Vol. 79 Tuesday, 

No. 179 September 16, 2014 

Part II 

Department of Energy 

10 CFR Part 431 

Energy Conservation Program: Energy Conservation Standards for 

Packaged Terminal Air Conditioners and Packaged Terminal Heat Pumps; 

Proposed Rule 


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55538 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket Number EERE–2012–BT–STD– 

0029] 

RIN 1904–AC82 

Energy Conservation Program: Energy 

Conservation Standards for Packaged 

Terminal Air Conditioners and 

Packaged Terminal Heat Pumps 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notice of proposed rulemaking 

(NOPR) and public meeting. 

SUMMARY: The Energy Policy and 

Conservation Act of 1975 (EPCA), as 

amended, prescribes energy 

conservation standards for various 

consumer products and certain 

commercial and industrial equipment, 

including packaged terminal air 

conditioners (PTACs) and packaged 

terminal heat pumps (PTHPs). EPCA 

also requires the U.S. Department of 

Energy (DOE) to determine whether 

more-stringent, amended standards 

would be technologically feasible and 

economically justified, and would save 

a significant amount of energy. In this 

document, DOE proposes amended 

energy conservation standards for 

PTACs and PTHPs. The document also 

announces a public meeting to receive 

comment on these proposed standards 

and associated analyses and results. 

DATES: DOE will hold a public meeting 

on Wednesday, October 29, 2014, from 

9 a.m. to 4 p.m., in Washington, DC. The 

meeting will also be broadcast as a 

webinar. See section VII, ‘‘Public 

Participation,’’ for webinar registration 

information, participant instructions, 

and information about the capabilities 

available to webinar participants. 

DOE will accept comments, data, and 

information regarding this notice of 

proposed rulemaking (NOPR) before and 

after the public meeting, but no later 

than November 17, 2014. See section 

VII, ‘‘Public Participation’’ for details. 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 8E–089, 1000 

Independence Avenue SW., 

Washington, DC 20585. To attend, 

please notify Ms. Brenda Edwards at 

(202) 586–2945. For more information, 

refer to the Public Participation section 

near the end of this document. 

Any comments submitted must 

identify the NOPR for Energy 

Conservation Standards for packaged 

terminal air conditioners (PTACs) and 

packaged terminal heat pumps (PTHPs), 

and provide docket number EERE– 

2012–BT–STD–0029 and/or regulatory 

information number (RIN) number 

1904–AC82. Comments may be 

submitted using any of the following 

methods: 

1. Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments. 

2. Email: pkgTerminalACHP2012STD0029@ee.doe.gov. Include 

the docket number and/or RIN in the 

subject line of the message. 

3. Mail: Ms. Brenda Edwards, U.S. 

Department of Energy, Building 

Technologies Program, Mailstop EE–5B, 

1000 Independence Avenue SW., 

Washington, DC 20585–0121. If 

possible, please submit all items on a 

CD. It is not necessary to include 

printed copies. 

4. Hand Delivery/Courier: Ms. Brenda 

Edwards, U.S. Department of Energy, 

Building Technologies Program, 950 

L’Enfant Plaza SW., Suite 600, 

Washington, DC 20024. Telephone: 

(202) 586–2945. If possible, please 

submit all items on a CD, in which case 

it is not necessary to include printed 

copies. 

Written comments regarding the 

burden-hour estimates or other aspects 

of the collection-of-information 

requirements contained in this proposed 

rule may be submitted to Office of 

Energy Efficiency and Renewable 

Energy through the methods listed 

above and by email to Chad_S_

Whiteman@omb.eop.gov. 

For detailed instructions on 

submitting comments and additional 

information on the rulemaking process, 

see section VII of this document, 

‘‘Public Participation.’’ 

Docket: The docket, which includes 

Federal Register notices, public meeting 

attendee lists and transcripts, 

comments, and other supporting 

documents/materials, is available for 

review at www.regulations.gov. All 

documents in the docket are listed in 

the www.regulations.gov index. 

However, some documents listed in the 

index, such as those containing 

information that is exempt from public 

disclosure, may not be publicly 

available. 

A link to the docket Web page can be 

found at: http://www.regulations.gov/

#!docketDetail;D=EERE-2012-BT-STD0029. This Web page contains a link to 

the docket for this document on the 

www.regulations.gov site. The 

www.regulations.gov Web page contains 

simple instructions on how to access all 

documents, including public comments, 

in the docket. See section VII for further 

information on how to submit 

comments through 

www.regulations.gov. 

For further information on how to 

submit a comment, review other public 

comments and the docket, or participate 

in the public meeting, contact Ms. 

Brenda Edwards at (202) 586–2945 or by 

email: Brenda.Edwards@ee.doe.gov. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Ronald Majette, U.S. Department of 

Energy, Office of Energy Efficiency and 

Renewable Energy, Building 

Technologies Program, EE–5B, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–7935. Email: 

PTACs@ee.doe.gov. 

Ms. Jennifer Tiedeman, U.S. 

Department of Energy, Office of the 

General Counsel, GC–71, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 287–6111. Email: 

Jennifer.Tiedeman@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Summary of the Proposed Rule 

A. Benefits and Costs to Customers 

B. Impact on Manufacturers 

C. National Benefits 

II. Introduction 

A. Authority 

B. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

PTACs and PTHPs 

III. General Discussion 

A. Compliance Dates 

B. Equipment Classes and Scope of 

Coverage 

C. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

D. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

E. Economic Justification 

1. Specific Criteria 

a. Economic Impact on Manufacturers and 

Customers 

b. Savings in Operating Costs Compared to 

Increase in Price 

c. Energy Savings 

d. Lessening of Utility or Performance of 

Equipment 

e. Impact of Any Lessening of Competition 

f. Need for National Energy Conservation 

g. Other Factors 

2. Rebuttable Presumption 

IV. Methodology and Discussion of Related 

Comments 

A. Market and Technology Assessment 

1. Definitions of a PTAC and a PTHP 

2. Equipment Classes 

3. Market Assessment 

a. Trade Association 

b. Manufacturers 

c. Shipments 

4. Technology Assessment 

B. Screening Analysis 

C. Engineering Analysis 


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1For editorial reasons, upon codification in the 

U.S. Code, Part C was redesignated Part A–1. 

2All references to EPCA in this document refer 

to the statute as amended through the American 

Energy Manufacturing Technical Corrections Act 

(AEMTCA), Public Law 112–210 (Dec. 18, 2012). 

1. Methodology 

2. Equipment Classes Analyzed 

3. Cost Model 

4. Baseline Efficiency Level 

5. Incremental Efficiency Levels 

6. Equipment Testing and Reverse 

Engineering 

7. Cost-Efficiency Results 

D. Markups To Determine Equipment Price 

E. Energy Use Analysis 

F. Life Cycle Cost and Payback Period 

Analyses 

1. Equipment and Installation Costs 

2. Unit Energy Consumption 

3. Electricity Prices and Electricity Price 

Trends 

4. Repair Costs 

5. Maintenance Costs 

6. Lifetime 

7. Discount Rate 

8. Base Case Efficiency Distribution 

9. Payback Period Inputs 

10. Rebuttable-Presumption Payback 

Period 

G. Shipments Analysis 

H. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analyses 

I. Customer Subgroup Analysis 

J. Manufacturer Impact Analysis 

1. Overview 

2. Government Regulatory Impact Model 

a. Government Regulatory Impact Model 

Key Inputs 

b. Government Regulatory Impact Model 

Scenarios 

c. Manufacturer Interviews 

d. Size Constraints 

e. Impact on Manufacturer Profitability 

f. Impact on Consumer Utility 

3. Discussion of Comments 

K. Emissions Analysis 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

1. Social Cost of Carbon 

a. Monetizing Carbon Dioxide Emissions 

b. Development of Social Cost of Carbon 

Values 

c. Current Approach and Key Assumptions 

2. Valuation of Other Emissions 

Reductions 

M. Utility Impact Analysis 

N. Employment Impact Analysis 

V. Analytical Results 

A. Trial Standard Levels 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Commercial 

Customers 

a. Life-Cycle Cost and Payback Period 

b. Customer Sub-Group Analysis 

c. Rebuttable Presumption Payback 

2. Economic Impacts on Manufacturers 

a. Industry Cash Flow Analysis Results 

b. Direct Impacts on Employment 

c. Impacts on Manufacturing Capacity 

d. Impacts on Subgroups of Manufacturers 

e. Cumulative Regulatory Burden 

3. National Impact Analysis 

a. Amount and Significance of Energy 

Savings 

b. Net Present Value of Customer Costs and 

Benefits 

c. Indirect Impacts on Employment 

4. Impact on Utility or Performance of 

Equipment 

5. Impact of Any Lessening of Competition 

6. Need of the Nation to Conserve Energy 

7. Summary of National Economic Impacts 

8. Other Factors 

C. Proposed Standard 

1. Benefits and Burdens of Trial Standard 

Levels Considered for Packaged Terminal Air 

Conditioners and Packaged Terminal Heat 

Pumps 

2. Summary of Benefits and Costs 

(Annualized) of the Proposed Standards 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Orders 12866 

and 13563 

B. Review Under the Regulatory Flexibility 

Act 

1. Description and Estimated Number of 

Small Entities Regulated 

a. Methodology for Estimating the Number 

of Small Entities 

b. Manufacturer Participation 

c. PTAC and PTHP Industry Structure and 

Nature of Competition 

2. Description and Estimate of Compliance 

Requirements 

3. Duplication, Overlap, and Conflict With 

Other Rules and Regulations 

4. Significant Alternatives to the Rule 

C. Review Under the Paperwork Reduction 

Act 

D. Review Under the National 

Environmental Policy Act of 1969 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates 

Reform Act of 1995 

H. Review Under the Treasury and General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality 

Bulletin for Peer Review 

VII. Public Participation 

A. Attendance at the Public Meeting 

B. Procedure for Submitting Prepared 

General Statements For Distribution 

C. Conduct of the Public Meeting 

D. Submission of Comments 

E. Issues on Which DOE Seeks Comment 

I. Summary of the Proposed Rule 

Title III, Part C1 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6291–6309, as codified), added by 

Public Law 95–619, Title IV, section 

441(a), established the Energy 

Conservation Program for Certain 

Industrial Equipment.2 This equipment 

includes packaged terminal air 

conditioners (PTACs) and packaged 

terminal heat pumps (PTHPs), the 

subjects of this document. 

Pursuant to EPCA, DOE may prescribe 

a standard more stringent than the level 

in American Society of Heating, 

Refrigerating, and Air-Conditioning 

Engineers (ASHRAE)/Illuminating 

Engineering Society of North America 

(IESNA) Standard 90.1, after ASHRAE 

amends the energy conservation 

standards found in ASHRAE/IESNA 

Standard 90.1, if DOE can demonstrate 

‘‘by clear and convincing evidence,’’ 

that such a more stringent standard 

‘‘would result in significant additional 

conservation of energy and is 

technologically feasible and 

economically justified.’’ (42 U.S.C. 

6313(a)(6)(A)(II)) In accordance with 

these criteria, DOE proposes to amend 

the energy conservation standards for 

standard-sized PTACs and PTHPs by 

raising the efficiency levels for this 

equipment to the levels shown in Table 

I.1, above the efficiency levels specified 

by ANSI/ASHRAE/IES Standard 90.1– 

2013. The proposed standards, which 

prescribe the minimum allowable 

energy efficiency ratio (EER) and, for 

packaged terminal heat pumps, 

coefficient of performance (COP), are 

shown in Table I.1. 

The proposed standards would apply 

to all covered PTACs and PTHPs 

manufactured on or after the date four 

years after publication of the final rule 

in the Federal Register. (42 U.S.C. 

6313(a)(6)(D)) The proposed standards 

for PTACs and PTHPs represent an 

improvement in energy efficiency of 

four to seven percent compared to the 

efficiency levels specified by ANSI/

ASHRAE/IES Standard 90.1–2013, 

depending on the equipment capacity. 

TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS

Equipment class 

Proposed energy conservation standards * 

Equipment Category Cooling capacity 

PTAC .................. Standard Size ** ............................ <7,000 Btu/h ................................. EER = 12.6 

≥7,000 Btu/h and ≤15,000 Btu/h .. EER = 14.9¥(0.324 × Cap ‡) 


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3All monetary values in this section are 

expressed in 2013 dollars and are discounted to 

2013. 

4Based on U.S. Department of Energy, Energy 

Information Administration, Annual Energy 

Outlook 2013. 

5A metric ton is equivalent to 1.1 short tons. 

Results for NOX and Hg are presented in short tons. 

6 DOE calculated emissions reductions relative to 

the Annual Energy Outlook 2013 (AEO 2013) 

reference case, which generally represents current 

legislation and environmental regulations for which 

implementing regulations were available as of 

December 31, 2012. The reduction in mercury (Hg) 

emissions is expected to be very small. 

7Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866. Interagency Working Group on Social 

Cost of Carbon, United States Government, May 

2013; revised November 2013. Available online at 

www.whitehouse.gov/sites/default/files/omb/assets/

TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS—Continued 

Equipment class 

Proposed energy conservation standards * 

Equipment Category Cooling capacity 

>15,000 Btu/h ............................... EER = 10.0 

PTHP .................. Standard Size ** ............................ <7,000 Btu/h ................................. EER = 12.6 

COP = 3.5 

≥7,000 Btu/h and ≤15,000 Btu/h .. EER = 14.9 ¥ (0.324 × Cap ‡) 

COP = 4.0 ¥ (0.064 × Cap ‡) 

>15,000 Btu/h ............................... EER = 10.0 

COP = 3.0 

* For equipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all energy efficiency ratio (EER) values must be 

rated at 95 °F outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85 °F entering water temperature for water cooled equipment. All coefficient of performance (COP) values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled 

equipment, and at 70 °F entering water temperature for water-source heat pumps. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or 

equal to 42 inches wide. 

† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. 

‡ Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 °F outdoor dry-bulb temperature. 

A. Benefits and Costs to Customers 

Table I.2 presents DOE’s evaluation of 

the economic impacts of the proposed 

standards on customers of PTAC and 

PTHP equipment, as measured by the 

average life-cycle cost (LCC) savings and 

the median payback period. LCC savings 

refers to the additional dollar amount a 

customer is expected to save (or expend) 

over the equipment’s lifetime when 

using equipment with higher efficiency 

compared to baseline efficiency 

equipment. For the two PTAC 

equipment classes the customer is 

expected to face costs, and for the two 

PTHP equipment classes the customer is 

expected to observe savings under the 

amended standards proposed in this 

document. 

TABLE I.2—IMPACTS OF PROPOSED STANDARDS ON CUSTOMERS OF PTACS AND PTHPS

Cooling capacity 

Average LCC 

savings 

(2013$) 

Median payback 

period 

(years) 

<12,000 Btu/h .............................................................................................................................................. $0.40 8.0 

≥12,000 Btu/h .............................................................................................................................................. ($2.11) 9.9 

* Numbers in parentheses indicate negative savings. 

Note: Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than 

or equal to 42 inches wide. 

B. Impact on Manufacturers 

The industry net present value (INPV) 

is the sum of the discounted cash flows 

to the industry from the base year 

through the end of the analysis period 

(2014 to 2048). Using a real discount 

rate of 8.5 percent, DOE estimates that 

the INPV for manufacturers of PTACs 

and PTHPs is $58.5 million in 2013$. 

Under the proposed standards, DOE 

expects that manufacturers may lose up 

to 1.3 percent of INPV, which 

corresponds to approximately $0.7 

million. 

C. National Benefits 3

DOE’s analyses indicate that the 

proposed standards would save a 

significant amount of energy. The 

lifetime savings for PTACs and PTHPs 

purchased in the 30-year period that 

begins in the year of expected 

compliance with amended standards 

(2019–2048) amount to 0.06 quadrillion 

British thermal units (quads). The 

annual energy savings in 2030 (1.49 

thousandths of a quad) are equivalent to 

0.08 thousandths of a percent of total 

U.S. commercial primary energy 

consumption in 2013.4

The cumulative net present value 

(NPV) of total customer costs and 

savings of the proposed standards for 

PTACs and PTHPs ranges from $10.7 

million (at a 7-percent discount rate) to 

$69.0 million (at a 3-percent discount 

rate). This NPV expresses the estimated 

total value of future operating-cost 

savings minus the estimated increase in 

product costs for equipment purchased 

in 2019–2048. 

In addition, the proposed standards 

would have significant environmental 

benefits. The energy savings would 

result in cumulative emission 

reductions of 4.3 million metric tons 

(Mt) 5 of carbon dioxide (CO2), 16 

thousand tons of methane, 9.7 thousand 

tons of sulfur dioxide (SO2), and 4.4 

thousand tons of nitrogen oxides 

(NOX).6 The cumulative reduction in 

CO2 emissions through 2030 amounts to 

0.7 Mt. 

The value of the CO2 reductions is 

calculated using a range of values per 

metric ton of CO2 (otherwise known as 

the Social Cost of Carbon, or SCC) 

developed by a recent Federal 

interagency process.7 The derivation of 


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inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf. 

8 DOE is currently investigating valuation of 

avoided Hg and SO2 emissions. 

9 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2013, the year used for discounting the 

NPV of total consumer costs and savings, for the 

time-series of costs and benefits using discount 

rates of three and seven percent for all costs and 

benefits except for the value of CO2 reductions. For 

the latter, DOE used a range of discount rates, as 

shown in Table I.3. From the present value, DOE 

then calculated the fixed annual payment over a 30- 

year period (2019 through 2048) that yields the 

same present value. The fixed annual payment is 

the annualized value. Although DOE calculated 

annualized values, this does not imply that the 

time-series of cost and benefits from which the 

annualized values were determined is a steady 

stream of payments. 

the SCC values is discussed in section 

IV.L.1. Using discount rates appropriate 

for each set of SCC values, DOE 

estimates that the present monetary 

value of the CO2 emissions reduction is 

between $28.1 million and $412.1 

million. DOE also estimates that the 

present monetary value of the NOX

emissions reduction is $2.20 million at 

a 7-percent discount rate and $5.43 

million at a 3-percent discount rate.8

Table I.3 summarizes the national 

economic costs and benefits expected to 

result from the proposed standards for 

PTACs and PTHPs. 

TABLE I.3—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION

STANDARDS FOR PTACS AND PTHPS * 

Category Present value 

million 2013$ 

Discount rate 

(percent) 

Benefits 

Operating Cost Savings ............................................................................................................................... 101.5 

241.9 

7 

3 

CO2 Reduction Monetized Value ($12.0/t case) ** ...................................................................................... 28.1 5 

CO2 Reduction Monetized Value ($40.5/t case) ** ...................................................................................... 133.0 3 

CO2 Reduction Monetized Value ($62.4/t case) ** ...................................................................................... 212.3 2.5 

CO2 Reduction Monetized Value ($119/t case) ** ....................................................................................... 412.1 3 

NOX Reduction Monetized Value (at $2,684/ton) ** .................................................................................... 2.20 

5.43 

7 

3 

Total Benefits † ..................................................................................................................................... 236.6 

380.2 

7 

3 

Costs 

Incremental Installed Costs ......................................................................................................................... 90.8 

172.9 

7 

3 

Total Net Benefits 

Including Emissions Reduction Monetized Value † ..................................................................................... 145.9 

207.3 

7 

3 

* This table presents the costs and benefits associated with PTACs and PTHPs shipped in 2019–2048. These results include benefits to customers which accrue after 2048 from the equipment purchased in 2019–2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to amended standards, some of which may be incurred in preparation for the rule. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporates an escalation factor. 

† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.5/

t case). 

The benefits and costs of the proposed 

standards, for equipment sold in 2019– 

2048, can also be expressed in terms of 

annualized values. The annualized 

monetary values are the sum of (1) the 

annualized national economic value of 

the benefits from customer operation of 

products that meet the proposed 

standards (consisting primarily of 

operating cost savings from using less 

energy, minus increases in equipment 

purchase and installation costs, which 

is another way of representing customer 

NPV), and (2) the annualized monetary 

value of the benefits of emission 

reductions, including CO2 emission 

reductions.9

Although combining the values of 

operating savings and CO2 emission 

reductions provides a useful 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. customer 

monetary savings that occur as a result 

of market transactions while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

PTACs and PTHPs shipped in 2019– 

2048. The SCC values, on the other 

hand, reflect the present value of some 

future climate-related impacts resulting 

from the emission of one ton of carbon 

dioxide in each year. These impacts 

continue well beyond 2100. 

Estimates of annualized benefits and 

costs of the proposed standards are 

shown in Table I.4. The results under 

the primary estimate are as follows. 

Using a 7-percent discount rate for 

benefits and costs other than CO2

reduction, for which DOE used a 3- 

percent discount rate along with the 

average SCC series that uses a 3-percent 

discount rate, the cost of the proposed 

standards is $8.38 million per year in 

increased equipment costs, while the 

benefits are $9.4 million per year in 

reduced equipment operating costs, $7.2 

million in CO2 reductions, and $0.20 

million in reduced NOX emissions. In 

this case, the net benefit amounts to 


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$8.4 million per year. Using a 3-percent 

discount rate for all benefits and costs 

and the average SCC series, the 

estimated cost of the proposed 

standards is $9.36 million per year in 

increased equipment costs, while the 

benefits are $13.1 million per year in 

reduced operating costs, $7.2 million in 

CO2 reductions, and $0.29 million in 

reduced NOX emissions. In this case, the 

net benefit amounts to $11.2 million per 

year. 

TABLE I.4—ANNUALIZED BENEFITS AND COSTS OF PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND

PTHPS

TSL 3 Discount rate 

(percent) 

Million 2013$/year 

Primary estimate * 

Low net 

benefits 

estimate * 

High net benefits 

estimate * 

Benefits 

Operating Cost Savings ............................. 7 ..............................................

3 ..............................................

9.4 ...........................

13.1 .........................

9.0 ...........................

2.5 ...........................

9.9 

3.9 

CO2 Reduction Monetized Value ($12.0/t 

case) **.

5 .............................................. 2.0 ........................... 2.0 ........................... 2.0 

CO2 Reduction Monetized Value ($40.5/t 

case) **.

3 .............................................. 7.2 ........................... 7.2 ........................... 7.2 

CO2 Reduction Monetized Value ($62.4/t 

case) **.

2.5 ........................................... 10.7 ......................... 10.7 ......................... 10.7 

CO2 Reduction Monetized Value ($119/t 

case) **.

3 .............................................. 22.3 ......................... 22.3 ......................... 22.3 

NOX Reduction Monetized Value (at 

$2,684/ton) **.

7 ..............................................

3 ..............................................

0.20 .........................

0.29 .........................

0.20 .........................

0.29 .........................

0.20 

0.29 

Total Benefits † ................................... 7 plus CO2 range ....................

7 ..............................................

3 plus CO2 range ....................

3 ..............................................

11.6 to 31.9 ............

16.8 .........................

15.4 to 35.7 ............

20.6 .........................

11.2 to 31.5 ............

16.4 .........................

14.8 to 35.0 ............

19.9 .........................

12.1 to 32.4 

17.3 

16.2 to 36.5 

21.4 

Costs 

Incremental Product Costs ......................... 7 ..............................................

3 ..............................................

8.38 .........................

9.36 .........................

8.18 .........................

9.06 .........................

10.61 

12.29 

Net Benefits 

Total † .................................................. 7 plus CO2 range ....................

7 ..............................................

3 plus CO2 range ....................

3 ..............................................

3.2 to 23.5 ..............

8.4 ...........................

6.0 to 26.3 ..............

11.2 .........................

3.0 to 23.3 ..............

8.2 ...........................

5.7 to 26.0 ..............

10.9 .........................

1.5 to 21.8 

6.7 

3.9 to 24.2 

9.1 

* This table presents the annualized costs and benefits associated with PTACs and PTHPs shipped in 2019–2048. These results include benefits to customers which accrue after 2048 from the equipment purchased in 2019–2048. The results account for the incremental variable and 

fixed costs incurred by manufacturers due to amended standards, some of which may be incurred in preparation for the rule. The Primary, Low 

Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Estimate, and High Estimate, 

respectively. All three estimates use a constant rate for projected product price trends. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. 

† Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with 3-percent discount 

rate ($40.5/t case). In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated 

using the labeled discount rate, and those values are added to the full range of CO2 values. 

DOE has tentatively concluded that 

the proposed standards represent the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified, and 

would result in a significant 

conservation of energy. DOE further 

notes that products achieving these 

standard levels are already 

commercially available for at least some, 

if not most, equipment classes covered 

by this proposal. Based on the analyses 

described above, DOE has tentatively 

concluded that the benefits of the 

proposed standards to the Nation 

(energy savings, positive NPV of 

customer benefits, customer LCC 

savings, and emission reductions) 

would outweigh the burdens (loss of 

INPV for manufacturers and LCC 

increases for some customers). 

DOE also considered more-stringent 

energy efficiency levels as trial standard 

levels, and is still considering them in 

this rulemaking. However, DOE has 

tentatively concluded that the potential 

burdens of the more-stringent energy 

efficiency levels would outweigh the 

projected benefits. Based on 

consideration of the public comments 

DOE receives in response to this 

document and related information 

collected and analyzed during the 

course of this rulemaking effort, DOE 

may adopt energy efficiency levels 

presented in this document that are 

either higher or lower than the proposed 

standards, or some combination of 

level(s) that incorporate the proposed 

standards in part. 

As noted previously, in this 

rulemaking DOE is required to, at a 

minimum, adopt the ASHRAE levels as 

the Federal standard. (42 U.S.C. 

(a)(6)(A)(ii)(I)) In order to adopt levels 

above ASHRAE, DOE must determine 

that such a standard would result in 

significant additional conservation of 


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10For editorial reasons, upon codification in the 

U.S. Code, Part C was re-designated Part A–1. 

energy and is technologically feasible 

and economically justified. (42 U.S.C. 

(a)(6)(A)(ii)(II)) To meet this statutory 

requirement, in this summary and 

throughout the NOPR, DOE examined 

and presents consumer, manufacturer, 

and economic benefits for the proposed 

PTAC and PTHP standards as compared 

to the default automatic adoption of the 

ASHRAE level, where no models would 

be available on the market at the current 

Federal minimum. However, for 

informational purposes only, in section 

V.C. DOE also presents summary results 

for the proposed standards in 

comparison to a base case including the 

current Federal minimum standards. 

This information was not used in the 

selection of the proposed standard level. 

The following section briefly 

discusses the statutory authority 

underlying this proposal, as well as 

some of the relevant historical 

background related to the establishment 

of standards for PTACs and PTHPs. 

II. Introduction 

A. Authority 

Title III, Part C10 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6311–6317, as codified), added by 

Public Law 95–619, Title IV, section 

441(a), established the Energy 

Conservation Program for Certain 

Industrial Equipment, which includes 

the PTAC and PTHP equipment that is 

the subject of this document. In general, 

this program addresses the energy 

efficiency of certain types of commercial 

and industrial equipment. Relevant 

provisions of the Act include definitions 

(42 U.S.C. 6311), energy conservation 

standards (42 U.S.C. 6313), test 

procedures (42 U.S.C. 6314), labelling 

provisions (42 U.S.C. 6315), and the 

authority to require information and 

reports from manufacturers (42 U.S.C. 

6316). 

EPCA contains mandatory energy 

conservation standards for commercial 

heating, air-conditioning, and waterheating equipment. (42 U.S.C. 6313(a)) 

Specifically, the statute sets standards 

for small, large, and very large 

commercial package air-conditioning 

and heating equipment, PTACs and 

PTHPs, warm-air furnaces, packaged 

boilers, storage water heaters, 

instantaneous water heaters, and 

unfired hot water storage tanks. Id. 

EPCA established Federal energy 

conservation standards that generally 

correspond to the levels in ASHRAE 

Standard 90.1, as in effect on October 

24, 1992 (i.e., ASHRAE/IESNA Standard 

90.1–1989), for each type of covered 

equipment listed in 42 U.S.C. 6313(a). 

EPCA requires that DOE conduct a 

rulemaking to consider amended energy 

conservation standards for a variety of 

enumerated types of commercial 

heating, ventilating, and airconditioning equipment (of which 

PTACs and PTHPs are a subset) each 

time ASHRAE Standard 90.1 is updated 

with respect to such equipment. (42 

U.S.C. 6313(a)(6)(A)) Such review is to 

be conducted in accordance with the 

procedures established for ASHRAE 

equipment under 42 U.S.C. 6313(a)(6). 

According to 42 U.S.C. 6313(a)(6)(A), for 

each type of equipment, EPCA directs 

that if ASHRAE Standard 90.1 is 

amended, DOE must publish in the 

Federal Register an analysis of the 

energy savings potential of amended 

energy efficiency standards within 180 

days of the amendment of ASHRAE 

Standard 90.1. (42 U.S.C. 

6313(a)(6)(A)(i)) EPCA further directs 

that DOE must adopt amended 

standards at the new efficiency level 

specified in ASHRAE Standard 90.1, 

unless clear and convincing evidence 

supports a determination that adoption 

of a more-stringent level would produce 

significant additional energy savings 

and be technologically feasible and 

economically justified. (42 U.S.C. 

6313(a)(6)(A)(ii)) In addition, DOE notes 

that pursuant to the Energy 

Independence and Security Act of 2007 

(EISA 2007) amendments to EPCA, the 

agency must periodically review its 

already-established energy conservation 

standards for ASHRAE equipment. (42 

U.S.C. 6313(a)(6)(C)) In December 2012, 

this provision was further amended by 

the American Energy Manufacturing 

Technical Corrections Act (AEMTCA) to 

clarify that DOE’s periodic review of 

ASHRAE equipment must occur 

‘‘[e]very six years.’’ (42 U.S.C. 

6313(a)(6)(C)(i)) 

AEMTCA also modified EPCA to 

specify that any amendment to the 

design requirements with respect to the 

ASHRAE equipment would trigger DOE 

review of the potential energy savings 

under U.S.C. 6313(a)(6)(A)(i). 

Additionally, AEMTCA amended EPCA 

to require that if DOE proposes an 

amended standard for ASHRAE 

equipment at levels more stringent than 

those in ASHRAE Standard 90.1, DOE, 

in deciding whether a standard is 

economically justified, must determine, 

after receiving comments on the 

proposed standard, whether the benefits 

of the standard exceed its burdens by 

considering, to the maximum extent 

practicable, the following seven factors: 

(1) The economic impact of the 

standard on manufacturers and 

consumers of the products subject to the 

standard; 

(2) The savings in operating costs 

throughout the estimated average life of 

the product in the type (or class) 

compared to any increase in the price, 

initial charges, or maintenance expenses 

of the products likely to result from the 

standard; 

(3) The total projected amount of 

energy savings likely to result directly 

from the standard; 

(4) Any lessening of the utility or the 

performance of the products likely to 

result from the standard; 

(5) The impact of any lessening of 

competition, as determined in writing 

by the Attorney General, that is likely to 

result from the standard; 

(6) The need for national energy 

conservation; and 

(7) Other factors the Secretary 

considers relevant. 

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

Because ASHRAE did not update its 

efficiency levels for PTACs and PTHPs 

in ANSI/ASHRAE/IES Standard 90.1– 

2010, DOE began this rulemaking by 

analyzing amended standards consistent 

with the procedures defined under 42 

U.S.C. 6313(a)(6)(C). Specifically, 

pursuant to 42 U.S.C. 6313(a)(6)(C)(i)(II), 

DOE, must use the procedures 

established under subparagraph (B) 

when issuing a NOPR. The statutory 

provision at 42 U.S.C. 6313(a)(6)(B)(ii), 

recently amended by AEMTCA, states 

that in deciding whether a standard is 

economically justified, DOE must 

determine, after receiving comments on 

the proposed standard, whether the 

benefits of the standard exceed its 

burdens by considering, to the 

maximum extent practicable, the seven 

factors stated above. 

However, before DOE could finalize 

this NOPR, ASHRAE acted on October 

9, 2013 to adopt ANSI/ASHRAE/IES 

Standard 90.1–2013, and this revision 

did contain amended standard levels for 

PTACs, thereby triggering DOE’s 

statutory obligation under 42 U.S.C. 

6313(a)(6)(A) to promulgate an amended 

uniform national standard at those 

levels unless DOE determines that there 

is clear and convincing evidence 

supporting the adoption of morestringent energy conservation standards 

than the ASHRAE levels. Consequently, 

DOE prepared an analysis of the energy 

savings potential of amended standards 

at the ANSI/ASHRAE/IES Standard 

90.1–2013 levels (as required by 42 

U.S.C. 6313(a)(6)(A)(i)) and updated this 

NOPR and accompanying analyses to 

reflect appropriate statutory provisions, 

timelines, and compliance dates. 

EPCA defines a PTHP as ‘‘a packaged 

terminal air conditioner that utilizes 


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reverse cycle refrigeration as its prime 

heat source and should have 

supplementary heat source available to 

builders with the choice of hot water, 

steam, or electric resistant heat.’’ (42 

U.S.C. 6311(10)(B)) Because PTHPs are 

defined explicitly as a subset of PTACs, 

the publication of ANSI/ASHRAE/IES 

Standard 90.1–2013 also triggered DOE 

to consider whether clear and 

convincing evidence supports a morestringent standard than the ASHRAE 

levels for PTHPs, though the ASHRAE 

levels for PTHPs were not explicitly 

revised in 2013. 

DOE is proposing amended standards 

that are more stringent than those set 

forth in ANSI/ASHRAE/IES Standard 

90.1–2013. DOE has tentatively 

concluded that this rulemaking provides 

‘‘clear and convincing evidence’’ that 

the proposed standards would result in 

significant conservation of energy and 

would be technologically feasible and 

economically justified, as mandated by 

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

EPCA, as codified, also contains what 

is known as an ‘‘anti-backsliding’’ 

provision, which prevents the Secretary 

from prescribing any amended standard 

that either increases the maximum 

allowable energy use or decreases the 

minimum required energy efficiency of 

a covered product. (42 U.S.C. 

6313(a)(6)(B)(iii)(I)) Also, the Secretary 

may not prescribe an amended or new 

standard if interested persons have 

established by a preponderance of the 

evidence that the standard is likely to 

result in the unavailability in the United 

States of any covered product type (or 

class) of performance characteristics 

(including reliability), features, sizes, 

capacities, and volumes that are 

substantially the same as those generally 

available in the United States. (42 U.S.C. 

6313(a)(6)(B)(iii)(II)) 

Further, EPCA, as codified, 

establishes a rebuttable presumption 

that a standard is economically justified 

if the Secretary finds that the additional 

cost to the customer of purchasing a 

product complying with an energy 

conservation standard level will be less 

than three times the value of the energy 

(and, as applicable, water) savings 

during the first year that the customer 

will receive as a result of the standard, 

as calculated under the applicable test 

procedure. 

Additionally, when a type or class of 

covered equipment such as ASHRAE 

equipment, has two or more 

subcategories, DOE often specifies more 

than one standard level. DOE generally 

will adopt a different standard level 

than that which applies generally to 

such type or class of products for any 

group of covered products that have the 

same function or intended use if DOE 

determines that products within such 

group: (A) Consume a different kind of 

energy from that consumed by other 

covered products within such type (or 

class); or (B) have a capacity or other 

performance-related feature which other 

products within such type (or class) do 

not have and which justifies a higher or 

lower standard. In determining whether 

a performance-related feature justifies a 

different standard for a group of 

products, DOE generally considers such 

factors as the utility to the customer of 

the feature and other factors DOE deems 

appropriate. In a rule prescribing such 

a standard, DOE includes an 

explanation of the basis on which such 

higher or lower level was established. 

DOE has followed a similar process in 

the context of this proposed rulemaking. 

DOE has also reviewed this regulation 

pursuant to Executive Order 13563, 

issued on January 18, 2011 (76 FR 3281, 

January 21, 2011). Executive Order 

13563 is supplemental to and explicitly 

reaffirms the principles, structures, and 

definitions governing regulatory review 

established in Executive Order 12866, 

which provides that significant 

regulatory actions be submitted for 

review to the Office of Information and 

Regulatory Affairs (OIRA) in the Office 

of Management and Budget (OMB). To 

the extent permitted by law, agencies 

are required by Executive Order 13563 

to: (1) Propose or adopt a regulation 

only upon a reasoned determination 

that its benefits justify its costs 

(recognizing that some benefits and 

costs are difficult to quantify); (2) tailor 

regulations to impose the least burden 

on society, consistent with obtaining 

regulatory objectives, taking into 

account, among other things, and to the 

extent practicable, the costs of 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

DOE emphasizes as well that 

Executive Order 13563 requires agencies 

to use the best available techniques to 

quantify anticipated present and future 

benefits and costs as accurately as 

possible. In its guidance, OIRA has 

emphasized that such techniques may 

include identifying changing future 

compliance costs that might result from 

technological innovation or anticipated 

behavioral changes. For the reasons 

stated in the preamble, DOE believes 

that the NOPR is consistent with these 

principles, including the requirement 

that, to the extent permitted by law, 

benefits justify costs and that net 

benefits are maximized. Consistent with 

Executive Order 13563, and the range of 

impacts analyzed in this rulemaking, 

the energy efficiency standards 

proposed herein by DOE achieves 

maximum net benefits. 

B. Background 

1. Current Standards 

In a final rule published on October 

7, 2008 (73 FR 58772), DOE prescribed 

the current energy conservation 

standards for all standard size PTAC 

and PTHP equipment manufactured on 

or after September 30, 2012, and for all 

non-standard size PTAC and PTHP 

equipment manufactured on or after 

September 30, 2010. (42 U.S.C. 

6313(a)(3)) The current energy 

conservation standards align with 

ANSI/ASHRAE/IES Standard 90.1– 

2010. These levels are expressed in EER 

for the cooling mode and in COP for the 

heating mode. EER is defined as ‘‘the 

ratio of the produced cooling effect of an 

air conditioner or heat pump to its net 

work input, expressed in Btu/watthour.’’ 10 CFR 431.92. COP is defined 

as ‘‘the ratio of produced cooling effect 

of an air conditioner or heat pump (or 

its produced heating effect, depending 

on model operation) to its net work 

input, when both the cooling (or 

heating) effect and the net work input 

are expressed in identical units of 

measurement.’’ 10 CFR 431.92. 

The current standards for PTACs and 

PTHPs are set forth in Table II.1. 


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11Prior to 1999, ASHRAE/IESNA Standard 90.1 

provided one efficiency standard for all PTAC and 

PTHP and did not have different standards by 

dimension. ASHRAE/IESNA Standard 90.1–1999 

increased the standards for all classes and 

established more stringent standards for ‘‘new 

construction’’ than for ‘‘replacements.’’ DOE energy 

conservation standards for PTACs and PTHPs did 

not distinguish between standard and non-standard 

size units until 2010 (for non-standard size) and 

2012 (for standard size). 

TABLE II.1—FEDERAL ENERGY EFFICIENCY STANDARDS FOR PTACS AND PTHPS

Equipment class 

Efficiency level * 

Equipment type Sub-category Cooling capacity 

(Btu/h) 

PTAC ....................... Standard Size ** ....................................... <7,000 ...................................................... EER = 11.7 

≥7,000 and ≤15,000 ................................. EER = 13.8 ¥ (0.300 × Cap ††) 

>15,000 .................................................... EER = 9.3 

Non-Standard Size † ................................ <7,000 ...................................................... EER = 9.4 

≥7,000 and ≤15,000 ................................. EER = 10.9 ¥ (0.213 × Cap ††) 

>15,000 .................................................... EER = 7.7 

PTHP ....................... Standard Size ** ....................................... <7,000 ...................................................... EER = 11.9 

COP = 3.3 

≥7,000 and ≤15,000 ................................. EER = 14.0 ¥ (0.300 × Cap ††) 

COP = 3.7 ¥ (0.052 × Cap ††) 

>15,000 .................................................... EER = 9.5 

COP = 2.9 

Non-Standard Size † ................................ <7,000 ...................................................... EER = 9.3 

COP = 2.7 

≥7,000 and ≤15,000 ................................. EER = 10.8 ¥ (0.213 × Cap ††) 

COP = 2.9 ¥ (0.026 × Cap ††) 

>15,000 .................................................... EER = 7.6 

COP = 2.5 

* For equipment rated according to ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products 

and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at 47 °F 

outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or 

equal to 42 inches wide. 

† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. 

ASHRAE/IESNA Standard 90.1–1999 also includes a factory labeling requirement for non-standard size PTAC and PTHP equipment as follows: 

‘‘MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED IN NEW CONSTRUCTION PROJECTS.’’ 

†† Cap means cooling capacity in k at 95 °F outdoor dry-bulb temperature. 

2. History of Standards Rulemaking for 

PTACs and PTHPs 

On October 29, 1999, ASHRAE 

adopted ASHRAE/IESNA Standard 

90.1–1999, ‘‘Energy Standard for 

Buildings Except Low-Rise Residential 

Building,’’ which included amended 

efficiency levels for PTACs and PTHPs. 

In amending the ASHRAE/IESNA 

Standard 90.1–1989 levels for PTACs 

and PTHPs, ASHRAE acknowledged the 

physical size constraints among the 

varying sleeve sizes on the market. 

Specifically, the wall sleeve dimensions 

of the PTAC and PTHP can limit the 

attainable energy efficiency of the 

equipment. Consequently, ASHRAE/ 

IESNA Standard 90.1–1999 used the 

equipment classes defined by EPCA, 

which are distinguished by equipment 

type (i.e., air conditioner or heat pump) 

and cooling capacity, and further 

separated these equipment classes by 

wall sleeve dimensions.11 Table II.2 

shows the efficiency levels in ASHRAE/ 

IESNA Standard 90.1–1999 for PTACs 

and PTHPs. 

TABLE II.2—ASHRAE/IESNA STANDARD 90.1–1999 ENERGY EFFICIENCY LEVELS FOR PTACS AND PTHPS

Equipment class ASHRAE/IESNA Standard 

90.1–1999 efficiency levels * Equipment Category Cooling capacity 

PTAC ....................... Standard Size ** ....................................... <7,000 Btu/h ............................................. EER = 11.0 

≥7,000 Btu/h and ≤15,000 Btu/h .............. EER = 12.5 ¥ (0.213 × Cap ‡) 

>15,000 Btu/h ........................................... EER = 9.3 

Non-Standard Size † ................................ <7,000 Btu/h ............................................. EER = 9.4 

≥7,000 Btu/h and ≤15,000 Btu/h .............. EER = 10.9 ¥ (0.213 × Cap ‡) 

>15,000 Btu/h ........................................... EER = 7.7 

PTHP ....................... Standard Size ** ....................................... <7,000 Btu/h ............................................. EER = 10.8 

COP = 3.0 

≥7,000 Btu/h and ≤15,000 Btu/h .............. EER = 12.3 ¥ (0.213 × Cap ‡) 

COP = 3.2 ¥ (0.026 × Cap ‡) 


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12 ‘‘Energy Conservation Program for Consumer 

Products: Screening Analysis for EPACT-Covered 

Commercial HVAC and Water-Heating Equipment 

Screening Analysis,’’ U.S. Department of Energy, 

Office of Energy Efficiency and Renewable Energy. 

April 2000. 

TABLE II.2—ASHRAE/IESNA STANDARD 90.1–1999 ENERGY EFFICIENCY LEVELS FOR PTACS AND PTHPS—Continued 

Equipment class ASHRAE/IESNA Standard 

90.1–1999 efficiency levels * Equipment Category Cooling capacity 

>15,000 Btu/h ........................................... EER = 9.1 

COP = 2.8 

Non-Standard Size † ................................ <7,000 Btu/h ............................................. EER = 9.3 

COP = 2.7 

≥7,000 Btu/h and ≤15,000 Btu/h .............. EER = 10.8 ¥ (0.213 × Cap ‡) 

COP = 2.9 ¥ (0.026 × Cap ‡) 

>15,000 Btu/h ........................................... EER = 7.6 

COP = 2.5 

* For equipment rated according to ARI standards, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled products 

and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at 47 °F 

outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or 

equal to 42 inches wide. 

† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. 

ASHRAE/IESNA Standard 90.1–1999 also includes a factory labeling requirement for non-standard size PTAC and PTHP equipment as follows: 

‘‘MANUFACTURED FOR REPLACEMENT APPLICATIONS ONLY; NOT TO BE INSTALLED IN NEW CONSTRUCTION PROJECTS.’’ 

†† Cap means cooling capacity in kBtu/h at 95 °F outdoor dry-bulb temperature. 

Following the publication of 

ASHRAE/IESNA Standard 90.1–1999, 

DOE performed a screening analysis that 

covered 24 of the 34 categories of 

equipment addressed in ASHRAE/ 

IESNA Standard 90.1–1999, to 

determine whether more stringent levels 

would result in significant additional 

energy conservation of energy and be 

technologically feasible and 

economically justified. The report 

‘‘Screening Analysis for EPACT-Covered 

Commercial [Heating, Ventilating and 

Air-Conditioning] HVAC and WaterHeating Equipment’’ (commonly 

referred to as the 2000 Screening 

Analysis) 12 summarizes this analysis. 

On January 12, 2001, DOE published a 

final rule for commercial HVAC and 

water heating equipment, which 

concluded that the 2000 Screening 

Analysis indicated a reasonable 

possibility of finding ‘‘clear and 

convincing evidence’’ that more 

stringent standards for PTACs and 

PTHPs ‘‘would be technologically 

feasible and economically justified and 

would result in significant additional 

conservation of energy.’’ 66 FR 3336, 

3349. Under EPCA, these are the criteria 

for DOE adoption of standards more 

stringent than those found in ASHRAE/ 

IESNA Standard 90.1. (42 U.S.C. 

6313(a)(6)(A)(ii)(II)) 

In addition, on March 13, 2006, DOE 

issued a Notice of Availability (NOA), in 

which DOE revised the energy savings 

analysis from the 2000 Screening 

Analysis. 71 FR 12634. DOE stated that, 

even though the revised analysis 

reduced the potential energy savings for 

PTACs and PTHPs that might result 

from more stringent standards than the 

efficiency levels specified in ASHRAE/ 

IESNA Standard 90.1–1999, DOE 

believed that there was a possibility that 

clear and convincing evidence exists 

that more stringent standards were 

warranted. Therefore, DOE stated in the 

NOA that it was inclined to seek more 

stringent standard levels than the 

efficiency levels specified in ASHRAE/ 

IESNA Standard 90.1–1999 for PTACs 

and PTHPs through a separate 

rulemaking. 71 FR 12639. On March 7, 

2007, DOE issued a final rule stating 

that DOE had decided to explore more 

stringent efficiency levels than those in 

ASHRAE/IESNA Standard 90.1–1999 

for PTACs and PTHPs through a 

separate rulemaking. 72 FR 10038, 

10044. 

In January 2008, ASHRAE published 

ANSI/ASHRAE/IESNA Standard 90.1– 

2007, which reaffirmed the definitions 

and efficiency levels for PTACs and 

PTHPs in ASHRAE/IESNA Standard 

90.1–1999. On October 7, 2008, DOE 

published a final rule amending energy 

conservation standards for PTACs and 

PTHPs (2008 final rule). 73 FR 58772. 

This 2008 final rule divided PTACs and 

PTHPs into two equipment classes— 

standard size and non-standard size. 

Prior DOE energy conservation 

standards for PTACs and PTHPs had not 

distinguished between standard and 

non-standard size units. Table II.1 

shows the energy conservation 

standards for PTACs and PTHPs, as 

amended by the 2008 final rule. 

Compared to ASHRAE/IESNA Standard 

90.1–1999, the standards in the 2008 

final rule were identical for nonstandard sized PTACs and PTHPs, but 

had steeper slopes for standard-size 

PTACs and PTHPs. 

In October 2010, ASHRAE published 

ANSI/ASHRAE/IES Standard 90.1– 

2010, which reaffirmed the efficiency 

levels for non-standard size PTACs and 

PTHPs and increased the efficiency 

levels for standard size PTACs and 

PTHPs to match the DOE standards, 

effective as of October 8, 2012. Hence, 

DOE did not consider revision of PTAC 

and PTHP standards at that time. 

On February 22, 2013, DOE published 

a notice of public meeting and 

availability of the framework document 

regarding energy conservation standards 

for PTACs and PTHPs. 78 FR 12252. 

The public meeting sought input on 

DOE’s planned analytical approach and 

identified several issues of particular 

interest to DOE for this rulemaking 

proceeding. 

DOE received a number of comments 

from interested parties through the 

public meeting and written 

submissions. These commenters are 

summarized in Table II.3. DOE 

considered these comments in the 

preparation of the NOPR. Relevant 

comments, and DOE’s responses, are 

provided in the appropriate sections of 

this document. 


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13EPCA defines a PTHP as ‘‘a packaged terminal 

air conditioner that utilizes reverse cycle 

refrigeration as its prime heat source and should 

have supplementary heat source available to 

builders with the choice of hot water, steam, or 

electric resistant heat.’’ (42 U.S.C. 6311(10)(B)) 

Additionally, in its reverse engineering analysis, 

DOE observed that PTHPs are derivative designs of 

PTACs such that similar design changes for PTACs 

and PTHPs (e.g., more efficient compressors, more 

efficient motors, increased heat exchanger area, and 

improved air flow) are used to achieve higher 

efficiency levels. 

TABLE II.3—INTERESTED PARTIES PROVIDING COMMENTS

Name Abbreviation Type * 

Air-Conditioning, Heating and Refrigeration Institute ..................................................... AHRI .......................................................... IR 

Appliance Standards Awareness Project ....................................................................... ASAP ......................................................... EA 

Appliance Standards Awareness Project, American Council for an Energy-Efficient 

Economy.

ASAP, ACEEE (Joint Efficiency Advocates).EA 

Troy Abraham ................................................................................................................ TA .............................................................. I 

EBM-Papst Inc. .............................................................................................................. EBM-Papst ................................................ CS 

General Electric .............................................................................................................. GE ............................................................. M 

Goodman Manufacturing Company, L.P. ....................................................................... Goodman ................................................... M 

Ice Air, LLC .................................................................................................................... Ice Air ........................................................ M 

McQuay International (now Daikin Applied) ................................................................... McQuay ..................................................... M 

Pacific Gas and Electric Company, Southern California Gas Company, San Diego 

Gas and Electric, Southern California Edison.

PG&E, SCGC, SDG&E, SCE ................... U 

Southern Company Services ......................................................................................... SCS ........................................................... U 

* IR: Industry Representative; M: Manufacturer; EA: Efficiency/Environmental Advocate; CS: Component Supplier; I: Individual; U: Utility. 

Subsequently, on October 9, 2013, 

ASHRAE published ANSI/ASHRAE/IES 

Standard 90.1–2013, which reaffirmed 

the efficiency levels for standard size 

PTHPs and for nonstandard size PTACs 

and PTHPs, and which increased the 

cooling efficiency levels for standard 

size PTACs to equalize them with the 

cooling efficiency levels for standard 

size PTHPs, effective as of January 1, 

2015. The issuance of ANSI/ASHRAE/ 

IES 90.1–2013 triggered DOE’s statutory 

obligation under 42 U.S.C. 6313(a)(6)(A) 

to promulgate an amended uniform 

national standard at those levels unless 

DOE determines that there is clear and 

convincing evidence supporting the 

adoption of more-stringent energy 

conservation standards than the 

ASHRAE levels. Because PTHPs are 

defined as a subset of PTACs,13 the 

publication of ANSI/ASHRAE/IES 

Standard 90.1–2013 also triggered DOE 

to consider whether clear and 

convincing evidence supports a morestringent standard than the ASHRAE 

levels for PTHPs, though the ASHRAE 

levels for PTHPs were not explicitly 

revised. 

III. General Discussion 

A. Compliance Dates 

There are several possible compliance 

dates for any amended standards for 

PTACs and PTHPs. These compliance 

dates vary depending on the triggering 

mechanism for DOE review (i.e., 

whether DOE is triggered by a revision 

to ASHRAE Standard 90.1 or by the ‘‘6- 

year look back’’ requirement), and the 

action taken (i.e., whether DOE is 

adopting ASHRAE Standard 90.1 levels 

or more-stringent levels). The 

discussion below explains the potential 

compliance dates as they pertain to the 

present rulemaking. 

DOE performed the analyses in this 

rulemaking as if all customers were to 

purchase new equipment in the year 

that compliance with amended 

standards is required. Both PTAC and 

PTHP equipment fall under the EPCA 

directive that mandates DOE to publish 

a final rule amending the standard for 

this equipment not later than 2 years 

after a notice of proposed rulemaking is 

issued. (42 U.S.C. 6313(a)(6)(C)(iii)) At 

the time of preparation of the NOPR 

analysis, the expected final rule 

publication date was 2015. EPCA also 

states that amended standards 

prescribed under this subsection shall 

apply to equipment manufactured after 

a date that is the later of—(I) the date 

that is 3 years after publication of the 

final rule establishing a new standard; 

or (II) the date that is 6 years after the 

effective date of the current standard for 

a covered product. (42 U.S.C. 

6313(a)(6)(C)(iv)) The date under clause 

(I) is currently projected to be 2018, and 

the date under clause (II) is also 2018. 

However, ASHRAE adopted a revised 

ANSI/ASHRAE/IES Standard 90.1– 

2013, which increases minimum 

efficiency standards for PTACs and not 

for PTHPs, before DOE published the 

NOPR for this rulemaking. This action 

creates an exception to the 

aforementioned compliance 

requirements. The revision of the ANSI/ 

ASHRAE/IES standard requires that the 

Federal standard for PTAC equipment 

become effective on or after a date 

which is two years after the effective 

date of the applicable minimum energy 

efficiency requirement in the amended 

ANSI/ASHRAE/IES standard. (42 U.S.C 

6313(a)(6)(D)(i)) The date of issuance of 

the amended ANSI/ASHRAE/IES 

standard is currently projected to be 

January 1, 2015. Therefore, PTAC 

equipment, only, manufactured on or 

after January 1, 2017 will be required to 

meet the amended ANSI/ASHRAE/IES 

standard. However, if DOE adopts a 

uniform national standard more 

stringent than the amended ANSI/ 

ASHRAE/IES Standard 90.1, equipment 

manufactured on or after a date which 

is four years after the date of final rule 

publication in the Federal Register must 

comply with the amended standard. (42 

U.S.C 6313(a)(6)(D)) Therefore, both 

PTAC and PTHP equipment 

manufactured on or after January 1, 

2019 would be required to meet the 

more stringent Federal standard. 

Based on the above considerations, 

DOE used 2017 as the compliance year 

for PTAC equipment with a proposed 

efficiency level at the ANSI/ASHRAE/ 

IES Standard 90.1–2013 minimum, and 

2019 as the compliance year for PTAC 

and PTHP and equipment with 

proposed efficiency levels more 

stringent than that specified in ANSI/ 

ASHRAE/IES Standard 90.1–2013. 

For each equipment class for which 

DOE developed a potential energy 

savings analysis, Table III.1 exhibits the 

approximate compliance dates of an 

amended energy conservation standard. 


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14See DOE’s discussion regarding shipment 

projections for standard and non-standard PTAC 

and PTHP equipment and the results of shipment 

projections in the PTAC and PTHP energy 

conservation standard technical support document 

at: http://www1.eere.energy.gov/buildings/ 

appliance_standards/commercial/pdfs/ 

ptac_pthp_tsd/chapter_10.pdf (Chapter 10, Section 

10.5). 15A notation in the form ‘‘McQuay, No. 10 at p. 

2’’ identifies a written comment: (1) Made by 

McQuay International (now Daikin Applied) 

(‘‘McQuay’’); (2) recorded in document number 10 

that is filed in the docket of the PTAC energy 

conservation standards rulemaking (Docket No. 

EERE–2012–BT–STD–0029) and available for 

review at www.regulations.gov; and (3) which 

appears on page 2 of document number 10. 

TABLE III.1—APPROXIMATE COMPLIANCE DATE OF AN AMENDED ENERGY CONSERVATION STANDARD FOR EACH

EQUIPMENT CLASS

Equipment class 

Approximate compliance date 

for adopting the efficiency levels in ASHRAE standard 

90.1–2013 

Approximate compliance date 

for adopting more stringent 

efficiency levels than those in 

ASHRAE standard 90.1–2013 

PTAC <7,000 Btu/h ............................................................................................. 01/2017 01/2019 

PTAC ≥7,000 to ≤15,000 Btu/h ........................................................................... 01/2017 01/2019 

PTAC >15,000 Btu/h ........................................................................................... 01/2017 01/2019 

PTHP <7,000 Btu/h ............................................................................................. 01/2019 01/2019 

PTHP ≥7,000 to ≤15,000 Btu/h ........................................................................... 01/2019 01/2019 

PTHP >15,000 Btu/h ........................................................................................... 01/2019 01/2019 

B. Equipment Classes and Scope of 

Coverage 

When evaluating and establishing 

energy conservation standards, DOE 

divides covered equipment into 

equipment classes by the type of energy 

used or by capacity or other 

performance-related features that 

justifies a different standard. In making 

a determination whether a performancerelated feature justifies a different 

standard, DOE must consider such 

factors as the utility to the customer of 

the feature and other factors DOE 

determines are appropriate. (42 U.S.C. 

6295(q)) 

Existing energy conservation 

standards divide PTACs and PTHPs into 

twelve equipment classes based whether 

the equipment is an air conditioner or 

heat pump; the equipment’s cooling 

capacity; and the equipment’s wall 

sleeve dimensions, which fall into two 

categories: 

• Standard size (PTAC or PTHP 

equipment with wall sleeve 

dimensions greater than or equal to 16 

inches high, or greater than or equal 

to 42 inches wide) 

• Non-standard size (PTAC or PTHP 

equipment with wall sleeve 

dimensions less than 16 inches high 

and less than 42 inches wide). 

DOE is not considering amended 

energy conservation standards for nonstandard size PTAC and PTHP 

equipment in this rulemaking because 

this equipment class represents a small 

and declining portion of the market, and 

due to a lack of adequate information to 

analyze non-standard size units. The 

shipments analysis conducted for the 

2008 final rule projected that shipments 

of non-standard size PTACs and PTHPs 

would decline from approximately 

30,000 units in 2012 (6.6% of the entire 

PTAC and PTHP market) to 

approximately 16,000 units in 2042 

(2.4% of the entire PTAC and PTHP 

market).14 McQuay (now Daikin 

Applied) commented that the installed 

base for non-standard PTAC and PTHP 

products is slowly declining as older 

buildings are demolished. McQuay also 

commented that non-standard PTAC 

and PTHP products are being produced 

by a very limited number of U.S. 

manufacturers, exclusively for 

replacement applications in older 

buildings. (McQuay, No. 10 at p. 2) 15

DOE believes McQuay’s observations of 

the market are indicative of a steadily 

decreasing market share for nonstandard-size PTACs and PTHPs, and 

thus bolsters the justification to 

eliminate analysis of non-standard-size 

equipment in the present rulemaking. 

An analysis of energy savings for the 

volume of shipments of non-standard 

size products show that the national 

energy savings of non-standard size 

equipment at a reasonable efficiency 

level adopted is five-thousandths of one 

quad of savings. Such level of savings 

DOE considers negligible. 

DOE has not been able to analyze and 

test non-standard sized PTACs and 

therefore the Department is proposing to 

maintain the non-standard size product 

classes but not subject them to amended 

minimum energy conservation 

standards. 

Ice Air commented that there should 

be separate equipment categories for 

PTACs that use hydronic or gas-fired 

heat sources. Ice Air also commented 

that PTACs with hydronic heat or gas 

heat comprise a significant portion of 

the market for PTACs installed in highrise buildings, and asked whether DOE 

is addressing the efficiency impacts of 

packaged terminal units with central 

hydronic systems as compared to units 

heated by electric heat or heat pumps. 

Ice Air commented that PTACs that use 

hydronic or gas-fired heat sources 

should receive a form of efficiency 

credit. (Ice Air, No. 9 at p. 1) 

DOE understands that hydronic heat 

sources are often more efficient than 

electric resistance heaters or electric 

heat pumps, in terms of heat delivered 

versus primary energy consumed. DOE 

also understands that hydronic coils 

impose a pressure drop that may 

increase fan power consumption and 

reduce EER. DOE is concerned that this 

impact may lead manufacturers to 

eliminate hydronic heating options in 

PTACs and also lead to sales shifting 

from hydronic to electric resistance 

heating, a shift that would lead to 

increased overall HVAC energy use. 

Hence, DOE proposes to provide 

guidance in the future regarding which 

features (such as hydronic and steam 

heating systems) may be excluded from 

products that are tested. 

C. Technological Feasibility 

1. General 

In each standards rulemaking, DOE 

conducts a screening analysis based on 

information gathered on all current 

technology options and prototype 

designs that could improve the 

efficiency of the products or equipment 

that are the subject of the rulemaking. 

As the first step in such an analysis, 

DOE develops a list of technology 

options for consideration in 

consultation with manufacturers, design 

engineers, and other interested parties. 

DOE then determines which of those 

means for improving efficiency are 

technologically feasible. DOE considers 

technologies incorporated in 

commercially available products or in 

working prototypes to be 

technologically feasible. 10 CFR part 

430, subpart C, appendix A, section 

4(a)(4)(i). 


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16 DOE also presents a sensitivity analysis that 

considers impacts for equipment shipped in a 9- 

year period. 

17 In the past, DOE presented energy savings 

results for only the 30-year period that begins in the 

year of expected compliance. In the calculation of 

economic impacts, however, DOE considered 

operating cost savings measured over the entire 

lifetime of equipment purchased in the 30-year 

period. DOE has chosen to modify its presentation 

of national energy savings to be consistent with the 

approach used for its national economic analysis. 

After DOE has determined that 

particular technology options are 

technologically feasible, it further 

evaluates each technology option in 

light of the following additional 

screening criteria: (1) Practicability to 

manufacture, install, or service; (2) 

adverse impacts on product utility or 

availability; and (3) adverse impacts on 

health or safety. Section IV.B of this 

document discusses the results of the 

screening analysis for PTACs and 

PTHPs, particularly the designs DOE 

considered, those it screened out, and 

those that are the basis for the TSLs in 

this rulemaking. For further details on 

the screening analysis for this 

rulemaking, see chapter 4 of the NOPR 

TSD. 

After screening out or otherwise 

removing from consideration most of 

the technologies, the following 

technologies were identified for 

consideration in the engineering 

analysis: (1) Improved compressor 

efficiency; (2) improved fan motor 

efficiency; (3) increased heat exchanger 

area; and (4) improved air flow and fan 

blade efficiency. To adopt standards for 

PTACs and PTHPs that are more 

stringent than the efficiency levels in 

ASHRAE Standard 90.1 as amended, 

DOE must determine, supported by 

clear and convincing evidence, that 

such standards are technologically 

feasible. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) 

DOE has determined that the efficiency 

levels considered in this rulemaking are 

technologically feasible, because DOE 

has access to test reports showing the 

highest efficiency level was attainable in 

a commercially available model. 

2. Maximum Technologically Feasible 

Levels 

When DOE proposes to adopt an 

amended standard for a type or class of 

covered product, it must determine the 

maximum improvement in energy 

efficiency or maximum reduction in 

energy use that is technologically 

feasible for such product. (42 U.S.C. 

6295(p)(1)) Accordingly, in the 

engineering analysis, DOE determined 

the maximum technologically feasible 

(‘‘max-tech’’) improvements in energy 

efficiency for PTACs and PTHPs, using 

the design parameters for the most 

efficient products available on the 

market or in working prototypes. (See 

chapter 5 of the NOPR TSD.) The maxtech levels that DOE determined for this 

rulemaking are described in section 

IV.C.5 of this proposed rule. 

D. Energy Savings 

1. Determination of Savings 

For each TSL, DOE projected energy 

savings from the equipment that is the 

subject of this rulemaking purchased in 

the 30-year period that begins in the 

year of expected compliance with 

amended standards (2019–2048).16 The 

savings are measured over the entire 

lifetime of products purchased in the 

30-year period.17 DOE quantified the 

energy savings attributable to each TSL 

as the difference in energy consumption 

between each standards case and the 

base case. The base case represents a 

projection of energy consumption in the 

absence of amended mandatory energy 

conservation standards, and it considers 

market forces and policies that affect 

demand for more-efficient equipment. 

DOE used its national impact analysis 

(NIA) spreadsheet model to estimate 

energy savings from amended standards 

for the equipment that is the subject of 

this rulemaking. The NIA spreadsheet 

model (described in section IV.H of this 

document) calculates energy savings in 

site energy, which is the energy directly 

consumed by equipment at the locations 

where it is used. For electricity, DOE 

reports national energy savings in terms 

of the savings in the energy that is used 

to generate and transmit the site 

electricity. To calculate this quantity, 

DOE derives annual conversion factors 

from the model used to prepare the 

Energy Information Administration’s 

(EIA) Annual Energy Outlook (AEO). 

DOE has begun to also estimate fullfuel-cycle energy savings, as discussed 

in DOE’s statement of policy and notice 

of policy amendment. 76 FR 51282 

(August 18, 2011), as amended at 77 FR 

49701 (August 17, 2012). The full-fuelcycle (FFC) metric includes the energy 

consumed in extracting, processing, and 

transporting primary fuels (i.e., coal, 

natural gas, petroleum fuels), and thus 

collectively presents a more complete 

picture of the impacts of energy 

efficiency standards. DOE’s approach is 

based on the calculation of an FFC 

multiplier for each of the energy types 

used by covered equipment. 

For more information on FFC energy 

savings, see section IV.H. 

2. Significance of Savings 

Among the criteria that govern DOE’s 

adoption of more stringent standards for 

PTACs and PTHPs than the amended 

levels in ASHRAE Standard 90.1, clear 

and convincing evidence must support 

a determination that the standards 

would result in ‘‘significant’’ energy 

savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) 

Although the term ‘‘significant’’ is not 

defined in the Act, the U.S. Court of 

Appeals, in Natural Resources Defense 

Council v. Herrington, 768 F.2d 1355, 

1373 (D.C. Cir. 1985), indicated that 

Congress intended ‘‘significant’’ energy 

savings in the context of EPCA to be 

savings that were not ‘‘genuinely 

trivial.’’ DOE’s estimates of the energy 

savings for each of the TSLs considered 

for this proposed rule for PTACs and 

PTHPs (presented in section V.B.3.a) 

provide evidence that the additional 

energy savings each would achieve by 

exceeding the corresponding efficiency 

levels in ANSI/ASHRAE/IES Standard 

90.1–2013 are nontrivial. Therefore, 

DOE considers these savings to be 

‘‘significant’’ as required by 42 

U.S.C.6313(a)(6)(A)(ii)(II). 

E. Economic Justification 

1. Specific Criteria 

EPCA provides seven factors to be 

evaluated in determining whether a 

more stringent standard for PTACs and 

PTHPs is economically justified. (42 

U.S.C. 6313(a)(6)(B)(ii)) The following 

sections discuss how DOE has 

addressed each of those seven factors in 

this rulemaking. 

a. Economic Impact on Manufacturers 

and Customers 

In determining the impacts of an 

amended standard on manufacturers, 

DOE first uses an annual cash-flow 

approach to determine the quantitative 

impacts. This step includes both a shortterm assessment—based on the cost and 

capital requirements during the period 

between when a regulation is issued and 

when entities must comply with the 

regulation—and a long-term assessment 

over a 30-year period. The industrywide impacts analyzed include industry 

net present value (INPV), which values 

the industry on the basis of expected 

future cash flows; cash flows by year; 

changes in revenue and income; and 

other measures of impact, as 

appropriate. Second, DOE analyzes and 

reports the impacts on different types of 

manufacturers, including impacts on 

small manufacturers. Third, DOE 

considers the impact of amended 

standards on domestic manufacturer 

employment and manufacturing 

capacity, as well as the potential for 


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amended standards to result in plant 

closures and loss of capital investment. 

Finally, DOE takes into account 

cumulative impacts of various DOE 

regulations and other regulatory 

requirements on manufacturers. 

For individual customers, measures of 

economic impact include the changes in 

LCC and payback period (PBP) 

associated with new or amended 

standards. These measures are 

discussed further in the following 

section. For customers in the aggregate, 

DOE also calculates the national net 

present value of the economic impacts 

applicable to a particular rulemaking. 

DOE also evaluates the LCC impacts of 

potential standards on identifiable 

subgroups of customers that may be 

affected disproportionately by a national 

standard. 

b. Savings in Operating Costs Compared 

to Increase in Price 

EPCA requires DOE to consider the 

savings in operating costs throughout 

the estimated average life of the covered 

equipment compared to any increase in 

the price of the covered product that are 

likely to result from the imposition of 

the standard. (42 U.S.C. 

6295(o)(2)(B)(i)(II)) DOE conducts this 

comparison in its LCC and PBP analysis. 

The LCC is the sum of the purchase 

price of a product (including its 

installation) and the operating expense 

(including energy, maintenance, and 

repair expenditures) discounted over 

the lifetime of the equipment. To 

account for uncertainty and variability 

in specific inputs, such as equipment 

lifetime and discount rate, DOE uses a 

distribution of values, with probabilities 

attached to each value. For its analysis, 

DOE assumes that customers will 

purchase the covered equipment in the 

first year of compliance with amended 

standards. 

The LCC savings and the PBP for the 

considered efficiency levels are 

calculated relative to a base case that 

reflects projected market trends in the 

absence of amended standards. DOE 

identifies the percentage of customers 

estimated to receive LCC savings or 

experience an LCC increase, in addition 

to the average LCC savings associated 

with a particular standard level. DOE’s 

LCC analysis is discussed in further 

detail in section IV.F. 

c. Energy Savings 

Although significant conservation of 

energy is a separate statutory 

requirement for imposing an energy 

conservation standard, EPCA requires 

DOE, in determining the economic 

justification of a standard, to consider 

the total projected energy savings that 

are expected to result directly from the 

standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) 

As discussed in section IV.H, DOE uses 

the NIA spreadsheet to project national 

energy savings. 

d. Lessening of Utility or Performance of 

Equipment 

In establishing classes of equipment, 

and in evaluating design options and 

the impact of potential standard levels, 

DOE evaluates standards that would not 

lessen the utility or performance of the 

considered equipment. (42 U.S.C. 

6295(o)(2)(B)(i)(IV)) The standards 

proposed in this document will not 

reduce the utility or performance of the 

equipment under consideration in this 

rulemaking. 

e. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition that is likely to 

result from energy conservation 

standards. It also directs the Attorney 

General of the United States (Attorney 

General) to determine the impact, if any, 

of any lessening of competition likely to 

result from a proposed standard and to 

transmit such determination to the 

Secretary within 60 days of the 

publication of a proposed rule, together 

with an analysis of the nature and 

extent of the impact. (42 U.S.C. 

6313(a)(6)(B)(ii)(V)) DOE will transmit a 

copy of this proposed rule to the 

Attorney General with a request that the 

Department of Justice (DOJ) provide its 

determination on this issue. DOE will 

address the Attorney General’s 

determination in the final rule. 

f. Need for National Energy 

Conservation 

In evaluating the need for national 

energy conservation, DOE expects that 

the energy savings from the proposed 

standards are likely to provide 

improvements to the security and 

reliability of the nation’s energy system. 

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

Reductions in the demand for electricity 

also may result in reduced costs for 

maintaining the reliability of the 

nation’s electricity system. DOE 

conducts a utility impact analysis to 

estimate how standards may affect the 

nation’s needed power generation 

capacity, as discussed in section IV.M. 

The proposed standards also are 

likely to result in environmental 

benefits in the form of reduced 

emissions of air pollutants and 

greenhouse gases associated with energy 

production. DOE reports the emissions 

impacts from the proposed standards, 

and from each TSL it considered, in 

section V.B.6 of this document. DOE 

also reports estimates of the economic 

value of emissions reductions resulting 

from the considered TSLs, in section 

IV.L of this document. 

g. Other Factors 

EPCA allows the Secretary of Energy, 

in determining whether a standard is 

economically justified, to consider any 

other factors that the Secretary deems to 

be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VII)) No other factors 

were considered in this proposal. 

2. Rebuttable Presumption 

As set forth in 42 U.S.C. 

6295(o)(2)(B)(iii), EPCA creates a 

rebuttable presumption that an energy 

conservation standard is economically 

justified if the additional cost to the 

customer of a product that meets the 

standard is less than three times the 

value of the first year’s energy savings 

resulting from the standard, as 

calculated under the applicable DOE 

test procedure. DOE’s LCC and PBP 

analyses generate values used to 

calculate the effects that proposed 

energy conservation standards would 

have on the payback period for 

customers. These analyses include, but 

are not limited to, the 3-year payback 

period contemplated under the 

rebuttable-presumption test. In addition, 

DOE routinely conducts an economic 

analysis that considers the full range of 

impacts to customers, manufacturers, 

the nation, and the environment, as 

required under 42 U.S.C. 

6295(o)(2)(B)(i). The results of this 

analysis serve as the basis for DOE’s 

evaluation of the economic justification 

for a potential standard level (thereby 

supporting or rebutting the results of 

any preliminary determination of 

economic justification). The rebuttable 

presumption payback calculation is 

discussed in section V.B.1.c of this 

proposed rule. 

IV. Methodology and Discussion of 

Related Comments 

This section addresses the analyses 

DOE has performed for this rulemaking 

with regard to PTACs and PTHPs. A 

separate subsection addresses each 

component of the analysis. 

A. Market and Technology Assessment 

For the market and technology 

assessment, DOE develops information 

that provides an overall picture of the 

market for the equipment concerned, 

including the purpose of the equipment, 

the industry structure, and market 

characteristics. This activity includes 

both quantitative and qualitative 

assessments, based primarily on 

publicly available information. The 


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18A notation in the form ‘‘Goodman, Framework 

Public Meeting Transcript, No. 7 at p. 41’’ identifies 

an oral comment that DOE received during the 

March 18, 2013, PTAC energy conservation 

standards framework public meeting, that was 

recorded in the public meeting transcript in the 

docket for the PTAC energy conservation standards 

rulemaking (Docket No. EERE–2012–BT–STD– 

0029), and is maintained in the Resource Room of 

the Building Technologies Program. This particular 

notation refers to a comment (1) made by Goodman 

during the public meeting; (2) recorded in 

document number 7, which is the public meeting 

transcript that is filed in the docket of this energy 

conservation standards rulemaking; and (3) which 

appears on page 41 of document number 7. 

subjects addressed in the market and 

technology assessment for this 

rulemaking include scope of coverage, 

equipment classes, types of equipment 

sold and offered for sale, and technology 

options that could improve the energy 

efficiency of the equipment under 

examination. The key findings of DOE’s 

market assessment are summarized 

below. For additional detail, see chapter 

3 of the NOPR TSD. 

1. Definitions of a PTAC and a PTHP 

Section 340 of EPCA defines a 

‘‘packaged terminal air conditioner’’ as 

‘‘a wall sleeve and a separate unencased 

combination of heating and cooling 

assemblies specified by the builder and 

intended for mounting through the wall. 

It includes a prime source of 

refrigeration, separable outdoor louvers, 

forced ventilation, and heating 

availability by builder’s choice of hot 

water, steam, or electricity.’’ (42 U.S.C. 

6311(10)(A)) EPCA defines a ‘‘packaged 

terminal heat pump’’ as ‘‘a packaged 

terminal air conditioner that utilizes 

reverse cycle refrigeration as its prime 

heat source and should have 

supplementary heat source available to 

builders with the choice of hot water, 

steam, or electric resistant heat.’’ (42 

U.S.C. 6311(10)(B)) DOE codified these 

definitions in 10 CFR 431.92 in a final 

rule issued October 21, 2004. 69 FR 

61970. 

2. Equipment Classes 

When evaluating and establishing 

energy conservation standards, DOE 

generally divides covered equipment 

into equipment classes by the type of 

energy used or by capacity or other 

performance-related features that affect 

efficiency. Different energy conservation 

standards may apply to different 

equipment classes. (42 U.S.C. 6316(a); 

42 U.S.C. 6295(q)) 

PTACs and PTHPs can be divided 

into various equipment classes 

categorized by physical characteristics 

that affect equipment efficiency. Key 

characteristics affecting the energy 

efficiency of the PTAC or PTHP are 

whether the equipment has reverse 

cycle heating (i.e., air conditioner or 

heat pump), the cooling capacity, and 

the physical dimensions of the unit. The 

existing Federal energy conservation 

standards for PTACs and PTHPs 

correspond to the efficiency levels in 

ANSI/ASHRAE/IES Standard 90.1– 

2010, as shown in Tables 4 and 5 of 10 

CFR 431.97, dividing PTACs and PTHPs 

into twelve equipment classes based on 

these key characteristics. Table IV.1 

shows the current equipment class 

structure. 

AHRI and Goodman separately 

commented that the current equipment 

classes for PTACs have worked well in 

the past and do not need to be changed. 

(Goodman, Framework Public Meeting 

Transcript, No. 7 at p. 41) (AHRI, 

Framework Public Meeting Transcript, 

No. 7 at p. 41) 18 Goodman also 

commented that the current equipment 

classes are fair and representative of the 

market. (Goodman, No. 13 at p. 3) 

Accordingly, for this rulemaking, DOE 

is proposing to maintain the same 

equipment classes, as shown in Table 

IV.1. As previously described in section 

III.B, DOE is not considering amending 

the energy conservation standards of 

non-standard size PTAC and PTHP 

equipment in this rulemaking, because 

this equipment class represents a small 

and declining portion of the market, and 

because of a lack of adequate 

information available to analyze nonstandard size units. As described in 

section III.B, Ice Air commented that 

there should be separate equipment 

categories for PTACs that use hydronic 

or gas-fired heat sources. (Ice Air, No. 9 

at p. 1) DOE plans to provide guidance 

in the future regarding how to address 

features (such as hydronic or steam 

heating) which might require special 

treatment when testing this equipment. 

TABLE IV.1—EQUIPMENT CLASSES FOR PTACS AND PTHPS

Equipment class 

Equipment Category Cooling capacity 

PTAC ........................................................ Standard Size * .......................................................................... < 7,000 Btu/h 

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 

> 15,000 Btu/h 

Non-Standard Size ** ................................................................. < 7,000 Btu/h 

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 

> 15,000 Btu/h 

PTHP ........................................................ Standard Size * .......................................................................... < 7,000 Btu/h 

≥7 ,000 Btu/h and ≤ 15,000 Btu/h 

> 15,000 Btu/h 

Non-Standard Size ** ................................................................. < 7,000 Btu/h 

≥ 7,000 Btu/h and ≤ 15,000 Btu/h 

> 15,000 Btu/h 

* Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions having an external wall opening greater than or equal to 16 

inches high or greater than or equal to 42 inches wide, and a cross-sectional area greater than or equal to 670 square inches. 

** Non-standard size refers to PTAC or PTHP equipment with existing wall sleeve dimensions having an external wall opening of less than 16 

inches high or less than 42 inches wide, and a cross-sectional area less than 670 square inches. 

3. Market Assessment 

This market assessment describes the 

trade associations, manufacturers in the 

PTAC/PTHP industry, and the 

quantities and types of PTAC and PTHP 

equipment sold and offered for sale. The 

information DOE gathered serves as 

resource material throughout the 

rulemaking. The sections below provide 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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19 DOE has incorporated by reference ANSI/

AHRI/CSA Standard 310/380–2004 as the DOE test 

procedure at 10 CFR 431.97. 

20Amana is a trademark of Maytag Corporation 

and is used under license to Goodman Global, Inc. 

21 Daikin Applied (formally McQuay 

International) is a subsidiary of Daikin Industries, 

Ltd. 

22This estimated breakdown of 90% standardsize and 10% non-standard-size units is based on 

information obtained in manufacturer interviews. 

This updated estimate differs from the shipment 

projections from the 2008 PTAC rulemaking quoted 

in section III.B, which projected that non-standard 

units would comprise 6.6% of the market in 2014. 

an overview of the PTAC and PTHP 

market. For more detail on the PTAC 

and PTHP market, see chapter 3 of the 

NOPR TSD. 

a. Trade Association 

The Air-Conditioning, Heating, and 

Refrigeration Institute (AHRI), formerly 

referred to as ARI, is the trade 

association representing PTAC and 

PTHP manufacturers. ARI and the Gas 

Appliance Manufacturers Association 

(GAMA) merged to become AHRI on 

January 1, 2008. 

AHRI develops and publishes 

technical standards for residential and 

commercial air-conditioning, heating, 

and refrigeration equipment using rating 

criteria and procedures for measuring 

and certifying equipment performance. 

The current Federal test procedure for 

PTACs and PTHPs incorporates by 

reference an AHRI standard—ANSI/

AHRI/CSA 310/380–2004.19 AHRI has 

developed a certification program that a 

number of manufacturers in the PTAC 

and PTHP industry have used to certify 

their equipment. Manufacturers certify 

their own equipment by providing AHRI 

with test data. Through the AHRI 

certification program, AHRI evaluates 

test data, determines if equipment 

conforms to ANSI/AHRI/CSA 310/380– 

2004, and verifies that manufacturerreported ratings are accurate. AHRI also 

maintains the Directory of Certified 

Product Performance, which is a 

database of equipment ratings for all 

manufacturers who elect to participate 

in the program. DOE used AHRI’s 

certification data, as summarized by the 

2013 AHRI directory of certified PTACs 

and PTHPs, to examine the population 

of commercially available units and to 

screen units for inclusion in the 

engineering analysis. 

AHRI commented that its database is 

a good source of information, as are the 

data provided on manufacturers’ Web 

sites. (AHRI, Framework Public Meeting 

Transcript, No. 7 at p. 56) McQuay (now 

Daikin Applied) commented that only 

five of the 19 interested parties are 

AHRI members and that non-member 

catalog and Web site performance data 

are not verified by an independent third 

party test facility. (McQuay, No. 10 at p. 

1) McQuay commented further that DOE 

should use extreme caution when using 

non-AHRI member efficiency data. 

(McQuay, No. 10 at p. 2) DOE notes that 

the Department used AHRI database and 

manufacturer-provided data as initial 

screening criteria, and that an 

independent third party test facility 

used test procedure ANSI/AHRI/CSA 

310/380–2004 to measure the 

efficiencies of all units used in the cost 

assessment analysis. 

b. Manufacturers 

DOE identified three large 

manufacturers of standard size PTAC 

and PTHP that represent more than 80 

percent of the standard size market in 

terms of shipments. These three 

manufacturers include: General Electric 

(GE) Company, Amana,20 and Daikin 

Applied.21 Ten other manufacturers 

represent the remaining 20 percent of 

the standard size PTAC and PTHP 

market: Comitale National, Inc.; E-Air, 

LLC; Electrolux Home Products, Inc.; 

Friedrich Air Conditioning Company; 

Gree Electric Appliances of Zhuhai; 

Haier America; Heat Controller, Inc.; 

Islandaire; RetroAire; and YMGI Group, 

LLC. 

DOE identified three major 

manufacturers of non-standard size 

PTAC and PTHP equipment: Daikin 

Applied, RetroAire, and Fedders 

Islandaire, Inc. These three 

manufacturers share the majority of the 

non-standard size PTAC and PTHP 

market. Other manufacturers of nonstandard size units include: Air-Con 

International; Cold Point Corporation; 

Comitale National, Inc.; E-Air LLC; ECR 

International; Evergreen LLC; Heat 

Controller, Inc.; Ice Air LLC; 

International Refrigeration Products; 

Prem Sales LLC; Simon-Aire, Inc.; and 

YMGI Group LLC. All of the major 

manufacturers certify their standard-size 

equipment with AHRI and are included 

in the AHRI directory of certified 

products. 

The standard size PTAC and PTHP 

market differs from the non-standard 

size PTAC and PTHP industry in that 

several of the manufacturers of standard 

size units are domestically owned with 

manufacturing facilities located outside 

of the United States. (In contrast, most 

non-standard size PTAC and PTHP 

production occurs in the United States.) 

Currently, there is only one major 

manufacturer of standard size PTAC and 

PTHP equipment manufacturing 

equipment in the United States. Several 

foreign-owned companies have recently 

entered the U.S. market for standardsized PTACs and PTHPs. 

Almost all of the manufacturers of 

non-standard size PTACs and PTHPs are 

domestically owned with manufacturing 

facilities located inside of the United 

States. The non-standard manufacturers 

tend to specialize in equipment solely 

for replacement applications. In 

addition, non-standard size 

manufacturers produce PTAC and PTHP 

equipment on a made-to-order basis. 

Unlike manufacturers of standard size 

equipment, there has not been an influx 

of foreign owned companies to sell nonstandard size PTAC and PTHP 

equipment in the United States. 

DOE takes into consideration the 

impact of amended energy conservation 

standards on small businesses. At this 

time, DOE has identified several small 

businesses in the PTAC and PTHP 

industry that fall under the Small 

Business Administration (SBA)’s 

definition as having 750 employees or 

fewer. DOE identified at least 12 

manufacturers that qualify as small 

businesses. The PTAC and PTHP small 

manufacturer subgroup is discussed in 

chapter 12 of the NOPR TSD and in 

section V.B.2 of this document. 

c. Shipments 

DOE reviewed data collected by the 

U.S. Census Bureau and AHRI to 

evaluate the annual PTAC and PTHP 

equipment shipment trends and the 

value of these shipments. The historical 

shipments data shown in Table IV.2 

provides a picture of the market for 

PTAC and PTHP equipment. The 

historical shipments for PTACs and 

PTHPs are based on data provided by 

AHRI for the years 2003–2012. 

TABLE IV.2—PTAC AND PTHP INDUSTRY ESTIMATED SHIPMENT DATA, 

10-YEAR TOTALS FOR 2003–2012, 

FROM AHRI (STANDARD SIZE

EQUIPMENT) 

Year 

Total shipments, standard 

size (thousands of units) 

PTAC PTHP 

2003–2012 2,458 2,055 

Using information gathered in 

manufacturer interviews, DOE estimates 

that about 90 percent of the shipments 

for PTACs and PTHPs are standard size 

units, while about 10 percent are nonstandard size units.22 AHRI did not 

provide a breakdown of shipment data 

by capacity; however, the cooling 

capacity with the highest number of 

models listed in the AHRI Directory of 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55553 

23See DOE’s discussion of technology options 

identified in the rulemaking framework document, 

available at: http://www.regulations.gov/

#!documentDetail;D=EERE-2012-BT-STD-0029-0002 

(Section 3.3). 

Certified Product Performance is 9,000 

Btu/h. 

4. Technology Assessment 

In the technology assessment, DOE 

uses information about existing and past 

technology options and prototype 

designs to help identify technologies 

that manufacturers could use to improve 

the efficiency of PTACs and PTHPs. 

This assessment provides the technical 

background and structure on which 

DOE bases its screening and engineering 

analyses. In surveying PTAC and PTHP 

technology options, DOE considered a 

wide assortment of equipment 

literature, information derived from the 

teardown analysis, information derived 

from the stakeholder interviews, and the 

previous DOE energy conservation 

standards rulemaking for airconditioning products and equipment. 

Table IV.3 presents the technology 

options that DOE identified in the 

Framework Document.23

TABLE IV.3—FRAMEWORK DOCUMENT

TECHNOLOGY OPTIONS

Compressor Improvements: 

• Scroll Compressors 

• Variable-speed Compressors 

• Higher Efficiency Compressors 

Complex Control Boards (fan motor controllers, digital ‘‘energy management’’ control 

interfaces, heat pump controllers) 

Condenser and evaporator fan and fan motor 

improvements: 

• Higher Efficiency Fan Motors 

• Clutched Fan Motors (allows PTACs 

with a single motor to reduce power 

input in recirculation mode by disengaging the condenser fan) 

Microchannel Heat Exchangers 

Increased Heat Exchanger Area 

Hydrophobic Material Treatment of Heat Exchangers (can improve repelling condensed water on evaporator coil) 

Re-circuiting Heat Exchanger Coils 

Improved Air Flow and Fan Design 

Heat Pipes (enhances the evaporator coil 

dehumidification performance) 

Corrosion Protection (helps prevent corrosion 

of coils and the resulting degradation of 

performance) 

Thermostatic Expansion Valve 

The framework document sought 

comment from interested parties on the 

technologies listed in Table IV.3, as well 

as other options that DOE had not listed. 

Several parties commented on the list of 

technologies. ASAP inquired whether 

microgroove heat exchangers are being 

considered as a potential technology. 

(ASAP, Framework Public Meeting 

Transcript, No. 7 at p. 42) DOE 

interpreted ASAP’s comment to 

reference all heat exchangers with rifled 

interior tube walls. Goodman 

commented that DOE should add 

alternative refrigerants (such as HCFC– 

32), which could have single-digit 

improvement in efficiency. (Goodman, 

No. 13 at p. 3) 

AHRI, Goodman, and SCS commented 

that proprietary designs should not be 

considered in establishing energy 

efficiency standards. (AHRI, Framework 

Public Meeting Transcript, No. 7 at p. 

61) (Goodman, No. 13 at p. 5) (SCS, 

Framework Public Meeting Transcript, 

No. 7 at p. 61) As noted in the 

framework document, DOE will not 

consider efficiency levels that can only 

be reached using proprietary designs. 78 

FR 12252 (February 22, 2013). Although 

DOE does consider technologies that are 

proprietary, it does not consider 

efficiency levels that can only be 

reached through the use of proprietary 

technologies, which could allow a 

single manufacturer to monopolize the 

market (any such technologies are 

eliminated during the engineering 

analysis). DOE only considers efficiency 

levels achieved through the use of 

proprietary designs in the engineering 

analysis if they are not part of a unique 

path to achieve that efficiency level (i.e., 

if there are other non-proprietary 

technologies capable of achieving the 

same efficiency). DOE believes the 

proposed standards for the equipment 

covered in this rulemaking would not 

mandate the use of any proprietary 

technologies, and that all manufacturers 

would be able to achieve the proposed 

levels through the use of nonproprietary designs. 

Table IV.4 lists all of the potential 

technology options considered, 

including options listed in the 

Framework Document and options 

suggested in stakeholder comments, for 

improving energy efficiency of PTACs 

and PTHPs. 

TABLE IV.4—POTENTIAL TECHNOLOGY

OPTIONS FOR IMPROVING ENERGY

EFFICIENCY OF PTACS AND PTHPS

Compressor Improvements: 

• Scroll Compressors 

• Variable-speed Compressors 

• Higher Efficiency Compressors 

Complex Control Boards 

Condenser and evaporator fan and fan motor 

improvements: 

• Higher Efficiency Fan Motors 

• Clutched Motor Fans 

Microchannel Heat Exchangers 

Rifled Interior Heat Exchanger Tube Walls 

Increased Heat Exchanger Area 

Hydrophobic Material Treatment of Heat Exchangers 

TABLE IV.4—POTENTIAL TECHNOLOGY

OPTIONS FOR IMPROVING ENERGY

EFFICIENCY OF PTACS AND

PTHPS—Continued 

Re-circuiting Heat Exchanger Coils 

Improved Air Flow and Fan Design 

Heat Pipes 

Corrosion Protection 

Thermostatic Expansion Valve 

Alternate Refrigerants (such as HCFC–32) 

B. Screening Analysis 

After DOE identified the technologies 

that might improve the energy efficiency 

of PTACs and PTHPs, DOE conducted a 

screening analysis. The purpose of the 

screening analysis is to evaluate the 

technologies that improve equipment 

efficiency to determine which 

technologies to consider further and 

which to screen out. DOE applied the 

following four screening criteria to 

determine which technologies are 

unsuitable for further consideration in 

the rulemaking (10 CFR part 430, 

subpart C, appendix A at 4(a)(4) and 

5(b)): 

1. Technological feasibility. DOE will 

consider technologies incorporated in 

commercial equipment or in working 

prototypes to be technologically 

feasible. 

2. Practicability to manufacture, 

install, and service. If mass production 

and reliable installation and servicing of 

a technology in commercial equipment 

could be achieved on the scale 

necessary to serve the relevant market at 

the time the standard comes into effect, 

then DOE will consider that technology 

practicable to manufacture, install, and 

service. 

3. Adverse impacts on product utility 

or product availability. If DOE 

determines a technology would have a 

significant adverse impact on the utility 

of the equipment to significant 

subgroups of customers, or would result 

in the unavailability of any covered 

equipment type with performance 

characteristics (including reliability), 

features, sizes, capacities, and volumes 

that are substantially the same as 

equipment generally available in the 

United States at the time, it will not 

consider this 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 this technology further. (10 

CFR part 430, subpart C, appendix A, 

4(a)(4) and 5(b)) 

Technologies that pass through the 

screening analysis are referred to as 

‘‘design options’’ in the engineering 

analysis. These four screening criteria 

do not include the propriety status of 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55554 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

24Additional information regarding EPA’s SNAP 

Program is available online at: http://www.epa.gov/ 

ozone/snap/. 

25This research was published in the journal 

ASHRAE Transactions, at: Biswas, Auvi; Barve, 

Atharva; Cremaschi, Lorenzo (2013). ‘‘An 

Experimental Study of the Performance of New Low 

Global Warming Potential (LGWP) Refrigerants at 

Extreme High Temperature Ambient Conditions in 

Residential AC Ducted Split Systems,’’ ASHRAE 

Transactions. 119(1), special section p1. 

design options. As noted previously, 

DOE will only consider efficiency levels 

achieved through the use of proprietary 

designs in the engineering analysis if 

they are not part of a unique path to 

achieve that efficiency level. 

Details of the screening analysis are in 

chapter 4 of the NOPR TSD. In view of 

the above factors, DOE screened out the 

following design options: 

Scroll Compressors 

Scroll compressors use two 

interleaved scrolls (with one scroll fixed 

and one scroll orbiting without rotating) 

to compress refrigerant, and may 

operate at higher efficiencies than the 

rotary compressors typically used in 

PTAC and PTHP applications. Goodman 

commented that presently scroll 

compressors are only available for 

equipment with capacity over 1.5 tons 

refrigeration and the largest model of 

PTAC or PTHP has capacity of 1.25 tons 

refrigeration. (Goodman, No. 13 at p. 4) 

Though scroll compressors are less 

common in the capacity range 

associated with PTAC and PTHP 

equipment (6,000 to 15,000 Btu/h), 

several companies manufacture scroll 

compressors from 9,000 Btu/h and up. 

However, DOE is not aware of scroll 

compressor models at these lower 

capacities that would fit in a PTAC 

cabinet and that are more efficient than 

the same capacity of rotary compressor. 

The rotary compressors found in reverse 

engineering of PTACs and PTHPs in the 

15,000 Btu/h class had efficiency ratings 

from 9.8 to 10.6 EER. By comparison, 

scroll compressors of similar capacity 

are rated from 7.2 EER to 11.0 EER, but 

most are too tall to fit in a 16′′ PTAC 

cabinet. 

As a result, DOE does not believe at 

this time that the use of scroll 

compressors would improve the 

efficiency of PTAC and PTHP units, 

given the size and capacity constraints 

of these units. For this reason, DOE did 

not consider scroll compressors further 

in the NOPR analyses. 

Heat Pipes 

Under humid ambient conditions, 

using heat pipes to pre-treat the entering 

air from the conditioned space can 

improve the evaporator heat exchanger 

performance. Heat pipes increase the 

latent cooling capacity (i.e., moisture 

removal) of an air-conditioner. They do 

this by transferring heat from the air 

entering the evaporator to the air leaving 

the evaporator. This allows the 

evaporator air exit temperature to be 

significantly lower. Since the maximum 

possible moisture content of air 

increases with increasing temperature, 

this also means that the reducedtemperature air at the evaporator exit 

would have lower moisture content. The 

temperature of the air is then warmed 

by the post-evaporator portion of the 

heat pipe. Heat pipes generally shift 

some of the cooling capacity of the 

product from reduction of air 

temperature to reduction of humidity, 

but do not increase the cooling capacity 

of an evaporator. They impose 

additional pressure drop that the indoor 

fan must overcome, thus they do not 

improve EER of the equipment. 

Therefore, DOE screened out heat pipes 

as a design option for improving the 

energy efficiency of PTACs and PTHPs. 

Alternate Refrigerants 

Nearly all PTAC and PTHP equipment 

is designed with R–410A as the 

refrigerant. The Environmental 

Protection Agency’s (EPA’s) Significant 

New Alternatives Policy (SNAP) 

Program evaluates and regulates 

substitutes for the ozone-depleting 

chemicals (such as air conditioning 

refrigerants) that are being phased out 

under the stratospheric ozone protection 

provisions of the Clean Air Act (CAA) 

(42 U.S.C. 7401 et seq.). The EPA’s 

SNAP Program currently lists 23 

acceptable alternatives for refrigerant 

used in the Household and Light 

Commercial Air Conditioning class of 

equipment (which includes PTAC and 

PTHP equipment). On July 9, 2014, the 

EPA issued a notice of proposed 

rulemaking proposing to list three 

flammable refrigerants as new 

acceptable substitutes, subject to use 

conditions, for refrigerant in the 

Household and Light Commercial Air 

Conditioning class of equipment. 79 FR 

38811 (July 9, 2014) 

Table IV.5 presents the list of 

potential substitute refrigerants 

(including refrigerants that are already 

approved and refrigerants that are 

proposed for approval) for use in new 

production in the Household and Light 

Commercial Air Conditioning class of 

equipment (which includes PTAC and 

PTHP equipment). DOE is not aware of 

any SNAP-approved refrigerants, or any 

refrigerants that have been proposed for 

SNAP approval, that are known to 

enable better efficiency than R–410A for 

PTAC and PTHP equipment.24 Hence, 

DOE did not consider alternate 

refrigerants for further analysis. 

TABLE IV.5—POTENTIAL SUBSTITUTES

FOR HCFCS IN NEW HOUSEHOLD

AND LIGHT COMMERCIAL AIR CONDITIONING EQUIPMENT

Substitutes Approved by EPA SNAP Program 

HFC–134a. 

ISCEON–59, NU–22, R–417A. 

R–410A. 

R–410B. 

R–407C. 

R–507, R–507A. 

Ammonia Absorption. 

Evaporative Cooling. 

Desiccant Cooling. 

R–404A. 

R–125/134a/600a. 

RS–44. 

R–421A. 

R–422D. 

R–424A. 

R–125/290/134a/600a. 

R–422C. 

R–422B. 

KDD5, R–438A. 

R–434A. 

R–407A. 

R–437A. 

R–407F. 

Substitutes Proposed by EPA SNAP Program in NOPR issued July 9, 2014 

HFC–32. 

Propane (R–290). 

R–441A. 

DOE is aware of initial research with 

drop-in applications (where an alternate 

refrigerant replaces the existing 

refrigerant in a system that is optimized 

for the existing refrigerant) using R–32 

in place of R–410A in a residential 

ducted split-system application. Initial 

research shows that, in this application, 

R–32 had a higher capacity and similar 

efficiency as R–410A, but its discharge 

temperatures and pressures were 

significantly higher.25 This suggests that 

R–32 might show efficiency comparable 

to R–410A in PTAC and PTHP 

applications, and the research is 

inconclusive regarding whether R–32 

will reduce energy use and/or by how 

much. 

DOE is not aware of test results from 

the use of alternate refrigerants in 

PTAC- or PTHP-specific applications 

that have been optimized for alternate 

refrigerants. DOE requests feedback on 

the efficacy of alternative refrigerants in 

PTAC and PTHP equipment. This is 

identified as issue 1 in section VII.E, 

‘‘Issues on Which DOE Seeks 

Comment.’’ 


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Other Technologies Not Considered in 

the Engineering Analysis 

Typically, energy-saving technologies 

that pass the screening analysis are 

evaluated in the engineering analysis. 

However, some technologies are not 

included in the analysis for other 

reasons, including: (1) Available data 

suggest that the efficiency benefits of the 

technology are negligible; (2) data are 

not available to evaluate the energy 

efficiency characteristics of the 

technology; or (3) the test procedure and 

EER or COP metric would not measure 

the energy impact of these technologies. 

Accordingly, DOE eliminated the 

following technologies from 

consideration in the engineering 

analysis based upon these three 

additional considerations: 

(1) Re-circuiting heat exchanger coils; 

(2) Rifled interior tube walls; 

(3) Microchannel heat exchangers; 

(4) Variable speed compressors; 

(5) Complex control boards; 

(6) Corrosion protection; 

(7) Hydrophobic material treatment of 

heat exchangers; 

(8) Clutched motor fans; and 

(9) Thermostatic expansion valves. 

Of these technologies, numbers 1 and 

2 are used in baseline products, so no 

additional energy savings would be 

expected from their use. Information 

indicating efficiency improvement 

potential in PTACs and PTHPs is not 

available for technology number 3; DOE 

is not aware of substantiated 

performance data for PTAC operation 

with microchannels. Any potential 

energy savings of technologies 4 through 

9 cannot be measured with the 

established energy use metrics (EER and 

COP) because those technologies are 

associated with part-load performance 

or long-term performance, which is not 

captured in the EER or COP metrics 

used for rating PTACs and PTHPs. AHRI 

commented that PTACs and PTHPs are 

generally operated at full load most of 

the time and that it is not common 

practice in the field to operate the units 

at part load. (AHRI, Framework Public 

Meeting Transcript, No. 7 at p. 36). DOE 

believes that the existing EER (full load) 

metric accurately reflects equipment 

efficiency during the year, and the 

PTAC test procedure revisions in 

progress at DOE are not expected to 

incorporate metrics that would account 

for part-load performance. 

Further details of these eliminations 

are provided below. 

Re-circuiting Heat Exchanger Coils 

Manufacturers of PTAC and PTHP 

heat exchangers may improve the heat 

transfer efficiency across the heat 

exchanger by rearranging the 

refrigerant’s path through the various 

tubes inside the heat exchanger. 

Manufacturers can rearrange the 

refrigerant path by ‘‘re-circuiting’’ the 

heat exchanger, either by splitting the 

refrigerant path into new circuits or rerouting the existing circuits. One 

objective of re-circuiting is to optimally 

pair air and refrigerant at every location 

in the heat exchanger. Goodman 

commented that PTACs are a very 

mature industry and that engineers have 

already optimized the number of 

circuits for heat transfer. (Goodman, No. 

13 at p. 4) DOE agrees with Goodman’s 

comment and has eliminated heat 

exchanger re-circuiting as a potential 

avenue for efficiency improvement. 

Rifled Interior Tube Walls 

Heat exchangers using rifled interior 

tube walls (also known as 

‘‘microgrooves’’) to enhance energy 

efficiency by improving heat transfer 

across the heat exchanger. With this 

technology, the internal face of heat 

exchanger tubes is rifled with small 

grooves that increase the interior surface 

area of the tube and induce turbulence 

in the refrigerant flow. Goodman 

commented that microgroove 

technology is currently being used in 

baseline products today. (Goodman, 

Framework Public Meeting Transcript, 

No. 7 at p. 43) Having observed that 

microgroove technology was used in the 

majority of baseline units disassembled 

in the engineering analysis, DOE agrees 

with Goodman’s comment and has 

eliminated microgroove technology as a 

potential avenue for efficiency 

improvement. 

Microchannel Heat Exchangers 

Microchannel heat exchangers in air 

conditioning applications are heat 

exchangers in which refrigerant fluid 

flows in confinements with typical 

hydraulic diameter of less than one 

millimeter. Microchannels may improve 

unit efficiency by improving the 

efficiency of heat transfer between 

refrigerant and air across the heat 

exchanger. Currently, microchannel 

heat exchangers are in the development 

stage for applications in PTACs and 

PTHPs. Goodman commented that 

microchannel heat exchangers are not 

proven for consistent, field installed 

product performance in PTACs and 

PTHPs. (Goodman, No. 13 at p. 4) ASAP 

and ACEEE commented that a 2011 

scouting report by ENERGY STAR 

identified microchannel heat 

exchangers as technology option for 

improving efficiency. (ASAP and 

ACEEE, No. 14 at p. 2) DOE notes that 

the engineering analysis was based on 

efficiency levels and, because units with 

microchannels are not commercially 

available, DOE cannot estimate the 

increase manufacturing costs associated 

with whatever efficiency gains such 

units may offer. 

ASAP and ACEEE also commented 

that Zess, Inc. Industries indicates that 

it is developing an integrated 

microchannel refrigeration system for 

applications in PTAC units as high as 15 

EER. (ASAP and ACEEE, No. 14 at p. 2) 

DOE does not have information 

regarding these prototype tests that 

would allow assessment of the 

efficiency improvements associated 

with the specific microchannel 

technology and/or the costs associated 

with its implementation in a unit that 

achieves 15 EER. 

Complex Control Boards 

Digital energy management control 

interfaces can reduce annual energy 

consumption of PTACs or PTHPs by 

optimizing the operation of the 

equipment under varying operating 

conditions. For example, they may 

allow operation managers in hotels to 

remotely turn off or change temperature 

set points of units throughout a 

building. Goodman commented that it 

offers controls that turn equipment off 

when the conditioned room is vacant. 

(Goodman, Framework Public Meeting 

Transcript, No. 7 at p. 103) Although 

this technology can reduce peak energy 

demand and also reduce overall energy 

consumption throughout the year, it 

does not increase the EER under the ARI 

310/380–2004 test procedure because of 

the steady state test conditions. 

Ebm-papst commented that some 

electronic motor speed controllers can 

cause structure-borne noise, and that a 

better controller could potentially avoid 

the need for sound attenuation, which 

would in turn free up the air path for 

increased air-side efficiency. (Ebmpapst, No. 8 at p. 1) DOE notes that 

sound attenuation between the outdoor 

and indoor sides of the unit is typically 

put in place to isolate noise originating 

from the compressor and from airflow 

across the outdoor heat exchanger. DOE 

acknowledges that well-designed motor 

controls can reduce motor noise at low 

frequencies, but DOE expresses doubt 

that this noise reduction would decrease 

the need to insulate against sound 

transmission from the compressor and 

outdoor heat exchanger. Goodman 

commented that complex control boards 

do not help steady state performance. 

(Goodman, No. 13 at p. 4) For the 

reasons noted above, DOE did not 

consider this technology in the 

engineering analysis. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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26Currently, all PTAC and PTHP manufacturers 

incorporate rotary compressors into their 

equipment designs. DOE is referring to rotary 

compressors throughout this document unless 

specifically noted. 

Corrosion Protection 

Corrosion protection materials used in 

PTACs and PTHPs also protect the 

equipment and prolong its use when it 

is exposed to chemically harsh 

operating conditions. Goodman 

commented that corrosion protection 

has a negative impact on steady state 

operation to some degree, but that 

corrosion protection may help improve 

the overall unit performance over 

several years of operation. (Goodman, 

No. 13 at p. 4) Although it is beneficial 

for the unit to be corrosion protected, 

corrosion protection does not improve 

the EER as measured by the test 

procedure. Therefore, DOE did not 

consider this technology in the 

engineering analysis. 

Hydrophobic Material Treatment of 

Heat Exchangers 

Material treatment of heat exchangers 

(also known as ‘‘plasma treatment’’) 

allows the condensate that forms on the 

fins to be repelled and drained faster 

than on non-treated heat exchangers. 

Hydrophobic treatments are used to 

reduce mineral build up and corrosion 

on heat exchanger fins, to improve longterm performance of the unit. Although 

enhanced long term performance is 

beneficial, this treatment is not shown 

to improve the EER as per the test 

procedure. 

Thermostatic Expansion Valves 

Goodman commented that thermal 

expansion valves (TXVs) help with 

seasonal performance but not steady 

state performance. (Goodman, No. 13 at 

p. 4) DOE notes that TXVs would not 

improve the energy efficiency of PTACs 

or PTHPs, because there is only one 

condition for which the fixed-orifice 

expansion device can be optimized. 

DOE has insufficient information to 

know whether testing at multiple 

conditions would make sufficient 

efficiency improvement to justify the 

increased test time. 

After screening out or otherwise 

removing from consideration most of 

the technologies, the technologies that 

DOE identified for consideration in the 

engineering analysis are included in 

Table IV.6. See chapter 3 of the TSD for 

additional detail on the technology 

assessment and the technologies 

analyzed. 

TABLE IV.6—DESIGN OPTIONS

RETAINED FOR ENGINEERING ANALYSIS

Compressor Improvements: 

• Higher Efficiency Compressors. 26

Condenser and evaporator fan and fan motor 

improvements: 

• Higher Efficiency Fan Motors. 

TABLE IV.6—DESIGN OPTIONS RETAINED FOR ENGINEERING ANALYSIS—Continued 

Increased Heat Exchanger Area. 

Improved Air Flow and Fan Design. 

These remaining technology options 

from Table IV.6 are briefly described 

below. 

Higher Efficiency Compressors 

Manufacturers can improve the 

energy efficiency of PTAC and PTHP 

units by incorporating more efficient 

components, such as high efficiency 

compressors, into their designs. 

Goodman commented that it is not 

aware of any compressors currently 

available or in development by its 

suppliers that are significantly more 

efficient than what it is are using now. 

(Goodman, No. 13 at p. 4) In private 

interviews, other manufacturers 

indicated that they are already using the 

most efficient compressor that meets 

their other design specifications (such 

as size and noise). DOE observed in 

reverse engineering analysis that PTAC 

and PTHP manufacturers use several 

different compressor models with a 

wide range of efficiency ratings. 

Higher Efficiency Fan Motors 

Manufacturers of baseline PTACs and 

PTHPs use permanent split capacitor 

(PSC) fan motors due to their modest 

cost, compact design, and durability. 

More efficient PSC motor designs 

applicable to PTACs and PTHPs are an 

ongoing industry challenge, and there 

been no substantial gain in efficiency in 

recent years. PSC manufacturers can 

improve efficiency by increasing the 

surface area of rotors, although the 

overall size of the PSC motor would 

increase in that case. PTACs and PTHPs 

have size constraints that do not allow 

an increase in motor size to a level 

which would have a significant impact 

on energy efficiency. DOE believes any 

further gains in PSC fan motor 

efficiency will be difficult to achieve, 

and has thus eliminated improvement of 

PSC fan motors as a potential avenue for 

efficiency improvement. 

Besides PSC-based fan motors, PTAC 

and PTHP original equipment 

manufacturers (OEMs) can choose to 

implement permanent magnet (PM) 

motors. Such motors typically offer 

higher efficiencies than PSC-based fan 

motors, but these improvements come 

with increased costs for the motor unit 

and control hardware. Several 

manufacturers use DC motors in their 

higher-efficiency PTAC and PTHP 

models. 

Increased Heat Exchanger Area 

Manufacturers of PTACs and PTHPs 

increase unit efficiency by increasing 

heat exchanger size, either through 

elongating the face of the heat exchanger 

or increasing the number of heat 

exchanger tube rows. Goodman 

commented that PTACs (as 

predominantly a replacement product) 

are constrained by the dimensions of the 

equipment that they are replacing. 

(Goodman, No. 13 at p. 4) Because of 

these constraints on unit size, there are 

limits to the efficiency gains that may be 

had by increasing heat exchanger size. 

At least one manufacturer has 

incorporated bent heat exchanger coils 

to increase the heat exchanger face area 

while remaining inside the standard 

size unit constraints. 

Improved Air Flow and Fan Design 

Manufacturers of PTACs and PTHPs 

currently use several techniques to 

shape and direct airflow inside PTAC 

and PTHP units. Ebm-papst commented 

that DOE should consider ‘‘optimization 

of air path to minimize airflow 

impedance’’ as a technology option. 

Ebm-papst also commented that fine 

tuning the fan blade design should be 

considered as a technology option. Ebmpapst further commented that DOE 

should look into optimization of the fan 

selection such that the peak fan 

efficiency is close to the performance 

demands of the PTAC and enhances the 

air path in the unit. DOE accepts that 

manufacturers may improve unit 

efficiency by selecting appropriate fan 

and motor combinations. (Ebm-papst, 

No. 8 at p. 1) 

C. Engineering Analysis 

The engineering analysis establishes 

the relationship between an increase in 

energy efficiency of the equipment and 

the increase in manufacturer selling 

price (MSP) associated with that 

efficiency level. This relationship serves 

as the basis for cost-benefit calculations 

for individual customers, 

manufacturers, and the nation. In 

determining the cost-efficiency 

relationship, DOE estimates the increase 

in manufacturer cost associated with 

increasing the efficiency of equipment 

above the baseline up to the maximum 

technologically feasible (‘‘max-tech’’) 

efficiency level for each equipment 

class. 


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27 DOE conducted interviews with high- and lowvolume PTAC and PTHP manufacturers, and 

collected information regarding shipments of 

PTACs and PTHPs at different cooling capacity 

levels. 

28 DOE found the cooling capacity of 9,000 Btu/ 

h to have the highest number of models available 

based on data in the 2013 AHRI Directory and the 

ACEEE database of equipment. 

1. Methodology 

DOE has identified three basic 

methods for developing cost-efficiency 

curves: (1) The design-option approach, 

which provides the incremental costs of 

adding design options to a baseline 

model that will improve its efficiency 

(i.e., lower its energy use); (2) the 

efficiency-level approach, which 

provides the incremental costs of 

moving to higher energy efficiency 

levels, without regard to the particular 

design option(s) used to achieve such 

increases; and (3) the reverseengineering (or cost-assessment) 

approach, which provides ‘‘bottom-up’’ 

manufacturing cost assessments for 

achieving various levels of increased 

efficiency, based on teardown analyses 

(or physical teardowns) providing 

detailed data on costs for parts and 

material, labor, shipping/packaging, and 

investment for models that operate at 

particular efficiency levels. 

In the framework document, DOE 

proposed using an efficiency-level 

approach combined with a costassessment approach to determine the 

cost-efficiency relationship, and 

requested comments on this approach. 

78 FR 12252 (February 22, 2013). 

Goodman commented that the process 

for DOE to calculate manufacturer costs 

is adequate, but that the cost analysis 

from previous rulemakings tended to be 

on the low side (even for a large 

manufacturer), and that aggressively low 

cost estimates could impact small 

businesses. (Goodman, No. 13 at p. 5) 

To gather information on the particular 

and unique costs that small businesses 

face, DOE interviewed a number of 

small business manufacturers of PTACs 

and PTHPs. In these interviews, DOE 

asked questions regarding the 

component costs, manufacturing costs, 

and cost of conversion to manufacturing 

PTAC and PTHP equipment with higher 

efficiency. Data collected from these 

interviews with small businesses were 

used in the engineering analysis and 

subsequent cost-benefit calculations. 

In the absence of recommended 

alternative approaches, DOE conducted 

this engineering analysis for PTACs and 

PTHPs using a combination of the 

efficiency level and cost-assessment 

approaches. More specifically, DOE 

identified the efficiency levels for the 

analysis based on the range of rated 

efficiencies of PTAC and PTHP 

equipment in the AHRI database. DOE 

selected PTAC and PTHP equipment 

that was representative of the market at 

different efficiency levels, then 

purchased, tested, and reverse 

engineered the selected equipment. DOE 

used the cost-assessment approach to 

determine the manufacturing 

production costs for PTAC and PTHP 

equipment across a range of efficiencies 

from the baseline to max-tech efficiency 

levels. 

Where feasible, DOE selected models 

for reverse engineering with low and 

high efficiencies from a given 

manufacturer, at both representative 

cooling capacity levels and for both 

PTACs and PTHPs. The methodology 

used to perform reverse engineering 

analysis and derive the cost-efficiency 

relationship is described in chapter 5 of 

the TSD. 

2. Equipment Classes Analyzed 

DOE developed its engineering 

analysis for the six equipment classes 

associated with standard-size PTACs 

and PTHPs listed in Table IV.1. As 

discussed in section III.B of this NOPR, 

DOE did not consider amending energy 

efficiency standards for non-standard 

size equipment classes because of their 

low and declining market share and 

because of a lack of adequate 

information to analyze these units. 

For PTACs and PTHPs, DOE focused 

its analysis on high-shipment-volume 

cooling capacities spanning the range of 

available equipment. Based on 

manufacturer interviews,27 DOE found 

that the majority of shipments are in the 

classes with cooling capacity between 

7,000 Btu/h to 15,000 Btu/h (see chapter 

3 of the TSD for more details on the 

shipments data). In the framework 

document, DOE indicated that it would 

analyze units at the representative 

capacity of 9,000 Btu/h, and requested 

comments on this approach. 78 FR 

12252 (February 22, 2013). Goodman 

commented that a 15,000 Btu/h model 

should be included in the comparison, 

specifically because 15,000 Btu/h is the 

largest typical capacity for PTAC and 

PTHP equipment, and which is spaceconstrained by its standard dimensions. 

(Goodman, No. 13 at p. 5) Hence, DOE 

conducted analysis for two 

representative cooling capacities: 9,000 

Btu/h and 15,000 Btu/h. The 9,000 Btu/ 

h cooling capacity represents the 

greatest number of models available on 

the market,28 while the 15,000 Btu/h 

cooling capacity represents the greater 

technical hurdles for efficiency 

improvement, considering the size 

constraints of standard-size PTACs and 

PTHPs. 

The selection of two cooling 

capacities for analysis, at 9,000 Btu/h 

and 15,000 Btu/h, allowed DOE to 

investigate the slope of the energy 

efficiency capacity relationship. For the 

purposes of conducting the analyses, 

DOE believes that the results from the 

two representative cooling capacities 

can be extrapolated to the entire range 

of cooling capacities for each equipment 

class. DOE developed the cost-efficiency 

curves based on these representative 

cooling capacities of standard-size units. 

For the PTAC and PTHP equipment 

classes with a cooling capacity greater 

than or equal to 7,000 Btu/h and less 

than or equal to 15,000 Btu/h, the 

energy efficiency equation characterizes 

the relationship between the EER of the 

equipment and cooling capacity (i.e., 

EER is a function of the cooling capacity 

of the equipment) in which EER 

decreases as capacity increases. For all 

cooling capacities less than 7,000 Btu/ 

h and all cooling capacities greater than 

15,000 Btu/h, the EER is calculated 

based on the energy efficiency equation 

for 7,000 Btu/h or 15,000 Btu/h, 

respectively. 

3. Cost Model 

DOE developed a manufacturing cost 

model to estimate the manufacturing 

production cost (MPC) of PTACs and 

PTHPs. The cost model is a spreadsheet 

model that converts the materials and 

components in the bills of materials 

(BOMs) for PTAC and PTHP equipment 

into dollar values based on the price of 

materials, average labor rates associated 

with fabrication and assembling, and 

the cost of overhead and depreciation, 

as determined based on manufacturer 

interviews and DOE expertise. To 

convert the information in the BOMs 

into dollar values, DOE collected 

information on labor rates, tooling costs, 

raw material prices, and other factors. 

For purchased parts, the cost model 

estimates the purchase price based on 

volume-variable price quotations and 

detailed discussions with manufacturers 

and component suppliers. For fabricated 

parts, the prices of raw metal materials 

(e.g., tube, sheet metal) are estimates on 

the basis of five-year averages (from 

2006 to 2011). The cost of transforming 

the intermediate materials into finished 

parts is estimated based on current 

industry pricing. Further details on the 

manufacturing cost analysis are 

provided in chapter 5 of the TSD. 

Developing the cost model involved 

disassembling various PTACs and 

PTHPs, analyzing the materials and 

manufacturing processes, and 

estimating the costs of purchased 


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55558 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

29 DOE’s estimates of potential energy savings 

from an amended energy conservation standard are 

further discussed in section IV.H. 

30 DOE announced in the framework document 

for this rulemaking that it planned to consider the 

maximum efficiency level equal to 20% above the 

2012 PTAC standard, because DOE observed a unit 

rated at that level in the 2013 AHRI Directory of 

Certified Product Performance. 78 FR 12252. Since 

issuing the framework document, DOE has acquired 

and tested many units rated at high efficiency 

levels. Having completed these observations, DOE 

believes that a the highest performing standard size 

PTAC or PTHP unit on the market can achieve an 

efficiency of 18% above the 2012 PTAC cooling 

standard. 

components. In addition to 

disassembling various PTACs and 

PTHPs, manufacturers provided DOE 

supplemental component cost data for 

various PTAC and PTHP equipment. 

DOE reported the MPCs in aggregated 

form to maintain confidentiality of 

sensitive component data. DOE obtained 

input from stakeholders on the MPC 

estimates and assumptions to confirm 

accuracy. DOE used the cost model for 

all of the representative cooling 

capacities within the PTAC and PTHP 

equipment classes. Chapter 5 of the TSD 

provides details and assumptions of the 

cost model. 

4. Baseline Efficiency Level 

The engineering analysis estimates 

the incremental costs for equipment 

with efficiency levels above the baseline 

in each equipment class. For the 

purpose of the engineering analysis, 

DOE used the engineering baseline EER 

as the starting point to build the cost 

efficiency curves. As discussed in 

section III.A, ANSI/ASHRAE/IES 

Standard 90.1–2013 was issued in the 

course of this rulemaking, and this 

revised Standard 90.1–2013 amended 

standard levels for PTACs, raising 

standards by 1.8% above the Federal 

minimum energy conservation 

standards for PTACs. DOE is obligated 

either to adopt those standards 

developed by ASHRAE or to adopt 

levels more stringent than the ASHRAE 

levels if there is clear and convincing 

evidence in support of doing so. (42 

U.S.C. 6313(a)(6)(A)). For the purposes 

of calculating energy savings over the 

ANSI/ASHRAE/IES standard, DOE 

identified the ANSI/ASHRAE/IES 

Standard 90.1–2013 as the baseline 

efficiency level.29

The baseline efficiency levels for each 

equipment class are presented below in 

Table IV.7. 

TABLE IV.7—BASELINE EFFICIENCY LEVELS

Equipment type Equipment class Baseline efficiency equation Cooling capacity 

Baseline 

efficiency 

level 

PTAC ................ Standard Size ............................... EER = 14.0 ¥ (0.300 × Cap †/1000) ...................... 9,000 Btu/h .......

15,000 Btu/h .....

11.3 EER 

9.5 EER 

PTHP ................ Standard Size ............................... EER = 14.0 ¥ (0.300 × Cap †/1000) ...................... 9,000 Btu/h .......

15,000 Btu/h .....

11.3 EER 

9.5 EER 

† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature. 

5. Incremental Efficiency Levels 

DOE examined performance data of 

standard size PTACs and PTHPs 

published in the AHRI Directory of 

Certified Product Performance (AHRI 

Directory) and on manufacturers’ Web 

sites in order to select efficiency levels 

for consideration in the rulemaking. 

AHRI commented that its database is a 

good source of information as well as 

data from manufacturers’ Web sites. 

(AHRI, Framework Public Meeting 

Transcript, No. 7 at p. 56) McQuay 

commented that Web site performance 

data are not verified by an independent 

third party test facility. (McQuay, No. 10 

at p. 1) DOE used Web site-published 

data as an initial screening mechanism 

to select units for reverse engineering; a 

third party test facility verified the 

actual performance of the units selected 

for analysis. 

In the framework document, DOE 

proposed to analyze levels for standard 

size PTACs that are 4%, 8%, 12%, 16%, 

and 20% more efficient than the 

amended PTAC standards that became 

effective on October 8, 2012. Goodman 

commented that the proposed increment 

of 4% for standard size PTACs is too 

large because PTAC equipment is spaceconstrained, and Goodman’s opinion, 

2% or 3% increments would be more 

reasonable. (Goodman, No. 13 at p. 5) 

DOE acknowledges Goodman’s 

comment, but believes that an 

increment of 4% is appropriate to 

maintain a manageable number of 

efficiency levels spanning the range of 

efficiency from the 2012 PTAC standard 

to the max-tech level of 20% above the 

2012 PTAC standard. 

After extensive unit testing, DOE 

revised the maximum technology level 

from 20% above 2012 PTAC standard 

stated in the framework document down 

to 18% above the 2012 PTAC 

standard.30 The maximum efficiency 

level, at 18% above the standards that 

became effective on October 8, 2012, 

coincides with the maximum efficiency 

level observed in the market for 

standard size PTACs and PTHPs. DOE 

has independent test data to verify that 

one PTHP unit demonstrated a cooling 

efficiency at this ‘‘max tech’’ level. 

Although the rated efficiencies of 

PTACs without reverse cycle heating 

extend only up to the 16% efficiency 

level, DOE expects that such equipment 

should be able to attain the same 

cooling mode efficiencies as PTHPs. 

DOE analyzed levels for standard size 

PTACs that are 1.8%, 4%, 8%, 12%, 

16%, and 18% more efficient than the 

amended PTAC standards that became 

effective on October 8, 2012. AHRI 

commented that there is an addendum 

to ANSI/ASHRAE/IES Standard 90.1– 

2010 which amends the efficiency 

standards for standard size PTACs. 

(AHRI, No. 11 at p. 4) Separately, AHRI 

commented that the amended efficiency 

level should be included in DOE’s 

analysis. (AHRI, Framework Public 

Meeting Transcript, No. 7 at p. 101) 

Since DOE received these comments, 

this addendum prescribing new 

efficiency standards for standard-size 

PTACs was integrated into ANSI/

ASHRAE/IES Standard 90.1–2013. DOE 

selected the first efficiency level of 1.8% 

to align with the amended ANSI/

ASHRAE/IES Standard 90.1–2013 

efficiency level for PTACs. Each of the 

remaining levels is represented by a 

percentage increase above the EER value 

of the PTAC standards that became 

effective on October 8, 2012. 

For the heating efficiency of PTHPs, 

DOE did not develop a cost-efficiency 

curve separately to represent the cost of 

improving COP. Rather, DOE correlated 

the COP associated with each efficiency 

level with the efficiency level’s EER 

based on COP and EER ratings from the 

AHRI database. DOE established a 

representative curve based on this data 

to obtain a relationship for COP in terms 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55559 

of EER. DOE used this relationship to 

select COP values corresponding to each 

efficiency level. This approach takes 

into consideration the fact that a PTHP’s 

EER and COP are related and cannot be 

independently analyzed, while basing 

the analysis on a representative average 

relationship between the two efficiency 

metrics. To determine the typical 

relationship between EER and COP, 

DOE examined the entire database of 

rated equipment and determined a 

relationship based on the EER and COP 

ratings of the collective body of certified 

PTAC and PTHP equipment. 

PG&E, SCGC, SDG&E, and SCE 

commented that DOE should use 

caution in drawing conclusions based 

on a relationship between EER and COP 

ratings, as this may decrease overall 

efficiency of the unit. Their joint 

comment states that, depending on the 

climate zone and operating cycle of a 

given unit, there may be instances 

where trading off COP for higher EER 

results in greater operating efficiency 

overall. (PG&E, SCGC, SDG&E, SCE, No. 

12 at p. 3) DOE did not observe any 

instances of standard size equipment 

manufacturers producing different 

PTHP models for different climate 

zones. DOE notes that regional 

standards are not being considered in 

this rulemaking. 

The efficiency levels for each 

equipment class that DOE considered 

for the NOPR analyses are presented in 

Table IV.8. The percentages associated 

with efficiency levels (ELs) indicate the 

percentage above the current Federal 

standard for PTACs. 

TABLE IV.8—INCREMENTAL EFFICIENCY LEVELS FOR STANDARD SIZE PTACS AND PTHPS

Equipment type Cooling 

capacity 

Efficiency levels (percentages relative to 2012 PTAC ECS) 

Current federal 

PTAC ECS * 

EL1, 

baseline, 

1.8% ** 

EL2, 4% EL3, 8% EL4, 12% EL5, 16% EL6, 18% 

(MaxTech) 

PTAC ................. All, EER .......... 13.8 ¥ (0.300 × 

Cap †).

14.0 ¥ (0.300 × 

Cap †).

14.4 ¥ (0.312 × 

Cap †).

14.9 ¥ (0.324 × 

Cap †).

15.5 ¥ (0.336 × 

Cap †).

16.0 ¥ (0.348 × 

Cap †).

16.3 ¥ (0.354 × 

Cap †). 

9,000 Btu/h ..... 11.1 EER ......... 11.3 EER ......... 11.5 EER ......... 12.0 EER ......... 12.4 EER ......... 12.9 EER ......... 13.1 EER.

15,000 Btu/h ... 9.3 EER ........... 9.5 EER ........... 9.7 EER ........... 10.0 EER ......... 10.4 EER ......... 10.8 EER ......... 11.0 EER. 

Equipment type Cooling 

capacity 

Baseline, 

1.8% ** 

EL1, 4% EL2, 8% EL3, 12% EL4, 16% EL5, 18% 

(MaxTech) 

PTHP ................. All, EER .......... .......................... 14.0 ¥ (0.300 × 

Cap †).

14.4 ¥ (0.312 × 

Cap †).

14.9 ¥ (0.324 × 

Cap †).

15.5 ¥ (0.336 × 

Cap †).

16.0 ¥ (0.348 × 

Cap †).

16.3 ¥ (0.354 × 

Cap †). 

All, COP ......... .......................... 3.7 ¥ (0.052 × 

Cap †).

3.8 ¥ (0.058 × 

Cap †).

4.0 ¥ (0.064 × 

Cap †).

4.1 ¥ (0.068 × 

Cap †).

4.2 ¥ (0.070 × 

Cap †).

4.3 ¥ (0.073 × 

Cap †). 

9,000 Btu/h ..... .......................... 11.3 EER .........

3.2 COP ...........

11.5 EER .........

3.3 COP ...........

12.0 EER .........

3.4 COP ...........

12.4 EER .........

3.5 COP ...........

12.9 EER .........

3.6 COP ...........

13.1 EER. 

3.6 COP. 

15,000 Btu/h ... .......................... 9.5 EER ...........

2.9 COP ...........

9.7 EER ...........

2.9 COP ...........

10.0 EER .........

3.0 COP ...........

10.4 EER .........

3.1 COP ...........

10.8 EER .........

3.2 COP ...........

11.0 EER. 

3.2 COP. 

* This level represents the current Federal minimum for PTAC equipment. 

** This level represents the ANSI/ASHRAE/IES Standard 90.1–2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline for PTAC and 

PTHP equipment since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. (a)(6)(A)(ii)(I)). DOE notes that the Baseline 

level is 1.8% higher than current Federal ECS for PTAC equipment, but is equivalent to current Federal ECS for PTHP equipment. For PTAC equipment, the Baseline 

level is also termed EL1, and is compared to current Federal ECS in the energy savings analysis in section V.B.3.a. 

† Cap means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature. 

ASAP commented that DOE should 

evaluate at least one level higher than 

the current market max efficient unit to 

arrive a true max-tech unit. (ASAP, 

Framework Public Meeting Transcript, 

No. 7 at p. 56–57) Separately, ASAP and 

ACEEE stated that DOE must capture 

the ‘‘true max-tech level,’’ which they 

claim would be higher that what is 

currently represented by the market. 

(ASAP and ACEEE, No. 14 at p. 3) DOE 

acknowledges the comments from ASAP 

and ACEEE and confirms that this 

analysis tested the most efficient 

standard size PTAC and PTHP units 

available. These units include all of the 

efficiency-improving design options 

listed in the screening analysis 

(increased heat exchanger area, high 

efficiency compressors, and high 

efficiency fan motors). DOE does not 

believe it is feasible to include 

efficiency levels higher than this, as 

achieving efficiency levels higher than 

max tech would depend upon design 

options that have not been 

demonstrated in the market for PTACs 

and PTHPs. 

6. Equipment Testing and Reverse 

Engineering 

As discussed above, for the 

engineering analysis, DOE specifically 

analyzed representative capacities of 

9,000 Btu/h and 15,000 Btu/h to 

develop incremental cost-efficiency 

relationships. DOE selected twenty 

different models representing PTAC and 

PTHP equipment types at 9,000 Btu/h 

and 15,000 Btu/h capacities. DOE 

selected the models as a representative 

sample of the market at different 

efficiency levels.DOE based the 

selection of units for testing and reverse 

engineering on the efficiency data 

available in the AHRI certification 

database. Details of the key features of 

the tested units are presented in chapter 

5 of the NOPR TSD. 

DOE conducted testing on each unit 

according to the DOE test procedure 

outlined at 10 CFR 431.96, which 

incorporates by reference AHRI 

Standard 310/380–2004 (which itself 

incorporates ASHRAE Standard 16 and 

ASHRAE Standard 58). DOE then 

conducted physical teardowns on each 

test unit to develop a manufacturing 

cost model and to evaluate key design 

features (e.g., improved heat exchangers, 

compressors, fans/fan motors). 

7. Cost-Efficiency Results 

The results of the engineering analysis 

are reported as a set of cost-efficiency 

data (or ‘‘curves’’) in the form of MPC 

(in dollars) versus EER, which form the 

basis for other analyses in the NOPR. 

DOE created cost-efficiency curves for 

the two representative cooling 

capacities within the two standard-size 

equipment classes of PTACs and PTHPs, 

as discussed in section IV.C.3, above. 

DOE developed the incremental costefficiency results shown in Table IV.9 

for each representative cooling capacity. 

These cost results are incremented from 

a baseline efficiency level equivalent to 

the ANSI/ASHRAE/IES Standard 90.1– 

2013. Details of the cost-efficiency 

analysis are presented in chapter 5 of 

the NOPR TSD. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55560 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

TABLE IV.9—INCREMENTAL MANUFACTURING PRODUCTION COSTS (MPC) FOR STANDARD SIZE PTACS AND PTHPS

Equipment type Cooling capacity 

Efficiency levels 

EL1, 

baseline * EL2 EL3 EL4 EL5 EL6 

PTAC ................................ 9,000 Btu/h ....................... $0.00 $4.44 $13.08 $22.41 $32.45 $37.73 

15,000 Btu/h ..................... 0.00 4.26 15.93 30.97 49.38 59.86 

Baseline * EL1 EL2 EL3 EL4 EL5 

PTHP ................................ 9,000 Btu/h ....................... $0.00 $4.44 $13.08 $22.41 $32.45 $37.73 

15,000 Btu/h ..................... 0.00 4.26 15.93 30.97 49.38 59.86 

* This level represents the ANSI/ASHRAE/IES Standard 90.1–2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. (a)(6)(A)(ii)(I)). DOE notes that the 

Baseline level is 1.8% higher than current Federal ECS for PTAC equipment, but is equivalent to current Federal ECS for PTHP equipment. For 

PTAC equipment, the Baseline level is also termed EL1. 

D. Markups To Determine Equipment 

Price 

The markups analysis develops 

appropriate markups in the distribution 

chain to convert the estimates of 

manufacturer selling price (MSP) 

derived in the engineering analysis to 

customer prices. (‘‘Customer’’ refers to 

purchasers of the equipment being 

regulated.) DOE calculates overall 

baseline and incremental markups 

based on the equipment markups at 

each step in the distribution chain. The 

incremental markup relates the change 

in the manufacturer sales price of higher 

efficiency models (the incremental cost 

increase) to the change in the customer 

price. 

DOE developed supply chain 

markups in the form of multipliers that 

represent increases above MSP and 

include distribution costs. DOE applied 

these markups to the MSPs it developed 

in the engineering analysis, and then 

added sales taxes to arrive at the 

equipment prices for baseline and 

higher efficiency equipment. See 

chapter 6 of the TSD for additional 

details on markups. 

In the 2008 Final Rule, DOE identified 

four distribution channels for PTACs 

and PTHPs, as shown in Table IV.10, to 

describe how the equipment passes 

from the manufacturer to the customer. 

73 FR 58772. In the new construction 

market, the manufacturer sells the 

equipment directly to the customer 

through a national account. In the 

replacement market, the manufacturer 

sells to a wholesaler, who sells to a 

mechanical contractor, who in turn sells 

the equipment to the customer or end 

user. In the third distribution channel, 

used in both the new construction and 

replacement markets, the manufacturer 

sells the equipment to a wholesaler. The 

wholesaler sells the equipment to a 

mechanical contractor, who sells it to a 

general contractor, who in turn sells the 

equipment to the customer or end user. 

In the fourth distribution channel, also 

used in both the new construction and 

replacement markets, the manufacturer 

sells the equipment to a wholesaler, 

who directly sells to the purchaser. DOE 

used these same distribution channels 

for the NOPR. 

TABLE IV.10—DISTRIBUTION CHANNELS FOR PTAC AND PTHP EQUIPMENT

Channel 1 Channel 2 Channel 3 Channel 4 

Manufacturer (through national accounts).Manufacturer .................................

Wholesaler ....................................

Manufacturer .................................

Wholesaler ....................................

Mechanical Contractor ..................

Manufacturer. 

Wholesaler. 

Mechanical Contractor. 

General Contractor. 

Customer ....................................... Customer ...................................... Customer ...................................... Customer. 

In the 2008 Final Rule, DOE also 

estimated percentages of the total sales 

in the new construction and 

replacement markets for each of the four 

distribution channels, as shown in 

Table IV.11. Commenting on the 

framework document, Goodman stated 

that the distribution channels from the 

2008 rulemaking are still applicable 

today. (Goodman, No. 13 at p. 5) 

Accordingly, DOE used the same shares 

of the market for the NOPR. However, 

DOE updated the distribution of 

equipment to the new construction and 

replacement markets by using the ratio 

of projected new construction 

shipments to total shipments in the 

compliance year for PTAC equipment. 

DOE requests comment regarding the 

selected channels and distribution of 

shipments through the channels. This is 

identified as issue 2 in section VII.E, 

‘‘Issues on Which DOE Seeks 

Comment.’’ 

TABLE IV.11—SHARE OF MARKET BY DISTRIBUTION CHANNEL FOR PTAC AND PTHP EQUIPMENT

Distribution channel New construction 

(percent) 

Replacement 

(percent) 

Wholesaler-Customer .............................................................................................................. 30 15 

Wholesaler-Mech Contractor-Customer .................................................................................. 0 25 

Wholesaler-Mech Contractor-General Contractor-Customer .................................................. 38 60 

National Account ...................................................................................................................... 32 0 

Total .................................................................................................................................. 100 100 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55561 

31 ‘‘2012 Profit Report,’’ Heating Air Conditioning 

& Refrigeration Distributors International. February 

2012. Available online at: www.hardinet.org/ProfitReport. 

32 ‘‘2005 Financial Analysis for the HVACR 

Contracting Industry,’’ Air Conditioning Contractors 

of America. 2005. 

33 ‘‘Plumbing, Heating, and Air-Conditioning 

Contractors. Sector 23: 238220. Construction: 

Industry Series, Preliminary Detailed Statistics for 

Establishments, 2007,’’ U.S. Census Bureau. 2007. 

34 ‘‘2007 Economic Census, Construction Industry 

Series and Wholesale Trade Subject Series,’’ U.S. 

Census Bureau. Available online at https://

www.census.gov/newsroom/releases/archives/

construction_industries/2009–07–27_economic_

census.html. 

35Walker, I.S., et al., ‘‘System Effects of High 

Efficiency Filters in Homes,’’ Lawrence Berkeley 

National Laboratory, LBNL–6144E, 2013. 

For each of the steps in the 

distribution channels presented above, 

DOE estimated a baseline markup and 

an incremental markup. DOE defines a 

baseline markup as a multiplier that 

converts the MSP of equipment with 

baseline efficiency to the customer 

purchase price for that equipment. An 

incremental markup is defined as the 

multiplier to convert the incremental 

increase in MSP of higher efficiency 

equipment to the incremental customer 

purchase price for that equipment. Both 

baseline and incremental markups are 

independent of the efficiency levels of 

the PTACs and PTHPs. 

DOE developed the markups for each 

step of the distribution channels based 

on available financial data. DOE utilized 

updated versions of the following data 

sources: (1) The Heating, Air 

Conditioning & Refrigeration 

Distributors International 2012 Profit 

Report 31 to develop wholesaler 

markups; (2) the Air Conditioning 

Contractors of America’s (ACCA) 2005 

Financial Analysis for the HVACR 

Contracting Industry 32 and U.S. Census 

Bureau economic data 33 to develop 

mechanical contractor markups; and (3) 

U.S. Census Bureau economic data for 

the commercial and institutional 

building construction industry to 

develop general contractor markups.34

DOE estimated an average markup for 

sales through national accounts to be 

one-half of the markup for the 

wholesaler-to-customer distribution 

channel. DOE determined this markup 

for national accounts on an assumption 

that the resulting national account 

equipment price must fall somewhere 

between the MSP (i.e., a markup of 1.0) 

and the customer price under a typical 

chain of distribution (i.e., a markup of 

wholesaler, mechanical contractor, or 

general contractor). 

The overall markup is the product of 

all the markups (baseline or incremental 

markups) for the different steps within 

a distribution channel. Replacement 

channels include sales taxes, which 

were calculated based on State sales tax 

data reported by the Sales Tax 

Clearinghouse. 

E. Energy Use Analysis 

The energy use analysis provides 

estimates of the annual unit energy 

consumption (UEC) of PTAC and PTHP 

equipment at the considered equipment 

classes and efficiency levels. The annual 

UECs are used in subsequent analyses 

including the LCC, PBP, and National 

Energy Savings (NES). 

Stakeholders commented on the data 

sources for UEC data. AHRI stated that 

the methodology used by the ASHRAE 

90.1 Committee to estimate energy 

savings was satisfactory and should be 

used in this rulemaking. (AHRI, No. 7 at 

p. 69) Goodman, however, commented 

that it does not have significant 

concerns with the energy use analysis 

performed in the 2008 rulemaking. 

(Goodman, No. 13 at p. 5) Since the 

inputs, software, and methodology of 

the energy use analysis in the 2008 

rulemaking was vetted among the 

stakeholders and there were no 

comments on the deficiency of the 

same, DOE used the results of the 

whole-building simulation performed in 

the 2008 rulemaking for the source of 

UEC data. However, DOE wishes to 

address certain stakeholder concerns, as 

described below. 

AHRI commented that new 

requirements for minimum air filter 

effectiveness finalized in 2013 for 

ASHRAE Standard 62.1 would increase 

pressure drop and increase fan power. 

(AHRI, No. 11 at p. 4) Goodman echoed 

AHRI’s concern. (Goodman, No. 13 at p. 

6) In response, DOE notes that a 

simulation- and field-based study found 

that the extent of the impact on energy 

consumption due to the change in filter 

effectiveness at the levels finalized is 

less than 1%.35 DOE does not expect 

such an improvement to impact outputs 

significantly enough to warrant a change 

to the value of the filter pressure drop. 

To estimate the UEC for each 

equipment class of PTAC and PTHP, 

DOE began with the cooling UECs for 

PTACs and the combined cooling and 

heating UECs for PTHPs utilized in the 

2008 standards rulemaking. 73 FR 

58772. The cooling and heating UECs 

for PTHPs were split, assuming equal 

cooling energy use for PTACs and 

PTHPs. In addition, DOE adjusted the 

base-year UECs to account for changes 

in climate (i.e., heating degree-days and 

cooling degree-days) between 2008 and 

2013, based on a typical meteorological 

year (TMY) hourly weather data set 

(referred to as TMY2) and an updated 

TMY3 data set. 

Where identical efficiency levels and 

cooling capacities were available, DOE 

used the cooling or heating UEC directly 

from the previous rulemaking. For 

additional efficiency levels, DOE scaled 

the cooling UECs based on 

interpolations between EERs and scaled 

the heating UECs based on 

interpolations between COPs, both at a 

constant cooling capacity. Likewise, for 

additional cooling capacities, DOE 

scaled the UECs based on interpolations 

between cooling capacities at a constant 

EER. 

For the LCC and PBP analyses, UECs 

were determined for the representative 

cooling capacities of 9,000 Btu/h and 

15,000 Btu/h for which cost-efficiency 

curves were provided, as discussed in 

section IV.C.7. For the NES, UECs were 

determined for the cooling capacities of 

7,000 Btu/h, 9,000 Btu/h, and 15,000 

Btu/h for which aggregate shipments 

were provided by AHRI, as highlighted 

in section IV.G. National UEC estimates 

for PTACs and PTHPs for the LCC and 

PBP analyses, and the NES, are 

described in detail in chapter 8 of the 

TSD. 

F. Life Cycle Cost and Payback Period 

Analyses 

The purpose of the LCC and PBP 

analysis is to analyze the effects of 

potential amended energy conservation 

standards on customers of PTAC and 

PTHP equipment by determining how a 

potential amended standard affects their 

operating expenses (usually decreased) 

and their total installed costs (usually 

increased). 

The LCC is the total customer expense 

over the life of the equipment, 

consisting of equipment and installation 

costs plus operating costs over the 

lifetime of the equipment (expenses for 

energy use, maintenance, and repair). 

DOE discounts future operating costs to 

the time of purchase using customer 

discount rates. The PBP is the estimated 

amount of time (in years) it takes 

customers to recover the increased total 

installed cost (including equipment and 

installation costs) of a more efficient 

type of equipment through lower 

operating costs. DOE calculates the PBP 

by dividing the change in total installed 

cost (normally higher) due to a standard 

by the change in annual operating cost 

(normally lower) that results from the 

standard. 

For any given efficiency level, DOE 

analyzed these impacts for PTAC and 

PTHP equipment starting in the 

compliance years as set for in section 

V.B.1.a by calculating the change in 

customers’ LCCs likely to result from 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55562 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

36 ‘‘Producer Price Indexes,’’ Bureau of Labor 

Statistics (BLS). 2014. Available online at 

www.bls.gov/ppi/. 

37RS Means Company, Inc. RS Means Mechanical 

Cost Data 2013. 2013. Kingston, MA. 

38Coughlin, K., C. Bolduc, R. Van Buskirk, G. 

Rosenquist and J.E. McMahon, ‘‘Tariff-based 

Analysis of Commercial Building Electricity 

Prices.’’ Lawrence Berkeley National Laboratory. 

LBNL–55551. 2008. 

39 ‘‘EEI Typical Bills and Average Rates Report 

(bi-annual, 2007–2012),’’ Edison Electric Institute, 

Washington, DC 2012. 

40 ‘‘Annual Energy Outlook 2013,’’ U.S. Energy 

Information Administration. May, 2013. Available 

online at http://www.eia.gov/forecasts/archive/

aeo13/index.cfm. 

41RS Means Company, Inc. RSMeans Online. 

(Last accessed March 26, 2013.) http://

www.rsmeansonline.com. 

higher efficiency levels compared with 

the ASHRAE baseline efficiency levels 

for the PTAC and PTHP equipment 

classes discussed in the engineering 

analysis. 

DOE conducted the LCC and PBP 

analyses for the PTAC and PTHP 

equipment classes using a spreadsheet 

model developed in Microsoft Excel. 

When combined with Crystal Ball (a 

commercially available software 

program), the LCC and PBP model 

generates a Monte Carlo simulation to 

perform the analyses by incorporating 

uncertainty and variability 

considerations in certain of the key 

parameters as discussed below. Inputs 

to the LCC and PBP analysis are 

categorized as: (1) Inputs for 

establishing the total installed cost and 

(2) inputs for calculating the operating 

expense. Results of the LCC and PBP 

analyses were applied to other 

equipment classes through linear 

scaling of the results by the cooling 

capacity of the equipment class. 

The following sections contain brief 

discussions of comments on the inputs 

and key assumptions of DOE’s LCC and 

PBP analysis and explain how DOE took 

these comments into consideration. 

They are also described in detail in 

chapter 8 of the NOPR TSD. 

1. Equipment and Installation Costs 

The equipment costs faced by 

purchasers of PTAC and PTHP 

equipment are derived from the MSPs 

estimated in the engineering analysis 

and the overall markups estimated in 

the markups analysis. 

To develop an equipment price trend 

for the NOPR, DOE derived an inflationadjusted index of the producer price 

index (PPI) for ‘‘all other miscellaneous 

refrigeration and air-conditioning 

equipment’’ from 1990–2013.36

Although the inflation-adjusted index 

shows a declining trend from 1990 to 

2004, data since 2008 have shown a flatto-slightly rising trend. Given the 

uncertainty as to which of the trends 

will prevail in coming years, DOE chose 

to apply a constant price trend (2013 

levels) for each efficiency level in each 

equipment class for the NOPR. 

For installation costs, DOE used a 

specific cost from RS Means 37 for 

PTACs and PTHPs and linearly scaled 

the cost according to the cooling 

capacities of the equipment classes. 

2. Unit Energy Consumption 

The calculation of annual per-unit 

energy consumption at each considered 

efficiency level and capacity is 

described in section IV.E. 

3. Electricity Prices and Electricity Price 

Trends 

DOE determined electricity prices for 

PTAC and PTHP users based on tariffs 

from a representative sample of electric 

utilities. 69 FR 45481–82. Since airconditioning loads are strongly peakcoincident, regional marginal prices 

were developed from the tariff data and 

then scaled to approximate 2013 prices. 

This approach calculates energy 

expenses based on actual commercial 

building marginal electricity prices that 

customers are paying.38

The Commercial Buildings Energy 

Consumption Survey completed in 1992 

(CBECS 1992) and in 1995 (CBECS 

1995) provides monthly electricity 

consumption and demand for a large 

sample of buildings. DOE used these 

values to help develop usage patterns 

associated with various building types. 

Using these monthly values in 

conjunction with the tariff data, DOE 

calculated monthly electricity bills for 

each building. The average price of 

electricity is defined as the total 

electricity bill divided by total 

electricity consumption. From this 

average price, the marginal price for 

electricity consumption was determined 

by applying a 5 percent decrement to 

the average CBECS consumption data 

and recalculating the electricity bill. 

Using building location and the prices 

derived from the above method, a 

marginal price was determined for each 

region of the U.S. 

The tariff-based prices were updated 

to 2013 using the commercial electricity 

price index published in the AEO 

(editions 2009 through 2012). An 

examination of data published by the 

Edison Electric Institute 39 indicates that 

the rate of increase of marginal and 

average prices is not significantly 

different, so the same factor was used 

for both pricing estimates. DOE 

projected future electricity prices using 

trends in average U.S. commercial 

electricity price from AEO 2013.40

Goodman commented on the need to 

consider the impact of peak loads on 

various parts of the analyses. (Goodman, 

No. 13 at p. 5) DOE is aware that cooling 

loads are peaking loads, which may be 

subject to demand charges. DOE’s tariffbased electricity prices reflect demand 

charges. 

For further discussion of electricity 

prices, see chapter 8 of the NOPR TSD. 

4. Repair Costs 

Repair costs are associated with 

repairing or replacing components that 

have failed. The cost of the material and 

labor in each incident is covered by 

extended warranties, which are service 

contracts that can be purchased, and the 

repair cost can be estimated from 

annualization of a contract’s total price. 

DOE utilized manufacturer- and vendorprovider extended warranty price data 

to estimate annual repair costs. DOE 

assumed that any routine or minor 

repairs are included in the annualized 

maintenance costs. Repair costs were 

linearly scaled by cooling capacity to 

apply to all equipment classes. 

Goodman commented that repair 

costs are dependent on the specific type 

of equipment. (Goodman, No. 7 at p. 77) 

The price data were disaggregated by 

equipment category, enabling 

determination of specific repair costs for 

PTACs and PTHPs. 

Goodman also commented that repair 

costs are typically higher for more 

efficient products. (Goodman, No. 7 at 

p. 77) DOE incorporated the cost of a 

major repair as a means of estimating 

repair costs by efficiency level. This 

resulted in repair costs that vary in 

direct proportion with the price of the 

equipment, which is a reasonable proxy 

for efficiency. 

5. Maintenance Costs 

Maintenance costs are costs 

associated with general maintenance of 

the equipment (e.g., checking and 

maintaining refrigerant charge levels 

and cleaning heat-exchanger coils). 

Goodman commented that maintenance 

costs would depend on the specific type 

of equipment. (Goodman, No. 7 at p. 77) 

For PTACs, DOE utilized estimates of 

annual maintenance cost from the 

previous rulemaking; the values were 

adjusted to current material and labor 

rates. For PTHPs, DOE scaled the 

adjusted estimate of PTAC maintenance 

costs with the ratio of PTHP to PTAC 

annualized maintenance costs from RS 

Means data.41 Since maintenance tasks 

do not change with efficiency level, 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55563 

42See www.ahridirectory.org/ahriDirectory/

pages/home.aspx. 

DOE does not expect maintenance costs 

to scale with efficiency level. 

Maintenance costs were linearly scaled 

by cooling capacity to apply to all 

equipment classes. 

6. Lifetime 

Equipment lifetime is the age at 

which the equipment is retired from 

service. In the 2008 Final Rule, DOE 

used a median equipment lifetime of 10 

years and a maximum lifetime of 20 

years based on a retirement function. 73 

FR 58772, 58789 (October 7, 2008). In 

the framework document, DOE stated its 

intention to use the same median and 

maximum equipment lifetime in the 

present rulemaking. AHRI noted in a 

comment it submitted prior to the 

publication of the October 7, 2008 Final 

Rule that the 11-year payback period 

from the previous rulemaking was 

longer than the actual life of the 

equipment, indicating that the value of 

the lifetime statistics in the present 

rulemaking too may be greater than the 

years of actual operation. (AHRI, No. 11 

at p. 3) Likewise, Ice Air commented 

that the lifespan for PTACs and PTHPs 

with refrigerant-to-air heat transfer 

technology commonly purchased for 

commercial use should be 6–7 years 

based on its conversations with major 

hotel chains, and the lifespan for 

hydronic PTACs is 12–20+ years. (Ice 

Air, No. 9 at p. 1) SCS similarly 

commented that while equipment may 

last 20 years, equipment often will be 

replaced en masse, such as in hotels 

where a set of equipment is replaced if 

failures begin to occur often. (SCS, No. 

7 at p. 81) 

Since DOE accounted for the vintage 

of each unit in addition to the average 

age of the stock, the retirement function 

was updated to allow the vintage of 

each unit as an input. Thereby, DOE 

updated the shape and scale factors so 

that the retirement function can be used 

to track individual failures for 

determination of replacement 

shipments. The details of utilizing the 

retirement function can be found in 

chapter 9 of the NOPR TSD. 

Additionally, DOE acknowledges that 

there is some uncertainty regarding the 

lifetime of PTAC and PTHP equipment, 

but in the absence of data to substantiate 

the statements by the stakeholders, it 

chose to retain the median equipment 

lifetime of 10 years with a maximum 

lifetime of 20 years for this NOPR. DOE 

will consider any data that may be 

provided in its preparation of the final 

rule. 

7. Discount Rate 

The discount rate is the rate at which 

future expenditures are discounted to 

estimate their present value. The cost of 

capital commonly is used 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 fund 

investments, so the cost of capital is the 

weighted-average cost to the firm of 

equity and debt financing. DOE uses the 

capital asset pricing model (CAPM) to 

calculate the equity capital component, 

and financial data sources to calculate 

the cost of debt financing. 

DOE estimated the cost of capital of 

companies that purchase PTAC and 

PTHP equipment. The types of 

companies that DOE used are large 

hotel/motel chains, independent hotel/

motel, assisted living/health care, and 

small office. More details regarding 

DOE’s estimates of customer discount 

rates are provided in chapter 8 of the 

NOPR TSD. 

SCS suggested that in determining 

discount rates DOE should focus on 

franchise owners who are purchasing 

the equipment. (SCS, No. 7 at p. 81) 

DOE believes that franchise owners 

would generally fall into the company 

categories listed above. 

8. Base Case Efficiency Distribution 

For the LCC analysis, DOE analyzes 

the considered efficiency levels relative 

to a base case (i.e., the case without 

amended energy efficiency standards). 

This analysis requires an estimate of the 

distribution of equipment efficiencies in 

the base case (i.e., what customers 

would have purchased in the 

compliance year in the absence of 

amended standards). DOE refers to this 

distribution of equipment energy 

efficiencies as the base case efficiency 

distribution. 

DOE reviewed the AHRI certified 

products directory 42 for relevant 

equipment classes to determine the 

distribution of efficiency levels for 

commercially-available models within 

each equipment class analyzed in this 

NOPR. DOE bundled the efficiency 

levels into efficiency ranges and 

determined the percentage of models 

within each range. To estimate the 

change between the present and the 

compliance year, DOE applied a slightly 

increasing efficiency trend, as explained 

in section IV.H. 

The distribution of efficiencies in the 

base case for each equipment class can 

be found in Table IV.12 and Table IV.13 

below. 

TABLE IV.12—BASE CASE EFFICIENCY MARKET SHARES FOR PACKAGED TERMINAL AIR CONDITIONING EQUIPMENT (2019) 

PTAC <12,000 Btu/h cooling capacity PTAC ≥12,000 Btu/h cooling capacity 

EER Market share 

(percent) EER Market share (percent) 

11.1–11.29 0.0 9.3–9.49 0.0 

11.3–11.49 43.6 9.5–9.69 25.8 

11.5–11.99 24.3 9.7–9.99 34.8 

12.0–12.39 29.5 10.0–10.39 34.7 

12.4–12.89 2.1 10.4–10.79 2.7 

12.9–13.09 0.5 10.8–10.99 1.4 

≥13.1 0.0 ≥11.0 0.7 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55564 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

TABLE IV.13—BASE CASE EFFICIENCY MARKET SHARES FOR PACKAGED TERMINAL HEAT PUMP EQUIPMENT (2019) 

PTHP <12,000 Btu/h cooling capacity PTHP ≥12,000 Btu/h cooling capacity 

EER Market share 

(percent) EER Market share (percent) 

11.3–11.49 48.5 9.5–9.69 58.2 

11.5–11.99 8.9 9.7–9.99 0.0 

12.0–12.39 30.2 10.0–10.39 32.5 

12.4–12.89 12.4 10.4–10.79 7.9 

12.9–13.09 0.0 10.8–10.99 1.4 

≥13.1 0.0 ≥11.0 0.0 

9. Payback Period Inputs 

The payback period is the amount of 

time it takes the customer to recover the 

additional installed cost of more 

efficient equipment, compared to 

baseline equipment, through energy cost 

savings. Payback periods are expressed 

in years. Payback periods that exceed 

the life of the equipment mean that the 

increased total installed cost is not 

recovered in reduced operating 

expenses. 

The inputs to the PBP calculation are 

the increase in the total installed cost of 

the equipment to the customer for each 

efficiency level and the annual 

operating cost savings for each 

efficiency level. The PBP calculation 

uses the same inputs as the LCC 

analysis, except that discount rates are 

not needed. 

10. Rebuttable-Presumption Payback 

Period 

EPCA establishes a rebuttable 

presumption that a standard is 

economically justified if the Secretary 

finds that the additional cost to the 

customer of purchasing a product 

complying with an energy conservation 

standard level will be less than three 

times the value of the energy (and, as 

applicable, water) savings during the 

first year that the customer will receive 

as a result of the standard, as calculated 

under the test procedure in place for 

that standard. (42 U.S.C. 

6295(o)(2)(B)(iii) and 42 U.S.C. 6316(a)) 

For each considered efficiency level, 

DOE determines the value of the first 

year’s energy savings by calculating the 

quantity of those savings in accordance 

with the applicable DOE test procedure, 

and multiplying that amount by the 

average energy price forecast for the 

year in which compliance with the 

amended standards would be required. 

G. Shipments Analysis 

DOE uses projections of equipment 

shipments for PTACs and PTHPs 

together to calculate equipment stock 

over the course of the analysis period, 

which in turn is used to determine the 

impacts of amended standards on 

national energy savings, net present 

value, and future manufacturer cash 

flows. DOE developed shipment 

projections based on historical data and 

an analysis of key market drivers for 

each product. Historical shipments data 

are used to build up an equipment stock 

and also to calibrate the shipments 

model. Based off the equipment stock 

and calibrated model, DOE calculated 

shipments intended for new 

construction and replacement 

applications. The sum of new 

construction and replacement 

shipments is the total shipments. 

DOE determined the distribution of 

total shipments among the equipment 

classes using shipments data by 

equipment class provided by AHRI for 

the previous PTAC and PTHP 

rulemaking. 73 FR 58772. 

New construction shipments were 

calculated using projected new 

construction floor space of healthcare, 

lodging, and small office buildings from 

AEO 2013 and historical PTAC and 

PTHP saturation in new buildings, 

which was calculated by dividing 

historical shipments by historical new 

construction floor space. Due to 

unrepresentative market conditions 

during the financial crisis of 2008–2010, 

DOE used historical data from its 

previous analysis to determine the value 

for the PTAC and PTHP saturation that 

was used for each year of the analysis 

period. DOE then projected shipments 

based on the product of the historical 

saturation and AEO’s projected floor 

space. 

Replacement shipments equal the 

number of units that fail in a given year. 

DOE used a retirement function in the 

form of a Weibull distribution with 

inputs based on lifetime values from the 

LCC analysis to estimate the number of 

units of a given age that fail in each 

year. When a unit fails, it is removed 

from the stock and a new unit is 

replaced in its stead. Replacement 

shipments account for the largest 

portion of total shipments. 

McQuay commented that non-AHRI 

PTAC manufacturers are not subject to 

report their shipment information, and 

this missing portion of the market 

should be calculated. (McQuay, No. 10 

at p. 1) DOE is not aware of any data 

that would allow it to account for 

shipments by non-AHRI PTAC 

manufacturers. The Department also 

believes that such shipments represent 

a small fraction of total shipments. DOE 

requests comment regarding and data 

supporting the expected number of 

shipments that are unreported. This is 

identified as issue 3 in section VII.E, 

‘‘Issues on Which DOE Seeks 

Comment.’’ 

Goodman commented that if the 

annual payback period is not in the low 

single digits, customers will be more 

likely to repair equipment rather than 

replace it with a higher efficiency 

product. (Goodman, No. 13 at p. 6) DOE 

recognizes that for any inoperable 

equipment, there exists a decision to 

repair or to replace. Given that repair 

generally would involve a new 

compressor, which is costly, and could 

also entail a new coil, DOE believes that 

equipment replacement would be more 

financially appealing than a major 

repair to most decision makers. Thus, 

for the NOPR DOE used the same 

shipments projections for the base case 

(assuming no amended standards) and 

each standards case. 

The details of the shipments analysis 

can be found in chapter 9 of the NOPR 

TSD. 

H. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analyses 

The purpose of the NIA is to estimate 

aggregate impacts of potential energy 

conservation standards from a national 

perspective, rather than from the 

customer perspective represented by the 

LCC and PBP analysis. Impacts that 

DOE reports include the national energy 

savings (NES) from potential standards, 

the net present value (NPV) of the total 

commercial customer costs, and the 

savings that are expected to result from 

amended standards at specific efficiency 

levels. 


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43 DOE’s use of spreadsheet models provides 

interested parties with access to the models within 

a familiar context. In addition, the TSD and other 

documentation that DOE provides during the 

rulemaking help explain the models and how to use 

them, and interested parties can review DOE’s 

analyses by changing various input quantities 

within the spreadsheet. 

44See DOE’s technical support document 

underlying DOE’s July 29, 2004 ANOPR. (Available 

at: http://www.regulations.gov/

#!documentDetail;D=EERE-2006-STD-0103-0078.) 

To make the analysis more accessible 

and transparent to all interested parties, 

DOE used a spreadsheet model to 

calculate the energy savings and the 

national commercial customer costs and 

savings from each TSL.43 The NIA 

calculations are based on the annual 

energy consumption and total installed 

cost data from the energy use analysis 

and the LCC analysis. In the NIA, DOE 

forecasted the lifetime energy savings, 

energy cost savings, equipment costs, 

and NPV of commercial customer 

benefits for each equipment class over 

the lifetime of equipment sold from 

2019 through 2048. 

For the NIA, DOE considered the 

following equipment classes for which 

DOE received shipments data: 

• PTAC: <7,000 Btu/h cooling 

capacity, ≥7000 and ≤15000 Btu/h 

cooling capacity, and ≥15000 Btu/h 

cooling capacity; and 

• PTHP: <7,000 Btu/h cooling 

capacity, ≥7000 and ≤15000 Btu/h 

cooling capacity, and ≥15000 Btu/h 

cooling capacity. 

To develop the NES, DOE calculates 

annual energy consumption for the base 

case and the standards cases. DOE 

calculates the annual energy 

consumption using per-unit annual 

energy use data multiplied by projected 

shipments. DOE calculated energy 

savings in each year relative to a base 

case, defined as DOE adoption of the 

efficiency levels specified by ANSI/

ASHRAE/IES Standard 90.1–2013. DOE 

also calculated energy savings from 

adopting efficiency levels specified by 

ANSI/ASHRAE/IES Standard 90.1–2013 

compared to the EPCA base case. 

To develop the national NPV of 

customer benefits from potential energy 

conservation standards, DOE calculates 

annual energy expenditures and annual 

equipment expenditures for the base 

case and the standards cases. DOE 

calculated such customer benefits in 

each year relative to the base case 

(ANSI/ASHRAE/IES Standard 90.1– 

2013). DOE calculates annual energy 

expenditures from annual energy 

consumption by incorporating 

forecasted energy prices, using 

shipment projections and average 

energy efficiency projections. DOE 

calculates annual equipment 

expenditures by multiplying the price 

per unit times the projected shipments. 

The aggregate difference each year 

between energy bill savings and 

increased equipment expenditures is the 

net savings or net costs. 

Given the uncertainty about future 

equipment prices, DOE chose to apply 

a constant price trend (2013 levels) for 

each efficiency level in each equipment 

class. 

A key component of the NIA is the 

equipment energy efficiency forecasted 

over time for the base case and for each 

of the standards cases. To estimate a 

base-case efficiency trend, DOE started 

with the base-case efficiency 

distribution described in section IV.F.8. 

For the equipment classes that were not 

covered in the LCC analysis, DOE used 

the same source (i.e., the AHRI 

Directory of Certified Product 

Performance) to estimate the base-case 

efficiency distribution. Then, DOE 

applied the trend from 2012 to 2035 that 

was used in the commercial unitary air 

conditioner Advance Notice of Proposed 

Rulemaking (ANOPR), which estimated 

an increase of approximately 1 EER 

every 35 years.44 69 FR 45460 (July 29, 

2004). DOE used this same trend in the 

standards-case scenarios, when seeking 

to ascertain the impact of amended 

standards. DOE, however, assumed for 

PTACs that a gradual replacement of 

equipment at the Federal minimum 

with equipment at the ASHRAE 

minimum occurs over 10 years after the 

first year of expected compliance. DOE 

requests comment regarding and data 

supporting the selected efficiency trend. 

This is identified as issue 4 in section 

VII.E, ‘‘Issues on Which DOE Seeks 

Comment.’’ 

The base case efficiency distributions 

in 2019 for the considered PTAC and 

PTHP equipment classes can be found 

in Table IV.14 and Table IV.15. 

TABLE IV.14—BASE CASE EFFICIENCY MARKET SHARES IN 2019 FOR PACKAGED TERMINAL AIR CONDITIONING

EQUIPMENT

PTAC <7000 Btu/h cooling capacity PTAC ≥7000 to ≤15000 Btu/h cooling capacity PTAC ≥15000 Btu/h cooling capacity 

EER Market share 

(percent) EER Market share (percent) EER Market share (percent) 

11.7 0 11.1 0 9.3 0 

11.9 0 11.3 38 9.5 65 

12.2 63 11.5 29 9.7 17 

12.6 37 12.0 29 10.0 18 

13.1 0 12.4 3 10.4 0 

13.6 0 12.9 1 10.8 0 

13.8 0 13.1 0 11.0 0 

TABLE IV.15—BASE CASE EFFICIENCY MARKET SHARES IN 2019 FOR PACKAGED TERMINAL HEAT PUMP EQUIPMENT

PTHP <7000 Btu/h cooling capacity PTHP ≥7000 to ≤15000 Btu/h cooling capacity PTHP ≥15000 Btu/h cooling capacity 

EER Market share 

(percent) EER Market share (percent) EER Market share (percent) 

11.9 0 11.3 0 9.5 0 

12.2 85 11.5 64 9.7 74 

12.6 15 12.0 26 10.0 26 

13.1 0 12.4 10 10.4 0 

13.6 0 12.9 1 10.8 0 

13.8 0 13.1 0 11.0 0 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55566 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

45U.S. Securities and Exchange Commission. 

Annual 10–K Reports. Various Years. http://

www.sec.gov. 

46 ‘‘Annual Survey of Manufacturers: General 

Statistics: Statistics for Industry Groups and 

Industries.’’ U.S. Census Bureau. 2014. Available at: 

http://factfinder2.census.gov/faces/nav/jsf/pages/

searchresults.xhtml?refresh=t. 

47Hoovers, Inc. Company Profiles. Various 

Companies. http://www.hoovers.com. 

To estimate the impact that amended 

energy conservation standards may have 

in the first year of compliance, DOE 

uses a ‘‘roll-up’’ scenario in its 

standards rulemakings. Under the ‘‘rollup’’ scenario, DOE assumes equipment 

efficiencies in the base case that do not 

meet the new or amended standard level 

under consideration would ‘‘roll up’’ to 

meet that standard level, and equipment 

shipments at efficiencies above the 

standard level under consideration 

would not be affected. Tables showing 

the distribution of efficiencies in the 

base case and the standards cases for 

each equipment class can be found in 

chapter 10 of the NOPR TSD. 

Using the distribution of efficiencies 

in the base case and in the standards 

cases for each equipment class analyzed 

in the NOPR, DOE calculated marketweighted average efficiency values. The 

market-weighted average efficiency 

value represents the average efficiency 

of the total units shipped at a specified 

amended standard level. The marketweighted average efficiency values for 

the base case and the standards cases for 

each efficiency level analyzed within 

the equipment classes is provided in 

chapter 10 of the NOPR TSD. 

DOE converted the site electricity 

consumption and savings to primary 

energy (power sector energy 

consumption) using annual conversion 

factors derived from the AEO 2013 

version of the National Energy Modeling 

System (NEMS). Cumulative energy 

savings are the sum of the NES for each 

year in which equipment shipped 

during 2019 to 2048 continues to 

operate. 

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 

document, 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). 

Therefore, DOE used the NEMS model 

to conduct the FFC analysis. The 

approach used for this NOPR, and the 

FFC multipliers that were applied, are 

described in appendix 10–B of the 

NOPR TSD. 

I. Customer Subgroup Analysis 

In analyzing the potential impacts of 

new or amended standards on 

commercial customers, DOE evaluates 

impacts on identifiable groups (i.e., 

subgroups) of customers that may be 

disproportionately affected by a national 

standard. AHRI stated that hotels and 

motels would be viable candidates for 

user subgroups. (AHRI, No. 7 at p. 91) 

For the NOPR, DOE evaluated impacts 

on a subgroup consisting of 

independently-operating lodging 

businesses using the LCC and PBP 

spreadsheet model. To the extent 

possible, it utilized inputs appropriate 

for this subgroup. 

The commercial customer subgroup 

analysis is discussed in detail in chapter 

11 of the NOPR TSD. 

J. Manufacturer Impact Analysis 

1. Overview 

DOE performed an MIA to estimate 

the financial impact of amended energy 

conservation standards on 

manufacturers of PTACs and PTHPs, 

and to calculate the potential impact of 

such standards on employment and 

manufacturing capacity. The MIA has 

both quantitative and qualitative 

aspects. The quantitative part of the 

MIA primarily relies on the Government 

Regulatory Impact Model (GRIM), an 

industry cash-flow model with inputs 

specific to this rulemaking. The key 

GRIM inputs are data on the industry 

cost structure, equipment costs, 

shipments, and assumptions about 

markups and conversion expenditures. 

The key output is the industry net 

present value (INPV). Different sets of 

assumptions (markup scenarios) will 

produce different results. The 

qualitative part of the MIA addresses 

factors such as product characteristics, 

impacts on particular subgroups of 

firms, and important market and 

product trends. The complete MIA is 

outlined in chapter 13 of the NOPR 

TSD. 

DOE conducted the MIA for this 

rulemaking in three phases. In Phase 1 

of the MIA, DOE conducted structured, 

detailed interviews with a 

representative cross-section of 

manufacturers and prepared a profile of 

the PTAC and PTHP industry. During 

manufacturer interviews, DOE 

discussed engineering, manufacturing, 

procurement, and financial topics to 

identify key issues or concerns and to 

inform and validate assumptions used 

in the GRIM. See section IV.J.2 for a 

description of the key issues 

manufacturers raised during the 

interviews. 

DOE used information obtained 

during these interviews to prepare a 

profile of the PTAC and PTHP industry, 

including a manufacturer cost analysis. 

Drawing on financial analysis 

performed as part of the 2008 energy 

conservation standard for PTACs and 

PTHPs, as well as feedback obtained 

from manufacturers, DOE derived 

financial inputs for the GRIM (e.g., 

sales, general, and administration 

(SG&A) expenses; research and 

development (R&D) expenses; and tax 

rates). DOE also used public sources of 

information, including company SEC 

10–K filings,45 corporate annual reports, 

the U.S. Census Bureau’s Economic 

Census,46 and Hoover’s reports,47 to 

develop the industry profile. 

In Phase 2 of the MIA, DOE prepared 

an industry cash-flow analysis to 

quantify the potential impacts of an 

amended energy conservation standard 

on manufacturers of PTACs and PTHPs. 

In general, energy conservation 

standards can affect manufacturer cash 

flow in three distinct ways: (1) Create a 

need for increased investment; (2) raise 

production costs per unit; and (3) alter 

revenue due to higher per-unit prices 

and possible changes in sales volumes. 

To quantify these impacts, DOE used 

the GRIM to perform a cash-flow 

analysis for the PTAC and PTHP 

industry using financial values derived 

during Phase 1. 

In Phase 3 of the MIA, DOE evaluated 

subgroups of manufacturers that may be 

disproportionately impacted by 

amended energy conservation standards 

or that may not be represented 

accurately by the average cost 

assumptions used to develop the 

industry cash-flow analysis. For 

example, small manufacturers, niche 

players, or manufacturers exhibiting a 

cost structure that largely differs from 

the industry average could be more 

negatively affected. DOE identified two 

subgroups for separate impact analyses: 

(1) Manufacturers with production 

assets; and (2) small businesses. 

DOE initially identified 22 companies 

that sell PTAC and PTHP equipment in 

the U.S. Most U.S. companies, however, 

do not own production assets; rather, 

they import and distribute PTACs and 

PTHPs manufactured overseas, 

primarily in China. DOE identified a 


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Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55567 

subgroup of three manufacturers that 

own production assets. Together, these 

three manufacturers account for 

approximately 80 percent of the 

domestic PTAC and PTHP market. 

Because manufacturers with production 

assets will incur different costs to 

comply with amended energy 

conservation standards compared to 

their competitors who do not own 

production assets, DOE conducted a 

separate subgroup analysis to evaluate 

the potential impacts of amended 

energy conservation standards on 

manufacturers with production assets. 

The subgroup analysis of PTAC and 

PTHP manufacturers with production 

assets is discussed in chapter 12 of the 

NOPR TSD and in section VI.B of this 

document. 

For the small businesses subgroup 

analysis, DOE applied the small 

business size standards published by 

the Small Business Administration 

(SBA) to determine whether a company 

is considered a small business. 65 FR 

30836, 30848 (May 15, 2000), as 

amended at 65 FR 53533, 53544 (Sept. 

5, 2000) and codified at 13 CFR part 

121. To be categorized as a small 

business under North American 

Industry Classification System (NAICS) 

code 333415, ‘‘Air-Conditioning and 

Warm Air Heating Equipment and 

Commercial and Industrial Refrigeration 

Equipment Manufacturing,’’ a PTAC 

and PTHP manufacturer and its 

affiliates may employ a maximum of 

750 employees. The 750-employee 

threshold includes all employees in a 

business’s parent company and any 

other subsidiaries. Based on this 

classification, DOE identified at least 12 

manufacturers that qualify as small 

businesses. The PTAC and PTHP small 

manufacturer subgroup is discussed in 

chapter 12 of the NOPR TSD and in 

section V.B.2 of this document. 

2. Government Regulatory Impact Model 

DOE uses the GRIM to quantify the 

changes in cash flow due to amended 

standards that result in a higher or 

lower industry value. The GRIM 

analysis uses a standard, annual cashflow analysis that incorporates 

manufacturer costs, markups, 

shipments, and industry financial 

information as inputs. The GRIM 

models changes in costs, distribution of 

shipments, investments, and 

manufacturer margins that could result 

from an amended energy conservation 

standard. The GRIM spreadsheet uses 

the inputs to arrive at a series of annual 

cash flows, beginning in 2014 (the base 

year of the analysis) and continuing to 

2048. DOE calculated INPVs by 

summing the stream of annual 

discounted cash flows during this 

period. For PTAC and PTHP 

manufacturers, DOE used a real 

discount rate of 8.5 percent, which was 

derived from industry financials and 

then modified according to feedback 

received during manufacturer 

interviews. 

The GRIM calculates cash flows using 

standard accounting principles and 

compares changes in INPV between a 

base case and each standards case. The 

difference in INPV between the base 

case and a standards case represents the 

financial impact of the amended energy 

conservation standard on 

manufacturers. As discussed previously, 

DOE collected this information on the 

critical GRIM inputs from a number of 

sources, including publicly available 

data and interviews with a number of 

manufacturers (described in the next 

section). The GRIM results are shown in 

section V.B.2. Additional details about 

the GRIM, the discount rate, and other 

financial parameters can be found in 

chapter 12 of the NOPR TSD. 

a. Government Regulatory Impact Model 

Key Inputs 

Manufacturer Production Costs 

Manufacturing more efficient 

equipment is typically more expensive 

than manufacturing baseline equipment 

due to the use of more complex 

components, which are typically more 

costly than baseline components. The 

changes in the manufacturer production 

costs (MPCs) of the analyzed equipment 

can affect the revenues, gross margins, 

and cash flow of the industry, making 

these equipment cost data key GRIM 

inputs for DOE’s analysis. 

In the MIA, DOE used the MPCs for 

each considered efficiency level 

calculated in the engineering analysis, 

as described in section IV.C and further 

detailed in chapter 5 of the NOPR TSD. 

In addition, DOE used information from 

its teardown analysis, described in 

chapter 5 of the TSD, to disaggregate the 

MPCs into material, labor, and overhead 

costs. To calculate the MPCs for 

equipment above the baseline, DOE 

added the incremental material, labor, 

and overhead costs from the engineering 

cost-efficiency curves to the baseline 

MPCs. These cost breakdowns and 

equipment markups were validated and 

revised with manufacturers during 

manufacturer interviews. 

Shipments Forecasts 

The GRIM estimates manufacturer 

revenues based on total unit shipment 

forecasts and the distribution of these 

values by efficiency level. Changes in 

sales volumes and efficiency mix over 

time can significantly affect 

manufacturer finances. For this analysis, 

the GRIM uses the NIA’s annual 

shipment forecasts derived from the 

shipments analysis from 2014 (the base 

year) to 2048 (the end year of the 

analysis period). See section IV.G. above 

and chapter 10 of the NOPR TSD for 

additional details. 

Product and Capital Conversion Costs 

An amended energy conservation 

standard would cause manufacturers to 

incur one-time conversion costs to bring 

their production facilities and 

equipment designs into compliance. 

DOE evaluated the level of conversionrelated expenditures that would be 

needed to comply with each considered 

efficiency level in each equipment class. 

For the MIA, DOE classified these 

conversion costs into two major groups: 

(1) Product conversion costs; and (2) 

capital conversion costs. Product 

conversion costs are one-time 

investments in research, development, 

testing, marketing, and other noncapitalized costs necessary to make 

equipment designs comply with the 

amended energy conservation standard. 

Capital conversion costs are one-time 

investments in property, plant, and 

equipment necessary to adapt or change 

existing production facilities such that 

new compliant equipment designs can 

be fabricated and assembled. 

To evaluate the level of capital 

conversion expenditures manufacturers 

would likely incur to comply with 

amended energy conservation 

standards, DOE used manufacturer 

interviews to gather data on the 

anticipated level of capital investment 

that would be required at each 

efficiency level. DOE validated 

manufacturer comments through 

estimates of capital expenditure 

requirements derived from the product 

teardown analysis and engineering 

analysis described in chapter 5 of the 

TSD. 

DOE assessed the product conversion 

costs at each considered efficiency level 

by integrating data from quantitative 

and qualitative sources. DOE considered 

market-share-weighted feedback 

regarding the potential costs of each 

efficiency level from multiple 

manufacturers to estimate product 

conversion costs and validated those 

numbers against engineering estimates 

of redesign efforts. 

In general, DOE assumes that all 

conversion-related investments occur 

between the year of publication of the 

final rule and the year by which 

manufacturers must comply with the 

new standard. The conversion cost 

figures used in the GRIM can be found 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55568 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

in section V.B.2 of this document. For 

additional information on the estimated 

product and capital conversion costs, 

see chapter 13 of the NOPR TSD. 

b. Government Regulatory Impact Model 

Scenarios 

Markup Scenarios 

Manufacturer selling prices (MSPs) 

include direct manufacturing 

production costs (i.e., labor, materials, 

and overhead estimated in DOE’s MPCs) 

and all non-production costs (i.e., 

SG&A, R&D, and interest), along with 

profit. To calculate the MSPs in the 

GRIM, DOE applied non-production 

cost markups to the MPCs estimated in 

the engineering analysis for each 

equipment class and efficiency level. 

Modifying these markups in the 

standards case yields different sets of 

impacts on manufacturers. For the MIA, 

DOE modeled two standards-case 

markup scenarios to represent the 

uncertainty regarding the potential 

impacts on prices and profitability for 

manufacturers following the 

implementation of amended energy 

conservation standards: (1) A 

preservation of gross margin percentage 

markup scenario; and (2) a preservation 

of per unit operating profit markup 

scenario. These scenarios lead to 

different markup values that, when 

applied to the inputted MPCs, result in 

varying revenue and cash flow impacts. 

Under the preservation of gross 

margin percentage scenario, DOE 

applied a single uniform ‘‘gross margin 

percentage’’ markup across all efficiency 

levels, which assumes that 

manufacturers would be able to 

maintain the same amount of profit as 

a percentage of revenues at all efficiency 

levels within an equipment class. As 

production costs increase with 

efficiency, this scenario implies that the 

absolute dollar markup will increase as 

well. Based on publicly-available 

financial information for manufacturers 

of PTACs and PTHPs as well as 

comments from manufacturer 

interviews, DOE assumed the average 

non-production cost markup—which 

includes SG&A expenses, R&D 

expenses, interest, and profit—to be 

1.27 for all PTAC and PTHP equipment 

classes. 

Because this markup scenario 

assumes that manufacturers would be 

able to maintain their gross margin 

percentage markups as production costs 

increase in response to an amended 

energy conservation standard, it 

represents a high bound to industry 

profitability. 

In the preservation of per unit 

operating profit scenario, manufacturer 

markups are set so that operating profit 

one year after the compliance date of the 

amended energy conservation standard 

is the same as in the base case on a per 

unit basis. Under this scenario, as the 

costs of production increase under an 

amended standards case, manufacturers 

are generally required to reduce their 

markups to a level that maintains basecase operating profit per unit. The 

implicit assumption behind this markup 

scenario is that the industry can only 

maintain its operating profit in absolute 

dollars per unit after compliance with 

the new standard is required. Therefore, 

operating margin in percentage terms is 

reduced between the base case and 

standards case. DOE adjusted the 

manufacturer markups in the GRIM at 

each TSL to yield approximately the 

same earnings before interest and taxes 

in the standards case as in the base case. 

This markup scenario represents a low 

bound to industry profitability under an 

amended energy conservation standard. 

c. Manufacturer Interviews 

As part of the MIA, DOE discussed 

the potential impacts of amended 

energy conservation standards with 

manufacturers of PTACs and PTHPs. 

DOE interviewed manufacturers 

representing approximately 90 percent 

of the market by revenue. Information 

gathered during these interviews 

enabled DOE to tailor the GRIM to 

reflect the unique financial 

characteristics of the industry. 

In interviews, DOE asked 

manufacturers to describe their major 

concerns regarding this rulemaking. The 

following section highlights 

manufacturer concerns that helped to 

shape DOE’s understanding of potential 

impacts of an amended standard on the 

industry. Manufacturer interviews are 

conducted under non-disclosure 

agreements (NDAs), so DOE does not 

document these discussions in the same 

way that it does public comments in the 

comment summaries and DOE’s 

responses throughout the rest of this 

document. 

d. Size Constraints 

Manufacturers expressed concern 

regarding their ability to maintain the 

physical dimensions of PTACs and 

PTHPs while meeting amended energy 

conservation standards. PTACs and 

PTHPs are inherently space-constrained 

equipment. Their value proposition 

rests in large part on the ability of units 

to fit into existing wall openings of fixed 

dimensions: In the case of standard-size 

equipment impacted by this rulemaking, 

this means a wall opening of 16′′ x 42′′. 

Manufacturers indicated that increasing 

the efficiency of units given these size 

constraints poses a significant technical 

challenge. Specifically, as units become 

more efficient, they tend to grow in size. 

Efficiency gains are often achieved by 

incorporating more efficient system 

components, including compressors and 

heat exchangers. Manufacturers noted 

that as these components become more 

efficient, they tend to become larger. Yet 

expanding the size of PTACs and PTHPs 

to accommodate larger, more efficient 

components is not an option, as 

manufacturers must continue to deliver 

products built to pre-existing 

dimensions. 

Manufacturers also indicated that 

increasing efficiency without altering 

product dimensions poses a greater 

technical challenge for higher-capacity 

models than for lower-capacity models. 

For example, redesigning a 15,000 Btu/ 

hour PTAC—the highest capacity 

offered by many manufacturers—would 

be more difficult than redesigning a 

7,000 Btu/hour model. Some 

manufacturers stated this could lead 

them to stop producing their highestcapacity PTAC and PTHP models under 

an amended standard. 

e. Impact on Manufacturer Profitability 

Manufacturers also stated that 

amended energy conservation standards 

could place downward pressure on 

profits. Manufacturers noted that 

consumers typically are unwilling to 

pay a premium for efficiency and 

instead purchase PTACs and PTHPs 

largely on a first-cost basis. Accordingly, 

manufacturers do not anticipate being 

able to pass all additional costs of 

manufacturing more efficient products 

onto consumers and would expect to see 

some decline in profitability as a result. 

Additionally, manufacturers indicated 

that higher production and purchase 

costs could impact profitability by 

reducing demand for PTACs and 

PTHPs. Specifically, manufacturers 

anticipate that higher purchase costs 

will lead greater numbers of consumers 

to repair rather than replace existing 

units. In addition, manufacturers stated 

higher costs could lead to product 

switching, as consumers turn to 

alternative HVAC systems. Presently, 

the market for PTACs and PTHPs is 

predominantly a replacement market: 

Approximately 80 percent of sales go 

toward replacement compared to 20 

percent for new construction. 

Manufacturers indicated that higher 

costs could drive the new construction 

market to seek alternatives. The 

potential for market contraction in this 

manner could further impact 

profitability. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55569 

48The NOPR document for SNAP listing status 

changes has not yet published in the Federal 

Register. Proposed changes to air conditioning 

refrigerants status are listed in pp. 132–34 of a prepublication version of the document, available from 

the EPA at: http://www.epa.gov/ozone/downloads/

SAN_5750_SNAP_Status_Change_Rule_NPRM_

signature_version-signed_7-9-2014.pdf. 

49 ‘‘GHG Emissions Factors Hub,’’ U.S. 

Environmental Protection Agency. 2014. Available 

online at http://www.epa.gov/climateleadership/

inventory/ghg-emissions.html. 

f. Impact on Consumer Utility 

Manufacturers stated that amended 

energy conservation standards could 

make it difficult to meet consumer 

needs effectively. Three primary 

concerns arose in this regard: Concerns 

surrounding noise; concerns 

surrounding humidity control; and 

concerns surrounding loss of specific 

product lines. 

Noise 

Several manufacturers stated that 

there is a tradeoff between higher 

efficiency in PTACs and PTHPs and 

noise levels. Design changes that 

improve the efficiency of airflow 

systems (e.g., by increasing fan speed) 

tend to make units noisier. This is 

especially true among higher capacity 

models. Because PTACs and PTHPs are 

widely used in the lodging sector, where 

noise is a significant consideration, 

design changes that result in noisier 

equipment are not a viable option to 

increase system efficiency. 

Humidity Control 

Several manufacturers also indicated 

that as units become more efficient, they 

tend to raise concerns surrounding 

humidity control and mold growth. One 

manufacturer indicated it has received 

more customer complaints about 

humidity levels since 2012, when the 

2008 energy conservation standard for 

PTACs and PTHPs took effect. Another 

manufacturer noted it has designed a 

PTAC model with a built-in 

dehumidification function to better 

control humidity and prevent mold 

growth, but this reduces the overall 

system EER, making it more difficult to 

comply with amended standards. 

Loss of Product Lines 

In addition, multiple manufacturers 

stated that certain models may become 

unavailable in the face of amended 

energy conservation standards. Within 

the standard-size market, the difficulty 

of redesigning higher capacity models 

(e.g., 15,000 Btu/hour) while 

maintaining the existing package size 

could drive manufacturers to 

discontinue those models, leaving 

lower-capacity models (e.g., 12,000 Btu/ 

hour) as the maximum capacity offered. 

3. Discussion of Comments 

Impact of Other Rulemakings 

AHRI commented that manufacturers 

of PTACs and PTHPs may be impacted 

by other product rulemakings. (AHRI, 

Framework Public Meeting at p. 93) In 

response, DOE has performed an 

analysis of cumulative regulatory 

burden (CRB) in section V.B.2 of the 

NOPR document. The CRB analysis 

includes only completed regulations 

that take effect within three years of the 

effective date of the current final 

rulemaking. Rulemakings addressed 

include those for: Residential Boilers 

(78 FR 675, January 4, 2013), Residential 

Furnaces (76 FR 37408, June 27, 2011) 

(76 FR 67037, October 31, 2011), 

Residential Central Air Conditioners 

and Heat Pumps (76 FR 37408, June 27, 

2011) (76 FR 67037, October 31, 2011), 

Gas Fired and Electric Storage Water 

Heaters (75 FR 20112, April 16, 2010), 

Electric Motors (79 FR 30933, May 29, 

2014), Walk-in Coolers and Freezers (79 

FR 32049, June 3, 2014), Furnace Fans 

(79 FR 38129, July 3, 2014), 

Compressors (79 FR 25377, August 5, 

2014), and Commercial and Industrial 

Fans and Blowers. (78 FR 7306, 

February 1, 2013). 

Alternate Refrigerants 

Goodman commented that DOE 

should look into the impacts of alternate 

refrigerants on manufacturers as well as 

users in terms of total energy 

consumption. (Goodman, Framework 

Public Meeting at p. 94) Nearly all 

PTAC and PTHP equipment is designed 

with R–410A as the refrigerant. DOE is 

not aware of any regulations or pending 

regulations that would impact 

manufacturers’ ability to continue using 

the refrigerant R–410A in PTAC and 

PTHP equipment. 

The U.S. EPA SNAP Program 

evaluates and regulates substitutes for 

ozone-depleting chemicals (such as air 

conditioning refrigerants) that are being 

phased out under the stratospheric 

ozone protection provisions of the CAA. 

On July 9, 2014, the EPA Administrator 

signed a notice of proposed rulemaking 

document that changes the listing status 

for certain substitutes under the SNAP 

Program.48 This proposal changes the 

status of several refrigerants used in 

automotive air conditioning and in food 

refrigeration systems. However, the 

proposal does not include delisting R– 

410A, nor does it mention that EPA may 

consider any future delisting of R–410A 

for use in air conditioning applications. 

DOE notes that the use of alternate 

refrigerants by manufacturers of PTACs 

and PTHPs would not be required as a 

direct result of this proposed rule. 

Furthermore, there is no requirement 

(nor any proposal to adopt 

requirements) mandating the use of 

alternate refrigerants at this time. Hence, 

alternate refrigerants were not 

considered in this analysis. 

Non-Standard Size Equipment 

AHRI commented that some 

manufacturers of non-standard size 

PTACs and PTHPs would be considered 

small businesses. (AHRI, Framework 

Public Meeting at p. 94) DOE has not 

proposed amended standards for nonstandard size PTAC and PTHP 

equipment in this document. As a 

result, impacts on manufacturers that 

exclusively produce non-standard size 

PTACs and PTHPs are not analyzed. 

Impacts on small manufacturers that 

produce standard size PTACs and 

PTHPs are analyzed in section VI.B, 

Review Under the Regulatory Flexibility 

Act. 

K. Emissions Analysis 

In the emissions analysis, DOE 

estimated 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 PTAC 

and PTHP equipment. In addition, DOE 

estimates 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 

(August 18, 2011)), the FFC analysis 

includes impacts on emissions of 

methane (CH4) and nitrous oxide (N2O), 

both of which are recognized as 

greenhouse gases. 

DOE primarily conducted the 

emissions analysis using emissions 

factors for CO2 and most of the other 

gases derived from data in EIA’s AEO 

2013. Combustion emissions of CH4 and 

N2O were estimated using emissions 

intensity factors published by the 

Environmental Protection Agency 

(EPA), GHG Emissions Factors Hub.49

DOE developed separate emissions 

factors for power sector emissions and 

upstream emissions. The method that 

DOE used to derive emissions factors is 

described in chapter 13 of the NOPR 

TSD. 

For CH4 and N2O, DOE calculated 

emissions reduction in tons and also in 

terms of units of carbon dioxide 

equivalent (CO2eq). Gases are converted 

to CO2eq by multiplying by the gas’ 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55570 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

50 IPCC, 2013: Climate Change 2013: The Physical 

Science Basis. Contribution of Working Group I to 

the Fifth Assessment Report of the 

Intergovernmental Panel on Climate Change 

[Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, 

S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex 

and P.M. Midgley (eds.)]. Cambridge University 

Press, Cambridge, United Kingdom and New York, 

NY, USA. Chapter 8. 

51See EME Homer City Generation, LP v. EPA, 

696 F.3d 7, 38 (D.C. Cir. 2012). 

52On 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 this NOPR, the analysis 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. 

global warming potential (GWP) over a 

100-year time horizon. Based on the 

Fifth Assessment Report of the 

Intergovernmental Panel on Climate 

Change,50 DOE used GWP values of 28 

for CH4 and 265 for N2O. 

EIA prepares the Annual Energy 

Outlook using the NEMS. Each annual 

version of NEMS incorporates the 

projected impacts of existing air quality 

regulations on emissions. AEO 2013 

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 capand-trade 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 (DC). SO2 emissions from 28 

eastern states and DC were also limited 

under the Clean Air Interstate Rule 

(CAIR; 70 FR 25162 (May 12, 2005)), 

which created an allowance-based 

trading program that operates along 

with the Title IV program. CAIR was 

remanded to the EPA by the U.S. Court 

of Appeals for the District of Columbia 

Circuit but it remained in effect. 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.51 The court 

ordered EPA to continue administering 

CAIR. The emissions factors used for 

this NOPR, which are based on AEO 

2013, assume that CAIR remains a 

binding regulation through 2040.52

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 negligible 

reductions in power sector SO2

emissions would occur 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, which were 

announced by EPA on December 21, 

2011. 77 FR 9304 (February 16, 2012). 

In the final MATS rule, EPA established 

a standard for hydrogen chloride 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 

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 28 eastern States and the 

District of Columbia. Energy 

conservation standards are expected to 

have little effect on NOX emissions 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 

estimated NOX emissions reductions 

from the standards considered in this 

NOPR for these States. 

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 Hg emissions. DOE 

estimated mercury emissions reduction 

using emissions factors based on AEO 

2013, which incorporates the MATS. 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

As part of the development of this 

proposed rule, DOE considered the 

estimated monetary benefits from the 

reduced emissions of CO2 and NOX that 

are expected to result from each of the 

TSLs considered. In order to make this 

calculation similar to the calculation of 

the NPV of customer benefit, DOE 

considered the reduced emissions 

expected to result over the lifetime of 

equipment shipped in the forecast 

period for each TSL. This section 

summarizes the basis for the monetary 

values used for each of these emissions 

and presents the values considered in 

this rulemaking. 

For this NOPR, DOE is relying on a set 

of values for the social cost of carbon 

(SCC) that was developed by an 

interagency process. A summary of the 

basis for these values is provided below, 

and a more detailed description of the 

methodologies used is provided as an 

appendix to chapter 14 of the NOPR 

TSD. 

1. Social Cost of Carbon 

The SCC is an estimate of the 

monetized damages associated with an 

incremental increase in carbon 

emissions in a given year. It is intended 

to include (but is not limited to) changes 

in net agricultural productivity, human 

health, property damages from 

increased flood risk, and the value of 

ecosystem services. Estimates of the 

SCC are provided in dollars per metric 

ton of carbon dioxide. A domestic SCC 

value is meant to reflect the value of 

damages in the United States resulting 

from a unit change in carbon dioxide 

emissions, while a global SCC value is 

meant to reflect the value of damages 

worldwide. 

Under section 1(b)(6) of Executive 

Order 12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (October 4, 1993), 

agencies must, to the extent permitted 

by law, assess both the costs and the 

benefits of the intended regulation and, 

recognizing that some costs and benefits 

are difficult to quantify, propose or 

adopt a regulation only upon a reasoned 

determination that the benefits of the 

intended regulation justify its costs. The 

purpose of the SCC estimates presented 

here is to allow agencies to incorporate 

the monetized social benefits of 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55571 

53National Research Council. Hidden Costs of 

Energy: Unpriced Consequences of Energy 

Production and Use. 2009. National Academies 

Press: Washington, DC. 

54 It is recognized that this calculation for 

domestic values is approximate, provisional, and 

highly speculative. There is no a priori reason why 

domestic benefits should be a constant fraction of 

net global damages over time. 

55 ‘‘Social Cost of Carbon for Regulatory Impact 

Analysis Under Executive Order 12866,’’ 

Interagency Working Group on Social Cost of 

Carbon, United States Government, February 2010. 

Available online at www.whitehouse.gov/sites/

default/files/omb/inforeg/for-agencies/Social-Costof-Carbon-for-RIA.pdf. 

reducing CO2 emissions into costbenefit analyses of regulatory actions. 

The estimates are presented with an 

acknowledgement of the many 

uncertainties involved and with a clear 

understanding that they should be 

updated over time to reflect increasing 

knowledge of the science and 

economics of climate impacts. 

As part of the interagency process that 

developed the SCC estimates, technical 

experts from numerous agencies met on 

a regular basis to consider public 

comments, explore the technical 

literature in relevant fields, and discuss 

key model inputs and assumptions. The 

main objective of this process was to 

develop a range of SCC values using a 

defensible set of input assumptions 

grounded in the existing scientific and 

economic literatures. In this way, key 

uncertainties and model differences 

transparently and consistently inform 

the range of SCC estimates used in the 

rulemaking process. 

a. Monetizing Carbon Dioxide Emissions 

When attempting to assess the 

incremental economic impacts of carbon 

dioxide emissions, the analyst faces a 

number of challenges. A report from the 

National Research Council 53 points out 

that any assessment will suffer from 

uncertainty, speculation, and lack of 

information about (1) future emissions 

of GHGs, (2) the effects of past and 

future emissions on the climate system, 

(3) the impact of changes in climate on 

the physical and biological 

environment, and (4) the translation of 

these environmental impacts into 

economic damages. As a result, any 

effort to quantify and monetize the 

harms associated with climate change 

will raise questions of science, 

economics, and ethics and should be 

viewed as provisional. 

Despite the limits of both 

quantification and monetization, SCC 

estimates can be useful in estimating the 

social benefits of reducing CO2

emissions. The agency can estimate the 

benefits from reduced (or costs from 

increased) emissions in any future year 

by multiplying the change in emissions 

in that year by the SCC values 

appropriate for that year. The net 

present value of the benefits can then be 

calculated by multiplying each of these 

future benefits by an appropriate 

discount factor and summing across all 

affected years. 

It is important to emphasize that the 

interagency process is committed to 

updating these estimates as the science 

and economic understanding of climate 

change and its impacts on society 

improves over time. In the meantime, 

the interagency group will continue to 

explore the issues raised by this analysis 

and consider public comments as part of 

the ongoing interagency process. 

b. Development of Social Cost of Carbon 

Values 

In 2009, an interagency process was 

initiated to offer a preliminary 

assessment of how best to quantify the 

benefits from reducing carbon dioxide 

emissions. To ensure consistency in 

how benefits are evaluated across 

Federal agencies, the Administration 

sought to develop a transparent and 

defensible method, specifically 

designed for the rulemaking process, to 

quantify avoided climate change 

damages from reduced CO2 emissions. 

The interagency group did not 

undertake any original analysis. Instead, 

it combined SCC estimates from the 

existing literature to use as interim 

values until a more comprehensive 

analysis could be conducted. The 

outcome of the preliminary assessment 

by the interagency group was a set of 

five interim values: Global SCC 

estimates for 2007 (in 2006$) of $55, 

$33, $19, $10, and $5 per metric ton of 

CO2. These interim values represented 

the first sustained interagency effort 

within the U.S. government to develop 

an SCC for use in regulatory analysis. 

The results of this preliminary effort 

were presented in several proposed and 

final rules. 

c. Current Approach and Key 

Assumptions 

After the release of the interim values, 

the interagency group reconvened on a 

regular basis to generate improved SCC 

estimates. Specifically, the group 

considered public comments and 

further explored the technical literature 

in relevant fields. The interagency group 

relied on three integrated assessment 

models commonly used to estimate the 

SCC: The Climate Framework for 

Uncertainty, Negotiation and 

Distribution (FUND), Dynamic 

Integrated Climate Economy (DICE), and 

Policy Analysis of the Greenhouse Effect 

(PAGE) models. These models are 

frequently cited in the peer-reviewed 

literature and were used in the last 

assessment of the Intergovernmental 

Panel on Climate Change (IPCC). Each 

model was given equal weight in the 

SCC values that were developed. 

Each model takes a slightly different 

approach to model how changes in 

emissions result in changes in economic 

damages. A key objective of the 

interagency process was to enable a 

consistent exploration of the three 

models, while respecting the different 

approaches to quantifying damages 

taken by the key modelers in the field. 

An extensive review of the literature 

was conducted to select three sets of 

input parameters for these models: 

Climate sensitivity, socio-economic and 

emissions trajectories, and discount 

rates. A probability distribution for 

climate sensitivity was specified as an 

input into all three models. In addition, 

the interagency group used a range of 

scenarios for the socio-economic 

parameters and a range of values for the 

discount rate. All other model features 

were left unchanged, relying on the 

model developers’ best estimates and 

judgments. 

The interagency group selected four 

sets of SCC values for use in regulatory 

analyses. Three sets of values are based 

on the average SCC from the three IAMs, 

at discount rates of 2.5, 3, and 5 percent. 

The fourth set, which represents the 

95th percentile SCC estimate across all 

three models at a 3-percent discount 

rate, was included to represent higher 

than expected impacts from temperature 

change further out in the tails of the 

SCC distribution. The 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,54 although preference is given to 

consideration of the global benefits of 

reducing CO2 emissions. Table IV.16 

presents the values in the 2010 

interagency group report,55 which is 

reproduced in appendix 14A of the 

NOPR TSD. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55572 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

56Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866. Interagency Working Group on Social 

Cost of Carbon, United States Government, May 

2013; revised November 2013. Available online at 

www.whitehouse.gov/sites/default/files/omb/assets/

inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf. 

TABLE IV.16—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050 

[In 2007 dollars per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2010 ................................................................................................................. 4.7 21.4 35.1 64.9 

2015 ................................................................................................................. 5.7 23.8 38.4 72.8 

2020 ................................................................................................................. 6.8 26.3 41.7 80.7 

2025 ................................................................................................................. 8.2 29.6 45.9 90.4 

2030 ................................................................................................................. 9.7 32.8 50.0 100.0 

2035 ................................................................................................................. 11.2 36.0 54.2 109.7 

2040 ................................................................................................................. 12.7 39.2 58.4 119.3 

2045 ................................................................................................................. 14.2 42.1 61.7 127.8 

2050 ................................................................................................................. 15.7 44.9 65.0 136.2 

The SCC values used for this 

document were generated using the 

most recent versions of the three 

integrated assessment models that have 

been published in the peer-reviewed 

literature. Table IV.17 shows the 

updated sets of SCC estimates from the 

2013 interagency update 56 in five-year 

increments from 2010 to 2050. The full 

set of annual SCC estimates between 

2010 and 2050 is reported in appendix 

14B of the NOPR TSD. The central value 

that emerges is the average SCC across 

models at 3-percent discount rate. 

However, for purposes of capturing the 

uncertainties involved in regulatory 

impact analysis, the interagency group 

emphasizes the importance of including 

all four sets of SCC values. 

TABLE IV.17—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE, 2010–2050 

[In 2007 dollars per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2010 ................................................................................................................. 11 32 51 89 

2015 ................................................................................................................. 11 37 57 109 

2020 ................................................................................................................. 12 43 64 128 

2025 ................................................................................................................. 14 47 69 143 

2030 ................................................................................................................. 16 52 75 159 

2035 ................................................................................................................. 19 56 80 175 

2040 ................................................................................................................. 21 61 86 191 

2045 ................................................................................................................. 24 66 92 206 

2050 ................................................................................................................. 26 71 97 220 

It is important to recognize that a 

number of key uncertainties remain, and 

that current SCC estimates should be 

treated as provisional and revisable 

since they will evolve with improved 

scientific and economic understanding. 

The interagency group also recognizes 

that the existing models are imperfect 

and incomplete. The National Research 

Council report mentioned above points 

out that there is tension between the 

goal of producing quantified estimates 

of the economic damages from an 

incremental ton of carbon and the limits 

of existing efforts to model these effects. 

There are a number of analytic 

challenges that are being addressed by 

the research community, including 

research programs housed in many of 

the Federal agencies participating in the 

interagency process to estimate the SCC. 

The interagency group intends to 

periodically review and reconsider 

those estimates to reflect increasing 

knowledge of the science and 

economics of climate impacts, as well as 

improvements in modeling. 

In summary, in considering the 

potential global benefits resulting from 

reduced CO2 emissions resulting from 

this proposed rule, DOE used the values 

from the 2013 interagency report, 

adjusted to 2013$ using the Gross 

Domestic Product price deflator. For 

each of the four SCC cases specified, the 

values used for emissions in 2015 were 

$12.0, $40.4, $62.2, and $119 per metric 

ton avoided (values expressed in 

2013$). DOE derived values after 2050 

using the relevant growth rates for the 

2040–2050 period in the interagency 

update. 

DOE multiplied 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 

discounted the values in each of the 

four cases using the specific discount 

rate that had been used to obtain the 

SCC values in each case. 

2. Valuation of Other Emissions 

Reductions 

As noted above, DOE has taken into 

account how amended energy 

conservation standards would reduce 

site NOX emissions nationwide and 

increase power sector NOX emissions in 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55573 

57 ‘‘2006 Report to Congress on the Costs and 

Benefits of Federal Regulations and Unfunded 

Mandates on State, Local, and Tribal Entities,’’ U.S. 

Office of Management and Budget, Office of 

Information and Regulatory Affairs. 2006. 58For more information on NEMS, refer to the 

U.S. Department of Energy, Energy Information 

Administration documentation. A useful summary 

is National Energy Modeling System: An Overview 

2003, DOE/EIA–0581(2003) (March 2003). 59 DOE/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 DOE/EIA assumptions, DOE 

refers to it by the name ‘‘NEMS–BT’’ (‘‘BT’’ is DOE’s 

Building Technologies Program, under whose aegis 

this work has been performed). 

60See Bureau of Economic Analysis, ‘‘Regional 

Multipliers: A Handbook for the Regional InputOutput Modeling System (RIMS II),’’ U.S. 

Department of Commerce (1992). 

61Scott, M.J., O.V. Livingston, P.J. Balducci, J.M. 

Roop, and R.W. Schultz. ImSET 3.1: Impact of 

Sector Energy Technologies. 2009. Pacific 

Northwest National Laboratory, Richland, WA. 

Report No. PNNL–18412. www.pnl.gov/main/ 

publications/external/technical_reports/PNNL18412.pdf 

those 22 States not affected by the CAIR. 

DOE estimated the monetized value of 

net NOX emissions reductions resulting 

from each of the TSLs considered for the 

NOPR based on estimates found in the 

relevant scientific literature. Estimates 

of monetary value for reducing NOX

from stationary sources range from $476 

to $4,889 per ton in 2013$.57 DOE 

calculated monetary benefits using a 

medium value for NOX emissions of 

$2,683 per short ton (in 2013$), and real 

discount rates of 3 percent and 7 

percent. 

DOE is evaluating appropriate 

monetization of avoided SO2 and Hg 

emissions in energy conservation 

standards rulemakings. It has not 

included monetization in the current 

analysis. 

M. Utility Impact Analysis 

The utility impact analysis estimates 

several effects on the power generation 

industry that would result from the 

adoption of new or amended energy 

conservation standards. In the utility 

impact analysis, DOE analyzes the 

changes in installed electricity capacity 

and generation that would result for 

each trial standard level. The utility 

impact analysis uses a variant of 

NEMS,58 which is a public domain, 

multi-sectored, partial equilibrium 

model of the U.S. energy sector. DOE 

uses a variant of this model, referred to 

as NEMS–BT,59 to account for selected 

utility impacts of new or amended 

energy conservation standards. DOE’s 

analysis consists of a comparison 

between model results for the most 

recent AEO Reference Case and for cases 

in which energy use is decremented to 

reflect the impact of potential standards. 

The energy savings inputs associated 

with each TSL come from the NIA. 

Chapter 15 of the NOPR TSD describes 

the utility impact analysis in further 

detail. 

N. Employment Impact Analysis 

Employment impacts from new or 

amended energy conservation standards 

include direct and indirect impacts. 

Direct employment impacts are any 

changes in the number of employees of 

manufacturers of the equipment subject 

to standards; the MIA addresses those 

impacts. Indirect employment impacts 

are changes in national employment 

that occur due to the shift in 

expenditures and capital investment 

caused by the purchase and operation of 

more-efficient equipment. Indirect 

employment impacts from standards 

consist of the jobs created or eliminated 

in the national economy, other than in 

the manufacturing sector being 

regulated, due to: (1) Reduced spending 

by end users on energy; (2) reduced 

spending on new energy supply by the 

utility industry; (3) increased customer 

spending on the purchase of new 

equipment; and (4) the effects of those 

three factors throughout the economy. 

One method for assessing the possible 

effects on the demand for labor of such 

shifts in economic activity is to compare 

sector employment statistics developed 

by the Labor Department’s Bureau of 

Labor Statistics (BLS). BLS regularly 

publishes its estimates of the number of 

jobs per million dollars of economic 

activity in different sectors of the 

economy, as well as the jobs created 

elsewhere in the economy by this same 

economic activity. Data from BLS 

indicate that expenditures in the utility 

sector generally create fewer jobs (both 

directly and indirectly) than 

expenditures in other sectors of the 

economy.60 There are many reasons for 

these differences, including wage 

differences and the fact that the utility 

sector is more capital-intensive and less 

labor-intensive than other sectors. 

Energy conservation standards have the 

effect of reducing customer utility bills. 

Because reduced customer expenditures 

for energy likely lead to increased 

expenditures in other sectors of the 

economy, the general effect of efficiency 

standards is to shift economic activity 

from a less labor-intensive sector (i.e., 

the utility sector) to more laborintensive sectors (e.g., the retail and 

service sectors). Thus, based on the BLS 

data alone, DOE believes net national 

employment may increase because of 

shifts in economic activity resulting 

from amended standards for PTACs and 

PTHPs. 

For the standard levels considered in 

this NOPR, DOE estimated indirect 

national employment impacts using an 

input/output model of the U.S. economy 

called Impact of Sector Energy 

Technologies, Version 3.1.1 (ImSET).61

ImSET is a special-purpose version of 

the ‘‘U.S. Benchmark National InputOutput’’ (I–O) model, which was 

designed to estimate the national 

employment and income effects of 

energy-saving technologies. The ImSET 

software includes a computer-based I–O 

model having structural coefficients that 

characterize economic flows among the 

187 sectors. ImSET’s national economic 

I–O structure is based on a 2002 U.S. 

benchmark table, specially aggregated to 

the 187 sectors most relevant to 

industrial, commercial, and residential 

building energy use. DOE notes that 

ImSET is not a general equilibrium 

forecasting model, and understands the 

uncertainties involved in projecting 

employment impacts, especially 

changes in the later years of the 

analysis. Because ImSET does not 

incorporate price changes, the 

employment effects predicted by ImSET 

may over-estimate actual job impacts 

over the long run. For the NOPR, DOE 

used ImSET only to estimate short-term 

(through 2023) employment impacts. 

For more details on the employment 

impact analysis, see chapter 16 of the 

NOPR TSD. 

V. Analytical Results 

A. Trial Standard Levels 

At the NOPR stage, DOE develops 

trial standard levels (TSLs) for 

consideration. TSLs are formed by 

grouping different efficiency levels, 

which are potential standard levels for 

each equipment class. DOE analyzed the 

benefits and burdens of the TSLs 

developed. 

In this proposed rule, DOE considers 

six efficiency levels for PTACs and five 

efficiency levels for PTHPs. DOE groups 

the efficiency levels into trial standard 

levels to determine the impact the 

selected trial standard level has on 

individual equipment classes. DOE may 

choose to promulgate equal or unequal 

efficiency levels, and, in the proposed 

rule, DOE bases its decision to group 

efficiency levels based on which is most 

economically justifiable. In the case of 

unequal efficiency levels, PTHP 

efficiency levels set higher than those of 

PTACs leads not only to additional 

national energy cost savings but also 

equipment switching from PTHPs to a 

less expensive PTAC with electric 

resistance strip heating, which 

consumes 190 to 280 percent more 


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energy than PTHPs for the same amount 

of heating. The national energy cost 

savings from unequal efficiency levels 

are negated by the energy costs from 

more electric resistance strip heating if 

2.8 percent or more of total customers 

switch. Given that PTHPs cost 

approximately 10 percent more in terms 

of total installed price compared to 

PTACs, DOE expects negative energy 

cost savings from unequal efficiency 

levels. DOE does not find the grouping 

of unequal efficiency levels 

economically justifiable and therefore 

groups PTAC and PTHP efficiency 

levels such that they are equalized for 

the five TSLs it examined. 

Table V.1 presents the baseline 

efficiency level and the efficiency level 

of each TSL analyzed for standard size 

PTACs and PTHPs subject to this 

proposed rule. The baseline efficiency 

levels correspond to the efficiency 

levels specified by the energy efficiency 

equations in ANSI/ASHRAE/IES 

Standard 90.1–2013 for PTACs and 

PTHPs. 10 CFR 431.97(c). The TSL 1, 2, 

3, 4 efficiency levels represent matched 

pairs of efficiency levels at 4%, 8%, 

12%, and 16% above the current 

Federal energy conservation standards 

for PTACs. TSL 5 is the maximum 

technologically feasible (‘‘max tech’’) 

level for each class of equipment as 

discussed in section IV.C.5. 

TABLE V.1—STANDARD SIZE PTACS AND PTHPS BASELINE EFFICIENCY LEVELS AND TSLS

Baseline (ANSI/ 

ASHRAE/IES 

Standard 90.1– 

2013) * 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Max-Tech

PTAC efficiency level EL1 EL2 EL3 EL4 EL5 EL6 

PTHP efficiency level Current Federal 

ECS 

EL1 EL2 EL3 EL4 EL5 

Equipment class (cooling capacity) Efficiency 

metric 

Standard Size PTAC 9,000 Btu/h .... EER ......... 11.3 11.5 12.0 12.4 12.9 13.1 

Standard Size PTAC 15,000 Btu/h .. EER ......... 9.5 9.7 10.0 10.4 10.8 11.0 

Standard Size PTHP 9,000 Btu/h .... EER .........

COP .........

11.3 

3.2 

11.5 

3.3 

12.0 

3.4 

12.4 

3.5 

12.9 

3.6 

13.1 

3.6 

Standard Size PTHP 15,000 Btu/h .. EER .........

COP .........

9.5 

2.9 

9.7 

2.9 

10.0 

3.0 

10.4 

3.1 

10.8 

3.2 

11.0 

3.2 

* This level represents the ANSI/ASHRAE/IES Standard 90.1–2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. (a)(6)(A)(ii)(I)). DOE notes that the 

Baseline level is 1.8% higher than current Federal ECS for PTAC equipment, but is equivalent to current Federal ECS for PTHP equipment. For 

PTAC equipment, the Baseline level is also termed EL1. 

As stated in the engineering analysis 

(see chapter 5 of the NOPR TSD), 

current Federal energy conservation 

standards and the efficiency levels 

specified by ANSI/ASHRAE/IES 

Standard 90.1–2013 for PTACs and 

PTHPs are a function of the equipment’s 

cooling capacity. Both the Federal 

energy conservation standards and the 

efficiency standards in ANSI/ASHRAE/ 

IES Standard 90.1–2013 are based on 

equations to calculate the efficiency 

levels for PTACs and PTHPs with a 

cooling capacity greater than or equal to 

7,000 Btu/h and less than or equal to 

15,000 Btu/h for each equipment class. 

To derive the standards (i.e., efficiency 

level as a function of cooling capacity), 

DOE plotted the representative cooling 

capacities and the corresponding 

efficiency levels for each TSL. DOE then 

calculated the equation of the line 

passing through the EER values for 

9,000 Btu/h and 15,000 Btu/h for 

standard size PTACs and PTHPs. More 

details describing how DOE determined 

the energy efficiency equations for each 

TSL are found in chapter 9 of the TSD. 

Table V.2 and Table V.3 identify the 

energy efficiency equations for each TSL 

for standard size PTACs and PTHPs. 

TABLE V.2—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) 

BY TSL FOR STANDARD SIZE PTACS

Standard size ** PTACs Energy efficiency equation * 

Baseline *** (ANSI/ASHRAE/IES Standard 90.1–2013) ...................................................................... EER = 14.0¥(0.300 × Cap †/1000) 

TSL 1 ................................................................................................................................................... EER = 14.4¥(0.312 × Cap †/1000) 

TSL 2 ................................................................................................................................................... EER = 14.9¥(0.324 × Cap †/1000) 

TSL 3 ................................................................................................................................................... EER = 15.5¥(0.336 × Cap †/1000) 

TSL 4 ................................................................................................................................................... EER = 16.0¥(0.348 × Cap †/1000) 

TSL 5—MaxTech ................................................................................................................................. EER = 16.3¥(0.354 × Cap †/1000) 

* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled 

products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or 

equal to 42 inches wide. 

*** This level represents the ANSI/ASHRAE/IES Standard 90.1–2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. (a)(6)(A)(ii)(I)). 

† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature. 


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TABLE V.3—ENERGY-EFFICIENCY EQUATIONS (EER AS A FUNCTION OF COOLING CAPACITY) BY TSL FOR STANDARD SIZE

PTHPS

Standard size ** PTHPs Energy efficiency equation * 

Baseline *** (ANSI/ASHRAE/IES Standard 90.1–2013) ...................................................................... EER = 14.0¥(0.300 × Cap †/1000) 

COP = 3.7¥(0.052 × Cap †/1000) 

TSL 1 ................................................................................................................................................... EER = 14.4¥(0.312 × Cap †/1000) 

COP = 3.8¥(0.058 × Cap †/1000) 

TSL 2 ................................................................................................................................................... EER = 14.9¥(0.324 × Cap †/1000) 

COP = 4.0¥(0.064 × Cap †/1000) 

TSL 3 ................................................................................................................................................... EER = 15.5¥(0.336 × Cap †/1000) 

COP = 4.1¥(0.068 × Cap †/1000) 

TSL 4 ................................................................................................................................................... EER = 16.0¥(0.348 × Cap †/1000) 

COP = 4.2¥(0.070 × Cap †/1000) 

TSL 5—MaxTech ................................................................................................................................. EER = 16.3¥(0.354 × Cap †/1000) 

COP = 4.3¥(0.073 × Cap †/1000) 

* For equipment rated according to the DOE test procedure, all EER values must be rated at 95 °F outdoor dry-bulb temperature for air-cooled 

products and evaporatively-cooled products and at 85 °F entering water temperature for water cooled products. All COP values must be rated at 

47 °F outdoor dry-bulb temperature for air-cooled products, and at 70 °F entering water temperature for water-source heat pumps. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or 

equal to 42 inches wide. 

*** This level represents the ANSI/ASHRAE/IES Standard 90.1–2013 minimum for PTAC and PTHP equipment. This level is used as the Baseline since DOE is required to, at a minimum, adopt the ASHRAE levels as the Federal standard. (42 U.S.C. (a)(6)(A)(ii)(I)). 

† Cap means cooling capacity in Btu/h at 95 °F outdoor dry-bulb temperature. 

For PTACs and PTHPs with cooling 

capacity less than 7,000 Btu/h, DOE 

determined the EERs using a cooling 

capacity of 7,000 Btu/h in the 

efficiency-capacity equations. For 

PTACs and PTHPs with a cooling 

capacity greater than 15,000 Btu/h 

cooling capacity, DOE determined the 

EERs using a cooling capacity of 15,000 

Btu/h in the efficiency-capacity 

equations. This is the same method 

established in the Energy Policy Act of 

1992 and provided in ANSI/ASHRAE/ 

IES Standard 90.1–2013 for calculating 

the EER and COP of equipment with 

cooling capacities smaller than 7,000 

Btu/h and larger than 15,000 Btu/h. (42 

U.S.C. 6313(a)(3)(A)) 

B. Economic Justification and Energy 

Savings 

As discussed in section II.A, EPCA 

provides seven factors to be evaluated in 

determining whether a more stringent 

standard for PTACs and PTHPs is 

economically justified. (42 U.S.C. 

6313(a)(6)(B)(ii)) The following sections 

generally discuss how DOE has 

addressed each of those factors in this 

rulemaking. 

1. Economic Impacts on Commercial 

Customers 

DOE analyzed the economic impacts 

on PTAC and PTHP equipment 

customers by looking at the effects 

amended standards would have on the 

LCC and PBP. DOE also examined the 

impacts of potential standards on 

customer subgroups. These analyses are 

discussed below. 

a. Life-Cycle Cost and Payback Period 

To evaluate the net economic impact 

of potential amended energy 

conservation standards on customers of 

PTAC and PTHP equipment, DOE 

conducted LCC and PBP analyses for 

each TSL. In general, higher-efficiency 

equipment would affect consumers in 

two ways: (1) Purchase price would 

increase, and (2) annual operating costs 

would decrease. Inputs used for 

calculating the LCC and PBP include 

total installed costs (i.e., product price 

plus installation costs), and operating 

costs (i.e., annual energy savings, energy 

prices, energy price trends, repair costs, 

and maintenance costs). The LCC 

calculation also uses product lifetime 

and a discount rate. Chapter 8 of the 

NOPR TSD provides detailed 

information on the LCC and PBP 

analyses. 

Table V.4 through Table V.7 show the 

LCC and PBP results for all efficiency 

levels considered for PTAC and PTHP 

equipment less than 12,000 Btu/h 

cooling capacity and greater than and 

equal to 12,000 Btu/h cooling capacity. 

In the first of each pair of tables, the 

simple payback is measured relative to 

the baseline product. In the second 

tables, the LCC savings are measured 

relative to the base-case efficiency 

distribution in the compliance year (see 

section IV.F.8 of this document). 

TABLE V.4—AVERAGE LCC AND PBP RESULTS FOR STANDARD SIZE EQUIPMENT <12,000 Btu/h COOLING CAPACITY

[9,000 Btu/h cooling capacity] 

TSL Efficiency level 

Average costs 

(2013$) Simple 

payback 

(years) 

Average 

lifetime 

(years) Installed cost 

First year’s 

operating 

cost 

Lifetime 

operating 

cost 

LCC 

1 ................................... 1 $1,491 $194 $1,411 $2,902 6.6 10 

2 ................................... 2 1,508 192 1,395 2,903 7.3 ........................

3 ................................... 3 1,527 189 1,379 2,906 7.8 ........................

4 ................................... 4 1,547 187 1,363 2,910 8.2 ........................

5 ................................... 5 1,557 186 1,356 2,913 8.3 ........................

Note: The results for each TSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the baseline product. 


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TABLE V.5—LCC SAVINGS RELATIVE TO THE BASE CASE EFFICIENCY DISTRIBUTION FOR STANDARD SIZE EQUIPMENT

<12,000 Btu/h COOLING CAPACITY

[9,000 Btu/h cooling capacity] 

TSL Efficiency level 

Life-cycle cost savings 

% of 

Consumers 

that experience 

net cost 

Average 

savings 

(2013$) * 

1 ................................................................................................................................................... 1 20 $1.23 

2 ................................................................................................................................................... 2 37 0.40 

3 ................................................................................................................................................... 3 62 (2.31) 

4 ................................................................................................................................................... 4 70 (6.66) 

5 ................................................................................................................................................... 5 73 (9.45) 

* Parentheses indicate negative values. 

** The calculation includes households with zero LCC savings (no impact). 

TABLE V.6—AVERAGE LCC AND PBP RESULTS FOR STANDARD SIZE EQUIPMENT ≥12,000 Btu/h COOLING CAPACITY

[9,000 Btu/h cooling capacity] 

TSL Efficiency level 

Average costs 

(2013$) Simple 

payback 

(years) 

Average 

lifetime 

(years) Installed cost First year’s 

operating cost 

Lifetime 

operating cost LCC 

1 ................................... 1 $1,744 $252 $1,832 $3,575 7.8 10 

2 ................................... 2 1,767 249 1,812 3,579 8.6 ........................

3 ................................... 3 1,797 246 1,793 3,590 9.8 ........................

4 ................................... 4 1,833 244 1,776 3,609 11.1 ........................

5 ................................... 5 1,854 243 1,767 3,621 11.7 ........................

Note: The results for each TSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the baseline product. 

TABLE V.7—SAVINGS RELATIVE TO THE BASE CASE EFFICIENCY DISTRIBUTION FOR STANDARD SIZE EQUIPMENT ≥12,000 

Btu/h COOLING CAPACITY

[15,000 Btu/h Cooling Capacity] 

TSL Efficiency level 

Life-cycle cost savings 

% of 

Consumers 

that experience net cost 

Average 

savings 

(2013$) * 

1 ................................................................................................................................................... 1 23 $0.01 

2 ................................................................................................................................................... 2 42 (2.11) 

3 ................................................................................................................................................... 3 77 (12.64) 

4 ................................................................................................................................................... 4 87 (31.18) 

5 ................................................................................................................................................... 5 91 (43.49) 

* Parentheses indicate negative values. 

** The calculation includes households with zero LCC savings (no impact). 

For PTACs and PTHPs with a cooling 

capacity less than 7,000 Btu/h, DOE 

established the proposed energy 

conservation standards using a cooling 

capacity of 7,000 Btu/h in the proposed 

efficiency-capacity equation. DOE 

believes the LCC and PBP impacts for 

equipment in this category will be 

similar to the impacts of the 9,000 Btu/ 

h units because the MSP and usage 

characteristics are in a similar range. 

Similarly, for PTACs and PTHPs with a 

cooling capacity greater than 15,000 

Btu/h, DOE established the proposed 

energy conservation standards using a 

cooling capacity of 15,000 Btu/h in the 

proposed efficiency-capacity equation. 

DOE believes the impacts for equipment 

in this category will be similar to units 

with a cooling capacity of 15,000 Btu/ 

h. More details explaining how DOE 

developed the proposed energy 

efficiency equations based on the 

analysis results for the representative 

cooling capacities are provided in 

section V.A of this document. 

b. Customer Sub-Group Analysis 

Using the LCC spreadsheet model, 

DOE determined the impact of the TSLs 

on the small businesses customer 

subgroup. Table V.8 shows the mean 

LCC savings from proposed energy 

conservation standards, and Table V.9 

shows the median payback period (in 

years) for this subgroup. More detailed 

discussion on the LCC subgroup 

analysis and results can be found in 

chapter 12 of the TSD. 


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TABLE V.8—MEAN LIFE-CYCLE COST SAVINGS FOR PTAC AND PTHP EQUIPMENT PURCHASED BY LCC SUB-GROUPS

[2013$] 

Equipment class 

(cooling capacity) TSL1 TSL2 TSL3 TSL4 TSL5 

Standard Size Equipment (9,000 Btu/h) .............................. $0.81 ($0.85) ($4.73) ($10.32) ($13.73) 

Standard Size Equipment (15,000 Btu/h) ............................ (0.27) (3.34) (15.24) (35.16) (48.14) 

* Parentheses indicate negative values. 

Note: The LCC savings for each TSL are calculated relative to the base case efficiency distribution. The calculation includes households with 

zero LCC savings (no impact). 

TABLE V.9—MEDIAN PAYBACK PERIOD FOR PTAC AND PTHP EQUIPMENT PURCHASED BY LCC SUB-GROUPS

[Years] 

Equipment class 

(cooling capacity) TSL1 TSL2 TSL3 TSL4 TSL5 

Standard Size Equipment (9,000 Btu/h) .............................. 7.1 8.0 8.9 9.5 9.7 

Standard Size Equipment (15,000 Btu/h) ............................ 8.4 9.9 12.4 14.7 15.9 

Note: The median payback period is calculated only for affected establishments. Establishments with no impact have an undefined payback 

period, and are therefore not included in calculating the median PBP. 

For PTACs and PTHPs with a cooling 

capacity less than 7,000 Btu/h, DOE 

believes that the LCC and PBP impacts 

for equipment in this category will be 

similar to the impacts of the 9,000 Btu/ 

h units because the MSP and usage 

characteristics are in a similar range. 

Similarly, for PTACs and PTHPs with a 

cooling capacity greater than 15,000 

Btu/h, DOE believes the impacts will be 

similar to units with a cooling capacity 

of 15,000 Btu/h. See chapter 5 of the 

TSD for how DOE selected the 

representative capacities that were 

analyzed. 

c. Rebuttable Presumption Payback 

As discussed in section IV.F.10, EPCA 

establishes a rebuttable presumption 

that an energy conservation standard is 

economically justified if the increased 

purchase cost for equipment that meets 

the standard is less than three times the 

value of the first-year energy savings 

resulting from the standard. DOE 

calculated a rebuttable-presumption 

PBP for each TSL to determine whether 

DOE could presume that a standard at 

that level is economically justified. 

DOE based the calculations on 

average usage profiles. As a result, DOE 

calculated a single rebuttablepresumption payback value, and not a 

distribution of PBPs, for each TSL. 

Table V.10 shows the rebuttablepresumption PBPs for the considered 

TSLs. The rebuttable presumption is 

fulfilled in those cases where the PBP is 

three years or less. However, DOE 

routinely conducts an economic 

analysis that considers the full range of 

impacts to the customer, manufacturer, 

Nation, and environment, as required by 

EPCA. The results of that analysis serve 

as the basis for DOE to evaluate 

definitively the economic justification 

for a potential standard level (thereby 

supporting or rebutting the results of 

any three-year PBP analysis). Section 

V.C addresses how DOE considered the 

range of impacts to select this proposed 

standards. 

TABLE V.10—REBUTTABLE-PRESUMPTION PAYBACK PERIOD (YEARS) FOR PTAC OR PTHP EQUIPMENT

Trial standard level 

1 2 3 4 5 

Standard Size Equipment (9,000 Btu/h) .............................. 6.6 7.3 7.8 8.2 8.3 

Standard Size Equipment (15,000 Btu/h) ............................ 7.8 8.6 9.8 11.1 11.7 

2. Economic Impacts on Manufacturers 

DOE performed a manufacturer 

impact analysis (MIA) to estimate the 

impact of amended energy conservation 

standards on PTAC and PTHP 

manufacturers. The following section 

describes the expected impacts on 

manufacturers at each considered TSL. 

Chapter 13 of the TSD explains the 

analysis in further detail. 

a. Industry Cash Flow Analysis Results 

Table V.11 depicts the estimated 

financial impacts (represented by 

changes in industry net present value, 

or INPV) of amended energy 

conservation standards on 

manufacturers of PTACs and PTHPs, as 

well as the conversion costs that DOE 

expects manufacturers would incur for 

all equipment classes at each TSL. 

As discussed in section IV.J.2, DOE 

modeled two different markup scenarios 

to evaluate the range of cash flow 

impacts on the PTAC and PTHP 

industry: (1) The preservation of gross 

margin percentage markup scenario; and 

(2) the preservation of per unit operating 

profit markup scenario. 

To assess the less severe end of the 

range of potential impacts, DOE 

modeled a preservation of gross margin 

percentage markup scenario, in which a 

uniform ‘‘gross margin percentage’’ 

markup is applied across all potential 

efficiency levels. In this scenario, DOE 

assumed that a manufacturer’s absolute 

dollar markup would increase as 

production costs increase in the 

standards case. 

To assess the more severe end of the 

range of potential impacts, DOE 

modeled the preservation of per unit 

operating profit markup scenario, which 

reflects manufacturer concerns 

surrounding their inability to maintain 

margins as manufacturing production 

costs increase to meet more stringent 


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efficiency levels. In this scenario, as 

manufacturers make the necessary 

investments required to convert their 

facilities to produce new standardscompliant products and incur higher 

costs of goods sold, their percentage 

markup decreases. Operating profit does 

not change in absolute dollars but 

decreases as a percentage of revenue. 

Each of the modeled scenarios results 

in a unique set of cash flows and 

corresponding industry values at each 

TSL. In the following discussion, the 

INPV results refer to the difference in 

industry value between the base case 

and each standards case that result from 

the sum of discounted cash flows from 

the base year 2014 through 2048, the 

end of the analysis period. To provide 

perspective on the short-run cash flow 

impact, DOE includes in the discussion 

of the results a comparison of free cash 

flow between the base case and the 

standards case at each TSL in the year 

before amended standards would take 

effect. This figure provides an 

understanding of the magnitude of the 

required conversion costs relative to the 

cash flow generated by the industry in 

the base case. 

The table below presents a range of 

results reflecting both the preservation 

of gross margin percentage markup 

scenario and the preservation of perunit operating profit markup scenario. 

As noted, the preservation of operating 

profit scenario accounts for the more 

severe impacts presented. Estimated 

conversion costs and free cash flow in 

the year prior to the effective date of 

amended standards do not vary with 

markup scenario. 

TABLE V.11—MANUFACTURER IMPACT ANALYSIS RESULTS FOR PTACS AND PTHPS* 

Units Base 

case 

Trial standard level 

1 2 3 4 5 

INPV ..................... 2013$M ..... 58.5 57.1 to 57.4 ........ 57.7 to 58.8 ........ 55.4 to 57.5 ........ 55.0 to 58.5 ........ 51.8 to 55.9. 

Change in INPV ... 2013$M ..... ............ (1.4) to (1.1) ....... (0.7) to 0.3 .......... (3.1) to (0.9) ....... (3.5) to 0.0 .......... (6.7) to (2.6). 

% Change ............ (2.4) to (1.9) ....... (1.3) to 0.5 .......... (5.3) to (1.6) ....... (5.9) to 0.0 ......... (11.4) to (4.4). 

Product Conversion Costs.2013$M ..... ............ 2.2 ...................... 4.7 ...................... 7.2 ...................... 8.5 ...................... 13.5. 

Capital Conversion 

Costs.

2013$M ..... ............ 2.3 ...................... 2.9 ...................... 7.1 ...................... 7.1 ...................... 7.4. 

Total Conversion 

Costs.

2013$M ..... ............ 4.5 ...................... 7.6 ...................... 14.3 .................... 15.6 .................... 20.9. 

Free Cash Flow .... 2013$M ..... 3.8 2.2 ...................... 1.2 ...................... (1.5) .................... (1.8) .................... (3.4). 

% Change ............ (43.5) .................. (69.9) .................. (138.6) ................ (148.2) ................ (190.3) 

* Parentheses indicate negative values. 

TSL 1 represents a 4 percent increase 

above current federal minimum 

efficiency standards for PTACs. At TSL 

1, DOE estimates the impacts on INPV 

to range from ¥$1.4 million to ¥$1.1 

million, or a change of ¥2.4 percent to 

¥1.9 percent. Industry free cash flow is 

estimated to decrease by $1.7 million, or 

a change of 43.5 percent compared to 

the base-case value of $3.8 million in 

the year before the compliance date 

(2018). 

DOE estimates that in the year of 

compliance (2019), 51 percent of all 

PTAC and PTHP shipments in the base 

case would already meet or exceed the 

standard levels at TSL 1. The capital 

and product conversion costs required 

to bring the balance of shipments into 

compliance with amended standards 

drive the negative INPV results at this 

level. DOE estimates industry 

conversion costs of $4.5 million at TSL 

1. 

TSL 2 represents an 8 percent 

increase above current federal minimum 

efficiency standards for PTACs. At TSL 

2, DOE estimates impacts on INPV to 

range from ¥$0.7 million to $0.3 

million, or a change in INPV of ¥1.3 

percent to 0.5 percent. At this level, 

industry free cash flow is estimated to 

decrease by $2.7 million, or a change of 

69.9 percent compared to the base-case 

value of $3.8 million in the year before 

the compliance date (2018). 

The INPV impacts at TSL 2 are 

slightly less severe than those at TSL 1 

due to the interplay of conversion costs, 

manufacturer selling prices, and 

shipments. DOE estimates that in the 

year of compliance (2019), 37 percent of 

all PTAC and PTHP base case shipments 

would meet efficiency levels at TSL 2 or 

higher. DOE expects conversion costs 

required to bring the balance of 

shipments into compliance would 

increase to $7.6 million, reflecting the 

need for additional motor and control 

changes as well as a more significant 

R&D and testing burden. However, an 

anticipated increase in per-unit 

purchase price at this level combined 

with steady shipments could dampen 

the effects of conversion costs on INPV. 

TSL 3 represents a 12 percent increase 

above current federal minimum 

efficiency standards for PTACs. At TSL 

3, DOE estimates impacts on INPV to 

range from ¥$3.1 million to ¥$0.9 

million, or a change in INPV of ¥5.3 

percent to ¥1.6 percent. At this level, 

industry free cash flow is estimated to 

decrease by $5.3 million, or a change of 

138.6 percent compared to the base-case 

value of $3.8 million in the year before 

the compliance date (2018). 

DOE estimates that in the year of 

compliance (2019), only 6 percent of all 

PTAC and PTHP base case shipments 

would already meet efficiency levels at 

TSL 3 or higher. DOE also estimates 

conversion costs would nearly double 

relative to conversion costs at TSL 2, 

increasing to $14.3 million. Anticipated 

conversion costs at this level include 

investing in new tooling and 

redesigning equipment to incorporate 

additional coils and/or formed coils. 

TSL 4 represents a 16 percent increase 

above current federal minimum 

efficiency standards for PTACs. At TSL 

4, DOE estimates impacts on INPV to 

range from ¥$3.5 million to $0.0 

million, or a change in INPV of ¥5.9 

percent to 0.0 percent. At this level, 

industry free cash flow is estimated to 

decrease by $5.7 million, or a change of 

148.2 percent compared to the base-case 

value of $3.8 million in the year before 

the compliance date (2018). 

DOE estimates that in the year of 

compliance (2019), less than 1 percent 

of all PTAC and PTHP base case 

shipments would already meet 

efficiency levels at TSL 4 or higher. 

Conversion costs required to bring 

nearly 100 percent of equipment into 

compliance would increase to an 

estimated $15.6 million. At this level, 

however, DOE does not anticipate 

capital conversion costs beyond those 

required at TSL 3. Rather, equipment 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55579 

62 ‘‘Annual Survey of Manufacturers: General 

Statistics: Statistics for Industry Groups and 

Industries,’’ U.S. Census Bureau, 2011. Available at 

www.census.gov/manufacturing/asm/index.html. 

conversion costs account for the full 

increase. 

TSL 5 represents the use of max-tech 

design options for each equipment class. 

At this level, DOE estimates impacts on 

INPV to range from ¥$6.7 million to 

¥$2.6 million, or a change in INPV of 

¥11.4 percent to ¥4.4 percent. Industry 

free cash flow is estimated to decrease 

by $7.3 million, or a change of 190.3 

percent compared to the base-case value 

of $3.8 million in the year before the 

compliance date (2018). 

DOE estimates that in the year of 

compliance (2019), less than 1 percent 

of all PTAC and PTHP base case 

shipments would already meet 

efficiency levels at TSL 5. At this level, 

conversion costs required to bring 

nearly 100 percent of equipment into 

compliance would increase to an 

estimated $20.9 million. 

At all TSLs, INPV impacts could 

prove more severe if consumer demand 

falls in the face of higher per-unit 

purchase prices. 

DOE requests feedback on the 

expected total conversion costs for the 

industry at the evaluated TSLs. This is 

identified as issue 5 in section VII.E, 

‘‘Issues on Which DOE Seeks 

Comment.’’ 

b. Direct Impacts on Employment 

To quantitatively assess the potential 

impacts of amended energy 

conservation standards on direct 

employment, DOE used the GRIM to 

estimate the domestic labor 

expenditures and number of direct 

employees in the base case and at each 

TSL from 2014 through 2048. DOE used 

statistical data from the U.S. Census 

Bureau’s 2011 Annual Survey of 

Manufacturers,62 the results of the 

engineering analysis, and interviews 

with manufacturers to determine the 

inputs necessary to calculate industrywide labor expenditures and domestic 

direct employment levels. Labor 

expenditures related to producing the 

equipment are a function of the labor 

intensity of producing the equipment, 

the sales volume, and an assumption 

that wages remain fixed in real terms 

over time. The total labor expenditures 

in each year are calculated by 

multiplying the MPCs by the labor 

percentage of MPCs. DOE estimates that 

50 percent of PTAC and PTHP units are 

produced domestically. 

The total labor expenditures in the 

GRIM were then converted to domestic 

production employment levels by 

dividing production labor expenditures 

by the annual payment per production 

worker (production worker hours times 

the labor rate found in the U.S. Census 

Bureau’s 2011 Annual Survey of 

Manufacturers). The production worker 

estimates in this section only cover 

workers up to the line-supervisor level 

who are directly involved in fabricating 

and assembling a product within an 

OEM facility. Workers performing 

services that are closely associated with 

production operations, such as materials 

handling tasks using forklifts, are also 

included as production labor. DOE’s 

estimates only account for production 

workers who manufacture the specific 

products covered by this rulemaking. 

To estimate an upper bound to 

employment change, DOE assumes all 

domestic manufacturers would choose 

to continue producing products in the 

U.S. and would not move production to 

foreign countries. To estimate a lower 

bound to employment, DOE estimates 

the maximum portion of the industry 

that would choose to leave the industry 

or relocate production overseas rather 

than make the necessary conversions at 

domestic production facilities. A 

complete description of the assumptions 

used to generate these upper and lower 

bounds can be found in chapter 12 of 

the NOPR TSD. 

As noted above, DOE estimates that 

50 percent of PTAC and PTHP units 

sold in the United States are 

manufactured domestically. In the 

absence of amended energy 

conservation standards, DOE estimates 

that the PTAC and PTHP industry 

would employ 170 domestic production 

workers in 2019. 

Table V.12 below shows the range of 

impacts of potential amended energy 

conservation standards on U.S. 

production workers of PTACs and 

PTHPs. The potential changes to direct 

employment presented suggest that the 

PTAC and PTHP industry could 

experience anything from a slight gain 

in domestic direct employment to a loss 

of all domestic direct employment. 

TABLE V.12—POTENTIAL CHANGES IN THE TOTAL NUMBER OF STANDARD SIZE PTAC AND PTHP PRODUCTION WORKERS

IN 2019 

Trial standard level * 

Base 

case† 1 2 3 4 5 

Potential Changes in Domestic Production Workers in 2019 ....... ................ (170) to 4 (170) to 10 (170) to 17 (170) to 22 (170) to 24 

* Parentheses indicate negative values. 

† Base case assumes 170 domestic production workers in the PTAC and PTHP industry in 2019. 

The upper end of the range estimates 

the maximum increase in the number of 

production workers in the PTAC and 

PTHP industry after implementation of 

an amended energy conservation 

standard. It assumes manufacturers 

would continue to produce the same 

scope of covered equipment within the 

United States and would require some 

additional labor to produce more 

efficient equipment. 

The lower end of the range represents 

the maximum decrease in total number 

of U.S. production workers that could 

result from an amended energy 

conservation standard. Throughout 

interviews, manufacturers stated their 

concerns about increasing offshore 

competition entering the market. If the 

cost of complying with amended 

standards significantly erodes the 

profitability of domestic manufacturers 

relative to their competitors who 

manufacture and/or import PTACs and 

PTHPs from overseas, manufacturers 

with domestic production could decide 

to exit the PTAC and PTHP market and/ 

or shift their production facilities 

offshore. The lower bound of direct 

employment impacts therefore assumes 

domestic production of PTACs and 

PTHPs ceases, as domestic 

manufacturers either exit the market or 

shift production overseas in search of 

reduced manufacturing costs. 

This conclusion is independent of any 

conclusions regarding indirect 

employment impacts in the broader 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55580 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

United States economy, which are 

documented in chapter 15 of the TSD. 

DOE requests comments on the total 

annual direct employment levels in the 

industry for PTAC production. This is 

identified as issue 6 in section VII.E, 

‘‘Issues on Which DOE Seeks 

Comment.’’ 

c. Impacts on Manufacturing Capacity 

According to PTAC and PTHP 

manufacturers interviewed, amended 

energy conservation standards will not 

significantly constrain manufacturing 

production capacity. Among 

manufacturers with production assets, 

some indicated that more stringent 

energy conservation standards could 

reduce sales volumes, thereby resulting 

in excess capacity. Among importers 

and distributors, amended energy 

conservation standards would not likely 

impact capacity. Accordingly, DOE 

believes manufacturers will be able to 

maintain production capacity levels 

sufficient to meet market demand under 

the proposed levels. 

d. Impacts on Subgroups of 

Manufacturers 

As discussed above, using average 

cost assumptions to develop an industry 

cash flow estimate is not adequate for 

assessing differential impacts among 

subgroups of manufacturers. Small 

manufacturers, niche players, or 

manufacturers exhibiting a cost 

structure that differs largely from the 

industry average could be affected 

differently. DOE used the results of the 

industry characterization to group 

manufacturers exhibiting similar 

characteristics. Specifically, DOE 

identified two subgroups of 

manufacturers for separate impact 

analyses: Manufacturers with 

production assets and small business 

manufacturers. 

DOE initially identified 22 companies 

that sell PTAC and PTHP equipment in 

the U.S. Among U.S. companies, few 

own production assets; rather, they 

import and distribute PTACs and PTHPs 

manufactured overseas, primarily in 

China. DOE identified a subgroup of 

three manufacturers that own 

production assets. These manufacturers 

own tooling or production assets either 

in the U.S. or in foreign countries. 

Together, these three manufacturers 

account for approximately 80 percent of 

the domestic PTAC and PTHP market. 

Because manufacturers with production 

assets will incur different conversion 

costs to comply with amended energy 

conservation standards compared to 

their competitors who do not own 

production assets, DOE conducted a 

separate analysis to evaluate the impact 

of an amended standard on the 

subgroup of manufacturers with 

production assets. 

As with the overall industry analysis, 

DOE modeled two different markup 

scenarios to evaluate the range of cash 

flow impacts on manufacturers with 

production assets: (1) The preservation 

of gross margin percentage markup 

scenario; and (2) the preservation of per 

unit operating profit markup scenario. 

See Section IV.J.2 for a complete 

description of markup scenarios. 

Each of the modeled scenarios results 

in a unique set of cash flows and 

corresponding INPV values at each TSL. 

In the following discussion, the INPV 

results refer to the difference in value of 

manufacturers with production assets 

between the base case and standards 

cases as represented by the sum of 

discounted cash flows from the base 

year 2014 through 2048, the end of the 

analysis period. To provide perspective 

on the short-run cash flow impact, DOE 

includes in the discussion of results a 

comparison of free cash flow between 

the base case and the standards case at 

each TSL in the year before amended 

standards would take effect. This figure 

provides an understanding of the 

magnitude of the required conversion 

costs relative to the cash flow generated 

by manufacturers with production 

assets in the base case. 

The table below presents a range of 

results reflecting both the preservation 

of gross margin percentage markup 

scenario and the preservation of per unit 

operating profit markup scenario. As 

discussed in section IV.J.B, the 

preservation of operating profit scenario 

accounts for the more severe impacts 

presented. Estimated conversion costs 

and free cash flow in the year prior to 

the effective date of amended standards 

do not vary with markup scenario. 

TABLE V.13—MANUFACTURER IMPACT ANALYSIS RESULTS FOR THE SUBGROUP OF PTAC AND PTHP MANUFACTURERS

WITH PRODUCTION ASSETS

Units Base 

case 

Trial standard level* 

1 2 3 4 5 

INPV ..................... 2013$M ..... 46.8 45.5 to 45.8 ........ 45.7 to 46.5 ........ 43.0 to 44.7 ........ 42.6 to 45.3 ........ 39.4 to 42.7 

Change in INPV ... 2013$M ..... ............ (1.3) to (1.0) ....... (1.1) to (0.3) ....... (3.8) to (2.1) ....... (4.2) to (1.5) ....... (7.3) to (4.1) 

% Change ............ (2.7) to (2.2) ....... (2.3) to (0.5) ....... (8.2) to (4.5) ....... (9.0) to (3.1) ....... (15.7) to (8.7) 

Product Conversion Costs.2013$M ..... ............ 1.4 ...................... 3.9 ...................... 6.4 ...................... 7.7 ...................... 12.7 

Capital Conversion 

Costs.

2013$M ..... ............ 2.3 ...................... 2.9 ...................... 7.1 ...................... 7.1 ...................... 7.4 

Total Conversion 

Costs.

2013$M ..... ............ 3.7 ...................... 6.8 ...................... 13.5 .................... 14.7 .................... 20.1 

Free Cash Flow .... 2013$M ..... 3.1 1.6 ...................... 0.6 ...................... (2.0) .................... (2.4) .................... (4.0) 

% Change ............ (46.7) .................. (79.7) .................. (165.5) ................ (177.5) ................ (230.1) 

* Parentheses indicate negative values. 

As the results above demonstrate, 

manufacturers with production assets 

will experience financial impacts more 

negative than those facing the industry 

as a whole, discussed earlier in section 

V.B.2. These differential impacts derive 

primarily from the conversion costs 

manufacturers with production assets 

will incur in order to comply with an 

amended standard. In particular, 

manufacturers with production assets 

will face capital conversion costs not 

shared by their competitors who import 

and distribute PTACs and PTHPs and 

do not require tooling investments. In 

interviews, manufacturers with 

production assets indicated that more 

stringent standards could require 

significant investment in new tooling to 

support new coil designs. In addition, 

manufacturers with production assets 

would face product conversion costs in 

the form of design engineering, product 

development, testing, certification, 

marketing, and related costs. 

At the standard proposed in this 

document, DOE estimates the PTAC and 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55581 

63ENERGY STAR is a U.S. EPA voluntary 

program designed to identify and promote energyefficient products to reduce greenhouse gas 

emissions. For more information on the ENERGY 

STAR program, please visit www.energystar.gov. 

PTHP industry as a whole would face 

$7.6 million in conversion costs; of this, 

the subgroup of manufacturers with 

production assets would incur $6.8 

million in conversion costs, or 89 

percent of the industry total. At this 

level, manufacturers with production 

assets would also face an estimated loss 

in INPV of up to 2.3 percent compared 

to 1.3 percent for the industry as a 

whole. 

For the small business subgroup 

analysis, DOE applied the small 

business size standards published by 

the Small Business Administration 

(SBA) to determine whether a company 

is considered a small business. 65 FR 

30836, 30848 (May 15, 2000), as 

amended at 65 FR 53533, 53544 (Sept. 

5, 2000) and codified at 13 CFR part 

121. To be categorized as a small 

business under North American 

Industry Classification System (NAICS) 

code 333415, ‘‘Air-Conditioning and 

Warm Air Heating Equipment and 

Commercial and Industrial Refrigeration 

Equipment Manufacturing,’’ a PTAC 

and PTHP manufacturer and its 

affiliates may employ a maximum of 

750 employees. The 750-employee 

threshold includes all employees in a 

business’s parent company and any 

other subsidiaries. Based on this 

classification, DOE identified at least 12 

manufacturers that qualify as small 

businesses. The PTAC and PTHP small 

business subgroup analysis is discussed 

in chapter 12 of the NOPR TSD and in 

section VI.B of this document. 

e. Cumulative Regulatory Burden 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

several impending regulations may have 

serious consequences for some 

manufacturers, groups of manufacturers, 

or an entire industry. Assessing the 

impact of a single regulation may 

overlook this cumulative regulatory 

burden. Multiple regulations affecting 

the same manufacturer can strain profits 

and can lead companies to abandon 

product lines or markets with lower 

expected future returns than competing 

products. For these reasons, DOE 

conducts an analysis of cumulative 

regulatory burden as part of its 

rulemakings pertaining to appliance 

efficiency. 

For the cumulative regulatory burden 

analysis, DOE looks at other regulations 

that could affect PTAC and PTHP 

manufacturers that will take effect 

approximately three years before or after 

the 2019 compliance date of amended 

energy conservation standards for 

standard-sized PTACs and PTHPs. In 

interviews, manufacturers cited federal 

regulations on equipment other than 

PTACs and PTHPs that contribute to 

their cumulative regulatory burden. The 

compliance years and expected industry 

conversion costs of relevant amended 

energy conservation standards are 

indicated in the table below: 

TABLE V.14—COMPLIANCE DATES AND EXPECTED CONVERSION EXPENSES OF FEDERAL ENERGY CONSERVATION

STANDARDS AFFECTING PTAC AND PTHP MANUFACTURERS

Federal energy conservation standards 

Approximate 

compliance 

date 

Estimated total 

industry conversion expense 

2011 Room Air Conditioners 76 FR 22454 (April 21, 2011); 76 FR 52854 (August 24, 2011) ...................... 2014 $171M (2009$) 

2007 Residential Furnaces & Boilers 72 FR 65136 (Nov. 19, 2007) ............................................................... 2015 $88M (2006$) * 

2011 Residential Furnaces 76 FR 37408 (June 27, 2011); 76 FR 67037 (Oct. 31, 2011) ............................. 2015 $2.5M (2009$) ** 

2011 Residential Central Air Conditioners and Heat Pumps 76 FR 37408 (June 27, 2011); 76 FR 67037 

(Oct. 31, 2011).

2015 $26.0M (2009$) ** 

2010 Gas Fired and Electric Storage Water Heaters 75 FR 20112 (April 16, 2010) ...................................... 2015 $95.4M (2009$) 

Dishwashers *** ................................................................................................................................................. 2018 TBD 

Commercial Packaged Air Conditioners and Heat Pumps *** .......................................................................... 2018 TBD 

Commercial Warm-Air Furnaces *** .................................................................................................................. 2018 TBD 

Furnace Fans 79 FR 38129 (July 3, 2014) ...................................................................................................... 2019 $40.6M (2013$) 

Miscellaneous Residential Refrigeration *** ...................................................................................................... 2019 TBD 

Single Packaged Vertical Units *** .................................................................................................................... 2019 TBD 

Commercial Water Heaters *** .......................................................................................................................... 2019 TBD 

Commercial Packaged Boilers *** ..................................................................................................................... 2020 TBD 

Residential Water Heaters *** ........................................................................................................................... 2021 TBD 

Clothes Dryers *** .............................................................................................................................................. 2022 TBD 

Central Air Conditioners *** ............................................................................................................................... 2022 TBD 

Room Air Conditioners *** ................................................................................................................................. 2022 TBD 

* Conversion expenses for manufacturers of oil-fired furnaces and gas-fired and oil-fired boilers associated with the November 2007 final rule 

for residential furnaces and boilers are excluded from this figure. The 2011 direct final rule for residential furnaces sets a higher standard and 

earlier compliance date for oil-fired furnaces than the 2007 final rule. As a result, manufacturers will be required to design to the 2011 direct final 

rule standard. The conversion costs associated with the 2011 direct final rule are listed separately in this table. EISA 2007 legislated more stringent standards and earlier compliance dates for residential boilers than were required by the November 2007 final rule. As a result, gas-fired and 

oil-fired boiler manufacturers were required to design to the EISA 2007 standard beginning in 2012. The conversion costs listed for residential 

gas-fired and oil-fired boilers in the November 2007 residential furnaces and boilers final rule analysis are not included in this figure. 

** Estimated industry conversion expense and approximate compliance date reflect a court-ordered April 24, 2014 remand of the residential 

non-weatherized and mobile home gas furnaces standards set in the 2011 Energy Conservation Standards for Residential Furnaces and Residential Central Air Conditioners and Heat Pumps. The costs associated with this rule reflect implementation of the amended standards for the remaining furnace product classes (i.e., oil-fired furnaces). 

*** The final rule for this energy conservation standard has not been published. The compliance date and analysis of conversion costs have not 

been finalized at this time. (If a value is provided for total industry conversion expense, this value represents an estimate from the NOPR.) 

Additionally, manufacturers cited 

increasing ENERGY STAR63 standards 

for room air conditioners and ductless 

heating and cooling systems as a source 

of regulatory burden. In response, DOE 

does not consider ENERGY STAR in its 

presentation of cumulative regulatory 

burden, because ENERGY STAR is a 

voluntary program and is not Federally 

mandated. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55582 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

64 ‘‘Circular A–4: Regulatory Analysis,’’ U.S. 

Office of Management and Budget, September, 

2003. Available at: www.whitehouse.gov/omb/

circulars_a004_a-4/. 

65EPCA requires DOE to review its standards at 

least once every 6 years, and requires, for certain 

equipment, a 3-year period after any new standard 

is promulgated before compliance is required, 

except that in no case may any new standards be 

required within 6 years of the compliance date of 

the previous standards. (42 U.S.C. 6313(a)(6)(C)(i)) 

While adding a 6-year review to the 3-year 

compliance period adds up to 9 years, DOE notes 

that it may undertake reviews at any time within 

the 6 year period and that the 3-year compliance 

date may yield to the 6-year backstop. 

3. National Impact Analysis 

a. Amount and Significance of Energy 

Savings 

For each TSL, DOE projected energy 

savings for PTAC and PTHP equipment 

purchased in the 30-year period that 

begins in the year of anticipated 

compliance with amended standards 

(2019–2048). The savings are measured 

over the entire lifetime of equipment 

purchased in the 30-year period. DOE 

quantified the energy savings 

attributable to each TSL as the 

difference in energy consumption 

between each standards case and the 

base case. DOE also determined energy 

savings for PTAC equipment with the 

ANSI/ASHRAE/IES Standard 90.1–2013 

minimum efficiency level by comparing 

with the energy consumption of PTAC 

equipment meeting the Federal 

minimum efficiency level. Table V.15 

shows the estimated primary energy 

savings for all the equipment classes of 

PTACs and PTHPs at each of the TSLs, 

and Table V.16 presents the estimated 

full-fuel-cycle energy savings for each 

TSL. The approach for estimating 

national energy savings is further 

described in section IV.H. 

TABLE V.15—CUMULATIVE PRIMARY ENERGY SAVINGS FOR PTACS AND PTHPS

[Units sold from 2019 to 2048] 

ASHRAE 

Standard 

90.1–2013 * 

Trial standard level 

(quads) 

1 2 3 4 5 

Standard Size Equipment, 7,000 Btu/h ... 0.000 0.000 0.003 0.005 0.006 0.006 

Standard Size Equipment, 9,000 Btu/h ... 0.000 0.013 0.050 0.100 0.129 0.132 

Standard Size Equipment, 15,000 Btu/h 0.001 0.002 0.005 0.010 0.012 0.013 

Total all classes ................................ 0.001 0.015 0.058 0.116 0.148 0.152 

* Energy savings determined from comparing PTAC energy consumption at the ANSI/ASHRAE/IES Standard 90.1–2013 efficiency level to that 

at the Federal minimum efficiency level. 

TABLE V.16—CUMULATIVE FULL-FUEL-CYCLE ENERGY SAVINGS FOR PTACS AND PTHPS

[Units sold from 2019 to 2048] 

ASHRAE 

Standard 

90.1–2013 * 

Trial standard level 

(quads) 

1 2 3 4 5 

Standard Size Equipment, 7,000 Btu/h ... 0.000 0.000 0.003 0.005 0.006 0.007 

Standard Size Equipment, 9,000 Btu/h ... 0.000 0.013 0.051 0.102 0.131 0.134 

Standard Size Equipment, 15,000 Btu/h 0.001 0.002 0.005 0.010 0.013 0.014 

Total all classes ................................ 0.001 0.015 0.059 0.118 0.150 0.155 

* Energy savings determined from comparing PTAC energy consumption at the ANSI/ASHRAE/IES Standard 90.1–2013 efficiency level to that 

at the Federal minimum efficiency level. 

The results indicate that each TSL 

that is more stringent than the 

corresponding level in ANSI/ASHRAE/ 

IES Standard 90.1–2013 results in 

additional energy savings. The primary 

national energy savings from adopting 

the ANSI/ASHRAE/IES Standard 90.1– 

2013 minimum for PTACs saves 0.079 

thousandths of a quad over the Federal 

minimum. 

OMB Circular A–4 64 requires 

agencies to present analytical results, 

including separate schedules of the 

monetized benefits and costs that show 

the type and timing of benefits and 

costs. Circular A–4 also directs agencies 

to consider the variability of key 

elements underlying the estimates of 

benefits and costs. For this rulemaking, 

DOE also undertook a sensitivity 

analysis using nine rather than 30 years 

of equipment shipments. The choice of 

a nine-year period is a proxy for the 

timeline in EPCA for the review of 

certain energy conservation standards 

and potential revision of and 

compliance with such revised 

standards.65 The review timeframe 

established in EPCA is generally not 

synchronized with the equipment 

lifetime, equipment manufacturing 

cycles, or other factors specific to 

PTACs and PTHPs. Thus, such results 

are presented for informational 

purposes only and are not indicative of 

any change in DOE’s analytical 

methodology. The NES results based on 

a 9-year analytical period are presented 

in Table V.17. The impacts are counted 

over the lifetime of PTAC and PTHP 

equipment purchased in 2019–2027. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55583 

66 ‘‘OMB Circular A–4, section E,’’ U.S. Office of 

Management and Budget, September, 2003. 

Available online at http://www.whitehouse.gov/

omb/circulars_a004_a-4. 

TABLE V.17—CUMULATIVE PRIMARY ENERGY SAVINGS FOR PTAC AND PTHP EQUIPMENT TRIAL STANDARD LEVELS FOR

UNITS SOLD IN 2019–2027 

Equipment class 

ASHRAE 

Standard 

90.1–2013 * 

Trial standard level 

(quads) 

1 2 3 4 5 

Standard Size Equipment, 7,000 Btu/h ... 0.000 0.000 0.000 0.002 0.002 0.002 

Standard Size Equipment, 9,000 Btu/h ... 0.000 0.005 0.014 0.028 0.044 0.047 

Standard Size Equipment, 15,000 Btu/h 0.000 0.000 0.002 0.004 0.005 0.005 

Total all classes ................................ 0.000 0.005 0.017 0.033 0.050 0.055 

* Energy savings determined from comparing PTAC energy consumption at the ANSI/ASHRAE/IES Standard 90.1–2013 efficiency level to that 

at the Federal minimum efficiency level. 

b. Net Present Value of Customer Costs 

and Benefits 

DOE estimated the cumulative NPV of 

the total costs and savings for customers 

that would result from the TSLs 

considered for PTAC and PTHP 

equipment. In accordance with OMB’s 

guidelines on regulatory analysis,66

DOE calculated the NPV using both a 7- 

percent and a 3-percent real discount 

rate. The 7-percent rate is an estimate of 

the average before-tax rate of return on 

private capital in the U.S. economy, and 

reflects the returns on real estate and 

small business capital as well as 

corporate capital. This discount rate 

approximates the opportunity cost of 

capital in the private sector (OMB 

analysis has found the average rate of 

return on capital to be near this rate). 

The 3-percent rate reflects the potential 

effects of standards on private 

consumption (e.g., through higher prices 

for equipment and reduced purchases of 

energy). This rate represents the rate at 

which society discounts future 

consumption flows to their present 

value. It can be approximated by the 

real rate of return on long-term 

government debt (i.e., yield on United 

States Treasury notes), which has 

averaged about 3 percent for the past 30 

years. 

Table V.18 shows the customer NPV 

results for each TSL considered for 

PTAC and PTHP equipment. In each 

case, the impacts cover the lifetime of 

equipment purchased in 2019–2048. 

TABLE V.18—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR PACKAGED TERMINAL AIR CONDITIONING AND HEAT

PUMP EQUIPMENT TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2019–2048 

Product class Discount rate 

(percent) 

Trial standard level * 

(millions 2013$) 

1 2 3 4 5 

<7,000 Btu/h ............................................ 3 0.7 1.8 2.4 2.2 2.1 

7,000–15,000 Btu/h .................................. ........................ 22.3 65.9 113.8 134.6 136.4 

>15,000 Btu/h .......................................... ........................ 1.0 1.2 (2.4) (6.7) (7.6) 

Total—all classes .............................. ........................ 23.9 69.0 113.8 130.2 131.0 

<7,000 Btu/h ............................................ 7 0.1 (0.2) (1.2) (2.2) (2.5) 

7,000–15,000 Btu/h .................................. ........................ 6.3 12.3 14.5 10.5 9.0 

>15,000 Btu/h .......................................... ........................ ........................ (1.5) (5.4) (9.5) (10.4)

Total—all classes .............................. ........................ 6.5 10.7 7.9 (1.1) (3.8) 

* Parentheses indicate negative values. Note: Values of 0.0 represent a non-zero NPV that cannot be displayed due to rounding. Numbers 

may not sum to total due to rounding. 

The NPV results based on the 

aforementioned nine-year analytical 

period are presented in Table V.19. The 

impacts are counted over the lifetime of 

equipment purchased in 2019–2027. As 

mentioned previously, this information 

is presented for informational purposes 

only and is not indicative of any change 

in DOE’s analytical methodology or 

decision criteria. 

TABLE V.19—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR PACKAGED TERMINAL AIR CONDITIONING AND HEATING

EQUIPMENT TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2019–2027 

Product class Discount rate 

(percent) 

Trial standard level * 

(millions 2013$) 

1 2 3 4 5 

<7,000 Btu/h ............................................ 3 0.2 0.7 0.6 0.4 0.3 

7,000—15,000 Btu/h ................................ ........................ 10.5 24.2 39.0 49.9 51.8 


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55584 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

TABLE V.19—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR PACKAGED TERMINAL AIR CONDITIONING AND HEATING

EQUIPMENT TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2019–2027—Continued 

Product class Discount rate 

(percent) 

Trial standard level * 

(millions 2013$) 

1 2 3 4 5 

>15,000 Btu/h .......................................... ........................ 0.5 1.2 0.2 (2.6) (3.5) 

Total—all classes .............................. ........................ 11.2 26.0 39.8 47.8 48.6 

<7,000 Btu/h ............................................ 7 0.1 ........................ (0.7) (1.4) (1.6) 

7,000—15,000 Btu/h ................................ ........................ 4.3 6.7 6.8 3.5 2.0 

>15,000 Btu/h .......................................... ........................ ........................ (0.4) (2.1) (5.1) (6.0) 

Total—all classes .............................. ........................ 4.4 6.2 4.0 (2.9) (5.6) 

* Parentheses indicate negative values. 

Note: Values of 0.0 represent a non-zero NPV that cannot be displayed due to rounding. Numbers may not sum to total due to rounding. 

c. Indirect Impacts on Employment 

DOE expects amended energy 

conservation standards for PTAC and 

PTHP equipment to reduce energy costs 

for equipment owners, and the resulting 

net savings to be redirected to other 

forms of economic activity. Those shifts 

in spending and economic activity 

could affect the demand for labor. As 

described in section IV.N, DOE used an 

input/output model of the U.S. economy 

to estimate indirect employment 

impacts of the TSLs that DOE 

considered in this rulemaking. DOE 

understands that there are uncertainties 

involved in projecting employment 

impacts, especially changes in the later 

years of the analysis. Therefore, DOE 

generated results for near-term time 

frames, where these uncertainties are 

reduced. 

The results suggest that the proposed 

standards are likely to have negligible 

impact on the net demand for labor in 

the economy. The net change in jobs is 

so small that it would be imperceptible 

in national labor statistics and might be 

offset by other, unanticipated effects on 

employment. Chapter 16 of the NOPR 

TSD presents detailed results. 

4. Impact on Utility or Performance of 

Equipment 

In performing the engineering 

analysis, DOE considered efficiency 

levels that may be achieved using 

design options that would not lessen the 

utility or performance of the individual 

classes of equipment. (42 U.S.C. 6316(a); 

42 U.S.C. 6295(o)(2)(B)(i)(IV)) As 

presented in section III.C of this 

document, DOE concluded that the 

efficiency levels proposed for standard 

size equipment in this document are 

technologically feasible and would not 

reduce the utility or performance of 

PTACs and PTHPs. PTAC and PTHP 

manufacturers currently offer 

equipment that meet or exceed the 

proposed standard levels. 

5. Impact of Any Lessening of 

Competition 

DOE considers any lessening of 

competition that is likely to result from 

amended standards. The Attorney 

General determines the impact, if any, 

of any lessening of competition likely to 

result from a proposed standard, and 

transmits such determination to the 

Secretary, together with an analysis of 

the nature and extent of such impact. 

To assist the Attorney General in 

making such determination, DOE will 

provide the Department of Justice (DOJ) 

with copies of this NOPR and the TSD 

for review. DOE will consider DOJ’s 

comments on the proposed rule in 

preparing the final rule, and DOE will 

publish and respond to DOJ’s comments 

in that document. 

6. Need of the Nation To Conserve 

Energy 

Enhanced energy efficiency, where 

economically justified, improves the 

Nation’s energy security, strengthens the 

economy, and reduces the 

environmental impacts or costs of 

energy production. Reduced electricity 

demand due to energy conservation 

standards is also likely to reduce the 

cost of maintaining the reliability of the 

electricity system, particularly during 

peak-load periods. As a measure of this 

reduced demand, chapter 15 of the TSD 

presents the estimated reduction in 

generating capacity for the TSLs that 

DOE considered in this rulemaking. 

The expected energy savings from 

amended PTAC and PTHP standards 

could also produce environmental 

benefits in the form of reduced 

emissions of air pollutants and 

greenhouse gases associated with 

electricity production. Table V.20 

provides DOE’s estimate of cumulative 

emissions reductions projected to result 

from the TSLs considered in this 

rulemaking. DOE reports annual 

emissions reductions for each TSL in 

chapter 13 of the NOPR TSD. 

TABLE V.20—SUMMARY OF EMISSIONS REDUCTIONS FOR PTAC AND PTHP 

[Units sold from 2019 to 2048] 

Trial standard level 

1 2 3 4 5 

Power Sector Emissions 

CO2 (million metric tons) ...................................................... 1.06 4.15 8.23 10.52 10.81 

SO2 (thousand tons) ............................................................ 2.46 9.70 19.22 24.07 24.60 

NOX (thousand tons) ........................................................... 0.48 1.90 3.76 4.63 4.69 

Hg (tons) .............................................................................. 0.00 0.01 0.02 0.03 0.03 

N2O (thousand tons) ............................................................ 0.02 0.07 0.14 0.17 0.17 


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Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55585 

TABLE V.20—SUMMARY OF EMISSIONS REDUCTIONS FOR PTAC AND PTHP—Continued 

[Units sold from 2019 to 2048] 

Trial standard level 

1 2 3 4 5 

CH4 (thousand tons) ............................................................ 0.10 0.39 0.77 0.98 1.01 

Upstream Emissions 

CO2 (million metric tons) ...................................................... 0.05 0.18 0.36 0.47 0.48 

SO2 (thousand tons) ............................................................ 0.01 0.04 0.08 0.10 0.10 

NOX (thousand tons) ........................................................... 0.65 2.53 5.02 6.43 6.62 

Hg (tons) .............................................................................. 0.00 0.00 0.00 0.00 0.00 

N2O (thousand tons) ............................................................ 0.00 0.00 0.00 0.00 0.00 

CH4 (thousand tons) ............................................................ 3.92 15.36 30.51 39.10 40.22 

Total FFC Emissions 

CO2 (million metric tons) ...................................................... 1.10 4.33 8.60 10.98 11.29 

SO2 (thousand tons) ............................................................ 2.47 9.74 19.30 24.17 24.70 

NOX (thousand tons) ........................................................... 1.12 4.42 8.78 11.06 11.31 

Hg (tons) .............................................................................. 0.00 0.01 0.02 0.03 0.03 

N2O (thousand tons) ............................................................ 0.02 0.07 0.14 0.18 0.18 

N2O (thousand tons CO2eq)* ............................................... 5.43 21.37 42.19 52.32 53.53 

CH4 (thousand tons) ............................................................ 4.02 15.75 31.28 40.08 41.22 

CH4 (million tons CO2eq) * ................................................... 100.53 393.72 782.02 1001.97 1030.54 

* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP) as the subject emission. 

As part of the analysis for this rule, 

DOE estimated monetary benefits likely 

to result from the reduced emissions of 

CO2 and NOX that DOE estimated for 

each of the TSLs considered. As 

discussed in section IV.L.1, DOE used 

the most recent values for the SCC 

developed by an interagency process. 

The four sets of SCC values resulting 

from that process (expressed in 2013$) 

are represented by $12.0/metric ton (the 

average value from a distribution that 

uses a 5-percent discount rate), $40.5/

metric ton (the average value from a 

distribution that uses a 3-percent 

discount rate), $62.4/metric ton (the 

average value from a distribution that 

uses a 2.5-percent discount rate), and 

$119/metric ton (the 95th-percentile 

value from a distribution that uses a 3- 

percent discount rate). These values 

correspond to the value of emission 

reductions in 2015; the values for later 

years are higher due to increasing 

damages as the projected magnitude of 

climate change increases. 

Table V.21 presents the global value 

of CO2 emissions reductions at each 

TSL. For each of the four cases, DOE 

calculated a present value of the stream 

of annual values using the same 

discount rate as was used in the studies 

upon which the dollar-per-ton values 

are based. DOE calculated domestic 

values as a range from 7 percent to 23 

percent of the global values, and these 

results are presented in chapter 14 of 

the NOPR TSD. 

TABLE V.21—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER PACKAGED TERMINAL AIR

CONDITIONING AND HEAT PUMP EQUIPMENT TRIAL STANDARD LEVELS

TSL 

Social cost of carbon case * 

(million 2013$) 

5% discount rate, 

average * 

3% discount rate, 

average * 

2.5% discount rate, 

average * 

3% discount rate, 

95th percentile * 

Power Sector Emissions 

1 ....................................................................................... 6.90 32.60 52.04 101.01 

2 ....................................................................................... 26.86 127.30 203.32 394.56 

3 ....................................................................................... 53.64 253.57 404.84 786.02 

4 ....................................................................................... 70.70 329.56 524.84 1021.08 

5 ....................................................................................... 73.17 339.99 541.12 1053.04 

Upstream Emissions 

1 ....................................................................................... 0.31 1.45 2.31 4.49 

2 ....................................................................................... 1.20 5.66 9.03 17.53 

3 ....................................................................................... 2.39 11.27 17.98 34.93 

4 ....................................................................................... 3.16 14.70 23.40 45.54 

5 ....................................................................................... 3.28 15.18 24.15 47.01 

Total FFC Emissions 

1 ....................................................................................... 7.21 34.05 54.35 105.50 

2 ....................................................................................... 28.06 132.95 212.35 412.08 


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55586 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

TABLE V.21—ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER PACKAGED TERMINAL AIR

CONDITIONING AND HEAT PUMP EQUIPMENT TRIAL STANDARD LEVELS—Continued 

TSL 

Social cost of carbon case * 

(million 2013$) 

5% discount rate, 

average * 

3% discount rate, 

average * 

2.5% discount rate, 

average * 

3% discount rate, 

95th percentile * 

3 ....................................................................................... 56.03 264.84 422.82 820.95 

4 ....................................................................................... 73.86 344.26 548.24 1066.62 

5 ....................................................................................... 76.45 355.18 565.28 1100.06 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119 per metric ton (2013$). 

DOE is well aware that scientific and 

economic knowledge about the 

contribution of CO2 and other 

greenhouse gas (GHG) emissions to 

changes in the future global climate and 

the potential resulting damages to the 

world economy continues to evolve 

rapidly. Thus, any value placed on 

reducing CO2 emissions in this 

rulemaking is subject to change. DOE, 

together with other Federal agencies, 

will continue to review various 

methodologies for estimating the 

monetary value of reductions in CO2

and other GHG emissions. This ongoing 

review will consider the comments on 

this subject that are part of the public 

record for this and other rulemakings, as 

well as other methodological 

assumptions and issues. However, 

consistent with DOE’s legal obligations, 

and taking into account the uncertainty 

involved with this particular issue, DOE 

has included in this proposed rule the 

most recent values and analyses 

resulting from the interagency process. 

DOE also estimated the cumulative 

monetary value of the economic benefits 

associated with NOX emissions 

reductions anticipated to result from 

amended standards for PTACs and 

PTHPs. The dollar-per-ton values that 

DOE used are discussed in section 

IV.L.1. Table V.22 presents the 

cumulative present values for each TSL 

calculated using seven-percent and 

three-percent discount rates. 

TABLE V.22—ESTIMATES OF PRESENT VALUE OF NOX EMISSIONS REDUCTION UNDER PACKAGED TERMINAL AIR

CONDITIONING AND HEAT PUMP EQUIPMENT TRIAL STANDARD LEVELS

TSL 

Million 2013$ 

3% discount rate 7% discount rate 

Power Sector Emissions 

1 ............................................................................................................................................................... 0.56 0.21 

2 ............................................................................................................................................................... 2.20 0.81 

3 ............................................................................................................................................................... 4.39 1.62 

4 ............................................................................................................................................................... 5.57 2.13 

5 ............................................................................................................................................................... 5.67 2.18 

Upstream Emissions 

1 ............................................................................................................................................................... 0.83 0.36 

2 ............................................................................................................................................................... 3.23 1.39 

3 ............................................................................................................................................................... 6.46 2.80 

4 ............................................................................................................................................................... 8.59 3.89 

5 ............................................................................................................................................................... 8.92 4.09 

Total FFC Emissions 

1 ............................................................................................................................................................... 1.39 0.57 

2 ............................................................................................................................................................... 5.43 2.20 

3 ............................................................................................................................................................... 10.85 4.42 

4 ............................................................................................................................................................... 14.16 6.02 

5 ............................................................................................................................................................... 14.59 6.27 

7. Summary of National Economic 

Impacts 

The NPV of the monetized benefits 

associated with emissions reductions 

can be viewed as a complement to the 

NPV of the customer savings calculated 

for each TSL considered in this 

rulemaking. Table V.23. presents the 

NPV values that result from adding the 

estimates of the potential economic 

benefits resulting from reduced CO2 and 

NOX emissions in each of four valuation 

scenarios to the NPV of customer 

savings calculated for each TSL 

considered in this rulemaking, at both a 

seven-percent and three-percent 

discount rate. The CO2 values used in 

the columns of each table correspond to 

the four sets of SCC values discussed 

above. 


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Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55587 

TABLE V.23—NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS

FROM CO2 AND NOX EMISSIONS REDUCTIONS

TSL 

Customer NPV at 3% discount rate added with: 

(million 2013$) 

SCC case $12.0/

metric ton CO2* 

and medium value 

for NOX

SCC case $40.5/

metric ton CO2* 

and medium value 

for NOX

SCC case $62.4/

metric ton CO2* 

and medium value 

for NOX

SCC case $119/

metric ton CO2* 

and medium value 

for NOX

1 ....................................................................................... 32.5 59.4 79.7 130.8 

2 ....................................................................................... 102.5 207.3 286.7 486.5 

3 ....................................................................................... 180.6 389.4 547.4 945.5 

4 ....................................................................................... 218.2 488.6 692.6 1211.0 

5 ....................................................................................... 222.1 500.8 710.9 1245.7 

TSL 

Customer NPV at 7% discount rate added with: 

(million 2013$) 

SCC case $12.0/

metric ton CO2* 

and medium value 

for NOX

SCC case $40.5/

metric ton CO2* 

and medium value 

for NOX

SCC case $62.4/

metric ton CO2* 

and medium value 

for NOX

SCC case $119/

metric ton CO2* 

and medium value 

for NOX

1 ....................................................................................... 14.3 41.1 61.4 112.6 

2 ....................................................................................... 41.0 145.9 225.2 425.0 

3 ....................................................................................... 68.3 277.1 435.1 833.3 

4 ....................................................................................... 78.7 349.1 553.1 1071.5 

5 ....................................................................................... 78.9 357.6 567.7 1102.5 

* These label values represent the global SCC in 2015, in 2013$. 

Although adding the value of 

customer savings to the values of 

emission reductions provides a valuable 

perspective, two issues should be 

considered. First, the national operating 

cost savings are domestic U.S. customer 

monetary savings that occur as a result 

of market transactions, while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and the SCC are 

performed with different methods that 

use different time frames for analysis. 

The national operating cost savings is 

measured for the lifetime of equipment 

shipped in 2019–2048. The SCC values, 

on the other hand, reflect the present 

value of future climate-related impacts 

resulting from the emission of one 

metric ton of CO2 in each year. These 

impacts continue well beyond 2100. 

8. Other Factors 

The Secretary of Energy, in 

determining whether a standard is 

economically justified, may consider 

any other factors that he/she deems to 

be relevant. (42 U.S.C. 6316 (a); 42 

U.S.C. 6295(o)(2)(B)(i)(VI)) No other 

factors were considered in this analysis. 

C. Proposed Standard 

EPCA, at 42 U.S.C. 

6313(a)(6)(A)(ii)(II), specifies that, for 

any commercial and industrial 

equipment addressed in section 

342(a)(6)(A)(i) of EPCA, 42 U.S.C. 

6313(a), DOE may prescribe an energy 

conservation standard more stringent 

than the level for such equipment in 

ANSI/ASHRAE/IES Standard 90.1, as 

amended, only if ‘‘clear and convincing 

evidence’’ shows that a more stringent 

standard ‘‘would result in significant 

additional conservation of energy and is 

technologically feasible and 

economically justified.’’ (42 U.S.C. 

6313(a)(6)(A)(ii)(II)) 

In selecting the proposed energy 

conservation standards for PTACs and 

PTHPs for consideration in this notice 

of proposed rulemaking, DOE started by 

examining the maximum 

technologically feasible levels, and 

determined whether those levels were 

economically justified. Upon finding the 

maximum technologically feasible 

levels not to be justified, DOE analyzed 

the next lower TSL to determine 

whether that level was economically 

justified. DOE repeated this procedure 

until it reached the highest efficiency 

level that is technologically feasible, 

economically justified and saves a 

significant amount of energy. 

To aid the reader as DOE discusses 

the benefits and/or burdens of each TSL, 

tables in this section summarize the 

quantitative analytical results for each 

TSL, based on the assumptions and 

methodology discussed herein. The 

efficiency levels contained in each TSL 

are described in section V.A. In addition 

to the quantitative results presented in 

the tables, DOE also considers other 

burdens and benefits that affect 

economic justification. These include 

the impacts on identifiable subgroups of 

customers that may be 

disproportionately affected by a national 

standard (see section V.B.1.b), and 

impacts on employment. DOE discusses 

the impacts on employment in PTAC 

and PTHP manufacturing in section 

V.B.2, and discusses the indirect 

employment impacts in section V.B.3.c. 

1. Benefits and Burdens of Trial 

Standard Levels Considered for 

Packaged Terminal Air Conditioners 

and Packaged Terminal Heat Pumps 

Table V.24 and Table V.25 summarize 

the quantitative impacts estimated for 

each TSL for packaged terminal air 

conditioners and packaged terminal 

heat pumps. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55588 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

TABLE V.24—SUMMARY OF ANALYTICAL RESULTS FOR PACKAGED TERMINAL AIR CONDITIONING AND HEAT PUMP

EQUIPMENT: NATIONAL IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

National FFC Energy Savings quads 

0.015 ................ 0.059 ................ 0.118 ................ 0.150 ................ 0.155 

NPV of Customer Benefits *** 2013$ million 

3% discount rate ................................................... 23.9 .................. 69.0 .................. 113.8 ................ 130.2 ................ 131.0 

7% discount rate ................................................... 6.5 .................... 10.7 .................. 7.9 .................... (1.1) .................. (3.8) 

Cumulative Emissions Reduction (Total FFC Emissions) 

CO2 million metric tons ......................................... 1.10 .................. 4.33 .................. 8.60 .................. 10.98 ................ 11.29 

SO2 thousand tons ................................................ 2.47 .................. 9.74 .................. 19.30 ................ 24.17 ................ 24.70 

NOX thousand tons ............................................... 1.12 .................. 4.42 .................. 8.78 .................. 11.06 ................ 11.31 

Hg tons .................................................................. 0.00 .................. 0.01 .................. 0.02 .................. 0.03 .................. 0.03 

N2O thousand tons ............................................... 0.02 .................. 0.07 .................. 0.14 .................. 0.18 .................. 0.18 

N2O thousand tons CO2eq* .................................. 5.43 .................. 21.37 ................ 42.19 ................ 52.32 ................ 53.53 

CH4 thousand tons ................................................ 4.02 .................. 15.75 ................ 31.28 ................ 40.08 ................ 41.22 

CH4 thousand tons CO2eq* .................................. 100.53 .............. 393.72 .............. 782.02 .............. 1001.97 ............ 1030.54 

Value of Emissions Reduction (Total FFC Emissions) 

CO2 2013$ million** .............................................. 7.2 to 105.5 ...... 28.1 to 412.1 .... 56.0 to 820.9 .... 73.9 to 1066.6 .. 76.4 to 1100.1 

NOX—3% discount rate 2013$ million ................. 1.39 .................. 5.43 .................. 10.85 ................ 14.16 ................ 14.59 

NOX—7% discount rate 2013$ million ................. 0.57 .................. 2.20 .................. 4.42 .................. 6.02 .................. 6.27 

* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP) as the subject emission. 

** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. 

*** Parentheses indicate negative values. 

TABLE V.25—SUMMARY OF ANALYTICAL RESULTS FOR PACKAGED TERMINAL AIR CONDITIONING AND HEAT PUMP

EQUIPMENT: MANUFACTURER AND CUSTOMER IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Industry Impacts *** 

Change in Industry NPV (2013$M) ...................... (1.4) to (1.1) ..... (0.7) to 0.3 ........ (3.1) to (0.9) ..... (3.5) to 0.0 ........ (6.7) to (2.6) 

Industry NPV (% Change) .................................... (2.4) to (1.9) ..... (1.3) to 0.5 ........ (5.3) to (1.6) ..... (5.9) to 0.0 ........ (11.4) to (4.4) 

Customer Mean LCC Savings *** 2013$ 

Standard Size Equipment, 9,000 Btu/h ................ 1.23 .................. 0.40 .................. (2.31) ................ (6.66) ................ (9.45) 

Standard Size Equipment, 15,000 Btu/h .............. 0.01 .................. (2.11) ................ (12.64) .............. (31.18) .............. (43.48) 

Weighted Average * .............................................. 1.14 .................. 0.21 .................. (3.05) ................ (8.41) ................ (11.89) 

Customer Median PBP years 

Standard Size Equipment, 9,000 Btu/h ................ 7.1 .................... 8.0 .................... 8.9 .................... 9.5 .................... 9.8 

Standard Size Equipment, 15,000 Btu/h .............. 8.4 .................... 9.9 .................... 12.4 .................. 14.8 .................. 15.9 

Weighted Average * .............................................. 7.2 .................... 8.2 .................... 9.2 .................... 9.9 .................... 10.2 

Standard Size Equipment 9,000 Btu/h ** 

Customers with Net Cost % ................................. 20% .................. 37% .................. 63% .................. 71% .................. 73% 

Customers with No Impact % ............................... 54% .................. 37% .................. 7% .................... 0% .................... 0% 

Customers with Net Benefit % .............................. 26% .................. 27% .................. 31% .................. 29% .................. 27% 

Standard Size Equipment 15,000 Btu/h ** 

Customers with Net Cost % ................................. 23% .................. 42% .................. 77% .................. 87% .................. 91% 

Customers with No Impact % ............................... 61% .................. 41% .................. 7% .................... 2% .................... 1% 

Customers with Net Benefit % .............................. 17% .................. 17% .................. 16% .................. 10% .................. 9% 

Weighted Average ** 

Customers with Net Cost % ................................. 20% .................. 37% .................. 63% .................. 72% .................. 74% 

Customers with No Impact % ............................... 54% .................. 37% .................. 7% .................... 0% .................... 0% 

Customers with Net Benefit % .............................. 26% .................. 26% .................. 30% .................. 28% .................. 26% 

* Weighted by shares of each equipment class in total projected shipments in 2019. 

** Rounding may cause some items to not total 100 percent. 

*** Parentheses indicate negative values. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55589 

First, DOE considered TSL 5, the most 

efficient level (max tech), which would 

save an estimated total of 0.155 quads 

of energy, an amount DOE considers 

significant. TSL 5 has an estimated NPV 

of customer cost of $3.8 million using a 

7 percent discount rate, and an 

estimated NPV of customer savings of 

$131.0 million using a 3 percent 

discount rate. 

The cumulative emissions reductions 

at TSL 5 are 11.29 million metric tons 

of CO2, 11.31 thousand tons of NOX, 

24.70 thousand tons of SO2, 41.22 

thousand tons of CH4, and 0.03 tons of 

Hg. The estimated monetary value of the 

CO2 emissions reductions at TSL 5 

ranges from $76.4 million to $1,100.1 

million. 

At TSL 5, DOE projects that the 

average PTAC customer or PTHP 

customer will experience an increase in 

LCC. Purchasers are projected to lose on 

average $11.89 over the life of the 

equipment. DOE estimates LCC 

increases for 74 percent of customers 

that purchase a standard size PTAC or 

PTHP. The median payback period for 

a standard size PTAC or PTHP at TSL 

5 is projected to be longer than the mean 

lifetime of the equipment. 

At TSL 5, the projected change in 

INPV ranges from a decrease of $6.7 

million to a decrease of $2.6 million. If 

the more severe range of impacts is 

reached, TSL 5 could result in a net loss 

of up to 11.4 percent of INPV for 

manufacturers. Currently, there is only 

one equipment line being manufactured 

at TSL 5 efficiency levels, and the 

equipment is a PTHP. DOE believes that 

PTAC and PTHP manufacturers will be 

able to design and produce equipment 

at TSL 5, based on the existence of a 

unit that achieves TSL 5 levels without 

the use of proprietary technologies. 

In view of the foregoing, DOE 

concludes that, at TSL 5 for PTACs and 

PTHPs, the benefits of energy savings 

and emissions reductions would be 

outweighed by the potential multimillion dollar negative net economic 

cost to the Nation, the economic burden 

on customers, and the large capital 

conversion costs that could result in a 

reduction in INPV for manufacturers. 

Consequently, DOE has concluded that 

TSL 5 is not economically justified. 

Next, DOE considered TSL 4, which 

would save an estimated total of 0.150 

quads of energy, an amount DOE 

considers significant. TSL 4 has an 

estimated NPV of customer cost of $1.1 

million using a 7 percent discount rate, 

and an estimated NPV of customer 

savings of $130.2 million using a 3 

percent discount rate. 

The cumulative emissions reductions 

at TSL 4 are 10.98 million metric tons 

of CO2, 11.06 thousand tons of NOX, 

24.17 thousand tons of SO2, 40.08 

thousand tons of CH4, and 0.03 tons of 

Hg. The estimated monetary value of the 

CO2 emissions reductions at TSL 4 

ranges from $73.9 million to $1066.6 

million. 

At TSL 4, DOE projects that the 

average PTAC customer or PTHP 

customer will experience an increase in 

LCC. Purchasers are projected to lose on 

average $8.41 over the life of the 

equipment. DOE estimates LCC 

increases for 72 percent of customers 

that purchase a standard size PTAC or 

PTHP. The median payback period for 

a standard size PTAC or PTHP at TSL 

4 is projected to be shorter than the 

mean lifetime of the equipment. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $3.5 

million to a decrease of $0.0 million. If 

the lower bound of the range of impacts 

is reached, TSL 4 could result in a net 

loss of up to 5.9 percent of INPV for 

manufacturers. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 4, the Secretary has 

tentatively concluded that at TSL 4, the 

benefits of energy savings and emissions 

reductions would be outweighed by the 

potential multi-million dollar negative 

net economic cost to the Nation, the 

economic burden on customers, and the 

large capital conversion costs that could 

result in a reduction in INPV for 

manufacturers. 

Next, DOE considered TSL 3, which 

would save an estimated total of 0.118 

quads of energy, an amount DOE 

considers significant. TSL 3 has an 

estimated NPV of customer savings of 

$7.9 million using a 7 percent discount 

rate, and $113.8 million using a 3 

percent discount rate. 

The cumulative emissions reductions 

at TSL 3 are 8.60 million metric tons of 

CO2, 8.78 thousand tons of NOX, 19.30 

thousand tons of SO2, 31.28 thousand 

tons of CH4, 0.02 tons of Hg. The 

estimated monetary value of the CO2

emissions reductions at TSL 3 ranges 

from $56.0 million to $820.9 million. 

At TSL 3, DOE projects that the 

average PTAC customer or PTHP 

customer will experience an increase in 

LCC. Purchasers are projected to lose on 

average $3.05 over the life of the 

product. DOE estimates LCC increases 

for 63 percent of customers that 

purchase a standard size PTAC or 

PTHP. The median payback period for 

a standard size PTAC or PTHP at TSL 

3 is projected to be shorter than the 

mean lifetime of the equipment. 

At TSL 3, the projected change in 

INPV ranges from a decrease of $3.1 

million to a decrease of $0.9 million. If 

the lower bound of the range of impacts 

is reached, TSL 3 could result in a net 

loss of up to 5.3 percent of INPV for 

manufacturers. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 3, the Secretary has 

tentatively concluded that at TSL 3, the 

benefits of energy savings, emissions 

reductions, and net economic savings to 

the Nation would be outweighed by the 

potential economic burden on the 

majority of customers of PTAC and 

PTHP equipment and the capital 

conversion costs that could result in a 

reduction in INPV for manufacturers. 

Next, DOE considered TSL 2, which 

would save an estimated total of 0.059 

quads of energy, an amount DOE 

considers significant. TSL 2 has an 

estimated NPV of customer savings of 

$10.7 million using a 7 percent discount 

rate, and $69.0 million using a 3 percent 

discount rate. 

The cumulative emissions reductions 

at TSL 2 are 4.33 million metric tons of 

CO2, 4.42 thousand tons of NOX, 9.74 

thousand tons of SO2, 15.75 thousand 

tons of CH4, and 0.01 tons of Hg. The 

estimated monetary value of the CO2

emissions reductions at TSL 2 ranges 

from $28.1 million to $412.1 million. 

At TSL 2, DOE projects that the 

average PTAC or PTHP customer will 

experience an decrease in LCC. 

Purchasers are projected to save on 

average $0.21 over the life of the 

equipment. DOE estimates LCC 

increases for 37 percent of customers 

that purchase a standard size PTAC or 

PTHP. The median payback period for 

a standard size PTAC or PTHP at TSL 

2 is projected to be shorter than the 

mean lifetime of the equipment. 

At TSL 2, the projected change in 

INPV ranges from a decrease of $0.7 

million to an increase of $0.3 million. If 

the lower bound of the range of impacts 

is reached, TSL 3 could result in a net 

loss of up to 1.3 percent of INPV for 

manufacturers. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 2, the Secretary has 

tentatively concluded that at TSL 2, the 

benefits of energy savings, emissions 

reductions, net economic benefits to the 

Nation and the potential economic 

savings to customers of PTAC and PTHP 

equipment outweigh the potential 

economic burden on customers and the 

capital conversion costs that could 

result in a reduction in INPV for 

manufacturers. Accordingly, the 

Secretary concludes that TSL 2 saves a 

significant amount of energy and is 

technologically feasible and 

economically justified. Therefore, DOE 

proposes to adopt the energy 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55590 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

conservation standards for PTACs and 

PTHPs at TSL 2. 

Although DOE proposed this level 

based on examining energy savings and 

economic justification as compared to 

adoption of the ANSI/ASHRAE/IES 

Standard 90.1–2013 level (i.e., the 

ASHRAE Standard 90.1–2013 baseline) 

as required by statute (42 U.S.C. 

6313(a)(6)(A)(ii)), DOE presents in Table 

V.26 to Table V.31, for informational 

purposes only, the benefits and burdens 

on the customer, the manufacturer, and 

the Nation in comparison to a base case 

including the current Federal standards. 

The results compared to the ASHRAE 

Standard 90.1–2013 baseline are also 

included for comparison. 

TABLE V.26—AVERAGE LCC AND PBP RESULTS FOR PTACS AND PTHPS AT THE PROPOSED TRIAL STANDARD LEVEL

FOR UNITS SOLD IN 2019–2048 COMPARED TO THE CURRENT FEDERAL STANDARDS

Equipment class 

Average Life-Cycle Costs (2013$) Simple 

payback 

(years) † 

Average 

lifetime 

Installed cost (years) First year’s 

operating cost 

Lifetime 

operating cost LCC 

ASHRAE baseline <12,000 Btu/h ....... $1,508 $192 $1,395 $2,903 7.3 10 

≥12,000 Btu/h ....... 1,767 249 1,812 3,579 8.6 

Total—All 

Classes.

1,527 196 1,425 2,952 7.4 

Current Federal 

standards.

<12,000 Btu/h ....... 1,506 192 1,395 2,901 7.2 

≥12,000 Btu/h ....... 1,764 249 1,812 3,576 8.1 

Total—All 

Classes.

1,525 196 1,425 2,950 7.3 

† Note: The results for each TSL are calculated assuming that all consumers use products with that efficiency level. The PBP is measured relative to the baseline product. 

TABLE V.27—LCC SAVINGS RELATIVE TO THE BASE CASE EFFICIENCY DISTRIBUTION FOR PTACS AND PTHPS AT THE

PROPOSED TRIAL STANDARD LEVEL FOR UNITS SOLD IN 2019–2048 COMPARED TO THE CURRENT FEDERAL STANDARDS

Equipment class 

Life-Cycle Cost Savings 

% of Consumers that 

experience net cost 

Avg. savings 

(2013$)* 

ASHRAE baseline ......................................... <12,000 Btu/h ............................................... 37 $0.40 

≥12,000 Btu/h ............................................... 42 ($2.11) 

Total—All Classes ................................. 37 0.21 

Current Federal standards ............................ <12,000 Btu/h ............................................... 36 0.47 

≥12,000 Btu/h ............................................... 41 ($2.02) 

Total—All Classes ................................. 36 0.29 

* Parentheses indicate negative values. 

** The calculation includes households with zero LCC savings (no impact). 

TABLE V.28—MANUFACTURER IMPACT ANALYSIS RESULTS FOR PTACS AND PTHPS AT THE PROPOSED TRIAL STANDARD

LEVEL FOR UNITS SOLD IN 2019–2048 COMPARED TO THE CURRENT FEDERAL STANDARDS

ASHRAE standard 

90.1–2013 baseline 

Current Federal 

standards 

Base Case INPV (2013$ millions) ................................................................................................... 58.47 ......................... 58.46 

Standards Case INPV (2013$ millions) ........................................................................................... 57.73 to 58.76 ........... 57.68 to 58.75 

Change in INPV (% Change) .......................................................................................................... (1.26) to 0.49 ............. (1.34) to 0.50 

* Numbers in parentheses indicate negative savings. 

TABLE V.29—CUMULATIVE NATIONAL PRIMARY AND FULL-FUEL-CYCLE ENERGY SAVINGS AND NET PRESENT VALUE OF

CUSTOMER BENEFIT FOR PTACS AND PTHPS AT THE PROPOSED TRIAL STANDARD LEVEL FOR UNITS SOLD IN

2019–2048 COMPARED TO CURRENT FEDERAL STANDARDS * 

National primary energy 

savings 

(quads) 

National FFC energy 

savings 

(quads) 

NPV at 3% 

(million 2013$) 

NPV at 7% 

(million 2013$) 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

Standards 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

Standard Size Equipment, 7,000 Btu/h ........ 0 .003 0 .003 0.003 0.003 1.8 1.8 (0.2) (0.2) 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55591 

TABLE V.29—CUMULATIVE NATIONAL PRIMARY AND FULL-FUEL-CYCLE ENERGY SAVINGS AND NET PRESENT VALUE OF

CUSTOMER BENEFIT FOR PTACS AND PTHPS AT THE PROPOSED TRIAL STANDARD LEVEL FOR UNITS SOLD IN

2019–2048 COMPARED TO CURRENT FEDERAL STANDARDS *—Continued 

National primary energy 

savings 

(quads) 

National FFC energy 

savings 

(quads) 

NPV at 3% 

(million 2013$) 

NPV at 7% 

(million 2013$) 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

Standards 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

Standard Size Equipment, 9,000 Btu/h ........ 0 .05 0 .05 0.051 0.051 65.9 65.8 12.3 12.3 

Standard Size Equipment, 15,000 Btu/h ...... 0 .005 0 .006 0.005 0.006 1.2 1.1 (1.5) (1.7) 

Total—All Classes .................................. 0 .058 0 .059 0.059 0.060 69.0 68.8 10.7 10.5 

* Parentheses indicate negative values. 

Note: Components may not sum to total due to rounding. 

TABLE V.30—CUMULATIVE EMISSIONS REDUCTION, GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION, AND

PRESENT VALUE OF NOX EMISSIONS REDUCTION FOR PTACS AND PTHPS AT THE PROPOSED TRIAL STANDARD

LEVEL COMPARED TO THE CURRENT FEDERAL STANDARDS

Power sector and site 

emissions 

Upstream 

emissions 

Total 

emissions 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

Cumulative Emissions Reductions 

CO2 (million metric tons) .......................... 4.15 4.17 0.18 0.18 4.33 4.35 

SO2 (thousand tons) ................................ 9.70 9.76 0.04 0.04 9.74 9.80 

NOX (thousand tons) ............................... 1.90 1.91 2.53 2.54 4.42 4.45 

Hg (tons) .................................................. 0.01 0.01 0.00 0.00 0.01 0.01 

N2O (thousand tons) ................................ 0.07 0.07 0.00 0.00 0.07 0.07 

CH4 (thousand tons) ................................ 0.39 0.39 15.36 15.45 15.75 15.84 

Global Present Value of CO2 Emissions Reduction, SCC Scenario * (million 2013$) 

5% discount rate, average ....................... 26.86 27.02 1.20 1.20 28.06 28.23 

3% discount rate, average ....................... 127.30 128.04 5.66 5.69 132.95 133.73 

2.5% discount rate, average .................... 203.32 204.51 9.03 9.08 212.35 213.59 

3% discount rate, 95th percentile ............ 394.56 396.87 17.53 17.63 412.08 414.50 

Present Value of NOX Emissions Reduction (million 2013$) 

3% discount rate ...................................... 2.20 2.22 3.23 3.25 5.43 5.46 

7% discount rate ...................................... 0.81 0.81 1.39 1.40 2.20 2.22 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4 and $119 per metric ton (2013$). 

** Values of ‘‘0.00’’ represent rounded non-zero emissions reductions. 

TABLE V.31—PTACS AND PTHPS AT THE PROPOSED TSL: NET PRESENT VALUE OF CONSUMER SAVINGS COMBINED

WITH NET PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS COMPARED TO

THE CURRENT FEDERAL STANDARDS

SCC Value of $12.0/metric 

ton CO2* and medium 

value for NOX** 

SCC Value of $40.5/metric 

ton CO2* and Medium 

Value for NOX** 

SCC Value of $62.4/metric 

ton CO2* and Medium 

Value for NOX** 

SCC Value of $119/metric 

ton CO2* and Medium 

Value for NOX** 

ASHRAE 

standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

Standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

Standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

ASHRAE 

Standard 

90.1–2013 

baseline 

Current 

Federal 

standards 

million 2013$ 

Consumer NPV at 3% Discount Rate added 

with each SCC and NOX value ..................... 102.5 102.5 207.3 208.0 286.7 287.8 486.5 488.7 

Consumer NPV at 7% Discount Rate added 

with each SCC and NOX value ..................... 41.0 40.9 145.9 146.4 225.2 226.3 425.0 427.2 

* These label values represent the global SCC in 2015, in 2013$. The present values have been calculated with scenario-consistent discount rates. 

** Medium Value corresponds to $2,684 per ton of NOX emissions. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
55592 Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 

67 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2013, the year used for discounting the 

NPV of total customer costs and savings, for the 

time-series of costs and benefits using discount 

rates of three and seven percent for all costs and 

benefits except for the value of CO2 reductions. For 

the latter, DOE used a range of discount rates. From 

the present value, DOE then calculated the fixed 

annual payment over a 30-year period (2019 

through 2048) that yields the same present value. 

The fixed annual payment is the annualized value. 

Although DOE calculated annualized values, this 

does not imply that the time-series of cost and 

benefits from which the annualized values were 

determined is a steady stream of payments. 

Table V.32 shows the proposed 

energy conservation standards for all 

equipment classes of PTACs and PTHPs, 

including all cooling capacities. 

TABLE V.32—PROPOSED ENERGY CONSERVATION STANDARDS FOR PTACS AND PTHPS

Equipment Class Proposed energy 

conservation standards* Equipment Category Cooling capacity 

PTAC ........................... Standard Size** .......... <7,000 Btu/h ....................................................

≥7,000 Btu/h and ≤15,000 Btu/h .....................

>15,000 Btu/h ..................................................

EER = 12.6. 

EER = 14.9 ¥ (0.324 × Cap††). 

EER = 10.0. 

PTHP ........................... Standard Size** .......... <7,000 Btu/h .................................................... EER = 12.6 

COP = 3.5. 

≥7,000 Btu/h and ≤15,000 Btu/h ..................... EER = 14.9 ¥ (0.324 × Cap††) 

COP = 4.0 ¥ (0.064 × Cap††). 

>15,000 Btu/h .................................................. EER = 10.0 

COP = 3.0. 

* For equipment rated according to the DOE test procedure (ARI Standard 310/380–2004), all energy efficiency ratio (EER) values must be 

rated at 95 °F outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85 °F entering water temperature for water cooled equipment. All coefficient of performance (COP) values must be rated at 47 °F outdoor dry-bulb temperature for air-cooled 

equipment, and at 70 °F entering water temperature for water-source heat pumps. 

** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or 

equal to 42 inches wide. † Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide. 

†† Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95 °F outdoor dry-bulb temperature. 

2. Summary of Benefits and Costs 

(Annualized) of the Proposed Standards 

The benefits and costs of the proposed 

standards, for equipment sold in 2019– 

2048, can also be expressed in terms of 

annualized values. The annualized 

monetary values are the sum of (1) the 

annualized national economic value of 

the benefits from customer operation of 

equipment that meet the proposed 

standards (consisting primarily of 

operating cost savings from using less 

energy, minus increases in equipment 

purchase and installation costs, which 

is another way of representing customer 

NPV), and (2) the annualized monetary 

value of the benefits of emission 

reductions, including CO2 emission 

reductions.67

Although combining the values of 

operating savings and CO2 emission 

reductions provides a useful 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. customer 

monetary savings that occur as a result 

of market transactions while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

PTACs and PTHPs shipped in 2019– 

2048. The SCC values, on the other 

hand, reflect the present value of some 

future climate-related impacts resulting 

from the emission of one ton of carbon 

dioxide in each year. These impacts 

continue well beyond 2100. 

Estimates of annualized benefits and 

costs of the proposed standards PTACs 

and PTHPs are shown in Table V.33. 

The results under the primary estimate 

are as follows. Using a 7-percent 

discount rate for benefits and costs other 

than CO2 reduction, for which DOE 

used a 3-percent discount rate along 

with the average SCC series that uses a 

3-percent discount rate, the cost of the 

amended standards proposed in this 

rule is $8.38 million per year in 

increased equipment costs; while the 

estimated benefits are $9.4 million per 

year in reduced equipment operating 

costs, $7.2 million in CO2 reductions, 

and $0.20 million in reduced NOX

emissions. In this case, the net benefit 

would amount to $8.4 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the average SCC 

series, the estimated cost of the 

standards proposed in this rule is $9.36 

million per year in increased equipment 

costs; while the estimated benefits are 

$13.1 million per year in reduced 

operating costs, $7.2 million in CO2

reductions, and $0.29 million in 

reduced NOX emissions. In this case, the 

net benefit would amount to 

approximately $11.2 million per year. 

TABLE V.33—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR PACKAGED TERMINAL AIR

CONDITIONERS AND PACKAGED TERMINAL HEAT PUMPS

[Million 2013$/year] 

Discount rate Primary 

estimate * 

Low net benefits 

estimate * 

High net benefits 

estimate * 

Benefits: 

Operating Cost Savings ....................................................... 7% ............................. 9.4 .................... 9.0 .................... 9.9 

3% ............................. 13.1 .................. 12.5 .................. 13.9 

CO2 Reduction Monetized Value ($12.0/t case) ** .............. 5% ............................. 2.0 .................... 2.0 .................... 2.0 

CO2 Reduction Monetized Value ($40.5/t case) ** .............. 3% ............................. 7.2 .................... 7.2 .................... 7.2 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 179 / Tuesday, September 16, 2014 / Proposed Rules 55593 

TABLE V.33—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR PACKAGED TERMINAL AIR

CONDITIONERS AND PACKAGED TERMINAL HEAT PUMPS—Continued 

[Million 2013$/year] 

Discount rate Primary 

estimate * 

Low net benefits 

estimate * 

High net benefits 

estimate * 

CO2 Reduction Monetized Value ($62.4/t case) ** .............. 2.5% .......................... 10.7 .................. 10.7 .................. 10.7 

CO2 Reduction Monetized Value ($119/t case) ** ............... 3% ............................. 22.3 .................. 22.3 .................. 22.3 

NOX Reduction Monetized Value (at $2,684/ton) ** ............ 7% ............................. 0.20 .................. 0.20 .................. 0.20 

3% ............................. 0.29 .................. 0.29 .................. 0.29 

Total Benefits † .................................................................... 7% plus CO2 range ... 11.6 to 31.9 ...... 11.2 to 31.5 ...... 12.1 to 32.4 

7% ............................. 16.8 .................. 16.4 .................. 17.3 

3% plus CO2 range ... 15.4 to 35.7 ...... 14.8 to 35.0 ...... 16.2 to 36.5 

3% ............................. 20.6 .................. 19.9 .................. 21.4 

Costs: 

Incremental Product Costs .................................................. 7% ............................. 8.38 .................. 8.18 .................. 10.61 

3% ............................. 9.36 .................. 9.06 .................. 12.29 

Net Benefits: 

Total † .................................................................................. 7% plus CO2 range ... 3.2 to 23.5 ........ 3.0 to 23.3 ........ 1.5 to 21.8 

7% ............................. 8.4 .................... 8.2 .................... 6.7 

3% plus CO2 range ... 6.0 to 26.3 ........ 5.7 to 26.0 ........ 3.9 to 24.2 

3% ............................. 11.2 .................. 10.9 .................. 9.1 

* This table presents the annualized costs and benefits associated with PTAC and PTHP shipped in 2019–2048. These results include benefits 

to customers which accrue after 2048 from the equipment purchased in 2019–2048. The results account for the incremental variable and fixed 

costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and 

High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental equipment costs reflect no change for projected product price trends in the Primary Estimate, an increasing trend for projected product prices in the Low Benefits Estimate, and a decreasing trend for projected product prices in the 

High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. 

The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with 3-percent discount 

rate. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled 

discount rate, and those values are added to the full range of CO2 values. 

The annualized values of benefits and 

burdens of the proposed trial standard 

level compared to a base case including 

the Federal baseline are shown in Table 

V.34. 

TABLE V.34—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR PTACS AND PTHPS AT THE PROPOSED

TRIAL STANDARD LEVEL FOR UNITS SOLD IN 2019–2048 COMPARED TO THE CURRENT FEDERAL STANDARDS

[Million 2013$/year] 

Discount rate Primary 

estimate * 

Low net benefits 

estimate * 

High net 

benefits 

estimate * 

Benefits: 

Operating Cost Savings ....................................................... 7% ............................. 9.4 .................... 9.0 .................... 9.9 

3% ............................. 13.2 .................. 12.5 .................. 14.0 

CO2 Reduction Monetized Value ($12.0/t case) ** .............. 5% ............................. 2.0 .................... 2.0 .................... 2.0 

CO2 Reduction Monetized Value ($40.5/t case) ** .............. 3% ............................. 7.2 .................... 7.2 .................... 7.2 

CO2 Reduction Monetized Value ($62.4/t case) ** .............. 2.5% .......................... 10.7 .................. 10.7 .................. 10.7 

CO2 Reduction Monetized Value ($119/t case) ** ............... 3% ............................. 22.4 .................. 22.4 .................. 22.4 

NOX Reduction Monetized Value (at $2,684/ton) ** ............ 7% ............................. 0.20 .................. 0.20 .................. 0.20 

3% ............................. 0.30 .................. 0.30 .................. 0.30 

Total Benefits † .................................................................... 7% plus CO2 range ... 11.6 to 32.1 ...... 11.3 to 31.7 ...... 12.2 to 32.6 

7% ............................. 16.9 .................. 16.5 .................. 17.4 

3% plus CO2 range ... 15.5 to 35.9 ...... 14.8 to 35.3 ...... 16.3 to 36.7 

3% ............................. 20.7 .................. 20.1 .................. 21.5 

Costs: 

Incremental Product Costs .................................................. 7% ............................. 8.45 .................. 8.25 .................. 10.71 

3% ............................. 9.44 .................. 9.14 .................. 12.39 

Net Benefits: 

Total † .................................................................................. 7% plus CO2 range ... 3.2 to 23.6 ........ 3.0 to 23.4 ........ 1.5 to 21.9 

7% ............................. 8.4 .................... 8.2 .................... 6.7 

3% plus CO2 range ... 6.0 to 26.5 ........ 5.7 to 26.1 ........ 3.9 to 24.3 


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TABLE V.34—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR PTACS AND PTHPS AT THE PROPOSED

TRIAL STANDARD LEVEL FOR UNITS SOLD IN 2019–2048 COMPARED TO THE CURRENT FEDERAL STANDARDS—Continued 

[Million 2013$/year] 

Discount rate Primary 

estimate * 

Low net benefits 

estimate * 

High net 

benefits 

estimate * 

3% ............................. 11.3 .................. 10.9 .................. 9.1 

* This table presents the annualized costs and benefits associated with PTAC and PTHP shipped in 2019–2048. These results include benefits 

to customers which accrue after 2048 from the equipment purchased in 2019–2048. The results account for the incremental variable and fixed 

costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and 

High Benefits Estimates utilize projections of energy prices from the AEO 2013 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect no change for projected product price trends in the Primary Estimate, an increasing trend for projected equipment prices in the Low Benefits Estimate, and a decreasing trend for projected equipment prices in 

the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. 

The value for NOX is the average of the low and high values used in DOE’s analysis. 

† Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with 3-percent discount 

rate. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled 

discount rate, and those values are added to the full range of CO2 values. 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Orders 

12866 and 13563 

Section 1(b)(1) of Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (Oct. 4, 1993), 

requires each agency to identify the 

problem that it intends to address, 

including, where applicable, the failures 

of private markets or public institutions 

that warrant new agency action, as well 

as to assess the significance of that 

problem. The problems that the 

proposed standards address are as 

follows: 

(1) For certain segments of the 

companies that purchase PTACs and 

PTHPs, such as small hotels and 

residential facilities, there may be a lack 

of customer information and/or 

information processing capability about 

energy efficiency opportunities in the 

commercial space conditioning market. 

(2) There is asymmetric information 

(one party to a transaction has more and 

better information than the other) and/ 

or high transactions costs (costs of 

gathering information). 

(3) There are external benefits 

resulting from improved energy 

efficiency of PTACs and PTHPs that are 

not captured by the users of such 

equipment. These benefits include 

externalities related to environmental 

protection and energy security that are 

not reflected in energy prices, such as 

reduced emissions of greenhouse gases. 

DOE attempts to quantify some of the 

external benefits through use of Social 

Cost of Carbon values. 

In addition, DOE has determined that 

this regulatory action is not an 

‘‘economically significant regulatory 

action’’ under section 3(f)(1) of 

Executive Order 12866. Section 

6(a)(3)(A) of the Executive Order states 

that absent a material change in the 

development of the planned regulatory 

action, regulatory action not designated 

as significant will not be subject to 

review under the aforementioned 

section unless, within 10 working days 

of receipt of DOE’s list of planned 

regulatory actions, the Administrator of 

OIRA notifies the agency that OIRA has 

determined that a planned regulation is 

a significant regulatory action within 

the meaning of the Executive order. 

Accordingly, DOE is not submitting this 

NOPR for review by the Office of 

Information and Regulatory Affairs 

(OIRA) in the Office of Management and 

Budget (OMB). 

DOE has also reviewed this regulation 

pursuant to Executive Order 13563, 

issued on January 18, 2011. (76 FR 3281, 

Jan. 21, 2011) EO 13563 is supplemental 

to and explicitly reaffirms the 

principles, structures, and definitions 

governing regulatory review established 

in Executive Order 12866. To the extent 

permitted by law, agencies are required 

by Executive Order 13563 to: (1) 

Propose or adopt a regulation only upon 

a reasoned determination that its 

benefits justify its costs (recognizing 

that some benefits and costs are difficult 

to quantify); (2) tailor regulations to 

impose the least burden on society, 

consistent with obtaining regulatory 

objectives, taking into account, among 

other things, and to the extent 

practicable, the costs of cumulative 

regulations; (3) select, in choosing 

among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

DOE emphasizes as well that 

Executive Order 13563 requires agencies 

to use the best available techniques to 

quantify anticipated present and future 

benefits and costs as accurately as 

possible. In its guidance, the Office of 

Information and Regulatory Affairs has 

emphasized that such techniques may 

include identifying changing future 

compliance costs that might result from 

technological innovation or anticipated 

behavioral changes. For the reasons 

stated in the preamble, DOE believes 

that this NOPR is consistent with these 

principles, including the requirement 

that, to the extent permitted by law, 

benefits justify costs and that net 

benefits are maximized. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis (IRFA) for any rule that by law 

must be proposed for public comment, 

unless the agency certifies that the rule, 

if promulgated, will not have a 

significant economic impact on a 

substantial number of small entities. As 

required by Executive Order 13272, 

‘‘Proper Consideration of Small Entities 

in Agency Rulemaking,’’ 67 FR 53461 

(August 16, 2002), DOE published 


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procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process. 68 FR 7990. DOE 

has made its procedures and policies 

available on the Office of the General 

Counsel’s Web site (http://energy.gov/ 

gc/office-general-counsel). 

1. Description and Estimated Number of 

Small Entities Regulated 

a. Methodology for Estimating the 

Number of Small Entities 

For manufacturers of PTACs and 

PTHPs, the Small Business 

Administration (SBA) has set a size 

threshold, which defines those entities 

classified as ‘‘small businesses’’ for the 

purposes of the statute. DOE used the 

SBA’s small business size standards to 

determine whether any small entities 

would be subject to the requirements of 

the rule. 65 FR 30836, 30848 (May 15, 

2000), as amended at 65 FR 53533, 

53544 (September 5, 2000) and codified 

at 13 CFR part 121. The size standards 

are listed by North American Industry 

Classification System (NAICS) code and 

industry description and are available at 

http://www.sba.gov/sites/default/files/ 

files/Size_Standards_Table.pdf. PTAC 

and PTHP manufacturing is classified 

under NAICS 333415, ‘‘AirConditioning and Warm Air Heating 

Equipment and Commercial and 

Industrial Refrigeration Equipment 

Manufacturing.’’ The SBA sets a 

threshold of 750 employees or less for 

an entity to be considered as a small 

business for this category. 

DOE reviewed the potential standard 

levels considered in this NOPR under 

the provisions of the Regulatory 

Flexibility Act and the procedures and 

policies published on February 19, 

2003. To better assess the potential 

impacts of this rulemaking on small 

entities, DOE conducted a more focused 

inquiry of the companies that could be 

small business manufacturers of 

products covered by this rulemaking. 

During its market survey, DOE used 

available public information to identify 

potential small manufacturers. DOE’s 

research involved industry trade 

association membership directories 

(e.g., AHRI), information from previous 

rulemakings, individual company Web 

sites, and market research tools (e.g., 

Hoover’s reports) to create a list of 

companies that manufacture or sell 

PTAC and PTHP products covered by 

this rulemaking. DOE also asked 

stakeholders and industry 

representatives if they were aware of 

any additional small manufacturers 

during manufacturer interviews and at 

DOE public meetings. DOE reviewed 

publicly available data and contacted 

various companies on its complete list 

of manufacturers, as necessary, to 

determine whether they met the SBA’s 

definition of a small business 

manufacturer. DOE screened out 

companies that do not offer products 

impacted by this rulemaking, do not 

meet the definition of a ‘‘small 

business,’’ or are foreign owned and 

operated. 

DOE initially identified 22 companies 

that sell PTAC and PTHP equipment 

that would be affected by this proposal. 

Of these 22 companies, DOE identified 

12 as small businesses. 

b. Manufacturer Participation 

DOE contacted the identified small 

businesses to invite them to take part in 

a manufacturer impact analysis 

interview. Of the 12 small businesses 

contacted, DOE was able to reach and 

discuss potential standards with two. 

DOE also obtained information about 

small businesses and potential impacts 

on small businesses while interviewing 

large manufacturers. 

c. PTAC and PTHP Industry Structure 

and Nature of Competition 

Three major manufacturers supply 

approximately 80 percent of the market 

for PTACs and PTHPs. DOE estimates 

that the remaining 20 percent of the 

PTAC and PTHP market is served by a 

combination of small businesses and 

large businesses that are foreign owned 

and operated. None of the major 

manufacturers of PTACs and PTHPs 

affected by this rulemaking is a 

domestic small business. 

Further, the small businesses 

identified are not original equipment 

manufacturers of standard-size PTACs 

and PTHPs impacted by this 

rulemaking. Rather, they import, 

rebrand, and distribute standard-size 

PTACs and PTHPs manufactured 

overseas by foreign companies. Some 

small businesses identified are original 

equipment manufacturers of nonstandard size PTACs and PTHPs. 

However, energy conservation standards 

for non-standard equipment are not 

being amended by this rulemaking. 

Accordingly, non-standard equipment is 

not considered in this small business 

analysis. Rather, this analysis focuses on 

likely impacts of the proposed rule on 

small businesses that sell standard-size 

PTACs and PTHPs. 

2. Description and Estimate of 

Compliance Requirements 

As noted, the small businesses 

identified are not OEMs of standard-size 

PTACs and PTHPs impacted by this 

rulemaking. Rather, they import, 

rebrand, and distribute PTACs and 

PTHPs manufactured overseas. 

Accordingly, small businesses would 

not face capital conversion costs in 

order to comply with amended 

standards, as machinery used to 

produce covered products is owned and 

operated by OEMs overseas. Small 

businesses also would not face product 

conversion costs associated with 

engineering and redesign of equipment. 

However, small businesses could 

experience an increase in equipment 

purchase price from overseas OEMs if 

the OEMs incur capital and product 

conversion costs and pass those onto 

small business importers. If small 

businesses are not able to pass all 

additional costs onto consumers, they 

could potentially face reduced markups 

and profits. 

Additionally, small businesses would 

likely face product conversion costs 

associated with testing and certifying 

PTACs and PTHPs redesigned to 

comply with amended standards. 

Typically, testing and certification costs 

are proportional to the number of 

models offered by a company and not to 

the volume of sales. Because the volume 

of sales of a small business is often 

lower than that of a larger manufacturer, 

a small business’s testing and 

certification costs may be spread over 

fewer units and lower revenues per 

model relative to a larger manufacturer. 

This may result in a disproportionate 

cost burden on small manufacturers. 

Table VI.1 below presents estimated 

conversion costs as a percentage of 

annual financial metrics for an average 

small manufacturer relative to an 

average large manufacturer. 


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TABLE VI.1—MAGNITUDE OF CONVERSION COSTS FACING AN AVERAGE SMALL MANUFACTURER VERSUS AN AVERAGE

LARGE MANUFACTURER UNDER THE PROPOSED RULE

Capital conversion 

costs as a 

percentage of 

annual capital 

expenditures 

(%) 

Product 

conversion costs 

as a percentage 

of annual 

R&D expense 

(%) 

Total conversion 

costs as a 

percentage of 

annual revenue 

(%) 

Total conversion 

costs as a 

percentage of 

annual EBIT 

(%) 

Average Small Manufacturer ................................................... 0 61 2 56 

Average Large Manufacturer ................................................... 29 70 4 109 

Because small businesses are not 

expected to incur capital conversion 

costs and are expected to face limited 

product conversion costs in order to 

comply with the proposed rule, DOE 

estimates that small businesses will 

experience lower conversion costs as a 

percentage of annual revenue and other 

financial metrics compared to large 

manufacturers. Nevertheless, DOE 

recognizes that amended energy 

conservation standards could 

potentially impact small businesses 

disproportionately. In general, larger 

businesses tend to have larger 

production and sales volumes over 

which to spread costs and could have a 

competitive advantage due to their size 

and ability to access capital that may 

not be available to small businesses. 

Since the proposed standards could 

cause competitive concerns for small 

manufacturers, DOE cannot certify that 

the proposed standards would not have 

a significant impact on a substantial 

number of small businesses. 

DOE requests comments on the 

impacts of amended energy 

conservation standards on small 

business. This is identified as issue 7 in 

section VII.E, ‘‘Issues on Which DOE 

Seeks Comment.’’ 

3. Duplication, Overlap, and Conflict 

With Other Rules and Regulations 

DOE is not aware of any rules or 

regulations that duplicate, overlap, or 

conflict with the rule being considered 

today. 

4. Significant Alternatives to the Rule 

The discussion above analyzes 

impacts on small businesses that would 

result from the TSL DOE is proposing in 

this document. Though TSLs less 

stringent than the proposed TSL would 

be expected to reduce the impacts on 

small entities, DOE is required by EPCA 

to establish standards that achieve the 

maximum improvement in energy 

efficiency that is technically feasible 

and economically justified, and result in 

a significant conservation of energy. 

Therefore, DOE rejected the lowest TSL. 

In addition to the other TSLs being 

considered, the NOPR TSD includes a 

regulatory impact analysis in chapter 

17. For PTACs and PTHPs, this report 

discusses the following policy 

alternatives: (1) No rebate, (2) consumer 

rebates, (3) consumer tax credits, (4) 

manufacturer tax credits, (5) voluntary 

energy efficiency targets, and (6) 

government bulk purchases. DOE does 

not intend to consider these alternatives 

further because they either are not 

feasible to implement without authority 

and funding from Congress, or are not 

expected to result in energy savings as 

large as those that would be achieved by 

the proposed energy conservation 

standards. For PTACs and PTHPs, the 

energy benefits of alternative policies 

analyzed range from less than 1 percent 

to approximately 22 percent of those 

estimated to result from amended 

standards. 

DOE continues to seek input from 

businesses that would be affected by 

this rulemaking and will consider 

comments received in the development 

of any final rule. 

C. Review Under the Paperwork 

Reduction Act 

Manufacturers of PTACs and PTHPs 

must certify to DOE that their products 

comply with any applicable energy 

conservation standards. In certifying 

compliance, manufacturers must test 

their products according to the DOE test 

procedures for PTACs and PTHPs, 

including any amendments adopted for 

those test procedures. DOE has 

established regulations for the 

certification and recordkeeping 

requirements for all covered consumer 

products and commercial equipment, 

including PTACs and PTHPs. 76 FR 

12422 (March 7, 2011). The collectionof-information requirement for the 

certification and recordkeeping is 

subject to review and approval by OMB 

under the Paperwork Reduction Act 

(PRA). This requirement has been 

approved by OMB under OMB control 

number 1910–1400. Public reporting 

burden for the certification is estimated 

to average 20 hours per response, 

including the time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing the collection of information. 

Notwithstanding any other provision 

of the law, no person is required to 

respond to, nor shall any person be 

subject to a penalty for failure to comply 

with, a collection of information subject 

to the requirements of the PRA, unless 

that collection of information displays a 

currently valid OMB Control Number. 

D. Review Under the National 

Environmental Policy Act of 1969 

Pursuant to the National 

Environmental Policy Act (NEPA) of 

1969, DOE has determined that the 

proposed rule fits within the category of 

actions included in Categorical 

Exclusion (CX) B5.1 and otherwise 

meets the requirements for application 

of a CX. See 10 CFR part 1021, app. B, 

B5.1(b); § 1021.410(b) and appendix B, 

B(1)–(5). The proposed rule fits within 

the category of actions because it is a 

rulemaking that establishes energy 

conservation standards for consumer 

products or industrial equipment, and 

for which none of the exceptions 

identified in CX B5.1(b) apply. 

Therefore, DOE has made a CX 

determination for this rulemaking, and 

DOE does not need to prepare an 

Environmental Assessment or 

Environmental Impact Statement for 

this proposed rule. DOE’s CX 

determination for this proposed rule is 

available at http://cxnepa.energy.gov/. 

E. Review Under Executive Order 13132 

Executive Order 13132, ‘‘Federalism,’’ 

64 FR 43255 (Aug. 10, 1999) imposes 

certain requirements on Federal 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have Federalism 

implications. The Executive Order 

requires agencies to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and to carefully assess the 

necessity for such actions. The 

Executive Order also requires agencies 

to have an accountable process to 

ensure meaningful and timely input by 


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State and local officials in the 

development of regulatory policies that 

have Federalism implications. On 

March 14, 2000, DOE published a 

statement of policy describing the 

intergovernmental consultation process 

it will follow in the development of 

such regulations. 65 FR 13735. EPCA 

governs and prescribes Federal 

preemption of State regulations as to 

energy conservation for the products 

that are the subject of the proposed rule. 

States can petition DOE for exemption 

from such preemption to the extent, and 

based on criteria, set forth in EPCA. (42 

U.S.C. 6297) No further action is 

required by Executive Order 13132. 

F. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, ‘‘Civil Justice 

Reform,’’ imposes on Federal agencies 

the general duty to adhere to the 

following requirements: (1) Eliminate 

drafting errors and ambiguity; (2) write 

regulations to minimize litigation; and 

(3) provide a clear legal standard for 

affected conduct rather than a general 

standard and promote simplification 

and burden reduction. 61 FR 4729 (Feb. 

7, 1996). Section 3(b) of Executive Order 

12988 specifically requires that 

Executive agencies make every 

reasonable effort to ensure that the 

regulation: (1) Clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires Executive agencies to 

review regulations in light of applicable 

standards in section 3(a) and section 

3(b) to determine whether they are met 

or it is unreasonable to meet one or 

more of them. DOE has completed the 

required review and determined that, to 

the extent permitted by law, this 

proposed rule meets the relevant 

standards of Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) requires 

each Federal agency to assess the effects 

of Federal regulatory actions on State, 

local, and Tribal governments and the 

private sector. Public Law 104–4, sec. 

201 (codified at 2 U.S.C. 1531). For a 

proposed regulatory action likely to 

result in a rule that may cause the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector of $100 million or more 

in any one year (adjusted annually for 

inflation), section 202 of UMRA requires 

a Federal agency to publish a written 

statement that estimates the resulting 

costs, benefits, and other effects on the 

national economy. (2 U.S.C. 1532(a), (b)) 

The UMRA also requires a Federal 

agency to develop an effective process 

to permit timely input by elected 

officers of State, local, and Tribal 

governments on a proposed ‘‘significant 

intergovernmental mandate,’’ and 

requires an agency plan for giving notice 

and opportunity for timely input to 

potentially affected small governments 

before establishing any requirements 

that might significantly or uniquely 

affect small governments. On March 18, 

1997, DOE published a statement of 

policy on its process for 

intergovernmental consultation under 

UMRA. 62 FR 12820. DOE’s policy 

statement is also available at http://

energy.gov/gc/office-general-counsel. 

This proposed rule is not expected to 

require expenditures of $100 million or 

more on the private sector. 

Section 202 of UMRA authorizes a 

Federal agency to respond to the content 

requirements of UMRA in any other 

statement or analysis that accompanies 

the proposed rule. 2 U.S.C. 1532(c). The 

content requirements of section 202(b) 

of UMRA relevant to a private sector 

mandate substantially overlap the 

economic analysis requirements that 

apply under section 325(o) of EPCA and 

Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of 

the NOPR and the ‘‘Regulatory Impact 

Analysis’’ section of the TSD for this 

proposed rule respond to those 

requirements. 

Under section 205 of UMRA, the 

Department is obligated to identify and 

consider a reasonable number of 

regulatory alternatives before 

promulgating a rule for which a written 

statement under section 202 is required. 

2 U.S.C. 1535(a). DOE is required to 

select from those alternatives the most 

cost-effective and least burdensome 

alternative that achieves the objectives 

of the proposed rule unless DOE 

publishes an explanation for doing 

otherwise, or the selection of such an 

alternative is inconsistent with law. As 

required by 42 U.S.C. 6313(a), the 

proposed rule would establish energy 

conservation standards for PTACs and 

PTHPs that are designed to achieve the 

maximum improvement in energy 

efficiency that DOE has determined to 

be both technologically feasible and 

economically justified. A full discussion 

of the alternatives considered by DOE is 

presented in the ‘‘Regulatory Impact 

Analysis’’ section of the TSD for the 

proposed rule. 

H. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act, 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a Family 

Policymaking Assessment for any rule 

that may affect family well-being. This 

rule would not have any impact on the 

autonomy or integrity of the family as 

an institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

I. Review Under Executive Order 12630 

DOE has determined, under Executive 

Order 12630, ‘‘Governmental Actions 

and Interference with Constitutionally 

Protected Property Rights’’ 53 FR 8859 

(Mar. 18, 1988), that this regulation 

would not result in any takings that 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516, note) 

provides for Federal agencies to review 

most disseminations of information to 

the public under guidelines established 

by each agency pursuant to general 

guidelines issued by OMB. OMB’s 

guidelines were published at 67 FR 

8452 (Feb. 22, 2002), and DOE’s 

guidelines were published at 67 FR 

62446 (Oct. 7, 2002). DOE has reviewed 

the NOPR under the OMB and DOE 

guidelines and has concluded that it is 

consistent with applicable policies in 

those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use’’ 66 FR 28355 (May 

22, 2001), requires Federal agencies to 

prepare and submit to OIRA at OMB, a 

Statement of Energy Effects for any 

proposed significant energy action. A 

‘‘significant energy action’’ is defined as 

any action by an agency that 

promulgates or is expected to lead to 

promulgation of a final rule, and that: 

(1) Is a significant regulatory action 

under Executive Order 12866, or any 

successor order; and (2) is likely to have 


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a significant adverse effect on the 

supply, distribution, or use of energy, or 

(3) is designated by the Administrator of 

OIRA as a significant energy action. For 

any proposed significant energy action, 

the agency must give a detailed 

statement of any adverse effects on 

energy supply, distribution, or use 

should the proposal be implemented, 

and of reasonable alternatives to the 

action and their expected benefits on 

energy supply, distribution, and use. 

DOE has tentatively concluded that 

this regulatory action, which proposes 

energy conservation standards for 

PTACs and PTHPs, is not a significant 

energy action because the proposed 

standards are not likely to have a 

significant adverse effect on the supply, 

distribution, or use of energy, nor has it 

been designated as such by the 

Administrator at OIRA. Accordingly, 

DOE has not prepared a Statement of 

Energy Effects on the proposed rule. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

and Technology Policy (OSTP), issued 

its Final Information Quality Bulletin 

for Peer Review (the Bulletin). 70 FR 

2664 (Jan. 14, 2005). The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the Federal 

Government, including influential 

scientific information related to agency 

regulatory actions. The purpose of the 

bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. Under the 

Bulletin, the energy conservation 

standards rulemaking analyses are 

‘‘influential scientific information,’’ 

which the Bulletin defines as scientific 

information the agency reasonably can 

determine will have, or does have, a 

clear and substantial impact on 

important public policies or private 

sector decisions. 70 FR 2667. 

In response to OMB’s Bulletin, DOE 

conducted formal in-progress peer 

reviews of the energy conservation 

standards development process and 

analyses and has prepared a Peer 

Review Report pertaining to the energy 

conservation standards rulemaking 

analyses. Generation of this report 

involved a rigorous, formal, and 

documented evaluation using objective 

criteria and qualified and independent 

reviewers to make a judgment as to the 

technical/scientific/business merit, the 

actual or anticipated results, and the 

productivity and management 

effectiveness of programs and/or 

projects. The ‘‘Energy Conservation 

Standards Rulemaking Peer Review 

Report’’ dated February 2007 has been 

disseminated and is available at the 

following Web site: 

www1.eere.energy.gov/buildings/

appliance_standards/peer_review.html. 

VII. Public Participation 

A. Attendance at the Public Meeting 

The time, date, and location of the 

public meeting are listed in the DATES

and ADDRESSES sections at the beginning 

of this document. If you plan to attend 

the public meeting, please notify Ms. 

Brenda Edwards at (202) 586–2945 or 

Brenda.Edwards@ee.doe.gov. Please 

note that foreign nationals visiting DOE 

Headquarters are subject to advance 

security screening procedures. Any 

foreign national wishing to participate 

in the meeting should advise DOE as 

soon as possible by contacting Ms. 

Edwards to initiate the necessary 

procedures. Please also note that those 

wishing to bring laptop computers into 

the Forrestal Building will be required 

to obtain a property pass. Visitors 

should avoid bringing laptop 

computers, or allow an extra 45 

minutes. Persons can attend the public 

meeting via webinar. 

In addition, you can attend the public 

meeting via webinar. Webinar 

registration information, participant 

instructions, and information about the 

capabilities available to webinar 

participants will be published on DOE’s 

Web site at: http://www1.eere.energy.

gov/buildings/appliance_standards/

product.aspx/productid/45. Participants 

are responsible for ensuring their 

systems are compatible with the 

webinar software. 

B. Procedure for Submitting Prepared 

General Statements for Distribution 

Any person who has plans to present 

a prepared general statement may 

request that copies of his or her 

statement be made available at the 

public meeting. Such persons may 

submit requests, along with an advance 

electronic copy of their statement in 

PDF (preferred), Microsoft Word or 

Excel, WordPerfect, or text (ASCII) file 

format, to the appropriate address 

shown in the ADDRESSES section at the 

beginning of this document. The request 

and advance copy of statements must be 

received at least one week before the 

public meeting and may be emailed, 

hand-delivered, or sent by mail. DOE 

prefers to receive requests and advance 

copies via email. Please include a 

telephone number to enable DOE staff to 

make follow-up contact, if needed. 

C. Conduct of the Public Meeting 

DOE will designate a DOE official to 

preside at the public meeting and may 

also use a professional facilitator to aid 

discussion. The meeting will not be a 

judicial or evidentiary-type public 

hearing, but DOE will conduct it in 

accordance with section 336 of EPCA 

(42 U.S.C. 6306). A court reporter will 

be present to record the proceedings and 

prepare a transcript. DOE reserves the 

right to schedule the order of 

presentations and to establish the 

procedures governing the conduct of the 

public meeting. After the public 

meeting, interested parties may submit 

further comments on the proceedings as 

well as on any aspect of the rulemaking 

until the end of the comment period. 

The public meeting will be conducted 

in an informal, conference style. DOE 

will present summaries of comments 

received before the public meeting, 

allow time for prepared general 

statements by participants, and 

encourage all interested parties to share 

their views on issues affecting this 

rulemaking. Each participant will be 

allowed to make a general statement 

(within time limits determined by DOE), 

before the discussion of specific topics. 

DOE will allow, as time permits, other 

participants to comment briefly on any 

general statements. 

At the end of all prepared statements 

on a topic, DOE will permit participants 

to clarify their statements briefly and 

comment on statements made by others. 

Participants should be prepared to 

answer questions by DOE and by other 

participants concerning these issues. 

DOE representatives may also ask 

questions of participants concerning 

other matters relevant to this 

rulemaking. The official conducting the 

public meeting will accept additional 

comments or questions from those 

attending, as time permits. The 

presiding official will announce any 

further procedural rules or modification 

of the above procedures that may be 

needed for the proper conduct of the 

public meeting. 

A transcript of the public meeting will 

be included in the docket, which can be 

viewed as described in the Docket 

section at the beginning of this 

document. In addition, any person may 

buy a copy of the transcript from the 

transcribing reporter. 

D. Submission of Comments 

DOE will accept comments, data, and 

information regarding this proposed 

rule before or after the public meeting, 

but no later than the date provided in 

the DATES section at the beginning of 

this proposed rule. Interested parties 


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may submit comments, data, and other 

information using any of the methods 

described in the ADDRESSES section at 

the beginning of this document. 

Submitting comments via 

regulations.gov. The regulations.gov 

Web page will require you to provide 

your name and contact information. 

Your contact information will be 

viewable to DOE Building Technologies 

staff only. Your contact information will 

not be publicly viewable except for your 

first and last names, organization name 

(if any), and submitter representative 

name (if any). If your comment is not 

processed properly because of technical 

difficulties, DOE will use this 

information to contact you. If DOE 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, DOE may not be 

able to consider your comment. 

However, your contact information 

will be publicly viewable if you include 

it in the comment itself or in any 

documents attached to your comment. 

Any information that you do not want 

to be publicly viewable should not be 

included in your comment, nor in any 

document attached to your comment. 

Otherwise, persons viewing comments 

will see only first and last names, 

organization names, correspondence 

containing comments, and any 

documents submitted with the 

comments. 

Do not submit to regulations.gov 

information for which disclosure is 

restricted by statute, such as trade 

secrets and commercial or financial 

information (hereinafter referred to as 

Confidential Business Information 

(CBI)). Comments submitted through 

regulations.gov cannot be claimed as 

CBI. Comments received through the 

Web site will waive any CBI claims for 

the information submitted. For 

information on submitting CBI, see the 

Confidential Business Information 

section below. 

DOE processes submissions made 

through regulations.gov before posting. 

Normally, comments will be posted 

within a few days of being submitted. 

However, if large volumes of comments 

are being processed simultaneously, 

your comment may not be viewable for 

up to several weeks. Please keep the 

comment tracking number that 

regulations.gov provides after you have 

successfully uploaded your comment. 

Submitting comments via email, hand 

delivery/courier, or mail. Comments and 

documents submitted via email, hand 

delivery, or mail also will be posted to 

regulations.gov. If you do not want your 

personal contact information to be 

publicly viewable, do not include it in 

your comment or any accompanying 

documents. Instead, provide your 

contact information in a cover letter. 

Include your first and last names, email 

address, telephone number, and 

optional mailing address. The cover 

letter will not be publicly viewable as 

long as it does not include any 

comments. 

Include contact information each time 

you submit comments, data, documents, 

and other information to DOE. If you 

submit via mail or hand delivery/

courier, please provide all items on a 

CD, if feasible. It is not necessary to 

submit printed copies. No facsimiles 

(faxes) will be accepted. 

Comments, data, and other 

information submitted to DOE 

electronically should be provided in 

PDF (preferred), Microsoft Word or 

Excel, WordPerfect, or text (ASCII) file 

format. Provide documents that are not 

secured, that are written in English, and 

that are free of any defects or viruses. 

Documents should not contain special 

characters or any form of encryption 

and, if possible, they should carry the 

electronic signature of the author. 

Campaign form letters. Please submit 

campaign form letters by the originating 

organization in batches of between 50 to 

500 form letters per PDF or as one form 

letter with a list of supporters’ names 

compiled into one or more PDFs. This 

reduces comment processing and 

posting time. 

Confidential Business Information. 

According to 10 CFR 1004.11, any 

person submitting information that he 

or she believes to be confidential and 

exempt by law from public disclosure 

should submit via email, postal mail, or 

hand delivery/courier two well-marked 

copies: One copy of the document 

marked confidential including all the 

information believed to be confidential, 

and one copy of the document marked 

non-confidential with the information 

believed to be confidential deleted. 

Submit these documents via email or on 

a CD, if feasible. DOE will make its own 

determination about the confidential 

status of the information and treat it 

according to its determination. 

Factors of interest to DOE when 

evaluating requests to treat submitted 

information as confidential include: (1) 

A description of the items; (2) whether 

and why such items are customarily 

treated as confidential within the 

industry; (3) whether the information is 

generally known by or available from 

other sources; (4) whether the 

information has previously been made 

available to others without obligation 

concerning its confidentiality; (5) an 

explanation of the competitive injury to 

the submitting person which would 

result from public disclosure; (6) when 

such information might lose its 

confidential character due to the 

passage of time; and (7) why disclosure 

of the information would be contrary to 

the public interest. 

It is DOE’s policy that all comments 

may be included in the public docket, 

without change and as received, 

including any personal information 

provided in the comments (except 

information deemed to be exempt from 

public disclosure). 

E. Issues on Which DOE Seeks Comment 

Although DOE welcomes comments 

on any aspect of this proposal, DOE is 

particularly interested in receiving 

comments and views of interested 

parties concerning the following issues: 

1. DOE did not consider alternate 

refrigerants in the analysis because DOE 

is not aware of any SNAP-approved 

refrigerants that are known to have 

better efficiency than R–410A for PTAC 

and PTHP equipment. DOE requests 

feedback on the efficacy of alternative 

refrigerants in PTAC and PTHP 

equipment. 

2. To estimate the number and type of 

distribution channels and the 

distribution of the shipments through 

the distribution channels, DOE 

leveraged the information from the 2008 

PTAC and PTHP final rule. (73 FR 

58772). DOE requests comment 

regarding the selected channels and 

distribution of shipments through the 

channels. 

3. Stakeholders mentioned that a 

number of shipments are not accounted 

for in the AHRI database because certain 

manufacturers are non-AHRI 

manufacturers and are not subject to 

reporting to the database. DOE requests 

comment regarding and data supporting 

the expected number of shipments that 

are unreported. 

4. To estimate a base-case efficiency 

trend, DOE applied the trend from 2012 

to 2035 that was used in the commercial 

unitary air conditioner Advance Notice 

of Proposed Rulemaking (ANOPR), 

which estimated an increase of 

approximately 1 EER every 35 years. 69 

FR 45460 (July 29, 2004). DOE requests 

comment regarding and data supporting 

the selected efficiency trend. 

5. DOE used information provided by 

manufacturers to estimate the 

conversion costs for manufacturers at 

each TSL. DOE requests feedback on the 

expected total conversion costs for the 

industry at the evaluated TSLs. 

6. DOE used the GRIM to estimate the 

domestic labor expenditures and 

number of direct employees in the base 

case and at each TSL from 2014 through 

2048. DOE requests comments on the 

total annual direct employment levels in 


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the industry for PTAC and PTHP 

production. 

7. DOE used information provided by 

manufacturers to analyze the effects of 

amended energy conservation standards 

on small businesses. DOE requests 

comments on impacts facing small 

businesses as a result of amended 

standards. 

VIII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this proposed rule. 

List of Subjects in 10 CFR Part 431 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation, 

Reporting and recordkeeping 

requirements. 

Issued in Washington, DC, on August 28, 

2014. 

Michael Carr, 

Principal Deputy Assistant Secretary, Energy 

Efficiency and Renewable Energy. 

For the reasons set forth in the 

preamble, DOE proposes to amend part 

431 of chapter II, subchapter D, of title 

10 of the Code of Federal Regulations as 

set forth below: 

PART 431—ENERGY EFFICIENCY 

PROGRAM FOR CERTAIN 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

■ 1. The authority citation for part 431 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6317. 

■ 2. Amend § 431.97 by revising 

paragraph (c) to read as follows: 

§ 431.97 Energy efficiency standards and 

their compliance dates. 

* * * * * 

(c) Each non-standard size packaged 

terminal air conditioner (PTAC) and 

packaged terminal heat pump (PTHP) 

manufactured on or after October 7, 

2010 must meet the applicable 

minimum energy efficiency standard 

level(s) set forth in Table 4 of this 

section. Each standard size PTAC and 

PTHP manufactured on or after October 

8, 2012, and before January 1, 2019 must 

meet the applicable minimum energy 

efficiency standard level(s) set forth in 

Table 4 of this section. Each standard 

size PTAC and PTHP manufactured on 

or after January 1, 2019 must meet the 

applicable minimum energy efficiency 

standard level(s) set forth in Table 5 of 

this section. 

TABLE 4 TO § 431.97—MINIMUM EFFICIENCY STANDARDS FOR PTAC AND PTHP 

Equipment 

type Category Cooling capacity Efficiency level 

Compliance date: 

Products manufactured on and 

after . . . 

PTAC ............. Standard Size ..................... <7,000 Btu/h ....................... EER = 11.7 ................................................ October 8, 2012. 2

≥7,000 and ≤15,000 Btu/h .. EER = 13.8 ¥ (0.3 × Cap 1) ..................... October 8, 2012. 2

>15,000 Btu/h ..................... EER = 9.3 .................................................. October 8, 2012. 2

Non-Standard Size ............. <7,000 Btu/h ....................... EER = 9.4 .................................................. October 7, 2010. 

≥7,000 and ≤15,000 Btu/h .. EER = 10.9 ¥ (0.213 × Cap 1) ................. October 7, 2010. 

>15,000 Btu/h ..................... EER = 7.7 .................................................. October 7, 2010. 

PTHP ............. Standard Size ..................... <7,000 Btu/h ....................... EER = 11.9 ................................................

COP = 3.3 

October 8, 2012. 2

≥7,000 and ≤15,000 Btu/h .. EER = 14.0 ¥ (0.3 × Cap 1) .....................

COP = 3.7 ¥ (0.052 × Cap 1) 

October 8, 2012. 2

>15,000 Btu/h ..................... EER = 9.5 ..................................................

COP = 2.9 

October 8, 2012. 2

Non-Standard Size ............. <7,000 Btu/h ....................... EER = 9.3 ..................................................

COP = 2.7 

October 7, 2010. 

≥7,000 and ≤15,000 Btu/h .. EER = 10.8 ¥ (0.213 × Cap 1) .................

COP = 2.9 ¥ (0.026 × Cap 1) 

October 7, 2010. 

>15,000 Btu/h ..................... EER = 7.6 ..................................................

COP = 2.5 

October 7, 2010. 

1 ‘‘Cap’’ means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature. 2And manufactured before January 1, 2019. See Table 5 of this section for updated efficiency standards that apply to this category of equipment manufactured on and after January 1, 2019. 


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TABLE 5 TO § 431.97—UPDATED MINIMUM EFFICIENCY STANDARDS FOR PTAC AND PTHP 

Equipment 

type Category Cooling capacity Efficiency level 

Compliance date: 

Products manufactured on and 

after . . . 

PTAC ............. Standard Size ..................... <7,000 Btu/h ....................... EER = 12.6 ................................................ January 1, 2019. 

≥7,000 and ≤15,000 Btu/h .. EER = 14.9 ¥ (0.324 × Cap 1) ................. January 1, 2019. 

>15,000 Btu/h ..................... EER = 10.0 ................................................ January 1, 2019. 

PTHP ............. Standard Size ..................... <7,000 Btu/h ....................... EER = 12.6 ................................................

COP = 3.5 

January 1, 2019. 

≥7,000 and ≤15,000 Btu/h .. EER = 14.9 ¥ (0.324 × Cap 1) .................

COP = 4.0 ¥ (0.064 × Cap 1) 

January 1, 2019. 

>15,000 Btu/h ..................... EER = 10.0 ................................................

COP = 3.0 

January 1, 2019. 

1 ‘‘Cap’’ means cooling capacity in thousand Btu/h at 95 °F outdoor dry-bulb temperature. 

* * * * * 

[FR Doc. 2014–21189 Filed 9–15–14; 8:45 am] 

BILLING CODE 6450–01–P 


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