CHAPTER 1

. INTRODUCTION

TABLE OF CONTENTS

1.1 PURPOSE OF THE DOCUM ENT

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1.2 OVERVIEW OF COMMERCI AL EQUIPMENT STANDAR DS

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1.3 OVERVIEW OF REFRIGER ATED BEVERAGE VENDIN G MACHINES

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1.3.1 Definitions

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1.3.2 Current Standards

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1.4 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

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1.5 STRUCTURE OF THE DOC UMENT

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LIST OF TABLES

Table 1.3.1 Standard levels for refrigerated beverage vending machines

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Table 1.4.1 Analyses Under the Process Rule

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- iCHAPTER 1. INTRODUCTION

1.1 PURPOSE OF THE DOCUM ENT

This preliminary technical support document (preliminary TSD) is a stand

- alone report that documents the technical analyses and results supporting the preliminary analysis for establishing energy conservation standards for refrigerated beverage vending machine s (BVMs)

.

1.2 OVERVIEW OF COMMERCIAL EQUIPMENT STANDARDS

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

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

- 210 (Dec. 18, 2 012).) Part B of title III, which for editorial reasons was redesignated as Part A upon incorporation into the U.S. Code (42 U.S.C. 6291

– 6309, as codified), establishes the “Energy Conservation Program

for Consumer Products Other Than Automobiles.” These i nclude refrigeration products such as beverage vending machines that are the subject of this TSD

.

Pursuant to EPCA, the U.S. Department of Energy (DOE) is required to design each

standard for these products to (1) achieve the maximum improvement in energ y efficiency that is technologically feasible and economically justified; and (2) result in significant conservation of energy. ( 42 U.S.C. 6295(v)) ) To determine whether a proposed standard is economically justified, DOE will, after receiving comments on t he proposed standard, determine whether the benefits of the standard exceed its burdens to the greatest extent practicable, considering the following seven

factors:

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

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

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

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

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

6. T he need for national energy conservation; and

7. O ther factors the Secretary considers relevant. (42 U.S.C. 6295(o)(2)(B)(i); 6313(d)(4))

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- 1EPCA also directs that DOE may not prescribe an amended or new standard if the standard is likely to result in the unavailability in the United States of performanc e characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time that the standard is prescribed. (42 U.S.C. 6295(o)(4) and 6313(d)(4))

For refrigerated beverage vending machines

, DOE is applying those factors in a manner consistent with its other energy conservation standards rulemakings to ascertain the maximum improvement in energy efficiency that is technologically feasible and economicall y justified for these products

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1.3 OVERVIEW OF REFRIGERATED BE VERAGE VENDING MACHI NE S

1.3.1 Definitions

Subsections 323(b)(15) of EPCA (42 U.S.C. 6293(b)(15)) and 323(f) (42 U.S.C. 6293(f)), state that the test procedure for refrigerated bottled or canned beverage vending machines shall be based on American National Standards Institute/American Society of Heating, Refrigerating

and Air

- Conditioning Engineers Standard 32.1

- 2004, “Methods of Testing for Rating Vending Machines for Bottled, Canned or Other Sealed Bever ages.”

Subsection 321(40) of EPCA (42 U.S.C. 6291(40)) establishes the following definition:

The term “refrigerated bottled or canned beverage vending machine” means a commercial refrigerator that cools bottled or canned beverages and dispenses the

bottl ed or canned beverages on payment.

Subsection 340(9) of EPCA (42 U.S.C 6311(9)) establishes definitions for the following terms relating to commercial refrigeration equipment that are relevant to beverage vending

machines due to the definition of a bevera ge vending machine being a type of “commercial refrigerator” :

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

- freezer’ means refrigeration equipment that

—

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

“(ii) is not desi gned and marketed exclusively for medical, scientific, or research

purposes;

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

“(iv) displays or stores merchandise and other perishable materials horizontally, semivertically, or vertically;

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

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- 2hinged, sliding, transparent, or solid doors, or no doors;

“(vi) is designed for pull

- down temperature applications or holding temperature appli cations; and

“(vii) is connected to a self

- contained condensing unit or to a remote condensing

unit.

“(B) The term ‘holding temperature application’ means a use of commercial refrigeration equipment other than a pull

- down temperature application, except a blast chiller or freezer.

* * *

“(D) The term ‘pull

- down temperature application’ means a commercial refrigerator with doors that, when fully loaded with 12 ounce beverage cans at 90 degrees F, can cool those beverages to an average stable temperature of 38 degrees F in 12 hours or less.

“(E) The term ‘remote condensing unit’ means a factory

- made assembly of refrigerating components designed to compress and liquefy a specific refrigerant that is remotely located from the refrigerated equipment and

cons ists of one or more refrigerant compressors, refrigerant condensers, condenser fans and motors, and factory supplied accessories.

“(F) The term ‘self

- contained condensing unit’ means a factory

- made assembly of refrigerating components designed to compres s and liquefy a specific refrigerant that is an integral part of the refrigerated equipment and consists of one or more refrigerant compressors, refrigerant condensers, condenser fans and motors, and factory supplied accessories.”

DOE further defines several equipment classes as follows:

• Class A means a refrigerated bottled or canned beverage vending machine that is fully cooled, and is not a combination vending machine. The Class A beverage vending machine equipment class comprises machines that cool product throughout the entire refriger ated volume of the machine. Class A machines generally use ‘‘shelf

- style’’ vending mechanisms and a transparent (glass or polymer) front necessitating full cooling b ecause the next

- to

- be

vended product is visible to the customer and any product can be sele cted by

the customer off the shelf.

• Class B means any refrigerated bottled or canned beverage vending machine not considered to be Class A, and is not a combination vending machine. In Class B beverage vending machines, refrigerated air is directed at a f raction

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- 3(or zone) of the refrigerated volume of the machine , where the next

- to

- be

vended product is stored . This cooling method is used to assure that the next

to

- be

- vended product will be the coolest product in the machine. These machines typically have a n opaque front and use a ‘‘stack

- style’’ vending

mechanism.

• A c ombination vending machine refer s to a refrigerated bottled or canned beverage vending machine that also has a non

- refrigerated volume for the purpose of vending other, non

- ‘‘sealed beverage’’ merchandise. The class makes up a much smaller fraction of the overall market than Class A and

Class B machines.

1.3.2 Current Standards

Th e first DOE rulemaking for refrigerated beverage vending machines began in 2006 and culminated in a final rule in August of 2009 (the 2009 BVM final rule) (DOE 10 CFR Part 431[Docket Number EERE

– 2006

– STD

– 0125] RIN 1904

–AB58 Energy Conservation Program: Energy Conservation Standards for Refrigerated Bottled or Canned Beverage Vending

Machines ). Table 1 .3

. 1 provides a summary of current standards, which went into effect on August 31, 2012.

Table 1.3

. 1 Standard Levels for Refrigerated Beverage Ven ding Machines

Equipment class Standard level maximum daily energy consumption (MDEC) kWh/day

A MDEC = 0.055

∙ V * + 2.56

B MDEC = 0.073

∙ V + 3.16

Combination [RESERVED]

* ‘‘V’’ is the refrigerated volume (ft 3 ) of the refrigerated bottled or canned beverage vending machine

EPCA grants DOE authority to review and possibly amend standards for covered equipment under 42 U.S.C. 6295(m)(1): within six years after issuance of any final rule establishing or amending a standard, DOE is required to publish e ither: 1) a notice of determination that energy conservation standards for the product do not need to be amended, or 2) a notice of proposed rulemaking including new proposed energy conservation standards

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1.4 PROCESS FOR SETTING ENERGY CONSERVATION STANDARDS

After the publication of the F ramework D ocument, the energy conservation standards rulemaking process typically involves three additional, formal public notices, which DOE publishes in the Federal Register . The first of the rulemaking notices is a notice of public meeting ( NOPM ) , which is designed to publicly vet the models and tools used in the preliminary rulemaking and to facilitate public participation before the notice of proposed rulemaking ( NOPR ) stage. The second notice is the NOPR, which presents a discussion of comments received in response to the NOPM and the preliminary analyses and analytical tools; analyses of

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- 4the impacts of potential amended energy conservation standards on consumers, manufacturers, and the Nation; DOE’s weighting of these im pacts of amended energy conservation standards; and the proposed energy conservation standards for each product. The third notice is the final rule, which presents a discussion of the comments received in response to the NOPR; the revised analyses; DOE’s w eighting of these impacts; the amended energy conservation standards DOE is adopting for each product; and the effective dates of the amended energy conservation standards.

Table 1.4

. 1 provides an overview of analyses performed at each stage of the rulemaking process.

Table 1.4

. 1 A nalyses Performed at Each Sta ge of the Rulemaking P rocess Preliminary Analyses NOPR Final Rule

Market and technology assessment Revised preliminary analysis Revised analyses

Screening analysis Consumer sub

- group analysis

Engineering analysis Manufacturer impact analysis

Energy use analysis Emissions analysis

Markups analysis Monetization of emissions

reduction benefits

Life

- cycle cost and payback period analysis Utility impact analysis

Shipments analysis Employment impact analysis

National impact analysis Regulatory impact analysis

Preliminary manufacturer impact analysis

At this preliminary analysis stage, DOE conducted the engineering analysis using a spreadsheet energy consumption model and inputs from equipment teardowns and manufacturer

literature. Following the publication of the preliminary analysis and the preliminary analysis public meeting, DOE intends to hold additional meetings with manufacturers to further verify inputs to the engineering analysis and as part of the consultative process for the MIA conducted during the NOPR phase.

DOE conducted th e l ife

- cycle cost (LCC) and payback period (PBP) analysis based on an approach that establishes an annual energy expense using regional average electric utility costs for affected businesses and projected those electricity costs into the future using elect ricity price projections for the commercial and industrial sector s from the DOE ’s Energy Information Agency (EIA). Under this approach, LCC results are based on the assumption that customers in the future will face electricity costs similar to those that e xist in today’s electricity markets.

DOE developed spreadsheets for the LCC and PBP analys i s for refrigerated beverage vending machines . DOE developed an LCC spreadsheet that calculates the LCC and PBP at various energy efficiency levels. DOE also developed a national impact analysis (NIA) spreadsheet that calculates the national energy savings (NES) and national net present values (NPVs) at various energy efficiency levels. This spreadsheet includes a model that forecasts the

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- 5impacts of amended energy conservation standards at various levels on product shipments. T hese spreadsheets are available on the DOE rulemaking website for refrigera ted beverage vending

machines: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/73

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1.5 STRUCTURE OF THE DOC UMENT

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

TSD consists of 1 7 chapters as well as appendices.

• Chapter 1, Introduction : provides an overview of the appliance standards program and how it applies to the BVM rulemaking, and outli nes the structure of the document.

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

• Chapter 3, Market and Technology Assessment : characterizes the BVM equipment market and the technologies available for increasing equipment efficiency.

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

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

• Chapter 6, Markups for Equ ipment Price Determination : discusses the methods used for establishing markups for converting manufacturer prices to customer equipment prices.

• Chapter 7, Energy Use Analysis : discusses the process used for generating energy use
estimates for each equipme nt class and efficiency level.

• Chapter 8, Life

- Cycle Cost and Payback Period Analys i s : discusses the economic
effects of standards on individual customers and users of the equipment and compares the

LCC and PBP of equipment with and without higher efficien cy standards.

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

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

• Chapter 11, Life

- Cycle Cost Subgroup Analysis : discusses the effects of standards on a subgroup of BVM customers and compares the LCC and PBP of equipment with and without higher efficiency standards.

• Chapter 12, Preliminary Manufacturer Impact Analysis : discusses the effects of standards on the finances and profitability of equipment man ufacturers.

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- 6• Chapter 13, Emissions Analysis : discusses the effects of standards on airborne
emissions of electric utilities.

• Chapter 14, Monetization of Emissions Reductions Benefits: considers the estimated monetary benefits likely to result from reduced e missions of carbon dioxide and nitrogen oxides expected to result from the standards.

• Chapter 15, Utility Impact Analysis : discusses the effects of standards on the installed generation capacity of electric utilities.

• Chapter 16, Employment Impact Analysi s : discusses the effects of standards on national employment.

• Chapter 17, Regulator y Impact Analysis : discusses the present regulatory actions as well as the impact of non

- regulatory alternatives to setting energy efficiency standards.

• Appendix 5A, Engineering Data

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

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

• Appendix 8B, Uncertainty and Variability in LCC Analysis : explains how the LCC model accounts for the uncertainty and variability of the numerical values.

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

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

• Appendix 10B , National Net Present Value of Consumer Benefits Using Alternative Equipment Price Forecasts : contains NPV results using alternative equipment price

forecast s

.

• Appendix 10C, Full Fuel Cycle Multipliers: contains a summary of the methods used
to calculate full

- fuel

- cycle (FFC) energy savings.

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