Vol. 80 Thursday, 

No. 5 January 8, 2015 

Part III 

Department of Energy 

10 CFR Part 431 

Energy Conservation Program for Certain Industrial Equipment: Energy 

Conservation Standards and Test Procedures for Commercial Heating, AirConditioning, and Water-Heating Equipment; Proposed Rule 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
1172 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket No. EERE–2014–BT–STD–0015] 

RIN 1904–AD23 

Energy Conservation Program for 

Certain Industrial Equipment: Energy 

Conservation Standards and Test 

Procedures for Commercial Heating, 

Air-Conditioning, and Water-Heating 

Equipment 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Notice of proposed rulemaking 

(NOPR) and announcement of public 

meeting. 

SUMMARY: The Energy Policy and 

Conservation Act of 1975 (EPCA), as 

amended, prescribes energy 

conservation standards for various 

consumer products and certain 

commercial and industrial equipment, 

including several classes of commercial 

heating, air-conditioning, and waterheating equipment. EPCA also requires 

that each time the American Society of 

Heating, Refrigerating and AirConditioning Engineers (ASHRAE) 

Standard 90.1 is amended with respect 

to the standard levels or design 

requirements applicable to that 

equipment, the U.S. Department of 

Energy (DOE) must adopt amended 

uniform national standards for this 

equipment equivalent to those in 

ASHRAE Standard 90.1, unless DOE 

determines that there is clear and 

convincing evidence showing that morestringent, amended standards would be 

technologically feasible and 

economically justified, and would save 

a significant additional amount of 

energy. ASHRAE most recently 

amended Standard 90.1 on October 9, 

2013. Based upon its analysis of the 

energy savings potential of amended 

energy conservation standards and the 

lack of clear and convincing evidence to 

support more-stringent standards, DOE 

is proposing to adopt the amended 

standards in ASHRAE Standard 90.1 for: 

Small three-phase commercial aircooled air conditioners (single package 

only) and heat pumps (single package 

and split system) less than 65,000 Btu/ 

h; water-source heat pumps; and 

commercial oil-fired storage water 

heaters. DOE is also making a proposed 

determination that the standards for 

small three-phase commercial air-cooled 

air conditioners (split system) do not 

need to be amended. Finally, DOE is 

proposing updates to the current 

Federal test procedures to incorporate 

by reference the most current version of 

the American National Standards 

Institute (ANSI) Z21.47, Gas-fired 

central furnaces, specified in ASHRAE 

Standard 90.1 applicable to commercial 

warm-air furnaces, and to the most 

current version of ASHRAE 103, Method 

of Testing for Annual Fuel Utilization 

Efficiency of Residential Central 

Furnaces and Boilers. This document 

also announces a public meeting to 

receive comment on these proposed 

standards and associated analyses and 

results, as well as the proposed test 

procedure provisions. 

DATES: Meeting: DOE will hold a public 

meeting on Friday, February 6, 2015 

from 1:00 p.m. to 4:00 p.m., in 

Washington, DC. The meeting will also 

be broadcast as a webinar. See section 

X, ‘‘Public Participation,’’ for webinar 

registration information, participant 

instructions, and information about the 

capabilities available to webinar 

participants. 

Comments: DOE will accept 

comments, data, and information 

regarding this notice of proposed 

rulemaking (NOPR) before and after the 

public meeting, but no later than March 

24, 2015. See section X, ‘‘Public 

Participation,’’ for details. 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 8E–089, 1000 

Independence Avenue SW., 

Washington, DC 20585. To attend, 

please notify Ms. Brenda Edwards at 

(202) 586–2945. Please note that foreign 

nationals visiting DOE Headquarters are 

subject to advance security screening 

procedures. Any foreign national 

wishing to participate in the meeting 

should advise DOE as soon as possible 

by contacting Ms. Edwards at the phone 

number above to initiate the necessary 

procedures. Please also note that any 

person wishing to bring a laptop or 

tablet into the Forrestal Building will be 

required to obtain a property pass. 

Visitors should avoid bringing laptops, 

or allow an extra 45 minutes. Persons 

may also attend the public meeting via 

webinar. For more information, refer to 

section X, ‘‘Public Participation,’’ near 

the end of this document. 

Due to the REAL ID Act implemented 

by the Department of Homeland 

Security (DHS), there have been recent 

changes regarding identification (ID) 

requirements for individuals wishing to 

enter Federal buildings from specific 

States and U.S. territories. As a result, 

driver’s licenses from the following 

States or territory will not be accepted 

for building entry, and instead, one of 

the alternate forms of ID listed below 

will be required. 

DHS has determined that regular 

driver’s licenses (and ID cards) from the 

following jurisdictions are not 

acceptable for entry into DOE facilities: 

Alaska, American Samoa, Arizona, 

Louisiana, Maine, Massachusetts, 

Minnesota, New York, Oklahoma, and 

Washington. 

Acceptable alternate forms of PhotoID include: U.S. Passport or Passport 

Card; an Enhanced Driver’s License or 

Enhanced ID-Card issued by the States 

of Minnesota, New York or Washington 

(Enhanced licenses issued by these 

States are clearly marked Enhanced or 

Enhanced Driver’s License); a military 

ID or other Federal government-issued 

Photo-ID card. 

Instructions: Any comments 

submitted must identify the NOPR on 

Energy Conservation Standards and Test 

Procedures for ASHRAE Standard 90.1 

Equipment, and provide docket number 

EERE–2014–BT–STD–0015 and/or 

regulatory information number (RIN) 

1904–AD23. Comments may be 

submitted using any of the following 

methods: 

1. Federal eRulemaking Portal: 

www.regulations.gov. Follow the 

instructions for submitting comments. 

2. E-Mail: ComHeatingACWH

Equip2014STD0015@ee.doe.gov. 

Include the docket number and/or RIN 

in the subject line of the message. 

Submit electronic comments in 

WordPerfect, Microsoft Word, PDF, or 

ASCII file format, and avoid the use of 

special characters or any form of 

encryption. 

3. Postal Mail: Ms. Brenda Edwards, 

U.S. Department of Energy, Building 

Technologies Office, Mailstop EE–5B, 

1000 Independence Avenue SW., 

Washington, DC 20585–0121. If 

possible, please submit all items on a 

compact disc (CD), in which case it is 

not necessary to include printed copies. 

4. Hand Delivery/Courier: Ms. Brenda 

Edwards, U.S. Department of Energy, 

Building Technologies Office, 950 

L’Enfant Plaza SW., Suite 600, 

Washington, DC 20024. Telephone: 

(202) 586–2945. If possible, please 

submit all items on a CD, in which case 

it is not necessary to include printed 

copies. 

Written comments regarding the 

burden-hour estimates or other aspects 

of the collection-of-information 

requirements contained in this proposed 

rule may be submitted to Office of 

Energy Efficiency and Renewable 

Energy through the methods listed 

above and by email to Chad_S_

Whiteman@omb.eop.gov. 

No telefacsimilies (faxes) will be 

accepted. For detailed instructions on 

submitting comments and additional 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1173 

information on the rulemaking process, 

see section X of this document (Public 

Participation). 

Docket: The docket, which includes 

Federal Register notices, public meeting 

attendee lists and transcripts, 

comments, and other supporting 

documents/materials, is available for 

review at www.regulations.gov. All 

documents in the docket are listed in 

the www.regulations.gov index. 

However, some documents listed in the 

index may not be publicly available, 

such as those containing information 

that is exempt from public disclosure. 

A link to the docket Web page can be 

found at: www.regulations.gov/

#!docketDetail;D=EERE-2014-BT-STD0015. This Web page contains a link to 

the docket for this document on the 

www.regulations.gov site. The 

www.regulations.gov Web page contains 

simple instructions on how to access all 

documents, including public comments, 

in the docket. See section X, ‘‘Public 

Participation,’’ for further information 

on how to submit comments through 

www.regulations.gov. 

For further information on how to 

submit a comment, review other public 

comments and the docket, or participate 

in the public meeting, contact Ms. 

Brenda Edwards at (202) 586–2945 or by 

email: Brenda.Edwards@ee.doe.gov. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Ashley Armstrong, U.S. Department of 

Energy, Office of Energy Efficiency and 

Renewable Energy, Building 

Technologies Office, EE–5B, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–6590. Email: 

Ashley.Armstrong@ee.doe.gov. 

Mr. Eric Stas, U.S. Department of 

Energy, Office of the General Counsel, 

GC–33, 1000 Independence Avenue 

SW., Washington, DC 20585–0121. 

Telephone: (202) 586–9507. Email: 

Eric.Stas@hq.doe.gov. 

For information on how to submit or 

review public comments, contact Ms. 

Brenda Edwards at (202) 586–2945 or by 

email: Brenda.Edwards@ee.doe.gov. 

SUPPLEMENTARY INFORMATION: DOE 

proposes to incorporate by reference the 

following industry standards into 10 

CFR 431.76: 

• ANSI Z21.47–2012, ‘‘Gas-Fired 

Central Furnaces,’’ ANSI approved on 

March 27, 2012. 

Copies of ANSI Z21.47–2012 can be 

obtained from ANSI. American National 

Standards Institute. 25 W. 43rd Street, 

4th Floor, New York, NY 10036. (212) 

642–4900, or by going to http://

www.ansi.org. 

• ASHRAE Standard 103–2007, 

sections 7.2.2.4, 7.8, 9.2, and 11.3.7, 

‘‘Method of Testing for Annual Fuel 

Utilization Efficiency of Residential 

Central Furnaces and Boilers,’’ ANSI 

approved on March 25, 2008. 

Copies of ASHRAE Standard 103– 

2007 can be obtained from ASHRAE. 

American Society of Heating, 

Refrigerating and Air-Conditioning 

Engineers Inc., 1791 Tullie Circle NE., 

Atlanta, Georgia 30329. (404) 636–8400, 

or by going to http://www.ashrae.org. 

Table of Contents 

I. Summary of the Proposed Rule 

II. Introduction 

A. Authority 

B. Background 

1. ASHRAE Standard 90.1–2013 

2. Notice of Data Availability 

III. General Discussion of Comments 

Regarding the ASHRAE Process and 

DOE’s Interpretation of EPCA’s 

Requirements With Respect to ASHRAE 

Equipment 

IV. General Discussion of the Changes in 

ASHRAE Standard 90.1–2013 and 

Determination of Scope for Further 

Rulemaking Activity 

A. Commercial Package Air-Conditioning 

and Heating Equipment 

1. Air-Cooled Equipment 

2. Water-Source Equipment 

3. Packaged Terminal Air Conditioners and 

Heat Pumps 

4. Small-Duct, High-Velocity, and 

Through-the-Wall Equipment 

5. Single-Package Vertical Air Conditioners 

and Single-Package Vertical Heat Pumps 

B. Commercial Water Heaters 

C. Test Procedures 

V. Methodology for Small Commercial AirCooled Air Conditioners and Heat 

Pumps Less Than 65,000 Btu/h 

A. Market Assessment 

1. Equipment Classes 

2. Review of Current Market 

a. Trade Association Information 

b. Manufacturer Information 

c. Market Data 

B. Engineering Analysis 

1. Approach 

2. Baseline Equipment 

3. Identification of Increased Efficiency 

Levels for Analysis 

4. Engineering Analysis Results 

a. Manufacturer Markups 

b. Shipping Costs 

C. Markups Analysis 

D. Energy Use Analysis 

E. Life-Cycle Cost and Payback Period 

Analysis 

1. Equipment Costs 

2. Installation Costs 

3. Unit Energy Consumption 

4. Electricity Prices and Electricity Price 

Trends 

5. Maintenance Costs 

6. Repair Costs 

7. Equipment Lifetime 

8. Discount Rate 

9. Base-Case Market Efficiency Distribution 

10. Compliance Date 

11. Payback Period Inputs 

F. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analysis 

1. Approach 

2. Shipments Analysis 

3. Base-Case and Standards-Case 

Forecasted Distribution of Efficiencies 

4. National Energy Savings and Net Present 

Value 

VI. Methodology for Water-Source Heat 

Pumps 

A. Market Assessment 

1. Equipment Classes 

2. Review of Current Market 

a. Trade Association Information 

b. Manufacturer Information 

c. Market Data 

B. Engineering Analysis 

1. Approach 

2. Baseline Equipment 

3. Identification of Increased Efficiency 

Levels for Analysis 

4. Engineering Analysis Results 

a. Manufacturer Markups 

b. Shipping Costs 

C. Markups Analysis 

D. Energy Use Analysis 

E. Life-Cycle Cost and Payback Period 

Analysis 

1. Equipment Costs 

2. Installation Costs 

3. Unit Energy Consumption 

4. Electricity Prices and Electricity Price 

Trends 

5. Maintenance Costs 

6. Repair Costs 

7. Equipment Lifetime 

8. Discount Rate 

9. Base-Case Market Efficiency Distribution 

10. Compliance Date 

11. Payback Period Inputs 

F. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analysis 

1. Approach 

2. Shipments Analysis 

3. Base-Case and Standards-Case 

Forecasted Distribution of Efficiencies 

4. National Energy Savings and Net Present 

Value 

VII. Methodology for Emissions Analysis and 

Monetizing Carbon Dioxide and Other 

Emissions Impacts 

A. Emissions Analysis 

B. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

1. Social Cost of Carbon 

a. Monetizing Carbon Dioxide Emissions 

b. Development of Social Cost of Carbon 

Values 

c. Current Approach and Key Assumptions 

2. Valuation of Other Emissions 

Reductions 

VIII. Analytical Results and Conclusions 

A. Efficiency Levels Analyzed 

1. Small Commercial Air-Cooled Air 

Conditioners and Heat Pumps Less Than 

65,000 Btu/h 

2. Water-Source Heat Pumps 

3. Commercial Oil-Fired Storage Water 

Heaters 

B. Energy Savings and Economic 

Justification 

1. Small Commercial Air-Cooled Air 

Conditioners and Heat Pumps Less Than 

65,000 Btu/h 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
1174 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

1For editorial reasons, upon codification in the 

U.S. Code, Part C was redesignated Part A–1. 

2ASHRAE Standard 90.1–2013 did not change 

any of the design requirements for the commercial 

(HVAC) and water-heating equipment covered by 

EPCA. 

3See Packaged Terminal Air Conditioners and 

Heat Pumps Standards Rulemaking Web page: 

www1.eere.energy.gov/buildings/appliance_

standards/rulemaking.aspx/ruleid/64 and Single 

Package Vertical Air Conditioners and Heat Pumps 

Standards Rulemaking Web page: 

www1.eere.energy.gov/buildings/appliance_

standards/rulemaking.aspx?ruleid=107. 

4To obtain a copy of ASHRAE Standard 90.1– 

2013, visit https://www.ashrae.org/resources-- 

publications/bookstore/standard-90-1. 

a. Economic Impacts on Commercial 

Customers 

b. National Impact Analysis 

2. Water-Source Heat Pumps 

a. Economic Impacts on Commercial 

Customers 

b. National Impact Analysis 

3. Commercial Oil-Fired Storage Water 

Heaters 

C. Need of the Nation To Conserve Energy 

D. Proposed Standards 

1. Small Commercial Air-Cooled Air 

Conditioners and Heat Pumps Less Than 

65,000 Btu/h 

2. Water-Source Heat Pumps 

3. Commercial Oil-Fired Storage Water 

Heaters 

IX. 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 of 1995 

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 

X. Public Participation 

A. Attendance at the Public Meeting 

B. Procedure for Submitting Prepared 

General Statements for Distribution 

C. Conduct of the Public Meeting 

D. Submission of Comments 

E. Issues on Which DOE Seeks Comment 

XI. Approval of the Office of the Secretary 

I. Summary of the Proposed Rule 

Title III, Part C1 of the Energy Policy 

and Conservation Act of 1975 (‘‘EPCA’’ 

or ‘‘the Act’’), Public Law 94–163, (42 

U.S.C. 6311–6317, as codified), added 

by Public Law 95–619, Title IV, section 

441(a), established the Energy 

Conservation Program for Certain 

Industrial Equipment, which sets forth a 

variety of provisions designed to 

improve energy efficiency. These 

encompass several types of commercial 

heating, air-conditioning, and waterheating equipment, including those that 

are the subject of this rulemaking. (42 

U.S.C. 6311(1)(B) and (K)) EPCA, as 

amended, also requires the U. S. 

Department of Energy (DOE) to consider 

amending the existing Federal energy 

conservation standard for certain types 

of listed commercial and industrial 

equipment (generally, commercial water 

heaters, commercial packaged boilers, 

commercial air-conditioning and 

heating equipment, and packaged 

terminal air conditioners and heat 

pumps) each time the American Society 

of Heating, Refrigerating and AirConditioning Engineers (ASHRAE) 

Standard 90.1, Energy Standard for 

Buildings Except Low-Rise Residential 

Buildings, is amended with respect to 

such equipment. (42 U.S.C. 

6313(a)(6)(A)) For each type of 

equipment, EPCA directs that if 

ASHRAE Standard 90.1 is amended, 

DOE must adopt amended energy 

conservation standards at the new 

efficiency level in ASHRAE Standard 

90.1, unless clear and convincing 

evidence supports a determination that 

adoption of a more-stringent efficiency 

level as a national standard would 

produce significant additional energy 

savings and be technologically feasible 

and economically justified. (42 U.S.C. 

6313(a)(6)(A)(ii)) If DOE decides to 

adopt as a national standard the 

efficiency levels specified in the 

amended ASHRAE Standard 90.1, DOE 

must establish such standard not later 

than 18 months after publication of the 

amended industry standard. (42 U.S.C. 

6313(a)(6)(A)(ii)(I)) If DOE determines 

that a more-stringent standard is 

appropriate under the statutory criteria, 

DOE must establish such more-stringent 

standard not later than 30 months after 

publication of the revised ASHRAE 

Standard 90.1. (42 U.S.C. 6313(a)(6)(B)) 

ASHRAE officially released ASHRAE 

Standard 90.1–2013 on October 9, 2013, 

thereby triggering DOE’s previously 

referenced obligations pursuant to EPCA 

to determine for those types of 

equipment with efficiency level or 

design requirement changes beyond the 

current Federal standard, whether: (1) 

The amended industry standard should 

be adopted; or (2) clear and convincing 

evidence exists to justify more-stringent 

standard levels. 

Accordingly, this NOPR sets forth 

DOE’s determination of scope for 

consideration of amended energy 

conservation standards with respect to 

certain heating, ventilating, airconditioning, and water-heating 

equipment addressed in ASHRAE 

Standard 90.1–2013. Such inquiry is 

necessary to ascertain whether the 

revised ASHRAE efficiency levels have 

become more stringent, thereby 

ensuring that any new amended 

national standard would not result in 

prohibited ‘‘backsliding.’’ For those 

equipment classes for which ASHRAE 

set more-stringent efficiency levels 2

(i.e., small three-phase air-cooled air 

conditioners (single package only) and 

heat pumps (single package and split 

system) less than 65,000 Btu/h; watersource heat pumps; commercial oil-fired 

storage water heaters; single package 

vertical units; and packaged terminal air 

conditioners), DOE analyzed the energy 

savings potential of amended national 

energy conservation standards (at both 

the new ASHRAE Standard 90.1 

efficiency levels and more-stringent 

efficiency levels). For small three-phase 

air-cooled air conditioners and heat 

pumps less than 65,000 Btu/h and 

water-source heat pumps, DOE analyzed 

the economic savings potential of 

amended national energy conservation 

standards at more-stringent efficiency 

levels, in addition to the energy savings 

potential. For commercial oil-fired 

storage water heaters, DOE determined 

that the potential for energy savings 

from adopting more-stringent levels 

than the ASHRAE Standard 90.1 levels 

was not significant, and, thus, DOE is 

proposing to adopt the ASHRAE 

Standard 90.1 levels without further 

analysis (see section IV.B for further 

details). For single package vertical 

units and packaged terminal air 

conditioners, DOE is performing 

economic analyses and responding to 

relevant comments from the NODA in 

separate rulemakings that were 

previously ongoing,3 and consequently, 

the analysis for this equipment and 

further discussion or proposal of 

standard levels will not be discussed in 

this NOPR. 

DOE has tentatively concluded that 

for three classes of small three-phase 

air-cooled air conditioners and heat 

pumps less than 65,000 Btu/h, three 

classes of water-source heat pumps, and 

one class of commercial oil-fired storage 

water heaters: (1) The revised efficiency 

levels in ASHRAE 90.1–2013 4 are more 

stringent than current national 

standards; and (2) their adoption as 

Federal energy conservation standards 

would result in energy savings where 

models exist below the revised 

efficiency levels. DOE has also 

tentatively concluded that there is not 

clear and convincing evidence that 

would justify adoption of more-stringent 

efficiency levels for this equipment. 


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Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1175 

5For editorial reasons, upon codification in the 

U.S. Code, Part C was redesignated Part A–1. 

It is noted that DOE’s regulations 

currently have a single equipment class 

for small, three-phase commercial aircooled air conditioners less than 65,000 

Btu/h, which covers both split-system 

and single-package models. Although 

ASHRAE Standard 90.1–2013 did not 

amend standard levels for the splitsystem models within that equipment 

class, it did so for the single-package 

models. Given this split, DOE is 

proposing to once again separate these 

two types of equipment into separate 

equipment classes. In the NOPR, DOE is 

proposing to evaluate amended 

standards for split-system models under 

the six-year-lookback provision at 42 

U.S.C. 6313(a)(6)(C). Following this 

evaluation, DOE has tentatively 

concluded that there is not clear and 

convincing evidence that would justify 

adoption of more-stringent efficiency 

levels for small three-phase split-system 

air-cooled air conditioners less than 

65,000 Btu/h, where the efficiency level 

in ASHRAE 90.1–2013 is the same as 

the current Federal energy conservation 

standards. 

Thus, in accordance with the criteria 

discussed elsewhere in this document, 

DOE is proposing amended energy 

conservation standards for three classes 

of small three-phase air-cooled air 

conditioners and heat pumps less than 

65,000 Btu/h, three classes of watersource heat pumps, and one class of 

commercial oil-fired storage water 

heaters by adopting the efficiency levels 

specified by ASHRAE Standard 90.1– 

2013, as shown in Table I.1. The 

proposed standards, if adopted, would 

apply to all equipment listed in Table 

I.1 and manufactured in, or imported 

into, the United States on or after the 

date two years after the effective date 

specified in ASHRAE Standard 90.1– 

2013 (i.e., by January 1, 2017 for small 

air-cooled air conditioners and heat 

pumps and by October 9, 2015 for 

water-source heat pumps and oil-fired 

storage water heaters). (42 U.S.C. 

6313(a)(6)(D)(i)) DOE is making a 

determination that standards for splitsystem air-cooled air conditioners less 

than 65,000 Btu/h do not need to be 

amended. 

TABLE I.1—PROPOSED ENERGY CONSERVATION STANDARDS FOR SPECIFIC TYPES OF COMMERCIAL EQUIPMENT

Equipment class Efficiency level Anticipated 

compliance date 

Three-Phase Air-Cooled Single-Package Air Conditioners <65,000 Btu/h ................................... 14.0 SEER ................... January 1, 2017. 

Three-Phase Air-Cooled Single-Package Heat Pumps <65,000 Btu/h ......................................... 14.0 SEER, ..................

8.0 HSPF .....................

January 1, 2017. 

Three-Phase Air-Cooled Split-System Heat Pumps <65,000 Btu/h .............................................. 14.0 SEER, ..................

8.2 HSPF .....................

January 1, 2017. 

Oil-Fired Storage Water Heaters >105,000 Btu/h and <4,000 Btu/h/gal ...................................... 80% Et ......................... October 9, 2015. 

Water-Source (Water-to-Air, Water-Loop) Heat Pumps <17,000 Btu/h ........................................ 12.2 EER, ....................

4.3 COP .......................

October 9, 2015. 

Water-Source (Water-to-Air, Water-Loop) Heat Pumps ≥17,000 and <65,000 Btu/h .................. 13.0 EER, ....................

4.3 COP .......................

October 9, 2015. 

Water-Source (Water-to-Air, Water-Loop) Heat Pumps ≥65,000 and <135,000 Btu/h ................ 13.0 EER, ....................

4.3 COP .......................

October 9, 2015. 

In addition, when the generally 

accepted industry test procedures 

referenced in ASHRAE Standard 90.1 

are updated, EPCA requires DOE to 

amend the DOE test procedures for the 

relevant type(s) of ASHRAE equipment 

(which manufacturers are required to 

use in order to certify compliance with 

energy conservation standards 

mandated under EPCA) to be consistent 

with the amended industry test 

procedure. (42 U.S.C. 6314(a)(4)(B)) 

DOE typically incorporates such 

industry test standards by reference, 

unless it determines they would not 

meet the requirements of 42 U.S.C. 

6314(a)(2) and (3). Specifically, the 

amendments in this NOPR would 

update the citations and incorporations 

by reference in DOE’s regulations to the 

most recent version of American 

National Standards Institute (ANSI) 

Z21.47, Standard for Gas-Fired Central 

Furnaces (i.e., ANSI Z21.47–2012). 

However, as a substantive matter, DOE 

notes that the most recent version does 

not contain any updates to the sections 

currently referenced by the DOE test 

procedure, so no additional burden 

would be expected to result from this 

test procedure update. 

Additionally, EISA 2007 amended 

EPCA to require that at least once every 

7 years, DOE must conduct an 

evaluation of the test procedures for all 

covered equipment and either amend 

test procedures (if the Secretary 

determines that amended test 

procedures would more accurately or 

fully comply with the requirements of 

42 U.S.C. 6314(a)(2)–(3)) or publish 

notice in the Federal Register of any 

determination not to amend a test 

procedure. (42 U.S.C. 6314(a)(1)(A)) 

Under this requirement, DOE has 

reviewed the test procedure for 

commercial warm-air furnaces and is 

proposing to update the citations and 

incorporations by reference to the most 

recent version of ASHRAE 103, Method 

of Testing for Annual Fuel Utilization 

Efficiency of Residential Central 

Furnaces and Boiler (i.e., ASHRAE 103– 

2007), Thus, the final rule resulting 

from this rulemaking will satisfy the 

requirement to review the test 

procedures for commercial warm-air 

furnaces within seven years. DOE notes 

that the most recent version of ASHRAE 

103 does not contain any updates to the 

sections currently referenced by the 

DOE test procedure, so no additional 

burden would be expected to result 

from this test procedure update. 

II. Introduction 

The following section briefly 

discusses the statutory authority 

underlying this proposal, as well as 

some of the relevant historical 

background related to the establishment 

of standards for small three-phase aircooled air conditioners and heat pumps 

less than 65,000 Btu/h, water-source 

heat pumps, and commercial oil-fired 

storage water heaters. 

A. Authority 

Title III, Part C5 of the Energy Policy 

and Conservation Act of 1975 (EPCA or 

the Act), Public Law 94–163 (42 U.S.C. 

6311–6317, as codified), added by 

Public Law 95–619, Title IV, section 

441(a), established the Energy 

Conservation Program for Certain 

Industrial Equipment, which includes 

the commercial heating, airconditioning, and water-heating 

equipment that is the subject of this 


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6All references to EPCA in this document refer 

to the statute as amended through the American 

Energy Manufacturing Technical Corrections Act 

(AEMTCA), Public Law 112–210 (Dec. 18, 2012). 

7Although EPCA does not explicitly define the 

term ‘‘amended’’ in the context of ASHRAE 

Standard 90.1, DOE provided its interpretation of 

what would constitute an ‘‘amended standard’’ in 

a final rule published in the Federal Register on 

March 7, 2007 (hereafter referred to as the ‘‘March 

2007 final rule’’). 72 FR 10038. In that rule, DOE 

stated that the statutory trigger requiring DOE to 

adopt uniform national standards based on 

ASHRAE action is for ASHRAE to change a 

standard for any of the equipment listed in EPCA 

section 342(a)(6)(A)(i) (42 U.S.C. 6313(a)(6)(A)(i)) by 

increasing the energy efficiency level for that 

equipment type. Id. at 10042. In other words, if the 

revised ASHRAE Standard 90.1 leaves the standard 

level unchanged or lowers the standard, as 

compared to the level specified by the national 

standard adopted pursuant to EPCA, DOE does not 

have the authority to conduct a rulemaking to 

consider a higher standard for that equipment 

pursuant to 42 U.S.C. 6313(a)(6)(A). DOE 

subsequently reiterated this position in a final rule 

published in the Federal Register on July 22, 2009 

(74 FR 36312, 36313) and again on May 16, 2012 

(77 FR 28928, 28937). However, in the AEMTCA 

amendments to EPCA in 2012, Congress modified 

several provisions related to ASHRAE Standard 

90.1 equipment. In relevant part, DOE is now 

triggered to act whenever ASHRAE Standard 90.1’s 

‘‘standard levels or design requirements under that 

standard’’ are amended. (42 U.S.C. 6313(a)(6)(A)(i)) 

Furthermore, DOE is now required to conduct an 

evaluation of each class of covered equipment in 

ASHRAE Standard 90.1 ‘‘every 6 years.’’ (42 U.S.C. 

6313(a)(6)(C)(i)) For any covered equipment for 

which more than 6 years has elapsed since issuance 

of the most recent final rule establishing or 

amending a standard for such equipment, DOE 

must publish either the required notice of 

determination that standards do not need to be 

amended or a NOPR with proposed standards by 

December 31, 2013. (42 U.S.C. 6313(a)(6)(C)(vi)) 

DOE has incorporated these new statutory mandates 

into its rulemaking process for covered ASHRAE 

90.1 equipment. 

rulemaking.6 In general, this program 

addresses the energy efficiency of 

certain types of commercial and 

industrial equipment. Relevant 

provisions of the Act specifically 

include definitions (42 U.S.C. 6311), 

energy conservation standards (42 

U.S.C. 6313), test procedures (42 U.S.C. 

6314), labelling provisions (42 U.S.C. 

6315), and the authority to require 

information and reports from 

manufacturers (42 U.S.C. 6316). 

EPCA contains mandatory energy 

conservation standards for commercial 

heating, air-conditioning, and waterheating equipment. (42 U.S.C. 6313(a)) 

Specifically, the statute sets standards 

for small, large, and very large 

commercial package air-conditioning 

and heating equipment, packaged 

terminal air conditioners (PTACs), 

packaged terminal heat pumps (PTHPs), 

warm-air furnaces, packaged boilers, 

storage water heaters, instantaneous 

water heaters, and unfired hot water 

storage tanks. Id. In doing so, EPCA 

established Federal energy conservation 

standards that generally correspond to 

the levels in ASHRAE Standard 90.1, as 

in effect on October 24, 1992 (i.e., 

ASHRAE Standard 90.1–1989), for each 

type of covered equipment listed in 42 

U.S.C. 6313(a). The Energy 

Independence and Security Act of 2007 

(EISA 2007) amended EPCA by adding 

definitions and setting minimum energy 

conservation standards for singlepackage vertical air conditioners 

(SPVACs) and single-package vertical 

heat pumps (SPVHPs). (42 U.S.C. 

6313(a)(10)(A)) The efficiency standards 

for SPVACs and SPVHPs established by 

EISA 2007 correspond to the levels 

contained in ASHRAE Standard 90.1– 

2004, which originated as addendum 

‘‘d’’ to ASHRAE Standard 90.1–2001. 

In acknowledgement of technological 

changes that yield energy efficiency 

benefits, the U.S. Congress further 

directed DOE through EPCA to consider 

amending the existing Federal energy 

conservation standard for each type of 

equipment listed, each time ASHRAE 

Standard 90.1 is amended with respect 

to such equipment. (42 U.S.C. 

6313(a)(6)(A)) For each type of 

equipment, EPCA directs that if 

ASHRAE Standard 90.1 is amended,7

DOE must publish in the Federal 

Register an analysis of the energy 

savings potential of amended energy 

efficiency standards within 180 days of 

the amendment of ASHRAE Standard 

90.1. (42 U.S.C. 6313(a)(6)(A)(i)) EPCA 

further directs that DOE must adopt 

amended standards at the new 

efficiency level in ASHRAE Standard 

90.1, unless clear and convincing 

evidence supports a determination that 

adoption of a more-stringent level 

would produce significant additional 

energy savings and be technologically 

feasible and economically justified. (42 

U.S.C. 6313(a)(6)(A)(ii)) If DOE decides 

to adopt as a national standard the 

efficiency levels specified in the 

amended ASHRAE Standard 90.1, DOE 

must establish such standard not later 

than 18 months after publication of the 

amended industry standard. (42 U.S.C. 

6313(a)(6)(A)(ii)(I)) However, if DOE 

determines that a more-stringent 

standard is justified under 42 U.S.C. 

6313(a)(6)(A)(ii)(II), then it must 

establish such more-stringent standard 

not later than 30 months after 

publication of the amended ASHRAE 

Standard 90.1. (42 U.S.C. 6313(a)(6)(B)) 

In addition, DOE notes that pursuant to 

the EISA 2007 amendments to EPCA, 

under 42 U.S.C. 6313(a)(6)(C), the 

agency must periodically review its 

already-established energy conservation 

standards for ASHRAE equipment. In 

December 2012, this provision was 

further amended by the American 

Energy Manufacturing Technical 

Corrections Act (AEMTCA) to clarify 

that DOE’s periodic review of ASHRAE 

equipment must occur ‘‘[e]very six 

years.’’ (42 U.S.C. 6313(a)(6)(C)(i)) 

AEMTCA also modified EPCA to 

specify that any amendment to the 

design requirements with respect to the 

ASHRAE equipment would trigger DOE 

review of the potential energy savings 

under U.S.C. 6313(a)(6)(A)(i). 

Additionally, AEMTCA amended EPCA 

to require that if DOE proposes an 

amended standard for ASHRAE 

equipment at levels more stringent than 

those in ASHRAE Standard 90.1, DOE, 

in deciding whether a standard is 

economically justified, must determine, 

after receiving comments on the 

proposed standard, whether the benefits 

of the standard exceed its burdens by 

considering, to the maximum 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 product in the type (or class) 

compared to any increase in the price, 

initial charges, or maintenance expenses 

of the products likely to result from the 

standard; 

(3) The total projected amount of 

energy savings likely to result directly 

from the standard; 

(4) Any lessening of the utility or the 

performance of the products likely to 

result from the standard; 

(5) The impact of any lessening of 

competition, as determined in writing 

by the Attorney General, that is likely to 

result from the standard; 

(6) The need for national energy 

conservation; and 

(7) Other factors the Secretary 

considers relevant. 

(42 U.S.C. 6313(a)(6)(B)(ii)) 

EPCA also requires that if a test 

procedure referenced in ASHRAE 

Standard 90.1 is updated, DOE must 

update its test procedure to be 

consistent with the amended test 

procedure in ASHRAE Standard 90.1, 

unless DOE determines that the 

amended test procedure is not 

reasonably designed to produce test 

results that reflect the energy efficiency, 

energy use, or estimated operating costs 

of the ASHRAE equipment during a 

representative average use cycle. In 

addition, DOE must determine that the 

amended test procedure is not unduly 

burdensome to conduct. (42 U.S.C. 

6314(a)(2) and(4)) 

Additionally, EISA 2007 amended 

EPCA to require that at least once every 

7 years, DOE must conduct an 


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evaluation of the test procedures for all 

covered equipment and either amend 

test procedures (if the Secretary 

determines that amended test 

procedures would more accurately or 

fully comply with the requirements of 

42 U.S.C. 6314(a)(2)–(3)) or publish 

notice in the Federal Register of any 

determination not to amend a test 

procedure. (42 U.S.C. 6314(a)(1)(A)) The 

final rule resulting from this rulemaking 

will satisfy the requirement to review 

the test procedures for commercial 

warm-air furnaces within seven years. 

On October 9, 2013 ASHRAE 

officially released and made public 

ASHRAE Standard 90.1–2013. This 

action triggered DOE’s obligations under 

42 U.S.C. 6313(a)(6), as outlined 

previously. 

EPCA, as codified, also contains what 

is known as an ‘‘anti-backsliding’’ 

provision, which prevents the Secretary 

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. 

6313(a)(6)(B)(iii)(I)) Also, the Secretary 

may not prescribe an amended or new 

standard if interested persons have 

established by a preponderance of the 

evidence that such standard would 

likely result in the unavailability in the 

United States of any covered product 

type (or class) of performance 

characteristics (including reliability), 

features, sizes, capacities, and volumes 

that are substantially the same as those 

generally available in the United States 

at the time of the Secretary’s finding. (42 

U.S.C. 6313(a)(6)(B)(iii)(II)(aa)) 

Further, EPCA, as codified, 

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 

during the first year that the consumer 

will receive as a result of the standard, 

as calculated under the applicable test 

procedure. 

Additionally, when a type or class of 

covered equipment such as ASHRAE 

equipment, has two or more 

subcategories, DOE often specifies more 

than one standard level. DOE generally 

will adopt a different standard level 

than that which applies generally to 

such type or class of products for any 

group of covered products that have the 

same function or intended use if DOE 

determines that products within such 

group: (A) Consume a different kind of 

energy from that consumed by other 

covered products within such type (or 

class); or (B) have a capacity or other 

performance-related feature which other 

products within such type (or class) do 

not have and which justifies a higher or 

lower standard. In determining whether 

a performance-related feature justifies a 

different standard for a group of 

products, DOE generally considers such 

factors as the utility to the consumer of 

the feature and other factors DOE deems 

appropriate. In a rule prescribing such 

a standard, DOE includes an 

explanation of the basis on which such 

higher or lower level was established. 

DOE plans to follow a similar process in 

the context of this rulemaking. 

B. Background 

1. ASHRAE Standard 90.1–2013 

As noted previously, ASHRAE 

released a new version of ASHRAE 

Standard 90.1 on October 9, 2013. The 

ASHRAE standard addresses efficiency 

levels for many types of commercial 

heating, ventilating, air-conditioning 

(HVAC), and water-heating equipment 

covered by EPCA. ASHRAE Standard 

90.1–2013 revised its efficiency levels 

for certain commercial equipment, but 

for the remaining equipment, ASHRAE 

left in place the preexisting levels (i.e., 

the efficiency levels in ASHRAE 

Standard 90.1–2010). ASHRAE 

Standard 90.1–2013 did not change any 

of the design requirements for the 

commercial HVAC and water-heating 

equipment covered by EPCA. 

Table II.1 presents the equipment 

classes (and corresponding efficiency 

levels) for which efficiency levels in 

ASHRAE Standard 90.1–2013 (for 

metrics included in Federal energy 

conservation standards) differed from 

those in the previous version of 

ASHRAE Standard 90.1 (i.e., ASHRAE 

Standard 90.1–2010). Table II.1 also 

presents the existing Federal energy 

conservation standards and the 

corresponding standard levels in both 

ASHRAE Standard 90.1–2010 and 

ASHRAE Standard 90.1–2013 for those 

equipment classes. Section IV of this 

document assesses each of these 

equipment types to determine whether 

the amendments in ASHRAE Standard 

90.1–2013 constitute increased energy 

efficiency levels, as would necessitate 

further analysis of the potential energy 

savings from amended Federal energy 

conservation standards; the conclusions 

of this assessment are presented in the 

final column of Table II.1. 

TABLE II.1—FEDERAL ENERGY CONSERVATION STANDARDS AND ENERGY EFFICIENCY LEVELS IN ASHRAE STANDARD

90.1–2013 FOR SPECIFIC TYPES OF COMMERCIAL EQUIPMENT * 

ASHRAE equipment class ** 

Energy efficiency levels in ASHRAE Standard 90.1–2010 Energy efficiency levels in ASHRAE Standard 90.1–2013 

Federal energy conservation standards Energy-savings potential analysis required? 

Commercial Package Air-Conditioning and Heating Equipment—Air-Cooled 

Air-Cooled Air Conditioner, 3-Phase, SinglePackage, <65,000 Btu/h.13.0 SEER ................. 14.0 SEER (as of 1/1/

2015).

13.0 SEER ................. Yes—See section 

IV.A.1. 

Air-Cooled Heat Pump, 3-Phase, SinglePackage, <65,000 Btu/h.13.0 SEER, 7.7 HSPF 14.0 SEER, 8.0 HSPF 

(as of 1/1/2015).

13.0 SEER, 7.7 HSPF Yes—See section 

IV.A.1. 

Air-Cooled Heat Pump, 3-Phase, Split System, <65,000 Btu/h.13.0 SEER, 7.7 HSPF 14.0 SEER, 8.2 HSPF 

(as of 1/1/2015).

13.0 SEER, 7.7 HSPF Yes—See section 

IV.A.1. 

Commercial Package Air-Conditioning and Heating Equipment—Water-Source 

Water-Source Heat Pump, <17,000 Btu/h ..... 11.2 EER, 4.2 COP ... 12.2 EER, 4.3 

COPH***.

11.2 EER, 4.2 COP ... Yes—See section 

IV.A.2. 

Water-Source Heat Pump, ≥17,000 and 

<65,000 Btu/h.

12.0 EER, 4.2 COP ... 13.0 EER, 4.3 

COPH***.

12.0 EER, 4.2 COP ... Yes—See section 

IV.A.2. 

Water-Source Heat Pump, ≥65,000 and 

<135,000 Btu/h.

12.0 EER, 4.2 COP ... 13.0 EER, 4.3 

COPH***.

12.0 EER, 4.2 COP ... Yes—See section 

IV.A.2. 


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TABLE II.1—FEDERAL ENERGY CONSERVATION STANDARDS AND ENERGY EFFICIENCY LEVELS IN ASHRAE STANDARD

90.1–2013 FOR SPECIFIC TYPES OF COMMERCIAL EQUIPMENT *—Continued 

ASHRAE equipment class ** 

Energy efficiency levels in ASHRAE Standard 90.1–2010 Energy efficiency levels in ASHRAE Standard 90.1–2013 

Federal energy conservation standards Energy-savings potential analysis required? 

Commercial Package Air-Conditioning and Heating Equipment—PTACs 

Package Terminal Air Conditioner, <7,000 

Btu/h, Standard Size (New Construction) †.

EER = 11.7 as of 10/

8/12).

EER = 11.9 (as of 1/1/

2015).

EER = 11.7 ................ Yes—See section 

IV.A.3. 

Package Terminal Air Conditioner, ≥7,000 

and ≤15,000 Btu/h, Standard Size (New 

Construction) †.

EER = 13.8—(0.300 × 

Cap ††) (as of 10/8/

12).

EER = 14.0—(0.300 × 

Cap ††) (as of 1/1/

2015).

EER = 13.8—(0.300 × 

Cap ††).

Yes—See section 

IV.A.3. 

Package Terminal Air Conditioner, >15,000 

Btu/h, Standard Size (New Construction) †.

EER = 9.3 (as of 10/8/

12).

EER = 9.5 (as of 1/1/

2015).

EER = 9.3 .................. Yes—See section 

IV.A.3. 

Commercial Package Air-Conditioning and Heating Equipment—SDHV and TTW 

Through-the-Wall (TTW), Air-Cooled Heat 

Pumps, ≤30,000 Btu/h.

13.0 SEER, 7.4 HSPF 12.0 SEER, 7.4 HSPF 13.0 SEER, 7.7 HSPF No—See section 

IV.A.4. 

Small-Duct, High-Velocity, Air-Cooled 

(SDHV) Air Conditioners, <65,000 Btu/h.

10.0 SEER ................. 11.0 SEER ................. 13.0 SEER ................. No—See section 

IV.A.4. 

Small-Duct, High-Velocity, Air-Cooled Heat 

Pumps, <65,000 Btu/h.

10.0 SEER, HSPF not 

listed †††.

11.0 SEER, 6.8 HSPF 13.0 SEER, 7.7 HSPF No—See section 

IV.A.4. 

Commercial Package Air-Conditioning and Heating Equipment—SPVACs and SPVHPs 

Single Package Vertical Air Conditioners, 

<65,000 Btu/h.

9.0 EER ..................... 10.0 EER ................... 9.0 EER ..................... Yes—See section 

IV.A.5. 

Single Package Vertical Air Conditioners, 

≥65,000 and <135,000 Btu/h.

8.9 EER ..................... 10.0 EER ................... 8.9 EER ..................... Yes—See section 

IV.A.5. 

Single Package Vertical Air Conditioners, 

≥135,000 and <240,000 Btu/h.

8.6 EER ..................... 10.0 EER ................... 8.6 EER ..................... Yes—See section 

IV.A.5. 

Single Package Vertical Heat Pumps, 

<65,000 Btu/h.

9.0 EER, 3.0 COP ..... 10.0 EER, 3.0 

COPH***.

9.0 EER, 3.0 COP ..... Yes—See section 

IV.A.5. 

Single Package Vertical Heat Pumps, 

≥65,000 and <135,000 Btu/h.

8.9 EER, 3.0 COP ..... 10.0 EER, 3.0 

COPH***.

8.9 EER, 3.0 COP ..... Yes—See section 

IV.A.5. 

Single Package Vertical Heat Pumps, 

≥135,000 and <240,000 Btu/h.

8.6 EER, 2.9 COP ..... 10.0 EER, 3.0 

COPH***.

8.6 EER, 2.9 COP ..... Yes—See section 

IV.A.5. 

Single Package Vertical Air Conditioners 

Nonweatherized Space Constrained, 

≤30,000 Btu/h.

N/A ............................. 9.2 EER ..................... N/A† ........................... No—See section 

IV.A.5. 

Single Package Vertical Air Conditioners 

Nonweatherized Space Constrained, 

>30,000 and ≤36,000 Btu/h.

N/A ............................. 9.0 EER ..................... N/A† ........................... No—See section 

IV.A.5. 

Single Package Vertical Heat Pumps Nonweatherized Space Constrained, ≤30,000 

Btu/h.

N/A ............................. 9.2 EER, 3.0 COPH ... N/A† ........................... No—See section 

IV.A.5. 

Single Package Vertical Heat Pumps Nonweatherized Space Constrained, >30,000 

and ≤36,000 Btu/h.

N/A ............................. 9.0 EER, 3.0 COPH ... N/A† ........................... No—See section 

IV.A.5. 

Commercial Water Heaters 

Electric Storage Water Heaters, >12 kW, ≥20 

gal.

20 + 35 V1/2 SL ‡‡, 

Btu/h.

0.3 + 27/Vm ‡‡‡ %/h .... 0.3 + 27/Vm ‡‡‡ %/h .... No—See Section 

IV.B. 

Gas Storage Water Heaters, >75,000 Btu/h, 

<4,000 Btu/h/gal.

80% Et; Q/800 + 110 

V1/2 SL ◊, Btu/h.

80% Et; Q/799 + 16.6 

V1/2 SL ◊, Btu/h◊◊.

80% Et; Q/800 + 110 

Vr

1/2 Btu/hr.

No—See Section 

IV.B. 

Oil Storage Water Heaters, >105,000 Btu/h, 

<4,000 Btu/h/gal.

78% Et; Q/800 + 110 

V1/2 SL ◊, Btu/h.

80% Et; Q/799 + 16.6 

V1/2 SL ◊, Btu/h◊◊.

78% Et; Q/800 + 110 

Vr

1/2 Btu/hr.

Yes—See Section 

IV.B. 

Gas Instantaneous Water Heaters, ≥200,000 

Btu/h, ≥4,000 Btu/h/gal, ≥10 gal.

80% Et, Q/800 + 110 

V1/2 SL ◊, Btu/h.

80% Et, Q/799 + 16.6 

V1/2 SL ◊, Btu/h◊◊.

80% Et, Q/800 + 110 

Vr

1/2 Btu/hr.

No—See Section 

IV.B. 

Oil Instantaneous Water Heaters, >210,000 

Btu/h, ≥4,000 Btu/h/gal, ≥10 gal.

78% Et, Q/800 + 110 

V1/2 SL ◊, Btu/h.

78% Et, Q/799 + 16.6 

V1/2 SL ◊, Btu/h◊◊.

78% Et, Q/800 + 110 

Vr

1/2 Btu/hr.

No—See Section 

IV.B. 

* ‘‘Et’’ means thermal efficiency; ‘‘EER’’ means energy efficiency ratio; ‘‘SEER’’ means seasonal energy efficiency ratio; ‘‘HSPF’’ means heating 

seasonal performance factor; ‘‘COP’’ and ‘‘COPH’’ mean coefficient of performance; and ‘‘Btu/h’’ or ‘‘Btu/hr’’ means British thermal units per hour. 

** ASHRAE Standard 90.1–2013 equipment classes may differ from the equipment classes defined in DOE’s regulations, but no loss of coverage will occur (i.e., all previously covered DOE equipment classes remain covered equipment). 

*** While ASHRAE Standard 90.1–2013 added a subscript H to COP for all heat pumps, its definition for ‘‘coefficient of performance (COP), 

heat pump—heating’’ has not changed. As a result, DOE believes the subscript to be a clarifying change of nomenclature (to differentiate from 

the COP metric used for refrigeration) only, rather than a change to the metric itself. † ‘‘Standard size’’ refers to PTAC equipment with wall sleeve dimensions ≥16 inches high or ≥42 inches wide. For DOE’s purposes, this equipment class applies to standard-size equipment regardless of application (e.g., new construction or replacement). †† ‘‘Cap’’ means cooling capacity in kBtu/h at 95°F outdoor dry-bulb temperature. †††This may have been an editorial error in ASHRAE 90.1–2010. 


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‡While ASHRAE Standard 90.1–2013 added this equipment class, DOE believes that equipment falling into these classes is already covered 

by Federal standards, most commonly in the residential space-constrained central air conditioning equipment class with minimum standards of 

12.0 SEER for air conditioners and heat pumps and 7.4 HSPF for heat pumps. See section II.A.5.1 of this NODA for further detail. ‡‡ ‘‘V’’ means rated volume in gallons; ‘‘SL’’ means standby loss. ‡‡‡ ‘‘Vm’’ means measured volume in tank. 

◊ ‘‘Q’’ means the nameplate input rate in Btu/hr; ‘‘V’’ means rated volume in gallons; ‘‘SL’’ means standby loss. DOE’s descriptor, ‘‘Vr,’’ also 

means rated volume in gallons and differs only in nomenclature. 

◊◊ As explained in section IV.B, DOE believes that all changes to standby loss levels for these equipment classes were editorial errors because they are identical to SI (International System of Units; metric system) formulas rather than I–P (Inch-Pound; English system) formulas. 

DOE notes that ASHRAE 90.1–2013 

also increased integrated energy 

efficiency ratio (IEER) levels for 

additional equipment not listed in Table 

II.1, including small, large, and very 

large air-cooled and water-cooled air 

conditioners and heat pumps. However, 

because current Federal energy 

conservation standards for this 

equipment do not use IEER as a rating 

metric, DOE is not triggered to review 

this equipment. In September 2014, 

DOE published a notice of proposed 

rulemaking (NOPR) for commercial aircooled equipment. 79 FR 58948 (Sept. 

30, 2014). In the NOPR, DOE proposed 

amended standards for small, large, and 

very large air-cooled commercial air 

conditioners and heat pumps based on 

IEER as the energy efficiency descriptor. 

Should DOE finalize new standards 

using IEER as the metric, future 

increases in IEER levels in ASHRAE 

Standard 90.1 as compared to the 

Federal energy conservation standards 

would trigger DOE to review its 

efficiency levels for that equipment. 

2. Notice of Data Availability 

On April 11, 2014, DOE published a 

notice of data availability (April 2014 

NODA) in the Federal Register and 

requested public comment as a 

preliminary step required pursuant to 

EPCA when DOE considers amended 

energy conservation standards for 

certain types of commercial equipment 

covered by ASHRAE Standard 90.1. 79 

FR 20114. Specifically, the April 2014 

NODA presented for public comment 

DOE’s analysis of the potential energy 

savings estimates related to amended 

national energy conservation standards 

for the types of commercial equipment 

for which DOE was triggered by 

ASHRAE action, based on: (1) The 

modified efficiency levels contained 

within ASHRAE Standard 90.1–2013; 

and (2) more-stringent efficiency levels. 

Id. at 20134–36. DOE has described 

these analyses and preliminary 

conclusions and sought input from 

interested parties, including the 

submission of data and other relevant 

information. Id. 

In addition, DOE presented a 

discussion in the April 2014 NODA of 

the changes found in ASHRAE Standard 

90.1–2013. Id. at 20119–25. The April 

2014 NODA includes a description of 

DOE’s evaluation of each ASHRAE 

equipment type in order for DOE to 

determine whether the amendments in 

ASHRAE Standard 90.1–2013 have 

increased efficiency levels or changed 

design requirements. As an initial 

matter, DOE sought to determine which 

requirements for covered equipment in 

ASHRAE Standard 90.1, if any: (1) Have 

been revised solely to reflect the level of 

the current Federal energy conservation 

standard (where ASHRAE is merely 

‘‘catching up’’ to the current national 

standard); (2) have been revised but 

with a reduction in stringency; or (3) 

have had any other revisions made that 

do not change the standard’s stringency, 

in which case, DOE is not triggered to 

act under 42 U.S.C. 6313(a)(6) for that 

particular equipment type. For those 

types of equipment in ASHRAE 

Standard 90.1 for which ASHRAE 

actually increased efficiency levels 

above the current Federal standard, DOE 

subjected that equipment to the 

potential energy savings analysis 

discussed previously and presented the 

results in the April 2014 NODA for 

public comment. 79 FR 20114, 20134– 

36 (April 11, 2014). Lastly, DOE 

presented an initial assessment of the 

test procedure changes included in 

ASHRAE Standard 90.1–2013. Id. at 

20124–25. 

As a result of the preliminary 

determination of scope set forth in the 

April 2014 NODA, DOE found that there 

were equipment types for which 

ASHRAE increased the efficiency levels 

(thereby triggering further analysis) 

including: (1) Three classes of small 

three-phase air-cooled air conditioners 

and heat pumps less than 65,000 Btu/h; 

(2) three classes of small water-source 

heat pumps; (3) six classes of single 

package vertical units; (4) three classes 

of packaged terminal air conditioners; 

and (5) commercial oil-fired storage 

water heaters. 79 FR 20114, 20119–23 

(April 11, 2014). DOE presented its 

methodology, data, and results for the 

preliminary energy savings analysis 

developed for these equipment classes 

in the April 2014 NODA for public 

comment. 79 FR 20114, 20125–38 (April 

11, 2014). 

III. General Discussion of Comments 

Regarding the ASHRAE Process and 

DOE’s Interpretation of EPCA’s 

Requirements With Respect to ASHRAE 

Equipment 

In response to its request for comment 

on the April 2014 NODA, DOE received 

11 comments from manufacturers, trade 

associations, utilities, and energy 

efficiency advocates. Commenters 

included: First Co.; Lennox 

International Inc.; National Comfort 

Products (NCP); Earthjustice; Goodman 

Global, Inc.; California Investor-Owned 

Utilities (CA IOUs); GE Appliances; a 

group including Appliance Standards 

Awareness Project (ASAP), the 

American Council for an EnergyEfficient Economy (ACEEE), the Natural 

Resources Defense Council (NRDC), and 

the Northwest Energy Efficiency 

Alliance (jointly referred to as the 

Advocates); Daikin Applied; Edison 

Electric Institute (EEI); and the Airconditioning, Heating, and Refrigeration 

Institute (AHRI). As discussed 

previously, these comments are 

available in the docket for this 

rulemaking and may be reviewed as 

described in the ADDRESSES section. The 

following section summarizes the issues 

raised in these comments, along with 

DOE’s responses. 

DOE received numerous comments 

regarding whether it should, in general, 

adopt levels contained in ASHRAE 

standard 90.1–2013 as the Federal 

energy conservation standard, rather 

than more-stringent levels. Several 

commenters stated that DOE should 

follow ASHRAE’s lead (e.g., Daikin 

Applied, No. 0022 at p. 1; Goodman 

Global, Inc., No. 0018 at p. 4; Lennox 

International Inc., No. 0015 at p. 1–2). 

AHRI stated that the ASHRAE revisions 

represent consensus standards that were 

subject to rigorous public review and 

were evaluated for cost-effectiveness. 

(AHRI, No. 24 at p. 1) Because the 

current Federal values are lower than 

ASHRAE 90.1–2013 values, EEI argued 

that less-efficient equipment could 

continue to enter the market until the 

effective date of any DOE standards, 

which would be four years after DOE 

completes the rulemaking for levels 

higher than ASHRAE. (EEI, No. 23 at p. 

2) EEI added that adopting ASHRAE 

would reduce the amount of DOE 


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resources needed for updating these 

standards. (Id.) 

On the other hand, the Advocates and 

CA IOUs commented that significant, 

non-trivial energy savings would be 

achievable by adopting higher efficiency 

levels than those in ASHRAE 90.1–2013 

for the equipment classes analyzed in 

the NODA, at least when considered in 

aggregate. (Advocates, No. 21 at p. 1; CA 

IOUs, No. 19 at pp. 2–3) The 

commenters provided justifications for 

adopting higher efficiency levels for 

specific equipment classes; these details 

are discussed in the relevant sections of 

this NOPR. 

In response to the submitted 

comments, DOE notes that it makes 

decisions about whether to adopt levels 

in ASHRAE 90.1–2013 or higher 

efficiency levels based on application of 

the statutory criteria to potential 

standard levels for individual 

equipment types (per its mandate under 

EPCA), rather than upon some general 

assessment of perceived benefits of a 

shorter process by adopting the 

ASHRAE levels or any other reason. 

Specifically, EPCA directs that if 

ASHRAE Standard 90.1 is amended, 

DOE must adopt amended energy 

conservation standards at the new 

efficiency level in ASHRAE Standard 

90.1, unless clear and convincing 

evidence supports a determination that 

adoption of a more-stringent level as a 

national standard would produce 

significant additional energy savings 

and be technologically feasible and 

economically justified. (42 U.S.C. 

6313(a)(6)(A)(ii)) In order to determine 

if more-stringent efficiency levels would 

meet EPCA’s criteria, DOE must review 

the efficiency levels in ASHRAE 

Standard 90.1–2013 and more-stringent 

efficiency levels for their energy savings 

and economic potentials irrespective of 

whether the efficiency levels were part 

of a consensus standards process. The 

specific rationale for DOE’s decisions 

for each equipment type can be found 

in the relevant sections of this 

document. 

AHRI also lodged several complaints 

regarding the analyses described in the 

April 2014 NODA. AHRI stated that 

DOE’s analysis ignored the energy 

savings from changes ASHRAE 

implemented even before Standard 

90.1–2013 was published. For example, 

AHRI argued that ASHRAE’s watersource heat pump level was developed 

in 2011, adopted in 2012, and took 

effect immediately. (AHRI, No. 24 at p. 

2) Thus, the products have been 

providing energy savings for at least 2 

years. (Id.) AHRI further asserted that 

DOE’s analysis ignores the savings that 

occur from implementation of the 

ASHRAE standard in 2015 or 2017, 

rather than developing its own revised 

standard that would take effect in 2020. 

According to AHRI, DOE’s rulemaking 

process will lose 3 to 5 years of energy 

savings, and DOE’s analysis must 

consider the energy savings associated 

with earlier implementation of the 

ASHRAE 90.1–2013. (Id.) Finally, AHRI 

stated that the April 2014 NODA did not 

address technological feasibility and 

economic justification, unlike ASHRAE 

90.1. (Id.) 

In response, DOE only takes into 

account energy savings that result from 

adoption of a Federal standard, not from 

adoption of an industry standard such 

as ASHRAE Standard 90.1. However, 

DOE did take the savings gap into 

account in the April 2014 NODA by 

using an analysis period of 30 years 

beginning with 2015 or 2017 for the 

ASHRAE level, and a shorter analysis 

period beginning in 2020 but with the 

same end date for efficiency levels 

higher than ASHRAE. As part of any 

rulemaking triggered by ASHRAE, DOE 

follows EPCA’s mandate by only 

addressing energy savings in the NODA 

and analyzing technological feasibility 

and economic justification in the NOPR 

where the potential for energy savings 

appears to be significant. DOE further 

notes that it can only take credit for 

savings from mandatory Federal 

standards and, therefore, cannot take 

credit for early adoption of ASHRAE 

Standard 90.1 levels prior to the 

compliance date of the corresponding 

DOE standard when evaluating any 

decision to amend DOE standards. DOE 

commends ASHRAE’s action to amend 

Standard 90.1, as well as any early 

adoption of these levels by 

manufacturers to improve commercial 

equipment efficiency and to reduce 

national energy use. DOE strives to 

consider such early adoption in its 

analysis to the extent that further energy 

savings associated with DOE’s adoption 

of either the ASHRAE 90.1 standard 

level or a more-stringent standard level 

would be negated or reduced. In other 

words, DOE seeks to determine any 

shifts in the baseline prior to adoption 

of amended DOE standards, thereby 

allowing for a more accurate assessment 

of energy savings. See section V.F.3 for 

more information regarding efficiency 

distributions of equipment shipments 

that allow proper consideration of the 

energy savings generated specifically by 

DOE’s potential actions. 

IV. General Discussion of the Changes 

in ASHRAE Standard 90.1–2013 and 

Determination of Scope for Further 

Rulemaking Activity 

As discussed previously, before 

beginning an analysis of the potential 

economic impacts and energy savings 

that would result from adopting the 

efficiency levels specified by ASHRAE 

Standard 90.1–2013 or more-stringent 

efficiency levels, DOE first sought to 

determine whether or not the ASHRAE 

Standard 90.1–2013 efficiency levels 

actually represented an increase in 

efficiency above the current Federal 

standard levels. This section discusses 

each equipment class for which the 

ASHRAE Standard 90.1–2013 efficiency 

level differs from the current Federal 

standard level, along with DOE’s 

preliminary conclusion as to the action 

DOE is taking with respect to that 

equipment. (Once again, DOE notes that 

ASHRAE Standard 90.1–2013 did not 

change any of the design requirements 

for the commercial HVAC and waterheating equipment covered by EPCA, so 

DOE is not conducting further analysis 

in the sections below on that basis.) 

A. Commercial Package AirConditioning and Heating Equipment 

EPCA, as amended, defines 

‘‘commercial package air conditioning 

and heating equipment’’ as air-cooled, 

evaporatively-cooled, water-cooled, or 

water-source (not including ground 

water-source) electrically operated, 

unitary central air conditioners and 

central air conditioning heat pumps for 

commercial use. (42 U.S.C. 6311(8)(A); 

10 CFR 431.92) EPCA also defines 

‘‘small,’’ ‘‘large,’’ and ‘‘very large’’ 

commercial package air conditioning 

and heating equipment based on the 

equipment’s rated cooling capacity. (42 

6311(8)(B)–(D); 10 CFR 431.92) ‘‘Small 

commercial package air conditioning 

and heating equipment’’ means 

equipment rated less than 135,000 Btu 

per hour (cooling capacity). (42 U.S.C. 

6311(8)(B); 10 CFR 431.92) ‘‘Large 

commercial package air conditioning 

and heating equipment’’ means 

equipment rated at or above 135,000 Btu 

per hour and less than 240,000 Btu per 

hour (cooling capacity). (42 U.S.C. 

6311(8)(C); 10 CFR 431.92) ‘‘Very large 

commercial package air conditioning 

and heating equipment’’ means 

equipment rated at or above 240,000 Btu 

per hour and less than 760,000 Btu per 

hour (cooling capacity). (42 U.S.C. 

6311(8)(D); 10 CFR 431.92) 

1. Air-Cooled Equipment 

The current Federal energy 

conservation standards for the three 


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8 DOE notes that pursuant to the EISA 2007 

amendments to EPCA, under 42 U.S.C. 

6313(a)(6)(C), the agency must periodically review 

its already established energy conservation 

standards for ASHRAE equipment. In December 

2012, this provision was further amended by the 

American Energy Manufacturing Technical 

Corrections Act (AEMTCA) to clarify that DOE’s 

periodic review of ASHRAE equipment must occur 

‘‘[e]very six years.’’ (42 U.S.C. 6313(a)(6)(C)(i)) The 

final rule incorporating the EISA 2007 prescribed 

levels into the CFR was published on March 23, 

2009. 74 FR 12058. 

classes of air-cooled commercial 

package air conditioners and heat 

pumps for which ASHRAE Standard 

90.1–2013 amended efficiency levels are 

shown in Table II.1 and can be found in 

DOE’s regulations at 10 CFR 431.97. The 

Federal energy conservation standards 

for air-cooled air conditioners and heat 

pumps are differentiated based on the 

unit’s cooling capacity (i.e., small, large, 

or very large). For small equipment, 

there is an additional disaggregation 

into: (1) Equipment less than 65,000 

Btu/h and (2) equipment greater than or 

equal to 65,000 Btu/h and less than 

135,000 Btu/h. In setting initial 

standards for three-phase equipment 

less than 65,000 Btu/h, Congress used 

the same metric for this commercial 

equipment as for residential singlephase equipment (i.e., seasonal energy 

efficiency ratio (SEER)), which is 

reflected in DOE’s current regulations. 

Unlike the current Federal energy 

conservation standards, ASHRAE 

Standard 90.1 also differentiates the 

equipment that is less than 65,000 Btu/ 

h into split system and single package 

subcategories. Historically, ASHRAE 

has set equivalent efficiency levels for 

this equipment; however, effective 

January 1, 2015, ASHRAE Standard 

90.1–2013 increases the efficiency level 

for single package air conditioners but 

not split system air conditioners. The 

increased efficiency level for single 

package air conditioners surpasses the 

current Federal energy conservation 

standard level for the overall equipment 

class, while the efficiency level for split 

system air conditioners meets and does 

not exceed the Federal energy 

conservation standard for the overall 

equipment class. ASHRAE Standard 

90.1–2013 also increases the efficiency 

levels, effective January 1, 2015, for both 

single package and split system aircooled heat pumps, for SEER and 

heating seasonal performance factor 

(HSPF), to efficiency levels that surpass 

the current Federal energy conservation 

standard levels. ASHRAE Standard 

90.1–2013 increases the HSPF level for 

split systems above that for single 

package heat pumps. 

Because ASHRAE increased the 

standard for only single package air 

conditioners, and increased the HSPF 

level to a more stringent level for split 

system heat pumps than for single 

package heat pumps, in the April 2014 

NODA, DOE proposed to consider 

separate equipment classes for single 

package and split system equipment in 

the overall equipment classes of small 

commercial package air conditioners 

and heat pumps (air-cooled, threephase) less than 65,000 Btu/h, as existed 

prior to codification of EISA 2007, and 

requested comment on this issue. 

In response, AHRI, Goodman Global, 

and Lennox International agreed that 

DOE should re-create separate classes 

for split system and single package 

equipment with input ratings less than 

65,000 Btu/h. (AHRI, No. 24 at p. 2; 

Goodman Global, Inc., No. 18 at p. 2; 

Lennox International Inc., No. 15 at p. 

5) The CA IOUs instead preferred 

having only two equipment classes, one 

for air conditioners, and one for heat 

pumps, with identical levels across 

single package and split system 

equipment. (CA IOUs, No. 19 at p. 4) In 

order to facilitate following the statutory 

requirements of the ASHRAE trigger, in 

this NOPR, DOE continues to propose 

the re-creation of separate equipment 

classes. 

With regard to split system threephase air conditioners, Earthjustice 

stated that standards must be reviewed, 

if not under the ASHRAE trigger, then 

under the six-year look back, as the 

clock will expire next year. 

(Earthjustice, No. 17 at pp. 1–2) 

Specifically, Earthjustice opined that 

ASHRAE has amended the Standard 

90.1 levels for air-cooled, three-phase 

air-conditioners less than 65,000 Btu/h 

by increasing the required SEER levels 

for single package air conditioners and 

all heat pump units. The fact that 

ASHRAE did not also increase the 

Standard 90.1-required SEER level for 

split system air conditioners in this 

equipment class does not insulate split 

system units from DOE’s obligation to 

consider amended standards. The ‘‘more 

stringent’’ standard that EPCA obliges 

DOE to consider for this equipment 

class may be one that, for example, 

applies a SEER 14 level (or a higher 

SEER level) to all air-cooled 3-phase airconditioners less than 65,000 Btu/h (see 

42 U.S.C. 6313(a)(6)(A)(ii)(II)). 

(Earthjustice, No. 17 at p. 1) In addition, 

more than six years have elapsed since 

EISA 2007 amended the standards for 

the split system air conditioners at 

issue, and even if the 6-year clock began 

to run only when DOE incorporated the 

EISA 2007 levels into the Code of 

Federal Regulations, the time limit for 

DOE’s review will expire next year.8

(Earthjustice, No. 17 at pp. 1–2) The CA 

IOUs also requested that DOE update 

efficiency levels for split-system air 

conditioners even though ASHRAE did 

not update them. (CA IOUs, No. 19 at 

p. 4) 

In response, DOE initially notes that 

EPCA’s trigger regarding ASHRAE 

equipment is tied to the equipment that 

ASHRAE acts to amend. (42 U.S.C. 

6313(a)(6)(A)) In this case, DOE was 

triggered for 3-phase air-cooled singlepackage air conditioners less than 

65,000 Btu/h, but not the split-system 

variant, even though both types of units 

were included in a more comprehensive 

DOE equipment class. As noted 

previously, DOE is acting to prevent 

confusion by proposing to re-create 

separate product classes for the two 

types of systems. However, DOE has 

decided to now consider amended 

standards for 3-phase air-cooled splitsystem air conditioners less than 65,000 

Btu/h under its 6-year look back 

authority. (42 U.S.C. 6313(a)(6)(C)(i)) It 

is worth noting that DOE did not 

consider ASHRAE’s single-package air 

conditioner level of 14 SEER as the 

default adoption value for split-system 

air conditioners. Instead, DOE is treating 

those as a separate equipment class and 

has reviewed the adoption of 14 SEER 

for split-system air conditioners as a 

level more stringent than ASHRAE that 

must result in significant additional 

conservation of energy and be 

technologically feasible and 

economically justified. 

In the April 2014 NODA, DOE 

conducted an analysis of the potential 

energy savings due to amended 

standards for single-package air 

conditioners and single-package and 

split-system heat pumps (air-cooled, 

three-phase, less than 65,000 Btu/h). At 

that time, DOE did not conduct an 

analysis of the potential energy savings 

for split-system air conditioners, but it 

added it to the analysis performed for 

this NOPR. 

In response to the April 2014 NODA, 

Goodman Global supported the 

ASHRAE levels for small air-cooled air 

conditioners and heat pumps so that 

single-phase and three-phase products 

would have the same minimum 

efficiencies, which is a reduced burden. 

(Goodman Global, Inc., No. 17 at p. 4) 

Goodman Global added that it does not 

believe higher values than ASHRAE 

Standard 90.1–2013 could be justified 

from a simple payback perspective. (Id.) 

In contrast, the Advocates and the CA 

IOUs supported higher efficiency levels 

for three-phase equipment. The CA 

IOUs argued that the higher annual 

operating hours in nonresidential 

applications would support a higher 


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efficiency standard. (CA IOUs, No. 19 at 

p. 4) The Advocates stated that threephase commercial units use a threephase compressor, which is generally 

more efficient than a single-phase 

compressor, which suggests that a threephase central air conditioner or heat 

pump has the potential to be more 

efficient than a comparable single-phase 

unit does. (Advocates, No. 21 at p. 1) 

Furthermore, the Advocates commented 

that efficiency levels were found on the 

market that were much higher than the 

ASHARE Standard 90.1–2013 level of 

SEER 14 and that energy savings as high 

as 0.2 quads may be possible. 

(Advocates, No. 21 at p. 3) The CA IOUs 

stated that more than one-fifth of the 

models of three-phase air-cooled singlepackage units for sale in California 

could meet a 16 SEER standard, which 

would result in energy savings five 

times greater than the 0.02 quad savings 

from simply adopting the ASHRAE 

level. (CA IOUs, No. 0019 at p. 2) The 

CA IOUs added that most manufacturers 

currently have products that meet 15 

SEER, and given that a compliance date 

for more-stringent levels would be 2020, 

the manufacturers that do not would 

have 6 years to redesign. (Id.) 

Upon reviewing the results of the 

potential energy savings analysis in the 

April 2014 NODA, DOE agrees with the 

Advocates and the CA IOUs that 

additional significant energy savings are 

possible and has conducted additional 

economic analysis on this equipment. 

However, after analysis, DOE has 

tentatively determined that efficiency 

levels higher than those in ASHRAE 

Standard 90.1–2013 are not 

economically justified for any of the 

four equipment classes and is proposing 

in this NOPR to adopt the energy 

efficiency levels contained in ASHRAE 

Standard 90.1–2013 for small air-cooled 

commercial package air conditioning 

and heating equipment less than 65,000 

Btu/h (see section VIII.D.1). For split 

system air conditioners, DOE is not 

updating standards, as the ASHRAE 

levels are equal to the current Federal 

minimum. 

For small commercial three-phase 

equipment less than 65,000 Btu/h, the 

CA IOUs stated that DOE should 

consider including the energy efficiency 

ratio (EER) metric, along with SEER, to 

align more closely with industry 

standards. (CA IOUs, No. 0019 at p. 3– 

4) The commenter noted that original 

equipment manufacturers would use 

both metrics when rating a unit. The CA 

IOUs also commented that the SEER 

metric is based on residential use 

patterns and, by itself, may not be 

appropriate to characterize energy use 

in nonresidential buildings. According 

to the commenter, full-load EER better 

approximates performance during peak 

loading conditions. (Id.) 

In response, DOE does not have 

authority to adopt multiple metrics for 

a single equipment class. Pursuant to 

42U.S.C. 6313(a)(6), the Secretary has 

authority to amend the energy 

conservation standards for specified 

equipment, but under 42 U.S.C. 

6311(18), the statute’s definition of the 

term ‘‘energy conservation standard’’ is 

limited to: (A) A performance standard 

that prescribes a minimum level of 

energy efficiency or a maximum 

quantity of energy use for a product; or 

(B) a design requirement for a product. 

The language of EPCA authorizes DOE 

to establish a single performance 

standard or a single design standard, but 

not multiple performance standards. 

2. Water-Source Equipment 

The current Federal energy 

conservation standards for the three 

classes of commercial water-source heat 

pumps for which ASHRAE Standard 

90.1–2013 amended efficiency levels are 

shown in Table II.1 and can be found in 

DOE’s regulations at 10 CFR 431.97. The 

Federal energy conservation standards 

for water-source equipment are 

differentiated based on the model’s 

cooling capacity. ASHRAE Standard 

90.1–2013 increased the energy 

efficiency levels for all three equipment 

classes to efficiency levels that surpass 

the current Federal energy conservation 

standard levels. Therefore, DOE 

conducted an analysis of the potential 

energy savings due to amended 

standards for this equipment in the 

April 2014 NODA. 

In response to the April 2014 NODA, 

the Advocates requested that DOE 

conduct further analysis to consider 

higher efficiency levels than those in 

ASHRAE Standard 90.1–2013 efficiency 

levels for water-source heat pumps, 

because efficiency levels as high as 21 

EER are available on the market and 

higher efficiency levels could achieve 

additional national energy savings of as 

much as 1 quad. (The Advocates, No. 21 

at p. 1) Upon reviewing the results of 

the potential energy savings analysis in 

the April 2014 NODA, DOE agrees with 

the Advocates that additional energy 

savings are possible and has conducted 

further analysis on this equipment. 

However, after the analysis, DOE has 

tentatively determined that there is not 

clear and convincing evidence that 

efficiency levels higher than those in 

ASHRAE 90.1–2013 are economically 

justified for any of the three watersource heat pump classes and is 

proposing in this NOPR to adopt the 

energy efficiency levels contained in 

ASHRAE Standard 90.1–2013 for watersource heat pumps (see section 

VIII.D.2). 

ASHRAE Standard 90.1–2013 also 

changed the name of this equipment 

class from ‘‘water source’’ to ‘‘water to 

air, water-loop’’ and changed the 

heating-mode descriptor for this 

equipment from COP to COPH. In the 

April 2014 NODA, DOE suggested that 

these were editorial changes only and 

that this new nomenclature refers to the 

same water-source heat pump 

equipment covered by Federal energy 

conservation standards, but with the 

metric nomenclature serving to clarify 

the difference between COP for 

refrigeration and COP for heat pumps. 

DOE requested comment on this issue. 

79 FR 20114, 20120, 20137 (April 11, 

2014). In response, AHRI agreed that the 

nomenclature changes were editorial. 

(AHRI, No. 24 at p. 3) 

In the April 2014 NODA, DOE noted 

that EPCA does not define ‘‘watersource heat pump’’ other than to 

exclude ground-water-source units from 

the definition of ‘‘commercial package 

air conditioning and heating 

equipment’’ at 42 U.S.C. 6311(8)(A). 79 

FR 20114, 20120 (April 11, 2014). 

However, DOE noted that there are 

several related types of water-source 

and ground-water-source heat pumps, as 

shown in Table IV.1. ASHRAE Standard 

90.1–2013 included new nomenclature 

for all such types of heat pumps. DOE 

further noted that the vast majority of 

water-source (water-to-air, water-loop) 

heat pump models are also rated for 

performance in ground-loop or groundwater heat pump applications. It is 

DOE’s understanding that design 

differences of the models used in the 

different applications are minimal, 

including potential use of material with 

better corrosion resistance in the water 

coil (for open-loop systems only) and/or 

added insulation for ground-water or 

ground-loop systems. Efficiency ratings 

are different across these three 

application types primarily because of 

the different test conditions. (Ground 

and ground-water-source systems are 

tested with cooler entering water.) 

Because of the similarity in models 

across applications, DOE believes that 

increased efficiency standards for waterloop applications may affect heat pumps 

for ground-source and ground-water 

applications, although they are 

excluded from coverage. Id. 


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9 2012 ASHRAE Handbook, Heating, Ventilating, 

and Air-Conditioning Systems and Equipment. 

ASHRAE, Chapter 9 (Available at: https://

www.ashrae.org/resources-publications/

description-of-the-2012-ashrae-handbook-hvacsystems-and-equipment). 

10See http://www.gpo.gov/fdsys/pkg/CFR-2013- 

title10-vol3/pdf/CFR-2013-title10-vol3-part431-

subpartF.pdf. 

11See http://www.ecfr.gov/cgi-bin/retrieveECFR?

gp=&SID=1f6aa69cce81d1ccc6e9158c94d81e91&r=

PART&n=pt10.3.431#sp10.3.431.f. 

TABLE IV.1—NOMENCLATURE FOR TYPES OF WATER-LOOP, GROUND-LOOP, AND GROUND-WATER-SOURCE HEAT PUMPS

ASHRAE standard 90.1–2010 ASHRAE standard 90.1–2013 Test procedure 

Water-source (86° entering water) ............................................. Water-to-air, water-loop ............................................ ISO Standard 13256–1. 

Ground-water-source (59° entering water) ................................ Water-to-air, ground-water.

Ground-water source (77° entering water) ................................ Brine-to-air, ground-loop.

Water-source water-to-water (86° entering water) ..................... Water-to-water, water-loop ....................................... ISO Standard 13256–2. 

Water-source water-to-water (59° entering water) ..................... Water-to-water, ground-water.

Ground-water-source brine-to-water (77° entering water) ......... Brine-to-water, ground-loop.

In the April 2014 NODA, DOE 

considered adding a definition for 

‘‘water-source heat pump’’ to the Code 

of Federal Regulations (CFR) that would 

include both single-phase and threephase units of all capacities (up to 

760,000 Btu/h) and would be applicable 

to water-to-air heat pumps. Specifically, 

DOE considered adapting the definition 

from that in the ASHRAE handbook: 9

‘‘A water-source heat pump is a [singlephase or three-phase] reverse-cycle heat 

pump that uses [a circulating water 

loop] as the heat source for heating and 

as the heat sink for cooling. The main 

components are a compressor, 

refrigerant-to-water heat exchanger, 

refrigerant-to-air heat exchanger, 

refrigerant expansion devices, and 

refrigerant reversing valve.’’ DOE 

requested comment on this definition. 

79 FR 20114, 20120 (April 11, 2014). 

Regarding the proposed definition, 

Goodman Global agreed that it is 

beneficial to all stakeholders to define 

as clearly as possible the products being 

regulated. (Goodman Global, Inc., No. 

17 at p. 2) On the other hand, AHRI 

stated that a definition for ‘‘water-source 

heat pump’’ was outside the scope of 

activity of this document, because 

ASHRAE Standard 90.1 does not 

contain any definition of a water-source 

heat pump. (AHRI, No. 24 at p. 3) AHRI 

also argued that the lack of definition 

has not hampered implementation of 

Federal minimum efficiency for such 

equipment and that DOE has not 

established any significant need or 

provided any compelling reasons that 

require the addition of this definition. 

(Id.) DOE agrees with Goodman Global 

and does not agree with AHRI, 

tentatively concluding that the 

nomenclature changes in ASHRAE 

Standard 90.1 that moved away from the 

term ‘‘water-source’’ necessitate 

inclusion of a definition for clarity. 

AHRI and Daikin Applied expressed 

concern with the definition covering 

capacities up to 760,000 Btu/h, noting 

that neither ASHRAE Standard 90.1 nor 

DOE have standards for models above 

135,000 Btu/h. (AHRI, No. 24 at p. 3; 

Daikin Applied, No. 22 at p. 1) Daikin 

Applied further commented that the 

size of the market above 135,000 Btu/h 

is approximately 2–3 percent of the 

total, that the AHRI certification 

program stops at 166,000 Btu/h, and 

that practically speaking, the largest 

models on the market are 250,000 Btu/ 

h. (Id.) Daikin Applied argued that there 

would be test burdens associated with 

accommodating the larger sizes in test 

labs. (Id.) In response, DOE notes that 

regardless of any current size limits on 

water-source heat pump standards, it 

does not change the fact that Congress 

set forth the scope of coverage in the 

statutory definitions for ‘‘commercial 

package air conditioning and heating 

equipment’’ and ‘‘very large commercial 

package air conditioning and heating 

equipment,’’ which is limited to 

equipment with a cooling capacity 

below 760,000 Btu per hour. (42 U.S.C. 

6311(8)(A) and (D)) However, setting in 

place a definition of ‘‘water-source heat 

pump’’ that clearly delineates what that 

equipment entails, as well as the limits 

on DOE’s regulatory authority, would 

not in and of itself generate any 

standards compliance responsibilities or 

test burden. If the market changed and 

larger-size units became the norm, such 

standards might be appropriate, with 

ASHRAE presumably setting levels for 

such equipment. However, providing 

increased clarity through an appropriate 

definition is not directly tied to any 

such future developments. 

Accordingly, DOE proposes to adopt 

the following definition, adapted from 

the ASHRAE Handbook and the 

definition proposed in the April 2014 

NODA, and specifically referencing the 

new nomenclature included in ASHRAE 

90.1–2013: ‘‘Water-source heat pump 

means a single-phase or three-phase 

reverse-cycle heat pump of all capacities 

(up to 760,000 Btu/h) that uses a 

circulating water loop as the heat source 

for heating and as the heat sink for 

cooling. The main components are a 

compressor, refrigerant-to-water heat 

exchanger, refrigerant-to-air heat 

exchanger, refrigerant expansion 

devices, refrigerant reversing valve, and 

indoor fan. Such equipment includes, 

but is not limited to, water-to-air waterloop heat pumps.’’ DOE requests 

additional comment on this proposed 

definition. This is identified as Issue 1 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section X.E of this NOPR. 

Furthermore, DOE is proposing to 

revise the nomenclature for its watersource heat pump equipment classes to 

match the revised nomenclature in 

ASHRAE 90.1–2013: water-to-air, waterloop. Specifically, DOE proposes to 

revise Table 1 to 10 CFR 431.96 and 

Tables 1 and 2 to 10 CFR 431.97 to refer 

to ‘‘water-source (water-to-air, waterloop)’’ heat pumps rather than simply 

‘‘water-source’’ heat pumps. Throughout 

this document, any reference to watersource heat pump equipment classes 

should be considered as referring to 

water-to-air, water-loop heat pumps. 

In preparing this rulemaking, DOE 

noticed that the 2013 CFR10 and the 

current e-CFR11 contained errors in 

Table 1 and Table 2 to 10 CFR 431.96 

and Table 2 to 10 CFR 431.97 for small 

water-source heat pumps (i.e., less than 

135,000 Btu/h), as well as in Table 1 to 

10 CFR 431.97 for small, large, and very 

large water-source heat pumps. DOE has 

determined that these errors were 

incorporated through the previous 

ASHRAE-trigger final rule. 77 FR 28928 

(May 16, 2012). By this rulemaking, 

DOE seeks to clarify the relevant tables 

by removing the inadvertently amended 

language. 

3. Packaged Terminal Air Conditioners 

and Heat Pumps 

EPCA defines a ‘‘packaged terminal 

air conditioner’’ as ‘‘a wall sleeve and a 

separate unencased combination of 

heating and cooling assemblies 

specified by the builder and intended 

for mounting through the wall. It 

includes a prime source of refrigeration, 

separable outdoor louvers, forced 

ventilation, and heating availability by 


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1184 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

builder’s choice of hot water, steam, or 

electricity.’’ (42 U.S.C. 6311(10)(A)) 

EPCA defines a ‘‘packaged terminal heat 

pump’’ as ‘‘a packaged terminal air 

conditioner that utilizes reverse cycle 

refrigeration as its prime heat source 

and should have supplementary heat 

source available to builders with the 

choice of hot water, steam, or electric 

resistant heat.’’ (42 U.S.C. 6311(10)(B)) 

DOE codified these definitions at 10 

CFR 431.92 in a direct final rule 

published in the Federal Register on 

October 21, 2004. 69 FR 61962, 61970. 

The current Federal energy 

conservation standards for the three 

classes of PTACs for which ASHRAE 

Standard 90.1–2013 amended efficiency 

levels are shown in Table II.1 and are 

found in DOE’s regulations at 10 CFR 

431.97. The Federal energy conservation 

standards for PTACs are differentiated 

based on the cooling capacity and 

physical dimensions (standard versus 

nonstandard size). ASHRAE Standard 

90.1–2013 increased the energy 

efficiency levels for all three standardsize PTAC equipment classes to 

efficiency levels that meet those for 

PTHPs and surpass the current Federal 

energy conservation standard levels for 

PTACs. Therefore, DOE conducted an 

analysis of the potential energy savings 

due to amended standards for standardsize PTACs in the April 2014 NODA. 79 

FR 20114, 20120–21 (April 11, 2014). 

Prior to the ASHRAE trigger, in 

February 2013, DOE published a notice 

of public meeting and availability of the 

Framework Document regarding energy 

conservation standards for packaged 

terminal air conditioners and heat 

pumps standards. 78 FR 12252 (Feb. 22, 

2013). This Framework Document was 

published as a first step toward meeting 

the six-year look back requirement 

specified in EISA 2007. (42 U.S.C. 

6313(a)(6)(C)(i)) As part of the six-year 

look back, in September 2014, DOE 

issued a NOPR for PTAC and PTHP 

equipment that included equipment 

classes for which ASHRAE Standard 

90.1–2013 increased efficiency levels 

(i.e., standard-size PTACs), as well as 

those for which it did not. 79 FR 55537 

(Sept. 16, 2014). Consequently, PTACs 

will not be discussed in the remainder 

of this document; comments received on 

the April 2014 NODA related to PTACs 

were discussed in the PTAC NOPR. 

4. Small-Duct, High-Velocity, and 

Through-The-Wall Equipment 

EPCA does not separate three-phase 

small-duct high-velocity (SDHV) or 

through-the-wall (TTW) heat pumps 

from other types of small commercial 

package air-conditioning and heating 

equipment in its definitions. (42 U.S.C. 

6311(8)) Therefore, EPCA’s definition of 

‘‘small commercial package air 

conditioning and heating equipment’’ 

would include three-phase SDHV and 

TTW heat pumps. In contrast, singlephase SDHV and space-constrained 

equipment (including TTW), which are 

not the subject of this document, have 

separate product classes under DOE’s 

residential central air conditioner and 

heat pump standards (see 10 CFR 

430.32(c)). 

ASHRAE Standard 90.1–2013 

appeared to change some of the 

efficiency levels for three-phase SDHV 

and TTW equipment. Specifically, 

ASHRAE Standard 90.1–2010 had 

increased the cooling efficiency 

requirements for TTW heat pumps to 

13.0 SEER in comparison to the 

efficiency levels of 12.0 SEER in 

ASHRAE Standard 90.1–2007. However, 

in March 2011, ASHRAE issued 

Proposed Addendum h for public 

review that would correct the minimum 

SEER for this equipment to 12.0 SEER, 

and this addendum was approved and 

incorporated into ASHRAE Standard 

90.1–2013. Therefore, this change in 

ASHRAE Standard 90.1–2013 was 

correcting an editorial error in ASHRAE 

Standard 90.1–2010. 

For SDHV air conditioners and heat 

pumps, ASHRAE Standard 90.1–2013 

increases the cooling efficiency 

requirement from 10.0 SEER to 11.0 

SEER. It also includes a heating 

efficiency requirement for SDHV heat 

pumps of 6.8 HSPF, which was present 

in ASHRAE 90.1–2007 but not ASHRAE 

90.1–2010 (which DOE also thought to 

be an editorial error). These changes 

were made through Addendum bj to 

ASHRAE 90.1–2010, which noted that 

the previously adopted Addendum j to 

ASHRAE Standard 90.1–2010 had 

deleted the SDHV equipment class 

entirely because all SDHV models sold 

were single-phase residential products, 

but that Addendum bj was reestablishing the equipment class 

because manufacturers had expressed 

an intention to introduce three-phase 

equipment to the market. In addition, 

Addendum bj noted that it contained 

minimum efficiency levels identical to 

those established by DOE for singlephase residential SDHV products. 

The DOE standards for both 

commercial (three-phase) TTW and 

SDHV air conditioners, which are 13.0 

SEER, and for heat pumps, which are 

13.0 SEER and 7.7 HSPF, were 

established for the overall equipment 

category of small commercial package 

air-conditioning and heating equipment 

by EISA 2007, which amended EPCA. 

(42 U.S.C. 6313(a)(7)(D)) Because the 

ASHRAE Standard 90.1–2013 efficiency 

levels for three-phase TTW and SDHV 

equipment are less than the applicable 

Federal standards, DOE has tentatively 

concluded that it is not required to take 

action on this equipment at this time 

(see 42 U.S.C. 6313(a)(6)(A)(i) and 

(B)(iii)(I)). DOE did not receive 

comment on this issue and reaffirms 

this position. 

5. Single-Package Vertical Air 

Conditioners and Single-Package 

Vertical Heat Pumps 

EPCA, as amended, defines ‘‘single 

package vertical air conditioner’’ as aircooled commercial package air 

conditioning and heating equipment 

that: 

(1) Is factory-assembled as a single 

package that: 

(i) Has major components that are 

arranged vertically; 

(ii) is an encased combination of 

cooling and optional heating 

components; and 

(iii) is intended for exterior mounting 

on, adjacent interior to, or through an 

outside wall; 

(2) is powered by a single- or 3-phase 

current; 

(3) may contain one or more separate 

indoor grilles, outdoor louvers, various 

ventilation options, indoor free air 

discharges, ductwork, wall plenum, or 

sleeves; and 

(4) has heating components that may 

include electrical resistance, steam, hot 

water, or gas, but may not include 

reverse cycle refrigeration as a heating 

means. 

(42 U.S.C. 6311(22) ; 10 CFR 431.92) 

EPCA, as amended, defines ‘‘single 

package vertical heat pump’’ as a singlepackage vertical air conditioner that 

(1) uses reverse cycle refrigeration as 

its primary heat source; and 

(2) may include secondary 

supplemental heating by means of 

electrical resistance, steam, hot water, or 

gas. 

(42 U.S.C. 6311(23); 10 CFR 431.92) 

The current Federal energy 

conservation standards for the six 

classes of single-package vertical units 

(SPVUs) for which ASHRAE Standard 

90.1–2013 amended efficiency levels are 

shown in Table II.1 and can be found in 

DOE’s regulations at 10 CFR 431.97. The 

equipment classes for SPVACs and 

SPVHPs, as well as their attendant 

Federal energy conservation standards, 

are differentiated based on cooling 

capacity. ASHRAE Standard 90.1–2013 

increased the energy efficiency levels 

for all six equipment classes to 

efficiency levels that surpass the current 

Federal energy conservation standard 

levels. Therefore, DOE conducted an 

analysis of the potential energy savings 


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Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1185 

12 (2) Test procedures prescribed in accordance 

with this section shall be reasonably designed to 

produce test results which reflect energy efficiency, 

energy use, and estimated operating costs of a type 

of industrial equipment (or class thereof) during a 

representative average use cycle (as determined by 

the Secretary), and shall not be unduly burdensome 

to conduct. (3) If the test procedure is a procedure 

for determining estimated annual operating costs, 

such procedure shall provide that such costs shall 

be calculated from measurements of energy use in 

a representative average-use cycle (as determined 

by the Secretary), and from representative average 

unit costs of the energy needed to operate such 

equipment during such cycle. The Secretary shall 

provide information to manufacturers of covered 

equipment respecting representative average unit 

costs of energy. 

due to amended standards for this 

equipment in the April 2014 NODA. 79 

FR 20114, 20121 (April 11, 2014). 

In response to the April 2014 NODA, 

Lennox urged DOE to adopt the 

ASHRAE Standard 90.1–2013 efficiency 

levels for SPVUs. (Lennox International 

Inc., No. 0015 at p. 2) On the other 

hand, the Advocates encouraged DOE to 

initiate a rulemaking for SPVUs to 

consider higher efficiency levels than 

those in ASHRAE Standard 90.1–2013 

because of potential national energy 

savings up to 0.48 quads. (Advocates, 

No. 21 at p. 3) DOE notes that prior to 

the release of ASHRAE Standard 90.1– 

2013, DOE had already been conducting 

a rulemaking on SPVUs as a result of a 

one-time review requirement added by 

EISA 2007. See 76 FR 25622, 25633 

(May 5, 2011). DOE will continue to 

conduct its SPVU analysis as part of a 

separate rulemaking that will also meet 

the requirements of the ASHRAE trigger, 

and accordingly, DOE has not included 

any further analysis or results regarding 

SPVUs in this NOPR. In the April 11, 

2014 NODA, DOE also discussed its 

consideration of a space-constrained 

SPVU equipment class (79 FR 20114, 

20121–23); DOE’s consideration of that 

issue will also occur in the separate 

SPVU rulemaking. 

B. Commercial Water Heaters 

EPCA defines ‘‘storage water heater’’ 

as a water heater that heats and stores 

water within the appliance at a 

thermostatically controlled temperature 

for delivery on demand. This term does 

not include units with an input rating 

of 4,000 Btu/h or more per gallon of 

stored water. (42 U.S.C. 6311(12)(A)) 

DOE further clarified this definition in 

its regulations by adding that it is 

industrial equipment. 10 CFR 431.102. 

EPCA defines ‘‘instantaneous water 

heater’’ as a water heater that has an 

input rating of at least 4,000 Btu/h per 

gallon of stored water. (42 U.S.C. 

6311(12)(B)) DOE further clarified this 

definition in its regulations by adding 

that it is industrial equipment, 

including products meeting this 

description that are designed to heat 

water to temperatures of 180°F or 

higher. 10 CFR 431.102. 

The current Federal energy 

conservation standards for the five 

classes of storage and instantaneous 

water heaters for which ASHRAE 

Standard 90.1–2013 amended efficiency 

levels are shown in Table II.1 and set 

forth in DOE’s regulations at 10 CFR 

431.110. The equipment classes for 

commercial storage and instantaneous 

water heaters, and attendant Federal 

energy conservation standards, are 

differentiated based on fuel type and 

size category. ASHRAE Standard 90.1– 

2013 appeared to change the standby 

loss levels for four equipment classes 

(gas-fired storage water heaters, oil-fired 

storage water heaters, gas-fired 

instantaneous water heaters, and oilfired instantaneous water heaters) to 

efficiency levels that surpass the current 

Federal energy conservation standard 

levels. However, as discussed in the 

April 11, 2014 NODA, upon review of 

the changes, DOE believes that all 

changes to standby loss levels for these 

equipment classes were editorial errors 

because they are identical to SI 

(International System of Units; metric 

system) formulas rather than I–P (InchPound; English system) formulas. 79 FR 

20114, 20123. Therefore, DOE did not 

conduct an analysis of the potential 

energy savings for this equipment. DOE 

received no comment on this issue. 

As discussed in the April 11, 2014 

NODA, ASHRAE Standard 90.1–2013 

also changed the standby loss level for 

electric storage water heaters, in this 

case in a purposeful manner to align 

with the current Federal energy 

conservation standard level. Id. Because 

these levels meet and do not exceed the 

current Federal standards, DOE did not 

conduct an analysis of the potential 

energy savings for this equipment class. 

ASHRAE Standard 90.1–2013 also 

increased the thermal efficiency levels 

for oil-fired storage water heaters to 

efficiency levels that surpass the current 

Federal energy conservation standards. 

Therefore, DOE conducted an analysis 

of the potential energy savings due to 

amended thermal efficiency standards 

for oil-fired storage water heaters in the 

April 2014 NODA. Id. 

DOE did not receive any comments 

from stakeholders specific to the 

efficiency level DOE should adopt for 

oil-fired storage water heaters. Based on 

the results of the April 2014 NODA, 

DOE has determined that there are 

minimal energy savings available from 

this equipment and has not conducted 

further analyses on these products. 

Therefore, DOE is proposing in this 

NOPR to adopt the energy efficiency 

levels contained in ASHRAE Standard 

90.1–2013 for commercial oil-fired 

storage water heaters (see section 

VIII.D.3). 

In response to the April 2014 NODA, 

DOE received comment from the 

Advocates that the standards for all 

commercial water heaters, not just oilfired storage water heaters, are due for 

a six-year look back. (Advocates, No. 21 

at p. 3) Although DOE acknowledges its 

statutory obligation to review the 

standards for commercial water heaters, 

in order to best allocate available 

resources, DOE is limiting the scope of 

this current rulemaking to ASHRAEtriggered equipment. However, in 

October 2014, the agency issued a 

request for information (RFI) regarding 

commercial water heaters to initiate a 

separate six-year look back rulemaking 

for all categories of commercial water 

heating equipment. 79 FR 62899 (Oct. 

21, 2014). 

C. Test Procedures 

EPCA requires the Secretary to amend 

the DOE test procedures for covered 

ASHRAE equipment to the latest 

version of those generally accepted 

industry testing procedures or the rating 

procedures developed or recognized by 

AHRI or by ASHRAE, as referenced by 

ASHRAE/IES Standard 90.1, unless the 

Secretary determines by rule published 

in the Federal Register and supported 

by clear and convincing evidence that 

the latest version of the industry test 

procedure does not meet the 

requirements for test procedures 

described in paragraphs (2) and (3) of 42 

U.S.C. 6314(a).12 (42 U.S.C. 

6314(a)(4)(B)) ASHRAE Standard 90.1– 

2013 updated several of its test 

procedures for ASHRAE equipment. 

Specifically, ASHRAE Standard 90.1– 

2013 updated to the most recent 

editions of test procedures for small 

commercial package air conditioners 

and heating equipment (AHRI 210/240– 

2008 with Addendum 1 and 2, 

Performance Rating of Unitary AirConditioning & Air-Source Heat Pump 

Equipment), large and very large 

commercial package air conditioners 

and heating equipment (AHRI 340/360– 

2007 with Addenda 1 and 2, 

Performance Rating of Commercial and 

Industrial Unitary Air-Conditioning and 

Heat Pump Equipment), variable 

refrigerant flow equipment (AHRI 1230– 

2010 with Addendum 1, Performance 

Rating of Variable Refrigerant Flow 

(VRF) Multi-Split Air-Conditioning and 

Heat Pump Equipment), commercial 

warm-air furnaces (ANSI (American 

National Standards Institute) Z21.47– 

2012, Standard for Gas-Fired Central 


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13This final rule for commercial heating, airconditioning, and water-heating equipment was 

published in the Federal Register on May 16, 2012. 

77 FR 28928. 

Furnaces), and commercial water 

heaters (ANSI Z21.10.3–2011, Gas Water 

Heaters, Volume III, Storage Water 

Heaters with Input Ratings Above 

75,000 Btu Per Hour, Circulating and 

Instantaneous). 

In the April 2014 NODA, DOE 

preliminarily reviewed each of the test 

procedures that were updated in 

ASHRAE Standard 90.1–2013 and 

discussed the changes to those industry 

test procedures. 79 FR 20114, 20123–25 

(April 11, 2014). DOE found that for 

AHRI 210/240, AHRI 340/360, AHRI 

1230, and ANSI Z1.10.3, DOE had 

already incorporated by reference the 

most recent version 13 and did not need 

to take action. DOE received no 

comment on this issue. For ANSI 

Z21.47, DOE determined that the 

changes to the 2012 version do not 

impact those provisions of that industry 

test procedure that are used under the 

DOE test procedure for gas-fired warm 

air furnaces, and, therefore, such 

changes do not affect the energy 

efficiency ratings for gas-fired furnaces. 

Consequently, DOE determined that no 

further action was required at the time. 

Id. at 20124–25. In response to the April 

2014 NODA, AHRI, Goodman Global, 

and Lennox International agreed with 

DOE’s substantive assessment of ANSI 

Z21.47–2012. (AHRI, No. 24 at p. 5; 

Goodman Global, Inc., No. 18 at p. 2; 

Lennox International, Inc., No. 15 at p. 

6) However, in keeping with EPCA’s 

mandate to incorporate the latest 

version of the applicable industry test 

procedure pursuant to 42 U.S.C. 

6314(a)(4)(B), DOE is proposing to 

incorporate by reference ANSI Z21.47– 

2012. Once again, DOE anticipates no 

substantive change or increase in test 

burden to be associated with this test 

procedure amendment for warm air 

furnaces. 

DOE is also required to review the test 

procedures for covered ASHRAE 

equipment at least once every seven 

years. (42 U.S.C. 6314(a)(1)(A)) In 

addition to the updates to the referenced 

standards discussed previously, DOE is 

proposing to update the citations and 

incorporations by reference in DOE’s 

regulations for commercial warm-air 

furnaces to the most recent version of 

ASHRAE 103, Method of Testing for 

Annual Fuel Utilization Efficiency of 

Residential Central Furnaces and Boiler 

(i.e., ASHRAE 103–2007). The 

applicable sections of this standard 

include measurement of condensate and 

calculation of additional heat gain and 

heat losses for condensing furnaces. 

DOE notes that the most recent version 

does not contain any updates to the 

sections currently referenced by the 

DOE test procedure, so no additional 

burden would be expected to result 

from this test procedure update. 

DOE is aware that some commercial 

furnaces are designed for make-up air 

heating (i.e., heating 100 percent 

outdoor air). DOE defines ‘‘commercial 

warm air furnace’’ at 10 CFR 431.72 as 

self-contained oil-fired or gas-fired 

furnaces designed to supply heated air 

through ducts to spaces that require it, 

with a capacity (rated maximum input) 

at or above 225,000 Btu/h. Further, 

DOE’s definitions specify that this 

equipment includes combination warm 

air furnace/electric air conditioning 

units but does not include unit heaters 

and duct furnaces. Given the 

characteristics of this category of 

commercial furnaces, DOE tentatively 

concludes that gas-fired and oil-fired 

commercial furnaces that are designed 

for make-up air heating and that have 

input ratings at or above 225,000 Btu/h 

meet the definition of ‘‘commercial 

warm air furnace’’ because they are selfcontained units that supply heated air 

through ducts. Consequently, DOE is 

clarifying that commercial warm air 

furnaces that are designed for make-up 

air heating are subject to DOE’s 

regulatory requirements, including 

being tested according to the test 

procedure specified in 10 CFR 431.76. 

DOE is seeking comments on any 

relevant issues that would affect the test 

procedure for commercial warm air 

furnaces. Interested parties are welcome 

to comment on any aspect of the DOE 

commercial warm air furnaces test 

procedure as part of this comprehensive 

7-year-review. This is identified as issue 

2 in section X.E, ‘‘Issues on Which DOE 

Seeks Comment.’’ 

V. Methodology for Small Commercial 

Air-Cooled Air Conditioners and Heat 

Pumps Less Than 65,000 Btu/h 

This section addresses the analyses 

DOE has performed for this rulemaking 

with respect to small commercial aircooled air conditioners and heat pumps 

less than 65,000 Btu/h. A separate 

subsection addresses each analysis. In 

overview, DOE used a spreadsheet to 

calculate the life-cycle cost (LCC) and 

payback periods (PBPs) of potential 

energy conservation standards. DOE 

used another spreadsheet to provide 

shipments projections and then 

calculate national energy savings and 

net present value impacts of potential 

amended energy conservation 

standards. 

A. Market Assessment 

To begin its review of the ASHRAE 

Standard 90.1–2013 efficiency levels, 

DOE developed information that 

provides an overall picture of the 

market for the equipment concerned, 

including the purpose of the equipment, 

the industry structure, and market 

characteristics. This activity included 

both quantitative and qualitative 

assessments based primarily on 

publicly-available information. The 

subjects addressed in the market 

assessment for this rulemaking include 

equipment classes, manufacturers, 

quantities, and types of equipment sold 

and offered for sale. The key findings of 

DOE’s market assessment are 

summarized in the following sections. 

For additional detail, see chapter 2 of 

the NOPR technical support document 

(TSD). 

1. Equipment Classes 

As discussed previously, the Federal 

energy conservation standards for aircooled air conditioners and heat pumps 

are differentiated based on the cooling 

capacity (i.e., small, large, or very large). 

For small equipment, there is an 

additional disaggregation into: (1) 

Equipment less than 65,000 Btu/h and 

(2) equipment greater than or equal to 

65,000 Btu/h and less than 135,000 Btu/ 

h. ASHRAE Standard 90.1–2013 also 

differentiates the equipment that is less 

than 65,000 Btu/h into split system and 

single package subcategories. In the 

past, DOE has followed the same 

disaggregation. However, when EISA 

2007 increased the efficiency levels to 

identical levels across single package 

and split system equipment, effective in 

2008, DOE combined the equipment 

classes in the CFR, resulting in only two 

equipment classes, one for air 

conditioners and one for heat pumps. 74 

FR 12058, 12074 (March 23, 2009). 

Because ASHRAE has increased the 

standard for only single package air 

conditioners, and has increased the 

HSPF level to a more stringent level for 

split system heat pumps than for single 

package heat pumps, and DOE is 

obligated to adopt, at a minimum, the 

increased level in ASHRAE 90.1–2013 

for that equipment class, DOE proposes 

to re-create separate equipment classes 

for single package and split system 

equipment in the overall equipment 

classes of small commercial package air 

conditioners and heat pumps (threephase air-cooled) less than 65,000 Btu/ 

h, as shown in Table V.1. 


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Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1187 

14AHRI Directory of Certified Product 

Performance (2013) (Available at: 

www.ahridirectory.org) (Last accessed November 

11, 2013). 

15Air-Conditioning, Heating, and Refrigeration 

Institute Web site, About Us (2013) (Available at: 

www.ari.org/site/318/About-Us) (Last accessed 

December 18, 2014). 

16Heating, Air-conditioning & Refrigeration 

Distributors International Web site, About HARDI 

(2014) (Available at: www.hardinet.org/about-hardi0) (Last accessed February 10, 2014). 

17Air Conditioning Contractors of America Web 

site, About ACCA (2014) (Available at: 

www.acca.org/acca) (Last accessed February 10, 

2014). 

TABLE V.1—PROPOSED EQUIPMENT CLASSES FOR SMALL COMMERCIAL PACKAGED AIR-CONDITIONING AND HEATING

EQUIPMENT <65,000 Btu/h 

Product 

Cooling 

capacity 

Btu/h) 

Sub-category 

Small Commercial Packaged Air Conditioning and Heating Equipment (Air-Cooled, 3-Phase, Split System) ...... <65,000 AC 

HP 

Small Commercial Packaged Air Conditioning and Heating Equipment (Air-Cooled, 3-Phase, Single Package) <65,000 AC 

HP 

2. Review of Current Market 

In order to obtain the information 

needed for the market assessment for 

this rulemaking, DOE consulted a 

variety of sources, including 

manufacturer literature, manufacturer 

Web sites, and the AHRI certified 

directory.14 The information DOE 

gathered serves as resource material 

throughout the rulemaking. The sections 

below provide an overview of the 

market assessment, and chapter 2 of the 

NOPR TSD provides additional detail 

on the market assessment, including 

citations to relevant sources. 

a. Trade Association Information 

DOE researched various trade groups 

representing manufacturers, 

distributors, and installers of the various 

types of equipment being analyzed in 

this rulemaking. AHRI is one of the 

largest trade associations for 

manufacturers of space-heating, cooling, 

and water-heating equipment, 

representing more than 90 percent of the 

residential and commercial airconditioning, space-heating, waterheating, and commercial refrigeration 

equipment manufactured in the United 

States.15 AHRI also develops and 

publishes test procedure standards for 

measuring and certifying the 

performance of residential and 

commercial HVAC equipment and 

coordinates with the International 

Organization for Standardization (ISO) 

to help harmonize U.S. standards with 

international standards, if feasible. 

AHRI also maintains the AHRI Directory 

of Certified Product Performance, which 

is a database that lists all the products 

and equipment that have been certified 

by AHRI, thereby providing equipment 

ratings for all manufacturers who elect 

to participate in the program. DOE 

utilized this database in developing 

base-case efficiency distributions. 

The Heating, Air-conditioning and 

Refrigeration Distributors International 

(HARDI) is a trade association that 

represents over 450 wholesale heating, 

ventilating, air-conditioning, and 

refrigeration (HVACR) companies, plus 

over 300 manufacturing associates and 

nearly 140 manufacturing 

representatives. HARDI estimates that 

80 percent of the revenue of HVACR 

systems goes through its members.16

DOE did not utilize HARDI data for this 

rule. 

The Air Conditioning Contractors of 

America (ACCA) is another trade 

association whose members include 

over 4,000 contractors and 60,000 

professionals in the indoor environment 

and energy service community. 

According to their Web site, ACCA 

provides contractors with technical, 

legal, and market resources, helping to 

promote good practices and to keep 

buildings safe, clean, and affordable.17

DOE did not use ACCA data for this 

rule. 

b. Manufacturer Information 

DOE reviewed data for air-cooled 

commercial air conditioners and heat 

pumps currently on the market by 

examining the AHRI Directory of 

Certified Product Performance. DOE 

identified 23 parent companies 

(comprising 61 manufacturers) of small 

three-phase air-cooled air conditioners 

and heat pumps, which are listed in 

chapter 2 of the NOPR TSD. Of these 

manufacturers, five were identified as 

small businesses based upon number of 

employees and the employee thresholds 

set by the Small Business 

Administration. More details on this 

analysis can be found below in section 

IX.B. 

c. Market Data 

DOE reviewed the AHRI database to 

characterize the efficiency and 

performance of small commercial aircooled air conditioners and heat pumps 

less than 65,000 Btu/h models currently 

on the market. The full results of this 

market characterization are found in 

chapter 2 of the NOPR TSD. For splitsystem air conditioners, the average 

SEER value was 13.9, and 120 models 

(0.1 percent of the total models) have 

SEER ratings below the ASHRAE 

Standard 90.1–2013 level of 13.0 SEER. 

For single-package air conditioners, the 

average SEER value was 14.3, and 1,450 

models (45 percent of the total models) 

have SEER ratings below the ASHRAE 

Standard 90.1–2013 level of 14.0 SEER. 

For single-package heat pumps, the 

average SEER value is 14.0. Of the 

models identified by DOE, 653 models 

(54 percent of the total models) have 

SEER ratings below the ASHRAE 

Standard 90.1–2013 level of 14.0 SEER. 

The average HSPF value for this 

equipment class is 7.9. Of the models 

identified by DOE, 632 models (52 

percent of the total models) have HSPF 

ratings below the ASHRAE Standard 

90.1–2013 levels of 8.0. For split-system 

heat pumps, the average SEER value for 

this equipment class is 13.7. Of the 

models identified by DOE, 30,009 

models (64 percent of the total models) 

have SEER ratings below the ASHRAE 

Standard 90.1–2013 level of 14.0. The 

average HSPF for this equipment class 

is 7.9. Of the models identified by DOE, 

36,902 models (79 percent of the total 

models) have HSPF ratings below the 

ASHRAE Standard 90.1–2013 level of 

8.2. For more information on market 

performance data, see chapter 2 of the 

NOPR TSD. 

B. Engineering Analysis 

The engineering analysis establishes 

the relationship between an increase in 

energy efficiency and the increase in 

cost (manufacturer selling price (MSP)) 

of a piece of equipment DOE is 

evaluating for potential amended energy 

conservation standards. This 

relationship serves as the basis for costbenefit calculations for individual 


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1188 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

consumers, manufacturers, and the 

Nation. The engineering analysis 

identifies representative baseline 

equipment, which is the starting point 

for analyzing possible energy efficiency 

improvements. For covered ASHRAE 

equipment, DOE sets the baseline for 

analysis at the ASHRAE Standard 90.1 

efficiency level, because by statute, DOE 

cannot adopt any level below the 

revised ASHRAE level. The engineering 

analysis then identifies higher efficiency 

levels and the incremental increase in 

product cost associated with achieving 

the higher efficiency levels. After 

identifying the baseline models and cost 

of achieving increased efficiency, DOE 

estimates the additional costs to the 

commercial consumer through an 

analysis of contractor costs and markups 

and uses that information in the 

downstream analyses to examine the 

costs and benefits associated with 

increased equipment efficiency. 

DOE typically structures its 

engineering analysis around one of three 

methodologies: (1) The design-option 

approach, which calculates the 

incremental costs of adding specific 

design options to a baseline model; (2) 

the efficiency-level approach, which 

calculates the relative costs of achieving 

increases in energy efficiency levels 

without regard to the particular design 

options used to achieve such increases; 

and/or (3) the reverse-engineering or 

cost-assessment approach, which 

involves a ‘‘bottom-up’’ manufacturing 

cost assessment based on a detailed bill 

of materials derived from teardowns of 

the equipment being analyzed. A 

supplementary method called a catalog 

teardown uses published manufacturer 

catalogs and supplementary component 

data to estimate the major physical 

differences between a piece of 

equipment that has been physically 

disassembled and another piece of 

similar equipment for which catalog 

data are available to determine the cost 

of the latter equipment. Deciding which 

methodology to use for the engineering 

analysis depends on the equipment, the 

design options under study, and any 

historical data upon which DOE may 

draw. 

1. Approach 

For this analysis, DOE used a 

combination of the efficiency-level and 

the cost-assessment approach. DOE used 

the efficiency-level approach to identify 

incremental improvements in efficiency 

for each equipment class and the costassessment approach to develop a cost 

for each efficiency level. The efficiency 

levels that DOE considered in the 

engineering analysis were representative 

of three-phase central air conditioners 

and heat pumps currently produced by 

manufacturers at the time the 

engineering analysis was developed. 

DOE relied on data reported in the AHRI 

Directory of Certified Product 

Performance to select representative 

efficiency levels. 

DOE generated a bill of materials 

(BOM) for each representative product 

that it disassembled. DOE did this for 

multiple manufacturers’ products that 

span a range of efficiency levels for the 

equipment classes that are analyzed in 

this rulemaking. The BOMs describe the 

manufacture of the equipment in detail, 

listing all parts and including all 

manufacturing steps required to make 

each part and to assemble the unit. DOE 

also conducted catalog teardowns to 

supplement the information obtained 

directly from physical teardowns. 

Subsequently, DOE developed a cost 

model that calculates manufacturer 

production cost (MPC) for each unit, 

based on the detailed BOM data. 

Chapter 3 of the NOPR TSD describes 

DOE’s cost model in greater detail. The 

calculated costs are plotted as a function 

of the equipment efficiency levels 

(based on rated efficiency) to create 

cost-efficiency curves. DOE notes that 

the cost at some efficiency levels was 

interpolated or extrapolated based on 

the available physical and catalog 

teardown data. 

DOE developed cost-efficiency curves 

for a representative capacity of three 

tons, which it decided well represents 

the range of capacities on the market for 

commercial three-phase products. 

Because other capacity levels had 

similar designs and efficiency levels, 

cost-efficiency curves were not 

developed for any other capacities. 

Instead, DOE was able to utilize the 

cost-efficiency curve for the 

representative capacity and apply it to 

all three-phase products. 

DOE based the cost-efficiency 

relationship for three-phase central air 

conditioners and heat pumps on reverse 

engineering conducted for the June 2011 

direct final rule (DFR) for single-phase 

central air conditioners and heat pumps. 

76 FR 37408. DOE researched 

manufacturer literature and noticed that 

most model numbers between singlephase products and three-phase 

equipment are interchangeable, with 

only a single-digit difference in the 

model number for the supply voltage. 

Although three-phase equipment 

contains three-phase compressors 

instead of single-phase compressors, 

DOE did not notice any inconsistency in 

energy efficiency ratings between singlephase products and three-phase 

equipment. To supplement the 2011 

DFR data (29 physical teardowns and 12 

catalog teardowns), DOE completed one 

physical teardown and seven catalog 

teardowns of three-phase equipment. 

This approach allowed DOE to provide 

an estimate of equipment prices at 

different efficiencies and spanned a 

range of technologies currently on the 

market that are used to achieve the 

increased efficiency levels. 

2. Baseline Equipment 

DOE selected baseline efficiency 

levels as reference points for each 

equipment class, against which it 

measured changes resulting from 

potential amended energy conservation 

standards. DOE defined the baseline 

efficiency levels as reference points to 

compare the technology, energy savings, 

and cost of equipment with higher 

energy efficiency levels. Typically, units 

at the baseline efficiency level just meet 

Federal energy conservation standards 

and provide basic consumer utility. 

However, EPCA requires that DOE must 

adopt either the ASHRAE Standard 

90.1–2013 levels or more-stringent 

levels. Therefore, because the ASHRAE 

Standard 90.1–2013 levels were the 

lowest levels that DOE could adopt, 

DOE used those levels as the reference 

points against which more-stringent 

levels were evaluated. 

Split-system 

AC 

Single-package AC Split-system 

HP 

Single-package HP 

SEER 

Baseline—Federal Standard ............................................................................ 13.0 13.0 13.0 13.0 

Baseline—ASHRAE Standard ......................................................................... 13.0 14.0 14.0 14.0 

HSPF 

Baseline—Federal Standard ............................................................................ 7.7 7.7 


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18See: http://www.ahridirectory.org/

ahridirectory/pages/home.aspx. 

Split-system 

AC 

Single-package AC Split-system 

HP 

Single-package HP 

Baseline—ASHRAE Standard ......................................................................... 8.2 8.0 

Table V.2 shows the current baseline 

and ASHRAE efficiency levels for each 

equipment class of small commercial 

air-cooled air conditioners and heat 

pumps <65,000 Btu/h. 

TABLE V.2—BASELINE EFFICIENCY LEVELS FOR SMALL COMMERCIAL AIR-COOLED AIR CONDITIONERS (AC) AND HEAT

PUMPS (HP) <65,000 Btu/h 

Split-system 

AC 

Single-package AC Split-system 

HP 

Single-package HP 

SEER 

Baseline—Federal Standard ............................................................................ 13.0 13.0 13.0 13.0 

Baseline—ASHRAE Standard ......................................................................... 13.0 14.0 14.0 14.0 

HSPF 

Baseline—Federal Standard ............................................................................ 7.7 7.7 

Baseline—ASHRAE Standard ......................................................................... 8.2 8.0 

3. Identification of Increased Efficiency 

Levels for Analysis 

DOE analyzed several efficiency 

levels and obtained incremental cost 

data for the four equipment classes 

under consideration. Table V.3 presents 

the efficiency levels examined for each 

equipment class. As part of the 

engineering analyses, DOE considered 

up to six efficiency levels beyond the 

baseline for each equipment class. DOE 

derived the maximum technologically 

feasible (‘‘max-tech’’) level from the 

market maximum in the AHRI Certified 

Directory,18 as of November 2013. The 

highest available efficiency level for 

split-system heat pumps was 16.2, 

compared to 18.05 for single-package 

heat pumps. DOE has tentatively 

determined that split-system heat 

pumps are capable of reaching the same 

efficiency level as single-package units, 

because the same technologies to 

increase efficiency can be employed 

across both equipment classes. As a 

result, the analyzed ‘‘max-tech’’ level for 

single-package and split-system heat 

pumps was 18.05. In the April 2014 

commercial heating, air-conditioning, 

and water-heating equipment NODA, 

DOE determined the ‘‘max-tech’’ level 

for single-package air conditioners to be 

19.15. 79 FR 20114, 20126 (April 11, 

2014). DOE also tentatively determined 

that split-system air conditioners are 

capable of reaching the same efficiency 

levels as single-package units. For the 

engineering analysis, DOE rounded the 

‘‘max-tech’’ levels to integer values of 18 

and 19 for split-system and singlepackage heat pumps, and split-system 

and single-package air conditioners, 

respectively. The impact of this 

rounding, which results in efficiency 

levels that are whole-number values of 

SEER, is minimal. 

The efficiency levels for each 

considered equipment class are 

presented in Table V.3. For additional 

details on the efficiency levels selected 

for analysis, see chapter 3 of the NOPR 

TSD. 

TABLE V.3—EFFICIENCY LEVELS FOR SMALL COMMERCIAL AIR-COOLED AIR CONDITIONERS AND HEAT PUMPS <65,000 

Btu/h 

Efficiency level 

Split-system 

AC 

Single-package AC Split-system HP Single-package HP 

SEER SEER SEER HSPF SEER HSPF 

Federal Baseline ...................................... 13 13 13 7.7 13 7.7 

0—ASHRAE Baseline* ............................ 14 14 14 8.2 14 8.0 

1 ............................................................... 15 15 15 8.5 15 8.4 

2 ............................................................... 16 16 16 8.7 16 8.8 

3 ............................................................... 17 17 17 9.0 17 8.9 

4** ............................................................ 18 18 18 9.2 18 9.1 

5*** ........................................................... 19 19 

* For consistency across equipment classes, DOE refers to 14 SEER as EL 0, which is only the ASHRAE Baseline for three of the equipment 

classes, excluding split-system AC. 

** Efficiency Level 4 is ‘‘Max-Tech’’ for HP equipment classes. 

*** Efficiency Level 5 is ‘‘Max-Tech’’ for AC equipment classes. 


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4. Engineering Analysis Results 

The results of the engineering analysis 

are cost-efficiency curves based on 

results from the cost models for 

analyzed units. DOE’s calculated MPCs 

for small commercial air conditioners 

and heat pumps less than 65,000 Btu/h 

are shown in Table V.4 through Table 

V.7, and further details on the 

calculation of these curves can be found 

in chapter 3 of the NOPR TSD. DOE 

used the cost-efficiency curves from the 

engineering analysis as an input for the 

life-cycle cost and payback period 

analyses. 

TABLE V.4—MANUFACTURER PRODUCTION COSTS FOR THREE-TON SPLITSYSTEM COMMERCIAL AIR-COOLED

AIR CONDITIONERS

SEER MPC [$] 

13 .......................................... 855 

14 .......................................... 937 

15 .......................................... 1,023 

16 .......................................... 1,115 

17 .......................................... 1,212 

18 .......................................... 1,316 

19 .......................................... 1,427 

TABLE V.5—MANUFACTURER PRODUCTION COSTS FOR THREE-TON SINGLE-PACKAGE COMMERCIAL AIRCOOLED AIR CONDITIONERS

SEER MPC [$] 

13 .......................................... 1,003 

14 .......................................... 1,122 

15 .......................................... 1,241 

16 .......................................... 1,361 

17 .......................................... 1,480 

18 .......................................... 1,599 

19 .......................................... 1,719 

TABLE V.6—MANUFACTURER PRODUCTION COSTS FOR THREE-TON SPLITSYSTEM COMMERCIAL AIR-COOLED

HEAT PUMPS

SEER HSPF MPC [$] 

13 ...................... 7.7 1,068 

14 ...................... 8.2 1,154 

15 ...................... 8.5 1,244 

16 ...................... 8.7 1,377 

17 ...................... 9.0 1,486 

18 ...................... 9.2 1,601 

TABLE V.7—MANUFACTURER PRODUCTION COSTS FOR THREE-TON SINGLE-PACKAGE COMMERCIAL AIRCOOLED HEAT PUMPS

SEER HSPF MPC [$] 

13 ...................... 7.7 1,239 

TABLE V.7—MANUFACTURER PRODUCTION COSTS FOR THREE-TON SINGLE-PACKAGE COMMERCIAL AIRCOOLED HEAT PUMPS—Continued 

SEER HSPF MPC [$] 

14 ...................... 8.0 1,372 

15 ...................... 8.4 1,504 

16 ...................... 8.8 1,637 

17 ...................... 8.9 1,769 

18 ...................... 9.1 1,902 

a. Manufacturer Markups 

DOE applies a non-production cost 

multiplier (the manufacturer markup) to 

the full MPC to account for corporate 

non-production costs and profit. The 

resulting manufacturer selling price 

(MSP) is the price at which the 

manufacturer can recover all production 

and non-production costs and earn a 

profit. To meet new or amended energy 

conservation standards, manufacturers 

often introduce design changes to their 

equipment lines that result in increased 

manufacturer production costs. 

Depending on the competitive 

environment for these particular types 

of equipment, some or all of the 

increased production costs may be 

passed from manufacturers to retailers 

and eventually to commercial 

consumers in the form of higher 

purchase prices. As production costs 

increase, manufacturers typically incur 

additional overhead. The MSP should 

be high enough to recover the full cost 

of the equipment (i.e., full production 

and non-production costs) and yield a 

profit. The manufacturer markup has an 

important bearing on profitability. A 

high markup under a standards scenario 

suggests manufacturers can pass along 

the increased variable costs and some of 

the capital and product conversion costs 

(the one-time expenditures) to the 

consumer. A low markup suggests that 

manufacturers will not be able to 

recover as much of the necessary 

investment in plants and equipment. 

For small commercial air-cooled airconditioners and heat pumps, DOE used 

a manufacturer markup of 1.3, as 

developed for the 2011 direct final rule 

for single-phase central air conditioners 

and heat pumps. 76 FR 37408 (June 27, 

2011). This markup was calculated 

using U.S. Security and Exchange 

Commission (SEC) 10–K reports for 

publicly-owned heating and cooling 

companies, as well as feedback from 

manufacturer interviews. See chapter 3 

of the NOPR TSD for more details about 

the methodology DOE used to determine 

the manufacturing markup. 

b. Shipping Costs 

Manufacturers of commercial HVAC 

products typically pay for freight 

(shipping) to the first step in the 

distribution chain. Freight is not a 

manufacturing cost, but because it is a 

substantial cost incurred by the 

manufacturer, DOE accounts for 

shipping costs separately from other 

non-production costs that comprise the 

manufacturer markup. DOE calculated 

the MSP for small commercial aircooled air-conditioners and heat pumps 

by multiplying the MPC at each 

efficiency level (determined from the 

cost model) by the manufacturer 

markup and adding shipping costs for 

equipment at the given efficiency level. 

More specifically, DOE calculated 

shipping costs at each efficiency level 

based on a typical 53-foot straight-frame 

trailer with a storage volume of 4,240 

cubic feet. DOE examined the sizes of 

small commercial air-cooled airconditioners and heat pumps and 

determined the number of units that 

would fit in each trailer, based on 

assumptions about the arrangement of 

units in the trailer. See chapter 3 of the 

NOPR TSD for more details about the 

methodology DOE used to determine the 

shipping costs. 

C. Markups Analysis 

The markups analysis develops 

appropriate markups in the distribution 

chain to convert the estimates of 

manufacturer selling price derived in 

the engineering analysis to commercial 

consumer prices. (‘‘Commercial 

consumer’’ refers to purchasers of the 

equipment being regulated.) DOE 

calculates overall baseline and 

incremental markups based on the 

equipment markups at each step in the 

distribution chain. The incremental 

markup relates the change in the 

manufacturer sales price of higherefficiency models (the incremental cost 

increase) to the change in the 

commercial consumer price. 

In the 2014 NOPR for Central Unitary 

Air Conditioners (CUAC), which 

includes equipment similar to but larger 

than that in this NOPR, DOE determined 

that there are three types of distribution 

channels to describe how the equipment 

passes from the manufacturer to the 

commercial consumer. 79 FR 58948, 

58975 (Sept. 30, 2014). In the new 

construction market, the manufacturer 

sells the equipment to a wholesaler. The 

wholesaler sells the equipment to a 

mechanical contractor, who sells it to a 

general contractor, who in turn sells the 

equipment to the commercial consumer 

or end user as part of the building. In 

the replacement market, the 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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19U.S. Census Bureau, 2007 Economic Census, 

Construction Industry Series and Wholesale Trade 

Subject Series (Available at: www.census.gov/econ/ 

census/data/historical_data.html). 20See Appendix D of the 2000 Screening Analysis 

for EPACT-Covered Commercial HVAC and WaterHeating Equipment. (EERE–2006–STD–0098–0015) 

21 In other words, the quantity of people, lighting, 

and equipment in the commercial building produce 

so much heat (i.e., internal heat gain) that heating 

is not required until the temperature is quite low, 

as mentioned in this case to be 30 °F. In contrast, 

residential buildings tend to have lower internal 

heat gain, so heating is required at a higher 

temperature. 

manufacturer sells to a wholesaler, who 

sells to a mechanical contractor, who in 

turn sells the equipment to the 

commercial consumer or end user. In 

the third distribution channel, used in 

both the new construction and 

replacement markets, the manufacturer 

sells the equipment directly to the 

customer through a national account. 

In this NOPR, DOE used two of the 

three distribution channels described 

above to determine the markups. Given 

the small cooling capacities of air 

conditioners and heat pumps less than 

65,000 Btu/h, DOE did not use the 

national accounts distribution chain in 

the markups analysis. National accounts 

are composed of large commercial 

consumers of HVAC equipment that 

negotiate equipment prices directly with 

the manufacturers, such as national 

retail chains. The end market consumers 

of three-ton central air conditioners and 

heat pumps are small offices and small 

retailers and do not fit the profile of 

large national chains. 

In the 2014 CUAC NOPR, based on 

information that equipment 

manufacturers provided, commercial 

consumers were estimated to purchase 

50 percent of the covered equipment 

through small mechanical contractors, 

32.5 percent through large mechanical 

contractors, and the remaining 17.5 

percent through national accounts. 79 

FR 58948, 58976 (Sept. 30, 2014). For 

this NOPR, DOE removed the national 

accounts distribution channel and 

recalculated the size of the small and 

large mechanical contractor distribution 

channels assuming they make up the 

entire market. Therefore, the small 

mechanical distribution chain accounts 

for 61 percent of equipment purchases 

(i.e., 50 percent divided by the sum of 

50 percent and 32.5 percent), and the 

large mechanical contractor distribution 

chain represents 39 percent of 

purchases. 

For this NOPR, DOE used the 

markups from the 2014 CUAC NOPR, 

for which DOE utilized updated 

versions of: (1) The Heating, Air 

Conditioning & Refrigeration 

Distributors International 2010 Profit 

Report to develop wholesaler markups; 

(2) the Air Conditioning Contractors of 

America’s (ACCA) 2005 Financial 

Analysis for the HVACR Contracting 

Industry to develop mechanical 

contractor markups; and (3) U.S. Census 

Bureau economic data for the 

commercial and institutional building 

construction industry to develop general 

contractor markups.19

Chapter 5 of the NOPR TSD provides 

further detail on the estimation of 

markups. 

D. Energy Use Analysis 

The energy use analysis provides 

estimates of the annual energy 

consumption of small air-cooled air 

conditioners and heat pumps with 

cooling capacities less than 65,000 

Btu/h at the considered efficiency 

levels. DOE uses these values in the LCC 

and PBP analyses and in the NIA. 

The cooling unit energy consumption 

(UEC) by equipment type and efficiency 

level came from the national impact 

analysis associated with the 2011 direct 

final rule (DFR) for residential central 

air conditioners and heat pumps. 

(EERE–2011–BT–STD–0011–0011). 

Specifically, DOE used the UECs for 

single-phase equipment installed in 

commercial buildings. The UECs for 

split system and single package 

equipment were similar in the 2011 

analysis for lower efficiency levels, but 

at higher efficiency levels, the only 

UECs available were for split-system 

equipment. DOE assumed that the 

similarities at lower levels could be 

expected to hold at higher efficiency 

levels; therefore, DOE is using the UECs 

for split equipment for all equipment 

classes in this NOPR, including split 

system and single package. In the April 

11, 2014 NODA, DOE requested 

comment on the use of UECs from an 

analysis of single-phase products in 

commercial applications. 79 FR 20114, 

20137. In response. Goodman, Lennox, 

and AHRI commented that single-phase 

and three-phase products should not 

differ substantially in energy 

consumption. (Goodman Global, Inc., 

No. 18 at p. 2; Lennox International, 

Inc., No. 15 at p. 6; AHRI, No. 24 at p. 

5) Goodman added that for products less 

than 65,000 Btu/h, industry practice 

involves creating a single-phase product 

and then changing the compressor from 

single-phase to three-phase while 

leaving the motors for the condenser fan 

and evaporator blower at single-phase. 

(Goodman Global, Inc., No. 18 at p. 2) 

DOE agrees with the commenters and 

has maintained this approach. 

In order to assess variability in the 

cooling UEC by region and building 

type, DOE used a Pacific Northwest 

National Laboratory report 20 that 

estimated the annual energy usage of 

space cooling and heating products 

using a Full Load Equivalent Operating 

Hour (FLEOH) approach. DOE 

normalized the provided FLEOHs to the 

UEC data discussed above to vary the 

average UEC across region and building 

type. The building types used in this 

analysis are small retail establishments 

and small offices. 

In the April 11, 2014 NODA, DOE 

stated that it also considered analyzing 

heating UECs for heat pumps. 79 FR 

20114, 20126. However, in reviewing 

the 2011 analysis, DOE found that the 

heating UECs did not scale 

proportionally with HSPF for 

commercial installations. Id. Therefore, 

DOE preliminarily determined that it 

was not possible to quantify energy 

savings given the available data. DOE 

requested comment seeking data and 

information related to the heating 

energy use of commercial heat pumps. 

Id. at 20137. 

In response, AHRI commented that 

Pacific Northwest National Laboratory 

(PNNL) analyzes the benefits of 

increased efficiency requirements in 

ASHRAE 90.1–2013, and it increased 

the heating seasonal performance factor 

(HSPF) for 3-phase heat pumps less than 

65,000 Btu/h. Therefore, PNNL may 

have information on the energy savings 

related to ASHRAE’s standard. (AHRI, 

No. 24 at p. 6) Goodman suggests it is 

logical for there to be a reasonable 

relationship between the HSPF rating 

and UEC. (Goodman Global, Inc., No. 18 

at p. 2) On the other hand, Lennox 

pointed out that HSPF is an efficiency 

metric designed to reflect the 

performance of a heat pump operating 

against a residential load profile in 

which the building balance point is at 

65°F. Most commercial buildings have 

enough internal heat gain that their 

heating balance points can be at 30°F or 

below.21 Therefore, the heat pump will 

not have a heating demand until the 

ambient temperature reaches this 

balance point. Much of the performance 

contribution for heat pumps to reach a 

high HSPF comes from its performance 

in the temperature range where it will 

never operate in a commercial building. 

For this reason, there will be little 

energy savings from increasing HSPF for 

commercial air-cooled equipment. 

(Lennox International Inc., No. 15 at p. 

8) 

DOE notes that ASHRAE increased 

the HSPF and SEER levels for this 

equipment to levels that matched DOE’s 

residential requirements, for 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
1192 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

22RS Means Mechanical Cost Data 2013. Reed 

Construction Data, LLC (2012). 

23Coughlin, K., C. Bolduc, R. Van Buskirk, G. 

Rosenquist and J.E. McMahon, ‘‘Tariff-based 

Analysis of Commercial Building Electricity Prices’’ 

(2008) Lawrence Berkeley National Laboratory: 

Berkeley, CA. Report No. LBNL–55551. 

consistency in the market rather than 

necessarily to achieve energy savings. In 

light of Goodman and Lennox’s 

comments, DOE has further reviewed 

the results of the simulations for the 

2011 DFR and determined that the 

heating loads for these small 

commercial applications are extremely 

low (less than 500 kwh/year). As a 

result, DOE has not included any energy 

savings due to the increase in HSPF for 

this equipment. 

E. Life-Cycle Cost and Payback Period 

Analysis 

The purpose of the LCC and PBP 

analysis is to analyze the effects of 

potential amended energy conservation 

standards on commercial consumers of 

small commercial air-cooled air 

conditioners and heat pumps less than 

65,000 btu/h by determining how a 

potential amended standard affects their 

operating expenses (usually decreased) 

and their total installed costs (usually 

increased). 

The LCC is the total consumer 

expense over the life of the equipment, 

consisting of equipment and installation 

costs plus operating costs (i.e., expenses 

for energy use, maintenance, and 

repair). DOE discounts future operating 

costs to the time of purchase using 

commercial consumer discount rates. 

The PBP is the estimated amount of 

time (in years) it takes commercial 

consumers to recover the increased total 

installed cost (including equipment and 

installation costs) of a more-efficient 

type of equipment through lower 

operating costs. DOE calculates the PBP 

by dividing the change in total installed 

cost (normally higher) due to a standard 

by the change in annual operating cost 

(normally lower) that results from the 

potential standard. However, unlike the 

LCC, DOE only considers the first year’s 

operating expenses in the PBP 

calculation. Because the PBP does not 

account for changes in operating 

expenses over time or the time value of 

money, it is also referred to as a simple 

PBP. 

For any given efficiency level, DOE 

measures the PBP and the change in 

LCC relative to an estimate of the basecase efficiency level. For split-system air 

conditioners, for which ASHRAE did 

not increase efficiency levels, the basecase estimate reflects the market in the 

absence of amended energy 

conservation standards, including the 

market for equipment that exceeds the 

current energy conservation standards. 

For single-package air conditioners, 

split-system heat pumps, and singlepackage heat pumps, the base-case 

estimate reflects the market in the case 

where the ASHRAE 90.1–2013 level 

becomes the Federal minimum, and the 

LCC calculates the LCC savings likely to 

result from higher efficiency levels 

compared with the ASHRAE base-case. 

DOE conducted an LCC and PBP 

analysis for small commercial air-cooled 

air conditioners and heat pumps less 

than 65,000 btu/h using a computer 

spreadsheet model. When combined 

with Crystal Ball (a commerciallyavailable software program), the LCC 

and PBP model generates a Monte Carlo 

simulation to perform the analyses by 

incorporating uncertainty and 

variability considerations in certain of 

the key parameters as discussed below. 

Inputs to the LCC and PBP analysis are 

categorized as: (1) Inputs for 

establishing the total installed cost and 

(2) inputs for calculating the operating 

expense. The following sections contain 

brief discussions of comments on the 

inputs and key assumptions of DOE’s 

LCC and PBP analysis and explain how 

DOE took these comments into 

consideration. They are also described 

in detail in chapter 6 of the NOPR TSD. 

1. Equipment Costs 

In the LCC and PBP analysis, the 

equipment costs faced by purchasers of 

small air-cooled air conditioning and 

heat pump equipment are derived from 

the MSPs estimated in the engineering 

analysis, the overall markups estimated 

in the markups analysis, and sales tax. 

To develop an equipment price trend 

for the NOPR, DOE derived an inflationadjusted index of the producer price 

index (PPI) for ‘‘unitary airconditioners, except air source heat 

pumps’’ from 1978 to 2013, which is the 

PPI series most relevant to small aircooled air-conditioning equipment. The 

PPI index for heat pumps covered too 

short a time period to provide a useful 

picture of pricing trends, so the airconditioner time series was used for 

both air conditioners and heat pumps. 

DOE expects this to be a reasonably 

accurate assessment for heat pumps 

because heat pumps are produced by 

the same manufacturers as airconditioners and contain most of the 

same components. Although the overall 

PPI index shows a long-term declining 

trend, data for the last decade have 

shown a flat-to-slightly-rising trend. 

Given the uncertainty as to which of the 

trends will prevail in coming years, 

DOE chose to apply a constant price 

trend (at 2013 levels) for the NOPR. See 

chapter 6 of the NOPR TSD for more 

information on the price trends. 

2. Installation Costs 

DOE derived national average 

installation costs for small air-cooled air 

conditioning and heat pump equipment 

from data provided in RS Means 2013.22

RS Means provides estimates for 

installation costs for the subject 

equipment by equipment capacity, as 

well as cost indices that reflect the 

variation in installation costs for 656 

cities in the United States. The RS 

Means data identify several cities in all 

50 States and the District of Columbia. 

DOE incorporated location-based cost 

indices into the analysis to capture 

variation in installation costs, 

depending on the location of the 

consumer. 

Based on these data, DOE tentatively 

concluded that data for 3-ton rooftop air 

conditioners would be sufficiently 

representative of the installation costs 

for air conditioners less than 65,000 btu/ 

h. For heat pumps, DOE used the 

installation costs for 3-ton air-source 

heat pumps. 

DOE also varied installation cost as a 

function of equipment weight. Because 

weight tends to increase with 

equipment efficiency, installation cost 

increased with equipment efficiency. 

The weight of the equipment in each 

class and efficiency level was 

determined through the engineering 

analysis. 

3. Unit Energy Consumption 

The calculation of annual per-unit 

energy consumption by each class of the 

subject small air-cooled air conditioning 

and heating equipment at each 

considered efficiency level is based on 

the energy use analysis as described 

above in section V.D and in chapter 4 

of the NOPR TSD. 

4. Electricity Prices and Electricity Price 

Trends 

DOE used average and marginal 

electricity prices by Census Division 

based on tariffs from a representative 

sample of electric utilities. This 

approach calculates energy expenses 

based on actual commercial building 

average and marginal electricity prices 

that customers are paying.23 The 

Commercial Buildings Energy 

Consumption Survey (CBECS) 1992 and 

CBECS 1995 surveys provide monthly 

electricity consumption and demand for 

a large sample of buildings. DOE used 

these values to help develop usage 

patterns associated with various 

building types. Using these monthly 

values in conjunction with the tariff 

data, DOE calculated monthly electricity 


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24Edison Electric Institute, EEI Typical Bills and 

Average Rates Report (bi-annual, 2007–2012). 

25RS Means Facilities Maintenance & Repair Cost 

Data 2013. Reed Construction Data, LLC. (2012). 26 Id. 

bills for each building. The average 

price of electricity is defined as the total 

electricity bill divided by total 

electricity consumption. From this 

average price, the marginal price for 

electricity consumption was determined 

by applying a 5-percent decrement to 

the average CBECS consumption data 

and recalculating the electricity bill. 

Using building location and the prices 

derived from the above method, an 

average and marginal price were 

determined for each region of the U.S. 

The average electricity price 

multiplied by the baseline electricity 

consumption for each equipment class 

defines the baseline LCC. For each 

efficiency level, the operating cost 

savings are calculated by multiplying 

the electricity consumption savings 

(relative to the baseline) by the marginal 

consumption price. 

For this NOPR, the tariff-based prices 

were updated to 2013 using the 

commercial electricity price index 

published in the AEO. An examination 

of data published by the Edison Electric 

Institute 24 indicates that the rate of 

increase of marginal and average prices 

is not significantly different, so the same 

factor was used for both pricing 

estimates. DOE projected future 

electricity prices using trends in average 

commercial electricity price from AEO 

2014. 

For further discussion of electricity 

prices, see chapter 6 of the NOPR TSD. 

5. Maintenance Costs 

Maintenance costs are costs to the 

commercial consumer of ensuring 

continued operation of the equipment 

(e.g., checking and maintaining 

refrigerant charge levels and cleaning 

heat-exchanger coils). DOE derived 

annualized maintenance costs for small 

commercial air-cooled air conditioners 

and heat pumps from RS Means data.25

These data provided estimates of 

person-hours, labor rates, and materials 

required to maintain commercial airconditioning and heating equipment. 

The estimated annualized maintenance 

cost is $298 for air conditioners rated 

between 36,000 Btu/h and 288,000 

Btu/h and $329 for heat pumps rated 

between 36,000 Btu/h and 288,000 

Btu/h; this capacity range includes the 

equipment that is the subject of this 

NOPR. DOE assumed that the 

maintenance costs do not vary with 

efficiency level. 

6. Repair Costs 

Repair costs are costs to the 

commercial consumer associated with 

repairing or replacing components that 

have failed. DOE utilized RS Means 26 to 

find the repair costs for small 

commercial air-cooled air conditioners 

and heat pumps. For air conditioners, 

DOE used the repair costs for a 3-ton, 

single-zone rooftop unit. For heat 

pumps, DOE took the repair costs for 

1.5-ton, 5-ton, and 10-ton air-to-air heat 

pumps and linearly scaled the repair 

costs to derive a 3-ton repair cost. DOE 

assumed that the repair would be a onetime event in year 10 of the equipment 

life. DOE then annualized the present 

value of the cost over the average 

equipment life of 19 or 16 years (for air 

conditioners and heat pumps, 

respectively) to obtain an annualized 

equivalent repair cost. This value ranges 

from $141 to $154 at the baseline level, 

depending on equipment class. The 

materials portion of the repair cost was 

scaled with the percentage increase in 

manufacturers’ production cost by 

efficiency level. The labor cost was held 

constant across efficiency levels. This 

annualized repair cost was then added 

to the maintenance cost to create an 

annual ‘‘maintenance and repair cost’’ 

for the lifetime of the equipment. For 

further discussion of how DOE derived 

and implemented repair costs, see 

chapter 6 of the NOPR TSD. 

7. Equipment Lifetime 

Equipment lifetime is the age at 

which the subject small air-cooled air 

conditioners and heat pumps less than 

65,000 Btu/h are retired from service. 

DOE based equipment lifetime on a 

retirement function in the form of a 

Weibull probability distribution. DOE 

used the inputs from the 2011 DFR 

technical support document for central 

air conditioners and heat pumps, which 

represented a mean lifetime of 19.01 

years for air conditioners and 16.24 

years for heat pumps, and used the same 

values for units in both residential and 

commercial applications. (EERE–2011– 

BT–STD–0011–0012) Given the 

similarity of such equipment types, DOE 

believes the lifetime for single-phase 

equipment may be a reasonable 

approximation of the lifetime for similar 

three-phase equipment. 

8. Discount Rate 

The discount rate is the rate at which 

future expenditures are discounted to 

estimate their present value. The cost of 

capital commonly is used to estimate 

the present value of cash flows to be 

derived from a typical company project 

or investment. Most companies use both 

debt and equity capital to fund 

investments, so the cost of capital is the 

weighted-average cost to the firm of 

equity and debt financing. DOE uses the 

capital asset pricing model (CAPM) to 

calculate the equity capital component, 

and financial data sources to calculate 

the cost of debt financing. 

DOE derived the discount rates by 

estimating the weighted-average cost of 

capital (WACC) of companies that 

purchase air-cooled air-conditioning 

equipment. More details regarding 

DOE’s estimates of commercial 

consumer discount rates are provided in 

chapter 6 of the NOPR TSD. 

9. Base-Case Market Efficiency 

Distribution 

For the LCC analysis, DOE analyzes 

the considered efficiency levels relative 

to a base case (i.e., the case without 

amended energy efficiency standards, in 

this case the current Federal standards 

for split-system air conditioners, and the 

default scenario in which DOE is 

required to adopt the efficiency levels in 

ASHRAE 90.1–2013 for the three 

equipment classes triggered by 

ASHRAE). This analysis requires an 

estimate of the distribution of 

equipment efficiencies in the base case 

(i.e., what consumers would have 

purchased in the compliance year in the 

absence of amended standards for splitsystem air conditioners, or amended 

standards more stringent than those in 

ASHRAE 90.1–2013 for the three 

triggered equipment classes). DOE refers 

to this distribution of equipment energy 

efficiencies as the base-case efficiency 

distribution. For more information on 

the development of the base-case 

distribution, see section V.F.3 and 

chapter 6 of the NOPR TSD. 

10. Compliance Date 

DOE calculated the LCC and PBP for 

all commercial consumers as if each 

were to purchase new equipment in the 

year that compliance with amended 

standards is required. Generally, 

covered equipment to which a new or 

amended energy conservation standard 

applies must comply with the standard 

if such equipment is manufactured or 

imported on or after a specified date. In 

this NOPR, DOE is evaluating whether 

more-stringent efficiency levels than 

those in ASHRAE Standard 90.1–2013 

would be technologically feasible, 

economically justified, and result in a 

significant additional amount of energy 

savings. If DOE were to propose a rule 

prescribing energy conservation 

standards at the efficiency levels 

contained in ASHRAE Standard 90.1– 

2013 for the three triggered equipment 


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27Since ASHRAE published ASHRAE Standard 

90.1–2013 on October 9, 2013, EPCA requires that 

DOE publish a final rule adopting more-stringent 

standards than those in ASHRAE Standard 90.1– 

2013, if warranted, within 30 months of ASHRAE 

action (i.e., by April 2016). Thus, four years from 

April 2016 would be April 2020, which would be 

the anticipated compliance date for DOE adoption 

of more-stringent standards. 

classes, EPCA states that compliance 

with any such standards shall be 

required on or after a date which is two 

or three years (depending on equipment 

size) after the compliance date of the 

applicable minimum energy efficiency 

requirement in the amended ASHRAE/ 

IES standard. (42 U.S.C. 6313(a)(6)(D)) 

Given the equipment size at issue here, 

DOE has applied the two-year 

implementation period to determine the 

compliance date of any energy 

conservation standard equal to the 

efficiency levels specified by ASHRAE 

Standard 90.1–2013 proposed by this 

rulemaking. Thus, if DOE decides to 

adopt the efficiency levels in ASHRAE 

Standard 90.1–2013, the compliance 

date of the rulemaking would be 

dependent upon the date specified in 

ASHRAE Standard 90.1–2013 or its 

publication date, if none is specified. In 

this case, the rule would apply to small 

commercial air-cooled air conditioners 

and heat pumps less than 65,000 Btu/h 

manufactured on or after January 1, 

2017, which is two years after the date 

specified in ASHRAE Standard 90.1– 

2013. 

If DOE were to propose a rule 

prescribing energy conservation 

standards more stringent than the 

efficiency levels contained in ASHRAE 

Standard 90.1–2013, EPCA states that 

compliance with any such standards is 

required for products manufactured on 

or after a date which is four years after 

the date the final rule is published in 

the Federal Register. (42 U.S.C. 

6313(a)(6)(D)) DOE has applied this 4- 

year implementation period to 

determine the compliance date for any 

energy conservation standard more 

stringent than the efficiency levels 

specified by ASHRAE Standard 90.1– 

2013 that might be prescribed at the 

final rule stage for the three equipment 

classes triggered by ASHRAE. Thus, for 

equipment for which DOE might adopt 

a level more stringent than the ASHRAE 

efficiency levels, the rule would apply 

to products manufactured on or after a 

date four years from the date of 

publication of the final rule, which the 

statute requires to be completed by 

April 9, 2016 (thereby resulting in a 

compliance date no later than April 9, 

2020).27

For split system air-cooled air 

conditioners, which DOE evaluated 

under the 6 year look back, DOE applied 

a different compliance date. 

Specifically, EPCA states that amended 

standards prescribed under this 

subsection shall apply to products 

manufactured after a date that is the 

later of: (I) the date that is 3 years after 

publication of the final rule establishing 

a new standard; or (II) the date that is 

6 years after the effective date of the 

current standard for a covered product. 

(42 U.S.C. 6313(a)(6)(C)(iv)) Because 

DOE must publish a final rule by April 

9, 2016, in the case that it adopts 

standards higher than those in ASHRAE 

Standard 90.1 for the other three 

equipment classes, DOE projected that 

the date under clause (I) would be April 

2019, which is later than the date under 

clause (II). For purposes of its analysis, 

DOE used 2019 as the first year of 

compliance with amended standards. 

Economic justification is not required 

for DOE to adopt the efficiency levels in 

ASHRAE 90.1–2013, as DOE is 

statutorily required to, at a minimum, 

adopt those levels. Therefore, DOE did 

not perform an LCC analysis on the 

ASHRAE Standard 90.1–2013 levels, 

and for purposes of the LCC analysis, 

DOE used 2020 as the first year of 

compliance with amended standards. 

11. Payback Period Inputs 

The payback period is the amount of 

time it takes the commercial consumer 

to recover the additional installed cost 

of more-efficient equipment, compared 

to baseline equipment, through energy 

cost savings. Payback periods are 

expressed in years. Payback periods that 

exceed the life of the equipment mean 

that the increased total installed cost is 

not recovered in reduced operating 

expenses. 

Similar to the LCC, the inputs to the 

PBP calculation are the total installed 

cost of the equipment to the commercial 

consumer for each efficiency level and 

the average annual operating 

expenditures for each efficiency level 

for each building type and Census 

Division, weighted by the probability of 

shipment to each market. The PBP 

calculation uses the same inputs as the 

LCC analysis, except that discount rates 

are not needed. Because the simple PBP 

does not take into account changes in 

operating expenses over time or the time 

value of money, DOE considered only 

the first year’s operating expenses to 

calculate the PBP, unlike the LCC, 

which is calculated over the lifetime of 

the equipment. Chapter 6 of the NOPR 

TSD provides additional detail about 

the PBP. 

F. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analysis 

The national impact analysis (NIA) 

evaluates the effects of a considered 

energy conservation standard from a 

national perspective rather than from 

the consumer perspective represented 

by the LCC. This analysis assesses the 

net present value (NPV) (future amounts 

discounted to the present) and the 

national energy savings (NES) of total 

commercial consumer costs and savings, 

which are expected to result from 

amended standards at specific efficiency 

levels. For each efficiency level 

analyzed, DOE calculated the NPV and 

NES for adopting more-stringent 

standards than the efficiency levels 

specified in ASHRAE Standard 90.1– 

2013. 

The NES refers to cumulative energy 

savings from 2017 through 2046 for the 

three equipment classes triggered by 

ASHRAE; however when evaluating 

more-stringent standards, energy 

savings do not begin accruing until the 

later compliance date of 2020. DOE 

calculated new energy savings in each 

year relative to a base case, defined as 

DOE adoption of the efficiency levels 

specified by ASHRAE Standard 90.1– 

2013. DOE also calculated energy 

savings from adopting efficiency levels 

specified by ASHRAE Standard 90.1– 

2013 compared to the EPCA base case 

(i.e., the current Federal standards). 

For split-system air conditioners, the 

NES refers to cumulative energy savings 

from 2019 through 2048 for all 

standards cases. DOE calculated new 

energy savings in each year relative to 

a base case, defined as the current 

Federal standards, which are equivalent 

to the efficiency levels specified by 

ASHRAE Standard 90.1–2013. 

The NPV refers to cumulative 

monetary savings. DOE calculated net 

monetary savings in each year relative 

to the base case (ASHRAE Standard 

90.1–2013) as the difference between 

total operating cost savings and 

increases in total installed cost. 

Cumulative savings are the sum of the 

annual NPV over the specified period. 

DOE accounted for operating cost 

savings until past 2100, when the 

equipment installed in the 30th year 

after the compliance date of the 

amended standards should be retired. 

1. Approach 

The NES and NPV are a function of 

the total number of units in use and 

their efficiencies. Both the NES and 

NPV depend on annual shipments and 

equipment lifetime. Both calculations 

start by using the shipments estimate 


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28An overview of the NEMS model and 

documentation is found at http://www.eia.doe.gov/ 

oiaf/aeo/overview/index.html. 

and the quantity of units in service 

derived from the shipments model. 

With regard to estimating the NES, 

because more-efficient air conditioners 

and heat pumps are expected to 

gradually replace less-efficient ones, the 

energy per unit of capacity used by the 

air conditioners and heat pumps in 

service gradually decreases in the 

standards case relative to the base case. 

DOE calculated the NES by subtracting 

energy use under a standards-case 

scenario from energy use in a base-case 

scenario. 

Unit energy savings for each 

equipment class are taken from the LCC 

spreadsheet for each efficiency level and 

weighted based on market efficiency 

distributions. To estimate the total 

energy savings for each efficiency level, 

DOE first calculated the national site 

energy consumption (i.e., the energy 

directly consumed by the units of 

equipment in operation) for each class 

of air conditioner and heat pumps for 

each year of the analysis period. The 

NES and NPV analysis periods begin 

with the earliest expected compliance 

date of amended Federal energy 

conservation standards (i.e., 2017 for the 

equipment classes triggered by 

ASHRAE, assuming DOE adoption of 

the baseline ASHRAE Standard 90.1– 

2013 efficiency levels, and 2019 for 

split-system air conditioners, 3 years 

after DOE would likely issue a final rule 

requiring standards more stringent than 

ASHRAE). For the analysis of DOE’s 

potential adoption of more-stringent 

efficiency levels for the equipment 

classes triggered by ASHRAE, the 

earliest compliance date would be 2020, 

four years after DOE would likely issue 

a final rule requiring such standards. 

Second, DOE determined the annual site 

energy savings, consisting of the 

difference in site energy consumption 

between the base case and the standards 

case for each class of small commercial 

air conditioner and heat pump less than 

65,000 Btu/h. Third, DOE converted the 

annual site energy savings into the 

annual primary and FFC energy savings 

using annual conversion factors derived 

from the AEO 2014 version of the 

Energy Information Administration’s 

(EIA) National Energy Modeling System 

(NEMS). Finally, DOE summed the 

annual primary and FFC energy savings 

from 2017 to 2046 (or 2019 to 2048) to 

calculate the total NES for that period. 

DOE performed these calculations for 

each efficiency level considered for 

small commercial air conditioners and 

heat pumps in this rulemaking. 

DOE considered whether a rebound 

effect is applicable in its NES analysis. 

A rebound effect occurs when an 

increase in equipment efficiency leads 

to an increased demand for its service. 

The NEMS model assumes a certain 

elasticity factor to account for an 

increased demand for service due to the 

increase in cooling (or heating) 

efficiency.28 EIA refers to this as an 

efficiency rebound. For the small 

commercial air conditioning and 

heating equipment market, there are two 

ways that a rebound effect could occur: 

(1) Increased use of the air conditioning 

equipment within the commercial 

buildings in which they are installed; 

and (2) additional instances of air 

conditioning of building spaces that 

were not being cooled before. 

DOE does not expect either of these 

instances to occur because the annual 

energy use for this equipment is very 

low; therefore, the energy cost savings 

from more-efficient equipment would 

likely not be high enough to induce a 

commercial consumer to increase the 

use of the equipment, either in a 

previously-cooled space or another 

previously-uncooled space. Therefore, 

DOE did not assume a rebound effect in 

the present NOPR analysis. DOE seeks 

input from interested parties on whether 

there will be a rebound effect for 

improvements in the efficiency of small 

commercial air conditioners and heat 

pumps. If interested parties believe a 

rebound effect would occur, DOE is 

interested in receiving data quantifying 

the effects, as well as input regarding 

how should DOE quantify this in its 

analysis. This is identified as Issue 3 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section X.E of this NOPR. 

To estimate NPV, DOE calculated the 

net impact as the difference between net 

operating cost savings (including 

electricity cost savings and increased 

repair costs) and increases in total 

installed costs (including customer 

prices). DOE calculated the NPV of each 

considered standard level over the life 

of the equipment using the following 

three steps. First, DOE determined the 

difference between the equipment costs 

under the standard-level case and the 

base case in order to obtain the net 

equipment cost increase resulting from 

the higher standard level. As noted in 

section V.E.1, DOE used a constant price 

assumption as the default price forecast. 

Second, DOE determined the difference 

between the base-case operating costs 

and the standard-level operating costs in 

order to obtain the net operating cost 

savings from each higher efficiency 

level. Third, DOE determined the 

difference between the net operating 

cost savings and the net equipment cost 

increase in order to obtain the net 

savings (or expense) for each year. DOE 

then discounted the annual net savings 

(or expenses) to 2014 for air 

conditioners and heat pumps bought on 

or after 2017 (or 2019) and summed the 

discounted values to provide the NPV of 

an efficiency level. An NPV greater than 

zero shows net savings (i.e., the 

efficiency level would reduce 

commercial consumer expenditures 

relative to the base case in present value 

terms). An NPV that is less than zero 

indicates that the efficiency level would 

result in a net increase in commercial 

consumer expenditures in present value 

terms. 

To make the analysis more 

transparent to all interested parties, 

DOE used a commercially-available 

spreadsheet tool to calculate the energy 

savings and the national economic costs 

and savings from potential amended 

standards. Interested parties can review 

DOE’s analyses by changing various 

input quantities within the spreadsheet. 

Unlike the LCC analysis, the NES 

spreadsheet does not use distributions 

for inputs or outputs, but relies on 

national average first costs and energy 

costs developed from the LCC 

spreadsheet. DOE used the NES 

spreadsheet to perform calculations of 

energy savings and NPV using the 

annual energy consumption and total 

installed cost data from the LCC 

analysis. DOE projected the energy 

savings, energy cost savings, equipment 

costs, and NPV of benefits for 

equipment sold in each small 

commercial air-cooled air conditioner 

and heat pump class from 2017 through 

2046 (or 2019 through 2048). For the 

three equipment classes triggered by 

ASHRAE, for efficiency levels more 

stringent than those in ASHRAE 90.1– 

2013, energy savings and costs do not 

begin accruing until 2020, the estimated 

first year of compliance. The projections 

provided annual and cumulative values 

for all four output parameters described 

previously. 

2. Shipments Analysis 

Equipment shipments are an 

important element in the estimate of the 

future impact of a potential energy 

conservation standard. DOE developed 

shipment projections for small 

commercial air-cooled air conditioners 

and heat pumps less than 65,000 Btu/h 

and, in turn, calculated equipment stock 

over the course of the analysis period by 

assuming a Weibull distribution with an 

average 19-year equipment life for air 

conditioners and a 16-year life for heat 

pumps. (See section V.E.7 for more 

information on lifetime.) DOE used the 

shipments projection and the equipment 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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29U.S. Census Bureau, Current Industrial Reports 

for Refrigeration, Air Conditioning, and Warm Air 

Heating Equipment, MA333M. Note that the current 

industrial reports were discontinued in 2010, so 

more recent data are not available. (Available at: 

http://www.census.gov/manufacturing/cir/

historical_data/ma333m/index.html). 

30AHRI, HVACR & Water Heating Industry 

Statistical Profile (2012) (Available at: http://

www.ari.org/site/883/Resources/Statistics/AHRIIndustry-Statistical-Profile). See also AHRI Monthly 

Shipments: http://www.ari.org/site/498/Resources/

Statistics/Monthly-Shipments; especially December 

2013 release: http://www.ari.org/App_Content/ahri/ 

files/Statistics/Monthly%20Shipments/2013/

December2013.pdf; May 2014 release: http://

www.ari.org/App_Content/ahri/files/Statistics/

Monthly%20Shipments/2014/May2014.pdf. 

stock to determine the NES. The 

shipments portion of the spreadsheet 

model projects small commercial aircooled air conditioner and heat pump 

shipments through 2046. 

In the April 11, 2014 NODA, DOE 

relied on 1999 shipment estimates along 

with trends from the U.S. Census to 

estimate shipments for this equipment. 

79 FR 20114, 20130. Table V.8 shows 

the 1999 shipments estimates from the 

2000 Screening Analysis for EPACTCovered Commercial HVAC and WaterHeating Equipment (EERE–2006–STD– 

0098–0015). While the U.S. Census 

provides shipments data for air-cooled 

equipment less than 65,000 Btu/h, it 

does not disaggregate the shipments into 

single-phase and three-phase. Therefore, 

DOE used the Census data from 1999 to 

2010 29 as a trend from which to 

extrapolate DOE’s 1999 estimated 

shipments data (which is divided by 

equipment class) for three-phase 

equipment for the time period from 

2000 to 2010. DOE then used the 

estimated shipments from 1999 to 2010 

to establish a trend from which to 

project shipments beyond 2010. For 

heat pumps, DOE used a linear trend, 

which is slightly decreasing for singlepackage units and increasing for split 

systems. However, for single-package air 

conditioners, the trend was 

precipitously declining. As a result, for 

single-package air conditioners for the 

years after 2010, DOE used the average 

value from 1999 to 2010. 

TABLE V.8—DOE ESTIMATED SHIPMENTS OF SMALL THREE-PHASE

COMMERCIAL AIR CONDITIONERS

AND HEAT PUMPS <65,000 Btu/h 

Equipment class 1999 

Three-Phase Air-Cooled SplitSystem Air Conditioners 

<65,000 Btu/h ........................... 91,598 

Three-Phase Air-Cooled SinglePackage Air Conditioners 

<65,000 Btu/h ........................... 213,728 

Three-Phase Air-Cooled SplitSystem Heat Pumps <65,000 

Btu/h .......................................... 11,903 

Three-Phase Air-Cooled SinglePackage Heat Pumps <65,000 

Btu/h .......................................... 27,773 

DOE received several comments on 

the NODA in response to these 

shipments estimates. Goodman found it 

illogical for DOE to base the initial value 

of shipments on data that was estimated 

a decade and a half ago. (Goodman 

Global, Inc., No. 18 at p. 3) The initial 

values, Goodman stated, should come 

from aggregated data provided by an 

industry trade association such as AHRI. 

(Id.) Goodman, AHRI, and Lennox also 

argued that by averaging shipments over 

1999 to 2010, DOE did not account for 

the recent decline in shipments and, 

therefore, was overstating market 

volumes and potential energy savings. 

(AHRI, No. 24 at p. 8; Goodman, No. 18 

at p. 3; Lennox International, No. 15 at 

p. 7) AHRI also asserted that the 

analysis did not support either the 

assumption that current shipments of 

packaged three-phase heat pumps less 

than 65,000 Btu/h are at 1999 levels and 

will decrease only slowly during the 

next 35 years or the assumption that 

current shipments of three-phase splitsystem heat pumps less than 65,000 

Btu/h are nearly double those of 1999 

and will more than double again in the 

next 35 years. (AHRI, No. 24 at p. 8). 

In response to these comments, DOE 

reviewed its shipments analysis. AHRI 

did not provide any more recent data, so 

DOE continued to rely on the 1999 

estimates for the initial value. However, 

DOE did revise its shipment projections 

for the years beyond 2010. Because the 

Census data end in 2010, DOE cannot 

use that data to determine whether 

shipments continue to decline past 

2010. Therefore, DOE reviewed AHRI’s 

monthly shipments data for the broader 

category of central air conditioners and 

heat pumps to determine more recent 

trends.30 DOE found that the average 

annual growth rate from 2005 to 2010 

was ¥12 percent for air conditioners 

and ¥4 percent for heat pumps. 

However, the average annual growth 

rate from 2010 to 2014 was 7 percent for 

air conditioners and 8 percent for heat 

pumps. These data indicate that the 

decline in shipments through 2010 has 

stopped and has in fact begun to 

reverse. Therefore, DOE used the AHRIreported growth rates from 2010 to 2011 

(10 percent for air conditioners and 1 

percent for heat pumps) to scale its 

projected 2010 shipments to 2011, at 

which time it could begin projecting 

shipments using Annual Energy Outlook 

(AEO) 2014 forecasts (2011 through 

2040) for commercial floor space. DOE 

assumed that shipments of small 

commercial air-cooled air conditioners 

and heat pumps would be related to the 

growth of commercial floor space. DOE 

used this projection, with an average 

annual growth rate of 1 percent, to 

project shipments for each of the four 

equipment classes through 2040. For 

years beyond 2040, DOE also applied an 

average annual growth rate of 1 percent. 

Table V.9 shows the projected 

shipments for the different equipment 

classes of small commercial air-cooled 

air conditioners and heat pumps less 

than 65,000 Btu/h for selected years 

from 2017 to 2046, as well as the 

cumulative shipments. As equipment 

purchase price and repair costs increase 

with efficiency, DOE recognizes that 

higher first costs and repair costs can 

result in a drop in shipments. However, 

DOE had no basis for estimating the 

elasticity of shipments for small 

commercial air-cooled air conditioners 

and heat pumps less than 65,000 Btu/h 

as a function of first costs, repair costs, 

or operating costs. In addition, because 

air-cooled air conditioners are likely the 

lowest-cost option for air conditioning 

small office and retail applications, DOE 

has tentatively concluded that it is 

unlikely that shipments would change 

as a result of higher first costs and repair 

costs. Therefore, DOE presumed that the 

shipments projection would not change 

with higher standard levels. DOE seeks 

input on this assumption. This is 

identified as Issue 4 under ‘‘Issues on 

Which DOE Seeks Comment’’ in section 

X.E of this NOPR. Chapter 7 of the 

NOPR TSD provides additional details 

on the shipments forecasts. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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31See DOE’s technical support document 

underlying DOE’s July 29, 2004 ANOPR. 69 FR 

45460 (Available at: http://www.regulations.gov/

#!documentDetail;D=EERE-2006-STD-0103-0078). 

DOE assumed that the EER trend would reasonably 

represent a SEER trend. 

TABLE V.9—SHIPMENTS PROJECTION FOR SMALL COMMERCIAL AIR-COOLED AIR CONDITIONERS AND HEAT PUMPS

<65,000 Btu/h 

Equipment 

Units shipped by year and equipment class 

2017 2020 2025 2030 2035 2040 2046 

Cumulative 

shipments 

(2017– 

2046) * 

Three-Phase Air-Cooled Split-System Air Conditioners <65,000 Btu/

h .................................................... 80,210 83,175 87,651 91,610 96,170 101,593 107,802 2,806,115 

Three-Phase Air-Cooled SinglePackage Air Conditioners <65,000 

Btu/h ............................................. 122,271 126,790 133,613 139,649 146,600 154,867 164,332 4,277,584 

Three-Phase Air-Cooled Split-System Heat Pumps <65,000 Btu/h ... 19,634 20,360 21,455 22,424 23,541 24,868 26,388 686,883 

Three-Phase Air-Cooled SinglePackage Heat Pumps <65,000 

Btu/h ............................................. 25,157 26,086 27,490 28,732 30,162 31,863 33,810 880,091 

Total .......................................... 247,272 256,411 270,210 282,415 296,473 313,191 332,333 8,650,673 

* Note that the analysis period for split-system air conditioners is 2019–2048, but for comparison purposes, the same time period for cumulative shipments is shown for each equipment class. 

3. Base-Case and Standards-Case 

Forecasted Distribution of Efficiencies 

In the April 11, 2014 NODA, DOE 

presented base-case efficiency 

distributions based on model 

availability in the AHRI certified 

directory. 79 FR 20114, 20132. DOE 

bundled the efficiency levels into 

‘‘efficiency ranges’’ and determined the 

percentage of models within each range. 

DOE applied the percentages of models 

within each efficiency range to the total 

unit shipments for a given equipment 

class to estimate the distribution of 

shipments within the base case. In 

response, AHRI commented that DOE’s 

use of a market-weighted unit energy 

consumption (UEC) based on the 

distribution of efficiencies of available 

models was flawed. (AHRI, No. 24 at p. 

7) AHRI stated that the majority of 

shipments involve models at or near the 

minimum efficiency standard level, 

with volume of shipments decreasing as 

efficiency increases. Although there 

may be no information on the exact 

percentages, AHRI considered this to be 

the general pattern. (Id.) Goodman 

Global also disagreed that roughly half 

or more of commercial HVAC products 

less than 65,000 Btu/h shipped today 

are above the minimum efficiency level; 

Goodman estimated roughly threequarters of such models are at base 

efficiency today. (Goodman Global, Inc. 

No 18 at p. 3) Neither AHRI nor 

Goodman provided any data to support 

their positions or to allow DOE to better 

estimate the base-case efficiency 

distribution. Therefore, DOE has 

retained the initial distribution used in 

the NODA. 

For this NOPR, DOE has estimated a 

base-case efficiency trend of an increase 

of approximately 1 SEER every 35 years, 

based on the EER trend from 2012 to 

2035 found in the Commercial Unitary 

Air Conditioner Advance Notice of 

Proposed Rulemaking (ANOPR).31 DOE 

used this same trend in the standardscase scenarios. DOE requests comment 

on the estimated efficiency trend. This 

is identified as Issue 5 under ‘‘Issues on 

Which DOE Seeks Comment’’ in section 

X.E of this NOPR. 

As in the April 11, 2014 NODA, for 

each efficiency level analyzed, DOE 

used a ‘‘roll-up’’ scenario to establish 

the market shares by efficiency level for 

the year that compliance would be 

required with amended standards (i.e., 

2017 for adoption of efficiency levels in 

ASHRAE Standard 90.1–2013 or 2020 if 

DOE adopts more-stringent efficiency 

levels than those in ASHRAE Standard 

90.1–2013). 79 FR 20114, 20132. DOE 

collected information that suggests the 

efficiencies of equipment in the base 

case that did not meet the standard level 

under consideration would roll up to 

meet the standard level. This 

information also suggests that 

equipment efficiencies in the base case 

that were above the standard level 

under consideration would not be 

affected. In response to the April 2014 

NODA, AHRI and Goodman agreed that 

the roll-up scenario was a reasonable 

assumption. (AHRI, No. 24 at p. 8; 

Goodman Global, Inc., No. 18 at p. 3) 

Table V.10 presents the estimated basecase efficiency market shares for each 

small commercial air-cooled air 

conditioner and heat pump equipment 

class. 

TABLE V.10—BASE-CASE EFFICIENCY MARKET SHARES FOR SMALL COMMERCIAL AIR-COOLED AIR CONDITIONERS AND

HEAT PUMPS <65,000 Btu/h 

Three-phase air-cooled split-system air conditioners <65,000 

Btu/h 

(2019) 

Three-phase air-cooled 

single-package air conditioners <65,000 Btu/h 

(2020) 

Three-phase air-cooled 

split-system heat pumps 

<65,000 Btu/h 

(2020) 

Three-phase air-cooled 

single-package heat 

pumps <65,000 Btu/h 

(2020) 

SEER 

Market 

share 

(%) SEER 

Market 

share 

(%) 

SEER 

Market 

share 

(%) 

SEER 

Market 

share 

(%) 

13 ........................................................................... 26 13 0 13 0 13 0 

14 ........................................................................... 50 14 52 14 80 14 69 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
1198 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

32The NES spreadsheet can be found in the 

docket for the ASHRAE rulemaking at: 

www.regulations.gov/#!docketDetail;D=EERE-2014- 

BT-STD-0015. 

TABLE V.10—BASE-CASE EFFICIENCY MARKET SHARES FOR SMALL COMMERCIAL AIR-COOLED AIR CONDITIONERS AND

HEAT PUMPS <65,000 Btu/h—Continued 

Three-phase air-cooled split-system air conditioners <65,000 

Btu/h 

(2019) 

Three-phase air-cooled 

single-package air conditioners <65,000 Btu/h 

(2020) 

Three-phase air-cooled 

split-system heat pumps 

<65,000 Btu/h 

(2020) 

Three-phase air-cooled 

single-package heat 

pumps <65,000 Btu/h 

(2020) 

SEER 

Market 

share 

(%) SEER 

Market 

share 

(%) 

SEER 

Market 

share 

(%) 

SEER 

Market 

share 

(%) 

15 ........................................................................... 22 15 30 15 19 15 21 

16 ........................................................................... 2 16 7 16 1 16 9 

17 ........................................................................... 0 17 4 17 0 17 1 

18 ........................................................................... 0 18 7 18 0 18 1 

19 ........................................................................... 0 19 0 .................. .................. .................. ..................

Note: The 0% market share at 13.0 SEER for three equipment classes is accounting for the default adoption of ASHRAE Standard 90.1–2013 

levels in 2017. 

4. National Energy Savings and Net 

Present Value 

The stock of small commercial aircooled air conditioner and heat pump 

equipment less than 65,000 Btu/h is the 

total number of units in each equipment 

class purchased or shipped from 

previous years that have survived until 

a given point. The NES spreadsheet,32

through use of the shipments model, 

keeps track of the total number of units 

shipped each year. For purposes of the 

NES and NPV analyses, DOE assumes 

that shipments of air conditioner and 

heat pump units survive for an average 

of 19 years and 16 years, respectively, 

following a Weibull distribution, at the 

end of which time they are removed 

from service. 

The national annual energy 

consumption is the product of the 

annual unit energy consumption and 

the number of units of each vintage in 

the stock, summed over all vintages. 

This approach accounts for differences 

in unit energy consumption from year to 

year. In determining national annual 

energy consumption, DOE estimated 

energy consumption and savings based 

on site energy and converted the 

electricity consumption and savings to 

primary energy using annual conversion 

factors derived from the AEO 2014 

version of NEMS. Cumulative energy 

savings are the sum of the NES for each 

year over the timeframe of the analysis. 

In response to the recommendations 

of a committee on ‘‘Point-of-Use and 

Full-Fuel-Cycle Measurement 

Approaches to Energy Efficiency 

Standards’’ appointed by the National 

Academy of Sciences, DOE announced 

its intention to use FFC measures of 

energy use and greenhouse gas and 

other emissions in the national impact 

analyses and emissions analyses 

included in future energy conservation 

standards rulemakings. 76 FR 51281 

(Aug. 18, 2011). After evaluating the 

approaches discussed in the August 18, 

2011 notice, DOE published a statement 

of amended policy in the Federal 

Register in which DOE explained its 

determination that NEMS is the most 

appropriate tool for its FFC analysis and 

its intention to use NEMS for that 

purpose. 77 FR 49701 (Aug. 17, 2012). 

The approach used for this NOPR is 

described in Appendix 8–A of the 

NOPR TSD. 

In accordance with the OMB’s 

guidelines on regulatory analysis, 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. 

DOE used this discount rate to 

approximate the opportunity cost of 

capital in the private sector, because 

recent OMB analysis has found the 

average rate of return on capital to be 

near this rate. DOE used the 3-percent 

rate to capture the potential effects of 

standards on private consumption (e.g., 

through higher prices for products and 

reduced purchases of energy). This rate 

represents the rate at which society 

discounts future consumption flows to 

their present value. This rate can be 

approximated by the real rate of return 

on long-term government debt (i.e., 

yield on United States 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 past 30 years. 

Table V.11 summarizes the inputs to 

the NES spreadsheet model along with 

a brief description of the data sources. 

The results of DOE’s NES and NPV 

analysis are summarized in section 

VIII.B.1.b and described in detail in 

chapter 8 of the NOPR TSD. 

TABLE V.11—SUMMARY OF SMALL COMMERCIAL AIR-COOLED AIR CONDITIONER AND HEAT PUMPS <65,000 Btu/h NES 

AND NPV MODEL INPUTS

Inputs Description 

Shipments ........................................................... Annual shipments based on U.S. Census, AHRI monthly shipment reports, and AEO2014 

forecasts of commercial floor space. (See chapter 7 of the NOPR TSD.) 

Compliance Date of Standard ............................. 2020 for adoption of a more-stringent efficiency level than those specified by ASHRAE Standard 90.1–2013 for the three equipment classes triggered by ASHRAE. 

2017 for adoption of the efficiency levels specified by ASHRAE Standard 90.1–2013. 

2019 for split-system air conditioners. 

Base-Case Efficiencies ....................................... Distribution of base-case shipments by efficiency level, with efficiency trend of an increase of 

1 EER every 35 years. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1199 

33AHRI Directory of Certified Product 

Performance (2013) (Available at: 

www.ahridirectory.org) (Last accessed November 

11, 2013). 

TABLE V.11—SUMMARY OF SMALL COMMERCIAL AIR-COOLED AIR CONDITIONER AND HEAT PUMPS <65,000 Btu/h NES 

AND NPV MODEL INPUTS—Continued 

Inputs Description 

Standards-Case Efficiencies ............................... Distribution of shipments by efficiency level for each standards case. In compliance year, units 

below the standard level ‘‘roll-up’’ to meet the standard. Efficiency trend of an increase of 1 

EER every 35 years. 

Annual Energy Use per Unit ............................... Annual national weighted-average values are a function of efficiency level. (See chapter 4 of 

the NOPR TSD.) 

Total Installed Cost per Unit ............................... Annual weighted-average values are a function of efficiency level. (See chapter 5 of the 

NOPR TSD.) 

Annualized Maintenance and Repair Costs per 

Unit.

Annual weighted-average values are a function of efficiency level. (See chapter 5 of the 

NOPR TSD.) 

Escalation of Fuel Prices .................................... AEO2014 forecasts (to 2040) and extrapolation for beyond 2040. (See chapter 8 of the NOPR 

TSD.) 

Site to Primary and FFC Conversion .................. Based on AEO2014 forecasts (to 2040) and extrapolation for beyond 2040. (See chapter 8 of 

the NOPR TSD.) 

Discount Rate ...................................................... 3 percent and 7 percent real. 

Present Year ....................................................... Future costs are discounted to 2014. 

VI. Methodology for Water-Source Heat 

Pumps 

This section addresses the analyses 

DOE has performed for this rulemaking 

with respect to water-source heat 

pumps. A separate subsection addresses 

each analysis. In overview, DOE used a 

spreadsheet to calculate the LCC and 

PBPs of potential energy conservation 

standards. DOE used another 

spreadsheet to provide shipments 

projections and then calculate national 

energy savings and net present value 

impacts of potential amended energy 

conservation standards. 

A. Market Assessment 

To begin its review of the ASHRAE 

Standard 90.1–2013 efficiency levels, 

DOE developed information that 

provides an overall picture of the 

market for the equipment concerned, 

including the purpose of the equipment, 

the industry structure, and market 

characteristics. This activity included 

both quantitative and qualitative 

assessments based primarily on 

publicly-available information. The 

subjects addressed in the market 

assessment for this rulemaking include 

equipment classes, manufacturers, 

quantities, and types of equipment sold 

and offered for sale. The key findings of 

DOE’s market assessment are 

summarized subsequently. For 

additional detail, see chapter 2 of the 

NOPR TSD. 

1. Equipment Classes 

EPCA and ASHRAE Standard 90.1– 

2013 both divide water-source heat 

pumps into three categories based on 

the following cooling capacity ranges: 

(1) <17,000 Btu/h; (2) ≥17,000 and 

<65,000 Btu/h; and (3) ≥65,000 and 

<135,000 Btu/h. As noted previously, 

ASHRAE 90.1–2013 revised the 

nomenclature for these equipment 

classes to refer to ‘‘water-to-air, waterloop.’’ In this document, DOE is 

proposing to revise the nomenclature for 

these equipment classes (but not the 

broader category) to match that used by 

ASHRAE. 

2. Review of Current Market 

In order to obtain the information 

needed for the market assessment for 

this rulemaking, DOE consulted a 

variety of sources, including 

manufacturer literature, manufacturer 

Web sites, and the AHRI certified 

directory.33 The information DOE 

gathered serves as resource material 

throughout the rulemaking. The sections 

that follow provide an overview of the 

market assessment, and chapter 2 of the 

NOPR TSD provides additional detail 

on the market assessment, including 

citations to relevant sources. 

a. Trade Association Information 

DOE identified the same trade groups 

relevant to water-source heat pumps as 

to those listed in section V.A.2.a for 

small air-cooled air conditioners and 

heat pumps, namely AHRI, HARDI, and 

ACCA. DOE used data available from 

AHRI in its analysis, as described in the 

next section. 

b. Manufacturer Information 

DOE reviewed data for water-source 

(water-to-air, water-loop) heat pumps 

currently on the market by examining 

the AHRI Directory of Certified Product 

Performance. DOE identified 18 parent 

companies (comprising 21 

manufacturers) of water-source (waterto-air, water-loop) heat pumps, which 

are listed in chapter 2 of the NOPR TSD. 

Of these manufacturers, seven were 

identified as small businesses based 

upon number of employees and the 

employee thresholds set by the Small 

Business Administration. More details 

on this analysis can be found below in 

section IX.B. 

c. Market Data 

DOE reviewed the AHRI database to 

characterize the efficiency and 

performance of water-source (water-toair, water-loop) heat pump models 

currently on the market. The full results 

of this market characterization are found 

in chapter 2 of the NOPR TSD. For 

water-source heat pumps less than 

17,000 Btu/h, the average EER was 13.8, 

and the average coefficient of 

performance (COP) was 4.7. Of the 

models identified by DOE, 34 (six 

percent of the total models) have EERs 

rated below the ASHRAE Standard 

90.1–2013 levels, and 30 (five percent of 

the total models) have COPs rated below 

the ASHRAE Standard 90.1–2013 levels. 

For water-source heat pumps greater 

than or equal to 17,000 Btu/h and less 

than 65,000 Btu/h, the average EER was 

15.2, and the average COP was 4.9. Of 

the models identified by DOE, 72 (two 

percent of the total models) have EERs 

rated below the ASHRAE Standard 

90.1–2013 levels, and 133 (four percent 

of the total models) have COPs rated 

below the ASHRAE Standard 90.1–2013 

levels. For water-source heat pumps 

greater than or equal to 65,000 Btu/h 

and less than 135,000 Btu/h, the average 

EER was 14.7, and the average COP was 

4.8. Of the models identified by DOE, 

five (one percent of the total models) 

have EERs rated below the ASHRAE 

Standard 90.1–2013 levels, and two (0.5 

percent of the total models) have COPs 

rated below the ASHRAE Standard 

90.1–2013 levels. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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B. Engineering Analysis 

The engineering analysis establishes 

the relationship between an increase in 

energy efficiency and the increase in 

cost (manufacturer selling price (MSP)) 

of a piece of equipment DOE is 

evaluating for potential amended energy 

conservation standards. This 

relationship serves as the basis for costbenefit calculations for individual 

consumers, manufacturers, and the 

Nation. The engineering analysis 

identifies representative baseline 

equipment, which is the starting point 

for analyzing possible energy efficiency 

improvements. For covered ASHRAE 

equipment, DOE sets the baseline for 

analysis at the ASHRAE Standard 90.1 

efficiency level, because by statute, DOE 

cannot adopt any level below the 

revised ASHRAE level. The engineering 

analysis then identifies higher efficiency 

levels and the incremental increase in 

product cost associated with achieving 

the higher efficiency levels. After 

identifying the baseline models and cost 

of achieving increased efficiency, DOE 

estimates the additional costs to the 

commercial consumer through an 

analysis of contractor costs and 

markups, and uses that information in 

the downstream analyses to examine the 

costs and benefits associated with 

increased equipment efficiency. 

DOE typically structures its 

engineering analysis around one of three 

methodologies: (1) The design-option 

approach, which calculates the 

incremental costs of adding specific 

design options to a baseline model; (2) 

the efficiency-level approach, which 

calculates the relative costs of achieving 

increases in energy efficiency levels 

without regard to the particular design 

options used to achieve such increases; 

and/or (3) the reverse-engineering or 

cost-assessment approach, which 

involves a ‘‘bottom-up’’ manufacturing 

cost assessment based on a detailed bill 

of materials derived from teardowns of 

the equipment being analyzed. A 

supplementary method called a catalog 

teardown uses published manufacturer 

catalogs and supplementary component 

data to estimate the major physical 

differences between a piece of 

equipment that has been physically 

disassembled and another piece of 

similar equipment for which catalog 

data are available to determine the cost 

of the latter equipment. Deciding which 

methodology to use for the engineering 

analysis depends on the equipment, the 

design options under study, and any 

historical data upon which DOE may 

draw. 

1. Approach 

For this analysis, DOE used a 

combination of the efficiency-level 

approach and the cost-assessment 

approach. DOE used the efficiency-level 

approach to identify incremental 

improvements in efficiency for each 

equipment class and the costassessment approach to develop a cost 

for each efficiency level. The efficiency 

levels that DOE considered in the 

engineering analysis were representative 

of commercial water-source heat pumps 

currently produced by manufacturers at 

the time the engineering analysis was 

developed. DOE relied on data reported 

in the AHRI Directory of Certified 

Product Performance to select 

representative efficiency levels. This 

directory reported EER, COP, heating 

and cooling capacities, and other data 

for all three application types (waterloop, ground-water, ground-loop) for all 

AHRI-certified units. After identifying 

representative efficiency levels, DOE 

used a catalog teardown or ‘‘virtual 

teardown’’ approach to estimate 

equipment costs at each level. DOE 

obtained general descriptions of key 

water-source heat pump components in 

product literature and used data 

collected for dozens of HVAC products 

to characterize the components’ design 

details. This approach was used instead 

of the physical teardown approach due 

to time constraints. 

Although there are benefits to using a 

catalog teardown approach, DOE notes 

that there are drawbacks as well. Most 

significantly, there are differences 

between water-source heat pumps and 

the commercial heating and cooling 

equipment that were physically torn 

down. DOE was only able to account for 

these difference based upon data 

supplied from manufacturer catalogs or 

component data. Therefore, there may 

be additional minor details or parts of 

the units that were not accounted for. 

However, DOE has tentatively 

concluded that this approach provides a 

reasonable approximation of the cost 

increases associated with efficiency 

increases by including all major parts 

and components. In the end, the 

approach allowed DOE to provide 

estimates of equipment prices for the 

range of efficiencies currently available 

on the market. 

After selecting efficiency levels for 

each capacity class, as described in the 

sections that follow, DOE selected 

products for the catalog teardown 

analysis that corresponded to the 

representative efficiencies and cooling 

capacities. The engineering analysis 

included data for over 60 water-source 

heat pumps. DOE calculated the MPC 

for products spanning the full range of 

efficiencies from the baseline to the 

max-tech level for each analyzed 

equipment class. In some cases, catalog 

data providing sufficient information for 

cost analysis were not available at each 

efficiency level under consideration. 

Hence, DOE calculated the costs for 

some of the efficiency levels based on 

the cost/efficiency trends observed for 

other efficiency levels for which such 

catalog data were available. The 

engineering analysis is described in 

more detail in chapter 3 of the NOPR 

TSD. 

2. Baseline Equipment 

DOE selected baseline efficiency 

levels as reference points for each 

equipment class, against which it 

measured changes resulting from 

potential amended energy conservation 

standards. DOE defined the baseline 

efficiency levels as reference points to 

compare the technology, energy savings, 

and cost of equipment with higher 

energy efficiency levels. Typically, units 

at the baseline efficiency level just meet 

Federal energy conservation standards 

and provide basic consumer utility. 

However, EPCA requires that DOE must 

adopt either the ASHRAE Standard 

90.1–2013 levels or more-stringent 

levels. Therefore, because the ASHRAE 

Standard 90.1–2013 levels were the 

lowest levels that DOE could adopt, 

DOE used those levels as the reference 

points against which more-stringent 

levels were evaluated. Table VI.1 shows 

the current baseline and ASHRAE 

efficiency levels for each water-source 

heat pump equipment class. In Table 

VI.2 below, the ASHRAE levels are 

designated ‘‘0’’ and more-stringent 

levels are designated 1, 2, and so on. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1201 

TABLE VI.1—BASELINE EFFICIENCY LEVELS FOR WATER-SOURCE HEAT PUMPS

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

<17,000 Btu/h 

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

≥17,000 and 

<65,000 Btu/h 

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

≥65,000 and 

<135,000 Btu/h 

Efficiency level (EER) 

Baseline—Federal Standard ............................................................................................ 11.2 12.0 12.0 

Baseline—ASHRAE Standard ......................................................................................... 12.2 13.0 13.0

3. Identification of Increased Efficiency 

Levels for Analysis 

DOE developed and considered 

potential increased energy efficiency 

levels for each equipment class. These 

more-stringent efficiency levels are 

representative of efficiency levels along 

the technology paths that manufacturers 

of residential heating products 

commonly use to maintain cost-effective 

designs while increasing energy 

efficiency. DOE developed morestringent energy efficiency levels for 

each of the equipment classes, based on 

a review of AHRI’s Directory of Certified 

Product Performance, manufacturer 

catalogs, and other publicly-available 

literature. The efficiency levels selected 

for analysis for each water-source heat 

pump equipment class are shown in 

Table VI.2. Chapter 3 of the NOPR TSD 

shows additional details on the 

efficiency levels selected for analysis. 

TABLE VI.2—EFFICIENCY LEVELS FOR ANALYSIS OF WATER-SOURCE HEAT PUMPS

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

<17,000 Btu/h 

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

≥17,000 and 

<65,000 Btu/h 

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

≥65,000 and 

<135,000 Btu/h 

Efficiency Level (EER, Btu/W-h) 

Baseline—Federal Standard ............................................................................................ 11.2 12.0 12.0 

Baseline—ASHRAE Level (0) ......................................................................................... 12.2 13.0 13.0 

Efficiency Level 1 ............................................................................................................. 13.0 14.6 14.0 

Efficiency Level 2 ............................................................................................................. 14.0 16.6 15.0 

Efficiency Level 3 ............................................................................................................. 15.7 18.0 16.0 

Efficiency Level 4 * ........................................................................................................... 16.5 19.2 17.2 

Efficiency Level 5 ** ......................................................................................................... 18.1 21.6 ............................

* Efficiency Level 4 is ‘‘Max-Tech’’ for the largest equipment classes. 

** Efficiency Level 5 is ‘‘Max-Tech’’ for the two smaller equipment classes. 

4. Engineering Analysis Results 

The results of the engineering analysis 

are cost-efficiency curves based on 

results from the cost models for 

analyzed units. DOE’s calculated MPCs 

for the three analyzed classes of watersource heat pumps are shown in Table 

VI.3. DOE used the cost-efficiency 

curves from the engineering analysis as 

an input for the life-cycle cost and PBP 

analysis. Further details regarding MPCs 

for water-source heat pumps may be 

found in chapter 3 of the NOPR TSD. 

TABLE VI.3—MANUFACTURER PRODUCTION COSTS FOR WATER-SOURCE HEAT PUMPS

Water-source 

(water-to-air, waterloop) 

heat pumps 

<17,000 Btu/h 

Water-source 

(water-to-air, waterloop) 

heat pumps 

≥17,000 and 

<65,000 Btu/h 

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

≥65,000 and 

<135,000 Btu/h 

EER MPC 

($) EER MPC 

($) EER MPC ($) 

ASHRAE—Level 0 ............................................................................................... 12.2 860 13.0 1,346 13.0 3,274 

Efficiency Level 1 ................................................................................................. 13.0 904 14.6 1,463 14.0 3,660 

Efficiency Level 2 ................................................................................................. 14.0 960 16.6 1,609 15.0 4,045 

Efficiency Level 3 ................................................................................................. 15.7 1,053 18.0 1,711 16.0 4,431 

Efficiency Level 4 ................................................................................................. 16.5 1,097 19.2 1,798 17.2 4,893 

Efficiency Level 5 ................................................................................................. 18.1 1,185 21.6 1,974 .............. ..............


tkelley on DSK3SPTVN1PROD with PROPOSALS2
1202 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

34A heating efficiency of 2.9 COP corresponds to 

the existing minimum heating efficiency standard 

for commercial unitary heat pumps, a value which 

DOE believes is representative of the heat pump 

stock characterized by CBECS. 

35See: http://www.ahridirectory.org/

ahridirectory/pages/homeM.aspx. 

36See Appendix D of the 2000 Screening Analysis 

for EPACT-Covered Commercial HVAC and WaterHeating Equipment. (EERE–2006–STD–0098–0015) 

a. Manufacturer Markups 

As discussed in detail in section 

V.B.4.a, DOE applies a non-production 

cost multiplier (the manufacturer 

markup) to the full MPC to account for 

corporate non-production costs and 

profit. The resulting manufacturer 

selling price (MSP) is the price at which 

the manufacturer can recover all 

production and nonproduction costs 

and earn a profit. Because water-source 

heat pumps and commercial air-cooled 

equipment are sold by similar heating 

and cooling product manufacturers, 

DOE used the same manufacturer 

markup of 1.3 that was developed for 

small commercial air-cooled airconditioners and heat pumps, as 

described in chapter 3 of the NOPR 

TSD. 

b. Shipping Costs 

Manufacturers of commercial HVAC 

equipment typically pay for freight 

(shipping) to the first step in the 

distribution chain. Freight is not a 

manufacturing cost, but because it is a 

substantial cost incurred by the 

manufacturer, DOE accounts for 

shipping costs separately from other 

non-production costs that comprise the 

manufacturer markup. DOE calculated 

the MSP for water-source heat pumps by 

multiplying the MPC at each efficiency 

level (determined from the cost model) 

by the manufacturer markup and adding 

shipping costs. Shipping costs for watersource heat pumps were calculated 

similarly to those for small commercial 

air-cooled air-conditioners and heat 

pumps described in section V.B.4.b. See 

chapter 3 of the NOPR TSD for more 

details about DOE’s shipping cost 

assumptions and the shipping costs per 

unit for each water-source heat pump 

product class. 

C. Markups Analysis 

The markups analysis develops 

appropriate markups in the distribution 

chain to convert the estimates of 

manufacturer selling price derived in 

the engineering analysis to commercial 

consumer prices. (‘‘Commercial 

consumer’’ refers to purchasers of the 

equipment being regulated.) DOE 

calculates overall baseline and 

incremental markups based on the 

equipment markups at each step in the 

distribution chain. The incremental 

markup relates the change in the 

manufacturer sales price of higherefficiency models (the incremental cost 

increase) to the change in the 

commercial consumer price. 

For water-source heat pumps, DOE 

used the same markups that were 

developed for small commercial aircooled air-conditioners and heat pumps, 

as discussed in section V.C. DOE 

understands that the equipment move 

through the same distribution channels 

and that, therefore, using the same 

markups is reasonable. In addition, 

DOE’s development of markups within 

those channels is at the broader 

equipment category level, in this case 

heating, ventilation, and airconditioning equipment. As with small 

commercial air-cooled equipment, DOE 

did not use national accounts in its 

markups analysis for water-source heat 

pumps, because DOE does not believe 

that the commercial consumers of 

water-source heat pump equipment less 

than 135,000 Btu/h would typically be 

national retail chains that negotiate 

directly with manufacturers. DOE seeks 

comment on whether the use of national 

accounts would be appropriate in this 

analysis. This is identified as Issue 6 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section X.E of this NOPR. 

Chapter 6 of the NOPR TSD provides 

further detail on the estimation of 

markups. 

D. Energy Use Analysis 

The energy use analysis provides 

estimates of the annual energy 

consumption of water-source heat 

pumps at the considered efficiency 

levels. DOE uses these values in the LCC 

and PBP analyses and in the NIA. 

The cooling unit energy consumption 

(UEC) by equipment type and efficiency 

level used in the April 11, 2014 NODA 

came from Appendix D of the 2000 

Screening Analysis for EPACT-Covered 

Commercial HVAC and Water-Heating 

Equipment. (EERE–2006–STD–0098– 

0015) 79 FR 20114, 20126–27. Where 

identical efficiency levels were 

available, DOE used the UEC directly 

from the screening analysis. For 

additional efficiency levels, DOE scaled 

the UECs based on the ratio of EER, as 

was done in the original analysis. In 

response to the NODA, AHRI 

commented that DOE should use up-todate data to estimate the cooling UEC of 

water-source heat pumps, because 

significant improvements have been 

made in envelope construction in the 14 

years since the screening analysis was 

performed. (AHRI, No. 24 at p. 6) In 

reviewing this comment, DOE found 

that the NEMS commercial demand 

module accounts for improvements in 

building shell characteristics and 

changes in internal load by adjusting the 

cooling energy use with a factor that is 

a function of region and building 

activity. Consequently, for this NOPR, 

DOE used these factors to adjust the 

cooling energy use from the 2000 

Screening Analysis. 

In the April 11, 2014 NODA, DOE did 

not analyze heating UECs for watersource heat pumps because of lack of 

data availability. 79 FR 20114, 20126. 

DOE requested input and data related to 

this topic but did not receive any. For 

this NOPR, to characterize the heatingside performance, DOE analyzed CBECS 

2003 data to develop a national-average 

annual energy use per square foot for 

buildings that use heat pumps. DOE 

assumed that the average COP of the 

commercial unitary heat pump (CUHP) 

was 2.9.34 DOE converted the energy use 

per square foot value to annual energy 

use per ton using a ton-per-square-foot 

relationship derived from the energy use 

analysis in the 2014 CUAC NOPR. 

(EERE–2013–BT–STD–0007–0027) This 

analysis relates to equipment larger than 

some of the equipment that is the 

subject of this current NOPR and is 

directly applicable only to air-source 

heat pumps rather than water-source 

heat pumps. However, for this NOPR, 

DOE assumed that this estimate was 

sufficiently representative of the heating 

energy use for all three classes of watersource heat pumps. DOE seeks comment 

on this issue. This is identified as Issue 

7 under ‘‘Issues on Which DOE Seeks 

Comment’’ in section X.E of this NOPR. 

Because equipment energy use is a 

function of efficiency, DOE assumed 

that the annual heating energy 

consumption of a unit scales 

proportionally with its heating COP 

efficiency level. Finally, to determine 

the COPs of units with given EERs, DOE 

correlated COP to EER based on the 

AHRI Certified Equipment Database.35

Thus, for any given cooling efficiency of 

a water-source heat pump, DOE was 

able to use this method to establish the 

corresponding heating efficiency, and, 

in turn, the associated annual heating 

energy consumption. 

In order to create variability in the 

cooling and heating UECs by region and 

building type, DOE used a Pacific 

Northwest National Laboratory report 36

that estimated the annual energy usage 

of space cooling and heating products 

using a Full Load Equivalent Operating 

Hour (FLEOH) approach. DOE 

normalized the provided FLEOHs to the 

UECs taken from the 2011 DFR for 

central air conditioners and heat pumps 

to vary the average UEC across region 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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37RS Means Mechanical Cost Data 2013. Reed 

Construction Data, LLC. (2012). 

38RS Means Facilities Maintenance & Repair Cost 

Data 2013. Reed Construction Data, LLC. (2012). 

and building type. In this analysis, DOE 

used the following building types: 

Office, education, lodging, multi-family 

apartments, and healthcare. DOE seeks 

comment on whether these building 

types are appropriate or whether there 

are other building types that should be 

considered for the water-source heat 

pump analysis. This is identified as 

Issue 8 under ‘‘Issues on Which DOE 

Seeks Comment’’ in section X.E of this 

NOPR. 

E. Life-Cycle Cost and Payback Period 

Analysis 

The purpose of the LCC and PBP 

analysis is to analyze the effects of 

potential amended energy conservation 

standards on commercial consumers of 

water-source heat pumps by 

determining how a potential amended 

standard affects their operating 

expenses (usually decreased) and their 

total installed costs (usually increased). 

The LCC is the total consumer 

expense over the life of the equipment, 

consisting of equipment and installation 

costs plus operating costs (i.e., expenses 

for energy use, maintenance, and 

repair). DOE discounts future operating 

costs to the time of purchase using 

commercial consumer discount rates. 

The PBP is the estimated amount of 

time (in years) it takes commercial 

consumers to recover the increased total 

installed cost (including equipment and 

installation costs) of a more-efficient 

type of equipment through lower 

operating costs. DOE calculates the PBP 

by dividing the change in total installed 

cost (normally higher) due to a standard 

by the change in annual operating cost 

(normally lower) that results from the 

potential standard. However, unlike the 

LCC, DOE only considers the first year’s 

operating expenses in the PBP 

calculation. Because the PBP does not 

account for changes in operating 

expense over time or the time value of 

money, it is also referred to as a simple 

PBP. 

For any given efficiency level, DOE 

measures the PBP and the change in 

LCC relative to an estimate of the basecase efficiency level. For water-source 

heat pumps, the base-case estimate 

reflects the market in the case where the 

ASHRAE level becomes the Federal 

minimum, and the LCC calculates the 

LCC savings likely to result from higher 

efficiency levels compared with the 

ASHRAE base case. 

DOE conducted an LCC and PBP 

analysis for water-source heat pumps 

using a computer spreadsheet model. 

When combined with Crystal Ball (a 

commercially-available software 

program), the LCC and PBP model 

generates a Monte Carlo simulation to 

perform the analyses by incorporating 

uncertainty and variability 

considerations in certain of the key 

parameters as discussed below. Inputs 

to the LCC and PBP analysis are 

categorized as: (1) Inputs for 

establishing the total installed cost and 

(2) inputs for calculating the operating 

expense. The following sections contain 

brief discussions of comments on the 

inputs and key assumptions of DOE’s 

LCC and PBP analysis and explain how 

DOE took these comments into 

consideration. They are also described 

in detail in chapter 6 of the NOPR TSD. 

1. Equipment Costs 

In the LCC and PBP analysis, the 

equipment costs faced by purchasers of 

water-source heat pumps are derived 

from the MSPs estimated in the 

engineering analysis, the overall 

markups estimated in the markups 

analysis, and sales tax. 

To develop an equipment price trend 

for the NOPR, DOE derived an inflationadjusted index of the PPI for ‘‘all other 

miscellaneous refrigeration and airconditioning equipment’’ from 1990– 

2013, which is the PPI series most 

relevant to water-source heat pumps. 

Although the inflation-adjusted index 

shows a declining trend from 1990 to 

2004, data since 2008 have shown a flatto-slightly rising trend. Given the 

uncertainty as to which of the trends 

will prevail in coming years, DOE chose 

to apply a constant price trend (at 2013 

levels) for each efficiency level in each 

equipment class for the NOPR. See 

chapter 6 of the NOPR TSD for more 

information on the price trends. 

2. Installation Costs 

DOE derived installation costs for 

water-source heat pump equipment 

from current RS Means data (2013).37 RS 

Means provides estimates for 

installation costs for the subject 

equipment by equipment capacity, as 

well as cost indices that reflect the 

variation in installation costs for 656 

cities in the United States. The RS 

Means data identify several cities in all 

50 States and the District of Columbia. 

DOE incorporated location-based cost 

indices into the analysis to capture 

variation in installation costs, 

depending on the location of the 

consumer. 

Based on these data, DOE tentatively 

concluded that data for 1-ton, 3-ton, and 

7.5-ton water-source heat pumps would 

be sufficiently representative of the 

installation costs for of water-source 

heat pumps with capacities of less than 

17,000 btu/h, greater than or equal to 

17,000 and less than 65,000 btu/h, and 

greater than or equal to 65,000 and less 

than 135,000 btu/h, respectively. 

DOE also varied installation cost as a 

function of equipment weight. Because 

weight tends to increase with 

equipment efficiency, installation cost 

increased with equipment efficiency. 

The weight of the equipment in each 

class and efficiency level was 

determined through the engineering 

analysis. 

3. Unit Energy Consumption 

The calculation of annual per-unit 

energy consumption by each class of the 

subject water-source heat pumps at each 

considered efficiency level based on the 

energy use analysis is described above 

in section VI.D and in chapter 4 of the 

NOPR TSD. 

4. Electricity Prices and Electricity Price 

Trends 

DOE used the same average and 

marginal electricity prices and 

electricity price trends as discussed in 

the methodology for small commercial 

air-cooled air conditioners and heat 

pumps (see section V.E.4). These data 

were developed for the broader 

commercial air-conditioning category 

and, thus, are also relevant to watersource heat pumps. 

5. Maintenance Costs 

Maintenance costs are costs to the 

commercial consumer of ensuring 

continued operation of the equipment 

(e.g., checking and maintaining 

refrigerant charge levels and cleaning 

heat-exchanger coils). Because RS 

Means does not provide maintenance 

costs for water-source heat pumps, DOE 

used annualized maintenance costs for 

air-source heat pumps, the closest 

related equipment category, derived 

from RS Means data.38 DOE does not 

expect the maintenance costs for watersource heat pumps to differ significantly 

from those for air-source heat pumps. 

These data provided estimates of 

person-hours, labor rates, and materials 

required to maintain commercial airsource heat pumps. The estimated 

annualized maintenance cost is $329 for 

a heat pump rated up to 60,000 Btu/h 

and $398 for a heat pump rated greater 

than 60,000 Btu/h. DOE applied the 

former cost to water-source heat pumps 

less than 17,000 Btu/h and heat pumps 

greater than or equal to 17,000 and less 

than 65,000 Btu/h. DOE applied the 

latter cost to water-source heat pumps 

greater than or equal to 65,000 Btu/h 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
1204 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

39 Id. 

and less than 135,000 Btu/h. DOE 

requests comment on how maintenance 

costs for water-source heat pumps might 

be expected to differ from that for airsource heat pumps. This is identified as 

Issue 9 under ‘‘Issues on Which DOE 

Seeks Comment’’ in section X.E of this 

NOPR. 

6. Repair Costs 

Repair costs are costs to the 

commercial consumer associated with 

repairing or replacing components that 

have failed. As with maintenance costs, 

RS Means does not provide repair costs 

for water-source heat pumps. Therefore, 

DOE assumed the repair costs for watersource heat pumps would be similar to 

air-source units and utilized RS 

Means 39 to find the repair costs for airsource heat pumps. DOE does not 

expect the repair costs for water-source 

heat pumps to differ significantly from 

those for air-source heat pumps. DOE 

took the repair costs for 1.5-ton, 5-ton, 

and 10-ton air to air heat pumps and 

linearly scaled the repair costs to derive 

repair costs for 1-ton, 3-ton, and 7.5-ton 

equipment. DOE assumed that the repair 

would be a one-time event in year 10 of 

the equipment life. DOE then 

annualized the present value of the cost 

over the average equipment life (see 

next section) to obtain an annualized 

equivalent repair cost. This value 

ranged from $92 to $237 for the 

ASHRAE baseline, depending on 

equipment class. The materials portion 

of the repair cost was scaled with the 

percentage increase in manufacturers’ 

production cost by efficiency level. The 

labor cost was held constant across 

efficiency levels. This annualized repair 

cost was then added to the maintenance 

cost to create an annual ‘‘maintenance 

and repair cost’’ for the lifetime of the 

equipment. For further discussion of 

how DOE derived and implemented 

repair costs, see chapter 8 of the NOPR 

TSD. DOE requests comment on how 

repair costs for water-source heat pumps 

might be expected to differ from that for 

air-source heat pumps. This is identified 

as Issue 10 under ‘‘Issues on Which 

DOE Seeks Comment’’ in section X.E of 

this NOPR. 

7. Equipment Lifetime 

Equipment lifetime is the age at 

which the subject water-source heat 

pump are retired from service. In the 

April 11, 2014 NODA, DOE used a mean 

lifetime of 19 years from the 2000 

screening analysis for EPACT-Covered 

Commercial HVAC and Water-Heating 

Equipment (EERE–2006–STD–0098– 

0015). 79 FR 20114, 20133. For this 

NOPR, DOE based equipment lifetime 

on a retirement function in the form of 

a Weibull probability distribution. 

Because a function specific to watersource heat pumps was not available, 

DOE used that for air-cooled air 

conditioners presented in the 2011 DFR 

(EERE–2011–BT–STD–0011–0012), as it 

is for similar equipment and 

represented the desired mean lifetime of 

19 years. DOE requests data and 

information that would help it develop 

a retirement function specific to watersource heat pumps. This is identified as 

Issue 11 under ‘‘Issues on Which DOE 

Seeks Comment’’ in section X.E of this 

NOPR. 

8. Discount Rate 

The discount rate is the rate at which 

future expenditures are discounted to 

estimate their present value. The cost of 

capital commonly is used to estimate 

the present value of cash flows to be 

derived from a typical company project 

or investment. Most companies use both 

debt and equity capital to fund 

investments, so the cost of capital is the 

weighted-average cost of capital 

(WACC) to the firm of equity and debt 

financing. DOE uses the capital asset 

pricing model (CAPM) to calculate the 

equity capital component, and financial 

data sources to calculate the cost of debt 

financing. 

DOE derived the discount rates by 

estimating the cost of capital of 

companies that purchase water-source 

heat pump equipment. More details 

regarding DOE’s estimates of 

commercial consumer discount rates are 

provided in chapter 6 of the NOPR TSD. 

9. Base-Case Market Efficiency 

Distribution 

For the LCC analysis, DOE analyzes 

the considered efficiency levels relative 

to a base case (i.e., the case without 

amended energy efficiency standards, in 

this case the default scenario in which 

DOE is statutorily required to adopt the 

efficiency levels in ASHRAE 90.1– 

2013). This analysis requires an estimate 

of the distribution of equipment 

efficiencies in the base case (i.e., what 

consumers would have purchased in the 

compliance year in the absence of 

amended standards more stringent than 

those in ASHRAE 90.1–2013). DOE 

refers to this distribution of equipment 

energy efficiencies as the base-case 

efficiency distribution. For more 

information on the development of the 

base-case distribution, see section VI.F.3 

and chapter 6 of the NOPR TSD. 

10. Compliance Date 

DOE calculated the LCC and PBP for 

all commercial consumers as if each 

were to purchase new equipment in the 

year that compliance with amended 

standards is required. Generally, 

covered equipment to which a new or 

amended energy conservation standard 

applies must comply with the standard 

if such equipment is manufactured or 

imported on or after a specified date. In 

this NOPR, DOE is evaluating whether 

more-stringent efficiency levels than 

those in ASHRAE Standard 90.1–2013 

would be technologically feasible, 

economically justified, and result in a 

significant additional amount of energy 

savings. If DOE were to propose a rule 

prescribing energy conservation 

standards at the efficiency levels 

contained in ASHRAE Standard 90.1– 

2013, EPCA states that compliance with 

any such standards shall be required on 

or after a date which is two or three 

years (depending on equipment size) 

after the compliance date of the 

applicable minimum energy efficiency 

requirement in the amended ASHRAE/ 

IES standard. (42 U.S.C. 6313(a)(6)(D)) 

Given the equipment size at issue here, 

DOE has applied the two-year 

implementation period to determine the 

compliance date of any energy 

conservation standard equal to the 

efficiency levels specified by ASHRAE 

Standard 90.1–2013 proposed by this 

rulemaking. Thus, if DOE decides to 

adopt the efficiency levels in ASHRAE 

Standard 90.1–2013, the compliance 

date of the rulemaking would be 

dependent upon the date specified in 

ASHRAE Standard 90.1–2013 or its 

publication date, if none is specified. In 

this case, the rule would apply to watersource heat pumps manufactured on or 

after October 9, 2015, which is two 

years after the publication date of 

ASHRAE Standard 90.1–2013. 

If DOE were to propose a rule 

prescribing energy conservation 

standards more stringent than the 

efficiency levels contained in ASHRAE 

Standard 90.1–2013, EPCA states that 

compliance with any such standards is 

required for equipment manufactured 

on or after a date which is four years 

after the date the final rule is published 

in the Federal Register. (42 U.S.C. 

6313(a)(6)(D)) DOE has applied this 4- 

year implementation period to 

determine the compliance date for any 

energy conservation standard more 

stringent than the efficiency levels 

specified by ASHRAE Standard 90.1– 

2013 that might be prescribed at the 

final rule stage. Thus, for equipment for 

which DOE might adopt a level more 

stringent than the ASHRAE efficiency 

levels, the rule would apply to such 

equipment manufactured on or after a 

date four years from the date of 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1205 

40Since ASHRAE published ASHRAE Standard 

90.1–2013 on October 9, 2013, EPCA requires that 

DOE publish a final rule adopting more-stringent 

standards than those in ASHRAE Standard 90.1– 

2013, if warranted, within 30 months of ASHRAE 

action (i.e., by April 2016). Thus, four years from 

April 2016 would be April 2020, which would be 

the anticipated compliance date for DOE adoption 

of more-stringent standards. 

41Although the expected compliance date for 

adoption of the efficiency levels in ASHRAE 

Standard 90.1–2013 is October 9, 2015, DOE began 

its analysis period in 2016 to avoid ascribing 

savings to the three-quarters of 2015 prior to the 

compliance date. 

42U.S. Census Bureau, Current Industrial Reports 

for Refrigeration, Air Conditioning, and Warm Air 

Heating Equipment, MA333M. Note that the current 

industrial reports were discontinued in 2010, so 

more recent data are not available (Available at: 

http://www.census.gov/manufacturing/cir/

historical_data/ma333m/index.html). 

publication of the final rule, which the 

statute requires to be completed by 

April 9, 2016 (thereby resulting in a 

compliance date no later than April 9, 

2020).40

Economic justification is not required 

for DOE to adopt the efficiency levels in 

ASHRAE 90.1–2013, as DOE is 

statutorily required to, at a minimum, 

adopt those levels. Therefore, DOE did 

not perform an LCC analysis on the 

ASHRAE Standard 90.1–2013 levels, 

and, for purposes of the LCC analysis, 

DOE used 2020 as the first year of 

compliance with amended standards. 

11. Payback Period Inputs 

The payback period is the amount of 

time it takes the commercial consumer 

to recover the additional installed cost 

of more-efficient equipment, compared 

to baseline equipment, through energy 

cost savings. Payback periods are 

expressed in years. Payback periods that 

exceed the life of the equipment mean 

that the increased total installed cost is 

not recovered in reduced operating 

expenses. 

Similar to the LCC, the inputs to the 

PBP calculation are the total installed 

cost of the equipment to the commercial 

consumer for each efficiency level and 

the average annual operating 

expenditures for each efficiency level 

for each building type and Census 

Division, weighted by the probability of 

shipment to each market. The PBP 

calculation uses the same inputs as the 

LCC analysis, except that discount rates 

are not needed. Because the simple PBP 

does not take into account changes in 

operating expenses over time or the time 

value of money, DOE considered only 

the first year’s operating expenses to 

calculate the PBP, unlike the LCC, 

which is calculated over the lifetime of 

the equipment. Chapter 6 of the NOPR 

TSD provides additional detail about 

the PBP. 

F. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analysis 

The NIA evaluates the effects of a 

considered energy conservation 

standard from a national perspective 

rather than from the consumer 

perspective represented by the LCC. 

This analysis assesses the NPV (future 

amounts discounted to the present) and 

the NES of total commercial consumer 

costs and savings, which are expected to 

result from amended standards at 

specific efficiency levels. For each 

efficiency level analyzed, DOE 

calculated the NPV and NES for 

adopting more-stringent standards than 

the efficiency levels specified in 

ASHRAE Standard 90.1–2013. 

The NES refers to cumulative energy 

savings from 2016 through 2045; 41

however, when evaluating morestringent standards, energy savings do 

not begin accruing until the later 

compliance date of 2020. DOE 

calculated new energy savings in each 

year relative to a base case, defined as 

DOE adoption of the efficiency levels 

specified by ASHRAE Standard 90.1– 

2013. DOE also calculated energy 

savings from adopting efficiency levels 

specified by ASHRAE Standard 90.1– 

2013 compared to the EPCA base case 

(i.e., the current Federal standards). 

The NPV refers to cumulative 

monetary savings. DOE calculated net 

monetary savings in each year relative 

to the base case (ASHRAE Standard 

90.1–2013) as the difference between 

total operating cost savings and 

increases in total installed cost. 

Cumulative savings are the sum of the 

annual NPV over the specified period. 

DOE accounted for operating cost 

savings until past 2100, when the 

equipment installed in the thirtieth year 

after the compliance date of the 

amended standards should be retired. 

1. Approach 

The NES and NPV are a function of 

the total number of units and their 

efficiencies. Both the NES and NPV 

depend on annual shipments and 

equipment lifetime. Both calculations 

start by using the shipments estimate 

and the quantity of units in service 

derived from the shipments model. DOE 

used the same approach to determine 

NES and NPV for water-source heat 

pumps which was used for small 

commercial air-cooled air-conditioning 

and heating equipment, as described in 

section V.F.1. In this case, the analysis 

period runs from 2016 through 2045. 

DOE considered whether a rebound 

effect is applicable in its NES analysis, 

a concept explained in detail in section 

V.F.1. DOE does not expect commercial 

consumers with water-source heat 

pump equipment to increase their use of 

the equipment, either in a previously 

cooled space or another previously 

uncooled space. Water-source heat 

pumps are part of engineered water-loop 

systems designed for specific 

applications. It is highly unlikely that 

the operation or installation of these 

systems would be changed simply as a 

result of energy cost savings. Therefore, 

DOE did not assume a rebound effect in 

the present NOPR analysis. DOE seeks 

input from interested parties on whether 

there will be a rebound effect for 

improvements in the efficiency of watersource heat pumps. If interested parties 

believe a rebound effect would occur, 

DOE is interested in receiving data 

quantifying the effects, as well as input 

regarding how DOE should quantify this 

in its analysis. This is identified as Issue 

3 under ‘‘Issues on Which DOE Seeks 

Comment’’ in section X.E of this NOPR. 

2. Shipments Analysis 

Equipment shipments are an 

important element in the estimate of the 

future impact of a potential energy 

conservation standard. DOE developed 

shipment projections for water-source 

heat pumps and, in turn, calculated 

equipment stock over the course of the 

analysis period by assuming a Weibull 

distribution with an average 19-year 

equipment life. (See section V.E.7 for 

more information on equipment 

lifetime.) DOE used the shipments 

projection and the equipment stock to 

determine the NES. The shipments 

portion of the spreadsheet model 

projects water-source heat pump 

shipments through 2045. 

In the April 11, 2014 NODA, DOE 

based its shipments analysis for watersource heat pumps on data from the 

U.S. Census. 79 FR 20114, 20130. The 

U.S. Census published historical (1980, 

1983–1994, 1997–2006, and 2008–2010) 

water-source heat pump shipment 

data.42 Table VI.4 exhibits the shipment 

data provided for a selection of years. 

DOE analyzed data from the years 1990– 

2010 to establish a trend from which to 

project shipments beyond 2010. DOE 

used a linear trend. Because the Census 

data do not distinguish between 

equipment capacities, DOE used the 

shipments data by equipment class 

provided by AHRI in 1999, and 

published in the 2000 Screening 

Analysis for EPACT-Covered 

Commercial HVAC and Water-Heating 

Equipment (EERE–2006–STD–0098– 

0015), to distribute the total watersource heat pump shipments to 

individual equipment classes. Table 


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43U.S. Energy Information Administration, 

Geothermal Heat Pump Manufacturing Activities 

2009 (2010) (Available at: www.eia.gov/renewable/ 

renewables/geothermalrpt09.pdf). 

VI.5 exhibits the shipment data 

provided for 1999. DOE assumed that 

this distribution of shipments across the 

various equipment classes remained 

constant and has used this same 

distribution in its projection of future 

shipments of water-source heat pumps. 

The complete historical data set and the 

projected shipments for each equipment 

class can be found in the ASHRAE 

NOPR TSD. 

TABLE VI.4—TOTAL SHIPMENTS OF WATER-SOURCE HEAT PUMPS

[Census Product Code: 333415E181] 

1989 1999 2009 

Total ............................................................................................................................................. 157,080 120,545 180,101 

TABLE VI.5—TOTAL SHIPMENTS OF WATER-SOURCE HEAT PUMPS

(AHRI) 

Equipment class 1999 Percent 

WSHP <17000 Btu/h .................................................................................................................... 41,000 31 

WSHP 17000–65000 Btu/h .......................................................................................................... 86,000 65 

WSHP 65000–135000 Btu/h ........................................................................................................ 5,000 4 

In the April 11, 2014 NODA, DOE 

noted that an EIA report on geothermal 

heat pump manufacturers 43 shows 

shipments of water-source units 

(defined by EIA as those tested to ARI– 

320) as only 22,009 in 2009 and 7,808 

in 2000, which is significantly less than 

that reported by the Census (product 

code 333415E181) and by AHRI. 79 FR 

20114, 20130. DOE added that both the 

Census data and the EIA report show 

consistent shipments of separatelyreported ground-source and groundwater-source heat pumps (listed as 

Census product code 333415G and 

defined by EIA as those tested to ARI– 

325/330) at approximately 87,000 

shipments in 2009; DOE is not counting 

these shipments in its estimates as 

reported in Table VI.4. DOE believes 

that water-source heat pumps operate 

with a water loop using a boiler or 

chiller as the heat source or sink, and 

that, therefore, may not be considered 

‘‘geothermal;’’ in this case, the EIA 

report may not include a comprehensive 

number of water-source heat pump 

shipments. Id. 

In the April 11, 2014 NODA, DOE 

requested comment on the market for 

water-source heat pumps, especially 

what magnitude of annual shipments is 

most accurate and how shipments are 

expected to change over time. DOE also 

sought comment on the share of the 

market for ground-source and groundwater-source heat pump applications 

that use models also rated for waterloop application. Id. at 20130–31. In 

response, AHRI reported that it has no 

data on the market share of various 

applications and no comment on the 

current shipments or future trends. 

(AHRI, No. 24 at p. 7) DOE did not 

receive any other comment on this 

issue. Consequently, DOE has retained 

the shipments analysis used in the April 

11, 2014 NODA for water-source heat 

pumps. Table VI.6 shows the projected 

shipments for the different equipment 

classes of water-source heat pumps for 

selected years from 2016 to 2045, as 

well as the cumulative shipments. 

TABLE VI.6—SHIPMENTS PROJECTION FOR WATER-SOURCE HEAT PUMPS

Equipment 

Units Shipped by Year and Equipment Class 

2016 2020 2025 2030 2035 2040 2045 

Cumulative 

shipments 

(2016– 

2045) 

WSHP <17000 Btu/h ........................ 62,934 68,072 74,495 80,918 87,341 93,764 100,187 2,446,810 

WSHP 17000–65000 Btu/h .............. 132,007 142,785 156,258 169,731 183,203 196,676 210,148 5,132,334 

WSHP 65000–135000 Btu/h ............ 7,675 8,301 9,085 9,868 10,651 11,435 12,218 7,579,144 

Total .......................................... 202,616 219,159 239,838 260,517 281,195 301,874 322,553 7,877,536 

As equipment purchase price and 

repair costs increase with efficiency, 

DOE recognizes that higher first costs 

and repair costs can result in a drop in 

shipments. However, DOE had no basis 

for estimating the elasticity of 

shipments for water-source heat pumps 

as a function of first costs, repair costs, 

or operating costs. In addition, because 

water-source heat pumps are often 

installed for their higher efficiency as 

compared to air-cooled equipment, DOE 

has tentatively concluded that it is 

unlikely that shipments would change 

as a result of higher first costs and repair 

costs. Therefore, DOE presumed that the 

shipments projection would not change 

with higher standard levels. DOE seeks 

input on this assumption. This is 

identified as Issue 4 under ‘‘Issues on 

Which DOE Seeks Comment’’ in section 

X.E of this NOPR. Chapter 7 of the 

NOPR TSD provides additional details 

on the shipments forecasts. 

3. Base-Case and Standards-Case 

Forecasted Distribution of Efficiencies 

In the April 11, 2014 NODA, DOE 

presented base-case efficiency 

distributions based on model 


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44See DOE’s technical support document 

underlying DOE’s July 29, 2004 ANOPR. 69 FR 

45460 (Available at: www.regulations.gov/

#!documentDetail;D=EERE-2006-STD-70103-0078). 

45The NES spreadsheet can be found in the 

docket for the ASHRAE rulemaking at: 

www.regulations.gov/#!docketDetail;D=EERE-2014- 

BT-STD-0015. 

availability in the AHRI certified 

directory. 79 FR 20114, 20132. As noted 

in section V.F.3, DOE received 

comments that this was an incorrect 

assumption; however, no data were 

provided that would allow DOE to 

better estimate the base-case efficiency 

distribution. Therefore, DOE has 

retained the initial distribution used in 

the April 2014 NODA. 

For this NOPR, DOE has estimated a 

base-case efficiency trend of an increase 

of approximately 1 EER every 35 years, 

based on the trend from 2012 to 2035 

found in the Commercial Unitary Air 

Conditioner Advance Notice of 

Proposed Rulemaking (ANOPR).44 DOE 

used this same trend in the standardscase scenarios. DOE requests comment 

on its estimated efficiency trends. This 

is identified as Issue 5 under ‘‘Issues on 

Which DOE Seeks Comment’’ in section 

X.E of this NOPR. 

As in the April 11, 2014 NODA, for 

each efficiency level analyzed, DOE 

used a ‘‘roll-up’’ scenario to establish 

the market shares by efficiency level for 

the first full year that compliance would 

be required with amended standards 

(i.e., 2016 for adoption of efficiency 

levels in ASHRAE Standard 90.1–2013 

or 2020 if DOE adopts more-stringent 

efficiency levels than those in ASHRAE 

Standard 90.1–2013). As noted in 

section V.F.3, stakeholders agreed that 

this was a reasonable assumption. Table 

VI.7 presents the estimated base-case 

efficiency market shares for each watersource heat pump equipment class. 

TABLE VI.7—BASE-CASE EFFICIENCY MARKET SHARES IN 2020 FOR WATER-SOURCE HEAT PUMPS

Water-source (water-to-air, water-loop) heat pumps 

<17,000 Btu/h 

Water-source (water-to-air, 

water-loop) heat pumps 

≥17,000 and 

<65,000 Btu/h 

Water-source (water-to-air, 

water-loop) heat pumps 

≥65,000 and 

<135,000 Btu/h 

EER Market share 

% EER Market share 

% EER Market share % 

11.2 ...................................................................................... 0.0 12.0 0.0 12.0 0.0 

12.2 ...................................................................................... 0.7 13.0 7.6 13.0 0.0 

13.0 ...................................................................................... 49.7 14.6 55.1 14.0 29.8 

14.0 ...................................................................................... 22.0 16.6 25.0 15.0 48.5 

15.7 ...................................................................................... 20.5 18.0 8.9 16.0 20.1 

16.5 ...................................................................................... 4.9 19.2 2.5 17.0 1.7 

18.1 ...................................................................................... 2.3 21.6 1.0 

NOTE: The 0% market share at the first listed EER level is accounting for the default adoption of ASHRAE Standard 90.1–2013 levels in 2016. 

4. National Energy Savings and Net 

Present Value 

The stock of water-source heat pump 

equipment is the total number of units 

in each equipment class purchased or 

shipped from previous years that have 

survived until a given point in time. The 

NES spreadsheet,45 through use of the 

shipments model, keeps track of the 

total number of units shipped each year. 

For purposes of the NES and NPV 

analyses, DOE assumes that shipments 

of water-source heat pump units survive 

for an average of 19 years, following a 

Weibull distribution, at the end of 

which time they are removed from 

service. 

The national annual energy 

consumption is the product of the 

annual unit energy consumption and 

the number of units of each vintage in 

the stock, summed over all vintages. 

This approach accounts for differences 

in unit energy consumption from year to 

year. In determining national annual 

energy consumption, DOE estimated 

energy consumption and savings based 

on site energy and converted the 

electricity consumption and savings to 

primary energy using annual conversion 

factors derived from the AEO 2014 

version of NEMS. Cumulative energy 

savings are the sum of the NES for each 

year over the timeframe of the analysis. 

In response to the recommendations 

of a committee on ‘‘Point-of-Use and 

Full-Fuel-Cycle Measurement 

Approaches to Energy Efficiency 

Standards’’ appointed by the National 

Academy of Sciences, DOE announced 

its intention to use FFC measures of 

energy use and greenhouse gas and 

other emissions in the national impact 

analyses and emissions analyses 

included in future energy conservation 

standards rulemakings. 76 FR 51281 

(Aug. 18, 2011). After evaluating the 

approaches discussed in the August 18, 

2011 notice, DOE published a statement 

of amended policy in the Federal 

Register in which DOE explained its 

determination that NEMS is the most 

appropriate tool for its FFC analysis and 

its intention to use NEMS for that 

purpose. 77 FR 49701 (Aug. 17, 2012). 

The approach used for this NOPR is 

described in Appendix 8–A of the 

NOPR TSD. 

Table VI.8 summarizes the inputs to 

the NES spreadsheet model along with 

a brief description of the data sources. 

The results of DOE’s NES and NPV 

analysis are summarized in section 

VIII.B.2.b and described in detail in 

chapter 7 of the NOPR TSD. 

TABLE VI.8—SUMMARY OF WATER-SOURCE HEAT PUMP NES AND NPV MODEL INPUTS

Inputs Description 

Shipments .......................................................................... Annual shipments based on U.S. Census data. (See chapter 7 of the NOPR TSD.) 

Compliance Date of Standard ............................................ 2020 for adoption of a more-stringent efficiency level than those specified by 

ASHRAE Standard 90.1–2013. 

2016 for adoption of the efficiency levels specified by ASHRAE Standard 90.1–2013. 

Base-Case Efficiencies ...................................................... Distribution of base-case shipments by efficiency level, with efficiency trend of an increase of 1 EER every 35 years. 


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46See http://www.epa.gov/climateleadership/

inventory/ghg-emissions.html. 

47See North Carolina v. EPA, 550 F.3d 1176 (D.C. 

Cir. 2008); North Carolina v. EPA, 531 F.3d 896 

(D.C. Cir. 2008). 

48See EME Homer City Generation, LP v. EPA, 

696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 

U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 

(U.S. June 24, 2013) (No. 12–1182). 

49On April 29, 2014, the U.S. Supreme Court 

reversed the judgment of the D.C. Circuit and 

remanded the case for further proceedings 

consistent with the Supreme Court’s opinion. The 

Supreme Court held in part that EPA’s methodology 

for quantifying emissions that must be eliminated 

in certain states due to their impacts in other 

downwind states was based on a permissible, 

workable, and equitable interpretation of the Clean 

Air Act provision that provides statutory authority 

for CSAPR. See EPA v. EME Homer City Generation, 

No 12–1182, slip op. at 32 (U.S. April 29, 2014). On 

October 23, 2014, the D.C. Circuit lifted the stay of 

CSAPR. Pursuant to this action, CSAPR will go into 

effect (and the Clean Air Interstate Rule will sunset) 

as of January 1, 2015. However, because DOE used 

emissions factors based on AEO 2014 for this 

NOPR, the analysis assumes that CAIR, not CSAPR, 

is the regulation in force. The difference between 

CAIR and CSAPR is not relevant for the purpose of 

DOE’s analysis of SO2 emissions. 

TABLE VI.8—SUMMARY OF WATER-SOURCE HEAT PUMP NES AND NPV MODEL INPUTS—Continued 

Inputs Description 

Standards-Case Efficiencies .............................................. Distribution of shipments by efficiency level for each standards case. In compliance 

year, units below the standard level ‘‘roll-up’’ to meet the standard. Efficiency trend 

of an increase of 1 EER every 35 years. 

Annual Energy Use per Unit .............................................. Annual national weighted-average values are a function of efficiency level. (See 

chapter 4 of the NOPR TSD.) 

Total Installed Cost per Unit .............................................. Annual weighted-average values are a function of efficiency level. (See chapter 5 of 

the NOPR TSD.) 

Annualized Maintenance and Repair Costs per Unit ........ Annual weighted-average values are a function of efficiency level. (See chapter 5 of 

the NOPR TSD.) 

Escalation of Fuel Prices ................................................... AEO2014 forecasts (to 2040) and extrapolation for beyond 2040. (See chapter 8 of 

the NOPR TSD.) 

Site to Primary and FFC Conversion ................................. Based on AEO2014 forecasts (to 2040) and extrapolation for beyond 2040. (See 

chapter 8 of the NOPR TSD.) 

Discount Rate ..................................................................... 3 percent and 7 percent real. 

Present Year ...................................................................... Future costs are discounted to 2014. 

VII. Methodology for Emissions 

Analysis and Monetizing Carbon 

Dioxide and Other Emissions Impacts 

A. Emissions Analysis 

In the emissions analysis, DOE 

estimates the reduction in power sector 

emissions of carbon dioxide (CO2), 

nitrogen oxides (NOX), sulfur dioxide 

(SO2), and mercury (Hg) from potential 

amended energy conservation standards 

for the ASHRAE equipment that is the 

subject of this document. In addition, 

DOE estimates emissions impacts in 

production activities (extracting, 

processing, and transporting fuels) that 

provide the energy inputs to power 

plants. These are referred to as 

‘‘upstream’’ emissions. Together, these 

emissions account for the full-fuel cycle 

(FFC). In accordance with DOE’s FFC 

Statement of Policy (76 FR 51281 (Aug. 

18, 2011) as amended at 77 FR 49701 

(August 17, 2012)), the FFC analysis 

also includes impacts on emissions of 

methane (CH4) and nitrous oxide (N2O), 

both of which are recognized as 

greenhouse gases. The combustion 

emissions factors and the method DOE 

used to derive upstream emissions 

factors are described in chapter 9 of the 

NOPR TSD. The cumulative emissions 

reduction estimated for the subject 

ASHRAE equipment is presented in 

section VIII.C. 

DOE primarily conducted the 

emissions analysis using emissions 

factors for CO2 and most of the other 

gases derived from data in AEO 2014. 

Combustion emissions of CH4 and N2O 

were estimated using emissions 

intensity factors published by the U.S. 

Environmental Protection Agency (EPA) 

in its Greenhouse Gas (GHG) Emissions 

Factors Hub.46 DOE developed separate 

emissions factors for power sector 

emissions and upstream emissions. The 

method that DOE used to derive 

emissions factors is described in chapter 

9 of the NOPR TSD. 

EIA prepares the AEO using NEMS. 

Each annual version of NEMS 

incorporates the projected impacts of 

existing air quality regulations on 

emissions. AEO 2014 generally 

represents current legislation and 

environmental regulations, including 

recent government actions, for which 

implementing regulations were 

available as of October 31, 2013. 

SO2 emissions from affected electric 

generating units (EGUs) are subject to 

nationwide and regional emissions capand-trade programs. Title IV of the 

Clean Air Act sets an annual emissions 

cap on SO2 for affected EGUs in the 48 

contiguous States and the District of 

Columbia (DC). (42 U.S.C. 7651 et seq.) 

SO2 emissions from 28 eastern States 

and DC were also limited under the 

Clean Air Interstate Rule (CAIR). 70 FR 

25162 (May 12, 2005). CAIR, which 

created an allowance-based trading 

program that operates along with the 

Title IV program, was remanded to the 

EPA by the U.S. Court of Appeals for the 

District of Columbia Circuit, but it 

remained in effect.47 In 2011, EPA 

issued a replacement for CAIR, the 

Cross-State Air Pollution Rule (CSAPR). 

76 FR 48208 (Aug. 8, 2011). On August 

21, 2012, the D.C. Circuit issued a 

decision to vacate CSAPR.48 The court 

ordered EPA to continue administering 

CAIR. The emissions factors used for 

this NOPR, which are based on AEO 

2014, assume that CAIR remains a 

binding regulation through 2040.49

The attainment of emissions caps is 

typically flexible among EGUs and is 

enforced through the use of emissions 

allowances and tradable permits. 

Beginning in 2016, however, SO2

emissions will decline significantly as a 

result of the Mercury and Air Toxics 

Standards (MATS) for power plants. 77 

FR 9304 (Feb. 16, 2012). In the final 

MATS rule, EPA established a standard 

for hydrogen chloride as a surrogate for 

acid gas hazardous air pollutants (HAP), 

and also established a standard for SO2

(a non-HAP acid gas) as an alternative 

equivalent surrogate standard for acid 

gas HAP. The same controls are used to 

reduce HAP and non-HAP acid gas; 

thus, SO2 emissions will be reduced as 

a result of the control technologies 

installed on coal-fired power plants to 

comply with the MATS requirements 

for acid gas. AEO 2014 assumes that, in 

order to continue operating, coal plants 

must have either flue gas 

desulfurization or dry sorbent injection 

systems installed by 2016. Both 

technologies are used to reduce acid gas 

emissions, and also reduce SO2

emissions. Under the MATS, emissions 


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50CSAPR also applies to NOX, and it would 

supersede the regulation of NOX under CAIR. As 

stated previously, the current analysis assumes that 

CAIR, not CSAPR, is the regulation in force. The 

difference between CAIR and CSAPR with regard to 

DOE’s analysis of NOX is slight. 

51National Research Council, Hidden Costs of 

Energy: Unpriced Consequences of Energy 

Production and Use, National Academies Press: 

Washington, DC (2009). 

will be far below the cap established by 

CAIR, so it is unlikely that excess SO2

emissions allowances resulting from the 

lower electricity demand would be 

needed or used to permit offsetting 

increases in SO2 emissions by any 

regulated EGU. Therefore, DOE believes 

that energy efficiency standards will 

reduce SO2 emissions in 2016 and 

beyond. 

CAIR established a cap on NOX

emissions in 28 eastern States and the 

District of Columbia.50 Energy 

conservation standards are expected to 

have little effect on NOX emissions in 

those States covered by CAIR, because 

excess NOX emissions allowances 

resulting from the lower electricity 

demand could be used to permit 

offsetting increases in NOX emissions. 

However, standards would be expected 

to reduce NOX emissions in the States 

not affected by the caps, so DOE 

estimated NOX emissions reductions 

from the standards considered in this 

NOPR for these States. 

The MATS limit mercury emissions 

from power plants, but they do not 

include emissions caps. DOE estimated 

mercury emissions using emissions 

factors based on AEO 2014, which 

incorporates the MATS. 

B. Monetizing Carbon Dioxide and 

Other Emissions Impacts 

As part of the development of this 

proposed rule, DOE considered the 

estimated monetary benefits from the 

reduced emissions of CO2 and NOX that 

are expected to result from each of the 

efficiency levels considered. In order to 

make this calculation analogous to the 

calculation of the NPV of consumer 

benefit, DOE considered the reduced 

emissions expected to result over the 

lifetime of equipment shipped in the 

forecast period for each efficiency level. 

This section summarizes the basis for 

the monetary values used for each of 

these emissions and presents the values 

considered in this NOPR. 

For this NOPR, DOE relied on a set of 

values for the social cost of carbon 

(SCC) that was developed by a Federal 

interagency process. The basis for these 

values is summarized in the next 

section, and a more detailed description 

of the methodologies used is provided 

as an appendix to chapter 14 of the 

NOPR TSD. 

1. Social Cost of Carbon 

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 

SCC are provided in dollars per metric 

ton of CO2. A domestic SCC value is 

meant to reflect the value of damages in 

the United States resulting from a unit 

change in CO2 emissions, while a global 

SCC value is meant to reflect the value 

of damages worldwide. 

Under section 1(b) of Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (Oct. 4, 1993), 

agencies must, to the extent permitted 

by law, ‘‘assess both the costs and the 

benefits of the intended regulation 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 CO2 emissions into 

cost-benefit analyses of regulatory 

actions. 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. 

As 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 

When attempting to assess the 

incremental economic impacts of CO2

emissions, the analyst faces a number of 

challenges. A report from the National 

Research Council 51 points out that any 

assessment will suffer from uncertainty, 

speculation, and lack of information 

about: (1) Future emissions of GHGs; (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 

monetize the harms associated with 

climate change will raise questions of 

science, economics, and ethics and 

should be viewed as provisional. 

Despite the limits of both 

quantification and monetization, SCC 

estimates can be useful in estimating the 

social benefits of reducing CO2

emissions. 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 values 

appropriate for that year. The NPV 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. 

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. 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. Development of Social Cost of Carbon 

Values 

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 

Federal 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 CO2 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$) of $55, 

$33, $19, $10, and $5 per metric ton of 

CO2. These interim values represented 

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 


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52 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. 

53Social Cost of Carbon for Regulatory Impact 

Analysis Under Executive Order 12866, Interagency 

Working Group on Social Cost of Carbon, United 

States Government (February 2010) (Available at: 

www.whitehouse.gov/sites/default/files/omb/

inforeg/for-agencies/Social-Cost-of-Carbon-forRIA.pdf). 

54Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866, Interagency Working Group on Social 

Cost of Carbon, United States Government (May 

2013; revised November 2013) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/

assets/inforeg/technical-update-social-cost-ofcarbon-for-regulator-impact-analysis.pdf). 

were presented in several proposed and 

final rules. 

c. Current Approach and Key 

Assumptions 

After the release of the interim values, 

the interagency group reconvened on a 

regular basis to generate improved SCC 

estimates. Specifically, the group 

considered public comments and 

further explored the technical literature 

in relevant fields. The interagency group 

relied on three integrated assessment 

models commonly used to estimate the 

SCC: the FUND, DICE, and PAGE 

models. These models are frequently 

cited in the peer-reviewed literature and 

were used in the last assessment of the 

Intergovernmental Panel on Climate 

Change (IPCC). 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. 

In 2010, the interagency group 

selected four sets of SCC values for use 

in regulatory analyses. Three sets of 

values are based on the average SCC 

from the three integrated assessment 

models, at discount rates of 2.5, 3, and 

5 percent. The fourth set, which 

represents the 95th percentile SCC 

estimate across all three models at a 3- 

percent discount rate, was included to 

represent higher-than-expected impacts 

from climate change further out in the 

tails of the SCC distribution. The 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,52 although preference 

is given to consideration of the global 

benefits of reducing CO2 emissions. 

Table VII.1 presents the values in the 

2010 interagency group report,53 which 

is reproduced in appendix 10–A of the 

NOPR TSD. 

TABLE VII.1—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050 

[2007$ per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2010 ................................................................................................................. 4.7 21.4 35.1 64.9 

2015 ................................................................................................................. 5.7 23.8 38.4 72.8 

2020 ................................................................................................................. 6.8 26.3 41.7 80.7 

2025 ................................................................................................................. 8.2 29.6 45.9 90.4 

2030 ................................................................................................................. 9.7 32.8 50.0 100.0 

2035 ................................................................................................................. 11.2 36.0 54.2 109.7 

2040 ................................................................................................................. 12.7 39.2 58.4 119.3 

2045 ................................................................................................................. 14.2 42.1 61.7 127.8 

2050 ................................................................................................................. 15.7 44.9 65.0 136.2 

The SCC values used for this 

document were generated using the 

most recent versions of the three 

integrated assessment models that have 

been published in the peer-reviewed 

literature.54

Table VII.2 shows the updated sets of 

SCC estimates from the 2013 

interagency update in 5-year increments 

from 2010 to 2050. The full set of 

annual SCC estimates between 2010 and 

2050 is reported in appendix 10–B of 

the NOPR TSD. The central value that 

emerges is the average SCC across 

models at the 3-percent discount rate. 

However, for purposes of capturing the 

uncertainties involved in regulatory 

impact analysis, the interagency group 

emphasizes the importance of including 

all four sets of SCC values. 

TABLE VII.2—ANNUAL SCC VALUES FROM 2013 INTERAGENCY REPORT, 2010–2050 

[2007$ per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2010 ................................................................................................................. 11 32 51 89 

2015 ................................................................................................................. 11 37 57 109 


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55U.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 (2006) (Available at: 

www.whitehouse.gov/sites/default/files/omb/assets/

omb/inforeg/2006_cb/2006_cb_final_report.pdf). 

TABLE VII.2—ANNUAL SCC VALUES FROM 2013 INTERAGENCY REPORT, 2010–2050—Continued 

[2007$ per metric ton CO2] 

Year 

Discount rate 

5% 3% 2.5% 3% 

Average Average Average 95th percentile 

2020 ................................................................................................................. 12 43 64 128 

2025 ................................................................................................................. 14 47 69 143 

2030 ................................................................................................................. 16 52 75 159 

2035 ................................................................................................................. 19 56 80 175 

2040 ................................................................................................................. 21 61 86 191 

2045 ................................................................................................................. 24 66 92 206 

2050 ................................................................................................................. 26 71 97 220 

It is important to recognize that a 

number of key uncertainties remain, and 

that current SCC estimates should be 

treated as provisional and revisable 

because they will evolve with improved 

scientific and economic understanding. 

The interagency group also recognizes 

that the existing models are imperfect 

and incomplete. The 2009 National 

Research Council report mentioned 

previously 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 analytical challenges that are 

being addressed by the research 

community, including research 

programs housed in many of the Federal 

agencies participating in the interagency 

process to estimate the SCC. The 

interagency group intends to 

periodically review and reconsider 

those estimates to reflect increasing 

knowledge of the science and 

economics of climate impacts, as well as 

improvements in modeling. 

In summary, in considering the 

potential global benefits resulting from 

reduced CO2 emissions, DOE used the 

values from the 2013 interagency report 

adjusted to 2013$ using the implicit 

price deflator for gross domestic product 

(GDP) from the Bureau of Economic 

Analysis. For each of the four sets of 

SCC cases specified, the values for 

emissions in 2015 were $12.0, $40.5, 

$62.4, and $119 per metric ton avoided 

(values expressed in 2013$). DOE 

derived values after 2050 using the 

relevant growth rates for the 2040–2050 

period in the interagency update. 

DOE multiplied the CO2 emissions 

reduction estimated for each year by the 

SCC value for that year in each of the 

four cases. 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 

As noted previously, DOE has taken 

into account how considered energy 

conservation standards would reduce 

site NOX emissions nationwide and 

increase power sector NOX emissions in 

those 22 States not affected by the CAIR. 

DOE estimated the monetized value of 

net NOX emissions reductions resulting 

from each of the efficiency levels 

considered for this NOPR based on 

estimates found in the relevant 

scientific literature. Estimates of 

monetary value for reducing NOX from 

stationary sources range from $476 to 

$4,893 per ton in 2013$.55 DOE 

calculated monetary benefits using a 

medium value for NOX emissions of 

$2,684 per short ton (in 2013$) and real 

discount rates of 3 percent and 7 

percent. 

DOE is evaluating appropriate 

monetization of avoided SO2 and Hg 

emissions in energy conservation 

standards rulemakings. DOE has not 

included monetization of those 

emissions in the current analysis. 

VIII. Analytical Results and 

Conclusions 

A. Efficiency Levels Analyzed 

1. Small Commercial Air-Cooled Air 

Conditioners and Heat Pumps Less 

Than 65,000 Btu/h 

The methodology for small 

commercial air-cooled air conditioners 

and heat pumps less than 65,000 Btu/h 

was presented in section V of this 

NOPR. Table VIII.1 presents the market 

baseline efficiency level and the higher 

efficiency levels analyzed for each 

equipment class of small commercial 

air-cooled air conditioners and heat 

pumps less than 65,000 Btu/h subject to 

this proposed rule. The EPCA baseline 

efficiency levels correspond to the 

lowest efficiency levels currently 

available on the market. The efficiency 

levels above the baseline represent 

efficiency levels specified by ASHRAE 

Standard 90.1–2013 and efficiency 

levels more stringent than those 

specified in ASHRAE Standard 90.1– 

2013 where equipment is currently 

available on the market. Note that for 

the energy savings and economic 

analysis, efficiency levels above those 

specified in ASHRAE Standard 90.1– 

2013 are compared to ASHRAE 

Standard 90.1–2013 as the baseline 

rather than the EPCA baseline (i.e., the 

current Federal standards). For splitsystem air conditioners, for which 

ASHRAE 90.1–2013 did not change the 

efficiency level, all efficiency levels are 

compared to the Federal or EPCA 

baseline. 


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TABLE VIII.1—EFFICIENCY LEVELS ANALYZED FOR SMALL COMMERCIAL AIR-COOLED AIR CONDITIONERS AND HEAT

PUMPS <65,000 Btu/h 

Small threephase air-cooled 

split-system air 

conditioners 

<65,000 Btu/h 

Small threephase air-cooled 

single-package 

air conditioners 

<65,000 Btu/h 

Small threephase air-cooled 

split-system 

heat pumps 

<65,000 Btu/h 

Small threephase air-cooled 

single-package 

heat pumps 

<65,000 Btu/h 

Efficiency Level (SEER/HSPF) 

Baseline—Federal Standard ............................................................ 13 13 13/7.7 13/7.7 

ASHRAE Level (0) ........................................................................... * 14 14 14/8.2 14/8.0 

Efficiency Level 1 ............................................................................. 15 15 15/8.5 15/8.4 

Efficiency Level 2 ............................................................................. 16 16 16/8.7 16/8.8 

Efficiency Level 3 ............................................................................. 17 17 17/9.0 17/8.9 

Efficiency Level 4 ** ......................................................................... 18 18 18.0/9.2 18.0/9.1 

Efficiency Level 5 *** ........................................................................ 19 19 ............................ ............................

* For split system air conditioners, the ASHRAE level is 13.0 SEER. DOE analyzed the 14.0 SEER level as a level more stringent than 

ASHRAE, but designated it as efficiency level 0 for consistency in SEER level across equipment classes. 

** Efficiency Level 4 is ‘‘Max-Tech’’ for HP equipment classes. 

*** Efficiency Level 5 is ‘‘Max-Tech’’ for AC equipment classes. 

2. Water-Source Heat Pumps 

Table VIII.2 presents the baseline 

efficiency level and the more-stringent 

efficiency levels analyzed for each 

equipment class of water-source heat 

pumps subject to this proposed rule. 

The baseline efficiency levels 

correspond to the lowest efficiency 

levels currently available on the market. 

The efficiency levels above the baseline 

represent efficiency levels specified in 

ASHRAE Standard 90.1–2013 and morestringent efficiency levels where 

equipment is currently available on the 

market. 

TABLE VIII.2—EFFICIENCY LEVELS ANALYZED FOR WATER-SOURCE HEAT PUMPS

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

<17,000 Btu/h 

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

≥17,000 and 

<65,000 Btu/h 

Water-source 

(water-to-air, 

water-loop) 

heat pumps 

≥65,000 and 

<135,000 Btu/h 

Efficiency Level (EER/COP) 

Baseline—Federal Standard ............................................................................................ 11.2/4.2 12.0/4.2 12.0/4.2 

ASHRAE Level (0) ........................................................................................................... 12.2/4.3 13.0/4.3 13.0/4.3 

Efficiency Level 1 ............................................................................................................. 13.0/4.6 14.6/4.8 14.0/4.7 

Efficiency Level 2 ............................................................................................................. 14.0/4.8 16.6/5.3 15.0/4.8 

Efficiency Level 3 ............................................................................................................. 15.7/5.1 18.0/5.6 16.0/5.0 

Efficiency Level 4 * ........................................................................................................... 16.5/5.3 19.2/5.9 17.2/5.1 

Efficiency Level 5 ** ......................................................................................................... 18.1/5.6 21.6/6.5 ............................

* Efficiency Level 4 is ‘‘Max-Tech’’ for the largest equipment class. 

** Efficiency Level 5 is ‘‘Max-Tech’’ for the two smaller equipment classes. 

3. Commercial Oil-Fired Storage Water 

Heaters 

The methodology for oil-fired storage 

water heating equipment was presented 

in the April 2014 NODA. 79 FR 20114, 

20129–33 (April 11, 2014). Table VIII.3 

presents the baseline efficiency level 

and the more-stringent efficiency levels 

analyzed for the class of oil-fired storage 

water heaters subject to this proposed 

rule. The baseline efficiency levels 

correspond to the lowest efficiency 

levels currently available on the market. 

The efficiency levels above the baseline 

represent efficiency levels specified in 

ASHRAE Standard 90.1–2013 and morestringent efficiency levels where 

equipment is currently available on the 

market. 

TABLE VIII.3—EFFICIENCY LEVELS ANALYZED FOR COMMERCIAL OIL-FIRED STORAGE WATER-HEATING EQUIPMENT

Oil-fired storage 

water-heating 

equipment 

(≤105,000 Btu/h and 

<4,000 Btu/h/gal) 

(%) 

Efficiency level (Et) 

Baseline—Federal Standard .................................................................................................................................................... 78 

ASHRAE Level (0) ................................................................................................................................................................... 80 

Efficiency Level 1 ..................................................................................................................................................................... 81 


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56An LCC cost is shown as a negative savings in 

the results presented. 

TABLE VIII.3—EFFICIENCY LEVELS ANALYZED FOR COMMERCIAL OIL-FIRED STORAGE WATER-HEATING EQUIPMENT— 

Continued 

Oil-fired storage 

water-heating 

equipment 

(≤105,000 Btu/h and 

<4,000 Btu/h/gal) 

(%) 

Efficiency Level 2—‘‘Max-Tech’’— .......................................................................................................................................... 82 

B. Energy Savings and Economic 

Justification 

1. Small Commercial Air-Cooled Air 

Conditioners and Heat Pumps Less 

Than 65,000 Btu/h 

a. Economic Impacts on Commercial 

Customers 

1. Life-Cycle Cost and Payback Period 

To evaluate the net economic impact 

of potential amended energy 

conservation standards on commercial 

consumers of small commercial aircooled air conditioners and heat pumps, 

DOE conducted LCC and PBP analyses 

for each efficiency level. In general, 

higher-efficiency equipment would 

affect commercial consumers in two 

ways: (1) Purchase price would 

increase, and (2) annual operating costs 

would decrease. Inputs used for 

calculating the LCC and PBP include 

total installed costs (i.e., equipment 

price plus installation costs), and 

operating costs (i.e., annual energy 

usage, energy prices, energy price 

trends, repair costs, and maintenance 

costs). The LCC calculation also uses 

equipment lifetime and a discount rate. 

The output of the LCC model is a 

mean LCC savings (or cost 56) for each 

equipment class, relative to the baseline 

small commercial air-cooled air 

conditioner and heat pump efficiency 

level. The LCC analysis also provides 

information on the percentage of 

commercial consumers that are 

negatively affected by an increase in the 

minimum efficiency standard. 

DOE also performed a PBP analysis as 

part of the LCC analysis. The PBP is the 

number of years it would take for the 

commercial consumer to recover the 

increased costs of higher-efficiency 

equipment as a result of energy savings 

based on the operating cost savings. The 

PBP is an economic benefit-cost 

measure that uses benefits and costs 

without discounting. Chapter 6 of the 

NOPR TSD provides detailed 

information on the LCC and PBP 

analyses. 

DOE’s LCC and PBP analyses 

provided five key outputs for each 

efficiency level above the baseline (i.e., 

efficiency levels above the current 

Federal standard for split-system air 

conditioners or efficiency levels more 

stringent than those in ASHRAE 

Standard 90.1–2013 for the three 

triggered equipment classes), as 

reported in Table VIII.4 through Table 

VIII.11 below. These outputs include 

the proportion of small commercial aircooled air conditioner and heat pump 

purchases in which the purchase of 

such a unit that is compliant with the 

amended energy conservation standard 

creates a net LCC increase, no impact, 

or a net LCC savings for the commercial 

consumer. Another output is the average 

net LCC savings from standardcompliant equipment, as well as the 

average PBP for the consumer 

investment in standard-compliant 

equipment. 

Chapter 6 of the NOPR TSD provides 

detailed information on the LCC and 

PBP analyses. 

Table VIII.4 through Table VIII.11 

show the LCC and PBP results for all 

efficiency levels considered for each 

class of small commercial air-cooled air 

conditioner and heat pump in this 

NOPR. In the first of each pair of tables, 

the simple payback is measured relative 

to the baseline equipment (i.e., 

equipment at the current Federal 

standards for split-system air 

conditioners or equipment with the 

efficiency levels required in ASHRAE 

Standard 90.1–2013 for the three 

triggered equipment classes). In the 

second tables, the LCC savings are 

measured relative to the base-case 

efficiency distribution in the 

compliance year (i.e., the range of 

equipment expected to be on the market 

in the absence of amended standards for 

split-system air conditioners or the 

default case where DOE adopts the 

efficiency levels in ASHRAE Standard 

90.1–2013 for the three triggered 

equipment classes). 

TABLE VIII.4—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR SMALL THREE-PHASE AIR-COOLED SPLITSYSTEM AIR CONDITIONERS <65,000 Btu/h 

Efficiency level 

Average costs 2013$ Simple payback 

(years) 

Average lifetime 

Installed cost (years) First year’s operating cost 

Lifetime operating cost LCC 

Baseline ................................................... $3,859 $765 $7,424 $11,282 N/A 19 

0 ............................................................... 4,106 762 7,389 11,495 68 19 

1 ............................................................... 4,353 755 7,326 11,680 49 19 

2 ............................................................... 4,619 749 7,268 11,887 47 19 

3 ............................................................... 4,873 753 7,302 12,176 80 19 

4 ............................................................... 5,138 757 7,342 12,480 148 19 

5 ............................................................... 5,415 762 7,400 12,815 562 19 

Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 


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TABLE VIII.5—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR SMALL THREE-PHASE AIRCOOLED SPLIT-SYSTEM AIR CONDITIONERS <65,000 Btu/h 

Efficiency level 

Life-cycle cost savings 

% of Customers 

that experience 

Average savings * 

Net cost 2013$ 

0 ............................................................................................................................................................................... 26 (55) 

1 ............................................................................................................................................................................... 75 (196) 

2 ............................................................................................................................................................................... 97 (398) 

3 ............................................................................................................................................................................... 100 (687) 

4 ............................................................................................................................................................................... 100 (992) 

5 ............................................................................................................................................................................... 100 (1,326) 

* The calculation includes households with zero LCC savings (no impact). 

TABLE VIII.6—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR SMALL THREE-PHASE AIR-COOLED SINGLEPACKAGE AIR CONDITIONERS <65,000 Btu/h 

Efficiency level 

Average costs 

2013$ Simple payback 

(years) 

Average Lifetime 

(years) Installed cost First year’s operating cost Lifetime operating cost LCC 

ASHRAE Baseline ................................... $4,731 $761 $7,408 $12,139 N/A 19 

1 ............................................................... 5,036 747 7,275 12,311 47 19 

2 ............................................................... 5,343 742 7,224 12,567 50 19 

3 ............................................................... 5,642 746 7,262 12,904 80 19 

4 ............................................................... 5,944 750 7,300 13,244 128 19 

5 ............................................................... 6,308 755 7,350 13,659 261 19 

Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 

TABLE VIII.7—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR SMALL THREE-PHASE AIRCOOLED SINGLE-PACKAGE AIR CONDITIONERS <65,000 Btu/h 

Efficiency level 

Life-cycle cost savings 

% of Customers 

that experience Average savings * 

Net cost 2013$ 

1 ........................................................................................................................................................... 49 (89) 

2 ........................................................................................................................................................... 81 (297) 

3 ........................................................................................................................................................... 89 (596) 

4 ........................................................................................................................................................... 93 (913) 

5 ........................................................................................................................................................... 100 (1,326) 

* The calculation includes households with zero LCC savings (no impact). 

TABLE VIII.8—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR SMALL THREE-PHASE AIR-COOLED SPLITSYSTEM HEAT PUMPS <65,000 Btu/h 

Efficiency level 

Average costs 

2013$ Simple 

payback 

(years) 

Average 

lifetime 

(years) Installed cost First year’s 

operating cost 

Lifetime 

operating cost LCC 

ASHRAE Baseline ................................... $4,467 $784 $6,969 $11,436 N/A 16 

1 ............................................................... 4,725 772 6,857 11,582 35 16 

2 ............................................................... 5,066 766 6,807 11,873 41 16 

3 ............................................................... 5,346 766 6,811 12,157 54 16 

4 ............................................................... 5,636 767 6,819 12,454 70 16 

Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 


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TABLE VIII.9—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR SMALL THREE-PHASE AIRCOOLED SPLIT-SYSTEM HEAT PUMPS <65,000 Btu/h 

Efficiency level 

Life-cycle cost savings 

% of customers that 

experience Average savings * 

Net cost 2013$ 

1 ........................................................................................................................................................... 75 (117) 

2 ........................................................................................................................................................... 99 (406) 

3 ........................................................................................................................................................... 100 (690) 

4 ........................................................................................................................................................... 100 (988) 

* The calculation includes households with zero LCC savings (no impact). 

TABLE VIII.10—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR SMALL THREE-PHASE AIR-COOLED SINGLEPACKAGE HEAT PUMPS <65,000 Btu/h 

Efficiency level 

Average costs 

2013$ Simple payback 

(years) 

Average lifetime 

(years) Installed cost First year’s operating cost Lifetime operating cost LCC 

ASHRAE Baseline ................................... $5,103 $786 $6,982 $12,085 N/A 16 

1 ............................................................... 5,444 773 6,869 12,313 50 16 

2 ............................................................... 5,771 766 6,810 12,581 50 16 

3 ............................................................... 6,099 767 6,817 12,915 67 16 

4 ............................................................... 6,484 768 6,823 13,307 87 16 

Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 

TABLE VIII.11—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR SMALL THREE-PHASE AIRCOOLED SINGLE-PACKAGE HEAT PUMPS <65,000 Btu/h 

Efficiency level 

Life-cycle cost savings 

% of customers that 

experience Average savings * 

Net cost 2013$ 

1 ........................................................................................................................................................... 68 ($157) 

2 ........................................................................................................................................................... 90 ($399) 

3 ........................................................................................................................................................... 99 ($728) 

4 ........................................................................................................................................................... 99 ($1,117) 

* The calculation includes households with zero LCC savings (no impact). 

b. National Impact Analysis 

1. Amount and Significance of Energy 

Savings 

To estimate the lifetime energy 

savings for equipment shipped through 

2046 (or 2048) due to amended energy 

conservation standards, DOE compared 

the energy consumption of small 

commercial air-cooled air conditioners 

and heat pumps less than 65,000 Btu/h 

under the ASHRAE Standard 90.1–2013 

efficiency levels (or current Federal 

levels for split-system air conditioners) 

to energy consumption of the same 

small commercial air-cooled air 

conditioners and heat pumps under 

more-stringent efficiency standards. For 

the three equipment classes triggered by 

ASHRAE, DOE also compared the 

energy consumption of those small 

commercial air-cooled air conditioners 

and heat pumps under the ASHRAE 

Standard 90.1–2013 efficiency levels to 

energy consumption of small 

commercial air-cooled air conditioners 

and heat pumps under the current EPCA 

base case (i.e., under current Federal 

standards). DOE examined up to five 

efficiency levels higher than those of 

ASHRAE Standard 90.1–2013. Table 

VIII.12 through Table VIII.15 show the 

projected national energy savings at 

each of the considered standard levels. 

(See chapter 8 of the NOPR TSD.) 

TABLE VIII.12—POTENTIAL ENERGY SAVINGS FOR SMALL THREE-PHASE AIR-COOLED SPLIT-SYSTEM AIR CONDITIONERS

<65,000 Btu/h 

Efficiency level 

Primary energy 

savings estimate 

(quads) 

FFC energy savings 

estimate 

(quads) 

Level 0—14 SEER ............................................................................................................................... 0.02 0.02 

Level 1—15 SEER ............................................................................................................................... 0.08 0.08 


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TABLE VIII.12—POTENTIAL ENERGY SAVINGS FOR SMALL THREE-PHASE AIR-COOLED SPLIT-SYSTEM AIR CONDITIONERS

<65,000 Btu/h—Continued 

Efficiency level 

Primary energy 

savings estimate 

(quads) 

FFC energy savings 

estimate 

(quads) 

Level 2—16 SEER ............................................................................................................................... 0.13 0.14 

Level 3—17 SEER ............................................................................................................................... 0.16 0.17 

Level 4—18 SEER ............................................................................................................................... 0.18 0.19 

Level 5—‘‘Max-Tech’’—19 SEER ........................................................................................................ 0.19 0.20 

TABLE VIII.13—POTENTIAL ENERGY SAVINGS FOR SMALL THREE-PHASE AIR-COOLED SINGLE-PACKAGE AIR

CONDITIONERS <65,000 Btu/h 

Efficiency level 

Primary energy 

savings 

estimate* 

(quads) 

FFC energy 

savings estimate* 

(quads) 

Level 0—ASHRAE—14 SEER ............................................................................................................ 0.04 0.04 

Level 1—15 SEER ............................................................................................................................... 0.05 0.06 

Level 2—16 SEER ............................................................................................................................... 0.11 0.12 

Level 3—17 SEER ............................................................................................................................... 0.15 0.15 

Level 4—18 SEER ............................................................................................................................... 0.18 0.18 

Level 5—‘‘Max-Tech’’—19 SEER ........................................................................................................ 0.19 0.20 

* The potential energy savings for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

TABLE VIII.14—POTENTIAL ENERGY SAVINGS FOR SMALL THREE-PHASE AIR-COOLED SPLIT-SYSTEM HEAT PUMPS

<65,000 Btu/h 

Efficiency level 

Primary energy 

savings estimate* 

(quads) 

FFC energy 

savings estimate* 

(quads) 

Level 0—ASHRAE—14 SEER ............................................................................................................ 0.01 0.01 

Level 1—15 SEER ............................................................................................................................... 0.01 0.01 

Level 2—16 SEER ............................................................................................................................... 0.02 0.02 

Level 3—17 SEER ............................................................................................................................... 0.03 0.03 

Level 4—‘‘Max-Tech’’—18 SEER ........................................................................................................ 0.03 0.03 

* The potential energy savings for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

TABLE VIII.15—POTENTIAL ENERGY SAVINGS FOR SMALL THREE-PHASE AIR-COOLED SINGLE-PACKAGE HEAT PUMPS

<65,000 Btu/h 

Efficiency level 

Primary energy 

savings estimate* 

(quads) 

FFC energy 

savings estimate* 

(quads) 

Level 0—ASHRAE—14 SEER ............................................................................................................ 0.01 0.01 

Level 1—15 SEER ............................................................................................................................... 0.01 0.01 

Level 2—16 SEER ............................................................................................................................... 0.02 0.02 

Level 3—17 SEER ............................................................................................................................... 0.03 0.03 

Level 4—‘‘Max-Tech’’—18 SEER ........................................................................................................ 0.04 0.04 

* The potential energy savings for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

2. Net Present Value of Customer Costs 

and Benefits 

The NPV analysis is a measure of the 

cumulative commercial consumer 

benefit or cost of standards to the 

Nation. In accordance with OMB’s 

guidelines on regulatory analysis (OMB 

Circular A–4, section E (Sept. 17, 2003)), 

DOE calculated NPV using both a 7- 

percent and a 3-percent real discount 

rate. Table VIII.16 and Table VIII.17 

provide an overview of the NPV results. 

(See chapter 8 of the NOPR TSD for 

further detail.) 


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Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1217 

TABLE VIII.16—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR SMALL THREE-PHASE AIR-COOLED AIR

CONDITIONERS AND HEAT PUMPS <65,000 Btu/h 

[Discounted at seven percent] 

[Net present value (billion 2013$)] 

Equipment class Efficiency 

level 0 

Efficiency 

level 1 

Efficiency 

level 2 

Efficiency 

level 3 

Efficiency 

level 4 

Efficiency 

level 5 

Three-Phase Air-Cooled Split-System Air Conditioners ..

<65,000 Btu/h .................................................................. (0.04) (0.16) (0.36) (0.61) (0.88) (1.08) 

Three-Phase Air-Cooled Single-Package Air Conditioners ...........................................................................

<65,000 Btu/h .................................................................. *N/A (0.13) (0.40) (0.75) (1.16) (1.51) 

Three-Phase Air-Cooled Split-System Heat Pumps 

<65,000 Btu/h ............................................................... *N/A (0.03) (0.08) (0.14) (0.18) **N/A 

Three-Phase Air-Cooled Single-Package Heat Pumps 

<65,000 Btu/h ............................................................... *N/A (0.04) (0.10) (0.19) (0.25) **N/A 

Notes: Numbers in parentheses indicate negative NPV. 

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the 

efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

* Economic analysis was not conducted for the ASHRAE levels (EL 0). 

** The max-tech level for this equipment class is EL 4. 

TABLE VIII.17—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR SMALL THREE-PHASE AIR-COOLED AIR

CONDITIONERS AND HEAT PUMPS <65,000 Btu/h 

[Discounted at three percent] 

[Net present value (billion 2013$)] 

Equipment class Efficiency 

level 0 

Efficiency 

level 1 

Efficiency 

level 2 

Efficiency 

level 3 

Efficiency 

level 4 

Efficiency 

level 5 

Three-Phase Air-Cooled Split-System Air Conditioners 

<65,000 Btu/h ............................................................... (0.07) (0.26) (0.61) (1.11) (1.64) (2.01) 

Three-Phase Air-Cooled Single-Package Air Conditioners <65,000 Btu/h ................................................... * N/A (0.20) (0.71) (1.41) (2.21) (2.84) 

Three-Phase Air-Cooled Split-System Heat Pumps 

<65,000 Btu/h ............................................................... * N/A (0.05) (0.14) (0.25) (0.32) ** N/A 

Three-Phase Air-Cooled Single-Package Heat Pumps 

<65,000 Btu/h ............................................................... * N/A (0.07) (0.18) (0.34) (0.46) ** N/A 

Notes: Numbers in parentheses indicate negative NPV. 

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the 

efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

* Economic analysis was not conducted for the ASHRAE levels (EL 0). 

** The max-tech level for this equipment class is EL 4. 

2. Water-Source Heat Pumps 

a. Economic Impacts on Commercial 

Customers 

1. Life-Cycle Cost and Payback Period 

Table VIII.18 through Table VIII.23 

show the LCC and PBP results for all 

efficiency levels considered for each 

class of water-source heat pump in this 

NOPR. In the first of each pair of tables, 

the simple payback is measured relative 

to the baseline equipment (i.e., 

equipment with the efficiency level 

specified in ASHRAE Standard 90.1– 

2013). In the second tables, the LCC 

savings are measured relative to the 

base-case efficiency distribution in the 

compliance year (i.e., the range of 

equipment expected to be on the market 

in the default case where DOE adopts 

the efficiency levels in ASHRAE 

Standard 90.1–2013). 

TABLE VIII.18—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR WATER-SOURCE HEAT PUMPS (WATER-TOAIR, WATER-LOOP) <17,000 Btu/h 

Efficiency level 

Average costs 

2013$ Simple payback 

(years) 

Average lifetime 

(years) Installed cost First year’s operating cost Lifetime operating cost LCC 

ASHRAE Baseline ................................... $3,184 $645 $7,581 $10,765 $3,184 

1 ............................................................... 3,320 636 7,469 10,789 15 3,320 

2 ............................................................... 3,494 628 7,385 10,879 17 3,494 

3 ............................................................... 3,782 619 7,271 11,054 20 3,782 

4 ............................................................... 3,917 615 7,229 11,146 21 3,917 

5 ............................................................... 4,189 609 7,159 11,349 24 4,189 

Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 


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1218 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

TABLE VIII.19—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR WATERSOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS <17,000 Btu/h 

Efficiency level 

Life-cycle cost savings 

Percent of 

customers 

that 

experience 

Average 

savings * 

Net cost 2013$ 

1 ........................ 0 0 

2 ........................ 46 (46) 

3 ........................ 68 (173) 

4 ........................ 89 (259) 

TABLE VIII.19—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR WATERSOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS <17,000 Btu/

h—Continued 

Efficiency level 

Life-cycle cost savings 

Percent of 

customers 

that 

experience 

Average 

savings * 

Net cost 2013$ 

5 ........................ 95 (458) 

* The calculation includes households with 

zero LCC savings (no impact). 

TABLE VIII.20—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR WATER-SOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS ≥17,000 Btu/h AND <65,000 Btu/h 

Efficiency level 

Average costs 

2013$ Simple 

payback 

(years) 

Average 

lifetime 

(years) Installed cost First year’s 

operating cost 

Lifetime 

operating cost LCC 

ASHRAE Baseline ................................... $4,834 $1,102 $12,980 $17,814 ........................ 19 

1 ............................................................... 5,111 1,059 12,473 17,584 6.2 19 

2 ............................................................... 5,458 1,024 12,057 17,515 7.3 19 

3 ............................................................... 5,700 1,008 11,868 17,569 8.2 19 

4 ............................................................... 5,908 999 11,759 17,667 9.1 19 

5 ............................................................... 6,328 982 11,564 17,892 10.8 19 

Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 

TABLE VIII.21—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR WATERSOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS ≥17,000 Btu/h 

AND < 65,000 Btu/h 

Efficiency level 

Life-cycle cost savings 

Percent of 

customers 

that 

experience 

Average 

savings * 

Net cost 2013$ 

1 ........................ 2 19 

2 ........................ 29 62 

3 ........................ 53 14 

TABLE VIII.21—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR WATERSOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS ≥17,000 Btu/h 

AND < 65,000 Btu/h—Continued 

Efficiency level 

Life-cycle cost savings 

Percent of 

customers 

that 

experience 

Average 

savings * 

Net cost 2013$ 

4 ........................ 66 (80) 

TABLE VIII.21—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR WATERSOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS ≥17,000 Btu/h 

AND < 65,000 Btu/h—Continued 

Efficiency level 

Life-cycle cost savings 

Percent of 

customers 

that 

experience 

Average 

savings * 

Net cost 2013$ 

5 ........................ 76 (303) 

* The calculation includes households with 

zero LCC savings (no impact). 

TABLE VIII.22—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR WATER-SOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS ≥65,000 Btu/h AND <135,000 Btu/h 

Efficiency level 

Average costs 

2013$ Simple 

payback 

(years) 

Average 

lifetime 

(years) Installed cost First year’s 

operating cost 

Lifetime 

operating cost LCC 

ASHRAE Baseline ................................... $11,886 $2,170 $25,586 $37,471 ........................ 19 

1 ............................................................... 12,832 2,095 24,705 37,537 14 19 

2 ............................................................... 13,780 2,057 24,246 38,026 16 19 

3 ............................................................... 14,681 2,024 23,865 38,546 17 19 


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Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1219 

TABLE VIII.22—AVERAGE LCC AND PBP RESULTS BY EFFICIENCY LEVEL FOR WATER-SOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS ≥65,000 Btu/h AND <135,000 Btu/h—Continued 

Efficiency level 

Average costs 

2013$ Simple 

payback 

(years) 

Average 

lifetime 

(years) Installed cost First year’s 

operating cost 

Lifetime 

operating cost LCC 

4 ............................................................... 15,817 1,993 23,492 39,309 20 19 

Note: The results for each efficiency level are calculated assuming that all commercial consumers use equipment with that efficiency level. 

The PBP is measured relative to the baseline equipment. 

TABLE VIII.23—LCC SAVINGS RELATIVE TO THE BASE-CASE EFFICIENCY DISTRIBUTION FOR WATERSOURCE (WATER-TO-AIR, WATERLOOP) HEAT PUMPS ≥65,000 Btu/h 

AND <135,000 Btu/h 

Efficiency level 

Life-cycle cost savings 

Percent of 

customers 

that 

experience 

Average 

savings* 

Net cost 2013$ 

1 ........................ ** 0 ** 0 

2 ........................ 27 (147) 

3 ........................ 72 (556) 

4 ........................ 93 (1,305) 

* The calculation includes households with 

zero LCC savings (no impact). 

** The base-case efficiency distribution has 

0-percent market share at the ASHRAE baseline; therefore, there are no savings for EL1. 

b. National Impact Analysis 

1. Amount and Significance of Energy 

Savings 

To estimate the lifetime energy 

savings for equipment shipped through 

2045 due to amended energy 

conservation standards, DOE compared 

the energy consumption of commercial 

water-source heat pumps under the 

ASHRAE Standard 90.1–2013 efficiency 

levels to energy consumption of the 

same water-source heat pumps under 

more-stringent efficiency standards. 

DOE also compared the energy 

consumption of those commercial 

water-source heat pumps under the 

ASHRAE Standard 90.1–2013 efficiency 

levels to energy consumption of 

commercial water-source heat pumps 

under the current EPCA base case (i.e., 

under current Federal standards). DOE 

examined up to five efficiency levels 

higher than those of ASHRAE Standard 

90.1–2013. Table VIII.24 through Table 

VIII.26 show the projected national 

energy savings at each of the considered 

standard levels. (See chapter 8 of the 

NOPR TSD.) 

TABLE VIII.24—POTENTIAL ENERGY SAVINGS FOR WATER-SOURCE (WATER-TO-AIR, WATER-LOOP) HEAT PUMPS

<17,000 Btu/h 

Efficiency level 

Primary energy 

savings estimate * 

(quads) 

FFC energy 

savings estimate * 

(quads) 

Level 0—ASHRAE—12.2 EER **.

Level 1—13.0 EER .............................................................................................................................. 0.0002 0.0002 

Level 2—14.0 EER .............................................................................................................................. 0.02 0.02 

Level 3—15.7 EER .............................................................................................................................. 0.06 0.06 

Level 4—16.5 EER .............................................................................................................................. 0.08 0.08 

Level 5—‘‘Max-Tech’’—18.1 EER ....................................................................................................... 0.11 0.11 

* The potential energy savings for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

** The base-case efficiency distribution has 0-percent market share at the Federal baseline; therefore, there are no savings for the ASHRAE 

level. 

TABLE VIII.25—POTENTIAL ENERGY SAVINGS FOR WATER-SOURCE (WATER-TO-AIR, WATER-LOOP) HEAT PUMPS ≥17,000 

AND <65,000 Btu/h 

Efficiency level 

Primary energy 

savings estimate * 

(quads) 

FFC energy 

savings estimate * 

(quads) 

Level 0—ASHRAE—13.0 EER **.

Level 1—14.6 EER .............................................................................................................................. 0.02 0.03 

Level 2—16.6 EER .............................................................................................................................. 0.26 0.27 

Level 3—18.0 EER .............................................................................................................................. 0.45 0.47 

Level 4—19.2 EER .............................................................................................................................. 0.60 0.63 

Level 5—‘‘Max-Tech’’—21.6 EER ....................................................................................................... 0.83 0.87 

* The potential energy savings for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

** The base-case efficiency distribution has 0-percent market share at the Federal baseline; therefore, there are no savings for the ASHRAE 

level. 


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1220 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

TABLE VIII.26—POTENTIAL ENERGY SAVINGS FOR WATER-SOURCE (WATER-TO-AIR, WATER-LOOP) HEAT PUMPS ≥65,000 

AND <135,000 Btu/h 

Efficiency level 

Primary energy 

savings estimate * 

(quads) 

FFC energy 

savings estimate * 

(quads) 

Level 0—ASHRAE—13.0 EER **.

Level 1—14.0 EER **.

Level 2—15.0 EER .............................................................................................................................. 0.01 0.01 

Level 3—16.0 EER .............................................................................................................................. 0.03 0.03 

Level 4—‘‘Max-Tech’’—17.2 EER ....................................................................................................... 0.05 0.05 

* The potential energy savings for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

** The base-case efficiency distribution has 0-percent market share at the Federal baseline and the ASHRAE baseline; therefore, there are no 

savings for the ASHRAE level or EL1. 

2. Net Present Value of Customer Costs 

and Benefits 

Table VIII.27 and Table VIII.28 

provide an overview of the NPV results. 

(See chapter 8 of the NOPR TSD for 

further detail.) 

TABLE VIII.27—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR WATER-SOURCE (WATER-TO-AIR, WATER-LOOP) 

HEAT PUMPS

[Discounted at seven percent] 

[Net present value (billion 2013$)] 

Equipment class Efficiency 

level 1 

Efficiency 

level 2 

Efficiency 

level 3 

Efficiency 

level 4 

Efficiency 

level 5 

Water-Source (Water-to-Air, Water-Loop) HP <17,000 Btu/h ............. (0 .00) (0 .04) (0.13) (0.19) (0.30) 

Water-Source (Water-to-Air, Water-Loop) HP ≥17,000 to <65,000 

Btu/h ................................................................................................. 0 .01 0 .01 (0.09) (0.24) (0.53) 

Water-Source (Water-to-Air, Water-Loop) HP ≥65,000 to 135,000 

Btu/h ................................................................................................. * (0 .01) (0.05) (0.10) ** N/A 

Notes: Numbers in parentheses indicate negative NPV. 

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the 

efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. Economic analysis was not conducted for the 

ASHRAE levels (EL 0). 

* The base-case efficiency distribution has 0-percent market share at the ASHRAE baseline; therefore, there are no savings for EL1. 

** The max-tech level for this equipment class is EL 4. 

TABLE VIII.28—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR WATER-SOURCE (WATER-TO-AIR, WATER-LOOP) 

HEAT PUMPS

[Discounted at three percent] 

[Net Present Value (Billion 2013$)] 

Equipment class Efficiency 

level 1 

Efficiency 

level 2 

Efficiency 

level 3 

Efficiency 

level 4 

Efficiency 

level 5 

Water-Source (Water-to-Air, Water-Loop) HP <17,000 Btu/h ......... (0 .00) (0 .05) (0 .19) (0 .29) (0.46) 

Water-Source (Water-to-Air, Water-Loop) HP ≥17,000 to <65,000 

Btu/h ............................................................................................. 0 .03 0 .26 0 .22 0 .05 (0.31) 

Water-Source (Water-to-Air, Water-Loop) HP ≥65,000 to 135,000 

Btu/h ............................................................................................. (*) (0 .02) (0 .07) (0 .14) ** N/A 

Notes: Numbers in parentheses indicate negative NPV. 

The net present value for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the 

efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. Economic analysis was not conducted for the 

ASHRAE levels (EL 0). 

* The base-case efficiency distribution has 0-percent market share at the ASHRAE baseline; therefore, there are no savings for EL1. 

** The max-tech level for this equipment class is EL 4. 

3. Commercial Oil-Fired Storage Water 

Heaters 

DOE estimated the potential primary 

energy savings in quads (i.e., 1015 Btu) 

for each efficiency level considered 

within each equipment class analyzed. 

Table VIII.29 shows the potential energy 

savings resulting from the analyses 

conducted as part of the April 2014 

NODA. 79 FR 20114, 20136 (April 11, 

2014). In response to the NODA, AHRI 

stated that DOE’s derivation of unit 

energy consumption for oil-fired storage 

water heaters based on a proportional 

relationship to gas-fired storage water 

heaters in the Commercial Building 

Energy Consumption Survey (CBECS) 

might not be fully correct because of 

regional variations between the two 

energy sources. (AHRI, No. 24 at p. 7) 

After re-examining the energy savings 

analysis for oil-fired storage water 

heaters, DOE has tentatively determined 


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57Because DOE did not conduct additional 

analysis for oil-fired storage water heaters, estimates 

of environmental benefits for amended standards 

for that equipment type are not shown here. 

that any resulting imprecision in this 

estimate would not be enough to make 

the energy-savings estimates for this 

class non-trivial, and, therefore, DOE 

did not adjust its analysis for the NOPR. 

TABLE VIII.29—POTENTIAL ENERGY

SAVINGS ESTIMATES FOR COMMERCIAL OIL-FIRED STORAGE WATER

HEATERS >105,000 Btu/h AND

<4,000 Btu/h/gal 

Efficiency level 

Primary energy savings estimate * 

(Quads) 

FFC energy 

savings estimate * 

(Quads) 

Level 0— 

ASHRAE— 

80% Et ........... 0.002 0.002 

Level 1—81% Et 0.001 0.001 

Level 2—‘‘MaxTech’’—82% 

Et ................... 0.002 0.002 

* The potential energy savings for efficiency 

levels more stringent than those specified by 

ASHRAE Standard 90.1–2013 were calculated 

relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards 

were adopted. 

As mentioned in section IV.B, DOE 

did not conduct an economic analysis 

for this oil-fired storage water heater 

equipment category because of the 

minimal energy savings. 

C. Need of the Nation To Conserve 

Energy 

An improvement in the energy 

efficiency of the equipment subject to 

this rule, where economically justified, 

is likely to improve the security of the 

nation’s energy system by reducing 

overall demand for energy, to strengthen 

the economy, and to reduce the 

environmental impacts or costs of 

energy production. Reduced electricity 

demand may also improve the reliability 

of the electricity system, particularly 

during peak-load periods. Reductions in 

national electric generating capacity 

estimated for each efficiency level 

considered in this rulemaking, 

throughout the same analysis period as 

the NIA, are reported in chapter 11 of 

the NOPR TSD. 

Energy savings from amended 

standards for the small air-cooled air 

conditioners and heat pumps less than 

65,000 Btu/h, water-source heat pumps, 

and oil-fired storage water heaters 

covered in this NOPR could also 

produce environmental benefits in the 

form of reduced emissions of air 

pollutants and greenhouse gases. 

Table VIII.30 and Table VIII.31 

provide DOE’s estimate of cumulative 

emissions reductions projected to result 

from the efficiency levels analyzed in 

this rulemaking.57 The tables include 

both power sector emissions and 

upstream emissions. The upstream 

emissions were calculated using the 

multipliers discussed in section VII.A. 

DOE reports annual CO2, NOX, and Hg 

emissions reductions for each efficiency 

level in chapter 9 of the NOPR TSD. As 

discussed in section VII.A, DOE did not 

include NOX emissions reduction from 

power plants in States subject to CAIR, 

because an energy conservation 

standard would not affect the overall 

level of NOX emissions in those States 

due to the emissions caps mandated by 

CAIR. 

TABLE VIII.30—CUMULATIVE EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR SMALL THREE-PHASE AIR-COOLED

AIR CONDITIONERS AND HEAT PUMPS <65,000 Btu/h 

[2017–2046 for ASHRAE level; 2020–2046 for more-stringent levels; 2019–2048 for split-system air conditioners] 

Efficiency level 

ASHRAE/0 1 2 3 4 5 

Power Sector Emissions 

CO2 (million metric tons) .............. 3 .7 8 .9 16 .8 20 .8 24 .3 25 .9 

SO2 (thousand tons) .................... 2 .9 6 .9 13 .0 16 .1 18 .8 20 .1 

NOX (thousand tons) ................... 2 .8 6 .7 12 .6 15 .6 18 .2 19 .4 

Hg (tons) ...................................... 0 .01 0 .02 0 .04 0 .05 0 .06 0 .06 

N2O (thousand tons) .................... 0 .05 0 .13 0 .24 0 .30 0 .35 0 .37 

CH4 (thousand tons) .................... 0 .38 0 .90 1 .69 2 .10 2 .45 2 .61 

Upstream Emissions 

CO2 (million metric tons) .............. 0 .22 0 .54 1 .00 1 .24 1 .45 1 .54 

SO2 (thousand tons) .................... 0 .04 0 .09 0 .17 0 .22 0 .25 0 .27 

NOX (thousand tons) ................... 3 .2 7 .6 14 .3 17 .7 20 .7 22 .0 

Hg (tons) ...................................... 0 .0001 0 .0002 0 .0004 0 .0005 0 .0006 0 .0006 

N2O (thousand tons) .................... 0 .002 0 .005 0 .009 0 .011 0 .012 0 .013 

CH4 (thousand tons) .................... 19 45 83 103 121 128 

Total FFC Emissions 

CO2 (million metric tons) .............. 4 .0 9 .5 17 .8 22 .1 25 .8 27 .4 

SO2 (thousand tons) .................... 2 .9 7 .0 13 .2 16 .4 19 .1 20 .3 

NOX (thousand tons) ................... 6 .0 14 .3 26 .8 33 .4 38 .9 41 .4 

Hg (tons) ...................................... 0 .01 0 .02 0 .04 0 .05 0 .06 0 .06 

N2O (thousand tons) .................... 0 .06 0 .13 0 .25 0 .31 0 .36 0 .39 

CH4 (thousand tons) .................... 19 45 85 105 123 131 

Note: The potential emissions reduction for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 


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1222 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

TABLE VIII.31—CUMULATIVE EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR WATER-SOURCE HEAT PUMPS

[2016–2045 for ASHRAE level; 2020–2045 for more-stringent levels] 

Efficiency level 

ASHRAE/0 * 1 2 3 4 5 

Power Sector Emissions 

CO2 (million metric tons) ................ ........................ 1 .4 16 .3 30 .5 41 .6 56 .8 

SO2 (thousand tons) ...................... ........................ 1 .1 12 .9 24 .2 32 .9 44 .9 

NOX (thousand tons) ..................... ........................ 1 .1 12 .3 23 .1 31 .4 42 .9 

Hg (tons) ........................................ ........................ 0 .003 0 .040 0 .075 0 .101 0 .139 

N2O (thousand tons) ...................... ........................ 0 .02 0 .23 0 .44 0 .60 0 .81 

CH4 (thousand tons) ...................... ........................ 0 .14 1 .63 3 .06 4 .17 5 .69 

Upstream Emissions 

CO2 (million metric tons) ................ ........................ 0 .08 0 .97 1 .81 2 .47 3 .37 

SO2 (thousand tons) ...................... ........................ 0 .01 0 .17 0 .32 0 .43 0 .59 

NOX (thousand tons) ..................... ........................ 1 .2 13 .8 25 .9 35 .2 48 .0 

Hg (tons) ........................................ ........................ 0 .00003 0 .00037 0 .00070 0 .00095 0 .00130 

N2O (thousand tons) ...................... ........................ 0 .001 0 .008 0 .016 0 .021 0 .029 

CH4 (thousand tons) ...................... ........................ 7 .0 80 .5 150 .8 205 .2 279 .9 

Total FFC Emissions 

CO2 (million metric tons) ................ ........................ 1 .5 17 .3 32 .4 44 .0 60 .1 

SO2 (thousand tons) ...................... ........................ 1 .1 13 .1 24 .5 33 .3 45 .5 

NOX (thousand tons) ..................... ........................ 2 .3 26 .1 49 .0 66 .7 91 .0 

Hg (tons) ........................................ ........................ 0 .004 0 .040 0 .075 0 .102 0 .140 

N2O (thousand tons) ...................... ........................ 0 .02 0 .24 0 .45 0 .62 0 .84 

CH4 (thousand tons) ...................... ........................ 7 .2 82 .1 153 .9 209 .4 285 .6 

Note: The potential emissions reduction for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

* There are no reductions for the ASHRAE level because there is no market share projected at the Federal baseline in the base case. 

As part of the analysis for this NOPR, 

DOE estimated monetary benefits likely 

to result from the reduced emissions of 

CO2 and NOX estimated for each of the 

efficiency levels analyzed for small aircooled air conditioners and heat pumps 

less than 65,000 Btu/h, water-source 

heat pumps, and oil-fired storage water 

heaters. As discussed in section VII.B.1, 

for CO2, DOE used values for the SCC 

developed by an interagency process. 

The interagency group selected four sets 

of SCC values for use in regulatory 

analyses. Three sets are based on the 

average SCC from three integrated 

assessment models, at discount rates of 

2.5 percent, 3 percent, and 5 percent. 

The fourth set, which represents the 

95th-percentile SCC estimate across all 

three models at a 3-percent discount 

rate, is included to represent higherthan-expected impacts from temperature 

change further out in the tails of the 

SCC distribution. The four SCC values 

for CO2 emissions reductions in 2015, 

expressed in 2013$, are $12.0/ton, 

$40.5/ton, $62.4/ton, and $119/ton. The 

values for later years are higher due to 

increasing emissions-related costs as the 

magnitude of projected climate change 

increases. 

Table VIII.32 and Table VIII.33 

present the global value of CO2

emissions reductions at each efficiency 

level. 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 chapter 10 of 

the NOPR TSD. 

TABLE VIII.32—GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR SMALL

THREE-PHASE AIR-COOLED AIR CONDITIONERS AND HEAT PUMPS <65,000 Btu/h 

Efficiency level 

SCC scenario * 

5% discount 

rate, average 

3% discount 

rate, average 

2.5% discount 

rate, average 

3% discount 

rate, 95th 

ercentile 

million 2013$ 

Power Sector Emissions 

ASHRAE/0 ................................................................................................... 23 110 177 340 

1 ................................................................................................................... 53 261 420 808 

2 ................................................................................................................... 103 498 799 1541 

3 ................................................................................................................... 127 617 990 1910 

4 ................................................................................................................... 149 721 1156 2231 

5 ................................................................................................................... 159 768 1232 2378 


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TABLE VIII.32—GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR SMALL

THREE-PHASE AIR-COOLED AIR CONDITIONERS AND HEAT PUMPS <65,000 Btu/h—Continued 

Efficiency level 

SCC scenario * 

5% discount 

rate, average 

3% discount 

rate, average 

2.5% discount 

rate, average 

3% discount 

rate, 95th 

ercentile 

Upstream Emissions 

ASHRAE/0 ................................................................................................... 1 .3 6 .5 10 20 

1 ................................................................................................................... 3 .1 15 25 48 

2 ................................................................................................................... 6 .0 29 47 91 

3 ................................................................................................................... 7 .4 36 59 113 

4 ................................................................................................................... 8 .7 43 68 132 

5 ................................................................................................................... 9 .3 45 73 140 

Total FFC Emissions 

ASHRAE/0 ................................................................................................... 24 116 187 360 

1 ................................................................................................................... 56 277 445 856 

2 ................................................................................................................... 109 527 846 1632 

3 ................................................................................................................... 135 654 1049 2023 

4 ................................................................................................................... 157 763 1224 2362 

5 ................................................................................................................... 168 814 1305 2518 

Note: The potential emissions reduction for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4 and $119 per metric ton (2013$). 

TABLE VIII.33—GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION FOR POTENTIAL STANDARDS FOR WATERSOURCE HEAT PUMPS

Efficiency level 

SCC scenario * 

5% discount 

rate, average 

3% discount 

rate, average 

2.5% discount 

rate, average 

3% discount 

rate, 95th 

percentile 

million 2013$ 

Power Sector Emissions 

ASHRAE/0 ** ............................................................................................ .......................... .......................... .......................... ..........................

1 ............................................................................................................... 8 .7 42 68 131 

2 ............................................................................................................... 99 482 773 1491

3 ............................................................................................................... 186 902 1448 2794 

4 ............................................................................................................... 253 1228 1972 3804 

5 ............................................................................................................... 347 1681 2698 5206 

Upstream Emissions 

ASHRAE/0 ** ............................................................................................ .......................... .......................... .......................... ..........................

1 ............................................................................................................... 0 .5 2 .5 4 .0 7 .7 

2 ............................................................................................................... 5 .8 28 45 88 

3 ............................................................................................................... 11 53 85 164 

4 ............................................................................................................... 15 72 116 224 

5 ............................................................................................................... 20 99 159 306 

Total FFC Emissions 

ASHRAE/0 ** ............................................................................................ .......................... .......................... .......................... ..........................

1 ............................................................................................................... 9 .2 45 72 138 

2 ............................................................................................................... 105 510 818 1579 

3 ............................................................................................................... 196 955 1533 2958 

4 ............................................................................................................... 267 1300 2088 4028 

5 ............................................................................................................... 367 1780 2856 5512 

Note: The potential emissions reduction for efficiency levels more stringent than those specified by ASHRAE Standard 90.1–2013 were calculated relative to the efficiency levels that would result if ASHRAE Standard 90.1–2013 standards were adopted. 

* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4 and $119 per metric ton (2013$). 

** There are no reductions for the ASHRAE level because there is no market share projected at the Federal baseline in the base case. 

DOE is well aware that scientific and 

economic knowledge about the 

contribution of CO2 and other GHG 

emissions to changes in the future 

global climate and the potential 

resulting damages to the world economy 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
1224 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

continues to evolve rapidly. Thus, any 

value placed in this rulemaking on 

reducing CO2 emissions is subject to 

change. DOE, together with other 

Federal agencies, will continue to 

review various methodologies for 

estimating the monetary value of 

reductions in CO2 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 NOPR the most recent values and 

analyses resulting from the interagency 

review process. 

DOE also estimated a range for the 

cumulative monetary value of the 

economic benefits associated with NOX

emissions reductions anticipated to 

result from amended standards for the 

small air-cooled air conditioners and 

heat pumps less than 65,000 Btu/h, 

water-source heat pumps, and oil-fired 

storage water heaters that are the subject 

of this NOPR. The dollar-per-ton values 

that DOE used are discussed in section 

VII.B.2. 

Table VIII.34 and Table VIII.35 

present the present value of cumulative 

NOX emissions reductions for each 

efficiency level calculated using the 

average dollar-per-ton values and 7- 

percent and 3-percent discount rates. 

TABLE VIII.34—PRESENT VALUE OF

NOX EMISSIONS REDUCTION FOR

POTENTIAL STANDARDS FOR SMALL

THREE-PHASE AIR-COOLED AIR

CONDITIONERS AND HEAT PUMPS

<65,000 Btu/h 

[2017–2046 for ASHRAE Level; 2020–2046 

for More-Stringent Levels; 2019–2048 for 

Split-System Air Conditioners] 

Efficiency 

level 

3% discount 

rate 

7% discount 

rate 

million 2013$ 

Power Sector Emissions 

ASHRAE/0 .... 3 .3 1 .4 

1 .................... 7 .8 3 .2 

2 .................... 15 6 .4 

3 .................... 19 7 .9 

4 .................... 22 9 .2 

5 .................... 23 9 .9 

Upstream Emissions 

ASHRAE/0 .... 3 .6 1 .4 

1 .................... 8 .6 3 .3 

2 .................... 17 6 .6 

3 .................... 21 8 .2 

4 .................... 24 9 .5 

TABLE VIII.34—PRESENT VALUE OF

NOX EMISSIONS REDUCTION FOR

POTENTIAL STANDARDS FOR SMALL

THREE-PHASE AIR-COOLED AIR

CONDITIONERS AND HEAT PUMPS

<65,000 Btu/h—Continued 

[2017–2046 for ASHRAE Level; 2020–2046 

for More-Stringent Levels; 2019–2048 for 

Split-System Air Conditioners] 

Efficiency 

level 

3% discount 

rate 

7% discount 

rate 

5 .................... 26 10 

Total FFC Emissions 

ASHRAE/0 .... 7 .0 2 .8 

1 .................... 16 6 .5 

2 .................... 32 13 

3 .................... 39 16 

4 .................... 46 19 

5 .................... 49 20 

Note: The potential emissions reduction for 

efficiency levels more stringent than those 

specified by ASHRAE Standard 90.1–2013 

were calculated relative to the efficiency levels 

that would result if ASHRAE Standard 90.1– 

2013 standards were adopted. 

TABLE VIII.35—PRESENT VALUE OF

NOX EMISSIONS REDUCTION FOR

POTENTIAL STANDARDS FOR WATERSOURCE HEAT PUMPS

[2016–2045 for ASHRAE Level; 2020–2045 

for More-Stringent Levels] 

Efficiency 

level 

3% 

discount rate 

7% 

discount rate 

million 2013$ 

Power Sector Emissions 

ASHRAE/0* ... ...................... ......................

1 .................... 1 .3 0 .5 

2 .................... 15 6 .0 

3 .................... 27 11 

4 .................... 37 15 

5 .................... 51 21 

Upstream Emissions 

ASHRAE/0* ... ...................... ......................

1 .................... 1 .4 0 .5 

2 .................... 16 6 .2 

3 .................... 30 12 

4 .................... 41 16 

5 .................... 56 22 

Total FFC Emissions 

ASHRAE/0*.

1 .................... 2 .7 1 .1 

2 .................... 31 12 

3 .................... 57 23 

4 .................... 78 31 

5 .................... 107 43 

Note: The potential emissions reduction for 

efficiency levels more stringent than those 

specified by ASHRAE Standard 90.1–2013 

were calculated relative to the efficiency levels 

that would result if ASHRAE Standard 90.1– 

2013 standards were adopted. 

* There are no reductions for the ASHRAE 

level because there is no market share projected at the Federal baseline in the base 

case. 

D. Proposed Standards 

1. Small Commercial Air-Cooled Air 

Conditioners and Heat Pumps Less 

Than 65,000 Btu/h 

As noted previously, EPCA specifies 

that, for any commercial and industrial 

equipment addressed under 42 U.S.C. 

6313(a)(6)(A)(i), DOE may prescribe an 

energy conservation standard more 

stringent than the level for such 

equipment in ASHRAE Standard 90.1, 

as amended, only if ‘‘clear and 

convincing evidence’’ shows that a 

more-stringent standard would result in 

significant additional conservation of 

energy and is technologically feasible 

and economically justified. (42 U.S.C. 

6313(a)(6)(A)(ii)(II)) This requirement 

also applies to split-system air 

conditioners evaluated under the 6-year 

look back. (42 U.S.C. 6313)(a)(6)(C)(i)

(II)) 

In evaluating more-stringent 

efficiency levels than those specified by 

ASHRAE Standard 90.1–2013 for small 

air-cooled air conditioners and heat 

pumps less than 65,000 Btu/h, DOE 

reviewed the results in terms of their 

technological feasibility, significance of 

energy savings, and economic 

justification. 

DOE has tentatively concluded that 

all of the SEER and HSPF levels 

considered by DOE are technologically 

feasible, as units with equivalent 

efficiency appeared to be available in 

the current market at all levels 

examined. 

DOE examined the potential energy 

savings that would result from the 

efficiency levels specified in ASHRAE 

Standard 90.1–2013 and compared these 

to the potential energy savings that 

would result from efficiency levels more 

stringent than those in ASHRAE 

Standard 90.1–2013. DOE estimates that 

0.05 quads of energy would be saved if 

DOE adopts the efficiency levels set in 

ASHRAE Standard 90.1–2013 for each 

small air-cooled air conditioner and 

heat pump class specified in that 

standard. If DOE were to adopt 

efficiency levels more stringent than 

those specified by ASHRAE Standard 

90.1–2013, the potential additional 

energy savings range from 0.02 quads to 

0.45 quads. Associated with proposing 

more-stringent efficiency levels for the 

three triggered equipment classes is a 

three-year delay in implementation 

compared to the adoption of energy 

conservation standards at the levels 

specified in ASHRAE Standard 90.1– 

2013 (see section V.E.10). This delay in 


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implementation of amended energy 

conservation standards would result in 

a small amount of energy savings being 

lost in the first years (2017 through 

2020) compared to the savings from 

adopting the levels in ASHRAE 

Standard 90.1–2013; however, this loss 

may be compensated for by increased 

savings in later years. Taken in 

isolation, the energy savings associated 

with more-stringent standards might be 

considered significant enough to 

warrant adoption of such standards. 

However, as noted previously, energy 

savings are not the only factor that DOE 

must consider. 

In considering whether potential 

standards are economically justified, 

DOE also examined the LCC savings and 

national NPV that would result from 

adopting efficiency levels more 

stringent than those set forth in 

ASHRAE Standard 90.1–2013. The 

analytical results show negative average 

LCC savings and negative national NPV 

at both 7-percent and 3-percent discount 

rate for all efficiency levels in all four 

equipment classes. These results 

indicate that adoption of efficiency 

levels more stringent than those in 

ASHRAE Standard 90.1–2013 as Federal 

energy conservation standards would 

likely lead to negative economic 

outcomes for the Nation. Consequently, 

this criterion for adoption of morestringent standard levels does not 

appear to have been met. 

As such, DOE does not have ‘‘clear 

and convincing evidence’’ that any 

significant additional conservation of 

energy that would result from adoption 

of more-stringent efficiency levels than 

those specified in ASHRAE Standard 

90.1–2013 would be economically 

justified. Therefore, DOE is proposing to 

adopt the energy efficiency levels for 

these products as set forth in ASHRAE 

Standard 90.1–2013. For split-system air 

conditioners, for which the efficiency 

level was not updated in Standard 90.1– 

2013, DOE is making a determination 

that standards for the product do not 

need to be amended for the reasons 

stated above. Table VIII.36 presents the 

proposed amended energy conservation 

standards and compliance dates for 

small air-cooled air conditioners and 

heat pumps less than 65,000 Btu/h. 

TABLE VIII.36—PROPOSED ENERGY CONSERVATION STANDARDS FOR SMALL THREE-PHASE AIR-COOLED AIR

CONDITIONERS AND HEAT PUMPS <65,000 Btu/h 

Equipment type Efficiency level Compliance date 

Three-Phase Air-Cooled Split System Air Conditioners ......................................

<65,000 Btu/h .......................................................................................................

13.0 SEER * .......................................... June 16, 2008. 

Three-Phase Air-Cooled Single Package Air Conditioners .................................

<65,000 Btu/h .......................................................................................................

14.0 SEER ............................................ January 1, 2017. 

Three-Phase Air-Cooled Split System Heat Pumps <65,000 Btu/h .................... 14.0 SEER ............................................

8.2 HSPF 

January 1, 2017. 

Three-Phase Air-Cooled Single Package Heat Pumps <65,000 Btu/h ............... 14.0 SEER ............................................

8.0 HSPF 

January 1, 2017. 

*13.0 SEER is the existing Federal minimum energy conservation standard for three-phase air-cooled split system air conditioners <65,000 

Btu/h. 

2. Water-Source Heat Pumps 

In evaluating more-stringent 

efficiency levels for water-source heat 

pumps than those specified by ASHRAE 

Standard 90.1–2013, DOE reviewed the 

results in terms of their technological 

feasibility, significance of energy 

savings, and economic justification. 

DOE has tentatively concluded that 

all of the EER and COP levels 

considered by DOE are technologically 

feasible, as units with equivalent 

efficiency appeared to be available in 

the current market at all levels 

examined. 

DOE examined the potential energy 

savings that would result from the 

efficiency levels specified in ASHRAE 

Standard 90.1–2013 and compared these 

to the potential energy savings that 

would result from efficiency levels more 

stringent than those in ASHRAE 

Standard 90.1–2013. DOE does not 

estimate any energy savings from 

adopting the levels set in ASHRAE 

Standard 90.1–2013, as very few models 

exist on the market below that level, and 

by 2020, DOE expects those models to 

be off the market. If DOE were to adopt 

efficiency levels more stringent than 

those specified by ASHRAE Standard 

90.1–2013, the potential additional 

energy savings range from 0.03 quads to 

1.0 quads. Associated with proposing 

more-stringent efficiency levels is a 

four-and-a-half-year delay in 

implementation compared to the 

adoption of energy conservation 

standards at the levels specified in 

ASHRAE Standard 90.1–2013 (see 

section VI.E.10). This delay in 

implementation of amended energy 

conservation standards would result in 

a small amount of energy savings being 

lost in the first years (2016 through 

2020) compared to the savings from 

adopting the levels in ASHRAE 

Standard 90.1–2013; however, this loss 

may be compensated for by increased 

savings in later years. Taken in 

isolation, the energy savings associated 

with more-stringent standards might be 

considered significant enough to 

warrant adoption of such standards. 

However, as noted above, energy 

savings are not the only factor which 

DOE must consider. 

In considering whether potential 

standards are economically justified, 

DOE also examined the NPV that would 

result from adopting efficiency levels 

more stringent than those set forth in 

ASHRAE Standard 90.1–2013. With a 7- 

percent discount rate, EL 1 results in 

positive NPV, and ELs 2 through 5 

result in negative NPV. With a 3-percent 

discount rate, ELs 1 and 2 create 

positive NPV, while ELs 3 through 5 

result in negative NPVs. These results 

indicate that adoption of efficiency 

levels more stringent than those in 

ASHRAE Standard 90.1–2013 as Federal 

energy conservation standards might 

lead to negative economic outcomes for 

the Nation, except at EL1, which offers 

very little energy savings. 

Furthermore, although DOE based it 

analyses on the best available data when 

examining the potential energy savings 

and the economic justification of 

efficiency levels more stringent than 

those specified in ASHRAE Standard 

90.1–2013, DOE believes there are 

several limitations regarding that data 

which should be considered before 

proposing amended energy conservation 

standards for water-source heat pumps. 

First, DOE reexamined the 

uncertainty in its analysis of watersource heat pumps. As noted in section 

VI.D, DOE relied on cooling energy use 

estimates from a 2000 study. While DOE 

applied a scaling factor to attempt to 

account for changes in buildings since 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
1226 Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 

2000, this is only a rough estimate. DOE 

considered running building 

simulations by applying a water-source 

heat pump module to reference 

buildings. However, DOE has been 

unable to obtain reliable information on 

the distribution of water-source heat 

pump applications. Therefore, it is not 

clear which building types would be 

most useful to simulate and how DOE 

would weight the results of the 

simulations. Furthermore, DOE has no 

field data with which to corroborate the 

results of the simulations. The analysis 

of heating energy use is also very 

uncertain; DOE relied on estimates for 

air-source heat pumps, but it is unclear 

whether water-source heat pumps 

would have similar heating usage, as 

they tend to be used in different 

applications. Any inaccuracy in UEC 

directly impacts the energy savings 

estimates and consumer impacts. 

Second, in developing its analysis, 

DOE made refinements to various 

inputs, such as heating UEC and repair 

cost. DOE observed that the NPV results 

were highly sensitive to small changes 

in these inputs, with NPV for EL 2, for 

example, changing from positive to 

negative and back over several 

iterations. This model sensitivity, 

combined with high uncertainty in 

various inputs, makes it difficult for 

DOE to determine that the results 

provide clear and convincing evidence 

that higher standards would be 

economically justified. 

Third, DOE relied on shipments 

estimates from the U.S. Census. As 

noted in section VI.F.2, these estimates 

are considerably higher than those 

found in an EIA report. Furthermore, 

DOE disaggregated the shipments into 

equipment class using data from over a 

decade ago. Although DOE requested 

comment in the April 2014 NODA, DOE 

has not received any information or data 

regarding the shipments of this 

equipment. Any inaccuracy in the 

shipment projection in total or by 

equipment class contributes to the 

uncertainty of the energy savings results 

and, thus, makes it difficult for DOE to 

determine that any additional energy 

savings are significant. 

Fourth, due to the limited data on the 

existing distribution of shipments by 

efficiency level or historical efficiency 

trends, DOE was not able to assess 

possible future changes in either the 

available efficiencies of equipment in 

the water-source heat pump market or 

the sales distribution of shipments by 

efficiency level in the absence of setting 

more-stringent standards. Instead, DOE 

applied an efficiency trend from a 

commercial air conditioner rulemaking 

published 10 years ago. DOE recognizes 

that manufacturers may continue to 

make future improvements in watersource heat pump efficiencies even in 

the absence of mandated energy 

conservation standards. In particular, 

water-source heat pumps tend to be a 

fairly efficient product, and the 

distribution of model availability 

indicates that many commercial 

consumers are already purchasing 

equipment well above the baseline. 

Consequently, it is likely that the true 

improvements in efficiency in the 

absence of a standard may be higher 

than estimated. This possibility 

increases the uncertainty of the energy 

savings estimates. To the extent that 

manufacturers improve equipment 

efficiency and commercial consumers 

choose to purchase improved products 

in the absence of standards, the energy 

savings estimates would likely be 

reduced. 

In light of the above, DOE would 

again restate the statutory test for 

adopting energy conservation standards 

more stringent than the levels in 

ASHRAE Standard 90.1. DOE must have 

‘‘clear and convincing’’ evidence in 

order to propose efficiency levels more 

stringent than those specified in 

ASHRAE Standard 90.1–2013, and for 

the reasons explained in this document, 

the totality of information does not meet 

the level necessary to support these 

more-stringent efficiency levels for 

water-source heat pumps. Consequently, 

DOE has tentatively decided to propose 

the efficiency levels in ASHRAE 

Standard 90.1–2013 as amended energy 

conservation standards for all three 

water-source heat pump equipment 

classes. Accordingly, Table VIII.37 

presents the proposed amended energy 

conservation standards and compliance 

dates for water-source heat pumps. 

TABLE VIII.37—PROPOSED ENERGY CONSERVATION STANDARDS FOR WATER-SOURCE HEAT PUMPS

Equipment type Efficiency level Compliance date 

Water-Source (Water-to-Air, Water-Loop) HP <17,000 Btu/h ............................. 12.2 EER ..............................................

4.3 COP 

October 9, 2015. 

Water-Source (Water-to-Air, Water-Loop) HP ≥17,000 to <65,000 Btu/h ........... 13.0 EER ..............................................

4.3 COP 

October 9, 2015. 

Water-Source (Water-to-Air, Water-Loop) HP ≥65,000 to 135,000 Btu/h ........... 13.0 EER ..............................................

4.3 COP 

October 9, 2015. 

DOE seeks comments from interested 

parties on its proposed amended energy 

conservation standards for water-source 

heat pumps, as well as the other 

efficiency levels considered. This is 

identified as Issue 12 under ‘‘Issues on 

Which DOE Seeks Comment’’ in section 

X.E of this NOPR. Although DOE 

currently believes that it would be 

appropriate to adopt the efficiency 

levels in ASHRAE Standard 90.1–2013 

for water-source heat pumps, DOE may 

consider the possibility of setting 

standards at more-stringent efficiency 

levels if public comments and 

additional data supply clear and 

convincing evidence in support of such 

an approach. 

3. Commercial Oil-Fired Storage Water 

Heaters 

EPCA specifies that, for any 

commercial and industrial equipment 

addressed under 42 U.S.C. 

6313(a)(6)(A)(i), DOE may prescribe an 

energy conservation standard more 

stringent than the level for such 

equipment in ASHRAE Standard 90.1, 

as amended, only if ‘‘clear and 

convincing evidence’’ shows that a 

more-stringent standard would result in 

significant additional conservation of 

energy and is technologically feasible 

and economically justified. (42 U.S.C. 

6313(a)(6)(A)(ii)(II)) 

In evaluating more-stringent 

efficiency levels for oil-fired storage 

water-heating equipment than those 

specified by ASHRAE Standard 90.1– 

2013, DOE reviewed the results in terms 

of the significance of their additional 

energy savings. DOE believes that the 

energy savings from increasing national 

energy conservation standards for oilfired storage water heaters above the 

levels specified by ASHRAE Standard 

90.1–2013 would be minimal. As such, 

DOE does not have ‘‘clear and 

convincing evidence’’ that significant 

additional conservation of energy would 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 80, No. 5 / Thursday, January 8, 2015 / Proposed Rules 1227 

result from adoption of more-stringent 

standard levels. Therefore, DOE did not 

examine whether the levels are 

economically justified, and DOE is 

proposing to adopt the energy efficiency 

levels for this equipment type as set 

forth in ASHRAE Standard 90.1–2013. 

Table VIII.38 presents the proposed 

energy conservation standard and 

compliance date for oil-fired storage 

water heaters. 

TABLE VIII.38—PROPOSED ENERGY CONSERVATION STANDARDS FOR OIL-FIRED STORAGE WATER HEATERS

Equipment type Efficiency level 

(Et) Compliance date 

Oil-Fired Storage Water Heaters >105,000 Btu/h and <4,000 Btu/h/gal ............. 80% ....................................................... October 9, 2015. 

IX. 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 the 

proposed standards set forth in this 

NOPR address are as follows: 

(1) Insufficient information and the high 

costs of gathering and analyzing relevant 

information leads some customers to miss 

opportunities to make cost-effective 

investments in energy efficiency. 

(2) In some cases the benefits of more 

efficient equipment are not realized due to 

misaligned incentives between purchasers 

and users. An example of such a case is when 

the equipment purchase decision is made by 

a building contractor or building owner who 

does not pay the energy costs. 

(3) There are external benefits resulting 

from improved energy efficiency of small aircooled air conditioners and heat pumps less 

than 65,000 Btu/h, water-source heat pumps, 

and oil-fired storage water heaters that are 

not captured by the users of such equipment. 

These benefits include externalities related to 

public health, environmental protection, and 

national energy security that are not reflected 

in energy prices, such as reduced emissions 

of air pollutants and greenhouse gases that 

impact human health and global warming. 

DOE attempts to quantify some of the 

external benefits through use of social cost of 

carbon values. 

In addition, DOE has determined that 

the proposed regulatory action is not an 

‘‘economically significant regulatory 

action’’ under section 3(f)(1) of 

Executive Order 12866. Accordingly, 

DOE has not prepared a regulatory 

impact analysis (RIA) for this rule, and 

the Office of Information and Regulatory 

Affairs (OIRA) in the Office of 

Management and Budget (OMB) has not 

reviewed this rule. 

DOE has also reviewed this regulation 

pursuant to Executive Order 13563, 

issued on January 18, 2011 (76 FR 3281 

(Jan. 21, 2011)). Executive Order 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 (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. 

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 Office 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 this NOPR is consistent with these 

principles, including the requirement 

that, to the extent permitted by law, 

benefits justify costs and that net 

benefits are maximized. 

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, 

unless the agency certifies that the rule, 

if promulgated, will 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 Web site (http://energy.gov/

gc/office-general-counsel). 

For manufacturers of small air-cooled 

air conditioners and heat pumps less 

than 65,000 Btu/h, water-source heat 

pumps, and oil-fired storage water 

heaters, 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 the 

SBA’s small business size standards to 

determine whether any small entities 

would be subject to the requirements of 

the rule. 65 FR 30836, 30848 (May 15, 

2000), as amended at 65 FR 53533, 

53544 (Sept. 5, 2000) and 77 FR 49991, 

50000 (August 20, 2012), as codified at 

13 CFR part 121. The size standards are 

listed by North American Industry 

Classification System (NAICS) code and 

industry description and are available at 

http://www.sba.gov/sites/default/files/

Size_Standards_Table.pdf. The 

ASHRAE equipment covered by this 

rule are classified under NAICS 333318, 

‘‘Other Commercial and Service 

Industry Machinery Manufacturing’’ 

(oil-fired water heaters) and NAICS 

333415, ‘‘Air-Conditioning and Warm 

Air Heating Equipment and Commercial 

and Industrial Refrigeration Equipment 

Manufacturing’’ (all other equipment 


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58For more information see: http://

www.hoovers.com/. 

addressed by the document). For an 

entity to be considered as a small 

business, the SBA sets a threshold of 

1,000 employees or fewer for the first 

category including commercial water 

heaters and 750 employees or fewer for 

the second category. 

DOE examined each of the 

manufacturers it found during its 

market assessment and used publiclyavailable information to determine if 

any manufacturers identified qualify as 

a small business under the SBA 

guidelines discussed previously. (For a 

list of all manufacturers of ASHRAE 

equipment covered by this rule, see 

chapter 2 of the NOPR TSD.) DOE’s 

research involved individual company 

Web sites and marketing research tools 

(e.g., Hoovers reports 58) to create a list 

of companies that manufacture the types 

of ASHRAE equipment affected by this 

rule. DOE screened out companies that 

do not have domestic manufacturing 

operations for ASHRAE equipment (i.e., 

manufacturers that produce all of their 

ASHRAE equipment internationally). 

DOE also did not consider 

manufacturers that are subsidiaries of 

parent companies that exceed the 

applicable 1000-employee or 750- 

employee threshold set by the SBA to be 

small businesses. DOE identified 16 

companies that qualify as small 

manufacturers: 5 central air conditioner 

manufacturers (of the 23 total 

identified), 7 water-source heat pump 

manufacturers (of the 18 total 

identified), and 7 oil-fired storage water 

heater manufacturers (of the 10 total 

identified). Please note that there are 3 

small manufacturers that produce 

equipment in more than one of these 

categories. 

Based on reviews of product listing 

data in the AHRI Directory for 

commercial equipment, DOE estimates 

that small manufacturers account for 

less than 1 percent of the market for 

covered three-phase central air 

conditioner equipment and less than 5 

percent of the market for covered watersource heat pump equipment. In the oilfired storage water heat market, DOE 

understands that one of the small 

manufacturers is a significant player in 

the market. That manufacturer accounts 

for 34 percent of product listings. DOE 

believes that the remaining oil-fired 

storage water heater manufacturers 

account for less than 5 percent of the 

market. 

DOE has reviewed this proposed rule 

under the provisions of the Regulatory 

Flexibility Act and the policies and 

procedures published on February 19, 

2003. 68 FR 7990. As part of this 

rulemaking, DOE examined the 

potential impacts of amended standard 

levels on manufacturers, as well as the 

potential implications of the proposed 

revisions to the commercial warm air 

furnace test procedures on compliance 

burdens. 

DOE examined the impact of raising 

the standards to the proposed levels by 

examining the distribution of 

efficiencies of commercially-available 

models in the AHRI Directory. For 

water-source heat pumps and oil-fired 

storage water heaters, DOE found that 

all manufacturers in the directory, 

including the small manufacturers, 

already offer equipment at and above 

the efficiency levels being proposed. 

While these small manufacturers would 

have to discontinue a fraction of their 

models in order to comply with the 

standards proposed in this rulemaking, 

DOE does not believe that there would 

be a significant burden placed on 

industry, as the market would shift to 

the new baseline levels when 

compliance with the new standards is 

required. 

For small commercial air-cooled air 

conditioners and heat pumps, DOE 

found one small manufacturer of singlepackage units in the directory with no 

models that could meet the proposed 

ASHRAE levels. 

To estimate the impacts of the 

proposed standard, DOE researched 

prior energy conservation standard 

analyses of the covered equipment, as 

well as any analyses of comparable 

single-phase products. The 2011 direct 

final rule for residential furnaces, 

central air conditioners, and heat pumps 

included analysis for a 14 SEER 

efficiency level for split-system as well 

as single-package air conditioners and 

heat pumps. 76 FR 37408 (June 27, 

2011). The 2011 analysis indicated that 

manufacturers would need to include 

additional heat exchanger surface area 

and to include modulating components 

to reach the 14 SEER level from a 13 

SEER baseline. The 2011 analyses 

further concluded that these 

improvements could be made without 

significant investments in equipment 

and production assets. The proposed 

levels for oil-fired storage water heaters 

or water-source heat pumps have not 

been analyzed as a part of any prior 

energy conservation standard 

rulemakings. 

However, DOE understands that the 

ASHRAE standards were developed 

through an industry consensus process, 

which included consideration of 

manufacturer input, including the 

impacts to small manufacturers, when 

increasing the efficiency of equipment. 

Because EPCA requires DOE to adopt 

the ASHRAE levels or to propose higher 

standards, DOE is limited in terms of 

the steps it can take to mitigate impacts 

to small businesses, but DOE reasons 

that such mitigation has already 

occurred since small manufacturers had 

input into the development of the 

industry consensus standard that DOE is 

statutorily required to adopt. DOE 

requests public comment on the number 

of small manufacturers producing 

covered three-phase central air 

conditioners, water-source heat pumps, 

and oil-fired storage water-heating 

equipment. Additionally, DOE requests 

data on the market shares of small 

manufactures covered in this 

rulemaking and the potential impacts of 

this rule on those manufacturers. 

As for the specific changes being 

proposed for the commercial warm air 

furnace test procedure, the test 

procedures (ANSI Z21.47–2012 and 

ASHRAE 103–2007) that DOE is 

proposing to incorporate by reference do 

not include any updates to the 

methodology in those sections utilized 

in the DOE test procedure. Thus, DOE 

has tentatively concluded that this test 

procedure rulemaking would keep the 

DOE test procedure current with the 

latest version of the applicable industry 

testing standards, but it will not change 

the methodology used to generate 

ratings of commercial warm air 

furnaces. Consequently, the proposed 

test procedure amendments would not 

be expected to have a substantive 

impact on manufacturers, either large or 

small. 

For the reasons stated previously, 

DOE did not prepare an initial 

regulatory flexibility analysis for the 

proposed rule. DOE will transmit its 

certification and a supporting statement 

of factual basis to the Chief Counsel for 

Advocacy of the SBA for review 

pursuant to 5 U.S.C. 605(b). 

C. Review Under the Paperwork 

Reduction Act of 1995 

Manufacturers of the ASHRAE 

equipment subject to this NOPR must 

certify to DOE that their equipment 

complies with any applicable energy 

conservation standards. In certifying 

compliance, manufacturers must test 

their equipment according to the 

applicable DOE test procedures for the 

relevant ASHRAE equipment, including 

any amendments adopted for those test 

procedures on the date that compliance 

is required. DOE has established 

regulations for the certification and 

recordkeeping requirements for all 

covered consumer products and 

commercial equipment, including the 

ASHRAE equipment in this NOPR. 76 


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FR 12422 (March 7, 2011). The 

collection-of-information requirement 

for the certification and recordkeeping 

is subject to review and approval by 

OMB under the Paperwork Reduction 

Act (PRA). This requirement has been 

approved by OMB 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. 

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 

Pursuant to the National 

Environmental Policy Act (NEPA) of 

1969, DOE has determined that the 

proposed rule fits within the category of 

actions included in Categorical 

Exclusion (CX) B5.1 and otherwise 

meets the requirements for application 

of a CX. See 10 CFR part 1021, App. B, 

B5.1(b); 1021.410(b) and Appendix B, 

B(1)–(5). The proposed rule fits within 

the category of actions because it is a 

rulemaking that establishes energy 

conservation standards for consumer 

products or industrial equipment, and 

for which none of the exceptions 

identified in CX B5.1(b) apply. 

Therefore, DOE has made a CX 

determination for this rulemaking, and 

DOE does not need to prepare an 

Environmental Assessment or 

Environmental Impact Statement for 

this proposed rule. DOE’s CX 

determination for this proposed rule is 

available at http://cxnepa.energy.gov/. 

E. Review Under Executive Order 13132 

Executive Order 13132, ‘‘Federalism,’’ 

imposes certain requirements on 

Federal agencies formulating and 

implementing policies or regulations 

that preempt State law or that have 

Federalism implications. 64 FR 43255 

(August 10, 1999). 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. DOE has 

examined this proposed rule and has 

tentatively determined that it would not 

have a substantial direct effect on the 

States, on the relationship between the 

national government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government. EPCA governs and 

prescribes Federal preemption of State 

regulations as to energy conservation for 

the equipment types that are the subject 

of this proposed rule. States can petition 

DOE for exemption from such 

preemption to the extent, and based on 

criteria, set forth in EPCA. (42 U.S.C. 

6297) Therefore, 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 (4) promote simplification 

and burden reduction. 61 FR 4729 (Feb. 

7, 1996). Regarding the review required 

by section 3(a), 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 

proposed rule meets the relevant 

standards of Executive Order 12988. 

G. 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. Public Law 104–4, sec. 

201 (codified at 2 U.S.C. 1531). For a 

proposed 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 proposed ‘‘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 them. On March 18, 1997, DOE 

published a statement of policy on its 

process for intergovernmental 

consultation under UMRA. 62 FR 

12820. DOE’s policy statement is also 

available at http://energy.gov/gc/officegeneral-counsel. 

This proposed rule contains neither 

an intergovernmental mandate nor a 

mandate that may result in the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any year. Accordingly, no assessment 

or analysis is required under the UMRA. 

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 

Pursuant to Executive Order 12630, 

‘‘Governmental Actions and Interference 

with Constitutionally Protected Property 

Rights,’’ 53 FR 8859 (March 18, 1988), 


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DOE has determined that this proposed 

rule 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 Federal agencies to review most 

disseminations of information to the 

public under information quality 

guidelines established by each agency 

pursuant to general guidelines issued by 

OMB. OMB’s guidelines were published 

at 67 FR 8452 (Feb. 22, 2002), and 

DOE’s guidelines were published at 67 

FR 62446 (Oct. 7, 2002). DOE has 

reviewed this NOPR 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 Affect 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 

proposed 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 proposed 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 tentatively concluded that 

this regulatory action, which sets forth 

proposed energy conservation standards 

for certain types of ASHRAE equipment, 

is not a significant energy action 

because the proposed standards are not 

a significant regulatory action under 

Executive Order 12866 and 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 

proposed rule. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

and Technology Policy (OSTP), issued 

its Final Information Quality Bulletin 

for Peer Review (the Bulletin). 70 FR 

2664 (Jan. 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 analyses 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.’’ Id. at 2667. 

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 has been 

disseminated and is available at the 

following Web site: http://energy.gov/

eere/buildings/peer-review. 

X. Public Participation 

A. Attendance at the Public Meeting 

The time, date, and location of the 

public meeting are listed in the DATES

and ADDRESSES sections at the beginning 

of this document. If you plan to attend 

the public meeting, please notify Ms. 

Brenda Edwards at (202) 586–2945 or 

Brenda.Edwards@ee.doe.gov. As 

explained in the ADDRESSES section, 

foreign nationals visiting DOE 

Headquarters are subject to advance 

security screening procedures. Any 

foreign national wishing to participate 

in the meeting should advise DOE of 

this fact as soon as possible by 

contacting Ms. Brenda Edwards to 

initiate the necessary procedures. 

In addition, you can attend the public 

meeting via webinar. Webinar 

registration information, participant 

instructions, and information about the 

capabilities available to webinar 

participants will be published on DOE’s 

Web site at: https://

www1.gotomeeting.com/register/

584170792. Participants are responsible 

for ensuring their systems are 

compatible with the webinar software. 

B. Procedure for Submitting Prepared 

General Statements for Distribution 

Any person who has plans to present 

a prepared general statement may 

request that copies of his or her 

statement be made available at the 

public meeting. Such persons may 

submit requests, along with an advance 

electronic copy of their statement in 

PDF (preferred), Microsoft Word or 

Excel, WordPerfect, or text (ASCII) file 

format, to the appropriate address 

shown in the ADDRESSES section at the 

beginning of this document. The request 

and advance copy of statements must be 

received at least one week before the 

public meeting and may be emailed, 

hand-delivered, or sent by mail. DOE 

prefers to receive requests and advance 

copies via email. Please include a 

telephone number to enable DOE staff to 

make follow-up contact, if needed. 

C. Conduct of the Public Meeting 

DOE will designate a DOE official to 

preside at the public meeting and may 

also use a professional facilitator to aid 

discussion. The meeting will not be a 

judicial or evidentiary-type public 

hearing, but DOE will conduct it in 

accordance with section 336 of EPCA 

(42 U.S.C. 6306). A court reporter will 

be present to record the proceedings and 

prepare a transcript. DOE reserves the 

right to schedule the order of 

presentations and to establish the 

procedures governing the conduct of the 

public meeting. There shall not be 

discussion of proprietary information, 

costs or prices, market share, or other 

commercial matters regulated by U.S. 

anti-trust laws. After the public meeting, 

interested parties may submit further 

comments on the proceedings, as well 

as on any aspect of the rulemaking, until 

the end of the comment period. 

The public meeting will be conducted 

in an informal, conference style. DOE 

will present summaries of comments 

received before the public meeting, 

allow time for prepared general 

statements by participants, and 

encourage all interested parties to share 

their views on issues affecting this 

rulemaking. Each participant will be 

allowed to make a general statement 

(within time limits determined by DOE), 


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before the discussion of specific topics. 

DOE will allow, as time permits, other 

participants to comment briefly on any 

general statements. 

At the end of all prepared statements 

on a topic, DOE will permit participants 

to clarify their statements briefly and 

comment on statements made by others. 

Participants should be prepared to 

answer questions by DOE and by other 

participants concerning these issues. 

DOE representatives may also ask 

questions of participants concerning 

other matters relevant to this 

rulemaking. The official conducting the 

public meeting will accept additional 

comments or questions from those 

attending, as time permits. The 

presiding official will announce any 

further procedural rules or modification 

of the above procedures that may be 

needed for the proper conduct of the 

public meeting. 

A transcript of the public meeting will 

be included in the docket, which can be 

viewed as described in the Docket 

section at the beginning of this 

document and will be accessible on the 

DOE Web site. In addition, any person 

may buy a copy of the transcript from 

the transcribing reporter. 

D. Submission of Comments 

DOE will accept comments, data, and 

information regarding this proposed 

rule before or after the public meeting, 

but no later than the date provided in 

the DATES section at the beginning of 

this proposed rule. Interested parties 

may submit comments, data, and other 

information using any of the methods 

described in the ADDRESSES section at 

the beginning of this document. 

Submitting comments via 

www.regulations.gov. The 

www.regulations.gov Web page will 

require you to provide your name and 

contact information. Your contact 

information will be viewable to DOE 

Building Technologies staff only. Your 

contact information will not be publicly 

viewable except for your first and last 

names, organization name (if any), and 

submitter representative name (if any). 

If your comment is not processed 

properly because of technical 

difficulties, DOE will use this 

information to contact you. If DOE 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, DOE may not be 

able to consider your comment. 

However, your contact information 

will be publicly viewable if you include 

it in the comment itself or in any 

documents attached to your comment. 

Any information that you do not want 

to be publicly viewable should not be 

included in your comment, nor in any 

document attached to your comment. 

Otherwise, persons viewing comments 

will see only first and last names, 

organization names, correspondence 

containing comments, and any 

documents submitted with the 

comments. 

Do not submit to www.regulations.gov 

information for which disclosure is 

restricted by statute, such as trade 

secrets and commercial or financial 

information (hereinafter referred to as 

Confidential Business Information 

(CBI)). Comments submitted through 

www.regulations.gov cannot be claimed 

as CBI. Comments received through the 

Web site will waive any CBI claims for 

the information submitted. For 

information on submitting CBI, see the 

Confidential Business Information 

section below. 

DOE processes submissions made 

through www.regulations.gov before 

posting. Normally, comments will be 

posted within a few days of being 

submitted. However, if large volumes of 

comments are being processed 

simultaneously, your comment may not 

be viewable for up to several weeks. 

Please keep the comment tracking 

number that www.regulations.gov 

provides after you have successfully 

uploaded your comment. 

Submitting comments via email, hand 

delivery/courier, or mail. Comments and 

documents submitted via email, hand 

delivery, or mail also will be posted to 

www.regulations.gov. If you do not want 

your personal contact information to be 

publicly viewable, do not include it in 

your comment or any accompanying 

documents. Instead, provide your 

contact information in a cover letter. 

Include your first and last names, email 

address, telephone number, and 

optional mailing address. The cover 

letter will not be publicly viewable as 

long as it does not include any 

comments 

Include contact information each time 

you submit comments, data, documents, 

and other information to DOE. If you 

submit via mail or hand delivery/

courier, please provide all items on a 

CD, if feasible, in which case it is not 

necessary to submit printed copies. No 

telefacsimiles (faxes) will be accepted. 

Comments, data, and other 

information submitted to DOE 

electronically should be provided in 

PDF (preferred), Microsoft Word or 

Excel, WordPerfect, or text (ASCII) file 

format. Provide documents that are not 

secured, that are written in English, and 

that are free of any defects or viruses. 

Documents should not contain special 

characters or any form of encryption 

and, if possible, they should carry the 

electronic signature of the author. 

Campaign form letters. Please submit 

campaign form letters by the originating 

organization in batches of between 50 to 

500 form letters per PDF or as one form 

letter with a list of supporters’ names 

compiled into one or more PDFs. This 

reduces comment processing and 

posting time. 

Confidential Business Information. 

Pursuant to 10 CFR 1004.11, any person 

submitting information that he or she 

believes to be confidential and exempt 

by law from public disclosure should 

submit via email, postal mail, or hand 

delivery/courier two well-marked 

copies: One copy of the document 

marked ‘‘confidential’’ including all the 

information believed to be confidential, 

and one copy of the document marked 

‘‘non-confidential’’ with the information 

believed to be confidential deleted. 

Submit these documents via email or on 

a CD, if feasible. DOE will make its own 

determination about the confidential 

status of the information and treat it 

according to its determination. 

Factors of interest to DOE when 

evaluating requests to treat submitted 

information as confidential include: (1) 

A description of the items; (2) whether 

and why such items are customarily 

treated as confidential within the 

industry; (3) whether the information is 

generally known by or available from 

other sources; (4) whether the 

information has previously been made 

available to others without obligation 

concerning its confidentiality; (5) an 

explanation of the competitive injury to 

the submitting person which would 

result from public disclosure; (6) when 

such information might lose its 

confidential character due to the 

passage of time; and (7) why disclosure 

of the information would be contrary to 

the public interest. 

It is DOE’s policy that all comments 

may be included in the public docket, 

without change and as received, 

including any personal information 

provided in the comments (except 

information deemed to be exempt from 

public disclosure). 

E. Issues on Which DOE Seeks Comment 

Although DOE welcomes comments 

on any aspect of this proposal, DOE is 

particularly interested in receiving 

comments and views of interested 

parties concerning the following issues: 

1. DOE’s proposed definition of ‘‘watersource heat pump.’’ 

2. Any relevant issues that would affect the 

test procedures for commercial warm-air 

furnaces. Interested parties are welcome to 

comment on any aspect of these test 

procedures as part of this comprehensive 7- 

year-review. 


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3. Is there a rebound effect in small aircooled three-phase air conditioner and heat 

pump equipment less than 65,000 Btu/h or 

water-source heat pump energy use as a 

result of improvements in the efficiency of 

such units? 

4. Would shipments of small air-cooled 

three-phase air conditioners and heat pump 

equipment less than 65,000 Btu/h or watersource heat pump equipment change at morestringent standard levels? 

5. The use of the projected base-case 

efficiency trend of an increase of 1 SEER or 

EER every 35 years for small air-cooled threephase air conditioner and heat pump 

equipment less than 65,000 Btu/h and watersource heat pump equipment. 

6. Should the mark-ups analysis for watersource heat pumps include national 

accounts? 

7. DOE’s methodology for developing 

heating UECs for water-source heat pumps. 

DOE also seeks relevant data on this issue. 

8. The appropriate building types for the 

water-source heat pump energy use analysis, 

which currently include office, education, 

lodging, multi-family, and healthcare. 

9. How maintenance costs for water-source 

heat pumps might be expected to differ from 

that for air-source heat pumps. 

10. How repair costs for water-source heat 

pumps might be expected to differ from that 

for air-source heat pumps. 

11. What is the appropriate retirement 

function for water-source heat pumps? 

12. The proposed standard levels for watersource heat pumps, as well as the other 

efficiency levels considered. 

XI. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this notice of proposed 

rulemaking. 

List of Subjects in 10 CFR Part 431 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation, 

Incorporation by reference, Reporting 

and recordkeeping requirements. 

Issued in Washington, DC, on December 

23, 2014. 

Kathleen B. Hogan, 

Deputy Assistant Secretary for Energy 

Efficiency, Energy Efficiency and Renewable 

Energy. 

For the reasons set forth in the 

preamble, DOE proposes to amend part 

431 of Chapter II, Subchapter D, of Title 

10 of the Code of Federal Regulations as 

set forth below: 

PART 431—ENERGY EFFICIENCY 

PROGRAM FOR CERTAIN 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

■ 1. The authority citation for part 431 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6317. 

■ 2. Section 431.75 is amended by 

revising paragraphs (b) and (c) to read 

as follows: 

§ 431.75 Materials incorporated by 

reference. 

* * * * * 

(b) ANSI. American National 

Standards Institute. 25 W. 43rd Street, 

4th Floor, New York, NY 10036. (212) 

642–4900 or go to http://www.ansi.org. 

(1) ANSI Z21.47–2012, (‘‘ANSI 

Z21.47–2012’’), ‘‘Gas-Fired Central 

Furnaces,’’ ANSI approved on March 

27, 2012, IBR approved for § 431.76. 

(2) [Reserved] 

(c) ASHRAE. American Society of 

Heating, Refrigerating and AirConditioning Engineers Inc., 1791 Tullie 

Circle, NE., Atlanta, Georgia 30329, 

(404) 636–8400, or go to: http://

www.ashrae.org. 

(1) ASHRAE Standard 103–2007, 

sections 7.2.2.4, 7.8, 9.2, and 11.3.7, 

‘‘Method of Testing for Annual Fuel 

Utilization Efficiency of Residential 

Central Furnaces and Boilers,’’ ANSI 

approved on March 25, 2008, IBR 

approved for § 431.76. 

(2) [Reserved] 

* * * * * 

■ 3. Section 431.76 is revised to read as 

follows: 

§ 431.76 Uniform test method for the 

measurement of energy efficiency of 

commercial warm air furnaces. 

(a) Scope. This section covers the test 

requirements used to measure the 

energy efficiency of commercial warm 

air furnaces with a rated maximum 

input of 225,000 Btu per hour or more. 

On and after [DATE 360 DAYS AFTER 

PUBLICATION OF THE FINAL RULE 

IN THE Federal Register], any 

representations made with respect to the 

energy use or efficiency of commercial 

warm air furnaces must be made in 

accordance with the results of testing 

pursuant to this section. At that time, 

you must use the relevant procedures in 

ANSI Z21.47–2012 or UL 727–2006 

(incorporated by reference, see 

§ 431.75). On and after [DATE 30 DAYS 

AFTER PUBLICATION OF THE FINAL 

RULE IN THE Federal Register] and 

prior to [DATE 360 DAYS AFTER 

PUBLICATION OF THE FINAL RULE 

IN THE Federal Register], 

manufacturers must test commercial 

warm air furnaces in accordance with 

this section or the section as it appeared 

at 10 CFR part 430, subpart B in the 10 

CFR parts 200 to 499 edition revised 

January 1, 2014. DOE notes that, 

because testing under this section is 

required as of [DATE 360 DAYS AFTER 

PUBLICATION OF THE FINAL RULE 

IN THE Federal Register], 

manufacturers may wish to begin using 

this amended test procedure 

immediately. Any representations made 

with respect to the energy use or 

efficiency of such commercial warm air 

furnaces must be made in accordance 

with whichever version is selected. 

(b) Testing. Where this section 

prescribes use of ANSI Z21.47–2012 or 

UL Standard 727–2006 (incorporated by 

reference, see § 431.75), perform only 

the procedures pertinent to the 

measurement of the steady-state 

efficiency, as specified in paragraph (c) 

of this section. 

(c) Test set-up—(1) Test set-up for 

gas-fired commercial warm air furnaces. 

The test set-up, including flue 

requirement, instrumentation, test 

conditions, and measurements for 

determining thermal efficiency is as 

specified in sections 1.1 (Scope), 2.1 

(General), 2.2 (Basic Test 

Arrangements), 2.3 (Test Ducts and 

Plenums), 2.4 (Test Gases), 2.5 (Test 

Pressures and Burner Adjustments), 2.6 

(Static Pressure and Air Flow 

Adjustments), 2.39 (Thermal Efficiency), 

and 4.2.1 (Basic Test Arrangements for 

Direct Vent Central Furnaces) of ANSI 

Z21.47–2012 (incorporated by reference, 

see § 431.75). The thermal efficiency test 

must be conducted only at the normal 

inlet test pressure, as specified in 

section 2.5.1 of ANSI Z21.47–2012, and 

at the maximum hourly Btu input rating 

specified by the manufacturer for the 

product being tested. 

(2) Test setup for oil-fired commercial 

warm air furnaces. The test setup, 

including flue requirement, 

instrumentation, test conditions, and 

measurement for measuring thermal 

efficiency is as specified in sections 1 

(Scope), 2 (Units of Measurement), 3 

(Glossary), 37 (General), 38 and 39 (Test 

Installation), 40 (Instrumentation, 

except 40.4 and 40.6.2 through 40.6.7, 

which are not required for the thermal 

efficiency test), 41 (Initial Test 

Conditions), 42 (Combustion Test— 

Burner and Furnace), 43.2 (Operation 

Tests), 44 (Limit Control Cutout Test), 

45 (Continuity of Operation Test), and 

46 (Air Flow, Downflow or Horizontal 

Furnace Test), of UL 727–2006 

(incorporated by reference, see 

§ 431.75). You must conduct a fuel oil 

analysis for heating value, hydrogen 

content, carbon content, pounds per 

gallon, and American Petroleum 

Institute (API) gravity as specified in 

section 8.2.2 of HI BTS–2000 

(incorporated by reference, see 

§ 431.75). The steady-state combustion 

conditions, specified in Section 42.1 of 

UL 727–2006, are attained when 

variations of not more than 5 °F in the 

measured flue gas temperature occur for 


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three consecutive readings taken 15 

minutes apart. 

(d) Additional test measurements—(1) 

Measurement of flue CO2 (carbon 

dioxide) for oil-fired commercial warm 

air furnaces. In addition to the flue 

temperature measurement specified in 

section 40.6.8 of UL 727–2006 

(incorporated by reference, see 

§ 431.75), you must locate one or two 

sampling tubes within six inches 

downstream from the flue temperature 

probe (as indicated on Figure 40.3 of UL 

727–2006). If you use an open end tube, 

it must project into the flue one-third of 

the chimney connector diameter. If you 

use other methods of sampling CO2, you 

must place the sampling tube so as to 

obtain an average sample. There must be 

no air leak between the temperature 

probe and the sampling tube location. 

You must collect the flue gas sample at 

the same time the flue gas temperature 

is recorded. The CO2 concentration of 

the flue gas must be as specified by the 

manufacturer for the product being 

tested, with a tolerance of ±0.1 percent. 

You must determine the flue CO2 using 

an instrument with a reading error no 

greater than ±0.1 percent. 

(2) Procedure for the measurement of 

condensate for a gas-fired condensing 

commercial warm air furnace. The test 

procedure for the measurement of the 

condensate from the flue gas under 

steady-state operation must be 

conducted as specified in sections 

7.2.2.4, 7.8, and 9.2 of ASHRAE 103– 

2007 (incorporated by reference, see 

§ 431.75) under the maximum rated 

input conditions. You must conduct this 

condensate measurement for an 

additional 30 minutes of steady-state 

operation after completion of the steadystate thermal efficiency test specified in 

paragraph (c) of this section. 

(e) Calculation of thermal efficiency— 

(1) Gas-fired commercial warm air 

furnaces. You must use the calculation 

procedure specified in section 2.39, 

Thermal Efficiency, of ANSI Standard 

Z21.47–2012 (incorporated by reference, 

see § 431.75). 

(2) Oil-fired commercial warm air 

furnaces. You must calculate the 

percent flue loss (in percent of heat 

input rate) by following the procedure 

specified in sections 11.1.4, 11.1.5, and 

11.1.6.2 of the HI BTS–2000 

(incorporated by reference, see 

§ 431.75). The thermal efficiency must 

be calculated as: 

Thermal Efficiency (percent) = 100 

percent ¥ flue loss (in percent). 

(f) Procedure for the calculation of the 

additional heat gain and heat loss, and 

adjustment to the thermal efficiency, for 

a condensing commercial warm air 

furnace. (1) You must calculate the 

latent heat gain from the condensation 

of the water vapor in the flue gas, and 

calculate heat loss due to the flue 

condensate down the drain, as specified 

in sections 11.3.7.1 and 11.3.7.2 of 

ASHRAE Standard 103–2007 

(incorporated by reference, see 

§ 431.75), with the exception that in the 

equation for the heat loss due to hot 

condensate flowing down the drain in 

section 11.3.7.2, the assumed indoor 

temperature of 70 °F and the 

temperature term TOA must be replaced 

by the measured room temperature as 

specified in section 2.2.8 of ANSI 

Z21.47–2012 (incorporated by reference, 

see § 431.75). 

(2) Adjustment to the thermal 

efficiency for condensing furnaces. You 

must adjust the thermal efficiency as 

calculated in paragraph (e)(1) of this 

section by adding the latent gain, 

expressed in percent, from the 

condensation of the water vapor in the 

flue gas, and subtracting the heat loss 

(due to the flue condensate down the 

drain), also expressed in percent, both 

as calculated in paragraph (f)(1) of this 

section, to obtain the thermal efficiency 

of a condensing furnace. 

■ 4. Section 431.92 is amended by 

adding in alphabetical order a definition 

for ‘‘Water-source heat pump’’ to read as 

follows: 

§ 431.92 Definitions concerning 

commercial air conditioners and heat 

pumps. 

* * * * * 

Water-source heat pump means a 

single-phase or three-phase reversecycle heat pump that uses a circulating 

water loop as the heat source for heating 

and as the heat sink for cooling. The 

main components are a compressor, 

refrigerant-to-water heat exchanger, 

refrigerant-to-air heat exchanger, 

refrigerant expansion devices, 

refrigerant reversing valve, and indoor 

fan. Such equipment includes, but is not 

limited to, water-to-air water-loop heat 

pumps. 

■ 5. Section 431.97 is amended by: 

■ a. Revising paragraph (b); 

■ b. Redesignating Tables 4 through 8 as 

Tables 5 through 9 respectively, in 

paragraphs (c), (d), (e) and (f); and 

■ c. Revising paragraph (c). 

The revisions read as follows: 

§ 431.97 Energy efficiency standards and 

their compliance dates. 

* * * * * 

(b) Each commercial air conditioner 

or heat pump (not including single 

package vertical air conditioners and 

single package vertical heat pumps, 

packaged terminal air conditioners and 

packaged terminal heat pumps, 

computer room air conditioners, and 

variable refrigerant flow systems) 

manufactured on or after the 

compliance date listed in the 

corresponding table must meet the 

applicable minimum energy efficiency 

standard level(s) set forth in Tables 1, 2, 

3, and 4 of this section. 

TABLE 1 TO § 431.97—MINIMUM COOLING EFFICIENCY STANDARDS FOR AIR-CONDITIONING AND HEATING EQUIPMENT

[Not including single package vertical air conditioners and single package vertical heat pumps, packaged terminal air conditioners and packaged 

terminal heat pumps, computer room air conditioners, and variable refrigerant flow multi-split air conditioners and heat pumps]

Equipment category Cooling capacity Sub-category Heating type Efficiency level 

Compliance date: 

equipment 

manufactured on and 

after . . . 

Small Commercial Packaged 

Air-Conditioning and Heating Equipment (AirCooled, 3-Phase, SplitSystem).

<65,000 Btu/h ...... AC ................

HP ................

All ........................................

All ........................................

SEER = 13 .........

SEER = 13 .........

June 16, 2008. 

June 16, 2008.1

Small Commercial Packaged 

Air-Conditioning and Heating Equipment (AirCooled, 3-Phase, SinglePackage).

<65,000 Btu/h ...... AC ................

HP ................

All ........................................

All ........................................

SEER = 13 .........

SEER = 13 .........

June 16, 2008.1

June 16, 2008.1


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TABLE 1 TO § 431.97—MINIMUM COOLING EFFICIENCY STANDARDS FOR AIR-CONDITIONING AND HEATING EQUIPMENT— 

Continued 

[Not including single package vertical air conditioners and single package vertical heat pumps, packaged terminal air conditioners and packaged 

terminal heat pumps, computer room air conditioners, and variable refrigerant flow multi-split air conditioners and heat pumps]

Equipment category Cooling capacity Sub-category Heating type Efficiency level 

Compliance date: 

equipment 

manufactured on and 

after . . . 

Small Commercial Packaged 

Air-Conditioning and Heating Equipment (AirCooled).

≥65,000 Btu/h and 

<135,000 Btu/h.

AC ................

HP ................

No Heating or Electric Resistance Heating.

All Other Types of Heating

No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 11.2 .........

EER = 11.0 .........

EER = 11.0 .........

EER = 10.8 .........

January 1, 2010. 

January 1, 2010. 

January 1, 2010. 

January 1, 2010. 

Large Commercial Packaged 

Air-Conditioning and Heating Equipment (AirCooled).

≥135,000 Btu/h 

and <240,000 

Btu/h.

AC ................

HP ................

No Heating or Electric Resistance Heating.

All Other Types of Heating

No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 11.0 .........

EER = 10.8 .........

EER = 10.6 .........

EER = 10.4 .........

January 1, 2010. 

January 1, 2010. 

January 1, 2010. 

January 1, 2010. 

Very Large Commercial 

Packaged Air-Conditioning 

and Heating Equipment 

(Air-Cooled).

≥240,000 Btu/h 

and <760,000 

Btu/h.

AC ................

HP ................

No Heating or Electric Resistance Heating.

All Other Types of Heating

No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 10.0 .........

EER = 9.8 ...........

EER = 9.5 ...........

EER = 9.3 ...........

January 1, 2010. 

January 1, 2010. 

January 1, 2010. 

January 1, 2010. 

Small Commercial Package 

Air-Conditioning and Heating Equipment (WaterCooled).

<65,000 Btu/h ......

≥65,000 Btu/h and 

<135,000 Btu/h.

AC ................

AC ................

All ........................................

No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 12.1 .........

EER = 12.1 .........

EER = 11.9 .........

October 29, 2003. 

June 1, 2013. 

June 1, 2013. 

Large Commercial Package 

Air-Conditioning and Heating Equipment (WaterCooled).

≥135,000 and 

<240,000 Btu/h.

AC ................ No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 12.5 .........

EER = 12.3 .........

June 1, 2014. 

June 1, 2014. 

Very Large Commercial 

Package Air-Conditioning 

and Heating Equipment 

(Water-Cooled).

≥240,000 and 

<760,000 Btu/h.

AC ................ No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 12.4 .........

EER = 12.2 .........

June 1, 2014. 

June 1, 2014. 

Small Commercial Package 

Air-Conditioning and Heating Equipment (Evaporatively-Cooled).

<65,000 Btu/h ......

≥65,000 and 

<135,000 Btu/h.

AC ................

AC ................

All ........................................

No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 12.1 .........

EER = 12.1 .........

EER = 11.9 .........

October 29, 2003. 

June 1, 2013. 

June 1, 2013. 

Large Commercial Package 

Air-Conditioning and Heating Equipment (Evaporatively-Cooled).

≥135,000 and 

<240,000 Btu/h.

AC ................ No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 12.0 .........

EER = 11.8 .........

June 1, 2014. 

June 1, 2014. 

Very Large Commercial 

Package Air-Conditioning 

and Heating Equipment 

(Evaporatively-Cooled).

≥240,000 and 

<760,000 Btu/h.

AC ................ No Heating or Electric Resistance Heating.

All Other Types of Heating

EER = 11.9 .........

EER = 11.7 .........

June 1, 2014. 

June 1, 2014. 

Small Commercial Packaged 

Air- Conditioning and 

Heating Equipment 

(Water-Source: Water-toAir, Water-Loop).

<17,000 Btu/h ......

≥17,000 Btu/h and 

<65,000 Btu/h.

≥65,000 Btu/h and 

<135,000 Btu/h.

HP ................

HP ................

HP ................

All ........................................

All ........................................

All ........................................

EER = 11.2 .........

EER = 12.0 .........

EER = 12.0 .........

October 29, 2003.2

October 29, 2003.2

October 29, 2003.2

1And manufactured before January 1, 2017. See Table 3 of this section for updated efficiency standards. 

2And manufactured before October 9, 2015. See Table 3 of this section for updated efficiency standards. 

TABLE 2 TO § 431.97—MINIMUM HEATING EFFICIENCY STANDARDS FOR AIR-CONDITIONING AND HEATING EQUIPMENT

[Heat Pumps] 

Equipment category Cooling capacity Efficiency level 

Compliance date: 

equipment 

manufactured on and 

after . . . 

Small Commercial Packaged Air-Conditioning and Heating 

Equipment (Air-Cooled, 3-Phase, Split-System).

<65,000 Btu/h .......................... HSPF = 7.7 ......... June 16, 2008.1

Small Commercial Packaged Air-Conditioning and Heating 

Equipment (Air-Cooled, 3-Phase, Single-Package).

<65,000 Btu/h .......................... HSPF = 7.7 ......... June 16, 2008.1

Small Commercial Packaged Air-Conditioning and Heating 

Equipment (Air-Cooled).

≥65,000 Btu/h and <135,000 

Btu/h.

COP = 3.3 .......... January 1, 2010. 


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TABLE 2 TO § 431.97—MINIMUM HEATING EFFICIENCY STANDARDS FOR AIR-CONDITIONING AND HEATING EQUIPMENT— 

Continued 

[Heat Pumps] 

Equipment category Cooling capacity Efficiency level 

Compliance date: 

equipment 

manufactured on and 

after . . . 

Large Commercial Packaged Air-Conditioning and Heating 

Equipment (Air-Cooled).

≥135,000 Btu/h and <240,000 

Btu/h.

COP = 3.2 .......... January 1, 2010. 

Very Large Commercial Packaged Air-Conditioning and Heating Equipment (Air-Cooled).≥240,000 Btu/h and <760,000 

Btu/h.

COP = 3.2 .......... January 1, 2010. 

Small Commercial Packaged Air-Conditioning and Heating 

Equipment (Water-Source: Water-to-Air, Water-Loop).

<135,000 Btu/h ........................ COP = 4.2 .......... October 29, 2003.2

1And manufactured before January 1, 2017. See Table 3 of this section for updated efficiency standards. 

2And manufactured before October 9, 2015. See Table 3 of this section for updated efficiency standards. 

TABLE 3 TO § 431.97—UPDATES TO THE MINIMUM COOLING EFFICIENCY STANDARDS FOR CERTAIN AIR-CONDITIONING

AND HEATING EQUIPMENT

Equipment category Cooling capacity Sub-category Heating type Efficiency level 

Compliance date: equipment manufactured on 

and after . . . 

Small Commercial Packaged 

Air-Conditioning and Heating Equipment (AirCooled, 3-Phase, SplitSystem).

<65,000 Btu/h ...... AC ................ All ........................................ SEER = 13.0 ...... June 16, 2008. 

HP ................ All ........................................ SEER = 14.0 ...... January 1, 2017. 

Small Commercial Packaged 

Air-Conditioning and Heating Equipment (AirCooled, 3-Phase, SinglePackage).

<65,000 Btu/h ...... AC ................ All ........................................ SEER = 14.0 ...... January 1, 2017. 

HP ................ All ........................................ SEER = 14.0 ...... January 1, 2017. 

Small Commercial Packaged 

Air-Conditioning and Heating Equipment (WaterSource: Water-to-Air, 

Water-Loop).

<17,000 Btu/h ...... HP ................ All ........................................ EER = 12.2 ......... October 9, 2015. 

≥17,000 Btu/h and 

<65,000 Btu/h.

HP ................ All ........................................ EER = 13.0 ......... October 9, 2015. 

≥65,000 Btu/h and 

<135,000 Btu/h.

HP ................ All ........................................ EER = 13.0 ......... October 9, 2015. 

TABLE 4 TO § 431.97—UPDATES TO THE MINIMUM HEATING EFFICIENCY STANDARDS FOR CERTAIN AIR-CONDITIONING

AND HEATING EQUIPMENT

[Heat pumps] 

Equipment category Cooling capacity Efficiency level 

Compliance date: 

equipment 

manufactured on 

and after . . . 

Small Commercial Packaged Air-Conditioning and Heating Equipment (AirCooled, 3-Phase, Split-System).<65,000 Btu/h ........ HSPF = 8.2 ........... January 1, 2017. 

Small Commercial Packaged Air-Conditioning and Heating Equipment (AirCooled, 3-Phase, Single-Package).<65,000 Btu/h ........ HSPF = 8.0 ........... January 1, 2017. 

Small Commercial Packaged Air-Conditioning and Heating Equipment (WaterSource: Water-to-Air, Water-Loop).<135,000 Btu/h ...... COP = 4.3 ............. October 9, 2015. 

(c) Each packaged terminal air 

conditioner (PTAC) and packaged 

terminal heat pump (PTHP) 

manufactured on or after January 1, 

1994, and before October 8, 2012 (for 

standard size PTACs and PTHPs) and 

before October 7, 2010 (for non-standard 

size PTACs and PTHPs) must meet the 

applicable minimum energy efficiency 

standard level(s) set forth in Table 5 of 

this section. Each PTAC and PTHP 

manufactured on or after October 8, 

2012 (for standard size PTACs and 

PTHPs) and on or after October 7, 2010 

(for non-standard size PTACs and 

PTHPs) must meet the applicable 

minimum energy efficiency standard 

level(s) set forth in Table 6 of this 

section. 

* * * * * 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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1Any packaged boiler that provides service water, 

that meets the definition of ‘‘commercial packaged 

boiler’’ in subpart E of this part, but does not meet 

the definition of ’’ hot water supply boiler’’ in this subpart, must meet the requirements that apply to 

it under subpart E. 

■ 6. Section 431.110 is revised to read 

as follows: 

§ 431.110 Energy conservation standards 

and their effective dates. 

Each commercial storage water heater, 

instantaneous water heater, unfired hot 

water storage tank and hot water supply 

boiler 1 must meet the applicable energy 

conservation standard level(s) as 

follows: 

Equipment category Size 

Energy conservation standard a

Maximum standby loss c

(equipment manufactured on and 

after October 29, 2003) b

Minimum 

thermal 

efficiency 

(equipment 

manufactured on 

and after 

October 29, 

2003 and before 

October 9, 

2015) b

Minimum 

thermal 

efficiency 

(equipment 

manufactured on 

and after 

October 9, 

2015) b

Electric storage water heaters ........................ All ............................... 0.30 + 27/Vm (%/hr) ..................... N/A ................... N/A. 

Gas-fired storage water heaters ..................... ≤155,000 Btu/hr ......... Q/800 + 110(Vr)1/2 (Btu/hr) .......... 80% .................. 80%. 

>155,000 Btu/hr ......... Q/800 + 110(Vr)1/2 (Btu/hr) .......... 80% .................. 80%. 

Oil-fired storage water heaters ....................... ≤155,000 Btu/hr ......... Q/800 + 110(Vr)1/2 (Btu/hr) .......... 78% .................. 80%. 

>155,000 Btu/hr ......... Q/800 + 110(Vr)1/2 (Btu/hr) .......... 78% .................. 80%. 

Gas-fired instantaneous water heaters and 

hot water supply boilers.

<10 gal ....................... N/A ............................................... 80% .................. 80%. 

≥10 gal ....................... Q/800 + 110(Vr)1/2 (Btu/hr) .......... 80% .................. 80%. 

Oil-fired instantaneous water heaters and hot 

water supply boilers.

<10 gal ....................... N/A ............................................... 80% .................. 80%. 

≥10 gal ....................... Q/800 + 110(Vr)1/2 (Btu/hr) .......... 78% .................. 78%. 

Equipment category Size Minimum thermal insulation 

Unfired hot water storage tank ....................... All ............................... R–12.5 

aVm is the measured storage volume, and Vr is the rated volume, both in gallons. Q is the nameplate input rate in Btu/hr. bFor hot water supply boilers with a capacity of less than 10 gallons: (1) The standards are mandatory for products manufactured on and after 

October 21, 2005, and (2) products manufactured prior to that date, and on or after October 23, 2003, must meet either the standards listed in 

this table or the applicable standards in subpart E of this part for a ‘‘commercial packaged boiler.’’ cWater heaters and hot water supply boilers having more than 140 gallons of storage capacity need not meet the standby loss requirement if: 

(1) The tank surface area is thermally insulated to R–12.5 or more; (2) a standing pilot light is not used; and (3) for gas or oil-fired storage water 

heaters, they have a fire damper or fan assisted combustion. 

[FR Doc. 2014–30839 Filed 1–7–15; 8:45 am] 

BILLING CODE 6450–01–P 


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