[6450- 01

- P]

DEPARTMENT OF ENERGY

10 CFR Part 430
[Docket Number EE

– 2008

– BT

– STD

– 0012]

RIN: 1904

– AB79

Energy Conservation Program: Energy Conservation Standards for Residential
Refrigerators, Refrigerator-Freezers, and Freezers

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION: Final rule.

SUMMARY: The Energy Policy and Conservation Act (EPCA) prescribes energy
conservation standards for various consumer products and commercial and industrial
equipment, including refrigerators, refrigerator-freezers, and freezers. EPCA also requires
the U.S. Department of Energy (DOE) to determine if more stringent, amended standards
for these products are technologically feasible and economically justified, and would save
a significant amount of energy. In this final rule, DOE is adopting more stringent energy
conservation standards for refrigerators, refrigerator-freezers, and freezers. It has
determined that the amended energy conservation standards for these products would
result in the significant conservation of energy and are technologically feasible and
economically justified.

1DATES: The effective date of this rule is [INSERT DATE 60 DAYS AFTER
PUBLICATION DATE] . Compliance with the amended standards established for
refrigerators, refrigerator- freezers, and freezers in today’s final rule is [INSERT DATE 3
YEARS AFTER PUBLICATION DATE].

ADDRESSES: For access to the docket to read background documents, the technical
support document, transcripts of the public meetings in this proceeding, or comments
received, visit the U.S. Department of Energy, Resource Room of the Building
Technologies Program, 95 0 L’Enfant Plaza, SW., 6th Floor, Washington, DC 20024,
(202) 586-2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal
holidays. Please call Ms. Brenda Edwards at the above telephone number for additional
information regarding visiting the Resource Room. You may also obtain copies of certain
previous rulemaking documents in this proceeding (i.e., framework document, notice of
public meeting and announcement of a preliminary technical support document (TSD),
notice of proposed rulemaking), draft analyses, public meeting materials, and related test
procedure documents from the Office of Energy Efficiency and Renewable Energy’s

website at:
http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrigerators_free

zers.html.

FOR FURTHER INFORMATION CONTACT:

2Lucas Adin, U.S. Department of Energy, Office of Energy Efficiency and
Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue,
SW., Washington, DC, 20585-0121, 202- 287

- 1317 , e-mail: Lucas.Adin @ee.doe.gov or Michael Kido, U.S. Department of Energy, Office of the General Counsel, GC-71, 1000
Independence Avenue, SW., Washington, DC, 20585-0121, (202) 586-9507, e-mail:
Michael.Kido@hq.doe.gov

.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits II. Introduction A. Authority B. Background 1. Current Standards 2. History of Standards Rulemaking for Refrigerators, Refrigerator-Freezers, and Freezers III. General Discussion A. Test Procedures 1. Test Procedure Rulemaking Schedule 2. Adjustment of the Energy Standards for the New Test Procedure

a. Products with Variable Anti-Sweat Heater Control b. Products with Multiple Defrost Cycle Types

c. Amendments to Capture Precooling Energy Use d. Test Procedures for Special Compartments 3. Standby and Off Mode Energy Use B. Technological Feasibility 1. General 2. Maximum Technologically Feasible Levels C. Energy Savings 1. Determination of Savings 2. Significance of Savings D. Economic Justification 1. Specific Criteria

a. Economic Impact on Manufacturers and Consumers b. Life-Cycle Costs

c. Energy Savings d. Lessening of Utility or Performance of Products

3e. Impact of Any Lessening of Competition f. Need for National Energy Conservation g. Other Factors 2. Rebuttable Presumption IV. Methodology and Discussion A. Market and Technology Assessment 1. Exclusion of Wine Coolers from This Rulemaking 2. Product Classes

a. General Discussion Regarding Added Product Classes b. Possible Combination of Product Class 2 with 1, and Class 12 with 11

c. All-Refrigerators and Basic Refrigerators d. Built-In Refrigeration Products

e. Modification of the Definition for Compact Products f. Icemaking B. Screening Analysis 1. Discussion of Comments

a. Compressors b. Alternative Refrigerants

c. Alternative Foam-Blowing Agents d. Vacuum-Insulated Panels 2. Technologies Considered C. Engineering Analysis 1. Discussion of Comments 2. Adjustment of the Baseline Energy Use Equations D. Markups to Determine Product Cost E. Energy Use Analysis F. Life-Cycle Cost and Payback Period Analyses 1. Product Cost 2. Installation Cost 3. Annual Energy Consumption 4. Energy Prices 5. Energy Price Projections 6. Maintenance and Repair Costs 7. Product Lifetime 8. Discount Rates 9. Compliance Date of Amended Standards 10. Base Case Efficiency Distribution 11. Inputs to Payback Period Analysis 12. Rebuttable-Presumption Payback Period G. National Impact Analysis

– National Energy Savings and Net Present Value Analysis 1. Shipments 2. Forecasted Efficiency in the Base Case and Standards Cases 3. Installed Cost per Unit 4. Site- to -Source Energy Conversion 5. Discount Rates

46. Benefits from Effects of Standards on Energy Prices H. Consumer Subgroup Analysis I. Manufacturer Impact Analysis 1. Comments from Interested Parties 2. GRIM Key Inputs

a. Product and Capital Conversion Costs b. Markup Scenarios 3. Manufacturer Interviews J. Employment Impact Analysis K. Utility Impact Analysis L. Environmental Assessment M. Monetizing Carbon Dioxide and Other Emissions Impacts 1. Social Cost of Carbon

a. Monetizing Carbon Dioxide Emissions b. Social Cost of Carbon Values Used in Past Regulatory Analyses

c. Current Approach and Key Assumptions 2. Valuation of Other Emissions Reductions V. Discussion of Other Comments A. Demand Response B. Energy Standard Round-off C. Trial Standard Levels and Proposed Standards 1. Efficiency Levels 2. Maximum Energy Use Equations VI. Analytical Results A. Trial Standard Levels B. Economic Justification and Energy Savings 1. Economic Impacts on Individual Consumers

a. Life-Cycle Cost and Payback Period b. Consumer Subgroup Analysis

c. Rebuttable Presumption Payback 2. Economic Impacts on Manufacturers

a. Cash-Flow Analysis Results b. Impacts on Employment

c. Impacts on Manufacturing Capacity d. Impacts on Sub-Group(s) of Manufacturers

e. Cumulative Regulatory Burden 3. National Impact Analysis

a. Significance of Energy Savings b. Net Present Value of Consumer Costs and Benefits

c. Indirect Impacts on Employment 4. Impact on Utility or Performance of Products 5. Impact of Any Lessening of Competition 6. Need of the Nation to Conserve Energy 7. Other Factors C. Conclusion 1. Standard-Size Refrigerator-Freezers

52. Standard-Size Freezers 3. Compact Refrigeration Products 4. Built-In Refrigeration Products 5. Summary of Benefits and Costs (Annualized) of Amended Standards VII. Procedural Issues and Regulatory Review A. Review Under Executive Order 12866 and 13563 B. Review Under the Regulatory Flexibility Act C. Review Under the Paperwork Reduction Act D. Review Under the National Environmental Policy Act of 1969 E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and General Government Appropriations Act, 1999 I. Review Under Executive Order 12630 J. Review Under the Treasury and General Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Review Under the Information Quality Bulletin for Peer Review M. Congressional Notification VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

The Energy Policy and Conservation Act (42 U.S.C. 6291, et seq .; EPCA or the
Act), as amended, provides that any new or amended energy conservation standard DOE
prescribes for certain consumer products, such as residential refrigerators, refrigeratorfreezers, and freezers (collectiv ely referred to in this document as “refrigeration
products”), shall be designed to “achieve the maximum improvement in energy efficiency
. . . which the Secretary determines is technologically feasible and economically
justified.” (42 U.S.C. 6295(o)(2)(A) ) The new or amended standard must result in the
significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In accordance with these
and other statutory provisions discussed in this notice, DOE is adopting amended energy

conservation standards for refri geration products. The standards in today’s final rule,

6which are the maximum allowable energy use expressed as a function of the calculated
adjusted volume of a given product, are shown in Table I.1. These standards apply to all
products listed in Table I.1 and manufactured in, or imported into, the United States
starting in 2014.

Table I.1. Refrigeration Product Energy Conservation Standards (Effective Starting 2014)

Product Class Equations for Maximum Energy Use (kWh/yr) based on AV (ft 3 ) based on av (L) 1. Refrigerator

- freezers and refrigerators other than all

refrigerators with manual defrost. 7.99AV + 225.0 0.282av + 225.0

1A. All

- refrigerators

— manual defrost. 6.79AV + 193.6 0.240av + 193.6
2. Refrigerator

- freezers

— partial automatic defrost 7.99AV + 225.0 0.282av + 225.0 3. Refrigerator

- freezers

— automatic defrost with top

- mounted freezer without an automatic icemaker. 8.07AV + 233.7 0.285av + 233.7
3

- BI. Built

- in refrigerator

- freezer

— automatic defrost with top

- mounted freezer without an automatic icemaker. 9.15AV + 264.9 0. 323av + 264.9 3I. Refrigerator

- freezers

— automatic defrost with top

mounted freezer with an automatic icemaker without through

the

- door ice service. 8.07AV + 317.7 0.285av + 317.7

3I

- BI. Built

- in refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 9.15AV + 348.9 0. 323av + 348.9

3A. All

- refrigerators

— automatic defrost. 7.07AV + 201.6 0.250av + 201.6 3A

- BI. Built

- in All

- refrigerators

— automatic defrost. 8.02AV + 228.5 0. 283av + 228.5 4. Refrigerator

- freezers

— automatic defrost with side

mounted freezer without an automatic icemaker. 8.51AV + 297.8 0.301av + 297.8
4

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer without an automatic icemaker. 1 0.22AV + 357.4 0. 361av + 357.4 4I. Refrigerator

- freezers

— automatic defrost with side

mounted freezer with an automatic icemaker without through

the

- door ice service. 8.51AV + 381.8 0.301av + 381.8

4I

- BI. Built

- In Refrigerator

- freezers

— aut omatic defrost with side

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 10.22AV + 441.4 0. 361av + 441.4
5. Refrigerator

- freezers

— automatic defrost with bottom

mounted freezer without an automatic icemaker. 8. 85AV + 317.0 0.312av + 317.0
5

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without an automatic icemaker. 9.40AV + 336. 9 0.332av + 336. 9 5I. Refrigerator

- freezers

— automatic def rost with bottom

mounted freezer with an automatic icemaker without through

the

- door ice service. 8. 85AV + 401.0 0.312av + 401.0

5I

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 9.40AV + 420. 9 0.332av + 420. 9 Deleted: 8.61AV + 249.3 Deleted: 304av + 249.3 Comment [A1]: Change recommended by OIRA.

Deleted: 8.61AV + 333.3 Deleted: 304av + 333.3 Comment [A2]: Change recommended by OIRA.

Deleted: 7.55AV + 215.1 Deleted: 266av + 215.1 Comment [A3]: Change recommended by OIRA.

Deleted: 9.08AV + 317.6 Deleted: 321av + 317.6 Comment [A4]: Change recommended by OIRA.

Deleted: 9.08AV + 401.6 Deleted: 321av + 401.6 Comment [A5]: Change recommended by OIRA.

Deleted: 84AV + 316.9 Deleted: 316.9 Deleted: 7 Deleted: 7 Deleted: 84AV + 400.9 Deleted: 400.9 Deleted: 7 Deleted: 7

75A. Refrigerator

- freezer

— automatic defrost with bottom

mounted freezer with through

- the

- door ice service. 9. 25AV + 475.4 0. 327av + 475.4
5A

- BI. Built

- in refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

- the

- door ice service. 9. 83AV + 499 .9 0. 347av + 499 .9 6. Refrigerator

- freezers

— automatic defrost with top

- mounted freezer with through

- the

- door ice ser vice. 8.40AV + 385.4 0.297av + 385.4 7. Refrigerator

- freezers

— automatic defrost with side

mounted freezer with through

- the

- door ice service. 8.54AV + 432.8 0.302av + 432.8
7

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service. 10.25AV + 502.6 0. 362av + 502.6 8. Upright freezers with manual defrost. 5.57AV + 193.7 0.197av + 193.7 9. Upright freezers with automatic defrost without an automatic icemaker. 8.62AV + 228.3 0.305av + 228.3 9I. Upright freezers with automatic defrost with an automatic icemaker. 8.62AV + 312.3 0.305av + 312.3
9

- BI. Built

- In Upright freezers with automatic defrost without an automatic icemaker. 9. 86AV + 260.9 0. 348av + 260.9
9I

- BI. Built

- in upright freezers with automatic defrost with an automatic icemaker. 9. 86AV + 344.9 0. 348av + 344.9 10. Chest freezers and all other freezers except compact freezers. 7.29AV + 107.8 0.257av + 107.8
10A. Chest freezers with automatic defrost. 10.24AV + 148.1 0.362av + 148.1 11. Compact refrigerator

- freezers and refrigerators other than all

- refrigerators with manual defrost. 9.03AV + 252.3 0.319av + 252.3 11A.Compact all

- refrigerators

— manual defrost. 7.84AV + 219.1 0.277av + 219.1 12. Compact refrigerator

- freezers

— partial automatic defrost 5.91AV + 335.8 0.209av + 335.8 13. Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer. 11.80AV + 339.2 0.417av + 339.2 13I. Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker. 11.80AV + 423.2 0.417av + 423.2 13A. Compact all

- refrigerators

— automatic defrost. 9.17AV + 259.3 0.324av + 259.3 14. Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer. 6.82AV + 456.9 0.241av + 456.9 14I. Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker. 6.82AV + 540.9 0.241av + 540.9 15. Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer. 11.80AV + 339.2 0.417av + 339.2 15I. Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker. 11.80AV + 423.2 0.417av + 423.2 16. Compact upright freezers with manual defrost. 8.65AV + 225.7 0.306av + 225.7 17. Compact upright freezers with automatic defrost. 10.17AV + 351.9 0.359av + 351.9 18. Compact chest freezers. 9.25AV + 136.8 0.327av + 136.8 Deleted: 23AV + 474.5 Deleted: 326av + 474.5 Deleted: 80AV + 498 Deleted: 346av + 498

Deleted: 9.11AV + 456.0 Deleted: 322av + 456.0 Comment [A6]: Change recommended by OIRA.

Deleted: 24AV + 244.6 Deleted: 326av + 244.6 Comment [A7]: Change recommended by OIRA.

Deleted: 24AV + 328.6 Deleted: 326av + 328.6 Comment [A8]: Change recommended by OIRA.

AV= adjusted volume in cubic feet; av = adjusted volume in liters

DOE’s analyses indicate that the amended standards would save a significant
amount of energy

– an estimated 4.84 quads of cumulative energy over 30 years (2014

8through 2043). This amount is equivalent to three times the total energy used annually for
refrigeration products in U.S. homes.

The cumulative national net present value (NPV) of total consumer costs and
savings of the amended standards for products shipped in 2014

– 2043, in 2009$, ranges

from $ 6.4 to $10.4 billion (at a 7-percent discount rate) to $ 28.1 to $36.1 billion (at a 3­
percent discount rate). 1 The NPV is the estimated total value of future operating-cost
savings during the analysis period, minus the estimated increased product costs,
discounted to 2010. The industry net present value (INPV) is the sum of the discounted
cash flows to the industry from the base year through the end of the analysis period (2010
to 2043). Using a real discount rate of 7.2 percent, DOE estimates that INPV for
manufacturers of all refrigeration products in the base case is $3.731 billion in 2009$. By
adopting the amended standards, DOE expects that manufacturers may lose 15 to 24
percent of their INPV, or approximately $0.573 to $0.887 billion. Using a 7-percent

discount rate, the NPV of consumer costs an d savings from today’s amended standards

would amount to 4 to 16 times the total estimated industry losses. Using a 3-percent Deleted: 9.52 Deleted: 33.74

Deleted: 11 Deleted: 17 Deleted: 38 Deleted: 59 discount rate, the NPV would amount to 26 to 60 times the total estimated industry

losses.

The projected economic impacts of the amended standards on individual
consumers are generally positive. For example, the estimated average life-cycle cost
(LCC) savings are $ 44 for top-mount refrigerator-freezers, $22 for bottom-mount Deleted: 41

1 DOE uses discount rates of 7 and 3 percent based on guidance from the Office of Management and Budget. See section IV.G for further information.

9refrigerator-freezers, $57 for side- by -side refrigerator-freezers, $195 for upright freezers,

$ 69 for chest freezers, $ 14 for compact refrigerators, $12 for compact freezers, and from

$2 to $71 for built-in refrigeration products, depending on the product class. 2 Deleted: 68 Deleted: 13

Deleted:

- $92 Comment [A9]: Change recommended by OIRA. Comment [A10]: Footnote change recommended by OIRA.
In addition, the amended standards are projected to have significant
environmental benefits. The energy saved is in the form of electricity and DOE expects
the energy savings from the amended standards to eliminate the need for approximately

4.8 gigawatts (GW) of generating capacity by 2043. The savings would result in
cumulative greenhouse gas emission reductions of 3 44 million metric tons (Mt) 3 of
carbon dioxide (CO 2 ) in 2014

– 2043. During this period, the amended standards would

result in emissions reductions 4 of 2 77 ,000 short tons (tons) of nitrogen oxides (NO X ) and

1. 45 tons of mercury (Hg).

The value of the CO 2 reductions is calculated using a range of values per metric

ton of CO 2 (otherwise known as the Social Cost of Carbon, or SCC) developed by a
recent interagency process. The derivation of the SCC values is discussed in section

IV.M. DOE estimates the present monetary value of the CO 2 emissions reduction is
between $2. 8 and $27. 5 billion, expressed in 2009$ and discounted to 2010. DOE also

2 The LCC is the total consumer expense over the life of a product, consisting of purchase and installation costs plus operating costs (expenses for energy use, maintenance and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product. The sources and methods used to derive purchase, installation and operating costs are described in section IV.F of this notice. 3 A metric ton is equivalent to 1.1 short tons. Results for NO X and Hg are given in short tons. 4 DOE calculates emissions reductions relative to the most recent version of the Annual Energy Outlook ( AEO ) Reference case forecast. This forecast accounts for regulatory emissions reductions through 2008, including the Clean Air Interstate Rule (CAIR, 70 FR 25162 (May 12, 2005)), but not the Clean Air Mercury Rule (CAMR, 70 FR 28606 (May 18, 2005)). Subsequent regulations, including the proposed CAIR replacement rule, the Clean Air Transport Rule (75 FR 45210 (Aug. 2, 2010)), do not appear in the forecast. DOE notes that a new CAIR rule has recently been finalized. See http://www.epa.gov/crossstaterule/ Comment [A11]: Change recommended by OIRA.

Deleted: 84 Deleted: 54

10estimates that the present monetary value of the NO X emissions reduction, expressed in
2009$ and discounted to 2010, is between $35 and $ 36 0 million at a 7-percent discount Deleted: 361
rate, and between $ 87 and $ 89 0 million at a 3-percent discount rate. 5

Deleted: 86 Deleted: 895 Comment [A12]: Footnote recommended by OIRA.

Table I.2 summarizes the national economic costs and benefits expected to result
from today’s standards for refrigeration products.

5 The range of values at each discount rate reflects use of low and high estimates of the benefits of avoiding one ton of NO X emissions. With respect to mercury, DOE is aware of multiple agency efforts to determine the appropriate range of values used in evaluating the potential economic benefits of reduced Hg emissions. DOE has decided to await further guidance regarding consistent valuation and reporting of Hg emissions before it once again monetizes Hg in its rulemakings. Deleted: 5

11Table I

. 2 . Summary of National Economic Benefits and Costs of Refrigeration Product Energy Conservation Standards

Category Present Value Billion 2009$ Discount Rate

Benefits Operating Cost Savings 21.7 7% 55.4 3% CO 2 Reduction Monetized Value (at $4.9/t)* 2.8 5%
CO 2 Reduction Monetized Value (at $22.1/t)* 9.0 3%
CO 2 Reduction Monetized Value (at $36.3/t)* 13.5 2.5%
CO 2 Reduction Monetized Value (at $67.1/t)* 27.5 3%

NO X Reduction Monetized Value (at $447/ton)* 0.035 7% 0.087 3% NO X Reduction Monetized Value (at $4,591/ton)* 0.36 7% 0.89 3%

Total Benefits † 30.9 7% 64.9 3% Costs
Incremental Installed Costs 1 1

. 3 to 1 5.3 7% 19 .3 to 27. 3 3%
Net Benefits
Including CO 2 and NO X † 15.6 to 1 9.5 7% 3 7.5 to 4 5.5 3%

* The CO 2 values represent global monetized values of the SCC in 2010 under several scenarios. The values of $4.9, $22.1, and $36.3 per metric ton (t) are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.1/t represents the 95 th percentile of the SCC distribution calculated using a 3% discount rate. ** The range of results for incremental product costs reflects the range of product price forecasts discussed in section IV.G.3. † Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, and the average of the low and high NO X values used in DOE’s analysis. Comment [A13]: Change recommended by OIRA.

The benefits and costs of today’s standards, for products sold in 2014 -2043, can
also be expressed in terms of annualized values. The annualized monetary values are the

12sum of (1) the annualized national economic value, expressed in 2009$, of the benefits
from operating products that meet the amended standards (consisting primarily of
operating cost savings from using less energy, minus increases in equipment purchase
and installation costs, which is another way of representing consumer NPV), and (2) the
annualized monetary value of the benefits of emission reductions, including CO 2
emission reductions. 6 Comment [A14]: Footnote change recommended by OIRA. Comment [A15]: Change recommended by OIRA. Although adding the value of consumer savings to the values of emission
reductions provides a valuable perspective, two issues should be considered. First, the
national operating savings are domestic U.S. consumer monetary savings that occur as a

result of market transactions while the value of CO 2 reductions is based on a global value.
Second, the assessments of operating cost savings and SCC are performed with different
methods that use different time frames for analysis. The national operating cost savings is
measured for the lifetime of refrigeration products shipped in 2014

– 2043. The SCC
values, on the other hand, reflect the present value of future climate-related impacts
resulting from the emission of one ton of carbon dioxide in each year. These impacts
continue well beyond 2100.

6 DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized values. First, DOE calculated a present value in 2010, the year used for discounting the NPV of total consumer costs and savings, for the time-series of costs and benefits using discount rates of three and seven percent for all costs and benefits except for the value of CO 2 reductions. For the latter, DOE used a range of discount rates, as shown in Table I. 3 . From the present value, DOE then calculated the fixed annual payment over a 30-year period (2014 through 2043) that yields the same present value. This payment includes benefits to consumers which accrue after 2043 from the refrigerators purchased from 2014 to 2043. Costs incurred by manufacturers, some of which may be incurred prior to 2014 in preparation for the rule, are not directly included, but are indirectly included as part of incremental equipment costs. The extent of these costs and benefits depends on the projected price trends of refrigerators since consumer demand of refrigerators is a function of refrigerator prices. The fixed annual payment is the annualized value. Although DOE calculated annualized values, this does not imply that the time-series of cost and benefits from which the annualized values were determined is a steady stream of payments. Deleted: The value of the CO 2 reductions, otherwise known as the Social Cost of Carbon (SCC), is calculated using a range of values per metric ton of CO 2 developed by a recent interagency process. The monetary benefits of emissions reductions are reported in 2009$ so that they can be compared with the other costs and benefits in the same dollar units. The derivation of the SCC values is discussed in sectio n IV.M.

Deleted: 2

13Estimates of annualized benefits and costs of today’s standards are shown in

Table I. 3 . The results under the primary estimate , expressed in 2009$, are as follows.
Using a 7-percent discount rate and the SCC series having a value of $22.1/ton in 2010
, the cost of the standards in today’s rule is $ 1, 167 to $1, 569 million per year in increased
equipment costs, while the annualized benefits are $ 2, 275 million per year in reduced
equipment operating costs, $ 515 million in CO 2 reductions, and $ 21 million in reduced

NO X emissions. In this case, the net benefit amounts to $1, 241 to $1, 643 million per year.
Using a 3-percent discount rate and the SC C series having a value of $22.1/ton in 2010
, the cost of the standards in today’s rule is $1
, 0 81 to $1, 526 million per year in increased
equipment costs, while the benefits are $ 3, 160 million per year in reduced operating
costs, $ 515 million in CO 2 reductions, and $ 28 million in reduced NO X emissions. In this
case, the net benefit amounts to $2, 176 to $2, 622 million per year. Deleted: 2

Deleted: (in 2009$),

Deleted: 016

Deleted: 1
, 745

Deleted: 4 60 Deleted: 1 6 Deleted: 205

Deleted: (in 2009$),

Deleted: 122

Deleted: 2
, 824

Deleted: 4 60 Deleted: 2 5 Deleted: 187

14...

... f

Table I. 3

. Annualized Benefits and Costs of Amended Standards for Refrigeration Products Shipped in 2014- 2043 *

Discount Rate Primary Estimate* Low Net Benefits Estimate* High Net Benefits Estimate*
Monetized (million 2009$/year) Benefits
Operating Cost Savings 7% 2275 1996 2560 3% 3160 2720 3596 CO 2 Reduction at $4.9/t** 5% 162 162 162 CO 2 Reduction at $22.1/t** 3% 515 515 515 CO 2 Reduction at $36.3/t** 2.5% 772 772 772 CO 2 Reduction at $67.1/t** 3% 1567 1567 1567
NO X Reduction at $2,519/ton** 7% 21 21 21 3% 28 28 28

Total (Operating Cost Savings, CO 2 Reduction and NO x Reduction)† 7% plus CO 2 range 2457 to 3863 2178 to 3584 2742 to 4148

7% 2810 2531 3095 3% 3703 3263 4139 3% plus CO 2 range 3350 to 4755 2910 to 4315 3786 to 5192

Costs

Incremental Product Costs 7% 1167 to 1569 1480 1232 3% 1081 to 1526 1430 1147 Net Benefits

Total† 7% plus CO 2 range 888 to 2696 698 to 2103 1511 to 2916

7% 1241 to 1643 1051 1863 3% 2176 to 2622 1832 2993 3% plus CO 2 range 1823 to 3674 1479 to 2885 2640 to 4045 Deleted: 2

... . Annualized Benefits and Costs o

... Comment [A16]: Changes recommended by

... Deleted: 1745 Deleted: 1531 Deleted: 1964 Deleted: 2824 Deleted: 2431 Deleted: 3214 Deleted: 184 Deleted: 184 Deleted: 184 Deleted: 460 Deleted: 460 Deleted: 460 Deleted: 646 Deleted: 646 Deleted: 646 Deleted: 1401 Deleted: 1401 Deleted: 1401 Deleted: 16 Deleted: 16 Deleted: 16 Deleted: 25 Deleted: 25 Deleted: 25 Deleted: 1946

... 457 to 3162

... Deleted: 1731

... 178 to 2948

... Deleted: 2164

... 742 to 3381

... Deleted: 2221 Deleted: 2007 Deleted: 2440 Deleted: 3309 Deleted: 2916 Deleted: 3699 Deleted: 3033

... 350 to 4250

... Deleted: 2640

... 910 to 3857

... Deleted: 3423

... 786 to 4640

... Deleted: 1016 Deleted: 1334 Deleted: 971 Deleted: 1122 Deleted: 1549 Deleted: 1058
Deleted: /Costs

Deleted: Total (Operating Cost Savings, CO 2

... Formatted Table

... Deleted: 929

... 88 to 2146

... Deleted: 398

... 98 to 1614

... Deleted: 1194

... 511 to 2410

... Deleted: 1205 Deleted: 673 Deleted: 1469

... 15* This table presents the annualized costs and benefits associated with refrigerators shipped between 2014 Deleted: The Primary, Low, and High and 2043. These results include benefits to consumers which accrue after 2043 from the refrigerators purchased from 2014 to 2043. Costs incurred by manufacturers, some of which may be incurred prior to 2014 in preparation for the rule, are not directly included, but are indirectly included as part of incremental equipment costs. The extent of these costs and benefits depends on the projected price trends of refrigerators since consumer demand of refrigerators is a function of refrigerator prices

. The extent of the costs and benefits will depend on the projected price trends of refrigerators, as the consumer demand for refrigerators is a function of refrigerator prices. The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and housing starts from the AEO2010 Reference case, Low Estimate , and Deleted: Economic Growth case High Estimate , respectively. In addition, incremental product costs reflect a medium decline rate for projected product price trends in the Primary Estimate, a low decline rate for projected product price trends using a Low Benefits Estimate, and a high decline rate for projected product price trends using a High Benefits Estimate. The different techniques used to derive projected price trends for each estimate are explained in section IV. G.3. In the Primary estimate, the range of results for incremental product costs reflects the range of projected price trends

. ** The CO 2 values represent global monetized values (in 2009$) of the SCC in 2010 under several scenarios. The values of $4.9, $22.1, and $36.3 per metric ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.1/t represents the 95 th percentile of the SCC distribution calculated using a 3% discount rate. The value for NO X (in 2009$) is the Deleted: Economic Growth case Deleted: the Low estimate uses Deleted: that Deleted: constant prices (no learning Deleted: prices, and the High estimate uses incremental
Deleted: costs that reflect a declining trend ( Deleted: learning Deleted: prices. The derivation and ap plication of learning rates for product prices is Deleted: F.1 Comment [A17]: Changes recommended by OIRA. average of the low and high values used in DOE’s analysis.
† Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $22.1/t in 2010 (in 2009$). In the rows labeled as “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO X benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values.

DOE has concluded that the standards in today’s rule represent the maximum
improvement in energy efficiency that is both technologically feasible and economically
justified, and would result in the significant conservation of energy. DOE further notes
that products achieving these standard levels are already commercially available for at
least some, if not most, product classes covered by today’s ruling. Based on the analyses
described above, DOE found the benefits of today’s standards to the Nation (energy
savings, positive NPV of consumer benefits, consumer LCC savings, and emission
reductions) outweigh the burdens (loss of INPV for manufacturers and LCC increases for
some consumers).

16II. Introduction

The following section briefly discusses the statutory au thority underlying today’s
final rule as well as some of the relevant historical background related to the
establishment of standards for refrigeration products.

A. Authority
Title III of EPCA sets forth a variety of provisions designed to improve energy

ef

ficiency. Part A of title III (42 U.S.C. 6291-6309) provides for the Energy Conservation
Program for Consumer Products Other than Automobiles. 7 EPCA covers consumer
products and certain commercial equipment (referred to collectively hereafter as “covered

p roducts”), including the types of refrigeration products that are the subject of this
rulemaking. (42 U.S.C. 6292(a)(1)) EPCA prescribed energy conservation standards for
these products (42 U.S.C. 6295(b)(1)-(2)), and directed DOE to conduct three cycles o f
rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(b)(3)(A)(i),
(b)(3)(B)-(C), and (b)(4)) As explained in further detail in section II.B, this rulemaking
satisfies the third round of amendments under 42 U.S.C. 6295(b). (DOE notes that under
42 U.S.C. 6295(m), the agency must periodically review its already established energy
conservation standards for a covered product. Under this requirement, the next review
that DOE would need to conduct would occur six years from the issuance of a final rule
establishing or amending a standard for a covered product.)

7 This part was titled Part B in EPCA, but was subsequently codified as Part A in the U.S. Code for editorial reasons.

17Under the Act, DOE’s energy conservation program for covered products consists
essentially of four parts: (1) testing, (2) labeling, (3) the establishment of Federal energy
conservation standards, and (4) certification and enforcement procedures. The Federal
Trade Commission (FTC) is generally responsible for labeling issues for consumer
products, and DOE implements the remainder of the program. Section 323 of the Act
(codified at 42 U.S.C. 6293) authorizes DOE, subject to certain criteria and conditions, to
develop test procedures to measure the energy efficiency, energy use, or estimated annual
operating cost of each covered product. Manufacturers of covered products must use the
prescribed DOE test procedure as the basis for certifying to DOE that their products
comply with the applicable energy conservation standards adopted under EPCA and
when making representations to the public regarding the energy use or efficiency of those
products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures
to determine whether the products comply with standards adopted under EPCA. Id . The
test procedures for refrigeration products currently appear at title 10, Code of Federal
Regulations (CFR), part 430, subpart B, appendices A1 and B1, respectively. (These
procedures have recently been amended and recodified as part of new Appendices A and
B, which will, pending further comment from interested parties, be required to be used
when certifying compliance with the standards detailed in today’s final rule. See 75 FR
78810 (December 16, 2010).

EPCA prescribes specific criteria for DOE to consider when amending standards
for covered products. As indicated above, any amended standard for a covered product
must be designed to achieve the maximum improvement in energy efficiency that is

18technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) EPCA
precludes DOE from adopting any standard that would not result in the significant
conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a
standard for certain products, including refrigeration products, (1) if no test procedure has
been established for that product, or (2) if DOE determines by rule that the amended
standard is not technologically feasible or economically justified. (42 U.S.C.
6295(o)(3)(A)-(B)) The Act also provides that, in deciding whether an amended standard
is economically justified, DOE must determine whether the benefits of the standard
exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must do so after receiving
comments on the proposed standard, and by considering, to the greatest extent
practicable, the following seven factors:

1. The economic impact of the standard on manufacturers and consumers of the
products subject to the standard;

2. The savings in operating costs throughout the estimated average life of the
covered products in the type (or class) compared to any increase in the price, initial
charges, or maintenance expenses for the covered products that are likely to result from
the imposition of the standard;

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 covered products likely to
result from the imposition of the standard;

195. 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 of Energy (Secretary) considers relevant. (42 U.S.C.
6295(o)(2)(B)(i)(I)

– (VI I))

EPCA also contains what is known as an “anti

- backsliding” provision, which
prevents DOE from prescribing any amended standard that either increases the maximum
allowable energy use or decreases the minimum required energy efficiency of a covered
product. (42 U.S.C. 6295(o)(1)) Also, DOE may not prescribe a new standard if
interested persons have established by a preponderance of the evidence that the standard
is likely to result in the unavailability in the United States of any covered product type (or
class) with performance characteristics, features, sizes, capacities, and volumes that are
substantially the same as those generally available in the United States. (42 U.S.C.
6295(o)(4))

Further, EPCA establishes a rebuttable presumption that a standard is
economically justified if the Secretary finds that the additional cost to the consumer of
purchasing a product complying with an energy conservation standard level will be less
than three times the value of the energy savings during the first year that the consumer
will receive as a result of the standard, as calculated under the applicable test procedure.
See 42 U.S.C. 6295(o)(2)(B)(iii). 8

8 In this context, the presumption provides a legal finding that the criteria under 42 U.S.C. 6295(o)(2) have been met if the specified level of savings within the first year occur. To ensure that it has fully examined

20 Comment [A18]: Footnote recommended by OIRA.Additionally, 42 U.S.C. 6295(q)(1) specifies the requirements for setting classes
of a covered product. In such cases, DOE may specify a different standard level than that
which applies generally to such type or class of products “for any group of covered
products which have the same function or intended use” if one of two conditions is met:
(A) the specific group of products for which a class category would apply consume a
different kind of energy from that consumed by other covered products within such type
(or class); or (B) that specific group of products has a capacity or other performancere lated feature which other products within such type (or class) do not have and such
feature justifies a higher or lower standard” than applies or will apply to the other
products within that type or class. Id . In determining whether a performance-related

f eature justifies a different standard for a group of products, DOE must “consider such
factors as the utility to the consumer of such a feature” and other factors DOE deems
appropriate. Id . Any rule prescribing such a standard must include an explanation of the
basis on which such higher or lower level was established. (42 U.S.C. 6295(q)(2))

Federal energy conservation requirements generally supersede State laws or
regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C.

629 7(a)

– (c)) DOE can, however, grant waivers of Federal preemption for particular State
laws or regulations in accordance with the procedures and other provisions of section
327(d) of the Act. (42 U.S.C. 6297(d))

the potential costs and benefits of a given level, DOE routinely conducts a full analysis of the potential standards it considers.

21Section 310(3) of the Energy Independence and Security Act of 2007 (EISA
2007; Pub. L. 110-140 (codified at 42 U.S.C. 6295(gg))) amended EPCA to require that
energy conservation standards address standby mode and off mode energy use.
Specifically, when DOE adopts a standard for a covered product after July 1, 2010, it
must, if justified by the criteria for adoption of standards in section 325(o) of EPCA (42

U.S.C. 6295(o)), incorporate standby mode and off mode energy use into the standard, if
feasible, or adopt a separate standard for such energy use for that product. (42 U.S.C.
6295(gg)(3)(A)- (B)) DOE’s current (and recently amended) test procedures and current
standards for refrigeration products address standby and off mode energy use, as do the
amended standards adopted in this final rule. Standby and off mode energy use is
measured by the test procedures and integrated into the energy use metric, thus separate
metrics for these quantities are not needed. Comment [A19]: Change recommended by OIRA.

DOE has also reviewed this regulation pursuant to Executive Order 13563 (76 FR
3281, Jan. 21, 2011). EO 13563 is supplemental to, and explicitly reaffirms the
principles, structures, and definitions governing regulatory review established in,
Executive Order 12866. To the extent permitted by law, agencies are required by
Executive Order 13563 to: (1) propose or adopt a regulation only upon a reasoned
determination that its benefits justify its costs (recognizing that some benefits and costs
are difficult to quantify); (2) tailor regulations to impose the least burden on society,
consistent with obtaining regulatory objectives, taking into account, among other things,
and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing
among alternative regulatory approaches, those approaches that maximize net benefits

22(including potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity); (4) to the extent feasible, specify
performance objectives, rather than specifying the behavior or manner of compliance that

re gulated entities must adopt; and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the desired behavior,
such as user fees or marketable permits, or providing information upon which choices can
be made by the public.

DOE emphasizes as well that Executive Order 13563 requires agencies “to use the
best available techniques to quantify anticipated present and future benefits and costs as
accurately as possible.” In its guidance, the Off ice of Information and Regulatory Affairs
has emphasized that such techniques may include “identifying changing future
compliance costs that might result from technological innovation or anticipated
behavioral changes.” For the reasons stated in the preamble, DOE believes that today’s
final rule is consistent with these principles, including that, to the extent permitted by
law, agencies adopt a regulation only upon a reasoned determination that its benefits
justify its costs and select, in choosing among alternative regulatory approaches, those
approaches that maximize net benefits.

Given the range of inputs and parameters analyzed in this rulemaking, there may
be multiple standards that would maximize annualized net benefits. 9 For some product
classes, depending on different assumptions, the standard that maximized annualized net
benefits could fall within a range of TSLs. Five different TSLs were considered for each

9 The maximum annualized net benefits included monetized emissions savings. Deleted: Consistent with EO 13563, and the range of impacts analyzed in this rulemaking, the energy efficiency standard adopted herein by DOE achieves maximum net benefits. ¶ ¶ Comment [A20]: Footnote recommended by OIRA.

23product class grouping with high and low values for the maximum annualized net
benefits estimated for each TSL. For standard-size refrigerator-freezers, the TSL with
maximum annualized net benefits with the highest value was TSL 3, although certain
values for maximum annualized net benefits fell within the ranges estimated for TSL 1 to
TSL 3. For standard-size freezers, the maximum annualized net benefits fell within the
calculated ranges for TSL 3 to TSL 4. However, DOE noted that even using the low end
of this range, efficiency levels are significantly higher than the most efficient products
already available on the market (see Section VI.C.2). Therefore, DOE selected TSL 2,
which DOE also notes corresponds to the recommended level in the Joint Comments. For
compact refrigeration products, the maximum annualized net benefits fell within the
calculated ranges for TSL 1 to TSL 3, and DOE selected TSL 2. With respect to compact
refrigeration products, DOE estimates an approximately 10 percent increase in total

installation costs as a result of the standard. Because DOE was unable to estimate the
income subgroup LCC effects due to lack of data, the agency believes choosing a TSL on
the lower end of the range of estimated cost impacts (i.e., TSL 2) would provide a more
conservative approach to minimize any potential ly ne gative consumer welfare impacts on
lower income consumers. For built-in refrigeration products, the TSL with maximum
annualized net benefits was TSL 2, and DOE selected TSL 2. Therefore, consistent with
EO 13563, the energy efficiency standards adopted herein by DOE achieves maximum

net benefits Comment [A21]: Change recommended by OIRA.

24B. Background
The following discussion provides some background information describing the
events leading up to today’s final rule.

1. Current Standards
In a final rule published on April 28, 1997 (1997 Final Rule), DOE prescribed
energy conservation standards for refrigeration products manufactured on or after July 1,
2001. 62 FR 23102. This 1997 rule set the energy conservation standards that are
currently in place and completed the second round of rulemaking to amend the standards
for refrigeration products required under 42 U.S.C. 6295(b)(3)(B)-(C). The current
standards consist of separate equations for each product class. Each equation provides a
means to calculate the maximum levels of energy use permitted under the regulations.
These levels vary based on the storage volume of the refrigeration product and on the
particular characteristics and features included in a given product ( i.e. , based on product
class). 10 CFR 430.32(a). The current standards are set forth in Table II.1. DOE notes
that the standard levels denoted in the additional product classes listed as 5A and 10A
were established by the Office of Hearings and Appeals (OHA) through that Offi ce’s
exception relief process , and are applicable to basic models of those types if their
manufacturer has applied for and been granted exception relief for them by OHA

.

Table II .1: Federal Energy Efficiency Standards for Refrigerators, RefrigeratorFreezers, and Freezers Energy Standard Equations for

Product Class Maximum Energy Use (kWh/yr)

25Made Effective by the 1997 Final Rule

1. Refrigerators and refrigerator

- freezers with manual defrost. 8.82AV+248.4 0.31av+248.4
2. Refrigerator

- freezers

— partial automatic defrost. 8.82AV+248.4 0.31av+248.4 3. Refrigerator

- freezers

— automatic defrost with top

- mounted freezer without through

- the

- door ice service and all

- refrigerator

— automatic defrost. 9.80AV+276.0 0.35av+276.0
4. Refrigerator

- freezers

— automatic defrost with side

- mounted freezer without through

- the

- door ice service. 4.91AV+507.5 0.17av+507.5 5. Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without through

- the

- door ice service. 4.60AV+459.0 0.16av+459.0 6. Refrigerator

- freezers

— automatic defrost with top

- mounted freezer with through

- the

- door ice service. 10.20AV+356.0 0.36av+356.0 7. Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service. 10.10AV+406.0 0.36av+406.0
8. Upright freezers with manual defrost. 7.55AV+258.3 0.27av+258.3
9. Upright freezers with automatic defrost. 12.43AV+326.1 0.44av+326.1 10. Chest freezers and all other freezers except compact freezers. 9.88AV+143.7 0.35av+143.7 11. Compact refrigerators and refrigerator

- freezers with manual defrost. 10.70AV+299.0 0.38av+299.0 12. Compact refrigerator

- freezer

—

partial automatic defrost. 7.00AV+398.0 0.25av+398.0 13. Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer and compact all

- refrigerator

— automatic defrost. 12.70AV+355.0 0.45av+355.0 14. Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer. 7.60AV+501.0 0.27av+501.0 15. Compact refrigerator

- freezers

— automatic defrost with bottom

mounted freezer. 13.10AV+367.0 0.46av+367.0 16. Compact upright freezers with manual defrost. 9.78AV+250.8 0.35av+250.8 17. Comp act upright freezers with automatic defrost. 11.40AV+391.0 0.40av+391.0 18. Compact chest freezers. 10.45AV+152.0 0.37av+152.0

Product Class Made Effective Through OHA Exception Relief 5A. Refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

- the

- door ice service. 5.0AV+539.0 0.18av+539.0
10A. Chest freezers with automatic defrost. 14.76AV+211.5 0.52av+211.5 AV: Adjusted Volume in ft 3 ; av: Adjusted Volume in liters (L)

262. History of Standards Rulemaking for Refrigerators, Refrigerator-Freezers, and

Freezers
The amendments made to EPCA by the National Appliance Energy Conservation
Act of 1987 (NAECA; Pub. L. 100-12) included mandatory energy conservation
standards for refrigeration products and requirements that DOE conduct two cycles of
rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(b)(1), (2),
(3)(A)(i), and (3)(B)-(C)) DOE completed the first of these rulemaking cycles in 1989
and 1990 by adopting amended performance standards for all refrigeration products
manufactured on or after January 1, 1993. 54 FR 47916 (November 17, 1989); 55 FR
42845 (October 24, 1990). As indicated above, DOE completed a second rulemaking
cycle to amend the standards for refrigeration products by issuing a final rule in 1997,
which adopted the current standards for these products. 62 FR 23102 (April 28, 1997).

In 2005, DOE granted a petition, submitted by a coalition of state governments,
utility companies, consumer and low-income advocacy groups, and environmental an d
energy efficiency organizations, requesting a rulemaking to amend the standards for
residential refrigerator-freezers. 10 DOE then conducted limited analyses to examine the
technological and economic feasibility of amended standards at the ENERGY STAR
levels that were in effect for 2005 for the two most popular product classes of
refrigerator-freezers. These analyses not only identified potential energy savings, benefits
and burdens from such standards, but also assessed other issues related to them. Most
recently, DOE has undertaken this rulemaking to satisfy the statutory requirement that

10 The petition, submitted June 1, 2004, can be viewed at http://www.standardsasap.org/documents/rfdoe.pdf (last accessed August 18, 2010) and is in the docket as item No. 117.

27DOE publish a final rule to determine whether to amend the standards for refrigeration
products manufactured in 2014. (42 U.S.C. 6295(b)(4)) The limited 2005 analyses served
as background for the more extensive analysis conducted for this rulemaking.

DOE initiated this rulemaking by making available on its website a framework
document for refrigeration products, a PDF copy of which is available at
http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_
freezer_framework.pdf ). DOE also published a notice announcing the availability of the
framework document and a public meeting to discuss the document. It also requested
public comment on the document. 73 FR 54089 (September 18, 2008). The framework
document described the procedural and analytical approaches that DOE anticipated using
to evaluate energy conservation standards for refrigeration products and identified
various issues to resolve during the rulemaking.

On September 29, 2008, DOE held the framework document public meeting and

discussed the issues detailed in the framework document. DOE also described the
analyses that it planned to conduct during the rulemaking. Through the public meeting,
DOE sought feedback from interested parties on these subjects and provided information
regarding the rulemaking process that DOE would follow. Interested parties discussed the
following major issues at the public meeting: test procedure revisions; product classes;
technology options; approaches to the engineering, life-cycle cost, and payback period
analyses; efficiency levels analyzed in the engineering analysis; and the approach for
estimating typical energy consumption. At the meeting, and during the related comment Deleted: starting on January 1,

Comment [A22]: Change recommended by OIRA.

28period, DOE received many comments that helped it identify and resolve issues involved
in this rulemaking.

DOE then gathered additional information and performed preliminary analyses
for the purpose of developing potential amended energy conservation standards for
refrigeration products. This process culminated in DOE’s public announcement of the
preliminary analysis public meeting. 74 FR 58915 (November 16, 2009) (the November
2009 notice) At that meeting, which was held on December 10, 2009, DOE discussed the
following matters: the product classes DOE analyzed; the analytical framework, models,
and tools that DOE was using to evaluate standards; the results of the preliminary
analyses performed by DOE; and potential standard levels that DOE could consider.
DOE also invited written and verbal comments on these subjects and announced the
availability on its website of a preliminary technical support document (preliminary TSD)
it had prepared to inform interested parties and enable them to provide comments. Id

. (The preliminary TSD is available at
http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/ref_frz_pren
opr_prelim_tsd.pdf ) DOE also sought views concerning other relevant issues that
participants believed would affect energy conservation standards for refrigeration
products, or that merited addressing in the Notice of Proposed Rulemaking (NOPR). Id

.
at 58917-18.

The preliminary TSD provided an overview of the activities DOE undertook in
developing potential standards for refrigeration products, and discussed the comments

29DOE received in response to the framework document. It also described the analytical
framework that DOE used, including a description of the methodology, the analytical
tools, and the relationships among the various analyses that are part of the rulemaking.
The preliminary TSD presented and described in detail each analysis DOE had performed
up to that point, including descriptions of inputs, sources, methodologies, and results.
These analyses included a market and technology assessment, a screening analysis, an
engineering analysis, an energy use analysis, a markups analysis, a life-cycle cost
analysis, a payback period (PBP) analysis, a shipments analysis, a national impact
analysis, and a preliminary manufacturer impact analysis. See the NOPR for an overview
of these assessments and analyses. 75 FR 59470, 59477 (September 27, 2010).

At the preliminary analysis meeting, DOE presented the methodologies and
results of the analyses set forth in the preliminary TSD. Major topics discussed at the
meeting included test procedure revisions, product classes (including wine coolers, allrefrigerators, 11 and built-in refrigeration products), the use of alternative foam blowing
agents and refrigerants, engineering analysis tools, the use of vacuum insulated panels
(VIPs), mark-ups, field energy consumption, life-cycle cost inputs, efficiency distribution
forecasts, and trial standard level selection criteria. DOE also discussed plans for
conducting the NOPR analyses. Comment received in response to the November 2009
notice, helped shape DOE’s resolution of the issues raised in the preliminary analysis
meeting.

11 An “all

- refrigerator” is defined as “an electric refrigerator which does not include a compartment for the freezing and long time storage of food at temperatures below 32 °F (0.0 °C). It may include a compartment of 0.50 cubic feet capacity (14.2 liters) or less for the freezing and storage of ice.” (10 CFR part 430, subpart B, appendix A1, section 1.4).

30In response to the preliminary analysis, DOE also received a comment submitted
jointly by groups representing manufacturers (Association of Home Appliance
Manufacturers, Whirlpool, General Electric Company (GE), Electrolux, LG Electronics,
BSH, Alliance Laundry, Viking Range, Sub Zero-Wolf, Friedrich A/C, U-Line,
Samsung, Sharp Electronics, Miele, Heat Controller, AGA Marvel, Brown Stove, Haier,
Fagor America, Airwell Group, Arcelik, Fisher & Paykel, Scotsman Ice, Indesit,
Kuppersbusch, Kelon, DeLonghi); energy and environmental advocates (American
Council for an Energy Efficient Economy, Appliance Standards Awareness Project,
Natural Resources Defense Council, Alliance to Save Energy, Alliance for Water
Efficiency, Northwest Power and Conservation Council, Northeast Energy Efficiency
Partnerships); and consumer groups (Consumer Federation of America, National
Consumer Law Center). This collective set of comments, which DOE refers to in this

notice as the “Joint Comments
, ” 12 recommended specific energy conservation standards
for refrigeration products that, in the commenters’ view, would satisfy the requirements
under EPCA. According to this submission, negotiations between these various groups
commenced in the spring of 2010, resulting in a finalized agreement with recommended
standards on July 30, 2010. (Joint Comments, No. 52 at p. 8) Those recommended
standards were reported in percentages of energy use reductions and in annual energy use
based on the test procedure then in place but after DOE had published its NOPR
proposing to amend that procedure. (Id. See also 75 FR 29824 (May 27, 2010)) DOE
neither organized nor was a member of the group but made its contractors available to

DOE Docket No. EERE-2008- BT -STD-0012, Comment 49. DOE considered the Joint Comments to supersede earlier comments by the listed parties regarding issues subsequently discussed in the Joint Comments.

31 12perform data processing. Consistent with its legal obligations when developing an energy
conservation standard, DOE provided the public with the opportunity to comment on the
proposed levels that DOE considered adopting for refrigeration products in the NOPR,

which mirror those recommended in the Joint Comments.

DOE published the NOPR on September 27, 2010. 75 FR 59470. The NOPR and
its accompanying NOPR TSD described the analyses that DOE conducted after the
preliminary analyses, including revisions of analyses to address stakeholder comments.
The additional analyses performed during the NOPR phase included the consumer
subgroup analysis, manufacturer impact analysis, employment impact analysis, utility
impact analysis, environmental analysis, and regulatory impact analysis. The NOPR
discussed all of the NOPR analyses in depth, including the revision of analyses initially
conducted in the preliminary analysis phase. (see 75 FR at 59485-59530 (September 27,
2010)) DOE held a public meeting to discuss the NOPR on October 14, 2010. At the
meeting, DOE presented its analyses and raised issues for comment. The issues discussed
at the meeting included the measurement changes associated with the new test procedures
under consideration, product classes, product class definitions, status of specific
technologies (e.g. high-efficiency compressors, VIPs, and isobutane refrigerant), maxtech levels, energy use equation slope changes, adjustments to the methodology for field
energy use estimates, maintenance costs, efficiency distributions, energy standard roundoff, impacts on small manufacturers, setting built-in standards at levels determined to
have negative consumer impacts, and DOE’s treatment of emissions reductions. DOE
considered comments received at the public meeting and during the NOPR comment

32period in finalizing the standards

.

As discussed in greater detail in section IV.F.1 below, after publishing the NOPR,
DOE more carefully examined trends in product prices and the possible impact of such
trends on its analyses. On February 22, 2011, DOE published a notice of data availability
(NODA) that discussed the approach it was considering to use in its forecasts of product
prices. 76 FR 9696. DOE requested comments on the information provided in the NODA,
and several stakeholders responded, including some that had not commented on the

NOPR.

Table II

. 2 below lists the stakeholders that provided comments on the NOPR and

the NODA. Deleted: b elow lists the stakeholders that provided comments on the NOPR.

Comment [A23]: Changes recommended by OIRA.

Table II

. 2 Stakeholders Providing Comments on the NOPR and NODA Name Acronym Type* NOPR Oral Comments Written Comments Air

- Conditioning, Heating, and Refrigeration Institute AHRI IR NODA
American Council for an Energy Efficient Economy ACEEE EA NODA

American Gas Association AGA UA NODA American Public Power Association APPA UA NOPR Appliance Standards Awareness Project (ASAP) ASAP EA  NODA
Appliance Standards Awareness Project (ASAP) and Others 13 Joint Advocates’ Comment (JAC) EA, CA NOPR
Association of Home Appliance Manufacturers AHAM IR  NOPR
, NODA California Investor

- Owned Utilities IOUs U NOPR
, NODA Comment [A24]: Changes recommended by OIRA.
Deleted:

­

Deleted: 

Deleted: 

Deleted: 

Deleted: 

13 Appliance Standards Awareness Project (ASAP), Alliance to Save Energy (ASE), American Council for an Energy-Efficient Economy (ACEEE), Consumer Federation of America (CFA), National Consumer Law Center (NCLC), Natural Resources Defense Council (NRDC), Northeast Energy Efficiency Partnerships (NEEP), and Northwest Energy Efficiency Alliance (NEEA).

33Consumer Federation of America CFA CA NODA Earthjustice Earthjustice EA  NOPR Edison Electric Institute EEI UA NOPR
, NODA Electrolux Home Products Electrolux M  General Electric Consumer and Industrial GE M  NOPR
Ingersoll Rand Residential Solutions Ingersoll Rand M NODA National Consumer Law Center NCLC CA NODA Natural Resources Defense Council NRDC EA NODA
Northeast Energy Efficiency Partnerships NEEP EA NODA
Northwest Energy Efficiency Alliance NEEA EA NODA

Northwest Power and Conservation Council NPCC UA 
People’s Republic of China WTO/TBT National Notification & Enquiry Center PRC FG NOPR

Portland General Electric Company PGEC U NOPR Sacramento Municipal Utility District SMUD U NOPR
Southern Company SC U NOPR
, NODA Sub Zero

- Wolf, Inc. Sub Zero M NOPR Traulsen Traulsen M NODA Whirlpool Corporation Whirlpool M  NOPR Deleted: 
Deleted: 

Deleted: 

Deleted: 

Deleted: 
Deleted: 

Deleted: 

Deleted: 

Deleted:  *IR: Industry Representative; M: Manufacturer; EA: Efficiency/Environmental Advocate; CA: Consumer Advocate; CS: Component Supplier: TE: Technical Expert: I: Individual; U: Utility; UA: Utility Advocate; FG: Foreign Government Agency

DOE notes that comments from the PRC indicated that it received notice of the
September 27 th NOPR on October 27, 2010, which permitted the Chinese government
less than 60 days to provide comment on the proposed regulation. In DOE’s view, the
publication of the September 2010 proposal, along with its immediate availability on the

Government Print ing Office’s website ( http://www.gpoaccess.gov), provided any
interested party with the specified 60 days of comment period. In future, however, to
accommodate the PRC’s concerns, and to the extent feasible, DOE ma y examine possible

34steps to ensure the availability of its proposals to interested foreign parties.

III. General Discussion

The following section discusses various technical aspects related to this
rulemaking. In particular, it addresses aspects involving the test procedures for
refrigeration products, the technological feasibility of potential standards to assign to
these products, and the potential energy savings and economic justification for
prescribing the amended standards for refrigeration products.

A. Te st Procedures
As noted above, DOE’s current test procedures for refrigeration products appear
at 10 CFR part 430, subpart B, appendices A1 (for refrigerators and refrigerator-freezers)
and B1 (for freezers). DOE recently published a notice containing both the test procedure

final rule (affecting products manufactured prior to 2014) and an interim final rule (for
products manufactured starting in 2014). The final/interim final rule notice amended
Appendices A1 and B1 (which affect pre-2014 products) and created new Appendices A

and B (which affect products starting in 2014). Appendix A applies to refrigerators and
refrigerator-freezers covered by today’s amended standards ( i.e. , those manufactured or Deleted: issued

Deleted: that

Deleted: these appendices,

Deleted: , applicable Deleted:
, Deleted: , and freezers, respectively, for products Deleted:
, Deleted: on Deleted: January 1, 2014)

. Deleted: )

. or after the 2014 compliance date prescribed by today’s rule ) and Appendix B applies to
freezers covered by today’s amended standards

. 75 FR 78810 (December 16, 2010 ) (this
notice contains both the final and interim final rules that detail the test procedures for
refrigeration products). The new Appendices A and B share many of the same revisions
and additions made in Appendices A1 and B1
, but also include additional revisions not

35made in Appendices A1 and B1 . See id . at 78817- 78818 DOE notes, however, that

because the new Appendices A and B were issued as an interim final rule, these
additional amendments may be subject to possible adjustment based on comments that

DOE receives . DOE had previously provided commenters with 60 days within which to
provide additional feedback regarding the interim final rule

. Id . at 78810. DOE may reopen this comment period for a limited period of time after the publication of today’s

standards final rule.

EPCA requires DOE to consider during a test procedure rulemaking whether test
procedure amendments alter the measured energy use of products, and, if so, to amend
the energy standards. (42 U.S.C. 6293(e)(1 )-( 2)) In this case, DOE simultaneously Deleted: if

Deleted: comments Deleted: the 60

- day period specified in the notice Deleted: ( Deleted: plans to

Deleted:
, considered the impacts of any measured energy changes within the context of the
standards rulemaking required by statute. Section III.A.2 discusses the adjustment of the
final energy conservation standard with respect to any test procedure changes. The
approach used to implement this adjustment is also discussed in the Section IV.C.2

below.

1. Test Procedure Rulemaking Schedule
The NOPR analysis documents were published, and the NOPR public meeting
was held, prior to publication of the final rule describing the amended test procedure on
which the analysis was based. Th e test procedure final/interim final rule was issued and
DOE made copies available to all interested parties prior to the end of the energy
conservation standard NOPR comment period. Deleted: below Deleted: .) While the new test procedures retain or revise many of the provisions currently in appendices A1 and B1, they also add some new procedures. Most Deleted: the revisions and additions apply to all refrigeration products, and are refl ected in both new appendices . See i d . at 78817

- 7881 8.

36AHAM and GE both commented that, despite DOE’s May 2010 publication of its
proposed test procedure, it is difficult to prepare comments on an energy standard when
the final test procedure is not yet known. (AHAM, Public Meeting Transcript, No. 67 at

p. 18; GE, Public Meeting Transcript, No. 67 at p. 37) AHAM clarified that
determination of the impact on energy use measurement of the test procedure changes
cannot be done without having a final test procedure (AHAM, Public Meeting Transcript,
No. 67 at p. 13-14, 35) In written comments, AHAM argued that because the test
procedure final/interim final rule was not issued until November 24, 2010, manufacturers
did not have a sufficient opportunity to test products to evaluate the impacts of the final
test procedure changes

— as a result, AHAM claimed it was not able to comment on the
proposed energy standard equations (AHAM, No. 73 at pp. 1- 2) 14 GE commented that the
industry wanted to know the final test procedure before starting test work to determine
whether the energy standard adjustments implemented by DOE in the NOPR sufficiently
represent all of the test procedure changes. (GE, Public Meeting Transcript, No. 67 at p.

46 -47) AHAM also asked whether any rulemaking process options allowed under EPCA
could be considered to give the industry more time to assess the test procedure impacts.
(AHAM, Public Meeting Transcript, No. 67 at p. 37-38)

DOE notes that the test procedure NOPR was published May 27, 2010, roughly
two months prior to the completion of negotiations conducted by industry and advocates
in creating the standards recommended in their joint comments. 75 FR 29824 (May 27,
2010). In developing those consensus standards, the industry and other stakeholders had

14 The rule was issued on November 23, 2010, not November 24 as indicated in AHAM’s comments.

37kno wledge of DOE’s test procedure proposals and ample time to consider adjustments to
the negotiated standards to address the proposals for today’s final rule . DOE also notes
that stakeholders have had several months since the publication of the test procedur e NOPR to quantify the impacts of the proposed test procedure amendments. DOE again
asked stakeholders at the energy conservation standard NOPR public meeting for
information that would help quantify these impacts. None was provided and participants
gave no indication that they had performed any such testing. In the absence of such
information, DOE has developed its own information to finalize the energy conservation
standards, as described in section III.A.2

.

DOE notes that under EPCA, an amended or new energy conservation standard
may not be prescribed unless a test procedure for the regulated product has been
prescribed. See 42 U.S.C. 6295(o)(3). DOE has met this requirement.

In response to AHAM’s request regarding additional time to evaluate the test
procedure impacts, DOE has issued the test procedure amendments affecting products
starting in 2014 as an interim final rule. This approach resulted in providing interested
parties with an additional 60 days to comment on the interim final rule’s amendments. 75
FR at 78810 (December 16, 2010). Additionally, as already indicated, DOE plans to
provide interested parties with additional time to comment on the interim final rule.
Notice of that limited reopening of the comment period will be provided in the Federal
Register.

382. Adjustment of the Energy Standards for the New Test Procedure
As described above, DOE amended its test procedures for refrigeration products.
These amendments will impact the measured energy use. DOE’s amended standard levels
incorporated adjustments (called a “crosswalk”) to reflect these changes in energy use
measurements. DOE described the crosswalk process in its September 2010 NOPR. See

75 FR at 59502- 5950 5 (September 27, 2010). In short, DOE applied the crosswalk to the
baseline (current energy standard) equations, thus developing baseline energy use
equations using the new test procedure. DOE applied the percentage energy use
reductions representing the new energy standards to these baseline equations to determine
the new energy standards. The NOPR also indicated that DOE tentatively concluded that
the only test procedure changes that would be likely to impact measured energy use are
those associated with compartment temperatures and the volume measurement method.
75 FR at 59505 (September 27, 2010). The term “NOPR crosswalk” refers to this set of
energy standard adjustments addressing these two test procedure changes

.

Commenters addressed both (a) the NOPR crosswalk addressing test procedure
changes in compartment temperatures and volume measurements and (b) the additional
test procedure changes that could affect energy use measurements. The NOPR public
meeting was held on October 14, 2010, before the publication of the test procedure
final/interim final rule. Hence, stakeholder comments from the meeting addressed the
proposed test procedure, rather than the final one that DOE ultimately adopted.

39Whirlpool indicated that it could not comment on the proposed standard levels
prior to publication of the test procedure and comprehensive testing to determine the
impact of the test procedure changes. (Whirlpool, No. 74 at p. 7) GE echoed this
comment, indicating that it is essential to have the final test procedure to allow evaluation
of the impacts of the test procedure changes in order to be able to comment effectively on
the proposed standard levels. (GE, No. 76 at p. 1) AHAM commented that the NOPR
crosswalk is partly theoretical since it uses extrapolation and analysis to determine
adjustments for some product classes. (AHAM, Public Meeting Transcript, No. 67 at p.
17) AHAM also commented that it “is critical” to do testing to determi ne the impact of
the test procedure changes, and that the industry was not provided sufficient time
between issuance of the final/interim final rule and the end of the comment period to
conduct such testing. (AHAM, 73 at p. 2)

The IOUs supported DOE’s ap proach for adjustment of the energy standards to
address test procedure changes. In light of the limited time available to complete the
rulemaking, the IOUs commented that DOE’s approach was appropriate in spite of
comments by parties at the public meeting calling for additional testing to perform a
crosswalk. (IOUs, No. 77 at p. 2)

DOE notes that the NOPR crosswalk was based primarily on data provided by

AHAM —which DOE described in detail in its TSD. See chapter 5, “Engineering
Analysis”, section 5.4.2. B ecause AHAM did not initially provide data for all product
classes, DOE conducted additional analysis and developed estimates to supplement the

40gaps present in AHAM’s data. These additional steps helped DOE to establish
appropriate crosswalks for the remaining product classes. DOE first presented this
process in its preliminary TSD, which DOE posted on its website in November 2009.

Stakeholders have had more than twelve months to comment on the crosswalks for these
remaining product classes, but have not done so.

Numerous commenters identified other test procedure changes that they believed
would affect the measured energy use of refrigeration products and offered their views on

how to address them in a final crosswalk. AHAM first indicated that the NOPR
crosswalk does not represent all of the measurement impacts of the test procedure
modifications. (AHAM, Public Meeting Transcript, No. 67 at p. 16; AHAM, No. 73 at p.
2) It asserted that there are many test procedure changes and that some of these changes,
other than those changes affecting compartment temperature and volume calculation, can
impact measured energy use. (AHAM asserted that the impact of these changes cannot be
determined as a sum of the impacts of the individual changes, but did not provide data
illustrating this assertion, nor did AHAM explain why an additive approach is not
reasonable. (Id. at p. 35- 36) ) To this end, AHAM identified four specific proposed test
procedure changes that it believed would impact measured energy use: (1) test procedures
addressing products with variable anti-sweat heater control, (2) use of the highest energy
use position for special compartments, (3) modification of the long-time-defrost test
procedure to capture precooling energy use, and (4) test procedures addressing products
with multiple defrost cycle types. (Id. at 42-43) DOE notes that AHAM identified these
same four additional test procedure changes in its comments on the test procedure

41rulemaking NOPR (AHAM, Test Procedure for Residential Refrigerators, RefrigeratorFreezers, and Freezers, Docket Number EERE-2009- BT

- TP -0003, No. 16 at p. 3) In its
written comments, AHAM indicated that the final test procedure that DOE developed for
products with variable anti-sweat heater control does not alter measured energy use, since
DOE adopted the procedure provided in waivers already granted to companies who
manufacture products with such features. (AHAM, No. 73 at p. 3)

Whirlpool asserted that applying the highest energy usage setting for special
compartments, including procedures designed to capture precooling energy and to
address products that use multiple defrost cycles, will alter measured energy use.
(Whirlpool, No. 74 at p. 7)

The IOUs agreed that there were additional test procedure changes that could alter
measured energy use that had not been considered in establishing the proposed standards,
including test procedures for products with variable anti-sweat heater control, new
procedures to capture precooling energy use, and new procedures for special
compartments. The IOUs recommended that the energy standards should be adjusted to
account for these test procedure changes. They noted that if the measured impacts of
these test procedure changes have not been determined through testing, DOE should
estimate their impact and direction of the impact (positive or negative). They added that
if these impacts are small or applicable to only a small portion of the market, DOE should
not adjust the baseline energy use equations 15 to avoid the risk of backsliding on the

15 The baseline energy use equations represent energy use for baseline products (i.e. products which are minimally compliant using the current test procedure) when tested using the new test procedure.

42standard levels. (IOUs, No. 77 at p. 2) The IOUs indicated that they did not have any
additional data regarding the impacts of the test procedure changes. (Id.)

GE generally noted the importance of conducting tests to evaluate the impacts of
the test procedure changes. It also expressed concerns that a number of the test procedure
changes may have significant measurement impacts. GE did not, however, specifically
identify these test procedure changes. (GE, Public Meeting Transcript, No. 67 at pp. 36­
37) Whirlpool commented that the test procedures addressing products with variable
anti-sweat heater controls represent a significant test burden (in some cases, an additional
week of test time) and could impact the measured energy use of a given product.
(Whirlpool, Public Meeting Transcript, No. 67 at pp. 44-45) Whirlpool further identified
electric heaters and/or fans in special compartments that may be used to prevent freezing
in such compartments as a factor in the potential energy use measurement impact of the
test procedure amendments for special compartments. (Id.)

When asked by DOE whether there are any manufacturer data that quantify the
impacts of the cited additional test procedure amendments, AHAM indicated that they

did not have such data. Instead , AHAM cited DOE’s own statement from the
refrigeration product test procedure rulemaking public meeting presentation discussing
the NOPR that the amendments to capture defrost precooling energy use would increase
energy use 2 percent for one tested product (AHAM, Public Meeting Transcript, No. 67
at pp. 44, 45 -46, 43) AHAM further stressed the importance of evaluating the entire
modified test procedure rather than investigating the potential impacts from individual

43changes, because the measurement impacts of the changes may not be additive. (Id. at pp.

26 -27) However, AHAM did not provide data illustrating or supporting this assertion,
nor did AHAM explain why an additive approach is not reasonable.

Stakeholders also commented on the approach used to apply the projected energy
measurement impacts to the energy conservation standards. When asked by DOE during
the public meeting if the crosswalk should apply to the population average of the
minimally compliant products, AHAM agreed, indicating that the Joint Agreement used
the words “average” and “minimally compliant”, but that the crosswalk should also be
based on evaluating low-volume and high-volume products to properly reflect capacity
impacts. (AHAM, Public Meeting Transcript, No. 67 at pp. 33-34) ASAP also agreed that
the crosswalk should apply to the “average”. (ASAP, Public Meeting Transcript, No. 67
at p. 34) DOE agrees that a shipment-weighted average approach for applying the energy
use measurement impacts of test procedure changes is appropriate and is consistent with
the requirements of EPCA

. (42 U.S.C. 6293(e)(2)) Consistent with this approach, and
the requirements of 42 U.S.C. 6293(e)(2), DOE applied a shipment-weighted approach,
which provides the best indication across all shipped products of the magnitude of the
impact.

AHAM also commented that anti-backsliding considerations would not apply
because the changes in test procedures and energy standards will take effect
simultaneously. (AHAM, Public Meeting Transcript, No. 67 at p. 41) DOE notes that
amending a test procedure without an accompanying energy standard rulemaking that

44increases stringency may result in an increase in the maximum allowable energy use for
some products. Such a change would not be allowed if the anti-backsliding provisions of
EPCA (42 U.S.C. 6295(o)(1)) applied to any particular product rather than to the average
for the product class population. However, such considerations do not apply in this case,
as indicated by AHAM, because the test procedure and energy standard changes will
occur simultaneously.

DOE notes that it has received no new information from stakeholders quantifying
the changes in measured energy use associated with any of the test procedure changes.
Hence, DOE adjusted its standards using the data discussed above that AHAM provided
during the preliminary analysis phase, as well as supplemental data and analysis (e.g.
testing DOE conducted during the rulemaking) that DOE developed on its own.

a. Products with Variable Anti-Sweat Heater Control
DOE amended its test procedures to require the use of the procedure currently
being used by manufacturers under waivers that DOE granted. This procedure, along with
a change to assure the consistency of compartment temperatures during testing, will be
required to establish compliance with the 2014 standards for variable anti-sweat heater
control-equipped products. The change involves the description of the conditions that
apply to the anti-sweat heater wattages used in the calculation of the anti-sweat heater
adjustment factor: the wattages will apply to a 0  ̊ F freezer compartment temperature and

a 39  ̊ F fresh food compartment temperature, rather than the 5  ̊ F and 45  ̊ F, respectively,

used in the waivers. 75 FR at 78828- 788 30 (December 16, 2010). DOE considers that the

45adjustments made to the energy conservation standards to account for compartment
temperature changes also apply to the adjustment factor for anti-sweat heaters operating
with variable control. Hence, no additional energy standard adjustment is needed to
address this test procedure amendment.

b. Products with Multiple Defrost Cycle Types
DOE amended the test procedure to address products with multiple defrost cycle

types. Id. at 78836- 788 38. As explained in the test procedure final rule, the previous
procedure could not ensure that the entire defrost energy used for such products would be
sufficiently captured. DOE received one test procedure waiver petition for such products,
from Samsung, requesting waiver of the current test procedure of Appendix A1 for
products manufactured before 2014. 76 FR 16760 (March 25, 2011). The waiver petition
requests use of the same test procedure to address multiple defrost cycle types that was
set forth in the test procedure interim final rule for Appendix A. Samsung did not provide
information regarding the change in measured energy use associated with the modified
test procedure. Furthermore, they indicated that the current energy efficiency standards
are adequate, and they did not request adjustment of the standards for the products that
are the subject of the waiver petition. Id. at p. 16763. DOE is unaware of any other
manufacturer who employs this type of design. Accordingly, DOE is unaware of any
impact on the measured energy use of these multiple defrost cycle products associated
with this test procedure amendment.

46c. Amendments to Capture Precooling Energy Use
DOE amended the test procedure for products with long-time or variable defrost
to capture precooling and partial recovery energy use. Id. at 78832- 788 36. Testing
performed during the engineering phase of this rulemaking indicates that capturing
precooling energy use would yield an impact of roughly two percent of the total
measured energy use. Additionally, the impact of capturing the energy from full
temperature recovery (i.e. extending the test period until the compartment temperatures
have recovered to their steady-state levels) for products exhibiting partial recovery may
comprise another 0.5 percent of total measured energy use for those products that do not
achieve a full temperature recovery within the test period prescribed by the current test
procedure. Of the nine refrigerator-freezers tested during the engineering analysis phase,
two of these units incorporated precooling. These units fell into current product classes 5
(refrigerator-freezers

— automatic defrost with bottom-mounted freezer without throughthe-door ice service) and 7 (refrigerator-freezers

— automatic defrost with side-mounted
freezer with through-the-door ice service). DOE is un aware of any significant percentage
of products that currently do not fully recover temperature within the time period allotted
by the current test procedure. DOE has adjusted the energy standard levels for these and
related product classes using the observed measurement impact for capturing precooling
energy use and applying that measured impact consistently with the frequency with
which this feature has been observed in this group of tested products. The adjustment

details are described in detail in section IV.C.2 below.

47d. Test Procedures for Special Compartments
DOE amended the test procedures to require that products with special
compartments using the a ddition of heat (“heat addition”) as a form of temperature
control be tested twice. The energy use measurement of such products will be an average
of measurements made with the special compartment temperature controls set in the
warmest position for the first test and in the coldest position for the second test. Id. at

78825

- 7882 6. Of the eleven refrigerator-freezers purchased for reverse engineering
analysis performed during the engineering analysis phase, two had special compartments
with separate temperature control. Neither of these products used heat addition for
controlling special compartment temperatures. In examining features of refrigeration
products on manufacturer websites, DOE found that the prevalence of special
compartments in standard-size refrigerator-freezers comprised 20 percent of the models

examined. Id. at 78823. Because of the limited nature of these data, DOE conducted
further study of products that employ heat addition.

DOE identified thirteen basic models that have heated special compartments. In

this assessment
, DOE concluded that special compartments use heaters for temperature
control if the high end of their controllable temperature range is significantly higher than
typical fresh food compartment temperatures. DOE considered typical fresh food
compartment temperature to be the default settings set at the factory. These default
settings are in the 37  ̊ F to 39  ̊ F range. (see, e.g., GE Bottom Freezer Refrigerators, No.
78 at p. 4; LG Owner’s Manual LFX28978**, No. 79 at p. 23) The controllable
temperature range of heated special compartments typically reaches temperatures of up to

4841  ̊ F or 42  ̊ F. By comparison, special compartments that rely on cooling air to manage
temperatures do not exceed the typical fresh food compartment temperature range. (See,
e.g., GE Bottom Freezer Refrigerators, No. 78 at p. 18; Use and Care Guide Electrolux
242046401, No. 80 at p. 18) The thirteen products identified include products from
current products classes 5 (refrigerator-freezers

— automatic defrost with bottom-mounted
freezer without through-the-door ice service), 5A (refrigerator-freezer

— automatic defrost
with bottom-mounted freezer with through-the-door ice service), and 7 (refrigeratorfreezers

— automatic defrost with side-mounted freezer with through-the-door ice
service). (Heated Special Compartments Web Pages, No. 81)

DOE does not have information on shipment weighting for these products. As a
proxy for shipment weighting, DOE instead determined the percentage of available
products represented by the identified products with heated special compartments for
each of the represented product classes. To do this, DOE considered the number of
available products listed in the California Energy Commission (CEC) database, adjusted

to account for out- of -date product listings. The details of this approach are described in
the TSD in chapter 5, section 5.4.2.6. The calculated percentages of products having
heated special compartments are 10. 6 percent for current product class 5A, 1.5 percent
for current product class 5, and 0. 7 percent for current product class 7. DOE used these Deleted: .5% Deleted: 0.9% Deleted: 4% percentages to adjust the standards for these product classes. The determination of the
adjustment is discussed in greater depth in section IV.C.2 below.

49DOE initially conducted analysis, described below in section IV.C.2, to estimate
what the projected impact from the relevant test procedures would be on the measured
energy use for a product with a heated special compartment. Initial estimates indicated
that the change would increase measured energy use by 5.9 percent for this type of
product

. DOE also conducted testing for two of the thirteen products that were identified
as having heated special compartments. These tests compared the measured energy use
not including icemaking energy use when tested using the interim final test procedures
set forth in the new Appendix A with a modified test procedure in which the heated
special compartment is tested only in its coldest setting. For both of these tests, the
Appendix A requirement to average measurements representing the coldest and warmest
setting of the compartment resulted in higher energy use. The impacts were 6.5 percent
for one product and 1.7 percent for the other — the average impact determined for these
tests was 4.1 percent, which is somewhat lower than the estimated 5.9 percent impact.

After reviewing these results, DOE determined that, because the test data
represent only two products, the uncertainty associated with the average of the measured
impacts is fairly high. As a result, DOE concluded that the more conservative approach of
basing its adjustment of the energy standard on the calculation rather than the limited
testing data is appropriate to ensure that the final standard is not overly aggressive.
Taking such an approach is consistent in this instance with EPCA’s prohibition to make
subsequent adjustments that would increase the permitted energy usage (or reduce the
energy efficiency) of a regulated product. See 42 U.S.C. 6295(o)(1). Accordingly, as

50described in greater detail in section IV.C.2, the results of the more conserevative
calculation were used to adjust the energy standard.

3. Standby and Off Mode Energy Use
DOE notes that EPCA, as amended by EISA 2007, requires DOE to amend its test
procedures for all covered products, including those for refrigeration products, to include

a measurement for standby mode and off mode energy consumption, except where
current test procedures fully address such energy consumption. (42 U.S.C. 6295(gg)(2))
As indicated above, DOE’s test procedures for refrigeration products, both the previous
and recently amended versions, already fully address standby and off mode energy use.
Whirlpool agreed with this assessment. (Whirlpool, No. 74 at p. 7) No commenters
challenged this assessment . Because the test procedures address standby and off mode
energy use, the energy conservation standards, which are based on the test procedures,
also address this energy use

.

B. Technological Feasibility

1. General
In each standards rulemaking, DOE conducts a screening analysis based on
information gathered on all current technology options and prototype designs that have
the potential to improve product or equipment efficiency. To conduct the analysis, DOE
typically develops a list of design options for consideration in consultation with
manufacturers, design engineers, and other interested parties. DOE then determines Comment [A25]: Change recommended by OIRA.

51which of these options are technologically feasible. DOE considers a design option to be
technologically feasible if it is currently in use by the relevant industry or if a working
prototype exists. See 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i)
(providing that “[t]echnolog ies incorporated in commercially available products or in
working prototypes will be considered technologically feasible.”)

Once DOE has determined that particular design options are technologically
feasible, it evaluates each one using the following additional screening criteria: (1)
practicability to manufacture, install, or service; (2) adverse impacts on product utility or
availability; and (3) adverse impacts on health or safety. (10 CFR part 430, subpart C,
appendix A, section 4(a)(4)). Section IV.B of this notice discusses the results of the
screening analysis for refrigeration products, namely, the designs DOE considered, those
it screened out, and those that are the basis for the trial standard levels (TSLs) in this
rulemaking. For further details on the screening analysis for this rulemaking, see chapter
4, Screening Analysis, of the NOPR TSD.

2. Maximum Technologically Feasible Levels
When DOE proposes to adopt (or not adopt) an amended standard for a type or
class of covered product, it must “dete rmine the maximum improvement in energy
efficiency or maximum reduction in energy use that is technologically feasible” for such
product. (42 U.S.C. 6295(p)(1)) Accordingly, DOE determined the maximum
technologically feasible (“max

- tech”) reductions in ene rgy use for refrigeration products
in the engineering analysis.

52As described in the preliminary TSD, DOE conducted a full analysis of a set of
product classes that comprise a large percentage of product shipments in the market
today. DOE’s approach for e xtending amended standard levels established for these
product classes to the non-analyzed product classes is described in chapter 2, Analytical
Framework, of the preliminary TSD, in section 2.15. Similarly, this section of today’s
rule reports the max-tech efficiency levels for the fully analyzed product classes, which
include Classes 3 (refrigerator-freezer

— automatic defrost with top-mounted freezer
without through-the-door ice service), 5 (refrigerator-freezers

— automatic defrost with
bottom-mounted freezer without through-the-door ice service), 7 (refrigerator-freezers — automatic defrost with side-mounted freezer with through-the-door ice service), 9
(upright freezers with automatic defrost), 10 (chest freezers), 11 (compact refrigerators
and refrigerator-freezers with manual defrost), 18 (compact chest freezers), 3A-BI (builtin all-refrigerators

— automatic defrost), 5-BI (built-in Refrigerator-freezers

— automatic
defrost with bottom-mounted freezer without through-the-door ice service), 7-BI (built-in
Refrigerator-freezers

— automatic defrost with side-mounted freezer with through-thedoor ice service, and 9-BI (built-in upright freezers with automatic defrost). DOE
considers the max-tech levels for these products classes to be representative of the maxtech levels of similar product classes. For example, product class 7 can be considered to
represent product class 4 (refrigerator-freezers

— automatic defrost with side-mounted
freezer without through-the-door ice service) because they are both side-mount
refrigerator-freezers, the only difference being the through-the-door ice feature of product

class 7.

53In determining the max-tech efficiency levels of the directly analyzed product
classes, DOE used the amended test procedures that would apply once manufacturers are
required to meet the new standard. The efficiency levels are defined as reductions in that
portion of the energy use not associated with icemaking. As described in section III.A,
above, the energy use associated with icemaking under the amended test procedure is a
fixed quantity not correlated with an efficiency level. Separating this fixed quantity of
energy use from the established efficiency level allows a more direct comparison of
products, irrespective of whether a given product is equipped with an automatic
icemaker. This approach also allows DOE to compare the efficiency levels based on th e amended test procedure ( i.e. , projections of possible energy use reductions) against the
energy use based on the existing test procedure and current standard. 16

DOE used the full set of design options considered applicable to these directly
analyzed product classes to determine their max-tech efficiency levels. (See chapter 5 of
the NOPR TSD, section 5.4.4.) Table III.1 lists the max-tech levels that DOE determined
for this rulemaking. The table also presents the max-tech levels that are commercially
available. The max-tech levels differ from those presented in the preliminary TSD and
are generally lower ( i.e. , the percent energy use reductions are lower for the NOPR
analysis, thus, the max-tech energy use is higher). The reduction in the max-tech
efficiency levels is due to the revisions DOE implemented in the NOPR engineering

16 In other words, a product with energy usage that is a certain percentage below the current energy standard should remain the same percentage below the baseline energy use under the proposed test procedure after subtracting icemaking energy use. Hence, the max-tech levels expressed as a percentage of energy use reduction should be the same for both sets of test procedures.

54analysis to address new information obtained during this phase of the rulemaking (see the
discussion of changes made to the engineering analysis in the NOPR, Table IV.10. 75 FR
59470, 59501-59502 (September 27, 2010)). DOE obtained t he new information through
NOPR phase interviews with manufacturers.

Table III .1 Max-Tech Efficiency Levels for the Refrigeration Products Rulemaking Comment [A26]: Change re commended by OIRA.

Product Class Description Efficiency Level (Percent Energy Use Reduction) DOE Analysis Max Tech Commercially

Available Standard

- Size Refrigerator

- Freezers 3 Refrigerator

- freezers

— automatic defrost with top

- mounted freezer without through

- the

- door ice service 36% 30%

5 Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without through

- the

door ice service 36% 33%

7 Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service 33% 32%

Standard

- Size Freezers 9 Upright freezers with automatic defrost 44% 27% 10 Chest freezers and all other freezers except compact freezers 41% 16%
Compact Products 11 Compact refrigerators and refrigerator

- freezers with manual defrost 59% 27%

18 Compact chest freezers 42% 23% Built

- In Products 3A

- BI Built

- In All

- refrigerators

— automatic defrost 28% 31% 5

- BI Built

- In Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without through

- the

- door ice service 27% 27%

7

- BI Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service 22% 21%

9

- BI Built

- In Uprig ht freezers with automatic defrost 27% 27%

55The max-tech efficiency levels identified for commercially available products are,
in most cases, different from the max-tech levels shown in Table III.1. The levels in
Table III.1 are significantly higher than the commercially available max-tech levels for
product classes 9 (upright freezers with automatic defrost), 10 (chest freezers), 11
(compact refrigerators and refrigerator-freezers with manual defrost), and 18 (compact
chest freezers). DOE determined that higher max-tech levels for these products were
possible because available products generally do not use all of the energy efficient design
options considered in the DOE max-tech analyses. Prototypes with the DOE max-tech
levels have not been identified, but the design options are all used in commercially
available products.

DOE determined the max-tech levels using a program initially developed by the
Environmental Protection Agency (EPA) called the Efficient Refrigerator Analysis
program (known simply as the ERA) to conduct energy modeling. DOE conducted this
energy modeling for specific products examined during the engineering analysis. DOE
created energy models for the existing products and adjusted these models to represent
modified designs using the screened-in design options. The max-tech levels represent the
most efficient design option combinations applicable for the analyzed products. This
process is described in Chapter 5 of the NOPR TSD. See NOPR TSD, sections 5.4.4 and

5.7. DOE considered different sets of design options for each product class, as indicated

in Table III .2.

56Table III .2 Design Options Considered for Max Tech Product Class Design OptionBLDC* FanMotorsHeatExchangerImprovementThickerWallsVacuumInsulationPanels (VIPs)VariableSpeedCompressorAdaptiveDefrostVariableAnti-sweatHeaterControlIsobutaneRefrigerant

3      5       7       9       10     11      18     3A

- BI     5

- BI      7

- BI       9

- BI      *Brushless-Direct-Current

DOE requested comments on its max-tech efficiency levels and on the evaluated
groups of design options DOE’s analyses indicated would be necessary to employ to
achieve these levels. 75 FR at 59484 (September 27, 2010). Sub Zero commented that
DOE’s analysi s leading to the max-tech feasible levels is reasonable. (Sub Zero, No. 69
at p. 1) Sub Zero also commented that many of the design options still available to
improve the efficiency of freestanding products have already been used in built-in
products that are available on the market.

Whirlpool commented that some of the design option combinations may not be
practical, that the resulting efficiency gains may not be additive, and that the
combinations may not be cost-effective. Whirlpool also commented that it does not
believe that DOE has met the obligation to demonstrate the technical and economic

57feasibility of these combinations. (Whirlpool, No. 74 at p. 1). Whirlpool did not identify
the specific combinations that it believed to be impractical. Accordingly, DOE has not
adjusted its max-tech analysis. DOE adds that max-tech efficiency levels are not required
to be cost-effective levels, but that DOE is required by EPCA to determine the maximum
improvement that is technologically feasible, and to explain why the standard is not set at
this level, if it is not. (42 U.S.C. 6295(p)(1))

C. Energy Savings

1. Determination of Savings
DOE used its National Impact Analysis (NIA) spreadsheet model to estimate the
energy savings from amended standards for the refrigeration products covered by this
rulemaking. 17 For each TSL, DOE forecasted energy savings beginning in 2014, the year
that manufacturers would be required to comply with amended standards, and ending in
2043. DOE quantified the energy savings attributable to each TSL as the difference in
energy consumption between the standards case and the base case. The base case
represents the forecast of energy consumption in the absence of amended mandatory
efficiency standards and considers market demand for more-efficient products.

The NIA spreadsheet model calculates the electricity savings in “site energy”
expressed in kilowatt-hours (kWh). Site energy is the energy directly consumed by
refrigeration products at the locations where they are used. DOE reports national energy
savings on an annual basis in terms of the aggregated source (primary) energy savings,
which is the savings in the energy that is used to generate and transmit the site energy.

17 The NIA spreadsheet model is described in section IV.G of this rule.

58(See TSD chapter 10.) To convert site energy to source energy, DOE derived annual
conversion factors from the model used to prepare the Energy Information
Administration’s (EIA) Annual Energy Outlook 2010 (AEO2010)

.

2. Significance of Savings
As noted above, DOE must adopt a standard for a covered product that results in
“significant” energy savings. 42 U.S.C. 6295(o)(3)(B). While the term “significant” is not
defined in the Act, the U.S. Court of Appeals, in Natural Resources Defense Council v.
Herrington , 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended
“significant” energy savings in this context to be savings that were not “genuinely
trivial.” The energy savings for all of the TSLs considered in this rulemaking are

nontrivial, and, therefore, DOE consid ers them “significant” within the meaning of

section 325 of EPCA.

D. Economic Justification

1. Specific Criteria
As noted in section II.A, EPCA provides seven factors for DOE to consider when
evaluating whether a potential energy conservation standard is economically justified. (42

U.S.C. 6295(o)(2)(B)(i)) The following sections discuss how DOE has addressed each of
those seven factors in this rulemaking.

a. Economic Impact on Manufacturers and Consumers
As required by EPCA, DOE considered the economic impact of potential

59standards on consumers and manufacturers. (42 U.S.C. 6295(o)(2)(B)(i)(I)) For
consumers, DOE measured the economic impact as the change in installed cost and lifecycle operating costs ( i.e. , the change in LCC). ( See section IV.F, section VI.B.1 and
chapter 8 of the final rule TSD.) DOE investigated the impacts on manufacturers through
the manufacturer impact analysis (MIA). ( See section IV.I and section VI.B.2 of today’s
final rule, and chapter 12 of the final rule TSD accompanying this rule.) The economic
impact on consumers and manufacturers is discussed in detail in the NOPR. See 75 FR at

59484

- 594 85, 59512- 595 16, 59519- 595 26, 59532- 595 37, and 59537- 595 49 (September
27, 2010).

For individual consumers, measures of economic impact include the changes in
life-cycle cost (LCC) and payback period (P BP ) associated with new or amended
standards. The LCC, which is separately specified in EPCA as one of the seven factors to
be considered in determining the economic justification for a new or amended standard,
42 U.S.C. 6295(o)(2)(B)(i)(II), is discussed in the following section. For consumers in
the aggregate, DOE also calculates the national net present value of the economic impacts
on consumers over the forecast period used in a particular rulemaking.

b. Life-Cycle Costs
The LCC is the sum of the purchase price of a product (including its installation)
and the operating expense (including energy and maintenance and repair expenditures)
discounted over the lifetime of the product. The LCC savings for the considered
efficiency levels are calculated relative to a base case that reflects likely trends in the

60absence of amended standards. The LCC analysis requires a variety of inputs, such as
product prices, product energy consumption, energy prices, maintenance and repair costs
, product lifetime, and consumer discount rates. DOE assumed in its analysis that
consumers will purchase the products affected by this rule in 2014.

To account for uncertainty and variability in specific inputs, such as product
lifetime and discount rate, DOE uses a distribution of values with probabilities attached
to each value. A distinct advantage of this approach is that DOE can identify the
percentage of consumers estimated to receive LCC savings or experience an LCC
increase, in addition to the average LCC savings associated with a particular standard
level. Aside from identifying ranges of impacts, DOE evaluates the LCC impacts of
potential standards on identifiable subgroups of consumers that may be
disproportionately affected by a national standard, such as low-income people or the
elderly.

c. Energy Savings
While the significant conservation of energy is a separate statutory requirement
for imposing an energy conservation standard, in determining the economic justification
of a standard, DOE must consider the total projected energy savings that are expected to
result directly from the standard. 42 U.S.C. 6295(o)(2)(B)(i)(III). DOE uses the NIA
spreadsheet results in its consideration of total projected energy savings.

61d. Lessening of Utility or Performance of Products
In establishing product classes, and in evaluating design options and the impact of
potential standard levels, DOE sought to develop standards for refrigeration products that
would not lessen the utility or performance of these products. None of the TSLs
presented in today’s final rule would substantially reduce the utility or performance of the
products under consideration in the rulemaking. However, the cost premium for features
that increase energy use, such as multiple drawers, may increase, thus shifting their
availability to higher-priced products. 42 U.S.C. 6295(o)(2)(B)(i)(IV).

e. Impact of Any Lessening of Competition
EPCA requires DOE to consider any lessening of competition that is likely to
result from setting new or amended standards for a covered product. Consistent with its
obligations under EPCA, DOE sought the views of the United States Department of
Justice (DOJ). DOE asked DOJ to provide a written determination of the impact, if any,
of any lessening of competition likely to result from the amended standards, together with
an analysis of the nature and extent of such impact. 42 U.S.C. 6295(o)(2)(B)(i)(V) and
(B)(ii).

To assist DOJ in making such a determination, DOE provided DOJ with copies of
both the NOPR and NOPR TSD for review. DOJ did not provide DOE with comments on
this rulemaking. Accordingly, DOE concludes that today’s final rule would not be likely
to lead to a lessening of competition.

62f. Need for National Energy Conservation
Certain benefits of the amended standards are likely to be reflected in
improvements to the security and reliability of the Nation’s energy system. Reductions in
the demand for electricity may also result in reduced costs for maintaining the reliability

of the Nation’s electricity system. DOE conducts a utility impact analysis to estimate how
standards may affect the Nation’s needed power generation capacity.

Energy savings from the amended standards are also likely to result in
environmental benefits in the form of reduced emissions of air pollutants and greenhouse
gases associated with energy production. DOE reported the environmental effects from
the amended standards for refrigeration products, and from each TSL it considered, in the
environmental assessment contained in chapter 15 in the NOPR TSD. DOE also reported
estimates of the economic value of emissions reductions resulting from the considered

TSLs.

g. Other Factors
EPCA allows the Secretary of Energy, in determining whether a standard is
economically justified, to consider any other factors that the Secretary deems to be
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) In developing this final rule, DOE also
considered the comments of the stakeholders, including those raised in the Joint
Comments, which DOE believes sets forth a statement by interested persons that are
fairly representative of relevant points of view (including representatives of
manufacturers of covered products, States, and efficiency advocates) and contains

63recommendations with respect to an energy conservation standard that are in accordance
with 42 U.S.C. 6295(o)

.

2. Rebuttable Presumption
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable
presumption that an energy conservation standard is economically justified if the
additional cost to the consumer of a product that meets the standard is less than three
times the value of the first-year of energy savings resulting from the standard, as
calculated under the applicable DOE test procedure. DOE’s LCC and P BP analyses
generate values used to calculate the payback period for consumers of potential amended
energy conservation standards. These analyses include, but are not limited to, the 3-year
payback period contemplated under the rebuttable presumption test. However, DOE
routinely conducts an economic analysis that considers the full range of impacts to the
consumer, manufacturer, Nation, and environment, as required under 42 U.S.C.
6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to definitively
evaluate the economic justification for a potential standard level (thereby supporting or
rebutting the results of any preliminary determination of economic justification). The
rebuttable presumption payback calculation is discussed in section IV.F.12 and chapter 8

of the final rule TSD.

IV. Methodology and Discussion

DOE used two spreadsheet tools to estimate the impact of today’s amended
standards. The first spreadsheet calculates LCCs and payback periods of new energy

64conservation standards. The second one provides shipments forecasts, and then calculates
national energy savings and net present value impacts of new energy conservation
standards. DOE also assessed manufacturer impacts, largely through use of the
Government Regulatory Impact Model (GRIM). The two spreadsheets are available
online at the rulemaking website:
http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrigerators_free

zers.html

.

Additionally, DOE estimated the impacts on utilities and the environment
stemming from energy efficiency standards for refrigeration products. DOE used a
version of EIA’s National Energy Modeling System (NEMS) for the utility and
environmental analyses. The NEMS model simulates the energy sector of the U.S.
economy. EIA uses NEMS to prepare its Annual Energy Outlook , a widely known
energy forecast for the United States. The version of NEMS used for appliance standards
analysis is called NEMS- BT 18 , and is based on the AEO version with minor

modifications. 19 The NEMS-BT offers a sophisticated picture of the effect of standards
because it accounts for the interactions between the various energy supply and demand
sectors and the economy as a whole.

18 BT stands for DOE’s Building Technologies Program. 19 The EIA allows the use of the name “NEMS” to describe only an AEO version of the model without any modification to code or data. Because the present analysis entails some minor code modifications and runs the model under various policy scenarios that deviate from AEO assumptions, the name “NEMS

- BT” refers to the model as used here. For more information on NEMS, refer to The National Energy Modeling System: An Overview , DOE/EIA

– 0581 (98) (Feb.1998), available at: http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf

.

65A. Market and Technology Assessment
When initiating an energy conservation standards rulemaking, DOE develops
information that provides an overall picture of the market for the products concerned,
including the purpose of the products, the industry structure, and market characteristics.
This activity includes both quantitative and qualitative assessments, based primarily on
publicly available information. The subjects addressed in the market and technology
assessment for this rulemaking include product classes and manufacturers; quantities, and
types of products sold and offered for sale; retail market trends; regulatory and nonregulatory programs; and technologies or design options that could improve the energy
efficiency of the product(s) under examination. See chapter 3, Market and Technology
Assessment, of the TSD for further discussion of the market and technology assessment.

Discussion presented in this section of today’s notice primarily addresses the
scope of coverage of refrigeration products, the product class structure, and product class
definitions. These issues were discussed during the NOPR public meeting. In response to
comments raised during that meeting and from written comments, DOE has modified the
product class structure, as discussed in section IV.A.2, below.

1. Exclusion of Wine Coolers from This Rulemaking
The NOPR explained that wine coolers are not covered products under the
definition for electric refrigerator, and hence, are not covered by this rulemaking. 75 FR
at 59486 (September 27, 2010). DOE explained that it would consider initiating a future
rulemaking to establish coverage and energy standards for these products. Id. Whirlpool
commented that it agrees that wine coolers do not meet the definition of electric

66refrigerator, but that DOE should reconsider its decision not to include these products in
this rulemaking. (Whirlpool, No. 74 at p. 8) GE commented that DOE should regulate
these products and should consider the proper mechanism for doing so. (GE, No. 76 at p.
2) In light of the timetable prescribed by EPCA, insufficient time and resources are
available for DOE to conduct the necessary analyses for these products within the context
of the current rulemaking. In response to the preliminary analysis, the California Investor
Owned Utilities agreed with DOE’s initial decision not to include wine coolers in this
rulemaking, indicating that they operate at temperatures outside the range defined for
refrigerators, and that they have been covered by California’s energy standards since
2002. (IOUs, No. 39 at p. 12) The IOUs submitted no new comments on this topic in
response to the NOPR. Sub Zero indicated in the preliminary analysis public meeting that
the California energy standard for these products has become a de-facto national
standard. (Preliminary Analysis Public Meeting Transcript, No. 30 at pp. 108-109). As
previously indicated, DOE will revisit the coverage of these products in the future.

2. Product Classes
In evaluating and establishing energy conservation standards, DOE generally
divides covered products into classes by the type of energy used, or by capacity or other
performance-related feature that justifies a different standard for those products. (See 42

U.S.C. 6295(q)). In deciding whether a feature justifies a different standard, DOE must
consider factors such as the utility of the feature to users. ( Id .) DOE normally establishes
different energy conservation standards for different product classes based on these

criteria. DOE’s regulations currently set forth 18 product classes for refrigerators, Deleted: As previously indicated, DOE may

67refrigerator-freezers, and freezers. 20 These classes are based on the following
characteristics: type of unit (refrigerator, refrigerator-freezer, or freezer), size of the
cabinet (standard or compact), type of defrost system (manual, partial, or automatic),
presence or absence of through-the-door (TTD) ice service, and placement of the fresh
food and freezer compartments for refrigerator-freezers (top, side, bottom).

DOE has created 24 new product classes to account for the increasingly wider
number of variants of products. Six new product classes were discussed and proposed in
the preliminary analysis phase, and an additional 13 were proposed in the NOPR. 75 FR

at 59486 -59487 (September 27, 2010). Table IV.1 presents the product classes
established in this rulemaking, including both current and new classes. DOE changed the
designation of some of the current product classes to address the division of these product
classes. The subsections below provide additional details and discussion of comments
relating to the product classes that have been added.

Table IV .1 Product Classes for Refrigeration Products No. Product Class Classes Currently Listed in the CFR 1 Refrigerators and refrigerator

- freezers with manual defrost 2 Refrigerator

- freezers

— partial automatic defrost
3 Refrigerator

- freezers

— automatic defrost with top

- mounted freezer without an automatic icemaker
4 Refrigerator

- freezers

— automatic defrost with side

- mounted freezer without an automatic icemaker
5 Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without an automatic icemaker
6 Refrigerator

- fr eezers

— automatic defrost with top

- mounted freezer with through

- the

- door ice service

20 Title 10

— Energy, Chapter II

— Department of Energy, Part 430

— Energy Conservation Program for Consumer Products, Subpart A

— General Provisions, Section 430.32

— Energy and Water Conservation Standards and Effective Dates

.

68No. Product Class

7 Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service 8 Upright freezers with manual defrost 9 Upright freezers with automatic defrost without an automatic icemaker 10 Chest freezers with manual defrost and all other freezers except compact freezers 11 Compact refrigerators and refrigerator

- freezers with manual defrost 12 Compact refrigerator

- freezers

— partial automatic defrost 13 Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer 14 Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer 15 Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer 1 6 Compact upright freezers with manual defrost 17 Compact upright freezers with automatic defrost 18 Compact chest freezers Product Classes Introduced in the Preliminary TSD 1A All

- refrigerators

— manual defrost 3A All

- refrigerators

— automatic defrost

5A Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with through

- the

door ice service 10A Chest freezers with automatic defrost 11A Compact all

- refrigerators

— manual defrost 13A Compact all

- refrigerators

— automatic defrost Additional Product Classes Proposed in the NOPR

3

- BI Built

- in refrigerator

- freezer

— automatic defrost with top

- mounted freezer without an automatic icemaker

3I Refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker without throug h

- the

- door ice service

3I

- BI Built

- in refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker without through

- the

- door ice service 3A

- BI Built

- in all

- refrigerators

— automatic defrost

4I Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker without through

- the

- door ice service

4

- BI Built

- in refrigerator

- freezers

— automatic defrost with side

- mounted freezer without an automatic icemaker

4I

- BI Built

- in refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker without through

- the

- door ice service

5I Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker without through

- the

- door ice service

5

- BI Built

- in refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without an automatic icemaker

5I

- BI Built

- in refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker without through

- the

- door ice service

5A

- BI Bui lt

- in refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

the

- door ice service 7

- BI Built

- in refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

69No. Product Class the

- door ice service 9

- BI Built

- in upright freezers w ith automatic defrost without an automatic icemaker Additional Product Classes 9I Upright freezers with automatic defrost with an automatic icemaker 9I

- BI Built

- in upright freezers with automatic defrost with an automatic icemaker

13I Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker

14I Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker

15I Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker

a. General Discussion Regarding Added Product Classes
DOE introduced six new product classes in the preliminary TSD. Two of these,
product class 5A, “automatic defrost refrigerator -freezers with bottom- mo unted freezer
with through-the- door ice service,” and product class 10A, “chest freezers with automatic
defrost,” were identified in the framework document as product classes 19 and 20. DOE
modified the designation of these product classes in order to maintain consistency with
the product class designations adopted by Canada and ease the overall burden on
manufacturers in ascertaining which standards to apply to these products. Id. at 59487­
59488. AHAM supported adding the new product classes 5A and 10A. (AHAM, No. 73
at p. 6)

Four additional product classes introduced in the preliminary TSD are allrefrigerators. As described in the NOPR, the new test procedure has led DOE to establish
separate product classes for these products. Id. at 59488.

70The NOPR also proposed 13 additional new product classes. These classes are
based on the incorporation of icemaking energy use into the test procedure and address
the different consumer utility and energy use characteristics of built-in products. Id. at

59489

- 59493

.

EPCA provides that separate product classes be based on either (A) consumption
of a different kind of energy from that consumed by other covered products within such
type (or class); or (B) a capacity or other performance-related feature which other
products within such type (or class) do not have, where such feature justifies a higher or
lower standard from that which applies to other products within such type (or class). (42

U.S.C. 6295(q)). The second of these criteria applies to all of the new product classes in
this rulemaking. DOE detailed the reasons for this approach in the NOPR. Id. at 59487­
59493. DOE received no comments challenging this approach.

DOE also requested comment on whether any additional product classes should

be established as bui lt -in or automatic icemaker variants of products to address the range
of commercially available products. Sub Zero recommended including additional product
classes 9I and 9I-BI, freestanding and built-in versions of upright freezers with automatic
defrost equipped with an automatic icemaker. The company asserted that such products
currently are being sold (Sub Zero, No. 69 at p. 3) DOE’s research confirms the existence
of these two product classes (Upright Freezers with Automatic Icemakers, No. 86).

71AHAM and Whirlpool recommended including product classes 9I, 9I-BI, 13I,
14I, and 15I as variants of proposed products without through-the-door ice service that
may have automatic icemakers. (AHAM, No. 73 at pp. 6-7; Whirlpool, No. 74 at pp. 1-2,
3) AHAM also re commended including product class 9A, described as “upright freezers
with automatic defrost with an automatic icemaker with through-the- door ice service”.
(AHAM, No. 73 at pp. 6-7) DOE has adopted product classes 9I, 9I-BI, 13I, 14I, and 15I.

DOE’s researc h identified at least one existing compact bottom-freezer product with an
automatic icemaker (product class 15I, Compact Products with Automatic Icemakers, No.
85 at p. 3). DOE was not able to positively identify any compact side-mount products
with automatic icemakers (product class 14I), nor any compact top-mount products
(product class 13I), but did identify one existing product whose product class is not
clearly indicated in the manufacturer’s literature that is either a 13I or 14I product.
(Compact Products with Automatic Icemakers, No. 85 at p. 1)

The standard levels for these classes are equal to the standards of their
counterparts without an icemaker plus the addition of 84 kWh to help account for the
energy consumed by the automatic icemaker. However, the suggested product class 9A is
not a variant of any of the proposed product classes. Instead, it constitutes a new class
that DOE had not considered within the context of this rulemaking. Accordingly, DOE is
declining to incorporate this particular class as part of the final rule.

Lastly, Whirlpool asserted that the negotiated agreement intended to combine
product classes 13 and 15, and Whirlpool likewise appeared to recommend combining

72product classes 13I and 15I, by grouping them together in its comments. (Whirlpool, No.
74 at p. 2) Whirlpool offered no support for this view and no other comments indicated
that these product classes should be combined. Hence, DOE is maintaining separate
classes for Classes 13, 15, 13I, and 15I.

b. Possible Combination of Product Class 2 with 1, and Class 12 with 11 Deleted: Treatment
DOE also indicated in the NOPR that it did not propose the combination of two
pairs of product classes that had been discussed in the preliminary TSD

-- specifically, a
potential combination of product classes 1 (refrigerators and refrigerator-freezers with
manual defrost) and 2 (refrigerator-freezers

— partial automatic defrost) and, separately, apotential combination of product classes 11 (compact refrigerators and refrigeratorfreezers with manual defrost) and 12 (compact refrigerator-freezers

— partial automatic
defrost). DOE requested comment on its proposal not to combine these pairs of product

classes. Id. at 59493. AHAM and NPCC agreed with this proposal. (AHAM, Public
Meeting Transcript, No. 67 at p. 52; AHAM, No. 73 at p. 6; NPCC, Public Meeting
Transcript, No. 67 at p. 52) Whirlpool presented a table suggesting that they were
opposed to keeping product classes 1 and 2 separated. (Whirlpool, No. 74 at p. 2), but
noted that it had nothing substantive to add on this matter because it does not
manufacture these products. (Whirlpool, No. 74 at p. 3) In light of these comments,
which generally favored DOE’s proposed approach, DOE is not combining these product
class pairs.

73c. All-Refrigerators and Basic Refrigerators
All-refrigerators are refrigerators that do not have a compartment for the freezing
and long-term storage of food below 32  ̊ F, but which may have a compartment not larger
than 0.5 cubic foot in size for freezing and storage of ice. (10 CFR part 430, subpart B,
appendix A1, section 1.2) The definition for refrigerator appears in 10 CFR 430.2 and it
includes both all-refrigerators and refrigerators that are not all-refrigerators. This latter
category of refrigerator, which does include a compartment for the storage of food below

32  ̊ F, is given the name “basic refrigerator” in both AHAM standards HRF -1-1979 and

HRF-1- 2008

. Appendix A1 and Appendix A, respectively, both reference these
industry-developed definitions.

AHAM supported establishing separate product classes for all-refrigerators,
indicating that these new product classes were supported in the negotiated agreement
described in the Joint Comments. (AHAM, No. 73 at p. 4) However, AHAM indicated
that the product classes for refrigerators that are not all-refrigerators should be renamed
using “basic refrigerator” to ensure that they exclude all -refrigerators. (Id.) Whirlpool
supported this view. (Whirlpool, No. 74 at p. 2)

DOE agrees with AHAM that clarifying the product class names for certain
classes will improve overall clarity. DOE notes that this change affects product classes 1
(refrigerators and refrigerator-freezers with manual defrost) and 11 (compact refrigerators
and refrigerator-freezers with manual defrost). (These are the product class names as
proposed

— and currently used in the CFR.) DOE has also considered whether to rely on

74referencing the definition sections of HRF-1-1979 and HRF-1-2008, as described above,
to provide the definition for basic refrigerator. The definitions for basic refrigerator are
the same in these standards and they read as follows:

3.1.1 Basic Refrigerator A refrigerator which includes a low temperature
compartment for the freezing and storage of ice and intended for short-term
storage of food at temperatures below 32°F (0°C) and normally above 8°F (­
13.3°C). It is characterized by a refrigerated surface(s) that partially encloses the
low temperature compartment and cools the fresh food compartment by natural
convection. It frequently has a partition (called the chiller or drip tray) which
when removed or adjusted exposes an additional area of the refrigerated surface to
the fresh food compartment.
HRF-1-1979, HRF-1-2008, section 3.1.1.

DOE notes two concerns regarding this definition of basic refrigerator.

First, the definition does not define a lower size limit for the low temperature
compartment, nor does it specify a temperature range for it. The clause “short -term
storage of food at temperatures below 32  ̊ F” does not distinguish the temperature range
of such a compartment from the compartment of an all- refrigerator that is “for freezing
and storage of ice”, since freezing and storage of ice also requires temperatures less than

32  ̊ F. As a result, it is not clear whether a product with a low temperature compartment
capable of reaching temperatures less than 32  ̊ F and above 8  ̊ F and a size no greater than

0.5 cubic foot is an all-refrigerator or a basic refrigerator under the AHAM definition.

75Second, characterizing the basic refrigerator by describing the low-temperature
compartment’s sides and how they transfer cooling air to the fresh food compartment
could exclude some types of refrigerators from AHAM’s basic refrigerator definition. For
instance, a product that uses a fan to provide forced convection transfer of cooling air to
the fresh food compartment from the refrigerated surfaces enclosing the low-temperature
compartment would not fit the definition. If the product class were renamed using “basic

refri gerators”, such products that do not fit the basic refrigerator definition would not be
included within the product class. A manufacturer could claim such a product is not
covered, assuming it does not meet the requirements of the all-refrigerator definition

either.

To resolve these issues, DOE has decided to clarify the product class names for
product classes 1 and 11, indicating that these product classes do not include allrefrigerators. The new names for these product classes are “1. Refrigerator -freezers and
refrigerators other than all- refrigerators with manual defrost” and “11. Compact
refrigerator-freezers and refrigerators other than all- refrigerators with manual defrost.”
DOE has taken this approach rather than using the term “basic refrigerator” and
modifying its definition, thus allowing the existing definition for basic refrigerator to
retain its current meaning.

AHAM provided in its written comments a table (Table A) showing the suggested
changes to all of the product class names. A similar table appears in Whirlpool’s

76comments. In addition to the suggested name changes for product classes 1 and 11,
AHAM and Whirlpool included the following suggestions.
Inclusion of basic refrigerators in product class 3.
Correction of the proposed name for product class 11A.
Insertion of an “s” to pluralize “all

- refrigerators” in the product class 13 name.
(AHAM, No. 73 at p. 5; Whirlpool, No. 74 at p. 2)

DOE notes that basic refrigerators have not previously been part of product class
3 (they instead have been part of product class 1), which makes the incorporation of this
suggestion inappropriate. DOE notes that product class 3 denotes "Refrigerator-freezersautomatic defrost with top-mounted freezer without an automatic icemaker". Basic
refrigerators do not belong in this product class because they are not refrigerator-freezers.
For this reason, DOE is declining to adopt this suggestion and will retain its proposed

name for this class

-- “refrigerator -freezers

— automatic defrost with top-mounted freezer
without an automatic icemaker” as proposed. However, DOE agrees with the other two
suggestions and has implemented them in this final rule.

d. Built-In Refrigeration Products
DOE requested comment on its proposal to establish separate product classes for
built-in products. 75 FR at 59492 (September 27, 2010). AHAM, Sub Zero, and
Whirlpool agreed with this proposal. (AHAM, No. 73 at p. 3; Sub Zero, No. 69 at p. 2;
Whirlpool, No. 74 at p. 3) DOE received no comments opposing the creation of built-in
product classes.

77DOE proposed to define built-in products as any refrigerator, refrigerator-freezer
or freezer with 7.75 cubic feet or greater total volume and 24 inches or less depth,
excluding handles and custom front panels. Such a product would also be designed to be
encased on the sides and rear by cabinetry, securely fastened to adjacent cabinetry, walls
or floor, and have sides that are not fully finished and not designed to be visible after
installation. See 75 FR at 59492 (September 27, 2010).

AHAM and NPCC noted that the proposed definition differed from the definition
developed as part of the consensus agreement and asked why it was different. (AHAM,
Public Meeting Transcript, No. 67 at pp. 54-55; AHAM, No. 73 at pp. 3-4; NPCC, Public
Meeting Transcript, No. 67 at pp. 53, 55) Sub Zero commented that the definition
developed during the negotiations should be adopted. (Sub Zero, No. 69 at p. 3)
Whirlpool also supported this view. (Whirlpool, No. 74 at p. 3) AHAM recommended
that DOE adopt the consensus agreement definition. AHAM also pointed out that the
most important difference between the consensus agreement definition and DOE’s

pr oposed definition is the specification in the consensus definition of what is not part of
the 24-inch depth limit

-- specifically, the doors, panels, and/or handles. AHAM
indicated that these components may extend beyond 24 inches in many built-in products

. In AHAM’s view, DOE’s proposed definition would not account for such situations.
(AHAM, No. 73 at p. 4) The JAC also commented that the proposed definition was not
the same as the definition of the negotiated agreement, and suggested that DOE adopt thi s definition with any minor changes that DOE deems necessary. (JAC, No. 75 at p. 2)

78The negotiated agreement presented to DOE included the following definition for
built-in products:

Definition of ’Built

- in’ product class – refrigerators, freezers and refrigerators
with freezer units that are 7.75 cubic feet or greater in total volume and 24 inches or less
cabinet depth not including doors, handles and custom front panels; are designed to be
totally encased by cabinetry or panels attached during installation; are designed to accept
a custom front panel or equipped with an integral factory

– finished face; are designed to
be securely fastened to adjacent cabinetry, walls or floor; and have sides which are not
fully finished and are not intended to be visible after installation.
(Joint Comments, No. 52 at p. 30)

The substantive differences between this definition and the definition DOE
proposed in its NOPR are as follows.
The 24-inch depth allowed by the Joint Comments definition does not include the
door depth. Technically, this removes the depth of the door edge and the gasket, a
difference expected to be typically about 2 inches.
The Joint Comments mention being “totally encased” by cabinetry or panels,
while the proposed definition mentions being encased on the sides and rear by
cabinetry. DOE did not propose to use the term “totally encased” as suggested in
AHAM’s preliminary analysis comment because the door is not always encased.

7975 FR at 59492 (September 27, 2010). The Joint Comments added “panels” to
apply to the cabinetry that may encase the product.
The Joint Comments provide that the “panels [are] attached during installation”
(emphasis added).
The Joint Comments include the clause, “are designed to accept a custom front
panel or equipped with an integral factory- finished face” whereas the proposed

definition did not include this clause.

The Joint Comments indicate that the sides “are not intended to be visible after
installation”, while the proposed definition uses “not designed to be”.

DOE was aware when proposing the definition that, although establishing a depth
limitation is entirely consistent with built-in designs and their use, the exact dimension
that would be appropriate for this limit would be subject to further refinement from
stakeholder discussion and comment. DOE considers the slightly less restrictive
definition of the Joint Comments to embody the consideration and consensus of
interested parties regarding the appropriate dimension, and will for this reason adopt the
suggested change to the depth limitation.

Regarding the use of the term “totally encased”, DOE recognizes the limitation of
its initially proposed approach and that the term does not necessarily mean fully
encapsulated to the extent that absolutely no surface of the delivered product is visible
after installation. Hence, DOE has reverted to the use of “totally encased” to indicate
encased on all surfaces but the door, which clearly needs to be accessible to consumers

80for the product to function properly. DOE also agrees to the addition of the term “panels”
that may also serve to encase the product, such as in the case where a product is installed
at the end of a row of cabinets and one of the sides is covered with a panel. Further, DOE
agrees with the inclusion of the wo rds “attached during installation” in reference to
panels, since this clause clearly distinguishes a built-in product from a freestanding
product, for which there would be no attachment of panels during delivery and

installation.

DOE is not convinced, h owever, that the clause “are designed to accept a custom
front panel or equipped with an integral factory- finished face” helps distinguish built -in
products from freestanding products, since freestanding products generally come with an
integral factory-finished face that is part of the door assembly. Based on the language
used in the Joint Comments definition, as well as the existence of built-in products that
are not designed to accept custom front panels, DOE suspects that the purpose of
including this clause is to ensure that built-in products that do not accept custom front
panels are not excluded from the definition. Many built-in products have doors with a
stainless steel finish (see, e.g.,
http://products.geappliances.com/ApplProducts/Dispatcher?REQUEST=SPECPAGE&S
KU=ZISP480DXSS&SITEID=MON2&TABID=2). Such products are not designed to
accept custom front panels, but otherwise have the same distinguishing design features of
built-in products that do accept custom front panels. DOE has decided to use language to
clarify that such products are not excluded from the built-in category.

81Additionally, DOE believes that the definition proposed by the Joint Commenters
in their negotiated agreement needs to be altered to mitigate the risk of manufacturers
applying the built-in definition to a free-standing product. To address this risk, DOE is
requiring that a built-in product be one that is designed, intended, and marketed
exclusively in a manner that would be consistent with how a built-in product would be
installed for consumer use. Factors that DOE would likely consider relevant in this
context could include whether the product is sold in an unfinished state and how the
product is advertised. DOE believes that by specifying these additional conditions, the
definition clearly requires that a manufacturer take affirmative steps establishing the

built- in nature of its products. In effect, DOE has taken the “intended” language
presented in the negotiated agreement’s proposal and clarified this concept by specifying
the conditions that must be met for a particular model to be considered a built-in product.

Because of the problems that both DOE and the industry have faced with respect
to the actions taken by certain manufacturers, DOE believes that it needs to take a
stronger approach than that proposed in the negotiated agreement with respect to the
delineation of these products. Adopting this stronger approach helps establish a clear
distinction between built-in and free-standing products. Such a distinction is necessary in
light of the considerably higher energy consumption of these built-in products, a fact that
DOE views with some concern. Should DOE receive reports that manufacturers are
misapplying this definition or otherwise abusing it, DOE will avail itself of all other
options at its disposal to correct that situation and may re-examine this definition to
assess whether additional modifications are require d.

82Accordingly, based on the above considerations, the final definition for built-in
products will read as follows:

Built-in refrigerator/refrigerator-freezer/freezer means any refrigerator,
refrigerator-freezer or freezer with 7.75 cubic feet or greater total volume and 24 inches
or less depth not including doors, handles, and custom front panels; with sides which are
not finished and not designed to be visible after installation; and that is designed,
intended, and marketed exclusively (1) to be installed totally encased by cabinetry or
panels that are attached during installation, (2) to be securely fastened to adjacent
cabinetry, walls or floor, and (3) to either be equipped with an integral factory-finished
face or accept a custom front panel.

e. Modification of the Definition for Compact Products
DOE proposed to eliminate the 36-inch height restriction in the definition for
compact products. DOE underscored two reasons for this change. First, DOE noted that
an increased height level provides no energy efficiency benefit. Second, DOE explained
that the reason for this 36-inch height restriction, which applies to undercounter products,
is not appropriate for the majority of compact products that are not undercounter
products. DOE requested comment on this proposal. 75 FR at 59493- 5949 4 (September
27, 2010).

83ASAP and AHAM both indicated that the consensus agreement did not eliminate
the 36-inch height limitation for compact products. (ASAP, Public Meeting Transcript,
No. 67 at pp. 57-58; AHAM, Public Meeting Transcript, No. 67 at p. 58; AHAM, No. 73
at p. 6) (DOE notes that the consensus agreement is silent on this definition. (See,
generally, Joint Comments, No. 52)) Whirlpool commented that the current 36-inch

limitation should be retained to maintain consistency with the consumer’s view of
compact, and prev ent “gaming”, i.e. circumvention. (Whirlpool, No. 74 at p. 3). The JAC
agreed, noting that this limit helps to distinguish compact products from standard-size
products and prevents the weakening of standards in other countries where products taller

than 36 ” but within the 7.75 cubic foot volume limit are more prevalent. (JAC, No. 75 at

p. 2)

Whirlpool’s comments do not indicate how removing the 36 -inch limitation could
lead to circumvention. The new test procedure includes a modified volume calculation

me thod that was specifically developed to limit circumvention associated with false

volume claims. 75 FR at 78839- 788 40 (December 16, 2010). Further, given the
importance of volume as an attribute important to consumers, 21 DOE does not believe
that consumers will consider tall, but low-volume, products to be standard-size. None of
the commenters took issue with any of the analysis or any of the reasons that DOE
presented in the NOPR to support the decision to propose eliminating the height
restriction. DOE notes that the impact of U.S. standards in other countries, while an

21 See, for example the discussion of the important of product volume in the 1995 TSD supporting the rulemaking to establish the 2001 energy conservation standard, in the discussion regarding increasing insulation thickness in Section 3, page 3- 6.

84important concern, are factors beyond the scope of DOE’s authority to control. Hence
, DOE is eliminating the height restriction as proposed.

f. Icemaking
DOE requested comments on its proposal to establish product classes for products
with automatic icemakers, including its proposed approach to account for icemakers in
the product class structure. 75 FR at 59489 (September 27, 2010). Sub Zero expressed
support for AHAM’s intent to work cooper atively with DOE to develop a robust
repeatable laboratory-based test procedure to measure automatic icemaking energy use.
Sub Zero also encouraged DOE to conduct field surveys to provide information on
consumer use of ice by icemaker type (automatic or manual), product class,
demographics, time of year, etc. This information, when combined with the laboratory
test and accompanying results, would allow determination of the actual energy used by
consumers to make ice. (Sub Zero, No. 69 at p. 2) Sub Zero did not object to DOE’s
proposed product class structure to address icemaking. (Id.) DOE received no comments
objecting to DOE’s proposed product class structure to integrate icemaking energy use.

AHAM supported the approach proposed by DOE to integrate automatic
icemaking into the product class structure. However, AHAM suggested that some
additional product classes, not specifically proposed by DOE, have been sold with
automatic icemakers. (AHAM, No. 73 at pp. 5-6) These added product classes were
previously discussed in section IV.A.2.a above.

85AHAM also commented that products equipped with the option to install an
automatic icemaker (“kitable models”) should be considered to be products with
icemakers, explaining that this approach is consistent with the test procedure and that
lack of clarity on this point would create confusion among manufacturers. (AHAM, No.
73 at p. 6)

DOE disagrees that AHAM’s suggested approach with respect to the treatment of
“kitable models” would be consistent with the test procedure. If such a product is

installed in a residence without the icemaker installed, it will not use the additional
energy use allocated for automatic icemaking, which is set at 84 kWh in the test
procedure. The added energy associated with manual icemaking is likely to be
significantly less, as indicated by initial test results conducted by the National Institute
for Standards and Technology (NIST)

. These initial results suggest that the energy use
associated with the mechanisms that are used to eject ice in automatic icemakers is
significantly greater than the energy use associated with the thermal load of freezing the
ice. (NIST, Test Procedure for Residential Refrigerators, Refrigerator-Freezers, and
Freezers, Docket Number EERE-2009- BT

- TP

- 0003 , Public Meeting Transcript, No. 10
at pp. 157-158) DOE agrees that some understanding of the energy use associated with
manual icemaking should be developed to allow more accurate reporting of the energy
use of products that do not have automatic icemakers but have freezers that allow for the
freezing and storage of ice. However, prior to the development of a manual icemaking
factor to account for this energy usage, better consistency with the test procedure will be
maintained by certifying kitable models as two separate models (i.e. with an automatic

86icemaker and without an automatic icemaker), since a consumer may purchase either

version.

B. Screening Analysis
DOE uses the following four screening criteria to determine which design options
are suitable for further consideration in a standards rulemaking:

1. Technological feasibility . DOE will consider technologies incorporated in
commercially available products or in working prototypes to be technologically feasible.

2. Practicability to manufacture, install, and service . If mass production and
reliable installation and servicing of a technology in commercially available products
could be achieved on the scale necessary to serve the relevant market at the time the
standard comes into effect, DOE would consider that technology practicable to
manufacture, install, and service.

3. Adverse impacts on product utility or product availability . If DOE determines
that a technology would significantly impact in an adverse way the utility of the product
for significant subgroups of consumers or would result in the unavailability of any
covered product type with performance characteristics (including reliability), feature s, sizes, capacities, and volumes that are substantially the same as products generally
available in the United States at the time, it will not consider this technology further.

874. Adverse impacts on health or safety . If DOE determines that a technology w ill
have significant adverse impacts on health or safety, it will not consider this technology

further.
10 CFR part 430, subpart C, appendix A, (4)(a)(4) and (5)(b)

In the framework document 22 and accompanying public workshop held on
September 29, 2008, DOE identified the energy efficient technologies under
consideration for the rulemaking analyses. These technologies are listed below in Table

IV.2. Please see chapter 3 of the TSD for detailed descriptions of these technology
options.

22 Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_freezer_framewor k.pdf

88Table IV .2 Technologies DOE Considered for Residential Refrigeration Products Insulation Expansion Valve

Improved resistivity of insulation Improved expansion valves Increased insulation thickness Cycling Losses VIPs Fluid control or solenoid valve Gas

- filled panels Defrost System Gasket and Door Design Reduced energy for automatic defrost

Improved gaskets Adaptive defrost Double door gaskets Condenser hot gas Improved door face frame Control System Reduced heat load for TTD feature Temperature control Anti

- Sweat Heater Air

- distribution control

Condenser hot gas Other Technologies Electric heater sizing Alternative refrigerants Electric heater controls Component location Compressor Alternative Refrigeration Cycles

Improved compressor efficiency Lorenz

- Meutzner cycle Variable

- speed compressors Dual

- loop system Linear compressors Two

- stage system Evaporator Control valve system

Increased surface area Ejector refrigerator Improved heat exchange Tandem system Condenser Alternative Refrigeration Systems

Increased surface area Stirling cycle Improved heat exchange Thermoelectric Force convection condenser Thermoacoustic Fans and Fan Motor

Evaporator fan and fan motor improvements Condenser fan and fan motor improvements

DOE requested, but did not receive, any comments at either the framework
workshop or during the framework comment period that identified additional
technologies that DOE should consider. Likewise, DOE received no comments
recommending additional technologies during the preliminary analysis or NOPR public
meetings or comment periods.

As described in chapter 4 of the TSD, Screening Analysis, DOE screened out
several of the technologies listed in Table IV.2 from consideration in this rulemaking
based on one or more of the screening criteria described above. A summary of the

89screening analysis identifying technologies that were screened out and the EPCA criteria
used for the screening is presented in Table IV.3. The checkmarks in the table indicate
which screening criteria were used to screen out the listed technologies. For greater detail
regarding the screening analysis, see chapter 4 of the TSD.

Table IV .3 Summary of Screening Analysis EPCA Criteria for Screening
Excluded Technology Option Technological Feasibility Practicability to Manufacture, Install, and service Adverse Impacts on Product Utility Adverse Impacts on Health and Safety Improved Insulation Resistivity 

Gas

- Filled Panels   Improved Gaskets, Double Gaskets, Improved Door Frame  

Linear Compressors  Improved Evaporator Heat Exchange  
Improved Condenser Heat Exchange  
Component Location    Lorenz

- Meutzner Cycle  

Two

- Stage System   Control Valve System and Tandem System  
Ejector Refrigerator   Stirling Cycle   Thermoelectric   Thermoacoustic  

In addition to this screening, DOE did not analyze a number of technologies in the
engineering analysis because they were judged unsuitable for improving the measured
energy use of refrigeration products for one or more of the following reasons:

90technology already used in baseline products and incapable of generating
additional energy efficiency or reducing energy consumption;
technology does not reduce energy use; or
insufficient data available demonstrating benefit of the technology.

The technologies not analyzed for these reasons include Improved Expansion
Valves, Off-Cycle Valves, Reduced Energy for Automatic Defrost, Condenser Hot Gas
Defrost, Reduced Heat Load for TTD Feature, Warm Liquid or Hot Gas Refrigerant
Anti-Sweat Heating, Electric Anti-Sweat Heater Sizing, Electronic Temperature Control,
Air Distribution Control, Fan Blade Improvements, and Dual Loop System. Chapter 4 of
the NOPR TSD discusses in greater detail the reasons for not analyzing these
technologies.

1. Discussion of Comments

DOE discussed several screening issues in the NOPR. These issues are
summarized, along with comments responding to the NOPR, in the sections below.

a. Compressors
DOE explained in the NOPR that the proprietary status of a technology is not a
screening criterion. 75 FR at 59495 (September 27, 2010). However, DOE pointed out
that selected technologies may be screened out if their proprietary status constrains their
supply, and that DOE must consider “the impact of any lessening of competition . . . that
is likely t o result from the imposition of the standard” (42 U.S.C. 6295(o)(2)(B)(i)(V)).

91DOE indicated in the NOPR that it considered potential supply issues of high-efficiency
single-speed and variable speed compressors, but concluded that the compressor
performance levels analyzed would not likely be subject to significant supply constraints
that would merit omitting the consideration of this particular design option. DOE
requested comment on this position. Id.

Sub Zero commented that, as a smaller manufacturer, it may have more difficulty
obtaining high-efficiency and variable speed compressors as compressor vendors ramp up
to meet refrigeration product manufacturer demands in 2014. In its view, because of the
proposed increased stringency of the standards, larger companies will demand many
more of these compressors than they are currently using. (Sub Zero, No. 69 at p. 3) While
it is difficult to predict the events that will occur up to the 2014 transition, DOE notes that
it reached its tentative conclusion based on its NOPR phase investigation that indicated
the compressor industry has been working to develop high efficiency and variable speed
compressors for the residential refrigeration market for many years. (See, e.g.,
http://www.panasonic.com/industrial/includes/pdf/invertercompressorsimprovingefficiency.pdf , a discussion of Panasonic’s development of variable speed
compressors, including initial introduction of variable speed compressors in refrigerators
in 1996.) These efforts led DOE to believe that the refrigeration industry has had
sufficient lead time to prepare for the possible increased demands for higher efficiency
and variable speed compressors. Although the submitted comments reiterated the
concerns of certain stakeholders, none contained information that would help justify

92altering the analysis DOE conducted regarding the projected supply of compressors

available to manufacturers.

Whir lpool concurred with DOE’s findings that availability of high -efficiency and
variable-speed compressors will expand to meet demand, but indicated that prices might
increase. (Whirlpool, No. 74 at p. 3) Whirlpool did not, however, provide any specific
information about compressor prices that would allow DOE to accurately revise its
analysis to address this comment. Accordingly, the analysis was not altered in this

respect.

b. Alternative Refrigerants
Most refrigeration products sold in the U.S. currently use H FC -134a refrigerant, a
hydrofluorocarbon (HFC) with a high global warming potential (GWP).

The NOPR described comments from several stakeholders made in response to
the preliminary analysis. These comments indicated that the DOE analysis should
acknowledge the widespread acceptance of hydrocarbon refrigerants in other parts of the
world and the growing interest in their use in the U.S. Id. at 59496

. The NOPR cited the
ongoing consideration of these refrigerants for use in residential refrigerators, particularly
isobutane, in Underwriters Laboratories’ (UL’s) ongoing revision of UL Standard 250,
“Household Refrigerators and Freezers” (UL 250), and in the EPA’s proposed rule (see
75 FR 25799 (May 10, 2010)) to add this refrigerant to its list of allowed substances
under the Significant New Alternatives Policy (SNAP) program. DOE explained in the

93NOPR that the EPA proposal calls for a total charge limit of 57 g of isobutane. Id. at
25803 (May 10, 2010). Neither effort has been finalized at the time of the preparation of

this notice..
The NOPR explained that DOE’s consideration of isobutane refrigerant was based
on the 57 g limit proposed by the EPA, and that this limit was sufficient to allow
consideration of the use of isobutane refrigerant only for compact refrigerators, based on
the refrigerant charge amounts of the reverse-engineered products. The preliminary
analyses for compact refrigerators, which did not include isobutane refrigerant as a
design option, were adjusted during the NOPR phase to include this design option. DOE
acknowledged in the NOPR that multiple sealed systems could potentially be used in
larger products without exceeding the charge limit per sealed system, but that it rejected
this approach due to the potential reduction of consumer utility associated with the extra
space that the additional sealed system would require. 75 FR at 59496-7 (September 27,
2010). DOE notes that the EPA’s SNAP proposal did not clearly specify whether the 57
gram limit was intended to apply to each sealed system or each appliance. 75 FR at
25803 (May 10, 2010).

DOE requested comment on its approach in considering isobutane only for
compact refrigerators.

Whirlpool commented that many compact and full-size refrigerators using
hydrocarbon refrigerants are sold all over the world, but that the safety threshold in the

U.S. is higher than many other countries. Whirlpool noted the possible tradeoffs of

94venting versus capturing and transporting flammable refrigerants

— venting such
refrigerants must be done with caution, but it alleviates the need for transport of
flammable refrigerants, which may represent even greater risk, since many pounds of
refrigerant captured from many products would be transported (as opposed to ounces that
are in each individual product), and the duration of transport is much greater than the
duration of the venting procedure. Capture and transport, however, avoid release of the
refrigerant, thus limiting the small global warming impact of these refrigerants and
avoiding concerns associated with volatile organic compound releases. Whirlpool
suggested that DOE contact the Consumer Product Safety Commission and/or UL
regarding the safety aspects related to the use of these refrigerants. (Whirlpool, No. 74 at

p. 4) DOE’s assessment of the use of isobutane did not extend to determination of the
servicing approach. DOE notes that Section 608 of the Clean Air Act generally prohibits
any person in the course of maintaining an appliance to knowingly vent refrigerants from
that appliance. See generally, 42 U.S.C. 7671g. EPA regulations at 40 CFR part 82,
subpart F, further clarify this prohibition and permit only de minimis releases where good
faith attempts to recycle or recover refrigerants are made.

GE criticized DOE’s approach. First, GE indic ated that the UL standard and the
EPA proposal are based on charge limits per sealed system, not per product, and that
DOE did not fully consider the potential to use dual system designs to implement a
switch to isobutane refrigerant. Second, GE commented that the lack of information
regarding refrigeration product technologies using isobutane refrigerant stems to a large
extent from the fact that this refrigerant currently is not allowed for use in these products.

95GE asserted that when the EPA SNAP approval is finalized, much more information will
become available as products are commercialized. (GE, Public Meeting Transcript, No.
67 at pp. 60-61) In written comments, GE highlighted recent activities related to the
introduction of isobutane products, includ ing the EPA SNAP rulemaking and GE’s own plans to start selling an isobutane product. It also mentioned that manufacturers will have
to redesign products to use this new refrigerant, thus reiterating its view that assessing
current products does not provide a complete picture of the potential use of isobutane.
(GE, No. 76 at p. 2)

Sub Zero commented that some studies show that isobutane, when limited to a
charge of 57 to 60 grams, is suitable for products up to 18 cubic feet in volume. Further,
using multiple separate refrigeration systems, each limited to 57 to 60 grams, would
allow the use of isobutane in many full-size products. Sub Zero also highlighted the
current uncertainty about potential future regulation of HFC refrigerants and blowing
agents, and suggested that the industry could potentially be compelled to use alternative
substances by 2014, which would require significant additional capital investment. The
company requested that DOE recognize in this rulemaking the possible impacts of new
requirements for refrigerants and blowing agents on system efficiency and insulating
performance when setting the standards. (Sub Zero, No. 69 at p. 4)

AHAM cited three issues with DOE’s treatment of isobutane in the NOPR:
There is a pending EPA Significant New Alternatives Policy (SNAP) decision
that would approve hydrocarbons for household use and is expected to lead to

96sale of full-size refrigeration products in the U.S. that use isobutane
refrigerant.
DOE’s review of the suitability of isobutane was based on review of existing
products rather than future products.
DOE concluded that the UL limit of 50 grams would apply to the entire
product rather than to each refrigeration system of a product, thus overlooking
the possibility that multiple systems could be used to produce full-size
products using isobutane.
(AHAM, No. 73 at pp. 7- 8)

In response, DOE agrees that a dual-system design would be an available option
that could, depending on the SNAP rulemaking, permit manufacturers to use isobutane
refrigerant within the limits of the UL standard and the anticipated EPA rule. DOE also
acknowledges increased manufacturer interest in this approach, as exemplified by GE’s
stated intention to introduce such products as soon as the EPA rule is final (see, for
example, GE’s announcement for such a product as reported by Appliance Magazine on
October 6, 2010,
http://www.appliancemagazine.com/news.php?article=1434814&zone=0&first=1 , GE
Designs Isobutane Fridge for Smaller Dwellings, No. 82 at p. 1). DOE explained in the
NOPR that consideration of the potential negative consumer utility impact of reduced
internal volume was a key reason for not adopting isobutane refrigerant as a design
option for the larger product classes. 75 FR at 59497 (September 27, 2010). Other
considerations included the lack of information regarding (1) the possible emergence of

97new heat exchanger designs that would alleviate the need to consider dual system
approaches and (2) the performance characteristics of low-charge designs using existing
heater exchanger technology. As a result, although isobutane products may become
available in the near future, considering the switch to isobutane refrigerant as a design
option to reduce energy use could not be considered in the analysis, because of the
consumer value concerns and the insufficient information regarding the energy savings
characteristics and the costs of these potential new designs.

Moreover, DOE notes that because the parameters of whatever limits that EPA or
UL may consider are not yet final, DOE is declining to speculate what these final limits
might be. Without further information regarding the elements described above, DOE
cannot ascertain the overall costs and benefits that could be reasonably ascribed to an
isobutane refrigerant-based design. Accordingly, in evaluating the standards set by
today’s final rule, DOE is continuing to retain the basic approach laid out in its NOPR
and related analyses.

c. Alternative Foam-Blowing Agents
DOE discussed in the NOPR the potential that legislation or newly enacted rules
may restrict the use of HFC blowing agents in the future. DOE indicated that it was
prepared to address this issue by evaluating the efficiency improvement and trial standard
levels for products using alternative foam insulation materials, if such legislation or rules
banning HFCs should be enacted or otherwise become effective. 75 FR at 59497
(September 27, 2010). As mentioned above, Sub Zero commented that DOE should

98recognize the potential impacts of restriction on HFC blowing agent usage in this
rulemaking. (Sub Zero, No. 69 at p. 4) DOE recognizes that such restrictions may occur
sometime in the future. However, as DOE explained in the NOPR, DOE believes that
basing energy conservation standards on the uncertain prospect of passage of specific
legislation would be speculative. Such restrictions have not emerged within the
timeframe of the preparation of this final rule. Hence, DOE has not adjusted its analysis
to account for this possibility.

d. Vacuum-Insulated Panels
The NOPR discussed DOE’s assessment of the potential issues regarding VIP
supply, longevity, durability, and quality that stakeholders raised during the preliminary
analysis comment period. DOE concluded that potential issues surrounding this
technology do not rise to a level justifying that it be screened out. DOE requested

comment on this tentative conclusion in the NOPR. 75 FR at 59497- 59 500 (September
27, 2010). Sub Zero commented on this topic, reiterating concerns regarding availability,
quality, and potential impact on warranty costs associated with the expected increase in
VIP usage. (Sub Zero, No. 69 at p. 4) Whirlpool commented in a similar fashion,
indicating that VIPs are not appropriate for improving efficiency in all situations, are
subject to damage during shipment from the supplier and during installation, and
expressing concern about the ability of VIP suppliers and the industry to ramp up demand
sufficiently. However, the comments provided no new information or arguments that
would impact DOE’s conclusions regarding the viability of VIPs. Hence, DOE’s final
analysis continues to include VIPs as a design option.

992. Technologies Considered
DOE has concluded that: (1) all of the efficiency levels discussed in today’s final
rule are technologically feasible; (2) products at these efficiency levels could be
manufactured, installed, and serviced on a scale needed to serve the relevant markets; (3)
these efficiency levels would not force manufacturers to use technologies that would
adversely affect product utility or availability; and (4) these efficiency levels would not
adversely affect consumer health or safety. Thus, the efficiency levels that DOE analyzed
and is discussing in this notice are all achievable using ”screened in” technology options
identified through the screening analysis. The technologies DOE considered for each
group of products are shown in Table IV.4.

Table IV .4 Technologies Considered by DOE for Residential Refrigeration Products, by Product Group

Design Option Standard

- Size Refrigerator

Freezers Standard

Size Freezers Compact Refrigerators Compact Freezer s Increased Insulation Thickness  (see Note 1)  

Isobutane Refrigerant 

VIPs     Improved Compressor Efficiency    
Variable

- Speed Compressor     Increased Evaporator Surface Area    
Increased Condenser Surface Area    

100Forced Convection Condenser  Brushless DC Evaporator Fan  
Brushless DC Condenser Fan  
Adaptive Defrost  
Variable Anti

- Sweat Heater Control 

Note 1: Increased Insulation Thickness was not considered for built-in standard-size freezers.

C. Engineering Analysis
The engineering analysis uses cost-efficiency relationships to show the
manufacturing cost increases associated with achieving increased efficiency. DOE has
identified the following three methodologies to generate the manufacturing costs needed
for the engineering analysis: (1) the design-option approach, which provides the
incremental costs of adding design options to a baseline model that will improve its
efficiency; (2) the efficiency-level approach, which provides the relative costs of
achieving increases in energy efficiency levels, without regard to the particular design
options used to achieve such increases; and (3) the cost-assessment (or reverse
engineering) approach, which provides “bottom

- up” man ufacturing cost assessments for
achieving various levels of increased efficiency, based on detailed data on costs for parts
and material, labor, shipping/packaging, and investment for models that operate at
particular efficiency levels.

DOE conducted the engineering analysis for this rulemaking using a combined
efficiency level/design option/reverse engineering approach. DOE defined efficiency

101levels using percentages representing energy use reductions. The reductions were defined
to apply to energy use (not including icemaking energy use) measured using the new test
procedure. DOE’s premise that efficiency levels expressed as a percentage of energy use
lower than that of baseline products are equivalent when calculated based on both the
current test procedure and the new test procedure (without icemaking energy use)
allowed DOE to compare information developed from different sources. However,
DOE’s analysis is based on the efficiency improvements associated with groups of design
options. DOE developed estimates for efficiency improvements for design options
through energy use modeling analysis conducted for selected reverse-engineered
products. The energy models were first established based on the existing product designs
and the models were subsequently adjusted to reflect application of the groups of design
options considered for analysis. DOE based some of the design option information on
data gained through reverse-engineering analysis, but also used other sources, such as
component vendor inquiries and discussions with manufacturers as appropriate. Details
of the engineering analysis are provided in the NOPR TSD chapter 5.

In the NOPR, DOE addressed preliminary analysis comments regarding the
engineering analysis. DOE explained the selection of product classes for detailed
analysis, adjustment of the analyses based on new information collected in preparation of
the NOPR, development of the baseline energy use equations representing baseline
product energy use using the new energy test procedure (less automatic icemaking energy
use), the approach used to adjust the slopes of some of these equations, the range of
efficiency levels considered, treatment of design options in the analyses, development of

102cost-efficiency curves, and the development of standards for low-volume product classes.

75 FR at 59500- 5950 8 (September 27, 2010).

1. Discussion of Comments
DOE requested comments and information on the following topics in the NOPR:
1) The approach used to adjust the slopes of the baseline energy use equations of

so me product classes. Id. at 59505.
2) The treatment of design options in the engineering analysis. Id. at 59507.
3) Information that would help improve the ERA energy use model used for the
engineering analysis. Id. at 59507.

Whirlpool commented that analyzing design options is an appropriate means of
assessing technological capability, but that DOE should establish minimum efficiency
standards without specifying particular design options to use. In its view, this approach
would permit manufacturers the freedom to develop products in a fashion which they
believe best meets the needs of consumers. (Whirlpool, No. 74 at p. 5) DOE notes that
the standards are expressed in terms of maximum energy use and do not specify the use
of particular design options in satisfying these standards.

DOE received no additional comments on these topics. Consequently, in the
absence of any other comments, DOE has not adjusted its engineering analysis for the

final rule.

1032. Adjustment of the Baseline Energy Use Equations
Comments addressing adjustment of the standard to account for test procedure
changes (the “crosswalk”) are discussed in section III.A.2 above. As part of the
engineering analysis, DOE adjusted the energy standard equations to address the
modifications to the test procedures. DOE initially made such adjustments during the
preliminary analysis based on consideration of the anticipated compartment temperature
and volume calculation method changes. DOE used an approach to account for the test
procedure changes that involved developing energy use equations representing baseline
products based on testing under the new test procedures. Baseline products are those that
are minimally compliant under the current energy standard when tested using the current
test procedure. The initial baseline energy use equations are presented in the preliminary
TSD in Chapter 5, “Engineering Analysis” in section 5.4.2. The efficiency levels
examined in this rulemaking are represented as percentages of energy use reductions
from the energy use of baseline products. Hence, the efficiency levels expressed in terms
of the new test procedures are equal to these same percentage reductions applied to the
baseline energy use equations.

Based on the comments responding to the preliminary analysis, as well as the
additional information DOE obtained during the NOPR phase, DOE adjusted the baseline
energy use equations for three product classes. These changes corrected the low slope of
the maximum energy use equation of the current energy standards for product classes 4
(refrigerator-freezers

— automatic defrost with side-mounted freezer without through-thedoor ice service), 5 (refrigerator-freezers

— automatic defrost with bottom-mounted

104freezer without through-the-door ice service), and 5A (refrigerator-freezer

— automatic
defrost with bottom-mounted freezer with through-the-door ice service). See the NOPR
TSD, Chapter 5, section 5.4.2.4. The NOPR-phase adjusted baseline energy use equations
are presented in the NOPR TSD in Chapter 5, in section 5.4.2.

Stakeholder comments recommending further adjustment to the baseline energy
use equations to address test procedure changes are discussed in section III.A.2 above.
These comments addressed both (1) extrapolating the analysis to product classes for

which DOE did not have relevant test data for the crosswalk associated with
compartment temperature changes and volume calculation method changes, and (2)
measurement changes, including other test procedure changes that were not captured in
the NOPR crosswalk. As discussed in section III.A.2, DOE has made adjustments to
account for two of these additional test procedure changes

-- those changes that capture
precooling energy use and that address the testing for products with heater-based
temperature control for special compartments. The analysis to implement these changes is

discussed below.

Special Compartments with Heater-Based Control
During the NOPR public meeting, DOE requested information regarding heaterbased control systems used to control the temperatures of special compartments. DOE
sought this information to help it better understand and evaluate the energy use impact of
these features and the manner in which the new (then proposed) test procedure may
change the measured energy use of products having such compartments. DOE received

105no information. In the absence of any information, DOE developed an analysis to help
represent the energy use of these compartments, including the change in measured energy
use associated with the new test procedure. The calculated energy use impact was
multiplied by the percentages of products that are believed to have such features in each
of the applicable product classes to develop average impacts associated with the test
procedure amendments. The determination of the prevalence of products with these

features is discussed in section III.A.2.d above.

The analysis describing the change in energy use for a product with a heated
special compartment is described in the TSD in Chapter 5, “Engineering Analysis”,
(Section 5.4.2.6). DOE conducted this analysis for a baseline-efficiency refrigeratorfreezer with automatic defrost and a bottom-mounted freezer with a total capacity of 25­

cubic feet

. The baseline energy use for this product is 733 kWh per year, excludin g icemaking energy use. This value was calculated using the baseline energy use equation
for product class 5 as presented in Table 5.4.12 of the NOPR TSD. The special
compartment was assumed to be located at the bottom of the fresh food compartment and

to be 20 inches deep, 32 inches wide, and 4 inches high. (These dimensions were based
on one of the reverse engineered products evaluated by DOE during the engineering
analysis. This product had a special compartment (without heater-based control) at the
bottom of the fresh food compartment of roughly the selected dimensions.)

The analysis determined the energy use for the product when tested both with the
special compartment set for its coldest temperature and with the compartment set at its

106warmest temperature (selected as 28  ̊ F and 42  ̊ F, respectively, consistent with the widest
range identified for special compartment temperature control for the product (see Use and
Care Guide Electrolux 242046401, No. 80 at p. 18)), with the fresh food and freezer
compartments operating at 39  ̊ F and 0  ̊ F, respectively. The influences on the
compartment temperature that DOE considered in the analysis include (1) the 39  ̊ F fresh
food compartment air surrounding the top, sides, back, and front of this special
compartment, transferring heat through the 3/16-inch plastic compartment wall, and the
air film thermal resistances outside and inside the special compartment, (2) the air near
the top of the freezer compartment, at an average temperature of - 5  ̊ F (at 0  ̊ F when the
compressor is not operating, and at -10  ̊ F when the compressor is operating and the
evaporator discharge air blows forward along the underside of the mullion, and assuming
a 50 percent compressor run time), transferring heat from the special compartment
throug h the special compartment’s bottom surface, the 1.5 -inch thick mullion, and
through four air films surrounding the compartment bottom and the mullion, (3) -10  ̊ F
evaporator discharge air diverted to the special compartment, if needed to maintain a low
temperature, and (4) electric resistive heating, if needed to maintain a high temperature.

At the 28  ̊ F setting for the special compartment, a small amount of evaporator discharge
air (less than 1 cubic foot per minute) is needed to maintain the compartment

te mperature, while a heater input of 5.8 W is needed to maintain the 42  ̊ F setting. DOE
calculated the additional system energy use associated with removing the 5.8 W of heat
input by assuming that the system efficiency is 5 Btu/h-W, which represents a syste m with a compressor with an Energy Efficiency Ratio (EER) rating of 5.5 and some
additional evaporator and condenser fan power input. As described in the TSD, Chapter

1075, section 5.84, standard-size baseline refrigerator-freezers typically use compressors
with an EER in the range 5.0 to 5.5. DOE used the high end of this range for the estimate,
recognizing that a shipment-weighted average EER would also include higher-efficiency

compressors.

The calculated energy use impact of the test procedure change (measurement with
the special compartment set at its coldest temperature, as is done under the current test
procedure, as compared with an average of tests with the special compartment setting in
the coldest position for one test and in the warmest position for the second test) is 43
kWh, a 5.9 percent energy use increase. As discussed above in section III.A.2, DOE has
conducted testing for two products that have heated special compartments. The average
measured impact of the test procedure change for these productss was 4.1 percent,
suggesting that the calculated 5.9 percent impact is conservative. DOE chose to use the
more conservative 5.9 percent impact in adjusting the energy conservation standards due
to the uncertainty associated with the small data sample and the EPCA requirements
prohibiting upward adjustment of maximum allowable energy use after such a standard
has been set. See 42 U.S.C. 6295(o)(1).

As discussed in section III.A.2, DOE assumed that this energy use impact applies
to the percentage of products of applicable product classes which currently have such
features. Hence, applying the calculated measurement impact to the product model
percentages of 10. 6 percent (determination of this value was discussed in section III.A.2)
for current product class 5A (refrigerator-freezer

— automatic defrost with bottomDeleted: .5%

108mounted freezer with through-the-door ice service), 1.5 percent for current product class
5 (refrigerator-freezers

— automatic defrost with bottom-mounted freezer without
through-the-door ice service), and 0. 7 percent for current product class 7 (refrigeratorfreezers

— automatic defrost with side-mounted freezer with through-the-door ice service)
results in average impacts for these product classes equal to 0. 62 percent for product class

5A, 0. 088 percent for product class 5, and 0. 041 percent for product class 7. Deleted: 0.9%

Deleted: 4%

Deleted: 38%

Deleted: 053% Deleted: 023%

Precooling
DOE conducted energy tests of nine standard-size refrigerator-freezers during the
engineering analysis. Two of these products exhibited precooling. The increase in
measured energy use for these products when using the modified approach that includes
precooling energy use was 2.3 percent for one product and 1.7 percent for the other. (S ee docket documents Precooling Product 1 and Precooling Product 2, Nos. 82.1 and 82. 2).
DOE has adopted an average impact of 2 percent based on these measurements. DOE
calculated the shipment-weighted average energy use impact of precooling using th is
value and the observed frequency of precooling as follows: 2% × (2/9) = 0.44%. DOE
applied this adjustment to all standard-size refrigerator-freezers with automatic defrost.

Combined Impact
To combine the impact of the two test procedure adjustments, DOE multiplied the
factors representing their impact. For example, for product class 5A: 1. 0062 × 1.0044 =

1. 0106

. 23 This approach addresses the need to consider the compounding of the impact

23 Note that multiplying a number by 1. 000062 is equivalent to increasing it by 0. 62 %. Hence, the 1. 0062 factor represents the adjustment to the energy use equation associated with the 0. 62 % increase to account

109 Deleted: 0038

Deleted: 0082 Deleted: 0038 Deleted: 38 Deleted: 0038 Deleted: 38inherent in multiple influences, similar to the compounding of interest in finance. DOE
used similar calculations for other product classes for which one or both of the testprocedure-based adjustments to the standard apply. These adjustments are reflected in the
table showing the final baseline energy use equations in the TSD, Chapter 5, Table

5.4.14. The final energy standards are based on applying the percentage energy use
reductions to these adjusted baseline energy use equations.

D. Markups to Determine Product Cost
The markups analysis develops appropriate markups in the distribution chain to
convert the manufacturer cost estimates derived in the engineering analysis to consumer
prices. DOE determined the distribution channels for refrigeration products and the
markups associated with the main parties in the distribution chain, manufacturers and
retailers. DOE developed an average manufacturer markup by examining the annual
Securities and Exchange Commission (SEC) 10-K reports filed by four publicly-traded
manufacturers primarily engaged in appliance manufacturing and whose combined
product range includes residential refrigeration products. For retailers, DOE developed
separate markups for baseline products (baseline markups) and for the incremental cost of
more-efficient products (incremental markups). Incremental markups are coefficients that
relate the change in the manufacturer sales price of higher-efficiency models to the
change in the retailer sales price.

fo r the heated special compartment shipment-weighted average measurement change for product class 5A. Similarly, the 1.0044 factor represents the 0.44% adjustment for the precooling shipment-weighted average measurement change. The resulting factor, 1. 0106 , means that the energy use equation is increased 1.06 %.

110 Deleted: 0082 Deleted: 0.82In response to comments that were received on the preliminary analysis, DOE
extensively reviewed its incremental markup approach in the NOPR. Among the tasks
DOE performed included assembling and analyzing relevant data from other retail
sectors. DOE found that empirical evidence is lacking with respect to appliance retailer
markup practices when a product increases in cost (due to increased efficiency or other
factors). DOE understands that real-world retailer markup practices vary depending on
market conditions and on the magnitude of the change in cost of goods sold (CGS)
associated with an increase in appliance efficiency.

Given this uncertainty with respect to actual markup practices in appliance
retailing, DOE uses an approach that reflects two key concepts. First, changes in the
efficiency of the appliances sold are not expected to increase economic profits. Thus,
DOE calculates markups/gross margins to allow cost recovery for retailers (including
changes in the cost of capital) without changes in company profits. Second, efficiency
improvements only impact some distribution costs. DOE sets markups to cover only the
variable costs expected to change with efficiency.

DOE’s separation of operating expenses into fixed and variable components to
estimate an incremental markup follows from the above concepts. DOE defines fixed
expenses as including labor and occupancy expenses because these costs are not likely to
increase as a result of a rise in CGS due to amended efficiency standards. All other
expenses, as well as the net profit, are assumed to vary in proportion to the change in
CGS. DOE acknowledges that its allocation of expenses into fixed and variable

111categories is based largely on limited information and sought additional information from
interested parties to help refine its allocation approach during the NOPR phase. DOE’s

method results in an outcome in which retailers are assumed to cover their costs while
maintaining their profit margins when the CGS of appliances changes.

As part of its review, DOE developed a new breakdown into fixed and variable Deleted: Market competition is a main reason why DOE believes that prof it margins would not change in a significant way. To properly measure the competitiveness within appliance retailing, DOE believes that one should measure the four firm concentration ratio (FFCR) for only the appliance sub

- sector within the three retail ch annels: Electronics and Appliance Stores, Building and Material and Supplies Dealers, and General Merchandise Stores. DOE is concerned only with the price effect of appliance sales in these sectors, excluding the residual effect on prices from firms selli ng electronics and other goods unrelated to this rulemaking. Therefore, DOE believes it is appropriate to include only appliances sales and to exclude sales of other goods in its estimate of market concentration. Accordingly DOE estimated the “appliance s ales” FFCR, equal to the sector FFCR multiplied by the percentage of appliance sales within each sector. DOE estimated that these sub

sector FFCRs are under the 40

- percent threshold, preventing major retailers in each sector from exercising significant mar ket power. Furthermore, “Household Appliance Stores,” a subsector of the Electronics and Appliance Stores sector that specifically represents appliance retailers, rather than computer or other electronics stores, has an FFCR of 17

- percent, signifying an un concentrated sector. components using the latest expense data provided by the U.S. Census for Electronics
and Appliance Stores, which cover 2002. The newly-derived incremental markup, which
would be applied to an incremental change in CGS, is 1.17, which is slightly higher than
the value of 1.15 that DOE used in the preliminary analysis. DOE requested information
regarding the likely retailer responses to incremental changes in the CGS of appliances

as sociated with the proposed standards. Whirlpool stated that it would not expect retailers
to accept reduced margins as a result of higher costing, more efficient products, and
asserted that most major retailers are publicly traded companies whose stockholders
demand consistent (or increasing) margins (Whirlpool, No. 74 at p. 5) No information or
other comments were received addressing this issue. Given the lack of quantitative
information, DOE has decided to continue to apply an incremental markup to the
incremental MSP of products with higher efficiency than the baseline products . Chapter 6
of the final rule TSD provides a description of both the method and its current
application. Deleted: DOE has decided to continue to apply an incremental markup to the incremental MSP of products with higher efficiency than the baseline products.

Deleted: retain its approach

Deleted: using the afore

- mentioned data

112E. Energy Use Analysis

DOE’ s analysis of the energy use of refrigeration products estimated the annual
energy use of products in the field that would meet the considered efficiency levels, i.e.
, as they are actually used by consumers. The energy use analysis provides the basis for
other analyses DOE performs, particularly assessments of the energy-savings and the
savings in consumer operating costs that could result from DOE’s adoption of amended
standard levels. In contrast to the DOE test procedure, which provides standardized
results that can serve as the basis for comparing the performance of different appliances
used under the same conditions, the energy use analysis seeks to capture the range of
operating conditions for refrigeration products in U.S. homes.

To determine the field energy use of products that would meet possible amended
standard levels, DOE used data from the Energy Information Administration (EIA)’s
2005 Residential Energy Consumption Survey (RECS), which was the most recent such
survey available at the time o f DOE’s analysis. 24 RECS is a national sample survey of
housing units that collects statistical information on the consumption of, and expenditures
for, energy in housing units along with data on energy-related characteristics of the
housing units and occupants. RECS provides sufficient information to establish the type
(product class) of refrigeration product used in each household, and also provides an
estimate of the household’s energy consumption attributable to “refrigerators” or

“freezers”. As a result , DOE was able to develop household samples for the
representative product classes for standard-size units. DOE did not use RECS for
compact refrigerators and freezers because a large fraction of these products are used

24 For information on RECS, see http://www.eia.doe.gov/emeu/recs/.

113outside the residential sector. Instead, it based the energy use for these products on the
DOE test procedure.

DOE believes that, in general, using RECS data in the estimation of field energy
use of refrigeration products is valid. However, it acknowledges that the approach used in
the preliminary analysis has limits. To compensate for these limits, DOE developed a
new approach for the NOPR to estimate energy use of refrigeration products in U.S.
homes. This approach involved collecting field-metered electricity use data for residential

ref rigeration products. Details of this approach and the engineering assumptions that
DOE used to estimate energy use of refrigeration products in U.S. homes were described
in chapter 7 of the NOPR TSD. DOE sought comment on its approach for developing
energy use estimates using field-metered data. 75 FR at 59512 (September 27, 2010).

Commenting on the NOPR TSD, AHAM stated that DOE should rely on the test
procedure, rather than RECS data, for determining energy use, but offered no reason or
data. (AHAM, Public Meeting Transcript, No. 67 at p, 78).

As discussed in section IV.E of the NOPR (75 FR at 59510 (September 27,
2010) ), test procedures must be reasonably designed to produce test results which
measure energy efficiency, energy use or estimated annual operating cost of a covered
product during a representative average use cycle or period of use. (42 U.S.C.
6293(b)(3)) Relying solely on a representative average use cycle or period of use does not
provide an accurate measure of the possible energy savings since this approach
inadequately evaluates the economic impact of the standard on consumers and the

114savings in operating costs throughout the estimated life of the product

— two factors under
EPCA that DOE must consider when promulgating an amended energy conservation
standard. Further, the approach suggested by AHAM would not account for the
variability stemming from household differences or be consistent with the above-cited
guidance contained in 10 CFR part 430, subpart C, appendix A. In contrast, the approach
that DOE has used in residential product rulemakings for over a decade, and continues to
apply here, accounts for all of these factors.

Sub Zero and AHAM also indicated that more comprehensive field data be
collected, including data on ice usage and icemaker energy consumption, for use in future
rulemakings (Sub Zero, No. 69 at pp. 4-5; AHAM, No. 73 at p. 8). DOE has retained the
approach detailed in the NOPR for the final rule. In future rulemakings, DOE may
evaluate the appropriateness of collecting additional field data as suggested by these

commenters.

In order to make the 2005 RECS sample more representative of current
refrigeration products, DOE made two modifications for the NOPR analysis. First, DOE
modified the RECS weights for top- vs. bottom-mount refrigerators in order to reflect
current information on the relationship between income and refrigerator door style ( i.e
., top - or bottom-mount) provided by AHAM in 2010. Second, DOE examined recent data

from three sources 25 to scale the average interior volume of standard-size refrigerator25 California Energy Commission, Appliances Database

— Refrigeration, 1998-2009.
< www.energy.ca.gov/appliances/database/excel_based_files/Refrigeration/> (Last accessed April 25, 2009); The NPD Group, Inc., The NPD Group/NPD Houseworld – POS, Refrigerators, January –

115freezers from the 2005 RECS data. DOE requested comments on the weighting of the
RECS sample using income relationships and volume scaling.

Whirlpool supported efforts to re-weight the RECS data to better reflect income
and volume; however, it reiterated its previously stated reservations regarding the
outdated nature of RECS. (Whirlpool, No. 74 at p. 5) AHAM did not view the weighting
of the RECS sample as having meaningfully contributed to the proposed levels, and as a
result, did not comment on these approaches. Instead, it emphasized that the lack of
comment on its part did not signify agreement with the approaches. (AHAM, No. 73 at p.
8)

Given the value of continuing to apply the RECS-based approach, the analysis
modifications to address the limits of the RECS data, and the analysis DOE performed
using updated data from AHAM and other sources, DOE believes that this approach
sufficiently accounts for the full range of estimated energy savings experienced by
households. Accordingly, DOE has retained its above-described approach for the final
rule. However, DOE did revise its usage adjustment factor (UAF) formulas, which raised
the average UAF by 6 to 14 percent, depending on the product class. The revision is
described in chapter 7 of the final rule TSD.

December 2008, 2007-2008, Port Washington, NY; and Association of Home Appliance Manufacturers, data from 2005-2008, memoranda dated January 19, 2009 and March 26, 2010, Washington, D.C.

116F. Life-Cycle Cost and Payback Period Analyses
DOE conducted LCC and PBP analyses to evaluate the economic impacts on
individual consumers of potential energy conservation standards for refrigeration
products. The LCC is the total consumer expense over the life of a product, consisting of
purchase and installation costs plus operating costs (expenses for energy use,
maintenance and repair). To compute the operating costs, DOE discounts future operating
costs to the time of purchase and sums them over the lifetime of the product. The PBP is
the estimated amount of time (in years) it takes consumers to recover the increased
purchase cost (including installation) of a more efficient product through lower operating
costs. DOE calculates the PBP by dividing the change in purchase cost (normally higher)
due to a more stringent standard by the change in average annual operating cost
(normally lower) that results from the standard.

For any given efficiency level, DOE measures the PBP and the change in LCC
relative to an estimate of the base-case appliance efficiency levels. The base-case
estimate reflects the market in the absence of amended energy conservation standards,
including the market for products that exceed the current energy conservation standards.

For each considered efficiency level in each product class, DOE calculated the
LCC and PBP for a nationally representative set of housing units. For both the NOPR and
final rule analyses, DOE developed household samples from the 2005 RECS. For each
sampled household, DOE determined the energy consumption for the refrigeration
product and the electricity price. By developing a representative sample of households,

117the analysis captured the variability in energy consumption and energy prices associated
with the use of residential refrigeration products.

Inputs to the calculation of total installed cost include the cost of the product — which includes manufacturer selling prices, retailer markups, and sales taxes

— and
installation costs. Inputs to the calculation of operating costs include annual energy
consumption, energy prices and price projections, repair and maintenance costs, product
lifetimes, discount rates, and the year that amended standards take effect. DOE
determined the operating costs for each sampled household using that household’s unique
energy consumption and the household’s energy price. DOE created distributions of
values for some inputs, with probabilities attached to each value, to account for their
uncertainty and variability. DOE used probability distributions to characterize product
lifetime, discount rates, and sales taxes.

The computer model DOE uses to calculate the LCC and PBP, which incorporates
Crystal Ball (a commercially available software program), relies on a Monte Carlo
simulation to incorporate uncertainty and variability into the analysis. The Monte Carlo
simulations randomly sample input values from the probability distributions and
household samples. The model calculated the LCC and PBP for products at each
efficiency level for 10,000 housing units per simulation run. Details of the spreadsheet
model, and of all the inputs to the LCC and PBP analyses, are contained in the final rule
TSD chapter 8 and its appendices.

118Table IV.5 summarizes the approach and data DOE used to derive inputs to the
LCC and PBP calculations. The table provides the data and approach DOE used for the
NOPR TSD, as well as the changes made for today’s final rule. The subsections that
follow discuss the initial inputs and the changes DOE made to them. Unless otherwise
specified, DOE received no comments on these inputs.

Moved down [1]: Product Cost Moved down [2]: To calculate consumer product costs, DOE multiplied the manufacturer selling prices developed in the engine ering analysis by the supply

- chain markups described in section IV.E (along with sales taxes). DOE used different Moved down [3]: DOE used different retail markups for baseline products and higher

- efficiency products because DOE applies an incremental markup to the MSP increase associated w ith higher

efficiency products. ¶

119Table IV .5 Summary of Inputs and Key Assumptions in the LCC and PBP Analysis* Inputs NOPR Changes for the Final Rule Installed Costs Product Cost Derived by multiplying manufacturer cost by manufacturer and retailer markups and sales tax, as appropriate. Applied a price trend to estimate equipment prices in 2014

.

Operating Costs Annual Energy Use Based on a multiple linear regression of field

- metered energy use data, adjusted using a UAF function based on 2005 RECS household characteristics. Revised UAF function, raising average UAF values by 6 to 14 percent , depending on product class

. Energy Prices Electricity: Based on EIA’s Form 861 data for 2007. Variability: Regional energy prices determined for 13 regions. No change.

Energy Price Trends Forecasted using Annual Energy Outlook 2010 ( AEO2010 ). No change.

Repair and Maintenance Costs Used repair cost estimation method that estimates the rate of failure for selected components along with the incremental cost of repair or replacement compared to the baseline product. No change.

Present Value of Operating Cost Savings Product Lifetime Estimated using survey results from RECS (1990, 1993, 1997, 2001, 2005) and the U.S. Census American Housing Survey (2005, 2007), along with historic data on appliance shipments. Variability: characterized using Weibull probability distributions. No change

.

Discount Rates Approach involves identifying all possible debt or asset classes that might be used to purchase the considered appliances, or might be affected indirectly. Primary data source was the Federal Reserve Board’s SCF** for 1989, 1992, 1995, 1998, 2001, 2004 and 2007. No change.

Compliance Date of New Standard 2014. No change.

* References for the data sources mentioned in this table are provided in the sections following the table or in chapter 8 of the TSD. ** Survey of Consumer Finances. Deleted: learning rate Comment [A27]: Change recommended by OIRA.

Deleted: future

120prices developed in the engineering analysis by the supply-chain markups described in
section IV.E (along with sales taxes). DOE used different retail markups for baseline
products and higher-efficiency products because DOE applies an incremental markup to
the MSP increase associated with higher-efficiency products.

In the NOPR analysis, DOE assumed that the manufacturer selling prices and
retail prices of products meeting various efficiency levels remain fixed, in real terms,
after 2010 (the year for which the engineering analysis estimated costs) and throughout
the analysis period. Subsequently, examination of historical price data for various
appliances and equipment indicates that the assumption of constant real prices and costs
may, in many cases, over-estimate long-term appliance and equipment price trends.
Economic literature and historical data suggest that the real costs of these products may
in fact trend downward over time, partially because of “learning” or “experience”

. 27

In light of the historical data and DOE’s aim to improve the accuracy and
robustness of its analyses, o n February 22, 2011, DOE published a notice that discussed
the approach it was considering to use to incorporate experience in its forecasts of
product prices. 76 FR 9696. DOE requested public comment on the potential inclusion of Deleted: learning Comment [A30]: Changes recommended by OIRA.
this approach for its future rulemaking activities, as well as on the merits of adopting this

27 A draft paper, “Using the Experience Curve Approach for Appliance Price Forecasting,” posted on the DOE web site at http://www.eere.energy.gov/buildings/appliance_standards, provides a summary of the data and literature currently available to DOE that is relevant to price forecasts for selected appliances and equipment. Moved (insertion) [1]

Moved (insertion) [2]

Moved (insertion) [3]

Deleted: E conomic literature and historical data suggest that the real cost s of these products may in fact trend downward over time according to “learning” or “experience” curves. In the experience curve method, the real cost of production is related to the cumulative production or “experience” with a product. The percentage red uction in cost that

occurs with each doubling of cumulative production is known as the learning rate

. In typical learning curve formulations, the learning rate parameter is derived using two historical data series: cumulative production and price (or cost)

. 26 Comment [A28]: Footnote recommended by OIRA. Comment [A29]: Change recommended by OIRA. Deleted: th e s e 1. Product Cost
To calculate consumer product costs, DOE multiplied the manufacturer selling

121approach within the context of its ongoing rulemaking to set standards for refrigeration
products.

DOE received a number of comments on the merits of incorporating experience in
its forecasts of product prices. Support for the inclusion of experience in appliance
standards rulemakings was expressed by NEEP, NCLC, ACEEE, ASAP, NRDC, CFA,
NEEA, and the IOUs. 28 (NEEP, No. 107 at p. 2; NCLC, No. 100 at pp. 1-2; ACEEE, No.
109 at p. 1; ASAP, No. 108 at p. 1; NRDC, No. 104 at p. 2; CFA, No. 105 at p. 2; NEEA,
No. 101 at p. 4; IOUs, No. 111 and 112 at p. 1) The IOUs, ASAP, NRDC, and CFA
specifically noted that incorporation of an experience curve would align with other Deleted: learning

Deleted: learning in equipment pricing

Deleted: the learning

Deleted: Executive Branch analyses that contribute to analysis of appliance standards , such as the approach used in

NEMS . (IOUs, No. 111 and 112 at p.1; ASAP, No. 108 at p.2; NRDC, No. 104 at p.4; Deleted: such as the supply

- side approach used in NEMS Deleted: contributes

Moved (insertion) [4]

Comment [A31]: Changes recommended by OIRA. CFA, No. 105 at p.4) ASAP and NRDC included as part of their comments an appendix
that found that the model described in the NODA offers appropriate methodology.
(ASAP, No. 108 at p. 10; NRDC, No. 104 at p. 5)

DOE also received a number of comments expressing opposition to, or concern
with, the proposed incorporation of experience into forecasts of product prices. (AHAM,
No. 113 at p. 1; AHRI, No. 106 at p. 2; EEI, No. 102 at pp. 2- 5; SC , No. 110 at p. 1) The
American Gas Association (AGA) criticized the use of experience curves, stating that the
current approach offers better opportunities to transparently assess costs. (AGA, No. 115
at p. 2) Traulsen, a manufacturer of commercial refrigerators, contended that a price

28 Pacific Gas and Electric Company, Southern California Gas Company, and San Diego Gas and Electric submitted a joint letter, while Southern California Edison submitted an identical letter; comments from these letters are referred to as made by IOUs. Deleted: learning

Deleted: learning

122decrease for technology over time only holds true if market forces prevail . (Traulsen, No.
99 at p. 3) Deleted: , but this does not consider short term impacts from government mandates. (Traulsen, No. 99.1 at p. 3) EEI criticized the reference to the current assumption as “conservative”, and noted that many manufacturers have already minimized costs to a maximum extent. (EEI, No. 102.1 at pp. 2

- 3) (However, as discussed later, EEI also filed supplemental comments s upporting key aspects of DOE’s approach. See EEI expressed agreement with the IOUs with respect to running sensitivity analyses. (EEI Supplemental Comments, No. XX at p. 2)) the experience curve approach cited several factors. Ingersoll Rand noted that the
experience curve is at best a heuristic model, and it urged more extensive examination of
several points related to experience curves. (Ingersoll Rand, No. 103 at p. 2) AHAM and

AHRI noted that experience curves apply only to specific products or companies and The comments that expressed opposition or reservation regarding application of

Comment [A32]: Changes recommended by OIRA. Deleted: learning Deleted: learning Deleted: learning

Deleted: learning
should not be inflated to industry wide cases. (AHAM, No. 113 at p. 53 -54; AHRI, No.
106 at p. 2) AGA noted that experience curves could be useful for some DOE regulated
products at the early stages of development and commercialization, but would not be
relevant to a wide range of equipment with mature designs and markets, including space
heating and water heating. (AGA, No. 115 at p. 2) Similarly, AHAM stated that the
experience curve came from early-stage industries, and at current cost reduction rates is
not reliable enough to apply in mature industries with large cumulative production.
(AHAM, No. 113 at p. 54) AHRI and SC noted that past performance does not Deleted: DOE makes the distinction between a learning model necessarily indicate future performance, as past trends may have reached a plateau.
(AHRI, No. 106 at pp. 2-3; SC, No. 110 at p. 2) DOE ’s proposed approach used
experience curves that reflect broad industry-wide changes resulting from many factors

. Deleted: learning Comment [A33]: Changes recommended by OIRA.

Deleted: an experience model. Both terms Deleted: been

Deleted: in the economics literature (sometimes interchangeably). The historical data over lengthy periods (not only early-stage industries) suggest that
experience curves are mathematically applicable to mature products as well as newer
products. The historic decline in inflation-adjusted PPI of household appliances has Deleted: much broader Deleted: , whereas learning is a more product

- or company

- specific phenomenon. DOE believes

Deleted: DOE’s proposed methodology is consistent with experience curve analyses in the academic literature, and is data

- driven. slowed since 2000, but there is no evidence of a plateau.

123 Comment [A34]: Changes recommended by OIRA.AHAM and AHRI opposed DOE’s analysis using prices , when experience or
experience curves are actually based on cost. (AHAM, No. 113 at p.55; AHRI, No. 106 at
p.3) Ingersoll Rand stated that while variable manufacturing costs may assume an experience curve, fixed costs and retail price do not. (Ingersoll Rand, No. 103 at p.2) EEI
stated that the primary cause of experience is outsourcing, so the domestic Producer Price
Index ( PPI ) should not be used when a significant fraction of manufacturers are overseas.
(E EI, No. 102 at pp. 3-5) In response, DOE acknowledges that the literature generally
approaches these effects through the costs of production and that the price of the relevant
good will not reflect learning as directly as the costs. This is because the price is a

ref lection of market conditions. Nevertheless, DOE notes that experience curves can be
based on either cost or price, and that the historical data in the case of ref ri gerators show
that real price declines occurred well before outsourcing became a significant factor in
manufacturing. DOE does not attempt to forecast the impact of future outsourcing of
production in its forecasts of appliance manufacturing costs.

SC noted that the PPI incorporates a performance correction so it would no t
reflect a true price change. ( SC , No. 110 at p.4) EEI stated that refrigerators and freezers
have undergone significant changes over the years in terms of types and features and
DOE did not explain how they accounted for this. (EEI, No. 102 at p.2-3) Ingersoll Rand
stated that product performance has changed dramatically over many years, and therefore
it is unclear what the PPI is actually measuring. (Ingersoll Rand, No. 103 at p.4) In
response, DOE notes that the PPI includes a quality adjustment, which attempts to factor Deleted: noted an unjustified increase in the cost of data preparation and analysis, as well as increased reliance on human judgment in data gathering and preparation. (AHAM, No. 113.1 at p.52) DOE believes the proposed methodology would not increase the cost of the analysis. The potential data sources are limited and easily accessible, and human judgment is not a factor. ¶ ¶ DOE received several comments that focused on issues of product cost and price, or raised concerns with the CPI or PPI. AHAM
Deleted: price Deleted: learning Deleted: a learning Deleted: It added that CPI is subject to a variety of factors that do not respond to actual cost of production. Deleted: learning Deleted: Southern

Comment [A35]: Changes recommended by OIRA.

Deleted: or CPI

Deleted: that the producer prices on which the PPI is based are a close approximation of manufacturing costs, which are generally not available in time series. Further, PPI is a wholesale price, not a retail price, so it is not subject to factors that solely affect retail prices. 29 DOE recognizes the limitations of PPI as a proxy for manufac turing costs because it represents wholesale price. However, the agency determined that even with this limitation the use of PPI may shed some directional information on the experience curve approach. DOE believes that the PPI may indicate long

- term decl ining real price trend for the subject products. Additionally, the PPI includes changes in both fixed and variable costs. It is true Comment [A36]: Change recommended by OIRA.

124out physical changes in the product that affect the price. 30 For that reason, the PPI is a

better measure of the trends in prices than actual wholesale prices would be without
quality adjustment

.

DOE also received several comments related to forecasting error and the time
period of the data used. Ingersoll Rand urged consideration of the expanding uncertainty
band as the forecast period expands, and AHAM also noted that error in forecasts
increases with time. (Ingersoll Rand, No. 103 at p. 1; AHAM, No. 113 at pp. 59- 62 ) EEI
stated that for refrigerators, the starting period used by DOE corresponds to a unique,
post-war boom. (EEI, No. 102 at p.2) SC stated that the choice of time period for PPI
changes results . ( SC , No. 110 at p. 4) In response to these comments, DOE conducted a (AHRI, No. 106.1 at pp. 2

- 3; Southern, No. 110.1 at p. 2 sensitivity analysis that considers different time periods for estimating product price

trends . DOE also notes that potentially growing forecast error is diminished by the Deleted: , and noted that recent price trends are flat or rising. (Southern Deleted: is incorporating discounting used in DOE’s analysis.

AHRI and Ingersoll Rand expressed concern related to products that use
significant quantities of commodities, as these prices have been volatile and cannot be
predicted. (AHRI, No. 106 at p.3; Ingersoll Rand, No. 103 at pp. 5-6) DOE will rely on
historical data to determine whether commodity price volatility is a concern when Deleted: learning effects than actual wholesale prices would be. The PPI includes only domestic manufacturing, and
, therefore
, outsourcing is not reflected in the PPI time series. Here too, this feature make s it a better indicator of learning. DOE does not attempt to forecast the impact of future outsourcing of production (or increase in imports generally) in its forecasts of appliance manufacturing costs. Comment [A37]: Change recommended by OIRA.

Deleted: 103.1 at p. 1; AHAM, No. 113.1 at pp. 59

- 62) AHAM added that as an experience curve is applied to industry wide prices, it becomes solely a measure of correlation between price le vels and cumulative production, making it difficult to define and develop the proper data and to project estimates into the future. (AHAM, No. 113.1 at p. 56) AHRI and Southern noted that past performance does not necessarily indicate future performance; i n particular, past trends may have reached a plateau.

Deleted: as part of the experience curve analysis. The effects of historical fluctuations, recent trends, and the fitting window will be analyzed. In general, however, DOE believes that persistent, significant, and lengthy historical trends are appropriate to estimate future trends Comment [A38]: Changes recommended by OIRA.

Deleted: for
estimating experience curves for specific products

.

Deleted: a learning rate Deleted: . In such cases, DOE will consider whether it can apply a learning rate to the non

commodity component of the producer price Comment [A39]: Changes recommended by OIRA.

30 See the Bureau of Labor Statistics’ Handbook of Methods (Chapter 14: Producer Prices ). http://www.bls.gov/opub/hom/homch14.htm

125Some of the parties generally supporting DOE’s proposed approach to
Deleted: DOE recei ved comments specific to the proposed model. ASAP and NRDC included as part of their comments an appendix that found that the model described in the NODA offers appropriate methodology. incorporating experience into price forecasting for appliance standards requested specific
changes to the proposed approach. ACEEE, NEEA, ASAP, NRDC, and the IOUs Moved up [4]: (ASAP, No.

expressed concern with the proposal to assume no experience curve in cases with limited
or no data; instead they recommended using scenarios or running sensitivity analyses to
examine a range of experience rates. (ACEEE, No. 109 at p.1; NEEA, No. 101 at p.5;
ASAP, No. 108 at p.3; NRDC, No. 104. at p.5; IOUs, No. 111 and 112 at p.2) EEI
expressed agreement with the IOUs with respect to running sensitivity analyses. (EEI
Supplemental Comments, No. 116 at p. 2) ASAP and NRDC also requested that, where
possible, DOE should attempt to analyze the more efficient models of certain products
separately from the baseline models. (ASAP, No. 108 at p.27; NRDC, No. 104 at p.31) Deleted: 108.1 at p. 10; NRDC, No. 104.1 at p. 5) In contrast, Inger soll Rand stated that the data do not seem to support the chosen model shape of the learning curve, and it proposed a modified formulation. (Ingersoll Rand, No. 103.1 at p p

. 3

- 4) DOE believes that additional parameters would overfit the data, and are not justified at this time. ¶ ¶ Deleted: learning Deleted: learning Deleted: learning

Deleted: further enhancements to the model, requesting

Deleted: standard

Deleted: learning Similarly, the IOUs suggested that separate experience coefficients should be used for the
base case and the standards case. (IOUs, No. 111 and 112 at p.2) In cases with limited or
no data, DOE is considering using data at a higher level of aggregation to estimate future
product prices. DOE’s approach in future rulemakings will be based on available data. At
this time DOE is not aware of data sufficient to separately analyze baseline models and

efficient models.

In conclusion , DOE evaluated the concerns expressed about its proposed
approach for incorporating experience in its forecasts of product prices and determined
that retaining an assumption-based approach of a constant real price trend was not
consistent with the historical data for the products covered in this rule. In its stead , DOE
developed a range of potential price trends that was consistent with the available data

. Deleted: d etermine a range of learning rates.

Comment [A40]: Changes recommended by OIRA.

Deleted: Speci fically related to the refrigerator and freezer rulemaking, NRDC and ASAP expressed opposition to the use of a single learning rate for the two products, stating that enough data exist to apply separate learning curves for each . (NRDC, No. 104.1 at p. 14; ASAP, No. 108.1 at p. 10) DOE found that the CPI index is not available separately for refrigerators and freezers, and the PPI series for freezers is limited. ¶ ¶ To summarize
Deleted: learning Deleted: recognition of the uncertainty regarding estimation of learning rates Deleted: learning rates Deleted: at this tim e. DOE also included a constant real

126rs For the default price trend for this final rule, DOE estimated an experience rate for
residential refrigerators and freezers based on an analysis of long-term historical data. Deleted: assumption as a sensitivity scenario representing Deleted: upper bound Deleted: the forecast price tren d. To evaluate the impact of the uncertainty of the price trend estimates, DOE performed sensitivity calculations in the national impact Deleted: examine the depe ndence of
Deleted: different assumptions about learning DOE derived a refrigerator/freezer price index from 1947 to 2010 by creating a hybrid
index that changed proportional to PPI data for the period when PPI data were available,
and changed proportional to the relevant CPI data for the period where CPI data w ere

available. DOE then divid ed the results by the GDP deflator for the relevant year to
produce an inflation-adjusted index. Th is proxy for historic price data was then regressed

on the quantity of refrigerators and freezers produced: a corresponding series for total
shipments of refrigerators and freezers

.

To calculate an experience rate, a least-squares power-law fit was performed on
the refrigerator/freezer price index versus cumulative shipments. DOE then derived an
index, with 2010 equal to 1, to forecast prices (using PPI and CPI data as proxies) in
2014, the compliance date for amended energy conservation standards in the LCC and
PBP analysis , and for the NIA, for each subsequent year through 2043 . The index value

in each year is a function of the experience rate and the cumulative production through
that year. Projected shipments were obtained from the base case projections made for the
NIA (see section IV.G.1 of this notice). The average annual rate of price decline in the
default case is 1.87 percent. DOE applied the same index value to forecast prices for each
group of refrigeration products at each considered efficiency level.

DOE notes that experience rates may decrease over time since returns from
experience about a single technology may diminish over time. As part of its sensitivity Deleted: The form of the fitting equation is : ¶ P(X) = P o X - b

, ¶ where b (the learning rate parameter) and P o (the price or cost o f the first unit of production) are obtained by fitting the model to the data. The estimated lea rning rate for refrigerators and freeze

... Deleted: ¶ DOE recognizes that its price trend forecasting methods are likely to be modified as more data and information becomes available to enhance the statistical certainty of the trend estimate and the completeness of the model. Additional data should enable an improved evaluation of the potential impacts of more of the factors that can influence equipment price trends over time. ¶ ¶ For this final rule, DOE estimated a learning rate for residential refrigerators and freezers based on an analysis of historical data. H istorical CPI data for residential refrigerators and freezers were obtained from the BLS for 1947

- 1997. To extend this index to 2010, DOE used the trend in the PPI for these products. A unified inflation

- a djusted refrigerator/freezer price index from 1947 to 2010 was calculated by dividing the refrigerator/freezer CPI series by the CPI “all items” index for the same years. ¶ ¶ DOE assembled a time

- series of a nnual shipments for 1951

- 2008 for standard

- size ref rigerator

- freezers; f or 1951

- 2007 for standard

- size freezers ; for 1966 and 1983

- 2007 for compact refrigerators and refrigerator

- freezers; and for 1983

- 2007 for compact freezers . (DOE used interpolation and extrapolation to fill in data gaps for compact ref rigeration products ). Shipments of all four product types were summed to produce an overall shipments history f o r 1951

- 2007. T otal shipments of refrigerators and freezers were available by year back to 1930 for refrig erators and 1946 for freezers , but due to anomalous post

- war shipments and price trends , data prior to 1951 were excluded from the default case analysis, and were only used to estimate cumulative shipments

. ¶ Deleted: a learning Deleted: unified

Deleted: 2014 Deleted: LR Deleted: after 2007 Deleted: ¶ For the NIA, DOE considered three learning rate sensitivi ties for refrigeration products in addition to the “default” learning rate described above. The

...

127analysis, DOE included models that derive an experience rate based on different time
periods, which may reflect such a “flattening” of the experience curve across time, as
well as a model with an explicit term that incorporates “flattening.” DOE notes tha t
learning rates may decrease over time since returns from learning about a single
technology may diminish over time. These fits usually incorporate the decrease in
learning through a variable representing time. DOE includes in the suite of modeling

result s for learning in this analysis models that do and do not reflect such a “flattening” of
learning across time; however, the models near the middle range of estimates in their
analysis do reflect this effect. DOE will continue to explore the basis and the
appropriateness of incorporating for compounding changing learning effects for future
rulemaking analyses.

For the NIA, DOE also analyzed two sensitivity cases that use a price trend based
on an exponential in time extrapolation of refrigeration equipment PPI data. Because
cumulative shipments for refrigerators can be fit to an exponential function of time for
long time periods, the experience curve formulation and an exponential in time
extrapolation of PPI data provide mathematically very similar price trend forecasts in
many cases. In addition to the default price trend, the NIA considered a high price decline
case and a low price decline case. See section IV.G.3 for further discussion

In recognition of the uncertainty regarding estimation of the future product price
trends, DOE will continue to review the relevant literature and seek to continually
improve and refine its methodology through research, enhancements to its models and by

128seeking public input. DOE will also work to ensure the robustness of its data sets as a
means to ensure the reliability of its projections.

For further information on the method and data sources used to develop price Deleted: learning rates

Comment [A41]: Changes recommended by OIRA. trends for residential refrigeration products, see appendix 8E of the final rule TSD.

2. Installation Cost
Installation cost includes labor, overhead, and any miscellaneous materials and
parts needed to install the equipment. DOE did not include an installation cost for
refrigeration products because it understands that this cost would be the same at all of the
considered efficiency levels.

3. Annual Energy Consumption
For each sampled household, DOE determined the energy consumption for a
refrigeration product at different efficiency levels using the approach described above in

section IV.E.

4. Energy Prices
DOE derived average energy prices for 13 geographic areas consisting of the nine

U.S. Census divisions, with four large States (New York, Florida, Texas, and California)
treated separately. For Census divisions containing one of these large States, DOE
calculated the regional average excluding the data for the large State.

129DOE estimated average residential electricity prices for each of the 13 geographic
areas based on data from EIA Form 861, “Annual Electric Power Industry Database.”
DOE calculated an average annual regional residential electricity price by: (1) estimating
an average residential price for each utility (by dividing the residential revenues by
residential sales); and (2) weighting each utility by the number of residential consumers
served in that region (based on EIA Form 861). DOE calculated average commercial
electricity prices in a similar manner. For both the NOPR and final rule analyses, DOE

used EIA data for 2007.

5. Energy Price Projections
To estimate energy prices in future years for the NOPR, DOE multiplied the
above average regional electricity prices by the forecast of annual average residential
electricity price changes in the Reference Case using AEO2010 , which has an end year of

2035. 31 To estimate the electricity price trend after 2035, DOE used the average annual
rate of change in prices from 2020 to 2035. DOE used the same energy price forecasts for

the final rule.

6. Maintenance and Repair Costs
Repair costs are associated with repairing or replacing components that have
failed in the appliance, whereas maintenance costs are associated with maintaining the
operation of the equipment. For the NOPR, DOE developed a repair cost estimation
method that estimates the rate of failure for selected components (compressor,
evaporator, condenser, evaporator fan, condenser fan, electronics and automatic

31 U.S. Energy Information Administration. Annual Energy Outlook 2010 . Washington, DC. April 2010.

130icemaker). The estimated average annual repair cost for a given efficiency level can be
expressed as the product of two elements: the average rate of repair of a component
(expressed as an annual probability of failure) times the incremental cost of repair or
replacement compared to the baseline product. DOE requested comment on its approach
used for estimating repair costs. 75 FR at 59514 (September 27, 2010).

Sub Zero commented that VIPs could add repair and/or replacement costs that
have not been adequately evaluated or estimated (Sub Zero, No. 69 at p. 5). However,
they did not provide estimates that would allow DOE to modify its approach.

Whi rlpool supported DOE’s approach to estimate repair costs for more efficient
refrigerators and freezers. However, it pointed out that the data shown in Table IV.14 of
the NOPR did not appear to be consistent with the logic expressed in section IV.F.6 of
the NOPR. It added that the use of commercial refrigeration failure rates, may lead to
inaccuracies (Whirlpool, No. 74 at pp. 5-6).

With regard to the alleged inconsistency between Table IV.14 of the NOPR (75
FR at 59514 (September 27, 2010)) and the accompanying discussion, DOE has checked
the accuracy of the table and notes that the table indicated only incremental repair costs,
not total repair costs, which add between $7.66 and $21.90 depending on standard-size
refrigerator-freezer product class. DOE also acknowledges the potential inaccuracy of
using commercial failure rate data, but notes that (a) no other data were available, and (b)
these data were scaled downward so that the total failure rate (sum of all component

131failure rates) was equal to observed rates for residential refrigeration products as reported
in Consumer Reports (see chapter 8 of TSD).

Accordingly, DOE retained the approach for the final rule. Details of this
approach can be found in chapter 8 of the final rule TSD.

7. Product Lifetime
Because the basis for lifetime estimates in the literature for refrigeration products
is uncertain, DOE used other data sources to estimate the distribution of standard-size
refrigerator and freezer lifetimes in the field for both the NOPR and today’s fina l rule. By
combining survey results from various years of RECS and the U.S. Census’s American
Housing Survey 32 with the known history of appliance shipments, DOE estimated the
fraction of appliances of a given age still in operation. The survival function, which DOE
assumed has the form of a cumulative Weibull distribution, provides an average and
median appliance lifetime.

For compact refrigerators, DOE estimated an average lifetime of 5.6 years in the
NOPR using data on shipments and the stock- in -place ( i.e. , the number of units in use).
DOE found that, given the data on historic shipments of compact refrigerators, using a
longer lifetime would result in an equipment stock that is far larger than the stock given
by 2005 RECS and EIA’s 2003 Commercial Buil ding Energy Consumption Survey. See

32 U.S. Census Bureau, American Housing Survey. Available at: http://www.census.gov/hhes/www/housing/ahs/ahs.html

132chapter 8 of the final rule TSD for further details on the method and sources DOE used to
develop product lifetimes for this final rule.

8. Discount Rates
To establish discount rates for the LCC analysis, DOE identified all debt or asset
classes that might be used to purchase refrigeration products, including household assets
that might be affected indirectly. DOE used data from the Federal Reserve Board’s
“Survey of Consumer Finances” (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and
2007 to estimate the average percentages of the various debt and equity classes in the
average U.S. household portfolios. DOE used SCF data and other sources to develop
distributions of interest or return rates associated with each type of equity and debt. The
average rate across all types of household debt and equity, weighted by the shares of each
class, is 5.1 percent. While this value corresponds to the average discount rate, DOE
assigned each sample household a specific discount rate drawn from the distributions.

DOE derived the discount rate for commercial-sector compact refrigeration
products from the cost of capital of publicly-traded firms in the sectors that purchase
those products (including lodging and other commercial sectors). The firms typically
finance equipment purchases through debt and/or equity capital. DOE estimated the cost
of the firms’ capital as the weighted average of the cost of equity financing and the cost
of debt financing for recent years for which data were available (2001 through 2008). The
estimated average discount rate for companies that purchase compact refrigeration
products is 6.2 percent.

133See chapter 8 in the final rule TSD for further details on the development of
discount rates for refrigeration products.

9. Compliance Date of Amended Standards
In the context of EPCA, the compliance date is the future date when parties
subject to the requirements of a new standard must begin to comply with that standard

.
As described in DOE’s semi -annual implementation report for energy conservation
standards activities submitted to Congress, a final rule for the refrigeration products that
are the subject of this rulemaking is scheduled for completion. Compliance with amended
standards for refrigeration products promulgated by DOE is required in 2014. DOE
calculated the LCC and PBP for refrigeration products as if consumers would purchase
new products in the year compliance with the standard is required.

10. Base Case Efficiency Distribution
To accurately estimate the share of consumers that would be affected by a
standard at a particular efficiency level, DOE’s LCC analysis considered the projected
distribution of product efficiencies that consumers purchase under the base case ( i.e. , the
case without new energy efficiency standards). DOE refers to this distribution of product
of efficiencies as a base-case efficiency distribution. DOE developed base-case efficiency
distributions for each of the seven representative product classes. These distributions
were developed from indust ry -supplied data for the year 2007 and were comprised of
product efficiencies ranging from existing baseline levels ( i.e. , meeting existing energy

134conservation standards) to levels meeting and exceeding ENERGY STAR levels. DOE
then projected these distribu tions to the year that today’s standards would become
effective (2014).

DOE modified its approach for estimating base-case efficiency distributions for
the NOPR analysis for certain product classes. DOE believes that, because the current
ENERGY STAR efficiency level is higher than it was prior to the requirements
established in 2008, the growth in market share may be slower than before due to the
reduction in sales generally associated with higher cost, more efficient produc ts . For the
NOPR, DOE adopted a projected market share of ENERGY STAR models in 2014
(under current requirements) that is equal to the average of ENERGY STAR market
shares in 2007 (the last year under the old requirements) and 2008 (when current
requirements took effect). With this approach, the ENERGY STAR market shares for
product class 3 (refrigerator-freezer

— automatic defrost with top-mounted freezer without
through-the-door ice service) and product class 5 (refrigerator-freezers

— automatic
defrost with bottom-mounted freezer without through-the-door ice service) are projected
to grow more slowly between 2008 and 2014 than they had under the old requirements
before 2008. ENERGY STAR products reach a market share in 2014 of 8 percent for
product class 3 and 68 percent for bottom-mount refrigerator-freezers.

DOE requested comment on its approach for estimating base case efficiency
distributions. 75 FR at 59515 (September 27, 2010). Whirlpool stated it had no comment
on the approach (Whirlpool, No. 74 at p. 6), and no other comments were received. In

135light of the absence of any comments on its approach, DOE maintained the same
approach for the final rule as it used in the NOPR for all of the product classes. For

further information on DOE’s estimate of base -case efficiency distributions, see chapter 8

of the final rule TSD.

11. Inputs to Payback Period Analysis
The payback period is the amount of time it takes the consumer to recover the
additional installed cost of more-efficient products, compared to baseline products,
through energy cost savings. The simple payback period does not account for changes in
operating expense over time or the time value of money. Payback periods are expressed
in years. Payback periods that exceed the life of the product indicate that the increased
total installed cost is not recovered in reduced operating expenses.

The inputs to the PBP calculation are the total installed cost of the equipment to
the customer for each efficiency level and the average annual operating expenditures for
each efficiency level. The PBP calculation uses the same inputs as the LCC analysis,
except that discount rates are not needed.

12. Rebuttable-Presumption Payback Period
As noted above, EPCA, as amended, establishes a rebuttable presumption that a
standard is economically justified if the Secretary finds that the additional cost to the
consumer of purchasing a product complying with an energy conservation standard level
will be less than three times the value of the energy (and, as applicable, water) savings

136during the first year that the consumer will receive as a result of the standard, as
calculated under the test procedure in place for that standard. (42 U.S.C.
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE determined the value of the
first year’s energy savings by calculating the quantity of those savings in accordance wit h
the applicable DOE test procedure, and multiplying that amount by the average energy
price forecast for the year in which compliance with the amended standard would be
required.

G. National Impact Analysis

– National Energy Savings and Net Present Value Analysis
The national impact analysis (NIA) assesses the national energy savings (NES)
and the national net present value (NPV) of total consumer costs and savings that would
be expected to result from new or amended standards at specific efficiency levels.
(“Consumer” in this context refers to consumers of the product being regulated.) DOE
calculates the NES and NPV based on projections of annual appliance shipments, along
with the annual energy consumption and total installed cost data from the energy use and
LCC analyses. For the present analysis, DOE forecasted the energy savings, operating
cost savings, product costs, and NPV of consumer benefits for products sold from 2014
through 2043.

DOE evaluates the impacts of new and amended standards by comparing basecase projections with standards-case projections. The base-case projections characterize
energy use and consumer costs for each product class in the absence of new or amended
energy conservation standards. DOE compares these projections with projections

137characterizing the market for each product class if DOE adopted new or amended
standards at specific energy efficiency levels ( i.e. , the TSLs or standards cases) for that
class. For the base case forecast, DOE considers historical trends in efficiency and
various forces that are likely to affect the mix of efficiencies over time. For the standards
cases, DOE also considers how a given standard would likely affect the market shares of
efficiencies greater than the standard.

To make the analysis more accessible and transparent to all interested parties,
DOE uses an MS Excel spreadsheet model to calculate the energy savings and the
national consumer costs and savings from each TSL. 33 The TSD and other documentation
that DOE provides during the rulemaking help explain the models and how to use them,
and interested parties can review DOE’s analyses by changing various input quantities
within the spreadsheet. The NIA spreadsheet model uses typical values as inputs (as
opposed to probability distributions).

For the current analysis, the NIA used projections of energy prices and housing

starts from the AEO2010 Reference case. In addition, DOE analyzed scenarios that used
inputs from the AEO2010 Low Economic Growth and High Economic Growth cases.
These cases have higher and lower energy price trends compared to the Reference case,
as well as higher and lower housing starts, which result in higher and lower appliance
shipments to new homes. NIA results based on these cases are presented in appendix 10­

A of the final rule TSD.

33 MS Excel is the most widely used spreadsheet calculation tool in the United States and there is general familiarity with its basic features. T hus, DOE’s use of MS Excel as the basis for the spreadsheet models provides interested parties with access to the models within a familiar context.

138Table IV.6 summarizes the inputs and key assumptions DOE used for the NIA
analysis contained in the overall NOPR analysis and the changes to the analyses for the
final rule. Discussion of these inputs and changes follows the table. See chapter 10 of the

final rule TSD for further details.

Table IV .6 Approach and Data Used for National Energy Savings and Consumer Net Present Value Analyses Inputs NOPR Changes for the Final Rule
Shipments Annual shipments from shipments model, using 2008 data to estimate the ratio of bottom

- mount share to side

by

- side share. No change.

Compliance Date of Standard 2014. No change.

Base

- Case Forecasted Efficiencies Used a “roll

- up + ENERGY STAR” scenario to establish the distribution of efficiencies. No change.

Standards

- Case Forecasted Efficiencies Used a “roll

- up + ENERGY STAR” scenario to establish the distribution of efficiencies. No c hange.

Annual Energy Consumption per Unit Annual weighted

- average values as a function of SWEUF.* No change.

Total Installed Cost per Unit Annual weighted

- average values as a function of SWEUF.* Applied a price trend to estimate future product prices

. Energy Cost per Unit Annual weighted

- average values as a function of the annual energy consumption per unit and energy prices. No change.

Repair and Maintenance Cost per Unit Annual values as a function of efficiency level. No change.

Escalation of Energy Prices AEO2010 forecasts (to 2035) and extrapolation through 2043. No change.
Energy Site

- to

Source Conversion Factor Varies yearly and is generated by DOE/EIA’s NEMS No change.

Discount Rate Three and seven percent real. No change. Present Year Future expenses are discounted to 2010. No change. Deleted: learning rate Comment [A42]: Change recommended by OIRA.

Deleted: equipment

139*Shipments-Weighted Energy Use Factor

1. Shipments
Forecasts of product shipments are needed to calculate the national impacts of
standards on energy use, NPV, and future manufacturer cash flows. DOE develops
shipment forecasts based on an analysis of key market drivers for each considered
product. In DOE’ s shipments model, product shipments are driven by new construction,
stock replacements, and other types of purchases. The shipments models take an
accounting approach, tracking market shares of each product class and the vintage of
units in the existing stock. Stock accounting uses product shipments as inputs to estimate
the age distribution of in-service product stocks for all years. The age distribution of inservice product stocks is a key input to calculations of both the NES and NPV, because
operating costs for any year depend on the age distribution of the stock. DOE also
considers the impacts on shipments from changes in product purchase price and operating
cost associated with higher energy efficiency levels.

In projecting shipments for refrigeration products, DOE accounted for
installations in new homes and replacement of failed equipment. In addition, for
standard-size refrigerator-freezers, DOE estimated purchases driven by the conversion of
a first refrigerator to a second refrigerator. It also estimated purchases by existing

household consumers who enter the market as new owners for standard-size freezers.

In conducting the analysis for today’s rule, DOE examined the historical trends in
the market shares of different refrigerator-freezer configurations to disaggregate the total

140shipments of refrigerator-freezers into the three considered refrigerator-freezer product
categories (top-mount, bottom-mount and side- by -side configurations). The market share

of side- by -side refrigerator-freezer models has grown significantly during the past two
decades. Bottom-freezer models historically had a small market share, but that share has
also grown in recent years. However, because DOE had insufficient data to forecast longterm growth of this product class, it made the assumption, based on past sales trends, that

consumer behavior related to bottom-mount models in the future would mirror behavior
regarding side- by -side models. DOE developed a model to forecast the combined bottommount and side- by -side market shares throughout the 30-year forecast period (beginning
in 2014), and assumed that the ratio of bottom-mount share to side- by -side share would
remain constant at the 2008 level (the last year for which DOE had disaggregated data).

To estimate the effects on product shipments from increases in product price
projected to accompany amended standards at higher efficiency levels, DOE applied a
price elasticity parameter. It estimated this parameter with a regression analysis that used
purchase price and efficiency data specific to residential refrigerators, clothes washers,
and dishwashers over the period 1980 –2002. The estimated “relative price elasticity”
incorporates the impacts from purchase price, operating cost, and household income, and
it also declines over time. DOE estimated shipments in each standards case using the
relative price elasticity along with the change in the relative price between a standards
case and the base case. For details on the shipments analysis, see chapter 9 of the final

rule TSD.

1412. Forecasted Efficiency in the Base Case and Standards Cases
A key component of the NIA is the trend in energy efficiency forecasted for the
base case (without new or amended standards) and each of the standards cases. Section

IV.X described how DOE developed a base-case energy efficiency distribution (which
yields a shipment-weighted average efficiency) for each of the considered product classes
for the first year of the forecast period. Based on recent trends, DOE assumed no
improvement of energy efficiency in the base case and held the base-case energy
efficiency distribution constant throughout the forecast period.

To estimate efficiency trends in the standards cases, DOE used a “roll

- up”
scenario in its standards rulemakings. Under the “roll

- up” scenario, DOE assumes: (1)
product efficiencies in the base case that do not meet the standard level under

consideration would “roll

- up” to meet the new standard level; and (2) pro duct efficiencies

above the standard level under consideration would not be affected.

For the NOPR, DOE refined its forecast for the base case and each of the
standards cases using information obtained from ENERGY STAR program staff. To
project the efficiency distributions after 2014 for the base case, DOE first considered the
potential for changes to the ENERGY STAR qualification levels. DOE assumed that, in
the absence of a new standard, the ENERGY STAR program would re-examine and
possibly revise its qualification levels regardless of the market share in 2014. When
setting a minimum product efficiency level to qualify for ENERGY STAR, one important
metric is that the average payback period compared to the current standard level should

1 42not exceed five years. Using the payback period calculation described in section IV.F,
DOE applied this criterion to all product classes to evaluate the extent to which the
current ENERGY STAR efficiency levels would be increased in the future.

DOE then estimated the market shares for ENERGY STAR products in 2021
based on past experience in the market for these products. Rather than make long-term
projections based on limited information, DOE assumed there would be no further
change in market shares between 2021 and the end of the forecast period. DOE
recognizes that some change in shares is likely to occur in reality. However, since DOE
used the same assumption in the standards cases, the accuracy of the assumption makes
no difference to the analysis of energy savings.

For the standards cases (also referred to as candidate standard levels, or CSLs),
DOE used the same approach as for the base case and assumed that in the case of
amended standards, the ENERGY STAR program would re-evaluate its qualifying levels
for all product classes using the five-year payback period criterion. For each CSL, DOE
identified the maximum efficiency level with a payback period of five years or less. If
that level was below the current ENERGY STAR level, DOE maintained the current
ENERGY STAR level. At higher CSLs, there is no efficiency level above the standard
level with a payback period of less than 5 years. DOE assumed that the ENERGY STAR
program would be suspended with standards at higher CSLs on a product-class specific

basis. This resu lt is projected to occur for all product classes at CSL 3 and above; for
product classes 9 (upright freezers with automatic defrost) and 10 (chest freezers and all

143other freezers except compact freezers), it occurs at lower CSLs. The market share
estimates for ENERGY STAR products in 2021 and beyond were based on a similar
approach as for the base case.

DOE requested comment on its approach for forecasting base case and standards
case efficiency distributions. 75 FR at 59518 (September 27, 2010). Whirlpool stated it
had no comment on the approach (Whirlpool, No. 74 at p. 6), and no other comments
were received. As a result, DOE retained its approach for the final rule. For further
details about the forecasted efficiency distributions, see chapter 10 of the final rule TSD.

3. Installed Cost per Unit
In the NOPR analysis, DOE followed its past practice and assumed that the
manufacturer costs and retail prices of products meeting various efficiency levels remain
fixed, in real terms, after 2008 (the year for which the engineering analysis estimated Deleted: e xamination of
costs) and throughout the period of the analysis. As discussed in section IV.F.1, for the
final rule DOE used a price trend based on an experience curve derived using historical

data on shipments and refrigeration equipment PPI. DOE applied the same price trend to

forecast prices for each group of refrigeration products at each considered efficiency Deleted: for certain appliances Deleted: that have been subject Deleted: energy conservation standards indicates that the assumption of constant real Deleted: and costs may, Deleted: price

Deleted: many cases, over

- estimate long

- term appliance and equipment price trends

level. The average projected annual rate of price decline in the default case is 1.87

percent

.

For the NIA, DOE also analyzed two cases that use a price trend based on an
exponential in time extrapolation of refrigeration equipment PPI data. DOE selected a Deleted: ¶ For the final rule, DOE applied the learning rate described in section IV.F.1 to forecast the prices of refrigeration products sold in each year in the forecast period (2014

- 2043). The price in each year is a function of the cumulative production of refrigeration products forecast in each year. DOE applied the same le arning rate to forecast prices for each group of refrigeration products at each considered efficiency level. ¶ ¶ For the NIA, DOE considered three learning rate sensitivities for refrigeration products in addition to the “default” learning rate of 44.6 perce nt . The learning rate for the “high learning” case is 54.1 percent. The learning rate for the “low learning” case is 35.6 percent. DOE also considered a “no learning” case as part of the sensitivity analysis. ¶

144high projected price trend decline case and a low projected price trend decline case from
among a number of price trends that it analyzed (see appendix 8E of the final rule TSD).
The high projected price trend decline case is based on the upper end of the 95 percent
confidence interval for an exponential fit to the PPI series in 1991- 2010 divided by the
relevant GDP deflator data from those y ears . The low projected price trend decline case
is based on the lower end of the 95 percent confidence interval for an exponential fit to

the PPI series in 1976- 2010 before dividing it by the relevant GDP deflator data from
those years. The annual rate o f projected price trend decline is 3.12 percent in the high
projected price trend decline case and 1.14 percent in the low projected price trend

decline case.

4. Site- to -Source Energy Conversion
For each year in the forecast period, DOE calculates the NES for each standard
level by multiplying the stock of equipment affected by the energy conservation
standards by the per-unit annual energy savings.

To estimate the national energy savings expected from appliance standards, DOE
uses a multiplicative factor to convert site energy consumption (at the home or
commercial building) into primary or source energy consumption (the energy required to
convert and deliver the site energy). These conversion factors account for the energy used
at power plants to generate electricity and losses in transmission and distribution, as well
as for natural gas losses from pipeline leakage and energy used for pumping. For
electricity, the conversion factors vary over time due to projected changes in generation Comment [A43]: Changes recommended by OIRA.

145sources ( i.e. , the power plant types projected to provide electricity to the country). The
factors that DOE developed are marginal values, which represent the response of the
system to an incremental decrease in consumption associated with appliance standards.

For the NOPR and today’s final rule, DOE updated its annual site

- to -source conversion factors based on the version of NEMS that corresponds to AEO2010 , which
provides energy forecasts through 2035. For 2036-2043, DOE used conversion factors

that remain constant at the 2035 values.

In response to a request from DOE’s Office of Energy Efficiency and Renewable
Energy (EERE), the National Academy of Sciences (NAS), appointed a committee on

“Point

- of -Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency

S tandards” to conduct a study required by section 1802 of the Energy Policy Act of 2005
(Pub. L. No. 109-58 (August 8, 2005)). The fundamental task before the committee was
to evaluate the methodology used for setting energy efficiency standards and to comment
on whether site (point- of -use) or source (full-fuel-cycle) measures of energy savings
would better support rulemaking efforts to achieve energy conservation goals. The NAS
committee defined full-fuel-cycle energy consumption as including, in addition to site
energy use, the following: energy consumed in the extraction, processing, and transport
of primary fuels such as coal, oil, and natural gas; energy losses in thermal combustion in

146power generation plants; and energy losses in transmission and distribution to homes and
commercial buildings. 34

In evaluating the merits of using point- of -use and full-fuel-cycle measures, the

NAS committee noted that DOE uses what the committee referred to as “extended site”
energy consumption to assess the impact of energy use on the economy, energy security,
and environmental quality. The extended site measure of energy consumption includes
the energy consumed during the generation, transmission, and distribution of electricity
but, unlike the full-fuel-cycle measure, does not include the energy consumed in
extracting, processing, and transporting primary fuels. A majority of the NAS committee
concluded that extended site energy consumption understates the total energy consumed
to make an appliance operational at the site. As a result, the NAS committee
recommended that DOE consider shifting its analytical approach over time to use a fullfuel-cycle measure of energy consumption when assessing national and environmental
impacts, especially with respect to the calculation of greenhouse gas emissions. The NAS
committee also recommended that DOE provide more comprehensive information to the
public through labels and other means, such as an enhanced website. For those appliances
that use multiple fuels ( e.g. , water heaters), the NAS committee indicated that measuring
full-fuel-cycle energy consumption would provide a more complete picture of energy
consumed and permit comparisons across many different appliances, as well as an
improved assessment of impacts.

34 The National Academies, Board on Energy and Environmental Systems, Letter to Dr. John Mizroch,Acting Assistant Secretary, U.S. DOE, Office of EERE from James W. Dally, Chair, Committee on Pointof -Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards, May 15, 2009.

147In response to the NAS recommendations, DOE issued, on August 20, 2010, (75
FR 51423), a Notice of Proposed Policy proposing to incorporate a full-fuel cycle
analysis into the methods it uses to estimate the likely impacts of energy conservation
standards on energy use and emissions. Specifically, DOE proposed to use full-fuel-cycle
(FFC) measures of energy and greenhouse gas (GHG) emissions, rather than the primary
(extended site) energy measurement it currently uses. Additionally, DOE proposed to
work collaboratively with the Federal Trade Commission (FTC) to make FFC energy and
GHG emissions data available to the public to enable consumers to make cross-class
comparisons. On October 7, 2010, DOE held an informal public meeting to discuss and
receive comments on its planned approach. The materials related to this proposed policy

are available at:
http://www.regulations.gov/search/Regs/home.html#docketDetail?R=EERE- 2010

- BT

NOA-0028 . Following the close of the public comment period, DOE intends to develop a
final policy statement on these subjects and then take steps to begin implementing that
policy in rulemakings and other activities that are undertaken during 2011.

5. Discount Rates
The inputs for determining the NPV of the total costs and benefits experienced by
consumers of the considered appliances are: (1) total annual installed cost, (2) total
annual savings in operating costs, and (3) a discount factor. DOE calculates net savings
each year as the difference between the base case and each standards case in total savings
in operating costs and total increases in installed costs. DOE calculates operating cost
savings over the life of each product shipped in the forecast period.

148DOE multiplies the net savings in future years by a discount factor to determine
their present value. For today’s final rule, DOE estimated the NPV of appliance
consumer benefits using both a 3-percent and a 7-percent real discount rate. DOE uses
these discount rates in accordance with guidance provided by the Office of Management
and Budget (OMB) to Federal agencies on the development of regulatory analysis. 35 The

discount rates for the determination of NPV are in contrast to the discount rates used in
the LCC analysis, which are designed to reflect a consumer’s perspective. The 7 -percent
real value is an estimate of the average before-tax rate of return to private capital in the

U.S. economy. The 3- percent real value represents the “societal rate of time preference,”
which is the rate at which society discounts future consumption flows to their present

value.

6. Benefits from Effects of Standards on Energy Prices
A decrease in electricity consumption associated with amended standards for
refrigeration products could reduce the electricity prices charged to consumers in all
sectors of the economy and thereby reduce their electricity expenditures. In chapter 2 of
the preliminary analysis TSD, DOE explained that, because the power industry is a
complex mix of fuel and equipment suppliers, electricity producers and distributors, it did
not plan to estimate the value of potentially reduced electricity costs for all consumers
associated with amended standards for refrigeration products. In response, the Northeast

35 OMB Circular A- 4 (Sept. 17, 2003), section E, “Identifying and Measur ing Benefits and Costs. Available at: http://www.whitehouse.gov/omb/memoranda/m03-21.html

.

149Energy Efficiency Partnerships urged DOE to quantify electricity demand reductions
achieved by these updated standards in financial terms. (NEEP, No. 41 at p. 1)

For the NOPR and today’s final rule, DOE used NEMS -BT to assess the impacts
of the reduced need for new electric power plants and infrastructure projected to result
from standards. In NEMS-BT, changes in power generation infrastructure affect utility
revenue requirements, which in turn affect electricity prices. DOE estimated the impact
on electricity prices associated with each considered TSL. Although the aggregate
benefits for electricity users are potentially large, there may be negative effects on some
of the actors involved in the supply of electricity, particularly power plant providers and
fuel suppliers. Because there is uncertainty about the extent to which the benefits for
electricity users from reduced electricity prices would be a transfer from actors involved
in electricity supply to electricity consumers, DOE has concluded that, at present,
because of this uncertainty, it should not give a heavy weight to this factor in its
consideration of the economic justification of new or amended standards. DOE is
continuing to investigate the extent to which electricity price changes projected to result
from standards represent a net gain to society.

H. Consumer Subgroup Analysis
In analyzing the potential impact of new or amended standards on consumers,
DOE evaluates the impact on identifiable sub-groups of consumers that may be
disproportionately affected by a national standard. DOE evaluates impacts on particular
sub-groups of consumers primarily by analyzing the LCC impacts and PBP for those

150parti cular consumers from alternative standard levels. For both the NOPR and today’s
final rule, DOE analyzed the impacts of the considered standard levels on low-income
consumers and senior citizens. DOE did not estimate the impacts for compact
refrigeration products because the household sample sizes were not large enough to yield
meaningful results. For further details on DOE’s consumer sub -group analysis, see
Chapter 11 in the final rule TSD.

I. Manufacturer Impact Analysis
DOE conducted the MIA to estimate the financial impact of amended energy
conservation standards on manufacturers of residential refrigeration products, and to
assess the impacts of such standards on employment and manufacturing capacity.

The MIA is both a quantitative and qualitative analysis. The quantitative part of
the MIA relies on the Government Regulatory Impact Model (GRIM), an industry cashflow model customized for the residential refrigeration products covered in this
rulemaking. The key MIA output is industry net present value (INPV). DOE used the
GRIM to calculate cash flows using standard accounting principles and to compare
changes in INPV between a base case and various TSLs (the standards cases). The
difference in INPV between the base and standards cases represents the financial impact
of the amended standard on manufacturers. Different sets of assumptions (scenarios)
produce different results. DOE reports the MIA impacts of amended energy conservation
standards by grouping together the impacts on manufacturers of certain product classes.
DOE presents the industry impacts by the major product types ( i.e. , standard size

151refrigerator-freezers, standard size freezers, compact refrigerators and freezers, and builtin refrigeration products). These product groupings represent markets that are served by
the same manufacturers. By segmenting the results into these product types, DOE is able
to discuss how these subgroups of manufacturers will be impacted by amended energy

conservation standards.

The qualitative part of the MIA addresses factors such as product characteristics,
characteristics of particular firms, and market trends. The qualitative discussion also
includes an assessment of the impacts of standards on subgroups of manufacturers. DOE
outlined its complete methodology for the MIA in the NOPR. 75 FR at 59519- 595 26
(September 27, 2010). The complete MIA is presented in chapter 12 of the NOPR and

final rule TSD.

1. Comments from Interested Parties
DOE received a number of comments from interested parties in response to the
NOPR. Sub Zero commented that while it is not a small business, it is a small refrigerator
manufacturer compared to its competition. It argued that its smaller size places it at a disadvantage compared to larger competitors with respect to the supply chain for
compressors, which could cause Sub Zero to experience supply disruptions that would
seriously impact their business and ability to compete. (Sub Zero, No. 69 at p. 3) Sub
Zero added that its cost and distribution structures are different from the majority of the
industry, and its small scale results in higher costs per unit production, including
engineering related expenses. (Sub Zero, No. 69 at p. 2) Sub Zero commented that the

152new standards on smaller manufacturers in any segment of the appliance industry
introduce costs and personnel requirements that represent a larger percentage of resources
than those required by larger competitors. (Sub Zero, No. 69 at p. 3) Whirlpool simply

stated that it was not a small business and offered no comment on the proposal’s impact
on small manufacturers. (Whirlpool, No. 74 at p 6)

DOE agrees that a smaller manufacturer could face all of the additional challenges
raised by Sub Zero relative to a larger competitor. DOE also notes that while many larger
refrigerator manufacturers also produce built-in units and could experience some benefits
in the built-in market from their overall scale, built-in production volumes for any
manufacturer are likely to be much lower for built-in products than free- st anding
products. While a smaller manufacturer could face all the challenges listed by Sub Zero,
DOE believes that the separate analysis and presentation of results for built-in products
adequately addresses Sub Zero’s concerns about the potential impacts o n built-in
manufacturers. DOE continues to believe that presenting the built-in analysis results
separately from other categories is the most appropriate way to analyze the lower
production volumes and different cost structure for built-in manufacturing.

In the NOPR, DOE investigated whether small business manufacturers should be
analyzed as a manufacturer subgroup. 75 FR at 59520, 59548 (September 27, 2010). As
part of this effort, DOE identified one company that manufactures products covered by
this rulemaking and qualifies as a small business under the applicable Small Business

153Administration (SBA) definition. 36 DOE did not analyze a separate subgroup of small
business manufacturers in the NOPR because it determined this rulemaking would not
have a significant economic impact on a substantial number of small entities. Id. at

59571

- 595 72. DOE requested comment on this determination and sought any information
concerning small businesses that could be impacted by this rulemaking as well as the
nature and extent of those potential impacts of the proposed energy conservation
standards on small residential refrigeration product manufacturers. Id. at 59572 and
59575. DOE received no information regarding these issues. DOE received comments
from Whirlpool and Sub Zero that supported its initial classification of the number of
small business manufacturers of residential refrigeration products. (Whirlpool No. 74, at
p.6; Sub Zero, No. 69 at p. 3) Therefore, the final rule continues to refrain from treating
small business manufacturers as a manufacturer subgroup but also maintains the separate
analysis and presentation of results for built-in products.

Sub Zero also commented that the proposed standards would have implications
for their company. At the proposed built-in standard levels, it asserted that the company
will be pressed to meet the necessary efficiency levels, remain a viable business, and
achieve profitability. Sub Zero also argued that the new standards could also impact the
number of products that meet high visibility programs such as ENERGY STAR and
indicated that these challenges are in addition to attempting to recover from a difficult
business environment. Sub Zero added that different regulations in other areas of the
world, notably Canada and Europe, that involve more than energy and are not

36 See http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf for a list of SBA size standards.

154harmonized with U.S. requirements, pose significant challenges and noted that this
regulatory burden is the biggest challenge for the future. (Sub Zero, No. 69 at p. 3) Sub
Zero agreed that DOE’s analysis presen ted in the NOPR confirms that new standards will
impact built-in designs more stringently than conventional free-standing products to meet
any given efficiency level. Sub Zero stated it was also concerned that built-ins be
separated as distinct product classes with different efficiency levels from conventional
product classes, in order to continue to offer consumers the utility they desire at
reasonable added costs. (Sub Zero, No . 69 at p. 1-2)

DOE agrees that manufacturers such as Sub Zero face challenges. For example,
because Sub Zero holds a large market share of the premium, built-in market, DOE
expects that a significant portion of the $65 million in product conversion costs and $55
million in capital conversion costs calculated for built-in product classes will be borne by
Sub Zero. However, DOE believes that the INPV impacts calculated in the MIA analyze
the potential impacts on built-in manufacturers due to amended energy conservation
standards. This adjustment, along with providing separate product classes for built-in
products to help preserve the utility that these products offer
, will help mitigate the
potential adverse financial impact that would result from this rule.

DOE also received a number of comments about possible refrigerant and blowing
agent changes. Whirlpool, GE, and AHAM all noted possible changes to the regulatory
landscape for the refrigerants available in residential refrigeration products. (Whirlpool,
No. 74 at p. 4; GE, No. 76 at p. 2; AHAM, No. 73 at pp. 7-8) Sub Zero also highlighted

155the current uncertainty about potential future regulation of HFC refrigerants and blowing

agents. It suggested that the industry could potentially be faced with enforced conversion

to other substances by 2014, which would require significant additional capital
investment. (Sub Zero, No. 69 at p. 4)

These comments are addressed above in section IV.B.1. Because these comments
also relate to the cumulative regulatory burden, DOE reiterates that it concluded
isobutane products may soon become available. However, DOE did not consider the
switch to isobutane refrigerant as a design option to reduce energy use because sufficient
information regarding the energy savings characteristics and the costs of the new designs
was not available. DOE did not consider the possible capital investment needed by
conversions to other substances by 2014 because DOE believes that basing energy
conservation standards on the uncertain prospect of pending regulations or legislation
would be speculative.

2. GRIM Key Inputs
The GRIM inputs are data characterizing the industry cost structure, investments,
shipments, and markups. DOE updates the MIA to reflect changes in the outputs of two
other key DOE analyses that feed into the GRIM: the engineering analysis and the NIA.
For the final rule, DOE did not receive any relevant comments that would necessitate
such changes to the engineering analysis. Similarly, DOE did not receive comments from
interested parties that would change assumptions or shipments in the NIA. DOE did not
request specific comment on the inputs to the MIA in the NOPR and is maintaining the
same methodology for the final rule.

156For the final rule, DOE incorporated trends in prices over time into the analysis.

T he se prices trends in every year also impact the MIA results. DOE used the same price

trends in the NIA from the base year of the analysis through the end of the analysis
period. DOE also assumed that manufacturer product costs (MPCs) and MSPs were
similarly impacted by the price trends in both the base case and standards cases. See
section IV.F.1 for a description of how DOE implemented price trends into the analysis. Deleted: learning

Deleted: learning rates

Deleted: learning rates

Deleted: learning rates Comment [A44]: Changes recommended by OIRA. The other major GRIM assumptions and inputs that are not part of the engineering
analysis or NIA are outlined below.

a. Product and Capital Conversion Costs
Amended energy conservation standards will cause manufacturers to incur onetime conversion costs to bring their production facilities and product designs into
compliance. For the MIA, DOE classified these one-time conversion costs into two major
groups: (1) product conversion costs and (2) capital conversion costs. Product conversion
costs are one-time investments in research, development, testing, marketing, and other
non-capitalized costs focused on making product designs comply with the amended
energy conservation standard. Capital conversion costs are one-time investments in
property, plant, and equipment to adapt or change existing production facilities so that
new product designs can be fabricated and assembled.

DOE based its estimates of the product conversion costs that would be required to
meet each TSL on information obtained from manufacturer interviews, the design

157pathways analyzed in the engineering analysis, and market information about the number
of platform and product families for each manufacturer. DOE based its capital conversion
cost estimates on manufacturer interviews and assumptions from the engineering
analysis. 75 FR at 59521 (September 27, 2010). DOE’s estimates of the product and
capital conversion costs for all of the refrigeration products addressed in this rulemaking

can be found in section VI.B.2 , of today’s final rule and in chapter 12 of the final rule

TSD.

b. Markup Scenarios
For the MIA, DOE modeled two standards-case markup scenarios to represent the
uncertainty regarding the potential impacts on prices and profitability for manufacturers
following the implementation of amended energy conservation standards: (1) a flat
markup scenario, and (2) a preservation of operation profit scenario. These scenarios lead
to different markup values, which, when applied to the inputted MPCs, result in varying
revenue and cash flow impacts.

The flat markup scenario assumes that the cost of goods sold for each product is
marked up by a flat percentage to cover standard SG&A expenses, R&D expenses, and
profit. This scenario represents the upper bound of industry profitability in the standards
case because manufacturers are able to fully pass through to their customers the
additional costs due to compliance with applicable standards. DOE also modeled the
preservation of operating profit markup scenario. In this scenario, the manufacturer
markups are lowered such that, in the standards case, manufacturers are only able to

158maintain the base-case total operating profit in absolute dollars, despite higher product
costs and investment. DOE implemented this scenario in GRIM by lowering the
manufacturer markups at each TSL to yield approximately the same earnings before
interest and taxes in the standards case in the year after the compliance date of the
amended standards as in the base case. This scenario represents the lower bound of
industry profitability following amended energy conservation standards because higher
MPCs and the investments required to comply with the amended energy conservation
standard do not yield additional operating profit. 75 FR at 59522 (September 27, 2010).

3. Manufacturer Interviews
DOE interviewed manufacturers representing more than 95 percent of standardsize refrigerator-freezer sales, approximately 95 percent of standard-size freezer sales,
about 75 percent of compact refrigerator and freezer sales, and more than 95 percent of
built-in refrigeration products. These interviews were in addition to those DOE conducted
as part of the engineering analysis. DOE outlined the key issues in the rulemaking for

manufacturers in the NOPR. 75 FR at 59524- 595 26 (September 27, 2010).

J. Employment Impact Analysis
DOE considers employment impacts in the domestic economy as one factor in
selecting an amended standard. Employment impacts consist of direct and indirect
impacts. Direct employment impacts are any changes in the number of employees of
manufacturers of the appliance products that are the subject of this rulemaking, their
suppliers, and related service firms. Indirect employment impacts are changes in national

159employment that occur due to the shift in expenditures and capital investment caused by
the purchase and operation of more-efficient appliances. The MIA addresses the direct
employment impacts that concern manufacturers of refrigeration products. The
employment impact analysis addresses the indirect employment impacts.

Indirect employment impacts from standards consist of the net jobs created or
eliminated in the national economy, other than in the manufacturing sector being
regulated, due to: (1) reduced spending by end users on energy; (2) reduced spending on
new energy supplies by the utility industry; (3) increased spending on new products to
which the new standards apply; and (4) the effects of those three factors throughout the
economy. DOE expects the net monetary savings from standards to be redirected to other
forms of economic activity. DOE also expects these shifts in spending and economic
activity to affect the demand for labor in the short term, as explained below.

One method for assessing the possible effects on the demand for labor of such
shifts in economic activity is to compare sectoral employment statistics developed by the
Labor Department’s Bureau of Labor Statistics (BLS). 37 The BLS regularly publishes its
estimates of the number of jobs per million dollars of economic activity in different
sectors of the economy, as well as the jobs created elsewhere in the economy by this
same economic activity. Data from BLS indicate that expenditures in the utility sector
generally create fewer jobs (both directly and indirectly) than expenditures in other

37 Data on industry employment, hours, labor compensation, value of production, and the implicit price deflator for output for these industries are available upon request by calling the Division of Industry Productivity Studies (202- 691 -5618) or by sending a request by e-mail to dipsweb@bls.gov. Available at: http://www.bls.gov/news.release/prin1.nr0.htm

.

160sectors of the economy. There are many reasons for these differences, including wage
differences and the fact that the utility sector is more capital intensive and less labor

intensive than other sectors. 38

Energy conservation standards have the effect of reducing consumer utility bills.
Because reduced consumer expenditures for energy likely lead to increased expenditures
in other sectors of the economy, the general effect of efficiency standards is to shift
economic activity from a less labor-intensive sector ( i.e. , the utility sector) to more laborintensive sectors ( e.g. , the retail and service sectors). Thus, based on the BLS data alone,
DOE believes net national employment will increase due to shifts in economic activity
resulting from amended standards for refrigeration products.

For the standards considered in today’s final rule, DOE estimated indirect national
employment impacts using an input/output model of the U.S. economy called Impact of

Se ctor Energy Technologies (ImSET). ImSET is a spreadsheet model of the U.S.
economy that focuses on 187 sectors most relevant to industrial, commercial, and
residential building energy use. 39 ImSET is a special purpose version of the “U.S.
Benchmark National Input- Output” (I– O) model, which has been designed to estimate the
national employment and income effects of energy-saving technologies. The ImSET
software includes a computer-based I

– O model with structural coefficients to characterize

economic flows amo ng the 187 sectors. ImSET’s national economic I– O structure is

38 See Bureau of Economic Analysis, Regional Multipliers: A User Handbook for the Regional InputOutput Modeling System (RIMS II) . Washington, DC. U.S. Department of Commerce, 1992. 39 J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, PNNL184 12, Pacific Northwest National Laboratory, 2009. Available at: http://www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf

161based on a 2002 U.S. benchmark table, specially aggregated to the 187 sectors. DOE
estimated changes in expenditures using the NIA spreadsheet. Using ImSET, DOE then
estimated the net national, indirect employment impacts by sector of potential amended
efficiency standards for refrigeration products.

For more details on the employment impact analysis, see the final rule TSD,
chapter 13.

K. Utility Impact Analysis
The utility impact analysis estimates several important effects on the utility
industry that would result from the adoption of new or amended standards. For both the
NOPR final rule analyses, DOE used the NEMS-BT model to generate forecasts of
electricity consumption, electricity generation by plant type, and electric generating
capacity by plant type, that would result from each TSL. DOE obtained the energy
savings inputs associated with efficiency improvements to considered products from the
NIA. DOE conducts the utility impact analysis as a scenario that departs from the latest

AEO2010 Reference case. In other words, the estimated impacts of an amended standard
are the differences between values forecasted by NEMS

– BT and the values in the

AEO2010 Reference case.

As part of the utility impact analysis, DOE used NEMS-BT to assess the impacts

on electricity prices of the reduced need for new electric power plants and
infrastructure projected to result from the considered standards. In NEMS-BT,

162changes in power generation infrastructure affect utility revenue requirements,
which in turn affect electricity prices. DOE estimated the change in electricity prices
projected to result over time from each TSL.

Chapter 14 of the final rule TSD presents more information on the utility impact
analysis.

L. Environmental Assessment
Pursuant to the National Environmental Policy Act and the requirements of 42

U.S.C. 6295(o)(2)(B)(i)(VI), DOE has prepared an environmental assessment (EA) of the
impacts of the standards for refrigeration products in today’s final rule, which it has
included as chapter 15 of the TSD. DOE found that the environmental effects associated
with the standards for refrigeration products were not significant. Therefore, DOE is
issuing a Finding of No Significant Impact (FONSI), pursuant to NEPA, the regulations
of the Council on Environmental Quality (40 CFR parts 1500 –1508), and DOE’s
regulations for compliance with NEPA (10 CFR part 1021). The FONSI is available in
the docket for this rulemaking.

In the EA, DOE estimated the reduction in power sector emissions of CO 2 , NO X , and Hg using the NEMS

– BT computer model. In the EA, NEMS

– BT is run similarly to
the AEO NEMS, except that refrigeration product energy use is reduced by the amount of
energy saved (by fuel type) due to each TSL. The inputs of national energy savings come
from the NIA spreadsheet model, while the output is the forecasted physical emissions.

The net benefit of each TSL in today’s final rule is the difference between the forecasted

163emissions estimated by NEMS

– BT at each TSL and the AEO 2010 Reference Case.

NEMS

– BT tracks CO 2 emissions using a detailed module that provides results with broad
coverage of all sectors and inclusion of interactive effects.

DOE has determined that SO 2 emissions from affected fossil fuel fired
combustion devices (also known as Electric Generating Units (EGUs)) are subject to
nationwide and regional emissions cap and trading programs that create uncertainty about
the standards’ impact on SO 2 emissions. Title IV of the Clean Air Act, 42 U.S.C. 7401­
7671q, sets an annual emissions cap on SO 2 for affected EGUs in the 48 contiguous states
and the District of Columbia (D.C.). SO 2 emissions from 28 eastern states and D.C. are
also limited under the Clean Air Interstate Rule (CAIR, 70 F.R. 25162 (May 12, 2005)),
which created an allowance-based trading program. Although CAIR has been remanded
to EPA by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit),

see North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008), it remains in effect
temporarily, consistent with the D.C. Circuit’s earlier opinion in North Carolina v. EPA
, 531 F.3d 896 (D.C. Cir. 2008). On August 2, 2010, EPA issued the Transport Rule
proposal, a replacement for CAIR, which would limit emissions from EGUs in 32 states,
and may allow some amount of interstate trading

. 75 FR 45210 . EPA issued the final
transport rule, entitled the Cross-State Air Pollution Rule, on July 6, 2011. 40 See
http://www.epa.gov/crossstaterule/

.

40 DOE notes that future iterations of the NEMS-BT model will incorporate any changes necessitated by issuance of the Cross-State Air Pollution Rule. Deleted: potentially through the Deleted: of allowances, among other options.

Deleted: (Aug. 2, 2010).

164The attainment of emissions caps is typically flexible among EGUs and is
enforced through the use of emissions allowances and tradable permits. Under existing
EPA regulations, any excess SO 2 emissions allowances resulting from the lower
electricity demand caused by the imposition of an efficiency standard could be used to
permit offsetting increases in SO 2 emissions by any regulated EGU. However, if the
standard resulted in a permanent increase in the quantity of unused emissions allowances,

there would be an overall reduction in SO 2 emissions from the standards. While there
remains some uncertainty about the ultimate effects of efficiency standards on SO 2 emissions covered by the existing cap and trade system, the NEMS-BT modeling system
that DOE uses to forecast emissions reductions currently indicates that no physical
reductions in power sector emissions would occur for SO 2 . Because the Transport Rule
has not been finalized, there is no way to predict the effect of this rulemaking on SO2
emissions after the Transport Rule goes into effect.

A cap on NO X emissions, affecting electric generating units in the CAIR region,
means that standards on refrigeration products may have little or no physical effect on

NO X emissions in the 28 eastern States and the District of Columbia covered by CAIR

. Again, as noted above, because the Transport Rule has not been finalized, there is no way
to predict the effect of this rulemaking on NOx emissions after the Transport Rule goes

into effect

. Deleted: and under the Transport Rule if it is finalized,

Deleted: or any states covered by

Deleted: proposed Deleted: if Deleted: is finalized

165Today’s standards would, however, reduce NO X emissions in those 22 States not
affected by the CAIR. As a result, DOE used NEMS

– BT to forecast emission reductions
from the standards that are considered in today’s final rule.

Similar to emissions of SO 2 and NO X , future emissions of Hg would have been
subject to emissions caps. In May 2005, EPA issued the Clean Air Mercury Rule
(CAMR). 70 FR 28606 (May 18, 2005). CAMR would have permanently capped
emissions of mercury for new and existing coal-fired power plants in all States by 2010.
However, on February 8, 2008, the D.C. Circuit issued a decision in New Jersey v.
Environmental Protection Agency , in which it vacated CAMR. 517 F.3d 574 (D.C. Cir.
2008). EPA has decided to develop emissions standards for power plants under the Clean
Air Act (Section 112), consistent with the D.C. Circuit’s opinion on CAMR. See
http://www.epa.gov/air/mercuryrule/pdfs/certpetition_withdrawal.pdf . Pending EPA's
forthcoming revisions to the rule, DOE is excluding CAMR from its Environmental
Analysis. In the absence of CAMR, a DOE standard would likely reduce Hg emissions
and DOE plans to use NEMS-BT to estimate these emission reductions. However, DOE
continues to review the impact of rules that reduce energy consumption on Hg emissions,
and may revise its assessment of Hg emission reductions in future rulemakings.

M. Monetizing Carbon Dioxide and Other Emissions Impacts
As part of the development of this final rule, DOE considered the estimated
monetary benefits likely to result from the reduced emissions of CO 2 and NO X that are
expected to result from each of the TSLs considered. In order to make this calculation

166similar to the calculation of the NPV of consumer benefit, DOE considered the reduced
emissions expected to result over the lifetime of products shipped in the forecast period
for each TSL. This section summarizes the basis for the monetary values used for each of
these emissions and presents the benefits estimates considered.

For today’s final rule, DOE is relying on a set of values for the social cost of
carbon (SCC) that were developed by an interagency process. A summary of the basis for
these new values is provided below, and a more detailed description of the methodologies
used is provided in appendix 16-A of the final rule TSD.

1. Social Cost of Carbon
Under Executive Order 12866, agencies must, to the extent permitted by law,
“assess both the costs and the benefits of the intended regulati on and, recognizing that
some costs and benefits are difficult to quantify, propose or adopt a regulation only upon
a reasoned determination that the benefits of the intended regulation justify its costs.” The
purpose of the SCC estimates presented here is to allow agencies to incorporate the
monetized social benefits of reducing CO 2 emissions into cost-benefit analyses of
regulatory actions that have small, or “marginal,” impacts on cumulative global
emissions. The estimates are presented with an acknowledgement of the many
uncertainties involved and with a clear understanding that they should be updated over
time to reflect increasing knowledge of the science and economics of climate impacts.

167As part of the interagency process that developed these SCC estimates, technical
experts from numerous agencies met on a regular basis to consider public comments,
explore the technical literature in relevant fields, and discuss key model inputs and
assumptions. The main objective of this process was to develop a range of SCC values
using a defensible set of input assumptions grounded in the existing scientific and
economic literatures. In this way, key uncertainties and model differences transparently
and consistently inform the range of SCC estimates used in the rulemaking process.

a. Monetizing Carbon Dioxide Emissions
The SCC is an estimate of the monetized damages associated with an incremental
increase in carbon emissions in a given year. It is intended to include (but is not limited
to) changes in net agricultural productivity, human health, property damages from
increased flood risk, and the value of ecosystem services. Estimates of the social cost of
carbon are provided in dollars per metric ton of carbon dioxide.

When attempting to assess the incremental economic impacts of carbon dioxide
emissions, the analyst faces a number of serious challenges. A recent report from the

National Research Council 41 points out that any assessment will suffer from uncertainty,
speculation, and lack of information about (1) future emissions of greenhouse gases, (2)
the effects of past and future emissions on the climate system, (3) the impact of changes
in climate on the physical and biological environment, and (4) the translation of these
environmental impacts into economic damages. As a result, any effort to quantify and

41 National Research Council. Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use . National Academies Press: Washington, DC. 2009.

168monetize the harms associated with climate change will raise serious questions of
science, economics, and ethics and should be viewed as provisional.

Despite the serious limits of both quantification and monetization, SCC estimates
can be useful in estimating the social benefits of reducing carbon dioxide emissions.
Consistent with the directive quoted above, the purpose of the SCC estimates presented
here is to make it possible for agencies to incorporate the social benefits from reducing
carbon dioxide emissions into cost-benefit analyses of regulatory actions that have small,
or “marginal,” impacts on cumulative global emissions. Most Federal regulatory actions
can be expected to have marginal impacts on global emissions.

For such policies, the agency can estimate the benefits from reduced (or costs
from increased) emissions in any future year by multiplying the change in emissions in
that year by the SCC value appropriate for that year. The net present value of the benefits
can then be calculated by multiplying each of these future benefits by an appropriate
discount factor and summing across all affected years. This approach assumes that the
marginal damages from increased emissions are constant for small departures from the
baseline emissions path, an approximation that is reasonable for policies that have effects
on emissions that are small relative to cumulative global carbon dioxide emissions. For
policies that have a large (non-marginal) impact on global cumulative emissions, there is
a separate question of whether the SCC is an appropriate tool for calculating the benefits
of reduced emissions. DOE does not attempt to answer that question here.

169At the time of the preparation of the notice, the most recent interagency estimates
of the potential global benefits resulting from reduced CO 2 emissions in 2010, expressed
in 2009$, were $4.9, $22.1, $36.3, and $67.1 per metric ton avoided. For emission
reductions that occur in later years, these values grow in real terms over time.
Additionally, the interagency group determined that a range of values from 7 percent to
23 percent should be used to adjust the global SCC to calculate domestic effects, 42
although preference is given to consideration of the global benefits of reducing CO 2
emissions.

It is important to emphasize that the interagency process is committed to updating
these estimates as the science and economic understanding of climate change and its
impacts on society improves over time. Specifically, the interagency group has set a
preliminary goal of revisiting the SCC values within two years or at such time as
substantially updated models become available, and to continue to support research in
this area. In the meantime, the interagency group will continue to explore the issues
raised by this analysis and consider public comments as part of the ongoing interagency

process.

b. Social Cost of Carbon Values Used in Past Regulatory Analyses
To date, economic analyses for Federal regulations have used a wide range of
values to estimate the benefits associated with reducing carbon dioxide emissions. In the
final model year 2011 CAFE rule, the Department of Transportation (DOT) used both a

42 It is recognized that this calculation for domestic values is approximate, provisional, and highly speculative. There is no a priori reason why domestic benefits should be a constant fraction of net global damages over time.

170“domestic” SCC value of $2 per ton of CO 2 and a “global” SCC value of $33 per ton of

CO 2 for 2007 emission reductions (in 2007 dollars), increasing both values at 2.4 percent

per year. 43 See Average Fuel Economy Standards Passenger Cars and Light Trucks

Model Year 2011 , 74 FR 14196 (March 30, 2009); Final Environmental Impact Statement
Corporate Average Fuel Economy Standards, Passenger Cars and Light Trucks, Model
Years 2011-2015 at 3-90 (Oct. 2008) (Available at: http://www.nhtsa.gov/fuel-economy ).
It also included a sensitivity analysis at $80 per ton of CO 2 . A domestic SCC value is
meant to reflect the value of damages in the United States resulting from a unit change in
carbon dioxide emissions, while a global SCC value is meant to reflect the value of
damages worldwide.

A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per ton

of CO 2 (in 2006 dollars) for 2011 emission reductions (with a range of $0-$14 for
sensitivity analysis), also increasing at 2.4 percent per year. See Average Fuel Economy
Standards, Passenger Cars and Light Trucks, Model Years 2011- 2015 , 73 FR 24352
(May 2, 2008); Draft Environmental Impact Statement Corporate Average Fuel Economy
Standards, Passenger Cars and Light Trucks, Model Years 2011-2015 at 3-58 (June 2008)
(Available at: http://www.nhtsa.gov/fuel-economy ). A regulation for packaged terminal
air conditioners and packaged terminal heat pumps finalized by DOE in October of 2008
used a domestic SCC range of $0 to $20 per ton CO 2 for 2007 emission reductions (in
2007 dollars). 73 FR 58772, 58814 (Oct. 7, 2008) In addition, EPA’s 2008 Advance
Notice of Proposed Rulemaking for Greenhouse Gases identified what it described as
“very preliminary” SCC estimates sub ject to revision. See Regulating Greenhouse Gas

43 Values per ton of CO 2 given in this section refer to metric tons.

171Emissions Under the Clean Air Act , 73 FR 44354 (July 30, 2008). EPA’s global mean
values were $68 and $40 per ton CO 2 for discount rates of approximately 2 percent and 3
percent, respectively (in 2006 dollars for 2007 emissions).

In 2009, an interagency process was initiated to offer a preliminary assessment of
how best to quantify the benefits from reducing carbon dioxide emissions. To ensure
consistency in how benefits are evaluated across agencies, the Administration sought to
develop a transparent and defensible method, specifically designed for the rulemaking
process, to quantify avoided climate change damages from reduced CO 2 emissions. The
interagency group did not undertake any original analysis. Instead, it combined SCC
estimates from the existing literature to use as interim values until a more comprehensive
analysis could be conducted. The outcome of the preliminary assessment by the
interagency group was a set of five interim values: global SCC estimates for 2007 (in
2006 dollars) of $55, $33, $19, $10, and $5 per ton of CO 2 .

These interim values represent the first sustained interagency effort within the

U.S. government to develop an SCC for use in regulatory analysis. The results of this
preliminary effort were presented in several proposed and final rules and were offered for
public comment in connection with proposed rules, including the joint EPA-DOT fuel
economy and CO 2 tailpipe emission proposed rules. See CAFE Rule for Passenger Cars
and Light Trucks Draft EIS and Final EIS, cited above.

172c. Current Approach and Key Assumptions
Since the release of the interim values, the interagency group reconvened on a
regular basis to generate improved SCC estimates considered for this amended rule

. Specifically, the group considered public comments and further explored the technical

literature in relevant fields.

The interagency group relied on three integrated assessment models (IAMs)
commonly used to estimate the SCC: the FUND, DICE, and PAGE models. 44 These
models are frequently cited in the peer-reviewed literature and were used in the last
assessment of the Intergovernmental Panel on Climate Change. Each model was given
equal weight in the SCC values that were developed.

Each model takes a slightly different approach to model how changes in
emissions result in changes in economic damages. A key objective of the interagency
process was to enable a consistent exploration of the three models while respecting the
different approaches to quantifying damages taken by the key modelers in the field. An
extensive review of the literature was conducted to select three sets of input parameters
for these models: climate sensitivity, socio-economic and emissions trajectories, and
discount rates. A probability distribution for climate sensitivity was specified as an input
into all three models. In addition, the interagency group used a range of scenarios for the
socio-economic parameters and a range of values for the discount rate. All other model

features were left unchanged, relying on the model developers’ best estimates and
judgments.

44 The models are described in appendix 16-A of the final rule TSD.

173The interagency group selected four SCC values for use in regulatory analyses.
Three values are based on the average SCC from the three IAMs, at discount rates of 2.5,

3, and 5 percent. The fourth value, which represents the 95th percentile SCC estimate
across all three models at a 3 percent discount rate, is included to represent higher-thanexpected impacts from temperature change further out in the tails of the SCC distribution.
For emissions (or emission reductions) that occur in later years, the SCC values grow in
real terms over time, as depicted in Table IV.7.

Table IV .7 SCC Values from Interagency Process, 2010

– 2050 (2007 dollars per metric ton) Discount Rate 5% Avg 3% 2.5% Avg Avg 3% 95th 2010 2015 2020 2025 2030 2035 2040 2045 2050 4.7 5.7 6.8 8.2 9.7 11.2 12.7 14.2 15.7 21.4 23.8 26.3 29.6 32.8 36.0 39.2 42.1 44.9 35.1 38.4 41.7 45.9 50.0 54.2 58.4 61.7 65.0 64.9 72.8 80.7 90.4 100.0 109.7 119.3 127.8 136.2

It is important to recognize that a number of key uncertainties remain, and that
current SCC estimates should be treated as provisional and revisable since they will
evolve with improved scientific and economic understanding. The interagency group also
recognizes that the existing models are imperfect and incomplete. The National Research

174Council report mentioned above points out that there is tension between the goal of
producing quantified estimates of the economic damages from an incremental ton of
carbon and the limits of existing efforts to model these effects. There are a number of
concerns and problems that should be addressed by the research community, including
research programs housed in many of the agencies participating in the interagency
process to estimate the SCC.

The U.S. Government intends to periodically review and reconsider estimates of
the SCC used for cost-benefit analyses to reflect increasing knowledge of the science and
economics of climate impacts, as well as improvements in modeling. In this context,
statements recognizing the limitations of the analysis and calling for further research take
on exceptional significance. The interagency group offers the new SCC values with all
due humility about the uncertainties embedded in them and with a sincere promise to
continue work to improve them.

In summary, in considering the potential global benefits resulting from reduced

CO 2 emissions, DOE used the most recent values identified by the interagency process,
adjusted to 2009$ using the GDP price deflator values for 2008 and 2009. For each of the
four cases specified, the values used for emissions in 2010 were $4.9, $22.1, $36.3, and
$67.1 per metric ton avoided (values expressed in 2009$). To monetize the CO 2 emissions reductions expected to result from amended standards for refrigeration
products in 2014 –2043, DOE used the values identified in Table A1 of the “Social Cost
of Carbon for Regulatory Impact Analysis Under Executive Order 12866,” which is

175reprinted in appendix 15-A of the final rule TSD, appropriately escalated to 2009$. 45 To
calculate a present value of the stream of monetary values, DOE discounted the values in
each of the four cases using the specific discount rate that had been used to obtain the

SCC values in each case.

2. Valuation of Other Emissions Reductions

DOE investigated the potential monetary benefit of reduced NO X emissions from
the TSLs it considered. As noted above, new or amended energy conservation standards

would reduce NO X emissions in those 22 States that are not affected by the CAIR. DOE

estimated the monetized value of NO X emissions reductions resulting from each of the
TSLs considered for today’s NOPR based on environmental damage estimates from the
literature. Available estimates suggest a very wide range of monetary values, ranging
from $370 per ton to $3,800 per ton of NO X from stationary sources, measured in 2001$
(equivalent to a range of $447 to $4,591 per ton in 2009$). 46 In accordance with OMB
guidance, DOE conducted two calculations of the monetary benefits derived using each

of the economic values used for NO X , one using a real discount rate of 3 percent and
another using a real discount rate of 7 percent. 47

DOE is aware of multiple agency efforts to determine the appropriate range of
values used in evaluating the potential economic benefits of reduced Hg emissions. DOE

45 Table A1 presents SCC values through 2050. For DOE’s calculation, it derived values after 2050 using the 3-percent per year escalation rate used by the interagency group.

46 For additional information, refer to U.S. Office of Management and Budget, Office of Information and Regulatory Affairs, ‘‘2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities,’’ Washington, DC. 47 OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).

176has decided to await further guidance regarding consistent valuation and reporting of Hg
emissions before it once again monetizes Hg in its rulemakings.

V. Discussion of Other Comments

The following section discusses comments received by DOE related to other
issues. In general, these issues involved subjects that generally fell outside of the

framework described in detail above.

A. Demand Response
This section discusses comments received regarding demand response or smart
grid controls. These are controls that can react to signals from utilities or other external
organizations and alter the product’s operation. This capability might be used to allow
utilities to reduce energy use during peak demand hours by reducing the power input of
many connected appliances.

DOE received comments on this topic during the preliminary analysis phase from
LG, the U.S. Navy, and the IOUs. (LG, No. 44 at p. 5; USN, No. 35 at p. 2; IOUs, No. 39
at p. 13). DOE explained in the NOPR that it did not consider a demand response feature,
in part because of the uncertainty of overall benefits and the limitations of the legal
framework under which DOE would be able to pursue such a design requirement
approach. 75 FR at 59530 (September 27, 2010)

.

AHAM disagreed with DOE’s conclusion that demand response would not
contribute significantly to energy use. (AHAM, No. 73 at p. 9) However, AHAM’s

177comments did not provide any information quantifying the potential energy savings
associated with implementation of demand response in refrigeration products. The
highlighted conclusions of the Electric Power Research Institute study cited by AHAM
do not even explicitly indicate that refrigeration product demand response contributed to
energy savings. (Id.) AHAM further indicates that demand response applied to appliances
including refrigeration products would help to enable use of renewable energy sources.
(AHAM, No. 73 at pp. 9-10)

DOE notes that this rulemaking involves the amending of an energy conservation
standard for refrigeration products. The term “energy conservation standard” is defined
as either a performance standard that prescribes a minimum level of energy efficiency or
maximum amount of energy use or a design standard for certain specified products. As
DOE stated previously, creating a design standard as an energy conservation standard is
limited to specific enumerated consumer products under 42 U.S.C. 6291(6). See 75 FR at
59530 (September 27, 2010). Since setting a demand response feature requirement
would be the same as setting a design standard, DOE must look to those products for
which it has the authority to set design standards. As DOE also pointed out, refrigeration
products are not within this list. Commenters made no effort to challenge the validity of
this view, citing instead to policy-related initiatives that highlighted the potential benefits
associated with smart grid approaches. While the issues cited by commenters are clearly
important issues, they do not obviate the requirement that DOE act within the boundaries

178of its authority within the context of this rulemaking. Accordingly, DOE did not
incorporate a demand response feature requirement as part of today’s final rule. 48

B. Energy Standard Round-off
The NOPR discussed the adoption of a round-off when reporting energy test
results. This approach, explained in greater detail in the test procedure NOPR, would
require manufacturers to report the measured energy consumption to the nearest
kWh/year based on consideration of achievable measurement accuracy. 75 FR at 29849
(May 27, 2010). The energy standard NOPR explained that similar round-off was
necessary to avoid meaningless indications of non-compliance. DOE also requested
comment on the implementation of energy standard round-off. 75 FR at 59570
(September 27, 2010).

AHAM supported using a round-off when calculating the energy standard using
the energy standard equations for refrigeration products. (AHAM, Public Meeting
Transcript, No. 67 at p. 94; AHAM, No. 73 at p. 10) Whirlpool concurred with this
approach. (Whirlpool, No. 74 at p. 6) No commenter objected to the round-off approach.

DOE has implemented the energy use round-off approach as part of the test
procedure final rule. As a result
, manufacturers must follow this approach when reporting
the energy consumption of its refrigeration products. The test procedure rule includes a

48 The inclusion of a demand response feature within these products would also require considerable analysis for which DOE has no data.

179round-off for the calculation of the energy standard when using the appropriate energy
standard equations. See 75 FR at 78831- 7883 2 (December 16, 2010).

C. Trial Standard Levels and Proposed Standards

1. Efficiency Levels
Many stakeholders supported DOE’s selection of efficiency levels that mirrored
the levels of the negotiated agreement. (AHAM, No. 73 at p. 1; IOUs, No. 77 at p. 1;
PGEC, No. 68 at p. 1; JAC, No. 75 at p. 1) Sub Zero supported the selection of efficiency

le vels for built-ins that mirrored the negotiated agreement while indicating that the
analyses suggest that less stringent levels would also have been appropriate. (Sub Zero,
No. 69 at p. 5) Whirlpool supported the selection of efficiency levels for built- in
products, subject to DOE’s adoption of the built -in product definition developed for the
consensus agreement. (Whirlpool, No. 74 at p. 6)

However, concerns about the negotiated levels for numerous products were
expressed by other stakeholders, primarily utilities and organizations representing
utilities. EEI and APPA expressed concern about the standard levels chosen for bottommount refrigerator-freezers, built-in bottom-mount refrigerator-freezers, and compact
refrigerators and did not endorse the standard levels chosen for top-mount refrigeratorfreezers, side- by -side refrigerator-freezers, built-in all-refrigerators, built-in side- by -side
refrigerators, and built-in upright freezers. (EEI, No. 71 at pp. 3-4; APPA, No. 72 at pp.
2-3) SC expressed concern about selection of any standard levels above the levels of
reasonable life cycle costs . (SC, No. 70 at p. 2) These concerns are based on (1) the

180percentage of consumers determined to experience life cycle cost benefits being uncertain
or too high, and (2) the implication that DOE used the soci al cost of carbon dioxide
emissions combined with consumer economics to justify the chosen standard levels.
(EEI, No. 71 at p. 2; APPA, No. 72 at pp. 1-2; SC, No. 70 at p. 2) Moreover, SC argued
that replacement of an older refrigerator with one meeting the current 2001 standard
would save 23 times more energy. (SC, No. 70 at p. 2)

Responding to the concern about the percentage of consumers determined to
experience a net life cycle cost, DOE must consider a range of factors in setting
efficiency levels (see section II.A), and for almost all product classes, the net savings per
consumer is positive.

Regarding the implication that DOE used the societal cost of carbon dioxide
emissions to help justify the chosen standard levels, DOE did not, in fact, combine the
societal cost of carbon with consumer economics in any of its calculations, but rather
considered the positive benefit of reducing the societal cost of carbon, as part of a general
assessment of environmental benefits, in making its final determination. Environmental
benefits are an important rationale for national energy conservation, especially because
the energy prices paid by consumers do not include some of the environmental costs
associated with their use of energy. Energy savings from energy conservation standards
often result in environmental benefits in the form of reduced emissions of air pollutants
and greenhouse gases associated with energy production. DOE analyzed the
environmental effects from the amended standards for refrigeration products, and from

181each TSL it considered, in the environmental assessment, which is described in section

IV.L of this notice and in chapter 15 of the TSD. As a companion to the quantitative
analysis in the environmental assessment, DOE also estimated a range of the economic
value of emissions reductions resulting from the considered TSLs, as described in section

IV.M of this notice.

With respect to the replacement of old refrigerators in lieu of a more stringent
standard, this case was considered as an alternative regulatory policy in chapter 16 of the
TSD. DOE found that the impact of such a policy would be, in all cases, much less

effective than a new standard.

The PRC commented that the maximum energy use of the proposed standards was
lower than the current ENERGY STAR levels for product classes 8, 9, 10, 10A, and 13A,
suggested that the current ENERGY STAR levels reflect current advanced technologies
and achieve the purpose of “protection of the environment and consumers”, and
recommended that the maximum allowable energy use be no lower than the current
ENERGY STAR levels. (PRC, No. 87 at p. 3) In response, DOE first notes that
ENERGY STAR is a voluntary program. As such, manufacturers do not need to meet
these levels unless they wish to produce ENERGY STAR-qualified products. Second,
DOE is required by EPCA to consider all feasible technology levels, regardless of
whether they represent less energy use than current ENERGY STAR levels, and to set a
standard at the most efficient and feasible level that is economically justified. (42 U.S.C.
6295(o)(2)(A)) Accordingly, the non-mandatory nature of ENERGY STAR, coupled

182with the mandatory nature of EPCA’s statutory requirement to promulgate new standards

cut in favor of t oday’s action.

The PRC also commented that the standard levels proposed for product classes
5A, 6, 7, and 7-BI were not very stringent, being very close to their current standard
levels expressed in kWh/year, even though the ENERGY STAR efficiency level has been
set at a level representing 20 percent less energy consumption. The PRC provided an
example of a product class 7 product with 500 liter adjusted volume, for which the
proposed energy standard is 581.1 kWh/year, while the current standard is only slightly
higher at 283.7 kWh/year. (PRC, No. 87 at p. 4) DOE believes that the PRC’s 283.7
kWh/year value is in error and should have been 583.7 kWh/year. DOE notes that these
values cannot be directly compared, because the new energy standard is based on the new
test procedure, for which both measured energy use and the calculated adjusted volume

are altered.

SMUD made two comments regarding the selection of standard levels. First,
SMUD noted that DOE indicated that it was considering either increasing or decreasing
the stringency of the proposed levels based on stakeholder comments. It recommended
that DOE not consider any decreased stringency. (SMUD, No. 88 at pp. 1, 2) DOE has
not altered the standards from those proposed in the NOPR. Second, SMUD noted that
the NOPR stated that products of the efficiency levels of the proposed standards are
already commercially available for some, if not most, of the product classes. (See 75 FR
at 59474 (September 27, 2010)) SMUD recommended moving the standards to efficiency

183levels more stringent than those of commercially available products, since these higher
levels should be viable. (Id. at p. 2) As described above, DOE is required by EPCA to
consider all feasible technology levels and that it must set the standard at the most
efficient of these feasible levels that is economically justified. (42 U.S.C. 6295(o)(2)(A))
The commercial availability of products at a specific efficiency level, alone, is not
sufficient justification for setting the standard at a more stringent efficiency level, since
the more stringent level may not be economically justified.

2. Maximum Energy Use Equations
Several stakeholders indicated that they could not comment on the specific values
represented by the maximum energy use equations because they did not have sufficient
time after the issuance of the test procedure final/interim final rule to conduct tests to
evaluate the equation levels. (AHAM, No. 73 at pp. 1-2 ; Whirlpool, No. 74 at p. ; GE,
No. 76 at pp. 1-2) This is discussed in greater detail in section III.A.2.

VI. Analytical Results

The following section addresses the results from DOE’s analyses with respect to
potential energy efficiency standards for the various product classes examined as part of
this rulemaking. Issues discussed include the trial standard levels examined by DOE, the
projected impacts of each of these levels if adopted as energy efficiency standards for
refrigeration products, and the standards levels that DOE is adopting in today’s final rule.
Additional details regarding the analyses conducted by the agency are contained in the
publicly available TSD supporting this rulemaking.

184A. Trial Standard Levels
DOE analyzed the benefits and burdens of a number of TSLs for the refrigeration
products that are the subject of today’s final rule. A description of each TSL DOE
analyzed is provided below. DOE attempted to limit the number of TSLs considered for
today’s final rule by excluding efficiency levels that do not exhibit significantly different
economic and/or engineering characteristics from the efficiency levels already selected as
a TSL. While DOE only presents the results for those efficiency levels in TSL
combinations in today’s final rule, DOE presents the results for all efficiency levels that it
analyzed in the final rule TSD.

Table VI.1 presents the TSLs and the corresponding product class efficiencies for
standard-size refrigerator-freezers. TSL 1 consists of those efficiency levels that meet

current ENERGY STAR criteria. TSL 2 consists of incrementally higher efficiency levels Deleted: TSL 2

Comment [A45]: Change recommended by OIRA. than the preceding TSL. TSL 3 consists of the highest efficiency levels for which the
consumer NPV is positive, using a 7-percent discount rate, as well as the levels
recommended in the Joint Comments. TSL 4 consists of those efficiency levels that yield
energy use 30 percent below the baseline products
, as well as the highest efficiency levels
for which the consumer NPV is positive, using a 3-percent discount rate. TSL 5 consists
of the max-tech efficiency levels. Deleted: . TSL 3 consists of the highest efficiency levels for which the consumer NPV is positive, using a 3

- percent discount rate

Deleted:

.

Comment [A46]: Change recommended by OIRA.

185Table VI .1 Trial Standard Levels for Standard-Size Refrigerator-Freezers

Trial Top

- Mount Refrigerator

- Freezers and All

- Refrigerators Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers

Standard

Level Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A, and 5I Product classes 4, 4I, and 7 Efficiency Level (% less than baseline energy use) 1 3 (20) 3 (20) 3 (20) 2 3(20) 3 (20) 4 (25) 3 4 (25) * 3 (20) 4 (25) 4 5 (30) 5 (30) 5 (30) 5 6 (36) 6 (36) 6 (33)

* Level for product classes 1, 1A, and 2 is 20%.

Table VI.2 presents the TSLs and the corresponding product class efficiencies for
standard-size freezers. TSL 1 consists of those efficiency levels that yield energy use 20
percent below the baseline products. TSL 2 consists of the levels recommended in the
Joint Comments. TSL 3 consists of incrementally higher efficiency levels than the
preceding TSL. TSL 4 consists of incrementally higher efficiency levels than the
preceding TSL . TSL 5 consists of the max-tech efficiency levels, which are also the Deleted: the Deleted: for which the consumer NPV is positive, using a 7

- percent discount rate
highest efficiency levels for which the consumer NPV is positive, using both a 3 -percent

and a 7 -percent discount rate. Comment [A47]: Changes recommended by OIRA.

Comment [A48]: Change recommend by OIRA.

186Table VI .2 Trial Standard Levels for Standard-Size Freezers

Trial Standard Level Upright Freezers Chest Freezers

Prod uct classes 9 and 9I Product class 8 Product classes 10 and 10A Efficiency Level (% less than baseline energy use) 1 3 (20) 3 (20) 3 (20) 2 5 (30) 4 (25) 4 (25) * 3 6 (35) 5 (30) 5 (30) 4 7 (40) 6 (35) 6 (35) 5 8 (44) 7 (41) 7 (41)

* Level for product class 10A is 30%.

Table VI.3 presents the TSLs and the corresponding product class efficiencies for
compact refrigeration products. TSL 1 consists of efficiency levels that meet current
ENERGY STAR criteria for some compact refrigerators (product classes 11, 11A, and
12), and efficiency levels that are 10 percent below the baseline energy use for other
compact refrigerators (product classes 13, 13I, 13A, 14, 14I, 15 and 15I) and compact
freezers (product classes 16, 17, and 18). TSL 2 consists of the levels recommended in

the Joint Comments. TSL 3 consists of incrementally higher efficiency levels than the
previous TSL. TSL 4 consists of the highest efficiency levels for which the consumer
NPV is positive, using both a 3-percent and a 7-percent discount rate. TSL 5 consists of Comment [A49]: Change recommended by OIRA.

Deleted: TSL 4 consists of incrementally higher efficiency levels than TSL 3. the max-tech efficiency levels.

187Table VI .3 Trial Standard Levels for Compact Refrigeration Products

Tria l Standard Level Compact Refrigerators and Refrigerator

- Freezers Compact Freezers

Product classes

11, 11A, 12 Product classes 13, 13I, 13A, 14,

14I, 15, 15I Product classes 16, 17, 18 Efficiency Level (% less than baseline energy use) 1 3 (20) 1 (10) 1 (10) 2 4 (25) 2 (15)* 1 (10) 3 5 (30) 2 (15) 2 (15) 4 7 (40) 4 (25) 4 (25) 5 10 (59) 7 (42) 7 (42) * Level for product class 13A is 25 percent, and for product classes 14 and 14I, is 20 percent.

Table VI.4 presents the TSLs and the corresponding product class efficiencies for
built-in refrigeration products. TSL 1 consists of the efficiency levels that are 10 percent
better than the current standard. TSL 2 consists of the highest efficiency levels for which
the consumer NPV is positive, using both a 3-percent and a 7-percent discount rate. TSL

3 consists of the levels recommended in the Joint Comments. TSL 4 consists of
incrementally higher efficiency levels than TSL 3. TSL 5 consists of the max- te ch
efficiency levels.

188Table VI .4 Trial Standard Levels for Built-in Refrigeration Products

Trial Standard Level Built

- in Top

- Mount Refrigerator

Freezers and All

Refrigerators Built

- in Bottom

Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright Freezers

Product classes 3

- BI, 3I

- BI, and 3A

- BI Product classes 5

- BI, 5I

- BI, and 5A

- BI Product classes 4

- BI, 4I

- BI and 7

- BI Product classes 9

- BI and 9I

- BI Efficiency Level (% less than baseline energy use) 1 1 (10) 1 (10) 1 (10) 1 (10) 2 2 (15) 2 (15) 1 (10) 3 (20) 3 3 (20) 2 (15) 3 (20) 4 (25) 4 4 (25) 4 (25) 3 (20) 4 (25) 5 5 (29) 5 (27) 4 (22) 5 (27)

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

a. Life-Cycle Cost and Payback Period
Consumers affected by new or amended standards usually experience higher
purchase prices and lower operating costs. DOE evaluates these impacts on individual
consumers by calculating changes in LCC and the PBP associated with potential standard
levels. Using the approach described in section IV.F, DOE calculated the LCC impacts
and PBPs for the efficiency levels considered in this rulemaking. For each representative
product class, DOE’s analysis provided several outputs for each TSL, which are reported

in Table VI. 5 through Table VI.15. Each table includes the average total LCC and the
average LCC savings, as well as the fraction of product consumers for which the LCC
will either decrease (net benefit), increase (net cost), or exhibit no change (no impact)
relative to the product purchased in the base case. The last output in the tables is the

189median PBP for the consumer purchasing a design that complies with a given TSL. The
results for each TSL are relative to the energy efficiency distribution in the base case (no
amended standards). DOE based the LCC and PBP analyses on energy consumption
under conditions of actual product use, whereas it based the rebuttable presumption PBPs
on energy consumption under conditions prescribed by the DOE test procedure, as
required by EPCA. (42 U.S.C. 6295(o)(2)(B)(iii))

Table VI .5 Product Class 3, Top-Mount Refrigerator-Freezers: LCC and PBP Results

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback Period (years)

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience

Median Net Cost No Impact Net Benefit
Baseline $ 491 $787 $1, 278

1 (10) $ 501 $730 $1, 231 $46 0. 28 % 21. 9% 77. 8% 2.3 2 (15) $ 508 $701 $1, 209 $69 0. 60 % 17. 6% 81. 8% 2.6 1, 2 3 (20) $ 564 $671 $1, 235 $ 44 34. 0% 8.31% 57. 7% 8.0
3 4 (25) $ 602 $634 $1, 236 $ 42 45. 7% 0.0% 54. 3% 9.5
4 5 (30) $ 686 $598 $1, 284

- $ 6 65. 1% 0.0% 34. 9% 13. 3
5 6 (36) $ 806 $560 $1, 365

- $ 87 79. 7% 0.0% 20. 3% 17.8

Table VI .6 Product Class 5, Bottom-Mount Refrigerator-Freezers: LCC and PBP Results

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback Period (years)

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience

Median Net Cost No Impact Net Benefit Deleted: 492 Deleted: 280 Deleted: 503 Deleted: 233 Deleted: 29 Deleted: 88 % Deleted: 83 % Deleted: 510 Deleted: 211 Deleted: 61 Deleted: 61 % Deleted: 78 % Deleted: 566 Deleted: 237 Deleted: 43 Deleted: 21 % Deleted: 48 % Deleted: 604 Deleted: 239 Deleted: 41 Deleted: 92 % Deleted: 08 % Deleted: 688 Deleted: 286 Deleted: 7 Deleted: 41 % Deleted: 59 % Deleted: 4 Deleted: 809 Deleted: 369 Deleted: 89 Deleted: 90 % Deleted: 10 %

190Median (years) Period Payback

Payback Period (years)

Median

1. Baseline $858 $970 $1,828

1 (10) $860 $961 $1,820 $9 0.02% 86.9% 13.1% 2.1 2 (15) $861 $956 $1,817 $14 0.05% 86.9% 13.1% 2.3 1, 2,3 3 (20) $867 $943 $1,809 $22 2.53% 67.8% 29.7% 4.2 4 (25) $926 $901 $1,827 $5 67.9% 0.03% 32.0% 14.9
4 5 (30) $1,023 $862 $1,885

- $53 82.8% 0.03% 17.2% 21.0
5 6 (36) $1,157 $810 $1,968

- $136 89.0% 0.00% 11.1% 24.7 Deleted: 861 Deleted: 970 Deleted: 1
, 831 Deleted: 863 Deleted: 961 Deleted: 1
, 824 Deleted: 9 Deleted: 0 2 Deleted: 86.88 Deleted: 13.10 Deleted: 2. Deleted: 864 Deleted: 956 Deleted: 1
, 820

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience
Net Cost No Impact Net Benefit
Baseline $ 1,040 $ 1,252 $ 2,292

1 (10) $ 1,043 $ 1,228 $ 2,271 $ 22 0. 00 % 78.1 % 21.9 % 1 .3 2 (15) $ 1,048 $ 1,202 $ 2,249 $ 44 0. 06 % 51.7 % 48.3 % 2. 1
1 3 (20) $ 1,064 $ 1,167 $ 2,232 $ 62 4.27 % 36.9 % 58.8 % 4. 0 2, 3 4 (25) $ 1,123 $ 1,114 $ 2,237 $ 57 41.5 % 0. 00 % 58.6 % 9.2

4 5 (30) $1, 251 $ 1,061 $ 2,312

- $ 18 69.7 % 0. 00 % 30.3 % 15.6
5 6 ( 33 ) $1, 351 $ 1,026 $ 2,377

- $ 83 79.5 % 0. 00 % 20.5 % 19.1

Table VI

. 8 Product Class 9, Upright Freezers: LCC and PBP Results Deleted: 13.10 Deleted: 4 Deleted: , 2,3 Deleted: 870 Deleted: 943 Deleted: 1
, 813 Deleted: 22 Deleted: 2.58 Deleted: 67.77 Deleted: 29.65 Deleted: 2 Deleted: 929 Deleted: 901 Deleted: 1
, 830 Deleted: 5 Deleted: 68.07 Deleted: 0 Deleted: 31.93 Deleted: 15.0 Deleted: 027 Deleted: 862 Deleted: 1
, 889 Deleted: 54 Deleted: 82.93 Deleted: 0 Deleted: 17.07 Deleted: 21.1 Deleted: 36 Deleted: 162 Deleted: 810 Deleted: 1
, 972 Deleted: 137 Deleted: 89.14 Deleted: 0 Deleted: 10.86

... Formatted Table

... Deleted: 14 Deleted: 05 Deleted: 86.85 Table VI

. 7 Product Class 7, Side- by -Side Refrigerator-Freezers with Through-theDoor Ice Service: LCC and PBP Results

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings

$1, $1, Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience
Net Cost No Impact Net Benefit
Baseline $ 505 098 $ 1,603

1 (10) $ 516 015 $ 1,530 $ 73 0. 25 % 19.9 % 79.9 % 9 2 (15) $ 535 $ 964 $ 1,499 $ 105 5.02 % 1.67 % 93.3 % 3.6

191... Formatted Table

...

... Formatted Table

... k Period Paybac
(years)

Median

Payback

ers Period (years) .8 3.

.1

5

Median

2 1 3 (20) $ 552 $ 912 $ 1,464 $ 140 6.03 % 0.59 % 93.4 % 4. 0 4 (25) $ 578 $ 859 $ 1,437 $ 166 9.58 % 0. 41 % 90.0 % 4. 9
2 5 (30) $ 602 $ 806 $ 1,408 $195 11.5 % 0. 22 % 88.2 % 5.3
3 6 ( 35 ) $ 656 $ 758 $ 1,414 $189 21.9 % 0. 00 % 78.1 % 7.1
4 7 (40) $731 $711 $1,442 $161 34.6% 0.00% 65.4% 9.3
5 8 (44) $898 $673 $1,570 $33 59.7% 0.00% 40.3% 14.7

Table VI

. 9 Product Class 10, Chest Freezer : LCC and PBP Results

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience
Net Cost No Impact Net Benefit
Baseline $ 367 $ 623 $ 990

1 (10) $ 373 $ 573 $ 947 $ 43 0. 20 % 16.2 % 83.6 % 2.0 2 (15) $ 383 $ 544 $ 927 $ 63 3.01 % 1. 18 % 95.8 % 2
1 3 (20) $ 393 $ 515 $ 908 $ 82 5.14 % 0. 22 % 94.6 % 3.9
2 4 (25) $ 436 $ 485 $ 921 $ 69 27.3 % 0. 22 % 72.5 % 8.1
3 5 (30) $ 456 $ 455 $ 911 $ 79 29.1 % 0.22% 70.6 % 8.
4 6 (35) $ 510 $ 433 $ 943 $ 47 48.7 % 0. 00 % 51.4 % 12
5 7 (41 ) $ 620 $ 395 $1, 015

- $25 69.1 % 0. 00 % 31.0 % 17 Deleted: 1
, 069 Deleted: 1
, 167 Deleted: 2
, 236 Deleted: 62 Deleted: 4.34 Deleted: 36.9 0 Deleted: 58.76 Deleted: 1 Deleted: 2, 3 Deleted: 1
, 128 Deleted: 1
, 114 Deleted: 2
, 242 Deleted: 57 Deleted: 41.71 Deleted: 0 Deleted: 58.29 Deleted: .3 Deleted: 4 Deleted: 1
, 256 Deleted: 1
, 061 Deleted: 2
, 317 Deleted:

- $ 18 Deleted: 69.90 Deleted: 0 Deleted: 30.10 Deleted: 15.7 Deleted: 5 Deleted: 33 Deleted: 1
, 356 Deleted: 1
, 026 Deleted: 2
, 383 Deleted:

- $ 85 Deleted: 79.58 Deleted: 0 Table VI

. 10 Product Class 11, Compact Refrigerators : LCC and PBP Results

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience
Net Cost No Impact Net Benefit
Baseline $ 131 $ 167 $ 298

1 (10) $ 137 $ 151 $ 287 $ 11 9.01 % 1.60 % 89.4 % 1.8 2 (15) $ 141 $ 143 $ 284 $ 14 13.6 % 1. 39 % 85.0 % .1
1 3 (20) $ 146 $ 135 $ 281 $ 17 19.7 % 1.39 % 79.0 % 2.5 Deleted: 20.42 Deleted: 19.2
Deleted:

- ... 9 Product Class 9, Upright Freez

... Formatted Table

... Deleted: 507 Deleted: 1,098 Deleted: 1,605 Deleted: 518 Deleted: 1,015 Deleted: 1, 532 Deleted: 73 Deleted: 25 Deleted: 19. 85 Deleted: 7 9.90
192 Deleted: 1.9 Deleted: 537 Deleted: 964 Deleted: 1 501...

... Formatted Table

... Period Payback
(years)

Median

2

4

t

Payback Period (years)

Median

Deleted: 1.8 2 4 (25) $ 157 $ 127 $ 284 $ 14 36.8 % 1.00 % 62.3 % 3.5
3 5 (30) $ 166 $ 119 $ 285 $ 13 43.4 % 0. 92 % 55.6 % 3.9 6 (35) $ 192 $ 112 $ 304

- $6 71.3 % 0. 00 % 28.7 % 6.0
4 7 ( 40 ) $ 199 $ 104 $ 303

- $ 5 69. 8 % 0. 00 % 30. 2 % 5.8 8 (45) $230 $97 $327

- $29 83.5% 0.00% 16.5% 7.7 9 (50) $247 $89 $336

- $38 85.4% 0.00% 14.6% 8.0
5 10 (59) $308 $75 $383

- $85 92.2% 0.00% 7.85% 10.4

Table VI

. 11 Product Class 18 , Compact Freezers : LCC and PBP Results Deleted: 438 Deleted: 485 Deleted: 923 Deleted: 68 Deleted: 27.50 Deleted: 0.2 2 Deleted: 72.28 Deleted: 8. 1 Deleted: 457 Deleted: 455 Deleted: 912 Deleted: 79 Deleted: 29.32 Deleted: 2 2 Deleted: 70.46 Deleted: 8.5 Deleted: 4 Deleted: 512 Deleted: 433 Deleted: 945 Deleted: $ 47 Deleted: 48.91 Deleted: 0 Deleted: 51.09 Deleted: 12.2 Deleted: 5 Deleted: 41 Deleted: 622 Deleted: 395 Deleted: 1, 018 Deleted: 26 Deleted: 24 Deleted: 0 Deleted: 76 Deleted: 1 7.9 Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings

7 ( Installed Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience
Net Cost No Impact Net Benefit
Baseline $ 182 $ 200 $ 382 1,2 1 (10) $ 189 $ 182 $ 370 $ 12 7.98 % 4.66 % 87.4 % 2.2
3 2 (15) $ 201 $ 172 $ 373 $ 9 33.9 % 0.00 % 66.1 % 4. 3 (20) $ 242 $ 163 $ 404

- $22 87.4 % 0.00 % 12.6 % 9.8
4 4 (25) $ 252 $ 153 $ 405

- $23 84.5 % 0 .00% 15.5 % 9.1 5 (30) $ 282 $ 146 $ 428

- $46 92.4 % 0. 00 % 7.6 % 11. 6 (35) $ 289 $ 137 $ 426

- $ 44 89.6 % 0. 00 % 10.4 % 10.4
5 42 ) $ 360 $ 124 $ 484

- $ 102 96.7 % 0. 00 % 3.3 % 14.4

Table VI

. 12 Product Class 3A -BI, Built-In All-Refrigerators : LCC and PBP Results Deleted:

- ... 11 Product Class 11

... 8 , Compac

... Formatted Table

... Deleted: 1 32 Deleted: 167 Deleted: 298 Deleted: 1 37 Deleted: 151 Deleted: 288 Deleted: 1 1 Deleted: 9.15 Deleted: 1.6 0 Deleted: 8 9.25 Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience
Net Cost No Impact Net Benefit
Baseline $ 4,316 $ 828 $ 5,144
1 1 (10) $ 4,323 $ 769 $ 5,091 $ 52 0.02 % 22.6 % 77.4 % 1.4

193 Deleted: 1 41 Deleted: 143 Deleted: 284 Deleted: 1 4... Formatted Table

...

... In 2 2 (15) $ 4,334 $ 739 $ 5,073 $ 71 0.94 % 18.4 % 80.7 % 2 .6
3 3 (20) $ 4,452 $ 703 $ 5,155

- $ 11 61.5 % 9.10 % 29.4 % 13.7
4 4 (25) $ 4,625 $ 670 $ 5,295

- $ 151 91.0 % 0. 00 % 9.02 % 25.5
5 5 ( 29 ) $ 4,756 $ 646 $ 5,402

- $ 258 95.0 % 0. 00 % 5.01 % 31 .4 Deleted: 3 Deleted: 202 Deleted: 172 Deleted: 374 Deleted: 9 Deleted: 34.10 Deleted: 0.0 Deleted: 65.90 Deleted: 4. Deleted: 243 Deleted: 163

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback Period (years)

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience

Median Net Cost No Impact Net Benefit
Baseline $4, 968 $ 960 $5, 928
1 1 (10) $4, 972 $ 951 $5, 923 $ 8 0. 60 % 87.1 % 12.3 % 3.8
2 ,3 2 (15) $4, 982 $ 957 $5, 939 $ 2 7.03 % 87.0 % 5.94 % 11.1 3 (20) $ 5,013 $ 943 $5, 955

- $ 14 27.4 % 67.5 % 5.09 % 22.3
4 4 (25) $ 5,168 $ 911 $ 6,079

- $ 138 98.0 % 0. 00 % 2.03 % 52.8
5 5 ( 27 ) $ 5,257 $ 891 $ 6,148

- $ 207 98.5 % 0. 00 % 1.50 % 52.2 Deleted: 87.57 Deleted: 0.0 Deleted: 12.43 Deleted: 9.9 Deleted: 253 Deleted: 153 Deleted: 406 Deleted: 2 3 Deleted: 84.72 Deleted: 0 Deleted: 15.28 Deleted: 9.1 Deleted: 30 Deleted: 283 Deleted: 146 Deleted: 429 Table VI

. 13 Product Class 5 -BI, Built-In Bottom-Mount Refrigerator-Freezers : LCC and PBP Results Deleted: 405 Deleted: 2 3

Deleted: 46 Deleted: 92.50 Table VI

. 14 Product Class 7 -BI, Built-In Side- by -Side Refrigerator-Freezers with Through-the-Door Ice Service : LCC and PBP Results

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback Period (years)

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience

Median Net Cost No Impact Net Benefit
Baseline $ 7,134 $ 1,494 $ 8,628
1 ,2 1 (10) $ 7,147 $ 1,476 $ 8,623 $ 10 5.77 % 78.5 % 15.7 % 7.5 2 (15) $ 7,188 $ 1,459 $ 8,647

- $9 36.4 % 52.4 % 11.2 % 17.6 3,4 3 (20) $ 7,307 $ 1,423 $ 8,729

- $ 91 58.5 % 37.2 % 4.28 % 31.0
5 4 ( 22 ) $ 7,414 $ 1,405 $ 8,820

- $ 182 97.6 % 0. 00 % 2.40 % 50.4 Deleted: 0 Deleted: 7.50 Deleted: 11
Deleted: ¶

... Deleted:

- ... 13 Product Class 3A

... - BI, Built

­

... Deleted: 333 Deleted: 71 Deleted: 160 Deleted: 339 Deleted: 66 Deleted: 108 Deleted: 52 Deleted: 02 Deleted: 22. 57 Deleted: 77. 41 Deleted: 1. 4

194 Formatted Table

... Deleted: 351 Deleted: 63 Deleted: 089 Deleted: 71Table VI

. 15 Product Class 9 -BI, Built-In Upright Freezers: LCC and PBP Results

Trial Standard

Level Efficiency Level
(% less than

baseline energy use ) Life

- Cycle Cost 2009$ Life

- Cycle Cost Savings Payback Period (years)

Installed

Cost Discounted Operating Cost LCC Average Savings 2009$ % of Households that Experience

Median Net Cost No Impact Net Benefit
Baseline $ 3,928 $ 1,071 $ 4,999
1 1 (10) $ 3,943 $ 990 $ 4,933 $ 66 1.53 % 19.9 % 78.6 % 2.9 2 (15) $ 3,956 $ 942 $ 4,898 $101 3.99 % 1.70 % 94.3 % 3.6
2 3 (20) $4,042 $898 $4,940 $59 42.9% 0.57% 56.5% 10.7 3,4 4 (25 ) $ 4,176 $ 847 $ 5,023

- $ 23 68.8 % 0.49 % 30.7 % 17.8
5 5 (27 ) $ 4,278 $ 822 $ 5,100

- $ 101 79.8 % 0. 27 % 20.0 % 22 .6

b. Consumer Subgroup Analysis
As described in section IV.H, DOE determined the impact of the considered TSLs
on low-income households and senior-only households. DOE did not estimate impacts for
compact refrigeration products because the household sample sizes were not large
enough to yield meaningful results.

Table VI.16 through Table VI.18 compare the average LCC savings at each
efficiency level for the two consumer subgroups with the average LCC savings for the
entire sample for each representative product class. In general, the average LCC savings
for low-income households and senior-only households at the considered efficiency
levels are not substantially different from the average for all households. Chapter 11 of
the final rule TSD presents the complete LCC and PBP results for the two subgroups. Deleted: 7

... - BI, Built

- In Side

- by

- Side

...

Formatted Table
Deleted: 7, 162 Deleted: 124 Deleted: 8,656 Deleted: ,2 Deleted: 7, 175 Deleted: 122 Deleted: 8,650 Deleted: 10 Deleted: 5.83 Deleted: 78.49 Deleted: 15.68 Deleted: 7.5 Deleted: 7, 216 Deleted: 121 Deleted: 8,675 Deleted:

- $9
Deleted: 36.43 Deleted: 52.43 Deleted: 11.14 Deleted: 17.7

Formatted Table
Deleted: 3 (20 Deleted: 7,335 Deleted: 118 Deleted: 8,758 Deleted: 92 Deleted: 58.53 Deleted: 37.23 Deleted: 4.24 Deleted: 31.1

Deleted: 4 (22 Deleted: 7,443 Deleted: 1 16 Deleted: 8,848 Deleted: 183 Deleted: 97.61 Deleted: 0 Deleted: 2.39 Deleted: 50
Deleted: ¶

...

195Table VI

. 16 Standard-Size Refrigerator-Freezers: Comparison of Average LCC Savings for Consumer Subgroups and All Households

Efficiency

Level (% less

than baseline energy use) Top

- Mount Refrigerator

- Freezers Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers Product class 3 Product class 5 Product class 7

Senior Low

Income All Senior Low

Income All Senior Low

Income All 1 (10) $43 $49 $46 $9 $10 $9 $22 $23 $22 2 (15) $64 $73 $69 $13 $15 $14 $42 $46 $44 3 (20) $36 $48 $43 $21 $24 $22 $59 $64 $62 4 (25) $31 $47 $41

- $1 $6 $5 $48 $56 $57 5 (30)

- $20 $0

- $7

- $63

- $52

- $54

- $31

- $23

- $18 6 (36/36/33)

- $105

- $81

- $89

- $151

- $136

- $137

- $100

- $91

- $85

Table VI

. 17 Standard-Size Freezers: Comparison of Average LCC Savings for Consumer Subgroups and All Households

Efficiency

Level (% less than

baseline energy use) Upright Freezers Chest Freezers

Product class 9 Product class 10

Senior Low

Income All Senior Low

Income All 1 (10) $69 $69 $73 $45 $42 $43 2 (15) $98 $98 $105 $66 $61 $63 3 (20) $130 $129 $139 $86 $79 $82 4 (25) $153 $153 $166 $74 $65 $68 5 (30) $179 $179 $195 $85 $75 $79 6 (35) $170 $170 $189 $54 $42 $47 7 (40/41) $139 $139 $160

- $18

- $32

- $26

1968 (44) $8 $8 $32

Table VI

. 18 Built-In Refrigeration Products: Comparison of Average LCC Savings for Consumer Subgroups and All Households

Efficiency

Level (% less than

baseline energy use) Built

- in All Refrigerators Built

- in Bottom

- Mount Refrigerator

- Freezers Built

- in Side

- by

- Side Refrigerator

- Freezers Built

- in Upright Freezers

Product class 3A

- BI Product class 5

- BI Product class 7

- BI Product class 9

- BI

Senior Low

Income All Senior Low

Income All Senior Low

Income All Senior Low

Income All 1 (10) $48 $54 $52 $7 $8 $8 $8 $9 $10 $61 $61 $66 2 (15) $65 $74 $71 $0 $2 $2

- $15

- $14

- $9 $93 $92 $101 3 (20)

- $25

- $14

- $12

- $19

- $17

- $15

- $107

- $109

- $92 $47 $46 $58

4 (25/25/22/25) - $170

- $155 - $152 - $148

- $141

- $139

- $199

- $201

- $183

- $39

- $41

- $24

5 (29/27/

- /27) - $280

- $263 - $260 - $219

- $210

- $208

- $119

- $121

- $102

c. Rebuttable Presumption Payback
As discussed in section III.D.2, EPCA provides a rebuttable presumption that an
energy conservation standard is economically justified if the increased purchase cost for a
product that meets the standard is less than three times the value of the first-year energy
savings resulting from the standard. In calculating a rebuttable presumption payback
period for the considered standard levels, DOE used discrete values rather than
distributions for input values, and, as required by EPCA, based the energy use calculation
on the DOE test procedures for refrigeration products. As a result, DOE calculated a
single rebuttable presumption payback value, and not a distribution of payback periods,
for each efficiency level. Table VI.19 through Table VI.22 present the average rebuttable
presumption payback periods for those efficiency levels where the increased purchase

197cost for a product that meets a standard at that level is less than three times the value of
the first-year energy savings resulting from the standard.

Ta ble VI

. 19 Standard-Size Refrigerator-Freezers: Efficiency Levels With Rebuttable Payback Period Less Than Three Years Product Class 3: Top

- Mount Refrigerator

Freezer Product Class 5: Bottom

- Mount Refrigerator

Freezer Product Class 7: Side

- by

- Side Refrigerator

- Freezer with TTD* Efficiency Level

( % less than baseline energy use ) PBP years Efficiency Level ( % less than baseline energy use ) PBP years Efficiency Level ( % less than baseline energy use ) PBP years 1 (10) 2.4 1 (10) 2.1 1 (10) 1.4 2 (15) 2.6 2 (15) 2.4 2 (15) 1.7 3 (20) 2.9 * Through-the-door ice service

Table VI

. 20 Standard-Size Freezers: Efficiency Levels With Rebuttable Payback Period Less Than Three Years Product Class 9: Upright Freezer Product Class 10: Chest Freezer Efficiency Level ( % less than baseline energy use ) PBP years Efficiency Level ( % less than baseline energy use ) PBP years 1 (10) 1.9 1 (10) 1.8 2 (15) 2.7

Table VI

. 21 Compact Refrigeration Products: Efficiency Levels With Rebuttable Payback Period Less Than Three Years Product Class 11: Compact Refrigerator Product Class 18: Compact Freezer Efficiency Level ( % less than baseline energy

use ) PBP years Efficiency Level ( % less than baseline energy

use ) PBP years 1 (10) 1.8 1 (10) 2.0 2 (15) 2.1 3 (20) 2.7

198Table VI

. 22 Built-In Refrigeration Products: Efficiency Levels With Rebuttable Payback Period Less Than Three Years

Product Class 3A

- BI: Built

- in All

Refrigerator Product Class 5

- BI: Built

- In Bottom

- Mount

Refrigerator

- Freezer Product Class 7

- BI: Built

- In Side

- by

- Side Refrigerator

- Freezer with TTD* Product Class 9

- BI: Built

- In Upright Freezer

Efficiency

Level ( % less

than baseline energy

use ) PBP years Efficiency Level ( % less

than baseline energy

use ) PBP years Efficiency Level ( % less

than baseline energy

use ) PBP years Efficiency Level ( % less

than baseline energy

use ) PBP years 1 (10) 1.5 1 (10) 1 (10) 1 (10) 2.7 2 (15) 2.6
* Through-the-door ice service

While DOE examined the rebuttable-presumption criterion, it considered whether
the standard levels considered for today’s rule are economically justified through a more
detailed analysis of the economic impacts of these levels pursuant to 42 U.S.C.
6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE to definitively
evaluate the economic justification for a potential standard level (thereby supporting or
rebutting the results of any preliminary determination of economic justification).

2. Economic Impacts on Manufacturers

The NOPR MIA used changes in INPV to compare the financial impacts of

different TSLs on manufacturers. 75 FR at 59537- 595 46 (September 27, 2010)
(describing the MIA used by DOE in its analysis). DOE presented the industry impacts
by the major product types ( i.e. , s tandard size refrigerator-freezers, standard size freezers,
compact refrigerators and freezers, and built-in refrigeration products). DOE used the

199GRIM to compare the INPV of the base case (no new energy conservation standards) to
that of each TSL for each product grouping. The INPV is the sum of all net cash flows
discounted by the industry’s cost of capital (discount rate). The difference in INPV
between the base case and the standards case is an estimate of the economic impacts that
implementing that sta ndard level would have on the entire industry. For today’s final
rule, DOE continues to use the methodology presented in the NOPR (75 FR at 59519­

595 26 (September 27, 2010)) and in section IV.I. The major methodology change DOE
made for the final rule was incorporating long term product price trends into the analysis.
Since the price trend for residential refrigeration products declines over the analysis
period, the base case industry value is lower for all product groupings. Thus,
incorporating price trends in the MIA increases the impacts on INPV due to standards.

a. Cash-Flow Analysis Results
The tables below depict the financial impacts on manufacturers (represented by
changes in INPV) and the conversion costs DOE estimates manufacturers would incur at
each TSL. DOE shows four sets of results, corresponding to the four sets of TSLs
considered in this rulemaking. Each set of TSLs reflects the impacts on manufacturers of
a certain group of product classes.

Each set of results below shows two tables of INPV impacts: the first table
reflects the lower (less severe) bound of impacts and the second represents the upper
bound. To evaluate this range of cash-flow impacts on the residential refrigeration
products industry, DOE modeled two different scenarios using different markup Deleted: learning rates Comment [A50]: Change recommended by OIRA.

Deleted: learning rates Comment [A51]: Change recommended by OIRA.

200assumptions. These assumptions correspond to the bounds of a range of market responses
that DOE anticipates could occur in the standards case (i.e. where amended energy
conservation standards apply). Each scenario results in a unique set of cash flows and
corresponding industry value at each TSL.

To assess the lower (less severe) end of the range of potential impacts, DOE
modeled the flat markup scenario. The flat markup scenario assumes that in the standards
case manufacturers would be able to pass the higher production costs required for more
efficient products on to their customers. Specifically, the industry would be able to
maintain its average base-case gross margin, as a percentage of revenue, despite higher
product costs. In general, the larger the product price increases, the less likely
manufacturers are able to achieve the cash flow from operations calculated in this
scenario because manufacturers would be less likely to be able to fully recoup these costs
through larger price increases.

Through its discussions with manufacturers, DOE found that overall profit is
driven more by the bundling of product features, such as stainless steel exteriors, ice
dispensers, and digital displays, than by energy efficiency characteristics. In other words,
more efficient products command higher prices, but these prices are driven by the many
other features that are also bundled with increased efficiency. However, the overall profit
margin percentage does not vary widely even if the dollar profit per unit increases for

pr oducts with these additional features. Manufacturers are skeptical that customers would
accept higher prices for increased energy efficiency because it does not command higher

201margins in the current market. Under such a scenario, it follows that the large retailers
that compose the relatively concentrated customer base of the industry would not accept
manufacturers fully passing through the additional cost of improved efficiency because
consumers would be wary of higher prices without additional features. Therefore, to
assess the higher (more severe) end of the range of potential impacts, DOE modeled the
preservation of operating profit markup scenario in which higher energy conservation
standards result in lower manufacturer markups. This scenario models ma nufacturers’
concerns that the higher costs of more efficient technology would harm profitability if the
full cost increases cannot be passed on. The scenario represents the upper end of the
range of potential impacts on manufacturers because higher production costs erode profit
margins and result in lower cash flows from operations.

DOE used the main NIA shipment scenario for both the lower- and higher-bound
MIA scenarios that were used to characterize the potential INPV impacts. The shipment
forecast is an important driver of the INPV results below. The main NIA shipment
scenario includes a price elasticity effect, meaning higher prices in the standards case
result in lower shipments. Lower shipments also reduce industry revenue, and, in turn,

INPV.

i. Cash-Flow Analysis Results for Standard-Size Refrigerator-Freezers
As part of its cash-flow analysis for standard-size refrigerator-freezers, DOE
applied two different scenarios to project the impacts on manufacturers from standards at
the various TSLs that DOE considered. The following tables provide those projected
impacts under the flat-markup and preservation of operating profit markup scenarios.

202Table VI

. 23 . Manufacturer Impact Analysis for Standard-Size RefrigeratorFreezers

– Flat Markup Scenario Units Base Case Trial Standard Level 1 2 3 4 5
INPV (2009$ millions) 2,670.1 2,552.2 2,450.9 2,325.1 1,885.1 1,627.9
Change in INPV (2009$ millions) (117.8) (219.2) (345.0) (784.9) (1,042.2)

(%)

- 4.4%

- 8.2%

- 12.9%

- 29.4%

- 39.0% Product Conversion Costs (2009$ millions) - 153 197 229 348 406
Capital Conversion Costs (2009$ millions) - 229 393 620 1,405 2,013

Total Conversion Costs (2009$ millions) - 382 590 848 1,753 2,419

Table VI

. 24 . Manufacturer Impact Analysis for Standard-Size RefrigeratorFreezers

– Preservation of Operating Profit Markup Scenario Units Base Case Trial Standard Level 1 2 3 4 5
INPV (2009$ millions) 2,670.1 2,417.5 2,274.2 2,089.4 1,360.8 828.6
Change in INPV (2009$ millions) (252.6) (395.9) (580.7) (1,309.3) (1,841.5)

(%)

- 9.5%

- 14.8%

- 21.7%

- 49.0%

- 69.0% Product Conversion Costs (2009$ millions) - 153 197 229 348 406
Capital Conversion Costs (2009$ millions) - 229 393 620 1,405 2,013

Total Conversion Costs (2009$ millions) - 382 590 848 1,753 2,419

TSL 1 represents the current ENERGY STAR level for standard-size refrigeratorfreezers or a 20-percent reduction in measured energy consumption over the current

203energy conservation standards for the analyzed standard-size top-mount product class 3, a

20

- pe recent reduction for the analyzed standard-size bottom-mount product class 5, and a

20 -percent reduction for the analyzed standard-size side- by -side product class 7. At TSL
1, DOE estimates impacts on INPV to range from -$117.8 million to -$252.6 million, or a
change in INPV of -4.4 percent to -9.5 percent. At this TSL, industry free cash flow is
estimated to decrease by approximately 71.8 percent to $51.5 million, compared to the
base-case value of $182.8 million in the year leading up to the amended energ y

conservation standards.

The INPV impacts at TSL 1 are relatively minor, in part because the vast majority
of manufacturers produce ENERGY STAR units in significant volumes, particularly for
product classes 5 and 7. Approximately 42 percent of product class 7 shipments and 47
percent of product class 5 shipments currently meet this TSL. By contrast, the vast
majority of product class 3 shipments are baseline units. Additionally, most of the design
options DOE analyzed at this TSL are one-for-one component swaps, including more
efficient compressors and brushless DC condenser and evaporator fan motors, which
require only modest changes to the manufacturing process at TSL 1. As such, DOE
estimated total product conversion costs of $153 million and capital conversion costs of

$229 million.

While substantial on a nominal basis, the total conversion costs are relatively low
compared to the industry value of $2.7 billion. The total conversion costs at TSL 1 are
mostly driven by the design options that manufacturers could use to improve the

204efficiency of the smaller-sized units of the product classes analyzed. For example, the
analyzed design options for the 22-cubic foot product class 7 unit included a VIP in the
freezer door, while the 26-cubic foot product class 7 unit only analyzed less costly
component swaps. VIP implementation would require significant capital and product
conversion costs because additional production steps are required to hold and bind each
panel in its location before the product is foamed. Each additional step requires more
equipment to lengthen production lines and, because of lower throughput, more
production lines for each manufacturer to maintain similar shipment volumes. Some
manufacturers have experience with VIPs, but DOE expects substantial engineering and
testing resources would be required for their use in new platforms and/or at higher
production volumes.

Similarly, the 16-cubic foot product class 3 unit uses a variable speed compressor
as a design option. While not a capital intensive solution, variable speed compressors
would require substantial engineering time to integrate the complex component,
especially if electronic control systems would also be required. Because these changes
are more complex than the other analyzed design options, more than three-quarters of the
conversion costs for TSL 1 are attributable to the use of the VIPs and variable speed
compressors in the smaller-volume product class 7 and product class 3 units, respectively.

The flat markup scenario shows slightly negative impacts at TSL 1, indicating
that the outlays for conversion costs marginally outweigh any additional profit earned on
incrementally higher variable costs. On a shipment-weighted basis, the average MPC for

205standard-size refrigerator-freezers increases by 10 percent at TSL 1 after standards. These
small component cost changes are not significant enough to fully recoup these
investments even if manufacturers earn additional profit on these costs, as the flat markup
scenario assumes. Hence, there is a slight negative impact, even in the upper-bound
scenario, at TSL 1.

The efficiency requirements for product class 3 and product class 5 refrigeratorfreezers are the same at TSL 2 as TSL 1. However, the efficiency requirements for
product class 7 increase to a 25-percent reduction in measured energy consumption from
current energy conservation standards. DOE estimates the INPV impacts at TSL 2 range
from -$219.2 million to -$395.9 million, or a change in INPV of -8.2 percent to -14.8
percent. At this TSL, the industry cash flow is estimated to decrease by approximately

113.9 percent to -$25.4 million, compared to the base-case value of $182.8 million in the
year leading up to the amended energy conservation standar d.

The additional impacts at TSL 2 relative to TSL 1 result from the further
improvements manufacturers must make to product class 7 refrigerator-freezers to
achieve a 25-percent energy reduction, as very few shipments of product class 7 currently
exceed the ENERGY STAR level. Specifically, for the 22-cubic foot products, the design
options DOE analyzed include a variable speed compressor and a VIP in the freezer
cabinet, instead of the door as in TSL 1. For the 26-cubic foot product class 7 unit, the
design options analyzed include a VIP in the freezer door in addition to additional
component swaps and the component swaps needed to meet TSL 1. Total conversion

206costs increase by $208 million compared to TSL 1, which is largely driven by the initial
use of VIPs in the 26-cubic foot product class 7 unit. Besides these specific changes to

side

- by -side units, at TSL 2 most production lines of standard-size refrigerator-freezers
do not use VIPs or other very costly components, which mitigates some of the disruption
to current facilities. Consequently, the INPV impacts, while greater than at TSL 1, are
still relatively moderate compared to the value of the industry as a whole.

At TSL 2, the INPV in the flat markup is lower than at TSL 1, which means the
additional conversion costs to add more VIPs leaves manufacturers worse off even if they
can earn additional profit on these costly components. In the preservation of operating
profit markup scenario, the industry earns no additional profit on this greater investment,
lowering cash flow from operations in the standards case and resulting in greater INPV
impacts.

The efficiency requirements for product class 5 and product class 7 refrigeratorfreezers are the same at TSL 3 as TSL 2. However, the efficiency requirements for
product class 3 increase to a 25-percent reduction in measured energy consumption from
current energy conservation standards. TSL 3 represents a 25-percent reduction in
measured energy consumption over the current energy conservation standards for both
product class 3 and product class 7. In addition, TSL 3 represents a 20-percent reduction
in measured energy consumption for product classes 1, 1A, and 2. DOE estimates the
INPV impacts at TSL 3 to range from -$345.0 million to -$580.7 million, or a change in
INPV of -12.9 percent to -21.7 percent. At this TSL, the industry cash flow is estimated

207to decrease by approximately 168.0 percent to -$124.3 million, compared to the base-case
value of $182.8 million in the year leading up to the standards.

The additional negative impacts on industry cash flow result from the changes to
product class 3 refrigerator-freezers to reach a 25-percent reduction in energy use (sideby -side products met this efficiency level at TSL 2). Specifically, the design options DOE
analyzed at TSL 3 for 16-cubic foot top-mount refrigerator-freezers included the use of
VIPs for the first time (in the freezer cabinet), in addition to the component swaps
discussed above. In total, DOE estimates product conversion costs of $229 million and
capital conversion costs of $620 million at TSL 3. The high cost to purchase new
production equipment and the large engineering effort to manufacture new platforms for
these smaller-sized product class 3 units drive the vast majority of this additional $258

million in conversion costs that DOE estimates manufacturers would incur at TSL 3.
Because the smaller size top-mounted units account for a large percentage of total
shipments, the production equipment necessary to implement new platforms for these
products is costly.

While production of units meeting TSL 3 is fairly limited, several manufacturers
have introduced products that meet these efficiency levels in response to Federal
production tax credits. This experience mitigates some of the product conversion costs by
giving manufacturers some experience with the newer technologies. However, the more
severe impacts at TSL 3, relative to TSL 2, are due to the incremental outlays for
conversion costs to make the changes described above. In particular, any experience with

208VIPs on some products does not lower the substantial capital conversion necessary to
purchase production equipment necessary to manufacture products that are substantially
different from existing products.

As mentioned above, the preservation of operating profit markup scenario
assumes no additional profit is earned on the higher production costs. This assumption
lowers profit margins as a percentage of revenue and leads to worse impacts on INPV. In
the flat markup scenario, the impact of the investments is mitigated by the assumption
that manufacturers can earn a similar profit margin as a percentage of revenues on their
higher variable costs. At TSL 3, MPCs increase by an average of 16 percent after
standards, leading to additional per-unit profit in this scenario. However, the magnitude
of the conversion investments still leads to negative INPV impacts even if additional
profit is earned on the incremental manufacturing costs. The lower industry shipments
driven by the relative price elasticity assumption account for approximately $45 million
of the impact in the flat markup scenario.

TSL 4 represents a 30-percent reduction in measured energy consumption over
the current energy conservation standards for product class 3, product class 5, and
product class 7. DOE estimates the INPV impacts at TSL 4 to range from -$784.9 million
to -$1,309.3 million, or a change in INPV of -29.4 percent to -49.0 percent. At this TSL,
the industry cash flow is estimated to decrease by approximately a factor of 3.6 to ­
$469.3 million, compared to the base-case value of $182.8 million in the year leading up
to the amended energy conservation standards.

209At TSL 4, significant changes to the manufacturing process are necessary for all
refrigerator-freezers. A 30-percent reduction in energy consumption is the maximumefficiency top-mounted products available on the market; 49 the maximum available sideby -side and bottom-mount only slightly exceed a 30-percent reduction. The design
options DOE analyzed for all standard-size products

— with the exception of the 25-cubic
foot product class 5 unit

—use multiple VIPs in the fresh food compartment, freezer
doors, and cabinets to reach the 30-percent efficiency level. The design options also
include the use of variable speed compressors for all units analyzed except the 21-cubic
foot product class 3 unit. These product changes substantially increase the variable costs
across nearly all platforms at this TSL.

While products that meet the efficiency requirements of TSL 4 are not in
widespread production, several manufacturers produce units at these efficiencies due to
tax credit incentives. However, at TSL 4, most manufacturers expect to completely
redesign existing production lines if the amended energy conservation standards were set
at levels that necessitated these changes across most or all of their products.
Manufacturers would need to purchase injection molding equipment, cabinet bending
equipment, and other equipment for interior tooling as they would need to create new
molds for these production lines. These changes drive DOE’s estimate of the large
product and capital conversion costs at TSL 4 ($348 million and $1,405 million,
respectively). The significant incremental investment relative to TSL 3 results, in large

49 Throughout the document, the terms “max available” or “max

- tech available” are in tended to mean the maximum efficiency level of available products.

210part, from the design option of adding VIPs to the 21-cubic foot analyzed product class 3
unit. This top-mounted refrigerator-freezer represents a substantial portion of the market
and manufacturers would have to completely redesign these platforms.

As a result of the large investment necessary to meet this TSL, some
manufacturers could move production to lower-labor-costs countries to achieve cost
savings for labor expenditures. (More information on employment impacts is provided in
section IV.B.1.b.) In addition to the large capital conversion costs, the shipment-weighted
average MPC increases by approximately 36 percent at TSL 4 after standards compared
to the base case. However, the magnitude of the conversion costs at TSL 4 are so large
that even if manufacturers can reap additional profit from these higher product costs (as
in the flat markup scenario), they would still be substantially impacted, as shown by the
negative INPV results in the flat markup scenario. Additionally, the 36-percent increase
in MPC drives shipments lower due to the price elasticity. Lower industry volume from
the decline in shipments accounts for a change in industry value of approximately 16
percent in the flat markup scenario. The large, negative impact on INPV is even greater
under the preservation of operating profit markup scenario due to the inability to pass on
the higher costs of expensive design options such as variable speed compressors and

VIPs.

TSL 5 represents max tech for all standard-size refrigerator-freezers. The maxtech level corresponds to reductions in measured energy consumption compared to the
current energy conservation standards for product class 3 (36 percent), product class 5

211(36 percent), and product class 7 (33 percent), respectively. DOE estimates the INPV
impacts at TSL 5 to range from -$1,042.2 million to -$1,841.5 million, or a change in
INPV of -39.0 percent to -69.0 percent. At this TSL, the industry cash flow is estimated
to decrease by a factor of approximately 5.0 to -$727.5 million, compared to the basecase value of $182.8 million in the year leading up to the amended energy conservation

standards.

No products that meet TSL 5 are currently offered on the U.S. market. At TSL 5,
the changes required to meet this TSL are similar to those at TSL 4, as complete
redesigns of all platforms would be required. TSL 5 requires much more extensive use of
VIPs, however. The higher conversion costs at TSL 5 are primarily due to the use of VIPs
in additional locations in the door, cabinet and freezer, whereas at TSL 4 some of the
analyzed design options of the larger-sized units included limited or no VIP use. This
level would require manufacturers to further lengthen assembly lines and even modify or
move their facilities outside of the United States. These factors drive the projected $2,419

million conversion cost estimate at this TSL. As with TSL 4, at TSL 5 some
manufacturers could elect to move production out of the U.S. to offset some of the
additional product costs. At TSL 5, DOE estimates MPCs increase by approximately 58
percent after standards compared to the base case. Similar to TSL 4, this substantially
reduces shipments due to the price elasticity effect and exacerbates the industry impacts
in both markup scenarios.

212As with other TSLs, the impact on INPV is mitigated under the flat markup
scenario because manufacturers are able to fully pass on the large increase in MPC to
consumers, thereby increasing manufacturers’ gross profit in absolute terms. However,
even assuming manufacturers could earn the same gross margin percentage per unit on
those higher costs, the capital and product conversion costs cause negative INPV impacts,
as shown by the 39 percent decline in INPV in the flat markup scenario. This large
impact even in the lower bound scenario demonstrates that the large conversion costs to
redesign all existing platforms results in substantial harm. The result is predicted even if
manufacturers earn a historical margin on these additional costs. Due to the extremely
large cost increases at the max-tech level, it is less likely at TSL 5 than at other examined
levels that manufacturers could fully pass through the increase in production costs. If
margins are impacted, TSL 5 would result in a substantial INPV loss under this scenario.

ii. Cash-Flow Analysis Results for Standard-Size Freezers

213As part of its cash-flow analysis for standard-size freezers, DOE applied two
different scenarios to project the impacts on manufacturers from standards at the various
TSLs that DOE considered. The following tables provide those projected impacts under
the flat-markup and preservation of operating profit markup scenarios.

Table VI

. 25 . Manufacturer Impact Analysis for Standard-Size Freezers

– Flat Markup Scenario Units Base Case Trial Standard Level 1 2 3 4 5
INPV (2009$ millions) 337.8 308.0 214.1 225.3 252.4 192.7
Change in INPV (2009$ millions) (29.8) (123.7) (112.5) (85.4) (145.0)

(%)

- 8.8%

- 36.6%

- 33.3%

- 25.3%

- 42.9% Product Conversion Costs (2009$ millions) - 22 51 55 63 70
Capital Conversion Costs (2009$ millions) - 50 175 182 183 320

Total Conversion Costs (2009$ millions) - 72 226 237 247 390

Table VI

. 26 . Manufacturer Impact Analysis for Standard-Size Freezers

– Preservation of Operating Profit Markup Scenario Units Base Case Trial Standard Level 1 2 3 4 5
INPV (2009$ millions) 337.8 287.7 167.3 159.6 155.3 39.0
Change in INPV (2009$ millions) (50.0) (170.5) (178.1) (182.4) (298.8)

(%)

- 14.8%

- 50.5%

- 52.7%

- 54.0%

- 88.5% Product Conversion Costs (2009$ millions) - 22 51 55 63 70
Capital Conversion Costs (2009$ millions) - 50 175 182 183 320

Total Conversion Costs (2009$ millions) - 72 226 237 247 390

214TSL 1 represents a 20-percent reduction in measured energy use over the current
energy conservation standards for the analyzed standard-size upright freezer product class
9 and a 20-percent reduction for the analyzed standard-size chest freezer product class 10.
DOE estimates the INPV impacts at TSL 1 to range from -$29.8 million to -$50.0
million, or a change in INPV of -8.8 percent to -14.8 percent. At this TSL, the industry
cash flow is estimated to decrease by approximately 111.2 percent to -$2.6 million,
compared to the base-case value of $23.2 million in the year leading up to the amended
energy conservation standards.

While products meeting TSL 1 are currently produced only in limited volumes,
the changes in the manufacturing process would not require completely new platforms to
meet the energy requirements at this TSL. For most standard-size freezer platforms, the
design options DOE analyzed include the use of brushless direct current (DC) evaporator
fan motors and compressors with higher EERs. However, the design options to meet this
efficiency level also include increasing door insulation thickness for all analyzed
products except the 20-cubic foot product class 10 unit. Increasing door insulation
thickness drives the majority of the conversion cost outlay DOE estimates manufacturers
would incur at TSL 1. To increase door insulation thickness, manufacturers would need
to purchase new tooling for their door assemblies. DOE estimates that these changes
would result in product conversion costs of $22 million and capital conversion costs of
$50 million at TSL 1. However, the conversion costs are somewhat mitigated at TSL 1
because the design options analyzed would not change the production equipment for the

cabinet.

215At TSL 1, variable costs increase by approximately 10 percent after standards
relative to base case MPCs. The flat markup scenario shows less severe impacts because
it assumes manufacturers can pass on these substantially higher product costs and
maintain gross margin percentages. Additionally, the reduction in shipments due to the
price elasticity has only a marginally negative effect at this TSL. The relatively large
conversion costs decrease industry value under both markup scenarios and account for a
substantial portion of the INPV impacts. This is especially the case if manufacturers are
unable to earn any additional profit on the higher production costs (the preservation of
operating profit scenario).

TSL 2 represents a reduction in measured energy consumption over the current
standards of 30 percent for product class 9 and 25 percent for product class 10. TSL 2
also represents reductions for the other product classes as well

-- product class 8 (upright
freezers with manual defrost, 25 percent) and product class 10A (chest freezers with
automatic defrost, 30 percent). DOE estimates the INPV impacts at TSL 2 to range from ­
$123.7 million to -$170.5 million, or a change in INPV of -36.6 percent to -50.5 percent.
At this TSL, the industry cash flow is estimated to decrease by approximately a factor of

3.6 to -$60.0 million, compared to the base-case value of $23.2 million in the year
leading up to the amended energy conservation standards.

The vast majority of the standard-size freezer market does not currently meet the
efficiency requirements at TSL 2. DOE’s design options assume that, in addition to the

216component swaps noted above, manufacturers would increase the insulation thickness of
both the door and cabinet. As a result, product redesigns are expected across most
platforms, which could substantially disrupt current manufacturing processes. These
changes account for the majority of DOE’s estimates for total product conversion costs of
$51 million and capital conversion costs of $175 million, an increase over TSL 1 of $29
million and $125 million, respectively. The magnitude of the investments, relative to the
industry value, results in severe INPV impacts. Even if manufacturers are able to pass on
the estimated 24-percent increase in product costs onto their customers after standards,
the large product and capital conversion costs resulting from increased insulation
thickness decrease INPV. If manufacturers are not able to pass on these costs, as shown
by the preservation of operating profit scenario, INPV impacts are projected to be severe.

TSL 3 represents a 35-percent reduction in measured energy use over the current
energy conservation standards for product class 9 and a 30-percent reduction for product
class 10. DOE estimates the INPV impacts at TSL 3 to range from -$112.5 million to ­

$17 8.1 million, or a change in INPV of -33.3 percent to -52.7 percent. At this TSL, the
industry cash flow is estimated to decrease by a factor of approximately 3.7 to -$63.8
million, compared to the base-case value of $23.2 million in the year leading up to the
amended energy conservation standards

.

The efficiency requirements at TSL 3 are more stringent than the max available
products in the market for product class 9 and product class 10. The impacts at TSL 3 are
similar to those at TSL 2 because the design options analyzed by DOE already required

217platform redesigns at TSL 2. However, the additional design options analyzed at TSL 3
also include a variable speed compressor in the 14-cubic foot product class 9 unit and
VIPs in the bottom wall of the 20-cubic foot product class 10 unit. These design options
substantially increase the variable costs associated with these products but do not greatly
change the product and capital conversion costs. DOE estimates that under TSL 3, the
average MPC of a standard- siz e freezer is roughly 34 percent higher after standards than
in the base case, leading to a 9-percent drop in shipments from the price elasticity
assumption for 2014 alone.

The impacts at TSL 3 under the flat markup scenario become less severe than at
TSL 2 because the scenario assumes manufacturers can fully pass on the added cost to
consumers, while investments do not significantly increase from TSL 2 to TSL 3.
However, under the preservation of operating profit markup scenario, manufacturers do
not receive any extra profit on units of higher cost, resulting in worse INPV impacts at

TSL 3 than at TSL 2.

TSL 4 represents a 40-percent reduction in measured energy use over the current
energy conservation standards for product class 9 and a 35-percent reduction for product
class 10. DOE estimates the INPV impacts at TSL 4 to range from -$85.4 million to ­
$182.4 million, or a change in INPV of -25.3 percent to -54.0 percent. At this TSL, the
industry cash flow is estimated to decrease by a factor of approximately 3.9 to -$66.5
million, compared to the base-case value of $23.2 million in the year leading up to the
amended energy conservation standards.

218At TSL 4, the design options DOE analyzed include the addition of a variable
speed compressor for the 20-cubic foot product class 9 unit, the 15-cubic foot product
class 10 unit, and the 20-cubic foot product class 10 unit. For the 14-cubic foot product
class 9 unit, the design options analyzed were even thicker wall cabinet insulation and the
implementation of VIPs.

The relative impacts at TSL 4 are also caused by the incremental MPCs compared
to the conversion costs to implement these design options. Outlays for conversion costs
increase only slightly at TSL 4 (by 4 percent, compared to TSL 3) while variable costs
increase substantially (by approximately 52 percent after standards compared to the
baseline) due to the addition of variable speed compressors and VIPs. Because
manufacturers earn incrementally more profit on each unit at TSL 4 compared to TSL 3
in the flat markup scenario

— without substantial changes to conversion costs

— further
declines in industry value, though still substantial, are mitigated in this scenario.
However, manufacturers expressed skepticism that such large cost increases could be
passed on. This view is reflected by the severely negative results in the preservation of
operating profit scenario.

TSL 5 represents max tech for the standard-size freezer product classes. This TSL
reflects a 44-percent reduction in measured energy use for product class 9 and a 41­
percent reduction for product class 10. DOE estimates the INPV impacts at TSL 5 to
range from -$145.0 million to -$298.8 million, or a change in INPV of -42.9 percent to ­

21988.5 percent. At this TSL, the industry cash flow is estimated to decrease by a factor of
approximately 6.3 to -$122.8 million, compared to the base-case value of $23.2 million in
the year leading up to the amended energy conservation standards.

To achieve the max-tech level at TSL 5, DOE analyzed design options that
include the widespread implementation of multiple VIPs on all standard-size freezers, in
addition to the use of more efficient components and thicker insulation already necessary
to achieve the efficiency requirements at TSL 4. DOE estimated that TSL 5 would
require product and capital conversion costs of $70 million and $320 million,
respectively. These large conversion costs result from the changes associated with
multiple VIP implementation and wall thickness increases. In addition, DOE estimates
that product costs would almost double base-case MPCs after standards, driven by the use
of variable speed compressors and VIPs in the doors and cabinet of all product lines. As a
result, INPV decreases substantially from TSL 4 to TSL 5.

iii. Cash-Flow Analysis Results for Compact Refrigeration Products

220As part of its cash-flow analysis for compact refrigeration products, DOE applied
two different scenarios to project the impacts on manufacturers from standards at the
various TSLs that DOE considered. The following tables provide those projected
impacts under the flat-markup and preservation of operating profit markup scenarios.

Table VI

. 27 . Manufacturer Impact Analysis for Compact Refrigeration Products

– Flat Markup Scenario Units Base Case Trial Standard Level 1 2 3 4 5
INPV (2009$ millions) 169.4 152.8 133.3 106.5 127.9 14.5
Change in INPV (2009$ millions) (16.6) (36.2) (62.9) (41.5) (154.9)

(%)

- 9.8%

- 21.4%

- 37.1%

- 24.5%

- 91.4% Product Conversion Costs (2009$ millions) - 15 35 41 48 67
Capital Conversion Costs (2009$ millions) - 24 46 76 71 220

Total Conversion Costs (2009$ millions) - 39 80 118 119 287

221Table VI

. 28

. Manufacturer Impact Analysis for Compact Refrigeration Products

– Preservation of Operating Profit Markup Scenario Units Base Case Trial Standard Level 1 2 3 4 5
INPV (2009$ millions) 169.4 141.6 110.8 80.1 76.6 (73.2)
Change in INPV (2009$ millions) (27.8) (58.7) (89.3) (92.8) (242.6)

(%)

- 16.4%

- 34.6%

- 52.7%

- 54.8%

- 143.2% Product Conversion Costs (2009$ millions) - 15 35 41 48 67
Capital Conversion Costs (2009$ millions) - 24 46 76 71 220

Total Conversion Costs (2009$ millions) - 39 80 118 119 287

TSL 1 represents a 20-percent reduction in measured energy use over the current
energy conservation standards for compact refrigerators and refrigerator-freezers (product
class 11) and a 10-percent reduction for compact freezers (product class 18) analyzed by

DOE

. DOE estimates the INPV impacts at TSL 1 to range from -$16.6 million to -$27.8
million, or a change in INPV of -9.8 percent to -16.4 percent. At this TSL, industry cash

fl ow is estimated to decrease by approximately 125.1 percent to -$2.7 million, compared
to the base-case value of $10.7 million in the year leading up to the amended energy
conservation standards. A small percentage of product class 18 shipments currently meet
this TSL, but most product class 11 shipments are baseline units.

The design options analyzed by DOE at TSL 1 assumed that more significant
changes in the manufacturing process would be required for product class 11, while
product class 18 would only require increased compressor efficiency. For product class
11, DOE analyzed several design options that represent component changes, such as a

222more efficient compressor and increased heat exchanger area, which do not have a
significant impact on consumer prices or conversion costs. However, DOE also analyzed
increasing door insulation thickness for product class 11, which drives the bulk of the
estimated $15 million and $24 million outlays for product conversion and capital
conversion costs, respectively. As described for standard-size refrigerator-freezers and
standard-size freezers, increasing insulation thickness requires manufacturers to invest in
injection molding equipment and other equipment for interior tooling to manufacture
products with different door dimensions. The overall impacts at TSL 1 are relatively
moderate because the conversion costs are still small compared to the industry value of
$169.4 million.

The higher production costs at TSL 1 do not have a substantial impact on INPV at
TSL 1. The MPC of compact refrigeration products on a shipment-weighted basis
increases 11 percent over the base case at TSL 1 after standards. The combined INPV
impacts are greater under the preservation of operating profit scenario since
manufacturers cannot pass on any of the added cost to consumers under that scenario,
resulting in lower cash flows from operations. However, because production costs do not
greatly increase at TSL 1, the impacts on INPV are relatively low under this scenario as

well.

TSL 2 represents a 25-percent reduction in measured energy use over the current
energy conservation standards for product class 11 and a 10-percent reduction for product
class 18. TSL 2 also represents a 15-percent reduction in measured energy consumption

223for the analyzed product classes 13, 13I, 15, and 15I, and a 20-percent reduction for the
unanalyzed product classes 14 and 14I. DOE estimates the INPV impacts at TSL 2 to
range from -$36.2 million to -$58.7 million, or a change in INPV of -21.4 percent to ­

34.6 percent. At this TSL, the industry cash flow is estimated to decrease by
approximately 254.9 percent to -$16.6 million, compared to the base-case value of $10.7
million in the year leading up to the amended energy conservation standards

.

At TSL 2, further changes are required for product class 11. In addition to
component swaps, the design options analyzed by DOE include thicker cabinet
insulation. As discussed for TSL 1, increasing insulation thickness significantly impacts
product and capital conversion costs, but much more so when adding insulation to the
cabinet (as opposed to the door). To increase the insulation thickness of the cabinet,
manufacturers must replace virtually all stamping equipment, which greatly increases the
capital conversion costs. Additionally, DOE analyzed the use of isobutane refrigerant as a
design option for the 4-cubic foot product class 11 unit. At TSL 2, a substantial portion of
the investment to reach TSL 2 would likely be for training service technicians to handle
this volatile refrigerant. As a result of thicker cabinet insulation and conversion to
isobutane, product conversion and capital conversion costs roughly double at TSL 2 (to
$35 million for product conversion costs and $46 million for capital conversion costs).
The shipment-weighted MPC increased 22 percent at TSL 2 after standards compared to
baseline costs, which also contributed to the more severe impacts projected under the
preservation of operation profit scenario if manufacturers do not earn additional profit on
these higher costs

.

224TSL 3 represents a 30-percent reduction in measured energy consumption over
the current energy conservation standards for product class 11 and a 15-percent reduction
for product class 18. DOE estimates the INPV impacts at TSL 3 to range from -$62.9
million to -$89.3 million, or a change in INPV of

-- 37.1 percent to -52.7 percent. At this
TSL, the industry cash flow is estimated to decrease by a factor of approximately 3.9 to ­
$30.6 million, compared to the base-case value of $10.7 million in the year leading up to
the amended energy conservation standards

.

At TSL 3, the design options analyzed for both product class 18 units include
thicker door insulation, which further increases the capital conversion costs over TSL 1
and TSL 2, where this was not analyzed as a design option. The additional impacts at
TSL 3 are also due to more stringent requirements for product class 11. A 30-percent
reduction for product class 11 is greater than the most efficient units on the market today.
For both analyzed sizes of product class 11, DOE analyzed the design option of thicker
insulation in the cabinet for both units analyzed. The net effect is a large increase in
conversion costs due to the much higher cost of the equipment necessary to manufactu re the cabinet. At TSL 3, DOE estimated total product conversion costs of $41 million and
capital conversion costs of $76 million, a 46 percent total increase in conversion costs
over TSL 2. The effect of the design changes at TSL 3 on shipment-weighted unit cost is
a 27-percent increase over the average baseline MPC after standards. The magnitude of
the investments relative to the industry value leads to significant impacts, although they

225are moderated somewhat in the flat markup because manufacturers earn additional profit

on the investments.

TSL 4 represents a 40-percent reduction in measured energy use over the current
energy conservation standards for product class 11 and a 25-percent reduction for product
class 18. DOE estimates the INPV impacts at TSL 4 to range from -$41.5 million to ­
$92.8 million, or a change in INPV of -24.5 percent to -54.8 percent. At this TSL, the
industry cash flow is estimated to decrease by a factor of approximately 3.9 to -$30.5
million, compared to the base-case value of $10.7 million in the year leading up to the
amended energy conservation standards

.

The design options analyzed at TSL 4 would also severely disrupt current
manufacturing processes. For the 1.7-cubic foot product class 11 unit, DOE analyzed a
variable speed compressor and isobutane refrigerant as design options. For the 4-cubic
foot product class 11 unit and the 7-cubic foot product class 18 unit, DOE analyzed
thicker insulation in the cabinets. For 3.4-cubic foot product class 18 unit, DOE analyzed
both an increase to cabinet insulation thickness and VIPs in the bottom wall as design
options. Although increasing insulation thickness, converting to isobutane, and
implementing VIPs all would necessitate large conversion costs, capital conversion costs
decrease slightly from TSL 3 to TSL 4 because of the removal of all previous design
options in the 1.7-cubic foot unit. In other words, the design options analyzed for this unit
cause less substantial changes to existing production equipment, but would also require a
large investment by manufacturers to train service technicians to deal with the refrigerant.

226Because this task would require a large outlay for product conversion costs, total
conversion costs are roughly the same at TSL 3 and TSL 4. Adding a variable speed
compressor in the smaller product class 11 unit analyzed also has a substantial impact on
unit price because of its high component cost. At TSL 4, the shipment-weighted MPC is

60 -percent higher than the baseline MPC after standards. These cost increases are
projected to cause a 16-percent decrease in shipments at TSL 4 in 2014 alone. Over time,
this decline significantly contributes to the negative impacts on INPV in both markup

scenarios.

The large conversion costs and higher prices leading to lower shipments cause a
decrease in INPV from TSL 3 to TSL 4 under the preservation of operating profit markup
scenario (since this scenario assumes higher production costs are not passed on to
consumers). However, under the flat markup scenario, manufacturers are able to earn
additional profit on the new high-cost components such as variable speed compressors,
resulting in an increase in INPV from TSL 3 to TSL 4.

TSL 5 represents max tech for both product classes 11 and 18. The max-tech level
corresponds to a 59-percent and 42-percent reduction in measured energy use for product
class 11 and product class 18, respectively. DOE estimates the INPV impacts at TSL 5 to
range from -$154.9 million t o -$242.6 million, or a change in INPV of -91.4 percent to ­

143.2 percent. At this TSL, the industry cash flow is estimated to decrease approximately
ten-fold to -$97.6 million, compared to the base-case value of $10.7 million in the year
leading up to the amended energy conservation standards

.

227The design options DOE analyzed include the use of VIPs for all analyzed
product class 11 and 18 units to reach max-tech efficiency levels. Additionally, the
design options analyzed for some products also included other costly changes. For the
1.7-cubic foot product class 11 unit, the design options analyzed included multiple VIPs,
a larger heat exchanger, and thicker insulation. The design options analyzed for the 4­
cubic foot product class 11 unit also included a variable speed compressor and thicker
insulation. For product class 18, DOE assumed that manufacturers would remove the
design options necessary to meet TSLs 1 through 4 and add a variable speed compressor
and thicker insulation for both analyzed products. These significant changes greatly
increase the investment required to manufacture standards-compliant products. DOE
estimated that product conversion costs would be $67 million at TSL 5, an increase of
almost 40 percent over TSL 4. DOE also estimated that capital conversion costs would be
$220 million, a more than three-fold increase over TSL 4. This drastic increase in
conversion costs demonstrates the significant investments required by implementing
widespread use of VIPs and increasing wall thickness.

At TSL 5, the shipment-weighted MPC increases by over 150 percent over the
baseline after standards due to the high material costs of VIPs and variable speed
compressors. These large jumps cause shipments to decrease by 42 percent due to the
price elasticity in 2014 alone. As a result of lower industry shipments and extremely high
conversion costs, INPV decreases substantially from TSL 4 to TSL 5 and becomes

228negative under the preservation of operating profit scenario, which indicates the industry

loses more than its base-case value in the standards case under this scenario.

iv. Cash-Flow Analysis Results for Built-In Refrigeration Products
As part of its cash-flow analysis for built-in refrigeration products, DOE applied
two different scenarios to project the impacts on manufacturers from standards at the
various TSLs that DOE considered. The following tables provide those projected
impacts under the flat-markup and preservation of operating profit markup scenarios.

Table VI

. 29 . Manufacturer Impact Analysis for Built-In Refrigeration Products

– Flat Markup Scenario Units Base Case Trial Standard Level 1 2 3 4 5
INPV (2009$ millions) 554.1 502.2 499.0 486.1 471.2 464.2
Change in INPV (2009$ millions) (51.9) (55.1) (68.0) (82.9) (89.9)

(%)

- 9.4%

- 9.9%

- 12.3%

- 15.0%

- 16.2% Product Conversion Costs (2009$ millions) - 41 51 65 75 87
Capital Conversion Costs (2009$ millions) - 40 38 55 74 84

Total Conversion Costs (2009$ millions) - 81 89 119 149 171

229Table VI

. 30 . Manufacturer Impact Analysis for Built-In Refrigeration Products

– Preservation of Operating Profit Markup Scenario Units Base Case Trial Standard Level 1 2 3 4 5
INPV (2009$ millions) 554.1 501.5 497.6 477.0 456.5 442.0
Change in INPV (2009$ millions) (52.6) (56.5) (77.2) (97.6) (112.1)

(%)

- 9.5%

- 10.2%

- 13.9%

- 17.6%

- 20.2% Product Conversion Costs (2009$ millions) - 41 51 65 75 87
Capital Conversion Costs (2009$ millions) - 40 38 55 74 84

Total Conversion Costs (2009$ millions) - 81 89 119 149 171

TSL 1 represents a 10-percent reduction in measured energy use over the current
energy conservation standards for the analyzed built-in all-refrigerator product class 3ABI, the analyzed built-in bottom-mount product class 5-BI, the analyzed built-in side- by

side product class 7-BI, and for the analyzed built-in freezer product class 9-BI. DOE
estimates the INPV impacts at TSL 1 to range from -$51.9 million to -$52.6 million, or a
change in INPV of -9.4 percent to -9.5 percent. At this TSL, the industry cash flow is
estimated to decrease by approximately 70.7 percent to $11.0 million, compared to the
base-case value of $37.5 million in the year leading up to the amended energy

conservation standards

.

At TSL 1, the design options that DOE analyzed result in moderate changes in the
manufacturing process for built-in refrigeration products. For product classes 3A-BI and

9- BI , the design options that DOE analyzed to reach TSL 1 included the use of more
efficient components that do not require significant changes to the manufacturing

230process. However, for product class 5-BI and product class 7-BI, the design options DOE
analyzed also include the use of VIPs in the freezer door. While these components add to
the overall costs of production, the added costs represent a small percentage of the total
cost of a built-in refrigeration product. These cost deltas are low compared to the overall
cost of the products and result in small impacts even if no additional profit is earned on
the incremental MPCs. The estimated product conversion costs for all built-in
refrigeration products at TSL 1 are $41 million and the estimated capital conversion costs
are $40 million. The implementation of VIPs represents a substantial part of the
conversion costs, but several built-in refrigeration manufacturers have products that use
similar technology, which helps to mitigate some of the product conversion costs that
would be required to design products from the ground up.

TSL 2 represents a 15-percent reduction in measured energy use for product class

3A -BI and product class 5-BI. For product classes 7-BI and 9-BI, TSL 2 represents a
reduction of 10 percent and 20 percent, respectively. DOE estimates the INPV impacts at
TSL 2 to range from -$55.1 million to -$56.5 million, or a change in INPV of -9.9
percent to -10.2 percent. At this TSL, the industry cash flow is estimated to decrease by
approximately 75.2 percent to $9.3 million, compared to the base-case value of $37.5
million in the year leading up to the amended energy conservation standards

.

The efficiency requirements for product class 7-BI refrigerator-freezers do not
change from TSL 1 to TSL 2, but the efficiency requirements for all other analyzed builtin product classes increase. The design options that DOE analyzes at TSL 2 for product

231classes 3A-BI and 7-BI still only include component swaps to reach a 15-percent
efficiency improvement. Product class 5-BI uses a variable speed compressor in the
freezer with a brushless DC condenser fan motor, but no longer use the VIPs used to
reach TSL 1. The design options analyzed for product class 9-BI include a brushless DC
evaporator and condenser fan motor, a larger condenser, a variable speed compressor,
and a VIP in the upper door. Because product class 5-BI no longer uses VIPs and fewer
changes to existing products are necessary, the overall impact is a slight decrease in
capital conversion costs from $40 million at TSL 1 to $38 million at TSL 2. Product
conversion costs increase to $51 million at TSL 2 because additional engineering time
would be required to implement the additional component changes. However, because
the complexity of the changes to the products and production facilities are similar at TSL
1 and TSL 2, there is only a small decrease in INPV from TSL 1 to TSL 2.

TSL 3 represents a 20-percent reduction in measured energy use for product class

3A -BI and product class 7-BI. For product classes 5-BI and 9-BI, TSL 3 represents a
reduction of 15 percent and 25 percent, respectively. DOE estimates the INPV impacts at
TSL 3 to range from -$68.0 million to -$77.2 million, or a change in INPV of -12.3
percent to -13.9 percent. At this TSL, the industry cash flow is estimated to decrease by
approximately 102.9 percent to -$1.1 million, compared to the base-case value of $37.5
million in the year leading up to the amended energy conservation standards

.

The efficiency requirements for product class 5-BI do not change from TSL 2 to
TSL 3. However, the design options for all other built-in refrigeration products at TSL 3

232include the implementation of VIPs. The widespread implementation of VIPs increases
product and capital conversion costs, which are estimated to be $65 million and $55
million at TSL 3, respectively. Substantial changes to existing production facilities would
be required to manufacture products that meet the required efficiencies at TSL 3. Most of
the capital conversion costs involve purchasing new production equipment and would
result in high stranded assets. The extensive changes that manufacturers would be
required to make to existing facilities and the projected erosion of profitability if the
additional production cost of implementing VIPs does not yield additional profit result in
a projected decrease in INPV from TSL 3 to TSL 4. However, the industry value is high
relative to the required capital conversion costs and the cost of the additional VIP panels
is relatively small compared to the overall cost of the products, which helps to mitigate
some of the negative impacts caused by these changes.

TSL 4 represents a 25-percent reduction in measured energy use over the current
energy conservation standards for the following product classes: 3A-BI, 5-BI, and 9-BI.
For product class 7-BI, TSL 4 represents a 20-percent reduction in measured energy use
from current energy conservation standards. DOE estimates the INPV impacts at TSL 4
to range from -$82.9 million to -$97.6 million, or a change in INPV of -15.0 percent to ­

17.6 percent. At this TSL, the industry cash flow is estimated to decrease by
approximately 130.3 percent to -$11.4 million, compared to the base-case value of $37.5
million in the year leading up to the amended energy conservation standards

.

233The efficiency requirements for product class 7-BI do not change from TSL 3 to
TSL 4. The design options for the other built-in refrigeration products all include the
addition of more VIPs to reach TSL 4. The design options analyzed for product classes

3A -BI and 5-BI also include using a variable speed compressor. The complexity of
implementing multiple component swaps and the additional production equipment
necessary to use additional VIPs increases both the product and capital conversion costs.
These costs are estimated to be $75 million and $74 million at TSL 4, respectively, and

result in a decrease in INPV from TSL 3 to TSL 4.

TSL 5 represents max tech for the four built-in product classes. This TSL
represents a reduction in measured energy use of 29 percent, 27 percent, 22 percent, and
27 percent, respectively, for product classes 3A-BI, 5-BI, 7-BI, and 9-BI. DOE estimates
the INPV impacts at TSL 5 to range from -$89.9 million to - $11 2.1 million, or a change
in INPV of -16.2 percent to -20.2 percent. At this TSL, the industry cash flow is
estimated to decrease by approximately 149.5 percent to -$18.6 million, compared to the
base-case value of $37.5 million in the year leading up to the amended energy

conservation standards.

The design options analyzed by DOE include the widespread use of VIPs to
achieve the max-tech efficiency levels at TSL 5. Additionally, product class 3A-BI uses
multiple variable speed compressors. Since the implementation of VIPs is both research
and capital intensive, product and capital conversion costs increase to $87 million and
$84 million, respectively. The complexity of implementing multiple component swaps

234and the additional production equipment necessary to use additional VIPs increases both
the product and capital costs.

b. Impacts on Employment
DOE quantitatively assessed the impacts of potential amended energy
conservation standards on employment. DOE used the GRIM to estimate the domestic
labor expenditures and number of domestic production workers in the base case and at

each TSL from 2010 to 2043. DOE used statistical data from the most recent U.S. Census
Bureau’s 2007 Economic Census, the results of the engineering analysis, and interviews
with manufacturers to determine the inputs necessary to calculate industry-wide labor
expenditures and domestic employment levels. Labor expenditures involved with the
manufacture of the product are a function of the labor intensity of the product, the sales
volume, and an assumption that wages remain fixed in real terms over time.

In each GRIM, DOE used the labor content of each product and the
manufacturing production costs from the engineering analysis to estimate the annual
labor expenditures in the residential refrigeration product industry. DOE used Census
data and interviews with manufacturers to estimate the portion of the total labor
expenditures that is attributable to U.S. ( i.e. , domestic) labor.

The production worker estimates in this section only cover workers up to the linesupervisor level who are directly involved in fabricating and assembling a product within
an Original Equipment Manufacturer (OEM) facility. Workers performing services that

235are closely associated with production operations, such as material handing with a
forklift, are also included as production labor. DOE’s estimates only account for
production workers who manufacture the specific products covered by this rulemaking.
For example, a worker on a wine cooler line would not be included with the estimate of
the number of residential refrigeration workers.

The employment impacts shown in Table VI

. 31 through Table VI

. 33 represent the
potential production employment that could result following amended energy
conservation standards. The upper end of the results in these tables estimates the
maximum change in the number of production workers after amended energy
conservation standards must be met. The upper end of the results assumes manufacturers
would continue to produce the same scope of covered products in the same production
facilities. The upper end of the range also assumes that domestic production does not

shift to lower-labor-cost countries. Because there is a real risk of manufacturers
evaluating sourcing decisions in response to amended energy conservation standards, the
lower end of the range of employment results in Table VI

. 31 through Table VI

. 33
includes the estimated total number of U.S. production workers in the industry who could
lose their jobs if all existing production were moved outside of the U.S. While the results
present a range of employment impacts following the compliance date of amended
energy conservation standards, the discussion below also includes a qualitative discussion
of the likelihood of negative employment impacts at the various TSLs. Finally, the
employment impacts shown are independent of the employment impacts from the broader

236U.S. economy, which are documented in chapter 13, Employment Impact Analysis, of the

final rule TSD.

i. Standard-Size Refrigerator-Freezer Employment Impacts
Using the GRIM, DOE estimates that, in the absence of amended energy
conservation standards, there would be 7,351 domestic production workers involved in
manufacturing standard-size refrigerator-freezers in 2014. Using 2007 Census Bureau
data and interviews with manufacturers, DOE estimates that approximately 42 percent of
standard-size refrigerator-freezers sold in the United States are manufactured
domestically

. Table VI

. 31 shows the range of the impacts of potential amended energy
conservation standards on U.S. production workers in the standard-size refrigeratorfreezer market.

Table VI

. 31 . Potential Changes in the Total Number of Domestic Standard-Size Refrigerator-Freezer Production Workers in 2014 Trial Standard Level Base Case 1 2 3 4 5 Total Number of Domestic Production Workers in 2014 (without changes in production locations) 7,351 7,164 7,127 7,172 7,109 6,981

Potential Changes in Domestic Production Workers in 2014* - (187)

­ (7,351) (224)

­ (7,351) (179)

­ (7,351) (242)

­ (7,351) (307)

­ (7,351) *DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

All examined TSLs show relatively minor impacts on domestic employment
levels at the lower end of the range. Most of the design options used in the engineering
analysis involve the swapping of components in baseline units with more efficient parts

237for top-mounted, side- by -side, and bottom-mounted refrigerator-freezers. These
component swaps for these design options add primarily material costs and do not greatly
impact the labor content of the baseline products. The relatively small decreases in
domestic production employment for the lower end of the range of the employment
impacts arise from higher product prices lowering shipments the year the standar d
becomes effective. At these higher TSLs, the effects of lower shipments more than offset
the additional product labor that is required to manufacture products that use VIP panels.

During interviews, manufacturers indicated that their domestic employment levels
could be impacted under two scenarios: (1) the widespread adoption of VIPs or (2)
significant capital conversion costs that would force them to consider non-domestic
manufacturing locations once the compliance date for the amended energy conservation
standards arrive. The widespread adoption of VIPs would increase the labor content of
today’s products. The labor content of products with VIPs increases because of the extra
handling steps that would be required to ensure that VIPs are not damaged during
production. Because of the competitive nature of the industry, manufacturers believed the
extra labor costs could force them to move their remaining domestic production to lower
labor cost countries to take advantage of the cheaper labor they offer

.

Manufacturers also indicated that large conversion costs would likely force them
to consider investing in lower-labor-cost countries. For most product categories, there is a
range of efficiency levels that can be met with relatively low-cost components (a s analyzed in the engineering analysis). Beyond these levels, manufacturers would need to

238decide to follow the MPC design options analyzed in the engineering analysis for each
product category. Manufacturers indicated the analyzed design options that use multiple
VIPs would involve significant capital conversion costs and add very large material costs
to their products that would likely result in the relocation of their production facilities
abroad. However, manufacturers indicated they would face even larger capital conversion
costs at lower efficiencies if they redesigned their products with thicker walls. While not
analyzed as a design option for standard-size refrigerator-freezers, increasing wall
thickness would likely result in moving domestic production outside of the U.S. at lower
efficiency levels.

ii. Standard-Size Freezer Employment Impacts
Using the GRIM, DOE estimates that, in the absence of amended energy
conservation standards, there would be 1, 643 standard-size freezer production workers in
the U.S. in 2014. Using the 2007 Census data and interviews with manufacturers, DOE
estimates that approximately 80 percent of standard-size freezers sold in the United States
are manufactured domestically. Table VI

. 32 shows the impacts of amended energy
conservation standards on U.S. production workers in the standard-size freezer market.

Table VI

. 32 Potentia l Changes in the Total Number of Domestic Standard-Size Freezer Production Workers in 2014 Trial Standard Level Base Case 1 2 3 4 5 Total Number of Domestic Production Workers in 2014 1,643 1,597 1,537 1,497 1,410 1,303 (without changes in production locations) Potential Changes in

- (46)

­ (106)

­ (146)

­ (233)

­ (340)

­ Domestic Production (1,643) (1,643) (1,643) (1,643) (1,643)

239Workers in 2014* *DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

Similar to standard-size refrigerator-freezers, there are relatively small decreases
in employment at the lower end of the range of employment impacts. These slight
declines are caused by higher prices that drive lower shipments once manufacturers must
meet the amended energy conservation standard. Standard-size freezer manufacturers
also indicated that domestic production could be shifted abroad with any efficiency level
that required large capital conversion costs. At TSL 1, DOE does not expect substantia l
changes to domestic employment in the standard-size freezer market if manufacturers use
the design options listed in the engineering analysis to reach the efficiency requirements

at this TSL.

However, at TSL 2 through TSL 5, manufacturers indicated that there could be
domestic employment impacts depending on the design pathway used to reach the
required efficiencies. At TSL 2 and above, the engineering analysis assumes that
manufacturers would have to change wall thicknesses to reach the required efficiencies.
Manufacturers indicated that because these products are typically low-end, they would
likely follow the design pathways in the engineering analysis and increase the wall
insulation thickness to reach higher efficiencies in order to avoid having to pass large
price increases on to consumers. While this approach would result in extremely large
conversion costs and would be more likely lead to manufacturers moving production
abroad, manufacturers believed this strategy would help to maintain sales volumes.

240iii. Compact Refrigeration Product Employment Impacts
DOE’s research suggests that a limited percentage of compact refrigerators and
refrigerator-freezers are made domestically (see Table VI

. 33 ). The overwhelming
majority of products are imported. Manufacturers with domestic manufacturing facilities
tend to source or import their compact products. The small employment numbers are
mostly from remaining domestic production of compact chest freezers. As a result,
amended energy conservation standards for compact refrigerators or refrigerator-freezers
are unlikely to noticeably alter domestic employment levels.

Table VI

. 33 Potential Changes in the Total Number of Domestic Compact Refrigeration Product Production Workers in 2014 Trial Standard Level Base Case 1 2 3 4 5
Total Number of Domestic Production Workers in 2014 (without 27 26 26 25 24 40 changes in production locations) Potential Changes in Domestic Production Workers in 2014* - (1)

­ (27) (1)

­ (27) (2)

­ (27) (3)

­ (27) 13

- (27)

*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

iv. Built-In Refrigeration Product Employment Impacts
Using the GRIM, DOE estimates that, in the absence of amended energy
conservation standards, there would be 1, 139 U.S. works manufacturing built-in
refrigeration products in 2014. Using the 2007 Census data and interviews with
manufacturers, DOE estimates that approximately 94 percent of the built-in refrigeration
products sold in the United States are manufactured domestically. Table VI

. 34 shows the

241impacts of amended energy conservation standards on U.S. production workers in the
built-in refrigeration market.

Table VI

. 34 Potential Changes in the Total Number of Built-In Refrigeration Product Production Workers in 2014 Trial Standard Level Base Case 1 2 3 4 5
Total Number of Domestic Production Workers in 2014 (without 1,139 1,139 1,138 1,145 1,148 1,171 changes in production locations) Potential Changes in Domestic Production Workers in 2014* - 0

­ (1,139) (1)

­ (1,139) 6

­ (1,139 9

­ (1,139) 32

­ (1,139) *DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

Employment in the built-in refrigeration market follows a pattern similar to that
seen in the market for standard-size refrigerator-freezers and standard-size freezers at
lower TSLs. At TSL 1 and TSL 2, higher prices result in fewer shipments, and a
consequent reduction in labor expenditures that more than offsets the additional labor
required to manufacture products with VIPs. However, at TSL 3 and above, the use of
additional VIPs in built-in refrigeration products requires enough additional labor to
cause a slight increase in the number of domestic production workers. Because built-in
products are high-end products with far fewer shipments, it is less likely that
manufacturers would choose to move all production facilities in response to amended
energy conservation standards. The higher margins and profit earned in this market also
make it more likely that manufacturers could earn a return on the investments required to
reach the amended energy conservation standards and invest in existing facilities rathe r than move production abroad.

242c. Impacts on Manufacturing Capacity
Manufacturers indicated that design changes involving thicker walls or multiple
VIP panels would require substantial changes to their current manufacturing process.
While these technologies would require the purchase of millions of dollars of production
equipment, most manufacturers indicated they would likely be able to make even these
substantial changes in between the announcement of the final rule and compliance date of
an amended energy conservation standard. Manufacturers have had experience with the
design options involving VIPs (even if not at the scale that would be required if the
higher efficiency levels were adopted) and thickening walls. In addition, the design
changes and investments analyzed at the levels required by the amended energy
conservation standards for most product classes are more similar in magnitude to the
introduction of a new product line – rather than complete redesigning of all products.
Therefore, a larger capacity concern of manufacturers is the ability of their suppliers,
particularly manufacturers of VIPs and more efficient compressors, to ramp up
production in time to meet the amended energy conservation standard.

d. Impacts on Sub-Group(s) of Manufacturers
For this rulemaking, DOE used the results of the industry characterization to
identify any subgroups of refrigerator manufacturers that exhibit similar characteristics
different from the industry as a whole. The only such subgroup DOE identified was builtin manufacturers. DOE is establishing separate product classes for built-in products and
is presenting separate analytical results for those products classes. Therefore, the MIA

243results DOE presents for those product classes already allow DOE to examine the MIA
impacts on these manufacturers. Section VI.B.2 presents a more detailed discussion of
the results for built-in product classes.

e. Cumulative Regulatory Burden
While any one regulation may not impose a significant burden on manufacturers,
the combined effects of several impending regulations may have serious consequences
for some manufacturers, groups of manufacturers, or an entire industry. Assessing the
impact of a single regulation may overlook this cumulative regulatory burden. In addition
to energy conservation standards, other regulations can significantly affect
manufacturers’ financial health. Multiple regulations affecting the same manufa cturer can
strain profits and can lead companies to abandon product lines or markets with lower
expected future returns than competing products. For these reasons, DOE conducts an
analysis of cumulative regulatory burden as part of its rulemakings pertaining to
appliance efficiency.

During previous stages of this rulemaking DOE identified a number of
requirements with which manufacturers of these refrigeration products must comply and
which take effect within three years of the anticipated effective date of the amended
standards. DOE discusses these and other requirements, and includes the full details of
the cumulative regulatory burden, in chapter 12 of the final rule’s TSD. In chapter 12,
DOE shows that many of the same products produced by residential refrigeration product

244manufacturers are also regulated by DOE and have a compliance date within 3 years of
the compliance date of this rulemaking.

3. National Impact Analysis

a. Significance of Energy Savings
To estimate the national energy savings attributable to potential standards for
refrigeration products, DOE compared the energy consumption of these products under
the base case to their anticipated energy consumption under each TSL. Table VI-35
through Table VI- 38 present DOE’s forecasts of the national e nergy savings for each
TSL, which were calculated using the approach described in section IV.G. Chapter 10 of
the final rule TSD presents tables that also show the magnitude of the energy savings if
the savings are discounted at rates of seven and three percent. Discounted energy savings
represent a policy perspective in which energy savings realized farther in the future are
less significant than energy savings realized in the nearer term.

Table VI

. 35 Standard-Size Refrigerator-Freezers: Cumulative National Energy Savings in Quads

Trial Standard Level Top

- Mount Refrigerator

- Freezers and All

- Refrigerators Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers
Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A, and 5I Product classes 4, 4I, and 7 1 1.73 0.10 0.58 2 1.73 0.10 0.95 3 2.22 0.10 0.95 4 2.67 0.48 1.30 5 3.11 0.70 1.50

245Table VI

. 36 Standard-Size Freezers: Cumulative National Energy Savings in Quads

Trial Standard Level Upright Freezers Chest Freezers

Product classes 8, 9 and 9I Product classes 10 and 10A
1 0.49 0.31 2 0.75 0.38 3 0.87 0.46 4 0.98 0.53 5 1.01 0.60

Table VI

. 37 Compact Refrigeration Products: Cumulative National Energy Savings in Quads

Trial Standard Compact Refrigerators Compact Freezers
Level Product classes 11, 11A, 12, 13, 13I, 13A, 14, 14I, 15 and 15I Product classes 16, 17, 18

1 0. 28 0.03 2 0. 35 0.03 3 0.39 0.04 4 0. 48 0.07 5 0. 51 0.09

Table VI

. 38 Built-In Refrigeration Products: Cumulative National Energy Savings in Quads
Trial Standard Level Built

- in All Refrigerators Built

- in Bottom

Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright Freezers

Product class 3A

- BI Product classes 5

- BI and 5I

- BI Product classes 4

- BI, 4I

- BI and 7

- BI Product classes 9

- BI and 9I

- BI 1 0.00 0.00 0.01 0.00 2 0.01 0.00 0.01 0.01 3 0.01 0.00 0.03 0.01 4 0.01 0. 02 0.03 0.01 5 0.01 0.02 0.04 0.0 2

246b. Net Present Value of Consumer Costs and Benefits
DOE estimated the cumulative NPV to the Nation of the total costs and savings
for consumers that would result from particular standard levels for refrigeration products.
In accordance with the OMB’s guidelines on regulatory analysis (OMB Circular A -4,
section E, September 17, 2003), DOE calculated NPV using both a 7-percent and a 3­
percent real discount rate. The 7-percent rate is an estimate of the average before-tax rate
of return on private capital in the U.S. economy and reflects the returns on real estate and
small business capital as well as corporate capital. DOE used this discount rate to
approximate the opportunity cost of capital in the private sector, since a recent OMB
analysis has found the average rate of return on capital to be near this rate. See
http://www.whitehouse.gov/omb/circulars_a004_a- 4/ . In addition, DOE used the 3­
percent rate to capture the potential effects of standards on private consumption ( e.g. , through higher prices for products and the purchase of reduced amounts of energy). This
rate represents the rate at which society discounts future consumption flows to their
present value. It can be approximated by the real rate of return on long-term government
debt ( i.e. yield on Treasury notes minus annual rate of change in the Consumer Price
Index), which has averaged about 3 percent on a pre-tax basis for the last 30 years.

Table VI -39 through Table VI-46 show the default consumer NPV results for
each TSL DOE considered for refrigeration products, using both a 7-percent and a 3­
percent discount rate. In each case, the impacts cover the lifetime of products purchased
in 2014-2043. See chapter 10 of the final rule TSD for more detailed NPV results. Comment [A52]: Change recommended by OIRA.

247Table VI

. 39 Cumulative Net Present Value of Consumer Benefits for Standard-Size Refrigerator-Freezers, 3-Percent Discount Rate Comment [A53]: Changes recommended by OIRA.

Trial Standard Level Top

- Mount Refrigerator

- Freezers and All

- Refrigerators Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers
Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A, and 5I Product classes 4, 4I, and 7 billion 2009 dollars 1 11.45 0.94 5.43 2 11.45 0.94 6.34 3 12.91 0.94 6.34 4 9.11 ( 0.47 ) 3.52 5 1.87 ( 2.52 ) 0.83

Table VI

. 40 Cumulative Net Present Value of Consumer Benefits for Standard-Size Comment [A54]: Changes recommended by OIRA.

Trial Standard Level Top

- Mount Refrigerator

- Freezers and All

- Refrigerators Bottom

- Mount Refrigerator

- Freezers Side

- by

- Side Refrigerator

- Freezers
Product classes 1, 1A, 2, 3, 3A, 3I and 6 Product classes 5, 5A, and 5I Product classes 4, 4I, and 7 billion 2009 dollars 1 2.99 0. 34 1.88 2 2.99 0. 34 1.67 3 2.81 0. 34 1.67 4 (0.31) ( 1.17 ) ( 0.60 ) 5 ( 5.28 ) ( 2. 74 ) ( 2.53 ) Deleted: 11.79 Deleted: 95 Deleted: 5.48 Deleted: 11.79 Deleted: 95 Deleted: 6.53 Deleted: 13.43 Deleted: 95 Deleted: 6.53 Deleted: 10.00 Deleted: 0.24 Deleted: 3.99 Deleted: 3.27 Deleted: 09 Deleted: 1.51 Refrigerator-Freezers, 7-Percent Discount Rate

248Table VI

. 41 Cumulative Net Present Value of Consumer Benefits for Standard-Size Freezers, 3-Percent Discount Rate

Trial Standard Upright Freezers Chest Freezers Level Product classes 8, 9 and 9I Product classes 10 and 10A
billion 2009 dollars
1 5.03 3.25 2 7.37 3.33 3 7.69 3.94 4 7.51 3.52 5 5.17 2.42 Comment [A55]: Changes recommended by OIRA.
Deleted: Table

- Cumulative Net Present Value of Consumer Benefits for Standard

- Size Refrigerator

- Freezers, 7

- Percent Discount Rate ¶

Table VI

. 42 Cumulative Net Present Value of Consumer Benefits for Standard-Size Freezers, 7-Percent Discount Rate

Trial Standard Level Upright Freezers Chest Freezers Product classes 8, 9 and 9I Product classes 10 and 10A

billion 2009 dollars
1 1.70 1.11 2 2.38 0.96 3 2.30 1.12 4 1.96 0.75 5 0.56 ( 0.04 )

Table VI

. 43 Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 3-Percent Discount Rate

Trial Standard Level Compact Refrigerators Compact Freezers Product classes 11, 11A, 12, 13,

13I, 13A, 14, 14I, 15 and 15I Product classes 16, 17, 18

billion 2009 dollars

1 1.61 0.20 2 1.42 0.20 3 1.62 0.21 4 0.81 ( 0.01 ) 5 ( 1.86 ) ( 0.48 ) Comment [A56]: Changes recommended by OIRA.

Deleted: 5.07 Deleted: 3.27 Deleted: 7.45 Deleted: 3.38 Deleted: 7.81 Deleted: 4.02 Deleted: 7.69 Deleted: 3.64 Deleted: 5.47 Deleted: 2.62 Comment [A57]: Changes recommended by OIRA.
Deleted: Table

- Cumulative Net Present Value of Consumer Benefits for Standard

- Size Freezers, 7

- Percent Discount Rate ¶

249Table VI

. 44 Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 7-Percent Discount Rate Comment [A58]: Changes recommended by OIRA.

Trial Standard Level Compact Refrigerators Compact Freezers Product classes 11, 11A, 12, 13,

13I, 13A, 14, 14I, 15 and 15I Product classes 16, 17, 18

billion 2009 dollars

1 0.67 0. 09 2 0.51 0. 09 3 0.59 0. 08 4 0. 08 ( 0. 07 ) 5 ( 1. 44 ) ( 0. 36 )

Table VI

. 45 Cumulative Net Present Value of Consumer Benefits for Built-In Refrigeration Products, 3-Percent Discount Rate
Trial Standard Level Built

- in All Refrigerators Built

- in Bottom

Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright Freezers

Product class 3A

- BI Product classes 5

- BI and 5I

- BI Product classes 4

- BI, 4I

- BI and 7

- BI Product classes 9

- BI and 9I

- BI
billion 2009 dollars
1 0. 04 0. 02 0. 06 0. 05 2 0. 05 0. 01 0. 06 0. 07 3 0. 02 0. 01 ( 0. 17 ) 0. 05 4 ( 0.04 ) ( 0. 20 ) ( 0. 17 ) 0. 05 5 ( 0. 08 ) ( 0. 31 ) ( 0. 43 ) 0.02 Deleted: 1.64 Deleted: 20 Deleted: 1.49 Deleted: 20 Deleted: 1.70 Deleted: 22 Deleted: 95 Deleted: 02 Deleted: 60 Deleted: 43 Comment [A59]: Changes recommended by OIRA.
Deleted: ¶ Table

- Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 7

- Percent Discount Rate ¶ Trial Standard Level

... Deleted: ¶ Product class 3A

- BI

...

Formatted Table Deleted: 01 Deleted: 01 Deleted: 02 Deleted: 02

Deleted: 02 Deleted: 00 Deleted: 02 Deleted: 02 Deleted: ( Deleted: 00) Deleted: 00 Deleted: 15 Deleted: 00 Deleted: 13 Deleted: 15 Deleted: 00 Deleted: 06 Deleted: 20 Deleted: 30 Deleted: ( Deleted: )

250Table VI

. 46 Cumulative Net Present Value of Consumer Benefits for Built-In Refrigeration Products, 7-Percent Discount Rate Comment [A60]: Chang es recommended by OIRA.

Trial Standard Level Built

- in All Refrigerators Built

- in Bottom

Mount Refrigerator

Freezers Built

- in Side

- by

Side Refrigerator

Freezers Built

- in Upright Freezers

Product class 3A

- BI Product classes 5

- BI and 5I

- BI Product classes 4

- BI, 4I

- BI and 7

- BI Product classes 9

- BI and 9I

- BI billion 2009 dollars
1 0.01 0.01 0.02 0.02 2 0.02 0.00 0.02 0.02 3 0.00 0.00 ( 0.16 ) 0.00 4 ( 0.04 ) ( 0.14 ) ( 0.16 ) 0.00 5 ( 0.07 ) ( 0.21 ) ( 0.32 ) ( 0.02 )

The NPV results presented above are based on a product price trend that reflects
the default price trend

. As discussed in section IV.G.3
, DOE investigated the impact of

different price trends on the NPV for the considered TSLs. DOE selected a high price

decline case and a low price decline case from among a number of price trends that it
analyzed. Table VI

. 47 through Table VI

. 54 provide the annualized NPV of consumer
benefits at 7-percent and 3-percent discount rates, combined with the annualized present

value of monetized benefits from CO 2 and NO X emissions reductions, for each of the

considered TSLs for the default price trend and the two sensitivity cases. (DOE’s method
for annualization is described in section VI.C.5 of this notice. Section VI.B.6 provides a
complete description and summary of the monetized benefits from CO 2 and NO X emissions reductions.) For details on the combined NPV results, see appendix 10-C of

the final rule TSD. Deleted: learning rates Deleted: The NPV results presented above are based on a learning rate of 44 .6 percent, which is referred to as the “default” learning rate.
Deleted: considered three le arning rate sensitivities: (1) Deleted: “ Deleted: learning” rate; (2)
Deleted: “ Deleted: learning” rate; and (3)

Deleted: learning rates. ¶ ¶

Deleted: “
Deleted: ” learning rate
Deleted: three Comment [A61]: Changes recommended by OIRA. Deleted: “no learning” rate. The “high learning” rate is 54.1 percent. The “low learning” rate is 35.6 percent. The “no learning” rate sensitivity assumes constant real prices ov er the entire forecast period. Refer to section IV.F.1 for details on the development

251Formatted Table

...

Deleted Cells

...

... Moved (insertion) [9]

... m

m

e

252 Table VI

. 47 Standard-size Refrigerat or -Freezers: Annualized Net Present Value of Consumer Benefits (7 -percent Discount Rate

and Annualized Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions* for Products Shipped in 2014- 204 3 Trial Standard

Level Medium Price Decline ( Default ) High Price Decline Low Price Decline
Billion 2009$ 1 0. 825 0. 902 0. 726 2 0. 845 0. 948 0. 715 3 0. 881 1.017 0. 708 4 0. 288 0. 593 ( 0. 100 ) 5 ( 0. 507 ) ( 0. 029) ( 1.114 ) Parentheses indicate negative (-) values.

* The economic benefits from reduced CO 2 emissions were calculated using a SCC value of $22.1/metric ton in 2010 (in 2009$) for CO 2 , increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced NO X emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high values used in DOE’s analysis, and a 7 -percent discount rate.

Table VI

. 48 Standard-size Refrigerator-Freezers : Annualized Net Present Value of Consumer Benefits (3 -percent Discount Rate) and Annualized Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions* for Products Shipped in 2014- 204 3

Trial Standard

Level Medium Price Decline ( Default ) High Price Decline Low Price Decline
Billion 2009$ 1 1.302 1.389 1.195 2 1.397 1.513 1.255 3 1.537 1.691 1.349 4 1.213 1.560 0. 791 5 0. 626 1.171 ( 0. 036) Parentheses indicate negative (-) values. * The economic benefits from reduced CO 2 emissions were calculated using a SCC value of $22.1/metric ton in 2010 (in 2009$) for CO 2 , increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced NO X emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high values used in DOE’s analysis, and a 3-percent discount rate.

Table VI

. 49 Standard-size Freezers : Annualized Net Present Value of Consumer Benefits (7 -percent Discount Rate) and Annualized Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions* for Products Shipped in 2014­ 2043 Deleted: ¶

... Moved down [5]: * The economic benefits fro

...

Deleted: The economic benefits from reduced

... Moved down [6]: ¶

...

Trial Medium Price High Price Decline Low Price Decline Deleted: , 3

- percent Discount Rate
Formatted Table

...

Deleted: LR RF = 44.6% Deleted: Sensitivity:

Deleted: LR RF = 54.1% Deleted: Sensitivity:

Deleted: LR RF = 35.6% Deleted: No Learning: ¶

... Deleted Cells

...

Deleted: 506 Deleted: 514 Deleted: 499 Deleted: 0.473
Deleted Cells

...

Deleted: 669 Deleted: 687 Deleted: 653 Deleted: 0.591

Deleted: 740 Deleted: 0.766 Deleted: 717 Deleted: 0.630

Deleted: 733 Deleted: 772 Deleted: 698 Deleted: 0.566

Deleted: 579 Deleted: 643 Deleted: 0.521 Deleted: 0.301

Moved down [7]: * The economic benefits fro

... Deleted: ¶

... Moved down [9]: Parentheses indicate negativ

... Deleted:

- Compact Refrigeration

... Deleted: ¶

...

Formatted Table

...

Deleted: : Deleted: LR RF = 44.6% Deleted: Sensitivity:

Deleted: LR RF = 54.1% Deleted: Sensitivity:

Deleted: LR RF = 35.6% Deleted: No Learning: ¶

... Deleted Cells

...

Deleted: 0.116 Deleted: 0.121 Deleted: 0.095
Deleted Cells

...ton in 2010 (in 2009$) for CO 2 , increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced NO X emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high values used in DOE’s analysis, and a 3-percent discount rate.

Table VI

. 51 Compact Refrigeration Products: Annualized Net Present Value of Consumer Benefits (7 -percent Discount Rate) and Annualized Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions* for Products Shipped in 2014- 2043

Trial Standard

Level Medium Price Decline (Default) High Price Decline Low Price Decline
Billion 2009$ 1 0.105 0.112 0.096 2 0.094 0.107 0.077 3 0.106 0.122 0.086 4 0.045 0.077 0.006 5 ( 0.142 ) (0.083) (0.216) Standard

Level Decline (Default)

Billion 2009$ 1 0.387 0.398 0.372 2 0.482 0.508 0.448 3 0.513 0.550 0.465 4 0.459 0.516 0.387 5 0.239 0.333 0.118

* The economic benefits from reduced CO 2 emissions were calculated using a SCC value of $22.1/metric ton in 2010 (in 2009$) for CO 2 , increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced NO X emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high values used in DOE’s analysis, and a 7 -percent discount rate.

Table VI

. 50 Standard-size Freezers: Annualized Net Present Value of Consumer Benefits (3 -percent Discount Rate) and Annualized Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions* for Products Shipped in 2014­ 2043

Trial Standard

Level Medium Price Decline ( Default ) High Price Decline Low Price Decline
Billion 2009$ 1 0. 566 0. 579 0. 551 2 0. 745 0. 775 0. 708 3 0. 822 0. 865 0. 770 4 0. 808 0. 873 0. 729 5 0. 623 0. 730 0. 492 * The economic benefits from reduced CO 2 emissions were calculated using a SCC value of $22.1/metric Moved (insertion) [6]
Deleted: , 7

- percent Discount Rate

Deleted: ¶ Learning Rate (LR)

...

Formatted Table

Deleted: :

Deleted: LR RF = 44.6% Deleted: Sensitivity:

Deleted: LR RF = 54.1% Deleted: Sensitivity:

Deleted: LR RF = 35.6% Deleted: No Learning: ¶

... Deleted Cells

Deleted: 007 Deleted: 007 Deleted: 007 Deleted: 0.006
Deleted Cells

Deleted: 008 Deleted: 008 Deleted: 007 Deleted: 0.006

Deleted:

­ Deleted: 006 Deleted:

­ Deleted: 003 Deleted:

­ Deleted: 009 Deleted:

- 0.019

Deleted:

­ Deleted: 019 Deleted:

­ Deleted: 014 Deleted:

­ Deleted: 023 Deleted:

- 0.039

Deleted:

­ Deleted: 039 Deleted:

­ Deleted: 032 Deleted:

­ Deleted: 046 Deleted:

- 0.069

253Parentheses indicate negative (-) values. * The economic benefits from reduced CO 2 emissions were calculated using a SCC value of $22.1/metric ton in 2010 (in 2009$) for CO 2 , increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced NO X emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high values used in DOE’s analysis, and a 7 -percent discount rate.

Table VI

. 52 Compact Refrigeration Products: Annualized Net Present Value of Consumer Benefits (3 -percent Discount Rate) and Annualized Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions* for Products Shipped in 2014- 2043

Trial Standard

Level Medium Price Decline ( Default ) High Price Decline Low Price Decline
Billion 2009$ 1 0. 129 0. 137 0. 119 2 0. 124 0. 139 0. 105 3 0. 141 0. 159 0. 119 4 0. 091 0. 127 0. 047 5 ( 0. 085 ) ( 0. 018) ( 0. 166) Parentheses indicate negative (-) values. * The economic benefits from reduced CO 2 emissions were calculated using a SCC value of $22.1/metric ton in 2010 (in 2009$) for CO 2 , increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced NO X emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high values used in DOE’s analysis, and a 3-percent discount rate.

Table VI

. 53 Built-in Refrigeration Products: Annualized Net Present Value of Consumer Benefits (7 -percent Discount Rate) and Annualized Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions* for Products Shipped in 2014- 2043

Parentheses indicate negative (-) values. * The economic benefits from reduced CO 2 emissions were calculated using a SCC value of $22.1/metric ton in 2010 (in 2009$) for CO 2 , increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced NO X emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high values used in DOE’s analysis, and a 7 -percent discount rate. Deleted:

- Built

- in
Deleted: , 3

- percent Discount Rate

Deleted: ¶ Learn ing Rate (LR)

... Formatted Table

Deleted: :

Deleted: LR RF = 44.6% Deleted: Sensitivity:

Deleted: LR RF = 54.1% Deleted: Sensitivity:

Deleted: LR RF = 35.6% Deleted: No Learning: ¶

... Deleted Cells

Deleted: 011 Deleted: 011 Deleted: 011 Deleted: 0.010
Deleted Cells

Deleted: 014 Deleted: 014 Deleted: 013 Deleted: 0.011

Deleted: 003 Deleted: 007 Deleted:

­ Deleted: 001 Deleted:

- 0.014

Deleted:

­ Deleted: 009 Deleted:

­ Deleted: 003 Deleted:

­ Deleted: 014 Deleted:

- 0.035

Deleted:

­ Deleted: 029 Deleted:

­ Deleted: 019 Deleted:

­ Deleted: 037 Deleted:

- 0.070

Moved (insertion) [5]
Deleted: 3 Trial Standard

Level Medium Price Decline (Default) High Price Decline Low Price Decline

Billion 2009$ 1 0.008 0.009 0.008 2 0.009 0.010 0.008 3 ( 0.011 ) (0.005) (0.018) 4 ( 0.028 ) (0.019) (0.040) 5 ( 0.056 ) (0.043) (0.074)

254Table VI

. 54 Built-in Refrigeration Products: Annualized Net Present Value of Consumer Benefits (3 -percent Discount Rate) and Annualized Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions* for Products Shipped in 2014- 2043 Trial Standard

Level Medium Price Decline (Default) High Price Decline Low Price Decline
Billion 2009$ 1 0.012 0.013 0.012 2 0.015 0.016 0.014 3 0.002 0.008 (0.006) 4 ( 0.013 ) (0.002) (0.025) 5 ( 0.036 ) (0.021) (0.056) Parentheses indicate negative (-) values. * The economic benefits from reduced CO 2 emissions were calculated using a SCC value of $22.1/metric ton in 2010 (in 2009$) for CO 2 , increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced NO X emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high values used in DOE’s analysis, and a 3-percent discount rate.

c. Indirect Impacts on Employment
DOE develops estimates of the indirect employment impacts of potential
standards on the economy in general. As discussed above, DOE expects amended energy
conservation standards for refrigeration products to reduce energy bills for consumers
and the resulting net savings to be redirected to other forms of economic activity. These
expected shifts in spending and economic activity could affect the demand for labor. As
described in section IV.J, above, to estimate these effects, DOE used an input/output
model of the U.S. economy. Table VI

. 55 presents the estimated net indirect employment
impacts in 2020 and 2043 for the TSLs that DOE considered in this rulemaking. Chapter
13 of the final rule TSD presents more detailed results.

Table VI

. 55 Net Increase in Jobs from Indirect Employment Effects Under Refrigeration Product TSLs Moved (insertion) [7] Moved (insertion) [8]
Comment [A62]: Changes recommended by OIRA.

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 thousands Standard

- Size Refrigerator

- Freezers

2020 2.35 2.34 2.33

- 0.06

- 3.18

2552043 16.24 18.45 21.33 26.31 28.85 Standard

- Size Freezers

2020 0.93 1.06 1.06 0.82

- 0.05 2043 5.18 7.24 8.38 9.19 9.12 Compact Refrigeration Products

2020 0.51 0.52 0.60 0. 50

- 0. 04 2043 1.44 1. 64 1.88 2.02 1.53 Built

- In Refrigeration Products

2020 0.02 0.0 2

- 0. 05

- 0.1 1

- 0. 2 1 2043 0.1 4 0.1 9 0. 29 0. 3 1

- 0. 30

The input/output model suggests that today’s amended standards are likely to
increase the net demand for labor in the economy. However, the model suggests that the
projected gains are very small relative to total national employment (currently
approximately 120 million). Moreover, neither the BLS data nor the input/output model
DOE uses includes the quality or wage level of the jobs. Therefore, because the analysis
indicates an increased demand for labor would likely result from the amended energy
conservation standards in this rulemaking, DOE has concluded that the amended
standards are likely to produce employment benefits sufficient to offset fully any adverse
impacts on employment in the manufacturing industry for the refrigeration products that
are the subject of this rulemaking.

4. Impact on Utility or Performance of Products
As presented in section III.D.1.d of this notice, DOE concluded that none of the
TSLs considered in this notice would substantially reduce the utility or performance of
the products under consideration in this rulemaking. However, the availability of features
that increase energy use, such as multiple drawers, might shift to higher-price products

256because the cost premium for implementing such features will likely increase.
Manufacturers currently offer refrigeration products that meet or exceed the amended
standards for most of the product classes. (42 U.S.C. 6295(o)(2)(B)(i)(IV))

5. Impact of Any Lessening of Competition
DOE has also considered any lessening of competition that is likely to result from
amended standards. The Attorney General determines the impact, if any, of any lessening
of competition likely to result from an amended standard, and transmits such
determination to the Secretary, together with an analysis of the nature and extent of such
impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))

To assist the Attorney General in making such determination, DOE has provided
DOJ with copies of this final rule and the TSD for review. As indicated earlier, DOE did
not receive comments from DOJ. Accordingly, DOE does not believe that there is likely
to be any lessening of competition as a result of today’s final rule.

6. Need of the Nation to Conserve Energy
An improve ment in the energy efficiency of the products subject to today’s rule is
likely to improve the security of the Nation’s energy system by reducing overall demand
for energy. Reduced electricity demand may also improve the reliability of the electricity
system. As a measure of this reduced demand, Table VI- 56 presents the estimated
reduction in generating capacity in 2043 for the TSLs that DOE considered in this
rulemaking.

257Table VI

. 56 Reduction in Electric Generating Capacity in 2043 Under Refrigeration Product TSLs TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Gigawatts Standard

- Size Refrigerator

- Freezers 2.62 3.03 3.56 4.86 5.82 Standard

- Size Freezers 0.83 0.8 3 1.40 1.59 1.71 Compact Refrigeration Products 0.273 0.335 0.386 0.480 0.511 Built

- In Refrigeration Products 0.021 0.031 0.062 0.077 0.092

DOE used NEMS-BT to assess the impacts on electricity prices of the reduced
need for new electric power plants and infrastructure projected to result from standards.
The projected impacts on prices, and their value to electricity consumers, are presented in
chapter 14 and chapter 10, respectively, of the final rule TSD. Although the aggregate
benefits for all electricity users are potentially large, there may be negative effects on the
actors involved in electricity supply. Because there is uncertainty about the extent to
which the calculated impacts from reduced electricity prices would be a transfer from the
actors involved in electricity supply to electricity consumers, DOE has concluded that, at
present, it should not assign a heavy weight to this factor in considering the economic
justification of standards on refrigeration products.

Energy savings from amended standards for refrigeration products could also
produce environmental benefits in the form of reduced emissions of air pollutants and
greenhouse gases associated with electricity production. Table VI

. 57 provides DOE’s

estimate of cumulative CO 2 , NO X , and Hg emissions reductions projected to result from

258the TSLs considered in this rulemaking. DOE reports annual CO 2 , NO X , and Hg
emissions reductions for each TSL in chapter 15 of the final rule TSD.

As discussed in sect IV.M, DOE did not report SO 2 emissions reductions from
power plants because there is uncertainty about the effect of energy conservation

standards on the overall level of SO 2 emissions in the United States due to SO 2 emissions
caps. DOE also did not include NO X emissions reduction from power plants in States
subject to CAIR because an energy conservation standard would not affect the overall

level of NO X emissions in those States due to the emissions caps mandated by CAIR.

Table VI

. 57 Su mmary of Emissions Reduction Estimated for Refrigeration Product TSLs (cumulative for 2014 through 2043) TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Standard

- Size Refrigerator

- Freezers

CO 2 (Mt) 175 202 238 323 386 NO X (1000 tons) 141 162 191 260 310 Hg (tons) 0.79 0.91 1.07 1.45 1.73 Standard

- Size Freezers

CO 2 (Mt) 54 77 91 103 110 NO X (1000 tons) 43 62 73 83 89 Hg (tons) 0.24 0.34 0.41 0.47 0.50 Compact Refrigeration Products

CO 2 (Mt) 20 24 28 35 39 NO X (1000 tons) 16 20 23 29 32 Hg (tons) 0.10 0.12 0.15 0.19 0.21 Built

- In Refrigeration Products

CO 2 (Mt) 1.41 2.05 4.10 5.09 6.09 NO X (1000 tons) 1.14 1.65 3.30 4.09 4.90 Hg (tons) 0.01 0.01 0.02 0.02 0.03

As part the analysis for this final rule, DOE estimated monetary benefits likely to

result from the reduced emissions of CO 2 and NO X that DOE estimated for each of the
TSLs considered. As discussed in section IV.M, DOE used values for the SCC developed

259by an interagency process. The four values for CO 2 emissions reductions resulting from
that process (expressed in 2009$) are $4.9/ton (the average value from a distribution that
uses a 5-percent discount rate), $22.1/ton (the average value from a distribution that uses
a 3-percent discount rate), $36.3/ton (the average value from a distribution that uses a
2.5-percent discount rate), and $67.1/ton (the 95 th -percentile value from a distribution
that uses a 3-percent discount rate). These values correspond to the value of emission
reductions in 2010; the values for later years are higher due to increasing damages as the
magnitude of climate change increases.

Table VI-58 through Table VI- 61 present the global values of CO 2 emissions
reductions at each TSL. For each of the four cases, DOE calculated a present value of the
stream of annual values using the same discount rate as was used in the studies upon
which the dollar-per-ton values are based. DOE calculated domestic values as a range
from 7 percent to 23 percent of the global values, and these results are presented in Table

VI

- 62 through Table VI- 65

.

260Table VI

. 58 Standard-Size Refrigerator-Freezers: Estimates of Global Present Value of CO 2 Emissions Reduction Under Trial Standard Levels

TSL B illion 2009$ 5% discount rate, average* 3% discount rate, average* 2.5% discount rate, average* 3% discount rate, 95 th percentile* 1 1.45 4.60 6.90 14.0 2 1.67 5.31 7.96 16.16 3 1.96 6.24 9.36 19.00 4 2.68 8.51 12.76 25.90 5 3.20 10.18 15.26 30.98

* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC over time.

Table VI

. 59 Standard-Size Freezers: Estimates of Global Present Value of CO 2 Emissions Reduction Under Trial Standard Levels

TSL B illion 2009$ 5% discount rate, average* 3% discount rate, average* 2.5% discount rate, average* 3% discount rate, 95 th percentile* 1 0.48 1.51 2.25 4.58 2 0.69 2.16 3.24 6.59 3 0.81 2.55 3.81 7.76 4 0.92 2.89 4.32 8.80 5 0.98 3.09 4.62 9.41

* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC over time.

261Table VI

. 60 Compact Refrigeration Products: Estimates of Global Present Value of CO 2 Emissions Reduction Under Trial Standard Levels

TSL Billion 2009$ 5% discount rate, average* 3% discount rate, average* 2.5% discount rate, average* 3% discount rate, 95 th percent ile* 1 0.12 0.41 0.63 1.26 2 0.15 0.51 0.77 1.54 3 0.18 0.59 0.89 1.79 4 0.22 0.74 1.12 2.25 5 0.24 0.81 1.23 2.47

* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC over time.

Table VI

. 61 Built-In Refrigeration Products: Estimates of Global Present Value of CO 2 Emissions Reduction Under Trial Standard Levels

TSL Billion 2009$ 5% discount rate, average* 3% discount rate, average* 2.5% discount rate, average* 3% discount rate, 95 th percentile* 1 0.012 0.038 0.057 0.12 2 0.017 0.055 0.083 0.17 3 0.035 0.11 0.17 0.34 4 0.043 0.014 0.20 0.41 5 0.051 0.16 0.24 0.50

* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC over time.

262Table VI

. 62 Standard-Size Refrigerator-Freezers: Estimates of Domestic Present Value of CO 2 Emissions Reduction Under Trial Standard Levels

TSL Billion 2009$ * 5% discount rate, average** 3% discount rate, average** 2.5% discount rate, average** 3% discount rate, 95 th percentile** 1 0.10 to 0.33 0.32 to 1.06 0.48 to 1.59 0.98 to 3.22 2 0.12 to 0.38 0.37 to 1.22 0.56 to 1.83 1.13 to 3.72 3 0.14 to 0.45 0.44 to 1.44 0.66 to 2.15 1.33 to 4.37 4 0.19 to 0.62 0.60 to 1.96 0.89 to 2.93 1.81 to 5.96 5 0.22 to 0.74 0.71 to 2.34 1.07 to 3.51 2.17 to 7.13

* Domestic values are presented as a range between 7% and 23% of the global values. ** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC over time.

Table VI

. 63 Standard-Size Freezers: Estimates of Domestic Present Value of CO 2 Emissions Reduction Under Trial Standard Levels

TSL Billion 2009$ * 5% discount rate, average** 3% discount rate, average** 2.5% discount rate, average** 3% discount rate, 95 th percentil e** 1 0.033 to 0.11 0.11 to 0.35 0.16 to 0.52 0.32 to 1.05 2 0.048 to 0.16 0.15 to 0.50 0.23 to 0.74 0.46 to 1.51 3 0.057 to 0.19 0.057 to 0.19 0.057 to 0.19 0.057 to 0.19 4 0.064 to 0.21 0.20 to 0.67 0.30 to 0.99 0.62 to 2.02 5 0.069 to 0.23 0.22 to 0.71 0.32 to 1.06 0.069 to 0.23

* Domestic values are presented as a range between 7% and 23% of the global values. ** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC over time.

263Table VI

. 64 Compact Refrigeration Products: Estimates of Domestic Present Value of CO 2 Emissions Reduction Under Trial Standard Levels

TSL Billion 2009$ * 5% discount rate, average** 3% discount rate, average** 2.5% discount rate, average** 3% discount rate, 95 th percentile** 1 0.0087 to 0.029 0.029 to 0.095 0.044 to 0.14 0.09 to 0.29 2 0.011 to 0.035 0.035 to 0.12 0.054 to 0.18 0.11 to 0.36 3 0.012 to 0.041 0.041 to 0.14 0.062 to 0.21 0.13 to 0.41 4 0.016 to 0.051 0.052 to 0.17 0.078 to 0.26 0.16 to 0.52 5 0.017 to 0.056 0.057 to 0.19 0.086 to 0.28 0.17 to 0.57

* Domestic values are presented as a range between 7% and 23% of the global values. ** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC over time.

Table VI

. 65 Built-In Refrigeration Products: Estimates of Domestic Present Value of CO 2 Emissions Reduction Under Trial Standard Levels

TSL Billion 2009$ * 5% discount rate, average** 3% discount rate, average** 2.5% discount rate, average** 3% discount rate, 95 th percentile**

1 0.00083 to 0.0027 0.0026 to 0.0087 0.0040 to 0.013 0.0081 to 0.026 2 0.0012 to 0.0040 0.0039 to 0.013 0.0058 to 0.019 0.012 to 0.039 3 0.0024 to 0.0080 0.0077 to 0.025 0.012 to 0.038 0.023 to 0.077 4 0.0030 to 0.010 0.010 to 0.031 0.014 to 0.047 0.029 to 0.10 5 0.0036 to 0.012 0.011 to 0.037 0.017 to 0.056 0.035 to 0.11

* Domestic values are presented as a range between 7% and 23% of the global values. ** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC over time.

DOE is well aware that scientific and economic knowledge about the contribution

of CO 2 and other GHG emissions to changes in the future global climate and the potential
resulting damages to the world economy continues to evolve rapidly. Thus, any value
placed in this rulemaking on reducing CO 2 emissions is subject to change. DOE, together
with other Federal agencies, will continue to review various methodologies for estimating

264the monetary value of reductions in CO 2 and other GHG emissions. This ongoing review
will consider the comments on this subject that are part of the public record for this and
other rulemakings, as well as other methodological assumptions and issues. However,
consistent with DOE’s legal obligations, and taking into account the uncertainty involved
with this particular issue, DOE has included in this final rule the most recent values and
analyses resulting from the ongoing interagency review process.

DOE also estimated a range for the cumulative monetary value of the economic

benefits associated with NO X emissions reductions anticipated to result from amended
standards for refrigeration products. The dollar-per-ton values that DOE used are

discussed in section IV.M. Table VI. 66 presents the cumulative present values for each
TSL calculated using seven- pe rcent and three-percent discount rates.

Table VI

. 66 Estimates of Present Value of NO X Emissions Reduction Under Refrigeration Product Trial Standard Levels TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Billion 2009$ Standard

- Size Refrigerator

- Freezers

7% discount rate 0.018 to 0.18 0.020 to 0.21 0.024 to 0.25 0.033 to 0.34 0.039 to 0.40 3% discount rate 0.044 to 0.45 0.051 to 0.52 0.060 to 0.62 0.082 to 0.84 0.097 to 1.00

Standard

- Size Freezers

7% discount rate 0.0055 to 0.056 0.008 to 0.081 0.009 to 0.095 0.01 1 to 0.107 0.011 to 0.1 2 3% discount rate 0.014 to 0.15 0.020 to 0.21 0.024 to 0.25 0.027 to 0.28 0.029 to 0.30

Compact Refrigeration Products

7% discount rate 0.002 to 0.021 0.00 3 to 0.026 0.00 3 to 0.030 0.00 4 to 0.038 0.004 to 0.042 3% discount rate 0.004 to 0.044 0.005 to 0.054 0.006 to 0.063 0.00 8 to 0.079 0.00 9 to 0.088

Built

- In Refrigeration Products

7% discount rate 0.000 to 0.00 2 0.001 to 0.002 0.000 to 0.004 0.00 1 to 0.005 0.00 1 to 0.006 3% discount rate 0.000 to 0.00 4 0.00 1 to 0.005 0.001 to 0.0 1 8 0.001 to 0.013 0.00 2 to 0.016

265The NPV of the monetized benefits associated with emissions reductions can be
viewed as a complement to the NPV of the consumer savings calculated for each TSL
considered in this rulemaking. Table VI. 67 shows an example of the calculation of the
combined NPV including benefits from emissions reductions for the case of TSL 3 for
standard-size refrigerator-freezers. Table VI.68 and Table VI.69 present the NPV values
that would result if DOE were to add the estimates of the potential economic benefits
resulting from reduced CO 2 and NO X emissions in each of four valuation scenarios to the
NPV of consumer savings calculated for each TSL considered in this rulemaking, at both
a seven-percent and three-percent discount rate. The CO 2 values used in the columns of
each table correspond to the four scenarios for the valuation of CO 2 emission reductions
presented in section IV.M.

266Table VI

. 67 Adding Net Present Value of Consumer Savings to Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions at TSL 3 for Standard-Size Refrigerator-Freezers

Category Present Value Billion 2009$ Discount Rate

Benefits Operating Cost Savings 14.65 7% 37.41 3% CO 2 Reduction Monetized Value (at $4.9/ t )* 1.96 5%
CO 2 Reduction Monetized Value (at $22.1/ t )* 6.24 3%
CO 2 Reduction Monetized Value (at $36.3/ t )* 9.36 2.5%
CO 2 Reduction Monetized Value (at $67.1/ t )* 19.0 3%

NO X Reduction Monetized Value (at $2,519/ t on)* 0.136 7% 0.338 3% Total Monetary Benefits ** 21.02 7% 43. 99 3% Costs
Total Incremental Installed Costs 9. 83 7% 17.22 3%
Net Benefits
Including CO 2 and NO X ** 11. 19 7% 26.77 3% Deleted: 98

Deleted: 49 Deleted: 16.51

Deleted: /Costs

Deleted: 53 Deleted: 27.48
* These values represent global values (in 2009$) of the social cost of CO 2 emissions in 2010 under several scenarios. The values of $4.9, $22.1, and $36.3 per metric ton (t) are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.1/t represents the 95 th percentile of the SCC distribution calculated using a 3% discount rate. See section IV.M for details. The value for NO X (in 2009$) is the average of the low and high values used in DOE’s analysis. ** Total Monetary Benefits for both the 3% and 7% cases utilize the central estimate of social cost of CO 2 emissions calculated at a 3% discount rate, which is equal to $22.1/t in 2010 (in 2009$).

267Table VI

. 68 Adding Net Present Value of Consumer Savings (at 7% Discount Rate) to Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions at Trial Standard Levels for Refrigeration Products

TSL Consumer NPV at 7% Discount Rate added with:
SCC Value of $4.9/metric ton CO 2 * and Low Value for

NO X ** billion 2009$ SCC Value of $22.1/metric ton CO 2 * and Medium Value for NO X **

billion 2009$ SCC Value of $36.3/metric ton CO 2 * and Medium Value for NO X **

billion 2009$ SCC Value of $67.1/metric ton CO 2 * and High Value for NO X **

Billion 2009$

1 10.92 15. 53 18.81 29. 06 2 11. 55 17. 20 21. 22 33.77 3 11.75 18. 42 23. 17 37.99 4 4.20 12.83 18.97 38.14 5 ( 7.93 ) 2.08 9.20 31.45 Deleted: 11.16 Deleted: 78 Deleted: 19.06 Deleted: 30 Deleted: 92 Deleted: 57 Deleted: 58 Deleted: 34.13 Deleted: 12.25 Deleted: 92 Deleted: 66 Deleted: 38.48 Deleted: 5.22 Deleted: 13.85 Deleted: 19.98 Deleted: 39.16 Deleted: 6.30 Deleted: 3.71 Deleted: 10.83 Deleted: 33.08

TSL Consumer NPV at 3% Discount Rate added with:
SCC Value of $4.9/metric ton CO 2 * and Low Value for

NO X ** billion 2009$ SCC Value of $22.1/metric ton CO 2 * and Medium Value for NO X **

billion 2009$ SCC Value of $36.31/metric ton CO 2 * and Medium Value for NO X **

billion 2009$ SCC Value of $67.1/metric ton CO 2 * and High Value for NO X **

Billion 2009$

1 30. 20 34.99 38. 27 48.69 2 33.85 39.71 43.73 56.50 3 36.64 43.57 48.31 63.39 4 27.59 36.56 42.69 62.19 5 9.25 19.65 26.76 49.39 Deleted: 70 Deleted: 35.49 Deleted: 77 Deleted: 49.19 Deleted: 34.60 Deleted: 40.46 Deleted: 44.48 Deleted: 57.24 Deleted: 37.66 Deleted: 44.59 Deleted: 49.33 Deleted: 64.41 Deleted: 29.70 Deleted: 38.66 Deleted: 44.79 Deleted: 64.30 Deleted: 12.63 Deleted: 23.02 Deleted: 30.14 Deleted: 52.77 * These label values represent the global SCC of CO 2 in 2010, in 2009$. Their present values have been calculated with scenario-consistent discount rates. See section IV.M for a discussion of the derivation of these values. ** Low Value corresponds to $447 per ton of NO X emissions. Medium Value corresponds to $2,519 per ton of NO X emissions. High Value corresponds to $4,591 per ton of NO X emissions.

Table VI

. 69 Adding Net Present Value of Consumer Savings (at 3% Discount Rate) to Present Value of Monetized Benefits from CO 2 and NO X Emissions Reductions at Trial Standard Levels for Refrigeration Products

* These label values represent the global SCC of CO 2 in 2010, in 2009$. Their present values have been calculated with scenario-consistent discount rates. See section IV.M for a discussion of the derivation of these values. ** Low Value corresponds to $447 per ton of NO X emissions. Medium Value corresponds to $2,519 per ton of NO X emissions. High Value corresponds to $4,591 per ton of NO X emissions.

268Although adding the value of consumer savings to the values of emission
reductions provides a valuable perspective, two issues should be considered. First, the
national operating savings are domestic U.S. consumer monetary savings that occur as a

result of market transactions while the value of CO 2 reductions is based on a global value.
Second, the assessments of operating cost savings and CO 2 savings are performed with
different methods that use quite different time frames for analysis. The national operating
cost savings is measured for the lifetime of refrigeration products shipped in 2014

– 2043.
The SCC values, on the other hand, reflect the present value of future climate-related
impacts resulting from the emission of one ton of carbon dioxide in each year. These
impacts continue well beyond 2100.

7. Other Factors
The Secretary, in determining whether a standard is economically justified, may
consider any other factors that he deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VI)))
DOE is aware of pending legislation that proposes to phase out substances with
significant GWP and that HFCs are included in the list of substances to be phased out.
DOE recognizes the significance that such legislation would have to the refrigeration
products industry and the impact it would have on the ability of manufacturers to meet
energy conservation standards. Given the uncertainty regarding such legislation,
however, DOE did not factor the impact of potential HFC limitations in developing the
standard levels presented in today’s final rule.

269DOE has also considered the Joint Comments submitted to DOE containing the
various recommended standard levels for refrigeration products. DOE recognizes the
value of consensus agreements submitted by parties in accordance with 42 U.S.C.
6295(p)(4) and has weighed the value of such consensus in establishing the standards set
forth in today’s final rule

.

C. Conclusion
When prescribing new or amended standards, the standard that DOE adopts for
any type (or class) of covered product shall be designed to achieve the maximum
improvement in energy efficiency that the Secretary determines is technologically

fe asible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining whether a
standard is economically justified, the Secretary must determine whether the benefits of
the standard exceed its burdens to the greatest extent practicable, in light of the seven
statutory factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or amended
standard must also “result in significant conservation of energy.” (42 U.S.C.
6295(o)(3)(B))

For today’s final rule, DOE considered the impacts of standards at each trial
standard level, beginning with the maximum technologically feasible level, to determine
whether that level was economically justified. Where the max-tech level was not
justified, DOE then considered the next most efficient level and undertook the same
evaluation until it reached the most efficient level that is both technologically feasible
and economically justified and saves a significant amount of energy.

2 70For ease of presentation, DOE separately discusses the benefits and/or burdens of
each trial standard level for standard-size refrigerator-freezers, standard-size freezers,
compact refrigeration products, and built-in refrigeration products. Tables that present a
summary of the results of DOE’s quantitative analysis for each TSL have bee n provided

to aid the reader as DOE discusses the benefits and/or burdens of each trial standard

level.

In addition to the quantitative results presented in the tables, DOE also considers
other burdens and benefits that affect economic justification. These include the impacts
on identifiable subgroups of consumers, such as low-income households and seniors, who
may be disproportionately affected by a national standard. Section VI.B.1.b presents the
estimated impacts of each TSL for these subgroups.

DOE notes that the proposed standards set forth in the Joint Comments were also
carefully considered by the agency. These suggested standards, along with the comments
from all interested parties and the agency’s analytical work developed in preparation of
today’s final rule, were considered during the development of the standards being
adopted today.

DOE also notes that the economics literature provides a wide-ranging discussion
of how consumers trade off upfront costs and energy savings in the absence of
government intervention. Much of this literature attempts to explain why consumers

271appear to undervalue energy efficiency improvements. This undervaluation suggests that
regulation that promotes energy efficiency can produce significant net private gains (as
well as producing social gains by, for example, reducing pollution). There is evidence
that consumers undervalue future energy savings as a result of (1) a lack of information,
(2) a lack of sufficient salience of the long-term or aggregate benefits, (3) a lack of
sufficient savings to warrant delaying or altering purchases (e.g. an inefficient ventilation
fan in a new building or the delayed replacement of a water pump), (4) excessive focus
on the short term, in the form of inconsistent weighting of future energy cost savings
relative to available returns on other investments; (5) computational or other difficulties
associated with the evaluation of relevant tradeoffs; and (6) a divergence in incentives
( e.g., renter versus building owner; builder vs. home buyer ). Other literature indicates Deleted: that is, Deleted: purchaser that with less than perfect foresight and a high degree of uncertainty about the future,
consumers may trade off these types of investments at a higher than expected rate
between current consumption and uncertain future energy cost savings.

In DOE’s current regulatory analysis, potential changes in the benefits and costs
of a regulation due to changes in consumer purchase decisions are included in two ways.
First, if consumers forego a purchase of a product in the standards case, this decreases
sales for product manufacturers, and the cost to manufacturers is included in the MIA.
Second, DOE accounts for energy savings attributable only to products actually used by
consumers in the standards case; if a regulatory option decreases the number of products
used by consumers, this decreases the potential energy savings from an energy
conservation standard. DOE provides detailed estimates of shipments and changes in the

272volume of product purchases in chap ter 9 of the final rule TSD. However, DOE’s current
analysis does not explicitly control for heterogeneity in consumer preferences,
preferences across subcategories of products or specific features, or consumer price
sensitivity variation according to household income

.

While DOE is not prepared at present to provide a fuller quantifiable framework
for estimating the benefits and costs of changes in consumer purchase decisions due to an Deleted: (Reiss and White 2004).

energy conservation standard, DOE has pos ted a paper that discusses the issue of Deleted: seeks
consumer welfare impacts of appliance energy efficiency standards, and potential
enhancements to the methodology by which these impacts are defined and estimated in
the regulatory process. 50 DOE is committed to developing a framework that can support
empirical quantitative tools for improved assessment of the consumer welfare impacts of
appliance standards. DOE welcomes comments on how to more fully assess the potential
impact of energy conservation standards on consumer choice and how to quantify this
impact in its regulatory analysis in future rulemakings.

1. Standard-Size Refrigerator-Freezers
Table VI-70 presents a summary of the quantitative impacts estimated for each
TSL for standard-size refrigerator-freezers. The efficiency levels contained in each TSL Comment [A63]: Footnote recommended by OIRA.

Comment [A64]: Change recommended by OIRA.

are described in section VI.A. The range of results for NPV of consumer benefits reflects
the range of product price forecasts discussed in section IV.G.3. Comment [A65]: Change recommended by OIRA.

50 Alan Sanstad, Notes on the Economics of Household Energy Consumption and Technology Choice

. Lawrence Berkeley National Laboratory. 2010. http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf

273Table VI

. 70 Summary of Results for Standard-Size Refrigerator-Freezers Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 National Energy Savings (quads) 2.41 2.78 3.27 4.45 5.30 NPV of Consumer Benefits (2009$ billion) 3% discount rate 15.96 to 19.3 5 16 .26 to 20.76 16.92 to 22.88 4.800 to 18.20 (11. 4 ) to 9.67 7% discount rate 4.272 to 5. 940 3.764 to 5. 973 3.173 to 6.104 ( 5.756) to 0.804 ( 16.30) to (6.0 3 ) Industry Impacts Industry NPV (2009$ million) (117.8) to (252.6) (219.2) to (395.9) (345.0) to (580.7) (784.9) to (1,309.3) (1,042.2) to (1,841.5) Industry NPV (% change) (4.4) to (9.5) (8.2) to (14.8) (12.9) to (21.7) (29.4) to (49.0) (39.0) to (69.0) Cumulative Emissions Reduction CO 2 (Mt) 175 202 238 323 386 NO X (1000 tons) 141 162 191 260 310 Hg (tons) 0.79 0.91 1.07 1.45 1.73 Value of Cumulative Emissions Reduction

CO 2 (2009$ billion)* 1.45 to 14.0 1.67 to 16. 2 1.96 to 19.0 2.68 to 25.9 3.20 to 3 1.0 NO X – 3% discount rate (2009$ billion) 0.044 to 0.45 0.051 to 0.52 0.060 to 0.62 0.082 to 0.84 0.097 to 1.00 NO X – 7% discount rate (2009$ billion) 0.018 to 0.18 0.020 to 0.21 0.024 to 0.25 0.033 to 0.34 0.039 to 0.40 Mean LCC Savings** (2009$)

Top

- Mount Refrigerator

- Freezers 44 44 42 ( 6 ) ( 87 ) Bottom

- Mount Refrigerator

- Freezers 22 22 22 ( 53 ) ( 136 ) Side

- by

- Side Refrigerator

- Freezers 62 57 57 (18) ( 83 ) Median PBP (years)

Top

- Mount Refrigerator

- Freezers 8.0 8.0 9.5 13. 3 17.8 Bottom

- Mount Refrigerator

- Freezers 4.2 4.2 4.2 21. 0 24. 7 Side

- by

- Side Refrigerator

- Freezers 4. 0 9. 2 9. 2 15. 6 19. 1 Distribution of Consumer LCC Impacts

Top

- Mount Refrigerator

- Freezers Net Cost (%) 34 34 46 65 80 No Impact (%) 8 .3 8 .3 0.0 0.0 0.0 Net Benefit (%) 58 58 54 35 20 Bottom

- Mount Refrigerator

- Freezers Net Cost (%) 2.5 2.5 2.5 83 89 No Impact (%) 68 68 68 0.0 0.0 Net Benefit (%) 30 30 30 17 11 Side

- by

- Side Refrigerator

- Freezers Net Cost (%) 4 .3 4 2 42 70 80 No Impact (%) 37 0.0 0.0 0.0 0.0 Net Benefit (%) 59 59 5 9 30 2 1 Generation Capacity Reduction ( GW ) † 2.62 3.03 3.56 4.86 5.82 Employment Impacts Total Potential Changes in Domestic Production Workers in 2014 (thousands) (0.19) to (7.35) (0.22) to (7.35) (0.18) to (7.35) (0.24) to (7.35) (0.37) to (7.35) Indirect Domestic Jobs (thousands) † 16.24 18.45 21.33 26.31 28.85 Formatted Table

... Deleted: 18.22 Deleted: 19 Deleted: 20.9 Deleted: 13.75

Deleted: 2.68

Deleted: 40 Deleted: 26 Deleted: 5.16 Deleted: 1.31 ) Deleted: 9.34

Deleted: Standard

- Size Refrigerator

- Freezers

... Formatted Table

... Deleted: 16 Deleted: 30.98
Formatted Table

... Deleted: 43 Deleted: 43 Deleted: 41 Deleted: 7 Deleted: 89 Deleted: 54 Deleted: 137 Deleted: 85
Formatted Table

... Deleted: 4 Deleted: 1 Deleted: 8 Deleted: 1 Deleted: 3 Deleted: 3 Deleted: 7 Deleted: 2
Formatted Table

... Deleted: 57 Deleted: 57
Formatted Table

... Deleted: 3 Deleted: 3 Deleted: 3
Formatted Table

... Formatted Table

... Deleted: 58 Deleted: 58 Deleted: 20

274Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Parentheses indicate negative (

- ) values. * Range of the economic value of CO 2 reductions is based on estimates of the global benefit of reduced CO 2 emissions. ** For LCCs, a negative value means an increase in LCC by the amount indicated. † Changes in 2043.

DOE first considered TSL 5, which represents the max-tech efficiency levels.
TSL 5 would save 5.30 quads of energy, an amount DOE considers significant. Under
TSL 5, the NPV of consumer benefit would be -$ 6.03 billion to -$16.3 billion, using a Deleted: 9

. 34

Deleted: $ 2.68 discount rate of 7 percent, and -$11.4 to $9.67 billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 5 are 386 Mt of CO 2 , 310,000 tons

of NO X , and 1.73 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 5 ranges from $3.20 billion to $30.98 billion. Total
generating capacity in 2043 is estimated to decrease by 5.82 GW under TSL 5.

At TSL 5, the average LCC impact is a cost (LCC increase) of $ 87 for top-mount
refrigerator-freezers, a cost of $ 136 for bottom-mount refrigerator-freezers, and a cost of
$ 83 for side- by -side refrigerator-freezers. The median payback period is 17.8 years for

top -mount refrigerator-freezers, 24. 7 years for bottom-mount refrigerator-freezers, and Deleted: 89

Deleted: 1 37

Deleted: 75

Deleted: 8

Deleted: 2 19. 1 years for side- by -side refrigerator-freezers. The fraction of consumers experiencing
an LCC benefit is 20 percent for top-mount refrigerator-freezers, 11 percent for bottommount refrigerator-freezers, and 21 percent for side- by -side refrigerator-freezers. The Deleted: 20
fraction of consumers experiencing an LCC cost is 80 percent for top-mount refrigerator275freezers, 89 percent for bottom-mount refrigerator-freezers, and 80 percent for side- by

side refrigerator-freezers.

At TSL 5, the projected change in INPV ranges from a decrease of $1,042.2
million to a decrease of $1,841.5 million. At TSL 5, DOE recognizes the risk of very
large negative impacts if manufacturers’ expectations concerning reduced profit margins
are realized. If the high end of the range of impacts is reached as DOE expects, TSL 5
could result in a net loss of 69.0 percent in INPV to standard-size refrigerator-freezer

manufacturers.

The Secretary has concluded that at TSL 5 for standard-size refrigerator-freezers,
the benefits of energy savings, generating capacity reductions, emission reductions, and
the estimated monetary value of the CO 2 emissions reductions would be outweighed by
the negative NPV of consumer benefits, the economic burden on a significant fraction of
consumers due to the large increases in product cost, and the capital conversion costs and
profit margin impacts that could result in a very large reduction in INPV for
manufacturers. Consequently, the Secretary has concluded that TSL 5 is not
economically justified.

DOE then considered TSL 4. TSL 4 would save 4.45 quads of energy, an amount
DOE considers significant. Under TSL 4, the NPV of consumer benefit would be -$ 5.76
billion to $0. 80 billion, using a discount rate of 7 percent, and $ 4.80 billion to $18.2
billion, using a discount rate of 3 percent. Deleted: 1. 31

Deleted: 13.75

276The cumulative emissions reductions at TSL 4 are 323 Mt of CO 2 , 260,000 tons

of NO X , and 1.45 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 4 ranges from $2.68 billion to $25.9 billion. Total generating
capacity in 2043 is estimated to decrease by 4.86 GW under TSL 4.

At TSL 4, DOE projects that the average LCC impact is a cost (LCC increase) of
$ 6 for top-mount refrigerator-freezers, a cost of $ 53 for bottom-mount refrigeratorfreezers, and a cost of $18 for side- by -side refrigerator-freezers. The median payback
period is 13. 3 years for top-mount refrigerator-freezers, 21. 0 years for bottom-mount
refrigerator-freezers, and 15. 6 years for side- by -side refrigerator-freezers. The fraction of
consumers experiencing an LCC benefit is 35 percent for top-mount refrigerator-freezers,
17 percent for bottom-mount refrigerator-freezers, and 30 percent for side- by -side
refrigerator-freezers. The fraction of consumers experiencing an LCC cost is 65 percent
for top-mount refrigerator-freezers, 83 percent for bottom-mount refrigerator-freezers,
and 70 percent for side- by -side refrigerator-freezers.

At TSL 4, the projected change in INPV ranges from a decrease of $784.9 million
to a decrease of $1,309.3 million. DOE recognizes the risk of large negative impacts if
manufacturers’ expectations concerning reduced profit margins are realized. If the high
end of the range of impacts is reached as DOE expects, TSL 4 could result in a net loss of

49.0 percent in INPV to standard-size refrigerator-freezer manufacturers. Deleted: 7 Deleted: 54

Deleted: 4 Deleted: 1 Deleted: 7

277The Secretary has concluded that at TSL 4 for standard-size refrigerator-freezers,
the benefits of energy savings, positive NPV of consumer benefits at 3-percent discount

rate, generating capacity reductions, and emission reductions and the estimated monetary

value of the CO 2 emissions reductions would be outweighed by the negative NPV of

consumer benefits at 7-percent discount rate , the economic burden on a significant
fraction of consumers due to the large increases in product cost, and the capital
conversion costs and profit margin impacts that could result in a substantial reduction in
INPV for the manufacturers. Consequently, the Secretary has concluded that TSL 4 is not
economically justified.

DOE then considered TSL 3. TSL 3 would save 3.27 quads of energy, an amount
DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $ 3.17
billion to $6.10 billion, using a discount rate of 7 percent, and $ 16.9 billion to $22 .9
billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 3 are 238 Mt of CO 2 , 191,000 tons

of NO X , and 1.07 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 3 ranges from $1.96 billion to $19.0 billion. Total generating
capacity in 2043 is estimated to decrease by 3.56 GW under TSL 3.

At TSL 3, the average LCC impact is a gain (consumer savings) of $ 42 for topmount refrigerator-freezers, a gain of $22 for bottom-mount refrigerator-freezers, and a
gain of $57 for side- by -side refrigerator-freezers. The median payback period is 9.5 years Deleted: 5.16

Deleted: 20

Deleted: 41

278for top-mount refrigerator-freezers, 4.2 years for bottom-mount refrigerator-freezers, and

9. 2 years for side- by -side refrigerator-freezers. The fraction of consumers experiencing
an LCC benefit is 54 percent for top-mount refrigerator-freezers, 30 percent for bottommount refrigerator-freezers, and 59 percent for side- by -side refrigerator-freezers. The
fraction of consumers experiencing an LCC cost is 46 percent for top-mount refrigeratorfreezers, 2.5 percent for bottom-mount refrigerator-freezers, and 42 percent for side- by

side refrigerator-freezers.

At TSL 3, the projected change in INPV ranges from a decrease of $345.0 million
to a decrease of $580.7 million. DOE recognizes the risk of negative impacts if
manufacturers’ expectations concerning reduced profit margins are realized. If the high
end of the range of impacts is reached as DOE expects, TSL 3 could result in a net loss of

21.7 percent in INPV to standard-size refrigerator-freezer manufacturers.

The Secretary has concluded that at TSL 3 for standard-size refrigerator-freezers,
the benefits of energy savings, positive NPV of consumer benefits, generating capacity
reductions, emission reductions, and the estimated monetary value of the CO 2 emissions
reductions outweigh the economic burden on a significant fraction of consumers due to
the increases in product cost, and the capital conversion costs and profit margin impacts

that could result in a reduction in INPV for the manufacturers. In addition to the
aforementioned benefits of the amended standards, DOE notes that the efficiency levels
in TSL 3 correspond to the recommended levels presented in the Joint Comments and, as Deleted: 3

Deleted: 58

Deleted: 3

279stated previously, DOE recognizes the value of consensus agreements submitted in
accordance with 42 U.S.C. 6295(p)(4).

After considering the analysis, comments responding to the September 2010
NOPR, and the benefits and burdens of TSL 3, the Secretary has concluded that this trial
standard level will offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and will result in the significant conservation of
energy. Therefore, DOE is adopting TSL 3 for standard-size refrigerator-freezers. The
amended energy conservation standards for standard-size refrigerator-freezers, expressed
as equations for maximum energy use, are shown in Table VI

. 71.

Table VI

. 71 Amended Standards for Standard-Size Refrigerators and RefrigeratorFreezers Deleted:

­

Deleted:

­

Product Class Equations for Maximum Energy Use (kWh/yr) based on AV (ft 3 ) based on av (L) 1. Refrigerator

- freezers and refrigerators other than all

refrigerators with manual defrost. 7.99AV + 225.0 0.282av + 225.0

1A. All

- refrigerators

— manual defrost. 6.79AV + 193.6 0.240av + 193.6 2. Refrigerator

- freezers

— partial automatic defrost 7.99AV + 225.0 0.282av + 225.0 3. Refrigerator

- freezers

— automatic defrost with top

mounted freezer without an automatic icemaker. 8.07AV + 233.7 0.285av + 233.7
3I. Refrigerator

- freezers

— automatic defrost with top

mounted freezer with an automatic icemaker without through

- the

- door ice service. 8.07AV + 317.7 0.285av + 317.7

3A. All

- refrigerators

— automatic defrost. 7.07AV + 201.6 0.250av + 201.6 4. Refrigerator

- freezers

— automatic defrost with side

mounted freezer without an automatic icemaker. 8.51AV + 297.8 0.301av + 297.8
4I. Refrig erator

- freezers

— automatic defrost with side

mounted freezer with an automatic icemaker without through

- the

- door ice service. 8.51AV + 381.8 0.301av + 381.8

5. Refrigerator

- freezers

— automatic defrost with bottom

mounted freezer without an automatic icemake r. 8. 85AV + 317.0 0.312av + 317.0
5I. Refrigerator

- freezers

— automatic defrost with bottom

mounted freezer with an automatic icemaker without through

- the

- door ice service. 8. 85AV + 401.0 0.312av + 401.0

5A. Refrigerator

- freezer

— automatic defrost with bottom

mounted freezer with through

- the

- door ice service. 9. 25AV + 475.4 0. 327av + 475.4 Deleted: 84AV + 316.9 Deleted: 316.9 Deleted: 84AV + 400.9 Deleted: 400.9 Deleted: 23AV + 474.5 Deleted: 326av + 474.5

2806. Refrigerator

- freezers

— automatic defrost with top

mounted freezer with through

- the

- door ice ser vice. 8.40AV + 385.4 0.297av + 385.4
7. Refrigerator

- freezers

— automatic defrost with side

mounted freezer with through

- the

- door ice service. 8.54AV + 432.8 0.302av + 432.8
AV= adjusted volume in cubic feet; av = adjusted volume in liters

2. Standard-Size Freezers

Table VI .72 presents a summary of the quantitative impacts estimated for each
TSL for standard-size freezers. The efficiency levels contained in each TSL are described

in section VI.A. The range of results for NPV of consumer benefits reflects the range of
product price forecasts discussed in section IV.G.3.

Table VI

. 72 Summary of Results for Standard-Size Freezers Comment [A66]: Change recommended by OIRA.

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 National Energy Savings (quads) 0.79 1.14 1.34 1.52 1.62 NPV of Consumer Benefits (2009$ billion) 3% discount rate 8. 00 to 8.50 10. 1 to 11.2 10.7 to 12. 4 9.6 6 to

to 0.107 0. to 0.095 0. 0.115

( 12. 2 5.32 to 9.46 7% discount rate 2. 6 7 to 2.92 3. 02 to 3.59 2.96 to 3. 77 2. 0 3 to 3.25 ( 0. 6 3 ) to 1.41 Industry Impacts Industry NPV (2009$ million) (29.8) to (50.0) (123.7) to (170.5) (112.5) to (178.1) (85.4) to (182.4) (145.0) to (298.8) Industry NPV (% change) (8.8) to (14.8) (36.6) to (50.5) (33.3) to (52.7) (25.3) to (54.0) (42.9) to (88.5) Cumulative Emissions Reduction CO 2 (Mt) 54 77 91 103 110 NO X (1000 tons) 43 62 73 83 89 Hg (tons) 0.24 0.34 0.41 0.47 0.50 Value of Cumulative Emissions Reduction
CO 2 (2009$ billion)* 0.48 to 4.58 0.69 to 6.59 0.81 to 7.76 0.92 to 8.80 0.98 to 9.41
NO X – 3% discount rate (2009$ billion) 0.014 to 0.15 0.020 to 0.21 0.024 to 0.25 0.027 to 0.28 0.029 to 0.30 NO X – 7% discount rate (2009$ billion) 0. 006 to 0.056 0. 008 to 0.081 009 011 0.011 to
Mean LCC Savings** (2009$) Upright Freezers 140 195 189 161 33 Chest Freezers 82 69 79 47 25 ) Median PBP (years) Upright Freezers 4. 0 5.3 7.1 9. 3 14. 7 Deleted: 34 Deleted: 83 Deleted: 11.83 Deleted: 11.32 Deleted: 8.09 Deleted: 84 Deleted: 41

Deleted: 51 Deleted: 86 Deleted: 76

Deleted: Standard

- Size Freezers

... Deleted: 0055 Deleted: 0078 Deleted: 0092 Deleted: 0105 Deleted: 139 Deleted: 160 Deleted: 32 Deleted: 68 Deleted: 26 Deleted: 1 Deleted: 4 Deleted: 8

281Chest Freezers 3.9 8.1 8.5 12. 1 17. 8 Distribution of Consumer LCC Impacts Upright Freezers Net Cost (%) 6 .0 12 22 35 60 No Impact (%) 0.6 0. 2 0.0 0.0 0.0 Net Benefit (%) 93 88 78 65 40 Chest Freezers Net Cost (%) 5 27 29 49 69 No Impact (%) 0. 2 0. 2 0. 2 0.0 0.0 Net Benefit (%) 95 73 71 51 31 Generation Capacity Reduction ( GW ) † 0.83 0.83 1.40 1.59 1.71 Employment Impacts Total Potential Changes in Domestic Production Workers in 2014 (thousands) (0.05) to (1.64) (0.11) to (1.64) (0.15) to (1.64) (0.23) to (1.64) (0.34) to (1.64)

Indirect Domestic Jobs (thousands) † 5.18 7.24 8.38 9.19 9.12 Deleted: 2 Deleted: 9

Deleted: 1 Deleted: 0

Deleted: 2 8 Deleted: 0 Deleted: 0 Deleted: 2 2 Deleted: 72 Deleted: 70

Parentheses indicate negative (

- ) values. Range of the economic value of CO 2 reductions is based on estimates of the global benefit of reduced CO 2 emissions. ** For LCCs, a negative value means an increase in LCC by the amount indicated. † Changes in 2043.

DOE first considered TSL 5, which represents the max-tech efficiency levels.
TSL 5 would save 1.62 quads of energy, an amount DOE considers significant. Under
TSL 5, the NPV of consumer benefit would be -$ 0. 63 billion to $1.41 billion, using a
discount rate of 7 percent, and $ 5.32 billion to $9 .4 6 billion, using a discount rate of 3 Deleted: $
Deleted: 76 Deleted: 8.09
percent.

The cumulative emissions reductions at TSL 5 are 110 Mt of CO 2 , 89,000 tons of

NO X , and 0.50 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 5 ranges from $0.98 billion to $9.41 billion. Total generating
capacity in 2043 is estimated to decrease by 1.71 GW under TSL 5.

282At TSL 5, the average LCC impact is a gain (LCC decrease) of $ 33 for upright
freezers, and a cost of $ 25 for chest freezers. The median payback period is 14. 7 years for
upright freezers and 17. 8 years for chest freezers. The fraction of consumers experiencing
an LCC benefit is 40 percent for upright freezers and 31 percent for chest freezers. The
fraction of consumers experiencing an LCC cost is 60 percent for upright freezers and 69
percent for chest freezers.

At TSL 5, the projected change in INPV ranges from a decrease of $145.0 million
to a decrease of $298.8 million. DOE recognizes the risk of very large negative impacts if
manufacturers’ expectations concerning reduced profit margins are realized. Standards at
TSL 5 would require efficiency levels that are far higher than the most efficient products
currently available on the market. Manufacturing products to meet standards at TSL 5
would require large investments in product redesign and conversion of facilities. Because
standard-size freezers are currently low-cost, low-margin products, there is a limited
ability to pass on to consumers the required conversion costs and added product costs
associated with efficiency-improving technologies for freezers. If the high end of the
range of impacts is reached as DOE expects, TSL 5 could result in a net loss of 88.5

pe rcent in INPV to standard-size freezer manufacturers.

The Secretary has concluded that at TSL 5 for standard-size freezers, the benefits
of energy savings, positive NPV of consumer benefits, generating capacity reductions,
emission reductions, and the estimated monetary value of the CO 2 emissions reductions
would be outweighed by the economic burden on a significant fraction of consumers due Deleted: 32

Deleted: 26 Deleted: 8 Deleted: 9

283to the large increases in product cost, and the capital conversion costs and profit margin
impacts that could result in a very large reduction in INPV for manufacturers.
Consequently, the Secretary has concluded that TSL 5 is not economically justified.

DOE then considered TSL 4. TSL 4 would save 1.52 quads of energy, an amount
DOE considers significant. Under TSL 4, the NPV of consumer benefit would be $2. 03
billion to $3.25 billion, using a discount rate of 7 percent, and $ 9.66 billion to $12.2
billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 4 are 103 Mt of CO 2 , 83,000 tons of

NO X , and 0.47 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 4 ranges from $0.92 billion to $8.80 billion. Total generating
capacity in 2043 is estimated to decrease by 1.59 GW under TSL 4.

At TSL 4, the average LCC impact is a gain (consumer savings) of $ 161 for
upright freezers and a gain of $47 for chest freezers. The median payback period is 9. 3
years for upright freezers and 12. 1 years for chest freezers. The fraction of consumers
experiencing an LCC benefit is 65 percent for upright freezers and 51 percent for chest
freezers. The fraction of consumers experiencing an LCC cost is 35 percent for upright
freezers and 49 percent for chest freezers.

At TSL 4, the projected change in INPV ranges from a decrease of $85.4 million
to a decrease of $182.4 million. DOE recognizes the risk of very large negative impacts if Deleted: 86

Deleted: 11.32

Deleted: 160

Deleted: 4

Deleted: 2

284manufacturers’ expectations concerning reduced profit margins are realized. Standards at
TSL 4 would require efficiency levels that are substantially higher than the most efficient
products currently available on the market. Manufacturing products to meet standards at
TSL 4 would require large investments in product redesign and conversion of facilities.
Because standard-size freezers are currently low-cost, low-margin products, there is a
limited ability to pass on to consumers the required conversion costs and added product
costs associated with efficiency-improving technologies for freezers. If the high end of
the range of impacts is reached as DOE expects, TSL 4 could result in a net loss of 54.0
percent in INPV to standard-size freezer manufacturers.

The Secretary has concluded that at TSL 4 for standard-size freezers, the benefits
of energy savings, positive NPV of consumer benefits, generating capacity reductions,
emission reductions, the estimated monetary value of the cumulative CO 2 emissions
reductions, and the economic benefit on a significant fraction of upright freezer
consumers would be outweighed by the economic burden on a significant fraction of
chest freezer consumers due to the increase in product cost, and the large capital
conversion costs and margin impacts that could result in a large reduction in INPV for

manufacturers.

DOE then considered TSL 3. TSL 3 would save 1.34 quads of energy, an amount
DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $ 2.96
billion to $ 3. 77 billion, using a discount rate of 7 percent, and $ 10.7 billion to $12.4
billion, using a discount rate of 3 percent. Deleted: 51 Deleted: 11.83

285The cumulative emissions reductions at TSL 3 are 91 Mt of CO 2 , 73,000 tons of

NO X , and 0.41 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 3 ranges from $0.81 billion to $7.76 billion. Total generating
capacity in 2043 is estimated to decrease by 1.40 GW under TSL 3.

At TSL 3, the average LCC impact is a gain (consumer savings) of $189 for
upright freezers and a gain of $79 for chest freezers. The median payback period is 7.1
years for upright freezers and 8.5 years for chest freezers. The fraction of consumers
experiencing an LCC benefit is 78 percent for upright freezers and 71 percent for chest
freezers. The fraction of consumers experiencing an LCC cost is 22 percent for upright
freezers and 29 percent for chest freezers.

At TSL 3, the projected change in INPV ranges from a decrease of $112.5 million
to a decrease of $178.1 million. DOE recognizes the risk of very large negative impacts if

manu facturers’ expectations concerning reduced profit margins are realized. Standards at
TSL 3 would require efficiency levels that are substantially higher than the most efficient
products currently available on the market. Similar to the case of TSL 4, manufacturing
products to meet standards at TSL 3 would require large investments in product redesign
and conversion of facilities. Because standard-size freezers are currently low-cost, lowmargin products, there is a limited ability to pass on to consumers the required
conversion costs and added product costs associated with more energy efficient
technologies for freezers. If the high end of the range of impacts is reached, as DOE Deleted: 7 0

286expects, TSL 3 could result in a net loss of 52.7 percent in INPV to standard- si ze freezer

manufacturers.

DOE notes that TSL 3 is not at the level recommended in the consensus
agreement. DOE also notes that the TSL 3 efficiency levels are significantly higher than
the maximum-efficiency products on the market: from 8% higher for product class 9
(upright freezers with automatic defrost) to 15% higher for product class 10 (chest
freezers). Hence, DOE believes that there may be other factors, including additional
burdens, that the parties to that agreement may have considered that are not reflected in
DOE’s analysis. Given this possibility, the strong support expressed by commenters in
favor of the consensus agreement levels, and the lack of product on the market that is
close to meeting the requirements of this level, DOE is declining to adopt TSL 3 as part
of today’s final rule. It may, however, reconsider this level as part of a future review of
the standards set by today’s rulemaking as part of the agency’s required review under 42

U.S.C. 6295(m).

Accordingly, the Secretary has concluded that at TSL 3 for standard-size freezers,
the benefits of energy savings, positive NPV of consumer benefits, generating capacity
reductions, emission reductions, the estimated monetary value of the cumulative CO 2 emissions reductions, and the economic benefit for a significant fraction of freezer
consumers would be outweighed by the large capital conversion costs and profit margin
impacts and other burdens that manufacturers would bear in order to produce freezers Deleted: that could result in a large reduction in INPV for manufacturers

. Comment [A67]: Change recommended by OIRA.

287that meet efficiency requirements substantially more stringent than what products on the
market presently can satisfy.

DOE then considered TSL 2. TSL 2 would save 1.14 quads of energy, an amount
DOE considers significant. Under TSL 2, the NPV of consumer benefit would be $3. 0 2
billion to $3.59 billion, using a discount rate of 7 percent, and $10. 1 billion to $11.2
billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 2 are 77 Mt of CO 2 , 62,000 tons of

NO X , and 0.34 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 2 ranges from $0.69 billion to $6.59 billion. Total generating
capacity in 2043 is estimated to decrease by 0.83 GW under TSL 2.

At TSL 2, the average LCC impact is a gain (consumer savings) of $195 for
upright freezers and a gain of $ 69 for chest freezers. The median payback period is 5.3 Comment [A68]: Change recommended by OIRA.

Deleted: 41

Deleted: 83

Deleted: 68
years for upright freezers and 8.1 years for chest freezers. The fraction of consumers
experiencing an LCC benefit is 88 percent for upright freezers and 73 percent for chest
freezers. The fraction of consumers experiencing an LCC cost is 12 percent for upright

freezers and 27 percent for chest freezers. Deleted: 72

Deleted: 2 8

DOE estimated the projected change in INPV ranges from a decrease of $123.7
million to a decrease of $170.5 million. At TSL 2, DOE recognizes the risk of negative
impacts if manufacturers’ expectations concerning reduced profit margins are realized.

288Standards at TSL 2 would pose many of the same issues as discussed above for TSL3,
but the projected negative impacts are somewhat less. If the high end of the range of
impacts is reached as DOE expects, TSL 2 could result in a net loss of 50.5 percent in

INPV to standard-size freezer manufacturers.

The Secretary has concluded that at TSL 2 for standard-size freezers, the benefits
of energy savings, positive NPV of consumer benefits, generating capacity reductions,
emission reductions, the estimated monetary value of the cumulative CO 2 emissions
reductions, and the economic benefit for a significant fraction of freezer consumers
would outweigh the capital conversion costs and profit margin impacts that could result
in a reduction in INPV for the manufacturers. In addition to the aforementioned benefits,
DOE notes that the efficiency levels in TSL 2 correspond to the recommended levels in
the Joint Comments and, as stated previously, DOE recognizes the value of consensus
agreements submitted in accordance with 42 U.S.C. 6295(p)(4).

After considering the analysis, comments responding to the September 2010
NOPR, and the benefits and burdens of TSL 2, the Secretary has concluded that this trial
standard level will offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and will result in the significant conservation of
energy. Therefore, DOE today is adopting TSL 2 for standard-size freezers. The amended
energy conservation standards for standard-size freezers, expressed as equations for
maximum energy use, are shown in Table VI.73.

289Table VI

. 73 Amended Standards for Standard-Size Freezers

Product Class Equations for Maximum Energy Use (kWh/yr) based on AV (ft 3 ) based on av (L) 8. Upright freezers with manual defrost. 5.57AV + 193.7 0.197av + 193.7 9. Upright freezers with automatic defrost without an automatic icemaker. 8.62AV + 228.3 0.305av + 228.3 9I. Upright freezers with automatic defrost with an automatic icemaker. 8.62AV + 312.3 0.305av + 312.3
10. Chest freezers and all other freezers except compact freezers. 7.29AV + 107.8 0.257av + 107.8
10A. Chest freezers with automatic defrost. 10.24AV + 148.1 0.362av + 148.1 AV= adjusted volume in cubic feet; av = adjusted volume in liters

3. Compact Refrigeration Products

Table VI. 74 presents a summary of the quantitative impacts estimated for each
TSL for compact refrigeration products. The efficiency levels contained in each TSL are

described in section VI.A. The range of results for NPV of consumer benefits reflects the
range of product price forecasts discussed in section IV.G.3. Comment [A69]: Change recommended by OIRA.

290Table VI

. 74 Summary of Results for Compact Refrigeration Products Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 National Energy Savings (quads) 0.30 0.37 0.43 0.54 0.59 NPV of Consumer Benefits (2009$ billion) 3% discount rate 1. 6 4 to 1.9 5 1. 29 to 1. 45 to 0. 046 to ( 3.7 5 ) to 1.8 9 2.15 1.4 3 (1.17 ) 7% discount rate 0. 675 to 0.821 0. 4 39 to 0. 482 to ( 0. 363) to (2.51) to 0.72 4 0.819 0.304 ( 1. 2 5 ) Industry Impacts Compact Refrigeration Products Industry NPV (2009$ million) (16.6) to (27.8) (36.2) to (58.7) (62.9) to (89.3) (41.5) to (92.8) (154.9) to (242.6) Industry NPV (% change) (9.8) to (16.4) (21.4) to (34.6) (37.1) to (52.7) (24.5) to (54.8) (91.4) to (143.2) Cumulative Emissions Reduction CO 2 (Mt) 20 24 28 35 39 NO X (1000 tons) 16 20 23 29 31 Hg (tons) 0.10 0.12 0.15 0.19 0.21 Value of Cumulative Emissions Reduction

CO 2 (2009$ billion)* 0.12 to 1.26 0.15 to 1.54 0.18 to 1.79 0.22 to 2.25 0.24 to 2.47
NO X – 3% discount rate (2009$ billion) 0. 004 to 0.044 0. 005 to 0. 009 to 0.054 0. 006 to 0.063 0. 008 to 0.079 0.088 NO X – 7% discount rate (2009$ billion) 0. 002 to 0.021 0. 003 to 0. 004 to 0.026 0. 003 to 0.030 0. 004 to 0.038 0.042 Mean LCC Savings** (2009$) Compact Refrigerators 17 14 13 ( 5 ) ( 85 ) Compact Freezers 12 12 9 (23) ( 102 ) Median PBP (years) Compact Refrigerators 2.5 3.5 3.9 5. 8 10.4 Compact Freezers 2.2 2.2 4.2 9.1 14.4 Distribution of Consumer LCC Impacts Compact Refrigerators Net Cost (%) 20 37 44 70 92 No Impact (%) 1 .4 1 .0 0.9 0.0 0.0 Net Benefit (%) 79 62 56 30 7.9 Compact Freezers Net Cost (%) 8 8 34 85 97 No Impact (%) 5 5 0.0 0.0 0.0 Net Benefit (%) 87 87 66 16 3. 3 Generation Capacity Reduction ( GW ) † 0.27 0.34 0.39 0.48 0.51
Employment Impacts Total Potential Changes in Domestic Production Workers in 2014 (thousands) (0.00) to (0.03) (0.00) to (0.03) (0.00) to (0.03) (0.00) to (0.03) (0.01) to (0.03)
Indirect Domestic Jobs (thousands) † 1.44 1.64 1.88 2.02 1.53 Deleted: 84 Deleted: 69 Deleted: 92 Deleted: 97 Deleted: 2.03 Deleted: 77 Deleted: 63 Deleted: 71 Deleted: 088 Deleted: 65

Deleted: 0043 Deleted: 0053

Deleted: 0061 Deleted: 0077 Deleted: 0085

Deleted: 0020 Deleted: 0025

Deleted: 0029 Deleted: 0037 Deleted: 0041

Deleted: 13 Deleted: 12 Deleted: 6 Deleted: 86 Deleted: 103 Deleted: 4. 0 Deleted: 9 Deleted: 1 Deleted: 55 Deleted: 8 Deleted: 15

Parentheses indicate negative (

- ) values. * Range of the economic value of CO 2 reductions is based on estimates of the global benefit of reduced CO 2

291Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 emissions. ** For LCCs, a negative value means an increase in LCC by the amount indicated. † Changes in 2043.

DOE first considered TSL 5, which represents the max-tech efficiency levels.
TSL 5 would save 0.59 quads of energy, an amount DOE considers significant. Under
TSL 5, the NPV of consumer benefit would be -$ 2.51 billion to -$1.25 billion, using a Deleted: 1.65

Deleted: 2.03 discount rate of 7 percent, and -$ 3.75 billion to -$1.17 billion, using a discount rate of 3

percent.

The cumulative emissions reductions at TSL 5 are 39 Mt of CO 2 , 31,000 tons of

NO X , and 0.21 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 5 ranges from $0.24 billion to $2.47 billion. Total generating
capacity in 2043 is estimated to decrease by 0.51 GW under TSL 5.

At TSL 5, the average LCC impact is a cost (LCC increase) of $ 85 for compact
refrigerators and a cost of $ 102 for compact freezers. The median payback period is 10.4
years for compact refrigerators and 14.4 years for compact freezers. The fraction of
consumers experiencing an LCC benefit is 7.9 percent for compact refrigerators and 3 .3
percent for compact freezers. The fraction of consumers experiencing an LCC cost is 92
percent for compact refrigerators and 97 percent for compact freezers.

At TSL 5, the projected change in INPV ranges from a decrease of $154.9 million
to a decrease of $242.6 million. DOE recognizes the risk of very large negative impacts if
manufacturers’ expectations concerning reduced profit margins are realized. Deleted: 86

Deleted: 1 03

Deleted: 8

292Manufacturing products to meet standards at TSL 5 would require large investments in
product redesign and conversion of facilities. Because compact refrigeration products are
currently low-cost, low-margin products, there is a limited ability to pass on to consumers
the required conversion costs and added product costs associated with efficiencyimproving technologies. If the high end of the range of impacts is reached as DOE
expects, TSL 5 could result in a net loss of 143.2 percent in INPV to compact
refrigeration product manufacturers.

The Secretary has concluded that at TSL 5 for compact refrigeration products, the
benefits of energy savings, generating capacity reductions, emission reductions, and the
estimated monetary value of the CO 2 emissions reductions would be outweighed by the
negative NPV of consumer benefits, the economic burden on a significant fraction of
consumers due to the increases in product cost, the capital conversion costs and profit
margin impacts that could result in a large reduction in INPV for manufacturers.
Consequently, the Secretary has concluded that TSL 5 is not economically justified.

DOE then considered TSL 4. TSL 4 would save 0.54 quads of energy, an amount
DOE considers significant. Under TSL 4, the NPV of consumer benefit would be -$ 0. 363
billion to $0. 30 4 billion, using a discount rate of 7 percent, and $0. 46 billion to $1. 43
billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 4 are 35 Mt of CO 2 , 29,000 tons of

NO X , and 0.19 tons of Hg. The estimated monetary value of the cumulative CO 2 Deleted: $
Deleted: 088 Deleted: 97

293emissions reductions at TSL 4 ranges from $0.22 billion to $2.25 billion. Total generating
capacity in 2043 is estimated to decrease by 0.48 GW under TSL 4.

At TSL 4, the average LCC impact is a cost (LCC increase) of $ 5 for compact
refrigerators and a cost of $23 for compact freezers. The median payback period is 5. 8
years for compact refrigerators and 9.1 years for compact freezers. The fraction of
consumers experiencing an LCC benefit is 30 percent for compact refrigerators and 16
percent for compact freezers. The fraction of consumers experiencing an LCC cost is 70
percent for compact refrigerators and 85 percent for compact freezers.

At TSL 4, the projected change in INPV ranges from a decrease of $41.5 million
to a decrease of $92.8 million. DOE recognizes the risk of very large negative impacts if

manufacturers’ e xpectations about reduced profit margins are realized. Manufacturing
products to meet standards at TSL 4 would require large investments in product redesign
and conversion of facilities. Because compact refrigeration products are currently lowcost, low- ma rgin products, there is a limited ability to pass on to consumers the required
conversion costs and added product costs associated with efficiency-improving
technologies. If the high end of the range of impacts is reached as DOE expects, TSL 4
could result in a net loss of 54.8 percent in INPV to compact refrigeration product

manufacturers.

The Secretary has concluded that at TSL 4 for compact refrigeration products, the
benefits of energy savings, generating capacity reductions, emission reductions, and the Deleted: 6

Deleted: 9

Deleted: 1 5

294estimated monetary value of the CO 2 emissions reductions would be outweighed by the
negative NPV of consumer benefits, the economic burden on a significant fraction of
consumers due to the increases in product costs, and the capital conversion costs and
profit margin impacts that could result in a large reduction in INPV for manufacturers.
Consequently, the Secretary has concluded that TSL 4 is not economically justified.

DOE then considered TSL 3. TSL 3 would save 0.43 quads of energy, an amount
DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $0. 482
billion to $0. 819 billion, using a discount rate of 7 percent, and $1. 45 to $2.15 billion,
using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 3 are 28 Mt of CO 2 , 23,000 tons of

NO X , and 0.15 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 3 ranges from $0.18 billion to $1.79 billion. Total generating
capacity in 2043 is estimated to decrease by 0.39 GW under TSL 3.

At TSL 3, the average LCC impact is a gain (consumer savings) of $ 13 for
compact refrigerators and a gain of $9 for compact freezers. The median payback period

is 3.9 years for compact refrigerators and 4.2 years for compact freezers. The fraction of
consumers experiencing an LCC benefit is 56 percent for compact refrigerators and 66
percent for compact freezers. The fraction of consumers experiencing an LCC cost is 44
percent for compact refrigerators and 34 percent for compact freezers. Deleted: 71

Deleted: 92

Deleted: 12

Deleted: 4

Deleted: 55

295At TSL 3, the projected change in INPV ranges from a decrease of $62.9 million
to a decrease of $89.3 million. DOE recognizes the risk of large negative impacts if
manufacturers’ expectations about reduced profit margins are realized. Manufacturing
products to meet standards at TSL 3 would require large investments in product redesign
and conversion of facilities. Because compact refrigeration products are currently lowcost, low-margin products, there is a limited ability to pass on to consumers the required
conversion costs and added product costs associated with efficiency-improving
technologies. If the high end of the range of impacts is reached as DOE expects, TSL 3
could result in a net loss of 52.7 percent in INPV to compact refrigeration product

manufacturers.

The Secretary has concluded that at TSL 3 for compact refrigeration products, the
benefits of energy savings, positive NPV of consumer benefits, generating capacity
reductions, emission reductions, and the estimated monetary value of the cumulative CO 2

em issions reductions would be outweighed by the economic burden on a significant
fraction of consumers due to the increases in product costs, and by the capital conversion
costs and profit margin impacts that could result in a large reduction in INPV for
manufacturers. Consequently, the Secretary has concluded that TSL 3 is not
economically justified.

DOE then considered TSL 2. TSL 2 would save 0.37 quads of energy, an amount
DOE considers significant. Under TSL 2, the NPV of consumer benefit would be $0. 4 39 Deleted: 63

296billion to $0. 72 4 billion, using a discount rate of 7 percent, and $1. 29 billion to $1. 89
billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 2 are 24 Mt of CO 2 , 20,000 tons of

NO X , and 0.12 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 2 ranges from $0.15 billion to $1.54 billion. Total generating
capacity in 2043 is estimated to decrease by 0.34 GW under TSL 2.

At TSL 2, the average LCC impact is a gain (consumer savings) of $ 14 for
compact refrigerators and a gain of $12 for compact freezers. The median payback period
is 3.5 years for compact refrigerators and 2.2 years for compact freezers. The fraction of
consumers experiencing an LCC benefit is 62 percent for compact refrigerators and 87
percent for compact freezers. The fraction of consumers experiencing an LCC cost is 37
percent for compact refrigerators and 8 percent for compact freezers.

At TSL 2, the projected change in INPV ranges from a decrease of $36.2 million
to a decrease of $58.7 million. DOE recognizes the risk of negative impacts if
manufacturers’ expectations about reduced profit margins are realized. Manufacturing
products to meet standards at TSL 2 would require investments in product redesign and
conversion of facilities. Because compact refrigeration products are currently low-cost,
low-margin products, there is a limited ability to pass on to consumers the required
conversion costs and added product costs associated with efficiency-improving
technologies. If the high end of the range of impacts is reached as DOE expects, TSL 2 Deleted: 69

Deleted: 1 3

297could result in a net loss of 34.6 percent in INPV to compact refrigeration product

manufacturers.

The Secretary has concluded that at TSL 2 for compact refrigeration products, the
benefits of energy savings, positive NPV of consumer benefits, generating capacity
reductions, emission reductions, the estimated monetary value of the cumulative CO 2 emissions reductions, and the economic benefit to a significant fraction of consumers
would outweigh the capital conversion costs that could result in a reduction in INPV for
manufacturers. In addition to the aforementioned benefits of the amended standards,
DOE notes that the efficiency levels in TSL 2 correspond to the recommended levels in

the Joint Comments

AHAM and ASAP both commented that the proposed standard energy efficiency
equation for product class 15 (compact refrigerator-freezers

— automatic defrost with
bottom-mounted freezer) was inconsistent with the consensus agreement, which had
recommended that both product class 15 and product class 13 (compact refrigeratorfreezers

— automatic defrost with top-mounted freezer) should have identical standards.
(ASAP, Public Meeting Transcript, No. 67 at p. 91; AHAM, Public Meeting Transcript,
No. 67 at p. 92) DOE agrees that the standards of these two product classes should be the
same, based on the similarities between these classes. Commenters favored this approach
and none offered any information suggesting an alternative approach. As stated
previously, DOE recognizes the value of consensus agreements submitted in accordance
with 42 U.S.C. 6295(p)(4).

298After considering the analysis, comments responding to the September 2010
NOPR, and the benefits and burdens of TSL 2, the Secretary has concluded that this trial
standard level will offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and will result in the significant conservation of
energy. Therefore, DOE today is adopting TSL 2 for compact refrigeration products. The
amended energy conservation standards for compact refrigeration products, expressed as
equations for maximum energy use, are shown in Table VI-75.

Table VI

. 75 Amended Standards for Compact Refrigeration Products

Product Class Equations for Maximum Energy Use (kWh/yr) based on AV (ft 3 ) based on av (L) 11. Compact refrigerators and refrigerator

- freezers with manual defrost. 9.03AV + 252.3 0.319av + 252.3 11A. Compact all

- refrigerators

— manual defrost. 7.84AV + 219.1 0.277av + 219.1 12. Compact refrigerator

- freezers

— partial automatic defrost 5.91AV + 335.8 0.209av + 335.8 13. Compact refrigerator

- freezers

— automatic defrost with top

mounted freezer. 11.80AV + 339.2 0.417av + 339.2 13I. Compact refriger ator

- freezers

— automatic defrost with top

mounted freezer with an automatic icemaker. 11.80AV + 423.2 0.417av + 423.2
13A. Compact all

- refrigerators

— automatic defrost. 9.17AV + 259.3 0.324av + 259.3 14. Compact refrigerator

- freezers

— automatic defrost with side

mounted freezer. 6.82AV + 456.9 0.241av + 456.9 14I. Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker. 6.82AV + 540.9 0.241av + 540.9
15. Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer. 11.80AV + 339.2 0.417av + 339.2 15I. Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker. 11.80AV + 423.2 0.417av + 423.2
16. Compact upright freezers with manual defrost. 8.65AV + 225.7 0.306av + 225.7 17. Compact upright freezers with automatic defrost. 10.17AV + 351.9 0.359av + 351.9 18. Compact chest freezers. 9.25AV + 136.8 0.327av + 136.8 AV= adjusted volume in cubic feet; av = adjusted volume in liters

2994. Built-In Refrigeration Products

Table V- 76 presents a summary of the quantitative impacts estimated for each
TSL for built-in refrigeration products. The efficiency levels contained in each TSL are

described in section VI.A. The range of results for NPV of consumer benefits reflects the
range of product price forecasts discussed in section IV.G.3.

Table VI

. 76 Summary of Results for Built-in Refrigeration Products Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 National Energy Savings (quads) 0.02 0.03 0.058 0.071 0.085 NPV of Consumer Benefits (2009$ billion) 3% discount rate 0. 166 to 0.184 0. 183 to 0.226 (0. 228) to 0.029 (0. 580) to (0.185 ) (1.1 4 ) to (0. 531) 7% discount rate 0. 053 to 0.062 0. 045 to 0.066 (0. 237) to (0.111 ) (0. 455) to (0.261 ) (0. 791) to (0.495 ) Industry Impacts Industry NPV (2009$ million) (51.9) to (52.6) (55.1) to (56.5) (68.0) to (77.2) (82.9) to (97.6) (89.9) to (112.1) Industry NPV (% change) (9.4) to (9.5) (9.9) to (10.2) (12.3) to (13.9) (15.0) to (17.6) (16.2) to (20.2) Cumulative Emissions Reduction CO 2 (Mt) 1.41 2.05 4.1 5.09 6.09 NO X (1000 tons) 1.14 1.65 3.3 4.09 4.9 Hg (tons) 0.01 0.01 0.02 0.02 0.03 Value of Cumulative Emissions Reduction
CO 2 (2009$ billion)* 0.012 to 0.12 0.017 to 0.17 0.035 to 0.34 0.043 to 0.41 0.051 to 0.50 NO X – 3% discount rate (2009$ billion) 0. 000 to 0. 004 0. 001 to 0. 005 0. 001 to 0.011 0. 001 to 0.013 0. 002 to 0.016 NO X – 7% discount rate (2009$ billion) 0. 000 to 0. 002 0. 000 to 0. 002 0. 000 to 0. 004 0. 001 to 0. 005 0. 001 to 0. 006 Mean LCC Savings** (2009$) Built

- in All

- Refrigerators 52 71 ( 11 ) ( 151 ) ( 258 ) Built

- in Bottom

- Mount Refrigerator

- Freezers 8 2 2 ( 138 ) ( 207 )
Built

- in Side

- by

- Side Refrigerator

- Freezers 10 10 ( 91 ) ( 91 ) ( 182 )
Built

- in Upright Freezers 66 59 ( 23 ) ( 23 ) ( 101 ) Median PBP (years) Built

- in All

- Refrigerators 1.4 2.6 13. 7 25. 5 31. 4 Built

- in Bottom

- Mount Refrigerator

- Freezers 3.8 11.1 11.1 52.8 52. 2
Built

- in Side

- by

- Side Refrigerator

- Freezers 7.5 7.5 31. 0 31. 0 50. 4
Built

- in Upright Freezers 2.9 10. 7 17. 8 17. 8 22. 6 Comment [A70]: Change recommended by

... Deleted: 18 Deleted: 21 Deleted: 056 ) Deleted: 3 16 Deleted: 73 ) Deleted: 059 Deleted: 059 Deleted: 15 Deleted: 32 4 Deleted: 59 Deleted: Built

- in Refrigeration Products

... Deleted: 00036

... 00 to 0. 0037

... Deleted: 00053

... 01 to 0. 0054

... Deleted: 0 0105 Deleted: 0013 Deleted: 0015 Deleted: 00014

... 00 to 0. 0015

... Deleted: 00021

... 00 to 0. 0021

... Deleted: 00042

... 00 to 0. 0043

... Deleted: 00052

... 01 to 0. 0053

... Deleted: 00062

... 01 to 0. 0063

... Deleted: 12 Deleted: 152 Deleted: 260 Deleted: 139 Deleted: 208 Deleted: 92 Deleted: 92 Deleted: 183 Deleted: 58 Deleted: 24 Deleted: 24 Deleted: 102 Deleted: 8 Deleted: 6 Deleted: 5 Deleted: 53.0 Deleted: 4 Deleted: 1 Deleted: 1 Deleted: 6 Deleted: 8 Deleted: 9 Deleted: 9 Deleted: 7

300Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Distribution of Consumer LCC Impacts Built

- in All

- Refrigerators Net Cost (%) 0.0 0.9 62 91 95 No Impact (%) 23 18. 9 .1 0.0 0.0 Net Benefit (%) 77. 81 29 9 .0 5 .0 Built

- in Bottom

- Mount Refrigerator

- Freezers Net Cost (%) 0.6 7 .0 7 .0 98 99 No Impact (%) 87 87 87 0.0 0.0 Net Benefit (%) 12 5.9 5.9 2 .0 1 .5 Built

- in Side

- by

- Side Refrigerator

- Freezers Net Cost (%) 5.8 5.8 59 59 98 No Impact (%) 79 79 37 37 0.0 Net Benefit (%) 16 16 4 .3 4 .3 2 .4 Built

- in Upright Freezers Net Cost (%) 1.5 43 69 69 80 No Impact (%) 20 0.6 0. 5 0. 5 0. 3 Net Benefit (%) 79 57 31 31 20 Generation Capacity Reduction ( GW ) † 0.02 0.03 0.06 0.08 0.09 Employment Impacts Total Potential Changes in Domestic Production Workers in 2014 (thousands) 0.00 to (1.14) (0.00) to (1.14) 0.01 to (1.14) 0.01 to (1.14) 0.03 to (1.14)

Indirect Domestic Jobs (thousands) † 0.14 0.19 0.29 0.31 0.30 Deleted: 1

Deleted: 30

Deleted: 1

Deleted: 6 Deleted: 6

Deleted: 6 Deleted: 6 Deleted: 78. Deleted: 78 Deleted: 2 Deleted: 1 Deleted: 0 Deleted: 0 Deleted: 0 Deleted: 56 Deleted: 30 Deleted: 30 Parentheses indicate negative (

- ) values. Range of the economic value of CO 2 reductions is based on estimates of the global benefit of reduced CO 2 emissions. ** For LCCs, a negative value means an increase in LCC by the amount indicated. † Changes in 2043.

DOE first considered TSL 5, which represents the max-tech efficiency levels.
TSL 5 would save 0.085 quads of energy, an amount DOE considers significant. Under
TSL 5, the NPV of consumer benefit would be - $0. 7 91 billion to -$0. 495 billion, using a
discount rate of 7 percent, and -$ 1.14 billion to -$0. 531 billion, using a discount rate of 3

percent. Deleted: 59

Deleted: 0.73

301The cumulative emissions reductions at TSL 5 are 6.09 Mt of CO 2 , 4,900 tons of

NO X , and 0.03 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 5 ranges from $0.051 billion to $0.50 billion. Total
generating capacity in 2043 is estimated to decrease by 0.09 GW under TSL 5.

At TSL 5, the average LCC impact is a cost (LCC increase) of $ 258 for built-in
all-refrigerators, a cost of $ 207 for built-in bottom-mount refrigerator-freezers, a cost of
$ 182 for built-in side- by -side refrigerator-freezers, and a cost of $ 101 for built-in upright
freezers. The median payback period is 31. 4 years for built-in all-refrigerators, 52. 2 years Deleted: 260

Deleted: 2 08

Deleted: 183 Deleted: 1 02 Deleted: 5 Deleted: 4 Deleted: 6

Deleted: 7 for built-in bottom-mount refrigerator-freezers, 50. 4 years for built-in side- by -side
refrigerator-freezers, and 22. 6 years for built-in upright freezers. The fraction of
consumers experiencing an LCC benefit is 5 percent for built-in all-refrigerators, 1 .5
percent for built-in bottom-mount refrigerator-freezers, 2 .4 percent for built-in side- by

side refrigerator-freezers, and 20 percent for built-in upright freezers. The fraction of
consumers experiencing an LCC cost is 95 percent for built-in all-refrigerators, 99
percent for built-in bottom-mount refrigerator-freezers, 98 percent for built-in side- by

side refrigerator-freezers, and 80 percent for built-in upright freezers.

At TSL 5, the projected change in INPV ranges from a decrease of $89.9 million
to a decrease of $112.1 million. If the high end of the range of impacts is reached as DOE
expects, TSL 5 could result in a net loss of 20.2 percent in INPV to built-in refrigeration
product manufacturers.

302The Secretary has concluded that at TSL 5 for built-in refrigeration products, the
benefits of energy savings, generating capacity reductions, emission reductions, and the
estimated monetary value of the CO 2 emissions reductions would be outweighed by the
negative NPV of consumer benefits, the economic burden on a significant fraction of
consumers due to the large increases in product cost, and the capital conversion costs and
profit margin impacts that could result in a reduction in INPV for the manufacturers.
Consequently, the Secretary has concluded that TSL 5 is not economically justified.

DOE then considered TSL 4. TSL 4 would save 0.071 quads of energy, an
amount DOE considers significant. Under TSL 4, the NPV of consumer benefit would be
-$0. 4 55 billion to -$0. 261 billion, using a discount rate of 7 percent, and -$0. 580 billion
to -$0. 185 billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 4 are 5.09 Mt of CO 2 , 4,090 tons of

NO X , and 0.02 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reductions at TSL 4 ranges from $0.043 billion to $0.41 billion. Total
generating capacity in 2043 is estimated to decrease by 0.08 GW under TSL 4.

At TSL 4, DOE projects that the average LCC impact is a cost (LCC increase) of
$ 151 for built-in all-refrigerators, a cost of $ 138 for built-in bottom-mount refrigeratorfreezers, a cost of $ 91 for built-in side- by -side refrigerator-freezers, and a cost of $ 23 for Deleted: 32 Deleted: 32

Deleted: 1 52 Deleted: 1 39 Deleted: 92 Deleted: 24 Deleted: 6

Deleted: 53 Deleted: 1 built-in upright freezers. The median payback period is 25. 5 years for built-in allrefrigerators, 52.8 years for built-in bottom-mount refrigerator-freezers, 31. 0 years for

303built-in side- by -side refrigerator-freezers, and 17. 8 years for built-in upright freezers. The
fraction of consumers experiencing an LCC benefit is 9 percent for built-in allrefrigerators, 2 percent for built-in bottom-mount refrigerator-freezers, 4 .3 percent for

built-in side- by -side refrigerator-freezers, and 31 percent for built-in upright freezers. The
fraction of consumers experiencing an LCC cost is 91 percent for built-in allrefrigerators, 98 percent for built-in bottom-mount refrigerator-freezers, 59 percent for

built-in side- by -side refrigerator-freezers, and 69 percent for built-in upright freezers.

At TSL 4, the projected change in INPV ranges from a decrease of $82.9 million
to a decrease of $97.6 million. If the high end of the range of impacts is reached as DOE
expects, TSL 4 could result in a net loss of 17.6 percent in INPV to built-in refrigeration
product manufacturers.

The Secretary has concluded that at TSL 4 for built-in refrigeration products, the
benefits of energy savings, generating capacity reductions, emission reductions, and the
estimated monetary value of the CO 2 emissions reductions would be outweighed by the
negative NPV of consumer benefits, the economic burden on a significant fraction of
consumers due to the increases in product cost, and the capital conversion costs and profit
margin impacts that could result in a reduction in INPV for the manufacturers.
Consequently, the Secretary has concluded that TSL 4 is not economically justified.

DOE then considered TSL 3. TSL 3 would save 0.058 quads of energy, an
amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be Deleted: 9

Deleted: 30

304-$0. 2 37 billion to -$0.1 11 billion, using a discount rate of 7 percent, and -$0. 228 billion
to $0.0 29 billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 3 are 4.1 Mt of CO 2 , 3,300 tons of

NO X , and 0.02 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reduction at TSL 3 ranges from $0.035 billion to $0.34 billion. Total
generating capacity in 2043 is estimated to decrease by 0.06 GW under TSL 3.

At TSL 3, the average LCC impact is a cost (LCC increase) of $ 11 for built-in allrefrigerators, a gain of $2 for built-in bottom-mount refrigerator-freezers, a cost of $ 91

for built-in side- by -side refrigerator-freezers, and a cost of $ 23 for built-in upright
freezers. The median payback period is 13. 7 years for built-in all-refrigerators, 11.1 years
for built-in bottom-mount refrigerator-freezers, 31. 0 years for built-in side- by -side Deleted: 15 Deleted: 056

Deleted: 12

Deleted: 92

Deleted: 24

Deleted: 8

Deleted: 1

Deleted: 9

Deleted: 6 refrigerator-freezers, and 17. 8 years for built-in upright freezers. The fraction of
consumers experiencing an LCC benefit is 29 percent for built-in all-refrigerators, 5.9
percent for built-in bottom-mount refrigerator-freezers, 4 .3 percent for built-in side- by

side refrigerator-freezers, and 31 percent for built-in upright freezers. The fraction of
consumers experiencing an LCC cost is 62 percent for built-in all-refrigerators, 7 percent
for built-in bottom-mount refrigerator-freezers, 59 percent for built-in side- by -side
refrigerator-freezers, and 69 percent for built-in upright freezers.

At TSL 3, the projected change in INPV ranges from a decrease of $68.0 million
to a decrease of $77.2 million. If the high end of the range of impacts is reached as DOE Deleted: 30

Comment [A71]: Change recommended by OIRA. Deleted: Although a significant fraction of consumers would experience an LCC cost, in the majority of cases the cost as a percentage of the purchase price (which ranges from approximately $4,500 to $8,000) is sma ll

— about 1 to 2 percent on average.

305expects, TSL 3 could result in a net loss of 13.9 percent in INPV to built-in refrigeration
product manufacturers.

The Secretary has concluded that at TSL 3 for built-in refrigeration products, the
benefits of energy savings, generating capacity reductions, emission reductions, and the
estimated monetary value of the CO 2 emissions reductions would be outweighed by the
negative NPV of of consumer benefits, the slight economic burden on a significant
fraction of consumers due to the increases in product cost, and the capital conversion
costs and profit margin impacts that could result in a reduction in INPV for the

manufacturers. Consequently, the Secretary has concluded that TSL 3 is not
economically justified.

DOE then considered TSL 2. TSL 2 would save 0.03 quads of energy, an amount
DOE considers significant. Under TSL 2, the NPV of consumer benefit would be $0.0 45
billion to $0.066 billion, using a discount rate of 7 percent, and $0. 183 billion to $0.226
billion, using a discount rate of 3 percent.

The cumulative emissions reductions at TSL 2 are 2.05 Mt of CO 2 , 1,650 tons of

NO X , and 0.01 tons of Hg. The estimated monetary value of the cumulative CO 2 emissions reduction at TSL 2 ranges from $0.017 billion to $0.17 billion. Total
generating capacity in 2043 is estimated to decrease by 0.03 GW under TSL 2. Deleted: outweigh

Deleted: In addition to the aforementioned benefits of the amended standards, DOE notes that the efficiency levels in TSL 3 correspond to the recommended levels in the Joint Com ments and, as stated previously, DOE recognizes the value of consensus agreements submitted in accordance with 42 U.S.C. 6295(p)(4). DOE notes that several commenters agreed with the proposed standard levels for built

- in products, which are the same as tho se adopted in this final rule. (Sub

- Zero, No. 69.1 at p. 5; Whirlpool, No. 74.1, p. 6; JAC, No. 75.1 at pp. 2

- 3)

306At TSL 2, the average LCC impact is a gain (LCC decrease) of $71 for built-in
all-refrigerators, a gain of $2 for built-in bottom-mount refrigerator-freezers, a gain of

$10 for built-in side- by -side refrigerator-freezers, and a gain of $59 for built-in upright
freezers. The median payback period is 2.6 years for built-in all-refrigerators, 11.1 years
for built-in bottom-mount refrigerator-freezers, 7.5 years for built-in side- by -side
refrigerator-freezers, and 10.7 years for built-in upright freezers. The fraction of
consumers experiencing an LCC benefit is 81 percent for built-in all-refrigerators, 5.9
percent for built-in bottom-mount refrigerator-freezers, 16 percent for built-in side- by

side refrigerator-freezers, and 57 percent for built-in upright freezers. The fraction of
consumers experiencing an LCC cost is 0.9 percent for built-in all-refrigerators, 7 percent
for built-in bottom-mount refrigerator-freezers, 5.8 percent for built-in side- by -side
refrigerator-freezers, and 43 percent for built-in upright freezers.

At TSL 2, the projected change in INPV ranges from a decrease of $55.1 million
to a decrease of $56.5 million. If the high end of the range of impacts is reached as DOE
expects, TSL 2 could result in a net loss of 10.2 percent in INPV to built-in refrigeration
product manufacturers.

The Secretary has concluded that at TSL 2 for built-in refrigeration products, the
benefits of energy savings, positive NPV of consumer benefits, generating capacity

re ductions, emission reductions, and the estimated monetary value of the CO 2 emissions
reductions would outweigh the slight economic burden on a small fraction of consumers

307due to the increases in product cost, and the capital conversion costs and profit margin
impacts that could result in a reduction in INPV for the manufacturers.

After considering the analysis, comments responding to the September 2010
NOPR, and the benefits and burdens of TSL 2 , the Secretary has concluded that this trial Deleted: 3
standard level will offer the maximum improvement in efficiency that is technologically
feasible and economically justified, and will result in significant conservation of energy.
Therefore, DOE today is adopting TSL 2 for built-in refrigeration products. The amended
energy conservation standards for built-in refrigeration products, expressed as equations
for maximum energy use, are shown in Table VI.77.

Table VI

. 77 Amended Standards for Built-In Refrigeration Products

Product Class Equations for Maximum Energy Use (kWh/yr) based on AV (ft 3 ) based on av (L) 3

- BI. Built

- in refrigerator

- freezer

— automatic defrost with top

mounted freezer without an automatic icemaker. 9.15AV + 264.9 0. 323av + 264.9
3I

- BI. Built

- in refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 9.15AV + 348.9 0. 323av + 348.9

3A

- BI. Built

- in All

- refrigerators

— automatic defrost. 8.02AV + 228.5 0. 283av + 228.5 4

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer without an automatic icemaker. 10.22AV + 357.4 0. 361av + 357.4
4I

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 10.22AV + 441.4 0. 361av + 441.4

5

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without an automatic icemaker. 9.40AV + 336. 9 0.332av + 336. 9
5I

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 9.40AV + 420. 9 0.332av + 420. 9

5A

- BI. Built

- in refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

- the

- door ice service. 9. 83AV + 499 .9 0. 347av + 499 .9
7

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service. 10.25AV + 502.6 0. 362av + 502.6

9

- BI. Built

- In Upright freezers with automatic defrost without 9. 86AV + 260.9 0. 348av + 260.9 Deleted: 3 Comment [A72]: Changes recommended by OIRA.

Deleted: 8.61AV + 249.3 Deleted: 304av + 249.3 Comment [A73]: Change recommended by OIRA.

Deleted: 8.61AV + 333.3 Deleted: 304av + 333.3 Comment [A74]: Change recommended by OIRA.

Deleted: 7.55AV + 215.1 Deleted: 266av + 215.1 Comment [A75]: Change recommended by OIRA.

Deleted: 9.08AV + 31 7.6 Deleted: 321av + 317.6 Comment [A76]: Change recommended by OIRA.

Deleted: 9.08AV + 401.6 Deleted: 321av + 401.6 Comment [A77]: Change recommended by OIRA.

Deleted: 7 Deleted: 7 Deleted: 7 Deleted: 7 Deleted: 80AV + 498 Deleted: 346av + 498

Deleted: 9.11AV + 456.0 Deleted: 322av + 456.0 Comment [A78]: Change recommended by OIRA.

Deleted: 24AV + 244.6 Deleted: 326av + 244.6 Comment [A79]: Change recommended by OIRA.

308an auto matic icemaker. 9I

- BI. Built

- in upright freezers with automatic defrost with an automatic icemaker. 9. 86AV + 344.9 0. 348av + 344.9
AV= adjusted volume in cubic feet; av = adjusted volume in liters Deleted: 24AV + 328.6 Deleted: 326av + 328.6 Comment [A80]: Change recommended by OIRA.

5. Summary of Benefits and Costs (Annualized) of Amended Standards
The benefits and costs of today’s amended standards can also be expressed in
terms of annualized values. The annualized monetary values are the sum of (1) the
annualized national economic value, expressed in 2009$, of the benefits from operating
products that meet the amended standards (consisting primarily of operating cost savings
from using less energy, minus increases in equipment purchase costs, which is another
way of representing consumer NPV), and (2) the monetary value of the benefits of
emission reductions, including CO 2 emission reductions. 51 The value of the CO 2 reductions (i.e. SCC) is calculated using a range of values per metric ton of CO 2 developed by a recent interagency process. The monetary costs and benefits of
cumulative emissions reductions are reported in 2009$ to permit comparisons with the

other costs and benefits in the same dollar units.

Although combining the values of operating savings and CO 2 reductions provides
a useful perspective, two issues should be considered. First, the national operating

51 DOE used a two-step calculation process to convert the time-series of costs and benefits into annualized values. First, DOE calculated a present value in 2010, the year used for discounting the NPV of total consumer costs and savings, for the time-series of costs and benefits using discount rates of three and seven percent for all costs and benefits except for the value of CO 2 reductions. For the latter, DOE used a range of discount rates, as shown in Table I.2. From the present value, DOE then calculated the fixed annual payment over a 30-year period (2014 through 2043) that yields the same present value. The fixed annual payment is the annualized value. Although DOE calculated annualized values, this does not imply that the time-series of cost and benefits from which the annualized values were determined is a steady stream of payments.

309savings are domestic U.S. consumer monetary savings that occur as a result of market

transactions while the value of CO 2 reductions is based on a global value. Second, the
assessments of operating cost savings and SCC are performed with different methods that
use quite different time frames for analysis. The national operating cost savings is
measured for the lifetime of refrigeration products shipped in 2014

– 2043. The SCC
values, on the other hand, reflect the present value of future climate-related impacts
resulting from the emission of one ton of carbon dioxide in each year. These impacts
continue well beyond 2100.

Estimates of annualized values are shown in Table VI.78. The results under the
primary estimate are as follows. Using a 7-percent discount rate and the SCC series
having a value of $22.1/ton in 2010 (in 2009$), the cost of the standards in today’s rule is
$ 1,167 to $1,569 million per year in increased equipment costs, while the annualized
benefits are $ 2,275 million per year in reduced equipment operating costs, $ 515 million

in CO 2 reductions, and $ 21 million in reduced NO X emissions. In this case, the net
benefit amounts to $ 1,241 to $1,643 million per year. Using a 3-percent discount rate and

the SCC series having a value of $22.1/ton in 2010
, the cost of the standards in today’s
rule is $ 1,081 to $1,526 million per year in increased equipment costs, while the benefits
are $ 3,160 million per year in reduced operating costs, $ 515 million in CO 2 reductions, Deleted: 1016

Deleted: 1745 Deleted: 460 Deleted: 16

Deleted: 1205

Deleted: (in 2009$),

Deleted: 1122

Deleted: 2824 Deleted: 460 Deleted: 25

Deleted: 2187 and $ 28 million in reduced NO X emissions. In this case, the net benefit amounts to
$ 2,176 to $2,622 million per year.

310... Comment [A81]: Changes recommended by

... Deleted: 1745 Deleted: 1531 Deleted: 1964 Deleted: 2824 Deleted: 2431

311 Discount Rate Primary Estimate* Low Net Benefits Estimate* High Net Benefits Estimate*
Monetized (million 2009$/year) Benefits
Operating Cost Savings 7% 2275 1996 2560 3% 3160 2720 3596 CO 2 Reduction at $4.9/t** 5% 162 162 162 CO 2 Reduction at $22.1/t** 3% 515 515 515 CO 2 Reduction at $36.3/t** 2.5% 772 772 772 CO 2 Reduction at $67.1/t** 3% 1567 1567 1567
NO X Reduction at $2,519/ton** 7% 21 21 21 3% 28 28 28

Total† 7% plus CO 2 range 2457 to 3863 2178 to 3584 2742 to 4148

7% 2810 2531 3095 3% 3703 3263 4139 3% plus CO 2 range 3350 to 4755 2910 to 4315 3786 to 5192

Costs

Incremental Product Costs 7% 1167 to 1569 1480 1232 3% 1081 to 1526 1430 1147 Net Benefits/Costs

Total† 7% plus CO 2 range 888 to 2696 698 to 2103 1511 to 2916

7% 1241 to 1643 1051 1863 3% 2176 to 2622 1832 2993 3% plus CO 2 range 1823 to 3674 1479 to 2885 2640 to 4045

* The Primary, Low Benefits , and High Benefits Estimates utilize forecasts of energy prices and housing starts from the AEO2010 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition
, incremental product costs reflect a medium decline rate for product prices in the Primary Estimate, a low decline rate for product prices in the Low Benefits Estimate , and a high decline rate for product prices in the High Benefits Estimate. In the Primary estimate, the range of results for incremental product costs reflects the range of product price forecasts

. Deleted: 3214 Deleted: 184 Deleted: 184 Deleted: 184 Deleted: 460 Deleted: 460 Deleted: 460 Deleted: 646 Deleted: 646 Deleted: 646 Deleted: 1401 Deleted: 1401 Deleted: 1401 Deleted: 16 Deleted: 16 Deleted: 16 Deleted: 25 Deleted: 25 Deleted: 25 Deleted: 1946

... 457 to 3162

... Deleted: 1731

... 178 to 2948

... Deleted: 2164

... 742 to 3381

... Deleted: 2221 Deleted: 2007 Deleted: 2440 Deleted: 3309 Deleted: 2916 Deleted: 3699 Deleted: 3033

... 350 to 4250

... Deleted: 2640

... 910 to 3857

... Deleted: 3423

... 786 to 4640

... Deleted: 1016 Deleted: 1334 Deleted: 971 Deleted: 1122 Deleted: 1549 Deleted: 1058

Formatted Table

... Deleted: 929

... 88 to 2146

... Deleted: 398

... 98 to 1614

... Deleted: 1194

... 511 to 2410

... Deleted: 1205 Deleted: 673 Deleted: 1469

Deleted: 2187 Deleted: 1366

...

...

...

... Table V-78 Annualized Benefits and Costs of Amended Standards for Refrigeration Products Sold in 2014- 2043** The CO 2 values represent global values (in 2009$) of the social cost of CO 2 emissions in 2010 under several scenarios. The values of $4.9, $22.1, and $36.3 per metric ton (t) are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.1/t represents the 95 th percentile of the SCC distribution calculated using a 3% discount rate. The value for NO X (in 2009$) is the average of the low and high values used in DOE’s analys is
† Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $22.1/t in 2010 (in 2009$). In the rows labeled as “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO X benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values.

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 and 13563
Section 1(b)(1) of Executive Order 12866, “Regulatory Planning and Review,” 58
FR 51735 (Oct. 4, 1993), requires each agency to identify the problem that it intends to
address, including, where applicable, the failures of private markets or public institutions
that warrant new agency action, as well as to assess the significance of that problem. The
problems that today’s standards address are as follows:

(1) There is a lack of consumer information and/or information processing capability
about energy efficiency opportunities in the home appliance market.
(2) There is asymmetric information (one party to a transaction has more and better
information than the other) and/or high transactions costs (costs of gathering
information and effecting exchanges of goods and services).
(3) There are external benefits resulting from improved energy efficiency of
refrigeration products that are not captured by the users of such products. These
benefits include externalities related to environmental protection and energy
security that are not reflected in energy prices, such as reduced emissions of
greenhouse gases.

312In addition, DOE has determined that today’s regulatory action is an “economically
significant regulatory action” under section 3(f)(1) of Executive Order 128 66.
Accordingly, section 6(a)(3) of the Executive Order requires that DOE prepare a
regulatory impact analysis (RIA) on today’s rule and that the Office of Information and
Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) review this
rule. DOE presented to OIRA for review the draft rule and other documents prepared for
this rulemaking, including the RIA, and has included these documents in the rulemaking
record. The assessments prepared pursuant to Executive Order 12866 can be found in the
technical support document for this rulemaking. They are available for public review in
the Resource Room of DOE’s Building Technologies Program, 950 L’Enfant Plaza, SW.,
Suite 600, Washington, DC 20024, (202) 586-2945, between 9:00 a.m. and 4:00 p.m.,
Monday through Friday, except Federal holidays.

DOE has also reviewed this regulation pursuant to Executive Order 13563, issued
on January 18, 2011 (76 FR 3281, Jan. 21, 2011). EO 13563 is supplemental to, and
explicitly reaffirms the principles, structures, and definitions governing regulatory review
established in, Executive Order 12866. To the extent permitted by law, agencies are
required by Executive Order 13563 to: (1) propose or adopt a regulation only upon a
reasoned determination that its benefits justify its costs (recognizing that some benefits
and costs are difficult to quantify); (2) tailor regulations to impose the least burden on
society, consistent with obtaining regulatory objectives, taking into account, among other
things, and to the extent practicable, the costs of cumulative regulations; (3) select, in

313choosing among alternative regulatory approaches, those approaches that maximize net
benefits (including potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity); (4) to the extent feasible, specify
performance objectives, rather than specifying the behavior or manner of compliance that
regulated entities must adopt; and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the desired behavior,
such as user fees or marketable permits, or providing information upon which choices can
be made by the public.

We emphasize as well that Executive Order 13563 requires agencies “to use the
best available techniques to quantify anticipated present and future benefits and costs as
accurately as possible.” In its guidance, the Office of Information and Regulatory Affa irs
has emphasized that such techniques may include “identifying changing future
compliance costs that might result from technological innovation or anticipated
behavioral changes.”

DOE emphasizes that Executive Order 13563 calls for “periodic review of
existing significant regulations,” with close reference to empirical evidence. Moreover,
with respect to energy conservation standards, EPCA mandates that DOE reveiew its
regulations, “not later than 6 years after issuance of any final rule establishing o r amending an energy efficiency standard. As part of the retrospective review, DOE will
review its data on refrigerator prices and costs and, as part of that review, will consider
tracking additional data on retail refrigerator prices and costs for the product classes

314identified in the rule as a means of comparing actual refrigerator prices and costs to
prices and costs forecasted as a result of the standards imposed by today’s and any future
rule. Such a review will likely be a part of the periodic review of energy efficiency
standards for refrigerators called for under Executive Order 13563. DOE’s plan for
conducting periodic reveiew, which will be updated regularly, should be consulted for

further information. See: http://energy.gov/gc/report-appliance-regulation-violation/exparte-communications/restrospective-regulatory-review

For the reasons stated in the preamble, DOE believes that today’s final rule is
consistent with these principles, including that, to the extent permitted by law, agencies
adopt a regulation only upon a reasoned determination that its benefits justify its costs
and select, in choosing among alternative regulatory approaches, those approaches that

maximize net benefits.

B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of an
initial regulatory flexibility analysis (IRFA) for any rule that by law must be proposed for
public comment, and a final regulatory flexibility analysis (FRFA) for any such rule that
an agency adopts as a final rule, unless the agency certifies that the rule, if promulgated, Comment [A83]: Change recommended by OIRA.

315will not have a significant economic impact on a substantial number of small entities. As
required by Executive Order 13272, “Proper Consideration of Small Entities in Agency
Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies
on February 19, 2003, to ensure that the potential impacts of its rules on small entities are
properly considered during the rulemaking process. 68 FR 7990. DOE has made its
procedures and policies available on the Office of the General Counsel’s website
( www.gc.doe.gov ).

For manufacturers of residential refrigerators, refrigerator-freezers, and freezers,
the Small Business Administration (SBA) has set a size threshold, which defines those
entities classified as “small businesses” for the purposes of the statute. DOE used t he
SBA’s small business size standards to determine whether any small entities would be
subject to the requirements of the rule. 65 FR 30836, 30850 (May 15, 2000), as amended
at 65 FR 53533, 53545 (September 5, 2000) and codified at 13 CFR part 121.The siz e standards are listed by North American Industry Classification System (NAICS) code and
industry description and are available at
http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf

. Residential refrigeration product manufacturing is classified under NAICS 335222,
“Household Refrigerator and Home Freezer Manufacturing.” The SBA sets a threshold of
1,000 employees or less for an entity to be considered as a small business for this

category.

316DOE reviewed its September 2010 NOPR under the provisions of the Regulatory
Flexibility Act and the procedure and policies published on February 19, 2003. In the
NOPR, DOE certified that the standards for residential refrigeration products set forth in
the proposed rule, if promulgated, would not have a significant economic impact on a
substantial number of small entities. DOE made this determination because only one
small business manufacturer would potentially be impacted by the proposed energy
conservation standards, and that manufacturer represents a small percentage of covered
products and is a leader in a niche market. 75 FR at 59571- 595 72 (September 27, 2010).

DOE also sought comment on the impacts of the proposed amended energy
conservation standards on small business manufacturers of residential refrigeration
products. DOE received no comments on the certification or its additional requests for
comment on small business impacts in response to the NOPR. Thus, DOE reaffirms the
certification and has not prepared a FRFA for this final rule.

C. Review Under the Paperwork Reduction Act
Manufacturers of refrigeration products must certify to DOE that those products
comply with any applicable energy conservation standard. In certifying compliance,
manufacturers must test their refrigeration products according to the DOE test procedure
for refrigeration products, including any amendments adopted for that test procedure.
DOE has proposed regulations for the certification and recordkeeping requirements for
all covered consumer products and commercial equipment, including refrigeration
products (i.e. refrigerators, refrigerator-freezers, and freezers). 75 FR 56796 (Sept. 16,

3172010). The information collection requirement for the certification and recordkeeping is
subject to review and approval by OMB under the Paperwork Reduction Act (PRA).
DOE received OMB approval for collecting certification, compliance, and enforcement
information for all covered products and covered equipment on February 3, 2011 under

OMB control number 1910-1400.

Public reporting burden for the certification is estimated to average 20 hours per
response, including the time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing the collection

of information. Send comments regarding this burden estimate or any other aspect of this
collection of information, including suggestions for reducing this burden, to Office of the
Chief Information Officer, Records Management Division, IM-23, Paperwork Reduction
Project (1910-1400), U.S. Department of Energy, 1000 Independence Ave SW,
Washington, DC 20585- 1290 ; and to the Office of Management and Budget (OMB),
OIRA, Paperwork Reduction Project (1910-1400), Washington, DC 20503.

Notwithstanding any other provision of the law, no person is required to respond
to, nor shall any person be subject to a penalty for failure to comply with, a collection of
information subject to the requirements of the PRA, unless that collection of information
displays a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969
DOE has prepared an environmental assessment (EA) of the impacts of the
amended rule pursuant to the National Environmental Policy Act of 1969 (42 U.S.C. Deleted: This requirement has been submitted to OMB for approval.

3184321 et seq .), the regulations of the Council on Environmental Quality (40 CFR parts

1500

– 1508), and D OE’s regulations for compliance with the National Environmental
Policy Act of 1969 (10 CFR part 1021). This assessment includes an examination of the
potential effects of emission reductions likely to result from the rule in the context of
global climate change, as well as other types of environmental impacts. The final EA has
been included as chapter 15 of the final rule TSD. Before issuing this final rule for
refrigeration products, DOE considered public comments. A finding of no significant
impact (FONS I) accompanies the final EA.

E. Review Under Executive Order 13132
Executive Order 13132, "Federalism," 64 FR 43255 (August 10, 1999) imposes
certain requirements on agencies formulating and implementing policies or regulations
that preempt State law or that have federalism implications. The Executive Order requires
agencies to examine the constitutional and statutory authority supporting any action that
would limit the policymaking discretion of the States and to carefully assess the necessity
for such actions. The Executive Order also requires agencies to have an accountable
process to ensure meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications. On March 14,
2000, DOE published a statement of policy describing the intergovernmental consultation
process it will follow in the development of such regulations. 65 FR 13735. EPCA
governs and prescribes Federal preemption of State regulations as to energy conservation
for the products t hat are the subject of today’s final rule. States can petition DOE for

319exemption from such preemption to the extent, and based on criteria, set forth in EPCA.
(42 U.S.C. 6297) No further action is required by Executive Order 13132.

F. Review Under Executive Order 12988
With respect to the review of existing regulations and the promulgation of new
regulations, section 3(a) of Executive Order 12988, "Civil Justice Reform," imposes on
Federal agencies the general duty to adhere to the following requirements: (1) eliminate
drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3)
provide a clear legal standard for affected conduct rather than a general standard and
promote simplification and burden reduction. 61 FR 4729 (February 7, 1996). Section
3(b) of Executive Order 12988 specifically requires that Executive agencies make every
reasonable effort to ensure that the regulation: (1) clearly specifies the preemptive effect,
if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides
a clear legal standard for affected conduct while promoting simplification and burden
reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms;
and (6) addresses other important issues affecting clarity and general draftsmanship under
any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988
requires Executive agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to
meet one or more of them. DOE has completed the required review and determined that,
to the extent permitted by law, this final rule meets the relevant standards of Executive

Order 12988.

320G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each
Federal agency to assess the effects of Federal regulatory actions on State, local, and
Tribal governments and the private sector. Pub. L. No. 104-4, sec. 201 (codified at 2

U.S.C. 1531). For an amended regulatory action likely to result in a rule that may cause
the expenditure by State, local, and Tribal governments, in the aggregate, or by the
private sector of $100 million or more in any one year (adjusted annually for inflation),
section 202 of UMRA requires a Federal agency to publish a written statement that
estimates the resulting costs, benefits, and other effects on the national economy. (2

U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective
process to permit timely input by elected officers of State, local, and Tribal governments
on a “significant intergovernmental mandate,” and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small governments before
establishing any requirements that might significantly or uniquely affect small
governments. On March 18, 1997, DOE published a statement of policy on its process for
intergovernmental consultation under UMRA. 62 FR 12820; also available at
http:// www.gc.doe.gov

.

Although today’s final rule does not contain a Federal intergovernmental
mandate, it may impose expenditures of $100 million or more on the private sector.
Specifically, the final rule will likely result in a final rule that could impose expenditures
of $100 million or more. Such expenditures may include (1) investment in research and
development and in capital expenditures by refrigeration product manufacturers in the

321years between the final rule and the compliance date for the new standard, and (2)
incremental additional expenditures by consumers to purchase higher-efficiency
refrigeration products, starting in 2014.

Section 202 of UMRA authorizes an agency to respond to the content
requirements of UMRA in any other statement or analysis that accompanies the final rule.
2 U.S.C. 1532(c). The content requirements of section 202(b) of UMRA relevant to a
private sector mandate substantially overlap the economic analysis requirements that
apply under section 325(o) of EPCA and Executive Order 12866. The Supplementary
Information section of the notice of final rulemaking and the “Regulatory Impa ct
Analysis” section of the TSD for this final rule respond to those requirements.

Under section 205 of UMRA, the Department is obligated to identify and consider
a reasonable number of regulatory alternatives before promulgating a rule for which a
written statement under section 202 is required. 2 U.S.C. 1535(a). DOE is required to

select from those alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an explanation for doing
otherwise or the selection of such an alternative is inconsistent with law. As required by
42 U.S.C. 6295(h) and (o), 6313(e), and 6316(a), today’s final rule would establish
energy conservation standards for residential refrigeration products that are designed to
achieve the maximum improvement in energy efficiency that DOE has determined to be
both technologically feasible and economically justified. A full discussion of the

322alternatives considered by DOE is presented in the “Regulatory Impact Analysis” section
of the TSD for today’s final rule.

H. Review Under the Treasury and General Government Appropriations Act, 1999
Section 654 of the Treasury and General Government Appropriations Act, 1999
(Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment
for any rule that may affect family well-being. This rule would not have any impact on
the autonomy or integrity of the family as an institution. Accordingly, DOE has
concluded that it is not necessary to prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630
DOE has determined, under Executi ve Order 12630, “Governmental Actions and
Interference with Constitutionally Protected Property Rights” 53 FR 8859 (March 18,
1988), that this regulation would not result in any takings that might require
compensation under the Fifth Amendment to the U.S. Constitution.

J. Review Under the Treasury and General Government Appropriations Act, 2001
Section 515 of the Treasury and General Government Appropriations Act, 2001
(44 U.S.C. 3516, note) provides for agencies to review most disseminations of
information to the public under guidelines established by each agency pursuant to general
guidelines issued by OMB. OMB’s guidelines were published at 67 FR 8452 (February
22, 2002), and DOE’s guidelines were published at 67 FR 62446 (October 7, 2002). DOE

323has reviewe d today’s final rule under the OMB and DOE guidelines and has concluded
that it is consistent with applicable policies in those guidelines.

K. Review Under Executive Order 13211
Executive Order 13211, “Actions Concerning Regulations That Significantly

Affec t Energy Supply, Distribution, or Use” 66 FR 28355 (May 22, 2001), requires
Federal agencies to prepare and submit to OIRA at OMB, a Statement of Energy Effects
for any significant energy action. A “significant energy action” is defined as any action
by an agency that promulgates or is expected to lead to promulgation of a final rule, and
that (1) is a significant regulatory action under Executive Order 12866, or any successor
order; and (2) is likely to have a significant adverse effect on the supply, distribution, or
use of energy, or (3) is designated by the Administrator of OIRA as a significant energy
action. For any significant energy action, the agency must give a detailed statement of
any adverse effects on energy supply, distribution, or use should the proposal be
implemented, and of reasonable alternatives to the action and their expected benefits on
energy supply, distribution, and use.

DOE has concluded that today’s regulatory action, which sets forth energy
conservation standards for refrigeration products, is not a significant energy action
because the amended standards are not likely to have a significant adverse effect on the
supply, distribution, or use of energy, nor has it been designated as such by the
Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy

Effects on the final rule.

324L. Review Under the Information Quality Bulletin for Peer Review
On December 16, 2004, OMB, in consultation with the Office of Science and
Technology (OSTP), issued its Final Information Quality Bulletin for Peer Review (the
Bulletin). 70 FR 2664 (January 14, 2005). The Bulletin establishes that certain scientific
information shall be peer reviewed by qualified specialists before it is disseminated by
the Federal Government, including influential scientific information related to agency
regulatory actions. The purpose of the bulletin is to enhance the quality and credibility of
the Government’s scientific information. Under the Bulletin, the energy conservation
standards rulemaking analyse s are “influential scientific information,” which the Bulletin
defines as “scientific information the agency reasonably can determine will have or does
have a clear and substantial impact on important public policies or private sector

decisions.” 70 FR 266 7.

In response to OMB’s Bulletin, DOE conducted formal in -progress peer reviews
of the energy conservation standards development process and analyses and has prepared
a Peer Review Report pertaining to the energy conservation standards rulemaking
analyses. Generation of this report involved a rigorous, formal, and documented
evaluation using objective criteria and qualified and independent reviewers to make a
judgment as to the technical/scientific/business merit, the actual or anticipated results,
and the productivity and management effectiveness of programs and/or projects. The
“Energy Conservation Standards Rulemaking Peer Review Report” dated February 2007

325has been disseminated and is available at the following Web site:
http://www1.eere.energy.gov/buildings/appliance_standards/peer_review.html

.

M. Congressional Notification
As required by 5 U.S.C. 801, DOE will submit to Congress a report regarding the

issuance of today’s final rule prior to the effective date set forth at the outset of this
notice. The report will state that it has been determined that the rule is a “major rule” as
defined by 5 U.S.C. 804(2). DOE will also submit the supporting analyses to the
Comptroller General in the U.S. Government Accountability Office (GAO) and make
them available to each House of Congress.

326________________________________ VIII. Approval of the Office of the Secretary

The Secretary of Energy has approved publication of today’s amended rule.

List of Subjects in 10 CFR Part 430

Administrative practice and procedure, Confidential business information, Energy
conservation, Household appliances, Reporting and recordkeeping requirements, and

Small businesses.

Issued in Washington, DC, on [INSERT DATE ISSUED].

Henry Kelly Acting Assistant Secretary Energy Efficiency and Renewable Energy

327For the reasons set forth in the preamble, DOE amends chapter II, subchapter D, of title
10 of the Code of Federal Regulations, as set forth below:

PART 430 - ENERGY CONSERVATION PROGRAM FOR CONSUMER

PRODUCTS

1. The authority citation for Part 430 continues to read as follows:
Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

2. In §430.2, add the definition for “Built -in refrigerator/refrigerator- freezer/freezer,” in
alphabetical order, and revise the definition for “Compact refrigerator/refrigerato rfreezer/freezer” to read as follows:

§430.2 Definitions.

* * * * *
Built-in refrigerator/refrigerator-freezer/freezer means any refrigerator,
refrigerator-freezer or freezer with 7.75 cubic feet or greater total volume and 24 inches
or less depth not including doors, handles, and custom front panels; with sides which are
not finished and not designed to be visible after installation; and that is designed,
intended, and marketed exclusively (1) to be installed totally encased by cabinetry or
panels that are attached during installation, (2) to be securely fastened to adjacent
cabinetry, walls or floor, and (3) to either be equipped with an integral factory-finished
face or accept a custom front panel.

328* * * * *
Compact refrigerator/refrigerator-freezer/freezer means any refrigerator,
refrigerator-freezer or freezer with total volume less than 7.75 cubic foot (220 liters)
(rated volume as determined in appendices A1 and B1 of subpart B of this part before
appendices A and B become mandatory and as determined in appendices A and B of this
subpart once appendices A and B become mandatory (see the notes at the beginning of
appendices A and B) ).

* * * * *

3. In §430.32 revise paragraph (a) to read as follows:
§430.32 Energy and water conservation standards and their effective dates.

* * *
(a) Refrigerators/refrigerator-freezers/freezers. These standards do not apply to
refrigerators and refrigerator-freezers with total refrigerated volume exceeding 39 cubic
feet (1104 liters) or freezers with total refrigerated volume exceeding 30 cubic feet (850
liters). The energy standards as determined by the equations of the following table(s)
shall be rounded off to the nearest kWh per year. If the equation calculation is halfway
between the nearest two kWh per year values, the standard shall be rounded up to the
higher of these values.
The following standards remain in effect from July 1, 2001 until [INSERT DATE 3 YEARS AFTER PUBLICATION DATE] :

Product Class Energy Standard Equations for Maximum Energy

Use (kWh/yr)

1. Refrigerators and refrigerator

- freezers with manual defrost. 8.82AV+248.4 0.31av+248.4 2. Refrigerator

- freezers

— partial automatic defrost. 8.82AV+248.4 Deleted: January 1, 2014:

3290.31av+248.4 3. Refrigerator

- freezers

— automatic defrost with top

- mounted freezer without through

- the

- door ice service and all

- refrigerator

— automatic defrost. 9.80AV+276.0 0.35av+276.0
4. Refrigerator

- freezers

— automatic defrost with side

- mounted freezer without through

- the

- door ice service. 4.91AV+507.5 0.17av+507.5 5. Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without through

- the

- door ice service. 4.60AV+459.0 0.16av+459.0 6. Refrigerator

- freezers

— automatic defrost with top

- mounted freezer with through

- the

- door ice service. 10.20AV+356.0 0.36av+356.0 7. Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service. 10.10AV+406.0 0.36av+406.0
8. Upright freezers with manual defrost. 7.55AV+258.3 0.27av+258.3
9. Upright freezers with automatic defrost. 12.43AV+326.1 0.44av+326.1 10. Chest freezers and all other freezers except compact freezers. 9.88AV+143.7 0.35av+143.7 11. Compact refrigerators and refrigerator

- freezers with manual defrost. 10.70AV+299.0 0.38av+299.0 12. Compact refrigerator

- freezer

—

partial automatic defrost. 7.00AV+398.0 0.25av+398.0 13. Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer and compact all

- refrigerator

— automatic defrost. 12.70AV+355.0 0.45av+355.0 14. Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer. 7.60AV+501.0 0.27av+501.0 15. Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer. 13.10AV+367.0 0.46av+367.0 16. Compact upright freezers with manual defrost. 9.78AV+250.8 0.35av+250.8
17. Compact upright freezers with automatic defrost. 11.40AV+391.0 0.40av+391.0 18. Compact chest freezers. 10.45AV+152.0 0.37av+152.0 AV: Adjusted Volume in ft 3 ; av: Adjusted Volume in liters (L)

330The following standards apply to products manufactured starting on [INSERT DATE 3 YEARS AFTER PUBLICATION DATE] :

Product Class Equations for Maximum Energy Use (kWh/yr) based on AV (ft 3 ) based on av (L) 1. Refrigerator

- freezers and refrigerators other than all

refrigerators with manual defrost. 7.99AV + 225.0 0.282av + 225.0

1A. All

- refrigerators

— manual defrost. 6.79AV + 193.6 0.240av + 193.6 2. Refrigerator

- freezers

— partial automatic defrost 7.99AV + 225.0 0.282av + 225.0 3. Refrigerator

- freezers

— automatic defrost with top

mounted freezer without an automatic icemaker. 8.07AV + 233.7 0.285av + 233.7
3

- BI. Built

- in refrigerator

- freezer

— automatic defrost with top

- mounted freezer without an automatic icemaker. 9.15AV + 264.9 0. 323av + 264.9 3I. Refrigerator

- freezers

— automatic defrost with top

mounted freezer with an automatic icemaker without through

- the

- door ice service. 8.07AV + 317.7 0.285av + 317.7

3I

- BI. Built

- in refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 9.15AV + 348.9 0. 323av + 348.9

3A. All

- refrigerators

— automatic defrost. 7.07AV + 201.6 0.250av + 201.6 3A

- BI. Built

- in All

- refrigerators

— automatic defrost. 8.02AV + 228.5 0. 283av + 228.5 4. Refrigerator

- freezers

— automatic defrost with side

mounted freezer without an automatic icemaker. 8.51AV + 297.8 0.301av + 297.8
4

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer without an automatic icemaker. 10.22AV + 357.4 0. 361av + 357.4 4I. Refrigerator

- freezers

— automatic defrost with side

mounted freezer with an aut omatic icemaker without through

- the

- door ice service. 8.51AV + 381.8 0.301av + 381.8

4I

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 10.22AV + 441.4 0. 361av + 441.4
5. Refrigerator

- freezers

— automatic defrost with bottom

mounted freezer without an automatic icemaker. 8. 85AV + 317.0 0.312av + 317.0
5

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer without an automatic icemaker. 9.40AV + 336. 9 0.332av + 336. 9 5I. Refrigerator

- freezers

— automatic defrost with bottom

mounted freezer with an automatic icemaker without through

- the

- door ice service. 8. 85AV + 401.0 0.312av + 401.0

5I

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker without through

- the

- door ice service. 9.40AV + 420. 9 0.332av + 420. 9
5A. Refrigerator

- freezer

— automatic defrost with bottom

mounted freezer with through

- the

- door ice service. 9. 25AV + 475.4 0. 327av + 475.4
5A

- BI. Built

- in refrigerator

- freezer

— automatic defrost with bottom

- mounted freezer with through

- the

- door ice service. 9. 83AV + 499

. 9 0. 347av + 499 .9 6. Refrigerator

- freezers

— automatic defrost with top

mounted freezer with through

- the

- door ice service. 8.40AV + 385.4 0.297av + 385.4 7. Refrigerator

- freezers

— automatic defrost with side

mounted freezer with through

- the

- door ice service. 8.54AV + 432.8 0.302av + 432.8

7

- BI. Built

- In Refrigerator

- freezers

— automatic defrost with side

- mounted freezer with through

- the

- door ice service. 10.25AV + 502.6 0. 362av + 502.6 8. Upright freezers with manual defrost. 5.57AV + 193.7 0.197av + 193.7 Deleted: 8.61AV + 249.3 Deleted: 304av + 249.3 Comment [A84]: Change recommended by OIRA.

Deleted: 8.61AV + 333.3 Deleted: 304av + 333.3 Comment [A85]: Change recommended by OIRA.

Deleted: 7.55AV + 215.1 Deleted: 266av + 215.1 Comment [A86]: Change recommended by OIRA.

Deleted: 9.08AV + 317.6 Deleted: 321av + 317.6 Comment [A87]: Change recommended by OIRA.

Deleted: 9.08AV + 401.6 Deleted: 321av + 401.6 Comment [A88]: Change recommended by OIRA.

Deleted: 84AV + 316.9 Deleted: 316.9 Deleted: 7 Deleted: 7 Deleted: 84AV + 400.9 Deleted: 400.9 Deleted: 7 Deleted: 7 Deleted: 23AV + 474.5 Deleted: 326av + 474.5 Deleted: 80AV + 498 Deleted: 346av + 498

Deleted: 9.11AV + 456.0 Deleted: 322av + 456.0 Comment [A89]: Change recommended by OIRA. Deleted: for Deleted: January 1, 2014:

3319. Upright freezers with automatic defrost without an automatic icemaker. 8.62AV + 228.3 0.305av + 228.3 9I. Upright freezers with automatic defrost with an automatic icemaker. 8.62AV + 312.3 0.305av + 312.3
9

- BI. Built

- In Upright freezers with automatic defrost without an automatic icemaker. 9. 86AV + 260.9 0. 348av + 260.9
9I

- BI. Built

- in upright freezers with automatic defrost with an automatic icemaker. 9. 86AV + 344.9 0. 348av + 344.9 10. Chest freezers and all other freezers except compact freezers. 7.29AV + 107.8 0.257av + 107.8

10A. Chest freezers with automatic defrost. 10.24AV + 148.1 0.362av + 148.1 11. Compact refrigerator

- freezers and refrigerators other than all

- refrigerators with manual defrost. 9.03AV + 252.3 0.319av + 252.3 11A.Compact all

- refrigerators

— manual defrost. 7.84AV + 219.1 0.277av + 219.1 12. Compact refrigerator

- freezers

— partial automatic defrost 5.91AV + 335.8 0.209av + 335.8 13. Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer. 11.80AV + 339.2 0.417av + 339.2 13I. Compact refrigerator

- freezers

— automatic defrost with top

- mounted freezer with an automatic icemaker. 11.80AV + 423.2 0.417av + 423.2 13A. Compact all

- refrigerators

— automatic defrost. 9.17AV + 259.3 0.324av + 259.3 14. Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer. 6.82AV + 456.9 0.241av + 456.9 14I. Compact refrigerator

- freezers

— automatic defrost with side

- mounted freezer with an automatic icemaker. 6.82AV + 540.9 0.241av + 540.9 15. Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer. 11.80AV + 339.2 0.417av + 339.2 15I. Compact refrigerator

- freezers

— automatic defrost with bottom

- mounted freezer with an automatic icemaker. 11.80AV + 423.2 0.417av + 423.2 16. Compact upright freezers with manual defrost. 8.65AV + 225.7 0.306av + 225.7 17. Compact upright freezers with automatic defrost. 10.17AV + 351.9 0.359av + 351.9 18. Compact chest freezers. 9.25AV + 136.8 0.327av + 136.8 Deleted: 24AV + 244.6 Deleted: 326av + 244.6 Comment [A90]: Change recommended by OIRA.

Deleted: 24AV + 328.6 Deleted: 326av + 328.6 Comment [A91]: Change recommended by OIRA.

AV=Total adjusted volume, expressed in ft 3 , as determined in appendices A and B of subpart B of this part. av=Total adjusted volume, expressed in Liters.

* * * * *

332