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CHAPTER 2. ANALYTICAL FRAMEWORK

TABLE OF CONTENTS

2.1 INTRODUCTION ........................................................................................................... 2-1

2.2 BACKGROUND ............................................................................................................. 2-2

2.2.1 METRIC .......................................................................................................................... 2-3

2.3 MARKET AND TECHNOLOGY ASSESSMENT........................................................ 2-3

2.3.1 Market Assessment .............................................................................................. 2-4

2.3.1.1 Equipment Classes............................................................................................... 2-4

2.3.2 Technology Assessment....................................................................................... 2-9

2.3.2.1 Technology Options............................................................................................. 2-9

2.4 SCREENING ANALYSIS ............................................................................................ 2-12

2.5 ENGINEERING ANALYSIS........................................................................................ 2-13

2.5.1 Baseline Equipment and Representative Sizes.................................................. 2-14

2.5.2 Refrigerants........................................................................................................ 2-14

2.5.3 Manufacturer Production Costs......................................................................... 2-18

2.5.4 Max Tech ........................................................................................................... 2-18

2.6 MARKUPS ANALYSIS ............................................................................................... 2-19

2.7 ENERGY USE ANALYSIS.......................................................................................... 2-20

2.8 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES .................................. 2-21

2.8.1 Retail Prices....................................................................................................... 2-22

2.8.2 Energy Prices..................................................................................................... 2-22

2.8.3 Maintenance, Repair, and Installation Costs...................................................... 2-22

2.8.4 Product Lifetime ................................................................................................ 2-23

2.8.5 Discount Rates................................................................................................... 2-23

2.8.6 Equipment Efficiency in the Base Case............................................................. 2-24

2.8.7 Split Incentives................................................................................................... 2-24

2.9 SHIPMENTS ANALYSIS ............................................................................................ 2-25

2.10 NATIONAL IMPACT ANALYSIS.............................................................................. 2-26

2.10.1 National Energy Savings Analysis..................................................................... 2-27

2.10.2 Net Present Value Analysis ............................................................................... 2-27

2.11 CUSTOMER SUB-GROUP ANALYSIS ..................................................................... 2-28

2.12 PRELIMINARY MANUFACTURER IMPACT ANALYSIS ..................................... 2-29

2.12.1 Manufacturer and Trade Group Comments....................................................... 2-29
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2.13 EMISSIONS ANALYSIS.............................................................................................. 2-31

2.14 MONETIZATION OF EMISSIONS REDUCTION BENEFITS ................................. 2-34

2.15 EMPLOYMENT IMPACT ANALYSIS....................................................................... 2-35

2.16 UTILITY IMPACT ANALYSIS................................................................................... 2-35

2.17 REGULATORY IMPACT ANALYSIS ....................................................................... 2-36
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CHAPTER 2.ANALYTICAL FRAMEWORK

2.1 INTRODUCTION

The Energy Policy and Conservation Act (EPCA), Pub. L. 94-163, 42 U.S.C. 6291 et 

seq., requires the U.S. Department of Energy (DOE) to establish energy conservation standards 

that achieve the maximum improvement in energy efficiency that is technologically feasible and 

economically justified. (42 U.S.C. 6295(o)(2)(A)) This chapter describes the general analytical 

framework that DOE uses in developing such standards, and in particular, the energy 

conservation standards that it is examining for refrigerated beverage vending machines. Included 

in this chapter are descriptions of the methodology, the analytical tools, and the relationships 

among the various analyses that are part of this rulemaking.

The analyses performed as part of the preliminary analysis stage and reported in this 

preliminary technical support document (TSD) are listed below.

• A market and technology assessment to characterize the markets for refrigerated 

beverage vending machines and the applicable existing technology options, including 

prototype designs.

• A screening analysis to review each technology option to decide whether it is 

technologically feasible; is practical to manufacture, install, and service; would adversely 

affect equipment utility or availability; or would have adverse effects on health and 

safety.

• An engineering analysis to develop cost-efficiency relationships, which indicate the 

manufacturer’s cost of achieving increased efficiency.

• A markups analysis to develop distribution channel markups that relate the manufacturer 

production cost (MPC) to the cost to the consumer.

• An analysis of the annual energy use of the considered products.

• Life-cycle cost (LCC) and payback period (PBP) analysis to calculate, at the vending

machine owner level, the savings in operating costs throughout the estimated average 

lifetime of the covered equipment, compared to any increase in purchase and installation 

cost.

• A shipments analysis to forecast shipments of refrigerated beverage vending machines, 

which are then used to calculate the national impacts of standards on energy, net present 

value (NPV), and future manufacturer cash flows.
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• A national impact analysis (NIA) to assess aggregate impacts at the national level of 

potential energy conservation standards for refrigerated beverage vending machines, as 

measured by the NPV of total consumer economic impacts and the national energy 

savings (NES).

• A preliminary manufacturer impact analysis (MIA) to assess the potential impacts of 

energy conservation standards on manufacturers’ capital conversion expenditures, 

marketing costs, shipments, and research and development costs.

In the subsequent Notice of Proposed Rulemaking (NOPR), DOE will present updated

tentative results of the above analyses, incorporating any revisions to the analyses based on 

comments and new information received. DOE will also present results of the following 

additional analyses in the NOPR:

• A LCC sub-group analysis conducted to evaluate variations in commercial business 

characteristics (e.g., energy prices, equipment use patterns, and installation and 

maintenance costs) that might cause a standard to affect particular customer subpopulations differently than the overall population. 

• An MIA to estimate the financial impact of standards on manufacturers and to calculate 

impacts on competition, employment, and manufacturing capacity.

• An emissions analysis to estimate the effects of considered standards on emissions of 

carbon dioxide (CO2), sulfur dioxide (SO2), nitrogen oxides (NOX), and mercury (Hg).

• Monetization of emissions reductions benefits estimated to occur from reduced emissions 

of carbon dioxide and nitrogen oxides as a result of the standards.

• A utility impact analysis to estimate selected effects of considered standards on the 

electric power sector.

• An employment impact analysis to assess the aggregate impacts of considered standards 

on national employment.

• A regulatory impact analysis to examine major alternatives to proposed amended energy 

conservation standards that potentially could achieve substantially the same regulatory 

goal at a lower cost.

2.2 BACKGROUND

DOE developed this analytical framework and documented its initial findings in the 

Rulemaking Framework for Refrigerated Bottled or Canned Beverage Vending Machines (the 

Framework Document). DOE announced the availability of the Framework Document in a 

Notice of Public Meeting and Availability of a Framework Document published in the Federal 
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Register on June 4, 2013. 77 FR 33262. DOE presented the analytical approach to interested 

parties during a public meeting on June 20, 2013. The Framework Document is available at the 

rulemaking website. 1

In response to the publication of the Framework Document and the associated public 

meeting, DOE received comments from interested parties regarding its analytical approach. In 

this chapter (chapter 2) of the preliminary TSD, DOE: (1) summarizes the key comments 

received from interested parties and describes DOE’s responses to those comments; (2) 

summarizes any significant changes made in its analysis approach since publishing the 

Framework Document; and (3) explains in further detail each of the issues, identified in the 

executive summary, for which DOE seeks public comment.

In a simultaneous rulemaking (hereafter referred to as the Test Procedure NOPR), DOE 

has published a NOPR including proposed clarifications and amendments to the test procedure

for refrigerated beverage vending machines. Comments pertaining to refrigerated beverage 

vending machine (BVM) test procedure received after publication of the framework document 

for this rulemaking were incorporated into and addressed in the test procedure NOPR. 

2.2.1 METRIC

Several manufacturers provided comment regarding DOE’s choice of metric for 

determining equipment performance. Royal and NAMA commented that energy use evaluation 

should be based on refrigerated volumetric capacity and vend capacity. (Royal, No. 11 at p. 9; 

NAMA, No. 8 at p. 11) AMS commented that the AHAM HRF-1 volume calculation currently 

included in the DOE test procedure was difficult to evaluate for its type of equipment (AMS, No. 

7 at p. 79). DOE agrees with Royal and NAMA that refrigerated volume is an appropriate metric 

because it allows for equitable comparison of machines based on the amount of space 

refrigerated, which is a proxy for the amount of product which can be stored. DOE, based on 

extensive stakeholder input and feedback, determined for this reason in its 2009 final rule that 

refrigerated volume was a more appropriate metric than vendible capacity. Therefore, absent any 

specific additional comment on this issue, DOE plans to retain the metric of refrigerated volume 

in this rulemaking. In response to the comment from AMS regarding difficulty in conducting the 

AHAM volume calculation, DOE has contacted numerous stakeholders who conduct the DOE 

BVM test procedure, including third party test labs and manufacturers, and has not received 

significant adverse comment to using the AHAM method of test for measuring volume. DOE 

plans to continue to use AHAM HRF-1 as the method for measuring the refrigerated volume of 

vending machines. 

2.3 MARKET AND TECHNOLOGY ASSESSMENT

The market and technology assessment characterizes the relevant equipment markets and 

existing technology options, including prototype designs.
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2.3.1 Market Assessment

In the course of an energy conservation standards rulemaking, DOE develops information that 

provides an overall picture of the market for the products considered, including the nature of the 

products, the industry structure, and market characteristics for the products. This activity consists 

of both quantitative and qualitative efforts based primarily on publicly available information. 

For this preliminary analysis, DOE reviewed relevant literature and interviewed 

manufacturers to develop an overall picture of the BVM market in the United States. Industry 

publications, trade journals, government agencies, and trade organizations provided the bulk of 

the information, including (1) manufacturers and their market shares; (2) shipments by 

equipment type; (3) detailed equipment information; and (4) industry trends; and (5) existing 

regulatory and non-regulatory equipment efficiency improvement initiatives. The analysis 

developed as part of the market and technology assessment is described in chapter 3 of the 

preliminary TSD.

2.3.1.1 Equipment Classes

In the Framework Document, DOE discussed its existing classification (from the 2009 

final rule) of beverage vending machines into Class A, Class B, and Combination machines, and 

requested comments from the public on this classification.

Class A and Class B Machines

 Royal agreed with the equipment class descriptions the Framework Document, noting 

that all of its transparent-front machines were fully cooled, and all of its solid-front machines 

were zone cooled. (Royal, No. 11 at p. 5) Royal and NAMA both stated that this was generally 

accepted as the market standard. (Royal, No. 11 at p. 5; NAMA, No. 8 at p. 10) Conversely, 

AMS commented that it sells transparent-front machines which are not fully cooled and that 

these are outsold by fully-cooled machines approximately two-to-one. (AMS, No. 17 at p. 4)

DOE agrees with Royal and NAMA that full cooling of transparent-font machines and 

zone-cooling of opaque-front machines appears to be the industry standard, and DOE has not 

identified any exceptions to this categorization on the market today. With respect to the comment 

from AMS regarding transparent-front machines which are not fully cooled, based on a review of 

manufacturer literature DOE believes that AMS was in fact referring to what DOE has 

categorized as combination vending machines, which contain two separate merchandising 

volumes, one of which is actively refrigerated and the other of which is not. Therefore DOE does 

not believe that the comment by AMS raises any issue with its existing equipment categorization 

scheme. 

Expressing the need for more clarity in the definition of Class B equipment, Wittern 

stated that its transparent-front machines could be configured to be either fully cooled, or 
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partially cooled, depending on the customer’s requirements. Additionally, Wittern noted that it 

would not achieve any energy savings by fully cooling a zone-cooled machine, and that it would 

be cost prohibitive to zone-cool only the next-to-vend products of a fully cooled machine 

(Wittern, No. 16 at p. 2). The CA IOUs agreed with Wittern, suggesting that Class B equipment 

be better defined. The CA IOU further requested that if the phrase “zone-cooled” is used in the 

definition, then this phrase also be explicitly defined (CA IOUs, No. 19 at p. 2).

In response to the comment from Wittern, DOE believes that there may be confusion 

regarding the use of the term “fully cooled” and that Wittern is in fact referring to machines 

which can be configured as combination machines. This is often attained through installation of 

an insulated horizontal divider to separate the refrigerated and non-refrigerated volumes. The 

statement by Wittern that it would be cost-prohibitive to zone-cool a fully cooled machine 

reaffirms DOE’s understanding of this comment. In reviewing the comments from Wittern, the 

CA IOUs, and other parties, DOE included proposed language to address these issues in its BVM 

test procedure NOPR by providing a definition of ”fully cooled”. For more information on this 

test procedure rulemaking, please visit 

http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/24. DOE 

welcomes comment regarding the proposed definitional clarifications. 

Moreover, CA IOUs commented that because zone cooling reduces the refrigeration 

power needed and thus lessens the energy consumption of the unit, and opaque-front machines 

do not have increased refrigeration loads from a transparent front, it would be intuitive to have 

more stringent energy consumption requirements for Class B than Class A, the reverse of the 

current situation. The CA IOUs stated that DOE should closely examine what accounts for 

differences in the overall energy consumption of these equipment types in order to better 

characterize the energy use of these equipment classes and set appropriate standard levels (CA 

IOUs, No. 19 at p. 2). AMS agreed, stating that glass front machines have different utility than 

the stack-style, zone-cooled, opaque-front machines that form the most common public 

perception of beverage vending machines. AMS added that despite having fewer energy saving 

options such as insulation in the door and zone-cooling, glass front beverage vending machines 

have a more stringent standard according to the 2009 final rule (AMS, No. 17 at p. 14).

DOE realizes that the standard levels set in the 2009 final rule exhibit the relation stated 

by the CA IOUs and AMS, with Class A machines being allowed a smaller amount of energy use 

for the same amount of refrigerated volume than Class B machines. However, DOE cautions 

against drawing conclusions from such a direct comparison of absolute standard levels. The 2009 

standard levels were set independently through analyses of performance, cost, and energy 

savings on a class-by-class basis utilizing a design option engineering approach. This approach 

applied efficiency-improving technologies one-by-one to build cost and performance curves 

from baseline to max-tech levels for each class examined. Impacts of each design option were 

quantified specific to each equipment class, and standard levels were set independently for each 

class based on economic and energy analyses. Therefore, the same design options may have 

proven to have different performance and economic impacts across classes, and different 
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combinations of design options thus proved justified for inclusion in the standard levels for the 

various classes in the 2009 final rule. DOE is revisiting this analysis in its current rulemaking, 

examining each product class in isolation and utilizing new cost and performance information to 

ensure that proposed standards for each class examined are economically justified and 

technologically feasible. 

Machines Vending Perishable Goods

Stakeholders also responded to DOE’s request for comments regarding machines vending 

perishable goods. While Royal and NAMA commented that they saw no need to define any 

additional equipment classes since the market for equipment sold to vend perishable items was 

an insignificant contributor to total BVM energy use, AMS expressed support for an equipment 

category more suited to multi-purpose machines which dispensed beverages as well as other 

perishable products. (Royal, No. 11 at p. 6; NAMA, No. 8 at p. 7; AMS, No. 17 at p. 5) NAMA 

noted that machines configured to sell either perishable or non-perishable items ship with special 

software controls governing the performance of the machine when vending perishable items, 

whose operations can be changed on site by the operator (NAMA, No. 8 at p. 7). Wittern, Crane 

and AMS agreed with NAMA, noting that their fully-cooled units are used to sell perishable and 

non-perishable items, and that these machines are all shipped with a standard controller and 

software package which can be configured to accommodate perishable items as certified by a 

NAMA/FDA Standard. (AMS, No. 17 at p. 6; AMS, No. 7 at p. 42; Wittern, No. 16 at p. 2; 

Crane, No. 7 at p. 43) AMS also stated that while it favors the definition of additional classes, it 

does not believe that the current rulemaking’s schedule allows enough time for DOE to 

sufficiently define and analyze additional classes. Additionally, AMS also requested DOE to 

explicitly exempt chilled snack machines (with the design intent of preventing chocolate from 

melting) from the scope of this rule (AMS, No. 17 at p. 6).

DOE believes that the comments in response to this issue present a unified industry 

position that machines capable of vending perishable goods are generally not materially different 

from other refrigerated beverage vending machines, and that the necessary levels of temperature 

maintenance to preserve perishables are achieved through the application of control settings 

rather than through more involved design changes. Therefore, in the interest of reducing 

analytical complexity and compliance burden, DOE is not considering separate equipment 

classes at this time for equipment vending perishable products. DOE does not see a need to 

expand its equipment classes to cover multi-purpose machines capable of vending both 

beverages and other perishable goods due to the fact that these designs can be tested using the 

existing method of test and do not have significantly different energy consumption profiles from 

other refrigerated beverage vending machines when tested using that methodology. With respect 

to the final comment from AMS, machines which do not meet the definition of a refrigerated 

beverage vending machine would not fall into any of the covered classes, and thus would not 

have applicable standards. 
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AMS also commented that in order to have perishables maintained at viable temperature 

above 32°F and below 41°F, the next –to-vend product temperatures in its machines are typically 

set above 36°F, and that it is forced to install special control software in units which will be used 

for testing as per ASHRAE 32.1, and therefore, AMS machines as shipped would consume less 

energy than the test would indicate (AMS, No. 17 at p. 5).

While DOE appreciates the input from AMS regarding variability in the temperature 

control of machines designed to accommodate perishable products, testing of covered equipment

for the purposes of determining compliance with DOE energy conservation standards requires 

the use of the DOE test procedure,, unless DOE has issued a test procedure waiver relating to the 

appropriate test procedure issue. This procedure includes a rating temperature requirement of a 

36°F next-to-vend temperature for refrigerated beverage vending machines. Therefore, 

regardless of the temperature set points as shipped or as used in some field applications, DOE 

will test covered equipment at the 36°F rating temperature. In its recent test procedure NOPR, 

DOE also proposed to establish provisions for testing of equipment that cannot attain a 36°F 

next-to-vend temperature at the lowest application product temperature. Should those provisions 

be included in a final rule, they would be potentially applicable to the types of equipment 

mentioned in the comment from AMS. 

Combination Vending Machines

In the Framework Document, DOE requested information and comments from 

stakeholders on the design, market prevalence, and energy performance of combination vending 

machines. The Joint Comment a encouraged DOE to gather data on sales and energy use for 

combination vending machines in order to help determine the potential for energy savings from 

them (Joint Comment, No. 13 at p. 3). Regarding the definition of combination vending 

machines, AMS commented that it manufactures machines which could potentially be 

considered either zone-cooled or combination machines, because even though cold air is blocked 

in the cold air supply plenum, there is some comingling of air in the product delivery path of the

machine, since complete separation of the zones would be cost prohibitive (AMS, No. 17 at p. 

8). Further, AMS noted that many transparent-front machines currently on the market were 

combination machines (AMS, No. 7 at p. 41). Wittern commented that these could be a part of 

Class A, if they were tested in the worst case condition – full cooling the refrigerated 

compartment – since any other partial cooling configuration would only consume less energy 

than this setup (Wittern, No. 16 at p. 2). Royal noted that it did not manufacture combination 

machines, and viewed these as a somewhat unique product (Royal, No. 7 at p. 33). NAMA 

agreed with Royal, noting that there is a segment of its members who did not manufacture or sell 

combination vending machines (NAMA, No. 8 at p. 6).

 a Joint Comment refers to a written comment submitted by the Appliance Standards Awareness Project, the 

Alliance to Save Energy, the American Council for an Energy-Efficient Economy, Natural Resources Defense 

Council, Northeast Energy Efficiency Partnerships, Northwest Energy Efficiency Alliance, and the Northwest Power 

and Conservation Council in Docket No. EERE-2013-BT-STD-0022.
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DOE appreciates the input from stakeholders regarding combination vending machines. 

In agreement with the Joint Comment, DOE has gathered data on the design, construction, and 

sales volume of combination machines based on available sources, and has used that information 

as the basis for its analysis of combination classes at this stage of the rulemaking. In response to 

the comments from AMS and Wittern, DOE believes that there may be confusion in the industry 

regarding combination machine classification. While DOE realizes that slight leakage of cold air 

from a refrigerated volume into a non-refrigerated volume, as described by AMS, may occur due 

to design inefficiencies, DOE does not believe that such a phenomenon would render a machine 

classified as fully cooledb

, as the design intent is not to chill the products in the non-refrigerated 

space to a certain refrigerated vending temperature. Regarding the comment from Wittern about 

the ability to test combination machines as fully cooled, DOE believes that Wittern is referring to 

a style of machine in which the refrigerated and non-refrigerated volumes are separated by way 

of a physical divider which could possibly be removed to allow the machine to be fully cooled. 

DOE invites further comment regarding the prevalence of such designs within the combination 

vending machine market. Further, DOE understands the comments from Royal and NAMA 

about the unique nature of combination machines, and correspondingly will continue to gather 

available data from all applicable sources in order to continue to improve its analysis of this 

equipment class. 

Several stakeholders also provided comments regarding the applicability of the DOE test 

procedure to combination vending machines. Royal and NAMA expressed concerns that the 

ASHRAE 32.1-2010 method of test might not be appropriate for testing combination vending 

machines. (Royal, No. 11 at p. 8; NAMA, No. 8 at p. 9) While AMS agreed with Royal and 

NAMA that ASHRAE 32.1 was not explicitly designed for combined equipment, they opined 

that ASHRAE 32.1 might be used with standard test packages loaded in the entire machine, but 

with only those in the cooled zone used to establish the average next-to-vend temperatures, and 

that the baseline maximum daily energy consumption (MDEC) could be established using the 

volume of the cooled zone only (AMS, No. 17 at p. 8). NAMA recommended that DOE look to 

other existing rulemakings by the CEC and NRCan which currently had standards and test 

procedures covering combined equipment (NAMA, No. 8 at p. 10).

DOE agrees with AMS that the testing of combination machines can be accomplished 

through loading the refrigerated volume with standard test packages and using the temperatures 

of next-to-vend products in that volume for the purposes of ensuring that the unit is attaining the 

required rating temperature. DOE, through its research and product testing efforts, has not 

encountered any evidence to support the concerns of Royal and NAMA regarding the 

applicability of the ASHRAE 32.1 test method to combination machines featuring a refrigerated 

 b In its recent BVM test procedure NOPR, DOE proposed a definition for “fully cooled” as follows: “a 

condition in which the refrigeration system of a beverage vending machine cools product throughout the entire 

refrigerated volume of a machine instead of being directed at a fraction (or zone) of the refrigerated volume as 

measured by the average temperature of the standard test packages in the furthest from the next-to-vend positions 

being no more than 10 °F above the integrated average temperature of the standard test packages”.
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volume. Therefore, in its recent test procedure NOPR, DOE proposed to retain ASHRAE 32.1 as 

the method of test for all covered equipment classes, including combination machines. In 

response to the comment from AMS regarding the development of standard levels, in its 

preliminary engineering analysis DOE modeled the performance of combination machines based 

on the need to cool the designated refrigerated volume, and also included the energy 

consumption of additional components such as lighting serving the entire machine. DOE 

believes that this modeling accurately depicts the performance of a combination machine as 

would be quantified by the DOE test procedure and ASHRAE 32.1 method of test. For a full 

discussion of the engineering analysis methodology, please see chapter 5 of the preliminary 

TSD.

2.3.2 Technology Assessment 

As part of the technology assessment, DOE developed a list of technologies to consider 

for improving the efficiency of refrigerated beverage vending machines. DOE typically uses 

information about existing and past technology options and prototype designs to help determine 

which technologies manufacturers use to attain higher energy performance levels. In consultation 

with interested parties, DOE develops a list of technologies for consideration in its screening and 

engineering analyses. Initially, these technologies encompass all those that DOE believes are 

technologically feasible. Since many options for improving equipment efficiency are available in 

existing equipment, equipment literature and direct examination of BVM units currently on the 

market provided much of the information underlying this analysis. Chapter 3 of the TSD 

includes the detailed list of all technology options DOE identified for potential consideration in 

this rulemaking. 

2.3.2.1 Technology Options

In the framework document, DOE discussed several possible technology options which 

could be adapted to improve BVM energy performance and requested comment on the 

technology options listed. While AMS asserted that it knew of no issues with the technology 

options listed in the framework document and did not have any additions to suggest, the Joint 

Comment urged DOE to examine microchannel heat exchangers and other options used 

internationally in similar equipment, such as variable speed compressors and alternative 

refrigerants, as potential technology options (AMS, No. 17 at p. 7; Joint Comment, No. 13 at p. 

3). On the matter of variable speed compressors, however, AMS commented that while it had 

worked with variable speed compressors in the past, there was very little interest amongst 

compressor manufacturers due to the small size of the BVM end-use market (AMS, No. 7 at p. 

45). ACEEE and the CA IOUs agreed with the Joint Comment, urging DOE to consider 

technology options which where prevalent outside the US (ACEEE, No. 7 at p. 61; CA IOUs, 

No. 19 at p. 6). ACEEE also pointed out that reasonably priced electronically commutated motor 

(ECM) and permanent magnet fan motors were available for heat exchangers, and were already 

being used in residential refrigerators (ACEEE, No. 7 at p. 61). 
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During its preliminary market and technology analysis, DOE researched and considered a 

broad array of technologies with the potential to improve the efficiency of refrigerated beverage 

vending machines. Based on the results of that analysis, DOE then considered those technology 

options which met the necessary screening criteria as design options in its engineering analysis. 

In response to the comments from the Joint Comment and ACEEE, DOE did not explicitly 

consider variable speed compressors or microchannel heat exchangers as design options in the 

preliminary engineering analysis due to a lack of available information, but will continue to 

gather data regarding applicable designs and components on the market and may include 

modeling of these technologies in its engineering analysis at the NOPR stage. Any consideration 

of these or other technologies would take into account any issues with suppliers and component 

availability such as the market-size issues raised by AMS. DOE agrees with ACEEE regarding 

the availability of ECM and permanent magnet fan motors for this application and has 

considered those motors explicitly in the modeling performed for its engineering analysis. With 

respect to refrigerants, DOE simulated equipment performance utilizing those refrigerants 

currently permitted in refrigerated beverage vending applications by the US EPA SNAPc

program, specifically HFCs (namely R-134a, the most common HFC used in BVM applications) 

and CO2, at the time of this analysis. DOE is also remaining alert to SNAP’s actions and will 

adjust its analyses appropriately should SNAP take any final action during the time frame of this 

rulemaking. For a full discussion of comments pertaining to refrigerants, please see section 2.5.2. 

NAMA noted that it did not believe that any bundling or packaging of future 

technologies should be reviewed or incorporated when considering potential standard levels, 

since current construction already comprises many combinations or packages of technologies to 

meet the current standards (NAMA, No. 8 at p. 9). During the course of the engineering analysis, 

DOE considers each design option separately, developing cost-efficiency curves by ordering the 

design options from lowest to highest payback period. Therefore DOE does not believe that it 

will encounter any of the issues with bundling or packaging of technologies as discussed by 

NAMA.

Honeywell commented that its SolsticeTM Liquid Blowing Agent ((HFO)-1233zd) 

should be added to the list of technology options considered. Honeywell stated this technology is 

commercially available, nonflammable, and offers superior energy efficiency and environmental 

performance to other market options with performance attributes including 12-20% better 

lambda factor, 10-12% improvement in residential refrigerator energy efficiency, estimated 5-

10% energy efficiency improvement for refrigerated beverage vending machines, and GWP of 1 

(Honeywell, No. 9 at p. 2). Further, ebm-papst commented that technologies such as fan blades 

with nano-coatings and refrigerant pressure sensors were present on its RadiCal centrifugal fans, 

which could increase flow channels and thereby unit efficiency (ebm-papst, No. 10 at p. 34). 

However, Honeywell also urged DOE to take a technology-neutral approach when setting the 

 c The EPA Significant New Alternatives Policy (SNAP) program is the U.S. government regulatory program 

responsible for maintaining the list of alternatives to ozone depleting substances allowed for use within specific 

applications, including refrigeration, in the United States.
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standard, so as to allow the market to choose the most effective designs for meeting the standard 

(Honeywell, No. 9 at p. 3).

DOE appreciates the specific comments and data concerning technologies applicable to 

the performance analysis of refrigerated beverage vending machines. DOE will consider as 

design options all technologies which meet the screening criteria and which produce quantifiable 

results under the DOE test procedure. In its preliminary engineering analysis, DOE did consider 

improved insulating materials and increased fan efficiency as design options. Additionally, DOE 

agrees with the comment from Honeywell concerning the need for a technology-neutral standard 

level approach. DOE is reviewing performance standards based on daily energy consumption 

under the DOE test procedure, and does not plan to explore prescriptive standards mandating the 

use of specific features. Therefore, as suggested by Honeywell, manufacturers will be free to 

choose any pathway they wish in order to develop designs compliant with any new or amended 

standards arising from this rulemaking. 

In the framework document, DOE requested comments from the public on proprietary 

designs or technologies which might affect this rulemaking. NAMA, Royal, and AMS agreed 

that proprietary designs were unlikely to be a concern. (NAMA, No. 8 at p. 8; Royal, No. 7 at p. 

75; AMS No. 17 at p. 7) AMS asserted that max-tech could be achieved without proprietary 

designs, albeit at a very high life-cycle cost. (AMS, No. 7 at p. 62) DOE considers a design 

option to be technologically feasible if it is used by the relevant industry or if a working 

prototype has been developed. Technologies incorporated in commercially available equipment 

or in working prototypes will be considered technologically feasible. 10 CFR 430, subpart C, 

appendix A, section 4(a)(4)(i) Although DOE considers technologies that are proprietary, it will 

not consider efficiency levels that can only be reached through the use of proprietary 

technologies (i.e., a unique pathway), which could allow a single manufacturer to monopolize 

the market.

With regard to the use of low-power-modes as a technology option, NAMA commented 

that vending machines are already required to be equipped with certain types of low-power 

modes which are currently available on all machines covered under the current rulemaking.

(NAMA, No. 8 at p. 10) AMS too, stated that all its units ship with software that includes a 

flexible low-power mode, the timing of which can be based on sales history or manual 

programming. (AMS, No. 17 at p. 7)

With respect to the comments from NAMA and AMS regarding low power modes, DOE 

wishes to clarify that its existing standards are solely performance-based and do not require the 

presence of a low power mode. However, ENERGY STAR does include prescriptive 

requirements on low power modes. In this rulemaking, DOE has considered both refrigeration 

and accessory (lighting) low power modes as design options in its engineering analysis, and 

DOE believes that the comments from NAMA and AMS regarding the prevalence of these 

features provide sound support of their inclusion in the analysis. 
2-12

Some manufacturers also commented on the prevalence and energy consumption of hotgas defrost and unit heating modes (used to prevent product from freezing in machines placed

outdoors). Whereas Royal commented that none of its vending machines for outdoor applications 

have heaters or hot gas defrost mode and that heaters that are installed are probably an aftermarket component or an optional accessory, AMS commented that it does sell some machines 

with a heating mode, but that being at high efficiency on the cooling side generally means 

equally at high efficiency on the heating side. AMS added that since most of these heating 

systems are based on electricity which is essentially 100 percent efficient at heating, DOE can 

ignore additional energy consumption from these features. (Royal, No. 7 at p. 92; AMS, No. 7 at 

p. 93)

DOE appreciates stakeholder comments regarding the presence of hot gas defrost and 

heating modes in refrigerated beverage vending machines. Based on the comments received, and 

additional research including reviews of manufacturer literatures and exploration of equipment

through teardowns, DOE did not model active defrost, including electric or hot gas defrost, in its 

preliminary engineering analysis. Instead, most machines on the market utilize off-cycle defrost, 

and this appears to be the industry standard technology. Additionally, as the DOE test procedure 

and the referenced ASHRAE 32.1-2004 method of test require testing at a constant 75°F ambient 

condition, heaters used to keep product from freezing in cold ambient conditions would never be 

activated during conduct of the test. Therefore, in the modeling conducted for the preliminary 

engineering analysis, DOE did not include any provision to account for the energy consumption 

of heaters.

2.4 SCREENING ANALYSIS

The purpose of the screening analysis is to evaluate the technologies identified in the 

technology assessment to determine which technologies to consider further and which 

technologies to screen out. DOE consulted with industry, technical experts, and other interested 

parties in developing a list of energy-saving technologies for the technology assessment. DOE 

then applied the screening criteria to determine which technologies were unsuitable for further 

consideration in this rulemaking. Chapter 4 of the TSD, the screening analysis, contains details 

about DOE’s screening criteria.

As presented in further detail below, the screening analysis examines whether various 

technologies: (1) are technologically feasible; (2) are practicable to manufacture, install, and 

service; (3) have an adverse impact on equipment utility or availability; and (4) have adverse 

impacts on health and safety. In the engineering analysis, DOE further considers the efficiencyenhancement technologies that it did not eliminate in the screening analysis.

1. Technological feasibility. DOE screens out technologies that are not incorporated in 

commercially available equipment or working prototypes. 
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2. Practicability to manufacture, install, and service. If DOE determines that mass 

production of a technology in commercial equipment and reliable installation and 

servicing of the technology could not be achieved on the scale necessary to serve the 

relevant market by the time of the compliance date of the standard, it will not consider 

that technology further.

3. Adverse impacts on product or equipment utility or availability. If DOE determines a 

technology has a significant adverse impact on the utility of the equipment for significant 

consumer subgroups or results in the unavailability of any covered equipment type with 

performance characteristics (including reliability), features, size, capacities, and volumes 

that are substantially the same as equipment generally available in the United States at the 

time, it will not consider that technology further.

4. Adverse impacts on health or safety. If DOE determines that a technology will have 

significant adverse impacts on health or safety, it will not consider that technology 

further.

2.5 ENGINEERING ANALYSIS

The engineering analysis (chapter 5 of the preliminary TSD) establishes the relationship 

between manufacturing production cost (MPC) and efficiency for refrigerated beverage vending 

machines. This relationship serves as the basis for cost-benefit calculations in terms of individual 

consumers, manufacturers, and the nation. Chapter 5 discusses the equipment classes analyzed, 

representative baseline units, incremental efficiency levels, methodology used to develop 

manufacturing production costs, cost-efficiency curves, and impact of efficiency improvements 

on the considered equipment. To determine the cost to consumers of refrigerated beverage 

vending machines at various efficiency levels, DOE estimated manufacturing costs, markups in 

the distribution chain, installation costs, and maintenance costs. Efficiency levels for equipment

included in this rulemaking were calculated according to the proposed DOE test procedure using 

an energy consumption model.

In the engineering analysis pertaining to refrigerated beverage vending machines, DOE 

evaluated a range of equipment efficiency levels and associated MPCs, which it converted to 

manufacturer selling prices (MSPs) using information regarding typical markups. The purpose of 

the analysis is to estimate the incremental increase to selling prices that would result from 

increasing efficiency levels above the baseline level in each equipment class. The engineering 

analysis considers technologies not eliminated in the screening analysis. The LCC analysis uses 

the cost-efficiency relationships developed in the engineering analysis. 

In the past, DOE has also noted that the maximum efficiency levels available in current 

equipment may not necessarily correspond to the max-tech levels. Maximum-availableefficiency models may not incorporate all possible design options for increasing efficiency and, 

therefore, may not represent the max-tech level. It is also possible that some of the design 
2-14

options that have met the screening criteria (i.e., passed the screening analysis) may not yet be 

commercially available and, therefore, would not be found in today’s available maximum 

efficiency equipment. 

2.5.1 Baseline Equipment and Representative Sizes

In the framework document, DOE stated a baseline configuration for each of the two 

classes of equipment with current standards (Class A and Class B), containing design options 

which aligned with units performing near the level of the existing standard. DOE requested 

comment on the choice of representative unit sizes in each of these classes. 

AMS stated that its refrigerated machines are built ranging from 20 to 27 cubic feet in 

two exterior sizes: 72"H x 36" D and either 34" or 39" W, and that all machines had the same 

design characteristics. Cabinet and door structures include blown-in foam insulation 

supplemented with polyisocyanurate foam board in smaller spaces. The glass is dual pane, 

tempered with an argon-fill. The perimeter is heated with resistance wire to prevent 

condensation. There is a reciprocating compressor and R134a gas with thermal expansion valve 

control. The fans are ECM design. Cabinet temperate is electronically controlled, and defrost is 

passive and is only used in the event that the cabinet set-point cannot be reached after one hour 

of continuous compressor operation. (AMS, No. 17 at p. 8) NAMA noted that manufacturers 

tend not to build multiple versions of the same machine that would be different from a baseline 

design. (NAMA, No. 8 at p. 11) With regard to the choice of representative sizes, NAMA, AMS, 

and Crane expressed agreement with DOE’s approach of using the same representative sizes that 

were used in the 2009 BVM Final Rule. (NAMA, No. 8 at p. 11; AMS, No. 17 at p. 10; Crane, 

No. 7 at p. 77)

DOE appreciates the quantitative input given by AMS regarding the size of their standard 

machines, as well as the details on specific features and design attributes that they use in baseline 

designs. DOE has corroborated that input with additional data gathered from supplemental 

sources and used it to ensure that the inputs into its engineering analysis reflect an accurate 

depiction of the design and features of today’s baseline equipment. Based on the information it 

has reviewed, DOE also agrees with NAMA that manufacturers tend to build units based on a 

limited number of chassis sizes, not creating significant numbers of variations across models. 

DOE further agrees with NAMA, AMS, and Crane regarding the appropriateness of the 2009 

representative sizes to this rulemaking, and has retained those representative sizes in the 

preliminary engineering analysis. For more information regarding the specifications DOE used in 

defining baseline designs and representative sizes, please see Chapter 5 of the preliminary TSD. 

2.5.2 Refrigerants

In its framework analysis, DOE stated its understanding that R134a was the most 

commonly used refrigerant for beverage vending machines of all classes and sizes. At the 

Framework public meeting, and through written comments, manufacturers and other 
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stakeholders noted that alternative refrigerants – specifically, natural refrigerants such as CO2

and propane – were not mentioned by DOE in the Framework Document. Royal and NAMA 

commented that DOE should consider technologies that have benefits in accordance with 

national policies but which may not necessarily result in decreased energy use, and 

recommended that DOE develop cost-benefit criteria that fairly compares the energy penalty 

against other benefits accrued. Royal included as an example the use of CO2 refrigerant reducing 

the emissions of refrigerants with ozone depleting potential and high global warming potential, 

paralleling EPA's stated goal of replacing refrigerants such as HFCs in the long term. Royal 

referred DOE to the presentation “Benefits of Addressing HFCs under the Montreal Protocol" by 

Drusilla Hufford et al. (USEPA, Stratospheric Protection Division) at the ASHRAE/NIST 

Refrigerants Conference, Oct. 29-30, 2012. (Royal, No. 11 at p. 9; NAMA, No. 8 at p. 11)

In this rulemaking, DOE is evaluating the performance and cost of refrigerant options 

relevant to refrigerated beverage vending machine applications. At this time, these options 

consist of HFCs and CO2, the only widely-utilized refrigerants approved by EPA SNAP (SNAP)

for use in refrigerated beverage vending machines. In July 2014, EPA issued two notices of 

proposed rulemakings stating the intent of SNAP to alter the list of allowable refrigerants for this 

application by adding and removing specified alternatives from the listing. d As DOE moves 

forward with this rulemaking, it will remain apprised of any ongoing SNAP actions and will 

adjust its analyses as necessary to follow any changes in the refrigerant regulation landscape. 

Specifically, DOE will continue to analyze the cost and performance of CO2 machines, which 

will be permitted in the marketplace going forward under both the existing and proposed SNAP 

regulatory structures. DOE will also remain aware of the action that SNAP may take with respect 

to HFCs and hydrocarbons. Should SNAP finalize its plan to consider HFC 134a as unacceptable 

and certain hydrocarbons as acceptable in BVM applications, DOE will update its analysis 

accordingly and consistent with available data on hydrocarbon refrigerant system performance

and cost. One potential approach may be for DOE to use its existing performance curves for 

HFC machines as the basis for evaluating the performance of hydrocarbon machines, consistent 

with DOE’s understanding from literature and academic studies that hydrocarbon refrigeration 

systems can generally achieve the level of performance seen in HFC systems. However, DOE 

would need specific additional data regarding the cost of components for hydrocarbon 

refrigeration systems, which are not currently in use in BVM applications in the United States. 

DOE may issue new or amended standards based on the results of its analysis, consistent with its 

statutory charge to promulgate standard levels which are both technologically feasible and 

economically justified, and which reflect a separate breakout of covered product based on the 

utility of different models and designs. 

 d Specifically, EPA proposed banning the use of certain HFC refrigerants in beverage vending machines and other 

refrigeration equipment starting January 1, 2016, and proposed approving the use of three hydrocarbon refrigerants: 

propane, isobutene and R441A (a blend of propane, n-butane, isobutane and ethane) (July 9, 2014; 79 FR 38811) 

(http://www.epa.gov/ozone/downloads/SAN_5750_SNAP_Status_Change_Rule_NPRM_signature_versionsigned_7-9-2014.pdf)
2-16

The Joint Comment, NAMA, Royal, and shecco commented that the EPA had recently 

approved the use of some hydrocarbon refrigerants and CO2 as acceptable substitutes to HFC’s 

under SNAP, and that this would increase the use of both R-744 and R-290 in the near future. 

(Joint Comment, No. 13 at p. 3; NAMA, No. 8 at p. 14; Royal, No. 11 at p. 11; shecco, No. 18 at 

p. 2) Royal and NAMA also referred DOE to the SNAP regulations for allowable refrigerants 

and technologies. (NAMA, No. 8 at p. 14; Royal, No. 11 at p. 11)

DOE agrees with the comments stating that SNAP has allowed the use of CO2 as a 

working fluid in refrigerated beverage vending machine applications, as CO2 is currently in the 

SNAP approved list of refrigerants for use in new vending equipment. However, DOE wishes to 

clarify that the SNAP approval issued for hydrocarbons, specifically propane, was applicable 

only to retail food refrigeration applications, and more specifically to only standalone 

refrigerators and freezers. Therefore, contrary to the suggestion of these commenters, 

hydrocarbons are not yet legally available for use in refrigerated beverage vending applications 

in the United States. 

With regard to the factors driving increased usage of natural refrigerants in the near 

future, shecco commented that since the SNAP approval of CO2, the Coca-Cola Company has 

instructed all its manufacturers to convert all their vending machines to CO2 by 2015, in keeping 

with the Consumer Goods Forum’s commitment to phase out HFCs by 2015. shecco also pointed 

out that roughly 950,000 HFC-free vending machines have already been successfully installed 

worldwide, including 8,000 for PepsiCo. (shecco, No. 18 at p. 2) NAMA suggested that DOE 

contact the primary consumers of the equipment (specifically beverage bottlers) to help compile 

information relating to future usage trends. (NAMA, No. 8 at p. 14)

DOE appreciates the specific inputs from shecco regarding the initiatives by some major 

purchasers of refrigerated beverage vending machines and the global market penetration of 

alternative refrigerant equipment. DOE considers information from a number of sources, 

including stakeholder comments and manufacturer interviews, in determining market size and 

shipment volume in its market & technology and shipments analyses. In response to the 

comment from NAMA, DOE agrees that input from bottlers regarding market trends would be 

extremely helpful, and invites comments or interviews with these parties in subsequent stages of 

the rulemaking. 

While some stakeholders felt that market demand would increase specifically for CO2-

based machines, certain manufactures pointed out that while those machines have lower-GWP 

refrigerant, CO2 refrigeration systems tend to be less energy-efficient than HFC systems of 

comparable capacity. Royal and NAMA commented that while natural refrigerants have direct 

environmental benefits over HFC refrigerants, transcritical CO2 is less energy efficient. Royal 

and NAMA thus recommended that DOE allow a 15%-20% higher MDEC for refrigerated 

beverage vending machines using CO2 as a working fluid versus the allowable level for 

machines using HFC refrigerants. (Royal, No. 11 at p. 11; NAMA, No. 8 at p. 14) AMS 

expressed agreement that the use of CO2 would negatively impact a unit’s energy performance, 
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and suggested that natural refrigerants could be treated as a separate design in DOE’s analysis.

(AMS, No. 17 at p. 7) However, shecco noted that data presented by the Coca-Cola Company at 

ATMOsphere Geneva 2012 showed improvements in the performance of CO2 units. shecco also 

drew attention to a study which showed that CO2 outperformed R134a and HFC1234yf at 

ambient temperatures below 32°C, and matches their performance up to 40°C. (shecco, No. 18 at 

p. 2) The Joint Comment also opined that natural refrigerants could prove to be more efficient, 

noting that well-designed commercial refrigerators and freezers may achieve 20%+ better 

efficiency with propane than with HFCs, and do so with lower refrigerant cost than the HFC 

machines. (Joint Comment, No. 13 at p. 3)

In response to the comments from stakeholders and the increasing prevalence of 

alternative refrigerant equipment within the refrigerated beverage vending machine market in the 

United States, DOE explicitly analyzed the performance of alternative refrigerant equipment in 

this preliminary analysis. Specifically, DOE conducted a separate investigation within its 

engineering analysis to develop cost-efficiency curves for Class A, Class B, and combination 

vending machines utilizing CO2 refrigerant, which has been approved for use in the United 

States in refrigerated beverage vending applications by EPA SNAP. For an explanation of the 

methodology used in modeling CO2 vending machines in the preliminary engineering analysis, 

please see chapter 5 of the preliminary TSD. DOE also used the outputs of the engineering 

analysis to inform downstream economic analyses including the life-cycle cost and national 

impact analyses. DOE will continue analysis of CO2 machines at subsequent stages of the 

rulemaking and may use the results of these analyses to inform any new or amended standards 

applicable to this equipment. 

With respect to the specific comments concerning hydrocarbon refrigerants, DOE 

understands that some literature indicates that these refrigerants may offer a potential opportunity 

for energy savings. These refrigerants are not approved for use in the United States in 

refrigerated beverage vending applications by the EPA SNAP program, and thus DOE did not 

conduct analysis of the performance potential of these refrigerants during the preliminary 

analysis. In July 2014, EPA SNAP issued two notices in which it proposed to add some 

hydrocarbons to the list of acceptable alternatives for this application, as well as to remove HFC 

134a from the allowable list of alternatives. DOE is monitoring the SNAP action closely and will 

ensure that its analysis aligns with any final status change rules issued by EPA. 

AMS requested that the consideration of hydrocarbon refrigerants be very closely 

scrutinized for safety reasons, because while these gases could be safely handled during the 

manufacturing process, these machines are transported, installed and serviced by persons that 

sometimes have little or no technical training. (AMS, No. 17 at p. 9) DOE agrees with AMS 

regarding industry safety concerns over hydrocarbon refrigerants. However, DOE understands 

that any equipment offered for sale in the United States will need to meet Underwriters 

Laboratories (UL) safety requirements in order to be compliant with codes. Additionally,

transport of refrigerants themselves may fall under DOT regulations and other safety standards. 

These requirements include stringent safety provisions for equipment utilizing hydrocarbon 
2-18

refrigerants. Therefore, DOE believes that, should hydrocarbon refrigerants become available for 

use in vending applications, models on the market will exhibit the necessary features in order to 

ensure safety and code compliance. 

2.5.3 Manufacturer Production Costs

In its engineering analysis, DOE estimates costs for manufacturers to produce equipment 

at the baseline and at increasingly higher levels of energy efficiency. In this preliminary analysis, 

DOE based this MPC model upon data from physical disassembly of units available on the 

market, corroborated with information from manufacturer literature, discussions with industry 

experts, and other sources. At the Framework Document public meeting and in written comment 

subsequent to the release of the framework document, DOE received comment pertaining to

MPC. 

With regard to the increase in MSP that may result from the need for manufacturers to 

incorporate additional efficiency measures, AMS commented that current in-compliance 

consumption is less than 50% that of machines produced before the 2009 final rule standard 

levels, and that achieving meaningful further improvement, such as another 10% reduction, will 

require a selling price increase at least as great as that to reach current levels. (AMS, No. 17 at p. 

10)

DOE appreciates the quantitative input provided by AMS regarding past efficiency and 

cost trends. In conducting this rulemaking, DOE is gathering currently-available equipment and 

component cost and performance data through a number of sources, including manufacturer 

literature, component supplier information, public comments, equipment testing, reverseengineering through teardowns, and manufacturer interviews. This information serves as the 

basis for the preliminary cost-efficiency curves presented in this analysis, and will be continually 

updated throughout the NOPR and final rule stages. DOE is confident that this methodology will 

ensure that its analyses capture with an appropriate degree of accuracy the costs inherent in 

advancing the efficiency of this equipment.

2.5.4 Max Tech

In the framework document, DOE requested comment regarding the maximum 

technologically feasible level of performance attainable with today’s technologies. AMS opined 

that max-tech efficiency levels for Class A equipment could likely only be improved through the 

use of hydrocarbon refrigerants and/or variable-speed compressors. (AMS, No. 17 at p. 7) Royal 

noted that there are only a few major customers in the global market for refrigerated beverage 

vending machines, and that they drive the max-tech level. (Royal, No. 7 at p. 62)

During its preliminary analysis, DOE reviewed a wide range of information sources from 

which to draw data on baseline and improved vending machine performance. DOE assembled 

this information into cost-efficiency curves extending from the baseline up through max tech for 
2-19

each equipment class and configuration examined. In doing so, DOE considered all available 

design options which met the criteria outlined in the screening analysis. Therefore DOE believes 

that it has captured the feasible levels of equipment performance to the extent possible at this 

stage in the analysis. In subsequent analysis stages, DOE may seek additional information and 

consider additional technologies as data becomes available; for example, DOE may explore 

variable-speed compressor technology as described by AMS. Regarding the comment by Royal 

on market share of major purchasers, DOE considers distribution channel pathways and costs in 

its markups, life-cycle cost, and national impact analyses. DOE develops the max-tech level 

independently of these factors in the engineering analysis based on available information 

regarding the highest technologically-feasible level of performance believed to be attainable at 

the time of the analysis.

2.6 MARKUPS ANALYSIS 

DOE uses manufacturer-to-customer markups to convert the MSP estimates from the 

engineering analysis into retail prices, which are then used in the LCC and PBP analysis and the 

manufacturer impact analysis. Retail prices are necessary for the baseline efficiency level and all 

other efficiency levels under consideration. 

Before it can develop markups, DOE must identify distribution channels (i.e., how the 

equipment is distributed from the manufacturer to the customer). Once it established proper

distribution channels for each of the equipment classes, DOE relied on economic data from the 

U.S. Census Bureau and input from the industry to determine to what extent equipment

prices are increased as they pass from the manufacturer to the customer (see chapter 6 of 

the TSD). 

DOE received comment from several parties regarding distribution channels. 

NAMA and Royal stated that refrigerated beverage vending machines are typically sold to 

beverage bottlers, distributors of vending equipment, and vending operators. Distributors 

may sell directly to vending operators as well as directly to non-commercial vending 

machine users. In most cases the distribution channel is BVM manufacturer to beverage 

bottler, or distributor to end-use customer (NAMA, No. 8 at p. 16; Royal, No. 11 at p. 13)

DOE identified three distribution channels, as described below: 

1. Equipment Manufacturer  Vending Machine Operator (e.g., bottler, beverage distributor) 

2. Equipment Manufacturer  Distributor  Vending Machine Operator 

3. Equipment Manufacturer  Distributor  Site Owner 

NAMA recommended that DOE consult with the BVM manufacturers directly to request 

relevant data used to calculate markups for distribution channels. (NAMA, No. 8 at p. 16) For 

the preliminary analysis DOE has used the markup calculated for the 2009 BVM final rule.. 
2-20

DOE requests data from stakeholders on markups, and DOE will interview manufacturers at the 

NOPR stage to obtain this and other information.

2.7 ENERGY USE ANALYSIS

The purpose of the energy use analysis is to establish the annual energy consumption of 

the equipment and assess the energy-savings potential of different equipment efficiencies. DOE 

uses the annual energy consumption and energy-savings potential in the LCC and PBP analysis 

to establish the consumer operating savings of considered efficiency levels.

The energy use analysis assessed the annual energy consumption of the refrigerated 

beverage vending machines that would be located inside and outside of industrial and 

commercial buildings. During the last round of standards (culminating in the 2009 Final Rule), 

DOE modified its energy consumption model developed during the engineering analysis to 

reflect the equipment’s thermal and compressor performance characteristics in order to simulate 

a realistic performance of the machine exposed to varying temperature and relative humidity 

conditions. For the current analysis, DOE simplified its analysis by developing linear regressions 

on the 2009 data to obtain scaling relationships between daily energy use and annual energy use 

for outdoor refrigerated beverage vending machines (class B only). DOE developed a state-level 

(plus District of Columbia) distribution of refrigerated beverage vending machines using

population weights to determine annual energy consumption of machines located outdoors. DOE 

also estimated the fraction of Class B machines located in outdoor settings, based on publicly 

available data from college campuses. The machines that are typically located inside industrial 

and commercial buildings were assumed to be in conditioned spaces, and hence are exposed to 

the same temperature and relative humidity conditions (75 degrees Fahrenheit and 45 percent 

relative humidity) throughout the year.

Most refrigerated beverage vending machines are located inside conditioned spaces and 

will add to the cooling load in the summer and reduce the heating load in the winter. DOE 

believes these impacts are fairly modest in most cases. DOE also believes that the added 

complexity of determining the overall impact on building space-conditioning loads is not worth 

the effort involved in accurately quantifying this effect, particularly given the variety of building 

types and BVM locations (e.g., outside, inside, or in vestibules) that would need to be taken into 

account.

NAMA and Royal commented that third parties sell timers and related devices that 

reduce energy consumption in low- or non-use periods by turning off the refrigerated beverage 

vending machine. (NAMA, No. 8 at p. 17; Royal, No. 11 at p. 13) DOE has included low-power 

lighting and refrigeration technology options that would affect energy use based on the TP 

NOPR currently in draft. Third-party accessories, however, are not included in the cost 

efficiency curves, and were not considered in the energy use analysis. DOE welcomes data from 

stakeholders on technologies that may reduce energy consumption through low-power modes. 
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2.8 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES

New or amended energy conservation standards usually decrease equipment operating 

expenses and increase the price. DOE analyzes the net effect of new or amended standards on 

consumers by evaluating the net life-cycle cost (LCC). To evaluate the net LCC, DOE uses the 

cost-efficiency relationship derived in the engineering analysis and the energy costs derived from 

the energy use analysis. Inputs to the LCC calculation include the installed cost of equipment to 

the consumer (consumer purchase price plus installation cost), operating expenses (energy 

expenses and maintenance and repair costs), the lifetime of the unit, and a discount rate.

Because the installed cost of equipment typically increases while operating costs 

typically decrease under new standards, there is a time in the life of equipment having higherthan-baseline efficiency when the net operating-cost benefit (in dollars) since the time of 

purchase is equal to the incremental first cost of purchasing the equipment. The time required for 

equipment to reach this cost-equivalence point is known as the payback period (PBP).

Recognizing that several inputs to determining consumer LCC and PBP are either 

variable or uncertain, DOE uses Monte Carlo simulation and probability distributions to model 

both the uncertainty and variability in inputs. DOE uses Microsoft Excel combined with Crystal 

Ball (a commercially available program) to develop LCC and PBP spreadsheet models that 

incorporate both Monte Carlo simulation and probability distributions. The LCC subgroup 

analysis includes an assessment of impacts on customer subgroups. 

For refrigerated beverage vending machines, it was necessary to determine several of the 

input values for the LCC estimation, including retail prices; electricity prices; discount rate; 

maintenance, service, and installation costs; and equipment lifetimes. 

DOE reviewed the Energy Information Administration’s (EIA) energy price data for 

refrigerated beverage vending machines to establish electricity prices. DOE relied on regional 

average energy price data for the commercial and industrial sectors (manufacturing facilities). 

DOE used projections of these energy prices for commercial and industrial customers to estimate 

future energy prices in the LCC and PBP analyses. DOE used EIA’s Annual Energy Outlook

2014 (AEO 2014) as the default source of projections for future energy prices. 

DOE used information from various literature sources (e.g., Automatic Merchandising 

and American Society of Heating, Refrigerating, and Air-Conditioning Engineers Refrigeration 

Handbook) and input from manufacturers and other interested parties to establish average

equipment lifetimes for use in the LCC and subsequent analyses.

NAMA commented that DOE should request feedback from the main users of the 

equipment (i.e. The Coca-Cola Company and PepsiCo) for assistance in compiling information 

related to many aspects of the LCC and other downstream analyses. (NAMA, No. 8 at p. 17) In 

publishing its preliminary LCC and NIA analyses, DOE hopes to solicit feedback from a wide 
2-22

range of stakeholders on ways it can improve its assumptions, data sources, and analysis 

methods.

2.8.1 Retail Prices

As described in section 2.6, DOE used markups to convert the MSPs estimated in the 

engineering analysis to consumer retail prices for the LCC and PBP analysis.

2.8.2 Energy Prices

DOE developed estimates of commercial and industrial electricity prices for each state 

and the District of Columbia. DOE derived average regional energy prices from data that are 

published annually based on EIA Form 861. 2 DOE then used EIA’s AEO 2014 price projections 

to estimate regional commercial and industrial electricity prices in future years. DOE assumed 

that 60 percent of installations were in commercial locations and 40 percent were in industrial 

locations.

2.8.3 Maintenance, Repair, and Installation Costs

DOE considered any expected changes to maintenance, repair, and installation costs for 

the refrigerated beverage vending machines covered in this rulemaking. Typically, small 

incremental changes in equipment efficiency incur little or no changes in repair and maintenance 

costs over baseline equipment. There is a greater probability that equipment with efficiencies that 

are significantly higher than the baseline will incur increased repair and maintenance costs, as 

such equipment is more likely to incorporate technologies that are not widely available. 

In earlier assessments, DOE assumed that more-efficient refrigerated beverage vending 

machines will not incur increased installation costs. DOE did not find evidence to the contrary, 

so it has maintained this assumption in the current analysis. 

The California IOUs and the Joint Comment both indicated that DOE should account for 

reduced maintenance costs associated with LED lighting in the analysis of LED lighting as a 

technology option. (CA IOUs, No. 19 at p. 6; Joint Comment, No. 13 at p. 3) DOE has accounted 

for this in the LCC analysis. LED lighting is expected to have longer lifetime than linear 

fluorescent lighting, which will reduce replacement frequency but is expected to have higher 

replacement cost due to higher bulb replacement cost. Overall, DOE estimated that the annual 

maintenance cost associated with replacement of LED lighting is lower than for fluorescent 

lighting. For efficiency levels corresponding to the use of LED lighting as a design option, DOE 

therefore used a lower total repair and maintenance cost than for efficiency levels that assumed 

the use of fluorescent lighting.

AMS estimated that among high efficiency units, less headroom is available for 

examination of poor sealing on the door and product retrieval bins. As a result, more frequent 
2-23

examination of seals, gaskets, hinged openings, etc. is necessary, adding as much as 10% to the 

routine and preventative maintenance costs. (AMS, No. 17 at p. 11) DOE welcomes more data 

to allow a quantitative estimate of increased maintenance costs on high efficiency units.

Royal commented that equipment with hydrocarbon refrigerant will have higher 

maintenance costs until the technology is more established. (Royal, No. 7 at p. 104) DOE 

welcomes additional data on the maintenance costs of hydrocarbon refrigerants, but at the 

present time it is not modeling any refrigerated beverage vending machines that use this 

technology.

Crane commented that there has been a recent move towards bringing equipment back to 

a shop for servicing rather than field servicing. (Crane, No. 7 at p. 108) DOE welcomes 

additional data that would help it quantify the difference in maintenance cost between field 

servicing and servicing at a repair center, as well as the relative frequency of which option is 

taken.

2.8.4 Product Lifetime

The 2009 Final Rule assumed that average BVM lifetime is 10 years. For this 

preliminary rulemaking, a longer lifetime of 13.4 years is assumed based on an assessment of 

current stock population and implied retirement rates. 

Royal commented that the lifetime of the equipment may be misrepresented if 

refurbished machines are not taken into account in the standards analysis. (Royal, No. 7 at p. 

100) Other data from Haeri et al. (2007) 3 indicate that many refrigerated beverage vending 

machines undergo repairs and/or refurbishment every 4 or 5 years several times in their lifetime. 

Assuming an average of two repairs/refurbishments every 4.5 years is consistent with an average 

lifetime of 13.4 years. DOE would welcome more quantitative information on refurbishment 

events and incidence rate of these events.

AMS noted that there is a possibility that some new technologies may result in a reduced 

lifetime, but that AMS knows of no way to accurately quantify the reduction. AMS also 

commented that their machines are designed for a 15 year serviceable life, and they do not plan 

to deviate from that when designing higher efficiency equipment. (AMS, No. 17 at p. 12) DOE 

would welcome any information that stakeholders have concerning the lifetime of new 

technologies and the effect they may have on overall equipment lifetime.

2.8.5 Discount Rates

DOE developed discount rates by estimating the average cost of capital to companies that 

purchase refrigerated beverage vending machines covered under this rulemaking. DOE 

commonly uses the cost of capital to estimate the present value of cash flows to be derived from 

a typical company project or investment. Most companies use both debt and equity capital to 
2-24

fund investments, so the cost of capital is the weighted-average cost to the firm of equity and 

debt financing. 

2.8.6 Equipment Efficiency in the Base Case

To estimate accurately the percentage of customers who would be affected by a standard 

at a particular efficiency level, DOE’s LCC and PBP analysis considered the projected 

distribution of equipment efficiencies that consumers purchase under the base case (the case 

without new energy efficiency standards). DOE relied on a combination of publicly-available

energy use data and energy consumption modeling to estimate the base-case efficiency 

distributions for each equipment class considered in the LCC and PBP analysis. Chapter 8 of this 

preliminary TSD provides more detail about DOE’s approach to developing base case efficiency 

distributions. 

Crane commented that the parent companies driving this industry only want to buy 

ENERGY STAR equipment because they do not want to be limited in potential machine 

locations, causing nearly the entire market to drive towards and meet ENERGY STAR levels. 

(Crane, No. 17 at p. 15) DOE acknowledges that the fraction of new equipment purchases are 

overwhelmingly ENERGY STAR compliant, and has modeled its projected base case shipments 

as 100% ENERGY STAR for major bottlers (comprising 90% of the BVM market) and 30% 

Energy Star for the remaining portion of the BVM market, resulting in an average ENERGY 

STAR market penetration of 93%.

NAMA and Royal commented that third parties are selling LED lighting kits to reduce 

the service costs of replacing fluorescent lamps and that these kits also reduce energy use.

(NAMA, No. 8 at p. 17; Royal, No. 11 at p. 13) DOE has assumed that the fraction of new Class 

A BVM shipments with LED lighting will increase rapidly from the current year to 100 percent 

by 2019, but that Class B shipments will constitute a smaller portion with LED lighting by 2019 

(about 19 percent) in the base case, and for Combination machines, DOE assumed zero

shipments with LED lighting in the base case. By 2019, DOE assumes that refurbishment does 

not result in changes in lighting technology and hence BVM efficiency remains constant over the 

life of the equipment.

2.8.7 Split Incentives

Crane and AMS commented that the purchasers of the equipment are often not the ones 

who pay the energy bill, so an increase in equipment prices may never be offset by a decrease in 

the purchaser’s energy use cost. (Crane, No. 7 at p. 102; AMS, No. 17 at p. 13) AMS stated that 

vending machine operators deserve attention, because their increasing equipment costs will 

almost never be offset by a decrease in energy use cost. (AMS, No. 17 at p. 13) 

DOE acknowledges that in most cases the purchasers of refrigerated beverage vending 

machines (a bottler or a vending services company) do not pay the energy costs for operation and 
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thus would not directly reap any energy cost savings from more-efficient equipment. However, 

DOE believes that BVM owners would seek to pass on higher equipment costs to the users who 

pay the energy costs. DOE understands that the BVM owner typically has a financial 

arrangement with the company or institution on whose premises the refrigerated beverage 

vending machine is located, in which the latter may pay a fee or receive a share of the revenue 

from the refrigerated beverage vending machine. Thus, DOE expects that BVM owners could 

modify the arrangement to effectively pass on higher equipment costs. Therefore, DOE's LCC 

and PBP analysis uses the perspective that the company or institution on whose premises the 

refrigerated beverage vending machine is located pays the higher equipment cost and receives 

the energy cost savings. DOE acknowledges that there is uncertainty about the pass-through of 

higher equipment costs, and thus it requests comments concerning the extent to which such passthrough occurs in the BVM market.

2.9 SHIPMENTS ANALYSIS

Shipments forecasts are required to calculate the national impacts of standards (NES and 

NPV) and to calculate the future cash flows of manufacturers. DOE developed shipments 

forecasts based on an analysis of key market drivers for the particular equipment. In DOE’s 

shipments model, shipments of equipment are driven by stock replacements assuming that the 

overall population of refrigerated beverage vending machines will slightly decrease over the next 

several decades. 

Crane commented that the vending industry has been a declining industry over the past 

several years with shipments stagnant and the number of units in the field declining. (Crane, No. 

7 at p. 113) Royal commented that the proportion of new equipment shipped annually that 

replaces existing equipment varies widely and can range from 25 percent to 75 percent or more, 

depending on customers' purchase programs. NAMA and Royal commented that DOE should 

consider the market trend that indicates a shrinking industry-wide sales volume for new 

refrigerated beverage vending machines a trend that is generally expected to continue. (NAMA, 

No. 8 at p. 21 and Royal, No. 11 at p. 16)

DOE appreciates this shipment trend information. DOE will use the information in its 

national impact analysis (NIA) to better understand industry purchasing power for components. 

DOE estimates that the current stock of units installed in the field is 2.6 million. While it is true 

that new geographical locations may add vending machines to the current stock, DOE believes 

that many other places are removing vending machines, and that total stock will continue to 

decline. DOE used publicly available reports from ENERGY STAR on the market penetration of 

ENERGY STAR qualified machines to estimate total sales from 2005 to 2012. These reports 

show that shipments of new equipment have remained stagnant at approximately 100,000, and 

DOE assumes this will continue into the future. DOE estimates that the total stock of refrigerated 

beverage vending machines will decline to 1.51 million by 2019, and then stabilize at around 

1.45 million through to 2048. DOE estimates that the proportion of new equipment shipped 
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annually that replaces existing equipment is 100 percent currently and will be for several years 

since the number of retiring units far exceeds units shipped. 

DOE welcomes any sources of quantitative information that can be used to provide a 

better estimate of vending machine stock and sales.

AMS predicted that as prices for its machines increase due to new or amended standards, 

shipments will go down because return-on-investment projections factor heavily in purchasing 

decisions. (AMS, No. 17 at p. 12) DOE’s national impact assessment model estimates changes in 

future shipments due to changes in equipment and operating costs using a price elasticity 

relationship. These estimates determine the lifetime costs of the equipment in the base case and 

each of the standards cases. The lifetime costs include purchase price, installation cost, operating 

costs, repair cost and maintenance costs. The lifetime costs are discounted to give the present 

value of these costs. 

AMS commented that as new standards drive costs of new equipment upward, 

refurbished and rebuilt equipment will become an increasingly larger portion of the market. 

(AMS, No. 17 at p. 13) DOE does not currently capture the possible shift toward more 

refurbished and rebuilt equipment as a result of higher equipment costs, but may consider doing 

so at the NOPR stage if it can identify appropriate parameters.

2.10 NATIONAL IMPACT ANALYSIS

The NIA assesses the national energy savings (NES) and the net present value (NPV)

from a national perspective of total consumer costs and savings expected to result from new or 

amended energy conservation standards at specific efficiency levels. DOE determined the NPV 

and NES for the standard levels considered for the beverage vending machine classes analyzed.

To make the analysis more accessible and transparent to all interested parties, DOE prepared a 

Microsoft Excel spreadsheet that uses typical values (as opposed to probability distributions) as 

inputs. To assess the effect of input uncertainty on NES and NPV results, DOE has developed its 

spreadsheet model to conduct sensitivity analyses by running scenarios on specific input 

variables. 

Analyzing impacts of potential energy conservation standards for refrigerated beverage 

vending machines requires comparing projections of U.S. energy consumption with new energy 

conservation standards against projections of energy consumption without standards. The 

forecasts include projections of annual appliance shipments, the annual energy consumption of 

new appliances, and the purchase price of new appliances.

A key component of DOE’s NIA is the energy efficiencies forecasted over time for the 

base case (without new standards) and each of the standards cases. The forecasted efficiencies 

represent the annual shipment-weighted energy efficiency of the equipment under consideration 

during the forecast period (i.e., from the assumed compliance date of a new standard to 30 years 

after compliance is required). 
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As discussed above, DOE developed a distribution of efficiencies in the base case for the 

assumed compliance year of new standards for each BVM equipment class. Because no 

information was available to suggest a different trend, DOE assumed that the efficiency 

distribution in the base case would remain the same in future years. In each standards case, a 

“roll-up” scenario approach was applied to establish the efficiency distribution for the 

compliance year. Under the “roll-up” scenario, DOE assumed: (1) equipment efficiencies in the 

base case that do not meet the standard level under consideration would “roll-up” to meet the 

new standard level; and (2) equipment efficiencies above the standard level under consideration 

would not be affected.

2.10.1 National Energy Savings Analysis

The inputs for determining the national energy savings are: (1) annual energy 

consumption per unit; (2) shipments; (3) product or equipment stock; (4) national energy 

consumption; and (5) site-to-source conversion factors. DOE calculated the national energy 

consumption by multiplying the number of units (stock) of each type of equipment (by vintage or 

age) by the unit energy consumption (also by vintage). Vintage represents the age of the 

equipment. DOE calculated annual NES based on the difference in national energy consumption 

for the base case (without new efficiency standards) and for each higher efficiency standard.

DOE estimated energy consumption and savings based on site energy and converted the 

electricity consumption and savings to primary energy using annual conversion factors derived 

from the most recent version of the National Energy Modeling System (NEMS). Cumulative 

energy savings are the sum of the NES for each year over the timeframe of the analysis.

DOE has historically presented NES in terms of primary energy savings. On August 18, 

2011, DOE published a final statement of policy in the Federal Register announcing its intention 

to use full-fuel-cycle (FFC) measures of energy use and greenhouse gas and other emissions in 

the national impact analyses and emissions analyses included in future energy conservation 

standards rulemakings. 76 FR 51281. After evaluating the approaches discussed in the August 

18, 2011 notice, DOE published a statement of amended policy in the Federal Register in which 

DOE explained its determination that NEMS is the most appropriate tool for its FFC analysis and 

its intention to use NEMS for that purpose. 77 FR 49701 (August 17, 2012). For this preliminary 

analysis, DOE presented NES in terms of FFC energy savings.

2.10.2 Net Present Value Analysis

The inputs for determining NPV are: (1) total annual installed cost; (2) total annual 

savings in operating costs; and (3) a discount factor to calculate the present value of costs and 

savings. DOE determined the net savings for each year as the difference between the base case 

and each standards case in terms of total savings in operating costs versus total increases in 

installed costs. DOE calculated savings over the lifetime of equipment shipped in the forecast 

period. DOE calculated NPV as the difference between the present value of operating cost 

savings and the present value of total installed costs.
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For the NPV analysis, DOE calculates increases in total installed costs as the difference 

in total installed cost between the base case and standards case (i.e., once the standards take 

effect). Because the more-efficient equipment bought in the standards case usually cost more 

than equipment bought in the base case, cost increases appear as negative values in the NPV.

DOE expresses savings in operating costs as decreases associated with the lower energy 

consumption of equipment bought in the standards case compared to the base case. Total savings 

in operating costs are the product of savings per unit and the number of units of each vintage that 

survive in a given year.

DOE used the most recently available edition of EIA’s Annual Energy Outlook (AEO 

2014) as the source of projections for future energy prices.

DOE estimates the NPV of consumer benefits using both a 3-percent and a 7-percent real 

discount rate. DOE uses these discount rates in accordance with guidance provided by the Office 

of Management and Budget (OMB) to Federal agencies on the development of regulatory 

analysis. (OMB Circular A-4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits 

and Costs”)

2.11 CUSTOMER SUB-GROUP ANALYSIS

A customer subgroup comprises a subset of the population that might be affected 

disproportionately by new or amended energy conservation standards. The purpose of a 

subgroup analysis is to determine the extent of this disproportional impact. DOE will work with 

stakeholders to identify any subgroups for consideration. DOE will analyze the consumer 

subgroups in the NOPR stage of the analysis. In comparing potential impacts on the different 

customer subgroups, DOE will evaluate variations in regional electricity prices, energy use 

profiles, and purchase prices that might affect the LCC of an energy conservation standard to 

certain customer subgroups. 

NAMA commented that it believes that all subgroups considered during the 2009 

rulemaking are still appropriate and require consideration. (NAMA, No. 8 at p. 21) DOE will 

consider including each of these potential subgroups in the subgroup analysis at the NOPR stage.

NAMA and Royal commented that small businesses (including machine manufacturers, 

distributors, suppliers and vending operators) may be strongly affected by amended standards. 

Additional expenses will be incurred by small manufacturers in reengineering model designs, 

manufacturing investment, testing, and reporting. If customers demand that all their equipment

meet current DOE standards, small businesses may be forced to scrap equipment before the end 

of their useful life. (NAMA, No. 8 at p. 22; Royal, No. 11 at p. 16) DOE will consider impacts of 

potential standards on small businesses as part of its NOPR analysis.
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2.12 PRELIMINARY MANUFACTURER IMPACT ANALYSIS

DOE performed a preliminary manufacturer impact analysis (MIA) to estimate the 

financial impact of higher energy conservation standards on manufacturers of refrigerated 

beverage vending machines and to calculate the impact of such standards on employment and 

manufacturing capacity. The MIA has both quantitative and qualitative aspects. The quantitative 

part of the MIA relies on the government regulatory impact model (GRIM), an industry-cashflow model customized for these industries. For more detail on the MIA, see chapter 12 of the 

preliminary TSD.

2.12.1 Manufacturer and Trade Group Comments

Several manufacturers provided comments in response to the framework document and 

meeting. A summary of these comments is presented below.

Both Crane and Royal commented that the specifications set by the Coca-Cola Company 

and PepsiCo drive design within the industry. These two major customers typically provide the 

quality standards, equipment performance metrics and design requirements that manufacturers 

must meet in order to remain competitive. (Crane, No. 7 at p. 56; Royal, No. 7 at p. 141) DOE 

recognizes that design constraints are placed on manufacturers by Coca-Cola and PepsiCo. 

Because all manufacturers will be required to comply with amended standards, DOE does not 

consider this characteristic of the refrigerated beverage vending machine market to be 

problematic relative to amended energy conservation standards as it would not 

disproportionately impose requirements on any specific manufacturer. 

Wittern commented that the refrigerated beverage vending machine industry has made 

great strides in energy efficiency over the last 10 years. However, Wittern believes that 

equipment innovation suffers as the industry faces the burden of continued and unnecessary

regulations. (Wittern, No. 16 at p. 3) DOE acknowledges that regulations compliance 

necessitates investment outlays and the use of other resources that might otherwise be directed 

elsewhere. As part of the MIA, DOE estimates conversion costs associated with each efficiency 

level and assesses the impact that conversion costs have on industry cash flows and net present 

value. 

AMS suggested that any changes involving hydrocarbon refrigerants be studied closely 

with respect to existing and pending OSHA, DOT, and other regulations. (AMS, No. 17 at p. 14) 

Royal commented that market-driver, ENERGY STAR, and SNAP should be considered under 

cumulative regulatory burden. (Royal, No. 7 at p. 123) 

DOE recognizes that the cumulative effect of multiple regulations on an industry may 

significantly increase the burden faced by manufacturers that need to comply with regulations 

and testing requirements from different organizations and various levels of government. DOE 

takes into account the cumulative cost of multiple regulations on manufacturers in the 
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cumulative regulatory burden section of its analysis. Additionally, DOE considers the 

cumulative regulatory burden as part of its decision process in setting proposed standards. 

Further information on cumulative regulatory burden can be found in chapter 12 of the TSD.

NAMA and Royal urge DOE to keep in mind the relatively small number of 

manufacturers active in the refrigerated beverage vending machine market. NAMA commented 

that a significant segment of its membership could be classified as small businesses based on 

factors such as earning less than $1 million in annual sales/revenue and/or employing fewer than 

50 people, and that this segment includes businesses in almost every industry category. (NAMA, 

No. 8 at p. 21) Both NAMA and Royal assert that additional regulatory burden on small 

manufacturers in this environment is undue and may curtail business investment, equipment

choices to users, employment, and competition. (NAMA, No. 8 at p. 21 and Royal, No. 11 at p. 

16) The two stakeholders stated that they oppose a substantive amendment to the existing 

standards due to the impact on small manufacturers attributed to lost sales and from expenses 

related to reengineering, testing, reporting, and manufacturing investment. Both stakeholders 

stated that the cost of compliance may be hundreds of thousands of dollars, which will mean that 

small businesses will have fewer resources to devote to the development and production of new 

equipment designs. (NAMA, No. 8 at p. 16; Royal, No. 11 at p. 16) Finally, Wittern commented 

that it is a small family-owned company with only one refrigeration engineer on staff. (Wittern, 

No. 16 at p. 3) 

For the assessment of small business manufacturer impacts, DOE uses the Small 

Business Administration (SBA) size standards to identify small businesses. The SBA defined 

small business manufacturing enterprises for North American Industry Classification System 

(NAICS) code 333318, Other Commercial and Service Industry Machinery Manufacturing,

which includes refrigerated beverage vending machines, as companies with 1,000 or less 

employees. Given this SBA size threshold, among the nine manufacturers occupying the 

refrigerated beverage vending space, DOE identified five companies that may be small 

businesses. 

Stakeholder feedback that DOE received confidentially and through public comments

indicated that smaller manufacturers of refrigerated beverage vending machines typically have 

smaller research and development and engineering staff than larger manufacturers. Although 

small manufacturers often have a more limited equipment range than larger manufacturers, the 

effort to address certain aspects of regulations are fixed and do not scale directly with the number 

of types of equipment or equipment platforms produced. Consequently, the cumulative burden of 

regulations will tend to place more of a burden on smaller manufacturers because of their more 

limited resources.

When small business manufacturers are identified during the course of a given 

rulemaking, DOE conducts a separate MIA for this sub-group. Unique or disproportionate 

impacts on competition and employment for small businesses as a result of the rulemaking are 

explored qualitatively, using the input from manufacturer interviews and other sources.
2-31

Additionally, a separate GRIM may be created pending the availability of information relating to 

financial metrics, cost structure, and distribution channels specific to the small business subgroup. This allows DOE to analyze of the impact on INPV and employment specific to the small 

business segment. DOE studies the potential impacts on small businesses in greater detail in 

Chapter 12 of the TSD and eventually in the Regulatory Flexibility Analysis.

AMS stated that those who experience the highest impact of the standards are small 

business vending operators, who experience no savings from the lower energy consumption, but 

rather a decrease in ROI. (AMS, No. 17 at p. 14)

The MIA assesses the economic impacts of amended standards on the stakeholders who 

carry the direct burden of compliance. In the context of this rulemaking, refrigerated beverage 

vending machine manufacturers carry the burden of compliance. Analysis of the economic 

impacts to business vending operators falls outside of the scope of the MIA.

2.13 EMISSIONS ANALYSIS

In the emissions analysis, DOE will estimate the reduction in power sector emissions of 

carbon dioxide (CO2), nitrogen oxides (NOX), sulfur dioxide (SO2) and mercury (Hg) from 

potential energy conservation standards for the considered products. In addition, DOE will 

estimate emissions impacts in production activities (extracting, processing, and transporting 

fuels) that provide the energy inputs to power plants. These are referred to as “upstream” 

emissions. Together, these emissions account for the full-fuel-cycle (FFC). In accordance with 

DOE’s FFC Statement of Policy (76 FR 51282 (Aug. 18, 2011)), the FFC analysis includes 

impacts on emissions of methane and nitrous oxide, both of which are recognized as greenhouse 

gases. 

DOE conducts the emissions analysis using emissions factors derived from data in the 

latest version of EIA’s AEO, supplemented by data from other sources. EIA prepares the AEO

using the NEMS. 4 Each annual version of NEMS incorporates the projected impacts of existing 

air quality regulations on emissions. The text below refers to AEO 2013, which generally 

represents current legislation and environmental regulations, including recent government 

actions, for which implementing regulations were available as of December 31, 2012.

SO2 emissions from affected electric generating units (EGUs) are subject to nationwide 

and regional emissions cap and trading programs. Title IV of the Clean Air Act sets an annual 

emissions cap on SO2 for affected EGUs in the 48 contiguous States and the District of Columbia 

(D.C.). SO2 emissions from 28 eastern States and D.C. were also limited under the Clean Air 

Interstate Rule (CAIR), which created an allowance-based trading program that operates along 

with the Title IV program in those States and D.C. 70 FR 25162 (May 12, 2005). CAIR was 

remanded to EPA by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. 
2-32

Circuit), but it remained in effect. e In 2011 EPA issued a replacement for CAIR, the Cross-State 

Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the D.C. 

Circuit issued a decision to vacate CSAPR. The court ordered EPA to continue administering 

CAIR. The emissions factors used for today’s NOPR, which are based on AEO 2013, assume 

that CAIR remains a binding regulation through 2040. f

The attainment of emissions caps is typically flexible among EGUs and is enforced 

through the use of emissions allowances and tradable permits. Under existing EPA regulations, 

any excess SO2 emissions allowances resulting from the lower electricity demand caused by the 

adoption of an efficiency standard could be used to permit offsetting increases in SO2 emissions 

by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about 

the effects of efficiency standards on SO2 emissions covered by the existing cap-and-trade 

system, but it concluded that no reductions in power sector emissions would occur for SO2 as a 

result of standards.

Beginning in 2016, however, SO2 emissions will fall as a result of the Mercury and Air 

Toxics Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012) In the final MATS rule, 

EPA established a standard for HCl as a surrogate for acid gas hazardous air pollutants (HAP), 

and also established a standard for SO2 (a non-HAP acid gas) as an alternative equivalent 

surrogate standard for acid gas HAP. The same controls are used to reduce HAP and non-HAP 

acid gas; thus, SO2 emissions will be reduced as a result of the control technologies installed on 

coal-fired power plants to comply with the MATS requirements for acid gas. AEO 2013 assumes 

that, in order to continue operating, coal plants must have either flue gas desulfurization or dry 

sorbent injection systems installed by 2016. Both technologies, which are used to reduce acid gas 

emissions, also reduce SO2 emissions. Under the MATS, emissions will be far below the cap that 

would be established by CAIR, so it is unlikely that excess SO2 emissions allowances resulting 

from the lower electricity demand would be needed or used to permit offsetting increases in SO2

emissions by any regulated EGU. Therefore, DOE believes that efficiency standards will reduce 

SO2 emissions in 2016 and beyond.

CAIR established a cap on NOX emissions in eastern States and the District of Columbia. 

Energy conservation standards are expected to have little or no physical effect on these emissions 

 e See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 

2008).

f On April 29, 2014, the U.S. Supreme Court reversed the judgment of the D.C. Circuit and remanded the case for 

further proceedings consistent with the Supreme Court's opinion. The Supreme Court held in part that EPA's 

methodology for quantifying emissions that must be eliminated in certain states due to their impacts in other 

downwind states was based on a permissible, workable, and equitable interpretation of the Clean Air Act provision 

that provides statutory authority for CSAPR. See EPA v. EME Homer City Generation, No 12-1182, slip op. at 32 

(U.S. April 29, 2014). Because DOE is using emissions factors based on AEO 2013 for today's NOPR, the NOPR 

assumes that CAIR, not CSAPR, is the regulation in force. The difference between CAIR and CSAPR is not relevant 

for the purpose of DOE's analysis of SO2 emissions. 
2-33

in those States covered by CAIR because excess NOx emissions allowances resulting from the 

lower electricity demand could be used to permit offsetting increases in NOx emissions.

However, standards would be expected to reduce NOx emissions in the States not affected by the 

caps, so DOE estimates NOX emissions reductions from potential standards in the States where 

emissions are not capped.

The MATS limit mercury emissions from power plants, but they do not include emissions 

caps and, as such, DOE’s energy conservation standards would likely reduce mercury emissions.

DOE will estimate mercury emissions reduction using emissions factors based on AEO 2013, 

which incorporates the MATS.

Power plants may emit particulates from the smoke stack, which are known as direct 

particulate matter (PM) emissions. NEMS does not account for direct PM emissions from power 

plants. DOE is investigating the possibility of using other methods to estimate reduction in PM 

emissions due to standards. The great majority of ambient PM associated with power plants is in 

the form of secondary sulfates and nitrates, which are produced at a significant distance from 

power plants by complex atmospheric chemical reactions that often involve the gaseous 

emissions of power plants, mainly SO2 and NOx. The monetary benefits that DOE estimates for 

reductions in SO2 and NOx emissions resulting from standards are in fact primarily related to the 

health benefits of reduced ambient PM.

NAMA and Royal commented that DOE should consider technologies that have benefits 

in accordance with national policies but may not necessarily result in decreased energy use, and 

recommends that DOE develop cost benefit criteria that fairly compares the energy penalty 

against other benefits accrued. Royal included as an example CO2 refrigerant having a lower 

ozone depletion potential and global-warming potential (GWP), paralleling EPA's stated goal of 

replacing refrigerants such as hydrofluorocarbons (HFCs) in the long term. (NAMA, No. 8 at p. 

11; Royal, No. 11 at p. 9)

DOE is considering the impacts of refrigerated beverage vending machines that utilize 

alternative non-HFC refrigerants (specifically CO2) in its analysis. This includes quantification 

of energy efficiency, cost of components and cost vs. energy efficiency curves, and lifetime 

GWP. Lifetime GWP analysis includes both direct emissions related to refrigerant leakage and 

losses during servicing and maintenance and indirect emissions from the generation of electricity 

used for BVM operation. Preliminary GWP analysis for CO2 finds that indirect emissions from 

electricity generation dominate direct emissions and that the impact to lifetime GHG emissions 

in moving to a low-GWP refrigerant are much more sensitive to a loss in energy efficiency than 

to changes in refrigerant leakage and losses. 
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2.14 MONETIZATION OF EMISSIONS REDUCTION BENEFITS

DOE plans to consider the estimated monetary benefits likely to result from the reduced 

emissions of CO2 and NOX that are expected to accompany each of the standard levels 

considered.

To estimate the monetary value of benefits resulting from reduced emissions of CO2, 

DOE plans to use the most current Social Cost of Carbon (SCC) values developed and/or agreed 

to by an interagency process. The SCC is intended to be a monetary measure of the incremental 

damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net 

agricultural productivity loss, human health effects, property damage from sea level rise, and 

changes in ecosystem services. Any effort to quantify and to monetize the harms associated with 

climate change will raise serious questions of science, economics, and ethics. But with full 

regard for the limits of both quantification and monetization, the SCC can be used to provide 

estimates of the social benefits of reductions in GHG emissions. 

The Interagency Working Group on Social Cost of Carbon released an update of its 

previous report in 2013. 5 The most recent estimates of the SCC in 2015, expressed in 2013$, are 

$12.0, $40.5, $62.4, and $119 per metric ton of CO2 avoided. For emissions reductions that occur 

in later years, these values grow in real terms over time. Additionally, the interagency group 

determined that a range of values from 7 percent to 23 percent should be used to adjust the global 

SCC to calculate domestic effects, although DOE will give preference to consideration of the 

global benefits of reducing CO2 emissions. 

DOE multiplies the CO2 emissions reduction estimated for each year by the SCC value 

for that year in each of the four cases. To calculate a present value of the stream of monetary 

values, DOE discounts the values in each of the four cases using the discount rates that had been 

used to obtain the SCC values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to 

the contribution of CO2 and other GHG to changes in the future global climate and the potential 

resulting damages to the world economy. Thus, these values are subject to change. 

DOE also estimates the potential monetary benefit of reduced NOX emissions resulting 

from the standard levels it considers. Estimates of monetary value for reducing NOX from 

stationary sources range from $476 to $4,893 per ton in 2013$.6 DOE calculates monetary 

benefits using a medium value for NOX emissions of $2,684 per short ton (in 2013$), and real 

discount rates of 3 percent and 7 percent, in accordance with OMB guidance. 7

DOE is evaluating an appropriate valuation of avoided SO2 and Hg emissions. Whether 

monetization of reduced Hg emissions will occur in this rulemaking is yet to be determined.
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2.15 EMPLOYMENT IMPACT ANALYSIS

The adoption of energy conservation standards can affect employment both directly and 

indirectly. Direct employment impacts are changes in the number of employees at the plants that 

produce the covered products, along with affiliated distribution and service companies. DOE will 

evaluate direct employment impacts in the MIA. 

Indirect employment impacts may result from expenditures shifting between goods (the 

substitution effect) and changes in income and overall expenditure levels (the income effect) that 

occur due to standards. DOE defines indirect employment impacts from standards as net jobs 

eliminated or created in the general economy as a result of increased spending driven by 

increased equipment prices and reduced spending on energy. 

The indirect employment impacts will be investigated in the employment impact analysis 

using the Pacific Northwest National Laboratory’s “Impact of Sector Energy Technologies” 

(ImSET) model. g The ImSET model was developed for DOE’s Office of Planning, Budget, and 

Analysis to estimate the employment and income effects of energy-saving technologies in 

buildings, industry, and transportation. Compared with simple economic multiplier approaches, 

ImSET allows for more complete and automated analysis of the economic impacts of energy 

conservation investments.

2.16 UTILITY IMPACT ANALYSIS

To estimate the impacts of potential energy conservation standards for refrigerated 

beverage vending machines on the electric utility industry, DOE will use a variant of the EIA’s 

NEMS called NEMS-BT. h NEMS is a large, multi-sectorial, partial-equilibrium model of the 

U.S. energy sector that EIA has developed over several years, primarily for the purpose of 

preparing the AEO. NEMS produces a widely recognized forecast for the United States through 

2035 and is available to the public. 

The utility impact analysis is a comparison between the NEMS-BT model results for the 

base case and standard cases. Outputs of the utility impact analysis usually parallel results that 

appear in the latest AEO, with some additions. The utility impact analysis reports the changes in 

installed capacity and generation that result from each standard level by plant type. DOE will 

model the anticipated energy savings impacts from potential amended energy conservation 

standards using NEMS-BT to generate forecasts that deviate from the AEO Reference Case.

 g J. M. Roop, M. J. Scott & R. W. Schultz, ‘‘ImSET: Impact of Sector Energy Technologies,’’ PNNL–15273,

Pacific Northwest National Laboratory (2005).

h EIA approves use of the name NEMS to describe only an official version of the model without any modification to 

code or data. Because this analysis entails some minor code modifications and the model is run under various policy 

scenarios that are variations on EIA assumptions, DOE refers to the model by the name NEMS-BT. (“BT” refers to 

DOE’s Building Technologies Program, under whose aegis this work is performed.) 
2-36

Intertek commented that smart-grid ready equipment should be given attention in the 

analyses. (Intertek, No. 7 at p. 137) DOE has not included smart-grid ready equipment as a 

technology option in the engineering analysis, because this equipment would not affect the 

energy consumption as measured by the draft DOE test procedure.

DOE is soliciting comment and data from the public on a variety of issues related to the 

physical characterization of smart and grid-connected commercial and residential buildings enduse equipment and appliances. To inform interested parties and to facilitate this data-gathering 

process, DOE will hold a public meeting for stakeholders to discuss issues concerning the 

physical characterization of grid-connected commercial and residential buildings end-use 

equipment and appliances, including but not limited to processes and metrics for measurement, 

identification of grid and building services that can be provided, and identification of values and 

benefits of grid connectivity. The public meeting will also allow DOE to gather input on topics 

related to grid-connected equipment, allow stakeholder groups to engage, and provide an 

opportunity to allow interested parties to provide published work and studies related to these 

issues. Further details can be found at the following website: 

https://www.federalregister.gov/articles/2014/04/08/2014-07864/physical-characterization-ofsmart-and-grid-connected-commercial-and-residential-buildings-end-use

2.17 REGULATORY IMPACT ANALYSIS

In the NOPR stage, DOE will prepare a regulatory impact analysis (RIA) that evaluates 

potential non-regulatory policy alternatives, comparing the costs and benefits of each to those of 

the proposed standards. DOE recognizes that non-regulatory policy alternatives can substantially 

affect energy efficiency or reduce energy consumption. DOE will base its assessment on the 

actual impacts of any such initiatives to date, but also will consider information presented by 

interested parties regarding the potential future impacts of current initiatives.

NAMA recommended that DOE research current activities of Natural Resources Canada, 

Canadian Standards Association, and California Energy Commission. (NAMA, No. 8 at p. 24) 

DOE will investigate the work of these organizations in the RIA at the NOPR stage. 
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REFERENCES

1 See Rulemaking for Refrigerated Beverage Vending Machines Energy Conservation Standards,

http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/73 (last visited Apr. 24, 2014).

This material is also available in Docket #EERE-2013-BT-STD-0022 at www.regulations.gov.

2 See Survey-level Detail Data Files, http://www.eia.gov/electricity/data/detail-data.html (last visited Apr. 24, 2014).

This material is also available in Docket #EERE-2013-BT-STD-0022 at www.regulations.gov.

3 H. Haeri, D. Bruchs, D. Korn, S. Shaw & J. Schott, Characterization and Energy Efficiency Opportunities in 

Vending Machines for the Northwestern US Market, July 24, 2007 (revised report).

4 For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information 

Administration documentation. For a useful summary see National Energy Modeling System: An Overview 2000, 

DOE/EIA-0581 (March 2000), 

http://webapp1.dlib.indiana.edu/virtual_disk_library/index.cgi/4265704/FID3754/pdf/Docs/05812000.pdf.

5 U. S. Gov’t, Interagency Working Group on Social Cost of Carbon, Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive Order 12866 (May 2013, revised Nov 2013).

6 Office of Mgmt. & Budget, Executive Office of the President, 2006 Report to Congress on the Costs and Benefits 

of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities (2006).

7 Office of Mgmt. & Budget, Executive Office of the President, Circular No. A-4, Regulatory Analysis (2003).