Energy Conservation Program for Commercial and Industrial Equipment: Energy Conservation Standards for Commercial Ice-Cream Freezers; Self-Contained Commercial Refrigerators, Commercial Freezers, and Commercial Refrigerator-Freezers Without Doors; and Remote Condensing Commercial Refrigerators, Commercial Freezers, and Commercial Refrigerator-Freezers

Federal RegisterJan 9, 2009

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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number EERE-2006-BT-STD-0126]

RIN 1904-AB59

Energy Conservation Program for Commercial and Industrial Equipment: Energy Conservation Standards for Commercial Ice-Cream Freezers; Self-Contained Commercial Refrigerators, Commercial Freezers, and Commercial Refrigerator-Freezers Without Doors; and Remote Condensing Commercial Refrigerators, Commercial Freezers, and Commercial Refrigerator-Freezers

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

The Department of Energy (DOE) is adopting new energy conservation standards for commercial ice-cream freezers; self-contained commercial refrigerators, commercial freezers, and commercial refrigerator-freezers without doors; and remote condensing commercial refrigerators, commercial freezers, and commercial refrigerator-freezers. DOE has determined that energy conservation standards for these types of equipment would result in significant conservation of energy, and are technologically feasible and economically justified.

DATES:

The effective date of this rule is March 10, 2009. The standards established in today's final rule will be applicable starting January 1, 2012. Incorporation by reference of the material listed is approved by the Director of the Federal Register on March 10, 2009.

ADDRESSES:

For access to the docket to read background documents, the technical support document, transcripts of the public meetings in this proceeding, or comments received, visit the U.S. Department of Energy, Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Brenda Edwards at the above telephone number for additional information regarding visiting the Resource Room. (

Note:

DOE's Freedom of Information Reading Room no longer houses rulemaking materials.) You may also obtain copies of certain previous rulemaking documents in this proceeding (

i.e.

, framework document, advance notice of proposed rulemaking, notice of proposed rulemaking), draft analyses, public meeting materials, and related test procedure documents from the Office of Energy Efficiency and Renewable Energy's Web site at

http://www.eere.energy.gov/buildings/appliance_standards/commercial/refrigeration_equipment.html

FOR FURTHER INFORMATION CONTACT:

Charles Llenza, U.S. Department of Energy, Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-2192,

Charles.Llenza@ee.doe.gov

Francine Pinto, Esq., U.S. Department of Energy, Office of General Counsel, GC-72, 1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-9507,

Francine.Pinto@hq.doe.gov

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits

A. The Standard Levels

B. Benefits to Customers of Commercial Refrigeration Equipment

C. Impact on Manufacturers

D. National Benefits

II. Introduction

A. Authority

B. Background

1. History of Standards Rulemaking for Commercial Refrigeration Equipment

III. General Discussion

A. Test Procedures

B. Technological Feasibility

1. General

2. Maximum Technologically Feasible Levels

C. Energy Savings

D. Economic Justification

1. Specific Criteria

a. Economic Impact on Commercial Customers and Manufacturers

b. Life-Cycle Costs

c. Energy Savings

d. Lessening of Utility or Performance of Equipment

e. Impact of Any Lessening of Competition

f. Need of the Nation To Conserve Energy

g. Other Factors

2. Rebuttable Presumption

IV. Methodology and Discussion of Comments on Methodology

A. Market and Technology Assessment

1. Definitions Related to Commercial Refrigeration Equipment

a. Air-Curtain Angle Definition

b. Door Angle Definition

c. Ice-Cream Freezer Definition

d. Equipment Configuration Definitions

e. Hybrid and Wedge Case Definitions

2. Equipment Classes

B. Engineering Analysis

1. Approach

2. Analytical Models

a. Cost Model

b. Energy Consumption Model

3. Equipment Classes Analyzed

4. Wedge Cases

5. Ice-Cream Freezers—Temperature Range

6. Special Application Temperature Cases

7. Coverage of Remote Condensing Units

8. Regulating Secondary Cooling Applications

C. Markups to Determine Equipment Price

D. Energy Use Characterization

E. Life-Cycle Cost and Payback Period Analyses

F. Shipments Analysis

G. National Impact Analysis

H. Life-Cycle Cost Sub-Group Analysis

I. Manufacturer Impact Analysis

J. Utility Impact Analysis

K. Employment Impact Analysis

L. Environmental Assessment

V. Discussion of Other Comments

A. Information and Assumptions Used in Analyses

1. Market and Technology Assessment

a. Data Sources

b. Beverage Merchandisers

2. Engineering Analysis

a. Design Options

b. Baseline Models

c. Consideration of Alternative Refrigerants

d. Consideration of NSF 7 Type II Equipment

e. Product Class Extension Factors

f. TSL Energy Limits

g. Compressor Selection Oversize Factor

h. Offset Factors for Self-Contained Equipment

i. Self-Contained Condensing Coils

3. Manufacturer Impact Analysis

VI. Analytical Results and Conclusions

A. Trial Standard Levels

1. Miscellaneous Equipment

B. Significance of Energy Savings

C. Economic Justification

1. Economic Impact on Commercial Customers

a. Life-Cycle Costs and Payback Period

b. Commercial Customer Sub-Group Analysis

2. Economic Impact on Manufacturers

a. Industry Cash-Flow Analysis Results

b. Cumulative Regulatory Burden

c. Impacts on Employment

d. Impacts on Manufacturing Capacity

e. Impacts on Manufacturers That Are Small Businesses

3. National Net Present Value and Net National Employment

4. Impact on Utility or Performance of Equipment

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

7. Other Factors

D. Conclusion

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under the Regulatory Flexibility Act

C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

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

I. Review Under Executive Order 12630

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

K. Review Under Executive Order 13211

L. Review Under the Information Quality Bulletin for Peer Review

M. Congressional Notification

VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

A. The Standard Levels

The Energy Policy and Conservation Act, as amended (42 U.S.C. 6291

et seq.

; EPCA), directs the Department of Energy (DOE) to establish mandatory energy conservation standards for commercial ice-cream freezers; self-contained commercial refrigerators, commercial freezers, and commercial refrigerator-freezers without doors; and remote condensing commercial refrigerators, commercial freezers, and commercial refrigerator-freezers. (42 U.S.C. 6313(c)(4)(A)) These types of equipment are referred to collectively hereafter as “commercial refrigeration equipment.” Any such standard must be designed to “achieve the maximum improvement in energy efficiency * * * which the Secretary determines is technologically feasible and economically justified.” (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) Furthermore, the new standard must “result in significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B) and 6316(e)(1)) The standards in today's final rule, which apply to all commercial refrigeration equipment, satisfy these requirements.

Currently, no mandatory Federal energy conservation standards exist for the commercial refrigeration equipment covered by this rulemaking.

Table I-1 shows the standard levels DOE is adopting today. These standards will apply to all commercial refrigeration equipment manufactured for sale in the United States, or imported to the United States, on or after January 1, 2012.

Table I-1—Standard Levels for Commercial Refrigeration Equipment

Equipment class

Standard level * **

(kWh/day) ***

Equipment class

Standard level * **

(kWh/day)

VOP.RC.M

0.82 × TDA + 4.07

VCT.RC.I

0.66 × TDA + 3.05

SVO.RC.M

0.83 × TDA + 3.18

HCT.RC.M

0.16 × TDA + 0.13

HZO.RC.M

0.35 × TDA + 2.88

HCT.RC.L

0.34 × TDA + 0.26

VOP.RC.L

2.27 × TDA + 6.85

HCT.RC.I

0.4 × TDA + 0.31

HZO.RC.L

0.57 × TDA + 6.88

VCS.RC.M

0.11 × V + 0.26

VCT.RC.M

0.22 × TDA + 1.95

VCS.RC.L

0.23 × V + 0.54

VCT.RC.L

0.56 × TDA + 2.61

VCS.RC.I

0.27 × V + 0.63

SOC.RC.M

0.51 × TDA + 0.11

HCS.RC.M

0.11 × V + 0.26

VOP.SC.M

1.74 × TDA + 4.71

HCS.RC.L

0.23 × V + 0.54

SVO.SC.M

1.73 × TDA + 4.59

HCS.RC.I

0.27 × V + 0.63

HZO.SC.M

0.77 × TDA + 5.55

SOC.RC.L

1.08 × TDA + 0.22

HZO.SC.L

1.92 × TDA + 7.08

SOC.RC.I

1.26 × TDA + 0.26

VCT.SC.I

0.67 × TDA + 3.29

VOP.SC.L

4.37 × TDA + 11.82

VCS.SC.I

0.38 × V + 0.88

VOP.SC.I

5.55 × TDA + 15.02

HCT.SC.I

0.56 × TDA + 0.43

SVO.SC.L

4.34 × TDA + 11.51

SVO.RC.L

2.27 × TDA + 6.85

SVO.SC.I

5.52 × TDA + 14.63

VOP.RC.I

2.89 × TDA + 8.7

HZO.SC.I

2.44 × TDA + 9.

SVO.RC.I

2.89 × TDA + 8.7

SOC.SC.I

1.76 × TDA + 0.36

HZO.RC.I

0.72 × TDA + 8.74

HCS.SC.I

0.38 × V + 0.88

* TDA is the total display area of the case, as measured in the Air-Conditioning and Refrigeration Institute (ARI) Standard 1200-2006, Appendix D.

** V is the volume of the case, as measured in ARI Standard 1200-2006, Appendix C.

*** Kilowatt hours per day.

For this rulemaking, equipment class designations consist of a combination (in sequential order separated by periods) of: (1) An equipment family code (VOP=vertical open, SVO=semivertical open, HZO=horizontal open, VCT=vertical transparent doors, VCS=vertical solid doors, HCT=horizontal transparent doors, HCS=horizontal solid doors, or SOC=service over counter); (2) an operating mode code (RC=remote condensing or SC=self contained); and (3) a rating temperature code (M=medium temperature (38 °F), L=low temperature (0 °F), or I=ice-cream temperature (−15 °F)). For example, “VOP.RC.M” refers to the “vertical open, remote condensing, medium temperature” equipment class. See discussion in section V.A.2 and chapter 3 of the TSD, market and technology assessment, for a more detailed explanation of the equipment class terminology. See Table IV-2 for a list of the equipment classes by category.

B. Benefits to Customers of Commercial Refrigeration Equipment

Table I-2 indicates the impacts on commercial customers of today's standards.

Table I-2—Implications of New Standards for Commercial Consumers

Equipment class

Energy conservation standard

Total

installed cost

($)

Total

installed cost

increase

($)

Life-cycle cost savings

($)

Payback

period

(years)

VOP.RC.M

0.82 × TDA + 4.07

8,065

536

1,788

2.0

VOP.RC.L

2.27 × TDA + 6.85

11,222

1,947

3,938

2.8

VOP.SC.M

1.74 × TDA + 4.71

4,381

633

1,549

2.4

VCT.RC.M

0.22 × TDA + 1.95

11,654

2,134

2,339

3.9

VCT.RC.L

0.56 × TDA + 2.61

12,584

2,513

5,419

2.6

VCT.SC.I

0.67 × TDA + 3.29

6,602

1,385

5,217

1.7

VCS.SC.I

0.38 × V + 0.88

4,227

326

1,757

1.3

SVO.RC.M

0.83 × TDA + 3.18

7,470

435

1,274

1.9

SVO.SC.M

1.73 × TDA + 4.59

3,719

439

1,136

2.3

SOC.RC.M

0.51 × TDA + 0.11

12,740

240

945

1.7

HZO.RC.M

0.35 × TDA + 2.88

8,133

248

1,040

1.6

HZO.RC.L

0.57 × TDA + 6.88

8,194

270

1,102

1.6

HZO.SC.M

0.77 × TDA + 5.55

3,398

313

826

2.3

HZO.SC.L

1.92 × TDA + 7.08

3,836

460

1,761

1.7

HCT.SC.I

0.56 × TDA + 0.43

2,478

238

785

1.9

The economic impacts on commercial consumers (

i.e.

, the average life-cycle cost (LCC) savings) are positive for all equipment classes. For example, currently available remote condensing vertical open equipment operating at medium temperatures, semivertical equipment with those same characteristics, and vertical closed equipment with transparent doors and operating at low temperatures—three of the most common types of commercial refrigeration equipment—typically have installed prices of $8,065, $7,470 and $12,584, and annual energy costs of $1,879, $1,413, and $2,249, respectively. To meet the new standards, DOE estimates that the installed prices of such equipment will be $8,601, $7,905, and $15,097, respectively, an increase of $536, $435, and $2,513. This price increase will be offset by annual energy savings of about $331, $234, and $977.

C. Impact on Manufacturers

Using a real corporate discount rate of 11.5 percent, DOE estimates the industry net present value (INPV) of the commercial refrigeration equipment industry to be $540 million in 2007$. DOE expects the impact of today's standards on the industry net present value (INPV) of manufacturers of commercial refrigeration equipment to be a loss of 7.29 to 27.35 percent (−$39 million to −$148 million). Based on DOE's interviews with manufacturers of commercial refrigeration equipment, DOE expects minimal plant closings or loss of employment as a result of the standards.

D. National Benefits

DOE estimates the standards will save approximately 1.035 quads (quadrillion (10

) British thermal units (Btu)) of energy over 30 years (2012-2042). This is equivalent to all the energy consumed by more than 5 million American households in a single year.

By 2042, DOE expects the energy savings from the standards to eliminate the need for approximately 0.7 new 1,000-megawatt (MW) power plants. These energy savings will result in cumulative greenhouse gas emission reductions of approximately 52.6 million tons (Mt) of carbon dioxide (CO

), or an amount equal to that produced by approximately 332,500 cars every year. Additionally, the standards will help alleviate air pollution by resulting in between approximately 3.64 and 89.97 kilotons (kt) of cumulative nitrogen oxide (NO

) emission reductions and between approximately 0 and 1.38 tons of cumulative mercury emission reductions from 2012 through 2042. The estimated net present values of these emissions reductions are between $0 and $469 million for CO

, between $394,000 and $9.7 million for NO

, and between $0 and $284,000 for mercury at a 7-percent discount rate in 2007$, discounted to 2008. At a 3-percent discount rate, the estimated net present values of these emissions reductions are between $0 and $955 million for CO

, between $0.8 million and $20.5 million for NO

, and between $0 and $560,000 for mercury.

The national NPV of the standards is $1.414 billion using a 7-percent discount rate and $3.930 billion using a 3-percent discount rate, cumulative from 2012 to 2062 in 2007$. This is the estimated total value of future savings minus the estimated increased equipment costs, discounted to 2008.

The benefits and costs of today's final rule can also be expressed in terms of annualized [2007$] values between 2012 and 2042. Using a 7-percent discount rate for the annualized cost analysis, the cost of the standards established in today's final rule is $95 million per year in increased equipment and installation costs, while the annualized benefits are $229 million per year in reduced equipment operating costs. Using a 3-percent discount rate, the cost of the standards established in today's final rule is $81 million per year, while the benefits of today's standards are $253 million per year.

II. Introduction

A. Authority

Title III of EPCA sets forth a variety of provisions designed to improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309) provides for the Energy Conservation Program for Consumer Products Other than Automobiles. Part A-1 of Title III (42 U.S.C. 6311-6317) establishes a similar program for “Certain Industrial Equipment,” including commercial refrigeration equipment, the subject of this rulemaking.

DOE publishes today's final rule pursuant to Part A-1 of Title III, which provides for test procedures, labeling, and energy conservation standards for commercial refrigeration equipment and certain other equipment; and authorizes DOE to require information and reports from manufacturers. The test procedure for commercial refrigeration equipment appears in Title 10 Code of Federal Regulations (CFR) part 431.64.

This part was originally titled Part C. However, it was redesignated Part A-1 after Part B of Title III of EPCA was repealed by Public Law 109-58.

EPCA provides criteria for prescribing new or amended standards for commercial refrigeration equipment. As indicated above, any new or amended standard for this equipment must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and

economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) Additionally, EPCA provides specific prohibitions on prescribing such standards. DOE may not prescribe an amended or new standard for any equipment for which DOE has not established a test procedure. (42 U.S.C. 6295(o)(3)(A) and 6316(e)(1)) Further, DOE may not prescribe an amended or new standard if DOE determines by rule that such standard would not result in “significant conservation of energy” or “is not technologically feasible or economically justified.” (42 U.S.C. 6295(o)(3)(B) and 6316(e)(1))

EPCA also provides that in deciding whether such a standard is economically justified for equipment such as commercial refrigeration equipment, DOE must, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens by considering, to the greatest extent practicable, the following seven factors:

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

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

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

4. Any lessening of the utility or the performance of the products likely to result from the imposition of the standard;

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

6. The need for national energy conservation; and

7. Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)-(ii) and 6316(e)(1))

In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and 6316(e)(1)), establishes a rebuttable presumption that a standard for commercial refrigeration equipment is economically justified if the Secretary finds that “the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and as applicable, water) savings during the first year that the consumer will receive as a result of the standard,” as calculated under the test procedure in place for that standard.

EPCA further provides that the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is “likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding.” (42 U.S.C. 6295(o)(4) and 6316(e)(1))

Section 325(q)(1) of EPCA is applicable to promulgating standards for most types or classes of equipment, including commercial refrigeration equipment, that have two or more subcategories. (42 U.S.C. 6295(q)(1) and 42 U.S.C. 6316(e)(1)) Under this provision, DOE must specify a different standard level than that which applies generally to such type or class of equipment for any group of products “which have the same function or intended use, if * * * products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard” than applies or will apply to the other products. (42 U.S.C. 6295(q)(1)(A) and (B)) In determining whether a performance-related feature justifies such a different standard for a group of products, DOE must consider “such factors as the utility to the consumer of such a feature” and other factors DOE deems appropriate. (42 U.S.C. 6295(q)(1)) Any rule prescribing such a standard must include an explanation of the basis on which DOE established such a higher or lower level. (See 42 U.S.C. 6295(q)(2))

Federal energy conservation standards for commercial equipment generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c); 42 U.S.C. 6316(e)(2)-(3)) DOE can, however, grant waivers of preemption for particular State laws or regulations, in accordance with the procedures and other provisions of section 327(d) of the Act. (42 U.S.C. 6297(d); 42 U.S.C. 6316(e)(2)-(3))

B. Background

1. History of Standards Rulemaking for Commercial Refrigeration Equipment

As discussed in the notice of proposed rulemaking, 73 FR 50072, 50076 (August 25, 2008) (the August 2008 NOPR), the EPACT 2005 amendments to EPCA require that DOE issue energy conservation standards for the equipment covered by this rulemaking. (42 U.S.C. 6313(c)(4)(A)) The amendments also include definitions for terms relevant to this equipment (42 U.S.C. 6311(9)). These definitions provide that commercial refrigeration equipment is connected to either a self-contained condensing unit or to a remote condensing unit (42 U.S.C. 6311(9)(A)(vii)), the two condenser configurations of equipment covered by this rulemaking, and include definitions of a remote condensing unit and self-contained condensing unit (42 U.S.C. 6311(9)(E)-(F)).

DOE commenced this rulemaking on April 25, 2006, by publishing a notice of a public meeting and of the availability of its framework document for the rulemaking. 71 FR 23876. The framework document described the approaches DOE anticipated using and issues to be resolved in the rulemaking. DOE held a public meeting on May 16, 2006, to present the contents of the framework document, describe the analyses DOE planned to conduct during the rulemaking, obtain public comment on these subjects, and facilitate the public's involvement in the rulemaking. DOE also allowed the submission of written statements, after the public meeting, in response to the framework document.

On July 26, 2007, DOE published an advance notice of proposed rulemaking (ANOPR) in this proceeding. 72 FR 41161 (the July 2007 ANOPR). In the July 2007 ANOPR, DOE sought comment on its proposed equipment classes for the rulemaking, and on the analytical framework, models, and tools that DOE used to analyze the impacts of energy conservation standards for commercial refrigeration equipment. In conjunction with the July 2007 ANOPR, DOE published on its Web site the complete ANOPR TSD, which included the results of DOE's various preliminary analyses in this rulemaking. In the July 2007 ANOPR, DOE requested oral and written comments on these results and on a range of other issues. DOE held a public meeting in Washington, DC, on August 23, 2007, to present the methodology and results of the ANOPR analyses and to receive oral comments from those who attended. The oral and written comments DOE received focused on DOE's assumptions, approach, and equipment class breakdown, and were addressed in detail in the August 2008 NOPR.

In the August 2008 NOPR, DOE proposed new energy conservation

standards for commercial refrigeration equipment. 73 FR 50072. In conjunction with the August 2008 NOPR, DOE also published on its Web site the complete technical support document (TSD) for the proposed rule, which incorporated the final analyses DOE conducted and technical documentation for each analysis. The TSD included the engineering analysis spreadsheets, the LCC spreadsheet, and the national impact analysis spreadsheet. The standards DOE proposed for commercial refrigeration equipment are shown in Table II-1.

Table II-1—August 2008 Proposed Standard Levels for Commercial Refrigeration Equipment

Equipment class

Standard level* **

(kWh/day)

Equipment class

Standard level* **

(kWh/day)

VOP.RC.M

0.82 × TDA + 4.07

VCT.RC.I

0.71 × TDA + 3.05

SVO.RC.M

0.83 × TDA + 3.18

HCT.RC.M

0.16 × TDA + 0.13

HZO.RC.M

0.35 × TDA + 2.88

HCT.RC.L

0.34 × TDA + 0.26

VOP.RC.L

2.28 × TDA + 6.85

HCT.RC.I

0.4 × TDA + 0.31

HZO.RC.L

0.57 × TDA + 6.88

VCS.RC.M

0.11 × V + 0.26

VCT.RC.M

0.25 × TDA + 1.95

VCS.RC.L

0.23 × V + 0.54

VCT.RC.L

0.6 × TDA + 2.61

VCS.RC.I

0.27 × V + 0.63

SOC.RC.M

0.51 × TDA + 0.11

HCS.RC.M

0.11 × V + 0.26

VOP.SC.M

1.74 × TDA + 4.71

HCS.RC.L

0.23 × V + 0.54

SVO.SC.M

1.73 × TDA + 4.59

HCS.RC.I

0.27 × V + 0.63

HZO.SC.M

0.77 × TDA + 5.55

SOC.RC.L

1.08 × TDA + 0.22

HZO.SC.L

1.92 × TDA + 7.08

SOC.RC.I

1.26 × TDA + 0.26

VCT.SC.I

0.73 × TDA + 3.29

VOP.SC.L

4.37 × TDA + 11.82

VCS.SC.I

0.38 × V + 0.88

VOP.SC.I

5.55 × TDA + 15.02

HCT.SC.I

0.56 × TDA + 0.43

SVO.SC.L

4.34 × TDA + 11.51

SVO.RC.L

2.28 × TDA + 6.85

SVO.SC.I

5.52 × TDA + 14.63

VOP.RC.I

2.9 × TDA + 8.7

HZO.SC.I

2.44 × TDA + 9

SVO.RC.I

2.9 × TDA + 8.7

SOC.SC.I

1.76 × TDA + 0.36

HZO.RC.I

0.72 × TDA + 8.74

HCS.SC.I

0.38 × V + 0.88

* TDA is the total display area of the case, as measured in the ARI Standard 1200-2006, Appendix D.

** V is the volume of the case, as measured in ARI Standard 1200-2006, Appendix C.

In the August 2008 NOPR, DOE identified seven issues on which is was particularly interested in receiving comments and views of interested parties: Light-emitting diode (LED) price projections, base case efficiency trends, operating temperature ranges, offset factors for smaller equipment, extension of standards developed for the 15 primary classes to the remaining 23 secondary classes, standards for hybrid cases and wedges, and standard levels. 73 FR 50134. After the publication of the August 2008 NOPR, DOE received written comments on these and other issues. DOE also held a public meeting in Washington, DC, on September 23, 2008, to hear oral comments on and solicit information relevant to the proposed rule. The August 2008 NOPR included additional background information on the history of this rulemaking. 73 FR 50076-77.

III. General Discussion

A. Test Procedures

On December 8, 2006, DOE published a final rule (the December 2006 final rule) in which it adopted American National Standards Institute (ANSI)/Air-Conditioning and Refrigeration Institute (ARI) Standard 1200-2006, “Performance Rating of Commercial Refrigerated Display Merchandisers and Storage Cabinets,” as the DOE test procedure for this equipment.

71 FR 71340, 71369-70; 10 CFR 431.63-431.64. ARI Standard 1200-2006 contains rating temperature specifications of 38 °F (±2 °F) for commercial refrigerators and refrigerator compartments, 0 °F (±2 °F) for commercial freezers and freezer compartments, and −5 °F (±2 °F) for commercial ice-cream freezers. The standard also requires performance tests to be conducted according to the ANSI/American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 72-2005, “Method of Testing Commercial Refrigerators and Freezers.” In the test procedure final rule, DOE also adopted a −15 °F (±2 °F) rating temperature for commercial ice-cream freezers. 71 FR 71370. In addition, DOE adopted ANSI/Association of Home Appliance Manufacturers (AHAM) Standard HRF-1-2004, “Energy, Performance and Capacity of Household Refrigerators, Refrigerator-Freezers and Freezers,” for determining compartment volumes for this equipment. 71 FR 71369-70.

The Air-Conditioning and Refrigeration Institute (ARI) and the Gas Appliance Manufacturers Association (GAMA) announced on December 17, 2007, that their members voted to approve the merger of two trade associations to represent the interests of cooling, heating, and commercial refrigeration equipment manufacturers. The merged association became AHRI on January 1, 2008.

B. Technological Feasibility

1. General

As stated above, any standards that DOE establishes for commercial refrigeration equipment must be technologically feasible. (42 U.S.C. 6295(o)(2)(A) and (o)(3)(B); 42 U.S.C. 6316(e)(1)) DOE considers a design option to be technologically feasible if it is in use by the respective industry or if research has progressed to the development of a working prototype. “Technologies incorporated in commercial products or in working prototypes will be considered technologically feasible.” 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).

This final rule considers the same design options as those evaluated in the August 2008 NOPR. (See chapter 4 of the final rule TSD accompanying this notice.) All the evaluated technologies have been used (or are being used) in commercially available products or working prototypes. Therefore, DOE has determined that all of the efficiency levels evaluated in this notice are technologically feasible.

2. Maximum Technologically Feasible Levels

As required by EPCA (42 U.S.C. 6295(p)(2) and 42 U.S.C. 6316(e)(1)) in developing the August 2008 NOPR, DOE identified the energy use levels that

would achieve the maximum reductions in energy use that are technologically feasible (max-tech levels) for commercial refrigeration equipment. 73 FR at 50077-78. (

See

NOPR TSD chapter 5.) DOE received comments indicating that LED efficacy had improved since the August 2008 NOPR. DOE also received comments regarding the LED lighting configurations assumed in the engineering analysis for various equipment types. This caused the max-tech levels proposed in the August 2008 NOPR to change for equipment classes with lighting. In general, the max-tech levels for open equipment classes decreased and the max-tech levels for closed cases increased from the max-tech levels proposed in the August 2008 NOPR. For today's final rule, the max-tech levels for all classes are the levels provided in Table III-1.

Table III-1—“Max-Tech” Energy Use Levels

Equipment class

“Max-tech” level

(kWh/day)

Equipment class

“Max-tech” level

(kWh/day)

VOP.RC.M

0.74 × TDA + 4.07

VCT.RC.I

0.66 × TDA + 3.05

SVO.RC.M

0.76 × TDA + 3.18

HCT.RC.M

0.16 × TDA + 0.13

HZO.RC.M

0.35 × TDA + 2.88

HCT.RC.L

0.34 × TDA + 0.26

VOP.RC.L

2.27 × TDA + 6.85

HCT.RC.I

0.4 × TDA + 0.31

HZO.RC.L

0.57 × TDA + 6.88

VCS.RC.M

0.11 × V + 0.26

VCT.RC.M

0.22 × TDA + 1.95

VCS.RC.L

0.23 × V + 0.54

VCT.RC.L

0.56 × TDA + 2.61

VCS.RC.I

0.27 × V + 0.63

SOC.RC.M

0.4 × TDA + 0.11

HCS.RC.M

0.11 × V + 0.26

VOP.SC.M

1.65 × TDA + 4.71

HCS.RC.L

0.23 × V + 0.54

SVO.SC.M

1.65 × TDA + 4.59

HCS.RC.I

0.27 × V + 0.63

HZO.SC.M

0.77 × TDA + 5.55

SOC.RC.L

0.84 × TDA + 0.22

HZO.SC.L

1.92 × TDA + 7.08

SOC.RC.I

0.99 × TDA + 0.26

VCT.SC.I

0.67 × TDA + 3.29

VOP.SC.L

4.14 × TDA + 11.82

VCS.SC.I

0.38 × V + 0.88

VOP.SC.I

5.26 × TDA + 15.02

HCT.SC.I

0.56 × TDA + 0.43

SVO.SC.L

4.15 × TDA + 11.51

SVO.RC.L

2.27 × TDA + 6.85

SVO.SC.I

5.27 × TDA + 14.63

VOP.RC.I

2.89 × TDA + 8.7

HZO.SC.I

2.44 × TDA + 9.

SVO.RC.I

2.89 × TDA + 8.7

SOC.SC.I

1.38 × TDA + 0.36

HZO.RC.I

0.72 × TDA + 8.74

HCS.SC.I

0.38 × V + 0.88

C. Energy Savings

DOE forecasted energy savings in its national energy savings (NES) analysis, through the use of an NES spreadsheet tool, as discussed in the August 2008 NOPR. 73 FR at 50078, 50101-04, 50121.

One of the criteria that governs DOE's adoption of standards for commercial refrigeration equipment is that the standard must result in “significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B) and 42 U.S.C. 6316(e)(1)) While EPCA does not define the term “significant,” a U.S. Court of Appeals, in

Natural Resources Defense Council

Herrington,

768 F.2d 1355, 1373 (DC Cir. 1985), indicated that Congress intended “significant” energy savings in this context to be savings that were not “genuinely trivial.” DOE's estimates of the energy savings for energy conservation standards at each of the trial standard levels (TSLs) in today's rule indicate that the energy savings each would achieve are nontrivial. Therefore, DOE considers these savings “significant” within the meaning of section 325 of EPCA.

D. Economic Justification

1. Specific Criteria

As noted earlier, EPCA provides seven factors to evaluate in determining whether an energy conservation standard for commercial refrigeration equipment is economically justified. (42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.

a. Economic Impact on Commercial Customers and Manufacturers

DOE considered the economic impact of the new commercial refrigeration equipment standards on commercial customers and manufacturers. For customers, DOE measured the economic impact as the change in installed cost and life-cycle operating costs,

i.e.

, the LCC. (

See

sections IV.E and VI.C.1.a, and chapter 8 of the TSD accompanying this notice.) DOE investigated the impacts on manufacturers through the manufacturer impact analysis (MIA). (

See

sections IV.I and VI.C.2, and chapter 13 of the TSD accompanying this notice.) The economic impact on commercial customers and manufacturers is discussed in detail in the August 2008 NOPR. 73 FR at 50078-79, 50095-50100, 50104-07, 50013-16, 50117-21, 50130-31.

b. Life-Cycle Costs

DOE considered life-cycle costs of commercial refrigeration equipment, as discussed in the August 2008 NOPR. 73 FR at 50078-79, 50095-50100, 50104, 50013-16, 50117-18. DOE calculated the sum of the purchase price and the operating expense—discounted over the lifetime of the equipment—to estimate the range in LCC benefits that commercial consumers would expect to achieve due to the standards.

c. Energy Savings

Although significant conservation of energy is a separate statutory requirement for imposing an energy conservation standard, EPCA also requires DOE, in determining the economic justification of a proposed standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and 42 U.S.C. 6316(e)(1)) As in the August 2008 NOPR, 73 FR at 50078, 50101-04, 50121, for today's final rule DOE used the NES spreadsheet results in its consideration of total projected savings that are directly attributable to the standard levels DOE considered.

d. Lessening of Utility or Performance of Equipment

In selecting today's standard levels, DOE sought to avoid new standards for commercial refrigeration equipment that would lessen the utility or performance of that equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 42 U.S.C. 6316(e)(1)) 73 FR at 50079, 50088-89, 50123.

e. Impact of Any Lessening of Competition

DOE considers any lessening of competition that is likely to result from standards. Accordingly, as discussed in the August 2008 NOPR, 73 FR at 50079, 50123, DOE requested that the Attorney General transmit to the Secretary a written determination of the impact, if any, of any lessening of competition likely to result from the proposed standards, together with an analysis of the nature and extent of such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii) and 42 U.S.C. 6316(e)(1))

To assist the Attorney General in making such a determination, DOE provided the Department of Justice (DOJ) with copies of the August 2008 proposed rule and the TSD for review. (DOJ, No. 37 at pp. 1-2) The Attorney General's response is discussed in section VI.C.5 below, and is reprinted at the end of this rule.

A notation in the form “DOJ, No. 37 at pp. 1-2” identifies a written comment that DOE has received and has included in the docket of this rulemaking. This particular notation refers to (1) a comment submitted by the Department of Justice (DOJ), (2) in document number 37 in the docket of this rulemaking, and (3) appearing on pages 1 and 2 of document number 37.

f. Need of the Nation To Conserve Energy

In considering standards for commercial refrigeration equipment, the Secretary must consider the need of the Nation to conserve energy. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 42 U.S.C. 6316(e)(1)) The Secretary recognizes that energy conservation benefits the Nation in several important ways. The non-monetary benefits of the standards are likely to be reflected in improvements to the security and reliability of the Nation's energy system. Today's standards also will likely result in environmental benefits. As discussed in the proposed rule, DOE has considered these factors in adopting today's standards. 73 FR 50074, 50079, 50108, 50123-26, 50132.

g. Other Factors

EPCA directs the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 42 U.S.C. 6316(e)(1)) In adopting today's standard, DOE considered the LCC impacts on the commercial refrigeration equipment of independent, small grocery/convenience store businesses. Compared to the impact of standards on the overall market for commercial refrigeration equipment, the impact of standards on these businesses might be disproportionate because these businesses experience both higher discount rates and lack of access to national account equipment purchases. 73 FR 50079, 50104, 50117-18.

2. Rebuttable Presumption

Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard level is less than three times the value of the first-year energy (and as applicable water) savings resulting from the standard, as calculated under the applicable DOE test procedure. (42 U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(e)(1)) DOE's LCC and payback period (PBP) analyses generate values that calculate the payback period for consumers of potential energy conservation standards, which includes, but is not limited to, the three-year payback period contemplated under the rebuttable presumption test discussed above. However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1). The results of this analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification).

IV. Methodology and Discussion of Comments on Methodology

DOE used several analytical tools that it developed previously and adapted for use in this rulemaking. One is a spreadsheet that calculates LCC and PBP. Another tool calculates national energy savings and national NPV. DOE also used the Government Regulatory Impact Model (GRIM), along with other methods, in its MIA. Finally, DOE developed an approach using the National Energy Modeling System (NEMS) to estimate impacts of energy efficiency standards for commercial refrigeration equipment on electric utilities and the environment. The TSD appendices discuss each of these analytical tools in detail. 73 FR 50079-108.

As a basis for this final rule, DOE has continued to use the spreadsheets and approaches explained in the August 2008 NOPR. DOE used the same general methodology as applied in the August 2008 NOPR, but revised some of the assumptions and inputs for the final rule in response to stakeholder comments. The following paragraphs discuss these revisions.

A. Market and Technology Assessment

When beginning an energy conservation standards rulemaking, DOE develops information that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, and market characteristics. This activity includes both quantitative and qualitative assessments based primarily on publicly available information. DOE presented various subjects in the market and technology assessment for this rulemaking. (

See

the August 2008 NOPR and chapter 3 of the NOPR TSD.) These include equipment definitions, equipment classes, manufacturers, quantities and types of equipment sold and offered for sale, retail market trends, and regulatory and nonregulatory programs.

1. Definitions Related to Commercial Refrigeration Equipment

a. Air-Curtain Angle Definition

For equipment without doors, an air curtain divides the refrigerated compartment from the ambient space. DOE proposed the following definition of air-curtain angle in the August 2008 NOPR that is consistent with the industry-approved standards: “Air-curtain angle means: (1) For equipment without doors and without a discharge air grille or discharge air honeycomb, the angle between a vertical line extended down from the highest point on the manufacturer's recommended load limit line and the load limit line itself, when the equipment is viewed in cross-section; and (2) For all other equipment without doors, the angle formed between a vertical line and the straight line drawn by connecting the point at the inside edge of the discharge air opening with the point at the inside edge of the return air opening, when the equipment is viewed in cross-section.” 73 FR 50080; 50135. DOE did not receive any additional comments on the definition of air-curtain angle in response to the August 2008 NOPR; thus, DOE is adopting these definitions as proposed.

b. Door Angle Definition

The door orientation affects the energy consumption of equipment with doors. This equipment can be broadly categorized by the angle of the door. In the August 2008 NOPR, DOE proposed the following definition of door angle: “(1) For equipment with flat doors, the angle between a vertical line and the

line formed by the plane of the door, when the equipment is viewed in cross-section; and (2) For equipment with curved doors, the angle formed between a vertical line and the straight line drawn by connecting the top and bottom points where the display area glass joins the cabinet, when the equipment is viewed in cross-section.” 73 FR 50080; 50135. DOE did not receive any additional comments on the definition of door angle in response to the August 2008 NOPR; thus, DOE is adopting the definition as proposed.

c. Ice-Cream Freezer Definition

During the NOPR public meeting, interested parties expressed concern about the definition of an “ice-cream freezer” as used in this rulemaking. Hussman stated that using the term “ice cream” to refer to a temperature range might be confusing because ice cream is also a product. (Hussman, Public Meeting Transcript, No. 27 at p. 15)

Southern Store Fixtures expressed a similar concern, adding that other types of frozen items, such as frozen juice, may be displayed in ice-cream type cases. (Southern Store Fixtures, Public Meeting Transcript, No. 27 at p. 18)

A notation in the form “Hussman, Public Meeting Transcript, No. 27 at p. 15” identifies an oral comment that DOE received during the September 23, 2008, NOPR public meeting. This comment was recorded in the public meeting transcript in the docket for this rulemaking (Docket No. EE-2006-STD-0126), maintained in the Resource Room of the Building Technologies Program. This particular notation refers to a comment (1) made during the public meeting by Hussman; (2) recorded in document number 27, which is the public meeting transcript filed in the docket of this rulemaking; and (3) appearing on page 15 of document number 27.

As described in the July 2007 ANOPR, the EPCA provision that required this rulemaking identifies specifically the categories “ice-cream freezers,” “self-contained commercial refrigerators, freezers, and refrigerator-freezers without doors,” and “remote condensing commercial refrigerators, freezers, and refrigerator-freezers.” (42 U.S.C. 6313(c)(4)(A), added by EPACT 2005, section 136(c)) Because the term “ice-cream freezers” was specified in EPCA, the term “ice cream” is appropriate to describe that specific equipment category in this rulemaking, and DOE is therefore maintaining the use of that term in the rulemaking. Also, see section IV.A.2 of this final rule.

d. Equipment Configuration Definitions

The configuration of commercial refrigeration equipment affects its energy consumption and the equipment classes into which this equipment is divided. In the August 2008 NOPR, DOE proposed five definitions of equipment configurations, shown in Table IV-1. 73 FR 50081; 50135.

Table IV-1—Equipment Configuration Definitions

Equipment family

Description

Vertical Open (VOP)

Equipment without doors and an air-curtain angle ≥0 degrees and <10 degrees from the vertical.

Semivertical Open (SVO)

Equipment without doors and an air-curtain angle ≥10 degrees and <80 degrees from the vertical.

Horizontal Open (HZO)

Equipment without doors and an air-curtain angle ≥80 degrees from the vertical.

Vertical Closed (VC)

Equipment with hinged or sliding doors and a door angle <45 degrees.

Horizontal Closed (HC)

Equipment with hinged or sliding doors and a door angle ≥45 degrees.

DOE did not receive any additional comments on the definitions of the five configurations; thus, DOE is adopting these definitions as proposed.

e. Hybrid and Wedge Case Definitions

As stated in the August 2008 NOPR, certain types of equipment meet the definition of “commercial refrigeration equipment” (Section 136(a)(3) of EPACT 2005), but do not fall directly into any of the 38 equipment classes defined in the market and technology assessment. Among these types are hybrid cases and wedge cases; DOE proposed definitions for these in the August 2008 NOPR. Because DOE did not receive any additional comments on the definitions of “commercial hybrid refrigerators, freezers, and refrigerator-freezers” or on the definition of “wedge case,” DOE is adopting these definitions as proposed in section 431.62.

2. Equipment Classes

Commercial refrigerators, commercial freezers, and commercial refrigerator-freezers can be divided into various equipment classes categorized largely by physical characteristics that affect energy efficiency. Some of these characteristics delineate the categories of equipment covered by this rulemaking.

Most affect the merchandise that the equipment can be used to display and how the customer can access that merchandise. Key physical characteristics that affect energy efficiency are the operating temperature, the presence or absence of doors (

i.e.

, closed cases or open cases), the type of doors used (

i.e.

, transparent or solid), the angle of the door or air-curtain (

i.e.

, horizontal, semivertical, or vertical), and the type of condensing unit (

i.e.

, remote or self-contained). As discussed in the August 2008 NOPR, 73 FR 50080-83, DOE is adopting equipment classes in this rulemaking by: (1) Dividing commercial refrigerators, commercial freezers, and commercial refrigerator-freezers into equipment families; (2) subdividing these families based on condensing unit configurations and rating temperature designations; and (3) identifying the resulting classes that are within each of the three equipment categories covered by this rulemaking. Because DOE did not receive any comments in response to the presentation of equipment classes in the August 2008 NOPR, DOE is adopting the equipment classes as proposed without further modification. Table IV-2 presents the equipment classes covered under this rulemaking, organized by the three equipment categories.

“Commercial refrigerators, commercial freezers, and commercial refrigerator-freezers” is a type of covered commercial equipment. For purposes of discussion only in this proceeding, DOE uses the term “categories” to designate groupings of “commercial refrigeration equipment.” The categories of equipment are: Self-contained commercial refrigerators, commercial freezers, and commercial refrigerator-freezers without doors; remote condensing commercial refrigerators, commercial freezers, and commercial refrigerator-freezers; and commercial ice-cream freezers. DOE will analyze specific equipment classes that fall within these general categories and set appropriate standards.

Table IV-2—Commercial Refrigeration Equipment Classes by Category

Equipment category

Condensing unit configuration

Equipment family

Operating temperature

(°F)

Equipment class

designation

Remote Condensing Commercial Refrigerators, Commercial Freezers, and Commercial Refrigerator-Freezers

Remote

Vertical Open

≥32

<32

VOP.RC.M

VOP.RC.L

Semivertical Open

≥32

<32

SVO.RC.M

SVO.RC.L

Horizontal Open

≥32

<32

HZO.RC.M

HZO.RC.L

Vertical Closed Transparent

≥32

<32

VCT.RC.M

VCT.RC.L

Horizontal Closed Transparent

≥32

<32

HCT.RC.M

HCT.RC.L

Vertical Closed Solid

≥32

<32

VCS.RC.M

VCS.RC.L

Horizontal Closed Solid

≥32

<32

HCS.RC.M

HCS.RC.L

Service Over Counter

≥32

<32

SOC.RC.M

SOC.RC.L

Self-Contained Commercial Refrigerators, Commercial Freezers, and Commercial Refrigerator-Freezers without Doors

Self-Contained

Vertical Open

≥32

<32

VOP.SC.M

VOP.SC.L

Semivertical Open

≥32

<32

SVO.SC.M

SVO.SC.L

Horizontal Open

≥32

<32

HZO.SC.M

HZO.SC.L

Commercial Ice-Cream Freezers

Remote

Vertical Open

* ≤−5

VOP.RC.I

Semivertical Open

SVO.RC.I

Horizontal Open

HZO.RC.I

Vertical Closed Transparent

VCT.RC.I

Horizontal Closed Transparent

HCT.RC.I

Vertical Closed Solid

VCS.RC.I

Horizontal Closed Solid

HCS.RC.I

Service Over Counter

SOC.RC.I

Self-Contained

Vertical Open

VOP.SC.I

Semivertical Open

SVO.SC.I

Horizontal Open

HZO.SC.I

Vertical Closed Transparent

VCT.SC.I

Horizontal Closed Transparent

HCT.SC.I

Vertical Closed Solid

VCS.SC.I

Horizontal Closed Solid

HCS.SC.I

Service Over Counter

SOC.SC.I

* Ice-cream freezer is defined in 10 CFR 431.62 as a commercial freezer designed to operate at or below −5 °F (−21 °C) and that the manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice cream.

B. Engineering Analysis

The engineering analysis develops cost-efficiency relationships to show the manufacturing costs of achieving increased efficiency. As discussed in the August 2008 NOPR, DOE used the design-option approach, involving consultation with outside experts, review of publicly available cost and performance information, and modeling of equipment cost and energy consumption. 73 FR 50083-50093. Chapter 5 of the NOPR TSD contained detailed discussion of the engineering analysis methodology. In response to the August 2008 NOPR, DOE received a number of comments on the engineering analysis methodology. These comments, and DOE's response, are detailed in the following paragraphs.

1. Approach

For the NOPR, DOE adopted a design-options approach for the engineering analysis. The methodology DOE used to perform the design-option analysis is described in detail in chapter 5 of the TSD. DOE used industry-supplied data, which were developed using an efficiency-level approach, to validate DOE data. DOE received no further comments on the design-options approach and, as a result, made no changes to this methodology for the final rule.

2. Analytical Models

a. Cost Model

In the engineering analysis, DOE establishes the relationship between manufacturer production cost and energy consumption for the commercial refrigeration equipment covered in this rulemaking. In determining this relationship, DOE estimated the incremental manufacturer production costs associated with technological changes that reduce the energy consumption of the baseline models (

i.e.

, design options).

During the NOPR public meeting, the American Council for an Energy-Efficient Economy (ACEEE) stated that DOE's method of estimating manufacturer production costs based on a snapshot analysis of available engineering options is flawed, because historical data for other building technologies show that incremental costs of complying with standards have been much lower than DOE estimated. ACEEE attributed this to manufacturers

redesigning their processes to meet new energy conservation standards. (ACEEE, Public Meeting Transcript, No. 27 at p. 28) AHRI disagreed with ACEEE and cited the residential central air-conditioner rulemaking as an example of where the actual cost of equipment was much higher than DOE estimated. (AHRI, Public Meeting Transcript, No. 27 at p. 29) However, ACEEE responded that this was because commodity prices increased dramatically for that equipment and that once this was accounted for, the observed price increase in baseline residential air-conditioner units was 2 percent lower than DOE's estimate. (ACEEE, Public Meeting Transcript, No. 27 at p. 30) Appliance Standards Awareness Project (ASAP) added that a retrospective analysis would be useful for helping DOE evaluate its model for predicting costs. (ASAP, Public Meeting Transcript, No. 27 at p. 31) ACEEE also commented that DOE's model for assessing the cost and value of energy conservation standards is flawed, because the model fails to account for manufacturer learning curves. Over time, the price of most equipment drops as more units are produced, regardless of the efficiency standards placed on them. Therefore, DOE's assumption that greater efficiency standards will cause equipment prices to increase is not valid. (ACEEE, No. 31 at p. 1) A comment submitted by representatives of ACEEE, Appliance Standards Awareness Project, Alliance to Save Energy, California Energy Commission, Natural Resources Defense Council, Northeast Energy Efficiency Partnerships, Northwest Power and Conservation Council, Pacific Gas and Electric Company, Sempra Energy Utilities, and Southern California Edison (hereafter referred to as the Joint Comment) agreed with ACEEE that DOE's engineering analysis methodology should take manufacturer learning curves into account. (Joint Comment, No. 34 at p. 6)

The cost-efficiency curves that DOE presented in the NOPR TSD showed incremental costs of implementing design option changes above the baseline. The cost-efficiency curves are not intended to capture future economies of scale, or other related cost reductions that may or may not result from increased cumulative production over time. DOE acknowledges that manufacturing efficiency evolves over time, but notes that earlier trends do not necessarily reflect future trends. DOE has insufficient data to project final minimized unit costs of newer technologies. DOE believes that thorough and rigorous manufacturing cost analysis based on actual equipment at all efficiency levels represents the most effective and appropriate way to estimate current and near-term incremental manufacturing costs. Therefore, DOE has used available information on existing design options in the cost-efficiency analysis.

i. LED Price Projections

DOE estimates the economic impacts of the proposed standards based on current costs of technologically feasible energy saving design options used in commercial refrigeration equipment. One such technology, which has been a focal point in this rulemaking, is solid-state lighting (

i.e.

, LEDs). For the ANOPR, DOE based LED lighting costs on a retrofit case study, but revised its assumptions for the NOPR after gathering information from LED chip and fixture manufacturers. These changes caused the original equipment manufacturer (OEM) cost (

i.e.

, the cost to commercial refrigeration equipment manufacturers) of LED fixtures to increase for both open refrigeration cases and refrigeration cases with transparent doors. Based on these revised costs, DOE tentatively rejected TSL 5 (

i.e.

, the efficiency level where LEDs were first implemented for most equipment classes) because it was not economically feasible.

However, DOE conducted a sensitivity analysis for the NOPR to gauge the effect of expected LED price reductions. That analysis estimated NPV and LCC values for equipment classes if projected LED prices were used in DOE's analysis. DOE's Multi-Year Program Plan was used to estimate the reduction in LED chip price by 2012.

The sensitivity analysis used an estimated reduction in LED chip price of 80 percent by 2012, which represented a 50-percent reduction in overall LED system cost, assuming the costs of the power supply and LED fixtures did not change significantly from the values used in the engineering analysis. DOE recognized that if these projected reductions were to be realized or exceeded, the economic impacts of this standard could change significantly, possibly making higher TSLs economically justified. Therefore, in the NOPR, DOE requested comment on all aspects of the LED issue, specifically soliciting any information or data that could increase confidence in the price projections.

U.S. Department of Energy, Solid-State Lighting Research and Development, Multi-Year Program Plan FY'09-FY'14. This document was prepared under the direction of a Technical Committee from the Next Generation Lighting Initiative Alliance (NGLIA). Information about NGLIA and its members is available at

http://www.nglia.org.

DOE received several comments. ASAP, Natural Resources Defense Council (NRDC), Earthjustice, and the Joint Comment all expressed support for the use of DOE LED price projections. They stated that the projections are sufficiently justified and would be a more adequate basis for the standard than the assumption that LED prices will remain constant at 2007 levels. (ASAP, No. 27 at p. 100; NRDC, Public Meeting Transcript, No. 27 at p. 105; Earthjustice, Public Meeting Transcript, No. 27 at p. 106; Joint Comment, No. 34 at p. 2) Pacific Gas and Electric Company, Southern California Edison, and Sempra Energy Utilities (Southern California Gas and San Diego Gas and Electric Company) (hereafter the California Utilities Joint Comment) suggested that the DOE projections might be too conservative. (California Utilities Joint Comment, No. 41 at p. 3) ACEEE agreed, attributing this underestimation to the exclusion of scale-dependent factors. ACEEE stated that as LED production scales up, there will be greater price reductions and increased quality in terms of reproducibility. (ACEEE, No. 31 at p. 7 and Public Meeting Transcript, No. 27 at p. 111) As evidence of the validity of DOE LED cost projections, the California Utilities Joint Comment stated that LED prices have already dropped rapidly, rendering DOE analyses based on 2007 prices obsolete. It suggested that the price of LED lighting for use in refrigeration has already fallen by roughly 10 percent since 2007. (California Utilities Joint Comment, No. 41 at p. 13) The California Utilities Joint Comment also stated that LED prices will continue to drop after 2012, a fact that should be considered in the NPV analyses. (California Utilities Joint Comment, No. 41 at p. 8)

For today's final rule, DOE updated the LED costs to represent the current cost of LEDs. DOE did not receive any data providing a greater level of confidence that LED price reductions would occur. However, LED costs have decreased and the costs used in the NOPR engineering analysis no longer represent the current cost of LEDs. While considerable information is available that suggests LED prices are likely to decline by at least as much as DOE's sensitivity analysis assumed, DOE is not using this information as the basis of its analysis due to a lack of certainty about the timing and success of LED research and product development. See section V.A.2. a for more detail on the updated LED lighting assumptions.

ii. Material Price Projections

As discussed in the August 2008 NOPR, DOE performed a sensitivity analysis to explore the effects of future LED fixture prices on commercial refrigeration equipment prices in the engineering analysis. During the NOPR public meeting, AHRI commented that if DOE were to include LED price projections in the technical analyses, equivalent actions should be taken for other materials that also have shown recent price variability (

i.e.

, refrigerants). (AHRI, Public Meeting Transcript, No. 27 at p. 102) AHRI believes commodity prices are likely to change significantly, which would affect equipment costs and change efficiency trends. AHRI cited the potential change in costs of hydrofluorocarbon refrigerants (HFCs) if pending legislation capping those refrigerants is passed. (AHRI, No. 33 at p. 3) True Manufacturing Company (True) added that the industry is already using cheaper, less efficient substitute materials to produce heat transfer devices in response to rising copper prices. (True, Public Meeting Transcript, No. 27 at p. 104)

As stated above, DOE did not use LED price projections in the final rule due to a lack of certainty about the timing and extent to which the projections would be realized. Similarly, DOE also did not include material price projections in the final rule analysis.

b. Energy Consumption Model

The energy consumption model estimates the daily energy consumption of commercial refrigeration equipment at various performance levels using a design-options approach. The model is specific to the categories of equipment covered under this rulemaking, but is sufficiently generalized to model the energy consumption of all covered equipment classes. For a given equipment class, the model estimates the daily energy consumption for the baseline and the energy consumption of several levels of performance above the baseline. The model is used to calculate each performance level separately. For the NOPR, DOE updated its radiation load calculations by revising its assumptions for the view factor and changed its calculation method for infiltration load by replacing defrost melt-water with infiltrated air. 73 FR 50086. No comments were received in response to these changes. Therefore, DOE maintained these revised calculation methodologies for the final rule.

3. Equipment Classes Analyzed

For the final rule, DOE did not make any changes to the equipment classes directly analyzed in the NOPR engineering analysis. Table IV-3 shows the 15 equipment classes DOE directly analyzed.

Table IV—3 Equipment Classes Directly Analyzed in the Engineering Analysis

Equipment class

Description

VOP.RC.M

Vertical Refrigerator without Doors with a Remote Condensing Unit, Medium Temperature

VOP.RC.L

Vertical Freezer without Doors with a Remote Condensing Unit, Low Temperature

SVO.RC.M

Semivertical Refrigerator without Doors with a Remote Condensing Unit, Medium Temperature

HZO.RC.M

Horizontal Refrigerator without Doors with a Remote Condensing Unit, Medium Temperature

HZO.RC.L

Horizontal Freezer without Doors with a Remote Condensing Unit, Low Temperature

VCT.RC.M

Vertical Refrigerator with Transparent Doors with a Remote Condensing Unit, Medium Temperature

VCT.RC.L

Vertical Freezer with Transparent Doors with a Remote Condensing Unit, Low Temperature

SOC.RC.M

Service Over Counter Refrigerator with a Remote Condensing Unit, Medium Temperature

VOP.SC.M

Vertical Refrigerator without Doors with a Self-Contained Condensing Unit, Medium Temperature

SVO.SC.M

Semivertical Refrigerator without Doors with a Self-Contained Condensing Unit, Medium Temperature

HZO.SC.M

Horizontal Refrigerator without Doors with a Self-Contained Condensing Unit, Medium Temperature

HZO.SC.L

Horizontal Freezer without Doors with a Self-Contained Condensing Unit, Low Temperature

VCT.SC.I

Vertical Ice-Cream Freezer with Transparent Doors with a Self-Contained Condensing Unit, Ice-Cream Temperature

VCS.SC.I

Vertical Ice-Cream Freezer with Solid Doors with a Self-Contained Condensing Unit, Ice-Cream Temperature

HCT.SC.I

Horizontal Ice-Cream Freezer with Transparent Doors with a Self-Contained Condensing Unit, Ice-Cream Temperature

4. Wedge Cases

In the August 2008 NOPR, DOE considered remote condensing and self-contained wedge cases as covered equipment.

DOE proposed that the calculated daily energy consumption (CDEC) or total daily energy consumption (TDEC) be measured according to the ANSI/ASHRAE Standard 72-2005 test procedure.

DOE also proposed that the maximum daily energy consumption (MDEC) for each model shall be the amount derived by incorporating into the standards equation for the appropriate equipment class a value for the TDA that is the product of: (1) The vertical height of the air curtain or glass (in a transparent door), and (2) the largest overall width of the case when viewed from the front. 73 FR 50113. In the NOPR, DOE sought comment regarding appropriate standard levels for wedge cases, but did not receive any comments on this specific proposal.

If a wedge case does not include a refrigeration component and simply serves as a miter transition piece between two other cases, then it does not meet the definition of commercial refrigeration equipment, and is not covered under this rulemaking.

In the August 2008 NOPR, the test procedure cited was ANSI/ASHRAE Standard 72-2005. However, the test procedure DOE adopted into section 431.64 of 10 CFR Part 431 is ARI Standard 1200-2006, which specifically references ANSI/ASHRAE Standard 72-2005 as the method of testing commercial refrigeration equipment. 71 FR 71356 DOE notes that ARI Standard 1200-2006 would give identical test results for the measurement of energy consumption as ANSI/ASHRAE Standard 72-2005. Therefore, for today's final rule, DOE is referencing ARI Standard 1200-2006 for the measurement of CDEC and TDEC of wedge cases.

Hussman, Hill Phoenix, and AHRI commented that wedge cases should be excluded from this rulemaking because they are niche products that do not represent a significant part of the commercial refrigeration industry. (Hussman, No. 42 at p. 2; Hill Phoenix, No. 32 at p. 6; AHRI, No. 33 at p. 5) Hill Phoenix further states that most supermarkets and grocery stores do not use wedge cases at all, and those that do will only use a few within a store because they are much more expensive per linear foot than a standard case. (Hill Phoenix, Public Meeting Transcript, No. 27 at p. 18) Hussman further states that wedge cases use less than 0.5 percent of the total energy consumed by the supermarket industry and represent only 1.5 percent of the cases shipped. (Hussman, No. 42 at p. 2) DOE acknowledges that wedge cases are niche equipment and do not represent a significant market share in the commercial refrigeration equipment

industry. However, market share is not a basis for rejecting an equipment category from consideration in the rulemaking. Therefore, DOE concludes that wedge cases are covered in this rulemaking.

Hill Phoenix and AHRI also commented that wedge cases should be excluded from this rulemaking because there are no test procedures in place to test wedges since ARI Standard 1200-2006 excludes wedges from its scope of coverage. (Hill Phoenix, No. 32 at p. 2; AHRI, No. 33 at p. 5) As stated in the July 2007 ANOPR, EPCA directs DOE to set standards for commercial refrigeration equipment (

i.e.

, the three categories of equipment identified above). Any equipment that meets the EPCA definition of a “commercial refrigerator, freezer, or refrigerator-freezer” and falls under one of these three categories will be covered by this rulemaking. In the December 2006 final rule, DOE incorporated by reference certain sections of ARI Standard 1200-2006 as the test procedure for commercial refrigeration equipment, but did not reference section 2.2, which provides exclusions for certain equipment such as wedge cases.

The equipment excluded in this section of ARI Standard 1200-2006 will only be excluded from this rulemaking if they do not meet the EPACT 2005 definition of a “commercial refrigerator, freezer, or refrigerator-freezer.”

72 FR 41169 DOE believes that the EPACT 2005 definition of a “commercial refrigerator, freezer, or refrigerator-freezer” is sufficiently broad that it includes wedge cases. Therefore, DOE has concluded that wedge cases are properly covered in this rulemaking.

ARI Standard 1200-2006 refers to wedge cases as “miter transition display merchandisers used as a corner section between two refrigerated display merchandisers.”

“(9)(A) The term `commercial refrigerator, freezer, and refrigerator-freezer' means refrigeration equipment that—

(i) Is not a consumer product (as defined in section 321of EPCA [42 U.S.C. 6291(1)]);

(ii) Is not designed and marketed exclusively for medical, scientific, or research purposes;

(iii) Operates at a chilled, frozen, combination chilled and frozen, or variable temperature;

(iv) Displays or stores merchandise and other perishable materials horizontally, semivertically, or vertically;

(v) Has transparent or solid doors, sliding or hinged doors, a combination of hinged, sliding, transparent, or solid doors, or no doors;

(vi) Is designed for pull-down temperature applications or holding temperature applications; and

(vii) Is connected to a self-contained condensing unit or to a remote condensing unit.” (42 U.S.C. 6311(9)(A))

Hussman, Hill Phoenix, and AHRI also commented that wedge cases should be excluded from this rulemaking because they do not function effectively and cannot be tested as a stand-alone merchandiser since they require straight cases of the same model on either side. This configuration makes accurate performance testing of wedges nearly impossible and no specific testing guidelines for wedges exist within ANSI/ASHRAE Standard 72-2005 or ANSI/ARI Standard 1200-6006. (Hussman, No. 42 at p. 2; Hill Phoenix, No. 32 at p. 6; AHRI, No. 33 at p. 5) DOE acknowledges that there is no specific guidance in the ANSI/ASHRAE Standard 72-2005 or ARI Standard 1200-2006 test procedures that addresses the proper operation of wedge cases. However, DOE believes that wedge cases are not significantly different from normal display cases used in between other display cases (

i.e.

, cases within a display case line-up) in terms of operation and the ability to be tested. A wedge case and a normal case within a display case line-up both have display cases adjacent to them in normal operation and do not have end panels installed on their sides. DOE expects that wedge cases and cases within a display case line-up should be tested in the same manner under the test procedure.

Hussman and Hill Phoenix also commented that wedge cases should be excluded from this rulemaking because the TDA for inside wedges approaches zero. Therefore, standards for such cases are not meaningful because the TDA in the standards equation is zero. (Hussman, Public Meeting Transcript, No. 27 at p. 16; Hill Phoenix, Public Meeting Transcript, No. 27 at p. 19) As stated above, DOE proposed language in the August 2008 NOPR to specifically address the TDA issue of wedge cases. DOE proposed that for remote condensing and self-contained wedge cases, the CDEC or TDEC shall be measured according to the ANSI/ASHRAE Standard 72-2005 Test Procedure. DOE also proposed that the MDEC for each model shall be the amount derived by incorporating into the standards equation for the appropriate equipment class a value for the TDA that is the product of: (1) The vertical height of the air curtain or glass (in a transparent door), and (2) the largest overall width of the case, when viewed from the front.

73 FR 50113. (See section VI.A.1.) This procedure is conservative because it allows for the widest horizontal dimension of the display case to be used in determining TDA. That is, using this procedure, the standards for a wedge case would be less stringent than a normal display case, in the same equipment class, of equal refrigerated volume.

If a manufacturer finds that meeting the standard for wedge cases would cause hardship, inequity, or unfair distribution of burdens, the manufacturer may petition OHA for exception relief or exemption from the standard pursuant to OHA's authority under section 504 of the DOE Organization Act (42 U.S.C. 7194), as implemented at subpart B of 10 CFR part 1003. OHA has the authority to grant such relief on a case-by-case basis if it determines that a manufacturer has demonstrated that meeting the standard would cause hardship, inequity, or unfair distribution of burdens.

5. Ice-Cream Freezers—Temperature Range

In the test procedure final rule for commercial refrigeration equipment, DOE established the definition of ice-cream freezer as “a commercial freezer that is designed to operate at or below −5 °F (−21 °C) and that the manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice cream.” 71 FR 71369-70. DOE incorporated the test procedure into its regulations in 10 CFR 431.62. Under this definition, unless equipment is designed, marketed, or intended specifically for the storage, display or dispensing of ice cream, it would not be considered an ice-cream freezer. For example, multi-purpose commercial freezers manufactured for storing and displaying frozen foods in addition to ice cream and designed to operate at or below −5 °F (−21 °C) would not meet this definition. Thus, DOE would not treat them as commercial ice-cream freezers in this rulemaking. However, any commercial freezer that is specifically manufactured for storing, displaying, or dispensing ice cream and is designed for normal operation at or below −5 °F would meet the definition. Other equipment that meet the definition include freezers designed to operate considerably below −5 °F and are specifically designed for ice cream storage (

e.g.

, “hardening” cabinets), as well as ice-cream dipping cabinets designed to operate below −5 °F. For the NOPR, DOE expanded the definition used to categorize a unit's rating temperature by including a specific operating temperature range for medium-temperature, low-temperature, and ice-cream temperature applications.

Hill Phoenix and AHRI commented on the proposed temperature ranges for low-temperature and ice-cream temperature freezers. Hill Phoenix, in agreement with AHRI, stated that the operating range for low-temperature

cases should be changed to less than 32 °F and greater than −15 °F, and the operating range for ice-cream temperature cases be changed to less than or equal to −15 °F. Hill Phoenix and AHRI stated that freezers that operate below −15 °F are constructed differently than cases that operate in the −5 °F to −10 °F range. Hill Phoenix stated that DOE's current temperature range designations would require freezers that operate in the −5 °F to −10 °F range to be rated at −15 °F. (Hill Phoenix, No. 32 at p. 4; AHRI, No. 33 at p. 4)

As previously stated, ice-cream freezers are defined by the test procedure, which states that an ice-cream freezer is “a commercial freezer that is designed to operate at or below −5 °F (−21 °C) and that the manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice cream.” 71 FR 71369; 10 CFR 431.62. Based on the comments from AHRI and Hill Phoenix discussed above, DOE is modifying the operating temperature ranges used to define each type of equipment from the temperature ranges that were used in the NOPR. For today's final rule, DOE is organizing equipment classes based on the three operating temperature ranges shown in Table IV-4. For today's final rule, DOE will continue to classify equipment as medium temperature (refrigerators), low temperature (freezers), or ice-cream temperature (ice-cream freezers). Furthermore, DOE maintains the required rating temperatures as specified in the test procedure final rule: 38 °F (±2 °F) for commercial refrigerators and refrigerator compartments, 0 °F (±2 °F) for commercial freezers and freezer compartments, and −15 °F (±2 °F) for commercial ice-cream freezers. 71 FR 71370.

Table IV-4—Rating Temperature Designations

Operating temperature (°F)

Rating temperature (°F)

Description

≥32 (M)

Medium temperature (refrigerators).

<32 (L)

Low temperature (freezers).

≤−5 (I) *

−15

Ice-cream temperature (ice-cream freezers).

* Ice-cream freezer is defined in 10 CFR 431.62 as a commercial freezer that is designed to operate at or below −5 °F (−21 °C) and that the manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice cream.

6. Special Application Temperature Cases

After the NOPR public meeting, DOE received comments on including “application temperatures” for commercial refrigeration equipment. These are rating temperatures other than the standard rating temperatures. Hill Phoenix stated that some refrigerated cases are designed for and operate at medium temperature and hold foods with temperature requirements that tend to range from 10 °F to 20 °F. These cases are not designed to operate at the rating temperature of 0 °F. Hill Phoenix also stated that the cases would have to be redesigned to operate at the rating temperature, which would cause them to consume more energy. Therefore, Hill Phoenix recommended that this type of product be tested using the application temperature at which the product is designed to perform, but be required to meet the low-temperature standard. (Hill Phoenix, No. 32 at p. 4) AHRI concurred with Hill Phoenix, recommending that any case designed specifically to hold products at temperatures higher than the rating temperature specified for that class be tested at its application temperature and must meet the energy standards of that class. (AHRI, No. 33 at p. 5) However, the Joint Comment cautioned that rating specialty cases at application temperatures could create loopholes allowing equipment to be tested at an application temperature different from the temperature at which the equipment is designed to operate in the field. (Joint Comment, No. 34 at p. 4)

In the test procedure final rule for commercial refrigeration equipment, DOE adopted ARI Standard 1200-2006 as the DOE test procedure for commercial refrigeration equipment. 71 FR 71340, 71369-70; 10 CFR 431.63-431.64. ANSI/ARI Standard 1200-2006 contains rating temperature specifications of 38 °F (±2 °F) for commercial refrigerators and refrigerator compartments, and 0 °F (±2 °F) for commercial freezers and freezer compartments. In the test procedure final rule, DOE also adopted a −15 °F (±2 °F) rating temperature for commercial ice-cream freezers. 71 FR 71370.

Requiring manufacturers to test special application cases at one of the three specified standard rating temperatures (38 °F, 0 °F, and − 15 °F) instead of at their corresponding application temperature could result in higher energy consumption for these cases if they have to be redesigned for testing at the standard rating temperature. However, DOE agrees with the Joint Comment that allowing such special application cases to be tested at an application temperature that is different from the temperature at which the equipment is designed to operate in the field could create loopholes. Therefore, DOE is maintaining the requirement that all equipment must be tested at one of the three specified standard rating temperatures adopted by DOE in the test procedure final rule. In the example from Hill Phoenix, the equipment is classified as a medium-temperature unit, but the equipment is designed to operate below 32 °F and above −5 °F, thus categorizing it as a low-temperature unit under today's final rule. Because it is a low-temperature unit, it is required to be tested at 0 °F (±2 °F).

Any manufacturer that is unable to test such equipment at its designated rating temperature must request a test procedure waiver from DOE under the provisions described in 10 CFR 431.401. If the manufacturer believes that meeting the standard would cause hardship, inequity, or unfair distribution of burdens, it may petition OHA for exception relief from the energy conservation standard pursuant to OHA's authority under section 504 of the DOE Organization Act (42 U.S.C. 7194), as implemented at subpart B of 10 CFR part 1003. However, the majority of equipment covered by this rulemaking can be tested using the three specified rating temperatures provided in the test procedure.

7. Coverage of Remote Condensing Units

In the framework document, ANOPR, and NOPR, DOE considered energy conservation standards that covered only the refrigerated cases of remote condensing commercial refrigeration equipment, and not the remote condensing unit. DOE cited language in EPACT 2005's definitions for “self

contained condensing unit” and “remote condensing unit” as a justification for this approach. DOE believes that, by definition, the remote condensing units that support remote condensing refrigeration equipment are not considered an “integral part” of the refrigeration equipment. (EPACT 2005, Section 136(a)(3)) As a result, DOE stated in the August 2008 NOPR that remote condensing units would not be considered in this rulemaking.

For the NOPR, the Joint Comment stated that the scope of this rulemaking should not be limited to the refrigerated cabinets or display cases of remote condensing systems. According to the Joint Comment, regulating the remote condensing units supporting these cabinets has a significant potential to save energy because these units account for 90 percent of the total capacity of commercial refrigeration equipment subject to this rulemaking. (Joint Comment, No. 34 at p. 7)

As stated in the framework document and the July 2007 ANOPR, DOE does not believe that the remote condensing units of remote condensing refrigeration equipment systems are considered part of the equipment to which they are connected. EPCA defines a “self-contained condensing unit,” in part, as an “assembly of refrigerating components that is an integral part of the refrigerated equipment * * *” (42 U.S.C. 6311(9)(F), added by EPACT 2005, section 136(a)(3)). EPCA also defines a “remote condensing unit,” in part, as an “assembly of refrigerating components that is remotely located from the refrigerated equipment * * *” (42 U.S.C. 6311(9)(E), added by EPACT 2005, section 136(a)(3)) The EPCA definition of remote condensing unit implies that the remote condensing unit is not part of the refrigeration equipment because it refers to the unit and the refrigeration equipment as separate entities. A remote condensing unit functions as a supplement to remote condensing refrigeration equipment, but is not an “integral part.” Therefore, energy conservation standards for remote condensing commercial refrigerators, commercial freezers, and commercial refrigerator-freezers apply only to the refrigerated equipment (

i.e.

, storage cabinets and display cases), but not to the remote condensing units. For the final rule, DOE maintains that the energy conservation standards set for remote condensing commercial refrigeration equipment only apply to display cases, not to the remote condensing units.

However, DOE has the authority to classify industrial or commercial equipment as covered under EPCA section 341(a) and (b), if classification is “necessary” to improve the efficiency of industrial equipment (which includes commercial refrigeration equipment) in order to conserve energy. (42 U.S.C. 6312(a) and (b)) If DOE were to add remote condensing units as covered equipment, DOE would undertake a separate rulemaking process to consider standards for these products in accordance with EPCA section 341(a) and (b).

8. Regulating Secondary Cooling Applications

In the framework document, DOE decided to exclude equipment designed for secondary coolant applications. DOE's interpretation of the EPACT 2005 definitions of “commercial refrigerator, freezer, and refrigerator-freezer” was consistent with the ARI Standard 1200-2006, which explicitly excludes secondary coolant applications. Following the framework document, many interested parties, including ARI, Southern Company, and EEI, agreed with the exclusion of secondary coolant applications in this rule because of their insignificant presence in the market and the complexity of modifying the test procedure to accommodate them. ACEEE, on the other hand, commented that DOE should have a broad scope of coverage and should, in general, cover as much as possible in the rulemaking. 72 FR 41171.

After considering the framework comments, DOE decided to continue to exclude secondary coolant applications from this rulemaking in the July 2007 ANOPR. Following the ANOPR, commercial refrigeration manufacturers expressed concerns that the exclusion of secondary coolant systems could provide a loophole if customers purchased these lower efficiency systems instead of regulated direct expansion equipment. 73 FR 50106. For the NOPR, the Joint Comment restated that DOE should consider secondary coolant applications in its analysis. (Joint Comment, No. 34 at p. 8)

Section 340(9)(A)(vii) of EPCA (42 U.S.C. 6311(9)(A)(vii), added by EPACT 2005, section 136(a)(3)) states that the terms commercial refrigerator, freezer, and refrigerator-freezer refer to equipment that is connected to a self-contained condensing unit or to a remote condensing unit. DOE maintains that this language excludes secondary coolant applications from coverage in this rulemaking because such applications are not directly connected to self-contained or remote condensing units. 72 FR 41171. For this reason, DOE is excluding secondary coolant applications from this rule.

C. Markups To Determine Equipment Price

In the August 2008 NOPR, DOE explained how it developed the distribution channel markups it used. 73 FR 50093-95. DOE did not receive comments on these markups. However, DOE updated the distribution channel markups by including 2008 sales tax data, and updated the markups for commercial refrigeration equipment wholesalers using 2008 financial data. DOE used these markups, along with sales taxes, installation costs, and manufacturer selling prices (MSPs) developed in the engineering analysis, to arrive at the final installed equipment prices for baseline and higher efficiency commercial refrigeration equipment. As explained in the August 2008 NOPR, 73 FR 50093-95, DOE defined three distribution channels for commercial refrigeration equipment to describe how the equipment passes from the manufacturer to the customer. DOE developed market shares by distribution channel for remote condensing and self-contained equipment. DOE retained the same distribution channel market shares described in the August 2008 NOPR.

The new overall baseline and incremental markups for sales to supermarkets within each distribution channel are shown in Table IV-5, Table IV-6, Table IV-7, and Table IV-8. Chapter 6 of the TSD provides additional details on markups.

Table IV-5—Baseline Markups by Distribution Channel Including Sales Tax for Self-Contained Equipment in Supermarkets

Wholesaler

Mechanical contractor (includes wholesaler)

National account (manufacturer-

direct)

Overall

Distributor(s) Markup

1.370

2.082

1.185

1.564

Sales Tax

1.069

Overall Markup

1.465

2.226

1.267

1.672

Table IV-6—Baseline Markups by Distribution Channel Including Sales Tax for Remote Condensing Equipment in Supermarkets

Wholesaler

Mechanical

contractor

(includes

wholesaler)

National account (manufacturer-

direct)

Overall

Distributor(s) Markup

1.370

2.082

1.185

1.347

Sales Tax

1.069

Overall Markup

1.465

2.226

1.267

1.440

Table IV-7—Incremental Markups by Distribution Channel Including Sales Tax for Self-Contained Equipment in Supermarkets

Wholesaler

Mechanical contractor (includes wholesaler)

National account (manufacturer-

direct)

Overall

Distributor(s) Markup

1.114

1.370

1.057

1.186

Sales Tax

1.069

Overall Markup

1.191

1.465

1.130

1.268

Table IV-8—Incremental Markups by Distribution Channel Including Sales Tax for Remote Condensing Equipment in Supermarkets

Wholesaler

Mechanical contractor (includes wholesaler)

National account (manufacturer-

direct)

Overall

Distributor(s) Markup

1.114

1.370

1.057

1.112

Sales Tax

1.069

Overall Markup

1.191

1.465

1.130

1.189

D. Energy Use Characterization

The energy use characterization estimates the annual energy consumption of commercial refrigeration equipment systems (including remote condensing units). This estimate is used in the subsequent LCC and PBP analyses (chapter 8 of the TSD) and NIA (chapter 11 of the TSD). For the August 2008 NOPR, DOE estimated the energy consumption of the 15 equipment classes analyzed in the engineering analysis (chapter 5 of the NOPR TSD) using the relevant test procedure. DOE then validated these energy consumption estimates with annual whole-building simulation modeling of selected equipment classes and efficiency levels. 73 FR 50095. For the final rule analyses, DOE used the same methodology to estimate the annual energy consumption of commercial refrigeration systems presented in the August 2008 NOPR.

See

chapter 7 of the TSD for additional detail on the energy use characterization.

DOE assumed for the energy analysis 24-hour operation of case lighting based on input received during the ANOPR. The California Utilities Joint Comment stated that while many grocers in California may shut down case lighting for 8 hours per day, national trends may be closer to 24-hour operation. (California Utilities Joint Comment, No. 41 at p. 12) The California Utilities Joint Comment also indicated that LED lighting may be more likely to be controlled on and off during the operational day or dimmed based on motion sensors, and that this can be done without the risk of moisture or startup problems common to fluorescent fixtures. They further speculated that retailers would take advantage of these LED characteristics through different operational scenarios. (California Utilities Joint Comment, No. 41 at p. 12) However, they provided no data to indicate the likelihood of a different LED usage profile, and did not provide costs to implement automatic or manual control to support this comment. While the potential for additional lighting controls exists and LEDs may offer additional controllability, the actual likelihood and costs of implementation are unknown. As a result, DOE did not change its default assumption of 24-hour operation based on these comments. Additional detail on the energy use characterization can be found in chapter 7 of the TSD.

E. Life-Cycle Cost and Payback Period Analyses

In response to the requirements of section 325(o)(2)(B)(i) of EPCA, DOE conducted LCC and PBP analyses to evaluate the economic impacts of possible new commercial refrigeration equipment standards on individual customers. DOE used the same spreadsheet models to evaluate the LCC

and PBP as it used for the NOPR; however, DOE updated certain specific inputs to the models. Details of the spreadsheet model and of all the inputs to the LCC and PBP analyses are in TSD chapter 8. DOE conducted the LCC and PBP analyses using a spreadsheet model developed in Microsoft Excel for Windows 2003.

The LCC is the total cost for a unit of commercial refrigeration equipment over the life of the equipment, including purchase and installation expense and operating costs (energy expenditures and maintenance). To compute the LCC, DOE summed the installed price of the equipment and its lifetime operating costs discounted to the time of purchase. The PBP is the change in purchase expense due to a given energy conservation standard divided by the change in first-year operating cost that results from the standard. DOE expresses PBP in years. DOE measures the changes in LCC and in PBP associated with a given energy use standard level relative to a base case equipment energy use. The base case forecast reflects the market in the absence of mandatory energy conservation standards.

The data inputs to the PBP calculation are the purchase expense (otherwise known as the total installed customer cost or first cost) and the annual operating costs for each selected design. The inputs to the equipment purchase expense were the equipment price and the installation cost, with appropriate markups. The inputs to the operating costs were the annual energy consumption, the electricity price, and the repair and maintenance costs. The PBP calculation uses the same inputs as the LCC analysis but, because it is a simple payback, the operating cost is for the year the standard takes effect, assumed to be 2012. For each efficiency level analyzed, the LCC analysis required input data for the total installed cost of the equipment, the operating cost, and the discount rate.

Table IV-9 summarizes the inputs and key assumptions DOE used to calculate the economic impacts of various energy consumption levels on customers. Equipment price, installation cost, and baseline and standard design selection affect the installed cost of the equipment. Annual energy use, electricity costs, electricity price trends, and repair and maintenance costs affect the operating cost. The effective date of the standard, the discount rate, and the lifetime of equipment affect the calculation of the present value of annual operating cost savings from a proposed standard. Table IV-9 also shows how DOE modified these inputs and key assumptions for the final rule, relative to the August 2008 NOPR. The changes in the input data and the discussion of the overall approach to the LCC analysis are provided in chapter 8 of the TSD.

RS Means Company, Inc., 2006. Means Costworks 2006: Facility Maintenance & Repair Cost Data. Kingston, Massachusetts.

Table IV-9—Summary of Inputs and Key Assumptions Used in the LCC and PBP Analyses

Input

NOPR description

Changes for final rule

Baseline Manufacturer Selling Price

Price charged by manufacturer to either a wholesaler or large customer for baseline equipment. Developed by using industry-supplied efficiency level data and a design option analysis

Data reflect updated engineering analysis.

Standard-Level Manufacturer Selling Price Increases

Incremental change in manufacturer selling price for equipment at each of the higher efficiency standard levels. Developed by using a combination of energy consumption level and design option analyses

Data reflect updated engineering analysis.

Markups and Sales Tax

Associated with converting the manufacturer selling price to a customer price (chapter 6 of TSD). Developed based on product distribution channels and sales taxes

Markups updated based on revised data on sales tax and wholesaler financial data.

Installation Price

Cost to the customer of installing the equipment. This includes labor, overhead, and any miscellaneous materials and parts. The total installed cost equals the customer equipment price plus the installation price. Installation cost data provided by industry comment

No change.

Equipment Energy Consumption

Site energy use associated with the use of commercial refrigeration equipment, which includes only the use of electricity by the equipment itself. Taken from engineering analysis and validated in energy use characterization. (chapter 7 of the TSD)

Data reflect updated engineering analysis for each efficiency level.

Electricity Prices

Established average commercial electricity price ($/kWh) from EIA data for 2007, in 2007$. DOE then established scaling factors for commercial refrigeration equipment consumers based on the 2003

Commercial Building Energy Consumption Survey

No change.

Electricity Price Trends

Used the

AEO2007

reference case to forecast future electricity prices and extrapolated prices to 2042

Updated to

AEO2008

Maintenance Costs

Labor and material costs associated with maintaining the commercial refrigeration equipment (

e.g.

, cleaning heat exchanger coils, checking refrigerant charge levels, lamp replacement). Estimated from data in RS Means Facilities Maintenance and Repair Cost Data.

Also considered lighting types and configurations for the refrigeration equipment

No change in methodology; however, LED fixture replacement costs reflect updated engineering analysis costs by equipment class.

Repair Costs

Labor and material costs associated with repairing or replacing components that have failed. Estimated based on replacement frequencies and costs for key components

No change in methodology from NOPR. Repair costs reflect estimates of individual component life and cost to replace. Repair costs increase with increasing component costs.

Equipment Lifetime

Age at which the commercial refrigeration equipment is retired from service. Used an average lifetime of 10 years for large grocery and multi-line retailers and an average lifetime of 15 years for small grocers and convenience stores

No change.

Discount Rate

Computed by estimating the cost of capital for companies that purchase refrigeration equipment using business financial data from the Damodaran Online database

Updated based on data available in the 2008 version of the Damodaran Web site.

Rebound Effect

A rebound effect was not taken into account in the LCC analysis

No change.

The changes in the input data and the discussion of the overall approach to the LCC analysis are provided in chapter 8 of the TSD.

In response to the NOPR, DOE received comments on two key issues affecting the LCC analysis: electricity price forecasts and lighting maintenance costs. Regarding electricity price forecasts, ACEEE asked DOE to confirm whether the Energy Information Administration (EIA) electricity price forecasts take into account well-documented regulatory-based changes in electricity prices and are not just based on responses to fuel cost forecasts. (ACEEE, Public Meeting Transcript, No. 27 at p. 82) In response, DOE notes that the EIA electricity price forecasts are developed through NEMS modeling and rely on a comprehensive series of supply- and demand-based modules integrated to capture the market dynamics for various energy sources, including oil, coal, and natural gas. These models also capture a wide range of consumption purposes, including such events as changes in the price and supplies of fossil fuels, developments in electricity markets, likely improvements in technology, and the impact of economic growth and various other regulatory impacts that affect market electricity prices. NEMS is regularly used to provide analyses to Congress and DOE. DOE believes that NEMS does attempt to capture many known regulatory changes.

The Joint Comment stated that DOE should use forecasts for electricity prices other than the Annual Energy Outlook (

AEO

), and that electricity price mitigation effects of the proposed standard must be documented. (Joint Comment, No. 34 at p. 6) This comment addresses both the LCC and NIA analyses. While DOE considers

AEO2008

reference case forecasts in its central case fuel price scenario, DOE reviewed LCC and PBP results based on both the

AEO2008

high price and low price electricity forecasts and discusses the resulting differences in the TSD. While the Joint Comment suggests that DOE consider other forecasts, it does not point to specific forecast sources or provide justification for the selection or weighting of one forecast over the other. The

AEO2008

high price forecast used in the commercial refrigeration equipment analysis provides sufficient insight into probable commercial electricity price variation based on existing data and current regulatory schemes.

DOE considered reporting electricity price impacts but found that the uncertainty of price projections, together with the fairly small impact of the standards relative to total electricity demand, makes these price changes highly uncertain. As a result, they should not be weighed heavily in the decision about the standard level. Given the current complexity of utility regulation in the United States (with significant variances among states), it does not seem appropriate to attempt to measure impacts on infrastructure costs and prices where there is likely to be significant overlap.

DOE develops estimates for repair and maintenance costs for commercial refrigeration equipment in the LCC analysis. In the August 2008 NOPR, DOE assumed that maintenance costs are constant and do not vary with time. AHRI commented that the costs of maintenance do not remain constant, as the cost of HFC refrigerants is expected to increase by 300 percent to 400 percent over the next decade. (AHRI, No. 33 at p. 6) DOE recognizes that refrigerant costs may increase. For remote condensing equipment, leakage during maintenance occurs throughout the entire refrigeration system, including store refrigeration piping and remote condensing units, and is expected to be approximately the same for all standard levels since little refrigerant is stored in the evaporator coils of remote-condensing commercial refrigeration equipment. The law also requires that any HFC refrigerant removed during maintenance must be captured (recovered), and in supermarkets it is often reused within the supermarket chain. 69 FR 11946. Any loss of refrigerant during maintenance is essentially the same at all standard levels analyzed, and therefore does not affect the results of DOE's LCC or NPV analysis. In self-contained equipment, the refrigeration system is sealed and little leakage is expected to occur over the life of the equipment. Consequently, DOE did not revise the maintenance costs from the NOPR to account for future changes in refrigerant costs.

DOE also included in the maintenance costs the cost of necessary lighting component replacements over the life of the commercial refrigeration equipment. DOE received comments on the lighting maintenance costs assumption for LED lamp fixtures. The California Utilities Joint Comment cited evidence from recent assessments, as well as the physical properties of LEDs, suggesting that 50,000 hours is likely a conservative estimate. Fixtures may actually be replaced less frequently than the 5.7 years assumed in the NOPR analysis. (California Utilities Joint Comment, No. 41 at pp. 10-11) The comment noted that the LED light output degrades over time and the amount of degradation is a function of the junction temperature of the LED. Reducing the junction temperature can result in increased time to failure.

While DOE agrees with this assessment, the brightness of a particular LED chip and the corresponding heat rejection and

junction temperature are largely a function of power supplied by the LED driver circuitry. As such, manufacturers of LED fixtures can trade off brightness, total fixture cost, and design life for LED fixtures designed for commercial refrigeration equipment applications. The LED manufacturer equipment specification sheets that DOE examined for the final rule provide for a 50,000-hour life for the known commercial refrigeration equipment applications. Due to the recent availability of LED fixtures for use with commercial refrigeration equipment, there are few instances of installed LED light fixtures in this equipment exceeding the 50,000-hour specification. Therefore, DOE did not modify its LED fixture replacement cycle assumptions beyond the manufacturers' estimated life.

DOE also received comments on using a rebuttable presumption payback period to establish the economic justification of an energy conservation standard level. Earthjustice commented that DOE does not provide any rationale for why it did not use or does not plan to use the rebuttable presumption payback period analysis to set the trial standard level for these products. Earthjustice stated that Congress specifically provided that once the rebuttable presumption payback period is satisfied for a trial standard level, no further economic justification would be necessary for DOE's selection of that TSL as the final standard. (Earthjustice, Public Meeting Transcript, No. 27 at p. 88) The Joint Comment also stated that DOE should give greater consideration to the rebuttable presumption payback period when selecting an appropriate standard level, reflecting the intent of Congress in 42 U.S.C. section 6295(o)(2)(B)(iii) that the highest standard level with a 3-year payback constitutes the presumptive lowest standard level that DOE must adopt. (Joint Comment, No. 34 at pp. 3-4)

DOE does consider both the rebuttable presumption payback criteria, as well as a full analysis including all seven relevant statutory criteria under 42 U.S.C. 6295(o)(2)(B)(i), when examining potential standard levels. DOE believes that the commenters may be misinterpreting the statutory provision in question. Earthjustice presents one possible reading of an ambiguous provision (

i.e.

, that DOE need not look beyond the results of the rebuttable presumption inquiry), but DOE believes that such an approach is neither required nor appropriate, because it could ask the agency to ignore other relevant information that would affect the selection of the most stringent standard level that meets all applicable statutory criteria. The commenter's interpretation would essentially restrict DOE from being able to rebut the findings of the preliminary presumptive analysis. However, the statute contains no such restriction, and such an approach would hinder DOE's efforts to base its regulations on the best available information.

Similarly, DOE believes that the Joint Comment misreads the statute in calling for a level that meets the rebuttable presumption test to serve as a minimum level when setting the final energy conservation standard. To do so would not only eliminate the “rebuttable” aspect of the presumption but would also lock in place a level that may not be economically justified based on the full complement of statutory criteria. DOE is already obligated under EPCA to select the most stringent standard level that meets the applicable statutory criteria, so there is no need to tie the same requirement to the rebuttable presumption.

DOE also received a comment supporting its selection of commercial refrigeration equipment lifetimes. For the NOPR, DOE determined the lifetime of commercial refrigeration equipment by consulting industry experts, other interested parties, and literature on equipment lifetimes. The Joint Comment stated that DOE's assumptions in the NOPR regarding product life are reasonable. (Joint Comment, No. 34 at p. 2) Therefore, DOE has maintained the NOPR assumptions regarding product life for the final rule.

F. Shipments Analysis

The shipments analysis develops future shipments for each class of commercial refrigeration equipment based on current shipments and equipment life assumptions, and takes into account the existing stock and expected growth of buildings using commercial refrigeration equipment. DOE received no comments on the shipments analysis or the resulting shipments during the NOPR. Therefore, DOE used the same shipments model for the final rule analysis as the NOPR.

G. National Impact Analysis

The national impact analysis (NIA) assesses future NES and the national economic impacts of different efficiency levels. The analysis measures economic impacts using the NPV metric (

i.e.

, future amounts discounted to the present) of total commercial customer costs, and savings expected to result from new standards at specific efficiency levels. For the final rule analysis, DOE used the same spreadsheet model used in the NOPR to calculate the energy savings and the national economic costs and savings from new standards, but with updates to specific input data. Unlike the LCC analysis, the NES spreadsheet does not use distributions for inputs or outputs. DOE examined sensitivities by applying different scenarios. DOE used the NES spreadsheet to perform calculations of national energy savings and NPV using the annual energy consumption and total installed cost data from the LCC analysis and estimates of national shipments for each of the 15 primary commercial refrigeration equipment classes. DOE forecasted the energy savings from each TSL from 2012 through 2042. DOE forecasted the energy cost savings, equipment costs, and NPV of benefits for all primary commercial refrigeration equipment classes from 2012 through 2062. The forecasts provided annual and cumulative values for all four output parameters.

DOE calculated the NES by subtracting energy use under a standards scenario from energy use in a base case (no new standards) scenario. Energy use is reduced when a unit of commercial refrigeration equipment in the base case efficiency distribution is replaced by a more efficient piece of equipment. Energy savings for each equipment class are the same national average values as calculated in the LCC and payback period spreadsheet. However, these results are normalized on a per-unit-length basis by equipment class and applied to the total annual estimated shipments in terms of line-up length of all equipment with the class. Table IV-10 summarizes key inputs to the NIA analysis and the changes DOE made in the analysis for the final rule. Chapter 11 of the TSD provides additional information about the NIA spreadsheet.

Table IV-10—Summary of National Energy Savings and Net Present Value Inputs

Input data

Description of NOPR analysis

Changes for final rule

Shipments

Annual shipments from shipments model for 15 equipment classes. Shipments model based on projected growth in building stock using commercial refrigeration equipment (new stock) and annual replacements to stock based on an equipment life. Equipment lifetime distribution based on a 10-year average life in large grocery and multi-line retail, and a 15-year average life in small grocery and convenience stores (chapter 10, Shipments Analysis)

No change.

Effective Date of Standard

2012

No change.

Base Case Efficiencies

Distribution of base case shipments by efficiency level

No change in methodology to derive base case shipments by efficiency level.

Standards Case Efficiencies

Distribution of shipments by efficiency level for each base case and each standards case. Annual market shares by efficiency level remain constant over time for the base case and each standards case

No change in methodology to derive shipments by efficiency level in each standards case.

Annual Energy Consumption per Linear Foot

Annual weighted-average values are a function of energy consumption level, which are established in the engineering analysis (chapter 5 of the TSD). Converted to a per linear foot basis

No change in methodology. Energy consumption estimates reflect the updated final rule engineering analysis.

Total Installed Cost per Linear Foot

Annual weighted-average values are a function of energy consumption level (chapter 8 of the TSD). Converted to a per linear foot basis

No change in methodology. Installed costs reflect the updated final rule LCC.

Repair Cost per Linear Foot

Annual weighted-average values are constant in real dollar terms for each energy consumption level (chapter 8 of the TSD). Converted to a per linear foot basis

No change in methodology. Repair costs reflect the updated final rule LCC values.

Maintenance Cost per Linear Foot

Annual weighted-average value equals $160 in 2007$ (chapter 8 of the TSD), plus lighting maintenance cost. Converted to a per linear foot basis

No change.

Escalation of Electricity Prices

EIA

AEO2007

forecasts (to 2030) and extrapolation for beyond 2030 (chapter 8 of the TSD)

EIA

AEO2008

forecasts (to 2030) and extrapolation for beyond 2030 (chapter 8 of the TSD).

Electricity Site-to-Source Conversion

Conversion varies yearly and is generated by DOE/EIA's NEMS program (a time series conversion factor; includes electric generation, transmission, and distribution losses) based on

AEO2007

Conversion factor varies yearly and is generated by EIA's NEMS model. Includes the impact of electric generation, transmission, and distribution losses based on

AEO2008.

Discount Rate

3 and 7 percent real

No change.

Present Year

Future costs are discounted to 2008

No change

Rebound Effect

A rebound effect (due to changes in shipments resulting from standards) was not considered in the NIA

No change.

The modifications DOE made to the NES and NIA analyses for the final rule primarily reflect updates to the same data sources used in the NOPR, but not changes in methodology. In addition, the underlying input data on equipment costs and energy savings by TSL are based on the LCC analysis results as revised in the final rule.

For the final rule, DOE developed marginal site-source conversion factors that relate the national electrical energy savings at the point of use to the fuel savings at the power plant. These factors use the NEMS model and the examination of the corresponding energy savings from standards scenarios considered in DOE's utility analysis (chapter 14 of the TSD). The conversion factors vary over time, due to projected changes in electricity generation sources (

i.e.

, the power plant types projected to provide electricity to the country) and power plant dispatch scenarios. DOE revised the stream of conversion factors based on the final rule utility impacts analysis and using a version of NEMS consistent with

AEO2008

. DOE also updated the electricity price forecasts used in the NIA to reflect forecasts found in

AEO2008

compared to

AEO2007

DOE did not receive information to support revising the shipments analysis or the methodology used in the NIA to estimate future shipments by efficiency level. DOE requested input on this methodology or on additional data to estimate future shipments. True commented that because so many different features and options can degrade a product's efficiency, True cannot afford to test every permutation's efficiency. Traditionally, therefore, True tests the most severe case, which includes all the options, and makes sure it can exceed the standard. As a result, the units shipped out are often more efficient than the testing would indicate. (True, Public Meeting Transcript, No. 27 at p. 119) DOE acknowledges this comment, but did not receive sufficient detail to address this concern in the final rule analysis for individual commercial refrigeration equipment classes. Because the distribution of efficiencies of all TSLs as well as the baseline would be similarly affected by some customers removing specific energy consuming options (

e.g.

, shelf lighting) from their purchased products, the impact of this particular issue on the potential national energy savings of one TSL over another may be insignificant.

To discount future impacts, DOE used discount rates of both 7 percent and 3 percent, in accordance with the Office of Management and Budget (OMB)'s guidelines (OMB Circular A-4, section E, Regulatory Analysis (September 17, 2003)). ASAP commented that DOE leans too heavily on the 7-percent discount rate, and that OMB has DOE looking at both the 3-percent and 7-percent discount rates. ASAP stated that DOE should be giving primacy to the lower discount rate, which is the societal discount rate—the time value of the society as a whole. (ASAP, Public Meeting Transcript, No. 27 at pp. 20-21 and p. 128) PG&E stated that a 3-percent discount rate is used for the California Energy Commission workshops on efficiency, and that it supports the 3-

percent rate for the Federal rulemaking. (PG&E, Public Meeting Transcript, No. 27 at p. 131) The Joint Comment stated that DOE improperly weighs the 7-percent discount rate more than the 3-percent discount rate. The Joint Comment noted that DOE should use the 3-percent discount rate because it is the required social discount rate and because the actual weighted average cost of capital is lower than 7 percent. (Joint Comment, No. 34 at p. 6)

DOE reports and uses both 3-percent and 7-percent discount rates in its analysis of net present value. OMB's guidance to Federal agencies for developing regulatory analysis (OMB Circular A-4, September 17, 2003)

references OMB Circular A-94

for the development of discount rates for regulatory analysis. OMB Circular A-94 states that, as a default position, constant-dollar benefit-cost analyses of proposed investments and regulations should report net present value and other outcomes determined using a real discount rate of 3 percent. The 7-percent rate is an estimate of the average before-tax rate of return to private capital in the U.S. economy. It is a broad measure that reflects the returns to real estate and small business capital as well as corporate capital. It approximates the opportunity cost of capital, and it is the appropriate discount rate whenever the main effect of a regulation is to displace or alter the use of capital in the private sector. OMB A-94 states that regulatory analyses should show the sensitivity of the discounted net present value and other outcomes to variations in the discount rate. The importance of these alternative calculations will depend on the specific economic characteristics of the program under analysis. OMB A-4 notes that the effects of regulation do not always fall exclusively or primarily on the allocation of capital. When regulation primarily and directly affects private consumption (

e.g.

, through higher consumer prices for goods and services), a lower discount rate is appropriate. The alternative most often used is sometimes called the social rate of time preference, or the rate at which society discounts future consumption flows to their present value. To represent these cases, OMB recommends using the rate the average saver uses to discount future consumption as the measure of the social rate of time preference, approximating this with the real rate of return on long-term Government debt (

e.g.

, the yield on Treasury notes minus the annual rate of change in the Consumer Price Index), which has averaged about 3 percent on a pre-tax basis for the last 30 years. For the commercial refrigeration equipment rulemaking in particular, DOE notes that the purchasers of commercial refrigeration equipment are indeed commercial businesses and not “savers.” Regarding the comment that the average cost of capital calculated for businesses purchasing commercial refrigeration equipment was less than 7 percent, DOE notes that the average cost of capital calculated for the LCC analysis is the after-tax cost of capital. OMB A-4 specifically notes that pre-tax rates of return better measure society's gains from investment. This is because corporate capital, in particular, pays an additional layer of taxation: The corporate income tax. This tax requires corporate capital to earn a higher pre-tax rate of return in order to provide investors with similar after-tax rates of return compared with non-corporate investments. Based on the guidance provided in OMB A-4, DOE considers both 3-percent and 7-percent discount rates in the NIA analysis.

http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf.

http://www.whitehouse.gov/omb/circulars/a094/a094.html.

ASAP stated that discount rates should not be applied to quads because a discount rate is a financial instrument and a quad is a physical quantity. (ASAP, Public Meeting Transcript, No. 27 at p. 22) DOE understands ASAP's concern about discounting of physical quantities. Unlike economic factors that are discounted into the future, physical quantities are not discounted because they do not change over time. DOE reports the undiscounted energy savings in Table VI-31 of today's final rule.

H. Life-Cycle Cost Sub-Group Analysis

In analyzing the potential impact of new or amended standards on commercial customers, DOE evaluates the impact on identifiable groups (

i.e.

, sub-groups) of customers, such as different types of businesses that may be disproportionately affected by a National standard level. For this rulemaking, DOE identified independent small grocery and convenience stores as a commercial refrigeration equipment customer sub-group that could be disproportionately affected, and examined the impact of proposed standards on this group. DOE determined the impact on this commercial refrigeration equipment customer sub-group using the LCC spreadsheet model. DOE conducted the LCC and PBP analyses for commercial refrigeration equipment customers represented by the subgroup. DOE did not receive comments on its identification of this class of users as the key sub-group or on the assumptions applied to those sub-groups. DOE relied on the same methodology outlined in the NOPR for the final rule analysis. The results of DOE's LCC sub-group analysis are summarized in section VI.C.2.e and described in detail in chapter 12 of the TSD.

I. Manufacturer Impact Analysis

DOE performed a manufacturer impact analysis (MIA) to estimate the financial impact of energy conservation standards on manufacturers of commercial refrigeration equipment, and to assess the impact of such standards on employment and manufacturing capacity. DOE conducted the MIA for commercial refrigeration equipment in three phases. Phase 1, Industry Profile, consisted of preparing an industry characterization, including data on market share, sales volumes and trends, pricing, employment, and financial structure. Phase 2, Industry Cash Flow Analysis, focused on the industry as a whole. In this phase, DOE used the GRIM to prepare an industry cash-flow analysis. Using publicly available information developed in Phase 1, DOE adapted the GRIM's generic structure to perform an analysis of commercial refrigeration equipment energy conservation standards. In Phase 3, Sub-Group Impact Analysis, DOE conducted interviews with manufacturers representing the majority of domestic commercial refrigeration equipment sales. This group included large and small manufacturers, providing a representative cross-section of the industry. During these interviews, DOE discussed engineering, manufacturing, procurement, and financial topics specific to each company and obtained each manufacturer's view of the industry. The interviews provided valuable information DOE used to evaluate the impacts of an energy conservation standard on manufacturer cash flows, manufacturing capacities, and employment levels.

The GRIM inputs consist of the commercial refrigeration industry's cost structure, shipments, and revenues. This includes information from many of the analyses described above, such as manufacturing costs and selling prices from the engineering analysis and shipments forecasts from the NES.

The GRIM uses the manufacturer production costs in the engineering analysis to calculate the MSPs for each equipment class at each TSL. By multiplying the production costs by different sets of markups, DOE derives the MSPs used to calculate industry

revenues. Following the NOPR, DOE revised its engineering cost curves to derive new manufacturer production costs. DOE used these updated production costs in the GRIM for the final rule.

The GRIM estimates manufacturer revenues based on total-unit-shipment forecasts and the distribution of these shipments by efficiency. Changes in the efficiency mix at each standard level are a key driver of manufacturer finances. For the final rule analysis, DOE used the total shipments and efficiency distribution found in the final rule NES. For additional detail on the manufacturer impact analysis, refer to chapter 13 of the TSD.

J. Utility Impact Analysis

The utility impact analysis estimates the effects of reduced energy consumption due to improved equipment efficiency on the utility industry. This analysis compares forecast results for a case comparable to the

AEO2008

reference case and forecast results for policy cases incorporating each of the commercial refrigeration equipment TSLs.

DOE analyzed the effects of proposed standards on electric utility industry generation capacity and fuel consumption using a variant of EIA's NEMS. EIA uses NEMS to produce its

AEO

, a widely recognized baseline energy forecast for the United States. DOE used a variant known as NEMS-BT. The NEMS-BT is run similarly to the

AEO2008

NEMS, except that commercial refrigeration equipment energy usage is reduced by the amount of energy (by fuel type) saved due to the TSLs. DOE obtained the inputs of national energy savings from the NES spreadsheet model. In response to the August 2008 NOPR, DOE did not receive comments directly on the methodology used for the utility impact analysis. DOE revised the final rule inputs to use the NEMS-BT consistent with the

AEO2008

and to use the NES impacts developed in the commercial refrigeration equipment final rule analysis.

In the utility impact analysis, DOE reported the changes in installed capacity and generation by fuel type that result for each TSL, as well as changes in end-use electricity sales. Chapter 14 of the TSD provides details of the utility analysis methods and results.

K. Employment Impact Analysis

DOE considers direct and indirect employment impacts when developing a standard. In this case, direct employment impacts are any changes in the number of employees for, commercial refrigeration equipment manufacturers, their suppliers, and related service firms. Indirect impacts are those changes in employment in the larger economy that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more efficient commercial refrigeration equipment. In this rulemaking, the MIA addresses direct impacts (chapter 13 of the TSD), and the employment impact analysis addresses indirect impacts (chapter 15 of the TSD).

Indirect employment impacts from commercial refrigeration equipment standards consist of the net jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, as a consequence of: (1) Reduced spending by end users on electricity (offset to some degree by the increased spending on maintenance and repair), (2) reduced spending on new energy supply by the utility industry, (3) increased spending on the purchase price of new commercial refrigeration equipment, and (4) the effects of those three factors throughout the economy. DOE expects the net monetary savings from standards to be redirected to other forms of economic activity. DOE also expects these shifts in spending and economic activity to affect the demand for labor.

DOE used the same methodology described in the August 2008 NOPR to estimate indirect national employment impacts using an input/output model of the U.S. economy, called ImSET (Impact of Sector Energy Technologies), which was developed by DOE's Building Technologies Program. 73 FR 50072, 50107-108. The ImSET model estimates changes in employment, industry output, and wage income in the overall U.S. economy resulting from changes in expenditures in various economic sectors. DOE estimated changes in expenditures using the NES spreadsheet. ImSET then estimated the net national indirect employment impacts of potential commercial refrigeration equipment efficiency standards on employment by sector.

In response to the August 2008 NOPR, DOE received several comments on the employment impact analysis. ASAP commented that the discussion of the employment benefits resulting from the net increase in jobs follows a pattern of DOE trivializing these benefits in the rulemakings by stating that they are so small that they would be imperceptible in national labor statistics and might be offset by other unanticipated effects on employment. ASAP stated that it is important that DOE keep performing the employment analysis given the cumulative impact of possible DOE rulemakings over the next 4 years. (ASAP, Public Meeting Transcript, No. 27 at p. 161)

The Joint Comment also stated that TSL 5 would create more jobs than TSL 4, and that DOE cannot reject the difference as statistically insignificant because it must consider the combined effect of all rulemakings. (Joint Comment, No. 34 at p. 5) The Joint Comment further stated that DOE should consider indirect job creation as a serious factor weighing in favor of stronger standards. (Joint Comment, No. 34 at p. 5)

Earthjustice noted that both indirect and direct employment benefits are shown to provide positive employment in the respective employment and MIA analyses and that DOE should consider this in the final rule. (Earthjustice, Public Meeting Transcript, No. 27 at p. 166)

DOE considers the employment impacts without quantifying the net economic value of such impacts. DOE agrees that the indirect employment analysis indicates that new energy conservation standards for commercial refrigeration equipment could increase the demand for labor in the economy and result in additional employment, a net benefit to society that DOE considers in establishing standards for commercial refrigeration equipment. Chapter 15 of the TSD describes and provides results for the employment impact analysis.

L. Environmental Assessment

DOE has prepared an environmental assessment (EA) pursuant to the National Environmental Policy Act and the requirements under 42 U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a) to determine the environmental impacts of the standards being established in today's final rule. Specifically, DOE estimated the reduction in total emissions of CO

using the NEMS-BT computer model. DOE calculated a range of estimates for reduction in NO

emissions and mercury (Hg) emissions using current power sector emission rates. However, the EA does not include the estimated reduction in power sector impacts of sulfur dioxide (SO

), because DOE has determined that any such reduction resulting from an energy conservation standard would not affect the overall level of SO

emissions in the United States due to the presence of national caps on SO

emissions as addressed below (see chapter 16 of the TSD).

The NEMS-BT is run similarly to the

AEO2008 NEMS,

except the energy use is reduced by the amount of energy

saved due to the TSLs. DOE obtained the inputs of national energy savings from the NIA spreadsheet model. For the EA, the output is the forecasted physical emissions. The net benefit of the standard is the difference between emissions estimated by NEMS-BT and the

AEO2008

reference case. The NEMS-BT tracks CO

emissions using a detailed module that provides results with a broad coverage of all sectors and inclusion of interactive effects.

The Clean Air Act Amendments of 1990 set an emissions cap on SO

for all power generation. Attaining this target, however, is flexible among generators and is enforced through emissions allowances and tradable permits. Because SO

emissions allowances have value, generators will almost certainly use them, although not necessarily immediately or in the same year with and without a standard in place. In other words, with or without a standard, total cumulative SO

emissions will always be at or near the ceiling, while there may be some timing differences between yearly forecasts. Thus, it is unlikely that there will be an SO

environmental benefit from electricity savings as long as there is enforcement of the emissions ceilings.

Although there may not be an actual reduction in SO

emissions from electricity savings, there still may be an economic benefit from reduced demand for SO

emission allowances. Electricity savings decrease the generation of SO

emissions from power production, which can decrease the need to purchase or generate SO

emissions allowance credits, and decrease the costs of complying with regulatory caps on emissions.

Like SO

, future emissions of NO

and Hg would have been subject to emissions caps under the Clean Air Interstate Act (CAIR) and Clean Air Mercury Rule (CAMR). However, as discussed in section VI.C.6, a Federal court has vacated these rules. The NEMS-BT model used for today's final rule assumed that both NO

and Hg emissions would be subject to CAIR and CAMR emissions caps. In the case of NO

emissions, CAIR would have permanently capped emissions in 28 eastern states and the District of Columbia. Because the NEMS-BT modeling assumed NO

emissions would be subject to CAIR, DOE established a range of NO

reductions based on the use of a NO

low and high emissions rates (in kt of NO

emitted per terawatt-hours (TWh) of electricity generated) derived from the

AEO2008

. To estimate the reduction in NO

emissions, DOE multiplied these emission rates by the reduction in electricity generation due to the standards considered. However, because the emissions caps specified by CAMR would have applied to the entire country, DOE was unable to use NEMS-BT model to estimate the physical quantity changes in mercury emissions due to energy conservation standards. To estimate mercury emission reductions due to standards, DOE used an Hg emission rate (in metric tons of Hg per energy produced) based on

AEO2008

. Because virtually all mercury emitted from electricity generation is from coal-fired power plants, DOE based the emission rate on the metric tons of mercury emitted per TWh of coal-generated electricity. To estimate the reduction in mercury emissions, DOE multiplied the emission rate by the reduction in coal-generated electricity associated with standards considered.

In comments on the August 2008 NOPR, ASAP stated that it was important for DOE to consider the economic impact calculations for carbon, noting that the economic savings are significant. In addition, until the CRE and packaged terminal air conditioner and heat pump (PTAC and PTHP) NOPRs, ASAP did not see that economic values for carbon emissions savings were factored into the analysis in a way that could affect decision making. (ASAP, Public Meeting Transcript, No. 27 at p. 172) On the other hand, AHRI believes DOE has no statutory obligation to monetize CO

benefits. (AHRI, Public Meeting Transcript, No. 27 at p. 173)

AHRI further commented that if DOE decides to monetize CO

benefits, then it should account for CO

emissions that will result from manufacturing more efficient products. For example, DOE should consider the CO

emissions resulting from additional copper to be mined and incorporated into the finished product. (AHRI, Public Meeting Transcript, No. 27 at p. 173) True also commented on types of manufacturing processes that should be considered in the emissions analysis. True stated that the most significant impact of commercial refrigeration equipment on the environment is from welding agents and refrigerants. True further explained with the global warming potentials (GWPs) of some of these substances at 1,300, 1,500, and 3,800, the impacts are astronomically greater than other impacts the industry faces. (True, Public Meeting Transcript, No. 27 at p. 174)

On the contrary, ASAP emphasized that the congressional deadline of December 31, 2008, means that “paralysis by analysis” is not an option at this point in this rulemaking and that it is incumbent upon AHRI to demonstrate that any proposed analysis changes would be significant. (ASAP, Public Meeting Transcript, No. 27 at p. 173) ACEEE commented that for buildings and the equipment used in them (not specific for this class of equipment), the energy use during the operating life is roughly 85 percent of the total lifecycle energy. Also, the incremental energy change from increased use of a largely recycled metals stock is likely have a small impact on this analysis. (ACEEE, Public Meeting Transcript, No. 27 at p. 173)

Several interested parties provided comments on the economic value of CO

used in DOE's monetization of carbon emissions for the August 2008 NOPR and the final rule for PTACs and PTHPs (73 FR 58772, October 7, 2008). ASAP stated that the low range for monetization of carbon emission reductions should not be zero. (ASAP, Public Meeting Transcript, No. 27 at p. 23) AHRI stated that DOE should not speculate on the value of CO

emissions because it has no statutory obligation to do so and that any value DOE used would be an estimate. There is no consensus on any single estimate of the value of CO

emissions. Therefore, DOE should not indulge in speculation to determine a value when it has no statutory obligation to do so. (AHRI, No. 33 at p. 6)

Earthjustice commented that the upper and lower bounds of the values DOE uses for its carbon emissions are arbitrarily low. (Earthjustice, No. 38 at pp. 7-14) Specifically, Earthjustice stated that by using the value of the social cost of carbon (SCC) estimated in Dr. Richard Tol's 2005 meta-analysis, DOE excluded critical damages and made optimistic assumptions that bias the damage cost downwards. (Earthjustice, No. 38 at p. 8) Earthjustice noted that Tol released an update of his 2005 meta-analysis in September 2007, which reports an increase in his peer-reviewed mean estimate of SCC from $14 to $20/ton CO

and from $43 to $71/ton carbon.

Earthjustice also asserted that the use of Tol's mean as an upper bound is inconsistent with sound risk analysis and distributions of climate damage functions, leading to systematic undervaluation of damages. (Earthjustice, No. 38 at p. 9) Lastly, Earthjustice noted that Tol's estimate relies primarily on estimates that did not use the currently accepted climate change discounting procedure of

declining discount rate over time, and it fails to recognize the distinction between the ways in which scarcity affects the value of normal goods and environmental goods. (Earthjustice, No. 38 at p. 11)

Tol, R.S.J. (2007) The social cost of carbon: trends, outliers, and catastrophes.

Research Unit Sustainability and Global Change, Working Paper FNU-144,

Hamburg University and Centre for Marine and Atmospheric Science, Hamburg, Germany.

AHRI noted that Congress is now engaged in debating a possible cap and trade program for the United States. The size of the allowance cap first set by such legislation or by implementing regulations and the pace of reduction of the emission allowances will largely determine the unit price or value of CO

emissions reductions. AHRI stated that it would be an arbitrary decision on DOE's part to rely on valuations identified in the Intergovernmental Panel on Climate Change (IPCC) or valuations used in the European Union (EU) cap and trade program when the United States has not yet set an emissions cap itself. Further, AHRI stated that DOE should not allow evaluation of environmental impacts to negate or render moot what has always been, and should remain, the core analysis in appliance standards rulemakings,

i.e.

, consumer payback and life-cycle cost analyses. (AHRI, No. 33 at p. 6) NRDC also stated that the cost of carbon emissions will become an issue with California adopting a Climate Program and the Regional Greenhouse Gas Initiative in the Northeast. (NRDC, Public Meeting Transcript, No. 27 at p. 105)

Earthjustice's written comment states that DOE's monetization of CO

emissions should reflect the potential U.S. legislation that would put a national cap on CO

emissions. This includes examining the effect of the standard in reducing allowance prices and the benefit of reduced emissions in the NPV. This is Earthjustice's primary suggested consideration for DOE; otherwise, DOE should take into account existing regional CO

caps when monetizing CO

. Finally, the most basic consideration DOE must make, according to Earthjustice, is to economically account for the avoided environmental harm from CO

emissions. (Earthjustice, No. 38 at pp. 2-6)

The Joint Comment stated that DOE should incorporate the monetization of carbon emission reductions in the life-cycle cost analysis and the national impact analysis. The Joint Comment further stated that DOE's exclusion of carbon monetization in the LCC and NIA results in a systematic underestimation of benefits of new energy conservation standards. (Joint Comment, No. 34 at p. 6) Earthjustice stated that DOE does not account for the economic value of CO

emissions reductions resulting from efficiency standards in any meaningful way. Although DOE has begun estimating a range of values for carbon emissions, it then ignores these values when choosing the new standard level. Earthjustice stated that DOE must address these issues by (1) accounting for the value of emissions reductions resulting from a standard in the economic analyses, the LCC, and NIA; and (2) using reasonable assumptions and sources when determining the value of carbon emission reductions because the current sources evaluated are inadequate. (Earthjustice, No. 38 at p. 1) Specifically, Earthjustice stated that DOE should quantify the effect of a CO

emission cap on energy prices in the LCC analysis. (Earthjustice, No. 38 at p. 2)

DOE has made several additions to its monetization of environmental emissions reductions in today's rule, which are discussed in section VI.C.6. DOE has chosen to continue to report these benefits separately from the net benefits of energy savings. Nothing in EPCA or in the National Environmental Policy Act (NEPA) requires that the economic value of emissions reduction be incorporated in the net present value analysis of energy savings. Unlike energy savings, the economic value of emissions reduction is not priced in the marketplace. However, DOE will consider both values when weighing the benefits and burdens of standards.

Although this rulemaking does not affect SO

emissions, there are markets for SO

emissions allowances. The market clearing price of SO

emissions is roughly the marginal cost of meeting the regulatory cap, not the marginal value of the cap itself. Further, because national SO

emissions are regulated by a cap and trade system, the need to meet these caps is already included in the price of energy or energy savings. With a cap on SO

, the value of energy savings already includes the value of SO

control for those consumers experiencing energy savings. The economic cost savings associated with SO

emissions caps is approximately equal to the change in the price of traded allowances resulting from energy savings multiplied by the number of allowances that would be issued each year. That calculation is uncertain because the energy savings for commercial refrigeration equipment are so small relative to the entire electricity generation market that the resulting emissions savings would have almost no impact on price formation in the allowances market. These savings would most likely be outweighed by uncertainties in the marginal costs of compliance with SO

emissions caps.

For those emissions currently not priced (CO

, Hg, and NO

), only a range of estimated economic values based on environmental damage studies of varying quality and applicability is available. DOE is weighing these values separately and is not including them in the NPV analysis.

V. Discussion of Other Comments

Since DOE opened the docket for this rulemaking, it has received more than 100 comments from a diverse set of parties, including manufacturers and their representatives, trade associations, wholesalers and distributors, energy conservation advocates, and electric utilities. Section IV of this preamble discusses comments DOE received on the analytic methodologies it used. Additional comments DOE received in response to the August 2008 NOPR addressed the information DOE used in its analyses, results of and inferences drawn from the analyses, impacts of standards, the merits of the different TSLs and standards options DOE considered, and other issues affecting adoption of standards for commercial refrigeration equipment. DOE addresses these comments in this section.

A. Information and Assumptions Used in Analyses

1. Market and Technology Assessment

a. Data Sources

DOE summarized its analysis for energy consumption in chapter 3 of the NOPR TSD. Traulsen stated that there are problems with the use of energy consumption data reported to government agencies because of inaccurate data reporting. Traulsen cited several problems with U.S. Environmental Protection Agency's (EPA's) ENERGY STAR database for self-contained commercial solid-door food service refrigerators and freezers, including equipment listed in the database that does not conform to the ENERGY STAR specifications. Traulsen suggested that sources such as these not be used in the technical analyses because of the errors they contain. (Traulsen, No. 25 at p. 1)

The ENERGY STAR requirements for commercial solid door refrigerators and freezers cover self-contained commercial refrigerators, freezers, and refrigerator-freezers that have solid doors, which are not covered in this commercial refrigeration equipment rulemaking. In terms of equipment classes, there is no overlap between the ENERGY STAR program and DOE's rulemaking on commercial refrigeration

equipment, except for commercial ice-cream freezers. EPA's commercial ice-cream freezer equipment class does not coincide with DOE's commercial ice-cream freezer equipment class because they are defined differently and tested at different rating temperatures. In addition, DOE understands that Traulsen has a large market in the commercial refrigeration industry for self-contained commercial refrigerator and freezers with doors. However, these equipment classes are not covered in this rulemaking. Also, DOE did not use energy consumption databases from other government agencies such as EPA. Rather, DOE conducted its own evaluation of energy consumption data for existing equipment from major manufacturers and compiled a performance database. The primary source of information for the database was equipment data sheets that were publicly available on manufacturers' Web sites. From these data sheets, equipment information such as total refrigeration load, evaporator temperature, lighting power draw, defrost power draw, and motor power draw allowed determination of calculated daily energy consumption (CDEC) according to the DOE test procedure. See chapter 3 of the TSD for additional information on market performance data.

b. Beverage Merchandisers

In response to the NOPR, Coca-Cola submitted a comment questioning the market share and shipment data in DOE's analysis. Coca-Cola stated that its own purchases contradict DOE's figures. According to Coca-Cola, vertical closed transparent, self-contained, medium temperature (VCT.SC.M) equipment makes up the majority of Coca-Cola's purchases. DOE's exclusion of this class accounts for the differences between Coca-Cola's purchases and the number of units shipped that DOE reported in the engineering analysis. (Coca-Cola, No. 21 at p. 1)

As explained in the July 2007 ANOPR, VCT.SC.M equipment is currently covered by energy conservation standards established in EPCA. 72 FR 41176. Therefore, self-contained glass-front beverage merchandisers (beverage coolers), which are included in the VCT.SC.M equipment class, are not covered in this commercial refrigeration equipment rulemaking. As a result, all the shipment and market share data reported in the engineering analysis are valid for the classes of commercial refrigeration equipment covered in this rulemaking.

2. Engineering Analysis

a. Design Options

In the NOPR, DOE reevaluated the list of design options remaining after the ANOPR screening analysis. Based on public comments, DOE made the following design option changes in the NOPR and did not receive any further comment for the final rule: increasing insulation thickness as a design option; revising anti-sweat heater power values for certain equipment classes with glass doors; and revising assumptions made to estimate changes in cost and efficiency for high-efficiency, single-speed compressors used in self-contained equipment. 73 FR 50087. However, there were certain design options for which DOE did receive comments and that warranted changes for the final rule. Specifically, LED cost and efficiency assumptions were updated.

For the NOPR, DOE could only identify LED luminaires on the market for use in vertical refrigerated cases with transparent doors (

i.e.

, the VCT equipment family). DOE used these LED luminaires as the basis for LED lighting for open refrigerated cases, because DOE could not identify LED luminaires for use in open refrigerated cases. However, when DOE reexamined the current state of LED lighting for the final rule, DOE identified LED luminaries on the market for use in open refrigerated cases. DOE updated the LED lighting prices for open refrigerated cases using these newly identified LED luminaires.

For the final rule, DOE also updated the LED prices for lighting used in the VCT equipment families using the actual reduction in the lumen-based price of LED chips reported in DOE's Multi-Year Program Plan between 2007 and 2008. DOE's 2007 Multi-Year Program Plan reported that the latest available OEM device price for LED chips was $35/kilolumen.

DOE's 2008 Multi-Year Program Plan reported that the latest available OEM device price for LED chips was $25/kilolumen.

This equates to a 29-percent reduction in lumen-based LED chip costs from 2007-2008. For the final rule, DOE applied this 29-percent reduction in lumen-based LED chip costs to the LED lighting for the VCT equipment families, representing about a 9-percent reduction in LED system costs, assuming the costs of the power supply and LED fixtures did not change from the values used in the NOPR engineering analysis. For additional detail regarding LED costs, see section IV.B.2.a.

U.S. Department of Energy, Solid-State Lighting Research and Development, Multi-Year Program Plan FY08-FY13.

U.S. Department of Energy, Solid-State Lighting Research and Development, Multi-Year Program Plan FY09-FY14.

In addition to expected price reductions, DOE received comments on the unique performance advantages of LED systems following the NOPR. Philips stated that LED systems are virtually maintenance-free. Without maintenance costs, LED payback periods amount to roughly half of their life expectancy. (Philips, No. 29 at pp. 1-6) Philips also claimed that LED efficacy (lm/W) is expected to increase. Increases in efficacy effectively reduce the operational costs of the system by allowing for less energy consumption while maintaining output. (Philips, No. 29 at p. 1)

As mentioned above, for today's final rule, DOE reexamined the LED lighting assumptions that were used in the NOPR. DOE identified more efficacious LED lighting options for use in both vertical refrigerated cases with transparent doors and open refrigerated cases than the LED lighting identified in the NOPR analysis. Based on the new LED lighting options, DOE updated case lighting configurations for each equipment class specific to LED lighting in the engineering analysis. For more detail about the updated LED lighting performance assumptions, see chapter 5 and appendix B of the TSD.

In addition to the life-cycle benefits afforded by LEDs, the California Utilities Joint Comment stated that LED systems have a higher degree of controllability, which gives the systems dimming, cold start, and short cycling capabilities. (California Utilities Joint Comment, No. 41 at p. 3) ASAP added that these features allow LED systems to be turned off in situations in which fluorescents could not. This equates to improved energy efficiency for commercial refrigeration equipment that uses LED lighting. (ASAP, Public Meeting Transcript, No. 27 at p. 106)

The enhanced controllability of LED lighting can offer multiple benefits over fluorescent lighting. Specifically, the ability to reduce the operating time of LED lighting can lead to increased energy efficiency for commercial refrigeration equipment. Therefore, in the July 2007 ANOPR, DOE specifically requested public comment on using 24 hours as the case lighting operational hours. 72 FR 41187. In the August 2008 NOPR, based on public comment, DOE determined that 24 hours was an adequate assumption for case lighting operating hours regardless of lighting type. 73 FR 50095. In addition, the test procedure DOE adopted for commercial refrigeration equipment, ANSI/ARI Standard 1200-2006, is a steady-state

test procedure, which is unable to capture significant energy savings due to dimming controls or motion sensors. 71 FR 71370.

Following the NOPR, some manufacturers expressed concerns that implementing LED lighting would reduce the quality of their equipment. Specifically, they disagreed with the use of general white light LEDs to develop a price specifically for LED lighting used in commercial refrigeration equipment. True and Southern Store Fixtures stated that the grocery store market will be most affected by the use of LED lighting because certain food products, such as meat, dairy, deli, and produce, have to have a special display color. (True, Public Meeting Transcript, No. 27 at p. 111; Southern Store Fixtures, Public Meeting Transcript, No. 27 at p. 108) Continental Refrigerator added that in low-temperature applications, there is degradation in LED color quality, requiring the technology to be developed further. (Continental Refrigerator, No. 27 at p. 141) Southern Store Fixtures stated that LEDs used in commercial refrigeration equipment are more expensive because additional labor is required to test and sort the LEDs to meet the industry's color quality requirements. (Southern Store Fixture, Public Meeting Transcript, No. 27 at p. 108) Hill Phoenix agreed with Southern Store Fixtures and added that repeatability and minimizing the LED output variance also factors into this costly sorting process (

i.e.

, binning). (Hill Phoenix, Public Meeting Transcript, No. 27 at p. 109) PG&E estimated that this premium will remain constant independent of any future price reductions. (PG&E, Public Meeting Transcript, No. 27 at p. 110) AHRI and Hill Phoenix suggested that prices for LED systems used in commercial refrigeration equipment will not experience the same price reductions that the rest of the LED industry will. Both interested parties agreed that, because the commercial refrigeration market for LEDs is small, there will not be a great demand for high-quality LEDs, providing little incentive for LED suppliers to offer low-price, high-quality LEDs. (AHRI, No. 33 at p. 2 and Hill Phoenix, No. 32 at p. 2)

DOE acknowledges that a premium markup is applied to LED chips used in commercial refrigeration applications due to the binning process. This highly selective process requires LED chips to be chosen by hand to ensure the consistency in color, temperature and light quality demanded by commercial refrigeration equipment customers. As LED technology advances (

e.g.

, efficacy or price), the binning process for quality remains the same, resulting in a constant markup on the price of LED chips used for commercial refrigeration equipment. DOE accounted for this premium in the pricing used for the NOPR analysis. In the update of LED prices between 2007 and 2008 for the final rule, DOE maintained the markup associated with the higher level of quality needed for LEDs used in commercial refrigeration equipment.

DOE also received comments on the relative benefits of using LEDs in low-temperature cases versus medium-temperature cases and in closed cases versus open cases. The California Utilities Joint Comment stated that LED luminous output is 10 percent higher at 0 °F than at 25 °F. (California Utilities Joint Comment, No. 41 at p. 11) Southern Store Fixtures stated the heat from the LED fixture could be used to control condensate on closed case doors. It suggested using a remote power module for open cases. (Southern Store Fixtures, Public Meeting Transcript, No. 27 at p. 98) Hill Phoenix also stated that it is still a challenge for LED lighting in open cases to provide the quality and quantity of light required by the food marketing industry. (Hill Phoenix, No. 32 at p. 1)

As stated above, DOE was able to identify for the final rule LED luminaires currently available on the market for both open refrigerated cases and vertical refrigerated cases with transparent doors. The benefits of using LEDs vary depending on the type of commercial refrigerated equipment in which they are used. However, the luminaires DOE identified for use in the final rule analysis were specifically developed for individual types of commercial refriger

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