Energy Conservation Program: Energy Conservation Standards for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps

Federal RegisterSep 16, 2014

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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number EERE-2012-BT-STD-0029]

RIN 1904-AC82

Energy Conservation Program: Energy Conservation Standards for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps

AGENCY:

Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION:

Notice of proposed rulemaking (NOPR) and public meeting.

SUMMARY:

The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs). EPCA also requires the U.S. Department of Energy (DOE) to determine whether more-stringent, amended standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this document, DOE proposes amended energy conservation standards for PTACs and PTHPs. The document also announces a public meeting to receive comment on these proposed standards and associated analyses and results.

DATES:

DOE will hold a public meeting on Wednesday, October 29, 2014, from 9 a.m. to 4 p.m., in Washington, DC. The meeting will also be broadcast as a webinar. See section VII, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.

DOE will accept comments, data, and information regarding this notice of proposed rulemaking (NOPR) before and after the public meeting, but no later than November 17, 2014. See section VII, “Public Participation” for details.

ADDRESSES:

The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at (202) 586-2945. For more information, refer to the Public Participation section near the end of this document.

Any comments submitted must identify the NOPR for Energy Conservation Standards for packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs), and provide docket number EERE-2012-BT-STD-0029 and/or regulatory information number (RIN) number 1904-AC82. Comments may be submitted using any of the following methods:

Federal eRulemaking Portal: www.regulations.gov.

Follow the instructions for submitting comments.

Email: pkgTerminalAC-HP2012STD0029@ee.doe.gov.

Include the docket number and/or RIN in the subject line of the message.

Mail:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, Mailstop EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. If possible, please submit all items on a CD. It is not necessary to include printed copies.

Hand Delivery/Courier:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite 600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies.

Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to Office of Energy Efficiency and Renewable Energy through the methods listed above and by email to

Chad_S_Whiteman@omb.eop.gov.

For detailed instructions on submitting comments and additional information on the rulemaking process, see section VII of this document, “Public Participation.”

Docket:

The docket, which includes

Federal Register

notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at

www.regulations.gov.

All documents in the docket are listed in the

www.regulations.gov

index. However, some documents listed in the index, such as those containing information that is exempt from public disclosure, may not be publicly available.

A link to the docket Web page can be found at:

http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0029.

This Web page contains a link to the docket for this document on the

www.regulations.gov

site. The

www.regulations.gov

Web page contains simple instructions on how to access all documents, including public comments, in the docket. See section VII for further information on how to submit comments through

www.regulations.gov.

For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact Ms. Brenda Edwards at (202) 586-2945 or by email:

Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT:

Mr. Ronald Majette, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-7935. Email:

PTACs@ee.doe.gov.

Ms. Jennifer Tiedeman, U.S. Department of Energy, Office of the General Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 287-6111. Email:

Jennifer.Tiedeman@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Rule

A. Benefits and Costs to Customers

B. Impact on Manufacturers

C. National Benefits

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for PTACs and PTHPs

III. General Discussion

A. Compliance Dates

B. Equipment Classes and Scope of Coverage

C. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

D. Energy Savings

1. Determination of Savings

2. Significance of Savings

E. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Customers

b. Savings in Operating Costs Compared to Increase in Price

c. Energy Savings

d. Lessening of Utility or Performance of Equipment

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

1. Definitions of a PTAC and a PTHP

2. Equipment Classes

3. Market Assessment

a. Trade Association

b. Manufacturers

c. Shipments

4. Technology Assessment

B. Screening Analysis

C. Engineering Analysis

1. Methodology

2. Equipment Classes Analyzed

3. Cost Model

4. Baseline Efficiency Level

5. Incremental Efficiency Levels

6. Equipment Testing and Reverse Engineering

7. Cost-Efficiency Results

D. Markups To Determine Equipment Price

E. Energy Use Analysis

F. Life Cycle Cost and Payback Period Analyses

1. Equipment and Installation Costs

2. Unit Energy Consumption

3. Electricity Prices and Electricity Price Trends

4. Repair Costs

5. Maintenance Costs

6. Lifetime

7. Discount Rate

8. Base Case Efficiency Distribution

9. Payback Period Inputs

10. Rebuttable-Presumption Payback Period

G. Shipments Analysis

H. National Impact Analysis—National Energy Savings and Net Present Value Analyses

I. Customer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model

a. Government Regulatory Impact Model Key Inputs

b. Government Regulatory Impact Model Scenarios

c. Manufacturer Interviews

d. Size Constraints

e. Impact on Manufacturer Profitability

f. Impact on Consumer Utility

3. Discussion of Comments

K. Emissions Analysis

L. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions

b. Development of Social Cost of Carbon Values

c. Current Approach and Key Assumptions

2. Valuation of Other Emissions Reductions

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Commercial Customers

a. Life-Cycle Cost and Payback Period

b. Customer Sub-Group Analysis

c. Rebuttable Presumption Payback

2. Economic Impacts on Manufacturers

a. Industry Cash Flow Analysis Results

b. Direct Impacts on Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Amount and Significance of Energy Savings

b. Net Present Value of Customer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Utility or Performance of Equipment

5. Impact of Any Lessening of Competition

6. Need of the Nation to Conserve Energy

7. Summary of National Economic Impacts

8. Other Factors

C. Proposed Standard

1. Benefits and Burdens of Trial Standard Levels Considered for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps

2. Summary of Benefits and Costs (Annualized) of the Proposed Standards

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

1. Description and Estimated Number of Small Entities Regulated

a. Methodology for Estimating the Number of Small Entities

b. Manufacturer Participation

c. PTAC and PTHP Industry Structure and Nature of Competition

2. Description and Estimate of Compliance Requirements

3. Duplication, Overlap, and Conflict With Other Rules and Regulations

4. Significant Alternatives to the Rule

C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Review Under the Treasury and General Government Appropriations Act, 1999

I. Review Under Executive Order 12630

J. Review Under the Treasury and General Government Appropriations Act, 2001

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

VII. Public Participation

A. Attendance at the Public Meeting

B. Procedure for Submitting Prepared General Statements For Distribution

C. Conduct of the Public Meeting

D. Submission of Comments

E. Issues on Which DOE Seeks Comment

I. Summary of the Proposed Rule

Title III, Part C

of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), added by Public Law 95-619, Title IV, section 441(a), established the Energy Conservation Program for Certain Industrial Equipment.

This equipment includes packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs), the subjects of this document.

For editorial reasons, upon codification in the U.S. Code, Part C was redesignated Part A-1.

All references to EPCA in this document refer to the statute as amended through the American Energy Manufacturing Technical Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012).

Pursuant to EPCA, DOE may prescribe a standard more stringent than the level in American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)/Illuminating Engineering Society of North America (IESNA) Standard 90.1, after ASHRAE amends the energy conservation standards found in ASHRAE/IESNA Standard 90.1, if DOE can demonstrate “by clear and convincing evidence,” that such a more stringent standard “would result in significant additional conservation of energy and is technologically feasible and economically justified.” (42 U.S.C. 6313(a)(6)(A)(II)) In accordance with these criteria, DOE proposes to amend the energy conservation standards for standard-sized PTACs and PTHPs by raising the efficiency levels for this equipment to the levels shown in Table I.1, above the efficiency levels specified by ANSI/ASHRAE/IES Standard 90.1-2013. The proposed standards, which prescribe the minimum allowable energy efficiency ratio (EER) and, for packaged terminal heat pumps, coefficient of performance (COP), are shown in Table I.1.

The proposed standards would apply to all covered PTACs and PTHPs manufactured on or after the date four years after publication of the final rule in the

Federal Register

. (42 U.S.C. 6313(a)(6)(D)) The proposed standards for PTACs and PTHPs represent an improvement in energy efficiency of four to seven percent compared to the efficiency levels specified by ANSI/ASHRAE/IES Standard 90.1-2013, depending on the equipment capacity.

Table I.1—Proposed Energy Conservation Standards for PTACs and PTHPs

Equipment class

Equipment

Category

Cooling capacity

Proposed energy conservation standards *

PTAC

Standard Size **

<7,000 Btu/h

EER = 12.6

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 14.9−(0.324 × Cap ‡)

>15,000 Btu/h

EER = 10.0

PTHP

Standard Size **

<7,000 Btu/h

EER = 12.6

COP = 3.5

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 14.9 − (0.324 × Cap ‡)

COP = 4.0 − (0.064 × Cap ‡)

>15,000 Btu/h

EER = 10.0

COP = 3.0

* For equipment rated according to the DOE test procedure (ARI Standard 310/380-2004), all energy efficiency ratio (EER) values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85 °F entering water temperature for water cooled equipment. All coefficient of performance (COP) values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled equipment, and at 70 °F entering water temperature for water-source heat pumps.

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide.

† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.

‡ Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 °F outdoor dry-bulb temperature.

A. Benefits and Costs to Customers

Table I.2 presents DOE's evaluation of the economic impacts of the proposed standards on customers of PTAC and PTHP equipment, as measured by the average life-cycle cost (LCC) savings and the median payback period. LCC savings refers to the additional dollar amount a customer is expected to save (or expend) over the equipment's lifetime when using equipment with higher efficiency compared to baseline efficiency equipment. For the two PTAC equipment classes the customer is expected to face costs, and for the two PTHP equipment classes the customer is expected to observe savings under the amended standards proposed in this document.

Table I.2—Impacts of Proposed Standards on Customers of PTACs and PTHPs

Cooling capacity

Average LCC

savings

(2013$)

Median payback period

(years)

<12,000 Btu/h

$0.40

8.0

≥12,000 Btu/h

($2.11)

9.9

* Numbers in parentheses indicate negative savings.

Note:

Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide.

B. Impact on Manufacturers

The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2014 to 2048). Using a real discount rate of 8.5 percent, DOE estimates that the INPV for manufacturers of PTACs and PTHPs is $58.5 million in 2013$. Under the proposed standards, DOE expects that manufacturers may lose up to 1.3 percent of INPV, which corresponds to approximately $0.7 million.

C. National Benefits

All monetary values in this section are expressed in 2013 dollars and are discounted to 2013.

DOE's analyses indicate that the proposed standards would save a significant amount of energy. The lifetime savings for PTACs and PTHPs purchased in the 30-year period that begins in the year of expected compliance with amended standards (2019-2048) amount to 0.06 quadrillion British thermal units (quads). The annual energy savings in 2030 (1.49 thousandths of a quad) are equivalent to 0.08 thousandths of a percent of total U.S. commercial primary energy consumption in 2013.

Based on U.S. Department of Energy, Energy Information Administration,

Annual Energy Outlook 2013.

The cumulative net present value (NPV) of total customer costs and savings of the proposed standards for PTACs and PTHPs ranges from $10.7 million (at a 7-percent discount rate) to $69.0 million (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increase in product costs for equipment purchased in 2019-2048.

In addition, the proposed standards would have significant environmental benefits. The energy savings would result in cumulative emission reductions of 4.3 million metric tons (Mt)

of carbon dioxide (CO

), 16 thousand tons of methane, 9.7 thousand tons of sulfur dioxide (SO

), and 4.4 thousand tons of nitrogen oxides (NO

The cumulative reduction in CO

emissions through 2030 amounts to 0.7 Mt.

A metric ton is equivalent to 1.1 short tons. Results for NO

and Hg are presented in short tons.

DOE calculated emissions reductions relative to the

Annual Energy Outlook 2013

(

AEO 2013

) reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of December 31, 2012. The reduction in mercury (Hg) emissions is expected to be very small.

The value of the CO

reductions is calculated using a range of values per metric ton of CO

(otherwise known as the Social Cost of Carbon, or SCC) developed by a recent Federal interagency process.

The derivation of

the SCC values is discussed in section IV.L.1. Using discount rates appropriate for each set of SCC values, DOE estimates that the present monetary value of the CO

emissions reduction is between $28.1 million and $412.1 million. DOE also estimates that the present monetary value of the NO

emissions reduction is $2.20 million at a 7-percent discount rate and $5.43 million at a 3-percent discount rate.

Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866.

Interagency Working Group on Social Cost of Carbon, United States Government, May 2013; revised November 2013. Available online at

www.whitehouse.gov/sites/default/files/omb/assets/

inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf

DOE is currently investigating valuation of avoided Hg and SO

emissions.

Table I.3 summarizes the national economic costs and benefits expected to result from the proposed standards for PTACs and PTHPs.

Table I.3—Summary of National Economic Benefits and Costs of Proposed Energy Conservation Standards for PTACs and PTHPs *

Category

Present value

million 2013$

Discount rate

(percent)

Benefits

Operating Cost Savings

101.5

241.9

Reduction Monetized Value ($12.0/t case) **

28.1

Reduction Monetized Value ($40.5/t case) **

133.0

Reduction Monetized Value ($62.4/t case) **

212.3

2.5

Reduction Monetized Value ($119/t case) **

412.1

Reduction Monetized Value (at $2,684/ton) **

2.20

5.43

Total Benefits †

236.6

380.2

Costs

Incremental Installed Costs

90.8

172.9

Total Net Benefits

Including Emissions Reduction Monetized Value †

145.9

207.3

* This table presents the costs and benefits associated with PTACs and PTHPs shipped in 2019-2048. These results include benefits to customers which accrue after 2048 from the equipment purchased in 2019-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to amended standards, some of which may be incurred in preparation for the rule.

** The CO

values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporates an escalation factor.

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.5/t case).

The benefits and costs of the proposed standards, for equipment sold in 2019-2048, can also be expressed in terms of annualized values. The annualized monetary values are the sum of (1) the annualized national economic value of the benefits from customer operation of products that meet the proposed standards (consisting primarily of operating cost savings from using less energy, minus increases in equipment purchase and installation costs, which is another way of representing customer NPV), and (2) the annualized monetary value of the benefits of emission reductions, including CO

emission reductions.

DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized values. First, DOE calculated a present value in 2013, the year used for discounting the NPV of total consumer costs and savings, for the time-series of costs and benefits using discount rates of three and seven percent for all costs and benefits except for the value of CO

reductions. For the latter, DOE used a range of discount rates, as shown in Table I.3. From the present value, DOE then calculated the fixed annual payment over a 30-year period (2019 through 2048) that yields the same present value. The fixed annual payment is the annualized value. Although DOE calculated annualized values, this does not imply that the time-series of cost and benefits from which the annualized values were determined is a steady stream of payments.

Although combining the values of operating savings and CO

emission reductions provides a useful perspective, two issues should be considered. First, the national operating savings are domestic U.S. customer monetary savings that occur as a result of market transactions while the value of CO

reductions is based on a global value. Second, the assessments of operating cost savings and CO

savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of PTACs and PTHPs shipped in 2019-2048. The SCC values, on the other hand, reflect the present value of some future climate-related impacts resulting from the emission of one ton of carbon dioxide in each year. These impacts continue well beyond 2100.

Estimates of annualized benefits and costs of the proposed standards are shown in Table I.4. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO

reduction, for which DOE used a 3-percent discount rate along with the average SCC series that uses a 3-percent discount rate, the cost of the proposed standards is $8.38 million per year in increased equipment costs, while the benefits are $9.4 million per year in reduced equipment operating costs, $7.2 million in CO

reductions, and $0.20 million in reduced NO

emissions. In this case, the net benefit amounts to

$8.4 million per year. Using a 3-percent discount rate for all benefits and costs and the average SCC series, the estimated cost of the proposed standards is $9.36 million per year in increased equipment costs, while the benefits are $13.1 million per year in reduced operating costs, $7.2 million in CO

reductions, and $0.29 million in reduced NO

emissions. In this case, the net benefit amounts to $11.2 million per year.

Table I.4—Annualized Benefits and Costs of Proposed Energy Conservation Standards for PTACs and PTHPs

TSL 3

Discount rate

(percent)

Million 2013$/year

Primary estimate *

Low net

benefits

estimate *

High net benefits estimate *

Benefits

Operating Cost Savings

9.4

13.1

9.0

2.5

9.9

3.9

Reduction Monetized Value ($12.0/t case) **

2.0

Reduction Monetized Value ($40.5/t case) **

7.2

Reduction Monetized Value ($62.4/t case) **

2.5

10.7

Reduction Monetized Value ($119/t case) **

22.3

Reduction Monetized Value (at $2,684/ton) **

0.20

0.29

0.20

0.29

0.20

0.29

Total Benefits †

7 plus CO

range

3 plus CO

range

11.6 to 31.9

16.8

15.4 to 35.7

20.6

11.2 to 31.5

16.4

14.8 to 35.0

19.9

12.1 to 32.4

17.3

16.2 to 36.5

21.4

Costs

Incremental Product Costs

8.38

9.36

8.18

9.06

10.61

12.29

Net Benefits

Total †

7 plus CO

range

3 plus CO

range

3.2 to 23.5

8.4

6.0 to 26.3

11.2

3.0 to 23.3

8.2

5.7 to 26.0

10.9

1.5 to 21.8

6.7

3.9 to 24.2

9.1

* This table presents the annualized costs and benefits associated with PTACs and PTHPs shipped in 2019-2048. These results include benefits to customers which accrue after 2048 from the equipment purchased in 2019-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to amended standards, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the

AEO 2013

Reference case, Low Estimate, and High Estimate, respectively. All three estimates use a constant rate for projected product price trends.

** The CO

† Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.5/t case). In the rows labeled “7% plus CO

range” and “3% plus CO

range,” the operating cost and NO

benefits are calculated using the labeled discount rate, and those values are added to the full range of CO

values.

DOE has tentatively concluded that the proposed standards represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in a significant conservation of energy. DOE further notes that products achieving these standard levels are already commercially available for at least some, if not most, equipment classes covered by this proposal. Based on the analyses described above, DOE has tentatively concluded that the benefits of the proposed standards to the Nation (energy savings, positive NPV of customer benefits, customer LCC savings, and emission reductions) would outweigh the burdens (loss of INPV for manufacturers and LCC increases for some customers).

DOE also considered more-stringent energy efficiency levels as trial standard levels, and is still considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more-stringent energy efficiency levels would outweigh the projected benefits. Based on consideration of the public comments DOE receives in response to this document and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this document that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part.

As noted previously, in this rulemaking DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. (a)(6)(A)(ii)(I)) In order to adopt levels above ASHRAE, DOE must determine that such a standard would result in significant additional conservation of

energy and is technologically feasible and economically justified. (42 U.S.C. (a)(6)(A)(ii)(II)) To meet this statutory requirement, in this summary and throughout the NOPR, DOE examined and presents consumer, manufacturer, and economic benefits for the proposed PTAC and PTHP standards as compared to the default automatic adoption of the ASHRAE level, where no models would be available on the market at the current Federal minimum. However, for informational purposes only, in section V.C. DOE also presents summary results for the proposed standards in comparison to a base case including the current Federal minimum standards. This information was not used in the selection of the proposed standard level.

The following section briefly discusses the statutory authority underlying this proposal, as well as some of the relevant historical background related to the establishment of standards for PTACs and PTHPs.

II. Introduction

A. Authority

Title III, Part C

of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6311-6317, as codified), added by Public Law 95-619, Title IV, section 441(a), established the Energy Conservation Program for Certain Industrial Equipment, which includes the PTAC and PTHP equipment that is the subject of this document. In general, this program addresses the energy efficiency of certain types of commercial and industrial equipment. Relevant provisions of the Act include definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labelling provisions (42 U.S.C. 6315), and the authority to require information and reports from manufacturers (42 U.S.C. 6316).

For editorial reasons, upon codification in the U.S. Code, Part C was re-designated Part A-1.

EPCA contains mandatory energy conservation standards for commercial heating, air-conditioning, and water-heating equipment. (42 U.S.C. 6313(a)) Specifically, the statute sets standards for small, large, and very large commercial package air-conditioning and heating equipment, PTACs and PTHPs, warm-air furnaces, packaged boilers, storage water heaters, instantaneous water heaters, and unfired hot water storage tanks.

Id.

EPCA established Federal energy conservation standards that generally correspond to the levels in ASHRAE Standard 90.1, as in effect on October 24, 1992 (i.e., ASHRAE/IESNA Standard 90.1-1989), for each type of covered equipment listed in 42 U.S.C. 6313(a).

EPCA requires that DOE conduct a rulemaking to consider amended energy conservation standards for a variety of enumerated types of commercial heating, ventilating, and air-conditioning equipment (of which PTACs and PTHPs are a subset) each time ASHRAE Standard 90.1 is updated with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) Such review is to be conducted in accordance with the procedures established for ASHRAE equipment under 42 U.S.C. 6313(a)(6). According to 42 U.S.C. 6313(a)(6)(A), for each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must publish in the

Federal Register

an analysis of the energy savings potential of amended energy efficiency standards within 180 days of the amendment of ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(i)) EPCA further directs that DOE must adopt amended standards at the new efficiency level specified in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent level would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) In addition, DOE notes that pursuant to the Energy Independence and Security Act of 2007 (EISA 2007) amendments to EPCA, the agency must periodically review its already-established energy conservation standards for ASHRAE equipment. (42 U.S.C. 6313(a)(6)(C)) In December 2012, this provision was further amended by the American Energy Manufacturing Technical Corrections Act (AEMTCA) to clarify that DOE's periodic review of ASHRAE equipment must occur “[e]very six years.” (42 U.S.C. 6313(a)(6)(C)(i))

AEMTCA also modified EPCA to specify that any amendment to the design requirements with respect to the ASHRAE equipment would trigger DOE review of the potential energy savings under U.S.C. 6313(a)(6)(A)(i). Additionally, AEMTCA amended EPCA to require that if DOE proposes an amended standard for ASHRAE equipment at levels more stringent than those in ASHRAE Standard 90.1, DOE, in deciding whether a standard is economically justified, must determine, after receiving comments on the proposed standard, whether the benefits of the standard exceed its burdens by considering, to the maximum 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 the product in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses of the products likely to result from the standard;

(3) The total projected amount of energy savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the products likely to result from the standard;

(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

(6) The need for national energy conservation; and

(7) Other factors the Secretary considers relevant.

(42 U.S.C. 6313(a)(6)(B)(ii))

Because ASHRAE did not update its efficiency levels for PTACs and PTHPs in ANSI/ASHRAE/IES Standard 90.1-2010, DOE began this rulemaking by analyzing amended standards consistent with the procedures defined under 42 U.S.C. 6313(a)(6)(C). Specifically, pursuant to 42 U.S.C. 6313(a)(6)(C)(i)(II), DOE, must use the procedures established under subparagraph (B) when issuing a NOPR. The statutory provision at 42 U.S.C. 6313(a)(6)(B)(ii), recently amended by AEMTCA, states that in deciding whether a standard is economically justified, DOE must determine, after receiving comments on the proposed standard, whether the benefits of the standard exceed its burdens by considering, to the maximum extent practicable, the seven factors stated above.

However, before DOE could finalize this NOPR, ASHRAE acted on October 9, 2013 to adopt ANSI/ASHRAE/IES Standard 90.1-2013, and this revision did contain amended standard levels for PTACs, thereby triggering DOE's statutory obligation under 42 U.S.C. 6313(a)(6)(A) to promulgate an amended uniform national standard at those levels unless DOE determines that there is clear and convincing evidence supporting the adoption of more-stringent energy conservation standards than the ASHRAE levels. Consequently, DOE prepared an analysis of the energy savings potential of amended standards at the ANSI/ASHRAE/IES Standard 90.1-2013 levels (as required by 42 U.S.C. 6313(a)(6)(A)(i)) and updated this NOPR and accompanying analyses to reflect appropriate statutory provisions, timelines, and compliance dates.

EPCA defines a PTHP as “a packaged terminal air conditioner that utilizes

reverse cycle refrigeration as its prime heat source and should have supplementary heat source available to builders with the choice of hot water, steam, or electric resistant heat.” (42 U.S.C. 6311(10)(B)) Because PTHPs are defined explicitly as a subset of PTACs, the publication of ANSI/ASHRAE/IES Standard 90.1-2013 also triggered DOE to consider whether clear and convincing evidence supports a more-stringent standard than the ASHRAE levels for PTHPs, though the ASHRAE levels for PTHPs were not explicitly revised in 2013.

DOE is proposing amended standards that are more stringent than those set forth in ANSI/ASHRAE/IES Standard 90.1-2013. DOE has tentatively concluded that this rulemaking provides “clear and convincing evidence” that the proposed standards would result in significant conservation of energy and would be technologically feasible and economically justified, as mandated by 42 U.S.C. 6313(a)(6).

EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6313(a)(6)(B)(iii)(I)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of 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. (42 U.S.C. 6313(a)(6)(B)(iii)(II))

Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the customer 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 customer will receive as a result of the standard, as calculated under the applicable test procedure.

Additionally, when a type or class of covered equipment such as ASHRAE equipment, has two or more subcategories, DOE often specifies more than one standard level. DOE generally will adopt a different standard level than that which applies generally to such type or class of products for any group of covered products that have the same function or intended use if DOE determines that 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 which justifies a higher or lower standard. In determining whether a performance-related feature justifies a different standard for a group of products, DOE generally considers such factors as the utility to the customer of the feature and other factors DOE deems appropriate. In a rule prescribing such a standard, DOE includes an explanation of the basis on which such higher or lower level was established. DOE has followed a similar process in the context of this proposed rulemaking.

DOE has also reviewed this regulation pursuant to Executive Order 13563, issued on January 18, 2011 (76 FR 3281, January 21, 2011). Executive Order 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866, which provides that significant regulatory actions be submitted for review to the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB). To the extent permitted by law, agencies are required by Executive Order 13563 to: (1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

DOE emphasizes as well that Executive Order 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, OIRA has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, DOE believes that the NOPR is consistent with these principles, including the requirement that, to the extent permitted by law, benefits justify costs and that net benefits are maximized. Consistent with Executive Order 13563, and the range of impacts analyzed in this rulemaking, the energy efficiency standards proposed herein by DOE achieves maximum net benefits.

B. Background

1. Current Standards

In a final rule published on October 7, 2008 (73 FR 58772), DOE prescribed the current energy conservation standards for all standard size PTAC and PTHP equipment manufactured on or after September 30, 2012, and for all non-standard size PTAC and PTHP equipment manufactured on or after September 30, 2010. (42 U.S.C. 6313(a)(3)) The current energy conservation standards align with ANSI/ASHRAE/IES Standard 90.1-2010. These levels are expressed in EER for the cooling mode and in COP for the heating mode. EER is defined as “the ratio of the produced cooling effect of an air conditioner or heat pump to its net work input, expressed in Btu/watt-hour.” 10 CFR 431.92. COP is defined as “the ratio of produced cooling effect of an air conditioner or heat pump (or its produced heating effect, depending on model operation) to its net work input, when both the cooling (or heating) effect and the net work input are expressed in identical units of measurement.” 10 CFR 431.92.

The current standards for PTACs and PTHPs are set forth in Table II.1.

Table II.1—Federal Energy Efficiency Standards for PTACs and PTHPs

Equipment class

Equipment type

Sub-category

Cooling capacity

(Btu/h)

Efficiency level *

PTAC

Standard Size **

<7,000

EER = 11.7

≥7,000 and ≤15,000

EER = 13.8 − (0.300 × Cap ††)

>15,000

EER = 9.3

Non-Standard Size †

<7,000

EER = 9.4

≥7,000 and ≤15,000

EER = 10.9 − (0.213 × Cap ††)

>15,000

EER = 7.7

PTHP

Standard Size **

<7,000

EER = 11.9

COP = 3.3

≥7,000 and ≤15,000

EER = 14.0 − (0.300 × Cap ††)

COP = 3.7 − (0.052 × Cap ††)

>15,000

EER = 9.5

COP = 2.9

Non-Standard Size †

<7,000

EER = 9.3

COP = 2.7

≥7,000 and ≤15,000

EER = 10.8 − (0.213 × Cap ††)

COP = 2.9 − (0.026 × Cap ††)

>15,000

EER = 7.6

COP = 2.5

* For equipment rated according to ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps.

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide.

† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. ASHRAE/IESNA Standard 90.1-1999 also includes a factory labeling requirement for non-standard size PTAC and PTHP equipment as follows: “MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED IN NEW CONSTRUCTION PROJECTS.”

†† Cap means cooling capacity in k at 95 °F outdoor dry-bulb temperature.

2. History of Standards Rulemaking for PTACs and PTHPs

On October 29, 1999, ASHRAE adopted ASHRAE/IESNA Standard 90.1-1999, “Energy Standard for Buildings Except Low-Rise Residential Building,” which included amended efficiency levels for PTACs and PTHPs. In amending the ASHRAE/IESNA Standard 90.1-1989 levels for PTACs and PTHPs, ASHRAE acknowledged the physical size constraints among the varying sleeve sizes on the market. Specifically, the wall sleeve dimensions of the PTAC and PTHP can limit the attainable energy efficiency of the equipment. Consequently, ASHRAE/IESNA Standard 90.1-1999 used the equipment classes defined by EPCA, which are distinguished by equipment type (i.e., air conditioner or heat pump) and cooling capacity, and further separated these equipment classes by wall sleeve dimensions.

Table II.2 shows the efficiency levels in ASHRAE/IESNA Standard 90.1-1999 for PTACs and PTHPs.

Prior to 1999, ASHRAE/IESNA Standard 90.1 provided one efficiency standard for all PTAC and PTHP and did not have different standards by dimension. ASHRAE/IESNA Standard 90.1-1999 increased the standards for all classes and established more stringent standards for “new construction” than for “replacements.” DOE energy conservation standards for PTACs and PTHPs did not distinguish between standard and non-standard size units until 2010 (for non-standard size) and 2012 (for standard size).

Table II.2—ASHRAE/IESNA Standard 90.1-1999 Energy Efficiency Levels for PTACs and PTHPs

Equipment class

Equipment

Category

Cooling capacity

ASHRAE/IESNA Standard

90.1-1999 efficiency levels *

PTAC

Standard Size **

<7,000 Btu/h

EER = 11.0

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 12.5 − (0.213 × Cap ‡)

>15,000 Btu/h

EER = 9.3

Non-Standard Size †

<7,000 Btu/h

EER = 9.4

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 10.9 − (0.213 × Cap ‡)

>15,000 Btu/h

EER = 7.7

PTHP

Standard Size **

<7,000 Btu/h

EER = 10.8

COP = 3.0

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 12.3 − (0.213 × Cap ‡)

COP = 3.2 − (0.026 × Cap ‡)

>15,000 Btu/h

EER = 9.1

COP = 2.8

Non-Standard Size †

<7,000 Btu/h

EER = 9.3

COP = 2.7

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 10.8 − (0.213 × Cap ‡)

COP = 2.9 − (0.026 × Cap ‡)

>15,000 Btu/h

EER = 7.6

COP = 2.5

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide.

†† Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature.

Following the publication of ASHRAE/IESNA Standard 90.1-1999, DOE performed a screening analysis that covered 24 of the 34 categories of equipment addressed in ASHRAE/IESNA Standard 90.1-1999, to determine whether more stringent levels would result in significant additional energy conservation of energy and be technologically feasible and economically justified. The report “Screening Analysis for EPACT-Covered Commercial [Heating, Ventilating and Air-Conditioning] HVAC and Water-Heating Equipment” (commonly referred to as the 2000 Screening Analysis)

summarizes this analysis. On January 12, 2001, DOE published a final rule for commercial HVAC and water heating equipment, which concluded that the 2000 Screening Analysis indicated a reasonable possibility of finding “clear and convincing evidence” that more stringent standards for PTACs and PTHPs “would be technologically feasible and economically justified and would result in significant additional conservation of energy.” 66 FR 3336, 3349. Under EPCA, these are the criteria for DOE adoption of standards more stringent than those found in ASHRAE/IESNA Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(ii)(II))

“Energy Conservation Program for Consumer Products: Screening Analysis for EPACT-Covered Commercial HVAC and Water-Heating Equipment Screening Analysis,” U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. April 2000.

In addition, on March 13, 2006, DOE issued a Notice of Availability (NOA), in which DOE revised the energy savings analysis from the 2000 Screening Analysis. 71 FR 12634. DOE stated that, even though the revised analysis reduced the potential energy savings for PTACs and PTHPs that might result from more stringent standards than the efficiency levels specified in ASHRAE/IESNA Standard 90.1-1999, DOE believed that there was a possibility that clear and convincing evidence exists that more stringent standards were warranted. Therefore, DOE stated in the NOA that it was inclined to seek more stringent standard levels than the efficiency levels specified in ASHRAE/IESNA Standard 90.1-1999 for PTACs and PTHPs through a separate rulemaking. 71 FR 12639. On March 7, 2007, DOE issued a final rule stating that DOE had decided to explore more stringent efficiency levels than those in ASHRAE/IESNA Standard 90.1-1999 for PTACs and PTHPs through a separate rulemaking. 72 FR 10038, 10044.

In January 2008, ASHRAE published ANSI/ASHRAE/IESNA Standard 90.1-2007, which reaffirmed the definitions and efficiency levels for PTACs and PTHPs in ASHRAE/IESNA Standard 90.1-1999. On October 7, 2008, DOE published a final rule amending energy conservation standards for PTACs and PTHPs (2008 final rule). 73 FR 58772. This 2008 final rule divided PTACs and PTHPs into two equipment classes—standard size and non-standard size. Prior DOE energy conservation standards for PTACs and PTHPs had not distinguished between standard and non-standard size units. Table II.1 shows the energy conservation standards for PTACs and PTHPs, as amended by the 2008 final rule. Compared to ASHRAE/IESNA Standard 90.1-1999, the standards in the 2008 final rule were identical for non-standard sized PTACs and PTHPs, but had steeper slopes for standard-size PTACs and PTHPs.

In October 2010, ASHRAE published ANSI/ASHRAE/IES Standard 90.1-2010, which reaffirmed the efficiency levels for non-standard size PTACs and PTHPs and increased the efficiency levels for standard size PTACs and PTHPs to match the DOE standards, effective as of October 8, 2012. Hence, DOE did not consider revision of PTAC and PTHP standards at that time.

On February 22, 2013, DOE published a notice of public meeting and availability of the framework document regarding energy conservation standards for PTACs and PTHPs. 78 FR 12252. The public meeting sought input on DOE's planned analytical approach and identified several issues of particular interest to DOE for this rulemaking proceeding.

DOE received a number of comments from interested parties through the public meeting and written submissions. These commenters are summarized in Table II.3. DOE considered these comments in the preparation of the NOPR. Relevant comments, and DOE's responses, are provided in the appropriate sections of this document.

Table II.3—Interested Parties Providing Comments

Name

Abbreviation

Type *

Air-Conditioning, Heating and Refrigeration Institute

AHRI

Appliance Standards Awareness Project

ASAP

Appliance Standards Awareness Project, American Council for an Energy-Efficient Economy

ASAP, ACEEE (Joint Efficiency Advocates)

Troy Abraham

EBM-Papst Inc.

EBM-Papst

General Electric

Goodman Manufacturing Company, L.P.

Goodman

Ice Air, LLC

Ice Air

McQuay International (now Daikin Applied)

McQuay

Pacific Gas and Electric Company, Southern California Gas Company, San Diego Gas and Electric, Southern California Edison

PG&E, SCGC, SDG&E, SCE

Southern Company Services

SCS

* IR: Industry Representative; M: Manufacturer; EA: Efficiency/Environmental Advocate; CS: Component Supplier; I: Individual; U: Utility.

Subsequently, on October 9, 2013, ASHRAE published ANSI/ASHRAE/IES Standard 90.1-2013, which reaffirmed the efficiency levels for standard size PTHPs and for nonstandard size PTACs and PTHPs, and which increased the cooling efficiency levels for standard size PTACs to equalize them with the cooling efficiency levels for standard size PTHPs, effective as of January 1, 2015. The issuance of ANSI/ASHRAE/IES 90.1-2013 triggered DOE's statutory obligation under 42 U.S.C. 6313(a)(6)(A) to promulgate an amended uniform national standard at those levels unless DOE determines that there is clear and convincing evidence supporting the adoption of more-stringent energy conservation standards than the ASHRAE levels. Because PTHPs are defined as a subset of PTACs,

the publication of ANSI/ASHRAE/IES Standard 90.1-2013 also triggered DOE to consider whether clear and convincing evidence supports a more-stringent standard than the ASHRAE levels for PTHPs, though the ASHRAE levels for PTHPs were not explicitly revised.

EPCA defines a PTHP as “a packaged terminal air conditioner that utilizes reverse cycle refrigeration as its prime heat source and should have supplementary heat source available to builders with the choice of hot water, steam, or electric resistant heat.” (42 U.S.C. 6311(10)(B)) Additionally, in its reverse engineering analysis, DOE observed that PTHPs are derivative designs of PTACs such that similar design changes for PTACs and PTHPs (e.g., more efficient compressors, more efficient motors, increased heat exchanger area, and improved air flow) are used to achieve higher efficiency levels.

III. General Discussion

A. Compliance Dates

There are several possible compliance dates for any amended standards for PTACs and PTHPs. These compliance dates vary depending on the triggering mechanism for DOE review (

i.e.,

whether DOE is triggered by a revision to ASHRAE Standard 90.1 or by the “6-year look back” requirement), and the action taken (

i.e.,

whether DOE is adopting ASHRAE Standard 90.1 levels or more-stringent levels). The discussion below explains the potential compliance dates as they pertain to the present rulemaking.

DOE performed the analyses in this rulemaking as if all customers were to purchase new equipment in the year that compliance with amended standards is required. Both PTAC and PTHP equipment fall under the EPCA directive that mandates DOE to publish a final rule amending the standard for this equipment not later than 2 years after a notice of proposed rulemaking is issued. (42 U.S.C. 6313(a)(6)(C)(iii)) At the time of preparation of the NOPR analysis, the expected final rule publication date was 2015. EPCA also states that amended standards prescribed under this subsection shall apply to equipment manufactured after a date that is the later of—(I) the date that is 3 years after publication of the final rule establishing a new standard; or (II) the date that is 6 years after the effective date of the current standard for a covered product. (42 U.S.C. 6313(a)(6)(C)(iv)) The date under clause (I) is currently projected to be 2018, and the date under clause (II) is also 2018.

However, ASHRAE adopted a revised ANSI/ASHRAE/IES Standard 90.1-2013, which increases minimum efficiency standards for PTACs and not for PTHPs, before DOE published the NOPR for this rulemaking. This action creates an exception to the aforementioned compliance requirements. The revision of the ANSI/ASHRAE/IES standard requires that the Federal standard for PTAC equipment become effective on or after a date which is two years after the effective date of the applicable minimum energy efficiency requirement in the amended ANSI/ASHRAE/IES standard. (42 U.S.C 6313(a)(6)(D)(i)) The date of issuance of the amended ANSI/ASHRAE/IES standard is currently projected to be January 1, 2015. Therefore, PTAC equipment, only, manufactured on or after January 1, 2017 will be required to meet the amended ANSI/ASHRAE/IES standard. However, if DOE adopts a uniform national standard more stringent than the amended ANSI/ASHRAE/IES Standard 90.1, equipment manufactured on or after a date which is four years after the date of final rule publication in the

Federal Register

must comply with the amended standard. (42 U.S.C 6313(a)(6)(D)) Therefore, both PTAC and PTHP equipment manufactured on or after January 1, 2019 would be required to meet the more stringent Federal standard.

Based on the above considerations, DOE used 2017 as the compliance year for PTAC equipment with a proposed efficiency level at the ANSI/ASHRAE/IES Standard 90.1-2013 minimum, and 2019 as the compliance year for PTAC and PTHP and equipment with proposed efficiency levels more stringent than that specified in ANSI/ASHRAE/IES Standard 90.1-2013.

For each equipment class for which DOE developed a potential energy savings analysis, Table III.1 exhibits the approximate compliance dates of an amended energy conservation standard.

Table III.1—Approximate Compliance Date of an Amended Energy Conservation Standard for Each Equipment Class

Equipment class

Approximate compliance date for adopting the efficiency levels in ASHRAE standard

90.1-2013

Approximate compliance date for adopting more stringent

efficiency levels than those in ASHRAE standard 90.1-2013

PTAC <7,000 Btu/h

01/2017

01/2019

PTAC ≥7,000 to ≤15,000 Btu/h

01/2017

01/2019

PTAC >15,000 Btu/h

01/2017

01/2019

PTHP <7,000 Btu/h

01/2019

PTHP ≥7,000 to ≤15,000 Btu/h

01/2019

PTHP >15,000 Btu/h

01/2019

B. Equipment Classes and Scope of Coverage

When evaluating and establishing energy conservation standards, DOE divides covered equipment into equipment classes by the type of energy used or by capacity or other performance-related features that justifies a different standard. In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility to the customer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q))

Existing energy conservation standards divide PTACs and PTHPs into twelve equipment classes based whether the equipment is an air conditioner or heat pump; the equipment's cooling capacity; and the equipment's wall sleeve dimensions, which fall into two categories:

• Standard size (PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide)

• Non-standard size (PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide).

DOE is not considering amended energy conservation standards for non-standard size PTAC and PTHP equipment in this rulemaking because this equipment class represents a small and declining portion of the market, and due to a lack of adequate information to analyze non-standard size units. The shipments analysis conducted for the 2008 final rule projected that shipments of non-standard size PTACs and PTHPs would decline from approximately 30,000 units in 2012 (6.6% of the entire PTAC and PTHP market) to approximately 16,000 units in 2042 (2.4% of the entire PTAC and PTHP market).

McQuay (now Daikin Applied) commented that the installed base for non-standard PTAC and PTHP products is slowly declining as older buildings are demolished. McQuay also commented that non-standard PTAC and PTHP products are being produced by a very limited number of U.S. manufacturers, exclusively for replacement applications in older buildings. (McQuay, No. 10 at p. 2)

DOE believes McQuay's observations of the market are indicative of a steadily decreasing market share for non-standard-size PTACs and PTHPs, and thus bolsters the justification to eliminate analysis of non-standard-size equipment in the present rulemaking.

See DOE's discussion regarding shipment projections for standard and non-standard PTAC and PTHP equipment and the results of shipment projections in the PTAC and PTHP energy conservation standard technical support document at:

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/ptac_pthp_tsd/chapter_10.pdf

(Chapter 10, Section 10.5).

A notation in the form “McQuay, No. 10 at p. 2” identifies a written comment: (1) Made by McQuay International (now Daikin Applied) (“McQuay”); (2) recorded in document number 10 that is filed in the docket of the PTAC energy conservation standards rulemaking (Docket No. EERE-2012-BT-STD-0029) and available for review at

www.regulations.gov;

and (3) which appears on page 2 of document number 10.

An analysis of energy savings for the volume of shipments of non-standard size products show that the national energy savings of non-standard size equipment at a reasonable efficiency level adopted is five-thousandths of one quad of savings. Such level of savings DOE considers negligible.

DOE has not been able to analyze and test non-standard sized PTACs and therefore the Department is proposing to maintain the non-standard size product classes but not subject them to amended minimum energy conservation standards.

Ice Air commented that there should be separate equipment categories for PTACs that use hydronic or gas-fired heat sources. Ice Air also commented that PTACs with hydronic heat or gas heat comprise a significant portion of the market for PTACs installed in high-rise buildings, and asked whether DOE is addressing the efficiency impacts of packaged terminal units with central hydronic systems as compared to units heated by electric heat or heat pumps. Ice Air commented that PTACs that use hydronic or gas-fired heat sources should receive a form of efficiency credit. (Ice Air, No. 9 at p. 1)

DOE understands that hydronic heat sources are often more efficient than electric resistance heaters or electric heat pumps, in terms of heat delivered versus primary energy consumed. DOE also understands that hydronic coils impose a pressure drop that may increase fan power consumption and reduce EER. DOE is concerned that this impact may lead manufacturers to eliminate hydronic heating options in PTACs and also lead to sales shifting from hydronic to electric resistance heating, a shift that would lead to increased overall HVAC energy use. Hence, DOE proposes to provide guidance in the future regarding which features (such as hydronic and steam heating systems) may be excluded from products that are tested.

C. Technological Feasibility

1. General

In each standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially available products or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).

After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, or service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety. Section IV.B of this document discusses the results of the screening analysis for PTACs and PTHPs, particularly the designs DOE considered, those it screened out, and those that are the basis for the TSLs in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the NOPR TSD.

After screening out or otherwise removing from consideration most of the technologies, the following technologies were identified for consideration in the engineering analysis: (1) Improved compressor efficiency; (2) improved fan motor efficiency; (3) increased heat exchanger area; and (4) improved air flow and fan blade efficiency. To adopt standards for PTACs and PTHPs that are more stringent than the efficiency levels in ASHRAE Standard 90.1 as amended, DOE must determine, supported by clear and convincing evidence, that such standards are technologically feasible. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) DOE has determined that the efficiency levels considered in this rulemaking are technologically feasible, because DOE has access to test reports showing the highest efficiency level was attainable in a commercially available model.

2. Maximum Technologically Feasible Levels

When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for PTACs and PTHPs, using the design parameters for the most efficient products available on the market or in working prototypes. (See chapter 5 of the NOPR TSD.) The max-tech levels that DOE determined for this rulemaking are described in section IV.C.5 of this proposed rule.

D. Energy Savings

1. Determination of Savings

For each TSL, DOE projected energy savings from the equipment that is the subject of this rulemaking purchased in the 30-year period that begins in the year of expected compliance with amended standards (2019-2048).

The savings are measured over the entire lifetime of products purchased in the 30-year period.

DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the base case. The base case represents a projection of energy consumption in the absence of amended mandatory energy conservation standards, and it considers market forces and policies that affect demand for more-efficient equipment.

DOE also presents a sensitivity analysis that considers impacts for equipment shipped in a 9-year period.

In the past, DOE presented energy savings results for only the 30-year period that begins in the year of expected compliance. In the calculation of economic impacts, however, DOE considered operating cost savings measured over the entire lifetime of equipment purchased in the 30-year period. DOE has chosen to modify its presentation of national energy savings to be consistent with the approach used for its national economic analysis.

DOE used its national impact analysis (NIA) spreadsheet model to estimate energy savings from amended standards for the equipment that is the subject of this rulemaking. The NIA spreadsheet model (described in section IV.H of this document) calculates energy savings in site energy, which is the energy directly consumed by equipment at the locations where it is used. For electricity, DOE reports national energy savings in terms of the savings in the energy that is used to generate and transmit the site electricity. To calculate this quantity, DOE derives annual conversion factors from the model used to prepare the Energy Information Administration's (EIA)

Annual Energy Outlook

(

AEO

DOE has begun to also estimate full-fuel-cycle energy savings, as discussed in DOE's statement of policy and notice of policy amendment. 76 FR 51282 (August 18, 2011), as amended at 77 FR 49701 (August 17, 2012). The full-fuel-cycle (FFC) metric includes the energy consumed in extracting, processing, and transporting primary fuels (i.e., coal, natural gas, petroleum fuels), and thus collectively presents a more complete picture of the impacts of energy efficiency standards. DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered equipment.

For more information on FFC energy savings, see section IV.H.

2. Significance of Savings

Among the criteria that govern DOE's adoption of more stringent standards for PTACs and PTHPs than the amended levels in ASHRAE Standard 90.1, clear and convincing evidence must support a determination that the standards would result in “significant” energy savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals, in

Natural Resources Defense Council

Herrington,

768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended “significant” energy savings in the context of EPCA to be savings that were not “genuinely trivial.” DOE's estimates of the energy savings for each of the TSLs considered for this proposed rule for PTACs and PTHPs (presented in section V.B.3.a) provide evidence that the additional energy savings each would achieve by exceeding the corresponding efficiency levels in ANSI/ASHRAE/IES Standard 90.1-2013 are nontrivial. Therefore, DOE considers these savings to be “significant” as required by 42 U.S.C.6313(a)(6)(A)(ii)(II).

E. Economic Justification

1. Specific Criteria

EPCA provides seven factors to be evaluated in determining whether a more stringent standard for PTACs and PTHPs is economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.

a. Economic Impact on Manufacturers and Customers

In determining the impacts of an amended standard on manufacturers, DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed include industry net present value (INPV), which values the industry on the basis of expected future cash flows; cash flows by year; changes in revenue and income; and other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of amended standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for

amended standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.

For individual customers, measures of economic impact include the changes in LCC and payback period (PBP) associated with new or amended standards. These measures are discussed further in the following section. For customers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of customers that may be affected disproportionately by a national standard.

b. Savings in Operating Costs Compared to Increase in Price

EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered equipment compared to any increase in the price of the covered product that are likely to result from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis.

The LCC is the sum of the purchase price of a product (including its installation) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the equipment. To account for uncertainty and variability in specific inputs, such as equipment lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. For its analysis, DOE assumes that customers will purchase the covered equipment in the first year of compliance with amended standards.

The LCC savings and the PBP for the considered efficiency levels are calculated relative to a base case that reflects projected market trends in the absence of amended standards. DOE identifies the percentage of customers estimated to receive LCC savings or experience an LCC increase, in addition to the average LCC savings associated with a particular standard level. DOE's LCC analysis is discussed in further detail in section IV.F.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H, DOE uses the NIA spreadsheet to project national energy savings.

d. Lessening of Utility or Performance of Equipment

In establishing classes of equipment, and in evaluating design options and the impact of potential standard levels, DOE evaluates standards that would not lessen the utility or performance of the considered equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) The standards proposed in this document will not reduce the utility or performance of the equipment under consideration in this rulemaking.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider any lessening of competition that is likely to result from energy conservation standards. It also directs the Attorney General of the United States (Attorney General) to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6313(a)(6)(B)(ii)(V)) DOE will transmit a copy of this proposed rule to the Attorney General with a request that the Department of Justice (DOJ) provide its determination on this issue. DOE will address the Attorney General's determination in the final rule.

f. Need for National Energy Conservation

In evaluating the need for national energy conservation, DOE expects that the energy savings from the proposed standards are likely to provide improvements to the security and reliability of the nation's energy system. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) Reductions in the demand for electricity also may result in reduced costs for maintaining the reliability of the nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the nation's needed power generation capacity, as discussed in section IV.M.

The proposed standards also are likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production. DOE reports the emissions impacts from the proposed standards, and from each TSL it considered, in section V.B.6 of this document. DOE also reports estimates of the economic value of emissions reductions resulting from the considered TSLs, in section IV.L of this document.

g. Other Factors

EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No other factors were considered in this proposal.

2. Rebuttable Presumption

As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the customer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effects that proposed energy conservation standards would have on the payback period for customers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to customers, manufacturers, the nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section V.B.1.c of this proposed rule.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this rulemaking with regard to PTACs and PTHPs. A separate subsection addresses each component of the analysis.

A. Market and Technology Assessment

For the market and technology assessment, 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. The

subjects addressed in the market and technology assessment for this rulemaking include scope of coverage, equipment classes, types of equipment sold and offered for sale, and technology options that could improve the energy efficiency of the equipment under examination. The key findings of DOE's market assessment are summarized below. For additional detail, see chapter 3 of the NOPR TSD.

1. Definitions of a PTAC and a PTHP

Section 340 of EPCA defines a “packaged terminal air conditioner” as “a wall sleeve and a separate unencased combination of heating and cooling assemblies specified by the builder and intended for mounting through the wall. It includes a prime source of refrigeration, separable outdoor louvers, forced ventilation, and heating availability by builder's choice of hot water, steam, or electricity.” (42 U.S.C. 6311(10)(A)) EPCA defines a “packaged terminal heat pump” as “a packaged terminal air conditioner that utilizes reverse cycle refrigeration as its prime heat source and should have supplementary heat source available to builders with the choice of hot water, steam, or electric resistant heat.” (42 U.S.C. 6311(10)(B)) DOE codified these definitions in 10 CFR 431.92 in a final rule issued October 21, 2004. 69 FR 61970.

2. Equipment Classes

When evaluating and establishing energy conservation standards, DOE generally divides covered equipment into equipment classes by the type of energy used or by capacity or other performance-related features that affect efficiency. Different energy conservation standards may apply to different equipment classes. (42 U.S.C. 6316(a); 42 U.S.C. 6295(q))

PTACs and PTHPs can be divided into various equipment classes categorized by physical characteristics that affect equipment efficiency. Key characteristics affecting the energy efficiency of the PTAC or PTHP are whether the equipment has reverse cycle heating (i.e., air conditioner or heat pump), the cooling capacity, and the physical dimensions of the unit. The existing Federal energy conservation standards for PTACs and PTHPs correspond to the efficiency levels in ANSI/ASHRAE/IES Standard 90.1-2010, as shown in Tables 4 and 5 of 10 CFR 431.97, dividing PTACs and PTHPs into twelve equipment classes based on these key characteristics. Table IV.1 shows the current equipment class structure.

AHRI and Goodman separately commented that the current equipment classes for PTACs have worked well in the past and do not need to be changed. (Goodman, Framework Public Meeting Transcript, No. 7 at p. 41) (AHRI, Framework Public Meeting Transcript, No. 7 at p. 41)

Goodman also commented that the current equipment classes are fair and representative of the market. (Goodman, No. 13 at p. 3) Accordingly, for this rulemaking, DOE is proposing to maintain the same equipment classes, as shown in Table IV.1. As previously described in section III.B, DOE is not considering amending the energy conservation standards of non-standard size PTAC and PTHP equipment in this rulemaking, because this equipment class represents a small and declining portion of the market, and because of a lack of adequate information available to analyze non-standard size units. As described in section III.B, Ice Air commented that there should be separate equipment categories for PTACs that use hydronic or gas-fired heat sources. (Ice Air, No. 9 at p. 1) DOE plans to provide guidance in the future regarding how to address features (such as hydronic or steam heating) which might require special treatment when testing this equipment.

A notation in the form “Goodman, Framework Public Meeting Transcript, No. 7 at p. 41” identifies an oral comment that DOE received during the March 18, 2013, PTAC energy conservation standards framework public meeting, that was recorded in the public meeting transcript in the docket for the PTAC energy conservation standards rulemaking (Docket No. EERE-2012-BT-STD-0029), and is maintained in the Resource Room of the Building Technologies Program. This particular notation refers to a comment (1) made by Goodman during the public meeting; (2) recorded in document number 7, which is the public meeting transcript that is filed in the docket of this energy conservation standards rulemaking; and (3) which appears on page 41 of document number 7.

Table IV.1—Equipment Classes for PTACs and PTHPs

Equipment class

Equipment

Category

Cooling capacity

PTAC

Standard Size *

< 7,000 Btu/h

≥ 7,000 Btu/h and ≤ 15,000 Btu/h

> 15,000 Btu/h

Non-Standard Size **

< 7,000 Btu/h

≥ 7,000 Btu/h and ≤ 15,000 Btu/h

> 15,000 Btu/h

PTHP

Standard Size *

< 7,000 Btu/h

≥7 ,000 Btu/h and ≤ 15,000 Btu/h

> 15,000 Btu/h

Non-Standard Size **

< 7,000 Btu/h

≥ 7,000 Btu/h and ≤ 15,000 Btu/h

> 15,000 Btu/h

* Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and a cross-sectional area greater than or equal to 670 square inches.

** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 inches high or less than 42 inches wide, and a cross-sectional area less than 670 square inches.

3. Market Assessment

This market assessment describes the trade associations, manufacturers in the PTAC/PTHP industry, and the quantities and types of PTAC and PTHP equipment sold and offered for sale. The information DOE gathered serves as resource material throughout the rulemaking. The sections below provide

an overview of the PTAC and PTHP market. For more detail on the PTAC and PTHP market, see chapter 3 of the NOPR TSD.

a. Trade Association

The Air-Conditioning, Heating, and Refrigeration Institute (AHRI), formerly referred to as ARI, is the trade association representing PTAC and PTHP manufacturers. ARI and the Gas Appliance Manufacturers Association (GAMA) merged to become AHRI on January 1, 2008.

AHRI develops and publishes technical standards for residential and commercial air-conditioning, heating, and refrigeration equipment using rating criteria and procedures for measuring and certifying equipment performance. The current Federal test procedure for PTACs and PTHPs incorporates by reference an AHRI standard—ANSI/AHRI/CSA 310/380-2004.

AHRI has developed a certification program that a number of manufacturers in the PTAC and PTHP industry have used to certify their equipment. Manufacturers certify their own equipment by providing AHRI with test data. Through the AHRI certification program, AHRI evaluates test data, determines if equipment conforms to ANSI/AHRI/CSA 310/380-2004, and verifies that manufacturer-reported ratings are accurate. AHRI also maintains the Directory of Certified Product Performance, which is a database of equipment ratings for all manufacturers who elect to participate in the program. DOE used AHRI's certification data, as summarized by the 2013 AHRI directory of certified PTACs and PTHPs, to examine the population of commercially available units and to screen units for inclusion in the engineering analysis.

DOE has incorporated by reference ANSI/AHRI/CSA Standard 310/380-2004 as the DOE test procedure at 10 CFR 431.97.

AHRI commented that its database is a good source of information, as are the data provided on manufacturers' Web sites. (AHRI, Framework Public Meeting Transcript, No. 7 at p. 56) McQuay (now Daikin Applied) commented that only five of the 19 interested parties are AHRI members and that non-member catalog and Web site performance data are not verified by an independent third party test facility. (McQuay, No. 10 at p. 1) McQuay commented further that DOE should use extreme caution when using non-AHRI member efficiency data. (McQuay, No. 10 at p. 2) DOE notes that the Department used AHRI database and manufacturer-provided data as initial screening criteria, and that an independent third party test facility used test procedure ANSI/AHRI/CSA 310/380-2004 to measure the efficiencies of all units used in the cost assessment analysis.

b. Manufacturers

DOE identified three large manufacturers of standard size PTAC and PTHP that represent more than 80 percent of the standard size market in terms of shipments. These three manufacturers include: General Electric (GE) Company, Amana,

and Daikin Applied.

Ten other manufacturers represent the remaining 20 percent of the standard size PTAC and PTHP market: Comitale National, Inc.; E-Air, LLC; Electrolux Home Products, Inc.; Friedrich Air Conditioning Company; Gree Electric Appliances of Zhuhai; Haier America; Heat Controller, Inc.; Islandaire; RetroAire; and YMGI Group, LLC.

Amana is a trademark of Maytag Corporation and is used under license to Goodman Global, Inc.

Daikin Applied (formally McQuay International) is a subsidiary of Daikin Industries, Ltd.

DOE identified three major manufacturers of non-standard size PTAC and PTHP equipment: Daikin Applied, RetroAire, and Fedders Islandaire, Inc. These three manufacturers share the majority of the non-standard size PTAC and PTHP market. Other manufacturers of non-standard size units include: Air-Con International; Cold Point Corporation; Comitale National, Inc.; E-Air LLC; ECR International; Evergreen LLC; Heat Controller, Inc.; Ice Air LLC; International Refrigeration Products; Prem Sales LLC; Simon-Aire, Inc.; and YMGI Group LLC. All of the major manufacturers certify their standard-size equipment with AHRI and are included in the AHRI directory of certified products.

The standard size PTAC and PTHP market differs from the non-standard size PTAC and PTHP industry in that several of the manufacturers of standard size units are domestically owned with manufacturing facilities located outside of the United States. (In contrast, most non-standard size PTAC and PTHP production occurs in the United States.) Currently, there is only one major manufacturer of standard size PTAC and PTHP equipment manufacturing equipment in the United States. Several foreign-owned companies have recently entered the U.S. market for standard-sized PTACs and PTHPs.

Almost all of the manufacturers of non-standard size PTACs and PTHPs are domestically owned with manufacturing facilities located inside of the United States. The non-standard manufacturers tend to specialize in equipment solely for replacement applications. In addition, non-standard size manufacturers produce PTAC and PTHP equipment on a made-to-order basis. Unlike manufacturers of standard size equipment, there has not been an influx of foreign owned companies to sell non-standard size PTAC and PTHP equipment in the United States.

DOE takes into consideration the impact of amended energy conservation standards on small businesses. At this time, DOE has identified several small businesses in the PTAC and PTHP industry that fall under the Small Business Administration (SBA)'s definition as having 750 employees or fewer. DOE identified at least 12 manufacturers that qualify as small businesses. The PTAC and PTHP small manufacturer subgroup is discussed in chapter 12 of the NOPR TSD and in section V.B.2 of this document.

c. Shipments

DOE reviewed data collected by the U.S. Census Bureau and AHRI to evaluate the annual PTAC and PTHP equipment shipment trends and the value of these shipments. The historical shipments data shown in Table IV.2 provides a picture of the market for PTAC and PTHP equipment. The historical shipments for PTACs and PTHPs are based on data provided by AHRI for the years 2003-2012.

Table IV.2—PTAC and PTHP Industry Estimated Shipment Data, 10-Year Totals for 2003-2012, From AHRI (Standard Size Equipment)

Year

Total shipments, standard size (thousands of units)

PTAC

PTHP

2003-2012

2,458

2,055

Using information gathered in manufacturer interviews, DOE estimates that about 90 percent of the shipments for PTACs and PTHPs are standard size units, while about 10 percent are non-standard size units.

AHRI did not provide a breakdown of shipment data by capacity; however, the cooling capacity with the highest number of models listed in the AHRI Directory of

Certified Product Performance is 9,000 Btu/h.

This estimated breakdown of 90% standard-size and 10% non-standard-size units is based on information obtained in manufacturer interviews. This updated estimate differs from the shipment projections from the 2008 PTAC rulemaking quoted in section III.B, which projected that non-standard units would comprise 6.6% of the market in 2014.

4. Technology Assessment

In the technology assessment, DOE uses information about existing and past technology options and prototype designs to help identify technologies that manufacturers could use to improve the efficiency of PTACs and PTHPs. This assessment provides the technical background and structure on which DOE bases its screening and engineering analyses. In surveying PTAC and PTHP technology options, DOE considered a wide assortment of equipment literature, information derived from the teardown analysis, information derived from the stakeholder interviews, and the previous DOE energy conservation standards rulemaking for air-conditioning products and equipment.

Table IV.3 presents the technology options that DOE identified in the Framework Document.

See DOE's discussion of technology options identified in the rulemaking framework document, available at:

http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0029-0002

(Section 3.3).

Table IV.3—Framework Document Technology Options

Compressor Improvements:

• Scroll Compressors

• Variable-speed Compressors

• Higher Efficiency Compressors

Complex Control Boards (fan motor controllers, digital “energy management” control interfaces, heat pump controllers)

Condenser and evaporator fan and fan motor improvements:

• Higher Efficiency Fan Motors

• Clutched Fan Motors (allows PTACs with a single motor to reduce power input in recirculation mode by disengaging the condenser fan)

Microchannel Heat Exchangers

Increased Heat Exchanger Area

Hydrophobic Material Treatment of Heat Exchangers (can improve repelling condensed water on evaporator coil)

Re-circuiting Heat Exchanger Coils

Improved Air Flow and Fan Design

Heat Pipes (enhances the evaporator coil dehumidification performance)

Corrosion Protection (helps prevent corrosion of coils and the resulting degradation of performance)

Thermostatic Expansion Valve

The framework document sought comment from interested parties on the technologies listed in Table IV.3, as well as other options that DOE had not listed. Several parties commented on the list of technologies. ASAP inquired whether microgroove heat exchangers are being considered as a potential technology. (ASAP, Framework Public Meeting Transcript, No. 7 at p. 42) DOE interpreted ASAP's comment to reference all heat exchangers with rifled interior tube walls. Goodman commented that DOE should add alternative refrigerants (such as HCFC-32), which could have single-digit improvement in efficiency. (Goodman, No. 13 at p. 3)

AHRI, Goodman, and SCS commented that proprietary designs should not be considered in establishing energy efficiency standards. (AHRI, Framework Public Meeting Transcript, No. 7 at p. 61) (Goodman, No. 13 at p. 5) (SCS, Framework Public Meeting Transcript, No. 7 at p. 61) As noted in the framework document, DOE will not consider efficiency levels that can only be reached using proprietary designs. 78 FR 12252 (February 22, 2013). Although DOE does consider technologies that are proprietary, it does not consider efficiency levels that can only be reached through the use of proprietary technologies, which could allow a single manufacturer to monopolize the market (any such technologies are eliminated during the engineering analysis). DOE only considers efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level (

i.e.,

if there are other non-proprietary technologies capable of achieving the same efficiency). DOE believes the proposed standards for the equipment covered in this rulemaking would not mandate the use of any proprietary technologies, and that all manufacturers would be able to achieve the proposed levels through the use of non-proprietary designs.

Table IV.4 lists all of the potential technology options considered, including options listed in the Framework Document and options suggested in stakeholder comments, for improving energy efficiency of PTACs and PTHPs.

Table IV.4—Potential Technology Options for Improving Energy Efficiency of PTACs and PTHPs

Compressor Improvements:

• Scroll Compressors

• Variable-speed Compressors

• Higher Efficiency Compressors

Complex Control Boards

Condenser and evaporator fan and fan motor improvements:

• Higher Efficiency Fan Motors

• Clutched Motor Fans

Microchannel Heat Exchangers

Rifled Interior Heat Exchanger Tube Walls

Increased Heat Exchanger Area

Hydrophobic Material Treatment of Heat Exchangers

Re-circuiting Heat Exchanger Coils

Improved Air Flow and Fan Design

Heat Pipes

Corrosion Protection

Thermostatic Expansion Valve

Alternate Refrigerants (such as HCFC-32)

B. Screening Analysis

After DOE identified the technologies that might improve the energy efficiency of PTACs and PTHPs, DOE conducted a screening analysis. The purpose of the screening analysis is to evaluate the technologies that improve equipment efficiency to determine which technologies to consider further and which to screen out. DOE applied the following four screening criteria to determine which technologies are unsuitable for further consideration in the rulemaking (10 CFR part 430, subpart C, appendix A at 4(a)(4) and 5(b)):

Technological feasibility.

DOE will consider technologies incorporated in commercial equipment or in working prototypes to be technologically feasible.

Practicability to manufacture, install, and service.

If mass production and reliable installation and servicing of a technology in commercial equipment could be achieved on the scale necessary to serve the relevant market at the time the standard comes into effect, then DOE will consider that technology practicable to manufacture, install, and service.

Adverse impacts on product utility or product availability.

If DOE determines a technology would have a significant adverse impact on the utility of the equipment to significant subgroups of customers, or would result in the unavailability of any covered equipment type with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as equipment generally available in the United States at the time, it will not consider this technology further.

Adverse impacts on health or safety.

If DOE determines that a technology will have significant adverse impacts on health or safety, it will not consider this technology further. (10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b))

Technologies that pass through the screening analysis are referred to as “design options” in the engineering analysis. These four screening criteria do not include the propriety status of

design options. As noted previously, DOE will only consider efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level.

Details of the screening analysis are in chapter 4 of the NOPR TSD. In view of the above factors, DOE screened out the following design options:

Scroll Compressors

Scroll compressors use two interleaved scrolls (with one scroll fixed and one scroll orbiting without rotating) to compress refrigerant, and may operate at higher efficiencies than the rotary compressors typically used in PTAC and PTHP applications. Goodman commented that presently scroll compressors are only available for equipment with capacity over 1.5 tons refrigeration and the largest model of PTAC or PTHP has capacity of 1.25 tons refrigeration. (Goodman, No. 13 at p. 4)

Though scroll compressors are less common in the capacity range associated with PTAC and PTHP equipment (6,000 to 15,000 Btu/h), several companies manufacture scroll compressors from 9,000 Btu/h and up. However, DOE is not aware of scroll compressor models at these lower capacities that would fit in a PTAC cabinet and that are more efficient than the same capacity of rotary compressor. The rotary compressors found in reverse engineering of PTACs and PTHPs in the 15,000 Btu/h class had efficiency ratings from 9.8 to 10.6 EER. By comparison, scroll compressors of similar capacity are rated from 7.2 EER to 11.0 EER, but most are too tall to fit in a 16″ PTAC cabinet.

As a result, DOE does not believe at this time that the use of scroll compressors would improve the efficiency of PTAC and PTHP units, given the size and capacity constraints of these units. For this reason, DOE did not consider scroll compressors further in the NOPR analyses.

Heat Pipes

Under humid ambient conditions, using heat pipes to pre-treat the entering air from the conditioned space can improve the evaporator heat exchanger performance. Heat pipes increase the latent cooling capacity (i.e., moisture removal) of an air-conditioner. They do this by transferring heat from the air entering the evaporator to the air leaving the evaporator. This allows the evaporator air exit temperature to be significantly lower. Since the maximum possible moisture content of air increases with increasing temperature, this also means that the reduced-temperature air at the evaporator exit would have lower moisture content. The temperature of the air is then warmed by the post-evaporator portion of the heat pipe. Heat pipes generally shift some of the cooling capacity of the product from reduction of air temperature to reduction of humidity, but do not increase the cooling capacity of an evaporator. They impose additional pressure drop that the indoor fan must overcome, thus they do not improve EER of the equipment. Therefore, DOE screened out heat pipes as a design option for improving the energy efficiency of PTACs and PTHPs.

Alternate Refrigerants

Nearly all PTAC and PTHP equipment is designed with R-410A as the refrigerant. The Environmental Protection Agency's (EPA's) Significant New Alternatives Policy (SNAP) Program evaluates and regulates substitutes for the ozone-depleting chemicals (such as air conditioning refrigerants) that are being phased out under the stratospheric ozone protection provisions of the Clean Air Act (CAA) (42 U.S.C. 7401 et seq.). The EPA's SNAP Program currently lists 23 acceptable alternatives for refrigerant used in the Household and Light Commercial Air Conditioning class of equipment (which includes PTAC and PTHP equipment). On July 9, 2014, the EPA issued a notice of proposed rulemaking proposing to list three flammable refrigerants as new acceptable substitutes, subject to use conditions, for refrigerant in the Household and Light Commercial Air Conditioning class of equipment. 79 FR 38811 (July 9, 2014)

Table IV.5 presents the list of potential substitute refrigerants (including refrigerants that are already approved and refrigerants that are proposed for approval) for use in new production in the Household and Light Commercial Air Conditioning class of equipment (which includes PTAC and PTHP equipment). DOE is not aware of any SNAP-approved refrigerants, or any refrigerants that have been proposed for SNAP approval, that are known to enable better efficiency than R-410A for PTAC and PTHP equipment.

Hence, DOE did not consider alternate refrigerants for further analysis.

Additional information regarding EPA's SNAP Program is available online at:

http://www.epa.gov/ozone/snap/.

Table IV.5—Potential Substitutes for HCFCs in New Household and Light Commercial Air Conditioning Equipment

Substitutes Approved by EPA SNAP Program

HFC-134a.

ISCEON-59, NU-22, R-417A.

R-410A.

R-410B.

R-407C.

R-507, R-507A.

Ammonia Absorption.

Evaporative Cooling.

Desiccant Cooling.

R-404A.

R-125/134a/600a.

RS-44.

R-421A.

R-422D.

R-424A.

R-125/290/134a/600a.

R-422C.

R-422B.

KDD5, R-438A.

R-434A.

R-407A.

R-437A.

R-407F.

Substitutes Proposed by EPA SNAP Program in NOPR issued July 9, 2014

HFC-32.

Propane (R-290).

R-441A.

DOE is aware of initial research with drop-in applications (where an alternate refrigerant replaces the existing refrigerant in a system that is optimized for the existing refrigerant) using R-32 in place of R-410A in a residential ducted split-system application. Initial research shows that, in this application, R-32 had a higher capacity and similar efficiency as R-410A, but its discharge temperatures and pressures were significantly higher.

This suggests that R-32 might show efficiency comparable to R-410A in PTAC and PTHP applications, and the research is inconclusive regarding whether R-32 will reduce energy use and/or by how much.

This research was published in the journal

ASHRAE

Transactions, at: Biswas, Auvi; Barve, Atharva; Cremaschi, Lorenzo (2013). “An Experimental Study of the Performance of New Low Global Warming Potential (LGWP) Refrigerants at Extreme High Temperature Ambient Conditions in Residential AC Ducted Split Systems,”

ASHRAE Transactions. 119

(1), special section p1.

DOE is not aware of test results from the use of alternate refrigerants in PTAC- or PTHP-specific applications that have been optimized for alternate refrigerants. DOE requests feedback on the efficacy of alternative refrigerants in PTAC and PTHP equipment. This is identified as issue 1 in section VII.E, “Issues on Which DOE Seeks Comment.”

Other Technologies Not Considered in the Engineering Analysis

Typically, energy-saving technologies that pass the screening analysis are evaluated in the engineering analysis. However, some technologies are not included in the analysis for other reasons, including: (1) Available data suggest that the efficiency benefits of the technology are negligible; (2) data are not available to evaluate the energy efficiency characteristics of the technology; or (3) the test procedure and EER or COP metric would not measure the energy impact of these technologies. Accordingly, DOE eliminated the following technologies from consideration in the engineering analysis based upon these three additional considerations:

(1) Re-circuiting heat exchanger coils;

(2) Rifled interior tube walls;

(3) Microchannel heat exchangers;

(4) Variable speed compressors;

(5) Complex control boards;

(6) Corrosion protection;

(7) Hydrophobic material treatment of heat exchangers;

(8) Clutched motor fans; and

(9) Thermostatic expansion valves.

Of these technologies, numbers 1 and 2 are used in baseline products, so no additional energy savings would be expected from their use. Information indicating efficiency improvement potential in PTACs and PTHPs is not available for technology number 3; DOE is not aware of substantiated performance data for PTAC operation with microchannels. Any potential energy savings of technologies 4 through 9 cannot be measured with the established energy use metrics (EER and COP) because those technologies are associated with part-load performance or long-term performance, which is not captured in the EER or COP metrics used for rating PTACs and PTHPs. AHRI commented that PTACs and PTHPs are generally operated at full load most of the time and that it is not common practice in the field to operate the units at part load. (AHRI, Framework Public Meeting Transcript, No. 7 at p. 36). DOE believes that the existing EER (full load) metric accurately reflects equipment efficiency during the year, and the PTAC test procedure revisions in progress at DOE are not expected to incorporate metrics that would account for part-load performance.

Further details of these eliminations are provided below.

Re-circuiting Heat Exchanger Coils

Manufacturers of PTAC and PTHP heat exchangers may improve the heat transfer efficiency across the heat exchanger by rearranging the refrigerant's path through the various tubes inside the heat exchanger. Manufacturers can rearrange the refrigerant path by “re-circuiting” the heat exchanger, either by splitting the refrigerant path into new circuits or re-routing the existing circuits. One objective of re-circuiting is to optimally pair air and refrigerant at every location in the heat exchanger. Goodman commented that PTACs are a very mature industry and that engineers have already optimized the number of circuits for heat transfer. (Goodman, No. 13 at p. 4) DOE agrees with Goodman's comment and has eliminated heat exchanger re-circuiting as a potential avenue for efficiency improvement.

Rifled Interior Tube Walls

Heat exchangers using rifled interior tube walls (also known as “microgrooves”) to enhance energy efficiency by improving heat transfer across the heat exchanger. With this technology, the internal face of heat exchanger tubes is rifled with small grooves that increase the interior surface area of the tube and induce turbulence in the refrigerant flow. Goodman commented that microgroove technology is currently being used in baseline products today. (Goodman, Framework Public Meeting Transcript, No. 7 at p. 43) Having observed that microgroove technology was used in the majority of baseline units disassembled in the engineering analysis, DOE agrees with Goodman's comment and has eliminated microgroove technology as a potential avenue for efficiency improvement.

Microchannel Heat Exchangers

Microchannel heat exchangers in air conditioning applications are heat exchangers in which refrigerant fluid flows in confinements with typical hydraulic diameter of less than one millimeter. Microchannels may improve unit efficiency by improving the efficiency of heat transfer between refrigerant and air across the heat exchanger. Currently, microchannel heat exchangers are in the development stage for applications in PTACs and PTHPs. Goodman commented that microchannel heat exchangers are not proven for consistent, field installed product performance in PTACs and PTHPs. (Goodman, No. 13 at p. 4) ASAP and ACEEE commented that a 2011 scouting report by ENERGY STAR identified microchannel heat exchangers as technology option for improving efficiency. (ASAP and ACEEE, No. 14 at p. 2) DOE notes that the engineering analysis was based on efficiency levels and, because units with microchannels are not commercially available, DOE cannot estimate the increase manufacturing costs associated with whatever efficiency gains such units may offer.

ASAP and ACEEE also commented that Zess, Inc. Industries indicates that it is developing an integrated microchannel refrigeration system for applications in PTAC units as high as 15 EER. (ASAP and ACEEE, No. 14 at p. 2) DOE does not have information regarding these prototype tests that would allow assessment of the efficiency improvements associated with the specific microchannel technology and/or the costs associated with its implementation in a unit that achieves 15 EER.

Complex Control Boards

Digital energy management control interfaces can reduce annual energy consumption of PTACs or PTHPs by optimizing the operation of the equipment under varying operating conditions. For example, they may allow operation managers in hotels to remotely turn off or change temperature set points of units throughout a building. Goodman commented that it offers controls that turn equipment off when the conditioned room is vacant. (Goodman, Framework Public Meeting Transcript, No. 7 at p. 103) Although this technology can reduce peak energy demand and also reduce overall energy consumption throughout the year, it does not increase the EER under the ARI 310/380-2004 test procedure because of the steady state test conditions.

Ebm-papst commented that some electronic motor speed controllers can cause structure-borne noise, and that a better controller could potentially avoid the need for sound attenuation, which would in turn free up the air path for increased air-side efficiency. (Ebm-papst, No. 8 at p. 1) DOE notes that sound attenuation between the outdoor and indoor sides of the unit is typically put in place to isolate noise originating from the compressor and from airflow across the outdoor heat exchanger. DOE acknowledges that well-designed motor controls can reduce motor noise at low frequencies, but DOE expresses doubt that this noise reduction would decrease the need to insulate against sound transmission from the compressor and outdoor heat exchanger. Goodman commented that complex control boards do not help steady state performance. (Goodman, No. 13 at p. 4) For the reasons noted above, DOE did not consider this technology in the engineering analysis.

Corrosion Protection

Corrosion protection materials used in PTACs and PTHPs also protect the equipment and prolong its use when it is exposed to chemically harsh operating conditions. Goodman commented that corrosion protection has a negative impact on steady state operation to some degree, but that corrosion protection may help improve the overall unit performance over several years of operation. (Goodman, No. 13 at p. 4) Although it is beneficial for the unit to be corrosion protected, corrosion protection does not improve the EER as measured by the test procedure. Therefore, DOE did not consider this technology in the engineering analysis.

Hydrophobic Material Treatment of Heat Exchangers

Material treatment of heat exchangers (also known as “plasma treatment”) allows the condensate that forms on the fins to be repelled and drained faster than on non-treated heat exchangers. Hydrophobic treatments are used to reduce mineral build up and corrosion on heat exchanger fins, to improve long-term performance of the unit. Although enhanced long term performance is beneficial, this treatment is not shown to improve the EER as per the test procedure.

Thermostatic Expansion Valves

Goodman commented that thermal expansion valves (TXVs) help with seasonal performance but not steady state performance. (Goodman, No. 13 at p. 4) DOE notes that TXVs would not improve the energy efficiency of PTACs or PTHPs, because there is only one condition for which the fixed-orifice expansion device can be optimized. DOE has insufficient information to know whether testing at multiple conditions would make sufficient efficiency improvement to justify the increased test time.

After screening out or otherwise removing from consideration most of the technologies, the technologies that DOE identified for consideration in the engineering analysis are included in Table IV.6. See chapter 3 of the TSD for additional detail on the technology assessment and the technologies analyzed.

Table IV.6—Design Options Retained for Engineering Analysis

Compressor Improvements:

• Higher Efficiency Compressors.

Condenser and evaporator fan and fan motor improvements:

• Higher Efficiency Fan Motors.

Increased Heat Exchanger Area.

Improved Air Flow and Fan Design.

These remaining technology options from Table IV.6 are briefly described below.

Currently, all PTAC and PTHP manufacturers incorporate rotary compressors into their equipment designs. DOE is referring to rotary compressors throughout this document unless specifically noted.

Higher Efficiency Compressors

Manufacturers can improve the energy efficiency of PTAC and PTHP units by incorporating more efficient components, such as high efficiency compressors, into their designs. Goodman commented that it is not aware of any compressors currently available or in development by its suppliers that are significantly more efficient than what it is are using now. (Goodman, No. 13 at p. 4) In private interviews, other manufacturers indicated that they are already using the most efficient compressor that meets their other design specifications (such as size and noise). DOE observed in reverse engineering analysis that PTAC and PTHP manufacturers use several different compressor models with a wide range of efficiency ratings.

Higher Efficiency Fan Motors

Manufacturers of baseline PTACs and PTHPs use permanent split capacitor (PSC) fan motors due to their modest cost, compact design, and durability. More efficient PSC motor designs applicable to PTACs and PTHPs are an ongoing industry challenge, and there been no substantial gain in efficiency in recent years. PSC manufacturers can improve efficiency by increasing the surface area of rotors, although the overall size of the PSC motor would increase in that case. PTACs and PTHPs have size constraints that do not allow an increase in motor size to a level which would have a significant impact on energy efficiency. DOE believes any further gains in PSC fan motor efficiency will be difficult to achieve, and has thus eliminated improvement of PSC fan motors as a potential avenue for efficiency improvement.

Besides PSC-based fan motors, PTAC and PTHP original equipment manufacturers (OEMs) can choose to implement permanent magnet (PM) motors. Such motors typically offer higher efficiencies than PSC-based fan motors, but these improvements come with increased costs for the motor unit and control hardware. Several manufacturers use DC motors in their higher-efficiency PTAC and PTHP models.

Increased Heat Exchanger Area

Manufacturers of PTACs and PTHPs increase unit efficiency by increasing heat exchanger size, either through elongating the face of the heat exchanger or increasing the number of heat exchanger tube rows. Goodman commented that PTACs (as predominantly a replacement product) are constrained by the dimensions of the equipment that they are replacing. (Goodman, No. 13 at p. 4) Because of these constraints on unit size, there are limits to the efficiency gains that may be had by increasing heat exchanger size. At least one manufacturer has incorporated bent heat exchanger coils to increase the heat exchanger face area while remaining inside the standard size unit constraints.

Improved Air Flow and Fan Design

Manufacturers of PTACs and PTHPs currently use several techniques to shape and direct airflow inside PTAC and PTHP units. Ebm-papst commented that DOE should consider “optimization of air path to minimize airflow impedance” as a technology option. Ebm-papst also commented that fine tuning the fan blade design should be considered as a technology option. Ebm-papst further commented that DOE should look into optimization of the fan selection such that the peak fan efficiency is close to the performance demands of the PTAC and enhances the air path in the unit. DOE accepts that manufacturers may improve unit efficiency by selecting appropriate fan and motor combinations. (Ebm-papst, No. 8 at p. 1)

C. Engineering Analysis

The engineering analysis establishes the relationship between an increase in energy efficiency of the equipment and the increase in manufacturer selling price (MSP) associated with that efficiency level. This relationship serves as the basis for cost-benefit calculations for individual customers, manufacturers, and the nation. In determining the cost-efficiency relationship, DOE estimates the increase in manufacturer cost associated with increasing the efficiency of equipment above the baseline up to the maximum technologically feasible (“max-tech”) efficiency level for each equipment class.

1. Methodology

DOE has identified three basic methods for developing cost-efficiency curves: (1) The design-option approach, which provides the incremental costs of adding design options to a baseline model that will improve its efficiency (

i.e.,

lower its energy use); (2) the efficiency-level approach, which provides the incremental costs of moving to higher energy efficiency levels, without regard to the particular design option(s) used to achieve such increases; and (3) the reverse-engineering (or cost-assessment) approach, which provides “bottom-up” manufacturing cost assessments for achieving various levels of increased efficiency, based on teardown analyses (or physical teardowns) providing detailed data on costs for parts and material, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.

In the framework document, DOE proposed using an efficiency-level approach combined with a cost-assessment approach to determine the cost-efficiency relationship, and requested comments on this approach. 78 FR 12252 (February 22, 2013). Goodman commented that the process for DOE to calculate manufacturer costs is adequate, but that the cost analysis from previous rulemakings tended to be on the low side (even for a large manufacturer), and that aggressively low cost estimates could impact small businesses. (Goodman, No. 13 at p. 5) To gather information on the particular and unique costs that small businesses face, DOE interviewed a number of small business manufacturers of PTACs and PTHPs. In these interviews, DOE asked questions regarding the component costs, manufacturing costs, and cost of conversion to manufacturing PTAC and PTHP equipment with higher efficiency. Data collected from these interviews with small businesses were used in the engineering analysis and subsequent cost-benefit calculations.

In the absence of recommended alternative approaches, DOE conducted this engineering analysis for PTACs and PTHPs using a combination of the efficiency level and cost-assessment approaches. More specifically, DOE identified the efficiency levels for the analysis based on the range of rated efficiencies of PTAC and PTHP equipment in the AHRI database. DOE selected PTAC and PTHP equipment that was representative of the market at different efficiency levels, then purchased, tested, and reverse engineered the selected equipment. DOE used the cost-assessment approach to determine the manufacturing production costs for PTAC and PTHP equipment across a range of efficiencies from the baseline to max-tech efficiency levels.

Where feasible, DOE selected models for reverse engineering with low and high efficiencies from a given manufacturer, at both representative cooling capacity levels and for both PTACs and PTHPs. The methodology used to perform reverse engineering analysis and derive the cost-efficiency relationship is described in chapter 5 of the TSD.

2. Equipment Classes Analyzed

DOE developed its engineering analysis for the six equipment classes associated with standard-size PTACs and PTHPs listed in Table IV.1. As discussed in section III.B of this NOPR, DOE did not consider amending energy efficiency standards for non-standard size equipment classes because of their low and declining market share and because of a lack of adequate information to analyze these units.

For PTACs and PTHPs, DOE focused its analysis on high-shipment-volume cooling capacities spanning the range of available equipment. Based on manufacturer interviews,

DOE found that the majority of shipments are in the classes with cooling capacity between 7,000 Btu/h to 15,000 Btu/h (see chapter 3 of the TSD for more details on the shipments data). In the framework document, DOE indicated that it would analyze units at the representative capacity of 9,000 Btu/h, and requested comments on this approach. 78 FR 12252 (February 22, 2013). Goodman commented that a 15,000 Btu/h model should be included in the comparison, specifically because 15,000 Btu/h is the largest typical capacity for PTAC and PTHP equipment, and which is space-constrained by its standard dimensions. (Goodman, No. 13 at p. 5) Hence, DOE conducted analysis for two representative cooling capacities: 9,000 Btu/h and 15,000 Btu/h. The 9,000 Btu/h cooling capacity represents the greatest number of models available on the market,

while the 15,000 Btu/h cooling capacity represents the greater technical hurdles for efficiency improvement, considering the size constraints of standard-size PTACs and PTHPs.

DOE conducted interviews with high- and low-volume PTAC and PTHP manufacturers, and collected information regarding shipments of PTACs and PTHPs at different cooling capacity levels.

DOE found the cooling capacity of 9,000 Btu/h to have the highest number of models available based on data in the 2013 AHRI Directory and the ACEEE database of equipment.

The selection of two cooling capacities for analysis, at 9,000 Btu/h and 15,000 Btu/h, allowed DOE to investigate the slope of the energy efficiency capacity relationship. For the purposes of conducting the analyses, DOE believes that the results from the two representative cooling capacities can be extrapolated to the entire range of cooling capacities for each equipment class. DOE developed the cost-efficiency curves based on these representative cooling capacities of standard-size units. For the PTAC and PTHP equipment classes with a cooling capacity greater than or equal to 7,000 Btu/h and less than or equal to 15,000 Btu/h, the energy efficiency equation characterizes the relationship between the EER of the equipment and cooling capacity (i.e., EER is a function of the cooling capacity of the equipment) in which EER decreases as capacity increases. For all cooling capacities less than 7,000 Btu/h and all cooling capacities greater than 15,000 Btu/h, the EER is calculated based on the energy efficiency equation for 7,000 Btu/h or 15,000 Btu/h, respectively.

3. Cost Model

DOE developed a manufacturing cost model to estimate the manufacturing production cost (MPC) of PTACs and PTHPs. The cost model is a spreadsheet model that converts the materials and components in the bills of materials (BOMs) for PTAC and PTHP equipment into dollar values based on the price of materials, average labor rates associated with fabrication and assembling, and the cost of overhead and depreciation, as determined based on manufacturer interviews and DOE expertise. To convert the information in the BOMs into dollar values, DOE collected information on labor rates, tooling costs, raw material prices, and other factors. For purchased parts, the cost model estimates the purchase price based on volume-variable price quotations and detailed discussions with manufacturers and component suppliers. For fabricated parts, the prices of raw metal materials (

e.g.,

tube, sheet metal) are estimates on the basis of five-year averages (from 2006 to 2011). The cost of transforming the intermediate materials into finished parts is estimated based on current industry pricing. Further details on the manufacturing cost analysis are provided in chapter 5 of the TSD.

Developing the cost model involved disassembling various PTACs and PTHPs, analyzing the materials and manufacturing processes, and estimating the costs of purchased

components. In addition to disassembling various PTACs and PTHPs, manufacturers provided DOE supplemental component cost data for various PTAC and PTHP equipment. DOE reported the MPCs in aggregated form to maintain confidentiality of sensitive component data. DOE obtained input from stakeholders on the MPC estimates and assumptions to confirm accuracy. DOE used the cost model for all of the representative cooling capacities within the PTAC and PTHP equipment classes. Chapter 5 of the TSD provides details and assumptions of the cost model.

4. Baseline Efficiency Level

The engineering analysis estimates the incremental costs for equipment with efficiency levels above the baseline in each equipment class. For the purpose of the engineering analysis, DOE used the engineering baseline EER as the starting point to build the cost efficiency curves. As discussed in section III.A, ANSI/ASHRAE/IES Standard 90.1-2013 was issued in the course of this rulemaking, and this revised Standard 90.1-2013 amended standard levels for PTACs, raising standards by 1.8% above the Federal minimum energy conservation standards for PTACs. DOE is obligated either to adopt those standards developed by ASHRAE or to adopt levels more stringent than the ASHRAE levels if there is clear and convincing evidence in support of doing so. (42 U.S.C. 6313(a)(6)(A)). For the purposes of calculating energy savings over the ANSI/ASHRAE/IES standard, DOE identified the ANSI/ASHRAE/IES Standard 90.1-2013 as the baseline efficiency level.

DOE's estimates of potential energy savings from an amended energy conservation standard are further discussed in section IV.H.

The baseline efficiency levels for each equipment class are presented below in Table IV.7.

Table IV.7—Baseline Efficiency Levels

Equipment type

Equipment class

Baseline efficiency equation

Cooling capacity

Baseline

efficiency

level

PTAC

Standard Size

EER = 14.0 − (0.300 × Cap †/1000)

9,000 Btu/h

15,000 Btu/h

11.3 EER

9.5 EER

PTHP

Standard Size

EER = 14.0 − (0.300 × Cap †/1000)

9,000 Btu/h

15,000 Btu/h

11.3 EER

9.5 EER

† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature.

5. Incremental Efficiency Levels

DOE examined performance data of standard size PTACs and PTHPs published in the AHRI Directory of Certified Product Performance (AHRI Directory) and on manufacturers' Web sites in order to select efficiency levels for consideration in the rulemaking. AHRI commented that its database is a good source of information as well as data from manufacturers' Web sites. (AHRI, Framework Public Meeting Transcript, No. 7 at p. 56) McQuay commented that Web site performance data are not verified by an independent third party test facility. (McQuay, No. 10 at p. 1) DOE used Web site-published data as an initial screening mechanism to select units for reverse engineering; a third party test facility verified the actual performance of the units selected for analysis.

In the framework document, DOE proposed to analyze levels for standard size PTACs that are 4%, 8%, 12%, 16%, and 20% more efficient than the amended PTAC standards that became effective on October 8, 2012. Goodman commented that the proposed increment of 4% for standard size PTACs is too large because PTAC equipment is space-constrained, and Goodman's opinion, 2% or 3% increments would be more reasonable. (Goodman, No. 13 at p. 5) DOE acknowledges Goodman's comment, but believes that an increment of 4% is appropriate to maintain a manageable number of efficiency levels spanning the range of efficiency from the 2012 PTAC standard to the max-tech level of 20% above the 2012 PTAC standard.

After extensive unit testing, DOE revised the maximum technology level from 20% above 2012 PTAC standard stated in the framework document down to 18% above the 2012 PTAC standard.

The maximum efficiency level, at 18% above the standards that became effective on October 8, 2012, coincides with the maximum efficiency level observed in the market for standard size PTACs and PTHPs. DOE has independent test data to verify that one PTHP unit demonstrated a cooling efficiency at this “max tech” level. Although the rated efficiencies of PTACs without reverse cycle heating extend only up to the 16% efficiency level, DOE expects that such equipment should be able to attain the same cooling mode efficiencies as PTHPs.

DOE announced in the framework document for this rulemaking that it planned to consider the maximum efficiency level equal to 20% above the 2012 PTAC standard, because DOE observed a unit rated at that level in the 2013 AHRI Directory of Certified Product Performance. 78 FR 12252. Since issuing the framework document, DOE has acquired and tested many units rated at high efficiency levels. Having completed these observations, DOE believes that a the highest performing standard size PTAC or PTHP unit on the market can achieve an efficiency of 18% above the 2012 PTAC cooling standard.

DOE analyzed levels for standard size PTACs that are 1.8%, 4%, 8%, 12%, 16%, and 18% more efficient than the amended PTAC standards that became effective on October 8, 2012. AHRI commented that there is an addendum to ANSI/ASHRAE/IES Standard 90.1-2010 which amends the efficiency standards for standard size PTACs. (AHRI, No. 11 at p. 4) Separately, AHRI commented that the amended efficiency level should be included in DOE's analysis. (AHRI, Framework Public Meeting Transcript, No. 7 at p. 101) Since DOE received these comments, this addendum prescribing new efficiency standards for standard-size PTACs was integrated into ANSI/ASHRAE/IES Standard 90.1-2013. DOE selected the first efficiency level of 1.8% to align with the amended ANSI/ASHRAE/IES Standard 90.1-2013 efficiency level for PTACs. Each of the remaining levels is represented by a percentage increase above the EER value of the PTAC standards that became effective on October 8, 2012.

For the heating efficiency of PTHPs, DOE did not develop a cost-efficiency curve separately to represent the cost of improving COP. Rather, DOE correlated the COP associated with each efficiency level with the efficiency level's EER based on COP and EER ratings from the AHRI database. DOE established a representative curve based on this data to obtain a relationship for COP in terms

of EER. DOE used this relationship to select COP values corresponding to each efficiency level. This approach takes into consideration the fact that a PTHP's EER and COP are related and cannot be independently analyzed, while basing the analysis on a representative average relationship between the two efficiency metrics. To determine the typical relationship between EER and COP, DOE examined the entire database of rated equipment and determined a relationship based on the EER and COP ratings of the collective body of certified PTAC and PTHP equipment.

PG&E, SCGC, SDG&E, and SCE commented that DOE should use caution in drawing conclusions based on a relationship between EER and COP ratings, as this may decrease overall efficiency of the unit. Their joint comment states that, depending on the climate zone and operating cycle of a given unit, there may be instances where trading off COP for higher EER results in greater operating efficiency overall. (PG&E, SCGC, SDG&E, SCE, No. 12 at p. 3) DOE did not observe any instances of standard size equipment manufacturers producing different PTHP models for different climate zones. DOE notes that regional standards are not being considered in this rulemaking.

The efficiency levels for each equipment class that DOE considered for the NOPR analyses are presented in Table IV.8. The percentages associated with efficiency levels (ELs) indicate the percentage above the current Federal standard for PTACs.

Table IV.8—Incremental Efficiency Levels for Standard Size PTACs and PTHPs

Equipment type

Cooling

capacity

Efficiency levels (percentages relative to 2012 PTAC ECS)

Current federal PTAC ECS *

EL1,

baseline, 1.8% **

EL2, 4%

EL3, 8%

EL4, 12%

EL5, 16%

EL6, 18%

(MaxTech)

PTAC

All, EER

13.8 − (0.300 × Cap †)

14.0 − (0.300 × Cap †)

14.4 − (0.312 × Cap †)

14.9 − (0.324 × Cap †)

15.5 − (0.336 × Cap †)

16.0 − (0.348 × Cap †)

16.3 − (0.354 × Cap †).

9,000 Btu/h

11.1 EER

11.3 EER

11.5 EER

12.0 EER

12.4 EER

12.9 EER

13.1 EER.

15,000 Btu/h

9.3 EER

9.5 EER

9.7 EER

10.0 EER

10.4 EER

10.8 EER

11.0 EER.

Equipment type

Cooling

capacity

Baseline, 1.8% **

EL1, 4%

EL2, 8%

EL3, 12%

EL4, 16%

EL5, 18%

(MaxTech)

PTHP

All, EER

14.0 − (0.300 × Cap †)

14.4 − (0.312 × Cap †)

14.9 − (0.324 × Cap †)

15.5 − (0.336 × Cap †)

16.0 − (0.348 × Cap †)

16.3 − (0.354 × Cap †).

All, COP

3.7 − (0.052 × Cap †)

3.8 − (0.058 × Cap †)

4.0 − (0.064 × Cap †)

4.1 − (0.068 × Cap †)

4.2 − (0.070 × Cap †)

4.3 − (0.073 × Cap †).

9,000 Btu/h

11.3 EER

3.2 COP

11.5 EER

3.3 COP

12.0 EER

3.4 COP

12.4 EER

3.5 COP

12.9 EER

3.6 COP

13.1 EER.

3.6 COP.

15,000 Btu/h

9.5 EER

2.9 COP

9.7 EER

2.9 COP

10.0 EER

3.0 COP

10.4 EER

3.1 COP

10.8 EER

3.2 COP

11.0 EER.

3.2 COP.

* This level represents the current Federal minimum for PTAC equipment.

** This level represents the ANSI/ASHRAE/IES Standard 90.1-2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline for PTAC and PTHP equipment since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. (a)(6)(A)(ii)(I)). DOE notes that the Baseline level is 1.8% higher than current Federal ECS for PTAC equipment, but is equivalent to current Federal ECS for PTHP equipment. For PTAC equipment, the Baseline level is also termed EL1, and is compared to current Federal ECS in the energy savings analysis in section V.B.3.a.

† Cap means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature.

ASAP commented that DOE should evaluate at least one level higher than the current market max efficient unit to arrive a true max-tech unit. (ASAP, Framework Public Meeting Transcript, No. 7 at p. 56-57) Separately, ASAP and ACEEE stated that DOE must capture the “true max-tech level,” which they claim would be higher that what is currently represented by the market. (ASAP and ACEEE, No. 14 at p. 3) DOE acknowledges the comments from ASAP and ACEEE and confirms that this analysis tested the most efficient standard size PTAC and PTHP units available. These units include all of the efficiency-improving design options listed in the screening analysis (increased heat exchanger area, high efficiency compressors, and high efficiency fan motors). DOE does not believe it is feasible to include efficiency levels higher than this, as achieving efficiency levels higher than max tech would depend upon design options that have not been demonstrated in the market for PTACs and PTHPs.

6. Equipment Testing and Reverse Engineering

As discussed above, for the engineering analysis, DOE specifically analyzed representative capacities of 9,000 Btu/h and 15,000 Btu/h to develop incremental cost-efficiency relationships. DOE selected twenty different models representing PTAC and PTHP equipment types at 9,000 Btu/h and 15,000 Btu/h capacities. DOE selected the models as a representative sample of the market at different efficiency levels.DOE based the selection of units for testing and reverse engineering on the efficiency data available in the AHRI certification database. Details of the key features of the tested units are presented in chapter 5 of the NOPR TSD.

DOE conducted testing on each unit according to the DOE test procedure outlined at 10 CFR 431.96, which incorporates by reference AHRI Standard 310/380-2004 (which itself incorporates ASHRAE Standard 16 and ASHRAE Standard 58). DOE then conducted physical teardowns on each test unit to develop a manufacturing cost model and to evaluate key design features (e.g., improved heat exchangers, compressors, fans/fan motors).

7. Cost-Efficiency Results

The results of the engineering analysis are reported as a set of cost-efficiency data (or “curves”) in the form of MPC (in dollars) versus EER, which form the basis for other analyses in the NOPR. DOE created cost-efficiency curves for the two representative cooling capacities within the two standard-size equipment classes of PTACs and PTHPs, as discussed in section IV.C.3, above. DOE developed the incremental cost-efficiency results shown in Table IV.9 for each representative cooling capacity. These cost results are incremented from a baseline efficiency level equivalent to the ANSI/ASHRAE/IES Standard 90.1-2013. Details of the cost-efficiency analysis are presented in chapter 5 of the NOPR TSD.

Table IV.9—Incremental Manufacturing Production Costs (MPC) for Standard Size PTACs and PTHPs

Equipment type

Cooling capacity

Efficiency levels

EL1,

baseline *

EL2

EL3

EL4

EL5

EL6

PTAC

9,000 Btu/h

$0.00

$4.44

$13.08

$22.41

$32.45

$37.73

15,000 Btu/h

0.00

4.26

15.93

30.97

49.38

59.86

Baseline *

EL1

EL2

EL3

EL4

EL5

PTHP

9,000 Btu/h

$0.00

$4.44

$13.08

$22.41

$32.45

$37.73

15,000 Btu/h

0.00

4.26

15.93

30.97

49.38

59.86

* This level represents the ANSI/ASHRAE/IES Standard 90.1-2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. (a)(6)(A)(ii)(I)). DOE notes that the Baseline level is 1.8% higher than current Federal ECS for PTAC equipment, but is equivalent to current Federal ECS for PTHP equipment. For PTAC equipment, the Baseline level is also termed EL1.

D. Markups To Determine Equipment Price

The markups analysis develops appropriate markups in the distribution chain to convert the estimates of manufacturer selling price (MSP) derived in the engineering analysis to customer prices. (“Customer” refers to purchasers of the equipment being regulated.) DOE calculates overall baseline and incremental markups based on the equipment markups at each step in the distribution chain. The incremental markup relates the change in the manufacturer sales price of higher efficiency models (the incremental cost increase) to the change in the customer price.

DOE developed supply chain markups in the form of multipliers that represent increases above MSP and include distribution costs. DOE applied these markups to the MSPs it developed in the engineering analysis, and then added sales taxes to arrive at the equipment prices for baseline and higher efficiency equipment. See chapter 6 of the TSD for additional details on markups.

In the 2008 Final Rule, DOE identified four distribution channels for PTACs and PTHPs, as shown in Table IV.10, to describe how the equipment passes from the manufacturer to the customer. 73 FR 58772. In the new construction market, the manufacturer sells the equipment directly to the customer through a national account. In the replacement market, the manufacturer sells to a wholesaler, who sells to a mechanical contractor, who in turn sells the equipment to the customer or end user. In the third distribution channel, used in both the new construction and replacement markets, the manufacturer sells the equipment to a wholesaler. The wholesaler sells the equipment to a mechanical contractor, who sells it to a general contractor, who in turn sells the equipment to the customer or end user. In the fourth distribution channel, also used in both the new construction and replacement markets, the manufacturer sells the equipment to a wholesaler, who directly sells to the purchaser. DOE used these same distribution channels for the NOPR.

Table IV.10—Distribution Channels for PTAC and PTHP Equipment

Channel 1

Channel 2

Channel 3

Channel 4

Manufacturer (through national accounts)

Manufacturer

Wholesaler

Manufacturer

Wholesaler

Mechanical Contractor

Manufacturer.

Wholesaler.

Mechanical Contractor.

General Contractor.

Customer

Customer.

In the 2008 Final Rule, DOE also estimated percentages of the total sales in the new construction and replacement markets for each of the four distribution channels, as shown in Table IV.11. Commenting on the framework document, Goodman stated that the distribution channels from the 2008 rulemaking are still applicable today. (Goodman, No. 13 at p. 5) Accordingly, DOE used the same shares of the market for the NOPR. However, DOE updated the distribution of equipment to the new construction and replacement markets by using the ratio of projected new construction shipments to total shipments in the compliance year for PTAC equipment. DOE requests comment regarding the selected channels and distribution of shipments through the channels. This is identified as issue 2 in section VII.E, “Issues on Which DOE Seeks Comment.”

Table IV.11—Share of Market by Distribution Channel for PTAC and PTHP Equipment

Distribution channel

New construction

(percent)

Replacement

(percent)

Wholesaler-Customer

Wholesaler-Mech Contractor-Customer

Wholesaler-Mech Contractor-General Contractor-Customer

National Account

Total

100

For each of the steps in the distribution channels presented above, DOE estimated a baseline markup and an incremental markup. DOE defines a baseline markup as a multiplier that converts the MSP of equipment with baseline efficiency to the customer purchase price for that equipment. An incremental markup is defined as the multiplier to convert the incremental increase in MSP of higher efficiency equipment to the incremental customer purchase price for that equipment. Both baseline and incremental markups are independent of the efficiency levels of the PTACs and PTHPs.

DOE developed the markups for each step of the distribution channels based on available financial data. DOE utilized updated versions of the following data sources: (1) The Heating, Air Conditioning & Refrigeration Distributors International

2012 Profit Report

to develop wholesaler markups; (2) the Air Conditioning Contractors of America's (ACCA)

2005 Financial Analysis for the HVACR Contracting Industry

and U.S. Census Bureau economic data

to develop mechanical contractor markups; and (3) U.S. Census Bureau economic data for the commercial and institutional building construction industry to develop general contractor markups.

DOE estimated an average markup for sales through national accounts to be one-half of the markup for the wholesaler-to-customer distribution channel. DOE determined this markup for national accounts on an assumption that the resulting national account equipment price must fall somewhere between the MSP (i.e., a markup of 1.0) and the customer price under a typical chain of distribution (i.e., a markup of wholesaler, mechanical contractor, or general contractor).

“2012 Profit Report,” Heating Air Conditioning & Refrigeration Distributors International. February 2012. Available online at:

www.hardinet.org/Profit-Report.

“2005 Financial Analysis for the HVACR Contracting Industry,” Air Conditioning Contractors of America. 2005.

“Plumbing, Heating, and Air-Conditioning Contractors. Sector 23: 238220. Construction: Industry Series, Preliminary Detailed Statistics for Establishments, 2007,” U.S. Census Bureau. 2007.

“2007 Economic Census, Construction Industry Series and Wholesale Trade Subject Series,” U.S. Census Bureau. Available online at

https://www.census.gov/newsroom/releases/archives/construction_industries/2009-07-27_economic_census.html.

The overall markup is the product of all the markups (baseline or incremental markups) for the different steps within a distribution channel. Replacement channels include sales taxes, which were calculated based on State sales tax data reported by the Sales Tax Clearinghouse.

E. Energy Use Analysis

The energy use analysis provides estimates of the annual unit energy consumption (UEC) of PTAC and PTHP equipment at the considered equipment classes and efficiency levels. The annual UECs are used in subsequent analyses including the LCC, PBP, and National Energy Savings (NES).

Stakeholders commented on the data sources for UEC data. AHRI stated that the methodology used by the ASHRAE 90.1 Committee to estimate energy savings was satisfactory and should be used in this rulemaking. (AHRI, No. 7 at p. 69) Goodman, however, commented that it does not have significant concerns with the energy use analysis performed in the 2008 rulemaking. (Goodman, No. 13 at p. 5) Since the inputs, software, and methodology of the energy use analysis in the 2008 rulemaking was vetted among the stakeholders and there were no comments on the deficiency of the same, DOE used the results of the whole-building simulation performed in the 2008 rulemaking for the source of UEC data. However, DOE wishes to address certain stakeholder concerns, as described below.

AHRI commented that new requirements for minimum air filter effectiveness finalized in 2013 for ASHRAE Standard 62.1 would increase pressure drop and increase fan power. (AHRI, No. 11 at p. 4) Goodman echoed AHRI's concern. (Goodman, No. 13 at p. 6) In response, DOE notes that a simulation- and field-based study found that the extent of the impact on energy consumption due to the change in filter effectiveness at the levels finalized is less than 1%.

DOE does not expect such an improvement to impact outputs significantly enough to warrant a change to the value of the filter pressure drop.

Walker, I.S., et al., “System Effects of High Efficiency Filters in Homes,” Lawrence Berkeley National Laboratory, LBNL-6144E, 2013.

To estimate the UEC for each equipment class of PTAC and PTHP, DOE began with the cooling UECs for PTACs and the combined cooling and heating UECs for PTHPs utilized in the 2008 standards rulemaking. 73 FR 58772. The cooling and heating UECs for PTHPs were split, assuming equal cooling energy use for PTACs and PTHPs. In addition, DOE adjusted the base-year UECs to account for changes in climate (i.e., heating degree-days and cooling degree-days) between 2008 and 2013, based on a typical meteorological year (TMY) hourly weather data set (referred to as TMY2) and an updated TMY3 data set.

Where identical efficiency levels and cooling capacities were available, DOE used the cooling or heating UEC directly from the previous rulemaking. For additional efficiency levels, DOE scaled the cooling UECs based on interpolations between EERs and scaled the heating UECs based on interpolations between COPs, both at a constant cooling capacity. Likewise, for additional cooling capacities, DOE scaled the UECs based on interpolations between cooling capacities at a constant EER.

For the LCC and PBP analyses, UECs were determined for the representative cooling capacities of 9,000 Btu/h and 15,000 Btu/h for which cost-efficiency curves were provided, as discussed in section IV.C.7. For the NES, UECs were determined for the cooling capacities of 7,000 Btu/h, 9,000 Btu/h, and 15,000 Btu/h for which aggregate shipments were provided by AHRI, as highlighted in section IV.G. National UEC estimates for PTACs and PTHPs for the LCC and PBP analyses, and the NES, are described in detail in chapter 8 of the TSD.

F. Life Cycle Cost and Payback Period Analyses

The purpose of the LCC and PBP analysis is to analyze the effects of potential amended energy conservation standards on customers of PTAC and PTHP equipment by determining how a potential amended standard affects their operating expenses (usually decreased) and their total installed costs (usually increased).

The LCC is the total customer expense over the life of the equipment, consisting of equipment and installation costs plus operating costs over the lifetime of the equipment (expenses for energy use, maintenance, and repair). DOE discounts future operating costs to the time of purchase using customer discount rates. The PBP is the estimated amount of time (in years) it takes customers to recover the increased total installed cost (including equipment and installation costs) of a more efficient type of equipment through lower operating costs. DOE calculates the PBP by dividing the change in total installed cost (normally higher) due to a standard by the change in annual operating cost (normally lower) that results from the standard.

For any given efficiency level, DOE analyzed these impacts for PTAC and PTHP equipment starting in the compliance years as set for in section V.B.1.a by calculating the change in customers' LCCs likely to result from

higher efficiency levels compared with the ASHRAE baseline efficiency levels for the PTAC and PTHP equipment classes discussed in the engineering analysis.

DOE conducted the LCC and PBP analyses for the PTAC and PTHP equipment classes using a spreadsheet model developed in Microsoft Excel. When combined with Crystal Ball (a commercially available software program), the LCC and PBP model generates a Monte Carlo simulation to perform the analyses by incorporating uncertainty and variability considerations in certain of the key parameters as discussed below. Inputs to the LCC and PBP analysis are categorized as: (1) Inputs for establishing the total installed cost and (2) inputs for calculating the operating expense. Results of the LCC and PBP analyses were applied to other equipment classes through linear scaling of the results by the cooling capacity of the equipment class.

The following sections contain brief discussions of comments on the inputs and key assumptions of DOE's LCC and PBP analysis and explain how DOE took these comments into consideration. They are also described in detail in chapter 8 of the NOPR TSD.

1. Equipment and Installation Costs

The equipment costs faced by purchasers of PTAC and PTHP equipment are derived from the MSPs estimated in the engineering analysis and the overall markups estimated in the markups analysis.

To develop an equipment price trend for the NOPR, DOE derived an inflation-adjusted index of the producer price index (PPI) for “all other miscellaneous refrigeration and air-conditioning equipment” from 1990-2013.

Although the inflation-adjusted index shows a declining trend from 1990 to 2004, data since 2008 have shown a flat-to-slightly rising trend. Given the uncertainty as to which of the trends will prevail in coming years, DOE chose to apply a constant price trend (2013 levels) for each efficiency level in each equipment class for the NOPR.

“Producer Price Indexes,” Bureau of Labor Statistics (BLS). 2014. Available online at

www.bls.gov/ppi/

For installation costs, DOE used a specific cost from RS Means

for PTACs and PTHPs and linearly scaled the cost according to the cooling capacities of the equipment classes.

RS Means Company, Inc.

RS Means Mechanical Cost Data 2013.

2013. Kingston, MA.

2. Unit Energy Consumption

The calculation of annual per-unit energy consumption at each considered efficiency level and capacity is described in section IV.E.

3. Electricity Prices and Electricity Price Trends

DOE determined electricity prices for PTAC and PTHP users based on tariffs from a representative sample of electric utilities. 69 FR 45481-82. Since air-conditioning loads are strongly peak-coincident, regional marginal prices were developed from the tariff data and then scaled to approximate 2013 prices. This approach calculates energy expenses based on actual commercial building marginal electricity prices that customers are paying.

Coughlin, K., C. Bolduc, R. Van Buskirk, G. Rosenquist and J.E. McMahon, “Tariff-based Analysis of Commercial Building Electricity Prices.” Lawrence Berkeley National Laboratory. LBNL-55551. 2008.

The Commercial Buildings Energy Consumption Survey completed in 1992 (CBECS 1992) and in 1995 (CBECS 1995) provides monthly electricity consumption and demand for a large sample of buildings. DOE used these values to help develop usage patterns associated with various building types. Using these monthly values in conjunction with the tariff data, DOE calculated monthly electricity bills for each building. The average price of electricity is defined as the total electricity bill divided by total electricity consumption. From this average price, the marginal price for electricity consumption was determined by applying a 5 percent decrement to the average CBECS consumption data and recalculating the electricity bill. Using building location and the prices derived from the above method, a marginal price was determined for each region of the U.S.

The tariff-based prices were updated to 2013 using the commercial electricity price index published in the

AEO

(editions 2009 through 2012). An examination of data published by the Edison Electric Institute

indicates that the rate of increase of marginal and average prices is not significantly different, so the same factor was used for both pricing estimates. DOE projected future electricity prices using trends in average U.S. commercial electricity price from

AEO 2013.

“EEI Typical Bills and Average Rates Report (bi-annual, 2007-2012),” Edison Electric Institute, Washington, DC 2012.

“Annual Energy Outlook 2013,” U.S. Energy Information Administration. May, 2013. Available online at

http://www.eia.gov/forecasts/archive/aeo13/index.cfm.

Goodman commented on the need to consider the impact of peak loads on various parts of the analyses. (Goodman, No. 13 at p. 5) DOE is aware that cooling loads are peaking loads, which may be subject to demand charges. DOE's tariff-based electricity prices reflect demand charges.

For further discussion of electricity prices, see chapter 8 of the NOPR TSD.

4. Repair Costs

Repair costs are associated with repairing or replacing components that have failed. The cost of the material and labor in each incident is covered by extended warranties, which are service contracts that can be purchased, and the repair cost can be estimated from annualization of a contract's total price. DOE utilized manufacturer- and vendor-provider extended warranty price data to estimate annual repair costs. DOE assumed that any routine or minor repairs are included in the annualized maintenance costs. Repair costs were linearly scaled by cooling capacity to apply to all equipment classes.

Goodman commented that repair costs are dependent on the specific type of equipment. (Goodman, No. 7 at p. 77) The price data were disaggregated by equipment category, enabling determination of specific repair costs for PTACs and PTHPs.

Goodman also commented that repair costs are typically higher for more efficient products. (Goodman, No. 7 at p. 77) DOE incorporated the cost of a major repair as a means of estimating repair costs by efficiency level. This resulted in repair costs that vary in direct proportion with the price of the equipment, which is a reasonable proxy for efficiency.

5. Maintenance Costs

Maintenance costs are costs associated with general maintenance of the equipment (e.g., checking and maintaining refrigerant charge levels and cleaning heat-exchanger coils). Goodman commented that maintenance costs would depend on the specific type of equipment. (Goodman, No. 7 at p. 77) For PTACs, DOE utilized estimates of annual maintenance cost from the previous rulemaking; the values were adjusted to current material and labor rates. For PTHPs, DOE scaled the adjusted estimate of PTAC maintenance costs with the ratio of PTHP to PTAC annualized maintenance costs from RS Means data.

Since maintenance tasks do not change with efficiency level,

DOE does not expect maintenance costs to scale with efficiency level. Maintenance costs were linearly scaled by cooling capacity to apply to all equipment classes.

RS Means Company, Inc.

RSMeans Online.

(Last accessed March 26, 2013.)

http://www.rsmeansonline.com

6. Lifetime

Equipment lifetime is the age at which the equipment is retired from service. In the 2008 Final Rule, DOE used a median equipment lifetime of 10 years and a maximum lifetime of 20 years based on a retirement function. 73 FR 58772, 58789 (October 7, 2008). In the framework document, DOE stated its intention to use the s

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