2

- i CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM INTERESTED PARTIES, AND DEPARTMENT OF ENERGY RESPONSES

TABLE OF CONTENTS

2.1 INTRODUCTION

................................ ................................ ................................ ........... 2

- 1 2.2 BACKGROUND

................................ ................................ ................................ ............. 2

- 2 2.2.1 Rulemaking Schedule

................................ ................................ ............... 2

- 3 2.3 MARKET AND TECHNOLOG Y ASSESSMENT

................................ ........................ 2

- 4 2.3.1 Definitions

................................ ................................ ................................ 2

- 5 2.3.2 Scope of Coverage

................................ ................................ ................... 2

- 6 2.3.3 Product Classes

................................ ................................ ...................... 2

- 21 2.3.4 Market Assessment

................................ ................................ ................ 2

- 23 2.3.5 Technology Assessment

................................ ................................ ......... 2

- 23 2.3.6 Test Procedures

................................ ................................ ...................... 2

- 24 2.4 SCREENING ANALYSIS

................................ ................................ ............................ 2

- 29 2.5 ENGINEERING ANALYSIS

................................ ................................ ........................ 2

- 30 2. 6 MARKUPS TO DETERMINE PRODUCT PRICE

................................ ...................... 2

- 32 2.7 ENERGY USE ANALYSIS

................................ ................................ .......................... 2

- 33 2.8 LIFE CYCLE COST AND PAYBACK PERIOD ANALY SES

................................ ... 2

- 34 2.8.1 Retail Prices

................................ ................................ ............................ 2

- 35 2.8.2 Energy Prices

................................ ................................ .......................... 2

- 35 2.8.3 Maintenance, Repair, and Installation Costs

................................ .......... 2

- 35 2.8.4 Product Lifetime

................................ ................................ ..................... 2

- 36 2.8.5 Discount Rates

................................ ................................ ........................ 2

- 36 2.8.6 Distribution of Product Efficiency in the Base Case

.............................. 2

- 36 2.9 SHIPMENTS ANALYSIS

................................ ................................ ............................ 2

- 37 2.10 NATIONAL IMPACT ANAL YSIS

................................ ................................ .............. 2

- 38 2.10.1 National Energy Savings Analysis

................................ ....................... 2

- 38 2.10.2 Net Present Value Analysis

................................ ................................ .. 2

- 39 2.11 CONSUMER SUBGROUP AN ALYSIS

................................ ................................ ...... 2

- 40 2.12 PRELIMINARY MANUFACT URER IMPACT ANALYSIS

................................ ..... 2

- 40 2.13 EMISSIONS ANALYSIS

................................ ................................ .............................. 2

- 41 2.14 MONETIZATION OF EMIS SIONS REDUCTION BENE FITS

................................ . 2

- 43 2.15 EMPLOYMENT IMPACT AN ALYSIS

................................ ................................ ....... 2

- 44 2.16 UTILITY IMPACT ANALY SIS

................................ ................................ ................... 2

- 45 2.17 REGULATORY IMPACT AN ALYSIS

................................ ................................ ....... 2

- 452

- 1 CHAPTER 2. ANALYTICAL FRAMEWORK , COMMENTS FROM INTERESTED PARTIES, AND D EPARTMENT OF ENERGY RESPONSES

2.1 INTRODUCTION

The Energy Policy and Conservation Act (EPCA), as amended (42 U.S.C. 6291

, et. seq. ), requires the U.S. Department of Energy (DOE) to prescribe energy conservation standards for covered products that achieve the maximum improvements in energy efficiency that a re technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) This chapter describes the general analytical framework that DOE is using to evaluate and develop energy conservation standards for miscellaneous refrigeration products. Incl uded in this chapter are descriptions of the methodology, the analytical tools, and the relationships among the various analyses that are part of DOE’s approach

. The analyses performed as part of the preliminary analysis stage and reported in this prelimin ary technical support document (TSD) are listed below.

• A market and technology assessment to characterize the markets for miscellaneous refrigeration products and the applicable existing technology options, including prototype designs.

• A screening analysis to review each technology option to decide whether it is technologically feasible; is practical to manufacture, install, and service; would adversely affect product utility or product availability; or would have adverse effects on health and safety.

• An en gineering analysis to develop cost

- efficiency relationships, which indicate the manufacturer’s cost of achieving increased efficiency.

• A markups analysis to develop distribution channel markups that relate the manufacturer production cost (MPC) to the cost to the consumer.

• An analysis of the annual energy use of the considered products.

• A l ife

- cycle cost (LCC) and payback period (PBP) analys i s to calculate, at the consumer level, the savings in operating costs throughout the estimated average lifetime of th e covered products, compared to any increase in purchase and installation cost.

• A shipments analysis to forecast shipments of miscellaneous refrigeration products, which are then used to calculate the national impacts of standards on energy, net present

va lue (NPV), and future manufacturer cash flows.2

- 2 • A national impact analysis (NIA) to assess aggregate impacts at the national level of potential energy conservation standards for the considered products, as measured by the NPV of total consumer economic impa cts and the national energy savings (NES).

• A preliminary manufacturer impact analysis (MIA) to assess the potential impacts of energy conservation standards on manufacturers’ capital conversion expenditures, marketing costs, shipments, and research and dev elopment costs.

In the subsequent Notice of Proposed Rulemaking (NOPR), DOE will present the tentative results of the above analyses, incorporating any revisions to the analyses based on comments and new information received. DOE will also present results of the following additional analyses in the NOPR:

• A consumer subgroup analysis to evaluate variations in consumer characteristics that might cause a standard to affect particular consumer subpopulations, such as low

- income households, differently than the overall population.

• An MIA to estimate the financial impact of standards on manufacturers and to calculate impacts on competition, employment, and manufacturing capacity.

• A utility impact analysis to estimate selected effects of considered standards on the electric power sector

.

• An employment impact analysis to assess the aggregate impacts of considered standards on national employment.

• An emissions analysis to estimate the effects of considered standards on emissions of carbon dioxide (CO 2 ), sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and mercury (Hg).

• A regulatory impact analysis to examine major alternatives to proposed amended energy conservation standards that may achieve substantially the same regulatory goal at a lower
cost.

2.2 BACKGROUND
DOE developed this analytical framework and documented its initial findings in the Rulemaking Framework Document for Wine Chillers and Miscellaneous Refrigeration Products (the Framework Document). DOE announced the availability of the Framework Document i n a Notice of Public Meeting and Availability of a Framework Document published in the Federal Register on February 13, 2012. 77 FR 7547. DOE presented the analytical approach to interested parties during a public meeting on February 22, 2012. The Framewor k Document is available at http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/wc_misc_refr_framework_02_ 06_12.pdf

.2

- 3 In response to the publication of the Framework Document and the associated public meeting, DOE received comments from interested parties regarding its analytical approach. In this chapter (chapter 2) of the preliminary TSD, DOE: (1) summarizes the key comments received from interested parties and describes DOE’s responses to those comments; (2) summarizes any significant changes made in its analys i s approach since publishing the Framework Document; and (3) explains in further detail each of the issues

, identified in the executive summary

, for which DOE seeks public comment.

Before the publication of the Framework Document, DOE published a coverage determination proposal ( “ the November 2011 Coverage Proposal ” ). 76 FR 69147 (November 8, 2011). In th at document, DOE prelimi narily determined that residential refrigeration products that do not incorporate compressors qualify as covered products as defined by EPCA

.
After the publication of the Framework Document, DOE published a second proposed coverage determination ( “ the October 2013 Coverage Proposal ” ). 78 FR 65223 (October 31, 2013)

. T his proposed determination, if finalized, would expand the scope of the November 2011 Coverage Proposal by explicitly add ing as covered products several additional types of refrigeration pr oducts., including hybrid (or combination) refrigerators, refrigerator

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

- f reezers, or freezers); cooled cabinets ( i.e. , products including wine chillers that are composed entirely of warm compartments ); refrigeration products that do not use vapor compression refrigeration systems ( i.e.
, products that do not include a compressor and condenser unit as an integral part of the cabinet assembly) ; and ice makers

. Under this proposal, DOE would cover all of these products under a single new aggregate product coverage category, distinct from the current compressor

based refrigerators, r efrigerator

- freezers, and freezers explicitly addressed by EPCA. It supplements the November 2011 Coverage Proposal, which did not include vapor

- compression products. Collectively, the products at issue would be defined as “miscellaneous refrigeration prod ucts.”

Simultaneously, DOE is proposing new test procedures to address the miscellaneous refrigeration products that DOE is weighing for coverage in the October 2013 Coverage Proposal. The test procedure NOPR for that rulemaking (“the Test Procedure NOPR” ) would also define the specific product types comprising the miscellaneous refrigeration products product type. These definitions are introduced in Chapter 1 and discussed further in Chapter 3 of this TSD. The miscellaneous refrigeration product testing provisions proposed by DOE are also summarized in Chapter 3 of this TSD.

2.2.1 Rulemaking Schedule
In the Framework Document, DOE stated that it would consider accelerating the timeline of an energy conservation standard rulemaking for miscellaneous refrigeratio n products. DOE provided two options to accelerate the schedule: (1) stakeholders would negotiate appropriate2

- 4 efficiency levels for the standard leading to a direct final rule and (2) DOE would bypass publication of a preliminary analysis and proceed direc tly to a NOPR. DOE estimated that these options to accelerate the timeline could save 6 to 8 months in the rulemaking process.

While the Association of Home Appliance Manufacturers (AHAM) commented that they were open to negotiations with other stakeholde rs about appropriate efficiency levels for the standard, AHAM urged DOE to publish a preliminary analysis, because it provides an opportunity for stakeholders to offer feedback to DOE early in the process. (AHAM, No. 9 at p. 7) The Appliance Standards Awar eness Project (ASAP) also stated that it is helpful to have information from DOE’s preliminary analysis to support negotiations between stakeholders. (ASAP, No. 15 at p. 65) Moreover, the Northwest Energy Efficiency Alliance (NEEA) and the Northwest Power Conservation Council (NPCC), referred to from here forward as NEEA

, et al.

, suggested that due to the lack of data currently available to DOE, as indicated in the Framework Document, an accelerated schedule would not be feasible. ( NEEA, et al.

, No. 10 at p. 5)

U

- Line highlighted the impact that an accelerated timeline would have on manufacturers. U

- Line was concerned that DOE and stakeholders would not have time to properly develop product definitions, test procedures, and standards, especially as the Framework Document did not finalize the scope of coverage. Additionally, U

- Line was concerned that an accelerated timeline would put small manufacturers at an unfair disadvantage, as they do not have the same resources as larger manufacturers to cop e with DOE requests for comments and data. ( U

- Line

, No. 14 at pp. 3

- 4)

Considering that miscellaneous refrigeration products have not been previously regulated, DOE agrees with interested parties that a preliminary analysis TSD should be published. This wi ll provide DOE with the ability to further investigate the products and provide interested parties with additional opportunities to comment. Therefore, DOE conducted a preliminary analysis and is publishing this preliminary TSD.

2.3 MARKET AND TECHNOLOG Y ASSES SMENT
When DOE begins an energy conservation standards rulemaking, it develops information that provides an overall picture of the market for the products considered, including the nature of the products, the industry structure, and market characteristics for the products. This activity consists of both quantitative and qualitative efforts based primarily on publicly available information. The subjects addressed in the market assessment for miscellaneous refrigeration products included manufacturers, trade associations, and the quantities and types of products sold and offered for sale. DOE included both large and small, and both foreign and domestic refrigeration product manufacturers in its product search . DOE examined publicly available data from AHAM, wh ich is the key trade association for this product category. DOE also reviewed shipment projections based on a study that collected information us ing online surveys of appliance owners. 1 Finally, DOE reviewed the energy conservation standards, voluntary2

- 5 eff iciency programs , and efficiency incentives of utilities, individual s tates, and other organizations. Chapter 3 of the preliminary TSD provides additional details on the market and technology assessment.

DOE also reviewed relevant literature and interviewe d manufacturers to help develop an overall picture of the miscellaneous refrigeration product market in the United States. Industry publications, trade journals, government agencies, and trade organizations provided the bulk of the information, including ( 1) manufacturers and their market shares; (2) shipments by product type; (3) detailed product information; and (4) industry trends. The analysis developed as part of the market and technology assessment is described in chapter 3 of the preliminary TSD.

2.3.1 Def initions
In the Framework Document, DOE proposed to define an electric wine chiller as “a cabinet (a) designed for the refrigerated storage of beverages, non

- perishable food products, and/or any other items, (b) not designed to be capable of achieving stor age temperatures below 39 °F (3.9 °C) , and (c) having a source of refrigeration requiring single phase, alternating current electric energy input only.” While EPCA does not define the term “refrigerator,” the proposed wine chiller definition is consistent with the current electric refrigerator definition ( s ee 10 CFR 430.2 ) except for the temperature designation and the fact that refrigerators may also contain a freezer compartment . Thus, DOE also proposed to modify the definition for the term

“ refrigerator ” in 10 CFR 430.2 , which currently refers to the definition for “electric refrigerator,” to “an electric refrigerator or an electric wine chiller.” Further, DOE proposed to modify the definition of compact refrigerators to exclude wine chillers so as not to create an additional compact wine chiller category given that the majority of wine chillers have total refrigerated volume less than 7.5 ft 3 , the threshold for compact refrigerators, refrigerator

- freezers, and freezers

. Industry stakeholders agreed with the wine chiller definition initially considered by DOE

. However, both AHAM and GE suggested that DOE extend this definition to “beverage centers

, ” which serve a similar purpose to wine chillers, and rename the category for products with temperatures above 39 °F to something other than wine chillers. (AHAM, No. 9 at p. 3; GE, No. 15 at pp. 25

- 26 ; AHAM , No. 15 at p. 2 ) AHAM and Sanyo also recommended that part (a) of the wine chiller definition be removed, finding it unnecessary to specify what types of prod ucts can be stored in the unit. (AHAM, No. 9 at p. 3; Sanyo, No. 12 at p. 1) With this modified definition, Sanyo stated that using the term “wine chiller” for all covered products would be acceptable and supported an approach to establish a new energy con servation standard based on the current statutory coverage laid out in 42 U.S.C. 6292(a) . (Sanyo, No. 12 at p. 1)

Efficiency advocates also commented on DOE’s proposed definition of wine chillers. NEEA and NPCC agreed with DOE’s definition and added that D OE should use the term “beverage coolers” instead of “wine chillers” to describe refrigeration products with storage temperatures above 39 °F. EarthJustice cautioned DOE to write definitions pertaining to wine2

- 6 chillers more broadly to ensure maximum inclus ion of different product types for coverage. (EJ, No. 15 at pp. 28

- 29)

DOE agrees with stakeholders’ suggestions that an alternative name be used for the “wine chiller” product type to ensure its applicability to all products that cannot reach s torage temperatures below 39 °F, not just those that are designed to store wine or other beverages. Hence, DOE propose d in the Test Procedure NOPR to use the term “cooled cabinet” to denote all such products, including wine chillers, that are not designed to main tain refrigerator storage temperatures. The Test Procedure NOPR proposed the following definition for “cooled cabinet”:

Cooled cabinet means a cabinet that has a source of refrigeration requiring electric energy input only and is capable of maintaining co mpartment temperature s either (a) no lower than 3 9 °F (3.9 °C) , or (b) in a range that extends no lower than 37 ° F (2.8 ° C) but at least as high as 60 ° F (15.6 ° C).

DOE notes that this definition would extend coverage to products that provide refrigerated storage at temperatures warmer than the range that is typical for wine chillers. a DOE also notes that the proposed “cooled cabinet” definition would not be limited to products that can only use alternating current power input, which addresses the possibili ty that such products may be cooled using thermoelectric refrigeration systems that can be powered by direct as well as alternating current power. Consequently, the definition should be sufficiently broad to ensure maximum coverage of different product s

.

D OE also notes that the Test Procedure NOPR proposed to reassign the current definition for “electric refrigerator” to the term “refrigerator” and eliminate the term “electric refrigerator” from 10 CFR 430.2, with a parallel proposal for the “electric refri gerator

- freezer” and “refrigerator

- freezer” definitions. DOE p roposed these changes to eliminate redundant terms, and to simplify the regulations. Unless otherwise noted, where DOE use s the term “refrigerator” or “refrigerator

- freezer” in this document, th ese terms will have the same meaning as the terms “electric refrigerator” or “electric refrigerator

- freezer,” respectively, as currently found in 10 CFR 430.2.

2.3.2 Scope of Coverage
As stated in the Framework Document, there are currently no DOE energy conservation standards for miscellaneous refrigeration products. Although c ooled cabinets (including wine chillers) that use a conventional compressor/condenser system could have been considered to fall into the category described in 42 U.S.C. 6292( a)(1), they are not covered by energy conservation standards for refrigerators, refrigerator

- freezers, and freezers, largely because of their inability to

a Wine chillers operate with storage temperatures above 40  ̊F and generally near 55  ̊F (see 75 FR 59470, 59486 (September 27, 2010)).2

- 7 reach storage temperatures colder than the 39 ° F limit specified in DOE’s current regulatory definiti on fo r “ electric refrigerator

. ” (10 CFR part 430.2)

The other products addressed in this TSD do not fall into the category described in 42 U.S.C. 6292(a)(1). However, EPCA a uthorizes DOE to classify additional types of consumer products as covered product s if they satisfy certain prerequisites, as listed in 42 U.S.C. 6292(b)(1). As described further in s ection 2.3.2.9

, based on DOE’s currently available data, the regulation of these miscellaneous refrigeration products would , in DOE’s tentative view, be consistent with the requirements of 42 U.S.C. 6292( b ) (1), which states that the Secretary of Energy may classify a type of consumer product as a covered product if: (1) coverage of the product is necessary or appropriate for carrying out the purposes of EPCA

, and (2) the average annual per

- household energy u se by products of such type is likely to exceed 100 kWh per year

. Should DOE determine that these criteria are satisfied , DOE would have the authority to extend
coverage over these products and to develop energy conservation standards for them

.

Vapor

- Comp ression Wine Chillers 2.3.2.1

The Framework Document stated that there are currently no DOE energy conservation standards for vapor

- compression wine chillers, although DOE is aware that both the California Energy Commission (CEC) and Natural Resources Canada have established energy conservation standards for these products.

In response to the Framework Document, U

- Line stated that both Canada and California have established standards for these products and that, due to the combined size of these markets, they effec tively set the standards for the U.S. market. ( U

- L ine, No. 14 at p. 1)

In response to both the Framework Document and the October 2013 Coverage Proposal,
t he California IOUs, Graven , and a joint comment submitted by EarthJustice , ASAP, and the Natural Resources Defense Council (NRDC), collectively referred to as the Joint Advocates Comment (JAC)

, stated that DOE should not establish coverage for wine chillers if it cannot also establish energy conservation standards for them; oth erwise, DOE would pre

- empt California standards for wine chillers without replacing them with new standards . (CAIOUs, No. 13 at p. 2; Graven , No. 6 at p. 1; JAC, No. 11 at p. 1 ; JAC, No. 17 at p. 2)

DOE acknowledges that Canada and California have establi shed standards for wine chillers and that these standards effectively set a standard for the North American vapor

compression wine chiller market ; however, given the significant additional potential for cost

effective energy savings associated with non

- co mpressor products, as well as potentially higher efficiency for vapor

- compression products , it is DOE’s view at this time that the regulation of these products would satisfy the relevant statutory criteria

. See 42 U.S.C. 6292( b ) and 42 U.S.C. 629 5 ( l )

.2

- 8 Thermoelectric and Vapor Absorption Products 2.3.2.2
As described further in Chapter 3 of this TSD, t hermoelectric refrigeration products are a widely available alternative to the vapor

- compression systems used in most refrigeration products.

Th ermoelectric techn ology is primarily used in products that do not maintain very low compartment temperatures , although some thermoelectric refrigerat ion products can maintain storage temperature below 39 °F in room

- temperature conditions ( i.e. , near 70 ° F). The coverage
pro vision of EPCA related to refrigerators, refrigerator

- freezers, and freezers would not apply to thermoelectric products because they do not employ compressor or condenser systems. The same coverage limitations apply to absorption refrigeration products, wh ich do not have integral
compressors . Thermoelectric and absorption refrigeration technologies are used in available products marketed either as wine chillers, which are generally configured with wine racks and glass doors, or as refrigerators, which are g enerally configured with shelves and solid doors.

Efficiency advocates expressed their belie f that DOE should establish both coverage and new energy conservation standards for thermoelectric products. NEEA and NPCC commented that, because thermoelectric pr oducts are less efficient and less expensive than compressor

- based products

, and because their market is growing, they are ideal candidates for energy conservation standards. ( NEEA, et al.

, No. 10 at p. 3) In the joint comment, efficiency advocates advised DOE to cover thermoelectric compact refrigerators

– not just thermoelectric wine chillers

– in order to prevent a market shift from vapor compression to thermoelectric technology. (JAC, No. 11 at p. 4; ASAP, No. 15 at p. 44) The California IOUs (CAIOUs) also expressed concern that, if the energy efficiency standards do not cover the different wine chiller refrigeration technologies, consumers would be encouraged to purchase less

- efficient, less

- expensive thermoel ectric wine chillers. (CAIOUs, No. 13 at pp. 1

- 2) An individual commented that covering vapor compression wine chillers but not thermoelectric wine chillers would be contrary to the provisions of 42 U.S.C. 6295(o)(2)(B)(i), which require that the potentia l reduction of competition must be considered when proposing new regulations. The coverage of only vapor

compression units would give manufacturers of thermoelectric units an unfair advantage. ( Graven , No. 6 at p. 1)

S ome interested parties , while agree ing that thermoelectric products should be included in the current rulemaking, added that the differences in design and operation between thermoelectric and vapor compression products suggest that each refrigeration type will need its own set of test procedur es and methods of evaluation. U

- Line commented that DOE should conduct a rulemaking for thermoelectric products separate from that for vapor

- compression products. ( U

- Line , No. 14 at p. 2)

Conversely, AHAM commented that DOE should not pursue coverage or se t energy conservation standards for thermoelectric wine chillers and indicated its view that these products

are not covered under California regulations. AHAM claimed that the California test procedure does not provide a procedure to test thermoelectric pr oducts because it evaluates "compressor2

- 9 cycles," whereas thermoelectric products do not have compressor cycles. AHAM cited further support of its position that thermoelectric wine chillers should not be covered by indicating that the Canadian test procedur e , which is similar to the California test procedure, specifically mentions that thermoelectric units are not included. (AHAM, No. 9 at p p

. 2

- 3)

In response to the October 2013 Coverage Proposal, AHAM commented that it is not feasible for manufacturers to evade EPCA coverage by switching from vapor compression to thermoelectric or absorption refrigeration. Moreover , AHAM commented that thermoelectric refrigeration products cannot be made in the same sizes that consumers demand for vapor

compression product s and that many thermoelectric products cannot reach wine storage temperatures, let alone safe food storage temperature s

. AHAM added that absorption

- based technologies use flammable gas and are therefore undesirable among consumers. AHAM concluded that the se factors indicate that it is not necessary for DOE to establish coverage for

non

- compressor refrigeration products. (AHAM , No. 15 at p. 4 )

DOE agrees with the efficiency advocates that it should pursue coverage and energy conservation standards for thermoelectric refrigeration products , including thermoelectric refrigerators , particularly because they are less expensive and less efficient than vapor

compression alternatives. Consequently, DOE has proposed to cover thermoelectric and absorption produc ts, referred to in aggregate as “non

- compressor refrigeration products,” in its October 2013 Coverage Proposal. 78 FR 65228 ( Oct. 31, 2013)

. DOE also agrees that covering both vapor

- compression and thermoelectric wine chillers would prevent the potential r eduction of competition for manufacturers of thermoelectric wine chillers.

While thermoelectric and vapor

- compression cooled cabinet products differ in design and operation, DOE does not believe that these technologies provide significant utility differen ces to the consumer. Therefore, DOE may propose cover ing both thermoelectric and vapor

compression cooled cabinets in the same product class, meaning that they w ould be subject to the same standards and considered in the same rulemaking. Nonetheless, in re sponse to U

- Line, although DOE may cover thermoelectric and vapor

- compression cooled cabinets in the same product class, it separately analyzed the markets and designs of these product types, as described further in its market and technology assessment (Ch apter 3 of this TSD) and engineering analysis (Chapter 5 of this TSD)

. DOE acknowledges that current products designed using thermoelectric refrigeration technology are un able to maintain storage temperatures that are safe for food storage in the high

usa ge conditions typical for refrigerators , as discussed in the Test Procedure NOPR . This limitation mak es it unlikely that manufacturers would switch refrigeration technologies in order to avoid EPCA coverage unless improved thermoelectric technology cooling becomes available

. DOE also acknowledges that the ammonia used in absorption refrigeration products is flammable. Nonetheless, DOE’s market analysis indicates that non

- compressor products comprise a majori ty of the cooled cabinet market , indicating that establishing coverage for such products could result in significant energy savings

.2

- 10 Regarding AHAM’s claim that the California wine chiller test procedure is not applicable
to non

- compressor products because of its reliance on evaluating compressor cycles, DOE will not comment on those State

- created regulations . However, DOE has proposed test methods for thermoelectric and absorption units in its Test Procedure NOPR , which proposes distinct ambient temperatur e requirements and usage adjustment factors for non

- compressor and vapor

compression units

. It also proposes to treat the term “compressor cycles” as meaning “refrigeration system cycles” when testing non

- compressor refrigeration products

.

Hybrid Refriger ation Products 2.3.2.3
DOE is aware of products featuring different combinations of fresh food, freezer, and “wine storage” compartments. In guidance issued February 2011 (“February 2011 Guidance ”), 2 DOE published guidelines on how to test refrigerators and refrigerator

- freezers featuring a wine storage compartment. The guidance stated that these hybrid products must be tested as refrigerators or refrigerator

- freezers using the applicable test procedu res. Depending on the design details of the additional wine storage compartment, this compartment would typically be tested as a fresh food compartment, even if it could not attain fresh food compartment temperatures. In contrast, the guidance also indicat ed that adding a wine storage compartment to a product that is otherwise a freezer would change its status if the compartment comprises a majority of the product’s total storage volume

, as the product would no longer meet the regulatory definition of a fre ezer . In the February 2011 Guidance , DOE acknowledged the potential disparity in treatment of these different product configurations and indicated its plans to address hybrid products in a future rulemaking. Citing this disparity i n the Framework Document, DOE requested comment on how to address products that combine fresh food and/or freezer compartments with wine storage compartments, the types and configurations of such products, and whether separate hybrid product categories should be established based on a threshold size or percent of total volume for wine storage compartments in such products. DOE also requested comment on whether test procedure revisions would be necessary to address such products, as well as whether it should develop separate definit ions and energy conservation standards for them.

In the Joint Advocates Comment, as well as in separate comments from NEEA and NPCC, efficiency advocates stated that all hybrid products should be included in the miscellaneous refrigeration products rulema king. (JAC, No. 11 at p. 3; NEEA, et al.

, No. 10 at p. 3; ASAP, No. 15 at p. 37) Separately, ASAP remarked that standards for hybrid products should be similar in stringency to standards for other refrigeration products, after taking into account their dif ferences in energy use. (ASAP, No. 15 at p. 33) Furthermore, NEEA and NPCC stated that supplementa l definitions and adjustments to the refrigerator test procedure will be necessary to include these products, such as specifying diffe r ent compartment tempera tures or including adjustments to address their typical door opening frequency, in order to cover the variety of products on the market both currently and in the future. ( NEEA, et al.

, No. 10 at p. 3)2

- 11 Writing in response to both the Framework Document and the October 2013 Coverage Proposal, AHAM agreed with efficiency advocates that all hybrid products including refrigerators, refrigerator

- freezers, or freezers with a wine storage compartment should be addressed within the current rulemaking. (AHAM, No. 9 at p. 5 ; AHAM , No. 15 at pp. 2

- 3 ) AHAM commented that the February 2011 Guidance regarding hybrid products was inequitable and unfair, because clear test procedures for hybrid products do not yet exist. (AHAM, No. 15 at pp. 31

- 32) U

- Line commented that

, du e to the high number of potential variations of hybrid
pr oducts that exist, attempts at further regulatory guidance on these products may in crease rather than decrease confusion on product test procedures. Therefore, U

- Line suggested that, if DOE
proposes definitions addressing hybrid products, these definitions should clearly cover all combination/hybrid products in order to prevent the possibility that some products may inadvertently be exempt from coverage . ( U

- L ine, No. 14 at p. 3) U

- Line also supported developing separate product definitions and test procedures for hybrid products where the products are used for different functions or where differences in technology and design require the use of different test procedures but did not provide any specific examples that would necessitate such differentiation. ( U

- Line , No. 14 at p. 3) While not commenting on whether hybrid products should be covered under the current rulemaking, Sanyo emphasized that more analysis and review was necessary to determine appropr iate standards and test procedures for hybrid products. (Sanyo, No. 12 at p. 1)

DOE agrees with stakeholders that all refrigeration products with a storage compartment that does not operate below 39 ° F , such as a wine storage compartment, should be covered and subject to energy conservation standards. In the October 2013 Coverage Proposal, DOE
propose d to extend coverage to all products containing compartments designed for storage at temperatures warmer than 39 °F and that otherwise perfor m the functions of refrigerators, refrigerator

- f reezers, or freezers. 78 FR 65227

. Subsequently, in the Test Procedure NOPR, DOE proposed definition s for hybrid refrigeration product s that were intended to clarify that at least half

, but not all

, of the refrigerated volume of such products would consist of a cellar compartment or multiple cellar compartments . The NOPR proposed defin ing these compartments as compartments not capable of storage temperatures lower than 39 °F. b DOE proposed test procedures for these hybrid prod ucts and is developing energy conservation standards for them as part of this effort . The Test Procedure NOPR also proposed to treat vapor

compression refrigeration products that do not meet one of the “hybrid” definitions, but that nevertheless combine wa rm compartments with fresh food and/or freezer compartments, as refrigerators, refrigerator

- freezers, or freezers as currently defined in 10 CFR 430.2

. (Consequently, these products would be subject to the applicable standards in 10 CFR 430.32(a) )

. DOE proposed these definitions to clarify the status of products representing all of the potential combinations of freezer, fresh food, and cellar compartments, as shown in Table 3

. 1 ; consequently, no refrigeration products with cellar compartments would be exempt from
coverage.

b DOE’s proposal also allows a small crossover in temperature below 39  ̊F, down to 37  ̊F, provided the compartment’s temper ature range extends at least up to 60  ̊F.2

- 12 Table 3

. 1 : Product Definitions Applicable to Different Compartment Combinations Compartment Types Freezer (“long term”) Freezer (“short term”) Freezer (“ice only”) Fresh Food < 50% Cellar ≥ 50% CellarProduct Types Currently Covered Product Combinations

All

- Refrigerator    Refrigerator other than an All

Refrigerator  
Refrigerator

- Freezer  
Freezer  Proposed Additional Covered Product Combinations Cooled Cabinet 
Hybrid All

- Refrigerator      Hybrid Refrigerator other than a Hybrid All

Refrigerator   

Hybrid Refrigerator

- Freezer    Hybrid Freezer   Currently Covered Product Combinations Whose Status Would be Clarified by the Test Procedure Rulemaking

All

- Refrigerator      Refrigerator other than an All

Refrigerator   
Refrigerator

- Freezer   
Freezer  

The last four product types in Table 3

. 1 represent refrigeration products with cellar compartments that comprise less than half of their total refrigerated volume. Should DOE revise its definitions for these products, these last fo ur product categories would be subject to the applicable standards already detailed in 10 CFR 430.32 (a). Conversely, coverage of cooled cabinets and hybrid refrigeration products would not begin until DOE publishes a final coverage determination.

DOE ag rees with NEEA, et al.

, and U

- Line that it is necessary to develop separate test procedures for hybrid refrigeration products that address the ir various configurations and fundamental differences from conventional refrigeration products. Consequently, DOE is proposing to address issues specific to hybrid refrigeration products, including, for example, the2

- 13 setpoint temperature of the cellar compartment (which DOE proposes as 55 °F) , energy use calculations, and calculation of adjust ed volume as part of its test procedure proposal

. Similarly, DOE has analyzed whether energy conservation standards would be appropriate for hybrid refrigeration products , as discussed in c hapter 5 of this TSD

.

Refrigeration Products U sing Either Alternating C urrent or Direct 2.3.2.4
C urrent Input
In the Framework Document, DOE requested information about whether refrigeration products with the ability to operate on either alternating current (AC) or direct current (DC) are sold in significant quantities for stationary applications ( e.g ., homes). Because EPCA’s coverage of refrigerators, refrigerator

- freezers, and freezers is currently limited to those units that can operate on alternating current (AC) electricity , products that operate solely on DC electricity or fuels other than electr icity, such as natural gas or propane, would need to be covered as a separate product type . (42 U.S.C. 6292(a)(1)) Furthermore

, coverage for any new category of products cannot extend to product s designed solely for use in recreational vehicles (RVs) or ot her mobile equipment. See 42 U.S.C. 6292(a)

.
NEEA and NPCC commented that the market for DC

- powered products is limited and focuses on RV and off

- grid applications, for which there are already significant incentives for efficient design. ( NEEA, et al.

, No . 10 at p. 4) Thus, in their view, DOE may want to exclude these products from coverage. True Manufacturing ( True ) stated that because thermoelectric products run internally on DC power , they may be able to sidestep the AC

- input requirement in EPCA by moving the AC/DC conversion outside the product, for example, by powering the product with an external battery recharged by a battery charger. ( True , No. 15 at p. 21

- 22) This comment suggests that extending coverage to thermoelectric products but limiting the scope of coverage to those products that operate on AC power may encourage manufacturers to use external AC/DC conversion or similar approaches to exclude their products from coverage.

To address the issue raised by True

, DOE’s Test Procedure NOPR is n ot restricted to those products that can operate on AC power input. DOE acknowledges that many refrigeration products that are designed to operate solely on DC power are designed exclusively for mobile applications and therefore cannot be covered under EPC A. However, although DOE is not aware of any current products powered only by DC electricity that are not designed exclusively for mobile applications, DOE notes tha t such products could exist or be introduced in the future. Further, refrigeration products that are capable of operating on either DC or AC power would not likely be designed exclusively for use in mobile applications. Therefore, DOE maintains that coverage of products that can operate on DC power is consistent with EPCA, provided they are
not designed exclusively for mobile applications. This is the same coverage approach proposed in the October 2013 Coverage Proposal and Test Procedure NOPR and the approach DOE may adopt when developing standards for these products. See 78 FR 65223

.2

- 14 Coverage of Residential and Commercial Wine Chillers in the Same 2.3.2.5 Product Category
In the Framework Document, DOE sought comment on design features and performance characteristics that could distinguish wine chillers used in commercial applications from those used in residential applications. DOE suggested that both commercial and reside ntial wine chillers could be covered under the same coverage authority , especially if products were manufactured on the same product lines or if DOE could identify that commercial wine chillers are often distributed for personal or individual use.

The C alifornia Investor

- Owned U tilities suggested that DOE should include commercial wine chillers in the then ongoing rulemaking for commercial refrigeration equipment rather than the current rulemaking for miscellaneous refrigeration products. (CAIOUs, No. 13 at p. 2) M anufacturers indicated that commercial and residential wine chillers are different products and should not be regulated under the same standards. (GE, No. 15 at p. 57; True , No. 15 at pp. 54

- 56) True noted that commercial wine chillers are desig ned for scenarios involving frequent door openings during peak usage times that require rapid temperature pull

- down to keep wine products cool enough during the limited period in which the wine remains in the wine chiller. As a result, commercial wine chil lers have a much larger compressor capacity and are louder compared to residential units. Additionally, the high air flow required for rapid temperature pull

down can dry out corks, making the units unacceptable for long

- term wine storage. ( True , No. 15
at p. 54

- 56) True added that these factors weighed against consumer use of commercial wine chillers for residential wine storage, and indicated that the penetration of commercial wine chillers in residential market s is very small

. ( True , No. 15 at pp. 54

- 56) According to True , the test procedure currently used for commercial wine chillers, ASHRAE 72, calls for eight hours of testing during which doors are opened every ten minutes. This frequency of door

- opening would result in temperatures that are unacceptab l y low for a residential product. ( True , No. 15 at p. 57)

Based on this information, DOE tentatively concluded that commercial wine chillers have characteristics distinguishing them from residential wine chillers and are unlikely to be distributed for personal or individual use. Therefore, DOE does not intend to establish standards for such equipment in this rulemaking.

Near

- F reezers 2.3.2.6
Under the current definition of a freezer, products that are sold as freezers and store food below 32 °F but not down to 0 °F would not be covered under the existing energy conservation standards applicable to freezers because of the temperature range pres cribed in that definition . In the Framework Document, DOE suggested one solution to this potential gap in standards
coverage might be to modify the freezer definition to apply to products that cannot meet the 0 °F standardized temperature.2

- 15 DOE also indicat ed that it might consider modifying the freezer test procedure to allow testing of such products with a modified standardized temperature. Such changes would potentially allow coverage and regulation of near

- freezers using the existing energy conservation standards without requiring the development of separate product classes. Alternatively, DOE could also consider the further step of establishing separate product classes for such products with their own energy conservation standards.

The joint e fficiency a dvocates urged DOE to address this possible loophole by covering

near

- freezers. (JAC, No. 17 at pp. 1

- 2) NEEA and NPCC commented that there are a number of products that can maintain temperatures between 0 °F and 32 °F but did not provide examples or shipm ent estimates. ( NEEA, et al.

, No. 10 at p. 3) NEEA and NPCC also suggested that DOE modify its definitions for refrigerators and freezers to extend to near

- freezers. (NEEA, et al. , No. 10 at p. 2) The joint efficiency advocates suggested that near

- freezer s could be covered under a new product category rather than freezers as currently defined , acknowledging that products in this class are most likely a small portion of the market. (JAC, No. 11 at p. 2) True identified specific commercial products that would fall into the near

- freezer category such as ice storage products that operate between 22 °F and 30 °F and products for beer storage, which can cool to 27

– 28 °F. ( True , No. 15 at p. 50) Conversely, GE commented that all of its freezer pr oducts can reach 0 °F. (GE, No. 15 at p. 47)

After carefully considering these comments, DOE has determined that the products identified by True fall under the category of commercial refrigeration equipment, for which Congress has already established a sep arate regulatory framework for DOE to follow. Additionally, DOE has not found evidence that any near

- freezer consumer products exist. Thus, at this time, DOE is declining to address such products as part of this particular effort

.

Ice Makers 2.3.2.7

In the Framew ork Document, DOE also discussed extending coverage to ice makers not currently covered by DOE’s standards for automatic commercial icemakers, which would apply to products typically used in residential settings

. In the Framework Document, DOE requested

co mment on the annual sales of such ice makers , on any current test procedures for them, and any available data on the typical energy use of such products in a residential setting.

In response to the Framework Document, efficiency advocates asserted that ic e makers are gaining popularity , and experience with commercial ice makers suggests that there may be significant potential for savings in residential applications. (JAC, No. 11 at p. 4) No supporting evidence of this trend, however, was provided. NEEA a nd NPCC, as well as the joint commenters, urged DOE to cover ice makers and establish energy conservation standards for these products if DOE is able to confirm the potential for savings. (JAC, No. 11 at p. 4; NEEA, et al.

, No. 10 at p. 4) NEEA and NPCC al so recommended that DOE establish separate test procedures for ice makers, basing them on the test procedures for commercial ice makers but putting more emphasis on the efficiency of the storage bin because ice production may be2

- 16 considerably lower in resid ential settings than in commercial settings. ( NEEA, et al.

, No. 10 at p. 4)

By contrast, manufacturers commented that ice makers should not be included in the scope of the current rulemaking. Whirlpool indicated that it was the intent of Congress that EPCA not regulate ice makers and further indicated that sales of these products are low enough that regulating them would have no significant impact on energy consumption. (Whirlpool, No. 15 at p. 51) True commented that existing regulations for ice makers do not state whether they apply to residential or commercial applications but instead apply to products with harvest capacities between 50 and 2,500 pounds of ice per day. ( True , No. 15 at p. 52) GE also stated that California regulates ice makers with a harvest capacity greater than 50 pounds, showing that such products exist and are regulated , but note d that no regulations exist for products that produce less than 50 pounds of ice per day. ( GE, No. 15 at pp. 52) In response to the October 2013 Coverage P roposal, Hoshizaki commented that ice makers are luxury items and differ from commercial ice makers in that they hold small amounts of ice and do not make more than 50 pounds of ice per day. Hoshizaki added that, because there is no known procedure for tes ting ice maker energy consumption, DOE should first establish a test procedure for ice makers before developing energy conservation standards, because there would be insufficient data to determine their energy consumption without a test procedure. (Hoshiza ki, No. 16 at p. 1)

Regarding DOE’s October 2013 Coverage Proposal, which used a market study 1 to derive a n ice maker lifetime estimate of appro ximately 1.7 years , see 78 FR 65228

, Hoshizaki commented that this short estimated lifetime is another factor to consider when determining the necessity of covering ice makers. (Hoshizaki, No. 16 at p. 1)

D OE used this market study to estimate a national s tock of 1.7 million non

- portable ice makers. 78 FR 65228

. Whirlpool commented that it estimates the annual market for non

- portable ice makers to be 73,000 units with a lifetime of 7 years, yielding a national stock estimate of 511,000 non

- portable ice make rs. (Whirlpool, No. 18 at p. 2) DOE acknowledges that its estimate of ice maker stock is uncertain, ranging from 0.6 to 2.7 million non

- portable ice makers. The low end of this range is close to Whirlpool’s estimate. DOE also acknowledges that it used a

su bstantially smaller lifetime estimate of 1.7 years, and would consider revising this estimate if it receives data that substantiates Whirlpool ’s lifetime estimate of 7 year s or another estimate that can be substantiated by data

. Finally, Hoshizaki also commented that it would be impossible to improve the efficiency of its ice makers using any parts currently available on the market and that any efficiency improvements would necessitate a total redesign, which would be expensive and potentially
unpr oductive. (Hoshizaki, No. 16 at p. 1)

AHAM commented that DOE should not regulate products with low production volumes and/or which use small amounts of energy annually because the potential energy savings will not outweigh the burden associated with regul ating those products. (AHAM, No. 9 at p. 1, 2)2

- 17 Specifically, AHAM noted that ice makers represent insignificant potential for energy savings. (AHAM, No. 9 at pp. 6

- 7; AHAM, No. 15 at p. 44)

In response to Whirlpool’s comment, DOE notes that ice makers wer e not originally covered under EPCA as consumer products ; however

, as described further in Sections 2.3.2 and 2.3.2.9 , EPCA grants DOE the authority to extend coverage to products that meet the criteria laid out in the provisions of 42 U.S.C. 6292(b)(1). DOE has tentatively determined that, in aggregate, ice makers and the ot her miscellaneous refrigeration products covered in this rulemaking meet these criteria and DOE is taking an approach that would include ice makers as part of this current effort examining the application of potential energy conservation standards for thes e products

. Additionally, assuming that the general assertion of the efficiency advocates is accurate

– that ice makers are becoming more popular

– DOE does not anticipate that the energy use of these products is likely to decrease in the absence of the pr omulgation of minimum standards for energy efficiency . As explained in the October 2013 Coverage Proposal, DOE estimates that the national stock of ice makers (including portable ice makers) is between 2 and 8.7 million, corresponding to a national energy consumption of 0.5 to 4 billion kWh, and that sales of these units are between 1.2 to 3.2 million per year. 78 FR 65227

- 65228. These numbers suggest that regulating the energy efficiency of these products is likely to yield significant savings in energy

us e , even if such products have a relatively short lifetime, as suggested by the survey results published in the October 2013 Coverage Proposal. In its simultaneous test procedure rulemaking, DOE has proposed a test procedure for ice makers that would requir e setup similar to that required by the DOE test procedure for commercial ice makers but would measure energy use associated with ice storage as well as icemaking energy, as recommended by NEEA, et al

.
DOE notes that it currently regulates the energy effic iency of automatic commercial ice makers for commercial or industrial use. See 42 U.S.C. 6311(2)(A)(ii). Conversely, ice makers would be consumer products as defined in 42 U.S.C. 6291(1) and would not be covered by the existing regulations for automatic co mmercial ice makers, even if their harvest rate is above 50 pounds per day.

DOE also notes that it has observed a range of ice maker efficiencies among products available on the market, indicating that efficiency improvements for such products are feasible and justifiable. F urther details can be found in c hapter 5 of this TSD.

Other Refrigeration Products 2.3.2.8

In the Framework Document, DOE also requested comment on the nature and availability of refrigeration products, other than ice makers, that are not curren tly regulated under existing standards.

The joint efficiency advocates commented that, overall, the October 2013 Coverage Proposal revealed a large potential for energy savings for refrigeration products that are not2

- 18 currently covered by standards and encouraged DOE to establish test procedures and standards for these products. (JAC , No. 17 at p. 1 )

AHAM commented that DOE should not regulate products with low production volumes and/or which use small amounts of energy annually because the potential ene rgy savings will not outweigh the burden associated with regulating those products. (AHAM, No. 9 at p. 1, 2) Specifically, AHAM noted that products using DC electricity and other miscellaneous refrigeration products represent insignificant potential for en ergy savings. (AHAM, No. 9 at pp. 6

- 7; AHAM, No. 15 at p. 44)

U

- Line stated that there are no additional refrigeration products that should be regulated with energy conservation standards and commented that products that require different test procedures should be regulated using separate product classes. ( U

- L ine, No. 14 at p. 3) However, other interested parties suggested that DOE should extend coverage to refrigeration products with external compressors or condensers. ( NEEA, et al.

, No. 10 at pp. 2

- 3; JA C, No. 11 at pp. 2

- 3) EarthJustice specifically requested that products with removable, compressor

- based, self

contained cooling units that mount on top of refrigeration cabinets should be considered , and the joint efficiency advocates added in response to the October 2013 Coverage Proposal that such products may use significantly more energy than comparable conventional refrigeration products . (EJ, No. 15 at p. 38 , JAC , No. 17 at pp. 1

- 2 ) GE claimed that existing coverage authority should already extend to products with removable cooling systems, pointing out that, although the statute indicates that the compressor and condenser must be an integral part of the cabinet assembly, it does not indicate that they must be permanently attached. (GE, No. 15 at pp. 38

- 39) True commented that refrigeration products of this type have been available in the commercial sector for a long time and can now be found in the residential sector. ( True , No. 15 at p. 41) While efficiency advocates noted that the market for such pr oducts is small, they urged DOE to consider regulating them to prevent manufacturers from circumventing regulation s

. (JAC, No. 11 at pp. 2

- 3) True commented that wine cellars, which are walk

- in cabinets that typically use remote refrigeration systems , are more common in residential applications and designed differently than commercial wine chillers . ( True , No. 15 at pp. 56

- 57)

DOE notes that refrigeration products with remote condensers and/or compressors , as well as refrigeration products with detach able cooling systems, are extremely rare in the residential market

– DOE is only aware of one such product , which suggests that it is unlikely that setting standards for these products would lead to significant energy savings. Therefore, DOE is not conside ring regulating these types of products at this time

. However, DOE may consider including such products in its final coverage determination for miscellaneous refrigeration products.

As for True ’s comments regarding wine cellars , DOE does not plan to develo p energy conservation standards for these types of products in the context of this current effort

.2

- 19 Combined Coverage of Miscellaneous Refrigeration Products in a Single 2.3.2.9 Coverage Category
As discussed in section 2.3.2.1, some refrigeration products use thermoelectric or absorption refrigeration technology to co ol their compartments. In the Framework Document, DOE presented two options to establish energy conservation standards for thermoelectric products.

The first option was to establish standards and a test procedure for vapor compression wine chillers under DOE’s existing authority for refrigerators in EPCA (42 U.S.C. 6292 (a)(1)) by modifying the definitions for “refrigerator” and/or “electric refrigerator.” DOE would then establish a separate covera ge category for thermoelectric products under the provisions of 42 U.S.C. 6292(a)(20) (“Any other type of consumer product which the Secretary classifies as a covered product under subsection (b) of this section.”) , which would require a determination that such coverage is necessary or appropriate to carry out the purposes of EPCA and that the annual
per

- household energy use of the product is likely to exceed 100 kWh. 42 U.S.C. 6292(b)(1)

. The second option was to establish coverage for all miscellaneous refrigeration products, including vapor

- compression

, thermoelectric, and absorption

- based products, under 42 U.S.C. 6292(a)(20). This would necessitate a similar determination that such cove rage is necessary or appropriate to carry out the purposes of EPCA and that the annual per

- household energy use of the product is likely to exceed 100 kWh. 42 U.S.C. 6292(b)(1).

In either case

, EPCA specifies additional requirements to consider before DOE can establish energy conservation standards for newly

- covered products. Under 42 U.S.C. 6295(l)(1)

, DOE may prescribe an energy conservation standard for a newly

- covered product if : (a) the average per household energy use within the United States by the p roduct exceeds 150 kWh for any 12

- month period ending before the determination; (b) the aggregate household energy use within the United States by the product exceeded 4.2 billion kWh during the same 12

- month period; (c) substantial improvement in the ener gy efficiency of products of such type (or class) is technologically feasible; and (d) the application of a labeling rule under 42 U.S.C. 6294 for the product is not likely to be sufficient to induce manufacturers to produce, and consumers and other persons to purchase products of that type which achieve the maximum energy efficiency which is technologically feasible and economically justified

.
In the Framewor k Document, DOE requested comment on these options for establishing coverage and energy conservation standards for wine chillers.

E fficiency advocates cited the absence of any claims of DOE pre

- emption of the California wine chiller standards as proof that the EPCA authority to cover refrigerators does not extend to wine chillers. Rather, efficiency advocates argued that wine chillers should instead be covered in their own product category. (JAC, No. 11 at p. 2)2

- 20 The CAIOUs, along with NEEA and NPCC, further commented that DOE should thoroughly evaluate the number of wine chillers installed nationally, segregated by refrigeration technology and their energy use, to determine if the 4.2 billion kWh threshold for establishing energy conservation standards can b e achieved. (CAIOUs, No. 13 at p. 2; NEEA, et al.

, No. 10 at p. 1) Efficiency advocates also believe that the most effective means to cover miscellaneous refrigeration products and to meet this threshold could be to combine the broad range of product types into a new product category with vapor compression wine chillers. ( Graven , No. 6 at p. 1; JAC, No. 11 at p. 2; NEEA, et al.

, No. 10 at p. 2; EJ, No. 15 at pp. 19

- 20, 36) ASAP supported coverage of the broadest possible range of products, including those w ith remote compressors and condensers. (ASAP, No. 15 at p. 23)

U

- Line commented that DOE may be using inaccurate, inflated values of unit energy consumption (UEC) in order to justify jurisdiction to issue a rule. ( U

- Line , No. 14 at p. 2)

In the October 201 3 Coverage Proposal, DOE proposed to select the second option described above and create a single coverage category for all miscellaneous refrigeration products not currently covered under EPCA as a refrigerator, refrigerator

- freezer, or freezer

, which inc lud es wine chillers, all thermoelectric and absorption refrigeration products, hybrid refrigeration products, and ice makers. In this proposal, DOE provided evidence that such a decision would meet the coverage requirements of 42 U.S.C. 6292(a)(20) as well as the requirements for establishing energy conservation standards, as outlined in 42 U.S.C. 6295 (l)(1)

. In response to the October 2013 Coverage Proposal, AHAM commented that the proposed scope of coverage is too broad and that the only thing that the m iscellaneous refrigeration products included in the coverage proposal have in common is that they are no t currently covered under EPCA. In AHAM’s opinion, this commonality is not sufficient to justify creating a single product category for products which, on their own, would be unlikely to meet EPCA’s threshold requirements or offer the opportunity for significant energy savings, due to their low volumes and energy use. However, AHAM did clarify that it fully supports coverage of wine chillers and hybrid pr oducts in this rulemaking. (AHAM, No. 15 at p. 2) Finally, in response to the October 2013 Coverage Proposal, AHAM commented that DOE’s role is to establish coverage for products only if those products meet EPCA’s statutory requirements and that coverage is not designed to dictate shifts in technologies. In AHAM’s opinion, thermoelectric and absorption refrigeration products would never meet EPCA’s statutory requirements if they were not grouped into a larger product category

. AHAM considers the creation of a single coverage category inappropriate because such a process does not consider inherent differences in design and functionality and could therefore cause products with specific consumer benefits to be pushed out of the market. (AHAM, No. 15 at p. 3)

Whirlpool commented in response to the October 2013 Coverage Proposal that it opposed the inclusion of ice makers in the scope of this rulemaking because they have significantly different functionality than the other miscellaneous refrigeration products, all of which provide food or beverage storage. Moreov er, while the other products in this rulemaking can be tested in2

- 21 a way that measures the energy required to maintain a volume of space at a specific temperature, ice makers must be tested in a dramatically different way that measures the energy required to produce a certain weight of ice. Whirlpool concluded that ice makers should be considered products independent of the scope of products addressed in this rulemaking. (Whirlpool, No. 18 at pp. 1

- 2)

In response to AHAM and Whirlpool, DOE tentatively conclud es that the products under consideration are all similar in that they utilize refrigeration, have a similar insulat ed “box” construction, and that their function, at least in part , includes cool or cold storage.

Contrary to the claims of efficiency advocat es, DOE maintains that the existing EPCA authority to cover refrigerators could be extended to vapor compression wine chillers by modifying the definition for refrigerator found in 10 CFR 430.2. However, as described in the Test Procedure NOPR, DOE chose i nstead to propose establishment of coverage for vapor compression wine chillers as part of a new product category. DOE proposed to cover all miscellaneous refrigeration products under a single new combined category, consistent with the recommendation of ef ficiency advocates. Such products would include vapor compression wine chillers, thermoelectric wine chillers, thermoelectric refrigerators, absorption refrigerators, hybrid refrigeration products, and ice makers.

In the October 2013 Coverage Proposal, DO E evaluated whether these products, in aggregate, would meet the EPCA criteria as newly covered products. DOE tentatively concluded that the average annual per household energy use for miscellaneous refrigeration products exceed s the 100 kWh threshold set by EPCA. Moreover, DOE tentatively concluded that (a) the average annual per household energy use for miscellaneous refrigeration products exceed s 1 5 0 kWh , and (b) the aggregate annual national energy use of these products , estim ated as 9.9 billion kWh, exceeds 4.2 billion kWh

, two threshold s set by EPCA for establishing energy conservation standards for newly

- covered products. DOE’s development of these estimates is described in more detail in the October 2013 Coverage Proposal. 78 FR 65228 (Oct

. 31, 2013) . DOE notes that these energy use estimates differ slightly from the estimates presented in the Framework Document and welcomes data that might improve its understanding about the aggregate energy consumption of these products. D OE’s approach to its analysis as presented in the preliminary TSD is consistent with the conclusion, expressed in the October 2013 Coverage Proposal, that these products can be combined in a single coverage category

. DOE will indicate its final decisions o n the topic in a final coverage determination.

2.3.3 Product Classes
When evaluating and establishing energy conservation standards, DOE generally divides covered products into product classes by the type of energy used, capacity, or other performance

related f eatures that affect efficiency. Different energy conservation standards are prescribed for different product classes. (42 U.S.C. 6295(q)).2

- 22 In the Framework Document, DOE identified two potential product classes for wine chillers based on the existing CEC regulation s : wine chillers with manual defrost and wine chillers with automatic defrost. DOE questioned whether wine chillers that employ manual defrost are still manufactured and sold

. Additionally, DOE sought comment on solid

- door products that would fit the definitions of wine chillers in order to determine their prevalence and whether the efficiency impact and consumer utility of a transparent door warranted a separate class.

Most i nterested parties supported use of the CEC product class es . AHAM encouraged DOE to adopt the CEC standards, which have separate product classes for manual and automatic defrost wine chillers and do not differentiate based on door type. (AHAM, No. 9 at pp. 7

- 8; AHAM, No. 15 at p. 76) AHAM further commented that DOE should set efficiency levels that are technologically feasible for all door types, adding that products with transparent doors likely represent the majority of products on the market. (AHAM, No. 9 at p. 8) As evidence that manual defrost products exist, GE commented that the CEC database lists five products as having manual defrost out of a total of 200, although this database does not reflect sales quantities of these products. (GE, No. 15 at pp. 76

- 77) In addition, GE noted that most wine chillers with automatic defrost do not employ active heating for defrost , due to their warm compartment temperatures and low compressor run times, and instead use off

- cycle defrost. (GE, No. 15 at p. 78) Sanyo al so commented that some wine chillers use heaters for defrost and/or the prevention of condensation ( i.e., anti

- sweat heaters). (Sanyo, No. 12 at p. 2) As an alternative to dividing product classes by defrost or door type, U

- Line suggested that DOE create a single group of product classes for products that cannot achieve temperatures below 39 °F, rather than separate product classes for products used for different purposes ( e.g., storage of wine versus other beverages). ( U

- Line , No. 14 at p. 2)

DOE is aware that wine chillers with solid doors do exist, though such doors are typically sold as accessories and are rare. DOE also notes that the energy consumption of a wine chiller with a solid door should be significantly lower than that of an otherwise identical wine chiller with a glass door due to the low thermal resistivity of glass compared with an insulated solid door ; therefore, any energy conservation standard that is feasible for units with glass doors should also be feasible for units with solid doors. B ased upon the relatively small number of solid door wine chillers on the market , DOE believes that a separate standard for such products would be unlikely to result in significant energy savings and proposes not to differentiate wine chiller product classe s based on door type.

DOE is also aware that the CEC database lists a small number of manual defrost wine chillers . However, DOE found that all but one of the manual defrost wine chillers in the CEC database are no longer for sale; additionally , it was not possible to confirm using publicly available information that the remaining unit did indeed use manual defrost. Moreover, as GE notes, the majority of automatic defrost wine chillers employ off

- cycle defrost . This type of defrost consumes no extra energy and is equivalent to manual defrost with respect to energy consumption . DOE agrees with Sanyo that some wine chillers use active heat defrost and is2

- 23 aware of at least one such unit. Based on testing of this unit, as described further in Chapter 5 of this TSD, DOE tentatively determined that its active defrost feature accounted for approximately three percent of its total energy use, thus indicating that active defrost does represent an increase in energy use. However, because of the modest energy use impact and because available data suggest that active defrost units comprise a small portion of the wine chiller market, DOE is not differentiating among wine chiller product classes based on defrost type. In stead, DOE is considering establish ing a single product class for products that cannot achieve temperatures below 39 °F.

As described further in the Test Procedure NOPR and Chapter 3 of this TSD, this single product class would comprise both vapor

- compress ion and non

- compressor cooled cabinets, because DOE has determined that non

- compressor cooled cabinets provide the same consumer utility at a lower efficiency compared to vapor

- compression cooled cabinets.

2.3.4 Market Asse s sment
As part of the market and techno logy assessment, DOE developed information that provides an overall picture of the market for the products considered, including the nature of the products, market characteristics, and industry structure. DOE collected quantitative and qualitative informat ion, primarily from publicly available sources. Industry publications, trade journals, government agencies, and trade organizations provided the bulk of the information, including: (1) manufacturers and their market shares; (2) shipments by product type; ( 3) product information; and (4) industry trends. DOE also interviewed manufacturers. The analyses developed as part of the market assessment are described in chapter 3 of the TSD.

In the Framework Document, DOE outlined its plan to qualitatively and quanti tatively characterize the structure of the miscellaneous refrigeration products industries and markets. DOE sought input that would contribute to the market assessment for the products considered in this rulemaking. However, DOE did not receive any comment on the market assessment.

2.3.5 Technology Assessment
As part of the technology assessment, DOE developed a list of technologies to consider for improving the efficiency of miscellaneous refrigeration products. DOE then removed technologies that would not be l ikely to change or affect the energy efficiency of these products if DOE were to apply the same testing approach that it recently proposed. Chapter 3 of the TSD includes the detailed list of all technology options DOE identified for potential consideration in this rulemaking. DOE sought comment on the preliminary technology options identified in the Framework Document, such as improved insulation or compressor efficiency, and whether there were other technology options DOE should consider in i ts analysis.

Some interested parties provided comments on technology option s for cabinet lighting

. GE stated that if DOE adopts a test procedure that includes lighting energy use, such as in the2

- 24 Canadian Standards Association (CSA) test procedure, improved lighting technologies should be considered. (GE, No. 15 at p. 80) JAC commented that DOE should consider improved efficacy of lighting as a technology option, and True specifically suggested that LED lighting be considered. (JAC, No. 11 at p. 4; True , No. 15 at p. 79)

Other interested parties, such as the Refrigeration Service Engineers Society (RSES), recommended that DOE consider alternative refrigerants as technology options. RSES believes alternative refrigerants, such as isobutane, propane, and so on, have better efficiency than HFC

134a. (RSES, No. 15 at p. 27)

U

- Line expressed concern that DOE may set standards based on technologies covered by a patent or trade secret or supplied by only one vendor. U

- Line stated that this would have an adverse impac t on small manufacturers with limited resources and may lead to unusually high cost increases that would not be supported by the market. ( U

- Line , No. 14 at p. 4)

DOE’s proposed test procedure would not measure lighting energy use ; therefore, DOE has not co nsider ed improved lighting efficiency as a technology option.

DOE agrees with RSES that some alternative refrigerants are more efficient than R

- 134a; therefore, it originally included isobutane as a technology option to consider

. The EPA Significant New Al ternatives Program (SNAP) allows the use of istobutane in refrigeration products, provided the refrigerant charge is no more than 57 grams per refrigeration circuit. 75 FR 78832 (Dec. 20, 2011). DOE is also aware that the EPA has recently propos ed allowing the use of propane in refrigeration products for residential applications . 79 FR 38811 (July 9, 2 014 ). However, as described further in Chapter 4, DOE ultimately screened out this technology option because compressors for these alternative refrigerants ar e not currently available in the voltage and capacity range relevant to the products under consideration.

In response to U

- Line’s comment, DOE will consider standards that are achievable. While a proprietary technolog y option may be one way to achieve a given level of efficiency that DOE is considering, so long as other means are available to achieve t hat level, DOE would not necessarily screen out that proprietary technology from its analysis when considering potential standards to propose. However, DOE would consider the impact of any lessening of competition that is likely to result from the imposition of energy conservation standards; consequently, it cannot set standards based solely on technology options that are patented or in limited supply. DOE

, ultimately

, did not consider any proprietary technologies in its analysis.

2.3.6 Test Procedures
The Code of Federal Regulations (CFR) details the DOE test procedures for refrigeration products. The test procedures for product s manufactured starting in 2014 appear in Appendix A (for refrigerators and refrigerator

- freezers) and Appendix B (for freezers).2

- 25 In the Framework Document, DOE recognized that the current test procedures for refrigeration products do not account for prod ucts that do not meet the current definitio n s for electric refrigerators , electric refrigerator

- freezers, or freezers . ( See, for example, appendix A to subpart B of 10 CFR 430) In particular, the standardized compartment temperatures specified in the test procedures are significantly lower than those typical for wine chillers, beverage coolers, or beverage centers.

DOE identified the following key issues for consideration when developing test procedures for miscellaneous refrigeration products and requeste d comment on whether additional issues should be addressed in the DOE’s analysis: (1) establishing definitions for product categories and/or compartment types to clarify which products are subject to which test requirements; (2) establishing standardized c ompartment temperatures that are appropriate for each identified product categor y ; (3) developing test procedures for products and compartments not designed to achieve fresh food storage temperatures ; (4) potential consideration of test procedures for comm ercial wine chillers; (5) applying a usage adjustment factor of 0.85 to account for the fact that miscellaneous refrigeration products may have fewer door openings than household refrigerators or may not be plugged in at all times ; and (6) potential consid eration of additional test procedure requirements to address standby and/or off mode energy use.

In order to address many of the test procedure issues raised by DOE in the Framework Document, AHAM and Sanyo stated that DOE should adopt the CEC 's test proce dure for wine chillers. (AHAM, No. 9 at pp. 1

- 2, 7; Sanyo, No. 12 at pp. 1

- 2) Whirlpool agreed in its response to the October 2013 Coverage Proposal. (Whirlpool , No. 18 at p. 2 ) AHAM specifically noted that the existing California test procedure captures s tandby and off mode energy use, and no test procedure modifications would be required to comply with the Energy Independence and Security Act (EISA) requirements for standby/off modes (AHAM, No. 9 at p. 7; AHAM, No. 15 at p. 69) NEAA and NPCC agreed that t he test procedures should not require separate measurements and metrics for standby energy use. ( NEEA, et al.

, No. 10 at p. 4) Alternatively, GE commented that Canada's test procedure for wine chillers has a provision that differs from the California test procedure in that units with a manual light switch must be tested twice: once with the light on and once with the light off. The results of these two tests are then averaged to yield the final energy test result . (GE, No. 15 at p. 67) GE and JAC agreed tha t the Canadian test procedure is probably more representative and should be adopted by DOE, as it might drive manufacturers to improve their designs to include an automatic light feature. (GE, No. 15 at p. 67; JAC, No. 11 at p. 4)

Another potential test pr ocedure issue identified by the CAIOUs was the use of multiple zones in wine chillers to allow for separate areas of temperature control. These zones address the market need for storage of different types of wines at different temperatures. The CAIOUs
sugg ested two possible approaches for the test procedure: (a) setting each zone at a different temperature, or (b) setting compartment temperature controls at their lowest temperature, or in their maximum energy use position, as is done in the test procedure f or refrigerators and refrigerator

- freezers for special compartments. (CAIOUs, No. 13 at p. 3) The CAIOUs also2

- 26 commented that there are some wine chiller products that have separate humidity controls, adding that any wine chiller test procedure should addre ss the energy use associated with this feature. Such products may use compressor heat or evaporator fan airflow to re

- evaporate condensed water vapor, running the compressor and/or fan as needed to control humidity. (CAIOUs, No. 13 at p. 3)

Manufacturers a lso had general comments on the potential standardized compartment temperature for miscellaneous refrigeration products. Sanyo commented that while 55 °F is a reasonable target temperature for long

- term storage of wine, ideal serving temperatures can be di fferent: mid

- 60s °F for red wines and mid

- 40s °F for white wines, for example. (Sanyo, No. 12 at p. 2) GE noted that testing for near

- freezers could involve extrapolating the results of two tests to the standardized temperature of 0 °F, if the lowest measu red compartment temperature is warmer than 0 °F. (GE, No. 15 at pp. 46

- 47) Further, GE commented that the definition for refrigerator

- freezer indicates that the fresh food compartment includes storage space at a temperature above 8 °F, not just above 32 °F

. For example, the icemaking compartment of a bottom

- mount refrigerator with through

- the

- door ice service is considered to be part of the fresh food compartment, even though it is in the 20 °F range when storing ice. (GE, No. 15 at pp. 50

- 51)

Regarding a s uggested usage adjustment factor, GE and Sanyo commented that the expected frequency of door openings for wine chillers is similar to that of upright freezers, whose test procedure requires a 0.85 correction factor because the doors of upright freezers are opened less frequently than refrigerator door s. (GE, No. 15 at pp. 66

- 67; Sanyo, No. 12 at p. 2) Although NEEA and NPCC agree that correction factors will likely be needed to ensure that the test procedure is consistent with the representative average use cycle of a product, they indicated that additional information must be collected before comments can be made recommending specific correction factors. ( NEEA, et al., No. 10 at p. 4)

Interested parties also emphasized that test procedures should be tailored to the specific product. AHAM commented that there may have to be differences in test procedures for wine chillers and beverage centers, but did not provide specific recommendation s. (AHAM, No. 9 at p. 3) Sanyo noted that there are no test procedures specifically tailored to hybrid products, because the existing test procedures for refrigerators and refrigerator

- freezers do not measure energy use in a way that is representative of t hese products. (Sanyo, No. 12 at p. 2) Further, AHAM and Sanyo stated that a clear definition for "compartment" should be developed, because there are different ways to achieve different temperature levels. Some hybrid wine storage products use heaters to maintain a wine compartment temperature above a minimum threshold

, resulting in greater energy use than non

- hybrids. (AHAM, No. 9 at p. 5; Sanyo, No. 12 at p. 2)

True noted that the most recent test procedure for commercial refrigeration equipment already addresses products that do not reach the standardized temperatures specified for other refrigeration equipment classes, such as the 38 °F storage temperature specified for commercial refrigerators. Th e test procedure for commercial refrigeration equipment does not distinguish2

- 27 between commercial wine chillers and similar products , such as equipment for flowers and chocolate; all such products are rated as though they are capable of operating at the standardized temperature, even though they are only required to be tested at the lowest internal temperature s that the y can achieve. ( True , No. 15 at p. 58

- 59)

In response to the October 2013 Coverage Proposal, Whirlpool and Hoshizaki both commented that they were not aware of any existing test procedures for ice makers. (Hoshizaki

, No. 16 at p. 1; Whirlpool , No. 18 at p. 2 )

DOE agrees with stakeholders that the existing C EC test procedure for wine chillers addresses many of the critical issues that DOE considered in developing a test procedure proposal for such p roducts. Although DOE acknowledges that the Canadian test procedure for wine chillers includes a provision for measuring light bulb energy use, survey data obtained by DOE indicates that testing with the lights off would be more representative of field use than testing with the lights on or using the average of the lights

- on and lights

- off tests followed in the Canadian test

. 1 Moreover, the Canadian test procedu re adds significant burden by requiring each product to be tested twice, on ce with the light switch on and once with it off . Therefore, the DOE proposal calls for only one test, with the light switch off, consistent with the CEC test procedure

.
DOE is awar e that many wine chillers have multiple zones with independent temperature controls. However, based on DOE’s review of available products, it is rare that such multi

- zone wine chillers have different temperature ranges for each compartment; typically, each zone has an identical temperature range, thus giving the customer the freedom to decide where to store each type of wine. Based on the available information, DOE does not agree that testing wine chillers over a range of standardized compartment temperatur es would improve the accuracy of predicting average field energy use sufficiently to justify the added complication of defining different cellar compartment types , since it is expected that the average compartment temperature used in the field will be near the 55 ° F standardized temperature proposed for the test procedure

. Moreover, although DOE is aware that wines are served at a wide variety of temperatures, it is important for DOE to select a single standardized temperature for specific compartment type s to reduce test burden and complication. Therefore , as suggested by Sanyo

, DOE propose d to use 55 °F, the temperature utilized by the C EC and Canadian test procedures, as the standardized temperature for all wine and beverage compartments, as well as all other compartments that are classified as “ cooled cabinets ,” based on the compartment temperatures described earlier in this chapter . Additionally, DOE i s not aware of any prod ucts whose marketing indicates an ability to separately control humidity using the mechanisms described by the CAIOUs. DOE did not directly observe such mechanisms in any of the products that it

reverse

- engineered.

DOE is aware that the C EC test procedur e for wine chillers uses an adjustment factor of 0.85 based upon an assumed door opening frequency similar to that of upright freezers. However, DOE is considering adopting an adjustment factor of 0.55 for vapor compression2

- 28 cooled cabinets , as explained in the Test Procedure NOPR , because DOE’s review of available information suggests that this is a more representative factor. For thermoelectric and absorption wine chillers, DOE propos ed a 72 ° F ambient temperature and using an adjustment factor equal to 1. 2

. As explained in the T est P rocedure NOPR, DOE feels that these test conditions are necessary for non

- compressor cooled cabinets to obtain a result that is representative of field
energy use.
In the absence of specific recommendations regarding test proce dure differences for wine chillers and beverage centers, DOE has not distinguished between these product types in its Test Procedure NOPR , as explained in Section 2.3.1 . DOE note s , however, that beverage centers that achieve refrigerator temperatures, i.e.
, temperatures below 39 ° F, would be classified and tested as refrigerators. As for the issues raised by Sanyo, t he T est P rocedure NOPR proposed specific test procedures to address hybrid products along with a means to evaluate compartments for the purpose of classifying a given product ’s status

.
DOE is aware that products can feature many permutations of compartments that achieve different temperature levels. However, because the term “compartment” is used in several different ways in the test procedure, rather than defining the term outright, DOE proposed adding to the test procedure a method for evaluati ng spaces within a cabinet and their temperature levels so that the product’s status ( e.g. , as a refrigerator or cooled cabinet) can be determined. Also , the Test Procedure NOPR proposed to establish a definition for “cellar compartment” based on a volume’ s designed storage temperature range. With definitions for cellar compartment, fresh food compartments, and freezer compartments, test facilities would have clear guidance on how to define volumes within a cabinet based on designed temperature ranges.

DOE is also aware of products that use heaters to maintain wine compartment temperature above minimum thresholds. However, DOE did not propose to make specific provisions for products of this nature because it believed that the two setting test method would ad equately account for operation that consumers would likely encounter. If heaters initiate during any portion of the proposed energy test, the test period would account for that added
energy.

DOE agrees that there is currently no industry test procedure ava ilable for ice makers, although it is aware that some manufacturers use the automatic commercial ice maker test procedure to rate their residential products. Therefore, DOE proposed a test procedure for these products in the T est P rocedure NOPR

.
DOE agrees with True that the most recent version of the test procedure for commercial refrigeration equipment (CRE) accounts for testing equipment that are not designed to hold temperatures as low as 38 °F, although the test procedure does not explicitly mention

co mmercial wine chillers . 10 CFR 431.62

. However, because DOE does not plan to consider commercial wine chillers in this rulemaking (as explained in section 2.3.2.5 ), DOE would not use its commercial refrigeration equipment test procedure for refrigeration products.2

- 29 2.4 SCREENING ANALYSIS
The purpose of the screening analysis is to evaluate the technologies identified in the technology assessment to determine which ones to consider further and which to remove . DOE consulted with industry, technical experts, and other interested parties in developing a list of
energy

- saving technologies for the technology assessment. DOE then applied the screening criteria to determine whi ch technologies were unsuitable for further consideration in this rulemaking. Chapter 4 of the TSD, the screening analysis, contains details about DOE’s screening criteria

, found in Appendix A to subpart C of 10 CFR Part 430 (the “Process Rule”)

. As presen ted in further detail below, the screening analysis examines whether various technologies: (1) are technologically feasible; (2) are practicable to manufacture, install, and service; (3) have an adverse impact on product utility or availability; and (4) ha ve adverse impacts on health and safety. In the engineering analysis, DOE further considers the efficiency

enhancement technologies that it did not eliminate in the screening analysis.

1. Technological feasibility. DOE screens out technologies that are not in corporated in commercially available products or working prototypes.

2. Practicability to manufacture, install, and service. If DOE determines that mass production of a technology in commercial products and reliable installation and servicing of the technol ogy could not be achieved on the scale necessary to serve the relevant market by the time of the compliance date of the standard, it will not consider that technology further.

3. Adverse impacts on product or equipment utility or availability. If DOE determi nes a technology has a significant adverse impact on the utility of the product for significant consumer subgroups or results in the unavailability of any covered product type with performance characteristics (including reliability), features, size, capaci ties, and volumes that are substantially the same as products generally available in the United States at the time, it will not consider that technology further.

4. Adverse impacts on health or safety. If DOE determines that a technology will have significan t adverse impacts on health or safety, it will not consider that technology further.

In the Framework Document, DOE presented a preliminary list of technology options that it proposed to consider and sought input on whether any of these technologies should be screened out based on the four screening criteria described previously. However, DOE did not receive any comment on the screening analysis.2

- 30 2.5 ENGINEERING ANALYSIS
The engineering analysis (chapter 5 of the TSD) establishes the relationship between manufa cturing production cost and efficiency for miscellaneous refrigeration products. This relationship serves as the basis for cost

- benefit calculations in terms of individual consumers, manufacturers, and the Nation. Chapter 5 discusses the product classes an alyzed, representative baseline units, incremental efficiency levels, methodology used to develop manufacturing production costs, cost

- efficiency curves, impact of efficiency improvements on the considered products, and methodology used to extend the analy sis to low

- shipment

- volume product classes. To determine the cost to consumers of miscellaneous refrigeration products at various efficiency levels, DOE estimated manufacturing costs, markups in the distribution chain, installation costs, and maintenance c osts. Efficiency levels for products included in this rulemaking were calculated according to the proposed DOE test procedure s

. In the engineering analysis pertaining to miscellaneous refrigeration products, DOE evaluated a range of product efficiency leve ls and associated manufacturing production costs (MPCs) , which it converted to manufacturer selling prices (MSPs) using information regarding typical markups . The purpose of the analysis is to estimate the incremental increase to selling prices that would result from increasing efficiency levels above the baseline level in each product class. The engineering analysis considers technologies not eliminated in the screening analysis. The LCC analysis uses the cost

- efficiency relationships developed in the engi neering analysis. In the Framework Document, DOE presented plans for its engineering analysis and sought input from stakeholders on whether the equations for maximum annual energy consumption from the California and Canadian regulations are appropriate to represent the performance of baseline wine chillers. DOE also requested feedback on the use of a design

- option approach based on energy modeling and some energy testing to determine the relationship between manufacturer cost and annual energy consumption. Additionally, DOE sought comment on any proprietary designs of which it should be aware. As explained in the Framework Document, DOE will consider a proprietary design in subsequent analyses only if the technology does not represent a unique path to a give n efficiency level. If the proprietary design is the only approach available to achieve a given efficiency level, then DOE will eliminate the efficiency level from further analysis. DOE will reject a standard level that can only be met with a single propri etary technology, because it could result in an anticompetitive market. This principle has been consistently applied in past DOE rulemakings. However, if a given energy efficiency level can be achieved by a number of design approaches, including a propriet ary design, DOE will continue to examine that efficiency level, in spite of the proprietary nature of that one design.

In the Framework Document, DOE also noted that the maximum efficiency levels available in current products may not necessarily correspond to the max

- tech levels. Maximum

available

- efficiency models may not incorporate all possible design options for increasing efficiency and, therefore, may not represent the true max

- tech level. It is also possible that some of the design options that have met the screening criteria ( i.e., passed the screening analysis) may not yet be commercially available and, therefore, would not be found in the most efficient2

- 31 products currently available . Given this potential dichotomy between max

- tech and available maximum efficiency levels, and DOE’s obligation to analyze max

- tech levels, DOE sought stakeholder input to determine appropriate max

- tech efficiency levels. (42 U.S.C. 6295(p)(2))

It is not practicable for DOE to evaluate every product class or capacity range on the market, as the possible number of permutations is enormous. Instead, DOE proposed to evaluate several representative products in its reverse

- engineering analysis that represent the majority of shipments and to then extrapolate the results to a ll products. DOE sought comment on what to consider when selecting representative products and how to extrapolate its analyses to the full range of available products.

Interested parties agreed with DOE’s approach to consider design options that may not be available in today’s maximum efficiency products. Specifically, JAC and ASAP cited the refrigeration product rulemaking (76 FR 57516) , in which DOE used energy modeling to establish maximum technology levels that were more efficient than the maximum avail able efficiency levels but remained within the constraints of technological feasibility. (JAC, No. 11 at p. 4; ASAP, No. 15 at p. 85) U

- Line requested that DOE work with AHAM to develop representative cost

- effectiveness data and to consider upper bounds in the incremental cost for achieving higher efficiency levels. ( U

- Line , No. 14 at p. 4) U

- Line also requested that DOE separately assess incremental costs to achieve higher efficiency for smaller manufacturers, because, unlike larger manufacturers with over seas production, these manufacturers pay higher costs for components. ( U

- Line , No. 14 at p. 6)

Broadly, manufacturers and their representatives commented that DOE should adopt the existing energy conservation standards currently in place in California. (AH AM, No. 9 at pp. 1

- 2, 8

- 10; Sanyo, No. 12 at p. 1; U

- Line , No. 14 at p. 2) Sanyo also commented that DOE standards should be harmonized with Canadian standards in the long run. (Sanyo, No. 12 at p. 1)

DOE notes EPCA requires the adoption of standards that maximize energy efficiency and

are also technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (o)(3)(B), 42 U.S.C. 6313(d)(4)) Therefore, it cannot adopt either set of standards that California and Canada use without first analy zing the projected impacts that would follow. In doing so, DOE must identify the standard levels that would a chieve the maximum improvement in energy efficiency and be both technologically feasible and economically justified

. As part of the engineering ana lysis, this means that high cost or poor cost

- effectiveness are not considered when evaluating the technical feasibility of a given technology . See also 10 CFR Part 430, Subpart C, Appendix A (detailing DOE’s analytical process when evaluating potential en ergy efficiency standards)

. DOE comprehensively evaluates whether a given efficiency level i s economically justified as part of its separate economic analysis.

In response to U

- Line’s suggestion that DOE work with AHAM, DOE encourages AHAM and manufacturers to collaboratively develop cost

- effectiveness data

– such data would be considered by DOE in its analysis. DOE notes that it has already conducted interviews with several manufacturers . These interviews provided manufacturers with the opport unity to review2

- 32 initial cost

- efficiency information . DOE considered their responses when developing its preliminary analysis.

In response to U

- Line’s comments about small manufacturers, generally the cost

efficiency relationship developed in the engineer ing analysis is more representative of large

scale manufacturers due to its basis on industry averages. However, DOE also investigates the impact of energy conservation standards on small manufacturers in its MIA. DOE generally assesses the conversion cost associated with implementing standards for small manufacturers as part of a manufacturer subgroup analysis, compares this cost with those experienced by large manufacturers, and considers the differential impacts when selecting standard levels. To the
ext ent that the higher costs of products sold by small manufacturers would cause efficiency standards to have a disproportionate impact on these manufacturers, DOE would consider this factor as part of the MIA. However, the cost

- efficiency curves developed as part of the engineering analysis would be developed to be representative of the overall industry, since this more properly represents the impact on consumers.

As mentioned in section 2.3.2.2 , refrigerators using refrigeration technologies other than vapor compression appear unable to maintain 39 ° F storage temperatures when operating in the 90 ° F ambient conditions used for refrigerator testing. To address this iss ue, DOE may consider implementing an adjustment in the maximum allowable energy use as part of the energy conservation standard for such products . This adjustment would compensate for the fact that such products would effectively be rated at a condition th at theoretically should require less energy use than operation at the standardized temperature. This standard adjustment factor, depicted in Equation 1 , would adjust the maximum allowable energy use downward so that the standard’s stringency would increase as the product’s coldest temperature increases.

Equation 1

Standard Adjustment Factor = (90 °F

– T Test_Cold )/(90 °F

– 39 ° F)

Where: T Test_Cold indicates the fresh food compartment temperature achieved by a non

compressor refrigerator in the cold setting during an energy test. When a group of units of the same model are tested, e.g. , for certification purposes, this value would be the average measured for the group.

DOE used this standard adjustment factor to develop its efficiency levels for non

compressor refrigerators, as described in c hapter 5 of this TSD. DOE requests comment on this approach

— see the TSD executive summ ary.

2.6 MARKUPS TO DETERMINE PRODUCT PRICE

DOE uses manufacturer

- to

- customer markups to convert the manufacturer selling price estimates from the engineering analysis to retail prices, which are then used in the LCC and PBP2

- 33 analysis and the manufacturer impac t analysis. Retail prices are necessary for the baseline efficiency level and all other efficiency levels under consideration.

As part of the markup s analysis , DOE identif ied relevant product distribution channels. In the Framework Document, DOE noted tha t the vast majority of appliances, including miscellaneous refrigeration products, are sold in a manufacturer

- to

- consumer distribution channel consisting of three parties: (1) the manufacturers producing the products; (2) retailers purchasing the products from manufacturers and selling them to consumers; and (3) the consumers that purchase the products.

One manufacturer expressed concern regarding DOE’s markups analysis. U

- Line stated that the standard process DOE uses to calculate mark

- ups would penalize smaller manufacturers, especially those who se distribution system includes a distributor before the retailer . ( U

- Line , No. 14 at p p . 4

- 5) While DOE recognizes that distribution systems can vary between manufacturers, DOE found evidence that the vast maj ori ty of sold products use a distribution system in which the manufacturer sells directly to retailers . As a result, DOE has structured its analysis using this form of distribution system.

2.7 ENERGY USE ANALYSIS
The purpose of the energy use determination is to establish the annual energy consumption of a given type of appliance and assess the energy

- savings potential of different product efficiencies. DOE uses the annual energy consumption and energy

- savings pote ntial in the LCC and PBP analysis to establish the consumer operating savings of considered efficiency levels.

In the Framework Document, DOE sought comment on its proposed approach of estimating the annual energy consumption of miscellaneous refrigeration products based on a combination of sales data from the market research firm NPD Group, information from the CEC model data base , and the C EC ’s energy conservation standards equations for establishing maximum energy use. Additionally, DOE sought comment on the viability of using in situ field measurements of energy use as a proposed basis for characterizing the product’s energy consumption as well as information on potential data sources to aid in this characterization.

AHAM strongly opposed DOE relying on in situ field measurements as a means to characterize energy use. (AHAM, No. 9 at p. 8; AHAM, No. 15 at pp. 90

- 91) However, EarthJustice encouraged DOE to use in situ field measurements of energy use. (JAC, No. 11 at p. 4) DOE seeks to estimate typical ene rgy use of products in the field, and believes that in situ field measurements of miscellaneous refrigeration products in actual use are an appropriate way to help estimate th e energy use of these products . To this end, DOE used a small number of in situ f ield measurements to supplement laboratory tests for determining the typical energy use of these products.2

- 34 Some interested parties were confused about the CEC’s method of calculat ing wine chiller energy use and requested clarification as to whether these calculations actually represent maximum energy use. (GE, No. 15 at p. 94; EJ, No. 15 at p. 92) U

- Line suggested that DOE use a different method for the calculation by (1) specifying test methods f or wine chillers and then (2) testing a broad sample of products. ( U

- Line , No. 14 at p. 5)

The CEC’s method of calculating wine chiller energy use is very similar to DOE’s test procedure for calculating refrigerator energy use, except that it requires a h igher standardized temperature of 55 °F and the application of a 0.85 usage adjustment factor. 3 This method is designed to approximate the energy consumption of a wine chiller as utilized in the field and is not necessarily representative of the maximum po ssible energy consumption of such units. However, the CEC’s wine chiller standard , like DOE’s standards for refrigerators and refrigerator

- freezers

, prescribe s a maximum energy consumption level.

Although DOE was unable to test a broad sample of products, DOE performed laboratory testing and collected data from field measurements and manufacturer websites. These data allowed DOE to adjust the CEC energy use ratings to reflect field energy use for these products.

DOE also asked whether annual energy use is b est characterized with a sensitivity analysis to determine how high and low estimates of energy use might impact the economic feasibility of any amended energy conservation standards.

EarthJustice worried that if DOE used a sensitivity analysis

, the Office of Management and Budget (OMB) may treat the least efficient estimate as the actual estimate of energy use in its analysis of the rule . (EJ, No. 15 at p. 96) DOE was able to collect sufficient energy use data to avoid the need to use a sensitivity analysi s.

DOE also sought comment on the rebound effect, which is the portion of the energy savings resulting from more efficient equipment that may be lost due to consumers purchasing larger or more feature

- laden equipment.

A HAM expressed doubt that the rebound effect exists for appliances

. (AHAM, No. 9 at p. 8 ) DOE was unable to find any evidence to support the existence of a rebound effect for the type of appliance under consideration , so DOE has not included a rebound effect in its analysis.

2.8 LIFE CYCLE COST AND PAYBACK PERIOD A NALYSES

New or amended energy conservation standards usually decrease a product’s operating expenses and increase its initial purchase price. DOE analyzes the net effect of new or amended standards on consumers by evaluating the LCC. To evaluate the net LCC, DOE uses the cost

efficiency relationship derived in the engineering analysis and the energy costs derived from the
energy use analysis . Inputs to the LCC calculation include the installed cost of a product to the2

- 35 consumer (consumer purchase price plus installation cost), operating expenses (energy expenses and maintenance and repair costs), the lifetime of the unit, and a discount rate.

Because the installed cost of a product typically increases while operating costs typically decrea se under new standards, there is a point in time during the life of products having higher

than

- baseline efficiency at which the net operating

- cost savings (in dollars) since the time of purchase is equal to the incremental first cost of purchasing the pro duct , after which the consumer will begin to accrue net cost savings from purchasing the product . The time required for products to reach this cost

- equivalence point is known as the PBP.

Recognizing that several inputs to determining consumer LCC and PBP a re either variable or uncertain, DOE uses Monte Carlo simulation and probability distributions to model both the uncertainty and variability in inputs. DOE uses Microsoft Excel combined with Crystal Ball (a commercially available program) to develop LCC an d PBP spreadsheet models that incorporate both Monte Carlo simulation and probability distributions.

DOE developed samples of individual households that use miscellaneous refrigeration products based on a study that surveyed appliance owners. 1 By developing household samples, DOE was able to calculate the LCC and PBP for each household to account for the variability in energy consumption and electric ity price associated with each household. DOE identified several other input values for estimating the LCC, including product retail prices, discount rates, and product lifetimes. DOE used probability distributions to characterize those input values.

2.8.1 Retail Prices

As described in section 2.6

, DOE used markups to convert the manufacturer selling prices estimated in the engineering analysis to consumer retail prices for the LCC and PBP analysis.

2.8.2 Energy Prices
DOE develop ed estimate s of residential electricity prices for each S tate and the District of Columbia. DOE derived average energy prices from data that are published annually based on EIA Form 861. 4 Those data include, for every utility that serves final consumers : a nnual elect ricity sales in kilowatt

- hours; revenues from electricity sales; and number of customers in the residential, commercial, and industrial sectors. Using these data, DOE was able to assess the variability of energy prices at the regional level for miscellaneo us refrigeration products as part of its preliminary analysis

.

2.8.3 Maintenance, Repair, and Installation Costs
DOE considered any expected changes to maintenance, repair, and installation costs for the miscellaneous refrigeration products covered in this rulem aking. Typically, small incremental2

- 36 changes in product efficiency incur little or no changes in repair and maintenance costs over baseline products. There is a greater probability that equipment with efficiencies that are significantly higher than the base line will incur increased repair and maintenance costs, as such equipment is more likely to incorporate technologies that are not widely available.

AHAM stated that the installation costs are unlikely to vary depending on the efficiency of the product. (AHAM, No. 9 at p. 9; AHAM, No. 15 at p. 101)

DOE agrees with AHAM that more efficient miscellaneous refrigeration products will not incur increased installation costs because the installation of these prod ucts is a relatively straight

- forward process that requires plugging the product into AC mains and, with products such as the ice makers DOE is considering regulating, the connection of a water line

– none of which is likely to change with the adoption of standards . Further, DOE did not find evidence of a change in repair or maintenance costs with a change in efficiency level. Therefore, DOE has not included different installation, maintenance, and repair costs for more efficient products.

2.8.4 Product Lifetime
In preparing the Framework Document, DOE was unable to identify sources to establish a generic wine chiller lifetime

. True stated that the lifetime of wine chillers may be about 5
years , and that consumers would be more likely to replace them rather than r epair them due to their relatively low initial cost . ( True , No. 15 at p. 102)

Since preparing the Framework Document, DOE acquired data from a study that surveyed wine chiller owners. 1 From these data, DOE derived a wine chiller lifetime estimate of approximately 4.3 years, which is consistent with True ’s estimate.

2.8.5 Discount Rates
DOE developed discount rates from estimates of the finance cost that a pplies to purchases of residential appliances. Following accepted principles of financial theory, the finance cost of raising funds to purchase such products can be interpreted as: (1) the financial cost of any debt incurred to purchase products, principal ly interest charges on debt; or (2) the opportunity cost of any equity used to purchase products, principally interest earnings on household equity. For this analysis, DOE developed a distribution of discount rates using data from the Federal Reserve’s Sur vey of Consumer Finances c and other sources.

2.8.6 Distribution of Product Efficiency in the Base Case
To estimate accurately the percentage of consumers who would be affected by a standard at a particular efficiency level, DOE’s LCC and PBP analysis considered the projected

c Website: http://www.federalreserve.gov/econresdata/scf/scfindex.htm2

- 37 distribution of product efficiencies that consumers purchase under the base case (t he case without new energy efficiency standards). DOE relied on a combination of lab testing, field energy measurements, and manufacturer

- reported energy use data to estimate the base

- case efficiency distributions for each product class considered in the L CC and PBP analysis. Chapter 8 of this preliminary TSD provides more detail about DOE’s approach to developing base case efficiency distributions.

2.9 SHIPMENTS ANALYSIS
Shipments forecasts are required for calculat i ng the national impacts of standards (NES

a nd NPV) and to calculate the future cash flows of manufacturers. DOE developed shipments forecasts by analyzing key market drivers for the particular products. In DOE’s shipments model, shipments of products are driven by new construction and stock replace ments.
In the Framework Document, DOE reviewed historical shipments data of cooled cabinets (specifically, wine chillers) from two sources: (1) data provided by AHAM as part of the 2011 refrigerator standards rulemaking (76 FR 57516)

, and (2) sales data f rom the NPD Group. The AHAM shipments data are for the years 2005

- 2007. The NPD Group’s sales data are for the five years spanning 2007

- 2011, and, according to NPD, represent 30 percent to 45 percent of total industry sales. DOE sought additional historica l shipments data from stakeholders as well as comment on which data source, AHAM or NPD, is more representative of historical shipments.

U

- Line was concerned with DOE ’ s use of data from the NPD Group, which could lead to a significant overestimation of the wine chiller market size. ( U

- Line , No. 14 at p. 5) Given U

Line ’s concerns

, DOE derived an estimate of shipments from a study that surveyed cooled cabinet product owners , which provided both stock and lifetime estimates that allowed DOE to estimate averag e shipments)

. 1

DOE considers the impact that standards may have on shipments. U

- Line claimed that the assumptions DOE use s to project changes in shipments due to new standards do not provide an accurate account of the rulemaking impacts. ( U

- L ine, No. 14 at p. 5) DOE recognizes that it is difficult to predict the impact of standards in the marketplace. In light of this difficu lty, DOE performed a literature search and used a simple model of price elasticity based on the change in price due to a standard.

True pointed out that wine chillers can be relatively inexpensive products and surmises that wine chiller sales will increas e in the future. ( True , No. 15 at p. 107) DOE agrees with this assessment and has estimated a constant rate of sales increase for future years.2

- 38 2.10 NATIONAL IMPACT ANAL YSIS
The NIA assesses the NES and the NPV from a national perspective of total consumer
cost s and savings expected to result from new or amended energy conservation standards at specific efficiency levels. DOE determined the NPV and NES for the standard levels considered for the miscellaneous refrigeration product classes analyzed. To make the an alysis more accessible and transparent to all interested parties, DOE prepared a Microsoft Excel spreadsheet that uses typical values (as opposed to probability distributions) as inputs. To assess the effect of input uncertainty on NES and NPV results, DOE has developed its spreadsheet model to conduct sensitivity analyses by running scenario s on specific input variables.

Analyzing the impacts of potential energy conservation standards for miscellaneous refrigeration product s requires comparing projections of U.S. energy consumption both with and without standards

. The forecasts include projections of annual appliance shipments, the annual energy consumption of new appliances, and the pu rchase price of new appliances.

A key component of DOE’s NIA is the ene rgy efficiencies that are forecasted to occur over time for the base case (without new standards) and each of the standards cases. The forecasted efficiencies represent the annual shipment

- weighted energy efficiency of the products under consideration duri ng the forecast period ( i.e. , from the assumed compliance date of a new standard to 30 years after compliance is required).

DOE developed a distribution of effici encies in the base case for 2021 (the assumed compliance date for new standards) for each mis cellaneous refrigeration product class. Because no information was available to suggest a different trend, DOE assumed that the efficiency distribution in the base case would remain the same in future years. In each standards case, a “roll

- up” scenario app roach was applied to establish the efficiency distribution for 2021

. Under the “roll

- up” scenario, DOE assumed: (1) product efficiencies in the base case that do not meet the standard level under consideration would “roll

- up” to meet the new standard level ; and (2) product efficiencies above the standard level under consi deration would not be affected.

2.10.1 National Energy Savings Analysis
The inputs for determining the national energy savings for each product analyzed are: (1) annual energy consumption per unit; (2) shipments; (3) product or equipment stock; (4) national energy consumption; and (5) site

- to

- source conversion factors. DOE calculated the national energy consumption by multiplying the number of units (stock) of each product (by vintage or age) b y the unit energy consumption (also by vintage). Vintage represents the age of the product. DOE calculated annual NES based on the difference in national energy consumption for the base case (without new efficiency standards) and for each higher efficiency standard. DOE estimated energy consumption and savings based on site energy and converted the electricity consumption and savings to source (primary) energy using annual conversion factors derived from the most2

- 39 recent version of the National Energy Modeli ng System (NEMS). Cumulative energy savings are the sum of the NES for each year over the timeframe of the analysis.

DOE has historically presented NES in terms of primary energy savings. On August 18, 2011, DOE published a final statement of policy in the Federal Register announcing its intention to use full

- fuel

- cycle (FFC) measures of energy use and greenhouse gas and other emissions in the national impact analyses and emissions analyses included in future energy conse rvation standards rulemakings. 76 FR 51281. 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 it s intention to use NEMS for that purpose . 77 FR 49701 ( Aug

. 17, 2012). For this preliminary analysis, DOE calculated FFC energy savings for the considered energy efficiency levels

.

2.10.2 Net Present Value Analysis
The inputs for determining NPV are total annua l installed cost

, total annual savings in operating costs , and a discount factor to calculate the present value of costs and savings. DOE determined the net savings for each year as the difference between the base case and each standards case in terms of t otal savings in operating costs versus total increases in installed costs. DOE calculated savings over the lifetime of products shipped in the 30

- year forecast period. DOE calculated NPV as the difference between the present value of operating cost savings and the present value of total installed costs. DOE used a discount factor based on real discount rates of 3 and 7 percent to discount future costs and savings to present values.

For the NPV analysis, DOE calculates increases in total installed costs as t he difference in total installed cost s between the base case and standards case ( i.e. , once the standards take effect). Because the more

- efficient products bought in the standards case usually cost more than products bought in the base case, cost increases appear as negative values in the NPV.

DOE expresses savings in operating costs as decreases associated with the lower energy consumption of products bought in the standards case compared to the base case. Total savings in operating costs are the product o f savings per unit and the number of units of each vintag e that survive in a given year.

DOE used the edition of EIA’s Annual Energy Outlook ( AEO 201 4 ) most recently available at the time of this analysis as the source of projecti ons for future energy prices.

DOE estimates the NPV of consumer benefits using both a 3

- percent and a 7

- percent real discount rate. DOE uses these discount rates in accordance with guidance provided by OMB to Federal agencies on the development of regulatory analysis. (OMB Circ ular A

- 4 (Sept. 17, 2003), section E, “Identifying and Measuring Benefits and Costs”)2

- 40 2.11 CONSUMER SUBGROUP ANALYSIS
A consumer subgroup comprises a subset of the population that might be affected disproportionately by new or amended energy conservation standa rds. The purpose of a subgroup analysis is to determine the extent of this disproportional impact. DOE will work with stakeholders to identify any subgroups for consideration. DOE will analyze the consumer subgroups in the NOPR stage of the analysis. In co mparing potential impacts on the different consumer subgroups, DOE will evaluate variations in regional electricity prices, energy use profiles, and purchase prices that might affect the LCC of an energy conservation standard to certain consumer subgroups.

True pointed out that the subgroups assessed in most rulemakings

— households with low income and households containing only senior citizens

— might not apply to this product type. True also mentioned that senior citizens will most likely have countertop win e chillers instead of under

- counter or built

- in wine chillers. ( True , No. 15 at pp. 99

- 100) DOE recognizes that the demographic and product characteristics can vary between subgroups. To ensure that subgroups include accurate product and demographic variat ion, DOE will perform subgroup analyses of households using demographic information from a survey of actual product owners. 1

2.12 PRELIMINARY MANUFACTURER IMPACT ANALYSIS
DOE performed a preliminary MIA to estimate the financial impact of higher energy conservation standards on manufacturers of miscellaneous refrigeration products and to calculate the impact of such standards on employment and m anufacturing capacity. The MIA has both quantitative and qualitative aspects. The quantitative part of the MIA relies on the government regulatory impact model (GRIM), an industry

- cash

- flow model customized for these industries. For more detail on the MIA, see chapter 12 of the preliminary TSD.

U

- Line commented that DOE's Framework Document presents cost information and other data that, while accurate for large manufacturers, may not be accurate for all manufacturers, citing the potential lessening of compe tition by implementing new standards and the potential loss of well

- paying U.S. based manufacturing jobs due to the shuttering of small manufacturer facilities. ( U

- Line , No. 14 at p. 2) U

- Line urged DOE to consider that small manufacturers have a cost stru cture that consists of a two

- tiered distribution system with component/part costs that are likely to be significantly higher than those of larger manufacturers. ( U

- Line , No. 14 at p. 6)

When small business manufacturers are identified during the course of a given rulemaking, DOE conducts a separate MIA for this sub

- group. Depending on the availability of information relating to financial metrics, cost structure, and distribution channels specific to the small business sub

- group, a separate GRIM is created. This allows for the estimation of industry net present value (INPV), as well as employment impacts, under different trial standard levels (TSLs) for small businesses only. Additionally, unique or disproportionate impacts on2

- 41 competition and employment for small businesses as a result of the rulemaking are explored qualitatively, using the input from manufacturer interviews and other sources.

U

- Line also advised DOE to consider the cost and initial burden associated with complying with current regulations a s it works to create new energy efficiency standards for miscellaneous refrigeration products. ( U

- Line , No. 14 at p. 6) As part of the MIA, DOE considers cumulative regulatory burdens to manufacturers, including current energy conservation standards. Speci fically, DOE considers all federal energy conservation standards affecting miscellaneous refrigeration and ice maker manufacturers that have taken or will take effect 3 years before or after the compliance date of the amended energy conservation standards for these products.

2.13 EMISSIONS ANALYSIS
In the emissions analysis, DOE will estimate the reduction in power sector emissions of carbon dioxide (CO 2 ), nitrogen oxides (NO X ), sulfur dioxide (SO 2 ) and mercury (Hg) from potential energy conservation standards for the considered products. In addition, DOE will estimate 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 FFC. In accordance with DOE’s FFC Statement of Policy (76 FR 51282 (Aug. 18, 2011)), the FFC analysis includes impacts on emissions of methane and nitrous oxide, both of which are recognized as greenhouse gases.

DOE primar ily conducts the emissions analysis using emissions factors for CO 2 and most of the other gases derived from data in the latest version of EIA’s Annual Energy Outlook (AEO)

. Combustion emissions of CH 4 and N 2 O are estimated using emissions intensity factors published by the Environmental Protection Agency ( EPA )

, greenhouse gas ( GHG ) Emissions Factors Hub

. d

EIA prepares the AEO using NEMS. Each annual version of NEMS incorporates the projected impacts of existing air quality regulations on emissions. The text below refers to AEO 2014

, which generally represents current legislation and environmental regulations, including recent government actions, for which implementing regulations were available as of Octo ber 31, 201 3

.
SO 2 emissions from affected electric generating units (EGUs) are subject to nationwide and regional emissions cap and trading programs. Title IV of the Clean Air Act sets an annual emissions cap on SO 2 for affected EGUs in the 48 contiguous States an d the District of Columbia (D.C.). SO 2 emissions from 28 eastern States and D.C. were also limited under the Clean Air Interstate Rule (CAIR), which created an allowance

- based trading program that operates along

d http://www.epa.gov/climateleadership/guidance/ghg

- emissions.html2

- 42 with the Title IV program in those States an d D.C. 70 FR 25162 (May 12, 2005). CAIR was remanded to EPA by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), but it remained in effect. e On July 6, 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. f The court ordered EPA to continue administering CAIR. AEO 2014 assumes that CAIR remains a binding regulation through 2040. g

The attainment of emissions caps is typically flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, any excess SO 2 emissions allowances resulting from the lower electricity demand caused by the adop tion of an efficiency standard could be used to permit offsetting increases in SO 2 emissions by any regulated EGU. In past rulemakings, DOE recognized that there was uncertainty about the effects of efficiency standards on SO 2 emissions covered by the exis ting cap

- and

- trade system, but it concluded that no reductions in power sector emissions would occur for SO 2 as a result of standards.

Beginning in 201 6 , however, SO 2 emissions will fall 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 HCl as a surrogate for acid gas hazardous air pollutants (HAP), and also established a standard for SO 2 (a non

- HAP acid gas) as an alternative equivalent surrogate s tandard for acid gas HAP. The same controls are used to reduce HAP and non

- HAP acid gas; thus, SO 2 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 201 6 . Both technologies, which are used to reduce acid gas emissions, also reduce SO 2 emissions. Under t he MATS, e missions will be far below the cap that would be established by CAIR , so it is unlikely that excess SO 2 emissions allowances resulting from the lower electricity demand would be needed or used to permit offsetting increases in SO 2 emissions by an y regulated EGU. Therefore, DOE believes that energy efficiency standards will reduce SO 2 emissions in 201 6 and beyond.

e See North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA , 531 F.3d 896 (D.C. Cir. 2008).
f See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 (D .C. Cir. 2012).
g On 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 authorit y for Cross

- State Air Pollution Rule ( CSAPR ) . See EPA v. EME Homer City Generation , No 12

- 1182, s lip o p. at 32 ( U.S. April 29, 2014). B ecause DOE is using emissions factors based on AEO 2014 , 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 SO 2 emissions.2

- 43 CAIR established a cap on NO X emissions in eastern States and the District of Columbia. Energy conservation standards are expected to have little or no physical effect on these emissions in those States covered by CAIR because excess NO X emissions allowances resulting from the lower e lectricity demand could be used to permit offsetting increases in NO X emissions. However, standards would be expected to reduce NO X emissions in the States not affected by the caps, so DOE estimates NO X emissions reductions from potential standards in the States where emissions are not capped.

The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE’s energy conservation standards would likely reduce me rcury emissions. DOE will estimate mercury emissions reduction using emissions factors based on AEO 2014

, which incorporates the MATS.

Power plants may emit particulates from the smoke stack, which are known as direct particulate matter (PM) emissions. NEM S does not account for direct PM emissions from power plants. DOE is investigating the possibility of using other methods to estimate reduction in PM emissions due to standards. The great majority of ambient PM associated with power plants is in the form o f secondary sulfates and nitrates, which are produced at a significant distance from power plants by complex atmospheric chemical reactions that often involve the gaseous emissions of power plants, mainly SO 2 and NO X . The monetary benefits that DOE estimat es for reductions in SO 2 and NO X emissions resulting from standards are in fact primarily related to the health benefits of reduced ambient PM.

2.14 MONETIZATION OF EMIS SIONS REDUCTION BENE FITS
DOE plans to consider the estimated monetary benefits likely to res ult from the reduced emissions of CO 2 and NO X that are expected to accompany each of the standard levels considered.

To estimate the monetary value of benefits resulting from reduced emissions of CO 2 , DOE plans to use the most current Social Cost of Carbo n (SCC) values developed and/or agreed to by an interagency process. The SCC is intended to be a monetary measure of the incremental damage resulting from GHG emissions, including, but not limited to, net agricultural productivity loss, human health effect s, property damage from sea level rise, and changes in ecosystem services. Any effort to quantify and to monetize the harms associated with climate change will raise serious questions of science, economics, and ethics. But with full regard for the limits o f both quantification and monetization, the SCC can be used to provide estimates of the social benefits of reductions in GHG emissions.

The Interagency Working Group on Social Cost of Carbon released an update of its previous report in 2013. 5 The most rec ent estimates of the SCC in 2015, expressed in 2012$, are $ 11.8, $39.7, $61.2, and $117 per metric ton of CO 2 avoided. For emissions reductions that occur in later years, these values grow in real terms over time. Additionally, the interagency group determ ined that a range of values from 7 percent to 23 percent should be used to adjust the global2

- 44 SCC to calculate domestic effects, although DOE will give preference to consideration of the global benefits of reducing CO 2 emissions.

DOE multiplies the CO 2 emi ssions 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 discounts the values in each of the four cases using the discount rates that had been used to obtain the SCC values in each case.

DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to the contribution of CO 2 and other GHG to changes in the future global climate and the potential resulting damages to the world e conomy. Thus, these values are subject to change.

DOE also estimates the potential monetary benefit of reduced NO X emissions resulting from the standard levels it considers. Estimates of monetary value for reducing NO X from stationary sources range from $ 468 to $4,809 per ton in 2012$. 6 DOE calculates monetary benefits using a medium value for NO X emissions of $2,639 per short ton (in 2012$), and real discount rates of 3 percent and 7 percent, in accordance with OMB guidance. 7

DOE is evaluating an appropr iate valuation of avoided SO 2 and Hg emissions. Whether monetization of reduced Hg emissions will occur in this rulemaking is yet to be determined.

2.15 EMPLOYMENT IMPACT AN ALYSIS
The adoption of energy conservation standards can affect employment both directly and indirectly. Direct employment impacts are changes in the number of employees at the plants that produce the covered products, along with affiliated distribution and service companies. DOE will evaluate direct employment impacts in the MIA.

Indirect e mployment impacts may result from expenditures shifting between goods (the substitution effect) and changes in income and overall expenditure levels (the income effect) that occur due to standards. DOE defines indirect employment impacts from standards as net jobs eliminated or created in the general economy as a result of increased spending driven by increased product prices and reduced spending on energy.

The indirect employment impacts will be investigated in the employment impact analysis using the Pac ific Northwest National Laboratory’s “Impact of Sector Energy Technologies” (ImSET) model. h The ImSET model was developed for DOE’s Office of Planning, Budget, and Analysis to estimate the employment and income effects of energy

- saving technologies in buil dings, industry, and transportation. Compared with simple economic multiplier approaches,

h Roop, J. M., M. J. Scott, and R. W. Schultz, ‘‘ImSET: Impact of Sector Energy Technologies,’’ PNNL

– 15273. Pacific Northwest National Labora tory (2005).2

- 45 ImSET allows for more complete and automated analysis of the economic impacts of energy conservation investments.

2.16 UTILITY IMPACT ANALY SIS
To estimate the impacts of p otential energy conservation standards for miscellaneous refrigeration products on the electric utility industry, DOE will use a variant of the EIA’s NEMS called NEMS

- BT. i NEMS is a large, multi

- sectorial , partial

- equilibrium model of the U.S. energy secto r that EIA has developed over several years, primarily for the purpose of preparing the AEO . NEMS produces a widely recognized forecast for the United States through 2035 and is available to the public.

The utility impact analysis is a comparison between the NEMS

- BT model results for the base case and standard cases. Outputs of the utility impact analysis usually parallel results that appear in the latest AEO , with some additions. The utility impact analysis reports the changes in installed capacity and ge neration that result from each standard level by plant type. DOE will model the anticipated energy savings impacts from potential amended energy conservation standards using NEMS

- BT to generate forecasts that deviate from the AEO Reference Case.

2.17 REGULATORY IMPACT ANALYSIS
In the NOPR stage, DOE will prepare a regulatory impact analysis (RIA) that evaluates potential non

- regulatory policy alternatives, comparing the costs and benefits of each to those of the proposed standards. DOE recognizes that non

- regulatory policy alternatives can substantially affect energy efficiency or reduce energy consump tion. DOE will base its assessment on the actual impacts of any such initiatives to date, but also will consider information presented by interested parties regarding the potential future impacts of current initiatives.

i EIA approves use of the name NEMS to describe only an official version of the model without any modification to code or data. Because this analysis entails some minor code modifications and the model is run under various policy scenarios th at are variations on EIA assumptions, DOE refers to the model by the name NEMS

- BT. (“BT” refers to DOE’s Building Technologies Program, under whose aegis this work is performed.)2

- 46 REFERENCES

1 Greenblatt, J. B . et al., U.S. Residential Miscellaneous Refrigeration Products: Results from Amazon Mechanical Turk Surveys , 2013. Lawrence Berkeley National Laboratory. Berkeley, CA. LBNL

- 6 537 E.

2 “Guidance with Respect to Scope of Coverage for Hybrid (Wine Storage) Refrigeration Products” (Feb. 10, 2011) available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_definiti on_faq.pdf , p. 4).

3 California Energy Commission, 2010 Appliance Efficiency Regulations, December 2010. CEC

- 400

- 2010

- 012. http://www.energy.ca.gov/2010publications/CEC

- 400

- 2010

- 01 2/CEC

- 400

- 2010

- 012.PDF

4 http://www.eia.gov/electricity/data/detail

- data.html

. Accessed December 11, 2013. This material is available in Docket #EERE

- 2011

- BT

- STD

- 0043 at regulations.gov.

5 Technical 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. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical

- update

- social

- cost

- of

- carbon

- for

regulator

- impact

- analysis.pdf

.

6 U.S. Office of Management and Budget (OMB), 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities , 2006. Washington, DC.

7 OMB. Circular No. A

- 4, Regulatory Analysis. 2003. Was hington, DC.