### Rulemaking Framework for

Refrigerated Bottled or Canned Beverage Vending Machines

Docket # EERE

- 2013

- BT

- STD

- 0022

United States Department of Energy Office of Energy Efficiency and Renewable Energy

Building Technologies Program

May 29 , 2013ii TABLE OF CONTENTS

1. INTRODUCTION

................................ ................................ ................................ .................. 1
1.1 The Appliances and Commercial Equipment Standards Program

.............................. 1
1.2 Rulemaking History

................................ ................................ ................................ .... 2
1.3 Definitions

................................ ................................ ................................ ................... 4
1.4 Current Energy Conservation Standards

................................ ................................ ..... 5
1.5 Standby Mode and Off Mode Standards

................................ ................................ ..... 5
1.6 Overview of the Rulemaking Process

................................ ................................ ......... 6
1.6.1 General Rulemaking Process and Participation of Inte rested Parties

.......... 6
1.6.2 Test Procedure

................................ ................................ ............................. 7
1.7 Preliminary Analysis

................................ ................................ ................................ . 11
1.8 Notice of Proposed Rulemaking (NOPR)

................................ ................................ . 12
1.9 Final Rule

................................ ................................ ................................ .................. 12
2. ANALYSES FOR ENERGY CONSERVATION STANDARDS RULEMAKING

........... 13
3. MARKET AND TECHNOLOGY ASSESSMENT

................................ ............................. 14
3.1 Market Assessment

................................ ................................ ................................ ... 15
3.2 Overview of Beverage Vending Machines

................................ ............................... 15
3.3 Equipment Classes

................................ ................................ ................................ .... 17
3.4 Technology Assessment

................................ ................................ ............................ 19
3.5 Baseline Units

................................ ................................ ................................ ........... 21
4. SCREENING ANALYSIS

................................ ................................ ................................ ... 21
5. ENGINEERING ANALYSIS

................................ ................................ ............................... 22
5.1 Engineering Analysis Overview

................................ ................................ ............... 22
5.2 Proposed Approach for Determining the Cost

- Efficiency Relationship

................... 23
5.3 Manufacturer Prices

................................ ................................ ................................ .. 24
5.4 Proprietary Designs

................................ ................................ ................................ ... 25
5.5 Representative Sizes

................................ ................................ ................................ . 25
5.6 Outside Regulatory Changes Affecting the Engineering Analysis

........................... 26
6. ENERGY USE ANALYSIS

................................ ................................ ................................ . 27
7. MARKUPS ANALYSIS

................................ ................................ ................................ ...... 27
8. LIFE

- CYCLE COST AND PAYBACK PERIOD ANALYSIS

................................ .......... 28
8.1 Overview

................................ ................................ ................................ ................... 28
8.2 Energy Prices

................................ ................................ ................................ ............ 29
8.3 Life

- Cycle Cost Discount Rates

................................ ................................ ................ 29
8.4 Installation, Maintenance, and Repair Costs

................................ ............................. 3 0
8.5 Equipment Lifetimes

................................ ................................ ................................ . 31
9. SHIPMENTS ANALYSIS

................................ ................................ ................................ ... 31
9.1 Base

- Case Projections

................................ ................................ ............................... 31
9. 2 Accounting Methodology

................................ ................................ ......................... 32
9.3 Standards Impacts on Shipments

................................ ................................ .............. 32
10. NATIONAL IMPACT ANALYSIS

................................ ................................ ..................... 33
10.1 Calculation of Energy Savings

................................ ................................ .................. 33
10.2 Net Present Value

................................ ................................ ................................ ..... 34
11. CUSTOMER SUBGROUP ANALYSIS

................................ ................................ .............. 34
12. MANUFACTURER IMPACT ANALYSIS

................................ ................................ ......... 35iii

12.1 Sources of Information

................................ ................................ ............................. 35
12.2 Industry Cash Flow Analysis

................................ ................................ .................... 36
12.3 Manufacturer Subgroup Analysis

................................ ................................ ............. 36
12.4 Competitive Impacts Assessment

................................ ................................ ............. 37
12.5 Cumulative Regulatory Burden

................................ ................................ ................ 37
13. EMPLOYMENT IMPACT ANALYSIS

................................ ................................ .............. 37
14. UTILITY IMPACT ANALYSIS

................................ ................................ .......................... 38
15. EMISSIONS ANALYSIS

................................ ................................ ................................ ..... 38
16. MONETI ZING REDUCED CO 2 AND OTHER EMISSIONS

................................ ........... 40
17. REGULATORY IMPACT ANALYSIS

................................ ................................ .............. 41
APPENDIX A

– LIST OF ITEMS FOR COMMENT

................................ ................................ .. 43

LIST OF FIGURES

Figure 2.1 Flow Diagram of Analyses for the BVM Standards Rulemaking Process

.................. 14

LIST OF TABLES

Table 1.4.1 Energy Conservation Standards for Beverage Vending Machines, Prescribed by 2009

BVM Final Rule

– Compliance Date August 31, 2012

................................ ............. 5 Table 5.5.1 Representative Sizes for Beverage Vending Machines in 2009 BVM Rulemaking

. 25iv LIST OF ACRONYMS

ABA American Beverage Association
AEO Annual Energy Outlook
AHAM Association of Home Appliance Manufacturers
ANOPR advance notice of proposed rulemaking
ANSI American National Standards Institute
ASHRAE American Society of Hea ting, Refrigerating, and Air

- Conditioning Engineers
BT Building Technologies Program
BVM beverage vending machine
CAIR Clean Air Interstate Rule
CFC chlorofluorocarbon
CFR Code of Federal Regulations
CO 2 carbon dioxide
CSL candidate standard level
CSAPR C ross

- State Air Pollution Rule
DOE U.S. Department of Energy
DOJ U.S. Department of Justice
ECM electronically commutated motor
EGU electric generating unit
EIA U.S. Energy Information Administration
EPA U.S. Environmental Protection Agency
EPCA Energy Policy and Conservation Act of 1975
FFC full

- fuel

- cycle
GHG greenhouse gas
GRIM Government Regulatory Impact Model
HAP hazardous air pollutants
HC hydrocarbon
HCFC hydrochlorofluorocarbon
HFC hydrofluorocarbon Hg mercury ImSET Impact of Sector Energy Techn ologies
LCC life

- cycle cost
MATS Mercury and Air Toxics Standards
MIA manufacturer impact analysis
MSP manufacturer selling price
NAMA National Automatic Merchandising Association
NEMS National Energy Modeling System
NES national energy savings
NIA nationa l impact analysis
NOPR notice of proposed rulemaking
NO X nitrogen oxides
NPV net present value
OIRA Office of Information and Regulatory Affairs
OMB Office of Management and Budget
PBP payback periodv

PM particulate matter
R&D research and development
RIA regulatory impact analysis
SCC Social Cost of Carbon
SO 2 sulfur dioxide
TSD technical support document
TSL trial standard level
WACC weighted

- average cost of capital1



### Rulemaking Framework for Beverage Vending Machines

1. INTRODUCTION

The U.S. Department of Energy (DOE) develops and promulgates test procedures and energy conservation standards for certain consumer appliances and commercial equipment. The process for developing standards involves analysis, public notice and comment, and consultat ion with interested parties. Interested parties , also referred to as stakeholders, include manufacturers,

customers , energy conservation and environmental advocates, State and Federal agencies, and any other groups or individuals with an interest in these standards and test procedures.

This Framework document provides an overview of the procedural and analytical approaches DOE anticipates using to determine whether to amend the existing energy conservation standards for refrigerated bottled or canned bevera ge vending machines, herein referred to as beverage vending machines (BVM) (see section 1.1 for a discussion of the statutory authority for this rulemaking) . The e xisting energy conservation standards for beverage vending machines can be found at 10 CFR 431.296 and are applicable to BVM units manufactured on or after August 31, 2012, as mandated by the Energy Policy and Conservation Act of 1975 (EPCA)

, as amended. ( 42 U.S.C. 6295(v))

This document is intended to inform stakeholders of the procedural and analytical approaches for the energy conservation standards and test procedure rulemaking s for covered beverage vending machines, and to encourage and facilitate sta keholder input during the rulemaking. This document is the starting point for determining whether to amend the existing energy conservation standards, and if so, for developing such standards, and is not a definitive statement with respect to any issue to be determined in the rulemaking.

Section 1 provides an overview of the rulemaking process. Sections 2 through 17 discuss analyses DOE intends to conduct to fulfill the statutory requirements and guidanc e for this energy conservation standards rulemaking for beverage vending machines. DOE is required, as part of this rulemaking, to determine whether to amend existing energy conservation standards for this equipment. T hese analyses will support DOE’ s determination of whether to amend the standards, and, if the determination is positive, its establishment of any amended energy conservation standards. Information regarding this rulemaking will be maintained on the DOE
website at http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/73

.

While DOE invites comment on all aspects of the material presented in this Framework document, several specific issues on which DOE seeks comment are set out in comment boxes like this one. DOE uses these comment boxes to highlight issues and ask specific questions on the approaches DOE is proposing to follow in conducting the analyses required for the energy conservation standards rulemaking. Such requests for stakeholder feedback are numbered according to the section in which they appear.

1.1 The Appliances and Commercial Equipment Standards Program

Title III of EPCA sets forth a variety of provisions designed to improve the energy efficiency of various products and equipment. Part B of Title III provides for the “Energy2

Conservation Program for Consumer Products Other Than Automobiles.” (42 U.S.C. 6291

– 6309) As part of this program, EPCA direct ed DOE t o prescribe energy conservation standards for beverage vending machines. (42 U.S.C. 6295(v)) 1

Under 42 U.S.C. 6295(m)(1), within 6 years after issuance of any final rule establishing or amending a standard, DOE is required to publish:

(A) A notice of the determination of the Secretary of Energy (Secretary) that energy conservation standards for the product do not need to be amended, based on the criteria established under subsection (n)(2); or

(B) A notice of proposed rulemaking including new proposed energy c onservation standards based on the criteria established under subsection (o) and the procedures established under subsection (p).

DOE is undertaking this rulemaking , including the publication of this Framework document, to meet this EPCA requirement.

1.2 Rulem aking History

EPCA directed the Secretary to issue by rule, no later than August 8, 2009, energy conservation standards for refrigerated bottled or canned beverage vending machines. DOE undertook a rulemaking process beginning in 2006, when it published th e Rulemaking Framework for Refrigerated Bottled or Canned Beverage Vending Machines ( henceforth referred to as the 2006 BVM Framework document). This document is available at: http://www.regulations.gov/#!documentDetail;D=EERE

- 2006

- STD

- 0125

- 0002 . The 2006 BVM Framework document described the procedural and analytical approaches DOE anticipated using to evaluate the establishment of energy conservation standards for b everage vending machines.

DOE held a public meeting on July 11, 2006 (henceforth referred to as the 2006 BVM Framework public meeting) to discuss procedural and analytical approaches to the rulemaking,
and to inform and facilitate the involvement of inte rested parties in the rulemaking process. The analytical framework presented at the public meeting described different analyses, such as the engineering analysis and the life

- cycle cost (LCC) analysis, the methods proposed for conducting them, and the rela tionships among the various analyses.

After the 2006 BVM Framework public meeting, as part of the information gathering process for the preliminary manufacturer impact analysis (MIA), DOE held interviews with
BVM manufacturers. DOE selected manufacturers that represented production of a wide range of equipment covered by the rulemaking, including both small and large manufacturers

. DOE had

1 Because of its placement in Part B of Title III of EPCA, the provisions of Part B apply to the rulemaking for BVM energy conservation standards . B ecause beverage vending machines are commonly referred to as commercial equipment, however, DOE places the requirements for beverage vending machines in Title 10 of the Code of Federal Regulations (CFR), part 431, “Energy Efficiency Program for Certain Commercial and Industrial Equipment

. ” The location of the provisions within the CFR do es not affect either their substance or applicable procedure; DOE is placing them in the commercial CFR part as a matter of administrative convenience based on their nature or type. DOE will refer to beverage vending machines as “equipment” throughout the document because of their placement in 10 CFR part 431.3

four objectives for these interviews: (1) solicit feedback on the draft engineering analysis (including methodology, production costs, manufacturing processes, and findings); (2) solicit feedback on topics related to the preliminary MIA; (3) provide an opportunity, early in the rulemaking process, for these manufacturers to express specific concerns to DOE; and (4) foste r cooperation between the manufacturers and DOE.

DOE developed a preliminary engineering analysis to estimate the cost of manufacturing equipment at efficiencies above the baseline levels. 2 DOE also developed spreadsheets to conduct the LCC analysis and national impact analysis (NIA). The LCC spreadsheet calculates national distributions of LCC savings at various energy efficiency levels above the baseline. It can also provide LCC savings based on typical input values for several business types that use
b everage vending machines. The NIA spreadsheet calculates the national energy savings (NES) and national net present values (NPVs) at various energy efficiency levels. It also includes a model that forecasts shipments for the various equipment classes of be verage vending machines at different efficiency levels.

In June 2008, DOE published an a dvance n otice of p roposed r ulemaking and n otice of

p ublic m eeting (ANOPR) for r efrigerated b ottled or c anned b everage v ending m achines (henceforth referred to as the 2 008 BVM ANOPR)

. 73 FR 34094 (June 16, 2008)

. This
document is available at http://www.regulations.gov/#!documentDetail;D=EERE

- 2006

- STD

0125

- 0003 . In that ANOPR, DOE considered establishing energy conservation standards for beverage vending machines and announced a public meeting to receive comments on a variety of
issues.

DOE held a public meeting on June 26, 2008 to provide interested parties the opportunity

to com ment on the proposed equipment classes DOE was considering; the analytical framework, models, and tools ( e.g. , LCC and NES spreadsheets) that DOE had developed to perform analyses of the impacts of potential energy conservation standards; the results of th e preliminary analyses; and the candidate energy conservation standard levels.

After the publication of the 2008 BVM ANOPR and the presentation of the ANOPR to interested parties at the public meeting, DOE conducted additional interviews with BVM
manufac turers as part of its development of the MIA for the notice of proposed rulemaking (NOPR). There were 13 topics discussed during each of the interviews: (1) general key issues; (2) company overview and organizational characteristics; (3) company financial parameters; (4) production cost breakdown; (5) shipment projections and market shares; (6) equipment mixes; (7) conversion costs; (8) markups and profitability; (9) cumulative regulatory burden; (10) exports, foreign competition, and outsourcing; (11) dire ct employment impact assessment; (12) market consolidation; and (13) baseline products and different design options. Based on findings from the preliminary engineering, analyses (LCC, NES, and NIA), and public comments provided in response to the ANOPR, DO E updated the analyses.

2 T he baseline l evel ( i.e. , the minimum level) typically represents the energy efficiency of equipment with the lowest energy efficiency level available on the market for a given category

. F or equipm ent categories where minimum energy conservation standards already exist, the baseline efficiency level is typically defined by the existing energy
conservation standard s.4

In May 2009, DOE published a NOPR for r efrigerated b ottled or c anned b everage

v ending m achines (henceforth referred to as the 2009 BVM NOPR) t o propose energy conservation standards for refrigerated beverage vending machines, and to announce a public meeting to receive comments on a variety of issues. 74 FR 26020 (May 29, 2009). This
document is available at http://www.regulations.gov/#!documentDetail;D=EERE

- 2006

- STD

0125

- 0003

.

DOE held a public meeting on June 17, 2009 (henceforth referred to as the 2009 BVM NOPR public meeting) to provide interested part ies the opportunity to comment on the proposed standards, results of the analyses, and the trial standard levels (TSLs).

After the publication of the 2009 BVM NOPR and the public meeting, DOE received comments from a diverse set of parties, including man ufacturers and their representatives, customers, energy conservation advocates, s tate officials and agencies, and electric utilities

. DOE considered these comments and in August 2009 published a final rule for beverage vending machines (henceforth referred to as the 2009 BVM final rule). 74 FR 44914 (Aug. 31, 2009). The entire rulemaking process that culminated with the publication of the 2009 BVM final rule will be referred to as the 2009 BVM rulemaking. The 2009 BVM final rule established energy

conservat ion standards for beverage vending machines, with a compliance date of August 31, 2012. The 2009 BVM final rule document is currently available at http://www.regulat ions.gov/#!documentDetail;D=EERE

- 2006

- STD

- 0125

- 0005

.

1.3 Definitions

EPCA defines a beverage vending machine as follows :

The term ‘refrigerated bottled or canned beverage vending machine’ means a commercial refrigerator 3 that cools bottled or canned beverages and dispenses the bottled or canned beverages on payment.

(42 U.S.C. 6291(40))

In the 2009 BVM final rule, DOE added the following definitions to 10 CFR 431.292, “Definitions concerning refrigerated bottled or can ned vending machines”:

Bottled or canned beverage means a beverage in a sealed container.

3 In addition, section 136(a)(3) of EPACT 2005 amended section 340 of EPCA in part by adding a definition for “commercial refrigerator, freezer, and refrigerator

- freezer.” (42 U.S.C. 6311(9)(A)) This definition reads as follows:

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

- freezer’ means refrigeration equipment th at

— (i) is not a consumer product (as defined in section 321 [of EPCA; 42 U.S.C. 6291(1)]); (ii) is not designed and marketed exclusively for medical, scientific, or research purposes; (iii) operates at a chilled, frozen, combination chilled and frozen, or variable temperature; (iv) displays or stores merchandise and other perishable materials horizontally, semivertically, or vertically; (v) has transparent or solid doors, sliding or hinged doors, a combination of hinged, sliding, transparent, or
solid doors, or no doors; (vi) is designed for pull

- down temperature applications or holding temperature applications; and (vii) is connected to a self

- contained condensing unit or to a remote condensing unit.5

Class A means a refrigerated bottled or canned beverage vending machine that is fully cooled, and is not a combination vending machine.
Class B means any refrigerat ed bottled or canned beverage vending machine not considered to be Class A, and is not a combination vending machine. Combination vending machine means a refrigerated bottled or canned beverage vending machine that also has nonrefrigerated volumes for the purpose of vending other,

non

- “sealed beverage” merchandise.
V means the refrigerated volume (ft 3 ) of the refrigerated bottled or canned beverage vending machine, as measured by ANSI/AHAM HRF

– 1

– 2004.

1.4 Current Energy Conservation Standards

Table 1.4

. 1 shows the current standards for beverage vending machines at 10 CFR
431.296

, as prescribed by the 2009 BVM final rule. 74 FR at 44968 (Aug. 31, 2009).

Table 1.4

. 1 Energy Conservation Standards for Beverage Vending Machines, Prescribed by 2009 BVM Final Rule

– Compliance Date August 31, 2012

Class Definition Maximum Daily Energy Consumption kWh/day

A a refrigerated bottled or canned beverage vending machine that is fully

cooled, and is not a combination vending machine 0.055 × V + 2.56

B any refrigerated bottled or canned beverage vending machine not

considered to be Class A, and is not a combination vending machine 0.073 × V + 3.16

Combinat ion a refrigerated bottled or canned beverage vending machine that also

has nonrefrigerated volumes for the purpose of vending other, non

-

“ sealed beverage ” merchandise [reserved]

1.5 Standby Mode and Off Mode Standards

EPCA requires any new or amended energy conservation standards adopted after July 1, 2010 to incorporate standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)(A))

EPCA also define s the terms “active mode,” “off mode,” and “standby mode.” “Active
mode” is defined as the condition in which an energy

- using product is connected to a main power source, has been activated, and provides one or more main functions. “Off mode” is defined as the condition in which an energy

- using product is connected to a main p ower source, and is not providing any standby or active mode function. “Standby mode” is defined as the condition in which an energy

- using product is connected to a main power source and offers one or more of the following user

- oriented or protective funct ions: facilitating the activation or deactivation of other functions (including active mode) by remote switch (including remote control), internal sensor, or timer; or providing continuous functions, including information or status displays (including cloc ks) or sensor

- based functions. (42 U.S.C. 6295(gg)(1)(A)) DOE may by rule amend these definitions after considering the most current versions of certain industry standards. (42 U.S.C. 6295(gg)(1)(B))

When connected to a power source, beverage vending mac hines always actively provide
one of the main functions

— refrigeration. Therefore, DOE believes that beverage vending machines do not operate under standby and off mode conditions as defined in EPCA , and that the energy use of a beverage vending machine wou ld be captured in any standard established for6

active mode energy use . (42 U.S.C. 6295(gg)(1)(A)) DOE does not plan to include standards regulating standby and off mode energy consumption for the equipment.

1.6 Overview of the Rulemaking Process

1.6.1 General Rulema king Process and Participation of Interested Parties

EPCA requires that any new or amended standards achieve the maximum energy efficiency or water efficiency that is technologically feasible and economically justified. To
determine whether a standard is e conomically justified, EPCA requires that DOE determine whether the benefits of the standard exceed its burdens by considering, to the greatest extent practicable, the following:

i. the economic impact of the standard on the manufacturers and consumers of th e affected products;
ii. the savings in operating costs throughout the estimated average life of the product compared to any increases in the initial cost or maintenance expense;
iii. the total projected amount of energy savings likely to result directly from the imposition of the standard;
iv. any lessening of the utility or the performance of the products likely to result from the imposition of the standard;

v. the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;
vi. the need for national energy conservation; and
vii. other factors the Secretary considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i))

As discussed in further detail below, the standards rulemaking process typically involves
four public notices that are published in the Federal Register . Publication of the F ramework document, preliminary analys i s , and NOPR are typically accompanied by p ublic meetings and comment periods to solicit comment from interested parties to enhance the rulemaking process.

DOE also encourages interested parties to develop and submit joint recommendations and will carefully consider such recommendations in its decision making. DOE believes that the analyses accompanying these notices will support DOE’s determination whether to amend t he standards, and, if the determination is positive, to establish any amended standards.

In this Framework document, DOE presents the procedural and analy tical approaches it expects to use to determine whether the establishment of amended energy conserva tion standards for beverage vending machines is justified and, if so, to set new, amended standards. DOE also presents several issues regarding the regulation of beverage vending machines and requesting feedback from interested parties . Following publicati on of the F ramework document, DOE will publish a preliminary analysis, a NOPR, and a final rule. These rulemaking stages are summarized below and described more fully in subsequent sections.

Preliminary a nalysis ( section 1.7 ). The preliminary analysis is designed to publicly
vet the models and tools that DOE intends to use in the rulemaking, and to facilitate public participation before the proposed rule stage. Usi ng these models and tools,7 DOE performs preliminary analyses to assess c andidate standard levels (CSLs)

, which span the range of efficiencies from baseline equipment to the most efficient technology.

Notice of p roposed r ulemaking (section 1.8 ). The NOPR presents a discussion of comments received in response to the preliminary analysis; DOE ’ s analysis of the impacts of potential standards on customer s, manufacturers, and the n ation; DOE ’ s weighting of these impacts; and any proposed standard levels for public comment.

Final r ule (section 1.9 ). The final rule presents a discussion of comments received in response to the NOPR, revised analysis, as appropriate, of the impacts of any standards, DOE’s weighting of those impacts, and t he standard levels, if any, that DOE is adopting. The final rule also establishes the date for compliance with any
standards.

1.6.2 Test Procedure

I n December 2006, DOE published a final rule establishing a test procedure for beverage vending machines ( the 2006 BVM test procedure final rule )

. 71 FR 71340, 713 55 (Dec. 8, 2006).
I n that final rule, consistent with 42 U.S.C. 6293(b)(15), DOE adopted American National Standards Institute (ANSI) / American Society of Heating, Refrigerating, and Air

- Conditioni ng Engineers (ASHRAE) Standard 32.1

- 2004, “Methods of Testing for Rating Vending Machines for Bottled, Canned, or Other Sealed Beverages,” as the DOE test procedure . ANSI /ASHRAE
Standard 32.1

- 2004 contains rating temperature specifications of 3 6 °F (±1 °F ) average for beverages in the next

- to

- vend position . In the 2006 BVM test procedure final rule, DOE also adopted a modification to test equipment with dual nameplate voltages at the lower of the two voltages only, and adopted section 5.2, “Refrigerated Vol ume Calculation,” of ANSI/Association of Home Appliance Manufacturers (AHAM) HRF

- 1

- 2004 to calculate the refrigerated volume of beverage vending machines in lieu of vendible capacity. DOE recognized that section 5.2 of
ANSI/AHAM HRF

- 1

- 2004 addresses the me asurement of refrigerated volume in household freezers, but determined that the methodology described includes methods for the measurement of volumes that are applicable to beverage vending machines and is more appropriate than the language in section 4.2 for household refrigerators. 71 FR 58308 (Oct. 3, 2006)

.

Since the publication of the 2006 BVM test procedure final rule, ASHRAE has updated its test procedure . T he most recent version is ANSI/ ASHRAE Standard 32.1

- 2010

, which includes changes aligning it with the nomenclature and methodology used in the 2006 BVM test procedure final rule and 2009 BVM final rule. ANSI/ASHRAE 32.1

- 2010 remov es the definitions of “bottled” and “canned” and the inclu des the portions of ANSI/AHAM HRF

- 1

- 2004 incorporated by ref

erence in the 2006 BVM test procedure final rule in a new a ppendix C. DOE believes that the aforementioned changes were largely editorial, and would not affect the method of test or other technical aspects of the DOE test procedure. AHAM has also updated its test standard since the publication of the 2006 BVM test procedure final rule. The most recent
version is ANSI/AHAM HRF

- 1

- 2008, which includes minor editorial changes to the refrigerated volume measurement portion of the standard, including reorganizin g some of the sections for simplicity and usability

.
EPCA requires DOE to periodically review test procedures for covered equipment to determine if amendments are necessary :8

(A) Amendment.

— At least once every 7 years, the Secretary shall review test proced ures for all covered products and

—

(i) amend test procedures with respect to any covered product, if the Secretary determines that amended test procedures would more accurately or fully comply with the requirements of paragraph (3); or (ii) publish noti ce in the Federal Register of any determination not to amend a test procedure.

(42 U.S.C. 6293(b)(1))

Consistent with this requirement , DOE will conduct a test procedure rulemaking concurrently with the current energy conservation standards rulemaking.

D OE is considering updates to its test procedure, both for clarity and to better represent the energy use of the various beverage vending machines. DOE is considering the following
modifications:

(1) Updating the referenced method of test : As discussed above, DOE incorporated by
reference ANSI /ASHRAE Standard 32.1

- 2004, an industry standard for determining the daily energy consumption of beverage vending machines. Since the incorporation
of the 2004 version of ANSI /ASHRAE Standard 32.1 as part of the 2006 BVM t est procedure final rule, ANSI /ASHRAE Standard 32.1 has been updated to
ANSI /ASHRAE Standard 32.1

- 2010. This version includes adjustments in the rating metric and nomenclature to align with the DOE test procedure but makes no changes that are expected to a ffect tested daily energy consumption values. DOE is considering amendments to its test procedure to reference ANSI /ASHRAE Standard
32.1

- 2010.

(2) Clarifying the next

- to

- vend beverage temperature test condition : DOE is considering amendments to the test proced ure to clarify that the average of all next

- to

- vend product temperatures be maintained within 36 °F (±1 °F) at all times for the duration of the test, which is DOE’s understanding of the intent of the ANSI/ ASHRAE
Standard 32.1 committee. DOE believes that s uch a procedure is more appropriate
than one in which t he temperature of next

- to

- vend beverages is averaged across all
selections and over the entire time of the test resulting in a single value of 36 °F (±1 °F) because it ensures that next

- to

- vend bevera ges remain at the vending temperature
at all time points during the test. This clarification is consistent with the performance in the field, wh ere vending temperature must be held at all times that a purchase may
be made

.

(3) T est ing at a 90 ° F ambient test condition : DOE is considering amendments to the test procedure that would eliminate the methodology used to derive performance of the beverage vending machine at the 90 ° F ambient as described in the test method incorporated by reference into the DOE test procedure, ANSI /ASHRAE Standard
32.1

- 2004

, and the updated ANSI /ASHRAE Standard 32.1

- 2010. DOE understands that this test is used primarily to represent and evaluate the performance of units when9 installed outdoors; however, the performance of a beve rage vending machine at 90 ° F ambient is not currently used for DOE regulatory purposes

.

(4) L owest application product temperature : DOE is considering amendments to the test procedure to allow covered beverage vending machines that cannot achieve an

average temperature of next

- to

- vend products of 36 °F (± 1 ° F) to instead be tested at their lowest application product temperature. This provision would be consistent with DOE’s 2012 test procedure final rule for commercial refrigeration equipment. 77 FR 10292 ( Feb. 21, 2012). In this context, the lowest application product temperature would describe the lowest temperature at which the beverage vending machine is capable of operating and is often indicated by the lowest setting on a unit’s
thermostat. The lowest application product temperature provision would specify a revised average beverage temperature for beverages in the next

- to

- vend position, but would not modify any other requirements of the DOE test procedure for beverage vending machines.

(5) P roduct temperature measurements : DOE is considering amendments to the test procedure to require additional temperature data. The current DOE equipment class distinction is based on whether a machine is fully cooled , which manufacturers
determine and report based on machine design

, T est data gathered using the current test procedure do es not include any information to show whether a given machine is fully cooled . This is because the test procedure requires beverage temperature data only from the next

- to

- vend positi ons and no other areas of the machine , and thus does not quantify the extent to which products in other parts of t h e machine are cooled

. DOE is considering requiring temperature measurements of standard test packages at
locations other than the next

- to

- ven d position as part of this test procedure rulemaking . These measurements c ould be used in verifying the equipment class (Class A or Class B) of the machine should a question arise

.

(6) E xpanded range of lighting and control settings : The current DOE test proce dure requires that the vending machine be operated with normal lighting and control settings, using only those energy management controls that are permanently operational and not capable of being adjusted by a machine operator

. ( ANSI/ASHRAE 32.1

- 2004 7.1.1 (d) )

. It does not specify how to test equipment that has permanently operational controls that can be adjusted , such as beverage vending machines that have multiple lighting and control option s to select for use in machine operation, without an option to d isable the controls . DOE is considering amendments to the test procedure to indicate what settings are to be used for the test ing of
machines with controls that are permanently operational (cannot be disabled) but can be adjusted by the operator

.

(7) Creating a provision to measure the impact of low

- power modes of operation : DOE is considering amendments to the test procedure that include provisions for measuring the energy consumption impact of certain low

- power modes with which beverage vending machines may be equipped. The features of these modes may include (but

are not limited to) switching off or dimming lights and raising the temperature set point (to which the unit cools the products) to a value higher than the temperature set point associated with the unit’s normal operation mode. These low

- power modes are typically activated during off hours or periods of low customer traffic. The current10 test procedure requires that the vending machine be operated with normal lighting and control settings, using only those energy management controls that are permanently operational and not capable of being adjusted by a machine operator. It is likely that the current test procedure does not capture the energy savings of all types of energy management systems in a representative manner. For the revised test procedure, DOE
is consideri ng specifying test requirements to account for the potential reduction in energy consumption associated with the use of certain energy management systems that may not be accounted for in the current test procedure. One amendment under
consideration is to i nclude a fixed period of time during which a low

- power mode
could be utilized during the test , if the low

- power mode is available on the unit as shipped from the factory.

DOE encourages input on how low

- power modes or other new technologies could best be
addressed in a test procedure rulemaking.

Item 1

- 1 DOE requests comment regarding adoption of updated test procedure for the

beverage vending machines covered under this rulemaking

.

Item 1

- 2 DOE requests comment on the possible elimination of the requi rement to test

units at 90 °

F.

Item 1

- 3 DOE requests comment regarding a requirement of measurement of product

temperatures at other than the next

- to

- vend positions.

Item 1

- 4 DOE requests comment on the current utilization of low

- power modes in certifica tion testing

. Do any current models meet the requirements of the current test procedure regarding energy management controls and utilize a
low

- power mode during the test?

Item 1

- 5 DOE requests comment on the testing of low

- power modes in a revised test

p rocedure. What are the typical functions of low

- power mode in beverage vending machines? Are these low

- po wer modes triggered by scheduled timers, activity , motion sensors, or other environment or state changes ? What lengths of time should DOE consider for the full

- power mode and low

-

power mode?

Item 1

- 6 DOE requests comment on the applicability of the current test procedure, and

all test procedure modifications under consideration, to combination vending
machines.

Item 1

- 7 DOE requests comment on its prop osal to consider modifications to the test

procedure to account for energy management systems

.

Manufacture rs must use the new or amended procedure to certify compliance with any
new or amended standards no later than the compliance date of those standards . M anufacturers

may also certify their products to DOE using the test procedure and any revised energy
conservation standards prior to the compliance date of any amended standards.11

1.7 Preliminary Analysis

As part of its initial rulemaking activity, DOE typically identifies equipment technology options and makes a preliminary determination on whether to retain each option for detailed analysis or to eliminate it from further consideration. This process inclu des a market and technology assessment ( section 3 ) and a screening analysis ( section 4 ). DOE applies four screening criteria in the screening analysis to determine if any technology options should be
eliminate d from further consideration: (1) technological feasibility; (2) practicability to manufacture, install, and service; (3) adverse impacts on utility or availability; and (4) adverse impacts on health or safety. Technologies that pass the screening analysis are evaluated, and referred to as design options

, in the engineering analysis.

DOE consults with interested parties and independent technical experts , and conducts research into industry literature to identify the key issues and design options or efficiency levels that DOE will consider in the rulemaking. DOE initiates dialogue with interested parties with
this F ramewo rk document, the public meeting following its publication, and the request for public comment. This dialogue also provides an opportunity for input into the structural and analytical approach planned for this energy conservation standards rulemaking.

At the start of any preliminary analysis, DOE considers design options or efficiency levels for each equipment class. DOE uses these design options or efficiency levels to collect manufacturer cost data, historical shipment data, shipment

- weighted average efficiency data, and preliminary manufacturer impact data ( e.g. , capital conversion expenditures, marketing costs, and research and development costs). As part of any preliminary analysis, DOE also conducts other principal analyses, including (1) the engin eering analysis ( section 5 ); (2) the customer LCC analys i s ( section 8 ); (3) the NIA , which considers NES and customer NPV ( section 10 ); and (4) a preliminary MIA ( sectio n 12 ). DOE present s the results of these analyses in the preliminary analysis technical support document (TSD).

DOE selects efficiency levels from the energy effic iency or energy use levels considered
as CSLs in any preliminary analysis. Discussion of various CSL s will help interested parties
review the data that underpin the analyses. DOE will use interested parties’ comments to refine the models for the next stage of the rulemaking analyses. In addition to the efficiency corresponding to the maximum technologically feasible (“max

- tech”) design and the efficiency corresponding to the minimum LCC point, DOE generally considers CSLs or design options that span the ful l range of technologically achievable efficiencies. The range of levels DOE typically analyzes includes the following :

t he baseline efficiency level ( i.e. , the minimum level), which typically represents the energy efficiency of equipment with the lowest energy efficiency level on the market for a given category ; f

or equipment categories where minimum energy conservation standards already exist, the baseline efficiency level is typically defined by the existing energy conservation standard;

t he level with the minimum LCC or greatest LCC savings; the level with the greatest NPV;

t he highest energy efficiency level or lowest energy consumption level that is technologically feasible ( i.e. , max

- tech); and

l evels that incorporate noteworthy technologies or fill large gaps between other efficiency levels considered.12

At the preliminary analysis stage, DOE uses analytical models and tools to assess the different equipment classes at each efficiency or energy use level analyzed. Many of these analytical models and t ools are in the form of spreadsheets, which are used to conduct the LCC analys i s and to determine the NES and NPV.

DOE make s the results of any preliminary analysis available on its website for review. 4 When it publishes a preliminary analysis, DOE also make s available a preliminary TSD that
contain s the details of all the analyses performed to date. After publication of any preliminary analysis, DOE provide s a public comment period and hold a public meeting.

1.8 Notice of Proposed Rulemaking (NOPR)

In devel oping a NOPR, DOE consider s all the comments it received after publication of the preliminary analysis. This process may result in revisions to the preliminary analysis, including the engineering and LCC analyses. At this point, DOE conduct s additional eco nomic and environmental impact analyses. These analyses generally include a customer subgroup analysis ( section 11 ), a complete MIA ( section 12 ), a n employment impact analysis ( section 13 ),

a utility impact analys is ( section 14 ), an emissions analysis ( section 15 ), monetization of sel ected environmental emissions (section 16 ), and a regulatory impact analysis ( section 17 ).

DOE describe s the methodology used and make s the results of all the analyses available on its website for review. Based on comments from interested parties, DOE may revise the analys e s further . This analytical process ends with the selection of proposed standard levels

, if

any , that DOE will present in the NOPR. DOE select s the proposed standard levels from the TSLs analyzed during the NOPR phase of the rulemaking. The NOPR, published in the Federal Register , document s the evaluation and selection of any proposed TSLs , along with a discussion
of other TSLs considered but not selected and the reasons DOE did not select them.

For each equipment class, DOE identif ies the max

- tech efficiency level. If DOE proposes a less stringent level than the max

- tech level

, DOE sequentially explain s the reasons for eliminating higher levels, beginning with the highest level considered. DOE present s the analytical results in the NOPR, and provide s the details of the analysis in an accompanying TSD.

Whe n DOE publishes a NOPR, it provide s the U.S. Department of Justice (DOJ) with copies of the NOPR and TSD to solicit feedback on the impact of any proposed standard levels on competition in the BVM industry. DOJ reviews standard levels in light of any lesse ning of competition likely to result from the imposition of such standards

. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) Publication of a NOPR is followed by a public comment period
that includes a public meeting.

1.9 Final Rule

After publication of a NOPR, DOE consider s public comments it receives on the proposal and accompanying analyses. DOE review s the engineering and economic impact analyses and

any proposed standards based on these comments and consider s modifications where necessary.

4 All materials associated with the rulemakings for BVM test procedures and energy conservation standards will be available on DOE’s website at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/7313

Before any final rule is issued, DOE also consider s DOJ comments on the NOPR relating to the impacts of any proposed standard levels on competition to determine whether changes to these standard levels are needed. DOE publish es the DOJ comments and DOE’s response as part of

an y final rule.

In any final rule, DOE determine s whether to amend the standards, and if such determination is positive, select s the final standard level based on the complete record of the energy conservation standards rulemaking. Any final rule establishes any final standard level s and the compliance date

, and also explain s the basis for the selection of any final energy
conservation standard levels

. A final rule is accompanied by a final rule TSD.

2. ANALYSES FOR ENERGY CONSERVATION STANDARDS RULEM AKING

The purpose of the analyses in this rulemaking is to support DOE’s determination whether to amend the energy conservation standards for beverage vending machines. If the energy conservation standards are amended, these analyses ensure that DOE select s standards that achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified and will result in significant energy savings, as required by EPCA. Economic justification includes the consideration of the s even factors set forth in EPCA (see
section 1.6.1 of this Framework document), which encompasses economic impacts on domestic manufacturers and customers, national benefits including environmental impacts, issues of consumer utility, and impacts from any lessening of competition.

Figure 2

. 1 summarizes the analytical components of the standards

- setting process. The analyses are presented in the center column. Each analysis has a set of key inputs, which are data and information required for the analysis. “Approaches” are the methods that DOE will use to obtain key inputs and meth ods of analysis, which may vary depending on the information and analysis step in question. Some key inputs exist in public databases. DOE will also collect information from interested parties or others with special knowledge and develop information indepe ndently in support of the rulemaking. The results of each analysis are key outputs, which feed directly into the rulemaking. Arrows indicate the flow of information between various analyses. DOE ensures a consistent approach to its analyses throughout the rulemaking by considering each analysis as a part of the overall standards

- setting framework.1 4

Figure 2

. 1 Flow Diagram of Analyses for the BVM Standards Rulemaking

3. MARKET AND TECHNOLOGY ASSESSMENT

The market and technology assessment will provide information about the BVM industry that DOE will use throughout the rulemaking. This assessment is particularly important at the outset of the rulemaking to determine equipment classes and to identify potential design options or efficiency (or energy consumption) levels for each equipment class.15

3.1 Market Assessment

DOE will qualitatively and quantitatively characterize the structure of the BVM industry and market. In the market assessment, DOE will identify and ch aracterize the manufacturers of this equipment; estimate market shares and trends in the market; address regulatory and

non

- regulatory initiatives intended to improve the energy efficiency or reduce the energy consumption of the beverage vending machines c overed under this rulemaking; and explore the potential for technological improvements in the design and manufacturing of such equipment.

This market assessment will establish the context for this rulemaking, and it will serve as a resource to guide the an alyses that follow. For example, DOE may use historical shipments and prices as indicator s of future shipments and prices. Similarly, DOE plans to use market structure
data for the MIA , data that will be particularly useful for assessing competitive impact s. This phase also allows DOE to start updating design options by reviewing equipment literature and industry publications. The National Automatic Merchandising Association (NAMA) is the trade association for manufacturers of equipment covered under this r ulemaking, and the American Beverage Association (ABA) is the trade association for the bottlers and syrup companies in the beverage industry. DOE expects that NAMA and ABA could play a critical role in providing market information, including input on char acterizing current and historical trends in equipment shipments and energy efficiency. This type of data is an important input for analyses that
determine whether any amended energy conservation standards are economically justified and will result in signi ficant energy savings.

DOE encourages interested parties to submit data that will improve DOE ’ s understanding
of the beverage vending machine market. DOE aggregates data provided by manufacturers and other organizations for use in its analys e s.

Item 3

- 1 DOE seeks information that would contribute to the market assessment (e.g.,

the manufacturers of this equipment in the United States and the equipment they sell, by equipment class). It is particularly important that DOE be aware of the major and small/nic he manufacturers.

Item 3

- 2 DOE seeks information on historical annual equipment shipments (both

domestic and imports) by equipment class and the corresponding efficiency distributions of these shipments.

Item 3

- 3 DOE seeks information on the proportion of new equipment shipped annually

that replaces existing equipment

, for each equipment class.

3.2 Overview of Beverage Vending Machines

Refrigerated bottled or canned beverage vending machines can be divided into categories in several ways: physical divisions based on door type (opaque or transparent) or beverage storage system (stack or shelves), machine

- use designation (indoor/outdoor use or indoor

- use

only), cooling mechanism (zone

- cooled or fully cooled), and the types of products dispensed. In
the 2009 BVM final rule, DOE established three equipment classes: Class A, Class B, and combination beverage vending machines. While equipment in the combination vending machine class by definition contains separate refrigerated and non

- refrigerated volumes, Class A a nd Class B equipment do not contain separate, non

- refrigerated volumes. In Class A beverage16

vending machine machines, all items are fully cooled to the same temperature at which they will be dispensed. Class B equipment consists of machines in which not al l the items are fully cooled to the vending temperature. 74 FR at 44924 (Aug. 31, 2009). Combination vending machines are equipment that also has non

- refrigerated volumes for the purpose of vending other, non

- “sealed beverage” merchandise. 74 FR at 44920 ( Aug. 31, 2009). The criteria, detailed definitions, and corresponding applicable standards for these equipment classes are further discussed in section
3.3

.
Another method of classifying beverage vending machines, aside from the cooling

method distinction used in the 2009 BVM final rule, is by the nature of their fronts

— transparent or opaque. Transparent

- front vending machines store items on shelves, allowing products contained within to be visible to the consumer. Some models have the capacity to display dozens of varieties of products. Product packaging is not limited to cans and bottles, but may also include cartons, juice packs, and non

- standard bottle and can shapes. With the market increasing
for non

- carbonated soft drinks such as energy drinks, fruit juices, and water (which come in a variety of packaging types and sizes), the design of transparent

- front machines provide s more flexibility than stack

- style opaque

- front machines (described later in this section). Products are dispensed mechanically, wit h many machines using a mechanism to move the product to the door gently rather than dropping it from the upper shelves.

Most transparent

- front machines are intended to be used indoors because their transparent
fronts make them vulnerable to vandalism. In addition, transparent

- front machines could experience additional heat flux through the transparent front due to solar heat gain and solar radiation if placed outdoors. However, some transparent

- front machines have been made to
withstand outdoor conditions

. All transparent

- front machines that DOE is currently aware of in the U.S. market are “fully cooled” such that all products contained within them are at the vending temperature, and are, therefore, considered Class A.

Unlike transparent

- front beverage vending machines, opaque

- front beverage vending
machines hold standard

- sized sealed containers, usually 12

- ounce cans or 20

- ounce bottles, stored in stacks. Capacity varies, with larger machines holding up to 800 cans split between up to
12 varieties of be verage (through 12 distinct beverage stacks or columns) internally and featuring up to 30 cubic feet of refrigerated volume. Opaque

- front machines comprise the majority of vending machines placed outdoors, and many are placed indoors as well. The products contained are typically advertised on the front via signage or a backlit panel and the actual machine contents are not visible to the user. Some opaque

- door models feature a “live display” door type, where a sample of the product that may or may not be ref rigerated is visible to the consumer through a small window. These “live

- display” machines represent a small fraction of the total
market.

Zone

- cooled machines, which belong to the Class B equipment class, typically have opaque fronts and feature “stack

- st yle” vending mechanism. In this type of equipment, refrigerated air is directed at a fraction (or zone) of the refrigerated volume. This cooling method
is used to en sure that some beverages in the lower part of the machine, which will be vended

sooner, are fully cooled to the vending temperature, while maintaining beverages in other areas of the machine at higher temperatures. This reduces the refrigeration power needed and thus lessens the energy consumption of the unit.17

Combination vending machines, whic h belong to the third equipment class defined in the 2009 BVM final rule, are refrigerated beverage vending machines that also have non

- refrigerated
volumes to hold other, non

- “sealed beverage” merchandise. Combination vending machines
were determined in t he 2009 BVM final rule to have much lower shipment volume s than either
Class A or Class B machines. Though combination machines are a class of beverage vending machines, DOE did not have the data needed to estimate either the energy efficiency improvement potential or the cost of more

- efficient designs of combination vending machines. As a result, no standard was set for combination vending machines in the 2009 BVM final rule.
74 FR at 44919

- 20 (Aug. 31, 2009). As part of the current rulemaking, DOE is cons idering performing a n analysis of the energy savings potential of combination vending machines.

Item 3

- 4 DOE requests comment on whether all transparent

- front beverage vending machines currently available on the market are fully cooled.

Item 3

- 5 DOE requ ests comment on whether all opaque

- front beverage vending machines currently available on the market are zone cooled.

Item 3

- 6 DOE requests information on perishable items in beverage vending machines.

Do machines that sell perishable and non

- perishable items (in addition to or including beverages) ship with different software or controls? Are they rated differently, such as to food safety specifications? What portion of the BVM market is composed of machines that sell perishable items?

3.3 Equipment Classe s

When evaluating and establishing energy conservation standards, DOE creates equipment classes based on the type of energy used, capacity, or other performance

- related features that affect efficiency. Additionally, DOE must consider such factors as utilit y to the consumer or others deemed appropriate in setting standards for separate equipment classes. (42 U.S.C.
6295 (q) )

In the 2009 BVM final rule, DOE determined that the most significant criterion affecting beverage vending machine energy use is the met hod used to cool beverages. Using this criterion, DOE divided covered equipment into two equipment classes:

Class A : a refrigerated bottled or canned beverage vending machine that is fully cooled, and is not a combination vending machine.

Class B : any refr igerated bottled or canned beverage vending machine not considered to be Class A, and is not a combination vending machine.

In addition, DOE interprets EPCA’s definition in 42 U.S.C. 6291(40) for beverage vending machines to cover any vending machine that dispenses at least one type of refrigerated bottled or canned beverage, regardless of the other types of vended products (some of which may not be refrigerated). In the 2009 BVM final rule, DOE concluded that combination vending
machines have a distinct ut ility and, accordingly, established a third equipment class to cover combination vending machines. As noted above, h owever, DOE did not establish standards for this equipment class in that rule . 74 FR at 44919

– 20 (Aug. 31, 2009). So that interested parties18

understand what constitutes a combination vending machine, DOE established the following
definition:

Combination vending machine : a refrigerated bottled or canned beverage vending
machine that also has non

- refrigerated volumes for the purpose of vending other,

non

- “sealed beverage” merchandise.

As part of the current rulemaking, DOE will evaluate the three equipment classes
established in the 2009 BVM final rule and determine whether modifications should be made to the classes in conjunction with any pote ntial new or amended standards.

In the 2009 BVM final rule, DOE did not provide a definition for the term “fully

- cooled.” In the current rulemaking DOE is considering the following definition:

Fully

- cooled beverage vending machine : a refrigerated bottled or canned beverage vending machine within which each item in the beverage vending machine is brought to and stored at temperatures that fall within plus or minus 2

° F of the average beverage temperature, which is the average of the temperatures
of all the items in the next

- to

- be

- vended position for each selection.

DOE is aware that certain beverage vending machines feature low

- power modes in which the machines maintain the refrigerated product at a higher temperature than they would during
normal

- mode opera tion. Such low

- power modes are typically meant to be activated during off hours when customer traffic is expected to be negligible and when the product being refrigerated
is non

- perishable. If such low

- power modes are taken into consideration and accounted for in the DOE test procedure (as described in section 1.6.2 ), a distinction may need to be made between beverage vending machines that vend only non

- perishable i tems (including or in addition to beverages) and those that also vend perishable items (including or in addition to beverages) . This is because machines vending perishable goods could not utilize a mode allowing product temperatures to rise above levels re quired for food safety purposes. Because of this, DOE may choose to treat beverage vending machines designed to vend perishable products as a separate equipment class.

DOE notes that equipment designed for vending perishable items could modulate the tempe rature of the non

- perishable beverage portion of the equipment, while not increasing the temperature of the section of the equipment designed to hold perishable items. DOE could consider test procedures for beverage vending machines that vend some perishab le products that account for the “perishable product volume” and “non

- perishable product volume” separately.

Item 3

- 7 DOE seeks comment on the equipment classes for beverage vending

machines, and on the criteria used in creating the classes. Are the equi pment classes appropriate? Are there other factors that should be considered in equipment class distinctions and definitions?

Item 3

- 8 DOE seeks comment regarding the possible use of alternative equipment

classes in this rulemaking. Specifically, are ther e other equipment characteristics that should be considered for equipment class distinctions and definitions?19

Item 3

- 9 DOE seeks comment on the proposed definition of “fully cooled vending

machine.” Does the current language reflect what is used in indust ry?

Item 3

- 10 DOE requests comment on the creation of a new equipment class for

machines that are manufactured and sold to vend perishable items (including or in addition to beverages) . How should DOE define equipment sold to vend perishable items? Does t his equipment obtain other certifications for vending perishable items? Is it common for beverage vending machines to vend both perishable and non

-

perishable items? Is the same beverage vending machine offered to vend both perishable and non

- perishable ite ms (i.e., the equipment is not currently differentiated in the marketplace)?

3.4 Technology Assessment

The technology assessment centers on understanding how equipment uses energy and what measures can reduce energy consumption of beverage vending machines. M easures that could potentially improve the energy efficiency of equipment are called “technology options,” and they are based on existing technologies as well as working prototype s . In consultation with interested parties, DOE intends to develop a list of technology options that should be considered in the analysis.

In recent years, new technological developments have emerged that are applicable to beverage vending machines. DOE is aware of, for example, a move away from hydrofluorocarbon (HFC) refrigeran ts toward natural refrigerants such as hydrocarbons (HCs) and carbon dioxide (CO 2 ), the incorporation of touch

- screen interfaces, increasing inclusion of
low

- power modes of operation by equipment manufacturers, reduced cost of electronic components, and gr eater use of variable

- speed compressor and permanent magnet motors.

DOE could consider various low

- power modes as design option s . Low

- power modes could include lighting low

- power modes in which lights are dimmed or turned off, refrigeration
low

- power modes in which beverage temperatures are allowed to rise to 40 °F or higher, and
whole machine low

- power modes where both features ar e employed. Refrigeration and whole
machine low

- power modes may not be options for beverage vending machines that sell perishable products such as milk and fresh juices due to food safety requirements. If low

- power modes incorporating increased product tem peratures are considered as a design option, DOE could consider creation of a new equipment class for equipment that is sold to vend perishable
items (in addition to or including beverages) , to acknowledge the fact that these units’ maximum
temperatures ar e dictated by food safety requirements and they may not be able to take advantage of a low

- power refrigeration mode of operation.

DOE is studying technology options by reviewing manufacturer catalogs, recent trade publications, technical journals, and pat ent filings. DOE also intends to consult with technical experts within the field and to conduct manufacturer interviews about these technology options. For the preliminary analysis, DOE is currently considering the specific technologies and designs
listed below.

The following technologies and designs are relevant to all of the equipment classes listed
above: higher efficiency signage lighting ( e.g. , light

- emitting diodes);20 higher efficiency lighting ballasts ( e.g. , electronic ballasts); remote lighting ball ast location ( i.e. , outside the refrigerated space); higher efficiency expansion valves ( e.g. , dual

- port thermostatic expansion valves and electronic expansion valves); higher efficiency evaporator fan motors ( e.g. , electronically commutated motors (ECMs)); increased evaporator surface area or efficiency to achieve lower machine

- evaporator temperature differential (with a possible increase in fan energy);
evaporator

- fan

- motor controllers; higher efficiency evaporator fan blades;
low

- pressure

- differential evaporators;
anti

- sweat heater controls;
machine

- insulation thickness increases or improved insulating materials, such as vacuum insulated panels or aerogels; defrost mechanism ( e.g. , hot

- gas defrost);
defrost

- cycle control ( e.g. , partially or fully demand

- based defrost rather than partially or fully time

- based defrost); higher efficiency compressors;
variable

- speed compressors; suction line heat exchangers (subcool liquid refrigerant with suction line);
increased condenser surfa ce area or efficiency to achieve lower ambient

- condenser temperature differential; higher efficiency condenser fan motors ( e.g ., ECMs);
condenser

- fan

- motor controllers; higher efficiency condenser fan blades; lighting controls, timer s, and/or sensors; and
low

- power modes incorporating refrigeration controls, timers, and/or sensors.

Item 3

- 11 DOE requests comment on whether any technologies or designs should be

added to or removed from the above list . For example, do any of the technologies above raise issues with proprietary designs or issues where testing pursuant to the DOE test procedure does not reflect a change in measured energy efficiency ?

Item 3

- 12 DOE requests comments, recommendations, an d data on max

- tech levels for

Class A equipment, Class B equipment , and combination vending machines

.

Item 3

- 1 3 DOE requests comment on whether max

- tech levels can only be achieved

using proprietary designs or whether there are alternative design paths

av ailable that can achieve the same energy use level?

Item 3

- 1 4 DOE requests comment on whether any technologies or designs should be

treated individually, or be in corporated into a few standard “design packages

. ” If “design packages” are possible, how shou ld the packages be
assembled? DOE would develop potential standard levels based on these packages, but manufacturers could meet any established standards through the use of any design options.21

Item 3

- 1 5 DOE requests comment on low

- power modes . What types of low

- power modes are currently used in the BVM market ? Are there other types of energy
management systems about which DOE should be aware that are applicable to beverage vending machines?

Item 3

- 1 6 DOE requests comment on whether transparent

- front machines could be designed with zone cooling.

3.5 Baseline Units

Once DOE has established equipment classes, it will select baseline models as reference points for each equipment class, against which it can measure changes resulting from energy
conservation st andards. The baseline models in each equipment class represent the characteristics of equipment in that class. Typically, a baseline model would be a model that just meets current required energy conservation standards. For equipment covered by conservatio n standards in the 2009 BVM final rule, DOE will select baseline models that are minimally compliant with the required energy conservation standards set forth in that final rule. If DOE determines it necessary to develop standards for equipment for which s tandards were not set in the 2009 BVM final rule, or for classes other than those specified in the 2009 BVM final rule, DOE will select baseline models using a different method ( e.g. , the unit with the highest energy consumption or a typical unit). DOE pro poses to use information provided by stakeholders, as well as information available through the DOE’s Compliance Certification Management System (CCMS) in selecting appropriate baseline models.

Item 3

- 1 7 DOE seeks comment on how to select baseline efficien cy levels for equipment

classes without a previous energy conservation standard (e.g., combination machines).

Item 3

- 1 8 What machine sizes and capacities (cubic feet, vendible capacity) should be

used as analysis points for each equipment class?

Item 3

- 1 9 DOE seeks information on what particular components and features

characterize the baseline model in each equipment class (materials, dimensions, insulation, refrigerant type, compressors, evaporators, condensers, expansion devices, fans, motors, anti

- cond ensate devices and controls, defrost mechanisms and controls, lighting, etc.).

4. SCREENING ANALYSIS

The purpose of the screening analysis is to screen out technology options that will not be further analyzed in the engineering analysis. DOE will follow the p rocess set forth below to screen out technology options.

DOE will use the list of technology options (developed through its own research and in consultation with interested parties in the technology assessment ) for consideration in the engineering analysi s (section 5 ). DOE will review each technology option or best available technology in light of the following four criteria:22

1. Technological feasibility. DOE will scr een out technologies that are not incorporated in commercially available equipment or working prototypes.

2. Practicability to manufacture, install, and service. If DOE determines that mass production of a technology in commercial equipment and reliable installation and servicing of the technology cannot be achieved on the scale necessary to serve the
relevant market at the time of the effective date of the standa rd, it will not consider that technology further.

3. Adverse impacts on product or equipment utility or availability. If DOE determines a technology will have significant adverse impact on the utility of the equipment to significant customer subgroups, or wo uld result in the unavailability of any covered equipment type with performance characteristics (including reliability), features, size, capacities, and volumes that are substantially the same as equipment generally available in the United States at the time, it will not be considered further.

4. Adverse impacts on health or safety. If DOE determines that a technology will have significant adverse impacts on health or safety, it will not be considered further

.
DOE will fully document its reasons for eliminating or retaining any technology options during the screening analysis and will publish this documentation for interested parties to review as part of the preliminary analysis. Those technology options not s creened out by the above four criteria will be considered design options in the development of cost

- efficiency curves in the engineering analysis.

Item 4

- 1 DOE welcomes comments on how the above four screening criteria might

apply to any additional techno logy option(s) that an interested party
recommends to DOE.

Item 4

- 2 DOE welcomes comments on the applicability of the four screening criteria to

the technologies listed in section 3.4

.

5. ENGINEERING ANALYSIS

After conducting the screening analysis, DOE performs an engineering analysis based on the remaining design options. The engineering analysis consists of estimating the costs of equipment at various levels of incr eased energy efficiency or reduced energy consumption. This section provides an overview of the engineering analysis (section 5.1 ), and includes discussion of (1) the approach for determining the cost

- efficiency relationship (section 5.2 ); (2) manufacturer prices (section 5.3 ); (3) proprietary designs (section 5.4 ); and (4) regulatory requirements outside the realm of DOE’s energy conservation standards pro gram (section 5.6 ).

5.1 Engineering Analysis Overview

The purpose of the engineering analysis is to determine the relationship between manufacturer selling price (MSP) and energy efficiency (energy use) for beverage vending machines. In determining this relationship, DOE will estimate the increase in MSP associated with design changes that increase the efficiency (decrease energy use) of the baseline models.23

DOE will obtain cost estimates for the engineering analysis (which it will also use in the MIA) from detailed incremental cost data disaggregated into the cost of incremental material, labor, and overhead. DOE will create an industry

- wide analysis based p rimarily on cost estimates of specific design options.

DOE seeks design and cost information to determine the cost of increasing energy efficiency (reducing the energy consumption) of the baseline models. In addition, DOE must identify the model with the h ighest energy efficiency (lowest energy consumption) that is technologically feasible within each equipment class ( i.e. , the “max

- tech” model).

Item 5

- 1 Within each equipment class, for energy consumption levels below the current

standards ’ baseline, DOE seeks information on daily energy consumption and

on incremental manufacturing costs and components (differentiation in components from the baseline, material costs

, 5 labor costs

, 6 factory overhead

costs 7 (excluding depreciation), building conversion capital expenditures, tooling/equipment conversion capital expenditures, research and development ( R&D ) expenses, marketing expenses, etc.).

Item 5

- 2 DOE is also interested in any equipment test data that stakeholders can

provide ( including equipment par ameters, test results, etc., and, in the case that a test procedure other than the DOE test procedure was used, the test procedures used and rating conditions ). Test data for the baseline model in each equipment class is particularly important.

5.2 Proposed Ap proach for Determining the Cost

- Efficiency Relationship

DOE performs an engineering analysis as part of its rulemaking efforts in order to
determine the cost

- efficiency relationship for each type or class of equipment for which standards are being consider ed. This cost

- efficiency relationship is a quantification of the fact that, in most cases, higher equipment efficiency inherently incurs a higher cost to the manufacturer (due to more sophisticated components or processes). Generally, this relationship
is depicted as an output of the engineering analysis in the form of curves plotting cost as a function of energy efficiency for the given equipment class. DOE typically structures its engineering analysis using one of three approaches: (1) design

- option; (2) efficiency

- level; or (3) reverse

- engineering (or cost

- assessment). A design

- option approach uses individual design options, or combinations of design options, to identify increases in efficiency. Under this approach, cost estimates are based on manufacture r or component supplier data or engineering

5 This consists of c osts of raw materials including scrap that can be trace d to final or end products. Direct material
costs do not include indirect material costs that are attributed to supplies that may be used in the production process
but not incorporated into final products ( e.g. , lubricating oil for production machinery).

6 Th is refers to earnings of workers who assemble parts into a finished good or operate machines i n the production

process. Direct labor includes the fringe benefits of direct laborers such as group health care, as well as overtime pay. Direct labor does not include indirect labor

, which is defined as the earnings of employees who do not work directly in assembling a product such as supervisors, janitors, stockroom personnel, inspectors, and forklift operators.

7 F actory overhead includes indirect labor, downtime, set

- up costs, indirect material, expendable tools, maintenance, property taxes, insurance on assets, and utility costs. Factory overhead does not include depreciation, selling, general, and administrative costs, R&D

, interest

, or profit (accounted for by DOE separately).24

computer simulation models focused on design options . Individual design options, or combinations of design options, are added to the baseline model in ascending order of cost

effectiveness. An efficiency

- level ap proach establishes the relationship between manufacturer cost and increased efficiency at predetermined efficiency levels above the baseline. Under this approach, manufacturers typically provide manufacturer cost data for incremental increases in
efficienc y , without identifying the technology or design options they would use to achieve such increases, or cost models are prepared based on procured equipment of a known efficiency level

. A reverse

- engineering or cost

- assessment approach involves purchasing rep resentative units of beverage vending machines , disassembling the units into their components , and evaluating the manufacturing costs based on a “bottoms

- up” manufacturing cost assessment of the components and their assembly

.

In the 2009 BVM rulemaking, DOE used a design

- option approach for the engineering analysis. DOE plans to continue us ing this approach for this rulemaking

. The d esign option approach will involve consultation with industry experts, review of publicly availa ble cost and performance information, and modeling of equipment costs and energy consumption. DOE believes that the design option approach, where modeling is used to simulate implementation of specific energy

- efficient features, lends itself best to this e quipment type. This is due to the fact that much of the equipment is built at or near the current required performance levels, and there is not a large range of efficiencies within the equipment currently on the market from which to draw trends, as would b e needed for an efficiency

- level or pure reverse

- engineering approach.

In the analyses for the 2009 BVM final rule, Class A beverage vending machines were modeled as having transparent fronts and Class B beverage vending machines were modeled as having o paque fronts.

For each equipment class, the engineering analysis will be used to estimate manufacturer production cost of equipment at each efficiency level considered. DOE plans to use a cost model
to estimate the cost of the case, refrigeration system, lighting, and other system components. A
cost model was developed for the 2009 BVM rulemaking and will be updated for the current rulemaking’s engineering analysis

.

Item 5

- 3 DOE requests feedback on the use of the design

- option approach to

determining the relation ship between manufacturer selling price and energy efficiency for beverage vending machines.

5.3 Manufacturer Prices

DOE plans to apply markups to convert manufacturer production cost to MSPs. DOE will estimate manufacturer markups from publicly avail able financial information ( e.g. , Securities and Exchange Commission 10

- K reports). This information will be adjusted later based on
information from manufacturer interviews.

Item 5

- 4 DOE seeks comment on the markup approach proposed for developing

estim ates of manufacturer selling prices.25

5.4 Proprietary Designs

DOE considers in its engineering and economic analyses all design options that have not been screened out, including proprietary designs. DOE will consider proprietary designs in the subsequent analy ses only if they are not part of a unique path to a given efficiency level. If the proprietary design is the only approach available to achieve a given efficiency level, DOE will reject that efficiency level from further analysis. Further, DOE is sensitive to manufacturer concerns regarding proprietary designs and will make provisions to maintain the confidentiality of any proprietary data submitted by manufacturers consistent with applicable law.

This information will provide input to the competitive impa cts assessment and other economic analyses.

Item 5

- 5 Are there proprietary designs that DOE should consider for any of the

equipment under consideration by this rulemaking? If so, how should DOE acquire the cost data necessary for evaluating these designs ?

Item 5

- 6 Are there alternative design paths that can achieve the same level of max

- tech

energy use (energy efficiency) as those using proprietary designs?

5.5 Representative Sizes

In performing the engineering analysis, DOE will select equipment models from the range of available equipment with sizes that DOE believes best represent the most typical offerings within that specific equipment class. In the case where the standard level is an equation, i.e. , function of the capacity, DOE may select multiple sizes of equipment as representative models in order to determine the relationship between energy use characteristics and equipment size within a given product class. Proper selection of representative si zes will allow for the analyses to accurately model the majority of available equipment. DOE plans to select representative sizes for each equipment class, while considering the possible design constraints at very small and very large capacities. For those classes already subject to standards, DOE plans to use the representative sizes it used in developing the 2009 BVM final ru le and
included in the 2009 BVM final rule TSD , shown in Table 5.5

. 1 , as starting values for the engineering analysis in this rulemaking. For any other analysis that DOE conducts, such as the complete analysis for combination vending machines that is under consideration, DOE will

s elect representative equipment sizes that represent the most typical offerings from within that equipment class.

Table 5.5

. 1 Representative Sizes for Beverage Vending Machines in 2009 BVM Rulemaking26 Class A Class B
Small Medium Large Small Medium Large Vendible Capacity number of cans 300 400 500 450 650 800

Refrigerated Volume ft 3 17 22 34 17 22 26

Item 5

- 7 DOE requests feedback on representative sizes. Are the representative sizes

used for the 2009 BVM final rule adequate, and should they be retained or modified?

Item 5

- 8 If DOE were to analyze a combination equipment class, perishables

(including or in addition to beverages) equipment class, or other new equipment classes, what should be the relevant representative sizes for that
class?

5.6 Outside Regulatory Changes Affecting the Engineering Analysis

In conducting an engineering analysis, DOE must consider the effects of regulat ory changes outside DOE’s statutory energy conservation standards rulemaking process that can affect the energy efficiency or energy consumption of the covered equipment , and/or the cost of improving such efficiency or consumption

. DOE will attempt to iden tify all such outside regulatory issues that could impact the engineering analysis. The consideration of these issues is closely related to the cumulative regulatory burden assessment that DOE will carry out as part of
the MIA . Based on consideration of th e comments received for the preliminary analysis, DOE will make the necessary changes to the analysis. These changes will be reflected in the
documentation of the NOPR.

One issue that may be relevant to this equipment is alternative refrigerants. DOE did n ot consider chlorofluorocarbon ( CFC ) or hydro chlorofluorocarbon ( HCFC ) refrigerants in its analysis for the 2009 BVM final rule , instead using HFC R

- 134a as the refrigerant in all technical analyses

. A lthough alternative refrigerants such as HC s, ammonia, and CO 2 are used in Europe and elsewhere, they were not used at the time of the analyses for the 2009 BVM rulemaking for BVM applications in the United States.

The majority of the U.S. BVM industry currently continues to use HFC refrigerants

, specifically R

- 134a, in its equipment

. However, DOE is aware that beverage vending machines using alternative refrigerants are now available in the U.S. and that this equipment represents a growing portion of the market. DOE requests information from interested partie s regarding the prevalence , cost, and energy consumption of equipment using these refrigerants.

Item 5

- 9 DOE requests information on the use of alternative refrigerants in beverage

vending machines, including shipment, cost, and energy consumption informa tion.

Item 5

- 10 Are there additional regulatory issues that DOE should consider in its

analysis of beverage vending machines? Do the issues discussed in this section affect shipments, cost

, or energy efficiency?27

6. ENERGY USE ANALYSIS

The purpose of the ener gy use analysis is to assess the energy

- and peak

- demand

- savings potential of different equipment efficiencies for various building types and across a range of climate zones where the equipment is used. As part of the energy use analysis, DOE must make

cer tain engineering assumptions regarding equipment application, including where the equipment is located (outdoor versus indoor). Although many beverage vending machines are located inside conditioned spaces, a relatively small number of machines are install ed outdoors or outside the conditioned space of buildings, which affects the thermal load on the beverage vending machines. A small number of machines installed outdoors in cold climates are equipped
with heater kits. Characterizing the energy use of bever age vending machines is a critical part of the standards rulemaking analysis, as it establishes the per

- unit energy

- savings potential achievable from energy efficiency standards.

Item 6

- 1 How should DOE consider energy use in “ heating mode ” for outdoor

ma chines in cold climates?

7. MARKUPS ANALYSIS

DOE uses manufacturer

- to

- customer markups to convert the MSP values, obtained from the engineering analysis

, to customer purchase prices, which are then used in the LCC analysis and the NIA. Customer purchase prices are needed for the baseline efficiency level and all other efficiency levels under consideration. To qua nt ify these markups, DOE will attempt to col lect data on existing prices in the market ( e.g. , purchased data sets or distributor Internet sites), where collecting such data is possible and produces meaningful results.

Before it can develop markups, DOE must identify distribution channels. Once it
id entifies the major distribution channels for each equipment class, DOE will use available data to determine how equipment is marked up from the manufacturer to the customer.

During the 2009 BVM final rule analysis, DOE identified the following four distri bution channels for beverage vending machines:

1. Equipment Manufacturer  Vending Machine Operator ( e.g. , bottler, beverage distributor)

2. Equipment Manufacturer  Distributor  Vending Machine Operator

3. Equipment Manufacturer  Site Owner

4. Equipm ent Manufacturer  Distributor  Site Owner

In the first distribution channel scenario, the equipment m anufacturer builds the equipment to meet the machine performance specifications provided by a beverage company and sells it directly to the vending machi ne operator, who is either a bottler or a beverage distributor. The vending machine operator owns the machine, places it on

- site through a “location contract

, ” maintains the machine and stocks it, and receives a certain percentage of the revenue . The site owner, in this case, allows the machine to be placed on

- site, receives a percentage of revenue or other payment, and pays the electric bill. In the second scenario, the vending machine operator28

purchases the equipment from a distributor instead of directly from the equipment manufacturer. In the third scenario, a site owner ( e.g. , large retail store chain) may purchase the vending machines directly from the manufacturer. In the fourth scenario, a site owner ( e.g. , gas stations) may purchase the vending mach ines from a distributor. In both the third and the fourth scenarios,
the site owner maintains and stocks the machines and earns the entire revenue.

DOE intends to use the data gathered from stakeholders to develop both baseline markups and incremental mark ups. Baseline markups will be applied to the MSP of the baseline equipment to determine the customer purchase price of baseline equipment. Incremental markups will be applied only to the cost increments (difference between MSP of baseline equipment and

equ ipment at higher efficiency levels). As a result, the customer purchase price of the equipment at higher efficiency levels will be equal to the sum of purchase price of baseline equipment and the product of cost increment and incremental markup. Incrementa l markups will be calculated by assuming that certain industry costs, such as labor and building occupancy expenses, do not increase with an increase in cost of goods sold. DOE will develop both baseline and incremental markups for use in the LCC analysis.

Item 7

- 1 DOE requests information on the distribution channels described above for

the beverage vending machines covered under this rulemaking. DOE also seeks information on other major distribution channels that DOE should be considering for markups ana lysis. DOE also requests information on the relative fractions of shipments expected for each channel.

Item 7

- 2 DOE requests information on how the overall markups for the beverage

vending machines covered under this rulemaking may vary for each channel.

Item 7

- 3 DOE requests feedback on its proposal to use baseline and incremental

markups.

Item 7

- 4 DOE requests comment on sources of relevant data that could be used to

calculate markups for each distribution channel.

8. LIFE

- CYCLE COST AND PAYBACK PERIOD ANALYSIS

8.1 Overview

DOE will conduct an LCC analysis to evaluate the economic impacts of amended energy conservation standards developed for beverage vending machines on individual commercial customers. The effect of standards on customers includes a change in operating cost (usually decreased) and a change in purchase cost (usually increased). The LCC analysis uses two metrics
to determine the effect of the standards on customers:

Life

- cycle cost . The total customer cost over the life of the equipment is the sum of
installed cost s (purchase and installation costs) and operating costs (maintenance, repair, and energy costs). Future operating costs are discounted to the time of purchase and
summed over the lifetime of the equipment.29

Payback period (PBP)

. Paybac k period is the estimated amount of time (in years) it would take customers to recover the higher purchase price of more

- efficient equipment through lower operating costs.

For the LCC analysis, DOE will use the cost

- efficiency relationships obtained from t he engineering analysis and the energy consumption values obtained from the energy use analysis. Other inputs to the LCC analysis include the installation costs and operating expenses (energy, maintenance and repair costs).

I nputs for the LCC analysis are estimated from the best available data for the market

. Where possible, DOE uses a range of values for each input ( for example , the equipment lifetime, which can vary over a wide range). 8 I n the NOPR stage of this rulemaking, DOE will perform the LCC analy s i s in the form of Monte Carlo simulations in which certain inputs are provided a range of values and probability distributions. The results of the LCC analysis are presented in the form of mean LCC savings ; percentages of customers experiencing net saving s, net cost

, and no impact in LCC ; and median PBP. For each equipment class, 10,000 Monte Carlo simulations
will be carried out . The simulations will be conducted using Microsoft Excel and Crystal Ball, a commercially available Excel add

- in for carrying ou t Monte Carlo simulations

.
The following sections discuss the methodologies DOE plans to use in determining the inputs necessary for the LCC analysis.

8.2 Energy Prices

DOE will review the U.S. Energy Information Administration’s (EIA) energy price data
for th e commercial sector as a means of establishing electricity prices. DOE typically relies on

state

- level average energy price data for the commercial sector. DOE will use projections of these energy prices for commercial customers to estimate future energy p rices in its LCC analysis. DOE will use EIA’s Annual Energy Outlook ( AEO ) as the default source of projections for future energy prices.

Item 8

- 1 DOE seeks comment on the proposed approaches for estimating current and

forecasted energy prices.

8.3 Life

- Cycle Cost Discount Rates

The calculation of customer LCC requires the use of an appropriate discount rate. For beverage vending machines, DOE intends to use the same approach that it used for developing discount rates for the 2009 BVM final rule. This approach involves deriving the discount rates for commercial customers, in this case, the bottling companies, the vending machine operators, or the site owners (including government entities), by estimating the cost of capital to the companies that purchase the bev erage vending machines covered under this rulemaking. DOE typically uses the cost of capital to estimate the present value of cash flows to be derived from a typical company project or investment. Most companies use both debt and equity capital to fund

8 DOE notes that in some cases, data are available for generally accepted representative values within the industry rather than a range of values. Calculations based on representative values yield average or representative values for the LCC and PBP outputs.30

inv estments; therefore, the cost of capital to the firm is the weighted

- average cost of equity and debt financing. For government entities, it is the rate on their debt. This corporate finance approach is referred to as the weighted

- average cost of capital (W ACC).

DOE will include for public comment in the preliminary analysis the discount rates and calculations associated with the LCC of beverage vending machines.

Item 8

- 2 DOE seeks comment on the proposed approaches for estimating discount

rates for custome rs using the equipment covered under this rulemaking.

Item 8

- 3 DOE recognizes that a large fraction of the customers of beverage vending

machines are beverage bottlers. Which commercial sectors besides the
bottlers should be considered in the evaluation o f discount rates? In addition, do stakeholders believe that government direct purchases of this equipment are large enough to require that they be included in the evaluation of discount
rates?

8.4 Installation, Maintenance, and Repair Costs

Installation costs are the material and labor costs incurred by the customers to install the beverage vending machines. Maintenance costs are the costs incurred by the customers for preventative maintenance. Repair costs are the costs to repair and replace malfunctioning

com ponents of the beverage vending machines.

Installation cost is a one

- time cost and is added to the customer equipment purchase price to obtain the equipment installed cost. The repair costs may and maintenance costs do occur several times during the lifet ime of the equipment. Therefore, repair and maintenance costs are expressed in the form of annualized costs.

For the calculation of LCC savings and PBP values at each efficiency level, only the
costs that are different from the baseline level are relevant . Therefore, for the calculation of the repair costs, DOE accounts for those repair costs related to the design options under consideration for each equipment class. DOE will request input from manufacturers and other stakeholders in developing appropriate incremental repair and maintenance costs for higher efficiency equipment if stakeholders feel such estimates are necessary.

Item 8

- 4 DOE seeks feedback on what fraction of the installation, maintenance, and

repairs involve efficiency improvements and what are the typical practices during the life cycle of an originally manufactured beverage vending machine (e.g., change lamps but not the compressor).

Item 8

- 5 What is a typical time period between the sale of a new BVM unit and the first

maintenance or repairs? What are the typical cycles of maintenance and repairs?

Item 8

- 6 DOE seeks feedback on whether ( and how ) routine maintenance, repair, and

installation costs will change for more

- efficient equipment.31

Item 8

- 7 DOE seeks feedback on appropriate m ethodologies for assessing changes to

maintenance, repair, and installation costs.

8.5 Equipment Lifetimes

DOE will use information from various published sources ( e.g. , Vending Times ) and input from manufacturers and other stakeholders to establish average equipment lifetimes for use in the LCC and subsequent analyses.

A typical vending machine may undergo periodic refurbishments during its lifetime. Depending on the frequency of the refurbishments and their nature with regard to improvements in energy perfo rmance, these refurbishments may change the useful lifetime of the equipment.

Item 8

- 8 DOE seeks feedback on appropriate equipment lifetimes for the beverage

vending machines covered under this rulemaking.

Item 8

- 9 DOE seeks comment on whether energy con servation standards will have an

impact on lifetimes of beverage vending machines.

Item 8

- 10 Is there a suitable inventory model that could be used to estimate the fraction

of new versus rebuilt/refurbished machines in the market? If no inventory
model ex ists, what is the impact of refurbishment on the equipment lifetime? DOE also seeks feedback on the number of refurbishment cycles in the typical lifetime of the beverage vending machines. DOE also seeks information on the effect of refurbishments on equip ment utility and energy consumption. In a typical refurbishment, for example, are features added to the beverage vending machine that affect its utility and/or are changes made that affect the energy consumption of the equipment?

9. SHIPMENTS ANALYSIS

Shipmen t projections are required to calculate the national impacts of standards on energy consumption, NPV, and future manufacturer cash flows. DOE plans to develop shipment projections based on an analysis of key market drivers for beverage vending machines.

9.1 Ba se
- Case Projections

To evaluate the various impacts of standards, DOE must develop a base

- case projection against which to compare projections for higher efficiency levels. The base

- case projection is designed to depict what will happen to energy consumpti on and energy costs over time if DOE does not adopt new or amended energy conservation standards for the equipment covered under this rulemaking. In determining the base

- case projection , DOE will consider historical shipments, the mix of efficiencies sold in the absence of standards, and how that mix might change over time

, for instance in response to known voluntary or incentive

- based programs such as ENERGYSTAR® or utility customer rebate programs that encourage purchase of higher efficiency equipment . Fo r these purposes, DOE needs data on historical shipments and the market shares of the different efficiency levels offered in each equipment class.32

Vending Times reports historical shipments for beverage vending machines as an overall product group. 9 In add ition, the U.S. B ureau of Census (Census Bureau) has also published limited statistics on the quantity and value of product shipment s. 10 Census Bureau d ata is available online for the years 1995, 1996, 1999, and 2000 for refrigerated soft drink vending
mach ines. Th ese data are not broken down by equipment class. The data collection was
discontinued after the 2000 data were published , so no additiona l data from the Census Bureau beyond 2000 is available.

DOE will attempt to collect shipment data and market

- share efficiency data ( i.e. , data on the distribution of product shipments by efficiency) for each equipment class. DOE recognizes that this information may be difficult to collect, and may therefore consider using other methods for estimating the e fficiency distribution in the market. For example, when market

- share efficiency data are not available, DOE may use efficiency distributions based on available models as a proxy. DOE may also request separate shipment information for equipment sold with sp ecific design features ( e.g. , ECM evaporator fan motors).

Item 9

- 1 DOE requests data on, sources of data related to, or any information

pertaining to historical shipments and the market shares of the different efficiency levels offered in each equipment c lass.

9.2 Accounting Methodology

DOE proposes to determine annual shipments in the base case by accounting for new building construction and historical rates of ownership (saturation rates) in buildings. This method has the distinct advantage of separately acc ounting for units installed in new construction and existing buildings. More importantly, DOE can express equipment saturation rates as a function of customer price and operating cost to capture their impact on future shipments. DOE plans to rely on EIA’s AEO to forecast new commercial construction. For equipment retirements, DOE will use the same equipment lifetimes and retirement functions that are used for the LCC analysis.

DOE will also consider any other input provided by stakeholders.

Item 9

- 2 DOE se eks information on representative saturation rates for each equipment

class covered under this rulemaking, as well as industry

- trend data regarding relative growth in each equipment class.

Item 9

- 3 DOE seeks input on methods of projecting the markets for each equipment

class and access to models or methods that could be used to estimate shipments.

9.3 Standards Impacts on Shipments

For each equipment class, DOE will develop a set of shipment projection s for each set of standards analyzed, also known as standar ds

- case projection s. These standards

- case projection s

9 See htt p://www.vendingtimes.com/ME2/default.asp

. 10 See http://www.census.gov/

.33

will be used to evaluate the impacts of standards on shipments. Standards

- case projection s are derived using the same datasets as base

- case projection s; however, because the standards

- case projection s t ake into account the increase in purchase price and the decrease in operating costs caused by standards, projected shipments may deviate from the base case. The magnitude of the
difference between the standards

- case and base

- case shipment projection s depen ds on the estimated purchase price increase as well as the operating cost savings caused by the standard. Because the purchase price tends to have a larger impact than operating cost on equipment purchase decisions, standards

- case projection s may show a dr op in shipments relative to the base

case.

DOE’s past standards analyses have attempted to quantify the sensitivity of shipments to purchase price and operating cost savings. Because the data required to develop these
sensitivities are limited and often di fficult to obtain, DOE will consider modeling standards

- case shipments projection s with scenarios ( i.e. , specified impacts to shipments) rather than developing sensitivities to purchase price or operating cost savings.

Market

- pull programs, such as custome r rebate programs that encourage the purchase of

more

- efficient equipment , ENERGYSTAR ®

, and manufacturer tax credits that encourage the production of more

- efficient equipment, also affect standards

- case projection s. When such programs exist, DOE will consi der their impact on the projection of both standards

- case and
base

- case shipments.

Item 9

- 4 DOE seeks input on likely impacts on shipments due to new or amended

standards for beverage vending machines. Please comment on what the possible scenarios are and the estimated quantitative impact of each scenario on the shipments numbers.

10. NATIONAL IMPACT ANALYSIS

Section 8 discusses methods for estimating the LCC savings and PBP for individual customers. This section discusses DOE’s assessment of the aggregate impacts at the national level. Measures of impact i nclude NES and the NPV of total customer LCC savings.

10.1 Calculation of Energy Savings

DOE calculates the annual site

- energy consumption of all the beverage vending machines covered under this rulemaking under the base

- case scenario and the standards

- case sce narios for each year in the analysis period. The difference in the annual site

- energy consumption between
base

- case scenario and a standards

- case scenario is the annual site

- energy savings associated with that particular standards

- case scenario. DOE will c onvert the site

- energy savings into annual primary energy savings using a full

- fuel

- cycle (FFC) analysis. The sum of annual primary energy savings for each standards

- case scenario over all the years in an analysis period gives the
NES value for each standa rds

- case scenario.

DOE carries out the NIA over a 30

- year period starting in the compliance year of the new or amended standards, and the annual energy savings are summed over the lifetimes of the equipment installed in the 30

- year period.34

Item 10

- 1 DOE se eks comment on the share of the market that is met by refurbished or

rebuilt machines. In particular, DOE seeks comment on the impact of refurbishment/rebuilding on the energy consumption and lifetime of the existing fleet in the absence of standards, and the impact of new standards on refurbishment kits, the subsequent cost, and performance of the stock of existing equipment.

Item 10

- 2 DOE seeks comment on its plan to develop NES spreadsheet models for

estimating national impacts of amended energy conserv ation standards.

10.2 Net Present Value

DOE calculates the national NPV of the standards similar to the way in which it
calculates the NES. DOE first calculates the annual increase in installed costs as the difference in installed cost of all the beverage vendi ng machines (installed in the nation) in the base

- case scenario and the standards

- case scenarios. The annual operating cost savings are calculated in a similar manner. The difference between annual operating cost savings and the annual increases
in install ed costs gives the annual savings. The annual savings are calculated for each year in the analysis period. These savings are then discounted to the present year (year in which the analysis in conducted) to determine the present value of each of the future annual savings. The summation of these present values of future annual savings for each standards

- case scenario gives the NPV for each standards

- case scenario.

The increases in installed costs are calculated for the 30

- year period starting with the complia nce year of the new or amended standards. The operating cost savings are calculated over the entire lifetime of the beverage vending machines installed in the 30

- year period.

DOE will take into account comments received in response to this Framework docum ent.

11. CUSTOMER SUBGROUP ANALYSIS

This section describes how DOE analyzes customer impacts by dividing customers into subgroups and accounting for variations in key inputs to the LCC analysis. A customer subgroup comprises a subset of the customer population that is likely to be impacted disproportionately by new or amended energy conservation standards. The purpose of a subgroup analysis is to determine the extent of this disproportionate impact. DOE will work with stakeholders early in the rulemaking proces s to identify any subgroups for this consideration. However, DOE will not analyze the customer subgroups until the NOPR stage of the analysis.

In comparing potential impacts on the different customer subgroups, DOE will evaluate variations in regional ener gy prices, variations in energy use, and variations in installation costs that might affect the LCC savings and PBP of a standard to customer subgroups. To the extent possible, DOE may obtain estimates of the variability in each input variable and consider this variability in its calculation of customer impacts. It will discuss the variability in each input variable and likely sources of information with stakeholders.35

Item 11

- 1 DOE seeks input on which customer subgroups DOE should consider in the

present r ulemaking. Examples of possible subgroups DOE could consider appropriate for beverage vending machines are manufacturing facilities that own their own BVM units, which was the identified subgroup in the 2009 BVM final rule analysis, and site owners that pa y the utilities but don’t own or stock the equipment.

12. MANUFACTURER IMPACT ANALYSIS

The manufacturer impact analysis will assess the potential impacts of energy conservation standards on manufacturers of beverage vending machines

. A wide range of quantitat ive and qualitative effects may occur following the adoption of amended standards that may require chang es to manufacturing practices. DOE will identify these potential effects through interviews with manufacturers and other experts.

For the NOPR, DOE will conduct an industry

- wide cash

- flow analysis using the Government Regulatory Impact Model (GRIM), identify and analyze subgroups of manufacturers whose businesses vary significantly from the industry as a whole, perform a competitive impacts assessment, an d review the cumulative regulatory burden for the industry.

12.1 Sources of Information

Many of the analyses described earlier provide important information that DOE uses as inputs for the MIA. Such information includes financial parameters developed in the mar ket assessment (section 3.1 ), cost data from the engineering analysis (section s 5.2 and 5.3 ), a nd shipments projection s (section 9.1 ). DOE supplements this data with information gathered during manufacturer interviews. The interview process will play a key role in the MIA, as it provides an opportunity for interested parties to express their views on important iss ues.

Navigant Consulting, Inc. ( Navigant ), a DOE contractor for this rulemaking, will conduct detailed interviews with manufacturers to gain insight into the range of potential impacts of standards. During the interviews, Navigant will solicit information on the possible impacts of standards on manufacturing costs, equipment prices, sales, direct employment, capital assets, and industry competitiveness. Both qualitative and quantitative information are valuable. DOE

, through Naviga nt

, will schedule interviews well in advance to provide every opportunity for key individuals to be available. DOE prefers an interactive interview process because it helps clarify responses and provides the opportunity for additional issues to be identifi ed.

DOE will ask that interview participants identify all confidential information provided, both in writing and orally. While it will consider information gathered, as appropriate, in its
decision

- making process, Navigant will protect confidential informa tion from disclosure consistent with applicable law. DOE will also ask participants to identify all information that they want included in the public record, but that they do not want to have associated with their interview. DOE will incorporate this infor mation into the public record, but will report it without
attribution.

Materials provided to Navigant are generally subject to the terms of the applicable agreement under which those materials are submitted. In the case of materials provided to Navigant in the context of a DOE rulemaking and subject to a non

- disclosure agreement, those36

materials are generally not shared with DOE, apart from aggregated data that do not identify particular submitters. These materials may also be subject to a variety of law s and regulations

govern ing the disclosure of Federal agency information. Information submitted to DOE through Navigant will be protect ed in accordance with all applicable federal laws, rules, or regulations, including but not limited to the Trade Secrets Act ( 18 U.S.C. 1905 ) and the Freedom of Information Act (FOIA ; 5 U.S.C. 552 ) , and DOE ’ s implementing regulations at 10 CFR part 1004. DOE will prepare a summary of the major issues and outcomes identified during
manufacturer interviews . This summary will b ecome part of the technical support document produced for this rulemaking.

12.2 Industry Cash Flow Analysis

The industry cash flow analysis relies primarily on the GRIM. DOE uses the GRIM to analyze the financial impacts of more

- stringent energy conservation st andards on the industry that manufactures the equipment covered by the standard.

The GRIM analysis uses a number of factors

— annual expected revenues; costs of goods sold; selling, general, and administrative costs; taxes; and capital expenditures

— to arriv e at a series of annual cash flows beginning from the announcement of the standard and continuing through the analysis period. DOE compares the results against base

- case projections that involve no amended standards. The financial impact of amended standar ds is then the difference between the two sets of discounted annual cash flows. Other performance metrics, such as return on invested capital, also are available from the GRIM.

DOE will gather inputs needed for the GRIM from two primary sources: (1) the an alyses conducted to this point; and (2) interviews with manufacturers and other stakeholders. Information gathered from previous analyses will include financial parameters, manufacturing costs, price projections , and shipments projections . Interviews with manufacturers and other stakeholders will supplement this information.

12.3 Manufacturer Subgroup Analysis

Average industry cost values may not reveal differential impacts among BVM manufacturer subgroups. Smaller manufacturers, niche players, and manufacturers exhibiting a cost structure that differs significantly from the industry average may be affected differently by
amended standards. Ideally, DOE would consider the impact on every firm individually. In highly concentrated industries, this may be possible. However, for industries that have numerous participants, DOE will use the results of the market and technology assessment to group manufacturers into subgroups, as appropriate. For beverage vending machines , DOE is interested in feedback about potential su bgroups, including small businesses. DOE will conduct a Regulatory Flexibility Act analysis to determine the impacts of any amended standards on small businesses consistent with the Regulatory Flexibility Act.

Item 12

- 1 DOE seeks comment on appropriate manufacturer subgroups, if any, that

DOE should consider in the manufacturer subgroup analysis for beverage vending machines.37

Item 12

- 2 DOE seeks comment on small businesses that could be impacted by amended

energy conservation standards for beverage vend ing machines , and what those impacts might entail.

12.4 Competitive Impacts Assessment

EPCA directs DOE to consider any lessening of competition that is likely to result from the imposition of standards. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It further directs the At torney General to determine in writing the impacts, if any, of any lessening of competition. (42 U.S.C. 6295(o)(2)(B)(ii))

DOE will make a determined effort to gather firm

- specific financial information and impacts

, and to report the anti cipated aggregate impact of amended standard s on manufacturers

. The competitive impacts assessment will focus on assessing the impacts on smaller manufacturers. DOE will base the assessment on manufacturing cost data and on information
collected from inter views with manufacturers. The manufacturer interviews will focus on gathering information that would help in assessing asymmetrical cost increases to some manufacturers, increased proportion of fixed costs potentially increasing business risks, and potenti al barriers to market entry ( e.g. , proprietary technologies). DOE will provide the Attorney General with a copy of any NOPR for consideration in its evaluation of the impact of amended standards on the lessening of competition. DOE will publish the Attorne y General’s letter and address any related comments in the final rule.

12.5 Cumulative Regulatory Burden

DOE is aware that o ther regulations (Federal, S tate, local, or international) may apply to
manufacturers of beverage vending machines covered under this rul emaking and to other equipment made by these manufacturers. Multiple regulati ons may result in a significant cumulative regulatory burden on these manufacturers. DOE will consider the impact of multiple, product

- specific regulatory actions on these manufac turers.

Item 12

- 3 DOE welcomes comments on other existing or pending regulations it should

consider in its examination of cumulative regulatory burden.

13. EMPLOYMENT IMPACT ANALYSIS

The imposition of standards can impact employment both directly and indirect ly. Direct employment impacts are changes in the number of employees at the plants that produce the covered equipment. DOE will evaluate direct employment impacts in the MIA, as described in
section 12

.
Indirect employment 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 the imposition of standards. The short

- term (5

- year) combined direct and indirect employment impacts will be investigated in the employment

- impact analysis using Pacific Northwest National Laboratory’s Impact of Sector Energy Technologies (ImSET) model. The
ImSET model was developed for DOE’s Office of Planning, Budget, and Analysis, and estimates the employment and income effects of energy

- saving technologies in buildings, industry, and38

transportation. In comparison with simple economic multiplier approaches, ImSET allows f or more complete and automated analysis of the economic impacts of energy conservation investments. DOE believes that the complexity of potential adjustments in the U.S. economy largely negates the value of long

- term projection s of indirect employment impa cts.

Item 13

- 1 DOE requests feedback on this approach to assessing employment impacts.

14. UTILITY IMPACT ANALYSIS

The utility impact analysis will include an analysis of the impact of new and amended
standards on electric utility industry. DOE will adapt the National Energy Modeling System (NEMS) produced by the EIA for this analysis. NEMS is a large, multi

- sectoral, partial

equilibrium model of the United States energy sector that has been developed over the past decade by the EIA, primarily for the purpose o f preparing DOE’s AEO . In prior rulemakings, a variant of NEMS (currently identified as NEMS

- BT, where BT refers to the DOE Building Technologies Program) was developed to better address the particular impacts of an energy efficiency standard for commercia l equipment.

The NEMS produces a widely recognized baseline energy forecast for the United States through the year 2035, and is available in the public domain. The typical NEMS outputs include forecasts of electricity sales, price, and avoided capacity. DO E plans to conduct the utility impact analysis as a scenario departing from the latest AEO reference case. In other words, the energy savings impacts from amended energy conservation standards will be modeled using NEMS

- BT to generate forecasts that deviat e from the AEO reference case.

Item 14

- 1 DOE seeks input on its proposed use of NEMS

- BT to conduct the utility

impact analysis.

Item 14

- 2 Should DOE consider using methods other than NEMS in the utility impact

analysis?

15. EMISSIONS ANALYSIS

In the emissions analysis, DOE will estimate the reduction in power sector emissions of
CO 2 , nitrogen oxides (NO X ), sulfur dioxide (SO 2 )

, and mercury (Hg) from potential energy
conservation standards for BVM equipment . 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 P olicy (76 FR 51282 (Aug. 18, 2011)), the FFC analysis includes impacts on emissions of methane (CH 4 ) and nitrous oxide (N 2 O) , both of which are recognized as greenhouse gases (GHGs)

.

DOE will conduct the emissions analysis using emissions factors derived from data in the latest version of EIA’s AEO , supplemented by data from other sources. 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 AEO2012.39

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 S t ates and the District of Columbia (D.C.). SO 2 emissions from 28 eastern S tates and D.C. were also limited under the Clean Air Interstate Rule (CAIR), which created an allowance

- based trading program that operates along
with the Title IV program in those St ates and D.C. 70 FR 25162 (May 12, 2005). CAIR was
remanded to the U.S. Environmental Protection Agency ( EPA ) by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), but it remains in effect. See North Carolina v.
EPA , 550 F.3d 11 76 (D.C. Cir. 2008); North Carolina v. EPA , 531 F.3d 896 (D.C. Cir. 2008). On July 6, 2011 EPA issued a replacement for CAIR, the Cross

- State Air Pollution Rule (CSAPR; also known as the Transport Rule). 76 FR 48208 (Aug

. 8, 2011). The AEO2012 NEMS

assumes the implementation of the CSAPR. 11

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 adoption 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 uncert ainty about the effects of efficiency standards on SO 2 emissions covered by the existing 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 2015, however, SO 2 emis sions will fall as a result of the Mercury and Air Toxics Standards (MATS) for power plants, which were announced by EPA on December 21,
2011. 77 FR 9304 (Feb. 16, 2012). In the final MATS rule, EPA established a standard for hydrogen chloride as a surroga te 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 standard for acid gas HAP. The same controls are used to reduce HAP and non

- HAP acid gas; thus, SO 2 emission s 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. AEO2012 assumes that, in order to continue operating, coal plants must have either flue gas desulfurization or dry sorbent injection systems installed by 2015. Both technologies, which are used to reduce acid gas emissions, also reduce SO 2 emissions. Under the MATS, NEMS shows a reduction in SO 2 emissions when electricity demand decreases ( e.g. , as a result of ene rgy efficiency standards). Emissions will be far below the cap that would be established by CSAPR, 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 any regulated EGU. Therefore, DOE believes that efficiency standards will reduce SO 2 emissions in 2015 and beyond.

CSAPR 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

11 On December 30, 2011, the D.C. Circuit stayed the new rules while a panel of judges reviews them, and told EPA
to continue administering CAIR (see EME Homer City Generation v. EPA , No. 11

- 1302, Slip Op. at *2 (D.C. Cir. Dec. 30, 2011)). On August 21, 2012, the D.C. Circuit issued a decision to vacate CSAPR. See EME Homer City Generation, LP v. EPA

, No. 11

- 1302

, 2012 WL 3570721 at *24 (D.C. Cir. Aug. 21, 2012). The court again ordered EPA to continue administering CAIR. AEO2012 had been finalized prior to this decision, however. DOE understands that CAIR and CSAPR are similar with respect to their effect on emissions impacts of energy effici ency standards.40

these emissions in those States covered by CSAPR because excess NO X emissions allowances resulting from the lower electricity demand could be used to permit offsetting increases in NO X emissions. However, st andards would be expected to reduce NO X emissions in the States not affected by CSAPR. Therefore, DOE estimates NO X emissions reductions from potential standards in the States where emissions are not capped.

The MATS limit mercury emissions from power pla nts, but they do not include emissions caps and, as such, DOE’s energy conservation standards would likely reduce Hg emissions.

Power plants may emit particulates from the smoke stack, which are known as dir ect particulate matter (PM ) emissions. NEMS 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. T he great majority of ambient PM associated with power plants is in
the form of 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 estimates 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.

Item 15

- 1 DOE seeks input on its approach to conduct the emissions analysis for the

equipment covered by this rul emaking

.

16. MONETIZING REDUCED CO 2 AND OTHER EMISSIONS

DOE plans to consider the estimated monetary benefits likely to result from the reduced
emissions of CO 2 and NO X that are expected to result from each of the standard levels
considered.

In order to estimate the monetary value of benefits resulting from reduced emissions of
CO 2 , DOE plans to use the most current Social Cost of Carbon (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 effects, property damage from sea level rise, and changes in ecosystem services. Any effort to quantify and to monetize the har ms associated with climate change will raise serious questions of science, economics, and ethics. But with full regard for the limits of both quantification and monetization, the SCC can be used to provide estimates of the
social benefits of reductions in GHG emissions.

At the time of this Framework document , the most recent interagency estimates of the potential global benefits resulting from reduced CO 2 emissions in 2015, expressed in 2012$, were $6.2, $25.9, $41.7, and $79.1 per metric ton avoided. For emissions reductions that occur in later years, these values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global
SCC to calculate domestic eff ects, although DOE will give preference to consideration of the global benefits of reducing CO 2 emissions. To calculate a present value of the stream of monetary values, DOE will discount the values in each of the four cases using the discount rates
that had been used to obtain the SCC values in each case.41

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 economy. 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. For NO X emissions, available estimates suggest a very wide

range o f monetary values, ranging from $ 468 to $4,809 per ton in 2012$. 12 In accordance with Office of Management and Budget ( OMB ) guidance, DOE conducts two calculations of the monetary benefits derived using each of the economic values used for NO X , one using a real discount rate of 3 percent and another using a real discount rate of 7 percent. 13

DOE is investigating appropriate valuation of Hg emissions. Whether monetization of reduced Hg emissions will occur in this rulemaking is not yet certain.

Item 16

- 1 DOE requests comments on the approach it plans to use for estimating

monetary values associated with emissions reductions.

17. REGULATORY IMPACT ANALYSIS

Pursuant to section 6(a)(3) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1 993), if DOE determines that amended energy conservation standards for beverage vending machines constitute a significant regulatory action, during the NOPR stage DOE will prepare and submit to OMB: (1) an assessment of the costs and benefits of the propos ed regulation, and (2) if the proposed rule is also significant under section 3(f)(1) of the E.O. 12866, a Regulatory Impact Analysis (RIA) which is subject to review under the Executive Order by the Office of Information and Regulatory Affairs (OIRA) at t he OMB. The RIA will address the potential for non

- regulatory approaches to supplant or augment energy conservation standards to improve the energy efficiency or reduce the energy consumption of the beverage vending machines covered under this rulemaking i n the market.

DOE recognizes that voluntary or other non

- regulatory efforts by manufacturers, utilities, and other interested parties can result in substantial improvements to energy efficiency or reductions in energy consumption. DOE intends to consider t he likely effects of non

- regulatory
initiatives such as the ENERGY STAR program on equipment energy use, customer utility, and LCC. DOE will base its assessment on the actual impacts of any such initiatives to date, but also will consider information prese nted regarding the impacts that any existing initiative might have
in the future.

Item 17

- 1 DOE is aware of the existing ENERGY STAR program for the beverage

vending machine industry covered under this rulemaking. Are stakeholders aware of any other such p rograms that should be examined as optional, non

regulatory approaches?

12 F or additional information , refer to U.S. Office of Management and Budget , Office of Information and Regulatory Affairs, 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and T

ribal Entities , Washington, DC

. 13 OMB, Circular A

- 4: Regulatory Analysis ( Sept. 17, 2003).42

Item 17

- 2 Are there specific subgroups of end

- users whom DOE should consider in its

review of potential adverse impacts from standards developed under this rulemaking?43

APPENDIX A

– L IST OF ITEMS FOR COMMENT

Item 1

- 1 DOE requests comment regarding adoption of updated test procedure for the

beverage vending machines covered under this rulemaking.

................................ .. 10
Item 1

- 2 DOE requests comment on the possible elimination of the requirement to test units

at 90 ° F.

................................ ................................ ................................ .................... 10
Item 1

- 3 DOE requests comment regarding a requirement of measurement of product

temperatures at other than the next

- to

- vend positions.

................................ ............ 10
Item 1

- 4 DOE requests comment on the current utilization of low

- power modes in

certification testing. Do any current models meet the requirements of the current test procedure regarding energy management controls and utilize a low

- power mode during the test?

................................ ................................ ................................ ......... 10
Item 1

- 5 DOE re quests comment on the testing of low

- power modes in a revised test

procedure. What are the typical functions of low

- power mode in beverage vending
machines? Are these low

- power modes triggered by scheduled timers, activity, motion sensors, or other environ ment or state changes? What lengths of time should
DOE consider for the full

- power mode and low

- power mode?

............................... 10
Item 1

- 6 DOE requests comment on the applicability of the current test procedure, and all

test procedure modifications under consideration, to combination vending
machines.

................................ ................................ ................................ ................. 10
Item 1

- 7 DOE requests comment on its proposal to consider modifications to the test

procedure to account for energy management systems.

................................ .......... 10
Item 3

- 1 DOE seeks information that would contribute to the market assessment (e.g., the

manufacturers of this equipment in the United States and the equipmen t they sell, by equipment class). It is particularly important that DOE be aware of the major and
small/niche manufacturers.

................................ ................................ ...................... 15
It em 3

- 2 DOE seeks information on historical annual equipment shipments (both domestic

and imports) by equipment class and the corresponding efficiency distributions of these shipments.

................................ ................................ ................................ ....... 15
Item 3

- 3 DOE seeks information on the proportion of new equipment shipped annually that

replaces existing equipment, for each equipment class.

................................ .......... 15
Item 3

- 4 DOE requests comment on whether all transparent

- front beverage vending

machines currently available on the market are fully cooled.

................................ . 17
Item 3

- 5 DOE requests comment on whether all opaque

- front beverage vending machines

currently available on the market are zone cooled.

................................ .................. 17
Item 3

- 6 DOE requests information on perishable items in beverage vending machines. Do

machines that sell perishable and non

- perishable items (in add ition to or including beverages) ship with different software or controls? Are they rated differently, such as to food safety specifications? What portion of the BVM market is composed of machines that sell perishable items?

................................ ................................ ........ 17
Item 3

- 7 DOE seeks comment on the equipment classes for beverage vending machines, and

on the criteria used in creating the classes. Are the equipment classe s appropriate? Are there other factors that should be considered in equipment class distinctions and
definitions?

................................ ................................ ................................ ............... 18
Item 3

- 8 DO E seeks comment regarding the possible use of alternative equipment classes in

this rulemaking. Specifically, are there other equipment characteristics that should be considered for equipment class distinctions and definitions?

............................. 1844

Item 3

- 9 DOE seeks comment on the proposed definition of “fully cooled vending machine.”

Does the current language reflect what is used in industry?

................................ .... 19
Item 3

- 10 DOE requests comment on the creation of a new equipment class for machines that

are manufactured and sold to vend pe rishable items (including or in addition to beverages). How should DOE define equipment sold to vend perishable items? Does this equipment obtain other certifications for vending perishable items? Is it common for beverage vending machines to vend both per ishable and non

perishable items? Is the same beverage vending machine offered to vend both perishable and non

- perishable items (i.e., the equipment is not currently differentiated in the marketplace)?

................................ ................................ .......... 19
Item 3

- 11 DOE requests comment on whether any technologies or designs should be added to

or removed from the above list. For example, do any of the technologies above raise
issues with proprietary designs or issues where testing pursuant to the DOE test procedure does not reflect a change in measured energy efficiency?

...................... 20
Item 3

- 12 DOE requests comments, recommendations, and data on max

- tech levels for Class

A equipment, Class B equipment, and combination vending machines.

................. 20
Item 3

- 13 DOE requests comment on whether max

- tech levels can only be achieved using

proprietary designs or whether there are alternative design paths available that can achieve the same energy use level?

................................ ................................ ......... 20
Item 3

- 14 DOE requests comment on whether any technologies or designs should be treated

individually, or be incorporated into a few standard “design packages.” If “design packages” are possible, how should the packages be assembled? DOE would develop potential standard levels based on these packages, but manufacturers could meet any established standards through the use of any design o ptions.

.................. 20
Item 3

- 15 DOE requests comment on low

- power modes. What types of low

- power modes are

currently used in the BVM market ? Are there other types of energy management systems about which DOE should be aware that are applicable to beverage vending
machines?

................................ ................................ ................................ ................. 21
Item 3

- 16 DOE requests comment on whether transparent

- front machines could be designed

with zone cooling.

................................ ................................ ................................ .... 21
Item 3

- 17 DO E seeks comment on how to select baseline efficiency levels for equipment

classes without a previous energy conservation standard (e.g., combination machines).

................................ ................................ ................................ ................ 21
Item 3

- 18 What machine sizes and capacities (cubic feet, vendible capacity) should be used as

analysis points for each equipment class?

................................ ............................... 21
Item 3

- 19 DOE seeks information on what particular components and features characterize the

baseline model in each equipment class (materials, dimensions, insulation, refrigerant type, compressors, evaporators, condensers, expansion devices, fans, motors, anti

- condensate devices and controls, defrost mechanisms and controls, lighting, etc.).

................................ ................................ ................................ ........... 21
Item 4

- 1 DOE welcomes comments on how the above four screening criteria might apply to

any additional technology option(s) that an interested party recommends to DOE. 22
Item 4

- 2 DOE welcomes comments on the applicability of the four screening criteria to the

technologies listed in section 3.4.

................................ ................................ ............ 22
Item 5

- 1 Within each equipment class, for energy consumption levels below the current

standards’ baseline, DOE seeks information on daily energy consumption and on incremental manufacturing costs and compone nts (differentiation in components from the baseline, material costs, labor costs, factory overhead costs (excluding45 depreciation), building conversion capital expenditures, tooling/equipment conversion capital expenditures, research and development (R&D) expenses, marketing expenses, etc.).

................................ ................................ ........................ 23
Item 5

- 2 DOE is also interested in any equipment test data that stakeholders can provide

(including equipment parameters, test results, etc., and, in the case that a test procedure other than the DOE test procedure was used, the test procedures used and rating conditions). Test data for the baseline model in each equipment class is particularl y important.

................................ ................................ .............................. 23
Item 5

- 3 DOE requests feedback on the use of the design

- option approach to determining the

relationship between manufacturer selling price and energy efficiency for beverage vending machines.

................................ ................................ ................................ .... 24
Item 5

- 4 DOE seeks comment on the markup appr oach proposed for developing estimates of

manufacturer selling prices.

................................ ................................ ..................... 24
Item 5

- 5 Are there proprietary designs that DOE should consider for any of the equipment

under consideration by this rulemaking? If so, how should DOE acquire the cost data necessary for evaluating these designs?

................................ ........................... 25
Item 5

- 6 Are there alternative design paths that can achieve the same level of max

- tech

energy use (energy efficiency) as those using proprietary designs?

........................ 25
Item 5

- 7 DOE requests feedback on representative sizes. Are the representative sizes used

for the 2009 BVM final rule adequate, and should they be retained or modified?

.. 26
Item 5

- 8 If DOE were to analyze a combination equipment class, perishables (including or in

addition to beverages) equipment class, or other new equipment classes, what should be the relevant representative sizes for that class?

................................ ....... 26
Item 5

- 9 DOE requests information on the use of alternative refrigerants in beverage

vending machines, including shipment, cost, and energy consumption information.

................................ ................................ ................................ ................................ .. 26
It em 5

- 10 Are there additional regulatory issues that DOE should consider in its analysis of

beverage vending machines? Do the issues discussed in this section affect shipments, cost, or energy efficiency?

................................ ................................ ..... 26
Item 6

- 1 How should DOE consider energy use in “heating mode” for outdoor machines in

cold climates?

................................ ................................ ................................ ........... 27
Item 7

- 1 DOE requests information on the distribution channels described above for the

beverage vending machines covered under this rulemaking. DOE also seeks information on other major distribution ch annels that DOE should be considering for markups analysis. DOE also requests information on the relative fractions of shipments expected for each channel.

................................ ................................ ...... 28
Item 7

- 2 DOE requests information on how the overall markups for the beverage vending

machines covered under this rulemaking may vary for each channel.

.................... 28
Item 7

- 3 DOE requests feedback on its proposal to use baseline and incremental markups. 28
Item 7

- 4 DOE requests comment on sources of relevant data that could be used to calculate

markups for each distribution channel.

................................ ................................ .... 28
Item 8

- 1 DOE seeks comment on the proposed approaches for estimating current and

forecasted energy prices.

................................ ................................ .......................... 29
Item 8

- 2 DOE seeks comment on the proposed approaches for estimating discount rates for

customers using the equipment covered under this rulemaking.

............................. 30
Item 8

- 3 DOE recognizes that a large fraction of the customers of beverage vending

machines are beverage bottlers. Which commercial sectors besides the bottlers should be considered in the evaluation of discount rates? In addition, do46 stakeholders believe that gove rnment direct purchases of this equipment are large enough to require that they be included in the evaluation of discount rates?

.......... 30
Item 8

- 4 DOE seeks feedback on what fraction of the installation, maintenance, and repairs

involve efficiency improvements and what are the typical practices during the life cycle of an originally manufactured beverage vending machine (e.g., change lamp s but not the compressor).

................................ ................................ ........................... 30
Item 8

- 5 What is a typical time period between the sale of a new BVM unit and the first

maintenance or repairs? What are the typical cycles of maintenance and repairs?

. 30
Item 8

- 6 DOE seeks feedback on whether (and how) routine maintenance, repair, and

installation costs will change for more

- efficient equipment.

................................ ... 30
Item 8

- 7 DOE seeks feedback on appropri ate methodologies for assessing changes to

maintenance, repair, and installation costs.

................................ ............................. 31
Item 8

- 8 DOE seeks feedback on appropriate equipment lifetimes for the beverage vending

machines covered under this rulemaking.

................................ ................................ 31
Item 8

- 9 DOE seeks comment on whether energy conservation standards will have an impact

on lifetimes of beverage vending machines.

................................ ............................ 31
Item 8

- 10 Is there a suit able inventory model that could be used to estimate the fraction of

new versus rebuilt/refurbished machines in the market? If no inventory model exists, what is the impact of refurbishment on the equipment lifetime? DOE also
seeks feedback on the number of refurbishment cycles in the typical lifetime of the beverage vending machines. DOE also seeks information on the effect of refurbishments on equipment utility and energy consumption. In a typical refurbishment, for example, are features added to the bever age vending machine that affect its utility and/or are changes made that affect the energy consumption of the equipment?

................................ ................................ ................................ ......... 31
Item 9

- 1 DOE requests data on, sources of data related to, or any information pertaining to

historical shipments and the market shares of the different efficiency levels offered in each equipment class.

................................ ................................ .......................... 32
Item 9

- 2 DOE seeks information on representative saturation rates for each equipment class

covered under this rulemaking, as well as industry

- trend data regarding relative growth in e ach equipment class.

................................ ................................ .............. 32
Item 9

- 3 DOE seeks input on methods of projecting the markets for each equipment class

and access to models or methods that could be used to estimate shipments.

.......... 3 2
Item 9

- 4 DOE seeks input on likely impacts on shipments due to new or amended standards

for beverage vending machines. Please comment on what the possible scenarios are and the estimated quantitative impact of each scenario on the shipments numbers. 33
Item 10

- 1 DOE seeks comment on the share of the market that is met by refurbished or rebuilt

machines. In particular, DOE seeks comment on the impact of refurbishment/rebuilding on the energy consum ption and lifetime of the existing fleet in the absence of standards, and the impact of new standards on refurbishment kits, the subsequent cost, and performance of the stock of existing equipment.

..... 34
Item 10

- 2 DOE seeks comment on its plan to develop NES spreadsheet models for estimating

national impacts of amended energy conservation standards.

................................ . 34
Item 11

- 1 DOE seeks input on which customer subgroups DOE should consider in the present

rulemaking. Examples of possible subgroups DOE could consider appropriate for beverage vending machines are manufacturing facilities that own their own BVM units, which was the identified subgroup in the 2009 BVM final rule analysis, and site owners that pay the utilities but don’t own or stock the equipment.

................. 3547

Item 12

- 1 DOE seeks comment on appropriate manufacturer subgroups, if any, that DOE

should consider in the manufacturer subgroup analysis for beverage vending
machines.

................................ ................................ ................................ ................. 36
Item 12

- 2 DOE seeks comment on small businesses that could be impacted by amended

energy conservati on standards for beverage vending machines, and what those impacts might entail.

................................ ................................ ................................ 37
Item 12

- 3 DOE welcomes comments on other exis ting or pending regulations it should

consider in its examination of cumulative regulatory burden.

................................ . 37
Item 13

- 1 DOE requests feedb ack on this approach to assessing employment impacts.

......... 38
Item 14

- 1 DOE seeks input on its proposed use of NEMS

- BT to conduct the utility impact

analysis.

................................ ................................ ................................ .................... 38
Item 14

- 2 Should DOE consider using methods other than NEMS in the utility impact

analysis?

................................ ................................ ................................ ................... 38
Item 15

- 1 DOE seeks input on its approach to conduct the emissions analysis for the

equipment covered by this rulemaking.

................................ ................................ ... 40
Item 16

- 1 DOE requests comments on the approach it plans to use for estimating monetary

values associated with emissions reduction s.

................................ .......................... 41
Item 17

- 1 DOE is aware of the existing ENERGY STAR program for the beverage vending

machine industry covered under this rule making. Are stakeholders aware of any other such programs that should be examined as optional, non

- regulatory approaches?

................................ ................................ ................................ .............. 41
Item 17

- 2 Are there specific subgroups of end

- users whom DOE should consider in its review

of potential adverse impacts from standards developed under this rulemaking?

.... 42