Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines

Federal RegisterAug 31, 2009

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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number EERE-2006-STD-0125]

RIN 1904-AB58

Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending Machines

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

The U.S. Department of Energy (DOE) is adopting new energy conservation standards for refrigerated bottled or canned beverage vending machines. 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 October 30, 2009, except that the standards in 10 CFR 431.296 are effective August 31, 2011. The incorporation by reference of certain publications listed in this rule was approved by the Director of the Federal Register on October 30, 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://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.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 Beverage Vending Machines

C. Impact on Manufacturers

D. National Benefits

II. Introduction

A. Authority

B. Background

1. History of Standards Rulemaking for Beverage Vending Machine Equipment

2. Miscellaneous Rulemaking Issues

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

2. Rebuttable Presumption

IV. Methodology and Discussion of Comments on Methodology

A. Market and Technology Assessment

1. Definitions Related to Refrigerated Beverage Vending Machines

2. Equipment Classes

B. Screening Analysis

C. Engineering Analysis

1. Approach

2. Analytical Models

D. Markups To Determine Equipment Price

E. Energy Use Characterization

F. Life-Cycle Cost and Payback Period Analyses

G. Shipments Analysis

1. Split Incentives

2. Sustainability of Sales Less Than 100 Thousand Units

3. Distribution of Equipment Classes and Sizes

4. Future Sales Decline

H. National Impact Analysis

1. Choice of Discount Rate

2. Discounting of Physical Values

I. Life-Cycle Cost Subgroup Analysis

J. Manufacturer Impact Analysis

K. Utility Impact Analysis

L. Employment Impact Analysis

M. Environmental Assessment

N. Monetizing Carbon Dioxide and Other Emissions Impacts

V. Discussion of Other Comments

A. Information and Assumptions Used in Analyses

1. Engineering Analysis

B. Benefits and Burdens

VI. Analytical Results and Conclusions

A. Trial Standard Levels

B. Significance of Energy Savings

C. Economic Justification

1. Economic Impact on Commercial Customers

2. Economic Impact on Manufacturers

3. National Impact Analysis

4. Impact on Utility or Performance of Equipment

5. Impact of Any Lessening of Competition

6. Need of the Nation To Conserve Energy

7. Other Factors

D. Conclusion

1. Class A Equipment

2. Class B Equipment

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

B. Review Under the Regulatory Flexibility Act

1. Need for and Objectives of the Final Rule

2. Significant Issues Raised by Public Comments

3. Description and Estimated Number of Small Entities Regulated

4. Description and Estimate of Reporting, Recordkeeping, and Other Compliance Requirements

5. Steps DOE Has Taken To Minimize the Economic Impact on Small Manufacturers

C. Review Under the Paperwork Reduction Act

D. Review Under the National Environmental Policy Act

E. Review Under Executive Order 13132

F. Review Under Executive Order 12988

G. Review Under the Unfunded Mandates Reform Act of 1995

H. Review Under the Treasury and General Government Appropriations Act, 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. 6295

et seq.

; EPCA), directs the Department of Energy (DOE) to establish mandatory energy conservation standards for refrigerated bottled or canned beverage vending machines. (42 U.S.C. 6295(v)(1), (2) and (3)) These types of equipment are referred to collectively hereafter as “beverage vending machines.” 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)) The standards in today's final rule, which apply to all beverage vending machines, satisfy these requirements. Currently, no mandatory Federal energy conservation

standards exist for the beverage vending machine equipment covered by this rulemaking.

Table I.1 shows the standard levels that DOE is adopting today. These standards will apply to all beverage vending machines manufactured for sale in the United States, or imported to the United States, starting 3 years after publication of the final rule.

Table I.1—Standard Levels for Beverage Vending Machines

Equipment class *

Proposed standard level **

maximum daily energy

consumption (MDEC)

kWh/day

***

MDEC = 0.055 × V + 2.56.

†

MDEC = 0.073 × V + 3.16.

††

See

section IV.A.2 of the NOPR for a discussion of equipment classes.

** “V” is the refrigerated volume (ft

) of the refrigerated bottled or canned beverage vending machine, as measured by the American National Standards Institute (ANSI)/Association of Home Appliance Manufacturers (AHAM) HRF-1-2004, “Energy, Performance and Capacity of Household Refrigerators, Refrigerator-Freezers and Freezers.” V is the volume of the case, as measured in ARI Standard 1200-2006, Appendix C.

*** Kilowatt hours per day.

†

Trial Standard Level (TSL) 6.

††

TSL 3.

B. Benefits to Customers of Beverage Vending Machines

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

Table I.2—Implications of New Standards for Commercial Customers

Equipment class

Energy

conservation

standard

Total installed cost

Total installed cost increase

Life-cycle cost savings

Payback period

years

Class A

TSL 6

2,935

233

277

4.1

Class B

TSL 3

2,070

6.8

The economic impacts on commercial customers (

i.e.

, the average life-cycle cost [LCC] savings) are positive for most equipment classes. For example, fully cooled (Class A) medium-capacity vending machines—the most common type currently being sold—have installed prices of $2,625 and annual energy costs of $188, respectively at national average values. To meet the new standards, DOE estimates that the installed prices of such equipment will be $2,864, an increase of $239, which will be offset by annual energy savings of approximately $69 and an increase in maintenance and repair cost of $13.

C. Impact on Manufacturers

Using a real corporate discount rate of 7 percent, DOE estimates the industry net present value (INPV) of the beverage vending machine industry to be $44.1 million for Class A units, and $33.7 million for Class B units (both figures in 2008$). For Class A machines, DOE expects the impact of today's standards on the INPV of manufacturers of beverage vending machines to be a loss of 18.0 to 25.1 percent ($7.9 million to $11.1 million) for Class A machines and a loss of 1.9 to 3.5 percent ($0.6 million to $1.2 million) for Class B machines. Based on DOE's interviews with manufacturers of beverage vending machines, DOE expects minimal plant closings or loss of employment as a result of the standards.

D. National Benefits

DOE estimates that the standards will save approximately 0.159 quads (quadrillion, or 10

) British thermal units (Btu) of energy over 30 years (2012-2042). This is equivalent to all the energy consumed by more than 830 thousand American households in a single year.

By 2042, DOE expects energy savings from the standards to eliminate the need for approximately 0.118 new 1,000-megawatt (MW) power plants. These energy savings will result in cumulative greenhouse gas emission reductions of approximately 9.6 million metric tons (Mt) of carbon dioxide (CO

), an amount equal to that produced by approximately 2.0 million cars every year. Additionally, the standards will help alleviate air pollution by resulting in 3.28 kilotons (kt) of cumulative nitrogen oxide (NO

) emission reductions and between 0 and 0.188 tons of cumulative mercury (Hg) emission reductions from 2012-2042. The estimated net present monetary values of these emissions reductions (expressed in 2007$) are between $5.5 and $266.3 million for CO

(expressed in 2007$), $354,000 and $3.6 million for NO

(expressed in 2007$), and $0 and $1.5 million for Hg (expressed in 2007$) at a 7-percent discount rate (discounted to 2009). At a 3 percent discount rate, the estimated net present values of these emissions reductions are between $11.3 and $543.5 million (2007$) for CO

, $749,000 and $7.7 million (2007$) for NO

, and $0 and $3.2 million (2007$) for Hg.

The national NPV of the standards is $0.182 billion using a 7 percent discount rate and $0.476 billion using a 3 percent discount rate, cumulative from 2012-2057 in 2008$. This is the estimated total value of future savings minus the estimated increased equipment costs, discounted to 2009.

The benefits and costs of today's final rule can also be expressed in terms of annualized (2008$) values from 2012-2042. Separate estimates of values for Class A and Class B equipment are shown in Table I.3 and Table I.4, respectively. In each table, the annualized monetary values are the sum of the annualized national economic value of operating savings benefits (energy, maintenance and repair), expressed in 2008$, plus the monetary values of the benefits of carbon dioxide emission reductions, otherwise known as the Social Cost of Carbon (SCC) expressed as $19 per metric ton of carbon dioxide, in 2007$. The $19 value is a central interim value from a recent interagency process. The derivation of this value is discussed in section VI.C.6. Although summing the value of operating savings to the values of CO

reductions provides a valuable perspective, please note the following: (1) The national operating savings are domestic U.S. consumer monetary savings found in market transactions while the CO

value is based on a range of estimates of imputed marginal social cost of carbon from $1.14 to $55 per metric ton (2007$), which are meant to reflect, for the most part, the global benefits of carbon dioxide reductions; (2) the national operating savings are measured in 2008$ while the CO

saving are measured in 2007$; and (3) the assessments of operating savings and CO

savings are performed with different computer models, leading to

different time frames for analysis. The present value of national operating savings is measured for the period 2012-2057 (31 years from 2012 to 2042 inclusive, plus the lifetime of the longest-lived equipment shipped in the 31st year), then converted the annualized equivalent for the 31 years. The value of CO

, on the other hand is meant to reflect the present value of all future climate related impacts, even those beyond 2057.

Using a 7 percent discount rate for the annualized cost analysis, the combined cost of the standards established in today's final rule for Class A and Class B beverage vending machines is $24.0 million per year in increased equipment and installation costs, while the annualized benefits are $41.8 million per year in reduced equipment operating costs and $9.0 million in CO

reductions, for a net benefit of $26.8 million per year. Using a 3 percent discount rate, the cost of the standards established in today's final rule is $23.1 million per year in increased equipment and installation costs, while the benefits of today's standards are $49.1 million per year in reduced operating costs and $10.3 million in CO

reductions, for a net benefit of $36.3 million per year. The separate estimates of values for Class A and Class B equipment are shown in Table I.3 and Table I.4 respectively.

Table I.3—Annualized Benefits and Costs for Class A Equipment

Category

Primary estimate

(AEO reference case)

Low estimate

(low growth case)

High estimate

(high growth case)

Units

Year

dollars

Disc

(percent)

Period

covered

Benefits

Annualized Monetized (millions$/year)

4.1

3.6

4.4

2008

4.9

4.3

5.2

2008

Annualized Quantified

0.03 CO

(Mt)

0.03 CO

(Mt)

0.03 CO

(Mt)

0.01 NO

(kt)

0.01 NO

(kt)

0.01 NO

(kt)

0.001 Hg (t)

0.04 CO

(Mt)

0.04 CO

(Mt)

0.04 CO

(Mt)

0.012 NO

(kt)

0.012 NO

(kt)

0.012 NO

(kt)

0.001 Hg (t)

Monetized Value (at $19/Metric Ton, millions$/year)

1.1

2007

1.3

2007

Total Monetary Benefits (millions$/year)*

5.2

4.7

5.6

2008 & 2007

6.1

5.5

6.5

2008 & 2007

Qualitative

Costs

Annualized Monetized (millions$/year)

4.4

2008

4.3

2008

Qualitative

Net Benefits/Costs

Annualized Monetized, including Carbon Benefits (million$/year)*

0.8

0.3

1.1

2008 & 2007

1.9

1.3

2.2

2008 & 2007

Qualitative

* Per the above discussion, this represents a simplified estimate that includes both 2007$ and 2008$.

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. The amendments to EPCA contained in the Energy Policy Act of 2005 (EPACT 2005), Public Law 109-58, include new or amended energy conservation standards and test procedures for some of these products, and direct DOE to undertake rulemakings to promulgate such requirements. In particular, section 135(c)(4) of EPACT 2005 amends EPCA to direct DOE to prescribe energy conservation standards for beverage vending machines. (42 U.S.C. 6295(v))

Because of its placement in Part A of Title III of EPCA, the rulemaking for beverage vending machine energy conservation standards is bound by the requirements of 42 U.S.C. 6295. However, since beverage vending machines are commercial equipment, DOE intends to place the new requirements for beverage vending machines in Title 10 of the Code of Federal Regulations (CFR), Part 431 (“Energy Efficiency Program for Certain Commercial and Industrial Equipment”), which is consistent with DOE's previous action to address the EPACT 2005 requirements for commercial equipment. The location of the provisions within the CFR does not affect either their substance or applicable procedure, so DOE is placing them in the appropriate CFR part based on their nature or type. DOE will refer to beverage vending machines as “equipment” throughout the notice because of their placement in 10 CFR part 431. DOE publishes today's final rule pursuant to Title III, Part A of EPCA, which provides for test procedures, labeling, and energy conservation standards for beverage vending machines and certain other equipment. The test procedures for beverage vending machines appear at sections 431.293 and 431.294.

EPCA provides criteria for prescribing new or amended standards for beverage vending machines. 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)) 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)) 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)(A) and (B))

EPCA also provides that in deciding whether such a standard is economically justified for equipment such as beverage vending machines, 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 the covered equipment in the type (or class) compared to any increase in the price, or in the initial charges for, or maintenance expenses of, the equipment 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))

In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and 6316(a)), establishes a rebuttable presumption that any standard for covered products 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 beverage vending machines 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 Beverage Vending Machine Equipment

As discussed in the notice of proposed rulemaking (NOPR), 74 FR 26022 (May 29, 2009) (the May 2009 NOPR), the EPACT 2005 amendments to EPCA require that DOE issue energy conservation standards for the equipment covered by this rulemaking, which would apply to equipment manufactured 3 years after publication of the final rule establishing the energy conservation standards. (42 U.S.C. 6295(v)(1), (2) and (3)) The energy use of this equipment has not previously been regulated by Federal law.

Section 135(a)(3) of EPACT 2005 also amended section 321 of EPCA, in part, by adding definitions for terms relevant to this equipment. (42 U.S.C. 6291 (40)) EPCA defines “refrigerated bottled or canned beverage vending machine” as “a commercial refrigerator that cools bottled or canned beverages and dispenses the bottled or canned beverages on payment.” (42 U.S.C. 6291 (40)) Section 136(a)(3) of EPACT 2005 amended section 340 of EPCA, in part, by adding a definition for “commercial refrigerator, freezer, and refrigerator-freezer.”

During the course of this rulemaking, Congress passed the Energy Independence Security Act of 2007 (EISA 2007), which the President signed on December 19, 2007 (Pub. L. 110-140). Section 310(3) of EISA 2007 amended section 325 of EPCA in part by adding subsection 325(gg) (42 U.S.C. 6295(gg)). This subsection requires any new or amended energy conservation standards adopted after July 1, 2010, to incorporate “standby mode and off mode energy use.” (42 U.S.C. 6295(gg)(3)(A)) In the NOPR, DOE stated that because any standards associated with this rulemaking are required by August 2009, the energy use calculations will not include “standby mode and off mode energy use.” To include standby mode and off mode energy use requirements for this rulemaking would take considerable analytical effort and would likely require changes to the test procedure. Given the statutory deadline, DOE has decided to address these additional requirements when the energy conservation standards for beverage vending machines are reviewed in August 2015. At that time, DOE will consider the need for possible amendment in accordance with 42 U.S.C. 6295(m). (74 FR 26023)

DOE commenced this rulemaking on June 28, 2006, by publishing a notice of a public meeting and of the availability of its framework document for the rulemaking. 71 FR 36715. The framework document described the approaches DOE anticipated using and issues to be resolved in the rulemaking. DOE held a public meeting in Washington, DC on July 11, 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. After the public meeting, DOE also allowed the submission of written statements in response to the framework document.

On June 16, 2008, DOE published an advance notice of proposed rulemaking (ANOPR) in this proceeding. 73 FR 34094 (the June 2008 ANOPR). In the June 2008 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 beverage vending machines. In conjunction with the June 2008 ANOPR, DOE published on its Web site the complete ANOPR technical support document (TSD), which included the results of DOE's various preliminary analyses in this rulemaking. In the June 2008 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 June 26, 2008, 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 May 2009 NOPR.

In the May 2009 NOPR, DOE proposed new energy conservation standards for beverage vending machines. 74 FR 26020. In conjunction with the May 2009 NOPR, DOE also published on its Web site the complete

TSD for the proposed rule, which incorporated the final analyses that DOE conducted, and contained technical documentation for each step of the analysis. The TSD included the engineering analysis spreadsheets, the LCC spreadsheet, and the national impact analysis spreadsheet. The standards DOE proposed for beverage vending machines are shown in Table II.1.

Table II.1—May 2009 Proposed Standard Levels for Beverage Vending Machines

Equipment

class

Proposed standard level

maximum daily energy

consumption (MDEC)

kWh/day

***

MDEC = 0.055 × V + 2.56.

†

MDEC = 0.073 × V + 3.16.

††

See

section IV.A.2 of the NOPR (74 FR 26027) for a discussion of equipment classes.

“V” is the refrigerated volume (ft

) of the refrigerated bottled or canned beverage vending machine, as measured by ANSI/AHAM HRF-1-2004, “Energy, Performance and Capacity of Household Refrigerators, Refrigerator-Freezers and Freezers.”

***

Kilowatt hours per day.

†

TSL 6.

††

TSL 3.

In the May 2009 NOPR, DOE identified issues on which it was particularly interested in receiving comments and views of interested parties. These included the magnitude of the estimated decline in INPV and what impact this level could have on industry parties including small businesses; whether the proposed linear equation used to describe the maximum daily energy consumption standards should be based on a two-point, three-point, or some other weighting strategy; whether the proposed standard risks industry consolidation; how small business manufacturers will be affected due to new energy conservation standards; the potential compliance costs and other impacts to small manufacturers that do not supply the high-volume customers of beverage vending machines; the impacts on small manufacturers for possible alternatives to the proposed rule; and whether the energy savings and related benefits outweigh the costs, including potential manufacturer impacts. After the publication of the May 2009 NOPR, DOE received written comments on these and other issues. DOE also held a public meeting in Washington, DC, on June 17, 2009, to hear oral comments on and solicit information relevant to the proposed rule. The May 2009 NOPR included additional background information on the history of this rulemaking. 74 FR 26023.

2. Miscellaneous Rulemaking Issues

a. Type of Standard

For the ANOPR, DOE received comments from interested parties regarding the type of standards it would be developing as part of this rulemaking. Some interested parties recommended that DOE set prescriptive standards, while others suggested that the choice of technologies used to achieve standards should be left to the discretion of the manufacturer. (73 FR 34100)

In response, DOE noted in the ANOPR that EPCA provides that an “energy conservation standard” must be either (A) “a * * * level of energy efficiency” or “a * * * quantity of energy use,” or (B), for certain specified equipment, “a design requirement.” (42 U.S.C. 6291(6)) Thus, an “energy conservation standard” cannot consist of both a design requirement and a level of efficiency or energy use. In addition, beverage vending machines are not one of the specified types of equipment for which EPCA allows a standard be set with a design requirement. (42 U.S.C. 6291(6)(B), 6292(a)) Item (A) above also indicates that, under EPCA, a single energy conservation standard cannot have measures of both energy efficiency and energy use. Furthermore, EPCA specifically requires DOE to base its test procedure for this equipment on ANSI/American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 32.1-2004, Methods of Testing for Rating Vending Machines for Bottled, Canned or Other Sealed Beverages. (42 U.S.C. 6293(b)(15)) The test methods in ANSI/ASHRAE Standard 32.1-2004 consist of means to measure energy consumption, not energy efficiency. (73 FR 34100)

During the NOPR public meeting, the Appliance Standards Awareness Project (ASAP), stated that DOE's previous decisions to not allow multi-part standards needs to be revisited, but not as part of this rulemaking. Multi-part standards would allow performance standards and design requirements to be established. (ASAP, Public Meeting Transcript, No. 56 at p. 35) A notation in the form “ASAP, No. 56 at p. 35” identifies an oral comment that DOE received during the June 17, 2008, NOPR Public Meeting. This comment was recorded in the public meeting transcript in the docket for this rulemaking (Docket No. EERE-2006-BT-STD-0125). This particular notation refers to a comment (1) made during the public meeting by the Appliance Standards Awareness Project; (2) recorded in document number 35, which is the public meeting transcript filed in the docket of this rulemaking; and (3) appearing on page 35 of document number 56. In a written comment co-signed by Pacific Gas and Electric Company (PG&E), Southern California Edison, Southern California Gas Company (SCGC), San Diego Gas and Electric (SDGE), ASAP, and the National Resource Defense Council (NRDC), hereafter the Joint Comment, signatories urged DOE to include a design requirement for factory set controls in today's final rule. (Joint Comment, No. 67 at p. 2) For the reasons given above, DOE maintains that it does not have authority to develop standards that consist of both a design requirement and a level of efficiency or energy use. Instead, DOE has developed standards that would require that each beverage vending machine be subject to a maximum level of energy consumption, and manufacturers could meet these standards with their own choice of design methods.

In response to the NOPR, the University of Southern Maine (USM) recommended that DOE establish energy consumption standards that are based on beverage vending machines that have no lights, with the exception of lighting the coin slots. Or as an alternative, USM suggested that the standards be based on a machine that has lights controlled by proximity sensors that turn lights on only when prospective purchasers are nearby. (USM, No. 52 at p. 1) USM also supported setting a design standard that encourages the use of refrigerant gases that offer the lowest total life-cycle impacts. (USM, No. 52 at p. 1) As stated above, beverage vending machines are not one of the specified equipment for which EPCA allows a standard to consist of a design requirement. (42 U.S.C. 6291(6)(B), 6292(a))

b. Combination Vending Machines

Combination vending machines have a refrigerated volume for the purpose of cooling and vending “beverages in a sealed container,” and are therefore covered by this rule. However, beverage vending is not their sole function. Combination vending machines also have non-refrigerated volumes for the purpose of vending other, non-“sealed beverage” merchandise. In the ANOPR, DOE addressed several comments from interested parties regarding combination vending machines. Specifically, these parties were concerned that regulating vending machines that contain both refrigerated and non-refrigerated products could result in confusion

about what this rulemaking covers, or could result in manufacturers taking advantage of loopholes to produce equipment that does not meet the standards. In response, DOE stated that the language used in EPCA to define beverage vending machines is broad enough to include any vending machine, including a combination vending machine, as long as some portion of that machine cools bottled or canned beverages and dispenses them upon payment. (42 U.S.C. 6291 (40)) DOE interprets this language to cover any vending machine that can dispense at least one type of refrigerated bottled or canned beverage, regardless of the other types of vended products (some of which may not be refrigerated). 73 FR 34105-06.

At the NOPR public meeting, Dixie-Narco stated that combination vending machines were not specifically included in the analysis, which focused on glass front and stack-style beverage vending machines, and should be studied further. (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 204) Dixie-Narco asserted that the existing formulas for Class A and Class B machines create an energy threshold that cannot be met by combination machines. Dixie-Narco explained that with combination machines, the entire cabinet is illuminated, but they typically have smaller refrigerated volumes compared to other vending machines with similar exterior dimensions. Dixie-Narco suggested creating a Class C equipment class for zone-cooled glass front vending machines. It proposed the following equation: MDEC = 0.073 × V + 3.5. Dixie-Narco also stated that it is open to other possible solutions suggested by DOE or other concerned parties. (Dixie-Narco, No. 64 at p. 3) Coca-Cola stated that combination vending machines may not scale down in efficiency because refrigeration components may not be available in small sizes. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 210) Dixie-Narco noted that combination vending machines are not typically purchased by Coca-Cola and PepsiCo, and are manufactured by a group of manufacturers different from the beverage vending machine manufacturers. Dixie-Narco also stated that shipments for combination vending machines are very small. (Dixie-Narco, Public Meeting Transcript, No. 56 at pp. 204, 212)

In the analysis for the proposed rule, DOE did not consider combination vending machines as a separate equipment class. Rather, they were considered with all other Class A and Class B beverage vending machines. However, based on comments received, DOE recognizes that the design and manufacture of combination vending machines may be challenged by less component availability compared to other beverage vending machines. DOE concludes that combination vending machines have a distinct utility that limits the energy efficiency improvement potential possible for such beverage vending machines. While more efficient combination vending machines are technologically feasible, DOE does not have the data needed to estimate either the energy efficiency improvement potential or the cost of more efficient designs of combination vending machines. Furthermore, none of the interested parties' comments provided an economic analysis demonstrating that efficiency standards for such beverage vending machines would be cost-justified. Without engineering cost and efficiency data, DOE was not able to perform an analysis of the impacts of standards on combination vending machines. Thus, DOE is not able to determine whether energy conservation standards for combination vending machines are economically justified and would result in significant energy savings. Based on the above, DOE concludes that combination vending machines are a class of beverage vending machines, and, since DOE cannot determine whether standards would meet EPCA's statutory criteria, DOE is not setting standards for combination vending machines at this time. Instead, DOE is reserving standards for combination vending machines. EPCA does require that, not later than 6 years after issuance of any final rule establishing or amending a standard, the Secretary shall publish either a notice of determination that standards for the product do not need to be amended or a notice of proposed rulemaking including new proposed standards. 42 U.S.C. 6295(m).

So that interested parties understand what constitutes a combination vending machine, DOE is incorporating into today's final rule a definition for combination vending machine, and is modifying the definitions of Class A and Class B beverage vending machines (see section IV.A.2). DOE adopts the following definition for combination vending machine: “Combination vending machine means a refrigerated bottled or canned beverage vending machine that also has non-refrigerated volumes for the purpose of vending other, non-“sealed beverage” merchandise.”

DOE notes that this definition for combination vending machine could be refined if DOE initiates a rulemaking proceeding that evaluates energy conservation standards for combination vending machines.

c. Installed Base

USA Technologies stated that it does not believe that significant energy savings will be achieved by the standard unless the installed base is included. (USA Technologies, Public Meeting Transcript, No. 56 at p. 16)

DOE acknowledges that additional energy savings can be obtained by regulating the installed base of beverage vending machines. This would require existing, used machines to be rebuilt or refurbished to comply with the standards. However, in the ANOPR, DOE carefully considered its authority to establish energy conservation standards for rebuilt and refurbished beverage vending machines and concluded that its authority does not extend to rebuilt and refurbished equipment. (73 FR 34106-07)

As stated in the ANOPR, throughout the history of the energy conservation standards program, DOE has not regulated used consumer products or commercial equipment that has been refurbished, rebuilt, or undergone major repairs, since EPCA only covers new covered equipment distributed in commerce. Therefore, for this final rule, DOE maintains that rebuilt or refurbished beverage vending machines are not new covered equipment under EPCA and, therefore, are not subject to DOE's energy conservation standards or test procedures.

d. Rating Conditions

In the ANOPR, DOE stated that it planned to use a 75 °F/45 RH rating condition for all beverage vending machines covered by this rulemaking. (73 FR 34102) In a written comment on the NOPR, the National Automatic Merchandising Association (NAMA) stated that these rating conditions were appropriate. (NAMA, No. 65 at p. 3) Dixie-Narco also commented that it supports the 75 °F/45 percent relative humidity (RH) rating condition because it is a more realistic temperature for measuring energy efficiency compared to the 90 °F/65 percent RH condition. Therefore, for this final rule, DOE continues to use the 75 °F/45 RH rating condition for all beverage vending machines covered by this rulemaking.

e. Certification and Enforcement

Regal Beloit asked how certification and enforcement will be conducted for the energy conservation standards that DOE establishes for beverage vending machines. (Regal Beloit, No. 59 at p. 1)

To enforce energy conservation standards, DOE establishes both

generally applicable regulations that apply to various types of products or equipment covered by standards, as well as a limited number of product-specific requirements. DOE has not adopted requirements that apply to beverage vending machines (an EPACT 2005 addition to the program). DOE is developing enforcement regulations for the EPACT 2005 equipment, which it expects will be based on the existing enforcement regulations that require manufacturers to certify compliance with the standards by filing two separate documents: (1) A compliance statement in which the manufacturer certifies its equipment meets the requirements; and (2) a certification report in which the manufacturer provides equipment-specific information, such as the model number, energy consumption and other model specific information that would enable DOE to determine which equipment class and standard the equipment is subject to and whether the equipment meets the standard.

In instances where there are questions whether equipment meets the standards, existing regulations require DOE to consult with the manufacturer. If DOE remains unsatisfied with the manufacturer's explanation for the alleged noncompliance, DOE may test units of the allegedly non-complying product or equipment, to determine whether it meets the applicable standard. After DOE has completed testing, the manufacturer has the option to conduct additional tests for DOE to consider. DOE has never had to conduct enforcement testing, as it has been able to resolve all issues with manufacturers prior to taking that step.

The beverage vending machine standards will go into effect 3 years after the publication of the final rule. DOE anticipates that it will have enforcement regulations in place, applicable to beverage vending machines, by that time. But if such regulations are not in place when the standards go into effect, manufacturers will not be required to report to DOE. Moreover, if there is a question regarding compliance with the standards, DOE will confer with the manufacturer before pursuing enforcement action. A violation of these standards could subject a manufacturer to injunctive action or other relief.

See

42 U.S.C. 6302-6305.

III. General Discussion

A. Test Procedures

On December 8, 2006, DOE published a final rule (the December 2006 final rule) in the

Federal Register

that incorporated by reference ANSI/ASHRAE Standard 32.1-2004, with two modifications, as the DOE test procedure for this equipment. 71 FR 71340, 71375; 10 CFR 431.294. In section 6.2 of ANSI/ASHRAE Standard 32.1-2004, Voltage and Frequency, the first modification specifies that equipment with dual nameplate voltages must be tested at the lower of the two voltages only. 71 FR 71340, 71355 The second modification specifies that (1) any measurement of “vendible capacity” of refrigerated bottled or canned beverage vending machines must be in accordance with the second paragraph of section 5 of ANSI/ASHRAE Standard 32.1-2004, Vending Machine Capacity; and (2) any measurement of “refrigerated volume” of refrigerated bottled or canned beverage vending machines must be in accordance with the methodology specified in section 5.2, Total Refrigerated Volume (excluding subsections 5.2.2.2 through 5.2.2.4) of ANSI/AHAM HRF-1-2004, “Energy, Performance and Capacity of Household Refrigerators, Refrigerator-Freezers and Freezers.”

The current version of ANSI/ASHRAE Standard 32.1-2004 defines standard bottled, canned, or other sealed beverage storage capacity; establishes uniform methods of testing for determining laboratory performance of vending machines for bottled, canned, or other sealed beverages; and defines three tests/test conditions, as seen in Table III.1.

Table III.1—ANSI/ASHRAE Standard 32.1-2004—Standard Test Conditions

Test and pretest conditions

Energy consumption tests

Vend test

Recovery test

Ambient Temperature

Perform twice: At 90 ± 2 °F (32.2 ± 1 °C) and at 75 °F ± 2 °F (23.9 ± 1 °C)

90 ± 2 °F (32.2 ± 1 °C)

90 ± 2 °F (32.2 ± 1 °C).

Relative Humidity

65 ± 5% for 90 ± 2 °F test and 45 ± 5% for 75 ± 2 °F test

65 ± 5%

65 ± 5%.

Reloaded Product Temperature

90 ± 1 °F (32.2 ± 0.5 °C)

90 ± 1 °F (32.2 ± 0.5 °C).

Average Beverage Temperature (for test)

36 ± 1 °F (2.2 ± 0.5 °C) Throughout Test

40 °F or less (4.4 °C or less) Final Temperature

33-40 °F (0.6-4.4 °C) Final

Temperature.

Average Beverage Temperature (for pretest conditions)

Not Applicable

36 ± 1 °F (2.2 ± 0.6 °C) Pretest Conditions

36 ± 1 °F (2.2 ± 0.6 °C) Pretest Conditions.

During the NOPR public meeting, ASAP stated that DOE's test procedures for beverage vending machines should be revised to capture technologies such as variable speed technologies and advanced controls. ASAP stated that there are energy savings that are not being achieved because the test procedure does not account for these types of technologies. (ASAP, Public Meeting Transcript, No. 56 at p. 36) In addition, Coca-Cola stated that the DOE test procedure does not accurately reflect actual operating conditions, because it does not regulate or dictate the control of the operating methods for all the powered elements in the equipment. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 147) Coca-Cola also stated that lighting controls would not save as much energy in real world applications as the test procedure indicates, resulting in “artificially low” test results. (Coca-Cola, No. 63 at p. 1) Coca-Cola commented that very few of its vending machines go into applications where they are inactive for long periods of time. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 193) For these reasons, Coca-Cola and NAMA conclude that TSL 6 for Class A machines is not “practically feasible.” (Coca-Cola, No. 63 at p. 1 and NAMA, No. 65 at p. 3) The Joint Comment recommends that the next revision to the current test procedure address; (1) the limitations of steady-state testing conditions, (2) the current test procedure's insufficient representation of real world conditions, and (3) the capture of increased energy use as a result of future, energy intensive beverage vending machine features, such as interactive displays. (Joint Comment, No. 67 at p. 4) Elstat stated that prohibiting the use of standby and off mode power does not support the goal of reduced energy consumption in

beverage vending machines, and recommends that DOE revisit the use of energy management controls in 2010, or within one year of the rule statutory deadline (Elstat, No. 62 at p. 1) DOE notes, however, that it is not prohibiting the use of standby and off mode power consumption, but rather is not including standby mode and off mode power consumption in its calculation of energy use. As stated in the May 2009 NOPR, DOE has decided to address these additional requirements when the energy conservation standards for beverage vending machines are reviewed in August 2015 (

see

section II.B.1) and, as described below, must review the test procedures by 2013.

As stated above, DOE's test procedure for refrigerated beverage vending machines is based on ANSI/ASHRAE Standard 32.1-2004. Section 302(a) of EISA 2007 amended section 323 of EPCA, in part, by adding new subsection 323(b)(1). (42 U.S.C. 6293(b)(1)) This subsection provides that the Secretary shall review test procedures at least once every 7 years. Therefore, the test procedure for refrigerated beverage vending machines must be reviewed by December 8, 2013, to determine whether an amendment is necessary. In addition, DOE is aware that ASHRAE, via its Standards Project Committee 32.1, is working on an update to ANSI/ASHRAE Standard 32.1-2004. While specific changes to ASHRAE Standard 32.1-2004 are unknown at this time, DOE understands that the beverage vending machine industry is working closely with ASHRAE to develop an update to this test procedure. As part of the 7-year review of the test procedures for refrigerated beverage vending machines, DOE will consider any updates to ASHRAE Standard 32.1 standard, as well as any technologies to reduce energy consumption and/or increase energy efficiency and determine whether the test procedure and/or measure of energy efficiency warrant revisions.

B. Technological Feasibility

1. General

As stated above, any standards that DOE establishes for beverage vending machines 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 commercially available equipment 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 May 2009 NOPR. (

See

chapter 4 of the TSD.) 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 May 2009 NOPR, DOE identified the energy use levels that would achieve the maximum reductions in energy use that are technologically feasible (“max-tech” levels) for beverage vending machines. 74 FR 26025. For today's final rule, the max-tech levels for all classes are the levels provided in Table III.2. DOE identified these maximum technologically feasible levels for the equipment classes analyzed as part of the engineering analysis (chapter 5 of the TSD). For both equipment classes, DOE applied the most efficient design options available for energy-consuming components.

Table III.2—Max-Tech Energy Use Levels

Equipment

class

Max-tech level

kWh/day *

MDEC = 0.045 × V + 2.42.

MDEC = 0.068 × V + 2.63.

“V” is the refrigerated volume of the refrigerated bottled or canned beverage vending machine, as measured by ANSI/AHAM HRF-1-2004.

* Kilowatt hours per day.

C. Energy Savings

DOE forecasted energy savings in its national energy savings (NES) analysis through the use of a spreadsheet tool discussed in the May 2009 NOPR. 74 FR 26020, 26039-43, 26057.

One criterion that governs DOE's adoption of standards for refrigerated beverage vending machines is 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,” the 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 TSLs in today's final 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 refrigerated beverage vending machines 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 refrigerated beverage vending machines 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.F and VI.C.1.a and chapter 8 of the TSD.) DOE investigated the impacts on manufacturers through the manufacturer impact analysis (MIA). (See sections IV.J and VI.C.2, and chapter 13 of the TSD.) The economic impact on commercial customers and manufacturers is discussed in detail in the May 2009 NOPR. 74 FR 26033-38, 26039-26044, 26044-47, 26050-53, 26053-56, 26063-67.

b. Life-Cycle Costs

DOE considered life-cycle costs of beverage vending machines, as discussed in the May 2009 NOPR. 74 FR at 26033-38, 26050-53

DOE calculated the sum of the purchase price and the operating expense (discounted over the lifetime of the equipment) to estimate the range in LCC benefits that commercial customers would expect to achieve due to the standards.

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 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 May 2009 NOPR (74 FR 26056-57), 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 beverage vending machines 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)); 74 FR 26059. Today's standards do not involve changes in design or unusual installation requirements that would reduce the utility or performance of the equipment.

e. Impact of Any Lessening of Competition

DOE considers any lessening of competition likely to result from standards. Accordingly, as discussed in the May 2009 NOPR (74 FR 26059, 26064-65, 26070-71), DOE requested that the Attorney General transmit to the Secretary a written determination of the impact (if any) of lessening of competition likely to result from today's standard, 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 May 2009 proposed rule and the NOPR TSD for review. (DOJ, No. 61 at pp. 1-2) The Attorney General's response is discussed in section VI.C.5 and is reprinted at the end of this rule. For Class A machines, DOJ concluded that the proposed TSL 6 could potentially lessen competition. DOJ requested that DOE ensure that the standard it adopts for Class A beverage vending machines will not require access to intellectual property owned by an industry participant, which would place other industry participants at a comparative disadvantage. For Class B machines, DOJ does not believe the proposed standard would likely lead to a lessening of competition. Compliance with a lesser standard does not appear to raise similar concerns.

f. Need of the Nation To Conserve Energy

In considering standards for refrigerated beverage vending machines, 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 will also result in environmental benefits. DOE has considered these factors in adopting today's standards.

g. Other Factors

In determining whether a standard is economically justified, EPCA directs the Secretary to consider any other factors deemed 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 LCC impacts on identifiable groups, such as customers of different business types who may be disproportionately affected by any national energy conservation standard. In particular, DOE examined the LCC on businesses with high financing costs and low energy prices that may not be able to afford a significant increase in the purchase price (“first cost”) of beverage vending machines. Some of these customers may retain equipment past its useful life. Large increases in first cost could also preclude the purchase and use of equipment entirely. DOE identified no factors for analysis other than those already considered above.

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 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 PBP for customers of potential energy conservation standards, which includes, but is not limited to, the 3-year PBP 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 customer, 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 evaluate definitively 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 previously developed analytical tools in setting today's standard. Each was adapted for this rule. One of these analytical tools is a spreadsheet that calculates LCC and PBP. Another calculates national energy savings and national NPV. A third tool is the Government Regulatory Impact Model (GRIM), the results of which are the basis for the MIA, among other methods. In addition, DOE developed an approach using the National Energy Modeling System (NEMS) to estimate impacts of energy efficiency standards for beverage vending machines on electric utilities and the environment. The TSD appendices discuss each of these analytical tools in detail. 74 FR 26026-49.

As a basis for this final rule, DOE has continued to use the spreadsheets and approaches explained in the May 2009 NOPR. DOE used the same general methodology but has revised some of the assumptions and inputs for this final rule in response to comments from interested parties. The following paragraphs discuss these revisions.

A. Market and Technology Assessment

When beginning an energy conservation standards rulemaking, DOE develops information that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, and market characteristics. This activity includes both quantitative and qualitative assessments based primarily on publicly available information. DOE presented its market and technology assessment for this rulemaking in the May 2009 NOPR and chapter 3 of the NOPR TSD. The assessment included equipment definitions, equipment classes, manufacturers, quantities and types of equipment offered for sale, retail market trends, and regulatory and non-regulatory programs.

1. Definitions Related to Refrigerated Beverage Vending Machines

a. Definition of Bottled or Canned Beverage

EPCA defines the term “refrigerated bottled or canned beverage vending machine” as “a commercial refrigerator that cools bottled or canned beverages and dispenses the bottled or canned beverages on payment.” (42 U.S.C. 6291(40)) Thus, coverage of equipment under EPCA as a beverage vending machine, in part, depends on whether it cools and dispenses “bottled beverages” and/or “canned beverages.” DOE

tentatively decided to consider a broader definition for the terms “bottled” and “canned” as they apply to beverage vending machines based on comments on the framework document. A bottle or can in this broader definition refers to “a sealed container for beverages,” so a bottled or canned beverage is “a beverage in a sealed container.” Such a definition would avoid unnecessary complications regarding the material composition of the container and eliminate the need to determine whether a particular container is a bottle or a can. In the ANOPR, DOE sought comment on this broader definition and on whether it is consistent with the intent of EPCA. (73 FR 34103) DOE did not receive any comments on this and thus proposed in the NOPR that a bottled or canned beverage mean “a beverage in a sealed container.” (74 FR 26027) Because DOE did not receive any comments in response to the proposed definition in the May 2009 NOPR, DOE is adopting the definition of bottled or canned beverage as proposed, without modification.

2. Equipment Classes

When evaluating and establishing energy conservation standards, DOE generally divides covered equipment into equipment classes by the type of energy used, capacity, or other performance-related features that affect efficiency and factors such as the utility of such feature(s). (42 U.S.C. 6295(q)) DOE routinely establishes different energy conservation standards for different equipment classes based on these criteria.

Certain characteristics of beverage vending machines have the potential to affect their energy use and efficiency. Accordingly, these characteristics could be the basis for separate equipment classes for these machines. DOE determined that the most significant criterion affecting beverage vending machine energy use is the method used to cool beverages. In the NOPR, DOE divided covered equipment into two equipment classes according to method of refrigeration: Class A and Class B. (74 FR 26027)

The Class A beverage vending machine equipment class comprises machines that cool product throughout the entire refrigerated volume of the machine. Class A machines generally use “shelf-style” vending mechanisms and a transparent (glass or polymer) front. Because the next-to-be-vended product is visible to the customer and any product can be selected by the customer off the shelf, all bottled or canned beverage containers are necessarily enclosed within the refrigerated volume.

In Class B beverage vending machines, refrigerated air is directed at a fraction (or zone) of the refrigerated volume of the machine. This cooling method is used to assure that the next-to-be-vended product will be the coolest product in the machine. These machines typically have an opaque front and use a “stack-style” vending mechanism.

Therefore, DOE defines Class A and Class B as follows:

• Class A means a refrigerated bottled or canned beverage vending machine that is fully cooled, and is not a combination vending machine.

• Class B means any refrigerated bottled or canned beverage vending machine not considered to be Class A, and is not a combination vending machine.

Because DOE did not receive any comments in response to the presentation of equipment classes in the May 2009 NOPR, DOE is adopting the equipment classes as proposed, with a modification to address combination vending machines as described in section II.B.2.b.

B. Screening Analysis

The purpose of the screening analysis is to evaluate the technology options identified as having the potential to improve the efficiency of equipment, to determine which technologies to consider further and which to screen out. DOE consulted with industry, technical experts, and other interested parties to develop a list of technologies for consideration. DOE then applied the following four screening criteria to determine which technologies are unsuitable for further consideration in the rulemaking:

Technological Feasibility

. Technologies incorporated in commercial equipment or in working prototypes will be considered technologically feasible.

Practicability to Manufacture, Install, and Service

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

Adverse Impacts on Equipment Utility or Equipment Availability

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

Adverse Impacts on Health or Safety

. If it is determined that a technology will have significant adverse impacts on health or safety, it will not be considered further.

10 CFR part 430, Subpart C, Appendix A at 4(a)(4) and 5(b).

In the ANOPR market and technology assessment, DOE developed an initial list of technologies expected to have the potential to reduce the energy consumption of beverage vending machines. In the screening analysis, DOE screened out technologies based on the four criteria discussed above. The list of remaining technologies became one of the key inputs to the engineering analysis. (73 FR 34108-09) For the engineering analysis each technology is referred to as a design option.

After the ANOPR screening analysis, DOE did not receive any comments suggesting a change to its list of design options. As a result, no changes were made for the NOPR. During the NOPR public meeting, multiple manufacturers expressed the ability to meet today's standard with the use of lighting controls. (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 188 and Royal Vendors, Public Meeting Transcript, No. 56 at p. 189) As a result, the signatories of the Joint Comment suggest that DOE consider lighting controls as a design option for the final rule because, if not considered, “cost-effective energy-savings may be forgone.” (Joint Comment, No. 67 at p. 3)

DOE disagrees with the Joint Commenters' assessment of lighting controls. The Joint Comment infers that a lighting control design option meets the screening analysis criteria. According to the screening criteria, however, a technology cannot be considered as a design option if it has adverse impacts on equipment utility. 10 CFR part 430, Subpart C, Appendix A at 4(a)(4) and 5(b) DOEs analysis ensures preservation of equipment utility by choosing design options that, when implemented, do not lessen utility relative to the engineering baseline unit. The energy-savings potential of lighting controls is realized when the control system automatically deactivates all or a portion of a machine's lighting system. While the lighting system is deactivated, the light output of the machine is reduced, leaving the machine's contents or signage less visible. If lighting

controls were a design option in the engineering analysis, this reduction would represent a loss in utility relative to the baseline unit. Therefore, lighting controls do not meet the screening criteria, and DOE will not consider them as a design option in its analysis for the final rule.

In the ANOPR screening analysis, variable-speed compressors were eliminated from consideration. For the NOPR analysis, DOE did not receive any comments recommending that variable-speed compressors be reconsidered. For the final rule analysis, the Joint Comment recommended that DOE reconsider this technology, stating that it believes variable-speed compressors can provide some energy-use reduction, despite the current steady-state conditions that are prescribed in ANSI/ASHRAE Standard 32.1-2004 test procedure. The Joint Comment asserted that when DOE screened out variable-speed compressors, DOE did not consider that beverage vending machine manufacturers oversize their compressors to meet purchasers' pull down requirements. (Joint Comment, No. 67 at p. 2)

DOE screened out variable-speed compressors in the ANOPR analysis because the resulting energy efficiency ratio of a variable-speed compressor operating at steady state, according to the test procedure, would not be greater than the energy efficiency ratio of a properly sized single-speed compressor. DOE acknowledges that a variable-speed compressor operating at steady state may have energy savings compared to an oversized single-speed compressor operating at the same conditions. However, DOE is unaware of any data that quantifies and compares these energy savings specifically for beverage vending machines under these conditions. DOE was also unable to determine whether variable-speed compressors are a cost-effective design option. Due to a lack of any comparative data on the performance of variable speed compressors for these applications and evidence of the cost effectiveness of variable-speed compressors, DOE did not consider variable-speed compressors in its analysis.

In the framework document, DOE stated that, to the greatest extent possible, it would base its analysis on commercially available technologies that have not been screened out, including proprietary designs. DOE stated that it would consider a proprietary design in the subsequent analyses only if it is not a unique path to a given efficiency level. If the proprietary design is the only approach available to achieve a given efficiency level, then DOE will exclude that efficiency level from further analysis.

During the NOPR public meeting, PepsiCo stated that the use of LED lighting in glass front vendors is a proprietary design patented by Coca-Cola, which PepsiCo is precluded from using. (PepsiCo, Public Meeting Transcript, No. 56 at p. 52) In a written comment, NAMA stated similar concerns. (NAMA, No. 65 at p. 3) Coca-Cola stated that there are control strategies used in beverage vending machines (

e.g.

, certain lighting controls and certain motor controls) that are patented and are not widely available for use by all manufacturers. (Coca-Cola, No. 56 at p. 149 and Coca-Cola, No. 63 at p. 1) Coca-Cola added that TSL 6 for Class A machines cannot be achieved without these “firmware” control strategies. (Coca-Cola, No. 63 at p. 1) According to USA Technologies, there are patented, after-market lighting control products widely used in the industry. (USA Technologies, Public Meeting Transcript, No. 56 at p. 200) In addition, Dixie-Narco stated that it is not aware of any intellectual property issues that would prevent other manufactures from adopting lighting strategies similar to those that it has been using in its equipment. (Dixie-Narco, No. 64 at p. 3) ASAP stated that certain patented technologies may provide a cost-effective way to achieve a certain efficiency level, but they do not preclude a manufacturer from achieving the same efficiency level in a different manner. ASAP submits that there are historically multiple paths to achieve any given efficiency level. (ASAP, Public Meeting Transcript, No. 56 at p. 202)

DOE recognizes that there are existing patents that involve specific screened-in beverage vending machine technologies. For example, there is a U.S. patent on a “Dispensing Apparatus with Directional LED Lighting” (Patent No. U.S. 6,550,269 B2, April 22, 2003). DOE is not screening out proprietary technologies such as LED lighting or certain control strategies, solely because they are proprietary. In contrast, DOE is incorporating these technologies into its analysis because DOE believes that there are alternate pathways to achieve the efficiency levels associated with these technologies. Providing LED lighting in a vending machine in a manner other than directionally, employing an alternative lighting type, and/or providing various other control strategies that are not patented, have the potential to result in a vending machine that meets equivalent efficiency levels.

DOE notes that most patents do not convey market power to their owners because close substitutes for these inventions exist. Licensors will pay no more for patented technologies than the cost advantage they provide over the next best alternative pathway to compliance with the efficiency standard. Ultimately, the availability of cost-effective alternate technology pathways is what limits the ability of the owner of a proprietary technology to extract high fees for its use. It is DOE's opinion that a standard level which can only be met with a single proprietary technology which comes without assurances of open and free technology access should be rejected because it carries great risk of resulting in an anti-competitive market. This principle has been consistently applied in past DOE rulemakings. If standard levels were set based on proprietary technologies representing a unique path to compliance and not available to all equipment manufacturers, the standards-setting process itself would convey great market power because there would be no alternative means to satisfy the standard. In consideration of these factors, DOE maintains that it can consider proprietary designs as long as it is not a unique path to a given efficiency level. For the reasons discussed, DOE believes that neither directional LED lighting nor lighting controls represent a unique path to compliance with TSL 6 for Class A equipment.

C. Engineering Analysis

The engineering analysis develops cost-efficiency relationships to show the manufacturing costs of achieving increased energy efficiency. As discussed in the May 2009 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. 74 FR 26027-26030. Chapter 5 of the NOPR TSD contains a detailed discussion of the engineering analysis methodology.

1. Approach

In this rulemaking, DOE is adopting a design-option approach, which calculates the incremental costs of increased efficiency. Efficiency increases are modeled by implementing specific energy saving technologies, referred to as design options, to a baseline model. Using the design-option approach, cost-efficiency relationship estimates are based on manufacturer or component supplier data or derived from engineering computer simulation

models. Chapter 5 of the TSD contains a detailed description of the equipment classes analyzed and analytical models used to conduct the design-option approach based beverage vending machine engineering analysis.

2. Analytical Models

a. Cost Model

DOE used a cost model to estimate the core case cost of beverage vending machines. The core case cost is the cost of all non-energy-consuming components, such as the structure, walls, doors, shelving, and fascia. This model was adapted from a cost model developed for DOE's rulemaking on commercial refrigeration equipment (refer to

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/refrigeration_equipment.html

for further detail on and validation of the commercial refrigeration equipment cost model). The approach for commercial refrigeration equipment involved disassembling a self-contained refrigerator, analyzing the materials and manufacturing processes for each component, and developing a parametric spreadsheet to model the cost to fabricate (or purchase) each component and the cost of assembly. Because of the similarities in manufacturing processes between self-contained commercial refrigeration equipment and beverage vending machines, DOE was able to adapt the commercial refrigeration equipment cost model for use in this rule. This adaptation involved maintaining many of the assumptions about materials and manufacturing processes but modifying the dimensions and types of components specific to beverage vending machines. To confirm the accuracy of the cost model, DOE obtained input from interested parties on beverage vending machine production cost estimates and on other assumptions DOE used in the model. Chapter 5 of the TSD provides details of the cost model.

b. Energy Consumption Model

The energy consumption model estimates the daily energy consumption (DEC) of beverage vending machines at various performance levels using the previously discussed design-option approach. The model is specific to the categories of equipment covered under this rulemaking, but is sufficiently generalized to model the energy consumption of both covered equipment classes. For a given equipment class, the model estimates the DEC for the baseline design and the energy consumption of several levels of performance above the baseline design. DOE uses the model to calculate each performance level separately. For the NOPR, DOE made updates to the energy consumption model by altering Class A can capacities (or vendible capacities) and verifying Class B can capacities. For both classes, DOE modified exterior case dimensions, which resulted in changes in infiltration loads, refrigerated volumes, and exterior wall areas. These alterations and their effects are detailed in chapter 5 of the TSD. DOE did not receive any comments in response to these changes. Therefore, DOE maintained these revised calculation methodologies for the final rule. DOE did, however, receive a comment regarding the energy consumption model DEC results. Royal Vendors and NAMA commented that, without lighting, a Class B machine will always consume less energy than a similarly equipped Class A machine due to differences in their thermodynamic properties. Royal Vendors cites the divergence from this expected outcome at TSL 4 as the origin of their skepticism for DOE's Class A analysis. (Royal Vendors, No. 60 at pp. 1 and 2; NAMA, No. 65 at pp. 3 and 4)

DOE's analysis results and selected TSLs adequately reflect the thermodynamic differences between Class A and Class B machines. DOE agrees that a Class B machine stripped of electricity consuming components that are not essential to the refrigeration system (

i.e.,

lighting) will consume less energy than a similarly equipped Class A machine. As described in chapter 5 of the final rule TSD, the engineering analysis' DEC results are modeled as the sum of the component electricity consumption and compressor electricity consumption. The physical and thermodynamic equipment differences described by Royal affect the total refrigeration load, which is factored into the compressor electricity consumption in DOE's energy consumption model. When comparing compressor electricity consumption results between a Class A and Class B machine with the same volume, the Class B machine compressor consumes less electricity at all engineering efficiency levels. The divergence in DEC described by Royal Vendors at higher TSLs occurs because the modeled Class A and Class B machines being compared are no longer “similarly equipped.” Different design options are implemented for each machine class at each TSL, and each design option has unique energy savings potential. For instance, at TSL 4 for Class A machines, LED lighting is implemented which has an incremental component energy savings of 0.89 kWh/day. At TSL 4 for Class B machines, an electronically commutated motor (ECM) condenser fan motor is implemented which has an incremental component energy savings of 0.05 kWh/day. These incremental component energy savings manifest themselves as reductions in the component electricity consumption addend of the DEC. The greater energy savings potential of some Class A design options results in component electricity consumption reductions significant enough to drive the overall DEC of Class A machines below that of Class B machines. See chapter 5 of the TSD for a detailed explanation of the engineering analysis energy consumption model.

Based on public comments, DOE proposed to use refrigerated volume instead of vendible capacity as the normalization metric for setting standards for beverage vending machines in the NOPR. (74 FR 26029) Following the NOPR, NAMA commented that volume was an appropriate normalization metric, rather than the number of cans. (NAMA, No. 65 at p. 3) Therefore, DOE will continue to use refrigerated volume as the normalization metric in the standard.

D. Markups To Determine Equipment Price

In the May 2009 NOPR, DOE explained how it developed the distribution channel markups used. 74 FR 26036. DOE did not receive comments on these markups; however, it updated the distribution channel markups by including 2009 sales tax data as well as the markups for refrigerated beverage vending machines wholesalers using 2009 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 refrigerated beverage vending machines. As explained in the May 2009 NOPR (74 FR 26036), DOE defined three distribution channels for refrigerated beverage vending machines to describe how the equipment passes from the manufacturer to the customer. DOE retained the same distribution channel market shares described in the May 2009 NOPR.

The new overall baseline and incremental markups for sales within each distribution channel are shown in Table IV.1 and Table IV.2. Chapter 6 of the TSD provides additional details on markups.

Table IV.1—Overall Average Baseline Markups by Distribution Channel Including Sales Tax

Markup category

Manufacturer

direct

Wholesaler/

distributor

Overall weighted average

Markup

1.000

1.460

1.069

Sales tax

1.071

Overall markup

1.071

1.564

1.145

Table IV.2—Overall Average Incremental Markups by Distribution Channel Including Sales Tax

Markup category

Manufacturer

direct

Wholesaler/

distributor

Overall weighted average

Markup

1.000

1.200

1.030

Sales tax

1.071

Overall markup

1.071

1.285

1.103

E. Energy Use Characterization

The energy use characterization estimates the annual energy consumption of beverage vending machines. This estimate is used in the subsequent LCC and PBP analyses (chapter 8 of the TSD) and NIA (chapter 11 of the TSD). DOE estimated the energy use for machines in the two equipment classes examined (74 FR 26027) in the engineering analysis (chapter 5 of the TSD) based on the DOE test procedure. DOE incorporated ANSI/ASHRAE Standard 32.1-2004 by reference with two modifications as the DOE test procedure for the beverage vending machines. 71 FR 71340, 71375 (Dec. 8, 2006); 10 CFR 431.294. DOE assumed all Class A machines to be installed indoors and subject to a constant air temperature of 75 °F and relative humidity of 45 percent, matching test conditions in the DOE test procedure. 73 FR 34114-15. Based on market data and discussions with several beverage vending machine distributors, DOE assumed that 25 percent of Class B machines are placed outdoors, with the remaining 75 percent placed indoors. DOE sought but did not receive comments on this distribution; thus, DOE maintained the same distribution of Class B machines for this final rule.

F. 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 beverage vending machine standards on individual customers. DOE used the same spreadsheet models to evaluate the LCC and PBP as it used for the NOPR analysis; 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 beverage vending machine 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, electricity price, and 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. DOE believes LCC is a better indicator of economic impacts on customers. For each efficiency level analyzed, the LCC analysis required input data for the total installed cost of the equipment, operating cost, and discount rate.

Table IV.3 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 today's standard. Table IV.3 also shows how DOE modified these inputs and key assumptions for the final rule relative to the May 2009 NOPR. Chapter 8 of the TSD provides the changes to the input data and discusses the overall approach to the LCC analysis.

Table IV.3—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

Data reflect updated installation costs.

Equipment Energy Consumption

Site energy use associated with the use of beverage vending machines, 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 ($/kWh) from EIA data for 2008 in 2007$. DOE then established scaling factors for beverage vending machine customers based on the 2003

Commercial Building Energy Consumption Survey

No change.

Electricity Price Trends

Used the

AEO2009

Reference Case to forecast future electricity prices and extrapolated prices to 2042

All price cases revised to reflect April 2009 update to AEO2009 values.

Maintenance Costs

Labor and material costs associated with maintaining the beverage vending machines (

e.g.,

cleaning heat exchanger coils, checking refrigerant charge levels, lamp replacement). Based on industry comment on the NOPR, included an updated annualized cost of one refurbishment/remanufacturing cycle

No change in methodology; however, reinterpreted year's values.

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.

Equipment Lifetime

Age at which the beverage vending machine is retired from service. Based on industry comment on the ANOPR, reduced average service life to 10 years, with 15 years as a maximum

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 from 2008

Updated based on data available in the 2009 version of the Damodaran Web site.

Rebound Effect

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

No change.

Analysis Period

The time span over which DOE calculated the LCC (

i.e.,

2012-2042)

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.

G. Shipments Analysis

The shipments analysis develops future shipments for each class of beverage vending machines based on current shipments and equipment life assumptions, and takes into account the existing stock and expected trends in markets that use beverage vending machines. DOE received several comments on the shipments analysis and the resulting shipments during the NOPR. Although DOE used the same shipments model for the final rule analysis as the NOPR, many of the underlying assumptions concerning future market behavior were changed as a result of the interested party comments.

1. Split Incentives

Coca-Cola (Coca-Cola, Public Meeting Transcript, No. 56 at p. 196 and Coca-Cola, No. 63 at p. 2) and PepsiCo (PepsiCo, Public Meeting Transcript, No. 56 at p. 94) stated that if costlier components and expensive control schemes are necessary to produce higher efficiency equipment, it would purchase less equipment. While DOE recognizes the principle that higher costs of equipment might possibly affect sales, neither major purchaser provided any data that would allow a quantitative assessment of the effect of higher prices on overall purchases (price elasticity) to be calculated. However, DOE notes that for Class A equipment, the increase in installed cost at TSL 6 is in the range of 5 to 10 percent; for Class B machines, the increase in installed cost is in the range of 2 to 4 percent. Even if shipments fell by the same percentage that installed cost increased by (

i.e.

, price elasticity equaled 1.0, a relatively large number), neither the net present value of TSL 6 for Class A equipment nor the net present value of TSL 3 for Class B equipment would be noticeably affected, nor would the choice of standard levels.

2. Sustainability of Sales Less Than 100 Thousand Units

USA Technologies (USA Tech, Public Meeting Transcript, No. 56 at pp. 78, 79, and 85) expressed a concern that the industry's current number of manufacturers could not stay in business if total production were under 100,000 machines per year. DOE acknowledges the concern about industry sustainability. However, for the final rule, DOE assumes a level of shipments of 190,000 units per year, as explained in section IV.G.4. This assumption mitigates the concern about sales declining below 100,000 units. One major manufacturer (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 86) stated that it can survive even at today's low sales levels (less than 100,000 units) by operating on one shift; additionally, neither manufacturer with a large market share believed that a costly investment was necessary to meet the proposed standard. (Dixie-Narco, Public Meeting Transcript, No. 56 at p.

186; Royal Vendors, Public Meeting Transcript, No. 56 at p. 188)

3. Distribution of Equipment Classes and Sizes

In the analysis conducted for the NOPR, DOE assumed based on interested party comments that Class A equipment would constitute 55 percent of new sales and Class B equipment would constitute 45 percent of new sales. PepsiCo (PepsiCo, Public Meeting Transcript, No. 56 at p. 89) commented that Class A sales would be between 50 and 60 percent and Coca-Cola (Coca-Cola, Public Meeting Transcript, No. 56 at p. 90) commented that, although they expected Class A equipment would be the majority of sales, currently Class B machines are more than 50 percent of sales. DOE has decided to shift to a ratio of 60 percent Class A machines to 40 percent Class B sales for the final rule. DOE also assumed in the analysis for the NOPR that small-size units would constitute approximately zero percent of future sales, medium-size units at 75 percent, and large-size units at 25 percent of sales. Coca-Cola (Coca-Cola, Public Meeting Transcript, No. 56 at p. 107) confirmed the distribution used for the NOPR. Dixie-Narco (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 107) commented that the small-size unit sales were zero, but that the large equipment share might be higher—by as much as 40 percent. Dixie-Narco also recommended that the NAMA could act as an intermediary to compile the data on sales and provide it to DOE. DOE asked NAMA, and NAMA was able to provide an estimate of the distribution between Class A and Class B units for a subset of the manufacturers, approximately 60 percent Class B machines and 40 percent Class A machines (NAMA, No. 65 at p. 2). To take account of all of the comments received, DOE has decided to shift to a ratio of 50 percent Class A machines to 50 percent Class B sales for the final rule. NAMA was not able to provide data on the size distribution within classes. In the absence of that data and to account for all comments received, DOE has modified its distribution of sales to account for as follows for both Class A and Class B units: Small-size units, zero percent; medium-size units, 67 percent; and large-size units, 33 percent.

4. Future Sales Decline

For the analysis at the NOPR stage, DOE assumed based on comments from interested parties on the ANOPR that future sales would all be replacement sales and would be flat at the then-current level of sales of about 90,000 units per year for the entire period of analysis. This level of replacements would result in a reduction in stock from today's level of about 2.3 million units to about 1 million units by 2020. The commenters agreed that the current economic situation would result in additional decline in the number of deployed units (Royal Vendors, Public Meeting Transcript, No. 56 at p. 74; Dixie-Narco, Public Meeting Transcript, No. 56 at p. 76); Coca-Cola, Public Meeting Transcript, No. 56 at pp. 77 and 91), but with a possibility of a near-term recovery based on the need to replace older equipment as it reaches the end of its lifetime and to continue to serve the current customer base. (Dixie-Narco, Public Meeting Transcript, No. 56 p. 79-80; Pepsi, Public Meeting Transcript, No. 56 at p. 88; Coca-Cola, Public Meeting Transcript, No. 56 at p. 91) Several commenters (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 76; Coca-Cola, Public Meeting Transcript, No. 56 at pp. 77 and 83; ASAP, Public Meeting Transcript, No. 56 at p. 87) stated that 1 million units was too small to sustain the current customer base and that the shipments would therefore have to be higher than the current level. During the public meeting, participants estimated the ultimate stock ranged from about 1.6 million (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 84) to above 2 million units. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 83) In view of these comments that there would be some additional shrinkage of stock but that the eventual level of stock in 2020 will need to be approximately 2 million units, DOE assumed that future shipments would quickly recover to 190,000 units per year by 2011 and continue at that level for the foreseeable future. This allows for some continued stock shrinkage to about 1.6 million units in the short run as the 1998-2000 vintage equipment retires faster than it is replaced, but with stock recovering to 1.9 million units by 2020 and to approximately 2 million units by 2022. As ASAP observed (ASAP, Public Meeting Transcript, No. 56 at p. 87), this change in assumptions for the final rule significantly increases the overall economic benefit of the rule, but its effect is proportional to sales and does not significantly affect the choice between potential levels of the standards.

H. 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 (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 did so 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 NIA spreadsheet to perform calculations of NES and NPV using; (1) the annual energy consumption and total installed cost data from the LCC analysis, and (2) estimates of national shipments and stock for each beverage vending machine class from the shipments analysis. DOE forecasted the energy savings from each TSL from 2012 to 2042. DOE forecasted the energy cost savings, equipment costs, and NPV of benefits for all refrigerated beverage vending machines classes from 2012 to 2057. 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 refrigerated beverage vending machines in the base case efficiency distribution is replaced by a more efficient piece of equipment as a result of the standard. Energy savings for each equipment class are the same national average values as calculated in the LCC and PBP spreadsheet. Table IV.4 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.4—Summary of National Energy Savings and Net Present Value Inputs

Input data

Description of NOPR analysis

Changes for final rule

Shipments

No growth in shipments; based on industry comments on the NOPR, all shipments are replacements

Shipments grow to 190,000 per year.

Effective Date of Standard

2012

No change.

Base Case Efficiencies

Distribution of base case shipments by efficiency level

No change.

Standards Case Efficiencies

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

No change.

Annual Energy Consumption per Unit

Annual weighted-average values are a function of energy consumption level per unit, which are established in chapter 7 of the TSD

No change.

Total Installed Cost per Unit

Annual weighted-average values are a function of energy consumption level (chapter 8 of the TSD)

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

Repair Cost per Unit

Annual weighted-average values are constant in real dollar terms for each energy consumption level (chapter 8 of the TSD)

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

Maintenance Cost per Unit

Annual weighted-average value (chapter 8 of the TSD), plus lighting maintenance cost

No change in methodology.

Escalation of Electricity Prices

Energy Information Administration (EIA)

Annual Energy Outlook 2009

(

AEO2009)

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

All cases updated to April 2009 update to

AEO2009

forecasts (chapter 8 of the TSD).

Electricity Site-to-Source Conversion

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

Site-to-source ratio follows April 2009 update to

AEO2009.

Discount Rate

3 and 7 percent real

No change.

Present Year

Future costs are discounted to 2009

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 the latest available 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.

Maintenance Costs Savings for LED Lighting in Machines

At the NOPR stage, the Joint Comment (No. 67 at p. 3) indicated that there are maintenance costs savings and therefore potential life-cycle cost savings when LED lighting is used in place of the baseline T8 fluorescent lighting for beverage vending machines. The Joint Comment referenced an article in the September 3, 2008, edition of “Automatic Merchandiser,”

Energize Displays with LED Lighting

, accessed on Vendingmarketwatch.com for information on LED lighting maintenance costs versus maintenance costs for a beverage vending machine with a fluorescent lighting system (last accessed July 25, 2009). DOE also reviewed a more recent industry publication on maintenance cost savings for LED display lights in beverage vending machines in the April 15, 2009, edition of “Automatic Merchandiser,”

Tools to Enhance Energy Savings

, which was accessed on Vendingmarketwatch.com (last accessed July 25, 2009).

In response to this comment, DOE conducted a sensitivity analysis for today's final rule to estimate the net economic effect of reduced maintenance costs for using LED lighting in place of baseline T8 fluorescent lighting in beverage vending machine equipment. The sensitivity analysis estimated the annualized life cycle cost savings for LED lighting. For machines with T8 lighting, the analysis assumes two maintenance visits to a machine to change out three T8 lamps and a change out of the T8 lamps and the ballast at refurbishment (at 5 years) DOE assumed there was no additional labor for this change out, since this is undertaken at refurbishment. DOE estimated the total cost for maintenance (labor and materials) for machines with T8 lighting over the machine lifetime (10 years) to be $194.

For machines with LED lighting, no lighting maintenance visits would be required over the lifetime of the machine. The cost of replacing three LED strips at $50 each would take place during refurbishment and would be $150. DOE assumed there would be no additional labor charge for this change out since this was being undertaken at refurbishment.

The analysis estimated that the annualized net maintenance cost savings is $4.68 for a LED lighting system used to light a machine compared to the baseline T8 lighting system for a machine. This net annualized maintenance cost savings is very small and does not significantly affect the life cycle cost analysis and thus does not impact the standards levels for today's final rule. Chapter 8 of the TSD provides additional details of this sensitivity analysis.

1. Choice of Discount Rate

ASAP commented that the balance of DOE's discussion of the choice of proposed standard overemphasized the 7 percent discount rate when both 7 percent and 3 percent are mandated by the Office of Management and Budget (OMB). (ASAP, Public Meeting Transcript, No. 56 at p. 144) ASAP argued that the actual cost of capital the Department chose for the purchase of the machine was lower than 7 percent so that the 3 percent rate should be considered in the Department's analysis, and is required to be considered by OMB. In response, DOE notes that it follows the guidelines on discount factors set forth in guidance that OMB provides to Federal agencies on the development of regulatory analysis (OMB Circular A-4 (September 17, 2003), particularly section E, “Identifying and Measuring Benefits and Costs”). Accordingly, DOE is continuing to use 3 percent and 7 percent real discount rates for the relevant calculations for this final rule.

2. Discounting of Physical Values

ASAP commented that DOE should not be applying financial discount rates to physical values such as energy savings. (ASAP, Public Meeting Transcript, No. 56 at p. 37) It said that doing so is an inappropriate application of financial evaluation tools and should be discontinued.

DOE continues to report both undiscounted and discounted values of energy savings and carbon emission reductions. DOE believes this allows for consideration of a range of policy perspectives, one of which is the view that a reduction in emissions today is more valuable than one in 30 years.

I. Life-Cycle Cost Subgroup Analysis

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

i.e.

, subgroups) of customers, such as different types of businesses that may be disproportionately affected by a National standard level. For this rulemaking, DOE identified manufacturing and industrial facilities that purchase their own beverage vending machines as a relevant sub-group. This customer subgroup is likely to include owners of high-cost beverage vending machines because it has the highest capital costs. This group also faces the lowest electricity prices of any customer subgroup. These two conditions make it likely that this subgroup will have the lowest life-cycle cost savings of any major customer sub-group.

DOE determined the impact on this refrigerated beverage vending machines customer subgroup using the LCC spreadsheet model. DOE conducted the LCC and PBP analyses for customers represented by the subgroup. DOE did not receive comments on its identification of this class of customers as the key sub-group or on the assumptions applied to those subgroups. DOE relied on the same methodology outlined in the NOPR for the final rule analysis. The results of DOE's LCC subgroup analysis are summarized in section VI.C.1.b and described in detail in chapter 12 of the TSD.

J. Manufacturer Impact Analysis

DOE performed an MIA to estimate the financial impact of energy conservation standards on manufacturers of beverage vending machine equipment, and to assess the impact of such standards on employment and manufacturing capacity. DOE conducted the MIA for beverage vending machine 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 beverage vending machine equipment energy conservation standards. In Phase 3, Subgroup Impact Analysis, DOE conducted interviews with manufacturers representing the majority of domestic beverage vending machine 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 beverage vending machine 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 selling prices in the engineering analysis to calculate the manufacturer production costs 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.

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.

DOE estimates the equipment conversion costs and capital conversion costs that the industry would incur at each TSL. Equipment conversion costs include engineering, prototyping, testing, and marketing expenses incurred by a manufacturer as it prepares to comply with a standard. Capital conversion costs are the one-time outlays for tooling and plant changes required for the industry to comply.

During the NOPR public meeting, DOE asked manufacturers to discuss their ability to meet the proposed TSLs and describe the impacts of those standards. Both Royal Vendors and Dixie-Narco discussed their ability to meet the proposed standards in terms of the conversion costs each would incur to develop higher efficiency equipment. Royal Vendors stated that, in the past, considerable costs were incurred to get from pre-ENERGY STAR efficiency levels to ENERGY STAR Tier I efficiency levels. These costs included implementation of ECM fan motors, magnetic ballasts, and higher efficiency compressors. (Royal Vendors, Public Meeting Transcript, No. 56 at p. 185) Dixie-Narco agreed with Royal Vendors and stated that it faced a costly transition from ENERGY STAR Tier I to ENERGY STAR Tier II efficiency levels. (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 186) In a written comment, NAMA also noted the considerable funds already spent by its members to comply with ENERGY STAR standards. (NAMA, No. 65 at p. 2) For Class B machines, Royal Vendors expects meeting TSL 3 will not require a tremendous effort. (Royal Vendors, Public Meeting Transcript, No. 56 at p. 220) Dixie-Narco also stated that it will be able to achieve the proposed standard for Class B machines without investing significant costs that would need to be passed on to its customers. (Dixie-Narco, No. 64 at p. 4) Dixie-Narco noted that it achieved the TSL 6 energy consumption level with one of its Class A vending machines this year, using a lighting management system. (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 188) Royal Vendors stated that it could meet TSL 6 for Class A machines at relatively minor cost if it were not precluded by proprietary design restrictions from adopting a lighting management system similar to Dixie-Narco's. (Royal Vendors, Public Meeting Transcript, No. 56 at p. 189) Royal Vendors stated that implementing an energy management system is not an expensive addition to the machine and that it can be passed on at essentially no additional cost. (Royal Vendors, Public Meeting Transcript, No. 56 at p. 188)

Based on public comments, DOE believes that it accurately estimated the conversion costs for Class B vending machines and did not make any changes for the final rule. However, for Class A vending machines, DOE believes that the use of energy management systems (

e.g.

, lighting) could provide a method of achieving energy savings at minimal cost to manufacturers. To account for

this possibility, DOE modified the assumed conversion costs required for manufacturers to meet the Class A energy consumption levels. In the NOPR, DOE assumed that since almost all of the market was already reaching TSL 1 (

i.e.

, ENERGY STAR Tier II) for Class A machines, the conversion costs at TSL 1 were zero. The conversion costs progressively increased from TSL 2 through TSL 7 (

i.e.

, max-tech). For the final rule, DOE accounted for the potential use of an energy management system by assuming there would be negligible conversion costs through TSL 2 for all Class A machines, shifting the conversion costs for TSLs 2 through 5 from the NOPR to TSLs 3 through 6 for the final rule. For TSL 7, DOE maintained the conversion costs from the NOPR since they represent the maximum possible conversion costs for the max-tech level. For more information about DOE's manufacturer impact assumptions,

see

chapter 13 of the TSD.

In a comment submitted on the NOPR, NAMA stated that one of its manufacturers would have difficulty achieving the reduction in energy consumption required by the proposed standard levels. The manufacturer could only meet the standards by changing the cabinet insulation thickness, which would require retooling its production lines at an estimated cost of over $1 million. (NAMA, No. 65 at p. 3)

DOE estimated the conversion costs to manufacturers of the standard levels for both equipment classes and reports the values in chapter 13 of the TSD. DOE's total estimated costs exceed the 1 million dollars reported by the manufacturer. Because DOE has accounted for conversion costs of this magnitude for the industry, DOE maintained the conversion costs reported in chapter 13 of the TSD.

For the final rule, DOE analyzed manufacturer impacts under two distinct markup scenarios: (1) The preservation-of-gross-margin-percentage markup scenario, and (2) the preservation-of-operating-profit markup scenario.

Under the first scenario, DOE applied a single uniform “gross margin percentage” markup that represents the current markup for manufacturers in the beverage vending machine industry. This markup scenario implies that as production costs increase with efficiency, the absolute dollar markup will also increase. DOE calculated that the non-production cost markup—which consists of selling, general, and administrative (SG&A) expenses; research and development (R&D) expenses; interest; and profit—is 1.26.

Under the second scenario, the implicit assumption behind the “preservation-of-operating-profit” scenario is that the industry can only maintain its operating profit (earnings before interest and taxes) from the baseline after implementation of the standard in 2012. The industry impacts occur in this scenario when manufacturers expand their capital base and production costs to make more expensive equipment, but the operating profit does not change from current conditions. DOE implemented this markup scenario in the GRIM by setting the manufacturer markups at each TSL to yield approximately the same operating profit in both the base case and the standard case in the standards effective year of 2012. Together, these two markup scenarios characterize the range of possible conditions that the beverage vending machine market will experience as a result of new energy conservation standards.

In the NOPR, DOE sought comments on whether and to what extent parties estimate they will be able to transfer costs of implementing TSL 6 to consumers. 74 FR 26022. During the NOPR public meeting, Coca-Cola stated that, 10 years ago, it only had to sell 20 cases for a vending machine to make a profit. Now, it has to sell 100 cases for a vending machine to make a profit. It continued that there are many factors driving the profitability model of a vending machine, and to assume that model will not change is erroneous. (Coca-Cola, Public Meeting transcript, No. 56 at p. 91) Coca-Cola stated that, historically, cost increases in equipment could not be passed through to the customer. It does not believe the increased cost of manufacturing higher efficiency equipment can be passed on to the consumer. As a result, the profit margin for each machine diminishes, resulting in an overall reduction in purchases. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 183, Coca-Cola, No. 63 at p. 2, and NAMA, No. 65 at p. 5) As a result, Coca-Cola concluded that any increase in cost resulting from installing more energy-efficient technologies into a vending machine cannot be transferred over to consumers. (Coca-Cola, Public Meeting Transcript, No. 56 at p. 182 and NAMA, No. 65 at p. 2) Coca-Cola estimates that today's standard will result in an overall weighted average price markup of 14

1/2

. (Coca-Cola, No. 63 at p. 2)

The inability to pass on costs starts at the consumer level and ultimately travels throughout the entire distribution chain. As stated in comments from the NOPR public meeting, consumers are typically unwilling to incur additional costs for more energy-efficient equipment. In addition, end-users (

e.g.

, bottlers) are typically unwilling to incur additional costs for energy-efficient equipment, primarily due to the split-incentive issue. The split incentive issue is described in detail in the ANOPR. 73 FR 34101. Therefore, it is very difficult for manufacturers to transfer any cost increases for more energy-efficient equipment to their customers. The preservation-of-operating-profit scenario models the more negative potential impacts on the refrigerated beverage vending machine industry, and accounts for manufacturers' inability to transfer additional costs to end-users. For additional detail on the manufacturer impact analysis, refer to chapter 13 of the TSD. In addition, as stated earlier in section IV.J, multiple major manufacturers stated that their equipment could meet today's standard at little or no added cost. (Dixie-Narco, No. 64 at p. 2 and Royal Vendors, Public Meeting Transcript, No. 56 at p. 189)

K. 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 April 2009 updated

AEO2009

Reference Case and forecast results for policy cases incorporating each of the beverage vending machines proposed TSLs.

DOE analyzed the effects of proposed standards on electric utility industry generation capacity and fuel consumption using a variant of EIA's NEMS model. 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, run similar to the April 2009 update to the NEMS, except that refrigerated beverage vending machines 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 May 2009 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 April 2009 update to

AEO2009

and to use the NES impacts developed in the beverage vending machines 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.

L. 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 beverage vending machines 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 beverage vending machines. 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 beverage vending machines 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 refrigerated beverage vending machines; 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 a different methodology to estimate indirect national employment impacts using an input-output model of the U.S. economy called ImSET (Impact of Sector Energy Technologies) developed by DOE's Building Technologies Program. 74 FR 26047, 26058. The new method uses the most recent version of the U.S. input-output table and updated sector employment intensities. 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 refrigerated beverage vending machines efficiency standards on employment by sector. In response to the May 2009 NOPR, DOE did not receive comments directly on the methodology used for the utility impact analysis. DOE updated its indirect employment impact analysis using Version 3 of the ImSET model in the final rule.

M. Environmental Assessment

Pursuant to the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321

et seq.

) and 42 U.S.C. 6295(o)(2)(B)(i)(VI), DOE prepared an environmental assessment (EA) of the potential impacts of the proposed standards it considered for today's final rule, which it has included as chapter 16 of the TSD for the final rule. DOE found that the environmental effects associated with the standards for beverage vending machines were not significant. Therefore, DOE is issuing a Finding of No Significant Impact (FONSI), pursuant to NEPA, the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and DOE's regulations for compliance with NEPA (10 CFR part 1021). The FONSI is available in the docket for this rulemaking.

In the EA, DOE estimated the reduction in total emissions of CO

and NO

using the NEMS-BT computer model. DOE calculated a range of estimates for reduction in Hg emissions using current power sector emission rates. The EA does not include the estimated reduction in power sector impacts of sulfur dioxide (SO

), because DOE is uncertain that 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. These topics are addressed further below; see chapter 16 of the TSD for additional detail.

The NEMS-BT is run similarly to the April 2009 update of NEMS, except that the refrigeration energy use is reduced by the amount of energy saved due to the trial standard levels. The inputs of national energy savings come from the NIA analysis. 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 April 2009 updated

AEO2009

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.

Title IV of the Clean Air Act sets an annual emissions cap on SO

for all affected Electric Generating Units. The attainment of the emissions cap is flexible among generators and is enforced through the use of emissions allowances and tradable permits. Thus, DOE is not certain that there will be reduced overall SO

emissions from the standards. However, there 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 lessen the need to purchase SO

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

emissions from 28 eastern States and the District of Columbia (DC) are limited under the Clean Air Interstate Rule (CAIR), published in the

Federal Register

on May 12, 2005. 70 FR 25162 (May 12, 2005). Although CAIR has been remanded to EPA by the DC Circuit, it will remain in effect until it is replaced by a rule consistent with the Court's July 11, 2008 opinion in

North Carolina

EPA

. 531 F.3d 896 (D.C. Cir. 2008);

see

also

North Carolina

EPA

, 550 F.3d 1176 (DC Cir. 2008). These court positions were taken into account in the May 2009 NOPR. Thus, the same methodology was followed in estimating future NO

in the May 2009 NOPR as in the final rule. Because all States covered by CAIR opted to reduce NO

emissions through participation in cap-and-trade programs for electric generating units, emissions from these sources are capped across the CAIR region.

For the 28 eastern States and DC where CAIR is in effect, no NO

emissions reductions will occur due to the permanent cap. Under caps, physical emissions reductions in those States would not result from the energy conservation standards under consideration by DOE, but standards might have produced an environmentally related economic impact in the form of lower prices for emissions allowance credits, if they were large enough. However, DOE determined that in the present case, such standards would not produce an environmentally related economic impact in the form of lower prices for emissions allowance credits, because the estimated reduction in NO

emissions or the corresponding allowance credits in States covered by the CAIR cap would be too small to affect allowance prices for NO

under the CAIR. In contrast, new or amended energy conservation standards would reduce NO

emissions in those 22 States not affected by the CAIR. As a result, DOE used the NEMS-BT to forecast emission reductions from the beverage vending machine standards that are considered in today's final rule.

Similar to SO

and NO

, future emissions of Hg would have been subject to emissions caps under the Clean Air Mercury Rule (CAMR) [70 FR 28606 (May 18, 2005)], which would

have permanently capped emissions of mercury for new and existing coal-fired power plants in all States beginning in 2010, but the CAMR was vacated by the DC Circuit in its decision in

New Jersey

Environmental Protection Agency

prior to publication of the May 2009 NOPR. 517 F 3d 574 (DC Cir. 2008).

After CAMR was vacated, DOE was unable to use the NEMS-BT model to estimate any changes in the quantity of mercury emissions (anywhere in the country) that would result from standard levels it considered for the proposed rule. Instead, DOE used a range of Hg emissions rates (in tons of Hg per unit energy produced) based on the

AEO2008

for the May 2009 NOPR. Because virtually all mercury emitted from electricity generation is from coal-fired power plants, DOE based the high-end emissions rate on the tons of mercury emitted per terawatt hour (TWh) of coal-generated electricity. To estimate the reduction in mercury emissions, DOE multiplied the emissions rate by the reduction in coal-generated electricity associated with the standards considered. DOE's low estimate assumed that future standards would displace electrical generation only from natural gas-fired power plants, thereby resulting in an effective emission rate of zero. The low end of the range of Hg emissions rates is zero because natural gas-fired powered power plants have virtually no Hg emissions associated with their operations. Because the CAMR remains vacated, DOE continued to use the approach it used for the May 2009 NOPR to estimate the Hg emission reductions due to standards for today's final rule. To estimate the reduction in Hg emissions, DOE multiplied the emissions rates by the reduction in electricity generation associated with the standards proposed in today's final rule.

Earthjustice commented that DOE's approach to estimating mercury emissions arbitrarily ignores the results of the Department's own utility impact analysis, which models cumulative avoided electricity from all sources and a breakout disclosing cumulative generation from several sources (coal, petroleum, natural gas, and renewables). (Earthjustice, No. 66 at pp. 1-2) Given that DOE's own utility impact analysis models the energy savings from each source of electricity generation, DOE may not refuse to apply that information to estimate the cumulative mercury emissions reductions without a rational explanation. EarthJustice added that DOE need only refer to the AEO Reference Case average emissions rates to obtain updated projections for future Hg emissions factors.

DOE estimates its emission factors based on marginal emissions rates for energy savings for the primary energy saved by the standard. Diagnosis of NEMS-BT model runs leaves significant uncertainty concerning which generating fuels would be affected at the margin at the scale of energy savings expected as a result of the standard. The differences in emission rates are particularly important for Hg because some fuels generate almost no Hg. Therefore, DOE has elected to keep a range of emissions values in this rule. DOE also notes that the average Hg emissions values suggested by Earthjustice fell between the two values used by DOE.

DOE notes that neither EPCA nor NEPA requires that the economic value of emissions reductions be incorporated in the LCC or NPV analysis of energy savings. DOE has chosen to report these benefits separately from the net benefits of energy savings. A summary of the monetary results is shown in section VI.C.6 of this final rule. DOE considered both values when weighing the benefits and burdens of standards.

N. Monetizing Carbon Dioxide and Other Emissions Impacts

DOE also calculated the possible monetary benefit of CO

, NO

, and Hg reductions. Cumulative monetary benefits discounted from the year of the emission reduction to the present using discount rates of 3 and 7 percent. DOE monetized reductions in CO

emissions due to the standards proposed in this final rule based on a range of monetary values drawn from studies that attempt to estimate the present value of the marginal economic benefits (based on the avoided marginal social costs of carbon) likely to result from lowering future atmospheric concentrations of greenhouse gases. The marginal social cost of carbon is an estimate of the monetary value to society of the environmental damages of CO

emissions. One comment was provided on the economic valuation of CO

at the NOPR public meeting.

ASAP stated that it is important for DOE to reevaluate its approach to carbon valuation. (ASAP, Public Meeting Transcript, No. 56 at p. 37) ASAP believes that DOE's estimate for the value of carbon is low, but did not provide data for analysis. As discussed in section VI.C.6, DOE has updated the approach described in the May 2009 NOPR for its monetization of environmental emissions reductions for today's final rule. DOE continues to work with other Federal agencies on a common approach and values to be used in monetizing carbon and other emissions.

Although this rulemaking may not affect SO

emissions nationwide and does not affect NO

emissions in the 28 eastern States and D.C. where CAIR is in effect, there are markets for SO

and NO

emissions allowances. The market clearing price of SO

and NO

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

and NO

emissions are regulated by a cap-and-trade system, the cost of meeting these caps is included in the price of energy. Thus, the value of energy savings already includes the value of SO

and NO

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

and NO

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 from new standards for beverage vending machines would be 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

and NO

emissions caps.

The current NEMS-BT model used in projecting the environmental impacts includes the CAIR rule, as described above, which is projected to reduce SO

and NO

emissions. NEMS-BT also takes into account the current set of State level renewable portfolio standards, the effect of the Northeastern states Regional Greenhouse Gas Initiative (RGGI), and utility investor reactions to the possibility of future CO

cap and trade programs, all of which affect electricity prices and reduce the projected carbon intensity of generation. The most recent Reference Case,

AEO2009,

is available at

http://www.eia.doe.gov/oiaf/servicerpt/stimulus/index.html,

and documentation of the

AEO2009

assumptions is available at

http://www.eia.doe.gov/oiaf/aeo/assumption/index.html.

V. Discussion of Other Comments

Since DOE opened the docket for this rulemaking, it has received more than 100 written comments from a diverse set of parties, including manufacturers and their representatives, wholesalers and

distributors, energy conservation advocates, State officials and agencies, 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 May 2009 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 beverage vending machines. DOE addresses these comments in this section.

A. Information and Assumptions Used in Analyses

1. Engineering Analysis

During the NOPR public meeting, Royal Vendors commented that the data used for Class A fluorescent lighting systems in the engineering analysis is not consistent with the specifications of the fluorescent lighting systems it uses in its glass-front machines. Specifically, it stated that DOEs estimated energy consumption of 32 watts (W) per fixture is too high. Royal Vendors claims its fluorescent fixtures only consume 22 W (Royal Vendors, Public Meeting Transcript, No. 56 at p. 68).

DOE uses aggregate values for its engineering analysis inputs. These values are derived using publicly available data or information provided by multiple manufacturers and/or component suppliers. Analysis inputs are generalized so as to better represent the industry as a whole. DOE's estimate of 32 W of energy consumed for T8 fluorescent fixtures in Class A machines is adequate for the beverage vending machine industry and it has not made any adjustments for the final rule.

B. Benefits and Burdens

Royal Vendors stated that the proposed standards appeared to be reversed for Class A machines and Class B machines. It stated that Class A machines typically use more energy than Class B machines. (Royal Vendors, Public Meeting Transcript, No. 56 at p. 27) Dixie-Narco disagreed with Royal Vendors, stating that the proposed standards are correct and appropriate. (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 29) ASAP stated that it generally supports DOE's proposed standard levels. It stated that for Class A machines, DOE's proposal, TSL 6, is the maximum level that is cost effective. However, for Class B machines, ASAP suggested that DOE consider selecting TSL 4 rather than TSL 3 because the economic results for these two levels are very similar. (ASAP, Public Meeting Transcript, No. 56 at p. 31) Dixie-Narco stated that when you consider that the standards equations are based on refrigerated volume and not can capacity (or vendible capacity), the equations for the standards are appropriate for both equipment classes. (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 152) Dixie-Narco further stated that it is currently achieving the proposed efficiency level for Class A machines but not for Class B machines, and therefore would have to make modifications to meet the proposed level for Class B machines. (Dixie-Narco, Public Meeting Transcript, No. 56 at p. 163, 219) Royal Vendors stated that for Class A machines, they do not currently meet those levels, but given no proprietary design problems, they could meet them fairly easily. For Class B machines, Royal Vendors stated that they do not meet the proposed standards currently, but could without tremendous effort. (Royal Vendors, Public Meeting Transcript, No. 56 at p. 220) Coca-Cola commented that an appropriate standard for Class A equipment would be one that is “on par” with the ENERGY STAR Tier II level. (Coca-Cola, No. 63 at p. 2)

In a written comment, NAMA stated that it received a mixed response from its members regarding the technological feasibility and economic benefits of the standard levels proposed by DOE. One manufacturer stated that it would have difficulty achieving additional reductions for Class A and Class B machines, while another stated that it could achieve the standard for both Class A and Class B machines without significant costs to them or their customers. However, most responses to NAMA's request for information indicated that the proposed standard for Class B machines was appropriate and achievable. One manufacturer specifically stated that TSL 3 for Class B could be reached without significant costs. The proposed standard for Class A, on the other hand, raised questions among many manufacturers, although one manufacturer stated that it already exceeds the Class A standard without adding significant costs. (NAMA, No. 65 at pp. 3, 4) DOE considers these comments on its selection of the final energy conservation standard level for beverage vending machines. See section VI.D.

VI. Analytical Results and Conclusions

A. Trial Standard Levels

DOE analyzed seven energy consumption levels for Class A equipment and six energy consumption levels for Class B equipment in the LCC and NIA analyses. For the May 2009 NOPR, DOE determined that each of these levels should be presented as a possible TSL and correspondingly identified seven TSLs for Class A and six TSLs for Class B equipment. For each equipment class, the range of TSLs selected includes the energy consumption level providing the maximum NES level for the class, the level providing the maximum NES while providing a positive NPV, the level providing the maximum NPV, and the level approximately equivalent to ENERGY STAR Tier II. Many of the higher levels selected correspond to equipment designs that incorporate specific noteworthy technologies that can provide energy savings benefits. For Class A machines, DOE also included two intermediate efficiency levels to fill in significant energy consumption gaps between the levels identified above the ENERGY STAR Tier II equivalent level. For Class A equipment, the ENERGY STAR Tier II level is equivalent to TSL 1, which allows for the highest energy consumption. For Class B equipment, DOE included one TSL with energy consumption higher than that provided by ENERGY STAR Tier II level.

For the May 2009 NOPR, four of the TSLs for each equipment class were based on the levels that provided maximum energy savings, maximum efficiency level with positive LCC savings, maximum LCC savings, and the highest efficiency level with a payback of less than 3 years.

DOE preserved energy consumption levels from the NOPR that met the same economic criteria in the final rule but also included the ENERGY STAR Tier II equivalency level and several additional TSLs. These additional levels either provide additional intermediate efficiency levels or include specific noteworthy technologies examined in the engineering analysis. Table VI.1 and Table VI.2 show the TSL levels DOE selected for the equipment classes and sizes analyzed. For Class A equipment, TSL 7 is the max-tech level for each equipment class. TSL 6 is the maximum efficiency level with a positive NPV at the 7 percent discount rate, achieved by incorporating an ECM condenser fan. TSL 5 is the efficiency level with the maximum NPV and maximum LCC savings, achieved by using an advanced refrigerant condenser design. TSL 4 is the level that first incorporated light-emitting diode (LED) lighting as a design feature in the engineering analysis. TSL 3 and TSL 2 were intermediate efficiency levels chosen to bridge the gap between TSL 4, and the

ENERGY STAR Tier II equivalent level, which is TSL 1.

Table VI.1—Trial Standard Levels for Class A Equipment Expressed in Terms of Daily Energy Consumption (kWh/day)

Size

TSL

Trial standard level in order of efficiency

Baseline

TSL 1

TSL 2

TSL 3

TSL 4

TSL 5

TSL 6

TSL 7

LCC Efficiency level

Small

Engineering Level

*NA

kWh/day

6.10

5.27

4.75

4.25

3.95

3.73

3.58

3.25

Medium

Engineering Level

*NA

kWh/day

6.53

5.51

5.25

4.75

4.19

3.95

3.79

3.43

Large

Engineering Level

*NA

kWh/day

6.75

6.21

5.75

5.25

4.89

4.60

4.41

3.94

* Not applicable. These levels established as intermediate points along the engineering cost curves.

Table VI.2—Trial Standard Levels for Class B Equipment Expressed in Terms of Daily Energy Consumption (kWh/day)

Size

TSL

Trial standard level in order of efficiency

Baseline

TSL 1

TSL 2

TSL 3

TSL 4

TSL 5

TSL 6

LCC Efficiency Level

Small

Engineering Level

kWh/day

4.96

4.62

4.31

4.28

3.78

3.69

Medium

Engineering Level

kWh/day

5.56

5.20

4.99

4.76

4.72

4.22

4.12

Large

Engineering Level

kWh/day

5.85

5.48

5.33

5.07

5.03

4.52

4.41

* Not applicable. These levels established as intermediate points along the engineering cost curves.

For Class B equipment, TSL 6 is the max-tech level for each equipment size. TSL 5 is the level that first incorporated LED lighting as a design option in the engineering analysis. TSL 4 is the next highest efficiency level incorporating an ECM condenser fan motor. TSL 3 was achieved by using an advanced refrigerant condenser design. This TSL provided an NPV value of essentially 0, with total capital expenditures for new equipment balanced by total operating cost savings over the NIA analysis period, based on a 7 percent discount rate. TSL 2 is the ENERGY STAR Tier II level for Class B machines. This TSL provided the maximum LCC savings and maximum NPV savings at a 7 percent discount rate. TSL 1, which provided an energy consumption level approximately 4 percent higher than TSL 2, was also included in the analysis. TSL 1 represented the first level incorporating an evaporator fan driven by an ECM in the engineering analysis.

As stated in the May 2009 NOPR, DOE chose to characterize the proposed TSL levels in terms of equations that establish a maximum daily energy consumption (MDEC) limit through a linear equation of the following form:

MDEC = A × V + B

Where:

A is expressed in terms of kWh/day/ft

of measured volume,

V is the measured refrigerated volume (ft

) calculated for the equipment, and

B is an offset factor expressed in kWh/day.

Coefficients A and B are uniquely derived for each equipment class based on a linear equation passing between the daily energy consumption values for equipment of different refrigerated volumes. For the A and B coefficients, DOE used the energy consumption values shown in Table VI.1 and Table VI.2 for the medium and large equipment sizes within each class of beverage vending machine. DOE did not use the small sizes in either equipment class because information from the May 2009 NOPR indicated that there are no significant shipments of this equipment size. Results are described in more detail in chapter 9 of the TSD.

Chapter 9 of the TSD also explains the methodology DOE used for selecting TSLs and developing the equations shown in Table VI.3.

Table VI.3—Trial Standard Levels Expressed in Terms of Equations and Coefficients for Class A and Class B Equipment

Trial standard level

Test metric

Class A

Class B

Baseline

kWh/day

MDEC = 0.019 × V + 6.09

MDEC = 0.068 × V + 4.07.

kWh/day

MDEC = 0.062 × V + 4.12

MDEC = 0.066 × V + 3.76.

kWh/day

MDEC = 0.044 × V + 4.26

MDEC = 0.080 × V + 3.24.

kWh/day

MDEC = 0.044 × V + 3.76

MDEC = 0.073 × V + 3.16.

kWh/day

MDEC = 0.062 × V + 2.80

MDEC = 0.073 × V + 3.12.

kWh/day

MDEC = 0.058 × V + 2.66

MDEC = 0.070 × V + 2.68.

kWh/day

MDEC = 0.055 × V + 2.56

MDEC = 0.068 × V + 2.63.

kWh/day

MDEC = 0.045 × V + 2.42.

NA. *

* Not applicable. There is no TSL 7 for Class B equipment.

B. Significance of Energy Savings

To estimate the energy savings through 2042 due to new standards, DOE compared the energy consumption of beverage vending machines under the base case (no standards) to energy consumption of this equipment under each TSL that DOE considered. Table VI.4 and Table VI.5 show DOE's NES estimates, which it based on the April 2009 update of the

AEO2009

Reference Case, for each TSL. Chapter 11 of the TSD describes these estimates in more detail. DOE reports both undiscounted and discounted values of energy savings. Discounted energy savings represent a policy perspective where energy savings farther in the future are less significant than energy savings closer to the present. Table VI.4 shows the forecasted aggregate national energy savings, both discounted and undiscounted, of Class A equipment at each TSL. The table also shows the magnitude of the estimated energy savings if the savings are discounted at the 7 percent and 3 percent real discount rates. Each TSL considered in this rulemaking would result in significant energy savings, and the amount of savings increases with higher energy conservation standards (ranging from an estimated 0.007 quads to 0.170 quads, undiscounted, for TSLs 1 through 7) (

see

chapter 11 of the TSD).

Table VI.4—Summary of Cumulative National Energy Savings for Class A Equipment

[Energy savings for units sold from 2012 to 2042]

Trial standard level

Primary national energy savings (quads)

Undiscounted

3% Discounted

7% Discounted

0.007

0.004

0.002

0.031

0.018

0.010

0.069

0.040

0.021

0.107

0.061

0.032

0.127

0.073

0.038

0.139

0.080

0.042

0.170

0.097

0.051

In Table VI.5, DOE reports both undiscounted and discounted values of energy savings for Class B equipment. As with Class A equipment, each TSL considered would result in significant energy savings, and the amount of energy savings increases with higher energy conservation standards (ranging from an estimated 0.003 quads to 0.068 quads, undiscounted, for TSLs 1 through 6.

Table VI.5—Summary of Cumulative National Energy Savings for Class B Equipment ]

[Energy savings for units sold from 2012 to 2042]

Trial standard level

Primary national energy savings (quads)

Undiscounted

3% Discounted

7% Discounted

0.003

0.002

0.001

0.004

0.002

0.001

0.020

0.012

0.006

0.023

0.013

0.007

0.061

0.035

0.018

0.068

0.039

0.020

C. Economic Justification

1. Economic Impact on Commercial Customers

a. Life-Cycle Costs and Payback Period

To evaluate the economic impact of the TSLs on customers, DOE conducted an LCC analysis for each TSL. More efficient beverage vending machines are expected to affect customers in two ways: Annual operating expense is expected to decrease and purchase price is expected to increase. DOE analyzed the net effect by calculating the LCC. Inputs used for calculating the LCC include total installed costs (

i.e.,

equipment price plus installation costs), annual energy savings, average electricity costs by customer, energy price trends, repair costs, maintenance costs, equipment lifetime, and discount rates.

DOE's LCC and PBP analyses provided five outputs for each TSL that are reported in Table VI.6 through Table VI.8 for Class A equipment. The first three outputs are the percentages of

standard-compliant machine purchases that would result in (1) a net LCC increase, (2) no impact, or (3) a net LCC savings for the customer. DOE used the estimated distribution of shipments by efficiency level for each equipment class to determine the affected customers. The fourth output is the average net LCC savings from standard-compliant equipment. The fifth output is the average PBP for the customer investment in standard-compliant equipment. The PBP is the number of years it would take for the customer through energy savings to recover the increased costs of higher efficiency equipment compared to baseline efficiency equipment.

Table VI.6—Summary LCC and PBP Results for Class A Equipment—Large

Results

Trial standard level

Equipment with Net LCC Increase

(%)

100

Equipment with No Change in LCC

(%)

Equipment with Net LCC Savings

(%)

Mean LCC Savings

($)

132

184

222

244

240

(1,481)

Mean Payback Period

(years)

2.3

3.1

3.4

3.6

3.8

4.3

83.8

Note:

Numbers in parentheses indicate negative values.

Table VI.7—Summary LCC and PBP Results for Class A Equipment—Medium

Results

Trial standard level

Equipment with Net LCC Increase

(%)

100

Equipment with No Change in LCC

(%)

Equipment with Net LCC Savings

(%)

100

Mean LCC Savings

($)

162

207

235

296

305

295

(1,183)

Mean Payback Period

(years)

2.1

2.0

3.1

3.3

3.6

4.0

71.0

Note:

Numbers in parentheses indicate negative values.

Table VI.8—Summary LCC and PBP Results for Class A Equipment—Small

Results

Trial standard level

Equipment with Net LCC Increase

(%)

100

Equipment with No Change in LCC

(%)

Equipment with Net LCC Savings

(%)

Mean LCC Savings

($)

130

179

227

255

265

255

(1,153)

Mean Payback Period

(years)

2.1

2.9

3.3

3.5

3.8

4.2

80.9

Note:

Numbers in parentheses indicate negative values.

For the Class A equipment, there are positive net LCC savings on average for TSL 1 through 6. Only 10 percent of all equipment purchased is expected to achieve a net LCC savings at TSL 1, since about 90 percent of the equipment on the market in 2012 is expected to meet that standard. LCC savings consistently peak at TSL 5, but about 95 percent of purchasers of Class A equipment are projected to achieve LCC savings even at TSL 6. Simple average PBPs are projected to be less than 3 years for all Class A equipment for TSL 1, and PBPs are less than 4 years from TSL 1 through 5.

DOE's LCC and PBP analyses provided the same five outputs for each TSL for Class B equipment. These outputs are reported in Table VI.9 through Table VI.11.

Table VI.9—Summary LCC and PBP Results for Class B Equipment—Large

Results

Trial standard level

Equipment with Net LCC Increase (

)

100

Equipment with No Change in LCC (

)

Equipment with Net LCC Savings (

)

Mean LCC Savings (

)

(545)

(2,414)

Mean Payback Period (

years

)

3.3

4.5

6.5

7.5

83.8

100.0

Note:

Numbers in parentheses indicate negative values.

Table VI.10—Summary LCC and PBP Results for Class B Equipment—Medium

Results

Trial standard level

Equipment with Net LCC Increase (

)

100

Equipment with No Change in LCC (

)

Equipment with Net LCC Savings (

)

Mean LCC Savings (

)

(558)

(2,230)

Mean Payback Period (

years

)

3.4

4.6

6.9

7.9

85.4

99.9

Note:

Numbers in parentheses indicate negative values.

Table VI.11—Summary LCC and PBP Results for Class B Equipment—Small

Results

Trial standard level

Equipment with Net LCC Increase (

)

100

Equipment with No Change in LCC (

)

Equipment with Net LCC Savings (

)

Mean LCC Savings (

)

(612)

(2,129)

Mean Payback Period (

years

)

3.9

8.7

10.9

94.7

100.0

Note:

Numbers in parentheses indicate negative values.

For Class B equipment, there are positive net LCC savings on average for TSLs 1 through 4. Only 10 percent of all equipment purchased is expected to achieve a net LCC savings at TSL 1, since about 90 percent of the equipment on the market in 2012 is expected to meet that standard. LCC savings consistently peak at TSL 2, but for 26 to 65 percent of purchasers, Class B equipment is projected to achieve

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