F2002-00520

Commercial Unitary Air

Conditioner and Heat Pump

Rulemaking Framework

U.S. Department of Energy

Office of Codes and Standards

1000 Independence Ave., SW

Washington, DC

June 13, 2001

EE-RM-STD-01-375 COMMENT 02DD

F2002-00520 

Commercial Unitary Air 

Conditioner and Heat Pump 

Rulemaking Framework 

u.s. Department of Energy 

Office of Codes and Standards 

1000 Independence Ave., SW 

Washington, DC 

June 13,2001 

--
Commercial Unitary Air Conditioner and Heat Pump Rulemaking Framework

I. Introduction ...... ........................ ......... ... .. 1

1.I Commercial Equipment Efficiency Program ................................. 1

1.2 Stakeholder Participation ................................................ 4

1.3 Advanced Notice of Proposed Rulemaking .................................. 6

1.4 Notice of Proposed Rulemaking .......................................... 7

1.5 Notice of Final 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 Baseline Units ..................................... ................. 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 in Costs between Manufacturers ................................. 25

6.3 Proprietary Design ................................................. 26

7. Prices . .................................................................. 27

7.1 R etail Prices ........................................................ 27

7.2 M anufacturer Prices .................................................. 28

8. Life-Cycle Cost and Payback Analysis ......................................... 28

EE-RM-STD-01-375 COMMENT 02DD

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 Stakeholder Participation 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 of Proposed 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 of Proposed 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 of Final 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 Retail 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 • 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. Shipm ents .................................. .. .. ................... 31

10. Preliminary National Impacts Analysis ........................................ 32

10.1 Inputs to Forecasts .............. ...................... .............. 32

10.2 Calculation of Energy 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. Manufacturer Impact Analysis .............................................. 34

13.1. Sources of Information 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 Im pacts ........................................................... 37

15. Environmental Analysis .................................................... 38

16. Employment Impacts ............ ............ ................ 38

Commercial Unitary AC & HP 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

9. Shipments ................................................................ 31 

10. Preliminary National Impacts Analysis ........................................ 32 

10.1 Inputs to Forecasts .................................................. 32 

10.2 Calculation of Energy 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. Manufacturer Impact Analysis .............................................. 34 

13.1. Sources of Information 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 of this document is to describe the procedural and analytical approaches the U.S.

Department of Energy (hereafter called the Department or DOE) anticipates using to evaluate whether

amended standards should be developed that are more stringent than standards found in American

Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc. (ASHRAE) / Illuminating

Engineering Society of North 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 is intended to inform

and facilitate stakeholders' involvement in the rulemaking process. Section 1 provides an overview of

the process. Sections 2 through 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. ov/buildines/codes standards/index.htm

In addition to the general discussion presented within its main text, this document contains comment

boxes, like this one, that address issues specific to the application of the analytical framework to the

commercial unitary air AC and HP rule. These boxes follow a generic description of each

component of a typical rulemaking, and include a discussion of key 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 major household appliances. The National Energy Conservation Policy Act

of 1978, (NECPA) Pub. L. 95-619, amended EPCA to add Part C of Title III, which established an

energy conservation program for certain industrial equipment. The amendments to EPCA in the Energy

Policy Act of 1992 (EPACT), Pub. L.. 102-486, included amendments that expanded DOE's energy

conservation program to include certain commercial equipment, including unitary air-conditioners and

heat pumps, the focus of this document.

Commercial Unitary AC & HP 1 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

Commercial Unitary Air Conditioner and Heat Pump 

Rulemaking Framework 

1. Introduction 

The purpose of this docwnent is to describe the procedural and analytical approaches the U.S. 

Department of Energy (hereafter called the Department or DOE) anticipates using to evaluate whether 

amended standards should be developed that are more stringent than standards found in American 

Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc. (ASHRAE) / Illuminating 

Engineering Society of North 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 2 through 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 of the analytical framework to the 

commercial unitary air AC and HP rule. These boxes follow a generic description of each 

component of a typical rulemaking, and include a discussion of key 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 major household appliances. The National Energy Conservation Policy Act 

of 1978, (NECPA) Pub. L. 95-619, amended EPCA to add Part C of Title III, which established an 

energy conservation program for certain industrial equipment. 1be amendments to EPCA in the Energy 

Policy Act of 1992 (EPACT), Pub. L.. 102-486, included amendments that expanded DOE's energy 

conservation program to include certain commercial equipment, including unitary air-conditioners and 

heat pumps, the focus of this document. 

Commercial Unitary AC & HP 13 June 2001 Framework Document 
The efficiency requirements in the statute correspond to the levels in ASHRAE/IESNA Standard 90.1

as in effect on October 24, 1992. The statute further provides that if the efficiency levels in

ASHRAE/IESNA Standard 90.1 are amended after that date for any of the covered products, the

Secretary of Energy (Secretary) must establish an amended uniform national standard for such

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 is technologically 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, if DOE adopts a more stringent standard, it must consider, to the greatest extent

practicable, the economic impact of the standard on the manufacturers and consumers of the affected

products; the savings in operating costs throughout the estimated average life of the product compared

to any increases in the initial cost, or maintenance expense; the total projected amount of energy

savings likely to result directly from the imposition of the standard; any lessening of the utility or the

performance of the products likely to result from the imposition of the standard; the impact of any

lessening of competition, as determined in writing by the Attorney General, that is likely to result from

the imposition of the standard; 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 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 of informing 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 that the EPCA criteria for a more stringent standard are not

likely to be satisfied. This could occur either as a result of further 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 is not justified.

The Department of Energy, Office of Energy Efficiency and Renewable Energy, Office of Building

Research and Standards (BRS) conducts the program that develops and promulgates

equipment energy conservation standards and has overall responsibility for rulemaking

Commercial Unitary AC & HP 2 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

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 if the efficiency levels in 

ASHRAElIESNA Standard 90.1 are amended after that date for any of the covered products, the 

Secretary of Energy (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 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, if DOE adopts a more stringent standard, it must consider, to the greatest extent 

practicable, the economic impact of the standard on the manufacturers and conswners of the affected 

products; the savings in operating costs throughout the estimated average life of the product compared 

to any increases in the initial cost, or maintenance expense; the total projected arnoWlt of energy 

savings likely to result directly from the imposition of the &iandard; any lessening of the utility or the 

performance of the products likely to result from the imposition of the standard; the impact of any 

lessening of competition, as determined in 'WTiting by the Attorney General, that is likely to result from 

the imposition of the 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. 63 I3(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 of informing 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 whenever DOE concludes that the EPCA criteria for a more stringent standard are not 

likely to be satisfied. This could occur either a<; a re&ult of further analysis by DOE during the 

rulemaking process or by ASHRAE adopting a new addendwn to ASHRAElIESNA Standard 90.1-

1999 for which a more stringent alternative is not justified. 

The Department of Energy, Office of Energy Efficiency and Renewable Energy, Office of Building 

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 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 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 air conditioners for

commercial application which are rated between 65 and 135 kBtu/h ("small") or between 135 and

240 kBtu/h ("large").

The term "unitary heat pump" means a unitary air conditioner that utilizes reverse cycle refrigeration

as its prime heat source and should have supplementary heat source available to builders with the

choice of hot water, steam, or electric resistant heat. The same capacity range categories are used

for both unitary air conditioners and heat pumps.

In this proceeding 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

EE-RM-STD-01-375 COMMENT 02DD

activities for unitary air-conditioners and heat pwnps. The Department has contracts 

with Lawrence Berkeley National LaboratOIY (LBNL), Arthur D. Little, Inc. (ADL), and Pacific 

Northwest National Laboratory (PNNL) to provide technical, analytical and managerial support in 

conducting these 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). The tenn "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 below 240,00 Btu per hour (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") or between 135 and 

240 kBtuIh ("large"). 

The tenn ''unitary heat pwnp" means a unitary air conditioner that utilizes reverse cycle refiigeration 

as its prime heat source and should have supplementary heat source available to builders with the 

choice of hot water, steam, or electric resistant heat. The same capacity range categories are used 

for both unitary air conditioners and heat pwnps. 

In this proceeding DOE will only examine commercial unitary AC and I-IP equipment that use air for 

cooling 

Commercial Unitary AC & Ii P 3 13 June 2001 Framework Docwnent 
Figure 1 shows DOE's time-line for amending standards for commercial unitary AC and HPs.

July

2001

Stakeholder Participation

Prior Activities

@. ' Current Standards Rulemaking

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 indicated by Figure 1, the Department considers stakeholder participation a very important part

of the process for setting energy conservation standards. The Department actively encourages the

participation and interaction of all stakeholders at all stages of the process. Early and frequent

interactions among stakeholders provide a balanced discussion on critical information required to

conduct the analysis to support any standards.

Stakeholders include manufacturers, consumers of commercial unitary AC and HPs, energy efficiency

and environmental advocates, state agencies, federal agencies and other groups or individuals 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

EE-RM-STD-01-375 COMMENT 02DD

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 indicated by Figure 1, the Department considers stakeholder participation a vel)' important part 

of the process for setting energy conservation standards. The Department actively encourages the 

participation and interdction of all stakeholders at all stages of the process. Early and frequent 

interactions among stakeholders provide a balanced discussion on critical infonnation required to 

conduct the analysis to support any standards. 

Stakeholders include manufacturers, consumers of commercial unitary AC and HPs, energy efficiency 

and environmental advocates, state agencies, federal agencies and other groups or individuals 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 to the 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 of Title Ifl of

EPCA and in Appendix A to Subpart C of 10 CFR 430, "Procedures, Interpretations and Policies for

Consideration of New or Revised Energy Conservation Standards for Consumer 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 of preliminary screening analysis to decide

which of the 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.

The test 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 a NOPR on August 9, 2000 and held a public hearing on September 21,

2000. 65 FR 48828. The Department expects to publish the test procedure final rule before

publishing the ANOPR on energy conservation standards.

In an energy conservation standards rulemaking, the first of the rulemaking notices is an Advance

Notice of Proposed Rulemaking (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 of a Notice of Proposed Rulemaking (NOPR) which will propose energy conservation

standards. The completion of the rulemaking process is a Notice of Final Rulemaking which places the

energy conservation standards in the Code of Federal Regulations.

The process provides numerous opportunities for stakeholder involvement. Specifically, the

Department intends to request public comments on the ANOPR, 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 public hearing or workshop. These activities will be summarized and

published in rulemaking notices that appear in the 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 of those notices.

Commercial Unitary AC & HP 5 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

rulemaking activities. For the commercial unitary AC and lIP energy conservation standards 

rulemaking, the Department will employ the rulemaking procedures set forth in Part B of Title ill of 

EPCA and in Appendix A to Subpart C of 10 CFR 430, "Procedures, Interpretations and Policies for 

Consideration of New or Revised Energy Conservation Standards for Consumer Products" (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 a notice of preliminary screening analysis to decide 

which of the 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 other products. 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 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 a NOPR on August 9, 2000 and held a public hearing on September 21, 

2000. 65 FR 48828. 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 of the rulemaking notices is an Advance 

Notice of Proposed 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 of a Notice of Proposed Rulemaking (NOPR) which will propose energy conservation 

standards. The completion of the rulemaking process is a Notice of Final Rulemaking which places the 

energy conservation standards in the Code of Federal Regulations. 

The process provides nwnerous opportunities for stakeholder involvement Specifically, the 

Department intends to request public comments on the ANOPR, 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 public hearing or workshop. These activities will be summarized and 

published in rulernaking notices that appear in the 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 of those notices. 

Conunercial Unitary AC & HP 5 13 June 200 1 Framework Docwnent 
In addition, the Department will elicit stakeholder participation prior to these notices and during

analyses prepared in support of the notices. The first of these 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 of energy 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 of energy

conservation standards for commercial unitary AC and HP leading to each of these notices and the

relationships among them are described below.

1.3 Advance Notice of Proposed Rulemaking

As part of its initial rulemaking activities, the Department will identify the product design options or

efficiency levels that will be analyzed in detail and those that can be 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 to be considered.

The technologically feasible design options or efficiency levels that are not eliminated 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 of 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. If appropriate, public workshops may be conducted to enhance the

exchange of information and comments. This analytical process culminates with the selection of

candidate standard levels, if any, that will be considered for the NOPR. The candidate standard levels

are contained in the ANOPR which DOE 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 of the engineering analysis and the preliminary

analyses of consumer life-cycle costs, national net present value, and national energy savings. The

Department will also make available a TSD containing the details of all the analyses performed to this

point.

Selection of candidate standard levels is based on costs and benefits of design 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

EE-RM-STD-01-375 COMMENT 02DD

In addition, the Department will elicit stakeholder participation prior to these notices and during 

analyses prepared in support of the notices. The first of these 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 of energy 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 of energy 

conservation standards for commercial unitary AC and HP leading to each of these notices and the 

relationships among them are described below. 

1.3 Advance Notice of Proposed Rulemaking 

As part of its initial rulcmaking activities, the Department will identifY the product design options or 

efficiency levels that will be analyzed in detail and those that can be 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 to be considered. 

The technologically feasible design options or efficiency levels that are not eliminate4 in the screening 

process are considered further. The principal activities W1dertaken 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 of 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. If appropriate, public workshops may be conducted to enhance the 

exchange of infonnation and comments. This analytical process culminates with the selection of 

candidate standard levels, if any, that will be considered for the NOPR. 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 of the engineering analysis and the preliminary 

analyses of consumer 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 of candidate standard levels is based on costs and benefits of design 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 
the product or which cause life-cycle cost increases relative to the base case would generally not be

selected as candidate standard levels.

The range of candidate 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 or fill in large gaps between

efficiency levels of other candidate standard levels.

After the publication of the ANOPR, there is a 75-day public comment period and at least one public

hearing or workshop. On the basis of comments received, DOE may revise the analysis or the

candidate standard levels. If major changes are required, stakeholders and technical experts will be

given an opportunity to review the revised analyses.

1.4 Notice of Proposed Rulemaking

After the ANOPR, DOE will conduct further economic impact analyses of the candidate standard

levels. These analyses may include refinements of the analyses done for the 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 of all 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. If appropriate, public workshops may be conducted to enhance the exchange of

information and comments. This analytical process culminates with the selection of proposed standard

levels, if any, that will be presented in the NOPR. The NOPR, published in the Federal Register, will

document the evaluation and selection of any proposed standards. For each product class, the

Department also will identify the maximum improvement in energy efficiency or maximum reduction in

energy use that is technologically feasible and, if the proposed standards would not achieve these levels,

the Department will identify the reasons for proposing different standards. The NOPR also will present

the results of all 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 established by statute and the many benefits, costs and impacts of the standards

shown by the analyses. Additionally, the Department encourages stakeholders to develop joint

recommendations for standard levels. If the Department receives a joint recommendation from a

Commercial Unitary AC & HP 7 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

the product or which cause life-cycle cost increases relative to the base case would generally not be 

selected as candidate standard levels. 

The range of candidate 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 or fill in large gaps between 

efficiency levels of other candidate standard levels. 

After the publication of the ANOPR, there is a 75-day public comment period and at least one public 

hearing or workshop. On the basis of corrunents received, DOE may revise the analysis or the 

candidate standard levels. If major changes are required, stakeholders and technical experts will be 

given an opportunity to review the revised analyses. 

1.4 Notice of Proposed Rulemaking 

After the ANOPR, OOE will conduct further economic impact analyses of the candidate standard 

levels. These analyses may include refinements of the analyses done for the ANOPR and also will 

include: a conswner sub-group analysis (see Section 12), a manufacturer 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 of all 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. If appropriate, public workshops may be conducted to enhance the exchange of 

information and corrunents. This analytical process culminates with the selection of proposed standard 

levels, if any, that will be presented in the NOPR. The NOPR, published in the Federal Register, will 

docwnent the evaluation and selection of any proposed standards. For each product class, the 

Department also will ident.iiY the maximum improvement in energy efficiency or maximum reduction in 

energy use that is technologically feasible and, if the proposed standards would not achieve these levels, 

the Department will identify the reasons for proposing different standards. The NOPR also will present 

the results of all 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 established by statute and the many benefits, costs and impacts of the standards 

shown by the analyses. Additionally, the Department encourages stakeholders to' develop joint 

recorrunendations for standard levels. If the Department receives a joint recorrunendation from a 

Corrunercial Unitary AC & HP 7 13 June 2001 Framework Document 
representative group of stakeholders, 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 the public comments. On the basis of the public

comments, DOE reviews the proposed standard and impact analyses and makes modifications as

necessary. If major changes to the analyses are required at this stage, stakeholders and experts will be

given an opportunity to review the revised analyses.

1.5 Notice of Final Rulemaking

The final step in the rulemaking process would be the publication of a Notice of Final Rulemaking in the

Federal Register. The Final Notice promulgates standard levels based on the record and explains the

basis for the selection of those standards. It is accompanied by the final TSD.

2. Analyses for Rulemaking

This section provides a brief description of the analyses to be conducted during the standards setting

process to determine the impacts of possible standards. It offers an overview of the analytic

methodology and discusses the major components of the analysis. By considering the inter-relationship

among these components, the consistency of approach throughout the analysis is ensured.

2.1 Introduction

The analytical components of the standards setting process are summarized in Figure 2. The focus of

this figure is the center column, identified as "Analysis." The column labeled "Approaches" is intended

to indicate various methods to be used to obtain information needed for the 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 of data and information

that are required by the analyses. Some key inputs exist in public databases, some will be collected

from stakeholders or others with special knowledge, and some of the 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 economically justified. In the context of this process, economic justification includes consideration

Commercial Unitary AC & HP 8 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

representative group of stakeholders, 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 one public hearing or 

workshop; revisions to the analyses may result from the public conunents. On the basis of the public 

coriunents, DOE reviews the proposed standard and impact analyses and makes modifications as 

necessary. If major changes to the analyses are required at this stage, stakeholders and experts will be 

given an opportunity to review the revised analyses. 

1.5 Notice of Final Rulemaking 

The fInal step in the rulemaking process would be the publication ofa Notice of Final Rulemaking in the 

Federal Register. The Final Notice promulgates standard levels based on the record and explains the 

basis for the selection of those standards. It is accompanied by the final TSD. 

2. Analyses for Rulemaking 

This section provides a brief description of the analyses to be conducted during the standards setting 

process to detennine the impacts of possible standards. It offers an overview of the analytic 

methodology and iliscusses the major components of the analysis. By considering the inter-relationship 

among these components, the consistency of approach throughout the analysis is ensured. 

2.1 Introduction 

The analytical components of the 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 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 of data and information 

that are required by the analyses. Some key inputs exist in public databases, some will be collected 

from stakeholders or others with special knowledge, and some of the key inputs will be developed by 

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 economically justified. In the context of this process, economic justification includes consideration 

Commercial Unitary AC & HP 8 13 June 2001 Framework Document 
of the economic impacts on domestic commercial unitary AC and HP manufacturers and consumers,

national benefits including environmental, issues of consumer utility and impacts from any lessening of

competition. Many of the analyses are aimed at answering questions about these aspects of economic

justification.

Commercial Unitary AC & HP 9 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

of the economic impacts on domestic commercial unitary AC and HP manufacturers and consumers, 

national benefits inclucling environmental, issues of consumer utility and impacts from any lessening of 

competition. Many of the analyses are aimed at answering questions about these aspects of economic 

justification. 

Commercial Unitary AC & HP 9 13 June 2001 Framework Docwnent 
Figure 2: Flow Diagram of Analysis for 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 Tecanonla Ootns_ .__-- __ _-

. L....Ja5i O.t1i(A : Ame .h Unc, 

r ila@.

nErW! ...... [ : 

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

;Pmdarar~P ' WibOla O 

_ ..... ' i · ; . Nenlbl:ns---, 

RenseAnys es , . !nttair-'t | - r seto

:fin~ im - I ,~Cid U-tfe Im- Life Cycle 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

COS pr e (Zaa Foi Qtiv alm .M 

L i iLPe.Omnd Reios

UCommeri Uaary AC' 10 ity Impacts 1 F RJu rL20 

raeq. ': .~(NEMS) ...rrs~o 

A nalysis (NEMS) ,

, ;= a c(in response to mmens)

Commercial Unitary AC & HP I0 13 June 2001 Framework Document

-. -- - - -_----- ----- --- ----- -- e - -l Imprxts A-aly s-s - - -- ----

EE-RM-STD-01-375 COMMENT 02DD

Aoproaches 

ANOPR 

NOPR 

Figure 2: Flow Diagram of Analysis for the Commercial Unitary 

Air Conditioner and Unitary Heat Pump Rulemaking Process 

Key-Inputs 

I 

, L_. \lb"v 10"""""'" 

., ......... -- : 

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 

• -..17y c..". __ Un<e<I...., ·onaE __ 

.C~~6~en 

.~­

.~c.m-. 

of'ea-Oemand RO<U:IiMs 

~ .... a 

"min"'" 

.su.,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 June ZOO 1 Framework 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 of the product classes.

3.1 Market Assessment

The Department will develop information on the present and past industry structure and market

characteristics of the product(s) concerned. This activity will consist of both 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 of firms; the

financial situation of manufacturers; existing non-regulatory efficiency improvement initiatives; and trends

in product characteristics and markets.

The information collected will serve as resource material to be used throughout the rulemaking. For

instance, historical product shipments 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 I1 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

3. Market and Technology Assessment 

The Market and Technology Assessment will provide information about the conunercial unitary AC and 

HP industry that will be used throughout the standards process, and at the outset to detennine prodUct 

classes, to identify potential design options or efficiency levels for each of the product classes. 

3.1 Market Assessment 

The Department will develop information on the present and past industry structure and market 

characteristics of the product(s) concerned. This activity will consist of both quantitative and qualitative 

efforts to assess the industry and products based on publicly available infonnation. Issues to be 

addressed include: manufacturer market share and characteristics; trends in the number offlrrns; the 

flnancial situation of manufacturers; 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] Framework Document 
The Department has initiated a market assessment of the 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 by providing insights and information

to help structure future analysis. While this effort involves the entire industry, the Department is

interested in developing profiles of individual manufacturers to gain a better understanding of the

potential impacts of standards on both individual firms and particular categories of firms.

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 of all

collected information. All the information transmitted will be considered, when appropriate, in the

Department's decision-making process. However, confidential information will not be made

available for the public record.

The Department requests stakeholders feedback on this market assessment approach.

3.2 Technology Assessment

Information about existing and past technology options and prototype 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 of technologies 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 technologically feasible design.

Commercial Unitary AC & HP 12 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

The Department has initiated a market assessment of the commercial unitaIy AC 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 of individual manufacturers to gain a better tUlderstanding of the 

potential impacts of standards on both individual firms and particular categories of finns. 

Interview participants will be requested to identity all confidential infonnation provided in writing and 

orally. Approximately two weeks following the interview, an interview swnmary will be provided to 

give participants the opportunity to confirm the accuracy and protect the confidentiality of all 

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 market assessment approach. 

3.2 Technology Assessment 

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 higher energy efficiency levels. 

In consultation with interested parties, the Department intends to develop a list of teclmologies 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 is collecting information on technologies that improve energy performance of

commercial unitary AC and HPs. An initial list of technologies 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 (for high latent loads)

Double-skin, high-albedo cabinets

Sub-coolers

Demand-control ventilation strategy

Are there specific technologies that should or should not be consideredfor commercial unitary

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 or negatively. Also, part-load performance is a key factor for assessing the in-situ energy

performance and energy savings of the equipment. The Department intends to assess the impact of

design options on part-load performance.

Current standardsfor commercial unitary AC and IHP are based on full load efficiency criteria

(i.e.,Energy Efficiency Ratio (EER) and Coefficient of Performance (COP)) only. What are

the potential drawbacks and benefits of the Department mandating only minimum full load

efficiency, but notpart-load efficiency in this rulemaking?

Commercial Unitary AC & HP 13 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

The Department is collecting information on technologies that improve energy performance .of 

conunercial unitary AC and HPs. An initial list of technologies include: 

Evaporator and condenser coils with larger heat-exchanger area 

"Deep coil" or microchannel evaporator coils 

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 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 equaliz4tion 

Heat-pipes (for high latent loads) 

Double-skin, high-albedo cabinets 

Sub-coolers 

Demand-control ventilation strategy 

Are there specific technologies that should or should not be considered for commercial unitary 

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 perfonnance can impact part-load perfonnance 

positively or negatively. Also, part-load perfonnance is a key factor for assessing the in-situ energy 

performance and energy savings of the equipment. The Department intends to assess the impact of 

design options on part-load performance. 

Current standards for commercial unitary A C and HP are based on full load efficiency criteria 

(i.e .. Energy Efficiency Ratio (EER) and Coefficient of Performance (COP)) only. What are 

the potential drawbacks and benefits of the Department mandating only minimum full load 

efficiency, but not part-load efficiency in this rulemaking? 

Commercial Unitary AC & HP 13 13 June 200t Framework Document 
3.3 Product Classes

Products may be separated into product classes if their capacity or other performance-related features

or attributes, including those that provide utility to the consumer, inherently affect efficiency and justify

the establishment of a different energy conservation standard, or possible 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 is considering 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

Should the Department consider creating additional classes based on performance related

features or other attributes?

What capacity equipment should be used in the analysis as the representative capacity for a

given capacity range (e.g., 7.5 ton for 65 - 135 kBtu/hr and 15 ton for 135-240 kBtu/hr)?

Should this value be the same for unitary AC and unitary HPs, or are unique values

warranted? If so what should they 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 of a commercial unitary AC and HP of a specific product class including

operating capabilities energy efficiency and price. Typically a baseline model would be a model that

'Note that the meaning of baseline is distinct from the time-dynamic base case, which is used in

the National Energy Savings analysis. In that analysis, the base case represents the mix of models

currently on the market and, in each future year, projected to be sold in the absence of energy

conservation standards.

Commercial Unitary AC & HP 14 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

3.3 Product Classes 

Products may be separated into product classes if their capacity or other performance-related features 

or attributes, including those that provide utility to th~ consumer, inherently affect efficiency and justilY 

the establishment of a different energy conservation standard, or possible 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 for this 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 consider creating additional classes based on performance related 

features or other attributes? 

What capacity equipment should be used in the analysis as the representative capacity Jor a 

given capacity range (e.g., 7.5 ton for 65 - 135 kBtulhr and 15 ton for 135-240 kBtulhr)? 

Should this value be the same for unitary AC and unitary HPs, or are unique values 

warranted? Ifso what should they 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 of a commercial unitary ACand HP of a specific product class including 

operating capabilities energy efficiency and price. Typically a baseline model would be a model that 

INote that the meaning of baseline 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 mix of models 

cwrently on the market and, in each future year, projected to be sold in the absence of energy 

conservation standards. 

Commercial Unitary AC & HP 14 13 June 200 I Framework Document 
just meets required energy conservation standards. After the product classes are chosen, the

characteristics of the 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 of the most vital statistics required for establishing the baseline 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 to assist in

determining energy savings.

If more 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 or minimum efficiency models. This information will assist the Department in

establishing what technologies can be employed to increase the efficiency of the equipment.

The Department invites stakeholderfeedback on this methodology.

4. Screening Analysis

The purpose of the screening analysis is to identify and evaluate those design options or efficiency levels

that could improve commercial unitary AC and HP efficiency 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 for eliminating 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 or efficiency levels that are not sufficiently developed or have

characteristics that make them technologically unsuitable for consideration in the rulemaking.

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EE-RM-STD-01-375 COMMENT 02DD

just meets required energy conservation standards. After the product classes are chosen, the 

characteristics of the 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 of the 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. For these products, DOE will further evaluate whether more stringent 

standards than those adopted by ASHRAElIESN A 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. 

If more 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 or minimum efficiency models. This information will assist the Department in 

establishing what technologies can be employed to increase the efficiency of the equipment. 

The Department invites stakeholder feedback on this methodology. 

4. Screening Analysis 

The purpose of the screening analysis is to identifY and evaluate those design options or efficiency 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 or efficiency levels. The screening analysis also 

discuses the criteria for eliminating certain design options or efficiency levels from further consideration. 

By comparing the design options or efficiency levels against these criteria, the Department eliminates 

from further analysis those options or efficiency levels that are not sufficiently developed or have 

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 of design options will be developed from the technologies identified in the technology

assessment. Following the development of this initial list of design options, the Department, in

consultation with interested parties, will review each design option to determine if it 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 of design options will provide a better understanding 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 of design options, the Department's primary consideration is how a technology

will impact the efficiency of the equipment as measured by the EER for cooling 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 Department consider otherfactors in developing its list ofpotential design

options? For example, should increases in EER be limited by the latent heat removal

capability of the equipment in order to make the product suitable for high humidity areas 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 of meeting 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 of the 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 design for specific capacities of

equipment? How should the Department address capacity control measures?

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4.1 Design Options 

An initial list of design options will be developed from the technologies identified in the technology 

assessment. Following the development of this initial list of design options, the Department, in 

consultation with interested parties, will review each design option to determine if it 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 of design options will provide a better understanding 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 of design options, the Department's primary consideration is how a technology 

will impact the efficiency of the equipment as measured by the fER for cooling 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 (IPL V), which is derived from a standard test 

procedure, in addition to EER and COP. 

Should the Department consider other factors in developing its list of potential design 

options? For example. should increases in EER be limited by the latent heat removal 

capability of the equipment in order to make the product suitable for high humidity areas 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 of meeting the peak 

capacity requirements (e.g., nwnber of compressors), which will require asswnptions about how the 

equipment would be designed for any given capacity iIrespective of the 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 design for specific capacities of 

equipment? How should the Department address capacity control measures? 

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Commercial Unitary AC & HP 17 I3 June 200 I Framework Docwnent 
5. Engineering Analysis

After the screening analysis, the Department performs an engineering analysis on the design options or

efficiency levels that were not eliminated. The engineering analysis consists of estimating the energy

consumption and costs of commercial unitary AC and HPs at various levels of increased efficiency.

This section discusses an overview of the 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 of energy consumption

and electric load shape impacts of equipment operated in buildings (Section 5.5)

5.1 Engineering Analysis Overview

The purpose of the 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 determine 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 each 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 be determined from the

information on products that are commercially available, data submitted by manufacturers and/or

engineering calculations.

The Department is aware that the most efficient commercial unitary AC listed in the most recent

version of the ARI Unitary Directory has an EER rating of 12.0. The most efficient HP listed has a

COP of 4.0. Therefore the Department proposes to establish these as starting points to establish the

pper range of energy efficiency to be covered in the analysis.

The Department is interested in comments on the range of efficiencies that should be

onsidered.

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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 of estimating the energy' 

conswnption and costs of commercial unitary AC and HPs at various levels of increased efficiency. 

This section discusses an overview of the 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 of energy consumption 

and electric load shape impacts of equipment operated in buildings (Section 5.5) 

5.1 Engineering Analysis Overview 

The purpose of the 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 each 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 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 most recent 

!version of the ARl Unitary Directory has an EER rating of 12.0. The most efficient HP listed has a 

jeop of 4.0. Therefore the Department proposes to establish these as starting points to establish the 

!Upper range of energy efficiency to be covered in the analysis. 

The Department is interested in comments on the range of efficiencies that should be 

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 of equipment components, labor, purchased parts and material, shipping/packaging and

investment. Estimates of the total cost to the consumer include the retail price of equipment and energy

and the installation and maintenance costs. The Department will generate manufacturing cost estimates

through the use of some combination of tear-down analysis, manufacturer supplied estimates, and direct

estimates of retail prices.

There are several ways to establish a relationship between cost and performance. The Department

understands that a fundamental 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 and price surveys.

Since the availability of commercial 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 of equipment 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 limit public access to proprietary data, yet allow the

public to examine the cost and design assumptions that underlie the cost-efficiency estimates.

The Department seeks input from stakeholders about pursuing a combined approach for the

engineering analysis.

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 of technologies at specific efficiency levels) and design options approach (i.e.,

technology specific).

5.2.1 Efficiency Level Approach

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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 of equipment components, labor, purchaSed parts and material, shipping/packaging and 

investment. Estimates of the total cost to the consumer include the retail price of equipment and energy 

and the installation and maintenance costs. The Department will generate manufacturing cost estimates 

through the use of some combination of tear-down analysis, manufacturer supplied estimates, and direct 

estimates of retail prices. 

There are several ways to establish a relationship 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 and price surveys. 

Since the availability of commercial 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 of equipment 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 

. simulation modeling. This approach would also limit public access to proprietary data., yet allow the 

public to examine the cost and design assumptions that underlie the cost-efficiency estimates. 

The Department seeks input/rom stakeholders about pursuing a combined approach/or the 

engineering analysis. 

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 of technologies 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 has the initial advantage of being 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 of the efficiency level approach is also its primary drawback. Namely, since

technological details are not provided, it could be difficult to verify the accuracy of the cost information

received from the manufacturers. The inability to verify information received would lead to greater

uncertainty about the costs of efficiency 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, if two manufacturers choose markedly different designs

with significantly different costs to attain the same efficiency level, taking an average of the 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 of the data supplied through the efficiency level approach

If the 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 Department seeks input from stakeholders as to how the efficiency level approach can be

applied to HPs to ensure that both cooling and heating performance are taken into account.

As discussed above, the efficiency level approach requires verification of the data submitted. Other

approaches, such as the design options method, can be conducted in parallel with the efficiency level

approach to verify the accuracy of its data.

The Department seeks input on what methods could be utilized to verify the data provided by

manufacturers using the efficiency level approach. Should the efficiency level approach be used?

What are the benefits and disadvantages bf this approach?

5.2.2 Design Options Approach

Under the design options approach, individual or combinations of design options are identified for

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The efficiency level approach establishes the relationship between manufacturer cost and increased 

efficiency at predetennined efficiency levels. It has the initial advantage of being 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 of the efficiency level approach is also its primary drawback. Namely, since 

teclmological details are not provided, it could be difficult to verify the accuracy of the cost infonnation 

received from the manufacturers. The inability to verify infonnation received would lead to greater 

uncertainty about the costs of efficiency 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, if two manufacturers choose markedly different designs 

with significantly different costs to attain the same efficiency level, taking an average of the 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 of the data supplied through the efficiency level approach. 

If the 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 Department seeks input/rom stakeholders as to how the efficiency level approach can be 

applied to HPs to ensure that both cooling and heating performance are taken into account. 

As discussed above, the efficiency level approach requires verification of the data submitted. Other 

approaches, such as the design options method, can be conducted in parallel with the efficiency level 

approach to verify the accuracy of its data. 

The Department seeks input on what methods could be utilized to verify the data provided by 

manufacturers using the efficiency level approach. Should the efficiency level approach be used? 

What are the benefits and disadvantages o/this approach? 

5.2.2 Design Options Approach 

Under the design options approach, individual or combinations of design 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 of engineering computer simulation models. The

incremental manufacturing costs of adding design options to a baseline model are then established.

Individual design options or combinations of design options are added to the baseline model in

ascending order of cost-effectiveness. Typically, the consumer payback period is used to establish a

design option's cost-effectiveness and is determined by the ratio of the change in total installed cost to

the change in operating cost (both as compared to the baseline).

The strength of this approach is in gaining a better understanding of the technological and economic

basis of efficiency 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 of any single technology on cost and efficiency is explicit. An additional advantage is the ability

to incorporate designs that have been demonstrated to perform in prototypes but have yet to be utilized

in equipment currently available on the market 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 to determine a

technology's impact on system efficiency, a computer simulation model is typically employed. Since

computer simulation models exhibit at least some level of inaccuracy, time and effort must be expended

to validate the model's results at a variety of operating 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 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.

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increased efficiency. Design option efficiency increases can either be based on manufacturer or 

component supplier estimates or through the use of engineering computer simulation models. The 

incremental manufacturing costs of adding design options to a baseline model are then established. 

Individual design options or combinations of design options are added to the baseline model in 

ascending order of cost-effectiveness. Typically, the consumer payback period is used to establisha 

design option's cost-effectiveness and is detennined by the ratio of the change in total installed cost to 

the change in operating cost (both as compared to the baseline). 

The strength oftllls approach is in gaining a better understanding of the technological and economic 

basis of efficiency 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 of any 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 order to detennine a 

technology'S impact on system efficiency, a computer simulation model is typically employed. Since 

computer simulation models exhibit at least some level of inaccuracy, time and effort must be expended 

to validate the model's results at a variety of operating 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 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 usefuJ in the manufacturing impact analysis. Therefore, for the 

manufacttning 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 
If the 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 or through the use of computer simulation models. There are at least two

public domain computer models for unitary AC and HPs, one from Oak Ridge National Laboratory

and the other from the National Institute of Standards and Technology, which could be used to

determine equipment efficiency.

The Department seeks input from stakeholders as to how efficiency impacts could be

determined under the design options approach. If computer simulation models are to be used,

which specific model should be used by the Department? Should the design options approach

be used? What are the benefits and disadvantages of this approach?

5.3 Approaches to Determining Cost Estimates

The Department strongly prefers to use a single set of cost-efficiency estimates in its analysis, and to

account for variability and uncertainty by using ranges, rather than analyzing competing scenarios.

Stakeholders are welcome to submit their own estimates in the form of public comment, but the

Department intends to analyze the differences among independent estimates and to synthesize them into

a range along with a most likely value. The cost estimates used should have the following

characteristics:

a level of transparency that permits validation by outside parties;

a level of detail that permits outside parties to draw conclusions regarding the design choices

underlying the analysis;

* protection of sensitive or confidential information;

a basis of generally accepted cost and performance estimation methodologies;

an assessable level of statistical certainty; and

be available by the scheduled deadline.

To the extent possible, the Department will seek the involvement of outside experts, and will include

manufacturers and other stakeholders to the process.

Are there particular cost estimating methodologies that are most appropriate for commercial

unitary AC and HPs? What role will manufacturers or other interested parties be willing to

play in the development of cost estimates?

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If the 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 stakeholder input or through the use of computer simulation models. There are at least two 

public domain computer models for unitary AC and HPs, one from Oak Ridge National Laboratory 

and the other from the National Institute of Standards and Technology, which could be used to 

determine equipment efficiency. 

The Department seeks inputfrom stakeholders as to how efficiency impacts could be 

determined under the design options approach. If computer simulation models are to be used, 

which specific model should be used by the Department? Should the design options approach 

be used? What are the benefits and disadvantages of this approach? 

5.3 Approaches to Determining Cost Estimates 

The Department strongly prefers to use a single set of cost-efficiency estimates in its ana1ysis, and to 

account for variability and uncertainty by using ranges, rather than analyzing competing scenarios. 

Stakeholders are welcome to submit their own estimates in the form of public comment, but the 

Department intends to analyze the differences among independent estimates and to synthesize them into 

a range along with a most likely value. The cost estimates used should have the following 

characteristics: 

a level of transparency that permits validation by outside parries; 

a level of detail that permits outside parties to draw conclusions regarding the design choices 

underlying the analysis; 

protection of sensitive or confidential information; 

a basis of generally accepted cost and performance estimation methodologies; 

an assessable level of statistical certainty; and 

be available by the scheduled deadline. 

To the extent possible, the Department will seek the involvement of outside experts, and will include 

manufacturers and other stakeholders to the process. 

Are there particular cost estimating methodologies that are most appropriatefor commercial 

unitary AC and HPs? What role will manufacturers or other interested parties 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 of a component-based engineering analysis or reverse engineering provides useful information

including the identification of potential 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 of the 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 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 of products

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 to whom they apply

6) aggregate the results and present them to the trade organization for review

7) revise the analysis and present it to the stakeholders for review and comment

The primary disadvantage of reverse engineering analysis is the time and effort required to analyze "offthe-shelf' equipment. Several models from a diverse range of manufacturers may need to be assessed

in order to ensure that an accurate representation of technological 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 maximum technologically feasible designs.

Tear-down analysis is a complementary methodology to whichever of the following engineering

approaches is followed. It can serve as verification of costs collected for an efficiency level analysis or

provide costs and design options choices for a design option analysis.

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5.4 Tear-Down Analysis 

The use of a component-based engineering analysis or reverse engineering provides useful information 

including the identification of potential 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 of the 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 order to 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 of products 

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 to whom they apply 

6) aggregate the results and present them to the trade organization for review 

7) revise the analysis and present it to the stakeholders for review and comment 

The primary disadvantage of reverse engineering analysis is the time and effort required to analyze "offthe-shelf' equipment. Several models from a diverse range of manufacturers may need to be assessed 

in order to ensure that an accurate representation of tedrnological 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 maxumun technologically feasible designs. 

Tear-down analysis is a complementary methodology to whichever of the following engineering 

approaches is followed. It can serve as verification of costs 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 analysis be used? What are the advantages and disadvantages of this

analysis? What guidelines should the Department consider when selecting the number and

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 of DOE's

statutory efficiency standards process that can impact the manufacture of the equipment. Some of these

changes can also affect the efficiency of the equipment. The Department will attempt to identify all

"outside" issues that can impact the engineering analysis.

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EE-RM-STD-01-375 COMMENT 02DD

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 analysis be used? What are the advantages and disadvantages oj this 

analysis? What guidelines should the Department consider when selecting the number and 

types oj models to be analyzed? 

5.5 Outside Regulatory Changes Affecting the Engineering Analysis 

In conducting an engineering analysis, there sometimes occur regulatory changes outside ofI)()E's 

statutory efficiency standards process that can impact the manufacture of the equipment. Some of these 

changes can also affect the efficiency of the 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 
The commercial unitary AC and HP industry is currently facing the impending phase-out of HCFC22, the refrigerant used in almost all the equipment currently being installed in the U.S. The phase:

out of HCFC-22 begins in the year 2010 and the industry has responded by conducting in-depth

analyses of various HCFC-22 alternatives.

As a result of the analyses conducted to date, two primary candidates have emerged from the field of

alternatives; R-410 A and R-407C. Both refrigerants have their advantages and disadvantages.

Although R-410A shows promise of being 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, it is still uncertain as to what impact the phase-out of HCFC-22 will have on the

industry. Namely, how will equipment manufacturer costs and efficiency levels be affected by the

phase-out of HCFC-22.

The Department seeks input from stakeholders as to how the impendingphase-out of HCFC22 should be handled in the engineering analysis. Is HCFC-22's phase-out date stillfar

enough in the future to base the analysis on the continued use of HCFC-22? If not, what are

the opportunities for a redesign and how will HCFC-22's elimination impact manufacturer

costs and equipment efficiency?

Are there any additional "outside " issues that stakeholders are aware of that should be

considered by the Department in its analysis of commercial unitary AC and HPs?

5.6 Building Energy Use and Electric Load Shape Characterization

The purpose of the building energy use and load shape characterization analysis is to assess the energy

and peak demand savings potential of different equipment efficiencies across the range of commercial

building types and climate zones. As part of the building energy use analysis, certain engineering

assumptions must be made regarding equipment application, including how the equipment is operated,

under what conditions, and as part of what integrated systems.

The Department intends to use computer building energy analysis software in this analysis, as it allows

the systematic treatment of interactions 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 will use one or more of

Commercial Unitary AC & HP 25 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

The commercial unitary AC and HP industry is currently facing the impending phase-out of HCFC22, the refrigerant used in almost all the equipment currently being installed in the U.S. The phase: 

out of HCFC-22 begins in the year 20 10 and the industry has responded by conducting in-depth 

analyses of various HCFC-22 alternatives. 

As a result of the 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 of being able to raise equjpment efficiencies, its high volumetric 

capacity rnay 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, it is still uncertain as to what impact the phase-out ofHCFC-22 will have on the 

industry. Namely, how will equipment manufacturer costs and efficiency levels be affected by the 

phase-out ofHCFC-22. 

The Department seeks input Jrom stakeholders as to how the impending phase-out of HCFC22 should be handled in the engineering analysis. Is HCFC-22's phase-out date still Jar 

enough in the Juture to base the analysis on the continued use oj HCFC-22? If not, what are 

the opportunitiesJor a redesign and how will HCFC-22's elimination impact manufacturer 

costs and equipment efficiency? 

Are there any additional "outside" issues that stakeholders are aware of that should be 

considered by the Department in its analysis oj commercial unitary AC and HPs? 

5.6 Building Energy Use and Electric Load Shape Characterization 

The ptupOse of the building energy use and load shape characterization analysis is to assess the energy 

and peak demand savings potential of different equipment efficiencies across the range of commercial 

building types and climate zones. As part of the building energy use analysis, certain engineering 

assumptions must be made regarding equipment application, including how the equipment is operated, 

under what conditions, and as part of what integrated systems. 

The Department intends to use computer building energy analysis software in this analysis, as it allows 

the systematic treatment of interactions 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. For commercial buildings, state-of-the-art building energy 

simulation software includes BLAST, ooE-2 and now Energy-Plus. DOE will use one or more of 

Commercial Unitary AC & HP 25 13 June 200 I 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 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 of commercial 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 to translate 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 Department seeks stakeholder input on the above and other sources of data concerning

U.S. commercial building stock characteristics for energy-related modeling purposes. Do you

agree with the use of these 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) of equipment efficiency improvements above

the base case. Together with electricity tariffs this information will generate operating costs for the lifecycle cost analysis in Section 8.

Commercial Unitary AC & HP 26 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

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 of commercial 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 or external 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 unitary AC and HP 

efficiency levels will be input and simulated yielding energy consumption results by building type and 

climate location. 

The Department seeks stakeholder input on the above and other sources oj data concerning 

u.s. commercial building stock characteristics Jor energy-related modeling purposes. Do you 

agree with the use oj these 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) of equipment efficiency improvements above 

the base case. Together with electricity tariffs this information will generate operating costs for the lifecycle cost analysis in Section 8. 

Commercial Unitary AC & HP 26 13 June 2001 Framework Docwnent 
The 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 of the efficiency of the equipment. How should the Department

include in the analysis the cooling provided by economizers? What assumptions should be

made in modeling the equipment regarding the use of, and control strategy applied to,

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 assumptions should be

made about how equipment is sized in order to address it correctly in the analysis from both

an energy and first cost impact?

Fan Static Pressure: Due to the varied ductwork designs for various commercial buildings the fan

static pressures will vary significantly. This will impact energy use and performance of the

equipment. What assumptions should be made regarding typical duct designs in order to

effectively accountforfan energy use?

Ventilation Air: Supply fans on commercial unitary AC and HPs generally operate continuously

when the building is occupied to provide ventilation air. How should energy use of the supply fans

operating only when ventilation is required (rather than heating or cooling) be excluded from

the energy use of the heating and cooling equipment?

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 of determining retail prices.

Commercial Unitary AC & HP 27 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

The 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 wUtal)' AC and HPs are likely to use economizers thiu 

provide cooling independent of the efficiency of the equipment. How should the Department 

include in the analysis the cooling provided by economizers? What assumptions should be 

made in modeling the equipment regarding the use of, and control strategy applied 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 should be 

made about how equipment is sized in order to address it correctly in the analysis from both 

an energy andfirst cost impact? 

Fan Static Pressure: Due to the varied ductwork designs for various commercial buildings the fan 

static pressures will vary significantly. This will impact energy use and performance of the 

equipment. What assumptions should be made regarding typical duct 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. How should energy use of the supply fans 

operating only when ventilation is required (rather than heating or cooling) be excluded from 

the energy use of the heating and cooling equipment? 

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 of detennining retail prices. 

Commercial Unitary AC & HP 27 13 June 200! Framework Document 
The Department intends to ask manufacturers to participate in the development of cost 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 Department welcomes suggestions and comments concerning the development of

manufacturing cost information.

6.1 Characterizing Uncertainty

DOE intends to place a range around the average manufacturing cost of incorporating 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.

For example, 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 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 DOE as percentile values. The entire

cost distribution would then be used in the calculation of life-cycle costs. If reverse engineering

methodologies are used, ranges can be estimated for each of the reverse engineering model's input

parameters (e.g., labor cost, plant size) to determine their effect on the cost estimates.

The Department seeks comment on these approaches to quantifying the uncertainty in our

manufacturing cost estimates.

6.2 Variability in Costs between Manufacturers

The Department is committed to assessing the differential impacts of standards on different

manufacturers. The detailed sub-group manufacturing impact analysis will entail calculating cashflows

Commercial Unitary AC & HP 28 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

The Department intends to ask manufacturers"to participate in the development of cost 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 accOlmt for different design 

strategies. 

The Department welcomes suggestions and comments concerning the development oj 

manufacturing cost information. 

6.1 Characterizing Uncertainty 

DOE intends to place a range around the average manufacturing cost of incorporating 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. 

For example, 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 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 of life-cycle costs. If reverse engineering 

methodologies are used, ranges can be estimated for each of the reverse engineering model's input 

parameters (e.g., labor cost, plant size) to determine their effect on the cost estimates. 

The Department seeks comment on these approaches to quantifying the uncertainty in our 

manufacturing cost estimates. 

6.2 Variability in Costs between Manufacturers 

The Department is committed to assessing the differential impacts of standards on different 

manufacturers. The detailed sub-group manufacturing impact analysis will entail calculating cashflows 

Commercial Unitary AC & HP 28 13 June 200 1 Framework Docwnent 
separately for each class of manufacturer defined. If appropriate, manufacturer impact analysis will be

performed for individual firms.

Manufacturing costs submitted to. DOE for appliance standard analyses have demonstrated large

variability. The Department prefers using disaggregated cost data from all manufacturers. If the

efficiency-level approach is used, disaggregated company-specific cost information developed for the

engineering analysis can be used to perform analysis for each manufacturer or manufacturer subgroup.

The method to be used in assessing manufacturer impacts will be the subject of an analysis workshop

to be held after publication of the ANOPR. The Department is considering use of the Government

Regulatory Impact Model (GRIM), which is in common use for other equipment.

The Department seeks comment on the approach of grouping the manufacturers into subgroups. What criteria should be used to determine these sub-groups?

63 Proprietary Designs

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 of any proprietary data submitted by

manufacturers. This information will provide input to the competitive impacts assessment and other

economic analyses.

Are there proprietary designs which the Department should considerfor commercial unitary

AC and HPs? If so, what type of approaches should be used to acquire the cost data

necessaryfor evaluating these designs?

Commercial Unitary AC & HP 29 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

separately for each class of manufacturer defined. If appropriate, manufacturer impact analysis will be 

performed for individual finns. 

Manufacturing costs submitted to. DOE for appliance standard analyses have demonstrated large 

variability. The Department prefers using disaggregated cost data from all manufacturers. If the 

efficiency-level approach is used, disaggregated company-specific cost infonnation developed for the 

engineering analysis can be used to perform analysis for each manufacturer or manufacturer subgroup. 

The method to be used in assessing manufactmer impacts will be the subject of an analysis workshop 

to be held after publication of the ANOPR. The Department is considering use of the Government 

Regulatory Impact Model (GRIM), which is in common use for other equipment. 

The Department seeks comment on the approach oj grouping the manuJacturers into subgroups. What criteria should be used to determine these sub-groups? 

63 Proprietary Designs 

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 enswe 

that provisions are made to maintain the confidentiality of any proprietary data submitted by 

manufacturers. This infonnation will provide input to the competitive impacts assessment and other 

economic analyses. 

Are there proprietary designs which the Department should consider Jor commercial unitary 

A C and HPs? If so, what type oj approaches should be used to acquire the cost data 

necessary Jor evaluating these 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. For this reason, retail prices used for the life-cycle cost analysis

need to be reconciled with manufacturer costs developed in the engineering analysis. Although the term

"retail" is used in this discussion, it is clear that for most of these products there is seldom an observable

retail price since the equipment is usually sold as part of an installed Heating Ventilating and Air

Conditioning (HVAC) system. In performing an economic analysis to determine whether a more

stringent standard is justified, information concerning how the incremental price to the end user 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 of retail prices, is

used to perform an initial selection of potential standards levels. Retail prices are needed for the

ASHRAE/IESNA 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: 1) conducting a survey of existing 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 for residential central AC and HPs (reference:

Estimation of the Distributor/Wholesaler and Dealer/Contractor Markups on Incremental

Central AC and H-P Costs, US-DOE, June 2000). That study concluded that both

distributors(/wholesalers) and dealers(/contractors) were likely to pass through changes in equipment

costs to a smaller 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 for this type of

equipment.

The Department believes that there is value in using various assumptions about cost pass-through that

will be reflected in price forecast approaches. The output of this 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

EE-RM-STD-01-375 COMMENT 02DD

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 

manufacturer economics are linked. For this 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 clear that for most of these products there is seldom an observable 

retail price since the equipment is usually sold as part of an installed Heating Ventilating and Air 

Conditioning (HV AC) system. In performing an economic analysis to determine whether a more 

stringent standard is justified, information concerning how the incremental price to the end user 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 of retail prices, is 

used to perform an initial selection of potential 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 of existing 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 for residential central AC and HPs (reference: 

Estimation 0/ the Distributor/Wholesaler and Dealer/Contractor Markups on Incremental 

Central AC and HP 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 smaller 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 smalI unitary commercial equipment are often similar to this residential 

equipment, this methodology may be a reasonable starting point for deriving markups for this type of 

equipment. 

The Department believes that there is value in using various assumptions about cost pass-through that 

will be reflected in price forecast approaches. The output of this 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 the process rule, and building on the estimates generated by the

various approaches, new retail prices would be described within a range of uncertainty.

The Department is considering using all the approaches described above to generate estimates of

future prices and intends to conduct uncertainty analysis of the range generated. The specific

methodologies and preliminary results will be submitted to stakeholders for review.

The above approaches are proposed in an effort to answer the following question: How

should the Department collect accurate equipment costs andprices for commercial equipment

that is not usually sold in a retail commodityfashion? Are there any nuances we should keep

in mind that may distort the results from one approach versus another? The Department

welcomes suggestions and comments concerning how estimates offuture retail prices can be

best developed.

7.2 Manufacturer Prices

Manufacturer prices are used during the industry cash flow phase of the 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 or private market reports.

The Department welcomes suggestions and comments concerning estimates of current andfuture

manufacturer prices.

8. Life-Cycle Cost and Payback Analysis

The effects of increased efficiency standards on a consumer of a product includes a change in operating

expense (usually decreased) and a change in purchase price (usually increased). In rulemakings for

other products, the Department has analyzed the net effect on consumers by calculating the life-cycle

cost using the engineering performance data for energy consumption and equipment retail prices which

can be derived in a number of ways (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

EE-RM-STD-01-375 COMMENT 02DD

efficiency standard. Consistent with the process rule, and building on the estimates generated by the 

various approaches, new retail prices would be described within a range of uncertainty. 

The Department is considering using all the approaches described above to generate estimates of 

future prices and intends to conduct uncertainty analysis of the range generated. The specific 

methodologies and preliminary results will be submitted to stakeholders for review. 

The above approaches are proposed in an effort to answer the following question: How 

should the Department collect accurate equipment costs and prices for commercial equipment 

that is not usually sold in a retail commodity fashion? Are there any nuances' we should keep 

in mind that may distort the results from one approach versuS another? The Department 

welcomes suggestions and comments concerning how estimates offuture retail prices can be 

best developed. 

7.2 Manufacturer Prices 

Manufacturer prices are used during the industry cash flow phase of the manufactW"er 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 BlU'eau or private market reports. 

The Department welcomes suggestions and comments concerning estimates of current and future 

manufacturer prices. 

8. Life-Cycle Cost and Payback Analysis 

The effects of increased efficiency standards on a consumer of a product includes a change in operating 

expense (usually decreased) and a change in purchase price (usually increased). In rulemakings for 

other products, the Department has 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 of ways (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 of the 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 for product price 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 of consumers as described in Section 12.

In the ANOPR stage, uncertainty analysis will be conducted on several of the 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 of the life-cycle cost analysis, DOE will select candidate standard levels for

analysis. The range of candidate standard levels will typically include the combination of design options

or efficiency levels with the lowest life-cycle cost; as well as other levels yet to be determined by the

Department.

In analyzing life-cycle cost, it is 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 of these tariffs for analysis of operating 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 of new equipment.

Commercial Unitary AC & HP 32 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

operating expenses (energy and maintenance costs), lifetime of the 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 for product price 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 of constuners as described in Section 12. 

In the ANOPR stage, uncertainty analysis will be conducted on several of the 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 of the life-cycle cost analysis, DOE will select candidate standard levels for 

analysis. The range of candidate standard levels will typically include the combination of design options 

or efficiency 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 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 of these tariffs for analysis of operating 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 of new equipment. 

Commercial Unitary AC & HP 32 13 June 2001 Framework Docwnent 
For commercial unitary AC and unitary HP it will be necessary to determine input values for several

variables. The following discusses some of these variables.

Retail Prices: The determination of prices is described in Section 7.1.

Electricity Prices: As discussed above, the Department is considering surveys to establish electricity

prices. Projections of future electricity prices for the life-cycle cost analysis will use high and low

projections of national average electricity prices to commercial customers. The present Energy

Information Administration (EIA) Annual Energy Outlook will be used as the default source of projections

for this uncertainty analysis. The Department is considering alternative methods of forecasting future

electricity prices including methods for determining marginal electricity rates.

Discount Rate: The calculation of consumer life-cycle costs requires the use of an appropriate discount

rate. The discount rate used in such calculations is intended to approximate the cost of capital of those

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 in energy expenses. Conceptually, the

cost of capital reflects all of the 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 of the 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 at 4% and 15%. For the commercial unitary AC and HP analysis, the

Department anticipates deriving a distribution of consumers' actual financing and opportunity costs to

develop appropriate discount rates for the purchase of commercial unitary AC and HP.

Are there recently-conducted empirical studies that have attempted to estimate the distribution of

discount rates (or payback criteria) used by building owners in evaluating energy conservation

investments or other investments with similar risks?

Maintenance. Service, and Installation Costs: The Department will consider expected changes to

maintenance, service, and installation costs for commercial unitary AC and HP, if applicable, such as new

curbing required for rooftop equipment in both new and replacement markets.

Tax Impacts: The Department will consider tax implications of equipment purchases.

Lifetime: In the original ASHRAE analysis of these products, a 15-year lifespan was suggested based on

estimates for typical 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 this an appropriate lifetime for commercial unitary AC and HP? Are there otherfactors the

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EE-RM-STD-01-375 COMMENT 02DD

For commercial unitary AC and unitary HP it will be necessary to detennine input values for several 

variables. The following discusses some of these variables. 

Retail Prices: The detennination of prices is described in Section 7.1. 

Electricity Prices: As discussed above, the Department is considering surveys to establish electricity 

prices. Projections of future electricity prices for the life-cycle cost analysis will use high and low 

projections of national average electricity prices to commercial customers. The present Energy 

Infonnation Administration (EIA) Annual Energy Outlook will be used as the default source of projections 

for this uncertainty analysis. The Department is considering alternative methods of forecasting future 

electricity prices including methods for determining marginal electricity rates. 

DiSCOunt Rate: The calculation of conswner life-cycIe costs requires the use of an appropriate discount 

rate. The discoWlt rate used in such calculations is intended to approximate the cost of capital of those 

who will make thc required investment in higher-efficiency equipment resulting from an amended standard 

and who would also, preswnably, benefit from the resulting savings in energy expenses. Conceptually, the 

cost of capital reflects all of the 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 of the businesses, institutions, or other parties affected by an amended standard. For the 

recent commercial ballast ruIemaking, the Department used a (real or inflation-adjusted) discoWlt rate of 

8%, with sensitivities performed at 4% and 15%. For the commercial unitary AC and HP analysis, the 

Department anticipates deriving a distribution of consumers' actual financing and opportunity costs to 

develop appropriate discount rates for the purchase of commercial unitary AC and HP. 

Are there recently-conducted empirical studies that have attempted to estimate the distribution of 

discount rates (or payback criteria) used by building owners in evaluating energy conservation 

investments or other investments with similar risks? 

Maintenance. Service. and Installation Costs: The Department will consider expected changes to 

maintenance, seIVice, and instaIlation costs for commercial unitary AC and HP, if applicable, such as new 

ctrrhing required for rooftop equipment in both new and replacement markets. 

Tax Impacts: The Department will consider tax implications of equipment purchases. 

Lifetime: In the original ASHRAE analysis of these 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 unitary AC and HP? 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 of standards (energy savings and net present value) and to calculate the future cashflows of

manufacturers. DOE is considering the use of three approaches to conduct these forecasts including:

I) an approach to derive shipments based on an analysis of key market drivers for the particular

product; 2) larger models to consider additional variables (i.e., retirement functions, price elasticities,

etc.), and, 3) applying the expert judgment of rulemaking participants.

In order to evaluate the various impacts of candidate 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 if DOE does not adopt energy conservation standards. The

base case is predicted on commercial unitary AC and HP shipments, the mix of efficiencies sold in the

absence of standards and how that mix would change over time. To determine the base case, the

Department needs data on commercial unitary AC and HP shipments, the market shares of the different

efficiency levels offered for each

A method, termed the accounting model, based on the accounting of new building construction and

historical rates of ownership (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 of consumer price and operating cost to

capture their impact on future shipments. In expressing saturation rates in this manner, consumer price

and operating cost elasticities can be developed to calibrate forecasts to historical shipments. Primary

drawbacks of this method include: 1) saturations of units in new and stock buildings must be

forecasted; 2) building construction must also be forecasted, although the Annual Energy Outlook

(AEO) and other sources do provide readily available forecasts; and 3) retirement of units must be

based upon assumptions regarding lifetimes.

The shipment model used for developing base case and standards cases forecasts can incorporate a

variety of features of the product market in order to 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 exists;

Consumer responsiveness to purchase price, operating costs, and business income elasticities;

Eligible market share and actual saturation rates; and

Multiple scenarios of efficiency shifts.

Commercial Unitary AC & HP 34 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

9. Shipments 

For all candidate standards levels, shipment forecasts are required in order to calculate the national 

benefits of standards (energy savings and net present value) and to calculate the future cashflows of 

manufacturers. DOE is considering the use of three approaches to conduct these forecasts including: 

I ) an approach to derive shipments based on an analysis of key market drivers for the particular 

product; 2) larger models to consider additional variables (i.e., retirement functions, price elasticities, 

etc.), and, 3) applying the expert judgment of rulemaking participants. 

In order to evaluate the various impacts of candidate 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 if DOE does not adopt energy conservation standards. The 

base case is predicted on commercial unitary AC and HP shipments, the mix of efficiencies sold in the 

absence of standards and how that mix would change over time. To determine the base case, the 

DePartment needs data on commercial unitary AC and HP shipments, the market shares of the different 

efficiency levels offered for each 

A method, termed the accounting model, based on the accounting of new building construction and 

historical rates of ownership (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 of consumer price and operating cost to 

capture their impact on future shipments. In expressing saturation rates in this manner, consumer price 

and operating cost elasticities can be developed to calibrate forecasts to historical shipments. Primary 

drawbacks of this method include: 1) saturations of units in new and stock buildings must be 

forecasted; 2) building construction must also be forecasted., although the Annual Energy Outlook 

(AEO) and other sources do provide readily available forecasts; and 3) retirement of units must be 

based upon assumptions regarding lifetimes. 

The shipment model used for developing base case and standards cases forecasts can incorporate a 

variety of features of the product market in order to 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; 

Consumer responsiveness to purchase price, operating costs, and business income elasticities; 

Eligible market share and actual satwation rates; and 

Multiple scenarios of efficiency 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 of efficiencies of these 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. In this

section, a prelminary assessment of the aggregate impacts at the national level is conducted. Measures

of impact to be reported include the net present value of total consumer life-cycle costs, national

energy savings, and national employment.

10.1 Inputs to Forecasts

Analyzing impacts of Federal energy-efficiency standards requires a comparison of projected 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

of unit energy consumption of new equipment, annual equipment shipments and the price of purchased

equipment. The derivations of the 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 to calculate national energy consumption for each year beginning with the

expected effective date of the 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 of a simple spreadsheet to multiply annual shipment

forecasts by unit energy savings; 2) the use of commercial 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).

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EE-RM-STD-01-375 COMMENT 02DD

In conducting a base case shipments forecast for commercial unitary AC and HP, historical 

shipments data on the distribution of efficiencies of these 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. In this 

section, a preliminary assessment of the aggregate impacts at the national level is conducted. Measures 

of impact to be reported include the net present value of total consumer life-cycle costs, national 

energy savings, and national employment. 

10.1 Inputs to Forecasts 

Analyzing impacts of Federal energy-efficiency standards requires a comparison of projected 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 contain projections 

of unit energy consumption of new equipment, annual equipment shipments and the price of purchased 

equipment. The derivations of the 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 to calculate national energy consumption for each year beginning with the 

expected effective date of the 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 of a simple spreadsheet to multiply annual shipment 

forecasts by unit energy savings; 2) the use of commercial 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 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 of national energy savings and net present value for commercial unitary

AC and HP.

The Department has prepared spreadsheet models for other products 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 can be applied to commercial unitary AC and

HP.

Are there any other models that should be considered as alternatives to these?

10.3 Net Present Value and Payback

The national net present value of the candidate standards levels is calculated in conjunction with the

national energy consumption. Annual energy expenditures are calculated 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 a base case and a standards case scenario

gives the national energy bill savings and increased equipment expenditures in dollars. The difference

each year between energy bill savings minus increased equipment expenditures is the net savings (if

positive) or net costs (if negative). These annual values are discounted to the present time and summed

to give a net present value.

11. Revised Engineering, LCC, and NES Analysis

Based on consideration of the comments received for the ANOPR, DOE will make the necessary

changes to the analysis and candidate standards levels. If major changes are required at this stage,

stakeholders will be given an opportunity to review the revised 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 if DOE

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.

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EE-RM-STD-01-375 COMMENT 02DD

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 of national energy savings and net present value for commercial unitary 

AC and HP. 

The Department has prepared spreadsheet models for other products 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 can be applied to commercial unitary AC and 

HP. 

Are there any other models that should be considered as alternatives to these? 

10.3 Net Present Value and Payback 

The national net present value of the 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 price per 

unit times the forecasted shipments. The difference between a base case and a standards case scenario 

gives the national energy bill savings and increased equipment expenditures in dollars. The difference 

each year between energy bill savings minus increased equipment expenditures is the net savings (if 

positive) or net costs (if negative). These annual values are discounted to the present time and swruned 

to give a net present value. 

11. Revised Engineering, LCC, and NES Analysis 

Based on consideration of the comments received for the ANOPR, DOE will make the necessary 

changes to the analysis and candidate standards levels. If major changes are required at this stage, 

stakeholders will be given an opportunity to review the revised analysis. If ASHRAE 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 if DOE 

determines that the amended ASHRAFJIESNA Standard 90.1 level as revised in October 1999 is 

appropriate, OOE will not conduct remaining analyses, and will publish a final rule. 

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

EE-RM-STD-01-375 COMMENT 02DD

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 to the LCC analysis, and by inviting consumer and bill-payer participation.

A consumer sub-group entails a subset of the population that is likely, for one reason or another, to be

impacted disproportionally by new standards. The purpose of a sub-group analysis is to determine the

extent of this 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 of a standard to consumer sub-groups. To the extent possible, DOE will

obtain estimates of the variability in each input variable and consider this variability in its calculation of

consumer impacts. The variability in each input variable and likely sources of information will be

discussed with stakeholders.

DOE intends to consider the impact of any new efficiency regulations on consumer sub-groups. In

the case of commercial unitary AC and HP products, some possible sub-groups DOE may choose

to consider are:

Owner-occupied vs. tenant-leased buildings.

Public sector buildings, especially schools, hospitals, etc.

What consumer sub-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 performing manufacturer impact analysis.

The Department held a public 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 under the National Appliance Energy Conservation Act of 1987 (NAECA). The

Department intends to apply this methodology to other EPCA-related efficiency standards as well,

tailoring the methodology for each rule on the basis of stakeholder comments. The analysis of impacts

on manufacturers is intended to provide the Department with an assessment of the impacts that may

occur on commercial unitary AC and HP manufacturers. In addition to financial impacts, a wide range

Commercial Unitary AC & HP 38 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

12. LCC Sub-group Analysis 

In this section, consumer impacts are analyzed by dividing consumers into sulrgroups and accoWlting 

for variations in key inputs to the LCC analysis, and by inviting consumer and bill-payer participation. 

A consumer sulrgroup entails a subset of the population that is likely, for one reason or another, to be 

impacted disproportionally by new standards. The pwpose of a sub-group analysis is to detennine the 

extent of this 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 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 of a standard to consumer sub-groups. To the extent possible, DOE will 

obtain estimates of the Variability in each input variable and consider this Variability in its calculation of 

consumer impacts. The variability in each input variable and likely sources of information will be 

discussed with stakeholders. 

DOE intends to consider the impact of any new efficiency regulations on conswner sulrgroups. In 

the case of commercial unitary AC and HP products, some possible sulrgroups DOE may choose 

to consider are: 

Owner-occupied vs. tenant-leased buildings. 

• Public sector buildings, especially schools, hospitals, etc. 

What consumer sub-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 a public 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 other EPCA-related efficiency standards as well, 

tailoring the methodology for each rule on the b~is of stakeholder comments. The analysis of impacts 

on manufacturers is intended to provide the Department with an assessment of the impacts that may 

occur on commercial unitary AC and HP manufacturers. In addition to financial impacts, a wide range 

Conunercial Unitary AC & HP 38 13 June 2001 Framework Docwnent 
of quantitative and qualitative effects may occur following adoption of a 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 for the Manufacturer Impact Analysis

Many of the 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 interview process has a key role in

the manufacturer impact analyses, since it provides an opportunity for interested parties to privately

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 of potential impacts of standards. During the interviews, the

Department solicits information on the possible impacts of potential 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 for key individuals to be available for comment. Although a written

response to the questionnaire is acceptable, an interactive interview process is preferred 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 but that

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 of the interview

process.

13.2 Industry Cash 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 of more stringent energy

efficiency standards on the industry that produces the products covered by the standard.

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EE-RM-STD-01-375 COMMENT 02DD

of quantitative and qualitative effects may occur following adoption of a 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 for the Manufacturer Impact Analysis 

Many of the analyses described earlier provide 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 interview process has a key role in 

the manufacturer impact analyses, since it provides an opportunity for interested parties to privately 

express their views on important issues, allowing confidential or sensitive 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 of potential impacts of standards. During the interviews, the 

Department solicits infonnation on the possible impacts of potential 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 evezy opportunity for key individuals to be available for comment. Although a written 

response to the questionnaire is acceptable, an interactive interview process is preferred because it 

helps clarify responses and provides the opportunity for additional issues to be iden~ed. 

Interview participants 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 but that 

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 of the interview 

process. 

13.2 Industry Cash Flow Analysis 

The Industry Cash Flow Analysis relies primarily upon the Government Regulatozy Impact Model 

(GRIM). The Department uses the GRIM to analyze the financial impacts of more stringent energy 

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 of factors - annual expected revenues; manufacturer costs such as

costs of sales, selling and general administration costs; taxes; and capital expenditures related to

depreciation, new standards, and maintenance -- to arrive at a series of annual cash flows beginning

from the announcement of the new standard and continuing for several years after implementation. The

results are compared against baseline projections that involve no new standards. The financial impact

of new standards is then the difference between the two sets of discounted annual cash flows. Other

performance metrics such as return on invested capital are also available from the GRIM.

For discussion purposes, the Department will prepare a list of default financial values to be used in

the GRIM industry analysis. These will be calculated by studying publicly available financial.

statements of commercial unitary AC and HP manufacturers, if available, or statements of companies

in similar industries.

133 Manufacturer Sub-group Analysis

Using industry "average" cost values is not adequate for assessing differential impacts among subgroups of manufacturers. Smaller manufacturers, niche players, or manufacturers 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 of the

industry characterization to group manufacturers exhibiting similar characteristics.

What procedures should we follow when scheduling interviews and requesting information?

Is there any value in grouping manufacturers into sub-groups? More generally, what would a

well executed sub-group analysis entail?

13.4 Competitive Impacts Assessment

EPCA section 342 (6)(BXi)(V) directs the Department to consider any lessening of competition that is

likely to result from imposition of standards. For these products, the Department must examine

whether there is any lessening of competition if a standard is set above the levels established in

ASHRAE/IESNA Standard 90.1-1999. It further directs the Attorney General to determine the

impacts, if any, of any lessening of competition. DOE will make a determined effort to gather and

report firm-specific financial information and impacts. The competitive analysis will focus on assessing

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

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EE-RM-STD-01-375 COMMENT 02DD

The GRIM analysis uses a number of factors - annual expected revenues; manufacturer costs such as 

costs of sales, selling and general administration costs; taxes; and capital expenditures related to 

depreciation, new standards, and maintenance -- to arrive at a series of annual cash flows beginning 

from the announcement of the new standard and continuing for several years after implementation. The 

results are compared against baseline projections that involve no new standards. The financial impact 

of new standards is then the difference between the two sets of discOlmted 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 of default fmancial values to be used in 

the GRIM industry analysis. These will be calculated by studying publicly available financial. 

statements of commercial wUtary AC and HP manufacturers, if available, or statements of companies 

in similar industries. 

13.3 Manufacturer Sub-group Analysis 

Using industry "average" cost values is not adequate for assessing differential impacts among subgroups of manufacturers. Smaller manufacturers, ruche players, or manufacturers 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 finn individually. In highly concentrated industries this 

may be possible. In industries having numerous participants, the Department uses the results of the 

industry characterization to group manufacturers exhibiting similar characteristics. 

What procedures should we follow when scheduling interviews and requesting information? 

Is there any value in grouping manufacturers into sub-groups? More generally, what would a 

well executed sub-group analysis entail? 

13.4 Competitive Impacts Assessment 

EPCA section 342 (6)(BXi)(V) directs the Department to consider any lessening of competition that is 

likely to result from imposition of standards. For these products, the Department must examine 

whether there is any lessening of competition if a standard is set above the levels established in 

ASHRAElIESNA Standard 90.1-1999. It further directs the Attorney General to detennine the 

impacts, if any, of any lessening of competition. ooE will make a determined effort to gather and 

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 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 seek to 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 regulations or pending regulations should the Department consider?

14. Utility Impacts

To perform the Utility Impacts Analysis, which would include an analysis of both the electric and gas

utility industry, the Department is considering using the Energy Information Administation's (EIA)

National Energy Modeling System (NEMS). NEMS is a large multi-sectoral partial equilibrium model

of the U.S. energy sector that has been developed over several years by the EIA primarily for the

purpose of preparing the AEO. NEMS produces a widely recognized baseline forecast for the United

States through 2020 and is available in the public domain. Outputs of the utility analysis can parallel

results that appear in the latest AEO, with some additions. Typical output includes forecasts of sales,

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 consider using alternative methods to NEMS for conducting the utility impacts

analysis?

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EE-RM-STD-01-375 COMMENT 02DD

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 seek to 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 regulations or pending regulations should the Department consider? 

14. Utility Impacts 

To perfonn the Utility Impacts Analysis, which would include an analysis of both 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 

of the U.S. energy sector that has been developed over several years by the EIA primarily for the 

purpose of preparing the AEO. NEMS produces a widely recognized baseline forecast for the United 

States through 2020 and is available in the public domain. Outputs of the utility analysis can parallel 

results that appear in the latest AEO, with some additions. Typical output includes forecasts of sales, 

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 consider using alternative methods to NEMS for conducting the utility impacts 

analysis? 

Commercial Unitary AC & HP 41 13 June 2001 Framework Document 
15. Environmental Analysis

The standards' analysis tracks three types of energy-related emissions: sulfur dioxide (SO 2), nitrous

oxides (NOx) and carbon dioxide (CO2). 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 EIA's NEMS. Outputs of the

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 of the latest AEO, and the

assumptions in place there can be the basic set of assumptions applied. For example, the operating

characteristics (energy conversion efficiency, emissions rates, etc.) of future electricity generating plant

can be 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 of its broad coverage of all sectors and inclusion of interactive effects. NEMS also

includes a module for SO2 allowance trading and delivers a forecast of SO 2 allowance prices. It is

important to note, however, that accurate simulation of SO2 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 is an SO2 benefit from

conservation in the form of a lower allowance price, and if big enough to be calculable by NEMS, this

value can be reported. NEMS also has an algorithm for estimating NOx emissions from power

generation.

The results for the environmental analysis can be in the form of a complete NEMS un. In general,

NEMS outputs become the tables of an AEO, and these should provide a good idea of the range of

results available. Reported in a NEMS run are NOx and carbon emissions and a resulting SO2 trading

price.

Are there any other environmentalfactors the Department should consider? Ifso,

what additional analytical methods are appropriatefor addressing them?

16. Employment Impacts

Two impacts on employment are possible from standards, direct impacts and indirect impacts. Direct

employment impacts would result if standards lead to a change in the number of employees at the plants

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EE-RM-STD-01-375 COMMENT 02DD

15. Environmental Analysis 

The standards' analysis tJacks three types of energy-related emissions: sulfur dioxide (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's NEMS. Outputs of the 

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 of the latest AEO, and the 

assumptions in place there can be the basic set of assumptions applied. For example, 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 of its broad coverage of all sectors and inclusion of interactive effects. NEMS also 

includes a module for S02 allowance trading and delivers a forecast of S02 allowance prices. It is 

important to note, however, that accurate simulation of S02 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 is an SOz benefit from 

conservation in the form of a lower allowance price, and ifbig enough to be calculable by NEMS, this 

value can be reported. NEMS also has an algorithm for estimating NOx emissions from power 

generation. 

The results for the environmental analysis can be in the form of a complete NEMS nul. In general, 

NEMS outputs become the tables of an AEO, and these should provide a good idea of the range of 

results available. Reported in a NEMS run are NOx and carbon emissions and a resulting S02 tJading 

pnce. 

Are there any other environmentalJactors the Department should consider? /fso, 

what additional analytical methods are appropriate Jor addressing them'? 

16. Employment Impacts 

Two impacts on employment are possible from standards, direct impacts and indirect impacts. Direct 

employment impacts would result if standards lead to a change in the nwnber of employees 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 national job impacts from reallocation of expenditures for purchasing and operating

appliances caused by standards.

What methods should be employed to assess employment impacts?

Commercial Unitary AC & HP 43 13 June 2001 Framework Document

EE-RM-STD-01-375 COMMENT 02DD

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 indirect impacts in the Employment Impacts analysis 

which will evaluate national job impacts from reallocation of expenditures for purchasing and operating 

appliances caused by standards. 

What methods should be employed to assess employment impacts? 

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