lifetime
assumed by DOE. These refurbishment cycles could affect actual energy
consumption savings as a result of increased energy efficiency as
compared to those savings estimated in the energy use characterization
analysis and as reported in the TSD. DOE requests comments on: (1) The
frequency of refurbishment cycles; (2) how refurbishing the vending
machines might affect energy use in the field; and (3) whether and how
DOE could account for these changes in assessing the overall impacts of
the candidate standards levels on beverage vending machines. (See
Section IV.E.3 of this ANOPR for further details.)
4. Life-Cycle Cost Baseline Level
DOE did not receive data from the industry or in the manufacturer
interviews concerning the average energy efficiency of beverage vending
machines currently being shipped. An analysis of the literature
suggests that little data on the energy characteristics of beverage
vending machines in the general market are available. Therefore, DOE
used the Level 1 established in the engineering analysis as the
baseline efficiency for the LCC analysis.
Selection of the baseline efficiency level impacts the LCC and PBP
analyses. It affects PBP, since payback is calculated from the baseline
efficiency level, and affects the maximum efficiency level showing LCC
savings, and the magnitude of LCC savings. It can also affect the
number of users who experience LCC savings at any level. The selection
of the baseline level does not generally affect the efficiency level
with maximum LCC savings. DOE requests feedback on whether the Level 1
baseline DOE selected is valid for the LCC analysis, and if not, what
changes DOE should make to provide a more realistic baseline. Since
higher efficiency equipment is sold in the market, DOE also seeks input
on whether it should use a distribution of efficiencies for the LCC
analysis baseline, and if so, what data could be used to populate this
distribution. If more detailed data to develop a distribution of
efficiencies in the baseline cannot be provided, DOE seeks input on how
a sensitivity analysis to alternative baselines could best be used to
inform the LCC and NES analyses supporting the rulemaking. (See Section
II.G.5 of this ANOPR for further details.)
5. Base-Case and Standards-Case Forecasts
Because key inputs to the calculation of the NES and NPV depend on
the estimated efficiencies under the base case (without standards) and
the standards case (with standards), forecasted efficiencies are of
great importance to the analysis. Information available to DOE suggests
that forecasted market shares would remain frozen throughout the
analysis period (i.e., 2012-2042). For its determination of standards-
case forecasted efficiencies, DOE used a roll-up scenario to establish
market shares by efficiency level for the year that standards become
effective (i.e., 2012). Available information suggests that equipment
shipments with efficiencies in the base case that did not meet the
standard level under consideration would roll up to meet the new
standard level. Available information also suggests that no equipment
efficiencies in the base case that were above the standard level under
consideration would be affected. DOE requests feedback on its
development of standards-case efficiency forecasts from the base-case
efficiency forecast, and on how it
[[Page 34137]]
determined that standards would affect efficiency distributions in the
year that standards are to take effect. (See Section II.I.2 of this
ANOPR for further details.)
6. Differential Impact of New Standards on Future Shipments by
Equipment Classes
The shipment model used in the NES and NIA presumes that the
relative market share of the different classes of beverage vending
machines remains constant over the time period analyzed. While DOE is
aware that market preferences for certain types of equipment may change
in the future, DOE has no data with which to predict or characterize
those changes. DOE is particularly concerned whether higher standards
for one class of beverage vending machines are likely to generate
significant market shifts to other equipment that may have higher
energy consumption (or lower efficiency). By developing standards for
both classes of beverage vending machines within the scope of this
rulemaking using the same economic criteria, DOE hopes to mitigate this
concern. However, DOE requests stakeholder input on the potential for
standards-driven market shifts between equipment classes that could
reduce national energy savings, and on how the standards-setting
process can reduce or eliminate these shifts. (See Section II.I.2 of
this ANOPR for further details.)
7. Selection of Candidate Standard Levels for Notice of Proposed
Rulemaking Analysis
DOE is required to examine specific criteria for the selection of
CSLs. Some of these criteria are economically based and the resulting
CSLs selected may be affected by updates to the ANOPR analysis after
input from stakeholders. DOE has discretion over the selection of
additional standard levels it chooses to analyze. DOE seeks input on
the candidate standard levels selected for future analysis shown in
Table III.1 (See Section III of this ANOPR for further details.)
8. Approach to Characterizing Energy Conservation Standards
When an efficiency or energy conservation standard is defined for a
class of equipment, DOE must consider how to express the level in a
manner suitable for all equipment within that class. DOE seeks input on
its approach for characterizing energy conservation standards for
beverage vending machines as discussed in Section III. If the approach
is acceptable, DOE seeks comments on how it could develop appropriate
offset factors (K) for the two classes of equipment. (See Section III
of this ANOPR for further details.)
V. Regulatory Review and Procedural Requirements
DOE submitted this ANOPR for review to the Office of Management and
Budget (OMB), under Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (October 4, 1993). If DOE later proposes energy
conservation standards for certain beverage vending machines, and if
the proposed rule constitutes a significant regulatory action, DOE
would prepare and submit to OMB for review the assessment of costs and
benefits required under section 6(a)(3) of the Executive Order. The
Executive Order requires that each agency identify in writing the
market failure or other specific problem that it intends to address
that warrant new agency action, as well as assess the significance of
that problem, to enable assessment of whether any new regulation is
warranted. (Executive Order 12866, Sec. 1(b)(1)) DOE presumes that a
perfectly functioning market would result in efficiency levels that
maximize benefits to all affected persons. Consequently, without a
market failure or other specific problem, a regulation would not be
expected to result in net benefits to customers and the Nation.
However, DOE also notes that whether it establishes standards for this
equipment is determined by the statutory criteria expressed in EPCA.
Even in the absence of a market failure or other specific problem, DOE
nevertheless may be required to establish standards under existing law.
DOE's preliminary analysis suggests that beverage vending machines
are predominantly owned either by site owners (i.e., the owner of the
establishment where the vending machine is installed), or by bottlers
or vending machine operators (i.e., the operator that installs, stocks,
and services the equipment and retains a percentage of the coin-box-
revenue). DOE believes that these owners and operators lack corporate
direction in terms of energy policy. The transaction costs for these
owners or operators to research, purchase, and install optimum-
efficiency equipment are too high to make such action commonplace. DOE
believes that there is a lack of information and/or information
processing capability about energy efficiency opportunities in the
beverage vending machine market available to site owners. Unlike
residential heating and air conditioning equipment, beverage vending
machines are not included in energy labeling programs such as the
Federal Trade Commission's energy labeling program. Furthermore, the
energy use of beverage vending machines is dependent on how often the
machines are used and, as such, the relevant information is not readily
available for the owners or operators to make a decision on whether
improving the energy efficiency of beverage vending machines is cost-
effective. To better understand this market, DOE seeks data on the
efficiency levels of existing beverage vending machines in use by owner
(i.e., site owner or machine operator), electricity price, equipment
class (Class A or Class B machines) and installation type (i.e.,
indoors or outdoors).
DOE recognizes that beverage vending machines are not purchased in
the same manner as regulated appliances that are sold in retail stores
(e.g., room air conditioners). When purchased by the end user, beverage
vending machines are more likely purchased directly from individual
manufacturers through equipment catalogs or specification sheets. NAMA,
unlike other industry trade associations, does not publish a directory
of covered equipment. DOE seeks comment on the availability of energy
efficiency information and the extent to which the information leads to
informed choices, specifically given how such equipment is purchased.
To the extent there is potentially a substantial information
problem, one could expect the energy efficiency for beverage vending
machines to be more or less randomly distributed across key variables
such as energy prices and usage levels. However, since data are not
available on how such equipment is purchased, DOE seeks detailed data
on the distribution of energy efficiency levels for both the new site
owner and equipment operator markets. DOE plans to use these data to
test the extent to which purchasers of this equipment behave as if they
are unaware of the costs associated with their energy consumption. DOE
requests data on, and suggestions for the existence and extent of
potential market failures to complete an assessment of the significance
of these failures and, thus, the net benefits of regulation.
A related issue is the problem of asymmetric information (one party
to a transaction has more and better information than the other) and/or
high transactions costs (costs of gathering information and effecting
exchanges of goods and services). In the case of beverage vending
machines, in most cases, the party responsible for the equipment
purchase may not be the one who pays the cost to operate it. For
example, in the case where the bottler
[[Page 34138]]
or beverage vending machine operator owns the equipment and the site
owner pays the utilities, the vending machine operator may make the
purchasing decision about the beverage vending machine without input
from the site owner and may not offer options to the site owner to
upgrade them.
In addition, this rulemaking is likely to yield certain
``external'' benefits resulting from improved energy efficiency of
beverage vending machines that are not captured by the users of such
equipment. These include both environmental and energy security-related
externalities that are not reflected in energy prices, such as reduced
emissions of greenhouse gases and reduced use of natural gas and oil
for electricity generation. DOE invites comments on the weight that
should be given to these factors in DOE's determination of the maximum
energy efficiency level at which the total benefits are likely to
exceed the total costs resulting from a DOE standard.
In addition, various other analyses and procedures may apply to
such future rulemaking action, including those required by the National
Environmental Policy Act (Pub. L. 91-190, 42 U.S.C. 4321 et seq.); the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4); the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.); the Regulatory Flexibility Act
(5 U.S.C. 601 et seq.); and certain Executive Orders.
The draft of today's action and any other documents submitted to
OMB for review are part of the rulemaking record and are available for
public review at the U.S. Department of Energy, Resource Room of the
Building Technologies Program, 950 L'Enfant Plaza, Suite 600, SW.,
Washington, DC 20024, (202) 586-2945, between 9:00 a.m. and 4:00 p.m.,
Monday through Friday, except Federal holidays.
VI. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of today's ANOPR.
Issued in Washington, DC, on June 9, 2008.
Alexander A. Karsner,
Assistant Secretary, Energy Efficiency and Renewable Energy.
[FR Doc. E8-13345 Filed 6-13-08; 8:45 am]
BILLING CODE 6450-01-P