Rulemaking Framework for Packaged Terminal Air Conditioners and 

Packaged Terminal Heat Pumps 

United States Department of Energy 

Office of Energy Efficiency and Renewable Energy 

Building Technologies Program 

February 22, 2013
i 

TABLE OF CONTENTS 

1. INTRODUCTION ..................................................................................................1

1.1 The Appliances and Commercial Equipment Standards Program ............................ 1

1.2 Definitions .............................................................................................................. 2

1.3 Rulemaking History ................................................................................................ 3

1.4 Overview of the Rulemaking Process ...................................................................... 4

1.4.1 Preliminary Analysis ................................................................................ 5

1.4.2 Notice of Proposed Rulemaking ............................................................... 7

1.4.3 Final Rule ................................................................................................. 8

1.5 Test Procedures....................................................................................................... 8

1.5.1 Test Procedure Issues ............................................................................. 10

1.6 Overview of Packaged Terminal Air Conditioners and Packaged Terminal Heat 

Pumps ................................................................................................................... 14

1.7 Interested Parties ................................................................................................... 15

2. ANALYSES FOR RULEMAKING ...................................................................... 16

3. MARKET AND TECHNOLOGY ASSESSMENT ............................................... 17

3.1 Market Assessment ............................................................................................... 18

3.2 Equipment Classes ................................................................................................ 18

3.3 Technology Assessment and Metrics..................................................................... 19

3.4 Baseline Units ....................................................................................................... 20

4. SCREENING ANALYSIS .................................................................................... 21

5. ENGINEERING ANALYSIS ............................................................................... 21

5.1 Engineering Analysis Overview............................................................................ 22

5.2 Proposed Approach for Determining the Cost-Efficiency Relationship.................. 22

5.3 Manufacturer Prices .............................................................................................. 23

5.4 Proprietary Designs ............................................................................................... 23

5.5 Representative Cooling Capacities ........................................................................ 24

5.6 Efficiency Levels for Analysis .............................................................................. 24

5.6.1 Standard Size PTACs and PTHPs ........................................................... 24

5.6.2 Non-standard Size PTACs and PTHPs .................................................... 26

5.7 Outside Regulatory Changes Affecting the Engineering Analysis ......................... 27

6. ENERGY USE ANALYSIS ................................................................................. 27

7. MARKUPS ANALYSIS ....................................................................................... 29

8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS ............................. 31

8.1 Installation Cost .................................................................................................... 31

8.2 Operating Cost ...................................................................................................... 32

8.3 Equipment Lifetime .............................................................................................. 32

8.4 Discount Rates ...................................................................................................... 32

9. SHIPMENTS ANALYSIS .................................................................................... 33

10. NATIONAL IMPACT ANALYSIS ...................................................................... 34

10.1 National Energy Savings ....................................................................................... 34

10.2 Net Present Value of Purchaser Benefits ............................................................... 35

11. PURCHASER SUBGROUP ANALYSIS ............................................................. 36

12. MANUFACTURER IMPACT ANALYSIS .......................................................... 36

12.1 Sources of Information.......................................................................................... 37
ii

12.2 Industry Cash Flow Analysis ................................................................................ 37

12.3 Manufacturer Subgroup Analysis .......................................................................... 38

12.4 Competitive Impacts Assessment .......................................................................... 38

12.5 Cumulative Regulatory Burden ............................................................................. 38

13. EMISSIONS ANALYSIS ..................................................................................... 39

14. MONETIZING CARBON DIOXIDE AND OTHER EMISSIONS REDUCTIONS

............................................................................................................................. 41

15. UTILITY IMPACT ANALYSIS ........................................................................... 42

16. EMPLOYMENT IMPACT ANALYSIS ............................................................... 42

17. REGULATORY IMPACT ANALYSIS ................................................................ 43

APPENDIX A – LIST OF ITEMS FOR COMMENT ............................................................... 44

LIST OF FIGURES 

Figure 2.1 Flow Diagram of Analyses for the Package Terminal Air Conditioning and Package 

Terminal Heat Pump Standards Rulemaking Process ............................................... 17

Figure 5.2 Non-standard Size PTAC and PTHP EER vs. Cooling Capacity ............................... 26

Figure 7.1 Distribution Channels for PTAC and PTHP Equipment ............................................ 30

LIST OF TABLES 

Table 1.1 PTACs and PTHPs Standards Prescribed by EPACT 1992 ..........................................3

Table 1.2 Energy Conservation Standards for PTACs and PTHPs, as Amended by the 2008 Final 

Rule ...........................................................................................................................4
iii

LIST OF ACRONYMS 

AEC annual energy consumption 

AEO Annual Energy Outlook

AHRI Air-Conditioning, Heating and Refrigeration Institute 

ARI Air-Conditioning and Refrigeration Institute (now AHRI) 

ASHRAE American Society of Heating, Refrigerating, and Air-Conditioning Engineers 

BT Building Technologies Program 

CAIR Clean Air Interstate Rule 

CEE Consortium for Energy Efficiency 

CEER combined energy efficiency ratio 

CO2 carbon dioxide 

COP coefficient of performance 

CSL candidate standard level 

DC (Washington) District of Columbia 

DOE U.S. Department of Energy 

DOJ U.S. Department of Justice 

EER energy efficiency ratio 

EERE Office of Energy Efficiency and Renewable Energy 

EGU electricity generating unit 

EIA Energy Information Administration 

EISA 2007 Energy Independence and Security Act of 2007 

E.O. Executive Order 

EPA U.S. Environmental Protection Agency 

EPACT 2005 Energy Policy Act of 2005 

EPCA Energy Policy and Conservation Act 

°F degrees Fahrenheit 

FR Federal Register 

GHG greenhouse gas 

GRIM Government Regulatory Impact Model 

HCFC hydrochlorofluorocarbon 

HFC hyrdofluorocarbon 

Hg mercury 

ImSET Impact of Sector Energy Technologies 

kWh kilowatt-hour 

LCC life-cycle cost 

MIA manufacturer impact analysis 

MPC manufacturing production cost 

NEMS National Energy Modeling System 

NEMS-BT National Energy Modeling System – Building Technologies Program 

NES national energy savings 

NIA national impact analysis 

NOPR notice of proposed rulemaking 

NOX nitrogen oxides 

NPV net present value 

OMB Office of Management and Budget 
iv

PBP payback period 

PM particulate matter 

Pub. L. Public Law 

R&D research and development 

RIA regulatory impact analysis 

SCC social cost of carbon 

SG&A selling, general, and administrative 

SO2 sulfur dioxide 

TSD technical support document 

TSL trial standard level 

U.S. United States 

U.S.C. U.S. Code 
1

1. INTRODUCTION 

The U.S. Department of Energy (DOE) Appliances and Commercial Equipment 

Standards Program within the Office of Energy Efficiency and Renewable Energy’s (EERE) 

Building Technologies Program (BT) develops and promulgates test procedures and energy 

conservation standards for certain consumer appliances and commercial equipment. The process 

for developing standards involves analysis, public notice and comment, and consultation with 

interested parties. “Interested parties” include manufacturers, purchasers, energy conservation 

and environmental advocates, State and Federal agencies, and any other groups or individuals 

with an interest in these standards and test procedures. 

 

The purpose of this document is to describe the procedural and analytical approaches 

DOE anticipates using to determine whether the energy conservation standards for packaged 

terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs) should be 

amended and, if so, to evaluate potential amended standards. (See section 1.1 for a discussion of 

the statutory authority for this rulemaking.). This document is intended to inform interested 

parties of the process DOE will follow for this rulemaking for PTACs and PTHPs and to 

encourage and facilitate the input of interested parties. This document is the starting point for 

determining whether standards should be amended and, if so, for developing such standards. This 

document is not a definitive statement on any issue for which a determination may be made in 

the rulemaking. 

Section 1 of this report provides an overview of DOE’s rulemaking process. Sections 2

through 17 discuss analyses DOE intends to conduct to fulfill the statutory requirements and 

guidance for this energy conservation standards rulemaking. As part of this rulemaking, DOE is 

required to determine whether to amend existing energy conservations standards for this 

equipment. DOE believes that these analyses will support its determination of whether to amend 

the standards and, if the determination is positive, to establish any amended standards. DOE will 

maintain information about this rulemaking on its website at: 

http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/45. 

Item 1-1 While DOE invites comment on all aspects of the material presented in this 

document, several specific issues on which DOE seeks comment are set out in 

comment boxes like this one. DOE uses these comment boxes to highlight issues 

and ask specific questions on the approaches DOE plans to follow to conduct the 

analyses required for the energy conservation standards rulemaking. Such 

requests for feedback are numbered sequentially throughout the document and 

are repeated in Appendix A.

1.1 The Appliances and Commercial Equipment Standards Program 

Title III, Part C of the Energy Policy and Conservation Act of 1975 (EPCA), Pub. L. 94-

163 (42 U.S.C. 6311–6317, as codified), added by Pub. L. 95-619, Title IV, § 441(a), established 
2

the Energy Conservation Program for Certain Industrial Equipment, a program covering certain 

industrial equipment, which includes the PTACs and PTHPs that are the focus of this notice.2

The Energy Policy Act of 1992 (EPACT 1992), Pub. L. 101-486, amended section 342 of 

EPCA to establish Federal energy conservation standards, effective October 24, 1992, that 

generally correspond to the levels in American Society of Heating, Refrigerating and AirConditioning Engineers (ASHRAE)/ Illuminating Engineering Society of North America 

(IESNA) Standard 90.1 (ASHRAE Standard 90.1) for most types of covered equipment listed in 

section 342(a) of EPCA (ASHRAE equipment3), including PTACs and PTHPs. (42 U.S.C. 

6313(a)) Further, section 342(a)(6)(A) of EPCA states that if ASHRAE modifies the required 

efficiency levels specified in its Standard 90.1 for certain equipment including PTACs and 

PTHPs, DOE must amend the national standard for that equipment at the level specified in 

ASHRAE Standard 90.1, unless DOE determines that a more-stringent standard would result in 

significant energy savings and would be technologically feasible and economically justified. (42 

U.S.C. 6313(a)(6)(A)) On October 29, 1999, ASHRAE Standard 90.1-1999 amended its 

efficiency levels for PTACs and PTHPs; in response, DOE published a final rule (2008 final 

rule) amending the minimum energy conservation standards for PTACs and PTHPs at a more 

stringent level than ASHRAE Standard 90.1-1999. 73 FR 58772 (Oct. 7, 2008). 

Section 305 of the Energy Independence and Security Act of 2007 (EISA 2007), Pub. L. 

110-140, amended section 342(a)(6)(C) of EPCA to mandate that not later than six years after 

the issuance of any final rule establishing or amending a standard for ASHRAE equipment, DOE 

must either publish a notice of determination that more-stringent standards for such equipment 

are not needed or a notice of proposed rulemaking proposing amended standards that are 

technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(C)(i)) Therefore, 

DOE must publish a determination or notice of proposed rulemaking by no later than October 7, 

2014 (6 years after the publication of the 2008 final rule). DOE has published this framework 

document as a first step toward meeting these statutory requirements. 

1.2 Definitions 

Section 122(a)(10)(A) of EPACT 1992 defines “packaged terminal air conditioner” as “a 

wall sleeve and separate unencased combination of heating and cooling assemblies specified by 

the builder and intended for mounting through the wall. It includes a prime source of 

refrigeration, separable outdoor louvers, forced ventilation, and heating availability by builder’s 

choice of hot water, steam, or electricity.” (42 U.S.C. 6311(10)(A)) Section 122(a)(10)(B) of 

EPACT 1992 defines “packaged terminal heat pump” as “a packaged terminal air conditioner 

that utilizes reverse cycle refrigeration as its prime heat source and should have supplementary 

heat source available to builders with the choice of hot water, steam, or electric resistant heat.” 

(42 U.S.C. 6311(10)(B)) 

 

2

 For editorial reasons, upon codification in the U.S. Code, Part C was re-designated Part A-1. 

3

 ASHRAE equipment includes commercial water heaters, commercial packaged boilers, commercial airconditioning and heating equipment, and packaged terminal air conditioners and heat pumps. 
3

The 2008 final rule divided both PTACs and PTHPs into “standard size” and “nonstandard size” equipment classes. A “standard size” PTAC or PTHP refers to a PTAC or PTHP 

“with wall sleeve dimensions having external wall opening of greater than or equal to 16 inches 

high or greater than or equal to 42 inches wide, and a cross sectional area greater than or equal to 

670 square inches.” 73 FR 58772, 58782 (Oct. 7, 2008). A “non-standard size” PTAC or PTHP 

refers to a PTAC or PTHP “with existing wall sleeve dimensions having an external wall 

opening of less than 16 inches high or less than 42 inches wide, and a cross sectional area less 

than 670 square inches.” Id. 

1.3 Rulemaking History 

EPACT 1992 set forth energy conservation standards for PTACs and PTHPs 

manufactured on or after January 1, 1994. (42 U.S.C. 6313(a)(3))Table 1.1 shows the energy 

conservation standards for PTACs and PTHPs as promulgated by EPACT 1992. 

Table 1.1 PTACs and PTHPs Standards Prescribed by EPACT 1992

Equipment 

Type

Cooling Capacity Minimum Energy Conservation 

Standard

Compliance Date1

PTAC

<7000 Btu/h EER2= 8.88 1/1/1994

≥7000 Btu/h and 

≤15,000 Btu/h EER = 10.0 – (0.16 x Cap*) 1/1/1994

>15,000 Btu/h EER = 7.6 1/1/1994

PTHP

<7000 Btu/h EER = 8.88

COP3= 2.7

1/1/1994

≥7000 Btu/h and 

≤15,000 Btu/h

EER = 10.0 – (0.16 x Cap*)

COP = 1.3 + (0.16 x EER)

1/1/1994

>15,000 Btu/h EER = 7.6

COP = 2.5

1/1/1994

Source: 10 CFR 431.97 

*

 Cap refers to cooling capacity in thousand British thermal units per hour (Btu/h) at the specified standard rating 

conditions. 

1

 Equipment manufactured on or after the compliance date must meet the standard. 

2 EER, or energy efficiency ratio, is the ratio of the produced cooling effect of an air conditioner or heat pump to its 

net electric energy input, expressed in Btu/Wh, at the specified standard rating conditions. 

3 COP, or coefficient of performance, is the ratio of the produced heating effect of a heat pump to its net electric 

energy input, expressed in W/W, at the specified standard rating conditions.

On October 7, 2008, DOE published a final rule amending energy conservation standards 

for PTACs and PTHPs (2008 final rule). 73 FR 58772. As discussed in section 1.2, this final 

rule also divided PTACs and PTHPs into two equipment classes – standard size and nonstandard size. Table 1.2 shows the energy conservation standards for PTACs and PTHPs, as 

amended by the 2008 final rule. 
4

Table 1.2 Energy Conservation Standards for PTACs and PTHPs, as Amended by the 

2008 Final Rule 

Equipment 

Type

Size Category Cooling Capacity Minimum Energy Conservation 

Standard

Compliance Date1

PTAC

Standard Size

<7000 Btu/h EER2= 11.7 10/8/2012

≥7000 Btu/h and 

≤15,000 Btu/h EER = 13.8 – (0.300xCap*)

10/8/2012

>15,000 Btu/h EER = 9.3 10/8/2012

Non-Standard 

Size

<7000 Btu/h EER = 9.4 10/7/2010

≥7000 Btu/h and 

≤15,000 Btu/h EER = 10.9 – (0.213xCap*) 10/7/2010

>15,000 Btu/h EER = 7.7 10/7/2010

PTHP

Standard Size

<7000 Btu/h EER = 11.9

COP3= 3.3

10/8/2012

≥7000 Btu/h and 

≤15,000 Btu/h

EER = 14.0 – (0.300xCap*)

COP = 3.7 – (0.052xCap*)

10/8/2012

>15,000 Btu/h EER = 9.5

COP = 2.9

10/8/2012

Non-Standard 

Size

<7000 Btu/h EER = 9.3

COP = 2.7

10/7/2010

≥7000 Btu/h and 

≤15,000 Btu/h

EER = 10.8 – (0.213xCap*)

COP = 2.9 – (0.026xCap*)

10/7/2010

>15,000 Btu/h EER = 7.6

COP = 2.5

10/7/2010

Source: 10 CFR 431.97 

*

 Cap refers to cooling capacity in thousand British thermal units per hour (Btu/h) at the specified standard rating 

conditions. 

1

 Equipment manufactured on or after the compliance date must meet the standard. 

2 EER, or energy efficiency ratio, is the ratio of the produced cooling effect of an air conditioner or heat pump to its 

net electric energy input, expressed in Btu/Wh, at the specified standard rating conditions. 

3

 COP, or coefficient of performance, is the ratio of the produced heating effect of a heat pump to its net electric 

energy input, expressed in W/W, at the specified standard rating conditions.

Standard size PTACs and PTHPs are only required to meet the standards as set by 

EPACT 1992 if they were manufactured before October 8, 2012; if they were manufactured on 

or after that date, they are required to meet the amended energy conservation standards shown in

Table 1.2. 

1.4 Overview of the Rulemaking Process 

Under EPCA, any new or amended standards must achieve the maximum level of energy 

efficiency that is technologically feasible and economically justified. In setting any new or 

amended standards, DOE must consider: (1) the economic impact of the standard on the 

manufacturers and purchasers of the affected equipment; (2) the savings in operating costs 

throughout the estimated average life of the equipment compared to any increases in the initial 

cost or maintenance expense; (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 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. (42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6311(a)) As 
5

discussed in further detail below, the standards rulemaking process typically involves four public 

notices that are published in the Federal Register, including a notice announcing the availability 

of the framework document. Publication of the framework document, preliminary analysis, and 

notice of proposed rulemaking (NOPR) are typically accompanied by public meetings to solicit 

comment from interested parties to enhance the rulemaking process. DOE encourages interested 

parties to develop and submit joint recommendations and will carefully consider such 

recommendations in its decision making. Preliminary analysis results could serve as the initial 

basis for the development of these recommendations. As stated previously, DOE believes the 

conduct of the analyses accompanying these notices will support DOE’s determination of 

whether to amend the standards and, if the determination is positive, to establish any amended 

standards. 

Preliminary Analysis (section 1.4.1). The preliminary analysis is designed to publicly vet 

the models and tools that DOE intends to use in the rulemaking and to facilitate public 

participation before the proposed rule stage. Using these models and tools, DOE performs 

preliminary analyses to assess candidate standard levels (CSLs), which span the range of 

efficiencies from baseline equipment to the most efficient technology. 

Notice of Proposed Rulemaking (section 1.4.2). The NOPR presents a discussion of 

comments received in response to the preliminary analysis, DOE’s analysis of the 

impacts of potential standards on purchasers, manufacturers, and the Nation, DOE’s 

weighting of these impacts, and any proposed standard levels for public comment. 

Final Rule (section 1.4.3). The final rule presents a discussion of comments received in 

response to the NOPR, revised analysis, as appropriate, of the impacts of any standards, 

DOE’s weighting of those impacts, and the standard levels, if any, that DOE is adopting. 

The final rule also establishes the date by which manufacturers must comply with any 

standards. 

1.4.1 Preliminary Analysis

As part of its energy conservation standards rulemaking activity, DOE typically identifies 

equipment technology options and makes a preliminary determination on whether to retain each 

option for detailed analysis or to eliminate it from further consideration. This process includes a 

market and technology assessment (section 3) and a screening analysis (section 4). DOE applies 

four screening criteria in the screening analysis to determine which technology options to 

eliminate from further consideration: (1) technological feasibility; (2) practicability to 

manufacture, install, and service; (3) adverse impacts on equipment utility or availability; and 

(4) adverse impacts on health or safety. Technologies that pass through the screening analysis are 

evaluated, and referred to as technology or design options, in the engineering analysis. 

DOE consults with interested parties and independent technical experts and researches 

industry literature to identify the key issues and design options or efficiency levels that DOE will 

consider in the rulemaking. DOE initiates dialogue with interested parties with this framework 

document, the public meeting following its publication, and the request for public comment. This 

dialogue provides an opportunity for input into the structural and analytical approach planned for 

the subsequent energy conservation standards rulemaking. 
6

At the start of the preliminary analysis, DOE considers design options or efficiency levels 

for each equipment class. DOE uses these design options or efficiency levels to collect 

manufacturer cost data, historical shipment data, shipment-weighted average efficiency data, and 

preliminary manufacturer impact data (e.g., capital conversion expenditures, marketing costs, 

and research and development (R&D) costs). Concurrent with the preliminary analysis, DOE 

also conducts other principal analyses, including: 

1. Engineering analysis (section 5); 

2. Purchaser life-cycle cost (LCC) and payback period (PBP) analyses (section 8); 

3. National impact analysis (NIA), which considers national energy savings (NES) and 

purchaser net present value (NPV) (section 10); and 

4. Preliminary manufacturer impact analysis (MIA) (section 12). 

 DOE will present the results of these analyses in the preliminary analysis technical 

support document (TSD). 

DOE selects CSLs from the energy efficiency or energy use levels considered in the 

preliminary analysis. Discussion of various CSLs in the preliminary analysis will help interested 

parties review the spreadsheet models that underpin the analyses. DOE will use comments from 

interested parties to refine the models for the next stage of the rulemaking analyses. In addition 

to the efficiency corresponding to the maximum technologically feasible (“max-tech”) design 

and the efficiency corresponding to the minimum LCC point, DOE generally considers 

efficiency levels or design options that span the full range of technologically achievable 

efficiencies. The range of efficiency levels DOE typically analyzes includes the following: 

The baseline efficiency level typically represents equipment with the lowest energy 

efficiency on the market. For equipment where minimum energy conservation standards 

already exist, the baseline efficiency level is typically defined by the existing energy 

conservation standard. 

The level with the minimum LCC or greatest LCC savings. 

The highest energy efficiency level or lowest energy consumption level that is 

technologically feasible (i.e., max-tech). 

Levels that incorporate noteworthy technologies or fill large gaps between other 

efficiency levels being considered. 

At the preliminary analysis stage, DOE uses analytical models and tools to assess the 

different equipment classes at each efficiency or energy use level analyzed. Many of these 

analytical models and tools are in the form of spreadsheets, which are used to conduct the LCC 

and PBP analyses and to determine the NES and NPV of prospective standards. 
7

DOE will make the spreadsheet tools and results of the preliminary analysis available on 

its website for review.4 When it publishes the preliminary analysis, DOE will also make a 

preliminary TSD available, which contains the details of all the analyses performed to date. After 

publication of the preliminary analysis, DOE will provide a public comment period and hold one 

public meeting. 

1.4.2 Notice of Proposed Rulemaking 

In developing the NOPR, DOE will consider all the comments it receives on the 

preliminary analysis, within the stated comment period. This process may result in revisions to 

the preliminary analysis, including the engineering and LCC analyses. At this point, DOE will 

conduct additional economic and environmental impact analyses. These analyses generally 

include: 

1. Purchaser LCC subgroup analysis (section 11); 

2. Complete MIA (section 12);

3. Emissions Analysis (section Error! Reference source not found.); 

4. Monetizing Carbon Dioxide and Other Emissions Reductions (section Error! Reference 

source not found.); 

5. Utility Impact Analysis (section Error! Reference source not found.); 

6. Employment Impact Analysis (section 16); and 

7. Regulatory Impact Analysis (RIA) (section 17).

DOE will describe the methodology used and make the results of all the analyses 

available on its website for review. Based on comments from interested parties, further revisions 

to the analysis may be made. This analytical process ends with the selection of proposed standard 

levels, if any, that DOE will present in the NOPR. DOE selects the proposed standard levels 

from the trial standard levels (TSLs) analyzed during the NOPR phase of the rulemaking. The 

NOPR, published in the Federal Register, will document the evaluation and selection of any 

proposed standards levels, along with a discussion of other TSLs considered but not selected and 

the reasons DOE did not select them. 

For each equipment class, DOE will identify the max-tech efficiency level. If DOE 

proposes a lower level, DOE will explain the reasons for eliminating higher levels, beginning 

with the highest level considered. DOE will present the analytical results in the NOPR and 

provide the details of the analysis in an accompanying TSD. 

 

4

 All materials associated with the rulemakings for packaged terminal air conditioners and packaged terminal heat 

pumps test procedures and energy conservation standards are available on DOE’s website at: 

http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/45 
8

DOE considers many factors in selecting proposed standards. These factors are contained 

in EPCA and take into consideration the benefits, costs, and impacts of energy conservation 

standards. 

When DOE publishes the NOPR, it will provide the U.S. Department of Justice (DOJ) 

with copies of the NOPR and TSD to solicit feedback on the impact of any proposed standard 

levels on competition in the PTAC and PTHP industry. DOJ reviews standard levels in light of 

any lessening of competition likely to result from the imposition of such standards. (42 U.S.C. 

6295(o)(2)(B)(i)(V) and (B)(ii)) Publication of the NOPR will be followed by a public comment 

period that includes a public meeting. 

1.4.3 Final Rule 

After publication of the NOPR, DOE will consider public comments it receives on the 

proposal and accompanying analyses. DOE will review the engineering and economic impact 

analyses and any proposed standards based on these comments and consider modifications where 

necessary. Before any final rule is issued, DOE also will consider DOJ comments on the NOPR 

relating to the impacts of any proposed standard levels on competition to determine whether 

changes to these standard levels are needed. DOE will publish the DOJ comments and DOE’s 

response as part of the final rule. 

In any final rule, DOE would determine whether to amend the standards, and if such 

determination is positive, would select the final standard level based on the complete record of 

the standards rulemaking. The final rule would set any final standard levels and the compliance 

date, and would also explain the basis for the selection of any final standard levels. The final rule 

would be accompanied by a final TSD. 

1.5 Test Procedures 

On December 8, 2006, DOE published a final rule (the 2006 test procedure final rule) 

that incorporated by reference Air-Conditioning and Refrigeration Institute (ARI) Standard 

310/380-2004 as the Federal test procedure for PTACs and PTHPs. 71 FR 71340, 71371. ARI 

later became the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), and its standards 

were renamed to reflect this change. More recently, DOE published a final rule for commercial 

heating, air-conditioning, and water-heating equipment (ASHRAE equipment), which included 

amendments for PTACs and PTHPs. In particular, this rule modified the test procedure 

requirements by clarifying that section 5.6 of AHRI Standard 310/380-2004, which addresses 

allowable tolerances of test results, does not apply to tolerances associated with DOE testing 

because DOE has its own procedures for determining whether equipment ratings are within 

acceptable tolerance limits, found in 10 CFR 429. 77 FR 28928, 28990 (May 16, 2012). 

However, DOE did not conduct an evaluation of test procedures for PTACs and PTHPs 

consistent with the periodic evaluation requirements under EPCA section 342(a)(1) during the 

course of this rulemaking. 77 FR 28928, 28941. 
9

AHRI Standard 310/380-2004 requires use of either the test procedure outlined in 

ASHRAE Standard 16-19995 or the test procedure outlined in ASHRAE Standard 37-1988 to 

determine cooling mode ratings for a PTAC or PTHP. AHRI Standard 310/380-2004 also 

requires use of the test procedure outlined in ASHRAE Standard 58-19996 to determine heating 

mode ratings. The specific versions (i.e., publication dates) of these ASHRAE standards are not 

specified in the AHRI standard. 

Section 342(a)(4)(B) of EPCA states that if the industry test procedure or rating 

procedure for PTACs or PTHPs is amended, the Secretary shall amend the Federal test 

procedures as necessary to be consistent with the amended industry standards, unless doing so 

would not meet the requirements of sections (2) and (3) of 342(a). (42 U.S.C 6314(a)(4)(B)) 

Sections 342(a)(2) and (3) require that test procedures be reasonably designed to product test 

results which reflect energy efficiency and estimated operating costs during a representative 

average use cycle, not be unduly burdensome to conduct, and that test procedures for 

determining estimated annual operating costs be calculated from measurements of energy use in 

a representative average-use cycle and from representative average unit costs of energy. (42 

U.S.C. 6314(a)(2)-(3)) 

Since the publication of the 2006 test procedure final rule, AHRI has not updated its 

Standard 310/380-2004. ASHRAE also has not updated either Standard 16-1999 or Standard 58-

1999 since the 2006 test procedure final rule but reaffirmed the existing versions of both test 

standards in 2009. ASHRAE updated Standard 37-1988 in 2009. 

DOE is required by EPCA to conduct an evaluation of test procedures every seven years 

to determine if amended procedures would more accurately or fully comply with the 

requirements of sections 342(a)(2) and (3), and to either prescribe amended test procedures or 

publish a notice in the Federal Register regarding a determination not to amend test procedures. 

(42 U.S.C 6314(a)(1)) DOE last evaluated its test procedures in accordance with this requirement 

in 2006.Consequently, DOE intends to conduct such an evaluation of the test procedures for 

PTACs and PTHPs in parallel with the energy conservation standard rulemaking which is now 

beginning. If DOE determines that test procedure amendments are warranted, it will conduct a 

test procedure rulemaking to develop, propose, and prescribe appropriate amendments. DOE will 

consider any amendments to the test procedure in its analysis of amended energy conservation 

standards. 

 

5

 To simplify nomenclature, DOE is using “ASHRAE Standard 16-1999” to refer to ASHRAE Standard 16-1983 

(RA1999). The standard was last amended in 1983 but “reaffirmed” in 1999, which means that ASHRAE reviewed 

the standard and determined that no changes were necessary. ASHRAE more recently reaffirmed the same version 

of the standard in 2009. 

6

 “ASHRAE Standard 58-1999” refers to ASHRAE Standard 58-1986 (RA1999). The standard was last amended in 

1986 but “reaffirmed” in 1999, which means that ASHRAE reviewed the standard and determined that no changes 

were necessary. ASHRAE more recently reaffirmed the same version of the standard in 2009. 
10

1.5.1 Test Procedure Issues 

During its preliminary review of the test procedure, DOE identified the following 

potential issues for comment associated with the current Federal test procedure for both PTACs 

and PTHPs. The issues are briefly summarized in a the following list and discussed in greater 

detail below. 

1. Break-in of the equipment prior to testing is generally conducted to smooth out 

fabrication imperfections of the compressor and assure the best performance. Should the 

PTAC and PTHP test procedure allow or require a break-in period? If so, should a 

maximum or minimum break-in period be specified and should break-in conditions (i.e., 

temperature) also be specified? 

2. Capacity and efficiency measurements can be affected by the sealing between the 

equipment’s wall sleeve and the test facility dividing wall. Is clarification required for 

this and/or other aspects of equipment set-up to assure accurate and repeatable test 

results?

3. Should DOE allow water to be added to the PTAC condensate drain pan at the start of 

testing to reduce test time? Are specifications needed for the amount and/or type of 

water to be used for this? 

4. ASHRAE Standard 16-1999 includes an adjustment of cooling capacity if barometric 

pressure correction is less than standard pressure, while ASHRAE Standard 37-1988 does 

not. Should this adjustment be used or not? If so, is the current Standard 16-1999

adjustment correct? 

5. Should other differences between ASHRAE Standards 16-1999 and 37-1988 be 

reconciled, or should the DOE test procedure allow just one of these standards to be used 

to determine cooling mode ratings? 

 

Product Break-In Time Prior to Testing 

Break-in, also called run-in, refers to the operation of a product prior to testing to cause 

preliminary wear that may improve measured performance. DOE’s final rule for ASHRAE 

equipment established optional break-in time of up to 20 hours for many types of commercial air 

conditioning and heating equipment, but those amendments did not apply to PTACs and PTHPs. 

77 FR 28928, 28991 (May 16, 2012). DOE regulations require that the duration of the break-in 

period used by manufacturers in the testing they conduct to develop the certified rating for a 

given basic model must be retained as part of the test data underlying the certified ratings 

pursuant to 10 CFR Part 429.71, thus allowing use of the same break-in duration during any 

third-party testing. If DOE establishes regulations addressing break-in for testing of PTACs and 

PTHPs, DOE would consider a similar approach. 

DOE further is aware that the time required to achieve full break-in may depend on 

ambient temperature. Generally, the break-in process is conducted outside the test chamber at 

room temperature conditions (i.e., 75 °F). However, conducting break-in in the test chamber at
11

elevated ambient temperatures (i.e., 95 °F outdoor/80 °F indoor) or in a dedicated (i.e., 

separately constructed) break-in room at an elevated temperature may reduce the time required to 

achieve full break-in. However, use of the test chamber for break-in would likely increase the 

expense of testing. In any case, the break-in process may not be fully described solely by its 

duration. 

Item 1-2 DOE requests detailed test data supporting (a) selection of a specific break-in 

time necessary for PTACs and PTHPs to achieve their steady-state performance 

level; (b) how much improvement in efficiency typically can be achieved using a 

full break-in period as compared with no break-in period; and (c) how the 

break-in period varies with break-in conditions such as temperature. DOE 

requests information regarding the test burden per unit associated with a given 

break-in period and with approaches that might accelerate break-in using 

elevated ambient temperature. DOE requests comment on whether a break-in 

period should be optional or required, and whether break-in parameters such as 

minimum and/or maximum break-in times and/or temperatures should be 

specified. 

Sealing Between the Equipment’s Wall Sleeve and the Test Facility Dividing Wall 

DOE’s regulations define PTAC as “a wall sleeve and a separate un-encased combination 

of heating and cooling assemblies specified by the builder and intended for mounting through the 

wall,” hence clarifying that PTACs, and similarly PTHPs, must be tested within their wall 

sleeves.7 10 CFR 431.92. Testing of both types of equipment is conducted in a test facility 

having an indoor side and an outdoor side separated by a dividing wall. The test sample is 

placed within its wall sleeve in an opening in the wall. ASHRAE Standard 16-1999, Section 

4.2.2, states, “The air conditioner shall be installed in a manner similar to its normal installation.” 

However, test laboratories do not permanently build PTAC wall sleeves into the dividing walls 

for testing. Air leakage between the outdoor and indoor portions of the test facility significantly 

degrades the capacity measurement if it is conducted using ASHRAE Standard 16-1999.8

 

Hence, poor sealing between the wall sleeve and the dividing wall will result in significantly 

lower capacity and efficiency measurements. In contrast, a typical installation of a PTAC or 

PTHP in a commercial building includes sealing between the wall sleeve and the outside wall 

using a sealant to reduce the air leakage through the outside barrier. 

AHRI Standard 310/380-2004 indicates in section 4.3 that “the filter and any air-mixers, 

air-inlets, grilles, deflecting vanes, and other standard equipment shall be in place during all 

tests, unless otherwise specified in the manufacturer’s instructions to the user.” ASHRAE 

Standard 16-1999, section 4.2.2, states, “The air conditioner shall be installed in a manner 

 

7

 PTHP is defined as “a package terminal air conditioner that utilizes reverse cycle refrigeration as its prime heat 

source, that has a supplementary heat source available, with the choice of hot water, steam, or electric resistance 

heat, and that is industrial equipment.” 10 CFR 431.92. Because a PTHP is a type of PTAC, the requirement that 

units must be tested within their wall sleeves also applies to PTHPs. 

8

 Such leakage is less important when testing using ASHRAE Standard 37-1988, because in this test method the 

measurement does not depend on the thermal load imposed on the indoor test room—it depends instead on the air 

flow and air enthalpy change of the air passing through the PTAC or PTHP’s indoor side. 
12

similar to its normal installation. No effort shall be made to seal the internal construction of the 

air conditioner to prevent air leakage from the condenser side to the evaporator side or vice 

versa, other than specifically provided by the manufacturer’s normal installation instructions. No 

connections or alterations shall be made to the air conditioner that interfere with its normal 

operation. Grille positions, fan speeds, and the like shall be set to result in maximum cooling 

capacity in accordance with manufacturer instructions.” Neither these nor any other 

requirements in AHRI Standard 310/380-2004 and ASHRAE Standard 16-1999 provide any 

specific instructions regarding sealing around the outside of the wall sleeve. 

In any proposed test procedures, DOE may require that the potential leakage gaps 

between the wall sleeve and the test facility partition wall be sealed. This would assure 

consistency with typical PTAC or PTHP installation in the field, for which a good seal around 

the sleeve is expected, and it would also ensure consistency of results among different test 

laboratories. 

Item 1-3 DOE requests comment regarding the potential requirement for sealing potential 

leakage gaps between the PTAC or PTHP wall sleeve and the test facility 

partition during testing. DOE also requests comment regarding whether any 

additional set-up requirements should be included in the test procedure to assure 

accurate and repeatable testing. 

Adding Water to the Condensate Drain Pan to Reduce Test Time 

PTACs transfer evaporator condensate to the condenser side and distribute the water over 

the air-inlet side of the condenser (the air blows through the condenser from inside the condenser 

compartment through the condenser to the outside) to help cool the condenser through 

evaporation. The condensate pan generally has water in it, while the PTAC or PTHP operates in 

the field in cooling mode in all but the driest operating conditions. Cooling capacity and 

efficiency measured during a test will increase as the water level in the drip pan fills to a constant 

height in which the condensate generated by the evaporator is balanced by the liquid that is 

evaporated by condenser air. Test facilities accelerate testing by adding water to the drip pan at 

the start of the test rather than waiting for the condensate level to stabilize. 

The current DOE test procedure does not specifically indicate whether this practice is 

allowed or required. 

Condensate dropping from the evaporator is generally pure water, but city water, which 

could potentially be used, includes dissolved solids. It is unclear if and how these dissolved 

solids would affect the measurement of the equipment’s cooling capacity or the calculation of the 

EER (as compared to waiting for the test to achieve steady state, or as compared to use of 

distilled water). DOE does not believe that use of city water to prefill the condensate pan would 

have a measurable impact on the cooling capacity or efficiency measurements, but has no data to 

verify this belief. 
13

Item 1-4 DOE requests any available test data which would indicate whether use of city 

water to prefill condensate pans would affect capacity or efficiency 

measurements as compared with no prefilling or with the use of distilled water. 

DOE requests comment regarding the amount of time and labor hours saved 

during testing by prefilling the condensate pan. Finally, DOE requests comment 

on whether prefilling of the condensate pan should be allowed and/or required, 

and whether there is any need to require certification reports to indicate whether 

this step was taken. 

Barometric Pressure Correction 

Air is less dense at higher altitudes, where the barometric pressure is lower. As a result, 

air mass flow generated by fans and blowers is lower at higher altitudes. In addition, the 

relationship between air enthalpy and dry bulb and wet bulb temperatures is affected by pressure. 

Air enthalpy is directly related to cooling capacity, which is equal to the indoor air mass flow 

multiplied by the difference in the enthalpies of the inlet air and discharge air. During the test 

procedure rulemaking for room air conditioners (RACs), products for which cooling capacities 

and efficiencies are also measured using ASHRAE Standard 16-1999, interested parties did not 

agree on whether lower barometric pressure significantly impacts measured energy use and, if 

so, by what magnitude. (See, e.g., Energy Conservation Program for Consumer Products: Test 

Procedures for Clothes Dryers and Room Air Conditioners, Docket EERE-2008-BT-TP-0010, 

ASAP and Earthjustice, No. 42).9 DOE has not been able to obtain data to resolve this issue or 

to verify whether barometric pressure has any significant impact on the measured efficiency of 

PTACs and PTHPs. 

ASHRAE Standard 16-1999 calls for adjustment of capacity if the test is conducted in 

low barometric pressure conditions: “[T]he capacity may be increased 0.8% for each in. Hg 

below 29.92 in. Hg (0.24% for each kPa below 101 kPa).” (Section 6.1.3). In contrast, ASHRAE 

Standard 37-1988 does not apply an adjustment for low barometric pressure conditions. 

Item 1-5 DOE requests detailed test data that would show the relationship between 

barometric pressure and cooling capacity or efficiency measurements for PTACs 

and PTHPs tested using ASHRAE Standard 16-1999 or ASHRAE Standard 37-

1988. 

Differences Between ASHRAE Standards 16-1999 and 37-1988 

DOE regulations cite AHRI Standard 310/380 as the test procedure to be used for 

determination of the EER for PTACs and PTHPs. 10 CFR 431.96(b)(1). The AHRI standard in 

turn indicates that either ASHRAE Standard 16-1999 or 37-1988 may be used to determine 

cooling mode ratings. In ASHRAE Standard 16-1999, manufacturers may increase the rated 

cooling capacity by 0.8% for each inch of mercury below standard atmospheric pressure 

 

9

 The docket folder for the Clothes Dryer and Room Air Conditioner Test Procedure Rulemaking can be viewed at 

http://www.regulations.gov/#!docketDetail;dct=FR%252BPR%252BN%252BO%252BSR%252BPS;rpp=25;po=0;

D=EERE-2008-BT-TP-0010 
14

(barometric pressure) in which the test is conducted. ASHRAE Standard 37-1988, however, does 

not allow manufacturers to make such an adjustment. Additional differences exist, including the 

following: (a) Standard 37-1988 involves measurement of indoor-side air flow and air enthalpy 

reduction, while Standard 16-1999 involves measurement of heat input to the indoor room 

required to balance the capacity of the unit; (b) Standard 37’s ducted test set-up eliminates the 

possibility of air recirculation on the indoor side (i.e., cooled discharge air being drawn back into 

the air inlet) which can reduce measured capacity, while Standard 16-1999 does not eliminate air 

recirculation; (c) Standard 16-1999, section 5.4.2, specifies that electric power measurements 

have an accuracy to within 0.5% of the quantity measured (i.e., voltage, wattage, or energy), 

while Standard 37-1988, section 5.4.2, specifies that electric power measurements have an 

accuracy to within 2.0% of the quantity measured (i.e., voltage, wattage, or energy). DOE does 

not have data that shows that these differences between the two standards would result in 

significant differences in measurements of the energy efficiency as measured by the DOE test 

procedure. However, the results could differ, and testing consistency may be improved by 

requiring all tests to be conducted using one or the other ASHRAE standard. On the other hand, 

such an approach may increase test burden, particularly for those manufacturers that currently 

use one particular test method. 

Item 1-6 DOE requests any available data that would show whether testing using 

ASHRAE Standard 16-1999, as compared with ASHRAE Standard 37-1988, 

results in any significant differences in measured cooling capacity or efficiency. 

DOE requests information regarding the test burden associated with each of 

these test methods, including labor hours, total test time, and the cost of the 

required test facilities. DOE also requests information on whether manufacturers 

generally rate their equipment using ASHRAE Standard 16-1999 or 37-1988. 

Finally, DOE requests comment on whether one of these test procedures should 

be selected as the test procedure applicable to this equipment. 

1.6 Overview of Packaged Terminal Air Conditioners and Packaged Terminal Heat 

Pumps 

There are four types of equipment covered under this rulemaking: 1) standard size 

PTACs; 2) non-standard size PTACs; 3) standard size PTHPs; and 4) non-standard size PTHPs. 

 

PTACs and PTHPs are generally used in hotel/motel rooms, health care facilities (e.g., 

assisted living homes, nursing homes, etc.), and small offices. PTACs and PTHPs are used in 

applications that required individual zone heating and cooling control. 

A typical PTAC consists of an unencased refrigeration system the fits into a wall sleeve, 

which fits through an exterior wall of a building. A PTAC’s refrigeration system cools an indoor 

space by moving heat from the cold location to a hotter location by means of evaporating and 

condensing a fluid, typically a refrigerant (e.g. R-410A). A refrigeration circuit typically has four 

major components: a compressor, condensing coil, expansion device, and an evaporator coil. The 

compressor turns the refrigerant from a low pressure gas into a high pressure gas, which raises 

the temperature of the gas. At the next step, the condensing coil removes the heat from the hot 

refrigerant, which condenses into a liquid, still at a high temperature and high pressure. This 
15

liquid refrigerant then passes through an expansion device that lowers the refrigerant’s pressure 

and temperature before it enters the evaporator coil. The evaporator coil cools the indoor air by 

transferring heat from the warm indoor air to the low temperature refrigerant. A PTHP consists 

of all the same basic components as a PTAC plus a reversing valve to reverse refrigerant flow 

during heating mode, so that it transfers heat from the outside to the inside. 

PTACs and PTHPs consume energy in two primary ways: through the compressor that 

operates to compress the refrigerant, and through the motor(s) that drives the fans that blow air 

over the evaporator and condenser coils. They may also consume energy directly through electric 

resistance heating elements or indirectly through steam or hot water heating coils (the steam 

would be produced or the water heated in a boiler, in which the associated energy is directly 

consumed). However, these energy uses are not considered in the EER and COP metrics for 

PTACs and PTHPs, as measured according to the DOE test procedure. 

1.7 Interested Parties 

Interested parties, or stakeholders, include manufacturers, purchasers, energy 

conservation and environmental advocates, State and Federal agencies, and any other groups or 

individuals with an interest in potentially amended standards. DOE research into interested 

parties has thus far identified the following. 

Manufacturers: 

Air-Con Internationale 

Cold Point Corporation 

Comitale National, Inc. 

Eair, LLC 

ECR International 

Electrolux Home Products, Inc. 

Evergreen Products, LLC 

Friedrich Air Conditioning, Co. 

General Electric Company 

Goodman Manufacturing Company 

Gree Electric Appliances of Zhuhai 

Haier America 

Heat Controller, Inc. 

Ice Air, LLC 

Islandaire, Inc. 

LG Electronics, Inc. 

McQuay International 

Simon-Aire, Inc. 

YMGI Group LLC. 

Other Stakeholders: 
16

Air-Conditioning, Heating and Refrigeration Institute (AHRI) 

Alliance to Save Energy 

American Council for an Energy-Efficient Economy (ACEEE) 

American Society of Heating, Refrigerating and Air-Conditioning Engineers 

(ASHRAE) 

Appliance Standards Awareness Project (ASAP) 

Association of Home Appliance Manufacturers (AHAM) 

Consortium for Energy Efficiency (CEE) 

Earthjustice 

Edison Electric Institute (EEI) 

National Resources Defense Council (NRDC) 

Northwest Energy Efficiency Alliance (NEEA) 

Item 1-7 DOE seeks information concerning any entities that should be added to the 

interested parties list, in particular additional manufacturers, small business 

manufacturers, purchasers, and energy conservation and environmental 

advocates. 

2. ANALYSES FOR RULEMAKING 

The purpose of the analyses is to support DOE’s determination on whether to amend the 

energy conservation standards for PTACs and PTHPs. The analyses ensure that if standards are 

amended, DOE selects standards that achieve the maximum improvement in energy efficiency 

that is technologically feasible and economically justified and will result in significant energy 

savings, as required by EPCA. Economic justification includes the consideration of the factors 

set forth in EPCA (see section 1.4 of this framework document), which encompass economic 

impacts on domestic manufacturers and purchasers, national benefits including environmental 

impacts, issues of purchaser utility, and impacts from any lessening of competition. 

Figure 2.1 summarizes the analytical components of the DOE standards-setting process. 

The analyses are presented in the center column. Each analysis has a set of key inputs, which are 

data and information required for the analysis. “Approaches” are the methods that DOE will use 

to obtain key inputs, which may vary depending on the information in question. Some key inputs 

exist in public databases. DOE will also collect information from interested parties or others with 

special knowledge and develop information independently to support the rulemaking. The results 

of each analysis are key outputs, which feed directly into the rulemaking. Arrows indicate the 

flow of information between the various analyses. DOE ensures a consistent approach to its 

analyses throughout the rulemaking by considering each analysis as a part of the overall 

standard-setting framework. 
17

Figure 2.1 Flow Diagram of Analyses for the Package Terminal Air Conditioning and 

Package Terminal Heat Pump Standards Rulemaking Process 

3. MARKET AND TECHNOLOGY ASSESSMENT 

The market and technology assessment will provide information about the packaged 

terminal air conditioner and packaged terminal heat pump industry that DOE will use throughout 

the rulemaking. This assessment is particularly important at the outset of the rulemaking to 

determine equipment classes and to identify potential design options or efficiency levels for each 

equipment class. 
18

3.1 Market Assessment 

DOE will qualitatively and quantitatively characterize the structure of the PTAC and 

PTHP industry and market. In the market assessment, DOE will identify and characterize the 

manufacturers of this equipment; estimate market shares and trends in the market; address 

regulatory and non-regulatory initiatives intended to improve the energy efficiency or reduce the 

energy consumption of PTACs and PTHPS covered under this rulemaking, and explore the 

potential for technological improvements in the design and manufacture of such equipment. 

This market assessment will establish the context for this rulemaking, and it will serve as 

a resource to guide the analyses that follow. For example, DOE may use historical shipments and 

prices as indicators of future shipments and prices. In addition, DOE plans to use market 

structure data for the manufacturer impact analysis (MIA), data that will be particularly useful 

for assessing competitive impacts. This phase also allows DOE to start updating design options 

by reviewing equipment literature and industry publications. 

AHRI is the trade association for many of the manufacturers of equipment covered under 

this rulemaking. DOE expects that AHRI will play a critical role in providing market 

information, including input on characterizing current and historical trends in equipment 

shipments and energy efficiency. This type of data is an important input for analyses that 

determine whether any amended energy conservation standards are economically justified and 

will result in significant energy savings. 

DOE encourages interested parties to submit data that will improve DOE’s understanding 

of the PTAC and PTHP market. DOE aggregates data provided by manufacturers and other 

organizations for use in its analyses. 

Item 3-1 DOE seeks information on annual PTAC and PTHP shipments into the U.S. 

market from 1995 to 2011 (both domestic and imports) by equipment class, and 

the corresponding shipment-weighted average efficiency of these shipments. 

Item 3-2 DOE seeks information on the proportion(s) of PTAC and PTHP equipment 

shipped annually that replaces existing equipment. 

3.2 Equipment Classes 

DOE classifies PTACS and PTHPs covered under this rulemaking into 12 equipment 

classes (Error! Reference source not found.). The statutory criteria for separation into different 

classes are type of energy used, capacity, and any other performance-related features that justify 

the establishment of a separate energy conservation standard. In determining whether a 

performance-related feature justifies a higher or lower standard, DOE must consider such factors 

as utility to the consumer of such performance-related features and other factors the Secretary 

deems appropriate. (42 U.S.C. 6295(q) and 6316(a)) 

EPACT 1992, referenced in section 1.1 of this document, set energy conservation 

standards for all PTACs and PTHPs. (42 U.S.C. 6313(a)(3)) Section 342(a)(6)(A) of EPCA also 

mandates that if ASHRAE Standard 90.1 amends its efficiency levels for PTACs and PTHPs, 
19

DOE must adopt as a national standard for PTACs and PTHPs the level specified in ASHRAE 

Standard 90.1, unless DOE determines that a more-stringent standard is technologically feasible 

and economically justified. (42 U.S.C. 6313(a)(6)(A)) On October 7, 2008, DOE published a 

final rule dividing PTACs and PTHPs in two equipment classes based on the size of the wall 

sleeve used – standard size and non-standard size. 10 73 FR 58772, 58782. DOE tentatively 

expects to propose maintaining the existing equipment classes during this rulemaking, as shown 

in Error! Reference source not found.. 

Table 3.1 Proposed Classes for PTACs and PTHPs 

Equipment Type Size Category Cooling Capacity

PTAC

Standard

<7,000 Btu/h

≥7,000 Btu/h and ≤15,000 Btu/h

>15,000 Btu/h

Non-standard

<7,000 Btu/h

≥7,000 Btu/h and ≤15,000 Btu/h

>15,000 Btu/h

PTHP

Standard

<7,000 Btu/h

≥7,000 Btu/h and ≤15,000 Btu/h

>15,000 Btu/h

Non-standard

<7,000 Btu/h

≥7,000 Btu/h and ≤15,000 Btu/h

>15,000 Btu/h

Item 3-3 DOE requests feedback on the equipment classes for PTACs and PTHPs covered 

under this rulemaking. 

3.3 Technology Assessment and Metrics 

The technology assessment centers on understanding how equipment uses energy and 

what measures can reduce energy consumption of PTACs and PTHPs. 

Measures that could improve the energy efficiency of equipment are called technology 

options, and they are based on existing technologies as well as prototype designs and concepts. 

In consultation with interested parties, DOE intends to develop a list of technology options that 

should be considered in the analysis. 

DOE is studying technology options by reviewing manufacturer catalogs, recent trade 

publications, technical journals, and patent filings. DOE also intends to consult with technical 

experts within the field and to conduct manufacturer interviews about these technology options. 

For the preliminary analysis, DOE is currently considering the specific technologies and designs 

listed below. 

 

10 Definitions for “standard size” and “non-standard size” are discussed in section 1.2. 
20

Current research shows the following technology options for improving PTACs and 

PTHPs: 

1. Scroll Compressors 

2. Variable-speed Compressors 

3. Higher Efficiency Compressors 

4. Complex Control Boards (fan motor controllers, digital “energy management” control 

interfaces, heat pump controllers) 

5. Higher Efficiency Fan Motors 

6. Microchannel Heat Exchangers 

7. Increased Heat Exchanger Area 

8. Hydrophobic Material Treatment of Heat Exchangers (can improve repelling condensed 

water on evaporator coil) 

9. Recircuiting Heat Exchanger Coils 

10. Improved Air Flow and Fan Design 

11. Heat Pipes (enhances the evaporator coil dehumidification performance) 

12. Corrosion Protection (helps prevent corrosion of coils and the resulting degradation of 

performance) 

13. Clutched Motor Fans (allows PTACs with a single motor to reduce power input in 

recirculation mode by disengaging the condenser fan) 

14. Thermostatic Expansion Valve 

Item 3-4 What technologies or designs, if any, should be added to the above list? If 

certain changes to the list are not applicable to all equipment classes, what 

equipment classes are affected? 

3.4 Baseline Units 

Once DOE establishes equipment classes, it will select a baseline model as a reference 

point for each class, against which it can measure changes resulting from amended energy 

conservation standards. The baseline model in each equipment class represents the characteristics 

of the equipment in that class. Typically, a baseline unit would be a model that just meets current 

minimum energy conservation standards, when such a standard exists. If there is no energy 

conservation standard, the baseline unit would represent typical industry efficiency levels. For 

this rulemaking, DOE will select the baseline models that are minimally compliant with the 

energy conservation standards established by the 2008 final rule. 73 FR 58772, 58773 (Oct. 7, 

2008). 

DOE will use the baseline models in the engineering analysis and the LCC, NES, and 

PBP analyses. To determine energy savings and changes in price, DOE will compare each 

higher-energy efficiency, or lower-energy consumption, design option with the baseline model. 
21

4. SCREENING ANALYSIS 

The purpose of the screening analysis is to determine which technology options will be 

analyzed further in the engineering analysis. DOE will follow the process set forth below to 

screen out technology options. 

DOE will use the list of technology options (developed through its own research and in 

consultation with interested parties in the technology assessment) for consideration in the 

engineering analysis (section 5). DOE will review each technology option or best available 

technology in light of the following four criteria: 

1. Technological feasibility. DOE will screen out technologies that are not incorporated in 

commercially available products or working prototypes. 

2. Practicability to manufacture, install, and service. If DOE determines that mass 

production of a technology in commercial products and reliable installation and servicing 

of the technology could not be achieved on the scale necessary to serve the relevant 

market by the effective date of the standard, it will not consider that technology further. 

3. Adverse impacts on product or equipment utility or availability. If DOE determines a 

technology has significant adverse impact on the utility of the equipment for significant 

purchaser subgroups, or would result in the unavailability of any covered equipment type 

with performance characteristics (including reliability), features, size, capacities, and 

volumes that are substantially the same as products generally available in the United 

States at the time, it will not consider that technology further. 

4. Adverse impacts on health or safety. If DOE determines that a technology will have 

significant adverse impacts on health or safety, it will not consider that technology 

further. 

DOE will fully document the rationale for eliminating any technology options during the 

screening analysis and will publish this documentation for interested parties to review as part of 

the preliminary analysis. Those technology options not screened out by the above four criteria 

will be considered design options in the development of cost-efficiency curves in the engineering 

analysis. 

Item 4-1 DOE welcomes comments on the above four screening criteria. In addition, DOE 

requests comment on which technology options should be screened out, and 

which screening criteria would be the appropriate basis for their elimination. 

5. ENGINEERING ANALYSIS 

After conducting the screening analysis, DOE performs an engineering analysis based on 

the remaining design options. The engineering analysis provides cost estimates of equipment at 

increasing levels of efficiency from the baseline level considered in the rulemaking. 
22

5.1 Engineering Analysis Overview 

The purpose of the engineering analysis is to determine the relationship between 

manufacturer selling price and energy consumption for PTACs and PTHPs. In determining this 

relationship, DOE will estimate the increase in manufacturer selling price associated with design 

changes that decrease energy consumption as compared with baseline-efficiency models. 

DOE will develop cost estimates for the engineering analysis disaggregated into the cost 

contributions of materials (including purchased parts), labor, and overhead. This information will 

be used in all of the downstream analyses, including the MIA. DOE will create an industry-wide 

analysis based on a variety of data sources, including manufacturer-supplied data. 

DOE has not yet developed specific requests for data to assist in collection of aggregated 

industry data. DOE hopes that industry stakeholders will be willing to participate in such an 

effort. DOE anticipates the data request will address such questions as costs to achieve 

reductions in energy use, shipments disaggregated by equipment classes, efficiency levels of 

current shipments, etc. 

In addition, DOE must identify the model with the lowest energy consumption that is 

technologically feasible within each equipment class (i.e., the “max-tech” model). 

Item 5-1 DOE requests comments on the best ways to collect such information from the 

industry. DOE anticipates that such data might be collected and aggregated by 

AHRI for submittal to DOE.

Item 5-2 DOE requests input on appropriate categories and questions to be included on 

such requests for data.

Item 5-3 DOE seeks comments and recommendations regarding the potential data 

collection efforts that might be made by industry participants to support this 

rulemaking, and the possible structure of data request forms that could be used 

to assist such efforts. 

Item 5-4 DOE is also interested in receiving equipment test data (test procedure used, 

rating conditions, voltage, integrated average product temperature, daily energy 

consumption, etc.). Test data representative of the baseline model in each 

equipment class is particularly important. 

5.2 Proposed Approach for Determining the Cost-Efficiency Relationship 

DOE typically structures its engineering analysis using one of three approaches: 

(1) design-option, (2) efficiency-level, or (3) reverse-engineering (or cost-assessment). 

A design-option approach uses individual design options, or combinations of design 

options, to identify increases in efficiency. Under this approach, cost estimates are based on 

manufacturer or component supplier data or engineering computer simulation models. Individual 

design options, or combinations of design options, are added to the baseline model in ascending 
23

order of cost-effectiveness. Also, the efficiency levels addressed in the analyses, including the 

downstream analyses, are based on groups of design options. 

 

An efficiency-level approach establishes the relationship between manufacturer cost and 

increased efficiency at predetermined efficiency levels above the baseline. Under this approach, 

manufacturers typically provide manufacturer cost data for incremental increases in efficiency, 

without identifying the technology or design options they would use to achieve such increases. 

 

A reverse-engineering or cost-assessment approach involves purchasing representative 

units of PTACs and PTHPs, disassembling the units, and reverse-engineering to determine the 

manufacturing costs based on a “bottoms-up” manufacturing cost assessment. The efficiency 

levels for such an analysis are based on the efficiency levels of the reverse-engineered 

equipment. 

DOE plans to use an efficiency-level approached combined with a cost-assessment 

approach to determine the cost-efficiency relationship. This approach will seek to obtain 

information from a variety of sources, including consultation with outside experts, review of 

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

consumption, interviews with manufacturers, equipment teardowns and reverse engineering, and 

data submissions provided by the industry (discussed in section 5.1). 

For each equipment class, the engineering analysis will estimate manufacturer production 

cost (MPC) for each design option considered. DOE plans to use a cost model to estimate the 

cost of the PTACs and PTHPs . 

Item 5-5 DOE requests feedback on the use of a combined analysis approach that uses 

multiple information sources to determine the relationship between manufacturer 

selling price and energy consumption for PTACs and PTHPs. 

5.3 Manufacturer Prices 

DOE plans to apply markups to convert MPC to manufacturer selling prices. DOE will 

evaluate a variety of sources to estimate manufacturer markups, including publicly available 

financial information (e.g., Securities and Exchange Commission 10-K reports), and interviews 

with manufacturers during the preliminary analysis phase. DOE recognizes that manufacturers of 

PTACs and PTHPs may produce many types of equipment, and that extracting the markup 

characteristics of PTACs and PTHPs separately may not be feasible. 

Item 5-6 DOE seeks comment on which information sources may be the best for 

developing estimates of manufacturer selling prices. 

5.4 Proprietary Designs 

DOE notes that the four screening criteria mentioned in section 4 do not include 

proprietary status of designs. However, DOE will consider proprietary designs in the engineering 

analyses only if they are not part of a unique path to a given efficiency level. If the proprietary 
24

design is the only approach available to achieve a given efficiency level, then DOE will reject 

that efficiency level from further analysis. Further, DOE is sensitive to manufacturer concerns 

regarding proprietary designs and will maintain the confidentiality of any proprietary data 

submitted by manufacturers, consistent with applicable law. This information will provide input 

to the competitive impacts assessment and other economic analyses. 

Item 5-7 Are there proprietary designs that DOE should consider in the analyses for any 

of the equipment under consideration by this rulemaking? If so, how should DOE 

acquire the cost data necessary for evaluating these designs? Conversely, are 

there proprietary designs that should not be considered? Which equipment uses 

these designs? 

5.5 Representative Cooling Capacities 

In performing the engineering analysis, DOE will select equipment models from the 

range of available equipment with cooling capacities that best represent the most typical 

offerings within that specific equipment class. Proper selection of representative capacities will 

allow for the analyses to accurately model the majority of available equipment. DOE plans to 

select representative capacities only for PTACs and PTHPs with a cooling capacity ≥7,000 Btu/h 

and ≤15,000 Btu/h, while considering the possible design constraints at the smaller and larger 

capacities. 

In the most recent PTAC rulemaking, DOE selected for analysis two representative 

capacities for standard size PTACs and PTHPs – 9,000 Btu/h and 12,000 Btu/h – and one 

representative capacity for non-standard size PTACs and PTHPs – 11,000 Btu/h. The 9,000 

Btu/h and 12,000 Btu/h capacities were chosen for standard size equipment because those were 

the capacities with the highest number of shipments. For non-standard size equipment, 11,000 

Btu/h was chosen since that capacity was in the middle of capacity range. 73 FR 58772, 58779 

(Oct. 7, 2008). 

For this rulemaking, DOE is planning to analyze standard size PTACs and PTHPs at the 

representative capacity of 9,000 Btu/h. For non-standard PTACs and PTHPs, DOE is planning 

on selecting 11,000 Btu/h as the representative capacity for analysis, similar to the previous 

rulemaking. 

Item 5-8 DOE requests feedback on the suggested representative cooling capacities for 

PTACs and PTHPs for direct analysis. 

5.6 Efficiency Levels for Analysis 

5.6.1 Standard Size PTACs and PTHPs 

DOE examined performance data of standard size PTACs and PTHPs published in the 

AHRI Directory of Certified Product Performance (AHRI Directory) and on manufacturers’ 

websites in order to select efficiency levels for consideration in the rulemaking. The cooling 

mode EER for the listed equipment is presented in Figure 5.1 below. The figure shows the 
25

Federal standards which took effect on October 8, 2012, “2012 PTAC Standard” and “2012 

PTHP Standard”—these are the baseline efficiency levels for this rulemaking for standard size 

PTACs and PTHPs. Finally, the figure shows suggested incremental efficiency levels that DOE 

will consider. Each of these levels is represented by a percentage increase above the EER value 

of the baseline efficiency level for PTACs. The maximum efficiency level, at 20% above the 

2012 PTAC standard, coincides with the rated efficiency of one PTHP model. Although the rated 

efficiencies of PTACs without reverse cycle heating extend only up to the 16% efficiency level, 

DOE expects that PTACs without reverse cycle heating should be able to attain the same cooling 

mode efficiencies as PTHPs. 

DOE is proposing to analyze levels for standard size PTACs that are 4%, 8%, 12%, 16%, 

and 20% more efficient than the amended standards that became effective on October 8, 2012. 

For PTHPs, DOE is proposing to analyze the same cooling efficiency levels as it is proposing to 

analyze for PTACs. 

Figure 5.1 Standard Size PTAC and PTHP EER vs. Cooling Capacity 

 For the heating efficiency of PTHPs, DOE is planning to correlate the COP associated 

with each efficiency level with the efficiency level’s EER based on COP and EER ratings from 

the AHRI database. DOE will establish a representative curve based on this data to obtain a 

relationship for COP in terms of EER. DOE will use this relationship to select COP values 

corresponding to each efficiency level. This approach takes into consideration the fact that a 

PTHP’s EER and COP are related and cannot be independently analyzed, while basing the 

analysis on a representative average relationship between the two efficiency metrics. 

Item 5-9 DOE requests feedback on DOE’s method of correlating COP with EER for 

PTHPs. Specifically, DOE requests data on possible correlations between COP 

and EER for PTHPs. 
26

Item 5-10 DOE requests feedback on DOE’s method of selecting EER efficiency levels for 

analysis of standard size PTACs and PTHPs. Specifically, DOE requests 

feedback on use of the AHRI database rating information as the source for this 

analysis. If this is not an appropriate source, DOE requests suggestions of 

alternative sources of efficiency information. Also, DOE requests comment on 

the use of the same efficiency levels, at four percent increments for both PTACs 

and PTHPs. 

5.6.2 Non-standard Size PTACs and PTHPs 

For non-standard size PTACs and PTHPs, DOE is proposing to choose EER efficiency 

levels for analysis in the same manner as described for standard size PTACs and PTHPs – by 

applying percentage increases to the baseline efficiency level, which represents the existing 

energy conservation standard for this equipment class. Because there is no efficiency data for 

non-standard size PTACs or PTHPs in the AHRI Directory, DOE gathered this data from the 

websites of known manufacturers of this equipment. Because some manufacturers of nonstandard size equipment are not AHRI members, the efficiency ratings they report for their 

equipment are not subjected to third party testing for verification, as required for any 

manufacturer who certifies its equipment in the AHRI database. 

Figure 5.2 below plots EER vs. cooling capacity for all the non-standard size PTACs and 

PTHPs models for which DOE could find efficiency data. DOE proposes to analyze levels for 

non-standard size PTACs that are 8%, 16%, 24%, 32%, and 40% more efficient than the level 

required by current standards for this equipment. For non-standard size PTHPs, DOE proposes

to analyze the same cooling efficiency levels as it is proposing to analyze for PTACs. DOE also 

proposes to select COP levels using the same correlation method as it proposes to use for 

standard size PTACs and PTHPs, basing the EER and COP relationship for this equipment on 

the available efficiency data. 

Figure 5.2 Non-standard Size PTAC and PTHP EER vs. Cooling Capacity
27

Item 5-11 DOE requests feedback on DOE’s method of choosing efficiency levels for 

analysis for non-standard size PTACs and PTHPs. Specifically, DOE requests 

feedback on the sources DOE used for this analysis, suggestions of other 

potential sources of efficiency information, and the accuracy of the efficiency 

information from these sources. 

5.7 Outside Regulatory Changes Affecting the Engineering Analysis 

In conducting an engineering analysis, DOE must consider the effects of regulatory 

changes outside DOE’s statutory energy conservation standards rulemaking process that can 

affect the energy efficiency or energy consumption of the covered equipment, the cost of 

improving such efficiency or consumption, or both. The U.S. Environmental Protection Agency 

(EPA)-mandated phaseout of the hydrochlorofluorocarbon (HCFC) refrigerant HCFC-22 for use 

in new equipment took place before the compliance dates of the amended standards promulgated 

in the 2008 final rule. 74 FR 66450 (Dec. 15, 2009) DOE expects that all current equipment uses 

hyrdofluorocarbon (HFC) refrigerants such as R-410A. DOE is aware of no other regulations 

that significantly affect the cost of reducing energy use of PTACs and PTHPs. The consideration 

of these issues is closely related to the cumulative regulatory burden assessment that DOE will 

carry out as part of the MIA. 

Item 5-12 Are there outside regulatory issues that DOE should consider in its engineering 

analysis of PTACs or PTHPs? 

6. ENERGY USE ANALYSIS 

The purpose of the energy use analysis is to identify how PTAC and PTHP equipment is 

used in buildings, and to determine the energy savings potential of equipment with a more 

efficient design in the same operating conditions. The results of this analysis are used as input to 

the LCC and PBP analysis, NIA, and several other downstream analyses. 

The energy use of baseline and energy-efficient PTAC and PTHP equipment is 

determined through whole building yearlong simulations in various U.S. climatic regions. In the 

2008 rulemaking (73 FR 58772), simulations were performed using EnergyPlus 11, that required 

inputs for parameters in four groups: Form, Fabric, Program, and Equipment, all of which are 

explained below. For the current rulemaking, DOE plans to utilize the same energy use outputs 

as in the previous rulemaking. 

Form refers to general building geometric and locational parameters, which reference the 

Commercial Building Energy Consumption Survey (CBECS) 2003 and 1992 building 

databases12,13 and climate data for each weather station found in the Typical Meteorological Year 

 

11 EnergyPlus is a whole building simulation program used for determining energy and water consumption in 

buildings. 

12 Energy Information Administration. 2003 Commercial Building Energy Consumption and Expenditures 

(CBECS), Public Use Data, Micro-data files on EIA website: 
28

(TMY2) database.14 A prototypical building was developed based on weighted averages of 

hotel/motel building data from these sources, resulting in a 20,000 ft2, two-story building with 44 

guest rooms. The building shape was a west-east-facing rectangle with an aspect ratio of 3. The 

building model was rotated three additional cardinal directions during the simulation to account 

for orientation-based deviations. Although information was available for facility end-uses other 

than lodging, there was not sufficient information to cover all four parameter groups, so only a 

prototypical lodging building model was analyzed. 

Fabric refers to the building envelope parameters, which reference the New Commercial 

Construction Characteristics database,15 CBECS 2003 building database, and TMY2 climate 

data. The wall of the prototypical building consisted of a steel-framed wall with R-13 fill 

insulation; the roof consisted of a sloped-frame, asphalt-shingled, roof with R-19 batt insulation. 

Approximately 10% of the wall was double-paned glass. 

Program and Equipment refer to building and equipment operation and scheduling, and 

occupancy parameters, which reference ASHRAE 90.1 lighting standards,16 ASHRAE 62.1 

ventilation standards,17,18 and DOE 2.1E equipment part-load performance curves.19 Typical 

selections of the non-space-conditioning equipment and typical values for such equipment 

parameters were employed; these selections and values referenced the 2000 Ducker Worldwide 

PTAC market study20 and the 2000 Pacific Northwest National Laboratory screening analysis for 

commercial HVAC and water-heating equipment.21 For space-conditioning equipment that are 

individual room PTACs and PTHPs, one baseline energy efficiency level and four more-efficient 

levels were selected. 

 

http://www.eia.doe.gov/emeu/cbecs/cbecs2003/public_use_2003/cbecs_pudata2003.html. (Last accessed January 

15, 2007.). 

13 Energy Information Administration. 1992 Commercial Building Energy Consumption and Expenditures 

(CBECS), Public Use Data, Micro-data files on EIA website: http://www.eia.doe.gov/emeu/cbecs/92microdat.html. 

(Last accessed March 1, 2007.). 

14 Winkelmann F.C., B.E. Birdsall, W.F. Buhl, K.L. Ellington, A.E. Erdem, J.J. Hirsch, S. Gates. 1993. DOE-2 

Supplement, Version 2.1E, LBL-34947, Lawrence Berkeley National Laboratory. Springfield: National Technical 

Information Service.

15 Pacific Northwest National Laboratory, National Commercial Construction Characteristics Database (NC3

).

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

Standard 90.1-1999, “Energy Efficient Design of New Buildings Except Low-Rise Residential Buildings.” Atlanta, 

Georgia. 

17 ANSI/ASHRAE. ASHRAE Standard 62.1-2004, “Ventilation for Acceptable Indoor Air Quality.” American 

Society of Heating, Refrigerating and Air-Conditioning Engineers, Atlanta, Georgia. 

18 ASHRAE. ASHRAE Standard 62-1989, “Ventilation for Acceptable Indoor Air Quality.” American Society of 

Heating, Refrigerating and Air-Conditioning Engineers, Atlanta, Georgia. 

19 Henderson, H.I., Y.J. Huang, and D. Parker. 1999. Residential Equipment Part-Load Curves for Use in DOE-2. 

LBNL-42175, February 1999. 

20 Ducker Worldwide. 2000 U.S. Market for Residential and Specialty Air Conditioning: Packaged Terminal Air 

Conditioning. HVAC0002. Final Report, March 2001. Ducker Industrial Standards, 6905 Telegraph Road Suite 

300, Bloomfield Hills, Michigan. 

21 Somasundaram, S., P.R. Armstrong, D.B. Belzer, S.C. Gaines, D.L. Hadley, S. Katipamula, D.L. Smith, D.W. 

Winiarski. 2000. Screening Analysis for EPACT-Covered Commercial HVAC and Water-Heating Equipment. 

PNNL-13232, Pacific Northwest National Laboratory, Richland, Washington. 
29

The simulation was run with the climate data of each weather station in the TMY2 

database. The simulation results were averaged across all weather stations, weighted by the 

population represented by each weather station, to obtain average energy consumption for the 

baseline equipment efficiency level and for each more-efficient energy efficiency level. The 

results were also aggregated to State and National levels using 2000 Census population data.22

DOE plans to update the aggregation to the State and National levels using 2010 Census 

population data, although these results are not yet available.23

Although the simulations were done several years ago, DOE believes that the results are 

reasonable for use in the current rulemaking. A newer building database is not available because 

the expected 2007 CBECS Database was not released. However, DOE intends to compare new 

weather data from the TMY3 database to the TMY2 weather data to determine whether there has 

been a change to either the monthly maximum temperatures or monthly cooling degree days. If 

there is an appreciable difference, then DOE intends to adjust the estimated cooling loads and 

energy use accordingly. 

Many of the more energy efficient levels considered in the current rulemaking were not 

simulated in the previous rulemaking. Therefore, DOE plans to scale the simulation outputs from 

the previous rulemaking to derive the unit-average energy use for the energy efficiency levels 

considered for the current rulemaking. 

Item 6-1 DOE seeks comment on whether the existing inputs, software, methodology, and 

outputs to estimate unit-average and national energy for PTAC and PTHP 

equipment are adequate and appropriate for the current rulemaking. 

7. MARKUPS ANALYSIS

DOE uses purchaser prices for equipment at the baseline efficiency level and all other 

efficiency levels under consideration in the LCC and PBP analyses and the national impact 

analysis. DOE uses distribution channel markups to convert the manufacturer selling price 

estimates from the engineering analysis to purchaser prices. These markups are in addition to the 

markups on production costs that DOE uses to estimate manufacturer selling price in the 

engineering analysis. 

Prior to developing markup information, DOE identifies appropriate distribution channels 

(i.e., how the equipment is distributed from the manufacturer to the purchaser). For the previous 

rulemaking, DOE identified four distribution channels, as shown in Figure 7.1.1, to describe how 

the equipment passes from the manufacturer to the purchaser for both new construction and 

replacement markets. 73 FR 58772. In the first distribution channel, the manufacturer sells the 

equipment to the purchaser through a national account. In the second channel, the manufacturer 

sells the PTAC and PTHP equipment to a wholesaler, who in turn sells it directly to the 

purchaser. In the third and fourth channel, the manufacturer sells the equipment to a wholesaler, 

who in turn sells it to a mechanical contractor, who in turn may sell it directly to the purchaser or 

 

22 The U.S. Census Bureau, 2000 Census, http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml. 

23 The U.S. Census Bureau. 2010 Census. http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml
30

through a general contractor who may sell it and its installation to the purchaser. DOE plans to 

use the same distribution channels for the current rulemaking. 

Figure 7.1 Distribution Channels for PTAC and PTHP Equipment 

Once it establishes proper distribution channels for the equipment, DOE will rely on data 

from the Heating, Air-conditioning & Refrigeration Distributors International (HARDI) Profit 

Planning Report,24 Air Conditioning Contractors of America (ACCA) literature, and the 2007 

Census data25 for the commercial and institutional building construction industry to determine 

how the equipment is marked up in each channel. 

In addition to developing the above markups, DOE will include sales taxes to calculate 

final equipment prices. The Sales Tax Clearinghouse26 is an Internet source that DOE plans to 

use to calculate applicable sales taxes. 

DOE intends to develop baseline and incremental markups for PTAC and PTHP 

equipment. Baseline markups are cost multipliers applied to the manufacturer sales price (MSP) 

of baseline equipment, while the incremental markups are cost multipliers only to be applied to 

the incremental cost change in the MSP of higher-efficiency equipment. The markups analysis 

will generate retail prices for each potential efficiency level, assuming that each level represents 

a new minimum efficiency level. 

 

24 Heating, Air-conditioning & Refrigeration Distributors International. 2012 Profit HARI Profit Report. 

http://www.hardinet.org/Profit-Report

25 The U.S. Census Bureau. 2007 Census. http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml

26 The Sales Tax Clearinghouse at https://thestc.com/STRates.stm. 
31

Item 7-1 DOE seeks input on whether the methodology to calculate markups for PTAC 

and PTHP equipment is adequate and appropriate for the current rulemaking. 

8. LIFE-CYCLE COST AND PAYBACK PERIOD ANALYSIS

The effects of energy conservation standards on purchasers include a change in operating 

expense (usually decreased) and a change in purchase price (usually increased). DOE analyzes 

the net effect on purchasers by calculating the LCC and PBP using the engineering performance 

data, the equipment prices, and the energy-use analysis data. Inputs to the LCC calculation 

include the cost to the purchaser of the installed equipment (purchase price plus installation 

cost), operating expenses (energy expenses and, if applicable, repair costs and maintenance 

costs), the lifetime of the equipment, and a discount rate. 

DOE plans to conduct an LCC and PBP analysis for each of the representative units for 

each representative equipment class. DOE conducts the LCC and PBP analysis by modeling both 

the uncertainty and variability in the inputs using Monte Carlo simulation and probability 

distributions. The Monte Carlo approach provides a significant advantage over other approaches 

(e.g., an approach using typical or average values to characterize inputs) by identifying the 

percentage of purchasers benefiting and burdened by a prospective standard. 

The LCC model uses Monte Carlo simulation to sample probability distributions for 

several of the parameters that affect the LCC. The variability in the energy use or annual energy 

consumption (AEC) is also handled in this manner. The Monte Carlo simulation is implemented 

using Microsoft Excel spreadsheets and the Crystal Ball add-in program. Each Monte Carlo 

simulation would typically consist of 10,000 LCC and PBP calculations. Each calculation uses 

input values sampled from a probability distribution or defined as single point values. The 

analysis results are presented as a distribution of LCC values and summary statistics such as 

average LCC, standard deviation, and so on. 

DOE expects to use probability distributions to characterize equipment lifetimes and 

discount rates. DOE expects to use point values to characterize the other LCC inputs, as these 

data are only available as single values. 

DOE is also required to perform an analysis to determine whether the three-year 

rebuttable presumption of economic justification applies, that is, whether the purchaser recovers 

the increase in installed cost through lowered operating costs within the first three years. (42 

U.S.C. 6295(o)(2)(B)(iii)) For this analysis, DOE determines the value of the first year’s energy 

savings using the DOE test procedure. Although DOE does examine the rebuttable-presumption 

criteria, the economic justification of potential standards is based on the more detailed analysis 

provided by the LCC pursuant to section 325(o)(2)(B)(i) of EPCA. (42 U.S.C. 6295(o)(2)(B)(i)) 

8.1 Installation Cost

The installation cost includes purchase price and installation cost. Purchase price 

accounts for the MSP, price premiums from equipment meeting more stringent energy-efficiency 
32

levels, distribution chain markups, and sales tax. To project future prices, DOE will investigate 

whether historical data indicate an experience-curve price trend that could be extrapolated. The 

installation cost will account for non-equipment material costs, including labor time and rates, 

from data sources such as RS Means: Cost Works.27 For higher efficiency levels, DOE plans to 

model these costs as constant, although non-constant costs may be provided as an alternative 

calculation within the spreadsheet model. Sales taxes and labor rates, varying by State, will 

provide a distribution of total installed costs. 

8.2 Operating Cost 

The lifetime operating cost is the present value of what the purchaser pays in operational 

costs for the lifetime of the equipment, and is a function of the annual energy cost, repair cost, 

and maintenance cost. 

DOE will determine the energy cost by considering both annual energy use from the 

energy use analysis and energy prices from State-specific commercial electricity prices and 

building type-specific electricity prices. Data sources may include Energy Information 

Administration (EIA) commercial electricity price data28 and the 2003 CBECS database. To 

project energy prices through the lifetime of the equipment, DOE plans to use projections from 

the Annual Energy Outlook 2012 (AEO 2012).29

For repair and maintenance costs, since little data are available that show change in these 

costs with efficiency, DOE currently plans to use the same costs for all considered efficiency 

levels. 

8.3 Equipment Lifetime 

DOE will use information from catalogs and various literature sources, and input from 

manufacturers and other stakeholders, to establish lifetimes for use in the LCC and subsequent 

analyses. From such literature and expert consultation, DOE expects that the equipment lifetime 

will be an average of 10 years and a maximum of 20 years, and is best represented by a Weibull 

distribution30 with similar parameters for average and maximum lifetime. 

8.4 Discount Rates 

Discount rates for determining the present value of future costs will be based on the 

inflation-adjusted weighted-average cost of debt and equity financing of businesses that 

frequently employ PTACs and PTHPs (primarily lodging). To determine the cost of equity 

financing, DOE will use the Capital Asset Pricing Model and financial data on publically-traded 

 

27 RS Means CostWorks, by R.S. Means Company, Inc., is a web-based database and software tool to estimate cost 

for construction and installation. http://www.meanscostworks.com. 

28 Energy Information Administration. Form EIA-826 Database Monthly Electric Utility Sales and Revenue Data 

("EIA-826 Sales and Revenue Spreadsheets"). http://www.eia.doe.gov/cneaf/electricity/page/eia826.html. 

29 Energy Information Administration. Annual Energy Outlook 2012. Washington, D.C., DOE/EIA-0383 (2012). 

30 A Weibull distribution is a continuous probability distribution that is typically used to model failure. 
33

companies from the Damodaran Online website.31 The yield on long term corporate bonds will 

determine the cost of debt financing. An average discount rate for each business type will be 

determined by weighting the corporate value of each business and its share of equity and debt 

financing. 

Item 8-1 DOE seeks comment on whether the methodology to calculate life-cycle costs 

and payback periods for PTAC and PTHP equipment is adequate and 

appropriate for the current rulemaking. 

9. SHIPMENTS ANALYSIS 

DOE requires shipment projections by equipment class to calculate the national impacts 

of potential standards on energy consumption, purchaser net present value (NPV), and future 

manufacturer cash flows. DOE plans to develop shipments projections based on an analysis of 

key market drivers for PTAC and PTHP equipment. DOE typically projects shipments for a 30-

year period beginning with the expected compliance date of any standards. 

DOE intends to follow the same methodology that was used in the previous PTAC and 

PTHP rulemaking. DOE plans to project annual shipments of replacement PTAC and PTHP 

equipment based on the rate of failure for the existing stock, estimated by a Weibull distribution 

with a 10-year average life and a 20-year maximum life. To quantify the existing stock, DOE 

plans to use data sources, such as the 2011 ENERGY STAR Market & Industry Scoping Report 

for PTACs and PTHPs.32

DOE plans to project annual shipments of new PTAC and PTHP equipment by 

multiplying the sum of the projection of new commercial floor space and the existing floor space 

stock by the estimated saturation of new PTAC and PTHP equipment in new commercial floor 

space. (The saturation is defined as the number of new PTAC and PTHP equipment per square 

foot of floor space.) As PTACs and PTHPs are most typically found in hotel/motels, health care 

facilities, and small offices, DOE plans to base shipments on projections of floor space in these 

building types. The data for the added floor space will be based on the projection found in AEO 

2012. DOE plans to use saturation data from the previous rulemaking, which were derived from 

historical shipment data provided by AHRI. DOE assumes that this saturation value will remain 

constant over time. 

Item 9-1 DOE requests historical shipments data for each of the considered equipment 

classes. 

 

31 Damodaran Online. Leonard N. Stern School of Business, New York University: 

http://www.stern.nyu.edu/~adamodar/New_Home_Page/data.html. 

32 U.S. Environmental Protection Agency. 2011. ENERGY STAR Market & Industry Scoping Report for Packaged 

Terminal Air Conditioners and Heat Pumps. 

http://www.energystar.gov/ia/products/downloads/ESTAR_PTAC_and_PTHP_Scoping_Report_Final_Dec_2011.p

df
34

Item 9-2 DOE welcomes comment on the proposed shipments forecast methodology and 

input regarding which market forces impact shipments. . 

DOE plans to derive standards-case forecasts using the same data as in the base-case 

forecast. In some rulemakings, the standards-case forecasts take into account the increase in 

purchase price and the decrease in operating costs caused by new or amended standards, and 

forecasted shipments typically deviate from the base case. In the previous rulemaking for PTACs 

and PTHPs, DOE assumed that shipments are not affected by the increased price of higher 

efficiency equipment. DOE proposes to maintain this assumption in the current rulemaking. 

Item 9-3 DOE welcomes comment on how amended standards for PTAC and PTHP 

equipment might impact shipments of the equipment. 

10. NATIONAL IMPACT ANALYSIS 

The national impact analysis (NIA) assesses the national energy savings (NES) from 

amended PTAC and PTHP standards and the net present value (NPV) of the total purchaser 

benefits. The methodology DOE plans to use is the same methodology as was used in the 2008 

PTAC and PTHP rulemaking. 73 FR 58772. 

 

A key component of DOE’s estimates of NES and NPV are the equipment energy 

efficiencies forecasted over time, for the base case (without amended standards) and for each of 

the standards cases. To project future efficiencies, DOE plans to develop market-share efficiency 

data (i.e., data on the distribution of equipment shipments by efficiency) for each PTAC and 

PTHP equipment class. This data may include PTAC and PTHP market studies similar to the 

2000 Ducker Worldwide PTAC market study and shipments data from AHRI. DOE will 

consider whether extrapolating efficiency trends is appropriate for this equipment. 

DOE applied a “roll-up” scenario for the 2008 PTAC and PTHP rulemaking. 73 FR 

58772. Under this scenario, DOE assumes equipment efficiencies in the base case that do not 

meet the standard level under consideration would “roll up” to meet an amended standard level. 

DOE also assumes equipment efficiencies in the base case that are above the standard level 

under consideration would not be affected. Once DOE establishes the shipment-weighted 

efficiency for the assumed compliance date of an amended standard, it estimates future 

shipment-weighted efficiencies using the same rate of forecasted efficiency growth as in the 

base-case efficiency trend. 

10.1 National Energy Savings 

DOE intends to calculate national PTAC and PTHP energy consumption for each year 

beginning with the expected compliance date of any amended standards. DOE will calculate 

national PTAC and PTHP energy consumption for the base case and each potential standard 

level analyzed. DOE plans to perform this calculation through the use of a spreadsheet model 
35

that accounts for the stock of equipment affected by amended standards.33 The energy savings 

are measured over the entire lifetime of equipment purchased in the 30-year projection period.34

DOE has historically presented NES in terms of primary energy savings. On August 18, 

2011, DOE announced its intention to use full-fuel-cycle (FFC) measures of energy use and 

greenhouse gas and other emissions in its national impact analysis and emissions analysis in 

future energy conservation standards rulemakings. (76 FR 51281) The FFC measure includes 

point-of-use (site) energy; the energy losses associated with generation, transmission, and 

distribution of electricity; and the energy consumed in extracting, processing, and transporting or 

distributing primary fuels. While DOE stated that it intended to use the Greenhouse Gases, 

Regulated Emissions, and Energy Use in Transportation (GREET) model to conduct the analysis, 

it also said it would review alternative methods, including the use of DOE/EIA’s National 

Energy Modeling System (NEMS). 76 FR 51287. NEMS is a public domain, multi-sectored, 

partial equilibrium model of the U.S. energy sector.35 Each year, DOE/EIA uses NEMS to 

produce an energy forecast for the United States, the AEO. After evaluating both models and the 

approaches discussed in the August 18, 2011 notice, DOE determined that NEMS is a more 

appropriate tool for FFC analysis. 77 FR 49701 (Aug. 17, 2012). Therefore, DOE plans to use 

the NEMS model to conduct FFC analyses. The method used to derive the FFC multipliers will 

be described in the preliminary TSD. 

10.2 Net Present Value of Purchaser Benefits 

The inputs for determining NPV of the total costs and benefits experienced by purchasers 

of the considered appliances are: (1) total annual installed cost; (2) total annual savings in 

operating costs; (3) a discount factor; (4) present value of costs; and (5) present value of savings. 

DOE calculates net savings each year as the difference between the base case and each standards 

case in terms of the total savings in operating costs and total increases in installed costs. DOE 

calculates savings over the life of each product. DOE calculates NPV as the difference between 

the present value of operating cost savings and the present value of total installed costs. 

DOE calculates increases in total installed costs as the difference in total installed cost 

between the base case and a standards case. DOE expresses savings in operating costs as 

decreases associated with the lower energy consumption of products bought in the standards case 

compared to the base case. Total savings in operating costs are the product of savings per unit 

and the number of units of each vintage that survive in a given year. 

 

33 Several examples of NES spreadsheet models from previous rulemakings can be found on DOE’s website at: 

http://www.eere.energy.gov/buildings/appliance_standards/. 

34 In the past, DOE presented energy savings results for only the 30-year period that begins in the year that 

compliance is required. In the calculation of economic impacts, however, DOE has considered operating cost 

savings measured over the entire lifetime of equipment purchased in the 30-year period. DOE has chosen to modify 

its calculation of national energy savings to be consistent with the approach used for its national economic analysis. 

35 For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration 

documentation. A useful summary is National Energy Modeling System: An Overview 2003, DOE/EIA-0581(2003), 

March, 2003. 
36

Based on U.S. Office of Management and Budget (OMB) guidelines for Federal 

agencies, DOE will conduct two NPV calculations, one using a real discount rate of 3 percent 

and another using a real discount rate of 7 percent (OMB, Circular A-4: Regulatory Analysis 

(2003)). The discount rates for the determination of NPV are in contrast to the discount rates 

used in the LCC analysis, which are designed to reflect a purchaser’s perspective. The 7-percent 

real value is an estimate of the average before-tax rate of return to private capital in the U.S. 

economy. The 3-percent real value represents the “societal rate of time preference,” which is the 

rate at which society discounts future consumption flows to their present value. 

Item 10-1 DOE seeks comment on whether the existing methodology to estimate national 

impact of amended energy-efficiency standards is adequate and appropriate to 

evaluate for the current analysis. 

Item 10-2 DOE seeks comment on the likely trend in average efficiency of PTAC and PTHP 

equipment in the absence of amended standards. 

11. PURCHASER SUBGROUP ANALYSIS 

The LCC analysis described in section 8 analyzes the impacts of energy conservation 

standards on all users of PTACs and PTHPs. For the subgroup analysis, DOE considers 

particular subgroups that may be affected disproportionately by new or revised energy 

conservation standards (e.g., small businesses or firms that use PTACs and PTHPs in particular 

applications where energy savings are likely to be small). The purpose of a subgroup analysis is 

to determine the extent of this disproportional impact. DOE will work with stakeholders to 

identify any subgroups for this consideration and will conduct a subgroup analysis during the 

NOPR stage of this rulemaking. 

Item 11-1 DOE welcomes comment on what, if any, user subgroups are appropriate in 

considering amended standards for PTACs and PTHPs. 

12. MANUFACTURER IMPACT ANALYSIS 

DOE will collect, evaluate, and report preliminary manufacturer impact information and 

data in the preliminary analysis.36 Such preliminary manufacturer impact information includes 

the anticipated capital conversion costs by efficiency level and the corresponding, anticipated 

impacts on jobs. DOE will solicit this information during the engineering analysis manufacturer 

interviews for the preliminary analysis. 

 

36 See U.S. Department of Energy. Congressional Report: Energy Conservation Standards Activities. 2006. p. 48. 

Available online at:

http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/congressional_report_013106.pdf (providing 

rationale for conducting an MIA early in the process of rulemaking).
37

The analysis of impacts on manufacturers is intended to provide DOE with an assessment 

of the potential impacts of energy conservation standards on manufacturers of PTHPs and 

PTACs. In addition to financial impacts, a wide range of quantitative and qualitative effects may 

occur following adoption of a standard that may require changes to the manufacturing practices 

for this equipment. DOE will identify these effects through interviews with manufacturers and 

other interested parties. 

12.1 Sources of Information 

Many of the analyses described in this notice provide important information that DOE 

uses as inputs for the MIA. Such information includes financial parameters developed in the 

market assessment (section 3.1), manufacturing costs and prices from the engineering analysis 

(sections 5.2 and 5.3), retail price forecasts (section 7), and shipments forecasts (section 9). DOE 

supplements this information with information gathered during manufacturer interviews. The 

interview process will play a key role in the MIA, as it provides an opportunity for interested 

parties to express their views on important issues. 

DOE will conduct detailed interviews with manufacturers to gain insight into the range of 

potential impacts of amended standards. During the interviews, DOE will solicit information on 

the possible impacts of standards on manufacturing costs, equipment prices, sales, direct 

employment, capital assets, and industry competitiveness. Both qualitative and quantitative 

information are valuable. In addition, an interview guide will be provided before the interviews 

to allow the manufacturers to gather the appropriate information. Although a written response to 

the questionnaire is acceptable, DOE prefers an interactive interview process because it helps 

clarify responses and provides the opportunity for additional issues to be identified. 

DOE will ask that interview participants identify all confidential information provided, 

both in writing and orally. While it will consider information gathered, as appropriate, in its 

decision-making process, DOE will protect confidential information from disclosure consistent 

with applicable law. 

DOE will collate the information from interviews and prepare a summary of the major 

issues and outcomes. This summary will become part of the TSD produced for this rulemaking. 

12.2 Industry Cash Flow Analysis 

The industry cash flow analysis relies primarily on the Government Regulatory Impact 

Model (GRIM). DOE uses the GRIM to analyze the financial impacts of more-stringent energy 

conservation standards on the industry that produces the equipment covered by the standard. 

The GRIM analysis uses a number of factors—annual expected revenues; manufacturer 

costs such as costs of goods sold; selling, general, and administrative (SG&A) costs; taxes; and 

capital expenditures—to arrive at a series of annual cash flows beginning from the 

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

DOE compares the results against base case projections that involve no new standards. The 

financial impact of new standards is the difference between the two sets of discounted annual 
38

cash flows. Other performance metrics, such as return on invested capital, also are available from 

the GRIM. 

DOE will gather this information from two primary sources: (1) the analyses conducted 

to this point; and (2) interviews with manufacturers and other interested parties. Information 

gathered from previous analyses will include financial parameters, manufacturing costs, price 

forecasts, and shipment forecasts. Interviews with manufacturers and other interested parties will 

be essential for supplementing this information. 

12.3 Manufacturer Subgroup Analysis 

It is possible that the use of average industry cost values will not adequately assess 

differential impacts among subgroups of manufacturers. DOE recognizes that smaller 

manufacturers, niche players, and manufacturers exhibiting a cost structure that differs largely 

from the industry average may be differentially impacted by the imposition of standards. Ideally, 

DOE would consider the impact on every firm individually. In highly concentrated industries, 

this may be possible. In industries having numerous participants, however, DOE will use the 

results of the market and technology assessment to group manufacturers into subgroups, as 

appropriate. 

Item 12-1 DOE seeks comment on the establishment of manufacturer subgroups for PTACs 

and PTHPs, if any, that DOE should consider in a manufacturer subgroup 

analysis. 

12.4 Competitive Impacts Assessment 

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

the imposition of new or amended standards. (42 U.S.C. 6295(o)(2)(B)(i)(V) and 6313(d)) It 

further directs the Attorney General to determine, in writing, the impacts, if any, of any lessening 

of competition. (42 U.S.C. 6295(o)(2)(B)(ii) and 6313(d)) 

DOE will make a determined effort to gather firm-specific financial information and 

impacts. DOE will then report the aggregated impact of the standard on manufacturers. The 

competitive impacts assessment will include a focus on the assessment of the impacts to smaller 

manufacturers. DOE will provide the Attorney General with a copy of the NOPR for 

consideration in the Attorney General’s evaluation of the impact, if any, of standards on any 

lessening of competition. DOE will base the assessment on manufacturing cost data and on 

information collected from interviews with manufacturers. One focus of the manufacturer 

interviews will be to gather information that would help in assessing asymmetrical cost increases 

to some manufacturers, whether an increased proportion of fixed costs could potentially increase 

business risks, and potential barriers to market entry (e.g., proprietary technologies). 

12.5 Cumulative Regulatory Burden 

Finally, DOE is aware that other regulations may be placed on equipment covered under 

this rulemaking as well as on other equipment manufactured by the same companies. Multiple 

regulations may result in a cumulative regulatory burden on these manufacturers. DOE will 
39

address and seek to mitigate the overlapping effects on manufacturers of amended DOE 

standards and other regulatory actions affecting the same equipment or companies. In this regard, 

DOE considers the impact of other rules with compliance dates within 3 years of the compliance 

date for this rulemaking. 

Item 12-2 What regulations or pending regulations should DOE consider in its analysis of 

cumulative regulatory burden? 

13. EMISSIONS ANALYSIS 

In the emissions analysis, DOE will estimate the reduction in power sector emissions of 

carbon dioxide (CO2), nitrogen oxides (NOX), sulfur dioxide (SO2), and mercury (Hg) from 

potential amended energy conservation standards for PTACs and PTHPs. In addition, DOE will 

estimate emissions impacts in production activities (extracting, processing, and transporting 

fuels) that provide the energy inputs to power plants. These are referred to as “upstream” 

emissions. Together, these emissions account for the full-fuel-cycle. In accordance with DOE’s 

FFC Statement of Policy (76 FR 51281 (Aug. 18, 2011)), the FFC analysis also includes impacts

of standards on emissions of methane and nitrous oxide, both of which are recognized as 

greenhouse gases. 

DOE will conduct the emissions analysis using emissions factors derived from data in the 

most recent edition of EIA’s Annual Energy Outlook (AEO), supplemented by data from other 

sources. EIA prepares the Annual Energy Outlook using NEMS. Each annual version of NEMS 

incorporates the projected impacts of existing air quality regulations on emissions. The text 

below refers to AEO 2012.

SO2 emissions from affected electric generating units (EGUs) are subject to nationwide 

and regional emissions cap-and-trade programs. Title IV of the Clean Air Act sets an annual 

emissions cap on SO2 for affected EGUs in the 48 contiguous States and the District of Columbia 

(D.C.). SO2 emissions from 28 eastern States and D.C. were also limited under the Clean Air 

Interstate Rule (CAIR, 70 FR 25162 (May 12, 2005)), which created an allowance-based trading 

program that operates along with the Title IV program. CAIR was remanded to the U.S. 

Environmental Protection Agency (EPA) by the U.S. Court of Appeals for the District of 

Columbia Circuit (D.C. Circuit) (see North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008)), 

but it remained in effect. On July 6, 2011 EPA issued a replacement for CAIR, the Cross-State 

Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). The AEO 2012 NEMS assumes 

the implementation of the CSAPR.37

 

37

 On December 30, 2011, the D.C. Circuit stayed the new rules while a panel of judges reviews them, and told EPA 

to continue administering CAIR. See EME Homer City Generation, LP v. EPA, Order, No. 11-1302, Slip Op. at *2 

(D.C. Cir. Dec. 30, 2011). On August 21, 2012, the D.C. Circuit issued a decision to vacate CSAPR. See EME 

Homer City Generation, LP v. EPA, No. 11-1302, 2012 WL 3570721 at *24 (D.C. Cir. Aug. 21, 2012). The court 

again ordered EPA to continue administering CAIR. AEO 2012 had been finalized prior to both these decisions; 

however. DOE understands that CAIR and CSAPR are similar with respect to their effect on emissions impacts of 

energy conservation standards. 
40

The attainment of emissions caps is typically flexible among EGUs and is enforced 

through the use of emissions allowances and tradable permits. Under existing EPA regulations, 

any excess SO2 emissions allowances resulting from the lower electricity demand caused by the 

adoption of an energy conservation standard could be used to permit offsetting increases in SO2

emissions by any regulated EGU. In past rulemakings, DOE recognized that there was 

uncertainty about the effects of efficiency standards on SO2 emissions covered by the existing 

cap-and-trade system, but it concluded that negligible reductions in power sector SO2 emissions 

would occur as a result of standards. 

Beginning in 2015, however, SO2 emissions will fall as a result of the Mercury and Air 

Toxics Standards (MATS) for power plants, which were announced by EPA on December 21, 

2011. 77 FR 9304 (Feb. 16, 2012). In the final MATS rule, EPA established a standard for 

hydrogen chloride as a surrogate for acid gas hazardous air pollutants (HAP), and also 

established a standard for SO2 (a non-HAP acid gas) as an alternative equivalent surrogate 

standard for acid gas HAP. The same controls are used to reduce HAP and non-HAP acid gas; 

thus, SO2 emissions will be reduced as a result of the control technologies installed on coal-fired 

power plants to comply with the MATS requirements for acid gas. AEO 2012 assumes that, in 

order to continue operating, coal plants must have either flue gas desulfurization or dry sorbent 

injection systems installed by 2015. Both technologies, which are used to reduce acid gas 

emissions, also reduce SO2 emissions. Under the MATS, NEMS shows a reduction in SO2

emissions when electricity demand decreases (e.g., as a result of energy efficiency standards). 

Emissions will be far below the cap that would be established by CSAPR, so it is unlikely that 

excess SO2 emissions allowances resulting from the lower electricity demand would be needed 

or used to permit offsetting increases in SO2 emissions by any regulated EGU. Therefore, DOE 

believes that efficiency standards will reduce SO2 emissions in 2015 and beyond. 

CSAPR established a cap on NOX emissions in 28 eastern States and the District of 

Columbia. Energy conservation standards are expected to have little effect on NOX emissions in 

those States covered by CSAPR because excess NOX emissions allowances resulting from the 

lower electricity demand could be used to permit offsetting increases in NOX emissions. 

However, standards would be expected to reduce NOX emissions in the States not affected by 

CSAPR, so DOE estimates NOX emissions reductions from potential standards in the States 

where emissions are not capped. 

 The MATS limit mercury emissions from power plants, but they do not include emissions 

caps, and, as such, DOE’s energy conservation standards would likely reduce Hg emissions. 

Power plants may emit particulates from the smoke stack, which are known as direct 

particulate matter (PM) emissions. NEMS does not account for direct PM emissions from power 

plants. DOE is investigating the possibility of using other methods to estimate reduction in PM 

emissions due to standards. The great majority of ambient PM associated with power plants is in

the form of secondary sulfates and nitrates, which are produced at a significant distance from 

power plants by complex atmospheric chemical reactions that often involve the gaseous 

emissions of power plants, mainly SO2 and NOx. The monetary benefits that DOE estimates for 

reductions in SO2 and NOx emissions resulting from standards are in fact primarily related to the 

health benefits of reduced ambient PM. 
41

Item 13-1 DOE seeks input on its proposed approach to analyze emissions impacts of 

amended standards on PTAC and PTHPs. 

14. MONETIZING CARBON DIOXIDE AND OTHER EMISSIONS REDUCTIONS 

 DOE plans to consider the estimated monetary benefits likely to result from the reduced 

emissions of CO2 and NOX that are expected to result from each of the standard levels 

considered.

 To estimate the monetary value of benefits resulting from reduced emissions of CO2, 

DOE plans to use the most current social cost of carbon (SCC) values developed and/or agreed to 

by an interagency process. The SCC is intended to be a monetary measure of the incremental 

damage resulting from greenhouse gas (GHG) emissions, including, but not limited to, net 

agricultural productivity loss, human health effects, property damage from sea level rise, and 

changes in ecosystem services. Any effort to quantify and to monetize the harms associated with 

climate change will raise serious questions of science, economics, and ethics. But with full 

regard for the limits of both quantification and monetization, the SCC can be used to provide 

estimates of the social benefits of reductions in GHG emissions. 

 At the time of this notice, the most recent interagency estimates of the potential global 

benefits resulting from reduced CO2 emissions in 2015, expressed in 2011$, were $6.1, $25.4, 

$41.0, and $77.7 per metric ton avoided. For emissions reductions that occur in later years, these 

values grow in real terms over time. Additionally, the interagency group determined that a range 

of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate 

domestic effects, although DOE will give preference to consideration of the global benefits of 

reducing CO2 emissions. To calculate a present value of the stream of monetary values, DOE 

will discount the values in each of the four cases using the discount rates used to obtain the SCC 

values in each case. 

 DOE recognizes that scientific and economic knowledge continues to evolve rapidly as to 

the contribution of CO2 and other GHG to changes in the future global climate and the potential 

resulting damages to the world economy. Thus, these values are subject to change. 

 DOE also intends to estimate the potential monetary benefit of reduced NOX emissions 

resulting from the standard levels it considers. For NOX emissions, available estimates suggest a 

very wide range of monetary values, ranging from $460 to $4,722 per ton in 2011.38 In 

accordance with OMB guidance, DOE will conduct two calculations of the monetary benefits 

derived using each of the economic values used for NOX, using real discount rates of 3 percent 

and 7 percent.39

 

38 For additional information, refer to U.S. Office of Management and Budget, 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. 

39 OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
42

DOE is investigating appropriate valuation of Hg emissions. Whether monetization of 

reduced Hg emissions will occur in this rulemaking is not yet certain. 

Item 14-1 DOE invites comments on its approach to monetization of emissions. 

15. UTILITY IMPACT ANALYSIS

In the utility impact analysis, DOE analyzes the changes in electric installed capacity and 

generation that result for each trial standard level. The utility impact analysis uses a variant of 

NEMS, referred to as NEMS-BT,40 to account for selected utility impacts of new or amended energy 

conservation standards. DOE’s analysis consists of a comparison between model results for the most 

recent AEO Reference Case and for cases in which energy use is decremented to reflect the impact of 

potential standards.

Item 15-1 DOE welcomes input from stakeholders on its proposed approach to conduct the 

utility impact analysis. 

16. EMPLOYMENT IMPACT ANALYSIS 

Employment impacts include direct and indirect impacts. Direct employment impacts are 

any changes in the number of employees of manufacturers of the equipment subject to standards. 

The MIA addresses impacts in the number of employees working for the manufacturers. Indirect 

employment impacts from standards consist of the net jobs created or eliminated in the national 

economy, other than in the manufacturing sector being regulated, caused by: (1) reduced 

spending by end users on energy; (2) reduced spending on new energy supply by the utility 

industry; (3) increased spending on new equipment to which the new or amended standards 

apply; and (4) the effects of those three factors throughout the economy. 

One method for assessing the possible effects on the demand for labor of such shifts in 

economic activity is to compare sector employment statistics developed by the Labor 

Department’s Bureau of Labor Statistics (BLS). The BLS regularly publishes its estimates of the 

number of jobs per million dollars of economic activity in different sectors of the economy, as 

well as the jobs created elsewhere in the economy by this same economic activity. Data from 

BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and 

indirectly) than expenditures in other sectors of the economy.41 There are many reasons for these 

differences, including wage differences and the fact that the utility sector is more capitalintensive and less labor-intensive than other sectors. Energy conservation standards have the 

effect of reducing purchaser utility bills. Because reduced purchaser expenditures for energy 

 

40 DOE/EIA approves use of the name NEMS to describe only an official version of the model without any 

modification to code or data. Because this analysis entails some minor code modifications and the model is run 

under various policy scenarios that are variations on DOE/EIA assumptions, DOE refers to it by the name NEMSBT (BT is DOE’s Building Technologies Program, under whose aegis this work has been performed). 

41 See Bureau of Economic Analysis, Regional Multipliers: A User Handbook for the Regional Input-Output 

Modeling System (RIMS II). Washington, DC. U.S. Department of Commerce, 1992. 
43

likely lead to increased expenditures in other sectors of the economy, the general effect of 

efficiency standards is to shift economic activity from a less labor-intensive sector (i.e., the 

utility sector) to more labor-intensive sectors (e.g., the retail and service sectors). 

 

In the NOPR stage of this rulemaking, DOE plans to estimate indirect national 

employment impacts using an input/output model of the U.S. economy called Impact of Sector 

Energy Technologies version 3.1.1 (ImSET).42 ImSET is a special-purpose version of the “U.S. 

Benchmark National Input-Output” (I–O) model, which was designed to estimate the national 

employment and income effects of energy-saving technologies. The ImSET software includes a 

computer-based I–O model with structural coefficients that characterize economic flows among 

187 sectors most relevant to industrial, commercial, and residential building energy use. 

DOE notes that ImSET is not a general equilibrium forecasting model, and understands 

the uncertainties involved in projecting employment impacts, especially changes in the later 

years of the analysis. Because ImSET does not incorporate price changes, the employment 

effects predicted by ImSET may over-estimate actual job impacts over the long run. DOE may 

consider the use of other modeling approaches for examining long-run employment impacts. 

Item 16-1 DOE welcomes feedback on its proposed approach to assessing national 

employment impacts. 

17. REGULATORY IMPACT ANALYSIS 

Pursuant to section 6(a)(3) of Executive Order (E.O.) 12866, “Regulatory Planning and 

Review,” 58 FR 51735 (Oct. 4, 1993), if DOE determines that amended energy conservation 

standards for PTAC and PTHP equipment would constitute a significant regulatory action, 

during the NOPR stage DOE will prepare and submit to OMB (1) an assessment of the costs and 

benefits of the proposed regulation, and (2) if the proposed rule is also significant under section 

3(f)(1) of the E.O., a regulatory impact analysis (RIA). The RIA would address the potential for 

non-regulatory approaches to supplant or augment energy conservation standards to improve the 

energy efficiency or reduce the energy consumption of the equipment covered under this 

rulemaking. 

DOE recognizes that voluntary or other non-regulatory efforts by manufacturers, utilities 

and other interested parties can result in substantial improvements to energy efficiency or 

reductions in energy consumption. DOE will base its assessment on the actual impacts of any 

such initiatives to date and will consider information presented regarding the impacts that any 

existing initiative might have in the future. 

Item 17-1 DOE seeks comment regarding programs that should be examined as nonregulatory approaches. 

 

42 J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, PNNL-18412, 

Pacific Northwest National Laboratory, 2009. Available at: 

www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf 
44

APPENDIX A – LIST OF ITEMS FOR COMMENT 

This appendix lists all the items for comment contained in this framework document and the 

page numbers on which those items can be found. 

Item 1-1 While DOE invites comment on all aspects of the material presented in this 

document, several specific issues on which DOE seeks comment are set out in 

comment boxes like this one. DOE uses these comment boxes to highlight issues and 

ask specific questions on the approaches DOE plans to follow to conduct the analyses 

required for the energy conservation standards rulemaking. Such requests for 

feedback are numbered sequentially throughout the document and are repeated in 

Appendix A. ..............................................................................................................1

Item 1-2 DOE requests detailed test data supporting (a) selection of a specific break-in time 

necessary for PTACs and PTHPs to achieve their steady-state performance level; (b) 

how much improvement in efficiency typically can be achieved using a full break-in 

period as compared with no break-in period; and (c) how the break-in period varies 

with break-in conditions such as temperature. DOE requests information regarding 

the test burden per unit associated with a given break-in period and with approaches 

that might accelerate break-in using elevated ambient temperature. DOE requests 

comment on whether a break-in period should be optional or required, and whether 

break-in parameters such as minimum and/or maximum break-in times and/or 

temperatures should be specified. ............................................................................. 11

Item 1-3 DOE requests comment regarding the potential requirement for sealing potential 

leakage gaps between the PTAC or PTHP wall sleeve and the test facility partition 

during testing. DOE also requests comment regarding whether any additional set-up 

requirements should be included in the test procedure to assure accurate and 

repeatable testing. .................................................................................................... 12

Item 1-4 DOE requests any available test data which would indicate whether use of city water 

to prefill condensate pans would affect capacity or efficiency measurements as 

compared with no prefilling or with the use of distilled water. DOE requests 

comment regarding the amount of time and labor hours saved during testing by 

prefilling the condensate pan. Finally, DOE requests comment on whether prefilling 

of the condensate pan should be allowed and/or required, and whether there is any 

need to require certification reports to indicate whether this step was taken. ............. 13

Item 1-5 DOE requests detailed test data that would show the relationship between barometric 

pressure and cooling capacity or efficiency measurements for PTACs and PTHPs 

tested using ASHRAE Standard 16-1999 or ASHRAE Standard 37-1988. ............... 13

Item 1-6 DOE requests any available data that would show whether testing using ASHRAE 

Standard 16-1999, as compared with ASHRAE Standard 37-1988, results in any 

significant differences in measured cooling capacity or efficiency. DOE requests 

information regarding the test burden associated with each of these test methods, 

including labor hours, total test time, and the cost of the required test facilities. DOE 

also requests information on whether manufacturers generally rate their equipment 

using ASHRAE Standard 16-1999 or 37-1988. Finally, DOE requests comment on 

whether one of these test procedures should be selected as the test procedure 

applicable to this equipment. .................................................................................... 14
45

Item 1-7 DOE seeks information concerning any entities that should be added to the interested 

parties list, in particular additional manufacturers, small business manufacturers, 

purchasers, and energy conservation and environmental advocates. ......................... 16

Item 3-1 DOE seeks information on annual PTAC and PTHP shipments into the U.S. market 

from 1995 to 2011 (both domestic and imports) by equipment class, and the 

corresponding shipment-weighted average efficiency of these shipments. ................ 18

Item 3-2 DOE seeks information on the proportion(s) of PTAC and PTHP equipment shipped 

annually that replaces existing equipment. ............................................................... 18

Item 3-3 DOE requests feedback on the equipment classes for PTACs and PTHPs covered 

under this rulemaking. ............................................................................................. 19

Item 3-4 What technologies or designs, if any, should be added to the above list? If certain 

changes to the list are not applicable to all equipment classes, what equipment classes 

are affected? ............................................................................................................ 20

Item 4-1 DOE welcomes comments on the above four screening criteria. In addition, DOE 

requests comment on which technology options should be screened out, and which 

screening criteria would be the appropriate basis for their elimination. ..................... 21

Item 5-1 DOE requests comments on the best ways to collect such information from the 

industry. DOE anticipates that such data might be collected and aggregated by AHRI 

for submittal to DOE. ............................................................................................... 22

Item 5-2 DOE requests input on appropriate categories and questions to be included on such 

requests for data. ...................................................................................................... 22

Item 5-3 DOE seeks comments and recommendations regarding the potential data collection 

efforts that might be made by industry participants to support this rulemaking, and the 

possible structure of data request forms that could be used to assist such efforts....... 22

Item 5-4 DOE is also interested in receiving equipment test data (test procedure used, rating 

conditions, voltage, integrated average product temperature, daily energy 

consumption, etc.). Test data representative of the baseline model in each equipment 

class is particularly important. .................................................................................. 22

Item 5-5 DOE requests feedback on the use of a combined analysis approach that uses multiple 

information sources to determine the relationship between manufacturer selling price 

and energy consumption for PTACs and PTHPs. ..................................................... 23

Item 5-6 DOE seeks comment on which information sources may be the best for developing 

estimates of manufacturer selling prices. .................................................................. 23

Item 5-7 Are there proprietary designs that DOE should consider in the analyses for any of the 

equipment under consideration by this rulemaking? If so, how should DOE acquire 

the cost data necessary for evaluating these designs? Conversely, are there proprietary 

designs that should not be considered? Which equipment uses these designs? .......... 24

Item 5-8 DOE requests feedback on the suggested representative cooling capacities for PTACs 

and PTHPs for direct analysis. ................................................................................. 24

Item 5-9 DOE requests feedback on DOE’s method of correlating COP with EER for PTHPs. 

Specifically, DOE requests data on possible correlations between COP and EER for 

PTHPs. .................................................................................................................... 25

Item 5-10 DOE requests feedback on DOE’s method of selecting EER efficiency levels for 

analysis of standard size PTACs and PTHPs. Specifically, DOE requests feedback on 

use of the AHRI database rating information as the source for this analysis. If this is 

not an appropriate source, DOE requests suggestions of alternative sources of 
46

efficiency information. Also, DOE requests comment on the use of the same 

efficiency levels, at four percent increments for both PTACs and PTHPs. ................ 26

Item 5-11 DOE requests feedback on DOE’s method of choosing efficiency levels for analysis 

for non-standard size PTACs and PTHPs. Specifically, DOE requests feedback on 

the sources DOE used for this analysis, suggestions of other potential sources of 

efficiency information, and the accuracy of the efficiency information from these 

sources. .................................................................................................................... 27

Item 5-12 Are there outside regulatory issues that DOE should consider in its engineering 

analysis of PTACs or PTHPs? .................................................................................. 27

Item 6-1 DOE seeks comment on whether the existing inputs, software, methodology, and 

outputs to estimate unit-average and national energy for PTAC and PTHP equipment 

are adequate and appropriate for the current rulemaking. ......................................... 29

Item 7-1 DOE seeks input on whether the methodology to calculate markups for PTAC and 

PTHP equipment is adequate and appropriate for the current rulemaking. ................ 31

Item 8-1 DOE seeks comment on whether the methodology to calculate life-cycle costs and 

payback periods for PTAC and PTHP equipment is adequate and appropriate for the 

current rulemaking. .................................................................................................. 33

Item 9-1 DOE requests historical shipments data for each of the considered equipment classes.

................................................................................................................................ 33

Item 9-2 DOE welcomes comment on the proposed shipments forecast methodology and input 

regarding which market forces impact shipments. . .................................................. 34

Item 9-3 DOE welcomes comment on how amended standards for PTAC and PTHP equipment 

might impact shipments of the equipment. ............................................................... 34

Item 10-1 DOE seeks comment on whether the existing methodology to estimate national 

impact of amended energy-efficiency standards is adequate and appropriate to 

evaluate for the current analysis. .............................................................................. 36

Item 10-2 DOE seeks comment on the likely trend in average efficiency of PTAC and PTHP 

equipment in the absence of amended standards. ...................................................... 36

Item 11-1 DOE welcomes comment on what, if any, user subgroups are appropriate in 

considering amended standards for PTACs and PTHPs. ........................................... 36

Item 12-1 DOE seeks comment on the establishment of manufacturer subgroups for PTACs and 

PTHPs, if any, that DOE should consider in a manufacturer subgroup analysis. ....... 38

Item 12-2 What regulations or pending regulations should DOE consider in its analysis of 

cumulative regulatory burden? ................................................................................. 39

Item 13-1 DOE seeks input on its proposed approach to analyze emissions impacts of amended 

standards on PTAC and PTHPs. ............................................................................... 41

Item 14-1 DOE invites comments on its approach to monetization of emissions. ...................... 42

Item 15-1 DOE welcomes input from stakeholders on its proposed approach to conduct the 

utility impact analysis. ............................................................................................. 42

Item 16-1 DOE welcomes feedback on its proposed approach to assessing national employment 

impacts. ................................................................................................................... 43

Item 17-1 DOE seeks comment regarding programs that should be examined as non-regulatory 

approaches. .............................................................................................................. 43