CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM INTERESTED
 

PARTIES, AND DOE RESPONSES 

TABLE OF CONTENTS 

2.1 INTRODUCTION ................................................................................................................ 1
 

2.1.1 Overview .................................................................................................................... 1
 

2.1.2 Miscellaneous Rulemaking Issues ............................................................................. 1
 

2.1.2.1 Separate Standards......................................................................................... 1
 

2.1.2.2 Compliance and Enforcement ........................................................................ 3
 

2.1.2.3 Food Safety .................................................................................................... 5
 

2.2 MARKET AND TECHNOLOGY ASSESSMENT ............................................................. 6
 

2.2.1 Equipment Classes and Scope of Coverage............................................................... 6
 

2.2.1.1 Equipment Classes – Envelope...................................................................... 7
 

2.2.1.2 Equipment Classes – Refrigeration................................................................ 8
 

2.2.1.3 Classifying Envelopes by Size..................................................................... 10
 

2.2.1.4 Scope............................................................................................................ 11
 

2.2.2 Technology Assessment........................................................................................... 11
 

2.2.2.1 Envelope Design Option Considerations ..................................................... 11
 

2.3 SCREENING ANALYSIS................................................................................................. 12
 

2.3.1 Screened-out Technologies: Refrigeration System.................................................. 12
 

2.3.2 Screened-out Technologies: Envelope..................................................................... 13
 

2.4 ENGINEERING ANALYSIS ............................................................................................ 13
 

2.4.1 Analysis Approach................................................................................................... 14
 

2.4.2 Definition of Baseline Equipment ........................................................................... 14
 

2.4.3 Materials Price Trends ............................................................................................. 16
 

2.4.4 Refrigerants .............................................................................................................. 16
 

2.4.5 Shipping Cost ........................................................................................................... 17
 

2.5 MARKUPS TO DETERMINE EQUIPMENT PRICE...................................................... 17
 

2.5.1 Distribution Channel Structure ................................................................................ 17
 

2.5.2 Data Sources for Distribution Channel Markups ..................................................... 18
 

2.5.3 Markups/Price Determination .................................................................................. 18
 

2.6 ENERGY USE CHARACTERIZATION.......................................................................... 18
 

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES ....................................... 20
 

2.7.1 General Approach for Life-Cycle Cost and Payback Period Analyses ................... 21
 

2.7.2 Electricity Prices ...................................................................................................... 22
 

2.7.3 Repair Costs............................................................................................................. 22
 

2.8 NATIONAL IMPACT ANALYSIS .................................................................................. 23
 

2.8.1 Net Present Value Analysis ..................................................................................... 23
 

2.9 PRELIMINARY MANUFACTURER IMPACT ANALYSIS.......................................... 24
 

2.9.1 Industry Cash-Flow Analysis................................................................................... 25
 

2.9.2 Manufacturer Subgroup Analysis ............................................................................ 25
 

2.9.3 Competitive Impacts Assessment ............................................................................ 26
 

2.9.4 Cumulative Regulatory Burden ............................................................................... 26
 

2.9.5 Preliminary Results for the Manufacturer Impact Analysis .................................... 26
 

2.10 LIFE-CYCLE COST SUBGROUP ANALYSIS............................................................... 27
 

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2.11 UTILITY IMPACT ANALYSIS ....................................................................................... 27
 

2.12 ENVIRONMENTAL ASSESSMENT............................................................................... 27
 

2.12.1Carbon Dioxide ........................................................................................................ 28
 

2.12.2Sulfur Dioxide.......................................................................................................... 28
 

2.12.3Nitrogen Oxides ....................................................................................................... 29
 

2.12.4Mercury .................................................................................................................... 29
 

2.12.5Particulate Matter..................................................................................................... 29
 

2.12.6Monetization of Emissions Reduction Benefits ....................................................... 30
 

2.13 EMPLOYMENT IMPACT ANALYSIS ........................................................................... 32
 

2.14 REGULATORY IMPACT ANALYSIS............................................................................ 33
 

LIST OF TABLES 

Table 2.2.1 Equipment Classes for Envelopes............................................................................... 6
 

Table 2.2.2 Equipment Classes for Refrigeration Systems............................................................ 7
 

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CHAPTER 2. ANALYTICAL FRAMEWORK, COMMENTS FROM 

INTERESTED PARTIES, AND DOE RESPONSES 

2.1 INTRODUCTION 

2.1.1 Overview 

The U.S. Department of Energy (DOE) is required to publish performance-based 

standards for walk-in coolers and walk-in freezers that achieve the maximum improvements in 

energy efficiency that are technologically feasible and economically justified. (42 U.S.C. 

6313(f)(4)(A)) This chapter provides a description of the analytical framework that DOE is using 

to evaluate new energy conservation standards for walk-in coolers and freezers. The chapter sets 

forth the methodology, analytical tools, and relationships among the various analyses that are 

part of this rulemaking. The analyses performed as part of the accompanying notice and reported 

in this preliminary technical support document (TSD) are described in section ES.2 of the 

Executive Summary. 

DOE proposed this analytical framework in the rulemaking framework document for 

walk-in coolers and freezers (December 22, 2008). DOE announced the availability of the 

framework document in a notice of public meeting and availability of a framework document 

published in the Federal Register on January 6, 2009. DOE presented the analytical approach to 

interested parties during a public meeting held on February 4, 2009. The framework document is 

available at 

www.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/wicf_framework_doc.pdf. 

Subsequent to the publication of the framework document and at the public meeting, 

DOE received numerous comments from interested parties regarding DOE’s analytical approach. 

This chapter summarizes the key comments and describes DOE’s responses. In this chapter, 

DOE also summarizes any significant changes that it has made to the analytical approach 

described in the framework document and that it has incorporated into its preliminary analyses. 

In the executive summary of the preliminary TSD, DOE identifies a number of issues for which 

DOE seeks public comment. DOE explains each of those issues in the relevant analysis sections 

below. 

2.1.2 Miscellaneous Rulemaking Issues 

2.1.2.1 Separate Standards 

During the framework public meeting, several interested parties expressed concern about 

DOE’s plan to create a single standard for an entire walk-in unit. SCE stated that it would be 

difficult for DOE to enforce requirements for the entire walk-in assembly, because some parts of 

the walk-in unit are sold separately. (SCE, Public Meeting Transcript, No. 15 at p. 27) Heating, 

Airconditioning, and Refrigeration Distributors International (HARDI) stated that DOE should 

not pursue a single whole-system standard because of the high level of variation among walk-in 

units. (HARDI, No. 28 at p. 2) Many stakeholders recommended that DOE should instead 

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develop separate standards for the components of walk-in units. Southern California Edison 

(SCE), the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), Chase, the Appliance 

Standards Awareness Project (ASAP), Craig, Earthjustice, and HARDI all commented that DOE 

should develop separate standards for the insulated envelope and for the refrigeration system. 

(SCE, Public Meeting Transcript, No. 15 at p. 27 and No. 32 at p. 8; AHRI, Public Meeting 

Transcript, No. 15 at p. 62; Chase, Public Meeting Transcript, No. 15 at p. 145; ASAP, No. 21 at 

p. 1; Craig, No. 22 at p. 2; Earthjustice, No. 24 at p. 2; HARDI, No. 28 at p. 2) Earthjustice 

stated its opinion that the statute requiring the rulemaking (42 U.S.C. 6313(f)(4)(A)) is phrased 

in the plural (i.e., “standards”) , indicating that DOE is authorized to publish more than one 

performance-based standard for walk-in units. (Earthjustice, Public Meeting Transcript, No. 15 

at p. 54 and No. 24 at p. 2) ASAP stated its opinion that DOE could publish a performance 

standard with two components: a metric for the refrigeration system and a metric for the thermal 

integrity of the box. (ASAP, Public Meeting Transcript, No. 15 at p. 53) It was further suggested 

by Kason that if the system were divided into sub-systems, each bearing their own standards and 

performance ratings, then a large number of equipment classes may not be necessary. (Kason, 

No. 16 at p. 2) 

After considering the issues raised by these comments, DOE intends to create one 

standard for the refrigeration systems of walk-ins and a separate standard for walk-in envelopes. 

Thus, two separate standards would apply to each walk-in unit: one for the refrigeration system 

and one for the envelope. The refrigeration system manufacturer would be responsible for 

complying with the standard applicable to that system and the envelope manufacturer would be 

responsible for complying with the standard for the envelope. DOE believes that well-defined, 

separate standards would capture the energy use of the equipment as a whole. DOE requests 

comment on this approach. 

The American Council for an Energy Efficient Economy (ACEEE) suggested that DOE 

should adopt 2 metrics: a box metric expressed in kWh per square foot of surface area per year, 

and a refrigeration system metric with 3 values: capacity, steady state efficiency, and part load 

efficiency. (ACEEE, Public Meeting Transcript, No. 15 at p. 92) Kason stated that the walk-in 

enclosure can have a minimum BTU requirement listed to size the refrigeration system for the 

storage load, and that process or product cooling requiring additional refrigeration can be added 

to this. (Kason, No. 16 at p. 4) Alternatively, AHRI suggested that the refrigeration system 

should be required to meet a minimum energy efficiency standard expressed in terms of energy 

efficiency ratio (EER) or a similar metric. (AHRI, No. 33 at p. 3) 

EPCA, as amended by the Energy Independence and Security Act of 2007 (EISA 2007), 

requires DOE to measure energy use in developing a test procedure for walk-ins. (42 U.S.C. 

6314(a)(9)(B)(i)) Thus, DOE intends to set a standard for the refrigeration system based on the 

energy consumption as measured by the test procedure, rather than efficiency as suggested by 

AHRI. The test procedure would determine the energy consumption of a refrigeration system 

when it is paired with a theoretical, or nominal, envelope, measured in kWh/day or kWh/year. 

The proposed test procedure assumes a certain heat load of the theoretical envelope for sizing the 

refrigeration system, similar to Kason’s suggested method. DOE intends to set a standard for the 

envelope in terms of energy consumption per square foot of surface area (kWh/ft2

), as 

recommended by ACEEE. Because the envelope consumes a minimal amount of energy, DOE 

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intends to examine the impact of more efficient components (e.g., walls and doors). DOE’s 

proposed test procedure pairs the envelope with a theoretical, or nominal, refrigeration system 

with a certain EER for analysis purposes. More efficient envelope components would result in 

less heat gain, which would be reflected as less energy consumed by the nominal refrigeration 

system. Cooler systems would use one EER and freezer systems would use a different EER. 

Thus, DOE would prescribe the same nominal EER for use with all cooler systems, and the same 

EER for use with all freezer systems, to compare the performance of walk-in envelopes across a 

range of sizes, product classes, and levels of feature implementation. DOE requests comment on 

this approach. 

DOE has tentatively concluded that an analysis of sub-systems or components beyond the 

division of the envelope and refrigeration system is unwarranted. First, the envelope and 

refrigeration systems are discrete pieces of equipment for which energy use can be measured and 

standards set, and generally each has a single identifiable manufacturer. Although the envelope 

and refrigeration system may both incorporate separately-manufactured components (e.g. a 

compressor for the refrigeration system), these components may be understood to be purchased 

from a supplier. Second, to set standards for sub-systems or components of envelopes and 

refrigeration systems would require very complex analyses and a complex set of standards, and 

could have the effect of reducing the flexibility of manufacturers to develop innovative ways to 

comply with conservation standards for this equipment. DOE requests comment on this 

approach. For more information on how energy consumption was determined using the 

engineering analysis, see chapter 5 of the preliminary TSD. 

2.1.2.2 Compliance and Enforcement 

During the framework public meeting, the Air Conditioning Contractors of America 

(ACCA) asked how the standards would be enforced, and who would incur penalties for 

noncompliance: the facility owner or the installer. (ACCA, Public Meeting Transcript, No. 15 at 

p. 81) Hired Hand stated that its interpretation of the statute was that the end user is responsible 

to ensure that the equipment complies with the standard. (Hired Hand, Public Meeting 

Transcript, No. 15 at p. 68) SCE stated that for the California standards, enforcement is at the 

time that the walk-in is sold, when its information is entered into an appliance database. (SCE, 

Public Meeting Transcript, No. 15 at p. 127) 

EPCA states that “the [energy conservation] standards shall apply to products...that are 

manufactured beginning on the date that is 3 years after the final rule is published.” (42 U.S.C. 

6313(f)(4)(B)(i) DOE energy conservation standards consistently govern products and 

equipment as manufactured at the point of manufacture. Therefore, DOE intends that the 

manufacturer would be responsible for complying with these standards, so the manufacturer, not 

the facility owner or end user, will incur any penalties related to noncompliance. Likewise, 

compliance would be determined at the point of manufacture, not the point of sale. 

EPCA provides that “[t]he term ‘manufacture’ means to manufacture, produce, assemble 

or import.” (42 U.S.C. 6291(10)) Therefore, anyone who manufactures, produces, assembles, or 

imports walk-ins could be considered the “manufacturer.” Because of the various ways in which 

a walk-in could be manufactured, this could allow for more than one party being held responsible 

for complying with an energy conservation standard. Walk-ins consist of an envelope and a 

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refrigeration system that are often made by different manufacturers. The refrigeration system 

may be installed in the envelope in a manufacturing plant, or the two components may be 

assembled on-site. 

During the framework public meeting, many interested parties expressed concern about 

responsibility for compliance and whether the burden of compliance fell on the envelope and 

refrigeration manufacturers individually, the installer, or another party. Hired Hand stated that 

there is no single manufacturer because the equipment is customized, and rather than having a 

unitary design, walk-ins are more like houses in the way they are manufactured. (Hired Hand, 

Public Meeting Transcript, No. 15 at p. 89) ASAP agreed that the locus of responsibility for 

compliance could be in several places. (ASAP, Public Meeting Transcript, No. 15 at p. 70) 

Manitowoc stated that because walk-ins are mostly field-assembled, a performance standard 

might be impractical for assemblers to support if they were considered the manufacturers. 

(Manitowoc, Public Meeting Transcript, No. 15 at p. 32) Nor-Lake stated that for the walk-ins 

that they sell, the components are produced by multiple manufacturers, and only the panel 

specifications are in their control when they manufacture a product. (Nor-Lake, No. 30 at p. 1) 

Hired Hand stated that the walk-in may be manufactured by several parties and there is no ruling 

on who is responsible for the final layout of the walk-in. (Hired Hand, Public Meeting 

Transcript, No. 15 at p. 83) 

Several stakeholders commented that the contractor who assembles the walk-in should be 

held responsible for the final walk-in product. Both Kason and Craig stated that often, the walkin box manufacturer sells only the box to the customer, and a contractor installs the refrigeration 

system on-site. (Craig, Public Meeting Transcript, No. 15 at p. 78; Kason, Public Meeting 

Transcript, No. 15 at p. 88) Craig added that a contractor who installs a unit in the field should be 

considered the manufacturer, because if not, then walk-in manufacturers who supply units with 

and without the refrigeration system are not competitive with contractors in the market for fullyassembled walk-ins. (Craig, Public Meeting Transcript, No. 15 at p. 85; Craig, No. 22 at p. 6) 

EEI, ASAP, and Earthjustice agreed that contractors who assemble walk-ins on site should be 

responsible for ensuring that the walk-in complies with the standards. (EEI, Public Meeting 

Transcript, No. 15 at p. 88; ASAP, No. 21 at p. 1; Earthjustice, No. 24 at p. 3) 

However, other interested parties disagreed. HARDI, a distributors’ association, stated 

that the contractor does not control all of the variables in the walk-in and should not be 

responsible for the performance of the equipment, because they are only responsible for a portion 

of it. (HARDI, Public Meeting Transcript, No. 15 at p. 90) ACCA, a contractors’ association, 

stated that it agreed with HARDI. (ACCA, Public Meeting Transcript, No. 15 at p. 90) ASAP 

stated that as an alternative to holding the contractor responsible, DOE could adopt standards 

that cover all new walk-in components and hold the original manufacturers of such components 

responsible for compliance. (ASAP, No. 21 at p. 1) 

As discussed above, DOE intends to set separate standards for the envelope and 

refrigeration system of a walk-in. DOE understands that the two parts of a walk-in—the 

envelope and the refrigeration system—are typically manufactured by separate parties, and are 

often assembled by a third-party contractor who has no direct control over the performance of 

the individual components. Under this approach, the manufacturer of the envelope would be 

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responsible for complying with the envelope standard, and the manufacturer of the refrigeration 

system would be responsible for complying with the refrigeration system standard. This 

approach provides strong incentives for both sets of manufacturers to create efficient 

components, and can be enforced because there are two readily-identifiable groups of 

manufacturers of these components who are directly responsible for the performance of each 

component. In cases where the same manufacturer produces both components, DOE still intends 

to treat the components separately in terms of compliance and enforcement, as this will ensure 

that both components meet the appropriate standard. 

DOE intends to hold the manufacturer of the envelope responsible for complying with the 

envelope standard, and the manufacturer of the refrigeration system responsible for complying 

with the refrigeration system standard. DOE believes that this will address the concerns of Craig 

that manufacturers of envelopes who also supply refrigeration would not be competitive with 

contractors; under this approach, the manufacturer of the refrigeration system would be 

responsible for the performance, not the supplier. DOE believes that because of the structure of 

the walk-in market, it makes more sense to consider the envelope and refrigeration as separately 

manufactured components, rather than depart from its precedent and hold the installer or 

contractor responsible. Thus, DOE agrees with the approach suggested by ASAP, with the caveat 

that it does not intend to consider sub-systems or components beyond the division of the 

envelope and refrigeration system. 

DOE found that for large walk-in envelopes, the manufacturer may ship the panels and 

other sub-assemblies (e.g. doors) disassembled, to be constructed on-site. The manufacturer 

provides instructions for assembling the walk-in, but the final layout is at the discretion of the 

contractor, installer, or even end-user. In this case, to maintain consistency, DOE intends to 

regulate the envelope as originally manufactured; i.e. at the manufacturer’s factory, assuming 

that the manufacturer adequately conveys the intent of construction to the assembler. 

2.1.2.3 Food Safety 

Kason Industries stated that when setting standards, DOE should consider both storage 

and process applications and should not impose a standard that may compromise the ability of a 

walk-in cooler or freezer to maintain food safety in its intended application. (Kason, No. 16 at p. 

1) Manitowoc stated that food safety must be factored into the analysis so that proper food 

storage temperatures are maintained under all conditions. (Manitowoc, No. 15 at p. 164) The 

Utilities Joint Comment recommended that DOE incorporate the thermal rating standard 

developed by NSF International to rate walk-in coolers and walk-in freezers (WICF). (Utilities 

Joint Comment, No. 32 at p. 8) 

DOE recognizes that food refrigeration equipment (including walk-ins) must be tested for 

compliance with NSF regulations using the NSF International standard 7, which measures food 

temperature at a specific ambient condition for food safety purposes. DOE will not use NSF 

Standard 7 to rate equipment as recommended by the Utilities Joint Comment, because NSF 

Standard 7 does not test for an energy use metric. However, DOE does not intend to set an 

energy conservation standard that will conflict with the requirements of NSF Standard 7. 

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2.2 MARKET AND TECHNOLOGY ASSESSMENT 

When DOE begins an energy conservation standards rulemaking, it develops information 

that provides an overall picture of the market for the equipment considered, including the nature 

of the equipment, market characteristics, and industry structure. This activity consists of both 

quantitative and qualitative efforts based primarily on publicly available information. The market 

assessment examined manufacturers, trade associations, and the quantities and types of 

equipment sold and offered for sale. 

DOE reviewed relevant literature and interviewed manufacturers to develop an overall 

picture of the walk-in cooler and freezer industry in the United States. Industry publications and 

trade journals, government agencies, and trade organizations provided the bulk of the 

information, including (1) manufacturers and their market shares; (2) shipments by product type 

and capacity; (3) product information; and (4) industry trends. 

Subsequent sections of this chapter describe the comments DOE received in response to 

its review of the walk-in cooler and freezer market for the framework document. The analysis 

developed as part of the market and technology assessment is described in chapter 3 of the 

preliminary TSD. 

2.2.1 Equipment Classes and Scope of Coverage 

When evaluating and establishing energy conservation standards, DOE generally divides 

covered equipment into equipment classes by the type of energy used, capacity, or other 

performance-related features that affect efficiency. Different energy conservation standards may 

apply to different equipment classes. (42 U.S.C. 6295(q)) 

Because DOE is considering separate standards for envelopes and refrigeration systems, 

DOE identified equipment classes separately for envelopes and refrigeration systems. 

Table 2.2.1 Equipment Classes for Envelopes 

Equipment Class Description 

Display Cooler Cooler with display glass or glass doors for displaying merchandise 

Display Freezer Freezer with display glass or glass doors for displaying merchandise 

Non-Display Cooler Cooler without display glass or glass doors for displaying merchandise 

Non-Display Freezer Freezer without display glass or glass doors for displaying merchandise 

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Table 2.2.2 Equipment Classes for Refrigeration Systems 

Equipment Class Description 

Dedicated condensing mediumtemperature indoor system Medium-temperature refrigeration system with a dedicated condensing unit 

located indoors 

Dedicated condensing lowtemperature indoor system Low-temperature refrigeration system with a dedicated condensing unit 

located indoors 

Dedicated condensing mediumtemperature outdoor system Medium-temperature refrigeration system with a dedicated condensing unit 

located outdoors 

Dedicated condensing lowtemperature outdoor system Low-temperature refrigeration system with a dedicated condensing unit 

located outdoors 

Multiplex condensing mediumtemperature system Unit cooler component of a medium-temperature multiplex refrigeration 

system 

Multiplex condensing lowtemperature system Unit cooler component of a low-temperature multiplex refrigeration system 

DOE received input from interested parties on the component definitions and equipment 

classes that DOE included in the framework document, as discussed below. 

2.2.1.1 Equipment Classes – Envelope 

SCE and EEI stated that the location of the walk-in, either indoors or outdoors, may 

necessitate separate equipment classes. (SCE, No. 32 at p. 7 and EEI, No. 25 at p. 3) SCE added 

that DOE should also evaluate partial indoor/outdoor boxes. (SCE, No. 32 at p.7) SCE added that 

interior space conditions including conditioned space, conditioned but within a hot kitchen or 

other similar environment, and unconditioned space should also be considered. (SCE, No. 32 at 

p.7) 

For the envelope, DOE will not consider outdoor units as a separate equipment class 

because typical walk-in design does not include additional design features that impact energy 

consumption for outdoor units. They are typically modified only to endure weather conditions 

such as rain, snow, and ice. DOE seeks comment on this approach. 

Craig stated that combination cooler-freezer units with a shared wall constitute a separate 

equipment class. (Craig, No. 15 at p. 117) ASAP and SCE stated that combination cooler-freezer 

units where the freezer is accessed through the cooler compartment should be considered a 

separate equipment class. (ASAP, No. 21 at p. 2 and SCE, No. 32 at p.7) ICS added that DOE 

should consider combination units of the same temperature as well. (ICS, No. 15 at p. 118) 

Combination units are composed of two or more walk-in coolers or freezers sharing one 

or more walls, including walk-ins that share a wall but can be accessed independently, walk-ins 

that share a wall where one of the walk-ins can only be accessed through the other, and walk-ins 

within larger walk-ins. DOE requests feedback on this characterization. From an energy 

efficiency perspective, the shared wall of a combination unit tends to save energy by reducing 

steady-state infiltration across doorways and other barriers. DOE proposes that all combination 

units be classified according to the design of their individual units that compose the combined 

system, which would account for the steady-state infiltration benefit of the shared wall. For 

instance, if a combination cooler-freezer that was used for storage purposes utilizes no glass 

display doors, the cooler would be classified as a “Non-Display Cooler” and the freezer would be 

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classified as a “Non-Display Freezer,” If each of the combination unit’s sub-parts complies with 

the standard, the combined system would also comply. DOE requests feedback on this proposed 

method of classification for combination units. 

Interested parties discussed several issues related to doors. Eliason stated that a doubleacting self-closing door is very common and should be considered when DOE classifies its 

equipment. (Eliason, No. 15 at p. 120 and No. 19 at p. 1) Eliason also recommended that all 

walk-in classes be considered with and without double-acting self-closing doors when DOE 

classifies its equipment. (Eliason, No. 15 at p. 120 and No. 19 at p. 1) Hired Hand commented 

that high traffic doors, specifically those used in supermarket storage applications, constitute a 

distinct application and equipment class. (Hired Hand, No. 27 at p. 2) ASAP and SCE stated that 

walk-ins with reach-in and/or glass doors should be a distinct equipment class. (ASAP, No. 21 at 

p. 2 and SCE, No. 15 at p. 116) 

DOE has found that traffic considerations can be factored into the energy efficiency 

calculations used for specific walk-ins. DOE does not propose creating a distinct equipment class 

based on traffic conditions. Rather, technologies such as improved doors will be considered in 

the Market and Technology Assessment (Chapter 3 of the proposed TSD). However, DOE 

intends to consider walk-ins with glass doors as a separate equipment class because glass 

significantly affects the energy consumption of the walk-in. DOE requests feedback on this 

proposal. 

Crown Tonka suggested that panel thickness constitutes different equipment classes since 

the R-value of a walk-in is directly related to the thickness of its panels. (Crown Tonka, No. 23 

at p. 2) DOE proposes that panel thickness be addressed in the context of design options, which 

would recognize the insulation values associated with different insulation thicknesses. DOE 

requests feedback on this proposal. 

Craig recommended that DOE consider separate classes for unassembled and 

preassembled boxes. (Craig, No. 22 at p. 1) DOE believes that assembly of the box (or envelope) 

does not constitute an equipment class, as it does not affect the energy consumption of the walkin after it has been assembled. 

2.2.1.2 Equipment Classes – Refrigeration 

AHRI suggested that DOE consider separate refrigeration equipment classes for coolers 

and freezers. (AHRI, No. 15 at p. 116) AHRI also stated that blast freezers used to quickly freeze 

product should be separated from conventional walk-in freezers. (AHRI, No. 33 at p. 4) DOE 

proposes to consider low- and medium-temperature refrigeration systems as different classes, 

due to the inherent differences in the refrigeration equipment selected for these two different 

applications. However, blast freezers were not treated as a separate equipment class within this 

analysis because DOE believes that blast freezers would not significantly differ in performance 

from standard freezers when measured by the proposed test procedure. DOE requests comment 

on this assumption. 

Craig Industries stated that many walk-in units are combinations, in which a cooler and 

freezer are packaged together and share a wall, but have separate refrigeration units either inside 

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or outside of the building in which they are housed. (Craig, No. 15 at p. 117) Craig also stated 

that the only application where a combination unit would be served by the same refrigeration 

system providing two different temperature levels would be a rack system with several 

compressors, and that normal combination units share a common wall but have two different 

refrigeration systems. (Craig, No. 15 at p. 119) The Edison Electric Institute (EEI) stated that 

DOE should have different standards for combination units. (EEI, No. 25 at p. 3) In response to 

comments about combination units, DOE has tentatively decided that combination units sharing 

a wall but possessing separate, dedicated refrigeration systems will be analyzed as two separate 

units, each measured according to the standards for the appropriate product class for the unit. 

DOE does not propose to create a separate class for refrigeration systems of combination units, 

because these systems would not be significantly different from refrigeration systems of 

individual coolers and freezers. For combination units connected to rack, or multiplex, 

compressors, each envelope would have its own unit cooler, and each would be analyzed 

separately as a unit cooler connected to a multiplex condensing system. DOE requests comment 

on this approach. 

Kason stated that, due to the disparity in condensing unit operating temperatures present, 

a division between indoor and outdoor units would be warranted. (Kason, No. 16 at p. 2) EEI 

agreed that separate efficiency standards for indoor and outdoor units were necessary. (EEI, No. 

25 at p. 3) The Utilities Joint Comment was in agreement with other parties in that indoor and 

outdoor self-contained envelopes should be separate classes, and suggested that partially-indoor 

envelopes and freezers located within coolers necessitated their own classes. It also stated that a 

distinction should be made within indoor units between envelopes in conditioned spaces, 

envelopes located in hot kitchens, and envelopes in unconditioned spaces. (Utilities Joint 

Comment, No. 32 at p. 7) DOE agrees that indoor and outdoor units should be grouped into 

different equipment classes. In this differentiation, the condensing unit of the refrigeration 

system is determined to be either inside or outside, as the location of the condensing unit is a 

determining factor of the efficiency of the system. The proposed test procedure allows for two 

sets of test conditions, corresponding to indoor and outdoor condensing units. DOE recognizes 

that there could be other operating conditions, such as freezers within coolers, and walk-ins 

located in either conditioned spaces or hot kitchens. However, DOE believes that the test 

conditions outlined in the proposed test procedure will capture the majority of walk-in 

applications. 

Manitowoc stated that a separate class could consist of an indoor box with a dedicated 

outdoor condensing unit, and that remote condensing units could include both the 

aforementioned systems and systems connected to a remote rack condensing unit serving 

multiple envelopes. (Manitowoc, No. 15 at p. 117) The Utilities Joint Comment, however, stated 

that DOE should evaluate self-contained, dedicated remote, and rack condensing units as 

separate equipment classes. (Utilities Joint Comment, No. 32 at p. 7) Chase stated that the most 

commonly used system in supermarkets consists of a single rack system with the same flow of 

refrigerant serving the cooler, freezer, and display cases. (Chase, No. 15 at p. 120) DOE is 

proposes to analyze rack, or multiplex, units separately. In these analyses, the unit cooler is 

evaluated by itself, and the multiplex compressor/condensing unit is not considered in the 

analysis. However, DOE proposes to group self-contained and split system refrigeration systems 

into the same class, called “dedicated condensing,” because each system has one condensing unit 

2-9 
that is dedicated to it. DOE believes that these systems are sufficiently similar and will obtain 

similar results using the test procedure; therefore, creating separate classes is not necessary. DOE 

requests comment on this approach. 

2.2.1.3 Classifying Envelopes by Size 

During the framework public meeting, interested parties discussed sizes of walk-ins as 

this metric relates to characterization and classification of the equipment. DOE proposed 

classifying walk-ins as follows: (1) small: ≤ 1,000 square feet of floor area; (2) medium: 1,000 ≤

X ≤ 2,000 square feet; (3) large: ≥ 2,000 square feet. HARDI stated that DOE’s proposed 

classification of small was not small enough, and commented that most walk-ins supplied by 

their members were about 200 square feet of floor area. (HARDI, No. 15 at p. 115) ICS stated 

that 200 to 400 square feet would be typical for small walk-ins. (ICS, No. 15 at p. 152) 

Manitowoc commented that small should be about 100 square feet. (Manitowoc, No. 15 at p. 

151) HARDI argued that walk-ins of less than 500 square feet have design characteristics that 

differ significantly from units of 1,000 square feet and larger. (HARDI, No. 28 at p. 2) AHRI 

suggested that capacity ranges should be expressed in volume rather than area. (AHRI, No. 33 at 

p. 4) AHRI recommended the following classes: (1) small: 2,000 cubic feet (250 square feet at 8 

foot ceilings), which is typical of restaurants; (2) medium: 10,000 cubic feet (1,250 square feet at 

8 foot ceilings), which is typical of convenience and grocery stores; (3) large: > 10,000 cubic feet 

for larger units. (AHRI, No. 33 at p. 4) Nor-Lake stated that they can build ceilings of up to 24 

feet high for large warehouse units and other manufacturers are capable of ceilings of 30 feet or 

higher, which indicates that volume could play a role in energy efficiency. (Nor-Lake, No. 30 at 

p. 1) 

Among interested parties, volume was the preferred option for characterizing walk-ins. 

Stakeholders unanimously agreed that volume would be preferable to floor area as a method of 

characterizing walk-ins. (Manitowoc, No. 15 at p. 56; EEI, No. 15 at p. 105; ASAP, No. 15 at 

p.115; EEI, No. 15 at p. 116; AHRI, No. 15 at p. 116; ICS, No. 15 at p. 152; Crown Tonka, No. 

23 at p. 1; ASAP, No. 21 at p. 2; EEI, No. 25 at p. 3; Northwest Energy Efficiency Alliance 

(NEEA), No. 18 at p. 3; SCE, No. 32 at p. 7) Manitowoc stated that using floor area is 

impractical because walk-ins can vary significantly by ceiling height. (Manitowoc, No. 15 at p. 

56) ASAP stated that test metrics should account for combined interior surface area of walls, 

ceilings, and floors, the volume of the conditioned space, or both. (ASAP, No. 21 at p. 2) ASAP 

stated that the three size categories based on floor area increments of 1,000 square feet are not 

useful and commented that the break points appear to be arbitrary. (ASAP, No. 21 at p. 2) Crown 

Tonka recommended that the test metric be kWh per cubic foot. (Crown Tonka, No. 23 at p. 1) 

DOE recognizes that the size classifications originally proposed in the framework 

document did not reflect typical sizes of walk-ins. DOE has found that walk-ins are highly 

customizable, particularly with regard to size, and that it can characterize the relationship 

between size and energy consumption within a given equipment class. As such, assigning size 

classifications would be arbitrary. DOE proposes no specific size classifications to further 

distinguish its envelope equipment classes since the use of arbitrary size could distort the 

standard that is created based on the engineering analysis. DOE may select a number of “sizes” 

purely for the purposes of generating cost-efficiency curves in the engineering analysis. DOE 

requests stakeholder feedback on this proposal. 

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2.2.1.4 Scope 

Regarding the scope of the equipment covered by the rulemaking, HARDI inquired as to 

whether the new standards will apply to reach-in blowers, and then suggested that DOE not 

evaluate equipment with a rating greater than 5 horsepower. (HARDI, No. 28 at p. 3) 

Any equipment that fits the definition of a “walk-in” as specified in EPCA is within the 

scope of this rulemaking. Reach-ins are excluded because the term “reach-in” refers to 

equipment that is accessed by reaching into it instead of walking into it; because it cannot be 

walked into, it does not meet the definition of “walk-in.” However, DOE cannot exclude 

refrigeration equipment based on horsepower. 

2.2.2 Technology Assessment 

As part of the market and technology assessment, DOE developed a list of technologies 

to consider for improving the efficiency of walk-in coolers and freezers. Chapter 3 of the 

preliminary TSD includes the detailed list of all technology options DOE identified for further 

consideration in this rulemaking. 

2.2.2.1 Envelope Design Option Considerations 

Eliason stated that double-acting self-closing doors are considered a proprietary and not 

yet commercially available technology, but DOE should consider them as a design option in the 

analysis. (Eliason, No. 19 at p. 3) AHRI suggested that no proprietary technologies should be 

considered in this rulemaking. (AHRI, No. at p. 5) 

DOE found that there are dozens of commercial available doors with various design 

characteristics that reduce air exchange both when open and when fully closed. Because DOE 

could not consider each individual door independently and because the actual door energy 

performance is highly dependent on human behavior, DOE did not consider any unique designs. 

Instead, as prescribed in the proposed WICF test procedure, DOE utilized specific assumptions 

about door opening frequency and duration for three major types: passage, glass display, and 

freight doors. As described in the test procedure, manufacturers receive credit for use of 

automatic opening/closing controls that reduce the door opening duration. Therefore, the 

automatic opening/closing control was considered a design option. 

EPCA specified that a primary door must meet minimum R-value insulation requirements 

to reduce heat conduction. (42 U.S.C. 6313(f)(1)(C)) However, doors that do not meet EPCA 

insulation R-value prescriptive requirements may be considered air infiltration reduction devices 

if installed as “secondary” doors. The performance of these secondary devices is measured by a 

device effectiveness test described in WICF test procedure. For design options, DOE considered 

infiltration reduction devices with varying levels of effectiveness. 

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2.3 SCREENING ANALYSIS 

The purpose of the screening analysis is to evaluate the technologies identified in the 

technology assessment to determine which options to consider further. First, DOE removed from 

consideration those technology options whose energy consumption could not be adequately 

measured by the DOE test procedure. DOE also removed technologies that do not change or 

affect the energy efficiency metrics of walk-in coolers and freezers. Second, the screening 

analysis examines whether the remaining technologies (1) are technologically feasible; (2) are 

practicable to manufacture, install, and service; (3) have an adverse impact on product utility or 

availability; and (4) have adverse impacts on health and safety. DOE reviewed the list of walk-in 

cooler and freezer technologies according to these criteria in consultation with industry, technical 

experts, and other interested parties. In the engineering analysis, DOE further considers the 

energy-saving technologies that it did not eliminate in the screening analysis. Chapter 4 of the 

preliminary TSD, the screening analysis, contains details about DOE’s screening criteria. 

2.3.1 Screened-out Technologies: Refrigeration System 

DOE received a number of comments regarding technologies that could be considered in 

the analysis for this rulemaking. Kason suggested that hot gas defrost, a possible technology 

option, may have a negative impact on energy efficiency due to the fact that the evaporator fan 

continues to run during defrost, resulting in the walk-in filling with warm air (Kason, No. 15 at 

p. 87). SCE inquired as to why electronically commutated motors (ECMs), also known as 

brushless DC motors, were included as a technology option in light of the fact that they are 

required by EISA 2007 and mandated in California. (SCE, No. 15 at p. 124) SCE further 

expressed that ECMs should not be a screening option, with the possible exception of the 460­

Volt option. (SCE, No. 15 at p. 139) Manitowoc stated that floating head pressure and external 

heat rejection will not provide a benefit for condensing units located indoors in constanttemperature conditions. (Manitowoc, No. 15 at p. 137) AHRI stated that economizer cooling is 

inapplicable to this product and should be removed as a technology option. (AHRI, No. 14 at p. 

140) AHRI also stated that expansion valves, including thermostatic expansion valves (TXVs), 

electronic expansion valves (EEVs), and differential pressure TXVs (DPTXVs), should not be 

included in the analysis, as they offer no real efficiency benefits. (AHRI, No. 33 at p. 5) 

A number of these technologies presented for consideration were not included in the 

analysis for various reasons. Hot gas defrost was not considered due to the fact that a number of 

manufacturers were in agreement that the feature is not likely to result in a net energy savings, as 

compressor and fan operation are required during the defrost period. ECMs are only considered 

as a design option for condenser fans because they are already mandated for all evaporator fans 

by EISA 2007. Economizer cooling involves directing outside air into the interior of a 

conditioned structure during lower-temperature hours. This would generally be inapplicable to 

walk-ins because the outside air would rarely, if ever, be at a lower temperature than the 

refrigerated air inside the walk-in; therefore, DOE removed economizer cooling from 

consideration as a technology option. DOE determined that floating head pressure provides no 

measurable benefit for indoor units, as indoor units are tested at only one ambient condition 

according to the proposed test procedure. DOE considered this option only for units located 

outdoors and subject to substantial ambient temperature variations. DOE did not consider 

2-12 
 

advanced valves such as EEVs as design options by themselves, as, in most cases, they are 

included as part of other technology options, such as floating head pressure controls. 

2.3.2 Screened-out Technologies: Envelope 

EEI believes that using alternative primary thermal energy sources for the purposes of 

anti-sweat heating should not be considered as an energy efficiency design option. (EEI, No. 25 

at p. 4) DOE agrees that alternative thermal energy sources should not be considered, as DOE 

did not find any commercially available alternatives. 

2.4 ENGINEERING ANALYSIS 

The engineering analysis (chapter 5 of the preliminary TSD) establishes the relationship 

between the manufacturing production cost and the efficiency for each walk-in cooler or freezer. 

This relationship serves as the basis for cost-benefit calculations in terms of individual 

customers, manufacturers, and the nation. Chapter 5 discusses the equipment classes analyzed, 

representative baseline units, incremental efficiency levels, methodology used to develop 

manufacturing production costs, cost-efficiency curves, impact of efficiency improvements on 

the equipment, and methodology used to extend the analysis to low-shipment-volume equipment 

classes. 

In the engineering analysis, DOE evaluates a range of equipment efficiency levels and 

associated manufacturing costs. The purpose of the analysis is to estimate the incremental MSPs 

that would result from increasing efficiency levels above the baseline model in each equipment 

class. The engineering analysis considers technologies not eliminated in the screening analysis. 

The LCC analysis uses the cost-efficiency relationships developed in the engineering analysis. 

DOE typically structures its engineering analysis around one of three methodologies: (1) 

the design-option approach, which calculates the incremental costs of adding specific design 

options to a baseline model; (2) the efficiency-level approach, which calculates the relative costs 

of achieving increases in energy efficiency levels without regard to design options used to 

achieve such increases; and/or (3) the reverse-engineering or cost-assessment approach, which 

involves a “bottom-up” manufacturing cost assessment based on a detailed bill of materials 

derived from tear-downs of the equipment being analyzed. 

In the framework document, DOE stated its intention to use a design-option approach for 

the engineering analysis. In a design-option approach, analysis is performed in terms of 

incremental increases in efficiency due to the implementation of selected design options. For 

each equipment class, the engineering analysis estimates manufacturer production costs (MPCs) 

for each successive design option. Hence, in the framework document, DOE requested industry 

cost data and shipment data. 

2-13 
 

2.4.1 Analysis Approach 

AHRI stated that the use of an efficiency-level approach to determine the relationship 

between manufacturer production cost and energy efficiency levels has shown its limit during 

past rulemakings. (AHRI, No. 33 at p. 5) The Joint Comment stated that DOE should use a 

design-option approach, and to ensure transparency, the most significant design options should 

be separately evaluated, rather than aggregated with other measures. (Joint Comment, No. 21 at 

p. 3) HARDI and Eliason also recommended that DOE should use a design-option approach. 

(HARDI, No. 28 at p. 2; Eliason, No. 19 at p. 3) 

For the preliminary analyses, DOE used a design-option approach for determining the 

cost-efficiency relationship. A design-option approach uses individual design options, or 

combinations of design options, to identify increases in efficiency. Under this approach, DOE 

bases its estimates of equipment cost and energy consumption on manufacturer or component 

supplier data or engineering computer simulation models. Individual design options, or 

combinations of design options, are added to the baseline model in ascending order of costeffectiveness. This approach involved consultation with outside experts, review of publicly 

available cost and performance information, and modeling of equipment cost and energy 

consumption. See chapter 5 of the preliminary TSD for more information about the engineering 

analysis approach. 

2.4.2 Definition of Baseline Equipment 

DOE received numerous comments during the framework public meeting and comment 

period regarding the definition of baseline units for the purpose of this analysis. In the 

framework document, DOE presented two options for defining the baseline unit and its 

efficiency level: that of using walk-in models compliant with EPCA as modified by EISA 2007, 

and that of using baseline models determined based on the units present in the market prior to the 

date EPCA’s prescriptive standards became applicable to walk-in equipment and then present in 

the installed base. In that document, DOE requested comment from interested parties on these 

options, and on whether other approaches existed for defining the baseline efficiency level for 

walk-in equipment. 

At the public meeting, ASAP commented that DOE should use the existing prescriptive 

standards within EISA 2007 and assemble a baseline unit in accordance with those requirements. 

(ASAP, Public Meeting Transcript, No. 15 at p. 122) ASAP further stated that the law prohibits 

the Secretary from setting a standard less stringent than that already in place (i.e.,EISA 2007), 

and thus that DOE must establish the efficacy of current standards in order to evaluate 

incremental energy savings without simply remaking the existing prescriptive standard. (ASAP, 

No. 15 at p. 123, No. 15 at p. 130) NEEA also stated that the baseline efficiency level should be 

no lower than the standards already in effect. (NEEA, No. 18 at p. 3) SCE concurred, agreeing in 

the public meeting and by written comment that the baseline should be the current legal 

requirement set forth in EISA 2007. (SCE, No. 15 at p. 131, No. 32 at p. 8) Craig disagreed, 

stating that overall product life cycle should be taken into account, as performance changes in 

real-world environments, and thus the baseline should be determined by studying existing units. 

(Craig, No. 15 at p. 127) EEI proposed that perhaps a comparison between current models and 

2-14 
 

 

2007 (pre-EISA 2007) models should be made in order to determine the impact of EISA 2007 on 

the technology thus far, and also suggested that DOE determine the impact of EISA 2007 by 

studying the increase in production of energy-efficient units as compared to the period before the 

passage of EISA 2007. (EEI, No. 15 at p. 122 and No. 25 at p. 3) 

A number of comments were made by interested parties addressing the short duration for 

which EISA 2007 has been in effect and the precedent set by the existing California standards 

that preceded EISA 2007. SCE stated that due to the similarity between the requirements of 

EISA 2007 and those of the California standards, 10 percent of the U.S. population has been 

effectively using those standards for several years. (SCE, No. 15 at p. 124) PG&E agreed that the 

EISA 2007 standard was based upon the California requirements. (PG&E, No. 15 at p. 126) 

Earthjustice stated that California and EISA 2007 standards should not have a diminished role 

just because they are new. (Earthjustice, No. 15 at p. 132) However, AHRI added that the lack of 

enforcement of the California standards means that they may not comprise a true baseline and 

that, because the EISA 2007 legislation is still quite new, and instead, DOE should use 

equipment that has been available for five years because it would better represent the installed 

base. (AHRI, No. 15 at p. 122; No. 15 at p. 129) 

Because EPCA’s prescriptive standards are currently in effect and mandatory, this 

rulemaking must assume that a baseline model complies with these standards as suggested by 

ASAP, NEEA, and SCE. Furthermore, EPCA states that performance-based standards must 

achieve the maximum improvement in energy that the Secretary determines is technologically 

feasible and economically justified. (42 U.S.C. 6313(f)(4)(A) [Emphasis added] DOE interprets 

this to mean, as it has uniformly done in similar contexts in this program (i.e., in interpreting 42 

USC 6295(o)(2)(a)), that the improvement must be measured with reference to products and 

equipment that meet existing standards that apply to them. Thus, any possible standard must 

achieve an improvement in energy efficiency over the existing standards, and DOE cannot accept 

the suggestion of Craig and AHRI that it define baseline walk-in equipment by reference to 

installed equipment that does not meet EPCA’s current, prescriptive standards. A comparison of 

pre- and post-EISA 2007 models, as suggested by EEI, would be outside the scope of this 

rulemaking. 

DOE also received comments during the public meeting and comment period suggesting 

other factors aside from compliance with EISA 2007 that could be taken into account when 

defining the baseline. Crown Tonka stated that baseline units should be of a simple configuration 

with normalizing factors for configuration changes, with those factors being developed by the 

responsible manufacturer. (Crown Tonka, No. 23 at p. 2) Craig stated that the most popular 

walk-in cooler in the U.S. is an 8×10×7.5 ft single-door model and that the most popular freezer 

is a 6×8×7.5 ft single-door model, and suggested that these sizes be taken into consideration as 

the baseline. (Craig, No. 22 at p. 6) 

In keeping with the overall approach of separate standards for the two components of a 

walk-in, DOE considered two sets of baseline specifications, one for the envelope and the other 

for the refrigeration system. These two categories were further subdivided by equipment class 

designations (cooler or freezer, storage or display, etc.), as well as representative unit sizes 

determined in accordance with the distribution of capacities of most commonly sold models. In 

2-15 
 

determining the specifications of these baseline units, including component specifications, 

dimensional values, and other technical data, DOE surveyed a selection of units and models 

currently available in the marketplace which meet the baseline levels of performance; that is, 

EISA 2007-compliant levels of performance for the baseline. For a more detailed explanation of 

the formulation of baseline unit specifications, as well as data regarding the specifications used, 

please see chapter 5. 

2.4.3 Materials Price Trends 

In regards to price trends over time, AHRI suggested that DOE perform a realistic 

analysis based on recent materials price trends in order to assess current and future equipment 

prices. (AHRI, No. 33 at p. 3) 

DOE determined the cost of raw materials by using prices for copper, steel, and 

aluminum from the American Metals Market. Prices for rifled and unrifled copper tubing were 

obtained directly from a tubing manufacturer. Because metal prices have fluctuated drastically 

over the last few years, DOE used metal prices that reflect a five-year average of the Bureau of 

Labor Statistics Producer Price Indices (PPIs) from 2004 to 2009 with an adjustment to 2009$. 

DOE used the PPIs for copper rolling, drawing, and extruding, and steel mill products, and DOE 

made the adjustments to 2009$ using the gross domestic product implicit price deflator. 

2.4.4 Refrigerants 

DOE received several comments regarding the choice of refrigerants to be used in its 

analysis. HARDI stated that the industry is in the midst of a refrigerant transition, and that DOE 

should consider only equipment using hydrofluorocarbon (HFC) refrigerants and associated 

performance metrics in its analysis. (HARDI, No. 15 at p. 141) ICS further expressed that the use 

of hydrochlorofluorocarbons (HCFCs) in the analysis would not be logical, as these refrigerants 

would be phased out by 2010. (ICS, No. 15 at p. 166) Manitowoc and AHRI additionally agreed 

that the use of HFC refrigerants as the basis for analysis would be appropriate. (Manitowoc, No. 

15 at p. 166 and AHRI, No. 15 at p. 167) In further comments, AHRI also stated that the 

majority of the walk-in industry has already transitioned to the use of HFC refrigerants and foam 

blowing agents, and that DOE should thus base all of its analyses, including cost-efficiency 

curves, “max tech,” and manufacturer equipment prices, on the use of HFC-based equipment. 

(AHRI, No. 33 at p. 5) 

Due to the phaseout of HCFC refrigerants in this industry, HFC refrigerants are most 

likely to be used in this equipment in the future. DOE has assumed that only HFC refrigerants 

will be utilized by WICF refrigeration systems and has based its analysis solely upon equipment 

containing those refrigerants. Other alternative refrigerants, such as ammonia, hydrocarbons, and 

CO2, were not considered in this analysis, as they are not currently used in domestically 

manufactured WICF refrigeration systems. Additionally, some of these refrigerants, including 

ammonia, could be limited by State and local building codes due to toxicity concerns. As a 

result, DOE has chosen HFC refrigerants as the basis for its analysis going forward. 

2-16 
 

2.4.5 Shipping Cost 

Craig expressed that the shipping cost was normally 4-6 percent of equipment cost and 

could increase substantially with increase in wall thickness, due to the commonly used “cube 

rule” for freight shipments and that thicker insulation could result in higher fuel consumption for 

shipping that would be counter to the intent of the standard. (Craig, No. 22 at p. 7) 

DOE believes that steps can be taken to avoid “cube rule” cost mark-ups by appropriate 

planning and freight company selection. In addition, many walk-in manufacturers ship units with 

6” thick walls. The effect of thickness, i.e. increased shipped volume per completed walk-in, is 

the same problem that manufacturers see when manufacturing various sizes of walk-in 

envelopes. Therefore, since manufactures regularly avoid “cube rule” markups, the freight 

shipping cost should increase linearly with increase in the volume of the product shipped. DOE 

requests cost data on shipping cost of combinations of equipment wall thickness and gross area 

of panels. DOE believes that the increase in fuel consumption for shipping versus the energy 

savings seen from increased wall thickness caused by thicker insulation is minimal. The life 

cycle energy savings of a walk-in with thicker walls would exceed the energy used for shipping 

by an order of magnitude. 

2.5 MARKUPS TO DETERMINE EQUIPMENT PRICE 

DOE used manufacturer-to-customer markups to convert the MSPs estimated in the 

engineering analysis to customer prices, which then were used in the LCC, PBP, and 

manufacturer impact analyses. DOE calculates markups for baseline equipment (baseline 

markups) based on the markups at each step in each distribution channel to obtain the customer 

purchase price for the baseline equipment sold through each channel. DOE similarly calculates 

incremental markups that relate the change in the manufacturer sales price of higher-efficiency 

models (the incremental cost increase) to the change in the customer sales price. 

To develop markups, DOE must identify how the equipment is distributed from the 

manufacturer to the customer (the distribution channels). After establishing appropriate 

distribution channels for each equipment class, DOE used economic data from the U.S. Census 

Bureau, HARDI, ACCA, and other sources to define how prices are marked up as the equipment 

pass from manufacturers to customers. 

2.5.1 Distribution Channel Structure 

At the framework public meeting, DOE proposed three distribution channels similar to 

those used for the commercial refrigeration equipment (CRE) standards rulemaking analysis. 

During the discussion of the three distribution channels for WICF, Craig Industries commented 

about the second distribution channel as proposed by DOE: Manufacturer -> Distributor -> 

Customer. Craig Industries said that DOE should instead use the following distribution channel: 

Manufacturer -> Mechanical Contractor -> Customer. (Craig, No. 15 at p. 169) HARDI agreed 

with Craig on this comment. (HARDI, No. 15 at p. 171) 

2-17 
Based on the comments above, DOE will use the second distribution channel as proposed 

above by Craig in its rulemaking analysis. 

In another related comment, Craig Industries proposed a new distribution channel to 

reflect the distribution of WICF equipment from a foodservice dealer directly to the customer as 

shown here: Foodservice Dealer -> Customer. (Craig, No. 22 at p. 6) HARDI, on the other hand, 

suggested a modified distribution channel as follows: Manufacturer -> Dealer -> Customer. 

(HARDI, No. 28 at p. 2) 

Based on these comments about an additional distribution channel, DOE will re-examine 

the WICF market and consider this alternative distribution channel in addition to the three 

channels already proposed. 

2.5.2 Data Sources for Distribution Channel Markups 

On the topic of data sources request from DOE for calculating the distribution channel 

markups, HARDI suggested that the first distribution channel is appropriate for almost all retrofit 

and repair of WICF equipment, and may account for 10-20 percent of new installations. Whereas 

the distribution channel #3 as proposed by DOE would be predominantly for new WICF 

equipment. (HARDI, No. 15 at p. 171) Eliason also provided a sample distribution dataset. 

(Eliason, No. 19 on 7-1 at p.1) 

DOE appreciates the information and dataset provided above and will incorporate this 

information in its analysis. 

2.5.3 Markups/Price Determination 

On the topic of markups and the customer price determination of the WICF equipment, 

AHRI and HARDI informed DOE about the difficulty of performing a markups analysis on a 

complex market such as walk-in coolers and freezers. (AHRI, No. 15 at p. 173; HARDI, No. 28 

at p. 2; HARDI, No. 28 at p. 5; HARDI, No. 15 at p. 176) HARDI further advised DOE to 

consider more than one distribution channel. (HARDI, No. 15 at p. 177) 

DOE intends to model the WICF market and the markups analysis using multiple 

distribution channels (as described above) and will conduct its markups analysis with all due 

caution. DOE will also invite further comments on the details of the markup analysis when it is 

presented as part of the preliminary analysis. 

2.6 ENERGY USE CHARACTERIZATION 

The energy use characterization assesses the energy savings impacts from higher 

efficiency levels and provides the basis for the energy savings used in the LCC and subsequent 

2-18 
 

 

analyses. The energy use characterization used the individual energy estimates from the 

engineering analysis for different classes of envelopes and the refrigeration systems to assess the 

aggregate energy savings for many possible combinations of matched sets of envelope and 

refrigeration system of higher efficiencies. DOE assessed the energy savings impacts for two 

different classes of cooler envelopes and two different classes of freezer envelopes matched with 

a single class of multiplex condensing refrigeration systems and two classes of dedicated 

condensing refrigeration systems (one each with indoor and outdoor condenser locations). For 

the dedicated condensing systems with outdoor condensers, the energy savings were also 

analyzed across a range of U.S. climates. For the multiplex condensing systems i.e., systems 

connected to compressor racks, DOE did not consider the impact of variability of climate. 

Although the condensers for these systems are also located outside, the compressor racks serve 

additional loads at the same time, which also impact their performance. For the analysis of 

energy use of envelopes with unit coolers served by multiplex condensing equipment, where the 

compressor rack efficiency is not the subject of this rulemaking, DOE used the annual 

condensing unit performance, or EER, estimates for coolers and freezers, as provided for by the 

proposed test procedure. Various design options corresponded to different energy efficiency 

levels for the envelopes and the refrigeration systems. DOE assessed the energy impacts at the 

level of the envelope and the associated refrigeration system. DOE’s analysis did not include 

potential additional energy impacts at the whole building level, as these impacts will be small 

and uncertain in most instances. As part of the energy use characterization, DOE made certain 

assumptions regarding system configuration, and usage, including how the equipment is operated 

and under what conditions and has documented these assumptions in the energy analysis. 

Chapter 7 of the preliminary TSD provides a detailed description of the energy analysis 

methodology. 

DOE received the following comments in response to a proposed energy use 

characterization for walk-in coolers and freezers outlined in the framework document. 

Manitowoc commented that the use of whole building simulation to establish whole building 

energy impacts for buildings using walk-in coolers and freezers would not be feasible due to 

uncertainties in the interaction between the building space and the walk-in systems for any 

integrated model. (Manitowoc, Public Meeting Transcript, No. 15 at p. 187) AHRI stated that for 

commercial refrigeration equipment standards rulemaking analysis, DOE used a whole-building 

simulation approach and found that the interaction between the commercial refrigeration 

equipment and the building HVAC system was minimal. (Public Meeting Transcript, No. 15 at p. 

188) ACEEE also suggested that DOE should not pursue this approach due to the considerable 

additional complexities involved. (Public Meeting Transcript, No. 15 at p. 189) After considering 

the complexities further and in light of the aforementioned comments, DOE has decided not to 

use the whole-building simulation approach for determining impacts on the energy use of 

buildings using the WICF equipment. 

Manitowoc commented on the approach to sizing of the refrigeration system and pointed 

out that the refrigeration systems may be conservatively sized when compared to the load, so 

DOE should not assume the refrigeration system runs 90 percent of the time. The sizing may also 

depend on application (a convenience store vs. a restaurant). (Public Meeting Transcript, No. 15 

at p. 194) For the preliminary analysis, DOE used a sizing methodology that conforms to the 

approach outlined in the proposed test procedure. The key premise of this sizing algorithm is that 

2-19 
for walk in refrigeration systems, the ratio of the refrigeration load (averaged over an 8-hour 

peak load period) to the nominal capacity of the refrigeration system should be 70 percent for 

coolers and 80 percent for freezers. This capacity would be adequate to meet typical walk-in 

refrigeration loads seen over a 24-hour daily use cycle. 

2.7 LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSES 

The effect of amended standards on individual customers usually includes a reduction in 

operating cost and an increase in purchase cost, which together determine the economic impact 

of standards on individual customers. This chapter describes the following two metrics, which 

DOE used in the analysis to measure this impact: 

Life-cycle cost (LCC) is the total customer cost of an appliance or equipment, generally over 

the life of the appliance or equipment, including purchase and operating costs. The latter 

consist of maintenance, repair, and energy costs. Future operating costs are discounted to 

the time of purchase and summed over the lifetime of the appliance or equipment. 

Payback period (PBP) measures the amount of time it takes customers to recover the 

assumed higher purchase price of a more energy-efficient equipment through reduced 

operating costs. 

New or amended energy conservation standards typically affect equipment-operating 

expenses and purchase prices. DOE evaluated the net LCC to analyze the net effect of amended 

walk-in cooler and freezer standards on customers. DOE used the cost-efficiency relationship 

derived from the engineering analysis, along with the energy costs derived from the energy use 

characterization. Inputs to the LCC calculation include the installed customer cost of the 

equipment (customer purchase price plus installation cost), operating expenses (energy, repair, 

and maintenance costs), the lifetime of the unit, and a discount rate. 

Because the installed cost of the equipment typically increases while operating cost 

typically decreases in response to amended standards, there is a point in the life of the equipment 

with higher-than-baseline efficiency when the net reduction in operating costs (in dollars) since 

the time of purchase is equal to the increase in the purchase price of the higher efficiency 

equipment. The length of time required for equipment to reach this cost-equivalence point is 

known as the PBP. 

DOE conducted the LCC and PBP analyses using typical values to reflect energy 

consumption in the field. DOE identified several input values for estimating the LCC, including 

retail prices; electricity prices; discount rate; maintenance, repair, and installation costs; and 

equipment lifetimes. 

DOE developed discount rates from estimates of the interest rate (finance cost) applied to 

commercial equipment purchases. Following accepted principles of financial theory, the finance 

cost of raising funds to purchase such equipment can be interpreted as either (1) the financial 

cost of any debt incurred to purchase the equipment (interest charges on debt), or (2) the 

2-20 
 

opportunity cost of any equity used to purchase the equipment (interest earnings on household or 

business equity). 

The LCC and PBP model was developed using Microsoft Excel spreadsheets combined 

with Crystal Ball, a commercially available add-in. The LCC and PBP analyses explicitly model 

the uncertainty and variability in the model’s inputs using Monte Carlo simulation and 

probability distributions. 

The LCC analysis estimated energy use for each walk-in cooler or freezer as described in 

chapter 7 of the preliminary TSD. Aside from energy use, other important factors influencing the 

analyses include energy prices, installation costs, equipment distribution markups, and sales tax. 

At the national and regional levels, the LCC spreadsheets explicitly model the uncertainty and 

variability in the model’s inputs using probability distributions based on the shipment of 

equipment to different regions of the country. The majority of WICF units have outdoor 

condensers, and the energy use of walk-in coolers and freezers is sensitive to the climate when 

the condensing units are located outdoors. Consequently, the LCC and PBP analyses need to take 

into account where the nation’s walk-in coolers and freezers are located. These analyses apply a 

probability distribution to apportion the shares of total number of walk-in coolers and freezers 

over different states according to their population and estimate the annual energy consumption 

based on a population-weighted representative climate profile for the state. 

As mentioned, DOE generated LCC and PBP results as probability distributions using a 

simulation based on Monte Carlo analysis methods in which certain key inputs consist of 

probability distributions rather than single-point values. Therefore, the outcomes can be 

expressed as probability distributions. As a result, the Monte Carlo analysis produces a range of 

LCC and PBP results. A distinct advantage of this type of approach is that DOE can identify the 

percentage of customers achieving LCC savings or attaining certain PBP values, in addition to 

identifying the average LCC savings or average PBP for a particular efficiency level. 

DOE received a number of comments from stakeholders on the LCC and PBP analysis 

methods and proposed sources of data. 

2.7.1 General Approach for Life-Cycle Cost and Payback Period Analyses 

During the framework public meeting, DOE sought comments from interested parties on 

the general approach for the LCC and PBP analyses. AHRI commented that transportation costs 

should be accounted for in DOE’s analysis. (AHRI, No. 15 at p. 200) AHRI further stated that 

installation costs might be correlated with the WICF unit size. 

Based on the above two comments from AHRI, DOE has decided to include the 

transportation costs in the life-cycle cost analysis and also determine the installation costs of the 

WICF units correlated with the unit sizes. 

2-21 
 

2.7.2 Electricity Prices 

Electricity price information is required to calculate the dollar benefits to customers who 

purchase and operate more efficient walk-in coolers and freezers. The electricity cost savings 

comprise the benefit side of the cost-benefit analysis used to estimate the LCC impacts of more 

efficient walk-ins. To value the electricity cost savings, DOE proposed to use the latest available 

edition of EIA’s Annual Energy Outlook for each region of the country. AHRI concurred with 

the DOE approach in its comment. (AHRI, No. 33 at p. 6) 

2.7.3 Repair Costs 

The repair cost is the cost to the customer of replacing or repairing WICF components 

that have failed. Because data were not available to indicate how repair costs vary with 

equipment efficiency, DOE proposed to use one of the following two scenarios: (1) repair costs 

that varied in direct proportion with the manufacturer price of the equipment, or (2) repair costs 

that did not increase with efficiency. AHRI commented that as equipment become more 

efficient, their repair costs increase. (AHRI, No. 15 at p. 200) HARDI also commented that if a 

performance standard is an all-encompassing energy consumption figure, labor costs could 

increase for equipment that is more efficient. (HARDI, No. 15 at p. 207) 

With respect to the WICF equipment, in particular, DOE finds that repair costs for the 

envelope is essentially zero because envelopes are typically replaced instead of repaired. 

However, the repair costs for the refrigeration system can either increase or decrease with respect 

to more efficient technology. In this case, DOE will assume that the repair cost for the 

refrigeration system will increase with increased efficiency of the refrigeration system. 

Additionally, DOE is always interested in obtaining the most recent and accurate labor costs 

possible; DOE invites further data or comment on both of these subjects. 

HARDI voiced concern regarding the lack of data for maintenance costs for new 

technologies. (HARDI, No. 28 at p. 2) Hired Hand specified one technology, automated doors, 

which have lower maintenance costs than traditional doors. (Hired Hand, No. 27 at p. 3) 

DOE will assume that maintenance cost for the WICF equipment remains constant even 

as the equipment efficiency increases. 

DOE received several comments suggesting that standards that require new technologies 

would lead to “learning curve” related maintenance costs. (Manitowoc, No. 15 at p. 203; 

HARDI, No. 15 at p. 212; AHRI, No. 33 at p. 6) DOE also received comments regarding the 

change in potential “learning curve” related costs over time. (SCE, No. 15 at p. 208; Earthjustice, 

No. 15 at p. 209; Eliason, No. 19 on 8-4,5,6 at p.1) 

All the improved technologies being proposed by DOE for the refrigeration system (e.g., 

scroll compressors, high efficiency fans, motors, coils, etc.) are existing and commercially 

available in the refrigeration and/or HVAC products market. WICF equipment is usually 

maintained by contractors who specialize in maintenance of both refrigeration and HVAC 

products. Consequently, DOE did not consider any “learning curve” related maintenance cost for 

the refrigeration system. For the improved technologies being proposed by DOE for the envelope 

(e.g., higher insulation thickness, door and sealant enhancement, active and passive infiltration 

2-22 
 

 

 

 

reduction devices, high efficacy lighting, etc.), DOE did not find any consensus of opinion 

regarding “learning curve” related maintenance cost. DOE requests comment on this issue. 

2.7.4 Equipment Lifetime 

DOE defined equipment lifetime as the age when the walk-in cooler or freezer unit is 

retired from service. DOE received multiple comments regarding equipment lifetime. Manitowoc 

commented that DOE’s estimates of equipment lifetime are reasonable. (Manitowoc, No. 15 at p. 

204) Additionally, Craig Industries stated that a 10-year lifetime for a refrigeration system is 

rather high. (Craig, No. 15 at p. 205) AHRI stated that refrigeration system lifetime is between 8 

and 12 years and envelope lifetime is between 12 and 25 years. (AHRI, No. 33 at p. 7) 

DOE will develop and use a Weibull distribution (a separate one for the envelope and the 

refrigeration system) for equipment lifetimes that accounts for all of this input. 

DOE received multiple comments regarding the salvage value of the equipment after its 

useful life. Owens Corning and Craig Industries asked DOE to consider the recyclability of the 

envelope, including the insulation material. (Owens Corning, No. 31 at p. 2; Craig, No. 22 at p. 

7) Craig Industries also asked DOE to consider certain disposal costs. (Craig, No. 8 at p. 1) 

DOE’s analysis will consider both salvage values and disposal costs at end of life of the 

total envelope and the insulation in the panels. 

2.8 NATIONAL IMPACT ANALYSIS 

The NIA assesses the national energy savings (NES) and the NPV from a national 

perspective of total customer costs and savings expected to result from standards at specific 

efficiency levels. DOE determined both the NPV and NES for the performance levels considered 

for the equipment classes analyzed. To make the analysis more accessible and transparent to all 

interested parties, DOE prepared a Microsoft Excel spreadsheet model to forecast NES and the 

national customer economic costs and savings resulting from new standards. The spreadsheet 

model uses typical values (as opposed to probability distributions) as inputs. To assess the effect 

of input uncertainty on NES and NPV results, DOE has developed its spreadsheet model to 

conduct sensitivity analyses by running scenarios on specific input variables. 

2.8.1 Net Present Value Analysis 

The inputs for determining net present value (NPV) are: (1) total annual installed cost; (2) 

total annual savings in operating costs; (3) a discount factor; (4) present value of costs; and (5) 

present value of savings. DOE calculated net savings each year as the difference between the 

base case and each standards case in total savings in operating costs and total increases in 

installed costs. DOE calculated savings over the life of each product, accounting for differences 

in annual energy rates. DOE calculated NPV as the difference between the present value of 

operating cost savings and the present value of total installed costs. DOE used a discount factor 

2-23 
 

based on real discount rates of 3 and 7 percent to discount future costs and savings to present 

values. 

Several comments were received suggesting DOE use a real discount rate of 2 to 

3 percent for its national impact analysis. (Joint Comment, No. 21 at p. 3; NEEA, No. 18 at p. 4) 

Additionally DOE received comment that convenience stores and floral applications be given 

consideration when estimating discount rates. (ICS, No. 15 at p. 199) A joint comment was also 

submitted suggesting that DOE should not apply discount rates to non-monetary indicators, such 

as tons of emissions or quads of energy. (Joint Comment, No. 21 at p. 4) 

As directed by the Office of Management and Budget, DOE will continue to use both 3 

and 7-percent real discount rates for its NPV analysis and will continue to discount nonmonetary indicators, such as physical units of measure. 

DOE calculated increases in total installed costs as the difference in total installed cost 

between the base case and standards case (i.e., once the standards take effect). Because the more 

efficient equipment purchased in the standards case usually costs more than equipment bought in 

the base case, cost increases appear as negative values in the NPV. 

DOE expressed savings in operating costs as decreases associated with the lower energy 

consumption of equipment purchased in the standards case compared to the base efficiency case. 

Total savings in operating costs are the product of savings per unit and the number of units of 

each vintage that survive in a given year. 

Chapter 10 of the preliminary TSD provides additional details on the national impacts 

analysis. 

2.9 PRELIMINARY MANUFACTURER IMPACT ANALYSIS 

DOE performed a preliminary manufacturer impact analysis (MIA) to estimate the 

financial impact of higher energy conservation standards on walk-in cooler and freezer 

manufacturers, and to calculate the impact of such standards on employment and manufacturing 

capacity. The MIA has both quantitative and qualitative aspects. The quantitative part of the 

MIA relies on the government regulatory impact model (GRIM), an industry-cash-flow model 

customized for these three industries. The GRIM inputs are information on the industry cost 

structure, shipments, and revenues. This includes information from many of the analyses 

described above, such as manufacturing costs and prices from the engineering analysis and 

shipments forecasts. The key GRIM output is the industry net present value (INPV). Different 

sets of assumptions (scenarios) will produce different results. The qualitative part of the MIA 

addresses factors such as equipment characteristics, characteristics of particular firms, and 

market and equipment trends, and includes assessment of the impacts of standards on 

manufacturer subgroups. Chapter 12 of the preliminary TSD describes the complete preliminary 

MIA. 

2-24 
 

DOE conducts each MIA in three phases and will further tailor the analytical framework 

for each MIA based on comments from interested parties. In Phase I, DOE creates an industry 

profile to characterize the industry and identify important issues that require consideration. In 

Phase II, DOE prepares an industry cash-flow model and interview questionnaire to guide 

subsequent discussions. In Phase III, DOE interviews manufacturers and assesses the impacts of 

standards quantitatively and qualitatively. DOE assesses industry and subgroup cash flow and 

NPV using the GRIM. DOE then assesses impacts on competition, manufacturing capacity, 

employment, and regulatory burden based on manufacturer interview feedback and discussions. 

Until recently, DOE reported MIA results in its standards rulemakings only during the 

NOPR phase of the rulemaking. However, DOE is now evaluating and reporting preliminary 

MIA information in this preliminary analysis. DOE gathered this information during the 

preliminary manufacturer interviews conducted for the engineering analysis. See chapter 12 of 

the preliminary TSD for a summary of manufacturers’ concerns regarding the impacts of new 

energy conservation standards for this rulemaking. 

As part of the NOPR, DOE will seek comments from manufacturers about their potential 

loss of market share, changes in the efficiency distribution within each industry, and the total 

reduction in equipment shipments at each new energy conservation standard level. DOE will 

then estimate the impacts on the industry quantitatively and qualitatively. DOE seeks further 

comment from interested parties about the impact of new standards on domestic manufacturers. 

The following is an overview of the information DOE will collect and the analysis it will 

conduct during the preliminary MIA (chapter 12 of the preliminary TSD). 

2.9.1 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 standards on the industry 

that produces the equipment covered by the standard. The GRIM analysis uses many factors to 

determine annual cash flows from a new standard: annual expected revenues; manufacturer 

costs, including cost of goods sold, depreciation, research and development, selling, general, and 

administrative expenses; taxes; and conversion capital expenditures. DOE compares the results 

against base-case projections that involve no new standards. The financial impact of new 

standards is then the difference between the two sets of discounted annual cash flows. Other 

performance metrics such as return on invested capital are available from the GRIM. For more 

information on the industry cash-flow analysis, refer to chapter 12 of the preliminary TSD. 

2.9.2 Manufacturer Subgroup Analysis 

Industry cost estimates are not adequate to assess differential impacts among subgroups 

of manufacturers. For example, small and niche manufacturers, or manufacturers whose cost 

structure differs significantly from the industry average, could be more negatively affected by the 

imposition of standards. Ideally, DOE would consider the impact on every firm individually; 

however, since this usually is not possible, DOE typically uses the results of the industry 

characterization to group manufacturers exhibiting similar characteristics. 

2-25 
 

 

DOE outlined the process it uses to establish manufacturer subgroups in the framework 

document and sought comment from interested parties on any potential subgroups within the 

industry. 

During the manufacturer interview process conducted as part of the NOPR, DOE will 

discuss the potential subgroups and subgroup members it has identified for the analysis. DOE 

will encourage manufacturers to recommend subgroups or characteristics appropriate for the 

subgroup analysis. DOE will also attempt to contact component suppliers, dealers, distributors, 

and contractors during the manufacturer interview process conducted for the NOPR. For more 

detail on the manufacturer subgroup analysis, see chapter 12 of the preliminary TSD. 

2.9.3 Competitive Impacts Assessment 

DOE must consider whether a new standard is likely to reduce industry competition, and 

the Attorney General must determine the impacts, if any, of reduced competition. DOE will 

make a determined effort to gather and report firm-specific financial information and impacts. 

The competitive impacts assessment will focus on assessing the impacts on smaller 

manufacturers. DOE will base this assessment on manufacturing cost data and information 

collected from interviews with manufacturers. The interviews will focus on gathering 

information to help assess asymmetrical cost increases to some manufacturers, increased 

proportion of fixed costs potentially increasing business risks, and potential barriers to market 

entry (e.g., proprietary technologies). The NOPR will be submitted to the Attorney General for a 

review of the impacts of standards on competition. The Attorney General’s comments on the 

proposed rule will be considered in preparing the final rule. 

2.9.4 Cumulative Regulatory Burden 

DOE recognizes and seeks to mitigate the overlapping effects on manufacturers of new or 

revised DOE standards and other regulatory actions affecting the same equipment. DOE will 

analyze and consider the impact on manufacturers of multiple, product-specific regulatory 

actions. DOE outlined the cumulative regulatory burden process in the framework document and 

sought comment on any additional regulations facing the walk-in cooler and freezer industry. 

Regulations that may affect WICF manufacturers include the phase-out of chlorofluorocarbons 

(CFCs) and HCFCs as refrigerants, costs of testing for fire and safety criteria, NSF International 

certification requirements, and international, state, and local building codes. See Chapter 13 of 

the preliminary TSD for further discussion of this issue. 

2.9.5 Preliminary Results for the Manufacturer Impact Analysis 

As part of the preliminary MIA, DOE discussed potential impacts of new energy 

conservation standards with manufacturers responsible for a majority of walk-in cooler and 

freezer equipment sales. These discussions occurred during the interviews DOE conducted for 

the engineering analysis. The interviews provided valuable information that DOE used to 

evaluate the impacts of new energy conservation standards on manufacturers’ cash flows, 

manufacturing capacities, and employment levels. DOE discusses its findings from the 

preliminary MIA interviews in the executive summary and in chapter 13 of the preliminary TSD. 

2-26 
 

2.10 LIFE-CYCLE COST SUBGROUP ANALYSIS 

The LCC subgroup analysis evaluates economic impacts on selected customer sub-groups 

who might be adversely affected by a change in the national energy conservation standards for 

the considered equipment. DOE evaluates impacts on particular subgroups of customers in part 

by analyzing the LCC impacts and PBP for those particular customers. 

DOE will use the LCC spreadsheet model to evaluate impacts on customer subgroups. 

DOE can analyze the LCC for any subgroup by applying the LCC spreadsheet model to only that 

subgroup. DOE is particularly sensitive to increases in the customer price of the considered 

equipment, wishing to avoid a negative economic impact on any identified customer subgroup. 

DOE received several comments regarding potential customer subgroups. While Eliason 

suggested independent grocery stores, convenience stores and cafeterias as possible subgroups, 

ICS stated that DOE should consider small independent restaurants as a possible subgroup as 

well. (Eliason, No. 19 on 11-1, at p.1; ICS, Public Meeting Transcript, No. 15 at p. 222) 

Manitowoc stated that food service, convenience stores, and grocery stores should be considered 

in this part of its analysis. (Manitowoc, Public Meeting Transcript, No. 15 at p. 231) 

DOE will review the available information with respect to the identified customer 

subgroups and consider independent grocery stores and small convenience stores in its LCC 

subgroup analysis. 

2.11 UTILITY IMPACT ANALYSIS 

The utility impact analysis includes an analysis of the effect of new energy conservation 

standards on the electric and the gas utility industries. For this analysis, DOE adapted National 

Energy Modeling System (NEMS), a large multi-sectoral, partial-equilibrium model of the U.S. 

energy sector that the EIA developed throughout the past decade primarily for preparing EIA’s 

AEO. In previous rulemakings, a variant of NEMS (currently termed NEMS-BT, BT referring to 

DOE’s Building Technologies program) was developed to address the specific impacts of an 

energy conservation standard. 

Available in the public domain, NEMS produces a widely recognized baseline energy 

forecast for the United States through 2030. The typical NEMS outputs include forecasts of 

electricity sales, prices, and electric generating capacity. DOE conducts the utility impact 

analysis as a scenario that departs from the latest AEO reference case. In other words, the energy 

savings impacts from amended energy conservation standards are modeled using NEMS-BT to 

generate forecasts that deviate from the AEO reference case. 

2.12 ENVIRONMENTAL ASSESSMENT 

2-27 
 

The intent of the environmental assessment is to quantify and consider the environmental 

effects of amended energy conservation standards for walk-in equipment. The primary 

environmental effects of these standards would be reduced power plant emissions resulting from 

reduced consumption of electricity. DOE will assess these environmental effects by using 

NEMS-BT to provide key inputs to its analysis. The portion of the environmental assessment 

that will be produced by NEMS-BT considers carbon dioxide (CO2), nitrogen oxides (NOX), and 

mercury (Hg). The environmental assessment also considers impacts on SO2 emissions. After a 

brief discussion of general methodology, this section will address each of the relevant emissions. 

This section then explains how DOE plans to monetize the benefits associated with emissions 

reductions. 

2.12.1 Carbon Dioxide 

In the absence of any Federal emissions control regulation of power plant emissions of 

CO2, a DOE standard is likely to result in reductions of these emissions. The CO2 emission 

reductions likely to result from a standard will be estimated using NEMS-BT and national energy 

savings estimates drawn from the NIA spreadsheet model. The net benefit of the standard is the 

difference between emissions estimated by NEMS-BT at each standard level considered and the 

AEO Reference Case. NEMS-BT tracks CO2 emissions using a detailed module that provides 

results with broad coverage of all sectors and inclusion of interactive effects. 

2.12.2 Sulfur Dioxide 

DOE has preliminarily determined that SO2 emissions from affected Electric Generating 

Units (EGUs) are subject to nationwide and regional emissions cap and trading programs that are 

likely to eliminate the standards’ impact on SO2 emissions. The costs of meeting such emission 

cap requirements are reflected in the electricity prices and forecasts used in DOE’s analysis of 

the standards. Title IV of the Clean Air Act sets an annual emissions cap on SO2 for all affected 

EGUs. SO2 emissions from 28 eastern States and the District of Columbia (DC) are also limited 

under the Clean Air Interstate Rule (CAIR, published in the Federal Register on May 12, 2005. 

70 FR 25162 (May 12, 2005)), which creates an allowance-based trading program that will 

gradually replace the Title IV program in those States and DC. (The recent legal history 

surrounding CAIR is discussed below.) The attainment of the emissions caps is flexible among 

EGUs and is enforced through the use of emissions allowances and tradable permits. Under 

existing EPA regulations, any excess SO2 emission allowances resulting from the lower 

electricity demand caused by the imposition of an efficiency standard could be used to permit 

offsetting increases in SO2 emissions by any regulated EGU. However, if the standard resulted in 

a permanent increase in the quantity of unused emission allowances, there would be an overall 

reduction in SO2 emissions from the standards. While there remains some uncertainty about the 

ultimate effects of efficiency standards on SO2 emissions covered by the existing cap and trade 

system, the NEMS-BT modeling system that DOE plans to use to forecast emissions reductions 

currently indicates that no physical reductions in power sector emissions would occur for SO2. 

Even if there is no significant reduction in the overall emissions of SO2 that results from 

the standard, there may still be some economic benefit from reduced demand for SO2 emission 

allowances that is not fully reflected in the cost savings experienced by individual consumers. 

Electricity savings that decrease the overall demand for SO2 emissions allowances could lower 

2-28 
allowance prices and thereby result in some economic benefits for all electricity consumers, not 

just those that reduced their electricity use as a result of an efficiency standard. DOE does not 

plan to monetize this particular benefit because the effect on the SO2 allowance price from any 

single energy conservation standard is likely to be small and highly uncertain. 

2.12.3 Nitrogen Oxides 

NEMS-BT also has an algorithm for estimating NOX emissions from power generation. 

The impact of these emissions, however, will be affected by the CAIR, which the Environmental 

Protection Agency (EPA) issued on May 12, 2005. CAIR will permanently cap emissions of 

NOX in 28 eastern states and the District of Columbia. 70 FR 25162 (May 12, 2005). 

Much like SO2 emissions, a cap on NOX emissions means that the amended walk-ins 

standards may have little or no physical effect on these emissions in the 28 eastern States and the 

DC covered by CAIR. Although CAIR has been remanded to the EPA by the DC Circuit, it will 

remain in effect until it is replaced by a rule consistent with the Court’s July 11, 2008, opinion in 

North Carolina v. EPA. 531 F.3d 896 (DC Cir. 2008); see also North Carolina v. EPA, 550 F.3d 

1176 (DC Cir. 2008). Because all States covered by CAIR opted to reduce NOX emissions 

through participation in cap-and-trade programs for electric generating units, emissions from 

these sources are capped across the CAIR region. 

Standards may produce an environmental-related economic benefit in the form of lower 

prices for emissions allowance credits. As with SO2 allowance prices, DOE does not plan to 

monetize this particular benefit because the effect on the NOX allowance price from any single 

energy conservation standard is likely small and highly uncertain. 

Accordingly, DOE plans to use NEMS-BT to estimate the emissions reductions from 

possible standards in the 22 States where emissions are not capped. 

2.12.4 Mercury 

Similar to emissions of SO2 and NOX, future emissions of Hg would have been subject to 

emissions caps. In May 2005, EPA issued the Clean Air Mercury Rule (CAMR). 70 FR 28606 

(May 18, 2005). CAMR would have permanently capped emissions of mercury for new and 

existing coal-fired power plants in all States by 2010. However, on February 8, 2008, the DC 

Circuit issued its decision in New Jersey v. Environmental Protection Agency, in which the DC 

Circuit, among other actions, vacated the CAMR. 517 F.3d 574 (DC Cir. 2008). EPA has 

decided to develop emissions standards for power plants under the Clean Air Act (Section 112), 

consistent with the DC Circuit’s opinion on the CAMR. See 

http://www.epa.gov/air/mercuryrule/pdfs/certpetition_withdrawal.pdf. Pending EPA's 

forthcoming revisions to the rule, DOE is excluding the CAMR from its Environmental 

Analysis. In the absence of CAMR, a DOE standard would likely reduce Hg emissions and DOE 

plans to use NEMS-BT to estimate these emission reductions. 

2.12.5 Particulate Matter 

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Earthjustice stated that DOE’s characterization of the PM formation as “complex” does 

not remove the need for DOE to considering the impact of reductions in PM in standards 

rulemakings. (Earthjustice, No. 24 at p. 4) 

DOE acknowledges that particulate matter (PM) impacts are of concern due to human 

exposures that can impact health. However, impacts of PM emissions reduction are much more 

difficult to estimate than other emissions reductions due to the complex interactions between 

PM, other power plant emissions, meteorology, and atmospheric chemistry that impact human 

exposure to particulates. Human exposure to PM usually occurs at a significant distance from the 

power plants that are emitting particulates and particulate precursors. When power plant 

emissions travel this distance, they undergo highly complex atmospheric chemical reactions. 

Although the EPA does keep inventories of direct PM emissions of power plants, in its source 

attribution reviews, the EPA does not separate direct PM emissions from power plants from the 

sulfate particulates indirectly produced through complex atmospheric chemical reactions. The 

great majority of PM emissions from power plants are of these secondary particles (secondary 

sulfates). Thus, it is not useful to examine how the amended standard impacts direct PM 

emissions independent of indirect PM production and atmospheric dynamics. Therefore, DOE is 

not planning to assess the impact of these standards on particulate emissions. Further, even the 

cumulative impact of PM emissions from power plants and indirect emissions of pollutants from 

other sources is unlikely to be significant. 

2.12.6 Monetization of Emissions Reduction Benefits 

DOE received a number of comments on the monetization of pollutants. SCE noted the 

example of monetized pollutants in the Time-Dependent Valuation approach available on the 

California Energy Commission’s website. (SCE, Public Meeting Transcript, No. 15 at p. 240) 

The Joint Comment proposed that DOE monetize CO2 emissions as equal in value to their prices 

under the proposed Climate Security Act as modeled in EIA’s 2008 analysis of the same. (Joint 

Comment, No. 21 at p. 3) Earthjustice stated that DOE must quantify the effect of a CO2 

emissions cap on energy prices in the lifecycle cost analysis, and account in the NPV for the 

effect of the standard in reducing allowance prices. (Earthjustice, No. 24 at p. 3) By contrast, EEI 

argued that any environmental regulation that internalized the cost of emissions would account 

for that cost in the price of electricity, so adding these costs would amount to "double counting," 

which could distort the life cycle cost analysis. (EEI, No. 25 at p. 4) AHRI stated that DOE 

should not estimate a price for CO2 emissions because there is currently no consensus on any 

single estimate of the value of CO2 emissions and the US has not set an emissions cap; therefore, 

DOE should not indulge in speculation to determine a value when it has no statutory obligation 

to do so. Moreover, DOE should not allow evaluation of environmental impacts to negate or 

moot what has always been, and should remain, the core analysis in appliance standards 

rulemakings, i.e. consumer payback and life cycle cost analysis. If DOE decides to estimate the 

monetary value of the CO2 emission reductions, it should incorporate increased CO2 emissions 

from the manufacture of higher efficiency units. (AHRI, No.33 at p. 8) DOE is considering the 

appropriate estimate(s) for the value of avoided CO2 emissions resulting from revised standards. 

For those emissions for which real national emission reductions are anticipated (CO2, Hg, 

and NOX for 22 states), only ranges of estimated economic values based on environmental 

damage studies of varying quality and applicability are available. Therefore, DOE plans to report 

2-30 
 

estimates of monetary benefits derived using these values and plans to consider these benefits in 

weighing the costs and benefits of each of the standard levels considered. 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. 

In order to estimate the monetary value of benefits resulting from reduced emissions of 

CO2 emissions, it is DOE’s intent to use in its analysis the most current Social Cost of Carbon 

(SCC) values developed and/or agreed to by interagency reviews. The SCC is intended to be a 

monetary measure of the incremental damage resulting from greenhouse gas (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 harms 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 notice, the most recent interagency estimates of the potential global 

benefits resulting from reduced CO2 emissions in 2010 are $4.7, $21.4, $35.1, and $64.9 per 

metric ton in 2007 dollars. These values are then adjusted to 2009$ using the standard GDP 

deflator value for 2008 and 2009. For emissions (or emission 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 effects, although preference will be given to consideration of the global 

benefits of reducing CO2 emissions. See appendix A of the Annex to chapter 15 of the 

preliminary Technical Support Document for the full range of annual SCC estimates from 2010 

to 2050. 

 DOE recognizes that scientific and economic knowledge continues to evolve rapidly as 

to the contribution of CO2 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 intends to estimate the potential monetary benefit of reduced NOX and Hg 

emissions resulting from the standard levels it considers. For NOX emissions, available estimates 

suggest a very wide range of monetary values for NOX emissions, ranging from $370 per ton to 

$3,800 per ton of NOX from stationary sources, measured in 2001$ (equivalent to a range of 

$447 to $4,591 per ton in 2009$). Refer to the OMB, Office of Information and Regulatory 

Affairs, “2006 Report to Congress on the Costs and Benefits of Federal Regulations and 

Unfunded Mandates on State, Local, and Tribal Entities,” for additional information. 

For Hg emissions reductions, DOE has previously determined that the impact of mercury 

emissions from power plants on humans is considered highly uncertain. However, DOE 

identified two estimates of the environmental damage of mercury based on two estimates of the 

adverse impact of childhood exposure to methyl mercury on intelligence quotient (IQ) for 

American children, and subsequent loss of lifetime economic productivity resulting from these 

IQ losses. The high-end estimate is based on an estimate of the current aggregate cost of the loss 

of IQ in American children that results from exposure to mercury of U.S. power plant origin 

($1.3 billion per year in year 2000$), which works out to $33.7 million per ton emitted per year 

in 2009$). Refer to L. Trasande et al., “Applying Cost Analyses to Drive Policy that Protects 

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Children,” 1076 Ann. N.Y. Acad. Sci. 911 (2006) for additional information. The low-end 

estimate is $0.66 million per ton emitted (in 2004$) or $0.745 million per ton in 2009$. DOE 

derived this estimate from a published evaluation of mercury control using different methods and 

assumptions from the first study but also based on the present value of the lifetime earnings of 

children exposed to mercury. See Ted Gayer and Robert Hahn, “Designing Environmental 

Policy: Lessons from the Regulation of Mercury Emissions,” Regulatory Analysis 05–01, 

American Enterprise Institute-Brookings Joint Center for Regulatory Studies, Washington, DC 

(2004). A version of this paper was published in the Journal of Regulatory Economics in 2006. 

The estimate was derived by back-calculating the annual benefits per ton from the net present 

value of benefits reported in the study. 

For both NOX and Hg, DOE will conduct two calculations of the monetary benefits 

derived using each of the economic values used, one using a real discount rate of 3 percent and 

another using a real discount rate of 7 percent, in accordance with the U.S. Office of 

Management and Budget (OMB) guidance. (OMB, Circular A-4: Regulatory Analysis (Sept. 17, 

2003). EEI stated that DOE should account for the rise in renewable portfolio standards as well 

as the continuous fall in NOX, CO2 and SO2 emissions. (EEI, No. 25 at p. 4) As stated above, 

DOE utilizes the most recent forecasts from EIA’s NEMS to estimate the future mix of power 

generation sources. EIA accounts for policies that have been enacted at the time of its analysis, 

including renewable portfolio standards, and DOE believes that this approach provides the most 

reliable basis for estimating future power sector emissions. 

For more detail on the environmental assessment, refer to the environmental assessment 

report in the preliminary TSD. 

2.13 EMPLOYMENT IMPACT ANALYSIS 

The imposition of standards can affect employment both directly and indirectly. Direct 

employment impacts are changes in the number of employees at plants that produce the covered 

equipment and at the affiliated distribution and service companies. DOE evaluated direct 

employment impacts in the manufacturer impact analysis. Indirect employment impacts may 

result from customers shifting expenditures between goods (the substitution effect) and from 

changes in income and overall expenditure levels (the income effect). DOE will use PNNL’s 

impact of sector energy technologies (ImSET) model to investigate the combined direct and 

indirect employment impacts. The ImSET model, which was developed for DOE’s Office of 

Planning, Budget, and Analysis, estimates the employment and income effects energy-saving 

technologies produce in buildings, industry, and transportation. Compared with simple economic 

multiplier approaches, ImSET allows for more complete and automated analysis of the economic 

impacts of energy conservation investments. 

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2.14 REGULATORY IMPACT ANALYSIS 

In the NOPR, DOE will prepare a regulatory impact analysis (RIA) pursuant to 

Executive Order 12866, Regulatory Planning and Review, 58 FR 51735, October 4, 1993. The 

RIA is subject to review under the Executive Order by the Office of Information and Regulatory 

Affairs at the Office of Management and Budget. The RIA addresses the potential for nonregulatory approaches to supplant or augment energy conservation standards in order to improve 

the energy efficiency or reduce the energy consumption of the equipment covered under this 

rulemaking. 

DOE recognizes that non-regulatory efforts by manufacturers, utilities, and other 

interested parties can substantially improve energy efficiency or reduce energy consumption. 

DOE will base its assessment on the actual impacts of any such initiatives to date, but also will 

consider information presented by interested parties on the impacts existing initiatives might 

have in the future. 

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