Energy Conservation Program for Certain Industrial Equipment: Energy Conservation Standards and Test Procedures for Commercial Heating, Air-Conditioning, and Water-Heating Equipment

Federal RegisterJan 8, 2015

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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket No. EERE-2014-BT-STD-0015]

RIN 1904-AD23

Energy Conservation Program for Certain Industrial Equipment: Energy Conservation Standards and Test Procedures for Commercial Heating, Air-Conditioning, and Water-Heating Equipment

AGENCY:

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

ACTION:

Notice of proposed rulemaking (NOPR) and announcement of 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 several classes of commercial heating, air-conditioning, and water-heating equipment. EPCA also requires that each time the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 90.1 is amended with respect to the standard levels or design requirements applicable to that equipment, the U.S. Department of Energy (DOE) must adopt amended uniform national standards for this equipment equivalent to those in ASHRAE Standard 90.1, unless DOE determines that there is clear and convincing evidence showing that more-stringent, amended standards would be technologically feasible and economically justified, and would save a significant additional amount of energy. ASHRAE most recently amended Standard 90.1 on October 9, 2013. Based upon its analysis of the energy savings potential of amended energy conservation standards and the lack of clear and convincing evidence to support more-stringent standards, DOE is proposing to adopt the amended standards in ASHRAE Standard 90.1 for: Small three-phase commercial air-cooled air conditioners (single package only) and heat pumps (single package and split system) less than 65,000 Btu/h; water-source heat pumps; and commercial oil-fired storage water heaters. DOE is also making a proposed determination that the standards for small three-phase commercial air-cooled air conditioners (split system) do not need to be amended. Finally, DOE is proposing updates to the current Federal test procedures to incorporate by reference the most current version of the American National Standards Institute (ANSI) Z21.47,

Gas-fired central furnaces,

specified in ASHRAE Standard 90.1 applicable to commercial warm-air furnaces, and to the most current version of ASHRAE 103,

Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boilers.

This document also announces a public meeting to receive comment on these proposed standards and associated analyses and results, as well as the proposed test procedure provisions.

DATES:

Meeting:

DOE will hold a public meeting on Friday, February 6, 2015 from 1:00 p.m. to 4:00 p.m., in Washington, DC. The meeting will also be broadcast as a webinar. See section X, “Public Participation,” for webinar registration information, participant instructions, and information about the capabilities available to webinar participants.

Comments:

DOE will accept comments, data, and information regarding this notice of proposed rulemaking (NOPR) before and after the public meeting, but no later than March 24, 2015. See section X, “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. Please note that foreign nationals visiting DOE Headquarters are subject to advance security screening procedures. Any foreign national wishing to participate in the meeting should advise DOE as soon as possible by contacting Ms. Edwards at the phone number above to initiate the necessary procedures. Please also note that any person wishing to bring a laptop or tablet into the Forrestal Building will be required to obtain a property pass. Visitors should avoid bringing laptops, or allow an extra 45 minutes. Persons may also attend the public meeting via webinar. For more information, refer to section X, “Public Participation,” near the end of this document.

Due to the REAL ID Act implemented by the Department of Homeland Security (DHS), there have been recent changes regarding identification (ID) requirements for individuals wishing to enter Federal buildings from specific States and U.S. territories. As a result, driver's licenses from the following States or territory will not be accepted for building entry, and instead, one of the alternate forms of ID listed below will be required.

DHS has determined that regular driver's licenses (and ID cards) from the following jurisdictions are not acceptable for entry into DOE facilities: Alaska, American Samoa, Arizona, Louisiana, Maine, Massachusetts, Minnesota, New York, Oklahoma, and Washington.

Acceptable alternate forms of Photo-ID include: U.S. Passport or Passport Card; an Enhanced Driver's License or Enhanced ID-Card issued by the States of Minnesota, New York or Washington (Enhanced licenses issued by these States are clearly marked Enhanced or Enhanced Driver's License); a military ID or other Federal government-issued Photo-ID card.

Instructions:

Any comments submitted must identify the NOPR on Energy Conservation Standards and Test Procedures for ASHRAE Standard 90.1 Equipment, and provide docket number EERE-2014-BT-STD-0015 and/or regulatory information number (RIN) 1904-AD23. Comments may be submitted using any of the following methods:

Federal eRulemaking Portal: www.regulations.gov.

Follow the instructions for submitting comments.

E-Mail: ComHeatingACWHEquip2014STD0015@ee.doe.gov.

Include the docket number and/or RIN in the subject line of the message. Submit electronic comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form of encryption.

Postal Mail:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. If possible, please submit all items on a compact disc (CD), in which case it is not necessary to include printed copies.

Hand Delivery/Courier:

Ms. Brenda Edwards, U.S. Department of Energy, Building Technologies Office, 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.

No telefacsimilies (faxes) will be accepted. For detailed instructions on submitting comments and additional

information on the rulemaking process, see section X 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 may not be publicly available, such as those containing information that is exempt from public disclosure.

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

www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0015.

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 X, “Public Participation,” 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:

Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-6590. Email:

Ashley.Armstrong@ee.doe.gov.

Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-9507. Email:

Eric.Stas@hq.doe.gov.

For information on how to submit or review public comments, contact Ms. Brenda Edwards at (202) 586-2945 or by email:

Brenda.Edwards@ee.doe.gov.

SUPPLEMENTARY INFORMATION:

DOE proposes to incorporate by reference the following industry standards into 10 CFR 431.76:

• ANSI Z21.47-2012, “

Gas-Fired Central Furnaces,”

ANSI approved on March 27, 2012.

Copies of ANSI Z21.47-2012 can be obtained from

ANSI.

American National Standards Institute. 25 W. 43rd Street, 4th Floor, New York, NY 10036. (212) 642-4900, or by going to

http://www.ansi.org.

• ASHRAE Standard 103-2007, sections 7.2.2.4, 7.8, 9.2, and 11.3.7, “Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boilers,” ANSI approved on March 25, 2008.

Copies of ASHRAE Standard 103-2007 can be obtained from

ASHRAE.

American Society of Heating, Refrigerating and Air-Conditioning Engineers Inc., 1791 Tullie Circle NE., Atlanta, Georgia 30329. (404) 636-8400, or by going to

http://www.ashrae.org.

Table of Contents

I. Summary of the Proposed Rule

II. Introduction

A. Authority

B. Background

1. ASHRAE Standard 90.1-2013

2. Notice of Data Availability

III. General Discussion of Comments Regarding the ASHRAE Process and DOE's Interpretation of EPCA's Requirements With Respect to ASHRAE Equipment

IV. General Discussion of the Changes in ASHRAE Standard 90.1-2013 and Determination of Scope for Further Rulemaking Activity

A. Commercial Package Air-Conditioning and Heating Equipment

1. Air-Cooled Equipment

2. Water-Source Equipment

3. Packaged Terminal Air Conditioners and Heat Pumps

4. Small-Duct, High-Velocity, and Through-the-Wall Equipment

5. Single-Package Vertical Air Conditioners and Single-Package Vertical Heat Pumps

B. Commercial Water Heaters

C. Test Procedures

V. Methodology for Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

A. Market Assessment

1. Equipment Classes

2. Review of Current Market

a. Trade Association Information

b. Manufacturer Information

c. Market Data

B. Engineering Analysis

1. Approach

2. Baseline Equipment

3. Identification of Increased Efficiency Levels for Analysis

4. Engineering Analysis Results

a. Manufacturer Markups

b. Shipping Costs

C. Markups Analysis

D. Energy Use Analysis

E. Life-Cycle Cost and Payback Period Analysis

1. Equipment Costs

2. Installation Costs

3. Unit Energy Consumption

4. Electricity Prices and Electricity Price Trends

5. Maintenance Costs

6. Repair Costs

7. Equipment Lifetime

8. Discount Rate

9. Base-Case Market Efficiency Distribution

10. Compliance Date

11. Payback Period Inputs

F. National Impact Analysis—National Energy Savings and Net Present Value Analysis

1. Approach

2. Shipments Analysis

3. Base-Case and Standards-Case Forecasted Distribution of Efficiencies

4. National Energy Savings and Net Present Value

VI. Methodology for Water-Source Heat Pumps

A. Market Assessment

1. Equipment Classes

2. Review of Current Market

a. Trade Association Information

b. Manufacturer Information

c. Market Data

B. Engineering Analysis

1. Approach

2. Baseline Equipment

3. Identification of Increased Efficiency Levels for Analysis

4. Engineering Analysis Results

a. Manufacturer Markups

b. Shipping Costs

C. Markups Analysis

D. Energy Use Analysis

E. Life-Cycle Cost and Payback Period Analysis

1. Equipment Costs

2. Installation Costs

3. Unit Energy Consumption

4. Electricity Prices and Electricity Price Trends

5. Maintenance Costs

6. Repair Costs

7. Equipment Lifetime

8. Discount Rate

9. Base-Case Market Efficiency Distribution

10. Compliance Date

11. Payback Period Inputs

F. National Impact Analysis—National Energy Savings and Net Present Value Analysis

1. Approach

2. Shipments Analysis

3. Base-Case and Standards-Case Forecasted Distribution of Efficiencies

4. National Energy Savings and Net Present Value

VII. Methodology for Emissions Analysis and Monetizing Carbon Dioxide and Other Emissions Impacts

A. Emissions Analysis

B. 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

VIII. Analytical Results and Conclusions

A. Efficiency Levels Analyzed

1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

2. Water-Source Heat Pumps

3. Commercial Oil-Fired Storage Water Heaters

B. Energy Savings and Economic Justification

1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

a. Economic Impacts on Commercial Customers

b. National Impact Analysis

2. Water-Source Heat Pumps

a. Economic Impacts on Commercial Customers

b. National Impact Analysis

3. Commercial Oil-Fired Storage Water Heaters

C. Need of the Nation To Conserve Energy

D. Proposed Standards

1. Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

2. Water-Source Heat Pumps

3. Commercial Oil-Fired Storage Water Heaters

IX. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 and 13563

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act of 1995

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

X. 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

XI. Approval of the Office of the Secretary

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. 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 sets forth a variety of provisions designed to improve energy efficiency. These encompass several types of commercial heating, air-conditioning, and water-heating equipment, including those that are the subject of this rulemaking. (42 U.S.C. 6311(1)(B) and (K)) EPCA, as amended, also requires the U. S. Department of Energy (DOE) to consider amending the existing Federal energy conservation standard for certain types of listed commercial and industrial equipment (generally, commercial water heaters, commercial packaged boilers, commercial air-conditioning and heating equipment, and packaged terminal air conditioners and heat pumps) each time the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 90.1,

Energy Standard for Buildings Except Low-Rise Residential Buildings,

is amended with respect to such equipment. (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 adopt amended energy conservation standards at the new efficiency level in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent efficiency level as a national standard would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE decides to adopt as a national standard the efficiency levels specified in the amended ASHRAE Standard 90.1, DOE must establish such standard not later than 18 months after publication of the amended industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) If DOE determines that a more-stringent standard is appropriate under the statutory criteria, DOE must establish such more-stringent standard not later than 30 months after publication of the revised ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(B)) ASHRAE officially released ASHRAE Standard 90.1-2013 on October 9, 2013, thereby triggering DOE's previously referenced obligations pursuant to EPCA to determine for those types of equipment with efficiency level or design requirement changes beyond the current Federal standard, whether: (1) The amended industry standard should be adopted; or (2) clear and convincing evidence exists to justify more-stringent standard levels.

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

Accordingly, this NOPR sets forth DOE's determination of scope for consideration of amended energy conservation standards with respect to certain heating, ventilating, air-conditioning, and water-heating equipment addressed in ASHRAE Standard 90.1-2013. Such inquiry is necessary to ascertain whether the revised ASHRAE efficiency levels have become more stringent, thereby ensuring that any new amended national standard would not result in prohibited “backsliding.” For those equipment classes for which ASHRAE set more-stringent efficiency levels

(

i.e.,

small three-phase air-cooled air conditioners (single package only) and heat pumps (single package and split system) less than 65,000 Btu/h; water-source heat pumps; commercial oil-fired storage water heaters; single package vertical units; and packaged terminal air conditioners), DOE analyzed the energy savings potential of amended national energy conservation standards (at both the new ASHRAE Standard 90.1 efficiency levels and more-stringent efficiency levels). For small three-phase air-cooled air conditioners and heat pumps less than 65,000 Btu/h and water-source heat pumps, DOE analyzed the economic savings potential of amended national energy conservation standards at more-stringent efficiency levels, in addition to the energy savings potential. For commercial oil-fired storage water heaters, DOE determined that the potential for energy savings from adopting more-stringent levels than the ASHRAE Standard 90.1 levels was not significant, and, thus, DOE is proposing to adopt the ASHRAE Standard 90.1 levels without further analysis (see section IV.B for further details). For single package vertical units and packaged terminal air conditioners, DOE is performing economic analyses and responding to relevant comments from the NODA in separate rulemakings that were previously ongoing,

and consequently, the analysis for this equipment and further discussion or proposal of standard levels will not be discussed in this NOPR.

ASHRAE Standard 90.1-2013 did not change any of the design requirements for the commercial (HVAC) and water-heating equipment covered by EPCA.

See Packaged Terminal Air Conditioners and Heat Pumps Standards Rulemaking Web page:

www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/64

and Single Package Vertical Air Conditioners and Heat Pumps Standards Rulemaking Web page:

www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=107.

DOE has tentatively concluded that for three classes of small three-phase air-cooled air conditioners and heat pumps less than 65,000 Btu/h, three classes of water-source heat pumps, and one class of commercial oil-fired storage water heaters: (1) The revised efficiency levels in ASHRAE 90.1-2013

are more stringent than current national standards; and (2) their adoption as Federal energy conservation standards would result in energy savings where models exist below the revised efficiency levels. DOE has also tentatively concluded that there is not clear and convincing evidence that would justify adoption of more-stringent efficiency levels for this equipment.

To obtain a copy of ASHRAE Standard 90.1-2013, visit

https://www.ashrae.org/resources--publications/bookstore/standard-90-1

It is noted that DOE's regulations currently have a single equipment class for small, three-phase commercial air-cooled air conditioners less than 65,000 Btu/h, which covers both split-system and single-package models. Although ASHRAE Standard 90.1-2013 did not amend standard levels for the split-system models within that equipment class, it did so for the single-package models. Given this split, DOE is proposing to once again separate these two types of equipment into separate equipment classes. In the NOPR, DOE is proposing to evaluate amended standards for split-system models under the six-year-lookback provision at 42 U.S.C. 6313(a)(6)(C). Following this evaluation, DOE has tentatively concluded that there is not clear and convincing evidence that would justify adoption of more-stringent efficiency levels for small three-phase split-system air-cooled air conditioners less than 65,000 Btu/h, where the efficiency level in ASHRAE 90.1-2013 is the same as the current Federal energy conservation standards.

Thus, in accordance with the criteria discussed elsewhere in this document, DOE is proposing amended energy conservation standards for three classes of small three-phase air-cooled air conditioners and heat pumps less than 65,000 Btu/h, three classes of water-source heat pumps, and one class of commercial oil-fired storage water heaters by adopting the efficiency levels specified by ASHRAE Standard 90.1-2013, as shown in Table I.1. The proposed standards, if adopted, would apply to all equipment listed in Table I.1 and manufactured in, or imported into, the United States on or after the date two years after the effective date specified in ASHRAE Standard 90.1-2013 (

i.e.,

by January 1, 2017 for small air-cooled air conditioners and heat pumps and by October 9, 2015 for water-source heat pumps and oil-fired storage water heaters). (42 U.S.C. 6313(a)(6)(D)(i)) DOE is making a determination that standards for split-system air-cooled air conditioners less than 65,000 Btu/h do not need to be amended.

Table I.1—Proposed Energy Conservation Standards for Specific Types of Commercial Equipment

Equipment class

Efficiency level

Anticipated

compliance date

Three-Phase Air-Cooled Single-Package Air Conditioners <65,000 Btu/h

14.0 SEER

January 1, 2017.

Three-Phase Air-Cooled Single-Package Heat Pumps <65,000 Btu/h

14.0 SEER,

8.0 HSPF

January 1, 2017.

Three-Phase Air-Cooled Split-System Heat Pumps <65,000 Btu/h

14.0 SEER,

8.2 HSPF

January 1, 2017.

Oil-Fired Storage Water Heaters >105,000 Btu/h and <4,000 Btu/h/gal

80% E

October 9, 2015.

Water-Source (Water-to-Air, Water-Loop) Heat Pumps <17,000 Btu/h

12.2 EER,

4.3 COP

October 9, 2015.

Water-Source (Water-to-Air, Water-Loop) Heat Pumps ≥17,000 and <65,000 Btu/h

13.0 EER,

4.3 COP

October 9, 2015.

Water-Source (Water-to-Air, Water-Loop) Heat Pumps ≥65,000 and <135,000 Btu/h

13.0 EER,

4.3 COP

October 9, 2015.

In addition, when the generally accepted industry test procedures referenced in ASHRAE Standard 90.1 are updated, EPCA requires DOE to amend the DOE test procedures for the relevant type(s) of ASHRAE equipment (which manufacturers are required to use in order to certify compliance with energy conservation standards mandated under EPCA) to be consistent with the amended industry test procedure. (42 U.S.C. 6314(a)(4)(B)) DOE typically incorporates such industry test standards by reference, unless it determines they would not meet the requirements of 42 U.S.C. 6314(a)(2) and (3). Specifically, the amendments in this NOPR would update the citations and incorporations by reference in DOE's regulations to the most recent version of American National Standards Institute (ANSI) Z21.47,

Standard for Gas-Fired Central Furnaces

(

i.e.,

ANSI Z21.47-2012). However, as a substantive matter, DOE notes that the most recent version does not contain any updates to the sections currently referenced by the DOE test procedure, so no additional burden would be expected to result from this test procedure update.

Additionally, EISA 2007 amended EPCA to require that at least once every 7 years, DOE must conduct an evaluation of the test procedures for all covered equipment and either amend test procedures (if the Secretary determines that amended test procedures would more accurately or fully comply with the requirements of 42 U.S.C. 6314(a)(2)-(3)) or publish notice in the

Federal Register

of any determination not to amend a test procedure. (42 U.S.C. 6314(a)(1)(A)) Under this requirement, DOE has reviewed the test procedure for commercial warm-air furnaces and is proposing to update the citations and incorporations by reference to the most recent version of ASHRAE 103,

Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boiler

(

i.e.,

ASHRAE 103-2007)

Thus, the final rule resulting from this rulemaking will satisfy the requirement to review the test procedures for commercial warm-air furnaces within seven years. DOE notes that the most recent version of ASHRAE 103 does not contain any updates to the sections currently referenced by the DOE test procedure, so no additional burden would be expected to result from this test procedure update.

II. Introduction

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 small three-phase air-cooled air conditioners and heat pumps less than 65,000 Btu/h, water-source heat pumps, and commercial oil-fired storage water heaters.

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 commercial heating, air-conditioning, and water-heating equipment that is the subject of this

rulemaking.

In general, this program addresses the energy efficiency of certain types of commercial and industrial equipment. Relevant provisions of the Act specifically 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 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).

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, packaged terminal air conditioners (PTACs), packaged terminal heat pumps (PTHPs), warm-air furnaces, packaged boilers, storage water heaters, instantaneous water heaters, and unfired hot water storage tanks.

Id.

In doing so, 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 Standard 90.1-1989), for each type of covered equipment listed in 42 U.S.C. 6313(a). The Energy Independence and Security Act of 2007 (EISA 2007) amended EPCA by adding definitions and setting minimum energy conservation standards for single-package vertical air conditioners (SPVACs) and single-package vertical heat pumps (SPVHPs). (42 U.S.C. 6313(a)(10)(A)) The efficiency standards for SPVACs and SPVHPs established by EISA 2007 correspond to the levels contained in ASHRAE Standard 90.1-2004, which originated as addendum “d” to ASHRAE Standard 90.1-2001.

In acknowledgement of technological changes that yield energy efficiency benefits, the U.S. Congress further directed DOE through EPCA to consider amending the existing Federal energy conservation standard for each type of equipment listed, each time ASHRAE Standard 90.1 is amended with respect to such equipment. (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 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)) If DOE decides to adopt as a national standard the efficiency levels specified in the amended ASHRAE Standard 90.1, DOE must establish such standard not later than 18 months after publication of the amended industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) However, if DOE determines that a more-stringent standard is justified under 42 U.S.C. 6313(a)(6)(A)(ii)(II), then it must establish such more-stringent standard not later than 30 months after publication of the amended ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(B)) In addition, DOE notes that pursuant to the EISA 2007 amendments to EPCA, under 42 U.S.C. 6313(a)(6)(C), the agency must periodically review its already-established energy conservation standards for ASHRAE equipment. 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))

Although EPCA does not explicitly define the term “amended” in the context of ASHRAE Standard 90.1, DOE provided its interpretation of what would constitute an “amended standard” in a final rule published in the

Federal Register

on March 7, 2007 (hereafter referred to as the “March 2007 final rule”). 72 FR 10038. In that rule, DOE stated that the statutory trigger requiring DOE to adopt uniform national standards based on ASHRAE action is for ASHRAE to change a standard for any of the equipment listed in EPCA section 342(a)(6)(A)(i) (42 U.S.C. 6313(a)(6)(A)(i)) by increasing the energy efficiency level for that equipment type.

Id.

at 10042. In other words, if the revised ASHRAE Standard 90.1 leaves the standard level unchanged or lowers the standard, as compared to the level specified by the national standard adopted pursuant to EPCA, DOE does not have the authority to conduct a rulemaking to consider a higher standard for that equipment pursuant to 42 U.S.C. 6313(a)(6)(A). DOE subsequently reiterated this position in a final rule published in the

Federal Register

on July 22, 2009 (74 FR 36312, 36313) and again on May 16, 2012 (77 FR 28928, 28937). However, in the AEMTCA amendments to EPCA in 2012, Congress modified several provisions related to ASHRAE Standard 90.1 equipment. In relevant part, DOE is now triggered to act whenever ASHRAE Standard 90.1's “standard levels or design requirements under that standard” are amended. (42 U.S.C. 6313(a)(6)(A)(i)) Furthermore, DOE is now required to conduct an evaluation of each class of covered equipment in ASHRAE Standard 90.1 “every 6 years.” (42 U.S.C. 6313(a)(6)(C)(i)) For any covered equipment for which more than 6 years has elapsed since issuance of the most recent final rule establishing or amending a standard for such equipment, DOE must publish either the required notice of determination that standards do not need to be amended or a NOPR with proposed standards by December 31, 2013. (42 U.S.C. 6313(a)(6)(C)(vi)) DOE has incorporated these new statutory mandates into its rulemaking process for covered ASHRAE 90.1 equipment.

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))

EPCA also requires that if a test procedure referenced in ASHRAE Standard 90.1 is updated, DOE must update its test procedure to be consistent with the amended test procedure in ASHRAE Standard 90.1, unless DOE determines that the amended test procedure is not reasonably designed to produce test results that reflect the energy efficiency, energy use, or estimated operating costs of the ASHRAE equipment during a representative average use cycle. In addition, DOE must determine that the amended test procedure is not unduly burdensome to conduct. (42 U.S.C. 6314(a)(2) and(4))

Additionally, EISA 2007 amended EPCA to require that at least once every 7 years, DOE must conduct an

evaluation of the test procedures for all covered equipment and either amend test procedures (if the Secretary determines that amended test procedures would more accurately or fully comply with the requirements of 42 U.S.C. 6314(a)(2)-(3)) or publish notice in the

Federal Register

of any determination not to amend a test procedure. (42 U.S.C. 6314(a)(1)(A)) The final rule resulting from this rulemaking will satisfy the requirement to review the test procedures for commercial warm-air furnaces within seven years.

On October 9, 2013 ASHRAE officially released and made public ASHRAE Standard 90.1-2013. This action triggered DOE's obligations under 42 U.S.C. 6313(a)(6), as outlined previously.

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 such standard would likely 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 at the time of the Secretary's finding. (42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa))

Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and, as applicable, water) savings during the first year that the consumer will receive as a result of the standard, as calculated under the 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 consumer 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 plans to follow a similar process in the context of this rulemaking.

B. Background

1. ASHRAE Standard 90.1-2013

As noted previously, ASHRAE released a new version of ASHRAE Standard 90.1 on October 9, 2013. The ASHRAE standard addresses efficiency levels for many types of commercial heating, ventilating, air-conditioning (HVAC), and water-heating equipment covered by EPCA. ASHRAE Standard 90.1-2013 revised its efficiency levels for certain commercial equipment, but for the remaining equipment, ASHRAE left in place the preexisting levels (

i.e.,

the efficiency levels in ASHRAE Standard 90.1-2010). ASHRAE Standard 90.1-2013 did not change any of the design requirements for the commercial HVAC and water-heating equipment covered by EPCA.

Table II.1 presents the equipment classes (and corresponding efficiency levels) for which efficiency levels in ASHRAE Standard 90.1-2013 (for metrics included in Federal energy conservation standards) differed from those in the previous version of ASHRAE Standard 90.1 (

i.e.,

ASHRAE Standard 90.1-2010). Table II.1 also presents the existing Federal energy conservation standards and the corresponding standard levels in both ASHRAE Standard 90.1-2010 and ASHRAE Standard 90.1-2013 for those equipment classes. Section IV of this document assesses each of these equipment types to determine whether the amendments in ASHRAE Standard 90.1-2013 constitute increased energy efficiency levels, as would necessitate further analysis of the potential energy savings from amended Federal energy conservation standards; the conclusions of this assessment are presented in the final column of Table II.1.

Table II.1—Federal Energy Conservation Standards and Energy Efficiency Levels in ASHRAE Standard 90.1-2013 for Specific Types of Commercial Equipment *

ASHRAE equipment class **

Energy efficiency levels in ASHRAE Standard 90.1-2010

Energy efficiency levels in ASHRAE Standard 90.1-2013

Federal energy conservation standards

Energy-savings potential analysis required?

Commercial Package Air-Conditioning and Heating Equipment—Air-Cooled

Air-Cooled Air Conditioner, 3-Phase, Single-Package, <65,000 Btu/h

13.0 SEER

14.0 SEER (as of 1/1/2015)

13.0 SEER

Yes—See section IV.A.1.

Air-Cooled Heat Pump, 3-Phase, Single-Package, <65,000 Btu/h

13.0 SEER, 7.7 HSPF

14.0 SEER, 8.0 HSPF (as of 1/1/2015)

13.0 SEER, 7.7 HSPF

Yes—See section IV.A.1.

Air-Cooled Heat Pump, 3-Phase, Split System, <65,000 Btu/h

13.0 SEER, 7.7 HSPF

14.0 SEER, 8.2 HSPF (as of 1/1/2015)

13.0 SEER, 7.7 HSPF

Yes—See section IV.A.1.

Commercial Package Air-Conditioning and Heating Equipment—Water-Source

Water-Source Heat Pump, <17,000 Btu/h

11.2 EER, 4.2 COP

12.2 EER, 4.3 COP

***

11.2 EER, 4.2 COP

Yes—See section IV.A.2.

Water-Source Heat Pump, ≥17,000 and <65,000 Btu/h

12.0 EER, 4.2 COP

13.0 EER, 4.3 COP

***

12.0 EER, 4.2 COP

Yes—See section IV.A.2.

Water-Source Heat Pump, ≥65,000 and <135,000 Btu/h

12.0 EER, 4.2 COP

13.0 EER, 4.3 COP

***

12.0 EER, 4.2 COP

Yes—See section IV.A.2.

Commercial Package Air-Conditioning and Heating Equipment—PTACs

Package Terminal Air Conditioner, <7,000 Btu/h, Standard Size (New Construction)

†

EER = 11.7 as of 10/8/12)

EER = 11.9 (as of 1/1/2015)

EER = 11.7

Yes—See section IV.A.3.

Package Terminal Air Conditioner, ≥7,000 and ≤15,000 Btu/h, Standard Size (New Construction)

†

EER = 13.8—(0.300 × Cap

††

) (as of 10/8/12)

EER = 14.0—(0.300 × Cap

††

) (as of 1/1/2015)

EER = 13.8—(0.300 × Cap

††

)

Yes—See section IV.A.3.

Package Terminal Air Conditioner, >15,000 Btu/h, Standard Size (New Construction)

†

EER = 9.3 (as of 10/8/12)

EER = 9.5 (as of 1/1/2015)

EER = 9.3

Yes—See section IV.A.3.

Commercial Package Air-Conditioning and Heating Equipment—SDHV and TTW

Through-the-Wall (TTW), Air-Cooled Heat Pumps, ≤30,000 Btu/h

13.0 SEER, 7.4 HSPF

12.0 SEER, 7.4 HSPF

13.0 SEER, 7.7 HSPF

No—See section IV.A.4.

Small-Duct, High-Velocity, Air-Cooled (SDHV) Air Conditioners, <65,000 Btu/h

10.0 SEER

11.0 SEER

13.0 SEER

No—See section IV.A.4.

Small-Duct, High-Velocity, Air-Cooled Heat Pumps, <65,000 Btu/h

10.0 SEER, HSPF not listed

†††

11.0 SEER, 6.8 HSPF

13.0 SEER, 7.7 HSPF

No—See section IV.A.4.

Commercial Package Air-Conditioning and Heating Equipment—SPVACs and SPVHPs

Single Package Vertical Air Conditioners, <65,000 Btu/h

9.0 EER

10.0 EER

9.0 EER

Yes—See section IV.A.5.

Single Package Vertical Air Conditioners, ≥65,000 and <135,000 Btu/h

8.9 EER

10.0 EER

8.9 EER

Yes—See section IV.A.5.

Single Package Vertical Air Conditioners, ≥135,000 and <240,000 Btu/h

8.6 EER

10.0 EER

8.6 EER

Yes—See section IV.A.5.

Single Package Vertical Heat Pumps, <65,000 Btu/h

9.0 EER, 3.0 COP

10.0 EER, 3.0 COP

***

9.0 EER, 3.0 COP

Yes—See section IV.A.5.

Single Package Vertical Heat Pumps, ≥65,000 and <135,000 Btu/h

8.9 EER, 3.0 COP

10.0 EER, 3.0 COP

***

8.9 EER, 3.0 COP

Yes—See section IV.A.5.

Single Package Vertical Heat Pumps, ≥135,000 and <240,000 Btu/h

8.6 EER, 2.9 COP

10.0 EER, 3.0 COP

***

8.6 EER, 2.9 COP

Yes—See section IV.A.5.

Single Package Vertical Air Conditioners Nonweatherized Space Constrained, ≤30,000 Btu/h

N/A

9.2 EER

N/A

†

No—See section IV.A.5.

Single Package Vertical Air Conditioners Nonweatherized Space Constrained, >30,000 and ≤36,000 Btu/h

N/A

9.0 EER

N/A

†

No—See section IV.A.5.

Single Package Vertical Heat Pumps Nonweatherized Space Constrained, ≤30,000 Btu/h

N/A

9.2 EER, 3.0 COP

N/A

†

No—See section IV.A.5.

Single Package Vertical Heat Pumps Nonweatherized Space Constrained, >30,000 and ≤36,000 Btu/h

N/A

9.0 EER, 3.0 COP

N/A

†

No—See section IV.A.5.

Commercial Water Heaters

Electric Storage Water Heaters, >12 kW, ≥20 gal

20 + 35 V

1/2

‡‡

, Btu/h

0.3 + 27/V

‡‡‡

%/h

0.3 + 27/V

‡‡‡

%/h

No—See Section IV.B.

Gas Storage Water Heaters, >75,000 Btu/h, <4,000 Btu/h/gal

80% E

; Q/800 + 110 V

1/2

⋄

, Btu/h

80% E

; Q/799 + 16.6 V

1/2

⋄

, Btu/h

⋄⋄

80% E

; Q/800 + 110 V

1/2

Btu/hr

No—See Section IV.B.

Oil Storage Water Heaters, >105,000 Btu/h, <4,000 Btu/h/gal

78% E

; Q/800 + 110 V

1/2

⋄

, Btu/h

80% E

; Q/799 + 16.6 V

1/2

⋄

, Btu/h

⋄⋄

78% E

; Q/800 + 110 V

1/2

Btu/hr

Yes—See Section IV.B.

Gas Instantaneous Water Heaters, ≥200,000 Btu/h, ≥4,000 Btu/h/gal, ≥10 gal

80% E

, Q/800 + 110 V

1/2

⋄

, Btu/h

80% E

, Q/799 + 16.6 V

1/2

⋄

, Btu/h

⋄⋄

80% E

, Q/800 + 110 V

1/2

Btu/hr

No—See Section IV.B.

Oil Instantaneous Water Heaters, >210,000 Btu/h, ≥4,000 Btu/h/gal, ≥10 gal

78% E

, Q/800 + 110 V

1/2

⋄

, Btu/h

78% E

, Q/799 + 16.6 V

1/2

⋄

, Btu/h

⋄⋄

78% E

, Q/800 + 110 V

1/2

Btu/hr

No—See Section IV.B.

* “E

” means thermal efficiency; “EER” means energy efficiency ratio; “SEER” means seasonal energy efficiency ratio; “HSPF” means heating seasonal performance factor; “COP” and “COP

” mean coefficient of performance; and “Btu/h” or “Btu/hr” means British thermal units per hour.

** ASHRAE Standard 90.1-2013 equipment classes may differ from the equipment classes defined in DOE's regulations, but no loss of coverage will occur (

i.e.,

all previously covered DOE equipment classes remain covered equipment).

*** While ASHRAE Standard 90.1-2013 added a subscript

to COP for all heat pumps, its definition for “coefficient of performance (COP), heat pump—heating” has not changed. As a result, DOE believes the subscript to be a clarifying change of nomenclature (to differentiate from the COP metric used for refrigeration) only, rather than a change to the metric itself.

†

“Standard size” refers to PTAC equipment with wall sleeve dimensions ≥16 inches high or ≥42 inches wide. For DOE's purposes, this equipment class applies to standard-size equipment regardless of application (

e.g.,

new construction or replacement).

††

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

†††

This may have been an editorial error in ASHRAE 90.1-2010.

‡

While ASHRAE Standard 90.1-2013 added this equipment class, DOE believes that equipment falling into these classes is already covered by Federal standards, most commonly in the residential space-constrained central air conditioning equipment class with minimum standards of 12.0 SEER for air conditioners and heat pumps and 7.4 HSPF for heat pumps. See section II.A.5.1 of this NODA for further detail.

‡‡

“V” means rated volume in gallons; “SL” means standby loss.

‡‡‡

“V

” means measured volume in tank.

⋄

“Q” means the nameplate input rate in Btu/hr; “V” means rated volume in gallons; “SL” means standby loss. DOE's descriptor, “Vr,” also means rated volume in gallons and differs only in nomenclature.

⋄⋄

As explained in section IV.B, DOE believes that all changes to standby loss levels for these equipment classes were editorial errors because they are identical to SI (International System of Units; metric system) formulas rather than I-P (Inch-Pound; English system) formulas.

DOE notes that ASHRAE 90.1-2013 also increased integrated energy efficiency ratio (IEER) levels for additional equipment not listed in Table II.1, including small, large, and very large air-cooled and water-cooled air conditioners and heat pumps. However, because current Federal energy conservation standards for this equipment do not use IEER as a rating metric, DOE is not triggered to review this equipment. In September 2014, DOE published a notice of proposed rulemaking (NOPR) for commercial air-cooled equipment. 79 FR 58948 (Sept. 30, 2014). In the NOPR, DOE proposed amended standards for small, large, and very large air-cooled commercial air conditioners and heat pumps based on IEER as the energy efficiency descriptor. Should DOE finalize new standards using IEER as the metric, future increases in IEER levels in ASHRAE Standard 90.1 as compared to the Federal energy conservation standards would trigger DOE to review its efficiency levels for that equipment.

2. Notice of Data Availability

On April 11, 2014, DOE published a notice of data availability (April 2014 NODA) in the

Federal Register

and requested public comment as a preliminary step required pursuant to EPCA when DOE considers amended energy conservation standards for certain types of commercial equipment covered by ASHRAE Standard 90.1. 79 FR 20114. Specifically, the April 2014 NODA presented for public comment DOE's analysis of the potential energy savings estimates related to amended national energy conservation standards for the types of commercial equipment for which DOE was triggered by ASHRAE action, based on: (1) The modified efficiency levels contained within ASHRAE Standard 90.1-2013; and (2) more-stringent efficiency levels.

Id.

at 20134-36. DOE has described these analyses and preliminary conclusions and sought input from interested parties, including the submission of data and other relevant information.

Id.

In addition, DOE presented a discussion in the April 2014 NODA of the changes found in ASHRAE Standard 90.1-2013.

Id.

at 20119-25. The April 2014 NODA includes a description of DOE's evaluation of each ASHRAE equipment type in order for DOE to determine whether the amendments in ASHRAE Standard 90.1-2013 have increased efficiency levels or changed design requirements. As an initial matter, DOE sought to determine which requirements for covered equipment in ASHRAE Standard 90.1, if any: (1) Have been revised solely to reflect the level of the current Federal energy conservation standard (where ASHRAE is merely “catching up” to the current national standard); (2) have been revised but with a reduction in stringency; or (3) have had any other revisions made that do not change the standard's stringency, in which case, DOE is not triggered to act under 42 U.S.C. 6313(a)(6) for that particular equipment type. For those types of equipment in ASHRAE Standard 90.1 for which ASHRAE actually increased efficiency levels above the current Federal standard, DOE subjected that equipment to the potential energy savings analysis discussed previously and presented the results in the April 2014 NODA for public comment. 79 FR 20114, 20134-36 (April 11, 2014). Lastly, DOE presented an initial assessment of the test procedure changes included in ASHRAE Standard 90.1-2013.

Id.

at 20124-25.

As a result of the preliminary determination of scope set forth in the April 2014 NODA, DOE found that there were equipment types for which ASHRAE increased the efficiency levels (thereby triggering further analysis) including: (1) Three classes of small three-phase air-cooled air conditioners and heat pumps less than 65,000 Btu/h; (2) three classes of small water-source heat pumps; (3) six classes of single package vertical units; (4) three classes of packaged terminal air conditioners; and (5) commercial oil-fired storage water heaters. 79 FR 20114, 20119-23 (April 11, 2014). DOE presented its methodology, data, and results for the preliminary energy savings analysis developed for these equipment classes in the April 2014 NODA for public comment. 79 FR 20114, 20125-38 (April 11, 2014).

III. General Discussion of Comments Regarding the ASHRAE Process and DOE's Interpretation of EPCA's Requirements With Respect to ASHRAE Equipment

In response to its request for comment on the April 2014 NODA, DOE received 11 comments from manufacturers, trade associations, utilities, and energy efficiency advocates. Commenters included: First Co.; Lennox International Inc.; National Comfort Products (NCP); Earthjustice; Goodman Global, Inc.; California Investor-Owned Utilities (CA IOUs); GE Appliances; a group including Appliance Standards Awareness Project (ASAP), the American Council for an Energy-Efficient Economy (ACEEE), the Natural Resources Defense Council (NRDC), and the Northwest Energy Efficiency Alliance (jointly referred to as the Advocates); Daikin Applied; Edison Electric Institute (EEI); and the Air-conditioning, Heating, and Refrigeration Institute (AHRI). As discussed previously, these comments are available in the docket for this rulemaking and may be reviewed as described in the

ADDRESSES

section. The following section summarizes the issues raised in these comments, along with DOE's responses.

DOE received numerous comments regarding whether it should, in general, adopt levels contained in ASHRAE standard 90.1-2013 as the Federal energy conservation standard, rather than more-stringent levels. Several commenters stated that DOE should follow ASHRAE's lead (

e.g.,

Daikin Applied, No. 0022 at p. 1; Goodman Global, Inc., No. 0018 at p. 4; Lennox International Inc., No. 0015 at p. 1-2). AHRI stated that the ASHRAE revisions represent consensus standards that were subject to rigorous public review and were evaluated for cost-effectiveness. (AHRI, No. 24 at p. 1) Because the current Federal values are lower than ASHRAE 90.1-2013 values, EEI argued that less-efficient equipment could continue to enter the market until the effective date of any DOE standards, which would be four years after DOE completes the rulemaking for levels higher than ASHRAE. (EEI, No. 23 at p. 2) EEI added that adopting ASHRAE would reduce the amount of DOE

resources needed for updating these standards. (

Id.

)

On the other hand, the Advocates and CA IOUs commented that significant, non-trivial energy savings would be achievable by adopting higher efficiency levels than those in ASHRAE 90.1-2013 for the equipment classes analyzed in the NODA, at least when considered in aggregate. (Advocates, No. 21 at p. 1; CA IOUs, No. 19 at pp. 2-3) The commenters provided justifications for adopting higher efficiency levels for specific equipment classes; these details are discussed in the relevant sections of this NOPR.

In response to the submitted comments, DOE notes that it makes decisions about whether to adopt levels in ASHRAE 90.1-2013 or higher efficiency levels based on application of the statutory criteria to potential standard levels for individual equipment types (per its mandate under EPCA), rather than upon some general assessment of perceived benefits of a shorter process by adopting the ASHRAE levels or any other reason. Specifically, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must adopt amended energy conservation standards at the new efficiency level in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent level as a national standard would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) In order to determine if more-stringent efficiency levels would meet EPCA's criteria, DOE must review the efficiency levels in ASHRAE Standard 90.1-2013 and more-stringent efficiency levels for their energy savings and economic potentials irrespective of whether the efficiency levels were part of a consensus standards process. The specific rationale for DOE's decisions for each equipment type can be found in the relevant sections of this document.

AHRI also lodged several complaints regarding the analyses described in the April 2014 NODA. AHRI stated that DOE's analysis ignored the energy savings from changes ASHRAE implemented even before Standard 90.1-2013 was published. For example, AHRI argued that ASHRAE's water-source heat pump level was developed in 2011, adopted in 2012, and took effect immediately. (AHRI, No. 24 at p. 2) Thus, the products have been providing energy savings for at least 2 years. (

Id.

) AHRI further asserted that DOE's analysis ignores the savings that occur from implementation of the ASHRAE standard in 2015 or 2017, rather than developing its own revised standard that would take effect in 2020. According to AHRI, DOE's rulemaking process will lose 3 to 5 years of energy savings, and DOE's analysis must consider the energy savings associated with earlier implementation of the ASHRAE 90.1-2013. (

Id.

) Finally, AHRI stated that the April 2014 NODA did not address technological feasibility and economic justification, unlike ASHRAE 90.1. (

Id.

)

In response, DOE only takes into account energy savings that result from adoption of a Federal standard, not from adoption of an industry standard such as ASHRAE Standard 90.1. However, DOE did take the savings gap into account in the April 2014 NODA by using an analysis period of 30 years beginning with 2015 or 2017 for the ASHRAE level, and a shorter analysis period beginning in 2020 but with the same end date for efficiency levels higher than ASHRAE. As part of any rulemaking triggered by ASHRAE, DOE follows EPCA's mandate by only addressing energy savings in the NODA and analyzing technological feasibility and economic justification in the NOPR where the potential for energy savings appears to be significant. DOE further notes that it can only take credit for savings from mandatory Federal standards and, therefore, cannot take credit for early adoption of ASHRAE Standard 90.1 levels prior to the compliance date of the corresponding DOE standard when evaluating any decision to amend DOE standards. DOE commends ASHRAE's action to amend Standard 90.1, as well as any early adoption of these levels by manufacturers to improve commercial equipment efficiency and to reduce national energy use. DOE strives to consider such early adoption in its analysis to the extent that further energy savings associated with DOE's adoption of either the ASHRAE 90.1 standard level or a more-stringent standard level would be negated or reduced. In other words, DOE seeks to determine any shifts in the baseline prior to adoption of amended DOE standards, thereby allowing for a more accurate assessment of energy savings. See section V.F.3 for more information regarding efficiency distributions of equipment shipments that allow proper consideration of the energy savings generated specifically by DOE's potential actions.

IV. General Discussion of the Changes in ASHRAE Standard 90.1-2013 and Determination of Scope for Further Rulemaking Activity

As discussed previously, before beginning an analysis of the potential economic impacts and energy savings that would result from adopting the efficiency levels specified by ASHRAE Standard 90.1-2013 or more-stringent efficiency levels, DOE first sought to determine whether or not the ASHRAE Standard 90.1-2013 efficiency levels actually represented an increase in efficiency above the current Federal standard levels. This section discusses each equipment class for which the ASHRAE Standard 90.1-2013 efficiency level differs from the current Federal standard level, along with DOE's preliminary conclusion as to the action DOE is taking with respect to that equipment. (Once again, DOE notes that ASHRAE Standard 90.1-2013 did not change any of the design requirements for the commercial HVAC and water-heating equipment covered by EPCA, so DOE is not conducting further analysis in the sections below on that basis.)

A. Commercial Package Air-Conditioning and Heating Equipment

EPCA, as amended, defines “commercial package air conditioning and heating equipment” as air-cooled, evaporatively-cooled, water-cooled, or water-source (not including ground water-source) electrically operated, unitary central air conditioners and central air conditioning heat pumps for commercial use. (42 U.S.C. 6311(8)(A); 10 CFR 431.92) EPCA also defines “small,” “large,” and “very large” commercial package air conditioning and heating equipment based on the equipment's rated cooling capacity. (42 6311(8)(B)-(D); 10 CFR 431.92) “Small commercial package air conditioning and heating equipment” means equipment rated less than 135,000 Btu per hour (cooling capacity). (42 U.S.C. 6311(8)(B); 10 CFR 431.92) “Large commercial package air conditioning and heating equipment” means equipment rated at or above 135,000 Btu per hour and less than 240,000 Btu per hour (cooling capacity). (42 U.S.C. 6311(8)(C); 10 CFR 431.92) “Very large commercial package air conditioning and heating equipment” means equipment rated at or above 240,000 Btu per hour and less than 760,000 Btu per hour (cooling capacity). (42 U.S.C. 6311(8)(D); 10 CFR 431.92)

1. Air-Cooled Equipment

The current Federal energy conservation standards for the three

classes of air-cooled commercial package air conditioners and heat pumps for which ASHRAE Standard 90.1-2013 amended efficiency levels are shown in Table II.1 and can be found in DOE's regulations at 10 CFR 431.97. The Federal energy conservation standards for air-cooled air conditioners and heat pumps are differentiated based on the unit's cooling capacity (

i.e.,

small, large, or very large). For small equipment, there is an additional disaggregation into: (1) Equipment less than 65,000 Btu/h and (2) equipment greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h. In setting initial standards for three-phase equipment less than 65,000 Btu/h, Congress used the same metric for this commercial equipment as for residential single-phase equipment (

i.e.,

seasonal energy efficiency ratio (SEER)), which is reflected in DOE's current regulations. Unlike the current Federal energy conservation standards, ASHRAE Standard 90.1 also differentiates the equipment that is less than 65,000 Btu/h into split system and single package subcategories. Historically, ASHRAE has set equivalent efficiency levels for this equipment; however, effective January 1, 2015, ASHRAE Standard 90.1-2013 increases the efficiency level for single package air conditioners but not split system air conditioners. The increased efficiency level for single package air conditioners surpasses the current Federal energy conservation standard level for the overall equipment class, while the efficiency level for split system air conditioners meets and does not exceed the Federal energy conservation standard for the overall equipment class. ASHRAE Standard 90.1-2013 also increases the efficiency levels, effective January 1, 2015, for both single package and split system air-cooled heat pumps, for SEER and heating seasonal performance factor (HSPF), to efficiency levels that surpass the current Federal energy conservation standard levels. ASHRAE Standard 90.1-2013 increases the HSPF level for split systems above that for single package heat pumps.

Because ASHRAE increased the standard for only single package air conditioners, and increased the HSPF level to a more stringent level for split system heat pumps than for single package heat pumps, in the April 2014 NODA, DOE proposed to consider separate equipment classes for single package and split system equipment in the overall equipment classes of small commercial package air conditioners and heat pumps (air-cooled, three-phase) less than 65,000 Btu/h, as existed prior to codification of EISA 2007, and requested comment on this issue.

In response, AHRI, Goodman Global, and Lennox International agreed that DOE should re-create separate classes for split system and single package equipment with input ratings less than 65,000 Btu/h. (AHRI, No. 24 at p. 2; Goodman Global, Inc., No. 18 at p. 2; Lennox International Inc., No. 15 at p. 5) The CA IOUs instead preferred having only two equipment classes, one for air conditioners, and one for heat pumps, with identical levels across single package and split system equipment. (CA IOUs, No. 19 at p. 4) In order to facilitate following the statutory requirements of the ASHRAE trigger, in this NOPR, DOE continues to propose the re-creation of separate equipment classes.

With regard to split system three-phase air conditioners, Earthjustice stated that standards must be reviewed, if not under the ASHRAE trigger, then under the six-year look back, as the clock will expire next year. (Earthjustice, No. 17 at pp. 1-2) Specifically, Earthjustice opined that ASHRAE has amended the Standard 90.1 levels for air‐cooled, three‐phase air‐conditioners less than 65,000 Btu/h by increasing the required SEER levels for single package air conditioners and all heat pump units. The fact that ASHRAE did not also increase the Standard 90.1‐required SEER level for split system air conditioners in this equipment class does not insulate split system units from DOE's obligation to consider amended standards. The “more stringent” standard that EPCA obliges DOE to consider for this equipment class may be one that, for example, applies a SEER 14 level (or a higher SEER level) to all air‐cooled 3‐phase air-conditioners less than 65,000 Btu/h (see 42 U.S.C. 6313(a)(6)(A)(ii)(II)). (Earthjustice, No. 17 at p. 1) In addition, more than six years have elapsed since EISA 2007 amended the standards for the split system air conditioners at issue, and even if the 6‐year clock began to run only when DOE incorporated the EISA 2007 levels into the Code of Federal Regulations, the time limit for DOE's review will expire next year.

(Earthjustice, No. 17 at pp. 1-2) The CA IOUs also requested that DOE update efficiency levels for split-system air conditioners even though ASHRAE did not update them. (CA IOUs, No. 19 at p. 4)

DOE notes that pursuant to the EISA 2007 amendments to EPCA, under 42 U.S.C. 6313(a)(6)(C), the agency must periodically review its already established energy conservation standards for ASHRAE equipment. 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)) The final rule incorporating the EISA 2007 prescribed levels into the CFR was published on March 23, 2009. 74 FR 12058.

In response, DOE initially notes that EPCA's trigger regarding ASHRAE equipment is tied to the equipment that ASHRAE acts to amend. (42 U.S.C. 6313(a)(6)(A)) In this case, DOE was triggered for 3-phase air-cooled single-package air conditioners less than 65,000 Btu/h, but not the split-system variant, even though both types of units were included in a more comprehensive DOE equipment class. As noted previously, DOE is acting to prevent confusion by proposing to re-create separate product classes for the two types of systems. However, DOE has decided to now consider amended standards for 3-phase air-cooled split-system air conditioners less than 65,000 Btu/h under its 6-year look back authority. (42 U.S.C. 6313(a)(6)(C)(i)) It is worth noting that DOE did not consider ASHRAE's single-package air conditioner level of 14 SEER as the default adoption value for split-system air conditioners. Instead, DOE is treating those as a separate equipment class and has reviewed the adoption of 14 SEER for split-system air conditioners as a level more stringent than ASHRAE that must result in significant additional conservation of energy and be technologically feasible and economically justified.

In the April 2014 NODA, DOE conducted an analysis of the potential energy savings due to amended standards for single-package air conditioners and single-package and split-system heat pumps (air-cooled, three-phase, less than 65,000 Btu/h). At that time, DOE did not conduct an analysis of the potential energy savings for split-system air conditioners, but it added it to the analysis performed for this NOPR.

In response to the April 2014 NODA, Goodman Global supported the ASHRAE levels for small air-cooled air conditioners and heat pumps so that single-phase and three-phase products would have the same minimum efficiencies, which is a reduced burden. (Goodman Global, Inc., No. 17 at p. 4) Goodman Global added that it does not believe higher values than ASHRAE Standard 90.1-2013 could be justified from a simple payback perspective. (

Id.

) In contrast, the Advocates and the CA IOUs supported higher efficiency levels for three-phase equipment. The CA IOUs argued that the higher annual operating hours in nonresidential applications would support a higher

efficiency standard. (CA IOUs, No. 19 at p. 4) The Advocates stated that three-phase commercial units use a three-phase compressor, which is generally more efficient than a single-phase compressor, which suggests that a three-phase central air conditioner or heat pump has the potential to be more efficient than a comparable single-phase unit does. (Advocates, No. 21 at p. 1) Furthermore, the Advocates commented that efficiency levels were found on the market that were much higher than the ASHARE Standard 90.1-2013 level of SEER 14 and that energy savings as high as 0.2 quads may be possible. (Advocates, No. 21 at p. 3) The CA IOUs stated that more than one-fifth of the models of three-phase air-cooled single-package units for sale in California could meet a 16 SEER standard, which would result in energy savings five times greater than the 0.02 quad savings from simply adopting the ASHRAE level. (CA IOUs, No. 0019 at p. 2) The CA IOUs added that most manufacturers currently have products that meet 15 SEER, and given that a compliance date for more-stringent levels would be 2020, the manufacturers that do not would have 6 years to redesign. (

Id.

)

Upon reviewing the results of the potential energy savings analysis in the April 2014 NODA, DOE agrees with the Advocates and the CA IOUs that additional significant energy savings are possible and has conducted additional economic analysis on this equipment. However, after analysis, DOE has tentatively determined that efficiency levels higher than those in ASHRAE Standard 90.1-2013 are not economically justified for any of the four equipment classes and is proposing in this NOPR to adopt the energy efficiency levels contained in ASHRAE Standard 90.1-2013 for small air-cooled commercial package air conditioning and heating equipment less than 65,000 Btu/h (see section VIII.D.1). For split system air conditioners, DOE is not updating standards, as the ASHRAE levels are equal to the current Federal minimum.

For small commercial three-phase equipment less than 65,000 Btu/h, the CA IOUs stated that DOE should consider including the energy efficiency ratio (EER) metric, along with SEER, to align more closely with industry standards. (CA IOUs, No. 0019 at p. 3-4) The commenter noted that original equipment manufacturers would use both metrics when rating a unit. The CA IOUs also commented that the SEER metric is based on residential use patterns and, by itself, may not be appropriate to characterize energy use in nonresidential buildings. According to the commenter, full-load EER better approximates performance during peak loading conditions. (

Id.

)

In response, DOE does not have authority to adopt multiple metrics for a single equipment class. Pursuant to 42U.S.C. 6313(a)(6), the Secretary has authority to amend the energy conservation standards for specified equipment, but under 42 U.S.C. 6311(18), the statute's definition of the term “energy conservation standard” is limited to: (A) A performance standard that prescribes a minimum level of energy efficiency or a maximum quantity of energy use for a product; or (B) a design requirement for a product. The language of EPCA authorizes DOE to establish a single performance standard or a single design standard, but not multiple performance standards.

2. Water-Source Equipment

The current Federal energy conservation standards for the three classes of commercial water-source heat pumps for which ASHRAE Standard 90.1-2013 amended efficiency levels are shown in Table II.1 and can be found in DOE's regulations at 10 CFR 431.97. The Federal energy conservation standards for water-source equipment are differentiated based on the model's cooling capacity. ASHRAE Standard 90.1-2013 increased the energy efficiency levels for all three equipment classes to efficiency levels that surpass the current Federal energy conservation standard levels. Therefore, DOE conducted an analysis of the potential energy savings due to amended standards for this equipment in the April 2014 NODA.

In response to the April 2014 NODA, the Advocates requested that DOE conduct further analysis to consider higher efficiency levels than those in ASHRAE Standard 90.1-2013 efficiency levels for water-source heat pumps, because efficiency levels as high as 21 EER are available on the market and higher efficiency levels could achieve additional national energy savings of as much as 1 quad. (The Advocates, No. 21 at p. 1) Upon reviewing the results of the potential energy savings analysis in the April 2014 NODA, DOE agrees with the Advocates that additional energy savings are possible and has conducted further analysis on this equipment. However, after the analysis, DOE has tentatively determined that there is not clear and convincing evidence that efficiency levels higher than those in ASHRAE 90.1-2013 are economically justified for any of the three water-source heat pump classes and is proposing in this NOPR to adopt the energy efficiency levels contained in ASHRAE Standard 90.1-2013 for water-source heat pumps (see section VIII.D.2).

ASHRAE Standard 90.1-2013 also changed the name of this equipment class from “water source” to “water to air, water-loop” and changed the heating-mode descriptor for this equipment from COP to COP

In the April 2014 NODA, DOE suggested that these were editorial changes only and that this new nomenclature refers to the same water-source heat pump equipment covered by Federal energy conservation standards, but with the metric nomenclature serving to clarify the difference between COP for refrigeration and COP for heat pumps. DOE requested comment on this issue. 79 FR 20114, 20120, 20137 (April 11, 2014). In response, AHRI agreed that the nomenclature changes were editorial. (AHRI, No. 24 at p. 3)

In the April 2014 NODA, DOE noted that EPCA does not define “water-source heat pump” other than to exclude ground-water-source units from the definition of “commercial package air conditioning and heating equipment” at 42 U.S.C. 6311(8)(A). 79 FR 20114, 20120 (April 11, 2014). However, DOE noted that there are several related types of water-source and ground-water-source heat pumps, as shown in Table IV.1. ASHRAE Standard 90.1-2013 included new nomenclature for all such types of heat pumps. DOE further noted that the vast majority of water-source (water-to-air, water-loop) heat pump models are also rated for performance in ground-loop or ground-water heat pump applications. It is DOE's understanding that design differences of the models used in the different applications are minimal, including potential use of material with better corrosion resistance in the water coil (for open-loop systems only) and/or added insulation for ground-water or ground-loop systems. Efficiency ratings are different across these three application types primarily because of the different test conditions. (Ground and ground-water-source systems are tested with cooler entering water.) Because of the similarity in models across applications, DOE believes that increased efficiency standards for water-loop applications may affect heat pumps for ground-source and ground-water applications, although they are excluded from coverage.

Id.

Table IV.1—Nomenclature for Types of Water-Loop, Ground-Loop, and Ground-Water-Source Heat Pumps

ASHRAE standard 90.1-2010

ASHRAE standard 90.1-2013

Test procedure

Water-source (86° entering water)

Water-to-air, water-loop

ISO Standard 13256-1.

Ground-water-source (59° entering water)

Water-to-air, ground-water

Ground-water source (77° entering water)

Brine-to-air, ground-loop

Water-source water-to-water (86° entering water)

Water-to-water, water-loop

ISO Standard 13256-2.

Water-source water-to-water (59° entering water)

Water-to-water, ground-water

Ground-water-source brine-to-water (77° entering water)

Brine-to-water, ground-loop

In the April 2014 NODA, DOE considered adding a definition for “water-source heat pump” to the Code of Federal Regulations (CFR) that would include both single-phase and three-phase units of all capacities (up to 760,000 Btu/h) and would be applicable to water-to-air heat pumps. Specifically, DOE considered adapting the definition from that in the ASHRAE handbook:

“A water-source heat pump is a [single-phase or three-phase] reverse-cycle heat pump that uses [a circulating water loop] as the heat source for heating and as the heat sink for cooling. The main components are a compressor, refrigerant-to-water heat exchanger, refrigerant-to-air heat exchanger, refrigerant expansion devices, and refrigerant reversing valve.” DOE requested comment on this definition. 79 FR 20114, 20120 (April 11, 2014).

2012 ASHRAE Handbook, Heating, Ventilating, and Air-Conditioning Systems and Equipment. ASHRAE, Chapter 9 (Available at:

https://www.ashrae.org/resources-publications/description-of-the-2012-ashrae-handbook-hvac-systems-and-equipment

Regarding the proposed definition, Goodman Global agreed that it is beneficial to all stakeholders to define as clearly as possible the products being regulated. (Goodman Global, Inc., No. 17 at p. 2) On the other hand, AHRI stated that a definition for “water-source heat pump” was outside the scope of activity of this document, because ASHRAE Standard 90.1 does not contain any definition of a water-source heat pump. (AHRI, No. 24 at p. 3) AHRI also argued that the lack of definition has not hampered implementation of Federal minimum efficiency for such equipment and that DOE has not established any significant need or provided any compelling reasons that require the addition of this definition. (

Id.

) DOE agrees with Goodman Global and does not agree with AHRI, tentatively concluding that the nomenclature changes in ASHRAE Standard 90.1 that moved away from the term “water-source” necessitate inclusion of a definition for clarity.

AHRI and Daikin Applied expressed concern with the definition covering capacities up to 760,000 Btu/h, noting that neither ASHRAE Standard 90.1 nor DOE have standards for models above 135,000 Btu/h. (AHRI, No. 24 at p. 3; Daikin Applied, No. 22 at p. 1) Daikin Applied further commented that the size of the market above 135,000 Btu/h is approximately 2-3 percent of the total, that the AHRI certification program stops at 166,000 Btu/h, and that practically speaking, the largest models on the market are 250,000 Btu/h. (

Id.

) Daikin Applied argued that there would be test burdens associated with accommodating the larger sizes in test labs. (

Id.

) In response, DOE notes that regardless of any current size limits on water-source heat pump standards, it does not change the fact that Congress set forth the scope of coverage in the statutory definitions for “commercial package air conditioning and heating equipment” and “very large commercial package air conditioning and heating equipment,” which is limited to equipment with a cooling capacity below 760,000 Btu per hour. (42 U.S.C. 6311(8)(A) and (D)) However, setting in place a definition of “water-source heat pump” that clearly delineates what that equipment entails, as well as the limits on DOE's regulatory authority, would not in and of itself generate any standards compliance responsibilities or test burden. If the market changed and larger-size units became the norm, such standards might be appropriate, with ASHRAE presumably setting levels for such equipment. However, providing increased clarity through an appropriate definition is not directly tied to any such future developments.

Accordingly, DOE proposes to adopt the following definition, adapted from the ASHRAE Handbook and the definition proposed in the April 2014 NODA, and specifically referencing the new nomenclature included in ASHRAE 90.1-2013: “

Water-source heat pump

means a single-phase or three-phase reverse-cycle heat pump of all capacities (up to 760,000 Btu/h) that uses a circulating water loop as the heat source for heating and as the heat sink for cooling. The main components are a compressor, refrigerant-to-water heat exchanger, refrigerant-to-air heat exchanger, refrigerant expansion devices, refrigerant reversing valve, and indoor fan. Such equipment includes, but is not limited to, water-to-air water-loop heat pumps.” DOE requests additional comment on this proposed definition. This is identified as Issue 1 under “Issues on Which DOE Seeks Comment” in section X.E of this NOPR.

Furthermore, DOE is proposing to revise the nomenclature for its water-source heat pump equipment classes to match the revised nomenclature in ASHRAE 90.1-2013: water-to-air, water-loop. Specifically, DOE proposes to revise Table 1 to 10 CFR 431.96 and Tables 1 and 2 to 10 CFR 431.97 to refer to “water-source (water-to-air, water-loop)” heat pumps rather than simply “water-source” heat pumps. Throughout this document, any reference to water-source heat pump equipment classes should be considered as referring to water-to-air, water-loop heat pumps.

In preparing this rulemaking, DOE noticed that the 2013 CFR

and the current e-CFR

contained errors in Table 1 and Table 2 to 10 CFR 431.96 and Table 2 to 10 CFR 431.97 for small water-source heat pumps (

i.e.,

less than 135,000 Btu/h), as well as in Table 1 to 10 CFR 431.97 for small, large, and very large water-source heat pumps. DOE has determined that these errors were incorporated through the previous ASHRAE-trigger final rule. 77 FR 28928 (May 16, 2012). By this rulemaking, DOE seeks to clarify the relevant tables by removing the inadvertently amended language.

See

http://www.gpo.gov/fdsys/pkg/CFR-2013-title10-vol3/pdf/CFR-2013-title10-vol3-part431-subpartF.pdf

See

http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=1f6aa69cce81d1ccc6e9158c94d81e91&r=PART&n=pt10.3.431#sp10.3.431.f

3. Packaged Terminal Air Conditioners and Heat Pumps

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 at 10 CFR 431.92 in a direct final rule published in the

Federal Register

on October 21, 2004. 69 FR 61962, 61970.

The current Federal energy conservation standards for the three classes of PTACs for which ASHRAE Standard 90.1-2013 amended efficiency levels are shown in Table II.1 and are found in DOE's regulations at 10 CFR 431.97. The Federal energy conservation standards for PTACs are differentiated based on the cooling capacity and physical dimensions (standard versus nonstandard size). ASHRAE Standard 90.1-2013 increased the energy efficiency levels for all three standard-size PTAC equipment classes to efficiency levels that meet those for PTHPs and surpass the current Federal energy conservation standard levels for PTACs. Therefore, DOE conducted an analysis of the potential energy savings due to amended standards for standard-size PTACs in the April 2014 NODA. 79 FR 20114, 20120-21 (April 11, 2014).

Prior to the ASHRAE trigger, in February 2013, DOE published a notice of public meeting and availability of the Framework Document regarding energy conservation standards for packaged terminal air conditioners and heat pumps standards. 78 FR 12252 (Feb. 22, 2013). This Framework Document was published as a first step toward meeting the six-year look back requirement specified in EISA 2007. (42 U.S.C. 6313(a)(6)(C)(i)) As part of the six-year look back, in September 2014, DOE issued a NOPR for PTAC and PTHP equipment that included equipment classes for which ASHRAE Standard 90.1-2013 increased efficiency levels (

i.e.,

standard-size PTACs), as well as those for which it did not. 79 FR 55537 (Sept. 16, 2014). Consequently, PTACs will not be discussed in the remainder of this document; comments received on the April 2014 NODA related to PTACs were discussed in the PTAC NOPR.

4. Small-Duct, High-Velocity, and Through-The-Wall Equipment

EPCA does not separate three-phase small-duct high-velocity (SDHV) or through-the-wall (TTW) heat pumps from other types of small commercial package air-conditioning and heating equipment in its definitions. (42 U.S.C. 6311(8)) Therefore, EPCA's definition of “small commercial package air conditioning and heating equipment” would include three-phase SDHV and TTW heat pumps. In contrast, single-phase SDHV and space-constrained equipment (including TTW), which are not the subject of this document, have separate product classes under DOE's residential central air conditioner and heat pump standards (see 10 CFR 430.32(c)).

ASHRAE Standard 90.1-2013 appeared to change some of the efficiency levels for three-phase SDHV and TTW equipment. Specifically, ASHRAE Standard 90.1-2010 had increased the cooling efficiency requirements for TTW heat pumps to 13.0 SEER in comparison to the efficiency levels of 12.0 SEER in ASHRAE Standard 90.1-2007. However, in March 2011, ASHRAE issued Proposed Addendum h for public review that would correct the minimum SEER for this equipment to 12.0 SEER, and this addendum was approved and incorporated into ASHRAE Standard 90.1-2013. Therefore, this change in ASHRAE Standard 90.1-2013 was correcting an editorial error in ASHRAE Standard 90.1-2010.

For SDHV air conditioners and heat pumps, ASHRAE Standard 90.1-2013 increases the cooling efficiency requirement from 10.0 SEER to 11.0 SEER. It also includes a heating efficiency requirement for SDHV heat pumps of 6.8 HSPF, which was present in ASHRAE 90.1-2007 but not ASHRAE 90.1-2010 (which DOE also thought to be an editorial error). These changes were made through Addendum bj to ASHRAE 90.1-2010, which noted that the previously adopted Addendum j to ASHRAE Standard 90.1-2010 had deleted the SDHV equipment class entirely because all SDHV models sold were single-phase residential products, but that Addendum bj was re-establishing the equipment class because manufacturers had expressed an intention to introduce three-phase equipment to the market. In addition, Addendum bj noted that it contained minimum efficiency levels identical to those established by DOE for single-phase residential SDHV products.

The DOE standards for both commercial (three-phase) TTW and SDHV air conditioners, which are 13.0 SEER, and for heat pumps, which are 13.0 SEER and 7.7 HSPF, were established for the overall equipment category of small commercial package air-conditioning and heating equipment by EISA 2007, which amended EPCA. (42 U.S.C. 6313(a)(7)(D)) Because the ASHRAE Standard 90.1-2013 efficiency levels for three-phase TTW and SDHV equipment are less than the applicable Federal standards, DOE has tentatively concluded that it is not required to take action on this equipment at this time (see 42 U.S.C. 6313(a)(6)(A)(i) and (B)(iii)(I)). DOE did not receive comment on this issue and reaffirms this position.

5. Single-Package Vertical Air Conditioners and Single-Package Vertical Heat Pumps

EPCA, as amended, defines “single package vertical air conditioner” as air-cooled commercial package air conditioning and heating equipment that:

(1) Is factory-assembled as a single package that:

(i) Has major components that are arranged vertically;

(ii) is an encased combination of cooling and optional heating components; and

(iii) is intended for exterior mounting on, adjacent interior to, or through an outside wall;

(2) is powered by a single- or 3-phase current;

(3) may contain one or more separate indoor grilles, outdoor louvers, various ventilation options, indoor free air discharges, ductwork, wall plenum, or sleeves; and

(4) has heating components that may include electrical resistance, steam, hot water, or gas, but may not include reverse cycle refrigeration as a heating means.

(42 U.S.C. 6311(22) ; 10 CFR 431.92)

EPCA, as amended, defines “single package vertical heat pump” as a single-package vertical air conditioner that

(1) uses reverse cycle refrigeration as its primary heat source; and

(2) may include secondary supplemental heating by means of electrical resistance, steam, hot water, or gas.

(42 U.S.C. 6311(23); 10 CFR 431.92)

The current Federal energy conservation standards for the six classes of single-package vertical units (SPVUs) for which ASHRAE Standard 90.1-2013 amended efficiency levels are shown in Table II.1 and can be found in DOE's regulations at 10 CFR 431.97. The equipment classes for SPVACs and SPVHPs, as well as their attendant Federal energy conservation standards, are differentiated based on cooling capacity. ASHRAE Standard 90.1-2013 increased the energy efficiency levels for all six equipment classes to efficiency levels that surpass the current Federal energy conservation standard levels. Therefore, DOE conducted an analysis of the potential energy savings

due to amended standards for this equipment in the April 2014 NODA. 79 FR 20114, 20121 (April 11, 2014).

In response to the April 2014 NODA, Lennox urged DOE to adopt the ASHRAE Standard 90.1-2013 efficiency levels for SPVUs. (Lennox International Inc., No. 0015 at p. 2) On the other hand, the Advocates encouraged DOE to initiate a rulemaking for SPVUs to consider higher efficiency levels than those in ASHRAE Standard 90.1-2013 because of potential national energy savings up to 0.48 quads. (Advocates, No. 21 at p. 3) DOE notes that prior to the release of ASHRAE Standard 90.1-2013, DOE had already been conducting a rulemaking on SPVUs as a result of a one-time review requirement added by EISA 2007. See 76 FR 25622, 25633 (May 5, 2011). DOE will continue to conduct its SPVU analysis as part of a separate rulemaking that will also meet the requirements of the ASHRAE trigger, and accordingly, DOE has not included any further analysis or results regarding SPVUs in this NOPR. In the April 11, 2014 NODA, DOE also discussed its consideration of a space-constrained SPVU equipment class (79 FR 20114, 20121-23); DOE's consideration of that issue will also occur in the separate SPVU rulemaking.

B. Commercial Water Heaters

EPCA defines “storage water heater” as a water heater that heats and stores water within the appliance at a thermostatically controlled temperature for delivery on demand. This term does not include units with an input rating of 4,000 Btu/h or more per gallon of stored water. (42 U.S.C. 6311(12)(A)) DOE further clarified this definition in its regulations by adding that it is industrial equipment. 10 CFR 431.102. EPCA defines “instantaneous water heater” as a water heater that has an input rating of at least 4,000 Btu/h per gallon of stored water. (42 U.S.C. 6311(12)(B)) DOE further clarified this definition in its regulations by adding that it is industrial equipment, including products meeting this description that are designed to heat water to temperatures of 180°F or higher. 10 CFR 431.102.

The current Federal energy conservation standards for the five classes of storage and instantaneous water heaters for which ASHRAE Standard 90.1-2013 amended efficiency levels are shown in Table II.1 and set forth in DOE's regulations at 10 CFR 431.110. The equipment classes for commercial storage and instantaneous water heaters, and attendant Federal energy conservation standards, are differentiated based on fuel type and size category. ASHRAE Standard 90.1-2013 appeared to change the standby loss levels for four equipment classes (gas-fired storage water heaters, oil-fired storage water heaters, gas-fired instantaneous water heaters, and oil-fired instantaneous water heaters) to efficiency levels that surpass the current Federal energy conservation standard levels. However, as discussed in the April 11, 2014 NODA, upon review of the changes, DOE believes that all changes to standby loss levels for these equipment classes were editorial errors because they are identical to SI (International System of Units; metric system) formulas rather than I-P (Inch-Pound; English system) formulas. 79 FR 20114, 20123. Therefore, DOE did not conduct an analysis of the potential energy savings for this equipment. DOE received no comment on this issue.

As discussed in the April 11, 2014 NODA, ASHRAE Standard 90.1-2013 also changed the standby loss level for electric storage water heaters, in this case in a purposeful manner to align with the current Federal energy conservation standard level.

Id.

Because these levels meet and do not exceed the current Federal standards, DOE did not conduct an analysis of the potential energy savings for this equipment class.

ASHRAE Standard 90.1-2013 also increased the thermal efficiency levels for oil-fired storage water heaters to efficiency levels that surpass the current Federal energy conservation standards. Therefore, DOE conducted an analysis of the potential energy savings due to amended thermal efficiency standards for oil-fired storage water heaters in the April 2014 NODA.

Id.

DOE did not receive any comments from stakeholders specific to the efficiency level DOE should adopt for oil-fired storage water heaters. Based on the results of the April 2014 NODA, DOE has determined that there are minimal energy savings available from this equipment and has not conducted further analyses on these products. Therefore, DOE is proposing in this NOPR to adopt the energy efficiency levels contained in ASHRAE Standard 90.1-2013 for commercial oil-fired storage water heaters (see section VIII.D.3).

In response to the April 2014 NODA, DOE received comment from the Advocates that the standards for all commercial water heaters, not just oil-fired storage water heaters, are due for a six-year look back. (Advocates, No. 21 at p. 3) Although DOE acknowledges its statutory obligation to review the standards for commercial water heaters, in order to best allocate available resources, DOE is limiting the scope of this current rulemaking to ASHRAE-triggered equipment. However, in October 2014, the agency issued a request for information (RFI) regarding commercial water heaters to initiate a separate six-year look back rulemaking for all categories of commercial water heating equipment. 79 FR 62899 (Oct. 21, 2014).

C. Test Procedures

EPCA requires the Secretary to amend the DOE test procedures for covered ASHRAE equipment to the latest version of those generally accepted industry testing procedures or the rating procedures developed or recognized by AHRI or by ASHRAE, as referenced by ASHRAE/IES Standard 90.1, unless the Secretary determines by rule published in the

Federal Register

and supported by clear and convincing evidence that the latest version of the industry test procedure does not meet the requirements for test procedures described in paragraphs (2) and (3) of 42 U.S.C. 6314(a).

(42 U.S.C. 6314(a)(4)(B)) ASHRAE Standard 90.1-2013 updated several of its test procedures for ASHRAE equipment. Specifically, ASHRAE Standard 90.1-2013 updated to the most recent editions of test procedures for small commercial package air conditioners and heating equipment (AHRI 210/240-2008 with Addendum 1 and 2,

Performance Rating of Unitary Air-Conditioning & Air-Source Heat Pump Equipment

), large and very large commercial package air conditioners and heating equipment (AHRI 340/360-2007 with Addenda 1 and 2,

Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment

), variable refrigerant flow equipment (AHRI 1230-2010 with Addendum 1,

Performance Rating of Variable Refrigerant Flow (VRF) Multi-Split Air-Conditioning and Heat Pump Equipment

), commercial warm-air furnaces (ANSI (American National Standards Institute) Z21.47-2012,

Standard for Gas-Fired Central

Furnaces

), and commercial water heaters (ANSI Z21.10.3-2011, Gas Water Heaters, Volume III,

Storage Water Heaters with Input Ratings Above 75,000 Btu Per Hour, Circulating and Instantaneous

(2) Test procedures prescribed in accordance with this section shall be reasonably designed to produce test results which reflect energy efficiency, energy use, and estimated operating costs of a type of industrial equipment (or class thereof) during a representative average use cycle (as determined by the Secretary), and shall not be unduly burdensome to conduct. (3) If the test procedure is a procedure for determining estimated annual operating costs, such procedure shall provide that such costs shall be calculated from measurements of energy use in a representative average-use cycle (as determined by the Secretary), and from representative average unit costs of the energy needed to operate such equipment during such cycle. The Secretary shall provide information to manufacturers of covered equipment respecting representative average unit costs of energy.

In the April 2014 NODA, DOE preliminarily reviewed each of the test procedures that were updated in ASHRAE Standard 90.1-2013 and discussed the changes to those industry test procedures. 79 FR 20114, 20123-25 (April 11, 2014). DOE found that for AHRI 210/240, AHRI 340/360, AHRI 1230, and ANSI Z1.10.3, DOE had already incorporated by reference the most recent version

and did not need to take action. DOE received no comment on this issue. For ANSI Z21.47, DOE determined that the changes to the 2012 version do not impact those provisions of that industry test procedure that are used under the DOE test procedure for gas-fired warm air furnaces, and, therefore, such changes do not affect the energy efficiency ratings for gas-fired furnaces. Consequently, DOE determined that no further action was required at the time.

Id.

at 20124-25. In response to the April 2014 NODA, AHRI, Goodman Global, and Lennox International agreed with DOE's substantive assessment of ANSI Z21.47-2012. (AHRI, No. 24 at p. 5; Goodman Global, Inc., No. 18 at p. 2; Lennox International, Inc., No. 15 at p. 6) However, in keeping with EPCA's mandate to incorporate the latest version of the applicable industry test procedure pursuant to 42 U.S.C. 6314(a)(4)(B), DOE is proposing to incorporate by reference ANSI Z21.47-2012. Once again, DOE anticipates no substantive change or increase in test burden to be associated with this test procedure amendment for warm air furnaces.

This final rule for commercial heating, air-conditioning, and water-heating equipment was published in the

Federal Register

on May 16, 2012. 77 FR 28928.

DOE is also required to review the test procedures for covered ASHRAE equipment at least once every seven years. (42 U.S.C. 6314(a)(1)(A)) In addition to the updates to the referenced standards discussed previously, DOE is proposing to update the citations and incorporations by reference in DOE's regulations for commercial warm-air furnaces to the most recent version of ASHRAE 103,

Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boiler

(

i.e.,

ASHRAE 103-2007). The applicable sections of this standard include measurement of condensate and calculation of additional heat gain and heat losses for condensing furnaces. DOE notes that the most recent version does not contain any updates to the sections currently referenced by the DOE test procedure, so no additional burden would be expected to result from this test procedure update.

DOE is aware that some commercial furnaces are designed for make-up air heating (

i.e.,

heating 100 percent outdoor air). DOE defines “commercial warm air furnace” at 10 CFR 431.72 as self-contained oil-fired or gas-fired furnaces designed to supply heated air through ducts to spaces that require it, with a capacity (rated maximum input) at or above 225,000 Btu/h. Further, DOE's definitions specify that this equipment includes combination warm air furnace/electric air conditioning units but does not include unit heaters and duct furnaces. Given the characteristics of this category of commercial furnaces, DOE tentatively concludes that gas-fired and oil-fired commercial furnaces that are designed for make-up air heating and that have input ratings at or above 225,000 Btu/h meet the definition of “commercial warm air furnace” because they are self-contained units that supply heated air through ducts. Consequently, DOE is clarifying that commercial warm air furnaces that are designed for make-up air heating are subject to DOE's regulatory requirements, including being tested according to the test procedure specified in 10 CFR 431.76.

DOE is seeking comments on any relevant issues that would affect the test procedure for commercial warm air furnaces. Interested parties are welcome to comment on any aspect of the DOE commercial warm air furnaces test procedure as part of this comprehensive 7-year-review. This is identified as issue 2 in section X.E, “Issues on Which DOE Seeks Comment.”

V. Methodology for Small Commercial Air-Cooled Air Conditioners and Heat Pumps Less Than 65,000 Btu/h

This section addresses the analyses DOE has performed for this rulemaking with respect to small commercial air-cooled air conditioners and heat pumps less than 65,000 Btu/h. A separate subsection addresses each analysis. In overview, DOE used a spreadsheet to calculate the life-cycle cost (LCC) and payback periods (PBPs) of potential energy conservation standards. DOE used another spreadsheet to provide shipments projections and then calculate national energy savings and net present value impacts of potential amended energy conservation standards.

A. Market Assessment

To begin its review of the ASHRAE Standard 90.1-2013 efficiency levels, DOE developed 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 included both quantitative and qualitative assessments based primarily on publicly-available information. The subjects addressed in the market assessment for this rulemaking include equipment classes, manufacturers, quantities, and types of equipment sold and offered for sale. The key findings of DOE's market assessment are summarized in the following sections. For additional detail, see chapter 2 of the NOPR technical support document (TSD).

1. Equipment Classes

As discussed previously, the Federal energy conservation standards for air-cooled air conditioners and heat pumps are differentiated based on the cooling capacity (

i.e.,

small, large, or very large). For small equipment, there is an additional disaggregation into: (1) Equipment less than 65,000 Btu/h and (2) equipment greater than or equal to 65,000 Btu/h and less than 135,000 Btu/h. ASHRAE Standard 90.1-2013 also differentiates the equipment that is less than 65,000 Btu/h into split system and single package subcategories. In the past, DOE has followed the same disaggregation. However, when EISA 2007 increased the efficiency levels to identical levels across single package and split system equipment, effective in 2008, DOE combined the equipment classes in the CFR, resulting in only two equipment classes, one for air conditioners and one for heat pumps. 74 FR 12058, 12074 (March 23, 2009). Because ASHRAE has increased the standard for only single package air conditioners, and has increased the HSPF level to a more stringent level for split system heat pumps than for single package heat pumps, and DOE is obligated to adopt, at a minimum, the increased level in ASHRAE 90.1-2013 for that equipment class, DOE proposes to re-create separate equipment classes for single package and split system equipment in the overall equipment classes of small commercial package air conditioners and heat pumps (three-phase air-cooled) less than 65,000 Btu/h, as shown in Table V.1.

Table V.1—Proposed Equipment Classes for Small Commercial Packaged Air-Conditioning and Heating Equipment <65,000

Btu/h

Product

Cooling

capacity

(Btu/h)

Sub-category

Small Commercial Packaged Air Conditioning and Heating Equipment (Air-Cooled, 3-Phase, Split System)

<65,000

Small Commercial Packaged Air Conditioning and Heating Equipment (Air-Cooled, 3-Phase, Single Package)

<65,000

2. Review of Current Market

In order to obtain the information needed for the market assessment for this rulemaking, DOE consulted a variety of sources, including manufacturer literature, manufacturer Web sites, and the AHRI certified directory.

The information DOE gathered serves as resource material throughout the rulemaking. The sections below provide an overview of the market assessment, and chapter 2 of the NOPR TSD provides additional detail on the market assessment, including citations to relevant sources.

AHRI Directory of Certified Product Performance (2013) (Available at:

www.ahridirectory.org

) (Last accessed November 11, 2013).

a. Trade Association Information

DOE researched various trade groups representing manufacturers, distributors, and installers of the various types of equipment being analyzed in this rulemaking. AHRI is one of the largest trade associations for manufacturers of space-heating, cooling, and water-heating equipment, representing more than 90 percent of the residential and commercial air-conditioning, space-heating, water-heating, and commercial refrigeration equipment manufactured in the United States.

AHRI also develops and publishes test procedure standards for measuring and certifying the performance of residential and commercial HVAC equipment and coordinates with the International Organization for Standardization (ISO) to help harmonize U.S. standards with international standards, if feasible. AHRI also maintains the AHRI Directory of Certified Product Performance, which is a database that lists all the products and equipment that have been certified by AHRI, thereby providing equipment ratings for all manufacturers who elect to participate in the program. DOE utilized this database in developing base-case efficiency distributions.

Air-Conditioning, Heating, and Refrigeration Institute Web site,

About Us

(2013) (Available at:

www.ari.org/site/318/About-Us

) (Last accessed December 18, 2014).

The Heating, Air-conditioning and Refrigeration Distributors International (HARDI) is a trade association that represents over 450 wholesale heating, ventilating, air-conditioning, and refrigeration (HVACR) companies, plus over 300 manufacturing associates and nearly 140 manufacturing representatives. HARDI estimates that 80 percent of the revenue of HVACR systems goes through its members.

DOE did not utilize HARDI data for this rule.

Heating, Air-conditioning & Refrigeration Distributors International Web site, About HARDI (2014) (Available at:

www.hardinet.org/about-hardi-0

) (Last accessed February 10, 2014).

The Air Conditioning Contractors of America (ACCA) is another trade association whose members include over 4,000 contractors and 60,000 professionals in the indoor environment and energy service community. According to their Web site, ACCA provides contractors with technical, legal, and market resources, helping to promote good practices and to keep buildings safe, clean, and affordable.

DOE did not use ACCA data for this rule.

Air Conditioning Contractors of America Web site, About ACCA (2014) (Available at:

www.acca.org/acca

) (Last accessed February 10, 2014).

b. Manufacturer Information

DOE reviewed data for air-cooled commercial air conditioners and heat pumps currently on the market by examining the AHRI Directory of Certified Product Performance. DOE identified 23 parent companies (comprising 61 manufacturers) of small three-phase air-cooled air conditioners and heat pumps, which are listed in chapter 2 of the NOPR TSD. Of these manufacturers, five were identified as small businesses based upon number of employees and the employee thresholds set by the Small Business Administration. More details on this analysis can be found below in section IX.B.

c. Market Data

DOE reviewed the AHRI database to characterize the efficiency and performance of small commercial air-cooled air conditioners and heat pumps less than 65,000 Btu/h models currently on the market. The full results of this market characterization are found in chapter 2 of the NOPR TSD. For split-system air conditioners, the average SEER value was 13.9, and 120 models (0.1 percent of the total models) have SEER ratings below the ASHRAE Standard 90.1-2013 level of 13.0 SEER. For single-package air conditioners, the average SEER value was 14.3, and 1,450 models (45 percent of the total models) have SEER ratings below the ASHRAE Standard 90.1-2013 level of 14.0 SEER.

For single-package heat pumps, the average SEER value is 14.0. Of the models identified by DOE, 653 models (54 percent of the total models) have SEER ratings below the ASHRAE Standard 90.1-2013 level of 14.0 SEER. The average HSPF value for this equipment class is 7.9. Of the models identified by DOE, 632 models (52 percent of the total models) have HSPF ratings below the ASHRAE Standard 90.1-2013 levels of 8.0. For split-system heat pumps, the average SEER value for this equipment class is 13.7. Of the models identified by DOE, 30,009 models (64 percent of the total models) have SEER ratings below the ASHRAE Standard 90.1-2013 level of 14.0. The average HSPF for this equipment class is 7.9. Of the models identified by DOE, 36,902 models (79 percent of the total models) have HSPF ratings below the ASHRAE Standard 90.1-2013 level of 8.2. For more information on market performance data, see chapter 2 of the NOPR TSD.

B. Engineering Analysis

The engineering analysis establishes the relationship between an increase in energy efficiency and the increase in cost (manufacturer selling price (MSP)) of a piece of equipment DOE is evaluating for potential amended energy conservation standards. This relationship serves as the basis for cost-benefit calculations for individual

consumers, manufacturers, and the Nation. The engineering analysis identifies representative baseline equipment, which is the starting point for analyzing possible energy efficiency improvements. For covered ASHRAE equipment, DOE sets the baseline for analysis at the ASHRAE Standard 90.1 efficiency level, because by statute, DOE cannot adopt any level below the revised ASHRAE level. The engineering analysis then identifies higher efficiency levels and the incremental increase in product cost associated with achieving the higher efficiency levels. After identifying the baseline models and cost of achieving increased efficiency, DOE estimates the additional costs to the commercial consumer through an analysis of contractor costs and markups and uses that information in the downstream analyses to examine the costs and benefits associated with increased equipment efficiency.

DOE typically structures its engineering analysis around one of three methodologies: (1) The design-option approach, which calculates the incremental costs of adding specific design options to a baseline model; (2) the efficiency-level approach, which calculates the relative costs of achieving increases in energy efficiency levels without regard to the particular design options used to achieve such increases; and/or (3) the reverse-engineering or cost-assessment approach, which involves a “bottom-up” manufacturing cost assessment based on a detailed bill of materials derived from teardowns of the equipment being analyzed. A supplementary method called a catalog teardown uses published manufacturer catalogs and supplementary component data to estimate the major physical differences between a piece of equipment that has been physically disassembled and another piece of similar equipment for which catalog data are available to determine the cost of the latter equipment. Deciding which methodology to use for the engineering analysis depends on the equipment, the design options under study, and any historical data upon which DOE may draw.

1. Approach

For this analysis, DOE used a combination of the efficiency-level and the cost-assessment approach. DOE used the efficiency-level approach to identify incremental improvements in efficiency for each equipment class and the cost-assessment approach to develop a cost for each efficiency level. The efficiency levels that DOE considered in the engineering analysis were representative of three-phase central air conditioners and heat pumps currently produced by manufacturers at the time the engineering analysis was developed. DOE relied on data reported in the AHRI Directory of Certified Product Performance to select representative efficiency levels.

DOE generated a bill of materials (BOM) for each representative product that it disassembled. DOE did this for multiple manufacturers' products that span a range of efficiency levels for the equipment classes that are analyzed in this rulemaking. The BOMs describe the manufacture of the equipment in detail, listing all parts and including all manufacturing steps required to make each part and to assemble the unit. DOE also conducted catalog teardowns to supplement the information obtained directly from physical teardowns. Subsequently, DOE developed a cost model that calculates manufacturer production cost (MPC) for each unit, based on the detailed BOM data. Chapter 3 of the NOPR TSD describes DOE's cost model in greater detail. The calculated costs are plotted as a function of the equipment efficiency levels (based on rated efficiency) to create cost-efficiency curves. DOE notes that the cost at some efficiency levels was interpolated or extrapolated based on the available physical and catalog teardown data.

DOE developed cost-efficiency curves for a representative capacity of three tons, which it decided well represents the range of capacities on the market for commercial three-phase products. Because other capacity levels had similar designs and efficiency levels, cost-efficiency curves were not developed for any other capacities. Instead, DOE was able to utilize the cost-efficiency curve for the representative capacity and apply it to all three-phase products.

DOE based the cost-efficiency relationship for three-phase central air conditioners and heat pumps on reverse engineering conducted for the June 2011 direct final rule (DFR) for single-phase central air conditioners and heat pumps. 76 FR 37408. DOE researched manufacturer literature and noticed that most model numbers between single-phase products and three-phase equipment are interchangeable, with only a single-digit difference in the model number for the supply voltage. Although three-phase equipment contains three-phase compressors instead of single-phase compressors, DOE did not notice any inconsistency in energy efficiency ratings between single-phase products and three-phase equipment. To supplement the 2011 DFR data (29 physical teardowns and 12 catalog teardowns), DOE completed one physical teardown and seven catalog teardowns of three-phase equipment. This approach allowed DOE to provide an estimate of equipment prices at different efficiencies and spanned a range of technologies currently on the market that are used to achieve the increased efficiency levels.

2. Baseline Equipment

DOE selected baseline efficiency levels as reference points for each equipment class, against which it measured changes resulting from potential amended energy conservation standards. DOE defined the baseline efficiency levels as reference points to compare the technology, energy savings, and cost of equipment with higher energy efficiency levels. Typically, units at the baseline efficiency level just meet Federal energy conservation standards and provide basic consumer utility. However, EPCA requires that DOE must adopt either the ASHRAE Standard 90.1-2013 levels or more-stringent levels. Therefore, because the ASHRAE Standard 90.1-2013 levels were the lowest levels that DOE could adopt, DOE used those levels as the reference points against which more-stringent levels were evaluated.

Split-system AC

Single-package AC

Split-system HP

Single-package HP

SEER

Baseline—Federal Standard

13.0

Baseline—ASHRAE Standard

13.0

14.0

HSPF

Baseline—Federal Standard

7.7

Baseline—ASHRAE Standard

8.2

8.0

Table V.2 shows the current baseline and ASHRAE efficiency levels for each equipment class of small commercial air-cooled air conditioners and heat pumps <65,000 Btu/h.

Table V.2—Baseline Efficiency Levels for Small Commercial Air-Cooled Air Conditioners (AC) and Heat Pumps (HP) <65,000

Btu/h

Split-system AC

Single-package AC

Split-system HP

Single-package HP

SEER

Baseline—Federal Standard

13.0

Baseline—ASHRAE Standard

13.0

14.0

HSPF

Baseline—Federal Standard

7.7

Baseline—ASHRAE Standard

8.2

8.0

3. Identification of Increased Efficiency Levels for Analysis

DOE analyzed several efficiency levels and obtained incremental cost data for the four equipment classes under consideration. Table V.3 presents the efficiency levels examined for each equipment class. As part of the engineering analyses, DOE considered up to six efficiency levels beyond the baseline for each equipment class. DOE derived the maximum technologically feasible (“max-tech”) level from the market maximum in the AHRI Certified Directory,

as of November 2013. The highest available efficiency level for split-system heat pumps was 16.2, compared to 18.05 for single-package heat pumps. DOE has tentatively determined that split-system heat pumps are capable of reaching the same efficiency level as single-package units, because the same technologies to increase efficiency can be employed across both equipment classes. As a result, the analyzed “max-tech” level for single-package and split-system heat pumps was 18.05. In the April 2014 commercial heating, air-conditioning, and water-heating equipment NODA, DOE determined the “max-tech” level for single-package air conditioners to be 19.15. 79 FR 20114, 20126 (April 11, 2014). DOE also tentatively determined that split-system air conditioners are capable of reaching the same efficiency levels as single-package units. For the engineering analysis, DOE rounded the “max-tech” levels to integer values of 18 and 19 for split-system and single-package heat pumps, and split-system and single-package air conditioners, respectively. The impact of this rounding, which results in efficiency levels that are whole-number values of SEER, is minimal.

See:

http://www.ahridirectory.org/ahridirectory/pages/home.aspx.

The efficiency levels for each considered equipment class are presented in Table V.3. For additional details on the efficiency levels selected for analysis, see chapter 3 of the NOPR TSD.

Table V.3—Efficiency Levels for Small Commercial Air-Cooled Air Conditioners and Heat Pumps <65,000

Btu/h

Efficiency level

Split-system AC

SEER

Single-package AC

SEER

Split-system HP

SEER

HSPF

Single-package HP

SEER

HSPF

Federal Baseline

7.7

0—ASHRAE Baseline*

8.2

8.0

8.5

8.4

8.7

8.8

9.0

8.9

4**

9.2

9.1

5***

* For consistency across equipment classes, DOE refers to 14 SEER as EL 0, which is only the ASHRAE Baseline for three of the equipment classes, excluding split-system AC.

** Efficiency Level 4 is “Max-Tech” for HP equipment classes.

*** Efficiency Level 5 is “Max-Tech” for AC equipment classes.

4. Engineering Analysis Results

The results of the engineering analysis are cost-efficiency curves based on results from the cost models for analyzed units. DOE's calculated MPCs for small commercial air conditioners and heat pumps less than 65,000 Btu/h are shown in Table V.4 through Table V.7, and further details on the calculation of these curves can be found in chapter 3 of the NOPR TSD. DOE used the cost-efficiency curves from the engineering analysis as an input for the life-cycle cost and payback period analyses.

Table V.4—Manufacturer Production Costs for Three-Ton Split-System Commercial Air-Cooled Air Conditioners

SEER

MPC [$]

855

937

1,023

1,115

1,212

1,316

1,427

Table V.5—Manufacturer Production Costs for Three-Ton Single-Package Commercial Air-Cooled Air Conditioners

SEER

MPC [$]

1,003

1,122

1,241

1,361

1,480

1,599

1,719

Table V.6—Manufacturer Production Costs for Three-Ton Split-System Commercial Air-Cooled Heat Pumps

SEER

HSPF

MPC [$]

7.7

1,068

8.2

1,154

8.5

1,244

8.7

1,377

9.0

1,486

9.2

1,601

Table V.7—Manufacturer Production Costs for Three-Ton Single-Package Commercial Air-Cooled Heat Pumps

SEER

HSPF

MPC [$]

7.7

1,239

8.0

1,372

8.4

1,504

8.8

1,637

8.9

1,769

9.1

1,902

a. Manufacturer Markups

DOE applies a non-production cost multiplier (the manufacturer markup) to the full MPC to account for corporate non-production costs and profit. The resulting manufacturer selling price (MSP) is the price at which the manufacturer can recover all production and non-production costs and earn a profit. To meet new or amended energy conservation standards, manufacturers often introduce design changes to their equipment lines that result in increased manufacturer production costs. Depending on the competitive environment for these particular types of equipment, some or all of the increased production costs may be passed from manufacturers to retailers and eventually to commercial consumers in the form of higher purchase prices. As production costs increase, manufacturers typically incur additional overhead. The MSP should be high enough to recover the full cost of the equipment (

i.e.,

full production and non-production costs) and yield a profit. The manufacturer markup has an important bearing on profitability. A high markup under a standards scenario suggests manufacturers can pass along the increased variable costs and some of the capital and product conversion costs (the one-time expenditures) to the consumer. A low markup suggests that manufacturers will not be able to recover as much of the necessary investment in plants and equipment.

For small commercial air-cooled air-conditioners and heat pumps, DOE used a manufacturer markup of 1.3, as developed for the 2011 direct final rule for single-phase central air conditioners and heat pumps. 76 FR 37408 (June 27, 2011). This markup was calculated using U.S. Security and Exchange Commission (SEC) 10-K reports for publicly-owned heating and cooling companies, as well as feedback from manufacturer interviews. See chapter 3 of the NOPR TSD for more details about the methodology DOE used to determine the manufacturing markup.

b. Shipping Costs

Manufacturers of commercial HVAC products typically pay for freight (shipping) to the first step in the distribution chain. Freight is not a manufacturing cost, but because it is a substantial cost incurred by the manufacturer, DOE accounts for shipping costs separately from other non-production costs that comprise the manufacturer markup. DOE calculated the MSP for small commercial air-cooled air-conditioners and heat pumps by multiplying the MPC at each efficiency level (determined from the cost model) by the manufacturer markup and adding shipping costs for equipment at the given efficiency level. More specifically, DOE calculated shipping costs at each efficiency level based on a typical 53-foot straight-frame trailer with a storage volume of 4,240 cubic feet. DOE examined the sizes of small commercial air-cooled air-conditioners and heat pumps and determined the number of units that would fit in each trailer, based on assumptions about the arrangement of units in the trailer. See chapter 3 of the NOPR TSD for more details about the methodology DOE used to determine the shipping costs.

C. Markups Analysis

The markups analysis develops appropriate markups in the distribution chain to convert the estimates of manufacturer selling price derived in the engineering analysis to commercial consumer prices. (“Commercial consumer” 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 commercial consumer price.

In the 2014 NOPR for Central Unitary Air Conditioners (CUAC), which includes equipment similar to but larger than that in this NOPR, DOE determined that there are three types of distribution channels to describe how the equipment passes from the manufacturer to the commercial consumer. 79 FR 58948, 58975 (Sept. 30, 2014). In the new construction market, 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 commercial consumer or end user as part of the building. In the replacement market, the

manufacturer sells to a wholesaler, who sells to a mechanical contractor, who in turn sells the equipment to the commercial consumer or end user. In the third distribution channel, used in both the new construction and replacement markets, the manufacturer sells the equipment directly to the customer through a national account.

In this NOPR, DOE used two of the three distribution channels described above to determine the markups. Given the small cooling capacities of air conditioners and heat pumps less than 65,000 Btu/h, DOE did not use the national accounts distribution chain in the markups analysis. National accounts are composed of large commercial consumers of HVAC equipment that negotiate equipment prices directly with the manufacturers, such as national retail chains. The end market consumers of three-ton central air conditioners and heat pumps are small offices and small retailers and do not fit the profile of large national chains.

In the 2014 CUAC NOPR, based on information that equipment manufacturers provided, commercial consumers were estimated to purchase 50 percent of the covered equipment through small mechanical contractors, 32.5 percent through large mechanical contractors, and the remaining 17.5 percent through national accounts. 79 FR 58948, 58976 (Sept. 30, 2014). For this NOPR, DOE removed the national accounts distribution channel and recalculated the size of the small and large mechanical contractor distribution channels assuming they make up the entire market. Therefore, the small mechanical distribution chain accounts for 61 percent of equipment purchases (

i.e.,

50 percent divided by the sum of 50 percent and 32.5 percent), and the large mechanical contractor distribution chain represents 39 percent of purchases.

For this NOPR, DOE used the markups from the 2014 CUAC NOPR, for which DOE utilized updated versions of: (1) The Heating, Air Conditioning & Refrigeration Distributors International

2010 Profit Report

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

2005 Financial Analysis for the HVACR Contracting Industry

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.

U.S. Census Bureau, 2007 Economic Census, Construction Industry Series and Wholesale Trade Subject Series (Available at:

www.census.gov/econ/census/data/historical_data.html).

Chapter 5 of the NOPR TSD provides further detail on the estimation of markups.

D. Energy Use Analysis

The energy use analysis provides estimates of the annual energy consumption of small air-cooled air conditioners and heat pumps with cooling capacities less than 65,000 Btu/h at the considered efficiency levels. DOE uses these values in the LCC and PBP analyses and in the NIA.

The cooling unit energy consumption (UEC) by equipment type and efficiency level came from the national impact analysis associated with the 2011 direct final rule (DFR) for residential central air conditioners and heat pumps. (EERE-2011-BT-STD-0011-0011). Specifically, DOE used the UECs for single-phase equipment installed in commercial buildings. The UECs for split system and single package equipment were similar in the 2011 analysis for lower efficiency levels, but at higher efficiency levels, the only UECs available were for split-system equipment. DOE assumed that the similarities at lower levels could be expected to hold at higher efficiency levels; therefore, DOE is using the UECs for split equipment for all equipment classes in this NOPR, including split system and single package. In the April 11, 2014 NODA, DOE requested comment on the use of UECs from an analysis of single-phase products in commercial applications. 79 FR 20114, 20137. In response. Goodman, Lennox, and AHRI commented that single-phase and three-phase products should not differ substantially in energy consumption. (Goodman Global, Inc., No. 18 at p. 2; Lennox International, Inc., No. 15 at p. 6; AHRI, No. 24 at p. 5) Goodman added that for products less than 65,000 Btu/h, industry practice involves creating a single-phase product and then changing the compressor from single-phase to three-phase while leaving the motors for the condenser fan and evaporator blower at single-phase. (Goodman Global, Inc., No. 18 at p. 2) DOE agrees with the commenters and has maintained this approach.

In order to assess variability in the cooling UEC by region and building type, DOE used a Pacific Northwest National Laboratory report

that estimated the annual energy usage of space cooling and heating products using a Full Load Equivalent Operating Hour (FLEOH) approach. DOE normalized the provided FLEOHs to the UEC data discussed above to vary the average UEC across region and building type. The building types used in this analysis are small retail establishments and small offices.

See Appendix D of the 2000 Screening Analysis for EPACT-Covered Commercial HVAC and Water-Heating Equipment. (EERE-2006-STD-0098-0015)

In the April 11, 2014 NODA, DOE stated that it also considered analyzing heating UECs for heat pumps. 79 FR 20114, 20126. However, in reviewing the 2011 analysis, DOE found that the heating UECs did not scale proportionally with HSPF for commercial installations.

Id.

Therefore, DOE preliminarily determined that it was not possible to quantify energy savings given the available data. DOE requested comment seeking data and information related to the heating energy use of commercial heat pumps.

Id.

at 20137.

In response, AHRI commented that Pacific Northwest National Laboratory (PNNL) analyzes the benefits of increased efficiency requirements in ASHRAE 90.1-2013, and it increased the heating seasonal performance factor (HSPF) for 3-phase heat pumps less than 65,000 Btu/h. Therefore, PNNL may have information on the energy savings related to ASHRAE's standard. (AHRI, No. 24 at p. 6) Goodman suggests it is logical for there to be a reasonable relationship between the HSPF rating and UEC. (Goodman Global, Inc., No. 18 at p. 2) On the other hand, Lennox pointed out that HSPF is an efficiency metric designed to reflect the performance of a heat pump operating against a residential load profile in which the building balance point is at 65°F. Most commercial buildings have enough internal heat gain that their heating balance points can be at 30°F or below.

Therefore, the heat pump will not have a heating demand until the ambient temperature reaches this balance point. Much of the performance contribution for heat pumps to reach a high HSPF comes from its performance in the temperature range where it will never operate in a commercial building. For this reason, there will be little energy savings from increasing HSPF for commercial air-cooled equipment. (Lennox International Inc., No. 15 at p. 8)

In other words, the quantity of people, lighting, and equipment in the commercial building produce so much heat (

i.e.,

internal heat gain) that heating is not required until the temperature is quite low, as mentioned in this case to be 30 °F. In contrast, residential buildings tend to have lower internal heat gain, so heating is required at a higher temperature.

DOE notes that ASHRAE increased the HSPF and SEER levels for this equipment to levels that matched DOE's residential requirements, for

consistency in the market rather than necessarily to achieve energy savings. In light of Goodman and Lennox's comments, DOE has further reviewed the results of the simulations for the 2011 DFR and determined that the heating loads for these small commercial applications are extremely low (less than 500 kwh/year). As a result, DOE has not included any energy savings due to the increase in HSPF for this equipment.

E. Life-Cycle Cost and Payback Period Analysis

The purpose of the LCC and PBP analysis is to analyze the effects of potential amended energy conservation standards on commercial consumers of small commercial air-cooled air conditioners and heat pumps less than 65,000 btu/h 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 consumer expense over the life of the equipment, consisting of equipment and installation costs plus operating costs (

i.e.,

expenses for energy use, maintenance, and repair). DOE discounts future operating costs to the time of purchase using commercial consumer discount rates. The PBP is the estimated amount of time (in years) it takes commercial consumers 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 potential standard. However, unlike the LCC, DOE only considers the first year's operating expenses in the PBP calculation. Because the PBP does not account for changes in operating expenses over time or the time value of money, it is also referred to as a simple PBP.

For any given efficiency level, DOE measures the PBP and the change in LCC relative to an estimate of the base-case efficiency level. For split-system air conditioners, for which ASHRAE did not increase efficiency levels, the base-case estimate reflects the market in the absence of amended energy conservation standards, including the market for equipment that exceeds the current energy conservation standards. For single-package air conditioners, split-system heat pumps, and single-package heat pumps, the base-case estimate reflects the market in the case where the ASHRAE 90.1-2013 level becomes the Federal minimum, and the LCC calculates the LCC savings likely to result from higher efficiency levels compared with the ASHRAE base-case.

DOE conducted an LCC and PBP analysis for small commercial air-cooled air conditioners and heat pumps less than 65,000 btu/h using a computer spreadsheet model. 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. 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 6 of the NOPR TSD.

1. Equipment Costs

In the LCC and PBP analysis, the equipment costs faced by purchasers of small air-cooled air conditioning and heat pump equipment are derived from the MSPs estimated in the engineering analysis, the overall markups estimated in the markups analysis, and sales tax.

To develop an equipment price trend for the NOPR, DOE derived an inflation-adjusted index of the producer price index (PPI) for “unitary air-conditioners, except air source heat pumps” from 1978 to 2013, which is the PPI series most relevant to small air-cooled air-conditioning equipment. The PPI index for heat pumps covered too short a time period to provide a useful picture of pricing trends, so the air-conditioner time series was used for both air conditioners and heat pumps. DOE expects this to be a reasonably accurate assessment for heat pumps because heat pumps are produced by the same manufacturers as air-conditioners and contain most of the same components. Although the overall PPI index shows a long-term declining trend, data for the last decade 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 (at 2013 levels) for the NOPR. See chapter 6 of the NOPR TSD for more information on the price trends.

2. Installation Costs

DOE derived national average installation costs for small air-cooled air conditioning and heat pump equipment from data provided in RS Means 2013.

RS Means provides estimates for installation costs for the subject equipment by equipment capacity, as well as cost indices that reflect the variation in installation costs for 656 cities in the United States. The RS Means data identify several cities in all 50 States and the District of Columbia. DOE incorporated location-based cost indices into the analysis to capture variation in installation costs, depending on the location of the consumer.

RS Means Mechanical Cost Data 2013.

Reed Construction Data, LLC (2012).

Based on these data, DOE tentatively concluded that data for 3-ton rooftop air conditioners would be sufficiently representative of the installation costs for air conditioners less than 65,000 btu/h. For heat pumps, DOE used the installation costs for 3-ton air-source heat pumps.

DOE also varied installation cost as a function of equipment weight. Because weight tends to increase with equipment efficiency, installation cost increased with equipment efficiency. The weight of the equipment in each class and efficiency level was determined through the engineering analysis.

3. Unit Energy Consumption

The calculation of annual per-unit energy consumption by each class of the subject small air-cooled air conditioning and heating equipment at each considered efficiency level is based on the energy use analysis as described above in section V.D and in chapter 4 of the NOPR TSD.

4. Electricity Prices and Electricity Price Trends

DOE used average and marginal electricity prices by Census Division based on tariffs from a representative sample of electric utilities. This approach calculates energy expenses based on actual commercial building average and marginal electricity prices that customers are paying.

The Commercial Buildings Energy Consumption Survey (CBECS) 1992 and CBECS 1995 surveys provide 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, an average and marginal price were determined for each region of the U.S.

Coughlin, K., C. Bolduc, R. Van Buskirk, G. Rosenquist and J.E. McMahon, “Tariff-based Analysis of Commercial Building Electricity Prices” (2008) Lawrence Berkeley National Laboratory: Berkeley, CA. Report No. LBNL-55551.

The average electricity price multiplied by the baseline electricity consumption for each equipment class defines the baseline LCC. For each efficiency level, the operating cost savings are calculated by multiplying the electricity consumption savings (relative to the baseline) by the marginal consumption price.

For this NOPR, the tariff-based prices were updated to 2013 using the commercial electricity price index published in the

AEO.

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 commercial electricity price from

AEO 2014.

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

For further discussion of electricity prices, see chapter 6 of the NOPR TSD.

5. Maintenance Costs

Maintenance costs are costs to the commercial consumer of ensuring continued operation of the equipment (

e.g.,

checking and maintaining refrigerant charge levels and cleaning heat-exchanger coils). DOE derived annualized maintenance costs for small commercial air-cooled air conditioners and heat pumps from RS Means data.

These data provided estimates of person-hours, labor rates, and materials required to maintain commercial air-conditioning and heating equipment. The estimated annualized maintenance cost is $298 for air conditioners rated between 36,000 Btu/h and 288,000 Btu/h and $329 for heat pumps rated between 36,000 Btu/h and 288,000 Btu/h; this capacity range includes the equipment that is the subject of this NOPR. DOE assumed that the maintenance costs do not vary with efficiency level.

RS Means Facilities Maintenance & Repair Cost Data 2013.

Reed Construction Data, LLC. (2012).

6. Repair Costs

Repair costs are costs to the commercial consumer associated with repairing or replacing components that have failed. DOE utilized RS Means

to find the repair costs for small commercial air-cooled air conditioners and heat pumps. For air conditioners, DOE used the repair costs for a 3-ton, single-zone rooftop unit. For heat pumps, DOE took the repair costs for 1.5-ton, 5-ton, and 10-ton air-to-air heat pumps and linearly scaled the repair costs to derive a 3-ton repair cost. DOE assumed that the repair would be a one-time event in year 10 of the equipment life. DOE then annualized the present value of the cost over the average equipment life of 19 or 16 years (for air conditioners and heat pumps, respectively) to obtain an annualized equivalent repair cost. This value ranges from $141 to $154 at the baseline level, depending on equipment class. The materials portion of the repair cost was scaled with the percentage increase in manufacturers' production cost by efficiency level. The labor cost was held constant across efficiency levels. This annualized repair cost was then added to the maintenance cost to create an annual “maintenance and repair cost” for the lifetime of the equipment. For further discussion of how DOE derived and implemented repair costs, see chapter 6 of the NOPR TSD.

Id.

7. Equipment Lifetime

Equipment lifetime is the age at which the subject small air-cooled air conditioners and heat pumps less than 65,000 Btu/h are retired from service. DOE based equipment lifetime on a retirement function in the form of a Weibull probability distribution. DOE used the inputs from the 2011 DFR technical support document for central air conditioners and heat pumps, which represented a mean lifetime of 19.01 years for air conditioners and 16.24 years for heat pumps, and used the same values for units in both residential and commercial applications. (EERE-2011-BT-STD-0011-0012) Given the similarity of such equipment types, DOE believes the lifetime for single-phase equipment may be a reasonable approximation of the lifetime for similar three-phase equipment.

8. Discount Rate

The discount rate is the rate at which future expenditures are discounted to estimate their present value. The cost of capital commonly is used to estimate the present value of cash flows to be derived from a typical company project or investment. Most companies use both debt and equity capital to fund investments, so the cost of capital is the weighted-average cost to the firm of equity and debt financing. DOE uses the capital asset pricing model (CAPM) to calculate the equity capital component, and financial data sources to calculate the cost of debt financing.

DOE derived the discount rates by estimating the weighted-average cost of capital (WACC) of companies that purchase air-cooled air-conditioning equipment. More details regarding DOE's estimates of commercial consumer discount rates are provided in chapter 6 of the NOPR TSD.

9. Base-Case Market Efficiency Distribution

For the LCC analysis, DOE analyzes the considered efficiency levels relative to a base case (

i.e.,

the case without amended energy efficiency standards, in this case the current Federal standards for split-system air conditioners, and the default scenario in which DOE is required to adopt the efficiency levels in ASHRAE 90.1-2013 for the three equipment classes triggered by ASHRAE). This analysis requires an estimate of the distribution of equipment efficiencies in the base case (

i.e.,

what consumers would have purchased in the compliance year in the absence of amended standards for split-system air conditioners, or amended standards more stringent than those in ASHRAE 90.1-2013 for the three triggered equipment classes). DOE refers to this distribution of equipment energy efficiencies as the base-case efficiency distribution. For more information on the development of the base-case distribution, see section V.F.3 and chapter 6 of the NOPR TSD.

10. Compliance Date

DOE calculated the LCC and PBP for all commercial consumers as if each were to purchase new equipment in the year that compliance with amended standards is required. Generally, covered equipment to which a new or amended energy conservation standard applies must comply with the standard if such equipment is manufactured or imported on or after a specified date. In this NOPR, DOE is evaluating whether more-stringent efficiency levels than those in ASHRAE Standard 90.1-2013 would be technologically feasible, economically justified, and result in a significant additional amount of energy savings. If DOE were to propose a rule prescribing energy conservation standards at the efficiency levels contained in ASHRAE Standard 90.1-2013 for the three triggered equipment

classes, EPCA states that compliance with any such standards shall be required on or after a date which is two or three years (depending on equipment size) after the compliance date of the applicable minimum energy efficiency requirement in the amended ASHRAE/IES standard. (42 U.S.C. 6313(a)(6)(D)) Given the equipment size at issue here, DOE has applied the two-year implementation period to determine the compliance date of any energy conservation standard equal to the efficiency levels specified by ASHRAE Standard 90.1-2013 proposed by this rulemaking. Thus, if DOE decides to adopt the efficiency levels in ASHRAE Standard 90.1-2013, the compliance date of the rulemaking would be dependent upon the date specified in ASHRAE Standard 90.1-2013 or its publication date, if none is specified. In this case, the rule would apply to small commercial air-cooled air conditioners and heat pumps less than 65,000 Btu/h manufactured on or after January 1, 2017, which is two years after the date specified in ASHRAE Standard 90.1-2013.

If DOE were to propose a rule prescribing energy conservation standards more stringent than the efficiency levels contained in ASHRAE Standard 90.1-2013, EPCA states that compliance with any such standards is required for products manufactured on or after a date which is four years after the date the final rule is published in the

Federal Register

. (42 U.S.C. 6313(a)(6)(D)) DOE has applied this 4-year implementation period to determine the compliance date for any energy conservation standard more stringent than the efficiency levels specified by ASHRAE Standard 90.1-2013 that might be prescribed at the final rule stage for the three equipment classes triggered by ASHRAE. Thus, for equipment for which DOE might adopt a level more stringent than the ASHRAE efficiency levels, the rule would apply to products manufactured on or after a date four years from the date of publication of the final rule, which the statute requires to be completed by April 9, 2016 (thereby resulting in a compliance date no later than April 9, 2020).

Since ASHRAE published ASHRAE Standard 90.1-2013 on October 9, 2013, EPCA requires that DOE publish a final rule adopting more-stringent standards than those in ASHRAE Standard 90.1-2013, if warranted, within 30 months of ASHRAE action (

i.e.,

by April 2016). Thus, four years from April 2016 would be April 2020, which would be the anticipated compliance date for DOE adoption of more-stringent standards.

For split system air-cooled air conditioners, which DOE evaluated under the 6 year look back, DOE applied a different compliance date. Specifically, EPCA states that amended standards prescribed under this subsection shall apply to products 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)) Because DOE must publish a final rule by April 9, 2016, in the case that it adopts standards higher than those in ASHRAE Standard 90.1 for the other three equipment classes, DOE projected that the date under clause (I) would be April 2019, which is later than the date under clause (II). For purposes of its analysis, DOE used 2019 as the first year of compliance with amended standards.

Economic justification is not required for DOE to adopt the efficiency levels in ASHRAE 90.1-2013, as DOE is statutorily required to, at a minimum, adopt those levels. Therefore, DOE did not perform an LCC analysis on the ASHRAE Standard 90.1-2013 levels, and for purposes of the LCC analysis, DOE used 2020 as the first year of compliance with amended standards.

11. Payback Period Inputs

The payback period is the amount of time it takes the commercial consumer to recover the additional installed cost of more-efficient equipment, compared to baseline equipment, through energy cost savings. Payback periods are expressed in years. Payback periods that exceed the life of the equipment mean that the increased total installed cost is not recovered in reduced operating expenses.

Similar to the LCC, the inputs to the PBP calculation are the total installed cost of the equipment to the commercial consumer for each efficiency level and the average annual operating expenditures for each efficiency level for each building type and Census Division, weighted by the probability of shipment to each market. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed. Because the simple PBP does not take into account changes in operating expenses over time or the time value of money, DOE considered only the first year's operating expenses to calculate the PBP, unlike the LCC, which is calculated over the lifetime of the equipment. Chapter 6 of the NOPR TSD provides additional detail about the PBP.

F. National Impact Analysis—National Energy Savings and Net Present Value Analysis

The national impact analysis (NIA) evaluates the effects of a considered energy conservation standard from a national perspective rather than from the consumer perspective represented by the LCC. This analysis assesses the net present value (NPV) (future amounts discounted to the present) and the national energy savings (NES) of total commercial consumer costs and savings, which are expected to result from amended standards at specific efficiency levels. For each efficiency level analyzed, DOE calculated the NPV and NES for adopting more-stringent standards than the efficiency levels specified in ASHRAE Standard 90.1-2013.

The NES refers to cumulative energy savings from 2017 through 2046 for the three equipment classes triggered by ASHRAE; however when evaluating more-stringent standards, energy savings do not begin accruing until the later compliance date of 2020. DOE calculated new energy savings in each year relative to a base case, defined as DOE adoption of the efficiency levels specified by ASHRAE Standard 90.1-2013. DOE also calculated energy savings from adopting efficiency levels specified by ASHRAE Standard 90.1-2013 compared to the EPCA base case (

i.e.,

the current Federal standards).

For split-system air conditioners, the NES refers to cumulative energy savings from 2019 through 2048 for all standards cases. DOE calculated new energy savings in each year relative to a base case, defined as the current Federal standards, which are equivalent to the efficiency levels specified by ASHRAE Standard 90.1-2013.

The NPV refers to cumulative monetary savings. DOE calculated net monetary savings in each year relative to the base case (ASHRAE Standard 90.1-2013) as the difference between total operating cost savings and increases in total installed cost. Cumulative savings are the sum of the annual NPV over the specified period. DOE accounted for operating cost savings until past 2100, when the equipment installed in the 30th year after the compliance date of the amended standards should be retired.

1. Approach

The NES and NPV are a function of the total number of units in use and their efficiencies. Both the NES and NPV depend on annual shipments and equipment lifetime. Both calculations start by using the shipments estimate

and the quantity of units in service derived from the shipments model.

With regard to estimating the NES, because more-efficient air conditioners and heat pumps are expected to gradually replace less-efficient ones, the energy per unit of capacity used by the air conditioners and heat pumps in service gradually decreases in the standards case relative to the base case. DOE calculated the NES by subtracting energy use under a standards-case scenario from energy use in a base-case scenario.

Unit energy savings for each equipment class are taken from the LCC spreadsheet for each efficiency level and weighted based on market efficiency distributions. To estimate the total energy savings for each efficiency level, DOE first calculated the national site energy consumption (

i.e.,

the energy directly consumed by the units of equipment in operation) for each class of air conditioner and heat pumps for each year of the analysis period. The NES and NPV analysis periods begin with the earliest expected compliance date of amended Federal energy conservation standards (

i.e.,

2017 for the equipment classes triggered by ASHRAE, assuming DOE adoption of the baseline ASHRAE Standard 90.1-2013 efficiency levels, and 2019 for split-system air conditioners, 3 years after DOE would likely issue a final rule requiring standards more stringent than ASHRAE). For the analysis of DOE's potential adoption of more-stringent efficiency levels for the equipment classes triggered by ASHRAE, the earliest compliance date would be 2020, four years after DOE would likely issue a final rule requiring such standards. Second, DOE determined the annual site energy savings, consisting of the difference in site energy consumption between the base case and the standards case for each class of small commercial air conditioner and heat pump less than 65,000 Btu/h. Third, DOE converted the annual site energy savings into the annual primary and FFC energy savings using annual conversion factors derived from the

AEO 2014

version of the Energy Information Administration's (EIA) National Energy Modeling System (NEMS). Finally, DOE summed the annual primary and FFC energy savings from 2017 to 2046 (or 2019 to 2048) to calculate the total NES for that period. DOE performed these calculations for each efficiency level considered for small commercial air conditioners and heat pumps in this rulemaking.

DOE considered whether a rebound effect is applicable in its NES analysis. A rebound effect occurs when an increase in equipment efficiency leads to an increased demand for its service. The NEMS model assumes a certain elasticity factor to account for an increased demand for service due to the increase in cooling (or heating) efficiency.

EIA refers to this as an efficiency rebound. For the small commercial air

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