CHAPTER 1. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUMENT

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

................................. 1-1 1.3 OVERVIEW OF COMMERCIAL REFRIG ERATION EQUIPMEN T STANDARDS 1-3 1.4 STRUCTURE OF THE DOCUMENT

............................................................................ 1-6

1-i1-iiCHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUMENT

This technical support document (TSD) is a stand-alone report that documents the technical analyses and results in support of the information pr esented in the final rule for establishing energy conservation standards for co mmercial ice-cream freezers; self-contained commercial refrigerators, commercial freezers, and commercial refriger ator-freezers without doors; and remote condensing commercial refrig erators, commercial freezers, and commercial refrigerator-freezers. Hereafter, this equipmen t is collectively referred to as 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 Conservati on Policy Act of 1978 (NECPA), Public Law 95-619; the National Appliance Energy Conservation Act of 1 987 (NAECA), Public Law 100

- 12; the National Appliance Energy Conservation Amendments of 1988 (NAECA 1988), Public Law 100-357; and the Energy Policy Act of 1992 (EPACT 1992), Public Law 102-486 (the Act or EPCA), established the Energy Conservati on Program for Consumer Products other than Automobiles. (42 U.S.C. 6291-6309) Part 3 of T itle IV of NECPA amended EPCA to add Part A-1 of Title III, which established an ener gy conservation program for Certain Industrial Equipment 1 . (42 U.S.C. 6311-6317) EPACT 1992 in cluded amendments to EPCA that expanded Title III to include additional commerci al equipment. The recent Energy Policy and Conservation Act of 2005 (EPACT 2005), Public Law 109-58, updates severa l existing standards and test procedures; prescribes definitions, standards, and te st procedures for certain new consumer products and commercial equipment; a nd mandates that the Secr etary 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 conser vation standards for commercial refrigeration equipment, manufactured on or after January 1, 2012.

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;

1 This part was originally titled Part C. However, it was re designated Part A-1 after Part B of Title III of EPCA was repealed by Pub. L. 109-58.

1-1(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;

(3) the total projected amount of energy sa vings 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 competiti on, 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 Secretar y 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 activel y 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 subseque nt comment periods, interactions among stakeholders provide a balanced discussion of the information that is required for the standards rulemaking.

Before DOE determines whether to adopt a proposed energy conservation standard, it must first solicit comments on the proposed standa rd. 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 jus tification exists, DOE mu st review comments on the proposal and determine that the benefits of the proposed standard exceed its burdens to the greatest extent practic able, weighing the seve n factors listed above.

Subsequent to the publicati on of the Framework Document, the standards rulemaking process involves three additional formal, ma jor 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 public ly 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 (NOP R), which presents a discussion of comments received in response to the ANOP R; 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 fi nal 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.

1-21.3 OVERVIEW OF COMMERCIAL REFRIGERATION EQUIPMENT STANDARDS

As mentioned above, section 136(c) of EP ACT 2005 amends section 342 of EPCA by adding new subsection 342(c)(4)(A ) (42 U.S.C. 6313(c)(4)(A)), wh ich directs the Secretary to issue by rule, no later than January 1, 2009, ener gy conservation standards for commercial refrigeration equipment manufact ured on or after January 1, 2012.

Additionally, section 136(f)(1)(B) of EPACT 2005 ame nds 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 establis h, by rule, appropriate rating temperatures for the above commercial refrig eration 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 defini tions for the following terms that describe commercial refrigeration equipment:

“(9)(A) The term ‘commercial refrigerator, freezer, and refrigerator-freezer’ means refrigeration equipment that—

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

(ii) is not designed and marketed exclus ively for medical, scientific, or research
purposes;
(iii) operates at a chilled, frozen, combination chilled and frozen, or variable temperature;

(iv) displays or stores merchandise a nd other perishable materials horizontally, semivertically, or vertically;

(v) has transparent or solid doors, slidi ng or hinged doors, a combination of hinged, sliding, transparent, or solid doors, or no doors;

(vi) is designed for pull-down temperat ure applications or holding temperature applications; and

(vii) is connected to a se lf-contained condensing unit or to a remote condensing unit.

(B) The term ‘holding temperature applicatio n’ means a use of commercial refrigeration equipment other than a pull-down temperatur e application, except a blast chiller or freezer.

* * *

1-3(D) The term ‘pull-down temperature applicat ion’ means a commercial refrigerator with doors that, when fully loaded with 12 ounce be verage cans at 90 degrees F, can cool those beverages to an average stable temp erature of 38 degrees F in 12 hours or less.

(E) The term ‘remote condensing unit’ means a factory-made 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, condens er fans and motors, and factory supplied accessories.

(F) The term ‘self-contained condensing unit’ means a factory-made assembly of refrigerating components designed to compress and liquefy a specific refrigerant that is an integral part of the refrigerated equipm ent and consists of one or more refrigerant compressors, refrigerant condensers, condens er fans and motors, and factory supplied accessories.”

In April 2006, DOE published a Rulemaking Framework for Commercial Refrigeration Equipment Including Ice-Cream Fr eezers; Self-Contained Commercial Refrigerators, Freezers, and Refrigerator-Freezers without doors; and Re mote Condensing Commercial Refrigerators, Freezers, and Refrigerator-Freezers , 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/buildin gs/appliance_standards/commerc ial/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 a nd facilitate stakeholde rs’ involvement in the rulemaking process. The analytical framewor k presented at the public meeting described different analyses, such as the engineering anal ysis and the life-cycle cost (LCC) and payback period (PBP) analyses, the methods proposed fo r 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 manufactur er 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 Air-Conditioning and Refrigeratio n Institute (ARI) member companies and nonARI member companies. DOE had four objectives for these interviews: (1) solicit feedback on the draft engineering analysis (includi ng 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 rulemaki ng process, to express specific concerns to DOE; and (4) foster cooper ation between the manufacturers and DOE.

In July 2007, DOE published an Advanced Notice of Proposed Rulemaking for Commercial Refrigeration Equipment Incl uding Ice-Cream Freezer s; Self-Contained Commercial Refrigerators, Freezers, and Refrig erator-Freezers without doors; and Remote Condensing Commercial Refrigerators, Freezers, and Refrigerator-Freezers , to consider

1-4establishing 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/buildin gs/appliance_standards/commerc ial/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 th e impacts of energy conser vation standards; the results of the preliminary analyses; and the candidate energy conserva tion standard levels.

After the publication of the ANOPR and the presentation of the ANOPR to stakeholders at the public meeting, DOE conduc ted interviews with CRE manufacturers as part of the manufacturer impact analysis for the NOPR. Th ere were 13 general topics discussed during each of the interviews: (1) general key issu es, (2) company overview and organizational characteristics, (3) company financial parame ters, (4) production cost breakdown, (5) shipment projections and market shares, (6) equipment mixes, (7) conv ersion costs, (8) markups and profitability, (9) cumulative regulatory bur den, (10) exports, foreign competition, and outsourcing, (11) direct employ ment impact assessment, (12) market consolidation, and (13) baseline products and di fferent design options.

DOE also developed spreadsheets to conduct the LCC, PBP and national impact analyses. The LCC spreadsheet calculates national distributions of life cycle cost savings at various energy-efficiency levels above the baseline. It can also provide LCC savings based on typical input values for several busine ss types who use CRE. The national impact analysis spreadsheet calculates the NES and national net present values (N PVs) at various energy-e fficiency levels. It also includes a model that forecasts shipments for the various equipment classes of commercial refrigeration equipment at di fferent efficiency levels.

In addition to the analyses, DOE reviewed the recommendations made on April 21, 1998, by the Advisory Committee on Appliance Energy E fficiency Standards. (Advisory Committee, No. 96) 2 DOE’s analysis implemented recommenda tions related to (1) defining a range of energy price futures for each fuel used in the economic analyses, and (2) defining a range of primary energy conversion factors and associated emission reductions based on the generation of energy and emissions that would be displa ced by energy-efficiency standards for each rulemaking.

In August 2008, DOE published a Notice of Proposed Rulemaking for Commercial Refrigeration Equipment Including Ice-Cr eam Freezers; Self-Contained Commercial Refrigerators, Freezers, and Refrigerator-Fre ezers without doors; and Remote Condensing Commercial Refrigerators, Freezers, and Refrigerator-Freezers , to propose energy conservation standards for CRE, and to announce a public meeting to receive comments on a variety of issues. This document is available at

2 Advisory Committee, No. 96 refers to the r ecommendations of the Advisory Committee on Energy Efficiency Standards and is available for inspection at the U.S. Department of Energy, Forrestal Building, Room 1J-018 (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.

1-5http://www1.eere.energy.gov/build ings/appliance_standards/comm ercial/pdfs/cre_nopr_fr_final

. pdf

DOE held a public meeting on September 23, 2008, to provide interested stakeholders the opportunity to comment on the proposed standards, results of the an alyses and the trial standard levels (TSL).

After the publication of the NOPR and the pr esentation of the NOPR to stakeholders at the public meeting, DOE received more than 100 comments from a diverse set of parties, including manufacturers and their representati ves, trade associations, wholesalers and distributors, energy conservati on advocates, and electric util ities. Comments addressed DOE methodology, the information DOE used in its analys es, results of and inferences drawn from the analyses, impacts of standards, th e merits of the different trial st andard levels (TSLs), standards options DOE considered and other issues aff ecting adoption of sta ndards for commercial refrigeration equipment.

1.4 STRUCTURE OF THE DOCUMENT

This Final Rule TSD outlines the analytical approaches used in this rulemaking. The TSD consists of 16 chapters, an environmenta l assessment, a regulatory impact analysis, and appendices.

Chapter 1 Introduction: provides an ove rview 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: desc ribes the rulemaking process step by step.

Chapter 3 Market and Technology Asse ssment: 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: discu sses the methods used for developing the relationship between increased ma nufacturer price and increased efficiency.

Chapter 6 Markups to Determine Equipment Price: discusses the methods used for establishing markups for converting ma nufacturer prices to customer equipment prices.

1-6Chapter 7 Energy Use Characterization: discusses the process used for generating energy use estimates of commercial re frigeration equipment for a variety of equipment classes, climate locations, and standard levels.

Chapter 8 Life-Cycle Cost and Payback Period Analyses: discusses the economic effects of standards on individual cu stomers and users of the equipment and compares the LCC and PBP of equipment with and without higher efficiency standards.

Chapter 9 Trial Standard Levels: discusse s the trial standard levels and the methods used to derive the energy-efficien cy 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: di scusses the methods used for forecasting national energy consumption and na tional economic impacts based on annual equipment shipments and estimates of future equipment efficiency distributions in the absence and pres ence of higher efficiency standards.

Chapter 12 Life-Cycle Cost Sub-Group Analys is: discusses the effects of standards on a subgroup of commercial refrig eration equipment customers and compares the LCC and PBP of e quipment 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: discu sses the effects of standards on the installed generation capacity of electric utilities.

Chapter 15 Employment Impact Analysis: discusses the effects of standards on National employment.

Chapter 16 Environmental Assessment fo r Commercial Refrigeration Equipment: discusses the effects of standards on air-borne emissions of electric utilities.

Chapter 17 Regulatory Impact Analysis for Commercial Refrigeration Equipment: discusses the present re gulatory actions as we ll as the impact of nonregulatory alternatives to setti ng energy efficiency standards.

Appendix A User Instructions for Engin eering Analysis Spreadsheet: accompanies Chapter 5, Engineering Analysis.

Appendix B Engineering Data: accompanies Chapter 5, Engineering Analysis

1-7Appendix 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: acco mpanies Chapter 7, Energy Use Characterization

Appendix E User Instructions for Life-Cyc le Cost Spreadsheet: accompanies Chapter 8, Life-Cycle Cost and Payback Period Analyses

Appendix F Mapping Between Engineering Anal ysis and Life-Cycle Cost Analysis Energy Efficiency Levels: accompanies Chapter 8, Life-Cycle Cost and Payback Period Analyses

Appendix G Detailed Life-Cycle Cost Ou tput: accompanies Chapter 8, Life-Cycle Cost and Payback Period Analyses

Appendix H User Instructions for Nationa l Energy Savings and Net Present Value Spreadsheet: accompanies Chapte r 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 NEMS-BT Output: accompanies Chapter 14, Utility Impact Analysis

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