APPENDIX J. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE AND 

GOVERNMENT REGULATORY IMPACT MODEL 

TABLE OF CONTENTS 

J.1 MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE............................... J-1

J.1.1.1 KEY ISSUES....................................................................................................... J-2

J.2 BOTTLER IMPACT ANALYSIS INTERVIEW GUIDE........................................... J-21

1 KEY ISSUES..................................................................................................... J-22

J.3 MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE FOR SMALL 

BUSINESSES............................................................................................................................ J-28

J.4 GOVERNMENT REGULATORY IMPACT MODEL ................................................ J-30

1 INTRODUCTION AND PURPOSE ................................................................. J-30

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EERE-2006-STD-0125 COMMENT 46
J-ii 

EERE-2006-STD-0125 COMMENT 46
J.1 MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE 

Refrigerated Beverage Vending Machines Rulemaking 

Manufacturer Impact Analysis Interview Guide 

September 17, 2008 

J-1 

EERE-2006-STD-0125 COMMENT 46
J.1.1.1 KEY ISSUES 

The Department of Energy (DOE) is currently reviewing 8 efficiency levels for its refrigerated 

beverage vending machines (BVM) rulemaking analyses. In responding to this questionnaire, 

please refer to the values for each equipment class described below. 

Table J.1 BVMs Efficiency Levels 

Equipment 

Class

Efficiency 

Metric Baseline EfficiencyLevel 1

Efficiency

Level 2

Efficiency

Level 3

Efficiency

Level 4

Efficiency

Level 5

Efficiency

Level 6

Efficiency

Level 7

Efficiency 

Level 8

Small-Size 

Class A

DEC 

kWh/day 7.66 5.80 5.21 4.76 4.34 4.16 4.12 3.88 3.71 

MediumSize Class ADEC 

kWh/day 8.23 6.36 5.76 5.30 4.86 4.63 4.59 4.32 4.14 

Large-Size 

Class A

DEC 

kWh/day 8.69 6.72 6.11 5.60 5.16 4.91 4.86 4.53 4.34 

Small-Size 

Class B

DEC 

kWh/day 10.36 5.49 4.55 4.18 3.93 3.48 3.28 3.26 3.21 

MediumSize Class BDEC 

kWh/day 10.93 6.02 5.07 4.65 4.26 4.18 3.58 3.55 3.49 

Large-Size 

Class B

DEC 

kWh/day 11.35 6.43 5.49 5.01 4.60 4.51 3.88 3.84 3.78 

1.1 What are the key issues for your company regarding energy conservation standards for 

BVMs and this rulemaking? 

1.2 For the issues identified, how significant are they for each efficiency level? 

1.3 How can we most effectively incorporate these issues in the Manufacturer Impact Analysis 

(MIA)? 

J-2 

EERE-2006-STD-0125 COMMENT 46
2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS 

DOE is interested in understanding manufacturer impact at the plant or profit center level 

directly pertinent to BVM production. However, the context within which the plant operates and 

the details of plant production and costs are not readily available from the published literature. 

Therefore, DOE invites you to provide these details confidentially in your own words to the 

extent possible and practical. Understanding the organizational setting around the BVM industry 

profit center will help DOE understand the probable future of the BVM manufacturing activity 

with and without energy conservation standards. 

2.1 Do you have a parent company, and/or any subsidiaries relevant to the BVM industry? 

2.2 Do you manufacture any equipment other than BVMs? If so, what other equipment do you 

manufacture? 

2.3 What percentage of your total manufacturing corresponds to BVMs? 

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EERE-2006-STD-0125 COMMENT 46
2.4 Where are your production facilities located, and what type of equipment is manufactured 

at each location? Could you provide figures for your company’s manufacturing at each 

location by equipment type (BVMs or other), size, and efficiency (i.e., provide the 

equipment mix for each location). 

2.5 At a particular facility, would potential BVM redesigns be difficult to implement? If so, 

would your company modify the existing facility or develop a new facility? 

2.6 What are your employment levels at each of these facilities? 

2.7 What are your company’s total BVM production volumes (i.e., units per year) for the past 

5 years? 

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2.8 What are your equipment lines, niches, and relative strengths in the BVM market? 

2.9 The Small Business Association (SBA) denotes a small business in the BVM industry as 

having less than 500 employees. By this definition, is your company considered a small 

business? 

2.10 Are there any niche manufacturers, small businesses, and/or component manufacturers 

(i.e., compressors) for which the adoption of new standards would have an impact? If so, 

would manufacturers of this equipment have different incremental impacts from 

implemented energy conservation standards than from the rest of the industry? 

 

3 FINANCIAL PARAMETERS 

Navigant Consulting, Inc. (NCI) has developed a “strawman” model of the BVM industry 

financial performance called the Government Regulatory Impact Model (GRIM), using publicly 

available data on BVM manufacturers. This section attempts to understand how your company’s 

financial situation differs from our industry aggregate picture. 

3.1 Please compare your financial parameters to the GRIM parameters tabulated below. 

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EERE-2006-STD-0125 COMMENT 46
Table J.2 Financial Parameters for CRE Manufacturers 

GRIM Input Definition BVM GRIM 

Estimated 

Value 

Your Actual (if 

significantly 

different from 

our estimate) 

Income Tax Rate Corporate (average) 

effective income tax paid 

(percentage of earnings 

before taxes, EBT) 

31.3 % 

Discount Rate Weighted average cost of 

capital (inflation-adjusted 

weighted average of 

corporate cost of debt and 

return on equity) 

9.6 % 

Working Capital Current assets less current 

liabilities (percentage of 

revenues) 

14.0 % 

SG&A Selling, general, and 

administrative expenses 

(percentage of revenues) 

19.3 % 

R&D Research and development 

expenses (percentage of 

revenues) 

2.7 % 

Depreciation Amortization of fixed 

assets (percentage of 

revenues) 

3.8 % 

Capital 

Expenditures 

Outlay of cash to acquire 

or improve capital assets 

(percentage of revenues, 

not including acquisition 

or sale of business units) 

3.7 % 

3.2 How would you expect new energy conservation standards to impact your company’s 

financial parameters? 

4 PRODUCTION COST BREAKDOWN 

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EERE-2006-STD-0125 COMMENT 46
DOE estimated the full production costs of various BVM units of different efficiencies for all 

equipment classes. With the combined data, DOE calculated the industry average percentage of 

each cost in the full production cost. 

4.1 Please compare your full production cost percentages to the estimated GRIM full 

production cost percentages tabulated below. Are the different percentages of each cost 

representative of your company or the BVM industry? Please explain any differences. 

Table 4.3 Breakdown by Percentage of Full Production Costs for Baseline BVM 

Components of Full 

Production Costs

Estimated % of Full 

Production Cost 

Your Actual 

(if different from our 

estimate) 

Materials 86.16 % 

Labor 9.61 % 

Overhead 2..83 % 

Depreciation 1.39 % 

5 SHIPMENT PROJECTIONS AND MARKET SHARES

A new energy conservation standard can change overall shipments by changing equipment 

attributes, marketing approaches, equipment availability, and price. The GRIM bases revenue 

projections on shipment projections obtained from the National Energy Savings Spreadsheet 

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EERE-2006-STD-0125 COMMENT 46
(NES) prepared by the Pacific Northwest National Laboratory (PNNL). The NES includes 

shipment forecasts for the baseline (absent new standards) and new standards at each efficiency 

level being analyzed. 

5.1 Please compare DOE’s projections of industry-wide shipments for BVMs with your 

company’s projections of industry-wide shipments? 

Table 5.4 2012 Industry-Wide Shipment Projections for BVMs (Number of Units) 

Equipment Class Baseline 

Shipments 

Comments or Your Company’s Projection 

Small-Size Class A 7,700 

Medium-Size Class A 7,700 

Large-Size Class A 7,700 

Small-Size Class B 77,600 

Medium-Size Class B 77,600 

Large-Size Class B 77,600 

5.2 DOE assumed that total industry shipments for 2012 would not be affected by increasing 

standard levels (i.e., total industry shipments remain constant at the various analyzed 

standard levels in comparison to the base case). Is this consistent with your expectations 

for the industry? If possible, please provide explanation if your expectations are different. 

5.3 What is your company’s approximate market share of the BVM industry? 

5.4 Would you expect your market share to change once higher energy conservation standards 

become effective? 

J-8 

EERE-2006-STD-0125 COMMENT 46
6 EQUIPMENT MIX 

Current differences in equipment mix (distribution of equipment sales by efficiency level) among 

manufacturers can lead to different reactions to and impacts from new energy conservation 

standards. 

6.1 If your company offers multiple equipment lines with different efficiency levels, how does 

your mix of BVM sales by equipment efficiency compare to our projected 2012 Industry 

Average distribution for the baseline case as shown in Table 6.1 - Table 6.5? If your 

company does not offer multiple equipment lines with different efficiency levels, are the 

projected distributions representative of the BVM industry? A new energy conservation 

standard affects the equipment mix by eliminating the sale of equipment below the 

minimum efficiency level. The NES forecasts the distribution of BVM sales by efficiency 

level after standards. Are the NES forecasts described in the tables below for the year 

2012 consistent with your own expectations for the industry? Do you expect any changes 

in your estimated profitability following the new energy conservation standard? If so, 

please explain why. 

Table 6.1 Percentage of Total Shipments by Efficiency Level for Small-Size Class A BVMs 

in 2012 

Analysis 

Efficiency 

Level 

(DEC - 

kWh/day)

Baseline 

(7.66) 

Efficiency

Level 1 

(5.80) 

Efficiency

Level 2 

(5.21) 

Efficiency 

Level 3 

(4.76) 

Efficiency

Level 4 

(4.34) 

Efficiency 

Level 5 

(4.16) 

Efficiency

Level 6 

(4.12) 

Efficiency

Level 7 

(3.88) 

Efficiency

Level 8 

(3.71) 

Baseline 

(7.66) 0.0% 26.6% 14.1% 13.9% 13.2% 12.1% 11.6% 7.1% 1.3% 

Level 1 

(5.80) 26.6% 14.1% 13.9% 13.2% 12.1% 11.6% 7.1% 1.3% 

Level 2 

(5.21) 40.8% 13.9% 13.2% 12.1% 11.6% 7.1% 1.3% 

Level 3 

(4.76) 54.6% 13.2% 12.1% 11.6% 7.1% 1.3% 

Level 4 

(4.34) 67.8% 12.1% 11.6% 7.1% 1.3% 

Level 5 

(4.16) 79.9% 11.6% 7.1% 1.3% 

Level 6 

(4.12) 91.6% 7.1% 1.3% 

Level 7 

(3.88) 98.7% 1.3% 

Level 8 

(3.71) 

100% 

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EERE-2006-STD-0125 COMMENT 46
Table 6.2 Percentage of Total Shipments by Efficiency Level for Medium-Size Class A 

BVMs in 2012 

Analysis 

Efficiency 

Level 

(DEC - 

kWh/day)

Baseline 

(8.23) 

Efficiency

Level 1 

(6.36) 

Efficiency

Level 2 

(5.76) 

Efficiency 

Level 3 

(5.30) 

Efficiency

Level 4 

(4.86) 

Efficiency 

Level 5 

(4.63) 

Efficiency

Level 6 

(4.59) 

Efficiency

Level 7 

(4.32) 

Efficiency

Level 8 

(4.14) 

Baseline 

(8.23) 0.0% 26.7% 14.2% 13.8% 13.2% 12.1% 11.7% 7.3% 1.1% 

Level 1 

(6.36) 26.7% 14.2% 13.8% 13.2% 12.1% 11.7% 7.3% 1.1% 

Level 2 

(5.76) 40.8% 13.8% 13.2% 12.1% 11.7% 7.3% 1.1% 

Level 3 

(5.30) 54.6% 13.2% 12.1% 11.7% 7.3% 1.1% 

Level 4 

(4.86) 67.8% 12.1% 11.7% 7.3% 1.1% 

Level 5 

(4.63) 79.9% 11.7% 7.3% 1.1% 

Level 6 

(4.59) 91.6% 7.3% 1.1% 

Level 7 

(4.32) 98.9% 1.1% 

Level 8 

(4.14) 

100% 

Table 6.3 Percentage of Total Shipments by Efficiency Level for Large-Size Class A BVMs 

in 2012 

Analysis 

Efficiency 

Level 

(DEC - 

kWh/day)

Baseline 

(8.69) 

Efficiency

Level 1 

(6.72) 

Efficiency

Level 2 

(6.11) 

Efficiency 

Level 3 

(5.60) 

Efficienc

y Level 4 

(5.16) 

Efficiency 

Level 5 

(4.91) 

Efficiency

Level 6 

(4.86) 

Efficiency

Level 7 

(4.53) 

Efficiency

Level 8 

(4.34) 

Baseline 

(8.69) 0.0% 26.6% 14.1% 13.8% 13.3% 12.3% 11.9% 7.0% 1.1% 

Level 1 

(8.72) 26.6% 14.1% 13.8% 13.3% 12.3% 11.9% 7.0% 1.1% 

Level 2 

(6.11) 40.6% 13.8% 13.3% 12.3% 11.9% 7.0% 1.1% 

Level 3 

(5.60) 54.4% 13.3% 12.3% 11.9% 7.0% 1.1% 

Level 4 

(5.16) 67.7% 12.3% 11.9% 7.0% 1.1% 

Level 5 

(4.91) 80.0% 11.9% 7.0% 1.1% 

Level 6 

(4.86) 91.9% 7.0% 1.1% 

Level 7 

(4.53) 98.9% 1.1% 

Level 8 

(4.34) 

100% 

J-10 

EERE-2006-STD-0125 COMMENT 46
Table 6.4 Percentage of Total Shipments by Efficiency Level for Small-Size Class B BVMs 

in 2012 

Analysis 

Efficiency 

Level 

(DEC - 

kWh/day)

Baseline 

(10.36) 

Efficiency

Level 1 

(5.49) 

Efficiency

Level 2 

(4.55) 

Efficiency

Level 3 

(4.18) 

Efficienc

y Level 4 

(3.93) 

Efficiency 

Level 5 

(3.48) 

Efficiency

Level 6 

(3.28) 

Efficiency

Level 7 

(3.26) 

Efficiency

Level 8 

(3.21) 

Baseline 

(10.36) 0.0% 26.4% 16.7% 15.6% 14.3% 10.0% 8.2% 7.8% 0.9% 

Level 1 

(5.49) 26.4% 16.7% 15.6% 14.3% 10.0% 8.2% 7.8% 0.9% 

Level 2 

(4.55) 43.1% 15.6% 14.3% 10.0% 8.2% 7.8% 0.9% 

Level 3 

(4.18) 58.8% 14.3% 10.0% 8.2% 7.8% 0.9% 

Level 4 

(3.93) 73.0% 10.0% 8.2% 7.8% 0.9% 

Level 5 

(3.48) 83.1% 8.2% 7.8% 0.9% 

Level 6 

(3.28) 91.3% 7.8% 0.9% 

Level 7 

(3.26) 99.1% 0.9% 

Level 8 

(3.21) 

100% 

Table 6.5 Percentage of Total Shipments by Efficiency Level for Medium-Size Class B 

BVMs in 2012 

Analysis 

Efficiency 

Level 

(DEC - 

kWh/day)

Baseline 

(10.93) 

Efficiency

Level 1 

(6.02) 

Efficiency

Level 2 

(5.07) 

Efficiency 

Level 3 

(4.65) 

Efficienc

y Level 4 

(4.26) 

Efficiency 

Level 5 

(4.18) 

Efficiency

Level 6 

(3.58) 

Efficiency

Level 7 

(3.55) 

Efficiency

Level 8 

(3.49) 

Baseline 

(10.93) 0.0% 25.8% 16.2% 15.5% 14.4% 10.5% 8.6% 8.2% 0.8% 

Level 1 

(6.02) 25.8% 16.2% 15.5% 14.4% 10.5% 8.6% 8.2% 0.8% 

Level 2 

(5.07) 42.1% 15.5% 14.4% 10.5% 8.6% 8.2% 0.8% 

Level 3 

(4.65) 57.6% 14.4% 10.5% 8.6% 8.2% 0.8% 

Level 4 

(4.26) 71.9% 10.5% 8.6% 8.2% 0.8% 

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EERE-2006-STD-0125 COMMENT 46
Level 5 

(4.18) 82.4% 8.6% 8.2% 0.8% 

Level 6 

(3.58) 91.0% 8.2% 0.8% 

Level 7 

(3.55) 99.2% 0.8% 

Level 8 

(3.49) 

100% 

Table 6.6 Percentage of Total Shipments by Efficiency Level for Large-Size Class B BVMs 

in 2012 

Analysis 

Efficiency 

Level 

(DEC - 

kWh/day)

Baseline 

(11.35) 

Efficiency

Level 1 

(6.43) 

Efficiency

Level 2 

(5.49) 

Efficiency 

Level 3 

(5.01) 

Efficienc

y Level 4 

(4.60) 

Efficiency 

Level 5 

(4.51) 

Efficiency

Level 6 

(3.88) 

Efficiency

Level 7 

(3.84) 

Efficiency

Level 8 

(3.78) 

Baseline 

(11.35) 0.0% 25.7% 16.0% 15.5% 14.4% 10.6% 8.8% 8.4% 0.7% 

Level 1 

(6.43) 25.7% 16.0% 15.5% 14.4% 10.6% 8.8% 8.4% 0.7% 

Level 2 

(5.49) 41.7% 15.5% 14.4% 10.6% 8.8% 8.4% 0.7% 

Level 3 

(5.01) 57.2% 14.4% 10.6% 8.8% 8.4% 0.7% 

Level 4 

(4.60) 71.6% 10.6% 8.8% 8.4% 0.7% 

Level 5 

(4.51) 82.2% 8.8% 8.4% 0.7% 

Level 6 

(3.88) 90.9% 8.4% 0.7% 

Level 7 

(3.84) 99.3% 0.7% 

Level 8 

(3.78) 

100% 

6.2 Do you expect the equipment mix to change over time absent any new energy conservation 

standards? If so, please explain how it will change. 

7 CONVERSION COSTS 

An increase in energy conservation standards may cause your company to incur one-time capital 

and equipment conversion costs. DOE calls these conversion costs because they are the costs of 

changing your business to comply with new energy conservation standards. 

7.1 What level of conversion costs do you anticipate incurring under the different efficiency 

levels? What portion of your capital conversion expenditures do you expect to go towards 

replacing existing assets, which would become obsolete under a new energy conservation 

J-12 

EERE-2006-STD-0125 COMMENT 46
standard? Refer to the tables below to provide your company’s estimates. Please provide 

additional qualitative information to help DOE understand the nature of your investments. 

J-13 

EERE-2006-STD-0125 COMMENT 46
J-14 

Table 7.5 Class A BVM Conversion Costs 

Eff Small-Size Class A 

Capita

Conv. Exp.a

iciency 

Level 

(EL)

l Product Stranded 

Conv. 

Exp.b

Assets 

Baseline 

EL 1 

EL 2 

EL 3 

EL 4 

EL 5 

EL 6 

EL 7 

EL 8 

Medium-Size Class A 

Baseline 

EL 1 

EL 2 

EL 3 

EL 4 

EL 5 

EL 6 

EL 7 

EL 8 

Large-Size Class A 

Baseline 

EL 1 

EL 2 

EL 3 

EL 4 

EL 5 

EL 6 

EL 7 

EL 8 

 

a

 Capital Conversion Expenditures - One-time investments in plant, property, and equipment (PPE) necessitated by 

an energy conservation standard. These may be completely incremental to existing PPE or they could involve 

replacement of existing PPE. 

b

 Product Conversion Expenditures - One-time expenses in research, product development, testing, and marketing 

necessi ted by an appliance energy conservation standard. ta

EERE-2006-STD-0125 COMMENT 46
J-15 

B BVM Conversion Costs 

Small-Size Class B 

Table 7.6 Class 

Efficiency 

Level 

(EL)

Capital 

Conv. Exp. 

Product 

Conv. Exp. 

Stranded 

Assets 

Baseline 

EL 1 

EL 2 

EL 3 

EL 4 

EL 5 

EL 6 

EL 7 

EL 8 

Medium-Size Class B 

Baseline 

EL 1 

EL 2 

EL 3 

EL 4 

EL 5 

EL 6 

EL 7 

EL 8 

Large-Size Class B 

Baseline 

EL 1 

EL 2 

EL 3 

EL 4 

EL 5 

EL 6 

EL 7 

EL 8 

7.2 What is your depreciation period for the capital expenditures (building, equipment, and 

tooling)? 

8 MARKUPS AND PROFITABILITY 

EERE-2006-STD-0125 COMMENT 46
J-16 

ne of the primary objectives of the MIA is to assess the impact of efficiency levels on industry 

rofitability. In this section, DOE would like your assistance in understanding how the 

rkups and profitability. 

hy not? 

.2 Based on publicly available information, DOE calculated a 1.36 manufacturer markupc

 for 

BVM manufacturing. DOE is aware that the manufacturer markup calculated using public 

information is based on companies that may manufacture other equipment in addition to 

BVM. Does this figure seem accurate, or is it too high or low? 

8.3 Do you expect changes in your estimated profitability following the new energy 

 

O

p

efficiency levels would impact your company’s ma

8.1 Do profit levels vary by equipment class? Do profit levels vary by efficiency level? 

Please explain why or w

8

conservation standard? If so, please explain why. 

 

e manufacturer markup is a multiplier that converts manufacturer production cost (MPC) to manufacture selling 

rice. The manufacture markup is a fixed percentage applied to MPCs to cover standard SG&A expenses; standard 

where: Gross Margin = (Revenues - Cost of Goods Sold) / (Revenues) 

 

c

 Th

p

research and development expenses; interest; and profit. It is calculated using the following formula: 

 Manufacturer Markup = 1 / (1 - Gross Margin) 

 

EERE-2006-STD-0125 COMMENT 46
9 CUMULATIVE REGULATORY BURDEN 

J-17 

umulative regulatory burden refers to the burden that industry faces from overlapping effects of 

ew or revised DOE standards, voluntary standards, and/or other regulatory actions affecting the 

me equipment or industry. 

.1 Are there other recent or impending regulations, excluding refrigerant phase-out, that 

BVM manufacturers face (from DOE or otherwise)? What level of expense are you 

r 

ability to compete? 

.2 Under what circumstances would you be able to coordinate any expenditures related to 

0 EXPORTS/FOREIGN COMPETITION/ OUTSOURCING 

Disparity between domestic and foreign energy conservation standards could impact exports 

or imports. Labor content and material changes, resulting from energy conservation 

0.1 What percentage of your company’s BVM sales is domestic? Absent standards, are 

production facilities being relocated to foreign countries? Would new energy conservation 

standards impact your domestic vs. foreign manufacturing decision? 

10 t? What 

C

n

sa

9

expecting to incur as a result of these regulations? How would new standards affect you

9

these other regulations thereby lessening the cumulative burden? 

1

standards, may impact sourcing decisions. 

1

.2 If applicable, to what foreign countries or regions do you export your equipmen

percentage of sales can be attributed to each? 

EERE-2006-STD-0125 COMMENT 46
10.3 Would a new standard be expected to affect your export sales? What would the resulting 

impact be, if any, on your manufacturing operations and profitability? 

J-18 

ation standards in other countries? 

 for the future operation of your company and the BVM industry with 

regards to exports? 

The impact of new energy conservation standards on employment is an important 

consideration in the rulemaking process. This section of the interview guide seeks to explore 

current trends in BVM production employment and solicit manufacturer views on how 

domestic employment patterns might be affected by new energy conservation standards. 

10.4 Are your foreign exports affected by energy conserv

10.5 What percentage of the U.S. market for BVMs has been captured by foreign competition? 

Would standards have an impact on foreign competition? 

10.6 What is your outlook

11 DIRECT EMPLOYMENT IMPACT 

EERE-2006-STD-0125 COMMENT 46
J-19 

W w 

s? If so, please explain how they would change. 

nservation standards require 

extensive retraining or replacement of employees? 

11.3 Would mandating higher efficiency levels result in larger sized equipment to compensate 

for larger, more efficient components? Have you found direct labor costs to be 

proportional to material costs? 

12 CONSOLIDATION 

New energy conservation standards can alter the competitive dynamics of the market. This can 

include prompting companies to enter or exit the market, or to merge. DOE and the Department 

of Justice are both interested in any potential reduction in competition that would result from a 

new energy conservation standard. 

12.1 Please comment on industry consolidation and related trends over the last 5 years. 

11.1 ould your domestic employment levels be expected to change significantly under ne

energy conservation standard

11.2 Would the workforce skills necessary under new energy co

EERE-2006-STD-0125 COMMENT 46
J-20 

12.2 In the absence of new standards, do you expect any further industry consolidation? 

12.2 How would new standards affect your ability to compete? 

Please describe your expectations. 

EERE-2006-STD-0125 COMMENT 46
J-21 

J.2 BOTTLER IMPACT ANALYSIS INTERVIEW GUIDE 

Refrigerated Beverage Vending Machines Rulemaking 

Manufacturer Impact Analysis (Bottler Interview Guide) 

September 17, 2008 

EERE-2006-STD-0125 COMMENT 46
J-22 

E) is currently undertaking a rulemaking for refrigerated 

everage vending machines (BVM). As part of the rulemaking process, DOE requests 

formation from all stakeholders regarding possible impacts from energy conservation 

andards. Although the questions are intended for bottlers and not manufacturers, all the 

formation provided will be valuable to help complete the Manufacturer Impact Analysis. All 

l only be reported in aggregate 

cross the industry.

 KEY ISSUES 

.1 What are the key issues for your company regarding energy conservation standards for 

BVMs and this rulemaking? 

.2 How can we most effectively incorporate these issues in the Manufacturer Impact Analysis 

(MIA) and this rulemaking in general? 

BOTTLER COMPANY CHARACTERISTICS 

.1 Could you briefly explain how the bottler industry is organized and operates? Are there 

several distribution chains? Who owns the machines at each stage in the distribution 

chain? 

.2 Do you consider the bottling industry fragmented or concentrated? 

.3 How many distributors/bottlers does your company associate with? 

.4 Do bottlers fill and/or service their own BVMs or do they rely on third-party vending 

operators to perform this service? 

INTRODUCTION 

The Department of Energy (DO

b

in

st

in

of the information gathered is completely confidential and wil

a

1

1

1

2

2

2

2

2

EERE-2006-STD-0125 COMMENT 46
J-23 

.5 Does your company purchase or lease BVMs? If owned, does your company lease the 

BVM

2.6 est ven ing operators you work with? 

.7 What are some example host sites you service? 

3.1 hat are the key factors influencing your BVM purchasing decisions? 

provide 

ype of BVM. 

.4 Could you provide projected purchases of BVMs for 2012 for your company? 

2

s to third-parties? 

Who are the larg d

2

3 BVM PURCHASING 

W

3.2 Approximately how many vending machines do you own and or operate? Please 

figures by t

3.3 How many new BVMs do you purchase each year? 

3

EERE-2006-STD-0125 COMMENT 46
J-24 

Table 3.7 Purchase Projections for BVMs in 2012 (Number of Units) 

Equipment Class Purchase Comments or Your Company’s Projection 

(Number of 

Units) 

Small-Size Class A 

Medium-Size Class A 

Large-Size Class A 

Small-Size Class B 

Medium-Size Class B 

Large-Size Class B 

3.5 Over the past 5 years has the number of new BVM purchases per year changed? If so, how

and why has it changed? 

ses per year changed? If 

so, how and why has it changed? 

s do 

the 

placement of BVMs in new locations versus the removal of BVMs from existing 

locations? 

.8 Which manufacturers do you purchase BVMs from? What percentage of your total 

.9 Are there significant switching costs associated with moving from one manufacturer to 

another? Are there manufacturer-specific investments you must make? 

.10 Does purchasing quantities of BVMs affect the price per unit? 

3.6 Over the past 5 years has the equipment mix of new BVM purcha

3.7 How many new BVMs do you place in new locations each year? How many BVM

you remove from existing locations each year? Have you noticed any trends related to 

3

purchases does each manufacturer represent? 

3

3

EERE-2006-STD-0125 COMMENT 46
J-25 

.11 Does your company have any purchasing preference for ENERGY STAR or other energy 

.12 What is the price premium for Energy Star Tier II compared to Energy Star Tier I? 

Compared to other non-Energy Star models? 

.13 Does the energy efficiency of BVMs significantly affect the price of the equipment from a 

purchaser point of view? 

3.14 ing/parts/warranties from manufacturers? 

.15 What are the types of refrigerants that are used in the BVMs you purchase (e.g., R-134a)? 

What alternate refrigerants are used (e.g., R-744, CO2 refrigerant) and what is the 

prevalence of such machines? What is your long term plan for refrigerants in BVMs? 

REFURBISHMENT AND REPLACEMENT OF BVM

.1 How often is a typical BVM refurbished (assuming no vandalism or other exceptionally 

harsh conditions) during its life? 

.2 Is the refurbishment cycle affected at all by the relocation of a BVM? 

3

efficient BVMs? If so, why? 

3

3

D o you require servic

3

4

4

4

EERE-2006-STD-0125 COMMENT 46
J-26 

 replacement and refurbishment made by your company? 

4.4 In your best estimation, what percentage of your units are refurbished each year? What 

percentage of your units are replaced each year? 

4.5 What percentage of your BVMs are: 

Less than five years old? 

Five to 10 years old? 

Ten to 15 years old? 

More than 15 years old? 

4.6 Upon replacement, do your machines have any salvage value? 

5 CONSOLIDATION 

New energy conservation standards can alter the competitive dynamics of the market. This can 

include prompting companies to enter or exit the market, or to merge. DOE and the Department 

4.3 How is the decision between

EERE-2006-STD-0125 COMMENT 46
J-27 

of Justice are both interested in any potential reduction in competition that would result from a 

mer of the BVM industry, please comment on industry consolidation and related 

trends over the last 5 years. 

5.2 In the absence of new standards, do you expect any further industry consolidation? Please 

new energy conservation standard. 

5.1 As a custo

describe your expectations. 

EERE-2006-STD-0125 COMMENT 46
J-28 

J.3

ds 

pact Analysis Interview Guide for Small Businesses 

mail database for updates relating to this 

3. What are the key issues for your company regarding energy conservation standards for 

frigerated beverage vending machines and this rulemaking? 

4. DOE would like to understand the small-business beverage vending machine industry in 

general and your company in particular. Could you please provide information on the following: 

 Is your company a domestic or international company? 

 What types of refrigerated beverage vending machines do you manufacture? Do you 

manufacture Class A or Class B refrigerated beverage vending machines, or both?e,f

What sizes of refrigerated beverage vending machines do you manufacture, 

measured in vendible capacity and/or refrigerated volume? Could you provide 

energy efficiency figures for those identified models? Does your equipment meet 

ENERGY STAR Tier I, Tier II, or any level above those energy efficiency levels? g,h

 

MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDE FOR SMALL 

BUSINESSES 

Refrigerated Beverage Vending Machines Energy Conservation Standar

Rulemaking 

Manufacturer Im

1. Are you aware of the US Department of Energy’s (DOE’s) ongoing rulemaking to 

establish national minimum energy conservation standards for refrigerated beverage vending 

d machines? Would you like to be added to DOE’s e

rulemaking? 

2. We are assessing the impacts of a potential energy conservation standard on small 

businesses. Is your company a small business (defined as less than 500 employees by the US 

Small Business Administration (SBA), including all subsidiaries and parent companies, and 

employees in all countries where you operate)? 

re

d

 For information on DOE’s efficiency standards rulemaking for beverage vending machines, visit the following 

website: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.html e

 “Class A” refers to a beverage vending machine that cools the entire internal volume. Class A machines are also 

referred to as “fully-cooled” machines. 

f

 “Class B” refers to any beverage vending machine not considered to be Class A. Class B machines are often 

“zone-cooled” machines, in that they typically cool only a fraction of the volume of the machine. g

 Tier I: Energy Consumption ≤ 0.55 [8.66 + (0.009 x Vendible Capacity)] 

EERE-2006-STD-0125 COMMENT 46
J-29 

 Do manufacture equipment other than refrigerated beverage vending machines? Do 

d beverage vending machines 

that do not easily fall in the categories from the previous question? 

ou serve in the refrigerated beverage vending 

5. 

6. DOE would like to understand your company’s employment impacts as a result of 

standar

tic 

re there any reasons that a small business such as yours might be at a disadvantage 

relative to a larger business unde

 where DOE will request 

etailed information about your business and possible impacts due to energy conservation 

andards? 

 

 

you manufacture any niche or specialty type refrigerate

 What are the types of customers y

machine market? 

Would a new energy conservation standard for refrigerated beverage vending machines 

(whereby all your competitors are also required to meet the same minimum level of energy 

consumption for their machines) cause any burdens on your business? If so, please explain. 

Please consider costs such as new designs, capital investment, prototype testing, and marketing 

that might be required. 

ds. Would your company consider relocating manufacturing to outside the United States

as a result of new energy conservation standards? If not, would standards cause your domes

employment level to change (increase or decrease)? 

 

 7. A

r mandatory energy conservation standards? Please consider 

such factors as technical expertise, access to capital, bulk purchasing power for materials, etc. If 

so, would you be willing to participate in a full manufacturer interview

d

st

i II: Energy Consumption ≤ 0.45 [8.66 + (0.009 x Vendible Capacity)] h T er 

EERE-2006-STD-0125 COMMENT 46
J.4 GOVERNMENT REGULATORY IMPACT MODEL 

J-30 

e 

impacts of energy conservation standards and other regulations on manufacturers. The basic 

wing 

s taking effect over a period of time, and of multiple regulations on the 

ent value is defined, for the purpose of this analysis, as the discounted 

hout 

case) and under different trial standard levels 

ION 

eters 

g profit after taxes. The cash flow calculation converts net 

s. 

ents for the industry were obtained from the National 

1 INTRODUCTION AND PURPOSE 

The purpose of the Government Regulatory Impact Model (GRIM) is to help quantify th

mode of analysis is to estimate the change in value of the industry or manufacturers(s) follo

a regulation or a series of regulations. The model structure also allows an analysis of multiple 

products with regulation

same products. 

Industry net pres

sum of industry free cash flows plus a discounted terminal value. The model calculates the 

actual cash flows by year and then determines the present value of those cash flows both wit

an energy conservation standard (i.e., the base 

(TSLs). 

Output from the model consists of summary financial metrics, graphs of major variables, 

and, when appropriate, access to the complete cash flow calculation. 

2 MODEL DESCRIPT

The basic structure of the GRIM is a standard annual cash flow analysis that uses 

manufacturer selling prices, manufacturing costs, a shipments forecast, and financial param

as inputs and accepts a set of regulatory conditions as changes in costs and investments. The 

cash flow analysis is separated into two major blocks: income and cash flow. The income 

calculation determines net operatin

operating profit after taxes into an annual cash flow by including investment and non-cash item

Below are definitions of listed items on the printout of the output sheet (see Section 3). 

(1) Unit Sales: Total annual shipm

Energy Savings Spreadsheet; 

(2) Revenues: Annual revenues - computed by multiplying unit costs at each efficiency level 

by the appropriate manufacturer markup; 

(3) Labor: The portion of cost of goods sold (COGS) that includes direct labor, commissions, 

dismissal pay, bonuses, vacation, sick leave, social security contributions, fringe, and

assembly labor up-time; 

(4) Material: The portion of COGS that includes materials; 

EERE-2006-STD-0125 COMMENT 46
J-31 

in overhead, the depreciation is shown as a separate line item; 

puted as a percentage 

of COGS. While included in overhead, the depreciation is shown as a separate line item; 

stranded assets (i.e., plant, property, and equipment rendered obsolete due to the standard) 

(8) Standard SG&A: Selling, general, and administrative costs are computed as a percentage 

(9) R&D: GRIM separately accounts for ordinary research and development (R&D) as a 

(10) Equipment Conversion Costs: Equipment conversion costs are one-time investments in 

(11) Earnings Before Interest and Taxes (EBIT): Includes profits before deductions for 

interest paid and taxes; 

(12) EBIT as a Percentage of Sales (EBIT/Revenues): GRIM calculates EBIT as a percentage 

of sales to compare with the industry’s average reported in financial statements; 

(13) Taxes: Taxes on EBIT (11) are calculated by multiplying the tax rate contained in Major 

Assumptions by EBIT (11). 

(14) Net Operating Profits After Taxes (NOPAT): Computed by subtracting Cost of Goods 

Sold ((3) to (6)), SG&A (8), R&D (9), Equipment Conversion Costs (10), and Taxes (13)

from Revenues (2). 

(15) NOPAT repeated: NOPAT is repeated in the Statement of Cash Flows; 

(16) Depreciation repeated: Depreciation and Stranded Assets are added back in the Statement 

of Cash Flows because they are non-cash expenses; 

(17) Change in Working Capital: Change in cash tied up in accounts receivable, inventory, and 

other cash investments necessary to support operations is calculated by multiplying 

working capital (as a percentage of revenues) by the change in annual revenues. 

(18) Cash Flow From Operations: Calculated by taking NOPAT (15), adding back non-cash 

items such as a Depreciation (16), and subtracting out Change in Working Capital (17); 

(5) Overhead: The portion of COGS that includes indirect labor, indirect material, energy use, 

maintenance, depreciation, property taxes, and insurance related to assets. While included 

(6) Depreciation: The portion of overhead that includes an allowance for the total amount of 

fixed assets used to produce that one unit. Annual depreciation com

(7) Stranded Assets: In the year the standard becomes effective, a one time write-off of 

is accounted for; 

of Revenues (2); 

percentage of Revenues (2); 

research, development, testing, and marketing focused on making products designs comply 

with the new energy conservation standard. GRIM allocates these costs over the period 

between the standard’s announcement and effective dates; 

EERE-2006-STD-0125 COMMENT 46
J-32 

(19) Ordinary Capital Expenditures: Ordinary investments in property, plant, and equipment to 

maintain and replace existing production assets, computed as a percentage of Revenues (2); 

(20) Capital Conversion Costs: Capital conversion costs are one-time investments in property, 

plant, and equipment to adapt or change existing production facilities so that new product 

designs can be fabricated and assembled under the new regulation; 

(21) Capital Investment: Total investments in property, plant, and equipment are computed by 

adding Ordinary Capital Expenditures (19) and Conversion Capital Expenditures (20); 

(22) Free Cash Flow: Annual cash flow from operations and investments; computed by 

subtracting Capital Investment (21) from Cash Flow from Operations (18); 

(23) Terminal Value: Estimate of the continuing value of the industry after 2042. Computed 

by growing the Free Cash Flow in year 2042 at a constant rate in perpetuity; 

(24) Present Value Factor: Factor used to calculate an estimate of the present value of an 

amount to be received in the future; 

(25) Discounted Cash Flow: Free Cash Flows (22) multiplied by the Present Value Factor 

(24). For 2042 the discounted cash flow includes the discounted Terminal Value (23); and 

(26) Industry Value thru 2042: The sum of Discounted Cash Flows (25). 

EERE-2006-STD-0125 COMMENT 46
J-1 

3 DETAILED CASH FLOW EXAMPLE 

EERE-2006-STD-0125 COMMENT 46