APPENDIX K. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDES

TABLE OF CONTENTS

**K.1 STANDARD**  **SIZE PACKAGED**  **TERMINAL AIR**  **CONDITIONERS AND** 

**PACKAGED TERMINAL**  **HEAT PUMPS**  **MANUFACTURER INTERVIEW**  **GUIDE**

**............................................................................................................................... ..........**  **K­1**

**K.2 NON­STANDARD**  **SIZE PACKAGED**  **TERMINAL AIR**  **CONDITIONERS AND** 

**PACKAGED TERMINAL**  **HEAT PUMPS**  **MANUFACTURER INTERVIEW**  **GUIDE**

**............................................................................................................................... ........**  **K­21**

**K­i K­ii** APPENDIX K. MANUFACTURER IMPACT ANALYSIS INTERVIEW GUIDES

K.1 STANDARD SIZE PACKAGED TERMINAL AIR CONDITIONERS AND

PACKAGED TERMINAL HEAT PUMPS MANUFACTURER INTERVIEW GUIDE



## Packaged Terminal Air Conditioners

and Packaged Terminal Heat Pumps Rulemaking

Manufacturer Impact Analysis Interview Guide:

Standard Size Packaged Terminal Air Conditioners and

Packaged Terminal Heat Pumps

**May 17,**  **2007**

**K­1**1 KEY ISSUES

**The Department**  **of Energy**  **(DOE) is**  **currently reviewing**  **five efficiency**  **levels for**  **the package** 

**terminal air**  **conditioner (PTAC)**  **and packaged**  **terminal heat**  **pump (PTHP)**  **rulemaking analyses.** 

**For the**  **purpose of**  **this interview**  **guide, DOE**  **refers to**  **new construction**  **PTACs and**  **PTHPs as** 

**“standard” size**  **PTACs and**  **PTHPs. Standard**  **size PTACs**  **and PTHPs**  **refers to**  **equipment with** 

**all other**  **wall sleeve**  **dimensions except**  **wall sleeve**  **dimension less**  **than 16**  **inches high**  **or less** 

**than 42**  **inches wide**  **and with**  **frontal cross­sectional**  **area greater**  **than 670**  **square inches.**  **The**

**efficiency levels**  **are presented**  **below as**  **they apply**  **to standard**  **size PTACs**  **and PTHPs**  **product**

**classes. In**  **responding to**  **this questionnaire,**  **please refer**  **to the**  **EER values**  **described below.** 

Table 1.1 Efficiency Levels

Product Class Efficiency Efficiency Level 0 Efficiency Efficiency Efficiency Efficiency

(cooling capacity) Metric Baseline Level 1 Level 2 Level 3 Level 4

(ASHRAE/IESNA

90.1­1999)

**PTAC 9,000**  **Btu/h**

**Standard Size**  **EER 10.6**  **10.9 11.3**  **11.5 12.0** 

**PTHP 9,000**  **Btu/h**

**Standard Size**  **EER 10.4**  **10.7 11.1**  **11.3 12.0** 

**COP 3.0**  **3.1 3.2**  **3.3 3.5** 

**PTAC 12,000** 

**Btu/h**

**Standard Size**  **EER 9.9**  **10.2 10.8**  **11.0 11.5** 

**PTHP 12,000**  **Btu/h**

**Standard Size**  **EER 9.7**  **10.0 10.6**  **10.8 11.5** 

**COP 2.9**  **3.0 3.1**  **3.1 3.3** 

**1.1 What**  **are the**  **key issues**  **for your**  **company regarding**  **PTACs and**  **PTHPs related**  **to energy** 

**conservation standards**  **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)?**

**K­2**2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

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

**directly pertinent**  **to PTAC**  **and PTHP**  **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**  **PTAC**

**and PTHP**  **industry profit**  **center will**  **help DOE**  **understand the**  **probable future**  **of the**  **PTAC and** 

**PTHP manufacturing**  **activity with**  **and without**  **energy conservation**  **standards.**

**2.1 Do**  **you have**  **a parent**  **company, and/or**  **any subsidiaries**  **relevant to**  **the PTAC**  **and PTHP** 

**industry?**

**2.2 Do**  **you manufacture**  **HVAC products**  **other than**  **PTACs and**  **PTHPs? If**  **so, what**  **other**

**products do**  **you manufacture?** 

**2.3 What**  **percentage of**  **your total**  **manufacturing is**  **for PTACs**  **and PTHPs?** 

**2.4 Where**  **are your**  **production facilities**  **located, and**  **what type**  **of product**  **is manufactured** 

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

**location by**  **product type**  **(PTACs and**  **PTHPs), cooling**  **capacity, and**  **efficiency (i.e.,** 

**provide the**  **product mix**  **for each**  **location).**

**2.5 From**  **the facilities**  **listed from**  **the previous**  **question, do**  **you manufacture**  **products other** 

**than PTACs**  **and PTHPs**  **at those**  **facilities? How**  **important are**  **the PTAC**  **and PTHP** 

**lines at**  **those facilities**  **to keeping**  **facility open?** 

**2.6 At**  **a particular**  **facility, would**  **potential PTAC**  **and PTHP**  **redesigns be**  **difficult to** 

**manufacture? If**  **so, would**  **your company**  **modify the**  **facility or**  **develop a**  **new facility?** 

**2.7 What**  **are your**  **employment levels**  **at these**  **facilities?**

**2.8 What**  **are your**  **company’s total**  **PTAC and**  **PTHP production**  **volumes (i.e.,**  **units per** 

**year) for**  **the past**  **5 years?** 

**K­3 2.9**  **What are**  **your product**  **lines, niches,**  **and relative**  **strengths in**  **the PTAC**  **and PTHP** 

**market?**

3 FINANCIAL PARAMETERS

**Navigant Consulting,**  **Inc. (NCI)**  **has developed**  **a “strawman”**  **model of**  **the PTAC**  **and PTHP** 

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

**publicly available**  **data on**  **PTAC and**  **PTHP manufacturers.**  **All estimates**  **and calculations**  **in the** 

**GRIM are**  **based on**  **PTACs and**  **PTHPs using**  **the refrigerant**  **R­22. This**  **section attempts**  **to**

**understand how**  **your company’s**  **financial situation**  **differs from**  **our industry**  **aggregate picture.** 

**K­4 3.1**  **Please compare**  **your financial**  **parameters to**  **the GRIM**  **parameters tabulated**  **below.**

Table 3.1 Financial Parameters for New Construction (Standard Size) PTAC and PTHP

Manufacturers

GRIM Input Definition PTAC and

PTHP 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) 35.4%** 

Discount Rate **Weighted average**  **cost of** 

**capital (inflation­adjusted** 

**weighted average**  **of**

**corporate cost**  **of debt**  **and**

**return on**  **equity) 5.0%** 

Working Capital **Current assets**  **less current** 

**liabilities (percentage**  **of**

**revenues) 3.5%** 

SG&A **Selling, general,**  **and**

**administrative expenses** 

**(percentage of**  **revenues) 14.1%** 

R&D **Research and**  **development**

**expenses (percentage**  **of**

**revenues) 1.6%** 

Depreciation **Amortization of**  **fixed**

**assets (percentage**  **of**

**revenues) 1.7%** 

Capital

Expenditures **Outlay of**  **cash to**  **acquire**

**or improve**  **capital assets** 

**(percentage of**  **revenues,**

**not including**  **acquisition**

**or sale**  **of business**  **units) 1.8%** 

**3.2 How**  **might new**  **energy conservation**  **standards impact**  **your company’s**  **financial**

**parameters?**

4 R­410A

**As part**  **of the**  **rulemaking process,**  **DOE is**  **interested in**  **understanding the**  **cumulative burden**  **on**

**manufacturers of**  **PTACs and**  **PTHPs due**  **to other**  **regulatory actions.**  **DOE is**  **aware that**  **the**

**Environmental Protection**  **Agency (EPA)**  **has mandated**  **the phase­out**  **of**

**hydrochlorofluorocarbon (HCFC)**  **refrigerants by**  **2010. For**  **analysis purposes,**  **DOE has** 

**assumed that**  **R­410A will**  **replace R­22**  **as the**  **refrigerant of**  **choice in**  **PTAC and**  **PTHP**

**K­5 equipment.**  **This questionnaire**  **attempts to**  **understand how**  **your company**  **is preparing**  **for the** 

**refrigerant phase­out**  **and its**  **effects to**  **your company’s**  **operations. DOE**  **would also**  **like to** 

**understand the**  **effects that**  **the refrigerant**  **phase­out will**  **have on**  **PTAC and**  **PTHP design** 

**performance.**

**4.1 Has**  **your company**  **identified the**  **steps to**  **converting from**  **R­22 to**  **R­410A (or**  **another**

**refrigerant) for**  **PTAC and**  **PTHP products?**  **If so,**  **please explain**  **any steps**  **your**

**company is**  **currently taking**  **to address**  **the conversion**  **issue.**

**4.2 Will**  **your company**  **invest the**  **capital and**  **product conversion**  **expenditures to**  **be able**  **to**

**market R­410A**  **PTACs and**  **PTHPs at**  **your current**  **R­22 PTAC**  **and PTHP**  **efficiencies**

**by 2010?**  **If so,**  **could you**  **please provide**  **a detailed**  **quantitative and**  **qualitative**

**description of**  **the types**  **of expenditures**  **that would**  **be necessary**  **to fully**  **convert your** 

**product lines?**  **Please refer**  **to the**  **table below**  **to provide**  **your company’s**  **estimates.**

Table 4.1 Standard Size PTAC and PTHP R­410A Conversion Costs

Product Class

(cooling capacity) R­410A Conversion Capital

Expenditures a R­410A Product Conversion

Expenses b

**PTAC**

**PTHP**

**4.2.a If**  **your company**  **does not**  **plan to**  **maintain your**  **current R­22**  **PTAC and**  **PTHP**

**efficiencies, could**  **you please**  **provide qualitative**  **and quantitative**  **information about** 

**your company’s**  **plans to**  **address the**  **refrigerant phase­out**  **and the**  **types of**  **investments**

**that would**  **be needed**  **to convert**  **your product**  **lines to**  **R­410A? Please**  **refer to**  **the table** 

**below to**  **provide your**  **company’s estimates.**  **Please provide**  **additional information,** 

**such as**  **a time**  **frame, cost**  **breakdowns, type**  **of tooling**  **needed, etc.,**  **to help**  **us**

**understand the**  **nature of**  **your investments.** 

Table 4.2 Standard Size PTAC and PTHP R­410A Conversion Costs

Product Class

(cooling capacity) R­410A Conversion Capital

Expenditures R­410A Product Conversion

Expenses

**PTAC**

**PTHP**

**4.3 What**  **changes do**  **you expect,**  **if any,**  **in your**  **estimated profitability**  **following the** 

**refrigerant phase­out**  **in 2010?** 

**4.4 Do**  **you expect**  **your projected**  **production volume**  **and shipments**  **to be**  **altered by**  **the**

**a Conversion**  **Capital Expenditures**  **­ One­time 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 Expenses**  **­ One­time expenses**  **in research,**  **product development,**  **testing, and**  **marketing**

**necessitated by**  **an appliance**  **energy conservation**  **standard.**

**K­6 refrigerant**  **phase­out? If**  **so, can**  **you please**  **provide your**  **R­410A PTAC**  **and PTHP** 

**production volume**  **and shipments**  **estimates?**

**4.5 Will**  **the refrigerant**  **phase­out cause**  **you to**  **discontinue production**  **of any**  **product lines** 

**including different**  **cooling capacities**  **and equipment**  **type (PTAC**  **and PTHP)?** 

**4.6 DOE**  **would like**  **to compare**  **current full**  **production costs**  **for R­22**  **PTACs and**  **PTHPs**

**with estimated**  **R­410A PTACs**  **and PTHPs**  **full production**  **costs (i.e.,**  **manufacturing**

**production costs,**  **which include**  **materials, labor,**  **overhead, and**  **depreciation costs).** 

**Could you**  **please compare**  **your current**  **r­22 equipment**  **full production**  **costs with**  **the**

**industry estimates**  **provided below?**  **Are they**  **representative of**  **your product’s**  **full**

**production costs?**  **If not,**  **could you**  **please explain**  **any differences?**  **Could you**  **please**

**provide an**  **estimated percentage**  **difference in**  **full production**  **cost between**  **R­22 and**  **R**

**410A PTACs**  **and PTHPs?** 

Table 4.3 R­22 and R­410A Standard PTAC 9,000 Btu/h Full Production Cost

Efficiency Level EER Industry

Estimated

R­22 Full

Production

Cost Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

**Baseline (ASHRAE** 

**90.1­1999) 10.6**  **$329.26**

**Efficiency Level**  **1 10.9**  **$334.55**

**Efficiency Level**  **2 11.3**  **$342.46**

**Efficiency Level**  **3 11.5**  **$346.78**

**Efficiency Level**  **4 12**  **$358.66**

Table 4.4 R­22 and R­410A Standard PTHP 9,000 Btu/h Full Production Cost

Efficiency Level EER Industry

Estimated

R­22 Full

Production

Cost Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

**Baseline (ASHRAE** 

**90.1­1999) 10.4**  **$376.04**

**Efficiency Level**  **1 10.7**  **$380.96**

**Efficiency Level**  **2 11.1**  **$388.38**

**Efficiency Level**  **3 11.3**  **$392.46**

**Efficiency Level**  **4 12**  **$408.66**

**K­7**Table 4.5 R­22 and R­410A Standard PTAC 12,000 Btu/h Full Production Cost

Efficiency Level EER Industry

Estimated

R­22 Full

Production

Cost Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

**Baseline (ASHRAE** 

**90.1­1999) 9.9**  **$375.55**

**Efficiency Level**  **1 10.2**  **$381.88**

**Efficiency Level**  **2 10.8**  **$397.47**

**Efficiency Level**  **3 11**  **$403.54**

**Efficiency Level**  **4 11.5**  **$420.59**

Table 4.6 R­22 and R­410A Standard PTHP 12,000 Btu/h Full Production Cost

Efficiency Level EER Industry

Estimated

R­22 Full

Production

Cost Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

**Baseline (ASHRAE** 

**90.1­1999) 9.7**  **$421.87**

**Efficiency Level**  **1 10**  **$427.55**

**Efficiency Level**  **2 10.6**  **$441.84**

**Efficiency Level**  **3 10.8**  **$447.47**

**Efficiency Level**  **4 11.5**  **$470.59**

**4.7 Does**  **your company**  **have any**  **working prototypes**  **of R­410A**  **PTACs and**  **PTHPs?**

**Could you**  **provide any**  **prototype or**  **simulation testing**  **information?**

**4.8 Are**  **there any**  **other concerns**  **regarding the**  **refrigerant phase­out**  **that you**  **would like** 

**DOE to**  **be aware**  **of?**

5 PRODUCTION COST BREAKDOWN

**5.1 DOE**  **estimated the**  **full production**  **costs of**  **various R­22**  **PTAC and**  **PTHP units**  **of**

**different efficiencies**  **for both**  **9,000 btu/h**  **and 12,000**  **btu/h cooling**  **capacities, as**  **shown**

**in the**  **previous section.**  **With the**  **combined data,**  **doe calculated**  **the industry**  **average**

**percentage of**  **each cost**  **in the**  **full production**  **cost.**

**5.2 Please**  **compare your**  **full production**  **cost percentages**  **to the**  **grim full**  **production cost** 

**percentages tabulated**  **below. Are**  **the different**  **percentages of**  **each cost**  **representative**

**K­8 of**  **your company**  **or the**  **R­22 PTAC**  **and PTHP**  **industry? Please**  **explain any** 

**differences.**

Table 5.1 Breakdown by Percentage of Full Production Costs for Standard Size, Baseline,

R­22 PTACs and PTHPs

Components of Full Production Costs Estimated % of Full

Production Cost Your Actual (if

significantly different

from our estimate)

**Materials 84.6**  **%**

**Labor 4.1**  **%**

**Overhead 6.9**  **%**

**Depreciation*** **4.4 %** 

***** **Depreciation is**  **calculated based**  **on a**  **completely new**  **factory**

**5.3 Do**  **you anticipate**  **your full**  **production cost**  **percentage breakdown**  **will change**  **as a** 

**result of**  **the refrigerant**  **phase­out in**  **2010? If**  **so, can**  **you please**  **provide your**  **estimates**

**in the**  **table below?** 

Table 5.2 Estimated Breakdown by Percentage of Full Production Costs for Standard Size,

Baseline, R­410A PTACs and PTHPs

Components of Full Production Costs R­410A Estimated %

of Full Production Cost

**Materials**

**Labor**

**Overhead**

**Depreciation***

***** **Depreciation is**  **calculated based**  **on a**  **completely new**  **factory**

6 SHIPMENT PROJECTIONS AND MARKET SHARES

**A new**  **energy conservation**  **standard can**  **change overall**  **shipments by**  **changing product** 

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

**projections on**  **shipment projections**  **obtained from**  **the National**  **Energy Savings**  **Spreadsheet**

**(NES) prepared**  **by the**  **Pacific Northwest**  **National Laboratory**  **(PNNL). The**  **NES includes** 

**shipment forecasts**  **for the**  **base case**  **(absent new**  **standards) and**  **new standards**  **at each**  **efficiency**

**level being**  **analyzed.**

**6.1 Please**  **compare DOE’s**  **projections of**  **industry­wide shipments**  **for R­22**  **standard size** 

**PTACs and**  **PTHPs with**  **your company’s**  **projections of**  **industry­wide shipments?** 

**K­9**Table 6.1 2012 Industry­Wide Shipment Projections for R­22 Standard Size PTACs and

PTHPs (Number of Units)

Case PTAC

9,000

Btu/h PTAC

12,000

Btu/h PTHP

9,000

Btu/h PTHP

12,000

Btu/h

**Base Case** 

**ASHRAE/IESNA 90.1­** 

**1999 87,300**  **129,100 68,600**  **93,500**

Comments Or Your

Company’s Projection

**6.2 Does**  **your company**  **anticipate the**  **industry­wide shipments**  **for PTACs**  **and PTHPs**  **to**

**change as**  **a result**  **of the**  **refrigerant phase­out?**  **If so,**  **could you**  **please provide**  **an**

**estimated percent**  **change in**  **the shipments?** 

Table 6.2 2012 Industry­Wide Shipment Projections for R­410A Standard Size PTACs and

PTHPs

Efficiency Level PTAC

9,000

Btu/h PTAC

12,000

Btu/h PTHP

9,000

Btu/h PTHP

12,000

Btu/h

Comments Or Your

Company’s Projection

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

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

**standard levels**  **in comparison**  **to the**  **base case).**  **Could you**  **provide your**  **company’s**

**estimates and/or**  **any qualitative**  **information on**  **expected changes**  **in total**  **industry**

**shipments due**  **to the**  **different analyzed**  **efficiency levels?** 

Table 6.3 Changes in Shipments versus Base Case in 2012 for R­22 Standard Size

Equipment

Efficiency

Levels PTAC 9,000 Btu/h PTHP 9,000 Btu/h

EER %

Change Comments EER %

Change Comments

**Efficiency**

**Level 1**  **10.9 10.7** 

**Efficiency**

**Level 2**  **11.3 11.1** 

**Efficiency**

**Level 3**  **11.5 11.3** 

**Efficiency**

**Level 4**  **12.0 12.0** 

**K­10**Table 6.4 Changes in Shipments versus Base Case in 2012 for R­22 Standard Size

Equipment

Efficiency

Levels PTAC 12,000 Btu/h PTHP 12,000 Btu/h

EER %

Change Comments EER %

Change Comments

**Efficiency**

**Level 1**  **10.2 10.0** 

**Efficiency**

**Level 2**  **10.8 10.6** 

**Efficiency**

**Level 3**  **11.0 10.8** 

**Efficiency**

**Level 4**  **11.5 11.5** 

**6.4 What**  **is your**  **company’s approximate**  **market share**  **of the**  **PTAC and**  **PTHP industry?** 

**6.5 Would**  **you expect**  **your market**  **share to**  **change once**  **higher energy**  **conservation**

**standards become**  **effective?**

**6.6 Would**  **you expect**  **your market**  **share to**  **change as**  **a result**  **of the**  **refrigerant phase­out?** 

7 PRODUCT MIX

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

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

**standards.**

**7.1 If**  **your company**  **offers multiple**  **product lines**  **with different**  **efficiency levels,**  **how does** 

**your mix**  **of PTACs**  **and PTHPs**  **sales by**  **product efficiency**  **compare to**  **our projected** 

**2012 industry**  **average distribution**  **for the**  **ASHRAE/IESNA 90.1­1999**  **base case**  **as**

**shown in**  **table 7.1** 

**– table**  **7.4? If**  **your company**  **does not**  **offer multiple**  **product lines** 

**with different**  **efficiency levels,**  **is the**  **projected distribution**  **representative of**  **the PTAC** 

**and PTHP**  **industry?**

Table 7.1 Percentage of Total Shipment by Efficiency Level for R­22 Standard Size PTAC

9,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

10.6 10.9 11.3 11.5 12.0

**2012 23%**  **22% 20%**  **19% 17%** 

**K­11**Table 7.2 Percentage of Total Shipment by Efficiency Level for R­22 Standard Size PTHP

9,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

10.4 10.7 11.1 11.3 12.0

**2012 22%**  **21% 20%**  **20% 17%** 

Table 7.3 Percentage of Total Shipment by Efficiency Level for R­22 Standard Size PTAC

12,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

9.9 10.2 10.8 11.0 11.5

**2012 24%**  **23% 20%**  **18% 16%** 

Table 7.4 Percentage of Total Shipment by Efficiency Level for R­22 Standard Size PTHP

12,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

9.7 10.0 10.6 10.8 11.5

**2012 23%**  **22% 20%**  **19% 16%** 

**7.2 Do**  **you expect**  **the product**  **mix to**  **change over**  **time absent**  **any new**  **energy conservation** 

**standards?**

**7.3 Do**  **you expect**  **the product**  **mix to**  **change due**  **to the**  **refrigerant phase­out**  **for 2012?**  **If**

**so, could**  **you provide**  **estimates or**  **any information**  **that could**  **help doe**  **understand the** 

**effects of**  **the refrigerant**  **phase­out on**  **industry product**  **mix? Please**  **use the**  **tables**

**below.**

Table 7.5 Percentage of Total Shipment by Efficiency Level for R­410A Standard Size

PTAC 9,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

10.6 10.9 11.3 11.5 12.0

**2012**

Table 7.6 Percentage of Total Shipment by Efficiency Level for R­410A Standard Size

PTHP 9,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

10.4 10.7 11.1 11.3 12.0

**2012**

**K­12**Table 7.7 Percentage of Total Shipment by Efficiency Level for R­410A Standard Size

PTAC 12,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

9.9 10.2 10.8 11.0 11.5

**2012**

Table 7.8 Percentage of Total Shipment by Efficiency Level for R­410A Standard Size

PTHP 12,000 Btu/h Cooling Capacity

Year Percent of Total Shipments by Efficiency Level

9.7 10.0 10.6 10.8 11.5

**2012**

**7.4 A**  **new energy**  **conservation standard**  **affects the**  **product mix**  **by eliminating**  **the sale**  **of**

**products below**  **the minimum**  **efficiency level.**  **The NES**  **forecasts the**  **distribution of**  **R**

**22 PTACs**  **and PTHPs**  **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? Would**  **you expect**  **your own**  **product mix**  **to differ?** 

Table 7.9 R­22 Standard Size PTAC 9,000 Btu/h Product Mix (2012)

Standard Level Efficiency Level (EER)

10.6 10.9 11.3 11.5 12.0

**10.6 22.9%**  **21.7% 19.9%**  **19.0% 16.6%** 

**10.9 NA**  **44.5% 19.9%**  **19.0% 16.6%** 

**11.3 NA**  **NA 64.4%**  **19.0% 16.6%** 

**11.5 NA**  **NA NA**  **83.4% 16.6%** 

**12.0 NA**  **NA NA**  **NA 100%** 

Table 7.10 R­22 Standard Size PTHP 9,000 Btu/h Product Mix (2012)

Standard Level Efficiency Level (EER)

10.4 10.7 11.1 11.3 12.0

**10.4 21.9%**  **21.2% 20.1%**  **19.6% 17.2%** 

**10.7 NA**  **43.1% 20.1%**  **19.6% 17.2%** 

**11.1 NA**  **NA 63.2%**  **19.6% 17.2%** 

**11.3 NA**  **NA NA**  **82.8% 17.2%** 

**12.0 NA**  **NA NA**  **NA 100%** 

**K­13**Table 7.11 R­22 Standard Size PTAC 12,000 Btu/h Product Mix (2012)

Standard Level Efficiency Level (EER)

9.9 10.2 10.8 11.0 11.5

**9.9 23.9%**  **22.6% 19.5%**  **18.4% 15.6%** 

**10.2 NA**  **46.5% 19.5%**  **18.4% 15.6%** 

**10.8 NA**  **NA 66.1%**  **18.4% 15.6%** 

**11.0 NA**  **NA NA**  **84.4% 15.6%** 

**11.5 NA**  **NA NA**  **NA 100%** 

Table 7.12 R­22 Standard Size PTHP 12,000 Btu/h Product Mix (2012)

Standard Level Efficiency Level (EER)

9.7 10.0 10.6 10.8 11.5

**9.7 22.7%**  **22.1% 20.0%**  **19.1% 16.1%** 

**10.0 NA**  **44.8% 20.0%**  **19.1% 16.1%** 

**10.6 NA**  **NA 64.8%**  **19.1% 16.1%** 

**10.8 NA**  **NA NA**  **83.9% 16.1%** 

**11.5 NA**  **NA NA**  **NA 100%** 

**K­14 7.5**  **Does your**  **company expect**  **any changes**  **to the**  **above product**  **mixes due**  **to the** 

**refrigerant phase­out?**  **Please explain**  **both qualitatively**  **and quantitatively**  **if possible.** 

8 INSTALLATION, MAINTENANCE, AND REPAIR COSTS

**DOE recognizes**  **that new**  **energy conservation**  **standards have**  **potential impacts**  **on the** 

**installation, maintenance,**  **and repair**  **costs of**  **equipment such**  **as PTACs**  **and PTHPs.**  **To meet** 

**new energy**  **conservation standards,**  **manufacturers may**  **implement more**  **efficient components** 

**and design**  **options that**  **can possibly**  **affect the**  **installation, maintenance,**  **and repair**  **costs. As** 

**part of**  **the life**  **cycle cost**  **analysis, DOE**  **estimated the**  **installation, maintenance,**  **and repair**  **costs**

**of standard**  **size PTACs**  **and PTHPs**  **for each**  **efficiency level.** 

**8.1 Are**  **these installation**  **and annual**  **repair cost**  **estimates representative**  **of the**  **industry for** 

**the different**  **equipment? Please**  **explain any**  **differences.**

Table 8.1 Average Installation and Average Annual Repair Costs for Standard Size PTAC

9,000 Btu/h Cooling Capacity

Efficiency Level Average Installation

Costs Average Annual Repair

Cost

**Efficiency Level** 

**1 $197**  **$16**

**Efficiency Level** 

**2 $202**  **$16**

**Efficiency Level** 

**3 $204**  **$16**

**Efficiency Level** 

**4 $211**  **$17**

Table 8.2 Average Installation and Average Annual Repair Costs for Standard Size PTAC

12,000 Btu/h Cooling Capacity

Efficiency Level Average Installation

Costs Average Annual Repair

Cost

**Efficiency Level** 

**1 $247**  **$16**

**Efficiency Level** 

**2 $257**  **$16**

**Efficiency Level** 

**3 $261**  **$16**

**Efficiency Level** 

**4 $272**  **$17**

**K­15**Table 8.3 Average Installation and Average Annual Repair Costs for Standard Size PTHP

9,000 Btu/h Cooling Capacity

Efficiency Level Average Installation

Costs Average Annual Repair

Cost

**Efficiency Level** 

**1 $197**  **$16**

**Efficiency Level** 

**2 $200**  **$16**

**Efficiency Level** 

**3 $203**  **$16**

**Efficiency Level** 

**4 $211**  **$17**

Table 8.4 Average Installation and Average Annual Repair Costs for Standard Size PTHP

12,000 Btu/h Cooling Capacity

Efficiency Level Average Installation

Costs Average Annual Repair

Cost

**Efficiency Level** 

**1 $246**  **$16**

**Efficiency Level** 

**2 $254**  **$16**

**Efficiency Level** 

**3 $257**  **$16**

**Efficiency Level** 

**4 $271**  **$17**

**8.2 Does**  **your company**  **expect there**  **will be**  **changes to**  **equipment installation**  **and annual** 

**repair cost**  **due to**  **the refrigerant**  **phase­out? If**  **possible, can**  **you provide**  **any estimates** 

**on the**  **changes to**  **the installation**  **and annual**  **repair costs**  **due to**  **the refrigerant**  **phase**

**out?**

**8.3 Are**  **the failure**  **and repair**  **rates for**  **your products**  **a function**  **of efficiency?**  **If so,**  **please**

**explain.**

9 CONVERSION COSTS

**An increase**  **in energy**  **conservation standards**  **may cause**  **your company**  **to incur**  **one­time capital** 

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

**changing your**  **business to**  **comply with**  **new energy**  **conservation standards.** 

**K­16 9.1**  **What level**  **of conversion**  **costs do**  **you anticipate**  **incurring under**  **the different**  **efficiency**

**levels? Refer**  **to the**  **tables below**  **to provide**  **your company’s**  **estimates. Please**  **provide**

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

Table 9.1 Standard Size PTAC 9,000 Btu/h Conversion Costs

Standard

Level Conversion Capital Expenditures Product Conversion Expenses

**10.6 EER** 

**10.9 EER** 

**11.3 EER** 

**11.5 EER** 

**12.0 EER** 

Table 9.2 Standard Size PTHP 9,000 Btu/h Conversion Costs

Standard

Level Conversion Capital Expenditures Product Conversion Expenses

**10.4 EER** 

**10.7 EER** 

**11.1 EER** 

**11.3 EER** 

**12.0 EER** 

Table 9.3 Standard Size PTAC 12,000 Btu/h Conversion Costs

Standard

Level Conversion Capital Expenditures Product Conversion Expenses

**9.9 EER** 

**10.2 EER** 

**10.8 EER** 

**11.0 EER** 

**11.5 EER** 

Table 9.4 Standard Size PTHP 12,000 Btu/h Conversion Costs

Standard

Level Conversion Capital Expenditures Product Conversion Expenses

**9.7 EER** 

**10.0 EER** 

**10.6 EER** 

**10.8 EER** 

**11.5 EER** 

**9.2 What**  **portion of**  **your conversion**  **capital expenditures**  **will go**  **towards replacing**  **existing**

**assets, which**  **would become**  **obsolete under**  **a new**  **energy conservation**  **standard? Does** 

**your answer**  **depend upon**  **the efficiency**  **level? If**  **yes, please**  **provide an**  **estimate with** 

**K­17 the**  **corresponding efficiency**  **level.**

Table 9.5 Portion of Conversion Capital Expenditure to Replace Existing Assets

Efficiency Level Portion of Conversion Capital

Expenditures For Replacing

Existing Assets

**Baseline**

**(ASHRAE/IESNA 90.1­1999)** 

**Efficiency Level**  **1**

**Efficiency Level**  **2**

**Efficiency Level**  **3**

**Efficiency Level**  **4**

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

**tooling)?**

10 MARKUPS AND PROFITABILITY

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

**profitability. In**  **this section,**  **DOE would**  **like your**  **assistance understanding**  **how the**  **efficiency**

**levels would**  **impact your**  **company’s markups**  **and profitability.** 

**10.1 Do**  **profit levels**  **vary by**  **product class**  **(i.e., PTAC**  **and PTHP**  **at different**  **cooling**

**capacities)? Do**  **profit levels**  **vary by**  **efficiency level?**  **Please explain**  **why or**  **why not?** 

**10.2 What**  **changes do**  **you expect,**  **if any,**  **in your**  **estimated profitability**  **following the**  **new**

**energy conservation**  **standard?**

**10.3 What**  **are the**  **causes of**  **any expected**  **changes in**  **profitability?**

11 CUMULATIVE REGULATORY BURDEN

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

**new or**  **revised DOE**  **standards and/or**  **other regulatory**  **actions affecting**  **the same**  **products or** 

**industry.**

**K­18 11.1**  **Are there**  **other recent**  **or impending**  **regulations, excluding**  **the refrigerant**  **phase­out, that** 

**PTAC and**  **PTHP manufacturers**  **face (from**  **doe or**  **otherwise)? What**  **level of** 

**investment are**  **you expecting**  **to incur**  **as a**  **result of**  **these regulations?** 

**11.2 Under**  **what circumstances**  **would you**  **be able**  **to coordinate**  **any expenditures**  **related to** 

**other regulations**  **thereby lessening**  **the cumulative**  **burden?**

12 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**  **standards, may** 

**impact sourcing**  **decisions.**

**12.1 Does**  **the bulk**  **of your**  **company’s PTAC**  **and PTHP**  **production occur**  **domestically?**

**Absent standards,**  **are production**  **facilities being**  **relocated to**  **foreign countries?**  **Would**

**standards impact**  **your domestic**  **vs. foreign**  **manufacturing decision?** 

**12.2 Could**  **a new**  **standard affect**  **your export**  **sales? What**  **would the**  **resulting impact**  **be, if** 

**any, on**  **your manufacturing**  **operations and**  **profitability?**

**12.3 What**  **percentage of**  **the U.S.**  **market has**  **been captured**  **by foreign**  **competition? Would** 

**standards have**  **an impact**  **on foreign**  **competition?**

13 DIRECT EMPLOYMENT IMPACT ASSESSMENT

**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** 

**PTAC and**  **PTHP production**  **employment and**  **solicit manufacturer**  **views on**  **how domestic** 

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

**K­19 13.1**  **Would your**  **domestic employment**  **levels change**  **under new**  **energy conservation** 

**standards?**

**13.2 Would**  **the workforce**  **skills necessary**  **under new**  **energy conservation**  **standards require** 

**extensive retraining**  **or replacement**  **of employees?** 

14 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 Justice** 

**Department are**  **both interested**  **in any**  **potential reduction**  **in competition**  **that would**  **result from**  **a**

**new energy**  **conservation standard.** 

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

**14.2 In**  **the absence**  **of new**  **standards, do**  **you expect**  **any industry**  **consolidation? Please** 

**describe your**  **expectations.**

**14.3 How**  **would new**  **standards affect**  **your ability**  **to compete?** 

**14.3 Could**  **new standards**  **disproportionately advance**  **or harm**  **the competitive**  **positions of** 

**some firms**  **(e.g., small**  **businesses)?**

**K­20**K.2 NON­STANDARD SIZE PACKAGED TERMINAL AIR CONDITIONERS AND

PACKAGED TERMINAL HEAT PUMPS MANUFACTURER INTERVIEW GUIDE



## Packaged Terminal Air Conditioners

and Packaged Terminal Heat Pumps Rulemaking

Manufacturer Impact Analysis Interview Guide:

Non­Standard Size Packaged Terminal Air Conditioners and

Packaged Terminal Heat Pumps

**May 18,**  **2007**

**K­21**1 KEY ISSUES

**The Department**  **of Energy**  **(DOE) is**  **currently reviewing**  **five efficiency**  **levels for**  **the package** 

**terminal air**  **conditioner (PTAC)**  **and packaged**  **terminal heat**  **pump (PTHP)**  **rulemaking analyses.** 

**For the**  **purpose of**  **this interview**  **guide, DOE**  **refers to**  **replacement PTACs**  **and PTHPs**  **as “non** 

**standard” size**  **PTACs and**  **PTHPs. Non­standard**  **size PTACs**  **and PTHPs**  **refers to**  **equipment**

**with a**  **wall sleeve**  **dimension having**  **an exterior**  **wall opening**  **less than**  **16 inches**  **high or**  **less**

**than 42**  **inches wide**  **or equipment**  **with cross­sectional**  **area less**  **than 670**  **square inches.**  **The**

**efficiency levels**  **are presented**  **below as**  **they apply**  **to non­standard**  **size PTACs**  **and PTHPs** 

**product classes.**  **In responding**  **to this**  **questionnaire, please**  **refer to**  **the EER**  **values described** 

**below.**

Table 1.1 Efficiency Levels

Product Class Efficiency Efficiency Level 0 Efficiency Efficiency Efficiency Efficiency

(cooling capacity) Metric Baseline Level 1 Level 2 Level 3 Level 4

(ASHRAE/IESNA

90.1­1999)

**PTAC all**  **capacities**

**Non­standard Size**  **EER 8.6**  **9.5 10.0**  **10.7 11.2** 

**PTHP all**  **capacities EER**  **8.5 9.4**  **9.9 10.6**  **11.2**

**Non­standard Size**  **COP 2.6**  **2.8 2.8**  **2.9 2.9** 

**1.4 What**  **are the**  **key issues**  **for your**  **company regarding**  **PTACs and**  **PTHPs related**  **to energy** 

**conservation standards**  **and this**  **rulemaking?**

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

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

**(MIA)?**

2 COMPANY OVERVIEW AND ORGANIZATIONAL CHARACTERISTICS

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

**directly pertinent**  **to PTAC**  **and PTHP**  **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**  **PTAC**

**and PTHP**  **industry profit**  **center will**  **help DOE**  **understand the**  **probable future**  **of the**  **PTAC and** 

**PTHP manufacturing**  **activity with**  **and without**  **energy conservation**  **standards.**

**K­22 2.1**  **Do you**  **have a**  **parent company,**  **and/or any**  **subsidiaries relevant**  **to the**  **PTAC and**  **PTHP**

**industry?**

**2.2 Do**  **you manufacture**  **hvac products**  **other than**  **PTACs and**  **PTHPs? If**  **so, what**  **other**

**products do**  **you manufacture?** 

**2.3 What**  **percentage of**  **your total**  **manufacturing is**  **for PTACs**  **and PTHPs?** 

**2.4 Where**  **are your**  **production facilities**  **located, and**  **what type**  **of product**  **is manufactured** 

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

**location by**  **product type**  **(PTACs and**  **PTHPs), cooling**  **capacity, and**  **efficiency (i.e.,** 

**provide the**  **product mix**  **for each**  **location).**

**2.5 From**  **the facilities**  **listed from**  **the previous**  **question, do**  **you manufacture**  **products other** 

**than PTACs**  **and PTHPs**  **at those**  **facilities? How**  **important are**  **the PTAC**  **and PTHP** 

**lines at**  **those facilities**  **to keeping**  **facility open?** 

**2.6 At**  **a particular**  **facility, would**  **potential PTAC**  **and PTHP**  **redesigns be**  **difficult to** 

**manufacture? If**  **so, would**  **your company**  **modify the**  **facility or**  **develop a**  **new facility?** 

**2.7 What**  **are your**  **employment levels**  **at these**  **facilities?**

**2.8 What**  **are your**  **company’s total**  **PTAC and**  **PTHP production**  **volumes (i.e.,**  **units per** 

**year) for**  **the past**  **5 years?** 

**2.9 What**  **are your**  **product lines,**  **niches and**  **relative strengths**  **in the**  **PTAC and**  **PTHP**

**market?**

3 FINANCIAL PARAMETERS

**Navigant Consulting,**  **Inc. (NCI)**  **has developed**  **a “strawman”**  **model of**  **the PTAC**  **and PTHP** 

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

**publicly available**  **data on**  **PTAC and**  **PTHP manufacturers.**  **All estimates**  **and calculations**  **in the** 

**GRIM are**  **based on**  **PTACs and**  **PTHPs using**  **the refrigerant**  **R­22. This**  **section attempts**  **to**

**understand how**  **your company’s**  **financial situation**  **differs from**  **our industry**  **aggregate picture.** 

**K­23 3.1**  **Please compare**  **your financial**  **parameters to**  **the grim**  **parameters tabulated**  **below.**

Table 3.1 Financial Parameters for Replacement (Non­Standard Size) PTAC and PTHP

Manufacturers

GRIM Input Definition PTAC and

PTHP 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) 35.4%** 

Discount Rate **Weighted average**  **cost of** 

**capital (inflation­adjusted** 

**weighted average**  **of**

**corporate cost**  **of debt**  **and**

**return on**  **equity) 5.0%** 

Working Capital **Current assets**  **less current** 

**liabilities (percentage**  **of**

**revenues) 3.5%** 

SG&A **Selling, general,**  **and**

**administrative expenses** 

**(percentage of**  **revenues) 14.1%** 

R&D **Research and**  **development**

**expenses (percentage**  **of**

**revenues) 1.6%** 

Depreciation **Amortization of**  **fixed**

**assets (percentage**  **of**

**revenues) 1.7%** 

Capital

Expenditures **Outlay of**  **cash to**  **acquire**

**or improve**  **capital assets** 

**(percentage of**  **revenues,**

**not including**  **acquisition**

**or sale**  **of business**  **units) 1.8%** 

**3.2 How**  **might new**  **energy conservation**  **standards impact**  **your company’s**  **financial**

**parameters?**

4 R­410A

**As part**  **of the**  **rulemaking process,**  **DOE is**  **interested in**  **understanding the**  **cumulative burden**  **on**

**manufacturers of**  **PTACs and**  **PTHPs due**  **to other**  **regulatory actions.**  **DOE is**  **aware that**  **the**

**Environmental Protection**  **Agency (EPA)**  **has mandated**  **the phase­out**  **of**

**hydrochlorofluorocarbon (HCFC)**  **refrigerants by**  **2010. For**  **analysis purposes,**  **DOE has** 

**assumed that**  **R­410A will**  **replace R­22**  **as the**  **refrigerant of**  **choice in**  **PTAC and**  **PTHP**

**K­24 equipment.**  **This questionnaire**  **attempts to**  **understand how**  **your company**  **is preparing**  **for the** 

**refrigerant phase­out**  **and its**  **effects to**  **your company’s**  **operations. DOE**  **would also**  **like to** 

**understand the**  **effects that**  **the refrigerant**  **phase­out will**  **have on**  **PTAC and**  **PTHP design** 

**performance.**

**4.1 Has**  **your company**  **identified the**  **steps to**  **converting from**  **R­22 to**  **R­410A (or**  **another**

**refrigerant) for**  **PTAC and**  **PTHP products?**  **If so,**  **please explain**  **any steps**  **your**

**company is**  **currently taking**  **to address**  **the conversion**  **issue.**

**4.2 Will**  **your company**  **invest the**  **capital and**  **product conversion**  **expenditures to**  **be able**  **to**

**market R­410A**  **PTACs and**  **PTHPs at**  **your current**  **R­22 PTAC**  **and PTHP**  **efficiencies**

**by 2010?**  **If so,**  **could you**  **please provide**  **a detailed**  **quantitative and**  **qualitative**

**description of**  **the types**  **of expenditures**  **that would**  **be necessary**  **to fully**  **convert your** 

**product lines?**  **Please refer**  **to the**  **table below**  **to provide**  **your company’s**  **estimates.**

Table 4.1 Non­Standard Size PTAC and PTHP R­410A Conversion Costs

Product Class

(cooling capacity) R­410A Conversion Capital

Expenditures c R­410A Product Conversion

Expenses d

**PTAC**

**PTHP**

**4.2a If**  **your company**  **does not**  **plan to**  **maintain your**  **current R­22**  **PTAC and**  **PTHP**

**efficiencies, could**  **you please**  **provide qualitative**  **and quantitative**  **information about** 

**your company’s**  **plans to**  **address the**  **refrigerant phase­out**  **and the**  **types of**  **investments**

**that would**  **be needed**  **to convert**  **your product**  **lines to**  **R­410A? Please**  **refer to**  **the table** 

**below to**  **provide your**  **company’s estimates.**  **Please provide**  **additional information,** 

**such as**  **a time**  **frame, cost**  **breakdowns, type**  **of tooling**  **needed, etc.,**  **to help**  **us**

**understand the**  **nature of**  **your investments.** 

Table 4.2 Non­Standard Size PTAC and PTHP R­410A Conversion Costs

Product Class

(cooling capacity) R­410A Conversion Capital

Expenditures R­410A Product Conversion

Expenses

**PTAC**

**PTHP**

**4.3 What**  **changes do**  **you expect,**  **if any,**  **in your**  **estimated profitability**  **following the** 

**refrigerant phase­out**  **in 2010?** 

**4.4 Do**  **you expect**  **your projected**  **production volume**  **and shipments**  **to be**  **altered by**  **the**

**c Conversion**  **Capital Expenditures**  **­ One­time 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.** 

**d Product**  **Conversion Expenses**  **­ One­time expenses**  **in research,**  **product development,**  **testing, and**  **marketing**

**necessitated by**  **an appliance**  **energy conservation**  **standard.**

**K­25 refrigerant**  **phase­out? If**  **so, can**  **you please**  **provide your**  **R­410A PTAC**  **and PTHP** 

**production volume**  **and shipments**  **estimates?**

**4.4 Will**  **the refrigerant**  **phase­out cause**  **you to**  **discontinue production**  **of any**  **product lines** 

**including different**  **cooling capacities**  **and equipment**  **type (PTAC**  **and PTHP)?** 

**4.5 DOE**  **would like**  **to compare**  **current full**  **production costs**  **for R­22**  **PTACs and**  **PTHPs**

**with estimated**  **R­410A PTACs**  **and PTHPs**  **full production**  **costs (i.e.,**  **manufacturing**

**production costs,**  **which include**  **materials, labor,**  **overhead, and**  **depreciation costs).** 

**Could you**  **please compare**  **your current**  **R­22 equipment**  **full production**  **costs with**  **the**

**industry estimates**  **provided below?**  **Are they**  **representative of**  **your product’s**  **full**

**production costs?**  **If not,**  **could you**  **please explain**  **any differences?**  **Could you**  **please**

**provide an**  **estimated percentage**  **difference in**  **full production**  **cost between**  **R­22 and**  **R**

**410A PTACs**  **and PTHPs?** 

Table 4.3 R­22 and R­410A Non­Standard PTAC Full Production Cost

Efficiency Level EER Industry

Estimated

R­22 Full

Production

Cost Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

**Baseline (ASHRAE** 

**90.1­1999) 8.6**  **$448.10**

**Efficiency Level**  **1 9.5**  **$456.03**

**Efficiency Level**  **2 10.0**  **$464.33**

**Efficiency Level**  **3 10.7**  **$480.63**

**Efficiency Level**  **4 11.2**  **$495.61**

Table 4.4 R­22 and R­410A Non­Standard PTHP Full Production Cost

Efficiency Level EER Industry

Estimated

R­22 Full

Production

Cost Your Comments

On The Industry

Estimated R­22

Equipment Full

Production Cost Your R­410A

Equipment Estimated

Percentage Difference

In Full Production Cost

**Baseline (ASHRAE** 

**90.1­1999) 8.5**  **$497.78**

**Efficiency Level**  **1 9.4**  **$504.70**

**Efficiency Level**  **2 9.9**  **$512.45**

**Efficiency Level**  **3 10.6**  **$527.96**

**Efficiency Level**  **4 11.2**  **$545.61**

**K­26 4.6**  **Does your**  **company have**  **any working**  **prototypes of**  **R­410A PTACs**  **and PTHPs?** 

**Could you**  **provide any**  **prototype or**  **simulation testing**  **information?**

**4.7 Are**  **there any**  **other concerns**  **regarding the**  **refrigerant phase­out**  **that you**  **would like** 

**DOE to**  **be aware**  **of?**

5 PRODUCTION COST BREAKDOWN

**DOE estimated**  **the full**  **production costs**  **of various**  **R­22 PTAC**  **and PTHP**  **units of**  **different**

**efficiencies for**  **all cooling**  **capacities, as**  **shown in**  **the previous**  **section. With**  **the combined**  **data,**

**DOE calculated**  **the industry**  **average percentage**  **of each**  **cost in**  **the full**  **production cost.** 

**5.1 Please**  **compare your**  **full production**  **cost percentages**  **to the**  **grim full**  **production cost** 

**percentages tabulated**  **below. Are**  **the different**  **percentages of**  **each cost**  **representative**

**of your**  **company or**  **the R­22**  **PTAC and**  **PTHP industry?**  **Please explain**  **any**

**differences.**

Table 5.1 Breakdown by Percentage of Full Production Costs for Non­Standard Size R­22

PTACs and PTHPs

Components of Full Production Costs Estimated % of Full

Production Cost Your Actual (if

significantly different

from our estimate)

**Materials 65.3%** 

**Labor 11.9%** 

**Overhead 9.8%** 

**Depreciation*** **13.1%**

***** **Depreciation is**  **calculated based**  **on a**  **completely new**  **factory**

**5.2 Do**  **you anticipate**  **your full**  **production cost**  **percentage breakdown**  **will change**  **as a** 

**result of**  **the refrigerant**  **phase­out in**  **2010? If**  **so, can**  **you please**  **provide your**  **estimates**

**in the**  **table below?** 

Table 5.2 Estimated Breakdown by Percentage of Full Production Costs for Non­Standard

Size R­410A PTACs and PTHPs

Components of Full Production Costs R­410A Estimated %

of Full Production Cost

**Materials**

**Labor**

**Overhead**

**Depreciation***

***** **Depreciation is**  **calculated based**  **on a**  **completely new**  **factory**

**K­27**6 SHIPMENT PROJECTIONS AND MARKET SHARES

**A new**  **energy conservation**  **standard can**  **change overall**  **shipments by**  **changing product** 

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

**projections on**  **shipment projections**  **obtained from**  **the National**  **Energy Savings**  **Spreadsheet**

**(NES) prepared**  **by the**  **Pacific Northwest**  **National Laboratory**  **(PNNL). The**  **NES includes** 

**shipment forecasts**  **for the**  **base case**  **(absent new**  **standards) and**  **new standards**  **at each**  **efficiency**

**level being**  **analyzed.**

**6.1 Please**  **compare DOE’s**  **projections of**  **industry­wide shipments**  **for R­22**  **non­standard**

**size PTACs**  **and PTHPs**  **with your**  **company’s projections**  **of industry­wide**  **shipments?**

Table 6.1 2012 Industry­Wide Shipment Projections for R­22 Non­Standard Size PTACs

and PTHPs (Number of Units)

PTAC All PTHP All

Case Cooling Cooling

Capacities Capacities

**Base Case** 

**ASHRAE/IESNA 37,800**  **28,500**

**90.1­1999**

Comments Or

Your Company’s

Projection

**6.2 Does**  **your company**  **anticipate the**  **industry­wide shipments**  **for PTACs**  **and PTHPs**  **to**

**change as**  **a result**  **of the**  **refrigerant phase­out?**  **If so,**  **could you**  **please provide**  **an**

**estimated percent**  **change in**  **the shipments?** 

Table 6.2 2012 Industry­Wide Shipment Projections for R­410A Non­Standard Size

PTACs and PTHPs

PTAC All PTHP All

Efficiency Level Cooling Cooling

Capacities Capacities

Comments Or

Your Company’s

Projection

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

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

**standard levels**  **in comparison**  **to the**  **base case).**  **Could you**  **provide your**  **company’s**

**estimates and/or**  **any qualitative**  **information on**  **expected changes**  **in total**  **industry**

**shipments due**  **to the**  **different analyzed**  **efficiency levels?** 

**K­28**Table 6.3 Changes in Shipments versus Base Case in 2012 for R­22 Non­Standard Size

Equipment

Efficiency PTAC All Cooling

Capacities PTHP All Cooling

Capacities

Levels EER %

Change Comments EER %

Change Comments

**Efficiency**

**Level 1**  **9.5 9.4** 

**Efficiency**

**Level 2**  **10.0 9.9** 

**Efficiency**

**Level 3**  **10.7 10.6** 

**Efficiency**

**Level 4**  **11.2 11.2** 

**6.4 What**  **is your**  **company’s approximate**  **market share**  **of the**  **PTAC and**  **PTHP industry?** 

**6.5 Would**  **you expect**  **your market**  **share to**  **change once**  **higher energy**  **conservation**

**standards become**  **effective?**

**6.6 Would**  **you expect**  **your market**  **share to**  **change as**  **a result**  **of the**  **refrigerant phase­out?** 

7 PRODUCT MIX

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

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

**standards.**

**7.1 If**  **your company**  **offers multiple**  **product lines**  **with different**  **efficiency levels,**  **how does** 

**your mix**  **of PTACs**  **and PTHPs**  **sales by**  **product efficiency**  **compare to**  **our projected** 

**2012 industry**  **average distribution**  **for the**  **ASHRAE/IESNA 90.1­1999**  **base case**  **as**

**shown in**  **table 7.1** 

**– table**  **7.2? If**  **your company**  **does not**  **offer multiple**  **product lines** 

**with different**  **efficiency levels,**  **is the**  **projected distribution**  **representative of**  **the PTAC** 

**and PTHP**  **industry?**

Table 7.1 Percentage of Total Shipment by Efficiency Level for R­22 Non­Standard Size

PTAC All Cooling Capacities

Year Percent of Total Shipments by Efficiency Level

8.6 9.5 10.0 10.7 11.2

**2012 22.4%**  **21.9% 20.8%**  **18.5% 16.5%** 

**K­29**Table 7.2 Percentage of Total Shipment by Efficiency Level for R­22 Non­Standard Size

PTHP All Cooling Capacities

Year Percent of Total Shipments by Efficiency Level

8.5 9.4 9.9 10.6 11.2

**2012 21.4%**  **21.7% 20.8%**  **19.1% 17.0%** 

**7.2 Do**  **you expect**  **the product**  **mix to**  **change over**  **time absent**  **any new**  **energy conservation** 

**standards?**

**7.3 Do**  **you expect**  **the product**  **mix to**  **change due**  **to the**  **refrigerant phase­out**  **for 2012?**  **If**

**so, could**  **you provide**  **estimates or**  **any information**  **that could**  **help DOE**  **understand the** 

**effects of**  **the refrigerant**  **phase­out on**  **industry product**  **mix? Please**  **use the**  **tables**

**below.**

Table 7.3 Percentage of Total Shipment by Efficiency Level for R­410A Non­Standard Size

PTAC All Cooling Capacities

Year Percent of Total Shipments by Efficiency Level

8.6 9.5 10.0 10.7 11.2

**2012**

Table 7.4 Percentage of Total Shipment by Efficiency Level for R­410A Non­Standard Size

PTHP All Cooling Capacities

Year Percent of Total Shipments by Efficiency Level

8.5 9.4 9.9 10.6 11.2

**2012**

**K­30 7.4**  **a new**  **energy conservation**  **standard affects**  **the product**  **mix by**  **eliminating the**  **sale of** 

**products below**  **the minimum**  **efficiency level.**  **The nes**  **forecasts the**  **distribution of**  **r­22**

**ptacs and**  **pthps 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? Would**  **you expect**  **your own**  **product mix**  **to differ?** 

Table 7.5 R­22 Non­Standard Size PTAC All Cooling Capacities Product Mix (2012)

Standard Level Efficiency Level (EER)

8.6 9.5 10.0 10.7 11.2

**8.6 22.4%**  **21.9% 20.8%**  **18.5% 16.5%** 

**9.5 NA**  **44.2% 20.8%**  **18.5% 16.5%** 

**10.0 NA**  **NA 65.0%**  **18.5% 16.5%** 

**10.7 NA**  **NA NA**  **83.5% 16.5%** 

**11.2 NA**  **NA NA**  **NA 100%** 

Table 7.6 R­22 Non­Standard Size PTHP All Cooling Capacities Product Mix (2012)

Standard Level Efficiency Level (EER)

8.5 9.4 9.9 10.7 11.2

**8.5 21.4%**  **21.7% 20.8%**  **19.1% 17.0%** 

**9.4 NA**  **43.1% 20.8%**  **19.1% 17.0%** 

**9.9 NA**  **NA 63.9%**  **19.1% 17.0%** 

**10.7 NA**  **NA NA**  **83.0% 17.0%** 

**11.2 NA**  **NA NA**  **NA 100%** 

**K­31 7.5**  **Does your**  **company expect**  **any changes**  **to the**  **above product**  **mixes due**  **to the** 

**refrigerant phase­out?**  **Please explain**  **both qualitatively**  **and quantitatively**  **if possible.** 

8 INSTALLATION, MAINTENANCE, AND REPAIR COSTS

**DOE recognizes**  **that new**  **energy conservation**  **standards have**  **potential impacts**  **on the** 

**installation, maintenance,**  **and repair**  **costs of**  **equipment such**  **as PTACs**  **and PTHPs.**  **To meet** 

**new energy**  **conservation standards,**  **manufacturers may**  **implement more**  **efficient components** 

**and design**  **options that**  **can possibly**  **affect the**  **installation, maintenance,**  **and repair**  **costs. As** 

**part of**  **the life**  **cycle cost**  **analysis, DOE**  **estimated the**  **installation, maintenance,**  **and repair**  **costs**

**of non­standard**  **size PTACs**  **and PTHPs**  **for each**  **efficiency level.** 

**8.1 Are**  **these installation**  **and annual**  **repair cost**  **estimates representative**  **of the**  **industry for** 

**the different**  **equipment? Please**  **explain any**  **differences.**

Table 8.1 Average Installation and Average Annual Repair Costs for Non­Standard Size

PTAC All Cooling Capacities

Efficiency Level Average Installation

Costs Average Annual Repair

Cost

**Efficiency Level** 

**1 $247**  **$16**

**Efficiency Level** 

**2 $251**  **$16**

**Efficiency Level** 

**3 $260**  **$16**

**Efficiency Level** 

**4 $268**  **$17**

Table 8.2 Average Installation and Average Annual Repair Costs for Non­Standard Size

PTHP All Cooling Capacities

Efficiency Level Average Installation

Costs Average Annual Repair

Cost

**Efficiency Level** 

**1 $245**  **$16**

**Efficiency Level** 

**2 $250**  **$16**

**Efficiency Level** 

**3 $257**  **$16**

**Efficiency Level** 

**4 $266**  **$17**

**8.2 Does**  **your company**  **expect there**  **will be**  **changes to**  **equipment installation**  **and annual** 

**repair cost**  **due to**  **the refrigerant**  **phase­out? If**  **possible, can**  **you provide**  **any estimates** 

**K­32 on**  **the changes**  **to the**  **installation and**  **annual repair**  **costs due**  **to the**  **refrigerant phase** 

**out?**

**8.3 Are**  **the failure**  **and repair**  **rates for**  **your products**  **a function**  **of efficiency?**  **If so,**  **please**

**explain.**

9 CONVERSION COSTS

**An increase**  **in energy**  **conservation standards**  **may cause**  **your company**  **to incur**  **one­time capital** 

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

**changing your**  **business to**  **comply with**  **new energy**  **conservation standards.** 

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

**levels? Refer**  **to the**  **tables below**  **to provide**  **your company’s**  **estimates. Please**  **provide**

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

Table 9.1 Non­Standard Size PTAC All Cooling Capacities Conversion Costs

Standard

Level Conversion Capital Expenditures Product Conversion Expenses

**8.6 EER** 

**9.5 EER** 

**10.0 EER** 

**10.7 EER** 

**11.2 EER** 

Table 9.2 Non­Standard Size PTHP All Cooling Capacities Conversion Costs

Standard

Level Conversion Capital Expenditures Product Conversion Expenses

**8.5 EER** 

**9.4 EER** 

**9.9 EER** 

**10.7 EER** 

**11.2 EER** 

**K­33 9.2**  **What portion**  **of your**  **conversion capital**  **expenditures will**  **go towards**  **replacing existing** 

**assets, which**  **would become**  **obsolete under**  **a new**  **energy conservation**  **standard? Does** 

**your answer**  **depend upon**  **the efficiency**  **level? If**  **yes, please**  **provide an**  **estimate with** 

**the corresponding**  **efficiency level.** 

Table 9.3 Portion of Conversion Capital Expenditure to Replace Existing Assets

Efficiency Level Portion of Conversion Capital

Expenditures For Replacing

Existing Assets

**Baseline**

**(ASHRAE/IESNA 90.1­1999)** 

**Efficiency Level**  **1**

**Efficiency Level**  **2**

**Efficiency Level**  **3**

**Efficiency Level**  **4**

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

**tooling)?**

10 MARKUPS AND PROFITABILITY

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

**profitability. In**  **this section,**  **DOE would**  **like your**  **assistance understanding**  **how the**  **efficiency**

**levels would**  **impact your**  **company’s markups**  **and profitability.** 

**10.1 Do**  **profit levels**  **vary by**  **product class**  **(i.e., PTAC**  **and PTHP**  **at different**  **cooling**

**capacities)? Do**  **profit levels**  **vary by**  **efficiency level?**  **Please explain**  **why or**  **why not?** 

**10.2 What**  **changes do**  **you expect,**  **if any,**  **in your**  **estimated profitability**  **following the**  **new**

**energy conservation**  **standard?**

**10.3 What**  **are the**  **causes of**  **any expected**  **changes in**  **profitability?**

11 CUMULATIVE REGULATORY BURDEN

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

**new or**  **revised DOE**  **standards and/or**  **other regulatory**  **actions affecting**  **the same**  **products or** 

**industry.**

**K­34 11.1**  **Are there**  **other recent**  **or impending**  **regulations, excluding**  **the refrigerant**  **phase­out, that** 

**PTAC and**  **PTHP manufacturers**  **face (from**  **doe or**  **otherwise)? What**  **level of** 

**investment are**  **you expecting**  **to incur**  **as a**  **result of**  **these regulations?** 

**11.2 Under**  **what circumstances**  **would you**  **be able**  **to coordinate**  **any expenditures**  **related to** 

**other regulations**  **thereby lessening**  **the cumulative**  **burden?**

12 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**  **standards, may** 

**impact sourcing**  **decisions.**

**12.1 Does**  **the bulk**  **of your**  **company’s PTAC**  **and PTHP**  **production occur**  **domestically?**

**Absent standards,**  **are production**  **facilities being**  **relocated to**  **foreign countries?**  **Would**

**standards impact**  **your domestic**  **vs. foreign**  **manufacturing decision?** 

**12.2 Could**  **a new**  **standard affect**  **your export**  **sales? What**  **would the**  **resulting impact**  **be, if** 

**any, on**  **your manufacturing**  **operations and**  **profitability?**

**12.3 What**  **percentage of**  **the U.S.**  **market has**  **been captured**  **by foreign**  **competition? Would** 

**standards have**  **an impact**  **on foreign**  **competition?**

13 DIRECT EMPLOYMENT IMPACT ASSESSMENT

**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** 

**PTAC and**  **PTHP production**  **employment and**  **solicit manufacturer**  **views on**  **how domestic** 

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

**K­35 13.1**  **Would your**  **domestic employment**  **levels change**  **under new**  **energy conservation** 

**standards?**

**13.2 Would**  **the workforce**  **skills necessary**  **under new**  **energy conservation**  **standards require** 

**extensive retraining**  **or replacement**  **of employees?** 

14 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 Justice** 

**Department are**  **both interested**  **in any**  **potential reduction**  **in competition**  **that would**  **result from**  **a**

**new energy**  **conservation standard.** 

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

**14.2 In**  **the absence**  **of new**  **standards, do**  **you expect**  **any industry**  **consolidation? Please** 

**describe your**  **expectations.**

**14.3 How**  **would new**  **standards affect**  **your ability**  **to compete?** 

**14.4 Could**  **new standards**  **disproportionately advance**  **or harm**  **the competitive**  **positions of** 

**some firms**  **(e.g., small**  **businesses)?**

**K­36**