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

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2015-16897

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** July 21, 2015
- **Citation:** 80 FR 43162

## Text

DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Number EERE-2012-BT-STD-0029]
RIN 1904-AC82
Energy Conservation Program: Energy Conservation Standards for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including packaged terminal air conditioner (PTAC) and packaged terminal heat pump (PTHP) equipment. EPCA requires the U.S. Department of Energy (DOE) to determine whether more-stringent standards for PTACs and PTHPs would be technologically feasible and economically justified, and would save a significant amount of energy. In this final rule, DOE is adopting amended energy conservation standards for PTACs equivalent to the PTAC standards in American National Standards Institute (ANSI)/American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)/Illuminating Engineering Society (IES) Standard 90.1-2013. DOE is not amending the current energy conservation standards for PTHPs, which are already equivalent to the PTHP standards in ANSI/ASHRAE/IES Standard 90.1-2013. DOE has determined that adoption of PTAC and PTHP standards more stringent than ANSI/ASHRAE/IES Standard 90.1-2013 is not economically justified.

DATES:

The effective date of this rule is September 21, 2015. Compliance with the amended standards established for standard-sized PTACs in this final rule is required on January 1, 2017.

ADDRESSES:

The docket, which includes
Federal Register
notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at regulations.gov. All documents in the docket are listed in the regulations.gov index. However, some documents listed in the index, such as those containing information that is exempt from public disclosure, may not be publicly available.

A link to the docket Web page can be found at:
http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0029.
This Web page contains a link to the docket for this document on the
www.regulations.gov
site. The
www.regulations.gov
Web page contains simple instructions on how to access all documents, including public comments, in the docket.

For further information on how to review the docket, contact Ms. Brenda Edwards at (202) 586-2945 or by email:
Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT:

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

Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 286-7796. Email:
Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule

A. National Benefits

II. Introduction

A. Authority

B. Background

1. Current Standards

2. History of Standards Rulemaking for PTACs and PTHPs

III. General Discussion

A. Compliance Dates

B. Equipment Classes and Scope of Coverage

C. Test Procedure

D. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

E. Energy Savings

1. Determination of Savings

2. Significance of Savings

F. Economic Justification

1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers

b. Savings in Operating Costs Compared to Increase in Price

c. Energy Savings

d. Lessening of Utility or Performance of Equipment

e. Impact of Any Lessening of Competition

f. Need for National Energy Conservation

g. Other Factors

2. Rebuttable Presumption

G. Additional Comments

IV. Methodology and Discussion of Related Comments

A. Market and Technology Assessment

B. Screening Analysis

C. Engineering Analysis

1. Methodology

2. Equipment Classes Analyzed

3. Cost Model

4. Baseline Efficiency Level

5. Incremental Efficiency Levels

6. Equipment Testing and Reverse Engineering

7. Cost-Efficiency Results

D. Markups to Determine Equipment Price

E. Energy Use Analysis

F. Life Cycle Cost and Payback Period Analyses

1. Equipment and Installation Costs

2. Unit Energy Consumption

3. Electricity Prices and Electricity Price Trends

4. Repair Costs

5. Maintenance Costs

6. Lifetime

7. Discount Rate

8. Base Case Efficiency Distribution

9. Payback Period Inputs

10. Rebuttable-Presumption Payback Period

G. Shipments Analysis

H. National Impact Analysis

I. Consumer Subgroup Analysis

J. Manufacturer Impact Analysis

1. Overview

2. Government Regulatory Impact Model

a. Government Regulatory Impact Model Key Inputs

b. Government Regulatory Impact Model Scenarios

c. Manufacturer Interviews

3. Discussion of Comments

K. Emissions Analysis

L. Monetizing Carbon Dioxide and Other Emissions Impacts

1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions

b. Development of Social Cost of Carbon Values

c. Current Approach and Key Assumptions

2. Social Cost of Other Air Pollutants

M. Utility Impact Analysis

N. Employment Impact Analysis

V. Analytical Results

A. Trial Standard Levels

B. Economic Justification and Energy Savings

1. Economic Impacts on Commercial Consumers

a. Life-Cycle Cost and Payback Period

b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback

2. Economic Impacts on Manufacturers

a. Industry Cash Flow Analysis Results

b. Direct Impacts on Employment

c. Impacts on Manufacturing Capacity

d. Impacts on Subgroups of Manufacturers

e. Cumulative Regulatory Burden

3. National Impact Analysis

a. Significance of Energy Savings

b. Net Present Value of Consumer Costs and Benefits

c. Indirect Impacts on Employment

4. Impact on Utility or Performance of Equipment

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

7. Other Factors

8. Summary of National Economic Impacts

C. Conclusions

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

B. Review Under the Regulatory Flexibility Act

1. Description and Estimated Number of Small Entities Regulated

a. Methodology for Estimating the Number of Small Entities

b. Manufacturer Participation

c. PTAC and PTHP Industry Structure and Nature of Competition

2. Description and Estimate of Compliance Requirements

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

4. Significant Alternatives to the Rule

C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act of 1969

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VII. Approval of the Office of the Secretary

I. Summary of the Final Rule

Title III, Part C
1

of the Energy Policy and Conservation Act of 1975 (EPCA or the Act) (42 U.S.C. 6291,
et. seq.
) established the Energy Conservation Program for Certain Industrial Equipment.
2

This equipment includes packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs), the subjects of this document. The current Federal energy conservation standards for PTAC and PTHP equipment were adopted in 2008. 73 FR 58772 (October 7, 2008).

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

2
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, as amended, 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, including 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)) On October 9, 2013, ASHRAE Standard 90.1-2013 raised the standards for standard-size PTAC equipment EPCA further 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))

Pursuant to EPCA, DOE must also, every six years, evaluate each class of covered equipment and publish either a notice of the determination that standards for the product do not need to be amended or a notice of proposed rulemaking including new proposed standards. (42 U.S.C. 6313(a)(6)(C)(i)) Under the six-year look back requirement, DOE must also demonstrate clear and convincing evidence supporting adoption of a national standard at a more-stringent efficiency level than that in ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(C)) Conduct of a rulemaking subsequent to ASHRAE action satisfies this six-year look back requirement.

Based on the analysis supporting this final rule, DOE is not able to show with clear and convincing evidence that energy conservation standards for PTAC and PTHP equipment at any of the considered efficiency levels that are more stringent than the minimum level specified in the ANSI/ASHRAE/IES Standard 90.1-2013 are economically justified. Therefore, in accordance with these and other statutory provisions discussed in this document, DOE is amending energy conservation standards for standard-sized PTAC equipment to be equivalent to the standards for standard-sized PTAC equipment found in ANSI/ASHRAE/IES Standard 90.1-2013.

The amended standards for PTACs, which are the minimum allowable cooling efficiency, are shown in Table I.1. These amended standards apply to all standard-sized PTAC equipment manufactured in, or imported into, the United States on or after the compliance date indicated in Table I.1. The standards for PTHP equipment remain unchanged.

Table I.1—Amended Energy Conservation Standards for Standard-Sized PTAC Equipment

Equipment class
Equipment
Category
Cooling capacity

Minimum cooling
efficiency *

Compliance date ***

PTAC
Standard Size **
<7,000 Btu/h
EER = 11.9
January 1, 2017.

≥7,000 Btu/h and ≤15,000 Btu/h
EER = 14.0 − (0.300 × Cap ††)

>15,000 Btu/h
EER = 9.5

* For equipment rated according to the DOE test procedure, Air Conditioning, Heating, and Refrigeration Institute (AHRI) Standard 310/380-2014.
** Standard size refers to PTAC equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide.
*** Amended standards shall become effective for equipment manufactured on or after a date which is two years after the effective date of the applicable minimum energy efficiency requirement in the amended ASHRAE/IES standard. (42 U.S.C. 6313(a)(6)(D)(i))
†† Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 °F outdoor dry-bulb temperature.

II. Introduction

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

A. Authority

Title III, Part C
3

of EPCA (42 U.S.C. 6291,
et. seq.
), established the Energy Conservation Program for Certain Industrial Equipment, which includes the PTAC and PTHP equipment that is the subject of this final rule.
4

In general, this program addresses the energy efficiency of certain types of commercial

and industrial equipment. Relevant provisions of the Act include definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C. 6315), and the authority to require information and reports from manufacturers (42 U.S.C. 6316).

3
For editorial reasons, upon codification in the U.S. Code, Part C was re-designated Part A-1.

4
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. Specifically, EPCA sets standards for small, large, and very large commercial package air-conditioning and heating equipment, PTACs and PTHPs, warm-air furnaces, packaged boilers, storage water heaters, instantaneous water heaters, and unfired hot water storage tanks. (42 U.S.C. 6313(a)) 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/Illuminating Engineering Society of North America (IESNA) Standard 90.1-1989), for each type of covered equipment listed in 42 U.S.C. 6313(a).

EPCA requires that DOE conduct a rulemaking to consider amended energy conservation standards for a variety of enumerated types of commercial heating, ventilating, and air-conditioning equipment (including PTACs and PTHPs) each time ASHRAE Standard 90.1 is amended with respect to the standard levels or design requirements applicable to such equipment. (42 U.S.C. 6313(a)(6)(A)) Such review is to be conducted in accordance with the procedures established for ASHRAE equipment under 42 U.S.C. 6313(a)(6). According to 42 U.S.C. 6313(a)(6)(A), for each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must publish in the
Federal Register
an analysis of the energy savings potential of amended energy efficiency standards within 180 days of the amendment of ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(i)) EPCA further directs that DOE must adopt amended standards at the new efficiency level specified in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more-stringent level would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) In addition, EPCA requires DOE to review its already-established energy conservation standards for ASHRAE equipment every six years. (42 U.S.C. 6313(a)(6)(C))

If DOE proposes an amended standard for ASHRAE equipment at levels more stringent than those in ASHRAE Standard 90.1, DOE must determine, after receiving comments on the proposed standard, whether the benefits of the standard exceed its burdens by considering, to the maximum extent practicable, the following seven factors:

(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;

(2) The savings in operating costs throughout the estimated average life of the product in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses of the products likely to result from the standard;

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

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

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

(6) The need for national energy conservation; and

(7) Other factors the Secretary considers relevant.

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

Because ASHRAE did not update its efficiency levels for PTACs and PTHPs in ANSI/ASHRAE/IES Standard 90.1-2010, DOE began this rulemaking by analyzing amended standards consistent with the six-year look back procedures defined under 42 U.S.C. 6313(a)(6)(C). However, before DOE could finalize this rule, ASHRAE acted on October 9, 2013 to adopt ANSI/ASHRAE/IES Standard 90.1-2013. This revision of ASHRAE Standard 90.1 contained amended standard levels for PTACs, thereby triggering DOE's statutory obligation under 42 U.S.C. 6313(a)(6)(A) to promulgate an amended uniform national standard at those levels unless DOE determines that there is clear and convincing evidence supporting the adoption of more-stringent energy conservation standards than the ASHRAE levels. Consequently, DOE prepared an analysis of the energy savings potential of amended standards at the ANSI/ASHRAE/IES Standard 90.1-2013 levels (as required by 42 U.S.C. 6313(a)(6)(A)(i)) and updated the proposed rule and its accompanying analyses to reflect appropriate statutory provisions, timelines, and compliance dates.

ANSI/ASHRAE/IES Standard 90.1-2013 did not contain amended standard levels for PTHPs, and the PTHP standard levels published in ANSI/ASHRAE/IES Standard 90.1-2013 are equivalent to the current Federal minimum standards for PTHPs.

DOE is adopting amended standards for PTAC equipment equivalent to those set forth in ANSI/ASHRAE/IES Standard 90.1-2013. DOE is not adopting amended standards for PTHP equipment.

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

B. Background

1. Current Standards

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

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

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

Equipment class
Equipment type
Sub-category
Cooling capacity
Efficiency level *

PTAC
Standard Size **
<7,000 Btu/h
EER = 11.7.

≥7,000 Btu/h and ≤15,000 Btu/h
EER = 13.8 − (0.300 × Cap ††).

>15,000 Btu/h
EER = 9.3.

Non-Standard Size †
<7,000 Btu/h
EER = 9.4.

≥7,000 Btu/h and ≤15,000 Btu/h
EER = 10.9 − (0.213 × Cap ††).

>15,000 Btu/h
EER = 7.7.

PTHP
Standard Size **
<7,000 Btu/h

EER = 11.9.
COP = 3.3.

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 14.0 − (0.300 × Cap ††).
COP = 3.7 − (0.052 × Cap ††).

>15,000 Btu/h

EER = 9.5.
COP = 2.9.

Non-Standard Size †
<7,000 Btu/h

EER = 9.3.
COP = 2.7.

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 10.8 − (0.213 × Cap ††).
COP = 2.9 − (0.026 × Cap ††).

>15,000 Btu/h

EER = 7.6.
COP = 2.5.

* For equipment rated according to ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide.
† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. ASHRAE/IESNA Standard 90.1-1999 also includes a factory labeling requirement for non-standard size PTAC and PTHP equipment as follows: “MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED IN NEW CONSTRUCTION PROJECTS.”
†† Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature.

2. History of Standards Rulemaking for PTACs and PTHPs

On October 29, 1999, ASHRAE adopted ASHRAE/IESNA Standard 90.1-1999, “Energy Standard for Buildings Except Low-Rise Residential Building,” which included amended efficiency levels for PTACs and PTHPs. In amending the ASHRAE/IESNA Standard 90.1-1989 levels for PTACs and PTHPs, ASHRAE acknowledged the physical size constraints among the varying sleeve sizes on the market. Specifically, the wall sleeve dimensions of the PTAC and PTHP can limit the attainable energy efficiency of the equipment. Consequently, ASHRAE/IESNA Standard 90.1-1999 used the equipment classes defined by EPCA, which are distinguished by equipment type (
i.e.,
air conditioner or heat pump) and cooling capacity, and further separated these equipment classes by wall sleeve dimensions.
5

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

5
Prior to 1999, ASHRAE/IESNA Standard 90.1 provided one efficiency standard for all PTAC and PTHP and did not have different standards by dimension. ASHRAE/IESNA Standard 90.1-1999 increased the standards for all classes and established more stringent standards for “new construction” than for “replacements.” DOE energy conservation standards for PTACs and PTHPs did not distinguish between wall sleeve dimensions for standard and non-standard size units until 2010 (for non-standard size) and 2012 (for standard size).

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

Equipment class
Equipment
Category
Cooling capacity
ASHRAE/IESNA Standard 90.1-1999 efficiency levels *

PTAC
Standard Size **
<7,000 Btu/h
EER = 11.0.

≥7,000 Btu/h and ≤15,000 Btu/h
EER = 12.5 − (0.213 × Cap ††).

>15,000 Btu/h
EER = 9.3.

Non-Standard Size †
<7,000 Btu/h
EER = 9.4.

≥7,000 Btu/h and ≤15,000 Btu/h
EER = 10.9 − (0.213 × Cap ††).

>15,000 Btu/h
EER = 7.7.

PTHP
Standard Size **
<7,000 Btu/h

EER = 10.8.
COP = 3.0.

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 12.3 − (0.213 × Cap ††).
COP = 3.2 − (0.026 × Cap ††).

>15,000 Btu/h

EER = 9.1.
COP = 2.8.

Non-Standard Size †
<7,000 Btu/h

EER = 9.3.
COP = 2.7.

≥7,000 Btu/h and ≤15,000 Btu/h

EER = 10.8 − (0.213 × Cap ††).
COP = 2.9 − (0.026 × Cap ††).

>15,000 Btu/h

EER = 7.6.
COP = 2.5.

* For equipment rated according to ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide.
† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. ASHRAE/IESNA Standard 90.1-1999 also includes a factory labeling requirement for non-standard size PTAC and PTHP equipment as follows: “MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED IN NEW CONSTRUCTION PROJECTS.”
†† Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature.

Following the publication of ASHRAE/IESNA Standard 90.1-1999, DOE analyzed whether more stringent levels would result in significant additional energy conservation of energy and be technologically feasible and economically justified. The report “Screening Analysis for EPACT-Covered Commercial [Heating, Ventilating and Air-Conditioning] HVAC and Water-Heating Equipment” (commonly referred to as the 2000 Screening Analysis)
6

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

6
“Energy Conservation Program for Consumer Products: Screening Analysis for EPACT-Covered Commercial HVAC and Water-Heating Equipment Screening Analysis,” U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. April 2000.

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

In January 2008, ASHRAE published ANSI/ASHRAE/IESNA Standard 90.1-2007, which reaffirmed the definitions and efficiency levels for PTACs and PTHPs in ASHRAE/IESNA Standard 90.1-1999. On October 7, 2008, DOE published a final rule amending energy conservation standards for PTACs and PTHPs (2008 final rule). 73 FR 58772. The 2008 final rule divided PTACs and PTHPs into two equipment classes, standard size and non-standard size, based on the wall sleeve dimensions of the equipment. Prior DOE energy conservation standards for PTACs and PTHPs had not distinguished between standard and non-standard size units. Table II.1 shows the energy conservation standards for PTACs and PTHPs, as amended by the 2008 final rule. Compared to ASHRAE/IESNA Standard 90.1-1999, the standards in the 2008 final rule were identical for non-standard sized PTACs and PTHPs, were more stringent for standard-size PTACs and PTHPs (except for standard-size PTACs with capacity greater than 15,000 Btu/h, for which the standards in ASHRAE/IESNA Standard 90.1-1999 and the 2008 final rule were equivalent).

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

On February 22, 2013, DOE published a notice of public meeting and availability of the framework document (“February 2013 Framework Document”) regarding energy conservation standards for PTACs and PTHPs. 78 FR 12252.

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

On September 16, 2014, DOE published a notice of proposed rulemaking (“September 2014 NOPR”) with proposed energy conservation standards for PTACs and PTHPs. 79 FR 55538. On October 29, 2014, DOE hosted a public meeting to discuss the proposed standards. DOE received a number of comments from interested parties; the parties are summarized in Table II.3. DOE considered these comments in the preparation of the final rule. Relevant comments, and DOE's responses, are provided in the appropriate sections of this document.

Table II.3—Interested Parties Providing Comments

Name
Abbreviation
Type *

Air-Conditioning, Heating and Refrigeration Institute
AHRI
IR

The U.S. Chamber of Commerce, the American Chemistry Council, the American Forest & Paper Association, the American Fuel & Petrochemical Manufacturers, the American Petroleum Institute, the Council of Industrial Boiler Owners, the National Association of Manufacturers, the National Mining Association, the National Oilseed Processors Association, and the Portland Cement Association
The Associations
TA

Appliance Standards Awareness Project
ASAP
EA

Appliance Standards Awareness Project, Alliance to Save Energy, American Council for an Energy-Efficient Economy, Natural Resources Defense Council, Northwest Energy Efficiency Alliance

ASAP
et al.

EA

Edison Electric Institute
EEI
U

Environmental Defense Fund, Institute for Policy Integrity at New York University School of Law, Natural Resources Defense Council, Union of Concerned Scientists

EDF
et al.

EA

Environmental Investigation Agency International
EIAI
EA

General Electric
GE
M

Goodman Manufacturing Company, L.P
Goodman
M

Pacific Gas and Electric Company
PG&E
U

Pacific Gas and Electric Company, Southern California Gas Company, San Diego Gas and Electric, Southern California Edison
CA IOUs
U

Southern Company Services
SCS
U

* IR: Industry Representative; M: Manufacturer; EA: Efficiency/Environmental Advocate; TA: Trade Association; U: Utility

III. General Discussion

A. Compliance Dates

ASHRAE adopted a revised ANSI/ASHRAE/IES Standard 90.1-2013, which increases minimum efficiency standards for PTACs. The revision of the ANSI/ASHRAE/IES standard requires that the Federal standard for PTAC equipment become effective on or after a date two years after the effective date of the applicable minimum energy efficiency requirement in the amended ANSI/ASHRAE/IES standard. (42 U.S.C. 6313(a)(6)(D)(i)) The effective date of the amended ANSI/ASHRAE/IES standards for PTACs is January 1, 2015. Therefore, PTAC equipment manufactured on or after January 1, 2017, will be required to meet the amended ANSI/ASHRAE/IES standard adopted as the Federal standard.

B. Equipment Classes and Scope of Coverage

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

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

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

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

Goodman requested that DOE consider defining PTAC and PTHP equipment as “space-constrained products” in a manner similar to the current definition in 10 CFR 430.2. Goodman stated that the standard proposed in the September 2014 NOPR would likely not warrant an increase in the size of standard size PTACs and PTHPs. However, Goodman stated that if there is a continual increase in the energy conservation standard for PTACs and PTHPs, manufacturers likely would need to increase the physical size of the equipment, which would significantly impact consumer utility and/or the cost of installation. (Goodman, No. 31 at p. 2-3)
7

DOE understands that the current definition of PTAC and PTHP equipment does not place limits on the physical dimensions of PTAC and PTHP equipment. (42 U.S.C. 6311(10)) Over the past 25 years, the industry has settled on conventional wall sleeve dimensions for PTACs and PTHPs that are 16 inches high by 42 inches wide. The installation cost for equipment that exceeds the conventional cross section would be high, because installation could require alterations to existing wall sleeve openings in building structures. DOE accounts for installation costs in the life cycle cost and payback period analyses used to evaluate increased standard levels. These analyses would account for any increased installation costs resulting from manufacturers increasing the cross section of their equipment. Therefore, DOE does not define PTACs and PTHPs as space-constrained equipment.

7
A notation in the form “Goodman, No. 31 at p. 2-3” identifies a written comment: (1) Made by Goodman Manufacturing Company (“Goodman”); (2) recorded in document number 31 that is filed in the docket of the PTAC energy conservation standards rulemaking (Docket No. EERE-2012-BT-STD-0029) and available for review at
www.regulations.gov;
and (3) which appears on page 2-3 of document number 31.

DOE is not amending energy conservation standards for non-standard size PTAC and PTHP equipment in this rulemaking because this equipment class represents a small and declining portion of the market, and due to a lack of adequate information to analyze non-standard size units. The shipments analysis conducted for the 2008 final rule projected that shipments of non-standard size PTACs and PTHPs would decline from approximately 30,000 units in 2012 (6.6% of the entire PTAC and PTHP market) to approximately 16,000 units in 2042 (2.4% of the entire PTAC and PTHP market).
8

8
See DOE's discussion regarding shipment projections for standard and non-standard PTAC and PTHP equipment and the results of shipment projections in the PTAC and PTHP energy conservation standard technical support document at:
http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/ptac_pthp_tsd/chapter_10.pdf
(Chapter 10, Section 10.5).

C. Test Procedure

DOE's current energy conservation standards for PTACs and PTHPs are expressed in terms of the energy efficiency ratio (EER, in Btu/Watt-hour) for cooling efficiency and coefficient of performance (COP, unitless) for heating efficiency.

DOE's test procedures for PTACs and PTHPs is codified at Title 10 of the Code of Federal Regulations (CFR), § 431.96. The test procedures were established on December 8, 2006 in a final rule that incorporated by reference the American National Standards Institute's (ANSI) and AHRI Standard 310/380-2004, “Standard for Packaged Terminal Air-Conditioners and Heat Pumps” (ANSI/AHRI Standard 310/380). 71 FR 71340, 71371. DOE amended the test procedures for PTACs and PTHPs on June 30, 2015 (80 FR 37136).

The test procedures applicable to PTAC and/or PTHP equipment are incorporated by reference at 10 CFR 431.95(a)(3). They include (1) AHRI Standard 310/380-2014, (2) ANSI/ASHRAE Standard 16-1983 (RA 2014), “Method of Testing for Rating Room Air Conditioners and Packaged Terminal Air Conditioners” (“ANSI/ASHRAE 16”); (2) ANSI/ASHRAE Standard 58-1986 (RA 2014), “Method of Testing for Rating Room Air Conditioner and Packaged Terminal Air Conditioner Heating Capacity” (“ANSI/ASHRAE 58”); and (3) ANSI/ASHRAE Standard 37-2009, “Methods of Testing for Rating Electrically Driven Unitary Air-Conditioning and Heat Pump Equipment” (“ANSI/ASHRAE 37”).

The California Utilities requested that the test procedure standard for PTAC and PTHP include testing of equipment in operation modes required by ASHRAE 90.1-2013. (CA IOUs, No. 33 at p. 5) The California Utilities also commented that that PTHP equipment listing a COP should certify that it meets the requirements of ASHRAE 90.1-2013 regarding control of the electric resistance strip heater during the “quick heating” mode. (CA IOUs, No. 33 at p. 4-5) Goodman commented regarding the test procedure NOPR for PTACs and PTHPs and requested that DOE maintain psychrometric testing as an option within the federal test procedures. (Goodman, No. 31 at p. 4). DOE responded to these comments in the rulemaking to amend the PTAC and PTHP test procedures. The docket Web page for the PTAC and PTHP test procedure rulemaking can be found at:
http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-TP-0032
.

D. Technological Feasibility

1. General

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

After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on equipment utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv). Section IV.B of this document discusses the results of the screening analysis for PTACs and PTHPs, particularly the designs DOE considered, those it screened out, and those that are the basis for the TSLs in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the final rule Technical Support Document (TSD).

2. Maximum Technologically Feasible Levels

When DOE adopts (or does not adopt) an amended energy conservation standard for a type or class of covered equipment, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such equipment. DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for PTACs and PTHPs in the engineering analysis using the design parameters that passed the screening analysis. The max-tech levels that DOE determined for this rulemaking are described in section IV.C.5 of this final rule and in chapter 5 of the final rule TSD.

E. Energy Savings

1. Determination of Savings

For each TSL, DOE projected energy savings from the equipment that is the subject of this rulemaking purchased in the 30-year period that begins in the year of compliance with any amended standards. The specific compliance years used in this analysis are discussed in section III.A of this final rule.
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The savings are measured over the entire lifetime of equipment purchased in the 30-year analysis period. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the base case. The base case represents a projection of energy consumption in the absence of amended efficiency standards, and it considers market forces and policies that affect demand for more efficient equipment.

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

DOE uses its national impact analysis (NIA) spreadsheet models to estimate energy savings from amended standards for the equipment that is the subject of this rulemaking. The NIA spreadsheet model (described in section IV.H of this document) calculates energy savings in site energy, which is the energy directly consumed by equipment at the locations where they are used. For electricity, DOE calculates national energy savings in terms of primary energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. For electricity and natural gas and oil, DOE also calculates full-fuel-cycle (FFC) energy savings. As discussed in DOE's statement of policy and notice of policy amendment, the FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (
i.e.,
coal, natural gas, petroleum fuels), and thus presents a more complete picture of the impacts of energy efficiency standards. 76 FR 51281 (August 18, 2011), as amended at 77 FR 49701 (August 17, 2012).

To calculate primary energy savings, DOE derives annual conversion factors from the model used to prepare the Energy Information Administration's (EIA) most recent
Annual Energy Outlook
(
AEO
). For FFC energy savings, DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products or equipment. For more information, see section IV.H.

2. Significance of Savings

To adopt standards more stringent standards for PTACs and PTHPs than the amended levels in ASHRAE Standard 90.1, clear and convincing evidence must support a determination that the standards would result in significant additional energy savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) This final rule does not adopt more stringent standards than the levels in ASHRAE Standard 90.1.

F. Economic Justification

1. Specific Criteria

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

a. Economic Impact on Manufacturers and Consumers

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

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

b. Savings in Operating Costs Compared to Increase in Price

EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered equipment compared to any increase in the price of the covered product that are likely to result from a standard. (42 U.S.C. 6313(a)(6)(B)(ii)(II)) DOE conducts this comparison in its LCC and PBP analysis.

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

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

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(III)) As discussed in section IV.H, DOE uses the spreadsheet models to project national energy savings.

d. Lessening of Utility or Performance of Equipment

In establishing classes of equipment, and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards adopted in this final rule would not reduce the utility or performance of the equipment under consideration in this rulemaking.

e. Impact of Any Lessening of Competition

EPCA directs DOE to consider the impact of any lessening of competition that is likely to result from energy conservation standards. It also directs the Attorney General of the United States (Attorney General) to determine the impact, if any, of any lessening of competition likely to result from a standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) DOE transmitted a copy of its proposed rule to the Attorney General with a request that the Department of Justice (DOJ) provide its determination on this issue. DOE received no adverse comments from DOJ regarding the proposed rule.

f. Need for National Energy Conservation

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

Amended standards are also likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production and use. DOE conducts an emissions analysis to estimate how standards may affect these emissions, as discussed in section IV.K. DOE reports the emissions impacts from each TSL it considered, in section V.B.6 of this document. DOE also reports estimates of the economic value of emissions reductions resulting from the considered TSLs, in section IV.L of this document.

g. Other Factors

EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to

be relevant. (42 U.S.C. 6295(o)(2)(B)(ii)(VII)) To the extent interested parties submit any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.” No other factors were considered in this rule.

2. Rebuttable Presumption

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

G. Additional Comments

DOE received additional comments that are not classified in the discussion sections above. Responses to these additional comments are provided below.

AHRI commented that, by proposing energy conservation standards for PTACs and PTHPs above the levels presented in ANSI/ASHRAE/IES 90.1-2013, DOE failed to recognize the Congressional intent for commercial standards-making to rely on the ASHRAE process. (AHRI, No. 35 at p. 2) EPCA authorizes the adoption of an energy conservation standard above the levels adopted by ASHRAE if clear and convincing evidence shows that adoption of such a more stringent standard would result in significant additional conservation of energy and be technologically feasible and economically justified. 42 U.S.C. 6313(a)(6)(A)(ii)(II) AHRI commented that DOE's economic justification in the NOPR falls short of the elevated “clear and convincing” requirement of proof. AHRI further commented that DOE failed to show with clear and convincing evidence that significant energy savings will result directly from the more stringent levels. (AHRI, No. 35 at p. 2-4) Following the publication of the September 2014 NOPR, DOE revised its analysis to incorporate feedback received through stakeholder comments. Based on results of its revised analysis, DOE concludes that the trial standard levels above ASHRAE 90.1-2013 would not be economically justified. This final rule amends the energy conservation standards for PTACs to be equal to PTAC standard levels in ANSI/ASHRAE/IES 90.1-2013. (42 U.S.C. 6313(a)(6)(A)(ii)(I))

SCS commented that stakeholders should have an additional opportunity to comment on the analysis after DOE completes the analytical changes that SCS requested. SCS requested that DOE issue an SNOPR if ECS levels above the ASHRAE 90.1-2013 levels are selected. (SCS, No. 29 at p. 3) This final rule amends the energy conservation standards for PTACs to be equal to PTAC standard levels in ANSI/ASHRAE/IES 90.1-2013. (42 U.S.C. 6313(a)(6)(A)(ii)(I))

AHRI objects to the use by DOE of proprietary software such as Crystal Ball to conduct its analysis in a public notice and comment rulemaking with concerns that small businesses and consumer advocacy groups would find the software cost prohibitive and unable to evaluate the models DOE used for its analysis and assumptions. AHRI states that all of DOE's models, process and software used in rulemaking under the Administrative Procedure Act should be fully and reasonably accessible. (AHRI, No. 35 at p. 4) The documentation in the TSD concerning the methods, data inputs, and assumptions used to generate LCC and PBP results provides stakeholders with sufficient information to adequately review DOE's analysis. To make its analyses accessible, DOE will run Monte Carlo simulations with its LCC spreadsheets utilizing Crystal Ball and provide the results to any stakeholder interested in researching specific scenarios.

IV. Methodology and Discussion of Related Comments

This section addresses the analyses DOE has performed for this rulemaking with regard to PTAC and PTHP. Separate subsections address each component of DOE's analyses.

DOE used several analytical tools to estimate the impact of the standards considered in this document. The first tool is a spreadsheet that calculates the LCC and PBP of potential amended or new energy conservation standards. The national impacts analysis uses a second spreadsheet set that provides shipments forecasts and calculates national energy savings and net present value resulting from potential energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (GRIM), to assess manufacturer impacts of potential standards. These three spreadsheet tools are available on the DOE docket Web page for this rulemaking:
http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0029.
Additionally, DOE used output from the latest version of EIA's
Annual Energy Outlook
(
AEO
), a widely known energy forecast for the United States, for the emissions and utility impact analyses.

A. Market and Technology Assessment

When beginning an energy conservation standards rulemaking, DOE develops information that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, and market characteristics. This activity includes both quantitative and qualitative assessments based primarily on publicly available information (
e.g.,
manufacturer specification sheets, industry publications) and data submitted by manufacturers, trade associations, and other stakeholders. The market and technology assessment presented in the September 2014 NOPR discussed scope of coverage, equipment classes, types of equipment sold and offered for sale, and technology options that could improve the energy efficiency of the equipment under examination. See chapter 3 of the final rule TSD for further discussion of the market and technology assessment. AHRI commented that it planned to provide PTAC and PTHP shipments by capacity level for 2008 through 2013. (AHRI, No. 35 at p. 8) DOE did not receive further comments or information regarding the equipment definitions or market assessments for PTACs and PTHP equipment.

GE commented that there are now PTACs on the market that incorporate a ventilation system attachment that takes in make-up air and provides supplemental conditioning for this make-up air: Dehumidification when outdoor humidity levels are high and also electric resistance heating when outdoor temperature is low. Admitting makeup air and provision of supplemental conditioning increases PTAC/PTHP energy use that is not

captured in the current test procedures for PTACs and PTHPs. GE suggested that DOE address PTACs with add-on dehumidifiers as a separate equipment class. (GE, No. 34 at p. 1) DOE acknowledges that models with add-on or integrated dehumidification systems exist in the current market. DOE believes that PTAC and PTHP units with add-on or integrated dehumidification systems currently meet the definition of PTACs and PTHPs, respectively. Thus, models with add-on or integrated dehumidification systems should be tested using the current test procedure and should meet the current energy conservation standards. Currently, the DOE test procedure does not require that the dehumidification module on such models be energized during testing, so the energy use of the dehumidification system would not be measured or accounted for in the EER metric. If DOE considers future amendments to the test procedure to account for energy consumed by the dehumidification systems, then DOE could consider designating a separate equipment class for such equipment at that time.

The September 2014 NOPR listed all of the potential technology options that DOE considered for improving energy efficiency of PTACs and PTHPs. 79 FR at 55553 (September 16, 2014). These technology options are listed in Table IV.1.

Table IV.1—Potential Technology Options for Improving Energy Efficiency of PTACs and PTHPs

Compressor Improvements

• Scroll Compressors

• Variable-speed Compressors

• Higher Efficiency Compressors.

Complex Control Boards.

Condenser and evaporator fan and fan motor improvements:

• Higher Efficiency Fan Motors

• Clutched Motor Fans.

Microchannel Heat Exchangers.

Rifled Interior Heat Exchanger Tube Walls.

Increased Heat Exchanger Area.

Hydrophobic Material Treatment of Heat Exchangers.

Re-circuiting Heat Exchanger Coils.

Improved Air Flow and Fan Design.

Heat Pipes.

Corrosion Protection.

Thermostatic Expansion Valve.

Alternate Refrigerants (such as HCFC-32).

DOE received several comments regarding the technology options listed in Table IV.1, and these comments are addressed in the relevant sections of the screening analysis in section IV.B. DOE did not receive any comments regarding technology options not listed in Table IV.1.

B. Screening Analysis

After DOE identified the technologies that might improve the energy efficiency of PTACs and PTHPs, DOE conducted a screening analysis. The purpose of the screening analysis is to evaluate the technologies that improve equipment efficiency to determine which technologies to consider further and which to screen out. DOE uses four screening criteria to determine which design options are suitable for further consideration in a standards rulemaking. Namely, design options will be removed from consideration if they are not technologically feasible; are not practicable to manufacture, install, or service; have adverse impacts on product utility or product availability; or have adverse impacts on health or safety. (10 CFR part 430, subpart C, appendix A at 4(a)(4) and 5(b)) Details of the screening analysis are in chapter 4 of the final rule TSD.

Technologies that pass through the screening analysis are referred to as “design options” in the engineering analysis. These four screening criteria do not include the propriety status of design options. DOE will only consider efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level.

In view of the above factors, DOE screened out the following design options in the September 2014 NOPR: Scroll compressors, heat pipes, and alternate refrigerants. 79 FR at 55554 (September 16, 2014). DOE received comments regarding alternative refrigerants, but did not receive comments regarding scroll compressors or heat pipes.

Alternate Refrigerants

Nearly all PTAC and PTHP equipment is designed with R-410A as the refrigerant. The Environmental Protection Agency's (EPA's) Significant New Alternatives Policy (SNAP) Program evaluates and regulates substitutes for the ozone-depleting chemicals (such as air conditioning refrigerants) that are being phased out under the stratospheric ozone protection provisions of the Clean Air Act (CAA). (42 U.S.C. 7401
et seq.
)
10

10
Additional information regarding EPA's SNAP Program is available online at:
http://www.epa.gov/ozone/snap/.

On July 9, 2014, the EPA issued a notice of proposed rulemaking proposing to list three flammable refrigerants (HFC-32 (R-32), Propane (R-290), and R-441A) as new acceptable substitutes, subject to use conditions, for refrigerant in the Household and Light Commercial Air Conditioning class of equipment. 79 FR 38811 (July 9, 2014). EIAI commented to suggest that DOE delay this PTAC/PTHP standards rulemaking until the EPA finalizes its proposed rule. (EIAI, No. 32 at p. 1) On April 10, 2015, the EPA published its final rule that allows the use of R-32, R-290, and R-441A in limited amounts in PTAC and PTHP applications. 80 FR 19454 (April 10, 2015) EEI commented that the EPA's proposed rule would allow flammable refrigerants to be used in PTACs in a limited amount. (EEI, NOPR Public Meeting Transcript, No. 37 at p. 47-8)
11

EIAI commented citing several reports that favorably compare HC-290 to R-410A. (EIAI, No. 32 at p. 4) EIAI requested that DOE fully analyze the direct mitigation impacts and the energy efficiency savings that can be achieved by using R-290 and R-441A. (EIAI, No. 32 at p. 1) EIAI commented that the amended standards for PTACs and PTHPs will not be as effective as possible if they exclude the alternative refrigerants under consideration for SNAP approval. (EIAI, No. 32 at p. 5) DOE considered the possibility of using the alternative refrigerants that EPA approved for limited use in PTAC and PTHP applications. The EPA's final rule limits the maximum design charge amount of the alternative refrigerants in PTAC and PTHP applications. For instance, for a PTAC or PTHP with cooling capacity of 9,000 Btu/h, the EPA rule imposes a maximum design charge of 140 grams of R-290 or 160 grams of R-441A. 80 FR at 19500 (April 10, 2015) In comparison, DOE reverse engineered eleven units with cooling capacities around 9,000 Btu/h and found that these units had refrigerant charges ranging from 600 grams to 950 grams and all units used refrigerant R-410A. The refrigerant charges currently used in current PTAC and PTHP designs far exceed the maximum charges that are allowed for alternative refrigerants under EPA's final rule. DOE

acknowledges that it might be possible to incorporate the new refrigerants under consideration into PTAC designs through the use of microchannel heat exchangers or tube and fin heat exchangers with smaller tube diameters than what is currently on the market. However, DOE has not seen evidence that such designs are technologically feasible. Therefore, DOE did not further consider the R-290 and R-441A substitutes proposed by EPA.

11
A notation in the form “EEI, NOPR Public Meeting Transcript, No. 37 at p. 47-8” identifies an oral comment that DOE received during the October 29, 2014, PTAC energy conservation standards NOPR public meeting, that was recorded in the public meeting transcript in the docket for the PTAC energy conservation standards rulemaking (Docket No. EERE-2012-BT-STD-0029), and is maintained in the Resource Room of the Building Technologies Program. This particular notation refers to a comment (1) made by EEI during the public meeting; (2) recorded in document number 37, which is the NOPR public meeting transcript that is filed in the docket of this energy conservation standards rulemaking; and (3) which appears on pages 47-8 of document number 37.

EIAI commented that DOE should include provisions in the rule that incentivize the use of HFC-free technologies that receive SNAP approval. (EIAI, No. 32 at p. 3) EPCA authorizes DOE to regulate the energy efficiency of certain equipment such as PTACs and PTHPs. (42 U.S.C. 6311-6317) EPCA does not authorize DOE to regulate or incentivize the use or substitution of alternative refrigerants.

The California Utilities stated that DOE should research potential efficiency improvements, for future years, that can be achieved through the use of alternative refrigerants. (CA IOUs, No. 33 at p. 4) EIAI commented that the proposed rule does not address the executive action announced on September 16, 2014, that encourages research and development of next generation cooling technologies, including alternatives to hydrofluorocarbon (HFC) refrigerants.
12

(EIAI, No. 32 at p. 1) DOE responds that the engineering analysis considers technology options that are technologically feasible. DOE considers technologies incorporated in commercially available equipment or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i). The research and development activities described by the California Utilities and EIAI do not include options that are technologically feasible at this time.

12
EIAI's comment referenced a White House fact sheet describing the Executive Action at:
http://www.whitehouse.gov/the-press-office/2014/09/16/fact-sheet-obama-administration-partners-private-sector-new-commitments.

EIAI suggested that DOE evaluate the commercialized PTACs and PTHPs using alternative refrigerants currently available in international markets. (EIAI, No. 32 at p. 6) ASAP
et al.
commented that manufacturers may have the option of utilizing alternative refrigerants to improve efficiency, even though the engineering analysis does not include alternative refrigerants as a technology option. (ASAP
et al.,
No. 30 at p. 3) DOE is not aware of any PTAC or PTHP model that uses alternative refrigerants approved by the EPA SNAP Program and achieves higher efficiency than equipment using R-410A.

DOE is not aware of any SNAP-approved refrigerants, or any refrigerants that have been proposed for SNAP approval, that are known to enable better efficiency than R-410A for PTAC and PTHP equipment. Hence, DOE did not consider alternate refrigerants for further analysis.

Other Technologies Not Considered in the Engineering Analysis

Typically, energy-saving technologies that pass the screening analysis are evaluated in the engineering analysis. However, some technologies are not included in the analysis for other reasons, including: (1) Available data suggest that the efficiency benefits of the technology are negligible; or (2) data are not available to evaluate the energy efficiency characteristics of the technology. Accordingly, in the September 2014 NOPR, DOE eliminated the following technologies from consideration in the engineering analysis based upon these three additional considerations: re-circuiting heat exchanger coils, rifled interior tube walls, microchannel heat exchangers, variable speed compressors, complex control boards, corrosion protection, hydrophobic material treatment of heat exchangers, clutched motor fans, and thermostatic expansion valves. 79 FR at 55555 (September 16, 2014). DOE received a comment on variable speed compressors.

Variable Speed Compressors

SCS commented that variable speed operation would enable PTACs and PTHPs to provide better humidity control, and that the current efficiency measurement of EER does not provide incentive to go to variable speed operation. (SCS, NOPR Public Meeting Transcript, No. 37 at p. 164) While the efficiency measurement of EER would not capture the benefits of variable speed operation, the existing EER (full load) metric accurately reflects equipment efficiency during the year because PTACs and PTHPs are believed to more often operate at full load rather than part load conditions. Thus, DOE did not consider variable speed compressors further in this analysis.

The technologies that DOE identified for consideration in the engineering analysis are listed in Table IV.2 and described briefly below.

Table IV.2—Design Options Retained for Engineering Analysis

Compressor Improvements.

• Higher Efficiency Compressors.
13

Condenser and evaporator fan and fan motor improvements:

• Higher Efficiency Fan Motors.

Increased Heat Exchanger Area.

Improved Air Flow and Fan Design.

Higher Efficiency Compressors

Manufacturers

can improve the energy efficiency of PTAC and PTHP units by incorporating more efficient components, such as high efficiency compressors, into their designs. Goodman commented to ask whether DOE included predictions of efficiency increases over time for compressors. (Goodman, NOPR Public Meeting Transcript, No. 37 at p. 28) DOE did not include predictions of compressor efficiency changes over time. DOE observed in reverse engineering analysis that PTAC and PTHP manufacturers use several different compressor models with a wide range of efficiency ratings. The capacities and efficiencies of the different compressors observed in the reverse engineering analysis are presented in the revised Tables 5.6.1 and 5.6.2 published in document 26 of the rulemaking docket at
http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0029-0026.
Manufacturers of PTACs and PTHPs may improve the unit efficiency of baseline models by selecting high efficiency compressors currently available in the market.

13
Currently, all PTAC and PTHP manufacturers incorporate rotary compressors into their equipment designs. DOE is referring to rotary compressors throughout this document unless specifically noted.

Higher Efficiency Fan Motors

Manufacturers of baseline PTACs and PTHPs use permanent split capacitor (PSC) fan motors due to their modest cost, compact design, and durability. DOE believes any further gains in PSC fan motor efficiency will be difficult to achieve, and has thus eliminated improvement of PSC fan motors as a potential avenue for efficiency improvement. PTAC and PTHP original equipment manufacturers (OEMs) can, however, use permanent magnet (PM) motors. Such motors typically offer higher efficiencies than PSC-based fan motors, but these improvements come with increased costs for the motor unit and control hardware. Several manufacturers use PM motors in their higher-efficiency PTAC and PTHP models.

Increased Heat Exchanger Area

Manufacturers of PTACs and PTHPs increase unit efficiency by increasing heat exchanger size, either through elongating the face of the heat exchanger or increasing the number of heat exchanger tube rows. Standard size PTACs are dimensionally constrained by the standard 16″ x 48″ wall opening in which they fit. This constraint limits the size of heat exchanger that can fit in the unit and thus limits the efficiency gains that may be achieved by increasing heat exchanger size. At least one manufacturer has incorporated bent heat exchanger coils to increase the heat exchanger face area while remaining inside the standard size unit constraints. AHRI commented that DOE did not account for the additional pressure drop from bent heat exchangers in the analysis. (AHRI, No. 35 at p. 12) DOE interprets this comment to mean that AHRI expects bent heat exchangers to increase the airside pressure drop across the heat exchangers leading to increased fan power consumption and lower unit efficiency. DOE considered any pressure drop impacts associated with bent heat exchangers. In its analysis, DOE considered at least three units that contained a bent heat exchanger. DOE based its analysis on the measured performance of these units (one of which performed at the max-tech efficiency level). The measured performance of these units includes the impact of additional pressure drop associated with the bent heat exchangers.

AHRI asked what the DOE analysis showed as the efficiency improvement from implementing improved air flow design and increased heat exchanger area. (AHRI, NOPR Public Meeting Transcript, No. 37 at p. 38) The combined efficiency level and cost assessment method used in this analysis does not separately evaluate the efficiency effects of individual design options. Among the units that DOE reverse engineered in the engineering analysis, the most efficient units had injection molded fan blades and volutes and achieved greater heat exchanger area within the constrained unit dimensions by incorporating a bent outdoor heat exchanger coil.

Improved Air Flow and Fan Design

Manufacturers of PTACs and PTHPs currently use several techniques to shape and direct airflow inside PTAC and PTHP units. Different equipment designs may have higher or lower resistance to air flow. Equipment designs with lower resistance to air flow will require lower fan power input, which would improve unit efficiency. Among the units that DOE reverse engineered in the engineering analysis, the most efficient units had injection molded fan blades and volutes to direct airflow. Manufacturers may improve unit efficiency improving fan blade designs, optimizing air paths, and optimizing fan selection.

Goodman commented that utilizing design features such as improved airflow and fan design would lead to redesigned products larger than the wall footprints for standard size PTACs and PTHPs. (Goodman, No. 31 at p. 3) In contrast, Ebm-papst commented in the framework phase that efficiency gains may result in existing units from optimizing the fan selection and design so that the fan's operational efficiency in the unit matches the fan's peak efficiency exactly. (Ebm-papst, No. 8 at p. 1) DOE's analysis did not consider any such larger PTAC/PTHP designs. Any improvement associated with improved airflow and fan design represented in the analysis is associated with the existing designs evaluated in the analysis, which conform to size of currently available PTACs and PTHPs.

Goodman commented that the technology options of bent heat exchangers [to increase heat exchanger area] and improved air flow are contradictory because bent heat exchangers will restrict air flow. (Goodman, NOPR Public Meeting Transcript, No. 37 at p. 82) DOE notes that, among the units that DOE reverse engineered in the engineering analysis, the most efficient units at both representative capacities of 9,000 Btu/h and 15,000 Btu/h incorporated a bent outdoor heat exchanger coil.

Based on all available information, DOE did not change the screening analysis between the September 2014 NOPR and this final rule. Additional detail on the screening analysis is contained in chapter 4 of the final rule TSD.

C. Engineering Analysis

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

1. Methodology

DOE has identified three basic methods for developing cost-efficiency curves: (1) The design-option approach, which provides the incremental costs of adding design options to a baseline model that will improve its efficiency (
i.e.,
lower its energy use); (2) the efficiency-level approach, which provides the incremental costs of moving to higher energy efficiency levels, without regard to the particular design option(s) used to achieve such increases; and (3) the reverse-engineering (or cost-assessment) approach, which provides “bottom-up” manufacturing cost assessments for achieving various levels of increased efficiency, based on teardown analyses (or physical teardowns) providing detailed data on costs for parts and material, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.

In the February 2013 Framework Document and the September 2014 NOPR, DOE described the approach for this engineering analysis that combines an efficiency-level approach with a cost-assessment approach to determine the relationship between cost and efficiency. 78 FR 12252 (February 22, 2013) and 79 FR at 55556-9 (September 14, 2014). The range of efficiency levels and costs considered were represented by the test data and/or ratings of specific PTAC and PTHP models available in the market that included different groups of design options.

DOE identified the efficiency levels for the analysis based on the range of rated efficiencies of PTAC and PTHP equipment in the AHRI database. DOE selected PTAC and PTHP equipment that was representative of the market at different efficiency levels, then purchased, tested, and reverse engineered the selected equipment. DOE used the cost-assessment approach to determine the manufacturing production costs (MPCs) for PTAC and PTHP equipment across a range of efficiencies from the baseline to max-tech efficiency levels. DOE observed that manufacturers used different approaches to improve unit energy efficiency. AHRI commented that it is not clear what efficiency gains the equipment will achieve based on implementing the technology options that DOE has considered. (AHRI, NOPR Public Meeting Transcript, No. 37 at p. 10) DOE notes that the combined efficiency level and cost-assessment approach does not separately evaluate the effects of individual design options and does not prescribe a particular set of design options for manufacturers to

improve unit efficiency. Instead, it selects units spanning a range of efficiency levels, estimates MPCs for those units, and constructs a cost curve to define the relationship between energy efficiency and MPC.

Where feasible, DOE selected models for reverse engineering with low and high efficiencies from a given manufacturer, at both representative cooling capacity levels and for both PTACs and PTHPs. The methodology used to perform reverse engineering analysis and derive the cost-efficiency relationship is described in chapter 5 of the final rule TSD. ASAP
et al.
commented to express their support for DOE's approach to the engineering analysis. (ASAP
et al.,
No. 30 at p. 3)

2. Equipment Classes Analyzed

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

For the PTAC and PTHP equipment classes with a cooling capacity greater than or equal to 7,000 Btu/h and less than or equal to 15,000 Btu/h, the energy efficiency equation characterizes the relationship between the EER of the equipment and cooling capacity (
i.e.,
EER is a function of the cooling capacity of the equipment) in which EER decreases as capacity increases. For all cooling capacities less than 7,000 Btu/h and all cooling capacities greater than 15,000 Btu/h, the EER is calculated based on the energy efficiency equation for 7,000 Btu/h or 15,000 Btu/h, respectively.

For PTACs and PTHPs, DOE focused its analysis on high-shipment-volume cooling capacities spanning the range of available equipment. Based on manufacturer interviews,
14

DOE found that the majority of shipments are in the classes with cooling capacity between 7,000 Btu/h to 15,000 Btu/h (see chapter 9 of the final rule TSD for more details on the shipments data). As described in the September 2014 NOPR, DOE selected two cooling capacities for analysis: 9,000 Btu/h and 15,000 Btu/h. 79 FR at 55557. DOE selected 9,000 Btu/h as a representative capacity because the AHRI Directory lists more PTAC models around the 9,000 Btu/h capacity level than any other capacity level. DOE selected 15,000 Btu/h as a representative capacity in response to manufacturer comments stating that it is technically challenging to achieve high efficiency in 15,000 Btu/h models and the analysis should explicitly analyze the 15,000 Btu/h capacity. AHRI commented that the two equipment sizes that DOE selected for testing and teardowns may not accurately represent the full capacity range of the product category. AHRI observed that a greater number of high-efficiency models are available at the 9,000 Btu/h capacity compared with other unit capacities. (AHRI, NOPR Public Meeting Transcript, No. 37 at p. 10) AHRI observation does not indicate that a cost/efficiency relationship determined based on the 9,000 Btu/h and 15,000 Btu/h capacities would not be representative of the full range of cooling capacities. The design changes that DOE observed in units at the representative capacities of 9,000 Btu/h and 15,000 Btu/h can be interpolated and extrapolated to include other common capacities (such as 7,000 Btu/h and 12,000 Btu/h) that were not directly analyzed in the reverse engineering analysis. It would not be feasible to conduct teardown analysis for every cooling capacity available in the market. DOE selected the representative cooling capacities of 9,000 and 15,000 Btu/h in response to comments from the framework stage of this rulemaking; available information indicates that these capacities accurately represent the markets for PTAC and PTHP equipment.

14
DOE conducted interviews with high- and low-volume PTAC and PTHP manufacturers, and collected information regarding shipments of PTACs and PTHPs at different cooling capacity levels.

Using its analysis of two cooling capacities, DOE investigated the slope of the energy efficiency-capacity relationship. Further details on this relationship are provided in chapter 5 of the final rule TSD.

3. Cost Model

DOE developed a manufacturing cost model to estimate the MPCs of PTAC and PTHP units over a range of cooling efficiencies. The cost model is a spreadsheet model that converts the materials and components in the bills of materials for PTAC and PTHP equipment into dollar values based on the price of materials, average labor rates associated with fabrication and assembling, and the cost of overhead and depreciation, as determined based on manufacturer interviews and equipment cost information compiled by DOE. To convert the information in the bills of materials into dollar values, DOE collected information on labor rates, tooling costs, raw material prices, and other factors. For purchased parts, the cost model estimates the purchase price based on volume-variable price quotations and detailed discussions with manufacturers and component suppliers. For fabricated parts, the prices of raw metal materials (
e.g.,
tube, sheet metal) are estimates on the basis of five-year averages (from 2009 to 2014). DOE estimated the cost of transforming the raw materials into finished parts based on current industry pricing. Further details on the manufacturing cost analysis are provided in chapter 5 of the final rule TSD.

Developing the cost model involved disassembling PTACs and PTHPs at various efficiencies, analyzing the materials and manufacturing processes, and estimating the costs of purchased components. DOE also collected supplemental component cost data from manufacturers of PTAC and PTHP equipment. DOE reports the MPCs in aggregated form to maintain confidentiality of sensitive component data. DOE obtained input from stakeholders on the MPC estimates and assumptions to confirm accuracy. DOE used the cost model for all of the representative cooling capacities within the PTAC and PTHP equipment classes. Chapter 5 of the final rule TSD provides details and assumptions of the cost model.

4. Baseline Efficiency Level

The engineering analysis estimates the incremental costs for equipment with efficiency levels above the baseline in each equipment class. For the purpose of the engineering analysis, DOE used the engineering baseline EER as the starting point to build the cost efficiency curves. As discussed in section III.A, ANSI/ASHRAE/IES Standard 90.1-2013 was issued in the course of this rulemaking, and this revised standard amended minimum efficiency levels for PTACs, raising standards by 1.8% above the Federal minimum energy conservation standards for PTACs. DOE is obligated either to adopt those standards developed by ASHRAE or to adopt levels more stringent than the ASHRAE levels if there is clear and convincing evidence in support of doing so. (42 U.S.C. 6313(a)(6)(A)). For the purposes of calculating energy savings over the ANSI/ASHRAE/IES Standard 90.1-2013, DOE identified the ANSI/ASHRAE/IES Standard 90.1-2013 as the baseline efficiency level.
15

SCS agreed that it is correct to use ASHRAE 90.1-

2013 as the baseline for analysis. (SCS, NOPR Public Meeting Transcript, No. 37 at p. 26-27)

15
DOE's estimates of potential energy savings from an amended energy conservation standard are further discussed in section IV.H.

The baseline efficiency levels for each equipment class are presented in Table IV.3.

Table IV.3—Baseline Efficiency Levels

Equipment type
Equipment class
Baseline efficiency equation
Cooling capacity

Baseline
efficiency
level

PTAC
Standard Size
EER = 14.0 − (0.300 × Cap †/1000)

9,000 Btu/h
15,000 Btu/h

11.3 EER.
9.5 EER.

PTHP
Standard Size
EER = 14.0 − (0.300 × Cap †/1000)

9,000 Btu/h
15,000 Btu/h

11.3 EER.
9.5 EER.

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

5. Incremental Efficiency Levels

DOE examined performance data of standard size PTACs and PTHPs published in the AHRI Directory and on manufacturers' Web sites to select efficiency levels for consideration in the rulemaking. DOE used Web site-published data as an initial screening mechanism to select units for reverse engineering; a third party test facility verified the actual performance of the units selected for analysis.

DOE analyzed the baseline efficiency level and efficiency levels that are 2.2%, 6.2%, 10.2%, 14.2%, and 16.2% more efficient than the ANSI/ASHRAE/IES Standard 90.1-2013 baseline.
16

The rated efficiencies of PTACs listed in the AHRI Directory extend up to 17.5% above the ANSI/ASHRAE/IES Standard 90.1-2013 baseline efficiency level. However, based on testing of individual units conducted for this rulemaking, DOE considered efficiencies up to only 16.2% above the baseline level. DOE expects that PTAC equipment without a reversing valve should be able to attain the cooling mode efficiencies as least as high as PTHPs. This is because the reversing valve of a PTHP, which allows for reverse cycle (heat pump) operation and is not required in a PTAC, imposes pressure drop which would reduce PTHP efficiency.

16
DOE notes that these efficiency levels are 4%, 8%, 12%, 16%, and 18% more efficient than the amended PTAC standards that became effective on October 8, 2012.

For the heating efficiency of PTHPs, DOE correlated the COP associated with each efficiency level with the efficiency level's EER based on COP and EER ratings from the AHRI database. DOE established a representative curve based on this data to obtain a relationship for COP in terms of EER. DOE used this relationship to select COP values corresponding to each efficiency level. This approach considers the fact that a PTHP's EER and COP are related and cannot be independently analyzed, while basing the analysis on a representative average relationship between the two efficiency metrics. To determine the typical relationship between EER and COP, DOE examined the entire database of rated equipment and determined a relationship based on the EER and COP ratings of the collective body of certified PTAC and PTHP equipment.

The efficiency levels for each equipment class that DOE considered are presented in Table IV.4. The percentages associated with efficiency levels (ELs) indicate the percentage above the baseline level for PTACs and PTHPs. In the September 2014 NOPR, DOE presented efficiency levels using percentages relative to the current Federal standard for PTACs. 79 FR at 55559. This method of presentation caused confusion among stakeholders. AHRI and SCS commented presenting efficiency increases as a percentage above current Federal minimum standards for PTACs was confusing. (AHRI, NOPR Public Meeting Transcript, No. 37 at p. 77; SCS, NOPR Public Meeting Transcript, No. 37 at p. 78) In response to these comments, DOE has changed the base value used in determining the percentage increase of EER so that the percentages represents increases above the ASHRAE 90.1-2013 efficiency level rather than increases above the current DOE standard. The EER values for this baseline are equal to those for the DOE PTHP standards and the ASHRAE 90.1-2013 PTHP standards. Table IV.4 presents percentages relative to the new baseline level, which is the same for PTACs and PTHPs.

Table IV.4—Incremental Efficiency Levels for Standard Size PTACs and PTHPs

Equipment type

Cooling
capacity

Efficiency levels (percentages relative to baseline)
Current Federal PTAC ECS *

EL1,
Baseline **

EL2, 2.2%
EL3, 6.2%
EL4, 10.2%
EL5, 14.2%

EL6, 16.2%
(MaxTech)

PTAC
All, EER
13.8 − (0.300 × Cap †)
14.0 − (0.300 × Cap †)
14.4 − (0.312 × Cap †)
14.9 − (0.324 × Cap †)
15.5 − (0.336 × Cap †)
16.0 − (0.348 × Cap †)
16.3 − (0.354 × Cap †)

9,000 Btu/h
11.1 EER
11.3 EER
11.5 EER
12.0 EER
12.4 EER
12.9 EER
13.1 EER

15,000 Btu/h
9.3 EER
9.5 EER
9.7 EER
10.0 EER
10.4 EER
10.8 EER
11.0 EER

Equipment type
Cooling capacity
N/A
Baseline **
EL1, 2.2%
EL2, 6.2%
EL3, 10.2%
EL4, 14.2%

EL5, 16.2%
(MaxTech)

PTHP
All, EER
N/A
14.0 − (0.300 × Cap †)
14.4 − (0.312 × Cap †)
14.9 − (0.324 × Cap †)
15.5 − (0.336 × Cap †)
16.0 − (0.348 × Cap †)
16.3 − (0.354 × Cap †)

All, COP
N/A
3.7 − (0.052 × Cap †)
3.8 − (0.058 × Cap †)
4.0 − (0.064 × Cap †)
4.1 − (0.068 × Cap †)
4.2 − (0.070 × Cap †)
4.3 − (0.073 × Cap †)

9,000 Btu/h
N/A

11.3 EER
3.2 COP

11.5 EER
3.3 COP

12.0 EER
3.4 COP

12.4 EER
3.5 COP

12.9 EER
3.6 COP

13.1 EER
3.6 COP

15,000 Btu/h
N/A

9.5 EER
2.9 COP

9.7 EER
2.9 COP

10.0 EER
3.0 COP

10.4 EER
3.1 COP

10.8 EER
3.2 COP

11.0 EER
3.2 COP

* This level represents the current Federal minimum for PTAC equipment.
** This level represents the ANSI/ASHRAE/IES Standard 90.1-2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline for PTAC and PTHP equipment since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)). DOE notes that the Baseline level is 1.8% higher than current Federal ECS for PTAC equipment, but is equivalent to current Federal ECS for PTHP equipment. For PTAC equipment, the Baseline level is also termed EL1, and is compared to current Federal ECS in the energy savings analysis in section V.B.3.a.
† Cap means cooling capacity in thousand Btu/h at 95°F outdoor dry-bulb temperature.

6. Equipment Testing and Reverse Engineering

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

DOE conducted testing on each unit according to the DOE test procedure outlined at 10 CFR 431.96. At the time of testing, the DOE test procedure incorporated by reference AHRI Standard 310/380-2004, which itself incorporates ANSI/ASHRAE 16, ANSI/ASHRAE 37, and ANSI/ASHRAE 58. In June, 2015, DOE revised the test procedure to incorporate by reference AHRI Standard 310/380-2014. The amendments adopted in the revised test procedure do not affect measured energy use. DOE then conducted physical teardowns on each test unit to develop a manufacturing cost model and to evaluate key design features (
e.g.,
improved heat exchangers, compressors, fans/fan motors).

7. Cost-Efficiency Results

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

Table IV.5—Incremental Manufacturing Production Costs (MPC) for Standard Size PTACs and PTHPs

Equipment type
Cooling capacity
Efficiency levels
EL1, baseline *
EL2
EL3
EL4
EL5
EL6

PTAC
9,000 Btu/h
$0.00
$4.44
$13.08
$22.41
$32.45
$37.73

15,000 Btu/h
0.00
4.26
15.93
30.97
49.38
59.86

Baseline *
EL1
EL2
EL3
EL4
EL5

PTHP
9,000 Btu/h
$0.00
$4.44
$13.08
$22.41
$32.45
$37.73

15,000 Btu/h
0.00
4.26
15.93
30.97
49.38
59.86

* This level represents the ANSI/ASHRAE/IES Standard 90.1-2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)). DOE notes that the Baseline level is 1.8% higher than current Federal ECS for PTAC equipment, but is equivalent to current Federal ECS for PTHP equipment. For PTAC equipment, the Baseline level is also termed EL1.

AHRI commented that DOE should publish the design options associated with different energy efficiency levels. (AHRI, NOPR Public Meeting Transcript, No. 37 at p. 85) Goodman requested that DOE clarify exactly what designs can help achieve the energy savings associated with higher efficiency levels. (Goodman, NOPR Public Meeting Transcript, No. 37 at p. 82) Goodman also commented that DOE should publish the efficiency improvements associated with individual design options, as DOE has done for previous rulemakings. (Goodman, NOPR Public Meeting Transcript, No. 37 at p. 86-87) For this rulemaking, DOE used a combined efficiency level and reverse engineering approach. This approach is unlike the design option approach in that it does not specify the options that manufacturers may use to achieve different efficiency levels. During the teardown analysis, DOE observed that different manufacturers use different design options to improve unit efficiency, and there is no single path to improved efficiency. Stakeholders interested in the specific design options used in different units should refer to chapter 5 of the final rule TSD, where DOE published the design options for each unit observed in the teardown analysis in Tables 5.6.1 and 5.6.2.

Goodman commented that the analysis did not capture the design changes that manufacturers made to increase from the current Federal minimum to the minimum level in ANSI/ASHRAE/IES Standard 90.1-2013, which for PTAC equipment is 1.8% more stringent than the current Federal minimum. (Goodman NOPR Public Meeting Transcript, No. 37 at p. 28) The efficiency level approach used in this analysis does capture the design changes that manufacturers used to

increase equipment efficiency from the current Federal minimum up to the ANSI/ASHRAE/IES Standard 90.1 level. Because DOE used an efficiency level approach rather than a design option approach, however, the design options used to attain the initial efficiency improvement are not specified in the analysis. DOE did examine units with efficiency levels above and below the ANSI/ASHRAE/IES Standard 90.1 level. DOE based its cost analysis on the observed differences in designs between these units. The engineering analysis does not account for the incremental manufacturing costs associated with an increase from the current Federal minimum up to the ANSI/ASHRAE/IES Standard 90.1-level. The analysis did not intend to capture these costs because DOE is required to, at a minimum, adopt the ANSI/ASHRAE/IES Standard 90.1 level as the Federal standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) DOE investigated what efficiency levels higher than the ASHRAE 90.1 level are cost effective, rather than evaluating whether the ASHRAE 90.1 level is cost effective as a step above the current DOE PTAC standard. DOE revised the MIA analysis in section IV.J to include an additional set of product conversion costs intended to capture the R&D and testing and certification burden of meeting amended ASHRAE standards in 2015. The results of the MIA analysis can be found in chapter 12 of the final rule TSD.

To convert the MPCs into manufacturer selling prices (MSPs), DOE applied non-production cost markups to the MPCs estimated in the engineering analysis for each equipment class and efficiency level. Based on publicly-available financial information for manufacturers of PTACs and PTHPs as well as feedback received from manufacturers during interviews, DOE assumed the average non-production cost baseline markup—which includes SG&A expenses, R&D expenses, interest, and profit—to be 1.27 for all PTAC and PTHP equipment classes. As part of its manufacturer impact analysis, DOE then modeled multiple markup scenarios to capture a range of potential impacts on manufacturers following implementation of amended energy conservation standards. These scenarios lead to different markup values, which, when applied to MPCs, result in varying revenue and cash flow impacts. Further details on manufacturer markups can be found in section IV.J.2 and in chapter 12 of the final rule TSD.

D. Markups To Determine Equipment Price

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

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

DOE identified and used four distribution channels for PTACs and PTHPs to describe how the equipment passes from the manufacturer to the consumer. Equipment is distributed to two end-use applications: New construction and replacement. In the new construction market, the manufacturer sells the equipment directly to the consumer through a national account. In the replacement market, the manufacturer sells to a wholesaler, who sells to a mechanical contractor, who in turn sells the equipment to the consumer or end user. In the third distribution channel, used in both the new construction and replacement markets, the manufacturer sells the equipment to a wholesaler. The wholesaler sells the equipment to a mechanical contractor, who sells it to a general contractor, who in turn sells the equipment to the consumer or end user. In the fourth distribution channel, also used in both the new construction and replacement markets, the manufacturer sells the equipment to a wholesaler, who directly sells to the purchaser.

Table IV.6—Distribution Channels for PTAC and PTHP Equipment

Channel 1
Channel 2
Channel 3
Channel 4

Manufacturer (through national accounts)

Manufacturer
Wholesaler

Manufacturer
Wholesaler

Manufacturer.
Wholesaler.

Mechanical Contractor

Mechanical Contractor.
General Contractor.

Consumer
Consumer
Consumer
Consumer.

DOE also estimated percentages of the total sales in the new construction and replacement markets for each of the four distribution channels, as shown in Table IV.7.

Table IV.7—Share of Market by Distribution Channel for PTAC and PTHP Equipment

Distribution channel

New construction
(%)

Replacement
(%)

Wholesaler-Consumer
30
15

Wholesaler-Mech Contractor-Consumer
0
25

Wholesaler-Mech Contractor-General Contractor-Consumer
38
60

National Account
32
0

Total
100
100

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

DOE developed the markups for each step of the distribution channels based on available financial data. DOE utilized updated versions of the following data sources: (1) The Heating, Air Conditioning & Refrigeration Distributors International
2012 Profit Report

17

to develop wholesaler markups; (2) the Air Conditioning Contractors of America's (ACCA)
2005 Financial Analysis for the HVACR Contracting Industry

18

and U.S. Census Bureau economic data
19

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.
20

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

17
“2012 Profit Report,” Heating Air Conditioning & Refrigeration Distributors International. February 2012. Available online at:
www.hardinet.org/Profit-Report
.

18
“2005 Financial Analysis for the HVACR Contracting Industry,” Air Conditioning Contractors of America. 2005.

19
“Plumbing, Heating, and Air-Conditioning Contractors. Sector 23: 238220. Construction: Industry Series, Preliminary Detailed Statistics for Establishments, 2007,” U.S. Census Bureau. 2007.

20
“2007 Economic Census, Construction Industry Series and Wholesale Trade Subject Series,” U.S. Census Bureau. Available online at
https://www.census.gov/newsroom/releases/archives/construction_industries/2009-07-27_economic_census.html.

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

DOE requested comment regarding the selected channels and distribution of shipments through the channels in the NOPR. AHRI stated that some national accounts purchase replacements through direct sales. (AHRI, No. 35 at p. 14) DOE did not find any data to indicate the magnitude of PTAC/PTHP replacement sales through national accounts. However, DOE understands that in general replacement purchases of PTACs and PTHPs are not in large volume as one would expect in national accounts. Thus, DOE believes that this channel is likely to be a minimal part of the market. DOE therefore retained the set of markups used in the September 2014 NOPR.

E. Energy Use Analysis

The energy use analysis provides estimates of the annual unit energy consumption (UEC) of PTAC and PTHP equipment at the considered efficiency levels. The annual UECs are used in subsequent analyses.

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

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

SCS expressed concern that DOE's adjustments to UEC estimates for higher efficiency levels are based on sensible heat only. SCS recommended that the energy modeling be based on compliance with ASHRAE 62.1-2010 ventilation standard. (SCS, No. 29 at p. 2) DOE notes that UEC estimates for higher efficiency levels include latent heat because the UECs upon which estimates are based include latent heat. DOE appreciates SCS's recommendation to comply with ventilation requirements in the simulation to ASHRAE 62.1-2010. As the simulations exceed the ventilation requirements of ASHRAE 62.1-2010, DOE does not intend to make modifications. SCS also suggested that DOE examine the occupancy rates for buildings where PTACs and PTHPs would be installed, since that would affect their operating hours. (SCS, NOPR Public Meeting Transcript, No. 37 at p. 103) The simulations account for variations in occupancy rates.

AHRI asked why DOE included the space conditioning load of lobby and lounge spaces, which are typically not conditioned by PTACs and PTHPs, in the building load of the energy simulations, suggesting that this is something that DOE should correct. (AHRI, No. 35 at p. 8) While DOE's whole-building simulations did include the energy consumption from the equipment conditioning the lobby and lounge zones, the per-unit energy consumption excluded from its total energy use the energy of such spaces prior to dividing by the number of PTAC or PTHP equipment conditioning the guest rooms.

AHRI suggested that DOE account for changes to ASHRAE 90.1 in its energy use analysis, incorporating at a minimum the following control-related provisions from ASHRAE 90.1-2013: manual changeover or dual setpoint thermostat; controls that prevent supplemental electric resistance strip heating when the heating load can be met; and zone thermostatic controls for off-hour, automatic shutdown, and setback. (AHRI, No. 35 at p. 7; AHRI, NOPR Public Meeting Transcript, No. 37 at p. 102) Similarly, SCS and Goodman stated that DOE did not include the control requirements from ASHRAE Standard 90.1-2013 and thus modifications to the simulations would ultimately reduce the UEC of PTACs and PTHPs. (SCS, No. 29 at p. 1; Goodman, No. 31 at p. 5) The control provisions of ASHRAE Standard 90.1-2013 would in certain situations save energy and were included in the energy use simulations performed for the 2008 PTAC and PTHP final rule, which were in turn the basis for this analysis. PG&E also asked whether energy from defrost and from electric resistance heating below 40 °F was included in the simulations. (PG&E, NOPR Public Meeting Transcript, No. 37 at pp. 103-105) DOE notes that energy from defrost and from electric resistance heating below 40 °F were included in the energy use analysis.

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

AHRI asked why national UEC estimates for PTACs are lower in the ASHRAE Standard 90.1-2013 notice of data availability and request for public comment (ASHRAE Standard 90.1-2013 NODA) (79 FR 20114) than in the September 2014 NOPR. (AHRI, No. 35 at p. 9) For the analysis in the ASHRAE Standard 90.1-2013 NODA, DOE did not use a multiplier to account for the weather as the data were not finalized at the time. Taking these multipliers into account, energy use increased in the UECs submitted for the September 2014 NOPR.

In the framework stage of this rulemaking, AHRI and Goodman commented that new requirements for minimum air filter effectiveness finalized in 2013 for ASHRAE Standard 62.1 would increase pressure drop and increase fan power. (AHRI, No. 11 at p. 4; Goodman, No. 13 at p. 6) In the September 2014 NOPR, DOE cited a study
21

that found the extent of the impact on energy consumption due to the change in filter effectiveness at the levels finalized in ASHRAE Standard 62.1 is less than 1%. Based on this finding, DOE concluded that the change in ASHRAE Standard 62.1 minimum air filter effectiveness requirements would not significantly impact the energy use outputs. 79 FR at 55561 (September 16, 2014). AHRI commented that the study cited by DOE was for residential products and stated that the results showing negligible impact cannot be extrapolated to commercial equipment. As such, AHRI stated that DOE must consider the energy and monetary implications for manufacturers to comply with the increased filtration requirement. (AHRI, No. 35 at p. 14) DOE understands that manufacturers have thus far not used filters rated with a Minimum Efficiency Reporting Value (MERV) filters in their PTAC equipment, and there is no reason to believe that they will begin using MERV-rated filters in the near term. Thus, the shift in ASHRAE 62.1 from requiring MERV 6 filter to requiring MERV 8 filters would not impact the operation or energy use of PTAC equipment. The change in ASHRAE 62.1 filtration requirements would also not affect the certification of PTAC equipment, since the PTAC and PTHP test procedures specify that equipment is to be tested using the filter that ships with it (or using a MERV 1 filter, if the equipment is shipped without a filter).

21
Walker, I.S., et al., “System Effects of High Efficiency Filters in Homes,” Lawrence Berkeley National Laboratory, LBNL-6144E, 2013.

F. Life Cycle Cost and Payback Period Analyses

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

The LCC is the total consumer expense over the life of the equipment, consisting of equipment and installation costs plus operating costs over the lifetime of the equipment (expenses for energy use, maintenance, and repair). DOE discounts future operating costs to the time of purchase using consumer discount rates. The PBP is the estimated amount of time (in years) it takes 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 standard.

For any given efficiency level, DOE analyzed these impacts for PTAC and PTHP equipment starting in the compliance years as set forth in section V.B.1.a by calculating the change in consumer LCCs likely to result from higher efficiency levels compared with the ASHRAE baseline efficiency levels for the PTAC and PTHP equipment classes discussed in the engineering analysis.

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

The following sections contain brief discussions of comments on the inputs and key assumptions of DOE's LCC and PBP analysis. They are also described in detail in chapter 8 of the final rule TSD.

1. Equipment and Installation Costs

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

To develop an equipment price trend for the September 2014 NOPR, DOE derived an inflation-adjusted index of the producer price index (PPI) for “all other miscellaneous refrigeration and air-conditioning equipment” from 1990-2014.
22

Although the inflation-adjusted index shows a declining trend from 1990 to 2004, and a rising trend from 2004-2008, data since 2008 have shown a flat-to-slightly rising trend. Given the uncertainty as to which of the trends will prevail in coming years, DOE applied a constant price trend (2014 levels) for each efficiency level in each equipment class for the September 2014 NOPR.

22
“Producer Price Indexes,” Bureau of Labor Statistics (BLS). 2014. Available online at
www.bls.gov/ppi/.

AHRI stated that DOE should utilize a trend based on the steady and significant price increase since 2004, a trend that has not been affected by the slowdown in activity since 2008. (AHRI, No. 35 at p. 5) While the historical data show an increasing price from 2004-2008, the data show a decreasing price trend from 1990 to 2004 and several years of constant prices after the economic slowdown. It is not clear if a new upward trend has been established. Given such uncertainty, DOE maintained its approach in the September 2014 NOPR to use a constant price assumption to project future PTAC and PTHP equipment prices.

For installation costs, DOE used a specific cost from RS Means
23

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

23
RS Means Company, Inc.
RS Means Mechanical Cost Data 2013.
2013. Kingston, MA.

2. Unit Energy Consumption

The calculation of annual per-unit energy consumption at each considered

efficiency level and capacity is described in section IV.E.

3. Electricity Prices and Electricity Price Trends

DOE determined electricity prices for PTAC and PTHP users based on tariffs from a representative sample of electric utilities. Since air-conditioning loads are strongly peak-coincident, regional marginal prices were developed from the tariff data and then scaled to approximate 2014 prices. This approach calculates energy expenses based on actual commercial building marginal electricity prices that consumers are paying.
24

24
Coughlin, K., C. Bolduc, R. Van Buskirk, G. Rosenquist and J. E. McMahon, “Tariff-based Analysis of Commercial Building Electricity Prices.” Lawrence Berkeley National Laboratory. LBNL-55551. 2008.

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

The tariff-based prices were updated to 2013 using the commercial electricity price index published in the
AEO
and then adjusted to 2014$. An examination of data published by the Edison Electric Institute
25

indicates that the rate of increase of marginal and average prices is not significantly different, so the same factor was used for both pricing estimates. DOE projected future electricity prices using trends in average U.S. commercial electricity price from
AEO 2014.
26

More information can be found in chapter 8 of the final rule TSD.

25
“EEI Typical Bills and Average Rates Report (bi-annual, 2007-2012),” Edison Electric Institute, Washington, DC. 2012.

26
“Annual Energy Outlook 2014,” U.S. Energy Information Administration. May, 2014. Available online at
http://www.eia.gov/forecasts/aeo/.

4. Repair Costs

Repair costs are associated with repairing or replacing components that have failed. In the September 2014 NOPR, DOE determined the cost of repair costs by annualizing warranty contract's prices and linearly scaling by cooling capacity and MSP to cover the equipment classes and considered efficiency levels.

DOE received comments regarding repair costs. AHRI stated that repair costs are significantly more expensive after the warranty has expired and that DOE should account for repair costs after five years. (AHRI, No. 35 at p. 13; AHRI, NOPR Public Meeting Transcript, No. 37 at p. 154) Goodman recommended that DOE reevaluate the repair cost amounts specified in the NOPR TSD, adding that equipment lifetime can be substantially longer than the typical equipment warranty and that using warranty costs as a proxy for lifetime repair prices understates average annual repair costs. Goodman also recommended that DOE survey contractors to determine average labor costs associated with repair work. (Goodman, No. 31 at pp. 3-4)

In response to these comments, DOE reevaluated the repair costs it had proposed in the September 2014 N

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2015-16897. Public record. Not legal advice.