## F2002-00520

Commercial Unitary Air Conditioner and Heat Pump Rulemaking Framework

U.S. Department ofEnergy Office of Codes and Standards 1000 Independence Ave., SW Washington, DC June 13, 2001 --- -----**~~---------**



### F2002-00520



## CommercialUnitary Air Conditioner and HeatPump Rulemaking Framework



## u.s. DepartmentofEnergy Office ofCodes and Standards 1000 Independence Ave., SW Washington, DC June 13,2001 

# --

### Commercial Unitary Air Conditioner and HeatPump Rulemaking Framework I. Introduction ...... ........................ ... ......... .. 1 1.I Commercial Equipment Efficiency Program
................................. 1 1.2 Stakeholder Participation
................................................ 4 1.3 Advanced Notice ofProposed Rulemaking
.................................. 6 1.4 Notice ofProposed Rulemaking
.......................................... 7 1.5 Notice ofFinal Rulemaking
.............................................. 8 2. Analysis for Rulemaking .................................... 8 2.1 Introduction
......................................................... 8 3. Market and Technology Assessment ....... .... ............................... 10 3.1 M arket Assessment
................................................... 10 3.2 Technology Assessment
.............................................. 11 3.3 Product Classes
.................................... ................ 12 3.4 BaselineUnits
..................................... ................. 12 4.Screening Analysis ......................................................... 14 4.1 Design Options
...................................................... 15 5. Engineering Analysis ....................................................... 16 5.1 Engineering Analysis Overview
..................... ................... 16 5.2 Approaches to Determining Efficiency Improvements
.......................... 17 5.2.1 Efficiency Level Approach
...................................... 17 5.2.2 Design Options Approach
...................................... 18 5.3 Approaches to Determining Cost Estimates
................................ 20 5.4 Tear-Down Analysis
.................................................. 21 5.5 Outside Regulatory Changes affecting the Engineering Analysis
................... 22 5.6 Building Energy Use and Electric Load Shape Characterization
.................. 23 6. Manufacturing Costs ........................................ . 24 6.1 Characterizing Uncertainty
.............................................. 25 6.2 Variability inCosts between Manufacturers
................................. 25 6.3 Proprietary Design
................................................. 26 7. Prices . .................................................................. 27 7.1 Retail Prices
........................................................ 27 7.2 Manufacturer Prices
.................................................. 28 8. Life-Cycle Cost and Payback Analysis ......................................... 28 Commercial Unitary Air Conditioner and Heat Pump Rulemaking Framework J. Introduction
............................................................. : ..1 1.1 Commercial Equipment Efficiency Program
. 0 • 0 •• 0 0 0 0 0 0 0 0 00 • 0 0 0 0 0 • 0 0 0 0 • 0 0 • 0 • 0 0 1

102 StakeholderParticipation
0 0 0 0 0 0 0 • 0 0 0 0 • 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 0 0 0 0 •• 0 0 0 0 0 0 0 0 0 • 0 0 0 0 4 1.3 Advanced Notice ofProposed Rulemaking
0 0 • 0 0 0 • 0 0 0 0 0 0 • 0 0 • 0 0 0 0 0 0 • 0 0 0 0 0 • 0 0 0 0 6

1.4 Notice ofProposed Rulemaking
0 0 0 0 • 0 0 0 0 0 0 • 0 0 0 0 0 0 • 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 • 0 0 • 0 0 0 0 7 1.5 Notice ofFinal Rulernaking
0 0 0 0 0 •• 0 0 0 0 0 0 • 0 0 0 0 0 • 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 • 0 • 0 0 8 2. AnaJysis for RuJemaking .................................•................... 8

201 Introduction o. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 0 0 0 0 0 0 0 0 0 0 • 0 • 0 0 0 0 0 0 0 0 0 • 0 0 0 0 0 8 3. Market and Technology Assessment
.......................................... 10

301 Market Assessment
0 0 0 0 0 0 0 0 0 00000000000000000000.00000000000000000000.10

302 Technology Assessment
0000. 0 0 0 000 0 0000000.0 0 0 0 0 0 0 0 0 000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 II

3.3 Product Classes
0 000 0 0 0 0 0 0 0 0 0 0 0.0 0 0 0 0 0 0 000 0 0 000 0 • 0 0 0 0 0 0 •• 0 0 00. 0 0 0 0 0 0 0 12

3.4 Baseline Units
00 0 0 0 • 0 0 0 0 00. 0 0 0 0 0 000 00.00. 0 0 000 0 0 • 0 0 • 0 0 0 0 0 0 0 0 • 0 0 0 0 0 0 0 0 12 4. Screening Analysis ..................................•.....•......••.......• 14

401 Design Options
00000000000.00000000 •• 0 0 o. 0 •• 000000. 0 0 0 0 0 0 0 0 o..'. o'
0 0.015 5. Engineering Analysis ...........................•..............•..•......... 16 Sol Engineering Analysis Overview o. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 • 0 0 0 • 0 •• 0 ••• 0 0 0 0 • 0 •• 0 0 16 5.2 Approaches to Detennining Efficiency Improvements
0 0 0 0 0 0 0 0 0 • 0 • 0 0 0 0 • 0 0 0 0 • 0 0 0 • 17

5020] Efficiency Level Approach
0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 • 0 • 0 0 0 0 0 0 0 0 0 • 0 0 0 0 0 0 • 0 0 17 5.2.2 Design Options Approach 

### o. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 • 0 0 0 • 0 0 • 0 • 0 0 0 0 • 0 0 0 18

5.3 Approaches to Detennining Cost Estimates
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 •• 0 0 0 0 20 5.4 Tear-Down Analysis
. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 0 • 0 0 0 0 0 0 0 0 • 0 0 0 • 0 0 0 0 0 0 0 0 0 0 0 •• 0 • 0 0 21 5.5 Outside Regulatory Changes affecting the Engineering Analysis
. 0 0 • 0 0 0 • 0 0 0 0 •• 0 0 0 0 0 22 

### 5.6 Building Energy Use and Electric Load Shape Characterization
0 0 0 • 0 • 0 0 0 0 0 • 0 0 0 0 0 0 23 6. Manufacturing Costs .........................................•............. 24

601 Characterizing Uncertainty
0 • 0 0 0 0 • 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 • 0 • 0 0 0 0 0 0 • 0 0 0 • 0 0 0 0 0 0 0 0 0 25 6.2 Variability in Costs between Manufacturers
0 0 0 0 0 0 • 0 0 •••• 0 • 0 0 ••• 0 0 •• 0 0 0 •• 0 ••• 25 6.3 Proprietary Design
0 0 0 0 0 0 0 0 0 0 0 0 0 0 • 0 0 0 0 0 0 •• 0 0 • 0 0 0 •• 0 • 0 0 0 0 0 •• 0 • 0 0 0 0 0 0 0 • 0 26 7. Prices
...................................................................27 7.1 RetailPrices
0 0 0 0 0 0 ••••• 0 0 0 • 0 0 0 0 0 0 0 0 0 0 • 0 0 •• 0 • 0 0 0 0 0 0 •• 0 • 0 • 00 0 0 0 0 0 0 0 • 0 0 27

7.2 Manufacturer Prices
0 0 0 0 0 0 0 •• 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 •• 0 0 • 0 ••• 0 0 0 0 0 0 0 0 0 .28 8. Life-Cycle Cost and Payback Analysis ....................•.......•..•.......•. 28

### 9. Shipments .................................. .. .. ................... 31 10. Preliminary National Impacts Analysis ........................................ 32 10.1 Inputs to Forecasts
.............. ...................... .............. 32 10.2 Calculation ofEnergy Savings
.......................................... 32 10.3 Net Present Value and Payback
........................................ 33 11. Revised Engineering, LCC, and NES Analysis ................................. 33 12. LCC Sub-group Analysis ................................................... 34 13. ManufacturerImpactAnalysis .............................................. 34 13.1. Sources ofInformation forthe Manufacturer Impact Analysis
................... 35 13.2 Industry Cash Flow Analysis
........................................... 35 13.3 Manufacturer Sub-group Analysis
...................................... 36 13.4 Competitive Impacts Assessment
........................................ 36 13.5 Cumulative Regulatory Burden
.......................................... 37 14. Utility Impacts ........................................................... 37 15. Environmental Analysis .................................................... 38 16. Employment Impacts ............ ............ ................ 38

Commercial Unitary AC & HP 13 June 2001 Framework Document

9. Shipments
................................................................31 10. Preliminary National Impacts Analysis
........................................32 10.1 Inputs to Forecasts
.................................................. 32 10.2 Calculation ofEnergy Savings
.......................................... 32 10.3 Net Present Value and Payback
........................................ 33 11. Revised Engineering, 

### Lee, and NES Analysis
.................................33 12. 

### Lee Sub-group Analysis
................................... "
.............. 34 13. ManufacturerImpactAnalysis
..............................................34 13.1. Sources ofInformation for the Manufacturer Impact Analysis
................... 35 13.2 Industry Cash Flow Analysis
........................................... 35 13.3 Manufacturer Sub-group Analysis
....................................... 36 13.4 Competitive Impacts Assessment
........................................ 36 13.5 Cumulative Regulatory Burden
.......................................... 37 14. Utility Impacts
....................................... '.'
.................. 37 15. Environmental Analysis
.............. " .............................•...... 38 16. Employment Impacts
...................................................... 38

Commercial Unitary AC & HP 13 June 2001 Framework Docwnent

## Commercial Unitary Air Conditioner and Heat Pump Rulemaking Framework 1. Introduction The purpose ofthis document isto describe the procedural and analytical approaches the U.S. Department ofEnergy (hereafter called the Department orDOE) anticipates using to evaluate whether amended standards should bedeveloped that are more stringent than standards found inAmerican Society ofHeating, Refrigerating and Air-Conditioning Engineers, Inc. (ASHRAE) / Illuminating Engineering Society ofNorth America (IESNA) Standard 90.1

- 1999 (ASHRAE/IESNA Standard 90.1-1999) for commercial unitary air-conditioners and heat pumps. As described in more detail below, the procedure for developing amended energy conservation standards entails several rounds of analysis and multiple consultations with interested stakeholders. This document isintended to inform and facilitate stakeholders' involvement inthe rulemaking process. Section 1provides an overview of the process. Sections 2through 16 discuss analyses tobe done. Information regarding the commercial unitary air-conditioner (AC)and heat pump (HP) rulemaking will be maintained on the DOE website at http://www.eren.doe. ov/buildines/codes standards/index.htm

Inaddition to the general discussionpresented withinits main text,this document contains comment boxes, like thisone, that address issues specific to the application ofthe analytical framework to the commercial unitary airACand HP rule. These boxes follow ageneric description ofeach component ofatypical rulemaking, and include adiscussion ofkey issues, the Department's perspectives onthese issues, and requests for additional stakeholder input.

1.1 Commercial Equipment Efficiency Program The Energy Policy and Conservation Act (EPCA) of 1975, Pub. L.94-163, established an energy conservation program formajor household appliances. TheNational Energy Conservation Policy Act of 1978, (NECPA) Pub. L.95-619, amended EPCA to addPart C ofTitle III,which established an energy conservation program forcertain industrial equipment. The amendments toEPCA inthe Energy Policy Act of 1992 (EPACT), Pub. L.. 102-486, included amendments that expanded DOE's energy conservation program to includecertain commercial equipment, including unitary air-conditioners and heat pumps, the focus ofthis document.

Commercial Unitary AC &HP 1 13 June 2001 Framework Document 

## Commercial Unitary Air Conditioner and HeatPump Rulemaking Framework 1. Introduction The purpose ofthis docwnent is to describe the procedural and analytical approaches the U.S. Department ofEnergy (hereaftercalled the Department orDOE) anticipates using to evaluate whether amended standards should be developed that are more stringent than standards found in American Society ofHeating, Refrigerating and Air-Conditioning Engineers, Inc. (ASHRAE) / Illuminating Engineering Society ofNorth America (IESNA) Standard 90.1

- 1999 (ASHRAElIESNA Standard 90.I-1999) for commercial unitary air-conditioners and heat pwnps. As described in more detail below, the procedure for developing amended energy conservation standards entails several rounds of analysis and multiple consultations with interested stakeholders. This docwnent is intended to inform and facilitate stakeholders' involvement in the rulemaking process. Section I provides an overview of the process. Sections 2through 16 discuss analyses to be done. Information regarding the commercial unitary air-conditioner (AC) and heat pump (HP) rulemaking will be maintained on the DOE website at http://www.eren.doe.govlbuildings/codesstandardslindex.htm

In addition to the general discussion presented 

### within its main text, this docwnent contains comment boxes, like this one, that address issues specific to the application ofthe analytical framework to the commercial unitary airAC and HP rule. These boxes follow a generic description ofeach component ofatypical rulemaking, and include a discussion ofkey issues, the Department's perspectives on these issues, and requests for additional stakeholder input.

1.1 Commercial Equipment Efficiency Program The Energy Policy and Conservation Act (EPCA) of 1975, Pub. L. 94-163, established an energy conservation program for majorhousehold appliances. The National Energy Conservation Policy Act of 1978, (NECPA) Pub. L. 95-619, amended EPCA to add Part C ofTitle III, which established an energy conservation program for certain industrial equipment. 1beamendments to EPCA in the Energy Policy Act of 1992 (EPACT), Pub. L.. 102-486, included amendments that expanded DOE's energy conservation programto include certain commercial equipment, including unitary air-conditioners and heat pumps, the focus ofthis document.

Commercial Unitary AC & HP 13 June 2001 Framework Document

### The efficiency requirements in the statute correspond tothe levels in ASHRAE/IESNA Standard 90.1 as in effect on October 24, 1992. The statute furtherprovides that ifthe efficiency levels in ASHRAE/IESNA Standard 90.1 are amended after that date for any ofthe covered products, the Secretary ofEnergy (Secretary) must establish an amended uniform national standard forsuch equipment at the new minimum level for each effective date specified in ASHRAE/IESNA Standard 90.1, unless (s)he determines, through a rulemaking supported by clear and convincing evidence, that a more stringent standard istechnologically feasible and economically justified and would result in significant additional energy conservation. EPCA section 342 (a)(6)(A), 42 U.S.C. 6313 (a)(6)(A). Under EPCA, ifDOE adopts a more stringent standard, itmust consider, to the greatest extent practicable, the economic impact ofthe standard on the manufacturers and consumers ofthe affected products; the savings in operating costs throughout the estimated average life ofthe product compared to any increases in theinitial cost, or maintenance expense; the total projected amount ofenergy savings likelyto result directly from the imposition ofthe standard; any lessening ofthe utilityor the performance ofthe products likely to result fromthe imposition ofthe standard; the impact ofany lessening ofcompetition, as determined inwriting by theAttorney General, that is likely to result from the imposition ofthe standard; the need for national energy conservation; and other factors the Secretary considers relevant. EPCA section 342 (a)(6)(B)(i), 42 U.S.C. 6313(a)(6)(BXi). Other statutory requirements are set forth in EPCA section 342 (6)(B)ii) and (C). On October 29, 1999, ASHRAE/IESNA adopted Standard 90.1-1999 which includes certain revisions to efficiency levels for covered products, including unitary air-conditioners and heat pumps. DOE conducted a screening analysis and on thatbasis determined that further analysis under a formal rulemaking process was warranted forunitary air-conditioners and heat pumps. As the analysis under this rulemaking proceeds, DOE intends tomake its findings available to the Standard 90.1 committee and other stakeholders for the purpose ofinforming ASHRAE's "continuous maintenance" addenda process. Furthermore, DOE may choose to propose an addendum to ASHRAE/IESNA Standard 90.1-1999. 

### DOE may also choose to proceed with adopting ASHRAE/IESNA Standard 90.1-1999 levels for these products whenever DOE concludes thatthe EPCA criteria for a more stringent standard are not likelyto be satisfied. This could occur either as a result offurther analysis by DOE during the rulemaking process or by ASHRAE adopting a new addendum to ASHRAE/IESNA Standard 90.1- 1999 for which a more stringent alternative isnotjustified. The Department ofEnergy, Office ofEnergy Efficiency and Renewable Energy, Office ofBuilding Research and Standards (BRS) conducts the program that develops and promulgates equipment energy conservation standards and has overall responsibility forrulemaking

Commercial Unitary AC &HP 2 13 June 2001 Framework Document

The efficiency requirements in the statute correspond to the levels in ASHRAEJIESNA Standard 90.1 as in effect on October 24, 1992. The statute further provides that ifthe efficiency levels in ASHRAElIESNA Standard 90.1 are amended after that date for any ofthe covered products, the Secretary ofEnergy (Secretary) must establish an amended tmiform national standard for such equipment at the new minimum level for each effective date specified in ASHRAElIESNA Standard 90.1, unless (s)he determines, through a rulemaking supported by clear and convincing evidence, that a more stringent standard is technologically feasible and economicallyjustified and would result in significant additional energy conservation. EPCA section 342 (a)(6)(A), 42 U.S.c. 6313 (a)(6)(A). Under EPCA, ifDOE adopts a more stringent standard, it must consider, to the greatest extent practicable, the economic impact ofthe standard on the manufacturers and conswners ofthe affected products; the savings in operating costs throughout the estimated average life ofthe product compared to any increases in the initial cost, or maintenance expense; the total projected arnoWlt ofenergy savings likely to result directly from the imposition ofthe &iandard; any lessening ofthe utility orthe performance ofthe products likely to result from the imposition ofthe standard; the impact ofany lessening ofcompetition, as determined in 'WTiting by the Attorney General, that is likely to result from the imposition ofthe standard; the need for national energy conservation; and otherfactors the Secretary considers relevant. EPCA section 342 (a)(6)(B)(i), 42 U.S.c. 63I3(a)(6)(B)(i). Other statutory requirements are set forth in EPCA section 342 (6)(B)(ii) and (C). On October 29, 1999, ASHRAElIESNA adopted Standard 90.1-1999 which includes certain revisions to efficiency levels for covered products, including tmitary air-conditioners and heat pumps. DOE conducted a screening analysis and on that basis determined that further analysis under a formal rulemaking process was warranted for unitary air-conditioners and heat pumps. As the analysis under this rulemaking proceeds, DOE intends to make its findings available to the Standard 90.1 committee and other stakeholders for the purpose ofinforming ASHRAE's "continuous maintenance" addenda process. Furthermore, DOE may choose to propose an addendum to ASHRAEIIESNA Standard 90.1-1999. DOE may also choose to proceed 

### with adopting ASHRAEJIESNA Standard 90.1-1999 levels for these products wheneverDOE concludes that the EPCA criteria for a more stringent standard are not likelyto be satisfied. This could occureithera<; a re&ult offurther analysis byDOE during the rulemaking process orbyASHRAE adopting a new addendwn to ASHRAElIESNA Standard 90.1- 1999 for which a more stringent alternative is notjustified. The Department ofEnergy, Office ofEnergy Efficiency and Renewable Energy, Office ofBuilding Research and Standards (BRS) conducts the program that develops and promulgates equipment energy conservation standards and has overall responsibility for rulernaking

Conunercial Unitary AC & HP 2 13 June 2001 Framework Document

### activities for unitary air-conditioners and heat pumps. The Department has contracts with Lawrence Berkeley National Laboratory (LBNL), Arthur D. Little, Inc. (ADL), and Pacific Northwest National Laboratory (PNNL) to provide technical, analytical and managerial support in conducting these activities.

As defined by EPCA, the term "small commercial package air conditioning and heating equipment" means air-cooled, water-cooled, evaporatively-cooled, or water source (not including ground water source) electrically operated, unitary central AC and central air conditioning HPs for commercial application which are rated below 135,000 Btu per hour (cooling capacity). The term "large commercial package airconditioning and heating equipment" means air-cooled, water-cooled, evaporatively cooled or water source (not including ground water source) electrically operated, unitary central AC and central air conditioning HPs for commercial application which are rated at or above 135,000 Btu per hour and below 240,00 Btu per hour (cooling capacity). See EPCA sections 340 (8) and (9), 42 U.S.C. 6311 (8)and (9). The term "unitary air conditioner" means air-cooled, electrically operated unitary airconditioners for commercial application which are rated between 65 and 135 kBtu/h ("small") orbetween 135 and 240 kBtu/h ("large"). The term "unitary heatpump" means a unitary air conditioner that utilizes reverse cycle refrigeration as itsprime heat source and should have supplementary heat source available to builders with the choice ofhot water, steam, or electric resistant heat. The same capacity range categories are used for both unitary air conditioners and heatpumps. In thisproceeding DOE will only examine commercial unitary AC and HP equipment that use air for cooling

Commercial Unitary AC &HP 3 13 June 2001 Framework Document

activities for unitary air-conditioners and heat pwnps. The Department has contracts with Lawrence BerkeleyNational LaboratOIY (LBNL), ArthurD. Little, Inc. (ADL), and Pacific Northwest National Laboratory (PNNL) to provide technical, analytical and managerial support in conductingthese activities.

As defmed by EPCA, the lenn "small commercial package air conditioning and heating equipment" means air-cooled, water-cooled, evaporative!y-cooled, or water source (not including ground water somce) electrically operated, unitary central AC and central air conditioning HPs for commercial application which are rated below 135,000 Btu per hour (cooling capacity). Thetenn "large commercial package 

### air conditioning and heating equipment" means air-cooled, water-cooled, evaporatively cooled or water source (not including ground water source) electrically operated, unitary central AC and central air conditioning I-IPs for commercial application which are rated at or above 135,000 

### Btu per hour and below240,00 

### Btu perhour (cooling capacity). 

### See EPCA sections 340 (8) and (9), 42 U.S.c. 6311 (8) and (9). The tenn "unitary air conditioner" means air-cooled, electrically operated unitary air conditioners for commercial application which are rated between 65 and 135 kBtu/h ("small") orbetween 135 and 240 kBtuIh ("large"). The tenn ''unitaryheat pwnp"means a unitary 

### air conditionerthat utilizes reverse cycle refiigeration as its primeheat source and should have supplementary heat source available to builders with the choice ofhot water, steam, orelectric resistant heat. The same capacityrange categories are used forboth unitary air conditioners and heat pwnps. In this proceeding DOE will only examine commercial unitary AC and I-IP equipmentthat use air for cooling

Commercial Unitary AC & IiP 

### 3 13 June 2001 Framework Docwnent

### Figure 1shows DOE's time-line for amending standards for commercial unitary AC and HPs.

July 2001 

### Stakeholder Participation
PriorActivities ' @. 

### Current Standards Rulemaking

1989 1992 1999 2001 2002 2003 2004 2008



### Figure 1.Principal procedural steps inthe commercial unitary air-conditioner and heat pump standards setting process
1.2 Stakeholder Participation As also indicated by Figure 1,the Department considers stakeholder participation a very important part ofthe processforsetting energy conservation standards. The Department actively encourages the participation and interaction ofall stakeholders at all stages oftheprocess. Early and frequent interactions among stakeholders provide a balanced discussion on critical information required to conduct theanalysis to support any standards. Stakeholders include manufacturers, consumers ofcommercial unitary AC and HPs, energy efficiency and environmental advocates, state agencies, federal agencies and other groups orindividuals with an interest in the standards. Both the test procedures and the energy conservation standards are being developed through the rulemaking process, which involves formal public notifications that are common to the Department's

Commercial Unitary AC &HP 

### 4 13 June 2001 Framework Document

Figure I shows DOE's time-line for amending standards for commercial unitary AC and HPs.

JUly 2001 Stakeholder Participation
Prior Activities CurrentStandcirds Rulemaklng**L---t<~'------~----~(~'_I~--~--~----~----~----~--~((~l------~** 1989 1992 1999 2001 2002 2003 2004 2008

Figure 1. Principal procedural steps in the commercial unitary air-conditioner and heat pump standards setting process
1.2 Stakeholder Participation As also indicatedby Figure 1, the Department considers stakeholderparticipation 

### a vel)' importantpart oftheprocess for setting energy conservation standards. The Department actively encouragesthe participation and interdction ofall stakeholders at all stages oftheprocess. Early andfrequent interactions among stakeholders provide abalanced discussion on critical infonnation 

### required to conduct the analysis to supportany standards. Stakeholders include manufacturers, consumers ofcommercial 

### unitary AC and HPs, energy efficiency and environmental advocates, state agencies, federal agencies and other groups orindividuals with an interest in the standards. Both the test procedures and the energy conservation standards are being developed through the rulemaking process, which involves fonnal public notifications that are common tothe Department's

Commercial Unitary AC & HP 4 13 June 2001 Framework Document

### rulemaking activities. For the commercial unitary AC and HP energy conservation standards rulemaking, the Department will employ the rulemaking procedures set forth in Part B ofTitle Ifl of EPCA and in Appendix A to Subpart C of 10 CFR 430, "Procedures, Interpretations and Policies for Consideration ofNew or Revised Energy Conservation Standards forConsumer Products" (the Process Rule ), (61 FR 36981, July 15, 1996), to the extent they are appropriate to develop energy conservation standards for commercial unitary AC and HP.

On March 1,2000, the Department published a notice ofpreliminary screening analysis to decide which ofthe ASHRAE/IESNA Standard 90.1-1999 standards should be adopted immediately and which to analyze further. 65 FR 10984. On January 12, 2001, the Department published a final rule adopting the ASHRAE/IESNA Standard 90.1-1999 level for 18 product categories and made a decision to further evaluate other products. 66 FR 3336. In the final rule, DOE determined that further analysis was warranted for commercial unitary air conditioners and heat pumps. This conclusion was based on DOE's screening analysis. The Department is considering more stringent standards then those adopted by ASHRAE/IESNA Standard 90.1-1999. Thetest procedure development for commercial unitary AC and HP was initiated on April 14 and 15, 1998, when the Department held a public workshop to solicit views and information from interested parties. The Department convened a second public workshop on October 18, 1998. The Department published aNOPR on August 9, 2000 and held a public hearing on September 21, 2000. 65 FR 48828. The Department expects topublish the test procedure final rule before publishing the ANOPR on energy conservation standards.
In an energy conservation standards rulemaking, the first ofthe rulemaking notices is an Advance Notice ofProposed Rulemaking (ANOPR), which isdesigned to facilitate extensive and early public participation and to select candidate standard levels for further analyses. The ANOPR is followed by the publication ofaNotice ofProposed Rulemaking (NOPR) which will propose energy conservation standards. The completion oftherulemaking process isa Notice ofFinal Rulemaking whichplaces the energy conservation standards in the Code ofFederal Regulations. The process provides numerous opportunities for stakeholder involvement. Specifically, the Department intends to request public comments on theANOPR, with a 75-day public comment period and at least one public hearing or workshop, and public comments on the NOPR, with a 75-day public comment period and at least one publichearing or workshop. These activities will be summarized and published inrulemaking notices that appear in the Federal Register and on the Department's website. Technical Support Documents (TSD) also will beprepared in conjunction with the notices and distributed forstakeholder review and comment in conjunction with publication ofthose notices.

Commercial Unitary AC &HP 5 13 June 2001 Framework Document

rulemaking activities. Forthe commercial unitary AC and lIP energy conservation standards rulemaking, the Department will employ the rulemaking procedures set forth in Part B ofTitle illof EPCA and in Appendix A to Subpart Cof 10 CFR 430, "Procedures, Interpretations and Policies for Consideration ofNew or Revised Energy Conservation Standards for ConsumerProducts" (the
. Process Rule ), (61 FR 36981, July IS, 1996), to the extent they are appropriate to develop energy conservation standards for commercial unitary AC and HP.

On March I, 2000, the Department published anotice ofpreliminary screening analysis to decide which ofthe**AS~RAEIlESNA** Standard 90.1-1999 standards should be adopted immediately and which to analyze further. 65 FR 10984. On January 12,2001, the Department published a fmal rule adopting the ASHRAEJIESNA Standard 90.1-1999 level for 18 product categories and made a decision to further evaluate otherproducts. 66 FR 3336. In the final rule, DOE detennined 

### that further analysis was warranted for commercial Wlitary air conditioners and heat pumps. 'This conclusion was based on DOE's screening analysis. The Department is considering more stringent standards then those adopted by ASHRAEIIESNA Standard 90.1-1999. The test proccdw-e development for commercial unitary AC and 

### HP was initiated on April 14 and 15, 1998, when the Departmentheld apublic workshop to solicit views and information from interested parties. The Department convened a second public workshop on October 18,1998. The Departmentpublished a NOPR on August 9, 2000 and held a public hearing on September 21, 2000. 65 FR48828. The Department expects to publish the test procedure fmal rule before publishing the ANOPR on energy conservation standards.
In an energy conservation standards rulemaking, the 

### first ofthe rulemaking notices 

### is an Advance Notice ofProposed RuJemaking (ANOPR), which is designed to facilitate extensive and early public participation and to select candidate standard levels for further analyses. The ANOPR is followed by the publication ofa Notice ofProposed Rulemaking (NOPR) which will propose energy conservation standards. The completion ofthe rulemaking process is aNotice ofFinal Rulemaking which places the energy conservation standards in the Code ofFederal Regulations. 

### The process provides nwnerous opportunities for stakeholder involvement Specifically, the Department intends to request public comments on the ANOPR, with a 75-daypublic commentperiod and at least one public hearing or workshop, and public comments on the NOPR, with a 75-day public comment period and at least one public hearing or workshop. These activities 

### will be 

### summarized and published inrulernaking notices that appear inthe Federal Register and on the Department's website. Technical Support Documents (TSD) also will be prepared in conjunction with the notices and distributed for stakeholder review and comment in conjunction with pUblication ofthose notices.

Conunercial Unitary AC & HP 

### 5 13 June 2001Framework Docwnent

### In addition, the Department will elicit stakeholder participation prior to these notices and during analyses prepared in support ofthe notices. The first ofthese opportunities will be the framework meeting to discuss the information contained in this document, and the Department will also seek written comments on this document. The formal rulemaking process for development ofenergy conservation standards includes three notices: the ANOPR (see Section 1.3 below), the NOPR (see Section 1.4 below), and the Notice of Final Rulemaking (see Section 1.5 below). The activities that are relevant tothe development ofenergy conservation standards for commercial unitary AC and HP leading toeach ofthese notices and the relationships among them are described below. 1.3 Advance Notice of Proposed Rulemaking As part ofits initial rulemaking activities, the Department will identify the product design options or efficiency levels thatwill be analyzed in detail andthose that canbe eliminated from further consideration. This process includes a market and technology assessment (see Section 3) and a screening analysis (see Section 4). These activities include consultations with stakeholders and independent technical experts who can assist with identifying the key issues and design options or efficiency levels tobe considered. The technologically feasible design options orefficiency levels that are noteliminated in the screening process are considered further. The principal activities undertaken during this stage are: an engineering analysis (see Section 5), a life-cycle cost and payback analysis (see Section 8), and preliminary national impact analysis (see Section 10). The results ofthe analyses will be made available on theDepartment's website forreview and the Department will consider comments on them. This review and comment process may result in revisions to the analyses. Ifappropriate, public workshops may be conducted to enhance the exchange ofinformation and comments. This analytical process culminates with the selection of 

### candidate standard levels, ifany, that will be considered for the NOPR. The candidate standard levels are contained in the ANOPR which DOEpublishes in the Federal Register. The ANOPR specifies the candidate standard levels that are chosen for further analysis but does not propose aparticular standard. The ANOPR alsopresents the results oftheengineering analysis and the preliminary analyses ofconsumer life-cycle costs, national netpresent value, and national energy savings. The Department will alsomake available a TSD containing the details ofall the analyses performed to this point. Selection ofcandidate standard levels isbased on costs and benefits ofdesign options or efficiency levels. Design options or efficiency levels which have payback periods that exceed the average life of

Commercial Unitary AC &HP 6 13 June 2001 Framework Document

In addition, the Department will elicit stakeholderparticipation prior to these notices and during analyses prepared 

### in support ofthe notices. The 

### first ofthese opportunities 

### will be the framework**meet~g** to discuss the infonnation contained in this document, and the Department will also seek**~tten** comments on this document. The fonnal rulemaking process for development ofenergy conservation 

### standards includes three notices: the ANOPR (see Section 1.3 below), the NOPR (see Section 1.4 below), and the Notice of Final Rulemaking (see Section 

### 1.5 below). The activities that are relevant to the development ofenergy conservation standards for commercial unitary AC and HP leading to each ofthese notices and the relationships among them aredescribed below. 1.3 Advance Notice ofProposed Rulemaking As part ofits initial rulcmaking activities, the Department will identifY the product design options or efficiency levels that will be analyzed in detail and those that canbeeliminated from further consideration. This process includes a market and technology assessment (see Section 3) and a screening analysis (see Section 4). These activities include consultations with stakeholders and independent techniCal experts who can assist with identifYing the key issues and design options or efficiency levels to beconsidered. The technologically feasible design options orefficiency levels that are not eliminate4 in the screening process 

### are considered further. The principal activities W1dertaken duringthis stage 

### are: an engineering analysis (see Section 5), a life-cycle cost and payback analysis (see Section 8), and preliminary national impact analysis (see Section 10). The results ofthe analyses will be made available on the Department's website for review and the Department will consider comments on them. This review and commentprocess may result in revisions to the analyses. Ifappropriate, public workshops may be conducted to enhance the exchange ofinfonnation and comments. This analytical process culminateswiththe selection of candidate standard levels, ifany, that will be considered for theNOPR. The candidate standard levels 

### are contained 

### in the ANOPR which

## ooE publishes 

### in the Federal Register. The ANOPR specifies the candidate standard levels that are chosen for further analysis but does not propose a particular standard. The ANOPR also presents the results ofthe engineering analysis and the preliminary analyses ofconsumer life-cycle costs, national net present value, and national energy savings. 1be Department will also make available a TSD containing the details of

### all the analyses perfonned to

### this point. Selection ofcandidate standard levels is based on costs and benefits ofdesign options orefficiency levels. Design options or efficiency levels which have payback periods that exceed the average life of

Commercial Unitary AC & HP 6 13 June 2001 Framework Document

### the product or which cause life-cycle cost increases relative to the base case would generally not be selected as candidate standard levels. Therange ofcandidate standard levels will typically include: *themost energy efficient level; *the level with the lowest life-cycle cost; and *candidate standard levels that incorporate noteworthy technologies or fill in large gaps between efficiency levels ofother candidate standard levels. After the publication ofthe ANOPR, there is a 75-day public comment period and at least one public hearing or workshop. Onthe basis ofcomments received, DOE may revise the analysis or the candidate standard levels. Ifmajor changes are required, stakeholders and technical experts will be given an opportunity to review the revised analyses. 1.4 Notice ofProposed Rulemaking After the ANOPR, DOE will conduct further economic impact analyses ofthe candidate standard levels. These analyses may include refinements ofthe analyses done forthe ANOPR and also will include: a consumer sub-group analysis (see Section 12), a manufacturer impact analysis (see Section 13), a utility impact analysis (see Section 14), an environmental analysis (see Section 15), and employment impacts (see Section 16). The results ofall the analyses will be made available on the Department's website for review and the Department will consider comments on them. This review and comment process may result in revisions to the analyses. Ifappropriate, public workshops may be conducted to enhance the exchange of information and comments. This analytical process culminates with the selection ofproposed standard levels, ifany, that will bepresented in the NOPR. The NOPR, published in the Federal Register, will document the evaluation and selection ofany proposed standards. For each product class, the Department also will identify the maximum improvement in energy efficiency ormaximum reduction in energy use that istechnologically feasible and, ifthe proposed standards would not achieve these levels, the Department will identify thereasons for proposing different standards. The NOPR also will present the results ofall the analyses. The Department will also make available a TSD containing the details of all the analyses. The Department considers many factors in selecting proposed standards. These factors include the selection policies establishedby statute and the many benefits, costs and impacts ofthe standards shown by the analyses. Additionally, the Department encourages stakeholders to developjoint recommendations for standard levels. Ifthe Department receives ajointrecommendation from a

Commercial Unitary AC &HP 7 13 June 2001 Framework Document

the product orwhich cause life-cycle cost increases relative to the base case would generally not be selected as candidate standard levels. The range ofcandidate standard levels will typically include:
• the most energy efficient level; •the level with the lowest life-cycle cost; and • candidate standard levels that incorporate noteworthy technologies orfill in large gaps between efficiency levels ofother candidate standard levels. Afterthe publication ofthe 

### ANOPR, there is a 75-day public comment period and at least onepublic hearing orworkshop. Onthe basis ofcorrunents received, 

### DOE may revise the analysis orthe candidate standard levels. Ifmajor changes are required, stakeholders and technical experts 

### will be given an opportunity to review the revised analyses. 1.4 Notice ofProposed Rulemaking After the ANOPR, OOE will conduct further economic impact analyses ofthe candidate standard levels. These analyses may include refinements ofthe analyses done forthe ANOPR and also will include: a conswner sub-group analysis (see Section 

### 12), amanufacturer impact analysis (see Section 13), a utility impact analysis (sec Section 14), an environmental analysis (sec Section 15), and employment impacts (see Section 16). The results ofall the analyses will be made available on the Department's website for review and the Department will consider corrunents on them. This review and corrunent process may result in revisions to the analyses. Ifappropriate, public workshops may be conducted to enhance the exchange of information and corrunents. This analytical process culminates with the selection ofproposed standard levels, 

### ifany, that will be presented in

# the NOPR. The 

### NOPR, published in the Federal Register, 

### will docwnent the evaluation and selection ofany proposed standards. Foreachproduct class, the Department also will ident.iiY the maximum improvement in energy efficiency ormaximumreduction in energy 

### use that 

### is technologically feasible and, 

### ifthe proposed standards 

### wouldnot achievethese levels, the Department will identify the reasons for proposing different standards. The

### NOPR also will present the results ofall the analyses. The Department will also make available a TSD containing the details of all the analyses. The Department considers many factors in selecting proposed standards. These factors include the selectionpolicies establishedby statute and the many benefits, costs and impacts ofthe standards shown by the analyses. Additionally, the Department encourages stakeholders to'developjoint recorrunendations for standard levels. Ifthe Department receives ajointrecorrunendation from a

Corrunercial Unitary AC & HP 7 13 June 2001 Framework Document

### representative group ofstakeholders, such a recommendation will be strongly considered in the decision process to select the proposed standard level. The NOPR is followed by a 75-day public comment period that includes at least one public hearing or workshop; revisions to the analyses may result from thepublic comments. On thebasis ofthe public comments, DOE reviews the proposed standard and impact analyses and makes modifications as necessary. Ifmajor changes to the analyses are required at this stage, stakeholders and experts will be given an opportunity toreview the revised analyses. 1.5 Notice ofFinal Rulemaking The final step in the rulemaking process would be the publication ofa Notice ofFinal Rulemaking in the Federal Register. The Final Notice promulgates standard levels based on the record and explains the basis for the selection ofthose standards. It is accompanied by the final TSD.


### 2. Analyses for Rulemaking This section provides a briefdescription ofthe analyses to be conducted during the standards setting process to determine the impacts ofpossible standards. It offers an overview ofthe analytic methodology and discusses the major components ofthe analysis. By considering the inter-relationship among these components, the consistency ofapproach throughout the analysis is ensured. 2.1 Introduction The analytical components ofthe standards setting process are summarized in Figure 2. The focus of this figure isthe centercolumn, identified as "Analysis." The column labeled "Approaches" is intended to indicate various methods tobe used to obtain information needed forthe key inputs. The columns labeled "Key inputs" and "Key Outputs" are intended to indicate how the analyses fit into the rulemaking process, and how the analyses relate to each other. Key outputs are analytical results that feed directly into the standard-setting process. Dotted lines connecting analyses indicate types of information that feed from one analysis to another. Key inputs are the types ofdata and information thatare required bythe analyses. Some key inputs exist in public databases, some will be collected from stakeholders or others with special knowledge, and some ofthe key inputs will be developed by the project team to support the standards-setting process. Ultimately, the Department intends to select the commercial unitary AC and HP energy conservation standards that achieve the maximum improvement in energy efficiency that is technologically feasible and economicallyjustified. In the context ofthis process, economicjustification includes consideration

Commercial Unitary AC &HP 8 13 June 2001 Framework Document

representative group ofstakeholders, such a reconunendation will be strongly considered in the decision process to select the proposed standard level. The NOPR is followed by a 75-day public comment period that includes at least onepublic hearingor workshop; revisions to the analyses may result from the public conunents. On the basis ofthepublic coriunents, DOE reviews the proposed standard and impact analyses and makes modifications as necessary. Ifmajorchanges to the analyses are required at this stage, stakeholders and experts

### will be given an opportunity to review the revised analyses. 1.5 Notice ofFinal Rulemaking ThefInal step in the rulemaking process would be the publication ofaNotice ofFinal Rulemakinginthe Federal Register. The Final Noticepromulgates standard levels based on the record and explains the basis for the selection ofthose standards. It is accompanied by the 

### final TSD. 

### 2. Analyses for Rulemaking This section provides a briefdescription ofthe analyses to be conducted during the standards setting process to detennine the impacts ofpossible standards. It offers an overview ofthe analytic methodology and iliscusses the major components ofthe analysis. By consideringthe inter-relationship among these components, the consistency ofapproach throughout the analysis is ensured. 2.1 Introduction The analytical components ofthe standards setting process are swnmarized in Figure 2. The focus of this figure is the center column, identified as "Analysis." The column labeled "Approaches" is intended to inilicate various methods to be used to obtain infonnation needed for the key inputs. The columns labeled "Key Inputs" and "Key Outputs" are intended to indicate howthe analyses fit into the rulemakingprocess, and how the analyses relate to each other. Key outputs are analytical results that feed directly into the standard-settingprocess. Dotted lines connecting analyses indicatetypes of information that feed from one analysis to another. Key inputs are the types ofdata and information that arerequired bythe analyses. Some key inputs exist in public databases, somewill be collected from stakeholders orothers with special knowledge, and some ofthe key inputs

### will be developedby the project team to support the standards-setting process. Ultimately, the Department intends to select the conunercial unitary AC and HP energy conservation standards that achieve the maximum improvement in energy efficiency that is technologically feasible and economicallyjustified. In the context ofthis process, economicjustification includes consideration

Commercial Unitary AC & HP 8 13 June 2001 Framework Document

### ofthe economic impacts on domestic commercial unitary AC and HPmanufacturers and consumers, national benefits including environmental, issues ofconsumer utility and impacts from any lessening of competition. Many ofthe analyses are aimed at answering questions aboutthese aspects ofeconomic justification.

Commercial Unitary AC &HP 9 13 June 2001 Framework Document

ofthe economic impacts on domestic commercial unitary AC and HP manufacturers and consumers, national benefits inclucling environmental, issues ofconsumerutility and impacts from any lessening of competition. Many ofthe analyses 

### are aimed at answering questions aboutthese aspects ofeconomic justification.

Commercial Unitary AC & HP 9 13 June 2001 Framework DocwnentFigure 2: Flow Diagram ofAnalysisfor the Commercial Unitary Air Conditioner and Unitary Heat Pump Rulemaking Process ADoroaches : Key-lDuts , AIalysis Kev-Outouts Inhustlrvfie» ----- w ertav Fi.rrS Prm:uas ' _ _, Marketand A SHRA 9 ro^.^- ^^-,_»^.~,--ieni -- 

### ~TechnlogyAssessmnert

- Tshna ncml amr etf4ic: r inSicie inges -- .| C"I·il Ens

ltin TecanonlaOotns_

__ .__-- _-

. L....Ja5i O.t1i(A Ame .h Unc, : r ila@.
nErW! [ :
......

;TM'^rA^t· -- ·*RE 90nneS Impactsee. Analys s

;Pmdarar~P O ' WibOla _ '
..... i · Nenlbl:ns---, ; .

RenseAnys es
, . !nttair-'t | - r seto :fin~ im ,~Cid I Im- - U-tfe LifeCycle Cost s « 1

.

o gi I ISub-group t Analysis

.. 4.:. --..- 

### ~ch~raoc~o 

### ~ ~~~~~ ~ ~ ~~-Dni~ E~ ~ wnpIct .~Elu~;2r j~i r'Manufacture iImpact · pi Vnp COSpr e (Zaa Qtiv Foi alm M
. L i iLPe.Omnd Reios UCommeri Uaary AC' ityImpacts 10 1 RJu L20 F r ...rrs~o raeq. ': .~ (NEMS) A nalysis (NEMS) ,

, ;= a c(in response tommens)

Commercial Unitary AC &HP I0 13 June 2001 Framework Document -. -- - - -_----- ----- --- ----- -- 

### e

- l - Imprxts - A-alys-s
- -- ---- Aoproaches

ANOPR

NOPR Figure 2: Flow Diagram ofAnalysis for the Commercial Unitary Air Conditioner and Unitary Heat Pump Rulemaking Process

Key-Inputs

I , 

### L_. \lb"v10"""""'" 

# .,

.........

# -- : I I Saeening Aro¥;is

Enginetling

Analysis

Manufacture< Impact Analysis


# , Utility ImpDCts

(NEMS) ErMrormenIa/ Analysis (NEMS) Kev=Outputs

• "'- Poybad<-l.JncertMl<y**·AYel"ageU....cydewilf'lU~y**

• -..17yc..".
__Un<e<I...., ·onaE
__**.~­ .C~~6~en** **.~c.m-.** of'ea-Oemand RO<U:IiMs**~** .... a

"min"'"

.s u.,MoII<c:o
__ :t.Jc:;.:o""_IDl<IlI>..._+
__________ 

# ;-_-+l1 Revt! Analyses**·L~(~~_ro_s~~_fr_'O-~---ms~)~** + FINAL RULE Commercial Unitary AC & HP 10 13 JuneZOO1Framework Document

### 3. Market and Technology Assessment The Market and Technology Assessment will provide information about the commercial unitary AC and HP industry that will be used throughout the standards process, and at the outset to determine product classes, to identify potential design options or efficiency levels for each ofthe product classes. 3.1 MarketAssessment The Department will develop information on thepresent and past industry structure and market characteristics ofthe product(s) concerned. This activity will consist ofboth quantitative and qualitative efforts to assess the industry and products based on publicly available information. Issues to be addressed include: manufacturer market share and characteristics; trends in the number offirms; the financial situation ofmanufacturers; existing non-regulatory efficiency improvement initiatives; and trends in product characteristics and markets. The information collected will serve as resource material tobe used throughout the rulemaking. For instance, historical product shipments and prices will be used to help predict futureprices and shipments. Market structure data will beparticularly useful to conducting the competitive impacts analysis.

Commercial Unitary AC &HP I1 13 June 2001 Framework Document



### 3. Market and Technology Assessment The Market and Technology Assessment will provide information about the conunercial unitary AC and HP industry that will beused throughout the standards process, and at the outset to detennine prodUct classes, to identify potential design options or efficiency levels for each ofthe product classes. 3.1 MarketAssessment The Departmentwill develop information on the present and pastindustry structure and market characteristics ofthe product(s) concerned. This activity will consist ofboth quantitative and qualitative efforts to assess the industry and products based onpublicly available infonnation. Issues to be addressed include: manufacturermarket share and characteristics; trends in the numberofflrrns; the flnancial situation ofmanufacturers; existing non-regulatory efficiency improvement initiatives; and trends in product characteristics and markets.
. The infOimation collected will serve as resource material to be used throughout the rulemaking. For instance, rustorical product srupments and prices will be used to help predict future prices and shipments. Market structure data will be particularly useful to conducting the competitive impacts analysis.

Commercial Unitary AC & HP II J3 June 200] FrameworkDocument

### The Department has initiated a market assessment ofthe commercial unitary AC and unitary HP industry. Once completed, collected information will be distributed for comment. The Department plans to conduct interviews with manufacturers following the framework workshop. These interviews will be useful in developing an industry profile byproviding insights and information to help structure future analysis. While this effort involves the entire industry, the Department is interested in developing profiles ofindividual manufacturers to gain a better understanding ofthe potential impacts ofstandards on both individual firms and particular categories offirms. Interview participants will be requested to identify all confidential information provided in writing and orally. Approximately two weeks following the interview, an interview summary will be provided to give participants the opportunity to confirm the accuracy and protect the confidentiality ofall collected information. All the information transmitted will be considered, when appropriate, in the Department's decision-making process. However, confidential information will not bemade available forthe public record. The Departmentrequestsstakeholders feedbackon this marketassessmentapproach.

3.2 Technology Assessment Information about existing and past technology options andprototype designs will typically be used as input to determine what technologies manufacturers could utilize to attain higher energy efficiency levels. In consultation with interested parties, the Department intends to develop a list oftechnologies than can and should be considered in the analysis. Initially, thetechnologies will encompass allthose considered to be technologically feasible and will serveto establish the maximum technologically feasible design.

Commercial Unitary AC &HP 12 13 June 2001 Framework Document The Department has initiated a market assessment ofthe commercial unitaIyAC and tmitaIy HP industry. Once completed, collected information will be distributed for comment. The Department plans to conduct interviews with manufacturers following the framework workshop. These inteJviews will be useful in developing an industIy profile by providing insights and information to help structure future analysis. While this effort involves the entire industIy, the Department is interested in developing profiles ofindividual manufacturers to gain abettertUlderstanding ofthe potential impacts ofstandards on both individual firms and particularcategories offinns. Interview participants will be requested to identity all confidential infonnation provided in writing and orally. Approximately two weeks following the interview, an interview swnmarywill beprovidedto give participants the opportunity to confirm the accuracy and protectthe confidentiality ofall collected infonnation. All the infonnation transmitted will 

### be considered, when appropriate, in the Department's decision-making process. However, confidential infonnation

### will not be made available for the public record. The Department requests stakeholders feedback on this marketassessment approach.

3.2 TechnologyAssessment lnfonnation about existing and past technology options and prototype designs will typically be used as input to determine what technologies manufacturers could utilize to attain higherenergy efficiency levels. In consultation with interested parties, the Department intends to develop a listofteclmologies than can and should be considered in the analysis. Initially, the technologies 

### will encompass 

### all those considered to be technologically feasible and will serve to establish the maximum technologie<;illy feasible design.

Commercial Unitary AC & HP 12 13 June 2001 Framework Docwnenl

### The Department iscollecting information on technologies that improve energy performance of commercial unitary AC and HPs. An initial list oftechnologies include:

· Evaporator and condenser coils with larger heat-exchanger area

· "Deep coil" or microchannel evaporator coils Low pressure-loss filters and cooling coils High efficiency motors

· High efficiency compressors, such as scrolls or"twin-single" technology

· Multiple compressors Inverter-driven, variable-speed compressors Thermal expansion valves (TXV) Electronic expansion valves Air-foil or backward-curved centrifugal fans Synchronous (toothed) belts or direct drive fans * Inverter-driven, variable-speed indoor or condenser fan motors

· High-efficiency propeller condenser fans

· High-side solenoid valve or discharge line check-valve to minimize pressure equalization

· Heat-pipes (forhigh latent loads) Double-skin, high-albedo cabinets Sub-coolers Demand-control ventilation strategy Are therespecific technologiesthat shouldorshouldnotbe consideredforcommercialunitary AC and HP? Equipment efficiency is generally expressed at full-load derived from a standard test procedure (e.g., EER). Part-load efficiency is another important equipment design parameter used by manufacturers. Equipment design options for increasing full-load performance can impact part-load performance positively ornegatively. Also,part-load performance is akey factor forassessing thein-situ energy performance and energy savings ofthe equipment. The Department intends to assess the impact of design options on part-load performance. Currentstandardsfor commercialunitaryACand IHParebasedon full loadefficiency criteria (i.e.,EnergyEfficiencyRatio (EER) andCoefficientofPerformance(COP))only. What are the potentialdrawbacksandbenefits of the Department mandatingonly minimum full load efficiency, butnotpart-load efficiency in this rulemaking?

Commercial Unitary AC &HP 13 13 June 2001 Framework Document The Department is collecting information on technologies that improve energy performance.of conunercial unitary AC and HPs. An initial list oftechnologies include: Evaporator and condensercoils with largerheat-exchanger area "Deep coil" ormicrochannel evaporatorcoils 

### Low pressure-loss ftItersand cooling coils High efficiency motors • High efficiency compressors, such as scrolls or ''twin-single'' technology Multiple compressors Inverter-driven, variable-speed compressors • Thennal expansion valves (TXV) • Electronic expansion valves • Air-foil orbackward-curved centrifugal fans Synchronous (toothed) belts or direct drive fans Inverter-driven, variable-speed indoor or condenser fan motors • High-efficiency propellercondenserfans • High-side solenoid valve or discharge line check-valve to minimize pressure equaliz4tion Heat-pipes (for high latent loads) Double-skin, high-albedo cabinets Sub-coolers Demand-control ventilation strategy Are there specific technologies thatshouldorshouldnot be considered for commercial unitary ACandHP? Equipment efficiency is generally expressed at full-load derived from a standard testprocedure (e.g., EER). Part-load efficiency is another important equipment design parameterused by manufacturers. Equipment design options for increasing full-load perfonnance can impact part-load perfonnance positively or negatively. Also, part-load perfonnance is akey factor for assessing the in-situ energy performance and energy savings ofthe equipment. The Department intends to assess the impact of design options on part-load performance. Current standards for commercial unitaryA

### CandHPare basedonfull loadefficiencycriteria (i.e
..EnergyEfficiencyRatio (EER) and Coefficient of Performance (COP)) only. What are thepotentialdrawbacks andbenefits of the Department mandating only minimum full load efficiency, but notpart-loadefficiency in this rulemaking?

Commercial Unitary AC & HP 13 13 June 200t Framework Document

### 3.3 Product Classes Products may be separated into product classes iftheir capacity or otherperformance-related features or attributes, including those that provide utility to the consumer, inherently affect efficiency andjustify the establishment ofa different energy conservation standard, orpossible exemption form energy conservation standards for products with that feature or attribute. Such different standards would then be formulated for the different product classes. In general, classes are defined using information obtained in discussions with manufacturers, trade associations, and other interested parties.
The Department isconsidering the following product classes for this rulemaking: AC (65-135 kBtu/hr), single package and split system AC (135-240 kBtu/hr), single package and split system HP (65-135 kBtu/hr), single package and split system HP (135-240 kBtu/hr), single package and split system Shouldthe Departmentconsider creatingadditional classes basedon performancerelated featuresorotherattributes?

Whatcapacityequipmentshouldbe usedin theanalysisas the representative capacity fora given capacityrange(e.g., 7.5 ton for65

- 135 kBtu/hrand15 ton for 135-240kBtu/hr)? Shouldthis value be thesame for unitaryAC andunitaryHPs,orareuniquevalues warranted?Ifso whatshouldthey be?

3.4. Baseline Units t 

### A baseline model is established as a reference point for each product class against which changes that would be brought about by energy conservation standards can be measured. A baseline model represents the characteristics ofa commercial unitary AC and HP ofa specific product class including operating capabilities energy efficiency andprice. Typically a baseline model would be a model that
'Note that the meaning ofbaselineis distinct from the time-dynamic base case, whichis used in the National Energy Savings analysis. In that analysis, the base case represents the mix ofmodels currently on the market and, in each future year, projected to be sold in the absence ofenergy conservation standards.
Commercial Unitary AC &HP 14 13 June 2001 Framework Document

3.3 Product Classes Products may be separated into product classes iftheir capacity orotherperformance-related features or attributes, including those that provide utility to**th~** consumer, inherently affect efficiency andjustilY the establishment ofa different energy conservation standard, orpossible exemption form energy conservation standards for products with that feature or attribute. Such different standards would then be fonnulated for the different product classes. In general, classes are defmed using information obtained in discussions with manufacturers, trade associations, and other interested parties.

The Department is considering the following product classes forthis rulemaking: AC (65-135 kBtuIhr), single package and split system AC (135-240 kBtuIhr), single package and split system HP (65-135 kBtuIhr), single package and.split system HP (135-240 kBtuIhr), single package and split system Should the Department considercreating additional classes basedon performance related features orother attributes?

What capacity equipmentshouldbe used in the analysis as the representative capacityJor a given capacity range (e.g., 7.5 tonfor 65

- 135 kBtulhr and 15 tonfor 135-240 kBtulhr)? Should this value be the same for unitaryACand unitary HPs, orare unique values warranted? Ifso what shouldthey be?
.

3.4. Baseline Units I A baseline model is established as a reference point for each product class against which changes

### that would be broUght about by energy conservation standards can be measured. A baseline model represents the characteristics ofa commercial unitary ACand HP ofa specific product class including operating capabilities energy efficiency andprice. Typically a baseline model would 

### be a model that

INote thatthe meaning ofbaseline is distinct from the tirne-dynamic base case, which is used in the National 

### Energy Savings analysis. In that analysis, the base case represents the mixofmodels cwrently on the market and, in each future year, projected to be sold in the absence ofenergy conservation standards.
Commercial Unitary AC & HP 14 13 June 200I Framework Document

### just meets required energy conservation standards. After the product classes are chosen, the characteristics ofthe baseline model for each class are defined. The baseline model is used in the lifecycle cost and payback analyses. To determine energy savings and change in price, each higher efficiency design option is compared with the baseline model.

One ofthe most vital statistics required for establishing thebaseline model is its efficiency. In this rulemaking, ASHRAE/IESNA Standard 90.1-1999 provides the minimum efficiency levels that will be used as the baseline. For these products, DOE will further evaluate whether more stringent standards than those adopted by ASHRAE/IESNA Standard 90.1-1999 are warranted. Since EPCA 1992 energy conservation standards are the current statutory requirements, the Department may choose to use the 1992 statutory standards in selected analyses toassist in determining energy savings. Ifmore detailed approaches are selected for conducting the engineering analysis, such as the design options approach, manufacturers may be requested to supply details on the technologies they utilize in their baseline orminimum efficiency models. This information will assist the Department in establishing what technologies can be employed to increase the efficiency ofthe equipment. The Departmentinvitesstakeholderfeedbackon thismethodology.



### 4. Screening Analysis Thepurpose ofthe screening analysis isto identify and evaluate those design options or efficiency levels that could improve commercial unitary AC and HPefficiency and to determine which to evaluate in detail in the engineering analysis and to evaluate no further during this rulemaking. This screening process includes consultations with interested parties and independent technical experts who can assist with identifying the key issues and design options or efficiency levels. The screening analysis also discuses the criteria foreliminating certain design options or efficiency levels from firther consideration. By comparing the design options or efficiency levels against these criteria, the Department eliminates from further analysis those options orefficiency levels that are not sufficiently developed orhave characteristics that make them technologically unsuitable forconsideration inthe rulemaking.

Commercial Unitary AC &HP 15 13 June 2001 Framework Document

just meets required energy conservation standards. After the product classes are chosen, the characteristics ofthe baseline model for each class are defmed. The baseline model is used in the lifecycle cost and payback analyses. To determine energy savings and change 

### in price, each higher efficiency design option is compared with the baseline model.

One ofthe most vital statistics required for establishing the baseline model is its efficiency. 

### In this rulemaking, ASHRAEJIESNA Standard 90.1-1999 provides the minimum efficiency levels that will be used as the baseline. Forthese products, DOE will further evaluate whethermore stringent standards than those adopted by ASHRAElIESNA Standard 90.1-1999 are warranted. Since EPCA 1992 energy conservation standards are the current statutory requirements, the Department may choose to use the 1992 statutory standards 

### in selected analyses to assist 

### in determining energy savings. Ifmore detailed approaches are selected for conducting the engineering analysis, such as the design options approach, manufacturers may be requested to supply details on the teclmologies they utilize in their baseline orminimum efficiency models. This information will assist

### the Departmentin establishing what technologies can be employed to increase the efficiency ofthe equipment. The Department invitesstakeholder feedback on this methodology.



### 4. Screening Analysis The purpose ofthe screening analysis is to identifY and evaluate those design options orefficiency levels 

### that could improve commercial unitary AC and HP efficiency and 

### to detennine which to evaluate 

### in detai1 in the engineering analysis and to evaluate no fiuther during this rulemaking. This screening process includes consultations with interested parties and independent technical experts who can assist with ident:i1)ring the key issues and design options orefficiency levels. The screening analysis also discuses the criteria for eliminating certain design options orefficiency levels from further consideration. By comparing the design options or efficiency levels against these criteria, the Department eliminates from further analysis those options orefficiency levels that are not sufficiently developed orhave characteristics that make them technologically unsuitable for consideration in the ruJemaking.

Conunercial Unitary AC & HP 

### 15 13 June 2001 Framework Document

### 4.1 Design Options An initial list ofdesign options willbe developed from the technologies identified in the technology assessment. Following the development ofthis initial list ofdesign options, the Department, in consultation with interested parties, will review each design option to determine ifit is practicable to manufacture, install and service; would adversely impact equipment utility or equipment availability; or would have adverse impacts on health and safety. Design options not eliminated in the screening process will be considered in the subsequent engineering analysis. Compiling a list ofdesign options will provide a betterunderstanding about the specific technologies that may be utilized by manufacturers to improve equipment efficiency. Knowing the technologies that are available to manufacturers to increase efficiency will also help the Department determine maximum technologically feasible efficiency levels.

In developing a list ofdesign options, the Department's primary consideration is how a technology will impact the efficiency ofthe equipment as measured bythe EER forcooling equipment and the COP for heating equipment. A secondary consideration is how the technology will affect part-load performance such as integrated part load value (IPLV), which is derived from a standard test procedure, in addition to EER and COP. Should the Departmentconsiderotherfactorsindeveloping its listofpotentialdesign options? Forexample, shouldincreasesin EERbe limitedby the latentheatremoval capabilityof the equipmentin orderto make theproductsuitable for high humidity areasof the country? The Department will need to make certain assumptions about equipment design related to its capacity and capacity control. Larger capacity equipment has multiple ways ofmeeting the peak capacity requirements (e.g., number of compressors), which will require assumptions about how the equipment would be designed for any given capacity irrespective ofthe efficiency level. Commercial unitary AC and HPsmay include capacity control, which may be implemented in different ways (e.g., multiple compressors, variable speed). This will impact manufacturer's strategies to increase EER in different ways. WhatassumptionsshouldtheDepartmentmake regardingdesign forspecific capacitiesof equipment? Howshouldthe Department addresscapacitycontrolmeasures?

Commercial Unitary AC &HP 16 13June 2001 Framework Document

4.1 Design Options Aninitial listofdesign options will be developed from the technologies identified in the technology assessment. Following the development ofthis initial list ofdesign options, the Department, in consultation with interested parties, will review each design option to determine ifit is practicable to manufacture, instaI1 and service; would adversely impact equipment utility or equipment availability; or would have adverse impacts on health and safety. Design options not eliminated in the screening process will be considered in the subsequent engineering analysis. Compiling a list ofdesign options will provide abetterunderstanding about the specific technologies that may be utilized by manufacturers to improve equipment efficiency. Knowing the technologies that are available to manufacturers to increase efficiency will also help the Department determine maximwn tedmologica1ly feasible efficiency levels.

In developing a list ofdesign options, the Department's primary consideration is how a technology will impact the efficiency ofthe equipment as measured by the

## fER for cooling equipment and the COP forheating equipment. A secondary consideration is how the technology will affect part-load performance such as integratedpart load value (IPLV), which is derived from a standard test procedure, in addition to EER and COP. Should the Department considerother factors in developing its list of potentialdesign options? For example. should increases in EER be limitedbythe latent heat removal capability of the equipment in order to make theproductsuitable for high humidityareas of the country? The Department will need to make certain assumptions about equipment design related to its capacity and capacity control. Larger capacity equipment

### has multiple ways ofmeeting the peak capacity requirements (e.g., nwnberof compressors), which will require asswnptions about how the equipment would be designed for any given capacity iIrespective ofthe efficiency level. Commercial unitary AC and HPs may include capacity control, which may 

### be implemented in different ways (e.g., multiple compressors, variable speed). This will impact manufacturer's strategies to increase EER in different ways. What assumptions should the Department make regarding designfor specific capacities of equipment? How should the Department address capacity controlmeasures?

Commercial Unitary AC & HP 16 13 June 2001 Framework DocumentCommercial Unitary AC &HP 17 13 June 2001 Framework Document Commercial Unitary AC & HP 

### 17 I3 June 200I Framework Docwnent

### 5. Engineering Analysis Afterthe screening analysis, the Department performs an engineering analysis on the design options or efficiency levels that were not eliminated. The engineering analysis consists ofestimating the energy consumption and costs ofcommercial unitary AC and HPs atvarious levels ofincreased efficiency. This section discusses an overview ofthe engineering analysis (Section 5.1), the approaches to determining equipment efficiency (Section 5.2), the approaches to estimating costs (Section 5.3), other regulatory impacts on the engineering analysis (Section 5.4), and the analysis ofenergy consumption and electric load shape impacts ofequipment operated inbuildings (Section 5.5) 5.1 Engineering Analysis Overview Thepurpose ofthe engineering analysis is to evaluate the increased equipment efficiency levels and associated manufacturing costs. The baseline units andpossible design options are identified in the screening analysis (Section 4). The Department, in consultation with stakeholders, will use the most appropriate means available to determine energy efficiency. Ranges and uncertainties inperformance will be established. The energy efficiency measures developed in the engineering analysis will be analyzed for energy savings potential in the building energy use analysis and combined with end-user costs in the life-cycle cost analysis. The engineering analysis involves estimating the possible efficiency increases from the baseline units (described in Section 3.4). A representative baseline unit will be established foreach product class that is identified. A cost-efficiency relationship will be developed to show the manufacturer cost of achieving increased efficiency. The efficiency levels corresponding to various design option combinations will bedetermined from the information on products that are commercially available, data submitted by manufacturers and/or engineering calculations.
The Department is aware thatthe most efficient commercial unitary AC listed in the most recent version oftheARI UnitaryDirectoryhas an EER rating of 12.0. The most efficient HP listed has a COP of4.0. Therefore the Department proposes to establish these as starting points to establish the pperrange ofenergy efficiency tobe covered in the analysis. TheDepartmentis interestedin comments on therangeofefficiencies that shouldbe onsidered.

Commercial Unitary AC &HP 18 13 June 2001 Framework Document



### 5. Engineering Analysis After the screening analysis, the Department perfonns an engineering analysis on the design options or efficiency levels that were not eliminated. The engineering analysis consists ofestimating the energy' conswnption and costs ofcommercial unitary AC and HPs at various levels ofincreased efficiency. This section discusses an overview ofthe engineering analysis (Section 5.1), the approaches to detennining equipment efficiency (Section 5.2), the approaches to estimating costs (Section 5.3), other regulatory impacts on the engineering analysis (Section 5.4), and the analysis ofenergy consumption and electric load shape impacts ofequipment operated in buildings (Section 5.5) 5.1 Engineering Analysis Overview The purpose ofthe engineering analysis is to evaluate the increased equipment efficiency levels and associated manufacturing costs. The baseline units and possible design options are identified in the screening analysis (Section 4). The Department, in consultation with stakeholders, will use the most appropriate means available to detennine energy efficiency. Ranges and uncertainties in performance will be established. The energy efficiency measures developed in the engineering analysis will be analyzed for energy savings potential in the building energy use analysis and combined with end-user costs in the life-cycle cost analysis. The engineering analysis involves estimating the possible efficiency increases from the baseline units
. (described in Section 3.4). A representative baseline unit will be established for eachproduct class that is identified. 

### Acost-efficiency relationship will be developed to show the manufacturercost of achieving increased efficiency. The efficiency levels corresponding to various design option combinations will 

### be detennined from the information on products that are conunercially available, data submitted by manufacturers and/or engineering calculations.
tIne Department is aware that the most efficient conunercial tmitary AC listed in the mostrecent !version oftheARl Unitary Directory has an EER rating of12.0. The most efficient HP listed has a 

### jeop of4.0. Therefore the Department proposes to establish these as starting points to establish the !Upperrange ofenergy efficiency to be covered in the analysis. The Department is interested in comments on the range of efficiencies thatshouldbe Ironsidered.

Commercial Unitary AC & HP 18 13 June 2001 Framework Document

### Cost estimates for the engineering analysis (which are also used for the manufacturer impact analysis described in Section 13) will be obtained from detailed incremental cost data disaggregated into the' cost ofequipment components, labor, purchased parts and material, shipping/packaging and investment. Estimates ofthe total cost to the consumer include the retail price ofequipment andenergy and the installation and maintenance costs. The Department will generate manufacturing cost estimates through the use ofsome combination oftear-down analysis, manufacturer supplied estimates, and direct estimates ofretail prices. There are several ways toestablish a relationship between cost and performance. The Department understands that a fundamental decision iswhether to use the efficiency level or design options approach forthe engineering analysis. Another decision concerns selecting from the various cost estimation methods including tear-downanalysis andpricesurveys.

Since the availability ofcommercial unitary AC and HP equipment in the marketplace is not uniform across the efficiency levels under consideration, the Department may decide to combine the efficiency level and design options approaches. In this combined approach, the Department would develop a single spreadsheet and use itto represent the cost ofequipment at the various efficiency levels covered by the analysis. Engineering expertise, results from simulation modeling, information gathered through tear-down analysis and manufacturer data submissions would all be used to populate the spreadsheet. Combining data sources in this way will allow the Department to represent equipment throughout the entire efficiency range without depending exclusively on simulation modeling. This approach would also limitpublic access to proprietary data, yet allow the public to examine the cost and design assumptions that underlie the cost-efficiency estimates. The Departmentseeks input from stakeholdersabout pursuinga combinedapproach forthe engineeringanalysis.

5.2 Approaches to Determining Efficiency Improvements There are two methods for identifying the opportunities for increasing energy efficiency: the efficiency level approach (i.e., mix oftechnologies at specific efficiency levels) and design options approach (i.e., technology specific). 5.2.1 Efficiency Level Approach
Commercial Unitary AC &HP 19 13 June 2001 Framework Document

Cost estimates for the engineering analysis (which are also used for the manufacturer impact anaIysis described in Section 13) will be obtained from detailed incremental cost data disaggregated into the' cost ofequipment components, labor, purchaSed parts and material, shipping/packaging and investment. Estimates ofthe total cost to the consumer include the retail price ofequipment andenergy and the installation and maintenance costs. The Department will generate manufacturing cost estimates through the use ofsome combination oftear-down analysis, manufacturer supplied estimates, and direct estimates ofretail prices. There are several ways to establish arelationship between cost and performance. The Department
. understands that a fimdamental decision is whether to use the efficiency level or design options approach for the engineering analysis. Another decision concerns selecting from the various cost estimation methods including tear-down analysis andpricesurveys.

Since the availability ofcommercial unitary AC and HP equipment in the marketplace is not uniform across the efficiency levels under consideration, the Department may decide to combine the efficiency level and design options approaches. In this combined approach, the Department would develop a single spreadsheet and use it to represent the cost ofequipment at the various efficiency levels covered by the analysis. Engineering expertise, results from simulation modeling, information gathered through tear-down analysis and manufacturer data submissions would all be used to populate the spreadsheet. Combining data sources in this way will alJow the Department to represent equipment throughout the entire efficiency range without depending exclusively on

.simulationmodeling. This approach would also limitpublic access to proprietary data., yet allow the public to examine the cost and design assumptions that underlie the cost-efficiency estimates. The Departmentseeks input/romstakeholders aboutpursuinga combinedapproach/orthe engineeringanalysis.

5.2 Approaches to Determining Efficiency Improvements There are two methods for identifying the opportunities for increasing energy efficiency: the efficiency level approach (i.e., mix oftechnologies at specific efficiency levels) and design options approach (i.e., technology specific). 5.2,1 Efficiency Level Approach

Conunercial Unitary AC & HP 19 13 June 2001 Framework Document

### The efficiency level approach establishes the relationship between manufacturer cost and increased efficiency at predetermined efficiency levels. It hasthe initial advantage ofbeing simple and straight forward. Manufacturers typically provide incremental manufacturer's cost data forincremental increases in efficiency. Cost-efficiency curves can then be constructed from this data. Additionally, the efficiency level approach allows manufacturers the ability to supply cost data without revealing details of their manufacturing processes or costs. However, the simplicity ofthe efficiency level approach isalso itsprimary drawback. Namely, since technological details are not provided, itcould be difficult to verify the accuracy ofthe cost information received from the manufacturers. The inability to verify information received would lead to greater uncertainty about the costs ofefficiency improvements for commercial unitary AC and HPs. In addition, prototypical designs become difficult to evaluate and maximum technologically feasible designs are then difficult to ascertain. For example, iftwo manufacturers choose markedly different designs with significantly different costs to attain the same efficiency level, taking an average ofthe costs may not accurately represent the situation. As a result, some stakeholders may prefer to supplement the engineering analysis with additional detail which needs to be derived from other sources in order to verify the accuracy ofthe data supplied through the efficiency level approach

Ifthe efficiency level approach is selected for conducting the engineering analysis, predetermined efficiency levels will be selected by the Department based on consultations with stakeholders. The Departmentseeks input from stakeholdersas to how the efficiency level approachcan be applied to HPsto ensure thatboth coolingandheating performancearetaken into account. As discussed above, the efficiency level approach requires verification ofthe data submitted. Other approaches, such as the design options method, can be conducted in parallel with the efficiency level approach to verify the accuracy ofits data. The Department seeks inputon what methods couldbe utilizedto verify the data providedby manufacturers usingtheefficiency levelapproach. Shouldtheefficiency levelapproach be used? Whatarethe benefits anddisadvantagesbf thisapproach?

5.2.2 Design Options Approach Under the design options approach, individual or combinations ofdesign options are identified for
Commercial Unitary AC &HP 20 13 June 2001 Framework Document

The efficiency level approach establishes the relationship between manufacturer cost and increased efficiency at predetennined efficiency levels. It has the initial advantage ofbeing simple and straight forward. Manufacturers typically provide incremental manufacturer's cost data for incremental increases in efficiency. Cost-efficiency curves can then be constructed from this data. Additionally, the efficiency level approach allows manufacturers the ability to supply cost data without revealing details of their manufacturing processes or costs. However, the simplicity ofthe efficiency level approach is also its primary drawback. Namely, since teclmological details are not provided, it could be difficult to verify the accuracy ofthe cost infonnation received from the manufacturers. The inability to verify infonnation received would lead to greater uncertainty about the costs ofefficiency improvements for commercial unitary AC and HPs. In addition, prototypical designs become difficult to evaluate and maximum technologicaI1y feasible designs are then difficult to ascertain. For example, iftwo manufacturers choose markedly different designs with significantly different costs to attain the same efficiency level, taking an average ofthe costs may not accurately represent the situation. As a result, some stakeholders may preferto supplement the engineering analysis with additional detail which needs to be derived from other sources in orderto verify the accuracy ofthe data supplied through the efficiency level approach.

Ifthe efficiency level approach is selected for conducting the engineering analysis, predetermined efficiency levels will be selected by the Department based on consultations with stakeholders. The Departmentseeks input/rom stakeholders as to how the efficiency level approach can be appliedto HPs to ensure that both coolingandheatingperformance are taken into account. As discussed above, the efficiency level approach requires verification ofthe data submitted. Other approaches, such as the design options method, can be conducted in parallel with the efficiency level approach to verify the accuracy ofits data. The Departmentseeks input on what methods could be utilized to verify the dataprovided by manufacturersusingthe efficiencylevelapproach. Shouldthe efficiencylevelapproachbeused? What are the benefits anddisadvantages o/thisapproach?

5.2.2 Design Options Approach Under the design options approach, individual or combinations ofdesign options are identified for

Commercial Unitary AC & HP 20 13 June 2001 Framework Document

### increased efficiency. Design option efficiency increases can either be based on manufacturer or component supplier estimates or through the use ofengineering computer simulation models. The incremental manufacturing costs ofadding design options to a baseline model are then established. Individual design options or combinations ofdesign options are added to the baseline model in ascending order ofcost-effectiveness. Typically, the consumer payback period is used to establish a design option's cost-effectiveness and is determined by the ratio ofthe change in total installed cost to the change in operating cost (both as compared to the baseline). The strength ofthis approach is in gaining a better understanding ofthe technological and economic basis ofefficiency improvements. Through the design options approach we have the ability to analyze individual technologies and to combine them in sequence. The approach is transparent in that the impact ofany single technology on cost and efficiency isexplicit. An additional advantage is the ability to incorporate designs thathave been demonstrated to perform in prototypes buthave yet tobe utilized in equipment currently available on themarket Thus, maximum technologically feasible designs are more easily established than in the efficiency level approach. Although individual technologies can be assessed, the design options approach can be complex. If individual technologies (especially prototype designs) are combined in ways not typically utilized by manufacturers, attention must be paid to the overall system cost and efficiency. In order todetermine a technology's impact on system efficiency, a computer simulation model is typically employed. Since computer simulation models exhibit at least some level ofinaccuracy, time andeffort mustbe expended to validate the model's results at a variety ofoperating conditions. Equipment simulation models may demand detailed input balanced bythe need to protect manufacturers and component suppliers proprietary design strategies. Also, equipment performance data at specified test conditions must be supplied in order to validate the model's performance. The design options approach must be reconciled with the manufacturing impact analysis. The Department recognizes that the manufacturer cost information derived in a component-based analysis should reflect the variability in baseline units, design strategies and cost structures that can exist among 

### manufacturers, in order to be most useful in the manufacturing impact analysis. Therefore, for the manufacturing impact analysis, the Department may need to derive additional manufacturing cost estimates, using other approaches developed in consultation with interested parties.

Commercial Unitary AC &HP 21 13 June 2001 Framework Document

increased efficiency. Design option efficiency increases can either be based on manufacturer or component supplier estimates or through the use ofengineering computer simulation models. The incremental manufacturing costs ofadding design options to a baseline model are then established. Individual design options or combinations ofdesign options are added to the baseline model in ascending order ofcost-effectiveness. Typically, the consumerpayback period is used to establisha design option's cost-effectiveness and is detennined by the ratio ofthe change in 

### total installed cost to the change in operating cost (both as compared to the baseline). The strength oftllls approach is in gaining abetterunderstanding ofthe technological and economic basis ofefficiency improvements. Through the design options approach we have the ability to analyze individual technologies and to combine them in sequence. The approach is transparent in

### thatthe impact ofany single technology on cost and efficiency is explicit. An additional advantage is the ability to incorporate designs that have been demonstnited to perform in prototypes but have yet to be utilized in equipment currently available on the market Thus, maximum technologicalJy feasible designs are more easily established than in the efficiency level approach. Although individual technologies can 

### be assessed, the design options approach can be complex. If individual technologies (especially prototype designs) are combined in ways not typicalJy utilized by manufacturers, attention must be paid to the overall system cost and efficiency. In orderto detennine a technology'S impact on system efficiency, acomputer simulation model is typically employed. Since computer simulation models exhibit at least some level ofinaccuracy, time and effort must

### be expended to validate the model's results at avariety ofoperating conditions. Equipment simulation models may demand detailed input balanced by the need to protect manufacturers and component suppliers proprietary design strategies. Also, equipment performance data at specified test conditions must be supplied in orderto validate the model's performance. The design options approach must be reconciled with the manufacturing impact analysis. The Departmentrecognizes that the manufacturer cost information derived in a component-based analysis should reflect the variability inbaseline units, design strategies and cost structures that can exist among manufacturers, in orderto be most usefuJ inthe manufacturing impact analysis. Therefore, for the manufacttning impact 

### analysis, the Department may needto derive additional manufacturing cost estimates, using otherapproaches developed in consultation with interested parties.

Commercial Unitary AC & HP 21 13 June 2001 Framework Document

### Ifthe design options approach is used for the engineering analysis, methods will have to be established for determining efficiency increases. As stated above, this can be done either directly through stakeholder input orthrough the use ofcomputer simulation models. There are at leasttwo public domain computer models forunitary AC and HPs, one from Oak Ridge National Laboratory and the other from theNational Institute ofStandards and Technology, which could be used to determine equipment efficiency. The Departmentseeks input from stakeholdersas to how efficiency impacts couldbe determinedunderthedesign optionsapproach. If computersimulationmodels are to be used, which specific modelshouldbe usedby the Department? Should the design optionsapproach be used? What arethe benefits anddisadvantagesof this approach?



### 5.3 Approaches to Determining Cost Estimates The Department strongly prefers to use a single set ofcost-efficiency estimates inits analysis, and to account for variability and uncertainty byusing ranges, rather than analyzing competing scenarios. Stakeholders are welcome to submit their own estimates inthe form ofpublic comment, but the Department intends to analyze the differences among independent estimates and to synthesize them into a range along with a mostlikely value. The cost estimates used should have the following characteristics:
a level oftransparency that permits validation by outside parties; a level ofdetail that permits outside parties to draw conclusions regarding the design choices underlying the analysis; * protection ofsensitive orconfidential information; a basis ofgenerally accepted cost and performance estimation methodologies; an assessable level ofstatistical certainty; and be available by the scheduled deadline. Tothe extent possible, the Department will seek the involvement ofoutside experts, and will include manufacturers and other stakeholders to theprocess. Are thereparticular cost estimatingmethodologiesthataremostappropriate for commercial 

### unitary ACandHPs? Whatrole willmanufacturersorother interested partiesbe willing to play in the development ofcost estimates?

Commercial Unitary AC &HP 22 13 June 2001 Framework Document Ifthe design options approach is used for the engineering analysis, methods will have to be established for detennining efficiency increases. As stated above, this can be done either directly
. through stakeholderinput orthrough the use ofcomputer simulation models. There are at leasttwo public domain computermodels for unitary AC and HPs, one from Oak Ridge National Laboratory and the other from the National Institute ofStandards and Technology, which could be used to determine equipmentefficiency. The Departmentseeks inputfrom stakeholders as to how efficiency impacts couldbe determined under the design options approach. 

## If computersimulation models are to be used, which specific modelshouldbe usedbythe Department? Should the design options approach be used? What are the benefits anddisadvantages of this approach?

5.3 Approaches to Determining Cost Estimates The Department strongly prefers to use a single set ofcost-efficiency estimates in its ana1ysis, and to account for variability and uncertainty by using ranges, ratherthan analyzing competing scenarios. Stakeholders 

### are welcome to submit theirown estimates in the form ofpublic comment, butthe Department intends to analyze the differences among independent estimates and to synthesize them into arange along with a most likely value. The cost estimates used should have the following characteristics:
a level oftransparency that permits validation by outside parries; a level ofdetail that permits outside parties to draw conclusions regarding the design choices underlying 

### the analysis; protection ofsensitive orconfidential information; a basis ofgenerally accepted cost and performance estimation methodologies; an assessable level of

### statistical certainty; and be available by the scheduled deadline. To the extentpossible, the Departmentwill seek the involvement ofoutside experts, and will include manufacturers and other stakeholders to the process. Are thereparticular cost estimatingmethodologies that are mostappropriateforcommercial unitaryACandHPs? What role will manufacturers or other interestedparties be willing to play in the development of cost estimates?

Corrunercial Unitary AC & HP 

### 22 13 June 2001 Framework Document

### 5.4 Tear-Down Analysis The use ofa component-based engineering analysis orreverse engineering provides useful information including the identification ofpotential technological paths manufacturers could use to achieve increased equipment energy efficiency. Under tear-down analysis, "off-the-shelf' equipment commerciallyavailable on the market are purchased and physically analyzed, i.e., dismantled, component-bycomponent to determine what technologies and designs manufacturers employ to increase efficiency. Independent costing methods along with manufacturer and component supplier data can then be used to estimate the costs ofthe components. The tear-down analysis will draw onreadily available data (provided directly by individual manufacturers through a process approved by the trade organization). In order to satisfy the data requirements, the Department anticipates it would be necessary to: 1) develop a consensus methodology with stakeholders' input 2) work with the trade organization and individual manufacturers to select a statistically representative sample ofproducts 3) receive key design data from those manufacturers for the sample products 4) undertake tear-downs and production cost analysis 5) verify Department estimates with the individual manufacturers towhom they apply 6) aggregate the results and present them to the trade organization forreview 7) revise the analysis and present itto the stakeholders for review and comment The primary disadvantage ofreverse engineering analysis isthe time and effort required to analyze "offthe-shelf' equipment. Several models from a diverse range ofmanufacturers may need to be assessed in orderto ensure that an accurate representation oftechnological paths for increasing efficiency are identified. In addition, since only "off-the-shelf' equipment is being analyzed, new combinations of existing technologies or prototypical designs may not be captured by the analysis, thus, making it difficult to establish maximumtechnologically feasible designs. Tear-down analysis is a complementary methodology to whichever ofthe following engineering approaches is followed. It can serve as verification ofcosts collected for an efficiency level analysis or provide costs and design options choices for a design option analysis.

Commercial Unitary AC &HP 23 13 June 2001 Framework Document

5.4 Tear-Down Analysis The use ofa component-based engineering analysis orreverse engineering provides useful information including the identification ofpotential technological paths manufacturers could use to achieve increased equipment energy efficiency. Under tear-down analysis, "off-the-shelf' equipment commerciallyavailable on the market are purchased and physically analyzed, i.e., dismantled, component-bycomponent to determine what technologies and designs manufacturers employ to increase efficiency. Independent costing methods along with manufacturer and component supplierdata 

### can then be used to estimate the costs ofthe components. The tear-down analysis will draw on readily available data (provided directly by individual manufacturers through a process approved by the trade organization). In orderto satisfY the data**requiremen~,** the Department anticipates it would be necessary to: I) develop a consensus methodology with stakeholders' input 2) work with the trade organization and individual manufacturers to select a statistically representative sample ofproducts 3) receive key design data from those manufacturers for the sampleproducts 4) undertake tear-downs and production cost analysis 5) verify Department estimates with the individual manufacturers to whom they apply 6) aggregate the results and presentthem to the trade organization for review 7) revise the analysis and present it to the stakeholders for review and comment The primary disadvantage ofreverse engineering analysis is the time and effort

### required to analyze "offthe-shelf' equipment. Several models from a diverse range ofmanufacturers may need to beassessed in orderto 

### ensure that an accurate representation oftedrnological paths for increasing efficiency 

### are identified. In addition, since only "off-the-shelf' equipment is being analyzed, new combinations of existing technologies orprototypical designs may not be capturedby the analysis, thus, making it difficult to establish maxumun technologically feasible designs. Tear-down analysis is a complementary methodology to whicheverofthe following engineering approaches is followed. Itcan serve

## as verification ofcosts collected for an efficiency level analysis or provide costs and design options choices for a design option analysis.

Commercial Unitary AC & HP 23 13 June 2001 Framework Document 

# .-

### Several different commercial unitary AC and HP models will need to be evaluated in order to ensure that all representative technologies for increasing efficiency are identified. Should the tear-down analysisbe used? What arethe advantagesanddisadvantages of this analysis? WhatguidelinesshouldtheDepartmentconsiderwhen selectingthe numberand types of models to be analyzed?



### 5.5 Outside Regulatory Changes Affecting the Engineering Analysis In conducting an engineering analysis, there sometimes occur regulatory changes outside ofDOE's statutory efficiency standards process that can impact the manufacture ofthe equipment. Some ofthese changes can also affectthe efficiency ofthe equipment. The Department will attempt to identify all "outside" issues that can impact the engineering analysis.

Commercial Unitary AC &HP 24 13 June 2001 Framework Document -------**~- ---~~-** **~~---~----~--~--~-~**

Several different commercial unitary AC and HP models will need to be evaluated in orderto ensure that all representative technologies for increasing efficiency are identified. Should the tear-down analysis be used? What are the advantages anddisadvantages ojthis analysis? What guidelines shouldthe Department consider when selecting the numberand types ojmodels to be analyzed?

5.5 Outside Regulatory Changes Affecting the Engineering Analysis In conducting an engineering analysis, there sometimes occurregulatory changes outside ofI)()E's statutory efficiency standards process that can impactthe manufacture ofthe equipment. Some ofthese changes can also affect the efficiency ofthe equipment. The Department will attemptto identifY all "outSide" issues that can impact the engineering analysis.

Commercial Unitary AC & HP 

### 24 13 June 2001 Framework Document

### The commercial unitary AC and HP industry is currently facing the impending phase-out ofHCFC22, the refrigerant used in almost all the equipment currently being installed in the U.S. Thephase: out ofHCFC-22 begins in the year 2010 and the industry has responded by conducting in-depth analyses ofvarious HCFC-22 alternatives. As a result ofthe analyses conducted to date, two primary candidates have emerged from the field of alternatives; R-410A and R-407C. Both refrigerants have their advantages and disadvantages. Although R-410A shows promise ofbeing able to raise equipment efficiencies, its high volumetric capacity may require systems to be redesigned to handle the significantly higher discharge pressures. R-407C is a virtual drop-in replacement, but may exhibit some efficiency degradation relative to HCFC-22. Thus, itis still uncertain as to what impact thephase-out ofHCFC-22 will have on the industry. Namely, how will equipment manufacturer costs and efficiency levelsbe affected bythe phase-out ofHCFC-22. The Departmentseeks input from stakeholdersas to how the impendingphase-out ofHCFC22shouldbe handledin the engineeringanalysis. IsHCFC-22's phase-outdatestillfar enough in the future to base the analysison the continueduseof HCFC-22? Ifnot, whatare the opportunities for a redesignandhow willHCFC-22's eliminationimpactmanufacturer costs andequipmentefficiency? Are thereany additional "outside" issues thatstakeholdersareawareofthatshouldbe consideredby the Departmentin its analysisof commercialunitary AC andHPs?

5.6 Building Energy Use and Electric Load Shape Characterization Thepurpose ofthe building energy use and load shape characterization analysis is to assess the energy and peak demand savings potential ofdifferent equipment efficiencies across the range ofcommercial building types and climate zones. Aspart ofthe building energy use analysis, certain engineering assumptions must be made regarding equipment application, including howthe equipment is operated, under what conditions, and as part ofwhatintegrated systems. The Department intends to use computer building energy analysis software in this analysis, as it allows the systematic treatment ofinteractions among building systems (including building envelope, lighting, and other internal processes) and their operating schedules along with occupancy on building energy use and overall equipment performance. For commercial buildings, state-of-the-art building energy simulation software includes BLAST, DOE-2 and now Energy-Plus. DOE willuse one ormore of
Commercial Unitary AC &HP 25 13 June 2001 Framework Document The commercial unitary AC and HP industry is currently facing the impending phase-out ofHCFC22, the refrigerant used in almost all the equipment currently being installed in the U.S. Thephase: out ofHCFC-22 begins in the year 20 10 and the industry has responded by conducting in-depth analyses ofvarious HCFC-22 alternatives. As a result ofthe analyses conducted to date, two primary candidates have emerged from the field of alternatives; R-4!OA and R-407C. Both refrigerants have their advantages and disadvantages. Although R-4JOA shows promise ofbeing able to raise equjpment efficiencies, 

### its high volumetric capacity rnay require systems to be redesigned to handle the significantly higherdischarge pressures. R-407C is a virtual drop-in replacement, but may exhibit some efficiency degradation relative to HCFC-22. Thus, it is still uncertain as to what impactthe phase-out ofHCFC-22 will have onthe industry. Namely, how 

### will equipment manufacturer costs and efficiency levels be

### affectedbythe phase-out ofHCFC-22. The Department seeks inputJrom stakeholders as to how the impendingphase-out ofHCFC22shouldbe handled in the engineeringanalysis. IsHCFC-22'sphase-outdate stillJar enough in theJuture to base the analysis on the continueduse oj HCFC-22? 

## If not, what are the opportunitiesJora redesign andhowwillHCFC-22's elimination impact manufacturer costs andequipment efficiency? Are there any additional "outside" issues thatstakeholders are aware of thatshouldbe considered by the Department in its analysis oj commercial unitaryACandHPs?



### 5.6 Building Energy Use and Electric Load Shape Characterization The ptupOse ofthe building energy use and load shape characterization analysis is to assess the energy and peak demand savings potential ofdifferent equipment efficiencies across the range ofcommercial building types and climate zones. As part ofthe building energy use analysis, certain engineering assumptions must be made regarding equipment application, including howthe equipment is operated, underwhat conditions, and as part ofwhat integrated systems. The Department intends to use computerbuilding energy analysis software in this analysis, as it allows the systematic treatment ofinteractions among building systems (including building envelope, lighting, and other internal processes) and their operating schedules along with occupancy on building energy use and overall equipment perfonnance. Forcommercial buildings, state-of-the-artbuilding energy simulation software includes BLAST, ooE-2 and now Energy-Plus. DOE will use one ormore of

Commercial Unitary AC & HP 25 13 June 200I Framework Document

### these public-domain building energy models in its analysis. Representative buildings will be simulated invarious climate locations, such as the 11 locations used in the ASHRAE/IESNA Standard 90.1-1999 analyses. Data on new and existing buildings will be used to develop and weight representative building types for modeling. Possible sources include: the Energy Information Administration's (EIA) Commercial Building Energy Consumption Survey (CBECS), Jackson Associates' Market Analysis and Information System (MAISY) database based on CBECS, and utility surveys. Both CBECS and MAISY provide a representative sample ofcommercial buildings from throughout the United States. Once building prototypes have been defined, whole-building energy simulation software is used in combination with climate data to estimate thermal loads on the commercial unitary AC and HP equipment. Various methods either integral or external to the wholebuilding energy simulation software will be used totranslate equipment thermal loads into equipment energy consumption taking account the part-load operation. Different commercial unitary AC and HP efficiency levels will be input and simulated yielding energy consumption results by building type and climate location.

The Departmentseeks stakeholderinputon theabove andothersources of dataconcerning U.S. commercialbuildingstock characteristics forenergy-related modeling purposes. Doyou agreewith the use ofthese tools?



### The simulations also produce hourly (or sub-hourly) electricity load shapes, which will be used in estimating peak load impacts (described in Section 14) ofequipment efficiency improvements above thebase case. Together with electricity tariffs this information will generate operating costs forthe lifecycle cost analysis in Section 8.

Commercial Unitary AC&HP 26 13June 2001 Framework Document

these public-domain building energy models in its analysis. Representative buildings will be simulated in various climate locations, such as the 

### 11 locations used in the ASHRAElIESNA Standard 90.1-1999 analyses. Data on new and existing buildings will be uSed to develop and weight representative building types for modeling. Possible sources include: the Energy Information Administration's (EIA) Commercial Building Energy Consumption Survey (CBECS), Jackson Associates' Market Analysis and Information System (MAISy) database based on CBECS, and utility surveys. Both CBECS and MAlSY provide a representative sample ofcommercial buildings from throughout the United States. Once building prototypes have been defined, whole-building energy simulation software is used in combination with climate data to estimate therrnalloads on the commercial unitary AC and HP equipment. Various methods either integral orexternal to the wholebuilding energy simulation software will be used to translate equipment thermal loads into equipment energy consumption taking account the part-load operation. Different commercial unitaryAC and HP efficiency levels will be input and simulated yielding energy consumption results by building type and climate location.

The Departmentseeks stakeholder input on the above andothersources oj data concerning 

# u.s. commercial buildingstockcharacteristicsJor energy-relatedmodelingpurposes. Doyou agree with the use ojthese tools?

The simulations also produce hourly (or sub-hourly) electricity load shapes, which 

### will be used in estimating peak load impacts (described in Section 14) ofequipment efficiency improvements above the base case. Togetherwith electricity tariffs this information 

### will generate operating costs forthe lifecycle cost analysis in Section 8.

Commercial Unitary AC & HP 26 13 June 2001 Framework DocwnentThe Department seeks input regarding how to address certain building modeling analysis issues for commercial unitary AC and HPs for determining energy savings. Economizer Use: Buildings with commercial unitary AC and HPs are likely to use economizers that provide cooling independent ofthe efficiency ofthe equipment. How shouldtheDepartment include in the analysisthe cooling providedby economizers? What assumptionsshouldbe madein modeling the equipment regardingthe use of, andcontrol strategyappliedto, economizers? Oversizing: Commercial unitary AC and HPs may be oversized to allow for growth, which affects the runtime, energy performance, and latent heat removal capability. What assumptionsshouldbe made about how equipmentissized in orderto addressit correctlyin the analysis from both an energyand firstcost impact? Fan Static Pressure: Due to thevaried ductwork designs for various commercial buildings the fan staticpressures will vary significantly. This will impact energy use and performance ofthe equipment. Whatassumptionsshouldbe made regardingtypicalduct designsin orderto effectively accountforfanenergy use? Ventilation Air: Supply fans oncommercial unitary AC and HPs generally operate continuously when the building is occupied to provide ventilation air. How shouldenergyuse ofthesupply fans operatingonly when ventilationis required(ratherthan heatingorcooling)be excluded from the energy use of the heatingandcoolingequipment?



### 6. Manufacturing Costs In addition to being used in conjunction with the engineering analysis, manufacturing costs are needed for the manufacturer impact analysis and are used as one means ofdetermining retail prices.

Commercial Unitary AC &HP 27 13 June 2001 Framework Document The Department seeks input regarding how to address certain building modeling analysis issues for commercial unitary AC and HPs for determining energy savings. EconomizerUse: Buildings with commercial wUtal)' AC and HPs are likely to use economizers 

### thiu provide cooling independent ofthe efficiency ofthe equipment. How should theDepartment include in the analysis the coolingprovidedby economizers? What assumptions shouldbe made in modeling the equipment regarding the use of, andcontrolstrategyapplied to, economizers? 

### Oversizing: Commercial unital)'AC and HPs may be oversized to allow for growth. which affects the nmtime, energy performance, and latent heat removal capability. What assumptions shouldbe made about how equipment is sized in order to address it correctly in the analysis from both an energy andfirstcost impact? Fan Static Pressure: Due to the varied ductwork designs for various commercial buildings the fan static pressures will vary significantly. This will impactenergy use and performance ofthe equipment. What assumptions shouldbe made regarding typicalduct designs in order to effectively account for fan energy use? Ventilation Air: Supply fans on commercial unital)'AC and HPs generally operate continuously when the building is occupied to provide ventilation air. Howshouldenergy use of the supply fans operating only when ventilation is required (rather than heating orcooling) be excluded from the energy use of the heating andcooling equipment?



### 6. Manufacturing Costs In addition to being used in conjunction with the engineering analysis, manufacturing costs are needed for the manufacturerimpact analysis and are used as one means ofdetennining retail prices.

Commercial Unitary AC & HP 

### 27 13 June 200! Framework DocumentThe Department intends to ask manufacturers to participate in the development ofcost estimates. The Department prefers to develop its own cost estimates in cooperation with the manufacturers. The Department recognizes that cost estimates developed using the design options approach may need to be supplemented for the manufacturer impact analysis in order to account for different design strategies. The Departmentwelcomes suggestionsandcomments concerningthe development of manufacturingcost information.

6.1 Characterizing Uncertainty DOE intends to place a range around the average manufacturing cost ofincorporating various design options or achieving various efficiency levels. This cost range will be used in the industry cashflow analysis and could also be utilized to generate retail prices for the consumer life-cycle cost analysis. The Department proposes that the data collection method incorporate cost estimates bound by a range. Forexample, manufacturers could provide their most likely point estimate and a range describing the lowest and highest values they consider likely (for each design option or efficiency level). Those values could be used to construct either a triangular or bounded normal distribution forcosts. Similar approaches were used recently for the design-option approach (residential water heaters) and the efficiency-level approach (residential clothes washers). The individual manufacturer submittals would be aggregated using a spreadsheet tool and reported back to DOE aspercentile values. The entire cost distribution would then be used in the calculation oflife-cycle costs. Ifreverse engineering methodologies are used, ranges can be estimated for each ofthe reverse engineering model's input parameters (e.g., labor cost, plant size) to determine theireffect on the cost estimates.

TheDepartmentseeks comment on these approachesto quantifyingthe uncertaintyin our manufacturingcost estimates.

6.2 Variabilityin Costs between Manufacturers The Department is committed to assessing the differential impacts ofstandards on different manufacturers. The detailed sub-group manufacturing impact analysis will entail calculating cashflows
Commercial Unitary AC &HP 28 13 June 2001 Framework Document --------------------

The Department intends to ask manufacturers"to participate in the development ofcostestimates. The Department prefers to develop its own cost estimates in cooperation with the manufacturers
.. The Department recognizes that cost estimates developed using the design options approach may need to be supplemented for the manufacturerimpact analysis in orderto accOlmt for different design strategies. The Department welcomes suggestions andcomments concerning the development oj manufacturing cost information.

6.1 Characterizing Uncertainty DOE intends to place a range around the average manufacturing cost ofincorporating various design options orachieving various efficiency levels. This costrange will be used in the industry cashflow analysis and could also be utilized to generate retail prices for the consumer life-cycle cost analysis. The Department proposes that the data collection method incorporate cost estimates bound by a range. For example, manufacturers could provide theirmost likely point estimate and arange describing the lowest and highest values they consider likely (for each design option orefficiency level). Those values " could be usedto construct eitheratriangularorbounded normal distribution for costs. Similar approaches were used recently for the design-option approach (residential water heaters) and the efficiency-level approach (residential clothes washers). The individual manufacturer submittals would be aggregated using a spreadsheet tool and reported back to OOE as percentile values. The entire cost distribution would then be used in the calculation oflife-cycle costs. Ifreverse engineering methodologies are used, ranges can be estimated for each ofthe reverse engineering model's input parameters (e.g., laborcost, plant size) to determine theireffect on the cost estimates.

The Departmentseeks comment on these approaches to quantifying the uncertainty in our manufacturingcost estimates.

6.2 Variabilityin Costs between Manufacturers The Department is committed to assessing the differential impacts ofstandards on different manufacturers. The detailed sub-group manufacturing impact analysis will entail calculating cashflows

Commercial Unitary AC & HP 

### 28 13 June 2001Framework Docwnent

### separately foreach class ofmanufacturer defined. Ifappropriate, manufacturer impact analysis will be performed for individual firms.

Manufacturing costs submitted to.DOE for appliance standard analyses have demonstrated large variability. TheDepartment prefers using disaggregated cost data from all manufacturers. Ifthe efficiency-level approach is used, disaggregated company-specific cost information developed for the engineering analysis can be used to perform analysis for each manufacturer ormanufacturer subgroup. The method to be used in assessing manufacturer impacts will be the subject ofan analysis workshop tobe held after publication ofthe ANOPR. The Department is considering use ofthe Government Regulatory Impact Model (GRIM), which isin common use forother equipment. TheDepartmentseeks comment on the approachof groupingthe manufacturersinto subgroups. What criteria shouldbe usedtodeterminethesesub-groups?

63 ProprietaryDesigns The Department will consider in its analysis all design options that are commercially available or present in a working prototype, including proprietary designs. Proprietary designs will be fully considered in the Department's engineering and economic analyses.

The Department is sensitive to manufacturer concerns regarding proprietary designs and will ensure that provisions are made to maintain the confidentiality ofany proprietary data submitted by manufacturers. This information will provide input to the competitive impacts assessment and other economic analyses. 

### Are there proprietary designswhich the Departmentshouldconsiderfor commercialunitary AC and HPs? Ifso, whattype of approachesshouldbe used to acquirethe costdata necessaryforevaluatingthese designs?

Commercial Unitary AC &HP 29 13 June 2001 Framework Document

separately for each class ofmanufacturer defined. Ifappropriate, manufacturerimpact analysis 

### will be performed for individual finns.

Manufacturing costs submitted to.DOE for appliance standard analyses have demonstrated large variability. The Departmentprefers using disaggregated cost data from all manufacturers. Ifthe efficiency-level approach is used, disaggregated company-specific cost infonnation developed forthe engineering analysis 

### can be used toperform analysis for eachmanufacturer or manufacturer subgroup. The method to be used in assessing manufactmerimpacts 

### will be the subject ofan analysis workshop to beheld afterpublication ofthe ANOPR. The Department is considering use ofthe Government Regulatory Impact Model (GRIM), which is in common use for other equipment. The Departmentseeks comment on the approach oj grouping the manuJacturers into subgroups. What criteria shouldbe usedto determine these sub-groups?



### 63 Proprietary Designs The Department will considerin its analysis all design options that are commercially available orpresent in a working prototype, including proprietary designs. Proprietary designs 

### willbe fully considered in the Department's engineering and economic analyses.

The Department is sensitive to manufacturer concerns regarding proprietary designs and will enswe thatprovisions are made to maintain the confidentiality ofany proprietary data submittedby manufacturers. This infonnation will provide input to the competitive impacts assessment and other economic analyses. Are thereproprietarydesigns which the Departmentshouldconsider Jorcommercial unitary A

### CandHPs? 

## If so, what type ojapproaches shouldbe used to acquire the costdata necessary Jor evaluatingthese deSigns?

Commercial Unitary AC & HP 

### 29 ) 3 June 200) Framework Document

### 7. Prices How standards-related manufacturing costs and associated margins are passed through from manufacturers to consumers has an impact on both consumers and manufacturers. Consumer and manufacturer economics are linked. Forthis reason, retail prices used for the life-cycle cost analysis need to be reconciled with manufacturer costs developed in theengineering analysis. Although the term "retail" isused in this discussion, it isclear that for most ofthese products there is seldom an observable retail price since the equipment isusually sold as part ofan installed Heating Ventilating and Air Conditioning (HVAC) system. In performing an economic analysis todetermine whether a more stringent standard isjustified, information concerning how the incremental price to the enduser changes in response to a change in manufacturing cost is important. 7.1 Retail Prices At the pre-ANOPR stage, a consumer life-cycle cost curve, based on a distribution ofretail prices, is used to perform an initial selection ofpotential standards levels. Retail prices are needed forthe ASHRAE/IESNA Standard 90.1-1999 baseline level, absent new standards, and for all efficiency levels tobe considered. Several approaches are possibleto obtain these retail prices. Potential approaches include: 1)conducting a survey ofexisting prices on the market at various points along the distribution chain, to the extent that they can be specifically identified; 2) surveying manufacturers, distributors, and contractors to better understand typical price-setting behavior when basic input costs significantly change; 3)applying various markups (e.g., manufacturer, distributor, and dealer/contractor markups) over variable manufacturing costs. With regard to the third approach, in June 2000, the Department released a supplemental analysis that employed publicly available data (from the Census Bureau and several trade organizations) to statistically estimate the distributor and dealer markups forresidential central AC and HPs (reference: EstimationoftheDistributor/Wholesaler and Dealer/Contractor Markupson Incremental Central ACandH-P Costs, US-DOE,June2000). That study concluded thatboth distributors(/wholesalers) and dealers(/contractors) were likely to pass through changes in equipment costs to asmaller degree than changes in labor and other operating costs. The markups on incremental equipment cost were estimated to be 1.09 and 1.27 for distributors and dealers, respectively. Since the distribution channels for small unitary commercial equipment are often similar to this residential equipment, this methodology may be a reasonable starting point for deriving markups forthis type of equipment. The Department believes that there isvalue in using various assumptions about costpass-through that will be reflected in price forecast approaches. The output ofthis analysis can be a table describing retail prices for each possible efficiency level which assumes that each level represents a new minimum
Commercial.Unitary AC &HP 30 13 June 2001 Framework Document



### 7. Prices How standards-related manufacturing costs and associated margins are passed through from manufacturers to consumers has an impact on Ix>th consumers and manufacturers. Consumer and manufacturereconomics are linked. Forthis reason, retail prices used for the life..cycle cost analysis need to be reconciled with manufacturer costs developed in the engineering analysis. Although the tenn "retail" is used in this discussion, it is clearthat for most ofthese products there is seldom an observable retail price since the equipment is usually sold as part ofan installed Heating Ventilating and Air Conditioning (HV AC) system. Inperforming an economic analysis to determine whethera more stringent standard isjustified, information concerning how the incremental priceto the enduserchanges in response to a change in manufacturing cost is important. 7.1 Retail Prices At the pre-ANOPR stage, a consumer life-cycle cost curve, based on a distribution ofretail prices, is used to perform an initial selection ofpotential standards levels. Retail prices are needed for the ASHRAEJIESNA Standard 90.1-1999 baseline level, absent new standards, and for all efficiency levels to be considered. Several approaches are possible to obtain these retail prices. Potential approaches include: I) conducting a survey ofexisting prices on the market at various points along the distribution chain, to the extent that they can be specifically identified; 2) surveying manufacturers, distributors, and contractors to betterunderstand typical price-setting behavior when basic input costs significantly change; 3) applying various markups (e.g., manufacturer, distributor, and dealer/contractor markups) over variable manufacturing costs. With regard to the third approach, in June 2000, the Departmentreleased a supplemental analysis that employed publicly available data (from the Census Bureau and several trade organizations) to statistically estimate the distributor and dealermarkups for residential central ACand HPs (reference: Estimation

## 0/ the Distributor/WholesalerandDealer/ContractorMarkups on Incremental CentralACandHP Costs, US-DOE, June 2000). lbat study concluded that both distributors(/whoIesalers) and dealers(/contractors) were likely to pass through changes in equipment costs to a smallerdegree than changes in labor and otheroperating costs. The markups onincremental equipment cost were estimated to be 1.09 and 1.27 for distributors and dealers, respectively. Since the distribution channels for smalI unitary commercial equipment are often similarto this residential equipment, this methodology may 

### be a reasonable starting point for deriving markups for this type of equipment. The Departmentbelieves that there is value in using various assumptions about costpass-through that will be reflected in price forecast approaches. The output ofthis analysis can 

### be a table describing retail prices for each possible efficiency level which assumes that each level represents a new minimum
Commercial,Unitary AC & HP 30 13 June 2001 Framework Document

### efficiency standard. Consistent with theprocess rule, and building on the estimates generated by the various approaches, new retail prices would be described within a range ofuncertainty.

The Department is considering using all the approaches described above to generate estimates of future prices and intends to conduct uncertainty analysis ofthe range generated. The specific methodologies and preliminary results willbe submitted to stakeholders for review. The aboveapproachesare proposedin an effort to answerthe following question: How shouldtheDepartmentcollectaccurateequipmentcosts andprices forcommercialequipment thatis not usuallysoldin a retailcommodityfashion? Are thereany nuanceswe shouldkeep in mindthatmay distortthe results from oneapproachversus another? TheDepartment welcomes suggestionsandcomments concerninghow estimatesoffuture retail pricescan be bestdeveloped.

7.2 Manufacturer Prices Manufacturer prices are used during the industry cash flow phase ofthe manufacturer impact analysis (Section 13.2). These can be estimated using the same techniques as retail prices, but can also draw directly on information provided by manufacturers or distributors or tracked by organizations such as the U.S. Census Bureau orprivate market reports.

TheDepartment welcomessuggestionsandcommentsconcerning estimatesof current andfuture manufacturer prices.



### 8. Life-Cycle Cost and Payback Analysis The effects ofincreased efficiency standards on a consumer ofa product includes a change in operating expense (usually decreased) and achange in purchase price (usually increased). In rulemakings for otherproducts, the Department has analyzed the net effect on consumers by calculating the life-cycle cost using theengineering performance data for energy consumption and equipment retail prices which canbe derived in a number ofways (as described in Section 7.1). Inputs tothe Life Cycle Cost (LCC) calculation include the installed cost to the consumer (purchase price plus installation cost),
Commercial Unitary AC &HP 31 13 June 2001 Framework Document

efficiency standard. Consistent with the process rule, and building onthe estimates generated by the various approaches, new retail prices would be described within arange ofuncertainty.

The Department is considering using all the approaches described above to generate estimates of future prices and intends to conduct uncertainty analysis ofthe range generated. The specific methodologies and preliminary results will be submittedto stakeholders for review. The above approaches areproposedin an effort to answer thefollowing question: How shouldthe Department collect accurate equipment costs andprices for commercialequipment that is not usuallysoldin a retail commodity fashion? Are there anynuances'we shouldkeep in mindthat maydistort the results from one approach versuS another? The Department welcomes suggestions andcomments concerning how estimates offuture retailprices can be best developed.

7.2 Manufacturer Prices Manufacturerprices are used during the industry cash flow phase ofthe manufactW"erimpact analysis (Section 13.2). These can be estimated using the same techniques as retail prices, but can also draw directly on information provided by manufacturers or distributors ortracked by organizations such as the U.S. Census BlU'eau or private market reports.

TheDepartmentwelcomessuggestionsandcommentsconcerningestimatesof currentand future manufacturerprices.



### 8. Life-Cycle Cost and Payback Analysis Theeffects ofincreased efficiency standards on a consumer ofaproduct includes a change in operating expense (usually decreased) and a change inpurchase price (usually increased). In rulemakings for otherproducts, the Departmenthas analyzed the net effect on consumers by calculating the life-cycle cost using the engineering perfonnance data for energy consumption and equipment retail prices which can be derived in a number ofways (as described in Section 7.1). Inputs to the Life Cycle Cost (LCC) calculation include the installed cost to the consumer(purchase price plus installation cost),

Commercial Unitary AC & HP 31 13 June 2001 Framework Document

### operating expenses (energy and maintenance costs), lifetime ofthe appliance, and a discount rate. In the ANOPR stage, the life-cycle cost analysis will be conducted using typical values to reflect conditions in the field forproduct price and life, energy costs, energy usage, and discount rates. The detailed impact calculation, conducted after theANOPR, will have a comprehensive assessment of impacts on sub-groups ofconsumers as described in Section 12. In the ANOPR stage, uncertainty analysis will be conducted on several ofthe typical values described. During the post-ANOPR consumer analysis (Section 12.), the Department will evaluate additional parameters not included in the pre-ANOPR stage . Based on the results ofthe life-cycle cost analysis, DOE will select candidate standard levels for analysis. The range ofcandidate standard levels will typically include the combination ofdesign options or efficiency levels with the lowest life-cycle cost; aswell as other levels yet to be determined by the Department. In analyzing life-cycle cost, itis important to consider regional impacts due to climate and energy price variability. Because electricity tariffs for commercial customers vary widely and there are no publicly-available centralized sources for these data, the Department has initiated a collection of representative samples ofthese tariffs for analysis ofoperating costs. Tariffs will be applied to end-use load-shapes developed from the building energy simulation analysis in Section 5.6 to generate representative operating costs. With this approach, regional comparisons can be made on the operating cost, and in turn life-cycle cost, between different efficiency levels ofnew equipment.

Commercial Unitary AC &HP 32 13 June 2001 Framework Document

operating expenses (energy and maintenance costs), lifetime ofthe appliance, and a discountrate. In the ANOPR stage, the life-cycle cost analysis will be conducted using typical values to reflect conditions in the field for productprice and life, energy costs, energy usage, and discount rates. The detailed impact calculation, conducted after the ANOPR, will have a comprehensive assessment of impacts on sub-groups ofconstuners as described in Section 12. Inthe ANOPR stage, uncertainty analysis will be conducted on several ofthe typical values described. During the post-ANOPR consumer analysis (Section 12.), the Department will evaluate additional parameters not included 

### in the pre-ANOPR stage. Based on the results ofthe life-cycle cost analysis, DOE will select candidate standard levels for analysis. Therange ofcandidate standard levels will typically include the combination ofdesign options orefficiency levels with the lowest life-cycle cost; as well as other levels yet to be detennined by the Department. In analyzing life-cycle cost, it is important to considerregional impacts due to climate and energy price variability. Because electricitytariffs for commercial customers vary widely and there are no publicly-available centralized sources for these data, the Department has initiated a collection of representative samples ofthese tariffs for analysis ofoperating costs. Tariffs will be applied to end-use load-shapes developed from the building energy simulation analysis in Section 5.6 to generate representative operating costs. With this approach, regional comparisons can be made on the operating cost, and in twn Iife-cycle cost, between different efficiency levels ofnew equipment.

Commercial Unitary AC & HP 32 13 June 2001 Framework Docwnent

### For commercial unitary AC and unitary HP itwill be necessary to determine input values forseveral variables. The following discusses some ofthese variables. Retail Prices: The determination ofprices isdescribed in Section 7.1. Electricity Prices: As discussed above, the Department is considering surveys to establish electricity prices. Projections offuture electricity prices for the life-cycle cost analysis will use high and low projections ofnational average electricity prices to commercial customers. Thepresent Energy Information Administration (EIA) Annual Energy Outlook will be used as the default source ofprojections for this uncertainty analysis. The Department isconsidering alternative methods offorecasting future electricity prices including methods for determining marginal electricity rates. Discount Rate: Thecalculation ofconsumer life-cycle costs requires the use ofan appropriate discount rate. The discount rate used in such calculations isintended to approximate the cost ofcapital ofthose who will make the required investment in higher-efficiency equipment resulting from an amended standard and who would also, presumably, benefit from the resulting savings inenergy expenses. Conceptually, the cost ofcapital reflects all ofthe funding sources available to the building owner, including debt financing and retained profits (owner's equity). Consequently, the most appropriate discount rate depends on the characteristics ofthe businesses, institutions, or other parties affected by an amended standard. For the recent commercial ballast rulemaking, the Department used a (real or inflation-adjusted) discount rate of 8%, with sensitivities performed at4% and 15%. Forthe commercial unitary AC andHP analysis, the Department anticipates deriving a distribution ofconsumers' actual financing and opportunity costs to develop appropriate discount rates forthe purchase ofcommercial unitary AC and HP. Are there recently-conductedempiricalstudiesthathaveattemptedto estimatethe distributionof discountrates(or paybackcriteria)usedby buildingowners in evaluatingenergy conservation investments orotherinvestments withsimilarrisks? Maintenance. Service, and Installation Costs: The Department will consider expected changes to maintenance, service, and installation costs for commercial unitary AC and HP, ifapplicable, such as new curbing required forrooftop equipment inboth new and replacement markets. Tax Impacts: The Department will consider tax implications ofequipment purchases. Lifetime: In the original ASHRAE analysis ofthese products, a 15-year lifespan was suggested basedon estimates fortypical unitary equipment. The same 15-year lifespan was used in the recent DOE Screening Analysis and is proposed to be used in this analysis. Is thisan appropriate lifetime for commercialunitaryACandHP? Are thereotherfactorsthe

Commercial Unitary AC &HP 33 13 June 2001 Framework Document For commercial unitary AC and unitary HP it will be necessary to detennine input values for several variables. The following discusses some ofthese variables. Retail Prices: The detennination ofprices is described in Section 7.1. Electricity Prices: As discussed above, the Department is considering surveys to establish electricity prices. Projections offuture electricity prices forthe life-cycle cost analysis will use high and low projections ofnational average electricity prices to commercial customers. Thepresent Energy Infonnation Administration (EIA) Annual Energy Outlook will be used as the default source ofprojections for this uncertainty analysis. The Department is considering alternative methods offorecasting future electricity prices including methods for determining marginal electricity rates. DiSCOunt Rate: The calculation ofconswner life-cycIe costs requires the use ofan appropriate discount rate. The discoWlt rate used in such calculations is intended to approximate the cost ofcapital ofthose who will make thc required investment in higher-efficiency equipmentresulting from an amended standard and who would also, preswnably, benefit from the resulting savings inenergy expenses. Conceptually, the cost ofcapital reflects all ofthe funding sources avaiIable to the building owner, including debt financing and retained profits (owner's equity). Consequently, the most appropriate discoWlt rate depends on the characteristics ofthe businesses, institutions, or otherparties affected by an amended standard. Forthe recent commercial ballast ruIemaking, the Departmentused a (real orinflation-adjusted) discoWlt rate of 8%, with sensitivities performed at 4% and 15%. Forthe commercial unitary AC and

### HP analysis, the Department anticipates deriving adistribution ofconsumers' actual financing and opportunity coststo develop appropriate discount rates for the purchase ofcommercial unitary AC and HP. Are there recently-conductedempiricalstudies that have attemptedto estimate the distribution of discount rates (orpaybackcriteria) usedby building owners in evaluating energy conservation investments orother investments with similar risks? Maintenance. Service. and Installation Costs: The Department will considerexpected changes to maintenance, seIVice, and instaIlation costs for commercial unitary AC and HP, ifapplicable, such as new ctrrhing required for rooftop equipment in both new and replacement markets. 

### Tax Impacts: The Department 

### will considertax implications ofequipmentpurchases. 

### Lifetime: Inthe original ASHRAE analysis ofthese products, a IS-year lifespan was suggested based on**estima~s** for typical unitary equipment. The same IS-year lifespan was used 

### in the recent DOE Screening Analysis and is proposed to be used 

### in this analysis. Is this an appropriate lifetime for commercial unitaryACandHP? Are there other factors the

Commercial Unitary AC & HP 33 13 June 2001 Framework Document

### 9. Shipments For all candidate standards levels, shipment forecasts are required in order to calculate the national benefits ofstandards (energy savings and net present value) and to calculate the future cashflows of manufacturers. DOE is considering the use ofthree approaches to conduct these forecasts including: I) an approach to derive shipments based on an analysis ofkey market drivers forthe particular product; 2) larger models to consider additional variables (i.e., retirement functions, price elasticities, etc.), and, 3) applying the expertjudgment of rulemaking participants. In order to evaluate the various impacts ofcandidate energy conservation standards, the Department must develop a base case to compare against. The base case is designed to depict what would happen to energy consumption and costs over time ifDOE does not adopt energy conservation standards. The base case is predicted on commercial unitary AC and HP shipments, the mix ofefficiencies sold in the absence ofstandards and how thatmix would change over time. To determine thebase case, the Department needs data on commercial unitary AC and HP shipments, the market shares ofthe different efficiency levels offered foreach A method, termed the accountingmodel, based on the accounting ofnew building construction and historical rates ofownership (saturation rates), is proposed. This method has the distinct advantage of separately accounting for units installed in new construction and existing buildings. More importantly, product saturation rates can be expressed as a function ofconsumer price and operating cost to capture their impact on future shipments. In expressing saturation rates in thismanner, consumer price and operating cost elasticities can be developed to calibrate forecasts to historical shipments. Primary drawbacks ofthis method include: 1)saturations ofunits in new and stock buildings must be forecasted; 2) building construction must also be forecasted, although theAnnualEnergyOutlook (AEO) and othersources do provide readily available forecasts; and 3) retirement ofunits mustbe based upon assumptions regarding lifetimes. The shipment model used fordeveloping base case and standards cases forecasts can incorporate a variety offeatures ofthe product market in order to provide more detailed predictions andaccounting. These features may include: Market segments: New construction market, early replacement market, regular replacement market, and remodeling market; Distinction between purchasers and owners when such a distinction exists; Consumer responsiveness to purchaseprice, operating costs, and business income elasticities; Eligible market share and actual saturation rates; and Multiple scenarios ofefficiency shifts.

Commercial Unitary AC &HP 34 13 June 2001 Framework Document



### 9. Shipments For all candidate standards levels, shipment forecasts are required in orderto calculate the national benefits ofstandards (energy savings and netpresent value) and to calculate the future cashflows of manufacturers. DOE is considering the use ofthree approaches to conduct these forecasts including: I )an approach to derive shipments based on an analysis ofkey market drivers for the particular product; 2) larger models to consider additional variables (i.e., retirement functions, price elasticities, etc.), and, 3) applying the expertjudgment of rulemaking participants. In orderto evaluate the various impacts ofcandidate energy conservation standards, the Department must develop a base case to compare against. The base case is designed to depict what wouldhappen to energy consumption and costs overtime ifDOE does not adopt energy conservation standards. The base case is predicted on commercial unitary AC and HP shipments, the 

### mix ofefficiencies sold in the absence ofstandards and how that mix wouldchange overtime. To determine the base case, the DePartment needs data on commercial unitary AC and HP shipments, the market shares ofthe different efficiency levels offered for each Amethod, termed the accounting model, based on the accounting ofnew building construction and historical rates ofownership (saturation rates), is proposed. 

### This method has the distinct advantage of separately accounting for units installed in new construction and existing buildings. More importantly, product saturation rates can be expressed as a function ofconsumerprice and operating cost to capture their impact on future shipments. In expressing saturation rates in this manner, consumerprice and operating cost elasticities can be developed to calibrate forecasts to historical shipments. Primary drawbacks ofthis method include: 1) saturations ofunits in new and stockbuildings mustbe forecasted; 2) building construction must also be forecasted., although theAnnualEnergy Outlook (AEO) and other sources do provide readily available forecasts; and 3) retirementofunits must be based upon assumptions regarding lifetimes. The shipment model used for developing base case and standards cases forecasts can incorporate a variety offeatures ofthe product market in orderto provide more detailed predictions and accounting. These features may include: Market segments: New construction market, early replacement market, regular replacement market, and remodeling market; Distinction between purchasers and owners when such a distinction e,osts; Consumerresponsiveness to purchase price, operating costs, and business income elasticities; Eligible market share and actual satwation rates; and Multiple scenarios ofefficiency shifts.

Commercial Unitary AC & HP 34 13 June 2001 Framework Document

### In conducting a base case shipments forecast for commercial unitary AC and HP, historical shipments data on the distribution ofefficiencies ofthese equipment are required. Whatsources for these dataareavailable?



### 10. Preliminary National Impacts Analysis In Section 8.0, the life-cycle cost and energy savings for individual consumers is estimated. In this section, aprelminary assessment ofthe aggregate impacts at the national level is conducted. Measures ofimpact to be reported include the netpresent value oftotal consumer life-cycle costs, national energy savings, and national employment. 10.1 Inputsto Forecasts Analyzing impacts ofFederal energy-efficiency standards requires a comparison ofprojected U.S. energy consumption with and without new more stringent standards beyond ASHRAE/IESNA Standard 90.1-1999 which are referred to as base case projections. The forecasts contain projections ofunit energy consumption ofnewequipment, annual equipment shipments and the price ofpurchased equipment. The derivations ofthe base case forecasts are discussed in Section 9. Approaches to determining retail prices are described in Section 7.1. 10.2 Calculation of Energy Savings The Department intends tocalculate national energy consumption for each yearbeginning with the expected effective date ofthe standards. National energy consumption by fuel type will be calculated for the base case and each candidate standards level. This calculation may be done by one or more alternative approaches, including: 1)the use ofa simple spreadsheet to multiply annual shipment forecasts by unit energy savings; 2) the use ofcommercial sector energy models such as the Electric Power Research Institute's (EPRI) COMMEND, or 3)the Energy Information Administration's National Energy Modeling System (NEMS).

Commercial Unitary AC &HP 35 13 June 2001 Framework Document In conducting a base case shipments forecast for commercial unitary AC and HP, historical shipments data on the distribution ofefficiencies ofthese equipment are required. What sources for these data are available?



### 10. Preliminary National Impacts Analysis In Section 8.0, the life-cycle cost and energy savings for individual consumers is estimated. Inthis section, a preliminary assessment ofthe aggregate impacts at the national level is conducted. Measures ofimpact to be reported include the net present value oftotal consumer life-cycle costs, national energy savings, and national employment. 

### 10.1 Inputs to Forecasts Analyzing impacts ofFederal energy-efficiency standards requires a comparison ofprojected U.S. energy consumption with and without new more stringent standards beyond ASHRAElIESNA Standard 90.1-1999 which are referred to as base case projections. The forecasts containprojections ofunitenergy consumption ofnewequipment, annual equipment shipments andthe price ofpurchased equipment. The derivations ofthe base case forecasts are discussed in Section 9. Approaches to determining retail prices are described in Section 7.1. 

### 10.2 Calculation ofEnergy Savings The Department intends to calculate national energy consumption for eachyearbeginning with the expected effective date ofthe standards. National energy consumption by fuel type will be calculated for the base case and eachcandidate standards level. This calculation may be done by one ormore alternative approaches, including: 1) the use ofa simple spreadsheet to multiply annual shipment forecasts byunit energy savings; 2) the use ofcommercial sector energy models such as the Electric PowerResearch Institute's (EPRI) COMMEND, or3) the Energy Information Administration's National Energy Modeling System (NEMS).

Commercial Unitary AC & HP 

### 35 13 June 200] Framework Doc"ument

### In response to comments by some stakeholders who asked for a simple, transparent model, LBNL has developed the National Energy Savings (NES) spreadsheets. NES is expected to provide a credible stand-alone forecast ofnational energy savings and net present value for commercial unitary AC and HP. The Department has prepared spreadsheet models for otherproducts to forecast energy savings and to demonstrate how the growth in efficiency can be accounted for over time. Although these models are specific to each product, their general structure canbe applied to commercial unitary AC and HP. Are thereany othermodels thatshouldbe considered as alternativesto these?



### 10.3 Net Present Value and Payback The national net present value ofthe candidate standards levels is calculated in conjunction withthe national energy consumption. Annual energy expenditures arecalculated from annual energy consumption by incorporating forecasted energy prices. The shipment and energy efficiency distribution forecasts from Section 9 are used. Annual equipment expenditures are calculated from the price per unit times the forecasted shipments. The difference between abase case and a standards case scenario gives the national energy bill savings and increased equipment expenditures in dollars. Thedifference each year between energy bill savings minus increased equipment expenditures is the net savings (if positive) or net costs (ifnegative). These annual values are discounted to the present time and summed to give anet present value.
11. Revised Engineering, LCC, and NES Analysis Based on consideration ofthe comments received for the ANOPR, DOE will make the necessary changes tothe analysis and candidate standards levels. Ifmajor changes are required at this stage, stakeholders will be given an opportunity to review therevised analysis. IfASHRAE proposes an addendum to its Standard 90.1-1999 at any point in the rulemaking process, and DOE adopts the efficiency level in the addendum to ASHRAE/IESNA Standard 90.1-1999 efficiency levels, or ifDOE determines that the amended ASHRAE/IESNA Standard 90.1 level as revised in October 1999 is appropriate, DOE will not conduct remaining analyses, and will publish a final rule.

Commercial Unitary AC &HP 36 13 June 2001 Framework Document In response to comments by some stakeholders who asked for a simple, transparent model, LBNL has developed the National Energy Savings (NBS) spreadsheets. NES is expected to provide a • credible stand-alone forecast ofnational energy savings and net present value for commercial unitary AC and HP. The Department has prepared spreadsheet models for otherproducts to forecast energy savings and to demonstrate howthe growth 

### in efficiency can be accounted for overtime. Althoughthese models are specific to each product, their general structure can be applied to commercial unitary AC and HP. Are there any othermodels that should be considered as alternatives to these?

10.3 Net PresentValue and Payback The national net present value ofthe candidate standards levels is calculated in conjunction with the national energy consumption. Annual energy expenditures are calculated from annual energy conswnption by incorporating forecasted energy prices. The shipment and energy efficiency distnbution forecasts from Section 9 are used. Annual equipment expenditures are calculated from the priceper unit times the forecasted shipments. The difference between abase case and a standards case scenario gives the national energy bill savings and increased equipment expenditures in dollars. The difference each yearbetween energy bill savings minus increased equipmentexpenditures is the net savings (if positive) ornet costs (ifnegative). These annual values are discounted to the present time and swruned to give anet present value.


### 11. Revised Engineering, LCC, and NES Analysis Based on consideration ofthe comments received for the ANOPR, DOE will make the necessary changes to the analysis and candidate standards levels. Ifmajor changes are required at this stage, stakeholders

## will be given an opportunity to review the 

### revised analysis. IfASHRAE proposes an addendwn to its Standard 90.1-1999 at any point in the rulemaking process, and OOE adopts the efficiency level in the addendwn to ASHRAEJIESNA Standard 90.1-1999 efficiency levels, or ifDOE determines that the amended ASHRAFJIESNA Standard 90.1 level as revised 

### in October 1999 is appropriate, OOE will not conductremaining analyses, and will publish a final rule.

Commercial Unitary AC & HP 

### 36 13 June 200I Framework DocwnentCommercial Unitary AC &HP 37 13 June 2001 Framework Document Commercial Unitary AC & HP 37 13 June 2001 Framework Document

### 12. LCC Sub-group Analysis In this section, consumer impacts are analyzed by dividing consumers into sub-groups and accounting for variations in key inputs tothe LCC analysis, and by inviting consumer and bill-payer participation. A consumer sub-group entails a subset ofthe population that is likely, forone reason or another,to be impacted disproportionally by new standards. The purpose ofa sub-group analysis is to determine the extent ofthis disproportional impact. DOE will work with stakeholders early in the process to identify any sub-groups for this consideration. In comparing potential impacts on the different consumer sub-groups, the Department will evaluate variations in regional energy prices, variations in energy use and variations in installation costs that might affect the net present value ofa standard to consumer sub-groups. To the extent possible, DOE will obtain estimates ofthe variability in each input variable and consider this variability inits calculation of consumer impacts. The variability in each input variable and likely sources ofinformation will be discussed with stakeholders.

DOE intends to consider the impact ofany new efficiency regulations on consumer sub-groups. In the case ofcommercial unitary AC and HP products, some possible sub-groups DOE may choose to consider are: Owner-occupied vs. tenant-leased buildings. Public sectorbuildings, especially schools, hospitals, etc. What consumersub-groupsareappropriate?



### 13. Manufacturer Impact Analysis Thepolicies outlined in the Department's "process rule" (61 FR 36974, July 15, 1996) called for substantial revisions to the analytical framework to be used in performing manufacturer impact analysis. The Department held a public workshop on March 11 and 12, 1997, todescribe and obtain comment on a new generic methodology tobe used inperforming future manufacturing impact analyses of products covered under the National Appliance Energy Conservation Act of 1987 (NAECA). The Department intends to apply thismethodology to other EPCA-related efficiency standards as well, tailoring the methodology foreach rule onthe basis ofstakeholder comments. The analysis ofimpacts on manufacturers is intended to provide the Department with an assessment ofthe impacts that may occur on commercial unitary AC and HP manufacturers. In addition tofinancial impacts, a wide range
Commercial Unitary AC &HP 38 13 June 2001 Framework Document



### 12. 

### LCC Sub-group 

### Analysis In this section, consumerimpacts are analyzed by dividing consumers into sulrgroups and accoWlting for variations in key inputs to the LCC analysis, and by inviting consumer and bill-payerparticipation. A consumer sulrgroup entails a subset ofthe population that is likely, for one reason oranother, to be impacted disproportionally by new standards. The pwpose ofa sub-group analysis is to detennine the extent ofthis disproportional impact. DOE will work with stakeholders early in the process to identifY any sub-groups for this consideration. Incomparing potential impacts on the different consumer sulrgroups, the Department will evaluate variations in regional energy prices, variations in energy use and variations in installation costs that might affect the net present value ofa standard to consumer sub-groups. To the extentpossible, DOE will obtain 

### estimates ofthe Variability in each input variable and considerthis Variability in its calculation of consumerimpacts. The variability in each input variable and likely sources ofinformation will be discussed with stakeholders.

DOE intends to considerthe impact ofany new efficiency regulations on conswner sulrgroups. In the case ofcommercial unitary AC and HP products, some possible sulrgroups DOEmay choose to considerare: Owner-occupied vs. tenant-leased buildings. • Public sectorbuildings, especially schools, hospitals, etc. What consumersub-groups are appropriate?



### 13. Manufacturer Impact 

### Analysis The policies outlined in the Department's "process rule" (61 FR 36974, July 15, 1996) called for substantial revisions to the analytical framework to be used in perfonning manufacturer impact analysis. The Department held apublic workshop on March 11 and 12, 1997, to describe and obtain comment on a new generic methodology to be used in performing future manufacturing impact analyses of products covered Wlder the National Appliance Energy Conservation Act of 1987 (NAECA). The Department intends to apply this methodology to otherEPCA-related efficiency standards as well, tailoring the methodology for each rule on the**b~is** ofstakeholder comments. The analysis ofimpacts on manufacturers is intended to provide the Department with an assessment ofthe impacts thatmay occur on commercial unitaryAC and HP manufacturers. In addition to financial impacts, a wide range
Conunercial Unitary AC & HP 38 13 June 2001 Framework Docwnent

### ofquantitative and qualitative effects may occur following adoption ofa standard that may require changes to the manufacturing practices for these products. These effects will be identified through interviews with manufacturers and other stakeholders. 13.1 Sources of Information forthe ManufacturerImpactAnalysis Many ofthe analyses described earlier provide important information concerning the manufacturer impact analysis. Information includes financial parameters (Section 3.1), manufacturing costs (Section 6), shipments forecasts (Section 9), and price forecasts (Section 7). This information is supplemented with information gathered during interviews with manufacturers. The interviewprocess has akey role in the manufacturer impact analyses, since itprovides an opportunity forinterested parties toprivately express their views on important issues, allowing confidential or sensitive information to be considered in the rulemaking decision. The Department and/or contractors will conduct detailed interviews with as many manufacturers as is necessary to gain insight into the range ofpotential impacts ofstandards. During the interviews, the Department solicits information on the possible impacts ofpotential efficiency levels on manufacturing costs, equipment prices, sales, direct employment, capital assets, and industry competitiveness. Both qualitative and quantitative information is valuable. Interviews will be scheduled well in advance in order to provide every opportunity forkey individuals to be available for comment. Although a written response to the questionnaire is acceptable, an interactive interview process ispreferred because it helps clarify responses and provides the opportunity for additional issues to be identified. Interview participants will be requested to identify all confidential information provided in writing or orally. All information transmitted will be considered, as appropriate, in DOE's decision-making process. However, confidential information will not be made available in the public record. Participants will also be asked to identify all information they wish included in the public record butthat they donot wantto have associated with their interview. This information will be incorporated intothe public record but reported without attribution. DOE and/or contractors will collate the completed interview questionnaires and prepare a summary of the major issues and outcomes. The Department will seek comment on the outcome ofthe interview process. 13.2 IndustryCash Flow Analysis The Industry Cash Flow Analysis relies primarily upon the Government Regulatory Impact Model (GRIM). The Department uses the GRIM to analyze the financial impacts ofmore stringent energy efficiency standards on theindustry thatproduces the products covered by the standard.

Commercial Unitary AC &HP 39 13 June 2001 Framework Document - -----------------

ofquantitative and qualitative effects may occur following adoption ofa standard that may require changes to the manufacturing practices for these products. These effects will be identified through interviews with manufacturers and other stakeholders. 13.1 Sources ofInformation for the ManufacturerImpactAnalysis Many ofthe analyses described earlierprovide important infonnation concerning the manufacturer impact analysis. Infonnation includes fmancial parameters (Section 3.1), manufacturing costs (Section 6), shipments forecasts (Section 9), and price forecasts (Section 7). This infonnation is supplemented with infonnation gathered during interviews with manufacturers. The interviewprocess has akeyrole in the manufacturer impact analyses, since it provides an opportunity for interested parties to privately express theirviews on important issues, allowing confidential orsensitive infonnation to be considered in the rulemaking decision.
. The Department and/or contractors will conduct detailed interviews with as many manufacturers as is necessary to gain insight into the range ofpotential impacts ofstandards. During the interviews, the Department solicits infonnation on the possible impacts ofpotential efficiency levels on manufacturing costs, equipment prices, sales, direct employment, capital assets, and industry competitiveness. Both qualitative and quantitative information is valuable. Interviews will be scheduled well in advance in orderto provide evezy opportunity for key individuals to be available for comment. Although awritten response to the questionnaire is acceptable, an interactive interview process is preferredbecause it helps clarify responses andprovides the opportunity for additional issues to be**iden~ed.** Interviewparticipants will be requested to identifY all confidential infonnation provided in writing or orally. All infonnation transrlli1ted will be considered, as appropriate, in DOE's decision-making process. However, confidential infonnation will not be made available in the public record. Participants will also be asked to identify all infonnation they wish included in the public record butthat they do not want to have associated with their interview. This information will be incorporated 

### into the public record but reported without attribution. DOE and/or contractors will collate the completed interview questionnaires and prepare a summary of the major issues and outcomes. The Department will seek comment on the outcome ofthe interview process. 13.2 Industry Cash Flow Analysis The Industry Cash Flow Analysis relies primarily upon the GovernmentRegulatozy Impact Model (GRIM). The Department uses the GRIM to analyze the financial impacts ofmore stringentenergy efficiency standards on the industry that produces the products covered by the standard.

Commercial Unitary AC & HP 39 13 June 2001 Framework Document

### The GRIM analysis uses a number offactors

- annual expected revenues; manufacturer costs such as costs ofsales, selling and general administration costs; taxes; and capital expenditures related to depreciation, new standards, and maintenance --to arrive at a series ofannual cash flows beginning from the announcement ofthe new standard and continuing for several years after implementation. The results are compared against baseline projections that involve no new standards. The financial impact ofnew standards is then the difference between the two sets ofdiscounted annual cash flows. Other performance metrics such as return on invested capital are also available from the GRIM.

For discussion purposes, the Department will prepare a list ofdefault financial values tobe used in the GRIM industry analysis. These will be calculated by studying publicly available financial. statements ofcommercial unitary AC and HP manufacturers, ifavailable, or statements ofcompanies in similar industries.
133 Manufacturer Sub-group Analysis Using industry "average" cost values is not adequate for assessing differential impacts among subgroups ofmanufacturers. Smaller manufacturers, niche players, ormanufacturers exhibiting a cost structure that differs largely from the industry average could be more negatively impacted. Ideally, the Department would consider the impact on every firm individually. In highly concentrated industries this may be possible. In industries having numerous participants, the Department uses the results ofthe industry characterization togroup manufacturers exhibiting similarcharacteristics.

What proceduresshouldwe follow when schedulinginterviewsandrequestinginformation? Is thereany value ingrouping manufacturersintosub-groups? Moregenerally,whatwoulda well executedsub-groupanalysisentail?

13.4 Competitive ImpactsAssessment EPCA section 342 (6)(BXi)(V) directs the Department to consider any lessening ofcompetition that is likely to result from imposition ofstandards. Forthese products, the Department must examine whether there is any lessening ofcompetition ifa standard is set above the levels established in ASHRAE/IESNA Standard 90.1-1999. It further directs the Attorney General to determine the impacts, ifany, ofany lessening ofcompetition. DOE will make a determined effort togather and report firm-specific financial information and impacts. The competitive analysis will focus on assessing the impacts to smaller, yet significant, manufacturers. The assessment will be based on manufacturing
Commercial Unitary AC &HP 40 13 June 2001 Framework Document

The GRIM analysis uses anumber offactors

- annual expected revenues; manufacturer costs such as costs ofsales, selling and general administration costs; taxes; and capital expenditures related to depreciation, new standards, and maintenance

-- to arrive at a series ofannual cash flows beginning from the announcement ofthe new standard and continuing for several years after implementation. The results are compared against baseline projections that involve no new standards. The financial impact ofnew standards is then the difference between the two sets ofdiscOlmted annual cash flows. Other performance metrics such as return on invested capital are also available from the GRIM.

Fordiscussion purposes, the Department will prepare a list ofdefault fmancial values to be used in the GRIM industry analysis. These will be calculated by studying publicly available financial. statements ofcommercial wUtary AC and HP manufacturers, ifavailable, or statements ofcompanies in similarindustries.
13.3 Manufacturer Sub-group Analysis Using industry "average" cost values is not adequate for assessing differential impacts among subgroups ofmanufacturers. Smallermanufacturers, ruche players, ormanufacturers exhibiting a cost structure that differs largely from the industry average could be more negatively impacted. Ideally, the Department would considerthe impact on every finn individually. In highly concentrated industries this may be possible. In industries having numerous participants, the Department uses the results ofthe industry characterization to group manufacturers exhibiting similarcharacteristics.

Whatprocedures shouldwefollow when scheduling interviews andrequesting information? Is there any value in grouping manufacturers into sub-groups? More generally, what woulda wellexecutedsub-group analysis entail?

13.4 Competitive Impacts Assessment EPCA section 342 (6)(BXi)(V) directs the Department to consider any lessening ofcompetition that is likely to result from imposition ofstandards. Forthese products, the Department must examine whetherthere is any lessening ofcompetition ifa standard is set above the levels established in ASHRAElIESNA Standard 90.1-1999. It further directs the Attorney General to detennine the impacts, ifany, ofany lessening ofcompetition. 

## ooE will make a determined effort to gatherand report finn-specific financial infonnation and impacts. The competitive analysis will focus on assessing the impacts to smaller, yet significant, manufacturers. The assessment will be based on manufacturing

Commercial Unitary AC & HP 

### 40 13 June 2001 Framework Docwnent

### cost data and on information collected from interviews with manufacturers. The manufacturer interviews will focus on gathering information thatwould help in assessing asymmetrical cost increases to some manufacturers, increased proportion offixed costs potentially increasing business risks, and potential barriers to market entry (proprietary technologies, etc.). 13.5 Cumulative Regulatory Burden The Department will recognize and seekto mitigate the overlapping effects on manufacturers of amended DOE standards and other regulatory actions affecting the same equipment or companies.

The Department is aware that there are other regulations that could affect this industry. What regulationsor pendingregulationsshouldtheDepartment consider?



### 14. Utility Impacts Toperform the Utility Impacts Analysis, which would include an analysis ofboth the electric and gas utility industry, the Department is considering using theEnergy Information Administation's (EIA) National Energy Modeling System (NEMS). NEMS is a large multi-sectoral partial equilibrium model ofthe U.S. energy sector that has been developed over several years bythe EIA primarily forthe purpose ofpreparing the AEO. NEMS produces a widely recognized baseline forecast forthe United States through 2020 and is available in the public domain. Outputs ofthe utility analysis can parallel results that appear in the latest AEO, with some additions. Typical output includes forecasts ofsales, price, and avoided capacity. The entire utility analysis can be conducted as a scenario departing from the latest AEO reference case, and the assumptions in place there can serve as the basic set of assumptions applied.
Should we considerusing alternativemethods to NEMSfor conducting the utility impacts analysis?

Commercial Unitary AC &HP 41 13 June 2001 Framework Document

cost data and on information collected from interviews with manufacturers. The manufacturer interviews will focus on gathering infonnation that would help in assessing asymmetrical cost increases to some manufacturers, increased proportion of

### fixed costs potentially increasing business 

### risks, and potential barriers to market entry (proprietary technologies, etc.). 13.5 Cumulative Regulatory Burden The Department will recognize and seekto mitigate the overlapping effects onmanufacturers of amended DOE standards and otherregulatory actions affecting the same equipment orcompanies.

The Department is aware that there are otherregulations that could affect this industry. What regulations orpending regulations shouldtheDepartment consider?



### 14. Utility Impacts To perfonn the Utility Impacts Analysis, which would include an analysis ofboth the electric and gas utility industry, the Department is considering using the 

### Energy Information Administration's 

### (EJA) National Energy Modeling System (NEMS). NEMS is a large multi-sectoral partial equihbriwn model ofthe U.S. energy sectorthat has been developed over several years bythe EIA primarily forthe purpose ofpreparing the AEO. NEMS produces a widely recognized baseline forecast forthe United States through 2020 and is available in the public domain. Outputs ofthe utility analysis can parallel results that appear in the latest AEO, with some additions. Typical output includes forecasts ofsales, price, and avoided capacity. The entire utility analysis can be conducted as a scenario departing from the latest AEO reference case, and the assumptions in place there can serve as the basic setof assumptions applied.

Should we consider using alternative methods to NEMSfor conducting the utility impacts analysis?

Commercial Unitary AC & HP 41 13 June 2001 Framework Document

### 15. Environmental Analysis The standards' analysis tracks three types ofenergy-related emissions: sulfur dioxide (SO 2

### ),nitrous oxides (NOx) and carbon dioxide (CO 2

### ). These emissions are calculated based on conversion factors developed by EIA for translating natural gas and oil savings into emissionreductions. To perform the Environmental Analysis, the Department will use EIA's NEMS. Outputs ofthe environmental analysis will mostly parallel results that appear in the latest AEO, with some additions. The entire environmental analysis can be conducted as a modification ofthe latest AEO, and the assumptions in place there can be the basic set ofassumptions applied. For example, the operating characteristics (energy conversion efficiency, emissions rates, etc.) offuture electricity generating plant canbe exactly those used in the latest AEO. Carbon emissions are tracked in NEMS by a quite detailed carbon module which should give good results because ofits broad coverage ofall sectors and inclusion ofinteractive effects. NEMS also includes a module for SO2 

### allowance trading and delivers a forecast ofSO 2 

### allowance prices. It is important to note, however, that accurate simulation ofSO 2 

### trading tends to imply that physical emissions effects will be zero. This fact has caused confusion in the past, and, in prior energy efficiency standards analyses, a simple emission reduction has been reported with the caveat that emissions trading implies that this reduction will unlikely be realized. However, there isan SO 2 

### benefit from conservation in the form ofa lower allowance price, and ifbig enough tobe calculable byNEMS, this value canbe reported. NEMS alsohas an algorithm for estimating NOx emissions from power generation. The results forthe environmental analysis can be inthe form ofa complete NEMS un. In general, NEMS outputs become the tables ofan AEO, and these should provide a good idea ofthe range of results available. Reported in a NEMS run are NOx and carbon emissions and aresulting SO2 

### trading price.

Are thereany otherenvironmentalfactorstheDepartmentshouldconsider? Ifso, what additional analyticalmethods areappropriatefor addressingthem?



### 16. Employment Impacts Two impacts on employment are possible from standards, direct impacts and indirect impacts. Direct employment impacts would result ifstandards lead to a change in the number ofemployees at the plants
Commercial Unitary AC &HP 42 13 June 2001 Framework Document



### 15. Environmental Analysis The standards' analysis tJacks three types ofenergy-related emissions: sulfurdioxide (S02), nitrous oxides (NOx) and carbon dioxide (C02), These emissions are calculated based on conversion factors developed by EIA for translating natural gas and oil savings into emission reductions. To perform the Environmental Analysis, the Department will use ElA'sNEMS. Outputs ofthe environmental analysis will mostly parallel results that appear in the latest AEO, with some additions. The entire environmental analysis can be conducted as a modification ofthe latest AEO, and the assumptions in place there can be the basic set ofassumptions applied. Forexample, the operating characteristics (energy conversion efficiency, emissions rates, etc.) offuture electricity generating plant can be exactly those used in the latest ABO. Carbon emissions are tJacked 

### in NEMS by a quite detailed carbon module which should give good results because ofits broad coverage ofall sectors and inclusion ofinteractive effects. NEMS 

### also includes a module for S02 allowance trading and delivers a forecast ofS02 allowance prices. It is important to note, however, that accurate simulation ofS02 trading tends to implythat physical emissions effects will be zero. This fact has caused confusion in the past, and, 

### in priorenergy efficiency standards analyses, a simple emission reduction has been reported with the caveat that emissions trading implies that this reduction will unlikely be realized. However, there is an SOz benefit from conservation in the form ofa lower allowance price, and ifbigenough to be calculable byNEMS, this value can bereported. NEMS also has an algorithm for estimating NOx emissions from power generation. The results for the environmental analysis can be in the form ofacomplete NEMS nul. In general, NEMS outputs become the tables ofan AEO, and these should provide a good idea ofthe range of results available. Reported in aNEMS run are NOx and carbon emissions and a resulting S02 tJading pnce.

Are there anyother environmentalJactors the Departmentshouldconsider? /fso, what additional analytical methods are appropriateJor addressing them'?



### 16. Employment Impacts Two impacts on employment are possible from standards, direct impacts and 

### indirect impacts. Direct employment impacts would result ifstandards lead to a change in the nwnberofemployees at the plants

Commercial Unitary AC & HP 42 13 June 2001 Framework Docwnent

### that produce the covered product, along with its affiliated distribution and service companies. The Department will evaluate direct employment impacts in the manufacturer sub-group analysis described in Section 13.3. Indirect impacts may result from expenditures shifting between goods (substitution effect) and changes in income and overall expenditure levels (income effect) due to standards. The Department will evaluate the combined direct and indirect impacts in the Employment Impacts analysis which will evaluate nationaljob impacts from reallocation ofexpenditures forpurchasing and operating appliances caused by standards.

What methods shouldbe employedto assessemployment impacts?

Commercial Unitary AC &HP 43 13 June 2001 Framework Document

that produce the covered product, along with its affiliated distribution and service companies. The Department will evaluate direct employment impacts in the manufacturer sub-group analysis described in Section 13.3. Indirect impacts may result from expenditures shifting between goods (substitution effect) and changes in income and overall expenditure levels (income effect) due to standards. TheDepartment will evaluate the combined direct and indirectimpacts in the Employment 

### Impacts analysis which will evaluate nationaljob impacts from reallocation ofexpenditures for purchasing and operating appliances caused by standards.

What methods shouldbe employedto assess employment impacts?

Commercial Unitary AC & HP 43 13 June 200] Framework Document