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- i CHAPTER 1

. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUMENT

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- 1 1.2 OVERVIEW OF APPLIANCE STANDARDS

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- 1 1.3 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

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- 2 1.4 STRUCTURE OF THE DOCUMENT

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LIST OF TABLES

Table 1.3.1 Analyses Under the Process Rule

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- 1 CHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUM ENT
This preliminary technical support document (preliminary TSD) is a standalone report that documents the technical analyses and results supporting the preliminary analysis for establishing energy conservation standards for miscellaneous refrigeration produc ts

. The products included in the rulemaking include cooled cabinets, non

- compressor refrigeration products, hybrid refrigeration products, and ice makers.

The U.S. Department of Energy (DOE) has issued a Notice of Proposed Rulemaking (NOPR) for test proced ures for miscellaneous refrigeration products (“2014 MREF TP NOPR”). The 2014 MREF TP NOPR proposed definitions for all of the products that are the subject of this rulemaking. The definitions are not repeated in this chapter. Please refer to the 2014 MR EF TP NOPR for more discussion of the definitions.

This is the first DOE rulemaking to establish standards for these products. There are currently no current Federal energy conservation standards for them

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1.2 OVERVIEW OF APPLIANC E STANDARDS

Title III of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6291, et seq.;

“ EPCA” or, “the Act”) sets forth a variety of provisions designed to improve energy efficiency. (All references to EPCA refer to the statute as amended through the American Energy Manufac turing Technical Corrections Act (AEMTCA), Pub. L. 112

- 210 (Dec. 18, 2012).) Part B of title III, which for editorial reasons was redesignated as Part A upon incorporation into the U.S. Code (42 U.S.C. 6291

– 6309, as codified), establishes the “Energy Conse rvation Program for Consumer Products Other Than Automobiles.” These include the consumer products that are subjects of this TSD: hybrid refrigerators, refrigerator

- freezers, and freezers, ( i.e.
, products that include warm compartments such as wine storage compartments in products that otherwise provide the functions of refrigerators, refrigerator

- freezers, or freezers) ; cooled cabinets (including wine chillers) ; refrigeration products that do not use vapor

- compression systems ; and ice makers

. DOE proposed in a n October 31 , 2013 notice to add all of these as covered products under EPCA. 78 FR 65223 (referred to in this TSD as the “ October 2013 Coverage Proposal ” ). a

Pursuant to EPCA, DOE is required to design each standard for these products to (1) achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified; and (2) result in significant conservation of energy. (42 U.S.C. 6295(o)(2)(A) and (o)(3)(B), 42 U.S.C. 6313(d)(4)) To determine wheth er a proposed standard is economically justified, DOE will, after receiving comments on the proposed standard, determine

a Although DOE has previously indicated its belief that wine chillers, and therefore cooled cabinets, that use compressor and condenser systems are covered under EPCA, it nevertheless has rece ntly proposed to add them as covered products.1

- 2 whether the benefits of the standard exceed its burdens to the greatest extent practicable, considering the following seven factors:

1 . T he economic impact of the standard on the manufacturers and on the consumers of the products subject to such standard;

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

3. T he total projected amount of energy savings likely to result directly from the imposi tion of the standard;

4. A ny lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;

5. T he impact of any lessening of competition, as determined in writing by the Attorney General, that i s likely to result from the imposition of the standard;

6. T he need for national energy conservation; and

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

EPCA also directs that DOE may not prescribe an amended or new standard if the standard is likely to result in the unavailability in the United States of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the Uni ted States at the time that the standard is prescribed. (42 U.S.C. 6295(o)(4))

For cooled cabinets, ice makers, non

- compressor refrigerators, and hybrid refrigeration products, DOE is applying those factors in a manner consistent with its other energy

con servation standards rulemakings to ascertain the maximum improvement in energy efficiency that is technologically feasible and economically justified for these products

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1.3 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

As discussed in section 1.2 , EPCA grants DOE authority to set standards for additional types of products, and requires DOE to review and, if appropriate, amend existing standards. Because no standard s exist for these newly covered products , DOE initiated this rulemaking to set standards for them

. After the publication of the F ramework D ocument, the energy conservation standards rulemaking process involves three additional, formal public notices, which DOE publishes in the Federal Register . The first of the rulemaking notices is a notice of public meeting ( NOPM )

, which is designed to publ icly vet the models and tools used in the preliminary rulemaking and to1

- 3 facilitate public participation before the NOPR stage. The second notice is the NOPR, which presents a discussion of comments received in response to the NOPM and the preliminary analy ses and analytical tools; analyses of the impacts of potential amended energy conservation standards on consumers, manufacturers, and the Nation; DOE’s weighting of these impacts of amended energy conservation standards; and the proposed energy conservatio n standards for each product. The third notice is the final rule, which presents a discussion of the comments received in response to the NOPR; the revised analyses; DOE’s weighting of these impacts; the amended energy conservation standards DOE is adoptin g for each product; and the effective dates of the amended energy conservation standards.

In February 2012 , DOE published a notice of public meeting and availability of the F ramework D ocument for the products covered in this rulemaking

. 77 FR 7547, 7549 (F eb. 13, 2012) . The F ramework D ocument, Rulemaking Framework for Wine Chillers and Miscellaneous Refrigeration Products , describes the procedural and analytical approaches DOE anticipated using to evaluate the establishment of amended energy conservation st andards for these products. This document is available at: http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/wc_misc_refr_framew ork_02_ 06_12.pdf

. Subsequently, DOE held a public meeting on February 22, 2012 to discuss procedural and analytical approaches to the rulemaking. In addition, DOE used the public meeting to inform and facilitate involvement of interested parties in the ru lemaking process. The analytical framework presented at the public meeting described the different analyses, such as the engineering analysis and the consumer economic analyses ( i.e. , the life

- cycle cost analysis (LCC)

, payback period analysis (PB P ) , and t he national impact analysis (NIA) ), the methods proposed for conducting them, and the relationships among the various analyses.

During the February 2012 public meeting, interested parties commented about numerous issues relating to each one of the analyse s listed in Table 1.3

. 1 . Comments from interested parties submitted during the F ramework D ocument comment period elaborated on the issues raised during the public meet ing. DOE attempted to address these issue s during its preliminary analysi s and summarized the comments and DOE’s responses in chapter 2 of the preliminary TSD.

Table 1.3

. 1 Analyses Under the Process Rule Preliminary Analyses NOPR Final Rule Market and technology assessment Revised preliminary analysis Revised analyses Screening analysis Consumer sub

- group analysis Engineering analysis Manufacturer impact analysis Energy use analysis Emissions analysis Markups analysis Monetization of emissions reduction benefits Life

- cycle cost and payback period analysis Utility impact analysis Shipments analysis Employment impact analysis National impact analysis Regulatory impact analysis Preliminary manufacturer impact analysis1

- 4 As part of the information gathering and sharing process of the engineering and preliminary manufacturer impact analyses , DOE organized and held interviews with manufacturers of the products considered in this rulemaking. DOE selected companies that represented production of all types of these products, ranging from small to large manufacturers. DOE had four objectives for these interviews: (1) solicit manufacturer feedback on the draft input s to the engineering analysis; (2) solicit feedback on topics related to the preliminary manufacturer impact analysis; (3) provide an opportunity, early in the rulemaking process, to express manufacturers’ concerns to DOE; and (4) foster cooperation betwee n manufacturers and DOE.

DOE incorporated the information gathered during the manufacturer interviews into its engineering analysis (c hapter 5) and preliminary manufacture r impact analysis ( Preliminary MIA, c hapter 12). Following the preliminary analysis comment period , DOE intends to hold additional meetings with manufacturers as part of the consultative process for the MIA conducted during the NOPR phase.

DOE conducted the LCC

, PBP , and NIA to determine the consumer economic impact of potential standards

. Each of these analyses estimated an annual energy expense using regional average electric costs and projections from the Energy Information Agency (EIA). DOE developed spreadsheets for the each of these analyses. A ll of the spreadsheets are available on the DOE rulemaking website for miscellaneous refrigeration products at: http://www1.eere.energy.gov/buildings/applia nce_standards/rulemaking.aspx/ruleid/71

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1.4 STRUCTURE OF THE DOC UMENT
This preliminary TSD outlines the analytical approaches used in this rulemaking. The TSD consists of 1 7 chapters as well as appendices.

• Chapter 1, Introduction : provides an overview of the appliance standards program and how it applies to the miscellaneous refrigeration products rulemaking, and outlines the structure of the document.

• Chapter 2, Analytical Framework, Comments from Interested Parties, and DOE Responses : describes the rulemakin g process step by step, summarizes comments made by interested parties during the F ramework D ocument comment period, and provides DOE responses to those comments.

• Chapter 3, Market and Technology Assessment : characterizes the miscellaneous refrigeration pr oduct market and the technologies available for increasing product efficiency.

• Chapter 4, Screening Analysis : determines which technology options are viable for consideration in the engineering analysis.

• Chapter 5, Engineering Analysis : discusses the metho ds used for developing the relationship between increased manufacturer price and increased efficiency.

• Chapter 6, Markups for Product Price Determination : discusses the methods used for establishing markups for converting manufacturer prices to consumer pr oduct prices.1

- 5 • Chapter 7, Energy Use Analysis : discusses the process used for generating energy use estimates of miscellaneous refrigeration products for a variety of product classes and standard levels.

• Chapter 8, Life

- Cycle Cost and Payback Period Analys i s : discusses the economic effects of standards on individual consumer s.

• Chapter 9, Shipments Analysis : discusses the methods used for forecasting shipments with and without higher efficiency standards.

• Chapter 10, National Impact Analysis : discusses the me thods used for forecasting national energy consumption and national economic impacts based on annual product shipments and estimates of future product efficiency distributions in the absence and presence of higher efficiency standards.

• Chapter 11, Consumer Subgroup Analysis : discusses the analysis that will be performed at the NOPR stage to determine the effects of miscellaneous refrigeration product standards on subgroup s of c onsumers who are most likely to be adversely affected by standards.

• Chapter 12, Preliminary Manufacturer Impact Analysis : discusses the effects of standards on the finances and profitability of product manufacturers.

• Chapter 13, Emissions Analysis : discusses the analysis that will be performed at the NOPR stage to determine the effec ts of standards on airborne emissions of electric utilities.

• Chapter 14, Monetization of Emissions Reductions Benefits: outline s the analysis that will be performed at the NOPR stage to determine the estimated monetary benefits likely to result from reduce d emissions of carbon dioxide and nitrogen oxides expected to result from the standards.

• Chapter 15, Utility Impact Analysis : discusses the analysis that will be performed at the NOPR stage to determine the effects of standards on the installed generation capacity of electric utilities.

• Chapter 16, Employment Impact Analysis : discusses the analysis that will be performed at the NOPR stage to determine the effects of standards on national employment.

• Chapter 17, Regulator y Impact Analysis : discusses the ana lysis that will be performed at the NOPR stage to estimate the impact of non

- regulatory alternatives to setting energy efficiency standards.

• Appendix 5A, Engineering Data : contains energy modeling and cost inputs used to develop cost

- efficiency curves, as well as the engineering questionnaire provided to manufacturers.

• Appendix 5B, ERA Model Description : contains a description of the ERA energy modeling software used in the engineering analysis.

• A p pendix 8A, User I nstruction s for the L ife

- C ycle C ost A nalysis S preadsheet : contains a description of the spreadsheet and instructions that allow the user to examine and reproduce the detailed results of the LCC and PBP analyses.

• Appendix 8B, Uncertainty and Variability in LCC Analysis : explains how the LCC

m odel accounts for the uncertainty and variability of the numerical values.1

- 6 • Appendix 8C, Distributions Used for Discount Rates : presents the distribution of interest and return rates for each type of debt and equity that DOE sampled to derive the

consumer discount rates for the LCC.

• Appendix 9A, Relative Price Elasticity of Demand for Appliances : presents a detailed explanation of the methodology DOE used to quantify the impacts of standards on shipments , including the effects of d ecreased operating costs and changes in household income.

• Appendix 10A, User Instructions for Shipments and NIA Spreadsheets : contains a description of the NIA spreadsheet and instructions on how to use it to examine and reproduce the NIA results.

• Appendix 10B, National Net Prese nt Value of Consumer Benefits using Alternative Product Price Forecasts: assesses the impact of altering product price projections, presenting the results of a high and low product price decline.

• Appendix 12A , Manufacturer Impact Analysis Interview Guide : contains the MIA questionnaire provided to manufacturers.