1-i

CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF DOCUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1

1.2 OVERVIEW OF COMMERCIAL EQUIPMENT STANDARDS . . . . . . . . . . . . . . . . 1-1

1.3 OVERVIEW OF COMMERCIAL UNITARY AIR CONDITIONER AND 

HEAT PUMP STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3

1.4 STRUCTURE OF THE DOCUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-6

LIST OF TABLES

Table 1.3.1 Commercial Unitary Air Conditioner and Heat Pump Analyses under the 

Process Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4
1-1

CHAPTER 1. INTRODUCTION

1.1 PURPOSE OF DOCUMENT

This technical support document (TSD) is a “stand-alone” report that provides the

technical analyses and results in support of the information presented in the Advance Notice of

Proposed Rulemaking (ANOPR) for commercial unitary air conditioners and heat pumps.

1.2 OVERVIEW OF COMMERCIAL EQUIPMENT STANDARDS

Part B of Title III of the Energy Policy and Conservation Act of 1975, Public Law 94-

163, as amended by the National Energy Conservation Policy Act of 1978 (NECPA), Public Law

95-619; the National Appliance Energy Conservation Act of 1987 (NAECA), Public Law 100-

12; the National Appliance Energy Conservation Amendments of 1988 (NAECA 1988), Public

Law 100-357; and the Energy Policy Act of 1992 (EPAct), Public Law 102-486 (the Act or

EPCA), established the Energy Conservation Program for Consumer Products other than

Automobiles. (42 U.S.C. 6291-6309) Part 3 of Title IV of NECPA amended EPCA to add

Certain Industrial Equipment, which includes air-conditioning equipment. (42 U.S.C.

6311(1)(B)) EPAct also amended EPCA with respect to air-conditioning equipment, providing

definitions in section 122(a), test procedures in section 122(b), labeling provisions in section

122(c), energy-efficiency standards in section 122(d), and enforcement requirements in section

122(e). (42 U.S.C. 6311, 6313-15) These amendments expanded the Department’s energy

conservation program to include commercial unitary air conditioners and heat pumps, the focus

of this document.

The EPCA, as amended by EPAct, established efficiency requirements that correspond to

the levels in American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc.

(ASHRAE)/Illuminating Engineering Society of North America (IESNA) Standard 90.1 as in

effect on October 24, 1992. The statute further provides that if the efficiency levels in

ASHRAE/IESNA Standard 90.1 are amended after that date for any of the covered products,

including commercial unitary air conditioners and heat pumps, the Secretary of Energy

(Secretary) must establish an amended uniform national standard for such equipment at the new

minimum level for each effective date specified in ASHRAE/IESNA Standard 90.1, unless the

Secretary determines, through a rulemaking supported by clear and convincing evidence, that a

more stringent standard is technologically feasible and economically justified and would result in

significant additional energy conservation. (42 U.S.C. 6313(a)(6)(A))

Under EPCA, if DOE adopts a more stringent standard, it must consider, to the greatest

extent practicable, the economic impact of the standard on the manufacturers and consumers of

the affected products; the savings in operating costs throughout the estimated average life of the

product compared to any increases in the initial cost, or maintenance expense; the total projected

amount of energy savings likely to result directly from the imposition of the standard; any

lessening of the utility or the performance of the products likely to result from the imposition of
1-2

the standard; 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; the need for

national energy conservation; and other factors the Secretary considers relevant. 

(42 U.S.C. 6313(a)(6)(B)(I)) Other statutory requirements are set forth in

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

In order to guide DOE in the consideration and promulgation of new or revised appliance

efficiency standards under EPCA, the Department established “Procedures for Consideration of

New or Revised Energy Conservation Standards for Consumer Products” (Process Rule) on July

15, 1996. 61 FR 36974. The Process Rule greatly enhanced opportunities for public input,

improved analytic approaches, and encouraged adoption of consensus-based standards. The

Process Rule provides policies and guidelines for early public review and consultation with

interested parties as to identifying and screening design options, selecting a proposed standard,

and establishing the final standard. The factors for screening design options include: (1)

technological feasibility; (2) practicability to manufacture, install and service; (3) adverse

impacts on product utility or product availability; and (4) adverse impacts on health or safety. 

Process Rule at 4(a)(4). The Process Rule requires the evaluation of uncertainty and variability

by calling for scenario or probability analysis, and provides for review by experts and interested

parties of the analyses used, including: (1) qualitative and quantitative analytical methods; (2)

economic, engineering and life-cycle cost analyses; and (3) impacts on manufacturers and

consumers, National energy savings, the economy and the environment. In addition, the DOE

established an Advisory Committee on Appliance Energy Efficiency Standards, consisting of a

representative group of these interested parties (61 FR 36979) to make recommendations to the

Secretary regarding the implementation of the Process Rule. Although the Process Rule

specifically applies only to the development of energy-efficiency standards for consumer

products, DOE has decided to apply its procedures to the development of energy conservation

standards for commercial and industrial equipment as well. Thus, the Process Rule is applicable

to this rulemaking to develop energy-efficiency standards for commercial unitary central air

conditioners and heat pumps. See appendix A to subpart C of Title 10 Code of Federal

Regulations Part 430 (10 CFR Part 430).

Therefore, before the Department determines whether to adopt a proposed energy

conservation standard, it must first solicit comments on the proposed standard. 

(42 U.S.C. 6313(a)(6)(B)(I)) Any new or amended standard must be designed so as to achieve

significant additional conservation of energy and be technologically feasible and economically

justified. (42 U.S.C. 6313(a)(6)(A)) To determine whether economic justification exists, the

Department must review comments on the proposal and determine that the benefits of the

proposed standard exceed its burdens to the greatest extent practicable, weighing the following

seven factors:

1. the economic impact of the standard on the manufacturers and on the consumers of the

products subject to such standard;
1-3

2. the savings in operating costs throughout the estimated average life of the covered

product in the type (or class) compared to any increase in the price, initial charges, or

maintenance expenses for the covered products that are likely to result from the

imposition of the standard;

3. the total projected amount of energy savings likely to result from the imposition of the

standard;

4. any lessening of the utility or the performance of the covered 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 considers relevant.

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

1.3 OVERVIEW OF COMMERCIAL UNITARY AIR CONDITIONER AND HEAT

PUMP STANDARDS

On October 29, 1999, ASHRAE/IESNA adopted the energy-efficiency standards found

in ASHRAE/IESNA Standard 90.1-1999 for certain commercial heating and air-conditioning

equipment, including commercial unitary air conditioners and heat pumps. On March 1, 2000,

the Department published a notice of preliminary screening analysis to decide which of the

ASHRAE/IESNA Standard 90.1-1999 standards to adopt immediately and which to analyze

further. 65 FR 10984. On January 12, 2001, the Department published a final rule adopting the

ASHRAE/IESNA Standard 90.1-1999 level for 18 product categories and made a decision to

further evaluate other products. 66 FR 3336. In the final rule, DOE determined that further

analysis was warranted for commercial unitary air conditioners and heat pumps. This conclusion

was based on DOE’s screening analysis.

Today’s TSD marks the next step in analyzing technical and economic data to determine

whether to adopt ASHRAE/IESNA Standard 90.1-1999 or amend the energy conservation

standards for commercial unitary air conditioners and heat pumps covered by the statute. As the

analysis under this rulemaking proceeds, DOE intends to make its findings available to the

ASHRAE/IESNA Standard Project Committee 90.1 and other stakeholders under the

ASHRAE/IESNA continuous maintenance process. Furthermore, the DOE may choose to

propose an addendum to ASHRAE/IESNA Standard 90.1-1999, or proceed with adopting

ASHRAE/IESNA Standard 90.1-1999 energy-efficiency levels for this equipment if DOE

concludes that the EPCA criteria for a more stringent standard are not likely to be satisfied. This
1-4

could occur either as a result of further analysis by the Department during the rulemaking

process or as a result of ASHRAE's adopting a new addendum to ASHRAE/IESNA Standard

90.1-1999, for which a more stringent alternative is not justified. 

In June 2001, the Department published a Framework Document for Commercial Air

Conditioner and Heat Pump Standards Rulemaking, describing the procedural and analytical

approaches the Department anticipates using to evaluate the establishment of energy

conservation standards for commercial unitary air conditioners and heat pumps. This document

is available at

http://www.eren.doe.gov/buildings/codes_standards/applbrf/coml_air_conditioner.html. The

Department held a workshop on October 1, 2001, to discuss procedural and analytical

approaches to the rulemaking, and to inform and facilitate stakeholders’ involvement in the

rulemaking process. The analytical framework presented at the workshop described different

analyses, such as life-cycle cost (LCC) and payback, the methods proposed for conducting them,

and the relationships among the various analyses. See Table 1.3.1.

Table 1.3.1 Commercial Unitary Air Conditioner and Heat Pump Analyses under the

Process Rule*

ANOPR NOPR Final Rule

Market and technology assessment Revised ANOPR analyses Revised analyses

Screening analysis Life-cycle cost sub-group analysis

Engineering analysis Manufacturer impact analysis

Energy use and end-use load

characterization

Utility impact analysis

Markups for equipment price

determination

Environmental assessment

Life-cycle cost and payback period

analyses

Employment impact analysis

Shipments analysis Regulatory impact analysis

National impact analysis

*

The Process Rule’s complete title is: Procedures for Consideration of New or Revised Energy Conservation

Standards for Consumer Products. 61 FR 36974.

During the October 1, 2001, workshop, stakeholders raised concerns about the

application of the Process Rule to the commercial unitary air conditioner and heat pump

rulemaking relative to: (1) the appropriateness of immediately adopting the applicable energyefficiency standards in ASHRAE/IESNA Standard 90.1-1999; (2) inclusion of efficiency ratings

to address both full-load and part-load performance; (3) appropriate approaches to conducting

the engineering analysis; (4) how non-regulatory issues, such as the phase-out of

hydrofluorochlorocarbon (HCFC) refrigerants, might affect the effective date of any new

standards; (5) methods for developing customer equipment prices; (6) methods for developing
1-5

discount rates to evaluate future energy cost savings realized from new equipment standards; and

(7) estimation of future electricity prices and possible impacts of electric utility deregulation.

In response to these concerns and related comments by stakeholders at the October 1,

2001, workshop, the Department performed the engineering analysis along two approaches: 

first, an energy-efficiency-level approach to establish a manufacturer cost-versus-efficiency

curve; and second, a design-option approach to simulate equipment performance at higher

efficiency levels for purposes of validating the cost-versus-efficiency curve.

In developing the cost-versus-efficiency curve, the Department conducted tear-down

analyses of actual commercial unitary air-conditioning equipment in order to itemize the cost of

specific design options. Thereafter, under the Process Rule, the Department met several times

with members of the Air-Conditioning & Refrigeration Institute (ARI) Unitary Equipment

Regulatory Committee and presented its preliminary findings. During this time, individual

manufacturers submitted production cost data to DOE in order to help DOE to refine cost

estimates generated through the efficiency-level approach. Both the efficiency-level and designoption approaches are discussed in detail in Chapter 5, entitled Engineering Analysis.

In addition to gathering and presenting manufacturer cost data, the Department met with

members of the ARI Unitary Equipment Regulatory Committee and presented data necessary for

conducting the building simulation, LCC, and payback period analyses. In turn, ARI committee

members provided comments on how to improve the quality of the data used in the analyses. 

Thereafter, the Department met with the ARI committee members and presented the preliminary

LCC analysis. The building simulation analysis is discussed in detail in Chapter 6, and the LCC

and payback period analyses are discussed in Chapter 8.

The Department conducted the LCC and payback period analyses along two approaches:

a monthly approach and an hourly approach. The monthly approach establishes an annual

energy expense using 2002 electric utility tariffs and derived electricity prices. Under this

approach, LCC results are based on the assumption that commercial building customers in the

future will face electricity charges very similar to those that exist in today’s electricity markets. 

The hourly approach establishes an annual energy expense using electricity prices that may exist

assuming all electricity markets are deregulated. Under this approach, LCC results are based on

the assumption that commercial building customers will face electricity charges under fully

deregulated electricity markets. 

The Department developed new spreadsheets for the LCC, payback period, and national

impact analyses in an effort to meet the objectives of the Process Rule. The Department

developed two spreadsheets for the LCC and payback period analyses, one based on the monthly

approach and the other based on the hourly approach. Both spreadsheets are essentially identical

except for the methods used to determine annual energy expenses. A spreadsheet tool that

demonstrates the calculation of annual energy expenses based on monthly electric utility tariffs

(i.e., the monthly approach) accompanies the monthly based LCC spreadsheet. The Department

developed a national impact analysis spreadsheet that calculates the national energy savings
a

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

b

 Advisory Committee, No. 96 refers to the recommendations of the Advisory Committee on Energy

Efficiency Standards and is available for inspection at the U.S. Department of Energy, Forrestal Building,

Room 1J-018 (Resource Room of the Building Technologies Program) in the file under “Energy Conservation

Program for Consumer Products: Procedures for Consideration of New or Revised Energy Conservation

Standards for Consumer Products,” RIN [1904–AA83], as document number 96.

1-6

(NES) and national net present values (NPV) at various energy-efficiency levels. This

spreadsheet includes a model that forecasts the impacts of energy-efficiency standards at various

levels on commercial unitary air conditioner shipments. These spreadsheets appear on the

Department’s web site.a The Department wants to receive notice of any significant errors in the

spreadsheet tools for correction. Any other comments may be submitted during the 75-day

period following publication of the ANOPR.

The Department has reviewed the recommendations made on April 21, 1998, by the

Advisory Committee on Appliance Energy Efficiency Standards. (Advisory Committee,

No. 96)b These recommendations relate to: (1) using the full range of consumer marginal

energy rates (CMER) in the LCC Analysis (replacing the use of national average energy prices),

(2) defining a range of energy price futures for each fuel used in the economic analyses, and (3)

defining a range of primary energy conversion factors and associated emission reductions based

on the generation of energy and emissions that would be displaced by energy-efficiency

standards for each rulemaking. As discussed above, DOE conducted the LCC analysis with

electricity prices based on both electric utility tariffs and hourly prices to capture the full range

of CMERs. Thus, the Department incorporated the use of consumer marginal energy rates into

the analysis for this ANOPR. Also, the Department incorporated a range of future energy prices

for ANOPR analysis, and plans to incorporate the recommendations concerning energy

conversion factors in future analyses for the Notice of Proposed Rulemaking (NOPR).

Although this rulemaking covers both commercial unitary air conditioners and heat

pumps, the analysis detailed in this ANOPR TSD covers only unitary air conditioners. The

Department in its ANOPR requests comments on the need for conducting analyses specific to 

commercial heat pumps. 

The ANOPR TSD outlines the analytical approaches used in this rulemaking and solicits

comments from stakeholders on them. The DOE will modify or refine these analytical

approaches, or explore alternative approaches if stakeholders demonstrate a need for such

changes.

1.4 STRUCTURE OF THE DOCUMENT

This ANOPR TSD consists of fourteen chapters, nineteen appendices, an environmental

assessment, and a regulatory impact analysis. 
1-7

Chapter 1 Introduction: provides an overview of the appliance standards program and how

it applies to the commercial unitary and heat pump rulemaking, and outlines the

structure of the document.

Chapter 2 Analytical Framework: describes the rulemaking process step-by-step.

Chapter 3 Market and Technology Assessment: characterizes the commercial unitary air

conditioner and heat pump market and the technologies available for increasing

equipment efficiency.

Chapter 4 Screening Analysis: determines which technology options are viable for

consideration in the Engineering Analysis.

Chapter 5 Engineering Analysis: discusses the methods used for developing the relationship

between increased manufacturer price and increased efficiency.

Chapter 6 Building Energy Use and End-Use Load Characterization: discusses the process

used for generating energy use estimates and end-use load shapes for commercial

cooling equipment in a variety of building types and climate locations.

Chapter 7 Markups for Equipment Price Determination: discusses the methods used for

establishing markups for converting manufacturer prices to customer equipment

prices.

Chapter 8 Life-Cycle Cost and Payback Period Analysis: discusses the effects of standards

on individual customers and users of the equipment and compares the life-cycle

cost and payback period of equipment with and without higher efficiency

standards.

Chapter 9 Shipments Analysis: discusses the methods used for forecasting shipments with

and without higher efficiency standards including how equipment purchase

decisions are economically influenced and modeled with econometric equations.

Chapter 10 National Impact Analysis: discusses the methods used for forecasting national

energy consumption and national economic impacts based on estimates of future

equipment efficiency, commercial building starts, and annual equipment sales in

the absence and presence of higher efficiency standards. 

Chapter 11 Life-Cycle Cost Sub-Group Analysis: describes the methodology for estimating

the life-cycle cost impacts on sub-groups of commercial air conditioner

customers.

Chapter 12 Manufacturer Impact Analysis: describes the methodology for determining the

financial impact of increased efficiency standards on manufactures.
1-8

Chapter 13 Utility Impact Analysis: describes the methodology for determining the decrease

in installed generation capacity due to higher efficiency standards.

Chapter 14 Employment Impact Analysis: describes the methodology for determining the

impact of higher efficiency standards on the national employment.

Environmental Assessment for Commercial Unitary Air Conditioners and Heat Pumps: 

describes the methodology for determining the reduction in air-borne emissions due to higher

efficiency standards.

Regulatory Impact Analysis for Commercial Unitary Air Conditioners and Heat Pumps: 

describes the methodology for analyzing the impact of non-regulatory alternatives to efficiency

standards.

Appendix A Commercial Technologies That Are Not Considered in the Engineering Analysis: 

accompanies Chapter 5, Engineering Analysis

Appendix B Technical Description of the Cost Estimation Methodology: accompanies

Chapter 5, Engineering Analysis

Appendix C Design Option Analysis - Supporting Documentation: accompanies Chapter 5,

Engineering Analysis

Appendix D PARM File Contents: accompanies Chapter 6, Building Energy Use and End-Use

Load Characterization

Appendix E Frequency of Occurrence of Buildings Type by Aspect Ratio Bin for Each of the

Six Principal Building Activities (PBAs): accompanies Chapter 6, Building

Energy Use and End-Use Load Characterization

Appendix F Aspect Ratio Calculations for Buildings with Courtyards: accompanies Chapter

6, Building Energy Use and End-Use Load Characterization

Appendix G Lights, Plug Load and Occupancy Schedules: accompanies Chapter 6, Building

Energy Use and End-Use Load Characterization

Appendix H Number of CBECS Buildings Assigned to Each TMY2 City: accompanies

Chapter 6, Building Energy Use and End-Use Load Characterization

Appendix I Typical Meteorological Year (TMY) Assignments: accompanies Chapter 6,

Building Energy Use and End-Use Load Characterization

Appendix J Sample BLAST Input File: accompanies Chapter 6, Building Energy Use and

End-Use Load Characterization
1-9

Appendix K Detailed Data for Equipment Price Markups: accompanies Chapter 7, Markups

for Equipment Price Determination

Appendix L Uncertainty and Variability: accompanies Chapter 8, Life-Cycle Cost and

Payback Period Analysis

Appendix M Sample Utilities: accompanies Chapter 8, Life-Cycle Cost and Payback Period

Analysis

Appendix N Historical and Modeled Data by Subdivision: accompanies Chapter 8, Life-Cycle

Cost and Payback Period Analysis

Appendix O Modeling Typical Meteorological Year (TMY) Prices: accompanies Chapter 8,

Life-Cycle Cost and Payback Period Analysis

Appendix P User Instructions for Life-Cycle Cost (LCC) and Payback Period (PBP)

Spreadsheets: accompanies Chapter 8, Life-Cycle Cost and Payback Period

Analysis

Appendix Q Life-Cycle Cost (LCC) and Payback Period (PBP) Results: accompanies Chapter

8, Life-Cycle Cost and Payback Period Analysis

Appendix R User Instructions for National Energy Savings (NES) and Net Present Value

(NPV) Spreadsheet: accompanies Chapter 10, National Impact Analysis

Appendix S National Equipment and Operating Costs: accompanies Chapter 10, National

Impact Analysis

Appendix T Base Case and Standards Case Efficiency Trends: accompanies Chapter 10, 

National Impact Analysis

Appendix U Alternative “Max Tech” Scenario and Its Impact on National Energy Savings and

Net Present Value: accompanies Chapter 10, National Impact Analysis