[Federal Register Volume 73, Number 195 (Tuesday, October 7, 2008)]
[Rules and Regulations]
[Pages 58772-58830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23312]
[[Page 58771]]
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Part III
Department of Energy
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10 CFR Part 431
Energy Conservation Program for Commercial and Industrial Equipment:
Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump
Energy Conservation Standards; Final Rule
Federal Register / Vol. 73, No. 195 / Tuesday, October 7, 2008 /
Rules and Regulations
[[Page 58772]]
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DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Number: EERE-2007-BT-STD-0012]
RIN 1904-AB44
Energy Conservation Program for Commercial and Industrial
Equipment: Packaged Terminal Air Conditioner and Packaged Terminal Heat
Pump Energy Conservation Standards
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Final rule.
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SUMMARY: The Department of Energy (DOE) has determined that its
adoption of amended energy conservation standards for commercial
standard size packaged terminal air conditioners (PTACs) and packaged
terminal heat pumps (PTHPs), at efficiency levels more stringent than
those in American Society of Heating, Refrigerating, and Air-
Conditioning Engineers (ASHRAE)/Illuminating Engineering Society of
North America (IESNA) Standard 90.1-1999, is supported by clear and
convincing evidence that such standards would result in significant
additional conservation of energy and are technologically feasible and
economically justified. On this basis, DOE is today amending the
existing energy conservation standards for these types of equipment. In
addition, DOE has determined that its adoption of amended energy
conservation standards more stringent than the efficiency levels
specified by ASHRAE Standard 90.1-1999 for non-standard size PTACs and
PTHPs is not supported by clear and convincing evidence, thus, DOE is
adopting the efficiency levels in ASHRAE Standard 90.1-1999 for non-
standard size PTACs and PTHPs in today's final rule.
DATES: The effective date of this rule is November 6, 2008. The
standards established in today's final rule will be applicable starting
October 8, 2012 for standard size PTACs and PTHPs. The standards
established in today's final rule will be applicable starting October
7, 2010 for non-standard size PTACs and PTHPs.
ADDRESSES: For access to the docket to read background documents, the
technical support document, transcripts of the public meetings in this
proceeding, or comments received, visit the U.S. Department of Energy,
Resource Room of the Building Technologies Program, 950 L'Enfant Plaza,
SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m.
and 4 p.m., Monday through Friday, except Federal holidays. For more
information about visiting the Resource Room, please call Ms. Brenda
Edwards at (202) 586-2945. (Note: DOE's Freedom of Information Reading
Room no longer houses rulemaking materials.) You may also obtain copies
of the final rule notice in this proceeding, related documents (e.g.,
the notice of proposed rulemaking and technical support document DOE
used to reassess whether to adopt certain efficiency levels in ASHRAE
Standard 90.1), draft analyses, public meeting materials, and related
test procedure documents from the Office of Energy Efficiency and
Renewable Energy's Web site at http://www.eere.energy.gov/buildings/appliance_standards/commercial/packaged_ac_hp.html.
FOR FURTHER INFORMATION CONTACT: Wes Anderson, Project Manager, Energy
Conservation Standards for Packaged Terminal Air Conditioners and
Packaged Terminal Heat Pumps, U.S. Department of Energy, Energy
Efficiency and Renewable Energy, Building Technologies Program, EE-2J,
1000 Independence Avenue, SW., Washington, DC 20585-0121. Phone: (202)
586-7335. E-mail: [email protected].
Francine Pinto, Esq., or Michael Kido, Esq., U.S. Department of
Energy, Office of General Counsel, GC-72, 1000 Independence Avenue,
SW., Washington, DC 20585. Phone: (202) 586-9507. E-mail:
[email protected] or [email protected].
SUPPLEMENTARY INFORMATION:
I. Summary of the Final Rule and Its Benefits
A. The Standard Levels
B. Current Federal Standards for Packaged Terminal Air
Conditioners and Packaged Terminal Heat Pumps
C. Benefits to Customers of Packaged Terminal Air Conditioners
and Packaged Terminal Heat Pumps
D. Impact on Manufacturers
E. National Benefits
F. Other Considerations
G. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Packaged Terminal
Equipment
III. General Discussion
A. Test Procedures
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
D. Economic Justification
1. Economic Impact on Commercial Consumers and Manufacturers
2. Life-Cycle Costs
3. Energy Savings
4. Lessening of Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
IV. Analysis Methodology and Discussion of Comments on Analysis
Methodology
A. Market and Technology Assessment
1. Equipment Classes--Generally
2. Comments
B. Screening Analysis
1. Scroll Compressors
2. ECM Motors
3. Fan Motors
4. Micro-Channel Heat Exchangers
5. Thermal Expansion Valves
C. Engineering Analysis
1. Material Prices for the Cost Model
2. Impacts of the Refrigerant Phaseout on PTAC and PTHP
Equipment Performance
3. Manufacturer Production Cost Increases With R-410A
D. Energy Use Characterization
E. Life-Cycle Cost Analysis
1. Equipment Prices
2. Installation Costs
3. Annual Energy Use
4. Electricity Prices
5. Maintenance Costs
6. Repair Costs
7. Equipment Lifetime
8. Discount Rate
F. National Impact Analysis--National Energy Savings and Net
Present Value Analysis
1. Shipments Analysis
2. Base Case and Standards Case Forecasted Distribution of
Efficiencies
G. Manufacturer Impact Analysis
1. GRIM Input Updates
2. Cumulative Regulatory Burden
3. Employment Impacts
H. Employment Impact Analysis
I. Utility Impact Analysis
J. Environmental Analysis
K. Other Comments
1. Burdens on Small, Non-Standard Size PTAC and PTHP
Manufacturers
2. PTAC and PTHP Labeling
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Significance of Energy Savings
C. Economic Justification
1. Economic Impact on Commercial Consumers
2. Economic Impact on Manufacturers
3. National Net Present Value and Net National Employment
4. Impact on Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
D. Conclusion
1. Standard Size PTACs and PTHPs
2. Non-Standard Size PTACs and PTHPs
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
1. Reasons for the Final Rule
2. Objectives of, and Legal Basis for, the Rule
3. Description and Estimated Number of Small Entities Regulated
[[Page 58773]]
4. Description and Estimate of Compliance Requirements
5. Significant Issues Raised by Public Comments
6. Steps DOE Has Taken To Minimize the Economic Impact on Small,
Non-Standard Size PTAC and PTHP Manufacturers
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act of 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act of 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Summary of the Final Rule and Its Benefits
A. The Standard Levels
The Energy Policy and Conservation Act, as amended (EPCA), (42
U.S.C. 6291, et seq.), establishes mandatory energy conservation
standards for certain commercial equipment covered by the American
Society of Heating, Refrigerating, and Air-Conditioning Engineers
(ASHRAE) and the Illuminating Engineering Society of North America
(IESNA) Standard 90.1, including packaged terminal air conditioners
(PTACs) and packaged terminal heat pumps (PTHPs) (collectively referred
to as ``packaged terminal equipment''). EPCA states that the Department
of Energy (DOE) may prescribe amended standards for this equipment that
exceed the stringency of efficiency levels contained in amendments to
ASHRAE Standard 90.1, only if DOE determines by rule that any such
standard ``would result in significant additional conservation of
energy and is technologically feasible and economically justified.''
(42 U.S.C. 6313(a)(6)(A)(ii)(II)) This determination must be
``supported by clear and convincing evidence.'' Id. If DOE is unable to
find that clear and convincing evidence exists that a more stringent
efficiency level than the efficiency level contained in ASHRAE Standard
90.1 would result in a significant additional energy savings and is
technologically feasible and economically justified, then EPCA states
DOE must establish an amended uniform national standard for the product
at the minimum level specified in the amended ASHRAE/IES Standard 90.1.
(42 U.S.C. 6313(a)(6)(A)(ii)(I)) The standards in today's final rule,
which apply to all packaged terminal equipment, satisfy these
requirements and will achieve the maximum improvements in energy
efficiency that are technologically feasible and economically
justified. (See 42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A).)
Table I.1 shows the amended energy conservation standards that DOE
is adopting today. These amended energy conservation standards will
apply to standard size PTACs and PTHPs manufactured for sale in the
United States, or imported to the United States, on or after October 8,
2012 and non-standard size PTACs and PTHPs manufactured for sale in the
United States, or imported to the United States, on or after October 7,
2010.
Table I.1--Amended Energy Conservation Standards for PTACs and PTHPs
------------------------------------------------------------------------
Equipment class
--------------------------------------------------------
Cooling
capacity Energy
(British conservation
Equipment Category thermal units standards *
per hour [Btu/
h])
------------------------------------------------------------------------
PTAC................. Standard Size <7,000......... EER = 11.7
**.
7,000-15,000... EER = 13.8-
(0.300 x Cap
[dagger][dagge
r])
>15,000........ EER = 9.3
--------------------------------------------------
Non-Standard <7,000......... EER = 9.4
Size [dagger].
7,000-15,000... EER = 10.9 -
(0.213 x Cap
[dagger][dagge
r])
>15,000........ EER = 7.7
------------------------------------------------------------------------
PTHP................. Standard Size <7,000......... EER = 11.9
**.
COP = 3.3
7,000-15,000... EER = 14.0 -
(0.300 x Cap
[dagger][dagge
r])
COP = 3.7 -
(0.052 x Cap
[dagger][dagge
r])
>15,000........ EER = 9.5
COP = 2.9
--------------------------------------------------
Non-Standard <7,000......... EER = 9.3
Size [dagger].
COP = 2.7
7,000-15,000... EER = 10.8 -
(0.213 x Cap
[dagger][dagge
r])
COP = 2.9 -
(0.026 x Cap
[dagger][dagge
r])
>15,000........ EER = 7.6
COP = 2.5
------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure (Air-
Conditioning and Refrigeration Institute [ARI] Standard 310/380-2004),
all energy efficiency ratio (EER) values must be rated at 95 [deg]F
outdoor dry-bulb temperature for air-cooled equipment and
evaporatively cooled equipment and at 85 [deg]F entering water
temperature for water-cooled equipment. All coefficient of performance
(COP) values must be rated at 47 [deg]F outdoor dry-bulb temperature
for air-cooled equipment.
** Standard size refers to PTAC or PTHP equipment with wall sleeve
dimensions having an external wall opening greater than or equal to 16
inches high or greater than or equal to 42 inches wide, and a cross-
sectional area greater than or equal to 670 square inches.
[dagger] Non-standard size refers to PTAC or PTHP equipment with
existing wall sleeve dimensions having an external wall opening of
less than 16 inches high or less than 42 inches wide, and a cross-
sectional area less than 670 square inches.
[dagger][dagger] Cap means cooling capacity in thousand Btu/h (kBtu/h)
at 95 [deg]F outdoor dry-bulb temperature.
DOE only presents the benefits and burdens of adopting a standard
level higher than the efficiency levels specified in ASHRAE Standard
90.1-1999. The benefits and burdens of adopting the efficiency levels
in ASHRAE Standard 90.1-1999 for non-standard size PTACs and PTHPs are
not calculated in this rulemaking because
[[Page 58774]]
DOE considers this the baseline efficiency levels even though they
represent an increase in energy efficiency when compared to the current
Federal energy conservation standards.
B. Current Federal Standards for Packaged Terminal Air Conditioners and
Packaged Terminal Heat Pumps
Table I.2 presents the minimum efficiency levels in the current
Federal energy conservation standards for PTACs and PTHPs.
Table I.2--Existing Federal Energy Conservation Standards for PTACs and PTHPs
----------------------------------------------------------------------------------------------------------------
Equipment class
-----------------------------------------------------------
Cooling capacity (Btu/ Existing Federal energy conservation standards*
Equipment h)
----------------------------------------------------------------------------------------------------------------
PTAC............................... <7,000............... EER = 8.88
7,000-15,000......... EER = 10.0 - (0.16 x Cap**)
>15,000.............. EER = 7.6
PTHP............................... <7,000............... EER = 8.88
COP = 2.7
7,000-15,000......... EER = 10.0 - (0.16 x Cap**)
COP = 1.3 + (0.16 x EER)
>15,000.............. EER = 7.6
COP = 2.5
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the ARI standards, all EER values must be rated at 95 [deg]F outdoor dry-bulb
temperature for air-cooled products and evaporatively cooled products and at 85 [deg]F entering water
temperature for water-cooled products. All COP values must be rated at 47 [deg]F outdoor dry-bulb temperature
for air-cooled products, and at 70 [deg]F entering water temperature for water-source heat pumps.
** Cap means cooling capacity in kBtu/h at 95 [deg]F outdoor dry-bulb temperature.
C. Benefits to Customers of Packaged Terminal Air Conditioners and
Packaged Terminal Heat Pumps
Table I.3 presents the impacts on commercial customers of the
energy conservation standards adopted in today's final rule.
Table I.3--Impacts of New Standards for a Sample of Commercial Customers *
----------------------------------------------------------------------------------------------------------------
Total
Amended energy Total installed Life-cycle Payback
Equipment class conservation standard installed cost cost period
cost increase savings (years)
----------------------------------------------------------------------------------------------------------------
Standard Size PTAC, 9,000 Btu/h 11.1 EER.............. 1,229 $22 ($3) 13.7
Cooling Capacity.
Standard Size PTAC, 12,000 Btu/h 10.2 EER.............. 1,469 16 (2) 13.1
Cooling Capacity.
Standard Size PTHP, 9,000 Btu/h 11.3 EER.............. 1,362 40 28 4.4
Cooling Capacity.
3.2 COP
Standard Size PTHP, 12,000 Btu/h 10.4 EER.............. 1,603 38 24 4.6
Cooling Capacity.
3.0 COP
Non-Standard Size PTAC, 11,000 Btu/h 8.6 EER............... 1,570 ** N/A ** N/A ** N/A
Cooling Capacity.
Non-Standard Size PTHP, 11,000 Btu/h 8.5 EER............... 1,692 ** N/A ** N/A ** N/A
Cooling Capacity.
2.6 COP
----------------------------------------------------------------------------------------------------------------
* The values in Table I.3 represent average values and all monetary values are expressed in 2007$.
** DOE did not calculate the implications on commercial customers of non-standard equipment because DOE is
adopting the efficiency levels in ASHRAE Standard 90.1-1999 (i.e., the baseline efficiency levels).
The economic impacts on commercial consumers (i.e., the average
life-cycle cost (LCC) savings) are positive. For example, the typical,
standard size PTAC with a cooling capacity of 9,000 Btu/h that meets
the existing Federal energy conservation standards has an installed
price of $1,207 and an annual energy cost of $109 (cooling only). A
typical, standard size PTHP of the same cooling capacity that meets the
existing Federal energy conservation standards has an installed price
of $1,362 and an annual energy cost of $209. To meet the new standard,
DOE estimates that the installed price of a typical, standard size PTAC
with a cooling capacity of 9,000 Btu/h will be $1,229, an increase of
$22. This price increase will be offset by an annual energy savings of
about $3. Similarly, for a typical, standard size PTHP of the same
cooling capacity to meet the new standard, the increase in installed
price would be $40, offset by an annual energy savings of $11. Whereas
the typical, non-standard size PTAC that meets the ASHRAE Standard
90.1-1999 efficiency levels has an installed price of $1,570 and an
annual energy cost of $180.
D. Impact on Manufacturers
Using a real corporate discount rate of five-percent, DOE estimates
the net present value (NPV) of the standard size packaged terminal
equipment industry to be $427 million in 2007$ and the NPV of the non-
standard size packaged terminal equipment industry to be $30 million in
2007$. DOE expects the impact of today's standards on the industry net
present value (INPV) of manufacturers of standard size packaged
terminal equipment to be between a two-percent loss and a 14 percent
loss (-$8 million to -$61 million). Based
[[Page 58775]]
on DOE's interviews with the manufacturers of PTACs and PTHPs, DOE
expects minimal plant closings or loss of employment as a result of the
standards for both the standard size and non-standard size industries.
E. National Benefits
DOE estimates the amended energy conservation standards will save
approximately 0.032 quads (quadrillion (1015) Btu) of energy
over 30 years (2012-2042). This is equivalent to all the electricity
used annually by approximately 500 motels.\1\
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\1\ Energy Informaton Agency. 2003 CBECS public use sample,
where specific building activity = ``motel or inn'' (PBAPLUS8=39).
Anual electricity use averages about 177,700 kWh per yer.
---------------------------------------------------------------------------
By 2042, DOE expects the energy savings from the standards to
eliminate the need for approximately one new 82-megawatt (MW) power
plant. These energy savings will result in cumulative greenhouse gas
emission reductions of approximately 1.06 million tons (Mt) of carbon
dioxide (CO2), or an amount equal to that produced by
approximately 6,700 cars every year. Additionally, the standards will
help alleviate air pollution by resulting in between approximately 90
and 2,130 tons (0.09 and 2.13 kilotons (kt)) of nitrogen oxides
(NOX) cumulative emission reductions from 2012 through 2042.
Finally, the standards will also alleviate air pollution by resulting
in between approximately 0 and 0.037 tons of mercury (Hg) cumulative
emission reductions from 2012 through 2042.
The national NPV of the standard for standard size PTACs and PTHPs
is $10 million using a seven-percent discount rate and $54 million
using a three-percent discount rate, cumulative from 2012 to 2062 in
2007$. This is the estimated total value of future savings minus the
estimated increased equipment costs, discounted to 2008.
The benefits and costs of today's final rule can also be expressed
in terms of annualized 2007$ values over the forecast period 2012
through 2042. Using a seven-percent discount rate for the annualized
cost analysis, the cost of the amended energy conservation standards
established in today's final rule for standard size PTACs and PTHPs is
$4.7 million per year in increased equipment and installation costs
while the annualized benefits are $5.7 million per year in reduced
equipment operating costs. Using a three-percent discount rate, the
cost of the amended energy conservation standards established in
today's final rule for standard size PTACs and PTHPs is $4.1 million
per year, whereas the benefits of today's amended energy conservation
standards are $6.5 million per year.
F. Other Considerations
DOE noted in the April 2008 Notice of Proposed Rulemaking (NOPR)
that PTAC and PTHP equipment manufacturers also face a mandated
refrigerant phaseout on January 1, 2010. 73 FR 18858, 18860 (April 7,
2008). R-22, the only refrigerant currently used by PTACs and PTHPs, is
a hydrochlorofluorocarbon (HCFC) refrigerant subject to the phaseout
requirement. Phaseout of this refrigerant could have a significant
impact on the manufacturing, performance, and cost of PTAC and PTHP
equipment. DOE discussed and estimated the impacts of the refrigerant
phaseout on PTAC and PTHP equipment and on the manufacturers of this
equipment in the NOPR, see generally, 73 FR 18872-74, and today's final
rule.
G. Conclusion
DOE concludes that the benefits (energy savings, commercial
customer LCC savings, positive national NPV, and emissions reductions)
to the Nation of the amended standards for standard size equipment
outweigh their costs (loss of manufacturer INPV and commercial customer
LCC increases for some users of PTACs and PTHPs). DOE believes that
these amended standards are technologically feasible, economically
justified, and will save additional significant amounts of energy as
compared to the savings that would result from adoption of the
efficiency levels for standard size PTACs and PTHPs in ASHRAE Standard
90.1-1999. DOE also believes that the standards for non-standard size
equipment (i.e., the efficiency levels in ASHRAE Standard 90.1-1999)
are technologically feasible, economically justified, and will save
significant amounts of energy compared to the current Federal energy
conservation standards. Finally, DOE concludes that today's standards
for PTACs and PTHPs are designed to achieve the maximum improvements in
energy efficiency that are technologically feasible and economically
justified. Currently, PTACs and PTHPs that meet the new standard levels
are commercially available utilizing R-22 refrigerant. DOE believes
that PTACs and PTHPs utilizing R-410A equipment at the new standard
levels will be commercially available by the effective dates of the new
standard levels.
II. Introduction
A. Authority
Title III of EPCA sets forth a variety of provisions designed to
improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309)
provides for the Energy Conservation Program for Consumer Products
Other than Automobiles. Part A-1 of Title III (42 U.S.C. 6311-6317)
establishes a similar program for ``Certain Industrial Equipment,''
including PTACs and PTHPs, the subjects of this rulemaking.\2\ DOE
publishes today's final rule pursuant to Part A-1 of Title III, which
provides for test procedures, labeling, and energy conservation
standards for PTACs and PTHPs and certain other equipment, and
authorizes DOE to require information and reports from manufacturers.
The test procedure for PTACs and PTHPs appears in title 10 Code of
Federal Regulations (CFR) section 431.96.
---------------------------------------------------------------------------
\2\ This part was originally titled Part C. However, it was
redesignated Part A-1 after Part B of Title III of EPCA was repealed
by Public Law 109-58.
---------------------------------------------------------------------------
EPCA established Federal energy conservation standards that
generally correspond to the levels in ASHRAE Standard 90.1, effective
October 24, 1992, for most types of covered equipment listed in section
342(a) of EPCA, including PTACs and PTHPs. (42 U.S.C. 6313(a)) For each
type of equipment, EPCA directs that if ASHRAE Standard 90.1 is
amended, DOE must adopt an amended standard at the new level in ASHRAE
Standard 90.1, unless clear and convincing evidence supports a
determination that adoption of a more stringent level as a national
standard would produce significant additional energy savings and be
technologically feasible and economically justified. (42 U.S.C.
6313(a)(6)(A)(ii)(II))
EPCA also provides that in deciding whether a more stringent
standard is economically justified for equipment such as PTACs and
PTHPs, DOE must, after receiving comments on the proposed standard,
determine whether the benefits of such a standard exceed its burdens by
considering the following seven factors to the greatest extent
practicable:
1. The economic impact of the standard on manufacturers and
consumers of the products subject to the standard;
2. The savings in operating costs throughout the estimated average
life of products in the type (or class) compared to any increase in the
price, initial charges, or maintenance expenses for the covered
products that are likely to
[[Page 58776]]
result from the imposition of the standard;
3. The total projected amount of energy savings likely to result
directly from the imposition of the standard;
4. Any lessening of the utility or the performance of the products
likely to result from the imposition of the standard;
5. The impact of any lessening of competition, as determined in
writing by the Attorney General, that is likely to result from the
imposition of the standard;
6. The need for national energy conservation; and
7. Other factors the Secretary of Energy (Secretary) considers
relevant. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)-(ii))
EPCA also contains an ``anti-backsliding'' provision, which
prohibits DOE from prescribing any amended energy conservation standard
that either increases the maximum allowable energy use or decreases the
minimum required energy efficiency of covered equipment. (42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(1)) It is a fundamental principle in EPCA's
statutory scheme that DOE cannot amend standards downward; that is, DOE
may not weaken standards that have been previously promulgated. Natural
Resources Defense Council v. Abraham, 355 F.3d 179 (2d Cir. 2004).
In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii)),
establishes 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
(and as applicable, water) savings during the first year that the
consumer will receive as a result of the standard,'' as calculated
under the test procedure in place for that standard. This approach
provides an alternative path in establishing economic justification
under the EPCA factors. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE considered
this test, but believes that the criterion it applies (i.e., a limited
payback period) is not sufficient for determining economic
justification. Instead, DOE has considered a full range of impacts,
including those to the consumer, manufacturer, Nation, and environment.
Additionally, the Secretary may not prescribe an amended standard
if interested persons have established by a preponderance of the
evidence that the standard is ``likely to result in the unavailability
in the United States of any product type (or class)'' with performance
characteristics, features, sizes, capacities, and volumes that are
substantially the same as those generally available in the United
States at the time of the Secretary's finding. (42 U.S.C. 6316(a); 42
U.S.C. 6295(o)(4))
Section 325(q)(1) of EPCA directs that DOE must specify a different
standard level than that which applies generally to such type or class
of equipment for any group of products ``which have the same function
or intended use, if * * * products within such group--(A) consume a
different kind of energy from that consumed by other covered products
within such type (or class); or (B) have a capacity or other
performance-related feature which other products within such type (or
class) do not have and such feature justifies a higher or lower
standard'' than applies or will apply to the other products within that
type or class. (42 U.S.C. 6295(q)(1)(A) and (B)) In determining whether
a performance-related feature justifies such a different standard for a
group of products, DOE must consider ``such factors as the utility to
the consumer of such a feature'' and other factors DOE deems
appropriate. (42 U.S.C. 6295(q)(1)) Any rule prescribing such a
standard must include an explanation of the basis on which DOE
established such higher or lower level. (42 U.S.C. 6295(q)(2))
Federal energy efficiency requirements for commercial equipment
generally supersede State laws or regulations concerning energy
conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c);
42 U.S.C. 6316(a) and (b)) However, DOE can grant waivers of preemption
for particular State laws or regulations, in accordance with the
procedures and other provisions of section 327(d) of the Act, as
amended. (42 U.S.C. 6297(d); 42 U.S.C. 6316(b)(2)(D))
B. Background
1. Current Standards
As described in greater detail in the NOPR, 73 FR 18861-62, the
current energy conservation standards in EPCA for PTACs and PTHPs apply
to all equipment manufactured on or after January 1, 1994. (42 U.S.C.
6313(a)(3); 10 CFR 431.97) Table I.2 details these standards.
2. History of Standards Rulemaking for Packaged Terminal Equipment
On October 29, 1999, ASHRAE adopted ASHRAE Standard 90.1-1999,
which revised the efficiency levels for various categories of
commercial equipment covered by EPCA, including PTACs and PTHPs. In
amending the ASHRAE Standard 90.1-1989 levels for packaged terminal
equipment, ASHRAE used the equipment classes contained in EPCA, which
are distinguished by equipment type (i.e., air conditioner (PTAC) or
heat pump (PTHP)) and cooling capacity. However, ASHRAE further divided
these classes by wall sleeve dimensions, because they affect the energy
efficiency of PTACs and PTHPs. Table II.1 shows the efficiency levels
in ASHRAE Standard 90.1-1999 for this equipment.
Table II.1--ASHRAE Standard 90.1-1999 Energy Efficiency Levels for PTACs
and PTHPs
------------------------------------------------------------------------
Equipment class
-------------------------------------------------------- ASHRAE standard
Cooling 90.1-1999
Equipment Category capacity (Btu/ efficiency
h) levels *
------------------------------------------------------------------------
PTAC................. Standard Size <7,000......... EER = 11.0
**.
7,000-15,000... EER = 12.5 -
(0.213 x Cap
[dagger][dagge
r])
>15,000........ EER = 9.3
--------------------------------------------------
Non-Standard <7,000......... EER = 9.4
Size [dagger].
7,000-15,000... EER = 10.9 -
(0.213 x Cap
[dagger][dagge
r])
>15,000........ EER = 7.7
------------------------------------------------------------------------
PTHP................. Standard Size <7,000......... EER = 10.8
**. COP = 3.0
7,000-15,000.. EER = 12.3 -
(0.213 x Cap
[dagger][dagge
r])
COP = 3.2 -
(0.026 x Cap
[dagger][dagge
r])
[[Page 58777]]
>15,000........ EER = 9.1
COP = 2.8
--------------------------------------------------
Non-Standard <7,000......... EER = 9.3
Size [dagger]. COP = 2.7
7,000-15,000... EER = 10.8 -
(0.213 x Cap
[dagger][dagge
r])
COP = 2.9 -
(0.026 x Cap
[dagger][dagge
r])
>15,000........ EER = 7.6
COP = 2.5
------------------------------------------------------------------------
* For equipment rated according to ARI standards, all EER values must be
rated at 95 [deg]F outdoor dry-bulb temperature for air-cooled
products and evaporatively cooled products and at 85 [deg]F entering
water temperature for water-cooled products. All COP values must be
rated at 47 [deg]F outdoor dry-bulb temperature for air-cooled
products.
** Standard size refers to PTAC or PTHP equipment with wall sleeve
dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
[dagger] Non-standard size refers to PTAC or PTHP equipment with wall
sleeve dimensions less than 16 inches high and less than 42 inches
wide. ASHRAE Standard 90.1-1999 also includes a factory labeling
requirement for non-standard size PTAC and PTHP equipment as follows:
``MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED
IN NEW CONSTRUCTION PROJECTS.''
[dagger][dagger] Cap means cooling capacity in kBtu/h at 95 [deg]F
outdoor dry-bulb temperature.
After publication of ASHRAE Standard 90.1-1999, DOE analyzed many
of its equipment categories to evaluate possible consideration of more
stringent efficiency levels than those specified in the Standard. DOE
summarized this analysis in a report, Screening Analysis for EPACT-
Covered Commercial HVAC [Heating, Ventilating and Air-Conditioning] and
Water-Heating Equipment (commonly referred to as the 2000 Screening
Analysis).\3\ On January 12, 2001, DOE published a final rule adopting
the efficiency levels in ASHRAE Standard 90.1-1999 for many types of
commercial HVAC and water heating equipment, excluding packaged
terminal equipment and certain other types of equipment. 66 FR 3336.
Regarding PTACs and PTHPs, the preamble to the final rule stated that
the 2000 Screening Analysis indicated at least a reasonable possibility
of finding ``clear and convincing evidence'' that more stringent
standards ``would be technologically feasible and economically
justified and would result in significant additional conservation of
energy.'' 66 FR 3349-50. Under EPCA, these are the criteria for DOE's
adoption of standards more stringent than the efficiency levels in
ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(ii)(II)).
---------------------------------------------------------------------------
\3\ U.S. Department of Energy, Office of Energy Efficiency and
Renewable Energy. ``Energy Conservation Program for Consumer
Products: Screening Analysis for EPACT-Covered Commercial HVAC and
Water-Heating Equipment Screening Analysis.'' April 2000. http://www.eere.energy.gov/buildings/highperformance/pdfs/screening_analysis_main.pdf.
---------------------------------------------------------------------------
More recently, DOE announced the availability of a technical
support document (TSD) it developed to reassess whether to adopt as
national standards certain efficiency levels that were in amendments to
ASHRAE Standard 90.1, including the levels in the 1999 amendments for
PTACs and PTHPs. 71 FR 12634 (March 13, 2006) (Notice of Availability).
According to DOE, although the revised analysis in the TSD reduced the
potential energy savings that might result from standards more
stringent than the efficiency levels specified in ASHRAE Standard 90.1-
1999 for PTACs and PTHPs, DOE was inclined to pursue standards that are
more stringent because there was a possibility that clear and
convincing evidence exists that such standards are warranted. Id. at
12638-39. DOE stated that it would explore more stringent efficiency
levels than those in ASHRAE Standard 90.1-1999 for PTACs and PTHPs
through a separate rulemaking. Id. at 12639.
DOE proposed energy conservation standards for PTACs and PTHPs in a
NOPR published on April 7, 2008. 73 FR 18858. In conjunction with the
NOPR, DOE also published on its Web site the complete TSD for the
proposed rule, which incorporated the final analyses that DOE conducted
and technical support documentation of each analysis. The NOPR TSD
included the LCC spreadsheets, the national impact analysis
spreadsheets, and the manufacturer impact analysis (MIA) spreadsheet--
all of which are available on DOE's PTAC and PTHP webpage. The proposed
standards were as follows:
Table II.2--NOPR Proposed Energy Conservation Standards for PTACs and
PTHPs
------------------------------------------------------------------------
Equipment class
-------------------------------------------------------- Proposed energy
Cooling conservation
Equipment Category capacity (Btu/ standards *
h)
------------------------------------------------------------------------
PTAC................. Standard Size <7,000......... EER = 11.4
**.
7,000-15,000... EER = 13.0-
(0.233 x Cap
[dagger][dagge
r])
>15,000........ EER = 9.5
--------------------------------------------------
Non-Standard <7,000......... EER = 10.2
Size.
7,000-15,000... EER = 11.7-
(0.213 x Cap
[dagger][dagge
r])
>15,000........ EER = 8.5
------------------------------------------------------------------------
[[Page 58778]]
PTHP................. Standard Size <7,000......... EER = 11.8
**. COP = 3.3
7,000-15,000... EER = 13.4-
(0.233 x Cap
[dagger][dagge
r])
COP = 3.7-
(0.053 x Cap
[dagger][dagge
r])
>15,000........ EER = 9.9
COP = 2.9
--------------------------------------------------
Non-Standard <7,000......... EER = 10.8
Size. COP = 3.0
7,000-15,000... EER = 12.3-
(0.213 x Cap
[dagger][dagge
r])
COP = 3.1-
(0.026 x Cap
[dagger][dagge
r])
>15,000........ EER = 9.1
COP = 2.8
------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure (ARI Standard
310/380-2004), all EER values must be rated at 95 [deg]F outdoor dry-
bulb temperature for air-cooled equipment and evaporatively cooled
equipment and at 85 [deg]F entering water temperature for water-cooled
equipment. All COP values must be rated at 47 [deg]F outdoor dry-bulb
temperature for air-cooled equipment, and at 70 [deg]F entering water
temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve
dimensions greater than or equal to 16 inches high, or greater than or
equal to 42 inches wide.
[dagger] Non-standard size refers to PTAC or PTHP equipment with wall
sleeve dimensions less than 16 inches high and less than 42 inches
wide.
[dagger][dagger] Cap means cooling capacity in kBtu/h at 95 [deg]F
outdoor dry-bulb temperature.
The NOPR also included additional background information on the
history of this rulemaking. 73 FR 18862-63. DOE held a public meeting
in Washington, DC, on May 1, 2008, to accept oral comments on and
solicit information relevant to the proposed rule.
III. General Discussion
A. Test Procedures
Section 343(a) of EPCA, as amended, authorizes the Secretary to
amend the test procedures for PTACs and PTHPs to the latest version
generally accepted by industry or the rating procedures developed or
recognized by the ARI, or ASHRAE as referenced in ASHRAE Standard 90.1,
unless the Secretary determines by clear and convincing evidence that
the latest version of the industry test procedure does not meet
specific requirements. (See 42 U.S.C. 6314(a)(4) As the NOPR explains,
DOE has determined that its existing test procedure for PTACs and PTHPs
does not need modification. 73 FR 18863. Accordingly, DOE has not
adopted a revised test procedure for this equipment.
B. Technological Feasibility
1. General
To adopt standards for PTACs and PTHPs that are more stringent than
the efficiency levels in ASHRAE Standard 90.1 as amended, DOE must
determine, supported by clear and convincing evidence, that such
standards are technologically feasible. (42 U.S.C.
6313(a)(6)(A)(ii)(II)) DOE considers a design option to be
technologically feasible if it is in use by the respective industry or
if research has progressed to the development of a working prototype.
DOE defines technological feasibility as follows: ``Technologies
incorporated in commercially available products or in working
prototypes will be considered technologically feasible.'' 10 CFR part
430, subpart C, appendix A, section 4(a)(4)(i).
This final rule considers the same design options as those
evaluated in the NOPR. (See the final rule TSD accompanying this
notice, Chapter 4.) Based on equipment literature, the teardown
analysis, manufacturer interviews, and the equipment performance
degradations provided by AHRI during the NOPR phase of the rulemaking,
DOE considered the following design options in the final rule analysis:
(1) Higher efficiency compressors; (2) increasing the heat exchanger
area; and (3) recircuiting the heat exchanger coils. Since these three
design options are commercially available, have been used in PTAC and
PTHP equipment, and are the most common ways by which manufacturers
improve the energy efficiency of their PTACs and PTHPs, DOE has
determined that clear and convincing evidence supports the conclusion
that all of the efficiency levels evaluated in this notice are
technologically feasible. DOE further discusses the technical
feasibility of PTAC and PTHP equipment utilizing R-410A in section
IV.C. of today's notice.
2. Maximum Technologically Feasible Levels
In order to evaluate whether energy conservation standards for
PTACs and PTHPs are economically justified, DOE determines the maximum
improvement in energy efficiency or maximum reduction in energy use
that is technologically feasible. (42 U.S.C. 6316(a); 42 U.S.C.
6295(p)(2)) DOE determined the maximum technologically feasible level
(``max-tech'') efficiency levels in its engineering analysis for the
NOPR. 73 FR 18863-64. (See NOPR TSD Chapter 5.) In the NOPR, DOE based
its identification of the max-tech efficiency levels on standard size
and non-standard size PTAC and PTHP equipment utilizing R-22 that is
currently available on the market. For the final rule, DOE revised the
max-tech efficiency levels for standard size and non-standard size
PTACs and PTHPs based on submitted comments, which are discussed in
section IV.C of today's notice. The max-tech efficiency levels
considered for today's final rule are based on the efficiency levels
identified in the NOPR and factor performance degradations stemming
from the switch to R-410A refrigerant.\4\ Table III.1 lists the max-
tech efficiency levels that DOE identified for this rulemaking for the
[[Page 58779]]
estimated system performance of equipment utilizing R-410A. DOE
discusses these levels further in section IV.C.
---------------------------------------------------------------------------
\4\ DOE expects the overall system efficiency of R-410A PTAC and
PTHP equipment will be lower than if that equipment used R-22, which
DOE estimated using an overall system performance degradation. This
estimate is based on data submitted by manufacturers and AHRI
pointing to a decline in performance when using R-410A refrigerant
in place of R-22 refrigerant.
Table III.1--R-410A Max-Tech Efficiency Levels (7,000-15,000 Btu/h
Equipment Classes) *
------------------------------------------------------------------------
R-410A ``Max-
Cooling Tech''
Equipment type Equipment class capacity (Btu/ efficiency
h) level **
------------------------------------------------------------------------
PTAC................. Standard Size 9,000.......... 11.5 EER
[dagger].
12,000......... 10.8 EER
--------------------------------------------------
Non-Standard 11,000......... 10.0 EER
Size
[dagger][dagge
r].
------------------------------------------------------------------------
PTHP................. Standard Size 9,000.......... 11.5 EER
[dagger]. 3.3 COP
12,000......... 10.8 EER
3.1 COP
--------------------------------------------------
Non-Standard 11,000......... 10.0 EER
Size 2.9 COP
[dagger][dagge
r].
------------------------------------------------------------------------
* As discussed in the NOPR, DOE is presenting the results for two
cooling capacities of standard size PTACs and PTHPs, 9,000 and 12,000
Btu/h, which fall within the equipment classes of PTACs and PTHPs with
cooling capacities of 7,000-15,000 Btu/h. 73 FR 18870-18871.
** For equipment rated according to the DOE test procedure, all EER
values would be rated at 95 [deg]F outdoor dry-bulb temperature for
air-cooled products and evaporatively cooled products and at 85 [deg]F
entering water temperature for water-cooled products. All COP values
must be rated at 47 [deg]F outdoor dry-bulb temperature for air-cooled
products and at 70 [deg]F entering water temperature for water-source
heat pumps.
[dagger] Standard size refers to PTAC or PTHP equipment with wall sleeve
dimensions having an external wall opening of greater than or equal to
16 inches high or greater than or equal to 42 inches wide, and having
a cross-sectional area greater than or equal to 670 square inches.
[dagger][dagger] Non-standard size refers to PTAC or PTHP equipment with
existing wall sleeve dimensions having an external wall opening of
less than 16 inches high or less than 42 inches wide, and having a
cross-sectional area less than 670 square inches.
C. Energy Savings
DOE forecasted energy savings in its national energy savings (NES)
analysis using an NES spreadsheet tool, which the NOPR discussed in
greater detail. See generally, 73 FR 18864, 18876, 18880-83, 18899.
Among the criteria that govern DOE's adoption of more stringent
standards for PTACs and PTHPs than the amended levels in ASHRAE
Standard 90.1, clear and convincing evidence must support a
determination that the standards would result in ``significant'' energy
savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) Although EPCA does not
define ``significant,'' the U.S. Court of Appeals for the District of
Columbia indicated that Congress intended ``significant'' energy
savings to mean savings that were not ``genuinely trivial'' in Section
325 of the Act. Natural Resources Defense Council v. Herrington, 768
F.2d 1355, 1373 (D.C. Cir. 1985). DOE's estimates of the energy savings
for each of the TSLs considered for today's rule provide clear and
convincing evidence that the additional energy savings each would
achieve by exceeding the corresponding efficiency levels in ASHRAE
Standard 90.1-1999 are nontrivial. Therefore, DOE considers these
savings to be ``significant'' as required by 42 U.S.C.
6313(a)(6)(A)(ii)(II).
D. Economic Justification
As noted earlier, EPCA provides seven factors to be evaluated in
determining whether an energy conservation standard for PTACs and PTHPs
is economically justified. (42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)-(ii)) The following paragraphs discuss how DOE has
addressed each of those seven factors in this rulemaking.
1. Economic Impact on Commercial Consumers and Manufacturers
DOE considered the economic impact of the standards on commercial
consumers and manufacturers. For customers, DOE measures the economic
impact as the change in installed cost and life-cycle operating costs,
i.e., the LCC. (See section V.C.1 and Chapter 8 of the TSD.) DOE
investigates the impacts of amended energy conservation standards of
PTACs and PTHPs on manufacturers through the manufacturer impact
analysis (MIA). (See section V.C.2 and Chapter 13 of the TSD.) This
factor is discussed in detail in the NOPR. See generally 73 FR 18860-
61, 18864-66, 18869, 18883-87, 18893-99, 18906-07, 18910-12.
2. Life-Cycle Costs
DOE considered life-cycle costs of PTACs and PTHPs. This factor is
discussed in detail in the NOPR. See generally 73 FR 18860-61, 18865,
18876-80, 18883, 18888, 18891-93. DOE calculated the sum of the
purchase price and the operating expense--discounted over the lifetime
of the equipment--to estimate the range in LCC benefits that commercial
customers would expect to achieve due to the standards.
3. Energy Savings
Although significant additional conservation of energy is a
separate statutory requirement for imposing a more stringent energy
conservation standard than the level in the most current ASHRAE
Standard 90.1, EPCA also requires that DOE consider the total projected
energy savings that will likely result directly from the standard in
determining whether a standard is economically justified. (42 U.S.C.
6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(III)) DOE used the NES spreadsheet
results in its consideration of total projected savings. 73 FR 18860-
61, 18864, 18876, 18880-83, 18899. DOE presents the energy savings at
each TSL for standard size and non-standard size PTACs and PTHPs in
section V.B of today's notice.
4. Lessening of Utility or Performance of Equipment
In selecting today's standard levels, DOE sought to avoid new
standards for PTACs and PTHPs that would lessen the utility or
performance of that equipment. (42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(IV)) 73 FR 18865, 18866-68, 18900. The design options
considered in the engineering analysis of this rulemaking, which
include higher efficiency compressors, increasing the heat exchanger
area, and recircuiting the heat exchanger coils, do not involve changes
in equipment design or unusual installation requirements that could
reduce the utility or performance of PTACs and PTHPs. In the NOPR, DOE
considered
[[Page 58780]]
industry concerns that one-third of the non-standard size market
subject to the more stringent standards under ASHRAE Standard 90.1-1999
definition would not be able to meet the efficiency levels specified by
ASHRAE Standard 90.1-1999 for standard size equipment due to the
physical size constraints of the wall sleeve if this equipment class
delineation was adopted. In today's final rule, DOE is adopting the
equipment class delineations specified in Addendum t to ASHRAE Standard
90.1-2007. This action should mitigate manufacturers' concerns
regarding the misclassification of non-standard equipment classes. DOE
further discusses the equipment classes it is adopting today and the
comments received from interested parties regarding equipment classes
in section IV.A of today's rulemaking.
5. Impact of Any Lessening of Competition
DOE considers any lessening of competition likely to result from
standards. As discussed in the NOPR (73 FR 18865, 18900), DOE requested
that the Attorney General transmit to the Secretary a written
determination of the impact of any lessening of competition likely to
result from the proposed standards, together with an analysis of the
nature and extent of such impact. (42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(V) and (B)(ii))
To assist the Attorney General in making such a determination, DOE
provided DOJ with copies of the proposed rule and the TSD for review.
(DOJ, No. 21 at p. 1-2) \5\ The Attorney General's response is
discussed in section IV.K.1, and is reprinted at the end of today's
rulemaking.
---------------------------------------------------------------------------
\5\ ``DOJ, No. 21 at pp 1-2'' refers to (1) a statement that was
submitted by the Department of Justice and is recorded in the
Resource Room of the Building Technologies Program in the docket
under ``Energy Conservation Program for Commercial and Industrial
Equipment: Packaged Terminal Air Conditioner and Packaged Terminal
Heat Pump Energy Conservation Standards,'' Docket Number EERE-2007-
BT-STD-0012, as comment number 21; and (2) a passage that appears on
pages 1 and 2 of that statement.
---------------------------------------------------------------------------
6. Need of the Nation To Conserve Energy
In considering standards for PTACs and PTHPs, the Secretary must
consider the need of the Nation to conserve energy. (42 U.S.C. 6316(a);
42 U.S.C. 6295(o)(2)(B)(i)(VI)) The Secretary recognizes that energy
conservation benefits the Nation in several important ways. The non-
monetary benefits of the standards will likely be reflected in
improvements to the security and reliability of the Nation's energy
system. Today's standards also will likely result in environmental
benefits. As discussed in the proposed rule, DOE has considered these
factors in adopting today's standards. See generally, 73 FR at 18860,
18865, 18888, 18900-02, 18912.
7. Other Factors
In determining whether a standard is economically justified, EPCA
directs the Secretary of Energy to consider any other factors that the
Secretary deems to be relevant. (42 U.S.C. 6316(a); 42 U.S.C.
6295(o)(2)(B)(i)(VII)) In adopting today's standard, DOE considered (1)
the impacts of setting different amended standards for PTACs and PTHPs,
(2) the potential that amended standards could cause equipment
switching (i.e., purchase of PTACs instead of PTHPs) and the effects of
any such switching, (3) the uncertainties associated with the impending
phaseout in 2010 of R-22 refrigerant, and (4) the impact of amended
standards on the manufacture of and market for non-standard size
packaged terminal equipment (e.g., impacts on small businesses). See
generally, 73 FR at 18860, 18865-66, 18872-74, 18882, 18884-87, 18893-
98, 18902, 18911-12.
IV. Analysis Methodology and Discussion of Comments on Analysis
Methodology
DOE used several analytical tools that it developed previously and
adapted for use in this rulemaking. The first tool is a spreadsheet
that calculates LCC and payback period (PBP). The second tool
calculates national energy savings and national NPV. DOE also used the
Government Regulatory Impact Model (GRIM), among other methods, in its
MIA. Finally, DOE developed an approach using the National Energy
Modeling System (NEMS) to estimate impacts of PTAC and PTHP energy
efficiency standards on electric utilities and the environment. The
NOPR discusses each analytical tool in detail. 73 FR at 18866-89.
As a basis for this final rule, DOE has continued to use the
spreadsheets and approaches described above and in the NOPR. DOE used
the same general methodology as applied in the NOPR, but revised some
of the assumptions and inputs for the final rule in response to
comments from interested parties. The following paragraphs discuss
these revisions.
A. Market and Technology Assessment
When beginning an energy conservation standards rulemaking, DOE
develops information that provides an overall picture of the market for
the equipment concerned, including the purpose of the equipment, the
industry structure, and market characteristics. This activity includes
both quantitative and qualitative assessments based primarily on
publicly available information. DOE presented various subjects in the
market and technology assessment for this rulemaking. (See the NOPR and
Chapter 3 of the NOPR TSD.) These include equipment classes,
manufacturers, quantities and types of equipment sold and offered for
sale, retail market trends, and regulatory and nonregulatory programs.
73 FR 18866-69 and Chapter 3 of the NOPR TSD. In response to
publication of the NOPR, DOE received comments from interested parties
about the establishment of equipment classes for the rulemaking.
1. Equipment Classes--Generally
When evaluating and establishing energy conservation standards, DOE
generally divides covered equipment into equipment classes by the type
of energy used, capacity, or other performance-related features that
affect efficiency. Different energy conservation standards may apply to
different equipment classes. (42 U.S.C. 6316(a); 42 U.S.C. 6295(q))
PTACs and PTHPs can be divided into various equipment classes
categorized by physical characteristics that affect equipment
efficiency. Key characteristics that affect the energy efficiency of
the PTAC or PTHP are whether the equipment has reverse cycle heating
(i.e., air conditioner or heat pump), the cooling capacity, and the
physical dimensions of the unit.
In the NOPR, DOE presented two alternative methods for defining
PTAC and PTHP equipment classes. 73 FR 18866-18868. DOE explained the
two alternative methods of defining the PTAC and PTHP equipment classes
consistent with the delineations provided in ASHRAE Standard 90.1-1999
or Addendum t to ASHRAE Standard 90.1-2007 in the NOPR. Id. at 18867.
ASHRAE Standard 90.1-1999 refers to wall sleeve dimensions in two
categories: ``New Construction'' and ``Replacement.'' Although ASHRAE
Standard 90.1-1999 does not describe ``New Construction,'' Table 6.21D,
footnote b of ASHRAE Standard 90.1-1999 states that ``replacement''
efficiencies apply only to units that are: (1) ``Factory labeled as
follows: Manufactured for Replacement Applications Only; Not to be
Installed in New Construction Projects''; and (2) manufactured ``with
existing wall sleeves less than 16 inches high and less than 42 inches
wide.'' Based on this
[[Page 58781]]
provision, DOE understands that the ``New Construction'' category under
ASHRAE Standard 90.1-1999 is residual, and covers all other PTAC and
PTHPs. Hence, this category consists of equipment with wall sleeve
dimensions greater than or equal to 16 inches high and greater than or
equal to 42 inches wide, or lacking the requisite label.
Addendum t to ASHRAE Standard 90.1-2007 includes a new definition
for non-standard size PTACs and PTHPs in place of the ``replacement''
delineation in ASHRAE Standard 90.1-1999. The new definition reads as
follows: ``equipment with existing sleeves having an external wall
opening of less than 16 in. high or less than 42 in. wide, and having a
cross-sectional area less than 670 in \2\.''
2. Comments
In the NOPR, DOE stated that ASHRAE must adopt AHRI's \6\
continuous maintenance proposal before DOE can officially use this
definition as the basis for DOE's standard because AHRI's proposed
definitions would effectively reclassify some equipment under ASHRAE
90.1-1999's delineations as non-standard size equipment. (42 U.S.C.
6313(a)(6)(A)(ii)) When the NOPR was published, AHRI's continuous
maintenance proposal on PTACs and PTHPs had been approved by ASHRAE as
Addendum t to ASHRAE Standard 90.1-2007. At the time of the NOPR, that
Addendum was the subject of public review by ASHRAE. DOE stated in the
NOPR that if ASHRAE were to adopt the Addendum before September 2008,
which is the deadline by which DOE must issue a final rule for this
rulemaking, DOE proposed to incorporate the modified definition
specified by that version of the ASHRAE standard in its final rule. In
the NOPR, DOE sought comment from interested parties on its proposal to
adopt Addendum t to ASHRAE Standard 90.1-2007. 73 FR 18867.
---------------------------------------------------------------------------
\6\ The Air-Conditioning and Refrigeration Institute (ARI) and
the Gas Appliance Manufacturers Association (GAMA) announced on
December 17, 2007, that their members voted to approve the merger of
the two trade associations to represent the interests of cooling,
heating, and commercial refrigeration equipment manufacturers. The
merged association became AHRI on Jan. 1, 2008.
---------------------------------------------------------------------------
AHRI commented that all standard and non-standard manufacturers who
are AHRI members support adoption of Addendum t. AHRI had not received
comments challenging the content in Addendum t during ASHRAE's formal
comment period, and ASHRAE was planning to adopt the Addendum during
the ASHRAE annual meeting in June 2008. AHRI added that manufacturers
believe that the definitions in Addendum t are needed to deter against
the reclassification of large numbers of non-standard size PTACs and
PTHPs as standard equipment, which will not be able to meet the
proposed standards. (Public Meeting Transcript, No. 12 at p. 31-32,
AHRI, No. 23 at pp. 6-7) \7\
---------------------------------------------------------------------------
\7\ A notation in the form ``ECR, Public Meeting Transcript, No.
12 at pp. 30, 37, 182'' identifies (1) an oral comment that DOE
received during the May 30, 2008, NOPR public meeting by ECR, which
was recorded in the public meeting transcript in the docket for this
rulemaking as comment number 12; and (2) a passage that appears on
page 30 of that transcript.
---------------------------------------------------------------------------
ECR, McQuay, Carrier, and Ice Air also commented that DOE should
use the delineations within Addendum t to classify non-standard
equipment. (Public Meeting Transcript (ECR and McQuay), No. 12 at p.
31; ECR, No. 15 at p. 4; Carrier, No. 16 at p. 1; Ice Air, No. 25 at p.
5) ECR also noted that if DOE used the delineations in ASHRAE Standard
90.1-1999 to define the equipment classes for PTACs and PTHPs,
approximately 50 percent of their equipment would be eliminated from
the market as a result of being reclassified into the standard size
category. (ECR, No. 15 at p. 4)
ECR commented that non-standard equipment is burdened by space
constraints that are more stringent than the constraints for standard
size PTACs and PTHPs. ECR added that the delineations within ASHRAE
Standard 90.1-1999, coupled with the proposed standards (TSL 4), would
force manufacturers to include more heat exchanger surface area within
the limited volumes of physical chassis of the equipment, to use
compressors incorporating inverter technology, and to use variable
speed motors, which would result in equipment switching. (ECR, No. 15
at p. 2)
AHRI, ECR, McQuay, Ice Air, and Cold Point also commented that non-
standard size PTACs and PTHPs meet a specific demand that exists in the
market, particularly for older buildings. These commenters stated that
if DOE adopted the delineations in ASHRAE Standard 90.1-1999, which
could further eliminate non-standard size PTACs and PTHPs from the
market, this would decrease competition and limit customer choices.
(Public Meeting Transcript, No. 12 at pp. 20 (ECR), 22 (AHRI), 38
(McQuay); AHRI, No. 23 at p. 7; ECR, No. 15 at p. 4; Ice Air, No. 25 at
p. 4; Cold Point, No. 18 at p. 2)
DOE also received comments about the potential for creating a
loophole by adopting Addendum t in the final rule. In this regard,
these commenters supported DOE's adoption of an alternative definition
for non-standard size PTACs and PTHPs.
Specifically, General Electric (GE) and the American Council for an
Energy Efficient Economy (ACEEE) recommended that DOE modify the non-
standard definitions and equipment classes to have the wall sleeve
dimension requirements set significantly below the proposed dimensions,
consistent with the non-standard size equipment currently on the
market. (Public Meeting Transcript, No. 12 at pp. 16 (GE), 33-34 (GE),
36-37 (ACEEE), 208 (ACEEE); GE, No. 8 at p. 2; GE, No. 20 at pp. 2-3)
GE asked DOE to make the difference in the wall sleeve dimensions of
standard size and non-standard size PTACs and PTHPs large enough to
prevent non-standard PTACs/PTHPs from being installed in standard size
PTAC and PTHP openings. GE used the example of a PTAC (15.75 x 41.75
inches) that GE believes could easily fit inside a standard size PTAC
wall sleeve, yet this unit would be classified as non-standard size
equipment subject to less stringent energy conservation standards.
(Public Meeting Transcript, No. 12 at pp. 16, 33-34; GE, No. 8 at p. 2)
GE stated that the wording in Addendum t might encourage the design
of new PTAC and PTHP equipment that may circumvent the intent of DOE's
regulations. (Public Meeting Transcript, No. 12 at pp. 16, 33-34; GE,
No. 8 at p. 2) As an alternative, GE suggested DOE use the wall sleeve
dimensions of the largest non-standard size PTAC and PTHP equipment
currently on the market to define non-standard size PTACs and PTHPs.
(Public Meeting Transcript, No. 12 at p. 33)
ECR, McQuay, and AHRI responded to concerns about the potential for
a loophole for less efficient standard size equipment to enter the
market if DOE adopts the delineations in Addendum t. (ECR, No. 15 at
pp. 1, 4; Public Meeting Transcript, No. 12 at pp. 20 (ECR), 22 (AHRI),
31-32 (AHRI), 38 (McQuay)) AHRI stated that the same potential loophole
exists in the delineations within ASHRAE Standard 90.1-1999 for
standard size and non-standard size PTACs and PTHPs. AHRI commented
that if manufacturers want to introduce less efficient standard size
equipment with wall sleeve dimensions just shy of the standard size
limitations, manufacturers would have introduced this type of equipment
already because this loophole has been in existence since 1999.
However, AHRI pointed out that none of the manufacturers in the PTAC
and PTHP industry have taken
[[Page 58782]]
advantage of this potential loophole. AHRI also noted that Addendum t
requires non-standard size equipment to be labeled to prevent
misapplications of less efficient non-standard equipment entering into
newly constructed projects. (AHRI, No. 23 at pp. 6-7)
ECR also commented that it does not believe that non-standard size
equipment will be used in newly constructed buildings. ECR stated that
commercial customers would not purchase non-standard equipment because
it is rated at lower efficiencies; rather, customers make purchases
based on the characteristics and needs of the installation (i.e., wall
sleeve dimensions). Placing non-standard size equipment in newly
constructed buildings does not make economic sense. (ECR, No. 15 at pp.
1, 4; Public Meeting Transcript, No. 12 at p. 20) McQuay pointed out
that non-standard equipment is needed to meet a specific demand that
exists in the market, particularly for older buildings, and that
phasing out the market would decrease competition and limit customer
choices. (Public Meeting Transcript, No. 12 at p. 38) If DOE were to
adopt the delineations within ASHRAE Standard 90.1-1999, ECR believes
building owners and commercial customers would keep their older, much
less efficient units in place longer because replacements could become
unavailable. (ECR, No. 15 at p. 1)
On June 22, 2008, ASHRAE Standard 90.1's committee voted to
officially approve the publication of Addendum t to ASHRAE Standard
90.1-2007 for PTACs and PTHPs.\8\ This action finalizes Addendum t,
which means that DOE can officially use this delineation as the basis
for amended energy conservation standards. (42 U.S.C.
6313(a)(6)(A)(ii))
---------------------------------------------------------------------------
\8\ To obtain a copy of Addendum t to ASHRAE Standard 90.1-2007,
contact the ASHRAE publications department at: [email protected] or
1-(800) 527-4723.
---------------------------------------------------------------------------
DOE divides equipment classes by the type of energy used or by
capacity or other performance-related features that affect efficiency.
Different energy conservation standards may apply to different
equipment classes. (42 U.S.C. 6295(q)) When installed, PTACs and PTHPs
are fitted into a wall sleeve. There is a wide variety of wall sleeve
sizes found in different buildings. Wall sleeve sizes are market driven
(i.e., the applications or facilities where the PTACs or PTHPs are
installed is what determines the ``market standard'' wall sleeve
dimension) and this factor requires manufacturers to offer various
PTACs and PTHPs that can fit into various wall sleeve dimensions. For
new units, the industry has standardized the wall sleeve dimension for
PTACs and PTHPs in buildings over the past 20 years to be 16 inches
high by 42 inches wide. Therefore, units that have a wall sleeve
dimension of 16 inches high by 42 inches wide are considered ``standard
size'' equipment and all other units are considered ``non-standard
size'' equipment. In contrast, the industry does not have a common wall
sleeve dimension that is typical for all older existing facilities.
These facilities, such as high-rise buildings found in large cities,
typically use non-standard size equipment. In these installations,
altering the existing wall sleeve opening to accommodate the more
efficient, standard size equipment could include extensive structural
changes to the building, which could be very costly, and is, therefore,
rarely done.
DOE believes that wall sleeve sizes are performance-related
features that affect PTAC and PTHP efficiency. Manufacturers typically
use various heat exchanger sizes in different wall sleeve size
equipment, and the size of the heat exchanger directly affects the
energy efficiency of the equipment. By examining the market data, DOE
found that non-standard size PTACs and PTHPs typically are less
efficient than standard size PTACs and PTHPs. Consequently, DOE is
adopting the delineations in Addendum t to ASHRAE Standard 90.1-2007 to
differentiate between standard size and non-standard size equipment.
DOE believes the delineations within Addendum t will help to
mitigate the impacts on manufacturers of non-standard size equipment,
and will not cause any equipment unavailability issues for commercial
customers. DOE was concerned that, absent non-standard equipment,
commercial customers could be forced to invest in costly building
modifications to convert non-standard sleeve openings to standard size
dimensions. Alternatively, customers may choose to use less efficient
through-the-wall air conditioners or maintain their older, less
efficient equipment longer in the absence of non-standard PTACs and
PTHPs.
Although DOE acknowledges GE's and ACEEE's concern about the
potential loophole in the definition, DOE believes that the effects of
this loophole will be reduced due to the labeling requirements
specified in Addendum t. DOE is not adopting the labeling requirement
set forth in Addendum t, but believes that non-standard manufacturers
will still be required to use this labeling through some of their State
building code regulations, which require the use of such labels on PTAC
and PTHP equipment. DOE believes ASHRAE's labeling requirement will
deter less efficient equipment from entering into newly constructed
buildings.
Additionally, DOE agrees with AHRI's assertion that if
manufacturers wanted to introduce less standard size equipment with
wall sleeve dimensions just shy of the standard size limitations they
could have done this in today's market. DOE believes the market forces
surrounding the standardized sleeve size have deterred standard size
manufacturers from producing this type of equipment because of the
unique non-standard size industry and the cost implications of
producing customized equipment. Further, DOE believes these market
forces will continue to deter standard size manufacturers from taking
advantage of this potential loophole after the adoption of the
delineations in Addendum t to ASHRAE Standard 90.1-2007.
In today's final rule, DOE incorporates the following definitions
of standard size and non-standard size PTACs and PTHPs as presented in
Addendum t to ASHRAE Standard 90.1-2007:
Standard size refers to a PTAC or a PTHP with wall sleeve
dimensions having an external wall opening of greater than or equal to
16 inches high or greater than or equal to 42 inches wide, and having a
cross-sectional area greater than or equal to 670 square inches.
Non-standard size refers to a PTAC or a PTHP with existing
wall sleeve dimensions having an external wall opening of less than 16
inches high or less than 42 inches wide, and having a cross-sectional
area less than 670 square inches.
DOE added these two definitions of standard size and non-standard
size to be codified at 10 CFR 431.2. Consistent with the definitions,
DOE has defined the equipment classes for today's final rule for PTACs
and PTHPs (as shown in Table IV.1).
[[Page 58783]]
Table IV.1--Equipment Classes for PTACs and PTHPs if ASHRAE Adopts Addendum to ASHRAE Standard 90.1-2007
----------------------------------------------------------------------------------------------------------------
Equipment class
-----------------------------------------------------------------------------------------------------------------
Equipment Category Cooling capacity (Btu/h)
----------------------------------------------------------------------------------------------------------------
PTAC..................................... Standard Size *............ <7,000
7,000-15,000
>15,000
----------------------------------------------------------------------
Non-Standard Size **....... <7,000
7,000-15,000
>15,000
----------------------------------------------------------------------------------------------------------------
PTHP..................................... Standard Size *............ <7,000
7,000-15,000
>15,000
----------------------------------------------------------------------
Non-Standard Size **....... <7,000
7,000-15,000
>15,000
----------------------------------------------------------------------------------------------------------------
* Standard size refers to PTAC or PTHP equipment with wall sleevedimensions having an external wall opening of
greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and having a cross-
sectional area greater than or equal to 670 square inches.
** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external
wall opening of less than 16 inches high or less than 42 inches wide, and having a cross-sectional area less
than 670 square inches.
B. Screening Analysis
The purpose of the screening analysis is to evaluate the
technologies that improve equipment efficiency, to determine which
technologies to consider further, and which to screen out. In
developing the screening analysis for the NOPR, DOE consulted with a
range of parties, including industry, technical experts, and others to
develop a list of technologies for consideration. DOE then applied the
four screening criteria to determine which technologies are unsuitable
for further consideration in the rulemaking (10 CFR part 430, subpart
C, appendix A4.(a)(4) and 5.(b)). DOE presented its results of the
screening analysis in the NOPR and in Chapter 4 of the NOPR TSD. In
response to the NOPR, DOE received one comment about the technology
options that it considered in the screening analysis.
ACEEE commented that DOE should not have screened out some of the
technology options. Instead, DOE should have further considered these
options in the engineering analysis. (Public Meeting Transcript, No. 12
at pp. 49-52, 64-65) ACEEE stated that DOE neglected to examine other
types of compressors (such as scroll compressors), electronically
commutated motor (ECM) fans, clutched fan motors, micro-channel heat
exchangers, and thermostatic expansion valves (TXVs). According to
ACEEE, the compressor choices for PTACs should not be different from
those used for residential refrigerators because the loads are similar.
ACEEE added that micro-channel heat exchangers allegedly cost less to
implement, require less refrigerant and space, and have been used in
air conditioning applications within automobiles. (Public Meeting
Transcript, No. 12 at pp. 50-51)
1. Scroll Compressors
As presented in Chapter 4 of the NOPR TSD, scroll compressors are
an alternative to rotary compressors in air-conditioning applications.
Scroll compressors are more efficient than rotary compressors at higher
cooling capacities than are typically found in packaged terminal
equipment. Whereas rotary compressors use a rotating motion to compress
refrigerant gases, scroll compressors use two nutating spirals--one
fixed and the other rotating. Although scroll compressors can be more
efficient than rotary compressors, they typically are more expensive,
heavier, and larger than rotary compressors of the same cooling
capacities.
After reviewing publicly available equipment literature and
specifications for scroll compressors currently available on the
market, DOE determined that manufacturers typically produce scroll
compressors with cooling capacities of approximately 20,000 Btu/h or
higher, and that the majority of equipment using scroll compressors is
typically rated at capacities higher than 40,000 Btu/h. Manufacturers
also produce scroll compressors with housings larger than those used
for compressors found in PTACs and PTHPs. DOE found that scroll
compressors are typically built to be 16 inches or higher in height and
that capacity ratings do not impact scroll compressor heights
significantly. For example, DOE found that the height of a scroll
compressor only decreases by approximately 1.5 inches when capacity
decreases from 80,000 to 20,000 Btu/h. However, significant
improvements in efficiency, when compared to rotary compressors, are
generally achieved with higher capacity models. DOE's market review
also found that scroll compressors weigh more than PTAC and PTHP
compressors. Scroll compressors typically weigh 50 pounds or more,
compared with the 25 to 30 pounds for a PTAC/PTHP rotary compressor
found in PTACs and PTHPs.
Ultimately, DOE screened out scroll compressors as a viable design
option. As stated in the NOPR and subsequently confirmed by DOE using
updated data, manufacturers do not produce scroll compressors for PTAC
and PTHP applications, making it unlikely that this technology option
could be readily applied to these products. DOE also screened out
scroll compressors because their manufacturers have yet to produce a
full line of scroll compressors that meet the size limitations,
capacity requirements, and voltage requirements of packaged terminal
equipment. The size limitation is particularly problematic when given
the installation limitations of the sleeve sizes for PTACs and PTHPs.
2. ECM Motors
As presented in Chapter 4 of the NOPR TSD, there are multiple types
of electric fan motors that manufacturers
[[Page 58784]]
can choose from to blow air over the condenser and evaporator coils.
Since the PTAC and PTHP industries have a relatively small number of
annual shipments, manufacturers typically have to choose their motors
from existing motor lines, rather than having motors customized for
their specific needs. The type of motor and its power rating are
typically indicative of its efficiency. For example, shaded pole motors
are generally the lowest efficiency motors that are available,
particularly at very low power levels. By contrast, the electronically
commutated motors (ECM) or brushless permanent magnet motors (BPMs) are
typically the most efficient motors for the low power levels.
DOE determined that the PTAC and PTHP industries have not adopted
ECMs or similar high efficiency motors due to size and weight
constraints. The size limitation is particularly problematic when given
the installation limitations of the sleeve sizes for PTACs and PTHPs,
particularly for non-standard PTACs. Ultimately, DOE screened out high
efficiency motors as a viable design option. As stated in the NOPR and
subsequently confirmed by DOE using updated data and through
discussions with industry experts, DOE found high efficiency motors are
not available in the full ranges of sizes needed for the PTAC and PTHP
industries making it unlikely that this technology option could be
readily applied to these products. DOE believes that, given these
circumstances, it would not be practical to manufacture, install, and
service this technology on the scale necessary to serve the relevant
market at the time of the effective date of an amended standard.
3. Fan Motors
ACEEE commented on clutched fan motors, but DOE did not consider
this technology. Although the automotive industry uses clutched fans to
engage and disengage a vehicle's cooling fan from the belt driven by
the engine, using a clutched fan would not provide appreciable benefits
within the energy efficiency context. In theory, these devices would
work with PTACs and PTHPs to reduce the load on a single fan motor used
to drive both the evaporator and the condenser fan blades when the
refrigerating system is not operating by disengaging the condenser fan.
In this way, power input could be reduced during times when only the
indoor blower is running to recirculate air, or when electric
resistance heating is being provided. However, the measure of energy
use for PTACs in cooling mode is based on full cooling operation, in
which both the indoor blower and the condenser fan must operate. Hence,
including a clutched condenser fan would not provide measurable energy
efficiency benefits.
4. Micro-Channel Heat Exchangers
As presented in Chapter 4 of the NOPR TSD, micro-channel heat
exchangers have a rectangular aluminum cross-section containing several
small channels through which refrigerant passes. Aluminum fins with a
corrugated shape are brazed at a 90-degree angle between the
rectangular tubes. Micro-channel heat exchanger designs provide more
heat transfer per volume of heat exchanger core and can provide more
heat transfer per unit of face area. In addition, these designs have
lower airside pressure drop than similarly performing conventional
coils, which reduces the fan power requirement. The small size and
lower airside pressure drop that results from micro-channel heat
exchangers provide opportunities to reduce the size and weight of the
heat exchanger. This explains the frequent use of micro-channel heat
exchangers in automobile air-conditioning systems, where their small
size and high performance allow car designers to minimize air
resistance by lowering the leading edge of the car.
As stated in the NOPR TSD, DOE screened out micro-channel heat
exchangers from the engineering analysis. 73 FR 18869-70. Through
review of publicly available literature, product specifications, and
discussions with manufacturers, DOE determined that micro-channel heat
exchangers have inherent problems with performance and condensate
removal when installed in PTAC equipment. In particular, manufacturers
observed that the smaller airflow passages between plate fins are
subject to clogging in installations where debris is present, which can
affect both the heat exchanger and fan motor performance. Additionally,
for PTACs and PTHPs operating in cooling mode, condensate buildup on
the evaporator of the installation may result in icing, which is harder
to remove from small horizontal micro-channel heat exchanger passages
than from the vertical fins found in the currently used tube and fin
heat exchangers.
For the reasons stated above, manufacturers have chosen not to
install micro-channel heat exchangers in PTAC and PTHP designs. DOE
determined that this technology has not yet penetrated the PTAC and
PTHP industry and that design challenges still exist. At this time, DOE
believes microchannel heat exchangers are technologically infeasible in
PTAC and PTHP applications. DOE understands that manufacturers are
conducting research into the use of micro-channel heat exchangers in
their PTACs and PTHP design at this time. However, DOE does not have
definite knowledge of whether their research efforts will be
successful, of when mirco-channel heat exchangers could appear in
either prototypes or equipment designs, and what the cost implications
would be and the contribution to system performance would be. Because
this technology is in the research stage for the PTAC industry, it is
also not possible to assess whether it will have any adverse impacts on
equipment utility to customers or equipment availability, or on
customer health or safety.
5. Thermal Expansion Valves
Regarding ACEEE's comments about TXVs, DOE did not consider this
technology for PTACs or PTHPs. TXVs are expansion devices that meter
the flow of refrigerant from the condenser to the evaporator at a rate
equivalent to the amount of refrigerant being boiled off in the
evaporator. For example, when the evaporator is exposed to high
temperatures, the TXV will open to allow faster flow of refrigerant to
match the higher boiling rate caused by higher temperatures.
Alternatively, for lower temperatures, the TXV will reduce the flow
rate to match the lower boiling rate caused by cooler temperatures.
Typically, TXVs are installed in central air conditioning applications
where equipment is rated with the seasonal energy efficiency ratio
(SEER) metric and testing occurs at various operating conditions and
temperatures. In contrast, PTACs and PTHPs are measured using the EER
metric, with testing occurring at a constant temperature of 95 degrees
F. Therefore, the energy efficiency benefits of a TXV will not affect
the EER rating of a PTAC because the orifice of the TXV and the flow of
refrigerant would remain constant during testing. Therefore, DOE does
not consider TXVs to be a technology for improving the EER of PTACs and
PTHPs.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the
relationship between the cost and efficiency of PTACs and PTHPs and to
show the manufacturing costs required to achieve that increased
efficiency level. As detailed in the NOPR, DOE's engineering analysis
for PTACs and PTHPs estimated the baseline manufacturer cost, as well
as the incremental cost for equipment at
[[Page 58785]]
efficiency levels above the baseline. 73 FR 18870-74. DOE presented its
engineering analysis in the NOPR, which included a discussion on the
approach, the equipment classes analyzed, the cost model, the baseline
equipment, the alternative refrigerant analysis, the cost efficiency
results, and mappings of the EER and COP values. In response to DOE's
presentation of the engineering analysis in the NOPR, DOE received
comments on the following topics: Standard size equipment performance
in systems using R-410A refrigerant, max-tech efficiency levels
analyzed for standard size equipment, energy-efficiency equations for
standard size equipment, max-tech efficiency levels analyzed for non-
standard size equipment, energy-efficiency for non-standard size
equipment, compressor availability, and the manufacturer production
cost increases with the introduction and use of R-410A. DOE discusses
each of these topics and the updates to the cost model for the final
rule in the subsections below.
1. Material Prices for the Cost Model
In the NOPR analyses, DOE used five-year average material prices
from years 2002 through 2006. 73 FR 18871. For the final rule, DOE
updated the five-year averages to include material price data from 2007
and 2008. DOE uses a five-year span to normalize the fluctuating prices
experienced in the commodities market to screen out temporary dips or
spikes. DOE believes a five-year span is the longest span that would
still provide appropriate weighting to current prices experienced in
the market.
DOE basis for its belief relies on updated commodity pricing data,
which point to continued increases. For example, the 5-year time period
ending in mid-2008 has higher commodity indices than a 5-year ending in
mid-2006 by 10 percent, 28 percent, and 45 percent for All Commodities,
Steel, and Copper, respectively.\9\ Considering the significant amount
of steel and copper in each PTAC or PTHP, incorporating commodity
prices that reflect 5-year average prices as close to the current
conditions best reflect the market conditions. DOE believes it is
appropriate to use prices from 2007 and 2008 in the data span because
it more closely represents current PTAC and PTHP material prices and
manufacturing conditions. DOE calculated a new five-year average
materials price for cold rolled steel, aluminized steel, galvanized
steel, painted cold rolled steel, and stainless steel. DOE used the
U.S. Department of Labor's Bureau of Labor Statistics (BLS) Producer
Price Indices (PPIs) for various materials from 2004 to 2008 to
calculate new averages, which incorporate the changes within each
material industry and inflation. Finally, DOE adjusted all averages to
2007$ using the gross-domestic-product implicit-price deflator.
---------------------------------------------------------------------------
\9\ Bureau of Labor Statistics (BLS) for Copper (WPU102502),
Cold Rolled Steel (WPU101707), and All Commodities (WPU00000000) as
tracked in the Producer Price Index (PPI) database of the BLS. To
download the data or to discover how it is gathered, please see
http://www.bls.gov.
---------------------------------------------------------------------------
As was the case for the NOPR, DOE developed a material-price-
sensitivity analysis. DOE used the annual average price for each of the
raw materials from 2008 to calculate the current manufacturing product
costs (MPCs). DOE expressed the material price sensitivity results in
2007$. The results for the material-price-sensitivity analysis are
presented in Chapter 5 of the final rule TSD.
2. Impacts of the Refrigerant Phaseout on PTAC and PTHP Equipment
Performance
a. Standard Size Equipment Performance in Systems Using R-410A
Refrigerant
GE commented that R-410A refrigerant has been in use for years by
the air conditioning industry. Even though GE believes switching to R-
410A refrigerant in PTAC and PTHP equipment will have a negative impact
on system efficiency, GE believes the difference can be made up with a
combination of higher efficiency compressors, motors, as well as
increases in heat exchanger size. GE stated that manufacturers have
been aware of the future requirements and should be far along with
developments and designs to meet both amended energy conservation
standards and R-410A requirements. GE also pointed out that one
manufacturer has produced an R-410A PTHP that exceeds the proposed
energy conservation standard level in the NOPR (i.e., 11.5 EER for
standard equipment) and is currently available on the market. (GE, No.
20 at pp. 2-3; Public Meeting Transcript, No. 12 at pp. 17-18, 66) GE
noted that it is finishing the design and test phase for several models
and is confident that it can manufacture standard size R-410A PTACs and
PTHPs at TSL 4 efficiency levels (i.e., the proposed energy
conservation standards for PTHPs in the NOPR). GE added that achieving
an efficiency level that is 10 percent higher than the proposed
standard for a potential ENERGY STAR category is also possible with
existing technology. (GE, No. 20 at p. 3; Public Meeting Transcript,
No. 12 at p. 66)
In addition to comments from manufacturers of standard size PTACs
and PTHPs, DOE also received confidential performance test data that
characterizes the equipment performance degradations in standard size
PTACs and PTHPs using R-410A refrigerant. The confidential data DOE
received regarding standard size equipment performance suggests the
performance degradation can vary greatly depending upon the cooling
capacity of the equipment. DOE further addresses comments from
interested parties and its analysis of the variation in standard size
equipment performance with changes in cooling capacity in DOE's
discussion of the energy-efficiency equations, below.
DOE reviewed the data submitted by manufacturers and comments from
interested parties and found, in general, the system performance
degradations for PTAC and PTHP equipment with R-410A, as described in
the NOPR, were in the middle of the range of the submitted data. For
today's final rule, DOE used the same system performance degradations
for PTAC and PTHP equipment with R-410A refrigerants as described in
the NOPR. 73 FR 18873. Because standard size PTAC and PTHP equipment
utilizing R-22 refrigerants exists at efficiency levels well above the
efficiency levels in ASHRAE Standard 90.1-1999, DOE believes that
manufacturers will be able to produce equipment utilizing R-410A at
efficiency levels specified by ASHRAE Standard 90.1-1999 and higher
efficiency levels in 2012. As GE noted, one standard size manufacturer
is already producing R-410A equipment at efficiency levels above ASHRAE
Standard 90.1-1999 efficiency levels. Lastly, the comments submitted by
GE establishes that PTAC and PTHP prototypes utilizing R-410A
refrigerant have been developed and will be able to meet the proposed
efficiency levels, i.e., TSL 4, for standard size PTACs and PTHPs.
As DOE reviewed the data submitted by interested parties, DOE
generally found larger performance degradations at higher cooling
capacities for standard size equipment. As a PTAC or PTHP increases in
capacity, manufacturers typically increase the surface area or add a
row to the heat exchanger in order to increase unit capacity. Even at
larger cooling capacities, manufacturers have to maintain the same
physical box sleeve, leaving little space for additional efficiency
modifications (e.g., adding heat exchanger area). DOE considered the
effects of the R-410A refrigerant
[[Page 58786]]
phaseout on the entire range of cooling capacities as part of the
generation of the energy-efficiency equations that translates the
results for the representative cooling capacities to the entire cooling
capacity range. See section IV.C.2.c for additional details on how DOE
extended the results for the representative cooling capacities to the
full range of cooling capacities for standard size PTACs and PTHPs.
b. ``Max-Tech'' Efficiency Levels Analyzed for Standard Size Equipment
AHRI and the People's Republic of China, through its WTO/TBT
National Notification and Enquiry Center (PRC), commented that the max-
tech levels are inaccurate because they are based on R-22 refrigerant
and there is no equipment in the 2008 AHRI Directory of Certified
Product Performance (AHRI Certified Directory) \10\ operating with R-
410A refrigerant. AHRI and the PRC also commented about the difficulty
in reaching the max-tech efficiency levels with R-410A refrigerant and
assert that attaining those efficiency levels is not possible at this
time. (Public Meeting Transcript, No. 12 at pp. 168-169; PRC, No. 17 at
p. 3)
---------------------------------------------------------------------------
\10\ The Air-Conditioning, Heating and Refrigerating Institute,
Directory of Certified Product Performance for Packaged Terminal Air
Conditioners and Packaged Terminal Heat Pumps. 2008. <http://www.ahridirectory.org/ahriDirectory/pages/home.aspx.
---------------------------------------------------------------------------
DOE agrees that with the prohibition on R-22 refrigerant, and the
expected use of R-410A refrigerant as the most likely alternative,
system performance will decline. The max-tech efficiency level should
be based on the most likely refrigerant, which is R-410A. Accordingly,
DOE revised the max-tech efficiency levels for standard size PTACs and
PTHPs in the final rule analysis. DOE applied the system performance
degradations described in the NOPR to the AHRI certified market data
for standard size equipment. (See graphs in Chapter 5 of the final rule
TSD.) DOE used the modified market data to estimate the max-tech
efficiency levels corresponding to current models utilizing R-410A and
has identified these efficiency levels in section III.B for the
representative cooling capacities. DOE estimates that these performance
degradations will fall within five to eight percent depending on
cooling capacity when compared to an R-22 baseline.
c. Energy-Efficiency Equations for Standard Size Equipment
In response to the NOPR, DOE also received a comment on its
approach for calculating the energy efficiency equations for standard
size PTACs and PTHPs. Carrier commented that the engineering
extrapolations might not provide an accurate view of the max-tech
efficiency levels for larger size equipment. In particular, Carrier
commented that the PTAC efficiency levels proposed in the NOPR are
achievable, but the PTHP proposed efficiency levels in the NOPR may be
unachievable in equipment with a cooling capacity of 12 kBtu/h and
above. (Carrier, No. 16 at p. 2)
DOE further considered the effects of R-410A on system performance
for larger cooling capacities in the engineering analysis. DOE found
that as a standard size PTAC or PTHP increases in capacity,
manufacturers typically increase the coil surface area or add a coil
row to the heat exchanger in order to increase unit capacity.
Manufacturers of standard size PTACs and PTHPs maintain the same
physical box sleeve (i.e., 42 inches by 16 inches) across all models
regardless of cooling capacity. This sleeve size is an established
common sleeve size that allows standardization across the industry.
This common sleeve size allows end-users to simply slide replacement
units into existing wall sleeve openings. However, the standard size
wall sleeve imposes a limitation on the total volume available into
which all components must fit. Manufacturers add heat exchanger coil
area or coil volume to either increase the cooling capacity or to
obtain higher efficiencies. This fixed volume limits the size of the
box into which the unit's components must fit. In turn, this fixed
volume limits the size of heat exchangers and other components that can
be used to increase efficiency and there are accompanying decreases in
thermodynamic returns when making such changes. Thus, higher capacity
units often have lower energy efficiency potentials due to the size
constraints of the box sleeve.
In order to consider the effects of the refrigerant phaseout on
larger capacity units, DOE reviewed the market data for standard size
equipment in the AHRI Certified Directory. DOE applied the efficiency
degradations distinguished by cooling capacity ranges estimated in the
engineering analysis to each of the models in the AHRI Certified
Directory. DOE used these data to estimate the overall system
performance of the models in the AHRI Certified Directory utilizing R-
410A refrigerant. From these data, DOE plotted each TSL it considered
as part of the final rule to see if there were models in the full range
of cooling capacity with estimated performance utilizing R-410A
refrigerant that would meet the TSL being considered.
For TSL A, which is the amended standard level for standard size
PTACs and PTHPs, DOE adjusted the slope of the energy-efficiency
equation from the revised slopes calculated in the NOPR for TSLs 1
through 7. This adjustment was based on manufacturer comment and DOE
data pointing to the reduced opportunities for achieving greater
efficiencies for larger capacity PTAC and PTHP equipment. By revising
the slope in this manner, DOE could create and ultimately, adopt, a
standard level that is more stringent for lower cooling capacities,
where manufacturers have additional physical space to add efficiency
improvements, but is less stringent for higher cooling capacities,
where manufacturers are physically constrained by the physical
dimensions of the box sleeve and less able to introduce efficiency
improvements. See Chapter 9 of the final rule TSD for additional
details and graphic demonstrations of the energy-efficiency equations
for each TSL, including today's amended energy conservation standard
for standard size PTACs and PTHPs.
d. Efficiency Levels Analyzed for Non-Standard Size Equipment
In the NOPR, DOE explicitly analyzed one cooling capacity of non-
standard equipment (i.e., 11,000 Btu/h). Based upon this cooling
capacity, DOE demonstrated a typical design option pathway a
manufacturer could use to increase the efficiency of its non-standard
PTAC and PTHP equipment. To account for the potential loss of system
efficiency as a result of the R-22 refrigerant phaseout, DOE applied an
overall system degradation of 6.8 percent, which effectively shifted
the cost-efficiency curve to the left (in the direction of decreasing
efficiency for the same cost). Thus, for any given efficiency level,
the MPC increase will be greater when R-410A refrigerants are used. By
degrading expected system performance, DOE accounts for the shift in
the baseline performance that a system converted to R-410A use
typically exhibits. Using the design option pathway described in the
engineering analysis, the maximum efficiency level analyzed is 10.0 EER
for non-standard equipment with a cooling capacity of 11,000 Btu/h
using R-410A.
e. Energy-Efficiency Equations for Non-Standard Size Equipment
In response to the NOPR, DOE received several comments on its
approach for calculating the energy-efficiency equations for non-
standard
[[Page 58787]]
size PTACs and PTHPs. Specifically, DOE retained the ASHRAE Standard
90.1-1999 slope from the energy-efficiency equation, which
characterizes the relationship between EER and cooling capacity for
non-standard PTACs and PTHPs in the NOPR. 73 FR 18890-91.
ECR and AHRI commented that they are particularly concerned about
reaching the efficiency levels for the larger capacity, non-standard
size equipment. (AHRI, No. 23 at pp. 4-5; Public Meeting Transcript
(ECR), No. 12 at p. 170) ECR specifically commented that it is
concerned about the methodology DOE used to develop the energy-
efficiency equations for non-standard equipment. (ECR, No. 15 at p. 2)
ECR and Ice Air commented that the proposed energy conservation
standard for non-standard PTHPs is too high for all capacities
considering the system performance degradations from switching to R-
410A refrigerant. (Public Meeting Transcript, No. 12 at pp. 56-60; Ice
Air, No. 25 at p. 2)
DOE further considered the effects of R-410A on system performance
in the engineering analysis for larger cooling capacities of non-
standard PTACs and PTHPs. As explained above, DOE found that as a non-
standard size PTAC or PTHP increases in capacity, manufacturers
typically increase the coil surface area or add a coil row to the heat
exchanger in order to increase unit capacity. The fixed volume of the
box sleeve imposes a physical limit on the size of heat exchangers and
other unit components that can be used to increase efficiency. Thus,
higher capacity units often have lower energy efficiency potential due
to the size constraints of the box.
In order to consider the effects on larger capacity units, DOE
reviewed the market data for non-standard size equipment in
manufacturer equipment catalogs. DOE applied the efficiency
degradations distinguished by cooling capacity ranges estimated in the
engineering analysis to each of the non-standard models offered for
sale and described in manufacturer equipment catalogs. DOE used this
data to estimate the overall system performance of the models on the
market utilizing R-410A refrigerant. DOE was able to plot each of the
TSLs it considered as part of the final rule (i.e., TSL 1 through 5) to
see if there were models in the full range of cooling capacities with
estimated performance utilizing R-410A refrigerant that would meet the
TSL being considered. These plots demonstrated the specific cooling
capacities where the TSL or amended standard would be eliminating all
of the models from the market using the estimated R-410A performance.
See Chapter 9 of the final rule TSD for additional details and graphic
demonstrations of the energy-efficiency equations for each TSL,
including today's amended energy conservation standard for non-standard
size PTACs and PTHPs.
DOE further considered the effects of the refrigerant phaseout on
larger cooling capacities when weighing the benefits and the burdens
for non-standard equipment. See section V.D for additional information.
f. Compressor Availability
AHRI, Carrier, Ice Air, ECR, and Goodman stated that the true
impact on PTAC and PTHP equipment efficiency levels cannot currently be
assessed because the lack of available components across the range of
equipment capacities prevents comprehensive equipment testing. These
manufacturers also stated that R-410A compressors are not available in
all required capacities and voltages. Further, compressor manufacturers
have not committed to improving compressor performance of rotary
compressors. (Public Meeting Transcript (ECR), No. 12 at p. 68-69;
Public Meeting Transcript (Goodman), No. 12 at p. 174; AHRI, No. 23 at
p. 4; Carrier, No. 16 at p. 5; Ice Air, No. 25 at pp. 1-2)
As DOE presented in the NOPR, DOE found the availability of R-410A
compressors in a wide range of efficiencies and voltages remains
uncertain. Several compressor manufacturers make R-22 PTAC and PTHP
compressors of different capacities, voltages, and efficiencies for
standard and non-standard equipment. As the market transitions to the
use of R-410A, manufacturers may only develop and offer one line of
compressors for PTACs and PTHPs. In engineering interviews conducted
for the NOPR, compressor manufacturers commented on the uncertainties
surrounding R-410A compressors and their performance characteristics
when compared to R-22 compressors. 73 FR 18874. DOE noted in the NOPR
that compressor manufacturers stated in interviews that they expect to
offer R-410A compressors at only one efficiency level in the initial
stages of the R-22 refrigerant phaseout, which could further reduce
compressor options for PTAC and PTHP manufacturers. Id.
In response to comments and the uncertainty surrounding compressor
options for manufacturers, DOE gave particular attention to the PTAC
and PTHP efficiency levels that cannot be met with current technologies
and practices with R-410A in weighing the benefits and burdens of the
various TSLs. However, DOE notes that GE stated its working prototypes
have experienced significantly less performance degradation due to R-
410A conversion than was modeled in the engineering analysis. (GE, No.
20 at p. 2) Based on manufacturer feedback during interviews and
historic precedent in other air-conditioning markets where similar
refrigerant transitions have taken place, DOE acknowledges that the R-
410A compressors available for use in PTAC and PTHP equipment could be
less efficient than similar compressors that use R-22 refrigerant at
the time of the R-22 phaseout. Even though DOE received comments during
engineering interviews stating compressor manufacturers may only offer
one rotary compressor line when the refrigerant phaseout occurs, DOE
believes compressor manufacturers will continue their development
efforts and eventually offer compressors in the full range of cooling
capacities, voltages, and efficiencies as they do today. Similar market
transformations have occurred in other industries and while the initial
set of compressors were less efficient, the markets eventually matured
to offer manufacturers a variety of compressors. See Chapter 5 of the
TSD for additional information. In addition, DOE believes the amended
energy conservation standards being adopted in today's final rule will
aid the PTAC and PTHP industry and provide compressor manufacturers
with target efficiencies for which they can concentrate their research
and development efforts.
3. Manufacturer Production Cost Increases With R-410A
Goodman stated that DOE's estimate of a two percent manufacturing
cost increase for converting standard size PTAC and PTHP equipment to
utilize R-410A refrigerant is too low. (Public Meeting Transcript, No.
12 at pp. 46-47, 74)
Goodman misstates DOE's estimate. DOE did not use a two percent
cost increase. To derive the baseline MPCs for the R-410A PTACs and
PTHPs used in the NOPR, DOE estimated the R-410A refrigerant pricing,
R-410A compressor pricing, as well as other design changes necessary to
accommodate the alternative refrigerant, and incorporated them into the
same cost model used for the R-22 engineering analysis. Based on
technical journals and manufacturer interviews, DOE increased the tube
wall thicknesses of all heat exchangers by 25 percent to
[[Page 58788]]
account for the higher pressures associated with R-410A refrigerant.
DOE also used a refrigerant price for R-410A based upon cost estimates
from refrigerant suppliers and engineering interviews with
manufacturers. During engineering interviews, PTAC and PTHP equipment
and component manufacturers stated that compressor prices would
increase between 10 percent and 20 percent from current R-22 compressor
prices. To incorporate manufacturers' comments, DOE estimated that
compressor costs would increase by 15 percent. Using the above
estimates, DOE calculated the baseline manufacturer selling price
(MSPs) \11\ of R-410 standard size equipment to be at least 10 percent
more than its' R-22 counterpart, on average. See Chapter 5 of the final
rule TSD for additional details of the R-410A analysis and results. See
TSD, Chapter 5, Section 5.8 (detailing representative capacities of
standard size equipment using R-410A).
---------------------------------------------------------------------------
\11\ This is the price at which the manufacturer can recover
both production and non-production costs and earns a profit.
---------------------------------------------------------------------------
Accordingly, DOE believes Goodman's statement mischaracterizes the
estimated manufacturing cost increases in the NOPR. DOE has continued
to use the same methodology as presented in the NOPR to develop the R-
410A manufacturer production costs for both standard size and non-
standard size equipment. After DOE revised the cost model in response
to comments from interested parties, DOE calculated the baseline MSPs
to be at least 15 percent more than its R-22 counterpart, on average,
for standard size PTAC and PTHP equipment. Additional details and
results can be found in section 5.8 of Chapter 5 of the final rule TSD.
D. Energy Use Characterization
The building energy use characterization analysis assessed the
energy savings potential of PTAC and PTHP equipment at different
efficiency levels. The analysis estimates the energy use of PTACs and
PTHPs at specified energy efficiency levels through energy use
simulations for key commercial building types across a range of climate
zones. The energy simulations yielded hourly estimates of building
energy consumption, including lighting, plug loads, and air-
conditioning and heating equipment. The analysis extracted the annual
energy consumption of the PTACs and PTHPs for use in subsequent
analyses, including the LCC, PBP, and NES.
DOE did not consider a rebound effect in the final rule analysis
when determining the reduction in energy consumption of PTAC and PTHP
equipment due to increased efficiency. The rebound effect occurs when a
piece of equipment is made more efficient such that the operating costs
come down to a point that either the use of the product increases or
the market increases, resulting in lower than expected energy savings.
Because the user of the equipment (e.g., the customer in a hotel room)
does not pay the utility bill, DOE assumed that increasing the
efficiency of the equipment will not affect the usage or market for the
equipment and, as a result, no rebound effect would occur. DOE
requested comment on this assumption in the NOPR. 73 FR 18876. The
commenters all agreed that there would be no rebound effect for PTACs
and PTHPs. (Public Meeting Transcript (ECR), No. 12 at p. 138, GE, No.
8 at p. 2, Carrier, No. 16 at p. 2) Based on the above, DOE did not
incorporate a rebound effect into the final rule analysis.
E. Life-Cycle Cost Analysis
For each efficiency level analyzed, the LCC analysis requires input
data for the total installed cost of the equipment, its operating cost,
and the discount rate. Table IV.2 summarizes the inputs and key
assumptions used to calculate the customer economic impacts of all
energy efficiency levels analyzed in this rulemaking. DOE also
calculated the PBP of the TSLs relative to a baseline efficiency level.
The PBP measures the amount of time it takes the commercial customer to
recover the assumed higher purchase expense of more energy efficient
equipment through lower operating costs. Similar to the LCC, the PBP is
based on the total installed cost and operating expenses, and is
calculated as a range of payback periods depending on the probability
distributions of the two key inputs (i.e., the supply chain markups and
where the unit is likely to be shipped). Unlike its calculation of the
LCC, DOE's calculation of the PBP considered only 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, it is also
referred to as a simple payback period. Aside from the installation
cost, the primary change for the final rule analysis affecting PBP is
the electricity price forecasted for 2012 based on the 2007 EIA State
energy price data and the AEO2008 electricity price forecasts. Chapter
8 of the TSD discusses the PBP calculation in more detail.
Table IV.2--Final Rule Inputs and Key Assumptions Used in the LCC and
PBP Analyses
------------------------------------------------------------------------
Changes for final
Inputs NOPR description rule
------------------------------------------------------------------------
Overall
------------------------------------------------------------------------
LCC Reporting............... All cost inputs and Updated cost inputs
LCC analysis and and LCC reporting
reporting done in to 2007 dollars
2006 dollars (2007$).
(2006$).
------------------------------------------------------------------------
Affecting Total Installed Cost
------------------------------------------------------------------------
Equipment Price............. Derived by All MSPs updated to
multiplying MSP 2007. Updated
(from the wholesaler markup
engineering to use 2007
analysis) by industry (Heating,
wholesaler markups Airconditioning and
and contractor Refrigeration
markups plus sales Distributors
tax (from markups International
analysis). Used the (HARDI)) data.
probability Sales tax data
distribution for updated to 2008.
the different Used State
markups to describe population weights
their variability. to determine
distribution of
sales updated to
2007 census data.
Installation Cost........... Includes Used RS Means
installation labor, CostWorks 2008 data
installer overhead, to update
and any installation costs.
miscellaneous
materials and
parts, derived from
RS Means CostWorks
2007.
------------------------------------------------------------------------
[[Page 58789]]
Affecting Operating Cost
------------------------------------------------------------------------
Annual Energy Use........... Derived from whole- No change.
building hourly
energy use
simulation for
PTACs or PTHPs in a
representative
hotel/motel
building in various
climate locations
(from energy use
characterization
analysis). Used
annual electricity
use per unit. Used
the probability
distribution to
account for which
State a unit will
be shipped to,
which in turn
affects the annual
energy use.
Electricity Price........... Calculated average Used EIA data for
commercial 2007 to update the
electricity price analysis for
in each State, as average electricity
determined from DOE price by state.
Energy Information Used the AEO2008
Administration electricity price
(EIA) data for forecasts to
2006. Used the calculate future
AEO2007 forecasts prices.
to estimate the
future electricity
prices. Used the
probability
distribution for
the electricity
price.
Maintenance Cost............ Annual maintenance Annual maintenance
cost did not vary costs updated to
as a function of use RS Means
efficiency. CostWorks 2008
data.
Repair Cost................. Estimated the No change.
annualized repair
cost for baseline
efficiency PTAC and
PTHP equipment as
$15, based on costs
of extended
warranty contracts
for PTACs and PTHPs
(Chapter 8 of the
TSD). Assumed that
repair costs would
vary in direct
proportion with the
MSP at higher
efficiency levels
because it
generally costs
more to replace
components that are
more efficient.
------------------------------------------------------------------------
Affecting Present Value of Annual Operating Cost Savings
------------------------------------------------------------------------
Equipment Lifetime.......... Used the probability No change.
distribution of
lifetimes, with
mean lifetime for
each of four
equipment classes
assumed to be 10
years based on
literature reviews
and consultation
with industry
experts.
Discount Rate............... Mean real discount Used 2008 financial
rates ranging from data discount rate
5.7% for owners of calculations to
health care update discount
facilities to 8.2% rates.
for independent Mean real discount
hotel/motel owners. rates ranging from
Used the 5.53% for owners of
probability large motel/hotel
distribution for chains to 8.14% for
the discount rate. offices.
Date Standards Become September 30, 2012 No change.
Effective. (4 years after the
publication of the
final rule).
------------------------------------------------------------------------
Analyzed Efficiency Levels
------------------------------------------------------------------------
Analyzed Efficiency Levels. Baseline efficiency No change for
levels (ASHRAE standard size PTAC
Standard 90.1-1999) and PTHP equipment
and five higher classes.
efficiency levels Only three
above the baseline efficiency levels
for six equipment above the baseline
classes. (DOE also analyzed for non-
considered levels standard size
that were equipment classes.
combinations of
efficiency levels
for PTACs and
PTHPs.)
------------------------------------------------------------------------
For this final rule, DOE did not introduce changes to the life-
cycle cost methodology described in the NOPR. However, as the following
sections discuss in more detail, DOE revised the inputs to the LCC
analysis.
1. Equipment Prices
The price of a PTAC or PTHP reflects the application of
distribution channel markups and the addition of sales tax to the MSP
as described in the NOPR. Modifications made for the final rule include
using the latest MSP data in 2007$ and incorporating changes to the
material prices discussed previously, updating the wholesale markups to
use 2007 data available from the HARDI 2007 Profit Report, updating
State sales tax data to 2008 data from the Sales Tax Clearing House Web
site, and updating State population data (used for allocating national
shipments to State-level shipments) to use 2007 information from the
U.S. Census Bureau.
2. Installation Costs
For the NOPR, DOE derived installation costs for PTACs and PTHPs
from data provided in RS Means CostWorks 2007 (RS Means).\12\ For the
final rule, DOE updated the installation costs using the RS Means
CostWorks 2008 data. Several commenters gave their views on whether
higher installation costs should be assumed for PTHP equipment compared
with PTAC equipment. Goodman commented that drain systems for PTHP
installations as required by several of the building codes might be
fairly expensive, resulting in higher installation costs for PTHP
compared to PTAC equipment. Goodman pointed out that the odds of
replacing a PTAC with a PTHP are low because of the additional cost to
add drains during equipment replacement. (Goodman, No 8.4 at p. 116) GE
commented that DOE does not need to include a significant cost in the
LCC for a drainage system because several manufacturers offer low cost
kits and special models that remove moisture without the use of a
drainage system. (GE, No. 20 at p. 3) Since there was differing opinion
with regard to whether higher installation costs would be required for
PTHP equipment and since these installation costs were held constant
for all efficiency levels and would not affect the LCC savings or NPV
figures calculated for higher
[[Page 58790]]
efficiency PTHP or PTAC standards, DOE did not further modify the
installation costs beyond what was reflected in the RS Means CostWorks
data.
---------------------------------------------------------------------------
\12\ R.S. Means Company, Inc. 2007. RS Means CostWorks 2007.
Kingston, Massachusetts.
---------------------------------------------------------------------------
3. Annual Energy Use
DOE estimated the electricity consumed in kilowatt hours per year
(kWh/year) by the PTAC and PTHP equipment based on the whole-building
energy use characterization as described in the NOPR. 73 FR 18876. DOE
also used the same energy use data and characterization developed for
the NOPR analysis in the final rule. See Chapter 7 of the NOPR and FR
TSDs for additional information.
4. Electricity Prices
Electricity prices are needed to convert the electric energy
savings into energy cost savings. DOE updated the State-by-State
average electricity price information for the commercial sector to
reflect 2007 data available from EIA. DOE further adjusted these prices
to reflect average electricity prices for the four types of businesses
DOE identified that use PTAC and PTHP equipment. DOE identified these
businesses using Commercial Buildings Energy Consumption Survey (CBECS)
2003 data,\13\ as described in the NOPR. To develop the LCC
distributions, DOE continued to use a probability distribution to
determine not only which State received the shipment of equipment, but
also which business types would purchase the equipment and what
electricity price they would pay. State populations formed the basis
for allocating the equipment shipment distribution to different States.
DOE updated these State-by-State population data with 2007 data
published by the U.S. Census. The State-average effective prices
(2007$) range from approximately 5.1 cents per kWh to approximately
28.0 cents per kWh. Chapter 8 of the TSD details the development and
use of State-average electricity prices by business type.
---------------------------------------------------------------------------
\13\ EIA's CBECS 2003 is the most recent version of this data
set.
---------------------------------------------------------------------------
The electricity price trend provides the relative change in
electricity prices for future years to 2042. DOE applied the AEO2008
reference case as the default scenario and extrapolated the trend in
values from 2020 to 2030 of the forecast to establish prices for 2030
to 2042, as in the NOPR. DOE provided a sensitivity analysis of the LCC
savings and PBP results to future electricity price scenarios. Because
EIA did not publish its high- and low-growth forecasts in time for
incorporation into this final rule, DOE developed high- and low-growth
electricity forecasts corresponding to the AEO2008 forecasts. DOE
calculated the ratio of the AEO2007 high- or low-growth forecasted
electricity price to the AEO2007 reference case forecast for each year.
DOE then applied those ratios, respectively, to the AEO2008 reference
case prices.
5. Maintenance Costs
Maintenance costs are the customer's costs to keep equipment in top
operating condition. For the NOPR, DOE estimated annual routine
maintenance costs for PTAC and PTHP equipment at $50 per year per unit.
DOE explained that this estimate was based on statements made during
informational interviews with manufacturers. Because data were not
available to indicate how maintenance costs vary with equipment
efficiency, DOE thus determined to use this preventative maintenance
costs that remain constant as equipment efficiency is increased. 73 FR
18879. For the final rule, DOE updated the maintenance costs to reflect
data for packaged terminal equipment available in RS Means Costworks
2008.
In the NOPR, DOE specifically requested comments on its estimate
for maintenance costs and whether the assumptions made would be the
same under R-410A. GE commented that repair and maintenance costs
(primarily cleaning) would be fixed costs and handled either in house
or contracted out. GE's experience working with their customers is that
maintenance costs are not a function of equipment efficiency, even
though GE equipment efficiencies have increased nearly 10% in the past
5 years. (Public Meeting Transcript, No. 12 at p. 99) Goodman commented
that third-party servicers or hoteliers themselves may be better
sources of maintenance cost data than manufacturers. (Public Meeting
Transcript, No. 12 at pp. 111-112) AHRI commented that maintenance
costs will increase with heat exchanger surface area that is
commensurate with higher efficiency equipment. (Public Meeting
Transcript, No. 12 at pp. 97-98) Goodman expressed concerns over
condenser maintenance if manufacturers use closer fin spacing or three
or four row coils due to the slinger ring throwing water on the coil
and dirt buildup. Goodman also pointed out that dirty condensers can
degrade compressors through overheating. This compressor degradation is
a long-term impact not improved by coil cleaning. (Public Meeting
Transcript, No. 12 at pp. 111-112) ACEEE commented that equipment
redesigns are likely to result in reduced repair costs, which would
offset any additional maintenance costs. (Public Meeting Transcript,
No. 12 at p. 98)
Although opinions were expressed that maintenance costs might
increase as a function of efficiency level, this appears not to be the
case in GE's experience. Accordingly, DOE decided to use the Means
CostWorks 2008 estimate of preventive maintenance costs, which remain
constant as equipment efficiency increases.
6. Repair Costs
The repair cost is the customer's cost of replacing or repairing
components that have failed in the PTAC and PTHP equipment. DOE
estimated annual repair costs for the final rule in the same way that
it estimated annual repair costs for the NOPR. DOE estimated the
annualized repair cost for baseline efficiency PTAC and PTHP equipment
at $15, based on costs of extended warranty contracts for PTACs and
PTHPs. After analyzing these data, DOE determined that repair costs
would increase in direct proportion with increases in equipment prices.
See Chapter 8 of the TSD for additional details.
In the NOPR, DOE specifically requested comment on its estimation
for repair costs, as well as installation and maintenance costs. The
comments DOE received addressed several areas. GE commented that it
does not expect the compressor service call rate to increase for higher
efficiency equipment because GE already has rotary compressors in
service. (GE, No. 20 at p. 2) Carrier stated that it would expect to
see slightly higher repair costs overall for R-410A refrigerant
equipment because of the more hygroscopic nature of R-410A. (Carrier,
No. 16 at p. 3) ECR warned that if efficiency standards are set too
high, existing R-22 refrigerant equipment may be kept in place longer,
which may result in increased repair costs. Although DOE recognizes
that overall repair costs may increase under R-410A, commenters
provided no data to refine DOE's repair cost estimate for equipment
using R-410A refrigerant. Because no commenter expressed disagreement
with DOE's methodology of scaling repair costs with efficiency level,
DOE continued to use the same approach in the final rule. DOE
recognizes that the extension of life for R-22 equipment is possible
under any scenario, but has no data with which to refine its shipment
or repair cost analysis. DOE believes that the impact of life extension
for R-22 equipment would, if it occurs, primarily affect the energy
savings estimate. However,
[[Page 58791]]
because extension of life generally increases the period over which a
purchased product can provide services regardless of efficiency level
or refrigerant, DOE does not expect a significant impact on the
economics of higher-efficiency PTAC and PTHP equipment to the Nation.
7. Equipment Lifetime
DOE defines equipment lifetime as the age when a PTAC or PTHP unit
is retired from service. For the NOPR, DOE used a typical lifetime of
10 years after reviewing available data sources and concluding that a
10-year life is appropriate for PTAC and PTHP equipment. DOE
incorporated variability in lifetime in its LCC analysis using a
Weibull \14\ statistical distribution with an average lifetime of 10
years and a maximum lifetime of 20 years. In response to the NOPR, DOE
received no comments on the lifetime assumptions for new equipment
purchases that would affect the LCC analysis. DOE, therefore, retained
the same lifetime assumptions and methodologies developed for the NOPR
in the final rule analysis. See Chapter 8 of the TSD for additional
information.
---------------------------------------------------------------------------
\14\ The Weibull distribution is a continuous probability
distribution used to understand the failure and durability of
equipment. It is popular because it is extremely flexible and can
accurately model various types of failure processes. A two-parameter
version of the Weibull was used and is described in chapter 8 of the
TSD,
---------------------------------------------------------------------------
8. Discount Rate
The discount rate is the rate at which future expenditures are
discounted to establish their present value. DOE estimated the discount
rate by estimating the weighted average cost of capital (WACC) for
purchasers of PTAC and PTHP equipment based on weighting the cost of
both debt and equity capital used to fund investments. For the NOPR,
DOE used financial information from a sample of companies, including
large hotel/motel chains and health-care chains drawn from a database
of U.S. companies on the Damodaran Online Web site. See http://
pages.stern.nyu.edu/~adamodar. The NOPR used the data available in
2007. The final rule's analysis relies on the same data source to
develop discount rates, but was updated to reflect the data available
in January 2008.
DOE calculated the weighted average after-tax discount rate for
PTAC and PTHP purchases, adjusted for inflation, as 5.53 percent for
large hotel chains and 5.64 percent for health care institutions
(nursing homes and assisted living facilities). The cost of capital for
independent hoteliers and small office companies is more difficult to
determine because these business types are not explicitly identified in
the Damodaran data. For the final rule, DOE used the same methodology
that it used to determine the discount rates for these business types
in the NOPR. Specifically, DOE developed an 8.03 percent after-tax
discount rate for independent hoteliers and an 8.14 percent after-tax
rate for small offices. These values vary only slightly from those
presented in the NOPR. Chapter 8 of the TSD provides more detail on the
calculation of discount rates.
F. National Impact Analysis--National Energy Savings and Net Present
Value Analysis
The National Impact Analysis (NIA) evaluates the impact of an
amended energy conservation standard from a national perspective rather
than from the customer perspective, which is represented by the LCC.
This analysis assesses the NES and the NPV (future amounts discounted
to the present) of total commercial customer costs and savings, which
are expected to result from amended energy conservation standards for
PTACs and PTHPs at specific efficiency levels. DOE followed the same
analysis approach for the NIA as it used for the NOPR analysis, using a
Microsoft Excel spreadsheet model to calculate the energy savings and
the national economic costs and savings from amended energy
conservation standards. Unlike the LCC analysis, the NES spreadsheet
does not use distributions for inputs or outputs. DOE examined
sensitivities by applying different scenarios. DOE used the NES
spreadsheet to perform calculations of energy savings and NPV, using
the annual energy consumption and total installed cost data from the
LCC analysis. DOE forecasted the energy savings, energy cost savings,
equipment costs, and NPV of benefits for each TSL from 2012 through
2042. The forecasts provided annual and cumulative values for all four
output parameters.
For each TSL, DOE calculated the NES and NPV as the difference
between a base case forecast (without amended standards) and the
standards case (with amended standards). The NES refers to cumulative
energy savings from 2012 through 2042. The NPV refers to cumulative
monetary savings. DOE calculated net monetary savings in each year
relative to the base case as the difference between total operating
cost savings and increases in total installed equipment cost.
Cumulative savings are the sum of the annual NPV over the specified
period. DOE accounted for operating cost savings until 2062 (i.e.,
until all the equipment installed through 2042 is retired).
DOE built up the NES analysis from a combination of unit energy
savings for each class of PTAC or PTHP equipment analyzed and estimated
shipments of units in this class at each efficiency level from 2012
through 2042. Unit energy savings for each equipment class are the
weighted-average values calculated in the LCC and PBP spreadsheet.
These calculations involved multiple steps. First, DOE calculated the
national site energy consumption (i.e., the energy directly consumed by
the units of equipment in operation) for PTACs or PTHPs for each year,
beginning with the expected effective date of the standards (2012) for
the base-case forecast and the standards case forecast. Second, DOE
determined the annual site energy savings, consisting of the difference
in site energy consumption between the base case and the standards
case. Third, DOE converted the annual site energy savings into the
annual amount of energy saved at the source of electricity generation
(the source energy). DOE used a site-to-source conversion factor
developed from an analysis of the marginal impacts of changes in PTAC
and PTHP energy use on the energy source energy inputs in DOE's Utility
Impacts analysis. Finally, DOE summed the annual source energy savings
from 2012 to 2042 to calculate the total NES for that period. DOE
performed these calculations for each TSL and equipment class
considered in this rulemaking.
Changes in inputs to the analyses and reporting drove the
modifications to the NIA analyses and results. Changes to the NES
results between the NOPR and final rule were due to a reduction in the
TSL levels considered for non-standard PTAC and PTHP equipment classes
and a change in the mix of equipment efficiencies used in the base case
and standards case equipment efficiency forecasts. Although DOE used
the same economic model for predicting the distribution of equipment
efficiencies in both the final rule and the NOPR, these changes in the
installed equipment prices and the lower R-410A max tech efficiency
levels resulted in slight shifts to the overall efficiency
distributions for each equipment class. In addition, the site-to-source
energy conversion factor developed for the final rule used EIA's NEMS
model consistent with AEO2008. The calculated conversion factors in the
final rule differed from that calculated for the NOPR, which relied on
EIA's AEO2007.
To estimate NPV, DOE calculated the net impact as the difference
between
[[Page 58792]]
total operating cost savings (including electricity, repair, and
maintenance cost savings) and increases in total installed costs
(including MSP, sales taxes, distribution chain markups, and
installation cost). DOE calculated the NPV of each TSL over the life of
the equipment by determining: (1) The difference between the equipment
costs under the TSL case and the base case in order to obtain the net
equipment cost increase resulting from the TSL; (2) the difference
between the base case operating costs and the TSL operating costs in
order to obtain the net operating cost savings from the TSL; and (3)
the difference between the net operating cost savings and the net
equipment cost increase in order to obtain the net savings (or expense)
for each year. DOE then discounted the annual net savings (or expenses)
to 2008 for PTACs and PTHPs bought between 2012 and 2042, and summed
the discounted values to provide the NPV of a TSL. DOE used discount
rates of 7 percent and 3 percent in accordance with Office of
Management and Budget (OMB) guidance to evaluate the impacts of
regulations. An NPV greater than zero shows net savings (i.e., the TSL
would reduce customer expenditures relative to the base case in present
value terms). An NPV less than zero indicates that the TSL would result
in a net increase in customer expenditures in present value terms.
Changes in inputs to the analyses and reporting drove modifications
to the NPV analyses and results. Changes to the NES results were due to
(1) a reduction in the number of TSL levels considered for non-standard
PTAC and PTHP equipment classes, (2) a change in the mix of equipment
efficiencies used in the base case and standards case equipment
efficiency forecasts, and (3) the use of electricity price forecasts
from the AEO 2008 reference case. As with the LCC analysis, DOE
analyzed high- and low-growth energy price forecasts. Because EIA had
not published actual high- and low-growth forecasts in time for the
final rule analysis, DOE developed high- and low-growth scenarios based
on the AEO2008 reference case forecast. DOE applied the ratio of the
year-by-year energy prices from the AEO2007 high- and low-growth price
forecasts, respectively, to the AEO2007 reference case forecast.
Chapter 10 of the TSD provides a full discussion of the NIA. Table IV.3
summarizes the inputs and key assumptions used to calculate the
national energy savings and national economic impacts of all energy
efficiency levels analyzed in this rulemaking.
Table IV.3--Summary of NES and NPV Model Inputs
------------------------------------------------------------------------
Changes for final
Inputs NOPR description rule
------------------------------------------------------------------------
Shipments................... Annual shipments No change.
from shipments
model (Chapter 10
of the TSD).
Effective Date of Standard.. September 2012...... No change.
Base Case Efficiencies...... Distribution of base Equipment costs and
case shipments by economic benefits
efficiency level. for each TSL level
come from final
rule LCC analysis.
Standard Case Efficiencies.. Distribution of Equipment costs and
shipments by economic benefits
efficiency level for each TSL level
for each standards come from final
case. Standards rule LCC analysis.
case annual Only three TSL
shipment-weighted levels considered
market shares for non-standard
remain the same as PTAC and PTHP
in the base case equipment.
and each standard
level for all
efficiencies above
the TSL. All other
shipments are at
the TSL efficiency.
Annual Energy Use per Unit.. Annual national No change.
weighted-average
values are a
function of
efficiency level.
Total Installed Cost per Annual weighted- Updated with values
Unit. average values are from final rule LCC
a function of analysis.
efficiency level.
Repair Cost per Unit........ Annual weighted- Updated with values
average values from final rule LCC
increase with analysis.
manufacturer's cost
level.
Maintenance Cost per Unit... Annual weighted- Updated with values
average value from final rule LCC
equals $50 (Chapter analysis.
8 of the TSD).
Escalation of Electricity 2007 EIA AEO 2008 EIA AEO
Prices. forecasts (to 2030) forecasts (to 2030)
and extrapolation and extrapolation
beyond 2030. for beyond 2030.
Electricity Site-to-Source Conversion factor Developed conversion
Conversion Factor. varies yearly and factor using EIA's
is generated by NEMS model for AEO
EIA's NEMS * model 2008.
for AEO2007.
Includes the impact
of electric
generation,
transmission, and
distribution losses.
Discount Rate............... 3% and 7% real...... No change.
Present Year................ Future costs are No change.
discounted to year
2008.
------------------------------------------------------------------------
* Chapter 14 on the utility impact analysis provides more detail on NEMS
model.
1. Shipments Analysis
DOE developed shipments projections under a base case and each of
the standards cases using the identical shipments model used in the
NOPR analysis. The NOPR and Chapter 10 of the TSD describe this model
in more detail.
The NES spreadsheet model contains a provision for a change in
projected shipments in response to efficiency level increases, but DOE
has no information with which to calibrate such a relationship. For the
NOPR analysis, DOE assumed that the shipments do not change in response
to the changing TSLs. ECR and Cold Point commented that if DOE sets a
high or unrealistic efficiency level for non-standard PTAC or PTHP
equipment, customers might choose to extend the life of existing
equipment that uses R-22 refrigerant. (Public Meeting Transcript (ECR),
No. 12 at pp. 100-101, Cold Point, No. 18 at p. 2) However, commenters
provided no data to suggest specific changes that DOE could make to its
shipments analysis to account for this possible impact. For the final
rule analysis, DOE presumed that projected industry shipments by
product class do not change in response to changing TSLs. See
discussion of equipment lifetime in section IV.E.7.
GE, ECR, and Carrier commented that it was possible that customers
could switch to a less efficient class of HVAC equipment than a
packaged terminal unit, such as a through-the-wall air
[[Page 58793]]
conditioner or a window air conditioner, which does not have a heat
pump option for providing space heat. Carrier elaborated that this kind
of equipment switch would occur mostly in small, independent, motel
markets. (Public Meeting Transcript (GE), No. 12 at p. 141; Public
Meeting Transcript (ECR), No. 12 at p. 141-141; Public Meeting
Transcript (Carrier), No. 12 at p. 143)
Several interested parties commented that DOE's proposed standard
level in the NOPR, TSL 4, had higher cooling efficiency requirements
for PTHP equipment compared with PTAC equipment of the same capacity.
This difference would mean higher proportional costs for PTHP equipment
under the new energy conservation standard compared with PTAC
equipment, and is likely to result in some current or future PTHP
customers choosing to purchase PTAC equipment. If this occurs, there
would be a decrease in overall equipment efficiency due to the much
lower heating efficiency of PTAC compared with PTHP equipment. Several
manufacturers expressed concern that people would be forced by cost or
lack of products at the proposed standard levels to shift from PTHP to
PTAC--forcing people into a less efficient product and negating much of
the energy savings from the rule. (Public Meeting Transcript (ECR), No.
12 at pp. 141-142; ECR, No. 15 at p. 3; Ice Air, No. 25 at pp. 3-4;
Public Meeting Transcript (Goodman), No. 12 at p. 142) AHRI and Carrier
both agreed that higher efficiency levels for PTHPs will cause a shift
to less efficient PTACs. (AHRI, No. 23 at p. 8; Carrier, No. 16 at p.
5)
In contrast, GE stated that the probability of users shifting to
other product classes would be remote. GE pointed out that the case for
a heat pump is compelling when the cost differential is $50. In almost
all cases, the payback for choosing a heat pump is less than 1 year. In
most cases, GE said, its customer base is composed of astute business
people who are concerned about operating costs and efficiencies.
(Public Meeting Transcript, No. 12 at pp. 145-146) AHRI questioned GE's
assertion, given that the current market is almost evenly split between
PTAC and PTHP equipment. (Public Meeting Transcript, No. 12 at p. 144)
To address concerns about equipment switching, DOE performed a
sensitivity analysis on the possible impact on energy savings due to
customers switching from PTACs to PTHPs for a case where a combined TSL
resulted in a higher cooling efficiency (EER) might be set for PTHPs
compared to PTACs of the same capacity. This sensitivity analysis
examined what fraction of the future projected PTHP market would need
to switch from PTHPs to PTACs with electric resistance heat to offset
the energy savings from increased efficiency requirements for PTHPs
relative to PTACs at TSLs 2, 4, and A. It also estimated the change in
payback period for purchasers of PTHP versus PTAC equipment at the
TSLs. DOE concluded that based on this analysis the increase in PTHP
cost and the resulting change in PBP for these TSLs were both small and
that it was unlikely that the savings from higher PTHP standards under
these TSLs would be offset by customers switching to PTAC equipment.
Section V.B. discusses the results of this sensitivity analysis.
2. Base Case and Standards Case Forecasted Distribution of Efficiencies
The annual energy consumption of a PTAC or PTHP unit relates
directly to the efficiency of the unit. For the final rule, DOE used
the same methodology that was used in the NOPR analysis to develop base
case and standards case efficiency distributions for shipments. DOE
developed shipment-weighted average equipment efficiency forecasts that
enabled a determination of the shipment-weighted annual energy
consumption values for the base case and each TSL analyzed by equipment
class. DOE developed shipment estimates by converting the 2005 PTAC and
PTHP equipment shipments by equipment class into market shares by
equipment class. DOE then adapted a cost-based method used in the NEMS
to estimate market shares for each equipment class by TSL. DOE used
those market shares and projections of shipments by equipment class to
determine future equipment efficiency forecasts both for a base case
scenario and standards case scenarios. The difference in equipment
efficiency between the base case and standards cases was the basis for
determining the reduction in per-unit annual energy consumption that
could result from amended energy conservation standards. Although the
methodology DOE used was identical to that in the NOPR, differences in
equipment price and annual energy consumption established in the LCC
analysis resulted in slight shifts in the estimated shipments by
efficiency level.
For each standards case, DOE assumed that shipments at efficiencies
below the projected minimum standard levels were most likely to roll up
to those efficiency levels in response to an increase in energy
conservation standards. The market shares for equipment at higher
efficiency levels were assumed not to be affected as the market already
has a choice of that equipment. DOE, thus, assumed that the new
standard would not affect the relative attractiveness of equipment with
efficiencies higher than the standard. For further discussion, see
Chapter 11 of the TSD.
G. Manufacturer Impact Analysis
In determining whether a standard for a covered product is
economically justified, the Secretary of Energy is required to consider
``the economic impact of the standard on the manufacturers and on the
consumers of the products subject to such standard.'' (42 U.S.C.
6295(o)(2)(B)(i)(I)) EPCA also requires for an assessment of the impact
of any lessening of competition as determined by the Attorney General.
(42 U.S.C. 6295(o)(2)(B)(i)(V)) DOE performed the MIA to estimate the
financial impact of energy conservation standards on the standard size
and non-standard size PTAC and PTHP industries, and to assess the
impact of such standards on employment and manufacturing capacity. DOE
published the results in the NOPR. 73 FR 18883-87, 18893-99. For this
final rule, while DOE did not introduce changes to the methodology
described in the NOPR, it updated the R-410A-shipment forecast
distribution of shipments based on the updated NIA results. (See TSD
Chapter 13.) In response to DOE's NOPR presentation, interested parties
provided comments on the cumulative regulatory burden, small business
impacts, and employment.
1. GRIM Input Updates
The GRIM inputs consists of information regarding the standard size
and non-standard size PTAC and PTHP industries' cost structure,
shipments, and revenues. This includes information from many of the
analyses described above, such as manufacturing costs and prices from
the engineering analysis and shipments forecasts. In response to the
presentation of the MIA analysis in the NOPR, DOE revised several key
inputs to the GRIM based on more recent sources of data for both
standard and non-standard size PTAC and PTHP industries.
a. Manufacturing Production Costs
The GRIM uses cost-efficiency curves derived in the engineering
analysis to calculate the MPCs for each equipment class at each TSL. By
multiplying different sets of markups with the MPCs, DOE derives the
manufacturing selling prices (MSP) used to calculate industry revenues.
For this final rule,
[[Page 58794]]
DOE used the MPCs from the final rule engineering analysis as described
in Chapter 5 of the TSD.
b. Shipments and Distributions of Efficiencies in the Base Case
The GRIM estimates manufacturer revenues based on total-unit-
shipment forecasts and the distribution of these values by EER. Changes
in the efficiency mix at each standard level are a key driver of
manufacturer finances. For the final rule analysis, DOE used only the
NES shipments forecasts and the distribution of efficiencies in the
base case for both standard size and non-standard size PTACs and PTHPs
from 2007 to 2042. DOE continued to allocate the closest representative
cooling capacity, within the appropriate equipment class, to any
shipments forecasted by the NES of equipment that was not within one of
the representative cooling capacities. For example, the total PTAC or
PTHP shipments with a cooling capacity less than 10,000 Btu/h for
standard size equipment are included with the 9,000 Btu/h
representative cooling capacity. (See Chapter 13 of the final rule
TSD.)
c. R-410A Base Case and Amended Energy Conservation Standards Markup
Scenarios
The PTAC and PTHP manufacturer impact analysis is explicitly
structured to account for the cumulative burden of sequential
refrigerant and amended energy conservation standards. In the NOPR, DOE
described the two markup scenarios used to calculate the base case INPV
after implementation of the R-22 refrigerant phaseout, and the
standards case INPV at each TSL. (See Chapter 13 of the NOPR TSD.) For
the final rule, DOE continued to analyze two distinct R-410A base case
and amended energy conservation standards markup scenarios: (1) The
flat markup scenario, and (2) the partial cost recovery markup
scenario. Under the flat markup scenario, DOE applied a single uniform
``gross margin percentage'' markup across all TSLs that DOE believes
represents the current markup for manufacturers in the standard and
non-standard size PTAC and PTHP industries. The ``partial cost
recovery'' scenario implicitly assumes that the industries can pass-
through only part of their regulatory-driven increases in production
costs to consumers in the form of higher prices. As presented in the
NOPR, these markup scenarios characterize the markup conditions
described by manufacturers, and reflect the range of market responses
manufacturers expect as a result of the R-22 phaseout and the amended
energy conservation standards. See Chapter 13 of the TSD for additional
details of the markup scenarios.
d. Capital and Equipment Conversion Expenses
Energy conservation standards typically cause manufacturers to
incur one-time conversion costs to bring their production facilities
and equipment designs into compliance with the amended standards. For
the purpose of the MIA, DOE classified these one-time conversion costs
into two major groups: equipment conversion and capital conversion
costs. Equipment conversion expenses are one-time investments in
research, development, testing, and marketing that are focused on
making equipment designs comply with the new energy conservation
standard. Capital conversion expenditures are one-time investments in
property, plant, and equipment to adapt or change existing production
facilities so that new equipment designs can be fabricated and
assembled.
For this final rule, DOE used the same capital expenses as
presented in the NOPR calculated in 2007$ for both standard and non-
standard size PTAC and PTHP industries. For equipment conversion
expenses for the standard size PTAC and PTHP industry, DOE also used
the same product expenses as presented in the NOPR calculated in 2007$.
For equipment conversion expenses for the non-standard size PTAC and
PTHP industry, DOE revised figures based on comments from interested
parties on the NOPR. For more information on DOE's revision to the
equipment conversion expenses for the non-standard size PTAC and PTHP
industry, see section V.C. and Chapter 13 of the TSD.
2. Cumulative Regulatory Burden
As discussed in the NOPR, one aspect of manufacturer burden is the
cumulative impact of multiple DOE standards and other regulatory
actions that affect the manufacture of the same covered equipment. All
PTAC and PTHP manufacturers believe that the EPA-mandated refrigerant
phaseout will be the largest external burden on PTAC and PTHP
manufacturers. DOE addressed the cumulative regulatory burden affecting
manufacturers of PTACs and PTHPs as a result of the refrigerant
phaseout by first examining impacts on INPV arising from converting R-
22 to R-410A equipment production. DOE then examined the possible
impacts of amended energy conservation standards on the R-410A base
case. Thus, DOE examined the cumulative impacts of both R-410A
conversion and compliance with the proposed energy conservation
standards. (See Chapter 13 of the TSD.) 73 FR 18897-98.
In response to DOE's NOPR, ECR stated that manufacturers are forced
to consider both the refrigerant phaseout and energy conservation
standard levels due to the timing of the regulations. According to ECR,
it is difficult to work on designs using R-410A knowing that the 2012
efficiency levels are not final and the efficiency levels proposed in
the NOPR may change. (Public Meeting Transcript, No. 12 at pp. 63-64)
Similarly, Ice Air stated its concern about the cumulative
regulatory burden placed on manufacturers by the refrigerant phaseout
and the amended energy conservation standards. Ice Air warned that the
burdens to comply with both of these regulatory actions could cause
manufacturers of non-standard size equipment to go out of business and
could also severely affect the standard size industry. (Ice Air, No. 25
at p. 2)
To assess the impacts on INPV due to both refrigerant phaseout and
energy conservation standards, DOE first examined the changes in
industry cash flows from 2007 to 2010 using only equipment with R-22
refrigerant (i.e., before the refrigerant phaseout). DOE then examined
the changes in industry cash flows from 2010 through 2042 using only
equipment with R-410A refrigerant (i.e., after the refrigerant
phaseout). The sum of the cash flows discounted to the current year
equates to the INPV used to quantify the impacts on the industries. DOE
included equipment prices using both R-22 and R-410A refrigerant
estimated in the engineering analysis and equipment conversion and
capital conversion expenses related to both energy conservation
standards and refrigerant phaseout in its manufacturer impact analysis.
Investment estimates used in the analysis can be found in the NOPR, 73
FR 18893-96, and in Chapter 13 of the TSD. Although investments needed
to meet the proposed energy conservation standards and refrigerant
phaseout requirements could vary among manufacturers, the values DOE
used in its analysis are an aggregate of information manufacturers
provided. Given these variations in investment within the industry, DOE
believes that the MIA captures the potential range of costs,
investments, and impacts on manufacturers due to both energy
conservation standards and the refrigerant phaseout.
AHRI commented that DOE did not account for the costs to phase out
HCFCs from other air-conditioning equipment or to comply with other
[[Page 58795]]
energy conservation standards produced by PTAC and PTHP manufacturers.
(AHRI, No. 23 at p. 5)
For the NOPR, DOE examined other Federal regulations that could
affect manufacturers of standard and non-standard size PTACs and PTHPs.
Chapter 13 of the TSD presents DOE's findings. 73 FR 18897-98. These
findings generally indicated that the refrigerant phaseout is the most
significant other Federal regulation impending in the industry at this
time. For this final rule, DOE also identified the other DOE
regulations standard size and non-standard size PTAC and PTHP
manufacturers are facing for other equipment they manufacture within
three prior and three years after the effective date of the amended
energy conservation standards for PTACs and PTHPs. DOE identified the
costs of additional regulations when these estimates were available
from other DOE rulemakings. Chapter 13 of the TSD presents additional
information regarding the cumulative regulatory burden analysis.
3. Employment Impacts
In response to DOE's presentation of the direct employment impacts
characterized in the MIA and presented in the NOPR TSD, EarthJustice
commented that DOE's projection of employment impacts of standards on
the regulated industry demonstrates an economic benefit in the form of
increased employment on a global scale. Specifically, EarthJustice
comments that the benefits from an increase in employment would be
principally to other countries and that DOE does not take this into
consideration in its analysis. (EarthJustice, No. 22 at p. 5)
DOE believes EarthJustice's assertion that DOE only considered the
direct employment impacts on international manufacturers is incorrect.
DOE calculated the total labor expenditures for the industry using the
unit labor costs from the engineering analysis and the total industry
shipments from the NES. DOE translated the total labor expenditures for
the industry to the total number of jobs using the average labor rate
for the industry and the annual worker hours. Finally, DOE multiplied
the total number of jobs by the domestic market share to derive the
domestic number of jobs for the base case and each TSL. The direct
employment results characterized by the MIA represent U.S. production
workers are impacted by this rulemaking in the standard and non-
standard size PTAC and PTHP manufacturing industries. See section V.C.2
for the results of the direct employment impact analysis. Accordingly,
DOE has considered all employment impacts in weighing the benefits and
the burdens, including direct (as calculated by the MIA) and indirect
(as calculated by the employment impact analysis).
In response to the increase in direct employment characterized by
the MIA, ECR, a domestic manufacturer of non-standard size equipment,
and McQuay, a domestic manufacturer of both standard and non-standard
size equipment, commented that the adoption of the proposed amended
energy conservation standards would have adverse impacts on employment
and their businesses. Specifically, ECR commented that adopting TSL 4
from the NOPR might have an adverse impact on employment and customers
in New York, where a large volume of equipment is produced and shipped.
(ECR, No. 15 at p. 3; see also Public Meeting Transcript, No. 12 at p.
184) Similarly, McQuay stated that unlike the standard size equipment
that is built overseas, the non-standard size equipment is unique
because it is developed, manufactured, and supported by domestic
facilities mainly located in the state of New York. Any impacts on its
non-standard size equipment business would have an economic impact on
McQuay. (Public Meeting Transcript, No. 12 at p. 184)
DOE calculated the potential impacts of amended energy conservation
standards on domestic production employment for the non-standard
industry by bounding the range of potential impacts. For the upper
bound, the direct employment impact analysis conducted as part of the
MIA estimates the number of U.S. production workers who are impacted by
this rulemaking in the non-standard size PTAC and PTHP manufacturing
industries, assuming that shipment levels and product availability
remain at current levels. In this best case scenario, where shipments
do not decrease and higher efficiency products require more labor, the
direct employment impact analysis shows a net increase in the number of
domestic jobs for the non-standard size industries. It is reasonable to
assume that shipments and product availability will continue because
consumers will continue to demand non-standard PTACs and PTHPs for
their replacement needs. For these customers, modifications to their
buildings to accommodate standard size PTACs and PTHPs is a large cost
they will try to prevent. However, at higher standard levels, the
product development costs are prohibitive for the small domestic
manufacturers that produce PTACs and PTHPs. These domestic
manufacturers may exit the industry rather than invest in new designs.
This would result in a loss of domestic employment at these firms. The
unmet demand could be satisfied by new domestic manufacturers or
foreign manufacturers.
To calculate the lower bound of the range of potential impacts, DOE
developed a scenario where either shipments drop or manufacturers
respond to higher labor requirements by shifting production to lower-
labor-cost countries. For the non-standard industry, DOE believes this
scenario is a possibility because DOE noticed that the non-standard
market currently offers over approximately 40 different equipment
platforms, many of which are built in very low volumes. As a result,
the non-standard market will incur a much higher impact due to fixed
costs on a per unit basis. Since the non-standard PTAC and PTHP
industry is composed chiefly of small businesses, any energy
conservation standard for non-standard PTACs and PTHPs will impact
mostly small businesses, which might choose to exit this industry
rather than invest the necessary resources to convert existing
equipment lines. Alternatively, manufacturers could choose to move
their manufacturing facilities overseas as a method of reducing costs.
Consequently, DOE assumed that the greater labor requirements displace
all U.S. production workers in the non-standard industry and used this
condition as a lower bound to the potential impacts of standards on
domestic production employment.
H. Employment Impact Analysis
When developing a standard for adoption, DOE considers its
employment impact. Direct employment impacts are any changes in the
number of employees for PTAC and PTHP manufacturers, their suppliers,
and related service firms. Indirect impacts are changes in employment
in the larger economy that occur due to the shift in expenditures and
capital investment caused by the purchase and operation of more
efficient PTAC and PTHP equipment. The MIA in this rulemaking addresses
the employment impacts on manufacturers of PTACs and PTHPs (i.e., the
direct employment impacts) (Chapter 13 of the TSD). This section
describes other, primarily indirect, employment impacts.
Indirect employment impacts from PTAC and PTHP standards consist of
the net jobs created or eliminated in the national economy, other than
in the manufacturing sector being regulated, as a consequence of (1)
reduced spending by end users on energy (electricity,
[[Page 58796]]
gas--including liquefied petroleum gas--and oil); (2) reduced spending
on new energy supply by the utility industry; (3) increased spending on
the purchase price of new PTACs and PTHPs; and (4) the effects of those
three factors throughout the economy. DOE expects the net monetary
savings from standards to be redirected to other forms of economic
activity. DOE also expects these shifts in spending and economic
activity to affect the demand for labor.
DOE estimated indirect national employment impacts using an input/
output model of the U.S. economy called Impact of Sector Energy
Technologies (ImSET). Developed by DOE's Building Technologies Program,
the ImSET model estimates 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. DOE estimated
changes in expenditures using the NES spreadsheet. ImSET then estimated
the net national indirect employment impacts of potential PTAC and PTHP
equipment efficiency standards on employment by sector. DOE received no
comments on the employment analysis during the NOPR, so it made no
changes to the analysis and methodology in the final rule.
The ImSET input/output model suggests that the amended PTAC and
PTHP efficiency standards could increase the net demand for labor in
the economy as the net monetary savings from standards are redirected
to other forms of economic activity. The gains would most likely be
small relative to total national employment, primarily due to the small
net monetary savings from amended PTAC and PTHP energy conservation
standards available for transfer to other sectors, relative to the
economy as a whole. Chapter 15 of the TSD provides more details on the
employment impact analysis.
I. Utility Impact Analysis
The utility impact analysis estimates the effects of reduced energy
consumption due to improved equipment efficiency on the utility
industry. This utility analysis consists of a comparison between
forecast results for a case comparable to the AEO2008 Reference Case
and forecasts for policy cases incorporating each of the PTAC and PTHP
TSLs.
DOE analyzed the effects of amended standards on electric utility
industry generation capacity and fuel consumption using a variant of
the EIA's NEMS. NEMS, which is available in the public domain, is a
large, multisectoral, partial-equilibrium model of the U.S. energy
sector. EIA uses NEMS to produce its AEO, a widely recognized baseline
energy forecast for the United States. DOE used a variant of NEMS,
referred to as NEMS-BT, to clarify that NEMS has been modified to take
into account the energy savings from standards for PTAC and PTHP at
different TSL levels.
DOE conducted the utility analysis as policy deviations from the
AEO2008, applying the same basic set of assumptions. The NEMS-BT is run
similarly to the AEO2008 NEMS, except that PTAC and PTHP energy usage
is reduced by the amount of energy (by fuel type) saved due to the
TSLs. DOE obtained the inputs of national energy savings from the NES
spreadsheet model. Using these inputs, the utility analysis reported
the changes in installed capacity and generation (by fuel type) that
result for each TSL, as well as changes in end-use electricity sales.
Aside from the use of the AEO2008, DOE made no other changes to the
methodology used for the utility impact analysis from the NOPR. Chapter
14 of the TSD provides details of the utility analysis methods and
results.
J. Environmental Analysis
DOE has prepared a draft environmental assessment (EA) pursuant to
the National Environmental Policy Act and the requirements under 42
U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a), to determine the environmental
impacts of the amended standards. Specifically, DOE estimated the
reduction in total emissions of carbon dioxide (CO2) using
the NEMS-BT computer model. DOE calculated a range of estimates for
reduction in NOX emissions and Hg emissions using current
power sector emission rates. However, the Environmental Assessment (see
Chapter 16 of the FR TSD accompanying this notice) does not include the
estimated reduction in power sector impacts of sulfur dioxide
(SO2), because DOE has determined that due to the presence
of national caps on SO2 emissions as addressed below, any
such reduction resulting from an energy conservation standard would not
affect the overall level of SO2 emissions in the United
States.
The NEMS-BT is run similarly to the AEO2008 NEMS, except the energy
use is reduced by the amount of energy saved due to the TSLs. DOE
obtained the inputs of national energy savings from the NIA spreadsheet
model. For the Environmental Assessment, the output is the forecasted
physical emissions. The net benefit of the standard is the difference
between emissions estimated by NEMS-BT and the AEO2008 Reference Case.
The NEMS-BT tracks CO2 emissions using a detailed module
that provides results with a broad coverage of all sectors and
inclusion of interactive effects.
The Clean Air Act Amendments of 1990 set an emissions cap on
SO2 all power generation. The attainment of this target,
however, is flexible among generators and is enforced through the use
of emissions allowances and tradable permits. Because SO2
emissions allowances have value, they will almost certainly be used by
generators, although not necessarily immediately or in the same year
with and without a standard in place. In other words, with or without a
standard, total cumulative SO2 emissions will always be at
or near the ceiling, while there may be some timing differences between
year-by-year forecasts. Thus, it is unlikely that there will be an
SO2 environmental benefit from electricity savings as long
as there is enforcement of the emissions ceilings.
Although there may not be an actual reduction in SO2
emissions from electricity savings, there still may be an economic
benefit from reduced demand for SO2 emission allowances.
Electricity savings decrease the generation of SO2 emissions
from power production, which can decrease the need to purchase or
generate SO2 emissions allowance credits, and decrease the
costs of complying with regulatory caps on emissions.
Like SO2, future emissions of NOX and Hg
would have been subject to emissions caps under the Clean Air
Interstate Act (CAIR) and Clean Air Mercury Rule (CAMR). As discussed
later in section V.C.6, these rules have been vacated by a Federal
court. But the NEMS-BT model used for today's final rule assumed that
both NOX and Hg emissions would be subject to CAIR and CAMR
emissions caps. In the case of NOX emissions, CAIR would
have permanently capped emissions in 28 eastern States and the District
of Columbia. Because the NEMS-BT modeling assumed NOX
emissions would be subject to CAIR, DOE established a range of
NOX reductions based on the use of a NOX low and
high emissions rates (in metric kilotons (kt) of NOX emitted
per terawatt-hours (TWh) of electricity generated) derived from the
AEO2008. To estimate the reduction in NOX emissions, DOE
multiplied these emission rates by the reduction in electricity
generation due to the standards considered. For mercury, because the
emissions caps specified by CAMR would have applied to the entire
country, DOE was unable to use NEMS-BT model to estimate the physical
quantity changes in mercury emissions due to energy conservation
[[Page 58797]]
standards. To estimate mercury emission reductions due to standards,
DOE used an Hg emission rate (in metric tons of Hg per energy produced)
based on AEO2008. Because virtually all mercury emitted from
electricity generation is from coal-fired power plants, DOE based the
emission rate on the metric tons of mercury emitted per TWh of coal-
generated electricity. To estimate the reduction in mercury emissions,
DOE multiplied the emission rate by the reduction in coal-generated
electricity associated with standards considered.
In comments on the NOPR, NRDC asked if the monetization of carbon
should have been included in the LCC and the NPV analyses and
questioned DOE's selection of the $0 to $14 range for carbon prices in
the NOPR analysis. The group recommended that DOE use new cost figures
for monetizing carbon from the new EIA report. (Public Meeting
Transcript No. 12 at pp. 110-111, 192-194) AHRI by contrast commented
that DOE is acting appropriately by not speculating on carbon emission
pricing. (AHRI, No. 23 at p. 9) EarthJustice stated that EPCA mandates
that DOE consider the need for national energy conservation and
determine whether a standard is ``economically justified'' require DOE
to factor economic benefits that are shared by the nation as a whole,
not just those benefits that accrue to PTAC and PTHP customers.
EarthJustice commented that in the case of SO2 emissions and
NOX emissions in states covered by the Clean Air Interstate
Rule (CAIR)\15\, DOE should monetize the values of total change in the
value of the allowance credits for these emissions and incorporate this
amount into the NPV analysis. In the case of CO2,
NOX in non-CAIR states, and Hg, EarthJustice stated that DOE
must consider the value of the environmental benefit resulting from
reduced emissions of these pollutants in the NPV analysis. Finally,
EarthJustice questioned the range of valuations for CO2
emissions used in the NOPR, pointing out that the high end valuation
used by DOE was consistent with the average value from the IPCC source
cited by DOE. (EarthJustice, No. 22 at pp. 4-5)
---------------------------------------------------------------------------
\15\ See http://www.epa.gov/cleanairinterstaterule/.
---------------------------------------------------------------------------
DOE has made several additions to its monetization of environmental
emissions reductions in today's rule, which are discussed in Section
V.C.6, but has chosen to continue to report these benefits separately
from the net benefits of energy savings. Nothing in EPCA, nor in the
National Environmental Policy Act, requires that the economic value of
emissions reduction be incorporated in the net present value analysis
of the value of energy savings. Unlike energy savings, the economic
value of emissions reduction is not priced in the marketplace.
SO2 emissions, which, as discussed previously are not
impacted by this rulemaking, have markets for emissions allowances. The
market clearing price of SO2 emissions is roughly the
marginal cost of meeting the regulatory cap, not the marginal value of
the cap itself. Further, because SO2 (for the nation) is
regulated by a cap and trade system, the effect of the need to meet
these caps is already included in the price of energy or energy
savings. With a cap on SO2, the value of energy savings
already includes the value of SO2 control for those
consumers experiencing energy savings. The economic cost savings
associated with SO2 emissions caps is approximately equal to
the change in the price of traded allowances resulting from energy
savings multiplied by the number of allowances that would be issued
each year. That calculation is uncertain because the energy savings for
PTAC and PTHP equipment are so small relative to the entire electricity
generation market that the resulting emissions savings would have
almost no impact on price formation in the allowances market and likely
would be outweighed by uncertainties in the marginal costs of
compliance with the SO2 emissions caps.
For those emissions currently not priced (CO2, Hg, and
NOX), only a range of estimated economic values based on
environmental damage studies of varying quality and applicability is
available. Consequently, DOE is reporting and weighing these values
separately and is not including them in the NPV analysis.
K. Other Comments
1. Burdens on Small, Non-Standard Size PTAC and PTHP Manufacturers
In the MIA conducted for the NOPR, DOE determined the impacts on
the non-standard size PTAC and PTHP industry separately from the
standard size PTAC and PTHP industry due to their differences in
equipment classes, shipment volumes, and equipment prices. DOE took
into consideration the size, location, and specialization of the non-
standard size PTAC and PTHP industry when calculating production costs
(see Chapter 5 of the NOPR TSD) and capital and equipment conversion
expenses (see Chapter 13 of the NOPR TSD) required to meet the proposed
amended energy conservation standards. Due to the limited number of
publicly owned manufacturers of non-standard equipment (i.e., the
majority of non-standard equipment manufacturers are privately held
companies), DOE relied on information provided by manufacturers during
interviews for the NOPR MIA. DOE estimated the industry research and
development (R&D) expenses needed to achieve each trial standard level.
Details of the R&D expenses by equipment class are presented in Chapter
13 of the NOPR TSD. The TSD generally indicates that these equipment
conversion expenses would be over 20 million dollars for the non-
standard size industry to transform their equipment lines at TSL 1 and
higher TSLs. In addition, the NOPR interviews suggested the kinds of
impacts imposed by amended energy conservation standards on small
businesses would not largely differ from impacts on larger companies
within the non-standard size equipment industry.
In response to the presentation of the potential impacts on non-
standard size manufacturers that DOE described in the NOPR, AHRI, Ice
Air, and ECR each provided comments and public statements regarding
this issue. AHRI commented that the relative impacts on non-standard
size equipment manufacturers are greater than the impacts on standard
size equipment manufacturers. (AHRI, No. 23 at p. 5) Ice Air commented
that the non-standard size PTAC and PTHP industry is comprised of five
or six smaller businesses (mainly located in New York State) that
cannot afford to match the R&D spending of large, multi-national
companies making standard PTACs and PTHPs at much higher volumes. Ice
Air, being one of the smallest manufacturers, stated that smaller
companies would be adversely impacted, with some companies forced to go
out of business. Similarly, Ice Air stated that the proposed standards
could potentially eliminate the ``non-standard'' segment of the
industry, including a significant portion of its own product offerings
of non-standard size PTACs and PTHPs. Ice Air also stated that the
possible elimination of non-standard size equipment manufacturers may
lead to a lessening of the competition and limit consumers' choices to
the offerings of the larger size equipment manufacturers. (Ice Air, No.
25 at p. 2-4) ECR commented that small manufacturers of non-standard
size PTAC and PTHP equipment would be negatively impacted at TSL 4 and
that this proposed standard could impact the availability of products
for its customers, particularly in concentrated
[[Page 58798]]
areas like New York City that have large shipments of non-standard
equipment. (ECR, No. 15 at p. 3)
In response to comments from interested parties, DOE further
reviewed the non-standard size PTAC and PTHP industry, the data
gathered during manufacturing interviews, and manufacturer literature
to determine if the amended energy conservation standards would
disproportionately harm the small, non-standard manufacturers.
a. Non-Standard PTAC and PTHP Industry Characteristics
The non-standard PTAC and PTHP equipment industry is characterized
by a wide scope of products being manufactured at low production rates.
Most non-standard units are built-to-order and are commonly customized
by the manufacturer to accommodate specific building requirements. DOE
review of the non-standard PTAC and PTHP market suggests that the non-
standard PTAC and PTHP industry supports nearly one hundred different
legacy models that were formerly made under over 30 different brand
names.
The six remaining manufacturers of non-standard PTACs and PTHPs
manufacture approximately 40 different replacement model platforms (as
determined by sleeve size and other equipment design requirements to
allow them to be drop-in replacements) and 100 models between them in
total. Most non-standard units are built-to-order and are commonly
customized by the manufacturer to accommodate specific building
requirements. The number of equipment families offered by a particular
company ranges from seven to 40 units, though customization
subsequently leads to thousands of stock-keeping-units (SKUs).
The wide range of non-standard sleeve sizes is the legacy of the
early PTAC and PTHP industry when over 30 competitors made these units
to suit the specific needs and different wall sleeve dimensions.
Industry consolidation has reduced the number of competitors to six,
though the scope of non-standard equipment for sale has not lessened
significantly. The number of equipment platforms offered by any
particular non-standard PTAC and PTHP manufacturer ranges from seven to
40 units, though multiple capacities per equipment platform and any
customization options subsequently generates thousands of SKUs.
b. Non-Standard PTAC and PTHP Market Review
DOE conducted a market review and created a list of every
manufacturer that produces standard and non-standard size PTACs and
PTHPs for sale in the United States using manufacturer catalogs. During
interviews and at the public meeting, DOE asked interested parties and
industry representatives if they were aware of any other non-standard
manufacturers. DOE reviewed publicly available data such as Dun and
Bradstreet reports and contacted manufacturers, where needed, to
determine whether they meet the SBA's definition of a small business in
the PTAC and PTHP industry. Table IV.4 lists the number of all
manufacturers that supply PTACs and PTHPs in standard and/or non-
standard sizes, as well as the number of small businesses in each
category.
Table IV.4--PTAC and PTHP Manufacturer Characteristics
------------------------------------------------------------------------
Total number of Total number of
manufacturers in small businesses
Market served each market in each market
segment segment
------------------------------------------------------------------------
Standard.......................... 9 1
Non-Standard...................... 2 2
Both Standard and Non-Standard.... 4 3
------------------------------------------------------------------------
As Table IV.4 illustrates, there is a greater proportion of small
businesses serving the non-standard market than the standard market.
The standard market is characterized by high unit volumes and a
significant degree of commoditization. The non-standard market offers
significantly more sleeve sizes and/or equipment platforms to choose
from, most of which are made to order for specific customers. The
discrepancy between unit shipments and the number of platforms
requiring significant product development to meet upcoming efficiency
standards is the main reason that the non-standard PTAC and PTHP
industry is expected to experience a greater relative impact for any
given efficiency level than the standard PTAC and PTHP industry.
DOE found that most small businesses in the PTAC and PTHP
industries focus primarily on manufacturing customized and/or non-
standard equipment. For example, standard size units offered by
manufacturers of both kinds of equipment feature customization features
such as hydronic coil heating that differentiate them from common
standard PTAC and PTHPs made by higher-volume competitors. According to
interviewees, the higher value that customers associate with customized
and/or non-standard equipment allows them to charge higher prices,
which in turn makes their (higher cost) low-volume operations viable.
The much lower volumes and the greater number of equipment
platforms distinguishes the standard from the non-standard PTAC and
PTHP market. Whereas standard PTAC and PTHP manufacturers only have to
modify one equipment platform to meet regulatory standards, non-
standard manufacturers may have to update as many as 40 different
equipment platforms in their portfolio. Many equipment development
costs (such as testing, certification, etc.) are somewhat fixed, making
manufacturing scale an important consideration in determining whether
the equipment development investments are economically justified.
Similarly, any capital expenditures, such as upgrading manufacturing
and fabrication lines can be spread across much higher unit volumes by
high-volume manufacturers. Due to the concentration of small businesses
in the non-standard PTAC and PTHP industry, that particular industry
segment is more vulnerable to impacts from amended energy conservation
standards. For further illustration of the economic issues, please
refer to the GRIM analysis in Chapter 13 of the final rule TSD.
c. Impacts on Small Businesses in the Non-Standard Size PTAC and PTHP
Industry
The phaseout of R-22 refrigerant use in 2010 adds a two-fold fixed-
cost burden on all manufacturers: (1) Equipment, manufacturing lines,
and fabrication centers have to be converted to R-410A refrigerant use;
and (2) all equipment platforms will have to undergo equipment
development, testing, and certification. Achieving even baseline ASHRAE
Standard 90.1-
[[Page 58799]]
1999 efficiency levels for all extant products is likely to be beyond
the reach of some manufacturers since they lack the scale to maintain
engineering departments with the time, equipment, and budget to address
multiple equipment platform conversions.
DOE reviewed published efficiency ratings for non-standard PTACs
and PTHPs to estimate the percentage of the units on the market that
would require extensive redesign to achieve the baseline standard level
once manufacturers switch from R-22 to alternate refrigerants. Table
IV.5 illustrates the various nominal EERs that non-standard PTACs and
PTHPs have to achieve and what percentage of the current models are
projected to achieve that level despite efficiency losses due to a R-
410A conversion. This table also includes the equipment conversion
costs for standard PTAC and PTHP units made by manufacturers that build
primarily non-standard equipment because these units share more
characteristics with non-standard equipment (such as very low
production volumes, extensive customization, etc.) than with the mass-
market standard PTACs and PTHPs manufactured by high-volume
manufacturers.
Table IV.5--Cumulative Equipment Development Cost Estimates for the Non-Standard Size PTAC and PTHP Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equipment class Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum EER for Non-Standard PTACs...................... 8.6 9.4 9.4 9.7 9.4 10.0
Minimum EER for Non-Standard PTHPs...................... 8.5 9.4 9.7 9.7 10.0 10.0
Percentage of Equipment Families to At or Above TSL 73% 25% 23% 23% 13% 13%
Efficiency Levels......................................
Number of Equipment Families Requiring Significant 29 82 84 84 95 95
Equipment Development to Meet Standards................
Aggregated Industry Burden *............................ 7.25 20.50 21.00 21.00 23.75 23.75
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Millions of dollars.
As noted in Table IV.5, DOE identified six manufacturers of non-
standard PTACs and PTHPs. DOE grouped equipment offered by
manufacturers into platforms, reflecting how some equipment chassis'
are sold with minimal modifications under different product names.
Altogether, these six non-standard manufacturers offer over 100
different PTAC and PTHP equipment model families for sale, which
represent approximately 40 different equipment platforms. In
determining whether equipment platforms would be likely to require
significant equipment development, DOE's estimates accounted for
published EERs for equipment platforms, equipment capacity, and
anticipated degradation factors as a result of adopting R-410A
refrigerants. DOE took published EER ratings and degraded them
according to factors from the engineering analysis. If one or more
capacities within an equipment platform fell below the EER levels
prescribed by a TSL (either for PTACs or PTHPs), then the equipment
platform was marked for redesign. Accordingly, non-standard platforms
that currently claim very high EERs are not expected to require
extensive redesign except at very high TSLs.
During interviews with manufacturers, none of the non-standard PTAC
and PTHP manufacturers were able to give estimates for their total
equipment conversion costs by efficiency level. As a result, DOE
estimated the investment requirements to upgrade an existing equipment
platform for optimal R-410A operation on the basis of its more numerous
standard size manufacturer responses and its own estimates.
Even in a best-case scenario ($0.25 million per equipment platform,
regardless of efficiency level, based on feedback from engineering
interview), the non-standard PTAC and PTHP industry would have great
difficulty meeting any standards level above baseline. As Table IV.5
illustrates, the industry burden to upgrade its equipment families to
meet TSL 1 would exceed $20 million or approximately 40 percent of its
total annual revenue. Higher TSL levels would impose even greater
economic burdens. However unsustainable this impact is in the
aggregate, the impact on individual businesses could be even greater.
For example, based on Dun & Bradstreet reports, one small
manufacturer of non-standard PTACs and PTHPs is estimated to have sales
of less than $5 million per year and currently ships approximately 12
different non-standard equipment platforms. DOE estimates that the
company would have to spend approximately $3 million to meet any
efficiency level (including baseline) using R-410A refrigerants. A $3
million equipment development expense translates into more than 60
percent of annual revenues or about 35 years worth of equipment
development budget for this manufacturer, assuming it spends the
industry average of 1.6 percent of revenues on research and
development.
DOE estimates that on average, small manufacturers of non-standard
PTACs and PTHPs require 25 years worth of equipment development budget
to reach any efficiency level above baseline (which in itself will
require about 14 years worth of equipment development budget). Because
small businesses lack the scale to afford the required investments for
R-410A conversion, certification requirements, and the equipment
development required for energy conservation standards, adopting an
efficiency standard above baseline is likely to cause some small
businesses to exit the market. This situation suggests that the non-
standard industry would reduce the number of equipment families and
capacities even at baseline efficiency levels to keep equipment
development expenses within manageable limits.
Table IV.6 describes DOE estimates regarding the average equipment
development cost per unit by manufacturing scale and equipment
lifetime. Manufacturing scale was roughly defined as small vs. large
businesses whereas equipment lifetime defines the number of years that
a specific equipment platform will stay in production without major
changes or
[[Page 58800]]
revisions. In the standard PTAC and PTHP industry, the impact on the
major manufacturers is relatively minor, regardless of whether they are
small businesses or not, due to the scale at which they manufacture and
because they only have one equipment platform to upgrade. However, in
the non-standard industry the impact of scale and the number of
equipment platforms is quite evident. The only large business operating
in the non-standard industry segment offers fewer equipment platforms
than any of its small business competitors, yet operates at a higher
overall production volume than most of them. As a result, the per-unit
conversion costs for the large business are significantly lower than
those of its smaller competitors.
Table IV.6--Impact of Manufacturing Scale on per Unit Equipment Development Cost
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Per unit equipment development cost by industry 5 7 10 20
segment versus equipment lifetime (years)
----------------------------------------------------------------------------------------------------------------
Standard PTAC and PTHP........ Small Business.. $6 $4 $3 $1
Large Business 7 5 3 2
Average.
Non-Standard PTAC and PTHP.... Small Business 136 97 68 34
Average.
Large Business.. 45 32 22 11
----------------------------------------------------------------------------------------------------------------
The current wide scope of equipment families offered by the non-
standard industry (over 100 equipment families from six manufacturers
with thousands of SKUs) is thus likely to shrink dramatically in
response to amended energy conservation standards by DOE. In
particular, higher capacity units will be vulnerable for elimination
since cabinet constraints may make required improvements to units
infeasible to implement. Equipment manufacturers would be expected to
cut their least popular equipment classes first, potentially
eliminating multiple extant equipment platforms from the market
altogether. However, cutting equipment classes by itself is difficult,
since every equipment class (and its resultant enhancement and
diversification of the revenue stream) adds some necessary
manufacturing scale to the manufacturer. Once enough equipment classes
are removed from its equipment offering, the manufacturer may lack the
scale to operate.
A likely result of these market dynamics is that some manufacturers
of non-standard PTACs and PTHPs will exit the market or consolidate
with other small business manufacturers to meet even baseline
efficiency requirements. At least in the initial years after the
implementation date of the energy conservation standard, DOE estimates
that most non-standard PTAC and PTHP equipment manufacturers will
reduce their scope of equipment platforms by 50 percent or more in
order to bring the required equipment development expenses down to more
sustainable levels, which will be likely to affect consumer choices in
the near term.
Whereas current equipment buyers benefit from being able to source
non-standard equipment families from multiple manufacturers, the number
of manufacturers for a specific type of non-standard PTAC or PTHP is
likely to shrink as manufacturers cut back the equipment families they
offer as a result of the R-410A conversion, certification requirements,
and efficiency standards. Limited monopolistic or oligopolistic market
conditions may result--limited only because consumers always have the
option of modifying their building to allow the use of alternative
cooling and heating equipment. Manufacturers also expect consumers to
prolong the life of existing units via repairs and remanufacturing--and
reduce demand for replacement units--if compliance with energy
conservation standards results in higher replacement costs or the
complete unavailability of replacement units.
2. PTAC and PTHP Labeling
In the NOPR, DOE stated that it believes that a label on PTAC and
PTHP equipment that identifies the equipment class would be useful in
enforcing both the energy conservation standards as well as the
building codes and would assist States and other interested parties in
determining which application correlates to a given PTAC or PTHP (based
upon size). DOE invited public comment on the type of information and
other requirements or factors, including format, it should consider in
developing a proposed labeling rule for PTACs and PTHPs.
AHRI commented that it continues to support the ASHRAE Standard
90.1-1999 labeling requirements and believes that a label on the
equipment identifying the equipment class would be useful. AHRI stated
that it does not support a label similar to the EnergyGuide label used
on consumer products and that such a label will do nothing to help
commercial customers in making purchasing decisions. It asserted that
product literature such as fact sheets and the AHRI Certified Directory
are more effective in providing customers with energy efficiency
information they need before purchasing PTACs and PTHPs. (AHRI, No. 23
at p. 7)
Carrier stated that the inclusion of an energy use information
label for customers of PTAC and PTHP equipment would have little or no
value since the purchasing entity will rely on the advice of the
contractor or literature, not on ``labels''. The nameplates also
provide an avenue for the performance information as necessary to
confirm that they received what was requested. (Carrier, No. 16 at p.
6)
ACEEE and NRDC also commented that with regard to non-standard
equipment, the path to a loophole-free standard requires adoption of
labeling, code, and/or equivalent measures to prevent installation of
non-standard PTAC and PTHP equipment in new construction. (ACEEE and
NRDC, No. 26 at p. 3)
In developing the final rule, DOE considered the information
identified by interested parties on the types of energy use or
efficiency information commercial customers and owners of PTACs and
PTHPs would find useful in making purchasing decisions. Before DOE can
establish labeling rules, it must first ascertain whether the criteria
outlined in the NOPR are met. 73 FR 18888-89. DOE will work with the
Federal Trade Commission and other interested parties to determine the
types of information and the forms (e.g., labels, fact sheets, or
directories) that would be most useful for commercial customers and
owners of PTACs and PTHPs. DOE continues to believe that a label on
PTAC and PTHP equipment identifying the equipment class and efficiency
level would be useful for enforcement of both the energy conservation
standards as well as the building codes and would assist States and
other interested parties in determining which application correlates to
a given PTAC or PTHP
[[Page 58801]]
(based upon size) because it would help commercial customers identify
the efficiency associated with the PTAC and PTHP equipment being placed
into commercial buildings. As DOE stated in the NOPR, DOE anticipates
proposing labeling requirements for PTAC and PTHP equipment in a
separate rulemaking and is not incorporating a labeling requirement as
part of today's final rule. 73 FR 18889.
V. Analytical Results and Conclusions
A. Trial Standard Levels
In the NOPR, DOE examined seven TSLs for standard size and non-
standard size PTACs and PTHPs at the representative cooling capacities.
73 FR 18889. Each TSL represented a set of efficiency levels that
describe a possible amended energy conservation standard for each
equipment class. For the final rule, DOE did not consider TSL 7 for
standard size equipment (see section IV.C) because DOE determined that
TSL 7 represented an efficiency level that potentially could not be
attained in the full range of cooling capacities for standard size
equipment utilizing R-410A. In addition, DOE analyzed a new TSL for
standard size PTACs and PTHPs--TSL A--which is adopted in today's final
rule. TSL A combines the efficiency levels in TSL 3 and TSL 1 for
standard size PTACs at the representative cooling capacities and the
efficiency levels in TSL 5 and TSL 3 for standard size PTHPs at the
representative cooling capacities. DOE's inclusion of TSL A recognizes
the challenge manufacturers encounter when increasing the efficiency of
larger cooling capacity equipment. Table V.1 presents the TSLs analyzed
for standard size PTACs and PTHPs in today's final rule and the
efficiency levels within each TSL for each class and size of equipment
analyzed.
Table V.1--Standard Size PTACs and PTHPs Baseline Efficiency Levels and TSLs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline
(ASHRAE TSL 6 (Max-
Equipment class (cooling capacity) Efficiency metric standard TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 Tech)
90.1-1999)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard Size PTAC, 9,000 Btu/h........... EER......................... 10.6 10.9 10.9 11.1 11.1 10.9 11.3 11.5
Standard Size PTAC, 12,000 Btu/h.......... EER......................... 9.9 10.2 10.2 10.4 10.2 10.2 10.6 10.8
Standard Size PTHP, 9,000 Btu/h........... EER......................... 10.4 10.9 11.1 11.1 11.3 11.3 11.3 11.5
COP......................... 3.0 3.1 3.2 3.2 3.3 3.3 3.3 3.3
Standard Size PTHP, 12,000 Btu/h.......... EER......................... 9.7 10.2 10.4 10.4 10.4 10.6 10.6 10.8
COP......................... 2.9 3.0 3.1 3.1 3.1 3.1 3.1 3.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.2 presents the TSLs analyzed for non-standard size PTACs
and PTHPs in today's final rule and the efficiency levels within each
TSL for each class and size of equipment analyzed.
Table V.2--Non-Standard Size PTACs and PTHPs Baseline Efficiency Levels and TSLs
----------------------------------------------------------------------------------------------------------------
Baseline
Equipment class (cooling Efficiency (ASHRAE TSL 5 (Max-
capacity) metric standard TSL 1 TSL 2 TSL 3 TSL 4 Tech)
90.1-1999)
----------------------------------------------------------------------------------------------------------------
Non-Standard Size PTAC, EER............ 8.6 9.4 9.4 9.7 9.4 10.0
11,000 Btu/h.
Non-Standard Size PTHP, EER............ 8.5 9.4 9.7 9.7 10.0 10.0
11,000 Btu/h. 2.6 2.8 2.8 2.8 2.9 2.9
----------------------------------------------------------------------------------------------------------------
As stated in the engineering analysis (Chapter 5 of the final rule
TSD), current Federal energy conservation standards and the efficiency
levels specified by ASHRAE Standard 90.1-1999 for PTACs and PTHPs are a
function of the equipment's cooling capacity. Both the Federal energy
conservation standards and the efficiency standards in ASHRAE Standard
90.1-1999 are based on equations that calculate the efficiency levels
for PTACs and PTHPs with a cooling capacity greater than or equal to
7,000 Btu/h and less than or equal to 15,000 Btu/h for each equipment
class (see Table II.1). For the NOPR, DOE derived the proposed
standards (i.e., efficiency level as a function of cooling capacity) by
plotting the representative cooling capacities and the corresponding
efficiency levels for each TSL. DOE then calculated the equation of the
line passing through the EER values for 9,000 Btu/h and 12,000 Btu/h
for standard size PTACs and PTHPs. Chapter 9 of the NOPR TSD describes
in detail how DOE determined the energy-efficiency equations for each
TSL.
For the final rule, DOE used the energy-efficiency equations
derived from the NOPR for TSLs 1, 2, 3, 4, 5, and 6 to extend the
results from the representative cooling capacities to the entire range
of cooling capacities of standard size PTACs and PTHPs. For TSL A, DOE
calculated a new slope of the energy-efficiency equations using the
methodology from the NOPR. Specifically, DOE calculated the equation of
the line passing through the EER values for 9,000 Btu/h and 12,000 Btu/
h for standard size PTACs and PTHPs. Table V.3 and Table V.4 identify
the energy-efficiency equations for each TSL for standard size PTACs
and PTHPs.
Table V.3--Energy-Efficiency Equations (EER as a Function of Cooling Capacity) by TSL for Standard Size PTACs
----------------------------------------------------------------------------------------------------------------
Standard size ** PTACs Energy-efficiency equation *
----------------------------------------------------------------------------------------------------------------
Baseline ASHRAE Standard 90.1-1999........... EER = 12.5 - (0.213 x Cap[dagger]/1000)
[[Page 58802]]
TSL 1........................................ EER = 13.0 - (0.233 x Cap [dagger]/1000)
TSL 2........................................ EER = 13.0 - (0.233 x Cap [dagger]/1000)
TSL 3........................................ EER = 13.2 - (0.233 x Cap [dagger]/1000)
TSL A........................................ EER = 13.8 - (0.300 x Cap [dagger]/1000)
TSL 4........................................ EER = 13.0 - (0.233 x Cap [dagger]/1000)
TSL 5........................................ EER = 13.4 - (0.233 x Cap [dagger]/1000)
TSL 6........................................ EER = 13.6 - (0.233 x Cap [dagger]/1000)
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 [deg]F outdoor dry-
bulb temperature for air-cooled products and evaporatively cooled products, and at 85 [deg]F entering water
temperature for water-cooled products.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening
greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and a cross-sectional area
greater than or equal to 670 square inches.
[dagger] Cap means cooling capacity in Btu/h at 95 [deg]F outdoor dry-bulb temperature.
Table V.4--Energy-Efficiency Equations (EER as a Function of Cooling Capacity) by TSL for Standard Size PTHPs
----------------------------------------------------------------------------------------------------------------
Standard size ** PTHPs Energy-efficiency equation *
----------------------------------------------------------------------------------------------------------------
Baseline ASHRAE Standard 90.1-1999........... EER = 12.3 - (0.213 x Cap[dagger]/1000)
COP = 3.2 - (0.026 x Cap [dagger]/1000)
TSL 1........................................ EER = 13.0 - (0.233 x Cap [dagger]/1000)
COP = 3.6 - (0.046 x Cap [dagger]/1000)
TSL 2........................................ EER = 13.2 - (0.233 x Cap [dagger]/1000)
COP = 3.6 - (0.044 x Cap [dagger]/1000)
TSL 3........................................ EER = 13.2 - (0.233 x Cap [dagger]/1000)
COP = 3.6 - (0.044 x Cap [dagger]/1000)
TSL A........................................ EER = 14.0 - (0.300 x Cap [dagger]/1000)
COP = 3.7 - (0.052 x Cap [dagger]/1000)
TSL 4........................................ EER = 13.4 - (0.233 x Cap [dagger]/1000)
COP = 3.7 - (0.053 x Cap [dagger]/1000)
TSL 5........................................ EER = 13.4 - (0.233 x Cap [dagger]/1000)
COP = 3.7 - (0.053 x Cap [dagger]/1000)
TSL 6........................................ EER = 13.6 - (0.233 x Cap [dagger]/1000)
COP = 3.8 - (0.053 x Cap [dagger]/1000)
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 [deg]F outdoor dry-
bulb temperature for air-cooled and evaporatively cooled products, and at 85 [deg]F entering water temperature
for water-cooled products. All COP values must be rated at 47 [deg]F outdoor dry-bulb temperature for air-
cooled products, and at 70 [deg]F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening
greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and a cross-sectional area
greater than or equal to 670 square inches.
[dagger] Cap means cooling capacity in Btu/h at 95 [deg]F outdoor dry-bulb temperature.
For non-standard size PTACs and PTHPs, DOE used the ASHRAE Standard
90.1-1999 equation slope and the representative cooling capacity (i.e.,
11,000 Btu/h cooling capacity) to determine the energy-efficiency
equations corresponding to each TSL in the NOPR. Chapter 9 of the NOPR
TSD details how DOE determined the energy-efficiency equations for each
TSL. For the final rule, DOE used the energy-efficiency equations
presented in the NOPR for TSLs 1 through 5 to extend the results from
the representative cooling capacities to the entire range of cooling
capacities of non-standard size PTACs and PTHPs. Table V.5 and Table
V.6 identify the energy-efficiency equations for each TSL for non-
standard size PTAC and PTHP.
Table V.5--Energy-Efficiency Equations (EER as a Function of Cooling Capacity) by TSL for Non-Standard Size
PTACs
----------------------------------------------------------------------------------------------------------------
Non-standard size ** PTACs Energy-efficiency equation *
----------------------------------------------------------------------------------------------------------------
Baseline ASHRAE Standard 90.1-1999........... EER = 10.9 - (0.213 x Cap[dagger]/1000)
TSL 1........................................ EER = 11.7 - (0.213 x Cap [dagger]/1000)
TSL 2........................................ EER = 11.7 - (0.213 x Cap [dagger]/1000)
TSL 3........................................ EER = 12.0 - (0.213 x Cap [dagger]/1000)
TSL 4........................................ EER = 11.7 - (0.213 x Cap [dagger]/1000)
TSL 5........................................ EER = 12.3 - (0.213 x Cap [dagger]/1000)
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 [deg]F outdoor dry-
bulb temperature for air-cooled and evaporatively cooled products, and at 85 [deg]F entering water temperature
for water-cooled products.
** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external
wall opening of less than 16 inches high or less than 42 inches wide, and a cross-sectional area less than 670
square inches.
[dagger] Cap means cooling capacity in Btu/h at 95 [deg]F outdoor dry-bulb temperature.
[[Page 58803]]
Table V.6--Energy-Efficiency Equations (EER as a Function of Cooling Capacity) by TSL for Non-Standard Size
PTHPs
----------------------------------------------------------------------------------------------------------------
Non-standard size ** PTHPs Energy-efficiency equation *
----------------------------------------------------------------------------------------------------------------
Baseline ASHRAE Standard 90.1-1999........... EER = 10.8-(0.213 x Cap [dagger]/1000)
COP = 2.9-(0.026 x Cap [dagger]/1000)
TSL 1........................................ EER = 11.7-(0.213 x Cap [dagger]/1000)
COP = 3.1-(0.026 x Cap [dagger]/1000)
TSL 2........................................ EER = 12.0-(0.213 x Cap [dagger]/1000)
COP = 3.1-(0.026 x Cap [dagger]/1000)
TSL 3........................................ EER = 12.0-(0.213 x Cap [dagger]/1000)
COP = 3.1-(0.026 x Cap [dagger]/1000)
TSL 4........................................ EER = 12.3-(0.213 x Cap [dagger]/1000)
COP = 3.1-(0.026 x Cap [dagger]/1000)
TSL 5........................................ EER = 12.3-(0.213 x Cap [dagger]/1000)
COP = 3.1-(0.026 x Cap [dagger]/1000)
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 [deg]F outdoor dry-
bulb temperature for air-cooled and evaporatively cooled products, and at 85 [deg]F entering water temperature
for water-cooled products. All COP values must be rated at 47 [deg]F outdoor dry-bulb temperature for air-
cooled products, and at 70 [deg]F entering water temperature for water-source heat pumps.
** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an eternal
wall opening of less than 16 inches high or less than 42 inches wide, and a cross-sectional area less than 670
square inches.
[dagger] Cap means cooling capacity in Btu/h at 95 [deg]F outdoor dry-bulb temperature.
For PTACs and PTHPs with a cooling capacity of less than 7,000 Btu/
h, DOE determined the EERs using a cooling capacity of 7,000 Btu/h in
the energy-efficiency equations. For PTACs and PTHPs with a cooling
capacity greater than 15,000 Btu/h cooling capacity, DOE determined the
EERs using a cooling capacity of 15,000 Btu/h in the energy-efficiency
equations. This is the same method established in the Energy Policy Act
of 1992 and provided in ASHRAE Standard 90.1-1999 for calculating the
EER and COP of equipment with cooling capacities less than 7,000 Btu/h
and greater than 15,000 Btu/h.
B. Significance of Energy Savings
To estimate the energy savings through 2042 due to amended
standards, DOE compared the energy consumption of packaged terminal
equipment under the base case (standards at the levels in ASHRAE
Standard 90.1-1999) to energy consumption of this equipment under each
standards case (i.e., each TSL, or set of amended standards, that DOE
has considered). Table V.7 and Table V.8 summarize DOE's NES estimates,
which are based on the AEO2008 energy price forecast, for each TSL.
Chapter 11 of the TSD describes these estimates in more detail. The
tables provide both undiscounted and discounted values of energy
savings from 2012 through 2042. Discounted energy savings at rates of 7
percent and 3 percent represent a policy perspective where energy
savings farther in the future are less significant than energy savings
closer to the present. Each TSL that is more stringent than the
corresponding level in ASHRAE Standard 90.1-1999 results in additional
energy savings, ranging from 0.015 quads to 0.068 quads for TSLs 1
through 6 for standard size PTAC and PTHP equipment classes, and from
0.004 to 0.009 quads for TSLs 1 through 5 for non-standard size PTAC
and PTHP equipment classes.
Table V.7--Summary of Cumulative National Energy Savings for Standard Size PTACs and PTHPs
[Energy savings for units sold from 2012 to 2042]
----------------------------------------------------------------------------------------------------------------
Trial standard level
Primary national energy savings (quads) (sum of all equipment -----------------------------------------------
classes) Undiscounted 3% Discounted 7% Discounted
----------------------------------------------------------------------------------------------------------------
1............................................................... 0.015 0.007 0.003
2............................................................... 0.024 0.012 0.006
3............................................................... 0.031 0.016 0.007
A............................................................... 0.032 0.016 0.007
4............................................................... 0.033 0.017 0.008
5............................................................... 0.049 0.025 0.011
6............................................................... 0.068 0.035 0.015
----------------------------------------------------------------------------------------------------------------
Table V.8--Summary of Cumulative National Energy Savings for Non-Standard Size PTACs and PTHPs
[Energy savings for units sold from 2012 to 2042]
----------------------------------------------------------------------------------------------------------------
Trial standard level
Primary national energy savings (quads) (sum of all equipment -----------------------------------------------
classes) Undiscounted 3% Discounted 7% Discounted
----------------------------------------------------------------------------------------------------------------
1............................................................... 0.004 0.002 0.001
2............................................................... 0.004 0.002 0.001
3............................................................... 0.005 0.003 0.001
4............................................................... 0.006 0.003 0.001
[[Page 58804]]
5............................................................... 0.009 0.004 0.002
----------------------------------------------------------------------------------------------------------------
Several commenters noted the potential for equipment switching
where TSLs resulted in higher cooling efficiency requirements for PTHP
and PTAC of the same cooling capacity. Higher cooling efficiency
requirements would result in an increase in the price differential of
minimum efficiency PTHP and PTAC equipment, causing some PTHP customers
to shift to a PTAC with electric resistance heat.
From the perspective of assessing the energy savings achieved by a
standard at a defined TSL, the primary concern from this anticipated
equipment switching is the loss in energy savings that could result if
some fraction of the PTHP market switches to the use of PTAC with
electric resistance heat. While DOE recognizes that some PTHP customers
might also switch to the use of fossil fuel (e.g. hydronic) heating,
the relatively small fraction of the existing PTAC customers who
currently use hydronic heat for the spaces served by PTAC (estimated at
less than 1%), and the difficulty of retrofitting hydronic heating into
buildings that do not use it suggests that the total fraction of the
market that would opt for PTAC with hydronic heating is small. The
majority of the total packaged terminal equipment market (PTAC and
PTHP) currently uses PTAC with electric resistance heat, which supports
the possibility that some purchasers would choose to switch from PTHPs
to PTACs.
DOE did not have the information with which to assess the
elasticity of the PTHP market with regards to this switching between
PTHP and PTAC. To assess the significance of a shift from PTHP to PTAC
purchases, DOE calculated the total fraction of the heat pump market
that would need to shift to the purchase of PTAC equipment to negate
the energy savings from increasing the PTHP cooling efficiency above
that of the PTAC equipment. Two TSLs were first examined, TSL 2, and
TSL 4. For standard size PTAC and PTHP equipment, TSL 2 has the same
EER requirements for PTAC as TSL 1 but has a 0.2 EER increase for PTHP
equipment as compared with TSL 1. For TSL 2, DOE calculated that a
shift of 2.0 percent of the heat pump market to the use of PTAC with
electric resistance would be sufficient to offset the energy savings
difference between TSL 1 and TSL 2. If PTAC and PTHP standards were set
at TSL 2, the purchase price differential between the two would
increase on the order of $11, which would represent an increase of
approximately 9.4 percent increase in the purchase price differential
between PTAC and PTHP over TSL 1. This increase in the purchase price
differential results from the increased PTHP efficiency at TSL 2. At
TSL 1, the average annual payback in 2012 for a PTHP over a PTAC was
calculated at approximately 2.10 years. At TSL 2, the average annual
payback for a PTHP over a PTAC was 2.18 years. The average PBP for
purchase of a PTHP over a PTAC increased 3.7 percent between TSL 1 and
TSL 2.
Similarly, for TSL 4, DOE calculated that a shift of 3.8 percent of
the heat pump market to the use of PTAC with electric resistance would
offset the energy savings difference between TSL 1 and TSL 4. If PTAC
and PTHP standards were set at TSL 4, the purchase price differential
between the two would increase on the order of $22, or an 18.8 percent
increase in the purchase price differential compared to that at TSL 1.
This increase in price reflects the higher efficiency of the PTHP
equipment at TSL 2 and TSL 4. At TSL 4, the average annual payback for
purchase of a PTHP over a PTAC was 2.29 years. The average PBP for
purchase of a PTHP over a PTAC increased approximately 9.2 percent
between TSL 1 and TSL 4.
DOE also examined TSL A in light of potential equipment switching.
In the case of TSL A, there is no comparable TSL considered by DOE that
had a PTAC cooling efficiency level identical to TSL A but with PTHP
cooling efficiencies at the same efficiency level. However, the nominal
difference between PTHP and PTAC EER levels at TSL A, 0.2 EER, is
identical to the nominal difference in EER levels at TSL 2 for all
capacities. The difference in equipment price between a PTHP and PTAC
at TSL A is $127 for a 9,000 Btu/h unit and $129 for a 12,000 Btu/h
unit, which is virtually identical to the price differential at TSL 2,
and represents a 9.2 percent increase in differential purchase price
compared with TSL 1. DOE examined the energy savings at TSL A and TSL 1
for standard size PTAC and PTHP equipment only, and determined that
under TSL A, it would take approximately 4.0 percent of standard size
PTHP users to switch to a PTAC to negate the energy savings for TSL A
over TSL 1. At TSL A, the estimated PBP for purchase of a PTHP over a
PTAC under average use conditions was estimated at 2.15 years. Given
the very small increase in differential purchase price between PTAC and
PTHP at TSL A compared with standards set at identical efficiency
levels (TSL 1) and the minimal difference in payback period at TSL A
compared to TSL 1, DOE concludes that it is unlikely that an efficiency
Standard set at TSL A would result in a significant number of standard
size PTHP customers opting to instead purchase PTAC equipment with
electric resistance heat.
C. Economic Justification
1. Economic Impact on Commercial Consumers
a. Life-Cycle Costs and Payback Period
Commercial consumers will be affected by the standards because they
will experience higher purchase prices and lower operating costs.
Generally, these impacts are best captured by changes in life-cycle
costs and payback period. To determine these impacts, DOE calculated
the LCC and PBP for the standard levels considered in this proceeding.
DOE's LCC and PBP analyses provided five key outputs for each TSL,
which are reported in Table V.9 through Table V.14. The first three
outputs in each table are the proportion of PTAC or PTHP purchases in
which the purchase of a design that complies with the TSL would create
a net life-cycle cost, no impact, or a net life-cycle cost savings for
the consumer. The fourth output is the average net life-cycle savings
from purchasing a complying design compared with purchasing baseline
equipment.
[[Page 58805]]
The fifth output is the average PBP for the consumer purchasing a
design that complies with the TSL compared with purchasing baseline
equipment. The PBP is the number of years it would take for the
customer to recover, as a result of energy savings, the increased costs
of higher-efficiency equipment based on the operating cost savings from
the first year of ownership. The PBP is an economic benefit-cost
measure that uses benefits and costs without discounting. TSD Chapter 8
details the LCC and PBP analyses.
Table V.9--Summary LCC and PBP Results for Standard Size PTAC With a Cooling Capacity of
9,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Trial standard level *
----------------------------------------------------------------------------
1 2 3 A 4 5 6
----------------------------------------------------------------------------------------------------------------
EER................................ 10.9 10.9 11.1 11.1 10.9 11.3 11.5
PTAC with Net LCC Increase (%)..... 15 15 30 30 15 46 62
PTAC with No Change in LCC (%)..... 77 77 56 56 77 37 18
PTAC with Net LCC Savings (%)...... 7 7 14 14 7 17 21
Mean LCC Savings (2007$)........... (1) (1) (3) (3) (1) (6) (10)
Mean Payback Period (years)........ 13.0 13.0 13.7 13.7 13.0 14.5 15.2
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative LCC savings, i.e., an increase in LCC. Detailed percentage changes
may not sum to 100% due to rounding.
Table V.10--Summary LCC and PBP Results for Standard Size PTHP With a Cooling Capacity of
9,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Trial standard level *
----------------------------------------------------------------------------
1 2 3 A 4 5 6
----------------------------------------------------------------------------------------------------------------
EER................................ 10.9 11.1 11.1 11.3 11.3 11.3 11.5
PTHP with Net LCC Increase (%)..... 7 10 10 13 13 13 24
PTHP with No Change in LCC (%)..... 78 57 57 37 37 37 18
PTHP with Net LCC Savings (%)...... 16 33 33 50 50 50 58
Mean LCC Savings (2007$)........... 11 20 20 28 28 28 24
Mean Payback Period (years)........ 5.1 4.5 4.5 4.4 4.4 4.4 5.1
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative LCC savings, i.e., an increase in LCC. Detailed percentage changes
may not sum to 100% due to rounding.
Table V.11--Summary LCC and PBP Results for Standard Size PTAC With a Cooling Capacity of
12,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Trial standard level *
----------------------------------------------------------------------------
1 2 3 A 4 5 6
----------------------------------------------------------------------------------------------------------------
EER................................ 10.2 10.2 10.4 10.2 10.2 10.6 10.8
PTAC with Net LCC Increase (%)..... 16 16 31 16 16 48 65
PTAC with No Change in LCC (%)..... 77 77 56 77 77 36 18
PTAC with Net LCC Savings (%)...... 7 7 13 7 7 16 17
Mean LCC Savings * (2007$)......... (2) (2) (5) (2) (2) (10) (15)
Mean PBP (years)................... 13.1 13.1 14.0 13.1 13.1 14.9 15.9
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative savings, i.e., an increase in LCC. Detailed percentage changes may
not sum to 100% due to rounding.
Table V.12--Summary LCC and PBP Results for Standard Size PTHP With a Cooling Capacity of
12,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Trial standard level *
----------------------------------------------------------------------------
1 2 3 A 4 5 6
----------------------------------------------------------------------------------------------------------------
EER................................ 10.2 10.4 10.4 10.4 10.6 10.6 10.8
PTHP with Net LCC Increase (%)..... 7 10 10 10 21 21 35
PTHP with No Change in LCC (%)..... 77 57 57 57 37 37 18
PTHP with Net LCC Savings (%)...... 16 33 33 33 42 42 47
Mean LCC Savings (2007$)........... 13 24 24 24 20 20 14
Mean PBP (years)................... 5.1 4.6 4.6 4.6 5.5 5.5 6.4
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative savings, i.e., an increase in LCC. Detailed percentage changes may
not sum to 100% due to rounding.
[[Page 58806]]
Table V.13--Summary LCC and PBP Results for Non-Standard Size PTACs With a Cooling Capacity of
11,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Trial standard level *
------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
EER...................................................... 9.4 9.4 9.7 9.4 10.0
PTAC with Net LCC Increase (%)........................... 6 6 14 6 25
PTAC with No Change in LCC (%)........................... 73 73 47 73 23
PTAC with Net LCC Savings (%)............................ 22 22 39 22 52
Mean LCC Savings (2007$)................................. 26 26 30 26 31
Mean PBP (years)......................................... 4.4 4.4 5.1 4.4 5.9
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative savings, i.e., an increase in LCC. Detailed percentage changes may
not sum to 100% due to rounding.
Table V.14--Summary LCC and PBP Results for Non-Standard Size PTHPs With a Cooling Capacity of
11,000 Btu/h
----------------------------------------------------------------------------------------------------------------
Trial standard level *
------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
EER...................................................... 9.4 9.7 9.7 10.0 10.0
PTHP with Net LCC Increase (%)........................... 1 3 3 5 5
PTHP with No Change in LCC (%)........................... 73 47 47 23 23
PTAC with Net LCC Savings (%)............................ 27 50 50 72 72
Mean LCC Savings (2007$)................................. 62 66 66 80 80
Mean PBP (years)......................................... 2.2 2.8 2.8 3.0 3.0
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative savings, i.e., an increase in LCC. Detailed percentage changes may
not sum to 100% due to rounding.
For PTACs and PTHPs with a cooling capacity of less than 7,000 Btu/
h, DOE established the energy conservation standards using a cooling
capacity of 7,000 Btu/h in the efficiency-capacity equation (see
section VI.A). The LCC and PBP impacts for equipment in this category
will be similar to the impacts for the 9,000 Btu/h units because the
MSP and usage characteristics are in a similar range. Similarly, for
PTACs and PTHPs with a cooling capacity greater than 15,000 Btu/h, DOE
established the energy conservation standards using a cooling capacity
of 15,000 Btu/h in the efficiency-capacity equation. Further, for PTACs
and PTHPs with a cooling capacity greater than 15,000 Btu/h, DOE
established that the impacts will be similar for units with a cooling
capacity of 12,000 Btu/h. Section V.A of today's final rule provides
more details on how DOE developed the energy-efficiency equations based
on the analysis results for the representative cooling capacities.
b. Commercial Consumer Subgroup Analysis
DOE estimated commercial consumer subgroup impacts by determining
the LCC impacts at each TSL on small businesses, such as small
independent hotels and motels. Table V.15 shows the mean LCC savings
from the final energy conservation standards; Table V.16 shows the mean
payback period (in years) for this subgroup of commercial consumers.
DOE's analysis using the LCC spreadsheet model indicated that the LCC
and PBP impacts on the small independent hotels and motels were similar
to the corresponding impacts on the larger population of the commercial
consumers. Chapter 12 of the TSD explains DOE's method for conducting
the consumer subgroup analysis and presents the detailed results of
that analysis.
Table V.15--Mean Life-Cycle Cost Savings for PTAC or PTHP Equipment Purchased by LCC Subgroups (2007$)
----------------------------------------------------------------------------------------------------------------
Equipment class (cooling capacity) Trial standard level
----------------------------------------------------------------------------------------------------------------
Standard Size TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6
----------------------------------------------------------------------------------------------------------------
Standard Size PTAC (9,000 Btu/h)................. (2) (2) (5) (5) (2) (9) (13)
Standard Size PTHP (9,000 Btu/h)................. 8 16 16 22 22 22 17
Standard Size PTAC (12,000 Btu/h)................ (4) (4) (7) (4) (4) (13) (19)
Standard Size PTHP (12,000 Btu/h)................ 10 18 18 18 13 13 7
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Non-Standard Size TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
-----------------------------------------------------------------------------------------------------------
Non-Standard Size PTAC....................................... 22 22 24 22 23
Non-Standard Size PTHP....................................... 54 56 56 68 68
-----------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative savings.
[[Page 58807]]
Table V.16--Mean Payback Period for PTAC or PTHP Equipment Purchased by LCC Subgroups (Years)
----------------------------------------------------------------------------------------------------------------
Equipment class (cooling capacity) Trial standard level
----------------------------------------------------------------------------------------------------------------
Standard Size TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6
----------------------------------------------------------------------------------------------------------------
Standard Size PTAC (9,000 Btu/h)........................ 13.0 13.0 13.6 13.6 13.0 14.4 15.1
Standard Size PTHP (9,000 Btu/h)........................ 5.0 4.5 4.5 4.4 4.4 4.4 5.1
Standard Size PTAC (12,000 Btu/h)....................... 13.1 13.1 13.9 13.1 13.1 14.8 15.8
Standard Size PTHP (12,000 Btu/h)....................... 5.1 4.6 4.6 4.6 5.5 5.5 6.3
----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Non-Standard Size TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
-----------------------------------------------------------------------------------------------
Non-Standard Size PTAC................................ 4.4 4.4 5.1 4.4 5.9
Non-Standard Size PTHP................................ 2.2 2.8 2.8 2.9 2.9
-----------------------------------------------------------------------------------------------
2. Economic Impact on Manufacturers
DOE described the qualitative economic impacts of today's standard
on manufacturers in the NOPR. 73 FR 18893-99. This analysis is
described in greater detail in Chapter 13 of the TSD.
As part of its NOPR analysis, DOE analyzed two distinct markup
scenarios: (1) The flat markup scenario, and (2) the partial cost
recovery markup scenario. 73 FR 18886. The flat markup scenario can
also be characterized as the ``preservation of gross margin
percentage'' scenario. Under this scenario, DOE applied, across all
TSLs, a single uniform ``gross margin percentage'' markup that DOE
believes represents the current markup for manufacturers in the PTAC
and PTHP industry. This flat markup scenario implies that, as
production costs increase with efficiency, the absolute dollar markup
will also increase. DOE calculated that the non-production cost markup,
which consists of SG&A expenses, R&D expenses, interest, and profit, is
1.29. This markup is consistent with the one DOE used in its
engineering and GRIM analyses for the base case.
The implicit assumption behind the ``partial cost recovery''
scenario is that the industry can pass-through only part of its
regulatory-driven increases in production costs to consumers in the
form of higher prices. DOE implemented this markup scenario in the GRIM
by setting the non-production cost markups at each TSL to yield an
increase in MSP equal to half the increase in production cost.
Together, these two markup scenarios characterize the markup
conditions described by manufacturers, and reflect the range of market
responses manufacturers expect as a result of the R-22 phaseout and the
amended energy conservation standards (See Chapter 13 of the TSD for
additional details of the markup scenarios.). For this final rule, DOE
also examined both of these scenarios.
a. Industry Cash-Flow Analysis Results
Using the two different markup scenarios described above, DOE
estimated the impact of amended standards for PTACs and PTHPs on the
INPV of the package terminal equipment industry. See 73 FR 18886-87 and
18893-94. The impact of new standards on INPV consists of the
difference between the INPV in the base case and the INPV in the
standards case. INPV is the primary metric used in the MIA, and
represents one measure of the fair value of the industry in today's
dollars. DOE calculated the INPV by summing all of the net cash flows,
discounted at the industry's cost of capital or discount rate.
Table V.17 through Table V.20 show the estimated changes in INPV
for manufacturers of standard size packaged terminal equipment and non-
standard size packaged terminal equipment, respectively, that would
result from the TSLs DOE considered for this final rule. The tables
also present the equipment conversion expenses and capital investments
that the industry would incur at each TSL. Equipment conversion
expenses include engineering, prototyping, testing, and marketing
expenses incurred by a manufacturer as it prepares to comply with a
standard. Capital investments are the one-time outlays for equipment
and buildings required for the industry to comply (i.e., conversion
capital expenditures).
Table V.17--Manufacturer Impact Analysis Results, Including INPV Estimates, for Standard Size PTACs and PTHPs Under the Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
R-410A full cost recovery with amended energy standards full recovery of increased cost
---------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ----------------------------------------------------------------------------
1 2 3 A 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.................................. (2007$ millions)........ 427 424 421 424 419 419 426 423
Change in INPV........................ (2007$ millions)........ ......... -3 -6 -3 -8 -8 -1 -4
(%)..................... ......... -0.8 -1.4 -0.8 -1.9 -1.9 -0.2 -0.9
Amended Energy Conservation Standards (2007$ millions)........ ......... 4.5 7.4 6.3 9.1 10.6 7.2 13.5
Equipment Conversion Expenses.
Amended Energy Conservation Standards (2007$ millions)........ ......... 3.5 5.7 4.9 8.2 8.2 5.6 10.4
Capital Conversion Expenses.
[[Page 58808]]
Total Energy Conservation Standards (2007$ millions)........ ......... 8.0 13.2 11.2 17.3 18.7 12.8 23.9
Investment Required.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.18--Manufacturer Impact Analysis Results, Including INPV Estimates, for Standard Size PTACs and PTHPs Under the Partial Cost Recovery Markup
Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
R-410A base case full cost recovery with amended energy standards partial cost recovery
---------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base ----------------------------------------------------------------------------
case 1 2 3 A 4 5 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.................................. (2007$ millions)......... 427 399 382 367 366 359 325 263
Change in INPV........................ (2007$ millions)......... ........ -28 -45 -60 -61 -68 -103 -164
(%)...................... ........ -6.6 -10.7 -14.0 -14.3 -16.0 -24.0 -38.3
Amended Energy Conservation Standards (2007$ millions)......... ........ 4.5 7.4 6.3 9.1 10.6 7.2 13.5
Equipment Conversion Expenses.
Amended Energy Conservation Standards (2007$ millions)......... ........ 3.5 5.7 4.9 8.2 8.2 5.6 10.4
Capital Conversion Expenses.
Total Energy Conservation Standards (2007$ millions)......... ........ 8.0 13.2 11.2 17.3 18.7 12.8 23.9
Investment Required.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table V.19--Manufacturer Impact Analysis Results, Including INPV Estimates, for Non-Standard Size PTACs and
PTHPs Under the Flat Markup Scenario
----------------------------------------------------------------------------------------------------------------
R-410A full cost recovery with amended energy standards full recovery of increased cost
-----------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base ------------------------------------------------------
case 1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
INPV......................... (2007$ millions) 30 14 13 13 9 11
Change in INPV............... (2007$ millions) ........ -16 -17 -17 -21 -20
(%)............. ........ -53.6 -57.6 -56.3 -68.5 -64.8
Amended Energy Conservation (2007$ millions) ........ 20.5 21.0 21.0 23.8 23.8
Standards Equipment
Conversion Expenses.
Amended Energy Conservation (2007$ millions) ........ 1.3 2.3 2.0 3.6 2.6
Standards Capital Conversion
Expenses.
Total Energy Conservation (2007$ millions) ........ 21.8 23.3 23.0 27.3 26.4
Standards Investment
Required.
----------------------------------------------------------------------------------------------------------------
Table V.20--Manufacturer Impact Analysis Results, Including INPV Estimates, for Non-Standard Size PTACs and
PTHPs Under the Partial Cost Recovery Markup Scenario
----------------------------------------------------------------------------------------------------------------
R-410A base case full cost recovery with amended energy standards partial cost recovery
-----------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base ------------------------------------------------------
case 1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
INPV......................... (2007$ millions) 30 13 11 10 7 6
Change in INPV............... (2007$ millions) ........ -17 -19 -20 -23 -24
(%)............. ........ -57.8 -63.8 -65.4 -78.0 -81.2
Amended Energy Conservation (2007$ millions) ........ 20.5 21.0 21.0 23.8 23.8
Standards Equipment
Conversion Expenses.
[[Page 58809]]
Amended Energy Conservation (2007$ millions) ........ 1.3 2.3 2.0 3.6 2.6
Standards Capital Conversion
Expenses.
Total Energy Conservation (2007$ millions) ........ 21.8 23.3 23.0 27.3 26.4
Standards Investment
Required.
----------------------------------------------------------------------------------------------------------------
The NOPR provides a discussion of the estimated impact of amended
PTAC and PTHP standards on INPV for each equipment class. 73 FR 18893-
97. This qualitative discussion on the estimated impacts of amended
PTAC and PTHP standards in INPV for each equipment class for the final
rule can be found in Chapter 13 of the TSD.
b. Impacts on Employment
As discussed in the NOPR, DOE expects no significant, discernable
direct employment impacts on both standard size and non-standard size
PTAC and PTHP manufacturers under today's standards compared to the
base case, or under any of the TSLs considered for today's rule. 73 FR
18898. Today's notice estimates the impacts on U.S. production workers
in the standard size and non-standard size PTAC and PTHP industry
impacted by the final rule. The estimated impacts are shown in Table
V.21. For the standard size PTAC and PTHP industry, DOE does not expect
negative direct employment impacts because the labor content of each
unit produced is expected to be slightly higher and the total number of
units produced is expected to be the same. Furthermore, based on
interviews with domestic manufacturers, DOE expects the proportion of
units produced domestically to remain unchanged. Therefore, DOE
presents a scenario where employment increases as a function of
increasing production costs.
For the non-standard size PTAC and PTHP industry, DOE reports a
range of possible domestic employment impacts. Assuming shipment levels
and product availability remain at the levels experienced in the
current market, DOE expects a slight increase in domestic employment as
characterized by the high-bound scenario. However, if either shipments
drop or if manufacturers respond to higher labor requirements by
shifting production to lower-labor-cost countries, DOE expects that
there could be reductions in total domestic employment as characterized
by the low-bound scenario. Further support for these conclusions is set
forth in Chapter 13 of the final rule TSD.
Table V.21--Change in Total Number of Domestic Production Employees in 2012 in the Standard Size and Non-Standard Size PTAC and PTHP Manufacturing
Industry *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard size PTAC and PTHP manufacturing industry
------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Total Number of Domestic Production Employees in 1 2 3 3 3 6 9
2012........................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-standard size PTAC and PTHP manufacturing industry
----------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Change in Total Number of Domestic Production (106)--1 (106)--1 (107)--1 (107)--1 (108)--2
Employees in 2012.............................
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate a loss in domestic employment.
3. National Net Present Value and Net National Employment
The NPV analysis estimates the cumulative benefits or costs to the
Nation that would result from particular standard levels. While the NES
analysis estimates the energy savings from each standard level DOE
considers, relative to the base case, the NPV analysis estimates the
national economic impacts of each such level relative to the base case.
Table V.22 and Table V.23 provide an overview of the NPV results for
PTACs and PTHPs, respectively, using both a 7-percent and a 3-percent
real discount rate. See TSD Chapter 11 for more detailed NPV results.
Table V.22--Summary of Cumulative Net Present Value for Standard Size PTACs and PTHPs
--------------------------------------------------------------------------------------------------------------------------------------------------------
PTAC NPV * (million 2007$) PTHP NPV * (million 2007$) PTAC and PTHP NPV * (million
-------------------------------------------------------------------- 2007$)
Trial standard level ---------------------------------
7% Discount 3% Discount 7% Discount 3% Discount 7% Discount 3% Discount
rate rate rate rate rate rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
1................................................. ($3) ($1) $4 $18 $1 $17
2................................................. (3) (1) 12 44 8 43
[[Page 58810]]
3................................................. (9) (6) 12 44 2 38
A................................................. (5) (3) 15 57 10 54
4................................................. (3) (1) 10 50 6 49
5................................................. (20) (20) 10 50 (11) 31
6................................................. (38) (43) (3) 34 (41) (10)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV, i.e., a net cost. Detail may not appear to sum to total due to rounding.
Table V.23--Summary of Cumulative Net Present Value for Non-Standard Size PTACs and PTHPs
--------------------------------------------------------------------------------------------------------------------------------------------------------
PTAC NPV * (million 2007$) PTHP NPV * (million 2007$) PTAC and PTHP NPV* (million
-------------------------------------------------------------------- 2007$)
Trial standard level ---------------------------------
7% Discount 3% Discount 7% Discount 3% Discount 7% Discount 3% Discount
rate rate rate rate rate rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
1................................................. $2 $6 $3 $8 $5 $14
2................................................. 2 6 4 10 6 16
3................................................. 3 8 4 10 7 19
4................................................. 2 6 6 17 8 23
5................................................. 4 11 6 17 10 29
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV, i.e., a net cost. Detail may not appear to sum to total due to rounding.
Using a 3-percent discount rate increases the present value of
future equipment purchase costs and operating cost savings. Because
annual operating cost savings in later years grow at a faster rate than
annual equipment purchase costs, using a 3-percent discount rate
increases the NPV at most TSLs. (See TSD Chapter 11.)
DOE also estimated the national employment impacts that would
result from each TSL. As discussed in the NOPR, 73 FR 18887, 18899-900,
DOE expects the net monetary savings from standards to be redirected to
other forms of economic activity. DOE also expects these shifts in
spending and economic activity to affect the demand for labor. As Table
V.24 and Table V.25 illustrate, DOE estimates net indirect employment
impacts--those changes of employment in the larger economy (other than
in the manufacturing sector being regulated)--from PTAC and PTHP energy
conservation standards to be positive but very small relative to total
national employment, primarily due to the small net monetary savings
from PTAC and PTHP standards available for transfer to other sectors,
relative to the economy as a whole. This increase would likely be
sufficient to fully offset any adverse impacts on employment that might
occur in the packaged terminal equipment industry. For details on the
employment impact analysis methods and results, see TSD Chapter 15.
Table V.24--Net National Change in Indirect Employment, Jobs in 2042,
Standard Size PTACs and PTHPs
------------------------------------------------------------------------
Net national
change in jobs
Trial standard level (number of jobs)
-----------------
PTACs PTHPs
------------------------------------------------------------------------
1..................................................... 14 27
2..................................................... 14 56
3..................................................... 31 56
A..................................................... 20 71
4..................................................... 14 82
5..................................................... 56 82
6..................................................... 86 104
------------------------------------------------------------------------
Table V.25--Net National Change in Indirect Employment, Jobs in 2042,
Non-Standard Size PTACs and PTHPs
------------------------------------------------------------------------
Net national
change in jobs
Trial standard level (number of jobs)
-----------------
PTACs PTHPs
------------------------------------------------------------------------
1..................................................... 3 5
2..................................................... 3 6
3..................................................... 6 6
4..................................................... 3 11
5..................................................... 9 11
------------------------------------------------------------------------
4. Impact on Utility or Performance of Equipment
DOE believes that the standards it is adopting today will not
lessen the utility or performance of any PTAC or PTHP because of the
steps DOE has taken to establish product classes and evaluate design
options and the impact of potential standard levels, as indicated in
section V.B.4 of the NOPR. 73 FR 18900. DOE stated in the NOPR, it was
concerned about the potential misclassification of a portion of the
non-standard size market if the delineations within ASHRAE Standard
90.1-1999 were adopted by DOE. 73 FR 18865. DOE has mitigated non-
standard manufacturers' concerns by adopting the delineations within
Addendum t to ASHRAE Standard 90.1-2007 for distinguishing various
sleeve size equipment.
5. Impact of Any Lessening of Competition
As discussed in the NOPR, 73 FR 18865, 18900, and in section
III.D.5 of this notice, DOE considered any lessening of competition
likely to result from standards. The Attorney General determines the
impact of any such lessening of competition.
In its comment on the NOPR, DOJ expressed concerns about whether
the proposed standards would adversely affect competition. In
particular, DOJ stated its belief that the efficiency levels for non-
standard size PTACs and PTHPs in the NOPR may create a risk that is too
[[Page 58811]]
strict for the manufacturers to satisfy given the state of the
technology. DOJ further commented that non-standard customers could
face the choice of incurring capital expenditures to alter the size of
the wall opening to accommodate standard size PTACs and PTHPs if non-
standard size units become unavailable. DOJ also stated its concerns
regarding the efficiency levels for standard size PTHPs proposed in the
NOPR, arguing the proposed levels would be too stringent for the
manufacturers to achieve. (DOJ, No. 21 at p. 1-2) The Attorney
General's response is reprinted at the end of today's rulemaking.
6. Need of the Nation To Conserve Energy
An improvement in the energy efficiency of PTACs and PTHPs, where
economically justified, is likely to improve the security of the
Nation's energy system by reducing overall demand for energy, and thus,
reducing the Nation's reliance on foreign sources of energy. Reduced
demand is also likely to improve the reliability of the electricity
system, particularly during peak-load periods. As a measure of this
reduced demand, DOE expects the amended standards covered under this
rulemaking to eliminate the need for construction of between
approximately 40 megawatts and 196 megawatts of new power by 2042.
Enhanced energy efficiency also produces environmental benefits.
The expected energy savings from higher standards for the products
covered by this rulemaking will reduce the emissions of air pollutants
and greenhouse gases associated with energy production and building use
of fossil fuels. Table V.26 and Table V.27 show cumulative
CO2, NOX, and Hg emissions reductions for
standard size and non-standard size PTACs and PTHPs by TSL over the
rulemaking period. The expected energy savings from amended standards
will reduce the emissions of greenhouse gases associated with energy
production, and may reduce the cost of maintaining nationwide emissions
standards and constraints.
Table V.26--Summary of Emissions Reductions for Standard Size PTACs and PTHPs (Cumulative Reductions for Equipment Sold From 2012 to 2042)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels
--------------------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Reductions for PTACs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)..................... 0.20............ 0.20............ 0.45............ 0.29............ 0.20........... 0.79........... 1.22.
NOX (kt)..................... 0.01 to 0.31.... 0.01 to 0.31.... 0.03 to 0.69.... 0.02 to 0.45.... 0.01 to 0.31... 0.05 to 1.23... 0.08 to 1.88.
Hg (t)....................... 0 to 0.007...... 0 to 0.007...... 0 to 0.016...... 0 to 0.010...... 0 to 0.007..... 0 to 0.028..... 0 to 0.043.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Reductions for PTHPs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)..................... 0.29............ 0.61............ 0.61............ 0.77............ 0.88........... 0.88........... 1.12.
NOX (kt)..................... 0.03 to 0.63.... 0.05 to 1.33.... 0.05 to 1.33.... 0.07 to 1.68.... 0.08 to 1.94... 0.08 to 1.94... 0.10 to 2.46.
Hg (t)....................... 0 to 0.010...... 0 to 0.021...... 0 to 0.021...... 0 to 0.027...... 0 to 0.031..... 0 to 0.031..... 0 to 0.039.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Reductions for PTACs and PTHPs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)..................... 0.49............ 0.81............ 1.05............ 1.06............ 1.09........... 1.68........... 2.34.
NOX (kt)..................... 0.04 to 0.94.... 0.07 to 1.64.... 0.08 to 2.02.... 0.09 to 2.13.... 0.09 to 2.25... 0.13 to 3.17... 0.18 to 4.34.
Hg (t)....................... 0 to 0.017...... 0 to 0.028...... 0 to 0.037...... 0 to 0.037...... 0 to 0.038..... 0 to 0.059..... 0 to 0.082.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Negative values indicate emission increases. Detail may not appear to sum to total due to rounding.
Table V.27--Summary of Emissions Reductions for Non-Standard Size PTACs and PTHPs (Cumulative Reductions for Equipment Sold From 2012 to 2042)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels
--------------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Reductions for PTACs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)........................... 0.06.................. 0.06.................. 0.10................. 0.06................. 0.16.
NOX (kt)........................... 0.004 to 0.10......... 0.004 to 0.10......... 0.006 to 0.16........ 0.004 to 0.10........ 0.010 to 0.24.
Hg (t)............................. 0 to 0.002............ 0 to 0.002............ 0 to 0.004........... 0 to 0.002........... 0 to 0.005.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Reductions for PTHPs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)........................... 0.06.................. 0.08.................. 0.08................. 0.14................. 0.14.
NOX (kt)........................... 0.005 to 0.13......... 0.007 to 0.18......... 0.007 to 0.18........ 0.012 to 0.30........ 0.012 to 0.30.
Hg (t)............................. 0 to 0.002............ 0 to 0.003............ 0 to 0.003........... 0 to 0.005........... 0 to 0.005.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Emissions Reductions for PTACs and PTHPs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)........................... 0.12.................. 0.14.................. 0.18................. 0.20................. 0.29.
NOX (kt)........................... 0.009 to 0.23......... 0.011 to 0.28......... 0.014 to 0.34........ 0.016 to 0.40........ 0.022 to 0.55.
Hg (t)............................. 0 to 0.004............ 0 to 0.005............ 0 to 0.006........... 0 to 0.007........... 0 to 0.010.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Negative values indicate emission increases. Detail may not appear to sum to total due to rounding.
[[Page 58812]]
The estimated cumulative CO2, NOX, and Hg
emissions reductions for the amended energy conservation standards
range up to a maximum of 2.34 Mt for CO2, 0.04 to 4.34 kt
for NOX, and 0 to 0.08 t for Hg for standard size PTACs and
PTHPs over the period from 2012 to 2042. In the Environmental
Assessment (Chapter 16 of the FR TSD), DOE reports estimated annual
changes in CO2, NOX, and Hg emissions
attributable to each TSL. As discussion in section IV.J of this final
rule, DOE does not report SO2 emissions reduction from power
plants because reductions from an energy conservation standard would
not affect the overall level of SO2 emissions in the United
States due to the emissions caps for SO2.
The NEMS-BT modeling assumed that NOX would be subject to the Clean
Air Interstate Rule (CAIR) issued by the U.S. Environmental Protection
Agency on March 10, 2005.\16\ 70 FR 25162 (May 12, 2005). On July 11,
2008, the U.S. Court of Appeals for the District of Columbia Circuit
(D.C. Circuit) issued its decision in North Carolina v. Environmental
Protection Agency,\17\ in which the court vacated the CAIR. 531 F.3d
896 (D.C. Cir. 2008). If left in place, the CAIR would have permanently
capped emissions of NOX in 28 eastern States and the
District of Columbia. As with the SO2 emissions cap, a cap
on NOX emissions would have meant that energy conservation
standards are not likely to have a physical effect on NOX
emissions in States covered by the CAIR caps. While the caps would have
meant that physical emissions reductions in those States would not have
resulted from the energy conservation standards that DOE is amending
today, the standards might have produced an environmental-related
economic impact in the form of lower prices for emissions allowance
credits, if large enough. DOE notes that the estimated total reduction
in NOX emissions, including projected emissions or
corresponding allowance credits in States covered by the CAIR cap was
insignificant and too small to affect allowance prices for
NOX under the CAIR.
---------------------------------------------------------------------------
\16\ See http://www.epa.gov/cleanairinterstaterule/.
\17\ Case No. 05-1244, 2008 WL 2698180 at *1 (DC Cir. July 11,
2008).
---------------------------------------------------------------------------
Even though the D.C. Circuit vacated the CAIR, DOE notes that the
D.C. Circuit left intact EPA's 1998 NOX SIP Call rule, which
capped seasonal (summer) NOX emissions from electric
generating units and other sources in 23 jurisdictions and gave those
jurisdictions the option to participate in a cap and trade program for
those emissions. 63 FR 57356, 57359 (Oct. 27, 1998).\18\ DOE notes that
the SIP Call rule may provide a similar, although smaller in extent,
regional cap and may limit actual reduction in NOX emissions
from revised standards occurring in States participating in the SIP
Call rule. However, the possibility that the SIP Call rule may have the
same effect as CAIR is highly uncertain. Therefore, DOE established a
range of NOX reductions due to the standards being amended
in today's final rule. DOE's low estimate was based on the emission
rate of the cleanest new natural gas combined-cycle power plant
available for electricity generated based on the assumption that energy
conservation standards would result in only the cleanest available
fossil-fueled generation being displaced. DOE used the emission rate,
specified in 0.0341t of NOX emitted per TWh of electricity
generated, associated with an advanced natural gas combined-cycle power
plant, as specified by NEMS-BT. To estimate the reduction in
NOX emissions, DOE multiplied this emission rate by the
reduction in electricity generation due to the amended energy
conservation standards considered. DOE's high estimate of 0.843 t of
NOX per TWh was based on the use of a nationwide
NOX emission rate for all electrical generation. Use of such
an emission rate assumes that future energy conservation standards
would result in displaced electrical generation mix that is equivalent
to today's mix of power plants (i.e., future power plants displaced are
no cleaner than what are being used currently to generate electricity).
In addition, under the high estimate assumption, energy conservation
standards would have little to no effect on the generation mix. Based
on AEO2008 for a recent year (2006) in which no regulatory or non-
regulatory measures were in effect to limit NOX emissions,
DOE multiplied this emission rate by the reduction in electricity
generation due to the standards considered. The range in NOX
emission changes calculated under using the low and high estimate
scenarios are shown in Table V.26 and Table V.27 by TSL. The range of
total NOX emission reductions is from 0.04 to 4.34 tons for
the range of TSLs considered. These changes in NOX emissions
are extremely small, with a range between 0.0001 and 0.009 percent of
the national base case emissions forecast by NEMS-BT, depending on the
TSL.
---------------------------------------------------------------------------
\18\ In the NOX SIP Call rule, EPA found that sources
in the District of Columbia and 22 ``upwind'' states (States) were
emitting NOX (an ozone precursor) at levels that
significantly contributed to ``downwind'' states not attaining the
ozone NAAQS or at levels that interfered with states in attainment
maintaining the ozone NAAQS. In an effort to ensure that
``downwind'' states attain or continue to attain the ozone NAAQS,
EPA established a region-wide cap for NOX emissions from
certain large combustion sources and set a NOX emissions
budget for each State. Unlike the cap that CAIR would have
established, the NOX SIP Call Rule's cap only constrains
seasonal (summer time) emissions. In order to comply with the
NOX SIP Call Rule, States could elect to participate in
the NOX Budget Trading Program. Under the NOX
Budget Trading Program, each emission source is required to have one
allowance for each ton of NOX emitted during the ozone
season. States have flexibility in how they allocate allowances
through their State Implementation Plans but States must remain
within the EPA-established budget. Emission sources are allowed to
buy, sell and bank NOX allowances as appropriate. It
should be noted that, on April 16, 2008, EPA determined that Georgia
is no longer subject to the NOX SIP Call rule. 73 FR
21528 (April 22, 2008).
---------------------------------------------------------------------------
As noted above in section IV.J, with regard to Hg emissions, DOE is
able to report an estimate of the physical quantity changes in these
emissions associated with an energy conservation standard. As opposed
to using the NEMS-BT model, DOE established a range of Hg rates to
estimate the Hg emissions that could be reduced from standards. DOE's
low estimate was based on the assumption that future standards would
displace electrical generation from natural gas-fired power plants
resulting in an effective emission rate of zero. The low-end emission
rate is zero because virtually all Hg emitted from electricity
generation is from coal-fired power plants. Based on an emission rate
of zero, no emissions would be reduced from energy conservation
standards. DOE's high estimate was based on the use of a nationwide
mercury emission rate from AEO2008. Because power plant emission rates
are a function of local regulation, scrubbers, and the mercury content
of coal, it is extremely difficult to come up with a precise high-end
emission rate. Therefore, DOE believes the most reasonable estimate is
based on the assumption that all displaced coal generation would have
been emitting at the average emission rate for coal generation as
specified by AEO2008. As noted previously, because virtually all
mercury emitted from electricity generation is from coal-fired power
plants, DOE based the emission rate on the tons of mercury emitted per
TWh of coal-generated electricity. Based on the emission rate for a
recent year (2006), DOE derived a high-end emission rate of 0.0255 tons
per TWh. To estimate the reduction in mercury emissions, DOE multiplied
the emission rate by the reduction in coal-generated electricity due to
the standards considered as determined in the utility impact analysis.
The estimated changes in Hg
[[Page 58813]]
emissions are shown in Table V.26 and Table V.27 for both the standard
and non-standard size PTAC and PTHP equipment for the period from 2012
to 2042. The range of total Hg emission reductions is from 0 to 0.082
tons for the range of TSLs considered. These changes in Hg emissions
are extremely small, with a range between 0 and 0.016 percent of the
national base case emissions forecast by NEMS-BT, depending on the TSL.
The NEMS-BT model used for today's rulemaking could not be used to
estimate Hg emission reductions due to standards as it assumed that Hg
emissions would be subject to EPA's Clean Air Mercury Rule \19\ (CAMR),
which would have permanently capped 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 a
system, energy conservation standards would have resulted in no
physical effect on these emissions, but might have resulted in an
environmental-related economic benefit in the form of a lower price for
emissions allowance credits, if large enough. DOE estimated that the
change in the Hg emissions from energy conservation standards would not
be large enough to influence allowance prices under CAMR.
---------------------------------------------------------------------------
\19\ 70 FR 28606 (May 18, 2005).
---------------------------------------------------------------------------
On February 8, 2008, the D.C. Circuit issued its decision in New
Jersey v. Environmental Protection Agency, \20\ in which the D.C.
Circuit, among other actions, vacated the CAMR referenced above. In
light of this development and because the NEMS-BT model could not be
used to directly calculate the Hg emission reductions, DOE used the
current Hg emission rates as discussed above to calculate the
reductions in Hg emissions in Table V.26 and Table V.27.
---------------------------------------------------------------------------
\20\ No. 05-1097, 2008 WL 341338, at * (DC Cir. Feb. 9, 2008),
---------------------------------------------------------------------------
In the NOPR, DOE stated that it was considering taking into account
a monetary benefit of CO2 emission reductions associated
with this rulemaking. To put the potential monetary benefits from
reduced CO2 emissions into a form that is likely to be most
useful to decisionmakers and stakeholders, DOE used the same methods
used to calculate the net present value of consumer cost savings: The
estimated year-by-year reductions in CO2 emissions were
converted into monetary values and these resulting annual values were
then discounted over the life of the affected appliances to the present
using both 3 percent and 7 percent discount rates.
In the NOPR, DOE proposed to use the range $0 to $14 per ton. These
estimates were based on an assumption of no benefit to an average
benefit value reported by the IPCC.\21\ It is important to note that
the IPCC estimate used as the upper bound value was derived from an
estimate of the mean value of worldwide impacts from potential climate
impacts caused by CO2 emissions, and not just the effects
likely to occur within the United States. As DOE considers a monetary
value for CO2 emission reductions, the value should be
restricted to a representation of those costs/benefits likely to be
experienced in the United States. As DOE also explained in the NOPR, it
expects that such values would be lower than comparable global values,
however, there currently are no consensus estimates for the U.S.
benefits likely to result from CO2 emission reductions.
However, DOE believes it is appropriate to use U.S. benefit values,
where available, and not world benefit values, in its analysis.\22\
Because U.S. specific estimates are not available, and DOE did not
receive any additional information that would help serve to narrow the
proposed range as a representative range for domestic U.S. benefits,
DOE believes it is appropriate to use the global mean value as an
appropriate upper bound U.S. value for purposes of sensitivity
analysis.
---------------------------------------------------------------------------
\21\ During the preparation of its most recent review of the
state of climate science, the Intergovernmental Panel on Climate
Change (IPCC) identified various estimates of the present value of
reducing carbon-dioxide emissions by one ton over the life that
these emissions would remain in the atmosphere. The estimates
reviewed by the IPCC spanned a range of values. In the absence of a
consensus on any single estimate of the monetary value of
CO2 emissions, DOE used the estimates identified by the
study cited in Summary for Policymakers prepared by Working Group II
of the IPCC's Fourth Assessment Report to estimate the potential
monetary value of CO2 reductions likely to result from
standards finalized in this rulemaking. According to IPCC, the mean
social cost of carbon (SCC) reported in studies published in peer-
reviewed journals was $43 per ton of carbon. This translates into
about $12 per ton of carbon dioxide. The literature review (Tol
2005) from which this mean was derived did not report the year in
which these dollars were denominated. However, we understand this
estimate was denominated in 1995 dollars. Updating that estimate to
2007 dollars yields a SCC of $15 per ton of carbon dioxide.
\22\ In contrast, most of the estimates of costs and benefits of
increasing the efficiency of PTACs and PTHPs include only economic
values of impacts that would be experienced in the U.S. For example,
in determining impacts on manufacturers, DOE generally does not
consider impacts that occur solely outside of the United States.
---------------------------------------------------------------------------
DOE received several comments in response to the proposed estimated
value of CO2 emissions reductions. EarthJustice questioned
both the upper and lower bounds of DOE's range of estimated
CO2 values, both of which EarthJustice argued were too low.
EarthJustice also stated that it would be inappropriate to limit the
consideration to the value of CO2 to a domestic value.
EarthJustice and the joint comment from ACEE and the Natural Resource
Defense Council recommended that DOE consider relying on the estimate
used in DOE's analysis of the America's Climate Security Bill of 2007
(S. 2191).\23\ AHRI commented that DOE should not rely on the IPCC
study or values under the European Union ``cap and trade'' program, but
instead should consider a monetary value for CO2 only once a
U.S. ``cap and trade'' program has been established, stressing that DOE
should consider only the domestic value of CO2 emissions.
---------------------------------------------------------------------------
\23\ EarthJustice, ACEEE, and the Natural Resource Defense
Council noted that the analysis of the America's Climate Security
Bill of 2007, used a value of $17 per ton of CO2 with a
7.4 percent annual growth rate. EarthJustice also cited a study by
the United Kingdom's Department for Environment, Food, and Rural
Affairs, which recommended valuing carbon emissions at just over $25
per ton of CO2.
---------------------------------------------------------------------------
Given the uncertainty surrounding estimates of the SCC, relying on
any single study may be inadvisable since its estimate of the SCC will
depend on many assumptions made by its authors. The Working Group II's
contribution to the Fourth Assessment Report of the IPCC notes that:
The large ranges of SCC are due in the large part to differences
in assumptions regarding climate sensitivity, response lags, the
treatment of risk and equity, economic and non-economic impacts, the
inclusion of potentially catastrophic losses, and discount
rates.\24\
---------------------------------------------------------------------------
\24\ Climate Change 2007--Impacts, Adaption and Vulnerability
Contribution of Working Group II to the Fourth Assessment Report of
the IPCC, 17. Available at http://www.ipcc-wg2.org (last accessed
Aug. 7, 2008).
Because of this uncertainty, DOE relied on Tol (2005), which was
presented in the IPCC's Fourth Assessment Report, and was a
comprehensive meta-analysis of estimates for the value of SCC.
Commenters did not provide a rationale for why it would be more
accurate or reliable for DOE to use values based on the limited number
of studies they cited. As a result, DOE continues to rely on the Tol
study reported by the IPCC as the basis for its analysis.
DOE continues to believe that the most appropriate monetary values
for consideration in the development of efficiency standards are those
drawn from studies that attempt to estimate the present value of the
marginal economic benefits likely to result from reducing greenhouse
gas emissions, rather than estimates that are based on the market
[[Page 58814]]
value of emission allowances under existing cap and trade programs or
estimates that are based on the cost of reducing emissions--both of
which are largely determined by policy decisions that set the timing
and extent of emission reductions and do not necessarily reflect the
benefit of reductions. DOE also believes that the studies it relies
upon generally should be studies that were the subject of a peer review
process and were published in reputable journals.
In today's final rule, DOE is essentially relying on the range of
values proposed in the NOPR, which was based on the values presented in
Tol (2005), as proposed. However, DOE notes that in the proposed rule,
DOE mistakenly assumed that the values presented in Tol (2005) were in
2000 dollars. In actuality, the values in Tol (2005) were indicated to
be approximately 1995 values in 1995 dollars. Had DOE, at the NOPR
stage, applied the correct dollar year of the values presented in Tol
(2005), DOE would have proposed the range of $0 to $15 in the NOPR.
Additionally, DOE has applied an annual growth rate of 2.4% to the
value of SCC, as suggested by the IPCC Working Group II (2007, p. 822),
based on estimated increases in damages from future emissions reported
in published studies. As a result, for today's final rule, DOE is
assigning a range for the SCC of $0 to $20 ($2007) per ton of
CO2 emissions.
EarthJustice questioned the use of the median estimated social cost
of CO2 as an upper bound of the range. However, the upper
bound of the range used by DOE is based on Tol (2005), which reviewed
103 estimates of the SCC from 28 published studies, and concluded that
when only peer-reviewed studies published in recognized journals are
considered, ``that climate change impacts may be very uncertain but
[it] is unlikely that the marginal damage costs of carbon dioxide
emissions exceed $50 per ton carbon [comparable to a 2007 value of $20
per ton carbon dioxide when expressed in 2007 U.S. dollars with a 2.4%
growth rate.]''
EarthJustice also questioned the use of $0 as the lower bound of
DOE's estimated range. In setting a lower bound, DOE agrees with the
IPCC Working Group II (2007) report that ``significant warming across
the globe and the locations of significant observed changes in many
systems consistent with warming is very unlikely to be due solely to
natural variability of temperatures or natural variability of the
systems'' (pp. 9), and thus tentatively concludes that a global value
of zero for reducing emissions cannot be justified. However, DOE also
believes that it is reasonable to allow for the possibility that the
U.S. portion of the global cost of carbon dioxide emissions may be
quite low. In fact, some of the studies looked at in Tol (2005)
reported negative values for the SCC. As stated in the NOPR, DOE is
using U.S. benefit values, and not world benefit values, in its
analysis and, further, DOE believes that U.S. domestic values will be
lower than the global values. Additionally, the statutory criteria in
EPCA do not require consideration of global effects. Therefore, DOE is
using a lower bound of $0 per ton of CO2 emissions in
estimating the potential benefits of today's final rule.
The resulting estimates of the potential range of net present value
benefits associated with the reduction of CO2 emissions are
reflected in Table V.28.
Table V.28--Estimates of Savings From CO2 Emissions Reductions Under PTAC and PTHP Trial Standard Levels at 7% Discount Rate and 3% Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
cumulative CO2 Value of estimated CO2 emission reductions Value of estimated CO2 emission reductions
(Mt) emission (million 2007$) at 7% discount rate (million 2007$) at 3% discount rate
reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard Size TSL:
1................................... 0.49 $0 to $4.8................................... $0 to $9.0.
2................................... 0.81 $0 to $8.0................................... $0 to $14.9.
3................................... 1.05 $0 to $10.4.................................. $0 to $19.4.
A................................... 1.06 $0 to $10.5.................................. $0 to $19.5.
4................................... 1.09 $0 to $10.8.................................. $0 to $20.0.
5................................... 1.68 $0 to $16.5.................................. $0 to $30.9.
6................................... 2.34 $0 to $22.9.................................. $0 to $43.0.
Non-Standard Size TSL:
1................................... 0.12 $0 to $1.2................................... $0 to $2.2.
2................................... 0.14 $0 to $1.4................................... $0 to $2.7.
3................................... 0.18 $0 to $1.8................................... $0 to $3.4.
4................................... 0.20 $0 to $2.0................................... $0 to $3.7.
5................................... 0.29 $0 to $2.9................................... $0 to $5.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
DOE also investigated the potential monetary impact resulting from
the impact of today's energy conservation standards on SO2,
NOX, and Hg emissions. As previously stated, DOE's initial
analysis assumed the presence of nationwide emission caps on
SO2 and Hg, and caps on NOX emissions in the 28
States covered by the CAIR caps. In the presence of these caps, DOE
concluded that no physical reductions in power sector emissions would
occur, but that the lower generation requirements associated with
energy conservation standards could potentially put downward pressure
on the prices of emissions allowances in cap-and-trade markets.
Estimating this effect is very difficult because of the factors such as
credit banking, which can change the trajectory of prices. DOE has
further concluded that the effect from energy conservation standards on
SO2 allowance prices is likely to be negligible, based upon
runs of the NEMS-BT model. See Chapter 16 (Environmental Assessment) of
the FR TSD for further details.
As discussed earlier, with respect to NOX the CAIR rule
has been vacated by the courts, so projected annual NOX
allowances from NEMS-BT are no longer relevant. In DOE's subsequent
analysis, NOX emissions are not controlled by a nationwide
regulatory system. For the range of NOX reduction estimates
(and Hg reduction estimates), DOE estimated the national monetized
benefits of emissions reductions from today's rule based on
environmental damage estimates from the literature. Available estimates
suggest a very wide
[[Page 58815]]
range of monetary values for NOX emissions, ranging from
$370 per ton to $3,800 per ton of NOX from stationary
sources, measured in 2001 dollars \25\ or a range of $432 per ton to
$4,441 per ton in 2007 dollars.
---------------------------------------------------------------------------
\25\ 2006 Report to Congress on the Costs and Benefits of
Federal Regulations and Unfunded Mandates on State, Local, and
Tribal Entities. Office of Management and Budget Office of
Information and Regulatory Affairs, Washington, DC.
---------------------------------------------------------------------------
DOE has already conducted research for today's final rule and
determined that the basic science linking mercury emissions from power
plants to impacts on humans is considered highly uncertain. However,
DOE identified two estimates of the environmental damages of mercury
based on two estimates of the adverse impact of childhood exposure to
methyl mercury on IQ for American children, and subsequent loss of
lifetime economic productivity resulting from these IQ losses. The high
end estimate is based on an estimate of the current aggregate cost of
the loss of IQ in American children that results from exposure to
mercury of U.S. power plant origin ($1.3 billion per year in year
2000$), which works out to $32.6 million per ton emitted per year
(2007$).\26\ The low-end estimate was $664,000 per ton emitted in 2004$
or $729,000 per ton in 2007$), which DOE derived from a published
evaluation of mercury control using different methods and assumptions
from the first study, but also based on the present value of the
lifetime earnings of children exposed.\27\ The resulting estimates of
the potential range of the present value benefits associated with the
national reduction of NOX and national reductions in Hg
emissions are reflected in Table V.29 and Table V.30.
---------------------------------------------------------------------------
\26\ Trasande, L., et al., ``Applying Cost Analyses to Drive
Policy that Protects Children'' 1076 ANN. N.Y. ACAD. SCI. 911
(2006).
\27\ Ted Gayer and Robert Hahn, Designing Environmental Policy:
Lessons from the Regulation of Mercury Emissions, Regulatory
Analysis 05-01. AEI-Brookings Joint Center For Regulatory Studies,
Washington, DC, 31 pp., 2004. A version of this paper was published
in the Journal of Regulatory Economics in 2006. The estimate was
derived by back-calculating the annual benefits per ton from the net
present value of benefits reported in the study.
Table V.29--Estimates of Savings From Reductions of NOX and Hg Under PTAC and PTHP Trial Standard Levels at a 7%
Discount Rate
----------------------------------------------------------------------------------------------------------------
Estimated Value of estimated Estimated Value of estimated
cumulative NOX NOX emission cumulative Hg Hg emission
(kt) emission reductions (tons) emission reductions
reductions * (thousand 2007$) reductions* (thousand 2007$)
----------------------------------------------------------------------------------------------------------------
Standard Size TSL:
1........................... 0.04 to 0.94...... $4 to $1,091...... 0 to 0.017........ $0 to $182.
2........................... 0.07 to 1.64...... $7 to $1,892...... 0 to 0.028........ $0 to $299.
3........................... 0.08 to 2.02...... $9 to $2,335...... 0 to 0.037........ $0 to $392.
A........................... 0.09 to 2.13...... $10 to $2,462..... 0 to 0.037........ $0 to $393.
4........................... 0.09 to 2.25...... $10 to $2,599..... 0 to 0.038........ $0 to $403.
5........................... 0.13 to 3.17...... $14 to $3,658..... 0 to 0.059........ $0 to $624.
6........................... 0.18 to 4.34...... $20 to $5,014..... 0 to 0.082........ $0 to $871.
Non-Standard Size TSL:
1........................... 0.01 to 0.23...... $1 to $263........ 0 to 0.004........ $0 to $45.
2........................... 0.01 to 0.28...... $1 to $319........ 0 to 0.005........ $0 to $54.
3........................... 0.01 to 0.34...... $2 to $390........ 0 to 0.006........ $0 to $69.
4........................... 0.02 to 0.40...... $2 to $463........ 0 to 0.007........ $0 to $75.
5........................... 0.02 to 0.55...... $2 to $631........ 0 to 0.010........ $0 to $110.
----------------------------------------------------------------------------------------------------------------
* Values in Table V.32 may not appear to sum to the cumulative values in Table V.26 due to rounding.
Table V.30--Estimates of Savings From Reductions of NOX and Hg Under PTAC and PTHP Trial Standard Levels at a 3%
Discount Rate
----------------------------------------------------------------------------------------------------------------
Estimated Value of estimated Estimated Value of estimated
cumulative NOX NOX emission cumulative Hg Hg emission
(kt) emission reductions (tons) emission reductions
reductions * (thousand 2007$) reductions * (thousand 2007$)
----------------------------------------------------------------------------------------------------------------
Standard Size TSL:
1........................... 0.04 to 0.94...... $9 to $2,250...... 0 to 0.017........ $0 to $331.
2........................... 0.07 to 1.64...... $15 to $3,903..... 0 to 0.028........ $0 to $544.
3........................... 0.08 to 2.02...... $19 to $4,815..... 0 to 0.037........ $0 to $712
A........................... 0.09 to 2.13...... $20 to $5,079..... 0 to 0.037........ $0 to $714.
4........................... 0.09 to 2.25...... $21 to $5,362..... 0 to 0.038........ $0 to $732.
5........................... 0.13 to 3.17...... $30 to $7,545..... 0 to 0.059........ $0 to $1,135.
6........................... 0.18 to 4.34...... $41 to $10,341.... 0 to 0.082........ $0 to $1,582.
Non-Standard Size TSL:
1........................... 0.01 to 0.23...... $2 to $542........ 0 to 0.004........ $0 to $83.
2........................... 0.01 to 0.28...... $3 to $659........ 0 to 0.005........ $0 to $98.
3........................... 0.01 to 0.34...... $3 to $805........ 0 to 0.006........ $0 to $125.
4........................... 0.02 to 0.40...... $4 to $954........ 0 to 0.007........ $0 to $136.
5........................... 0.02 to 0.55...... $5 to $1,301...... 0 to 0.010........ $0 to $200.
----------------------------------------------------------------------------------------------------------------
* Values in Table V.33 may not appear to sum to the cumulative values in Table V.26 due to rounding.
[[Page 58816]]
7. Other Factors
In developing today's standards, the Secretary took into
consideration: (1) The impacts of setting different amended standards
for PTACs and PTHPs; (2) the potential that amended standards could
cause equipment switching (i.e., purchase of PTACs instead of PTHPs)
and the effects of any such switching; (3) the uncertainties associated
with the impending phaseout in 2010 of R-22 refrigerant; and (4) the
impact of amended standards on the manufacturers of and market for non-
standard size packaged terminal equipment (e.g., impacts on small
businesses). To address the impact of setting different amended energy
conservation standards for PTACs and PTHPs and the potential that
amended energy conservation standards could cause equipment switching,
DOE conducted a sensitivity analysis. The results of the sensitivity
analysis are shown in section V.B. DOE discusses the uncertainties
associated with the impending refrigerant phaseout in 2010 of R-22
refrigerant and the impact of amended energy conservation standards on
the non-standard size industry in the conclusion section below.
D. Conclusion
EPCA contains criteria for prescribing new or amended energy
conservation standards. For commercial HVAC and water heating equipment
such as PTACs and PTHPs, DOE must adopt as national standards the
levels in amendments to ASHRAE Standard 90.1 unless DOE determines,
``supported by clear and convincing evidence,'' that standards more
stringent than those levels ``would result in significant additional
conservation of energy and [be] technologically feasible and
economically justified.'' (42 U.S.C. 6313(a)(6)(A)(ii)(II)) Any more
stringent standard must be designed to achieve the maximum improvement
in energy efficiency and be technologically feasible and economically
justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A)) Moreover, in
determining whether an energy conservation standard is economically
justified, DOE must weigh all seven factors specified in EPCA, and set
forth above, to determine whether the benefits of the standard exceed
its costs. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i))
In this rulemaking, DOE has evaluated whether standards more
stringent than the efficiency levels in ASHRAE Standard 90.1-1999 for
PTACs and PTHPs are justified under the above criteria. As stated in
sections III.B.1 and C, DOE determined, based on clear and convincing
evidence, that all of the more stringent standard levels considered in
this rulemaking are technologically feasible and would save significant
additional amounts of energy. To determine if these more stringent TSLs
are economically justified, DOE compared the maximum technologically
feasible levels with the base case, and determined whether those levels
are economically justified. Upon finding the maximum technologically
feasible levels not to be justified, DOE analyzed the next lower TSL to
determine whether that level was economically justified. DOE repeated
this procedure until it identified a TSL that was economically
justified.
In the NOPR, DOE weighed the benefits and burdens for standard size
and non-standard size PTACs and PTHPs through TSL 1 through 7. In
response to both the uniqueness of the two separate industries and
comments from interested parties on the potential impacts of standards
on the standard size and non-standard size equipment, DOE weighed the
benefits and burdens separately in today's final rule.
In addition to the quantitative results, DOE also considered other
factors that might affect economic justification. DOE took into
consideration the EPA-mandated refrigerant phaseout and its effect on
PTAC and PTHP equipment efficiency, which concern both standard size
and non-standard size PTACs and PTHPs. In addition, DOE considered the
uniqueness of the PTAC and PTHP industry with its substantial number of
manufacturers of non-standard size equipment. In particular, DOE
considered the declining shipments of non-standard size equipment, the
small size segment of the industry (both relative to the rest of the
PTAC and PTHP industry and in absolute terms), and the small businesses
that could be affected by amended energy conservation standards.
1. Standard Size PTACs and PTHPs
Table V.31 summarizes DOE's quantitative analysis results for each
TSL it considered for standard size PTACs and PTHPs in this final rule.
This table presents the results or, in some cases a range of results,
for each TSL, and will aid the reader in the discussion of costs and
benefits of each TSL. The range of values for industry impacts
represents the results for the different markup scenarios that DOE used
to estimate manufacturer impacts.
Table V.31--Summary of Results for Standard Size PTACs and PTHPs Based Upon the AEO2008 Energy Price Forecast *
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy saved (quads)............ 0.015 0.024 0.031 0.032 0.033 0.049 0.068
7% Discount rate (Standard Size).... 0.003 0.006 0.007 0.007 0.008 0.011 0.015
3% Discount rate (Standard Size).... 0.007 0.012 0.016 0.016 0.017 0.025 0.035
Generation capacity reduction (GW) (0.040) (0.062) (0.086) (0.082) (0.082) (0.139) (0.196)
(Standard Size) **.....................
NPV (2007$ million) (Standard Size):
7% Discount rate.................... 1 8 2 10 6 (11) (41)
3% Discount rate.................... 17 43 38 54 49 31 (10)
Industry impacts (Standard Size):
Industry NPV (2007$ million)........ (3)-(28) (6)-(45) (3)-(60) (8)-(61) (8)-(68) (1)-(103) (4)-(164)
Industry NPV (% Change)............. (0.8)-(7) (1)-(11) (0.8)-(14) (2)-(14) (2)-(16) (0.2)-(24) (0.9)-(38)
[[Page 58817]]
Cumulative emissions impacts (Standard
Size) [dagger]:
CO2 (Mt)............................ (0.49) (0.81) (1.05) (1.06) (1.09) (1.68) (2.34)
NOX (kt)............................ (0.04)-(0.94) (0.07)-(1.64) (0.08)-(2.02) (0.09)-(2.13) (0.09)-(2.25) (0.13)-(3.17) (0.18)-(4.34)
Hg (t).............................. 0-(0.017) 0-(0.028) 0-(0.037) 0-(0.037) 0-(0.038) 0-(0.059) 0-(0.082)
Employment Impacts (Standard Size):
Indirect Employment Impacts......... 41 70 87 91 96 138 190
Direct, Domestic Employment Impacts. 1 2 3 3 3 6 9
Mean LCC savings (2007$) (Standard Size)
*:
Standard Size PTAC, 9,000 Btu/h..... (1) (1) (3) (3) (1) (6) (10)
Standard Size PTHP, 9,000 Btu/h..... 11 20 20 28 28 28 24
Standard Size PTAC, 12,000 Btu/h.... (2) (2) (5) (2) (2) (10) (15)
Standard Size PTHP, 12,000 Btu/h.... 13 24 24 24 20 20 14
Mean PBP (years) (Standard Size):
Standard Size PTAC, 9,000 Btu/h..... 13.0 13.0 13.7 13.7 13.0 14.5 15.2
Standard Size PTHP, 9,000 Btu/h..... 5.1 4.5 4.5 4.4 4.4 4.4 5.1
Standard Size PTAC, 12,000 Btu/h.... 13.1 13.1 14.0 13.1 13.1 14.9 15.9
Standard Size PTHP, 12,000 Btu/h.... 5.1 4.6 4.6 4.6 5.5 5.5 6.4
LCC Results (Standard Size):
Standard Size PTAC, 9,000 Btu/h.....
Net Cost (%).................... 15% 15% 30% 30% 15% 46% 62%
No Impact (%)................... 77% 77% 56% 56% 77% 37% 18%
Net Benefit (%)................. 7% 7% 14% 14% 7% 17% 21%
Standard Size PTHP, 9,000 Btu/h.....
Net Cost (%).................... 7% 10% 10% 13% 13% 13% 24%
No Impact (%)................... 78% 57% 57% 37% 37% 37% 18%
Net Benefit (%)................. 16% 33% 33% 50% 50% 50% 58%
Standard Size PTAC, 12,000 Btu/h....
Net Cost (%).................... 16% 16% 31% 16% 16% 48% 65%
No Impact (%)................... 77% 77% 56% 77% 77% 36% 18%
Net Benefit (%)................. 7% 7% 13% 7% 7% 16% 17%
Standard Size PTHP, 12,000 Btu/h....
Net Cost (%).................... 7% 10% 10% 10% 21% 21% 35%
No Impact (%)................... 77% 57% 57% 57% 37% 37% 18%
[[Page 58818]]
Net Benefit (%)................. 16% 33% 33% 33% 42% 42% 47%
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC by the amount indicated.
** Change in installed generation capacity by the year 2042 based on AEO 2008 Reference Case.
[dagger] CO2 emissions impacts are physical reductions from all sources. NOX and Hg emissions impacts are physical reductions at power plants.
First, DOE considered TSL 6, the max-tech efficiency level for
standard size PTACs and PTHPs. TSL 6 would likely save 0.068 quads of
energy through 2042 for standard size PTACs and PTHPs, an amount DOE
considers significant. Discounted at seven percent, the projected
energy savings through 2042 would be 0.015 quads. For the Nation as a
whole, DOE projects that TSL 6 would result in a net decrease of $41
million in NPV for standard size PTACs and PTHPs, using a discount rate
of seven percent and a net decrease of $10 million for standard size
PTACs and PTHPs, using a discount rate of three percent. The emissions
reductions at TSL 6 for standard size PTACs and PTHPs are 2.34 Mt of
CO2, between 0.18 kt and 4.34 kt of NOX, and
between zero and 0.082 t of Hg. Total generating capacity needed in
2042 is estimated to decrease compared to the reference case by 0.196
gigawatts (GW) under TSL 6.
At TSL 6, DOE projects that the average PTAC customer will
experience an increase in LCC for all standard size equipment classes.
Purchasers of standard size PTACs are projected to lose on average -$12
(2007$) over the life of the product, and purchasers of standard size
PTHPs would save on average $20 (2007$). DOE estimates LCC increases
for 63 percent of customers in the Nation who purchase a standard size
PTAC, and for 29 percent of customers in the Nation who purchase a
standard size PTHP. The mean payback period of each standard size PTAC
equipment class at TSL 6 is projected to be substantially longer than
the mean lifetime of the equipment.
The projected change in the standard size industry value (INPV)
ranges from a decrease of $4 million to a decrease of $164 million, in
2007$. For standard size PTACs and PTHPs, the impacts are driven
primarily by the assumptions regarding the ability to pass on larger
increases in MPCs to the customer. Currently, there are equipment lines
being manufactured with efficiency levels above TSL 6 utilizing R-22
refrigerant. Using the degradations estimated in the engineering
analysis, DOE believes standard size equipment could be produced at TSL
6 in the lower range of cooling capacities. DOE believes manufacturers
would not be able to manufacture standard size PTACs and PTHPs at TSL 6
at the high range of the cooling capacities (e.g., 15,000 Btu/h) within
a given equipment class (i.e., standard size PTACs with a cooling
capacity greater than or equal to 7,000 Btu/h and less than or equal to
15,000 Btu/h). DOE has not initially been able to identify technologies
and design approaches for R-410A units to meet these higher levels in
the absence of the availability of high efficiency compressors spanning
the full range of cooling capacities. At TSL 6, DOE recognizes the risk
of very large negative impacts if manufacturers' expectations about
reduced profit margins are realized. In particular, if the high end of
the range of impacts is reached as DOE expects, TSL 6 could result in a
net loss of 38.3 percent in INPV to the standard size PTAC and PTHP
industry.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 6, the Secretary has concluded that at TSL 6, even
if manufacturers could overcome the barriers to produce R-410 equipment
in the full range of cooling capacities by the effective date of an
amended energy conservation standard, the benefits of energy savings
and emissions reductions would be outweighed by the potential multi-
million dollar negative net economic cost to the Nation, the economic
burden on consumers, and the large capital conversion costs that could
result in a reduction in INPV for manufacturers.
Next, DOE considered TSL 5. Primary energy savings is estimated at
0.049 quads of energy through 2042 for standard size PTACs and PTHPs,
which DOE considers significant. Discounted at seven percent, the
energy savings through 2042 would be 0.011 quads. For the Nation as a
whole, DOE projects that TSL 5 would result in a net decrease of $11
million in NPV for standard size PTACs and PTHPs, using a discount rate
of seven percent and an increase of $31 million for standard size PTACs
and PTHPs, using a discount rate of three percent. The emissions
reductions are projected to be 1.68 Mt of CO2, between 0.013
kt and 3.17 kt of NOX and between 0 and 0.082 t of Hg. Total
generating capacity needed in 2042 under TSL 5 is estimated to decrease
by 0.139 GW for standard size PTACs and PTHPs.
At TSL 5, DOE found the impacts of amended energy conservation
standards on customers of PTACs would likely differ significantly from
their impacts on PTHP customers. While only 16 percent of customers of
standard size PTHPs would likely have an LCC increase at TSL 5, 47
percent of customers of standard size PTACs would experience an LCC
increase at this TSL. A customer for a standard size PTAC, on average,
would experience an increase in LCC of $8, while the customer for a
standard size PTHP, on average, would experience a decrease in LCC of
$25. At TSL 5, DOE projects that the average PTAC customer for a
standard size PTAC will experience an increase in LCC in each equipment
class. In addition, the mean payback period of each standard size PTAC
equipment class at TSL 5 is projected to be substantially longer than
the mean lifetime.
At TSL 5, the projected change in INPV ranges between losses of $1
million and $103 million. For manufacturers of standard size equipment
alone, DOE estimated a decrease in the INPV to range from 0.2 percent
to 24.0 percent. The magnitude of projected impacts is still largely
determined, however, by the manufacturers' ability to pass on larger
increases in MPC to the customer. Thus, the potential INPV decrease of
$103 million assumes that DOE's projections of partial cost recovery as
described in Chapter 13 of the TSD remain valid. In addition, at TSL 5
the impending refrigerant phaseout could also have a significant impact
on manufacturers. Currently, both standard size PTACs and PTHPs using
R-22 refrigerant are available on the market at and above TSL 5
efficiency levels. However, at the performance degradations that DOE
estimated in the engineering analysis for R-410A equipment,
manufacturers would be unable to produce R-410A equipment at these
levels unless high
[[Page 58819]]
efficiency R-410A compressors become available. The absence of such
compressors would likely mean that the negative financial impacts of
TSL 5 would be greater than characterized by DOE's MIA analysis. Even
though the ability of manufacturers to produce equipment utilizing R-
410A is greater at TSL 5 than at TSL 6, DOE anticipates that
manufacturers would not be able to produce standard size PTACs and
PTHPs at TSL 5 in the full range of capacities available today due to
the physical size constraints imposed by the wall sleeve dimensions.
While DOE recognizes the increased economic benefits to the nation
that could result from TSL 5 for standard size PTACs and PTHPs, DOE
concludes that the benefits of a Federal standard at TSL 5 would still
be outweighed by the economic burden that would be placed upon PTAC
customers. In addition, DOE believes at TSL 5, the benefits of energy
savings and emissions impacts would be outweighed by the large impacts
on standard size manufacturers' INPV. Finally, DOE is concerned that
standard size manufacturers may be unable to offer the full capacity
range of equipment utilizing R-410A by the effective date of the
amended energy conservation standards.
Next, DOE considered TSL 4. For TSL 4, DOE combined the efficiency
levels in TSL 1 for PTACs and the efficiency levels in TSL 5 for PTHPs.
This combination of efficiency levels serves to maximize LCC savings,
while recognizing the differences in LCC results for standard size
PTACs and PTHPs. DOE projects that TSL 4 for standard size PTACs and
PTHPs would save 0.033 quads of energy through 2042, an amount DOE
considers significant. Discounted at seven percent, the projected
energy savings through 2042 would be 0.008 quads. For the Nation as a
whole, DOE projects that TSL 4 would result in net savings in NPV of $6
million for standard size PTACs and PTHPs, using a discount rate of
seven percent, and $49 million for standard size PTACs and PTHPs, using
a discount rate of three percent. The estimated emissions reductions
are 1.09 Mt of CO2, between 0.09 kt and 2.25 kt of
NOX, and between 0 and 0.038 t of Hg. Total generating
capacity needed in 2042 under TSL 4 would likely decrease by 0.082 GW.
At TSL 4, DOE projects that the average PTAC or PTHP customer would
experience LCC savings. Purchasers of standard size PTACs, on average,
have LCC increase of $2 (2007$) over the life of the product and
purchasers of PTHPs would save on average $25 (2007$). DOE estimates an
LCC increase for 15 percent of customers in the Nation who purchase a
standard size PTAC, and for 16 percent of customers in the Nation who
purchase a standard size PTHP. For standard size PTACs and PTHPs, the
remainder of customers would experience either a decrease or no change
in LCC. DOE also projects that the mean payback period of each standard
size PTAC equipment class at TSL 4 would be substantially longer than
the mean lifetime of the equipment.
The projected change in INPV ranges between a loss of $8 million
and a loss of $68 million for the standard size PTAC and PTHP industry.
Just as with TSLs 5 and 6, the projected impacts continue to be driven
primarily by the manufacturers' ability to pass on increases in MPCs to
the customer. The loss of $68 million assumes DOE's projections of
partial cost recovery as described in Chapter 13 of the TSD. TSL 4
requires the production of standard size PTACs at the efficiency levels
in TSL 1 and standard size PTHPs at efficiency levels at TSL 5. For the
larger cooling capacity range (e.g., 15,000 Btu/h) of standard size
PTACs with cooling capacities greater than or equal to 7,000 Btu/h and
less than or equal to 15,000 Btu/h, DOE believes manufacturers would
not be able to produce equipment in a given equipment class at the EER
required by the TSL 4 energy-efficiency equation. Specifically, DOE is
concerned that standard size manufacturers would be forced to eliminate
larger cooling capacity equipment due to the stringency of the standard
in the higher cooling capacity regions.
While DOE recognizes the increased economic benefits to the nation
that could result from TSL 4 for standard size PTACs and PTHPs, DOE
concludes that the benefits of a Federal standard at TSL 4 would still
be outweighed by the economic burden that would be placed upon PTAC
customers. In addition, DOE believes at TSL 4, the benefits of energy
savings and emissions impacts would be outweighed by the large impacts
on standard size manufacturers' INPV. Finally, DOE is concerned that
standard size manufacturers may be unable to offer the full capacity
range of equipment utilizing R-410A by the effective date of the
amended energy conservation standards.
Next, DOE considered TSL A. TSL A is a modified version of TSL 3
and TSL 4 DOE used for the final rule. To generate the efficiency
analyzed in TSL A for standard size equipment, DOE further investigated
the slope of the energy-efficiency equation as discussed in section
IV.C. DOE adjusted the slope of the energy-efficiency equation to make
the curve steeper. In other words, DOE adjusted the energy-efficiency
to require more stringent efficiency levels for lower cooling
capacities, where manufacturers have more physical space inside the box
sleeve to make efficiency improvements, while lessening the stringency
for higher cooling capacities, where manufacturers are already using
most of the physical space inside the box sleeve for capacity
increases, leaving little room for efficiency improvements. For TSL A,
DOE combined the efficiency levels in TSL 3 and TSL 1 for standard size
PTACs depending on cooling capacity. For TSL A, DOE combined the
efficiency levels in TSL 5 and TSL 3 for standard size PTHPs depending
on cooling capacity. This combination of efficiency levels serves to
maximize LCC savings, while recognizing the differences in LCC results
for standard size PTACs and PTHPs and the differences in the energy
efficiency potentials between the various cooling capacities of
standard size equipment. (See Chapter 9 of the TSD for further
explanation and a graphical representation of the energy-efficiency
equations.)
DOE projects that TSL A for standard size PTACs and PTHPs would
save 0.032 quads of energy through 2042, an amount DOE considers
significant. Discounted at seven percent, the projected energy savings
through 2042 would be 0.007 quads. For the Nation as a whole, DOE
projects that TSL A would result in net savings in NPV of $10 million
for standard size PTACs and PTHPs, using a discount rate of seven
percent, and $54 million for standard size PTACs and PTHPs, using a
discount rate of three percent. The estimated emissions reductions are
1.06 Mt of CO2, between 0.09 kt and 2.13 kt of
NOX, and between 0 and 0.037 t of Hg. Total generating
capacity needed in 2042 under TSL A would likely decrease by 0.082 GW.
At TSL A, DOE projects that the average PTAC or PTHP customer would
experience LCC savings. Purchasers of standard size PTACs, on average,
would experience an LCC increase of $3 (2007$) over the life of the
product while purchasers of PTHPs would save on average $26 (2007$).
DOE estimates LCC savings for 24 percent of customers in the Nation who
purchase a standard size PTAC, and for 12 percent of customers in the
Nation who purchase a standard size PTHP. For standard size PTACs and
PTHPs, the remainder of customers would experience either a decrease or
no change in LCC. DOE also projects that the mean payback period of
each standard size PTAC equipment
[[Page 58820]]
class at TSL A would be substantially longer than the mean lifetime of
the equipment.
The projected change in INPV ranges between losses of $8 million
and $61 million for the standard size PTAC and PTHP industry at TSL A.
Just as with TSL 4, the projected impacts continue to be driven
primarily by the manufacturers' ability to pass on increases in MPCs to
the customer. However, TSL A requires efficiency levels for standard
size PTHPs to be 0.2 EER higher than the efficiency levels for PTACs.
DOE believes bringing these efficiency levels closer together will
ultimately aid manufacturers in using one equipment platform to design
their standard size PTAC and PTHP equipment offerings. The loss of $61
million assumes the continued validity of DOE's projections of partial
cost recovery as described in Chapter 13 of the TSD. For the larger
cooling capacity range (e.g., 15,000 Btu/h), DOE believes manufacturers
could produce equipment at the EER required by the TSL A energy-
efficiency equation utilizing R-410A. Specifically, DOE believes
manufacturers would not be forced to eliminate larger cooling capacity
equipment since DOE modified the slope of the energy-efficiency
equation at TSL A to accommodate the additional concerns regarding the
physical constraints at larger cooling capacities.
After considering the analysis and weighing the benefits and the
burdens, DOE concludes that the benefits of a TSL A standard outweigh
the burdens. In particular, the Secretary concludes that TSL A saves a
significant amount of energy and is technologically feasible and
economically justified in the full range of cooling capacities for R-
410A standard size PTACs and PTHPs. Therefore, DOE adopts the energy
conservation standards for standard size PTACs and PTHPs at TSL A, as
described by the energy-efficiency equations. Table V.32 sets out the
energy conservation standards for standard size PTACs and PTHPs in the
full range of cooling capacities that DOE is adopting.
Table V.32--Final Energy Conservation Standards for Standard Size PTACs and PTHPs
----------------------------------------------------------------------------------------------------------------
Equipment class
-----------------------------------------------------------------
Cooling Final energy conservation standards *
Equipment Category capacity
----------------------------------------------------------------------------------------------------------------
PTAC......................... Standard Size ** <7,000......... EER = 11.7
7,000-15,000... EER = 13.8 - (0.300 x Cap [dagger])
>15,000........ EER = 9.3
PTHP......................... Standard Size ** <7,000......... EER = 11.9
COP = 3.3
7,000-15,000... EER = 14.0 - (0.300 x Cap [dagger])
COP = 3.7 - (0.052 x Cap [dagger])
>15,000........ EER = 9.5
COP = 2.9
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure (ARI Standard 310/380-2004), all energy efficiency
ratio (EER) values must be rated at 95 [deg]F outdoor dry-bulb temperature for air-cooled equipment and
evaporatively-cooled equipment and at 85 [deg]F entering water temperature for water cooled equipment. All
coefficient of performance (COP) values must be rated at 47 [deg]F outdoor dry-bulb temperature for air-cooled
equipment.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening
greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and a cross-sectional area
greater than or equal to 670 square inches.
[dagger] Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 [deg]F outdoor dry-
bulb temperature.
2. Non-Standard Size PTACs and PTHPs
Table V.33 summarizes DOE's quantitative analysis results for each
TSL it considered for non-standard size PTACs and PTHPs in this final
rule. This table presents the results or, in some cases a range of
results, for each TSL, and will aid the reader in the discussion of
costs and benefits of each TSL. The range of values for industry
impacts represents the results for the different markup scenarios that
DOE used to estimate manufacturer impacts.
Table V.33--Summary of Results for Non-Standard Size PTACs and PTHPs Based Upon the AEO2008 Energy Price
Forecast *
----------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Primary energy saved (quads).... 0.004 0.004 0.005 0.006 0.009
7% Discount rate (Non- 0.001 0.001 0.001 0.001 0.002
Standard Size).............
3% Discount rate (Non- 0.002 0.002 0.003 0.003 0.004
Standard Size).............
Generation capacity reduction (0.009) (0.010) (0.013) (0.014) (0.021)
(GW) (Standard Size) **........
NPV (2007$million) (Non-Standard
Size):
7% Discount rate............ 5 6 7 8 10
3% Discount rate............ 14 16 19 23 29
Industry Impacts (Non-Standard
Size):
Industry NPV (2007$ million) (16)-(17) (17)-(19) (17)-(20) (21)-(23) (20)-(24)
Industry NPV (% Change)..... (54)-(58) (58)-(64) (56)-(65) (69)-(78) (65)-(81)
Cumulative Emissions Impacts
(Non-Standard Size): [dagger]
CO2 (Mt).................... (0.12) (0.14) (0.18) (0.20) (0.29)
NOX (kt).................... (0.01)-(0.23) (0.01)-(0.28) (0.01)-(0.34) (0.02)-(0.40) (0.02)-(0.55)
Hg (t)...................... 0-(0.004) 0-(0.005) 0-(0.006) 0-(0.007) 0-(0.010)
Employment Impacts (Non-Standard
Size):
Indirect Employment Impacts. 8 9 12 14 20
Direct, Domestic Employment (106)-1 (106)-1 (107)-1 (107)-1 (108)-2
Impacts....................
Mean LCC Savings (2007$) (Non-
Standard Size): \*\
[[Page 58821]]
Non-Standard Size PTAC, 26 26 30 26 31
11,000 Btu/h...............
Non-Standard Size PTHP, 62 66 66 80 80
11,000 Btu/h...............
Mean PBP (years) (Standard
Size):
Non-Standard Size PTAC, 4.4 4.4 5.1 4.4 5.9
11,000 Btu/h...............
Non-Standard Size PTHP, 2.2 2.8 2.8 3.0 3.0
11,000 Btu/h...............
----------------------------------------------------------------------------------------------------------------
LCC Results (Non-Standard Size)
----------------------------------------------------------------------------------------------------------------
Non-Standard Size PTAC, 11,000
Btu/h:
Net Cost (%)................ 6 6 14 6 25
No Impact (%)............... 73 73 47 73 23
Net Benefit (%)............. 22 22 39 22 52
Non-Standard Size PTHP, 11,000
Btu/h:
Net Cost (%)................ 1 3 3 5 5
No Impact (%)............... 73 47 47 23 23
Net Benefit (%)............. 27 50 50 72 72
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC by the amount
indicated.
** Change in installed generation capacity by the year 2042 based on AEO2008 Reference Case.
[dagger] CO2 emissions impacts are physical reductions from all sources. NOX and Hg emissions impacts are
physical reductions at power plants.
First, DOE considered TSL 5, the max-tech efficiency level for non-
standard size PTACs and PTHPs. TSL 5 would likely save 0.009 quads of
energy through 2042 for non-standard size PTACs and PTHPs, an amount
DOE considers significant. Discounted at seven percent, the projected
energy savings through 2042 would be 0.002 quads. For the Nation as a
whole, DOE projects that TSL 5 would result in a net increase of $10
million in NPV for non-standard size PTACs and PTHPs, using a discount
rate of seven percent, and $29 million for non-standard size PTACs and
PTHPs, using a discount rate of three percent. The emissions reductions
at TSL 5 for non-standard size PTACs and PTHPs are 0.29 Mt of
CO2, between 0.02 and 0.55 kt of NOX, and between
0.0 and 0.01 t of Hg. Total generating capacity needed in 2042 is
estimated to decrease compared to the reference case by 0.021 GW under
TSL 5 for non-standard size equipment.
At TSL 5, DOE projects that the average PTAC customer will
experience a decrease in LCC for all non-standard size equipment
classes. Purchasers of non-standard size PTACs are projected to save on
average $31 (2007$) over the life of the product and purchasers of non-
standard size PTHPs would save on average $80 (2007$). DOE estimates
LCC increases for 25 percent of customers in the Nation that purchase a
non-standard size PTAC, and for 5 percent of customers in the Nation
that purchase a non-standard size PTHP.
The projected change in the non-standard size industry value (INPV)
ranges from a decrease of $20 million to a decrease of $24 million, in
2007$. For non-standard size PTACs and PTHPs, the impacts are driven
primarily by the assumptions regarding the ability to pass on larger
increases in MPCs to the customer. Currently, there are very few
equipment lines being manufactured that have efficiency levels at or
above TSL 5 utilizing R-22 refrigerant. Using the degradations
estimated in the engineering analysis, DOE believes non-standard size
equipment could be produced at TSL 5 in the lower range of cooling
capacities. DOE believes manufacturers would not be able to manufacture
non-standard size PTACs and PTHPs at TSL 5 at the high range of cooling
capacities (e.g., 15,000 Btu/h) within a given equipment class for non-
standard size PTACs and PTHPs with cooling capacities greater than or
equal to 7,000 Btu/h and less than or equal to 15,000 Btu/h. In
addition, DOE believes many small manufacturers of non-standard size
equipment would be unable to recover the large investments needed to
change over all of their existing equipment lines to the efficiency
levels required by TSL 5. If some small non-standard manufacturers
cannot invest the product and capital conversion costs necessary to
comply with TSL 5, they would be forced to abandon their equipment
lines and exit the business. Others could be forced to reduce their
equipment offerings in order to reduce the magnitude of the investments
required to meet TSL 5 efficiency levels for non-standard equipment.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 5, the Secretary has reached the following
conclusion: At TSL 5, even if manufacturers overcome the barriers to
produce R-410 equipment in the full range of cooling capacities by the
effective date of an amended energy conservation standard, the benefits
of energy savings and emissions reductions would be outweighed by the
potential multi-million dollar negative economic burden on
manufacturers, the risks of small, non-standard manufacturers exiting
from the market, and the reduction of equipment lines resulting from
decreased equipment offerings.
Next, DOE considered TSL 4. For TSL 4, DOE combined the efficiency
levels in TSL 1 for non-standard size PTACs and the efficiency levels
in TSL 5 for non-standard size PTHPs. This combination of efficiency
levels serves to maximize LCC savings, while recognizing the
differences in LCC results for non-standard size PTACs and PTHPs. DOE
projects that TSL 4 for non-standard size PTACs and PTHPs would save
0.006 quads of energy through 2042, an amount DOE considers
significant. Discounted at seven percent, the projected energy savings
through 2042 would be 0.001 quads. For the Nation as a whole, DOE
projects that TSL 4 would result in net savings in NPV of $8 million
for non-standard size PTACs and PTHPs, using a discount rate of seven
percent, and $23 million for non-standard size PTACs and PTHPs, using a
discount rate of three percent. The estimated emissions reductions are
0.20 Mt of CO2, between 0.02 kt and 0.40 kt of
NOX, and between 0 and 0.007 t of Hg. Total generating
capacity needed in 2042 under TSL 4 would likely decrease by 0.014 GW.
At TSL 4, DOE projects that the average PTAC or PTHP customer would
experience LCC savings. Purchasers of
[[Page 58822]]
non-standard size PTACs, on average, would experience an LCC decrease
of $26 (2007$) over the life of the product and purchasers of non-
standard size PTHPs would save on average $80 (2007$). DOE estimates an
LCC increase for 6 percent of customers in the Nation who purchase a
non-standard size PTAC, and for 5 percent of customers in the Nation
who purchase a non-standard size PTHP. The remaining customers of non-
standard size PTACs and PTHPs would experience either a decrease or no
change in LCC.
The projected change in INPV ranges between losses of $21 million
and $23 million for the non-standard size PTAC and PTHP industry. Just
as with TSL 5, the projected impacts continue to be driven primarily by
the manufacturers' ability to pass on increases in MPCs to the
customer. The loss of $23 million assumes that DOE's projections of
partial cost recovery as described in Chapter 13 of the TSD remain
valid. TSL 4 requires the production of non-standard size PTACs at the
efficiency levels in TSL 1 and non-standard size PTHPs at efficiency
levels at TSL 5. Thus, TSL 4 requires the production of non-standard
size PTHPs using R-410A that would have efficiencies equivalent to the
``max tech'' efficiency levels with R-410A applying the degradations
estimated in the engineering analysis in the absence of a high
efficiency compressor. For the larger cooling capacity range (i.e.,
15,000 Btu/h) within a given equipment class of non-standard size PTACs
and PTHPs with a cooling capacity greater than or equal to 7,000 Btu/h
and less than or equal to 15,000 Btu/h, DOE believes manufacturers
would not be able to produce equipment at the efficiency levels
provided by the TSL 4 energy-efficiency equations. At larger cooling
capacities for non-standard equipment, manufacturers do not have the
additional space within the box sleeve to add heat exchanger area to
increase the efficiency of the equipment. Specifically, DOE believes
non-standard manufacturers would eliminate equipment due to the
stringency of the standard--and the costs associated with attaining
them--at higher cooling capacity regions. In addition, DOE believes
many small manufacturers of non-standard size equipment would be unable
to recover the large investments needed to change over all of their
existing equipment lines to the efficiency levels required by TSL 4. If
some of these manufacturers cannot invest the product and capital
conversion costs necessary to comply with TSL 4, they would be forced
to abandon their equipment lines and exit the business. Others could be
forced to reduce their equipment offerings in order to reduce the
magnitude of the investments required to meet the TSL 4 efficiency
levels, which will affect their ability to offer R-410A-compatible
equipment in the full range of capacities currently being offered by
the time the new standard would become effective.
Based on the reasons stated earlier, while DOE recognizes the
increased economic benefits to the nation that could result from TSL 4
for non-standard size PTACs and PTHPs, DOE concludes that the benefits
of a Federal standard at TSL 4 would still be outweighed by the
economic burden that would be placed upon non-standard size PTAC and
PTHP manufacturers.
Next, DOE considered TSL 3. TSL 3 includes the same efficiency
levels for non-standard PTACs as non-standard PTHPs. DOE projects that
TSL 3 for non-standard size PTACs and PTHPs would save 0.005 quads of
energy through 2042, an amount DOE considers significant. Discounted at
seven percent, the projected energy savings through 2042 would be 0.001
quads. For the Nation as a whole, DOE projects that TSL 3 would result
in net savings in NPV of $7 million for non-standard size PTACs and
PTHPs, using a discount rate of seven percent, and $19 million for non-
standard size PTACs and PTHPs, using a discount rate of three percent.
The estimated emissions reductions are 0.18 Mt of CO2,
between 0.01 and 0.34 kt of NOX, and between 0 and 0.006 t
of Hg. Total generating capacity needed in 2042 under TSL 3 for non-
standard size PTACs and PTHPs would likely decrease by 0.013 GW.
At TSL 3, DOE projects that the average PTAC or PTHP customer would
experience LCC savings. Purchasers of non-standard size PTACs, on
average, would experience a decrease in LCC of $30 (2007$) over the
life of the product and purchasers of non-standard size PTHPs would
save on average $66 (2007$). DOE estimates an LCC increase for 14
percent of customers in the Nation that purchase a non-standard size
PTAC, and for 3 percent of customers in the Nation that purchase a non-
standard size PTHP. The remaining customers would experience either a
decrease or no change in LCC.
The projected change in INPV ranges between a loss of $17 million
and a loss of $20 million for the non-standard size PTAC and PTHP
industry. Just as with TSL 5, the projected impacts continue to be
driven primarily by the manufacturers' ability to pass on increases in
MPCs to the customer. The loss of $20 million assumes the continued
validity of DOE's projections of partial cost recovery as described in
Chapter 13 of the TSD. Even at TSL 3, DOE is concerned about the
manufacturers' ability to produce and offer equipment in the full range
of cooling capacities that would fit the wide variety of wall sleeves
that currently exist. For the larger cooling capacity range (i.e.,
15,000 Btu/h) within a given equipment class of non-standard size PTACs
and PTHPs with a cooling capacity greater than or equal to 7,000 Btu/h
and less than or equal to 15,000 Btu/h, DOE believes manufacturers
would not be able to produce equipment at the efficiency levels
provided by the TSL 3 energy-efficiency equations. Specifically, DOE
believes non-standard manufacturers would eliminate equipment due to
the stringency of the standard at higher cooling capacity regions. In
addition, TSL 3 requires a $23 million investment by the industry in
order to transform all of the existing equipment lines available in the
current non-standard market to TSL 3 efficiency levels. DOE believes
many small non-standard manufacturers would not be able to recover
these investments needed to change over all of their existing equipment
lines to the efficiency levels required by TSL 3. If some small non-
standard manufacturers cannot invest the product and capital conversion
costs necessary to comply with TSL 3, they would be forced to abandon
their equipment lines and exit the business. Others could be forced to
reduce their equipment offerings in order to reduce the magnitude of
the investments required to meet TSL 3 efficiency levels for non-
standard equipment.
While DOE recognizes the increased economic benefits to the nation
and the energy savings that could result from TSL 3 for non-standard
size PTACs and PTHPs, DOE concludes that, based on the above, the
benefits of an amended energy conservation standard at TSL 3 would be
outweighed by the economic burden that would be placed upon non-
standard size PTAC and PTHP manufacturers.
Next, DOE considered TSL 2. TSL 2 requires different efficiency
levels for non-standard size PTACs and non-standard PTHPs at the same
cooling capacity. DOE projects that TSL 2 for non-standard size PTACs
and PTHPs would save 0.004 quads of energy through 2042, an amount DOE
considers significant. Discounted at seven percent, the projected
energy savings through 2042 would be 0.001 quads. For the Nation as a
whole, DOE projects that TSL 2 would result in net savings in
[[Page 58823]]
NPV of $6 million for non-standard size PTACs and PTHPs, using a
discount rate of seven percent, and $16 million for non-standard size
PTACs and PTHPs, using a discount rate of three percent. The estimated
emissions reductions are 0.14 Mt of CO2, between 0.01 kt and
0.28 kt of NOX, and between 0 and 0.005 t of Hg. Total
generating capacity needed in 2042 under TSL 2 for non-standard size
PTACs and PTHPs would likely decrease by 0.010 GW.
At TSL 2, DOE projects that the average PTAC or PTHP customer would
experience LCC savings. Purchasers of non-standard size PTACs, on
average, would have an LCC decrease of $26 (2007$) over the life of the
product and purchasers of non-standard size PTHPs would save on average
$66 (2007$). DOE estimates an LCC increase for 6 percent of customers
in the Nation that purchase a non-standard size PTAC and for 3 percent
of customers in the Nation that purchase a non-standard size PTHP. The
remaining customers of non-standard size PTACs and PTHPs would
experience either a decrease or no change in LCC.
The projected change in INPV ranges between a loss of $17 million
and a loss of $19 million for the non-standard size PTAC and PTHP
industry. Just as with other TSLs, the projected impacts continue to be
driven primarily by the manufacturers' ability to pass on increases in
MPCs to the customer. The loss of $19 million assumes DOE's projections
of partial cost recovery as described in Chapter 13 of the TSD remain
valid. Since TSL 2 requires non-standard size manufacturers to be
produced at the efficiency levels in TSL 3, DOE is concerned about the
manufacturer's ability to produce and offer equipment in the full range
of cooling capacities to fit the wide variety of wall sleeves that
currently exist for non-standard size PTHPs.
For the larger cooling capacity range (i.e., 15,000 Btu/h) within a
given equipment class of non-standard size PTACs and PTHPs with a
cooling capacity greater than or equal to 7,000 Btu/h and less than or
equal to 15,000 Btu/h, DOE believes manufacturers would be unable to
produce equipment at the efficiency levels provided by the TSL 2
energy-efficiency equations. Specifically, DOE believes non-standard
manufacturers would eliminate equipment due to the costs required to
satisfy this level at higher cooling capacity regions. In addition, TSL
2 requires a 23.3 million dollar investment in order to transform all
of the existing equipment lines available in the current non-standard
market to TSL 2 efficiency levels. The investment required at TSL 2 is
larger than at TSL 3 because manufacturers could be forced to design
separate equipment platforms for non-standard size PTACs and non-
standard size PTHPs because of the differences in efficiency level
requirements. DOE believes many small manufacturers of non-standard
size equipment would be unable to recover these investments needed to
change over all of their existing equipment lines to the efficiency
levels required by TSL 2. If some small, non-standard manufacturers
cannot invest the product and capital conversion costs necessary to
comply with TSL 2, they would be forced to abandon their equipment
lines and exit the business. Others could be forced to reduce their
equipment offerings in order to reduce the magnitude of the investments
required to meet TSL 2 efficiency levels for non-standard equipment.
While DOE recognizes the increased economic benefits to the nation
and the energy savings that could result from TSL 2 for non-standard
size PTACs and PTHPs, DOE concludes, based on the reasons stated above,
that the benefits of an amended energy conservation standard at TSL 2
would be outweighed by the economic burden that would be placed upon
non-standard size PTAC and PTHP manufacturers.
Last, DOE considered TSL 1. TSL 1 requires the same efficiency
levels for non-standard size PTACs and non-standard PTHPs at the same
cooling capacity. DOE projects that TSL 1 for non-standard size PTACs
and PTHPs would save 0.004 quads of energy through 2042, an amount DOE
considers significant. Discounted at seven percent, the projected
energy savings through 2042 would be 0.001 quads. For the Nation as a
whole, DOE projects that TSL 1 would result in net savings in NPV of $5
million for non-standard size PTACs and PTHPs, using a discount rate of
seven percent, and $14 million for non-standard size PTACs and PTHPs,
using a discount rate of three percent. The estimated emissions
reductions are 0.12 Mt of CO2, between 0.01 kt and 0.23 kt
of NOX, and between 0 and 0.004 t of Hg. Total generating
capacity needed in 2042 under TSL 1 for non-standard size PTACs and
PTHPs would likely decrease by 0.009 GW.
At TSL 1, DOE projects that the average PTAC or PTHP customer would
experience an LCC savings. Purchasers of non-standard size PTACs, on
average would experience an LCC decrease of $26 (2007$) over the life
of the product and purchasers of non-standard size PTHPs would save on
average $62 (2007$). DOE estimates LCC increase for 6 percent of
customers in the Nation that purchase a non-standard size PTAC, and for
1 percent of customers in the Nation that purchase a non-standard size
PTHP. The remaining customers of non-standard size equipment would
experience either a decrease or no change in LCC.
The projected change in INPV ranges between losses of $16 million
and $17 million for the non-standard size PTAC and PTHP industry. Just
as with other TSLs, the projected impacts continue to be driven
primarily by the manufacturers' ability to pass on increases in MPCs to
the customer. The loss of $17 million assumes DOE's projections of
partial cost recovery as described in Chapter 13 of the TSD remain
valid. Even at TSL 1, DOE estimates manufacturers of non-standard PTACs
and PTHPs would experience over a 50 percent reduction in INPV as a
result of amended energy conservation standards. TSL 1 requires a 22
million dollar investment by the industry in order to transform all of
the existing equipment lines available in the current non-standard
market to TSL 1 efficiency levels. DOE believes many small
manufacturers of non-standard equipment would be unable to recover
these investments needed to change over all of their existing equipment
lines to the efficiency levels required by TSL 1. If some small non-
standard manufacturers cannot invest the product and capital conversion
costs necessary to comply with TSL 1, they would be forced to abandon
their equipment lines and exit the business. Others could be forced to
reduce their equipment offerings in order to reduce the magnitude of
the investments required to meet TSL 1 efficiency levels for non-
standard equipment.
While DOE recognizes the increased economic benefits to the nation
and the energy savings that could result from TSL 1 for non-standard
size PTACs and PTHPs, DOE concludes that the benefits of an amended
energy conservation standard at TSL 1 would still be outweighed by the
economic burden that would be placed upon non-standard size PTAC and
PTHP manufacturers. DOE is especially concerned about the large
investments required for non-standard size manufacturers to transform
their entire equipment offerings to TSL 1 efficiency levels and with
the likelihood that small non-standard size manufacturers would exit
the market, causing some existing non-standard size PTACs and PTHPs to
become unavailable to consumers.
After considering the analysis and weighing the benefits and the
burdens, DOE concludes that the benefits of a standard at the
efficiency levels
[[Page 58824]]
specified by ASHRAE Standard 90.1-1999 outweigh the burdens.
Therefore based on the discussion above, DOE concludes that the
efficiency levels beyond those in ASHRAE Standard 90.1-1999 are not
economically justified and is adopting the efficiency level in ASHRAE
Standard 90.1-1999. Table V.34 demonstrates the amended energy
conservation standards for standard size PTACs and PTHPs in the full
range of cooling capacities.
Table V.34--Final Energy Conservation Standards for Non-Standard Size PTACs and PTHPs
----------------------------------------------------------------------------------------------------------------
Equipment class
-----------------------------------------------------------------
Cooling Final energy conservation standards *
Equipment Category capacity
----------------------------------------------------------------------------------------------------------------
PTAC......................... Non-Standard <7,000......... EER = 9.4
Size **.
7,000-15,000... EER = 10.9 - (0.213 x Cap [dagger])
>15,000........ EER = 7.7
<7,000......... EER = 9.3
COP = 2.7
PTHP......................... Non-Standard 7,000-15,000... EER = 10.8 - (0.213 x Cap [dagger])
Size **. COP = 2.9 - (0.026 x Cap [dagger])
>15,000........ EER = 7.6
COP = 2.5
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure (ARI Standard 310/380-2004), all energy efficiency
ratio (EER) values must be rated at 95 [deg]F outdoor dry-bulb temperature for air-cooled equipment and
evaporatively cooled equipment and at 85 [deg]F entering water temperature for water cooled equipment. All
coefficient of performance (COP) values must be rated at 47 [deg]F outdoor dry-bulb temperature for air-cooled
equipment.
** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external
wall opening of less than 16 inches high or less than 42 inches wide, and a cross-sectional area less than 670
square inches.
[dagger] Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 [deg]F outdoor dry-
bulb temperature.
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (October 4, 1993), requires each agency to
identify in writing the market failure or other problem that it intends
to address that warrants agency action such as today's final rule, and
to assess the significance of that problem in evaluating whether any
new regulation is warranted.
DOE's analysis suggests that much of the hospitality industry
segment using PTAC and PTHP equipment tends to be small hotels or
motels. DOE believes that these small hotels and motels tend to be
individually owned and operated and lack corporate direction in terms
of energy policy. The transaction costs for these smaller owners or
operators to research, purchase, and install optimum efficiency
equipment are too high to make such action commonplace. DOE believes
that there is a lack of information and/or information processing
capability about energy efficiency opportunities in the PTAC and PTHP
market available to hotel or motel owners. Unlike residential heating
and air conditioning products, PTACs and PTHPs are not included in
energy labeling programs such as the Federal Trade Commission's energy
labeling program. Furthermore, the energy use of PTACs and PTHPs
depends on the climate and equipment usage and, as such, is not readily
available for the owners or operators to decide whether improving the
energy efficiency of PTAC and PTHP equipment is cost effective.
PTACs and PTHPs are not purchased in the same manner as other
regulated appliances that are sold in retail stores (e.g., room air
conditioners). When purchased by the end user, PTACs and PTHPs are more
likely to be purchased through contractors and builders that perform
the installation. (See Chapter 8 of the final rule TSD) The AHRI
Certified Directory includes PTACs and PTHPs, and provides the energy
efficiency and capacity information on PTACs and PTHPs produced by
participating manufacturers.
To the extent that a lack of information may exist, DOE could
expect the energy efficiency for PTACs and PTHPs to be more or less
randomly distributed across key variables such as energy prices and
usage levels. DOE found that energy efficiency and energy cost savings
are not the primary drivers of the hotel and motel business. Instead,
hotel and motel operators work on a fixed budget and are concerned
primarily with providing clean and comfortable rooms to the customers
to ensure customer satisfaction. If consumer satisfaction decreases,
hotel or motel owners may incur increased transaction costs, thus
preventing access to capital to finance energy efficiency investment.
A related issue is the problem of asymmetric information (one party
to a transaction has more and better information than the other) and/or
high transactions costs (costs of gathering information and effecting
exchanges of goods and services) among PTAC and PTHP equipment
customers. In the case of PTACs and PTHPs, in many cases, the party
responsible for the equipment purchase may not be the one who pays the
operating cost. For example, PTAC and PTHP equipment are also used in
nursing homes (i.e., assisted living) and medical office buildings. In
these settings, the builder or complex owner often makes decisions
about PTACs and PTHPs without input from tenants and typically does not
offer tenants the option to upgrade that equipment. Furthermore, DOE
believes that the tenant typically pays the utility bills. If there
were no transactions costs, it would be in the builder or complex
owners' interest to install equipment that the tenants would choose on
their own. For example, a tenant who knowingly faces higher utility
bills from low-efficiency equipment would expect to pay less in rent,
thereby shifting the higher utility cost back to the complex owner.
However, this information is not without a cost. It may not be in the
tenant's interest to take the time to develop it or, in the case of the
complex owner who installs less efficient equipment, to convey that
information to the tenant.
To the extent that asymmetric information and/or high transaction
costs are problems, one would expect to find certain outcomes regarding
PTAC and PTHP efficiency. For example, all things being equal, one
would not expect to see higher rents for office complexes with high-
efficiency
[[Page 58825]]
equipment. Alternatively, one would expect higher energy efficiency in
rental units where the rent includes utilities, compared with those
where the tenant pays the utility bills separately. DOE did not receive
any data that would enable it to conduct tests of market failure in
response to the NOPR.
In addition, this rulemaking is likely to yield certain
``external'' benefits resulting from improved energy efficiency of
PTACs and PTHPs that are not captured by the users of such equipment.
These benefits include externalities related to environmental and
energy security that are not reflected in energy prices, such as
reduced emissions of greenhouse gases. Regarding environmental
externalities, the emissions reductions in today's final rule are
projected to be 1.06 million metric tons (Mt) of CO2,
between 0.09 kilotons and 2.13 kilotons (kt) of NOX, and
between 0 and 0.037 tons of Hg.
Because today's regulatory action is a significant regulatory
action under section 3(f)(1) of Executive Order 12866, section 6(a)(3)
of the Executive Order requires DOE to prepare and submit for review to
OMB's Office of Information and Regulatory Affairs (OIRA) an assessment
of the costs and benefits of today's rule. Accordingly, DOE presented
to OIRA for review the draft final rule and other documents prepared
for this rulemaking, including a regulatory impact analysis (RIA).
These documents are included in the rulemaking record and are available
for public review in the Resource Room of DOE's Building Technologies
Program, 950 L'Enfant Plaza, SW., 6th Floor, Washington, DC 20024,
(202) 586-9127, between 9 a.m. and 4 p.m., Monday through Friday,
except Federal holidays.
The NOPR contained a summary of the RIA, which evaluated the extent
to which major alternatives to standards for PTACs and PTHPs could
achieve significant energy savings at reasonable cost, compared with
the effectiveness of the proposed rule. 73 FR 18907-10. The complete
RIA (Regulatory Impact Analysis for Proposed Energy Conservation
Standards for Packaged Terminal Air Conditioners and Heat Pumps), is
contained in the TSD prepared for today's rule. The RIA consists of (1)
a statement of the problem addressed by this regulation and the mandate
for government action, (2) a description and analysis of the feasible
policy alternatives to this regulation, (3) a quantitative comparison
of the impacts of the alternatives, and (4) the national economic
impacts of the amended standards.
As explained in the NOPR, DOE determined that none of the
alternatives that it examined would save as much energy or have an NPV
as high as the proposed standards. That same conclusion applies to the
amended standards in today's rule. In addition, several of the
alternatives would require new enabling legislation, because authority
to conduct those alternatives currently does not exist. The RIA report
in the TSD provides additional detail on the regulatory alternatives.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (IRFA) for
any rule that by law must be proposed for public comment, and a final
regulatory flexibility analysis (FRFA) for any such rule that an agency
adopts as a final rule, unless the agency certifies that the rule, if
promulgated, will not have a significant economic impact on a
substantial number of small entities. A regulatory flexibility analysis
examines the impact of the rule on small entities and considers
alternative ways of reducing negative impacts. Also, as required by
Executive Order 13272, ``Proper Consideration of Small Entities in
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published
procedures and policies on February 19, 2003, to ensure that the
potential impacts of its rules on small entities are properly
considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of General Counsel's
Web site: http://www.gc.doe.gov.
Small businesses, as defined by the Small Business Administration
(SBA) for the packaged terminal equipment manufacturing industry, are
manufacturing enterprises with 750 employees or fewer. DOE used the
small business size standards published on March 11, 2008, as amended,
by the SBA to determine whether any small entities would be required to
comply with the rule. 61 FR 3286 and codified at 13 CFR part 121. The
size standards are listed by North American Industry Classification
System (NAICS) code and industry description. PTAC and PTHP
manufacturing is classified under NAICS 333415, which sets a threshold
of 750 employees or less for an entity to be considered as a small
business under the ``Air-Conditioning and Warm Air Heating Equipment
and Commercial and Industrial Refrigeration Equipment Manufacturer''
category.
For the NOPR, DOE identified and interviewed two manufacturers of
PTACs and PTHPs that are small businesses affected by this rulemaking.
73 FR 18910. DOE reviewed the proposed rule under the provisions of the
Regulatory Flexibility Act and the procedures and policies published on
February 19, 2003. Id. On the basis of this review, DOE determined that
it could not certify that the proposed standards (TSL4), if
promulgated, would have no significant economic impact on a substantial
number of small entities. Id. DOE made this determination because of
the potential impacts of the proposed standard levels on PTAC and PTHP
manufacturers generally, including small businesses. Id.
Because of these potential impacts on small manufacturers, DOE
prepared an IRFA during the NOPR stage of this rulemaking. DOE provided
the IRFA in its entirety in the NOPR, 73 FR 18910-12, and also
transmitted a copy to the Chief Counsel for Advocacy of the SBA for
review. Chapter 13 of the TSD contains more information about the
impact of this rulemaking on manufacturers.
The IRFA divided potential impacts on small businesses into two
broad categories: (1) Impacts associated with standard size PTAC and
PTHP manufacturers; and (2) impacts associated with non-standard size
PTAC and PTHP manufacturers. The PTAC and PTHP industry is
characterized by both domestic and international manufacturers.
Standard size PTACs and PTHPs are primarily manufactured outside of the
U.S. with the exception of one domestic PTAC and PTHP manufacturer.
Non-standard size PTACs and PTHPs are primarily manufactured
domestically by a handful of manufacturers. Consolidation within the
PTAC and PTHP industry has reduced the number of parent companies that
manufacture similar equipment under different affiliates and labels.
DOE has prepared a FRFA for this rulemaking, which is presented in
the following discussion. Comments received in response to the IRFA
regarding the impacts on small businesses in the non-standard industry
are summarized in section IV.K.2. In addition, DOE further reviewed the
non-standard size industry, in particular, the market for small
businesses, and presented its finding in section IV.K.2. The FRFA below
is written in accordance with the requirements of the Regulatory
Flexibility Act, and addresses the comments received from interested
parties in response to the IRFA.
1. Reasons for the Final Rule
Part A-1 of Title III of EPCA addresses the energy efficiency of
certain types of commercial and
[[Page 58826]]
industrial equipment. (42 U.S.C. 6311-6317) It contains specific
mandatory energy conservation standards for commercial PTACs and PTHPs.
(42 U.S.C. 6313(a)(3)) EPACT 1992, Public Law 102-486, also amended
EPCA with respect to PTACs and PTHPs, providing definitions in section
122(a), test procedures in section 122(b), labeling provisions in
section 122(c), and the authority to require information and reports
from manufacturers in section 122(e). DOE publishes today's final rule
pursuant to Part A-1. The PTAC and PTHP test procedures appear at 10
CFR 431.96.
EPCA established Federal energy conservation standards that
generally correspond to the levels in ASHRAE Standard 90.1, as in
effect on October 24, 1992 (ASHRAE Standard 90.1-1989), for each type
of covered equipment listed in section 342(a) of EPCA, including PTACs
and PTHPs. (42 U.S.C. 6313(a)) For each type of equipment, EPCA
directed that if ASHRAE Standard 90.1 is amended, DOE must adopt an
amended standard at the new level in ASHRAE Standard 90.1, unless clear
and convincing evidence supports a determination that adoption of a
more stringent level as a national standard would produce significant
additional energy savings and be technologically feasible and
economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) In accordance
with these statutory criteria, DOE is amending the energy conservation
standards for PTACs and PTHPs by raising the efficiency levels for this
equipment above the efficiency levels specified by ASHRAE Standard
90.1-1999 for standard size PTACs and PTHPs and adopting the efficiency
levels in ASHRAE Standard 90.1-1999 for non-standard size PTACs and
PTHPs.
2. Objectives of, and Legal Basis for, the Rule
To determine whether economic justification exists, DOE reviews
comments received and conducts analysis to determine whether the
economic benefits of the amended standard exceed the burdens to the
greatest extent practicable, taking into consideration seven factors
set forth in 42 U.S.C. 6295(o)(2)(B) (see section II.B of this
preamble). (42 U.S.C. 6316(a)) Further information concerning the
background of this rulemaking is provided in Chapter 1 of the TSD.
3. Description and Estimated Number of Small Entities Regulated
Through market research, interviews with manufacturers of all
sizes, discussions with industry trade groups, and comments from
interested parties on the IRFA, DOE identified six small manufacturers
in the PTAC and PTHP industry. These six manufacturers can be further
sub-categorized by their manufacturing scale: (1) One small business
competes successfully making standard-size PTACs and PTHPs in high
volumes; (2) the remaining five small businesses make PTACs and PTHPs
at much lower volumes. While three of these five low-volume small
businesses make PTACs and PTHPs that fit into standard-size sleeves,
the customization options offered by these manufacturers suggests that
these units have more in common with the non-standard size equipment
that these manufacturers also offer than with the high-volume standard
size PTAC and PTHP equipment on the market. DOE found one small
manufacturer of standard size PTACs and PTHPs manufactures equipment
outside the U.S. DOE found the five small manufacturers produce
equipment domestically. None of the six firms are divisions of larger
owned companies.
4. Description and Estimate of Compliance Requirements
Potential impacts on all manufacturers of PTACs and PTHPs vary by
TSL. Margins for all businesses could be impacted negatively by the
adoption of any TSL, since all manufacturers have expressed an
inability to pass on cost increases to retailers and consumers. The six
small domestic businesses under discussion differ from their
competitors in that they are much smaller entities than their
competitors in the standard PTAC and PTHP industry. Any rule affecting
products manufactured by these small businesses will affect them
disproportionately because of their size and their focus on non-
standard PTAC and PTHP equipment. However, due to the low number of
competitors that agreed to be interviewed, DOE was not able to
characterize the small business industry segment with a separate cash-
flow analysis due to concerns about maintaining confidentiality.
For all other TSLs concerning PTAC and PTHP equipment (which are
not being considered in today's rule), the impact on small, focused
business entities will be proportionately greater than for their
competitors since these businesses lack the scale to afford significant
R&D expenses and capital expansion budgets. The exact extent is hard to
gauge since manufacturers did not respond to all proposed investment
requirements by TSL during interviews. However, research associated
with other small entities in prior rulemakings suggests that many costs
associated with complying with rulemakings are typically fixed,
regardless of production volume. Thus, given their focus and scale, any
appliance rulemaking could affect these six small businesses
disproportionately compared to their larger and more diversified
competitors.
5. Significant Issues Raised by Public Comments
DOE summarized comments from interested parties in section IV.K.1.
6. Steps DOE Has Taken To Minimize the Economic Impact on Small, Non-
Standard Size PTAC and PTHP Manufacturers
In consideration of the benefits and burdens of standards,
including the burdens posed to small manufacturers, DOE concluded that
the efficiency levels in ASHRAE Standard 90.1-1999 are the highest
levels that can be justified for non-standard size PTAC and PTHP
equipment. DOE discusses the potential impacts on small, non-standard
manufacturers from higher TSLs in section IV.K.1. Since DOE has adopted
the efficiency levels in ASHRAE Standard 90.1-1999, DOE believes it has
taken the necessary steps to minimize the economic impact on small,
non-standard size PTAC and PTHP manufacturers.
C. Review Under the Paperwork Reduction Act
DOE stated in the NOPR that this rulemaking would impose no new
information and recordkeeping requirements, and that OMB clearance is
not required under the Paperwork Reduction Act (44 U.S.C. 3501 et
seq.). 73 FR 18912. DOE received no comments on this in response to the
NOPR and, as with the proposed rule, today's rule imposes no
information and recordkeeping requirements. DOE takes no further action
in this rulemaking with respect to the Paperwork Reduction Act.
D. Review Under the National Environmental Policy Act
DOE prepared an environmental assessment of the impacts of today's
standards, which it published as a chapter within the TSD for the final
rule. DOE found the environmental effects associated with today's
various standards levels for PTACs and PTHPs to be not significant, and
therefore it is issuing a Finding of No Significant Impact (FONSI)
pursuant to the National Environmental Policy Act of 1969 (42 U.S.C.
4321 et seq.), the regulations of the Council on
[[Page 58827]]
Environmental Quality (40 CFR parts 1500-1508), and DOE's regulations
for compliance with the National Environmental Policy Act (10 CFR part
1021). The FONSI is available in the docket for this rulemaking.
E. Review Under Executive Order 13132
DOE reviewed this rule pursuant to Executive Order 13132,
Federalism, 64 FR 43255 (August 4, 1999), which imposes certain
requirements on agencies formulating and implementing policies or
regulations that preempt State law or that have federalism
implications. In accordance with DOE's statement of policy describing
the intergovernmental consultation process that it will follow in the
development of regulations that have federalism implications, 65 FR
13735 (March 14, 2000), DOE examined the proposed rule and determined
that the rule would not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government. 73 FR 18912. DOE received no comments on this
issue in response to the NOPR, and its conclusions on this issue are
the same for the final rule as they were for the proposed rule. DOE
takes no further action in today's final rule with respect to Executive
Order 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
Civil Justice Reform 61 FR 4729 (February 7, 1996) imposes on Federal
agencies the general duty to adhere to the following requirements: (1)
Eliminate drafting errors and ambiguity, (2) write regulations to
minimize litigation, and (3) provide a clear legal standard for
affected conduct rather than a general standard and promote
simplification and burden reduction. Section 3(b) of Executive Order
12988 specifically requires that executive agencies make every
reasonable effort to ensure that the regulation: (1) Clearly specifies
the preemptive effect, if any; (2) clearly specifies any effect on
existing Federal law or regulation; (3) provides a clear legal standard
for affected conduct while promoting simplification and burden
reduction; (4) specifies the retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses other important issues affecting
clarity and general draftsmanship under any guidelines issued by the
Attorney General. Section 3(c) of Executive Order 12988 requires
executive agencies to review regulations in light of applicable
standards in section 3(a) and section 3(b) to determine whether they
are met or whether it is unreasonable to meet one or more of them. DOE
has completed the required review and determined that, to the extent
permitted by law, the final regulations meet the relevant standards of
Executive Order 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
As described in the NOPR, title II of the Unfunded Mandates Reform
Act of 1995 (Pub. L. 104-4) (UMRA) imposes requirements on Federal
agencies when their regulatory actions will have certain types of
impacts on State, local, and Tribal governments and the private sector.
73 FR 18912-13. DOE concluded that, because this rule would contain
neither an intergovernmental mandate nor a mandate that may result in
expenditure of $100 million or more in any year, the requirements of
UMRA do not apply to the rule. Id. DOE received no comments concerning
the UMRA in response to the NOPR, and its conclusions on this issue are
the same for the final rule as for the proposed rule. DOE takes no
further action in today's final rule with respect to the UMRA.
H. Review Under the Treasury and General Government Appropriations Act
of 1999
DOE determined that, for this rulemaking, it need not prepare a
Family Policymaking Assessment under Section 654 of the Treasury and
General Government Appropriations Act, 1999 (Pub. L. 105-277). 73 FR
18913. DOE received no comments concerning Section 654 in response to
the NOPR, and thus takes no further action in today's final rule with
respect to this provision.
I. Review Under Executive Order 12630
DOE determined, under Executive Order 12630, Governmental Actions
and Interference with Constitutionally Protected Property Rights, 53 FR
8859 (March 18, 1988), that today's rule would not result in any
takings which might require compensation under the Fifth Amendment to
the U.S. Constitution. 73 FR 18913. DOE received no comments concerning
Executive Order 12630 in response to the NOPR, and thus takes no
further action in today's final rule with respect to this Executive
Order.
J. Review Under the Treasury and General Government Appropriations Act
of 2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most
disseminations of information to the public under guidelines
established by each agency pursuant to general guidelines issued by
OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002),
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002).
DOE has reviewed today's final rule under the OMB and DOE guidelines
and concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use, 66 FR at
28355 (May 22, 2001), requires Federal agencies to prepare and submit
to the OIRA a Statement of Energy Effects for any significant energy
action. DOE determined that the proposed rule was not a significant
energy action within the meaning of Executive Order 13211. 73 FR 18913.
Accordingly, it did not prepare a Statement of Energy Effects on the
proposed rule. DOE received no comments on this issue in response to
the NOPR. As with the proposed rule, DOE has concluded that today's
final rule is not a significant energy action within the meaning of
Executive Order 13211, and has not prepared a Statement of Energy
Effects on the rule.
L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, the OMB, in consultation with the Office of
Science and Technology, issued its Final Information Quality Bulletin
for Peer Review (the Bulletin). 70 FR 2664 (January 14, 2005). The
purpose of the Bulletin is to enhance the quality and credibility of
the Government's scientific information. The Bulletin establishes that
certain scientific information shall be peer reviewed by qualified
specialists before it is disseminated by the federal government, and,
as indicated in the NOPR, this includes influential scientific
information related to agency regulatory actions, such as the analyses
in this rulemaking. 73 FR 18913.
In response to OMB's Bulletin, DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses and has prepared a Peer
[[Page 58828]]
Review Report pertaining to the energy conservation standards
rulemaking analyses. The ``Energy Conservation Standards Rulemaking
Peer Review Report'' dated February 2007 has been disseminated and is
available at the following web site: http://www.eere.energy.gov/buildings/appliance_standards/peer_review.html. DOE on June 28-29,
2005.
M. Congressional Notification
As required by 5 U.S.C. 801, DOE will submit to Congress a report
regarding the issuance of today's final rule prior to the effective
date set forth at the outset of this notice. The report will state that
it has been determined that the rule is a ``major rule'' as defined by
5 U.S.C. 804(2). DOE also will submit the supporting analyses to the
Comptroller General in the U.S. Government Accountability Office (GAO)
and make them available to Congress.
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of today's final
rule.
List of Subjects in 10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Energy conservation.
Issued in Washington, DC, on September 29, 2008.
John F. Mizroch,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
0
For the reasons set forth in the preamble, chapter II of title 10, Code
of Federal Regulations, part 431 is amended to read as set forth below.
PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND
INDUSTRIAL EQUIPMENT
0
1. The authority citation for part 431 continues to read as follows:
Authority: 42 U.S.C. 6291-6317.
0
2. Section 431.92 is amended by adding in alphabetical order new
definitions for ``Non-standard size,'' and ``Standard size'' to read as
follows:
Sec. 431.92 Definitions concerned commercial air conditioners and
heat pumps.
* * * * *
Non-standard size means a packaged terminal air conditioner or
packaged terminal heat pump with existing wall sleeve dimensions having
an external wall opening of less than 16 inches high or less than 42
inches wide, and a cross-sectional area less than 670 square inches.
* * * * *
Standard size means a packaged terminal air conditioner or packaged
terminal heat pump with wall sleeve dimensions having an external wall
opening of greater than or equal to 16 inches high or greater than or
equal to 42 inches wide, and a cross-sectional area greater than or
equal to 670 square inches.
* * * * *
0
3. Section 431.97 is amended by revising paragraph (a), including
Tables 1 and 2, and by adding a new paragraph (c) to read as follows:
Sec. 431.97 Energy efficiency standards and their effective dates.
(a) All small or large commercial package air conditioning and
heating equipment manufactured on or after January 1, 1994 (except for
large commercial package air-conditioning and heating equipment, for
which the effective date is January 1, 1995), and before January 1,
2010, in the case of the air-cooled equipment covered by the standards
in paragraph (b), must meet the applicable minimum energy efficiency
standard level(s) set forth in Tables 1 and 2 of this section. Each
standard size packaged terminal air conditioner or packaged terminal
heat pump manufactured on or after January 1, 1994, and before
September 30, 2012, must meet the applicable minimum energy efficiency
standard level(s) set forth in Tables 1 and 2 of this section. Each
non-standard size packaged terminal air conditioner or packaged
terminal heat pump manufactured on or after January 1, 1994, and before
September 30, 2010, must meet the applicable minimum energy efficiency
standard level(s) set forth in Tables 1 and 2 of this section.
Table 1 to Sec. 431.97--Minimum Cooling Efficiency Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency level \1\
---------------------------------------------
Product Category Cooling capacity Sub-category Products Products manufactured
manufactured until on and after October
October 29, 2003 29, 2003
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air Air Cooled, 3 Phase... <65,000 Btu/h......... Split System......... SEER = 10.0.......... SEER = 10.0.
Conditioning and Heating Equipment. Single Package....... SEER = 9.7........... SEER = 9.7.
Air Cooled............ >=65,000 Btu/h and All.................. EER = 8.9............ EER = 8.9.
<135,000 Btu/h.
Water Cooled, <17,000 Btu/h......... AC................... EER = 9.3............ EER = 12.1.
Evaporatively Cooled, HP................... EER = 9.3............ EER = 11.2.
and Water-Source.
>=17,000 Btu/h and AC................... EER = 9.3............ EER = 12.1.
<65,000 Btu/h. HP................... EER = 9.3............ EER = 12.0.
>=65,000 Btu/h and AC................... EER = 10.5........... EER = 11.5.\2\
<135,000 Btu/h. HP................... EER = 10.5........... EER = 12.0.
Large Commercial Packaged Air Air Cooled............ >=135,000 Btu/h and All.................. EER = 8.5............ EER = 8.5.
Conditioning and Heating Equipment. <240,000 Btu/h.
Water-Cooled and >=135,000 Btu/h and All.................. EER = 9.6............ EER = 9.6.\3\
Evaporatively Cooled. <240,000 Btu/h.
[[Page 58829]]
Packaged Terminal Air Conditioners All................... <7,000 Btu/h.......... All.................. EER = 8.88........... EER = 8.88.
and Heat Pumps.
>=7,000 Btu/h and ..................... EER = 10.0-(0.16 x EER = 10.0-(0.16 x
<=15,000 Btu/h. capacity [in kBtu/h capacity [in kBtu/h
at 95 [deg]F outdoor at 95 [deg]F outdoor
dry-bulb dry-bulb
temperature]). temperature]).
>15,000 Btu/h......... ..................... EER = 7.6............ EER = 7.6.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For equipment rated according to the ARI standards, all EER values must be rated at 95 [deg]F outdoor dry-bulb temperature for air-cooled products
and evaporatively cooled products and at 85 [deg]F entering water temperature for water-cooled products. For water-source heat pumps rated according
to the ISO standard, EER must be rated at 30 [deg]C (86 [deg]F) entering water temperature.
\2\ Deduct 0.2 from the required EER for units with heating sections other than electric resistance heat.
\3\ Effective 10/29/2004, the minimum value became EER = 11.0.
Table 2 to Sec. 431.97--Minimum Heating Efficiency Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
Efficiency level \1\
---------------------------------------------
Product Category Cooling capacity Sub-category Products Products manufactured
manufactured until on and after October
October 29, 2003 29, 2003
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Commercial Packaged Air Air Cooled, 3 Phase... <65,000 Btu/h......... Split System......... HSPF = 6.8........... HSPF = 6.8.
Conditioning and Heating Equipment. Single Package....... HSPF = 6.6........... HSPF = 6.6.
Water-Source.......... <135,000 Btu/h........ Split System and COP = 3.8............ COP = 4.2.
Single Package.
Air Cooled............ >=65,000 Btu/h and All.................. COP = 3.0............ COP = 3.0.
<135,000 Btu/h.
Large Commercial Packaged Air Air Cooled............ >=135,000 Btu/h and Split System and COP = 2.9............ COP = 2.9.
Conditioning and Heating Equipment. <240,000 Btu/h. Single Package.
Packaged Terminal Heat Pumps....... All................... All................... All.................. COP = 1.3 + (0.16 x COP = 1.3 + (0.16 x
the applicable the applicable
minimum cooling EER minimum cooling EER
prescribed in Table prescribed in Table
1--Minimum Cooling 1--Minimum Cooling
Efficiency Levels). Efficiency Levels).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For units tested by ARI standards, all COP values must be rated at 47 [deg]F outdoor dry-bulb temperature for air-cooled products, and at 70 [deg]F
entering water temperature for water-source heat pumps. For heat pumps tested by the ISO Standard 13256-1, the COP values must be obtained at the
rating point with 20 [deg]C (68 [deg]F) entering water temperature.
* * * * *
(c) Each standard size packaged terminal air conditioner or
packaged terminal heat pump manufactured on or after September 30, 2012
and each non-standard size packaged terminal air conditioner or
packaged terminal heat pump manufactured on or after September 30,
2010, shall have an Energy Efficiency Ratio and Coefficient of
Performance no less than:
----------------------------------------------------------------------------------------------------------------
Equipment class
---------------------------------------------------------------------
Cooling capacity
(British thermal Energy conservation standards *
Equipment Category units per hour
[Btu/h])
----------------------------------------------------------------------------------------------------------------
PTAC.......................... Standard Size.... <7,000........... EER = 11.7
7,000-15,000..... EER = 13.8-(0.300 x Cap**)
>15,000.......... EER = 9.3
Non-Standard Size <7,000........... EER = 9.4
7,000-15,000..... EER = 10.9-(0.213 x Cap**)
>15,000.......... EER = 7.7
[[Page 58830]]
PTHP.......................... Standard Size.... <7,000........... EER = 11.9
7,000-15,000..... COP = 3.3
>15,000.......... EER = 14.0-(0.300 x Cap**)
COP = 3.7-(0.052 x Cap**)
EER = 9.5
COP = 2.9
Non-Standard Size <7,000........... EER = 9.3
7,000-15,000..... COP = 2.7
>15,000.......... EER = 10.8-(0.213 x Cap**)
COP = 2.9-(0.026 x Cap**)
EER = 7.6
COP = 2.5
----------------------------------------------------------------------------------------------------------------
* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 [deg]F outdoor dry-
bulb temperature for air-cooled products and evaporatively-cooled products and at 85 [deg]F entering water
temperature for water cooled products. All COP values must be rated at 47 [deg]F outdoor dry-bulb temperature
for air-cooled products, and at 70 [deg]F entering water temperature for water-source heat pumps.
** Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 [deg]F outdoor dry-bulb
temperature.
* * * * *
APPENDIX
[The following letter from the Department of Justice will not
appear in the Code of Federal Regulations.]
DEPARTMENT OF JUSTICE,
Antitrust Division,
Main Justice Building,
950 Pennsylvania Avenue, NW.,
Washington, DC 20530-0001, (202) 514-2401/(202) 616-2645(f),
[email protected], http://www.usdoj.gov.
June 6, 2008
Warren Belmar, Deputy General Counsel for Energy Policy, Department
of Energy, Washington, DC 20585.
Dear Deputy General Counsel Belmar:
I am responding to your April 3, 2008 letter seeking the views
of the Attorney General about the potential impact on competition of
two proposed energy conservation standards for packaged terminal air
conditioners (``PTACs'') and packaged terminal heat pumps
(``PTHPs''). Your request was submitted pursuant to Section
325(o)(2)(B)(i)(V) of the Energy Policy and Conservation Act, as
amended, (``EPCA''), 42 U.S.C. 6295(o)(B)(i)(V), which requires the
Attorney General to make a determination of the impact of any
lessening of competition that is likely to result from the
imposition of proposed energy conservation standards. The Attorney
General's responsibility for responding to requests from other
departments about the effect of a program on competition has been
delegated to the Assistant Attorney General for the Antitrust
Division in 28 CFR 0.40(g).
In conducting its analysis the Antitrust Division examines
whether a proposed standard may lessen competition, for example, by
placing certain manufacturers of a product at an unjustified
competitive disadvantage compared to other manufacturers, or by
inducing avoidable inefficiencies in production or distribution of
particular products. In addition to harming consumers directly
through higher prices, these effects could undercut the ultimate
goals of the legislation.
We have reviewed the proposed standards and the supplementary
information submitted to the Attorney General, including the
transcript of the May 1 public meeting on the proposed standards. We
have additionally conducted interviews with members of the industry.
What we have heard raises legitimate issues about whether the
proposed standards may adversely affect competition. The proposed
standard for non-standard PTACs and PTHPs may create a risk that is
too strict for the manufacturers to satisfy, given the state of
technology.
Customers that own older buildings with non-standard wall
openings for air conditioning and heating units could face the
choice of incurring capital expenditures to alter the size of the
wall openings so that they could use standard sized units, or of not
being able to replace their nonstandard sized units with units that
are appropriately sized and meet the proposed energy conservation
standards. Similarly, we have heard that the proposed standards for
standard sized PTHPs may be too strict for manufacturers to satisfy.
Since there are few manufacturers of standard PTHPs and of
nonstandard PTACs and PTHPs, if some manufacturers cannot meet the
proposed standards, consumers will have fewer competitive
alternatives and may pay higher prices.
The Department of Justice is not in a position to judge whether
manufacturers will be able to meet the proposed standards--we urge,
however, the Department of Energy to take into account these
possible impacts on competition in determining its final energy
efficiency standard for PTACs and PTHPs.
Sincerely,
Deborah A. Garza,
Acting Assistant Attorney General.
[FR Doc. E8-23312 Filed 10-6-08; 8:45 am]
BILLING CODE 6450-01-P