U.S. Department of Energ

Energy Conservation Program for Consumer 

and Commercial and Industrial Equipm

Framework Document Public Meeti

Energy Conservation Standards for Residen

Conditioners and Heat Pumps

June 12th, 2008

Washington, DC

http://eere.energy.gov/buildings/appliance_standards/residenti

 EERE-2008-BT-STD-0006 COMMENT 06
Welcome and Introduction

• Introductions• Role of the Facilitator• Ground Rules (norms)

– Listen as an ally– Use short, succinct statements/keep to the poin– Hold sidebar conversations outside the room– Focus on issues, not personalities– One person speaks at a time (raise hand to be 

your name for the record)

– Set cell phones to silent/vibrate

• Housekeeping Items• Agenda Review• Opening Remarks

 EERE-2008-BT-STD-0006 COMMENT 06
Stakeholder Opening Stateme

• Stakeholders who contacted the Department of En

opportunity to issue an opening statement should s

 EERE-2008-BT-STD-0006 COMMENT 06
Public Meeting Agenda

23

NOPR Analyses

1

ANOPR Analyses

4

Rulemaking OverviewIntroduction

5 Final Rule6 Closing Remarks

23

ANOPR AnalysesTest Procedure

4

Rulemaking Overview

5 NOPR Analyses6 Closing Remarks

 EERE-2008-BT-STD-0006 COMMENT 06
Purpose of the Framework Document P

• Present the procedural and analytical approache

energy conservation standards for residential ceconditioners and heat pumps

• Provide a forum for public discussion of rulemak

• Encourage interested parties to submit data, info

written comments

 EERE-2008-BT-STD-0006 COMMENT 06
Requests for Comment

Issue Box Throughout the Framework documentare brought up for discussion and feedback. Throupresentation, these issues are brought up in commthis one. Comments concerning any part of the dopresentation are welcomed.

 EERE-2008-BT-STD-0006 COMMENT 06
In all correspondence, please refer to this rulemaking b

– Framework Document for Residential Central Air Co

Pumps

– Docket Number EERE-2008-BT-STD-0006, and

– Regulatory Identification Number (RIN) 1904-AB47

Email: Res_Central_AC_HP@ee.doe.gov

Postal Mail: Ms. Brenda Edwards

U.S. Department of EnergyBuilding Technologies Program, Mailstop EE-21000 Independence Avenue, SWWashington, DC 20585-0121

Courier: Ms. Brenda Edwards

U.S. Department of Energy, Building Technologies Sixth Floor, 950 L’Enfant Plaza, SWWashington, DC 20024 Telephone: (202) 586-2945

Feedback Is Requested 

 EERE-2008-BT-STD-0006 COMMENT 06
Comment period closes at 4

July 7, 2008

 EERE-2008-BT-STD-0006 COMMENT 06
Agenda

9:00 – 9:05am Welcome9:05 – 9:15am Introduction and Agenda Revie9:15 – 10:15am Opening Remarks from Interest10:15 – 10:30am Rulemaking Overview10:30 – 10:45am Test Procedures10:45 – 11:00am BREAK11:00 – 12:00pm Market and Technology Assess

Analysis, Engineering Analysis Manufacturer Impact Analysis

12:00 – 1:00pm LUNCH1:00 – 2:00pm Energy Use Analysis, Markups 

Determination, and Life-Cycle CPeriod Analysis

2:00 – 2:30pm Shipments Analysis and Nation2:30 – 2:45pm BREAK2:45 – 3:30pm Notice of Proposed Rulemaking 3:30 – 4:00pm Discussion of Issues and Closin

 EERE-2008-BT-STD-0006 COMMENT 06
Background

1 42 U.S.C. 6317(b)(1)

• This energy conservation standard is a “backlog

• Addresses requirements from 42 USC 6295(d)(3

Pursuant to 6295(d)(3)(A), the first review was co2004, with the publication of a Technical Amendmstandards determined in the 2001 “13 SEER” finaPursuant to 6295(d)(3)(B), this rulemaking constitreview of possible amendment to energy conservcentral air conditioners and heat pumps

 EERE-2008-BT-STD-0006 COMMENT 06
23

NOPR Analyses

1

ANOPR Analyses

4

Rulemaking OverviewIntroduction

3

ANOPR AnalysesTest Procedure

4

Introduction

5 NOPR Analyses Final Rule6 Closing Remarks

Public Meeting Agenda

 EERE-2008-BT-STD-0006 COMMENT 06
42 U.S.C. 6317(c) Directs DOE to Take into Cons

Factors When Setting Energy Conservation 

EPCA Factors DOE An

1. Economic impact on consumers 

and manufacturers

Life-Cycle Cost AnalyManufacturer Impact 

2. Lifetime operating cost savings 

compared to increased cost for the product

Life-Cycle Cost Analy

3. Total projected energy savings National Impact Anal4. Impact on utility or performance Engineering Analysis

Screening Analysis

5. Impact of any lessening of 

competition

Manufacturer Impact 

6. Need for national energy 

conservation

National Impact Anal

7. Other factors the Secretary 

considers relevant

Environmental AssesUtility Impact AnalysiEmployment Impact A

 EERE-2008-BT-STD-0006 COMMENT 06
Framework Document

Framework 

Document ANOPR NOPR Fina

Rule

Today

• Today’s public meeting covers the Framework Document for 

• Federal Register Notice of Public Meeting – (73 FR 3224

– Gives notice of the public meeting and availability of the 

Document being discussed today

– Encourages interested parties to submit comments

• Framework Document

– Provides an overview of the rulemaking process and en

participation by interested parties

– Invites comments on proposed approach and issues– The Framework Document is available online: 

http://www.eere.energy.gov/buildings/appliance_standa_ac_hp.html

 EERE-2008-BT-STD-0006 COMMENT 06
Milestones for the Rulemaking P

Milestone 

End of Framework Comment Period 

ANOPR Published in Federal Register 

NOPR Published in Federal Register Final Rule Published in Federal Register 

Effective Date of Standard (5 years after FR) 

 EERE-2008-BT-STD-0006 COMMENT 06
23

NOPR Analyses

1

Test Procedure

4

Rulemaking OverviewIntroduction

24 ANOPR Analyses

Introduction

5 NOPR Analyses Final Rule6 Closing Remarks

Public Meeting Agenda

 EERE-2008-BT-STD-0006 COMMENT 06
Test Procedure

• DOE published a Final Rule for the central air con

heat pumps test procedure on October 22, 2007 (and it is found in 10 CFR 430, Subpart B, Append

• EISA 2007 amended EPCA to direct DOE to cons

test procedures and to include standby mode and consumption

• DOE understands that standby mode and off mod

consumption for central air conditioners and heat the energy consumed by the equipment when the not providing cooling, heating, or ventilation

• DOE expects to propose an amendment to the tes

central air conditioners and heat pumps by Octobe

 EERE-2008-BT-STD-0006 COMMENT 06
Request for Feedback

Item 1-1 What are the standby power modes and thof the standby power consumption during those modeoperation of the central air conditioners and heat pumshould consider in this rulemaking? For example, are heaters still being used in the product designs and if stypical power consumption?Item 1-2 DOE invites comments on whether it would feasible to incorporate standby power consumption inmetric or whether it instead should be considered as measure for this rulemaking.Item 1-3 DOE also invites comments on the necessthe existing DOE test procedure for central air conditipumps to account for standby power consumption anmeasurement.

 EERE-2008-BT-STD-0006 COMMENT 06
23

ANOPR Analyses

1

ANOPR Analyses

4

Rulemaking OverviewIntroduction

23 Test Procedure

Introduction

5 NOPR Analyses Final Rule6 Closing Remarks

Public Meeting Agenda

 EERE-2008-BT-STD-0006 COMMENT 06
Market & Technology

ScreeningAnalysis

Engineering Analysis

Energy Use Analysis

Shipments Analysis

Markups for Equipment Price Determination

Life-Cycle Cost and Payback Period Analysis

Steps in the Standards Rulemaking

Preliminary Manufacturer Impact Analysis

Energy 

Framework 

Document ANOPR NOPR Fina

Rule

 EERE-2008-BT-STD-0006 COMMENT 06
Market and Technology Assess

• Purpose:

– Characterize the residential central air conditione

market, industry, and measures to improve efficie

• Method: 

– Identify and characterize manufacturers of reside

conditioners and heat pumps

– Estimate shipments and trends in the market– Identify technologies that could improve efficiency– Identify regulatory and non-regulatory initiatives in

the efficiency of products covered under this rulem

Market and 

 EERE-2008-BT-STD-0006 COMMENT 06
Request for Feedback

Item 3-1 DOE seeks information that would contribute to assessment for residential central air conditioners and hincluding information on manufacturers, market shares, tmarket, and any other applicable information that is avai

Market and 

 EERE-2008-BT-STD-0006 COMMENT 06
Current Product Classes & Stan

Current Product Classes:• Split System Air Conditioners• Split System Heat Pumps• Single Package Air Conditioners• Single Package Heat Pumps• Small-Duct High-Velocity (SDHV) Air 

Conditioners and Heat Pumps

• Space-Constrained Air Conditioners• Space-Constrained Heat Pumps• Through-the-Wall Split Air Conditioners 

and Heat Pumps**

• Through-the-Wall Package Air 

Conditioners and Heat Pumps**

Curre

13 SE13 SE13 SE13 SE13 SE12 SE12 SE10.9 10.6 

* Exception relief has been granted for manufacturers of SDHV systems ** The through-the-wall product class ceases to exist on 1/23/2010.

Market and 

 EERE-2008-BT-STD-0006 COMMENT 06
Planned Product Classes

• Split System Air Conditioners• Split System Heat Pumps• Single Package Air Conditioners• Single Package Heat Pumps• Small-Duct High-Velocity (SDHV) Air Conditioners • Space-Constrained Air Conditioners• Space-Constrained Heat Pumps

Market and 

Item 3-2 DOE requests feedback on the planned produItem 3-3 Are there other product classes that should be Should all of the identified product classes be considere

 EERE-2008-BT-STD-0006 COMMENT 06
SDHV Air Conditioners and Heat 

• Manufacturers of SDHV systems have filed for, a

exception relief

– 11 SEER/6.8 HSPF– Effective January 23, 2006; effective until DOE es

standards

• DOE is considering maintaining a separate prod

SDHV systems and conducting a detailed analysappropriate standards

Item 3-4 DOE requests that stakeholders submit any avdata to DOE concerning SDHV systems, including markshipments, cost and performance data, and design spec

Market and 

 EERE-2008-BT-STD-0006 COMMENT 06
Through-the-Wall (TTW) Air Conditioners 

• Two main types of TTW products

– Split systems (condensers using conventional air – Package systems (similar to packaged terminal a

heat pumps (PTACs and PTHPs), but ducted to in

• Current standards

– Split: 10.9 SEER/7.1 HSPF– Package: 10.6 SEER/7.0 HSPF

• The TTW product class ceases to exist on Janua

the space constrained product class remains

• DOE is assuming a 12 SEER/7.4 HSPF baseline 

constrained products, including TTW split and pa

Item 3-45 DOE requests submission of any available, apconcerning TTW systems, including market shares, shipperformance data, and design specifications.

Market and 

 EERE-2008-BT-STD-0006 COMMENT 06
Ductless Split Systems

• Ductless split systems (“mini-splits” and “multi-sp

represent only a small fraction of the domestic m

• In the most recent test procedures final rule, DO

believes ductless splits compete mainly with consystems, not room air conditioners

• In this rulemaking, DOE is considering maintaini

ductless split systems as part of the conventionaproduct class

Item 3-6 DOE requests submission of any available, appconcerning ductless split systems, including market shacost and performance data, and design specifications.

Market and 

 EERE-2008-BT-STD-0006 COMMENT 06
Technology Assessment

• In the technology assessment, DOE identifies te

improve the efficiency of central air conditioners 

Higher-efficiency expansion valves (e.g., dual-port TXVs, EEVs)Higher-efficiency evaporator and condenser fan motors (e.g., brIncreased evaporator and condenser coil surface areaEvaporator and condenser fan motor controllersHigher-efficiency evaporator and condenser fan bladesHigher-efficiency compressors (e.g., variable-speed compressorMicro-channel heat exchangersLiquid-to-suction heat exchangersFlat tube heat exchangersHigh-efficiency defrost mechanism (heat pumps only; e.g., “frost

Improved defrost timer control (heat pumps only; e.g., demand-b

Market and 

 EERE-2008-BT-STD-0006 COMMENT 06
Item 3-7 What technologies or design options, if any, sor remove from the above lists? Please provide rationalrecommendation.

Request for Comment

Market and 

 EERE-2008-BT-STD-0006 COMMENT 06
Screening Analysis

Impacts on health or safety

Impacts on product utility or availability to con

Practicability to manufacture, install and se

Technological feasibility

• Purpose

– Screen out technology options that will not be con

engineering analysis

• Method:

– Each technology option will be evaluated based o

 EERE-2008-BT-STD-0006 COMMENT 06
Rulema

• Life-Cyc

Payback 

• Manufac

Analysis 

• Employ

Analysis

Manufacturer Selling Price – 

Efficiency Relationship

Manufacturer 

Selling Price

SEER/HSPF level

Engineering Analysis

• Purpose: 

– To characterize the relationship between manuf

and air conditioner and heat pump efficiency

 EERE-2008-BT-STD-0006 COMMENT 06
Õ Determine baseline efficiency levels fo

(current standard levels)

Õ Through reverse engineering analysis, 

baseline units at a representative capaclass

Õ Estimate the cost of units at efficiency 

baseline for each product class (efficie

Õ Document the Engineering Analysis, s

reverse engineering data with informatcatalogs, websites and trade publicatio

Establish 

Baseline

Establish 

Baseline

Document 

Results

Estimate Cost 

of Baseline 

Units

Estimate Cost 

of Units Above 

the Baseline

Engineering Analysis Methodol

 EERE-2008-BT-STD-0006 COMMENT 06
Item 5-2 DOE requests feedback on the use of an efficapproach to determine the relationship between manufacost and energy efficiency levels for central air conditionpumps. Item 5-3 For each product class, DOE seeks feedback representative cooling capacity to use (i.e., what is the most appropriate size air conditioner or heat pump to anItem 5-4 DOE seeks information on the limitations of pand very large capacities, and how to consider these limanalysis.

Request for Comment

 EERE-2008-BT-STD-0006 COMMENT 06
Efficiency Levels

Level Split System Air 

Conditioners

PC

EnergyStar & CEE Tier 1 14 SEER 1CEE Tier 2 15 SEER 1CEE Tier 3 16 SEER or higher NMaximum available (3 ton) 21 SEER 1

Level Split System Heat Pumps P

EnergyStar 14 SEER 8.2 HSPF 1

CEE Tier 1 14 SEER 8.5 HSPF 1

CEE Tier 2 15 SEER or 

higher

8.5 HSPF or higher

1h

Maximum Available (3 ton) 19.5 SEER 10.8 HSPF 1

 EERE-2008-BT-STD-0006 COMMENT 06
Efficiency Levels

• DOE will consider the above levels, but may ana

not in these lists

• DOE will examine the “maximum technologically 

tech) level, which is not necessarily the maximum 

Item 5-5 DOE seeks input from stakeholders concerninlevels is plans to use for collecting incremental cost datinput from stakeholders on appropriate max-tech levelsItem 5-6 DOE seeks input on appropriate levels to anasystems, and for space constrained products. DOE also stakeholders on appropriate max tech levels for SDHV constrained products.

 EERE-2008-BT-STD-0006 COMMENT 06
Regional Standards

• Section 306 of EISA 2007 – Regional Standards 

– Permits DOE to establish standards for one or two 

a base national standard if regional standards wosignificant amount of energy compared to only a bstandard and are economically justified

– Standards for the additional region(s) are intende

restrictive than the base national standard

– The Secretary may define the boundaries of the r

contiguous States only (AK and HI may be includeregions)

 EERE-2008-BT-STD-0006 COMMENT 06
Request for Feedback

Item 1-4 DOE seeks feedback from interested partiedetermine appropriate regions when considering potestandards for central air conditioners and heat pumpsItem 1-5 For an analysis that uses regional standardregions (e.g., the hot and dry southwest, the hot and would be appropriate for setting standards above the standard? Which States would be included in such rein mind the statutory directive to include contiguous SItem 1-6 How should DOE address impacts to other participants (distributors, dealers, contractors, installepotential adoption of regional standards for central aiand heat pumps?

 EERE-2008-BT-STD-0006 COMMENT 06
Manufacturer Markup

• Direct material• Direct labor• Factory overhead• Depreciation

• Sales, general & admin.• Research & development• Interest• Profit

• Manufacturer Production Cost

– Reverse engineering analysis– Interviews with technical experts– Interviews with manufacturers– Manufacturer catalogs and specification sheet

Manufacturer 

Markup 

(Non-Production Costs)

Manufacturer 

Production 

Cost

+

= 

 EERE-2008-BT-STD-0006 COMMENT 06
Manufacturer Markup

• Direct material• Direct labor• Factory overhead• Depreciation

• Sales, general & admin.• Research & development• Interest• Profit

Manufacturer 

Markup 

(Non-Production Costs)

Manufacturer 

Production 

Cost

+

= 

• Manufacturer Markup

– SEC 10-K reports– Company annual rep– Dun and Bradstreet r– Value Line industry s– Standard and Poor’s – Ibbotson Associates 

 EERE-2008-BT-STD-0006 COMMENT 06
Item 5-7 DOE seeks comment on the planned markudeveloping estimates of manufacturer selling prices.

Request for Comment

 EERE-2008-BT-STD-0006 COMMENT 06
Proprietary Designs

• The Department will evaluate all design options 

commercially available or present in a working pincluding proprietary designs

• Proprietary designs will only be considered if the

a unique path to a given efficiency level

• The confidentiality of manufacturers will be main

Item 5-8 Are there proprietary designs or technologieshould consider for any of the products under considerulemaking? If so, how should DOE acquire the cost for evaluating these designs?

 EERE-2008-BT-STD-0006 COMMENT 06
Outside Regulatory Change

• DOE will consider the effects of regulatory chang

DOE’s statutory rulemaking process

• The Environmental Protection Agency has mand

out of chlorofluorocarbons (CFCs) and hydrochlo(HCFCs)

• Notably, R-22 will be phased out, beginning with 

production and importation on January 1, 2010

• This ban falls before the final rule (2011) and eff

of this rulemaking

• DOE intends to conduct the analysis under the a

R-410A will be the refrigerant of choice to replac

• DOE also understands that reduced availability o

likely result in increased prices

 EERE-2008-BT-STD-0006 COMMENT 06
Item 5-9 DOE seeks feedback from interested partiepotential impacts of reduced availability of R-22.Item 5-10 Are there additional outside regulatory issshould consider in its analysis of air conditioners and 

Request for Comment

 EERE-2008-BT-STD-0006 COMMENT 06
Preliminary Manufacturer Impact A

Methodology

• The MIA consists of three main phases. In the A

preliminary MIA focuses on Phase 1 

Industry profile

Develop straw man GRIM*

Develop interview guide

Intervie

& indu

wide 

subgr

analys

Phase 2

* Government Regulatory Impact Model (GRIM)

Preliminary MIA interviews

Phase 1

ANOPR 

Preliminary Manu

 EERE-2008-BT-STD-0006 COMMENT 06
Methodology: Phase 1

• Consists of the industry profile and preliminary m

impact analysis interviews

Industry Profile Industry Profile

» Evaluate current and past industry 

structure and market characteristics 

» Produce an industry profile report 

with aggregated findings and characteristics 

» Identify critical issues that require 

special consideration in the MIA, for example: 

» Types or groups of manufacturers» Access to technology» Potential regulatory scenarios

» Evaluate current and past industry 

structure and market characteristics

» Produce an industry profile report 

with aggregated findings and characteristics

» Identify critical issues that require 

special consideration in the MIA, for example:

» Types or groups of manufacturers» Access to technology» Potential regulatory scenarios

Preliminary M

Preliminary 

» Occurs during t

analysis 

» Topics include:

» Shipment pr

» Conversion » Product mix » Market shar

consolidatio

» Cumulative 

» Occurs during th

analysis

» Topics include:

» Shipment pro

» Conversion c» Product mix a» Market share

consolidation

» Cumulative r

Preliminary Manu

 EERE-2008-BT-STD-0006 COMMENT 06
Market & Technology

ScreeningAnalysis

Engineering Analysis

Energy Use Analysis

Shipments Analysis

Markups for Equipment Price Determination

Life-Cycle Cost and Payback Period Analysis

Steps in the Standards Rulemaking

Preliminary Manufacturer Impact Analysis

Energy 

Framework 

Document ANOPR NOPR Fina

Rule

 EERE-2008-BT-STD-0006 COMMENT 06
• Purpose:

– Determine annual energy consumption to calculat

costs for the life-cycle cost (LCC) and payback peanalyses 

– Access the energy-savings potential of increased 

efficiencies

Energy Use Analysis 

for Residential Buildings

• Method:

– Develop residential building samples for each pro

DOE-EIA’s Residential Energy Consumption Surv

• RECS 2001 data is currently available but RECS 20

available in time for the ANOPR

– Use RECS data along with Engineering Analysis d

annual energy use

 EERE-2008-BT-STD-0006 COMMENT 06
Energy Use Analysis Approa

for Residential Buildings

Annual Energy Useper household (kWh/year)(UECres_stock )

from RECS

+

SEER per household(deduced from‘equipment age’)(SEERres_stock )

from RECS

SEER byEfficiencyLevel(SEERres_effcy )

from Engineering

Analysis

e

res

s

res

effcyres stockres SEER

SEER UEC UEC

_

_

_

=

_

×

 EERE-2008-BT-STD-0006 COMMENT 06
Request for Comment

Item 6-1 DOE seeks comments on the accuracy anspecificity of the annual shipped efficiency (SEER) dpublished in the HVAC&R News. Also, are there regof the SEER data by vintage available? If so, where be found?Item 6-2 DOE seeks input on the planned approach data for determining the energy consumption of centconditioners and heat pumps in residential buildings

 EERE-2008-BT-STD-0006 COMMENT 06
• Purpose:

– DOE will consider the “rebound effect” in its deter

energy consumption

Rebound Effect

• Assumptions:

– Rebound effect occurs when a more efficient appl

is used more intensively so the expected savings materialize

– Rebound effect for residential space-cooling equip

be highly variable (0% to 50% according to existin

 EERE-2008-BT-STD-0006 COMMENT 06
Request for Comment

Item 6-3 Because the rebound effect for residential equipment appears to be highly variable, DOE seeks the rebound effect that may be associated with more air conditioners and heat pumps. 

 EERE-2008-BT-STD-0006 COMMENT 06
• Purpose:

– Determine annual energy consumption and peak 

associated with the estimated ten percent of centand heat pumps that are installed in commercial bannual energy consumption and peak demand wiand PBP analyses

Energy Use Analysis 

for Commercial Buildings

• Method:

– Use a whole-building simulation-based analysis fo

commercial building type in different climate regio

– Consider the small office as the most representati

building type where the covered products are insta

– Characterize the small office building prototype m

EIA’s Commercial Building Energy Consumption S

 EERE-2008-BT-STD-0006 COMMENT 06
Item 6-4 DOE specifically requests comment on wheis an accurate estimate of the fraction of single-phase conditioners and heat pumps installed in commercial Item 6-5 DOE requests input on whether, as defined “small office building” is the appropriate commercial buse for this analysis. If so, DOE further requests complanned approach to use a small office building protothe annual energy consumption and peak-demand imcovered equipment installed in commercial buildings.

Request for Comment

 EERE-2008-BT-STD-0006 COMMENT 06
Markups for Equipment Price Deter

• DOE uses markups to convert manufacturer cost

engineering analysis into consumer retail prices

• DOE needs retail prices for the life-cycle cost and 

analyses

• DOE will characterize distribution channels for bo

and product with higher efficiency levels

• DOE develops markups for each party involved in 

• SEC 10-K reports provide data for calculating ma• U.S. Census Bureau provides data for calculating • DOE may collect retail price data for validation pu• DOE will investigate the variability of retail prices

Markups for Equi

 EERE-2008-BT-STD-0006 COMMENT 06
Markups for Equipment Price Deter

Manufacturer

Consumer Consumer

Manufacturer

Distributor (Wholesaler)

Distribution Channel 1 Distribution Channel 2 Dis

Dealer (Contractor)

DOE Proposed Distribution Chann

Builder 

(

Distributor (Wholesaler)

Markups for Equi

 EERE-2008-BT-STD-0006 COMMENT 06
Markups for Equi

Request for Comment

Item 7-1 DOE requests information from stakeholders distribution channels for the central air conditioners anwould be similar to those described above and, if not, be different. Also, what might be the differences in the channels for the new versus replacement market? And regional differences in the distribution channels?Item 7-2 DOE also requests information on the relative shipments expected for each distribution channel for nreplacement central air conditioners and heat pumps. Aregional differences in the relative fractions of shipmen

 EERE-2008-BT-STD-0006 COMMENT 06
Request for Comment

Item 7-3 DOE requests feedback on its plan to use baincremental distribution channel markups for the LCC aanalysis.Item 7-4 DOE seeks comment on other sources of relecould be used to characterize markups for the central aand heat pumps covered under this rulemaking.

Markups for Equi

 EERE-2008-BT-STD-0006 COMMENT 06
• Method:

– LCC equals product installed price plus the sum of a

maintenance and repair costs discounted to a partic

– Economic evaluation is from the consumer perspec– Analysis implemented using an Excel® spreadsheet

– Results are expressed as LCC difference (baseline – Simple payback period (years) is also calculated an

analysis

Life-Cycle Cost and Payback Period 

• Purpose:

– Assess the net life-cycle cost (LCC) impacts of differ

conservation standards for central air conditioners athe consumer

Life-Cycle Cost an

 EERE-2008-BT-STD-0006 COMMENT 06
Approach

• Monte Carlo analysis will allow DOE to consider e

and conduct sensitivity analyses

– Consider different end-use sectors by weighting inp– Correlate inputs where necessary (e.g., electricity p

• One LCC and PBP analysis result per product clas

Life-Cycle Cost an

 EERE-2008-BT-STD-0006 COMMENT 06
Life-Cycle Cost an

Baseline

Manufacturer

Cost

Std-Level

Manufacturer

Cost

Sales Tax

Installation

Cost

Total Installed

Cost

Electricity

Prices

 Energy Use

Equipment

Price

Annual Energy

Expense

Lifetime

Repair Cost

Discount Rate

Maintenance

Cost

Electricity

Price Trends

Annual

Operating

Expense

Payba

Perio

Manufacturer

Markup

From

Engineering

Analysis

(Cost is a

function of

Efficiency)

From

Markups for

Equipment

Price

Determination

From

Energy Use

Determination

(Use is a

function of

Efficiency)

Distributor

Markups

Contractor/

Builder

Markups

LCC and PBP Analysis Inpu

 EERE-2008-BT-STD-0006 COMMENT 06
Electricity Prices

• Electricity prices are used to convert energy use to 

• DOE intends to use marginal prices to determine e

– Marginal price is the charge for the last increment of c

Life-Cycle Cost an

 EERE-2008-BT-STD-0006 COMMENT 06
Residential Electricity Price

• No demand charges means simpler methods are s

• Two possible approaches, based on two data sourc

– Residential Energy Consumption Survey (RECS) utilit

where marginal prices are estimated by plotting monthagainst monthly consumption (kWh); the slope ($/kWh

• RECS 2001 data is currently available but RECS 2005 d

in time for the ANOPR

– Edison Electric Institute (EEI) data consists of monthly 

consumer usage (500, 750 and 1000 kWh) for ~180 uwinter; the marginal price can be estimated from the d(published annually, most recently for 2007)

• EEI 2007 data could alternatively be used to adjust 

Life-Cycle Cost an

 EERE-2008-BT-STD-0006 COMMENT 06
Commercial Electricity Price

• Commercial electricity prices will need to be develo

building applications are considered

• Commercial prices are more complex because of d

charges and so-called hours charges (where energdepend on demand)

• Electric utility tariffs can be used to accurately calcu

– A tariff is the set of rules used by the utility to calcula– Marginal cost savings are equal to the marginal ener

energy savings plus the marginal demand price timereduction

• This relationship has been summarized in a simple 

formula to estimate a consumer’s marginal price as marginal load factor

– The marginal load factor is the ratio of the demand s

energy savings

Life-Cycle Cost an

 EERE-2008-BT-STD-0006 COMMENT 06
Item 8-1 DOE seeks comments on which data source electric utility tariffs) should be used to estimate marginprices.

Request for Comment

Life-Cycle Cost an

 EERE-2008-BT-STD-0006 COMMENT 06
Electricity Price Forecasts

• DOE will use the Energy Information Administratio

Energy Outlook 

(AEO) for projections of future ma

prices (reference, high, and low scenarios)

Life-Cycle Cost an

Item 8-2 DOE seeks comments on its planned use of project future marginal electricity prices.

 EERE-2008-BT-STD-0006 COMMENT 06
Discount Rate

• Discount rates are used to convert streams of annual ope

present value in the LCC analysis

• Residential discount rates – DOE will use similar approac

product standards rulemakings

– Derived from estimates of the “finance cost” to purchase res– “Finance cost” based on: (1) cost of any debt incurred to pur

cards, home equity loans) and (2) opportunity cost of any eq(e.g., stocks, bonds, savings accounts)

– Federal Reserve Board’s Survey of Consumer Finances is a 

equity and debt data

• Commercial discount rates (if necessary) – DOE will use s

other commercial product standards rulemakings

– Calculated from the weighted-average cost of capital to the f

equity and debt financing

Life-Cycle Cost an

Item 8-3 DOE seeks comment on the planned approestimating discount rates for residential consumers acustomers of central air conditioners and heat pumps

 EERE-2008-BT-STD-0006 COMMENT 06
Maintenance, Repair and Installatio

• DOE believes that routine repair and maintenance 

with more efficient central air conditioners and heatechnologies that are not currently widely available

• DOE expects that installation costs will not change 

efficient central air conditioners and heat pumps

Life-Cycle Cost an

Item 8-4 DOE seeks feedback on whether it is correct changes in maintenance, repair, and installation costs negligible for more efficient equipment.Item 8-5 If it is not appropriate to assume that changes maintenance, repair, or installation costs would be negefficient equipment, DOE seeks comment on appropriamethodologies for assessing changes to each of these 

 EERE-2008-BT-STD-0006 COMMENT 06
Equipment Lifetime

• DOE proposes to use an analysis where equipmen

base case and standards case are the same

• In the previous rulemaking for these covered produ

average lifetime of 18.4 years

Life-Cycle Cost an

Item 8-6 DOE seeks comments on appropriate equifor the central air conditioners and heat pumps.

 EERE-2008-BT-STD-0006 COMMENT 06
Market & Technology

ScreeningAnalysis

Engineering Analysis

Energy Use Analysis

Shipments Analysis

Markups for Equipment Price Determination

Life-Cycle Cost and Payback Period Analysis

Steps in the Standards Rulemaking

Preliminary Manufacturer Impact Analysis

Energy 

Framework 

Document ANOPR NOPR Fina

Rule

 EERE-2008-BT-STD-0006 COMMENT 06
Shipments Analysis

• Purpose:

– Quantify changes in product’s shipments due to p

energy efficiency standards

• Method:

– The shipments model will rely on a range of data – The model will only consider shipments of covere

 EERE-2008-BT-STD-0006 COMMENT 06
Base-Case Shipments Forecast A

• Depicts the situation where new standards are not a

• Residential shipments forecast will account for: (1) p

construction and (2) replacements for failed units

• DOE will use approach to determine split-system an

annual shipments

• New construction shipments estimated with forecas

and historical rates of product ownership (saturation 

• Replacement shipments estimated with product reti

applied to existing units in housing stock

• Historical forecasts (‘backcasts’) will be calibrated to 

– Calibration performed by accounting for product sales 

that do not already own a covered product

– DOE will derive a historical rate of adoption for the “e

 EERE-2008-BT-STD-0006 COMMENT 06
Base-Case Shipments Forecast Appro

• Commercial shipments forecast will need to be deve

building applications are considered

• Commercial shipments forecast will account for: (1) 

construction and (2) replacements for failed units

• New construction commercial shipments estimated 

construction and historical rates of product ownersh

• Replacement commercial shipments estimated with 

function applied to existing units in building stock

• Historical commercial forecasts (‘backcasts’) will be 

historical shipments. Calibration performed by accosales to existing buildings that do not already own t

 EERE-2008-BT-STD-0006 COMMENT 06
Base-Case Shipments Forecast Appro

• DOE intends to estimate SDHV and Space-Const

forecasts from extrapolations of historical shipmen

– Simplified approach will require historical shipments 

 EERE-2008-BT-STD-0006 COMMENT 06
Request for Comment

Item 9-1 DOE seeks historical shipments data for eafollowing product classes: (1) split-system air conditiosystem heat pumps; (3) single-package air conditionepackage heat pumps; (5) SDHV systems; (6) throughconditioners; and (7) through-the-wall heat pumps. Wproduct class, DOE also requests shipments data disregionally by Census Region.

 EERE-2008-BT-STD-0006 COMMENT 06
Standards Impacts on Shipme

• DOE develops Standards-Case Forecasts from the 

develop the Base-Case Forecast

• Standards-Case Forecasts also use purchase price 

operating cost savings to estimate shipments impac

• It is difficult to obtain data showing sensitivity of ship

price and operating costs

– DOE may forecast Standards-Case shipments foreca

specific percentage drops in annual shipments for pa

• DOE will consider impacts from market-pull program

• For heat pumps, DOE will consider fuel and equipm

– Any forecasted drop in heat pump shipments will be a

sales of gas-fired and electric-resistance forced-air fu

– Reflects a “maximum” scenario that will indicate the m

and equipment switching

 EERE-2008-BT-STD-0006 COMMENT 06
Request for Comment

Item 9-2 As part of its preliminary manufacturer impact ainput from manufacturers on the potential impact of new standards on central air conditioner and heat pump shipmseeks input from other stakeholders on the potential impaproduct shipments.Item 9-3 DOE also requests input on any market-pull proexist to promote the purchase or manufacture of more efconditioner and heat pump equipment.

 EERE-2008-BT-STD-0006 COMMENT 06
• Method:

– Develops annual series of national energy and ec

– Utilizes the shipments model to estimate the tota

central air conditioners in service each year

– Utilizes the LCC to estimate cost and energy use 

year

– Aggregates the costs and energy use for all year

period

– Reports energy savings in Quads of primary ene

(One Quad = 1 quadrillion Btus = 293 terawatt ho

– Reports estimates for economic impact as chang

National Net Present Value (in constant year doll

– Accounts for the time-value of money though def

National Impact Analysis

• Purpose:

– Determine the projected national energy savings a

national net present value

 EERE-2008-BT-STD-0006 COMMENT 06
Base Case 

Annual Energy 

Consumption

2046

Base Case 

Annual Energy 

Consumption

2018

Base Case 

Annual Energy 

Consumption

2017

Base Case 

Annual Energy 

Consumption

2016

National Energy Savings Flow D

Shipments 

Analysis 

Base-Case Projection

A

Base 

Annua

Consu

Base C

Annual E

Consum

Standards 

Annual En

Consump

Base-Case 

Cumulative 

Energy Use

Standards-Ca

Cumulative 

Energy Us

Site to Source 

Energy 

Conversion

National Energy 

Savings

 EERE-2008-BT-STD-0006 COMMENT 06
National Consumer Net Present Value 

Shipments 

Analysis 

Energy 

Cost 

(2016 – 

20XX)

Base-Case 

Projection

Cumulative 

Operating Cost 

Savings

Cu

Total 

Cos

Discount 

Rate

Net Present 

Value

Mainten. 

Cost 

(2016 – 

20XX)

Equipment 

Cost 

(2016 – 

2046)

Energy 

Cost 

(2016 – 

20XX)

M

(

 EERE-2008-BT-STD-0006 COMMENT 06
Shipment-Weighted Efficiency 

• Key components of the national impact analysis are de

weighted efficiencies

– Per-unit annual energy consumption—needed to determi

– Retail equipment price and per-unit annual operating cost

NPV

• Historical trends in product efficiency help project future 

for the base-case

7.58.08.59.09.5

10.010.511.011.5

1980 1985 1990 1995 2000 2005

Year

Shiipment-Weighted SEER Unitary Air Conditioners

Heat Pumps

– – 

 EERE-2008-BT-STD-0006 COMMENT 06
Market Share Efficiency Data 

Standards Impacts on Product Effi

• Historical market share efficiency data helps estimate how standa

efficiencies

– Market share data reveals the distribution of product efficiencies for a – If product efficiency distributions are significantly different by region, D

effects if stakeholders provide data

• DOE has assumed “roll up” and “shift” scenarios to forecast stand

standards rulemakings

– “Roll-up”: Products in the base-case that do not 

meet the standard “roll up” to meet new standard; products above standard are not affected

– “Shift”: Retains the p

efficiency distribution 

and above the new sta

13 14 15 

0%

10%

20%

30%40%

50%

60%

70%80%

90%

100%

Percent of Models

SEER

13 14 15 16 17 18 Base Roll-up

0%

10%

20%30%

40%

50%60%

70%80%

90%

100%

Percent of Models

SEER

 EERE-2008-BT-STD-0006 COMMENT 06
Item 10-1 DOE seeks historical shipment-weighted by product class and by the four Census Regions. Dhistorical market share data showing the percentage shipments by efficiency level for as many product clapossible.Item 10-2 DOE seeks comments on the use of the ““shift” efficiency scenarios to characterize the impact standards will have on the product distributions.Item 10-3 DOE seeks comment on its plan to develospreadsheet models for estimating national impacts oenergy conservation standards for residential central conditioners and heat pumps.

Request for Comment

 EERE-2008-BT-STD-0006 COMMENT 06
23

NOPR Analyses

1

ANOPR Analyses

4

Rulemaking OverviewIntroduction

23 Test Procedure

Introduction

5 NOPR Analyses

4 ANOPR Analyses

6 Closing Remarks

Public Meeting Agenda

 EERE-2008-BT-STD-0006 COMMENT 06
Steps in the Standards Rulemakin

Manufacturer

Impact 

Analysis

Utility

Impact 

Analysis

Employment 

Impact 

Analysis

Life-Cycle 

Cost 

Subgroup 

Analysis

Revise ANOPR Analyses

Engineering Analysis

Life-Cycle Cost & Payback Period Analyses

National 

Impact 

Analysis

Energy 

Framework 

Document ANOPR NOPR Fina

Rule

 EERE-2008-BT-STD-0006 COMMENT 06
Life-Cycle Cost Subgroup Ana

• Purpose:

– Analyze the economic impacts of energy conserv

central air conditioners and heat pumps on consusubgroups who may be disproportionately impactthe general user population

• Method:

– Extend the LCC analysis to examine the economic 

defined subgroups

Life-Cycle 

Item 11-1 DOE seeks input on which of the consumeDOE should consider in this rulemaking. Examples osubgroups DOE could consider for this rulemaking inincome consumers, senior citizens, or persons living climate zones that might be subject to the same stand

 EERE-2008-BT-STD-0006 COMMENT 06
Manufa

Manufacturer Impact Analys

• Purpose: 

– Assess the impacts of standards on manufacturer– Identify and estimate impacts on manufacturer su

be more severely impacted than the industry as a 

– Examine the impact of cumulative regulatory burd

• Method: 

– Analyze industry cash flow and net present value 

Government Regulatory Impact Model (GRIM)

– Interview manufacturers to refine inputs to the GR

subgroup analyses, and address qualitative issue

 EERE-2008-BT-STD-0006 COMMENT 06
Manufa

Methodology

• In the NOPR phase, the MIA will consist of phas

Industry profile

Develop straw man GRIM*

Develop interview guide

Intervie

& indu

wide 

subgr

analys

Phase 2

* Government Regulatory Impact Model (GRIM)

Preliminary MIA Interviews

Phase 1

ANOPR 

 EERE-2008-BT-STD-0006 COMMENT 06
Manufa

Methodology: Phase 2

• Consists of the straw man GRIM and interview g

Straw man GRIM Straw man GRIM

» Starting point for discussion of 

impacts 

» Inputs include:

» Manufacturer prices» Shipment forecasts» Manufacturing cost estimates» Financial information

» Starting point for discussion of 

impacts

» Inputs include:

» Manufacturer prices» Shipment forecasts» Manufacturing cost estimates» Financial information

Interview Gu

Interview Gui

» Interview topics 

» Engineering a» Shipments mo» Cost structure 

parameters 

» Conversion co» Cumulative bu» Direct employ» Import / expor» Consolidation » Replacement » Impact of the 

» Interview topics 

» Engineering an» Shipments mo» Cost structure 

parameters

» Conversion co» Cumulative bu» Direct employm» Import / export » Consolidation / » Replacement p» Impact of the s

 EERE-2008-BT-STD-0006 COMMENT 06
Manufa

Methodology: Phase 3

• Consists of the manufacturer interviews, subgro

assessment of industry impacts

Manufacturer Interviews Manufacturer Interviews

» Confidential discussion of potential 

impacts resulting from standards, including: 

» Obsolescence of existing manufacturing assets » Tooling» Investment

» Confidential discussion of potential 

impacts resulting from standards, including:

» Obsolescence of existing manufacturing assets» Tooling» Investment

Assessme

Assessme

» Assess compet

smaller, signific

» Assess cumula

burden on manamended DOE regulatory actio

» Assess impacts 

employment lev

» Assess impacts 

subgroups 

» Assess competi

smaller, significa

» Assess cumulat

burden on manuamended DOE sregulatory action

» Assess impacts 

employment lev

» Assess impacts 

subgroups

 EERE-2008-BT-STD-0006 COMMENT 06
Item 12-1 DOE seeks comment on appropriate mansubgroups - if any - that DOE should consider in a masubgroup analysis.Item 12-2 What regulations or pending regulations sconsider in the analysis of cumulative regulatory burdmanufacturers of covered equipment for this rulemak

Request for Comment

Manufa

 EERE-2008-BT-STD-0006 COMMENT 06
Utility Impact Analysis

• Purpose:

– Assess the overall impacts on domestic energy su

result from the imposition of standards

• Method:

– The Department proposes to use NEMS-BT, a va

(National Energy Modeling System) developed anfor their Annual Energy Outlook report, as the basImpact Analysis

– Use the energy savings calculated from the NES 

analysis to reduce the sector electrical loads from Demand Modules in NEMS-BT

– Energy savings translated to a reduction in the ele

faced by the utility system over time

Item 13-1 DOE seeks input from stakeholders on its NEMS-BT to conduct the utility impact analysis on the covered under this rulemaking.

 EERE-2008-BT-STD-0006 COMMENT 06
Employment Impact Analys

• Purpose:

– Assess the overall impact on national employme

imposition of energy conservation standards

• Method:

– Include both direct and indirect employment imp

• Direct employment impacts are estimated in the m

analysis

• Indirect employment impacts result from shifting c

among goods and services (“substitution effect”) aequipment and energy costs (“income effect”) 

– DOE proposes to use the ImSET (Impact of Sec

Technologies) model for the evaluation of indireimpacts

Item 14-1 DOE requests feedback on this approach temployment impacts on the equipment covered unde

Empl

 EERE-2008-BT-STD-0006 COMMENT 06
Environmental Impact Analy

• Purpose:

– Estimate national environmental impacts from new energy efficienc

conditioners and heat pumps covered under this rule

• Method:

– DOE intends to use the environmental impacts predicted from the N

used for the Utility Impacts Analysis. The following emissions are a

• Carbon dioxide (CO2 )

– NEMS calculates quantities of U.S. emissions of CO2 from power plan

– DOE will consider the use of monetary values to represent the value o

• Sulfur dioxide (SO2 ) 

– Clean Air Act amendments of 1990 cap SO2 emissions

– Any measurable impact from NEMS in terms of the trading price of SO

• Nitrogen oxides (NOx )

– Clean Air Interstate Rule (CAIR) permanently caps NOx emissions in 

– NEMS calculates quantities of U.S. emissions of NOx from power plan

– For the 28 “capped” States and DC, NEMS will determine any measu

trading price of NOx in the utility sector

• Mercury (Hg)

– Court actions vacated the Clean Air Mercury Rule (CAMR), which wo– DOE is considering approaches to address the issue of Hg emissions 

Enviro

 EERE-2008-BT-STD-0006 COMMENT 06
Item 15-1 DOE invites comments on how to estimate suvalues associated with CO2 emissions reductions or on a

values which might be used in DOE’s analyses.Item 15-2 Because court actions have vacated the CAMstakeholder input on how it should address Hg emissions rulemaking. In addition, DOE seeks comment on how it emissions for the 22 States not covered by the CAIR.Item 15-3 DOE seeks input from stakeholders on its plaBT to conduct the environmental impact analysis on the by this rulemaking. Are there any other approaches to thimpact analysis that DOE should consider? Item 15-4 Are there any other environmental factors DOin this rulemaking?

Request for Comment

Enviro

 EERE-2008-BT-STD-0006 COMMENT 06
Regulatory Impact Analysi

Re

• Purpose:

– Explore the potential for non-regulatory alternatives 

conservation standards

• Method:

– Base the assessment on the actual impacts of any 

date, but consider information presented regarding existing initiative might have in the future

 EERE-2008-BT-STD-0006 COMMENT 06
23

NOPR Analyses

1

ANOPR Analyses

4

Rulemaking OverviewIntroduction

23 Test Procedure

Introduction

5 Final Rule4 ANOPR Analyses6 Closing Remarks5 NOPR Analyses

Public Meeting Agenda

 EERE-2008-BT-STD-0006 COMMENT 06
In all correspondence, please refer to this rulemaking b

– Framework Document for Residential Central Air Co

Pumps

– Docket Number EERE-2008-BT-STD-0006, and

– Regulatory Identification Number (RIN) 1904-AB47

Email: Res_Central_AC_HP@ee.doe.gov

Postal Mail: Ms. Brenda Edwards

U.S. Department of EnergyBuilding Technologies Program, Mailstop EE1000 Independence Avenue, SWWashington, DC 20585-0121

Courier: Ms. Brenda Edwards

U.S. Department of Energy, Building Technologies Sixth Floor, 950 L’Enfant Plaza, SWWashington, DC 20024 Telephone: (202) 586-2945

How to Submit Written Com

 EERE-2008-BT-STD-0006 COMMENT 06
Comment period closes at 4

July 7, 2008

 EERE-2008-BT-STD-0006 COMMENT 06