[Federal Register Volume 74, Number 6 (Friday, January 9, 2009)]
[Rules and Regulations]
[Pages 1092-1142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-31449]
[[Page 1091]]
-----------------------------------------------------------------------
Part III
Department of Energy
-----------------------------------------------------------------------
10 CFR Part 431
Energy Conservation Program for Commercial and Industrial Equipment;
Final Rule
Federal Register / Vol. 74, No. 6 / Friday, January 9, 2009 / Rules
and Regulations
[[Page 1092]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Number EERE-2006-BT-STD-0126]
RIN 1904-AB59
Energy Conservation Program for Commercial and Industrial
Equipment: Energy Conservation Standards for Commercial Ice-Cream
Freezers; Self-Contained Commercial Refrigerators, Commercial Freezers,
and Commercial Refrigerator-Freezers Without Doors; and Remote
Condensing Commercial Refrigerators, Commercial Freezers, and
Commercial Refrigerator-Freezers
AGENCY: Department of Energy, Office of Energy Efficiency and Renewable
Energy.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Energy (DOE) is adopting new energy
conservation standards for commercial ice-cream freezers; self-
contained commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers without doors; and remote condensing commercial
refrigerators, commercial freezers, and commercial refrigerator-
freezers. DOE has determined that energy conservation standards for
these types of equipment would result in significant conservation of
energy, and are technologically feasible and economically justified.
DATES: The effective date of this rule is March 10, 2009. The standards
established in today's final rule will be applicable starting January
1, 2012. Incorporation by reference of the material listed is approved
by the Director of the Federal Register on March 10, 2009.
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. Please call
Brenda Edwards at the above telephone number for additional information
regarding visiting the Resource Room. (Note: DOE's Freedom of
Information Reading Room no longer houses rulemaking materials.) You
may also obtain copies of certain previous rulemaking documents in this
proceeding (i.e., framework document, advance notice of proposed
rulemaking, notice of proposed rulemaking), 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/refrigeration_equipment.html.
FOR FURTHER INFORMATION CONTACT:
Charles Llenza, U.S. Department of Energy, Energy Efficiency and
Renewable Energy, Building Technologies Program, EE-2J, 1000
Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-2192,
[email protected].
Francine Pinto, Esq., U.S. Department of Energy, Office of General
Counsel, GC-72, 1000 Independence Avenue, SW., Washington, DC 20585-
0121, (202) 586-9507, [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Final Rule and Its Benefits
A. The Standard Levels
B. Benefits to Customers of Commercial Refrigeration Equipment
C. Impact on Manufacturers
D. National Benefits
II. Introduction
A. Authority
B. Background
1. History of Standards Rulemaking for Commercial Refrigeration
Equipment
III. General Discussion
A. Test Procedures
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
D. Economic Justification
1. Specific Criteria
a. Economic Impact on Commercial Customers and Manufacturers
b. Life-Cycle Costs
c. Energy Savings
d. Lessening of Utility or Performance of Equipment
e. Impact of Any Lessening of Competition
f. Need of the Nation To Conserve Energy
g. Other Factors
2. Rebuttable Presumption
IV. Methodology and Discussion of Comments on Methodology
A. Market and Technology Assessment
1. Definitions Related to Commercial Refrigeration Equipment
a. Air-Curtain Angle Definition
b. Door Angle Definition
c. Ice-Cream Freezer Definition
d. Equipment Configuration Definitions
e. Hybrid and Wedge Case Definitions
2. Equipment Classes
B. Engineering Analysis
1. Approach
2. Analytical Models
a. Cost Model
b. Energy Consumption Model
3. Equipment Classes Analyzed
4. Wedge Cases
5. Ice-Cream Freezers--Temperature Range
6. Special Application Temperature Cases
7. Coverage of Remote Condensing Units
8. Regulating Secondary Cooling Applications
C. Markups to Determine Equipment Price
D. Energy Use Characterization
E. Life-Cycle Cost and Payback Period Analyses
F. Shipments Analysis
G. National Impact Analysis
H. Life-Cycle Cost Sub-Group Analysis
I. Manufacturer Impact Analysis
J. Utility Impact Analysis
K. Employment Impact Analysis
L. Environmental Assessment
V. Discussion of Other Comments
A. Information and Assumptions Used in Analyses
1. Market and Technology Assessment
a. Data Sources
b. Beverage Merchandisers
2. Engineering Analysis
a. Design Options
b. Baseline Models
c. Consideration of Alternative Refrigerants
d. Consideration of NSF 7 Type II Equipment
e. Product Class Extension Factors
f. TSL Energy Limits
g. Compressor Selection Oversize Factor
h. Offset Factors for Self-Contained Equipment
i. Self-Contained Condensing Coils
3. Manufacturer Impact Analysis
VI. Analytical Results and Conclusions
A. Trial Standard Levels
1. Miscellaneous Equipment
B. Significance of Energy Savings
C. Economic Justification
1. Economic Impact on Commercial Customers
a. Life-Cycle Costs and Payback Period
b. Commercial Customer Sub-Group Analysis
2. Economic Impact on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Cumulative Regulatory Burden
c. Impacts on Employment
d. Impacts on Manufacturing Capacity
e. Impacts on Manufacturers That Are Small Businesses
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
VII. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
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, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
[[Page 1093]]
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VIII. 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 (42 U.S.C. 6291
et seq.; EPCA), directs the Department of Energy (DOE) to establish
mandatory energy conservation standards for commercial ice-cream
freezers; self-contained commercial refrigerators, commercial freezers,
and commercial refrigerator-freezers without doors; and remote
condensing commercial refrigerators, commercial freezers, and
commercial refrigerator-freezers. (42 U.S.C. 6313(c)(4)(A)) These types
of equipment are referred to collectively hereafter as ``commercial
refrigeration equipment.'' Any such standard must be designed to
``achieve the maximum improvement in energy efficiency * * * which the
Secretary determines is technologically feasible and economically
justified.'' (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) Furthermore, the
new standard must ``result in significant conservation of energy.'' (42
U.S.C. 6295(o)(3)(B) and 6316(e)(1)) The standards in today's final
rule, which apply to all commercial refrigeration equipment, satisfy
these requirements.\1\
---------------------------------------------------------------------------
\1\ Currently, no mandatory Federal energy conservation
standards exist for the commercial refrigeration equipment covered
by this rulemaking.
---------------------------------------------------------------------------
Table I-1 shows the standard levels DOE is adopting today. These
standards will apply to all commercial refrigeration equipment
manufactured for sale in the United States, or imported to the United
States, on or after January 1, 2012.
Table I-1--Standard Levels for Commercial Refrigeration Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equipment class \2\ Standard level * ** (kWh/day) *** Equipment class Standard level * ** (kWh/day)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M.............................. 0.82 x TDA + 4.07 VCT.RC.I................ 0.66 x TDA + 3.05
SVO.RC.M.............................. 0.83 x TDA + 3.18 HCT.RC.M................ 0.16 x TDA + 0.13
HZO.RC.M.............................. 0.35 x TDA + 2.88 HCT.RC.L................ 0.34 x TDA + 0.26
VOP.RC.L.............................. 2.27 x TDA + 6.85 HCT.RC.I................ 0.4 x TDA + 0.31
HZO.RC.L.............................. 0.57 x TDA + 6.88 VCS.RC.M................ 0.11 x V + 0.26
VCT.RC.M.............................. 0.22 x TDA + 1.95 VCS.RC.L................ 0.23 x V + 0.54
VCT.RC.L.............................. 0.56 x TDA + 2.61 VCS.RC.I................ 0.27 x V + 0.63
SOC.RC.M.............................. 0.51 x TDA + 0.11 HCS.RC.M................ 0.11 x V + 0.26
VOP.SC.M.............................. 1.74 x TDA + 4.71 HCS.RC.L................ 0.23 x V + 0.54
SVO.SC.M.............................. 1.73 x TDA + 4.59 HCS.RC.I................ 0.27 x V + 0.63
HZO.SC.M.............................. 0.77 x TDA + 5.55 SOC.RC.L................ 1.08 x TDA + 0.22
HZO.SC.L.............................. 1.92 x TDA + 7.08 SOC.RC.I................ 1.26 x TDA + 0.26
VCT.SC.I.............................. 0.67 x TDA + 3.29 VOP.SC.L................ 4.37 x TDA + 11.82
VCS.SC.I.............................. 0.38 x V + 0.88 VOP.SC.I................ 5.55 x TDA + 15.02
HCT.SC.I.............................. 0.56 x TDA + 0.43 SVO.SC.L................ 4.34 x TDA + 11.51
SVO.RC.L.............................. 2.27 x TDA + 6.85 SVO.SC.I................ 5.52 x TDA + 14.63
VOP.RC.I.............................. 2.89 x TDA + 8.7 HZO.SC.I................ 2.44 x TDA + 9.
SVO.RC.I.............................. 2.89 x TDA + 8.7 SOC.SC.I................ 1.76 x TDA + 0.36
HZO.RC.I.............................. 0.72 x TDA + 8.74 HCS.SC.I................ 0.38 x V + 0.88
--------------------------------------------------------------------------------------------------------------------------------------------------------
* TDA is the total display area of the case, as measured in the Air-Conditioning and Refrigeration Institute (ARI) Standard 1200-2006, Appendix D.
** V is the volume of the case, as measured in ARI Standard 1200-2006, Appendix C.
*** Kilowatt hours per day.
\2\ For this rulemaking, equipment class designations consist of a combination (in sequential order separated by periods) of: (1) An equipment family
code (VOP=vertical open, SVO=semivertical open, HZO=horizontal open, VCT=vertical transparent doors, VCS=vertical solid doors, HCT=horizontal
transparent doors, HCS=horizontal solid doors, or SOC=service over counter); (2) an operating mode code (RC=remote condensing or SC=self contained);
and (3) a rating temperature code (M=medium temperature (38 [deg]F), L=low temperature (0 [deg]F), or I=ice-cream temperature (-15 [deg]F)). For
example, ``VOP.RC.M'' refers to the ``vertical open, remote condensing, medium temperature'' equipment class. See discussion in section V.A.2 and
chapter 3 of the TSD, market and technology assessment, for a more detailed explanation of the equipment class terminology. See Table IV-2 for a list
of the equipment classes by category.
B. Benefits to Customers of Commercial Refrigeration Equipment
Table I-2 indicates the impacts on commercial customers of today's
standards.
Table I-2--Implications of New Standards for Commercial Consumers
----------------------------------------------------------------------------------------------------------------
Total
Total installed Life-cycle Payback
Equipment class Energy conservation installed cost cost period
standard cost ($) increase savings ($) (years)
($)
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................... 0.82 x TDA + 4.07...... 8,065 536 1,788 2.0
VOP.RC.L........................... 2.27 x TDA + 6.85...... 11,222 1,947 3,938 2.8
VOP.SC.M........................... 1.74 x TDA + 4.71...... 4,381 633 1,549 2.4
[[Page 1094]]
VCT.RC.M........................... 0.22 x TDA + 1.95...... 11,654 2,134 2,339 3.9
VCT.RC.L........................... 0.56 x TDA + 2.61...... 12,584 2,513 5,419 2.6
VCT.SC.I........................... 0.67 x TDA + 3.29...... 6,602 1,385 5,217 1.7
VCS.SC.I........................... 0.38 x V + 0.88........ 4,227 326 1,757 1.3
SVO.RC.M........................... 0.83 x TDA + 3.18...... 7,470 435 1,274 1.9
SVO.SC.M........................... 1.73 x TDA + 4.59...... 3,719 439 1,136 2.3
SOC.RC.M........................... 0.51 x TDA + 0.11...... 12,740 240 945 1.7
HZO.RC.M........................... 0.35 x TDA + 2.88...... 8,133 248 1,040 1.6
HZO.RC.L........................... 0.57 x TDA + 6.88...... 8,194 270 1,102 1.6
HZO.SC.M........................... 0.77 x TDA + 5.55...... 3,398 313 826 2.3
HZO.SC.L........................... 1.92 x TDA + 7.08...... 3,836 460 1,761 1.7
HCT.SC.I........................... 0.56 x TDA + 0.43...... 2,478 238 785 1.9
----------------------------------------------------------------------------------------------------------------
The economic impacts on commercial consumers (i.e., the average
life-cycle cost (LCC) savings) are positive for all equipment classes.
For example, currently available remote condensing vertical open
equipment operating at medium temperatures, semivertical equipment with
those same characteristics, and vertical closed equipment with
transparent doors and operating at low temperatures--three of the most
common types of commercial refrigeration equipment--typically have
installed prices of $8,065, $7,470 and $12,584, and annual energy costs
of $1,879, $1,413, and $2,249, respectively. To meet the new standards,
DOE estimates that the installed prices of such equipment will be
$8,601, $7,905, and $15,097, respectively, an increase of $536, $435,
and $2,513. This price increase will be offset by annual energy savings
of about $331, $234, and $977.
C. Impact on Manufacturers
Using a real corporate discount rate of 11.5 percent, DOE estimates
the industry net present value (INPV) of the commercial refrigeration
equipment industry to be $540 million in 2007$. DOE expects the impact
of today's standards on the industry net present value (INPV) of
manufacturers of commercial refrigeration equipment to be a loss of
7.29 to 27.35 percent (-$39 million to -$148 million). Based on DOE's
interviews with manufacturers of commercial refrigeration equipment,
DOE expects minimal plant closings or loss of employment as a result of
the standards.
D. National Benefits
DOE estimates the standards will save approximately 1.035 quads
(quadrillion (10\15\) British thermal units (Btu)) of energy over 30
years (2012-2042). This is equivalent to all the energy consumed by
more than 5 million American households in a single year.
By 2042, DOE expects the energy savings from the standards to
eliminate the need for approximately 0.7 new 1,000-megawatt (MW) power
plants. These energy savings will result in cumulative greenhouse gas
emission reductions of approximately 52.6 million tons (Mt) of carbon
dioxide (CO2), or an amount equal to that produced by
approximately 332,500 cars every year. Additionally, the standards will
help alleviate air pollution by resulting in between approximately 3.64
and 89.97 kilotons (kt) of cumulative nitrogen oxide (NOX)
emission reductions and between approximately 0 and 1.38 tons of
cumulative mercury emission reductions from 2012 through 2042. The
estimated net present values of these emissions reductions are between
$0 and $469 million for CO2, between $394,000 and $9.7
million for NOX, and between $0 and $284,000 for mercury at
a 7-percent discount rate in 2007$, discounted to 2008. At a 3-percent
discount rate, the estimated net present values of these emissions
reductions are between $0 and $955 million for CO2, between
$0.8 million and $20.5 million for NOX, and between $0 and
$560,000 for mercury.
The national NPV of the standards is $1.414 billion using a 7-
percent discount rate and $3.930 billion using a 3-percent discount
rate, cumulative from 2012 to 2062 in 2007$. 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 between 2012 and 2042. Using a 7-
percent discount rate for the annualized cost analysis, the cost of the
standards established in today's final rule is $95 million per year in
increased equipment and installation costs, while the annualized
benefits are $229 million per year in reduced equipment operating
costs. Using a 3-percent discount rate, the cost of the standards
established in today's final rule is $81 million per year, while the
benefits of today's standards are $253 million per year.
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 commercial refrigeration equipment, the subject of this
rulemaking.\3\ 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 commercial refrigeration equipment and
certain other equipment; and authorizes DOE to require information and
reports from manufacturers. The test procedure for commercial
refrigeration equipment appears in Title 10 Code of Federal Regulations
(CFR) part 431.64.
---------------------------------------------------------------------------
\3\ 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 provides criteria for prescribing new or amended standards for
commercial refrigeration equipment. As indicated above, any new or
amended standard for this equipment must be designed to achieve the
maximum improvement in energy efficiency that is technologically
feasible and
[[Page 1095]]
economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1))
Additionally, EPCA provides specific prohibitions on prescribing such
standards. DOE may not prescribe an amended or new standard for any
equipment for which DOE has not established a test procedure. (42
U.S.C. 6295(o)(3)(A) and 6316(e)(1)) Further, DOE may not prescribe an
amended or new standard if DOE determines by rule that such standard
would not result in ``significant conservation of energy'' or ``is not
technologically feasible or economically justified.'' (42 U.S.C.
6295(o)(3)(B) and 6316(e)(1))
EPCA also provides that in deciding whether such a standard is
economically justified for equipment such as commercial refrigeration
equipment, DOE must, after receiving comments on the proposed standard,
determine whether the benefits of the standard exceed its burdens by
considering, to the greatest extent practicable, the following seven
factors:
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 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. 6295(o)(2)(B)(i)-(ii) and 6316(e)(1))
In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and
6316(e)(1)), establishes a rebuttable presumption that a standard for
commercial refrigeration equipment 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.
EPCA further provides that the Secretary may not prescribe an
amended or new standard if interested persons have established by a
preponderance of the evidence that the standard is ``likely to result
in the unavailability in the United States in any covered product type
(or class) of performance characteristics (including reliability),
features, sizes, capacities, and volumes that are substantially the
same as those generally available in the United States at the time of
the Secretary's finding.'' (42 U.S.C. 6295(o)(4) and 6316(e)(1))
Section 325(q)(1) of EPCA is applicable to promulgating standards
for most types or classes of equipment, including commercial
refrigeration equipment, that have two or more subcategories. (42
U.S.C. 6295(q)(1) and 42 U.S.C. 6316(e)(1)) Under this provision, 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. (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 a higher or lower level. (See 42 U.S.C. 6295(q)(2))
Federal energy conservation standards 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(e)(2)-(3)) DOE can, however, 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. (42
U.S.C. 6297(d); 42 U.S.C. 6316(e)(2)-(3))
B. Background
1. History of Standards Rulemaking for Commercial Refrigeration
Equipment
As discussed in the notice of proposed rulemaking, 73 FR 50072,
50076 (August 25, 2008) (the August 2008 NOPR), the EPACT 2005
amendments to EPCA require that DOE issue energy conservation standards
for the equipment covered by this rulemaking. (42 U.S.C. 6313(c)(4)(A))
The amendments also include definitions for terms relevant to this
equipment (42 U.S.C. 6311(9)). These definitions provide that
commercial refrigeration equipment is connected to either a self-
contained condensing unit or to a remote condensing unit (42 U.S.C.
6311(9)(A)(vii)), the two condenser configurations of equipment covered
by this rulemaking, and include definitions of a remote condensing unit
and self-contained condensing unit (42 U.S.C. 6311(9)(E)-(F)).
DOE commenced this rulemaking on April 25, 2006, by publishing a
notice of a public meeting and of the availability of its framework
document for the rulemaking. 71 FR 23876. The framework document
described the approaches DOE anticipated using and issues to be
resolved in the rulemaking. DOE held a public meeting on May 16, 2006,
to present the contents of the framework document, describe the
analyses DOE planned to conduct during the rulemaking, obtain public
comment on these subjects, and facilitate the public's involvement in
the rulemaking. DOE also allowed the submission of written statements,
after the public meeting, in response to the framework document.
On July 26, 2007, DOE published an advance notice of proposed
rulemaking (ANOPR) in this proceeding. 72 FR 41161 (the July 2007
ANOPR). In the July 2007 ANOPR, DOE sought comment on its proposed
equipment classes for the rulemaking, and on the analytical framework,
models, and tools that DOE used to analyze the impacts of energy
conservation standards for commercial refrigeration equipment. In
conjunction with the July 2007 ANOPR, DOE published on its Web site the
complete ANOPR TSD, which included the results of DOE's various
preliminary analyses in this rulemaking. In the July 2007 ANOPR, DOE
requested oral and written comments on these results and on a range of
other issues. DOE held a public meeting in Washington, DC, on August
23, 2007, to present the methodology and results of the ANOPR analyses
and to receive oral comments from those who attended. The oral and
written comments DOE received focused on DOE's assumptions, approach,
and equipment class breakdown, and were addressed in detail in the
August 2008 NOPR.
In the August 2008 NOPR, DOE proposed new energy conservation
[[Page 1096]]
standards for commercial refrigeration equipment. 73 FR 50072. In
conjunction with the August 2008 NOPR, DOE also published on its Web
site the complete technical support document (TSD) for the proposed
rule, which incorporated the final analyses DOE conducted and technical
documentation for each analysis. The TSD included the engineering
analysis spreadsheets, the LCC spreadsheet, and the national impact
analysis spreadsheet. The standards DOE proposed for commercial
refrigeration equipment are shown in Table II-1.
Table II-1--August 2008 Proposed Standard Levels for Commercial Refrigeration Equipment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equipment class Standard level* ** (kWh/day) Equipment class Standard level* ** (kWh/day)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M.............................. 0.82 x TDA + 4.07 VCT.RC.I................ 0.71 x TDA + 3.05
SVO.RC.M.............................. 0.83 x TDA + 3.18 HCT.RC.M................ 0.16 x TDA + 0.13
HZO.RC.M.............................. 0.35 x TDA + 2.88 HCT.RC.L................ 0.34 x TDA + 0.26
VOP.RC.L.............................. 2.28 x TDA + 6.85 HCT.RC.I................ 0.4 x TDA + 0.31
HZO.RC.L.............................. 0.57 x TDA + 6.88 VCS.RC.M................ 0.11 x V + 0.26
VCT.RC.M.............................. 0.25 x TDA + 1.95 VCS.RC.L................ 0.23 x V + 0.54
VCT.RC.L.............................. 0.6 x TDA + 2.61 VCS.RC.I................ 0.27 x V + 0.63
SOC.RC.M.............................. 0.51 x TDA + 0.11 HCS.RC.M................ 0.11 x V + 0.26
VOP.SC.M.............................. 1.74 x TDA + 4.71 HCS.RC.L................ 0.23 x V + 0.54
SVO.SC.M.............................. 1.73 x TDA + 4.59 HCS.RC.I................ 0.27 x V + 0.63
HZO.SC.M.............................. 0.77 x TDA + 5.55 SOC.RC.L................ 1.08 x TDA + 0.22
HZO.SC.L.............................. 1.92 x TDA + 7.08 SOC.RC.I................ 1.26 x TDA + 0.26
VCT.SC.I.............................. 0.73 x TDA + 3.29 VOP.SC.L................ 4.37 x TDA + 11.82
VCS.SC.I.............................. 0.38 x V + 0.88 VOP.SC.I................ 5.55 x TDA + 15.02
HCT.SC.I.............................. 0.56 x TDA + 0.43 SVO.SC.L................ 4.34 x TDA + 11.51
SVO.RC.L.............................. 2.28 x TDA + 6.85 SVO.SC.I................ 5.52 x TDA + 14.63
VOP.RC.I.............................. 2.9 x TDA + 8.7 HZO.SC.I................ 2.44 x TDA + 9
SVO.RC.I.............................. 2.9 x TDA + 8.7 SOC.SC.I................ 1.76 x TDA + 0.36
HZO.RC.I.............................. 0.72 x TDA + 8.74 HCS.SC.I................ 0.38 x V + 0.88
--------------------------------------------------------------------------------------------------------------------------------------------------------
* TDA is the total display area of the case, as measured in the ARI Standard 1200-2006, Appendix D.
** V is the volume of the case, as measured in ARI Standard 1200-2006, Appendix C.
In the August 2008 NOPR, DOE identified seven issues on which is
was particularly interested in receiving comments and views of
interested parties: Light-emitting diode (LED) price projections, base
case efficiency trends, operating temperature ranges, offset factors
for smaller equipment, extension of standards developed for the 15
primary classes to the remaining 23 secondary classes, standards for
hybrid cases and wedges, and standard levels. 73 FR 50134. After the
publication of the August 2008 NOPR, DOE received written comments on
these and other issues. DOE also held a public meeting in Washington,
DC, on September 23, 2008, to hear oral comments on and solicit
information relevant to the proposed rule. The August 2008 NOPR
included additional background information on the history of this
rulemaking. 73 FR 50076-77.
III. General Discussion
A. Test Procedures
On December 8, 2006, DOE published a final rule (the December 2006
final rule) in which it adopted American National Standards Institute
(ANSI)/Air-Conditioning and Refrigeration Institute (ARI) Standard
1200-2006, ``Performance Rating of Commercial Refrigerated Display
Merchandisers and Storage Cabinets,'' as the DOE test procedure for
this equipment.\4\ 71 FR 71340, 71369-70; 10 CFR 431.63-431.64. ARI
Standard 1200-2006 contains rating temperature specifications of 38
[deg]F (2 [deg]F) for commercial refrigerators and
refrigerator compartments, 0 [deg]F (2 [deg]F) for
commercial freezers and freezer compartments, and -5 [deg]F (2 [deg]F) for commercial ice-cream freezers. The standard also
requires performance tests to be conducted according to the ANSI/
American Society of Heating, Refrigerating, and Air-Conditioning
Engineers (ASHRAE) Standard 72-2005, ``Method of Testing Commercial
Refrigerators and Freezers.'' In the test procedure final rule, DOE
also adopted a -15 [deg]F (2 [deg]F) rating temperature for
commercial ice-cream freezers. 71 FR 71370. In addition, DOE adopted
ANSI/Association of Home Appliance Manufacturers (AHAM) Standard HRF-1-
2004, ``Energy, Performance and Capacity of Household Refrigerators,
Refrigerator-Freezers and Freezers,'' for determining compartment
volumes for this equipment. 71 FR 71369-70.
---------------------------------------------------------------------------
\4\ 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
two trade associations to represent the interests of cooling,
heating, and commercial refrigeration equipment manufacturers. The
merged association became AHRI on January 1, 2008.
---------------------------------------------------------------------------
B. Technological Feasibility
1. General
As stated above, any standards that DOE establishes for commercial
refrigeration equipment must be technologically feasible. (42 U.S.C.
6295(o)(2)(A) and (o)(3)(B); 42 U.S.C. 6316(e)(1)) 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. ``Technologies incorporated in commercial 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 August 2008 NOPR. (See chapter 4 of the final rule TSD
accompanying this notice.) All the evaluated technologies have been
used (or are being used) in commercially available products or working
prototypes. Therefore, DOE has determined that all of the efficiency
levels evaluated in this notice are technologically feasible.
2. Maximum Technologically Feasible Levels
As required by EPCA (42 U.S.C. 6295(p)(2) and 42 U.S.C. 6316(e)(1))
in developing the August 2008 NOPR, DOE identified the energy use
levels that
[[Page 1097]]
would achieve the maximum reductions in energy use that are
technologically feasible (max-tech levels) for commercial refrigeration
equipment. 73 FR at 50077-78. (See NOPR TSD chapter 5.) DOE received
comments indicating that LED efficacy had improved since the August
2008 NOPR. DOE also received comments regarding the LED lighting
configurations assumed in the engineering analysis for various
equipment types. This caused the max-tech levels proposed in the August
2008 NOPR to change for equipment classes with lighting. In general,
the max-tech levels for open equipment classes decreased and the max-
tech levels for closed cases increased from the max-tech levels
proposed in the August 2008 NOPR. For today's final rule, the max-tech
levels for all classes are the levels provided in Table III-1.
Table III-1--``Max-Tech'' Energy Use Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equipment class ``Max-tech'' level (kWh/day) Equipment class ``Max-tech'' level (kWh/day)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M.............................. 0.74 x TDA + 4.07 VCT.RC.I................ 0.66 x TDA + 3.05
SVO.RC.M.............................. 0.76 x TDA + 3.18 HCT.RC.M................ 0.16 x TDA + 0.13
HZO.RC.M.............................. 0.35 x TDA + 2.88 HCT.RC.L................ 0.34 x TDA + 0.26
VOP.RC.L.............................. 2.27 x TDA + 6.85 HCT.RC.I................ 0.4 x TDA + 0.31
HZO.RC.L.............................. 0.57 x TDA + 6.88 VCS.RC.M................ 0.11 x V + 0.26
VCT.RC.M.............................. 0.22 x TDA + 1.95 VCS.RC.L................ 0.23 x V + 0.54
VCT.RC.L.............................. 0.56 x TDA + 2.61 VCS.RC.I................ 0.27 x V + 0.63
SOC.RC.M.............................. 0.4 x TDA + 0.11 HCS.RC.M................ 0.11 x V + 0.26
VOP.SC.M.............................. 1.65 x TDA + 4.71 HCS.RC.L................ 0.23 x V + 0.54
SVO.SC.M.............................. 1.65 x TDA + 4.59 HCS.RC.I................ 0.27 x V + 0.63
HZO.SC.M.............................. 0.77 x TDA + 5.55 SOC.RC.L................ 0.84 x TDA + 0.22
HZO.SC.L.............................. 1.92 x TDA + 7.08 SOC.RC.I................ 0.99 x TDA + 0.26
VCT.SC.I.............................. 0.67 x TDA + 3.29 VOP.SC.L................ 4.14 x TDA + 11.82
VCS.SC.I.............................. 0.38 x V + 0.88 VOP.SC.I................ 5.26 x TDA + 15.02
HCT.SC.I.............................. 0.56 x TDA + 0.43 SVO.SC.L................ 4.15 x TDA + 11.51
SVO.RC.L.............................. 2.27 x TDA + 6.85 SVO.SC.I................ 5.27 x TDA + 14.63
VOP.RC.I.............................. 2.89 x TDA + 8.7 HZO.SC.I................ 2.44 x TDA + 9.
SVO.RC.I.............................. 2.89 x TDA + 8.7 SOC.SC.I................ 1.38 x TDA + 0.36
HZO.RC.I.............................. 0.72 x TDA + 8.74 HCS.SC.I................ 0.38 x V + 0.88
--------------------------------------------------------------------------------------------------------------------------------------------------------
C. Energy Savings
DOE forecasted energy savings in its national energy savings (NES)
analysis, through the use of an NES spreadsheet tool, as discussed in
the August 2008 NOPR. 73 FR at 50078, 50101-04, 50121.
One of the criteria that governs DOE's adoption of standards for
commercial refrigeration equipment is that the standard must result in
``significant conservation of energy.'' (42 U.S.C. 6295(o)(3)(B) and 42
U.S.C. 6316(e)(1)) While EPCA does not define the term ``significant,''
a U.S. Court of Appeals, in Natural Resources Defense Council v.
Herrington, 768 F.2d 1355, 1373 (DC Cir. 1985), indicated that Congress
intended ``significant'' energy savings in this context to be savings
that were not ``genuinely trivial.'' DOE's estimates of the energy
savings for energy conservation standards at each of the trial standard
levels (TSLs) in today's rule indicate that the energy savings each
would achieve are nontrivial. Therefore, DOE considers these savings
``significant'' within the meaning of section 325 of EPCA.
D. Economic Justification
1. Specific Criteria
As noted earlier, EPCA provides seven factors to evaluate in
determining whether an energy conservation standard for commercial
refrigeration equipment is economically justified. (42 U.S.C.
6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1)) The following sections
discuss how DOE has addressed each of those seven factors in this
rulemaking.
a. Economic Impact on Commercial Customers and Manufacturers
DOE considered the economic impact of the new commercial
refrigeration equipment standards on commercial customers and
manufacturers. For customers, DOE measured the economic impact as the
change in installed cost and life-cycle operating costs, i.e., the LCC.
(See sections IV.E and VI.C.1.a, and chapter 8 of the TSD accompanying
this notice.) DOE investigated the impacts on manufacturers through the
manufacturer impact analysis (MIA). (See sections IV.I and VI.C.2, and
chapter 13 of the TSD accompanying this notice.) The economic impact on
commercial customers and manufacturers is discussed in detail in the
August 2008 NOPR. 73 FR at 50078-79, 50095-50100, 50104-07, 50013-16,
50117-21, 50130-31.
b. Life-Cycle Costs
DOE considered life-cycle costs of commercial refrigeration
equipment, as discussed in the August 2008 NOPR. 73 FR at 50078-79,
50095-50100, 50104, 50013-16, 50117-18. 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
consumers would expect to achieve due to the standards.
c. Energy Savings
Although significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard, EPCA also
requires DOE, in determining the economic justification of a proposed
standard, to consider the total projected energy savings that are
expected to result directly from the standard. (42 U.S.C.
6295(o)(2)(B)(i)(III) and 42 U.S.C. 6316(e)(1)) As in the August 2008
NOPR, 73 FR at 50078, 50101-04, 50121, for today's final rule DOE used
the NES spreadsheet results in its consideration of total projected
savings that are directly attributable to the standard levels DOE
considered.
d. Lessening of Utility or Performance of Equipment
In selecting today's standard levels, DOE sought to avoid new
standards for commercial refrigeration equipment that would lessen the
utility or performance of that equipment. (42 U.S.C.
6295(o)(2)(B)(i)(IV) and 42 U.S.C. 6316(e)(1)) 73 FR at 50079, 50088-
89, 50123.
[[Page 1098]]
e. Impact of Any Lessening of Competition
DOE considers any lessening of competition that is likely to result
from standards. Accordingly, as discussed in the August 2008 NOPR, 73
FR at 50079, 50123, DOE requested that the Attorney General transmit to
the Secretary a written determination of the impact, if any, 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. 6295(o)(2)(B)(i)(V) and (B)(ii) and 42 U.S.C. 6316(e)(1))
To assist the Attorney General in making such a determination, DOE
provided the Department of Justice (DOJ) with copies of the August 2008
proposed rule and the TSD for review. (DOJ, No. 37 at pp. 1-2) The
Attorney General's response is discussed in section VI.C.5 below, and
is reprinted at the end of this rule.\5\
---------------------------------------------------------------------------
\5\ A notation in the form ``DOJ, No. 37 at pp. 1-2'' identifies
a written comment that DOE has received and has included in the
docket of this rulemaking. This particular notation refers to (1) a
comment submitted by the Department of Justice (DOJ), (2) in
document number 37 in the docket of this rulemaking, and (3)
appearing on pages 1 and 2 of document number 37.
---------------------------------------------------------------------------
f. Need of the Nation To Conserve Energy
In considering standards for commercial refrigeration equipment,
the Secretary must consider the need of the Nation to conserve energy.
(42 U.S.C. 6295(o)(2)(B)(i)(VI) and 42 U.S.C. 6316(e)(1)) The Secretary
recognizes that energy conservation benefits the Nation in several
important ways. The non-monetary benefits of the standards are likely
to 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. 73 FR 50074,
50079, 50108, 50123-26, 50132.
g. Other Factors
EPCA directs the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)
and 42 U.S.C. 6316(e)(1)) In adopting today's standard, DOE considered
the LCC impacts on the commercial refrigeration equipment of
independent, small grocery/convenience store businesses. Compared to
the impact of standards on the overall market for commercial
refrigeration equipment, the impact of standards on these businesses
might be disproportionate because these businesses experience both
higher discount rates and lack of access to national account equipment
purchases. 73 FR 50079, 50104, 50117-18.
2. Rebuttable Presumption
Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable
presumption that an energy conservation standard is economically
justified if the additional cost to the consumer of a product that
meets the standard level is less than three times the value of the
first-year energy (and as applicable water) savings resulting from the
standard, as calculated under the applicable DOE test procedure. (42
U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(e)(1)) DOE's LCC and
payback period (PBP) analyses generate values that calculate the
payback period for consumers of potential energy conservation
standards, which includes, but is not limited to, the three-year
payback period contemplated under the rebuttable presumption test
discussed above. However, DOE routinely conducts a full economic
analysis that considers the full range of impacts, including those to
the consumer, manufacturer, Nation, and environment, as required under
42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1). The results of
this analysis serve as the basis for DOE to definitively evaluate the
economic justification for a potential standard level (thereby
supporting or rebutting the results of any preliminary determination of
economic justification).
IV. Methodology and Discussion of Comments on Methodology
DOE used several analytical tools that it developed previously and
adapted for use in this rulemaking. One is a spreadsheet that
calculates LCC and PBP. Another tool calculates national energy savings
and national NPV. DOE also used the Government Regulatory Impact Model
(GRIM), along with other methods, in its MIA. Finally, DOE developed an
approach using the National Energy Modeling System (NEMS) to estimate
impacts of energy efficiency standards for commercial refrigeration
equipment on electric utilities and the environment. The TSD appendices
discuss each of these analytical tools in detail. 73 FR 50079-108.
As a basis for this final rule, DOE has continued to use the
spreadsheets and approaches explained in the August 2008 NOPR. DOE used
the same general methodology as applied in the August 2008 NOPR, but
revised some of the assumptions and inputs for the final rule in
response to stakeholder comments. 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 August
2008 NOPR and chapter 3 of the NOPR TSD.) These include equipment
definitions, equipment classes, manufacturers, quantities and types of
equipment sold and offered for sale, retail market trends, and
regulatory and nonregulatory programs.
1. Definitions Related to Commercial Refrigeration Equipment
a. Air-Curtain Angle Definition
For equipment without doors, an air curtain divides the
refrigerated compartment from the ambient space. DOE proposed the
following definition of air-curtain angle in the August 2008 NOPR that
is consistent with the industry-approved standards: ``Air-curtain angle
means: (1) For equipment without doors and without a discharge air
grille or discharge air honeycomb, the angle between a vertical line
extended down from the highest point on the manufacturer's recommended
load limit line and the load limit line itself, when the equipment is
viewed in cross-section; and (2) For all other equipment without doors,
the angle formed between a vertical line and the straight line drawn by
connecting the point at the inside edge of the discharge air opening
with the point at the inside edge of the return air opening, when the
equipment is viewed in cross-section.'' 73 FR 50080; 50135. DOE did not
receive any additional comments on the definition of air-curtain angle
in response to the August 2008 NOPR; thus, DOE is adopting these
definitions as proposed.
b. Door Angle Definition
The door orientation affects the energy consumption of equipment
with doors. This equipment can be broadly categorized by the angle of
the door. In the August 2008 NOPR, DOE proposed the following
definition of door angle: ``(1) For equipment with flat doors, the
angle between a vertical line and the
[[Page 1099]]
line formed by the plane of the door, when the equipment is viewed in
cross-section; and (2) For equipment with curved doors, the angle
formed between a vertical line and the straight line drawn by
connecting the top and bottom points where the display area glass joins
the cabinet, when the equipment is viewed in cross-section.'' 73 FR
50080; 50135. DOE did not receive any additional comments on the
definition of door angle in response to the August 2008 NOPR; thus, DOE
is adopting the definition as proposed.
c. Ice-Cream Freezer Definition
During the NOPR public meeting, interested parties expressed
concern about the definition of an ``ice-cream freezer'' as used in
this rulemaking. Hussman stated that using the term ``ice cream'' to
refer to a temperature range might be confusing because ice cream is
also a product. (Hussman, Public Meeting Transcript, No. 27 at p. 15)
\6\ Southern Store Fixtures expressed a similar concern, adding that
other types of frozen items, such as frozen juice, may be displayed in
ice-cream type cases. (Southern Store Fixtures, Public Meeting
Transcript, No. 27 at p. 18)
---------------------------------------------------------------------------
\6\ A notation in the form ``Hussman, Public Meeting Transcript,
No. 27 at p. 15'' identifies an oral comment that DOE received
during the September 23, 2008, NOPR public meeting. This comment was
recorded in the public meeting transcript in the docket for this
rulemaking (Docket No. EE-2006-STD-0126), maintained in the Resource
Room of the Building Technologies Program. This particular notation
refers to a comment (1) made during the public meeting by Hussman;
(2) recorded in document number 27, which is the public meeting
transcript filed in the docket of this rulemaking; and (3) appearing
on page 15 of document number 27.
---------------------------------------------------------------------------
As described in the July 2007 ANOPR, the EPCA provision that
required this rulemaking identifies specifically the categories ``ice-
cream freezers,'' ``self-contained commercial refrigerators, freezers,
and refrigerator-freezers without doors,'' and ``remote condensing
commercial refrigerators, freezers, and refrigerator-freezers.'' (42
U.S.C. 6313(c)(4)(A), added by EPACT 2005, section 136(c)) Because the
term ``ice-cream freezers'' was specified in EPCA, the term ``ice
cream'' is appropriate to describe that specific equipment category in
this rulemaking, and DOE is therefore maintaining the use of that term
in the rulemaking. Also, see section IV.A.2 of this final rule.
d. Equipment Configuration Definitions
The configuration of commercial refrigeration equipment affects its
energy consumption and the equipment classes into which this equipment
is divided. In the August 2008 NOPR, DOE proposed five definitions of
equipment configurations, shown in Table IV-1. 73 FR 50081; 50135.
Table IV-1--Equipment Configuration Definitions
----------------------------------------------------------------------------------------------------------------
Equipment family Description
----------------------------------------------------------------------------------------------------------------
Vertical Open (VOP)......................................... Equipment without doors and an air-curtain angle
>=0 degrees and <10 degrees from the vertical.
Semivertical Open (SVO)..................................... Equipment without doors and an air-curtain angle
>=10 degrees and <80 degrees from the vertical.
Horizontal Open (HZO)....................................... Equipment without doors and an air-curtain angle
>=80 degrees from the vertical.
Vertical Closed (VC)........................................ Equipment with hinged or sliding doors and a door
angle <45 degrees.
Horizontal Closed (HC)...................................... Equipment with hinged or sliding doors and a door
angle >=45 degrees.
----------------------------------------------------------------------------------------------------------------
DOE did not receive any additional comments on the definitions of
the five configurations; thus, DOE is adopting these definitions as
proposed.
e. Hybrid and Wedge Case Definitions
As stated in the August 2008 NOPR, certain types of equipment meet
the definition of ``commercial refrigeration equipment'' (Section
136(a)(3) of EPACT 2005), but do not fall directly into any of the 38
equipment classes defined in the market and technology assessment.
Among these types are hybrid cases and wedge cases; DOE proposed
definitions for these in the August 2008 NOPR. Because DOE did not
receive any additional comments on the definitions of ``commercial
hybrid refrigerators, freezers, and refrigerator-freezers'' or on the
definition of ``wedge case,'' DOE is adopting these definitions as
proposed in section 431.62.
2. Equipment Classes
Commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers can be divided into various equipment classes
categorized largely by physical characteristics that affect energy
efficiency. Some of these characteristics delineate the categories of
equipment covered by this rulemaking.\7\ Most affect the merchandise
that the equipment can be used to display and how the customer can
access that merchandise. Key physical characteristics that affect
energy efficiency are the operating temperature, the presence or
absence of doors (i.e., closed cases or open cases), the type of doors
used (i.e., transparent or solid), the angle of the door or air-curtain
(i.e., horizontal, semivertical, or vertical), and the type of
condensing unit (i.e., remote or self-contained). As discussed in the
August 2008 NOPR, 73 FR 50080-83, DOE is adopting equipment classes in
this rulemaking by: (1) Dividing commercial refrigerators, commercial
freezers, and commercial refrigerator-freezers into equipment families;
(2) subdividing these families based on condensing unit configurations
and rating temperature designations; and (3) identifying the resulting
classes that are within each of the three equipment categories covered
by this rulemaking. Because DOE did not receive any comments in
response to the presentation of equipment classes in the August 2008
NOPR, DOE is adopting the equipment classes as proposed without further
modification. Table IV-2 presents the equipment classes covered under
this rulemaking, organized by the three equipment categories.
---------------------------------------------------------------------------
\7\ ``Commercial refrigerators, commercial freezers, and
commercial refrigerator-freezers'' is a type of covered commercial
equipment. For purposes of discussion only in this proceeding, DOE
uses the term ``categories'' to designate groupings of ``commercial
refrigeration equipment.'' The categories of equipment are: Self-
contained commercial refrigerators, commercial freezers, and
commercial refrigerator-freezers without doors; remote condensing
commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers; and commercial ice-cream freezers. DOE will
analyze specific equipment classes that fall within these general
categories and set appropriate standards.
[[Page 1100]]
Table IV-2--Commercial Refrigeration Equipment Classes by Category
----------------------------------------------------------------------------------------------------------------
Operating
Equipment category Condensing unit Equipment family temperature Equipment class
configuration ([deg]F) designation
----------------------------------------------------------------------------------------------------------------
Remote Condensing Commercial Remote.............. Vertical Open....... >=32 VOP.RC.M
Refrigerators, Commercial <32 VOP.RC.L
Freezers, and Commercial
Refrigerator-Freezers.
Semivertical Open... >=32 SVO.RC.M
<32 SVO.RC.L
Horizontal Open..... >=32 HZO.RC.M
<32 HZO.RC.L
Vertical Closed >=32 VCT.RC.M
Transparent. <32 VCT.RC.L
Horizontal Closed >=32 HCT.RC.M
Transparent. <32 HCT.RC.L
Vertical Closed >=32 VCS.RC.M
Solid. <32 VCS.RC.L
Horizontal Closed >=32 HCS.RC.M
Solid. <32 HCS.RC.L
Service Over Counter >=32 SOC.RC.M
<32 SOC.RC.L
Self-Contained Commercial Self-Contained...... Vertical Open....... >=32 VOP.SC.M
Refrigerators, Commercial <32 VOP.SC.L
Freezers, and Commercial
Refrigerator-Freezers without
Doors.
Semivertical Open... >=32 SVO.SC.M
<32 SVO.SC.L
Horizontal Open..... >=32 HZO.SC.M
<32 HZO.SC.L
Commercial Ice-Cream Freezers.... Remote.............. Vertical Open....... * <=-5 VOP.RC.I
Semivertical Open... ........... SVO.RC.I
Horizontal Open..... ........... HZO.RC.I
Vertical Closed ........... VCT.RC.I
Transparent.
Horizontal Closed ........... HCT.RC.I
Transparent.
Vertical Closed ........... VCS.RC.I
Solid.
Horizontal Closed ........... HCS.RC.I
Solid.
Service Over Counter ........... SOC.RC.I
Self-Contained...... Vertical Open....... ........... VOP.SC.I
Semivertical Open... ........... SVO.SC.I
Horizontal Open..... ........... HZO.SC.I
Vertical Closed ........... VCT.SC.I
Transparent.
Horizontal Closed ........... HCT.SC.I
Transparent.
Vertical Closed ........... VCS.SC.I
Solid.
Horizontal Closed ........... HCS.SC.I
Solid.
Service Over Counter ........... SOC.SC.I
----------------------------------------------------------------------------------------------------------------
* Ice-cream freezer is defined in 10 CFR 431.62 as a commercial freezer designed to operate at or below -5
[deg]F (-21 [deg]C) and that the manufacturer designs, markets, or intends for the storing, displaying, or
dispensing of ice cream.
B. Engineering Analysis
The engineering analysis develops cost-efficiency relationships to
show the manufacturing costs of achieving increased efficiency. As
discussed in the August 2008 NOPR, DOE used the design-option approach,
involving consultation with outside experts, review of publicly
available cost and performance information, and modeling of equipment
cost and energy consumption. 73 FR 50083-50093. Chapter 5 of the NOPR
TSD contained detailed discussion of the engineering analysis
methodology. In response to the August 2008 NOPR, DOE received a number
of comments on the engineering analysis methodology. These comments,
and DOE's response, are detailed in the following paragraphs.
1. Approach
For the NOPR, DOE adopted a design-options approach for the
engineering analysis. The methodology DOE used to perform the design-
option analysis is described in detail in chapter 5 of the TSD. DOE
used industry-supplied data, which were developed using an efficiency-
level approach, to validate DOE data. DOE received no further comments
on the design-options approach and, as a result, made no changes to
this methodology for the final rule.
2. Analytical Models
a. Cost Model
In the engineering analysis, DOE establishes the relationship
between manufacturer production cost and energy consumption for the
commercial refrigeration equipment covered in this rulemaking. In
determining this relationship, DOE estimated the incremental
manufacturer production costs associated with technological changes
that reduce the energy consumption of the baseline models (i.e., design
options).
During the NOPR public meeting, the American Council for an Energy-
Efficient Economy (ACEEE) stated that DOE's method of estimating
manufacturer production costs based on a snapshot analysis of available
engineering options is flawed, because historical data for other
building technologies show that incremental costs of complying with
standards have been much lower than DOE estimated. ACEEE attributed
this to manufacturers
[[Page 1101]]
redesigning their processes to meet new energy conservation standards.
(ACEEE, Public Meeting Transcript, No. 27 at p. 28) AHRI disagreed with
ACEEE and cited the residential central air-conditioner rulemaking as
an example of where the actual cost of equipment was much higher than
DOE estimated. (AHRI, Public Meeting Transcript, No. 27 at p. 29)
However, ACEEE responded that this was because commodity prices
increased dramatically for that equipment and that once this was
accounted for, the observed price increase in baseline residential air-
conditioner units was 2 percent lower than DOE's estimate. (ACEEE,
Public Meeting Transcript, No. 27 at p. 30) Appliance Standards
Awareness Project (ASAP) added that a retrospective analysis would be
useful for helping DOE evaluate its model for predicting costs. (ASAP,
Public Meeting Transcript, No. 27 at p. 31) ACEEE also commented that
DOE's model for assessing the cost and value of energy conservation
standards is flawed, because the model fails to account for
manufacturer learning curves. Over time, the price of most equipment
drops as more units are produced, regardless of the efficiency
standards placed on them. Therefore, DOE's assumption that greater
efficiency standards will cause equipment prices to increase is not
valid. (ACEEE, No. 31 at p. 1) A comment submitted by representatives
of ACEEE, Appliance Standards Awareness Project, Alliance to Save
Energy, California Energy Commission, Natural Resources Defense
Council, Northeast Energy Efficiency Partnerships, Northwest Power and
Conservation Council, Pacific Gas and Electric Company, Sempra Energy
Utilities, and Southern California Edison (hereafter referred to as the
Joint Comment) agreed with ACEEE that DOE's engineering analysis
methodology should take manufacturer learning curves into account.
(Joint Comment, No. 34 at p. 6)
The cost-efficiency curves that DOE presented in the NOPR TSD
showed incremental costs of implementing design option changes above
the baseline. The cost-efficiency curves are not intended to capture
future economies of scale, or other related cost reductions that may or
may not result from increased cumulative production over time. DOE
acknowledges that manufacturing efficiency evolves over time, but notes
that earlier trends do not necessarily reflect future trends. DOE has
insufficient data to project final minimized unit costs of newer
technologies. DOE believes that thorough and rigorous manufacturing
cost analysis based on actual equipment at all efficiency levels
represents the most effective and appropriate way to estimate current
and near-term incremental manufacturing costs. Therefore, DOE has used
available information on existing design options in the cost-efficiency
analysis.
i. LED Price Projections
DOE estimates the economic impacts of the proposed standards based
on current costs of technologically feasible energy saving design
options used in commercial refrigeration equipment. One such
technology, which has been a focal point in this rulemaking, is solid-
state lighting (i.e., LEDs). For the ANOPR, DOE based LED lighting
costs on a retrofit case study, but revised its assumptions for the
NOPR after gathering information from LED chip and fixture
manufacturers. These changes caused the original equipment manufacturer
(OEM) cost (i.e., the cost to commercial refrigeration equipment
manufacturers) of LED fixtures to increase for both open refrigeration
cases and refrigeration cases with transparent doors. Based on these
revised costs, DOE tentatively rejected TSL 5 (i.e., the efficiency
level where LEDs were first implemented for most equipment classes)
because it was not economically feasible.
However, DOE conducted a sensitivity analysis for the NOPR to gauge
the effect of expected LED price reductions. That analysis estimated
NPV and LCC values for equipment classes if projected LED prices were
used in DOE's analysis. DOE's Multi-Year Program Plan was used to
estimate the reduction in LED chip price by 2012.\8\ The sensitivity
analysis used an estimated reduction in LED chip price of 80 percent by
2012, which represented a 50-percent reduction in overall LED system
cost, assuming the costs of the power supply and LED fixtures did not
change significantly from the values used in the engineering analysis.
DOE recognized that if these projected reductions were to be realized
or exceeded, the economic impacts of this standard could change
significantly, possibly making higher TSLs economically justified.
Therefore, in the NOPR, DOE requested comment on all aspects of the LED
issue, specifically soliciting any information or data that could
increase confidence in the price projections.
---------------------------------------------------------------------------
\8\ U.S. Department of Energy, Solid-State Lighting Research and
Development, Multi-Year Program Plan FY'09-FY'14. This document was
prepared under the direction of a Technical Committee from the Next
Generation Lighting Initiative Alliance (NGLIA). Information about
NGLIA and its members is available at http://www.nglia.org.
---------------------------------------------------------------------------
DOE received several comments. ASAP, Natural Resources Defense
Council (NRDC), Earthjustice, and the Joint Comment all expressed
support for the use of DOE LED price projections. They stated that the
projections are sufficiently justified and would be a more adequate
basis for the standard than the assumption that LED prices will remain
constant at 2007 levels. (ASAP, No. 27 at p. 100; NRDC, Public Meeting
Transcript, No. 27 at p. 105; Earthjustice, Public Meeting Transcript,
No. 27 at p. 106; Joint Comment, No. 34 at p. 2) Pacific Gas and
Electric Company, Southern California Edison, and Sempra Energy
Utilities (Southern California Gas and San Diego Gas and Electric
Company) (hereafter the California Utilities Joint Comment) suggested
that the DOE projections might be too conservative. (California
Utilities Joint Comment, No. 41 at p. 3) ACEEE agreed, attributing this
underestimation to the exclusion of scale-dependent factors. ACEEE
stated that as LED production scales up, there will be greater price
reductions and increased quality in terms of reproducibility. (ACEEE,
No. 31 at p. 7 and Public Meeting Transcript, No. 27 at p. 111) As
evidence of the validity of DOE LED cost projections, the California
Utilities Joint Comment stated that LED prices have already dropped
rapidly, rendering DOE analyses based on 2007 prices obsolete. It
suggested that the price of LED lighting for use in refrigeration has
already fallen by roughly 10 percent since 2007. (California Utilities
Joint Comment, No. 41 at p. 13) The California Utilities Joint Comment
also stated that LED prices will continue to drop after 2012, a fact
that should be considered in the NPV analyses. (California Utilities
Joint Comment, No. 41 at p. 8)
For today's final rule, DOE updated the LED costs to represent the
current cost of LEDs. DOE did not receive any data providing a greater
level of confidence that LED price reductions would occur. However, LED
costs have decreased and the costs used in the NOPR engineering
analysis no longer represent the current cost of LEDs. While
considerable information is available that suggests LED prices are
likely to decline by at least as much as DOE's sensitivity analysis
assumed, DOE is not using this information as the basis of its analysis
due to a lack of certainty about the timing and success of LED research
and product development. See section V.A.2. a for more detail on the
updated LED lighting assumptions.
[[Page 1102]]
ii. Material Price Projections
As discussed in the August 2008 NOPR, DOE performed a sensitivity
analysis to explore the effects of future LED fixture prices on
commercial refrigeration equipment prices in the engineering analysis.
During the NOPR public meeting, AHRI commented that if DOE were to
include LED price projections in the technical analyses, equivalent
actions should be taken for other materials that also have shown recent
price variability (i.e., refrigerants). (AHRI, Public Meeting
Transcript, No. 27 at p. 102) AHRI believes commodity prices are likely
to change significantly, which would affect equipment costs and change
efficiency trends. AHRI cited the potential change in costs of
hydrofluorocarbon refrigerants (HFCs) if pending legislation capping
those refrigerants is passed. (AHRI, No. 33 at p. 3) True Manufacturing
Company (True) added that the industry is already using cheaper, less
efficient substitute materials to produce heat transfer devices in
response to rising copper prices. (True, Public Meeting Transcript, No.
27 at p. 104)
As stated above, DOE did not use LED price projections in the final
rule due to a lack of certainty about the timing and extent to which
the projections would be realized. Similarly, DOE also did not include
material price projections in the final rule analysis.
b. Energy Consumption Model
The energy consumption model estimates the daily energy consumption
of commercial refrigeration equipment at various performance levels
using a design-options approach. The model is specific to the
categories of equipment covered under this rulemaking, but is
sufficiently generalized to model the energy consumption of all covered
equipment classes. For a given equipment class, the model estimates the
daily energy consumption for the baseline and the energy consumption of
several levels of performance above the baseline. The model is used to
calculate each performance level separately. For the NOPR, DOE updated
its radiation load calculations by revising its assumptions for the
view factor and changed its calculation method for infiltration load by
replacing defrost melt-water with infiltrated air. 73 FR 50086. No
comments were received in response to these changes. Therefore, DOE
maintained these revised calculation methodologies for the final rule.
3. Equipment Classes Analyzed
For the final rule, DOE did not make any changes to the equipment
classes directly analyzed in the NOPR engineering analysis. Table IV-3
shows the 15 equipment classes DOE directly analyzed.
Table IV--3 Equipment Classes Directly Analyzed in the Engineering
Analysis
------------------------------------------------------------------------
Equipment class Description
-----------------------------------------------------------------------
VOP.RC.M................... Vertical Refrigerator without Doors with
a Remote Condensing Unit, Medium
Temperature.
VOP.RC.L................... Vertical Freezer without Doors with a
Remote Condensing Unit, Low Temperature.
SVO.RC.M................... Semivertical Refrigerator without Doors
with a Remote Condensing Unit, Medium
Temperature.
HZO.RC.M................... Horizontal Refrigerator without Doors
with a Remote Condensing Unit, Medium
Temperature.
HZO.RC.L................... Horizontal Freezer without Doors with a
Remote Condensing Unit, Low Temperature.
VCT.RC.M................... Vertical Refrigerator with Transparent
Doors with a Remote Condensing Unit,
Medium Temperature.
VCT.RC.L................... Vertical Freezer with Transparent Doors
with a Remote Condensing Unit, Low
Temperature.
SOC.RC.M................... Service Over Counter Refrigerator with a
Remote Condensing Unit, Medium
Temperature.
VOP.SC.M................... Vertical Refrigerator without Doors with
a Self-Contained Condensing Unit, Medium
Temperature.
SVO.SC.M................... Semivertical Refrigerator without Doors
with a Self-Contained Condensing Unit,
Medium Temperature.
HZO.SC.M................... Horizontal Refrigerator without Doors
with a Self-Contained Condensing Unit,
Medium Temperature.
HZO.SC.L................... Horizontal Freezer without Doors with a
Self-Contained Condensing Unit, Low
Temperature.
VCT.SC.I................... Vertical Ice-Cream Freezer with
Transparent Doors with a Self-Contained
Condensing Unit, Ice-Cream Temperature.
VCS.SC.I................... Vertical Ice-Cream Freezer with Solid
Doors with a Self-Contained Condensing
Unit, Ice-Cream Temperature.
HCT.SC.I................... Horizontal Ice-Cream Freezer with
Transparent Doors with a Self-Contained
Condensing Unit, Ice-Cream Temperature.
------------------------------------------------------------------------
4. Wedge Cases
In the August 2008 NOPR, DOE considered remote condensing and self-
contained wedge cases as covered equipment.\9\ DOE proposed that the
calculated daily energy consumption (CDEC) or total daily energy
consumption (TDEC) be measured according to the ANSI/ASHRAE Standard
72-2005 test procedure.\10\ DOE also proposed that the maximum daily
energy consumption (MDEC) for each model shall be the amount derived by
incorporating into the standards equation for the appropriate equipment
class a value for the TDA that is the product of: (1) The vertical
height of the air curtain or glass (in a transparent door), and (2) the
largest overall width of the case when viewed from the front. 73 FR
50113. In the NOPR, DOE sought comment regarding appropriate standard
levels for wedge cases, but did not receive any comments on this
specific proposal.
---------------------------------------------------------------------------
\9\ If a wedge case does not include a refrigeration component
and simply serves as a miter transition piece between two other
cases, then it does not meet the definition of commercial
refrigeration equipment, and is not covered under this rulemaking.
\10\ In the August 2008 NOPR, the test procedure cited was ANSI/
ASHRAE Standard 72-2005. However, the test procedure DOE adopted
into section 431.64 of 10 CFR Part 431 is ARI Standard 1200-2006,
which specifically references ANSI/ASHRAE Standard 72-2005 as the
method of testing commercial refrigeration equipment. 71 FR 71356
DOE notes that ARI Standard 1200-2006 would give identical test
results for the measurement of energy consumption as ANSI/ASHRAE
Standard 72-2005. Therefore, for today's final rule, DOE is
referencing ARI Standard 1200-2006 for the measurement of CDEC and
TDEC of wedge cases.
---------------------------------------------------------------------------
Hussman, Hill Phoenix, and AHRI commented that wedge cases should
be excluded from this rulemaking because they are niche products that
do not represent a significant part of the commercial refrigeration
industry. (Hussman, No. 42 at p. 2; Hill Phoenix, No. 32 at p. 6; AHRI,
No. 33 at p. 5) Hill Phoenix further states that most supermarkets and
grocery stores do not use wedge cases at all, and those that do will
only use a few within a store because they are much more expensive per
linear foot than a standard case. (Hill Phoenix, Public Meeting
Transcript, No. 27 at p. 18) Hussman further states that wedge cases
use less than 0.5 percent of the total energy consumed by the
supermarket industry and represent only 1.5 percent of the cases
shipped. (Hussman, No. 42 at p. 2) DOE acknowledges that wedge cases
are niche equipment and do not represent a significant market share in
the commercial refrigeration equipment
[[Page 1103]]
industry. However, market share is not a basis for rejecting an
equipment category from consideration in the rulemaking. Therefore, DOE
concludes that wedge cases are covered in this rulemaking.
Hill Phoenix and AHRI also commented that wedge cases should be
excluded from this rulemaking because there are no test procedures in
place to test wedges since ARI Standard 1200-2006 excludes wedges from
its scope of coverage. (Hill Phoenix, No. 32 at p. 2; AHRI, No. 33 at
p. 5) As stated in the July 2007 ANOPR, EPCA directs DOE to set
standards for commercial refrigeration equipment (i.e., the three
categories of equipment identified above). Any equipment that meets the
EPCA definition of a ``commercial refrigerator, freezer, or
refrigerator-freezer'' and falls under one of these three categories
will be covered by this rulemaking. In the December 2006 final rule,
DOE incorporated by reference certain sections of ARI Standard 1200-
2006 as the test procedure for commercial refrigeration equipment, but
did not reference section 2.2, which provides exclusions for certain
equipment such as wedge cases.\11\ The equipment excluded in this
section of ARI Standard 1200-2006 will only be excluded from this
rulemaking if they do not meet the EPACT 2005 definition of a
``commercial refrigerator, freezer, or refrigerator-freezer.'' \12\ 72
FR 41169 DOE believes that the EPACT 2005 definition of a ``commercial
refrigerator, freezer, or refrigerator-freezer'' is sufficiently broad
that it includes wedge cases. Therefore, DOE has concluded that wedge
cases are properly covered in this rulemaking.
---------------------------------------------------------------------------
\11\ ARI Standard 1200-2006 refers to wedge cases as ``miter
transition display merchandisers used as a corner section between
two refrigerated display merchandisers.''
\12\ ``(9)(A) The term `commercial refrigerator, freezer, and
refrigerator-freezer' means refrigeration equipment that--
(i) Is not a consumer product (as defined in section 321of EPCA
[42 U.S.C. 6291(1)]);
(ii) Is not designed and marketed exclusively for medical,
scientific, or research purposes;
(iii) Operates at a chilled, frozen, combination chilled and
frozen, or variable temperature;
(iv) Displays or stores merchandise and other perishable
materials horizontally, semivertically, or vertically;
(v) Has transparent or solid doors, sliding or hinged doors, a
combination of hinged, sliding, transparent, or solid doors, or no
doors;
(vi) Is designed for pull-down temperature applications or
holding temperature applications; and
(vii) Is connected to a self-contained condensing unit or to a
remote condensing unit.'' (42 U.S.C. 6311(9)(A))
---------------------------------------------------------------------------
Hussman, Hill Phoenix, and AHRI also commented that wedge cases
should be excluded from this rulemaking because they do not function
effectively and cannot be tested as a stand-alone merchandiser since
they require straight cases of the same model on either side. This
configuration makes accurate performance testing of wedges nearly
impossible and no specific testing guidelines for wedges exist within
ANSI/ASHRAE Standard 72-2005 or ANSI/ARI Standard 1200-6006. (Hussman,
No. 42 at p. 2; Hill Phoenix, No. 32 at p. 6; AHRI, No. 33 at p. 5) DOE
acknowledges that there is no specific guidance in the ANSI/ASHRAE
Standard 72-2005 or ARI Standard 1200-2006 test procedures that
addresses the proper operation of wedge cases. However, DOE believes
that wedge cases are not significantly different from normal display
cases used in between other display cases (i.e., cases within a display
case line-up) in terms of operation and the ability to be tested. A
wedge case and a normal case within a display case line-up both have
display cases adjacent to them in normal operation and do not have end
panels installed on their sides. DOE expects that wedge cases and cases
within a display case line-up should be tested in the same manner under
the test procedure.
Hussman and Hill Phoenix also commented that wedge cases should be
excluded from this rulemaking because the TDA for inside wedges
approaches zero. Therefore, standards for such cases are not meaningful
because the TDA in the standards equation is zero. (Hussman, Public
Meeting Transcript, No. 27 at p. 16; Hill Phoenix, Public Meeting
Transcript, No. 27 at p. 19) As stated above, DOE proposed language in
the August 2008 NOPR to specifically address the TDA issue of wedge
cases. DOE proposed that for remote condensing and self-contained wedge
cases, the CDEC or TDEC shall be measured according to the ANSI/ASHRAE
Standard 72-2005 Test Procedure. DOE also proposed that the MDEC for
each model shall be the amount derived by incorporating into the
standards equation for the appropriate equipment class a value for the
TDA that is the product of: (1) The vertical height of the air curtain
or glass (in a transparent door), and (2) the largest overall width of
the case, when viewed from the front.10 73 FR 50113. (See
section VI.A.1.) This procedure is conservative because it allows for
the widest horizontal dimension of the display case to be used in
determining TDA. That is, using this procedure, the standards for a
wedge case would be less stringent than a normal display case, in the
same equipment class, of equal refrigerated volume.
If a manufacturer finds that meeting the standard for wedge cases
would cause hardship, inequity, or unfair distribution of burdens, the
manufacturer may petition OHA for exception relief or exemption from
the standard pursuant to OHA's authority under section 504 of the DOE
Organization Act (42 U.S.C. 7194), as implemented at subpart B of 10
CFR part 1003. OHA has the authority to grant such relief on a case-by-
case basis if it determines that a manufacturer has demonstrated that
meeting the standard would cause hardship, inequity, or unfair
distribution of burdens.
5. Ice-Cream Freezers--Temperature Range
In the test procedure final rule for commercial refrigeration
equipment, DOE established the definition of ice-cream freezer as ``a
commercial freezer that is designed to operate at or below -5 [deg]F (-
21 [deg]C) and that the manufacturer designs, markets, or intends for
the storing, displaying, or dispensing of ice cream.'' 71 FR 71369-70.
DOE incorporated the test procedure into its regulations in 10 CFR
431.62. Under this definition, unless equipment is designed, marketed,
or intended specifically for the storage, display or dispensing of ice
cream, it would not be considered an ice-cream freezer. For example,
multi-purpose commercial freezers manufactured for storing and
displaying frozen foods in addition to ice cream and designed to
operate at or below -5 [deg]F (-21 [deg]C) would not meet this
definition. Thus, DOE would not treat them as commercial ice-cream
freezers in this rulemaking. However, any commercial freezer that is
specifically manufactured for storing, displaying, or dispensing ice
cream and is designed for normal operation at or below -5 [deg]F would
meet the definition. Other equipment that meet the definition include
freezers designed to operate considerably below -5 [deg]F and are
specifically designed for ice cream storage (e.g., ``hardening''
cabinets), as well as ice-cream dipping cabinets designed to operate
below -5 [deg]F. For the NOPR, DOE expanded the definition used to
categorize a unit's rating temperature by including a specific
operating temperature range for medium-temperature, low-temperature,
and ice-cream temperature applications.
Hill Phoenix and AHRI commented on the proposed temperature ranges
for low-temperature and ice-cream temperature freezers. Hill Phoenix,
in agreement with AHRI, stated that the operating range for low-
temperature
[[Page 1104]]
cases should be changed to less than 32 [deg]F and greater than -15
[deg]F, and the operating range for ice-cream temperature cases be
changed to less than or equal to -15 [deg]F. Hill Phoenix and AHRI
stated that freezers that operate below -15 [deg]F are constructed
differently than cases that operate in the -5 [deg]F to -10 [deg]F
range. Hill Phoenix stated that DOE's current temperature range
designations would require freezers that operate in the -5 [deg]F to -
10 [deg]F range to be rated at -15 [deg]F. (Hill Phoenix, No. 32 at p.
4; AHRI, No. 33 at p. 4)
As previously stated, ice-cream freezers are defined by the test
procedure, which states that an ice-cream freezer is ``a commercial
freezer that is designed to operate at or below -5 [deg]F (-21 [deg]C)
and that the manufacturer designs, markets, or intends for the storing,
displaying, or dispensing of ice cream.'' 71 FR 71369; 10 CFR 431.62.
Based on the comments from AHRI and Hill Phoenix discussed above, DOE
is modifying the operating temperature ranges used to define each type
of equipment from the temperature ranges that were used in the NOPR.
For today's final rule, DOE is organizing equipment classes based on
the three operating temperature ranges shown in Table IV-4. For today's
final rule, DOE will continue to classify equipment as medium
temperature (refrigerators), low temperature (freezers), or ice-cream
temperature (ice-cream freezers). Furthermore, DOE maintains the
required rating temperatures as specified in the test procedure final
rule: 38 [deg]F (2 [deg]F) for commercial refrigerators and
refrigerator compartments, 0 [deg]F (2 [deg]F) for
commercial freezers and freezer compartments, and -15 [deg]F (2 [deg]F) for commercial ice-cream freezers. 71 FR 71370.
Table IV-4--Rating Temperature Designations
----------------------------------------------------------------------------------------------------------------
Operating temperature Rating temperature
([deg]F) ([deg]F) Description
----------------------------------------------------------------------------------------------------------------
>=32 (M)..................... 38 Medium temperature (refrigerators).
<32 (L)...................... 0 Low temperature (freezers).
<=-5 (I) *................... -15 Ice-cream temperature (ice-cream freezers).
----------------------------------------------------------------------------------------------------------------
* Ice-cream freezer is defined in 10 CFR 431.62 as a commercial freezer that is designed to operate at or below
5 [deg]F (-21 [deg]C) and that the manufacturer designs, markets, or intends for the storing, displaying, or
dispensing of ice cream.
6. Special Application Temperature Cases
After the NOPR public meeting, DOE received comments on including
``application temperatures'' for commercial refrigeration equipment.
These are rating temperatures other than the standard rating
temperatures. Hill Phoenix stated that some refrigerated cases are
designed for and operate at medium temperature and hold foods with
temperature requirements that tend to range from 10 [deg]F to 20
[deg]F. These cases are not designed to operate at the rating
temperature of 0 [deg]F. Hill Phoenix also stated that the cases would
have to be redesigned to operate at the rating temperature, which would
cause them to consume more energy. Therefore, Hill Phoenix recommended
that this type of product be tested using the application temperature
at which the product is designed to perform, but be required to meet
the low-temperature standard. (Hill Phoenix, No. 32 at p. 4) AHRI
concurred with Hill Phoenix, recommending that any case designed
specifically to hold products at temperatures higher than the rating
temperature specified for that class be tested at its application
temperature and must meet the energy standards of that class. (AHRI,
No. 33 at p. 5) However, the Joint Comment cautioned that rating
specialty cases at application temperatures could create loopholes
allowing equipment to be tested at an application temperature different
from the temperature at which the equipment is designed to operate in
the field. (Joint Comment, No. 34 at p. 4)
In the test procedure final rule for commercial refrigeration
equipment, DOE adopted ARI Standard 1200-2006 as the DOE test procedure
for commercial refrigeration equipment. 71 FR 71340, 71369-70; 10 CFR
431.63-431.64. ANSI/ARI Standard 1200-2006 contains rating temperature
specifications of 38 [deg]F (2 [deg]F) for commercial
refrigerators and refrigerator compartments, and 0 [deg]F (2 [deg]F) for commercial freezers and freezer compartments. In
the test procedure final rule, DOE also adopted a -15 [deg]F (2 [deg]F) rating temperature for commercial ice-cream freezers.
71 FR 71370.
Requiring manufacturers to test special application cases at one of
the three specified standard rating temperatures (38 [deg]F, 0 [deg]F,
and - 15 [deg]F) instead of at their corresponding application
temperature could result in higher energy consumption for these cases
if they have to be redesigned for testing at the standard rating
temperature. However, DOE agrees with the Joint Comment that allowing
such special application cases to be tested at an application
temperature that is different from the temperature at which the
equipment is designed to operate in the field could create loopholes.
Therefore, DOE is maintaining the requirement that all equipment must
be tested at one of the three specified standard rating temperatures
adopted by DOE in the test procedure final rule. In the example from
Hill Phoenix, the equipment is classified as a medium-temperature unit,
but the equipment is designed to operate below 32 [deg]F and above -5
[deg]F, thus categorizing it as a low-temperature unit under today's
final rule. Because it is a low-temperature unit, it is required to be
tested at 0 [deg]F (2 [deg]F).
Any manufacturer that is unable to test such equipment at its
designated rating temperature must request a test procedure waiver from
DOE under the provisions described in 10 CFR 431.401. If the
manufacturer believes that meeting the standard would cause hardship,
inequity, or unfair distribution of burdens, it may petition OHA for
exception relief from the energy conservation standard pursuant to
OHA's authority under section 504 of the DOE Organization Act (42
U.S.C. 7194), as implemented at subpart B of 10 CFR part 1003. However,
the majority of equipment covered by this rulemaking can be tested
using the three specified rating temperatures provided in the test
procedure.
7. Coverage of Remote Condensing Units
In the framework document, ANOPR, and NOPR, DOE considered energy
conservation standards that covered only the refrigerated cases of
remote condensing commercial refrigeration equipment, and not the
remote condensing unit. DOE cited language in EPACT 2005's definitions
for ``self
[[Page 1105]]
contained condensing unit'' and ``remote condensing unit'' as a
justification for this approach. DOE believes that, by definition, the
remote condensing units that support remote condensing refrigeration
equipment are not considered an ``integral part'' of the refrigeration
equipment. (EPACT 2005, Section 136(a)(3)) As a result, DOE stated in
the August 2008 NOPR that remote condensing units would not be
considered in this rulemaking.
For the NOPR, the Joint Comment stated that the scope of this
rulemaking should not be limited to the refrigerated cabinets or
display cases of remote condensing systems. According to the Joint
Comment, regulating the remote condensing units supporting these
cabinets has a significant potential to save energy because these units
account for 90 percent of the total capacity of commercial
refrigeration equipment subject to this rulemaking. (Joint Comment, No.
34 at p. 7)
As stated in the framework document and the July 2007 ANOPR, DOE
does not believe that the remote condensing units of remote condensing
refrigeration equipment systems are considered part of the equipment to
which they are connected. EPCA defines a ``self-contained condensing
unit,'' in part, as an ``assembly of refrigerating components that is
an integral part of the refrigerated equipment * * *'' (42 U.S.C.
6311(9)(F), added by EPACT 2005, section 136(a)(3)). EPCA also defines
a ``remote condensing unit,'' in part, as an ``assembly of
refrigerating components that is remotely located from the refrigerated
equipment * * *'' (42 U.S.C. 6311(9)(E), added by EPACT 2005, section
136(a)(3)) The EPCA definition of remote condensing unit implies that
the remote condensing unit is not part of the refrigeration equipment
because it refers to the unit and the refrigeration equipment as
separate entities. A remote condensing unit functions as a supplement
to remote condensing refrigeration equipment, but is not an ``integral
part.'' Therefore, energy conservation standards for remote condensing
commercial refrigerators, commercial freezers, and commercial
refrigerator-freezers apply only to the refrigerated equipment (i.e.,
storage cabinets and display cases), but not to the remote condensing
units. For the final rule, DOE maintains that the energy conservation
standards set for remote condensing commercial refrigeration equipment
only apply to display cases, not to the remote condensing units.
However, DOE has the authority to classify industrial or commercial
equipment as covered under EPCA section 341(a) and (b), if
classification is ``necessary'' to improve the efficiency of industrial
equipment (which includes commercial refrigeration equipment) in order
to conserve energy. (42 U.S.C. 6312(a) and (b)) If DOE were to add
remote condensing units as covered equipment, DOE would undertake a
separate rulemaking process to consider standards for these products in
accordance with EPCA section 341(a) and (b).
8. Regulating Secondary Cooling Applications
In the framework document, DOE decided to exclude equipment
designed for secondary coolant applications. DOE's interpretation of
the EPACT 2005 definitions of ``commercial refrigerator, freezer, and
refrigerator-freezer'' was consistent with the ARI Standard 1200-2006,
which explicitly excludes secondary coolant applications. Following the
framework document, many interested parties, including ARI, Southern
Company, and EEI, agreed with the exclusion of secondary coolant
applications in this rule because of their insignificant presence in
the market and the complexity of modifying the test procedure to
accommodate them. ACEEE, on the other hand, commented that DOE should
have a broad scope of coverage and should, in general, cover as much as
possible in the rulemaking. 72 FR 41171.
After considering the framework comments, DOE decided to continue
to exclude secondary coolant applications from this rulemaking in the
July 2007 ANOPR. Following the ANOPR, commercial refrigeration
manufacturers expressed concerns that the exclusion of secondary
coolant systems could provide a loophole if customers purchased these
lower efficiency systems instead of regulated direct expansion
equipment. 73 FR 50106. For the NOPR, the Joint Comment restated that
DOE should consider secondary coolant applications in its analysis.
(Joint Comment, No. 34 at p. 8)
Section 340(9)(A)(vii) of EPCA (42 U.S.C. 6311(9)(A)(vii), added by
EPACT 2005, section 136(a)(3)) states that the terms commercial
refrigerator, freezer, and refrigerator-freezer refer to equipment that
is connected to a self-contained condensing unit or to a remote
condensing unit. DOE maintains that this language excludes secondary
coolant applications from coverage in this rulemaking because such
applications are not directly connected to self-contained or remote
condensing units. 72 FR 41171. For this reason, DOE is excluding
secondary coolant applications from this rule.
C. Markups To Determine Equipment Price
In the August 2008 NOPR, DOE explained how it developed the
distribution channel markups it used. 73 FR 50093-95. DOE did not
receive comments on these markups. However, DOE updated the
distribution channel markups by including 2008 sales tax data, and
updated the markups for commercial refrigeration equipment wholesalers
using 2008 financial data. DOE used these markups, along with sales
taxes, installation costs, and manufacturer selling prices (MSPs)
developed in the engineering analysis, to arrive at the final installed
equipment prices for baseline and higher efficiency commercial
refrigeration equipment. As explained in the August 2008 NOPR, 73 FR
50093-95, DOE defined three distribution channels for commercial
refrigeration equipment to describe how the equipment passes from the
manufacturer to the customer. DOE developed market shares by
distribution channel for remote condensing and self-contained
equipment. DOE retained the same distribution channel market shares
described in the August 2008 NOPR.
The new overall baseline and incremental markups for sales to
supermarkets within each distribution channel are shown in Table IV-5,
Table IV-6, Table IV-7, and Table IV-8. Chapter 6 of the TSD provides
additional details on markups.
Table IV-5--Baseline Markups by Distribution Channel Including Sales Tax for Self-Contained Equipment in
Supermarkets
----------------------------------------------------------------------------------------------------------------
Mechanical
contractor National account
Wholesaler (includes (manufacturer- Overall
wholesaler) direct)
----------------------------------------------------------------------------------------------------------------
Distributor(s) Markup................... 1.370 2.082 1.185 1.564
Sales Tax............................... 1.069 1.069 1.069 1.069
[[Page 1106]]
Overall Markup.......................... 1.465 2.226 1.267 1.672
----------------------------------------------------------------------------------------------------------------
Table IV-6--Baseline Markups by Distribution Channel Including Sales Tax for Remote Condensing Equipment in
Supermarkets
----------------------------------------------------------------------------------------------------------------
Mechanical
contractor National account
Wholesaler (includes (manufacturer- Overall
wholesaler) direct)
----------------------------------------------------------------------------------------------------------------
Distributor(s) Markup................... 1.370 2.082 1.185 1.347
Sales Tax............................... 1.069 1.069 1.069 1.069
Overall Markup.......................... 1.465 2.226 1.267 1.440
----------------------------------------------------------------------------------------------------------------
Table IV-7--Incremental Markups by Distribution Channel Including Sales Tax for Self-Contained Equipment in
Supermarkets
----------------------------------------------------------------------------------------------------------------
Mechanical
contractor National account
Wholesaler (includes (manufacturer- Overall
wholesaler) direct)
----------------------------------------------------------------------------------------------------------------
Distributor(s) Markup................... 1.114 1.370 1.057 1.186
Sales Tax............................... 1.069 1.069 1.069 1.069
Overall Markup.......................... 1.191 1.465 1.130 1.268
----------------------------------------------------------------------------------------------------------------
Table IV-8--Incremental Markups by Distribution Channel Including Sales Tax for Remote Condensing Equipment in
Supermarkets
----------------------------------------------------------------------------------------------------------------
Mechanical
contractor National account
Wholesaler (includes (manufacturer- Overall
wholesaler) direct)
----------------------------------------------------------------------------------------------------------------
Distributor(s) Markup................... 1.114 1.370 1.057 1.112
Sales Tax............................... 1.069 1.069 1.069 1.069
Overall Markup.......................... 1.191 1.465 1.130 1.189
----------------------------------------------------------------------------------------------------------------
D. Energy Use Characterization
The energy use characterization estimates the annual energy
consumption of commercial refrigeration equipment systems (including
remote condensing units). This estimate is used in the subsequent LCC
and PBP analyses (chapter 8 of the TSD) and NIA (chapter 11 of the
TSD). For the August 2008 NOPR, DOE estimated the energy consumption of
the 15 equipment classes analyzed in the engineering analysis (chapter
5 of the NOPR TSD) using the relevant test procedure. DOE then
validated these energy consumption estimates with annual whole-building
simulation modeling of selected equipment classes and efficiency
levels. 73 FR 50095. For the final rule analyses, DOE used the same
methodology to estimate the annual energy consumption of commercial
refrigeration systems presented in the August 2008 NOPR. See chapter 7
of the TSD for additional detail on the energy use characterization.
DOE assumed for the energy analysis 24-hour operation of case
lighting based on input received during the ANOPR. The California
Utilities Joint Comment stated that while many grocers in California
may shut down case lighting for 8 hours per day, national trends may be
closer to 24-hour operation. (California Utilities Joint Comment, No.
41 at p. 12) The California Utilities Joint Comment also indicated that
LED lighting may be more likely to be controlled on and off during the
operational day or dimmed based on motion sensors, and that this can be
done without the risk of moisture or startup problems common to
fluorescent fixtures. They further speculated that retailers would take
advantage of these LED characteristics through different operational
scenarios. (California Utilities Joint Comment, No. 41 at p. 12)
However, they provided no data to indicate the likelihood of a
different LED usage profile, and did not provide costs to implement
automatic or manual control to support this comment. While the
potential for additional lighting controls exists and LEDs may offer
additional controllability, the actual likelihood and costs of
implementation are unknown. As a result, DOE did not change its default
assumption of 24-hour operation based on these comments. Additional
detail on the energy use characterization can be found in chapter 7 of
the TSD.
E. Life-Cycle Cost and Payback Period Analyses
In response to the requirements of section 325(o)(2)(B)(i) of EPCA,
DOE conducted LCC and PBP analyses to evaluate the economic impacts of
possible new commercial refrigeration equipment standards on individual
customers. DOE used the same spreadsheet models to evaluate the LCC
[[Page 1107]]
and PBP as it used for the NOPR; however, DOE updated certain specific
inputs to the models. Details of the spreadsheet model and of all the
inputs to the LCC and PBP analyses are in TSD chapter 8. DOE conducted
the LCC and PBP analyses using a spreadsheet model developed in
Microsoft Excel for Windows 2003.
The LCC is the total cost for a unit of commercial refrigeration
equipment over the life of the equipment, including purchase and
installation expense and operating costs (energy expenditures and
maintenance). To compute the LCC, DOE summed the installed price of the
equipment and its lifetime operating costs discounted to the time of
purchase. The PBP is the change in purchase expense due to a given
energy conservation standard divided by the change in first-year
operating cost that results from the standard. DOE expresses PBP in
years. DOE measures the changes in LCC and in PBP associated with a
given energy use standard level relative to a base case equipment
energy use. The base case forecast reflects the market in the absence
of mandatory energy conservation standards.
The data inputs to the PBP calculation are the purchase expense
(otherwise known as the total installed customer cost or first cost)
and the annual operating costs for each selected design. The inputs to
the equipment purchase expense were the equipment price and the
installation cost, with appropriate markups. The inputs to the
operating costs were the annual energy consumption, the electricity
price, and the repair and maintenance costs. The PBP calculation uses
the same inputs as the LCC analysis but, because it is a simple
payback, the operating cost is for the year the standard takes effect,
assumed to be 2012. For each efficiency level analyzed, the LCC
analysis required input data for the total installed cost of the
equipment, the operating cost, and the discount rate.
Table IV-9 summarizes the inputs and key assumptions DOE used to
calculate the economic impacts of various energy consumption levels on
customers. Equipment price, installation cost, and baseline and
standard design selection affect the installed cost of the equipment.
Annual energy use, electricity costs, electricity price trends, and
repair and maintenance costs affect the operating cost. The effective
date of the standard, the discount rate, and the lifetime of equipment
affect the calculation of the present value of annual operating cost
savings from a proposed standard. Table IV-9 also shows how DOE
modified these inputs and key assumptions for the final rule, relative
to the August 2008 NOPR. The changes in the input data and the
discussion of the overall approach to the LCC analysis are provided in
chapter 8 of the TSD.
---------------------------------------------------------------------------
\13\ RS Means Company, Inc., 2006. Means Costworks 2006:
Facility Maintenance & Repair Cost Data. Kingston, Massachusetts.
Table IV-9--Summary of Inputs and Key Assumptions Used in the LCC and
PBP Analyses
------------------------------------------------------------------------
Changes for final
Input NOPR description rule
------------------------------------------------------------------------
Baseline Manufacturer Price charged by Data reflect updated
Selling Price. manufacturer to engineering
either a wholesaler analysis.
or large customer
for baseline
equipment.
Developed by using
industry-supplied
efficiency level
data and a design
option analysis.
Standard-Level Manufacturer Incremental change Data reflect updated
Selling Price Increases. in manufacturer engineering
selling price for analysis.
equipment at each
of the higher
efficiency standard
levels. Developed
by using a
combination of
energy consumption
level and design
option analyses.
Markups and Sales Tax....... Associated with Markups updated
converting the based on revised
manufacturer data on sales tax
selling price to a and wholesaler
customer price financial data.
(chapter 6 of TSD).
Developed based on
product
distribution
channels and sales
taxes.
Installation Price.......... Cost to the customer No change.
of installing the
equipment. This
includes labor,
overhead, and any
miscellaneous
materials and
parts. The total
installed cost
equals the customer
equipment price
plus the
installation price.
Installation cost
data provided by
industry comment.
Equipment Energy Consumption Site energy use Data reflect updated
associated with the engineering
use of commercial analysis for each
refrigeration efficiency level.
equipment, which
includes only the
use of electricity
by the equipment
itself. Taken from
engineering
analysis and
validated in energy
use
characterization.
(chapter 7 of the
TSD).
Electricity Prices.......... Established average No change.
commercial
electricity price
($/kWh) from EIA
data for 2007, in
2007$. DOE then
established scaling
factors for
commercial
refrigeration
equipment consumers
based on the 2003
Commercial Building
Energy Consumption
Survey.
Electricity Price Trends.... Used the AEO2007 Updated to AEO2008.
reference case to
forecast future
electricity prices
and extrapolated
prices to 2042.
Maintenance Costs........... Labor and material No change in
costs associated methodology;
with maintaining however, LED
the commercial fixture replacement
refrigeration costs reflect
equipment (e.g., updated engineering
cleaning heat analysis costs by
exchanger coils, equipment class.
checking
refrigerant charge
levels, lamp
replacement).
Estimated from data
in RS Means
Facilities
Maintenance and
Repair Cost
Data.\13\ Also
considered lighting
types and
configurations for
the refrigeration
equipment.
[[Page 1108]]
Repair Costs................ Labor and material No change in
costs associated methodology from
with repairing or NOPR. Repair costs
replacing reflect estimates
components that of individual
have failed. component life and
Estimated based on cost to replace.
replacement Repair costs
frequencies and increase with
costs for key increasing
components. component costs.
Equipment Lifetime.......... Age at which the No change.
commercial
refrigeration
equipment is
retired from
service. Used an
average lifetime of
10 years for large
grocery and multi-
line retailers and
an average lifetime
of 15 years for
small grocers and
convenience stores.
Discount Rate............... Computed by Updated based on
estimating the cost data available in
of capital for the 2008 version of
companies that the Damodaran Web
purchase site.
refrigeration
equipment using
business financial
data from the
Damodaran Online
database.
Rebound Effect.............. A rebound effect was No change.
not taken into
account in the LCC
analysis.
------------------------------------------------------------------------
The changes in the input data and the discussion of the overall
approach to the LCC analysis are provided in chapter 8 of the TSD.
In response to the NOPR, DOE received comments on two key issues
affecting the LCC analysis: electricity price forecasts and lighting
maintenance costs. Regarding electricity price forecasts, ACEEE asked
DOE to confirm whether the Energy Information Administration (EIA)
electricity price forecasts take into account well-documented
regulatory-based changes in electricity prices and are not just based
on responses to fuel cost forecasts. (ACEEE, Public Meeting Transcript,
No. 27 at p. 82) In response, DOE notes that the EIA electricity price
forecasts are developed through NEMS modeling and rely on a
comprehensive series of supply- and demand-based modules integrated to
capture the market dynamics for various energy sources, including oil,
coal, and natural gas. These models also capture a wide range of
consumption purposes, including such events as changes in the price and
supplies of fossil fuels, developments in electricity markets, likely
improvements in technology, and the impact of economic growth and
various other regulatory impacts that affect market electricity prices.
NEMS is regularly used to provide analyses to Congress and DOE. DOE
believes that NEMS does attempt to capture many known regulatory
changes.
The Joint Comment stated that DOE should use forecasts for
electricity prices other than the Annual Energy Outlook (AEO), and that
electricity price mitigation effects of the proposed standard must be
documented. (Joint Comment, No. 34 at p. 6) This comment addresses both
the LCC and NIA analyses. While DOE considers AEO2008 reference case
forecasts in its central case fuel price scenario, DOE reviewed LCC and
PBP results based on both the AEO2008 high price and low price
electricity forecasts and discusses the resulting differences in the
TSD. While the Joint Comment suggests that DOE consider other
forecasts, it does not point to specific forecast sources or provide
justification for the selection or weighting of one forecast over the
other. The AEO2008 high price forecast used in the commercial
refrigeration equipment analysis provides sufficient insight into
probable commercial electricity price variation based on existing data
and current regulatory schemes.
DOE considered reporting electricity price impacts but found that
the uncertainty of price projections, together with the fairly small
impact of the standards relative to total electricity demand, makes
these price changes highly uncertain. As a result, they should not be
weighed heavily in the decision about the standard level. Given the
current complexity of utility regulation in the United States (with
significant variances among states), it does not seem appropriate to
attempt to measure impacts on infrastructure costs and prices where
there is likely to be significant overlap.
DOE develops estimates for repair and maintenance costs for
commercial refrigeration equipment in the LCC analysis. In the August
2008 NOPR, DOE assumed that maintenance costs are constant and do not
vary with time. AHRI commented that the costs of maintenance do not
remain constant, as the cost of HFC refrigerants is expected to
increase by 300 percent to 400 percent over the next decade. (AHRI, No.
33 at p. 6) DOE recognizes that refrigerant costs may increase. For
remote condensing equipment, leakage during maintenance occurs
throughout the entire refrigeration system, including store
refrigeration piping and remote condensing units, and is expected to be
approximately the same for all standard levels since little refrigerant
is stored in the evaporator coils of remote-condensing commercial
refrigeration equipment. The law also requires that any HFC refrigerant
removed during maintenance must be captured (recovered), and in
supermarkets it is often reused within the supermarket chain. 69 FR
11946. Any loss of refrigerant during maintenance is essentially the
same at all standard levels analyzed, and therefore does not affect the
results of DOE's LCC or NPV analysis. In self-contained equipment, the
refrigeration system is sealed and little leakage is expected to occur
over the life of the equipment. Consequently, DOE did not revise the
maintenance costs from the NOPR to account for future changes in
refrigerant costs.
DOE also included in the maintenance costs the cost of necessary
lighting component replacements over the life of the commercial
refrigeration equipment. DOE received comments on the lighting
maintenance costs assumption for LED lamp fixtures. The California
Utilities Joint Comment cited evidence from recent assessments, as well
as the physical properties of LEDs, suggesting that 50,000 hours is
likely a conservative estimate. Fixtures may actually be replaced less
frequently than the 5.7 years assumed in the NOPR analysis. (California
Utilities Joint Comment, No. 41 at pp. 10-11) The comment noted that
the LED light output degrades over time and the amount of degradation
is a function of the junction temperature of the LED. Reducing the
junction temperature can result in increased time to failure.
While DOE agrees with this assessment, the brightness of a
particular LED chip and the corresponding heat rejection and
[[Page 1109]]
junction temperature are largely a function of power supplied by the
LED driver circuitry. As such, manufacturers of LED fixtures can trade
off brightness, total fixture cost, and design life for LED fixtures
designed for commercial refrigeration equipment applications. The LED
manufacturer equipment specification sheets that DOE examined for the
final rule provide for a 50,000-hour life for the known commercial
refrigeration equipment applications. Due to the recent availability of
LED fixtures for use with commercial refrigeration equipment, there are
few instances of installed LED light fixtures in this equipment
exceeding the 50,000-hour specification. Therefore, DOE did not modify
its LED fixture replacement cycle assumptions beyond the manufacturers'
estimated life.
DOE also received comments on using a rebuttable presumption
payback period to establish the economic justification of an energy
conservation standard level. Earthjustice commented that DOE does not
provide any rationale for why it did not use or does not plan to use
the rebuttable presumption payback period analysis to set the trial
standard level for these products. Earthjustice stated that Congress
specifically provided that once the rebuttable presumption payback
period is satisfied for a trial standard level, no further economic
justification would be necessary for DOE's selection of that TSL as the
final standard. (Earthjustice, Public Meeting Transcript, No. 27 at p.
88) The Joint Comment also stated that DOE should give greater
consideration to the rebuttable presumption payback period when
selecting an appropriate standard level, reflecting the intent of
Congress in 42 U.S.C. section 6295(o)(2)(B)(iii) that the highest
standard level with a 3-year payback constitutes the presumptive lowest
standard level that DOE must adopt. (Joint Comment, No. 34 at pp. 3-4)
DOE does consider both the rebuttable presumption payback criteria,
as well as a full analysis including all seven relevant statutory
criteria under 42 U.S.C. 6295(o)(2)(B)(i), when examining potential
standard levels. DOE believes that the commenters may be
misinterpreting the statutory provision in question. Earthjustice
presents one possible reading of an ambiguous provision (i.e., that DOE
need not look beyond the results of the rebuttable presumption
inquiry), but DOE believes that such an approach is neither required
nor appropriate, because it could ask the agency to ignore other
relevant information that would affect the selection of the most
stringent standard level that meets all applicable statutory criteria.
The commenter's interpretation would essentially restrict DOE from
being able to rebut the findings of the preliminary presumptive
analysis. However, the statute contains no such restriction, and such
an approach would hinder DOE's efforts to base its regulations on the
best available information.
Similarly, DOE believes that the Joint Comment misreads the statute
in calling for a level that meets the rebuttable presumption test to
serve as a minimum level when setting the final energy conservation
standard. To do so would not only eliminate the ``rebuttable'' aspect
of the presumption but would also lock in place a level that may not be
economically justified based on the full complement of statutory
criteria. DOE is already obligated under EPCA to select the most
stringent standard level that meets the applicable statutory criteria,
so there is no need to tie the same requirement to the rebuttable
presumption.
DOE also received a comment supporting its selection of commercial
refrigeration equipment lifetimes. For the NOPR, DOE determined the
lifetime of commercial refrigeration equipment by consulting industry
experts, other interested parties, and literature on equipment
lifetimes. The Joint Comment stated that DOE's assumptions in the NOPR
regarding product life are reasonable. (Joint Comment, No. 34 at p. 2)
Therefore, DOE has maintained the NOPR assumptions regarding product
life for the final rule.
F. Shipments Analysis
The shipments analysis develops future shipments for each class of
commercial refrigeration equipment based on current shipments and
equipment life assumptions, and takes into account the existing stock
and expected growth of buildings using commercial refrigeration
equipment. DOE received no comments on the shipments analysis or the
resulting shipments during the NOPR. Therefore, DOE used the same
shipments model for the final rule analysis as the NOPR.
G. National Impact Analysis
The national impact analysis (NIA) assesses future NES and the
national economic impacts of different efficiency levels. The analysis
measures economic impacts using the NPV metric (i.e., future amounts
discounted to the present) of total commercial customer costs, and
savings expected to result from new standards at specific efficiency
levels. For the final rule analysis, DOE used the same spreadsheet
model used in the NOPR to calculate the energy savings and the national
economic costs and savings from new standards, but with updates to
specific input data. 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 national energy savings and NPV using the
annual energy consumption and total installed cost data from the LCC
analysis and estimates of national shipments for each of the 15 primary
commercial refrigeration equipment classes. DOE forecasted the energy
savings from each TSL from 2012 through 2042. DOE forecasted the energy
cost savings, equipment costs, and NPV of benefits for all primary
commercial refrigeration equipment classes from 2012 through 2062. The
forecasts provided annual and cumulative values for all four output
parameters.
DOE calculated the NES by subtracting energy use under a standards
scenario from energy use in a base case (no new standards) scenario.
Energy use is reduced when a unit of commercial refrigeration equipment
in the base case efficiency distribution is replaced by a more
efficient piece of equipment. Energy savings for each equipment class
are the same national average values as calculated in the LCC and
payback period spreadsheet. However, these results are normalized on a
per-unit-length basis by equipment class and applied to the total
annual estimated shipments in terms of line-up length of all equipment
with the class. Table IV-10 summarizes key inputs to the NIA analysis
and the changes DOE made in the analysis for the final rule. Chapter 11
of the TSD provides additional information about the NIA spreadsheet.
[[Page 1110]]
Table IV-10--Summary of National Energy Savings and Net Present Value Inputs
----------------------------------------------------------------------------------------------------------------
Input data Description of NOPR analysis Changes for final rule
----------------------------------------------------------------------------------------------------------------
Shipments.......................... Annual shipments from shipments model for 15 No change.
equipment classes. Shipments model based on
projected growth in building stock using
commercial refrigeration equipment (new stock)
and annual replacements to stock based on an
equipment life. Equipment lifetime
distribution based on a 10-year average life
in large grocery and multi-line retail, and a
15-year average life in small grocery and
convenience stores (chapter 10, Shipments
Analysis).
Effective Date of Standard......... 2012........................................... No change.
Base Case Efficiencies............. Distribution of base case shipments by No change in methodology
efficiency level. to derive base case
shipments by efficiency
level.
Standards Case Efficiencies........ Distribution of shipments by efficiency level No change in methodology
for each base case and each standards case. to derive shipments by
Annual market shares by efficiency level efficiency level in each
remain constant over time for the base case standards case.
and each standards case.
Annual Energy Consumption per Annual weighted-average values are a function No change in methodology.
Linear Foot. of energy consumption level, which are Energy consumption
established in the engineering analysis estimates reflect the
(chapter 5 of the TSD). Converted to a per updated final rule
linear foot basis. engineering analysis.
Total Installed Cost per Linear Annual weighted-average values are a function No change in methodology.
Foot. of energy consumption level (chapter 8 of the Installed costs reflect
TSD). Converted to a per linear foot basis. the updated final rule
LCC.
Repair Cost per Linear Foot........ Annual weighted-average values are constant in No change in methodology.
real dollar terms for each energy consumption Repair costs reflect the
level (chapter 8 of the TSD). Converted to a updated final rule LCC
per linear foot basis. values.
Maintenance Cost per Linear Foot... Annual weighted-average value equals $160 in No change.
2007$ (chapter 8 of the TSD), plus lighting
maintenance cost. Converted to a per linear
foot basis.
Escalation of Electricity Prices... EIA AEO2007 forecasts (to 2030) and EIA AEO2008 forecasts (to
extrapolation for beyond 2030 (chapter 8 of 2030) and extrapolation
the TSD). for beyond 2030 (chapter
8 of the TSD).
Electricity Site-to-Source Conversion varies yearly and is generated by Conversion factor varies
Conversion. DOE/EIA's NEMS program (a time series yearly and is generated
conversion factor; includes electric by EIA's NEMS model.
generation, transmission, and distribution Includes the impact of
losses) based on AEO2007. electric generation,
transmission, and
distribution losses based
on AEO2008.
Discount Rate...................... 3 and 7 percent real........................... No change.
Present Year....................... Future costs are discounted to 2008............ No change
Rebound Effect..................... A rebound effect (due to changes in shipments No change.
resulting from standards) was not considered
in the NIA.
----------------------------------------------------------------------------------------------------------------
The modifications DOE made to the NES and NIA analyses for the
final rule primarily reflect updates to the same data sources used in
the NOPR, but not changes in methodology. In addition, the underlying
input data on equipment costs and energy savings by TSL are based on
the LCC analysis results as revised in the final rule.
For the final rule, DOE developed marginal site-source conversion
factors that relate the national electrical energy savings at the point
of use to the fuel savings at the power plant. These factors use the
NEMS model and the examination of the corresponding energy savings from
standards scenarios considered in DOE's utility analysis (chapter 14 of
the TSD). The conversion factors vary over time, due to projected
changes in electricity generation sources (i.e., the power plant types
projected to provide electricity to the country) and power plant
dispatch scenarios. DOE revised the stream of conversion factors based
on the final rule utility impacts analysis and using a version of NEMS
consistent with AEO2008. DOE also updated the electricity price
forecasts used in the NIA to reflect forecasts found in AEO2008
compared to AEO2007.
DOE did not receive information to support revising the shipments
analysis or the methodology used in the NIA to estimate future
shipments by efficiency level. DOE requested input on this methodology
or on additional data to estimate future shipments. True commented that
because so many different features and options can degrade a product's
efficiency, True cannot afford to test every permutation's efficiency.
Traditionally, therefore, True tests the most severe case, which
includes all the options, and makes sure it can exceed the standard. As
a result, the units shipped out are often more efficient than the
testing would indicate. (True, Public Meeting Transcript, No. 27 at p.
119) DOE acknowledges this comment, but did not receive sufficient
detail to address this concern in the final rule analysis for
individual commercial refrigeration equipment classes. Because the
distribution of efficiencies of all TSLs as well as the baseline would
be similarly affected by some customers removing specific energy
consuming options (e.g., shelf lighting) from their purchased products,
the impact of this particular issue on the potential national energy
savings of one TSL over another may be insignificant.
To discount future impacts, DOE used discount rates of both 7
percent and 3 percent, in accordance with the Office of Management and
Budget (OMB)'s guidelines (OMB Circular A-4, section E, Regulatory
Analysis (September 17, 2003)). ASAP commented that DOE leans too
heavily on the 7-percent discount rate, and that OMB has DOE looking at
both the 3-percent and 7-percent discount rates. ASAP stated that DOE
should be giving primacy to the lower discount rate, which is the
societal discount rate--the time value of the society as a whole.
(ASAP, Public Meeting Transcript, No. 27 at pp. 20-21 and p. 128) PG&E
stated that a 3-percent discount rate is used for the California Energy
Commission workshops on efficiency, and that it supports the 3-
[[Page 1111]]
percent rate for the Federal rulemaking. (PG&E, Public Meeting
Transcript, No. 27 at p. 131) The Joint Comment stated that DOE
improperly weighs the 7-percent discount rate more than the 3-percent
discount rate. The Joint Comment noted that DOE should use the 3-
percent discount rate because it is the required social discount rate
and because the actual weighted average cost of capital is lower than 7
percent. (Joint Comment, No. 34 at p. 6)
DOE reports and uses both 3-percent and 7-percent discount rates in
its analysis of net present value. OMB's guidance to Federal agencies
for developing regulatory analysis (OMB Circular A-4, September 17,
2003) \14\ references OMB Circular A-94 \15\ for the development of
discount rates for regulatory analysis. OMB Circular A-94 states that,
as a default position, constant-dollar benefit-cost analyses of
proposed investments and regulations should report net present value
and other outcomes determined using a real discount rate of 3 percent.
The 7-percent rate is an estimate of the average before-tax rate of
return to private capital in the U.S. economy. It is a broad measure
that reflects the returns to real estate and small business capital as
well as corporate capital. It approximates the opportunity cost of
capital, and it is the appropriate discount rate whenever the main
effect of a regulation is to displace or alter the use of capital in
the private sector. OMB A-94 states that regulatory analyses should
show the sensitivity of the discounted net present value and other
outcomes to variations in the discount rate. The importance of these
alternative calculations will depend on the specific economic
characteristics of the program under analysis. OMB A-4 notes that the
effects of regulation do not always fall exclusively or primarily on
the allocation of capital. When regulation primarily and directly
affects private consumption (e.g., through higher consumer prices for
goods and services), a lower discount rate is appropriate. The
alternative most often used is sometimes called the social rate of time
preference, or the rate at which society discounts future consumption
flows to their present value. To represent these cases, OMB recommends
using the rate the average saver uses to discount future consumption as
the measure of the social rate of time preference, approximating this
with the real rate of return on long-term Government debt (e.g., the
yield on Treasury notes minus the annual rate of change in the Consumer
Price Index), which has averaged about 3 percent on a pre-tax basis for
the last 30 years. For the commercial refrigeration equipment
rulemaking in particular, DOE notes that the purchasers of commercial
refrigeration equipment are indeed commercial businesses and not
``savers.'' Regarding the comment that the average cost of capital
calculated for businesses purchasing commercial refrigeration equipment
was less than 7 percent, DOE notes that the average cost of capital
calculated for the LCC analysis is the after-tax cost of capital. OMB
A-4 specifically notes that pre-tax rates of return better measure
society's gains from investment. This is because corporate capital, in
particular, pays an additional layer of taxation: The corporate income
tax. This tax requires corporate capital to earn a higher pre-tax rate
of return in order to provide investors with similar after-tax rates of
return compared with non-corporate investments. Based on the guidance
provided in OMB A-4, DOE considers both 3-percent and 7-percent
discount rates in the NIA analysis.
---------------------------------------------------------------------------
\14\ http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf.
\15\ http://www.whitehouse.gov/omb/circulars/a094/a094.html.
---------------------------------------------------------------------------
ASAP stated that discount rates should not be applied to quads
because a discount rate is a financial instrument and a quad is a
physical quantity. (ASAP, Public Meeting Transcript, No. 27 at p. 22)
DOE understands ASAP's concern about discounting of physical
quantities. Unlike economic factors that are discounted into the
future, physical quantities are not discounted because they do not
change over time. DOE reports the undiscounted energy savings in Table
VI-31 of today's final rule.
H. Life-Cycle Cost Sub-Group Analysis
In analyzing the potential impact of new or amended standards on
commercial customers, DOE evaluates the impact on identifiable groups
(i.e., sub-groups) of customers, such as different types of businesses
that may be disproportionately affected by a National standard level.
For this rulemaking, DOE identified independent small grocery and
convenience stores as a commercial refrigeration equipment customer
sub-group that could be disproportionately affected, and examined the
impact of proposed standards on this group. DOE determined the impact
on this commercial refrigeration equipment customer sub-group using the
LCC spreadsheet model. DOE conducted the LCC and PBP analyses for
commercial refrigeration equipment customers represented by the
subgroup. DOE did not receive comments on its identification of this
class of users as the key sub-group or on the assumptions applied to
those sub-groups. DOE relied on the same methodology outlined in the
NOPR for the final rule analysis. The results of DOE's LCC sub-group
analysis are summarized in section VI.C.2.e and described in detail in
chapter 12 of the TSD.
I. Manufacturer Impact Analysis
DOE performed a manufacturer impact analysis (MIA) to estimate the
financial impact of energy conservation standards on manufacturers of
commercial refrigeration equipment, and to assess the impact of such
standards on employment and manufacturing capacity. DOE conducted the
MIA for commercial refrigeration equipment in three phases. Phase 1,
Industry Profile, consisted of preparing an industry characterization,
including data on market share, sales volumes and trends, pricing,
employment, and financial structure. Phase 2, Industry Cash Flow
Analysis, focused on the industry as a whole. In this phase, DOE used
the GRIM to prepare an industry cash-flow analysis. Using publicly
available information developed in Phase 1, DOE adapted the GRIM's
generic structure to perform an analysis of commercial refrigeration
equipment energy conservation standards. In Phase 3, Sub-Group Impact
Analysis, DOE conducted interviews with manufacturers representing the
majority of domestic commercial refrigeration equipment sales. This
group included large and small manufacturers, providing a
representative cross-section of the industry. During these interviews,
DOE discussed engineering, manufacturing, procurement, and financial
topics specific to each company and obtained each manufacturer's view
of the industry. The interviews provided valuable information DOE used
to evaluate the impacts of an energy conservation standard on
manufacturer cash flows, manufacturing capacities, and employment
levels.
The GRIM inputs consist of the commercial refrigeration industry's
cost structure, shipments, and revenues. This includes information from
many of the analyses described above, such as manufacturing costs and
selling prices from the engineering analysis and shipments forecasts
from the NES.
The GRIM uses the manufacturer production costs in the engineering
analysis to calculate the MSPs for each equipment class at each TSL. By
multiplying the production costs by different sets of markups, DOE
derives the MSPs used to calculate industry
[[Page 1112]]
revenues. Following the NOPR, DOE revised its engineering cost curves
to derive new manufacturer production costs. DOE used these updated
production costs in the GRIM for the final rule.
The GRIM estimates manufacturer revenues based on total-unit-
shipment forecasts and the distribution of these shipments by
efficiency. Changes in the efficiency mix at each standard level are a
key driver of manufacturer finances. For the final rule analysis, DOE
used the total shipments and efficiency distribution found in the final
rule NES. For additional detail on the manufacturer impact analysis,
refer to chapter 13 of the TSD.
J. Utility Impact Analysis
The utility impact analysis estimates the effects of reduced energy
consumption due to improved equipment efficiency on the utility
industry. This analysis compares forecast results for a case comparable
to the AEO2008 reference case and forecast results for policy cases
incorporating each of the commercial refrigeration equipment TSLs.
DOE analyzed the effects of proposed standards on electric utility
industry generation capacity and fuel consumption using a variant of
EIA's NEMS. EIA uses NEMS to produce its AEO, a widely recognized
baseline energy forecast for the United States. DOE used a variant
known as NEMS-BT. The NEMS-BT is run similarly to the AEO2008 NEMS,
except that commercial refrigeration equipment 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. In response to the August 2008 NOPR, DOE did not receive
comments directly on the methodology used for the utility impact
analysis. DOE revised the final rule inputs to use the NEMS-BT
consistent with the AEO2008 and to use the NES impacts developed in the
commercial refrigeration equipment final rule analysis.
In the utility impact analysis, DOE 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. Chapter 14 of the
TSD provides details of the utility analysis methods and results.
K. Employment Impact Analysis
DOE considers direct and indirect employment impacts when
developing a standard. In this case, direct employment impacts are any
changes in the number of employees for, commercial refrigeration
equipment manufacturers, their suppliers, and related service firms.
Indirect impacts are those 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 commercial
refrigeration equipment. In this rulemaking, the MIA addresses direct
impacts (chapter 13 of the TSD), and the employment impact analysis
addresses indirect impacts (chapter 15 of the TSD).
Indirect employment impacts from commercial refrigeration equipment
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 electricity
(offset to some degree by the increased spending on maintenance and
repair), (2) reduced spending on new energy supply by the utility
industry, (3) increased spending on the purchase price of new
commercial refrigeration equipment, 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 used the same methodology described in the August 2008 NOPR to
estimate indirect national employment impacts using an input/output
model of the U.S. economy, called ImSET (Impact of Sector Energy
Technologies), which was developed by DOE's Building Technologies
Program. 73 FR 50072, 50107-108. The ImSET model estimates changes in
employment, industry output, and wage income in the overall U.S.
economy resulting from changes in expenditures in various economic
sectors. DOE estimated changes in expenditures using the NES
spreadsheet. ImSET then estimated the net national indirect employment
impacts of potential commercial refrigeration equipment efficiency
standards on employment by sector.
In response to the August 2008 NOPR, DOE received several comments
on the employment impact analysis. ASAP commented that the discussion
of the employment benefits resulting from the net increase in jobs
follows a pattern of DOE trivializing these benefits in the rulemakings
by stating that they are so small that they would be imperceptible in
national labor statistics and might be offset by other unanticipated
effects on employment. ASAP stated that it is important that DOE keep
performing the employment analysis given the cumulative impact of
possible DOE rulemakings over the next 4 years. (ASAP, Public Meeting
Transcript, No. 27 at p. 161)
The Joint Comment also stated that TSL 5 would create more jobs
than TSL 4, and that DOE cannot reject the difference as statistically
insignificant because it must consider the combined effect of all
rulemakings. (Joint Comment, No. 34 at p. 5) The Joint Comment further
stated that DOE should consider indirect job creation as a serious
factor weighing in favor of stronger standards. (Joint Comment, No. 34
at p. 5)
Earthjustice noted that both indirect and direct employment
benefits are shown to provide positive employment in the respective
employment and MIA analyses and that DOE should consider this in the
final rule. (Earthjustice, Public Meeting Transcript, No. 27 at p. 166)
DOE considers the employment impacts without quantifying the net
economic value of such impacts. DOE agrees that the indirect employment
analysis indicates that new energy conservation standards for
commercial refrigeration equipment could increase the demand for labor
in the economy and result in additional employment, a net benefit to
society that DOE considers in establishing standards for commercial
refrigeration equipment. Chapter 15 of the TSD describes and provides
results for the employment impact analysis.
L. Environmental Assessment
DOE has prepared an 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 standards being established in today's final rule. Specifically,
DOE estimated the reduction in total emissions of CO2 using
the NEMS-BT computer model. DOE calculated a range of estimates for
reduction in NOX emissions and mercury (Hg) emissions using
current power sector emission rates. However, the EA does not include
the estimated reduction in power sector impacts of sulfur dioxide
(SO2), because DOE has determined that any such reduction
resulting from an energy conservation standard would not affect the
overall level of SO2 emissions in the United States due to
the presence of national caps on SO2 emissions as addressed
below (see chapter 16 of the TSD).
The NEMS-BT is run similarly to the AEO2008 NEMS, except the energy
use is reduced by the amount of energy
[[Page 1113]]
saved due to the TSLs. DOE obtained the inputs of national energy
savings from the NIA spreadsheet model. For the EA, 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 for all power generation. Attaining this target,
however, is flexible among generators and is enforced through emissions
allowances and tradable permits. Because SO2 emissions
allowances have value, generators will almost certainly use them,
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
yearly 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). However, as
discussed in section VI.C.6, a Federal court has vacated these rules.
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 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. However, 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 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 August 2008 NOPR, ASAP stated that it was
important for DOE to consider the economic impact calculations for
carbon, noting that the economic savings are significant. In addition,
until the CRE and packaged terminal air conditioner and heat pump (PTAC
and PTHP) NOPRs, ASAP did not see that economic values for carbon
emissions savings were factored into the analysis in a way that could
affect decision making. (ASAP, Public Meeting Transcript, No. 27 at p.
172) On the other hand, AHRI believes DOE has no statutory obligation
to monetize CO2 benefits. (AHRI, Public Meeting Transcript,
No. 27 at p. 173)
AHRI further commented that if DOE decides to monetize
CO2 benefits, then it should account for CO2
emissions that will result from manufacturing more efficient products.
For example, DOE should consider the CO2 emissions resulting
from additional copper to be mined and incorporated into the finished
product. (AHRI, Public Meeting Transcript, No. 27 at p. 173) True also
commented on types of manufacturing processes that should be considered
in the emissions analysis. True stated that the most significant impact
of commercial refrigeration equipment on the environment is from
welding agents and refrigerants. True further explained with the global
warming potentials (GWPs) of some of these substances at 1,300, 1,500,
and 3,800, the impacts are astronomically greater than other impacts
the industry faces. (True, Public Meeting Transcript, No. 27 at p. 174)
On the contrary, ASAP emphasized that the congressional deadline of
December 31, 2008, means that ``paralysis by analysis'' is not an
option at this point in this rulemaking and that it is incumbent upon
AHRI to demonstrate that any proposed analysis changes would be
significant. (ASAP, Public Meeting Transcript, No. 27 at p. 173) ACEEE
commented that for buildings and the equipment used in them (not
specific for this class of equipment), the energy use during the
operating life is roughly 85 percent of the total lifecycle energy.
Also, the incremental energy change from increased use of a largely
recycled metals stock is likely have a small impact on this analysis.
(ACEEE, Public Meeting Transcript, No. 27 at p. 173)
Several interested parties provided comments on the economic value
of CO2 used in DOE's monetization of carbon emissions for
the August 2008 NOPR and the final rule for PTACs and PTHPs (73 FR
58772, October 7, 2008). ASAP stated that the low range for
monetization of carbon emission reductions should not be zero. (ASAP,
Public Meeting Transcript, No. 27 at p. 23) AHRI stated that DOE should
not speculate on the value of CO2 emissions because it has
no statutory obligation to do so and that any value DOE used would be
an estimate. There is no consensus on any single estimate of the value
of CO2 emissions. Therefore, DOE should not indulge in
speculation to determine a value when it has no statutory obligation to
do so. (AHRI, No. 33 at p. 6)
Earthjustice commented that the upper and lower bounds of the
values DOE uses for its carbon emissions are arbitrarily low.
(Earthjustice, No. 38 at pp. 7-14) Specifically, Earthjustice stated
that by using the value of the social cost of carbon (SCC) estimated in
Dr. Richard Tol's 2005 meta-analysis, DOE excluded critical damages and
made optimistic assumptions that bias the damage cost downwards.
(Earthjustice, No. 38 at p. 8) Earthjustice noted that Tol released an
update of his 2005 meta-analysis in September 2007, which reports an
increase in his peer-reviewed mean estimate of SCC from $14 to $20/ton
CO2 and from $43 to $71/ton carbon.\16\ Earthjustice also
asserted that the use of Tol's mean as an upper bound is inconsistent
with sound risk analysis and distributions of climate damage functions,
leading to systematic undervaluation of damages. (Earthjustice, No. 38
at p. 9) Lastly, Earthjustice noted that Tol's estimate relies
primarily on estimates that did not use the currently accepted climate
change discounting procedure of
[[Page 1114]]
declining discount rate over time, and it fails to recognize the
distinction between the ways in which scarcity affects the value of
normal goods and environmental goods. (Earthjustice, No. 38 at p. 11)
---------------------------------------------------------------------------
\16\ Tol, R.S.J. (2007) The social cost of carbon: trends,
outliers, and catastrophes. Research Unit Sustainability and Global
Change, Working Paper FNU-144, Hamburg University and Centre for
Marine and Atmospheric Science, Hamburg, Germany.
---------------------------------------------------------------------------
AHRI noted that Congress is now engaged in debating a possible cap
and trade program for the United States. The size of the allowance cap
first set by such legislation or by implementing regulations and the
pace of reduction of the emission allowances will largely determine the
unit price or value of CO2 emissions reductions. AHRI stated
that it would be an arbitrary decision on DOE's part to rely on
valuations identified in the Intergovernmental Panel on Climate Change
(IPCC) or valuations used in the European Union (EU) cap and trade
program when the United States has not yet set an emissions cap itself.
Further, AHRI stated that DOE should not allow evaluation of
environmental impacts to negate or render moot what has always been,
and should remain, the core analysis in appliance standards
rulemakings, i.e., consumer payback and life-cycle cost analyses.
(AHRI, No. 33 at p. 6) NRDC also stated that the cost of carbon
emissions will become an issue with California adopting a Climate
Program and the Regional Greenhouse Gas Initiative in the Northeast.
(NRDC, Public Meeting Transcript, No. 27 at p. 105)
Earthjustice's written comment states that DOE's monetization of
CO2 emissions should reflect the potential U.S. legislation
that would put a national cap on CO2 emissions. This
includes examining the effect of the standard in reducing allowance
prices and the benefit of reduced emissions in the NPV. This is
Earthjustice's primary suggested consideration for DOE; otherwise, DOE
should take into account existing regional CO2 caps when
monetizing CO2. Finally, the most basic consideration DOE
must make, according to Earthjustice, is to economically account for
the avoided environmental harm from CO2 emissions.
(Earthjustice, No. 38 at pp. 2-6)
The Joint Comment stated that DOE should incorporate the
monetization of carbon emission reductions in the life-cycle cost
analysis and the national impact analysis. The Joint Comment further
stated that DOE's exclusion of carbon monetization in the LCC and NIA
results in a systematic underestimation of benefits of new energy
conservation standards. (Joint Comment, No. 34 at p. 6) Earthjustice
stated that DOE does not account for the economic value of
CO2 emissions reductions resulting from efficiency standards
in any meaningful way. Although DOE has begun estimating a range of
values for carbon emissions, it then ignores these values when choosing
the new standard level. Earthjustice stated that DOE must address these
issues by (1) accounting for the value of emissions reductions
resulting from a standard in the economic analyses, the LCC, and NIA;
and (2) using reasonable assumptions and sources when determining the
value of carbon emission reductions because the current sources
evaluated are inadequate. (Earthjustice, No. 38 at p. 1) Specifically,
Earthjustice stated that DOE should quantify the effect of a
CO2 emission cap on energy prices in the LCC analysis.
(Earthjustice, No. 38 at p. 2)
DOE has made several additions to its monetization of environmental
emissions reductions in today's rule, which are discussed in section
VI.C.6. DOE has chosen to continue to report these benefits separately
from the net benefits of energy savings. Nothing in EPCA or in the
National Environmental Policy Act (NEPA) requires that the economic
value of emissions reduction be incorporated in the net present value
analysis of energy savings. Unlike energy savings, the economic value
of emissions reduction is not priced in the marketplace. However, DOE
will consider both values when weighing the benefits and burdens of
standards.
Although this rulemaking does not affect SO2 emissions,
there are markets for SO2 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 national SO2 emissions are
regulated by a cap and trade system, 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 commercial refrigeration
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. These savings would most
likely be outweighed by uncertainties in the marginal costs of
compliance with 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. DOE is weighing these values separately and is not including
them in the NPV analysis.
V. Discussion of Other Comments
Since DOE opened the docket for this rulemaking, it has received
more than 100 comments from a diverse set of parties, including
manufacturers and their representatives, trade associations,
wholesalers and distributors, energy conservation advocates, and
electric utilities. Section IV of this preamble discusses comments DOE
received on the analytic methodologies it used. Additional comments DOE
received in response to the August 2008 NOPR addressed the information
DOE used in its analyses, results of and inferences drawn from the
analyses, impacts of standards, the merits of the different TSLs and
standards options DOE considered, and other issues affecting adoption
of standards for commercial refrigeration equipment. DOE addresses
these comments in this section.
A. Information and Assumptions Used in Analyses
1. Market and Technology Assessment
a. Data Sources
DOE summarized its analysis for energy consumption in chapter 3 of
the NOPR TSD. Traulsen stated that there are problems with the use of
energy consumption data reported to government agencies because of
inaccurate data reporting. Traulsen cited several problems with U.S.
Environmental Protection Agency's (EPA's) ENERGY STAR database for
self-contained commercial solid-door food service refrigerators and
freezers, including equipment listed in the database that does not
conform to the ENERGY STAR specifications. Traulsen suggested that
sources such as these not be used in the technical analyses because of
the errors they contain. (Traulsen, No. 25 at p. 1)
The ENERGY STAR requirements for commercial solid door
refrigerators and freezers cover self-contained commercial
refrigerators, freezers, and refrigerator-freezers that have solid
doors, which are not covered in this commercial refrigeration equipment
rulemaking. In terms of equipment classes, there is no overlap between
the ENERGY STAR program and DOE's rulemaking on commercial
refrigeration
[[Page 1115]]
equipment, except for commercial ice-cream freezers. EPA's commercial
ice-cream freezer equipment class does not coincide with DOE's
commercial ice-cream freezer equipment class because they are defined
differently and tested at different rating temperatures. In addition,
DOE understands that Traulsen has a large market in the commercial
refrigeration industry for self-contained commercial refrigerator and
freezers with doors. However, these equipment classes are not covered
in this rulemaking. Also, DOE did not use energy consumption databases
from other government agencies such as EPA. Rather, DOE conducted its
own evaluation of energy consumption data for existing equipment from
major manufacturers and compiled a performance database. The primary
source of information for the database was equipment data sheets that
were publicly available on manufacturers' Web sites. From these data
sheets, equipment information such as total refrigeration load,
evaporator temperature, lighting power draw, defrost power draw, and
motor power draw allowed determination of calculated daily energy
consumption (CDEC) according to the DOE test procedure. See chapter 3
of the TSD for additional information on market performance data.
b. Beverage Merchandisers
In response to the NOPR, Coca-Cola submitted a comment questioning
the market share and shipment data in DOE's analysis. Coca-Cola stated
that its own purchases contradict DOE's figures. According to Coca-
Cola, vertical closed transparent, self-contained, medium temperature
(VCT.SC.M) equipment makes up the majority of Coca-Cola's purchases.
DOE's exclusion of this class accounts for the differences between
Coca-Cola's purchases and the number of units shipped that DOE reported
in the engineering analysis. (Coca-Cola, No. 21 at p. 1)
As explained in the July 2007 ANOPR, VCT.SC.M equipment is
currently covered by energy conservation standards established in EPCA.
72 FR 41176. Therefore, self-contained glass-front beverage
merchandisers (beverage coolers), which are included in the VCT.SC.M
equipment class, are not covered in this commercial refrigeration
equipment rulemaking. As a result, all the shipment and market share
data reported in the engineering analysis are valid for the classes of
commercial refrigeration equipment covered in this rulemaking.
2. Engineering Analysis
a. Design Options
In the NOPR, DOE reevaluated the list of design options remaining
after the ANOPR screening analysis. Based on public comments, DOE made
the following design option changes in the NOPR and did not receive any
further comment for the final rule: increasing insulation thickness as
a design option; revising anti-sweat heater power values for certain
equipment classes with glass doors; and revising assumptions made to
estimate changes in cost and efficiency for high-efficiency, single-
speed compressors used in self-contained equipment. 73 FR 50087.
However, there were certain design options for which DOE did receive
comments and that warranted changes for the final rule. Specifically,
LED cost and efficiency assumptions were updated.
For the NOPR, DOE could only identify LED luminaires on the market
for use in vertical refrigerated cases with transparent doors (i.e.,
the VCT equipment family). DOE used these LED luminaires as the basis
for LED lighting for open refrigerated cases, because DOE could not
identify LED luminaires for use in open refrigerated cases. However,
when DOE reexamined the current state of LED lighting for the final
rule, DOE identified LED luminaries on the market for use in open
refrigerated cases. DOE updated the LED lighting prices for open
refrigerated cases using these newly identified LED luminaires.
For the final rule, DOE also updated the LED prices for lighting
used in the VCT equipment families using the actual reduction in the
lumen-based price of LED chips reported in DOE's Multi-Year Program
Plan between 2007 and 2008. DOE's 2007 Multi-Year Program Plan reported
that the latest available OEM device price for LED chips was $35/
kilolumen.\17\ DOE's 2008 Multi-Year Program Plan reported that the
latest available OEM device price for LED chips was $25/kilolumen.\18\
This equates to a 29-percent reduction in lumen-based LED chip costs
from 2007-2008. For the final rule, DOE applied this 29-percent
reduction in lumen-based LED chip costs to the LED lighting for the VCT
equipment families, representing about a 9-percent reduction in LED
system costs, assuming the costs of the power supply and LED fixtures
did not change from the values used in the NOPR engineering analysis.
For additional detail regarding LED costs, see section IV.B.2.a.
---------------------------------------------------------------------------
\17\ U.S. Department of Energy, Solid-State Lighting Research
and Development, Multi-Year Program Plan FY08-FY13.
\18\ U.S. Department of Energy, Solid-State Lighting Research
and Development, Multi-Year Program Plan FY09-FY14.
---------------------------------------------------------------------------
In addition to expected price reductions, DOE received comments on
the unique performance advantages of LED systems following the NOPR.
Philips stated that LED systems are virtually maintenance-free. Without
maintenance costs, LED payback periods amount to roughly half of their
life expectancy. (Philips, No. 29 at pp. 1-6) Philips also claimed that
LED efficacy (lm/W) is expected to increase. Increases in efficacy
effectively reduce the operational costs of the system by allowing for
less energy consumption while maintaining output. (Philips, No. 29 at
p. 1)
As mentioned above, for today's final rule, DOE reexamined the LED
lighting assumptions that were used in the NOPR. DOE identified more
efficacious LED lighting options for use in both vertical refrigerated
cases with transparent doors and open refrigerated cases than the LED
lighting identified in the NOPR analysis. Based on the new LED lighting
options, DOE updated case lighting configurations for each equipment
class specific to LED lighting in the engineering analysis. For more
detail about the updated LED lighting performance assumptions, see
chapter 5 and appendix B of the TSD.
In addition to the life-cycle benefits afforded by LEDs, the
California Utilities Joint Comment stated that LED systems have a
higher degree of controllability, which gives the systems dimming, cold
start, and short cycling capabilities. (California Utilities Joint
Comment, No. 41 at p. 3) ASAP added that these features allow LED
systems to be turned off in situations in which fluorescents could not.
This equates to improved energy efficiency for commercial refrigeration
equipment that uses LED lighting. (ASAP, Public Meeting Transcript, No.
27 at p. 106)
The enhanced controllability of LED lighting can offer multiple
benefits over fluorescent lighting. Specifically, the ability to reduce
the operating time of LED lighting can lead to increased energy
efficiency for commercial refrigeration equipment. Therefore, in the
July 2007 ANOPR, DOE specifically requested public comment on using 24
hours as the case lighting operational hours. 72 FR 41187. In the
August 2008 NOPR, based on public comment, DOE determined that 24 hours
was an adequate assumption for case lighting operating hours regardless
of lighting type. 73 FR 50095. In addition, the test procedure DOE
adopted for commercial refrigeration equipment, ANSI/ARI Standard 1200-
2006, is a steady-state
[[Page 1116]]
test procedure, which is unable to capture significant energy savings
due to dimming controls or motion sensors. 71 FR 71370.
Following the NOPR, some manufacturers expressed concerns that
implementing LED lighting would reduce the quality of their equipment.
Specifically, they disagreed with the use of general white light LEDs
to develop a price specifically for LED lighting used in commercial
refrigeration equipment. True and Southern Store Fixtures stated that
the grocery store market will be most affected by the use of LED
lighting because certain food products, such as meat, dairy, deli, and
produce, have to have a special display color. (True, Public Meeting
Transcript, No. 27 at p. 111; Southern Store Fixtures, Public Meeting
Transcript, No. 27 at p. 108) Continental Refrigerator added that in
low-temperature applications, there is degradation in LED color
quality, requiring the technology to be developed further. (Continental
Refrigerator, No. 27 at p. 141) Southern Store Fixtures stated that
LEDs used in commercial refrigeration equipment are more expensive
because additional labor is required to test and sort the LEDs to meet
the industry's color quality requirements. (Southern Store Fixture,
Public Meeting Transcript, No. 27 at p. 108) Hill Phoenix agreed with
Southern Store Fixtures and added that repeatability and minimizing the
LED output variance also factors into this costly sorting process
(i.e., binning). (Hill Phoenix, Public Meeting Transcript, No. 27 at p.
109) PG&E estimated that this premium will remain constant independent
of any future price reductions. (PG&E, Public Meeting Transcript, No.
27 at p. 110) AHRI and Hill Phoenix suggested that prices for LED
systems used in commercial refrigeration equipment will not experience
the same price reductions that the rest of the LED industry will. Both
interested parties agreed that, because the commercial refrigeration
market for LEDs is small, there will not be a great demand for high-
quality LEDs, providing little incentive for LED suppliers to offer
low-price, high-quality LEDs. (AHRI, No. 33 at p. 2 and Hill Phoenix,
No. 32 at p. 2)
DOE acknowledges that a premium markup is applied to LED chips used
in commercial refrigeration applications due to the binning process.
This highly selective process requires LED chips to be chosen by hand
to ensure the consistency in color, temperature and light quality
demanded by commercial refrigeration equipment customers. As LED
technology advances (e.g., efficacy or price), the binning process for
quality remains the same, resulting in a constant markup on the price
of LED chips used for commercial refrigeration equipment. DOE accounted
for this premium in the pricing used for the NOPR analysis. In the
update of LED prices between 2007 and 2008 for the final rule, DOE
maintained the markup associated with the higher level of quality
needed for LEDs used in commercial refrigeration equipment.
DOE also received comments on the relative benefits of using LEDs
in low-temperature cases versus medium-temperature cases and in closed
cases versus open cases. The California Utilities Joint Comment stated
that LED luminous output is 10 percent higher at 0 [deg]F than at 25
[deg]F. (California Utilities Joint Comment, No. 41 at p. 11) Southern
Store Fixtures stated the heat from the LED fixture could be used to
control condensate on closed case doors. It suggested using a remote
power module for open cases. (Southern Store Fixtures, Public Meeting
Transcript, No. 27 at p. 98) Hill Phoenix also stated that it is still
a challenge for LED lighting in open cases to provide the quality and
quantity of light required by the food marketing industry. (Hill
Phoenix, No. 32 at p. 1)
As stated above, DOE was able to identify for the final rule LED
luminaires currently available on the market for both open refrigerated
cases and vertical refrigerated cases with transparent doors. The
benefits of using LEDs vary depending on the type of commercial
refrigerated equipment in which they are used. However, the luminaires
DOE identified for use in the final rule analysis were specifically
developed for individual types of commercial refrigeration equipment,
and the luminaire manufacturers reported that the performance and
quality of those luminaires were developed to meet the specific light
output requirements of the commercial refrigeration equipment
manufacturers that use them. Therefore, although the LED luminous
output may be about 10 percent higher for low-temperature cases
compared to medium-temperature cases, the luminaires chosen for the
analysis were actual products that commercial refrigeration equipment
manufacturers specified provide appropriate lighting levels. Likewise,
the power configuration used in the analysis for LED fixtures was also
based on actual products used in closed and open cases. However, DOE
did modify the LED lighting configurations assumed in the engineering
analysis based on comments received and lighting manufacturer
specification sheets. Most notably, for the final rule, DOE doubled the
shelf lighting for open cases compared to that assumed for the NOPR.
This increase in shelf lighting is needed to meet the lighting
requirements of open cases due to the directional nature of LED
lighting. See appendix B for more detail regarding the lighting
configurations assumed in the engineering analysis.
b. Baseline Models
DOE established baseline specifications for each equipment class
modeled in the engineering analysis by reviewing available manufacturer
data, selecting several representative units, and then aggregating the
physical characteristics of those units. This process created a unit
representative of commercial refrigeration equipment currently offered
for sale in each equipment class, with average characteristics for
physical parameters (e.g., volume, TDA), and minimum performance of
energy-consuming components (e.g., fans, lighting). In the NOPR
analysis, DOE made several revisions to the baseline specifications.
These changes include updates to baseline lighting, TDA calculations,
and baseline energy consumption. Appendix B of the NOPR TSD explained
in detail the changes made to the baseline design specifications
relative to the ANOPR analysis. DOE received no comments specific to
these changes, and is therefore maintaining them for the final rule.
c. Consideration of Alternative Refrigerants
The framework document stated that due to the phaseout of
chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) in
refrigeration equipment, the industry would likely use HFC refrigerants
in their products. Following the framework document, AHRI stated that
most of the data it provided to DOE was based on the use of HFC
refrigerants. In the ANOPR TSD and NOPR, DOE assumed that HFC
refrigerants were already in wide use in the refrigeration industry,
and therefore used HFC refrigerants as the basis for the technical
analysis conducted in the rulemaking.
The Joint Comment in response to the NOPR stated that DOE should
consider alternative primary refrigerants such as hydrocarbons,
ammonia, and CO2 in its analysis because of their potential
energy benefits, and because of the current phase-out of CFCs and HCFCs
as refrigerants. The Joint Comment pointed out that alternative primary
refrigerants are widely used in countries other than
[[Page 1117]]
the United States, principally in Europe. (Joint Comment, No. 34 at p.
8)
As stated in the ANOPR TSD and NOPR, DOE based its technical
analysis on the use of HFC refrigerants. A Federal phaseout of CFC
refrigerants has already occurred, and a Federal phaseout of HCFC
refrigerants is pending in 2010. Thus, DOE did not consider CFCs and
HCFCs in its analysis. Likewise, although alternative refrigerants such
as hydrocarbons, ammonia, and CO2 are used in Europe and
elsewhere in the world, there is no evidence that they are widely used
for commercial refrigeration applications in the United States. In
addition, current state and local building codes would not allow the
use of many alternative refrigerants (Safety Class A3--most hydrocarbon
refrigerants) in remote condensing equipment covered by this rulemaking
due to flammability concerns. These codes would also severely limit the
use of ammonia due to toxicity concerns. Both could be considered for
use with secondary loop refrigeration systems, but these are not the
subject of this rulemaking. Hydrocarbon refrigerants could possibly be
used for small self-contained commercial refrigeration equipment
covered in this rulemaking if they contain less than 3 pounds of
refrigerant and if they have been certified by Underwriters
Laboratories or another product certification lab. However, DOE
believes that no such equipment has been certified for the U.S. market,
and it did not consider these refrigerants as a viable design option in
the engineering analysis.
The majority of the U.S. commercial refrigeration industry uses HFC
refrigerants in commercial refrigeration equipment. Since the analysis
should be based on the refrigerant most widely used in commercial
refrigeration equipment, it is unnecessary to consider alternative
refrigerants. For these reasons, DOE has continued to use HFC
refrigerants as the basis for its technical analysis. DOE used the HFC
refrigerant R-404A for all remote condensing equipment and HFC
refrigerant R-404A or refrigerant R-134A for all self-contained
equipment.
d. Consideration of NSF 7 Type II Equipment
On December 8, 2006, DOE published a final rule in which it adopted
ANSI/ARI Standard 1200-2006 as the DOE test procedure for commercial
refrigeration equipment. 71 FR at 71340, 71369-70. DOE incorporated the
test procedure into its regulations in 10 CFR 431.63-431.64. The
standard also requires performance tests to be conducted according to
ANSI/ASHRAE Standard 72-2005. Following the NOPR, DOE received comments
from Southern Store Fixtures and Zero Zone stating that the DOE test
procedure is insufficient because a subset of the equipment covered in
this rulemaking is designed for and operates under harsher conditions
than the 75.2 [deg]F dry-bulb and 64.4 [deg]F wet-bulb ambient
temperature condition used in the DOE test procedure.
According to Southern Store Fixtures and Zero Zone, the hotter,
more humid ambient condition requires additional energy consumption to
power larger compressors and the anti-condensate capabilities necessary
in this environment. These conditions make it more difficult to meet
the standards proposed by this rulemaking. As a result, both Zero Zone
and Southern Store Fixtures suggested that DOE should account for the
difference between test procedure ambient conditions and operating
ambient conditions for this subset of equipment by making a distinction
similar to the one currently used in the National Sanitation Foundation
Standard 7 (NSF 7) standard. (Zero Zone Public Meeting Transcript, No.
27 at p. 17 and Southern Store Fixtures No. 27 at p. 18) Under NSF 7,
equipment intended for use in more severe environments is designated as
``Type II'' equipment and is tested at 80 [deg]F dry-bulb and 68 [deg]F
wet-bulb ambient conditions. NSF ``Type I'' equipment is tested at the
same ambient conditions as the DOE test procedure, namely the 75.2
[deg]F dry-bulb and 64.4 [deg]F wet-bulb temperature ambient condition.
To address this issue, AHRI suggested exempting Type II equipment
from coverage or instructing manufacturers of Type II equipment to
apply for waivers. (AHRI, Public Meeting Transcript, No. 27 at p. 50)
If the waiver approach is pursued, Southern Store Fixtures suggested
using available NSF Type II testing data to find the relationship among
food temperature, the metric used in NSF testing, and energy
consumption, the metric used in the DOE test procedure. This
relationship would allow at least some Type II equipment to be
considered fairly under this rule and mitigate a spike in waiver
applications. (Southern Store Fixtures, Public Meeting Transcript, No.
27 at p. 54)
After consideration of these comments, DOE believes that
instituting a distinction between Type I and Type II commercial
refrigeration equipment, as defined by NSF 7, is unnecessary in this
rulemaking. The DOE test procedure, ARI Standard 1200-2006, requires
that energy consumption testing for all commercial refrigeration
equipment covered in this rulemaking be conducted according to ANSI/
ASHRAE Standard 72-2005, which prescribes specific ambient conditions.
There is no requirement to address the ambient conditions specified in
the NSF 7 standard. The two standards also serve different purposes.
The ANSI/ASHRAE 72-2005 standard measures energy consumption for a
specific ambient condition, whereas the NSF 7 standard measures food
temperature at a specific ambient condition for food safety purposes.
Although these test procedures have different purposes, including the
NSF 7 Type II test procedure would have a minimal impact on the energy
consumption of this equipment because the differences between the ANSI/
ASHRAE 72-2005 and NSF 7 Type II ambient test conditions are marginal.
NSF 7 Type II equipment is defined as a unit intended for use in an
environment in which the ambient dry-bulb temperature does not exceed
80 [deg]F. This is at most 5 [deg]F higher than the 75 [deg]F ambient
dry bulb temperature used in the DOE test procedure. Therefore, the
test procedure requires all commercial refrigeration equipment covered
under this rulemaking to be tested for energy consumption according to
the ambient conditions specified in ANSI/ASHRAE Standard 72-2005 and
will not include any distinction between Type I and Type II equipment
as defined by NSF 7.
e. Product Class Extension Factors
In the NOPR, DOE developed multipliers to extend standards from the
15 equipment classes it directly analyzed to the remaining 23 secondary
equipment classes of commercial refrigeration equipment it did not
directly analyze. DOE's approach involved a matched-pair analysis,
which examined the relationship between several related pairs of
equipment classes. Chapter 5 of the TSD discusses the development of
the extension multipliers and the set of focused matched-pair analyses.
Following the NOPR, Southern Store Fixtures questioned the
extension multiplier for self-contained equipment that was based on the
analytical results for open remote condensing equipment. Southern Store
Fixtures believed that the extension multiplier of 2.51 DOE developed
to correlate remote medium-temperature equipment without doors to self-
contained medium-temperature equipment without doors should be higher
to adequately account for the more severe conditions in which self
contained equipment are typically used,
[[Page 1118]]
but did not offer a recommendation for the value. (Southern Store
Fixtures, Public Meeting Transcript, No. 27 at p. 37)
The DOE test procedure, ARI Standard 1200-2006, requires that
energy consumption testing for all commercial refrigeration equipment
covered in this rulemaking be conducted according to ANSI/ASHRAE
Standard 72-2005, which prescribes specific ambient conditions. The
ambient conditions specified by the DOE test procedure are the same
regardless of the condensing unit configuration (i.e., remote
condensing or self-contained). In addition, the 2.51 extension
multiplier was developed based on the relationship between the medium
temperature VOP, SVO, and HZO equipment classes that DOE directly
analyzed. Because neither an alternative value nor contradicting
analysis was offered, for today's final rule, DOE will continue to use
the 2.51 and other extension multipliers developed in the NOPR.
f. TSL Energy Limits
After the NOPR, Hussman submitted a comment expressing its concern
about the technologies required for equipment to meet minimum energy
consumption levels for TSL 4. In particular, Hussman is reluctant to
use the no-heat door design option in humid climates, such as Houston,
Texas. In its experience, no-heat doors in humid climates result in
more condensation on store floors. According to Hussman, wet floors
have led to accidents and costly law suits, indirectly linking
increased energy efficiency with increased safety risks. (Hussman, No.
42 at p. 1)
Energy conservation standards for today's final rule set a maximum
allowable energy conservation level for commercial refrigeration
equipment. DOE does not limit the technologies manufacturers can use to
achieve standards. Manufacturers are free to use any combination of
technologies and design options to achieve a required level of energy
consumption. Manufacturers also have the ability to design equipment
for use in specific regions where certain design options may cause
safety concerns. Certain anti-condensate design options consume no
energy and could be used to achieve the energy consumption levels TSL 4
requires. Anti-condensate films can be applied to the inner surface of
glass doors to prevent condensation and fog formation. By installing
this film, some portion (and potentially all) of the glass and/or door
mullion heaters can be removed and still maintain fog-free operation.
In addition, DOE does not have the authority to set regional standards
for commercial refrigeration equipment, and therefore cannot customize
its analysis to exclude the use of design options in a specific climate
region. Therefore, in developing the energy conservation standards for
today's final rule, DOE did not make any modifications to accommodate
concerns related to any particular climate regions.
g. Compressor Selection Oversize Factor
DOE's energy consumption model selects the most appropriate
compressor by comparing each compressor's capacity to the total
refrigeration load in the case multiplied by the compressor oversize
factor. For the ANOPR analysis, DOE listed capacity at the standard
rating conditions used in ANSI/ARI Standard 540-2004.\19\ However, the
standard rating conditions differed from the operating conditions used
in the model, resulting in different capacity values. Because the
standard conditions and modeled conditions differed, the model
typically overestimated the capacity of the selected compressors. To
compensate, DOE adjusted the compressor oversize factor to an
unrealistic level (typically level 1) for the ANOPR model to select the
correct compressor. In the NOPR analysis, DOE revised the capacity
values used to select self-contained compressors in the energy
consumption model. For the NOPR, DOE used capacities based on the same
conditions used to calculate total refrigeration load and revised the
oversize factor (typically 1.4 in the NOPR model) for all self-
contained equipment classes to maintain the selection of the correct
compressor size. See chapter 5 of the TSD for more detail.
---------------------------------------------------------------------------
\19\ 18ANSI/ARI Standard 540-2004: Performance Rating of
Positive Displacement Refrigerant Compressors and Compressor Units
lists standard rating conditions for hermetic refrigeration
compressors. For medium-temperature equipment, compressors are rated
at 20 [deg]F suction dewpoint, 120 [deg]F discharge dewpoint, 40
[deg]F return gas, and 0 [deg]F subcooling. For low-temperature
equipment, compressors are rated at -10 [deg]F suction dewpoint, 120
[deg]F discharge dewpoint, 40 [deg]F return gas, and 0 [deg]F
subcooling. For ice-cream-temperature equipment, compressors are
rated at -25 [deg]F suction dewpoint, 105 [deg]F discharge dewpoint,
40 [deg]F return gas, and 0 [deg]F subcooling.
---------------------------------------------------------------------------
Following the NOPR, Structural Concepts commented that the
compressor selection criteria in the engineering analysis results in
the selection of unreasonable compressors for the refrigeration load.
Specifically, Structural Concepts stated that the refrigeration load is
6,990 Btu/h for the VOP.SC.M equipment class, and the compressor sizing
value is 9,787 Btu/h. Using the oversize factor value of 1.4, the
compressor selected in the engineering analysis has a capacity of
13,219 Btu/h. The selection of an unrealistically large compressor
unfairly skews the energy efficiency ratio because the larger
compressor has a higher efficiency rating than the next smallest
compressor that has a rated capacity closer to the compressor sizing
value. (Structural Concepts, No. 30 at p. 3)
The energy consumption model selects a compressor assuming that the
rated capacity of the compressor must be at or above the compressor
sizing value. This prevents the selection of a compressor that is
unable to meet the refrigeration load. The example Structural Concepts
selected highlights one of the more extreme cases of how this model can
select a compressor that is larger than necessary. However, Structural
Concepts did not provide a recommendation that would result in the
selection of a more appropriate compressor, or a more appropriate
compressor oversize factor value to use for all the self-contained
equipment classes. Because manufacturers previously agreed that the
compressor oversize factor of 1.4 was appropriate to use for all the
self-contained equipment classes used in the analysis, DOE maintained
its assumptions from the NOPR.
h. Offset Factors for Self-Contained Equipment
For the NOPR, DOE developed offset factors to adjust the energy
consumption calculations to accommodate smaller equipment for the
equipment classes it directly analyzed. These offset factors account
for the components of the refrigeration load that remain constant even
when equipment sizes vary (i.e., the conduction end effects) and
disproportionately affect smaller cases. In the equation that describes
the relationship between energy consumption and the corresponding TDA
or volume metric, the offset factors are intended to approximate these
constant loads and provide a fixed end point that corresponds to a zero
TDA or zero volume case. See chapter 5 of the TSD for further details
on the development of these offset factors for each equipment class.
Following the NOPR, Structural Concepts requested that DOE increase the
offset factor for self-contained equipment because DOE's analysis
selected compressors that were too large and had unrealistically high
efficiencies. (Structural Concepts, No. 30 at p. 4)
The compressors suggested by Structural Concepts for DOE's model
would, in some cases, be undersized for
[[Page 1119]]
the refrigeration load. As mentioned in section V.A.2.g, DOE maintained
the methodology used to select compressors in the energy consumption
model. Because DOE did not receive any comments on necessary
improvements or data on which its analysis can be reevaluated, and
because the compressor selections used to develop the offset factors
have not changed, DOE maintained the offset factors developed in the
NOPR.
i. Self-Contained Condensing Coils
Following the NOPR, Structural Concepts revealed a discrepancy
about the running temperature for self-contained equipment using coil
enhancements. (Structural Concepts, No. 30 at p. 1) Chapter 5, section
5.6.3.7 of the NOPR TSD stated that self-contained equipment condenser
coil enhancements would allow the condenser to run at a saturated
condenser temperature (SCT) 10 [deg]F cooler than a standard coil.
However, the engineering analysis spreadsheet showed a decrease of 14
[deg]F for this design option. There was a typographical error in the
NOPR TSD and the 14 [deg]F decrease in the engineering analysis is
correct. In chapter 5 of the final rule TSD, DOE updated its figure to
reflect the correct SCT 14 [deg]F cooler temperature for the coil
enhancements design option for self-contained equipment.
Structural Concepts also questioned the validity of using 98 [deg]F
as the baseline SCT in the engineering analysis. According to
Structural Concepts, this value is not representative of the current
``off the shelf'' self-contained condensing units available. It
believes the baseline SCT value should be closer to 105 [deg]F or 110
[deg]F. (Structural Concepts, No. 30 at p. 2)
There are condensing coils available that operate at both higher
and lower SCT than the standard coil used in its model. This
discrepancy exists because the standard coil used in DOE's model is not
an actual condensing coil. DOE reviewed a range of available
manufacturer data, selected several representative units, and
aggregated the physical characteristics of the selected units to create
a representative unit for each equipment class. The 98 [deg]F operating
SCT is an average characteristic. DOE also conducted a sensitivity
analysis to evaluate Structural Concept's claim that baseline SCT was
too low. In this sensitivity analysis in which the SCT was raised to
105 [deg]F, DOE observed only minor changes in the energy consumption
of the self-contained units. For these reasons, DOE will continue to
use 98 [deg]F as the baseline SCT for self-contained equipment
condensers for today's final rule.
For the NOPR, DOE used data from teardowns by Southern California
Edison's Refrigeration and Thermal Test Center (RTTC) to model the
enhanced condenser coil used in the engineering analysis. Based on this
information, DOE considered both minimum and maximum technology levels
for this design option. For each level, DOE specified an overall UA-
value and a coil cost. The UA-value is normalized to the standard coil,
and the coil cost is normalized to the heat removal capacity of the
coil. This approach allowed DOE to apply the details of coil design
across all self-contained equipment classes. In consultation with
outside experts, DOE determined that applying the same coil
improvements to different sized coils would result in similar
performance improvements. See chapter 5 of the TSD for more detail on
the development of the enhanced condenser coil specifications.
Following the NOPR, Structural Concepts stated that DOE overstates
the magnitude of the UA-value increase achievable with an enhanced
condenser coil. It claimed the enhanced condenser prototype DOE used as
a model for this design option is too large for use in self-contained
equipment and, because UA-value primarily depends on surface area, the
use of a smaller, practical condenser would yield a lower UA-value. As
a result, it requested that DOE base the UA-value on coils that are
closer in size to the standard coil. (Structural Concepts, No. 30 at p.
2)
The specifications for the enhanced coil used in DOE's analysis are
based on a model developed specifically for use in a self-contained
refrigeration system. The details of the coil construction are based on
data from teardowns by Southern California Edison's Refrigeration and
Thermal Test Center (RTTC).\20\ Therefore, DOE is confident that it
modeled an appropriately sized high efficiency condenser coil. In
addition to increased exterior dimensions, DOE's enhanced condenser
coil also uses a higher fin pitch, rifled tubing, and different tube
spacing to achieve a higher UA-value than the standard coil. Structural
Concepts also did not provide costs for their suggested coil model.
Because DOE did not receive additional information or data that would
suggest that the UA-value is not representative of enhanced condenser
coils, and the data that was provided were incomplete, DOE maintained
its assumptions from the NOPR for the enhanced condenser coil.
---------------------------------------------------------------------------
\20\ Refrigeration and Thermal Test Center. Personal
communication. Southern California Edison. March 29, 2007.
---------------------------------------------------------------------------
3. Manufacturer Impact Analysis
The Joint Comment stated that DOE gives exclusive consideration to
the preservation-of-gross-margin (absolute dollars) scenario. According
to the Joint Comment, relying solely on this scenario only considers
manufacturers' expectations about the manufacturing impacts at the
proposed standard. (Joint Comment, No. 7 at p. 2) The Joint Comment
stated the preservation-of-gross-margin-percentage markup scenario
provides a more plausible representation of impacts on manufacturers
due to new energy conservation standards. (Joint Comment, No. 7 at p.
3)
DOE developed two markup scenarios: The preservation-of-gross-
margin-percentage and the preservation-of-gross-margin (absolute
dollars). DOE used these scenarios to bound the potential impacts on
the industry value as a result of new energy conservation standards and
presented its findings in the August 2008 NOPR for public comment. 73
FR 50107. The preservation-of-gross-margin-percentage markup scenario
is a lower bound estimate on manufacturer impacts because it assumes
that manufacturers will be able to fully recover all the increases in
production costs due to energy conservation standards requirements. The
preservation-of-gross-margin (absolute dollars) markup scenario is an
upper bound estimate on manufacturer impacts because it assumes that
manufacturers will be able to only partially recover cost increases (to
maintain an absolute dollar gross margin) due to energy conservation
standards. The markup scenarios DOE modeled in the GRIM reflect both
its interpretation of qualitative information learned during
manufacturer interviews and the analysis of limited profit margin data
provided under confidentiality agreements.
DOE notes the large uncertainty about the actual impacts on the
industry due to standards. The commercial refrigeration equipment
industry has never been regulated for energy efficiency and
manufacturers do not have previous experience on how energy
conservation standards affect their business. The seven manufacturers
that DOE interviewed for the NOPR expressed a divergence of views on
how prices would change after standards. Most manufacturers stated that
they expect profit levels to decrease due to new energy conservation
standards based on their recent inability to pass on
[[Page 1120]]
increases in material and component costs to their customers. The
portion of production costs reflected in selling prices varied
significantly from manufacturer to manufacturer. In general, companies
with lower market shares face greater challenges in passing along costs
and would suffer larger margin impacts due to new energy conservation
standards. Manufacturers with relatively large market shares have been
more successful passing through costs and they are more confident of
maintaining profit levels over the long term. Because of the divergence
of experience with cost pass-through and the implication for prices and
profitability after standards, DOE considers the full range of
potential impacts bounded by the markup scenarios and does not consider
one scenario to be more likely.
In response to the NOPR, Earthjustice noted that the direct
employment benefits are shown to provide positive employment in the MIA
analysis. Earthjustice stated DOE should consider these benefits in the
final rule. (Earthjustice, Public Meeting Transcript, No. 27 at p. 166)
For the MIA, DOE calculated the direct employment impacts on the
commercial refrigeration industry. DOE calculated total labor
expenditures for the industry using the production costs from the
engineering analysis, labor information from U.S. Census Bureau's 2006
Annual Survey of Manufacturers, and the total industry shipments from
the NES. DOE translated the total labor expenditures for the industry
into the total number of domestic jobs using the domestic share of
commercial refrigeration equipment manufacturing, the labor rate for
the industry, and the annual hours per worker. DOE calculated its
estimate of the domestic employment for the base case and each TSL. The
direct employment results characterized by the MIA represent U.S.
production and non-production workers that are affected by this
rulemaking in the commercial refrigeration equipment manufacturing
industry.
For the final rule, DOE examined the impacts of energy conservation
standards on domestic manufacturing employment levels. The direct
employment impact analysis conducted as part of the MIA estimates the
number of domestic workers who are affected by this rulemaking in the
commercial refrigeration equipment manufacturing industry, assuming
that shipment levels and product availability remain at current levels.
Because labor costs are assumed to be a fixed percentage of total
manufacturing production costs, which increase with more efficient
equipment, the GRIM predicts a gradual increase in employment after
standards. 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). For
further details on the direct employment impact analysis, see chapter
13 of the accompanying TSD.
VI. Analytical Results and Conclusions
A. Trial Standard Levels
DOE selected between four and eight energy consumption levels for
each commercial refrigeration equipment class in the LCC analysis.
Based on the results of the analysis, DOE selected five trial standard
levels above the baseline level for each equipment class for the NOPR.
The range of TSLs selected includes the most energy efficient
combination of design options with a positive NPV at the 7-percent
discount rate, and the combination of design options with the minimum
LCC. TSLs also were selected that filled large gaps between the
baseline and the level with the minimum LCC.
For the NOPR, DOE developed offset factors to adjust the energy
efficiency requirements for smaller equipment in each equipment class
analyzed. These offset factors account for certain components of the
refrigeration load (such as the conduction end effects) that remain
constant even when equipment sizes vary. These constant loads affect
smaller cases disproportionately. The offset factors are intended to
approximate these constant loads and provide a fixed end point,
corresponding to a zero TDA or zero volume case, in an equation that
describes the relationship between energy consumption and the
corresponding TDA or volume metric. See chapter 5 of the TSD for
further details on the development of these offset factors for each
equipment class.
For the final rule, DOE preserved the general methodology it used
for the selection of efficiency levels in the NOPR in establishing
specific efficiency levels for equipment classes. These levels are
based on the results of the updated LCC analysis and made up the TSLs
used in the NOPR. Table VI-1 shows the TSL levels DOE selected for
energy use for the equipment classes analyzed. TSL 5 is the max-tech
level for each equipment class. TSL 4 is the maximum efficiency level
with a positive NPV at the 7-percent discount rate, except for
VOP.RC.M. In this class, the minimal difference in energy efficiency
between the minimum life-cycle cost level as determined by the LCC
analysis and the maximum efficiency level with positive NPV prompted
DOE to select the minimum life-cycle cost level instead of the maximum
level with positive NPV. TSL 4 is a combination of the efficiency
levels selected for TSL 3 and TSL 5. For a given equipment class, the
efficiency levels selected for TSL 4 are either equivalent to those of
TSL 3 or TSL 5. TSL 3 is the efficiency level that provides the minimum
life-cycle cost determined by the LCC analysis. TSL 2 and TSL 1
represent lower efficiency levels that fill in the gap between the
current baseline and the levels determined to have the minimum LCC.
Table VI-1 shows the same TSL levels in terms of proposed equations
that establish an MDEC limit through a linear equation of the form:
MDEC = A x TDA + B (for equipment using TDA as a normalizing metric)
or
MDEC = A x V + B (for equipment using volume as a normalizing metric)
Coefficients A and B are uniquely derived for each equipment class
based on the calculated offset factor B (see chapter 5 of the TSD for
offset factors) and the equation slope A. Equation slope A would be
used to describe the efficiency requirements for equipment of different
sizes within the same equipment class. Chapter 9 of the TSD explains
the methodology DOE used for selecting TSLs and developing the
coefficients shown in Table VI-2.
[[Page 1121]]
Table VI-1--Trial Standard Levels for Analyzed Equipment Expressed in Terms of Daily Energy Consumption
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels for equipment analyzed expressed in
terms of energy consumption (kWh/day)
Equipment class Normalization metric Normalization Test metric (kWh/ -----------------------------------------------------------
value * day) Base-
line TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M......................... TDA [ft\2\] \**\.... 53.30 CDEC................ 57.90 51.99 50.68 47.69 47.69 43.75
VOP.RC.L......................... TDA [ft\2\]......... 44.66 CDEC................ 133.60 118.44 113.28 112.00 108.40 108.40
VOP.SC.M......................... TDA [ft\2\]......... 14.93 TDEC 39.60 35.95 33.38 30.70 30.70 29.33
[dagger][dagger].
VCT.RC.M......................... TDA [ft\2\]......... 65.00 CDEC................ 33.18 31.77 30.00 16.36 16.18 16.18
VCT.RC.L......................... TDA [ft\2\]......... 65.00 CDEC................ 69.31 65.73 46.90 39.60 39.18 39.18
VCT.SC.I......................... TDA [ft\2\]......... 26.00 TDEC................ 45.63 33.35 23.39 21.17 20.81 20.81
VCS.SC.I......................... V [ft\3\] [dagger].. 48.00 TDEC................ 27.13 24.31 21.64 19.07 19.07 19.07
SVO.RC.M......................... TDA [ft\2\]......... 40.00 CDEC................ 43.56 39.58 38.59 36.34 36.34 33.61
SVO.SC.M......................... TDA [ft\2\]......... 12.80 TDEC................ 33.11 30.66 28.87 26.74 26.74 25.74
SOC.RC.M......................... TDA [ft\2\]......... 51.00 CDEC................ 31.70 30.01 27.93 26.24 26.24 20.62
HZO.RC.M......................... TDA [ft\2\]......... 33.00 CDEC................ 19.63 17.89 15.73 14.69 14.54 14.54
HZO.RC.L......................... TDA [ft\2\]......... 46.00 CDEC................ 38.38 35.30 33.41 32.97 32.97 32.97
HZO.SC.M......................... TDA [ft\2\]......... 12.00 TDEC................ 19.23 17.85 16.51 14.93 14.81 14.81
HZO.SC.L......................... TDA [ft\2\]......... 12.00 TDEC................ 38.69 36.02 33.52 30.31 30.14 30.14
HCT.SC.I......................... TDA [ft\2\]......... 5.12 TDEC................ 7.25 6.37 3.70 3.53 3.32 3.32
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This is the assumed baseline size for each equipment class used in DOE's analyses.
** TDA is total display area of the case.
[dagger] V is gross refrigerated volume of the case.
[dagger][dagger] TDEC is total daily energy consumption of the case.
Table VI-2--Trial Standard Levels Expressed in Terms of Equations and Coefficients for Each Primary Equipment Class
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels for primary equipment classes analyzed
Equipment class Test metric (kWh/----------------------------------------------------------------------------------------------------------------------------------------------
day) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M...................... CDEC............. 1.01 x TDA + 4.07 0.9 x TDA + 4.07 0.87 x TDA + 4.07 0.82 x TDA + 4.07 0.82 x TDA + 4.07 0.74 x TDA + 4.07
VOP.RC.L...................... CDEC............. 2.84 x TDA + 6.85 2.5 x TDA + 6.85 2.38 x TDA + 6.85 2.35 x TDA + 6.85 2.27 x TDA + 6.85 2.27 x TDA + 6.85
VOP.SC.M...................... TDEC............. 2.34 x TDA + 4.71 2.09 xTDA + 4.71 1.92 xTDA + 4.71 1.74 x TDA + 4.71 1.74 x TDA + 4.71 1.65 x TDA + 4.71
VCT.RC.M...................... CDEC............. 0.48 x TDA + 1.95 0.46 x TDA + 1.95 0.43 x TDA + 1.95 0.22 x TDA + 1.95 0.22 x TDA + 1.95 0.22 x TDA + 1.95
VCT.RC.L...................... CDEC............. 1.03 x TDA + 2.61 0.97 x TDA + 2.61 0.68 x TDA + 2.61 0.57 x TDA + 2.61 0.56 x TDA +2.61 0.56 x TDA + 2.61
VCT.SC.I...................... TDEC............. 1.63 x TDA + 3.29 1.16 x TDA + 3.29 0.77 x TDA + 3.29 0.69 x TDA + 3.29 0.67 x TDA + 3.29 0.67 x TDA + 3.29
VCS.SC.I...................... TDEC............. 0.55 x V + 0.88 0.49 x V + 0.88 0.43 x V + 0.88 0.38 x V + 0.88 0.38 x V + 0.88 0.38 x V + 0.88
SVO.RC.M...................... CDEC............. 1.01 x TDA + 3.18 0.91 x TDA + 3.18 0.89 x TDA + 3.18 0.83 x TDA + 3.18 0.83 x TDA + 3.18 0.76 x TDA + 3.18
SVO.SC.M...................... TDEC............. 2.23 x TDA + 4.59 2.04 x TDA + 4.59 1.9 x TDA + 4.59 1.73 x TDA + 4.59 1.73 x TDA + 4.59 1.65 x TDA + 4.59
SOC.RC.M...................... CDEC............. 0.62 x TDA + 0.11 0.59 x TDA + 0.11 0.55 x TDA + 0.11 0.51 x TDA + 0.11 0.51 x TDA + 0.11 0.4 x TDA + 0.11
HZO.RC.M...................... CDEC............. 0.51 x TDA + 2.88 0.45 x TDA + 2.88 0.39 x TDA + 2.88 0.36 x TDA + 2.88 0.35 x TDA + 2.88 0.35 x TDA + 2.88
HZO.RC.L...................... CDEC............. 0.68 x TDA + 6.88 0.62 x TDA + 6.88 0.58 x TDA + 6.88 0.57 x TDA + 6.88 0.57 x TDA + 6.88 0.57 x TDA + 6.88
HZO.SC.M...................... TDEC............. 1.14 x TDA + 5.55 1.03 x TDA + 5.55 0.91 x TDA + 5.55 0.78 x TDA + 5.55 0.77 x TDA + 5.55 0.77 x TDA + 5.55
HZO.SC.L...................... TDEC............. 2.63 x TDA + 7.08 2.41 x TDA + 7.08 2.2 x TDA + 7.08 1.94 x TDA + 7.08 1.92 x TDA + 7.08 1.92 x TDA + 7.08
HCT.SC.I...................... TDEC............. 1.33 x TDA + 0.43 1.16 x TDA + 0.43 0.64 x TDA + 0.43 0.6 x TDA + 0.43 0.56 x TDA + 0.43 0.56 x TDA + 0.43
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
In addition to the standards for the 15 primary equipment classes
DOE analyzed, DOE is adopting standards for the remaining 23 secondary
equipment classes of commercial refrigeration equipment covered in this
rulemaking that were not directly analyzed in the engineering analysis
due to low annual shipments (less than 100 units per year). DOE's
approach involved extension multipliers developed using both the 15
primary equipment classes analyzed and a set of focused matched-pair
analyses. In addition, standards for certain primary equipment classes
could be directly applied to other similar secondary equipment classes.
Chapter 5 of the TSD discusses the development of the extension
multipliers and the set of focused matched-pair analyses.
Using this approach, DOE developed an additional set of TSLs for
these secondary equipment classes that corresponds to each of the
equations shown in Table VI-2 at each TSL. Table VI-3 shows this
additional set of corresponding TSL levels.
Table VI-3--Trial Standard Levels Expressed in Terms of Equations and Coefficients for Each Secondary Equipment Class
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels for secondary equipment classes analyzed
Equipment class Test metric (kWh/----------------------------------------------------------------------------------------------------------------------------------------------
day) Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SVO.RC.L...................... CDEC............. 2.84 x TDA + 6.85 2.5 x TDA + 6.85 2.38 x TDA + 6.85 2.35 x TDA + 6.85 2.27 x TDA + 6.85 2.27 x TDA + 6.85
VOP.RC.I...................... CDEC............. 3.6 x TDA + 8.7 3.17 x TDA + 8.7 3.03 x TDA + 8.7 2.99 x TDA + 8.7 2.89 x TDA + 8.7 2.89 x TDA + 8.7
SVO.RC.I...................... CDEC............. 3.6 x TDA + 8.7 3.17 x TDA + 8.7 3.03 x TDA + 8.7 2.99 x TDA + 8.7 2.89 x TDA + 8.7 2.89 x TDA + 8.7
HZO.RC.I...................... CDEC............. 0.87 x TDA + 8.74 0.78 x TDA + 8.74 0.73 x TDA + 8.74 0.72 x TDA + 8.74 0.72 x TDA + 8.74 0.72 x TDA + 8.74
VCT.RC.I...................... CDEC............. 1.2 x TDA + 3.05 1.14 x TDA + 3.05 0.8 x TDA + 3.05 0.67 x TDA + 3.05 0.66 x TDA + 3.05 0.66 x TDA + 3.05
HCT.RC.M...................... CDEC............. 0.39 x TDA + 0.13 0.34 x TDA + 0.13 0.19 x TDA + 0.13 0.18 x TDA + 0.13 0.16 x TDA + 0.13 0.16 x TDA + 0.13
[[Page 1122]]
HCT.RC.L...................... CDEC............. 0.81 x TDA + 0.26 0.71 x TDA + 0.26 0.39 x TDA + 0.26 0.37 x TDA + 0.26 0.34 x TDA + 0.26 0.34 x TDA + 0.26
HCT.RC.I...................... CDEC............. 0.95 x TDA + 0.31 0.83 x TDA + 0.31 0.46 x TDA + 0.31 0.43 x TDA + 0.31 0.4 x TDA + 0.31 0.4 x TDA + 0.31
VCS.RC.M...................... CDEC............. 0.16 x V + 0.26 0.14 x V + 0.26 0.13 x V + 0.26 0.11 x V + 0.26 0.11 x V + 0.26 0.11 x V + 0.26
VCS.RC.L...................... CDEC............. 0.33 x V + 0.54 0.3 x V + 0.54 0.26 x V + 0.54 0.23 x V + 0.54 0.23 x V + 0.54 0.23 x V + 0.54
VCS.RC.I...................... CDEC............. 0.39 x V + 0.63 0.35 x V + 0.63 0.31 x V + 0.63 0.27 x V + 0.63 0.27 x V + 0.63 0.27 x V + 0.63
HCS.RC.M...................... CDEC............. 0.16 x V + 0.26 0.14 x V + 0.26 0.13 x V + 0.26 0.11 x V + 0.26 0.11 x V + 0.26 0.11 x V + 0.26
HCS.RC.L...................... CDEC............. 0.33 x V + 0.54 0.3 x V + 0.54 0.26 x V + 0.54 0.23 x V + 0.54 0.23 x V + 0.54 0.23 x V + 0.54
HCS.RC.I...................... CDEC............. 0.39 x V + 0.63 0.35 x V + 0.63 0.31 x V + 0.63 0.27 x V + 0.63 0.27 x V + 0.63 0.27 x V + 0.63
SOC.RC.L...................... CDEC............. 1.3 x TDA + 0.22 1.23 x TDA + 0.22 1.15 x TDA + 0.22 1.08 x TDA + 0.22 1.08 x TDA + 0.22 0.84 x TDA + 0.22
SOC.RC.I...................... CDEC............. 1.52 x TDA + 0.26 1.44 x TDA + 0.26 1.34 x TDA + 0.26 1.26 x TDA + 0.26 1.26 x TDA + 0.26 0.99 x TDA + 0.26
VOP.SC.L...................... TDEC............. 5.87 x TDA + 11.82 5.25 x TDA + 11.82 4.82 x TDA + 11.82 4.37 x TDA + 11.82 4.37 x TDA + 11.82 4.14 x TDA + 11.82
VOP.SC.I...................... TDEC............. 7.45 x TDA + 15.02 6.67 x TDA + 15.02 6.13 x TDA + 15.02 5.55 x TDA + 15.02 5.55 x TDA + 15.02 5.26 x TDA + 15.02
SVO.SC.L...................... TDEC............. 5.59 x TDA + 11.51 5.11 x TDA + 11.51 4.76 x TDA + 11.51 4.34 x TDA + 11.51 4.34 x TDA + 11.51 4.15 x TDA + 11.51
SVO.SC.I...................... TDEC............. 7.11 x TDA + 14.63 6.5 x TDA + 14.63 6.05 x TDA + 14.63 5.52 x TDA + 14.63 5.52 x TDA + 14.63 5.27 x TDA + 14.63
HZO.SC.I...................... TDEC............. 3.35 x TDA + 9 3.06 x TDA + 9 2.8 x TDA + 9 2.46 x TDA + 9 2.44 x TDA + 9 2.44 x TDA + 9
SOC.SC.I...................... TDEC............. 2.13 x TDA + 0.36 2.02 x TDA + 0.36 1.88 x TDA + 0.36 1.76 x TDA + 0.36 1.76 x TDA + 0.36 1.38 x TDA + 0.36
HCS.SC.I...................... TDEC............. 0.55 x V + 0.88 0.49 x V + 0.88 0.43 x V + 0.88 0.38 x V + 0.88 0.38 x V + 0.88 0.38 x V + 0.88
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1. Miscellaneous Equipment
As stated in the August 2008 NOPR, certain types of equipment meet
the definition of ``commercial refrigeration equipment'' (Section
136(a)(3) of EPACT 2005), but do not fall directly into any of the 38
equipment classes defined in the market and technology assessment. One
of these types is hybrid cases, in which two or more compartments are
in different equipment families and are contained in one cabinet.
Another is refrigerator-freezers, which have two compartments in the
same equipment family but have different operating temperatures. Hybrid
refrigerator-freezers, where two or more compartments are in different
equipment families and have different operating temperatures, may also
exist. Another is wedge cases, which form miter transitions (a corner
section between two refrigerated display merchandisers) between
standard display case lineups. DOE is using language that will allow
manufacturers to determine appropriate standard levels for these types
of equipment.
An example of a pure hybrid case (one with two or more compartments
in different equipment families and operating at the same temperature)
is a unit with one open and one closed medium-temperature compartment,
such as those seen in coffee shops that sell baked goods and beverages.
These hybrid cases may be either self-contained or remote condensing,
and may be cooled by one or more condensing units. They may also have
one evaporator cooling both compartments or one evaporator feeding each
compartment separately.
An example of a refrigerator-freezer is a unit with doors where one
compartment operates at medium temperature and one compartment operates
at low temperature. Remote condensing commercial refrigerator-freezers
(with and without doors) and self-contained commercial refrigerator-
freezers without doors may operate in one of two ways. They may operate
as separate chilled and frozen compartments with evaporators fed by two
sets of refrigerant lines or two compressors. Alternatively, they may
operate as separate chilled and frozen compartments fed by one set of
low-temperature refrigerant lines (with evaporator pressure regulator
(EPR) valves or similar devices used to raise the evaporator pressure)
or one compressor.
An example of a hybrid refrigerator-freezer is a unit with one open
compartment at medium temperature and one closed compartment at low
temperature. As with pure hybrid cases, these cases may be either self-
contained or remote condensing, and may be cooled by one or more
condensing units. In the case of remote condensing equipment, they may
operate as separate chilled and frozen compartments with evaporators
fed by two sets of refrigerant lines or two compressors, or they may
operate as separate chilled and frozen compartments fed by one set of
low-temperature refrigerant lines (with EPR valves or similar devices
used to raise the evaporator pressure of one compartment) or one
compressor.
In the August 2008 NOPR, DOE proposed using the following language
for requiring manufacturers to meet standards for hybrid cases,
refrigerator-freezers, and hybrid refrigerator-freezers:
For commercial refrigeration equipment with two or more
compartments (i.e., hybrid refrigerators, hybrid freezers, hybrid
refrigerator-freezers, and non-hybrid refrigerator freezers), the MDEC
for each model shall be the sum of the MDEC values for all of its
compartments. For each compartment, measure the TDA or volume of that
compartment, and determine the appropriate equipment class based on
that compartment's equipment family, condensing unit configuration, and
designed operating temperature. The MDEC limit for each compartment
shall be the calculated value obtained by entering that compartment's
TDA or volume into the standard equation for that compartment's
equipment class. Measure the calculated daily energy consumption (CDEC)
or total daily energy consumption (TDEC) for the entire case as
follows:
[cir] For remote condensing commercial hybrid refrigerators,
hybrid freezers, hybrid refrigerator-freezers, and non-hybrid
refrigerator-freezers, where two or more independent condensing units
each separately cool only one compartment, measure the total
refrigeration load of each compartment separately according to the
ANSI/ASHRAE Standard 72-2005 test procedure. Calculate compressor
energy consumption (CEC) for each compartment using Table 1 in ARI
Standard 1200-2006 using the saturated evaporator temperature for that
compartment. The calculated daily energy consumption (CDEC) for the
entire case shall be the sum of the CEC for each compartment, fan
energy consumption (FEC), lighting energy consumption (LEC), anti-
condensate energy consumption (AEC), defrost energy consumption (DEC),
and condensate evaporator pan energy consumption (PEC) (as measured in
ARI Standard 1200-2006).
[[Page 1123]]
[cir] For remote condensing commercial hybrid refrigerators,
hybrid freezers, hybrid refrigerator-freezers, and non-hybrid
refrigerator-freezers, where two or more compartments are cooled
collectively by one condensing unit, measure the total refrigeration
load of the entire case according to the ANSI/ASHRAE Standard 72-2005
test procedure. Calculate a weighted saturated evaporator temperature
for the entire case by (i) multiplying the saturated evaporator
temperature of each compartment by the volume of that compartment (as
measured in ARI Standard 1200-2006), (ii) summing the resulting values
for all compartments, and (iii) dividing the resulting total by the
total volume of all compartments. Calculate the CEC for the entire case
using Table 1 in ARI Standard 1200-2006, using the total refrigeration
load and the weighted average saturated evaporator temperature. The
CDEC for the entire case shall be the sum of the CEC, FEC, LEC, AEC,
DEC, and PEC.
[cir] For self-contained commercial hybrid refrigerators, hybrid
freezers, hybrid refrigerator-freezers, and non-hybrid refrigerator-
freezers, measure the total daily energy consumption (TDEC) for the
entire case according to the ANSI/ASHRAE Standard 72-2005 test
procedure.
In response to the NOPR, Traulsen suggested that DOE address
commercial refrigerator-freezers by summing the maximum daily energy
consumption values for all of its individual compartments. (Traulsen,
No. 25 at p. 2)
DOE agrees with this suggestion and notes that it is in alignment
with the proposal in the August 2008 NOPR for commercial refrigeration
equipment with two or more compartments. Therefore, DOE is adopting the
language above for hybrid cases, refrigerator-freezers, and hybrid
refrigerator-freezers in its final rule.
Additionally, DOE is adopting the following language to address
wedge cases: For remote condensing and self-contained wedge cases,
measure the CDEC or TDEC according to the ANSI/ARI 1200-2006 test
procedure. The MDEC for each model shall be the amount derived by
incorporating into the standard equation for the appropriate equipment
class a value for the TDA that is the product of: (1) The vertical
height of the air curtain (or glass in a transparent door), and (2) the
largest overall width of the case when viewed from the front.
B. Significance of Energy Savings
To estimate the energy savings through 2042 due to new standards,
DOE compared the energy consumption of commercial refrigeration
equipment under the base case (no standards) to energy consumption of
this equipment under each TSL that DOE considered. Table VI-4 shows
DOE's NES estimates, which it based on the AEO2008 reference case, for
each TSL. Chapter 11 of the TSD describes these estimates in more
detail. DOE reports both undiscounted and discounted values of energy
savings. Discounted energy savings represent a policy perspective where
energy savings farther in the future are less significant than energy
savings closer to the present. Each TSL considered in this rulemaking
resulted in significant energy savings, and the amount of savings
increased with higher energy conservation standards. Energy savings
ranged from an estimated 0.168 quads to 1.298 quads for TSLs 1 through
5 (undiscounted).
Table VI-4--Summary of Cumulative National Energy Savings for Commercial Refrigeration Equipment (Energy Savings
for Units Sold From 2012 to 2042)
----------------------------------------------------------------------------------------------------------------
Primary national energy savings (quads) (sum of
all equipment classes)
Trial standard level --------------------------------------------------
Undiscounted 3% Discounted 7% Discounted
----------------------------------------------------------------------------------------------------------------
1............................................................ 0.168 0.088 0.041
2............................................................ 0.645 0.339 0.159
3............................................................ 1.013 0.532 0.250
4............................................................ 1.035 0.544 0.256
5............................................................ 1.298 0.683 0.321
----------------------------------------------------------------------------------------------------------------
C. Economic Justification
1. Economic Impact on Commercial Customers
a. Life-Cycle Costs and Payback Period
Commercial customers 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. Therefore, DOE calculated the LCC and PBP for
the standard levels considered in this rulemaking. DOE's LCC and PBP
analyses provided five key outputs for each TSL, reported in Table VI-5
through Table VI-19. The first three outputs are the proportion of
purchases of commercial refrigeration equipment where the purchase of a
design that complies with the TSL would create: (1) A net life-cycle
cost, (2) no impact, or (3) a net life-cycle savings for the consumer.
The fourth output is the average net life-cycle savings from purchasing
a complying design. The fifth output is the average PBP for the
customer 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 the increased costs of higher-
efficiency equipment through energy savings 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.
Table VI-5--Summary LCC and PBP Results for VOP.RC.M Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 99
Equipment with No Change in LCC (%)............ 64 46 29 29 1
Equipment with Net LCC Savings (%)............. 36 54 71 71 0
Mean LCC Savings ($) *......................... 1,344 1,308 1,788 1,788 (3,959)
[[Page 1124]]
Mean Payback Period (years).................... 0.8 1.3 2.0 2.0 138.1
----------------------------------------------------------------------------------------------------------------
\*\ Numbers in parentheses indicate negative savings.
Table VI-6--Summary LCC and PBP Results for VOP.RC.L Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 69 52 23 8 8
Equipment with Net LCC Savings (%)............. 31 48 77 92 92
Mean LCC Savings ($)........................... 3,501 4,500 4,610 3,938 3,938
Mean Payback Period (years).................... 0.7 1.1 1.2 2.8 2.8
----------------------------------------------------------------------------------------------------------------
Table VI-7--Summary LCC and PBP Results for VOP.SC.M Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 69
Equipment with No Change in LCC (%)............ 67 35 21 21 1
Equipment with Net LCC Savings (%)............. 33 65 79 79 30
Mean LCC Savings ($)........................... 842 1,209 1,549 1,549 (451)
Mean Payback Period (years).................... 0.8 1.6 2.4 2.4 11.2
----------------------------------------------------------------------------------------------------------------
Table VI-8--Summary LCC and PBP Results for VCT.RC.M Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 80 60 17 8 8
Equipment with Net LCC Savings (%)............. 20 40 83 92 92
Mean LCC Savings ($)........................... 320 657 2,375 2,339 2,339
Mean Payback Period (years).................... 0.8 1.3 3.8 3.9 3.9
----------------------------------------------------------------------------------------------------------------
Table VI-9--Summary LCC and PBP Results for VCT.RC.L Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 62 43 20 10 10
Equipment with Net LCC Savings (%)............. 38 57 80 90 90
Mean LCC Savings ($)........................... 762 4,137 5,450 5,419 5,419
Mean Payback Period (years).................... 1.1 2.4 2.5 2.6 2.6
----------------------------------------------------------------------------------------------------------------
Table VI-10--Summary LCC and PBP Results for VCT.SC.I Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 55 41 20 9 9
Equipment with Net LCC Savings (%)............. 45 59 80 91 91
Mean LCC Savings ($)........................... 2,941 4,893 5,234 5,217 5,217
Mean Payback Period (years).................... 1.0 1.5 1.6 1.7 1.7
----------------------------------------------------------------------------------------------------------------
[[Page 1125]]
Table VI-11--Summary LCC and PBP Results for VCS.SC.I Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 76 50 11 11 11
Equipment with Net LCC Savings (%)............. 24 50 89 89 89
Mean LCC Savings ($)........................... 704 1,321 1,757 1,757 1,757
Mean Payback Period (years).................... 0.4 0.6 1.3 1.3 1.3
----------------------------------------------------------------------------------------------------------------
Table VI-12--Summary LCC and PBP Results for SVO.RC.M Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 99
Equipment with No Change in LCC (%)............ 65 47 30 30 1
Equipment with Net LCC Savings (%)............. 35 53 70 70 0
Mean LCC Savings ($)........................... 907 896 1,274 1,274 (2,974)
Mean Payback Period (years).................... 0.8 1.3 1.9 1.9 196.8
----------------------------------------------------------------------------------------------------------------
Table VI-13--Summary LCC and PBP Results for SVO.SC.M Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 69
Equipment with No Change in LCC (%)............ 68 36 22 22 2
Equipment with Net LCC Savings (%)............. 32 64 78 78 29
Mean LCC Savings ($)........................... 583 853 1,136 1,136 (355)
Mean Payback Period (years).................... 0.6 1.4 2.3 2.3 11.5
----------------------------------------------------------------------------------------------------------------
Table VI-14--Summary LCC and PBP Results for SOC.RC.M Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 92
Equipment with No Change in LCC (%)............ 82 64 29 29 3
Equipment with Net LCC Savings (%)............. 18 36 71 71 5
Mean LCC Savings ($)........................... 405 851 945 945 (1,458)
Mean Payback Period (years).................... 0.5 0.8 1.7 1.7 19.4
----------------------------------------------------------------------------------------------------------------
Table VI-15--Summary LCC and PBP Results for HZO.RC.M Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 80 60 39 19 19
Equipment with Net LCC Savings (%)............. 20 40 61 81 81
Mean LCC Savings ($)........................... 419 887 1,063 1,040 1,040
Mean Payback Period (years).................... 0.5 0.8 1.2 1.6 1.6
----------------------------------------------------------------------------------------------------------------
Table VI-16--Summary LCC and PBP Results for HZO.RC.L Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 59 39 19 19 19
Equipment with Net LCC Savings (%)............. 41 61 81 81 81
Mean LCC Savings ($)........................... 668 1,047 1,102 1,102 1,102
Mean Payback Period (years).................... 1.0 1.4 1.6 1.6 1.6
----------------------------------------------------------------------------------------------------------------
[[Page 1126]]
Table VI-17--Summary LCC and PBP Results for HZO.SC.M Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 73 45 21 10 10
Equipment with Net LCC Savings (%)............. 27 55 79 90 90
Mean LCC Savings ($)........................... 344 615 861 826 826
Mean Payback Period (years).................... 0.4 1.0 1.8 2.3 2.3
----------------------------------------------------------------------------------------------------------------
Table VI-18--Summary LCC and PBP Results for HZO.SC.L Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 73 46 21 10 10
Equipment with Net LCC Savings (%)............. 27 54 79 90 90
Mean LCC Savings ($)........................... 670 1,215 1,784 1,761 1,761
Mean Payback Period (years).................... 0.3 0.8 1.5 1.7 1.7
----------------------------------------------------------------------------------------------------------------
Table VI-19--Summary LCC and PBP Results for HCT.SC.I Equipment Class
----------------------------------------------------------------------------------------------------------------
Trial standard level
----------------------------------------------------------------
1 2 3 4 5
----------------------------------------------------------------------------------------------------------------
Equipment with Net LCC Increase (%)............ 0 0 0 0 0
Equipment with No Change in LCC (%)............ 65 47 30 14 14
Equipment with Net LCC Savings (%)............. 35 53 70 86 86
Mean LCC Savings ($)........................... 211 775 797 785 785
Mean Payback Period (years).................... 0.6 1.4 1.5 1.9 1.9
----------------------------------------------------------------------------------------------------------------
For five equipment classes (VOP.RC.M, VOP.SC.M, SVO.RC.M, SVO.SC.M,
and SOC.RC.M), TSL 5 resulted in negative LCC savings compared to the
purchase of baseline equipment. For all other equipment classes, TSL 5
showed positive LCC savings. For equipment classes with lighting,
including LED lighting at TSL 5 had a significant impact on the
calculated LCC savings. For equipment classes without lighting (i.e.,
VCS.SC.I, HZO.RC.L, HZO.SC.M, HZO.SC.L, and HCT.SC.I), the difference
in LCC savings between TSL 3 and TSL 5 was small, between $0 and $35
less at TSL 5 than at TSL 3. For VCT.RC.L, VCT.RC.I, and VCT.SC.I, the
difference in LCC savings between TSL 3 and TSL 5 was small as well
(between $17 and $36 less savings at TSL 5 than at TSL 3). VOP.RC.L
showed a more significant reduction in LCC savings at TSL 5 compared to
TSL 3 at $672.
b. Commercial Customer Sub-Group Analysis
Using the LCC spreadsheet model, DOE estimated the impact of the
TSLs on small businesses, a customer sub-group. DOE estimated the LCC
and PBP for small food sales businesses defined by the Small Business
Administration (SBA) by presuming that most small business customers
could be represented by the analysis performed for small grocery and
convenience store owners. DOE further assumed that the smaller,
independent grocery and convenience store chains may not have access to
national accounts, but would instead purchase equipment primarily
through distributors and grocery wholesalers. DOE modified the
distribution channels for remote condensing and self-contained
equipment to these small businesses as follows:
For remote condensing equipment, 15 percent of the sales
were assumed to pass through a manufacturer-to-distributor-to-
contractor-to-customer channel, and 85 percent were assumed to be
purchased through a manufacturer-to-distributor-to-customer channel.
For self-contained equipment, 35 percent of sales were
assumed to pass through a manufacturer-to-distributor-to-contractor-to-
customer channel, and 65 percent were assumed to be purchased through a
manufacturer-to-distributor-to-customer channel.
In both cases, the distribution chain markups were calculated with
these revised shipment weights. Table VI-20 shows the mean LCC savings
from proposed energy conservation standards for the small business sub-
group, and Table VI-21 shows the mean payback period (in years) for
this sub-group. More detailed discussion on the LCC sub-group analysis
and results can be found in chapter 12 of the TSD.
Table VI-20--Mean Life-Cycle Cost Savings for Commercial Refrigeration Equipment Purchased by LCC Sub-Group
(Small Business) (2007$)*
----------------------------------------------------------------------------------------------------------------
Equipment class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M............................................ 1,746 1,764 2,443 2,443 (3,463)
VOP.RC.L............................................ 4,534 5,882 6,064 5,549 5,549
[[Page 1127]]
VOP.SC.M............................................ 1,094 1,624 2,145 2,145 131
VCT.RC.M............................................ 416 868 3,484 3,458 3,458
VCT.RC.L............................................ 1,001 5,639 7,454 7,447 7,447
VCT.SC.I............................................ 3,811 6,451 6,944 6,949 6,949
VCS.SC.I............................................ 902 1,703 2,314 2,314 2,314
SVO.RC.M............................................ 1,177 1,209 1,738 1,738 (2,637)
SVO.SC.M............................................ 752 1,138 1,565 1,565 61
SOC.RC.M............................................ 521 1,106 1,290 1,290 (948)
HZO.RC.M............................................ 538 1,152 1,397 1,383 1,383
HZO.RC.L............................................ 875 1,383 1,466 1,466 1,466
HZO.SC.M............................................ 440 803 1,156 1,129 1,129
HZO.SC.L............................................ 857 1,574 2,364 2,352 2,352
HCT.SC.I............................................ 272 1,022 1,055 1,057 1,057
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative savings.
Table VI-21--Mean Payback Period for Commercial Refrigeration Equipment Purchased by LCC Sub-Group (Small
Business) (Years)
----------------------------------------------------------------------------------------------------------------
Equipment class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M............................................ 0.71 1.19 1.77 1.77 51.97
VOP.RC.L............................................ 0.64 0.99 1.10 2.53 2.53
VOP.SC.M............................................ 0.70 1.43 2.17 2.17 9.50
VCT.RC.M............................................ 0.73 1.14 3.54 3.64 3.64
VCT.RC.L............................................ 1.00 2.17 2.32 2.42 2.42
VCT.SC.I............................................ 0.90 1.32 1.47 1.57 1.57
VCS.SC.I............................................ 0.33 0.53 1.17 1.17 1.17
SVO.RC.M............................................ 0.70 1.19 1.73 1.73 106.71
SVO.SC.M............................................ 0.55 1.26 2.09 2.09 9.71
SOC.RC.M............................................ 0.48 0.75 1.55 1.55 15.62
HZO.RC.M............................................ 0.46 0.72 1.13 1.47 1.47
HZO.RC.L............................................ 0.93 1.26 1.50 1.50 1.50
HZO.SC.M............................................ 0.36 0.92 1.66 2.06 2.06
HZO.SC.L............................................ 0.29 0.71 1.35 1.55 1.55
HCT.SC.I............................................ 0.58 1.24 1.32 1.74 1.74
----------------------------------------------------------------------------------------------------------------
For commercial refrigeration equipment, the LCC and PBP impacts for
small businesses are similar to those of all customers as a whole.
While the discount rate for small grocery stores is higher than the
rate for commercial refrigeration equipment customers as a whole and
equipment prices are higher due to the higher markups, these small
business customers appear to retain commercial refrigeration equipment
over longer periods. Also, smaller stores generally tend to pay higher
electric prices. The average LCC savings for the small business sub-
group is slightly higher than that calculated for the average
commercial refrigeration equipment customer, and the average PBP is
slightly shorter than the national average. DOE concluded that the
small food sales businesses defined by SBA will not experience economic
impacts significantly different from or more negative than those
impacts on food sales businesses as a whole.
2. Economic Impact on Manufacturers
DOE determined the economic impacts of today's standard on
manufacturers, as described in the proposed rule. 73 FR 50118-21. For
the final rule, DOE analyzed manufacturer impacts under two distinct
markup scenarios: (1) The preservation-of-gross-margin-percentage
markup scenario, and (2) the preservation-of-gross-margin (absolute
dollars) markup scenario. 73 FR 50107. Under the first scenario, DOE
applied a single uniform ``gross margin percentage'' markup that
represents the current markup for manufacturers in the commercial
refrigeration equipment industry. This 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 selling, general, and administrative (SG&A)
expenses; research and development (R&D) expenses; interest; and
profit--is 1.32. This markup is consistent with the one DOE used in its
engineering and GRIM analyses for the base case.
The implicit assumption behind the second scenario is that the
industry can only maintain its gross margin from the baseline (in
absolute dollars) after the standard. The industry would do so by
passing its increased production costs on to customers without passing
on its increased R&D and SG&A expenses so the gross profit per unit is
the same in absolute dollars. DOE implemented this markup scenario in
the GRIM by setting the production cost markups at each TSL to yield
approximately the same gross margin in the standards cases in 2012 as
they yielded in the base case.
Together, these two markup scenarios characterize the range of
possible conditions the commercial refrigeration equipment market will
experience as a result of new energy conservation standards. See
chapter 13 of the TSD for additional details of the markup scenarios
and analysis. DOE also examined both of these scenarios for this final
rule.
[[Page 1128]]
a. Industry Cash-Flow Analysis Results
Using two different markup scenarios, 73 FR 50107, 50118-20, DOE
estimated the impact of new standards for commercial refrigeration
equipment on the INPV of the commercial refrigeration equipment
industry. The impact consists of the difference between INPV in the
base case and 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 commercial refrigeration
equipment industry's cost of capital or discount rate.
Table VI-22 and Table VI-23 show the changes in INPV that DOE
estimates 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. Product
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
tooling and plant changes required for the industry to comply (i.e.,
conversion capital expenditures).
Table VI-22--Manufacturer Impact Analysis Results, Including INPV Estimates, for Commercial Refrigeration Equipment Under the Preservation of Gross
Margin Percentage Markup Scenario
[Preservation of gross margin percentage markup scenario with a rollup shipment scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------
INPV.................................... 2007$ millions............ 540 540 548 530 501 560
Change in INPV \*\...................... 2007$ millions............ ......... 0 8 (11) (39) 20
(%)....................... ......... 0.02 1.42 1.95 (7.29) 3.73
New Energy Conservation Standards 2007$ millions............ ......... 0.5 2.8 20.6 40.4 51.6
Equipment Conversion Expenses.
New Energy Conservation Standards 2007$ millions............ ......... 0.8 5.0 36.3 71.2 90.8
Capital Investments.
Total Investment Required............... 2007$ millions............ ......... 1.3 7.8 57.0 111.6 142.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in Table VI-22 may not appear to sum due to rounding.
Table VI-23--Manufacturer Impact Analysis Results, Including INPV Estimates, for Commercial Refrigeration Equipment Under the Preservation of Gross
Margin (Absolute Dollars) Markup Scenario
[Preservation of gross margin absolute dollars markup scenario with a rollup shipment scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard level
Units Base case ------------------------------------------------------
1 2 3 4 5
--------------------------------------------------------------------------------------------------------------------------------------
INPV.................................... 2007$ millions............ 540 533 502 442 392 200
Change in INPV *........................ 2007$ millions............ ......... (7) (39) (99) (148) (340)
(%)....................... ......... (1.27) (7.16) (18.26) (27.35) (63.01)
New Energy Conservation Standards 2007$ millions............ ......... 0.5 2.8 20.6 40.4 51.6
Equipment Conversion Expenses.
New Energy Conservation Standards 2007$ millions............ ......... 0.8 5.0 36.3 71.2 90.8
Capital Investments.
Total Investment Required............... 2007$ millions............ ......... 1.3 7.8 57.0 111.6 142.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in Table VI-23 may not appear to sum due to rounding.
The August 2008 NOPR discusses the estimated impact of new
commercial refrigeration equipment standards on INPV for each equipment
class. 73 FR 50118-20. See chapter 13 of the TSD for details.
b. Cumulative Regulatory Burden
DOE's assesses manufacturer burden through the cumulative impact of
multiple DOE standards and other regulatory actions that affect
manufacturers of the same covered equipment and other equipment
produced by the same manufacturers or their parent companies. 73 FR
50120. For the August 2008 NOPR, DOE listed the EPA-mandated phaseout
of HCFCs as refrigerants and blowing agents, and energy conservation
standards for residential central air conditioners and heat pumps and
room air conditioners as examples of other Federal regulations that
could affect manufacturers of commercial refrigeration equipment. 73 FR
50120.
Following the August 2008 NOPR, public comments made DOE aware that
commercial refrigeration equipment manufacturers must test equipment
using the NSF 7 test procedure in addition to the DOE test procedure.
As mentioned previously, NSF 7 measures product temperature for food
safety requirements, while the DOE test procedure measures energy
consumption for energy conservation standards. Although NSF 7 is not a
Federal regulation, the commercial refrigeration equipment industry in
general already tests its equipment using this procedure to meet food
safety requirements.
For this final rule, DOE also identified the other DOE regulations
commercial refrigeration equipment manufacturers are facing for other
equipment. DOE identified several regulations that go into effect 3
years before and after the effective date of the new energy
conservation standards for commercial refrigeration equipment. DOE
recognizes that each regulation can significantly affect manufacturers'
financial operations. Multiple regulations affecting the same
manufacturer can quickly reduce manufacturers' profits and possibly
cause an exit from the market.
[[Page 1129]]
DOE requested information about the cumulative regulatory burden
during manufacturer interviews. Manufacturers indicated that they had
already begun using other non-HCFC refrigerants and blowing agents.
Manufacturers did not indicate that the DOE regulations on residential
central air conditioners and heat pumps or room air conditioners were a
great concern. DOE sought comment on these and other potential
regulations affecting manufacturers for the final rule. From its own
research, DOE learned that manufacturers of commercial refrigeration
equipment or their parent companies could also be affected by
rulemakings on PTACs and PTHPs, room air conditioners, residential
furnaces, and walk-in freezers and coolers. DOE identified the costs of
additional regulations when these estimates were available from other
DOE rulemakings. For example, two commercial refrigeration equipment
manufacturers (or their parent companies) also manufacture PTACs and
PTHPs. DOE estimated that in the PTAC and PTHP industry, manufacturers
may incur an estimated total conversion expense of $17.3 million
(2007$). However, DOE has limited data on the importance of these other
regulated products for manufacturers of commercial refrigeration
equipment. Differences in market shares and manufacturing processes of
other regulated products for each manufacturer could cause varying
degrees of burdens on these manufacturers. See chapter 13 of the TSD
for additional information regarding the cumulative regulatory burden
analysis.
c. Impacts on Employment
As discussed in the August 2008 NOPR, DOE expects that employment
by commercial refrigeration equipment manufacturers would increase
under all of the TSLs considered for today's rule. However, this does
not take into account any relocation of domestic jobs to countries with
lower labor costs that might be influenced by the level of investment
required by new standards. 73 FR 50120-21. Table VI-24 shows the direct
employment impacts at each TSL. Further support for this conclusion is
set forth in chapter 13 of the TSD.
Table VI-24--Commercial Refrigeration Equipment Estimated Employment Impacts in 2012
----------------------------------------------------------------------------------------------------------------
Base
Trial standard level case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Employees in 2,199 2,205 2,291 2,371 2,396 2,978
2012...............................................
Change in Total Number of Domestic Production ........ 6 92 172 197 779
Employees in 2012 Due to Standards *...............
Total Number of Domestic Non-Production Employees in 681 683 709 734 742 922
2012 *.............................................
Total Number of Domestic Employees in 2012 *........ 2,880 2,888 3,000 3,105 3,137 3,900
----------------------------------------------------------------------------------------------------------------
* Figures do not take into account any relocation of domestic jobs to countries with lower labor costs that
might be influenced by the level of investment required by new standards.
d. Impacts on Manufacturing Capacity
According to the majority of commercial refrigeration equipment
manufacturers, new energy conservation standards will not significantly
affect manufacturers' production capacity. Any necessary redesign of
commercial refrigeration equipment will not change the fundamental
assembly of the equipment. However, manufacturers anticipate some minor
changes to tooling. Thus, manufacturers will be able to maintain
manufacturing capacity levels and continue to meet market demand under
new energy conservation standards.
e. Impacts on Manufacturers That Are Small Businesses
As discussed in the August 2008 NOPR, DOE expects today's standard
to have little or no differential impact on small manufacturers of
commercial refrigeration equipment. 73 FR at 50121, 50130-31. DOE found
that small manufacturers generally have the same concerns as large
manufacturers regarding energy conservation standards. DOE also found
no significant differences in the R&D emphasis or marketing strategies
between small and large manufacturers. Therefore, DOE believes the GRIM
analysis, which models each equipment class separately and aggregates
the results to produce an industry-wide impact, is representative of
the small manufacturers that would be affected by standards. The
impacts on small manufacturers are discussed further in section VII.B
of this preamble (``Review Under the Regulatory Flexibility Act'').
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 level relative to the base case.
Table VI-25 provides an overview of the NPV results for each TSL
considered for this final rule, using both a 7-percent and a 3-percent
real discount rate.
Table VI-25 shows the estimated cumulative NPV for commercial
refrigeration equipment resulting from the sum of the NPV calculated
for each of the 15 primary equipment classes analyzed. Table VI-25
assumes the AEO2008 reference case forecast for electricity prices. At
a 7-percent discount rate, TSLs 1-4 show positive cumulative NPVs. The
highest NPV is provided by TSL 3 at $1.45 billion. TSL 4 provided $1.41
billion, close to that of TSL 3. TSL 5 showed a negative NPV at - $2.59
billion, the result of negative NPV observed in five equipment classes
(VOP.RC.M, VOP.SC.M, SVO.RC.M, SVO.SC.M, and SOC.RC.M).
At a 3-percent discount rate, the picture is similar across the
equipment classes. TSL 5 showed a negative NPV at - $3.79 billion,
whereas the highest NPV was provided at TSL 3 (i.e., $3.97 billion).
TSL 4 provided a near equivalent NPV at $3.93 billion. TSL 5 provided a
NPV of - $3.79 billion dollars. Five equipment classes (VOP.RC.M,
VOP.SC.M, SVO.RC.M, SVO.SC.M, and SOC.RC.M) were determined to have
negative NPVs at a 3-percent discount rate at TSL 5. See TSD chapter 11
for more detailed NPV results.
[[Page 1130]]
Table VI-25--Overview of National Net Present Value Results
------------------------------------------------------------------------
NPV (billion 2007$)
Trial standard level ---------------------------------------
7% Discount rate 3% Discount rate
------------------------------------------------------------------------
1............................... 0.33 0.83
2............................... 0.98 2.60
3............................... 1.45 3.97
4............................... 1.41 3.93
5............................... (2.59) (3.79)
------------------------------------------------------------------------
DOE also estimated the national employment impacts that would
result from each TSL. As discussed in the August 2008 NOPR, 73 FR
50107-08, 50122-23, 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 shown in Table VI-26, DOE estimates net indirect employment
impacts--those changes of employment in the larger economy (other than
in the manufacturing sector being regulated)--from commercial
refrigeration equipment energy conservation standards to be positive
but very small relative to total national employment. These impacts
might be offset by other, unanticipated effects on employment. For
details on the employment impact analysis methods and results, see TSD
chapter 15.
Table VI-26--Net National Change in Indirect Employment, Thousands of
Jobs in 2042
------------------------------------------------------------------------
Net national change in jobs
Trial standard level ---------------------------------------
2012 2022 2032 2042
------------------------------------------------------------------------
1............................... 0 202 289 332
2............................... (6) 1,056 1,482 1,699
3............................... (15) 1,591 2,238 2,559
4............................... (18) 1,658 2,337 2,670
5............................... (40) 1,856 2,645 3,011
Maximum Job Impact.............. (40) 1,856 2,645 3,011
------------------------------------------------------------------------
4. Impact on Utility or Performance of Equipment
As indicated in section V.B.4 of the August 2008 NOPR, the new
standards DOE is adopting today will not lessen the utility or
performance of any commercial refrigeration equipment. 73 FR 50123.
5. Impact of Any Lessening of Competition
As discussed in the August 2008 NOPR, 73 FR 50079, 50123, and in
section III.D.1.e of this preamble, DOE considers any lessening of
competition likely to result from standards. The Attorney General
determines the impact, if any, of any lessening of competition.
DOJ concluded that the commercial refrigeration equipment standards
contained in the proposed rule would not adversely affect competition.
In reaching this conclusion, DOJ noted that the proposed standards took
into account comments from commercial refrigeration equipment
manufacturers, ASHRAE, ACEEE, and electric utilities. DOJ noted further
that all key components are available for purchase by any manufacturer;
therefore, no manufacturer has a technological advantage in meeting the
proposed standards. Finally, DOJ noted that DOE found no significant
differences between the concerns of large and small manufacturers, and
DOJ found no evidence that certain manufacturers would be placed at a
competitive disadvantage to other manufacturers.
6. Need of the Nation To Conserve Energy
When economically justified, an improvement in the energy
efficiency of commercial refrigeration equipment is likely to improve
the security of the Nation by reducing overall energy demand, 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 new standards covered under this
rulemaking to eliminate the need for the construction of approximately
121 megawatts to 2,989 megawatts of new power by 2042.
Enhanced energy efficiency also produces environmental benefits.
The expected energy savings from new standards for the equipment
covered by this rulemaking will reduce the emissions of air pollutants
and greenhouse gases associated with electricity production. Table VI-
27 provides DOE's estimate of cumulative CO2,
NOX, and Hg emissions reductions that would result from the
TSLs considered in this rulemaking. The expected energy savings from
new standards for commercial refrigeration equipment may also reduce
the cost of maintaining nationwide emissions standards and constraints.
Table VI-27--Summary of Emissions Reductions for Commercial Refrigeration Equipment (Cumulative Reductions for Equipment Sold From 2012 to 2042)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Trial standard levels [dagger][dagger]
---------------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt \*\).................... 8.5........................... 32.8.......................... 50.7.......................... 52.6.......................... 66.0.
[[Page 1131]]
NOX (kt \**\)................... 0.59 to 14.58................. 2.27 to 56.04................. 3.51 to 86.77................. 3.64 to 89.97................. 4.56 to 112.84.
Hg (t [dagger])................. 0 to 0.224.................... 0 to 0.86..................... 0 to 1.332.................... 0 to 1.381.................... 0 to 1.732.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Mt = million metric tons.
** kt = thousand tons.
[dagger] t = tons.
[dagger][dagger] Negative values indicate emission increases. Detail may not appear to sum to total due to rounding.
The estimated cumulative CO2, NOX, and Hg
emissions reductions for the new energy conservation standards range up
to 66 Mt for CO2, 1.56 to 112.84 kt for NOX, and
0 to 1.732 t for Hg for commercial refrigeration equipment from 2012 to
2042. In the EA (chapter 16 of the TSD), DOE reports estimated annual
changes in CO2, NOX, and Hg emissions
attributable to each TSL. As discussed in section IV.L 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 emissions caps for SO2.
The NEMS-BT modeling assumed that NOX would be subject
to CAIR, issued by the U.S. Environmental Protection Agency on March
10, 2005.\21\ 70 FR 25162 (May 12, 2005). On July 11, 2008, the U.S.
Court of Appeals for the District of Columbia Circuit (DC Circuit)
issued its decision in North Carolina v. Environmental Protection
Agency,\22\ in which the court vacated the CAIR. 531 F.3d 896 (DC Cir.
2008). If left in place, 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 establishing 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 CAIR.
---------------------------------------------------------------------------
\21\ On December 23, 2008, the DC Circuit decided to allow CAIR
to remain in effect until it is replaced by a rule consistent with
the court's earlier opinion. North Carolina v. EPA, No. 05-1244,
2008 WL 5335481 (DC Cir. Dec. 23, 2008). Neither the July 11, 2008,
nor the December 23, 2008, decisions of the DC Circuit change the
standard-setting conclusions reached in this rule. See http://www.epa.gov/cleanairinterstaterule.
\22\ Case No. 05-1244, 2008 WL 2698180 at *1 (DC Cir. July 11,
2008).
---------------------------------------------------------------------------
Even though the DC Circuit vacated CAIR, DOE notes that the DC
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. 63
FR 57356, 57359 (Oct. 27, 1998).\23\ The SIP Call rule may provide a
similar, although less extensive, 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 established 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, assuming that energy conservation standards would displace
the generation of only the cleanest available fossil fuels. DOE used
the emission rate, specified as 0.0341 t 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 new energy
conservation standards considered. DOE's high estimate of 0.843 t of
NOX per TWh was based on a nationwide NOX
emission rate for all electrical generation. Use of such an emission
rate assumes that future power plants displaced are no cleaner than the
plants that are being used currently to generate electricity. Under the
high estimate assumption, energy conservation standards also would have
little to no effect on the generation mix. Based on AEO2008 for 2006,
when 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.
Table VI-27 shows the range in NOX emission changes
calculated using the low and high estimate scenarios by TSL.
NOX emission reductions range from 0.59 to 112.84 kt for the
TSLs considered. These changes in NOX emissions are
extremely small, ranging from 0.001 to 0.168 percent of the national
base case emissions forecast by NEMS-BT, depending on the TSL.
---------------------------------------------------------------------------
\23\ In the NOX SIP Call rule, EPA found that sources
in the District of Columbia and 22 ``upwind'' 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. 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 (summertime) emissions. To comply with
the NOX SIP Call Rule, states could elect to participate
in the NOX Budget Trading Program. Under this 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. 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 in section IV.L, DOE is able to report an estimate of the
physical quantity changes in Hg emissions associated with an energy
conservation standard. Rather than using the NEMS-BT model, DOE
established a range of Hg rates to estimate the Hg emissions that could
be reduced through standards. DOE's low estimate assumed that future
standards would displace electrical generation from natural gas-fired
power plants, resulting in an effective emission rate of zero. The low-
[[Page 1132]]
end emission rate is zero because natural gas-fired power plants have
virtually zero Hg emissions associated with their operation.
DOE's high estimate was based on 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 identify 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 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
in the utility impact analysis. The estimated changes in Hg emissions
are shown in Table VI-27 for commercial refrigeration equipment from
2012 to 2042. Hg emission reductions range from 0 to 1.732 tons for the
TSLs considered. These changes in Hg emissions are extremely small,
ranging from 0 to 0.003 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 estimate Hg
emission reductions due to new energy conservation standards, as it
assumed that Hg emissions would be subject to EPA's Clean Air Mercury
Rule \24\ (CAMR). CAMR would have permanently capped emissions of
mercury for new and existing coal-fired plants in all states by 2010.
As with 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.
---------------------------------------------------------------------------
\24\ 70 FR 28606 (May 18, 2005).
---------------------------------------------------------------------------
On February 8, 2008, the DC Circuit issued its decision in New
Jersey v. Environmental Protection Agency \25\ to vacate CAMR. In light
of this development and because the NEMS-BT model could not be used to
directly calculate Hg emission reductions, DOE used the current Hg
emission rates discussed above to calculate the emissions reductions in
Table VI-27.
---------------------------------------------------------------------------
\25\ No. 05-1097, 2008 WL 341338, at * (DC Cir. Feb. 9, 2008).
---------------------------------------------------------------------------
In the August 2008 NOPR, DOE considered accounting for 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 decision-makers and interested parties, DOE used the same methods it
used to calculate the net present value of consumer cost savings. DOE
converted the estimated year-by-year reductions in CO2
emissions into monetary values, which were then discounted over the
life of the affected equipment to the present using both 3-percent and
7-percent discount rates.
In the August 2008 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 Intergovernmental Panel on
Climate Change (IPCC).\26\ DOE derived the IPCC estimate used as the
upper bound value from an estimate of the mean value of worldwide
impacts due to climate change, 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, if possible, be
restricted to a representation of those costs and benefits likely to be
experienced in the United States. DOE explained in the August 2008 NOPR
that it expects 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, it is appropriate to use U.S. benefit values, where available,
and not world benefit values, in its analysis.\27\ Because U.S.-
specific estimates are unavailable, and DOE did not receive any
additional information that would help narrow the proposed range of
domestic benefits, DOE used the global mean value as an upper bound
U.S. value for purposes of the sensitivity analysis.
---------------------------------------------------------------------------
\26\ During the preparation of its most recent review of the
state of climate science, the IPCC identified various estimates of
the present value of reducing CO2 emissions by 1 ton over
the life that these emissions would remain in the atmosphere. The
estimates reviewed by the IPCC spanned a range of values. Absent 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 $12 per ton of CO2. The literature
review (Tol 2005) from which this mean was derived did not report
the year in which these dollars were denominated. However, DOE
understands this estimate was denominated in 1995$. Updating that
estimate to 2007$ yields a SCC of $15 per ton of CO2.
\27\ In contrast, most of the estimated costs and benefits of
increasing the efficiency of commercial refrigeration equipment
include only economic values of impacts that would be experienced in
the United States. DOE generally does not consider impacts on
manufacturers that occur solely outside of the United States.
---------------------------------------------------------------------------
DOE received several comments in response to the proposed estimated
value of CO2 emissions reductions. In a comment submitted by
Earthjustice on behalf of itself and NRDC, Earthjustice questioned both
the upper and lower bounds of DOE's range of estimated CO2
values, which it argued were too low. (Earthjustice, No. 38 at p. 7)
Earthjustice also stated that it would be inappropriate to limit the
consideration to the value of CO2 to a domestic value.
(Earthjustice, No. 38 at p. 13) Earthjustice suggested that DOE
consider relying on the estimate used in DOE's analysis of the impacts
of the Lieberman-Warner Climate Security Act of 2007 (S. 2191).\28\
(Earthjustice, No. 38 at p. 2) AHRI stated that DOE should not rely on
the IPCC study or values under the European Union cap and trade
program, because such a program has not yet been established in the
United States. (AHRI, No. 33 at p. 6)
---------------------------------------------------------------------------
\28\ According to Earthjustice's analysis of the Lieberman-
Warner Climate Security Act of 2007, implementation of this
legislation would lead to a CO2 allowance price of $30
per ton in 2020, rising to $61 per ton in 2030.
---------------------------------------------------------------------------
Given the uncertainty surrounding estimates of the social cost of
carbon, relying on any single estimate may be inadvisable because any
estimate will depend on many assumptions. Working Group II's
contribution to the Fourth Assessment Report of the IPCC notes the
following:
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.\29\
---------------------------------------------------------------------------
\29\ Climate Change 2007--Impacts, Adaptation 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 used the SCC value from Tol
(2005), which was presented in the IPCC's Fourth
[[Page 1133]]
Assessment Report and provided a comprehensive meta-analysis of
estimates for the value of SCC. Earthjustice commented that this value
was out of date, because Tol released an update of his 2005 meta-
analysis in September 2007. This update reported an increase in his
mean estimate of SCC from $43 to $71/ton carbon. Earthjustice stated
that DOE should not continue to use old data and should update its
sources. (Earthjustice, No. 38 at p. 9)
Although the Tol study was updated in 2007, the IPCC has not
adopted the updated Tol study for its report. As a result, DOE
continues to rely on the same study used by the IPCC. Moreover, DOE
notes that the conclusions of Tol (2007) are similar to the conclusions
of Tol (2005). Tol (2007) continues to indicate that there is no
consensus regarding the monetary value of reducing CO2
emissions by 1 ton. The broad range of values in both Tol studies are
the result of significant differences in the methodologies used in the
studies Tol summarized. According to Tol, all of the studies have
shortcomings, largely because the subject is inherently complex and
uncertain and requires broad multidisciplinary knowledge. Thus, it is
not certain that the values reported in Tol (2007) are more accurate or
representative than the values reported in Tol (2005).
In today's final rule, DOE is relying on the range of values
proposed in the August 2008 NOPR, which was based on the values
presented in Tol (2005), as proposed. DOE does note that 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 August 2008 NOPR.
Additionally, DOE has applied an annual growth rate of 2.4 percent to
the value of SCC, as suggested by the IPCC Working Group II (2007, p.
822). This growth rate is based on estimated increases in damage from
future emissions that published studies have reported. As a result, for
today's final rule, DOE is assigning a range for SCC of $0 to $20
($2007) per ton of CO2 emissions.
Earthjustice questioned the use of the mean estimated social cost
of CO2 as an upper bound of the range. (Earthjustice, No. 38
at p. 9) However, the upper bound of the range DOE used is based on Tol
(2005), which reviewed 103 estimates of SCC from 28 published studies.
Tol concluded that when only peer-reviewed studies published in
recognized journals are considered, ``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 percent growth rate.]''
Earthjustice also questioned using $0 as the lower bound of DOE's
estimated range. (Earthjustice, No. 38 at p. 10) 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'' (p. 9), and thus tentatively
concludes that a global value of zero for reducing emissions cannot be
justified. However, it is reasonable to allow for the possibility that
the U.S. portion of the global cost of CO2 emissions may be
quite low. In fact, some of the studies examined by Tol (2005) reported
negative values for the SCC. As stated in the August 2008 NOPR, DOE is
using U.S. benefit values, and not world benefit values, in its
analysis. Further, 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 $0 per ton of CO2 emissions in estimating the potential
benefits of today's final rule.
Table VI-28 presents the resulting estimates of the potential range
of net present value benefits associated with reducing CO2
emissions.
Table VI--28 Estimates of Savings From CO2 Emissions Reductions Under Commercial Refrigeration Equipment Trial
Standard Levels at a Seven-Percent Discount Rate and Three-Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
Estimated
cumulative Value of estimated CO2 Value of estimated CO2
TSL CO2 (Mt) emission reductions (million emission reductions (million
emission 2007$) at 7% discount rate 2007$) at 3% discount rate
reductions
----------------------------------------------------------------------------------------------------------------
1.................................. 8.52 $0 to $76.01.................. $0 to $154.73.
2.................................. 32.76 $0 to $292.26................. $0 to $594.94.
3.................................. 50.71 $0 to $452.49................. $0 to $921.1.
4.................................. 52.59 $0 to $469.19................. $0 to $955.1.
5.................................. 65.95 $0 to $588.44................. $0 to $1,197.85.
----------------------------------------------------------------------------------------------------------------
DOE also investigated the potential monetary impact from today's
energy conservation standards of reducing 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 CAIR. 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 put downward pressure on the prices of
emissions allowances in cap and trade markets. Estimating this effect
is very difficult because of 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 on runs of the NEMS-BT model.
See chapter 16 (Environmental Assessment) of the TSD for further
details.
Because the courts have vacated the CAIR rule, 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. DOE estimated the national monetized
benefits of NOX and Hg emissions reductions from today's
rule based on environmental damage estimates from the literature.
Available estimates suggest a very wide range of monetary values for
NOX emissions, ranging from $370 per ton to $3,800 per
[[Page 1134]]
ton of NOX from stationary sources, measured in 2001$,\30\
or a range of $432 per ton to $4,441 per ton in 2007$.
---------------------------------------------------------------------------
\30\ 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 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 damage 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 $32.6 million per ton emitted per year (2007$).\31\ 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.\32\ Table VI-29 and Table VI-30 present the resulting
estimates of the potential range of present value benefits associated
with reducing national NOX and Hg emissions.
---------------------------------------------------------------------------
\31\ Trasande, L., et al., ``Applying Cost Analyses to Drive
Policy that Protects Children,'' 1076 Ann. N.Y. Acad. Sci. 911
(2006).
\32\ 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, 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 VI-29--Estimates of Savings From Reducing NOX and Hg Emissions Under Commercial Refrigeration Equipment TSLs at a Seven-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of estimated NOX Estimated cumulative Hg Value of estimated Hg
TSL Estimated cumulative NOX emission reductions (tons) emission reductions emission reductions
(kt) emission reductions* (thousand 2007$) * (thousand 2007$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1................................ 0.59 to 14.58............... $64 to $1,578............... 0 to 0.224.................. $0 to $46.
2................................ 2.27 to 56.04............... $245 to $6,067.............. 0 to 0.86................... $0 to $177.
3................................ 3.51 to 86.77............... $380 to $9,394.............. 0 to 1.332.................. $0 to $274.
4................................ 3.64 to 89.97............... $394 to $9,741.............. 0 to 1.381.................. $0 to $284.
5................................ 4.56 to 112.84.............. $494 to $12,216............. 0 to 1.732.................. $0 to $356.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in Table VI-29 may not appear to sum to the cumulative values in Table VI-27 due to rounding.
Table VI-30--Estimates of Savings from Reducing NOX and Hg Emissions Under Commercial Refrigeration Equipment TSLs at a Three-Percent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Value of estimated NOX Estimated cumulative Hg Value of estimated Hg
TSL Estimated cumulative NOX emission reductions (tons) emission reductions emission reductions
(kt) emission reductions* (thousand 2007$) * (thousand 2007$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1................................ 0.59 to 14.58............... $135 to $3,329.............. 0 to 0.224.................. $0 to 91.
2................................ 2.27 to 56.04............... $518 to $12,799............. 0 to 0.86................... $0 to $349.
3................................ 3.51 to 86.77............... $802 to 19,815.............. 0 to 1.332.................. $0 to $540.
4................................ 3.64 to 89.97............... $831 to $20,547............. 0 to 1.381.................. $0 to $560.
5................................ 4.56 to 112.84.............. $1,042 to $25,769........... 0 to 1.732.................. $0 to $702.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in Table VI-30 may not appear to sum to the cumulative values in Table VI-27 due to rounding.
7. Other Factors
EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)
and 6316(e)(1)) Under this provision, DOE considered LCC impacts on
identifiable groups of customers, such as customers of different
business types who may be disproportionately affected by any national
energy conservation standard level. DOE also considered the reduction
in generated capacity that could result from the imposition of any
national energy conservation standard level.
D. Conclusion
EPCA contains criteria for prescribing new or amended energy
conservation standards. It provides that any such standard for
commercial refrigeration equipment must be designed to achieve the
maximum improvement in energy efficiency that the Secretary determines
is technologically feasible and economically justified. (42 U.S.C.
6295(o)(2)(A) and 42 U.S.C. 6316(e)(1)) As stated above, the Secretary
must determine whether the benefits of the standards exceed its burdens
considering the seven factors discussed in section II.A. (42 U.S.C.
6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1)) A determination is not made
based on any one of these factors in isolation. The Secretary must
weigh each of these seven factors in total. Further, the Secretary may
not establish a new or amended standard if such standard would not
result in ``significant conservation of energy.'' (42 U.S.C.
6295(o)(3)(B) and 42 U.S.C. 6316(e)(1))
In selecting today's energy conservation standards for commercial
refrigeration equipment, DOE started by examining the maximum
technologically feasible levels to determine whether those levels were
economically justified. Upon finding the maximum technologically
feasible levels not to be justified, DOE analyzed the next lower TSL.
DOE followed this procedure until it identified a TSL that is
economically justified.
[[Page 1135]]
Table VI-31 summarizes DOE's quantitative analysis results for each
TSL it considered for this final rule. This table presents the results
or a range of results for each TSL, and will aid the reader in
understanding the costs and benefits of each one. The range of values
for industry impacts represents the results for the different markup
scenarios that DOE used to estimate manufacturer impacts.
Table VI-31--Summary of Results Based Upon the AEO2008 Reference Case Energy Price Forecast *
----------------------------------------------------------------------------------------------------------------
TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
----------------------------------------------------------------------------------------------------------------
Primary Energy Saved (quads).... 0.168 0.645 1.013 1.035 1.298
7% Discount Rate............ 0.041 0.159 0.250 0.256 0.321
3% Discount Rate............ 0.088 0.339 0.532 0.544 0.683
Generation Capacity Reduction (0.121) (0.465) (0.720) (0.747) (0.936)
(GW) **........................
NPV (2007$ billion)
7% Discount Rate............ $0.33 $0.98 $1.45 $1.414 $(2.59)
3% Discount Rate............ $0.83 $2.60 $3.97 $3.930 $(3.79)
Industry Impacts
Industry NPV (2007$ million) 0-(7) 8-(39) (11)-(99) (39)-(148) 20-(340)
Industry NPV (% change)..... 0-(1) 1-(7) (2)-(18) (7)-(27) 4-(63)
Cumulative Emissions Impacts
[dagger]
CO2 (Mt).................... 8.52 32.76 50.71 52.59 65.95
NOX (kt).................... 0.59-14.58 2.27-56.04 3.51-86.77 3.64-89.97 4.56-112.84
Hg (t)...................... 0-0.224 0-0.86 0-1.332 0-1.381 0-1.732
Employment Impacts
Indirect Employment Impacts 332 1,699 2,559 2,670 3,011
(2042).....................
Direct, Domestic Employment 6 92 172 197 779
Impacts (2012)
[dagger][dagger]...........
Life-Cycle Cost
Net Savings (%)............. 18-45 36-65 61-89 70-92 0-92
Net Increase (%)............ 0-0 0-0 0-0 0-0 0-99
No Change (%)............... 55-82 35-64 11-39 8-30 1-19
Mean LCC Savings (2007$).... 211-3501 615-4893 797-5450 785-5419 (3959)-5419
Mean PBP (years)............ 0.3-1.1 0.6-2.4 1.2-3.8 1.3-3.9 1.3-196.8
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount
indicated.
** Change in installed generation capacity by 2042 based on AEO2008 Reference Case.
[dagger] CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include
physical reductions at power plants as well as production of emissions allowance credits where NOX emissions
are subject to emissions caps.
[dagger][dagger] Change in total number of domestic production employees in 2012 due to standards.
First, DOE considered TSL 5, the most efficient level for all
equipment classes. TSL 5 would likely save an estimated 1.298 quads of
energy through 2042, an amount DOE considers significant. Discounted at
7 percent, the projected energy savings through 2042 would be 0.321
quads. For the Nation as a whole, DOE projects that TSL 5 would result
in a net decrease of $2.59 billion in NPV, using a discount rate of 7
percent. Five equipment classes (VOP.RC.M, VOP.SC.M, SVO.RC.M,
SVO.SC.M, and SOC.RC.M) show negative NPV at TSL 5, primarily due the
use of LED lighting for these cases.\33\ The emissions reductions at
TSL 5 are 65.95 Mt of CO2 and up to 112.84 kt of
NOX. DOE also estimates that under TSL 5, total generating
capacity in 2042 will decrease compared to the base case by 0.936
gigawatts (GW).
---------------------------------------------------------------------------
\33\ LED lighting for open cases was updated from the August
2008 NOPR to reflect LED lighting fixtures currently available for,
and specific to, open cases. DOE also increased the amount of LED
lighting assumed for open cases. See section V.A.2.a and appendix B
of the TSD.
---------------------------------------------------------------------------
At TSL 5, DOE projects that the average commercial refrigeration
equipment customer will experience a reduction in LCC compared to the
baseline for 10 of the 15 equipment classes analyzed, while they will
experience an increase in LCC for five equipment classes (VOP.RC.M,
VOP.SC.M, SVO.RC.M, SOC.RC.M). These equipment classes are the five
that DOE showed had negative NPV. Mean LCC savings for all 15 equipment
classes vary from -$3,959 to $5,419. At TSL 5, DOE estimates the
fraction of customers experiencing LCC increases will vary between 0
and 99 percent depending on equipment class. The mean payback period
for the average commercial refrigeration equipment customer at TSL 5
compared to the baseline level is projected to be between 1.3 and 196.8
years, depending on equipment class.
At TSL 5, there is the risk of very large negative impacts on the
industry if manufacturers' profit margins are reduced. The investments
required to modify all equipment lines at the max-tech levels are
large. At this level, manufacturers have to make costly changes to
their production lines. In addition, the incremental cost of adding LED
lights at TSL 5 are extremely large. Because customers put a much
higher priority on marketing and displaying their goods than they do on
energy efficiency, most manufacturers expressed a concern that they
would be unable to fully recover the additional cost incurred when only
manufacturing the most efficient equipment possible. If manufacturers
are not able to fully pass along these large incremental production
costs, the industry could lose up to 63 percent of the INPV.
Although TSL 5 is the most efficient level and thus saves the most
energy of all TSLs, four of the 15 equipment classes show a reduction
in LCC compared to the baseline. The energy savings at TSL 5 would
reduce installed generating capacity by 0.94 GW, or roughly 2.5 large,
400-MW power plants. DOE estimates the associated emissions reductions
at 66 Mt of CO2. DOE concludes that at TSL 5, the benefits
of energy savings, generating capacity reductions, and emission
reductions would be outweighed by the economic burdens on customers as
indicated by the net decrease in NPV, long payback periods of up to 197
years, and a drop in INPV of up to 63 percent. Consequently, DOE
concludes that TSL 5 is not economically justified.
DOE then considered TSL 4, which provides for all equipment classes
the maximum efficiency levels that the analysis showed to have positive
NPV to the Nation. DOE projects that the
[[Page 1136]]
average commercial refrigeration equipment customer will experience a
reduction in LCC compared to the baseline for all 15 equipment classes
analyzed, ranging from $785 to $5,419 depending on equipment class. The
mean payback period for the average commercial refrigeration equipment
customer at TSL 4 is projected to be between 1.3 and 3.9 years compared
to the purchase of baseline equipment.
TSL 4 would likely save an estimated 1.035 quads of energy through
2042, an amount DOE considers significant. Discounted at 7 percent, the
projected energy savings through 2042 would be 0.256 quads. For the
Nation as a whole, DOE projects that TSL 4 would result in a net
increase of $1.41 billion in NPV, using a discount rate of 7 percent.
The estimated emissions reductions at TSL 4 are 42.6 Mt of
CO2 and up to 90 kt of NOX.
Similar to TSL 5, there is a risk at TSL 4 of large negative
impacts on the industry if manufacturers' profit margins are reduced.
The investments required at TSL 4 are also large because, based on the
construction of the TSL, many equipment classes are at the max-tech
level. Because a large portion of the equipment classes are at max-
tech, the incremental manufacturing costs are also large. If
manufacturers are not able to fully pass along these large incremental
production costs, the industry could lose up to 27 percent of the INPV.
After carefully considering the analysis and weighing the benefits
and burdens of TSL 4, DOE concludes that the benefits of TSL 4 (in
terms of energy savings to the Nation of 1.035 quads through 2042,
economic benefits of $1.41 billion in NPV using a discount rate of 7
percent, significant environmental benefits in terms of reduced
emissions from power plants, and national employment benefits) outweigh
the burdens in terms of the range of possible reductions in INPV of up
to 27 percent, and that TSL 4 represents the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. Therefore, DOE is adopting the energy conservation standards
for this equipment at TSL 4.
VII. 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.
In the August 2008 NOPR for this rulemaking, DOE requested feedback
related to the possible existence of a market failure in the commercial
refrigeration equipment industry. Because the commercial refrigeration
equipment industry is part of the food merchandising industry, energy
efficiency and energy cost savings are not the primary drivers of the
business. Selling food products to shoppers is the primary driver. It
is difficult for store personnel to identify cost-effective efficiency
levels for commercial refrigeration equipment given reasons identified
in the NOPR, and doing so may incur transaction costs, thus reducing
cost-effectiveness of the energy efficiency investment. 73 FR 50128.
DOE sought data on the efficiency levels of existing commercial
refrigeration equipment by owner, electricity price, and equipment
class. Following the publication of the August 2008 NOPR and subsequent
public comment period, DOE did not receive any feedback related to this
request.
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
the Office of Information and Regulatory Affairs (OIRA) in OMB 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 August 2008 NOPR contained a summary of the RIA, which
evaluated the extent to which major alternatives to standards for
commercial refrigeration equipment could achieve significant energy
savings at reasonable cost, as compared to the effectiveness of the
proposed rule. 73 FR 50128-29. The complete RIA (Regulatory Impact
Analysis for Proposed Energy Conservation Standards for Commercial
Refrigeration Equipment) 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 today's
standards.
As explained in the August 2008 NOPR, none of the alternatives DOE
examined would save as much energy or have an NPV as high as the
proposed standards. That same conclusion applies to the standards in
today's rule. Also, several of the alternatives would require new
enabling legislation, because authority to carry out those alternatives
does not exist. Additional detail on the regulatory alternatives is
found in the RIA report in the TSD.
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 commercial refrigeration equipment manufacturing
industry, are manufacturing enterprises with 750 employees or fewer.
DOE used the small business size standards published by 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. Commercial refrigeration
equipment manufacturing is classified under NAICS 333415.
DOE interviewed two of the nine manufacturers of commercial
refrigeration equipment it identified as small businesses affected by
this rulemaking. 73 FR 50130. DOE reviewed
[[Page 1137]]
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 (TSL 4) 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 commercial refrigeration equipment 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 August 2008 NOPR, 73 FR 50130-31, 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 commercial refrigeration
equipment design and manufacturing, and (2) impacts associated with the
effect on customers' ability to merchandise products by limiting the
flexibility in choosing design options. The commercial refrigeration
industry is highly customized, and manufacturers were concerned that
limiting the choices in design options would commoditize the industry
and reduce profit margins. However, this concern was echoed by all
manufacturers, not just small business manufacturers.
DOE has prepared a FRFA for this rulemaking, which is presented in
the following discussion. DOE has transmitted a copy of this FRFA to
the Chief Counsel for Advocacy of the SBA for review. The FRFA below is
written in accordance with the requirements of the Regulatory
Flexibility Act.
1. Reasons for the Final Rule
Part A-1 of Title III of EPCA addresses the energy efficiency of
certain types of commercial and industrial equipment. (42 U.S.C. 6311-
6317) EPACT 2005, Public Law 109-58, included an amendment to Part A-1
requiring that DOE prescribe energy conservation standards for the
commercial refrigeration equipment that is the subject of this
rulemaking. (EPACT 2005, Section 136(c); 42 U.S.C. 6313(c)(4)(A)) DOE
publishes today's final rule pursuant to Part A-1. The commercial
refrigeration equipment test procedures appear at 10 CFR parts 430-431.
2. Objectives of, and Legal Basis for, the Rule
EPCA requires new and amended standards to be designed to achieve
the maximum improvement in energy efficiency that is technologically
feasible and economically justified (see section II.B of this
preamble). To determine whether economic justification exists, DOE
reviews comments received and conducts analysis to determine whether
the economic benefits of the new 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) and 6316(e)(1) (see section II.B
of this preamble). 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
DOE reviewed AHRI's listing of commercial refrigeration equipment
manufacturer members and surveyed the industry to develop a list of
every manufacturer. DOE also asked interested parties and AHRI
representatives within the industry if they were aware of any other
small business manufacturers. DOE then looked at publicly available
data and contacted manufacturers, when needed, to determine if they
meet the SBA's definition of a small business manufacturing facility
and if their manufacturing facilities are located within the United
States. Based on this analysis, DOE identified nine small commercial
refrigeration equipment manufacturers and conducted on-site interviews
with two of them. See chapter 13 of the TSD for further discussion
about the methodology DOE used in the manufacturer impact analysis.
4. Description and Estimate of Compliance Requirements
Potential impacts on manufacturers, including small businesses,
come from impacts associated with commercial refrigeration equipment
design and manufacturing. All manufacturers, including small
businesses, would have to develop designs to comply with higher TSLs.
Product redesign costs tend to be fixed and do not scale with sales
volume. Thus, small manufacturers would be at a relative disadvantage
at higher TSLs because research and development efforts would be on the
same scale as those for larger companies. Furthermore, the level of
research and development needed to meet energy conservation standards
increases with more stringent energy conservation standards. DOE
expects that small manufacturers will have more difficulty funding the
required research and development necessary to meet energy conservation
standards than larger manufacturers. However, as explained in part 6 of
the IRFA, ``Significant Alternatives to the Proposed Rule,'' DOE
explicitly considered the impacts on small manufacturers of commercial
refrigeration equipment in selecting TSL 4, rather than selecting a
higher standard level. DOE expects that the differential impact on
small manufacturers of commercial refrigeration equipment would be
smaller in moving from TSL 3 to TSL 4 than it would be in moving from
TSL 4 to TSL 5.
5. Significant Issues Raised by Public Comments
DOE summarized comments from interested parties, including
commercial refrigeration equipment manufacturers, in sections IV and V
of this preamble. However, DOE did not receive any comments regarding
impacts specific to small business manufacturers for the adoption of
TSL 4 or the alternatives identified in section 6 of the IRFA,
``Significant Alternatives to the Rule.''
6. Steps DOE Has Taken To Minimize the Economic Impact on Small
Manufacturers
In consideration of the benefits and burdens of standards,
including the burdens posed on small manufacturers, DOE concluded that
TSL 4 is the highest level that can be justified for commercial
refrigeration equipment. As explained in part 6 of the IRFA,
``Significant Alternatives to the Rule,'' DOE explicitly considered the
impacts on small manufacturers of commercial refrigeration equipment in
selecting TSL 4. Levels at TSL 5 would place excessive burdens on
manufacturers, including small manufacturers, of commercial
refrigeration equipment. Such burdens would include research and
development costs and also a potential reduction of profit margins by
limiting the flexibility of customers to choose design options.
However, the differential impact on small businesses is expected to be
lower in moving from TSL 3 to TSL 4 than in moving from TSL 4 to TSL 5,
because research and development efforts are less at lower TSLs.
Chapter 13 of the TSD contains additional information about the impact
of this rulemaking on manufacturers.
Section VI.C.2 discusses how small business impacts entered into
DOE's selection of today's standards for commercial refrigeration
equipment.
[[Page 1138]]
DOE made its decision regarding standards by beginning with the highest
level considered (TSL 5) and successively eliminating TSLs until it
found a TSL that is both technically feasible and economically
justified, taking into account other EPCA criteria. As discussed in
section VI.C.2.e, DOE expects today's standard to have little or no
differential impact on small manufacturers of commercial refrigeration
equipment.
Finally, in the NOPR, DOE requested comment on the impacts on small
business manufacturers of TSL 4 and any other alternatives to the
proposed rule. DOE received no comments in reference to any undue
burden placed on small manufacturers.
C. Review Under the Paperwork Reduction Act
DOE stated in the August 2008 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 50131-32. DOE received no comments on this in
response to the August 2008 NOPR, and, as with the proposed rule,
today's rule imposes no information and recordkeeping requirements.
Therefore, DOE has taken 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 chapter 16 within the TSD for the final
rule. DOE found the environmental effects associated with today's
various standard levels for commercial refrigeration equipment to be
insignificant. Therefore, DOE is issuing a Finding of No Significant
Impact (FONSI) pursuant to the National Environmental Policy Act of
1969 (NEPA) (42 U.S.C. 4321 et seq.), the regulations of the Council on
Environmental Quality (40 CFR parts 1500-1508), and DOE's regulations
for compliance with NEPA (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 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 50132. DOE received no comments on this
issue in response to the August 2008 NOPR, and its conclusions on this
issue are the same for the final rule as they were for the proposed
rule. Therefore, DOE is taking 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 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 indicated in the August 2008 NOPR, DOE reviewed the proposed
rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub.
L. 104-4) (UMRA), which 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 50132. DOE
concluded that although this rule would not contain an
intergovernmental mandate, it may result in expenditure of $100 million
or more in one year by the private sector. Id. Therefore, in the August
2008 NOPR, DOE addressed the UMRA requirements that it prepare a
statement as to the basis, costs, benefits, and economic impacts of the
proposed rule, and that it identify and consider regulatory
alternatives to the proposed rule. Id. DOE received no comments
concerning the UMRA in response to the August 2008 NOPR, and its
conclusions on this issue are the same for the final rule as they were
for the proposed rule. Therefore, DOE is taking no further action in
today's final rule with respect to the UMRA.
H. Review Under the Treasury and General Government Appropriations Act,
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). Id. DOE
received no comments concerning Section 654 in response to the August
2008 NOPR, and, therefore, 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 that might require compensation under the Fifth Amendment to
the U.S. Constitution. 73 FR 50132. DOE received no comments concerning
Executive Order 12630 in response to the August 2008 NOPR, and,
therefore, 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,
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
[[Page 1139]]
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 has
concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001) requires Federal agencies to prepare and submit to OIRA
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 50133.
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 August 2008 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, 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. As
indicated in the August 2008 NOPR, this includes influential scientific
information related to agency regulatory actions, such as the analyses
in this rulemaking. 73 FR 50133.
As set forth in the August 2008 NOPR, DOE held formal in-progress
peer reviews of the types of analyses and processes that DOE has used
to develop the energy efficiency standards in today's rule, and issued
a report on these peer reviews. Id.
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 each House of Congress.
VIII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of today's final
rule.
Issued in Washington, DC, on December 31, 2008.
John F. Mizroch,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
List of Subjects in 10 CFR Part 431
Administrative practice and procedure, Confidential business
information, Energy conservation, Incorporation by reference.
0
For the reasons set forth in the preamble, chapter II of title 10, Code
of Federal Regulations, part 431 is amended 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 431.62 of subpart C is amended by adding in alphabetical
order new definitions for ``air-curtain angle,'' ``commercial hybrid
refrigerator, freezer, and refrigerator-freezer,'' ``door angle,''
``horizontal closed,'' ``horizontal open,'' ``semivertical open,''
``vertical closed,'' ``vertical open,'' and ``wedge case'' to read as
follows:
Sec. 431.62 Definitions concerning commercial refrigerators,
freezers, and refrigerator-freezers.
Air-curtain angle means:
(1) For equipment without doors and without a discharge air grille
or discharge air honeycomb, the angle between a vertical line extended
down from the highest point on the manufacturer's recommended load
limit line and the load limit line itself, when the equipment is viewed
in cross-section; and
(2) For all other equipment without doors, the angle formed between
a vertical line and the straight line drawn by connecting the point at
the inside edge of the discharge air opening with the point at the
inside edge of the return air opening, when the equipment is viewed in
cross-section.
* * * * *
Commercial hybrid refrigerator, freezer, and refrigerator-freezer
means a commercial refrigerator, freezer, or refrigerator-freezer that
has two or more chilled and/or frozen compartments that are:
(1) In two or more different equipment families,
(2) Contained in one cabinet, and
(3) Sold as a single unit.
* * * * *
Door angle means:
(1) For equipment with flat doors, the angle between a vertical
line and the line formed by the plane of the door, when the equipment
is viewed in cross-section; and
(2) For equipment with curved doors, the angle formed between a
vertical line and the straight line drawn by connecting the top and
bottom points where the display area glass joins the cabinet, when the
equipment is viewed in cross-section.
* * * * *
Horizontal Closed means equipment with hinged or sliding doors and
a door angle greater than or equal to 45[deg].
* * * * *
Horizontal Open means equipment without doors and an air-curtain
angle greater than or equal to 80[deg] from the vertical.
* * * * *
Semivertical Open means equipment without doors and an air-curtain
angle greater than or equal to 10[deg] and less than 80[deg] from the
vertical.
* * * * *
Vertical Closed means equipment with hinged or sliding doors and a
door angle less than 45[deg].
Vertical Open means equipment without doors and an air-curtain
angle greater than or equal to 0[deg] and less than 10[deg] from the
vertical.
Wedge case means a commercial refrigerator, freezer, or
refrigerator-freezer that forms the transition between two regularly
shaped display cases.
0
3. Section 431.63 of subpart C is revised to read as follows:
Sec. 431.63 Materials incorporated by reference.
(a) General. We incorporate by reference the following standards
into Subpart C of Part 431. The material listed has been approved for
incorporation by reference by the Director of the Federal Register in
accordance with 5 U.S.C. 552(a) and 1 CFR 51. Any subsequent amendment
to a standard by the standard-setting organization will not affect the
DOE regulations unless and until amended by DOE. Material is
incorporated as it exists on the date of the approval and a notice of
any change in the material will be published in the Federal
[[Page 1140]]
Register. All approved material is available for inspection at the
National Archives and Records Administration (NARA). For information on
the availability of this material at NARA, call 202-741-6030 or go to
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. Also, this material is available for
inspection at U.S. Department of Energy, Office of Energy Efficiency
and Renewable Energy, Building Technologies Program, 6th Floor, 950
L'Enfant Plaza, SW., Washington, DC 20024, 202-586-2945, or go to:
http://www1.eere.energy.gov/buildings/appliance_standards/. Standards
can be obtained from the sources listed below.
(b) ANSI. American National Standards Institute, 25 W. 43rd Street,
4th Floor, New York, NY 10036, 212-642-4900, or go to http://www.ansi.org:
(1) ANSI /AHAM HRF-1-2004, Energy, Performance and Capacity of
Household Refrigerators, Refrigerator-Freezers and Freezers, approved
July 7, 2004, IBR approved for Sec. 431.64.
(2) [Reserved]
(c) ARI. Air-Conditioning and Refrigeration Institute, 4100 N.
Fairfax Dr., Suite 200, Arlington, VA 22203, or http://www.ari.org/std/standards.html:
(1) ARI Standard 1200-2006, Performance Rating of Commercial
Refrigerated Display Merchandisers and Storage Cabinets, 2006, IBR
approved for Sec. Sec. 431.64 and 431.66.
(2) [Reserved]
0
4. Section 431.66 of subpart C is amended by adding new paragraphs
(a)(3) and (d) to read as follows:
Sec. 431.66 Energy conservation standards and their effective dates.
(a) * * *
(3) The term ``TDA'' means the total display area (ft2)
of the case, as defined in the ARI Standard 1200-2006, appendix D
(incorporated by reference, see Sec. 431.63).
* * * * *
(d) Each commercial refrigerator, freezer, and refrigerator-freezer
with a self-contained condensing unit and without doors; commercial
refrigerator, freezer, and refrigerator-freezer with a remote
condensing unit; and commercial ice-cream freezer manufactured on or
after January 1, 2012, shall have a daily energy consumption (in
kilowatt hours per day) that does not exceed the levels specified:
(1) For equipment other than hybrid equipment, refrigerator-
freezers or wedge cases:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rating Operating
Equipment category Condensing unit Equipment family temp. temp. Equipment class Maximum daily energy
configuration ([deg]F) ([deg]F) designation \*\ consumption (kWh/day)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Remote Condensing Commercial Remote (RC)....... Vertical Open (VOP).... 38 (M) >=32 VOP.RC.M........... 0.82 x TDA + 4.07
Refrigerators and Commercial 0 (L) <32 VOP.RC.L........... 2.27 x TDA + 6.85
Freezers.
Semivertical Open (SVO) 38 (M) >=32 SVO.RC.M........... 0.83 x TDA + 3.18
0 (L) <32 SVO.RC.L........... 2.27 x TDA + 6.85
Horizontal Open (HZO).. 38 (M) >=32 HZO.RC.M........... 0.35 x TDA + 2.88
0 (L) <32 HZO.RC.L........... 0.57 x TDA + 6.88
Vertical Closed 38 (M) >=32 VCT.RC.M........... 0.22 x TDA + 1.95
Transparent (VCT). 0 (L) <32 VCT.RC.L........... 0.56 x TDA + 2.61
Horizontal Closed 38 (M) >=32 HCT.RC.M........... 0.16 x TDA + 0.13
Transparent (HCT). 0 (L) <32 HCT.RC.L........... 0.34 x TDA + 0.26
Vertical Closed Solid 38 (M) >=32 VCS.RC.M........... 0.11 x V + 0.26
(VCS). 0 (L) <32 VCS.RC.L........... 0.23 x V + 0.54
Horizontal Closed Solid 38 (M) >=32 HCS.RC.M........... 0.11 x V + 0.26
(HCS). 0 (L) <32 HCS.RC.L........... 0.23 x V + 0.54
Service Over Counter 38 (M) >=32 SOC.RC.M........... 0.51 x TDA + 0.11
(SOC). 0 (L) <32 SOC.RC.L........... 1.08 x TDA + 0.22
Self-Contained Commercial Self-Contained Vertical Open (VOP).... 38 (M) >=32 VOP.SC.M........... 1.74 x TDA + 4.71
Refrigerators and Commercial (SC). 0 (L) <32 VOP.SC.L........... 4.37 x TDA + 11.82
Freezers without Doors.
Semivertical Open (SVO) 38 (M) >=32 SVO.SC.M........... 1.73 x TDA + 4.59
0 (L) <32 SVO.SC.L........... 4.34 x TDA + 11.51
Horizontal Open........ 38 (M) >=32 HZO.SC.M........... 0.77 x TDA + 5.55
0 (L) <32 HZO.SC.L........... 1.92 x TDA + 7.08
Commercial Ice-Cream Freezers.. Remote (RC)....... Vertical Open (VOP).... -15 (I) <=-5 \**\ VOP.RC.I........... 2.89 x TDA + 8.7
Semivertical Open (SVO) ........... ........... SVO.RC.I........... 2.89 x TDA + 8.7
Horizontal Open (HZO).. ........... ........... HZO.RC.I........... 0.72 x TDA + 8.74
Vertical Closed ........... ........... VCT.RC.I........... 0.66 x TDA + 3.05
Transparent (VCT).
Horizontal Closed ........... ........... HCT.RC.I........... 0.4 x TDA + 0.31
Transparent (HCT).
Vertical Closed Solid ........... ........... VCS.RC.I........... 0.27 x V + 0.63
(VCS).
Horizontal Closed Solid ........... ........... HCS.RC.I........... 0.27 x V + 0.63
(HCS).
Service Over Counter ........... ........... SOC.RC.I........... 1.26 x TDA + 0.26
(SVO).
Self-Contained Vertical Open (VOP).... ........... ........... VOP.SC.I........... 5.55 x TDA + 15.02
(SC).
Semivertical Open (SVO) ........... ........... SVO.SC.I........... 5.52 x TDA + 14.63
Horizontal Open (HZO).. ........... ........... HZO.SC.I........... 2.44 x TDA + 9
Vertical Closed ........... ........... VCT.SC.I........... 0.67 x TDA + 3.29
Transparent (VCT).
Horizontal Closed ........... ........... HCT.SC.I........... 0.56 x TDA + 0.43
Transparent (HCT).
[[Page 1141]]
Vertical Closed Solid ........... ........... VCS.SC.I........... 0.38 x V + 0.88
(VCS).
Horizontal Closed Solid ........... ........... HCS.SC.I........... 0.38 x V + 0.88
(HCS).
Service Over Counter ........... ........... SOC.SC.I........... 1.76 x TDA + 0.36
(SVO).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\*\ The meaning of the letters in this column is indicated in the three columns to the left.
\**\ Ice-cream freezer is defined in 10 CFR 431.62 as a commercial freezer that is designed to operate at or below -5 [deg]F (-21 [deg]C) and that the
manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice cream.
(2) For commercial refrigeration equipment with two or more
compartments (i.e., hybrid refrigerators, hybrid freezers, hybrid
refrigerator-freezers, and non-hybrid refrigerator-freezers), the
maximum daily energy consumption (MDEC) for each model shall be the sum
of the MDEC values for all of its compartments. For each compartment,
measure the TDA or volume of that compartment, and determine the
appropriate equipment class based on that compartment's equipment
family, condensing unit configuration, and designed operating
temperature. The MDEC limit for each compartment shall be the
calculated value obtained by entering that compartment's TDA or volume
into the standard equation in paragraph (d)(1) of this section for that
compartment's equipment class. Measure the calculated daily energy
consumption (CDEC) or total daily energy consumption (TDEC) for the
entire case:
(i) For remote condensing commercial hybrid refrigerators, hybrid
freezers, hybrid refrigerator-freezers, and non-hybrid refrigerator-
freezers, where two or more independent condensing units each
separately cool only one compartment, measure the total refrigeration
load of each compartment separately according to the ARI Standard 1200-
2006 test procedure (incorporated by reference, see Sec. 431.63).
Calculate compressor energy consumption (CEC) for each compartment
using Table 1 in ARI Standard 1200-2006 using the saturated evaporator
temperature for that compartment. The CDEC for the entire case shall be
the sum of the CEC for each compartment, fan energy consumption (FEC),
lighting energy consumption (LEC), anti-condensate energy consumption
(AEC), defrost energy consumption (DEC), and condensate evaporator pan
energy consumption (PEC) (as measured in ARI Standard 1200-2006).
(ii) For remote condensing commercial hybrid refrigerators, hybrid
freezers, hybrid refrigerator-freezers, and non-hybrid refrigerator-
freezers, where two or more compartments are cooled collectively by one
condensing unit, measure the total refrigeration load of the entire
case according to the ARI Standard 1200-2006 test procedure
(incorporated by reference, see Sec. 431.63). Calculate a weighted
saturated evaporator temperature for the entire case by:
(A) Multiplying the saturated evaporator temperature of each
compartment by the volume of that compartment (as measured in ARI
Standard 1200-2006),
(B) Summing the resulting values for all compartments, and
(C) Dividing the resulting total by the total volume of all
compartments.
Calculate the CEC for the entire case using Table 1 in ARI Standard
1200-2006 (incorporated by reference, see Sec. 431.63), using the
total refrigeration load and the weighted average saturated evaporator
temperature. The CDEC for the entire case shall be the sum of the CEC,
FEC, LEC, AEC, DEC, and PEC.
(iii) For self-contained commercial hybrid refrigerators, hybrid
freezers, hybrid refrigerator-freezers, and non-hybrid refrigerator-
freezers, measure the TDEC for the entire case according to the ARI
Standard 1200-2006 test procedure (incorporated by reference, see Sec.
431.63).
(3) For remote-condensing and self-contained wedge cases, measure
the CDEC or TDEC according to the ARI Standard 1200-2006 test procedure
(incorporated by reference, see Sec. 431.63). The MDEC for each model
shall be the amount derived by incorporating into the standards
equation in paragraph (d)(1) of this section for the appropriate
equipment class a value for the TDA that is the product of:
(i) The vertical height of the air-curtain (or glass in a
transparent door) and (ii) The largest overall width of the case, when
viewed from the front.
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.
October 24, 2008.
Warren Belmar, Esq., Deputy General Counsel for Energy Policy,
Department of Energy, Washington, DC 20585.
Dear Deputy General Counsel Belmar: I am responding to your
August 12, 2008 letter seeking the views of the Attorney General
about the potential impact on competition of the proposed energy
efficiency standards for commercial refrigeration equipment. The
Energy Policy and Conservation Act (``EPCA'') authorizes the
Department of Energy (``DOE'') to establish energy conservation
standards for a number of appliances where DOE determines that those
standards would be technologically feasible, economically justified,
and result in significant energy savings.
Your request was submitted pursuant to Section 325(o)(2)(B)(i)
of the Energy Policy and Conservation Act, 42 U.S.C. Sec. 6295
(``EPCA''), which states that, before the Secretary of Energy may
prescribe a new or amended energy conservation standard, the
Secretary shall ask the Attorney General to make a determination of
``the impact of any lessening of competition * * * that is likely to
result from the imposition of standard.'' The Attorney General's
responsibility for responding to requests from other departments
about the effect of a program on competition has been delegated to
the Assistant Attorney General for the Antitrust Division in 28 CFR
Sec. 0.40(g). In conducting its analysis the Antitrust Division
examines whether a proposed standard may lessen competition, for
example, by 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.
Along with your request, you sent us the draft final rule and a
number of other documents relating to commercial refrigeration
equipment, including a hearing transcript and the names of parties
interviewed by DOE's consultant.
We have concluded that the proposed standards would not
adversely affect competition. In reaching this conclusion, we note
that the proposed standards were
[[Page 1142]]
developed taking into account comments by commercial refrigeration
equipment manufacturers, the American Society of Heating,
Refrigerating, and Air-Conditioning Engineers, the American Council
for an Energy Efficient Economy and electric utilities. We note
further that all key components are available for purchase by any
manufacturer; therefore no manufacturer has a technological
advantage in meeting the proposed standards. Finally, DOE found no
significant differences between the concerns of large and small
manufacturers, and we found no evidence that certain manufacturers
would be placed at a competitive disadvantage to other
manufacturers.
In conclusion, the Antitrust Division does not believe the
proposed final rule would adversely affect competition.
Yours sincerely,
Deborah A. Garza,
Acting Assistant Attorney General.
[FR Doc. E8-31449 Filed 1-8-09; 8:45 am]
BILLING CODE 6450-01-P