# UNITEL?A

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# r Co0114

I. Definition of Basic Model?

. a. DOE defined as productfamilies with the same efficiency. i. What constitutes a Product Family ii. What constitutes the same efficiency b. Relative to "Built-To-Order" models While our process may start with a "basic model" it is seldom that we fabricate more than afew units that are identical. Therefore, the definition of"basic model" has a large impact on the implications associated with testing.

c. Does the addition ofunit options impact on what is considered a basic madel



### II. Definition ofCommercial 'niche' product?

Page r 1 a. Subset ofthe main HVAC market b. Associated more with specific needs c. Niche defines productfeatures d. A highly specialized market e. Sales volume? (Number of units produced) f. Configuration? (Horizontal orVertical) g. Cooling Source? (Air- orWater-Cooled) h. Application? i. Power supply? j. Capacity? k. Standards The DOE indicated that they did not specify new standards for niche products due to the concern overviability for replacement applications. However, the definition as to what constitutes a "niche" product (page 7196) was so narrow and limiting that itfails to cover products impacted. From that point until this date there has not been any further clarification or definition for "niche" products, and in particularforthose in the commercial segment, that have helped the small manufacturers. Not only are efficiency standards impacted, but also the associated testing.

### III. AEDM Development

a. Availability ofresources to developAEDM Manysmall manufacturers may not have the talent orcapabilities 

### inhouse to create and maintain an AEDM. This means that an outside companywould have to be utilized forthe AEDM creation and maintenance. Again this is an expenditure ofcapital that must be passed along in the lowvolume 

### unit pricing. b. Development ofan AEDM 

### is notjustat the rating 

### point An AEDM, as a mathematical model, 

### requires decisions on where and to what extent accuracy is 

### requiredforthe 

### multitude of

### calculations. Verification ofthese 

### decisions must be made by 

### testing ofmany units at various operating conditions, notjustatthe rating point. Factoring 

### in the accuracyoftestfacility instrumentation compounds the effective developmentofan AEDM. This process would, for most small manufacturers, require the services ofan independent third party test lab. This may involve from $5,000 to $12,000 pertest ofa basic model at only the rating point. Ifmore than one facility is used there would be concerns as to howeach facility would be rated 

### in comparison to anotherone forthe same product. This means that a small manufacturerwould have to spend an enormous amount of capital to develop an AEDM.



### IV. Testing

Page/2 a. Model Classes i. Small Commercial Package Air Conditioning and Heating Equipment ii. Large 

### Commercial Package 

### AirConditioning and Heating Equipment 

### iii. Very Large Commercial Package Air Conditioning and Heating Equipment iv. Packaged Terminal Air Conditioners (PTAC) and Heat Pumps (PTHP) b. AEDMs do not require prior DOE approval

c. Intent: Establish modeling techniques to ensure products are correctly rated without unnecessarily 

### burdening regulated entities d. Critically importantto differentiate between residential and commercial products

e. Market share for small business, versus the amountoftesting, places a disproportionate burden on the small manufacturer.

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## 13 f. Substantiation requires several basic models to validate the accuracy of an AEDM i. Manufacturer must retain anytest records used to support use of the AEDM ii. Manufacturer should be able to demonstrate that an AEDM can be applied across a variety ofproduct classes iii. At least one basic model from each DOE product class is to be testedUnlike residential units that have a relatively low cost, niche value-added units have a cost that may run into 5 figures. It is our strong beliefthat no small manufacturer ofniche products can afford to provide the quantityofunits required. It must be kept in mind that the models used for testing cannot be sold so there is no way to directly re-coup the capital for the test units. There is an impact on our abilityto produce the test units while maintaining production for sales to support and sustain the small manufacturer. Dependent upon howa basic model gets defined and what statistical sample is required, it is very easyto realize that the quantity oftest units could exceed 20% to 30% ofour capabilityfor production ofcommercial units. The costfor the creation oftest units and the costs for testing

.would have to be factored into our unit pricing. Since these costs are spread out over a lowvolume of units, unlike residential or high volume, mass produced units, our pricing will have to be increased substantially. We have already been experiencing market pressures on pricing. Again, as a small manufacturer ofniche products the financial impact is much greaterthan the larger companies. In fact, it may so onerous that small companies would have to abandon the business.

g. AEDM versus Testing i. Test Mean must be within 3% ofAEDM Mean The DOE proposal to have the Test Mean and the AEDM Mean fall within 3% may not be realistic. Motors are only required to have an individual tolerance often (10%) percent between the AEDM and tested values. Since motors constitute the majority ofpower consumed in a unitthis does not support a closertolerance for the air conditioners and the AEDM.Page/4 

### Variations in manufacturing, unit components, test lab 

### instrumentation, test set up and testing procedures and from one lab to another may not hold the requested mean values to within tolerance. As a result more units would have to be tested in orderto substantiate an AEDM. Fora small manufacturerof

### niche products this gets very expensive. All manufacturers 

### will have several component vendors approved for each of

### theirbasic models. This allows them to look at performance, cost and 

### reliabilitywhen 

### making the purchases. However, 

### it must be noted that all the components 

### will not operate at the same 

### specific level. The power consumed by a motorfrom vendor "A" may not match what 

### is consumed by vendor "8". In some systems this range ofperformance where there are a 

### multitude ofmotors can mean the 

### difference between passing and 

### failing the specific 

### efficiencylevels. Howwill results be addressed ifall the Test data is in the 3 to 5% level? A 3% average cannot be obtained. Howare the results to be handled 

### ifthe AEDM 

### is always conservative? 

### ii. Test 

### unitquantity 

### Figure C.1 has been described as the minimum number of tests (5) needed to substantiate the AEDM. This is for when there are not a SUbstantial numberofproduct classes. What defines a substantial numberofproduct classes? The number ofunits to be tested was given as six (6) for commercial HVAC. DOE has proposed at leastfive (5) basic models be tested, 

### with a minimum ofone 

### unittested ofeach basic model. This could be hundreds of 

### units for built-to-order products. In the proposal DOE has indicated that physical size and capacity can have a 

### significanteffect on 

### efficiency. Any 

### physical or 

### mechanicalchange to one 

### unitversus anotherwill 

### impactthe 

### efficiency. The proposal to test the smallest and the largest ora 

### unit25% smallerthan the largest creates a burden for small manufacturers. The DOE furtherwent on to 

### indicate that the product class with the 

### highestsales volume would be most 

### representative since they are less likelyto be highly customized or built-to-order and therefore would be less costly to test. To what extent does the term "highly" apply? For high volume manufacturer, such as 

### residential units, this may be true; however, as a small manufacturerof niche products that are almost all customized ortailored and

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## 15 are built-to-order this concept is not avalid or applicable position. One proposed requirementfor validation ofan AEDM is that a manufacturer is to use their highest selling basic models. The highest selling models for a small manufacturer can easily change from yearto year. This meansthat the amount of testing and validation would be increased relative to the large manufacturers that have a much more consistent product sales mix.

iii. Substantiation and Re-Substantiation United CoolAir is ofthe beliefthat an AEDM does not need to be substantiated or re-substantiated, in particular for built-toorder orcustom units. Ifan AEDM has been developed correctlythen no matter what the unit efficiency level is the results should still be valid. An AEDM is nottime sensitive from one year to another. Ifan AEDM has been designed to be applied across different product classes then it should stand up for any products at any time. No pre-approval for an AEDM is required, but the DOE wants assurance that the AEDM is accurate across a range of products and product types. At one point itwas stated that "However, DOE does notwant to unduly burden manufacturers, adversely impactthe ability ofsmall business to compete, orotherwise impede the development and marketing ofnewand innovative compliant products for consumers to purchase." Unfortunatelythe whole context oftesting and substantiation ofan AEDM for a small manufacturer, especially ofniche value added products, doesjustthe opposite. Atthe end ofSection "D-3" it was stated that "When a model used for SUbstantiation ofthe AEDM is discontinued or becomes obsolete, a manufacturerwill need to replace that model with a new model and re-rate or re-certify as necessary." Ifa models test data was sufficient at the time an AEDM is substantiated then the discontinuance ofthat model or obsolescence ofthat model should not be an impacton the validity ofthe AEDM. This statement appears to dictatewhat a manufacturer can or mustoffer.

h. DOE Validationi. Manufacturer must run tests on selected basic models on request Section "D -1" addressed the topic of how often an AEDM had to be validated, 

### ifat all. DOE has indicated that 

### itwants to reserve the right to request the documentation supporting the AEDM and to test a basic model at any point. In fairness to all manufacturers there should be a minimum time period between a requestfor documentation and a subsequent request supporting the AEDM from anyone manufacturer. i;, Test Results 1. Re-Substantiation Under

### section "D-2-a" 

### itwas indicated that "Ifa basic model is rated incorrectly, DOE proposes to 

### require manufacturers to re-substantiate 

### theirAEDM within 30 days ofbeing provided with test data by the Department." It takes a sufficiently long period oftime to develop and create an AEDM, let alone all the testing that must be accomplished. Having only 30 days to adjust the AEDM and re-substantiate an AEDM is unreasonable ifa unit takes up to 10 weeks to fabricate. 2. Non-Compliant In 

### section "D-2-b" the DOE may initiate an 

### investigation that a basic model may not comply with the applicable standard. "If following enforcementtesting, a model is determined to be non-compliant; all other models within that basic model are deemed non-compliant." In other sections up until now it appeared that a basic model was singularand that therefore there would be no other models within that basic model. Statistically 

### verified results would mean that one divergence does not mean that the entire process orAEDM is invalid. Underthe topic ofnon-compliance it was indicated that "Therefore, DOE is proposing to disallowthe use ofan AEDM following multiple instances ofnon-compliance and/or ifthere is evidence that the miss-rating was willfuL" A 

### definition or expectation of"multiple instances" should be stated or clarified for consistency in application.



### V. Impact on Small Business



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## 16 a. Which small business will be impacted? i. Diversity ofsmall business affected ii. Size ofsmall business relative to the HVAC industry iii. Quantity ofsmall business impactedPage

## 17 b. What economic datawas obtained? i. Source ofthe data ii. Howwas cost impact determined

c. What are the economic implications and impacts? i. What rationale was used ii. Is the cost data significant relative to small business d. Regulatory FlexibilityAct Section 

### 111- B. Review Underthe Regulatory FlexibilityAct indicates that "DOE reviewed the AEDM and ARM requirements being proposed underthe provisions ofthe Regulatory FlexibilityAct and the procedures and policies published on February 19, 2003. As discussed in more detail below, DOE found that because the provisions ofthis rule will not result in increased testing and/or reporting burden for manufacturers already eligible to use an AEDM and will extend AEDM use to a number ofmanufacturers, thus reducing their testing burden, manufacturerswill not experience increased financial burden as a result ofthis rule." As a small manufacturer of niche value added built-to-order products this proposed testing and the associated AEDM requirements will place a substantial burden on the company. They went on to further communicate that "Today's proposal, which represents voluntary methods for certifying compliance in lieu of conducting actual physical testing, would not increase the testing or reporting burden of manufacturers

... "These proposals will not only increase the testing and reporting, butwill impose otherfinancial and operational burdens on the small manufacturers.

. At the conclusion ofsection Bthey indicated "Forthe reasons enumerated above, DOE is certifying that the proposed rule, if promulgated, would not have a significant impact on a substantial numberofsmall entities." It is the belief of United CoolAirthat the proposed rules will have a significant impact on all small entities. United CoolAirwould request that a statement offactual basis be provided.

e. What portion ofthe intent ofthe regulations does small business have on the industry as a whole? f. What, ifany, alternatives were considered for the proposed rule to minimize the economic impact on small entities? g. Evolution of Requirements On the surface it appears that requirements for commercial HVAC equipmentwere developed or evolved from the earlier residentialPage

## 18 programs. For residential type products and producers ofhigh volume commercial products there is some degree ofsimilarity. However, fora 

### small manufacturerof "niche" or custom commercial units this does not necessarily 

### follow. Statistical sampling and test burdens on manufacturers place the 

### small manufacturers at a competitive disadvantage in the market place.

h. Testing Practices 

### In the Federal Register/ Vol. 64, No. 238/ Monday, December 13, 1999 Page 69607 itwas indicated that 'The Department believes that anysignificant economic impact 

### will fall onlyon those firms which do not now routinelytest their products. The Departmentfurther believes thattesting is a 

### widelyaccepted practice and that companies that do not test are rare and do not represent a substantial numberof

### small entities." 

### It is one thing to have a 

### beliefand anotherto be 

### able to support that 

### belief. Yes, testing for performance and efficiency is a 

### widelyaccepted practice in the HVAC industry. However, it is done by the 

### largermanufacturers and those companies that make high volumes for any particular model. 

### It is 

### feltthat most 

### small companies do not test due to the costs and limited resources associated with the testing as 

### well as the type ofproducts being produced. Therefore, "".companies that do not test are rare and do not represent a substantial number of

### smallentities." is not a valid conclusion or 

### belief. That 

### beliefor presumption seems to have been carried forward to this dayand continues to have a negative impacton 

### small business. i. Disproportionate Burden i. Large and High 

### Volume Producers On page 36387 ofthe Federal Register/ 

### Vol. 67, No. 100/ Thursday, May23, 2002 the DOE had broached the subject of financial burdens associated with the newstandards. Atthis point itwas noted that 

### larger"volume" manufacturers 

### will benefit disproportionately versus the value-added systems (i.e. 

### smallermanufacturers). ii. Niche Product Manufacturers The Department and the Department ofJustice both indicated in the Federal Register/ Vol. 67, No.100/Thursday, May23, 2002, Pg. 36388 that 

### small manufacturers 

### would be disproportionately impacted by the efficiency standard. 

### In particularthose companies involved with space constrained type products. 

### It would onlyfollowthat the associated testing 

### would also constitute a hardship. The Department indicatedthat manufacturers ofniche products would have more ofa detrimental effect.

VI. Conclusions 1. The definition of "basic model" and in particular niche products are critical to small manufacturers. 2. There is a substantial increase in the administration and processing of data for a small company. 3. Small businesses do not have the resources available to support all the requirementsforthe creation and substantiation ofan AEDM. 4. Small entities have the highest cost to complywith the regulations. This cost may eclipse their ability to remain a viable company. 5. The amount oftesting required is somewhat unclear. However, it is clear that the amount oftesting anticipated will incur a substantial financial burden on small manufacturers. 6. The number oftest units required for United CoolAir could be more than 30% ofour annual production. In addition to the financial impact this may not provide us with enough capacity to fill orders for sales. 7. Pricing for our products will have to growsubstantially in orderto try and re-coup the expenses incurred for testing and substantiation ofan AEDM. The higher pricing will render our units not acceptable in the market place.

491 E. Princess Street· York, PA 17403 • 717-843-4311 • Fax: 717-854-4462 • www.unitedcooJair.com



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