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CHAPTER 12. PRELIMINARY MANUFACTURER IMPACT ANALYSIS

TABLE OF CONTENTS

12.1 INTRODUCTION ......................................................................................................... 12-1

12.2 METHODOLOGY ........................................................................................................ 12-1

12.2.1 Phase 1: Industry Profile................................................................................................ 12-2

12.2.2 Phase 2: Industry Cash-Flow Analysis and Interview Guide ........................................ 12-2

12.2.2.1 Industry Cash-Flow Analysis....................................................................... 12-2

12.2.2.2 Interview Guide ........................................................................................... 12-2

12.2.3 Phase 3: Sub-Group Analysis ........................................................................................ 12-3

12.2.3.1 Manufacturer Interviews.............................................................................. 12-3

12.2.3.2 Revised Industry Cash-Flow Analysis......................................................... 12-3

12.2.3.3 Manufacturer Sub-Group Analysis.............................................................. 12-4

12.2.3.4 Competitive Impact Assessment.................................................................. 12-4

12.2.3.5 Manufacturing Capacity Impact .................................................................. 12-4

12.2.3.6 Employment Impact..................................................................................... 12-4

12.2.3.7 Cumulative Regulatory Burden ................................................................... 12-5

12.3 PRELIMINARY MANUFACTURER IMPACT ANALYSIS ..................................... 12-5

12.3.1 General Interview Structure........................................................................................... 12-5

12.3.1.1 Key Issues ............................................................................................... 12-5

12.3.1.2 Shipment Trends and Projections ................................................................ 12-6

12.3.1.3 Profitability ............................................................................................... 12-6

12.3.1.4 Product Mix ............................................................................................... 12-6

12.3.1.5 Conversion Costs......................................................................................... 12-7

12.3.1.6 Market Shares and Industry Consolidation.................................................. 12-7

12.3.1.7 Product Utility and Innovation..................................................................... 12-7

12.3.1.8 Impact on Small Manufacturers................................................................... 12-8

12.3.1.9 Cumulative Regulatory Burden ................................................................... 12-8

12.4 PORTABLE AIR CONDITIONER PRELIMINARY MIA RESULTS ....................... 12-8

12.4.1 Key Issues .............................................................................................................. 12-8

12.4.2 Shipments, Profitability, and Competitiveness.............................................................. 12-9

12.4.3 Conversion Costs, Manufacturing Capacity, and Employment Levels....................... 12-10

12.4.4 Impact on Innovation and Product Utility ................................................................... 12-10

12.4.5 Cumulative Burdens..................................................................................................... 12-11

12.4.5.1 Standards for Other Products Made by Portable AC Manufacturers......... 12-11

12.4.5.2 Certification Requirements in California................................................... 12-11

12.4.6 Impact on Small Manufacturers................................................................................... 12-12
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CHAPTER 12. PRELIMINARY MANUFACTURER IMPACT ANALYSIS

12.1 INTRODUCTION

The purpose of the manufacturer impact analysis (MIA) is to identify the likely 

impacts of potential energy conservation standards on manufacturers. The U.S. 

Department of Energy (DOE) will conduct this analysis with input from manufacturers 

and other interested parties and will apply this methodology to its evaluation of analyzed 

efficiency levels for portable ACs. DOE will also consider financial impacts and a wide 

range of quantitative and qualitative industry impacts that might occur following the 

adoption of a potential energy conservation standard. For example, a particular energy 

conservation standard level, if adopted by DOE, could require changes to practices used 

in manufacturing portable ACs. If and when DOE decides to propose an energy 

conservation standard for portable ACs, DOE will identify and come to understand these 

impacts through interviews with manufacturers and other interested parties during the 

Notice of Proposed Rulemaking (NOPR) stage of analysis.

DOE announced changes to the MIA format through a report issued to Congress 

on January 31, 2006 (as required by section 141 of the Energy Policy Act of 2005 

(EPACT 2005)), entitled “Energy Conservation Standards Activities.”a Previously, DOE 

did not report any MIA results until the Notice of Proposed Rulemaking (NOPR) phase; 

however, under this new format, DOE has collected, evaluated, and reported preliminary 

information and data during the preliminary phase (the phase preceding the NOPR) of 

this rulemaking. Such preliminary information includes the anticipated conversion capital 

expenditures by efficiency level and the corresponding anticipated impacts on jobs. DOE 

solicited this information during the engineering analysis manufacturer interviews and 

reported the results below.

12.2 METHODOLOGY

DOE conducts the MIA in three phases and further tailors the analytical

framework based on comments from interested parties. In Phase 1, DOE creates an 

industry profile to characterize the industry and conducts preliminary manufacturer 

interviews to identify important issues that require consideration. The preliminary

technical support document (preliminary TSD) presents the results of the Phase 1 

analysis. In Phase 2, DOE prepares an industry cash-flow model and an interview 

 

a This report is available on the DOE website at 

www.eere.energy.gov/buildings/appliance_standards/2006_schedule_setting.html.
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questionnaire to guide subsequent discussions. In Phase 3, DOE interviews 

manufacturers, and assesses the impacts of potential energy conservation standards both 

quantitatively and qualitatively. Using the government regulatory impact model (GRIM), 

DOE assesses industry and sub-group cash flow and NPV. Then, DOE assesses impacts 

on competition, manufacturing capacity, employment, and regulatory burden based on 

feedback received during manufacturer interviews and subsequent discussions. The 

NOPR TSD presents results of the Phase 2 and Phase 3 analyses.

12.2.1 Phase 1: Industry Profile

In Phase 1 of the manufacturer impact analysis, DOE collects pertinent qualitative 

and quantitative financial and market information. This includes portable AC

manufacturer market shares, corporate operating ratios, wages, employment levels, and

production cost ratios. Sources of information may include reports published by industry 

groups, trade journals, the U.S. Census Bureau, copies of Securities Exchange 

Commission (SEC) 10-K filings, and interviews with manufacturers. DOE also relies on 

information from its market and technology assessment, engineering analysis, life-cycle 

cost analysis, and markup analysis.

12.2.2 Phase 2: Industry Cash-Flow Analysis and Interview Guide

In Phase 2, DOE will perform a preliminary industry cash-flow analysis and

prepare written guidelines for interviewing manufacturers.

12.2.2.1 Industry Cash-Flow Analysis

DOE uses the GRIM to analyze the financial impacts of potential energy

conservation standards on the portable AC industry. Standards will likely require 

additional investment, raise production costs, and affect revenue through higher prices 

and, possibly, lower sales. The GRIM uses several factors to determine a series of annual 

cash flows for the year standards become effective and for several years after 

implementation. These factors include annual expected revenues, costs of sales, selling 

and general administration costs, and taxes, as well as capital expenditures, depreciation

and maintenance related to new standards. Inputs to the GRIM include manufacturing 

costs, shipments forecasts, and price forecasts developed in other analyses. Another 

input, financial information, will be developed based on publicly available data and 

confidentially submitted manufacturer information. DOE compares the results of the 

GRIM against baseline projections where no standards are in place. The financial impact 

of potential energy conservation standards is the difference between the two sets of 

discounted annual cash flows.

12.2.2.2 Interview Guide

DOE will conduct interviews with manufacturers to gather information on the 

effects of standards on revenues and finances, direct employment, capital assets, and 

industry competitiveness. Before the interviews, DOE will distribute an interview guide 

that will provide a starting point to identify relevant issues and help identify the impacts 

of standards on individual manufacturers or sub-groups of manufacturers. DOE 
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anticipates that the interview guide will cover current organizational characteristics, 

industry infrastructure, manufacturer cash-flow analysis, a competitive impacts 

assessment, an employment impacts assessment, and a manufacturing capacity impacts 

assessment.

12.2.3 Phase 3: Sub-Group Analysis

Phase 3 activities include manufacturer interviews, revision of the industry cashflow analysis, manufacturer sub-group cash-flow analysis, competitive impact 

assessment, manufacturing capacity impact, employment impact, and cumulative 

regulatory burden.

12.2.3.1 Manufacturer Interviews

The information gathered in Phase 1 and the cash-flow analysis performed in 

Phase 2 will be supplemented with information gathered during interviews with 

manufacturers during Phase 3. The interview process has a key role in the manufacturer 

impact analysis, since it provides an opportunity for interested parties to express their 

views privately on important issues, allowing confidential or sensitive information to be 

considered in the rulemaking decision.

DOE will conduct detailed interviews with as many manufacturers as necessary to 

gain insight into the range of possible impacts of potential standards. During the 

interviews, DOE will solicit information on the possible impacts of potential standards on 

sales, direct employment, capital assets, and industry competitiveness. Both qualitative 

and quantitative information are valuable. Interviews will be scheduled well in advance 

in order to provide every opportunity for key individuals to be available for comment.

Although a written response to the questionnaire will be acceptable, DOE prefers an

interactive interview process because it helps clarify responses and provides the

opportunity to identify additional issues.

All information transmitted will be considered, as appropriate, in DOE’s decisionmaking process. Interview participants will be asked to identify all confidential 

information provided in writing or orally; no confidential information will be made 

available in the public record. Participants will also be asked to identify all information 

they wish included in the public record but do not want to have associated with their 

interview. This information will be incorporated into the public record but reported 

without attribution.

12.2.3.2 Revised Industry Cash-Flow Analysis

In Phase 2 of the MIA, DOE will provide manufacturers with a preliminary 

GRIM for review and evaluation. During the interviews, DOE will seek comment and 

suggestions regarding the values selected for the parameters. Upon completion of the 

interviews, DOE will revise its industry cash-flow model based on manufacturer 

feedback.
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12.2.3.3 Manufacturer Sub-Group Analysis

Using average cost assumptions to develop an industry cash-flow estimate is not 

adequate for assessing differential impacts among sub-groups of manufacturers. Smaller 

manufacturers, niche players, or manufacturers exhibiting a cost structure that differs 

largely from the industry average could be more negatively affected. Ideally, DOE would 

consider the impact on every firm individually; however, it typically uses the results of 

the industry characterization to group manufacturers exhibiting similar characteristics.

During the interview process, DOE will discuss the potential sub-groups and sub-group 

members that have been identified for the analysis. DOE will look to the manufacturers 

and other stakeholders to suggest what sub-groups or characteristics are most appropriate 

for the analysis.

12.2.3.4 Competitive Impact Assessment

Section 342 (6)(B)(i)(V) of the Energy Policy Act of 1992 (EPCA) directs DOE 

to consider any lessening of competition likely to result from standards. It further directs 

the U.S. Attorney General to determine the impacts, if any, of any decrease in 

competition. DOE will make a determined effort to gather and report firm-specific 

financial information and impacts. The competitive analysis will focus on assessing the

impacts on smaller, yet significant, manufacturers. The assessment will be based on 

manufacturing cost data and information collected from interviews with manufacturers.

The manufacturer interviews will focus on gathering information that would help in 

assessing asymmetrical cost increases to some manufacturers, the potential increase in 

business risks from an increased proportion of fixed costs, and potential barriers to 

market entry (e.g., proprietary technologies).

12.2.3.5 Manufacturing Capacity Impact

One of the significant outcomes of standards could be the obsolescence of 

existing manufacturing assets, including tooling and investment. The manufacturer 

interview guide will have a series of questions to help identify impacts on manufacturing 

capacity, specifically capacity utilization and plant location decisions in North America 

with and without a standard; the ability of manufacturers to upgrade or remodel existing 

facilities to accommodate the new requirements; the nature and value of stranded assets, 

if any; and estimates for any one-time restructuring and other charges, where applicable.

12.2.3.6 Employment Impact

The impact of potential energy conservation standard on employment is an 

important consideration in the rulemaking process. To assess how domestic employment 

patterns might be affected, the interview will explore current employment trends in the 

portable AC industry. The interview will also solicit manufacturer views on changes in 

employment patterns that may result from increased standard levels. The employment 

impacts section of the interview guide will focus on current employment levels associated 

with manufacturers at each of their production facilities, expected future employment 
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levels with and without a standard, and differences in workforce skills and issues related 

to the retraining of employees.

12.2.3.7 Cumulative Regulatory Burden

DOE recognizes and seeks to mitigate the overlapping effects of potential energy 

conservation standards and other regulatory actions affecting the same products on 

manufacturers. DOE will analyze and consider the impact of multiple, product-specific 

regulatory actions on manufacturers. Based on its own research and discussions with 

manufacturers, DOE identified regulations relevant to portable AC manufacturers,

including standards for other products made by portable AC manufacturers and California

certification requirements. DOE will study the potential impacts of these cumulative 

burdens in greater detail during the MIA conducted during the NOPR phase.

12.3 PRELIMINARY MANUFACTURER IMPACT ANALYSIS

During the preliminary rulemaking phase, DOE conducted a preliminary 

evaluation of the impact of potential energy conservation standards on manufacturer

market share and financial performance, industry consolidation, manufacturing capacity, 

and product utility and innovation. The interviews also served as an opportunity to get 

feedback from manufacturers relating to other regulatory burdens they may face. 

The primary sources of information for this analysis were on-site or telephone 

interviews with manufacturers of portable ACs conducted in January and February of 

2014. To maintain confidentiality, DOE did not identify the individual manufacturers that 

disclosed information. The evaluation only reports aggregated information and does not 

disclose sensitive or company-specific information.

For the preliminary MIA, DOE conducted interviews with manufacturers 

primarily to identify key issues and gain insights into the qualitative impacts of proposed

energy conservation standards. For each product, DOE used an interview guide to gather 

responses from multiple manufacturers on many issues. Appendix 12A contains a copy of 

the interview guide for portable ACs.

12.3.1 General Interview Structure

The manufacturer interviews included questions relating to the following 

topics. DOE received responses to most, if not all, of these topics from various 

manufacturers.

12.3.1.1 Key Issues

One of the most important aspects of the preliminary MIA is the opportunity to 

identify key manufacturer issues early in the development of potential energy 

conservation standards. During the interviews, DOE engages manufacturers in a 

discussion about what they perceive to be the key issues in the rulemaking. Key issues, 

once identified, are added to the list of topics explored during NOPR-phase interviews.
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For example, key issues in previous rulemakings have included the ability to pass cost 

increases on to consumers.

12.3.1.2 Shipment Trends and Projections

Shipment projections can be a significant factor in determining the impacts of 

potential energy conservation standards. The interviews provide an opportunity for 

manufacturers to share information that can help DOE quantify the magnitude of any 

changes in shipments resulting from potential energy conservation standards. DOE is 

interested in information relating to the historical and current number of product 

shipments, broken down by product class, capacity rating, and efficiency level. DOE also 

seeks input on the forecast of future shipments absent a potential energy conservation

standard. Manufacturers are asked how they would expect shipments to change for the 

industry as a whole as a function of standard levels and why they expect these changes 

might occur. More specific questions aim to derive a price elasticity estimate for use in 

the national impact analysis (NIA) spreadsheet.

Another aspect of the shipments discussion is to understand the impacts of a 

reduction in shipments on individual manufacturers of portable ACs.

12.3.1.3 Profitability

DOE requests manufacturers’ views on what they perceive to be the possible 

impact of potential energy conservation standards on their future profitability. A potential

energy conservation standard could affect financial performance in several different 

ways. Several of these impacts are captured in previous sections. For instance, the outlays 

of capital to upgrade manufacturing equipment before it has reached the end of its useful 

life and the investment in product development to redesign products to comply with 

potential standard can engender significant conversion costs that otherwise would not be 

expended, resulting in reduced cash flow and stranded investments. New energy 

efficiency standards also can result in higher per-unit costs that may deter some 

consumers from purchasing the products, or cause some consumers to choose less 

efficient products, thereby reducing shipments. Alternatively, if manufacturers wish to 

maintain a cost competitive product offering on minimally compliant products, the 

inability to pass-through increased per-unit costs to the consumer may decrease the 

manufacturers’ gross margin (as a percentage).

12.3.1.4 Product Mix

DOE is interested in understanding if potential energy conservation standards

might change a manufacturer’s product mix and if this change affects profits. For 

example, higher energy efficiency standards might limit a manufacturer’s ability to 

differentiate and market premium products that command higher profit margins.

The interview guide also investigates how potential energy conservation standards 

might affect a manufacturer’s consumer mix and its distribution channels, and how in 

turn this might change profitability.
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12.3.1.5 Conversion Costs

During the interviews, DOE asks manufacturers to quantify and explain both the 

capital and product conversion costs necessary to raise the energy efficiency of their 

product lines to the potential standard levels. In some instances, manufacturers may be 

able to meet potential standard levels by modifying existing products. In other cases, the 

necessary changes may entail a complete product-line redesign. In these situations, an 

increase in efficiency standards will cause manufacturers to incur one-time conversion 

capital expenditures and product conversion expenses. Capital conversion costs are onetime investments in property, plant, and equipment. Product conversion costs include 

one-time investments in research, product development, testing, and marketing.

12.3.1.6 Market Shares and Industry Consolidation

Potential energy conservation standards can alter the competitive dynamics of the 

marketplace. This can include prompting companies to enter the market, exit the market, 

or merge with other companies. The preliminary MIA interview questions ask 

manufacturers to share their perspectives on industry consolidation both in the absence of 

potential standards and assuming potential standards at various efficiency levels. The 

interview questions focus on gathering information that helps in assessing:

 disproportionate cost increases to some manufacturers;

 increased proportion of fixed costs potentially increasing business risks; and

 potential barriers to market entry (e.g., proprietary technologies).

12.3.1.7 Product Utility and Innovation

DOE conducts an assessment of anti-competitive effects of potential standards in 

order to protect the interests of the consumer. During the interviews, DOE solicits 

information to understand if a potential standard could result in disproportionate 

economic or performance penalties for particular consumer/user sub-groups.

DOE also asks manufacturers if potential energy conservation standards could 

result in products that will be more or less desirable to consumers due to changes in 

product functionality, utility, or other features.

Potential energy conservation standards may require investment in conversion 

costs, including research and development (R&D). This required spending may force a 

manufacturer to reduce funding usually allocated to product innovation. Potential energy 

conservation standards may also force manufacturers to eliminate innovative energyconsuming features from their products. During the interviews, DOE requests

information on the effect of potential standards on innovation.
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12.3.1.8 Impact on Small Manufacturers

DOE will consider the possibility of small businesses being affected by the 

potential promulgation of new energy conservation standards for portable ACs. Should 

any small business manufacturers be identified, DOE will study the potential impacts on 

these small businesses in greater detail during the MIA.

12.3.1.9 Cumulative Regulatory Burden

While any one regulation may not impose a significant burden on manufacturers, 

the combined effects of several impending regulations may have serious consequences 

for some manufacturers, groups of manufacturers, or entire industries. Assessing the 

impact of a single regulation may overlook this cumulative regulatory burden.

Expenditures associated with meeting other regulations are an important aspect of 

DOE’s consideration of the “cumulative regulatory burden” the industry faces. The 

interviews help DOE identify the level and timing of investments manufacturers are 

expecting to incur as a result of these regulations. Manufacturers are also asked under 

what circumstances they might be able to coordinate expenditures related to these 

regulations and efficiency standards.

In addition to the potential energy conservation standard for portable ACs, several 

other Federal and State regulations and pending regulations apply to these products. DOE 

will investigate these cumulative regulatory burdens in greater detail during the NOPR 

phase of the rulemaking.

12.4 PORTABLE AIR CONDITIONER PRELIMINARY MIA RESULTS

During the preliminary MIA interview, manufacturers identified key 

issues surrounding DOE’s rulemaking for portable ACs and provided feedback regarding 

the possible impact of potential energy conservation standard. DOE summarizes the 

feedback below.

12.4.1 Key Issues

One of the central questions of the preliminary analysis manufacturer interview 

guide is: “What are the key issues for your company regarding the portable AC energy 

conservation standards rulemaking?” This open question initiated dialogue with 

manufacturers, enabling them to identify key points that DOE would explore and discuss 

during the interview. This section describes the key issues manufacturers felt were of the 

highest importance and that would have the most significant impact on the industry.

Manufacturers indicated that, for the most part, the risks associated with these issues 

increase with more stringent potential energy conservation standard levels. The issues are 

overall concerns that many manufacturers expressed.

Portable AC manufacturers cited concerns regarding a number of issues that are 

covered in greater detail elsewhere in this chapter. Detailed descriptions of these 
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manufacturer concerns are provided in the appropriate sections that follow; only brief 

descriptions are provided here.

 Impacts of higher selling prices – A number of manufacturers cited that higher 

selling prices associated with standards compliance could be detrimental to 

consumers and the industry. Higher selling prices could effectively price-out a 

segment of portable AC consumers or cause customers to purchase room air 

conditioners in lieu of portable ACs. 

 Impacts on competition – Manufacturers agree that new standards, because they

would be accompanied by a new test procedure that would provide consistent 

portable AC ratings, will improve the situation for some manufacturers and 

sourcing companies, while others may be forced to exit the market. Overall, 

competition within the market will decrease.

 Impacts on consumer utility – Manufacturers of portable ACs believe that 

increased product efficiency will negatively impact consumer utility associated 

with product features such as size, noise level, and ease of water disposal.

The other issues of key importance to manufacturers and importers include 

impacts of cumulative regulatory burdens, variations among testing labs, and the 

importance of establishing a test method that allows for direct comparison of portable and 

room ACs.

12.4.2 Shipments, Profitability, and Competitiveness

DOE solicits information from manufacturers during the preliminary interviews 

about the impacts of a potential energy conservation standard on their overall shipments, 

profitability, and on their competitiveness. 

As mentioned above, several manufacturers stressed that potential energy 

conservation standards for portable ACs would increase per-unit costs of production, 

which, in turn, would result in higher selling prices. Depending on the standard level, this 

would be detrimental both to consumers and the industry as whole. Higher selling prices 

could become prohibitive for lower-income customers or cause customers to purchase 

room ACs in lieu of portable ACs. 

Nearly all manufacturers stated that an energy conservation standard would have 

a negative impact on total industry shipments, although the magnitude of the decrease 

would depend on the efficiency level chosen. Two manufacturers emphasized that the 

portable AC market is a highly price-competitive market. Manufacturers all affirmed that 

increased production costs can only be passed through to a certain point, after which 

demand would decline. Manufacturers noted that price is the primary factor influencing 

purchasing decisions in the market, which is one reason for the popularity of single-duct 

portable ACs relative to more expensive dual-duct units. Relatedly, two of these 

manufacturers suggested that consumers may switch to buying room ACs as the price of 

portable ACs increases with standards.
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Among manufacturers, it was generally agreed that small increases in 

manufacturer production costs on the order of 5 to 10 percent are tolerable. However, 

manufacturers asserted that a cost increase of 25 percent would have major detrimental 

impacts on portable AC shipments. A cost increase of 50 percent or more would have a

devastating impact the market.

However, some manufacturers stated that it is unlikely that a new energy 

conservation standard would greatly affect their profitability. One manufacturer stated

that their profitability in the portable AC segment would likely decrease for a few years 

when resources are strained to fund upfront investments in capital and R&D, but that the

company’s competitive position within the industry would ultimately increase as some 

companies are forced to exit the market (i.e., competition decreases). Similarly, some 

manufacturers believe that efficiency standards would have a positive impact on their 

competitive position, as it would force all products onto a level playing field in terms of 

product efficiency (and associated testing and certification burdens).

12.4.3 Conversion Costs, Manufacturing Capacity, and Employment Levels

DOE asked manufacturers what level of conversion costs they anticipate if 

potential energy conservation standards were to take effect. Manufacturers generally 

responded that they may have to incur significant product and capital conversion costs in 

order to upgrade their product designs and production processes, depending on the 

standard level adopted.

One manufacturer noted that efficiency levels that would necessitate platform 

redesigns (in the form of changes in chassis size) would impose a significant burden.

Most manufacturers agreed that potential energy conservation standards would 

likely not greatly impact direct production (or related non-production) employment levels 

in the industry.

12.4.4 Impact on Innovation and Product Utility

Several manufacturers expressed concerns that stringent energy conservation

standards could have a negative impact on product innovation and performance from the 

consumer standpoint.

Manufacturers cited multiple impacts (beyond price) brought about by an energy 

conservation standard, including size, noise level, and ease of water disposal. Regarding 

product size, some manufacturers raised concern over the need for portable ACs to 

become physically larger in order to achieve improved efficiency. Therefore, for 

customers with significant space constraints or lifting capabilities, a proposed standard 

may inhibit these customers from getting the product that best fits their needs. 

Some manufacturers also believe that potential energy conservation standards 

would decrease consumer-focused product innovation by diverting finite human and 

capital resources. Finally, another manufacturer believes that new efficiency standards 

will cause manufacturers to produce better quality products overall.
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12.4.5 Cumulative Burdens

DOE will not include testing and certification costs as a cumulative regulatory 

burden. If and when DOE determines that portable ACs will be covered products, and, 

subsequently, proposes and then adopts energy conservation standards for them, all 

manufacturers will be required to test and certify their products according to a test 

procedure developed by DOE. In this case, testing and certification costs will be treated 

as conversion costs and incorporated into the GRIM in order to estimate the direct impact 

of these costs on the industry.

Based on its own research and discussions with manufacturers, DOE identified 

the following regulations relevant to portable ACs, including: 

12.4.5.1 Standards for Other Products Made by Portable AC

Manufacturers

In addition to the efficiency regulations for portable ACs, several other DOE 

regulations and pending regulations apply to other products manufactured by the 

companies that manufacture portable ACs. Other Federal energy conservation standards 

that may impact manufacturers of portable ACs include the standards for room ACs, 

residential dehumidifiers, dishwashers, microwave ovens, residential clothes washers, 

residential clothes dryers, residential refrigerators and freezers, and HVAC products (i.e.,

mini-splits and packaged terminal air conditioners and heat pumps). 

12.4.5.2 Certification Requirements in California

California’s Appliance Efficiency Regulationsbrequire that “spot air conditioner” 

performance be certified according to an industry standard for rating portable air 

conditioners for all such products sold in that State. Although the California regulations

define “spot air conditioner” as “an air conditioner that discharges cool air into a space 

and discharges rejected heat back into that space, where there is no physical boundary 

separating the discharges,” which would preclude ducted portable ACs, DOE notes that 

the California Energy Commission’s Appliance Efficiency Database lists many ducted 

portable ACs.

DOE will study the potential impacts of these cumulative burdens in greater detail 

during the MIA conducted during the NOPR phase.

 

b California Code of Regulations, Title 20, Sections 1601–1608.
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12.4.6 Impact on Small Manufacturers

The Small Business Administration (SBA) defines small business manufacturing 

enterprises for North American Industry Classification System (NAICS) code 333415, 

Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial 

Refrigeration Equipment Manufacturing, as companies with 750 or less employees. SBA 

lists small business size standards that are matched to industries as they are described in 

the NAICS. The size standard defines the maximum allowable size of a for-profit small 

business for Federal Government programs. Size standards are generally based on the 

average annual receipts or the average number of employees at a firm.

Using this classification in conjunction with information from industry databases, 

the SBA member directory, and reports from vendors such as Dun & Bradstreet, DOE 

has not identified any small, U.S.-based manufacturers of portable ACs covered by this 

rulemaking. DOE will continue investigate whether there are any small manufacturers of 

portable ACs based in the United States.