From: Llenza, Charles [mailto:Charles.Llenza@ee.doe.gov] 

Sent: Wednesday, May 27, 2009 6:46 PM 

To: undisclosed-recipients 

Subject: Advance Notification of: Notice of Proposed Rulemaking (NOPR) for Refrigerated 

Bottled or Canned Beverage Vending Machines (BVM) (Docket No. EERE-2006-STD-0125, RIN 

1904-AB58) 

Importance: High 

Ladies and Gentlemen: 

On Friday, May 22, 2009, the Department of Energy (DOE) issued a Notice of 

Proposed Rulemaking (NOPR) Regarding Energy Conservation Standards for 

Refrigerated Bottled or Canned Beverage Vending Machines (BVM) and a 

Related Public Meeting notice, see "Federal_Register_BVM_NOPR_2009-05-

22.pdf" file attached. 

DOE will hold an informal public meeting, on Wednesday, June 17, 2009, to 

discuss the proposed energy conservation standards as issued in the BVM 

NOPR. The public meeting will be held at the U.S. Department of Energy, 

Forrestal Building, Room 8E-069, 1000 Independence Avenue, SW, Washington, 

D.C. 20585-0121 from 9:00 AM to 5:00 PM EST. 

Additional information is available at the DOE website:

 

http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverag

e_machines_nopr_pub_mtg.html

If you have any additional questions please contact: 

Charles Llenza 

Project Manager/Engineer 

Appliance Standards Team 

Energy Efficiency and Renewable Energy 

US Department of Energy 

(202)586-2192(work) 

(202)287-1590(fax) 

Charles.Llenza@ee.doe.gov

 

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EERE-2006-STD-0125 COMMENT 48
 

Billing Code 6450-01-P 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket No. EERE-2006-STD-0125] 

RIN 1904-AB58 

Energy Conservation Program: Energy Conservation Standards for Refrigerated 

Bottled or Canned Beverage Vending Machines 

AGENCY: Office of Energy Efficiency and Renewable Energy, U.S. Department of 

Energy. 

ACTION: Notice of proposed rulemaking and notice of public meeting. 

SUMMARY: The Energy Policy and Conservation Act prescribes energy conservation 

standards for certain commercial and industrial equipment and requires the U.S. 

Department of Energy (DOE) to administer an energy conservation program for this 

equipment. In this notice, DOE is proposing new energy conservation standards for 

refrigerated bottled or canned beverage vending machines. DOE is also announcing a 

public meeting on its proposed standards. 

DATES: DOE will hold a public meeting on Wednesday, June 17, 2009 from 9:00 a.m. 

to 4:00 p.m. in Washington, DC. DOE must receive requests to speak at the public 

meeting no later than 4:00 p.m. Wednesday, June 3, 2009. DOE must receive a signed 

1
 

EERE-2006-STD-0125 COMMENT 48
original and an electronic copy of statements to be given at the public meeting no later 

than 4:00 p.m. Wednesday, June 10, 2009. 

DOE will accept comments, data, and information regarding the notice of 

proposed rulemaking (NOPR) before and after the public meeting, but no later than 

[INSERT DATE 60 DAYS AFTER FEDERAL REGISTER PUBLICATION]. See 

section VII, “Public Participation,” of this NOPR for details. 

ADDRESSES: The public meeting will be held at the U.S. Department of Energy, 

Forrestal Building, Room 1E-245, 1000 Independence Avenue, SW., Washington, DC 

20585-0121. Please note that foreign nationals visiting DOE Headquarters are subject to 

advance security screening procedures, requiring a 30-day advance notice. If you are a 

foreign national and wish to participate in the public meeting, please inform DOE as soon 

as possible by contacting Ms. Brenda Edwards at (202) 586-2945 so that the necessary 

procedures can be completed. 

Any comments submitted must identify the NOPR for beverage vending 

machines, and provide docket number EERE-2006-STD-0125 and/or RIN number 1904­

AB58. Comments may be submitted using any of the following methods: 

•	 Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions 

for submitting comments. 

•	 E-mail: beveragevending.rulemaking@ee.doe.gov. Include docket number EERE2006-STD-0125 and/or RIN 1904-AB58 in the subject line of the message. 

•	 Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building 

Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW., 

2
 

EERE-2006-STD-0125 COMMENT 48
 

Washington, DC 20585-0121. Telephone: (202) 586-2945. Please submit one 

signed original paper copy. 

•	 Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of Energy, 

Building Technologies Program, 950 L’Enfant Plaza, SW., 6th Floor, Washington, 

DC 20024. Please submit one signed original paper copy. 

For detailed instructions on submitting comments and additional information on 

the rulemaking process, see section VII, “Public Participation,” of this document. 

Docket: For access to the docket to read background documents or comments 

received, visit the U.S. Department of Energy, Resource Room of the Building 

Technologies Program, 950 L’Enfant Plaza, SW., 6th Floor, Washington, DC, 20024, 

(202) 586-2945, between 9:00 a.m. and 4:00 p.m. Monday through Friday, except Federal 

holidays. Please call Ms. Brenda Edwards at the above telephone number for additional 

information regarding visiting the Resource Room. Please note: DOE’s Freedom of 

Information Reading Room (Room 1E-190 at the Forrestal Building) no longer houses 

rulemaking materials. 

FOR FURTHER INFORMATION CONTACT: 

Mr. Charles Llenza, U.S. Department of Energy, Building Technologies Program, EE-2J, 

1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-2192, 

Charles.Llenza@ee.doe.gov or Ms. Francine Pinto, Esq., U.S. Department of Energy, 

Office of General Counsel, GC-72, 1000 Independence Avenue, SW., Washington, DC
 

20585-0121, (202) 586-9507, Francine.Pinto@hq.doe.gov. 

3
 

EERE-2006-STD-0125 COMMENT 48
SUPPLEMENTARY INFORMATION: 

I. Summary of the Proposed Rule 

II. Introduction 

A. Overview 

B. Authority 

C. Background 

1. History of Standards Rulemaking for Beverage Vending Machines 

2. Miscellaneous Rulemaking Issues 

III. General Discussion 

A. Test Procedures 

B. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible Levels 

C. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

D. Economic Justification 

1. Specific Criteria 

2. Rebuttable Presumption 

IV. Methodology and Discussion of Comments 

A. Market and Technology Assessment 

1. Definition of Beverage Vending Machine 

2. Equipment Classes 

B. Engineering Analysis 

1. Approach 

2. Equipment Analyzed in the Engineering Analysis 

3. Analytical Models 

4. Engineering Analysis Results 

C. Markups to Determine Equipment Price 

D. Energy Use Characterization 

E. Life-Cycle Cost and Payback Period Analyses 

1. Manufacturer Selling Price 

2. Increase in Selling Price 

3. Markups 

4. Installation Costs 

5. Energy Consumption 

6. Electricity Prices 

7. Electricity Price Trends 

8. Repair Costs 

9. Maintenance Costs 

10. Lifetime 

11. Discount Rate 

12. Payback Period 

4
 

EERE-2006-STD-0125 COMMENT 48
F. Shipments Analysis 

G. National Impact Analysis 

1. Base Case and Standards Case Forecasted Efficiencies 

2. Annual Energy Consumption, Total Installed Cost, Maintenance Cost, and Repair 

Costs 

3. Escalation of Electricity Prices 

4. Electricity Site-to-Source Conversion 

H. Life-Cycle Cost Subgroup Analysis 

I. Manufacturer Impact Analysis 

1. Overview 

2. Discussion of Comments 

3. Government Regulatory Impact Model Analysis 

4. Manufacturer Interviews 

5. Government Regulatory Impact Model Key Inputs and Scenarios 

J. Utility Impact Analysis 

K. Employment Impact Analysis 

L. Environmental Assessment 

M. Monetizing Carbon Dioxide and Other Emissions Impacts 

V. Analytical Results 

A. Trial Standard Levels 

B. Economic Impacts on Commercial Customers 

1. Economic Impacts on Commercial Customers 

2. Economic Impacts on Manufacturers 

3. National Impact Analysis 

4. Impact on Utility or Performance of Equipment 

5. Impact of Any Lessening of Competition 

6. Need of the Nation to Conserve Energy 

7. Other Factors 

C. Proposed Standard 

1. Class A Equipment 

2. Class B Equipment 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Order 12866 

B. Review Under the Regulatory Flexibility Act/Initial Regulatory Flexibility Analysis 

1. Reasons for the Proposed Rule 

2. Objectives of and Legal Basis for the Proposed Rule 

3. Description and Estimated Number of Small Entities Regulated 

4. Description and Estimate of Compliance Requirements 

5. Duplication, Overlap, and Conflict with Other Rules and Regulations 

6. Significant Alternatives to the Rule 

C. Review Under the Paperwork Reduction Act 

D. Review Under the National Environmental Policy Act 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates Reform Act of 1995 

H. Review Under the Treasury and General Government Appropriations Act, 1999 

5
 

EERE-2006-STD-0125 COMMENT 48
 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality Bulletin for Peer Review 

VII. Public Participation 

A. Attendance at Public Meeting 

B. Procedure for Submitting Requests to Speak 

C. Conduct of Public Meeting 

D. Submission of Comments 

VIII. Approval of the Office of the Secretary 

I. Summary of the Proposed Rule 

The Energy Policy and Conservation Act (EPCA), as amended, specifies that any 

new or amended energy conservation standard the U.S. Department of Energy (DOE) 

prescribes for the equipment covered by this notice shall be designed to “achieve the 

maximum improvement in energy efficiency . . . which the Secretary determines is 

technologically feasible and economically justified.” (42 U.S.C. 6295(o)(2)(A), and (v)) 

Further, the new or amended standard must “result in significant conservation of energy.” 

(42 U.S.C. 6295(o)(3)(B) and (v)) In accordance with these and other statutory criteria 

discussed in this notice, DOE proposes to adopt new energy conservation standards for 

refrigerated bottled or canned beverage vending machines, hereafter referred to as 

“beverage vending machines.” The proposed standards, shown in Table I-1, would apply 

to all beverage vending machines manufactured 3 years after publication of the final rule 

establishing the energy conservation standards and offered for sale in the United States. 

(42 U.S.C. 6295(v)(4))1 

1 This provision was redesignated by EISA, section 316(d)(1), as 42 U.S.C. 6295(v)(3). 

6
 

EERE-2006-STD-0125 COMMENT 48
Table I-1 Proposed Standard Levels 

Equipment Class* 

Proposed Standard Level** 

Maximum Daily Energy Consumption (MDEC) 

kWh/day 

A 0.055 x V + 2.56† 

B 0.073 x V + 3.16†† 

*

 See section IV.A.2 of this notice for a discussion of equipment classes. ** “V” is the refrigerated volume (ft3

) of the refrigerated bottled or canned beverage vending machine, as 

measured by the American National Standards Institute (ANSI)/Association of Home Appliance 

Manufacturers (AHAM) HRF-1-2004, “Energy, Performance and Capacity of Household Refrigerators,
 

Refrigerator-Freezers and Freezers.” 

†

 Trial Standard Level (TSL) 6.

†† TSL 3. 

DOE’s analyses indicate that the proposed energy conservation standards, trial 

standard level (TSL) 6 for Class A equipment and TSL 3 for Class B equipment would 

save a significant amount of energy—an estimated 0.098 quadrillion British thermal units 

(Btu), or quads, of cumulative energy over 30 years (2012 to 2042). See section V.A for a 

detailed description of TSLs. The economic impacts on commercial customers (i.e., the 

average life-cycle cost (LCC) savings) are positive for both equipment classes. 

The cumulative national net present value (NPV) of the proposed standards from 

2012 to 2042 ranges from $0.105 billion (at a 7-percent discount rate) to $0.273 billion 

(at a 3-percent discount rate) in 2008$. This is the estimated total value of future 

operating cost savings minus the estimated increased equipment costs, discounted to 

2008$. The benefits and costs of the standards can also be expressed in terms of 

annualized 2008$ values over the forecast period 2012 through 2042. Using a 7-percent 

discount rate for the annualized cost analysis, the cost of the standards is estimated to be 

$11.1 million per year in increased equipment and installation costs, while the annualized 

benefits are expected to be $20.5 million per year in reduced equipment operating costs. 

Using a 3-percent discount rate, the annualized cost of the standards is expected to be 

7
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

 

$9.4 million per year, while the annualized benefits of the standards are expected to be 

$21.4 million per year. (See section V.B.3 for additional details.) If DOE adopts the 

proposed standards, it expects manufacturers will lose 22.9 to 25.3 percent of the industry 

net present value (INPV), which is approximately $13.2 to $14.6 million. 

DOE estimates that the proposed standards will have environmental benefits 

leading to reductions in greenhouse gas emissions (i.e., cumulative (undiscounted) 

emission reductions) of 5.14 million tons (Mt) of carbon dioxide (CO2) from 2012 to 

2042.2 Most of the energy saved is electricity. In addition, DOE expects the energy 

savings from the proposed standards to eliminate the need for approximately 46 

megawatts (MW) of electric generating capacity by 2042. These results reflect DOE’s 

use of energy price projections from the U.S. Energy Information Administration (EIA)’s 

Annual Energy Outlook 2009 (AEO2009).3 DOE also estimated that the net present value 

benefits of the proposed standards from reducing CO2 emissions would range from $0 to 

$49.6 million using a 7-percent discount rate and $0 to $96.4 million using a 3-percent 

discount rate, although the method for developing these estimates is now under review. 

The net present value benefits of the proposed standards from reducing oxides of nitrogen 

(NOx) emissions would range from $109,000 to $1.13 million using a 7-percent discount 

rate and from $187,000 to $1.93 million using a 3-percent discount rate. Finally, the net 

2

 Additionally, the standards would result in emissions reductions for nitrogen oxides (NOx) or generate a 

similar amount of NOx emissions allowance credits in areas where such emissions are subject to regulatory 

or voluntary emissions caps.

3

 DOE intends to use EIA’s AEO2009 to generate the results for the final rule. The AEO2009 Early 

Release contains reference case energy price forecasts, which shows higher commercial electricity prices at 

the national level compared with the AEO2008 on a real (inflation adjusted) basis. If these early release 

energy prices remain unchanged in the final release, then incorporation of the AEO2008 forecasts would 

likely result in reduced payback periods, greater life-cycle cost savings, and greater national net present 

value for the proposed standards. 

8
 

EERE-2006-STD-0125 COMMENT 48
present value benefits of the proposed standards from reducing Hg emissions would 

range from $0 to $1.0 million using a 7-percent discount rate and $0 to $1.73 million 

using a 3-percent discount rate. 

DOE proposes that the standards in today’s NOPR for Class A and Class B 

beverage vending machines represent the maximum improvement in energy efficiency 

that is technologically feasible and economically justified. DOE proposes that the 

benefits to the Nation of the proposed standards (energy savings, commercial customer 

average LCC savings, national NPV increase, and emission reductions) outweigh the 

costs (loss of manufacturer INPV). Furthermore, DOE proposes that the proposed 

standards are technologically feasible because the technologies required to achieve these 

levels already exist. 

DOE requests comment and further data or information on whether the energy 

savings and related benefits of TSL 6 outweigh the costs, including potential 

manufacturer impacts. DOE seeks comment on the magnitude of the estimated decline in 

INPV at TSL 6, and what impact this level could have on industry parties, including 

small businesses. DOE is particularly interested in receiving comments, views, and 

further data or information from interested parties concerning: 1) why the private market 

has not been able to capture the energy benefits proposed in TSL 6; 2) whether and to 

what extent parties estimate they will be able to transfer costs of implementing TSL 6 on 

to consumers; 3) whether and to what extent parties estimate distributional chain 

intermediaries (such as wholesalers or bottlers) will be able to absorb TSL 6 

9
 

EERE-2006-STD-0125 COMMENT 48
 

implementation costs and in turn transfer these costs to on-site consumers, who 

ultimately benefit from the energy gains associated with the proposed standard. 

II. Introduction 

A. Overview 

DOE proposes to set energy conservation standards for beverage vending 

machines at the levels shown in Table I-1. The proposed standards would apply to 

equipment manufactured 3 years after publication of the final rule establishing the energy 

conservation standards and offered for sale in the United States. DOE has tentatively 

found that the standards would save a significant amount of energy (see section III.C.2) 

and result in a cleaner environment. In the 30-year period after the new standards become 

effective, the Nation would tentatively save 0.098 quads (sum of 0.088 quads for Class A 

machines and 0.010 quads for Class B machines) of primary energy. These energy 

savings also would tentatively result in significantly reduced emissions of air pollutants 

and greenhouse gases associated with electricity production by avoiding the emission of 

5.14 Mt of CO2, up to 0.69 kt of NOx, and up to 0.085 tons of Hg. In addition, DOE 

expects the standards to prevent the construction of 0.046 new 1,000 MW power plants 

by 2042. In total, DOE tentatively estimates the total net present value to the Nation of 

these standards to be $0.105 billion (sum of a positive net present value of $0.105 billion 

for Class A machines and zero [less than $0.5 million] for Class B machines) from 2012 

to 2042 in 2008$. 

10
 

EERE-2006-STD-0125 COMMENT 48
Commercial customers would see benefits from the proposed standards. Although 

DOE expects the installed cost of the higher efficiency beverage vending machine to be 

approximately 4.8 percent higher than the average price of machines available today, 

when weighted by shipments across equipment classes, the energy efficiency gains would 

result in lower energy costs, saving customers about 19.8 percent per year on their energy 

bills. Based on DOE’s LCC analysis for equipment with known shipments, DOE 

tentatively estimates that the mean payback period for higher efficiency beverage 

vending machines would be between 3.8 and 6.0 years depending on equipment class. In 

addition, when the net results of these equipment price increases and energy cost savings 

are summed over the lifetime of the higher efficiency equipment, customers could save 

approximately $49 to $316 (depending on equipment class) compared to their 

expenditures on today’s baseline beverage vending machine. 

B. Authority 

Title III of EPCA sets forth a variety of provisions designed to improve energy 

efficiency. Part A of Title III (42 U.S.C. 6291-6309) provides for the Energy 

Conservation Program for Consumer Products Other Than Automobiles. The 

amendments to EPCA contained in the Energy Policy Act of 2005 (EPACT 2005), Pub. 

L. 109-58, include new or amended energy conservation standards and test procedures for 

some of these products, and direct DOE to undertake rulemakings to promulgate such 

requirements. In particular, section 135(c)(4) of EPACT 2005 amends EPCA to direct 

DOE to prescribe energy conservation standards for beverage vending machines. (42 

U.S.C. 6295(v)) 

11
 

EERE-2006-STD-0125 COMMENT 48
 

Because of its placement in Part A of Title III of EPCA, the rulemaking for 

beverage vending machine energy conservation standards is bound by the requirements 

of 42 U.S.C. 6295. However, since beverage vending machines are commercial 

equipment, DOE intends to place the new requirements for beverage vending machines in 

Title 10 of the Code of Federal Regulations (CFR), Part 431 (“Energy Efficiency 

Program for Certain Commercial and Industrial Equipment”), which is consistent with 

DOE’s previous action to incorporate the EPACT 2005 requirements for commercial 

equipment. The location of the provisions within the CFR does not affect either their 

substance or applicable procedure, so DOE is placing them in the appropriate CFR part 

based on their nature or type and will refer to beverage vending machines as “equipment” 

throughout the notice.4

 The test procedures for beverage vending machines appear at 

Title 10 CFR sections 431.293 and 431.294. 

EPCA provides criteria for prescribing new or amended standards for covered 

equipment. As indicated above, any new or amended standard for beverage vending 

machines must be designed to achieve the maximum improvement in energy efficiency 

that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 

(v)) But EPCA precludes DOE from adopting any standard that would not result in 

significant conservation of energy. (42 U.S.C. 6295(o)(3) and (v)) Moreover, DOE may 

not prescribe a standard for certain equipment if no test procedure has been established 

for that equipment. (42 U.S.C. 6295(o)(3) and (v)) EPCA also provides that, in deciding 

4

 Because of their placement into 10 CFR 431, beverage vending machines will be referred to as 

“equipment” throughout this notice. 

12
 

EERE-2006-STD-0125 COMMENT 48
whether a standard is economically justified, DOE must determine whether the benefits 

of the standard exceed its burdens after receiving comments on the proposed standard. 

(42 U.S.C. 6295(o)(2)(B)(i) and (v)) To the greatest extent practicable, DOE must 

consider the following seven factors: 

1. The economic impact of the standard on manufacturers and consumers of the 

equipment subject to the standard; 

2. The savings in operating costs throughout the estimated average life of the covered 

equipment in the type (or class) compared to any increase in the price, or in the initial 

charges for, or maintenance expenses of, the equipment likely to result from the 

imposition of the standard; 

3. The total projected amount of energy savings likely to result directly from the 

imposition of the standard; 

4. Any lessening of the utility or the performance of the covered equipment likely to 

result from the imposition of the standard; 

5. 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; 

6. The need for national energy conservation; and 

7. Other factors the Secretary considers relevant. 

Id. 

Further, the Secretary may not prescribe an amended or new standard if interested parties 

have established by a preponderance of the evidence that the standard is likely to result in 

the unavailability in the United States of any equipment type (or class) with performance 

13
 

EERE-2006-STD-0125 COMMENT 48
 

 

characteristics (including reliability), features, sizes, capacities, and volumes that are 

substantially the same as those generally available in the United States. (42 U.S.C. 

6295(o)(4) and (v)) In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii) and 

6316(a)), establishes a rebuttable presumption that any standard for covered products is 

economically justified if the Secretary finds that “the additional cost to the consumer of 

purchasing a product complying with an energy conservation standard level will be less 

than three times the value of the energy (and as applicable, water) savings during the first 

year that the consumer will receive as a result of the standard,” as calculated under the 

test procedure in place for that standard. See section III.D.2. 

C. Background 

1. History of Standards Rulemaking for Beverage Vending Machines 

On August 8, 2005, section 135(c)(4) of EPACT 2005 amended section 325 of 

EPCA, in part, to direct DOE to issue energy conservation standards for the equipment 

covered by this rulemaking, which would apply to equipment manufactured 3 years after 

publication of the final rule establishing the energy conservation standards. (42 U.S.C. 

6295(v)(1), (2) and (3)5) The energy use of this equipment has never been regulated at the 

Federal level. 

Section 135(a)(3) of EPACT 2005 also amended section 321 of EPCA, in part, by 

adding definitions for terms relevant to this equipment. (42 U.S.C. 6291(40)) EPCA 

defines “refrigerated bottled or canned beverage vending machine” as “a commercial 

refrigerator that cools bottled or canned beverages and dispenses the bottled or canned 

5

 The relevant statutory provisions were renumbered pursuant to section 316 of the Energy Independence 

and Security Act of 2007, Pub. L. 110-140. 

14
 

EERE-2006-STD-0125 COMMENT 48
 

 

beverages on payment.” (42 U.S.C. 6291(40)) Section 136(a)(3) of EPACT 2005 

amended section 340 of EPCA in part by adding a definition for “commercial 

refrigerator, freezer, and refrigerator-freezer.”6 

During the course of this rulemaking, Congress passed the Energy Independence 

Security Act of 2007 (EISA 2007), which the President signed on December 19, 2007 

(Pub. L. 110-140). Section 310(3) of EISA 2007 amended section 325 of EPCA in part 

by adding subsection 325(gg) (42 U.S.C. 6295(gg)). This subsection requires any new or 

amended energy conservation standards adopted after July 1, 2010, to incorporate 

“standby mode and off mode energy use.” (42 U.S.C. 6295(gg)(3)(A)) Because any 

standards associated with this rulemaking are required by August 2009, the energy use 

calculations will not include “standby mode and off mode energy use.” To include 

standby mode and off mode energy use requirements for this rulemaking would take 

considerable analytical effort and would likely require changes to the test procedure. 

Given the statutory deadline, DOE has decided to address this requirement when the 

energy conservation standards for beverage vending machines are reviewed in August 

6 This definition reads as follows: 

“(9)(A) The term ‘commercial refrigerator, freezer, and refrigerator-freezer’ means refrigeration equipment 

that— 

(i) is not a consumer product (as defined in section 321[of EPCA; 42 U.S.C. 6291(1)]); 

(ii) is not designed and marketed exclusively for medical, scientific, or research purposes; 

(iii) operates at a chilled, frozen, combination chilled and frozen, or variable temperature; 

(iv) displays or stores merchandise and other perishable materials horizontally, semivertically, or vertically; 

(v) has transparent or solid doors, sliding or hinged doors, a combination of hinged, sliding, transparent, or 

solid doors, or no doors; 

(vi) is designed for pull-down temperature applications or holding temperature applications; and 

(vii) is connected to a self-contained condensing unit or to a remote condensing unit.” 

(42 U.S.C. 6311(9)(A)) 

15
 

EERE-2006-STD-0125 COMMENT 48
2015. At that time, DOE will consider the need for possible amendment in accordance 

with 42 U.S.C. 6295(m). 

As an initial step to comply with EPCA’s mandate to issue standards for beverage 

vending machines and to commence this rulemaking, on June 28, 2006, DOE published a 

notice of a public meeting and of the availability of its framework document for this 

rulemaking. 71 FR 36715. The framework document described the procedural and 

analytical approaches that DOE anticipated using to evaluate energy conservation 

standards for beverage vending machines and identified various issues to be resolved in 

conducting the rulemaking. DOE held a public meeting on July 11, 2006, to present the 

contents of the framework document, describe the analyses it planned to conduct during 

the rulemaking, obtain public comment on these subjects, and inform and facilitate 

interested parties’ involvement in the rulemaking. DOE also gave interested parties an 

opportunity after the public meeting to submit written statements in response to the 

framework document. 

On June 16, 2008, DOE published an advance notice of proposed rulemaking 

(ANOPR) concerning energy conservation standards for beverage vending machines. 72 

FR 34094. In the ANOPR, DOE described and sought comment on its proposed 

equipment classes for this rulemaking and on the analytical framework, models, and tools 

(e.g., LCC and national energy savings (NES) spreadsheets) that DOE used to analyze the 

impacts of energy conservation standards for beverage vending machines. In conjunction 

with the ANOPR, DOE also published on its website the complete ANOPR technical 

16
 

EERE-2006-STD-0125 COMMENT 48
 

support document (TSD),7 which included the results of DOE’s preliminary (1) 

engineering analysis, (2) markups analysis to determine equipment price, (3) energy use 

characterization, (4) LCC and payback period (PBP) analyses, (5) NES and national 

impact analyses (NIA), and (6) manufacturer impact analysis (MIA). In the ANOPR, 

DOE requested comment on these results and on a range of other issues including 

equipment classes, operating hours of compressors and lighting, refurbishment cycles, 

LCC baseline levels, base and standards case forecasts, differential impacts of new 

standards on future shipments by equipment class, selection of candidate standard levels, 

and the approach to characterizing energy conservation standards for beverage vending 

machines. 

DOE held a public meeting in Washington, DC, on June 26, 2008, to present the 

methodology and results of the ANOPR analyses and solicit oral and written comments. 

Public comments focused on DOE’s assumptions and approach and are addressed in 

detail in this NOPR. 

2. Miscellaneous Rulemaking Issues 

a. Consensus Agreement 

After the ANOPR, Dixie-Narco stated that it would like the National Automatic 

Merchandising Association (NAMA) to facilitate and submit a consensus 

recommendation on behalf of the industry no later than December 15, 2008. Dixie-Narco 

7

 See www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines_tsd.html. 

17
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

 

stated that it would also like the new standards take effect no later than January 1, 2010. 

(Dixie-Narco, No. 36 at p. 3)8 

DOE supports efforts by interested parties to work together to develop and present 

to DOE recommendations on equipment categories and standard levels. Such 

recommendations are welcome throughout the standards rulemaking process. However, 

DOE did not receive any consensus recommendations before publication of this NOPR. 

While DOE still encourages a consensus recommendation and will attempt to incorporate 

it into this rulemaking, any recommendation submitted to DOE during the NOPR 

comment period will be considered as a public comment. 

b. Design Requirements 

At the ANOPR public meeting, the Northwest Power and Conservation Council 

(NPCC) stated that under EISA, the Federal Government can regulate more than one 

characteristic of equipment, perhaps as a performance standard as well as a prescriptive 

standard. (NPCC, Public Meeting Transcript, No. 29 at p. 83)9 

8

 A notation in the form “Dixie-Narco, No. 36 at p. 3” identifies a written comment that DOE has received 

and has included in the docket of this rulemaking. This particular notation refers to (1) a comment 

submitted by Dixie-Narco, (2) in document number 36 in the docket of this rulemaking, and (3) appearing 

on page 3 of document number 36. 

9

 A notation in the form “NPCC, Public Meeting Transcript, No. 29 at p. 83” identifies an oral comment 

that DOE received during the June 26, 2008, ANOPR Public Meeting. This comment was recorded in the 

public meeting transcript in the docket for this rulemaking (Docket No. EERE-2006-STD-0125). This 

particular notation refers to a comment (1) made during the public meeting by NPCC; (2) recorded in 

document number 29, which is the public meeting transcript filed in the docket of this rulemaking; and (3) 

appearing on page 83 of document number 29. 

18
 

EERE-2006-STD-0125 COMMENT 48
 

EPCA provides that an “energy conservation standard” must be either (A) “a ... 

level of energy efficiency” or “a ... maximum quantity of energy use,” or (B) for certain 

specified equipment, “a design requirement.” (42 U.S.C. 6291(6)) Thus, an “energy 

conservation standard” cannot consist of both a design requirement and a level of 

efficiency or energy use. Id.10 Moreover, item (A) above indicates that a single energy 

conservation standard cannot have measures of both energy efficiency and energy use. 

Furthermore, EPCA specifically requires DOE to base its test procedure for this 

equipment on American National Standards Institute (ANSI)/American Society of 

Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 32.1-2004, 

“Methods of Testing for Rating Vending Machines for Bottled, Canned or Other Sealed 

Beverages.” (42 U.S.C. 6293(b)(15)) The test methods in ANSI/ASHRAE Standard 32.1­

2004 consist of means to measure energy consumption, not energy efficiency. 

For the reasons stated above, DOE does not intend to develop efficiency standards 

or design requirements for this equipment. Instead, DOE intends to develop standards for 

maximum levels of energy use for beverage vending machines, and manufacturers could 

meet these standards with their own design methods. 

c. Combination Vending Machines 

Combination vending machines have a refrigerated volume for the purpose of 

cooling and vending “beverages in a sealed container,” and are therefore covered by this 

rule. However, beverage vending is not their sole function. Combination machines also 

10 Beverage vending machines are not one of the specified equipment for which EPCA allows a standard to 

consist of a design requirement. (42 U.S.C. 6291(6)(B), 6292(a)) 

19
 

EERE-2006-STD-0125 COMMENT 48
have non-refrigerated volumes for the purpose of vending other, non-“sealed beverage” 

merchandise. In the ANOPR, DOE addressed several comments from interested parties 

regarding combination vending machines. Specifically, these parties were concerned that 

regulating vending machines that contain both refrigerated and non-refrigerated products 

could result in confusion about what this rulemaking covers, or could result in 

manufacturers taking advantage of loopholes to produce equipment that does not meet the 

standards. In response, DOE stated that that the language used in EPCA to define 

beverage vending machines is broad enough to include any vending machine, including a 

combination machine, as long as some portion of that machine cools bottled or canned 

beverages and dispenses them upon payment. (42 U.S.C. 6291 (40)) DOE interprets this 

language to cover any vending machine that can dispense at least one type of refrigerated 

bottled or canned beverage, regardless of the other types of vended products (some of 

which may not be refrigerated). 73 FR 34105-06. 

III. General Discussion 

A. Test Procedures 

On December 8, 2006, DOE published a final rule in the Federal Register that 

incorporated by reference ANSI/ASHRAE Standard 32.1-2004, with two modifications, 

as the DOE test procedure for this equipment. (71 FR 71340, 71375; 10 CFR 431.294) 

The first modification specified that in section 6.2, Voltage and Frequency, equipment 

with dual nameplate voltages must be tested at the lower of the two voltages only. 71 FR 

71340, 71355 The second modification specified that (1) any measurement of “vendible 

capacity” of refrigerated bottled or canned beverage vending machines must be in 

20
 

EERE-2006-STD-0125 COMMENT 48
accordance with the second paragraph of section 5 of ANSI/ASHRAE Standard 32.1– 

2004, Vending Machine Capacity; and (2) any measurement of “refrigerated volume” of 

refrigerated bottled or canned beverage vending machines must be in accordance with the 

methodology specified in section 5.2, Total Refrigerated Volume (excluding subsections 

5.2.2.2 through 5.2.2.4) of ANSI/Association of Home Appliance Manufacturers 

(AHAM) HRF–1–2004, “Energy, Performance and Capacity of Household Refrigerators, 

Refrigerator-Freezers and Freezers.” Id. 

B. Technological Feasibility 

1. General 

DOE considers design options technologically feasible if they exist in the 

marketplace or if research has progressed to the development of a working prototype. 

“Technologies incorporated in commercially available equipment or in working 

prototypes will be considered technologically feasible.” 10 CFR part 430, subpart C, 

appendix A, section 4(a)(4)(i) 

In each standards rulemaking, DOE conducts a screening analysis based on 

information it has gathered regarding all current technology options and prototype 

designs. In consultation with interested parties, DOE develops a list of design options for 

consideration in the rulemaking. All technologically feasible design options are 

candidates in this initial assessment. Early in the process, DOE eliminates from 

consideration any design option (a) that is not technologically feasible; (b) that is not 

practicable to manufacture, install, or service; (c) that will have adverse impacts on 

21
 

EERE-2006-STD-0125 COMMENT 48
equipment utility or availability; or (d) for which there are health or safety concerns that 

cannot be resolved. Chapter 4 of the TSD accompanying this notice contains a 

description of the screening analysis for this rulemaking. 

In the ANOPR, DOE eliminated seven of the technologies considered in the 

market and technology assessment. Higher efficiency evaporator and condenser fan 

blades, low-pressure differential evaporators, and defrost mechanisms were eliminated 

because they are not expected to improve energy efficiency. (73 FR 34108-09) 

Thermoacoustic refrigeration, magnetic refrigeration, electro-hydrodynamic heat 

exchangers, and copper rotor motors were eliminated because they are in the research 

stage. Therefore, they would not be practicable to manufacture, install, or service on the 

scale necessary to serve the relevant market at the time of the effective date of the 

standard. Because these technologies are in the research stage, there are also no working 

prototypes that allow DOE to assess whether they would have any adverse impacts on 

utility to significant subgroups of customers, result in the unavailability of any types of 

equipment, or present any significant adverse impacts on health or safety. (73 FR 34109) 

DOE believes that all the efficiency levels discussed in today’s notice are technologically 

feasible because there is equipment on the market or there are working prototypes at all 

of the efficiency levels analyzed. Chapter 4 of the TSD includes a discussion of the 

technological feasibility of the design options considered in the screening analysis. 

22
 

EERE-2006-STD-0125 COMMENT 48
 

2. Maximum Technologically Feasible Levels 

In considering whether to adopt new standards for a type or class of beverage 

vending machines, DOE must “determine the maximum improvement in energy 

efficiency or maximum reduction in energy use that is technologically feasible” for such 

equipment. (42 U.S.C. 6295(p)(1) and (v)) If the standards are not designed to achieve 

such efficiency or use, the Secretary shall state the reasons for this in the proposed rule. 

Id. The values in Table III-1 represent the energy use levels that would achieve the 

maximum reductions in energy use that are technologically feasible at this time for 

beverage vending machines. DOE identified these maximum technologically feasible 

(“max-tech”) levels for the equipment classes analyzed as part of the engineering analysis 

(chapter 5 of the TSD). For both equipment classes, DOE applied the most efficient 

design options available for energy-consuming components. 

Table III-1 Max-Tech Energy Use Levels 

Equipment Class Max-Tech Level 

 kWh/day 

A MDEC = 0.045 x V + 2.42 

B MDEC = 0.068 x V + 2.63 

“V” is the refrigerated volume of the refrigerated bottled or canned beverage vending machine, as 

measured by ANSI/ AHAM HRF-1-2004, “Energy, Performance and Capacity of Household Refrigerators, 

Refrigerator-Freezers and Freezers.” 

C. Energy Savings 

1. Determination of Savings 

DOE used the NES spreadsheet to estimate energy savings. The spreadsheet 

forecasts energy savings over the period of analysis for TSLs relative to the base case. 

DOE quantified the energy savings attributable to an energy conservation standard as the 

difference in energy consumption between the trial standards case and the base case. The 

23
 

EERE-2006-STD-0125 COMMENT 48
base case represents the forecast of energy consumption in the absence of new mandatory 

efficiency standards. The NES spreadsheet model is described in section IV.G of this 

notice and in chapter 11 of the TSD accompanying this notice. 

The NES spreadsheet model calculates the energy savings in site energy or 

kilowatt hours (kWh). Site energy is the energy directly consumed at building sites by 

beverage vending machines. DOE expresses national energy savings in terms of the 

source energy savings, which are the energy savings used to generate and transmit the 

energy consumed at the site. Chapter 11 of the TSD contains a table of factors used to 

convert kWh to Btu. DOE derives these conversion factors, which change with time, 

from EIA’s AEO2009. 

2. Significance of Savings 

EPCA prohibits DOE from adopting a standard that would not result in significant 

additional energy savings. (42 U.S.C. 6295(o)(3)(B) and (v)) While the term “significant” 

is not defined in the Act, the U.S. Court of Appeals in Natural Resources Defense 

Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress 

intended significant energy savings to be savings that were not “genuinely trivial.” The 

estimated energy savings for the trial standard levels considered in this rulemaking range 

from 0.001 to 0.107 quadrillion Btu (quads); therefore, DOE considers them significant 

within the meaning of section 325 of the Act. 

24
 

EERE-2006-STD-0125 COMMENT 48
D. Economic Justification 

1. Specific Criteria 

As noted earlier, EPCA provides seven factors to be evaluated in determining 

whether an energy conservation standard is economically justified. The following 

sections discuss how DOE has addressed each factor thus far in this rulemaking. (42 

U.S.C. 6295(o)(2)(B)(i) and (v)) 

a. Economic Impact on Manufacturers and Commercial Customers 

DOE uses an annual cash-flow approach in determining the quantitative impacts 

of a new or amended standard on manufacturers. This includes both a short-term 

assessment based on the cost and capital requirements between the announcement of a 

regulation and when the regulation comes into effect, and a long-term assessment. 

Impacts analyzed include INPV, cash flows by year, and changes in revenue and income. 

Next, DOE analyzes and reports the impacts on different types of manufacturers, paying 

particular attention to impacts on small manufacturers. DOE then considers the impact of 

standards on domestic manufacturer employment, manufacturing capacity, plant closures, 

and loss of capital investment. Finally, DOE takes into account the cumulative impact of 

regulations on manufacturers. For a more detailed discussion of the MIA, see chapter 13 

of the TSD. 

For customers, measures of economic impact are generally the changes in 

installed price and annual operating costs (i.e., the LCC). Chapter 8 of the TSD presents 

the LCC of the equipment at each TSL. The LCC is one of the seven factors to be 

25
 

EERE-2006-STD-0125 COMMENT 48
considered in determining the economic justification for a new or amended standard. (42 

U.S.C. 6295(o)(2)(B)(i)(II) and (v)) 

b. Life-Cycle Costs 

The LCC is the total customer expense for a piece of equipment over the life of 

the equipment (i.e., purchase price plus maintenance and operating costs). The LCC 

analysis compares the life-cycle costs of equipment designed to meet new or amended 

energy conservation standards with the life-cycle cost of the equipment likely to be 

installed in the absence of such standards. DOE determines these costs by considering (1) 

total installed price to the purchaser (including manufacturer selling price (MSP), sales 

taxes, distribution channel markups as shown in Table IV-3, and installation cost), (2) the 

operating expenses of the equipment (energy cost and maintenance and repair cost), (3) 

equipment lifetime, and (4) a discount rate that reflects the real cost of capital and puts 

the LCC in present value terms. 

Recognizing that each type of commercial customer who uses a beverage vending 

machine is unique, DOE analyzed variability and uncertainty by performing the LCC and 

PBP calculations for seven types of businesses. Six of these typically purchase and install 

beverage vending machines in their buildings: office/healthcare (including a large 

number of firms engaged in financial and other services, medical and dental offices, and 

nursing homes); retail (including all types of retail stores and food and beverage service 

facilities); schools (including colleges, universities and large groups of housing facilities 

owned by State governments, such as prisons); manufacturing facilities and military 

26
 

EERE-2006-STD-0125 COMMENT 48
bases (typically large utility customers that pay industrial rates for their electricity 

consumption); and “other” (including warehouses, hotels/motels, and assembly 

buildings). The seventh business type, which is the most common purchaser of the 

equipment, is a local bottler or vending machine operator that typically has the machine 

installed in one of the other six business types, provides vending services, and splits the 

coin box receipts through a contractual arrangement with the site owner. For a more 

detailed discussion of the LCC analysis, see chapter 8 of the TSD. 

c. Energy Savings 

While significant energy conservation is a separate statutory requirement for 

imposing an energy conservation standard, EPCA requires DOE to consider the total 

projected energy savings that are expected to result directly from the standard in 

determining the economic justification of such a standard. (42 U.S.C. 6295(o) 

(2)(B)(i)(III), and (3), and (v)) DOE used the NES spreadsheet results in its consideration 

of total projected savings. Section IV.G.1 of this notice discusses the savings figures. 

d. Lessening of Utility or Performance of Equipment 

In establishing equipment classes, evaluating design options, and assessing the 

impact of potential standard levels, DOE tried to avoid having new standards for 

beverage vending machines lessen the utility or performance of the equipment under 

consideration in this rulemaking. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and (v)) None of the 

proposed trial standard levels considered in this rulemaking involves changes in 

27
 

EERE-2006-STD-0125 COMMENT 48
equipment design or unusual installation requirements that would reduce the utility or 

performance of the equipment. See chapter 4 and chapter 16 of the TSD for more detail. 

e. Impact of Any Lessening of Competition 

EPCA directs DOE to consider any lessening of competition likely to result from 

standards. It directs the Attorney General to determine in writing the impact, if any, of 

any lessening of competition likely to result from imposition of a proposed standard. (42 

U.S.C. 6295(o)(2)(B)(i)(V) and (ii), and (v)) DOE has transmitted a written request to the 

Attorney General soliciting a written determination on this issue. 

f. Need of the Nation to Conserve Energy 

The non-monetary benefits of the proposed standards are likely to be reflected in 

improvements to the security and reliability of the Nation’s energy system, and in 

reduced reliance on foreign sources of energy. Reductions in the overall demand for 

energy will reduce the Nation’s reliance on foreign sources of energy and increase 

reliability of the Nation’s electricity system. DOE conducted a utility impact analysis to 

show the reduction in installed generation capacity. Reduced power demand (including 

peak power demand) generally improves the security and reliability of the energy system. 

The proposed standards are likely to result in improvements to the environment. 

In quantifying these improvements, DOE has defined a range of primary energy 

conversion factors and associated emission reductions based on the generation that 

energy conservation standards displaced. DOE reports the environmental effects from 

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EERE-2006-STD-0125 COMMENT 48
each trial standard level for this equipment in the draft environmental assessment in 

chapter 16 of the TSD. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and (v)) 

g. Other Factors 

EPCA allows the Secretary of Energy, in determining whether a standard is 

economically justified, to consider any other factors the Secretary deems to be relevant. 

(42 U.S.C. 6295(o)(2)(B)(i)(VII) and (v)) Under this provision, DOE considered LCC 

impacts on identifiable groups of customers, such as customers of different business 

types who may be disproportionately affected by any national energy conservation 

standard. In particular, DOE examined the LCC impact on small businesses (i.e., those 

with low annual income) that may not be able to afford a significant increase in the 

purchase price (“first cost”) of beverage vending machines. Some of these customers may 

retain equipment past its useful life. Large increases in first cost also could preclude the 

purchase and use of equipment altogether. 

2. Rebuttable Presumption 

Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable presumption 

that an energy conservation standard is economically justified if the additional cost to the 

consumer of a product that meets the standard level is less than three times the value of 

the first-year energy (and, as applicable, water) savings resulting from the standard, as 

calculated under the applicable DOE test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) 

DOE’s LCC and PBP analyses generate values that indicate the cost-effectiveness of 

products meeting potential energy conservation standards. These values include, but are 

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EERE-2006-STD-0125 COMMENT 48
not limited to, the 3-year payback period contemplated under the rebuttable presumption 

test discussed above. (See chapter 8 of the TSD that accompanies this notice.) However, 

DOE routinely conducts a full economic analysis that considers the full range of impacts, 

including those to the consumer, manufacturer, Nation, and environment, as required 

under 42 U.S.C. 6295(o)(2)(B)(i). The results of this full analysis serve as the basis for 

DOE to definitively determine the economic justification for a potential standard level 

(thereby supporting or rebutting the results of any preliminary determination of economic 

justification). 

IV. Methodology and Discussion of Comments 

DOE used two spreadsheet tools to determine the impact of energy conservation 

standards on the Nation. The first spreadsheet calculates LCCs and PBPs of potential new 

energy conservation standards. The second spreadsheet provides shipments forecasts and 

then calculates NES and NPV impacts of potential new energy conservation standards. 

DOE also assessed manufacturer impacts, largely through use of the Government 

Regulatory Impact Model (GRIM). 

Additionally, DOE estimated the impacts that energy conservation standards for 

beverage vending machines have on utilities and the environment. DOE used a version of 

EIA’s National Energy Modeling System (NEMS) for the utility and environmental 

analyses. The NEMS model simulates the energy economy of the United States and has 

been developed over several years by EIA primarily to prepare the Annual Energy 

Outlook (AEO). NEMS produces a widely known baseline forecast for the Nation 

30
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

through 2025 and is available on the DOE website.11 The version of NEMS used for 

efficiency standards analysis is called NEMS-BT12 and is based on the AEO2008 version 

with minor modifications. NEMS offers a sophisticated picture of the effect of standards, 

since it measures the interactions between the various energy supply and demand sectors 

and the economy as a whole. 

A. Market and Technology Assessment 

When beginning an energy conservation standards rulemaking, DOE develops 

information that provides an overall picture of the market for the equipment concerned, 

including the purpose of the equipment, the industry structure, and market characteristics. 

This activity includes both quantitative and qualitative assessments based primarily on 

publicly available information. The subjects addressed in the market and technology 

assessment for this rulemaking include equipment classes, manufacturers, quantities, and 

types of equipment sold and offered for sale; retail market trends; and regulatory and 

non-regulatory programs. See chapter 3 of the TSD for further discussion of the market 

and technology assessment. 

1. Definition of Beverage Vending Machine 

EPCA defines the term “refrigerated bottled or canned beverage vending 

machine” as “a commercial refrigerator that cools bottled or canned beverages and 

11 www.eia.doe.gov/oiaf/aeo/overview 

12 EIA approves use of the name NEMS to describe only an AEO version of the model without any 

modification to code or data. Because the present analysis entails some minor code modifications and runs 

the model under various policy scenarios that deviate from AEO assumptions, the name NEMS-BT refers 

to the model used here. For more information on NEMS, refer to The National Energy Modeling System: 

An Overview 1998. DOE/EIA–0581 (98), February 1998. BT is DOE’s Building Technologies Program. 

NEMS-BT was formerly called NEMS-BRS. 

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EERE-2006-STD-0125 COMMENT 48
 

dispenses the bottled or canned beverages on payment.” (42 U.S.C. 6291(40)) Thus, 

coverage of equipment under EPCA as a beverage vending machine in part depends on 

whether it cools and dispenses “bottled beverages” and/or “canned beverages.” Based on 

comments on the framework document, DOE tentatively decided to consider a broader 

definition for the terms “bottled” and “canned” as they apply to beverage vending 

machines. Such a definition would avoid unnecessary complications regarding the 

material composition of the container and eliminate the need to determine whether a 

particular container is a bottle or a can. A bottle or can in this context refers to “a sealed 

container for beverages,” so a bottled or canned beverage is “a beverage in a sealed 

container.” In the ANOPR, DOE sought comment on this broader definition and on 

whether it is consistent with the intent of EPCA. DOE did not receive any comments on 

this definition. Therefore, DOE is proposing to define a bottled or canned beverage as “a 

beverage in a sealed container.” 

2. Equipment Classes 

When evaluating and establishing energy conservation standards, DOE generally 

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

or other performance-related features that affect efficiency and factors such as the utility 

of such feature(s). (42 U.S.C. 6295(q)) DOE routinely establishes different energy 

conservation standards for different equipment classes based on these criteria. 

Certain characteristics of beverage vending machines have the potential to affect 

their energy use and efficiency. Accordingly, these characteristics could be the basis for 

32
 

EERE-2006-STD-0125 COMMENT 48
 

separate equipment classes for these machines. DOE determined that the most significant 

criterion affecting beverage vending machine energy use is the method used to cool 

beverages. DOE divided covered equipment into two equipment classes, Class A and 

Class B. DOE defines these terms as follows: 

•	 Class A means a refrigerated bottled or canned beverage vending machine that is 

fully cooled. 

•	 Class B means any refrigerated bottled or canned beverage vending machine not 

considered to be Class A. 

The Class A beverage vending machine equipment class comprises machines that 

cool product throughout the entire refrigerated volume. Class A machines generally use 

“shelf-style” vending mechanisms and a transparent (glass or polymer) front. Because the 

next-to-be-vended product is visible to the customer and any product can be selected by 

the customer off the shelf, all bottled or canned beverage containers are necessarily 

enclosed within the refrigerated volume. 

In Class B beverage vending machines, cold, refrigerated air is directed at a 

fraction (or zone) of the refrigerated volume. This cooling method is used to assure that 

the next-to-be-vended product will be the coolest product in the machine. These 

machines typically have an opaque front and use a “stack-style” vending mechanism. 

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EERE-2006-STD-0125 COMMENT 48
B. Engineering Analysis 

The engineering analysis develops cost-efficiency relationships to show the 

manufacturing costs of achieving increased efficiency. DOE has identified the following 

three methodologies to generate the manufacturing costs needed for the engineering 

analysis: (1) the design-option approach, which calculates the incremental costs of adding 

design options to a baseline model that will improve its efficiency; (2) the efficiencylevel approach, which provides the relative costs of achieving increases in energy 

efficiency levels without regard to the particular design options used to achieve such 

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

“bottom-up” manufacturing cost assessments for achieving various levels of increased 

efficiency based on detailed cost data for parts and material, labor, shipping/packaging, 

and investment for models that operate at particular efficiency levels. 

1. Approach 

In this rulemaking, DOE is adopting a design-option approach, which calculates 

the incremental costs of adding specific design options to a baseline model. DOE decided 

on this approach after receiving no response to its ANOPR request for the manufacturer 

data needed to execute an efficiency-level, approach-based analysis. The design-option 

approach allows DOE to make its engineering analysis methodologies, assumptions, and 

results publicly available, allowing advocates, manufacturers, and other interested parties 

the opportunity to review and comment on this information. Using the design-option 

approach, cost-efficiency relationship estimates are based on manufacturer or component 

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EERE-2006-STD-0125 COMMENT 48
supplier data or derived from engineering computer simulation models. Chapter 5 of the 

TSD contains a detailed description of the equipment classes analyzed and analytical 

models used to conduct the beverage vending machine engineering analysis based on the 

design-option approach. 

2. Equipment Analyzed in the Engineering Analysis 

DOE analyzed three beverage vending machines of different sizes for both 

equipment classes to assess how energy use varies with size. DOE chose a small, 

medium, and large machine for Class A and Class B beverage vending machines, based 

on current market offerings. See chapter 3 of the TSD for a detailed description of the 

Class A and Class B equipment classes. 

In the ANOPR, DOE responded to several comments and presented a detailed 

discussion of its equipment class selection methodology. 73 FR 34103. For the NOPR, 

DOE increased the physical case dimensions based on a reevaluation of equipment 

currently on the market, even though the equipment classification methodology has not 

changed since the ANOPR. The case dimension increases affected the engineering 

parameters that are a function of case dimension, including wall area, vendible capacity, 

and refrigerated volume. The changes to refrigerated volume and assumed vendible 

capacity are summarized in Table IV-1. All changes are described in detail in chapter 5 of 

the TSD. 

Table IV-1 Configurations of the Beverage Vending Machines Analyzed 

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EERE-2006-STD-0125 COMMENT 48
 

 

 

Class A Class B 

Small Medium Large Small Medium Large 

Vendible Capacity 

number of cans 300 400 500 450 650 800 

Refrigerated 

Volume ft3 17 22 34 17 22 26 

3. Analytical Models 

DOE’s design-option-based engineering analysis relies on four analytical models 

to develop the relationship between cost and increased efficiency: the cost model, 

baseline model, design-options analysis, and energy consumption model. The cost model 

estimates the core case cost of a beverage vending machine for each equipment class. The 

core case cost is the fully absorbed production cost of components that do not consume 

energy. The baseline model, which defines baseline specifications and incorporates 

energy consuming components for each equipment class, estimates the energyconsumption and cost of the typical equipment (i.e., units of typical efficiency) on the 

market today. The design-options analysis develops cost-efficiency input data for a list of 

potential energy-saving technologies that can be integrated into the baseline model to 

increase efficiency. The energy consumption model calculates the daily energy 

consumption (DEC) of beverage vending machines at the various performance levels 

achieved by implementing these design options. Chapter 5 of the TSD includes a detailed 

description of each analytical model and its role in calculating the cost-efficiency data 

results of the engineering analysis. 

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EERE-2006-STD-0125 COMMENT 48
 

a. Cost Model 

DOE used a cost model to estimate the core case cost (i.e., the fully absorbed 

production cost of the structure, walls, doors, shelving and fascia of the case, but not the 

cost of any energy-using components) of beverage vending machines. This model was 

adapted from a cost model developed for DOE’s rulemaking on commercial refrigeration 

equipment.13 The approach for commercial refrigeration equipment involved 

disassembling a self-contained refrigerator, analyzing the materials and manufacturing 

processes for each component, and developing a parametric spreadsheet to model the cost 

to fabricate (or purchase) each component and the cost of assembly. Because of the 

similarities in manufacturing processes between self-contained commercial refrigeration 

equipment and beverage vending machines, DOE was able to adapt the commercial 

refrigeration equipment cost model for beverage vending machines by maintaining many 

of the assumptions about materials and manufacturing processes but modifying the 

dimensions and types of components specific to beverage vending machines. To confirm 

the accuracy of the cost model, DOE obtained input from interested parties on beverage 

vending machine production cost estimates and on other assumptions DOE used in the 

model. Chapter 5 of the TSD provides details of the cost model. 

Following the ANOPR, DOE received no comments regarding its cost model; 

therefore, no significant changes were made to the methodology used in the NOPR 

analysis. Since the ANOPR, all dollar amounts have been updated to 2008$ using the 

producer price index. 

13 See www.eere.energy.gov/buildings/appliance_standards/commercial/refrigeration_equipment.html for 

further detail on and validation of the commercial refrigeration equipment cost model. 

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EERE-2006-STD-0125 COMMENT 48
b. Baseline Models 

As mentioned above, the engineering analysis calculates the incremental costs for 

equipment with efficiency levels above a baseline model in each equipment class. DOE 

defined baseline specifications for each equipment class, including dimensions, numbers 

of components, operating temperatures, nominal power ratings, and other features needed 

to calculate energy consumption. The baseline specifications define the energy 

consumption and cost of the typical equipment (i.e., units of typical efficiency) on the 

market today, namely beverage vending machines meeting the ENERGY STAR Tier 1 

efficiency level. (See chapter 3 of the TSD for further details on the ENERGY STAR 

criteria.) 

DOE established baseline specifications for each equipment class modeled in the 

engineering analysis by reviewing available manufacturer data, selecting several 

representative units based on that data, and then aggregating the physical characteristics 

of the selected units. This process created a representative unit for each equipment class 

with average characteristics for physical parameters (e.g., volume, wall area), and typical 

performance for energy-consuming components (e.g., fans, lighting). See chapter 5 of the 

TSD for these specifications. 

DOE received one comment regarding the baseline refrigerant. In the ANOPR, 

DOE stated that hydrofluorocarbon (HFC) refrigerants would be the basis of its analyses 

38
 

EERE-2006-STD-0125 COMMENT 48
 

 

because of the phaseout of hydrochlorofluorocarbons (HCFCs) in 2010,14 and the 

volatility and availability issues associated with hydrocarbon (HC) refrigerants and CO2. 

Coca-Cola commented that it is phasing out HFCs and that it should not have any 

refrigeration equipment with HFC refrigerants by 2012. (Coca-Cola, Public Meeting 

Transcript, No. 29 at pp. 179-180) The Joint Comment stated that while manufacturers 

and customers are interested in alternatives to HFC refrigerants, it considers the use of 

HFC refrigerants a good default assumption with respect to costs and performance. (Joint 

Comment, No. 34 at p. 2) 

While DOE acknowledges the use of some alternative refrigerants (i.e., HCs and 

CO2) elsewhere in the world, the majority of the U.S. beverage vending machine industry 

uses HFC refrigerants. Since the analysis should be based on the refrigerant most widely 

used in beverage vending machines, DOE will continue to use HFC refrigerants as the 

basis for its technical analysis in this rulemaking. 

c. Design Options 

In the market and technology assessment for the ANOPR, DOE defined an initial 

list of technologies that could reduce the energy consumption of beverage vending 

machines. In the screening analysis for the ANOPR, DOE screened out four of these 

technologies based on four screening criteria: technological feasibility; practicability to 

manufacture, install and service; impacts on equipment utility or availability; and impacts 

14 EPA is phasing out the production and importation of certain HCFC refrigerants (i.e., HCFC-142b and 

HCFC-22) in new equipment in the United States by January 1, 2010. EPA is phasing out the production 

and importation of all HCFC refrigerants in new equipment in the United States by January 1, 2015. (42 

U.S.C. 7671(d)) 

39
 

EERE-2006-STD-0125 COMMENT 48
 

on health or safety. 73 FR 34108-09. The remaining technologies became inputs to the 

ANOPR engineering analysis as design options. 

For the NOPR, DOE did not receive any comments suggesting revisions to the list 

of ANOPR design options. Therefore, the design option inputs remain the same for the 

NOPR engineering analysis. However, the Joint Comment stated that DOE must 

document that the energy savings potential of light-emitting diode (LED) lighting has 

received adequate consideration (Joint Comment, No. 34 at p. 2). 

DOE’s consideration of LED lighting technology is documented in the 

Engineering Analysis Spreadsheet and chapter 5 of the TSD. Since the issuance of the 

ANOPR, DOE has carefully reviewed the LED technology design option and revised the 

cost and energy usage data for the NOPR. The LED price and energy use updates are 

adapted from the commercial refrigeration rulemaking.15 These changes are based on 

conversations with LED manufacturers and information gathered on existing LED 

systems for beverage vending machines. As a result of these conversations, DOE better 

understands how LED lighting can be configured to replace fluorescent systems in order 

to save energy without sacrificing utility. In certain applications, the focused light from 

LED systems delivers the same amount of light to the space being illuminated as 

fluorescent systems and allows for a reduction in the wattage consumed. As a result, 

overall energy consumption for lighting decreases. Implemented across the installed base 

15 See www.eere.energy.gov/buildings/appliance_standards/commercial/refrigeration_equipment.html for 

further detail on and validation of the commercial refrigeration equipment LED price and usage data. 

40
 

EERE-2006-STD-0125 COMMENT 48
 

of beverage vending machines, LED systems could result in considerable energy savings. 

Estimates of these savings can be found in chapter 5 of the TSD. 

d. Energy Consumption Model 

The energy consumption model estimates the DEC of beverage vending machines 

at various performance levels using a design-option approach. The model is specific to 

the categories of equipment covered under this rulemaking, but is sufficiently generalized 

to model the energy consumption of both covered equipment classes. For a given 

equipment class, the model estimates the DEC for the baseline and the energy 

consumption of several levels of performance above the baseline. The model is used to 

calculate each performance level separately. 

In developing the energy consumption model, DOE made certain assumptions, 

including general assumptions about the analytical methodology and specific 

assumptions regarding load components and design options. DOE based its energy 

consumption estimates on new equipment tested in a controlled-environment chamber 

under the procedures and conditions specified in ANSI/ASHRAE Standard 32.1-2004, 

“Methods of Testing for Bottled, Canned, and Other Sealed Beverages.”16 Manufacturers 

of beverage vending machines must certify that their equipment complies with Federal 

standards using this test method, which specifies a certain ambient temperature, humidity, 

and other requirements. One relevant specification that is absent from ANSI/ASHRAE 

Standard 32.1-2004 is the operating hours of the display case lighting during a 24-hour 

16 These test procedures are incorporated by reference at 10 CFR 431.294. 

41
 

EERE-2006-STD-0125 COMMENT 48
period. DOE assumes the operating time to be 24 hours (i.e., that display case lighting is 

on throughout the 24-hour period) when conducting the analyses for this rulemaking. 

Chapter 5 of the TSD details these and other beverage vending machine considerations. 

The energy consumption model calculates DEC from two major components: (1) 

component energy consumption, and (2) compressor energy consumption (expressed as 

kWh/day). Component energy consumption is a sum of the direct electrical energy 

consumption of fan motors, lighting, vend mechanisms, control systems, and coin and bill 

validators. Compressor energy consumption is calculated from the total refrigeration 

load, expressed as Btu/h, and a compressor model based on the 10-coefficient compressor 

model in American Refrigeration Institute (ARI) Standard 540-2004, “Performance 

Rating of Positive Displacement Refrigerant Compressors and Compressor Units.” The 

total refrigeration load is a sum of the component heat load and non-electric load. The 

component heat load is a sum of the heat emitted by evaporator fan motors and lighting 

affecting refrigerated space. (Condenser fan motors are outside the refrigerated space of a 

beverage vending machine and do not contribute to the component heat load.) The nonelectric load is the sum of: the heat contributed by radiation through glass doors in Class 

A machines; heat conducted through walls and doors; and sensible and latent loads from 

warm, moist air infiltration through vend doors and cracks. Chapter 5 of the TSD 

provides details on component energy consumption, compressor energy consumption, 

and heat load models. 

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EERE-2006-STD-0125 COMMENT 48
During the framework public meeting, DOE asked for comments on which 

normalization metric, vendible capacity, or refrigerated volume would be most 

appropriate for setting standards for beverage vending machines. Based on public 

comments, DOE decided to use refrigerated volume in the ANOPR. 73 FR 34105. 

Following the ANOPR, a comment submitted by the American Council for an EnergyEfficient Economy (ACEEE), Appliance Standards Awareness Project (ASAP), Natural 

Resources Defense Council (NRDC), and NPCC (hereafter “Joint Comment”) stated that 

using internal refrigerated volume instead of a 12-ounce can count for rating beverage 

vending machines is appropriate. (Joint Comment, No. 34 at p. 3). 

4. Engineering Analysis Results 

The results of the engineering analysis are reported as cost-efficiency data (or 

“curves”) in the form of DEC (in kWh) versus MSP (in dollars). DOE developed six 

curves representing the two equipment classes and three representative sizes analyzed in 

each equipment class. The methodology for developing the curves started with 

determining the energy consumption for baseline equipment and the full cost of 

production for this equipment. Above the baseline, DOE implemented design options 

using the ratio of cost to savings, and implemented only one design option at each 

engineering level analyzed. Design options were implemented until all available 

technologies were employed (i.e., at a max-tech level). Table IV-2 shows the engineering 

analysis results. See TSD chapter 5 for additional detail on the engineering analysis and 

TSD appendix B for complete cost-efficiency results. 

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EERE-2006-STD-0125 COMMENT 48
Table IV-2 Engineering Analysis Cost-Efficiency Results 

Equipment 

Class 

Size 

Analyzed Metric Efficiency Level Baseline 1 2 3 4 5 6 7 8 

A 

Small 

MSP 

$/ft3 $1,817.34 $1,856.20 $1,868.92 $1,876.79 $1,881.93 $1,893.33 $2,003.03 $2,027.85 $2,043.

DEC 

kWh/day/ft3 9.00 6.10 5.73 5.57 5.47 5.27 3.95 3.73 3.63 

Medium 

MSP 

$/ft3 $2,187.45 $2,222.07 $2,243.64 $2,251.52 $2,257.59 $2,268.99 $2,378.69 $2,408.68 $2,427.

DEC 

kWh/day/ft3 9.18 6.53 5.97 5.81 5.70 5.51 4.19 3.95 3.83 

Large 

MSP 

$/ft3 $2,368.67 $2,426.95 $2,433.02 $2,440.90 $2,453.62 $2,563.32 $2,593.31 $2,613.58 $2,624.

DEC 

kWh/day/ft3 10.24 6.75 6.62 6.46 6.21 4.89 4.60 4.46 4.41 

B 

Small 

MSP 

$/ft3 $1,468.18 $1,521.33 $1,544.13 $1,557.72 $1,591.67 $1,603.07 $2,023.72 $2,909.47 n/a 

DEC 

kWh/day/ft3 11.49 4.96 4.62 4.51 4.31 4.28 3.78 3.69 n/a 

Medium 

MSP 

$/ft3 $1,667.51 $1,716.84 $1,739.63 $1,744.77 $1,760.59 $1,796.01 $1,807.41 $2,228.06 $3,247.

DEC 

kWh/day/ft3 12.31 5.56 5.20 5.12 4.99 4.76 4.72 4.22 4.12 

Large 

MSP 

$/ft3 $1,725.34 $1,779.80 $1,802.60 $1,819.53 $1,854.95 $1,866.35 $2,287.00 $3,439.97 n/a 

DEC 

kWh/day/ft3 12.76 5.85 5.48 5.33 5.07 5.03 4.52 4.41 n/a 

44

EERE-2006-STD-0125 COMMENT 48
In addition to the design-option efficiency levels above, DOE calculated intermediate 

efficiency levels to bridge large performance level gaps created by certain design options. For 

instance, in a representative, medium-sized Class A machine, the LED design option leads to a 

considerable decrease in energy consumption between efficiency levels 5 and 6. Intermediate 

efficiency levels are necessary to create an even distribution of performance levels that are 

achievable without using a specified combination of design options. Chapter 5 of the TSD 

discusses these intermediate efficiency levels and the methodology behind their selection in more 

detail. 

C. Markups to Determine Equipment Price 

This section explains how DOE developed the distribution channel (supply chain) 

markups to determine installed costs for beverage vending machines (chapter 6 of the TSD). 

DOE used the supply chain markups it developed (including sales taxes and installation costs), 

along with the MSPs developed from the engineering analysis, to arrive at the final installed 

equipment prices for baseline and higher-efficiency beverage vending machines. As explained in 

the ANOPR, 73 FR 34113, DOE defined three distribution channels for beverage vending 

machines to describe how the equipment passes from the manufacturer to the customer. For the 

ANOPR analysis, DOE estimated market shares of 68 percent, 27 percent, and 5 percent for the 

manufacturer/beverage bottler (distribution channel #1), manufacturer/wholesaler/operator 

(distribution channel #2), and manufacturer/wholesaler/site owner (distribution channel #3) 

channels, respectively, for all beverage vending machines, based on market estimates from 

consultants. That is, 68 percent of all sales were estimated to pass from the manufacturer directly 

45
 

EERE-2006-STD-0125 COMMENT 48
to a bottler; 27 percent were estimated to pass from the manufacturer through a wholesaler to a 

beverage machine operator; and 5 percent were estimated to pass from the manufacturer through 

a wholesaler to the owner of the premises where the machine operated. In the latter case, the 

owner of the premises also owned the beverage vending machine. 73 FR 34113. 

Regarding distribution channels for vending machines and the calculation of the overall 

cost markups, Royal Vendors commented that distribution channel #1 (direct sales to major 

bottlers) will be around 85 percent to 90 percent (Royal Vendors, No. 29 at p. 39). Dixie-Narco 

stated its sales percentages through the three distribution channels would be 85 percent, 12 

percent and 3 percent, respectively. (Dixie-Narco, No. 29 at p. 40) Both comments gave 

increased importance to direct sales to major bottlers and deemphasized sales through 

wholesalers to vending operators and site owners. NPCC asked if the markups would be lower if 

DOE increased the market share of channel #1 from 68 percent to 80 or 85 percent. (NPCC, No. 

29 at p. 52) 

For the NOPR, DOE updated its assumptions regarding the percentage breakdown of 

market distribution through the different channels to determine customer markups for purchasing 

beverage vending machines. These updates were to increase the fraction of the market through 

distribution channel #1 to 85 percent and reduce the fraction of the market distribution through 

other channels in line with manufacturer comments. Table IV-3 provides the revised estimated 

distribution channel shares (in percentage of total sales) through each of the three distribution 

channels. 

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EERE-2006-STD-0125 COMMENT 48
 

Table IV-3 Distribution Channel Market Shares for Beverage Vending Machines 

Channel 1 Channel 2 Channel 3 

Manufacturer 

↓

Beverage Bottler/Distributor 

Manufacturer 

↓

Equipment 

Wholesaler/Distributor 

↓

Vending Machine Operator 

Manufacturer 

↓

Equipment 

Wholesaler/Distributor 

↓

Site Owner 

85% 10% 5% 

For each step in the distribution channels presented above, DOE estimated a baseline 

markup and an incremental markup, which are additional amounts added when equipment is sold 

and installed. A baseline markup is applied for the purchase of baseline equipment. An 

incremental markup is applied to the incremental increase in MSP for the purchase of higher 

efficiency equipment. 

DOE developed markups for each step of a given distribution channel based on available 

financial data as described in the ANOPR analysis. 73 FR 34113-14. DOE continued to use the 

same sources of data for the NOPR analysis, but updated the input assumptions to the most 

recent data where possible. 

Average overall markups in each distribution channel can be calculated using estimates 

of the shipments of beverage vending machines by distribution of State population. Since 

markups are not uniform among wholesalers, DOE used the Excel spreadsheet-based Crystal 

Ball program, which employs Monte Carlo analysis, to reflect this uncertainty in the LCC 

analysis. Table IV-4 and Table IV-5 show overall baseline and incremental markups for sales 

within each distribution channel. Chapter 6 of the TSD provides additional detail on markups. 

47
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

Table IV-4 Overall Average Baseline Markups by Distribution Channel Including Sales 

Tax 

Manufacturer 

Direct Wholesaler/Distributor Overall Weighted Average 

Markup 1.000 1.460 1.069 

Sales Tax 1.070 1.070 1.070 

Overall 

Markup 1.070 1.562 1.144 

Table IV-5 Overall Average Incremental Markups by Distribution Channel Including 

Sales Tax 

Manufacturer 

Direct Wholesaler/Distributor Overall Weighted Average 

Markup 1.000 1.200 1.030 

Sales Tax 1.070 1.070 1.070 

Overall 

Markup 1.070 1.284 1.102 

D. Energy Use Characterization 

The energy use characterization estimates the annual energy consumption of beverage 

vending machines. This estimate is used in the subsequent LCC and PBP analyses (chapter 8 of 

the TSD) and NIA (chapter 11 of the TSD). DOE estimated the energy use for machines in the 

two equipment classes analyzed17 in the engineering analysis (chapter 5 of the TSD) based on the 

DOE test procedure.18 DOE assumed all Class A machines to be installed indoors and subject to 

a constant air temperature of 75 °F and relative humidity of 45 percent, matching test conditions 

in the DOE test procedure. 73 FR 34114-15. Based on market data and discussions with several 

beverage vending machine distributors, DOE assumed that 25 percent of Class B machines are 

placed outdoors and the remaining 75 percent are installed indoors. DOE sought but did not 

receive comment on this distribution. Thus, DOE maintained the distribution for the NOPR 

analysis of Class B machines. 

17 Class A and Class B vending machines are described in section II.A.2 of the ANOPR. 73 FR 34103-34104. 18 DOE incorporated ANSI/ASHRAE Standard 32.1-2004 by reference, with two modifications, as the DOE test 

procedure for the beverage vending machines. 71 FR 71340, 71375 (Dec. 8, 2006); 10 CFR 431.294. 

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EERE-2006-STD-0125 COMMENT 48
In response to the ANOPR, the Edison Electric Institute (EEI) commented that it would 

be helpful for interested parties if DOE would provide the annual energy usage of Class B 

machines located outdoors versus machines located indoors. (EEI, No. 37 at p. 2) EEI also 

commented that it would be helpful if DOE collected data on peak kW demands for machines 

located both indoors and outdoors. Such data would help determine if the new energy 

conservation standards will have any impact on the peak kW demands based on DEC, especially 

for equipment located outdoors on hot summer days. (EEI, No. 37 at p. 2) EEI further 

commented that DOE should calculate energy savings separately for indoor and outdoor 

machines based on actual estimated ambient conditions for the machines (test procedure for 

indoor machines, climate data for outdoor machines). Also, for outdoor machines, DOE should 

estimate a percentage of machines that will be affected by solar heat gain because of southern or 

western exposures. (EEI, No. 37 at p. 4) 

In response to the EEI request, DOE is including the annual energy usage of Class B 

machines located outdoors versus machines located indoors in the TSD of today’s NOPR. 

However, DOE does not plan to obtain peak demand data for indoor and outdoor machines. 

During the ANOPR public meeting, DOE presented the statement that 100 percent of Class A 

machines were intended to be installed indoors and that, based on inquiries to distributors, 75 

percent of Class B machines appeared to be installed indoors (DOE, No. 29 at pp. 53-54). 

Interested parties discussed the implications of that assumption, but made no challenge to the 

assumption itself. Therefore, the vast majority of all beverage vending machines appear to be in 

49
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

conditioned environments. As a result, DOE does not believe that outdoor beverage vending 

machines will have a significant impact on peak loads for utilities. 

During the ANOPR public meeting, participants discussed the impact of refurbished 

machines, their energy use profile, and energy efficiency upgrades to existing machines based on 

accounting demands. (Coca-Cola, No. 29 at pp. 88-89) Dixie-Narco commented that it has kits 

listed on the U.S. Environmental Protection Agency (EPA) website that upgrade existing 

machines to meet ENERGY STAR Tier 2. (Dixie-Narco, No. 29 at pp. 90-91) 

DOE acknowledges this information, but it does not have the authority to regulate 

refurbished vending machines. DOE has carefully considered its authority to establish energy 

conservation standards for rebuilt and refurbished beverage vending machines in light of these 

comments, and has tentatively concluded that its authority does not extend to rebuilt and 

refurbished equipment. 

Throughout the history of the energy conservation standards program, DOE has not 

regulated used consumer products or commercial equipment that has been refurbished, rebuilt, or 

undergone major repairs, since EPCA only covers new covered equipment distributed in 

commerce.19 DOE concludes that rebuilt or refurbished beverage vending machines are not new 

covered equipment under EPCA and, therefore, are not subject to DOE’s energy conservation 

standards or test procedures. 

19 As an example, this position was taken and discussed in the distribution transformers final rule. 72 FR 58203. 

50
 

EERE-2006-STD-0125 COMMENT 48
Regarding the energy consumption model, Coca-Cola commented that moisture removal 

could account for nearly 12 percent of vending machine energy consumption in a reload 

situation, which is an intermittent occurrence. (Coca-Cola, No. 29 at p. 32 and No. 29 at p. 65) 

DOE accounts for the effect of ambient humidity changes on the hourly energy consumption 

calculation through use of weather files. However, DOE has not modeled a product reload 

situation because it is an intermittent occurrence and DOE has no information about total reload 

times or schedules in actual use. A reload of product is not part of the daily energy consumption 

test required by ASHRAE Standard 32.1-2004, which DOE used as the basis for the energy 

consumption calculations. 

Several commenters discussed the use of lighting controls and their impact on beverage 

vending machine energy use. Several manufacturers and other interested parties commented that 

having lighting and/or occupancy controls will help reduce energy consumption, especially when 

these machines go into “sleep mode.” (Coca-Cola, No. 29 at p. 78; Dixie-Narco, No. 29 at pp. 

69-71; EEI, No. 37 at p. 3; Dixie-Narco, No. 36 at pp. 1, 2; PepsiCo, No. 29 at pp. 20-21; and 

Naval Facilities Engineering Service Center (NFESC), No. 41 at p. 1). PepsiCo stated that it is 

difficult to determine an average lighting operation time, but that turning the lights off should be 

encouraged. (PepsiCo, Public Meeting Transcript, No. 29 at p. 74) Coca-Cola stated that 

beverage vending machines may not incorporate lighting in the near future. (Coca-Cola, Public 

Meeting Transcript, No. 29 at p. 78) Royal Vendors stated that although automated refrigeration 

and lighting controls may become more popular, the current methodology is reasonable and 

consistent for the purposes of this analysis. 

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EERE-2006-STD-0125 COMMENT 48
Having lighting controls and setting them properly at the factory does reduce beverage 

vending machine energy consumption when the machine goes into sleep mode. However, DOE 

does not have the authority to mandate lighting controls and/or occupancy sensors as a design 

requirement simultaneously with an energy conservation standard due to the definition of 

“energy conservation standard” in 42 U.S.C. 6291(6). See section II.C.2.c for further detail. 

Also, the current DOE test procedure does not provide a mechanism to account for the reduction 

in DEC resulting from lighting controls and/or occupancy sensors in the machines. However, 

EPCA as amended by EISA 2007 states that “at least once every 7 years, the Secretary shall 

review test procedures for all covered products....” 42 U.S.C. 6293(b)(1)(A). DOE may consider 

incorporating a mechanism to account for the reduction in DEC resulting from lighting controls 

and/or occupancy sensors during its review of the test procedure for beverage vending machines. 

DOE has not included the impact of these lighting controls as part of the engineering or energy 

use characterization analyses for this rulemaking and is retaining the assumption of a 24-hour 

lighting operation period. 

NFESC commented that the DOE analysis should not neglect the added electricity load 

on air-conditioned buildings. (NFESC, No. 41 at p. 3) Specifically, the comment stated that the 

appropriate question to ask is whether the added electricity required (as building cooling load) 

represents a significant percentage of the electricity required to operate the beverage vending 

machine. NEFSC calculations indicated that the added building cooling load electric demand 

represents an annual addition most probably on the order of 15% to the basic load imposed by 

operating the vending machine. 

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EERE-2006-STD-0125 COMMENT 48
DOE acknowledges that it did not account for the additional cooling load imposed by the 

BVM on the whole building cooling load, and correspondingly, any space cooling energy 

benefits that come from the reduction of the BVM's electrical load. DOE accepts that such a 

cooling energy use reduction will likely occur. At the same time, any reduction in BVM energy 

use will also result in an increase in heating energy use within the buildings. This impact on 

building heating and cooling loads would only occur for those BVMs located indoors. The 

relative cooling-energy-use benefit to heating-energy-use penalty is a function of the climate 

location, building type and size, and the placement of the BVMs within the building. The BVM 

could be located in uncooled portions of an industrial building, in the entering vestibules in a 

grocery store or in a supermarket, or in the core of an office building. The relative monetary 

benefits are also a function of the relative heating and cooling fuel costs. The quantification of 

the relative benefits impact would have required an extensive whole-building heating and 

cooling energy use analysis. Such studies of the impacts coming from lighting energy use within 

buildings have been done in the past. However, lighting tends to have a load profile that 

correlates with the cooling energy use in buildings. This is less true for BVMs since they operate 

on a 24-hour basis. Considering both the cooling benefits and the heating penalties from 

reductions in BVM energy use, DOE believes, that the 15% figure suggested by the NFESC 

comment overstates the likely benefits. Therefore, DOE determined that an extensive wholebuilding analysis was not warranted. 

As discussed in the engineering analysis above, DOE analyzed the three typical sizes 

(small, medium, and large vendible capacities), each with a different refrigerated volume as 

measured by ANSI/AHAM HRF-1-2004 and shown in Table IV-1. 

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EERE-2006-STD-0125 COMMENT 48
DOE used the same methodology to calculate the annual energy consumption for Class A 

and Class B vending machines as described in the ANOPR analysis. 73 FR 34115-16. For Class 

A vending machines, DOE calculated the annual energy consumption as the product of the 

average DEC (from the DOE test procedure indoor test condition of 75 °F, 45 percent relative 

humidity), times 365 days per year, which did not vary by State. For Class B vending machines, 

DOE used a weighted average between the annual average energy consumption for an outdoor 

machine and an indoor machine. To calculate a weighted energy use of all Class B machines, 

DOE added aggregated State-by-State results using data from each of the 237 Typical 

Meteorological Year 2 (TMY2) weather stations to the annual energy consumption of the 

remaining 75 percent of Class B machines located indoors. 

DOE developed the annual energy consumption for each equipment class at each 

efficiency level for every State as inputs to the LCC and PBP analyses. Chapter 7 of the TSD 

shows the annual average energy consumption estimates by equipment class and efficiency level. 

E. Life-Cycle Cost and Payback Period Analyses 

In response to the requirements of section 325(o)(2)(B)(i) of EPCA (42 U.S.C. 

6295(o)(2)(B)(i)), DOE conducted LCC and PBP analyses to evaluate the economic impacts of 

possible new beverage vending machine standards on individual customers. This section 

describes the analyses and the spreadsheet model DOE used. TSD chapter 8 provides details of 

the model and of all inputs to the LCC and PBP analyses. 

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EERE-2006-STD-0125 COMMENT 48
The effects of standards on individual commercial customers include changes in 

operating expenses (usually lower) and total installed price (usually higher). The LCC is the total 

cost for a unit of beverage vending machines, over the life of the equipment, including purchase 

and installation expense and operating costs (energy expenditures and maintenance). To compute 

the LCC, DOE summed the installed cost of the equipment and its lifetime operating costs 

discounted to the time of purchase. The PBP is the change in purchase expense due to a given 

energy conservation standard divided by the change in first-year operating costs resulting from 

the standard. Otherwise stated, the PBP is the number of years it would take for the customer to 

recover the increased costs of a more efficient product through energy savings. DOE measures 

the changes in LCC and PBP associated with a given energy use standard level relative to a base 

case forecast of equipment energy use. The base case forecast reflects the market absent 

mandatory energy conservation standards. DOE believes LCC is a better indicator of economic 

impacts on consumers. 

DOE also analyzed the effect of changes in operating expenses and installed price by 

calculating the PBP of potential standards relative to a base case. The PBP estimates the amount 

of time it would take the commercial customer to recover the anticipated, incrementally higher 

purchase expense of more energy efficient equipment through lower operating costs. The data 

inputs to the PBP calculation are the purchase expense (otherwise known as the total installed 

cost or first cost) and the annual operating costs for each selected design. The inputs to the 

equipment purchase expense were the equipment purchase price and installation price, with 

appropriate markups. The inputs to the operating costs were the annual energy consumption, 

electricity price, and repair and maintenance costs. The PBP calculation uses the same inputs as 

the LCC analysis but, since it is a simple payback, the operating cost is for the year the standards 

55
 

EERE-2006-STD-0125 COMMENT 48
take effect, assumed to be 2012. For each efficiency level analyzed, the LCC analysis required 

input data for the total installed price of the equipment, operating cost, and discount rate. 

DOE calculated the LCC for all customers as if each would purchase a new beverage 

vending machine in the year the standards take effect for newly manufactured equipment. 

Section 135(c)(4) of EPACT 2005 amended EPCA to add new subsections 325(v)(2), (3), and 

(4) (42 U.S.C. 6295(v)(1), (2), and (3)), which directs the Secretary to issue a final rule for 

refrigerated bottled or canned beverage vending machines no later than August 8, 2009. The 

energy conservation standard levels in the rule apply to all equipment manufactured 3 years after 

publication of the final rule. Consistent with EPCA, DOE used these dates in the NOPR 

analyses. 

At the ANOPR public meeting, Dixie-Narco suggested that the industry has made great 

strides in partnership with the bottlers to reduce the energy consumption by over 50 percent in 

the last 5 years for both Class A and Class B beverage vending machines. Dixie-Narco stated 

that a vast majority of the machines will meet ENERGY STAR levels when the new DOE 

standards go into effect in 2012. (Dixie-Narco, No. 29 at pp. 17-19) The Joint Comment stated 

that provided DOE can confirm industry’s assertion that the market has already shifted to 

ENERGY STAR Tier 2, DOE should take that level as the baseline rather than ENERGY STAR 

Tier 1. (Joint Comment, No. 34 at p. 3) 

DOE does not agree that it should use ENERGY STAR Tier 2 as the baseline for the 

present analysis, because not all new products are expected to meet the Tier 2 level by 2012. 

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EERE-2006-STD-0125 COMMENT 48
(PepsiCo, No. 29 at p. 152), though most are expected to meet Tier 2 even without a minimum 

standard at Tier 2 (Dixie Narco, No. 29 at pp. 150-151; Coca-Cola, No. 29 at p. 149; PepsiCo, 

No. 29 at p. 149). In other rules, DOE has consistently based the baseline levels for the LCC 

analysis on products available in the marketplace. DOE used a distribution of efficiency levels 

based on its assessment of the future market for beverage vending machines when establishing 

the base case for the NIA. This distribution in the 2012 baseline market includes 10 percent of 

shipments at approximately the ENERGY STAR Tier 1 efficiency level and 90 percent of 

shipments at approximately the ENERGY STAR Tier 2 efficiency level. Thus, the baseline 

market includes efficiency levels at and above the LCC baseline efficiency, which is 

approximately ENERGY STAR Tier 1. 

Regarding equipment lifetime, Dixie-Narco stated that it believes that the life expectancy 

of beverage vending machines will be 10 to 12 years by 2012. (Dixie-Narco, No. 29 at pp. 17­

19) Coca-Cola commented that the lifetime has gone down from 13 years to about 10 years, and 

that the machine typically undergoes one refurbishment cycle during its life. Coca-Cola uses a 

financial model to replace or upgrade components or subsystems that need to be changed, which 

may or may not result in a change in energy profile. (Coca-Cola, No. 29 at pp. 86-87) Coca-Cola 

further commented that the lifetimes of legacy machines may be extended because of 

refurbishment and that it upgrades the energy efficiency of existing machines based on account 

needs and account demands. (Coca-Cola, No. 29 at pp. 88-89) Dixie-Narco stated that it 

currently has kits listed on the EPA website to upgrade existing machines to meet ENERGY 

STAR Tier 2 level. (Dixie-Narco, No. 29 at pp. 90-91) 

57
 

EERE-2006-STD-0125 COMMENT 48
Based on the information provided by the manufacturers in this discussion, DOE has 

changed the input assumptions for the life-cycle cost analysis and the shipment analysis model to 

reflect the revised equipment life estimates to 10 years with one refurbishment cycle. The DOE 

analysis of proposed standard levels does not account for future, unknown energy impacts from 

refurbishments that may or may not occur during the 10-year equipment life or that provide 

energy benefits in conjunction with life extension. See chapter 8 of the TSD for further 

information. 

Regarding the electricity prices and forecasts DOE used in the LCC analysis, EEI asked 

if DOE used Manufacturing Energy Consumption Survey (MECS) data for the beverage vending 

machines installed in the manufacturing sector. (EEI, No. 29 at p. 104) EEI recommended that 

DOE use EIA data for industrial electricity prices, as a large number of beverage vending 

machines are located in industrial facilities. 

During the ANOPR public meeting, EEI asked if DOE considered separately the summer 

and winter energy usage of some of the outdoor machines, as summer use may be greater and at 

a higher commercial rate than winter use in certain climates. (EEI, No. 29 at p. 106) In its written 

comment, EEI recommended that DOE use seasonal rates and MECS data. (EEI, No. 37 at p. 3) 

DOE used the EIA industrial electricity prices for averaging State-by-State electricity 

prices for the percentage of machines located in industrial, manufacturing, and government 

facilities for the ANOPR and NOPR analyses. DOE did not use seasonal variation in commercial 

58
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

electricity rates in its LCC analysis because seasonal variation in electricity rates differs 

throughout the country and even by utility, significantly complicating the analysis. The impact of 

higher energy consumption on the relatively small fraction of beverage vending machines 

located outdoors in the summer compared to winter was deemed to be of little impact on Class B 

equipment and of no impact on Class A equipment. 

Regarding electricity price forecasts, the Joint Comment suggested that DOE use the 

most recent EIA AEO high price case for energy price forecasts20 and include the cost and value 

of peak electricity demand in the analysis. (Joint Comment, No. 34 at p. 3) ACEEE asked DOE 

to review EIA AEO price applicability and offered to provide a list of alternative price forecasts. 

(ACEEE, No. 29 at pp. 107-108) 

DOE updated its NOPR analysis to use the AEO2009 reference case scenario for the base 

electricity price and electricity price forecasts into the future. The NOPR provides a sensitivity 

analysis based on the AEO high and low price scenarios. DOE continued to use the AEO 

forecasts, as it has done for other rules, and did not explore alternative electricity price forecasts. 

DOE believes that analyzing the results using the high-price and low-price scenarios provides 

sufficient insight into the likely range of electricity price impacts. DOE has no evidence that 

alternative scenarios are better predictors of future electricity costs. 

20 EIA high and low price cases are based on EIA’s assumed average world price for oil and the adjustments of the 

economy and the energy sector to that key assumption. In the high price case in AEO2008, the average electricity 

price in 2030 was about 2.2 percent higher than in the reference case. Since the supplemental tables for the AEO 

2009 were not yet available, DOE used the ratio of high and low price cases from AEO2008 to scale the AEO2009 

reference case. See chapter 8 of the TSD for additional information. 

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EERE-2006-STD-0125 COMMENT 48
Regarding future climate change legislation and its impact on the price of electricity, the 

Joint Comment suggested including the value of carbon emissions in the LCC and NPV 

analyses. (Joint Comment, No. 34 at p. 3) 

The intent of Federal carbon control legislation, and the ensuing cost of carbon mitigation 

to electricity generators, is as yet too uncertain to incorporate into the energy price forecasts that 

DOE uses. The costs of carbon mitigation to electricity generators resulting from the regional 

programs are also very uncertain over the forecast period for this rulemaking. Even so, EIA did 

include the effect of the Northeast Regional Greenhouse Gas Initiative (RGGI) in its AEO2009 

Early Release energy price forecasts. Western Climate Initiative (WCI) did not provide sufficient 

detail for EIA to model the impact of the WCI on energy price forecasts. Therefore, the energy 

price forecasts used in today’s final rule do include the impact of one of the two regional capand-trade programs to the extent possible. In addition, the Nation will benefit from reduction of 

carbon emissions as part of a national impact. Because of the range of possible values of 

emissions reductions, DOE shows them separately in order to take the impact into consideration. 

Putting the values into the overall NPV calculation will bury the effects. DOE believes it is 

important for the decision maker to be fully aware of the economic impacts of a proposed energy 

conservation standard. For these reasons, DOE will continue to report the results of the 

monetization of the value of carbon emissions in the Environmental Assessment (section V.B.6). 

In the discussion of discount rates, Royal Vendors commented that Coca-Cola and 

PepsiCo purchase approximately 90 percent of all beverage vending machines. (Royal Vendors, 

No. 32 at p. 1) Royal Vendors and Dixie-Narco made similar remarks about the size of the 

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EERE-2006-STD-0125 COMMENT 48
market purchases by these two entities in a discussion of distribution channels. (Royal Vendors 

and Dixie-Narco, Public Meeting Transcript, No. 29 at pp. 39-40) In accordance with the 

comments regarding distribution channels, DOE modified the mix of commercial customers so 

that bottlers represent 85 percent of commercial customers. DOE also used the same 85 percent 

weight of bottlers to develop the discount rate distribution among beverage vending machine 

purchasers. 

During the ANOPR public meeting, Coca-Cola commented that beverage vending 

machine maintenance costs are approximately $90 per year, energy upgrade costs vary based on 

the kit used, and a remanufacturing cycle costs around $500 to $600. (Coca-Cola, No. 29 at pp. 

113-116) DOE received no other comments on this issue. 

DOE has updated its maintenance cost assumptions to more closely reflect Coca-Cola’s 

comments. This resulted in a minor decrease in assumed annual maintenance cost from $165 in 

the ANOPR analysis to $154 in the NOPR analysis. 

Also during the ANOPR public meeting, participants discussed how the energy cost 

benefits should be reflected in the LCC analysis. Coca-Cola stated that energy subsidy contracts 

are pre-negotiated as part of the location contract based on considerations such as volume of 

throughput and length of the contract. (Coca-Cola, No. 29 at pp. 125-126) Any kind of energy 

subsidy machine owners pay to locate their machines on-site is pre-negotiated as part of the 

location contract. Also, energy cost reductions due to the use of higher efficiency equipment 

would be reflected in a reduced subsidy paid to the site. However, no market data have been 

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EERE-2006-STD-0125 COMMENT 48
provided to DOE that would allow computation of the actual allocation of energy cost benefits 

for the site owner and the vending machine owner. To account for such energy cost benefits for 

purposes of computing life cycle cost and payback period, DOE assumes that operating cost 

savings due to energy cost savings are transferred to the owner/operator of the beverage vending 

machine through the location contract. This is analytically equivalent to assuming that energy 

subsidies are reduced by the amount of the energy cost reductions. 

Table IV-6 summarizes the inputs and key assumptions DOE used to calculate the 

economic impacts of various energy consumption levels on customers. Equipment price (which 

includes Manufacturer’s Selling Price, markups, and sales taxes), installation price, and baseline 

and higher efficiency all affect the installed cost of the equipment. Annual equipment energy 

consumption, electricity prices, electricity price trends, and repair and maintenance costs affect 

the operating cost. The effective date of the standard, discount rate, and lifetime of equipment all 

affect the calculation of the present value of annual operating cost savings from a proposed 

standard. Table IV-6 also shows how DOE modified these inputs and key assumptions for the 

NOPR analysis. 

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EERE-2006-STD-0125 COMMENT 48
 

 

 

Table IV-6 Summary of Inputs and Key Assumptions Used in the LCC and PBP Analyses 

Input ANOPR Description Changes for NOPR 

Baseline Efficiency Level 

Energy savings (changes in 

equipment energy 

consumption) and energy cost 

savings are compared to a preselected baseline efficiency 

level (in this case Level 1). 

Baseline MSP and equipment 

energy consumption depend on 

the baseline efficiency level. 

No changes 

Higher Efficiency Levels 

A certain number of higher 

efficiency levels are preselected up to the max-tech 

level for LCC and PBP 

analyses. These higher 

efficiency levels affect MSP 

and equipment energy 

consumption. 

No changes 

Baseline Manufacturer Selling 

Price 

Price charged by manufacturer 

to either a wholesaler or large 

customer for baseline 

equipment. 

No changes 

Standard-Level Manufacturer 

Selling Price Increases 

Incremental change in 

manufacturer selling price for 

equipment at each of the higher 

efficiency levels. 

No changes 

Markups and Sales Tax 

Associated with converting the 

manufacturer selling price to a 

customer price (chapter 6 of 

TSD). 

Distribution of sales among market 

channels changed based on 

comments on the ANOPR. Sales 

tax rates updated to January 2009. 

Installation Price 

Cost to the customer of 

installing the equipment 

including labor, overhead, and 

any miscellaneous materials 

and parts. The total installed 

cost equals the customer 

equipment price plus the 

installation price. 

Installation price updated to 2008$ 

Equipment Energy 

Consumption 

Site energy use associated with 

the use of beverage vending 

machines, which includes only 

the use of electricity by the 

equipment itself. 

Updated to reflect results of the 

energy analysis. 

Electricity Prices 

Average commercial electricity 

price ($/kWh) in each State and 

for seven classes of commercial 

and industrial customers, as 

determined from EIA data for 

2003 converted to 2007$. 

Average commercial electricity 

price ($/kWh) in each State and for 

seven classes of commercial and 

industrial customers, as determined 

from EIA data for 2003, updated to 

2008 prices. 

Electricity Price Trends 

Reflects the AEO2007 

reference case forecast future 

electricity prices. 

Reflects the AEO2009 reference 

case to forecast future electricity 

prices. 

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EERE-2006-STD-0125 COMMENT 48
 

Input ANOPR Description Changes for NOPR 

Maintenance Costs 

Labor and material costs 

associated with maintaining the 

beverage vending machines 

(e.g., cleaning heat exchanger 

coils, checking refrigerant 

charge levels, lamp 

replacement) included 

annualized costs of two 

refurbishment cycles. 

Updated basic maintenance cost to 

2008$ Based on industry comment 

on the ANOPR, included an 

updated annualized cost of one 

refurbishment/remanufacturing 

cycle. 

Repair Costs 

Labor and material costs 

associated with repairing or 

replacing components that have 

failed 

Updated costs to 2008$ 

Equipment Lifetime 

Age at which the beverage 

vending machine is retired from 

service (estimated to be 14 

years) 

Based on industry comment on the 

ANOPR, reduced average service 

life to 10 years, with 15 years as a 

maximum 

Discount Rate 

Rate at which future costs are 

discounted to establish their 

present value to beverage 

vending machine purchasers 

Updated discount rates for all 

classes of purchasers based on 

weighted average cost of capital 

figures from 2008 

Rebound Effect 

Rebound effect was not taken 

into account in the LCC 

analysis 

No change 

Analysis Period 

The time span over which DOE 

calculated the LCC (i.e., 2012­

2042) 

No change 

The following sections contain brief discussions of the methods underlying each input 

and key assumption in the LCC analysis. 

1. Manufacturer Selling Price 

The “baseline MSP” is the price manufacturers charge to either a wholesaler/distributor or 

very large customer for beverage vending machines meeting baseline efficiency levels. DOE 

developed the baseline MSPs using a cost model (detailed in chapter 5 of the TSD). DOE used 

the efficiency level closest to ENERGY STAR Tier 1 as the baseline in the NOPR analysis. The 

baseline efficiency level represents the least efficient equipment likely to be sold in 2012. 

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EERE-2006-STD-0125 COMMENT 48
 

 

 

DOE developed MSPs for the two equipment classes consisting of three possible 

equipment sizes. Not all covered equipment sizes have shipments of more than a few percent of 

the total.21 (See chapter 10 of the TSD.) DOE estimated the MSPs for Class A and Class B 

equipment at the three representative rated volumes between the baseline efficiency level and up 

to seven more efficient levels. See chapter 5 of the TSD for details. 

2. Increase in Selling Price 

The standard level MSP increase is the change in MSP associated with producing 

equipment at lower energy consumption levels to meet higher standards. DOE developed MSP 

increases associated with decreasing equipment energy consumption (or higher efficiency) levels 

in the engineering analysis. See chapter 5 of the TSD for details. DOE developed MSP increases 

as a function of equipment energy consumption for each equipment class. 

3. Markups 

As discussed earlier, overall markups are based on one of three distribution channels for 

beverage vending machines. The distribution channels defined in the ANOPR were also used for 

the NOPR analysis, but DOE modified the relative fractions of shipments through each 

distribution channel based on input from interested parties. Based on input received by DOE, site 

owners purchase approximately 5 percent of equipment from wholesaler/distributors, vending 

machine operators purchase 10 percent of equipment from wholesaler/distributors, and beverage 

21 Comments received at the ANOPR stage from interested parties indicated that small volume machines were never 

more than about 10 percent of the total (Royal Vendors, No. 29, p. 141); that small machines are financially 

unattractive (Coca-Cola, No. 29, p. 141); and that shipments range from 10 percent medium to 100 percent medium 

machines, depending on the manufacturer, with the rest being large (Royal Vendors, No. 29, pp. 141-142). 

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EERE-2006-STD-0125 COMMENT 48
 

bottler/distributors purchase 85 percent of equipment directly from manufacturers. See chapter 

10 of the TSD for details. 

4. Installation Costs 

DOE derived installation costs for beverage vending machines from the U.S. Bureau of 

Labor Statistics (BLS) data.22 BLS provides median wage rates for installation, maintenance, and 

repair occupations that reflect the labor rates for each State. These data allow DOE to compute 

State labor cost indices relative to the national average for these occupations. DOE incorporated 

these cost indices into the analysis to capture variations in installation cost by location. DOE 

calculated the installation cost by multiplying the number of person-hours by the corresponding 

labor rate as reported by Foster-Miller, Inc.23 Foster-Miller data are more specific to the beverage 

vending machine industry and service calls, and were used whenever possible. DOE decided that 

the installation costs (including overhead and profit) represent the total installation costs for 

baseline equipment. Because data were not available to indicate how installation costs vary by 

class or efficiency, DOE considered installation costs to be fixed and independent of equipment 

cost or efficiency. Although the LCC spreadsheet allows for alternative scenarios, DOE did not 

find a compelling reason to change its basic premise for the NOPR analysis. 

See chapter 8 of the TSD for details. 

As described earlier, the total installed cost is the sum of the equipment purchase price 

and installation price. DOE derived the customer equipment purchase price for any given 

22 Bureau of Labor Statistics, Occupational Employment and Wage Estimates (May 2007). Available at 

www.bls.gov/oes/oes_dl.htm. 

23 Foster-Miller, Inc. “Vending Machine Service Call Reduction Using the VendingMiser.” Report BAY-01197. 

Foster-Miller, Inc. Waltham, MA. February 18,2002. 

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EERE-2006-STD-0125 COMMENT 48
 

efficiency level by multiplying the baseline MSP by the baseline markup and adding to it the 

product of the incremental MSP and incremental markup. Because MSPs, markups, and sales 

taxes can differ depending on location, the resulting total installed cost for a particular efficiency 

level will not be a single-point value, but a distribution of values. DOE used a Monte-Carlo 

analysis24 to determine this distribution of values. See chapter 8 of the TSD for details. 

5. Energy Consumption 

DOE based its estimate of the annual electricity consumption of beverage vending 

machines on the energy use characterization described in section IV.D. DOE did not change the 

ANOPR methodology. See chapters 7 and 8 of the TSD for details. 

6. Electricity Prices 

Electricity prices are necessary to convert the electric energy savings into energy cost 

savings. Because of the wide variation in electricity consumption patterns, wholesale costs, and 

retail rates across the country, it is important to consider regional differences in electricity prices. 

DOE divided the continental United States into the 50 States and the District of Columbia. DOE 

used reported average effective commercial electricity prices which are the average commercial 

prices in each state, multiplied times a factor that adjusts the price to account for the fact that 

different types of commercial customers historically have higher or lower prices than average. 

(See chapter 8 of the TSD for details.) Effective commercial prices were estimated for four of the 

six building types. Lower industrial electricity prices were assumed to apply to the 

manufacturing plants and Federal facilities. State level commercial and industrial prices were 

24 The Monte-Carlo analysis is a numerical simulation approach using random values from known statistical 

distributions. 

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collected from the EIA publication, “State Energy Consumption, Price, and Expenditure 

Estimates (SEDS).”25 The latest available prices from this source are for 2008.See chapter 8 of 

the TSD for details. 

Different kinds of businesses use electricity in different amounts at different times of the 

day, week, and year, and therefore face different effective prices. To make this adjustment, DOE 

used the 2003 CBECS data set to identify the average prices that the four kinds of commercial 

businesses in this analysis pay compared with the average prices all commercial customers pay. 

(DOE assumed manufacturing and Federal facilities pay the average industrial price.) Once the 

building type prices are adjusted, the resulting estimated prices paid become the electricity prices 

used in the analysis. To obtain a weighted average national price, the prices paid by each 

building in each state are weighted by the estimated sales of beverage vending machines in each 

state to each prototype building type (U.S. Census Bureau 2002, 2004a–2004c). The 

state/building type weights are the probabilities that a given beverage vending machine shipped 

will be operated within a given price. For evaluation purposes, the prices and weights can be 

depicted as a cumulative probability distribution. The effective prices range from approximately 

5 cents per kWh to approximately 30 cents per kWh. This approach includes regional variations 

in energy prices and provides for estimated electricity prices suitable for the target market, yet 

reduces the overall complexity of the analysis. Chapter 8 of the TSD describes the development 

and use of State-average electricity prices by building type in more detail. 

25 www.eia.doe.gov/emeu/states/_seds.html. 

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EERE-2006-STD-0125 COMMENT 48
 

7. Electricity Price Trends 

The electricity price trend provides the relative change in electricity prices until 2030. 

Estimating future electricity prices is difficult, especially considering that many States are 

attempting to restructure the electricity supply industry. DOE uses the most recent AEO 

reference case to forecast energy prices for standards rulemakings. DOE applied the AEO2009 

reference case as the default scenario and extrapolated the trend in values from 2020 to 2030 of 

the forecast to establish prices for 2030 to 2042. This method of extrapolation is in line with 

methods the EIA uses to forecast fuel prices for the Federal Energy Management Program 

(FEMP). DOE intends to update its analysis for the final rule to reflect the AEO2009 electricity 

price forecasts when final versions are available. 

8. Repair Costs 

The repair cost is the cost to the customer of replacing or repairing beverage vending 

machine components that have failed. DOE based the annualized repair cost for baseline 

efficiency equipment on the report “Vending Machine Service Call Reduction Using the 

VendingMiser,”26 and adjusted the cost to 2008 prices. Because data were not available to 

indicate how repair costs vary with equipment efficiency, DOE considered two scenarios: (1) 

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

repair costs that did not increase with efficiency. 

26 Foster-Miller, Inc. “Vending Machine Service Call Reduction Using the VendingMiser.” Report BAY-01197. 

Foster-Miller, Inc. Waltham, MA. February 18,2002. 

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EERE-2006-STD-0125 COMMENT 48
DOE used the first scenario as the default annualized repair cost scenario in the LCC and 

PBP analyses. Spreadsheets can be used to calculate LCC and PBP based on the second scenario 

as well. See chapter 8 of the TSD for details. 

9. Maintenance Costs 

DOE estimated annualized maintenance costs for beverage vending machines from data 

provided by Coca-Cola at the ANOPR public meeting. Coca-Cola estimated that average 

equipment maintenance costs are $98.20 (2008$) for preventive maintenance for both beverage 

vending machine classes. In addition to routine maintenance, industry contacts stated that most 

beverage vending machines are fully refurbished every 5 years at an average cost of 

approximately $550. DOE calculated the annual cost of refurbishment by assuming one 

refurbishment (in year five), and then annualizing the present value of the cost using the discount 

rate that applied to the business type owning the beverage vending machine. DOE added the two 

maintenance cost components to produce an overall annual maintenance cost of approximately 

$154 (2008$). Because data are not available on how maintenance costs vary with equipment 

efficiency, DOE held maintenance costs constant even as equipment efficiency increased. See 

chapter 8 of the TSD for details. 

10. Lifetime 

DOE defined lifetime as the age when a beverage vending machine unit is retired from 

service. DOE based the lifetime on comments it received during the ANOPR. DOE concluded 

that a typical lifetime is 10 years and a maximum lifetime is 15 years. Beverage vending 

machine equipment is typically replaced when buildings are renovated about every 10 years, 

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which is before the equipment would have physically worn out. As a result, there is a usedequipment market for these products. Because the salvage value to the original purchaser is very 

low, DOE did not take this value into account in the LCC analysis. Chapter 3 of the TSD 

contains a discussion of equipment life. 

11. Discount Rate 

The discount rate is the rate at which future expenditures are discounted to establish their 

present value. DOE derived discount rates for the LCC analysis by estimating the cost of capital 

for companies that purchase beverage vending machines. The cost of capital is commonly used 

to estimate the present value of cash flows to be derived from a typical company project or 

investment. For most companies, the cost of capital is the weighted average of the cost to the 

company of equity and debt financing. DOE estimated the cost of equity financing with the 

Capital Asset Pricing Model (CAPM), which is among the most widely used models to estimate 

such costs. CAPM considers the cost of equity to be proportional to the amount of systematic 

risk for a company. The cost of equity financing tends to be high when a company faces a large 

degree of systematic risk and low when the company faces a small degree of systematic risk.27 

To estimate the weighted average cost of capital (WACC; defined as the weighted 

average cost of debt and equity financing) of purchasers, DOE used a sample of companies 

involved in the six ownership categories, according to their type of activity. DOE sought 

27 Aswath Damodaran, Leonard N. Stern School of Business, New York University. Available at 

www.stern.nyu.edu/~adamodar/New_Home_Page/data.html. Accessed December 15, 2008. See also the 

Investopedia website definition of Beta, the measure of such volatility: www.investopedia.com/terms/b/beta.asp. 

Accessed April 1, 2009. 

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financial information for all firms in the full sample involved in the seven types of businesses 

drawn from a database of 7,460 U.S. companies on the Damodaran Online website.28 In cases 

where one or more of the variables needed to estimate the discount rate was missing or could not 

be obtained, DOE discarded the firm from the analysis. Overall, it discarded about 36 percent of 

the firms in the full database for this reason, resulting in a final count of 4,139 firms. This 

WACC approach for determining discount rates accounts for the current tax status of individual 

firms on an overall corporate basis. DOE did not evaluate the marginal effects of increased costs, 

and thus depreciation due to more expensive equipment, on the overall tax status. See chapter 8 

of the TSD for details. 

DOE used the final sample of 4,139 companies to represent beverage vending machine 

purchasers. For each company in the sample, DOE derived the cost of debt, percent debt 

financing, and systematic company risk from information on the Damodaran Online website. 

Damodaran estimated the cost of debt financing from the long-term government bond rate (4.39 

percent) and the standard deviation of the stock price. DOE then determined the weighted 

average values for the cost of debt, range of values, and standard deviation of WACC for each 

category of the sample companies. Deducting expected inflation from the cost of capital 

provided estimates of real discount rate by ownership category. 

The above methodology yielded the following average after-tax discount rates, weighted 

by the percentage shares of total purchases of beverage vending machines: (1) 5.54 percent for 

bottlers and distributors, (2) 6.25 percent for manufacturing facilities, (3) 4.81 percent for office 

28 Aswath Damodaran, Leonard N. Stern School of Business, New York University. Available at 

www.stern.nyu.edu/~adamodar/New_Home_Page/data.html. Accessed December 15, 2008. 

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and health care businesses, (4) 6.00 percent for retail stores, (5) 2.35 percent for schools and 

colleges, (6) 3.03 percent for military bases, and (7) 5.23 percent for all other types of 

businesses.29 See chapter 8 of the TSD for details. 

12. Payback Period 

The PBP is the amount of time it takes the customer to recover the incrementally higher 

purchase cost of more energy efficient equipment as a result of lower operating costs. 

Numerically, the PBP is the ratio of the increase in purchase cost (i.e., from a less efficient 

design to a more efficient design) to the decrease in annual operating expenditures. This type of 

calculation is known as a “simple” PBP because it does not take into account changes in 

operating cost over time or the time value of money; that is, the calculation is done at an 

effective discount rate of 0 percent. 

The equation for PBP is 

 PBP =∆IC/∆OC 

Where: 

PBP = payback period in years, 

∆IC = difference in the total installed cost between the more efficient standard level 

equipment (energy consumption levels 2, 3, etc.) and the baseline (energy consumption 

level 1) equipment, and 

∆OC = difference in annual operating costs. 

29 These discount rates are what private companies pay as beverage vending machine purchasers. Government 

agencies use 3-percent and 7-percent discount rates for economic calculations. 

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The data inputs to the PBP analysis are the total installed cost of the equipment to the 

customer for each energy consumption level and the annual (first-year) operating costs for each 

energy consumption level. The inputs to the total installed cost are the equipment price and 

installation cost. The inputs to the operating costs are the annual energy cost, annual repair cost, 

and annual maintenance cost. The PBP uses the same inputs as the LCC analysis, except that 

electricity price trends and discount rates are not required. Since the PBP is a “simple” 

(undiscounted) payback, the required electricity cost is only for the year in which new energy 

conservation standards take effect—in this case, 2012. The electricity price used in the PBP 

calculation of electricity cost was the price projected for 2012, expressed in 2008$, but not 

discounted to 2008. Discount rates are not used in the PBP calculation. 

As discussed in section III.D.2, section 325(o)(2)(B)(iii) of EPCA states that there is a 

rebuttable presumption that an energy conservation standard is economically justified if the 

additional cost to the consumer of a product that meets the standard level is less than three times 

the value of the first-year energy (and, as applicable, water) savings resulting from the standard, 

as calculated under the applicable DOE test procedure. However, as stated in section III.D.2, 

DOE does not rely on the rebuttable presumption payback criteria when examining potential 

standard levels, but does consider it as part of a full analysis that includes all seven relevant 

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

F. Shipments Analysis 

DOE developed forecasts of the number of units shipped for the base case and standards 

cases and included those forecasts in the NES spreadsheet. The shipments portion of the 

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spreadsheet forecasts shipments of beverage vending machines from 2012 to 2042. DOE 

developed shipments forecasts for the two equipment classes by accounting for the shipments 

replacing the existing stock of beverage vending machines in new commercial floor spaces and 

old equipment removed through demolitions. Chapter 10 of the TSD provides additional details 

on shipments forecasts. 

The shipments analysis is a description of beverage vending machine stock flows as a 

function of year and age. The shipment analysis treats each of the two classes of equipment 

independently, such that future shipments in any one class are unaffected by shipments in the 

other equipment class. In addition, the relative fraction of shipments in each equipment class 

compared to all beverage vending machine shipments is assumed to be constant over time. DOE 

recognizes that a business or a beverage vending machine owner can choose to use different 

classes of beverage vending machines to sell the same product if the equipment is in the required 

temperature range and is suitable for the environment in which the equipment will be placed. The 

decision to adopt one equipment class over another within the same temperature range will 

depend on first costs, operating costs, machine location (e.g., outdoors versus indoors), and the 

perceived ability to merchandise product. 

DOE received many comments on the shipment analysis and assumptions in the ANOPR. 

Many comments addressed the declining size of the beverage vending machine market. Royal 

Vendors estimate that the current beverage vending machine stock is about 2.3 or 2.5 million 

units. Further, Royal Vendors commented that the population of machines is decreasing and that 

replacements purchased are less than “normal shrinkage.” (Royal Vendors, No. 32 at p. 1) Dixie75
 

EERE-2006-STD-0125 COMMENT 48
Narco stated that a significant number of machines are being pulled out of the marketplace, 

partly because of the number of locations (particularly schools) that no longer allow vending 

machines. (Dixie-Narco, No. 29 at p. 44) Coca-Cola said that it has removed between 200,000 

and 250,000 beverage vending machines since 2006 and that future shipments will only be 

replacements. (Coca-Cola, No. 29 at p. 140) PepsiCo agreed that the number of machines is 

decreasing and it doesn’t see this trend reversing anytime soon. (PepsiCo, No. 29 at pp. 43-44) It 

attributed this, in part, to the “very high cost” of vandalism. NAMA also noted that there has 

been a decline in beverage vending machine sales over the last 5 or 6 years. NAMA attributed 

this to the removal of vending machines from school districts. (NAMA, No. 29 at pp. 48-49) The 

Joint Comment recommended that DOE conduct an independent annual sales forecast of 

equipment, stating that it was not clear why school district soda bans would result in the removal 

of vending machines rather than replacing sodas with healthier beverages in existing machines. 

(Joint Comment, No. 34 at p. 2) EEI suggested that DOE obtain data to monitor the downward 

trend in shipments and incorporate any observed reductions of the market into the analysis. (EEI, 

No. 37 at p. 2) EPA offered to share aggregated shipment data of ENERGY STAR qualified 

equipment with DOE. (EPA, No. 29 at p. 48) 

DOE also received input on sales of new and replacement equipment. Royal Vendors 

stated that the overall current stock is approximately 90 percent Class B machines and 10 percent 

Class A machines, of which it builds large and medium Class A machines. However, trends are 

changing. In the future, the overall stock will more closely resemble ratios of 60/40 or 50/50 

76
 

EERE-2006-STD-0125 COMMENT 48
 

between Class A and Class B machines. (Royal Vendors, No. 29 at p. 139 and No. 29 at pp. 163­

167). This data was also confirmed by data from The Cadmus Group (2006).30 

DOE has updated its shipments model for the NPV analysis to reflect the comments it 

received. The model now reflects that there is zero growth in the number of vending machines 

and that new machines will only replace old and retired machines. DOE also updated its 

shipments analysis model to reflect more closely comments on the breakdown of shipments 

between equipment classes as well as the different sizes. 

Dixie-Narco commented that it currently has kits listed on the EPA website to upgrade 

existing machines to meet ENERGY STAR Tier 2. (Dixie-Narco, No. 29 at pp. 90-91) DOE 

accepts the comment and has assumed that a high percentage of the machines shipped in 2012 in 

the base case shipment forecast will meet ENERGY STAR Tier 2 levels even without energy 

conservation standards. 

The results of the shipments analysis are driven primarily by historical shipments data for 

the two equipment classes of beverage vending machines under consideration. The model 

estimates that, in each year, the existing stock of beverage vending machines either ages by one 

year or is worn out and replaced. In addition, new equipment can be shipped into new 

commercial building floor space and old equipment can be removed through demolitions. DOE 

30 Cadmus Group. 2006. “Saving Energy in Vending Machines: Opportunities for the Regional Technical Forum.” 

Presentation for the Northwest Power Conservation Council. Available at 

www.nwcouncil.org/energy/rtf/meetings/2006/2006_09. Accessed on January 5, 2009. 

77
 

EERE-2006-STD-0125 COMMENT 48
 

chose to analyze all efficiency levels analyzed in the LCC in the NIA. DOE determined 

shipments forecasts for all levels analyzed in the NIA and NPV analysis. 

Because several different types of businesses own beverage vending machines and use 

them in a variety of locations, machines are divided into several market segments. Table IV-7 

gives the business locations and the approximate size of the market segments from 2002 to 2005. 

Table IV-7 Market Segments for the Beverage Vending Machines (2004-2007) 

Business Location Percent of 

Machines Ownership Percent of Machines 

Manufacturing 36.2 Bottlers and Vendors 95.0 

Offices 19.5 Business Owned 

- Manufacturing 

- Offices and Health Care 

- Retail/Restaurants/Bars/Clubs 

- Schools, Colleges, and Public 

Facilities (including Correctional) 

- Military Bases 

- Other (including hotels/motels) 

Site Owned 

5.0 

1.5 

1.4 

0.8 

0.8 

0.4 

0.1 

5.0 

Retail 8.0 

Schools/Colleges 13.0 

Health Care 6.2 

Hotels/Motels 3.6 

Restaurants/Bars/ Clubs 0.7 

Correctional Facilities 2.1 

Military Bases 3.0 

Other 7.8 

Total 100.0 Total 100.0 

Table IV-8 shows the forecasted shipments of the three typical sizes of beverage vending 

machines for Class A and Class B units for selected years and cumulatively between 2012 and 

2042. As equipment purchase price increases with higher efficiency levels, a drop in shipments 

could occur relative to the base case. On the other hand, as annual energy consumption is 

reduced, equipment sales could increase due to more frequent installations and use of beverage 

vending machines by retailers. DOE has no information to calibrate either relationship. 

Therefore, although the spreadsheet allows for changes in projected shipments in response to 

efficiency increases or energy consumption decreases, DOE presumed for the NOPR analysis 

that shipments would not change in response to the changing TSLs. Table IV-8 also shows the 

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EERE-2006-STD-0125 COMMENT 48
 

 

cumulative shipments for the 31-year period between 2012 and 2042 for all beverage vending 

machines. Comments from the ANOPR public meeting indicated that there has been a substantial 

decrease in shipments since 2000 and that future shipments are not expected to increase for the 

foreseeable future. These shipments are entirely for replacements, but the stock of beverage 

vending machines has also been declining at a significant rate. DOE has estimated a current level 

of shipments of about 90,000 units per year. This rate is consistent with observed declines in 

stock, expected retirement rates based on stated stock lifetimes, and extra removals due to 

vandalism and other causes, as stated by interested parties. Consistent with public comment, 

these shipment rates (which equals replacements) are assumed to be constant through 2042, 

which results in a continuing decline in the stock of beverage vending machines from recent 

levels of about 2.4 million units to a level of about 944,000 units by 2020, at which point the 

stock stabilizes. Chapter 10 of the TSD provides additional details on the shipments analysis. 

Table IV-8 Forecasted Shipments for Beverage Vending Machines (Baseline Efficiency, 

Level 1) for Selected Years (thousands of units shipped) 

Thousands of Units Shipped 

Equip. 

Class Size 2012 2015 2020 2025 2030 2035 2040 2042 

Cumulative 

Shipments* 

2012-2042 

A L 12.4 12.4 12.4 12.4 12.4 12.4 12.4 12.4 383.6 

A M 37.1 37.1 37.1 37.1 37.1 37.1 37.1 37.1 1,150.9 

A S - - - - - - - - -

B L 10.1 10.1 10.1 10.1 10.1 10.1 10.1 10.1 313.9 

B M 30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 941.6 

B S - - - - - - - - -

* The cumulative shipments do not equal the totals across each row because all years from 2012 to 2042 are 

included in the calculation. 

G. National Impact Analysis 

The NIA assesses future NES and the national economic impacts of different efficiency 

levels of beverage vending machines. The analysis measures economic impacts using the NPV 

metric (i.e., future amounts discounted to the present) of total commercial customer costs and 

79
 

EERE-2006-STD-0125 COMMENT 48
savings expected to result from new standards at specific efficiency levels. For the NOPR 

analysis, DOE used the same spreadsheet model used in the ANOPR to calculate the energy 

savings and the national economic costs and savings from new standards, but with updates to 

specific input data. 

Unlike the LCC analysis, the NES spreadsheet does not use distributions for inputs or 

outputs. DOE examined sensitivities by applying different scenarios. DOE used the NES 

spreadsheet to calculate national energy savings and NPV using the annual energy consumption 

and total installed cost data from the LCC analysis and estimates of national shipments for the 

two equipment classes. DOE forecasted the energy savings, energy cost savings, equipment 

costs, and NPV of benefits for both beverage vending machine classes from 2012 to 2057. The 

forecasts provided annual and cumulative values for all four output parameters. 

DOE calculated the NES by subtracting energy use under a standards scenario from 

energy use in a base case (no new standards) scenario. Energy use is reduced when a unit of 

beverage vending machine in the base case efficiency distribution is replaced by a more efficient 

unit. Energy savings from this replacement for each equipment class are the same national 

average values as calculated in the LCC and PBP spreadsheet on a per-unit basis. Table IV-9 

shows key inputs to the NIA. In the NIA analysis for the NOPR, DOE did not include a rebound 

effect. As the ANOPR discussed, a rebound effect occurs when a piece of equipment that is 

made more efficient is used more intensively, so that the expected energy savings from the 

efficiency improvement do not fully materialize. Because beverage vending machines operate on 

a 24-hour basis to maintain adequate conditions for the merchandise being retailed, a rebound 

80
 

EERE-2006-STD-0125 COMMENT 48
effect resulting from increased refrigeration energy consumption seemed unlikely. Thus, DOE 

did not account for a rebound effect in the LCC analysis. There were no comments on this issue. 

Chapter 11 of the TSD provides additional information about the NES spreadsheet. 

On the topic of shipments by efficiency levels, Coca-Cola commented that, essentially, 

all machines will be in the same efficiency class, which is the optimal point between price and 

performance. (Coca-Cola, No. 29 at p. 148) PepsiCo stated that every machine it approves for 

purchase must meet ENERGY STAR Tier 2. This includes purchases by PepsiCo bottlers as 

well. (PepsiCo, No. 29 at p. 149) Dixie-Narco stated that vending distributors (or operators and 

independent bottlers) do not mandate ENERGY STAR Tier 2, but that they are only a small part 

of the business. (Dixie-Narco, No. 29 at pp. 150-152) USA Technologies commented that much 

of the industry is already meeting Tier 2 and that 80 to 90 percent of the machines sold are 

probably at the Tier 2 levels. (USA Technologies, No 29 at pp. 101-102). 

DOE understands that the major bottlers that purchase over 85 percent of the new 

machines require ENERGY STAR Tier 2, which went into effect on July 1, 2007. Therefore, 

most of the machines that will be purchased in 2012 when the new standards take effect are 

expected to meet Tier 2 levels. In response to the input received, DOE has changed the 

distribution of efficiency levels to reflect an estimate of 90 percent of the market meeting 

ENERGY STAR Tier 2 levels by 2012 in the base case market efficiency distribution. DOE does 

not have information on how the distribution of efficiency levels might change over the analysis 

period (2012 to 2042) and therefore assumed that the distribution in 2012 remained constant. See 

section IV.G.1 for more details. 

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EERE-2006-STD-0125 COMMENT 48
 

 

Regarding the period of the rulemaking analysis, EEI commented that DOE should consider 

using a 20-year analytical timeframe if typical machines only have a 10-year lifetime and the 

analysis covers “two lifetimes.” 

The Department of Energy’s appliance standards program is conducted pursuant to Title 

III, Parts A and A-1 of EPCA. (42 U.S.C. 6291–6317) The program includes consumer products, 

such as refrigerators and freezers, central air conditioners and central air conditioning heat 

pumps, furnaces and water heaters, and certain commercial and industrial equipment, including 

electric motors and commercial heating and air conditioning equipment and water heaters. 

EPCA directs DOE to conduct a series of rulemakings to consider whether to amend the 

existing energy conservation standards. EPCA also directs DOE to set any new standard such 

that the maximum improvement in energy efficiency is achieved that is technologically feasible 

and economically justified. In addition, the amount of energy saved must be significant. (42 

U.S.C. 6296(o)(2)) DOE calculates the net present value (NPV) of new or amended standards to 

estimate the impacts of standards on the nation. In performing the NPV analysis for the first 

energy conservation standards rulemakings, DOE selected a 30-year analysis period, beginning 

on the effective date of the standard, because it closely matched the lifetime of the longest lived 

products among the products being considered for standards. Matching the lifetime of the longest 

lived products allows for a full turnover of the stock31. In subsequent years, for the next few 

31 Refrigerators have an average lifetime of 19 years, and, based on industry data (Techinical Support Document: 

Energy Efficiency Standards for Consumer Products: Refrigerators, Refrigerator-freezers, & Freezers, July 1995) 

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EERE-2006-STD-0125 COMMENT 48
 

 

rulemakings, DOE used the same analysis end-date as the initial rulemakings, but with the 

appropriate start-of-standard date, resulting in a shorter analysis period. Then, in the 1990’s 

rulemakings, DOE found that using the same end-date of the analysis would result in analyses 

that could not capture the full impact of amended standards. As a result, DOE determined it was 

necessary to change the end-date of the analyses. DOE settled on the 30-year analysis period, 

which allows DOE to capture the full life of any product that was shipped in the first year in 

which that standard became effective. Because products have varying lifetimes, DOE uses a 30­

year analysis period to maintain a consistent time frame to compare the energy savings and 

economic impacts from all the standards rulemakings. For consistency and for ease in comparing 

results across rulemakings, DOE settled on a 30-year analysis period for subsequent 

rulemakings. 

DOE believes that using a 30-year analysis period is appropriate. In order to compare 

energy savings for residential product classes or commercial equipment classes across appliance 

rulemakings where the various products and equipment classes have different lifetimes, DOE 

must use at least the lifetime of the longest-lived product or equipment type for assessment, since 

the annual energy consequences of improving the longest-lived residential products or 

commercial equipment would not be known until all of the market for such product or equipment 

consisted of improved units. That would not happen until the last of the pre-standard equipment 

is retired. Thirty years is a practical estimate for that event for short- and long-lived equipment. 

on when refrigerators are retired, DOE estimates the refrigerators are retired as early as 13 years and as late as 24 

years (i.e., vintaging). DOE rounded up 24 years to 30 years in order to end the analysis on a decade. 

83 

EERE-2006-STD-0125 COMMENT 48
To compare economic costs and savings for products or equipment using discounted 

present value, it is common in economics to use the stream of benefits and costs over the lifetime 

of the equipment. In DOE energy conservation standards rulemakings, the outer limit for 

economic benefits and costs is established at the last year of life of the oldest equipment 

purchased during the 30-year period used for energy savings comparisons. 

There are also economic consequences for choosing different time periods over which to 

compare rules. As an example, consider two different time periods that could be used to compare 

two rules, one for 30-year equipment and one for 20-year equipment with identical costs and 

savings, but a shorter 20-year lifetime. If the 30-year period comparison period were shortened 

to 20 years to compare the two rules there would be significant consequences for NPV. 

Approximately one-third of the (undiscounted) savings from equipment with a 30-year 

life would be not counted, and the value of the savings would be reduced by about 15 percent at 

a 7 percent discount rate and by about 24 percent at a 3 percent discount rate. In addition, the 

investment required for shorter-life equipment that would have been required with a 30-year 

comparison would be ignored if the lifetime of the shorter-lived equipment is used to compare 

rulemakings. Therefore, DOE believes the 30-year analytical period enables it to fully capture 

the impacts of standards on the nation as well as to compare the relative economic impacts of 

different rulemakings. DOE will continue to use the 30-year analytical timeframe for this 

rulemaking. DOE will consider changes to the analytical period in other rulemakings, where 

appropriate; such as rulemakings for products with significantly shorter lifetimes (both average 

life and the life of the oldest product when retired). 

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On the topic of site-to-source energy conversion factor, EEI commented that DOE should 

account for the fact that more than 29 States now have renewable portfolio standards that will 

increase the amount of zero emissions and zero Btu electricity production sources by 2010, 2015, 

2020, or 2025. These factors will reduce the overall heat rate faster than the AEO forecast, and 

DOE should not use fossil fuel power plant heat rates as a “proxy” for renewable electricity 

generation stations. (EEI, No. 37 at p. 3) 

DOE will continue to use AEO2009 base electricity price and the price projections as 

long as no other credible and publicly available data that could be used to generate or revise the 

site-to-source energy conversion factors are made available to DOE.32 

32 DOE is committed to using the latest AEO forecast that is appropriate for its analysis. For example, if an updated 

AEO forecast is available for the final rule analysis, DOE will use that forecast. However, if an updated AEO 

forecast is published after the final rule analysis is completed, but before the final rule is published, the analysis will 

remain unchanged. DOE may conduct some sensitivity analyses, if appropriate, to determine if its conclusions 

would change based on the updated AEO forecast. 

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EERE-2006-STD-0125 COMMENT 48
 

 

 

 

 

Table IV-9 Summary of National Energy Savings and Net Present Value Input 

Input ANOPR Description Changes for NOPR 

Shipments 

Annual shipments from 

shipments model (chapter 9 of 

the ANOPR TSD, Shipments 

Analysis). 

No growth in shipments; based 

on industry comments on the 

ANOPR, all shipments are 

replacements. 

Effective Date of Standard 2012. No change. 

Base Case Efficiencies Distribution of base case 

shipments by efficiency level. 

Efficiency mix changed based 

on industry comment. 

Standards Case Efficiencies Distribution of shipments by 

efficiency level for each 

standards case. Standards case 

annual market shares by 

efficiency level remain constant 

over time for the base case and 

each standards case. 

No change. 

Annual Energy Consumption 

per Unit 

Annual weighted-average values 

are a function of energy 

consumption level per unit, 

which are established in chapter 

7 of the ANOPR TSD, Energy 

Use Characterization. 

No change. 

Total Installed Cost per Unit 

Annual weighted-average values 

are a function of energy 

consumption level (see chapter 8 

of the ANOPR TSD). 

No change. 

Repair Cost per Unit 

Annual weighted-average values 

increase with manufacturer’s 

cost (chapter 8 of the ANOPR 

TSD). 

No change. 

Maintenance Cost per Unit 

Annual weighted-average value 

equals $165.44 (chapter 8 of the 

ANOPR TSD). 

Annual weighted-average value 

equals $154 (chapter 8 of the 

TSD). 

Escalation of Electricity Prices 

EIA AEO2007 forecasts (to 

2030) and extrapolation beyond 

2030 (chapter 8 of the ANOPR 

TSD). 

Updated to AEO2009 forecasts. 

Electricity Site-to-Source 

Conversion 

Conversion varies yearly and is 

generated by DOE/EIA’s 

NEMS* model (a time-series 

conversion factor that includes 

electric generation, transmission, 

and distribution losses). 

Conversion varies yearly and is 

generated by DOE/EIA’s NEMS 

model. Calculated marginal rates 

by year. 

Discount Rate 3% and 7% real. No change. 

Present Year Future costs are discounted to 

2008. 

Future costs are discounted to 

2009 

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EERE-2006-STD-0125 COMMENT 48
 

Input ANOPR Description Changes for NOPR 

Rebound Effect 

As explained in the LCC inputs 

section, DOE does not anticipate 

unit energy consumption to 

rebound above the levels used in 

the LCC analysis and passed to 

the NIA analysis. Further, the 

shipments model develops 

shipment projections to meet 

historical market saturation 

levels. The shipment model does 

not adjust shipments as a 

function of unit energy 

consumption levels, because 

DOE has no information with 

which to calibrate such a 

relationship. 

No change. 

1. Base Case and Standards Case Forecasted Efficiencies 

Components of DOE’s estimates of NES and NPV are the energy efficiencies of shipped 

equipment that DOE forecasts over time for the base case (without new standards) and for each 

standards case. The forecasted efficiencies represent the distribution of energy efficiency of the 

equipment under consideration that is shipped over the forecast period (i.e., from the assumed 

effective date of a new standard to 30 years after the standard becomes effective). 

The average annual energy consumption of the BVMs shipped in a given year depends on 

the per-unit energy consumption of BVM equipment at each efficiency level and the mix of 

efficiency levels of new units that is shipped in each year. Per-unit energy consumption at each 

efficiency level is determined in the energy use characterization. (See chapter 7 of the TSD.) 

The standards affect the mix of annual shipments by efficiency level as briefly described below. 

(See chapter 11 for details.) 

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EERE-2006-STD-0125 COMMENT 48
 

Because no published data were available on market shares broken down by efficiency 

level, DOE developed estimates based on comments from interested parties at the ANOPR 

public meeting. These comments concerned approximate market shares of current shipments by 

equipment class and size, and approximate shipments by efficiency level for the base case (i.e., 

without new standards). 

DOE developed base case efficiency forecasts based on the estimated market shares by 

equipment class and efficiency level. Because there are no historical data to indicate how 

equipment efficiencies or relative equipment class preferences have changed over time, DOE 

assumed that forecasted market shares would remain frozen at the 2012 efficiency level until the 

end of the forecast period (30 years after the effective date or 2042). 

For its estimate of standards case forecasted efficiencies, DOE used a “roll-up” scenario 

to establish the market shares by efficiency level for the year that standards become effective 

(i.e., 2012). Information available to DOE suggests that equipment shipments with efficiencies in 

the base case that did not meet the standard levels under consideration would roll up to meet the 

new standard levels. Also, DOE assumed that all equipment efficiencies in the base case that 

were above the standard levels under consideration likely would not be affected. 

2. Annual Energy Consumption, Total Installed Cost, Maintenance Cost, and Repair Costs 

The difference in shipments by equipment efficiency level between the base case and 

standards case was the basis for determining the reduction in per-unit annual energy 

consumption that could result from new standards. The beverage vending machine stock in a 

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EERE-2006-STD-0125 COMMENT 48
 

given year is the total number of beverage vending machines shipped from earlier years that 

survive in the given year. The NES spreadsheet model tracks the number of beverage vending 

machines shipped each year and estimates the total beverage vending machine stock for each 

year. The annual energy consumption by efficiency level for each equipment class comes from 

the LCC analysis on a per-unit basis. Similarly, the total installed, maintenance, and repair costs 

for each efficiency level for each equipment class analyzed in the LCC are on a per-unit basis. 

Using the total estimated shipments and total estimated stock by equipment class and efficiency 

level, DOE calculates the annual energy consumption for the beverage vending machine stock in 

each year, the maintenance and repair costs associated with the equipment stock, and the total 

installed costs associated with new shipments in each year based on the standards scenario and 

associated distribution of shipments by efficiency level. 

As explained above, DOE assumes that all Class A machines and 75 percent of Class B 

machines are installed indoors and that 25 percent of Class B machines are located outdoors. To 

calculate a weighted energy use for all Class B machines, DOE added aggregated results based 

on State-by-State TMY2 weather station data to the annual energy consumption of the remaining 

75 percent of Class B machines that are located indoors. DOE further aggregated energy 

consumption at the State level to arrive at the national average energy consumption, using the 

2000 Census population data.33 Table IV-10 presents the national average annual energy 

consumption figures for the three different sizes of Class B machines. 

33 The U.S. Census Bureau,”2000 Census,” http://factfinder.census.gov/servlet/GCTTable?_bm=y&­

geo_id=01000US&-_box_head_nbr=GCT-PH1&-context=gct&-ds_name=DEC_2000_SF1_U&-tree_id=4001&­

format=US-9. Accessed March 25, 2007. 

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EERE-2006-STD-0125 COMMENT 48
 

 

 

 

 

 

 

 

Table IV-10 National Average Annual Energy Consumption for Class B Machines, by 

Efficiency Levels 

Annual Energy Consumption (all locations, kWh) 

Size Level 1 

(Baseline) 

Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 

Large 2019 1890 1842 1760 1746 1561 1526 

Medium 1925 1799 1731 1658 1645 1463 1431 

Small 1724 1606 1505 1505 1495 1313 1285 

Table IV-11 shows annual energy consumption for each size of Class A machine. 

National average energy consumption figures are identical to State energy consumption figures. 

These national average annual energy consumption figures are used in the subsequent LCC, 

PBP, and NES analyses. 

Table IV-11 Annual Energy Consumption for Class A Machines, All Sizes and All 

Locations, by Efficiency Levels 

Average Annual Energy Consumption (all locations, kWh) 

Size Level 1 

(Baseline) 

Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 

Large 2464 2267 2099 1916 1785 1679 1610 1438 

Medium 2383 2011 1916 1734 1529 1442 1383 1252 

Small 2227 1924 1734 1551 1442 1361 1307 1186 

DOE’s energy use characterization assumes that there are no controls limiting display 

lighting or compressor operation in a beverage vending machine to certain hours of the day. As a 

result, the display lighting or compressor operation would not be affected by occupancy patterns 

in the building. However, using occupancy sensors and other controllers might reduce a vending 

machine’s energy requirements during long periods of non-use, such as overnight and weekends. 

This occupancy controller option is often used when de-lamping a vending machine is not 

advisable (i.e., when a vending machine does not have a captive audience or when de-lamping 

results in reduced vending sales revenues). Controllers can either be added on or enabled in 

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EERE-2006-STD-0125 COMMENT 48
certain beverage vending machines. See section IV.D for additional discussion of lighting 

controls and occupancy sensors. See chapter 7 in the TSD. 

3. Escalation of Electricity Prices 

DOE uses the most recent AEO reference case to forecast energy prices for standard 

rulemakings. DOE used the AEO2009 reference case forecasts for future electricity prices, 

extended out to the end of the analysis period. DOE extrapolated the trend in values from 2020 to 

2030 of the forecast to establish prices for the remainder of the analysis period. DOE intends to 

update its analysis for the final rule to reflect the AEO2009 electricity price forecasts when final 

versions of these price forecasts are available. 

4. Electricity Site-to-Source Conversion 

The site-to-source conversion factor is a multiplier used for converting site energy, 

expressed in kWh, into primary or source energy, expressed in quadrillion Btu (quads). The siteto-source conversion factor accounts for losses in electricity generation, transmission, and 

distribution. For the ANOPR, DOE used site-to-source conversion factors based on U.S. average 

values for the commercial sector, calculated from AEO2008, Table A5. The average conversion 

factors vary over time because of projected changes in electricity generation sources (i.e., the 

power plant types projected to provide electricity to the country). For the NOPR, DOE developed 

marginal site-to-source conversion factors that relate the national electrical energy savings at the 

point of use to the fuel savings at the power plant. These factors use the NEMS model and the 

examination of the corresponding energy savings from standards scenarios considered in DOE’s 

utility impact analysis (chapter 14 of the TSD). The conversion factors vary over time because of 

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EERE-2006-STD-0125 COMMENT 48
projected changes in electricity generation sources and power plant dispatch scenarios. DOE 

used average U.S. conversion factors in the ANOPR because the utility impact analysis that is 

used to determine marginal conversion factors appropriate to efficiency standards for beverage 

vending machines occurs in the NOPR stage of the analysis. 

To estimate NPV, DOE calculated the net impact each year as the difference between 

total operating cost savings (including electricity, repair, and maintenance cost savings) and 

increases in total installed costs (including MSP, sales taxes, distribution channel markups, and 

installation costs). DOE calculated the NPV of each TSL over the life of the equipment using 

three steps. First, DOE determined the difference between the equipment costs under the TSL 

and the base case to calculate the net equipment cost increase resulting from the TSL. Second, 

DOE determined the difference between the base case operating costs and the TSL operating 

costs to calculate the net operating cost savings from the TSL. Third, DOE determined the 

difference between the net operating cost savings and the net equipment cost increase to 

calculate the net savings (or expense) for each year. DOE then discounted the annual net savings 

(or expenses) for beverage vending machines purchased on or after 2012 to the reference year 

2009, and summed the discounted values to determine the NPV of a TSL. An NPV greater than 

zero shows net savings (i.e., the TSL would reduce overall customer expenditures relative to the 

base case in present value terms). An NPV less than zero (i.e., negative value) indicates that the 

TSL would result in a net increase in customer expenditures in present value terms. 

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H. Life-Cycle Cost Subgroup Analysis 

In analyzing the potential impact of new or amended standards on commercial customers, 

DOE evaluates the impact on identifiable groups (i.e., subgroups) of customers, such as different 

types of businesses that may be disproportionately affected by an energy conservation standard. 

The subgroup used to perform this evaluation was manufacturing and/or industrial facilities that 

purchase their own vending machines. This customer subgroup is likely to include owners of 

high-cost vending machines because they have the highest capital costs and face the lowest 

electricity prices of any customer subgroup. These two conditions make it likely that this 

subgroup will have the lowest life-cycle cost savings of any major customer group. 

The Joint Comment suggested that DOE focus its customer subgroup analysis on lifecycle costs rather than first-cost impacts. (Joint Comment, No. 34 at p. 6) DOE agrees with the 

Joint Comment and will continue in this rulemaking to focus the customer LCC subgroup 

analysis on examination of the life-cycle cost impacts. There will likely be first-cost increases 

with higher standard levels but also increased energy savings over the lifetime of the equipment. 

By examining LCC, DOE considers both impacts simultaneously for the designated subgroup in 

the LCC subgroup analysis, just as it does for the entire customer base in the LCC analysis. 

DOE determined the impact on this beverage vending machine customer subgroup using 

the LCC spreadsheet model. DOE conducted the LCC and PBP analyses for beverage vending 

machine customers. The standard LCC and PBP analyses (described in section IV.E) include 

various types of businesses that own and use beverage vending machines. The LCC spreadsheet 

model allows for the identification of one or more subgroups of businesses, which can then be 

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analyzed by sampling only each subgroup. The results of DOE’s LCC subgroup analysis are 

summarized in section V.B.1.b and described in detail in chapter 12 of the TSD. 

I. Manufacturer Impact Analysis 

1. Overview 

DOE performed an MIA to estimate the financial impact of energy conservation 

standards on beverage vending machine manufacturers, and to calculate the impact of such 

standards on domestic manufacturing employment and capacity. The MIA has both quantitative 

and qualitative aspects. The quantitative part of the MIA primarily relies on the GRIM, an 

industry-cash-flow model customized for this rulemaking. The GRIM inputs are data 

characterizing the industry cost structure, shipments, and revenues. The key output is the INPV. 

Different sets of assumptions (scenarios) will produce different results. The qualitative part of 

the MIA addresses factors such as equipment characteristics, characteristics of particular firms, 

and market and equipment trends, as well as an assessment of the impacts of standards on 

manufacturer subgroups. The complete MIA is outlined in chapter 13 of the TSD. 

DOE conducted the MIA in three phases. Phase 1, Industry Profile, consisted of 

preparing an industry characterization. Phase 2, Industry Cash Flow Analysis, focused on the 

industry as a whole. In this phase, DOE used the GRIM to prepare an industry cash-flow 

analysis. DOE used publicly available information developed in Phase 1 to adapt the GRIM 

structure to analyze refrigerated beverage vending machine equipment energy conservation 

standards. In Phase 3, Subgroup Impact Analysis, DOE interviewed manufacturers representing 

the majority of domestic refrigerated beverage vending machine equipment sales. During these 

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interviews, DOE discussed engineering, manufacturing, procurement, and financial topics 

specific to each company, and also obtained each manufacturer's view of the industry as a whole. 

The interviews provided valuable information DOE used to evaluate the impacts of energy 

conservation standards on manufacturer cash flows, manufacturing capacities, and employment 

levels. 

a. Phase 1, Industry Profile 

In Phase 1 of the MIA, DOE prepared a profile of the refrigerated beverage vending 

machine equipment industry based on the market and technology assessment prepared for this 

rulemaking. Before initiating the detailed impact studies, DOE collected information on the 

present and past structure and market characteristics of the refrigerated beverage vending 

machine equipment industry. DOE collected such information as market share, equipment 

shipments, markups, and cost structure for various manufacturers. The industry profile includes 

further detail on the overall market, equipment characteristics, estimated manufacturer market 

shares, the financial situation of manufacturers, and trends in the number of firms of refrigerated 

beverage vending machine equipment industry. 

The industry profile included a top-down cost analysis of refrigerated beverage vending 

machine equipment manufacturers that DOE used to derive equipment cost and preliminary 

financial inputs for the GRIM (e.g., revenues; material, labor, overhead, and depreciation 

expenses; selling, general, and administrative expenses (SG&A); and research and development 

(R&D) expenses). DOE also used public information to further calibrate its initial 

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characterization of the industry, including U.S. Securities and Exchange Commission (SEC) 10– 

K reports, Standard & Poor’s (S&P) stock reports, and corporate annual reports. 

b. Phase 2, Industry Cash-Flow Analysis 

Phase 2 of the MIA focused on the financial impacts of potential energy conservation 

standards on the industry as a whole. DOE used the GRIM to calculate the financial impacts of 

energy conservation standards on manufacturers. In Phase 2, DOE used the GRIM to perform a 

preliminary industry cash-flow analysis. In performing this analysis, DOE used the financial 

values determined during Phase 1 and the shipment scenarios used in the NIA analysis. 

c. Phase 3, Subgroup Impact Analysis 

Using average cost assumptions to develop an industry cash-flow estimate does not 

adequately assess differential impacts among manufacturer subgroups. For example, small 

manufacturers, niche players, or manufacturers exhibiting a cost structure that largely differs 

from the industry average could be more negatively affected. DOE used the results of the 

industry characterization analysis (in Phase 1) to group manufacturers that exhibit similar 

characteristics. 

DOE established two subgroups for the MIA corresponding to large and small business 

manufacturers of beverage vending machines. For the beverage vending machine manufacturing 

industry, small businesses, as defined by the Small Business Administration (SBA), are 

manufacturing enterprises with 500 or fewer employees. Based on identification of these two 

subgroups, DOE prepared one interview guide with questions related to beverage vending 

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machine manufacturing for large and small manufacturers. DOE used the interview guide to 

tailor the GRIM to address unique financial characteristics of manufacturers of the industry. 

DOE interviewed companies from each subgroup, including subsidiaries and independent firms 

and public and private corporations. The purpose of the interviews was to develop an 

understanding of how manufacturer impacts vary by TSL. During the course of the MIA, DOE 

interviewed manufacturers representing the vast majority of domestic beverage vending machine 

sales. Many of these same companies also participated in interviews for the engineering analysis. 

However, the MIA interviews broadened the discussion from primarily technology-related issues 

to include business-related topics. One objective was to obtain feedback from industry on the 

assumptions used in the GRIM and to isolate key issues and concerns. See chapter 13 of the TSD 

for details. 

2. Discussion of Comments 

In the ANOPR, DOE reported that manufacturers claimed higher energy conservation 

standards could deter some customers from buying higher margin units with more features. 73 

FR 34130. The Joint Comment disagreed with this claim, stating that manufacturers have many 

options besides energy use to differentiate products. All these features have value to customers 

because they help sell more product or cut operating costs. (Joint Comment, No. 34 at pp. 6-7) 

For the ANOPR, DOE reported some of the preliminary concerns manufacturers voiced 

during the initial engineering interviews. For the NOPR, DOE interviewed manufacturers and 

major customers and conducted market research to understand profitability in the beverage 

vending machine industry. DOE learned that the vast majority of equipment produced by 

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manufacturers meets the same efficiency levels. In addition, the energy consumption of most 

equipment sold in the beverage vending machine industry is set by the specifications of the 

major purchasers of the equipment. Based on manufacturer interviews and the information found 

in the MIA, manufacturers design their equipment to meet this requirement of the large 

purchasers, but rarely exceed it. Because efficiency does not vary and the product designs are 

determined mainly by the major purchasers of the equipment, manufacturers typically do not 

earn a higher margin for additional features. Annual shipments are mainly determined by 

contracts with the major customers to replace a portion of retiring equipment. Additional features 

are unlikely to stimulate additional demand, especially if these features add costs to the 

purchaser or manufacturer. Due to split incentives, manufacturers may not earn a higher margin 

for equipment that reduces operating costs for the end-user, since these benefits are not directly 

conferred on the purchaser. 

The Joint Comment stated that DOE provided an estimate for the life cycle of a beverage 

vending machine production line during the ANOPR. The Joint Comment also stated that the 

low end of this range is shorter than the time frame from the beginning of this rulemaking to the 

possible effective date of the standard. Thus, a manufacturer that chooses to anticipate a standard 

can reduce or eliminate standards-induced capital conversion costs. The commenters believe that 

DOE should not view capital conversion costs as a result of the regulation, but as a result of 

some manufacturers’ failure to plan for standards. While manufacturers cannot know precise 

standards levels, the ANOPR analysis provides a very strong indication that standards at or near 

level 7 should be expected. (Joint Comment, No. 34 at p. 7) 

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In the ANOPR, DOE stated that a beverage vending machine production line has a life 

cycle of approximately 5 to 10 years in the absence of standards. 73 FR 34130. However, 

manufacturers would not be able to reduce or eliminate standards-induced capital conversion 

costs because a 5-year production line life cycle is shorter than the time frame between the 

initiation of this rulemaking and the possible effective date. In the GRIM, DOE incorporates 

annual research and development costs and the capital expenditures manufacturers would 

undertake regardless of standards. The INPV reported for the beverage vending machine industry 

incorporates the impacts due to new energy conservation standards. DOE separates recurring 

research and development and capital expenditures that occur regardless of energy conservation 

standards from equipment and capital conversion costs. Capital and equipment conversion costs 

capture the additional costs that manufacturers will face due to standards and are necessary to 

accurately calculate the impacts standards have on INPV. To minimize the costs that may be 

required to convert production lines to produce higher efficiency equipment, manufacturers will 

usually wait until standards are published. Manufacturers will not know the stringency of this 

standard until the publication of the final rule, which is scheduled for August 8, 2009. Finally, 

the energy conservation standard for this rulemaking applies to all equipment manufactured on 

or after 3 years of the publication of the final rule (42 U.S.C. 6295(v)(3)). This allows 

manufacturers 3 years after the publication date of the energy conservation standard levels to 

make any changes to production lines that would be required to comply with the new energy 

conservation standard. Since this preparation time is less than the lower end of the estimated 

beverage vending machine production line life cycle, DOE assumes that one-time capital 

conversion costs can be attributed to the new energy conservation standard level. 

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The Joint Comment questioned the assertion that stringent standards could cause 

production to be moved outside the United States. The Joint Comment noted that sourcing 

decisions are sensitive to the costs of production and product distribution, and not to the energy 

efficiency of the unit being produced (Joint Comment, No. 34 at p. 7). 

DOE agrees that sourcing decisions are sensitive to the costs of production and product 

distribution. However, since the efficiency of equipment sold can directly affect production 

costs, DOE believes that the level of the new energy conservation standard could affect sourcing 

decisions. However, as noted in the Joint Comment, sourcing decisions are based on several 

factors, including many outside the scope of this rulemaking (e.g., product distribution costs). 

Consequently, DOE does not speculate how standards will affect sourcing decisions. 

3. Government Regulatory Impact Model Analysis 

The GRIM analysis uses a standard annual cash-flow analysis that incorporates 

manufacturer selling prices, manufacturing production costs, shipments, and industry financial 

information as inputs. The analysis models changes in costs, distribution of shipments, 

investments, and associated margins that would result from new or amended regulatory 

conditions (in this case, standard levels). The GRIM spreadsheet uses a number of inputs to 

arrive at a series of annual cash flows, beginning with the base year of the analysis (2008) and 

continuing to 2042. DOE calculated INPVs by summing the stream of annual discounted cash 

flows during this period. 

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DOE used the GRIM to calculate cash flows using standard accounting principles and 

compare changes in INPV between a base case and various TSLs (the standards cases). 

Essentially, the difference in INPV between the base case and a standards case represents the 

financial impact of energy conservation standards on manufacturers. DOE collected this 

information from a number of sources, including publicly available data and interviews with 

manufacturers. See chapter 13 of the TSD for details. 

4. Manufacturer Interviews 

As part of the MIA, DOE discussed potential impacts of new energy conservation 

standards with manufacturers responsible for more than 65 percent of the beverage vending 

machines on the market. These interviews were in addition to those DOE conducted as part of 

the engineering analysis. DOE used the interviews to evaluate the impacts of new energy 

conservation standards on manufacturer cash flows, manufacturing capacities, and employment 

levels. Key issues that the manufacturers identified for DOE to consider in developing energy 

conservation standards are discussed in chapter 13 of the TSD. 

5. Government Regulatory Impact Model Key Inputs and Scenarios 

a. Base Case Shipments Forecast 

The GRIM estimates manufacturer revenues based on unit shipment forecasts and the 

distribution by equipment class and efficiency. Changes in the efficiency mix at each standard 

level are a key driver of manufacturer finances. Consequently, DOE is seeking comment on the 

shipments forecast (section VII.E.2). For this analysis, the GRIM used the NES shipments 

forecasts from 2008 to 2042. Total shipments forecasted by the NES for the base case in 2012 

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are shown in Table IV-12 and further discussed in this section of today’s notice and chapter 10 

of the TSD. Using the equipment class shipment assumptions from the NES, the GRIM 

maintains total industry shipments consisting of 55 percent Class A equipment and 45 percent 

Class B equipment throughout the analysis period. 

Table IV-12 Total NES-Forecasted Shipments in 2012 (Number of Units) 

Equipment Class Total Industry Shipments by 

Equipment Class 

Class A 49,500 

Class B 40,500 

In the shipments analysis, DOE also estimated the distribution of efficiencies in the base 

case for beverage vending machines (chapter 10 of the TSD). Table IV-13 and Table IV-14 show 

examples of the distribution of efficiencies in the base case for a Class A medium-size and a 

Class B medium-size beverage vending machine. 

Table IV-13 GRIM Distribution of Shipments in the Base Case for Class A Medium-Sized 

Beverage Vending Machines 

TSL 

kWh/day 

Baseline 

6.10 

TSL 1 

5.27 

TSL 2 

4.75 

TSL 3 

4.25 

TSL 4 

3.95 

TSL 5 

3.73 

TSL 6 

3.58 

TSL 7 

3.25 

Distribution of 

Shipments % 10 90 0 0 0 0 0 0 

Table IV-14 GRIM Distribution of Shipments in the Base Case for Class B Medium-Sized 

Beverage Vending Machines 

TSL 

kWh/day 

Baseline 

4.96 

TSL 1 

4.62 

TSL 2 

4.31 

TSL 3 

4.31 

TSL 4 

4.28 

TSL 5 

3.78 

TSL 6 

3.69 

Distribution of 

Shipments % 10 0 90 0 0 0 0 

b. Standards Case Shipments Forecast 

For each standards case, DOE assumed that shipments at efficiencies below the projected 

standard levels were most likely to roll up to those efficiency levels in response to an energy 

conservation standard. This scenario assumes that demand for high-efficiency equipment is a 

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function of its price without regard to the standard level. See chapter 13 of the TSD for 

additional details. 

c. Manufacturing Production Costs 

DOE derived manufacturing production costs (MPCs) from manufacturing selling prices 

found in the engineering analysis. Using data from the U.S. Census Bureau to develop an 

industry cost structure, DOE disaggregated the financial components that comprise 

manufacturing selling price (production costs, SG&A, R&D, and profit). By summing the labor, 

overhead, materials, and depreciation portions of the manufacturing selling price, DOE estimated 

the manufacturing production costs for the analyzed equipment. Further discussion of how DOE 

calculated other GRIM financial inputs from publicly available information is found in chapter 

13 of the TSD. 

d. Manufacturing Markup Scenarios 

To understand how baseline and more efficient equipment are differentiated, DOE 

reviewed manufacturer catalogs and information gathered by manufacturers. In the base case, 

DOE used the manufacturer selling prices from the engineering analysis. For the analysis, DOE 

considered different manufacturer markup scenarios for beverage vending machines. Scenarios 

were used to bound the range of expected equipment prices following new energy conservation 

standards. For each equipment class, DOE used the markup scenarios that best characterized the 

prevailing markup conditions and captured the range of market responses that could result from 

new energy conservation standards. DOE learned from interviews with manufacturers that the 

majority only offer one equipment line for each product class that meets the same efficiency 

level. Similar efficiency levels and the small number of product offerings in each product class 

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generally mean that there is no difference in markup used to differentiate baseline equipment 

from premium equipment. 

For the MIA, DOE considered two distinct markup scenarios: (1) the preservation-ofgross-margin-percentage scenario, and (2) the preservation-of-operating-profit scenario. Under 

the “preservation-of-gross-margin-percentage” scenario, DOE applied a single, uniform “gross 

margin percentage” markup across all efficiency levels. This scenario implies that as production 

cost increases with efficiency, the absolute dollar markup will increase. For this scenario, DOE 

used a markup that yielded the same manufacturer selling prices found in the engineering 

analysis. The implicit assumption behind the “preservation-of-operating profit” scenario is that 

the industry can only maintain its operating profit (earnings before interest and taxes) from the 

baseline after implementation of the standard (2012). The industry impacts occur in this scenario 

when manufacturers expand their capital base and production costs to make more expensive 

equipment, but the operating profit does not change from current conditions. DOE implemented 

this markup scenario in the GRIM by setting the non-production cost markups at each TSL to 

yield approximately the same operating profit in both the base case and the standard case in the 

year after standard implementation (2012). 

e. Equipment and Capital Conversion Costs 

Energy conservation standards typically cause manufacturers to incur one-time 

conversion costs to bring their production facilities and product designs into compliance. For the 

purpose of the MIA, DOE classified these conversion costs into two major groups: (1) equipment 

conversion costs, and (2) capital conversion costs. Equipment conversion costs are one-time 

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investments in research, development, testing, and marketing, focused on making equipment 

designs comply with the new energy conservation standard. Capital conversion costs are onetime investments in property, plant, and equipment to adapt or change existing production 

facilities so that new equipment designs can be fabricated and assembled. 

DOE assessed the R&D expenditures manufacturers would be required to make at each 

TSL. DOE obtained financial information through manufacturer interviews and aggregated the 

results to mask any proprietary or confidential information from any one manufacturer. DOE 

considered a number of manufacturer responses for beverage vending machines at each TSL. 

DOE estimated the total equipment conversion costs by gathering manufacturer responses, then 

weighting these responses by market share. 

DOE also evaluated the level of capital conversion expenditures manufacturers would 

incur to comply with energy conservation standards. DOE used the manufacturer interviews to 

gather data on the level of capital investment required at each TSL. Manufacturers explained 

how different TSLs affected their ability to use existing plants, tooling, and equipment. From the 

interviews, DOE was able to estimate what portion of existing manufacturing assets would need 

to be replaced or reconfigured, and what additional manufacturing assets would be required to 

manufacture the higher-efficiency products. 

The investment figures used in the GRIM can be found in section V.B.2 of today’s 

notice. For additional information on the estimated product conversion and capital conversion 

costs, see chapter 13 of the TSD. 

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J. Utility Impact Analysis 

The utility impact analysis estimates the effects of reduced energy consumption resulting 

from improved equipment efficiency on the utility industry. This utility analysis compares 

forecast results for a case comparable to the AEO2008 reference case and forecasts for policy 

cases incorporating each of the beverage vending machine TSLs. 

NPCC asked whether the utility impact analysis computes a national capital cost savings 

because of the change in new utility capacity from each standard level (NPCC, No. 29 at p. 196). 

DOE does compute the impact on total gigawatts (GW) of generation capacity in its utility 

impact analysis, but does not monetize changes in capital costs for building power plants. 

DOE analyzed the effects of proposed standards on electric utility industry generation 

capacity and fuel consumption using a variant of EIA's NEMS. The NEMS-BT is run similarly 

to the AEO2008 NEMS, except that beverage vending machine energy usage is reduced by the 

amount of energy (by fuel type) saved because of the TSLs. DOE obtained the inputs of the NES 

from the NES spreadsheet model. For the final rule, DOE intends to report utility analysis results 

using a version of NEMS-BT based on the AEO2009 NEMS. 

DOE conducted the utility analysis as policy deviations from the AEO2008, applying the 

same basic set of assumptions. In the utility analysis, DOE reported the changes in installed 

capacity and generation by fuel type that result for each TSL, as well as changes in end-use 

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electricity sales. Chapter 14 of the NOPR TSD provides details of the utility analysis methods 

and results. 

K. Employment Impact Analysis 

Employment impact is one factor DOE considers in selecting a standard. Employment 

impacts include direct and indirect impacts. Direct employment impacts are any changes in the 

number of employees for beverage vending machine manufacturers, their suppliers, and related 

service firms. Indirect impacts are those changes of employment in the larger economy that 

occur because of the shift in expenditures and capital investment caused by the purchase and 

operation of more efficient beverage vending machines. The MIA in this rulemaking addresses 

only the direct employment impacts on manufacturers of beverage vending machines. Chapter 15 

of the TSD describes other, primarily indirect, employment impacts. 

Indirect employment impacts from beverage vending machine standards consist of the net 

jobs created or eliminated in the national economy, other than in the manufacturing sector being 

regulated, as a consequence of (1) reduced spending by end users on electricity (offset to some 

degree by the increased spending on maintenance and repair), (2) reduced spending on new 

energy supply by the utility industry, (3) increased spending on the purchase price of new 

beverage vending machines, and (4) the effects of those three factors throughout the economy. 

DOE expects the net monetary savings from standards to be redirected to other forms of 

economic activity. DOE also expects these shifts in spending and economic activity to affect the 

demand for labor. 

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In developing this notice of proposed rulemaking, DOE estimated indirect national 

employment impacts using an input/output model of the U.S. economy, called ImSET (Impact of 

Sector Energy Technologies) developed by DOE’s Building Technologies Program. ImSET is a 

personal-computer-based, economic analysis model that characterizes the interconnections 

among 188 sectors of the economy as national input/output structural matrices using data from 

the U.S. Department of Commerce’s 1997 Benchmark U.S. input-output table. The ImSET 

model estimates changes in employment, industry output, and wage income in the overall U.S. 

economy resulting from changes in expenditures in various sectors of the economy. DOE 

estimated changes in expenditures using the NES spreadsheet. ImSET then estimated the net 

national indirect employment impacts of beverage vending machine efficiency standards on 

employment by sector. 

The ImSET input/output model suggests that the proposed beverage vending machine 

efficiency standards could increase the net demand for labor in the economy and the gains would 

most likely be very small relative to total national employment. DOE therefore concludes that 

the proposed beverage vending machine standards are not likely to produce employment benefits 

that are sufficient to fully offset any adverse impacts on employment in the beverage vending 

machine industry. For more details on the employment impact analysis and its results, see 

chapter 15 of the TSD and section V.B.3.c of this notice. 

L. Environmental Assessment 

DOE has prepared a draft environmental assessment (EA) pursuant to the National 

Environmental Policy Act and the requirements under 42 U.S.C. 6295(o)(2)(B)(i)(VI) and 

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6316(a) to determine the environmental impacts of the standards being established in today’s 

final rule. Specifically, DOE estimated the reduction in total emissions of CO2 and NOx using the 

NEMS–BT computer model. DOE calculated a range of estimates for reduction in Hg emissions 

using current power sector emission rates. The EA does not include the estimated reduction in 

power sector impacts of sulfur dioxide (SO2), because DOE has determined that any such 

reduction resulting from an energy conservation standard would not affect the overall level of 

SO2 emissions in the United States due to the presence of national caps on SO2 emissions. These 

topics are addressed further below; see chapter 16 of the TSD for additional detail. 

The NEMS–BT is run similarly to the AEO2008 NEMS, except the beverage vending 

machine energy use is reduced by the amount of energy saved (by fuel type) due to the trial 

standard levels. The inputs of national energy savings come from the NIA analysis. For the EA, 

the output is the forecasted physical emissions. The net benefit of the standard is the difference 

between emissions estimated by NEMS–BT and the AEO2008 reference case. The NEMS–BT 

tracks CO2 and NOx emissions using a detailed module that provides broad coverage of all 

sectors and includes interactive effects. 

Sulfur Dioxide (SO2) 

The Clean Air Act Amendments of 1990 set an emissions cap on SO2 for all power 

generation. Attaining this target is flexible among generators and is enforced through emissions 

allowances and tradable permits. In other words, with or without a standard, total cumulative 

SO2 emissions will always be at or near the ceiling, while there may be some timing differences 

among yearly forecasts. Thus, it is unlikely that there will be reduced overall SO2 emissions from 

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EERE-2006-STD-0125 COMMENT 48
standards as long as the emissions ceilings are enforced. Although there may be no actual 

reduction in SO2 emissions, there still may be an economic benefit from reduced demand for SO2 

emission allowances. Electricity savings decrease the generation of SO2 emissions from power 

production, which can lessen the need to purchase SO2 emissions allowance credits, and thereby 

decrease the costs of complying with regulatory caps on emissions. 

NOx 

NOx emissions from 28 eastern States and the District of Columbia (D.C.) are limited 

under the Clean Air Interstate Rule (CAIR), published in the Federal Register on May 12, 2005. 

70 FR 25162 (May 12, 2005). Although the rule has been remanded to EPA by the D.C. Circuit, 

it will remain in effect until it is replaced by a rule consistent with the Court's opinion in North 

Carolina v. EPA. Because all States covered by CAIR opted to reduce NOx emissions through 

participation in cap-and-trade programs for electric generating units, emissions from these 

sources are capped across the CAIR region. As with the SO2 emissions cap, energy conservation 

standards are not likely to have a physical effect on NOx emissions in those States. However, the 

standards proposed in today’s NOPR might have produced an environmentally related economic 

impact in the form of lower prices for emissions allowance credits if they were large enough. 

DOE believes that such standards would not produce such an impact because the estimated 

reduction in NOx emissions or the corresponding increase in available allowance credits in States 

covered by the CAIR cap would be too small to affect allowance prices for NOx. 

In contrast, new or amended energy conservation standards would reduce NOx emissions 

in those 22 States that are not affected by the CAIR, and these emissions could be estimated from 

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NEMS-BT. As a result, DOE used the NEMS-BT to forecast emission reductions from the 

beverage vending machine standards that are considered in today’s NOPR. 

Though currently in effect, CAIR has been the subject of significant litigation. CAIR was 

vacated by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in its 

July 11, 2008, decision in North Carolina v. Environmental Protection Agency.

34 However, on 

December 23, 2008, the D.C. Circuit decided to allow the CAIR to remain in effect until it is 

replaced by a rule consistent with the court’s earlier opinion.35 

Mercury (HG) 

Similar to SO2 and NOx, future emissions of Hg would have been subject to emissions 

caps under the Clean Air Mercury Rule (CAMR). The CAMR would have permanently capped 

emissions of mercury for new and existing coal-fired plants in all States by 2010, but was 

vacated by the D.C. Circuit in its February 8, 2008, decision in New Jersey v. Environmental 

Protection Agency.

36 DOE typically uses the NEMS-BT model to calculate emissions from the 

electrical generation sector; however, the 2008 NEMS-BT model is not suitable for assessing 

mercury emissions in the absence of a CAMR cap. Thus, DOE used a range of Hg emissions 

rates (in tons of Hg per energy per TWh produced) based on the AEO2008. Because the high end 

of the range of Hg emissions rates attributable to electricity generation are from coal-fired power 

plants, DOE based that emissions rate on the tons of mercury emitted per TWh of coal-generated 

electricity. DOE’s low estimate assumed that future standards would displace electrical 

34 531 F.3d 896 (D.C. Cir. 2008). 

35 North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). 36 New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008). 

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generation from natural gas-fired powered power plants. The low end of the range of Hg 

emissions rates is zero because natural gas-fired powered power plants have virtually no Hg 

emissions associated with their operations. To estimate the reduction in mercury emissions, DOE 

multiplied the emissions rates by the reduction in electricity generation associated with the 

standards proposed in today’s NOPR. 

Refrigerant Leaks 

DOE received one comment regarding the treatment of refrigerant leaks during beverage 

vending machine production and end-use in which DOE was asked how it would analyze this 

issue in the environmental assessment. (EEI, No. 37 at p. 4) In response, DOE notes that it has 

no reliable information on the rates of refrigerant leaks during the production of and during 

operational life of beverage vending machines, and consequently did not conduct a quantitative 

analysis of environmental impacts from refrigerant leaks. DOE does not anticipate a significant 

change in shipments for beverage vending machines, significant changes in refrigerant use by the 

beverage vending machine manufacturers, or significant changes in refrigerant leakage rates as a 

result of new energy conservation standards. DOE does not have any information indicating that 

refrigerant leakage rates would vary by energy efficiency level. 

M. Monetizing Carbon Dioxide and Other Emissions Impacts 

DOE also calculated the possible monetary benefit of CO2, NOx, and Hg reductions. 

Cumulative monetary benefits were determined using discount rates of 3 and 7 percent. DOE 

monetized reductions in CO2 emissions due to the standards proposed in this NOPR based on a 

range of monetary values drawn from studies that attempt to estimate the present value of the 

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marginal economic benefits (based on the avoided marginal social costs of carbon) likely to 

result from reducing greenhouse gas emissions. The marginal social cost of carbon is an estimate 

of the monetary value to society of the environmental damages of CO2 emissions. This concept is 

used rather than compliance costs because CO2 is not regulated. Several parties provided 

comments on the economic valuation of CO2 for the NOPR. 

On the treatment of emissions, Earthjustice made the following four statements: 

(1) DOE cannot rationally weigh the economic benefit of reduced emissions unless it 

actually calculates the economic dimension of those emissions reductions. (Earthjustice, 

No. 38 at p. 2) 

(2) DOE must evaluate the impact of vending machine standards on NOx through a twopronged approach, calculating both the effect on allowance prices under the NOx SIP Call 

rule, where applicable, and the monetary value of avoided NOx emissions. (Earthjustice, 

No. 38 at p. 3) 

(3) Once DOE calculates the projected reductions in mercury emission, it must assign an 

appropriate economic value to those emissions. (Earthjustice, No. 38 at p. 3) 

(4) Excluding CO2 emissions reduction benefits from DOE’s NPV analysis on the basis 

of uncertainty about their precise measure would be arbitrary and capricious. 

(Earthjustice, No. 38 at p. 4) 

In addition, NRDC advocated that DOE monetize the value of CO2 emissions and take that into 

account in the LCC analysis, using a price for carbon emissions based on EIA's analysis of the 

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Lieberman-Warner bill. (NRDC, Public Meeting Transcript, No. 29 at p. 107) 

In response to the ANOPR comments on monetization of emissions and how that is 

included in the DOE analyses, DOE notes that neither EPCA nor NEPA requires that the 

economic value of emissions reduction be incorporated in the LCC or NPV analysis of energy 

savings. Unlike energy savings, the economic value of the emissions reductions discussed by 

commenters is not priced in the marketplace. DOE has chosen to report these benefits separately 

from the net benefits of energy savings. A summary of the monetary results are shown in section 

V.B.6 of this notice. DOE will consider both values when weighing the benefits and burdens of 

standards. 

With respect to NOx, the proposed standards might have produced an environmentally 

related economic impact in the form of lower prices for emissions allowance credits if they are 

large enough. However, DOE believes that in the present case, such standards would not 

produce even an environmentally related economic impact in the form of lower prices for 

emissions allowance credits because the estimated reduction in NOx emissions or the 

corresponding allowance credits in States covered by the CAIR cap would be too small to affect 

allowance prices for NOx under the CAIR. 

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EERE-2006-STD-0125 COMMENT 48
V. Analytical Results 

A. Trial Standard Levels 

DOE analyzed seven energy consumption levels for Class A equipment and six energy 

consumption levels for Class B equipment in the LCC and NIA analyses. For the NOPR, DOE 

determined that each of these levels should be presented as a possible TSL and correspondingly 

identified seven TSLs for Class A and six TSLs for Class B equipment. For each equipment 

class, the range of TSLs selected includes the energy consumption level providing the maximum 

NES level for the class, the level providing the maximum NES while providing a positive NPV, 

the level providing the maximum NPV, and the level approximately equivalent to ENERGY 

STAR Tier 2. Many of the higher levels selected correspond to equipment designs that 

incorporate specific noteworthy technologies that can provide energy savings benefits. For Class 

A, DOE also included two intermediate efficiency levels to fill in significant energy consumption 

gaps between the levels identified above the ENERGY STAR Tier 2 equivalent level. For Class 

A equipment, the ENERGY STAR Tier 2 equivalent TSL level, TSL 1, allows for the highest 

energy consumption. For Class B, DOE included one trial standard level with energy 

consumption higher than that provided by ENERGY STAR Tier 2. 

For the ANOPR, DOE proposed four candidate standard levels for each equipment class 

based on the levels that provided maximum energy savings, maximum efficiency level with 

positive LCC savings, maximum LCC savings, and the highest efficiency level with a payback of 

less than 3 years. 

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EERE-2006-STD-0125 COMMENT 48
DOE preserved energy consumption levels from the ANOPR that met the same economic 

criteria in the NOPR, but also included the Tier 2 equivalency level and several additional TSLs. 

These additional levels either provide additional intermediate efficiency levels or include 

specific noteworthy technologies examined in the engineering analysis. Table V-1 and Table V-2 

show the TSL levels DOE selected for the equipment classes and sizes analyzed. For Class A 

equipment, TSL 7 is the max-tech level for each equipment class. TSL 6 is the maximum 

efficiency level with a positive NPV at the 7-percent discount rate, achieved by incorporating an 

electronically commutated motor (ECM) condenser fan. TSL 5 is the efficiency level with the 

maximum NPV and maximum LCC savings, achieved by using an advanced refrigerant 

condenser design. TSL 4 is the level that first incorporated LED lighting as a design feature in 

the engineering analysis. TSL 3 and TSL 2 were intermediate efficiency levels chosen to bridge 

the gap between TSL 4, and the ENERGY STAR Tier 2 equivalent level, TSL 1. 

 For Class B equipment, TSL 6 is the max-tech level for each equipment size. TSL 5 is 

the level that first incorporated LED lighting as a design option in the engineering analysis. TSL 

4 is the next highest efficiency level including incorporation of an ECM condenser fan motor. 

TSL 3 was achieved by using an advanced refrigerant condenser design. This TSL provided an 

NPV value of essentially 0, with total capital expenditures for new equipment balanced by total 

operating cost savings over the NIA analysis period, based on a 7-percent discount rate. TSL 2 is 

the ENERGY STAR Tier 2 level for Class B equipment. This TSL provided the maximum LCC 

savings and maximum NPV savings at a 7-percent discount rate. TSL 1, which provided an 

energy consumption level approximately 4 percent higher than TSL 2, was also included in the 

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EERE-2006-STD-0125 COMMENT 48
 

analysis. TSL 1 represented the first level incorporating an evaporator fan driven by an ECM in 

the engineering analysis. 

As determined in the ANOPR, DOE chose to characterize the proposed TSL levels in 

terms of proposed equations that establish a maximum daily energy consumption (MDEC) limit 

through a linear equation of the following form: 

MDEC = A × V + B 

Where: 

A is expressed in terms of kWh/day/ft3 of measured volume, 

V is the measured refrigerated volume (ft3) calculated for the equipment, and 

B is an offset factor expressed in kWh/day. 

Coefficients A and B are uniquely derived for each equipment class based on a linear 

equation passing between the daily energy consumption values for equipment of different 

refrigerated volumes. For the development of the A and B coefficients, DOE used the energy 

consumption values shown in Table V-1 and Table V-2 for the medium and large equipment 

sizes within each class of beverage vending machine. DOE did not use the small equipment sizes 

in each class because information from the ANOPR indicated that there are no significant 

shipments of this equipment size. However, DOE seeks input from interested parties on whether 

the proposed linear equation used to describe the maximum daily energy consumption standards 

should be based on medium and large equipment (using two points); small, medium, and large 

equipment (three points); or some other possible weighting strategy. Results for using two points 

and three points are described in more details in chapter 9 of the TSD. 

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EERE-2006-STD-0125 COMMENT 48
 

 

Chapter 9 of the TSD explains the methodology DOE used for selecting TSLs and 

developing the equations shown in Table V-3. 

Table V-1 Trial Standard Levels for Class A Equipment Expressed in Terms of Daily 

Energy Consumption 

Size Test 

Metric 

Trial Standard Level in Order of Efficiency 

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

Engineering 

Level 1 5 n/a* n/a* 6 7 9 11 

Small kWh/day 6.1 5.27 4.75 4.25 3.95 3.73 3.58 3.25 

Medium kWh/day 6.53 5.51 5.25 4.75 4.19 3.95 3.79 3.43 

Large kWh/day 6.75 6.21 5.75 5.25 4.89 4.60 4.41 3.94 

* Not applicable. These levels established as intermediate points along the engineering cost curves. 

Table V-2 Trial Standard Levels for Class B Equipment Expressed in Terms of Daily 

Energy Consumption 

Size Test 

Metric 

Trial Standard Level in Order of Efficiency 

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Engineering Level 1 2 4 4 5 6 7 

Small kWh/day 4.96 4.62 4.31 4.31 4.28 3.78 3.69 

Medium kWh/day 5.56 5.2 4.99 4.76 4.72 4.22 4.12 

Large kWh/day 5.85 5.48 5.33 5.07 5.03 4.52 4.41 

Table V-3 Trial Standard Levels Expressed in Terms of Equations and Coefficients for 

Each Equipment Class 

Trial 

Standard 

Level 

Test Metric Class A Class B 

Baseline kWh/day MDEC = 0.019 x V + 6.09 MDEC = 0.068 x V + 4.07 

TSL 1 kWh/day MDEC = 0.062 x V + 4.12 MDEC = 0.066 x V + 3.76 

TSL 2 kWh/day MDEC = 0.044 x V + 4.26 MDEC = 0.080 x V + 3.24 

TSL 3 kWh/day MDEC = 0.044 x V + 3.76 MDEC = 0.073 x V + 3.16 

TSL 4 kWh/day MDEC = 0.062 x V + 2.80 MDEC = 0.073 x V + 3.12 

TSL 5 kWh/day MDEC = 0.058 x V + 2.66 MDEC = 0.070 x V + 2.68 

TSL 6 kWh/day MDEC = 0.055 x V + 2.56 MDEC = 0.068 x V + 2.63 

TSL 7 kWh/day MDEC = 0.045 x V + 2.42 n/a* 

* Not applicable. There is no TSL 7 for Class B machines. 

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EERE-2006-STD-0125 COMMENT 48
B. Economic Impacts on Commercial Customers 

1. Economic Impacts on Commercial Customers 

a. Life-Cycle Cost and Payback Period 

To evaluate the economic impact of the TSLs on customers, DOE conducted an LCC 

analysis for each TSL. More efficient beverage vending machines are expected to affect 

customers in two ways: annual operating expense is expected to decrease and purchase price is 

expected to increase. DOE analyzed the net effect by calculating the LCC. Inputs used for 

calculating the LCC include total installed costs (i.e., equipment price plus installation costs), 

annual energy savings, average electricity costs by customer, energy price trends, repair costs, 

maintenance costs, equipment lifetime, and discount rates. 

DOE’s LCC and PBP analyses provided five outputs for each TSL that are reported in 

Table V-4 through Table V-6 for Class A equipment. The first three outputs are the percentages 

of standard-compliant machine purchases that would result in (1) a net LCC increase, (2) no 

impact, or (3) a net LCC savings for the customer. DOE used the estimated distribution of 

shipments by efficiency level for each equipment class to determine the affected customers. The 

fourth output is the average net LCC savings from standard-compliant equipment. The fifth 

output is the average PBP for the customer investment in standard-compliant equipment. The 

PBP is the number of years it would take for the customer to recover, through energy savings, 

the increased costs of higher efficiency equipment compared to baseline efficiency equipment. 

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EERE-2006-STD-0125 COMMENT 48
 

Table V-4 Summary LCC and PBP Results for Class A-Large-IN 

Trial Standard Level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase % 0 0 0 0 0 7 100 

Equipment with No Change in LCC % 90 0 0 0 0 0 0 

Equipment with Net LCC Savings % 10 100 100 100 100 93 0 

Mean LCC Savings $ 91 145 204 246 272 271 (1,419) 

Mean Payback Period years 2.1 2.9 3.2 3.3 3.5 3.9 74.0 

Numbers in parentheses indicate negative values. 

Table V-5 Summary LCC and PBP Results for Class A-Medium-IN 

Trial Standard Level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase % 0 0 0 0 0 0 100 

Equipment with No Change in LCC %) 90 0 0 0 0 0 0 

Equipment with Net LCC Savings % 10 100 100 100 100 100 0 

Mean LCC Savings $ 175 223 258 327 339 331 (1,119) 

Mean Payback Period years 2.0 1.9 2.8 3.0 3.3 3.7 59.2 

Numbers in parentheses indicate negative values. 

Table V-6 Summary LCC and PBP Results for Class A-Small-IN 

Trial Standard Level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase % 0 0 0 0 0 7 100 

Equipment with No Change in LCC % 90 0 0 0 0 0 0 

Equipment with Net LCC Savings % 10 100 100 100 100 93 0 

Mean LCC Savings $ 141 197 251 284 297 290 (1,090) 

Mean Payback Period years 2.0 2.7 3.1 3.2 3.5 3.9 69.7 

Numbers in parentheses indicate negative values. 

For the Class A equipment, there are positive net LCC savings on average through TSL 

6. Only 10 percent of all equipment purchased is expected to achieve a net LCC savings at the 

first TSL level, since about 90 percent of the equipment on the market in 2012 is expected to 

meet that standard. LCC savings consistently peak at TSL 5, but for between 93 percent and 100 

percent of purchasers, Class A equipment is projected to achieve LCC savings even at TSL 6. 

Simple average PBPs are projected to be less than 3 years for all Class A equipment through 

TSL 2. PBPs are less than 4 years through TSL 6. 

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EERE-2006-STD-0125 COMMENT 48
 

 

 

DOE’s LCC and PBP analyses provided the same five outputs for each TSL for Class B 

equipment. These outputs are reported in Table V-7 through Table V-9. 

Table V-7 Summary LCC and PBP Results for Class B-Large 

Trial Standard Level 

1 2 3 4 5 6 

Equipment with Net LCC Increase % 0 9 19 27 100 100 

Equipment with No Change in LCC % 90 0 0 0 0 0 

Equipment with Net LCC Savings % 10 91 81 73 0 0 

Mean LCC Savings $ 48 53 51 42 (515) (2,352) 

Mean Payback Period (years) 3.0 4.1 5.8 6.6 74.0 100.0 

Numbers in parentheses indicate negative values. 

Table V-8 Summary LCC and PBP Results for Class B-Medium 

Trial Standard Level 

1 2 3 4 5 6 

Equipment with Net LCC Increase % 0 11 21 33 100 100 

Equipment with No Change in LCC % 90 0 0 0 0 0 

Equipment with Net LCC Savings % 10 89 79 67 0 0 

Mean LCC Savings $ 46 57 48 38 (528) (2,170) 

Mean Payback Period years 3.1 4.1 6.1 6.9 76.9 100.0 

Numbers in parentheses indicate negative values. 

Table V-9 Summary LCC and PBP Results for Class B-Small 

Trial Standard Level 

1 2 3 4 5 6 

Equipment with Net LCC Increase % 1 39 39 47 100 100 

Equipment with No Change in LCC % 90 0 0 0 0 0 

Equipment with Net LCC Savings % 10 61 61 53 0 0 

Mean LCC Savings $ 39 26 26 13 (582) (2,070) 

Mean Payback Period years 3.5 7.5 7.5 9.1 86.9 100.0 

Numbers in parentheses indicate negative values. 

For Class B equipment, there are positive net LCC savings on average through TSL 4. 

Only 10 percent of all equipment purchased is expected to achieve a net LCC savings at the first 

TSL level, since about 90 percent of the equipment on the market in 2012 is expected to meet 

that standard. LCC savings consistently peak at TSL 3, but for 53 percent to 74 percent of 

purchasers, Class B equipment is projected to achieve LCC savings at TSL 5. Simple average 

PBPs are projected to be about 3 years for large and medium size Class B equipment at TSL 1. 

PBPs are about 4 years for large and medium size Class B equipment through TSL 2. 

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EERE-2006-STD-0125 COMMENT 48
 

 

 

 

b. Life-Cycle Cost Subgroup Analysis 

Using the LCC spreadsheet model, DOE estimated the impact of the TSLs on the 

following customer subgroup: manufacturing facilities that have purchased their own beverage 

vending machines. This is the largest component of the 5 percent of site owners who also own 

their own vending machines, and comprises about 2 percent of all beverage vending machines. 

About 95 percent are owned by bottlers and vendors. The manufacturing facilities subgroup was 

analyzed because, in addition to being the largest independent block of owners, it had among the 

highest financing costs (based on weighted average cost of capital) and faced the lowest energy 

costs of any customer group. The group was therefore expected to have the least LCC savings 

and longest PBP of any identifiable customer group. 

DOE estimated the LCC and PBP for the manufacturing facilities subgroup. 

Table V-10 shows the mean LCC savings for equipment that meets the proposed energy 

conservation standards for the manufacturing facilities subgroup, and Table V-11 shows the 

mean PBP (in years) for this subgroup. More detailed discussion on the LCC subgroup analysis 

and results can be found in chapter 12 of the TSD. 

Table V-10 Mean Life-Cycle Cost Savings for Refrigerated Beverage Vending Machine 

Equipment Purchased by the Manufacturing Facilities LCC Subgroup (2008$) 

Equipment Class Size TSL 1 TSL 2 TSL 3 TSL 4 TSL5 TSL6 TSL 7 

A S $94 $123 $150 $166 $168 $153 -$1,210 

A M $118 $152 $160 $197 $197 $181 -$1,256 

A L $60 $89 $121 $144 $153 $142 -$1,537 

B S $22 -$6 -$6 -$19 -$623 -$2,072 NA 

B M $27 $28 $9 -$2 -$579 -$2,183 NA 

B L $29 $27 $13 $2 -$567 -$2,361 NA 

Numbers in parentheses indicate negative values. 

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EERE-2006-STD-0125 COMMENT 48
 

Table V-11 Mean Payback Period for Refrigerated Beverage Vending Machine Equipment 

Purchased by the Manufacturing Facilities LCC Subgroup (Years) 

Equipment Class Size TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

A S 2.4 3.4 3.8 4.0 4.3 4.8 81.0 

A M 2.4 2.3 3.5 3.7 4.1 4.6 74.1 

A L 2.6 3.5 3.9 4.1 4.4 4.9 84.2 

B S 4.4 10.0 10.0 12.4 95.8 100.0 NA 

B M 3.9 5.2 7.9 9.1 88.7 100.0 NA 

B L 3.7 5.1 7.4 8.6 86.1 100.0 NA 

For beverage vending machines, the LCC and PBP impacts for manufacturing facilities 

that own their own beverage vending machines are less than those of all customers. Because they 

face lower energy costs, the lower value of energy savings lengthens the period over which the 

original investment is paid back and also reduces operating cost savings over the lifetime of 

more efficient beverage vending machines. In addition, because they face higher financing costs, 

these sites have a relatively high opportunity cost for investment, so the value of future 

electricity savings from higher efficiency equipment is further reduced. Even so, for this 

subgroup of Class A machines, LCC is still positive for all but the TSL 8 level. PBP is 

lengthened by about a year, but is still less than 4 years at TSL 1 and less than 5 years at TSL 

2. Economic Impacts on Manufacturers 

To assess the lower end of the range of potential impacts for the beverage vending 

machine industry, DOE considered the preservation-of-gross-margin-percentage scenario. This 

scenario represents the lower end of the range of industry profitability because it assumes that 

manufacturers are able to pass through increased production costs to their customers. However, 

manufacturers indicated during interviews that market conditions usually do not allow them to 

fully pass through costs to their customers. 

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To assess the higher end of the range of potential impacts for the beverage vending 

machine industry, DOE considered the preservation-of-operating-profit scenario. The 

preservation-of-operating-profit scenario models manufacturer concerns about the overcapacity 

of the industry and the inability to set the prices they charge their customers. In this scenario, 

manufacturers spend the necessary investments required to convert their facilities to produce 

standards-compliant equipment. Despite this effort, operating profit does not change in absolute 

dollars and decreases as a percentage of revenue. 

a. Class A Beverage Vending Machine Equipment 

Table V-12 and Table V-13 show the MIA results for each TSL using both scenarios 

described above for Class A beverage vending machines. 

Table V-12 Manufacturer Impact Analysis for Class A Beverage Vending Machine 

Equipment Under the Preservation of Gross Margin Percentage Markup Scenario 

Preservation of Gross Margin Percentage Markup Scenario 

Metric Units Base 

Case 

Trial Standard Level 

1 2 3 4 5 6 7 

INPV 2008$ 

millions 

35.3 35.3 35.1 33.4 33.2 26.5 22.9 26.8 

Change in 

INPV 

2008$ 

millions 

- 0.0 (0.2) (1.9) (2.1) (8.8) (12.4) (8.3) 

% - 0.08 -0.65 -5.47 -5.86 -24.95 -35.09 -23.67 

Equipment 

Conversion 

Costs 

2008$ 

millions 

- 0.0 0.6 0.6 1.2 2.9 3.5 3.5 

Capital 

Conversion 

Costs 

2008$ 

millions 

- 0.0 0.0 2.2 2.2 9.1 13.0 14.1 

Total 

Investment 

Required 

2008$ 

millions 

- 0.0 0.6 2.8 3.4 11.9 16.4 17.6 

Numbers in parentheses indicate negative values. 

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Table V-13 Manufacturer Impact Analysis for Class A Beverage Vending Machine 

Equipment Under the Preservation of Operating Profit Markup Scenario 

Preservation of Gross Margin Percentage Markup Scenario 

Metric Units Base 

Case 

Trial Standard Level 

1 2 3 4 5 6 7 

INPV 2008$ 

millions 

35.3 35.3 34.9 32.7 32.2 25.4 21.6 14.1 

Change in 

INPV 

2008$ 

millions 

- (0.0) (0.4) (2.6) (3.1) (9.9) (13.7) (20.9) 

% - -0.04 -1.04 -7.45 -8.83 -28.14 -38.89 -59.74 

Equipment 

Conversion 

Costs 

2008$ 

millions 

- 0.0 0.6 0.6 1.2 2.9 3.5 3.5 

Capital 

Conversion 

Costs 

2008$ 

millions 

- 0.0 0.0 2.2 2.2 9.1 13.0 14.1 

Total 

Investment 

Required 

2008$ 

millions 

- 0.0 0.6 2.8 3.4 11.9 16.4 17.6 

Numbers in parentheses indicate negative values. 

DOE estimates that there are no significant impacts on INPV for Class A equipment to 

meet TSL 1. The vast majority of equipment for sale today meets TSL 1. Therefore, DOE 

expects there will be no equipment or capital conversion costs and that industry revenue and 

production costs will not be significantly negatively affected. 

At TSL 2, DOE estimated the impacts in INPV for Class A equipment to range from 

approximately -$0.2 million to -$0.4 million, a change in INPV of -0.65 percent to -1.04 percent. 

At this level, the industry cash flow decreases by approximately 6.5 percent, to $2.12 million, 

compared to the base case value of $2.27 million in the year leading up to the standards. At TSL 

2, manufacturers will have to make some component switches to comply with the standard. 

However, most manufacturers will not have to make significant alterations to their production 

process and will only require minimal conversion costs. Though standards will increase the 

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EERE-2006-STD-0125 COMMENT 48
manufacturing production costs, the incremental cost is not substantially larger than most 

equipment sold today, resulting in minimal impacts on industry value. 

At TSL 3, DOE estimated the impacts on INPV for Class A equipment to range from 

approximately -$1.9 million to -$2.6 million, a change in INPV of -5.47 percent to -7.45 percent. 

At this level, the industry cash flow decreases by approximately 46 percent, to $1.23 million, 

compared to the base case value of $2.27 million in the year leading up to the standards. At TSL 

3, manufacturers will have to make additional component switches and minor changes to their 

production lines, resulting in minimal equipment and capital conversion costs. Standards 

increase production costs, but these additional costs are not enough to severely affect INPV even 

if the dollar value of operating profit remains unchanged. 

At TSL 4, DOE estimated the impacts on INPV for Class A equipment to range from ­

$2.1 million to -$3.1 million, a change in INPV of approximately -5.86 percent to -8.83 percent. 

At this level, the industry cash flow decreases by approximately 52.4 percent to $1.08 million, 

compared to the base case value of $2.27 million in the year leading up to the standards. At TSL 

4, certain manufacturers have to make major changes to their production lines, while others will 

only have to make minor component changes to their existing production lines to comply with 

the standard. As a result, DOE believes TSL 4 may have differential impacts among 

manufacturers. The most significant change that must be implemented at this TSL is replacing 

fluorescent lighting with LEDs. If profitability remains at pre-standard levels, then the impacts 

on INPV are worse. 

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EERE-2006-STD-0125 COMMENT 48
At TSL 5, DOE estimated the impacts on INPV for Class A equipment to range from ­

$8.8 million to -$9.9 million, a change in INPV of approximately -24.95 percent to -28.14 

percent. At this level, the industry cash flow decreases by approximately 191.9 percent to -$2.09 

million, compared to the base case value of $2.27 million in the year leading up to the standards. 

At TSL 5, certain manufacturers have to completely redesign all their existing equipment, while 

others only have to make costly changes to their existing production lines to comply with the 

standard. Therefore, DOE believes TSL 5 has differential impacts among manufacturers. 

Depending on the pathway to meet TSL 5, manufacturers may have to alter their existing 

equipment cabinet designs, which would greatly increase conversion costs. These costly 

equipment and capital conversion costs are the most significant driver of INPV. In addition, the 

higher manufacturing costs of standards-compliant equipment could reduce profitability. 

At TSL 6, DOE estimated the impacts on INPV for Class A equipment to range from ­

$12.4 million to -$13.7 million, a change in INPV of approximately -35.09 percent to -38.89 

percent. DOE seeks comment on the magnitude of this estimated decline in INPV. Also, at TSL 

6, the industry cash flow decreases by approximately 267.0 percent to -$3.79 million, compared 

to the base case value of $2.27 million in the year leading up to the standards. In addition, 

manufacturers have to redesign all their existing equipment and make capital investments in their 

production lines to comply with the standard. Manufacturers will have to make additional 

alterations to the existing equipment cabinet designs. In addition, the equipment changes 

necessary to meet TSL 6 are more complex, which increases the engineering and capital 

resources that must be employed. The production costs of equipment that meets TSL 6 are higher 

than at TSL 5. The cost to manufacture standards-compliant equipment could have a greater 

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EERE-2006-STD-0125 COMMENT 48
impact on profitability if the dollar value of operating profit remains unchanged. However, at 

TSL 5, the costly equipment and capital conversion costs are a more significant driver of INPV 

because the revenues from the higher incremental prices do not offset the greater conversion 

expenditures even if operating profit increases under standards. At TSL 6, DOE believes there 

are no differential impacts among manufacturers. 

At TSL 7 (max-tech), DOE estimated the impacts on INPV for Class A to range from ­

$8.3 million to -$20.9 million, a change in INPV of approximately -23.67 percent to -59.74 

percent. At this level, the industry cash flow decreases by approximately 287.9 percent to -$4.27 

million, compared to the base case value of $2.27 million in the year leading up to the standards. 

Similar to TSL 6, TSL 7 involves additional and more complex changes to equipment cabinet 

designs. These additional changes increase equipment and capital conversion costs. However, the 

substantial increases in production costs to manufacture standard-compliant equipment is also a 

significant driver of INPV. If profitability does not increase with the substantially higher 

manufacturing costs, then the impact on INPV is much larger. 

b. Class B Beverage Vending Machine Equipment 

Table V-14 and Table V-15 show the MIA results for Class B beverage vending 

machines at each TSL using the preservation-of-gross-margin-percentage and preservation-ofoperating-profit scenarios described above. 

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Table V-14 Manufacturer Impact Analysis for Class B Beverage Vending Machine 

Equipment Under the Preservation of Gross Margin Percentage Markup Scenario
 

Preservation of Gross Margin Percentage Markup Scenario 

Units Base 

Case 

Trial Standard Level 

1 2 3 4 5 6 

INPV 2008$ millions 22.1 22.1 22.1 21.3 20.9 12.4 11.0 

Change in INPV 2008$ millions - 0.0 0.0 (0.8) (1.3) (9.7) (11.2) 

% - 0.04 0.07 -3.71 -5.71 -44.01 -50.38 

Equipment 

Conversion Costs 2008$ millions - 0.0 0.0 1.7 2.6 3.5 6.9 

Capital Conversion 

Costs 2008$ millions - 0.0 0.0 0.0 0.0 11.0 14.7 

Total Investment 

Required 2008$ millions - 0.0 0.0 1.7 2.6 14.5 21.6 

Numbers in parentheses indicate negative values. 

Table V-15 Manufacturer Impact Analysis for Class B Beverage Vending Machine 

Equipment Under the Preservation of Operating Profit Markup Scenario 

Preservation of Gross Margin Percentage Markup Scenario 

Units Base 

Case 

Trial Standard Level 

1 2 3 4 5 6 

INPV 2008$ millions 22.1 22.1 22.1 21.2 20.8 8.8 (1.3) 

Change in INPV 2008$ millions - (0.0) (0.0) (0.9) (1.3) (13.4) (23.4) 

% - -0.05 -0.10 -4.17 -6.07 -60.33 -105.79 

Equipment 

Conversion Costs 2008$ millions - 0.0 0.0 1.7 2.6 3.5 6.9 

Capital Conversion 

Costs 2008$ millions - 0.0 0.0 0.0 0.0 11.0 14.7 

Total Investment 

Required 2008$ millions - 0.0 0.0 1.7 2.6 14.5 21.6 

Numbers in parentheses indicate negative values. 

DOE estimates that there are no significant impacts on INPV for Class B equipment at 

TSL 1 or TSL 2. The vast majority of equipment for sale today meets these TSLs. Therefore, 

DOE expects there will be no equipment or capital conversion costs and that industry revenues 

and production costs will not be significantly negatively affected at TSL 1 or TSL 2. 

At TSL 3, DOE estimated the impacts in INPV for Class B equipment to range from 

approximately -$0.8 million to -$0.9 million, a change in INPV of -3.71 percent to -4.17 percent. 

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At this level, the industry cash flow decreases by approximately 30.9 percent, to $.98 million, 

compared to the base case value of $1.42 million in the year leading up to the standards. At TSL 

3, manufacturers will have to make some component switches to comply with the standard. 

However, most manufacturers will not have to significantly alter their production process. In 

addition, these minor design changes will not raise the production costs beyond the cost of most 

equipment sold today, resulting in minimal impacts on industry value. 

At TSL 4, DOE estimated the impacts on INPV for Class B equipment to range from ­

$1.3 million to -$1.3 million, a change in INPV of approximately -5.71 percent to -6.07 percent. 

At this level, the industry cash flow decreases by approximately 46.3 percent to $.76 million, 

compared to the base case value of $1.42 million in the year leading up to the standards. At TSL 

4, manufacturers will have to make additional component switches, resulting in minimal 

equipment conversion costs. Standards increase production costs, but the cost increases are not 

enough to severely affect INPV if profitability remains the same as it was before standards. 

At TSL 5, DOE estimated the impacts on INPV for Class B equipment to range from ­

$9.7 million to -$13.4 million, a change in INPV of approximately -44.01 percent to -60.33 

percent. At this level, the industry cash flow decreases by approximately 371.9 percent to -$3.87 

million, compared to the base case value of $1.42 million in the year leading up to the standards. 

At TSL 5, manufacturers have to redesign all their existing equipment and make capital 

investments in their production lines to comply with the standard. In addition, the equipment 

designs necessary to meet TSL 5 are more complex, which increases the engineering and capital 

resources that must be employed. Finally, the production costs of equipment that meets TSL 5 

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are higher. The cost to manufacture standards-compliant equipment could have a greater impact 

on the industry if operating profit does not increase with production costs. 

At TSL 6 (max-tech), DOE estimated the impacts on INPV for Class B to range from ­

$11.2 million to -$23.4 million, a change in INPV of approximately -50.38 percent to -105.79 

percent. At this level, the industry cash flow decreases by approximately 549.7 percent to -$6.40 

million, compared to the base case value of $1.42 million in the year leading up to the standards. 

Similar to TSL 5, TSL 6 involves more complex changes to existing cabinet designs. These 

additional changes increase the equipment and capital conversion costs. However, the substantial 

increase in cost of manufacturer standards-compliant equipment at this TSL is also a significant 

driver of INPV. If profitability does not increase with the substantially higher manufacturing 

costs, then the impact on INPV is much larger. 

c. Cumulative Regulatory Burden 

While any one regulation may not impose a significant burden on manufacturers, the 

combined effects of several regulations may have serious consequences for some manufacturers, 

groups of manufacturers, or an entire industry. Assessing the impact of a single regulation may 

overlook this cumulative regulatory burden. 

DOE recognizes that each regulation can significantly affect manufacturers’ financial 

operations. Multiple regulations affecting the same manufacturer can quickly reduce 

manufacturers’ profits and possibly cause manufacturers to exit from the market. However, DOE 

could not identify any other DOE regulations that would affect the manufacturers of beverage 

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EERE-2006-STD-0125 COMMENT 48
 

 

vending machines or their parent companies. DOE requested information about the cumulative 

regulatory burden during manufacturer interviews. In general, manufacturers were not greatly 

concerned about other Federal, State, or international regulations. The requirements of their 

major customers have a greater impact on their business than any of these other regulations. For 

further information about the cumulative regulatory burden impacts, see chapter 13 of the TSD. 

d. Impacts on Employment 

DOE used the GRIM to assess the impacts of energy conservation standards on beverage 

vending machine industry employment. DOE used statistical data from the U.S. Census Bureau’s 

2006 Annual Survey of Manufacturers, the results of the engineering analysis, and interviews 

with manufacturers to estimate the inputs necessary to calculate industry-wide labor expenditures 

and employment levels.37 

The vast majority of beverage vending machines are manufactured in the United States. 

Based on results of the GRIM, DOE expects that there would be slightly positive direct 

employment impacts among domestic beverage vending machine manufacturers for TSL 1 

through TSL 6 for Class A equipment and TSL 1 through TSL 5 for Class B equipment. The 

GRIM estimates that employment would increase by fewer than 20 employees for Class A 

equipment at TSL 1 through TSL 6 and fewer than 42 employees for Class B equipment at TSL 

1 though TSL 5. The employment impacts at the max-tech levels for both equipment classes are 

positive. The employment impacts are more positive at the max-tech levels because more labor is 

required and the production costs of the most efficient equipment greatly increase. The 

37 Results of the U.S. Census Bureau’s 2007 Annual Survey of Manufacturers are not yet available. 

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EERE-2006-STD-0125 COMMENT 48
employment impacts calculated in the GRIM are shown in Table V-29 and Table V-30 in section 

V.C. 

The results calculated in the GRIM do not account for the possible relocation of domestic 

jobs to lower-labor-cost countries, which may occur independently of new standards or may be 

influenced by the level of investments new standards require. Manufacturers stated that although 

there are no current plans to relocate production facilities, higher TSLs would increase pressure 

to cut costs, which could result in relocation. In addition, standards could increase pressure to 

consolidate within the industry due to the low profitability and existing excess capacity. DOE 

requests comment on whether or not the proposed standard risks industry consolidation. Because 

the labor impacts in the GRIM do not take relocation or consolidation into account, the labor 

impacts would be different if manufacturers chose to relocate to lower cost countries or if 

manufacturers consolidated. Chapter 13 of the TSD further discusses how the employment 

impacts are calculated and shows the projected changes in employment levels by TSL. 

The conclusions in this section are independent of any conclusions regarding 

employment impacts from the broader U.S. economy estimated in the employment impact 

analysis. Those impacts are documented in chapter 15 of the accompanying TSD. 

e. Impacts on Manufacturing Capacity 

According to the majority of beverage vending machine manufacturers, new energy 

conservation standards will not affect manufacturers’ production capacity. Within the last 

decade, annual shipments of beverage vending machines have decreased almost three-fold. Due 

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to the decline in shipments, it is likely that any of the major manufacturers has the capacity to 

meet most of the recent market demand. Consequently, the industry has the capacity to make 

many times more units than are currently sold each year. Thus, DOE believes manufacturers will 

be able to maintain manufacturing capacity levels and continue to meet market demand under 

new energy conservation standards. 

f. Impacts on Subgroups of Manufacturers 

As discussed above, using average cost assumptions to develop an industry cash-flow 

estimate is not adequate for assessing differential impacts among manufacturer subgroups. Small 

manufacturers, niche equipment manufacturers, and manufacturers exhibiting a cost structure 

that differs largely from the industry average could be affected differently. DOE used the results 

of the industry characterization to group manufacturers exhibiting similar characteristics. 

DOE evaluated the impact of new energy conservation standards on small manufacturers 

as defined by the SBA. During DOE’s interviews, small business manufacturers suggested that 

the impacts of standards would not differ from impacts on larger companies. For a discussion of 

the impacts on small manufacturers, see chapter 13 of the TSD. 

3. National Impact Analysis 

a. Amount and Significance of Energy Savings 

Because the pattern and strategies for improving the energy performance of beverage 

vending machines is somewhat different between Class A and Class B equipment, energy 

savings are reported separately for each class of equipment by TSL. The national energy savings 

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were between 0.001 and 0.107 quads, depending on the TSL and equipment class, an amount of 

energy savings that DOE considers significant. There is clear and convincing evidence that each 

TSL that is more stringent than the baseline efficiency level would result in significantly more 

energy savings, ranging from 0.001 quads to 0.107 quads beyond that achieved in ENERGY 

STAR Tier 1 equipment. 

To estimate the energy savings through 2042 due to new energy conservation standards, 

DOE compared the energy consumption of beverage vending machines under the base case to 

energy consumption under a new standard. The energy consumption calculated in the NIA is 

source energy, taking into account energy losses in the generation and transmission of electricity 

as discussed in section IV.J. 

DOE tentatively determined the amount of energy savings at each of the seven TSLs 

being considered for Class A equipment and six TSLs for Class B equipment, then analyzed and 

aggregated the results across the three sizes for each equipment class. 

Table V-16 shows the forecasted aggregate national energy savings of Class A equipment 

at each TSL. The table also shows the magnitude of the estimated energy savings if the savings 

are discounted at the 7-percent and 3-percent real discount rates. Each TSL considered in this 

rulemaking would result in significant energy savings, and the amount of savings increases with 

higher energy conservation standards (chapter 11 of the TSD). DOE reports both undiscounted 

and discounted values of energy savings. Each TSL analyzed results in additional energy 

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EERE-2006-STD-0125 COMMENT 48
savings, ranging from an estimated 0.004 quads to 0.107 quads for TSLs 1 through 7 

(undiscounted). 

Table V-16 Summary of Cumulative National Energy Savings for Class A Equipment 

(Energy Savings for Units Sold from 2012 to 2042) 

Primary National Energy Savings (quads) 

Trial Standard Level Undiscounted 3% Discounted 7% Discounted 

1 0.004 0.002 0.001 

2 0.019 0.011 0.006 

3 0.043 0.025 0.013 

4 0.068 0.038 0.020 

5 0.080 0.045 0.024 

6 0.088 0.050 0.026 

7 0.107 0.060 0.031 

In Table V-17, DOE reports both undiscounted and discounted values of energy savings 

for Class B equipment. Each higher TSL analyzed results in additional energy savings, ranging 

from an estimated 0.001 quads to 0.035 quads for TSLs 1 through 6 (undiscounted). 

Table V-17 Summary of Cumulative National Energy Savings for Class B Equipment 

(Energy Savings for Units Sold from 2012 to 2042) 

Primary National Energy Savings (quads) 

Trial Standard Level Undiscounted 3% Discounted 7% Discounted 

1 0.001 0.001 0.000 

2 0.002 0.001 0.001 

3 0.010 0.006 0.003 

4 0.012 0.007 0.003 

5 0.031 0.018 0.009 

6 0.035 0.020 0.010 

b. Net Present Value 

The NPV analysis is a measure of the cumulative benefit or cost of standards to the 

Nation. In accordance with the Office of Management and Budget’s (OMB) guidelines on 

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EERE-2006-STD-0125 COMMENT 48
regulatory analysis (OMB Circular A-4, section E, September 17, 2003), DOE calculated an 

estimated NPV using both a 7-percent and 3-percent real discount rate. The 7-percent rate is an 

estimate of the average before-tax rate of return to private capital in the U.S. economy. This rate 

reflects the returns to real estate and small business capital as well as corporate capital. DOE 

used this discount rate to approximate the opportunity cost of capital in the private sector, since 

recent OMB analysis has found the average rate of return to capital to be near this rate. In 

addition, DOE used the 3-percent discount rate to capture the potential effects of standards on 

private consumption (e.g., through higher prices for equipment and purchase of reduced amounts 

of energy). This rate represents the rate at which society discounts future consumption flows to 

their present value. This rate can be approximated by the real rate of return on long-term 

Government debt (e.g., the yield on Treasury notes minus the annual rate of change in the 

Consumer Price Index), which has averaged about 3 percent on a pre-tax basis for the last 30 

years. 

Table V-18 shows the estimated cumulative NPV for beverage vending machines 

resulting from the sum of the NPV calculated for the Class A equipment class. Table V-19 

assumes the AEO2009 reference case forecast for electricity prices. At a 7-percent discount rate, 

TSLs 1 through 6 show positive cumulative NPVs. The highest NPV is provided by TSL 5 at 

$0.108 billion. TSL 6 provided $0.105 billion. TSL 7 showed an NPV at -$0.719 billion, the 

result of negative NPV observed in all sizes of this equipment class. 

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EERE-2006-STD-0125 COMMENT 48
Table V-18 Summary of Cumulative Net Present Value for Class A Equipment (AEO2009 

Reference Case) 

NPV* billion 2008$ 

Trial Standard Level 7% Discount Rate 3% Discount Rate 

1 0.009 0.020 

2 0.038 0.084 

3 0.062 0.149 

4 0.098 0.235 

5 0.108 0.263 

6 0.105 0.265 

7 (0.719) (1.210) 

Numbers in parentheses indicate negative NPV (i.e., net cost). 

At a 3-percent discount rate, all but TSL 7 showed a positive NPV, with the highest NPV 

provided at TSL 6 (i.e., $0.265 billion). TSL 5 provided a near equivalent NPV at $0.263 billion. 

TSL 7 provided an NPV of -$1.210 billion. DOE estimates that all Class A equipment at TSL 7 

has negative NPVs at a 3-percent discount rate. 

Table V-19 shows the estimated cumulative NPV for beverage vending machines 

resulting from the sum of the NPV calculated for Class B equipment. This table assumes the 

AEO2009 reference case forecast for electricity prices. At a 7-percent discount rate, TSLs 1 

through 4 show positive cumulative NPVs. The highest NPV is provided by TSL 2 at $0.003 

billion. TSL 3 provided zero NPV. TSLs 5 and TSL 6 show a negative NPV. TSL 5 has a ­

$0.256 billion NPV, the result of negative NPV observed in all sizes of Class B equipment. 

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EERE-2006-STD-0125 COMMENT 48
 

Table V-19 Summary of Cumulative Net Present Value for Class B Equipment (AEO2009 

Reference Case) 

NPV billion 2008$ 

Trial Standard Level 7% Discount Rate 3% Discount Rate 

1 0.002 0.005 

2 0.003 0.007 

3 0.000 0.008 

4 (0.004) 0.001 

5 (0.256) (0.442) 

6 (1.013) (1.822) 

Numbers in parentheses indicate negative NPV (i.e., net cost). 

At a 3-percent discount rate, TSLs 1 through 4 showed a positive NPV, with the highest 

NPV provided at TSL 3 ($0.008 billion). TSL 2 provided a near equivalent NPV at $0.007 

billion. TSL 5 provided an NPV of $-0.442 billion. DOE estimated that all Class B equipment 

sizes at TSL 5 have negative NPVs at a 3-percent discount rate. 

In addition to the reference case, DOE examined the NPV under the AEO2009 highgrowth and low-growth electricity price forecasts. The results of this examination can be found 

in chapter 11 of the TSD. 

c. Impacts on Employment 

Besides the direct impacts on manufacturing employment discussed in section V.B.2.d, 

DOE develops general estimates of the indirect employment impacts of proposed standards on 

the economy. As discussed above, DOE expects energy conservation standards for beverage 

vending machines to reduce energy bills for commercial customers, and the resulting net savings 

to be redirected to other forms of economic activity. DOE also realizes that these shifts in 

spending and economic activity by vending machine operators and site owners could affect the 

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demand for labor. The impact comes in a variety of businesses not directly involved in the 

decision to make, operate, or pay the utility bills for beverage vending machines. The economic 

impact is “indirect.” To estimate these indirect economic effects, DOE used an input/output 

model of the U.S. economy using U.S. Department of Commerce, Bureau of Economic Analysis 

(BEA) and Bureau of Labor Statistics (BLS) data (as described in section IV.K; see chapter 15 of 

the TSD for details). 

In this input/output model, the spending of the money saved on utility bills when more 

efficient vending machines are deployed is centered in economic sectors that create more jobs 

than are lost in electric utilities when spending is shifted from electricity to other products and 

services. Thus, the proposed beverage vending machine energy conservation standards are likely 

to slightly increase the net demand for labor in the economy. However, the net increase in jobs is 

so small that it would be imperceptible in national labor statistics and might be offset by other, 

unanticipated effects on employment. Neither the BLS data nor the input/output model used by 

DOE includes the quality of jobs. As shown in Table V-20 and Table V-21, DOE estimates that 

net indirect employment impacts from a proposed beverage vending machine standard are likely 

to be very small. 

Table V-20 Net National Change in Indirect Employment from Class A Equipment: Jobs in 

2012 to 2042 

Trial Standard Net National Change in Jobs 

Level 2012 2022 2032 2042 

1 0 10 13 14 

2 3 50 57 64 

3 5 113 132 146 

4 9 173 203 226 

5 9 204 239 265 

6 9 223 262 292 

7 (61) 220 267 304 

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EERE-2006-STD-0125 COMMENT 48
 

 

Table V-21 Net National Change in Indirect Employment from Class B Equipment: Jobs in 

2012 to 2042 

Trial Standard Net National Change in Jobs 

Level 2012 2022 2032 2042 

1 0 3 4 4 

2 0 5 5 6 

3 0 24 29 33 

4 0 28 34 38 

5 (19) 66 80 90 

6 (78) 39 56 68 

7 NA NA NA NA 

Numbers in parentheses indicate negative values. 

4. Impact on Utility or Performance of Equipment 

In performing the engineering analysis, DOE considers design options that would not 

lessen the utility or performance of the individual classes of equipment. (42 U.S.C. 

6295(o)(2)(B)(i)(IV) and 6316(e)(1)) As presented in the screening analysis (chapter 4 of the 

TSD), DOE eliminates design options that reduce the utility of the equipment from 

consideration. For this notice, DOE tentatively concluded that none of the efficiency levels 

proposed for beverage vending machines reduce the utility or performance of the equipment. 

5. Impact of Any Lessening of Competition 

EPCA directs DOE to consider any lessening of competition likely to result from 

standards. It directs the Attorney General to determine in writing the impact, if any, of any 

lessening of competition likely to result from a proposed standard. (42 U.S.C. 

6295(o)(2)(B)(i)(V) and 6316(e)(1)) To assist the Attorney General in making such a 

determination, DOE provided the Department of Justice (DOJ) with copies of this notice and the 

TSD for review. During MIA interviews, domestic manufacturers indicated that foreign 

manufacturers have not entered the beverage vending machine market for the past several years. 

Manufacturers also stated that little or no consolidation has occurred among beverage vending 

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machine manufacturers in recent years. Manufacturers indicated that the competitive nature of 

the industry has created pressure to consolidate, but that new energy conservation standards 

should not put any one manufacturer at a competitive disadvantage. Manufacturers have also 

stated that there has been some consolidation among bottlers in the industry. DOE believes that 

these trends will continue in this market regardless of the proposed standard levels chosen. 

DOE does not believe that standards would result in domestic firms moving their 

production facilities outside the United States. The vast majority of beverage vending machines 

are manufactured in the United States and, during interviews, manufacturers in general indicated 

they would modify their existing facilities to comply with energy conservation standards. 

6. Need of the Nation to Conserve Energy 

Improving the energy efficiency of beverage vending machines, where economically 

justified, would likely improve the security of the Nation’s energy system by reducing overall 

demand for energy, thus reducing the Nation’s reliance on foreign sources of energy. Reduced 

demand would also likely improve the reliability of the electricity system, particularly during 

peak-load periods. 

Energy savings from higher standards for beverage vending machines would also 

produce environmental benefits in the form of reduced emissions of air pollutants and 

greenhouse gases associated with energy production. Table V-22 provides DOE’s estimate of 

cumulative CO2, NOx, and Hg emissions reductions that would result from the TSLs considered 

in this rulemaking for both Class A and Class B equipment. The expected energy savings from 

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the proposed standards for beverage vending machines may also reduce the cost of maintaining 

nationwide emissions standards and constraints. In the draft EA (found in chapter 16 of the TSD 

accompanying this notice), DOE reports estimated annual changes in CO2, NOx, and Hg 

emissions attributable to each TSL. 

Table V-22 Cumulative CO2 and Other Emissions Reductions (Cumulative Reductions for 

Products Sold from 2012 to 2042) 

Trial Standard Levels for Class A 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

Emissions Reductions 

CO2 (Mt) 0.23 1.01 2.27 3.56 4.19 4.61 5.59 

NOx (kt) 0.03 0.14 0.31 0.48 0.57 0.62 0.75 

Hg (tons) 

Low 

High 

0 

0.004 

0 

0.017 

0 

0.038 

0 

0.059 

0 

0.069 

0 

0.076 

0 

0.093 

Trial Standard Levels for Class B 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Emissions Reductions 

CO2 (Mt) 0.07 0.11 0.53 0.61 1.64 1.83 

NOx (kt) 0.01 0.01 0.07 0.08 0.22 0.25 

Hg (tons) 

Low 

High 

0 

0.001 

0 

0.002 

0 

0.009 

0 

0.010 

0 

0.027 

0 

0.030 

Mt = million metric tons 

kt = thousand tons 

Negative values indicate emission increases. Detail may not sum to total due to rounding. 

As noted in section IV.L, DOE does not report SO2 emissions reductions from power 

plants because reductions from an energy conservation standard would not affect the overall 

level of U.S. SO2 emissions due to emissions caps. 

NOx emissions are currently subject to emissions caps under the Clean Air Interstate Rule 

(CAIR) published in the Federal Register on May 12, 2005. 70 FR 25162 (May 12, 2005). The 

CAIR caps emissions in 28 eastern States and the District of Columbia (D.C.) (collectively 

“States”). As with the SO2 emissions cap, energy conservation standards are not likely to have a 

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physical effect on NOx emissions in those States. However, the standards proposed in today’s 

NOPR might have produced an environmentally related economic impact in the form of lower 

prices for emissions allowance credits if they were large enough. DOE believes that such 

standards would not produce such an impact because the estimated reduction in NOx emissions 

or the corresponding increase in available allowance credits in States covered by the CAIR cap 

would be too small to affect allowance prices for NOx. 

In contrast, new or amended energy conservation standards would reduce NOx emissions 

in those 22 States that are not affected by the CAIR, and these emissions could be estimated from 

NEMS-BT. As a result, DOE used the NEMS-BT to forecast emission reductions from the 

beverage machine standards that are considered in today’s NOPR. 

Though currently in effect, CAIR has been the subject of significant litigation. CAIR was 

vacated by the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in its 

July 11, 2008, decision in North Carolina v. Environmental Protection Agency.

38 However, on 

December 23, 2008, the D.C. Circuit decided to allow the CAIR to remain in effect until it is 

replaced by a rule consistent with the court’s earlier opinion.39 

DOE established a range of Hg emission rates to estimate the Hg emissions that could be 

reduced through standards. DOE’s low estimate assumed that future standards would displace 

electrical generation only from natural gas-fired power plants, thereby resulting in an effective 

emission rate of zero. (Under this scenario, coal-fired power plant generation would remain 

38 531 F.3d 896 (D.C. Cir. 2008). 

39 North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). 

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unaffected.) The low-end emission rate is zero because natural gas-fired power plants have 

virtually zero Hg emissions associated with their operation. 

DOE’s high estimate, which assumed that standards would displace only coal-fired power 

plants, was based on a nationwide mercury emission rate from AEO2008. (Under this scenario, 

gas-fired power plant generation would remain unaffected.) Because power plant emission rates 

are a function of local regulation, scrubbers, and the mercury content of coal, it is extremely 

difficult to identify a precise high-end emission rate. Therefore, the most reasonable estimate is 

based on the assumption that all displaced coal generation would have been emitting at the 

average emission rate for coal generation as specified by AEO2008. As noted previously, 

because virtually all mercury emitted from electricity generation is from coal-fired power plants, 

DOE based the emission rate on the tons of mercury emitted per TWh of coal-generated 

electricity. Based on the emission rate for 2006, DOE derived a high-end emission rate of 0.0255 

tons per TWh. To estimate the reduction in mercury emissions, DOE multiplied the emission rate 

by the reduction in coal-generated electricity due to the standards considered in the utility impact 

analysis. These changes in Hg emissions are extremely small, ranging from 0 to 0.02 percent of 

the national base-case emissions forecast by NEMS-BT, depending on the TSL. 

DOE has considered the possible monetary value of the benefits likely to result from the 

CO2 emission reductions associated with standards. To put the potential monetary benefits from 

reduced CO2 emissions into a form that would likely be most useful to decision makers and 

interested parties, DOE used the same methods it used to calculate the net present value of 

consumer cost savings. DOE converted the estimated yearly reductions in CO2 emissions into 

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monetary values, which were then discounted over the life of the affected equipment to the 

present using both 3-percent and 7-percent discount rates. 

DOE previously proposed using the range $0 to $20 per ton for the year 2007 in 2007$. 

73 FR 62034, 62110 (Oct. 17, 2008). These estimates were based on a previous analysis that 

used a range of no benefit to an average benefit value reported by the Intergovernmental Panel 

on Climate Change (IPCC). DOE derived the IPCC estimate used as the upper bound value from 

an estimate of the mean value of worldwide impacts due to climate change and not just the 

effects likely to occur within the United States. This previous analysis assumed that the 

appropriate value should be restricted to a representation of those costs and benefits likely to be 

experienced in the United States. DOE expects that such domestic values would be lower than 

comparable global values; however, there currently are no consensus estimates for the U.S. 

benefits likely to result from CO2 emission reductions. Because U.S.-specific estimates were 

unavailable and DOE did not receive any additional information that would help narrow the 

proposed range of domestic benefits, DOE used the global mean value as an upper bound U.S. 

value. 

The Department of Energy, together with other Federal agencies, is reviewing various 

methodologies for estimating the monetary value of reductions in CO2 and other greenhouse gas 

emissions. This review will consider the comments on this subject that are part of the public 

record for this and other rulemakings, as well as other methodological assumptions and issues, 

such as whether the appropriate values should represent domestic U.S. or global benefits (and 

costs). Given the complexity of the many issues involved, this review is ongoing. However, 

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consistent with DOE’s legal obligations, and taking into account the uncertainty involved with 

this particular issue, DOE has included in the proposed rulemaking the values and analyses 

previously conducted. 

Given the uncertainty surrounding estimates of the social cost of carbon, DOE previously 

concluded that relying on any single estimate may be inadvisable because that estimate will 

depend on many assumptions. Working Group II’s contribution to the “Fourth Assessment 

Report” of the IPCC notes the following: 

The large ranges of SCC are due in the large part to differences in assumptions regarding 

climate sensitivity, response lags, the treatment of risk and equity, economic and noneconomic impacts, the inclusion of potentially catastrophic losses, and discount rates.40 

Because of this uncertainty, DOE previously used the SCC value from Tol (2005), which 

was presented in the IPCC’s “Fourth Assessment Report” and provided a comprehensive metaanalysis of estimates for the value of SCC. Tol released an update of his 2005 meta-analysis in 

September 2007 that reported an increase in the mean estimate of SCC from $43 to $71 per ton 

carbon. Although the Tol study was updated in 2007, the IPCC has not adopted the update. As a 

result, DOE previously decided to continue to rely on the study cited by the IPCC. DOE notes 

that the conclusions of Tol in 2007 are similar to the conclusions of Tol in 2005. In 2007, Tol 

continues to indicate that there is no consensus regarding the monetary value of reducing CO2 

40 “Climate Change 2007—Impacts, Adaptation and Vulnerability.” Contribution of Working Group II to the 

“Fourth Assessment Report” of the IPCC, 17. Available at www.ipcc.ch/ipccreports/ar4-wg2.htm (last accessed 

Aug. 7, 2008). 

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emissions by 1 ton. The broad range of values in both Tol studies are the result of significant 

differences in the methodologies used in the studies Tol summarized. According to Tol, all of the 

studies have shortcomings, largely because the subject is inherently complex and uncertain and 

requires broad multidisciplinary knowledge. Thus, it was not certain that the values reported in 

Tol in 2007 are more accurate or representative than the values reported in Tol in 2005. 

For today’s NOPR, DOE used the range of values based on the values presented in Tol 

(2005) as proposed. Additionally, DOE applied an annual growth rate of 2.4 percent to the value 

of SCC, as suggested by the IPCC Working Group II (2007, p. 822). This growth rate is based on 

estimated increases in damage from future emissions that published studies have reported. 

Because the values in Tol (2005) were presented in 1995$, DOE calculated more current values, 

assigning a range for SCC of $0 to $20 (2007$) per ton of CO2 emissions. 

The upper bound of the range DOE used is based on Tol (2005), which reviewed 103 

estimates of SCC from 28 published studies. Tol concluded that when only peer-reviewed studies 

published in recognized journals are considered, “climate change impacts may be very uncertain 

but [it] is unlikely that the marginal damage costs of carbon dioxide emissions exceed $50 per 

ton carbon [comparable to a 2007 value of $20 per ton carbon dioxide when expressed in 2007 

U.S. dollars with a 2.4 percent growth rate].” 

In setting a lower bound, DOE’s analysis agreed with the IPCC Working Group II (2007) 

report that “significant warming across the globe and the locations of significant observed 

changes in many systems consistent with warming is very unlikely to be due solely to natural 

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variability of temperatures or natural variability of the systems” (p. 9), and thus tentatively 

concluded that a global value of zero for the SCC cannot be justified. However, DOE concludes 

that it is reasonable to allow for the possibility that the SCC for the United States may be quite 

low. In fact, some of the studies examined by Tol (2005) reported negative values for the SCC. 

DOE assumes that it is most appropriate to use U.S. benefit values rather than world benefit 

values in its analysis, and U.S. values will likely be lower than global values. 

Table V-23 and Table V-24 present the resulting estimates of the potential range of NPV 

benefits associated with reducing CO2 emissions for both Class A and Class B equipment based 

on the range of values used by DOE for this proposed rule. 

Table V-23 Estimates of Savings from CO2 Emissions Reductions at All TSLs at a SevenPercent Discount Rate and Three-Percent Discount Rate for Class A Equipment 

TSL Estimated Cumulative CO2 

Emission Reductions Mt 

Value of Estimated CO2 

Emission Reductions at 7% 

Discount Rate million 2007$ 

Value of Estimated CO2 

Emission Reductions at 3% 

Discount Rate million 2007$ 

1 0.23 0 – 2.2 0 – 4.3 

2 1.01 0 – 9.7 0 – 18.9 

3 2.27 0 – 21.9 0 – 42.5 

4 3.56 0 – 34.3 0 – 66.6 

5 4.19 0 – 40.4 0 – 78.5 

6 4.61 0 – 44.5 0 – 86.4 

7 5.59 0 – 53.9 0 – 104.7 

Table V-24 Estimates of Savings from CO2 Emissions Reductions at All TSLs at a SevenPercent Discount Rate and Three-Percent Discount Rate for Class B Equipment 

TSL Estimated Cumulative CO2 

Emission Reductions Mt 

Value of Estimated CO2 

Emission Reductions at 7% 

Discount Rate million 2007$ 

Value of Estimated CO2 

Emission Reductions at 3% 

Discount Rate million 2007$ 

1 0.07 0 – 0.7 0 – 1.3 

2 0.11 0 – 1.0 0 – 2 

3 0.53 0 – 5.1 0 – 10 

4 0.61 0 – 5.9 0 – 11.4 

5 1.64 0 – 15.8 0 – 30.8 

6 1.83 0 – 17.6 0 – 34.2 

149
 

EERE-2006-STD-0125 COMMENT 48
The Department is well aware that scientific and economic knowledge about the 

contribution of CO2 and other green house gas emissions (GHG) to changes in the future global 

climate and the potential resulting damages to the world economy continues to evolve rapidly. 

Thus, any value placed in this rulemaking on reducing CO2 emissions is subject to likely change. 

DOE recognizes the importance of continuing to monitor current research on the potential 

economic damages resulting from climate change, and of periodically updating estimates of the 

value of reducing CO2 emissions to reflect continuing advances in scientific and economic 

knowledge about the nature and extent of climate change and the threat it poses to world 

economic development. Further, DOE recognizes the interest and expertise of other federal 

agencies, particularly the Environmental Protection Agency and the Department of 

Transportation, in the issue of valuing the reductions in climate damages that are likely to result 

from those agencies’ own efforts to reduce GHG emissions. DOE will continue to work closely 

with those and other federal agencies in the development and review of the economic values of 

reducing GHG emissions. 

DOE also investigated the potential monetary benefit of reduced SO2, NOx, and Hg 

emissions from the TSLs it considered. As previously stated, DOE’s initial analysis assumed the 

presence of nationwide emission caps on SO2 and Hg, and caps on NOx emissions in the 28 

States covered by the CAIR. In the presence of these caps, DOE concluded that no physical 

reductions in power sector emissions would occur, but that the standards could put downward 

pressure on the prices of emissions allowances in cap-and-trade markets. Estimating this effect is 

very difficult because of factors such as credit banking, which can change the trajectory of 

prices. DOE has concluded that the effect from energy conservation standards on SO2 allowance 

150
 

EERE-2006-STD-0125 COMMENT 48
 

 

prices is likely to be negligible based on runs of the NEMS-BT model. See chapter 16 of the 

TSD accompanying this notice for further details. 

Because the courts have decided to allow the CAIR rule to remain in effect, projected 

annual NOx allowances from NEMS-BT are relevant. As noted above, standards would not 

produce an economic impact in the form of lower prices for emissions allowance credits in the 

28 eastern States and D.C. covered by the CAIR cap. New or amended energy conservation 

standards would reduce NOx emissions in those 22 States that are not affected by the CAIR. For 

the area of the United States not covered by the CAIR, DOE estimated the monetized value of 

NOx emissions reductions resulting from each of the TSLs considered for today’s NOPR based 

on environmental damage estimates from the literature. Available estimates suggest a very wide 

range of monetary values for NOx emissions, ranging from $370 per ton to $3,800 per ton of 

NOx from stationary sources, measured in 2001$ (equivalent to a range of $432 per ton to $4,441 

per ton in 2007$).41 

To estimate the monetary value of Hg emission reductions resulting from the TSLs 

considered for today’s NOPR, DOE utilized a range of monetary values per ton of emissions and 

a range of physical emission reductions for Hg. Similar to SO2 and NOx, future emissions of Hg 

would have been subject to emissions caps under the Clean Air Mercury Rule (CAMR). The 

CAMR would have permanently capped emissions of mercury for new and existing coal-fired 

plants in all States by 2010, but was vacated by the D.C. Circuit in its February 8, 2008, decision 

41 OMB, Office of Information and Regulatory Affairs, “2006 Report to Congress on the Costs and Benefits of 

Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities,” Washington, DC (2006). 

151
 

EERE-2006-STD-0125 COMMENT 48
 

in New Jersey v. Environmental Protection Agency.

42 DOE typically uses the NEMS-BT model 

to calculate emissions from the electrical generation sector; however, the 2008 NEMS-BT model 

is not suitable for assessing mercury emissions in the absence of a CAMR cap. Thus, DOE used 

a range of Hg emissions rates (in tons of Hg per energy per TWh produced) based on the 

AEO2008. Because the high end of the range of Hg emissions rates attributable to electricity 

generation are from coal-fired power plants, DOE based that emissions rate on the tons of 

mercury emitted per TWh of coal-generated electricity. DOE’s low estimate assumed that future 

standards would displace electrical generation from natural gas powered power plants. The low 

end of the range of Hg emissions rates is zero because natural gas powered power plants have 

virtually no Hg emissions associated with their operations. To estimate the reduction in mercury 

emissions, DOE multiplied the emissions rates by the reduction in electricity generation 

associated with the standards proposed in today’s NOPR. 

DOE estimated the national monetized values per ton based on environmental damage 

estimates from the literature. DOE conducted research for today’s NOPR and determined that the 

impact of mercury emissions from power plants on humans is considered highly uncertain. 

However, DOE identified two estimates of the environmental damage of mercury based on two 

estimates of the adverse impact of childhood exposure to methyl mercury on IQ for American 

children, and subsequent loss of lifetime economic productivity resulting from these IQ losses. 

The high-end estimate is based on an estimate of the current aggregate cost of the loss of IQ in 

American children that results from exposure to mercury of U.S. power plant origin ($1.3 billion 

42 New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008). 

152
 

EERE-2006-STD-0125 COMMENT 48
 

 

per year in year 2000$), which works out to $32.6 million per ton emitted per year (2007$).43 

The low-end estimate is $0.66 million per ton emitted (in 2004$) or $0.739 million per ton in 

2007$. DOE derived this estimate from a published evaluation of mercury control using different 

methods and assumptions from the first study, but also based on the present value of the lifetime 

earnings of children exposed.44 Table V-25 through Table V-28 present the resulting estimates of 

the potential range of present value benefits associated with reducing national NOx and Hg 

emissions for Class A and B equipment. 

43 Trasande, L., et al., “Applying Cost Analyses to Drive Policy that Protects Children,” 1076 Ann. N.Y. Acad. Sci. 

911 (2006). 

44 Ted Gayer and Robert Hahn, “Designing Environmental Policy: Lessons from the Regulation of Mercury
 

Emissions,” Regulatory Analysis 05–01, AEI-Brookings Joint Center for Regulatory Studies, Washington, DC
 

(2004). A version of this paper was published in the Journal of Regulatory Economics in 2006. The estimate was 

derived by back-calculating the annual benefits per ton from the net present value of benefits reported in the study.
 

153
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

 

 

 

 

Table V-25 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs at a 

Seven-Percent Discount Rate for Class A Equipment 

TSL 

Estimated 

Cumulative NOx 

Emission 

Reductions 

kt 

Value of Estimated 

NOx Emission 

Reductions 

thousand 2007$ 

Estimated 

Cumulative 

Hg Emission 

Reductions 

tons 

Value of Estimated Hg 

Emission Reductions 

thousand 2007$ 

1 0.03 5 – 50 0 – 0.004 0 – 44 

2 0.14 21 – 221 0 – 0.017 0 – 196 

3 0.31 48 – 497 0 – 0.038 0 – 441 

4 0.48 76 – 778 0 – 0.059 0 – 690 

5 0.57 89 – 918 0 – 0.069 0 – 814 

6 0.62 98 – 1010 0 – 0.076 0 – 896 

7 0.75 119 – 1224 0 – 0.093 0 – 1086 

Table V-26 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs at a 

Seven-Percent Discount Rate for Class B Equipment 

TSL 

Estimated 

Cumulative NOx 

Emission 

Reductions 

kt 

Value of Estimated 

NOx Emission 

Reductions 

thousand 2007$ 

Estimated 

Cumulative 

Hg Emission 

Reductions 

tons 

Value of Estimated Hg 

Emission Reductions 

thousand 2007$ 

1 0.01 2 – 16 0-0.001 0 – 14 

2 0.01 2 – 23 0-0.002 0 – 21 

3 0.07 11 – 116 0-0.009 0 – 103 

4 0.08 13 – 133 0-0.010 0 – 118 

5 0.22 35 – 359 0-0.027 0 – 319 

6 0.25 39 – 400 0-0.030 0 – 355 

Table V-27 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs at a 

Three-Percent Discount Rate for Class A Equipment 

TSL 

Estimated 

Cumulative NOx 

Emission 

Reductions 

kt 

Value of Estimated 

NOx Emission 

Reductions 

thousand 2007$ 

Estimated 

Cumulative 

Hg Emission 

Reductions 

tons 

Value of Estimated Hg 

Emission Reductions 

thousand 2007$ 

1 0.03 8 – 85 0 – 0.004 0 – 76 

2 0.14 37 – 377 0 – 0.017 0 – 338 

3 0.31 83 – 849 0 – 0.038 0 – 761 

4 0.48 129 – 1330 0 – 0.059 0 – 1192 

5 0.57 153 – 1568 0 – 0.069 0 – 1405 

6 0.62 168 – 1726 0 – 0.076 0 – 1547 

7 0.75 203 – 2092 0 – 0.093 0 – 1874 

154
 

EERE-2006-STD-0125 COMMENT 48
Table V-28 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs at a 

Three-Percent Discount Rate for Class B Equipment 

TSL 

Estimated 

Cumulative NOx 

Emission 

Reductions 

kt 

Value of Estimated 

NOx Emission 

Reductions 

thousand 2007$ 

Estimated 

Cumulative 

Hg Emission 

Reductions 

tons 

Value of Estimated Hg 

Emission Reductions 

thousand 2007$ 

1 0.01 3 – 27 0-0.001 0 – 24 

2 0.01 4 – 40 0-0.002 0 – 36 

3 0.07 19 – 199 0-0.009 0 – 178 

4 0.08 22 – 227 0-0.010 0 – 204 

5 0.22 60 – 614 0-0.027 0 – 550 

6 0.25 67 – 684 0-0.030 0 – 613 

7. Other Factors 

EPCA allows the Secretary of Energy, in determining whether a standard is economically 

justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VII) and 6316(e)(1)) DOE identified no factors other than those already 

considered above for analysis. 

C. Proposed Standard 

EPCA specifies that any new or amended energy conservation standard for any type (or 

class) of covered equipment shall be designed to achieve the maximum improvement in energy 

efficiency that the Secretary determines is technologically feasible and economically justified. 

(42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) In determining whether a standard is economically 

justified, the Secretary must determine whether the benefits of the standard exceed its burdens. 

(42 U.S.C. 6295(o)(2)(B)(i) and 6316(e)(1)) The new or amended standard must “result in 

significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B) and 6316(e)(1)) 

155
 

EERE-2006-STD-0125 COMMENT 48
DOE developed trial standard levels independently for Class A and Class B beverage 

vending machines. DOE considered 7 TSLs for Class A and 6 TSLs for Class B. In selecting the 

proposed energy conservation standards for both classes of beverage vending machines for 

consideration in today’s notice of proposed rulemaking, DOE started by examining the 

maximum technologically feasible levels, and determined whether those levels were 

economically justified. Upon finding the maximum technologically feasible levels not to be 

justified, DOE analyzed the next lower TSL to determine whether that level was economically 

justified. DOE repeated this procedure until it identified a TSL that was economically justified. 

To aid the reader as DOE discusses the benefits and/or burdens of each TSL, Table V-29 

and Table V-30 present summaries of quantitative analysis results for each TSL for Class A 

equipment and Class B equipment, respectively, based on the assumptions and methodology 

discussed above. These tables present the results or, in some cases, a range of results, for each 

TSL. The range of values reported in these tables for industry impacts represents the results for 

the different markup scenarios that DOE used to estimate manufacturer impacts. 

156
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

 

 

 

 

 

 

 

 

1. Class A Equipment 

Table V-29 Summary of Results for Class A Equipment Based Upon the AEO2009 

Reference Case Energy Price Forecast* 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

Primary Energy Saved quads 

7% Discount Rate 

3% Discount Rate 

0.004 

0.001 

0.002 

0.019 

0.006 

0.011 

0.043 

0.013 

0.025 

0.068 

0.020 

0.038 

0.080 

0.024 

0.045 

0.088 

0.026 

0.050 

0.107 

0.031 

0.060 

Generation Capacity Reduction 

GW** 0.002 0.009 0.020 0.031 0.037 0.041 0.049 

NPV 2008$billion: 

7% Discount Rate 

3% Discount Rate 

0.009 

0.020 

0.038 

0.084 

0.062 

0.149 

0.098 

0.235 

0.108 

0.263 

0.105 

0.265 

(0.719) 

(1.210) 

Industry Impacts 

Industry NPV 2008$ million 

Industry NPV % change 

0 

0.1 

(0.2) – 

(0.4) 

 (0.6) – 

(1.0) 

(1.9) – 

(2.6) 

(5.5) – 

(7.4) 

(2.1) – 

(3.1) 

(5.9) – 

(8.8) 

(8.8) – 

(9.9) 

(25.0) – 

(28.1) 

(12.4) – 

(13.7) 

(35.1) – 

(38.9) 

(8.3) – 

(20.9) 

(23.7) – 

(59.7) 

Cumulative Emissions Impacts†

: 

CO2 Reductions Mt 

Value of CO2 Reductions at 7% 

Discount Rate million 2007$ 

Value of CO2 Reductions at 3% 

Discount Rate million 2007$ 

0.23 

0 – 2.2 

0 – 4.3 

1.01 

0 – 9.7 

0 – 18.9 

2.27 

0 – 21.9 

0 – 42.5 

3.56 

0 – 34.3 

0 – 66.6 

4.19 

0 – 40.4 

0 – 78.5 

4.61 

0 – 44.5 

0 – 86.4 

5.59 

0 – 53.9 

0 – 104.7 

NOx Reductions kt 

Value of NOx Reductions at 7% 

Discount Rate thousand 2007$ 

Value of NOx Reductions at 3% 

Discount Rate thousand 2007$ 

0.03 

5 – 50 

8 – 85 

0.14 

21 – 221 

37 – 377 

0.31 

48 – 497 

83 – 849 

0.48 

76 – 778 

129 – 

1330 

0.57 

89 – 918 

153 – 

1568 

0.62 

98 – 1010 

168 – 

1726 

0.75 

119 – 1224 

203 – 2092 

Hg Reductions tons 

Value of Hg Reductions at 7% 

Discount Rate thousand 2007$ 

Value of Hg reductions at 3% 

Discount Rate thousand 2007$ 

0 – 

0.004 

0 – 44 

0 – 76 

0 – 

0.017 

0 – 196 

0 – 338 

0 – 

0.038 

0 – 441 

0 – 761 

0 – 

0.059 

0 – 690 

0 – 1192 

0 – 

0.069 

0 – 814 

0 – 1405 

0 – 

0.076 

0 – 896 

0 – 1547 

0 – 

0.093 

0 – 1086 

0 – 1874 

Life-Cycle Cost 

Net Savings % 

Net Increase % 

No Change % 

Mean LCC Savings 2008$ 

Mean PBP years 

10 

0 

90 

154 

2.0 

100 

0 

0 

204 

2.1 

100 

0 

0 

245 

2.9 

100 

0 

0 

307 

3.1 

100 

0 

0 

322 

3.4 

100 

2 

0 

316 

3.8 

98 

100 

0 

(1,194) 

62.9 

Direct Domestic Employment 

Impacts (2012) jobs 0 2 8 12 15 19 133 

Indirect Employment Impacts 

(2042) jobs 14 64 146 226 265 292 304 

* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount indicated. 

** Change in installed generation capacity by the year 2042 based on AEO2009 Reference Case. 

†

 CO2 emissions impacts include physical reductions at power plants. NOx emissions impacts include physical reductions at power 

plants as well as production of emissions allowance credits where NOx emissions are subject to emissions caps. 

157
 

EERE-2006-STD-0125 COMMENT 48
First, DOE considered TSL 7, the most efficient level for Class A beverage vending 

machines. TSL 7 would save an estimated 0.107 quads of energy through 2042, an amount DOE 

considers significant. Discounted at 7 percent, the projected energy savings through 2042 would 

be 0.031 quads. For the Nation as a whole, DOE projects that TSL 7 would result in a net 

decrease of $719 million in NPV, using a discount rate of 7 percent. The emissions reductions at 

TSL 7 are 5.59 Mt of CO2, up to 0.75 kt of NOx, and up to 0.093 tons of Hg. These reductions 

have a value of up to $53.9 million for CO2, $1.2 million for NOx, and $1.1 million for Hg, at a 

discount rate of 7 percent. DOE also estimates that at TSL 7, total electric generating capacity in 

2042 will decrease compared to the base case by 0.049 GW. 

At TSL 7, DOE projects that the average Class A beverage vending machine customer 

will experience an increase in LCC of $1,194 compared to the baseline. At TSL 7, DOE 

estimates the fraction of customers experiencing LCC increases will be 100 percent. The mean 

PBP for the average Class A beverage vending machine customer at TSL 7 compared to the 

baseline level is projected to be 62.9 years. 

At higher TSLs, manufacturers have a more difficult time maintaining current operating 

profit levels with larger increases in manufacturing production costs, as standards increase 

recurring operating costs like capital expenditures, purchased materials, and carrying inventory. 

Therefore, it is more likely that the higher end of the range of impacts will be reached at TSL 7 

(i.e., a drop of 59.7 percent in INPV). Manufacturers expressed great concern about high capital 

and equipment conversion costs necessary to convert production into standards-compliant 

equipment. At TSL 7, there is the risk of very large negative impacts on the industry if 

158
 

EERE-2006-STD-0125 COMMENT 48
manufacturers’ operating profits levels are reduced. See section IV.I for additional manufacturer 

concerns. 

After carefully considering the analysis and weighing the benefits and burdens of TSL 7, 

DOE finds that the benefits to the Nation of TSL 7 (i.e., energy savings and emissions reductions 

(including environmental and monetary benefits)) do not outweigh the burdens (i.e., a decrease 

of $719 million in NPV and a decrease of 59.7 percent in INPV). Because the burdens of TSL 7 

outweigh the benefits, TSL 7 is not economically justified. Therefore, DOE proposes to reject 

TSL 7 for Class A equipment. 

DOE then considered TSL 6, which provides for Class A equipment the maximum 

efficiency level that the analysis showed to have positive NPV to the Nation. TSL 6 would likely 

save an estimated 0.088 quads of energy through 2042, an amount DOE considers significant. 

Discounted at 7 percent, the projected energy savings through 2042 would be 0.026 quads. For 

the Nation as a whole, DOE projects that TSL 6 would result in a net increase of $105 million in 

NPV, using a discount rate of 7 percent. The estimated emissions reductions at TSL 6 are 4.61 

Mt of CO2, up to 0.62 kt of NOx, and up to 0.076 tons of Hg. These reductions have a value of up 

to $44.5 million for CO2, $1.0 million for NOx, and $896,000 for Hg, at a discount rate of 7 

percent. Total electric generating capacity in 2042 is estimated to decrease compared to the base 

case by 0.041 GW under TSL 6. 

At TSL 6, DOE projects that the average beverage vending machine customer will 

experience a reduction in LCC of $316 compared to the baseline. The mean PBP for the average 

159
 

EERE-2006-STD-0125 COMMENT 48
beverage vending machine customer at TSL 6 is projected to be 3.8 years compared to the 

purchase of baseline equipment. 

As is the case with TSL 7, DOE believes the majority of manufacturers would need to 

completely redesign all Class A equipment offered for sale. Therefore, DOE expects beverage 

vending machine manufacturers would have some difficulty maintaining current operating profit 

levels with higher production costs. Similar to TSL 7, it is more likely that the higher end of the 

range of impacts would be reached at TSL 6 (i.e., a decrease of 38.9 percent in INPV). However, 

compared to the baseline, Class A equipment showed significant positive LCC savings on a 

national average basis and customers did not experience an increase in LCC with a standard at 

TSL 6 compared with purchasing baseline equipment. The PBP calculated for Class A 

equipment was lower than the life of the equipment. 

After carefully considering the analysis and weighing the benefits and burdens of TSL 6, 

DOE proposes that for Class A equipment, TSL 6 represents the maximum improvement in 

energy efficiency that is technologically feasible and economically justified. TSL 6 is 

technologically feasible because the technologies required to achieve these levels are already in 

existence. TSL 6 is economically justified because the benefits to the Nation (i.e., increased 

energy savings of 0.088 quads, emissions reductions including environmental and monetary 

benefits of, for example, 4.61 Mt of carbon dioxide emissions reduction with an associated value 

of up to $44.5 million at a discount rate of 7 percent, and an increase of $105 million in NPV) 

outweigh the costs (i.e., a decrease of 38.9 percent in INPV). There is also the added benefit in 

terms of a reduction in total electrical generating capacity in 2042 compared to the base case of 

160
 

EERE-2006-STD-0125 COMMENT 48
0.041 GW under the TSL 6 scenario. 

Therefore, DOE proposes TSL 6 as the energy conservation standard for Class A 

beverage vending machines in this NOPR. DOE seeks comment and further data or information 

on the magnitude of the estimated decline in INPV at TSL 6, and what impact this level could 

have on industry parties, including small businesses. DOE also requests comment on whether the 

energy savings and related benefits of TSL 6 outweigh the costs, including potential 

manufacturer impacts. DOE is particularly interested in receiving comments, views, and further 

data or information from interested parties concerning: 1) why the private market has not been 

able to capture the energy benefits proposed in TSL 6; 2) whether and to what extent parties 

estimate they will be able to transfer costs of implementing TSL 6 on to consumers; 3) whether 

and to what extent parties estimate distributional chain intermediaries (such as wholesalers or 

bottlers) will be able to absorb TSL 6 implementation costs and in turn transfer these costs to onsite consumers, who ultimately benefit from the energy gains associated with the proposed 

standard. 

161
 

EERE-2006-STD-0125 COMMENT 48
 

 

 

 

 

 

 

 

 

 

 

 

2. Class B Equipment 

Table V-30 Summary of Results for Class B Equipment Based on the AEO2009 Reference 

Case Energy Price Forecast* 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Primary Energy Saved (quads) 

7% Discount Rate 

3% Discount Rate 

0.001 

0.000 

0.001 

0.002 

0.001 

0.001 

0.010 

0.003 

0.006 

0.012 

0.003 

0.007 

0.031 

0.009 

0.018 

0.035 

0.010 

0.020 

Generation Capacity Reduction 

(GW)** 0.001 0.001 0.005 0.005 0.014 0.016 

NPV (2008$billion): 

7% Discount Rate 

3% Discount Rate 

0.002 

0.005 

0.003 

0.007 

0.000 

0.008 

(0.004) 

0.001 

(0.256) 

(0.442) 

(1.013) 

(1.822) 

Industry Impacts 

Industry NPV (2008$ million) 

Industry NPV (% Change) 

0 

0 - (0.1) 

0 

0.1 - (0.1) 

(0.8) – 

(0.9) 

(3.7) – 

(4.2) 

(1.3) – 

(1.3) 

(5.7) – 

(6.1) 

(9.7) – 

(13.4) 

(44.0) – 

(60.3) 

(11.2) – 

(23.4) 

(50.4) – 

(105.8) 

Cumulative Emissions Impacts†

: 

CO2 Reductions (Mt) 

Value of CO2 reductions at 7% 

discount rate (million 2007$) 

Value of CO2 reductions at 3% 

discount rate (million 2007$) 

0.07 

0 – 0.7 

0 – 1.3 

0.11 

0 – 1 

0 – 2 

0.53 

0 – 5.1 

0 – 10 

0.61 

0 – 5.9 

0 – 11.4 

1.64 

0 – 15.8 

0 – 30.8 

1.83 

0 – 17.6 

0 – 34.2 

NOx Reductions (kt) 

Value of NOx reductions at 7% 

discount rate (thousand 2007$) 

Value of NOx reductions at 3% 

discount rate (thousand 2007$) 

0.01 

2 – 16 

3 – 27 

0.01 

2 – 23 

4 – 40 

0.07 

11 – 116 

19 – 199 

0.08 

13 – 133 

22 – 227 

0.22 

35 – 359 

60 – 614 

0.25 

39 – 400 

67 – 684 

Hg Reductions (t) 0-0.001 0-0.002 0-0.009 0-0.010 0-0.027 0-0.030 

Value of Hg reductions at 7% 

discount rate (thousand 2007$) 

0 – 14 0 – 21 0 – 103 0 – 118 0 – 319 0 – 355 

Value of Hg reductions at 3% 

discount rate (thousand 2007$) 

0 – 24 0 – 36 0 – 178 0 – 204 0 – 550 0 – 613 

Life-Cycle Cost 

Net Savings (%) 10 100 90 80 69 0 

Net Increase (%) 0 11 21 32 100 100 

No Change (%) 90 0 0 0 0 0 

Mean LCC Savings (2008$) 47 56 49 39 (525) (2216) 

Mean PBP (years) 3.1 4.1 6.0 6.9 76.2 100 

Direct Domestic Employment 

Impacts (2012) (jobs) 0 0 3 4 41 134 

Indirect Employment Impacts 

(2042)(jobs) 4 6 33 38 90 68 

* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount indicated. 

** Change in installed generation capacity by the year 2042 based on AEO2008 Reference Case. 

† CO2 emissions impacts include physical reductions at power plants. NOx emissions impacts include physical 

reductions at power plants as well as production of emissions allowance credits where NOx emissions are subject to 

emissions caps. 

162
 

EERE-2006-STD-0125 COMMENT 48
First, DOE considered TSL 6, the most efficient level for Class B beverage vending 

machines. TSL 6 would likely save an estimated 0.035 quads of energy through 2042, an amount 

DOE considers significant. Discounted at 7 percent, the projected energy savings through 2042 

would be 0.01 quads. For the Nation as a whole, DOE projects that TSL 6 would result in a net 

decrease of $1.013 billion in NPV, using a discount rate of 7 percent. The emissions reductions 

at TSL 6 are 1.83 Mt of CO2, up to 0.25 kt of NOx, and up to 0.03 tons of Hg. These reductions 

have a value of up to $17.6 million for CO2, $400,000 for NOx, and $355,000 for Hg, at a 

discount rate of 7 percent. DOE also estimates that at TSL 6, total electric generating capacity in 

2042 will decrease compared to the base case by 0.016 GW. 

At TSL 6, DOE projects that for the average customer, the LCC of Class B beverage 

vending machines will increase by $2,216 compared to the baseline. At TSL 6, DOE estimates 

the fraction of customers experiencing LCC increases will be 100 percent. The mean PBP for the 

average Class B beverage vending machine customer at TSL 6 compared to the baseline level is 

projected to be 100 years. 

At higher TSLs, manufacturers have a more difficult time maintaining operating profit 

with large increases in production costs. Therefore, it is more likely that the higher end of the 

range of impacts would be reached at TSL 6 (i.e., a decrease of 105.8 percent in INPV). At TSL 

6, there is the risk of very large negative impacts on the industry if manufacturers’ operating 

profit levels are reduced. 

163
 

EERE-2006-STD-0125 COMMENT 48
After carefully considering the analysis and weighing the benefits and burdens of TSL 6, 

DOE finds that the benefits to the Nation of TSL 6 (i.e., energy savings and emissions reductions 

including environmental and monetary benefits) do not outweigh the burdens (i.e., a decrease of 

$1.013 billion in NPV, a decrease of 105.8 percent in INPV, and an economic burden on 

customers). Therefore, DOE proposes that the burdens of TSL 6 outweigh the benefits and TSL 

6 is not economically justified. Therefore, DOE proposes to reject TSL 6 for Class B equipment. 

TSL 5 offers the maximum efficiency levels for Class B equipment that provide positive 

NPV to the Nation. TSL 5 would likely save an estimated 0.031 quads of energy through 2042, 

an amount DOE considers significant. Discounted at 7 percent, the projected energy savings 

through 2042 would be 0.009 quads. For the Nation as a whole, DOE projects that TSL 5 would 

result in a net decrease of $256 million in NPV, using a discount rate of 7 percent. The estimated 

emissions reductions at TSL 5 are 1.64 Mt of CO2, up to 0.22 kt of NOx, and up to 0.027 tons of 

Hg. These reductions have a value of up to $15.8 million for CO2, $359,000 for NOx, and 

$319,000 for Hg at a discount rate of 7 percent. Total electric generating capacity in 2042 is 

estimated to decrease compared to the base case by 0.014 GW at TSL 5. 

At TSL 5, DOE projects that the average Class B beverage vending machine customers 

will experience an increase in LCC of $525 compared to the baseline. The mean PBP for the 

average Class B beverage vending machine customer at TSL 5 is projected to be 76.2 years 

compared to the purchase of baseline equipment. 

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As with TSL 6, DOE believes the majority of manufacturers would need to completely 

redesign all Class B equipment offered for sale at TSL 5. Therefore, DOE expects that 

manufacturers will have difficulty maintaining operating profit with larger MPC increases. 

Similar to TSL 6, manufacturers expect the higher end of the range of impacts to be reached at 

TSL 5 (i.e., a decrease of 60.3 percent in INPV). 

After carefully considering the analysis and evaluating the benefits and burdens of TSL 5, 

DOE finds that the benefits to the Nation of TSL 5 (i.e., energy savings and emissions 

reductions, including environmental and monetary benefits) do not outweigh the burdens (i.e., a 

decrease of $256 million in NPV and a decrease of 60.3 percent in INPV, as well as the 

economic burden on customers). Therefore, DOE proposes that the burdens of TSL 5 outweigh 

the benefits and TSL 5 is not economically justified. Therefore, DOE proposes to reject TSL 5 

for Class B equipment. 

TSL 4 would likely save an estimated 0.012 quads of energy through 2042, an amount 

DOE considers significant. Discounted at 7 percent, the projected energy savings through 2042 

would be 0.003 quads. For the Nation as a whole, DOE projects that TSL 4 would result in a net 

decrease of $4 million in NPV, using a discount rate of 7 percent. However, using a 3-percent 

discount rate, DOE projects that TSL 4 would result in a net increase of $1 million in NPV. The 

estimated emissions reductions at TSL 4 are 0.61 Mt of CO2, up to 0.08 kt of NOx, and up to 

0.01 tons of Hg. Based on previously developed estimates, these reductions could have a value of 

up to $5.9 million for CO2, $133,000 for NOx, and $118,000 for Hg at a discount rate of 7 

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percent. Total electric generating capacity in 2042 is estimated to decrease compared to the base 

case by 0.005 GW at TSL 4. 

At TSL 4, DOE projects that the average Class B beverage vending machine customer 

will experience a reduction in LCC of $39 compared to the baseline. The mean PBP for the 

average Class B beverage vending machine customer at TSL 4 is projected to be 6.9 years 

compared to the purchase of baseline equipment. 

At TSL 4, DOE believes manufacturers would need to redesign most existing Class B 

equipment offered for sale. Therefore, DOE expects that manufacturers will have difficulty 

maintaining operating profit with high increases in production costs. Similar to TSL 5, it is more 

likely that the higher end of the range of impacts would be reached at TSL 4 (i.e., a decrease of 

6.1 percent in INPV). However, compared to the baseline, Class B equipment showed significant 

positive LCC savings on a national average and customers did not experience an increase in LCC 

at TSL 4. The PBP calculated for Class B equipment was less than the lifetime of the equipment. 

After carefully considering the analysis and evaluating the benefits and burdens of TSL 4, 

DOE finds that the benefits to the Nation of TSL 4 (i.e., energy savings and emissions 

reductions, including environmental and monetary benefits) do not outweigh the burdens (i.e., a 

decrease of $4 million in NPV and a decrease of up to 6.1 percent in INPV). DOE proposes that 

the burdens of TSL 4 outweigh the benefits and TSL 4 is not economically justified. Therefore, 

DOE proposes to reject TSL 4 for Class B equipment. 

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TSL 3 would likely save an estimated 0.010 quads of energy through 2042, an amount 

DOE considers significant. Discounted at 7 percent, the projected energy savings through 2042 

would be 0.003 quads. For the Nation as a whole, DOE projects that TSL 3 would result in no 

change in NPV (less than $0.5 million),using a discount rate of 7 percent. However, using a 3­

percent discount rate, DOE projects that TSL 3 would result in a net increase of $8 million in 

NPV. The estimated emissions reductions at TSL 3 are 0.53 Mt of CO2, up to 0.07 kt of NOx, 

and up to 0.009 tons of Hg. Based on previously developed estimates, these reductions could 

have a value of up to $5.1 million for CO2, $116,000 for NOx, and $103,000 for Hg at a discount 

rate of 7 percent. Total electric generating capacity in 2042 is estimated to decrease compared to 

the base case by 0.005 GW at TSL 3. 

At TSL 3, DOE projects that the average Class B beverage vending machine customer 

will experience a reduction in LCC of $49 compared to the baseline. The mean PBP for the 

average Class B beverage vending machine customer at TSL 3 is projected to be 6.0 years 

compared to the purchase of baseline equipment. 

At TSL 3, DOE believes manufacturers would have to make some component switches to 

comply with the standard, but most manufacturers will not have to significantly alter their 

production process. These minor design changes would not raise the production costs beyond the 

cost of most equipment sold today, resulting in minimal impacts on industry value. Compared to 

the baseline, Class B equipment showed significant positive LCC savings on a national average 

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and customers did not experience an increase in LCC at TSL 3. The PBP calculated for Class B 

equipment was less than the lifetime of the equipment. 

After carefully considering the analysis and weighing the benefits and burdens of TSL 3, 

DOE proposes that for Class B equipment, TSL 3 represents the maximum improvement in 

energy efficiency that is technologically feasible and economically justified. TSL 3 is 

technologically feasible because the technologies required to achieve these levels are already in 

existence. TSL 3 is economically justified because the benefits to the Nation (i.e., an increase of 

$8 million in NPV using a 3-percent discount rate, energy savings, and emissions reductions, 

including the estimated monetary value of certain environmental benefits) outweigh the costs 

(i.e., a decrease of 4.2 percent in INPV). Therefore, DOE is proposing TSL 3 as the energy 

conservation standard for Class B beverage vending machines in this NOPR. 

For the reasons discussed above, DOE also requests comments on whether it should 

adopt a different TSL for Class B beverage vending machines. 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Order 12866 

Today’s proposal has been determined to be a significant regulatory action under 

Executive Order 12866, “Regulatory Planning and Review.” 58 FR 51735 (October 4, 1993). 

Accordingly, this proposed rule was subject to review by OMB under the Executive Order. 

However, DOE has also determined that today’s regulatory action is not an “economically 

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significant” action under section 3(f)(1) of the Executive Order 

Executive Order 12866 requires that each agency identify in writing the specific market 

failure or other problem that warrants new agency action, as well as assess the significance of 

that problem to determine whether any new regulation is necessary. Executive Order 12866, 

§1(b)(1). 

In the ANOPR for this rulemaking, DOE requested feedback and data on a number of 

issues related to Executive Order 12866 and the existence of a market failure in the beverage 

vending machine industry. In the ANOPR, DOE sought (1) data on the efficiency levels of 

existing beverage vending machines in use by owner (i.e., site owner or machine operator), 

electricity price, equipment class (Class A or Class B machines) and installation type (i.e., 

indoors or outdoors); (2) comment on the availability of energy efficiency information to end 

users and the extent to which the information leads to informed choices, specifically given how 

such equipment is purchased; (3) detailed data on the distribution of energy efficiency levels for 

both the new site owner and equipment operator markets; (4) data on and suggestions for the 

existence and extent of potential market failures to complete an assessment of the significance of 

these failures and, thus, the net benefits of regulation; and (5) comments on the weight that 

should be given to “external” benefits resulting from improved energy efficiency of beverage 

vending machines that are not captured by the users of such equipment. These benefits include 

both environmental and energy security-related externalities that are not reflected in energy 

prices, such as reduced emissions of greenhouse gases and reduced use of natural gas and oil for 

electricity generation. 

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DOE prepared a regulatory impact analysis (RIA) for this rulemaking, which is contained 

in the TSD. The RIA is subject to review by the Office of Information and Regulatory Affairs 

(OIRA) in the OMB. The RIA consists of (1) a statement of the problem addressed by this 

regulation and the mandate for Government action, (2) a description and analysis of policy 

alternatives to this regulation, (3) a qualitative review of the potential impacts of the alternatives, 

and (4) the national economic impacts of the proposed standard. 

The RIA assesses the effects of feasible policy alternatives to beverage vending machine 

standards and provides a comparison of the impacts of the alternatives. DOE evaluated the 

alternatives in terms of their ability to achieve significant energy savings at reasonable cost, and 

compared them to the effectiveness of the proposed rule. DOE analyzed these alternatives 

qualitatively with reference to the particular market dynamics of the beverage vending industry. 

DOE identified the following major policy alternatives for achieving increased beverage 

vending machine energy efficiency: 

•	 No new regulatory action 

•	 Financial incentives, including tax credits and rebates 

•	 Revisions to voluntary energy efficiency targets (e.g., ENERGY STAR program 

criteria) 

•	 Early replacement 

•	 Bulk government purchases 

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•	 Prescriptive standards that would mandate design requirements (e.g., lighting and 

refrigeration controls) 

DOE qualitatively evaluated each alternative’s ability to achieve significant energy 

savings at reasonable cost and compared it to the effectiveness of the proposed rule. The 

following paragraphs discuss each policy alternative. (See chapter 17 of the TSD, Regulatory 

Impact Analysis, for further details.) 

No new regulatory action. The case in which no regulatory action is taken for beverage 

vending machines constitutes the base case (or no action) scenario. By definition, no new 

regulatory action yields zero energy savings and a net present value of zero dollars. 

Tax credits, rebates, and other financial incentives. DOE considered the impact of various 

financial incentives at both the ENERGY STAR Tier 2 level and higher efficiency levels, and 

examined the likelihood of an increase in customers purchasing high-efficiency equipment due to 

these financial incentives. 

In considering the impact of financial incentives, DOE reviewed existing rebate programs 

for beverage vending machines. The majority are utility-sponsored rebate programs that provide 

incentives for incorporating lighting and temperature controllers. Also, similar rebates for other 

technologies (e.g., ECM motors for evaporator fans) are provided in other industries, such as in 

the food sales industry for commercial refrigerated display cases, and could theoretically be 

adapted for beverage vending machines. However, utility rebate programs are aimed at the site of 

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installation and not at the purchasers of the machines (as most of the controllers covered by the 

rebate are add-on devices), and utility rebates are only provided for reducing electricity at sites 

served by the utility. Because beverage vending machines purchased by large-scale bottlers may 

not remain on a given site, tracking the location of rebated equipment could be an issue for 

utilities. Also, because most utility rebate programs are not aimed at purchasers, these programs 

do not provide incentives for large bottlers to choose high-efficiency equipment. 

Besides utility-sponsored rebate programs, other possibilities for programs include 

national manufacturer rebates, purchaser rebates, or tax incentives. Typically, these programs are 

advocated as a means to encourage households or organizations that are sensitive to the first cost 

of equipment to purchase or manufacture more costly efficient equipment that ultimately has a 

favorable payoff either to the purchaser, to society, or both. The incentive can be given to the 

buyer of the equipment, the rate payer, or the manufacturer, depending on which method is 

considered to be most administratively effective. However, the nature of the beverage vending 

machine industry and market makes this approach largely ineffective. At least 75 percent of 

beverage vending machines are purchased by two companies (Coca-Cola and PepsiCo) and their 

affiliated bottlers and distributors. In the ANOPR public meeting, PepsiCo stated that all 

beverage vending machines purchased by the company are required to meet ENERGY STAR 

Tier 2 levels. (PepsiCo, Public Meeting Transcript, No. 29 at p. 149) Coca-Cola stated that by 

2010, the beverage vending machines purchased by the company would use half as much energy 

as they do now, which would meet at least ENERGY STAR Tier 1 levels. 73 FR 34104. These 

companies purchase ENERGY STAR equipment despite the first-cost increase because it 

improves their public image, which results in higher sales in the long run. (Coca-Cola, Public 

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Meeting Transcript, No. 29 at pp. 154-56) Direct compensation for the energy savings is not 

assured but comes only through a negotiation with the site. Because the driving economic force 

for these companies is product sales, not equipment purchases, lowering the purchase price of 

equipment would make no significant difference in market behavior, and the program would 

simply transfer the amount of tax credit or rebate to the rebated entity without having induced 

extra purchases of efficient beverage vending machines. Regarding the use of rebates or other 

incentives beyond Tier 2 efficiency levels, it is not clear how the buying policy of Coca-Cola and 

PepsiCo would be influenced by tax credits or rebates. However, the companies are large enough 

to successfully finance the higher costs of beverage vending machines more efficient than Tier 2 

with or without tax credits or rebates. 

While rebates or tax credits may affect small purchasers, their influence over the market 

for beverage vending machines is marginal. In addition, because of the existing market 

dynamics, a significant portion of any economic incentive paid for the purchase of Tier 2 

efficiency equipment could be free riders, those that would purchase Tier 2 equipment absent 

incentives. This is particularly true of rebates paid to manufacturers. Rebates to purchasers 

would have to be limited to small volumes of purchases by individual rebatees and target nonbottler, site-owned equipment. Tax credits to purchasers face similar issues. Currently, no 

national manufacturer rebates, purchaser rebates, or tax incentives are available for enhancement 

of beverage vending machine efficiency. 

DOE sees value in the continued use of rebates for lighting and temperature controller 

technologies even under the standards proposed in this notice of proposed rulemaking. Because 

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the impact of these technologies is not captured in the DOE test procedure for beverage vending 

machines, employing these technologies in the field will continue to provide reductions in energy 

consumption beyond those that can be achieved by the standards proposed for beverage vending 

machines. The reductions will continue to accrue at the site of installation; therefore, these 

rebates, primarily for the purchase of aftermarket controller equipment, should continue to be 

provided to the installation site directly. 

Revisions to voluntary energy efficiency targets (e.g., ENERGY STAR). ENERGY 

STAR currently has two levels of efficiency targets: Tier 1 and Tier 2. The current program 

appears to have been effective at inducing large-scale adoption of ENERGY STAR Tier 1 

equipment. Furthermore, the beverage vending industry expects that ENERGY STAR will be 

highly effective in securing purchases of Tier 2 equipment due to the favorable response of the 

two purchasers who essentially define the market, Coca-Cola and PepsiCo. While it is possible 

that voluntary programs for equipment more efficient than Tier 2 would also be effective, DOE 

lacks a quantitative basis to determine how effective such a program might be. As noted 

previously, broader economic and social considerations are in play than simple economic return 

to the equipment purchaser. DOE lacks the data necessary to quantitatively project the degree to 

which such voluntary programs for more expensive, higher efficiency equipment would modify 

the market. 

Bulk Government purchases and early replacement incentive programs: DOE also 

considered, but did not analyze, the potential of bulk Government purchases and early 

replacement incentive programs as alternatives to the proposed standards. Bulk purchases would 

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have very limited impact on improving the overall market efficiency of beverage vending 

machines because they are a small part of the total market and the volume of high-efficiency 

equipment purchases that the Federal Government might make directly (versus equipment 

installed by bottlers at Federal Government sites). In the case of replacement incentives, several 

policy options exist to promote early replacement, including a direct national program of 

customer incentives, incentives paid to utilities to promote an early replacement program, market 

promotions through equipment manufacturers, and replacement of Federally owned equipment. 

In considering early replacements, DOE estimates that the energy savings realized through a onetime early replacement of existing stock equipment does not result in energy savings 

commensurate to the cost to administer the program. Consequently, DOE did not analyze this 

option in detail. 

Prescriptive standards that would mandate design requirements (e.g., lighting and 

refrigeration controls). EPCA provides that standards regulating the energy use of certain 

equipment may be design standards, which require specific features in the design of the 

equipment; or performance standards, which describe a required level of equipment performance 

(e.g., maximum kWh/year energy consumption) and provide a manufacturer with discretion in 

determining how best to meet that performance level. (42 U.S.C. 6291(6)) However, EPCA does 

not include beverage vending machines in the list of equipment for which a design requirement 

is acceptable. (42 U.S.C. 6291(6)(B), 6292(a)) Furthermore, EPCA specifically requires DOE to 

base its test procedure for this equipment on ANSI/ASHRAE Standard 32.1-2004, “Methods of 

Testing for Rating Vending Machines for Bottled, Canned or Other Sealed Beverages.” (42 

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EERE-2006-STD-0125 COMMENT 48
U.S.C. 6293(b)(15)) The test methods in ANSI/ASHRAE Standard 32.1-2004 consist of means 

to measure energy consumption. 

For these reasons, DOE does not intend to develop design requirements for this 

equipment. Instead, DOE intends to develop standards that allow a maximum level of energy use 

for each beverage vending machine, and manufacturers could meet these standards with their 

own choice of design methods. 

Performance standards. The difficulty in using these non-regulatory alternatives must be 

gauged against the more direct benefits calculated for the performance standards DOE is 

proposing in this NOPR. Based on its qualitative review, DOE is not confident that any of the 

alternatives it examined would save as much energy as today’s proposed rule, and the financial 

incentives in particular may engender significant free ridership issues. Also, several of the 

alternatives would require new enabling legislation, since authority to carry out those alternatives 

does not exist. 

B. Review Under the Regulatory Flexibility Act/Initial Regulatory Flexibility Analysis 

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of an initial 

regulatory flexibility analysis (IRFA) for any rule that by law must be proposed for public 

comment, unless the agency certifies that the rule, if promulgated, will not have a significant 

economic impact on a substantial number of small entities. As required by Executive Order 

13272, “Proper Consideration of Small Entities in Agency Rulemaking” 67 FR 53461 (August 

16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the 

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potential impacts of its rules on small entities are properly considered during the rulemaking 

process. 68 FR 7990. DOE has made its procedures and policies available on the Office of 

General Counsel’s website, www.gc.doe.gov. 

For the beverage vending machine manufacturing industry, small businesses, as defined 

by the SBA, are manufacturing enterprises with 500 or fewer employees. DOE used the small 

business size standards published on August 28, 2008, as amended, by the SBA to determine 

whether any small entities would be required to comply with the rule. (61 FR 3286 and codified 

at 13 CFR Part 121.) The size standards are listed by North American Industry Classification 

System (NAICS) code and industry description. Beverage vending machine manufacturing is 

classified under NAICS 333311. 

The beverage vending machine industry is characterized by both large and small 

manufacturers that service a wide range of customers, including large bottlers and direct endusers. Almost all beverage vending machines sold in the United States are manufactured 

domestically. Three major companies supply roughly 90 percent of all equipment sales. Most of 

the sales for these companies are made to a few major bottlers. One of the major manufacturers 

with significant market share is considered a small business. The remaining 10 percent of 

industry shipments is believed to be supplied by five manufacturers. All of these companies that 

do not supply the major bottlers are considered to be small businesses. 

Before issuing this notice of proposed rulemaking, DOE, through its contractor, contacted 

all identified small business manufacturers. These manufacturers were provided a questionnaire 

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seeking information to better understand the impacts of the proposed standards on small 

businesses and how these impacts differ between large and small manufacturers. The small 

business interview questionnaire is a condensed version of the manufacturer interview guide 

described in the manufacturer impact analysis, chapter 13 of the TSD, and includes the following 

questions: 

•	 Are you aware of the US Department of Energy’s (DOE’s) ongoing rulemaking to 

establish national minimum energy conservation standards for refrigerated beverage 

vending machines?45 Would you like to be added to DOE’s email database for updates 

relating to this rulemaking? 

•	 We are assessing the impacts of a potential energy conservation standard on small 

businesses. Is your company a small business (defined as less than 500 employees by the 

US Small Business Administration (SBA), including all subsidiaries and parent 

companies, and employees in all countries where you operate)? 

•	 What are the key issues for your company regarding energy conservation standards for 

refrigerated beverage vending machines and this rulemaking? 

•	 DOE would like to understand the small-business beverage vending machine industry in 

general and your company in particular. Could you please provide information on the 

following: 

•	 Is your company a domestic or international company? 

•	 What types of refrigerated beverage vending machines do you manufacture? Do you 

manufacture Class A or Class B refrigerated beverage vending machines, or 

both?46,47 What sizes of refrigerated beverage vending machines do you manufacture, 

measured in vendible capacity and/or refrigerated volume? Could you provide 

energy efficiency figures for those identified models? Does your equipment meet 

ENERGY STAR Tier I, Tier II, or any level above those energy efficiency levels?

48,49 

•	 Do you manufacture equipment other than refrigerated beverage vending machines? 

Do you manufacture any niche or specialty type refrigerated beverage vending 

machines that do not easily fall in the categories from the previous question? 

45 For information on DOE’s efficiency standards rulemaking for beverage vending machines, visit the following 

website: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines.html
 46 “Class A” refers to a beverage vending machine that cools the entire internal volume. Class A machines are also
 

referred to as “fully-cooled” machines. 

47 “Class B” refers to any beverage vending machine not considered to be Class A. Class B machines are often 

“zone-cooled” machines, in that they typically cool only a fraction of the volume of the machine. 48 Tier I: Energy Consumption ≤ 0.55 [8.66 + (0.009 x Vendible Capacity)]
 49 Tier II: Energy Consumption ≤ 0.45 [8.66 + (0.009 x Vendible Capacity)]
 

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•	 What are the types of customers you serve in the refrigerated beverage vending 

machine market? 

•	 Would a new energy conservation standard for refrigerated beverage vending machines 

(whereby all your competitors are also required to meet the same minimum level of 

energy consumption for their machines) cause any burdens on your business? If so, 

please explain. Please consider costs such as new designs, capital investment, prototype 

testing, and marketing that might be required. 

•	 DOE would like to understand your company’s employment impacts as a result of 

standards. Would your company consider relocating manufacturing to outside the United 

States as a result of new energy conservation standards? If not, would standards cause 

your domestic employment level to change (increase or decrease)? 

•	 Are there any reasons that a small business such as yours might be at a disadvantage 

relative to a larger business under mandatory energy conservation standards? Please 

consider such factors as technical expertise, access to capital, bulk purchasing power for 

materials, etc. If so, would you be willing to participate in a full manufacturer interview 

where DOE will request detailed information about your business and possible impacts 

due to energy conservation standards? 

DOE reviewed the standard levels considered in this notice of proposed rulemaking under 

the provisions of the Regulatory Flexibility Act and the procedures and policies published on 

February 19, 2003. Based on this review, DOE has prepared an IRFA for this rulemaking. The 

IRFA describes potential impacts on small businesses associated with beverage vending machine 

design and manufacturing. 

The potential impacts on beverage vending machine manufacturers are discussed in the 

following sections of this IRFA. DOE has transmitted a copy of this IRFA to the Chief Counsel 

for Advocacy of the Small Business Administration for review. 

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1. Reasons for the Proposed Rule 

Part A of subchapter III (42 U.S.C. 6291-6309) provides for the Energy Conservation 

Program for Consumer Products Other Than Automobiles.50 The amendments to EPCA 

contained in the Energy Policy Act of 2005 (EPACT 2005), Pub. L. 109-58, include new or 

amended energy conservation standards and test procedures for some of these products, and 

direct DOE to undertake rulemakings to promulgate such requirements. In particular, section 

135(c)(4) of EPACT 2005 amends EPCA to direct DOE to prescribe energy conservation 

standards for beverage vending machines. (42 U.S.C. 6295(v)) Hence, DOE is proposing energy 

conservation standards for refrigerated bottle or canned beverage vending machines.51 

2. Objectives of and Legal Basis for the Proposed Rule 

EPCA provides that any new or amended standard for beverage vending machines must 

be designed to achieve the maximum improvement in energy efficiency that is technologically 

feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (v)) EPCA precludes DOE 

from adopting any standard that would not result in significant conservation of energy. (42 

U.S.C. 6295(o)(3)(B) and (v)) Moreover, DOE may not prescribe a standard for certain 

equipment if no test procedure has been established for that equipment, or if DOE determines by 

rule that the standard is not technologically feasible or economically justified and will not result 

in significant conservation of energy. (42 U.S.C. 6295(o)(3)(A)(B) and (v)) To determine 

50 This part was originally titled Part B; however, it was redesignated Part A, after Part B of Title III was repealed by 

Pub. L. 109-58. Similarly, Part C, Certain Industrial Equipment, was redesignated Part A-1. 51 Because of its placement in Part A of Title III of EPCA, the rulemaking for beverage vending machine energy 

conservation standards is bound by the requirements of 42 U.S.C. 6295. However, since beverage vending machines 

are commercial equipment, DOE intends to place the new requirements for beverage vending machines in Title 10 

of the Code of Federal Regulations (CFR), Part 431 (“Energy Efficiency Program for Certain Commercial and 

Industrial Equipment”), which is consistent with DOE’s previous action to incorporate the EPACT 2005 

requirements for commercial equipment. The location of the provisions within the CFR does not affect either their 

substance or applicable procedure, so DOE is placing them in the appropriate CFR part based on their nature or type. 

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whether economic justification exists, DOE reviews comments received and conducts analysis to 

determine whether the economic benefits of the proposed standard exceed the burdens to the 

greatest extent practicable, taking into consideration seven factors set forth in 42 U.S.C. 

6295(o)(2)(B) and (v). (See section II.B of this preamble.) 

EPCA also states that the Secretary may not prescribe an amended or new standard if 

interested parties have established by a preponderance of the evidence that the standard is likely 

to result in the unavailability in the United States of any equipment type (or class) with 

performance characteristics (including reliability), features, sizes, capacities, and volumes that 

are substantially the same as those generally available in the United States. (42 U.S.C. 6295 

(o)(4) and (v)) Further information concerning the background of this rulemaking is provided in 

chapter 1 of the TSD. 

3. Description and Estimated Number of Small Entities Regulated 

To establish a list of small beverage vending machine manufacturers, DOE examined 

publicly available data and contacted manufacturers to determine if they meet the SBA’s 

definition of a small manufacturing facility and if their manufacturing facilities are located 

within the United States. Based on this analysis, DOE confirmed that there are six small 

manufacturers of beverage vending machines. 

One of these six small manufacturers is one of the top three major manufacturers, who 

supply roughly 90 percent of all equipment sales. The full line of products offered by this small 

manufacturer and the remaining two major manufacturers, which are considered large 

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businesses, are covered under this rulemaking (i.e., equipment that dispenses refrigerated bottled 

or canned beverages). The remaining five small manufacturers comprise approximately 10 

percent of industry shipments for covered equipment. See chapter 3 of the TSD for further details 

on the beverage vending machine market. In its examination of the beverage vending machine 

industry, DOE has determined that these small business manufactures with small market shares 

differ significantly from the large manufacturers. The primary difference between these small 

business manufacturers and the large business manufacturers is that these five small business 

manufacturers produce a wide variety of specialty and niche equipment that are not covered 

under this rulemaking. The specialty and niche equipment that these small manufacturers 

produce include machines that dispense a wide range of items including snacks, heated drinks, 

electronic goods, DVDs, bowling supplies, and medical products. Furthermore, unlike the major 

manufacturers, these small business manufacturers do not sell equipment to the major bottlers 

because they do not produce covered equipment in the necessary volumes. Instead, these 

manufacturers rely on providing customized equipment in much smaller volumes. 

Requests for interviews were delivered electronically to the six manufacturers that met 

the small business criteria. DOE received responses from fewer than half and conducted an onsite interview with only one. In the questionnaire and during the interview, DOE requested 

information that would determine if there are differential impacts on small manufacturers that 

may result from new energy conservation standards. See chapter 13 of the TSD for further 

discussion about the methodology DOE used in its analysis of manufacturer impacts to include 

small manufacturers. 

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4. Description and Estimate of Compliance Requirements 

Potential impacts on manufacturers include impacts associated with beverage vending 

machine design and manufacturing. The level of research and development needed to meet 

energy conservation standards increases with more stringent standards. As mentioned previously, 

DOE examined the level of impacts that small manufacturers would incur by identifying small 

business manufacturers and, through its contractor, sending them a short questionnaire seeking 

information to better understand the impacts of the proposed standard that are unique to small 

manufacturers. Since not all of the small business manufacturers responded to the questionnaire, 

it is difficult to specifically quantify how the impacts of the proposed standards differ between 

large and small manufacturers. However, DOE found that, for the small business manufacturer 

with a major market share, the impacts of the proposed standard would not differ greatly from 

those of its larger competitors, and, for the remaining small business manufacturers, the impacts 

would not be significant. 

Small Business Manufacturer with a Major Market Share 

The small business manufacturer that has a major market share in covered equipment will 

not be disproportionately disadvantaged by the proposed standard. It has a large shipment 

volume as a major supplier to the large bottlers and its access to capital is nearly identical to its 

larger competitors. Its large shipment volume allows it to distribute the added cost of compliance 

across its products, similar to the large manufacturers. Correspondingly, it echoed the large 

manufacturers’ concerns about new energy conservation standards, including conversion costs 

needed to meet standards, meeting customer needs, and current market conditions. DOE found 

no significant differences in the R&D emphasis or marketing strategies between this small 

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business manufacturer with a major market share and large manufacturers. As a result, DOE does 

not believe the impacts of the proposed standard will be significantly different for the small 

business manufacturer with a large market share when compared to those expected for the large 

business manufacturers. 

Small Business Manufacturers with Small Market Shares 

DOE does not expect the small businesses with small market shares to be compromised 

by the proposed energy conservation standard. DOE estimates that only approximately 40 

percent of their offered vending equipment is covered by the proposed standard. The majority of 

equipment offered is specialty or niche equipment. As a result, the primary source of revenue for 

these small manufacturers comes from supplying a market underserved by the major 

manufacturers of covered equipment. Any cost disadvantage experienced by these small 

manufacturers as a result of the proposed standard can be balanced by the relatively larger profit 

margins achievable by charging premium prices for niche equipment. As a result, DOE believes 

the proposed standard will not affect the competitive position of the small business 

manufacturers with small market shares in covered equipment. 

To estimate a portion of the differential impacts of the proposed standard on the small 

manufacturers with small market shares, DOE compared their cost of compliance for testing and 

certifying covered equipment with that of the major manufacturers (the two large and one small 

business manufacturers that account for 90 percent of industry shipments). Manufacturers must 

test the energy performance of each basic model it manufacturers in order to determine 

compliance with energy conservation standards and testing requirements. Therefore, DOE 

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examined the number of basic models available from each manufacturer to determine an estimate 

for the differential in overall compliance costs. The number of basic models attributed to each 

manufacturer is based on an examination of the different models advertised by each. DOE 

estimates the cost of testing a piece of covered equipment to be approximately $2,000. A typical 

major manufacturer has approximately 23 basic models, approximately 85 percent of which are 

covered and would require separate standards compliance certifications. Therefore, DOE 

estimates that a typical major manufacturer will incur approximately $44,013 in annual costs for 

standards compliance certifications. DOE estimates that a typical small manufacturer with small 

market share has approximately 27 basic models, 44 percent of which are covered and would 

require separate standards compliance certifications. DOE estimates that a typical small 

manufacturer will incur approximately $14,380 in annual costs for standards compliance 

certifications. According to this comparison, the cost of certification for a small manufacturer 

with small market share is significantly lower than that of a major manufacturer. 

As stated above, DOE expects that there will be some differential impacts associated with 

beverage vending machine design and manufacturing on small manufacturers. DOE requests 

comments on how small business manufacturers will be affected due to new energy conversation 

standards. Specifically, DOE requests comments on the compliance costs and other impacts to 

small manufacturers that do not supply the high-volume customers of beverage vending 

machines. 

5. Duplication, Overlap, and Conflict with Other Rules and Regulations 

DOE is not aware of any rules or regulations that duplicate, overlap, or conflict with the 

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rule being considered today. 

6. Significant Alternatives to the Rule 

The primary alternatives to the proposed rule considered by DOE are the other TSLs 

besides the ones being proposed today, TSL 6 for Class A and TSL 3 for Class B. As discussed 

in section VI.B subsection 6, DOE expects that the differential impact on small beverage vending 

machine manufacturers would be less severe in moving from TSL 5 to proposed TSL 6 for Class 

A than it would be in moving from TSL 6 to TSL 7. For Class B machines, DOE expects that the 

differential impact on small beverage vending machine manufacturers would be less significant 

in moving from TSL 2 to proposed TSL 3 than it would be in moving from TSL 4 to TSL 5. 

While lower TSLs (i.e., TSLs 1-5 for Class A and TSLs 1 and 2 for Class B) would have less 

impact on all manufacturers affected by this rulemaking, including the small manufacturers, 

these TSLs do not meet the statutory requirement that DOE implement the standard that is 

designed to achieve the maximum improvement in energy efficiency that is technologically 

feasible and economically justified. 

In addition, the TSD includes a regulatory impact analysis (RIA) (chapter 17 of the TSD), 

which discusses the following policy alternatives: (1) no new regulatory action, (2) financial 

incentives including rebates or tax credits, (3) revisions to voluntary energy efficiency targets 

such as ENERGY STAR program criteria, (4) bulk government purchases, (5) early replacement 

incentive programs, and (6) prescriptive standards that would mandate design requirements (e.g., 

lighting and refrigeration controls). DOE does not intend to consider these alternatives further 

because they are either not feasible to implement, or not expected to result in energy savings as 

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large as those that would be achieved by the standard levels under consideration. 

Section 603(c) of the RFA lists the following as alternatives that agencies should 

consider in an IRFA: (1) establishment of different compliance or reporting requirements for 

small entities or timetables that take into account the resources available to small entities, (2) 

clarification, consolidation, or simplification of compliance and reporting requirements for small 

entities, (3) use of performance rather than design standards, and (4) exemption for certain small 

entities from coverage of the rule, in whole or in part.52 

For alternatives (1) and (2) above, testing and reporting of certification and compliance 

with the proposed energy conservation standards are expected to be a relatively minor 

component of compliance compared with manufacturers’ other actions to meet the standard. In 

addition, as explained further in the discussion of alternative (4), DOE is not authorized to delay 

the setting of the standard past August 9, 2009, and the standard must apply to products 

manufactured 3 years after the date of publication of the final rule. (42 U.S.C. 6295(v)(2) and 

(3). Therefore, DOE cannot establish different energy standards or a different timetable for 

small entities, as contemplated by alternative (1). The proposed rule is a performance standard 

rather than a prescriptive standard, so alternative (3) is not applicable to the proposed rule. 

Alternative (4) considers exemptions for small entities in whole or in part. The authority 

granted to DOE to promulgate the proposed rule under the Energy Policy Act of 2005 (EPACT 

2005) does not allow for exemptions in whole or in part. EPACT 2005 amended the Energy 

Policy and Conservation Act by adding new subsections 325(v)(2), (3) and (4), which direct the 

52 Id. at 36. 

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EERE-2006-STD-0125 COMMENT 48
 

Secretary of Energy to issue, by rule, energy conservation standards for refrigerated bottled or 

canned beverage vending machines. (42 U.S.C. 6295(v) (1), (2), and (3))53 The proposed 

standards apply to all beverage vending machines manufactured 3 years after publication of the 

final rule establishing the energy conservation standards and offered for sale in the United 

States (42 U.S.C. 6295(v)(4)) [emphasis added].54 However, a manufacturer can petition DOE’s 

Office of Hearing and Appeals (OHA) for exception relief from the energy conservation standard 

pursuant to OHA’s authority under section 504 of the DOE Organization Act (42 U.S.C. 7194), 

as implemented at subpart B of 10 CFR part 1003. OHA grants such relief on a case-by-case 

basis if it determines that a manufacturer has demonstrated that meeting the standard would 

cause hardship, inequity, or unfair distributions of burdens. 

Chapter 13 of the TSD contains additional information about the impact of this 

rulemaking on manufacturers. As mentioned above, the other policy alternatives are described in 

section VI.A of the preamble and in the Regulatory Impact Analysis (chapter 17 of the TSD). 

Since the impacts of these policy alternatives are less than the impacts described above for TSL 6 

for Class A and TSL 3 for Class B, DOE expects that the impacts on small manufacturers of 

these alternatives would also be less than the impacts described above for the proposed standard 

levels. DOE requests comment on the impacts on small manufacturers for these and any other 

possible alternatives to the proposed rule. DOE will consider any comments received regarding 

impacts on small manufacturers for all the alternatives identified, including those in the RIA, for 

the final rule. 

53 Note that the relevant statutory provisions were renumbered pursuant to section 316(d)(1) of EISA, Pub. L. 110­

140.
 54 This provision was redesignated by EISA, section 316(d)(1), as 42 U.S.C. 6295(v)(3).
 

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C. Review Under the Paperwork Reduction Act 

This rulemaking will impose no new information or record keeping requirements. 

Accordingly, OMB clearance is not required under the Paperwork Reduction Act. (44 U.S.C. 

3501 et seq.) 

D. Review Under the National Environmental Policy Act 

DOE is preparing a draft environmental assessment of the impacts of the potential 

standards. The assessment will include an examination of the potential effects of emission 

reductions likely to result from the rule in the context of global climate change as well as other 

types of environmental impacts. DOE anticipates completing a Finding of No Significant Impact 

(FONSI) before publishing the final rule on beverage vending machines, pursuant to the National 

Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.), the regulations of the 

Council on Environmental Quality (40 CFR parts 1500 – 1508), and DOE’s regulations for 

compliance with the NEPA (10 CFR part 1021). The draft EA can be found in chapter 16 of the 

TSD. 

E. Review Under Executive Order 13132 

Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999) imposes certain 

requirements on agencies formulating and implementing policies or regulations that preempt 

State law or have federalism implications. Agencies are required to examine the constitutional 

and statutory authority supporting any action that would limit the policymaking discretion of the 

States and carefully assess the necessity for such actions. The Executive Order also requires 

agencies to have an accountable process to ensure meaningful and timely input by State and local 

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EERE-2006-STD-0125 COMMENT 48
officials in the development of regulatory policies that have federalism implications. On March 

14, 2000, DOE published a statement of policy describing the intergovernmental consultation 

process it will follow in the development of such regulations. (65 FR 13735.) DOE has examined 

today’s proposed rule and has determined that it would not have a substantial direct effect on the 

States, on the relationship between the Federal Government and the States, or on the distribution 

of power and responsibilities among the various levels of government. EPCA governs and 

prescribes Federal preemption of State regulations on energy conservation for the equipment that 

is the subject of today’s proposed rule. Specifically, EPCA provides that States are preempted 

from adopting new standards once DOE publishes a final rule. Once the final rule takes effect, 

State standards that were in effect at the time of the publication of the final rule are preempted. 

(42 U.S.C. 6295(ii)) States can petition DOE for waiver from such preemption to the extent, and 

based on criteria, set forth in EPCA. (42 U.S.C. 6297(d) and 6316(b)(2)(D)) No further action is 

required by Executive Order 13132. 

F. Review Under Executive Order 12988 

With respect to the review of existing regulations and the promulgation of new 

regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 

(February 7, 1996), imposes on Executive agencies the general duty to adhere to the following 

requirements: (1) eliminate drafting errors and ambiguity, (2) write regulations to minimize 

litigation, and (3) provide a clear legal standard for affected conduct rather than a general 

standard and promote simplification and burden reduction. With regard to the review required by 

section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies 

make every reasonable effort to ensure that the regulation (1) clearly specifies the preemptive 

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effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a 

clear legal standard for affected conduct while promoting simplification and burden reduction; 

(4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses 

other important issues affecting clarity and general draftsmanship under any guidelines issued by 

the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to 

review regulations in light of applicable standards in section 3(a) and section 3(b) to determine 

whether they are met or it is unreasonable to meet one or more of them. DOE has completed the 

required review and determined that this proposed rule meets the relevant standards of Executive 

Order 12988 to the extent permitted by law. 

G. Review Under the Unfunded Mandates Reform Act of 1995 

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) (UMRA), 

requires each Federal agency to assess the effects of Federal regulatory actions on State, local 

and Tribal governments and the private sector. For a proposed regulatory action likely to result in 

a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, 

or by the private sector of $100 million or more in any one year (adjusted annually for inflation), 

section 202 of UMRA requires a Federal agency to publish a written statement that estimates the 

resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)). 

UMRA also requires a Federal agency to develop an effective process to permit timely input by 

elected officers of State, local, and Tribal governments on a proposed “significant 

intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for 

timely input to potentially affected small governments before establishing any requirements that 

might significantly or uniquely affect small governments. On March 18, 1997, DOE published a 

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statement of policy on its process for intergovernmental consultation under UMRA, (62 FR 

12820) (also available at www.gc.doe.gov). Today’s proposed rule does not impose expenditures 

of $100 million or more on the private sector. It does not contain a Federal intergovernmental 

mandate. 

Section 202 of UMRA authorizes an agency to respond to the content requirements of 

UMRA in any other statement or analysis that accompanies the proposed rule. 2 U.S.C. 1532(c). 

The content requirements of section 202(b) of UMRA relevant to a private sector mandate 

substantially overlap the economic analysis requirements that apply under section 325(o) of 

EPCA and Executive Order 12866. The Supplementary Information section of this notice of 

proposed rulemaking and the Regulatory Impact Analysis section of the TSD respond to those 

requirements. 

Under section 205 of UMRA, DOE is obligated to identify and consider a reasonable 

number of regulatory alternatives before promulgating a rule for which a written statement under 

section 202 is required. DOE is required to select from those alternatives the most cost-effective 

and least burdensome alternative that achieves the objectives of the rule unless DOE publishes an 

explanation for doing otherwise or the selection of such an alternative is inconsistent with law. 

As required by sections 325(o), 345(a) and 342(c)(4)(A) of EPCA (42 U.S.C. 6295(o), 6316(a) 

and 6313(c)(4)(A)), today’s proposed rule would establish energy conservation standards for 

beverage vending machines that are designed to achieve the maximum improvement in energy 

efficiency that DOE has determined to be both technologically feasible and economically 

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justified. A full discussion of the alternatives considered by DOE is presented in the Regulatory 

Impact Analysis in the TSD. 

H. Review Under the Treasury and General Government Appropriations Act, 1999 

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 

105-277) requires Federal agencies to issue a Family Policymaking Assessment for any proposed 

rule that may affect family well-being. This proposed rule would not have any impact on the 

autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is 

not necessary to prepare a Family Policymaking Assessment. 

I. Review Under Executive Order 12630 

DOE has determined, under Executive Order 12630, Governmental Actions and 

Interference with Constitutionally Protected Property Rights, 53 FR 8859 (March 18, 1988), that 

this regulation would not result in any takings that might require compensation under the Fifth 

Amendment to the U.S. Constitution. 

J. Review Under the Treasury and General Government Appropriations Act, 2001 

The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) 

provides for agencies to review most disseminations of information to the public under 

guidelines established by each agency pursuant to general guidelines issued by OMB. The 

OMB’s guidelines were published at 67 FR 8452 (February 22, 2002), and DOE’s guidelines 

were published at 67 FR 62446 (October 7, 2002). DOE has reviewed today’s notice under the 

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OMB and DOE guidelines and has concluded that it is consistent with applicable policies in 

those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect 

Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001) requires Federal agencies to 

prepare and submit to OMB a Statement of Energy Effects for any proposed significant energy 

action. A “significant energy action” is defined as any action by an agency that promulgated or is 

expected to lead to promulgation of a final rule, and that (1) is a significant regulatory action 

under Executive Order 12866, or any successor order; and (2) is likely to have a significant 

adverse effect on the supply, distribution, or use of energy; or (3) is designated by the 

Administrator of OIRA as a significant energy action. For any proposed significant energy 

action, the agency must give a detailed statement of any adverse effects on energy supply, 

distribution, or use should the proposal be implemented, and of reasonable alternatives to the 

action and their expected benefits on energy supply, distribution, and use. 

Today’s regulatory action would not have a significant adverse effect on the supply, 

distribution, or use of energy and, therefore, is not a significant energy action. Accordingly, DOE 

has not prepared a Statement of Energy Effects. 

L. Review Under the Information Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in consultation with the Office of Science and Technology 

(OSTP), issued its Final Information Quality Bulletin for Peer Review (Bulletin). 70 FR 2664, 

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EERE-2006-STD-0125 COMMENT 48
(January 14, 2005) The Bulletin establishes that certain scientific information shall be peer 

reviewed by qualified specialists before it is disseminated by the Federal Government, including 

influential scientific information related to agency regulatory actions. The purpose of the bulletin 

is to enhance the quality and credibility of the Government’s scientific information. Under the 

Bulletin, the energy conservation standards rulemakings analyses are “influential scientific 

information.” The Bulletin defines “influential scientific information” as “scientific information 

the agency reasonably can determine will have, or does have, a clear and substantial impact on 

important public policies or private sector decisions.” 70 FR 2667 (January 14, 2005) 

In response to OMB’s Bulletin, DOE conducted a formal peer review of the energy 

conservation standards development process and analyses and has prepared a Peer Review 

Report pertaining to the energy conservation standards rulemaking analyses. The Energy 

Conservation Standards Rulemaking Peer Review Report dated February 2007 has been 

disseminated and is available at 

www.eere.energy.gov/buildings/appliance_standards/peer_review.html. 

VII. Public Participation 

A. Attendance at Public Meeting 

The time, date and location of the public meeting are provided in the DATES and 

ADDRESSES sections at the beginning of this document. To attend the public meeting, please 

notify Ms. Brenda Edwards at (202) 586-2945. As explained in the ADDRESSES section, 

foreign nationals visiting DOE headquarters are subject to advance security screening 

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EERE-2006-STD-0125 COMMENT 48
procedures. Any foreign national wishing to participate in the meeting should advise DOE of this 

fact as soon as possible by contacting Ms. Brenda Edwards to initiate the necessary procedures. 

B. Procedure for Submitting Requests to Speak 

Any person who has an interest in today's notice, or who is a representative of a group or 

class of persons that has an interest in these issues, may request an opportunity to make an oral 

presentation. Please hand-deliver requests to speak to the address shown under the heading 

“Hand Delivery/Courier” in the ADDRESSES section of this NOPR, between 9:00 a.m. and 4:00 

p.m., Monday through Friday, except Federal holidays. Also, requests may be sent by mail to the 

address shown under the heading “Postal Mail” in the ADDRESSES section of this NOPR, or by 

e-mail to Brenda.Edwards@ee.doe.gov. 

Parties requesting to speak should briefly describe the nature of their interest in this 

rulemaking and provide a telephone number for contact. DOE asks parties selected to be heard to 

submit a copy of their statements at least two weeks before the public meeting, either in person, 

by postal mail, or by e-mail as described in the preceding paragraph. Please include an electronic 

copy of your statement on a computer diskette or compact disk when delivery is by postal mail 

or in person. Electronic copies must be in WordPerfect, Microsoft Word, Portable Document 

Format (PDF), or text (American Standard Code for Information Interchange (ASCII)) file 

format. At its discretion, DOE may permit any person who cannot supply an advance copy of his 

or her statement to participate, if that person has made alternative arrangements with the 

Building Technologies Program. In such situations, the request to give an oral presentation 

should ask for alternative arrangements. 

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C. Conduct of Public Meeting 

DOE will designate a DOE official to preside at the public meeting and may also use a 

professional facilitator to aid discussion. The meeting will not be a judicial or evidentiary-type 

public hearing, but DOE will conduct it in accordance with 5 U.S.C. 553 and section 336 of 

EPCA. (42 U.S.C. 6306). A court reporter will be present to record and transcribe the 

proceedings. DOE reserves the right to schedule the order of presentations and to establish the 

procedures governing the conduct of the public meeting. After the public meeting, interested 

parties may submit further comments about the proceedings, and any other aspect of the 

proposed rulemaking, until the end of the comment period. 

The public meeting will be conducted in an informal, conference style. DOE will present 

summaries of comments received before the public meeting, allow time for presentations by 

participants, and encourage all interested parties to share their views on issues affecting this 

rulemaking. Each participant will be allowed to make a prepared general statement (within time 

limits determined by DOE) before discussion of a particular topic. DOE will permit other 

participants to comment briefly on any general statements. 

At the end of all prepared statements on a topic, DOE will permit participants to clarify 

their statements briefly and comment on statements made by others. Participants should be 

prepared to answer questions by DOE and by other participants concerning these issues. DOE 

representatives may also ask questions of participants concerning other matters relevant to the 

proposed rulemaking. The official conducting the public meeting will accept additional 

comments or questions from those attending, as time permits. The presiding official will 

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announce any further procedural rules or modification of the above procedures that may be 

needed for proper conduct of the public meeting. 

DOE will include the entire record of this proposed rulemaking, including the transcript 

from the public meeting, in the docket for this rulemaking. For access to the docket to read the 

transcript, visit the U.S. Department of Energy, Resource Room of the Building Technologies 

Program, 950 L’Enfant Plaza, SW., 6th Floor, Washington, DC, 20024, (202) 586-2945, between 

9:00 a.m. and 4:00 p.m., Monday through Friday, except Federal holidays. Please call Ms. 

Brenda Edwards at the above telephone number for additional information regarding visiting the 

Resource Room. Any person may purchase a copy of the transcript from the transcribing 

reporter. 

D. Submission of Comments 

DOE will accept comments, data, and information regarding all aspects of this NOPR 

before or after the public meeting, but no later than the date provided at the beginning of this 

notice of proposed rulemaking. Please submit comments, data, and information electronically to 

the following e-mail address: beveragevending.rulemaking@ee.doe.g.ov. Submit electronic 

comments in WordPerfect, Microsoft Word, PDF, or ASCII file format and avoid the use of 

special characters or any form of encryption. Comments in electronic format should be identified 

by the docket number EERE-2006-STD-0125 and/or RIN 1904-AB58, and whenever possible 

carry the electronic signature of the author. Absent an electronic signature, comments submitted 

electronically must be followed and authenticated by submitting a signed original paper 

document. No faxes will be accepted. 

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Under 10 CFR Part 1004.11, any person submitting information that he or she believes to 

be confidential and exempt by law from public disclosure should submit two copies: one copy of 

the document including all the information believed to be confidential, and one copy of the 

document with the information believed to be confidential deleted. DOE will make its own 

determination about the confidential status of the information and treat it according to its 

determination. 

Factors of interest to DOE when evaluating requests to treat submitted information as 

confidential include (1) a description of the items, (2) whether and why such items are 

customarily treated as confidential within the industry, (3) whether the information is generally 

known by or available from other sources, (4) whether the information has previously been made 

available to others without obligation concerning its confidentiality, (5) an explanation of the 

competitive injury to the submitting person which would result from public disclosure, (6) when 

such information might lose its confidential character due to the passage of time, and (7) why 

disclosure of the information would be contrary to the public interest. 

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VIlI. Approval of the Office of the Secretary 

The Secretary of Energy has appro\:ed publication of this proposed rule. 

List of Subjects in 10 CFR Part 431 

Administrative practice and procedure, Confidential business information, Energy conservation. 

Issued in Washington, DC, on May 22, 2009. 

Steven G. Chalk 

Principal Deputy Assistant Secretary 

Energy Efficiency and Renewable Energy 

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For the reasons set forth in the preamble, DOE proposes to amend Chapter II of Title 10, 

Code of Federal Regulations, Part 431 to read as set forth below. 

PART 431 - ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 

INDUSTRIAL EQUIPMENT 

1. The authority citation for part 431 continues to read as follows: 

Authority: 42 U.S.C. 6291-6317. 

2. In §431.292 add, in alphabetical order, new definitions for “bottled or canned beverage”, 

“Class A”, “Class B”, and “V” to read as follows: 

§ 431.292 Definitions concerning refrigerated bottled or canned beverage vending 

machines. 

* * * * * 

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

* * * * * 

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

cooled. 

* * * * * 

 Class B means any refrigerated bottled or canned beverage vending machine not 

considered to be Class A. 

* * * * * 

V means the refrigerated volume (ft3

) of the refrigerated bottled or canned beverage 

vending machine, as measured by AHAM HRF-1-2004 (incorporated by reference, see 

§431.293). 

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3. Section 431.293 is revised to read as follows: 

§ 431.293 Materials incorporated by reference. 

(a) General. DOE incorporates by reference the following standards into subpart Q of 

part 431. The material listed has been approved for incorporation by reference by the Director of 

the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Any subsequent 

amendment to a standard by the standard-setting organization will not affect the DOE regulations 

unless and until amended by DOE. Material is incorporated as it exists on the date of the 

approval and a notice of any change in the material will be published in the Federal Register. All 

approved material is available for inspection at the National Archives and Records 

Administration (NARA). For information on the availability of this material at NARA, call 202­

741-6030 or visit 

www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. This 

material is also available for inspection at U.S. Department of Energy, Office of Energy 

Efficiency and Renewable Energy, Building Technologies Program, 6th Floor, 950 L’Enfant 

Plaza, SW., Washington, DC 20024, 202-586-2945, or visit 

www1.eere.energy.gov/buildings/appliance_standards. Standards can be obtained from the 

sources listed below. 

(b) ANSI. American National Standards Institute, 25 W. 43rd Street, 4th Floor, New York, 

NY 10036, 212-642-4900, or visit www.ansi.org. 

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(1) ANSI /AHAM HRF-1-2004, Energy, Performance and Capacity of Household 

Refrigerators, Refrigerator-Freezers and Freezers, approved July 7, 2004, IBR approved for 

§431.294. 

(2) ANSI/ASHRAE Standard 32.1-2004, Methods of Testing for Rating Vending 

Machines for Bottled, Canned, and Other Sealed Beverages, approved December 2, 2004, IBR 

approved for §431.294. 

4. Section 431.296 is added to subpart Q to read as follows: 

ENERGY CONSERVATION STANDARDS 

§431.296 Energy conservation standards and their effective dates. 

Each refrigerated bottled or canned beverage vending machine manufactured on or after 3 

years from the date of publication of the final rule, shall have a daily energy consumption (in 

kilowatt hours per day) that does not exceed the following: 

Equipment Class Maximum daily energy consumption 

kilowatt hours per day 

Class A 0.055 x V + 2.56 

Class B 0.073 x V + 3.16 

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