Energy Conservation Program for Commercial and Industrial Equipment: Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump Energy Conservation Standards
Federal RegisterOct 7, 2008
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DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Number: EERE-2007-BT-STD-0012]
RIN 1904-AB44
Energy Conservation Program for Commercial and Industrial Equipment: Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump Energy Conservation Standards
AGENCY:
Office of Energy Efficiency and Renewable Energy, Department of Energy.
ACTION:
Final rule.
SUMMARY:
The Department of Energy (DOE) has determined that its adoption of amended energy conservation standards for commercial standard size packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs), at efficiency levels more stringent than those in American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)/Illuminating Engineering Society of North America (IESNA) Standard 90.1-1999, is supported by clear and convincing evidence that such standards would result in significant additional conservation of energy and are technologically feasible and economically justified. On this basis, DOE is today amending the existing energy conservation standards for these types of equipment. In addition, DOE has determined that its adoption of amended energy conservation standards more stringent than the efficiency levels specified by ASHRAE Standard 90.1-1999 for non-standard size PTACs and PTHPs is not supported by clear and convincing evidence, thus, DOE is adopting the efficiency levels in ASHRAE Standard 90.1-1999 for non-standard size PTACs and PTHPs in today's final rule.
DATES:
The effective date of this rule is November 6, 2008. The standards established in today's final rule will be applicable starting October 8, 2012 for standard size PTACs and PTHPs. The standards established in today's final rule will be applicable starting October 7, 2010 for non-standard size PTACs and PTHPs.
ADDRESSES:
For access to the docket to read background documents, the technical support document, transcripts of the public meetings in this proceeding, or comments received, visit the U.S. Department of Energy, Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. For more information about visiting the Resource Room, please call Ms. Brenda Edwards at (202) 586-2945. (
Note:
DOE's Freedom of Information Reading Room no longer houses rulemaking materials.) You may also obtain copies of the final rule notice in this proceeding, related documents (
e.g.
, the notice of proposed rulemaking and technical support document DOE used to reassess whether to adopt certain efficiency levels in ASHRAE Standard 90.1), draft analyses, public meeting materials, and related test procedure documents from the Office of Energy Efficiency and Renewable Energy's Web site at
http://www.eere.energy.gov/buildings/appliance_standards/commercial/packaged_ac_hp.html.
FOR FURTHER INFORMATION CONTACT:
Wes Anderson, Project Manager, Energy Conservation Standards for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps, U.S. Department of Energy, Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121.
Phone:
(202) 586-7335.
E-mail: Wes.Anderson@ee.doe.gov.
Francine Pinto, Esq., or Michael Kido, Esq., U.S. Department of Energy, Office of General Counsel, GC-72, 1000 Independence Avenue, SW., Washington, DC 20585.
Phone:
(202) 586-9507.
E-mail: Francine.Pinto@hq.doe.gov
or
Michael.Kido@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
I. Summary of the Final Rule and Its Benefits
A. The Standard Levels
B. Current Federal Standards for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps
C. Benefits to Customers of Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps
D. Impact on Manufacturers
E. National Benefits
F. Other Considerations
G. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. History of Standards Rulemaking for Packaged Terminal Equipment
III. General Discussion
A. Test Procedures
B. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
C. Energy Savings
D. Economic Justification
1. Economic Impact on Commercial Consumers and Manufacturers
2. Life-Cycle Costs
3. Energy Savings
4. Lessening of Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation To Conserve Energy
7. Other Factors
IV. Analysis Methodology and Discussion of Comments on Analysis Methodology
A. Market and Technology Assessment
1. Equipment Classes—Generally
2. Comments
B. Screening Analysis
1. Scroll Compressors
2. ECM Motors
3. Fan Motors
4. Micro-Channel Heat Exchangers
5. Thermal Expansion Valves
C. Engineering Analysis
1. Material Prices for the Cost Model
2. Impacts of the Refrigerant Phaseout on PTAC and PTHP Equipment Performance
3. Manufacturer Production Cost Increases With R-410A
D. Energy Use Characterization
E. Life-Cycle Cost Analysis
1. Equipment Prices
2. Installation Costs
3. Annual Energy Use
4. Electricity Prices
5. Maintenance Costs
6. Repair Costs
7. Equipment Lifetime
8. Discount Rate
F. National Impact Analysis—National Energy Savings and Net Present Value Analysis
1. Shipments Analysis
2. Base Case and Standards Case Forecasted Distribution of Efficiencies
G. Manufacturer Impact Analysis
1. GRIM Input Updates
2. Cumulative Regulatory Burden
3. Employment Impacts
H. Employment Impact Analysis
I. Utility Impact Analysis
J. Environmental Analysis
K. Other Comments
1. Burdens on Small, Non-Standard Size PTAC and PTHP Manufacturers
2. PTAC and PTHP Labeling
V. Analytical Results and Conclusions
A. Trial Standard Levels
B. Significance of Energy Savings
C. Economic Justification
1. Economic Impact on Commercial Consumers
2. Economic Impact on Manufacturers
3. National Net Present Value and Net National Employment
4. Impact on Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
7. Other Factors
D. Conclusion
1. Standard Size PTACs and PTHPs
2. Non-Standard Size PTACs and PTHPs
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
1. Reasons for the Final Rule
2. Objectives of, and Legal Basis for, the Rule
3. Description and Estimated Number of Small Entities Regulated
4. Description and Estimate of Compliance Requirements
5. Significant Issues Raised by Public Comments
6. Steps DOE Has Taken To Minimize the Economic Impact on Small, Non-Standard Size PTAC and PTHP Manufacturers
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government Appropriations Act of 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government Appropriations Act of 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
M. Congressional Notification
VII. Approval of the Office of the Secretary
I. Summary of the Final Rule and Its Benefits
A. The Standard Levels
The Energy Policy and Conservation Act, as amended (EPCA), (42 U.S.C. 6291,
et seq.
), establishes mandatory energy conservation standards for certain commercial equipment covered by the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) and the Illuminating Engineering Society of North America (IESNA) Standard 90.1, including packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs) (collectively referred to as “packaged terminal equipment”). EPCA states that the Department of Energy (DOE) may prescribe amended standards for this equipment that exceed the stringency of efficiency levels contained in amendments to ASHRAE Standard 90.1, only if DOE determines by rule that any such standard “would result in significant additional conservation of energy and is technologically feasible and economically justified.” (42 U.S.C. 6313(a)(6)(A)(ii)(II)) This determination must be “supported by clear and convincing evidence.”
Id
. If DOE is unable to find that clear and convincing evidence exists that a more stringent efficiency level than the efficiency level contained in ASHRAE Standard 90.1 would result in a significant additional energy savings and is technologically feasible and economically justified, then EPCA states DOE must establish an amended uniform national standard for the product at the minimum level specified in the amended ASHRAE/IES Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) The standards in today's final rule, which apply to all packaged terminal equipment, satisfy these requirements and will achieve the maximum improvements in energy efficiency that are technologically feasible and economically justified. (
See
42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A).)
Table I.1 shows the amended energy conservation standards that DOE is adopting today. These amended energy conservation standards will apply to standard size PTACs and PTHPs manufactured for sale in the United States, or imported to the United States, on or after October 8, 2012 and non-standard size PTACs and PTHPs manufactured for sale in the United States, or imported to the United States, on or after October 7, 2010.
Table I.1—Amended Energy Conservation Standards for PTACs and PTHPs
Equipment class
Equipment
Category
Cooling capacity
(British thermal units per hour [Btu/h])
Energy conservation standards *
PTAC
Standard Size **
<7,000
EER = 11.7
7,000-15,000
EER = 13.8−(0.300 × Cap
††
)
>15,000
EER = 9.3
Non-Standard Size
†
<7,000
EER = 9.4
7,000-15,000
EER = 10.9 − (0.213 × Cap
††
)
>15,000
EER = 7.7
PTHP
Standard Size **
<7,000
EER = 11.9
COP = 3.3
7,000-15,000
EER = 14.0 − (0.300 × Cap
††
)
COP = 3.7 − (0.052 × Cap
††
)
>15,000
EER = 9.5
COP = 2.9
Non-Standard Size
†
<7,000
EER = 9.3
COP = 2.7
7,000-15,000
EER = 10.8 − (0.213 × Cap
††
)
COP = 2.9 − (0.026 × Cap
††
)
>15,000
EER = 7.6
COP = 2.5
* For equipment rated according to the DOE test procedure (Air-Conditioning and Refrigeration Institute [ARI] Standard 310/380-2004), all energy efficiency ratio (EER) values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled equipment and evaporatively cooled equipment and at 85 °F entering water temperature for water-cooled equipment. All coefficient of performance (COP) values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled equipment.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and a cross-sectional area greater than or equal to 670 square inches.
†
Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 inches high or less than 42 inches wide, and a cross-sectional area less than 670 square inches.
††
Cap means cooling capacity in thousand Btu/h (kBtu/h) at 95 °F outdoor dry-bulb temperature.
DOE only presents the benefits and burdens of adopting a standard level higher than the efficiency levels specified in ASHRAE Standard 90.1-1999. The benefits and burdens of adopting the efficiency levels in ASHRAE Standard 90.1-1999 for non-standard size PTACs and PTHPs are not calculated in this rulemaking because
DOE considers this the baseline efficiency levels even though they represent an increase in energy efficiency when compared to the current Federal energy conservation standards.
B. Current Federal Standards for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps
Table I.2 presents the minimum efficiency levels in the current Federal energy conservation standards for PTACs and PTHPs.
Table I.2—Existing Federal Energy Conservation Standards for PTACs and PTHPs
Equipment class
Equipment
Cooling capacity
(Btu/h)
Existing Federal energy conservation standards*
PTAC
<7,000
EER = 8.88
7,000-15,000
EER = 10.0 − (0.16 × Cap**)
>15,000
EER = 7.6
PTHP
<7,000
EER = 8.88
COP = 2.7
7,000-15,000
EER = 10.0 − (0.16 × Cap**)
COP = 1.3 + (0.16 × EER)
>15,000
EER = 7.6
COP = 2.5
* For equipment rated according to the ARI standards, all EER values must be rated at 95 °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.
** Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature.
C. Benefits to Customers of Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps
Table I.3 presents the impacts on commercial customers of the energy conservation standards adopted in today's final rule.
Table I.3—Impacts of New Standards for a Sample of Commercial Customers *
Equipment class
Amended energy
conservation standard
Total
installed
cost
Total installed cost increase
Life-cycle cost savings
Payback
period (years)
Standard Size PTAC, 9,000 Btu/h Cooling Capacity
11.1 EER
1,229
$22
($3)
13.7
Standard Size PTAC, 12,000 Btu/h Cooling Capacity
10.2 EER
1,469
16
(2)
13.1
Standard Size PTHP, 9,000 Btu/h Cooling Capacity
11.3 EER
1,362
40
28
4.4
3.2 COP
Standard Size PTHP, 12,000 Btu/h Cooling Capacity
10.4 EER
1,603
38
24
4.6
3.0 COP
Non-Standard Size PTAC, 11,000 Btu/h Cooling Capacity
8.6 EER
1,570
** N/A
** N/A
** N/A
Non-Standard Size PTHP, 11,000 Btu/h Cooling Capacity
8.5 EER
1,692
** N/A
** N/A
** N/A
2.6 COP
* The values in Table I.3 represent average values and all monetary values are expressed in 2007$.
** DOE did not calculate the implications on commercial customers of non-standard equipment because DOE is adopting the efficiency levels in ASHRAE Standard 90.1-1999 (i.e., the baseline efficiency levels).
The economic impacts on commercial consumers (i.e., the average life-cycle cost (LCC) savings) are positive. For example, the typical, standard size PTAC with a cooling capacity of 9,000 Btu/h that meets the existing Federal energy conservation standards has an installed price of $1,207 and an annual energy cost of $109 (cooling only). A typical, standard size PTHP of the same cooling capacity that meets the existing Federal energy conservation standards has an installed price of $1,362 and an annual energy cost of $209. To meet the new standard, DOE estimates that the installed price of a typical, standard size PTAC with a cooling capacity of 9,000 Btu/h will be $1,229, an increase of $22. This price increase will be offset by an annual energy savings of about $3. Similarly, for a typical, standard size PTHP of the same cooling capacity to meet the new standard, the increase in installed price would be $40, offset by an annual energy savings of $11. Whereas the typical, non-standard size PTAC that meets the ASHRAE Standard 90.1-1999 efficiency levels has an installed price of $1,570 and an annual energy cost of $180.
D. Impact on Manufacturers
Using a real corporate discount rate of five-percent, DOE estimates the net present value (NPV) of the standard size packaged terminal equipment industry to be $427 million in 2007$ and the NPV of the non-standard size packaged terminal equipment industry to be $30 million in 2007$. DOE expects the impact of today's standards on the industry net present value (INPV) of manufacturers of standard size packaged terminal equipment to be between a two-percent loss and a 14 percent loss (−$8 million to −$61 million). Based
on DOE's interviews with the manufacturers of PTACs and PTHPs, DOE expects minimal plant closings or loss of employment as a result of the standards for both the standard size and non-standard size industries.
E. National Benefits
DOE estimates the amended energy conservation standards will save approximately 0.032 quads (quadrillion (10
15
) Btu) of energy over 30 years (2012-2042). This is equivalent to all the electricity used annually by approximately 500 motels.
1
1
Energy Informaton Agency. 2003 CBECS public use sample, where specific building activity = “motel or inn” (PBAPLUS8=39). Anual electricity use averages about 177,700 kWh per yer.
By 2042, DOE expects the energy savings from the standards to eliminate the need for approximately one new 82-megawatt (MW) power plant. These energy savings will result in cumulative greenhouse gas emission reductions of approximately 1.06 million tons (Mt) of carbon dioxide (CO
2
), or an amount equal to that produced by approximately 6,700 cars every year. Additionally, the standards will help alleviate air pollution by resulting in between approximately 90 and 2,130 tons (0.09 and 2.13 kilotons (kt)) of nitrogen oxides (NO
X
) cumulative emission reductions from 2012 through 2042. Finally, the standards will also alleviate air pollution by resulting in between approximately 0 and 0.037 tons of mercury (Hg) cumulative emission reductions from 2012 through 2042.
The national NPV of the standard for standard size PTACs and PTHPs is $10 million using a seven-percent discount rate and $54 million using a three-percent discount rate, cumulative from 2012 to 2062 in 2007$. This is the estimated total value of future savings minus the estimated increased equipment costs, discounted to 2008.
The benefits and costs of today's final rule can also be expressed in terms of annualized 2007$ values over the forecast period 2012 through 2042. Using a seven-percent discount rate for the annualized cost analysis, the cost of the amended energy conservation standards established in today's final rule for standard size PTACs and PTHPs is $4.7 million per year in increased equipment and installation costs while the annualized benefits are $5.7 million per year in reduced equipment operating costs. Using a three-percent discount rate, the cost of the amended energy conservation standards established in today's final rule for standard size PTACs and PTHPs is $4.1 million per year, whereas the benefits of today's amended energy conservation standards are $6.5 million per year.
F. Other Considerations
DOE noted in the April 2008 Notice of Proposed Rulemaking (NOPR) that PTAC and PTHP equipment manufacturers also face a mandated refrigerant phaseout on January 1, 2010. 73 FR 18858, 18860 (April 7, 2008). R-22, the only refrigerant currently used by PTACs and PTHPs, is a hydrochlorofluorocarbon (HCFC) refrigerant subject to the phaseout requirement. Phaseout of this refrigerant could have a significant impact on the manufacturing, performance, and cost of PTAC and PTHP equipment. DOE discussed and estimated the impacts of the refrigerant phaseout on PTAC and PTHP equipment and on the manufacturers of this equipment in the NOPR, see generally, 73 FR 18872-74, and today's final rule.
G. Conclusion
DOE concludes that the benefits (energy savings, commercial customer LCC savings, positive national NPV, and emissions reductions) to the Nation of the amended standards for standard size equipment outweigh their costs (loss of manufacturer INPV and commercial customer LCC increases for some users of PTACs and PTHPs). DOE believes that these amended standards are technologically feasible, economically justified, and will save additional significant amounts of energy as compared to the savings that would result from adoption of the efficiency levels for standard size PTACs and PTHPs in ASHRAE Standard 90.1-1999. DOE also believes that the standards for non-standard size equipment (
i.e.
, the efficiency levels in ASHRAE Standard 90.1-1999) are technologically feasible, economically justified, and will save significant amounts of energy compared to the current Federal energy conservation standards. Finally, DOE concludes that today's standards for PTACs and PTHPs are designed to achieve the maximum improvements in energy efficiency that are technologically feasible and economically justified. Currently, PTACs and PTHPs that meet the new standard levels are commercially available utilizing R-22 refrigerant. DOE believes that PTACs and PTHPs utilizing R-410A equipment at the new standard levels will be commercially available by the effective dates of the new standard levels.
II. Introduction
A. Authority
Title III of EPCA sets forth a variety of provisions designed to improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309) provides for the Energy Conservation Program for Consumer Products Other than Automobiles. Part A-1 of Title III (42 U.S.C. 6311-6317) establishes a similar program for “Certain Industrial Equipment,” including PTACs and PTHPs, the subjects of this rulemaking.
2
DOE publishes today's final rule pursuant to Part A-1 of Title III, which provides for test procedures, labeling, and energy conservation standards for PTACs and PTHPs and certain other equipment, and authorizes DOE to require information and reports from manufacturers. The test procedure for PTACs and PTHPs appears in title 10 Code of Federal Regulations (CFR) section 431.96.
2
This part was originally titled Part C. However, it was redesignated Part A-1 after Part B of Title III of EPCA was repealed by Public Law 109-58.
EPCA established Federal energy conservation standards that generally correspond to the levels in ASHRAE Standard 90.1, effective October 24, 1992, for most types of covered equipment listed in section 342(a) of EPCA, including PTACs and PTHPs. (42 U.S.C. 6313(a)) For each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must adopt an amended standard at the new level in ASHRAE Standard 90.1, unless clear and convincing evidence supports a determination that adoption of a more stringent level as a national standard would produce significant additional energy savings and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II))
EPCA also provides that in deciding whether a more stringent standard is economically justified for equipment such as PTACs and PTHPs, DOE must, after receiving comments on the proposed standard, determine whether the benefits of such a standard exceed its burdens by considering the following seven factors to the greatest extent practicable:
1. The economic impact of the standard on manufacturers and consumers of the products subject to the standard;
2. The savings in operating costs throughout the estimated average life of products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to
result from the imposition of the standard;
3. The total projected amount of energy savings likely to result directly from the imposition of the standard;
4. Any lessening of the utility or the performance of the products likely to result from the imposition of the standard;
5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;
6. The need for national energy conservation; and
7. Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)-(ii))
EPCA also contains an “anti-backsliding” provision, which prohibits DOE from prescribing any amended energy conservation standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of covered equipment. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(1)) It is a fundamental principle in EPCA's statutory scheme that DOE cannot amend standards downward; that is,
DOE may not
weaken standards that have been previously promulgated.
Natural Resources Defense Council
v.
Abraham
, 355 F.3d 179 (2d Cir. 2004).
In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii)), establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that “the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and as applicable, water) savings during the first year that the consumer will receive as a result of the standard,” as calculated under the test procedure in place for that standard. This approach provides an alternative path in establishing economic justification under the EPCA factors. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE considered this test, but believes that the criterion it applies (i.e., a limited payback period) is not sufficient for determining economic justification. Instead, DOE has considered a full range of impacts, including those to the consumer, manufacturer, Nation, and environment.
Additionally, the Secretary may not prescribe an amended standard if interested persons have established by a preponderance of the evidence that the standard is “likely to result in the unavailability in the United States of any product type (or class)” with performance characteristics, features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(4))
Section 325(q)(1) of EPCA directs that DOE must specify a different standard level than that which applies generally to such type or class of equipment for any group of products “which have the same function or intended use, if * * * products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard” than applies or will apply to the other products within that type or class. (42 U.S.C. 6295(q)(1)(A) and (B)) In determining whether a performance-related feature justifies such a different standard for a group of products, DOE must consider “such factors as the utility to the consumer of such a feature” and other factors DOE deems appropriate. (42 U.S.C. 6295(q)(1)) Any rule prescribing such a standard must include an explanation of the basis on which DOE established such higher or lower level. (42 U.S.C. 6295(q)(2))
Federal energy efficiency requirements for commercial equipment generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c); 42 U.S.C. 6316(a) and (b)) However, DOE can grant waivers of preemption for particular State laws or regulations, in accordance with the procedures and other provisions of section 327(d) of the Act, as amended. (42 U.S.C. 6297(d); 42 U.S.C. 6316(b)(2)(D))
B. Background
1. Current Standards
As described in greater detail in the NOPR, 73 FR 18861-62, the current energy conservation standards in EPCA for PTACs and PTHPs apply to all equipment manufactured on or after January 1, 1994. (42 U.S.C. 6313(a)(3); 10 CFR 431.97) Table I.2 details these standards.
2. History of Standards Rulemaking for Packaged Terminal Equipment
On October 29, 1999, ASHRAE adopted ASHRAE Standard 90.1-1999, which revised the efficiency levels for various categories of commercial equipment covered by EPCA, including PTACs and PTHPs. In amending the ASHRAE Standard 90.1-1989 levels for packaged terminal equipment, ASHRAE used the equipment classes contained in EPCA, which are distinguished by equipment type (
i.e.
, air conditioner (PTAC) or heat pump (PTHP)) and cooling capacity. However, ASHRAE further divided these classes by wall sleeve dimensions, because they affect the energy efficiency of PTACs and PTHPs. Table II.1 shows the efficiency levels in ASHRAE Standard 90.1-1999 for this equipment.
Table II.1—ASHRAE Standard 90.1-1999 Energy Efficiency Levels for PTACs and PTHPs
Equipment class
Equipment
Category
Cooling capacity
(Btu/h)
ASHRAE standard 90.1-1999 efficiency levels *
PTAC
Standard Size **
<7,000
EER = 11.0
7,000-15,000
EER = 12.5 − (0.213 × Cap
††
)
>15,000
EER = 9.3
Non-Standard Size
†
<7,000
EER = 9.4
7,000-15,000
EER = 10.9 − (0.213 × Cap
††
)
>15,000
EER = 7.7
PTHP
Standard Size **
<7,000
EER = 10.8
COP = 3.0
7,000-15,000
EER = 12.3 − (0.213 × Cap
††
)
COP = 3.2 − (0.026 × Cap
††
)
>15,000
EER = 9.1
COP = 2.8
Non-Standard Size
†
<7,000
EER = 9.3
COP = 2.7
7,000-15,000
EER = 10.8 − (0.213 × Cap
††
)
COP = 2.9 − (0.026 × Cap
††
)
>15,000
EER = 7.6
COP = 2.5
* For equipment rated according to ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products and evaporatively cooled products and at 85 °F entering water temperature for water-cooled products. All COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled products.
** 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 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.
After publication of ASHRAE Standard 90.1-1999, DOE analyzed many of its equipment categories to evaluate possible consideration of more stringent efficiency levels than those specified in the Standard. DOE summarized this analysis in a report,
Screening Analysis for EPACT-Covered Commercial HVAC [Heating, Ventilating and Air-Conditioning] and Water-Heating Equipment
(commonly referred to as the
2000 Screening Analysis
).
3
On January 12, 2001, DOE published a final rule adopting the efficiency levels in ASHRAE Standard 90.1-1999 for many types of commercial HVAC and water heating equipment, excluding packaged terminal equipment and certain other types of equipment. 66 FR 3336. Regarding PTACs and PTHPs, the preamble to the final rule stated that the
2000 Screening Analysis
indicated at least a reasonable possibility of finding “clear and convincing evidence” that more stringent standards “would be technologically feasible and economically justified and would result in significant additional conservation of energy.” 66 FR 3349-50. Under EPCA, these are the criteria for DOE's adoption of standards more stringent than the efficiency levels in ASHRAE Standard 90.1. (42 U.S.C. 6313(a)(6)(A)(ii)(II)).
3
U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy. “Energy Conservation Program for Consumer Products: Screening Analysis for EPACT-Covered Commercial HVAC and Water-Heating Equipment Screening Analysis.” April 2000.
http://www.eere.energy.gov/buildings/highperformance/pdfs/screening_analysis_main.pdf.
More recently, DOE announced the availability of a technical support document (TSD) it developed to reassess whether to adopt as national standards certain efficiency levels that were in amendments to ASHRAE Standard 90.1, including the levels in the 1999 amendments for PTACs and PTHPs. 71 FR 12634 (March 13, 2006) (Notice of Availability). According to DOE, although the revised analysis in the TSD reduced the potential energy savings that might result from standards more stringent than the efficiency levels specified in ASHRAE Standard 90.1-1999 for PTACs and PTHPs, DOE was inclined to pursue standards that are more stringent because there was a possibility that clear and convincing evidence exists that such standards are warranted.
Id.
at 12638-39. DOE stated that it would explore more stringent efficiency levels than those in ASHRAE Standard 90.1-1999 for PTACs and PTHPs through a separate rulemaking.
Id.
at 12639.
DOE proposed energy conservation standards for PTACs and PTHPs in a NOPR published on April 7, 2008. 73 FR 18858. In conjunction with the NOPR, DOE also published on its Web site the complete TSD for the proposed rule, which incorporated the final analyses that DOE conducted and technical support documentation of each analysis. The NOPR TSD included the LCC spreadsheets, the national impact analysis spreadsheets, and the manufacturer impact analysis (MIA) spreadsheet—all of which are available on DOE's PTAC and PTHP webpage. The proposed standards were as follows:
Table II.2—NOPR Proposed Energy Conservation Standards for PTACs and PTHPs
Equipment class
Equipment
Category
Cooling capacity
(Btu/h)
Proposed energy conservation standards *
PTAC
Standard Size **
<7,000
EER = 11.4
7,000-15,000
EER = 13.0−(0.233 × Cap
††
)
>15,000
EER = 9.5
Non-Standard Size
<7,000
EER = 10.2
7,000-15,000
EER = 11.7−(0.213 × Cap
††
)
>15,000
EER = 8.5
PTHP
Standard Size **
<7,000
EER = 11.8
COP = 3.3
7,000-15,000
EER = 13.4−(0.233 × Cap
††
)
COP = 3.7−(0.053 × Cap
††
)
>15,000
EER = 9.9
COP = 2.9
Non-Standard Size
<7,000
EER = 10.8
COP = 3.0
7,000-15,000
EER = 12.3−(0.213 × Cap
††
)
COP = 3.1−(0.026 × Cap
††
)
>15,000
EER = 9.1
COP = 2.8
* For equipment rated according to the DOE test procedure (ARI Standard 310/380-2004), all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled equipment and evaporatively cooled equipment and at 85 °F entering water temperature for water-cooled equipment. All COP values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled equipment, and at 70 °F entering water temperature for water-source heat pumps.
** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equal to 42 inches wide.
†
Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.
††
Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature.
The NOPR also included additional background information on the history of this rulemaking. 73 FR 18862-63. DOE held a public meeting in Washington, DC, on May 1, 2008, to accept oral comments on and solicit information relevant to the proposed rule.
III. General Discussion
A. Test Procedures
Section 343(a) of EPCA, as amended, authorizes the Secretary to amend the test procedures for PTACs and PTHPs to the latest version generally accepted by industry or the rating procedures developed or recognized by the ARI, or ASHRAE as referenced in ASHRAE Standard 90.1, unless the Secretary determines by clear and convincing evidence that the latest version of the industry test procedure does not meet specific requirements. (
See
42 U.S.C. 6314(a)(4) As the NOPR explains, DOE has determined that its existing test procedure for PTACs and PTHPs does not need modification. 73 FR 18863. Accordingly, DOE has not adopted a revised test procedure for this equipment.
B. Technological Feasibility
1. General
To adopt standards for PTACs and PTHPs that are more stringent than the efficiency levels in ASHRAE Standard 90.1 as amended, DOE must determine, supported by clear and convincing evidence, that such standards are technologically feasible. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) DOE considers a design option to be technologically feasible if it is in use by the respective industry or if research has progressed to the development of a working prototype. DOE defines technological feasibility as follows: “Technologies incorporated in commercially available products or in working prototypes will be considered technologically feasible.” 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).
This final rule considers the same design options as those evaluated in the NOPR. (See the final rule TSD accompanying this notice, Chapter 4.) Based on equipment literature, the teardown analysis, manufacturer interviews, and the equipment performance degradations provided by AHRI during the NOPR phase of the rulemaking, DOE considered the following design options in the final rule analysis: (1) Higher efficiency compressors; (2) increasing the heat exchanger area; and (3) recircuiting the heat exchanger coils. Since these three design options are commercially available, have been used in PTAC and PTHP equipment, and are the most common ways by which manufacturers improve the energy efficiency of their PTACs and PTHPs, DOE has determined that clear and convincing evidence supports the conclusion that all of the efficiency levels evaluated in this notice are technologically feasible. DOE further discusses the technical feasibility of PTAC and PTHP equipment utilizing R-410A in section IV.C. of today's notice.
2. Maximum Technologically Feasible Levels
In order to evaluate whether energy conservation standards for PTACs and PTHPs are economically justified, DOE determines the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible. (42 U.S.C. 6316(a); 42 U.S.C. 6295(p)(2)) DOE determined the maximum technologically feasible level (“max-tech”) efficiency levels in its engineering analysis for the NOPR. 73 FR 18863-64. (See NOPR TSD Chapter 5.) In the NOPR, DOE based its identification of the max-tech efficiency levels on standard size and non-standard size PTAC and PTHP equipment utilizing R-22 that is currently available on the market. For the final rule, DOE revised the max-tech efficiency levels for standard size and non-standard size PTACs and PTHPs based on submitted comments, which are discussed in section IV.C of today's notice. The max-tech efficiency levels considered for today's final rule are based on the efficiency levels identified in the NOPR and factor performance degradations stemming from the switch to R-410A refrigerant.
4
Table III.1 lists the max-tech efficiency levels that DOE identified for this rulemaking for the
estimated system performance of equipment utilizing R-410A. DOE discusses these levels further in section IV.C.
4
DOE expects the overall system efficiency of R-410A PTAC and PTHP equipment will be lower than if that equipment used R-22, which DOE estimated using an overall system performance degradation. This estimate is based on data submitted by manufacturers and AHRI pointing to a decline in performance when using R-410A refrigerant in place of R-22 refrigerant.
Table III.1—R-410A Max-Tech Efficiency Levels (7,000-15,000 Btu/h Equipment Classes) *
Equipment type
Equipment class
Cooling capacity
(Btu/h)
R-410A “Max-Tech” efficiency level **
PTAC
Standard Size
†
9,000
11.5 EER
12,000
10.8 EER
Non-Standard Size
††
11,000
10.0 EER
PTHP
Standard Size
†
9,000
11.5 EER
3.3 COP
12,000
10.8 EER
3.1 COP
Non-Standard Size
††
11,000
10.0 EER
2.9 COP
* As discussed in the NOPR, DOE is presenting the results for two cooling capacities of standard size PTACs and PTHPs, 9,000 and 12,000 Btu/h, which fall within the equipment classes of PTACs and PTHPs with cooling capacities of 7,000-15,000 Btu/h. 73 FR 18870-18871.
** For equipment rated according to the DOE test procedure, all EER values would be rated at 95 °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 having an external wall opening of greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and having a cross-sectional area greater than or equal to 670 square inches.
††
Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 inches high or less than 42 inches wide, and having a cross-sectional area less than 670 square inches.
C. Energy Savings
DOE forecasted energy savings in its national energy savings (NES) analysis using an NES spreadsheet tool, which the NOPR discussed in greater detail. See generally, 73 FR 18864, 18876, 18880-83, 18899.
Among the criteria that govern DOE's adoption of more stringent standards for PTACs and PTHPs than the amended levels in ASHRAE Standard 90.1, clear and convincing evidence must support a determination that the standards would result in “significant” energy savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) Although EPCA does not define “significant,” the U.S. Court of Appeals for the District of Columbia indicated that Congress intended “significant” energy savings to mean savings that were not “genuinely trivial” in Section 325 of the Act.
Natural Resources Defense Council
v.
Herrington
, 768 F.2d 1355, 1373 (D.C. Cir. 1985). DOE's estimates of the energy savings for each of the TSLs considered for today's rule provide clear and convincing evidence that the additional energy savings each would achieve by exceeding the corresponding efficiency levels in ASHRAE Standard 90.1-1999 are nontrivial. Therefore, DOE considers these savings to be “significant” as required by 42 U.S.C. 6313(a)(6)(A)(ii)(II).
D. Economic Justification
As noted earlier, EPCA provides seven factors to be evaluated in determining whether an energy conservation standard for PTACs and PTHPs is economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)-(ii)) The following paragraphs discuss how DOE has addressed each of those seven factors in this rulemaking.
1. Economic Impact on Commercial Consumers and Manufacturers
DOE considered the economic impact of the standards on commercial consumers and manufacturers. For customers, DOE measures the economic impact as the change in installed cost and life-cycle operating costs,
i.e.
, the LCC. (See section V.C.1 and Chapter 8 of the TSD.) DOE investigates the impacts of amended energy conservation standards of PTACs and PTHPs on manufacturers through the manufacturer impact analysis (MIA). (See section V.C.2 and Chapter 13 of the TSD.) This factor is discussed in detail in the NOPR. See generally 73 FR 18860-61, 18864-66, 18869, 18883-87, 18893-99, 18906-07, 18910-12.
2. Life-Cycle Costs
DOE considered life-cycle costs of PTACs and PTHPs. This factor is discussed in detail in the NOPR. See generally 73 FR 18860-61, 18865, 18876-80, 18883, 18888, 18891-93. DOE calculated the sum of the purchase price and the operating expense—discounted over the lifetime of the equipment—to estimate the range in LCC benefits that commercial customers would expect to achieve due to the standards.
3. Energy Savings
Although significant additional conservation of energy is a separate statutory requirement for imposing a more stringent energy conservation standard than the level in the most current ASHRAE Standard 90.1, EPCA also requires that DOE consider the total projected energy savings that will likely result directly from the standard in determining whether a standard is economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(III)) DOE used the NES spreadsheet results in its consideration of total projected savings. 73 FR 18860-61, 18864, 18876, 18880-83, 18899. DOE presents the energy savings at each TSL for standard size and non-standard size PTACs and PTHPs in section V.B of today's notice.
4. Lessening of Utility or Performance of Equipment
In selecting today's standard levels, DOE sought to avoid new standards for PTACs and PTHPs that would lessen the utility or performance of that equipment. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(IV)) 73 FR 18865, 18866-68, 18900. The design options considered in the engineering analysis of this rulemaking, which include higher efficiency compressors, increasing the heat exchanger area, and recircuiting the heat exchanger coils, do not involve changes in equipment design or unusual installation requirements that could reduce the utility or performance of PTACs and PTHPs. In the NOPR, DOE considered
industry concerns that one-third of the non-standard size market subject to the more stringent standards under ASHRAE Standard 90.1-1999 definition would not be able to meet the efficiency levels specified by ASHRAE Standard 90.1-1999 for standard size equipment due to the physical size constraints of the wall sleeve if this equipment class delineation was adopted. In today's final rule, DOE is adopting the equipment class delineations specified in Addendum t to ASHRAE Standard 90.1-2007. This action should mitigate manufacturers' concerns regarding the misclassification of non-standard equipment classes. DOE further discusses the equipment classes it is adopting today and the comments received from interested parties regarding equipment classes in section IV.A of today's rulemaking.
5. Impact of Any Lessening of Competition
DOE considers any lessening of competition likely to result from standards. As discussed in the NOPR (73 FR 18865, 18900), DOE requested that the Attorney General transmit to the Secretary a written determination of the impact of any lessening of competition likely to result from the proposed standards, together with an analysis of the nature and extent of such impact. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))
To assist the Attorney General in making such a determination, DOE provided DOJ with copies of the proposed rule and the TSD for review. (DOJ, No. 21 at p. 1-2)
5
The Attorney General's response is discussed in section IV.K.1, and is reprinted at the end of today's rulemaking.
5
“DOJ, No. 21 at pp 1-2” refers to (1) a statement that was submitted by the Department of Justice and is recorded in the Resource Room of the Building Technologies Program in the docket under “Energy Conservation Program for Commercial and Industrial Equipment: Packaged Terminal Air Conditioner and Packaged Terminal Heat Pump Energy Conservation Standards,” Docket Number EERE-2007-BT-STD-0012, as comment number 21; and (2) a passage that appears on pages 1 and 2 of that statement.
6. Need of the Nation To Conserve Energy
In considering standards for PTACs and PTHPs, the Secretary must consider the need of the Nation to conserve energy. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(VI)) The Secretary recognizes that energy conservation benefits the Nation in several important ways. The non-monetary benefits of the standards will likely be reflected in improvements to the security and reliability of the Nation's energy system. Today's standards also will likely result in environmental benefits. As discussed in the proposed rule, DOE has considered these factors in adopting today's standards. See generally, 73 FR at 18860, 18865, 18888, 18900-02, 18912.
7. Other Factors
In determining whether a standard is economically justified, EPCA directs the Secretary of Energy to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(B)(i)(VII)) In adopting today's standard, DOE considered (1) the impacts of setting different amended standards for PTACs and PTHPs, (2) the potential that amended standards could cause equipment switching (
i.e.
, purchase of PTACs instead of PTHPs) and the effects of any such switching, (3) the uncertainties associated with the impending phaseout in 2010 of R-22 refrigerant, and (4) the impact of amended standards on the manufacture of and market for non-standard size packaged terminal equipment (
e.g.
, impacts on small businesses). See generally, 73 FR at 18860, 18865-66, 18872-74, 18882, 18884-87, 18893-98, 18902, 18911-12.
IV. Analysis Methodology and Discussion of Comments on Analysis Methodology
DOE used several analytical tools that it developed previously and adapted for use in this rulemaking. The first tool is a spreadsheet that calculates LCC and payback period (PBP). The second tool calculates national energy savings and national NPV. DOE also used the Government Regulatory Impact Model (GRIM), among other methods, in its MIA. Finally, DOE developed an approach using the National Energy Modeling System (NEMS) to estimate impacts of PTAC and PTHP energy efficiency standards on electric utilities and the environment. The NOPR discusses each analytical tool in detail. 73 FR at 18866-89.
As a basis for this final rule, DOE has continued to use the spreadsheets and approaches described above and in the NOPR. DOE used the same general methodology as applied in the NOPR, but revised some of the assumptions and inputs for the final rule in response to comments from interested parties. The following paragraphs discuss these revisions.
A. Market and Technology Assessment
When beginning an energy conservation standards rulemaking, DOE develops information that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, and market characteristics. This activity includes both quantitative and qualitative assessments based primarily on publicly available information. DOE presented various subjects in the market and technology assessment for this rulemaking. (See the NOPR and Chapter 3 of the NOPR TSD.) These include equipment classes, manufacturers, quantities and types of equipment sold and offered for sale, retail market trends, and regulatory and nonregulatory programs. 73 FR 18866-69 and Chapter 3 of the NOPR TSD. In response to publication of the NOPR, DOE received comments from interested parties about the establishment of equipment classes for the rulemaking.
1. Equipment Classes—Generally
When evaluating and establishing energy conservation standards, DOE generally divides covered equipment into equipment classes by the type of energy used, capacity, or other performance-related features that affect efficiency. Different energy conservation standards may apply to different equipment classes. (42 U.S.C. 6316(a); 42 U.S.C. 6295(q))
PTACs and PTHPs can be divided into various equipment classes categorized by physical characteristics that affect equipment efficiency. Key characteristics that affect the energy efficiency of the PTAC or PTHP are whether the equipment has reverse cycle heating (
i.e.
, air conditioner or heat pump), the cooling capacity, and the physical dimensions of the unit.
In the NOPR, DOE presented two alternative methods for defining PTAC and PTHP equipment classes. 73 FR 18866-18868. DOE explained the two alternative methods of defining the PTAC and PTHP equipment classes consistent with the delineations provided in ASHRAE Standard 90.1-1999 or Addendum t to ASHRAE Standard 90.1-2007 in the NOPR.
Id.
at 18867.
ASHRAE Standard 90.1-1999 refers to wall sleeve dimensions in two categories: “New Construction” and “Replacement.” Although ASHRAE Standard 90.1-1999 does not describe “New Construction,” Table 6.21D, footnote b of ASHRAE Standard 90.1-1999 states that “replacement” efficiencies apply only to units that are: (1) “Factory labeled as follows: Manufactured for Replacement Applications Only; Not to be Installed in New Construction Projects”; and (2) manufactured “with existing wall sleeves less than 16 inches high and less than 42 inches wide.” Based on this
provision, DOE understands that the “New Construction” category under ASHRAE Standard 90.1-1999 is residual, and covers all other PTAC and PTHPs. Hence, this category consists of equipment with wall sleeve dimensions greater than or equal to 16 inches high and greater than or equal to 42 inches wide, or lacking the requisite label.
Addendum t to ASHRAE Standard 90.1-2007 includes a new definition for non-standard size PTACs and PTHPs in place of the “replacement” delineation in ASHRAE Standard 90.1-1999. The new definition reads as follows: “equipment with existing sleeves having an external wall opening of less than 16 in. high or less than 42 in. wide, and having a cross-sectional area less than 670 in
2
.”
2. Comments
In the NOPR, DOE stated that ASHRAE must adopt AHRI's
6
continuous maintenance proposal before DOE can officially use this definition as the basis for DOE's standard because AHRI's proposed definitions would effectively reclassify some equipment under ASHRAE 90.1-1999's delineations as non-standard size equipment. (42 U.S.C. 6313(a)(6)(A)(ii)) When the NOPR was published, AHRI's continuous maintenance proposal on PTACs and PTHPs had been approved by ASHRAE as Addendum t to ASHRAE Standard 90.1-2007. At the time of the NOPR, that Addendum was the subject of public review by ASHRAE. DOE stated in the NOPR that if ASHRAE were to adopt the Addendum before September 2008, which is the deadline by which DOE must issue a final rule for this rulemaking, DOE proposed to incorporate the modified definition specified by that version of the ASHRAE standard in its final rule. In the NOPR, DOE sought comment from interested parties on its proposal to adopt Addendum t to ASHRAE Standard 90.1-2007. 73 FR 18867.
6
The Air-Conditioning and Refrigeration Institute (ARI) and the Gas Appliance Manufacturers Association (GAMA) announced on December 17, 2007, that their members voted to approve the merger of the two trade associations to represent the interests of cooling, heating, and commercial refrigeration equipment manufacturers. The merged association became AHRI on Jan. 1, 2008.
AHRI commented that all standard and non-standard manufacturers who are AHRI members support adoption of Addendum t. AHRI had not received comments challenging the content in Addendum t during ASHRAE's formal comment period, and ASHRAE was planning to adopt the Addendum during the ASHRAE annual meeting in June 2008. AHRI added that manufacturers believe that the definitions in Addendum t are needed to deter against the reclassification of large numbers of non-standard size PTACs and PTHPs as standard equipment, which will not be able to meet the proposed standards. (Public Meeting Transcript, No. 12 at p. 31-32, AHRI, No. 23 at pp. 6-7)
7
7
A notation in the form “ECR, Public Meeting Transcript, No. 12 at pp. 30, 37, 182” identifies (1) an oral comment that DOE received during the May 30, 2008, NOPR public meeting by ECR, which was recorded in the public meeting transcript in the docket for this rulemaking as comment number 12; and (2) a passage that appears on page 30 of that transcript.
ECR, McQuay, Carrier, and Ice Air also commented that DOE should use the delineations within Addendum t to classify non-standard equipment. (Public Meeting Transcript (ECR and McQuay), No. 12 at p. 31; ECR, No. 15 at p. 4; Carrier, No. 16 at p. 1; Ice Air, No. 25 at p. 5) ECR also noted that if DOE used the delineations in ASHRAE Standard 90.1-1999 to define the equipment classes for PTACs and PTHPs, approximately 50 percent of their equipment would be eliminated from the market as a result of being reclassified into the standard size category. (ECR, No. 15 at p. 4)
ECR commented that non-standard equipment is burdened by space constraints that are more stringent than the constraints for standard size PTACs and PTHPs. ECR added that the delineations within ASHRAE Standard 90.1-1999, coupled with the proposed standards (TSL 4), would force manufacturers to include more heat exchanger surface area within the limited volumes of physical chassis of the equipment, to use compressors incorporating inverter technology, and to use variable speed motors, which would result in equipment switching. (ECR, No. 15 at p. 2)
AHRI, ECR, McQuay, Ice Air, and Cold Point also commented that non-standard size PTACs and PTHPs meet a specific demand that exists in the market, particularly for older buildings. These commenters stated that if DOE adopted the delineations in ASHRAE Standard 90.1-1999, which could further eliminate non-standard size PTACs and PTHPs from the market, this would decrease competition and limit customer choices. (Public Meeting Transcript, No. 12 at pp. 20 (ECR), 22 (AHRI), 38 (McQuay); AHRI, No. 23 at p. 7; ECR, No. 15 at p. 4; Ice Air, No. 25 at p. 4; Cold Point, No. 18 at p. 2)
DOE also received comments about the potential for creating a loophole by adopting Addendum t in the final rule. In this regard, these commenters supported DOE's adoption of an alternative definition for non-standard size PTACs and PTHPs.
Specifically, General Electric (GE) and the American Council for an Energy Efficient Economy (ACEEE) recommended that DOE modify the non-standard definitions and equipment classes to have the wall sleeve dimension requirements set significantly below the proposed dimensions, consistent with the non-standard size equipment currently on the market. (Public Meeting Transcript, No. 12 at pp. 16 (GE), 33-34 (GE), 36-37 (ACEEE), 208 (ACEEE); GE, No. 8 at p. 2; GE, No. 20 at pp. 2-3) GE asked DOE to make the difference in the wall sleeve dimensions of standard size and non-standard size PTACs and PTHPs large enough to prevent non-standard PTACs/PTHPs from being installed in standard size PTAC and PTHP openings. GE used the example of a PTAC (15.75 × 41.75 inches) that GE believes could easily fit inside a standard size PTAC wall sleeve, yet this unit would be classified as non-standard size equipment subject to less stringent energy conservation standards. (Public Meeting Transcript, No. 12 at pp. 16, 33-34; GE, No. 8 at p. 2)
GE stated that the wording in Addendum t might encourage the design of new PTAC and PTHP equipment that may circumvent the intent of DOE's regulations. (Public Meeting Transcript, No. 12 at pp. 16, 33-34; GE, No. 8 at p. 2) As an alternative, GE suggested DOE use the wall sleeve dimensions of the largest non-standard size PTAC and PTHP equipment currently on the market to define non-standard size PTACs and PTHPs. (Public Meeting Transcript, No. 12 at p. 33)
ECR, McQuay, and AHRI responded to concerns about the potential for a loophole for less efficient standard size equipment to enter the market if DOE adopts the delineations in Addendum t. (ECR, No. 15 at pp. 1, 4; Public Meeting Transcript, No. 12 at pp. 20 (ECR), 22 (AHRI), 31-32 (AHRI), 38 (McQuay)) AHRI stated that the same potential loophole exists in the delineations within ASHRAE Standard 90.1-1999 for standard size and non-standard size PTACs and PTHPs. AHRI commented that if manufacturers want to introduce less efficient standard size equipment with wall sleeve dimensions just shy of the standard size limitations, manufacturers would have introduced this type of equipment already because this loophole has been in existence since 1999. However, AHRI pointed out that none of the manufacturers in the PTAC and PTHP industry have taken
advantage of this potential loophole. AHRI also noted that Addendum t requires non-standard size equipment to be labeled to prevent misapplications of less efficient non-standard equipment entering into newly constructed projects. (AHRI, No. 23 at pp. 6-7)
ECR also commented that it does not believe that non-standard size equipment will be used in newly constructed buildings. ECR stated that commercial customers would not purchase non-standard equipment because it is rated at lower efficiencies; rather, customers make purchases based on the characteristics and needs of the installation (
i.e.
, wall sleeve dimensions). Placing non-standard size equipment in newly constructed buildings does not make economic sense. (ECR, No. 15 at pp. 1, 4; Public Meeting Transcript, No. 12 at p. 20) McQuay pointed out that non-standard equipment is needed to meet a specific demand that exists in the market, particularly for older buildings, and that phasing out the market would decrease competition and limit customer choices. (Public Meeting Transcript, No. 12 at p. 38) If DOE were to adopt the delineations within ASHRAE Standard 90.1-1999, ECR believes building owners and commercial customers would keep their older, much less efficient units in place longer because replacements could become unavailable. (ECR, No. 15 at p. 1)
On June 22, 2008, ASHRAE Standard 90.1's committee voted to officially approve the publication of Addendum t to ASHRAE Standard 90.1-2007 for PTACs and PTHPs.
8
This action finalizes Addendum t, which means that DOE can officially use this delineation as the basis for amended energy conservation standards. (42 U.S.C. 6313(a)(6)(A)(ii))
8
To obtain a copy of Addendum t to ASHRAE Standard 90.1-2007, contact the ASHRAE publications department at:
orders@ashrae.org
or 1-(800) 527-4723.
DOE divides equipment classes by the type of energy used or by capacity or other performance-related features that affect efficiency. Different energy conservation standards may apply to different equipment classes. (42 U.S.C. 6295(q)) When installed, PTACs and PTHPs are fitted into a wall sleeve. There is a wide variety of wall sleeve sizes found in different buildings. Wall sleeve sizes are market driven (
i.e.
, the applications or facilities where the PTACs or PTHPs are installed is what determines the “market standard” wall sleeve dimension) and this factor requires manufacturers to offer various PTACs and PTHPs that can fit into various wall sleeve dimensions. For new units, the industry has standardized the wall sleeve dimension for PTACs and PTHPs in buildings over the past 20 years to be 16 inches high by 42 inches wide. Therefore, units that have a wall sleeve dimension of 16 inches high by 42 inches wide are considered “standard size” equipment and all other units are considered “non-standard size” equipment. In contrast, the industry does not have a common wall sleeve dimension that is typical for all older existing facilities. These facilities, such as high-rise buildings found in large cities, typically use non-standard size equipment. In these installations, altering the existing wall sleeve opening to accommodate the more efficient, standard size equipment could include extensive structural changes to the building, which could be very costly, and is, therefore, rarely done.
DOE believes that wall sleeve sizes are performance-related features that affect PTAC and PTHP efficiency. Manufacturers typically use various heat exchanger sizes in different wall sleeve size equipment, and the size of the heat exchanger directly affects the energy efficiency of the equipment. By examining the market data, DOE found that non-standard size PTACs and PTHPs typically are less efficient than standard size PTACs and PTHPs. Consequently, DOE is adopting the delineations in Addendum t to ASHRAE Standard 90.1-2007 to differentiate between standard size and non-standard size equipment.
DOE believes the delineations within Addendum t will help to mitigate the impacts on manufacturers of non-standard size equipment, and will not cause any equipment unavailability issues for commercial customers. DOE was concerned that, absent non-standard equipment, commercial customers could be forced to invest in costly building modifications to convert non-standard sleeve openings to standard size dimensions. Alternatively, customers may choose to use less efficient through-the-wall air conditioners or maintain their older, less efficient equipment longer in the absence of non-standard PTACs and PTHPs.
Although DOE acknowledges GE's and ACEEE's concern about the potential loophole in the definition, DOE believes that the effects of this loophole will be reduced due to the labeling requirements specified in Addendum t. DOE is not adopting the labeling requirement set forth in Addendum t, but believes that non-standard manufacturers will still be required to use this labeling through some of their State building code regulations, which require the use of such labels on PTAC and PTHP equipment. DOE believes ASHRAE's labeling requirement will deter less efficient equipment from entering into newly constructed buildings.
Additionally, DOE agrees with AHRI's assertion that if manufacturers wanted to introduce less standard size equipment with wall sleeve dimensions just shy of the standard size limitations they could have done this in today's market. DOE believes the market forces surrounding the standardized sleeve size have deterred standard size manufacturers from producing this type of equipment because of the unique non-standard size industry and the cost implications of producing customized equipment. Further, DOE believes these market forces will continue to deter standard size manufacturers from taking advantage of this potential loophole after the adoption of the delineations in Addendum t to ASHRAE Standard 90.1-2007.
In today's final rule, DOE incorporates the following definitions of standard size and non-standard size PTACs and PTHPs as presented in Addendum t to ASHRAE Standard 90.1-2007:
•
Standard size
refers to a PTAC or a PTHP with wall sleeve dimensions having an external wall opening of greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and having a cross-sectional area greater than or equal to 670 square inches.
•
Non-standard size
refers to a PTAC or a PTHP with existing wall sleeve dimensions having an external wall opening of less than 16 inches high or less than 42 inches wide, and having a cross-sectional area less than 670 square inches.
DOE added these two definitions of standard size and non-standard size to be codified at 10 CFR 431.2. Consistent with the definitions, DOE has defined the equipment classes for today's final rule for PTACs and PTHPs (as shown in Table IV.1).
Table IV.1—Equipment Classes for PTACs and PTHPs if ASHRAE Adopts Addendum to ASHRAE Standard 90.1-2007
Equipment class
Equipment
Category
Cooling capacity
(Btu/h)
PTAC
Standard Size *
<7,000
7,000-15,000
>15,000
Non-Standard Size **
<7,000
7,000-15,000
>15,000
PTHP
Standard Size *
<7,000
7,000-15,000
>15,000
Non-Standard Size **
<7,000
7,000-15,000
>15,000
* Standard size refers to PTAC or PTHP equipment with wall sleevedimensions having an external wall opening of greater than or equal to 16 inches high or greater than or equal to 42 inches wide, and having a cross-sectional area greater than or equal to 670 square inches.
** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 inches high or less than 42 inches wide, and having a cross-sectional area less than 670 square inches.
B. Screening Analysis
The purpose of the screening analysis is to evaluate the technologies that improve equipment efficiency, to determine which technologies to consider further, and which to screen out. In developing the screening analysis for the NOPR, DOE consulted with a range of parties, including industry, technical experts, and others to develop a list of technologies for consideration. DOE then applied the four screening criteria to determine which technologies are unsuitable for further consideration in the rulemaking (10 CFR part 430, subpart C, appendix A4.(a)(4) and 5.(b)). DOE presented its results of the screening analysis in the NOPR and in Chapter 4 of the NOPR TSD. In response to the NOPR, DOE received one comment about the technology options that it considered in the screening analysis.
ACEEE commented that DOE should not have screened out some of the technology options. Instead, DOE should have further considered these options in the engineering analysis. (Public Meeting Transcript, No. 12 at pp. 49-52, 64-65) ACEEE stated that DOE neglected to examine other types of compressors (such as scroll compressors), electronically commutated motor (ECM) fans, clutched fan motors, micro-channel heat exchangers, and thermostatic expansion valves (TXVs). According to ACEEE, the compressor choices for PTACs should not be different from those used for residential refrigerators because the loads are similar. ACEEE added that micro-channel heat exchangers allegedly cost less to implement, require less refrigerant and space, and have been used in air conditioning applications within automobiles. (Public Meeting Transcript, No. 12 at pp. 50-51)
1. Scroll Compressors
As presented in Chapter 4 of the NOPR TSD, scroll compressors are an alternative to rotary compressors in air-conditioning applications. Scroll compressors are more efficient than rotary compressors at higher cooling capacities than are typically found in packaged terminal equipment. Whereas rotary compressors use a rotating motion to compress refrigerant gases, scroll compressors use two nutating spirals—one fixed and the other rotating. Although scroll compressors can be more efficient than rotary compressors, they typically are more expensive, heavier, and larger than rotary compressors of the same cooling capacities.
After reviewing publicly available equipment literature and specifications for scroll compressors currently available on the market, DOE determined that manufacturers typically produce scroll compressors with cooling capacities of approximately 20,000 Btu/h or higher, and that the majority of equipment using scroll compressors is typically rated at capacities higher than 40,000 Btu/h. Manufacturers also produce scroll compressors with housings larger than those used for compressors found in PTACs and PTHPs. DOE found that scroll compressors are typically built to be 16 inches or higher in height and that capacity ratings do not impact scroll compressor heights significantly. For example, DOE found that the height of a scroll compressor only decreases by approximately 1.5 inches when capacity decreases from 80,000 to 20,000 Btu/h. However, significant improvements in efficiency, when compared to rotary compressors, are generally achieved with higher capacity models. DOE's market review also found that scroll compressors weigh more than PTAC and PTHP compressors. Scroll compressors typically weigh 50 pounds or more, compared with the 25 to 30 pounds for a PTAC/PTHP rotary compressor found in PTACs and PTHPs.
Ultimately, DOE screened out scroll compressors as a viable design option. As stated in the NOPR and subsequently confirmed by DOE using updated data, manufacturers do not produce scroll compressors for PTAC and PTHP applications, making it unlikely that this technology option could be readily applied to these products. DOE also screened out scroll compressors because their manufacturers have yet to produce a full line of scroll compressors that meet the size limitations, capacity requirements, and voltage requirements of packaged terminal equipment. The size limitation is particularly problematic when given the installation limitations of the sleeve sizes for PTACs and PTHPs.
2. ECM Motors
As presented in Chapter 4 of the NOPR TSD, there are multiple types of electric fan motors that manufacturers
can choose from to blow air over the condenser and evaporator coils. Since the PTAC and PTHP industries have a relatively small number of annual shipments, manufacturers typically have to choose their motors from existing motor lines, rather than having motors customized for their specific needs. The type of motor and its power rating are typically indicative of its efficiency. For example, shaded pole motors are generally the lowest efficiency motors that are available, particularly at very low power levels. By contrast, the electronically commutated motors (ECM) or brushless permanent magnet motors (BPMs) are typically the most efficient motors for the low power levels.
DOE determined that the PTAC and PTHP industries have not adopted ECMs or similar high efficiency motors due to size and weight constraints. The size limitation is particularly problematic when given the installation limitations of the sleeve sizes for PTACs and PTHPs, particularly for non-standard PTACs. Ultimately, DOE screened out high efficiency motors as a viable design option. As stated in the NOPR and subsequently confirmed by DOE using updated data and through discussions with industry experts, DOE found high efficiency motors are not available in the full ranges of sizes needed for the PTAC and PTHP industries making it unlikely that this technology option could be readily applied to these products. DOE believes that, given these circumstances, it would not be practical to manufacture, install, and service this technology on the scale necessary to serve the relevant market at the time of the effective date of an amended standard.
3. Fan Motors
ACEEE commented on clutched fan motors, but DOE did not consider this technology. Although the automotive industry uses clutched fans to engage and disengage a vehicle's cooling fan from the belt driven by the engine, using a clutched fan would not provide appreciable benefits within the energy efficiency context. In theory, these devices would work with PTACs and PTHPs to reduce the load on a single fan motor used to drive both the evaporator and the condenser fan blades when the refrigerating system is not operating by disengaging the condenser fan. In this way, power input could be reduced during times when only the indoor blower is running to recirculate air, or when electric resistance heating is being provided. However, the measure of energy use for PTACs in cooling mode is based on full cooling operation, in which both the indoor blower and the condenser fan must operate. Hence, including a clutched condenser fan would not provide measurable energy efficiency benefits.
4. Micro-Channel Heat Exchangers
As presented in Chapter 4 of the NOPR TSD, micro-channel heat exchangers have a rectangular aluminum cross-section containing several small channels through which refrigerant passes. Aluminum fins with a corrugated shape are brazed at a 90-degree angle between the rectangular tubes. Micro-channel heat exchanger designs provide more heat transfer per volume of heat exchanger core and can provide more heat transfer per unit of face area. In addition, these designs have lower airside pressure drop than similarly performing conventional coils, which reduces the fan power requirement. The small size and lower airside pressure drop that results from micro-channel heat exchangers provide opportunities to reduce the size and weight of the heat exchanger. This explains the frequent use of micro-channel heat exchangers in automobile air-conditioning systems, where their small size and high performance allow car designers to minimize air resistance by lowering the leading edge of the car.
As stated in the NOPR TSD, DOE screened out micro-channel heat exchangers from the engineering analysis. 73 FR 18869-70. Through review of publicly available literature, product specifications, and discussions with manufacturers, DOE determined that micro-channel heat exchangers have inherent problems with performance and condensate removal when installed in PTAC equipment. In particular, manufacturers observed that the smaller airflow passages between plate fins are subject to clogging in installations where debris is present, which can affect both the heat exchanger and fan motor performance. Additionally, for PTACs and PTHPs operating in cooling mode, condensate buildup on the evaporator of the installation may result in icing, which is harder to remove from small horizontal micro-channel heat exchanger passages than from the vertical fins found in the currently used tube and fin heat exchangers.
For the reasons stated above, manufacturers have chosen not to install micro-channel heat exchangers in PTAC and PTHP designs. DOE determined that this technology has not yet penetrated the PTAC and PTHP industry and that design challenges still exist. At this time, DOE believes microchannel heat exchangers are technologically infeasible in PTAC and PTHP applications. DOE understands that manufacturers are conducting research into the use of micro-channel heat exchangers in their PTACs and PTHP design at this time. However, DOE does not have definite knowledge of whether their research efforts will be successful, of when mirco-channel heat exchangers could appear in either prototypes or equipment designs, and what the cost implications would be and the contribution to system performance would be. Because this technology is in the research stage for the PTAC industry, it is also not possible to assess whether it will have any adverse impacts on equipment utility to customers or equipment availability, or on customer health or safety.
5. Thermal Expansion Valves
Regarding ACEEE's comments about TXVs, DOE did not consider this technology for PTACs or PTHPs. TXVs are expansion devices that meter the flow of refrigerant from the condenser to the evaporator at a rate equivalent to the amount of refrigerant being boiled off in the evaporator. For example, when the evaporator is exposed to high temperatures, the TXV will open to allow faster flow of refrigerant to match the higher boiling rate caused by higher temperatures. Alternatively, for lower temperatures, the TXV will reduce the flow rate to match the lower boiling rate caused by cooler temperatures. Typically, TXVs are installed in central air conditioning applications where equipment is rated with the seasonal energy efficiency ratio (SEER) metric and testing occurs at various operating conditions and temperatures. In contrast, PTACs and PTHPs are measured using the EER metric, with testing occurring at a constant temperature of 95 degrees F. Therefore, the energy efficiency benefits of a TXV will not affect the EER rating of a PTAC because the orifice of the TXV and the flow of refrigerant would remain constant during testing. Therefore, DOE does not consider TXVs to be a technology for improving the EER of PTACs and PTHPs.
C. Engineering Analysis
The purpose of the engineering analysis is to establish the relationship between the cost and efficiency of PTACs and PTHPs and to show the manufacturing costs required to achieve that increased efficiency level. As detailed in the NOPR, DOE's engineering analysis for PTACs and PTHPs estimated the baseline manufacturer cost, as well as the incremental cost for equipment at
efficiency levels above the baseline. 73 FR 18870-74. DOE presented its engineering analysis in the NOPR, which included a discussion on the approach, the equipment classes analyzed, the cost model, the baseline equipment, the alternative refrigerant analysis, the cost efficiency results, and mappings of the EER and COP values. In response to DOE's presentation of the engineering analysis in the NOPR, DOE received comments on the following topics: Standard size equipment performance in systems using R-410A refrigerant, max-tech efficiency levels analyzed for standard size equipment, energy-efficiency equations for standard size equipment, max-tech efficiency levels analyzed for non-standard size equipment, energy-efficiency for non-standard size equipment, compressor availability, and the manufacturer production cost increases with the introduction and use of R-410A. DOE discusses each of these topics and the updates to the cost model for the final rule in the subsections below.
1. Material Prices for the Cost Model
In the NOPR analyses, DOE used five-year average material prices from years 2002 through 2006. 73 FR 18871. For the final rule, DOE updated the five-year averages to include material price data from 2007 and 2008. DOE uses a five-year span to normalize the fluctuating prices experienced in the commodities market to screen out temporary dips or spikes. DOE believes a five-year span is the longest span that would still provide appropriate weighting to current prices experienced in the market.
DOE basis for its belief relies on updated commodity pricing data, which point to continued increases. For example, the 5-year time period ending in mid-2008 has higher commodity indices than a 5-year ending in mid-2006 by 10 percent, 28 percent, and 45 percent for All Commodities, Steel, and Copper, respectively.
9
Considering the significant amount of steel and copper in each PTAC or PTHP, incorporating commodity prices that reflect 5-year average prices as close to the current conditions best reflect the market conditions. DOE believes it is appropriate to use prices from 2007 and 2008 in the data span because it more closely represents current PTAC and PTHP material prices and manufacturing conditions. DOE calculated a new five-year average materials price for cold rolled steel, aluminized steel, galvanized steel, painted cold rolled steel, and stainless steel. DOE used the U.S. Department of Labor's Bureau of Labor Statistics (BLS) Producer Price Indices (PPIs) for various materials from 2004 to 2008 to calculate new averages, which incorporate the changes within each material industry and inflation. Finally, DOE adjusted all averages to 2007$ using the gross-domestic-product implicit-price deflator.
9
Bureau of Labor Statistics (BLS) for Copper (WPU102502), Cold Rolled Steel (WPU101707), and All Commodities (WPU00000000) as tracked in the Producer Price Index (PPI) database of the BLS. To download the data or to discover how it is gathered, please see
http://www.bls.gov.
As was the case for the NOPR, DOE developed a material-price-sensitivity analysis. DOE used the annual average price for each of the raw materials from 2008 to calculate the current manufacturing product costs (MPCs). DOE expressed the material price sensitivity results in 2007$. The results for the material-price-sensitivity analysis are presented in Chapter 5 of the final rule TSD.
2. Impacts of the Refrigerant Phaseout on PTAC and PTHP Equipment Performance
a. Standard Size Equipment Performance in Systems Using R-410A Refrigerant
GE commented that R-410A refrigerant has been in use for years by the air conditioning industry. Even though GE believes switching to R-410A refrigerant in PTAC and PTHP equipment will have a negative impact on system efficiency, GE believes the difference can be made up with a combination of higher efficiency compressors, motors, as well as increases in heat exchanger size. GE stated that manufacturers have been aware of the future requirements and should be far along with developments and designs to meet both amended energy conservation standards and R-410A requirements. GE also pointed out that one manufacturer has produced an R-410A PTHP that exceeds the proposed energy conservation standard level in the NOPR (i.e., 11.5 EER for standard equipment) and is currently available on the market. (GE, No. 20 at pp. 2-3; Public Meeting Transcript, No. 12 at pp. 17-18, 66) GE noted that it is finishing the design and test phase for several models and is confident that it can manufacture standard size R-410A PTACs and PTHPs at TSL 4 efficiency levels (i.e., the proposed energy conservation standards for PTHPs in the NOPR). GE added that achieving an efficiency level that is 10 percent higher than the proposed standard for a potential ENERGY STAR category is also possible with existing technology. (GE, No. 20 at p. 3; Public Meeting Transcript, No. 12 at p. 66)
In addition to comments from manufacturers of standard size PTACs and PTHPs, DOE also received confidential performance test data that characterizes the equipment performance degradations in standard size PTACs and PTHPs using R-410A refrigerant. The confidential data DOE received regarding standard size equipment performance suggests the performance degradation can vary greatly depending upon the cooling capacity of the equipment. DOE further addresses comments from interested parties and its analysis of the variation in standard size equipment performance with changes in cooling capacity in DOE's discussion of the energy-efficiency equations, below.
DOE reviewed the data submitted by manufacturers and comments from interested parties and found, in general, the system performance degradations for PTAC and PTHP equipment with R-410A, as described in the NOPR, were in the middle of the range of the submitted data. For today's final rule, DOE used the same system performance degradations for PTAC and PTHP equipment with R-410A refrigerants as described in the NOPR. 73 FR 18873. Because standard size PTAC and PTHP equipment utilizing R-22 refrigerants exists at efficiency levels well above the efficiency levels in ASHRAE Standard 90.1-1999, DOE believes that manufacturers will be able to produce equipment utilizing R-410A at efficiency levels specified by ASHRAE Standard 90.1-1999 and higher efficiency levels in 2012. As GE noted, one standard size manufacturer is already producing R-410A equipment at efficiency levels above ASHRAE Standard 90.1-1999 efficiency levels. Lastly, the comments submitted by GE establishes that PTAC and PTHP prototypes utilizing R-410A refrigerant have been developed and will be able to meet the proposed efficiency levels,
i.e.
, TSL 4, for standard size PTACs and PTHPs.
As DOE reviewed the data submitted by interested parties, DOE generally found larger performance degradations at higher cooling capacities for standard size equipment. As a PTAC or PTHP increases in capacity, manufacturers typically increase the surface area or add a row to the heat exchanger in order to increase unit capacity. Even at larger cooling capacities, manufacturers have to maintain the same physical box sleeve, leaving little space for additional efficiency modifications (
e.g.
, adding heat exchanger area). DOE considered the effects of the R-410A refrigerant
phaseout on the entire range of cooling capacities as part of the generation of the energy-efficiency equations that translates the results for the representative cooling capacities to the entire cooling capacity range. See section IV.C.2.c for additional details on how DOE extended the results for the representative cooling capacities to the full range of cooling capacities for standard size PTACs and PTHPs.
b. “Max-Tech” Efficiency Levels Analyzed for Standard Size Equipment
AHRI and the People's Republic of China, through its WTO/TBT National Notification and Enquiry Center (PRC), commented that the max-tech levels are inaccurate because they are based on R-22 refrigerant and there is no equipment in the 2008 AHRI Directory of Certified Product Performance (AHRI Certified Directory)
10
operating with R-410A refrigerant. AHRI and the PRC also commented about the difficulty in reaching the max-tech efficiency levels with R-410A refrigerant and assert that attaining those efficiency levels is not possible at this time. (Public Meeting Transcript, No. 12 at pp. 168-169; PRC, No. 17 at p. 3)
10
The Air-Conditioning, Heating and Refrigerating Institute,
Directory of Certified Product Performance for Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps
. 2008. <
http://www.ahridirectory.org/ahriDirectory/pages/home.aspx>.
DOE agrees that with the prohibition on R-22 refrigerant, and the expected use of R-410A refrigerant as the most likely alternative, system performance will decline. The max-tech efficiency level should be based on the most likely refrigerant, which is R-410A. Accordingly, DOE revised the max-tech efficiency levels for standard size PTACs and PTHPs in the final rule analysis. DOE applied the system performance degradations described in the NOPR to the AHRI certified market data for standard size equipment. (See graphs in Chapter 5 of the final rule TSD.) DOE used the modified market data to estimate the max-tech efficiency levels corresponding to current models utilizing R-410A and has identified these efficiency levels in section III.B for the representative cooling capacities. DOE estimates that these performance degradations will fall within five to eight percent depending on cooling capacity when compared to an R-22 baseline.
c. Energy-Efficiency Equations for Standard Size Equipment
In response to the NOPR, DOE also received a comment on its approach for calculating the energy efficiency equations for standard size PTACs and PTHPs. Carrier commented that the engineering extrapolations might not provide an accurate view of the max-tech efficiency levels for larger size equipment. In particular, Carrier commented that the PTAC efficiency levels proposed in the NOPR are achievable, but the PTHP proposed efficiency levels in the NOPR may be unachievable in equipment with a cooling capacity of 12 kBtu/h and above. (Carrier, No. 16 at p. 2)
DOE further considered the effects of R-410A on system performance for larger cooling capacities in the engineering analysis. DOE found that as a standard size PTAC or PTHP increases in capacity, manufacturers typically increase the coil surface area or add a coil row to the heat exchanger in order to increase unit capacity. Manufacturers of standard size PTACs and PTHPs maintain the same physical box sleeve (
i.e.
, 42 inches by 16 inches) across all models regardless of cooling capacity. This sleeve size is an established common sleeve size that allows standardization across the industry. This common sleeve size allows end-users to simply slide replacement units into existing wall sleeve openings. However, the standard size wall sleeve imposes a limitation on the total volume available into which all components must fit. Manufacturers add heat exchanger coil area or coil volume to either increase the cooling capacity or to obtain higher efficiencies. This fixed volume limits the size of the box into which the unit's components must fit. In turn, this fixed volume limits the size of heat exchangers and other components that can be used to increase efficiency and there are accompanying decreases in thermodynamic returns when making such changes. Thus, higher capacity units often have lower energy efficiency potentials due to the size constraints of the box sleeve.
In order to consider the effects of the refrigerant phaseout on larger capacity units, DOE reviewed the market data for standard size equipment in the AHRI Certified Directory. DOE applied the efficiency degradations distinguished by cooling capacity ranges estimated in the engineering analysis to each of the models in the AHRI Certified Directory. DOE used these data to estimate the overall system performance of the models in the AHRI Certified Directory utilizing R-410A refrigerant. From these data, DOE plotted each TSL it considered as part of the final rule to see if there were models in the full range of cooling capacity with estimated performance utilizing R-410A refrigerant that would meet the TSL being considered.
For TSL A, which is the amended standard level for standard size PTACs and PTHPs, DOE adjusted the slope of the energy-efficiency equation from the revised slopes calculated in the NOPR for TSLs 1 through 7. This adjustment was based on manufacturer comment and DOE data pointing to the reduced opportunities for achieving greater efficiencies for larger capacity PTAC and PTHP equipment. By revising the slope in this manner, DOE could create and ultimately, adopt, a standard level that is more stringent for lower cooling capacities, where manufacturers have additional physical space to add efficiency improvements, but is less stringent for higher cooling capacities, where manufacturers are physically constrained by the physical dimensions of the box sleeve and less able to introduce efficiency improvements. See Chapter 9 of the final rule TSD for additional details and graphic demonstrations of the energy-efficiency equations for each TSL, including today's amended energy conservation standard for standard size PTACs and PTHPs.
d. Efficiency Levels Analyzed for Non-Standard Size Equipment
In the NOPR, DOE explicitly analyzed one cooling capacity of non-standard equipment (i.e., 11,000 Btu/h). Based upon this cooling capacity, DOE demonstrated a typical design option pathway a manufacturer could use to increase the efficiency of its non-standard PTAC and PTHP equipment. To account for the potential loss of system efficiency as a result of the R-22 refrigerant phaseout, DOE applied an overall system degradation of 6.8 percent, which effectively shifted the cost-efficiency curve to the left (in the direction of decreasing efficiency for the same cost). Thus, for any given efficiency level, the MPC increase will be greater when R-410A refrigerants are used. By degrading expected system performance, DOE accounts for the shift in the baseline performance that a system converted to R-410A use typically exhibits. Using the design option pathway described in the engineering analysis, the maximum efficiency level analyzed is 10.0 EER for non-standard equipment with a cooling capacity of 11,000 Btu/h using R-410A.
e. Energy-Efficiency Equations for Non-Standard Size Equipment
In response to the NOPR, DOE received several comments on its approach for calculating the energy-efficiency equations for non-standard
size PTACs and PTHPs. Specifically, DOE retained the ASHRAE Standard 90.1-1999 slope from the energy-efficiency equation, which characterizes the relationship between EER and cooling capacity for non-standard PTACs and PTHPs in the NOPR. 73 FR 18890-91.
ECR and AHRI commented that they are particularly concerned about reaching the efficiency levels for the larger capacity, non-standard size equipment. (AHRI, No. 23 at pp. 4-5; Public Meeting Transcript (ECR), No. 12 at p. 170) ECR specifically commented that it is concerned about the methodology DOE used to develop the energy-efficiency equations for non-standard equipment. (ECR, No. 15 at p. 2) ECR and Ice Air commented that the proposed energy conservation standard for non-standard PTHPs is too high for all capacities considering the system performance degradations from switching to R-410A refrigerant. (Public Meeting Transcript, No. 12 at pp. 56-60; Ice Air, No. 25 at p. 2)
DOE further considered the effects of R-410A on system performance in the engineering analysis for larger cooling capacities of non-standard PTACs and PTHPs. As explained above, DOE found that as a non-standard size PTAC or PTHP increases in capacity, manufacturers typically increase the coil surface area or add a coil row to the heat exchanger in order to increase unit capacity. The fixed volume of the box sleeve imposes a physical limit on the size of heat exchangers and other unit components that can be used to increase efficiency. Thus, higher capacity units often have lower energy efficiency potential due to the size constraints of the box.
In order to consider the effects on larger capacity units, DOE reviewed the market data for non-standard size equipment in manufacturer equipment catalogs. DOE applied the efficiency degradations distinguished by cooling capacity ranges estimated in the engineering analysis to each of the non-standard models offered for sale and described in manufacturer equipment catalogs. DOE used this data to estimate the overall system performance of the models on the market utilizing R-410A refrigerant. DOE was able to plot each of the TSLs it considered as part of the final rule (i.e., TSL 1 through 5) to see if there were models in the full range of cooling capacities with estimated performance utilizing R-410A refrigerant that would meet the TSL being considered. These plots demonstrated the specific cooling capacities where the TSL or amended standard would be eliminating all of the models from the market using the estimated R-410A performance. See Chapter 9 of the final rule TSD for additional details and graphic demonstrations of the energy-efficiency equations for each TSL, including today's amended energy conservation standard for non-standard size PTACs and PTHPs.
DOE further considered the effects of the refrigerant phaseout on larger cooling capacities when weighing the benefits and the burdens for non-standard equipment. See section V.D for additional information.
f. Compressor Availability
AHRI, Carrier, Ice Air, ECR, and Goodman stated that the true impact on PTAC and PTHP equipment efficiency levels cannot currently be assessed because the lack of available components across the range of equipment capacities prevents comprehensive equipment testing. These manufacturers also stated that R-410A compressors are not available in all required capacities and voltages. Further, compressor manufacturers have not committed to improving compressor performance of rotary compressors. (Public Meeting Transcript (ECR), No. 12 at p. 68-69; Public Meeting Transcript (Goodman), No. 12 at p. 174; AHRI, No. 23 at p. 4; Carrier, No. 16 at p. 5; Ice Air, No. 25 at pp. 1-2)
As DOE presented in the NOPR, DOE found the availability of R-410A compressors in a wide range of efficiencies and voltages remains uncertain. Several compressor manufacturers make R-22 PTAC and PTHP compressors of different capacities, voltages, and efficiencies for standard and non-standard equipment. As the market transitions to the use of R-410A, manufacturers may only develop and offer one line of compressors for PTACs and PTHPs. In engineering interviews conducted for the NOPR, compressor manufacturers commented on the uncertainties surrounding R-410A compressors and their performance characteristics when compared to R-22 compressors. 73 FR 18874. DOE noted in the NOPR that compressor manufacturers stated in interviews that they expect to offer R-410A compressors at only one efficiency level in the initial stages of the R-22 refrigerant phaseout, which could further reduce compressor options for PTAC and PTHP manufacturers.
Id.
In response to comments and the uncertainty surrounding compressor options for manufacturers, DOE gave particular attention to the PTAC and PTHP efficiency levels that cannot be met with current technologies and practices with R-410A in weighing the benefits and burdens of the various TSLs. However, DOE notes that GE stated its working prototypes have experienced significantly less performance degradation due to R-410A conversion than was modeled in the engineering analysis. (GE, No. 20 at p. 2) Based on manufacturer feedback during interviews and historic precedent in other air-conditioning markets where similar refrigerant transitions have taken place, DOE acknowledges that the R-410A compressors available for use in PTAC and PTHP equipment could be less efficient than similar compressors that use R-22 refrigerant at the time of the R-22 phaseout. Even though DOE received comments during engineering interviews stating compressor manufacturers may only offer one rotary compressor line when the refrigerant phaseout occurs, DOE believes compressor manufacturers will continue their development efforts and eventually offer compressors in the full range of cooling capacities, voltages, and efficiencies as they do today. Similar market transformations have occurred in other industries and while the initial set of compressors were less efficient, the markets eventually matured to offer manufacturers a variety of compressors. See Chapter 5 of the TSD for additional information. In addition, DOE believes the amended energy conservation standards being adopted in today's final rule will aid the PTAC and PTHP industry and provide compressor manufacturers with target efficiencies for which they can concentrate their research and development efforts.
3. Manufacturer Production Cost Increases With R-410A
Goodman stated that DOE's estimate of a two percent manufacturing cost increase for converting standard size PTAC and PTHP equipment to utilize R-410A refrigerant is too low. (Public Meeting Transcript, No. 12 at pp. 46-47, 74)
Goodman misstates DOE's estimate. DOE did not use a two percent cost increase. To derive the baseline MPCs for the R-410A PTACs and PTHPs used in the NOPR, DOE estimated the R-410A refrigerant pricing, R-410A compressor pricing, as well as other design changes necessary to accommodate the alternative refrigerant, and incorporated them into the same cost model used for the R-22 engineering analysis. Based on technical journals and manufacturer interviews, DOE increased the tube wall thicknesses of all heat exchangers by 25 percent to
account for the higher pressures associated with R-410A refrigerant. DOE also used a refrigerant price for R-410A based upon cost estimates from refrigerant suppliers and engineering interviews with manufacturers. During engineering interviews, PTAC and PTHP equipment and component manufacturers stated that compressor prices would increase between 10 percent and 20 percent from current R-22 compressor prices. To incorporate manufacturers' comments, DOE estimated that compressor costs would increase by 15 percent. Using the above estimates, DOE calculated the baseline manufacturer selling price (MSPs)
11
of R-410 standard size equipment to be at least 10 percent more than its' R-22 counterpart, on average. See Chapter 5 of the final rule TSD for additional details of the R-410A analysis and results. See TSD, Chapter 5, Section 5.8 (detailing representative capacities of standard size equipment using R-410A).
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This is the price at which the manufacturer can recover both production and non-production costs and earns a profit.
Accordingly, DOE believes Goodman's statement mischaracterizes the estimated manufacturing cost increases in the NOPR. DOE has continued to use the same methodology as presented in the NOPR to develop the R-410A manufacturer production costs for both standard size and non-standard size equipment. After DOE revised the cost model in response to comments from interested parties, DOE calculated the baseline MSPs to be at least 15 percent more than its R-22 counterpart, on average, for standard size PTAC and PTHP equipment. Additional details and results can be found in section 5.8 of Chapter 5 of the final rule TSD.
D. Energy Use Characterization
The building energy use characterization analysis assessed the energy savings potential of PTAC and PTHP equipment at different efficiency levels. The analysis estimates the energy use of PTACs and PTHPs at specified energy efficiency levels through energy use simulations for key commercial building types across a range of climate zones. The energy simulations yielded hourly estimates of building energy consumption, including lighting, plug loads, and air-conditioning and heating equipment. The analysis extracted the annual energy consumption of the PTACs and PTHPs for use in subsequent analyses, including the LCC, PBP, and NES.
DOE did not consider a rebound effect in the final rule analysis when determining the reduction in energy consumption of PTAC and PTHP equipment due to increased efficiency. The rebound effect occurs when a piece of equipment is made more efficient such that the operating costs come down to a point that either the use of the product increases or the market increases, resulting in lower than expected energy savings. Because the user of the equipment (
e.g.
, the customer in a hotel room) does not pay the utility bill, DOE assumed that increasing the efficiency of the equipment will not affect the usage or market for the equipment and, as a result, no rebound effect would occur. DOE requested comment on this assumption in the NOPR. 73 FR 18876. The commenters all agreed that there would be no rebound effect for PTACs and PTHPs. (Public Meeting Transcript (ECR), No. 12 at p. 138, GE, No. 8 at p. 2, Carrier, No. 16 at p. 2) Based on the above, DOE did not incorporate a rebound effect into the final rule analysis.
E. Life-Cycle Cost Analysis
For each efficiency level analyzed, the LCC analysis requires input data for the total installed cost of the equipment, its operating cost, and the discount rate. Table IV.2 summarizes the inputs and key assumptions used to calculate the customer economic impacts of all energy efficiency levels analyzed in this rulemaking. DOE also calculated the PBP of the TSLs relative to a baseline efficiency level. The PBP measures the amount of time it takes the commercial customer to recover the assumed higher purchase expense of more energy efficient equipment through lower operating costs. Similar to the LCC, the PBP is based on the total installed cost and operating expenses, and is calculated as a range of payback periods depending on the probability distributions of the two key inputs (
i.e.
, the supply chain markups and where the unit is likely to be shipped). Unlike its calculation of the LCC, DOE's calculation of the PBP considered only the first year's operating expenses. Because the PBP does not account for changes in operating expense over time or the time value of money, it is also referred to as a simple payback period. Aside from the installation cost, the primary change for the final rule analysis affecting PBP is the electricity price forecasted for 2012 based on the 2007 EIA State energy price data and the AEO2008 electricity price forecasts. Chapter 8 of the TSD discusses the PBP calculation in more detail.
Table IV.2—Final Rule Inputs and Key Assumptions Used in the LCC and PBP Analyses
Inputs
NOPR description
Changes for final rule
Overall
LCC Reporting
All cost inputs and LCC analysis and reporting done in 2006 dollars (2006$)
Updated cost inputs and LCC reporting to 2007 dollars (2007$).
Affecting Total Installed Cost
Equipment Price
Derived by multiplying MSP (from the engineering analysis) by wholesaler markups and contractor markups plus sales tax (from markups analysis). Used the probability distribution for the different markups to describe their variability
All MSPs updated to 2007. Updated wholesaler markup to use 2007 industry (Heating, Airconditioning and Refrigeration Distributors International (HARDI)) data.
Sales tax data updated to 2008. Used State population weights to determine distribution of sales updated to 2007 census data.
Installation Cost
Includes installation labor, installer overhead, and any miscellaneous materials and parts, derived from
RS Means CostWorks 2007
Used
RS Means CostWorks 2008
data to update installation costs.
Affecting Operating Cost
Annual Energy Use
Derived from whole-building hourly energy use simulation for PTACs or PTHPs in a representative hotel/motel building in various climate locations (from energy use characterization analysis). Used annual electricity use per unit. Used the probability distribution to account for which State a unit will be shipped to, which in turn affects the annual energy use
No change.
Electricity Price
Calculated average commercial electricity price in each State, as determined from DOE Energy Information Administration (EIA) data for 2006. Used the AEO2007 forecasts to estimate the future electricity prices. Used the probability distribution for the electricity price
Used EIA data for 2007 to update the analysis for average electricity price by state. Used the AEO2008 electricity price forecasts to calculate future prices.
Maintenance Cost
Annual maintenance cost did not vary as a function of efficiency
Annual maintenance costs updated to use
RS Means CostWorks 2008
data.
Repair Cost
Estimated the annualized repair cost for baseline efficiency PTAC and PTHP equipment as $15, based on costs of extended warranty contracts for PTACs and PTHPs (Chapter 8 of the TSD). Assumed that repair costs would vary in direct proportion with the MSP at higher efficiency levels because it generally costs more to replace components that are more efficient
No change.
Affecting Present Value of Annual Operating Cost Savings
Equipment Lifetime
Used the probability distribution of lifetimes, with mean lifetime for each of four equipment classes assumed to be 10 years based on literature reviews and consultation with industry experts
No change.
Discount Rate
Mean real discount rates ranging from 5.7% for owners of health care facilities to 8.2% for independent hotel/motel owners. Used the probability distribution for the discount rate
Used 2008 financial data discount rate calculations to update discount rates.
Mean real discount rates ranging from 5.53% for owners of large motel/hotel chains to 8.14% for offices.
Date Standards Become Effective
September 30, 2012 (4 years after the publication of the final rule)
No change.
Analyzed Efficiency Levels
Analyzed Efficiency Levels
Baseline efficiency levels (ASHRAE Standard 90.1-1999) and five higher efficiency levels above the baseline for six equipment classes. (DOE also considered levels that were combinations of efficiency levels for PTACs and PTHPs.)
No change for standard size PTAC and PTHP equipment classes.
Only three efficiency levels above the baseline analyzed for non-standard size equipment classes.
For this final rule, DOE did not introduce changes to the life-cycle cost methodology described in the NOPR. However, as the following sections discuss in more detail, DOE revised the inputs to the LCC analysis.
1. Equipment Prices
The price of a PTAC or PTHP reflects the application of distribution channel markups and the addition of sales tax to the MSP as described in the NOPR. Modifications made for the final rule include using the latest MSP data in 2007$ and incorporating changes to the material prices discussed previously, updating the wholesale markups to use 2007 data available from the HARDI 2007 Profit Report, updating State sales tax data to 2008 data from the Sales Tax Clearing House Web site, and updating State population data (used for allocating national shipments to State-level shipments) to use 2007 information from the U.S. Census Bureau.
2. Installation Costs
For the NOPR, DOE derived installation costs for PTACs and PTHPs from data provided in
RS Means CostWorks 2007
(RS Means).
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For the final rule, DOE updated the installation costs using the
RS Means CostWorks 2008
data. Several commenters gave their views on whether higher installation costs should be assumed for PTHP equipment compared with PTAC equipment. Goodman commented that drain systems for PTHP installations as required by several of the building codes might be fairly expensive, resulting in higher installation costs for PTHP compared to PTAC equipment. Goodman pointed out that the odds of replacing a PTAC with a PTHP are low because of the additional cost to add drains during equipment replacement. (Goodman, No 8.4 at p. 116) GE commented that DOE does not need to include a significant cost in the LCC for a drainage system because several manufacturers offer low cost kits and special models that remove moisture without the use of a drainage system. (GE, No. 20 at p. 3) Since there was differing opinion with regard to whether higher installation costs would be required for PTHP equipment and since these installation costs were held constant for all efficiency levels and would not affect the LCC savings or NPV figures calculated for higher
efficiency PTHP or PTAC standards, DOE did not further modify the installation costs beyond what was reflected in the RS Means CostWorks data.
12
R.S. Means Company, Inc. 2007. RS Means CostWorks 2007. Kingston, Massachusetts.
3. Annual Energy Use
DOE estimated the electricity consumed in kilowatt hours per year (kWh/year) by the PTAC and PTHP equipment based on the whole-building energy use characterization as described in the NOPR. 73 FR 18876. DOE also used the same energy use data and characterization developed for the NOPR analysis in the final rule. See Chapter 7 of the NOPR and FR TSDs for additional information.
4. Electricity Prices
Electricity prices are needed to convert the electric energy savings into energy cost savings. DOE updated the State-by-State average electricity price information for the commercial sector to reflect 2007 data available from EIA. DOE further adjusted these prices to reflect average electricity prices for the four types of businesses DOE identified that use PTAC and PTHP equipment. DOE identified these businesses using Commercial Buildings Energy Consumption Survey (CBECS) 2003 data,
13
as described in the NOPR. To develop the LCC distributions, DOE continued to use a probability distribution to determine not only which State received the shipment of equipment, but also which business types would purchase the equipment and what electricity price they would pay. State populations formed the basis for allocating the equipment shipment distribution to different States. DOE updated these State-by-State population data with 2007 data published by the U.S. Census. The State-average effective prices (2007$) range from approximately 5.1 cents per kWh to approximately 28.0 cents per kWh. Chapter 8 of the TSD details the development and use of State-average electricity prices by business type.
13
EIA's CBECS 2003 is the most recent version of this data set.
The electricity price trend provides the relative change in electricity prices for future years to 2042. DOE applied the AEO2008 reference case as the default scenario and extrapolated the trend in values from 2020 to 2030 of the forecast to establish prices for 2030 to 2042, as in the NOPR. DOE provided a sensitivity analysis of the LCC savings and PBP results to future electricity price scenarios. Because EIA did not publish its high- and low-growth forecasts in time for incorporation into this final rule, DOE developed high- and low-growth electricity forecasts corresponding to the AEO2008 forecasts. DOE calculated the ratio of the AEO2007 high- or low-growth forecasted electricity price to the AEO2007 reference case forecast for each year. DOE then applied those ratios, respectively, to the AEO2008 reference case prices.
5. Maintenance Costs
Maintenance costs are the customer's costs to keep equipment in top operating condition. For the NOPR, DOE estimated annual routine maintenance costs for PTAC and PTHP equipment at $50 per year per unit. DOE explained that this estimate was based on statements made during informational interviews with manufacturers. Because data were not available to indicate how maintenance costs vary with equipment efficiency, DOE thus determined to use this preventative maintenance costs that remain constant as equipment efficiency is increased. 73 FR 18879. For the final rule, DOE updated the maintenance costs to reflect data for packaged terminal equipment available in
RS Means Costworks 2008
.
In the NOPR, DOE specifically requested comments on its estimate for maintenance costs and whether the assumptions made would be the same under R-410A. GE commented that repair and maintenance costs (primarily cleaning) would be fixed costs and handled either in house or contracted out. GE's experience working with their customers is that maintenance costs are not a function of equipment efficiency, even though GE equipment efficiencies have increased nearly 10% in the past 5 years. (Public Meeting Transcript, No. 12 at p. 99) Goodman commented that third-party servicers or hoteliers themselves may be better sources of maintenance cost data than manufacturers. (Public Meeting Transcript, No. 12 at pp. 111-112) AHRI commented that maintenance costs will increase with heat exchanger surface area that is commensurate with higher efficiency equipment. (Public Meeting Transcript, No. 12 at pp. 97-98) Goodman expressed concerns over condenser maintenance if manufacturers use closer fin spacing or three or four row coils due to the slinger ring throwing water on the coil and dirt buildup. Goodman also pointed out that dirty condensers can degrade compressors through overheating. This compressor degradation is a long-term impact not improved by coil cleaning. (Public Meeting Transcript, No. 12 at pp. 111-112) ACEEE commented that equipment redesigns are likely to result in reduced repair costs, which would offset any additional maintenance costs. (Public Meeting Transcript, No. 12 at p. 98)
Although opinions were expressed that maintenance costs might increase as a function of efficiency level, this appears not to be the case in GE's experience. Accordingly, DOE decided to use the Means CostWorks 2008 estimate of preventive maintenance costs, which remain constant as equipment efficiency increases.
6. Repair Costs
The repair cost is the customer's cost of replacing or repairing components that have failed in the PTAC and PTHP equipment. DOE estimated annual repair costs for the final rule in the same way that it estimated annual repair costs for the NOPR. DOE estimated the annualized repair cost for baseline efficiency PTAC and PTHP equipment at $15, based on costs of extended warranty contracts for PTACs and PTHPs. After analyzing these data, DOE determined that repair costs would increase in direct proportion with increases in equipment prices. See Chapter 8 of the TSD for additional details.
In the NOPR, DOE specifically requested comment on its estimation for repair costs, as well as installation and maintenance costs. The comments DOE received addressed several areas. GE commented that it does not expect the compressor service call rate to increase for higher efficiency equipment because GE already has rotary compressors in service. (GE, No. 20 at p. 2) Carrier stated that it would expect to see slightly higher repair costs overall for R-410A refrigerant equipment because of the more hygroscopic nature of R-410A. (Carrier, No. 16 at p. 3) ECR warned that if efficiency standards are set too high, existing R-22 refrigerant equipment may be kept in place longer, which may result in increased repair costs. Although DOE recognizes that overall repair costs may increase under R-410A, commenters provided no data to refine DOE's repair cost estimate for equipment using R-410A refrigerant. Because no commenter expressed disagreement with DOE's methodology of scaling repair costs with efficiency level, DOE continued to use the same approach in the final rule. DOE recognizes that the extension of life for R-22 equipment is possible under any scenario, but has no data with which to refine its shipment or repair cost analysis. DOE believes that the impact of life extension for R-22 equipment would, if it occurs, primarily affect the energy savings estimate. However,
because extension of life generally increases the period over which a purchased product can provide services regardless of efficiency level or refrigerant, DOE does not expect a significant impact on the economics of higher-efficiency PTAC and PTHP equipment to the Nation.
7. Equipment Lifetime
DOE defines equipment lifetime as the age when a PTAC or PTHP unit is retired from service. For the NOPR, DOE used a typical lifetime of 10 years after reviewing available data sources and concluding that a 10-year life is appropriate for PTAC and PTHP equipment. DOE incorporated variability in lifetime in its LCC analysis using a Weibull
14
statistical distribution with an average lifetime of 10 years and a maximum lifetime of 20 years. In response to the NOPR, DOE received no comments on the lifetime assumptions for new equipment purchases that would affect the LCC analysis. DOE, therefore, retained the same lifetime assumptions and methodologies developed for the NOPR in the final rule analysis. See Chapter 8 of the TSD for additional information.
14
The Weibull distribution is a continuous probability distribution used to understand the failure and durability of equipment. It is popular because it is extremely flexible and can accurately model various types of failure processes. A two-parameter version of the Weibull was used and is described in chapter 8 of the TSD,
8. Discount Rate
The discount rate is the rate at which future expenditures are discounted to establish their present value. DOE estimated the discount rate by estimating the weighted average cost of capital (WACC) for purchasers of PTAC and PTHP equipment based on weighting the cost of both debt and equity capital used to fund investments. For the NOPR, DOE used financial information from a sample of companies, including large hotel/motel chains and health-care chains drawn from a database of U.S. companies on the
Damodaran Online
Web site. See
http://pages.stern.nyu.edu/~adamodar
. The NOPR used the data available in 2007. The final rule's analysis relies on the same data source to develop discount rates, but was updated to reflect the data available in January 2008.
DOE calculated the weighted average after-tax discount rate for PTAC and PTHP purchases, adjusted for inflation, as 5.53 percent for large hotel chains and 5.64 percent for health care institutions (nursing homes and assisted living facilities). The cost of capital for independent hoteliers and small office companies is more difficult to determine because these business types are not explicitly identified in the Damodaran data. For the final rule, DOE used the same methodology that it used to determine the discount rates for these business types in the NOPR. Specifically, DOE developed an 8.03 percent after-tax discount rate for independent hoteliers and an 8.14 percent after-tax rate for small offices. These values vary only slightly from those presented in the NOPR. Chapter 8 of the TSD provides more detail on the calculation of discount rates.
F. National Impact Analysis—National Energy Savings and Net Present Value Analysis
The National Impact Analysis (NIA) evaluates the impact of an amended energy conservation standard from a national perspective rather than from the customer perspective, which is represented by the LCC. This analysis assesses the NES and the NPV (future amounts discounted to the present) of total commercial customer costs and savings, which are expected to result from amended energy conservation standards for PTACs and PTHPs at specific efficiency levels. DOE followed the same analysis approach for the NIA as it used for the NOPR analysis, using a Microsoft Excel spreadsheet model to calculate the energy savings and the national economic costs and savings from amended energy conservation standards. Unlike the LCC analysis, the NES spreadsheet does not use distributions for inputs or outputs. DOE examined sensitivities by applying different scenarios. DOE used the NES spreadsheet to perform calculations of energy savings and NPV, using the annual energy consumption and total installed cost data from the LCC analysis. DOE forecasted the energy savings, energy cost savings, equipment costs, and NPV of benefits for each TSL from 2012 through 2042. The forecasts provided annual and cumulative values for all four output parameters.
For each TSL, DOE calculated the NES and NPV as the difference between a base case forecast (without amended standards) and the standards case (with amended standards). The NES refers to cumulative energy savings from 2012 through 2042. The NPV refers to cumulative monetary savings. DOE calculated net monetary savings in each year relative to the base case as the difference between total operating cost savings and increases in total installed equipment cost. Cumulative savings are the sum of the annual NPV over the specified period. DOE accounted for operating cost savings until 2062 (
i.e.
, until all the equipment installed through 2042 is retired).
DOE built up the NES analysis from a combination of unit energy savings for each class of PTAC or PTHP equipment analyzed and estimated shipments of units in this class at each efficiency level from 2012 through 2042. Unit energy savings for each equipment class are the weighted-average values calculated in the LCC and PBP spreadsheet. These calculations involved multiple steps. First, DOE calculated the national site energy consumption (
i.e.
, the energy directly consumed by the units of equipment in operation) for PTACs or PTHPs for each year, beginning with the expected effective date of the standards (2012) for the base-case forecast and the standards case forecast. Second, DOE determined the annual site energy savings, consisting of the difference in site energy consumption between the base case and the standards case. Third, DOE converted the annual site energy savings into the annual amount of energy saved at the source of electricity generation (the source energy). DOE used a site-to-source conversion factor developed from an analysis of the marginal impacts of changes in PTAC and PTHP energy use on the energy source energy inputs in DOE's Utility Impacts analysis. Finally, DOE summed the annual source energy savings from 2012 to 2042 to calculate the total NES for that period. DOE performed these calculations for each TSL and equipment class considered in this rulemaking.
Changes in inputs to the analyses and reporting drove the modifications to the NIA analyses and results. Changes to the NES results between the NOPR and final rule were due to a reduction in the TSL levels considered for non-standard PTAC and PTHP equipment classes and a change in the mix of equipment efficiencies used in the base case and standards case equipment efficiency forecasts. Although DOE used the same economic model for predicting the distribution of equipment efficiencies in both the final rule and the NOPR, these changes in the installed equipment prices and the lower R-410A max tech efficiency levels resulted in slight shifts to the overall efficiency distributions for each equipment class. In addition, the site-to-source energy conversion factor developed for the final rule used EIA's NEMS model consistent with AEO2008. The calculated conversion factors in the final rule differed from that calculated for the NOPR, which relied on EIA's AEO2007.
To estimate NPV, DOE calculated the net impact as the difference between
total operating cost savings (including electricity, repair, and maintenance cost savings) and increases in total installed costs (including MSP, sales taxes, distribution chain markups, and installation cost). DOE calculated the NPV of each TSL over the life of the equipment by determining: (1) The difference between the equipment costs under the TSL case and the base case in order to obtain the net equipment cost increase resulting from the TSL; (2) the difference between the base case operating costs and the TSL operating costs in order to obtain the net operating cost savings from the TSL; and (3) the difference between the net operating cost savings and the net equipment cost increase in order to obtain the net savings (or expense) for each year. DOE then discounted the annual net savings (or expenses) to 2008 for PTACs and PTHPs bought between 2012 and 2042, and summed the discounted values to provide the NPV of a TSL. DOE used discount rates of 7 percent and 3 percent in accordance with Office of Management and Budget (OMB) guidance to evaluate the impacts of regulations. An NPV greater than zero shows net savings (
i.e.
, the TSL would reduce customer expenditures relative to the base case in present value terms). An NPV less than zero indicates that the TSL would result in a net increase in customer expenditures in present value terms.
Changes in inputs to the analyses and reporting drove modifications to the NPV analyses and results. Changes to the NES results were due to (1) a reduction in the number of TSL levels considered for non-standard PTAC and PTHP equipment classes, (2) a change in the mix of equipment efficiencies used in the base case and standards case equipment efficiency forecasts, and (3) the use of electricity price forecasts from the AEO 2008 reference case. As with the LCC analysis, DOE analyzed high- and low-growth energy price forecasts. Because EIA had not published actual high- and low-growth forecasts in time for the final rule analysis, DOE developed high- and low-growth scenarios based on the AEO2008 reference case forecast. DOE applied the ratio of the year-by-year energy prices from the AEO2007 high- and low-growth price forecasts, respectively, to the AEO2007 reference case forecast. Chapter 10 of the TSD provides a full discussion of the NIA. Table IV.3 summarizes the inputs and key assumptions used to calculate the national energy savings and national economic impacts of all energy efficiency levels analyzed in this rulemaking.
Table IV.3—Summary of NES and NPV Model Inputs
Inputs
NOPR description
Changes for final rule
Shipments
Annual shipments from shipments model (Chapter 10 of the TSD)
No change.
Effective Date of Standard
September 2012
No change.
Base Case Efficiencies
Distribution of base case shipments by efficiency level
Equipment costs and economic benefits for each TSL level come from final rule LCC analysis.
Standard Case Efficiencies
Distribution of shipments by efficiency level for each standards case. Standards case annual shipment-weighted market shares remain the same as in the base case and each standard level for all efficiencies above the TSL. All other shipments are at the TSL efficiency
Equipment costs and economic benefits for each TSL level come from final rule LCC analysis.
Only three TSL levels considered for non-standard PTAC and PTHP equipment.
Annual Energy Use per Unit
Annual national weighted-average values are a function of efficiency level
No change.
Total Installed Cost per Unit
Annual weighted-average values are a function of efficiency level
Updated with values from final rule LCC analysis.
Repair Cost per Unit
Annual weighted-average values increase with manufacturer's cost level
Updated with values from final rule LCC analysis.
Maintenance Cost per Unit
Annual weighted-average value equals $50 (Chapter 8 of the TSD)
Updated with values from final rule LCC analysis.
Escalation of Electricity Prices
2007 EIA AEO forecasts (to 2030) and extrapolation beyond 2030
2008 EIA AEO forecasts (to 2030) and extrapolation for beyond 2030.
Electricity Site-to-Source Conversion Factor
Conversion factor varies yearly and is generated by EIA's NEMS * model for AEO2007. Includes the impact of electric generation, transmission, and distribution losses
Developed conversion factor using EIA's NEMS model for AEO 2008.
Discount Rate
3% and 7% real
No change.
Present Year
Future costs are discounted to year 2008
No change.
* Chapter 14 on the utility impact analysis provides more detail on NEMS model.
1. Shipments Analysis
DOE developed shipments projections under a base case and each of the standards cases using the identical shipments model used in the NOPR analysis. The NOPR and Chapter 10 of the TSD describe this model in more detail.
The NES spreadsheet model contains a provision for a change in projected shipments in response to efficiency level increases, but DOE has no information with which to calibrate such a relationship. For the NOPR analysis, DOE assumed that the shipments do not change in response to the changing TSLs. ECR and Cold Point commented that if DOE sets a high or unrealistic efficiency level for non-standard PTAC or PTHP equipment, customers might choose to extend the life of existing equipment that uses R-22 refrigerant. (Public Meeting Transcript (ECR), No. 12 at pp. 100-101, Cold Point, No. 18 at p. 2) However, commenters provided no data to suggest specific changes that DOE could make to its shipments analysis to account for this possible impact. For the final rule analysis, DOE presumed that projected industry shipments by product class do not change in response to changing TSLs. See discussion of equipment lifetime in section IV.E.7.
GE, ECR, and Carrier commented that it was possible that customers could switch to a less efficient class of HVAC equipment than a packaged terminal unit, such as a through-the-wall air
conditioner or a window air conditioner, which does not have a heat pump option for providing space heat. Carrier elaborated that this kind of equipment switch would occur mostly in small, independent, motel markets. (Public Meeting Transcript (GE), No. 12 at p. 141; Public Meeting Transcript (ECR), No. 12 at p. 141-141; Public Meeting Transcript (Carrier), No. 12 at p. 143)
Several interested parties commented that DOE's proposed standard level in the NOPR, TSL 4, had higher cooling efficiency requirements for PTHP equipment compared with PTAC equipment of the same capacity. This difference would mean higher proportional costs for PTHP equipment under the new energy conservation standard compared with PTAC equipment, and is likely to result in some current or future PTHP customers choosing to purchase PTAC equipment. If this occurs, there would be a decrease in overall equipment efficiency due to the much lower heating efficiency of PTAC compared with PTHP equipment. Several manufacturers expressed concern that people would be forced by cost or lack of products at the proposed standard levels to shift from PTHP to PTAC—forcing people into a less efficient product and negating much of the energy savings from the rule. (Public Meeting Transcript (ECR), No. 12 at pp. 141-142; ECR, No. 15 at p. 3; Ice Air, No. 25 at pp. 3-4; Public Meeting Transcript (Goodman), No. 12 at p. 142) AHRI and Carrier both agreed that higher efficiency levels for PTHPs will cause a shift to less efficient PTACs. (AHRI, No. 23 at p. 8; Carrier, No. 16 at p. 5)
In contrast, GE stated that the probability of users shifting to other product classes would be remote. GE pointed out that the case for a heat pump is compelling when the cost differential is $50. In almost all cases, the payback for choosing a heat pump is less than 1 year. In most cases, GE said, its customer base is composed of astute business people who are concerned about operating costs and efficiencies. (Public Meeting Transcript, No. 12 at pp. 145-146) AHRI questioned GE's assertion, given that the current market is almost evenly split between PTAC and PTHP equipment. (Public Meeting Transcript, No. 12 at p. 144)
To address concerns about equipment switching, DOE performed a sensitivity analysis on the possible impact on energy savings due to customers switching from PTACs to PTHPs for a case where a combined TSL resulted in a higher cooling efficiency (EER) might be set for PTHPs compared to PTACs of the same capacity. This sensitivity analysis examined what fraction of the future projected PTHP market would need to switch from PTHPs to PTACs with electric resistance heat to offset the energy savings from increased efficiency requirements for PTHPs relative to PTACs at TSLs 2, 4, and A. It also estimated the change in payback period for purchasers of PTHP versus PTAC equipment at the TSLs. DOE concluded that based on this analysis the increase in PTHP cost and the resulting change in PBP for these TSLs were both small and that it was unlikely that the savings from higher PTHP standards under these TSLs would be offset by customers switching to PTAC equipment. Section V.B. discusses the results of this sensitivity analysis.
2. Base Case and Standards Case Forecasted Distribution of Efficiencies
The annual energy consumption of a PTAC or PTHP unit relates directly to the efficiency of the unit. For the final rule, DOE used the same methodology that was used in the NOPR analysis to develop base case and standards case efficiency distributions for shipments. DOE developed shipment-weighted average equipment efficiency forecasts that enabled a determination of the shipment-weighted annual energy consumption values for the base case and each TSL analyzed by equipment class. DOE developed shipment estimates by converting the 2005 PTAC and PTHP equipment shipments by equipment class into market shares by equipment class. DOE then adapted a cost-based method used in the NEMS to estimate market shares for each equipment class by TSL. DOE used those market shares and projections of shipments by equipment class to determine future equipment efficiency forecasts both for a base case scenario and standards case scenarios. The difference in equipment efficiency between the base case and standards cases was the basis for determining the reduction in per-unit annual energy consumption that could result from amended energy conservation standards. Although the methodology DOE used was identical to that in the NOPR, differences in equipment price and annual energy consumption established in the LCC analysis resulted in slight shifts in the estimated shipments by efficiency level.
For each standards case, DOE assumed that shipments at efficiencies below the projected minimum standard levels were most likely to roll up to those efficiency levels in response to an increase in energy conservation standards. The market shares for equipment at higher efficiency levels were assumed not to be affected as the market already has a choice of that equipment. DOE, thus, assumed that the new standard would not affect the relative attractiveness of equipment with efficiencies higher than the standard. For further discussion, see Chapter 11 of the TSD.
G. Manufacturer Impact Analysis
In determining whether a standard for a covered product is economically justified, the Secretary of Energy is required to consider “the economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard.” (42 U.S.C. 6295(o)(2)(B)(i)(I)) EPCA also requires for an assessment of the impact of any lessening of competition as determined by the Attorney General. (42 U.S.C. 6295(o)(2)(B)(i)(V)) DOE performed the MIA to estimate the financial impact of energy conservation standards on the standard size and non-standard size PTAC and PTHP industries, and to assess the impact of such standards on employment and manufacturing capacity. DOE published the results in the NOPR. 73 FR 18883-87, 18893-99. For this final rule, while DOE did not introduce changes to the methodology described in the NOPR, it updated the R-410A-shipment forecast distribution of shipments based on the updated NIA results. (See TSD Chapter 13.) In response to DOE's NOPR presentation, interested parties provided comments on the cumulative regulatory burden, small business impacts, and employment.
1. GRIM Input Updates
The GRIM inputs consists of information regarding the standard size and non-standard size PTAC and PTHP industries' cost structure, shipments, and revenues. This includes information from many of the analyses described above, such as manufacturing costs and prices from the engineering analysis and shipments forecasts. In response to the presentation of the MIA analysis in the NOPR, DOE revised several key inputs to the GRIM based on more recent sources of data for both standard and non-standard size PTAC and PTHP industries.
a. Manufacturing Production Costs
The GRIM uses cost-efficiency curves derived in the engineering analysis to calculate the MPCs for each equipment class at each TSL. By multiplying different sets of markups with the MPCs, DOE derives the manufacturing selling prices (MSP) used to calculate industry revenues. For this final rule,
DOE used the MPCs from the final rule engineering analysis as described in Chapter 5 of the TSD.
b. Shipments and Distributions of Efficiencies in the Base Case
The GRIM estimates manufacturer revenues based on total-unit-shipment forecasts and the distribution of these values by EER. Changes in the efficiency mix at each standard level are a key driver of manufacturer finances. For the final rule analysis, DOE used only the NES shipments forecasts and the distribution of efficiencies in the base case for both standard size and non-standard size PTACs and PTHPs from 2007 to 2042. DOE continued to allocate the closest representative cooling capacity, within the appropriate equipment class, to any shipments forecasted by the NES of equipment that was not within one of the representative cooling capacities. For example, the total PTAC or PTHP shipments with a cooling capacity less than 10,000 Btu/h for standard size equipment are included with the 9,000 Btu/h representative cooling capacity. (See Chapter 13 of the final rule TSD.)
c. R-410A Base Case and Amended Energy Conservation Standards Markup Scenarios
The PTAC and PTHP manufacturer impact analysis is explicitly structured to account for the cumulative burden of sequential refrigerant and amended energy conservation standards. In the NOPR, DOE described the two markup scenarios used to calculate the base case INPV after implementation of the R-22 refrigerant phaseout, and the standards case INPV at each TSL. (See Chapter 13 of the NOPR TSD.) For the final rule, DOE continued to analyze two distinct R-410A base case and amended energy conservation standards markup scenarios: (1) The flat markup scenario, and (2) the partial cost recovery markup scenario. Under the flat markup scenario, DOE applied a single uniform “gross margin percentage” markup across all TSLs that DOE believes represents the current markup for manufacturers in the standard and non-standard size PTAC and PTHP industries. The “partial cost recovery” scenario implicitly assumes that the industries can pass-through only part of their regulatory-driven increases in production costs to consumers in the form of higher prices. As presented in the NOPR, these markup scenarios characterize the markup conditions described by manufacturers, and reflect the range of market responses manufacturers expect as a result of the R-22 phaseout and the amended energy conservation standards. See Chapter 13 of the TSD for additional details of the markup scenarios.
d. Capital and Equipment Conversion Expenses
Energy conservation standards typically cause manufacturers to incur one-time conversion costs to bring their production facilities and equipment designs into compliance with the amended standards. For the purpose of the MIA, DOE classified these one-time conversion costs into two major groups: equipment conversion and capital conversion costs. Equipment conversion expenses are one-time investments in research, development, testing, and marketing that are focused on making equipment designs comply with the new energy conservation standard. Capital conversion expenditures are one-time investments in property, plant, and equipment to adapt or change existing production facilities so that new equipment designs can be fabricated and assembled.
For this final rule, DOE used the same capital expenses as presented in the NOPR calculated in 2007$ for both standard and non-standard size PTAC and PTHP industries. For equipment conversion expenses for the standard size PTAC and PTHP industry, DOE also used the same product expenses as presented in the NOPR calculated in 2007$. For equipment conversion expenses for the non-standard size PTAC and PTHP industry, DOE revised figures based on comments from interested parties on the NOPR. For more information on DOE's revision to the equipment conversion expenses for the non-standard size PTAC and PTHP industry, see section V.C. and Chapter 13 of the TSD.
2. Cumulative Regulatory Burden
As discussed in the NOPR, one aspect of manufacturer burden is the cumulative impact of multiple DOE standards and other regulatory actions that affect the manufacture of the same covered equipment. All PTAC and PTHP manufacturers believe that the EPA-mandated refrigerant phaseout will be the largest external burden on PTAC and PTHP manufacturers. DOE addressed the cumulative regulatory burden affecting manufacturers of PTACs and PTHPs as a result of the refrigerant phaseout by first examining impacts on INPV arising from converting R-22 to R-410A equipment production. DOE then examined the possible impacts of amended energy conservation standards on the R-410A base case. Thus, DOE examined the cumulative impacts of both R-410A conversion and compliance with the proposed energy conservation standards. (See Chapter 13 of the TSD.) 73 FR 18897-98.
In response to DOE's NOPR, ECR stated that manufacturers are forced to consider both the refrigerant phaseout and energy conservation standard levels due to the timing of the regulations. According to ECR, it is difficult to work on designs using R-410A knowing that the 2012 efficiency levels are not final and the efficiency levels proposed in the NOPR may change. (Public Meeting Transcript, No. 12 at pp. 63-64)
Similarly, Ice Air stated its concern about the cumulative regulatory burden placed on manufacturers by the refrigerant phaseout and the amended energy conservation standards. Ice Air warned that the burdens to comply with both of these regulatory actions could cause manufacturers of non-standard size equipment to go out of business and could also severely affect the standard size industry. (Ice Air, No. 25 at p. 2)
To assess the impacts on INPV due to both refrigerant phaseout and energy conservation standards, DOE first examined the changes in industry cash flows from 2007 to 2010 using only equipment with R-22 refrigerant (
i.e.
, before the refrigerant phaseout). DOE then examined the changes in industry cash flows from 2010 through 2042 using only equipment with R-410A refrigerant (
i.e.
, after the refrigerant phaseout). The sum of the cash flows discounted to the current year equates to the INPV used to quantify the impacts on the industries. DOE included equipment prices using both R-22 and R-410A refrigerant estimated in the engineering analysis and equipment conversion and capital conversion expenses related to both energy conservation standards and refrigerant phaseout in its manufacturer impact analysis. Investment estimates used in the analysis can be found in the NOPR, 73 FR 18893-96, and in Chapter 13 of the TSD. Although investments needed to meet the proposed energy conservation standards and refrigerant phaseout requirements could vary among manufacturers, the values DOE used in its analysis are an aggregate of information manufacturers provided. Given these variations in investment within the industry, DOE believes that the MIA captures the potential range of costs, investments, and impacts on manufacturers due to both energy conservation standards and the refrigerant phaseout.
AHRI commented that DOE did not account for the costs to phase out HCFCs from other air-conditioning equipment or to comply with other
energy conservation standards produced by PTAC and PTHP manufacturers. (AHRI, No. 23 at p. 5)
For the NOPR, DOE examined other Federal regulations that could affect manufacturers of standard and non-standard size PTACs and PTHPs. Chapter 13 of the TSD presents DOE's findings. 73 FR 18897-98. These findings generally indicated that the refrigerant phaseout is the most significant other Federal regulation impending in the industry at this time. For this final rule, DOE also identified the other DOE regulations standard size and non-standard size PTAC and PTHP manufacturers are facing for other equipment they manufacture within three prior and three years after the effective date of the amended energy conservation standards for PTACs and PTHPs. DOE identified the costs of additional regulations when these estimates were available from other DOE rulemakings. Chapter 13 of the TSD presents additional information regarding the cumulative regulatory burden analysis.
3. Employment Impacts
In response to DOE's presentation of the direct employment impacts characterized in the MIA and presented in the NOPR TSD, EarthJustice commented that DOE's projection of employment impacts of standards on the regulated industry demonstrates an economic benefit in the form of increased employment on a global scale. Specifically, EarthJustice comments that the benefits from an increase in employment would be principally to other countries and that DOE does not take this into consideration in its analysis. (EarthJustice, No. 22 at p. 5)
DOE believes EarthJustice's assertion that DOE only considered the direct employment impacts on international manufacturers is incorrect. DOE calculated the total labor expenditures for the industry using the unit labor costs from the engineering analysis and the total industry shipments from the NES. DOE translated the total labor expenditures for the industry to the total number of jobs using the average labor rate for the industry and the annual worker hours. Finally, DOE multiplied the total number of jobs by the domestic market share to derive the domestic number of jobs for the base case and each TSL. The direct employment results characterized by the MIA represent U.S. production workers are impacted by this rulemaking in the standard and non-standard size PTAC and PTHP manufacturing industries. See section V.C.2 for the results of the direct employment impact analysis. Accordingly, DOE has considered all employment impacts in weighing the benefits and the burdens, including direct (as calculated by the MIA) and indirect (as calculated by the employment impact analysis).
In response to the increase in direct employment characterized by the MIA, ECR, a domestic manufacturer of non-standard size equipment, and McQuay, a domestic manufacturer of both standard and non-standard size equipment, commented that the adoption of the proposed amended energy conservation standards would have adverse impacts on employment and their businesses. Specifically, ECR commented that adopting TSL 4 from the NOPR might have an adverse impact on employment and customers in New York, where a large volume of equipment is produced and shipped. (ECR, No. 15 at p. 3; see also Public Meeting Transcript, No. 12 at p. 184) Similarly, McQuay stated that unlike the standard size equipment that is built overseas, the non-standard size equipment is unique because it is developed, manufactured, and supported by domestic facilities mainly located in the state of New York. Any impacts on its non-standard size equipment business would have an economic impact on McQuay. (Public Meeting Transcript, No. 12 at p. 184)
DOE calculated the potential impacts of amended energy conservation standards on domestic production employment for the non-standard industry by bounding the range of potential impacts. For the upper bound, the direct employment impact analysis conducted as part of the MIA estimates the number of U.S. production workers who are impacted by this rulemaking in the non-standard size PTAC and PTHP manufacturing industries, assuming that shipment levels and product availability remain at current levels. In this best case scenario, where shipments do not decrease and higher efficiency products require more labor, the direct employment impact analysis shows a net increase in the number of domestic jobs for the non-standard size industries. It is reasonable to assume that shipments and product availability will continue because consumers will continue to demand non-standard PTACs and PTHPs for their replacement needs. For these customers, modifications to their buildings to accommodate standard size PTACs and PTHPs is a large cost they will try to prevent. However, at higher standard levels, the product development costs are prohibitive for the small domestic manufacturers that produce PTACs and PTHPs. These domestic manufacturers may exit the industry rather than invest in new designs. This would result in a loss of domestic employment at these firms. The unmet demand could be satisfied by new domestic manufacturers or foreign manufacturers.
To calculate the lower bound of the range of potential impacts, DOE developed a scenario where either shipments drop or manufacturers respond to higher labor requirements by shifting production to lower-labor-cost countries. For the non-standard industry, DOE believes this scenario is a possibility because DOE noticed that the non-standard market currently offers over approximately 40 different equipment platforms, many of which are built in very low volumes. As a result, the non-standard market will incur a much higher impact due to fixed costs on a per unit basis. Since the non-standard PTAC and PTHP industry is composed chiefly of small businesses, any energy conservation standard for non-standard PTACs and PTHPs will impact mostly small businesses, which might choose to exit this industry rather than invest the necessary resources to convert existing equipment lines. Alternatively, manufacturers could choose to move their manufacturing facilities overseas as a method of reducing costs. Consequently, DOE assumed that the greater labor requirements displace all U.S. production workers in the non-standard industry and used this condition as a lower bound to the potential impacts of standards on domestic production employment.
H. Employment Impact Analysis
When developing a standard for adoption, DOE considers its employment impact. Direct employment impacts are any changes in the number of employees for PTAC and PTHP manufacturers, their suppliers, and related service firms. Indirect impacts are changes in employment in the larger economy that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more efficient PTAC and PTHP equipment. The MIA in this rulemaking addresses the employment impacts on manufacturers of PTACs and PTHPs (
i.e.
, the direct employment impacts) (Chapter 13 of the TSD). This section describes other, primarily indirect, employment impacts.
Indirect employment impacts from PTAC and PTHP standards consist of the net jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, as a consequence of (1) reduced spending by end users on energy (electricity,
gas—including liquefied petroleum gas—and oil); (2) reduced spending on new energy supply by the utility industry; (3) increased spending on the purchase price of new PTACs and PTHPs; and (4) the effects of those three factors throughout the economy. DOE expects the net monetary savings from standards to be redirected to other forms of economic activity. DOE also expects these shifts in spending and economic activity to affect the demand for labor.
DOE estimated indirect national employment impacts using an input/output model of the U.S. economy called Impact of Sector Energy Technologies (ImSET). Developed by DOE's Building Technologies Program, the ImSET model estimates changes in employment, industry output, and wage income in the overall U.S. economy resulting from changes in expenditures in the various sectors of the economy. DOE estimated changes in expenditures using the NES spreadsheet. ImSET then estimated the net national indirect employment impacts of potential PTAC and PTHP equipment efficiency standards on employment by sector. DOE received no comments on the employment analysis during the NOPR, so it made no changes to the analysis and methodology in the final rule.
The ImSET input/output model suggests that the amended PTAC and PTHP efficiency standards could increase the net demand for labor in the economy as the net monetary savings from standards are redirected to other forms of economic activity. The gains would most likely be small relative to total national employment, primarily due to the small net monetary savings from amended PTAC and PTHP energy conservation standards available for transfer to other sectors, relative to the economy as a whole. Chapter 15 of the TSD provides more details on the employment impact analysis.
I. Utility Impact Analysis
The utility impact analysis estimates the effects of reduced energy consumption due to improved equipment efficiency on the utility industry. This utility analysis consists of a comparison between forecast results for a case comparable to the AEO2008 Reference Case and forecasts for policy cases incorporating each of the PTAC and PTHP TSLs.
DOE analyzed the effects of amended standards on electric utility industry generation capacity and fuel consumption using a variant of the EIA's NEMS. NEMS, which is available in the public domain, is a large, multisectoral, partial-equilibrium model of the U.S. energy sector. EIA uses NEMS to produce its AEO, a widely recognized baseline energy forecast for the United States. DOE used a variant of NEMS, referred to as NEMS-BT, to clarify that NEMS has been modified to take into account the energy savings from standards for PTAC and PTHP at different TSL levels.
DOE conducted the utility analysis as policy deviations from the AEO2008, applying the same basic set of assumptions. The NEMS-BT is run similarly to the AEO2008 NEMS, except that PTAC and PTHP energy usage is reduced by the amount of energy (by fuel type) saved due to the TSLs. DOE obtained the inputs of national energy savings from the NES spreadsheet model. Using these inputs, the utility analysis reported the changes in installed capacity and generation (by fuel type) that result for each TSL, as well as changes in end-use electricity sales. Aside from the use of the AEO2008, DOE made no other changes to the methodology used for the utility impact analysis from the NOPR. Chapter 14 of the TSD provides details of the utility analysis methods and results.
J. Environmental Analysis
DOE has prepared a draft environmental assessment (EA) pursuant to the National Environmental Policy Act and the requirements under 42 U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a
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