Energy Conservation Standards forPackaged Terminal Air Conditioners andPackaged Terminal Heat PumpsNotice of Proposed Rulemaking (NOPR)Public MeetingBuilding Technologies ProgramOffice of Energy Efficiency and Renewable EnergyU.S. Department of EnergyMay 1, 2008http://www.eere.energy.gov/buildings/appliance_standards/commercial/packaged_ac_hp.html2Meeting Agenda9:00-9:05 am Welcome9:05-9:15 am Introduction and Agenda Review9:15-9:30 am Rulemaking Overview9:30-10:15 am Opening Remarks from Interested Parties10:15-11:15 am Market andTechnology Assessment, Screening Analysis, andEngineering Analysis11:15-11:30 am Break11:30-12:30 pm Energy Use Analysis and Life-cycle Cost Analysis12:30-1:30 pm Break for Lunch1:30-2:00 pm National Impact Analysis2:00-2:30 pm Trial Standard Levels and Manufacturer Impact Analysis2:30-3:00 pm Utility Impact Analysis, Employment Impact Analysis,Environmental Assessment, and Regulatory Impact Analysis3:00-3:15 pm Break3:15-4:15 pm Discussion of Issues4:15-4:30 pm Closing Remarks3Purposes•To present methodologies and characterize results forrulemaking analyses;•To discuss specific issuesrelated to each analysis;•To seek input from interestedparties on methodologies, assumptions, data sources, andresults from the analyses; and•To describe the next steps.Comments from Participants•Participants are invited to provide summary comments or statements;•Participants are invited toraise additional issuesfor discussion today; and•NOPR comment period open through May 31, 2008.Purpose of the Public Meeting andComments From ParticipantsOverview4Statutory Authority – Energy Policy andConservation Act as amendedAddresses requirements of 42 USC 6313(a)(6)(A)-(B):•Review and adopt efficiencylevels specified by ASHRAE Standard 90.1-1999, unless:•DOE determines, supported by clear and convincingevidence, that adoption of a uniformnational standard more stringentthan the efficiency levelsspecified by ASHRAE Standard90.1 for PTACs and PTHPs would result in significant additional conservation of energyand is technologically feasible and economically justified.Overview5DOE Actions on PTACs and PTHPsTest Procedures– Final Rule published on October 21, 2004, based on ARIstandards (ARI 310/380-2004Standard for Packaged Terminal Air-Conditioners andHeat Pumps(ARI 310/380-2004)). 69 FR 61962.Energy Conservation Standards•Screening Analysis published March 1, 2000.65 FR 10984.•Notice of Document Availability published March 13, 2006. 71 FR 12634.•Technical SupportDocument publishedMarch 13, 2006.•NOPR published in the Federal Registeron April 7, 2008. 73 FR 18858.•Final Rule scheduled for September 2008.Overview6The Energy Policy and Conservation Act (EPCA) directsDOE to consider seven factors when setting energyconservation standardsFactorAnalysis1. Economic impact on consumersand manufacturersLife-cycle cost analysisManufacturer impact analysis2. Lifetime operating cost savings Life-cycle cost analysis3. Total projected energy savings National impact analysis4. Impact on utility or performance Screening analysisEngineering analysis5. Impact of any lessening ofcompetitionManufacturer impact analysis6. Need for national energyconservationNational impact analysis7. Other factors the Secretaryconsiders relevantEnvironmental assessmentUtility impact analysisEmployment impact analysisOverview7Proposed StandardProposed Amended Energy Conservation Standards (TSL 4)Equipment ClassProposed EnergyConservation Standards*Equipment Category Cooling CapacityPTACStandard Size**< 7,000 Btu/hEER = 11.4≥7,000 Btu/h and≤15,000 Btu/hEER = 13.0 – (0.233 x Cap††)> 15,000 Btu/h EER = 9.5Non-Standard Size†< 7,000 Btu/hEER = 10.2≥7,000 Btu/h and≤15,000 Btu/hEER = 11.7 – (0.213 x Cap††)> 15,000 Btu/h EER = 8.5PTHPStandard Size**< 7,000 Btu/hEER = 11.8COP = 3.3≥7,000 Btu/h and≤15,000 Btu/hEER = 13.4 – (0.233 x Cap††)COP = 3.7 – (0.053 x Cap††)> 15,000 Btu/hEER = 9.9COP = 2.9Non-Standard Size†< 7,000 Btu/hEER = 10.8COP = 3.0≥7,000 Btu/h and≤15,000 Btu/hEER = 12.3 – (0.213 x Cap††)COP = 3.1 – (0.026 x Cap††)> 15,000 Btu/hEER = 9.1COP = 2.8* For equipment rated according to the DOE test procedure (ARI Standard 310/380-2004), all energy efficiency ratio (EER) valuesmust be ratedat 95oF outdoor dry-bulb temperature for air-cooled equipment and evaporatively-cooled equipment and at 85oF entering water temperature forwater cooled equipment. All coefficient of performance (COP) values must be rated at 47oF outdoor dry-bulb temperature for air-cooledequipment, and at 70oF entering water temperature for water-source heat pumps.** Standard size refers to PTAC or PTHP equipment with wall sleeve dimensions greater than or equal to 16 inches high, or greater than or equalto 42 inches wide.† Non-standard size refers to PTAC or PTHP equipment with wall sleeve dimensions less than 16 inches high and less than 42 inches wide.†† Cap means cooling capacity in thousand British thermal units per hour (Btu/h) at 95oF outdoor dry-bulb temperature.8Proposed Standard(Issue #10)DOE invites comment on the proposed standardlevel, TSL 4, for standard size and non-standard sizePTACs and PTHPs.Proposed Standard9NOPR Analyses Flow DiagramNOPRFinalRuleNationalImpactAnalysisEnergy UseCharacterizationMarket andTechnologyAssessmentScreeningAnalysisEngineeringAnalysisMarkups toDetermineEquipmentPriceLife-CycleCost andPaybackPeriod AnalysisShipmentsAnalysis10Market & Technology Assessment•To characterize the PTAC and PTHP marketsto determine available equipment efficienciesand shipments by equipment class.Screening Analysis•To identify design options thatincrease efficiency andto apply screening criteria establishedby DOE to determine whichdesign options to evaluateand which to screen out.Engineering Analysis•To characterize manufacturer cost-efficiency relationships for higher efficiency equipment.•To evaluate design options that improve efficiency relative to the baseline units.•Sensitivity analysis to lookat current material prices.Purpose11Market CharacteristicsStandard Size PTACs and PTHPs•Five manufacturers account for approximately 90% of thedomestic marketshare of standardsize PTAC and PTHP equipment.•Approximately 380,000 units covered by this rulemaking were shipped in2006 (2006 ARIdata).•Majority of standard sizeequipment is manufactured overseas. Thereis only one majormanufacturer of standard size equipment operatingin the United States.Non-standard Size PTACs and PTHPs•Three major manufacturersaccount for the majority of thedomestic marketshare of nonstandard size PTAC and PTHP equipment.•Approximately 70,000 units covered by this rulemaking were shipped in2006 (2006 ARI data).•Non-standard size equipment is manufactured inthe United States.Market and Technology Assessment12Equipment ClassesPTACs and PTHPs – DOE proposes 12 equipment classes differentiated byequipment type (i.e., airconditioner or heat pumps), wall sleeve dimensions(i.e., standard and non-standard), and cooling capacity.For differentiating non-standard equipment, DOE proposed two alternativemethods in the NOPR:•Equipment classes consistent withASHRAE/IESNA Standard 90.1-1999; or•Equipment classes consistent with Addendum t to ASHRAE/IESNA Standard 90.1-2007.Market and Technology Assessment13Equipment Class Organization(Issue #1)DOE invites comments on the selected equipment class organizationfor PTACs and PTHPs.•Specifically, the delineations specified in ASHRAE/IESNA Standard90.1-1999 compared to the delineations specified in Addendum t toASHRAE/IESNA Standard 90.1-2007 (i.e., AHRI’s continuousmaintenance proposal to ASHRAE).Market and Technology Assessment14Screening Analysis MethodScreening AnalysisDesign options screened using the following criteria:•Technological feasibility;•Practicability to manufacture, install and service;•Adverse impacts on product utility or product availability; and•Adverse impacts on health or safety.Technologies selected for further consideration:Technologies that can improve energy-efficiency ratio (EER)•Higher-efficiency compressors•Increase heat exchanger area(extension of surface area oraddition of coil rows)•Re-circuiting heat exchanger coils15Downstream Analyses•Life-Cycle Cost andPayback Period•National ImpactsCost – EfficiencyRelationship

Incremental Manufacturing CostEEREngineering AnalysisCharacterize the relationship betweenmanufacturer cost and efficiency(EER or COP)Purpose of the Engineering Analysis16Equipment classes analyzed•DOE prioritized the analysis byfocusing on the equipment classes and cooling capacitieswith the highestshipment volumes.– For standard size equipment, DOE analyzed 9,000 Btu/hand 12,000 Btu/h PTACs andPTHPs.– For non-standard size equipment, DOE analyzed 11,000 Btu/h PTACs and PTHPs.Design-option approach•DOE analytically derivedcost-efficiency curves.•DOE developed baseline costand incremental costs based on thephysical teardownanalysis and the manufacturing cost model.EPA mandated refrigerant phaseout of R-22 in 2010•Currently, PTACs and PTHPs utilizing R-410A refrigerantare not available on the market.•Engineering analysis estimated a degradation in system performance based on availablestudies and similar market transformations.Engineering AnalysisEngineering Analysis Method17Extension of Proposed Energy Conservation Standardsfor Standard Size PTACs and PTHPs(Issue #2)This approach is intended to streamline the analysis by focusing on the highshipment volume equipment classes andavoiding analysis on multiple coolingcapacities.Engineering AnalysisDOE invites comments on the extension of the energy conservationstandard from the two cooling capacities with the highest number ofshipments to the other cooling capacities for standard size equipment.For Standard Size PTACs and PTHPs, translationof standardequation, avoiding additional downstream analysisCooling Capacity

Energy Efficiency Ratio9,000 Btu/h12,000 Btu/hASHRAE Standard 90.1-1999Energy-Efficiency EquationAmended EnergyEfficiency Equation18Extension of Proposed Energy Conservation Standardsfor Non-Standard Size PTACs and PTHPs(Issue #2)This approach is intended to streamline the analysis by focusing on the highshipment volume equipment classes andavoiding analysis on multiple coolingcapacities.Engineering AnalysisDOE invites comments on the extension of the energy conservationstandard from one cooling capacity tothe other cooling capacities usingthe ASHRAE slope for non-standard size equipment.For Non-Standard Size PTACs andPTHPs, translation of standardequation, avoiding additional downstream analysis.Cooling Capacity

Energy Efficiency Ratio11,000 Btu/hASHRAE Standard 90.1-1999Energy-Efficiency EquationAmended Energy-Efficiency Equation19EPA Mandated Refrigerant Phaseout of R-22PTAC and PTHP Market:•PTAC and PTHP Equipment using R-410A refrigerant are not available on the market.•R-410A compressors are less efficient than R-22compressors, which translates to a systemefficiency degradation.DOE is using an overall lower systemperformance for PTAC and PTHPequipment with R-410A.•For standard size PTACs and PTHPs with 9,000 Btu/h cooling capacity: 6.3 percent.•For standard size PTACs and PTHPs with 12,000 Btu/h coolingcapacity: 7.6 percent.•For non-standard size PTACs and PTHPs ofall cooling capacities: 6.8 percent.Additional concerns:•Compressor availability;•Increase in component cost(i.e., increase heat exchangerand compressor cost); and•Timing of refrigerant phaseout andamended energy conservation standards.Engineering AnalysisDOE invites comments on the potential impacts of the refrigerantphaseout on PTAC and PTHP equipment,the industry, and the availabilityof components used in PTAC and PTHP equipment.20Extension of Proposed Energy Conservation Standards(Issue #3)This approach is intended to streamline the analysis by focusing the analysison the cooling mode and determining the heating mode efficiencies usingmarket data.Engineering AnalysisDOE invites comments on the EER and COP pairings for PTHPs based onthe current ARI product directory information.Equipment ClassEfficiency LevelStandard Size PTHP –9,000 Btu/h CoolingCapacityEER = 10.9COP = 3.1EER = 11.1COP = 3.2EER = 11.3COP = 3.3EER = 11.5COP = 3.3EER = 12.0COP = 3.5Standard Size PTHP –12,000 Btu/h CoolingCapacityEER = 10.2COP = 3.0EER = 10.4COP = 3.1EER = 10.6COP = 3.1EER = 10.8COP = 3.1EER = 11.7COP = 3.3Non-Standard Size PTHP –11,000 Btu/h CoolingCapacityEER = 9.4COP = 2.8EER = 9.7COP = 2.8EER = 10.0COP = 2.9EER = 10.7COP = 2.9EER = 11.4COP = 2.921NOPR Analyses Flow DiagramNOPRFinalRuleNationalImpactAnalysisEnergy UseCharacterizationMarket andTechnologyAssessmentScreeningAnalysisEngineeringAnalysisMarkups toDetermineEquipmentPriceLife-CycleCost andPaybackPeriod AnalysisShipmentsAnalysis22Energy Use Characterization•To estimate electricity consumed by PTAC and PTHP equipment at selected efficiencylevels using whole-building simulations of hotel/motelbuildings located ina diverse set ofclimates in theUnited States.Markups to Determine Equipment Price•To characterize the channelsfor how equipment isdistributed fromthe manufacturer tothe customer; and•To determine prices paid bycustomers based onmanufacturer sellingprices for bothbaseline and higher efficiency equipment.Life-Cycle Cost and Payback Period Analyses•To develop the customer life-cycle cost savings and payback period for higher efficiencyequipment.Purpose23Energy Use Characterization -- ResultsResults obtained for cooling and fanenergy use for PTAC and cooling,heating and fan energy use for PTHP on an annual basis.Results were validated by comparing with EIA’s 2003 Commercial BuildingEnergy Characterization Survey (CBECS).Annual national average energy savingsper unit range from 7.9% for 9,000Btu/h standard size PTAC to 12.2% for non-standard size PTAC at themaximum efficiency level comparedwith baseline efficiency level.Annual national average energy savingsper unit range from 8.4% for 9,000Btu/h standard size PTHP to 10.8%for non-standard size PTHP at themaximum efficiency level comparedwith baseline efficiency level.Energy Use Characterization24Distribution ChannelsEstimated Fraction of Equipment Shipments by Distribution ChannelsNew Construction and Replacement MarketMarkups to Determine Equipment PriceMechanical Contractor(New Construction or Replacement)ReplacementNew ConstructionManufacturerrNational AccountCustomerWholesalerCustomerGeneralContractorCustomerCustomer15% 25%60%0%30% 0%38%32%25Inputs•Firm balance sheets:– Wholesalers:HARDI’s 2005 Profit Planning Report.– Mechanical and General Contractors:U.S. Census Bureau Financial Data for Plumbing,Heating, and Air-Conditioning Contractors, 2002 and AirConditioning Contractors ofAmerica (ACCA) financial analysis data.•20% - 80% split of equipment between newconstruction and replacement market,respectively.Outputs•Weighted average baseline markups of 2.08 (new construction) and 1.93 (replacementmarket) for baseline efficiencyequipment (including sales tax).•Weighted average incremental markups of 1.29 (newconstruction) and1.28 (replacementmarket) for higher efficiency equipment (including sales tax).Markups to Determine Equipment PriceInputs and OutputsMarkups to Determine Equipment Price26Life-Cycle Cost (LCC) equals customer price plus the sum of annualoperating costs discounted to a particular base year (2012, in this case).Economic evaluation from the customer perspective.Analysis implemented in an Excel®spreadsheet with add-on Cristal Ball togenerate the Monte Carlo simulation.Results are expressed as LCC savings (baseline minus standard level).Simple payback period (in years) is also calculated and reported in thisanalysis.Life-Cycle Cost and Payback Period AnalysesLife-Cycle Cost AnalysisCombine Changesin CostsLCC ResultsInstalled Cost(Customer Price + Installation Cost)Operating ExpensesConvertto PresentValue27LCC Calculation FlowchartLife-Cycle Cost and Payback Period AnalysesBaselineManufacturerPriceStd-LevelManufacturerPriceTotal InstalledCostFromEngineeringAnalysis(Price is aFunction ofEfficiency)From Markupsfor EquipmentPriceDeterminationAnalysisElectricityPricesAnnual EnergyExpenseRepair CostMaintenanceCostAnnualOperatingExpenseLifetimeDiscount RateElectricityPrice TrendLifetimeOperatingExpenseFrom EnergyUseCharacterizationAnalysis(Energy Use as aFunction ofEfficiency)PaybackPeriodEnergyConsumptionDistributorMarkupSales TaxMechanicalContractorMarkupCustomerPriceInstallationCost28LCC analysis was based on State-by-State average electricity prices paid byfour business types that use PTAC and PTHP equipment.Electricity prices by business type were developed using the ratio of averageprice in 2003 CBECS by business type to commercial average price.These ratios are then applied to the State-by-State average commercial sectorelectricity prices calculated from EIA data for 2006 to obtain State-by-Stateelectricity prices by business type.These State-by-State prices by businesstype were projected for 2012 andbeyond by using EIA AEO 2007 national commercial electricity price trends.The final rule analysis will use the latest EIA data and the AEO 2008 forecast.Electricity PricesLife-Cycle Cost and Payback Period Analyses29Installation costs (fromRS Means CostWorks 2007).Discount rates (weighted average cost of capital—data fromDamodaranOnlinewebsite).Equipment lifetime (distribution of lifetimes with a 10-year average, based onindustry comments).Repair costs (annualized value based on warranty contracts).Maintenance costs.Other Inputs(Issue #5)Life-Cycle Cost and Payback Period AnalysesDOE is interested in how the installation, maintenance, and repair costs maychange with the implementation of R-410A refrigerant in 2010 because DOE’sestimates are based on data from the field for equipment using R-22.30Life-cycle Cost Analysis ResultsAverage Life-Cycle Cost Savings vs. Efficiency (EER) for R-410 Standard SizePTACs and PTHPs 9,000 Btu/h and 12,000 Btu/h($40)($30)($20)($10)$0$10$20$30$40$509 9.5 10 10.5 11 11.5 12 12.5 13Efficiency (EER)

Average LCC Savings (2006$)R-410A Standard PTAC 9,000 Btu/hR-410A Standard PTAC 12,000 Btu/hR-410A Standard PTHP 9,000 Btu/hR-410A Standard PTHP 12,000 Btu/h31NOPR Analyses Flow DiagramNOPRFinalRuleNationalImpactAnalysisEnergy UseCharacterizationMarket andTechnologyAssessmentScreeningAnalysisEngineeringAnalysisMarkups toDetermineEquipmentPriceLife-CycleCost andPaybackPeriod AnalysisShipmentsAnalysis32PurposeShipments Analysis•To estimate standard sizeand non-standard size PTACs and PTHPs shipments overtime.National Impact Analysis•To estimate the National Energy Savings (NES) from standardand non-standard PTACand PTHP efficiency standards atdifferent efficiency levels.•To estimate the national economic impact on the nation(or the Net Present Value(NPV)) from equipment energy conservationstandards at different efficiency levels.33ApproachNational Impact AnalysisConsiders all customer choices, including energy-saving and non-energysaving substitutes.Shipment forecasts (2012-2042) derived from:•Historical shipments;•PTAC and PTHP replacements based on equipment lifetimes;•New installations based on theprojected floor space construction published by the AnnualEnergy Outlook 2006 forecasts; and•Estimates of the equipment mix of baseline and higher-efficiency technologies in the stockand shipments.National energy savings calculatedfrom 2012-2042 and NPV calculated from2012-2062.Base case incorporates the penetrationof higher efficiency PTACs and PTHPs.Shipments and stocks of equipment tracked by vintage, market (new andreplacement), and equipment class.34Shipments ModelNational Impact AnalysisNEMS BldgConstruction ForecastARI Estimate ofShipments (2005)Initial ReplacementShipmentsInitial Shipments to NewConstructionInitial Equipment StockEstimated Lifetimeof Equipment StockShipments to NewConstructionReplacementShipmentsTotalShipments ByEquipmentClass andCapacity% Shipments byEquipment Class andCapacity (2005)EquipmentStock byEquipmentClass andCapacityNEMS BldgConstruction ForecastARI Estimate ofShipments (2005)Initial ReplacementShipmentsInitial Shipments to NewConstructionInitial Equipment StockEstimated Lifetimeof Equipment StockShipments to NewConstructionReplacementShipmentsTotalShipments ByEquipmentClass andCapacity% Shipments byEquipment Class andCapacity (2005)EquipmentStock byEquipmentClass andCapacity35Outcomes of Shipments Forecasts: ShipmentsPTAC and PTHP Shipments0100200300400500600700800 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033 2036 2039 2042Years

ThousandsNew SalesTotal Replacements from New Vintages (Multiple Rounds)Total Non-Standard SalesReplacements for Yr 2000 Existing Standard Stock36Outcomes of Shipments Forecasts: StockStock of PTAC and PTHP Units,Including Replacements-1,0002,0003,0004,0005,0006,0007,000 2000 2004 2008 2012 2016 2020 2024 2028 2032 2036 2040 2044 2048 2052 2056 2060

ThousandsYearsCumulative New Standard Units (Including Replacements)Non-Standard Units Existing in 2000Standard Units Existing in 200037Key Inputs(Issue #4)National Impact AnalysisNational Discount Rate: 3% and 7%(real) from OMB’s Regulatory AnalysisCircular A-4 (2003).Electricity Prices and Trends: EnergyInformation Administration 2006 data andAnnual Energy Outlook 2007 forecasts.•DOE will update to most recent data for the Final Rule.Rebound Effect: Operating cost savingsresulting in increased equipment useand therefore reduced energy savings potential.•None. DOE believes that since the customer renting a hotel/motel room does not pay theutility bill, the customer’s usagewill be unaffected by increasing the efficiency of the PTAC orPTHP equipment.DOE invites comment on the rebound effect for the PTAC and PTHP industry.38Issues for which DOE seeks comments(Issue #6-9)National Impacts Analysis6.DOE requests data that would enable it to better characterizethe likely increases in efficiency that would occur over the 30-year analysis period in the absence of this rule (i.e., thedistribution of efficiency levels in absence of standards isassumed to be constant).7.The NES-forecasted base case distribution of efficiencies afterthe refrigerant phaseout and its prediction on how amendedenergy conservation standards impact the distribution ofefficiencies in the standards case.8.Whether amended energy conservation standards will result inPTAC and PTHP customers shifting to other, less efficientequipment types.9.The NES shipments forecasts of total shipments for standardsize and non-standard size equipment. In addition, thedistribution of standard size equipment being placed into newconstruction buildings versus replacing existing units.39ManufacturerImpactAnalysisUtilityImpactAnalysisTrialStandardLevelsEnvironmentalAssessmentRegulatoryImpactAnalysisNOPR Analyses Flow DiagramEmploymentImpactAnalysisUtility Impact AnalysisNOPRFinalRuleEffectiveDate40Purpose•To develop a list of standardlevels from which impacts areweighed and aproposed standardlevel is selected.– Each trial standard levelconsists of a set of potential minimum efficiency levels coveringall equipment classes, and may vary between equipment classes; and– NOPR analyses assess impacts for trial standard levels (not equipment classes).Method•Trial standard levels are assembled from theequipment classes identified in the NOPR.– Analyzed standard levelscover a range of efficiencies and can include:Most energy efficientlevel (max tech);Efficiency level with the lowest life-cycle cost;Efficiency level with a paybackperiod of three years or less;Efficiency levels with noteworthy technologies; andEfficiency levels that fill in largegaps between candidate standard levels.– Each trial standard level consists of the analyzed standardlevel from each equipmentclass that meets one ofthe above criteria.Trial Standard LevelsSelection of Trial Standard Levels41Trial Standard LevelsTrial Standard Levels for the NOPR (R-410A)Equipment ClassEfficiencyMetricBaseline(ASHRAE/IESNAStandard 90.1-1999)TSL 1TSL 2TSL 3TSL 4TSL 5TSL 6TSL 7(Max Tech)PTAC, Standard Size,9,000 Btu/hEER10.610.9 10.9 11.1 10.9 11.3 11.5 12.0PTAC, Standard Size,12,000 Btu/hEER9.910.2 10.2 10.4 10.2 10.6 10.8 11.5PTAC, Non-StandardSize, 11,000 Btu/hEER8.69.4 9.4 9.7 9.4 10.0 10.7 11.2PTHP, Standard Size,9,000 Btu/hEERCOP10.43.010.93.111.13.211.13.211.33.311.33.311.53.312.03.5PTHP, Standard Size,12,000 Btu/hEERCOP9.72.910.23.010.43.110.43.110.63.110.63.110.83.111.73.3PTHP, Non-StandardSize, 11,000 Btu/hEERCOP8.52.69.42.89.72.89.72.810.02.910.02.910.72.911.42.9Equipment ClassesTSL 2TSL 4PTACsTSL 1 TSL 1PTHPsTSL 3 TSL 5“Mixed” Trial Standard Levels for the NOPR (R-410A)42ManufacturerImpactAnalysisUtilityImpactAnalysisTrialStandardLevelsEnvironmentalAssessmentRegulatoryImpactAnalysisNOPR Analyses Flow DiagramEmploymentImpactAnalysisUtility Impact AnalysisNOPRFinalRuleEffectiveDate43Manufacturer Impact AnalysisManufacturer Impact AnalysisPurpose•To assess the impacts of standards on commercialrefrigeration equipment manufacturers;•To identify and estimate impacts on manufacturersub-groups that maybe more severelyimpacted than the industry as a whole; and•To examine the impact of cumulativeregulatory burdenson the industry.Method•Analyze industry cash flowand net present value throughuse of the GovernmentRegulatory ImpactModel (GRIM); and•Interview manufacturers torefine inputs to the GRIM,develop sub-groupanalyses, andaddress qualitative issues.44Manufacturer Impact Analysis ProcessManufacturer Impact AnalysisThe MIA consists of three phases:IndustryprofileDevelopstraw-manGRIM*DevelopinterviewguideInterviews& industrywide /subgroupanalysesAssess directemployment,competition,cumulativeburdenFinalizeMIA resultsfor NOPRPhase 2* Government Regulatory Impact Model (GRIM)Phase 3Phase 145Manufacturer Impact Analysis ResultsManufacturer Impact AnalysisIndustry Net Present Value Impacts•Standard size and non-standard size impacts by TSL.Cumulative Regulatory Burden Impacts•Refrigerant phaseout.Qualitative Concerns•Refrigerant phaseout (e.g., compressor availability and compressor degradation);•Product conversion and capital costs;•Timing of the refrigerantphaseout and amendedenergy conservation standards;•Definition of non-standard equipment; and•Ability to recover increasesin manufacturing productioncosts from the consumer.Small Business Impacts•Two small business of PTACs and PTHPs.46Manufacturer Impact Analysis Results forNon-Standard Size PTAC and PTHP Equipment(Issue #13)Manufacturer Impact AnalysisDOE invites comment on the unique impacts on thenon-standard size equipment and manufacturers. Inparticular, would the ASHRAE/IESNA Standard 90.1-1999 delineations of non-standard size equipmentresult in PTAC and PTHP lines being misclassified orunavailable?47ManufacturerImpactAnalysisUtilityImpactAnalysisTrialStandardLevelsEnvironmentalAssessmentRegulatoryImpactAnalysisNOPR Analyses Flow DiagramEmploymentImpactAnalysisUtility Impact AnalysisNOPRFinalRuleEffectiveDate48Purpose•To investigate the effects on utilities from reduced energy sales and peak loaddemand due topotential standards.Method•Uses national energysavings results; and•Uses the EIA’s National Energy Modeling System (NEMS-BT) tailored for DOE’s BuildingTechnologies Program.Output•Change in electricity sales and price by region;•Change in the mix of electricity generation; and•Change in new capacity construction.Utility Impact AnalysisUtility Impact Analysis49ManufacturerImpactAnalysisUtilityImpactAnalysisTrialStandardLevelsEnvironmentalAssessmentRegulatoryImpactAnalysisNOPR Analyses Flow DiagramEmploymentImpactAnalysisEmployment Impact AnalysisNOPRFinalRuleEffectiveDate50Purpose•To report net jobs created oreliminated nationally as aconsequence of new or amendedenergy conservation standards.Method•Uses the Impact of Sector Energy Technologies (ImSET) model;•Changes in equipmentand energy expenditures taken fromthe National Energy SavingsAnalysis; and•Direct employment impacts taken fromthe Manufacturer Impact Analysis.Output•Change in employment by sector as a consequenceof new or amendedenergy conservationstandards.Employment Impact AnalysisEmployment Impact Analysis51ManufacturerImpactAnalysisUtilityImpactAnalysisTrialStandardLevelsEnvironmentalAssessmentRegulatoryImpactAnalysisNOPR Analyses Flow DiagramEmploymentImpactAnalysisEnvironmental AssessmentNOPRFinalRuleEffectiveDate52Purpose•To report environmentalimpacts as a consequence of newor amended energy conservationstandards, including changesin power plant emissions.Output•Calculated the reductionin power plant emissions of carbon dioxide (CO2), oxides of nitrogen(NOX) and mercury (Hg), usingthe NEMS-BT computer model.•Sulfur dioxide (SO2) emission was not included due to the emission cap set by the Clean AirAct Amendments of 1990.•Monetized value ofcarbon reduction.Environmental AssessmentEnvironmental Assessment53ManufacturerImpactAnalysisUtilityImpactAnalysisTrialStandardLevelsEnvironmentalAssessmentRegulatoryImpactAnalysisNOPR Analyses Flow DiagramEmploymentImpactAnalysisRegulatory Impact AnalysisNOPRFinalRuleEffectiveDate54Purpose•To investigate the national impacts due tonon-regulatory alternatives compared withmandatory energy conservation standards.•The non-regulatory alternativesthat may beconsidered:– No new regulatory action;early replacement; prescriptive standards; customer taxcredits; manufacturer tax credits; customer rebates; voluntary efficiency targets; bulkgovernment procurement.Method•Modify NES spreadsheet model toconsider scenarios. Changesmay include:energy pricesand escalation factors; implicit market discount rates; customer purchase price, operatingcost, and income elasticities; and equipment stock data.Output•National Energy Savings andNet Present Value of the non-regulatory alternatives.•Impact of non-regulatory alternatives on purchase priceand use of energy-efficientequipment.Regulatory Impact AnalysisRegulatory Impact Analysis55Summary of Issues on which DOEseeks comment - NOPR issues #1-14Issues for Public Comment1.Addendum t to ASHRAE/IESNA Standard 90.1-2007.2.Extrapolating the engineering analysis to othercooling capacities.3.The EER and COP pairings for PTHPs.4.The rebound effect for the PTAC and PTHP industry.5.Estimation of installation, maintenance, and repair costs for R-410A equipment.6.Assumption that forecasted market shares of PTACs and PTHPsat each efficiency level wouldremain frozen beginning in2012 until the end ofthe forecastperiod (2042).7.The NES-forecasted distribution of efficiencies after the refrigerant phaseout.8.Equipment shifting as a result ofamended energy conservation standards.9.NES shipments forecasts.10.Proposed standard level, TSL 4.11.Consideration of a higher orlower TSL, including the baseline efficiency levels.12.Potential equipment switchingas a result of different standard levels for PTACs and PTHPs.13.The non-standard PTAC and PTHP industry.14.Labeling for PTACs and PTHPs.56Issues Raised by Interested Partiesas of 04/28/08Issues for Public Comment1.Equipment switching will be very likely in thenon-standard size industrybecause the industryis very competitive and most(if not all) equipment issold based on price only.2.By setting the proposed energy conservation standards of PTHPsat significantly higher levelsthan PTACs, DOE is likely toget a very unwanted period of time betweenJanuary 1, 2010, andSeptember 30, 2012, where all R-410A system efficiencies are going to be significantly lowerthan the proposed levels in NOPR, and less than today’s R-22 levels.57How to Submit Comments...Public Meeting– Oral comments will be capturedin the transcript and becomepart of the public record.Written comments– NOPR comment period open untilMay 31, 2008Reference docket #: EERE-2007-BT-STD-0012 and/or RIN #: 1904–AB44.Email: ptac_hp@ee.doe.govMail: Ms. Brenda EdwardsU.S. Department of EnergyBuilding TechnologiesProgram, Mail stop EE-2JNOPR for Packaged Terminal Air Conditioners and Heat PumpsEERE-2007-BT-STD-00121000 Independence Avenue, SWWashington DC, 20585-0121Courier: Ms. Brenda EdwardsU.S. Department of EnergyBuilding Technologies Program950 L’Enfant Plaza, 6th FloorWashington, DC 20024Closing58Backup Slides59Baseline and Incremental MarkupsMarkupsrelate customer price tocost of goods sold (COGS)Baseline markupsrelate price to cost prior to a change in efficiency•Baseline markups indicate a customer price that covers allof a wholesaler’s or contractor’sexpenses plus profit.•Direct labor costs (salaries, payroll, rental and occupancy) are included.Incremental markupsrelate the incremental change in customer price to theincremental change in COGS beyond baseline•Some distribution costs remainconstant with COGS increases.•Incremental markups cover onlyexpenses that vary with an increase in equipment efficiency– For example, direct labor costs (salaries, payroll), rental, and occupancy do not vary withefficiency-induced changes in COGS.•DOE assumes other operating costs and profit willscale proportionally with COGS.Markups to Determine Equipment Price60Shipments by Equipment ClassShipments of PTACs and PTHPs-100200300400500600700800 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042Year

Thousands of UnitsStandard-Size PTACs,≤10,000 BTU/HrStandard Size PTACs, >10,000 BTU/HrStandard-Size PTHPs,≤10,000 BTU/HrStandard Size PTHPs, >10,000 BTU/HrNon-Standard Size PTACsNon-Standard Size PTHPs61National Impact Analysis ProcessShipmentsModelNationalEnergySavingsNationalEconomicImpactsLCCAnalysisResults andOther InputsNationalEnergy Savings(Quads)NationalNet Present Value(2006 US $, billion)National energy savings calculatedfor period from 2012-2042 (30 years)NPV calculated for period from 2012-206262NES and NPV Flow ChartStock of Unitsby YearUnits Shippedby YearShipments byEquipmentClass andEfficiency LevelUnit InstalledCosts,Energy Use,Other OperatingCostsShipmentsAnalysisMarketShares byEquipmentClassAnnualizedCostsCalculations byRisk GroupStock byEquipmentClass andEfficiency LevelTotal Installed Costsby Year, EquipmentClass, EfficiencyLevelTotal EnergyUsed, EnergyCosts, andOtherOperatingCostsElectricityPrices,ForecastsEnergyInformationAdministrationLCC ModelUnit ElectricityUsed, ElectricityCost per Unit, OtherOperating CostsDiscountRates and TSLLevelsCumulative Energy UsePV CostsAnnualized CostsNet Present ValueNet Annualized CostsMarketShares byEquipmentClass