CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUMENT

................................................................................. 1­1

1.2 OVERVIEW OF COMMERCIAL EQUIPMENT STANDARDS................................. 1­1

1.3 OVERVIEW OF COMMERCIAL REFRIGERATION EQUIPMENT STANDARDS 1­3

1.4 STRUCTURE OF THE DOCUMENT............................................................................ 1­6

LIST OF TABLES

Table 1.3.1 Commercial Refrigeration Equipment Analyses Under the Process Rule

.............. 1­5

1­i1­iiCHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUMENT

This technical support document (TSD) is a stand­alone report that documents the

technical analyses and results in support of the information presented in the Notice of Proposed

Rulemaking (NOPR) for establishing energy conservation standards for commercial refrigeration

equipment (CRE).

1.2 OVERVIEW OF COMMERCIAL EQUIPMENT STANDARDS

Part B of Title III of the Energy Policy and Conservation Act of 1975, Public Law 94­

163, as amended by the National Energy Conservation Policy Act of 1978 (NECPA), Public Law

95­619; the National Appliance Energy Conservation Act of 1987 (NAECA), Public Law 100­

12; the National Appliance Energy Conservation Amendments of 1988 (NAECA 1988), Public

Law 100­357; and the Energy Policy Act of 1992 (EPACT 1992), Public Law 102­486 (the Act

or EPCA), established the Energy Conservation Program for Consumer Products other than

Automobiles. (42 U.S.C. 6291­6309) Part 3 of Title IV of NECPA amended EPCA to add Part

C of Title III, which established an energy conservation program for Certain Industrial

Equipment. (42 U.S.C. 6311­6317) EPACT 1992 included amendments to EPCA that expanded

Title III to include additional commercial equipment. The recent Energy Policy and

Conservation Act of 2005 (EPACT 2005), Public Law 109­58, updates several existing standards

and test procedures; prescribes definitions, standards, and test procedures for certain new

consumer products and commercial equipment; and mandates that the Secretary of Energy (the

Secretary) commence rulemakings to develop test procedures and standards for certain new

consumer products and commercial equipment.

In particular, section 136(c) of EPACT 2005 amends section 342 of EPCA by adding

new subsection 342(c)(4)(A) (42 U.S.C. 6313(c)(4)(A)), which directs the Secretary to issue by

rule, no later than January 1, 2009, energy conservation standards for the following equipment,

manufactured on or after January 1, 2012: commercial ice­cream freezers; self­contained

commercial refrigerators, commercial freezers, and commercial refrigerator­freezers without

doors; and remote condensing commercial refrigerators, commercial freezers, and commercial

refrigerator­freezers. Hereafter, this equipment is collectively referred to as commercial

refrigeration equipment (CRE).

Under EPCA, when the U.S. Department of Energy (DOE) studies new or amended

standards, it must consider to the greatest extent practicable, the following seven factors:

(1) the economic impact of the standard on the manufacturers and consumers of the

affected products;

(2) the savings in operating costs throughout the estimated average life of the product

compared to any increases in the initial cost or maintenance expense;

1­1(3) the total projected amount of energy savings likely to result directly from the

imposition of the standard;

(4) any lessening of the utility or the performance of the products likely to result from the

imposition of the standard;

(5) the impact of any lessening of competition, as determined in writing by the Attorney

General, that is likely to result from the imposition of the standard;

(6) the need for national energy conservation; and

(7) other factors the Secretary considers relevant (42 U.S.C. 6295 (o)(2)(B)(i) and 42

U.S.C. 6316(e), added by section 136(h)(3) of EPACT 2005).

Other statutory requirements are set forth in 42 U.S.C. 6295 (o)(1)–(2)(A), (2)(B)(ii)–

(iii), and (3)–(4) and 42 U.S.C. 6316(a)(1)­(3), and (e).

DOE considers stakeholder participation to be a very important part of the process for

setting energy conservation standards. DOE actively encourages the participation and interaction

of all stakeholders during the comment period in each stage of the rulemaking. Beginning with

the framework document and during subsequent comment periods, interactions among

stakeholders provide a balanced discussion of the information that is required for the standards

rulemaking.

In conducting the test procedures rulemaking and the energy conservation standards

rulemakings, DOE involves stakeholders through formal public notifications ( i.e., Federal

Register notices). For this CRE energy conservation standards rulemaking, DOE employed the

procedures set forth in DOE’s Process Rule (Procedures for Consideration of New or Revised

Energy Conservation Standards for Consumer Products, 61 FR 36974, July 15, 1996, 10 CFR

Part 430, Subpart C, Appendix A) to the extent they were appropriate for developing energy

conservation standards for the commercial refrigeration equipment covered under this

rulemaking.

Although the Process Rule specifically applies only to the development of energyefficiency standards for consumer products, DOE has decided to apply its procedures to the

development of energy conservation standards for commercial and industrial equipment as well.

See Appendix A to Subpart C of Title 10 of the Code of Federal Regulations, Part 430 (10 CFR

Part 430).

Before DOE determines whether to adopt a proposed energy conservation standard, it

must first solicit comments on the proposed standard. Any new or amended standard must be

designed to achieve significant additional conservation of energy and be technologically feasible

and economically justified. (42 U.S.C. 6295(o)(3)(B) as directed by 42 U.S.C. 6316(a)(1)

through (3)) To determine whether economic justification exists, DOE must review comments

on the proposal and determine that the benefits of the proposed standard exceed its burdens to the

greatest extent practicable, weighing the seven factors listed above.

1­2Subsequent to the publication of the Framework Document, the standards rulemaking

process involves three additional formal, major public notices, which are published in the

Federal Register

. The first of the rulemaking notices is an Advanced Notice of Proposed

Rulemaking (ANOPR) that is designed to publicly vet the models and tools used in the

rulemaking, and to facilitate public participation before the proposed rule stage. The second

notice is a Notice of Proposed Rulemaking (NOPR), which presents a discussion of comments

received in response to the ANOPR; analysis of the impacts of standards on customers,

manufacturers, and the Nation; DOE’s weighting of the impacts; and the proposed standards.

The third notice is the Final Rule, which presents a discussion of comments received in response

to the NOPR; the revised analysis of the impacts of standards; DOE’s weighting of the impacts;

the standards adopted by DOE; and the effective dates of the standards.

1.3 OVERVIEW OF COMMERCIAL REFRIGERATION EQUIPMENT

STANDARDS

As mentioned above, section 136(c) of EPACT 2005 amends section 342 of EPCA by

adding new subsection 342(c)(4)(A) (42 U.S.C. 6313(c)(4)(A)), which directs the Secretary to

issue by rule, no later than January 1, 2009, energy conservation standards for commercial

refrigeration equipment manufactured on or after January 1, 2012.

Additionally, section 136(f)(1)(B) of EPACT 2005 amends section 343 of EPCA (42

U.S.C. 6314) by adding new subsection 343(a)(6)(A)­(D) (42 U.S.C. 6314(a)(6)(A)­(D)), which

directs the Secretary to adopt test procedures and establish, by rule, appropriate rating

temperatures for the above commercial refrigeration equipment. Accordingly, on December 8,

2006, DOE published a final rule establishing test procedures and rating temperatures for

commercial refrigeration equipment. 71 FR 71340.

Section 136(a)(3) of EPACT 2005 amended section 340 of EPCA by replacing

subsection 340(9) (42 U.S.C 6311(9)) with definitions for the following terms that describe

commercial refrigeration equipment:

“(9)(A) The term ‘commercial refrigerator, freezer, and refrigerator­freezer’ means

refrigeration equipment that—

(i) is not a consumer product (as defined in section 321);

(ii) is not designed and marketed exclusively for medical, scientific, or research

purposes;

(iii) operates at a chilled, frozen, combination chilled and frozen, or variable

temperature;

(iv) displays or stores merchandise and other perishable materials horizontally,

semivertically, or vertically;

(v) has transparent or solid doors, sliding or hinged doors, a combination of hinged,

sliding, transparent, or solid doors, or no doors;

1­3(vi) is designed for pull­down temperature applications or holding temperature

applications; and

(vii) is connected to a self­contained condensing unit or to a remote condensing unit.

(B) The term ‘holding temperature application’ means a use of commercial refrigeration

equipment other than a pull­down temperature application, except a blast chiller or

freezer.

* * *

(D) The term ‘pull­down temperature application’ means a commercial refrigerator with

doors that, when fully loaded with 12 ounce beverage cans at 90 degrees F, can cool

those beverages to an average stable temperature of 38 degrees F in 12 hours or less.

(E) The term ‘remote condensing unit’ means a factory­made assembly of refrigerating

components designed to compress and liquefy a specific refrigerant that is remotely

located from the refrigerated equipment and consists of one or more refrigerant

compressors, refrigerant condensers, condenser fans and motors, and factory supplied

accessories.

(F) The term ‘self­contained condensing unit’ means a factory­made assembly of

refrigerating components designed to compress and liquefy a specific refrigerant that is

an integral part of the refrigerated equipment and consists of one or more refrigerant

compressors, refrigerant condensers, condenser fans and motors, and factory supplied

accessories.”

In April 2006, DOE published a Rulemaking Framework for Commercial Refrigeration

Equipment Including Ice­Cream Freezers; Self­Contained Commercial Refrigerators, Freezers,

and Refrigerator­Freezers without doors; and Remote Condensing Commercial Refrigerators,

Freezers, and Refrigerator­Freezers

, describing the procedural and analytical approaches DOE

anticipated using to evaluate the establishment of energy conservation standards for CRE. This

document is available at

http://www.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/comml_refrig_fram

ework.pdf

DOE held a public meeting on May 16, 2006, to discuss procedural and analytical

approaches to the rulemaking, and to inform and facilitate stakeholders’ involvement in the

rulemaking process. The analytical framework presented at the public meeting described

different analyses, such as the engineering analysis and the life­cycle cost (LCC) and payback

period (PBP) analyses, the methods proposed for conducting them, and the relationships among

the various analyses.

After the analytical framework public meeting, as part of the information gathering and

sharing process for the preliminary manufacturer impact analysis, DOE organized and held

interviews with CRE manufacturers. DOE selected companies that represented production of all

types of commercial refrigeration equipment, ranging from small to large manufacturers, and

included both Air­Conditioning and Refrigeration Institute (ARI) member companies and non1­4ARI member companies. DOE had four objectives for these interviews: (1) solicit feedback on

the draft engineering analysis (including methodology, production costs, manufacturing

processes, and findings); (2) solicit feedback on topics related to the preliminary manufacturer

impact analysis; (3) provide an opportunity, early in the rulemaking process, to express specific

concerns to DOE; and (4) foster cooperation between the manufacturers and DOE.

In July 2007, DOE published an Advanced Notice of Proposed Rulemaking for

Commercial Refrigeration Equipment Including Ice­Cream Freezers; Self­Contained

Commercial Refrigerators, Freezers, and Refrigerator­Freezers without doors; and Remote

Condensing Commercial Refrigerators, Freezers, and Refrigerator­Freezers

, to consider

establishing energy conservation standards for CRE, and to announce a public meeting to receive

comments on a variety of issues. This document is available at

http://www.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/comml_refrig_html.

pdf

DOE held a public meeting on August 23, 2007, to provide interested stakeholders the

opportunity to comment on the proposed equipment classes DOE is considering; the analytical

framework, models, and tools ( e.g., LCC and national energy savings (NES) spreadsheets) that

DOE has been using to perform analyses of the impacts of energy conservation standards; the

results of the preliminary analyses; and the candidate energy conservation standard levels. See

Table 1.3.1 for all the analyses discussed at the public meeting to be undertaken in each of the

formal public rulemaking documents.

Table 1.3.1 Commercial Refrigeration Equipment Analyses Under the Process Rule

ANOPR NOPR Final Rule*

Market and technology assessment Revised ANOPR analyses Revised NOPR analyses

Screening analysis Life­cycle cost sub­group analysis

Engineering analysis Manufacturer impact analysis

Energy use characterization Utility impact analysis

Markups to determine equipment price Employment impact analysis

Life­cycle cost and payback period analyses Environmental assessment

Shipments analysis Regulatory impact analysis

National impact analysis

Preliminary manufacturer impact analysis

* During the Final Rule phase, DOE considers the comments submitted by the U.S. Department of Justice in the

NOPR phase concerning the impact of any lessening of competition that is likely to result from the imposition of the

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

After the publication of the ANOPR and the presentation of the ANOPR to stakeholders

at the public meeting, DOE conducted interviews with CRE manufacturers as part of the

manufacturer impact analysis for the NOPR. There were six general topics discussed during

each of the interviews: (1) general key issues, (2) company overview and organizational

characteristics, (3) company financial parameters, (4) production cost breakdown, (5) shipment

projections and market shares, (6) equipment mixes, (7) conversion costs, (8) markups and

profitability, (9) cumulative regulatory burden, (10) exports, foreign competition, and

outsourcing, (11) direct employment impact assessment, (12) market consolidation, and (13)

baseline products and different design options.

1­5DOE conducted the LCC and PBP analyses based on an approach that establishes an

annual energy expense using regional average electric utility costs for affected businesses and

projected those electricity costs into the future using electricity price projections for the

commercial sector from the DOE Energy Information Agency (DOE/EIA). Under this approach,

LCC results are based on the assumption that manufacturing plants and commercial building

customers in the future will face electricity costs similar to those that exist in today’s electricity

markets.

DOE developed spreadsheets for the LCC and PBP analyses, and for the national impact

analyses in an effort to meet the objectives of the Process Rule. The LCC spreadsheet calculates

national distributions of life cycle cost savings at various energy­efficiency levels above the

baseline as well can provide LCC savings based on typical input values for several business

types who use CRE as well as distributions of energy costs. DOE also developed a national

impact analysis spreadsheet that calculates the NES and national net present values (NPVs) at

various energy­efficiency levels. This spreadsheet includes a model that forecasts shipments for

the various equipment classes of commercial refrigeration equipment at different efficiency

levels.

DOE reviewed the recommendations made on April 21, 1998, by the Advisory

Committee on Appliance Energy Efficiency Standards. (Advisory Committee, No. 96) 1 These

recommendations related to: (1) using the full range of consumer marginal energy rates

(CMERs) in the LCC analysis (replacing the use of national average energy prices), (2) defining

a range of energy price futures for each fuel used in the economic analyses, and (3) defining a

range of primary energy conversion factors and associated emission reductions based on the

generation of energy and emissions that would be displaced by energy­efficiency standards for

each rulemaking. DOE’s analysis implemented (2) and (3) above, however as discussed

previously, DOE conducted the LCC analysis using regional average electricity prices for

affected business types and did not develop CMERs in the LCC analysis.

1.4 STRUCTURE OF THE DOCUMENT

This NOPR TSD outlines the analytical approaches used in this rulemaking. The TSD

consists of 16 chapters, an environmental assessment, a regulatory impact analysis, and

appendices.

Chapter 1 Introduction: provides an overview of the appliance and equipment

standards program and how it applies to the commercial refrigeration

equipment rulemaking, and outlines the structure of the document.

Chapter 2 Analytical Framework: describes the rulemaking process step by step.

1 Advisory Committee, No. 96 refers to the recommendations of the Advisory Committee on Energy

Efficiency Standards and is available for inspection at the U.S. Department of Energy, Forrestal Building,

Room 1J­018 (Resource Room of the Building Technologies Program) in the file under “Energy Conservation

Program for Consumer Products: Procedures for Consideration of New or Revised Energy Conservation

Standards for Consumer Products,” RIN [1904–AA83], as document number 96.

1­6Chapter 3 Market and Technology Assessment: characterizes the commercial

refrigeration equipment market and the technologies available for

increasing equipment efficiency.

Chapter 4 Screening Analysis: determines which technology options are viable for

consideration in the engineering analysis.

Chapter 5 Engineering Analysis: discusses the methods used for developing the

relationship between increased manufacturer price and increased

efficiency.

Chapter 6 Markups to Determine Equipment Price: discusses the methods used for

establishing markups for converting manufacturer prices to customer

equipment prices.

Chapter 7 Energy Use Characterization: discusses the process used for generating

energy use estimates of commercial refrigeration equipment for a variety

of equipment classes, climate locations, and standard levels.

Chapter 8 Life­Cycle Cost and Payback Period Analyses: discusses the economic

effects of standards on individual customers and users of the equipment

and compares the LCC and PBP of equipment with and without higher

efficiency standards.

Chapter 9 Trial Standard Levels: discusses the trial standard levels and the methods

used to derive the energy­efficiency equations corresponding to the

proposed energy conservation standards.

Chapter 10 Shipments Analysis: discusses the methods used for forecasting

shipments with and without higher efficiency standards.

Chapter 11 National Impact Analysis: discusses the methods used for forecasting

national energy consumption and national economic impacts based on

annual equipment shipments and estimates of future equipment efficiency

distributions in the absence and presence of higher efficiency standards.

Chapter 12 Life­Cycle Cost Sub­Group Analysis: discusses the effects of standards

on a subgroup of commercial refrigeration equipment customers and

compares the LCC and PBP of equipment with and without higher

efficiency standards for these customers.

Chapter 13 Manufacturer Impact Analysis: discusses the effects of standards on the

finances and profitability of equipment manufacturers.

Chapter 14 Utility Impact Analysis: discusses the effects of standards on the installed

generation capacity of electric utilities.

1­7Chapter 15 Employment Impact Analysis: discusses the effects of standards on

National employment.

Chapter 16 Environmental Assessment for Commercial Refrigeration Equipment:

discusses the effects of standards on air­borne emissions of electric

utilities.

Chapter 17 Regulatory Impact Analysis for Commercial Refrigeration Equipment:

discusses the present regulatory actions as well as the impact of nonregulatory alternatives to setting energy efficiency standards.

Appendix A User Instructions for Engineering Analysis Spreadsheet: accompanies

Chapter 5, Engineering Analysis.

Appendix B Engineering Data: accompanies Chapter 5, Engineering Analysis

Appendix C Detailed Data for Equipment Price Markups: accompanies Chapter 6,

Markups for Equipment Price Determination

Appendix D Annual Energy Simulation Inputs and Results for Commercial

Refrigeration Equipment: accompanies Chapter 7, Energy Use

Characterization

Appendix E User Instructions for Life­Cycle Cost Spreadsheet: accompanies Chapter

8, Life­Cycle Cost and Payback Period Analyses

Appendix F Mapping Between Engineering Analysis and Life­Cycle Cost Analysis

Energy Efficiency Levels: accompanies Chapter 8, Life­Cycle Cost and

Payback Period Analyses

Appendix G Detailed Life­Cycle Cost Output: accompanies Chapter 8, Life­Cycle

Cost and Payback Period Analyses

Appendix H User Instructions for National Energy Savings and Net Present Value

Spreadsheet: accompanies Chapter 11, National Impact Analysis

Appendix I Detailed National Energy Savings and National Net Present Value Output:

accompanies Chapter 11, National Impact Analysis

Appendix J Government Regulatory Impact Model (GRIM): accompanies Chapter 13,

Manufacturer Impact Analysis

Appendix K Estimation of Utility and Environmental Results from NEMS­BT Output:

accompanies Chapter 14, Utility Impact Analysis

1­8