CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES
 

TABLE OF CONTENTS 

8.1 INTRODUCTION ........................................................................................................... 8-1
 

8.1.1 General Approach for LCC and PBP Analyses ................................................... 8-2
 

8.1.2 Overview of LCC and PBP Inputs ....................................................................... 8-5
 

8.2 LIFE-CYCLE COST INPUTS ........................................................................................ 8-6
 

8.2.1 Definition of Life Cycle Cost .............................................................................. 8-6
 

8.2.2 Total Installed Cost Inputs ................................................................................... 8-6
 

8.2.2.1 Manufacturer Selling Price ...................................................................... 8-7
 

8.2.2.2 Installation Costs ...................................................................................... 8-7
 

8.2.2.3 Distributor Markup and Sales Tax......................................................... 8-12
 

8.2.3 Operating Cost Inputs ........................................................................................ 8-13
 

8.2.3.1 Energy Costs .......................................................................................... 8-13
 

8.2.3.2 Maintenance Costs................................................................................. 8-15
 

8.2.3.3 Replacement Costs and Equipment Lifetime......................................... 8-17
 

8.2.3.4 Discount Rate......................................................................................... 8-18
 

8.2.4 Analysis Period and Effective Date of Standard................................................ 8-19
 

8.3 PAYBACK PERIOD INPUTS ...................................................................................... 8-19
 

8.3.1 Definition ........................................................................................................... 8-19
 

8.3.2 Rebuttable Presumption Payback Period........................................................... 8-20
 

8.3.3 Inputs.................................................................................................................. 8-20
 

8.4 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS ...................................... 8-20
 

8.4.1 LCC Savings Summary Results ......................................................................... 8-21
 

8.4.2 PBP Results........................................................................................................ 8-23
 

REFERENCES .......................................................................................................................... 8-24
 

LIST OF TABLES 

Table 8.1.1 Equipment Classes Analyzed in the LCC and PBP Analyses ............................. 8-4
 

Table 8.1.2 Summary Information of Inputs for the Life-Cycle Cost and Payback 

Period Analyses ................................................................................................... 8-5
 

Table 8.2.1 Slope and Intercept Values Used for Estimation of Installation Costs of
 

Unit Coolers....................................................................................................... 8-10
 

Table 8.2.2 Slope and Intercept Values Used for Estimation of Installation Costs of
 

Refrigeration Systems........................................................................................ 8-12
 

Table 8.2.3 Inputs for Operating Costs ................................................................................. 8-13
 

Table 8.2.4 Annualized Maintenance Costs for Each Efficiency Level from Baseline 

to Efficiency Level 7 for Life-Cycle Cost Analysis (2009$)............................. 8-16
 

Table 8.2.5 Annualized Maintenance Costs for Each Efficiency Level from Efficiency
 

Levels 8-15 for Life-Cycle Cost Analysis (2009$)............................................ 8-17
 

Table 8.4.1 Summary of Maximum LCC Savings for All Matched Pairs of WICF
 

Envelopes and Refrigeration Systems ............................................................... 8-22
 

8-i 
LIST OF FIGURES 

Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP ....................... 8-3
 

Figure 8.2.1 Installation Labor Hours for Small Unit Coolers ................................................. 8-9
 

Figure 8.2.2 Installation Labor Hours for Medium Unit Coolers ............................................ 8-9
 

Figure 8.2.3 Installation Labor Hours for Large Unit Coolers............................................... 8-10
 

Figure 8.2.4 Installation Cost in Dollars for Small (Under 5 Tons) Condensing Units......... 8-11
 

Figure 8.2.5 Installation Cost in Dollars for Large (Over 5 Tons) Condensing Units........... 8-12
 

Figure 8.2.6 Electricity Price Trend Projections by Sector.................................................... 8-15
 

8-ii 
 

 

CHAPTER 8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES 

8.1 INTRODUCTION 

This chapter describes the analysis the U.S. Department of Energy (DOE) conducts to 

evaluate the economic impacts on individual consumers that would be required to comply with 

proposed energy conservation standards for walk-in coolers and freezers (walk-ins or WICF). 

Appliance efficiency standards usually decrease operating costs and increase purchase 

costs for consumers. However, in this particular standard, a number of the walk-in efficiency 

improvements under consideration decrease both operating costs and purchase costs. This 

chapter describes the two metrics used in this analysis to determine the impact of standards on 

individual consumers: 

•	 The life-cycle cost (LCC) is the total (discounted) consumer cost over the analysis period 

including purchase price, operating costs (including energy expenditures), and 

installation costs. LCC savings is the reduction in LCC that a consumer would benefit 

from if switching to more efficient equipment. 

•	 The payback period (PBP) is the number of years it takes a customer to recover the 

generally higher purchase price of more energy-efficient equipment through the operating 

cost savings of using the more energy-efficient equipment. The PBP is calculated as the 

change in first cost divided by the change in operating costs in the first year. 

While the two metrics vary in their precise meaning, they share the same basic 

implication: the lower the value, the more financially attractive a piece of equipment is in the 

long run (at any given level of service). An efficiency improvement that is financially attractive 

will typically have a low LCC (or a high LCC savings) and low PBP. In rare cases, an efficiency 

improvement can be so financially advantageous that it exhibits a PBP that is less than zero, i.e., 

the improvement reduces both operating costs and installed costs. As noted above, a number of 

the walk-in efficiency improvements considered in this chapter meet this exceptionally stringent 

criterion for financial benefit. 

DOE is considering setting separate performance standards on the two different 

components of a walk-in, the envelope and the refrigeration system. But, because a walk-in 

cooler or freezer operates as a combined unit, DOE analyzed the life cycle cost and payback 

period of a walk-in as a whole. In this life cycle cost analysis, DOE analyzed pairs of envelopes 

and refrigeration systems equipment classes—e.g., a small display cooler might be paired with a 

small dedicated indoor medium-temperature refrigeration system. 

This chapter is laid out as follows. The remainder of sections 8.1 outlines the general 

approach for the LCC and PBP analyses and describes the inputs in broad strokes. Sections 8.2 

and 8.3 discuss inputs to the LCC and PBP, respectively, in greater detail. Section 8.4 presents 

summary results for the LCC savings. Appendix 8A provides more detailed results for the LCC 

and PBP. Key variables and calculations are presented for each metric. DOE performs the 

calculations discussed here using a series of Microsoft Excel spreadsheets developed for this 

rulemaking. Stakeholders are invited to download and examine the spreadsheets available at 

8-1 
 

www1.eere.energy.gov/buildings/appliance_standards/commercial/wicf.html. Appendix 8B will 

present details and instructions for using the spreadsheet. 

8.1.1 General Approach for LCC and PBP Analyses 

To conduct the LCC and PBP analyses, DOE first estimates all of the installed costs and 

annual operating costs for each possible combination of envelope and refrigeration system for 

representative equipment classes, both in the base case and at each possible combination of the 

efficiency levels used in the engineering analysis (preliminary technical support document [TSD] 

chapter 7). Because those efficiency levels are candidates for potential standards for the envelope 

and refrigeration system, DOE refers to them as candidate standard levels (CSLs) in the LCC and 

PBP analysis as well as the following chapters. With this information, the analyses can be 

conducted in the following manner: 

•	 For the life cycle cost analysis, DOE discounts all annual operating costs across the 

expected lifetime of the unit, adds them together, and then adds that sum to the installed 

costs to find the LCC. Then, the LCC at each CSL is subtracted from the baseline LCC to 

find the LCC savings for that CSL. 

•	 For the PBP analysis, DOE sums the operating costs across the expected lifetime of the 

unit and then divides that amount by that lifetime to produce an average operating cost 

per year at the baseline and at each CSL. Then, the operating cost per year at each CSL is 

subtracted from the baseline operating costs per year to find an operating cost savings per 

year. Similarly, DOE calculates the increase in installed costs per year. DOE then divides 

the installed cost increase by the annual operating cost savings to determine the PBP. 

DOE typically uses the operating costs in the first year to calculate PBP. However, for 

the preliminary WICF analysis, DOE uses average operating costs instead for the following 

reason. Replacement costs for WICF equipment are significant in an average year because the 

refrigeration system and doors require replacement during the life cycle of a typical walk-in. Yet 

these costs are zero in the first year, before any equipment needs replacing. Since replacement 

costs are a subset of operating costs, a PBP calculation based on operating costs in the first year 

would produce a misleading result for this type of equipment. Section 8.2.3.3 describes 

replacement costs in more detail. 

To calculate the installed costs for both the LCC and PBP analyses, DOE produces 

estimates of purchase costs of both the envelope and refrigeration system (including sales taxes 

and other markups), shipping costs, and installation costs. Those estimates are discussed further 

in section 8.2.2. 

To calculate the operating costs, DOE produces estimates of electricity costs (based on 

annual electricity use and electricity prices), maintenance costs, and replacement costs. Repair 

costs were not included because DOE determined that most walk-in equipment failures are 

resolved through replacing rather than repairing the broken component. Those estimates are 

discussed further in section 8.2.3. Figure 8.1.1 depicts the relationships between the different of 

the LCC and PBP analysis. In this figure, the rectangular boxes indicate the inputs, the 

parallelograms indicate intermediate calculated values, and the diamond boxes indicate the 

analysis outputs (the LCC and PBP). 

8-2 
Figure 8.1.1 Flow Diagram of Inputs for the Determination of LCC and PBP 

DOE is conducting the LCC and PBP analyses on the baseline equipment from the 

representative equipment classes identified in the market and technology assessment 

(preliminary TSD chapter 3). Because the energy consumption of a walk-in depends on both the 

envelope and the refrigeration system, it is not possible to analyze the energy costs—and the 

resulting LCC or PBP—of an envelope or refrigeration system in isolation. Accordingly, DOE 

analyzes the LCC and PBP of individual pairings of particular types of envelopes and 

refrigeration systems (equipment classes) in combination. Table 8.1.1 shows all pairings of 

equipment classes that DOE is evaluating in this analysis. 

8-3 
Table 8.1.1 Equipment Classes Analyzed in the LCC and PBP Analyses 

8-4 

Class/ Size Code 

Small NonDisplay Cooler (SCS)* 

Medium NonDisplay Cooler (SCM) 

Large NonDisplay Cooler (SCL) 

Small Display Cooler (DCS) 

Medium Display Cooler (DCS) 

Large Display Cooler (DCL) 

Small NonDisplay Freezer (SFS) 

Medium NonDisplay Freezer (SFM) 

Large NonDisplay Freezer (SFL) 

Small MediumTemperature Indoor Dedicated System 

√

Large MediumTemperature Indoor Dedicated System 

√

√

√

√

√

Small MediumTemperature Outdoor Dedicated System 

√

Large MediumTemperature Outdoor Dedicated System 

√

√

√

√

√

Small MediumTemperature Multiplex System 

√

Large MediumTemperature Multiplex System 

√

√

√

√

√

Small Low Temperature Indoor Dedicated System 

√

Large Low Temperature Indoor Dedicated System 

√

√

Small Low Temperature Outdoor Dedicated System 

√

Large Low Temperature Outdoor Dedicated System 

√

√

Small Low Temperature Multiplex System 

√

Large Low Temperature Multiplex System 

√

√

* Letter codes in parentheses are abbreviations. 
 

 

 

8.1.2 Overview of LCC and PBP Inputs 

As mentioned previously, the LCC represents the total consumer expense over the 

analysis period, including purchase expenses, operating costs (including energy expenditures), 

and installation costs. DOE discounts future operating costs to the time of purchase and sums 

them over the analysis period. The PBP represents the number of years it takes customers to 

recover the purchase price of more energy-efficient equipment through lower operating costs. 

The PBP is calculated as the change in first cost divided by the change in operating costs in per 

year. 

DOE characterized all of the total cost inputs with single-point values for this preliminary 

LCC analysis, focusing on the average impacts to the nation. For the next stage of this analysis, 

DOE intends to also perform a Monte Carlo analysis that will characterize several of the 

operating cost inputs with probability distributions that capture the input’s uncertainty and/or 

variability across U.S. States (TSD appendix 8C). 

DOE categorizes inputs to the LCC and PBP analysis as follows: (1) inputs for 

establishing the purchase expense, otherwise known as the total installed cost; and (2) inputs for 

calculating the expenses incurred during operation of the walk-in, otherwise known as the 

operating costs. The primary inputs for establishing the LCC and PBP are shown in Table 8.1.2. 

Each row of the table also gives the chapter of the preliminary TSD, which provides more 

detailed information about this input. 

Table 8.1.2 Summary Information of Inputs for the Life-Cycle Cost and Payback Period 

Analyses 

Factor TSD Reference 

Section 

Total Installed Cost Primary Inputs 

Manufacturer Selling Price Chapters 5, 7 

Distributer Markup and Sales Tax Chapter 7 

Installation Cost Chapter 8 

Operating Cost Primary Inputs 

Annual Energy Consumed Chapter 6 

Current Electricity Prices Chapter 8 

Electricity Price Trends Chapter 8 

Discount Rate Chapter 8 

Walk-in Lifetime Chapter 8 

Sections 8.2 and 8.3 discuss the inputs of installed costs and operating costs that are 

depicted in this table. 

8-5 
 

 

 

8.2 LIFE-CYCLE COST INPUTS 

8.2.1 Definition of Life Cycle Cost 

LCC is the total customer cost over the life of a good, including total installed costs and 

operating costs. Future operating costs are discounted to the analysis start year (e.g., 2015) and 

summed over the analysis period. The LCC is defined by the following equation: 

N ⎛ OCt ⎞ LCC = IC +∑⎜

⎜ t ⎟

⎟ Eq. 8.1 t =1 ⎝(1+ r) ⎠

Where: 

LCC = life-cycle cost, 

IC = total installed cost, 

N = analysis period, 

∑ = sum over the analysis period, from year 1 to year N, 

OC = annual operating cost in year t, 

r = discount rate, and 

t = year for which operating cost is determined. 

DOE expresses all the costs in its LCC and PBP analyses in 2009$. 

8.2.2 Total Installed Cost Inputs 

The total installed cost of a walk-in to the customer is defined by the following equation: 

IC = FEPE × FEPR + INST	 Eq. 8.2 

Where: 

FEPE = envelope final equipment price (i.e., customer price for the equipment 

only), 

FEPR = refrigeration system final equipment price, and 

INST =	 installation cost or the customer price to install the equipment (i.e., the 

cost for labor and materials). 

The final equipment price represents the average cost of a walk-in component (envelope 

or refrigeration system) before installation costs. DOE then applies installation costs where 

necessary to derive the total installed costs for use in the LCC. Thus, the total installed cost for a 

walk-in equals the final equipment price of each component plus the installation cost. The 

installation cost represents all costs required to install the walk-in except the final equipment 

price. The installation cost includes labor and overhead and is described below. 

8-6 
 

 

 

 

DOE calculates the final equipment cost for each walk-in component analyzed based on 

the following equation: 

FEP = PRICE × MU × (1 +ST ) Eq. 8.3 

Where: 

FEP = envelope or refrigeration system final equipment price, 

PRICE = envelope or refrigeration system manufacturer selling price (including 

shipping costs), 

MU = distribution channel markup, and 

ST = sales tax. 

DOE calculates the manufacturer selling price for both envelopes and refrigeration 

systems in the engineering analysis (preliminary TSD chapter 5). The markup represents DOE 

estimates of the additional costs to the consumer of obtaining WICF equipment through 

whatever distribution channel the consumer uses. The sales tax represents State and local sales 

taxes applied to the end-user equipment price. It is added to one to produce a multiplicative 

factor that increases the final equipment price. The markup analysis (preliminary TSD chapter 6) 

provides detail on the markup and sales tax. 

8.2.2.1 Manufacturer Selling Price 

As noted above, the manufacturer selling price represents the average cost of a walk-in 

component (envelope or refrigeration system) to distributors before distributor markup, 

installation costs, and sale tax. It is described in the engineering analysis (preliminary TSD 

chapter 5). 

8.2.2.2 Installation Costs 

This input represents the cost to the customers of installing the walk-in. The installation 

cost represents all costs required to install the system but does not include the end-user 

equipment price. The installation cost includes labor and overhead. Thus, the total installed cost 

equals the end-user equipment price including sales tax plus the installation cost. 

WICF equipment and components are generally installed from two different vendors i.e., 

one supplying the envelope components and a different vendor supplying the components of the 

refrigeration system. Generally, the enclosures are field installed from the insulated panels, 

doors, and other components supplied by the WICF envelope manufacturer by a specialized crew 

(carpenters). A different crew installs the refrigeration system components and electrical 

components associated with the envelope, such as lights and air curtains. For some smaller 

systems, the entire assembly comprising both the enclosure and the refrigeration system are 

sometimes factory assembled and mounted on a trailer for final delivery to the customer site. 

DOE estimated the total installation costs for the WICF systems by aggregating separate 

installation costs for the envelope, the unit cooler in the enclosure, and the condensing unit. For 

the systems coupled with multiplex systems, DOE added only the first two cost elements because 

the multiplex condensing systems are usually shared with other equipment. For estimating the 

8-7 
 

 

installation costs of the WICF subsystems, DOE used installation cost data for the specific 

subsystems from an industry publication, RSMeans Mechanical Cost Data.

1

 The installation cost 

data for different sizes or capacities of a specific piece of equipment were pooled, and a linear 

relationship was sought between the installation cost and the size/capacity. However, DOE 

noticed that using a single pool of data and using a linear relationship across the entire range of 

sizes could lead to considerable estimation errors around range extremities. Consequently, DOE 

partitioned the whole range into smaller sub-ranges over which a linear relationship could be 

established and used with smaller errors of estimates. R2

 parameters of the regression analysis 

were used as an indicator of the goodness-of-fit. 

Envelopes 

In the reference version of the RSMeans Mechanical Cost Data handbook, the labor cost 

for installing the WICF system (Division number 13 21 26.50), including doors and floors but 

not including the partitions within the enclosure and refrigeration system, are reported for four 

different sizes of enclosures. The smallest size in the set of four is for a WICF system of 6 ft × 

6 ft outside dimension and was considered unrepresentative for the set of WICF enclosures 

selected for analysis. For the other three WICF enclosures, the bare labor cost reported for the 

smallest enclosure of 6 ft × 6 ft outside dimensions was $7.80 per sft. For both the intermediatesized WICF enclosure of 12 ft × 14 ft and the largest-sized 12 ft × 20 ft outside dimensions, the 

bare labor cost reported was $5.85 per sft. Consequently, DOE used only two per sft unit 

installation cost rates in estimating the installation cost for the WICF enclosures. For the 

enclosures with an area less than 168 sft, DOE used the higher rate of $7.80 per sft. For 

enclosures having areas larger than the threshold value, the lower rate of $5.85 was used. The 

bare labor cost was multiplied by the installing contractors overhead and profit percentage 

(55.10 percent) reported in the referenced handbook for this category of labor (carpenters). 

Unit Coolers 

For estimating the installation cost of the unit coolers, DOE extracted the installation 

labor hours data for the unit coolers of different capacities tabulated under classification 23 76 16 

from the RSMeans handbook. Though the installation cost of a specific unit cooler is not entirely 

determined by its capacity (Btu/ hr), other parameters were ignored for reasons of simplicity. A 

unit cooler with the same physical dimension but having evaporator tubes with different fin 

densities (fpi) may have nearly the same installation costs, but significantly different capacities. 

 DOE obtained plots of the installation labor hours against the capacities of the unit 

coolers in different capacity ranges. DOE assumed that using pooled data for unit coolers with 

somewhat differing specifications resulted in installation cost plots for generic unit coolers. The 

plots obtained from the pooled data are shown in Figure 8.2.1, Figure 8.2.2, and Figure 8.2.3. 

8-8 
Installation Labor Hours14 

12 

10 

8 

6 

4 

2 

0 

y = 1.0327x + 3.0837 

R2

 = 0.9085 

0 2 4 6 8 10 

Capacity (kBtu/ Hr) 

 Capacity of Unit coolers <10 kBtu/Hr Regression Line 

Figure 8.2.1 Installation Labor Hours for Small Unit Coolers 

30
 

25
 

Installation Labor Hours 

20 

15 

10 

5 

0 

y = 0.2395x + 13.411 

R2

 = 0.7127 

0 10 20 

Capacity over 10 kBtu/ hr 

30 40 

Capacity of Unit coolers 10--35 kBtu/Hr Regression Line 

Figure 8.2.2 Installation Labor Hours for Medium Unit Coolers 

8-9 
 

Installation Labor Hours 

60 

50 

40 

30 

20 

10 

0 

0 20 40 

Capacity over 50 kBtu/Hr 

Capacity of Unit Coolers > 50 kBTu/ hr 

y = 0.3869x + 22.991 

R2

 = 0.8865 

60 

Regression Line 

Figure 8.2.3 Installation Labor Hours for Large Unit Coolers 

From the installation labor hours against capacity plots for the unit coolers, regression 

lines were fitted, and the intercept and the slopes of the line and R2

 values were obtained. For 

maintaining continuity of the intermediate end points of the plots, the terminal value obtained 

from the plot for the previous range was forced as an intercept for the plot for the next higher 

range. This resulted in somewhat lower R2

 values in the plots for the medium and high capacity 

unit coolers. The slopes and the intercepts were directly converted to the corresponding intercept 

and slope for the installation cost regression line using a labor hourly rate multiplier of 

US$66.67/hour obtained from the RSMeans handbook1

 (p. 629). The labor hour rate includes the 

bare labor costs, overheads, and profit. The results of this analysis are shown in Table 8.2.1 and 

have been used to estimate the installation costs of unit coolers used in this LCC analysis. 

Table 8.2.1 Slope and Intercept Values Used for Estimation of Installation Costs of Unit 

Coolers 

Unit cooler 

Capacity Range 

Labor hour Plot Installation Cost 

($) Plot 

Btu /Hr Slope Intercept Slope Intercept 

< 10,000 1.0327 3.0837 $68.85 $205.59 

<50000 0.2395 11.016 $15.97 $734.44 

>50,000 0.3869 3.646 $25.79 $243.08 

Condensing Units 

To estimate the installation cost for the condensing units, labor cost data for installing the 

packaged compressor and condensing units (Division number 23 62 13.10) were extracted from 

8-10 
the reference version of the RSMeans Mechanical Cost Data handbook. The plots for the labor 

cost for installation and the capacity of the condensing unit in kBtu/hr for smaller sized units 

with capacity less than 5 tons (60 kBtu/ hr) are shown in Figure 8.2.4. The intercept of the slope 

of the regression line in the plot is used for estimating the labor cost of installing the condensing 

units with a capacity less than 5 tons. 

$2,000.0 

$1,800.0 

$1,600.0 

$1,400.0 

$1,200.0 

$1,000.0 

$800.0 

$600.0 

$400.0 

$200.0 

$0.0 

0 

Small (<5 tons) Condensing Units Regression Line 

Figure 8.2.4 Installation Cost in Dollars for Small (Under 5 Tons) Condensing Units 

For the larger sized condensing units, the RSMeans reference handbook reports 

installation costs over a range of sizes, the maximum size being 100 tons. The regression plot of 

the installation labor cost for the larger capacity range of condensing units is forced to pass 

through the end point of the regression line for the units of smaller capacity to avoid 

discontinuity. The plot of the labor cost for installation against the differential capacity over 

12,000 kBtu/ hours is presented in Figure 8.2.5. Labor cost for Installation 

y = 31.682x - 265.49 

R2

 = 0.9577 

10 20 30 40 50 60 70 

Capacity kBtu/Hr

8-11 
 

 

 

 

Labor cost for Installation 

$20,000.0 

$18,000.0 

$16,000.0 

$14,000.0 

$12,000.0 

$10,000.0 

$8,000.0 

$6,000.0 

$4,000.0 

$2,000.0 

$0.0 

y = 13.63x + 1635.4 

R2

 = 0.9883 

0 200 400 600 800 1000 1200

 Capacity over 12,000 kBTu/ Hr 

Large Condensing Units >5 tons Regression Line 

Figure 8.2.5 Installation Cost in Dollars for Large (Over 5 Tons) Condensing Units 

The slope and the intercept values used in the two ranges for projecting the labor cost of 

installing the condensing units of different sizes are shown in Table 8.2.3. The difference in the 

intercept values in the plot for the large-sized units and the table value is due to the difference in 

the definition of the x-axis variables. 

Table 8.2.2 Slope and Intercept Values Used for Estimation of Installation Costs of 

Refrigeration Systems 

Capacity in kBtu/Hr Slope Intercept 

< 60 31.682 -265.49 

>60 13.63 817.6 

8.2.2.3 Distributor Markup and Sales Tax 

As noted above, DOE calculates the end-user equipment price by multiplying the 

manufacturer selling price by a distributor markup to determine the final equipment price. This 

markup includes both a distributor markup component and a sales tax component. 

Different markups are calculated for different equipment classes based on their of 

distribution channels. Specifically, the markups analysis distinguishes between remote 

condensing and self-contained equipment refrigeration systems. 

For the preliminary LCC and PBP analyses, DOE calculated and used a national average 

sales tax. For the Monte Carlo analysis in the next round of analysis (appendix 8A of the TSD), 

DOE intends to use State-specific sales taxes. 

8-12 
 

 

DOE then applies the sales tax to complete the conversion of the end-user equipment 

price to the final equipment price. The markups analysis (chapter 7 of the preliminary TSD) 

describes the distributor markup and sales tax markup in detail. 

8.2.3 Operating Cost Inputs 

The operating cost represents the costs incurred in operating the walk-in. This includes 

energy costs, maintenance costs, and replacement costs. Table 8.2.3 lists the inputs for operating 

costs. The analysis period, discount rate, and effective date of the amended standard are required 

for determining the operating cost and for establishing the operating cost present value. A 

primary driver of the operating costs is the electricity consumption for the baseline, and other 

CSLs are examined to enable comparison of standard operating costs. 

Table 8.2.3 Inputs for Operating Costs 

Annual Electricity Consumption (kWh) 

Current Electricity Prices ($/kWh) 

Electricity Price Trend 

Equipment Lifetimes (years) 

Discount Rate (%) 

Replacement Costs ($/year) 

Electricity prices used in the analysis are the price per kilowatt-hour in cents or dollars 

(e.g., $/kWh) paid by each customer for electricity. DOE uses electricity price trends to forecast 

electricity prices for future year analysis. These trends with the electricity price and annual 

energy consumption are used to calculate the energy cost in each year. DOE defines energy cost 

by the following equation: 

OC = Econs × EP × EPT 

Eq. 8.4 = (PWR ×OH )× EP × EPT 

Where: 

OC = operating costs, 

Econs = annual energy consumed, 

EP = electricity price, 

EPT = electricity price trend factor relative to 2007, 

PWR = power rating (rate of energy use, measured in watts), and 

OH = annual operating hours. 

The remainder of this section provides information about each of the above input 

variables that DOE used to calculate the operating costs. 

8.2.3.1 Energy Costs 

The annual energy costs for each WICF unit is an important input to the LCC and PBP 

analyses. Since walk-ins are almost exclusively powered by electricity, DOE defined energy 

8-13 
 

 

 

costs in any given year as the electricity use per year multiplied by the electricity price in that 

year. 

DOE calculates annual walk-in electricity consumption as described in the energy use 

characterization (chapter 7 of the preliminary TSD). 

DOE combines two different data sources to estimate future electricity prices. The 

current electricity prices are taken from U.S. Energy Information Administration (EIA) Form 

861 data. 2 DOE then grows the current price estimates by the long-term electricity price growth 

rates used in the most recent available version of the National Energy Modeling System 

(NEMS), the updated (April 2009) version of the Annual Energy Outlook 2009 (AEO 2009-B).3 

In this way, the latest available short-term prices can be combined with the longer-term growth 

projections. The method is described below. 

Current Electricity Prices 

As noted above, DOE develops all electricity price inputs using monthly data from EIA 

Form 861. DOE uses the average price per kilowatt-hour (i.e., $/kWh) paid by customers. DOE 

determines electricity prices using national average commercial and industrial electricity prices 

for the sample calculation, weighted according to the share of walk-ins estimated to be in the 

commercial and industrial sectors. Those weights are detailed in the shipments analysis 

(preliminary TSD chapter 9). For the Monte Carlo distribution, DOE will use average 

commercial and industrial values by State for the current electricity price. 

The EIA Form 861 data are published annually and include annual electricity sales in 

kilowatt-hours; revenues from electricity sales; and number of consumers for the commercial and 

industrial sectors for every State. DOE calculates average electricity prices for each State by 

dividing the total commercial or industrial revenues from the EIA Form 861 data by total 

commercial or industrial sales from the same source. 

The calculation uses the most recent 12 months of available EIA data at the time the 

analysis was conducted, from September 2008 through August 2009. Because DOE conducted 

the LCC and PBP analyses in 2009$, it needed to convert all electricity prices into 2009$. To 

perform the necessary monetary conversion, DOE uses the consumer price index (CPI) to 

convert the 2008 electricity prices from 2008$ to 2009$. 

Electricity Price Trend 

The electricity price trend projects the future cost of electricity to 2045. DOE normalizes 

the AEO2009-B scenarios to the 2008-2009 electricity prices and then uses that electricity price 

factor to scale up the 2008-2009 electricity prices over time through 2030. The AEO 2009-B 

price projections do not continue past 2030, so for the years 2031-2045, DOE flatlines the 

electricity price projections. Figure 8.2.6 shows the commercial and industrial electricity price 

trends, respectively, based on the two AEO2009-B projections. Both sectors are forecast to 

experience a fall in electricity prices (measured in real dollars) before the analysis period, but 

rising electricity prices during the analysis period. The AEO2009-B provides only reference case 

electricity prices. 

8-14 
 

 

Figure 8.2.6 Electricity Price Trend Projections by Sector 

In the LCC spreadsheet, these electricity price trends are used to project electricity prices 

into the future, which are then multiplied by the annual energy usage. The resulting operating 

costs are presented in both the LCC spreadsheets and the LCC results tables in this chapter and 

in the detailed results appendix (appendix 8A). 

8.2.3.2 Maintenance Costs 

The maintenance cost is the cost to the consumer of maintaining equipment operation. In 

this analysis, DOE considered only the costs associated with general maintenance (e.g., checking 

and maintaining refrigerant charge levels, checking settings, cleaning heat exchanger coils). 

DOE took annualized maintenance costs for WICF equipment (Classification 1095) from 

data in RSMeans Facilities Maintenance & Repair Cost Data.4 RSMeans provides estimates on 

the labor hours, labor rates, and materials required to maintain WICF equipment. 

The RSMeans cost data covered both display and non-display type WICF equipment with 

external condensers only and ranged from $158 to $239 on annualized basis. Equipment sizes 

were not indicated. DOE assumed that the maintenance costs do not vary with the size and also 

that the cost is the same for equipment with internal and external condensing units. Further, DOE 

decided to use constant preventative maintenance costs independent of equipment efficiency. 

In addition to the preventative maintenance, DOE considered replacements of lamps and 

ballasts and other lighting maintenance activities as an essential maintenance activity for WICF 

equipment. Different sizes of WICF equipment in different equipment classes have different 

numbers of lamps (and ballasts), and several efficiency options that DOE considered in its design 

option for engineering analysis involved changes to the lighting configuration (lamp, ballast, or 

use of light emitting diode (LED) lighting systems). Because the lighting configurations can vary 

by efficiency level, DOE estimated the relative maintenance costs for lighting for each analyzed 

equipment type. DOE’s methodology was to estimate the frequency of failure and replacement of 

8-15 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

individual lighting components, to estimate the cost of replacement in the field, and to develop 

an annualized maintenance cost based on the aggregate lighting maintenance costs (in 2009$) 

over the estimated life of the equipment . 

The number of total lifetime replacements for particular types of lamps was estimated as 

follows: 

•	 Fluorescent lamps (T8 and compact fluorescent lamp [CFL]) would be replaced eight 

times in a preventative fashion over the entire life of the WICF equipment. 

•	 LED lamps would be replaced three times over the WICF equipment lifetime based on a 

typical fixture life of 50,000 hours (GE 2007).5 

However, some of the lamp replacements coincide with the display door replacements, 

and since the replacement of doors inclusive of the lamps has been separately considered, only 

non-coincidental replacements were considered. Thus, effectively no separate replacements were 

considered either for the fluorescent lamp ballasts or the LED lamps. 

DOE based cost estimates for fluorescent lamps (CFL and T8) on a review of the original 

equipment manufacturer (OEM) costs used in the engineering analysis and RSMeans estimates. 

The final approach taken was to estimate the costs of field replacement using labor cost hours 

from RSMeans Electrical Cost Data6

 for typical lamp or ballast replacement for other lighting 

fixtures, and to provide a 150-percent multiplier on OEM costs for lamps (provided in the 

engineering analysis spreadsheets) to reflect retail pricing. 

Table 8.2.4 and Table 8.2.5 show the annualized lighting maintenance costs for each 

efficiency level addressed in the LCC analysis. 

Table 8.2.4 Annualized Maintenance Costs for Each Efficiency Level from Baseline to 

Efficiency Level 7 for Life-Cycle Cost Analysis (2009$) 

Efficiency levels 

WICF Class/ 

Size 0 1 2 3 4 5 6 7 

SCS $2,462 $2,462 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 

SCM $2,462 $2,462 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 

SCL $2,647 $2,647 $3,269 $3,269 $3,269 $3,269 $3,269 $3,269 

DCS $3,786 $3,786 $3,786 $3,270 $3,270 $3,270 $3,270 $3,270 

DCM $4,559 $4,559 $4,559 $4,559 $3,270 $3,270 $3,270 $3,270 

DCL $9,975 $9,975 $9,975 $3,270 $3,270 $3,270 $3,270 $3,270 

SFS $2,462 $2,462 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 

SFM $2,462 $2,462 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 

SFL $2,647 $2,647 $2,647 $3,269 $3,269 $3,269 $3,269 $3,269 

DFS $4,101 $4,101 $4,101 $3,585 $3,585 $3,585 $3,585 $3,585 

DFM $4,745 $4,745 $4,745 $4,745 $3,585 $3,585 $3,585 $3,585 

DFL $10,290 $10,290 $10,290 $10,290 $3,585 $3,585 $3,585 $3,585 

8-16 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table 8.2.5 Annualized Maintenance Costs for Each Efficiency Level from Efficiency 

Levels 8-15 for Life-Cycle Cost Analysis (2009$) 

Efficiency Levels 

WICF Class/ 

Size 8 9 10 11 12 13 14 15 

SCS $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 

SCM $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 

SCL $3,269 $3,269 $3,269 $3,269 $3,269 $3,269 $3,269 $3,269 

DCS $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 

DCM $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 

DCL $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 $3,270 

SFS $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 

SFM $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 $2,670 

SFL $3,269 $3,269 $3,269 $3,269 $3,269 $3,269 $3,269 $3,269 

DFS $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 

DFM $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 

DFL $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 $3,585 

8.2.3.3 Replacement Costs and Equipment Lifetime 

Equipment lifetime is an important input to the LCC analysis in two different ways. One 

way is that the operating costs must be summed across each year in the lifetime of the 

equipment. The longer the lifetime, the more important annual operating cost savings become 

relative to installing cost increase. For a detailed explanation on how DOE derives its estimates 

of WICF equipment lifetimes, see the shipments analysis (preliminary TSD chapter 9). 

The other way in which equipment lifetimes are important to the LCC analysis is that 

replacement costs are based on the relationship between the equipment lifetimes of the different 

walk-in components. This works as follows. Envelopes and refrigeration systems are both 

essential components of a single walk-in. Yet, because refrigeration system lifetimes are 

typically shorter than envelope lifetimes, DOE must consider whether the lifetime of a walk-in 

refers to the refrigeration system or the envelope. Because an envelope is typically longer-lived 

than a refrigeration system, keeping an envelope functioning for its normal lifetime frequently 

requires replacing its associated refrigeration system at least one time. Therefore, DOE is 

electing to define the lifetime of a walk-in as equal to the lifetime of its envelope and to treat any 

necessary refrigeration system replacements in that time period as replacement costs that feed 

into the operating costs. 

Replacement costs are also included for envelope doors, which frequently have to be 

replaced over the lifetime of a walk-in. Based on manufacturer interviews, DOE estimates that 

envelope doors typically last 5 years on average. 

Each year in which a refrigeration system or door reaches the end of its life, a 

replacement component is assumed to be purchased and installed at the beginning of that year. 

This component is assumed to cost the same as a new refrigeration system or door, including all 

shipping, installation, and other costs. The costs of those doors are derived in the engineering 

8-17 
 

 

 

analysis (preliminary TSD chapter 5). During years in which replacement is necessary, DOE 

based the replacement costs on the total installed cost inputs, as seen in the following equation: 

RC = FEPL Eq. 8.5 

Where: 

RC = replacement cost, and 

FEP = final equipment price (price for the equipment only). 

For the years when no replacement is necessary, the replacement costs are set to zero. For 

the LCC and PBP analyses, the analysis period corresponds with the envelope lifetime; for this 

reason, envelope replacement is not considered, and only refrigeration system and door price and 

labor costs are included in the calculation of total installed costs. 

8.2.3.4 Discount Rate 

A discount rate is a rate at which future expenditures are discounted to establish their 

present value. The greater a discount rate used in an analysis, the less that future expenditures 

will be valued compared to current expenditures. Different actors in a market frequently apply 

different discount rates to future expenditures, e.g., discount rates in the residential sector are 

typically not the same as commercial sector discount rates. For the WICF LCC analysis, DOE 

intends to use discount rates that are appropriate for each type of owner of WICF equipment. As 

detailed in the shipments analysis (preliminary TSD chapter 9), one way to classify WICF 

owners is by building or commercial establishment type—grocery stores, convenience stores, 

food service establishments, dairy farms, or “other.” 

However, at the time of this preliminary analysis, DOE does not have sufficient 

information to calibrate these relationships precisely. Therefore, for the preliminary analysis, 

DOE bases its discount rates on the rates used in the 2009 “Commercial Refrigeration Equipment 

Final Rule” (72 FR 1092)7

 rather than producing new estimates specifically for walk-ins. This 

rule was used because the consumer base for commercial refrigeration equipment is the most 

similar of previous final rules to that for walk-ins, so the average discount rate for consumers of 

commercial refrigeration equipment is likely very similar to the average discount rate for 

consumers that operate walk-in coolers and freezers. DOE intends to revisit the issue of walk-in 

discount rates for the next stage of analysis. 

The average after-tax discount rates used in 72 FR 1092 were 5.00 percent for large 

grocery stores, which DOE uses as an estimate of grocery store discount rates for the WICF 

preliminary analysis; 7.50 percent for convenience stores, which DOE uses for convenience store 

discount rates for this analysis; and 5.24 percent for multi-line retailers. For food sales 

establishments, dairy farms, and “other” WICF categories, DOE uses the average of these three 

discount rates, or 5.91 percent. 

The basis for the discount rate estimates used in 72 FR 1092 was DOE estimates of the 

cost of capital for companies that purchase commercial refrigeration equipment. The cost of 

capital is commonly used to estimate the present value of cash flows to be derived from a typical 

8-18 
 

 

company project or investment. Most companies use both debt and equity capital to fund 

investments, so their cost of capital is the weighted average of the cost to the company of equity 

and debt financing. As explained in the CRE Final Rule, DOE estimated the cost of equity 

financing by using the Capital Asset Pricing Model (CAPM). The CAPM, which is among the 

most widely used models to estimate the cost of equity financing, assumes that the cost of equity 

is proportional to the amount of systematic risk associated with a company. 

8.2.4 Analysis Period and Effective Date of Standard 

The effective date is the date when a standard becomes operative (i.e., the date by which 

walk-in manufacturers must manufacture only equipment that complies with a standard). DOE’s 

publication of a final rule in this standards rulemaking is scheduled for completion by January 1, 

2012. The effective date of any energy conservation standards for these walk-ins must be at least 

3 years after the final rule is published (42 U.S.C. 6295(g)(4)(C)), which will be January, 2015. 

DOE calculates the LCCs for all consumers as if each would purchase new equipment in the year 

the standard takes effect. However, DOE bases the cost of the equipment on the most recent 

available data; all dollar values are expressed in 2009$. 

8.3 PAYBACK PERIOD INPUTS 

8.3.1 Definition 

The PBP is the amount of time it takes the consumer to recover the assumed higher 

purchase cost of more energy-efficient equipment as a result of lower operating costs. 

Numerically, the PBP is the ratio of the increase in purchase cost (i.e., from a less efficient 

design to a more efficient design) to the decrease in annual operating expenditures. This type of 

calculation is known as a “simple” PBP because it does not take into account changes in 

operating cost over time or the time value of money. That is, the calculation is done at an 

effective discount rate of zero percent. 

The equation for PBP is: 

ΔIC PBP = Eq. 8.6 ΔOC 

Where: 

PBP = payback period, 

∆IC = difference in the total installed cost between the more efficacious standard 

level; equipment (CSL 1, 2, etc.) and baseline (CSL 0) equipment, and 

∆OC = difference in annual operating costs. 

PBPs are expressed in years. PBPs greater than the life of the equipment mean that the 

increased total installed cost of the more efficacious equipment is not recovered in reduced 

operating costs over its lifetime. Because all walk-in designs in the LCC and PBP analyses save 

energy and thus yield a positive ∆OC, PBPs that are negative indicate that the total installed cost 

of the equipment that meets the more efficacious CSL is less than that of the baseline. 

8-19 
8.3.2 Rebuttable Presumption Payback Period 

Section 325(o)(2)(B)(iii) of the Energy Policy and Conservation Act (EPCA) establishes 

a rebuttable presumption that an amended standard for walk-ins is economically justified if the 

Secretary finds that “the additional cost to the consumer of purchasing a product complying with 

an energy conservation standard level will be less than three times the value of the energy 

savings during the first year that the consumer will receive as a result of the standard, as 

calculated under the applicable test procedure” (42 U.S.C. 6295(o)(2)(B)(iii)). This rebuttable 

presumption test is an alternative path to establishing an economic justification compared to 

consideration of the seven factors set forth in 42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII). 

Because DOE calculates PBPs in a methodology consistent with the rebuttable 

presumption test in the LCC and PBP analyses, DOE is not performing a stand-alone rebuttable 

presumption analysis because it is already embodied in the LCC and PBP analyses. Because 

calculations of energy savings in the LCC are based on real-world conditions, DOE will also rely 

on standard PBPs for this rulemaking. 

8.3.3 Inputs 

The data inputs to PBP are the total installed cost of the equipment to the customer for 

each CSL and the annual (first year) operating costs for each CSL. The inputs to the total 

installed cost are the final equipment price and the installation cost. The inputs to the operating 

costs are the walk-in input power rating, annual operating hours, and electricity cost. The PBP 

uses the same inputs as the LCC calculation described in section 8.2, except that electricity price 

trends are not required. Since the PBP is a “simple” (undiscounted) PBP, the required electricity 

cost is only for the year in which an amended energy conservation standard is to take effect 

(e.g., 2014). The electricity price DOE uses in the PBP calculation for electricity cost is the price 

projected for 2014, expressed in 2009$, but not discounted to 2009. DOE does not use discount 

rates in the PBP calculation. 

8.4 LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS 

As stated earlier, DOE conducts a series of LCC calculations for each baseline walk-in. 

Key inputs include the engineering analysis (preliminary TSD chapter 5), historical electricity 

prices from EAI File 861, electricity price projections from the AEO2009–B reference case, and 

an analysis period of 31 years. 

Appendix 8A presents detailed LCC savings results for each combination of envelope 

and refrigeration system equipment classes that DOE considers. The LCC savings is the 

difference between the LCC of baseline equipment and equipment of any given combination of 

envelope and refrigeration system CSLs. When a standard results in positive LCC savings, this 

indicates that the LCC of the standards-compliant system is less than the LCC of the baseline 

system, and the consumer enjoys a financial benefit of the amount of the LCC savings. When a 

standard results in negative LCC savings, each WICF consumer would suffer a net financial loss 

of this amount were the standard to be set at that level. 

8-20 
8.4.1 LCC Savings Summary Results 

This section presents summary LCC savings results. Table 8.4.1 summarizes the CSLs 

for envelopes and dedicated refrigeration systems that result in maximum LCC savings. For each 

envelope and refrigeration system pair, the cell shows the maximum LCC savings and the 

efficiency level of envelope and refrigeration. For example, the table shows that LCC savings for 

a large display freezer using a large multiplex refrigeration system are $146,800 per year and that 

this is achieved with a CSL 4 envelope and a CSL 2 refrigeration system. 

The highest LCC savings typically occur when the efficiency levels of the envelope and 

refrigeration systems are at least somewhat similar; e.g., a very efficient envelope and a very 

inefficient refrigeration system will likely not pair as an LCC-maximizing system. However, in 

many cases, the LCC is maximized at the highest possible efficiency level for the refrigeration 

system, but not for the envelope. 

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Table 8.4.1 Summary of Maximum LCC Savings for All Matched Pairs of WICF 

Envelopes and Refrigeration Systems 

Envelope 

Maximum LCC Savings ($) and Matched Efficiency Levels for Envelope and Refrigeration 

Unit (a,b) 

Refrigeration System* 

Dedicated 

Indoor 

Small 

Dedicated 

Indoor 

Large 

Dedicated 

Outdoor 

Small 

Dedicated 

Outdoor 

Large 

Multiplex 

System 

Small 

Multiplex 

system 

Large 

NonDisplay 

Cooler 

Small 

$7,335 - $6,411 - $2,702 -

5,6 3,7 3,2 

NonDisplay 

Cooler 

Medium 

- $13,720 - $14,019 - $5,288

 5,6 4,6 1,3 

NonDisplay 

Cooler 

Large 

- $28,369 - $30,808 - $10,393

 1,6 1,7 1,3 

Display 

Cooler 

Small 

- $41,865 - $41,130 - $18,486

 5,6 5,7 4,3 

Display 

Cooler 

Medium 

- $98,912 - $96,740 - $44,749

 6,6 6,7 5,3 

Display 

Cooler 

Large 

- $552,429 - $546,793 - $242,378

 6,6 6,8 6,3 

NonDisplay 

Freezer 

Small 

$27,867 - $26,124 - $11,071 -

10,6 10,7 7,2 

NonDisplay 

Freezer 

Medium 

- $54,842 - $50,572 - $20,718

 10,8 10,9 6,2 

NonDisplay 

Freezer 

Large 

- $102,693 - $95,557 - $39,312

 10,8 10,9 5,2 

Display 

Freezer 

Small 

- $53,548 - $50,779 - $19,658

 10,6 3,7 3,2 

Display 

Freezer 

Medium 

- $108,341 - $104,054 - $40,191

 11,7 4,7 4,2 

Display 

Freezer 

Large 

- $479,751 - $469,115 - $146,800

 10,7 4,9 4,2 

*Refrigeration system is matched to the envelope temperature regime. For example, a small non-display cooler will have a 

medium-temperature refrigeration system while a small non-display freezer will have a low-temperature refrigeration system. 

8-22 
8.4.2 PBP Results 

Detailed PBP results are presented in appendix 8A. However, DOE does not present 

summary PBP results in the same manner as LCC savings results because the concept of PBP is 

less well suited to summarization. There is no appropriate equivalent to the metric used in Table 

8.4.1. For example, the maximum payback period for all matched pairs of WICF envelopes and 

refrigeration systems is not a useful metric because it is not desirable to seek the maximum 

possible payback period. Presenting the optimal (minimum) payback periods and associated 

CSLs would also not be useful because the minimum payback period always occurs at the 

minimum possible CSL by definition. As noted in the engineering analysis (preliminary TSD 

chapter 5), the CSLs or efficiency levels are designed to consist of design options laid out in 

ascending order of payback period. 

A key result of the WICF PBP analysis for is that the available design options present an 

unusually large number of negative PBP options. The concept of a payback period is typically 

used to compare the relative benefits of low initial purchase costs against the benefits of low 

operating costs over time. However, many of the candidate standard levels considered in this 

particular analysis do not face this situation. Rather, DOE identifies numerous possible 

efficiency improvements in WICF equipment that would both decrease purchase costs and 

decrease operating costs for the consumer, presenting no such tradeoff. Therefore, for many of 

the candidate standard levels in this rulemaking, the PBP is a negative number. The concepts of 

PBP and rebuttable PBP were not designed to distinguish well between different negative values, 

which have multiple possible interpretations. If two different efficiency options are both 

negative, it does not necessarily hold that the option with the lower PBP is more financially 

attractive. However, it is safe to say that any negative value for a PBP or rebuttable PBP 

indicates an uncommonly attractive financial option because it indicates a choice that saves 

money at a later date for less than zero cost. As noted above, detailed PBP results are presented 

in appendix 8A. 

8-23 
 

 

REFERENCES 

1 RSMeans Mechanical Cost Data, 32nd Edition. 2009. Kingston, Massachusetts -02364. 

2 EIA (Energy Information Administration). Form EIA-861 for 2006. 2006. Washington, 

D.C. Accessed January 2010 at http://www.eia.doe.gov/cneaf/electricity/page/eia861.html 

3 EIA (U. S. Energy Information Administration). 2009. Annual Energy Outlook 2009-B. 

DOE/EIA-0383(2007). U.S. Department of Energy, Energy Information Administration, 

Washington D.C. 

4 R.S. Means Company, Inc. 2009. Means Costworks 2009: Facility Maintenance & Repair 

Cost Data. Kingston, Massachusetts -02364. 

5 General Electric Company (GE). 2006. GE LED Refrigerated Reach-In Case Display Light 

Specification, Publication No. SP005070706. 

6 R.S. Means Company, Inc. 2009. RSMeans Electrical Cost Data, 32nd Annual Edition. 

Kingston, Massachusetts -02364. 

7 EERE (U.S. Department of Energy Office of Energy Efficiency and Renewable Energy). 

“Commercial Refrigeration Equipment Final Rule.” 72 FR 1092. Technical Support 

Document. 2009. Washington, D.C. Accessed March 2010 at 

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/refrig_equip_final 

_rule_tsd.html 

8-24